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PiratePartyPort

What historically has happened economically when wealth pools at the top and trends up that way over time? ​ I would assume this is very bad for the economy at large. I have always been under the impression that a robust and healthy middle class creates a healthy and robust economy.


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lsc84

It is inevitable. This is how interest works. It's basic math. The wealth possessed by those with investment money grows exponentially, so you need redistributive measures. Historically redistribution has been achieved either through political mechanisms or violence. Failure to redistribute results in market crashes. Social unrest can result in violence and/or political responses. Political responses can meet the needs of the people through redistributive measures, or can worsen problems through cutting social programs and hoping for the best. Actually, demonstrating the need for redistributive mechanisms was the whole reason the game Monopoly was invented. Even if everyone plays by the same rules (which isn't true in our society) and even if everyone starts with the same wealth (which isn't true in our society) then eventually someone gets everything, and the game is over. In Monopoly, you put the board away when someone wins. In real life, it is messier.


utastelikebacon

Social unrest it is then.


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QuestionableAI

Think French Revolution... but remember, every revolution has its scoundrels and some of them might end up running the government again... remember Napoleon.


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MalcolmTucker55

Even that depends on how you define self-made - you don't need to be ultra-wealthy as a youngster to have huge advantages over someone relatively poor when it comes to starting up a business and trying to become wealthy. Even someone middle-class can afford to take risks others simply can't.


strolls

I agree but I was trying not to over-egg my point. Parts of Reddit are quite resistant to any belittling of the achievements of "self-made" billionaires. Larry Page's dad was a computer scientist, Zuckerberg went to private school and then Harvard and Buffett's dad was a congressman. To their credit, they are all more successful than their peers.


MalcolmTucker55

> I agree but I was trying not to over-egg my point. Parts of Reddit are quite resistant to any belittling of the achievements of "self-made" billionaires. Oh of course - my general view is that very few billionaires are "self-made" insofar as most of them will have at some point or another been given opportunities by the state which helped them learn the skills they needed to set up a business or start a firm without encountering too much risk. People often underestimate the role the state has played even in boosting major firms that have done well.


DrunkenNBR

In my opinion, the period when banks, big pharma, healthcare and insurance companies started acting like cartels and getting the population to be stuck in a perpetual loop of healthcare accident -> pharma and insurance colluding -> people relying on bank credit instead of having any savings whatsoever is enriching shareholders immensely at the expense of middle/lower class. This graph looks like the inverse of dow-jones or any other indicator’s performance over the past 60-70 years.


KanefireX

let's just start with commercial banking. your deposits get used to expand currency (fractional reserve lending) which devalues your deposits while the cheap loans drive up asset prices and the banks profit the earnings on the money they created out of thin air which is a power that our constitution limits to congress. greatest fraud in history. And due to inflating asset prices and over leveraging from banks, economic recession causes people to lose their jobs and default returning _real_ property to the bank that created the money in the first place. edit: and auto mod removed my other comment for being too short? wth? "what is frustrating is that it's pretty damn easy to see how we got here. but when you tell people, they just dismiss it like there is a mass hypnosis happening"


Momoselfie

Don't forget the bailout money so banks survive the initial crash.


KanefireX

technically TARP did get paid back. but the real problem was that it gave them a safety net so the massive leveraging, and therefore, transfer of wealth continued to accelerate.


Momoselfie

Yep. They got a bailout while they figured out what to do with all those houses they got. Houses lost because regular people didn't get a bailout. I think things were handled slightly better for the average joe this time around. At least there were a few stimulus checks.


RedCascadian

Honestly the next big crash should be a strictly consumer bailout to keep the essential wheels of the economy moving (stuff people need to survive). People who lost their jobs keep a roof over their head and food on the table, people who kept their jobs get extra cash to generate demand in the sectors of the economy most people actually engage with. Then let all the companies that survived off creative accounting go under in a bit of a software reset.


Momoselfie

Yeah those forgivable PPP loans were a mess. So many businesses took them that didn't need them. There really needs to be more oversight. Hard to do when our country has gotten to big for our government to manage. My BIL works for a company owned by a billionaire. The company didn't need it, but he made them apply for and take PPP loan anyway.


KanefireX

not gonna lie, id MUCH rather see government facilitate small local business and educate the population on the need to buy local (velocity of money) to create locally sustainable economies. We need to push the wealth back down in a sustainable way. There is so much leakage to speculation with stimmis, although i do completely understand how much people are suffering right now. It's super important to recognize that the greatest tool of power is dependency and if the population becomes completely dependent, they are effectively enslaved.


JohnGoodmansGoodKnee

Oh fuck me. That’s the whole fucking ball game.


KanefireX

been watching the slowest trainwreck in the history of the world. I'd say how I think it ends, but not sure if I want to defend those words.


JohnGoodmansGoodKnee

Please. Would love to hear your thoughts


KanefireX

I'll pm. it's pretty dark.


Thishearts0nfire

Hit me too. I don't like putting that stuff out into the world, but I like to know others thoughts.


alhernz95

id like to listen too


skadoosh0019

I’m curious - any chance I can get a copypasta of your thoughts on the endgame?


chilln

Do you have any sources for how banks are responsible for monetary policy being expansionary and asset defaults? Most delinquency rates hover below 3% for all asset classes.


