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Are super-rich people just better at making money?

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Re: Are super-rich people just better at making money?

#511

Post by bawolff »

aqme28 wrote: post #335
dontreact wrote: post #304

Earlier quoted context omitted.

It’s hard problem that can only be solved through attempts and iteration. The fact that a wealth tax is difficult is not a good enough reason to not try, because the problem of wealth inequality is so severe now.

There are also some things that do work decently well that we don't do anymore for political reasons, such as estate taxes.

Yeah, but that isn't a wealth tax, its a tax on the heir's income.

There is lots of ways to improve taxes on income and capital gains, but that is really different from a general wealth tax.

Re: Are super-rich people just better at making money?

#512

Post by quickthrower2 »

SyzygistSix wrote: post #419
quickthrower2 wrote: post #26

Earlier quoted context omitted.

Producing value? Sometimes. Sometimes extracting rent. Sometimes speculating. If private equity buys a pharma company and cuts research, jacks up prices to extract money from insurance, that might be "clever" but it is not really benefitting anyone, quite the opposite. Obviously a lot of capital is used to create more value, but it does so by using labour, so it is the creativity of the people working for that capita…

>while the capital sits back and enjoys it's growth So people should risk their capital for nothing? I'm all for better pay and working conditions but the value from some ventures does not always come from the creativity of the workers. Sometimes it does, sometimes it doesn't so much.

Er no. Just saying we shouldn’t be in awe of people because they have money and can make more of it, like this is a societal service they are performing. Sometimes it is, sometimes it isn’t, sometimes it is the opposite.

Re: Are super-rich people just better at making money?

#513

Post by rayiner »

xg15 wrote: post #440
burlesona wrote: post #377

There are two core insights here that are actually pretty obvious: 1. 20% of 1200 is more than 20% of 800. Duh! But the practical insight is simply that people with more wealth can afford bigger bets and expect bigger payouts. 2. Many systems are sensitive to initial conditions. In this model, the first coin flip matter vastly more than all others and determines almost the entire outcome. As others have pointed out t…

> A very simple distribution solution therefore is to stop privileging capital gains and tax all income equally. But of course this has been considered and hasn’t gained traction. A reason why it hasn't gained traction though is that wealth doesn't just give you buying power but also political influence. So especially those who already have excessive wealth would be in a position to block such a measure.

That, and economists broadly agree that taxing businesses and investment is a bad idea, and that the most efficient thing is a consumption tax: https://www.npr.org/sections/money/2012/07/19/157047211/six-.... Note that this article is from NPR of all things.

Re: Are super-rich people just better at making money?

#514

Post by imgabe »

matthewdgreen wrote: post #298
imgabe wrote: post #180

Earlier quoted context omitted.

It does not demonstrate that at all. It assumes everyone, rich and poor, is exactly equal at allocating capital because they all have a flat 50% chance to make money on every investment. In reality some poor people are savvy investors and become rich and some rich people are foolish investors and become poor.

What it demonstrates is that people with equal investing skills will see radically unequal outcomes, based entirely on their pre-existing wealth. Presumably you could update this model to give some people “better investing skills” and others worse skills. (In practice you’d just bias the coin flip against the ‘worse’ investors.) I suspect that once inequality has crept into the game then even having “better investing…

> What it demonstrates is that people with equal investing skills will see radically unequal outcomes, based entirely on their pre-existing wealth.

Well, duh. Did anyone think otherwise? Obviously a great investor with $1,000,000 will make more money than a great investor with $100. That's not some nefarious plot of evil capitalists to keep down the poors, it's just the math of how percentages work.

What system could possibly eliminate that advantage without destroying the incentive to invest at all? If you're managing a million dollars and you are unable to make any more money than you would investing $100, then why would you invest? What would people do with their money in that case? Hide it under a mattress?

Re: Are super-rich people just better at making money?

