4 ms·

>The flip side of that argument is that the top xx% people and organizations have accumulated so much wealth that they really don't know how to allocate it sane

>The flip side of that argument is that the top xx% people and organizations have accumulated so much wealth that they really don't know how to allocate it sanely. As soon as some channel opens to receive it (government or private), money starts flooding in, eroding the integrity of that investment channel - and stupid investments inevitably get made. How does this work, generally? Sure, there are people with "so much wealth they don't really know how to allocate it sanely," as you say. But ultimately what happens with it? The "super wealthy" don't have it sitting under their mattresses--it's in all kinds of investments: stocks, property, etc. I don't really get the point in your words, other than "some people have more money than others". What counts as a valid use of money, to you? Paying for other people's college? Paying other people's mortgages? What makes one use of money/property more valuable than other uses? As seen on HN recently, mutual funds are investing in startups, some of which essentially pays our salaries. Is paying $10m for a yacht a less sane use of money than a million people paying $10 for gas? For the 2nd time in as many days, I'll use Bill Gates as an example. He's apparently worth something like $80B. Apparently ~$15B is in Microsoft stocks, and the rest is in Cascade Investment LLC. That's all being invested in a variety of ways, certainly: some public companies, some bonds, some private company, etc. It's all being used in various ways, ultimately paying salaries, paying taxes on properties, investing in capital. If it were to be liquidated (assuming that you could do so without losing value), and given to everyone in the USA equally at $80B / 330 million people => $242/person in the US, why would that necessarily be allocated "better"? My naive guess would be that a significant chunk of it would end up at Walmart, Apple and Samsung--how is that more sanely allocated? Or is your point that the government could better allocate that money? If the government were given $80B to use "on behalf of the people", do you think it would be better spent?

digikata 11y ago
As a thought experiment, I would predict that putting $80B more in the hands of the population of people in the bottom 50% of the wealth distribution would cause more and longer lasting economic activity than the same amount injected, for example, into the stock market. Broadly how it's working is that too much money is sticking in banks and financial markets, and not enough actually circulating in the hands of people and that's causing poor economic growth in real terms. What does that mean for suggested fiscal or monetary policy? I don't know. I believe that capitalism makes sense at a lot of levels, but I also think that the over-accumulation of wealth unbalances the whole. The traditional proposed "solutions" to this are ineffective to me. e.g. increasing the minimum wage may do some social good but it's so far on the edges of the solving the fundamental problem it's laughable. Instituting a tax on wealth seems unworkable from a political level - and on top of that, it seems to be on the other far edge of trying to fix a problem long after the problem has occurred. To me the fundamental problem isn't that individuals get wealth, it's that our financial system systematically approaches wages to be optimized down as a cost, and that companies are applauded for squeezing labor cost as equally as any other cost. So instead of investing in better training, or capital equipment, or better processes, a viable way to operate is to squeeze your employees as hard as possible. This is a process that's causing broad flow towards inequality and single worst misapplication of money flow in the economy, giving rise to the problem in the parent above. This is also a process that squeezes out the benefits of capitalism to people broadly in society. I don't have a pat answer to solve that problem. Sometimes I wonder about a salary tax credit that looks something like an x% credit for the amount of money an employer pays in wages. It would have to be some fairly out-of-the-box proposal that shifts enough wages as a proportion of gross profits that would have an effect without fundamentally breaking down the way that capitalism does lead to benefits.
zuminator 11y ago
> How does this work, generally? Sure, there are people with "so much wealth they don't really know how to allocate it sanely," as you say. But ultimately what happens with it? The "super wealthy" don't have it sitting under their mattresses--it's in all kinds of investments: stocks, property, etc. Yes, that's the point, if you're really rich, you don't spend most of your money, you invest it. And that's all very well and good, but there's a problem. In this world there are are all kinds of investments: excellent investments, merely good ones, poor investments, catastrophic ones. And the problem is, currently there is far more money in the hands of the wealthy than there are excellent investments for them to invest in. That means they're constantly on the prowl for new areas to invest in but even so, a lot of investments turn out to be catastrophic, meaning they don't generate wealth, they destroy it. And so, under these specific conditions, that there is far more liquidity than worthwhile places to invest, then yes, I would consider it better for some of that money to be taxed and spent than on just melting away in bad land deals, risky schemes and fraud.
eli_gottlieb 11y ago
>How does this work, generally? Sure, there are people with "so much wealth they don't really know how to allocate it sanely," as you say. But ultimately what happens with it? The "super wealthy" don't have it sitting under their mattresses--it's in all kinds of investments: stocks, property, etc. I don't really get the point in your words, other than "some people have more money than others". Well, those "investments" need to have a rate of return/profit, and the more money is chasing the same amount of investments, the lower that rate drops. Eventually, you get the holders of concentrated wealth investing cheaply in bad ideas because, well, all the good ideas at good prices have been bought.

digikata 11y ago

As a thought experiment, I would predict that putting $80B more in the hands of the population of people in the bottom 50% of the wealth distribution would cause more and longer lasting economic activity than the same amount injected, for example, into the stock market. Broadly how it's working is that too much money is sticking in banks and financial markets, and not enough actually circulating in the hands of people and that's causing poor economic growth in real terms. What does that mean for suggested fiscal or monetary policy? I don't know. I believe that capitalism makes sense at a lot of levels, but I also think that the over-accumulation of wealth unbalances the whole. The traditional proposed "solutions" to this are ineffective to me. e.g. increasing the minimum wage may do some social good but it's so far on the edges of the solving the fundamental problem it's laughable. Instituting a tax on wealth seems unworkable from a political level - and on top of that, it seems to be on the other far edge of trying to fix a problem long after the problem has occurred. To me the fundamental problem isn't that individuals get wealth, it's that our financial system systematically approaches wages to be optimized down as a cost, and that companies are applauded for squeezing labor cost as equally as any other cost. So instead of investing in better training, or capital equipment, or better processes, a viable way to operate is to squeeze your employees as hard as possible. This is a process that's causing broad flow towards inequality and single worst misapplication of money flow in the economy, giving rise to the problem in the parent above. This is also a process that squeezes out the benefits of capitalism to people broadly in society. I don't have a pat answer to solve that problem. Sometimes I wonder about a salary tax credit that looks something like an x% credit for the amount of money an employer pays in wages. It would have to be some fairly out-of-the-box proposal that shifts enough wages as a proportion of gross profits that would have an effect without fundamentally breaking down the way that capitalism does lead to benefits.

zuminator 11y ago

> How does this work, generally? Sure, there are people with "so much wealth they don't really know how to allocate it sanely," as you say. But ultimately what happens with it? The "super wealthy" don't have it sitting under their mattresses--it's in all kinds of investments: stocks, property, etc. Yes, that's the point, if you're really rich, you don't spend most of your money, you invest it. And that's all very well and good, but there's a problem. In this world there are are all kinds of investments: excellent investments, merely good ones, poor investments, catastrophic ones. And the problem is, currently there is far more money in the hands of the wealthy than there are excellent investments for them to invest in. That means they're constantly on the prowl for new areas to invest in but even so, a lot of investments turn out to be catastrophic, meaning they don't generate wealth, they destroy it. And so, under these specific conditions, that there is far more liquidity than worthwhile places to invest, then yes, I would consider it better for some of that money to be taxed and spent than on just melting away in bad land deals, risky schemes and fraud.

eli_gottlieb 11y ago