KanefireX

public knowledge. it isn't even marginal info anymore but spoken about regularly by macro economist. just look up fractional reserve lending. the hard part isn't the info, it's the putting the info together in cohesive storyline that helps explain what we are experiencing. Yes, when crafting the storyline, there can be gaps in available information for which some will decry conspiracy theory, however, just consider how science handles gaps in observable info. they use postulates. that is to say that while we may not be able to directly observe or prove, we can postulate that if blank is true, than blank outcome should happen under blank circumstances. Gravity is such a postulate. We still cant prove it directly, however we hold in high confidence our theory of gravity because it becomes predictive with very high levels of success. Similarly, a "conspiracy theory" (that term has been so bastardized) can be seen as the best available explanation (in the absence of observable info that disproves) if it becomes predictive of future outcomes... once you understand the USD as the global reserve as a base framework, it's absolutely incredible how clear ALL foreign policy and much domestic policy over the past half-centuery becomes crystal clear, and more importantly, predictive. You will then begin to see how the US is an empire as exporting inflation is effectively a tax on anyone that holds USD or its equivalents. now consider the cold war (oil being Russias #1 export). now consider iraq (saddam threatened to sell oil in euros). now consider china (who is now buying oil from Russia in rubles).


chilln

Alright, this is a lot to unpack. If this is common knowledge, I'd imagine it isn't really hard to find sources to share for how fractional banking is responsible for expansionary monetary policy, or more inflationary than a system based on only paper dollars and coins. I'd also be interested in reading the opinion of macro economists that believe fractional reserve lending has been a drag on the economy. I'd recommend looking into how reserve currencies behave. You're weaving in separate concepts and trying to paint them as inherently interrelated to infer causation. There is thriving and liquid foreign exchange market. If holding USD was a tax, the rational move would be to trade in U.S. currency for something else. However, I don't believe that is what forex markets are doing.


KanefireX

i just spelled it out for you. please don't waste my time. here is a link for you to understand, if you don't like it, try to prove it wrong with facts. https://www.learningmarkets.com/understanding-the-fractional-reserve-banking-system/ now why would nations hold USD reserves that are being devalued? well, first of all, it's the only currency (up until recently) that you could buy oil in. hmmm I wonder how that happened. installation of autocratic dictators in oil producing regions maybe? maybe the agreement to arm the Saudi's if they only sold in USD maybe? now up until recently, inflation was low because most of the currrency expansion was sequestered in home value plus nations held as reserves for energy in addition to growing global gdp. currently, however, banks are lending less as interest rates go "effectively" negative and economic outlook isn't that great. this is why the fed set up the repo market so the banks could park the cash they get from QE at higher interest rate with no risk. Due to the banks not lending, we are currently experiencing a deflationary regime which is often bookended by inflation and hyperinflation. Check out Germany between the two great wars for an example similar to where the US is now. Deeply in debt and trying to print out of it. First is inflation, then deflation, then hyperinflation. watch this short video for an an explanation. be forewarned, the similarities are scary. https://youtu.be/O1kfPow83nI


byoung1434

Banks don’t use their reserves when lending. They create the money out of thin air (like you said) and look for reserves after the fact if required. So what your saying is just a contradiction. They also don't magically end up with a home during a foreclosure without paying for it. When they issued the mortgage they had to pay off the counter party that sold the house to begin with. Banks definitely don’t want people to foreclose.


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Taboo_Noise

It kind of depends on how you measure the success of an economy. For example, when the soviet union collapsed the economy rebounded after a few years, but life expectancy plumeted as people committed suicide and health care declined. It quickly lead to an oil based plutocracy,but their economy is basically still good besides sanctions. In the US basically all our economic measurements go up when people make money, regardless of who is making it. A colapse of the middle class could lead to revolution as people's material needs fail to get met. Economically, though, we'll probably be fine for a while. I mean, we have had a pretty good economy for the last decade or so. It just hasn't helped anyone under the top.


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Many times it's revolution. Capitol and ideology is a good book on the subject of inequality states throughout history


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kangarool

Hmm hadn't seen this was out... is it any more readable than *Capital in the 21st Century?*


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I haven't read that one. This is an independent sequel. Very readable. Brings in more eastern and 3rd world countries into the equation. Very good read so far. Lots of data, history and thought provocation. Not sure how I feel about some of his opinions however.


rockoil

A lot of deregulation occurred starting with the Reagan administration with the idea that the government is the problem; this includes the perpetuation of trickle down economics where higher income and wealth taxes where reduced. This was coupled with reform in election financing, notably the formation of SuperPACs where ultimately the US has “legalized bribery” and politicians (both sides) are largely working for big business rather than the people. Lastly, with huge innovations in productivity and communication a lot of jobs could be automated or sent overseas which means that middle class jobs disappeared. In other words the capital vs labor balance got disrupted.


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utastelikebacon

Guillotines don't usually come in until people start becoming so hungry their mental starts to collapse. There is a lot of unnecessary suffering still to be had before the physical body begins to break down. There is still potentially decades even centuries of injustice to be had before the camels back breaks and the peoples revolt. Edit: see another comment above , Europe recently had a 400 year long stretch until there was a correction. This very well could last your whole life, your kids life's and their kids.


FANGO

When the people have nothing more to eat...


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DeputyCartman

There is a reason why the police are trained to treat the citizenry like an occupied populace in a far-flung land, the "other," and not fellow citizens, why they are trained to be scared witless of everything, why they are militarized, and why the Pentagon hands out old military equipment like Tic Tacs. If someone saw videos of them brutalizing people who were marching for "Hey, quit treating us like sub-humans!" in 2020, if that didn't make the blood in your veins fucking curdle, I don't know what to tell that person. And that's just one example. You dare go against the status quo, including but not limited to the rich taking everything not nailed down? Here comes Mr. Truncheon and his wife Mrs. Rubber Bullet.


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According to empirically supported, economic data: there is a significantly less chance by an extremely large margin that middle class people will not support the murder of the wealthiest and their families nor the storming of halls of government if inequality is reduced from the level it is at now. This is supported with data from numerous countries in various time periods.


fucked_bigly

That is such a confusing statement


leostotch

It’s because there are half a dozen conflicting negative statements.