#515

Post by [deleted] »

gnull wrote: post #491
burlesona wrote: post #377

There are two core insights here that are actually pretty obvious: 1. 20% of 1200 is more than 20% of 800. Duh! But the practical insight is simply that people with more wealth can afford bigger bets and expect bigger payouts. 2. Many systems are sensitive to initial conditions. In this model, the first coin flip matter vastly more than all others and determines almost the entire outcome. As others have pointed out t…

> If we made it much much easier to build housing then then rental housing market would be like the used car market: viable but not an easy place to sit back and make passive income. You're overthinking it. Sweden made renting out apartments unattractive without all this sophistication, they just regulate the prices and keep them low.

[deleted]

Re: Are super-rich people just better at making money?

#516

Post by matthewdgreen »

imgabe wrote: post #514
matthewdgreen wrote: post #298

Earlier quoted context omitted.

What it demonstrates is that people with equal investing skills will see radically unequal outcomes, based entirely on their pre-existing wealth. Presumably you could update this model to give some people “better investing skills” and others worse skills. (In practice you’d just bias the coin flip against the ‘worse’ investors.) I suspect that once inequality has crept into the game then even having “better investing…

> What it demonstrates is that people with equal investing skills will see radically unequal outcomes, based entirely on their pre-existing wealth. Well, duh. Did anyone think otherwise? Obviously a great investor with $1,000,000 will make more money than a great investor with $100. That's not some nefarious plot of evil capitalists to keep down the poors, it's just the math of how percentages work. What system could…

TFA talks about all of this. The point of the article is that in a system with a finite amount of wealth, even a society that starts equal will eventually become highly unequal: as long as there is continued betting/competition where all parties have an equal risk tolerance corresponding to their income. The concentrating effects of these bets is the important lesson. TFA describes some ways to avoid this outcome.

Re: Are super-rich people just better at making money?

#517

Post by imgabe »

matthewdgreen wrote: post #516
imgabe wrote: post #514

Earlier quoted context omitted.

> What it demonstrates is that people with equal investing skills will see radically unequal outcomes, based entirely on their pre-existing wealth. Well, duh. Did anyone think otherwise? Obviously a great investor with $1,000,000 will make more money than a great investor with $100. That's not some nefarious plot of evil capitalists to keep down the poors, it's just the math of how percentages work. What system could…

TFA talks about all of this. The point of the article is that in a system with a finite amount of wealth, even a society that starts equal will eventually become highly unequal: as long as there is continued betting/competition where all parties have an equal risk tolerance corresponding to their income. The concentrating effects of these bets is the important lesson. TFA describes some ways to avoid this outcome.

But TFA article is completely unrelated to the real world.

There is not a finite amount of wealth. People create new wealth through innovation.

People do not mindlessly continue the same investing strategy when incentives change. If you reduce the expected return from an investment, they stop investing in it.

So any strategies that might be useful for the contrived game described in the article are not relevant to the real world.

Re: Are super-rich people just better at making money?

#519

Post by kelseyfrog »

astrange wrote: post #503
kelseyfrog wrote: post #325

Earlier quoted context omitted.

Sell them to land trusts, co-operatives, and housing unions. There are creative and viable alternatives.

Most of those are bad; at least if a landlord is only interested in money they’ll take your money. In the “decommodified” forms, you can’t live there unless the manager personally likes you. With government public housing you can lose it if you break the law (hope you never smoke weed) or if the populace elects a racist government and you’re a minority. Commodifying housing helped black people in the South because th…

Sorry, but I'm not sure where you got government housing from. I specifically omitted it to avoid that dialog option.

Re: Are super-rich people just better at making money?

#520

Post by fomine3 »

bmitc wrote: post #3

To solve all this, it's pretty simple, and the U.S. actually used to do it: heavily tax the super rich. Heavy taxation and then appropriate use of those funds for education, R&D funding, infrastructure, etc. is actual trickle-down economics. And mega corporations should be heavily taxed instead of holding the country economically hostage. They jumpstart their companies off of government funding and R&D and then act a…

Global fair taxation is what capitalism must solve in this century.
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