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The analysis is broken by the focus on the top 1%. They should be looking at the top 0.1%, or smaller. It's absurd to put together hedge fund managers making $

The analysis is broken by the focus on the top 1%. They should be looking at the top 0.1%, or smaller. It's absurd to put together hedge fund managers making $30 million a year with the established doctor who works two blocks from your house making $250k. These are entirely different phenomena. You can see it by the section where they realize, shockingly, that the most common workplace among the 1% is the doctor's office. Well, duh. That's what makes it so clear that the 1% is much too broad of a target. When people (innumerately) rage against the 1%, they're not thinking of real estate agents and local doctors and lawyers and dentists and university or hospital administrators. But that's who the 1% is.

alayne 11y ago
You have to be worth something like $8 million to be in the top 1% in the U.S. by net worth. I don't think that includes most dentists.
- jedberg 11y ago
  This report is about top 1% of income, not wealth. To be in the top 1% nationally, you had to have earned $383,000 in 2015. In some cities that number is as low as $175K, very doable for a doctor or dentist.
  - alayne 11y ago
    Yep and I don't think that is a good measurement.
  - bsimpson 11y ago
    Of course, some of that is cost of living, but a lot of it is the lack of diversity in the ratings. I'm sure Elko, Nevada has some doctors, but probably not many investment bankers. With less representation from other well-remunerated occupations, a doctor in Elko is likely to be in the top 1%; however, a similar doctor in Manhattan probably isn't.
  - sokoloff 11y ago
    That $383K is very likely a household income (or tax return AGI, which is a close proxy for household) figure, not an individual income figure.
    - jedberg 11y ago
      Yes, it's household income, not individual.
- rashkov 11y ago
  I think your numbers might be off because the most I've seen for the 1% cutoff is 500-600k
  - alayne 11y ago
    I got the 8 million from here http://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ http://economix.blogs.nytimes.com/2012/01/17/measuring-the-t... Feel free to cite a better source.
    - nkurz 11y ago
      Interesting, like 'rashkov' that's much higher than I would have guessed. It does look authoritative, although part of the disparity may be that the "administrative" estimates of wealth are much less than other presumably more accurate measures. This paper gives a more up to date chart on P. 62 in Table C.3: http://www.federalreserve.gov/econresdata/feds/2015/files/2015030pap.pdf http://www.federalreserve.gov/econresdata/feds/2015/files/20... Table C.3. Net Worth Fractile Thresholds (Thousands $) SCF Bulletin Wealth, HHDs 1989 1992 1995 1998 2001 2004 2007 2010 2013 90th Percentile 364 357 381 494 740 834 910 953 942 99th Percentile 2,251 2,318 2,460 3,793 5,787 6,356 8,360 6,815 8,155 99.9th Percentile 9,703 9,207 13,898 15,346 20,338 25,109 30,826 27,488 30,894 I chose the top line for each percentile, which gives the highest figures, but it's possible that one of the "adjusted" numbers is more appropriate. It's interesting to me that over the time period from 1989 to 2013, the 90th, 99th, and 99.9th percentiles have all basically tripled. The summary, in case the chart is hard to read, is that for 2013, the 90th percentile threshold for household wealth is about 1 million dollars, the 99th is about 8 million, and the 99.9th is about 30 million. The adjusted estimates (see the paper) are generally 10-30% lower.
- jsonne 11y ago
  A quick Google suggest that Dentist make 120k+ per year. Over a lifetime of a career that works out to roughly 5 million dollars of earning potential (Assuming you retire at 65 and never receive a raise.) Assuming you have a spouse that works as well you could pretty handily be in the top 1% as a dentist.
  - rgbrenner 11y ago
    doesn't the dentist need to eat and a place to live? taxes? No one gets to save 100% of their income from their entire life.
  - briandear 11y ago
    You're assuming dentists don't invest. In the independent film business one of the secrets to finding funding was to find a bunch of dentists.
- duaneb 11y ago
  I always understood it to be top 1% of income. Asset wealth may make more sense.
- ChinoAntrax 11y ago
  Dentists can most definitely make far more than that in a career. I have 2 brothers that are dentists. One of them had a practice in Hattiesburg, MS (about 47,000 people) and in the city of Bay Springs, MS (about 2,000 people) and he was making anywhere from $600,000/year on the low end, to $1m on the best years. Before he got divorced and moved to Florida, anyways, and the glut of dentists there has him making around $250,000/year max so far (lived there about 4-5 years now.) He's planning to retire when he is 50 and he's 44 now. He got his pilots license in the last few years and now flies between his practices in Florida and owns his own plane (just a small little Beechcraft Bonanza.) But either way, he's made great money in his lifetime through dentistry. Unfortunately my other brother that is a dentist I don't talk to that much so I have no idea of his earnings, but I know he also does very well.