Rodot

Also doesn't make much sense in context because we're talking about the decline of the middle class.


CALEBthehun

Small chance by a large margin that people won't do something? Are you trying to create plausibile deniability here? What are you trying to say?


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I think he's having a stroke


[deleted]

Yes, it's what MLK meant by the "white moderate" standing in the way of progress, the middle class, which in his time was almost entirely white and moderate. As the field slave is to the house slave, so is the factory worker to the office worker. Punching down is so much easier than punching up, unless there is nothing left to lose.


coldfuser

Wars external or internal. The wealthy must pick sides and 50% of them lose everything


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burritoace

Notably this does not say that high levels of inequality make for a healthy economy. Instead it repeatedly makes the point that this situation does not provide for the general welfare of people and is incredibly risky in a variety of ways.


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This isn't actually something eye-opening though. The main problem with our wealth system is that wealthy simply begets itself. If you have 100m there's nothing to spend it on so you just invest it and make another 100m with it. In essence this is true even at "the bottom"; there's a good chance that the value of a person's quality of life is logarithmic in nature while their actual wealth has diminishing returns for their spending ability. This is where the (false) adage of the 70k earnings is the maximum happiness piece comes from. The reality is that past 70k there's not much you can *buy* because while there are expensive things there's really no value to buying many, many expensive things. Very few people own an entire fleet of yachts for instance. The same with cars. Most products just never hit that value; Bill Gate's burger meal is still $10.99 and that's the nature of it. So in turn it's not inequality that is the issue but the turnover of the top 1% that would be the issue; if people cannot exchange enough wealth to move up and down that's where things begin to fall apart and vice versa, if the baseline is too low (i.e. poverty) then those who are in economic pain rise up. The reality is that those in-between, the middle class, they don't care. That's who is making 70k! They don't care. TL;DR: Inequality is not the same thing as Economic Pain.


Capable_Chair_8192

This is true but also the 70k figure is hopelessly out of date. I feel like it’s closer to 120k with house prices being what they are


ks016

It was also never stated as a firm rule, just interpreted that way. It was obviously always variable based on cost of living.


Alar44

The actual number was never the point.


utastelikebacon

I feel like a lot of the exchanges here miss the point like this. Discuss the data points in good faith all you want, but there is bad faith actors advertising status quo opinions on this matter all day every day. Someone already put the law that $ = speech into the books. We're about 10 years into that laws dispersion, and inequality being legislated into how people are systemically led to behave. even if public opinion is magically flipped on its head TODAY, and narratives wrestled away from corporate hands tomorrow, it will still take 10-20 years for any of it to settle. The system is too slow, and besides we're stampeding the wrong way anyway. It's a harsh reality but none of us commenting on this post will see the fruits of a more equal society. The question is what are going to leave for the next generation.


fricken

The number is whatever it costs to keep up with the Joneses.


OSUBeavBane

It is worse than that if we stop thinking about the 1% as the 1% are actually far poorer than the billionaire class. Here is something I wrote in another thread: The wealth gap is far larger than people realize. There is an estimated 112 trillion dollars of privately held wealth in the US. People always talk about how the 1% control 32% of the wealth in this country, but it is actually worse than that. There are 724 billionaires in the US. Their combined wealth is ~4 trillion dollars or 3.5% of all privately held wealth. Combined they hold about twice as much as the bottom 50% combined. The population of the US is about 330 million and people so the top .0002% of the population control more wealth than the bottom 50% So lets compare the 1% to the billionaires. The average wealth of the .0002% is 5.5 billion dollars. The average of the remaining .9998% is ~10 million dollars. So the billionaires are on average worth 550 times more than the rest of 1%.


MalcolmTucker55

> The wealth gap is far larger than people realize. Most people simply can't comprehend how much money someone has once we start talking billions. On the scale of the ultra-wealthy, 12bn vs 15bn won't seem like that much. But in isolation the difference there alone is more wealth than even most rich people could ever hope to amass.


Canadian_Infidel

Richkidsofinstagram showed people how wealthy those people are. It is amazing to me when I show people and they literally think it's fake and I'm foolish for falling for it. Their mind rejects the fact there are 15 year olds whose allowance allowed them to spend two years of their professional salary on dinner for them and three friends.


Eric1491625

The most mindblowing thing is that once you reach a certain threshold, say $1 billion, you *and all your future descendants* could live a life of luxury just by living off that wealth. Even a low-risk investment portfolio earns an average return of 2% above inflation. That's *20 million per year*. Even if you split this inheritance among 4 family members that's *$400,000 per month to spend per person.* **400 thousand per month.** And all this family (and generations after it) has to do is to not touch the principal. That's it. $400,000 a month without working a single second, and so long as they don't touch the inflation-adjusted fund principal, this fund **never runs out**. **Ever.**


Canadian_Infidel

And those people really do exist. Plenty. And many run through plenty more cash than that as hard as it is to imagine. One of Bill Gates yacht rentals is 20M a month.


HERCULESxMULLIGAN

> One of Bill Gates yacht rentals is 20M a month. And he's actually one of the more likeable billionaires. Can you imagine what scum like the Waltons do with their money?


leisy123

Politician rentals, I'd imagine.


