20 year study of global wealth demolishes the myth of ‘trickle-down’ • Hacker News Board

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#311

Post by lordlimecat » Wed, Dec 08, 2021, 2:57 PM UTC

romwell wrote: post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

It does work if you rely on actual relevant data. Disparity is a terrible measure, especially when you consolidate the entire world into one pot. China has higher taxes than the US, and far worse inequality as well as far lower median incomes.

Europe has substantially higher taxes and cost-of-living than the US, but lower median, PPP-adjusted median, and median post-tax post-government-transfer disposable incomes than the US.

When you compare countries by their tax rate compared to what the average (median) citizen ends up with, it does not seem to be the case that higher taxes result in greater personal financial security. Frankly, whether lower taxes results in more billionaires is irrelevant to the question of whether it increases the quality-of-life or economic security of your average person.

Imagine pointing at one of the richest societies to ever exist (across all quartiles) as an example of how bad its economic policy is.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#312

Post by xondono » Wed, Dec 08, 2021, 3:00 PM UTC

romwell wrote: post #262

xondono wrote: post #255

Earlier quoted context omitted.

And it impoverishes those who you took those 20M$. You can’t assess real impact without taking that into account.

A billionaire wont be "impoverished" by that. I'll play my tiniest violin to their loss.

The issue is that there’s an amazing amount of overlap between the people who pay and the people who receive, making the exercise quite pointless.

Even if you took all the wealth of billionaires and found a way of liquidating that at that price (you can’t, but let’s assume you can), then divide by all US citizens , you’ll see a pretty insignificant number.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#313

Post by JackFr » Wed, Dec 08, 2021, 3:00 PM UTC

wilkommen wrote: post #234

JackFr wrote: post #149

Earlier quoted context omitted.

> as the billionaire holds on to whatever financial product they bought forever as long as it appreciates faster than inflation. Another word for that is investment. Where do you think that money goes? You don’t earn returns on money that isn’t doing anything.

Yes you absolutely do earn returns on money that isn’t doing anything. If I buy a share of Apple and the share price goes up, I’ve just made a return on money that isn’t doing anything. The money I spent on that share didn’t enable any real economic activity other that me buying that share. My money didn’t go to Apple to enable them to grow their business. It went to some other investor who is primarily engaged in th…

I buy a liquor store for $1 million. A year later someone offers me $1.25 million for the liquor store. Would you argue that my million dollars was doing nothing?

The income the liquor store earned was income on my $1 million. The $250,000 may have been because of a change in tastes for liquor, or improvements I've made to the business through efficiency or reinvesting the icnome.

But what of the original owner who took my $1 million. He is retired and he has most of it in the bank (who will use it to make loans) while he spends the rest over the years as his retirement income.

The share of Apple is no different.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#314

Post by jdgoesmarching » Wed, Dec 08, 2021, 3:04 PM UTC

Jensson wrote: post #283

hiptobecubic wrote: post #266

Earlier quoted context omitted.

No? There are more wealthy people today who earned it without being bootstrapped by an insanely good starting position than ever before, but to suggest that it's the _majority_ is to ignore everything people have been complaining about in the streets for the last two years. A huge predictor, if not the single biggest predictor, of wealth is still just whether or not your parents are wealthy, especially at the top. E.…

> huge predictor, if not the single biggest predictor, of wealth is still just whether or not your parents are wealthy, especially at the top. If you count top 10% as wealthy, sure then you need to be wealthy to make it big. A kid with top 10% parents has everything they need to succeed and create a top company. A poor kid doesn't, true, but a poor kid in USA still has everything they need to get to top 10%, and then…

> a poor kid in USA still has everything they need to get to top 10%

As a poor kid who did this, this is an incredibly ignorant and out-of-touch statement. This is like the socioeconomic equivalent of that Verge PC build.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#315

Post by cloverich » Wed, Dec 08, 2021, 3:05 PM UTC

opportune wrote: post #309

WastingMyTime89 wrote: post #98

Earlier quoted context omitted.

> In any case, the "wealth disparity" discussion is almost always badly anchored. The first thing to understand about wealth disparity is that it maps pretty much to wealth. More wealth, more wealth disparity... almost universally. Many or most people have no wealth, depending on your semantics of "wealth." Therefore, if the value/quantity of wealth rises, wealth disparity rises. I agree with you but it remains a pro…

This is not necessarily true because wealth parked in such a manner doesn’t enter the economy. We have a general problem in that people do not consume enough to grow our economy. Now, endlessly increasing consumption sounds bad, but it’s basically required for the economy to keep growing in real terms, since it’s the main component of GDP. Most wealthy people, not even billionaires but lots of run-of-the-mill hundred…

Aren't savings required to support loans -- business, home, etc? Does that imply saved money actually is doing something?

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#316

Post by jdgoesmarching » Wed, Dec 08, 2021, 3:11 PM UTC

1234letshaveatw wrote: post #268

Clubber wrote: post #201

Earlier quoted context omitted.