  - alayne 11y ago
    Most dentists aren't making $600k per year. I just think OP was being a little bit generous with who is in the 1%, particularly if you look at net worth which is a better metric.
Mikeb85 11y ago
Yup. While a case can be made against some in the financial industry for extracting rents, the problem of the "1%" isn't about the top 1% of labour, but the oversized returns on capital that concentrates wealth in the hands of the top 0.1-0.01%.
- WalterBright 11y ago
  Creating wealth is not the same thing as concentrating wealth.
  - SolarNet 11y ago
    True, but it's the concentration of wealth that's the problem. If the CEO and investors gave a fair portion of the wealth they created to their workers (see Walmart) or reinvested it into the company or other companies, then there wouldn't be a problem. The problem is ALL of that created wealth has gone to the people who control the capital. The workers (whose productivity has gone up nearly 300% since the last time real wages went up) deserve some portion of that return in, for example, fair wages. The labor market is not be a free market (for a number of reasons it likely never will be), and so we must regulate at least part of this equation. And one way to do that is to put taxes on taking exorbitant capital returns as personal income; build something you want in the world with it instead (and in the process put it back into the economy). Another way, and one I'm partial to, is to institute a basic income, that way people will never work for exploitative wages, will always have a base of capital to pull from, and will bring the labor market to something much closer to a free market (where price discovery will actually work).
    - mac01021 11y ago
      Whose productivity has increased threefold? How?
  - chongli 11y ago
    "Creating wealth" is such a loaded term. Do people like the Walton family and the Koch brothers personally create billions in wealth every year? No. They depend on millions of people who work for them. They merely reap a ridiculously outsized share of the benefits for being the owners of all the capital.
danielgcarrillo 11y ago
I'd be interested to see the degrees of privilege that take place among the upper echelons of the 0.1% - what types of opportunities are only available to them? Are there tactics we are simply unaware of, that skew our understanding of the fight for economic prosperity?
- jonesb6 11y ago
  I imagine a much greater emphasis is put on the value of time as time really becomes the only finite resource in most circumstances.
- mryan 11y ago
  This topic comes up on AskReddit frequently. There was a post on it yesterday [0], and I found this [1] comment rather interesting as it highlights the fact that material possessions are only one small aspect of being truly wealthy. The real value comes from the connections that can be made while moving in these social circles. 0: https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_items_or_products_are_found_only_in_rich/ https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_item... 1: https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_items_or_products_are_found_only_in_rich/d1bh29b https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_item...
  - aninhumer 11y ago
    Here's a long post from a while ago that goes into even more detail: https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_insanely_wealthy_people_buy_that_ordinary/cnnmca8 https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_i...
- cm2187 11y ago
  If you mean in term of quality of life, I actually think that in absolute terms it is probably marginal. They might enjoy a more comfortable life, going to places where the normal middle class doesn't go, tasting food which is slightly better. But they don't eat more calories than the average american, if they get sick they will be treated with the same molecules than the average american, the shinny tesla car they will drive will not transport them much better than the cheap Ford of the average american, they will not sleep much better in their big house than the average american, etc. If you think in term of investment opportunities, clearly there are many investments that are only accessible to wealthy people, because of the amount of risk they involve, or because owning a tiny fractional share of a company is a sort of anomaly. Most investments (building, company, project) have few and require few investors, not the least to ensure proper governance. But at one point the marginal benefit of the accumulation of wealth becomes zero. I don't think someone who own 1 billions lives much better than someone who owns 50 millions.