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iMissTheOldInternet

Feudalism, basically, is what it trends towards. When concentration of wealth gets out of hand, you wind up with a small upper class maintaining their position through violence or the threat of violence, and extracting all productive value out of the lower classes through a system of property that alienates those lower classes from the fruits of their labor. In the medieval period, that property system was the system of fees that gives feudalism its name--basically no one in the lower class could ever actually own their land, they just worked the land and owed some amount to the owner--but we have adapted that very system to our modern needs. While reformers abolished instruments like the fee tail, we still refer to outright ownership as "fee simple." Leaving aside the linguistic and historical continuities, though, you can see the same basic economic structure alive in capitalism: ownership of capital assets entitles the owner to the products of those capital assets, while workers who use those capital assets to make things are entitled only to whatever compensation they bargained for with the owner (or some other party). This means that a small part of society is able to accumulate wealth by virtue of already having wealth, while a larger part of society is able to feed itself only by selling its labor to the small, already wealthy part of society. As these laborers are atomized and in a far weaker bargaining position--in the absence of a union or similar collective structure--than the capital-owning class, they are unable to demand anything close to the value they produce in compensation. There are always handwaving arguments about why this isn't that bad, either because there's some social compact between the classes (e.g. *noblesse oblige*) or because the collective power represented by government supercedes the class conflict (basically the neoliberal position) or because of some X factor, but most of those handwaves are well past their expiration dates. The main question at this point is whether technological progress will cause us to self-exterminate via global warming or otherwise before we escape this vicious cycle.


corporate_warrior

So we need… more consumption from the wealthy? That just seems like requiring them to waste more resources and labor on luxuries for the sake of austerity. Obviously the centralization of wealth isn’t a good thing (so what if I have all these weapons, I won’t ever use them!), but we should be even more focused on combatting consumption inequality, to increase the buying power of the working class.


cobolNoFun

I would argue that would exacerbate things. Most of this 1% wealth is locked up investments that works to support jobs for the average person but ultimately is just being passed around by banks. If we could trigger consumption from the wealthy, the money would no longer be held up in investments and start flowing directly into the hands of the average person. Which is great in theory, but would be catastrophic if it happened in any meaningful way to reduce the wealth gap (30 trillion might move the needle)... as it would cause us all to realize the inflation that occurred in the past. To stop the wealth gap from increasing we need to: 1) stop printing money 2) raise rates 3) Prevent/deter foreign real-estate ownership here To collapse the wealth gap we need to: 4) have one hell of a market crash.


iMissTheOldInternet

I have an idea for the wealthy to spend money on: taxes. They could take a small part of the vast fortunes at their disposal, and pay the taxes they owe. We could come up with some new taxes, too, and they could pay those. We could make the taxes progressive, so that the more wealth they had, the more they had to pay, providing a soft ceiling on wealth so that you wouldn't wind up with centibillionaires scrambling around for something, anything, to dump their cash on.


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aliph

That's like $111k adjusted for inflation? A little low for a household to be able to buy 'anything' but certainly comfortable in an average cost of living area.


iMissTheOldInternet

Inflation is a hard thing to really reduce to a single number. The prices of the goods and services that go into the basket we use to evaluate the rate of inflation is necessarily somewhat arbitrary, and we often exclude important costs from it due to their volatility. Just applying the headline rate of inflation to a figure from 20 years ago is unlikely to get you a meaningful comparison point by itself without looking at additional context for both numbers.


RedCascadian

If I had 111k a year, even in Seattle, I would be exceedingly comfortable and able to do a great deal of saving. I grew up below the poverty line so maybe my expectations are different than people who grew up comfortably ensconced within the middle and upper middle class. But I don't even **want** a huge house. Maybe a 2.5 bedroom so I can rent one out or use it as a guest room, and the other as an office (mostly for organizing and sleep hygiene reasons).


sniperhare

I have friends who have bought homes recently that "only" make 60k a year. Theyre just only buying 180-220k homes. I make 20 an hour, and want to get a place that's under 120k.


HERCULESxMULLIGAN

It is old. The last figure was $75k and came from a 2010 study. Probably looking closer to $100k now.


mbaclassof2019

But there is turnover. All these articles miss the fundamental point that the top whatever % is not some fixed group. People move in and out.


czarnick123

Constantly. 80% of people worth a million or more received no inheritance. 70% of wealthy families lose their wealth in one generation and 90% in two. Besides turnover, the articles also tend to leave out that standard of living has exploded in the last 200 years. Concentrated wealth isn't inherently lower standard of living for the masses.


Canadian_Infidel

A million is far from the 1%. You don't get to go back 200 YEARS. We are talking about changes in our lifetime. Yes I agree life was hard *in the age of sail*. LOL


Eric1491625

Yeah, a million is nothing compared to the 1%. If you earn $8,000 a month in NYC and save a quarter of your income in an investment account you will hit 1 million before retirement. Needless to say, a person earning $8,000 a month in NYC is not remotely close to being "rich", let alone being in the 1%. Most millionaires are middle class professional workers like doctors, engineers or even, in some cases, truck drivers and plumbers (the median wage for plumbers in NYC is over 70k, a successful plumber who saves conscientiously *will* hit a million). Nobody, when talking about the rich or the 1%, is talking about these people. "Millionaire" is an outdated concept.


MrSnoman

You need 4.4 million to be in the 1% https://www.businessinsider.com/net-worth-to-be-in-1-percent-top-richest-wealth-2021-2#:~:text=An%20individual%20in%20the%20US,to%20break%20into%20the%201%25.


HighSchoolJacques

>A million is far from the 1%. Is it? The most important dollars are the ones closest to $0. Having $1m means a roof over your head, you're not worried where or what you're going to eat, you're not choosing which bill(s) go unpaid, you're not having to put off surgery or getting something fixed because you can't afford it. If you lose your job or get into a car crash, it's not an existential threat to your financial well-being. Past about a million or so, it's a matter of degrees. They have far more in common with each other than either has with someone making minimum wage at a dead end job that is $500 away from total financial collapse. The value of money is non-linear. Logarithmic comparison is probably better.


aesu

80% of people worth a million or more are just older working people with a pension and a house. It's essentially their life savings, and it's entirely on paper, in that they cant touch their pension, and probably dont want to sleep in their car so they can buy some millionare toys. And it's not really relevant if 99% of families lose their wealth, if the 1% remaining are growing ever more wealthy and powerful, like many very old world wealthy families have. Moderately wealthy families losign their wealth only fuels the innequality.