>Because that would require taking from some people and giving to others through government, which is a very inefficient way to do it. I mean where do you think defense contractor profits come from? How about medical and Pharma? Medicare is the largest single payor in the US and they deal exclusively with the elderly who require more prescriptions and medical care. Many large industry's largest client is the federal,…

>I mean where do you think defense contractor profits come from? How about medical and Pharma? Inefficiency

Regulatory capture is not inefficiency, it is an extremely efficient result of a system designed to serve capital. At some point we have to stop pretending like we aren’t successfully achieving what our economy is optimized for.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#317

Post by ianai » Wed, Dec 08, 2021, 3:12 PM UTC

thinkcontext wrote: post #296

ianai wrote: post #54

Earlier quoted context omitted.

Gold does pollute-but it’s probably a lot less polluting once it’s out of the ground. You make an excellent point about modern finance. Increasingly to me it seems modern finance should be considered for its affects on money supply and finance not dissimilar to actions of central banks and certain government spending. It’s probably gone unnoticed largely exactly because the corporate finance machinations are not anyw…

> Gold does pollute-but it’s probably a lot less polluting once it’s out of the ground. How could you possibly think that? Most gold today is produced through hard rock mining, which involves either enormous pits or tunnels. Many tons of ore is crushed and processed with either cyanide or mercury to get a few grams of gold.

You’re arguing over definition. “Out of the ground” implies processing/refinement. Once it’s truly out of the ground it’s stored in a vault in elemental form or something similar.

Look it’s the internet. I know we all want to pretend that we’re super pedantic lawyers. Oh wait. I never agreed to those terms.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#318

Post by rrrrrrrrrrrryan » Wed, Dec 08, 2021, 3:12 PM UTC

Jensson wrote: post #283

hiptobecubic wrote: post #266

Earlier quoted context omitted.

No? There are more wealthy people today who earned it without being bootstrapped by an insanely good starting position than ever before, but to suggest that it's the _majority_ is to ignore everything people have been complaining about in the streets for the last two years. A huge predictor, if not the single biggest predictor, of wealth is still just whether or not your parents are wealthy, especially at the top. E.…

> huge predictor, if not the single biggest predictor, of wealth is still just whether or not your parents are wealthy, especially at the top. If you count top 10% as wealthy, sure then you need to be wealthy to make it big. A kid with top 10% parents has everything they need to succeed and create a top company. A poor kid doesn't, true, but a poor kid in USA still has everything they need to get to top 10%, and then…

> a poor kid in USA still has everything they need to get to top 10%

Generally, after a lifetime of honest, hard work, you'll make it 1, maybe 2 tax brackets higher than your parents. To make it further than that you have to be especially talented, lucky, or both.

I just looked it up: as of 2016, 7.5% of kids born in the bottom quintile make it to the top quintile, so it is indeed possible, though quite rare. [1]

I think your basic sentiment is right, though you'd probably need to insert one more generation: a poor kid has everything they need to make it to the middle class and live a not-poor life, a middle class kid has everything they need to make it to the top 10%, and a top 10% kid has everything they need to become fabulously wealthy.

The poor -> middle class leap is probably more difficult than any of the others.

[1] https://www.economist.com/graphic-detail/2018/02/14/american...

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#319

Post by ZeroGravitas » Wed, Dec 08, 2021, 3:13 PM UTC

netcan wrote: post #52

In college, I studied Ronald Coase's famous 1920s papers. The major application ATT was infrastructure stuff. Coase's argument was that "given 0 transaction costs," it doesn't matter who owns what property or right. The market will achieve efficient solutions as firms sell each other radio spectrum or whatnot. Policy should focus on minimizing transaction costs and let the market organize itself. Circa 2005, I heard…

Even the strong 'in a perfect theoretical world' version only says;

> The theorem states that if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property.'

Key phrase there being 'Pareto efficient' which basically means 'without addressing the initial starting point inequality'.

I'm also not sure what your last claim is about, it sounds like a garbled version of 'you need inequality to progress' which is a common trope, but not actually backed by any logic as far as I can tell, or even fleshed out enough to escape from the 'not even wrong' category.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#320

Post by temp10298385 » Wed, Dec 08, 2021, 3:16 PM UTC

refurb wrote: post #121

esarbe wrote: post #95

Earlier quoted context omitted.

What do you mean? That 'Trickle Down' was a satirical term coined to disparagingly talk about supply-side economics? Sure, I know. That doesn't mean that there aren't more than enough people still clinging to supply-side economic theories as if their undeserved wealth depended on it. Because it does.

Supply side is a valid economic theory. Give people more money and they spend it. You disagree? “Trickle down” was a Democratic ploy to disparage the policy of reducing tax rates. Apparently we are still talking about it despite the economic expansion of the 1980’s in contrast to the “malaise” of the 70’s.

Giving people more money (i.e tie wages to increase in productivity) is demand side economics.

Supply side economics is increasing the amount of available goods regardless of demand. The lagging wages are mitigated by credit, i.e. debt.