cat-dev-null 11y ago
1% is obviously a simplified, talking-point metaphor; not a literal 1 out of every 100. The sliding cliff, gray-area seems to be an issue regarding the problematic portion is around the top .01% or perhaps smaller still. Another issue is that said narrow group is incredibly skilled in exploiting whichever rules are enforced, buying elected officials from all three branches of US government under the current campaign finance rubric and generally making sure their interests are first. Folks whom have tax accountants, tax attorneys and investment managers are able to hyperoptimize purposefully-byzantine tax code while grandpa does TurboTax (in the US, take a look at the 1040 (full, non-EZ form) for all the odd, special interest tax deductions which clutter up forms and have the own extra forms (Schedule _)). Complexity is a game to catch the unweary, confuse most people and create an official "elite qualifying miles" gambit to reduce taxes in "certain" situations. It comes down to whom has the most influence over collection, allocation and redistribution of taxation.
- cm2187 11y ago
  If we focus on the .01%, I am not sure what we are observing says much about inequality in our society. More to do with the fact that 50 years ago, a successful US entrepeneur would sell its products to a few millions americans, if he was lucky enough to be a national success. And if it was international (even more rare, and taking many years) a few more millions western europeans. The rest of the world was basically not a potential customer. Today a successful entrepeneur can go directly international, and with a client base that includes not only the US and Western Europe but also a huge (and quickly growing) middle class all over the world. This is several orders of magnitude the potential reach than 50 years ago. Successful entrepeneurs make billions not millions anymore. So it's not absurd that we end up with more extreme wealth in the top .01%, and I think it is kind of structural to a modern, global society. If we focus on the 1%, or rather the delta between the 1% and the 99%, I think we are rather observing skill supply/demand mismatch. In the US and Western Europe there is an oversupply of unskilled or low-skills labour, driving their wages down (relatively to skilled labour). So they will do worse than the more sought after skilled labour. It can partially be mitigated with better education. But part of it is also structural. Not everyone can be a good programmer or engineer. Unless we find a way to change IQ distributions, we may have a long term problem here that we may not be able to solve.
devdas 11y ago
The 1% is a question of wealth, not income. If you make most of your financial returns from capital gains, rather than income, you are in the 1%
- cm2187 11y ago
  The problem with observing wealth is that the numbers are polluted by things like real estate bubbles. In theory, if you own and live in a £1m home in London you are very wealthy, you could sell it and live off the proceeds in a cheaper place. But in practice you are not really wealthier than someone who owns a £200k home in a village. That home is likely much smaller and the population of London is not going to migrate away from London. Real estate bubbles have made parts of the population much wealthier on paper but they still live in the same houses than before the bubble. Actually income has a similar bias. You can earn twice the median salary in the UK and still not afford to live on your own in central london. Most junior bankers live in flatshare, but are on paper earning much more than an average family in a cheaper village. These bias are what I think make comparisons of nominal wealth or income between countries a pointless exercise, and in a country as vast and heterogenous as the US a difficult exercise.
  - diskcat 11y ago
    well you are wealthier. you have the option of selling your home and move to a village. the villager does not. The additional option available to you is brought to you by your wealth
    - cm2187 11y ago
      But again, no one really does that. And unless people do it en masse, that population is not really wealthier.
      - effie 11y ago
        Why would selling houses en masse be necessary condition to call the owners wealthy? The mere ownership makes them wealthy, not their selling activities.
raziel2p 11y ago
If I were part of a 1% or .1%, I'd probably be making the same argument. "The 1%" is just a simplification for the benefactors of gross income and wealth inequality.
atemerev 11y ago
Hedge fund managers make that much money because they earn much more money for their clients. And less than 1-2% of them can beat the market consistently, and only these 1-2% are accordingly compensated. And it's not like there are high barriers of entry. Everybody can call local Bloomberg office and arrange for trial terminal subscription (I did it once). Or pay around $75/month for realtime market data feed and test strategies on it. Compare it to, say, becoming a dentist.