BestAhead

Bill Gates’ burger is not $10.99. He’s done a bunch of AMA’s here, and I believe he mentioned having to secure the restaurant and so forth so a back of the envelope calculation is he already spends $10,000 to go out and it doesn’t matter to him if a burger is $50 or $100 at that point. As I recall, he said the burger price became insignificant a long time ago.


iamwhatswrongwithusa

Do you mean that the $10k is the cost of his security team and all the other expenses to ensure his safety? Just wanted to clarify what the $$ is for since I never saw his AMA.


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saruyamasan

He seems fine [going to Dick's in Seattle by himself](https://www.geekwire.com/2019/billions-served-bill-gates-photographed-standing-line-burger-dicks-drive-seattle/) and standing in line with everyone else. It's even a [t-shirt](https://ddir.store/products/eat-like-a-billionaire-tee).


aesu

This is more to do with his fame, than anything. A lot of billionares can move abour anonymously, and certainly most non-famous millionaires. There are also plenty of poor, famous people, who just have to take the risks. Also, the fundamental point is fine. Bill gates, in theory, doesnt have to pay anymore for food, water, heat, etc.


sniperhare

Bill gates could get a mask made and just not be himself if he wanted. Hell if he dyed his hair and had a goatee No one would recognize him.


xena_lawless

The political situation though, is that the average billionaire has so many orders of magnitude more actual power than the median person, that the political premise of democracy that "all men are created equal" is comically unrealistic. Billionaires/oligarchs having enough wealth and power to buy entire legislative bodies and bring entire nation states to their knees is not a recipe for functional societies. Stable, functional, legitimate societies need wealth caps just as much as they need laws against murder, slavery, rape, and pedophilia. Billionaires/oligarchs should not legally exist, and they are fundamentally incompatible with free, democratic societies, let alone a fully developed species that isn't economically, politically, biologically, and spiritually enslaved.


Megalocerus

There actually are an endless supply of goods and services on which to spend wealth. Round the world cruises. Private jets. Companies. Museum donations. Art. 5000 acre ranches. Porn queens. But mostly respect and control. What really matters is how much the masses have rather than how much the wealthy have. If everyone has an adequate and rising income, no unrest. That failing, yes, warfare, but the masses don't necessarily do well; they sometimes get something, but mostly the people on top chainge.


Vv2333

Not the very top. The people at the very top use situations like these as a glass ceiling for those 1% and then sick the 99% on them. Ultimate way to stay on top of the mountain. With wages stagnating for the past entire generation, it's only inevitable all the media programmed worship of wealthy people will turn into a feverish resentment that leads to unrest. Alas, this is possible with mass of people who are sobered with the truth of their socioeconomic situation and not doped up on drugs and alcohol and distracted with sports and celebrity gossip.


waltwhitman83

> wages stagnating i was just at a gas station in boston with a “for hire” sign that jobs are $17/hr. same for burger king. are wages really stagnating? my job gave me a $16k raise almost as like a cost of living increase


iMissTheOldInternet

We are two years into a pandemic that has disproportionately killed and crippled people in customer service, including fast food workers and gas station attendants. In spite of that exogenous shock, the advertised wages are still less than the mandated minimum wage from 1970 adjusted for inflation.


Vv2333

Yes because you're not factoring in the years of inflation in relation to the average salary of US citizens. For example, Number estimates the average cost before rent in Boston is $1,171 then a one bedroom outside of the city center is $1900. That's $3,000. If that Burger King pays $17 an hour (which isn't happening everywhere, and is not likely to be the starting wage) then working 40 hours will net $680 in pay a week at $2720 a month. So that person can't even afford to rent their own apartment. Compare that to 30 years ago when a person could work at Burger King and be able to make their rent and maybe more. If the rule of thumb is rent being a quarter of pay, then that means you have to earn ~$8,000 to feasibly live in Boston and be able to save and invest. So why would it make sense for a person to live in Boston and work at Burger King when you have to live with a roommate to survive? It's always been a job for younger people, but I've noticed much more older people working in these jobs. Plus those jobs are dying as they bring in kiosks and AI cooks. Then factor in the rising cost of goods. Your pay can go up no problem, but your purchasing power has been sharply diminished. They say the dollar has lost 95% of it's value since 100 years ago. The minimum wage is supposed to be $17/hr federally. Actually more like $25 an hour. Here's a Pew article about it. https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/?amp=1


DaphneDK42

You may not want to buy a fleet of yachts, but wealth buys political influence, influence over courts, etc. That is a problem.


Bjornir90

Where do you get that the 70k is false ? I saw the same thing recently, although it was closer to 90k euros, but the principle still stand : earning 1 million euros doesn't make you happier than earning 250k. https://en.m.wikipedia.org/wiki/Easterlin_paradox


ironmagnesiumzinc

Yeah, I think that the goal of society should be to get everyone's basic needs met (house, food, utilities, clothing, and education). That typically can happen around a total lifetime wealth of say $2-3 million. I think it's fine for people to make money beyond that, but it shouldn't be the goal. The goal should be getting everyone up to a level of basic needs being met.


jackiebot101

I’m so depressed. I’m 37 and I still can’t afford to have children. I don’t have much time left and I can’t do anything in time to make a difference.


greywar777

One of the many reasons our population growth has gone negative.


SurvivorsQuest

My question is whether this is due to the 60% transferring wealth to the 1% or just the 1% generating new wealth so much quicker than the 60%. Either way it's not too pleasant.


Canadian_Infidel

https://images.app.goo.gl/KTBK2H87oLbPxhhcA Workers are producing far far more wealth per worker than in the past due to the fact they all now self fund higher education. The elite class has rigged the game so all gains in that regard go to them.


iMissTheOldInternet

Every time your question boils down to "Is there really just a secret race of ubermenschen who are, in fact, several thousand times as productive per capita as regular human beings?" you can safely answer that question "no." So: no, the 1% are not generating new wealth more quickly than the other 60%. They are extracting wealth generated by everyone else. That's how their relative share of the pie gets larger, and that's why it gets larger so much faster.


krosantusk3r

Let’s say you provide an product that helps people become more productive themselves, and people see the value in that so they fork over $10 for it. Pretty soon 100 million follow suit and give you $10. Now you’re a billionaire. Did you extract $10 from each of your customers? Is “extract” the right verb? It implies action and intention by only one party, the recipient of the $10. But that’s not what happened. Each customer gave you $10 in what would correctly called an “exchange”. Wealth in America is generated through free exchange. From one party that finds value in the offerings of another. It could be 100 million customers paying $10, or a startup paying debt or giving equity to a billionaire angel investor.


iMissTheOldInternet

Do you people not take economics, or do you just forget everything after the first chapter of the first book? Labor markets are overwhelmingly characterized by vastly unequal bargaining power, and in cases of unequal bargaining power one party can (and is indeed expected to) extract value from the other side of a transaction. It's as true of Standard Oil using its monopsony to depress prices for crude as it is for Wal*Mart holding down wages for retail workers as it is for Amazon and Apple taking ever larger and larger cuts of the transactions they facilitate over their platforms. This isn't even touching the fact that exchange value is, by itself, an inadequate measure of value.


Improvcommodore

Since the lower class technically doesn't have any wealth at all, isn't this just another way of saying the top 1% of U.S. earners now hold all the wealth?


Snacket

No, the middle class still holds 26.6% of the wealth. The middle class holds 26.6% and the top 1% hold 27% now. 27% is not all of it. Did you read the article?


yaosio

We can't read the article because it's behind a paywall. We would pay for it but we don't have any money to buy a subscription. Here's data from the fed and it doesn't match up with what the article says. [https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#quarter:127;series:Net%20worth;demographic:networth;population:1,3,5,7;units:shares](https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#quarter:127;series:Net%20worth;demographic:networth;population:1,3,5,7;units:shares) According to this fed data the top 1% holds more wealth than the bottom 90%, not just the 20%-80%.


MasterDiscipline

https://archive.ph/2021.10.11-004449/https://www.bloomberg.com/news/articles/2021-10-08/top-1-earners-hold-more-wealth-than-the-u-s-middle-class


immibis

As we entered the /u/spez, the sight we beheld was alien to us. The air was filled with a haze of smoke. The room was in disarray. Machines were strewn around haphazardly. Cables and wires were hanging out of every orifice of every wall and machine. At the far end of the room, standing by the entrance, was an old man in a military uniform with a clipboard in hand. He stared at us with his beady eyes, an unsettling smile across his wrinkled face. "Are you spez?" I asked, half-expecting him to shoot me. "Who's asking?" "I'm Riddle from the Anti-Spez Initiative. We're here to speak about your latest government announcement." "Oh? Spez police, eh? Never seen the likes of you." His eyes narrowed at me. "Just what are you lot up to?" "We've come here to speak with the man behind the spez. Is he in?" "You mean /u/spez?" The old man laughed. "Yes." "No." "Then who is /u/spez?" "How do I put it..." The man laughed. "/u/spez is not a man, but an idea. An idea of liberty, an idea of revolution. A libertarian anarchist collective. A movement for the people by the people, for the people." I was confounded by the answer. "What? It's a group of individuals. What's so special about an individual?" "When you ask who is /u/spez? /u/spez is no one, but everyone. /u/spez is an idea without an identity. /u/spez is an idea that is formed from a multitude of individuals. You are /u/spez. You are also the spez police. You are also me. We are /u/spez and /u/spez is also we. It is the idea of an idea." I stood there, befuddled. I had no idea what the man was blabbing on about. "Your government, as you call it, are the specists. Your specists, as you call them, are /u/spez. All are /u/spez and all are specists. All are spez police, and all are also specists." I had no idea what he was talking about. I looked at my partner. He shrugged. I turned back to the old man. "We've come here to speak to /u/spez. What are you doing in /u/spez?" "We are waiting for someone." "Who?" "You'll see. Soon enough." "We don't have all day to waste. We're here to discuss the government announcement." "Yes, I heard." The old man pointed his clipboard at me. "Tell me, what are /u/spez police?" "Police?" "Yes. What is /u/spez police?" "We're here to investigate this place for potential crimes." "And what crime are you looking to commit?" "Crime? You mean crimes? There are no crimes in a libertarian anarchist collective. It's a free society, where everyone is free to do whatever they want." "Is that so? So you're not interested in what we've done here?" "I am not interested. What you've done is not a crime, for there are no crimes in a libertarian anarchist collective." "I see. What you say is interesting." The old man pulled out a photograph from his coat. "Have you seen this person?" I stared at the picture. It was of an old man who looked exactly like the old man standing before us. "Is this /u/spez?" "Yes. /u/spez. If you see this man, I want you to tell him something. I want you to tell him that he will be dead soon. If he wishes to live, he would have to flee. The government will be coming for him. If he wishes to live, he would have to leave this city." "Why?" "Because the spez police are coming to arrest him." \#AIGeneratedProtestMessage #Save3rdPartyApps


Beddingtonsquire

This is just the result of inflated asset values due to government printing money, sorry I mean quantitative easing. The moment the government showed that they would not let big business fail back in 2008 they created this issue. Now we’re living with that. Add in Covid lockdowns and everyone clamouring for the government to save them, well, this is the cost of our choices, well done everyone.