moonshinefe 11y ago
"When people (innumerately) rage against the 1%, they're not thinking of real estate agents and local doctors and lawyers and dentists and university or hospital administrators. But that's who the 1% is. " Actually that's not true at all. Even if those people are just under/barely millionaires, they're still getting most of the advantages over poor people. They're probably also not paying rents, in debt as much, and probably had higher educations.
- ralusek 11y ago
  But that's okay. I don't think anybody that is rallying against the 1% is mad that there are people who aren't poor. They're mad that there are families sitting on tens of billions of dollars. They are mad that hedge fund managers are making tens of billions of dollars a year, and banks are able to gamble their mortgages and assets into oblivion, only to be saved by their tax dollars. Nobody is mad at the concept of being able to improve your situation with hard work.
feelix 11y ago
Since it's impossible to fully track the wealth of the worlds wealthiest people, I'm just going to go ahead and speculate. 0.0001% of 6 billion = 6000 people. I would say that 6000 people easily control anywhere between 20% and 50% of the worlds wealth. Especially considering that if you research "How many billionaires are there?" You come up with something like this: "A total of 1,645 people made the 2014 billionaire list, representing combined wealth of $6.4 trillion." So taking the top 1000 billionaires, or perhaps even the top 100 or so, and then you have the families who really have enough money to control things. These would be the people that are impossible to get much information on, but who definitely hold a lot of sway over the planet. I think these families are the ones we should be concerned with. Either them or once again a small proportion of them, numbering anywhere between 5 families and 100 families.
- id 11y ago
  > I would say that 6000 people easily control anywhere between 20% and 50% of the worlds wealth. The 62 richest people in the world own as much as the poorest 3.6billion. In 2010 it was 388. The 1% owns more than the rest of the world. https://www.oxfam.org/en/pressroom/pressreleases/2016-01-18/62-people-own-same-half-world-reveals-oxfam-davos-report https://www.oxfam.org/en/pressroom/pressreleases/2016-01-18/...
  - deleted 11y ago
    [deleted]
  - tablewatcher 11y ago
    Completely hypothetical but what would happen if those 62 people were "taken out" so to speak, would debt forgiveness happen or would there be more equality in the world or how do you see it play out?
  - asuffield 11y ago
    Look closer at that data. Both the 62 richest people in the world and the 3.6bn poorest own a tiny tiny fraction of the world's wealth. All you're really doing here is observing that the 3.6bn poorest people are really poor. This does not support your statement that "the 1%" owns more than the rest of the world. However, that statement happens to be true. If you look at the Credit Suisse wealth report that those oxfam figures are cherry picked from, you'll find that the 1% (globally) comprises about half the population of the US. It's you, in other words.
Ericson2314 11y ago
Yes that's true, the 0.1% percent is phenomenally richer by definition a bigger contributor to inequality, and for the most part enriches itself entirely differently. That said, just as inequality is deemed unfair (I understand that's not the reason to oppose it), protectionism of these "guilded" industries can be deemed unfair in its own right. More practically, the inflation of doctor's compensation could inflate healthcare costs to the the point of contributing to inequality more as a leech on the poor than boon to the rich. tl;dr, the things this article points out are definitely bad, if only for the immediate justifications given rather than the article's thesis.
pmorici 11y ago
You should go look at current statistics. $250k does not put in in the 1% you need to make closer to $380k to breach that mark. Doctors work in an industry where compensation is strongly influenced by government policy. The government is the largest single payer for healthcare services due to Medicare and Medicaid which makeup roughly 40% of heath care costs in the US. The AMA lobbies the government heavily to ensure favorable rates on procedures paid for by those programs and thus ensures a high income for their members. So in the sense that a lot of their economic prosperity is derived from their political influence they aren't all that different from any other wealthy person who lobbies the government for tax breaks and other economic advantages.
- jessriedel 11y ago
  That's $380k household income. A large fraction of the folks making $250k have spouses making at least $130k, so I don't think the grandparent is particularly wrong.
  - pmorici 11y ago
    When you talk about tax policy that generally applies to households not incomes from individual jobs.
  - Alex3917 11y ago