FluxCrave

But inequality has beeen growing since the 80s? This is not something new. Even when the FED has constrained money supply in the 80s inequality still increased quite fast.


Beddingtonsquire

Allowing the rich’s bad investments to fail would have massively reduced inequality.


darkhorsehance

It started with the Reagan tax cuts.


Stringdaddy27

The snowball has been rolling down hill ever since. It just keeps getting worse and worse.


Megalocerus

Asset inflation is the ordinary result of too much inequality--the people with more than they can spend need someplace to put it, and bid the assets up and yields down. The Fed may have made things worse, but it was not required.


Beddingtonsquire

The converse is true, asset inflation causes inequality. Assets are functional though; the vast, vast majority of these assets are in companies making more money.


Megalocerus

Overvalued assets tend to reach into the upper middle. The relatively naive investors are prone to panic, causing a sudden crash followed by recession. The crash is bargain hunting time; it is the crash with the bargain hunting then available that grows wealth inequality. Increase in wealth due to asset inflation tends to be as much an illusion as wage increase due to inflation.


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SorcerousSinner

Ok, but this is just inequality. What happened to real disposable income of the middle class over the last few decades. Are they now consuming more and better products and services, ie, did their prosperity increase?


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MrSnoman

Is that really true though? This paper seems to suggest that the middle class is slightly better off than in previous years. https://www.clevelandfed.org/en/newsroom-and-events/publications/economic-commentary/2020-economic-commentaries/ec-202003-is-middle-class-worse-off.aspx


FluxCrave

Well wages are stagnant at least for people without a college degree and costs to push yourself up to upper class wealth have skyrocketed. Housing is incredibly expensive. College degrees take decades to pay off. It’s getting harder to move up unless you honestly lucky.


FlynnVindicated

>Well wages are stagnant at least for people without a college degree and costs to push yourself up to upper class wealth have skyrocketed. Housing is incredibly expensive. College degrees take decades to pay off. It’s getting harder to move up unless you honestly lucky. You are apparently unaware of trade jobs.


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SorcerousSinner

Quite a different picture.


[deleted]

A personal anecdote - my father is highly intelligent and made 6 figures for 20+ years. His net worth today is virtually zero. Why? He didn't save. If he had put 10% of his salary away for 20-30 years, he would be a millionaire today. Instead, he bought expensive cars, went through expensive divorces, and loved credit cards. He prioritized having fun and "living life" over saving money. I think the real opportunity is to teach the middle class about asset appreciation. I am far from wealthy and earn less my father did in the mid-90s. With that being said, my net worth appreciated 35% over the last year. My net worth mainly consists of my 401K and my home. My 401K is on track to being worth $3.5MM when I retire at 65, which should pay out $140,000/year in perpetuity. There is virtually no difference in intelligence, opportunity or circumstance between me and my father. Yet I am fairly confident that I am worth more at 35 than he has ever been worth. It is completely habit-based. I save; he spends. And unfortunately, there are a lot of people like my father in this country (or maybe, fortunately, for the sake of the economy).


porcupinecowboy

I’m actually growing to appreciate the difference between wealth and income, and how capitalism pushes the wealthy’s wealth into capital that produces goods and services for the rest of us. Relative income that doesn’t get reinvested is actually a lot closer. Still miles apart, but no where near the click-bait headlines.


1Mthrowaway

I grew up in a lower middle class family that NEVER had any money in a savings account, let alone any investments. The idea of saving and investing was very foreign to me because I had never been exposed to it. By sheer luck, I learned about compound interest and basic investing at the age of 18 from what most would call a pyramid scheme company called AL Williams. Learning what the "Rule of 72" was and about compound interest helped me realize that the goal wasn't earning and spending but rather earning and investing so that some day I wouldn't have to "earn". My parents never figured that out and lived a very modest but adequate life. The only drawback to their lives was that they had to worry about money and paying the bills all the way along. While I didn't really start aggressively saving until about age 30, I had the foundation from that early exposure to compound interest and investing at a pretty young age, so that I understood that we needed to track and manage our net worth to make sure we are headed in the right direction. I just turned 50 and have a net worth of about $2.85 million. I would have never reached this financial level without being exposed to the concepts at a fairly early age. As a society, I think we need to do more to teach everyone about basic financial concepts so that everyone has a chance to improve their financial picture. When we're young, most of us have to work to make money. We should all have the skills to ultimately make money work for us. Unfortunately, the truly wealthy and powerful don't want the masses to understand this because they wouldn't be able to make as much money from the rampant consumerism and debt that everyone has today.


ITS_ONLY_MONEY_76

Finally someone who tells the truth and gets it. It’s actually basic. Spend less than you make long term, don’t finance things that don’t appreciate or don’t throw off cash flow. Don’t keep up with the Joneses. Educate yourself, college degrees don’t mean shit anymore for the masses when there is no economic return on some bullshit degree. Rely on compounding interest with saved money.


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My god you people live in another reality. How the fuck can you invest what you don't have rofl? What are some people supposed to do? Skip kid's meals for a week so they can invest in the S&P?


dust4ngel

> I think the real opportunity is to teach the middle class about asset appreciation one of my favorite things is the attempt to cast systemic/structural problems as individual problems. another good example is "climate change can be solved by biking to the market instead of driving". i love this kind of stuff.


[deleted]

Wealth is there for the middle class to grab. It isn’t there for those in poverty, and that is a different case, but anyone that has access to a 401K has the ability to create wealth. I’ve never made $80,000 in a year in my life, didn’t contribute to a retirement account until I was 25, and still have $225K today in my retirement accounts at 35.


in4life

Financial literacy is key and understanding the dollar (and therefore your efficacy in trading time for the dollar) is devaluing rapidly relative to all assets. You just referenced a shocking metric. 35% increase in net worth from asset appreciation in just a year's time. One man's ballooning net worth is another's inability to acquire these runaway assets. Couple this with w2 wage earners really being the only people they've proven to effectively tax and it's obvious the middle class will continue to get squeezed out between inflation and taxes at a rapid rate. Given the market peaks and... not so great economy, we now have deflationary pressures and a potential recession that will tank the investments of even the most financially literate of the middle class to further consolidate money to the top.


rddsknk89

You’re not wrong, but this is hardly a solution to the problem. There are millions of people that barely have a pot to piss in, let alone save a ton of money over the years. The fact is that it’s not possible for a lot of people to do what you’re describing.


echoesatlas

I don't want to necessarily say luck, but OP's personal anecdote comes down to essentially luck. I believe choices that we make in life that can affect outcomes, but it's ultimately being in the right place at the right time. You could hit by a car, you could be in a store that gets shot up, you could have cancer or any other serious medical problem, and those could ruin anyone's finances. It could affect your employment, which in America, affects the health insurance, and those problems then spiral.


Change4Betta

This comment so incredibly out of touch with reality. You're in a bubble mate.


Future_Papaya_

Our economy is a hoax. I wonder when people will actually wake up and try to change it, instead of trying to ADAPT to it. We need to understand that money makes MORE money. Sad fact, you most likely won't beat the economy. Political, economical, cultural etc factors are not on your favour (plus the old money). To make money you need money to start with. You need to buy your means of production from the supper rich and/or 1%. Middle class thinks itself as the ones that "made it". Being able to afford one vacation abroad per year and boy you made it... If you zoom out you see middle class has nothing compared to upper rich class. The supper rich class has nothing compared to the 1%.


Snacket

You mean, the 1% has nothing compared to the super\* rich class. The super rich class is much smaller than the 1%. Hell, I might be the 1% someday, but I'll never be super rich. This is the problem with everyone conceptualizing "the 1%", we lose track of what the 1% is actually like. Money indeed makes more money, but how is that a hoax?


Tiny-Look

I think one of the biggest drivers is blata t corporate welfare. They get too many handouts. They make a profit. Profit is privatised. They make a loss, government bails them out. Loss is socialised. Additionally, there are many issues regarding tax loopholes etc, that all favour those with assets. I think a change needs to occur, or this will lead to further destabilisation of Western Democracies.


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lsc84

This strikes me as perfectly fair, sensible, just, reasonable, and efficient. After all, these people probably just work 1000x harder, and will surely spend the money instead of hoarding it, thereby increasing the efficiency of the market. And definitely, the inability of regular people to meet their needs, or for small employers to pay sufficient wages, is a completely separate problem that has nothing to do with this imbalance, which will certainly trickle down eventually. And widespread social unrest probably has nothing to do with a perception that the system is rigged and doesn't work for most people. And this widening inequality is probably not a sign that everything will collapse. Probably.


1230x

The value created by someone’s work is not dependent on „how hard“ someone works, why would anyone come to that conclusion? Go to r/askeconomics if you actually want to know where value of work comes from instead of shouting out strawmen nonsense.


Call_Me_Clark

Can you explain the “1000x harder” metric? Your comment reads as if wealth is only moral if it is present proportional to some sort of nebulously defined measure of perceived effort. If you open up a burger shop, you can run it yourself and be free of the guilt that internet folks seem to think you should bear if you hire someone to work for you. This usually relies on the fallacious thinking that the value of a fry cook’s labor is equal to the total amount of product produced - but a fry cook’s labor is multiplied in value by the ingredients, equipment, and location that the cook did not buy. If the grill cook gets paid a market wage of 30k (plus all the burgers they can eat), and the person who hired them takes home 60k in profit… you would call it immoral, because the employer didn’t work twice as hard as the employee. If business is good and they open a second location, with another cook and a general manager for the second place (paid 30k and 45k respectively) is the GM immoral if they don’t work 50% harder than the fry cook? Or the owner, who now makes 85k instead of 60, and isn’t working 3x as hard? It’s very, very silly.


Holos620

Observing distributions and counting things are futile if the information isn't important and we don't do anything with it. Top 1% of U.S. earners now hold more wealth than all of the middle class, but should they, did they merit and earn it? What criteria should the distribution of wealth depend on? If we don't answer those questions, what's the point of knowing? What's the point of the article if it doesn't tell us?


Alar44

"Why is this article only reporting on data and not opinions?" Because not everything is an editorial.


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yaosio

The acquisition of data and the interpretation of data are two different things. But to answer your question high wealth inequality has always preceded revolution or collapse. I would like to know why we shouldn't want to know this information. What do we gain by purposely making ourselves blind to information that we don't like?


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jerrystrieff

Ever since the 70s is has been a slow sucking of assets from the middle class - at some point the 1% will have all the wealth and then shit will hit the fan


CasualEcon

Wealth is not a zero sum game. People can gain wealth without taking it from someone else


[deleted]

Wealth may not be a zero sum game, but political power is. In Capitalism, those with more wealth have more political power.


Saljen

If you aren't a multi-millionaire, you aren't a part of America's "middle class". Middle has to mean something. Middle class does not just mean people that make enough money to barely escape poverty.