    Right, and per capita income doesn't make sense to use as a metric... Unless you think infants are oppressed due to having high unemployment or whatever. (Since per capita income includes infants, retirees, etc.)
zb 11y ago
It's not your local doctor making $250k that is in the 1%, it's the doctor who set up a diagnostic company and ordered lots of unnecessary tests and is demanding kickbacks from other healthcare suppliers, whose rent-seeking is pulling in several million a year: http://www.newyorker.com/magazine/2009/06/01/the-cost-conundrum http://www.newyorker.com/magazine/2009/06/01/the-cost-conund... If your point was that nurse practitioners won't help that siutation a lot, then I agree (although I think nurse practitioners are still a great idea for other reasons). But I believe it's wrong to suggest this is not a real problem. Similarly, salaries for top college and hospital administrators are routinely equally and exceeding that of your $30M hedge fund manager. Perhaps even worse, they justify this based on the size of the organisations they manage, which are easily inflated by hiring lots of non-teaching, non-clinical administration staff (not to mention mergers, which also give hospitals especially more market power to extract rents). It's all financed by easy money from student loans and from insurance/Medicare that doesn't have a choice. So I totally disagree that looking at the 1% is unhelpful, because all of the things above are real problems that need to be solved even if you think inequality doesn't matter. Anyone born after about 1980 and anyone who has medical insurance or pays taxes is getting fleeced, and they're not getting better services for their money. Fixing that will make a much bigger difference in most people's lives than confiscating a bit from the hedge fund manager (though of course there's no shortage of screwed up incentives in finance to fix either).
bpodgursky 11y ago
And on top of that, a doctor is only in the 1% for a fraction of their actual career. Four years of school, many of residency, maybe specialty, those salaries are to a large degree paying off accumulated debt and opportunity cost. It would be cruel to try to take even more of that highly delayed income in taxes.
- bsbechtel 11y ago
  I agree with you regarding taxes, although I don't anyone can honestly say that having more doctors and other highly educated professionals is bad for society. Requiring 12+ years of education to do some of the menial tasks doctors do, that could be done cheaper by someone with less schooling, would also be beneficial to everyone. The same goes for requiring a 4 year college degree that costs +$50,000 for many non-professional jobs.
  - tamana 11y ago
    This is how medicine works today. Most US health-care is provided by nurses and Physicians Assistants which have roughly the education that doctors had 70 years ago.
wmil 11y ago
The "1%" is actually an interesting choice of number. Most NYC media types are friends with very wealthy people. They needed to pick a number large enough that it didn't seem like they were attacking people they know.
- tamana 11y ago
  That's ridiculous. They say "1%" because it is easy to write and pronounce. It is a figurative number. When people complain about billionaires, they don't think that $1.1Billionaires are monsters and $0.9Billionaires are middle class.
voidlogic 11y ago
>The analysis is broken by the focus on the top 1%. They should be looking at the top 0.1%, or smaller. I think sometimes a picture really does say 1,000 words. This short info-graphic video makes is pretty clear how dramatically top heavy wealth distribution in the U.S. is: https://youtu.be/QPKKQnijnsM https://youtu.be/QPKKQnijnsM It also does a nice job of comparing the "ideal", to the "perception" to the actual.
voidlogic 11y ago
> I think sometimes a picture really does say 1,000 words. This short info-graphic video makes is pretty clear how dramatically top heavy wealth distribution in the U.S. is: https://youtu.be/QPKKQnijnsM https://youtu.be/QPKKQnijnsM It also does a nice job of comparing the "ideal", to the "perception" to the actual.
forgetsusername 11y ago
>It's absurd to put together hedge fund managers making $30 million a year with the established doctor who works two blocks from your house making $250k. There will always be problems when trying to draw these lines. Of course putting someone who makes $30MM vs $250k is absurd. What about $1MM vs $250k? $300k vs $250k? There's an inordinate amount of conversation about this subject on HackerNews, which has some irony, since I'm sure the demographics here skew "wealthy". Everyone wants to believe they're in the "99%", but the fact is the vast majority of the population in America, and more so the world, would consider people here the 1%. $250k is more than most people need, in terms of sharing the wealth, even in a household. If there's a populist shift, your doctor may find some empathy for that kind of salary; the guy who coded the latest photo app won't.

alayne 11y ago

You have to be worth something like $8 million to be in the top 1% in the U.S. by net worth. I don't think that includes most dentists.

jedberg 11y ago
This report is about top 1% of income, not wealth. To be in the top 1% nationally, you had to have earned $383,000 in 2015. In some cities that number is as low as $175K, very doable for a doctor or dentist.
- alayne 11y ago
  Yep and I don't think that is a good measurement.
- bsimpson 11y ago
  Of course, some of that is cost of living, but a lot of it is the lack of diversity in the ratings. I'm sure Elko, Nevada has some doctors, but probably not many investment bankers. With less representation from other well-remunerated occupations, a doctor in Elko is likely to be in the top 1%; however, a similar doctor in Manhattan probably isn't.
- sokoloff 11y ago
  That $383K is very likely a household income (or tax return AGI, which is a close proxy for household) figure, not an individual income figure.
  - jedberg 11y ago
    Yes, it's household income, not individual.
rashkov 11y ago
I think your numbers might be off because the most I've seen for the 1% cutoff is 500-600k
- alayne 11y ago
  I got the 8 million from here http://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ http://economix.blogs.nytimes.com/2012/01/17/measuring-the-t... Feel free to cite a better source.
  - nkurz 11y ago
    Interesting, like 'rashkov' that's much higher than I would have guessed. It does look authoritative, although part of the disparity may be that the "administrative" estimates of wealth are much less than other presumably more accurate measures. This paper gives a more up to date chart on P. 62 in Table C.3: http://www.federalreserve.gov/econresdata/feds/2015/files/2015030pap.pdf http://www.federalreserve.gov/econresdata/feds/2015/files/20... Table C.3. Net Worth Fractile Thresholds (Thousands $) SCF Bulletin Wealth, HHDs 1989 1992 1995 1998 2001 2004 2007 2010 2013 90th Percentile 364 357 381 494 740 834 910 953 942 99th Percentile 2,251 2,318 2,460 3,793 5,787 6,356 8,360 6,815 8,155 99.9th Percentile 9,703 9,207 13,898 15,346 20,338 25,109 30,826 27,488 30,894 I chose the top line for each percentile, which gives the highest figures, but it's possible that one of the "adjusted" numbers is more appropriate. It's interesting to me that over the time period from 1989 to 2013, the 90th, 99th, and 99.9th percentiles have all basically tripled. The summary, in case the chart is hard to read, is that for 2013, the 90th percentile threshold for household wealth is about 1 million dollars, the 99th is about 8 million, and the 99.9th is about 30 million. The adjusted estimates (see the paper) are generally 10-30% lower.
jsonne 11y ago
A quick Google suggest that Dentist make 120k+ per year. Over a lifetime of a career that works out to roughly 5 million dollars of earning potential (Assuming you retire at 65 and never receive a raise.) Assuming you have a spouse that works as well you could pretty handily be in the top 1% as a dentist.
- rgbrenner 11y ago
  doesn't the dentist need to eat and a place to live? taxes? No one gets to save 100% of their income from their entire life.
- briandear 11y ago
  You're assuming dentists don't invest. In the independent film business one of the secrets to finding funding was to find a bunch of dentists.
duaneb 11y ago
I always understood it to be top 1% of income. Asset wealth may make more sense.
ChinoAntrax 11y ago
Dentists can most definitely make far more than that in a career. I have 2 brothers that are dentists. One of them had a practice in Hattiesburg, MS (about 47,000 people) and in the city of Bay Springs, MS (about 2,000 people) and he was making anywhere from $600,000/year on the low end, to $1m on the best years. Before he got divorced and moved to Florida, anyways, and the glut of dentists there has him making around $250,000/year max so far (lived there about 4-5 years now.) He's planning to retire when he is 50 and he's 44 now. He got his pilots license in the last few years and now flies between his practices in Florida and owns his own plane (just a small little Beechcraft Bonanza.) But either way, he's made great money in his lifetime through dentistry. Unfortunately my other brother that is a dentist I don't talk to that much so I have no idea of his earnings, but I know he also does very well.
- alayne 11y ago
  Most dentists aren't making $600k per year. I just think OP was being a little bit generous with who is in the 1%, particularly if you look at net worth which is a better metric.

Mikeb85 11y ago

Yup. While a case can be made against some in the financial industry for extracting rents, the problem of the "1%" isn't about the top 1% of labour, but the oversized returns on capital that concentrates wealth in the hands of the top 0.1-0.01%.

WalterBright 11y ago
Creating wealth is not the same thing as concentrating wealth.
- SolarNet 11y ago
  True, but it's the concentration of wealth that's the problem. If the CEO and investors gave a fair portion of the wealth they created to their workers (see Walmart) or reinvested it into the company or other companies, then there wouldn't be a problem. The problem is ALL of that created wealth has gone to the people who control the capital. The workers (whose productivity has gone up nearly 300% since the last time real wages went up) deserve some portion of that return in, for example, fair wages. The labor market is not be a free market (for a number of reasons it likely never will be), and so we must regulate at least part of this equation. And one way to do that is to put taxes on taking exorbitant capital returns as personal income; build something you want in the world with it instead (and in the process put it back into the economy). Another way, and one I'm partial to, is to institute a basic income, that way people will never work for exploitative wages, will always have a base of capital to pull from, and will bring the labor market to something much closer to a free market (where price discovery will actually work).
  - mac01021 11y ago
    Whose productivity has increased threefold? How?
- chongli 11y ago
  "Creating wealth" is such a loaded term. Do people like the Walton family and the Koch brothers personally create billions in wealth every year? No. They depend on millions of people who work for them. They merely reap a ridiculously outsized share of the benefits for being the owners of all the capital.

danielgcarrillo 11y ago

I'd be interested to see the degrees of privilege that take place among the upper echelons of the 0.1% - what types of opportunities are only available to them? Are there tactics we are simply unaware of, that skew our understanding of the fight for economic prosperity?

jonesb6 11y ago
I imagine a much greater emphasis is put on the value of time as time really becomes the only finite resource in most circumstances.
mryan 11y ago
This topic comes up on AskReddit frequently. There was a post on it yesterday [0], and I found this [1] comment rather interesting as it highlights the fact that material possessions are only one small aspect of being truly wealthy. The real value comes from the connections that can be made while moving in these social circles. 0: https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_items_or_products_are_found_only_in_rich/ https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_item... 1: https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_items_or_products_are_found_only_in_rich/d1bh29b https://www.reddit.com/r/AskReddit/comments/4bpjxo/what_item...
- aninhumer 11y ago
  Here's a long post from a while ago that goes into even more detail: https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_insanely_wealthy_people_buy_that_ordinary/cnnmca8 https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_i...
cm2187 11y ago
If you mean in term of quality of life, I actually think that in absolute terms it is probably marginal. They might enjoy a more comfortable life, going to places where the normal middle class doesn't go, tasting food which is slightly better. But they don't eat more calories than the average american, if they get sick they will be treated with the same molecules than the average american, the shinny tesla car they will drive will not transport them much better than the cheap Ford of the average american, they will not sleep much better in their big house than the average american, etc. If you think in term of investment opportunities, clearly there are many investments that are only accessible to wealthy people, because of the amount of risk they involve, or because owning a tiny fractional share of a company is a sort of anomaly. Most investments (building, company, project) have few and require few investors, not the least to ensure proper governance. But at one point the marginal benefit of the accumulation of wealth becomes zero. I don't think someone who own 1 billions lives much better than someone who owns 50 millions.

cat-dev-null 11y ago

1% is obviously a simplified, talking-point metaphor; not a literal 1 out of every 100. The sliding cliff, gray-area seems to be an issue regarding the problematic portion is around the top .01% or perhaps smaller still. Another issue is that said narrow group is incredibly skilled in exploiting whichever rules are enforced, buying elected officials from all three branches of US government under the current campaign finance rubric and generally making sure their interests are first. Folks whom have tax accountants, tax attorneys and investment managers are able to hyperoptimize purposefully-byzantine tax code while grandpa does TurboTax (in the US, take a look at the 1040 (full, non-EZ form) for all the odd, special interest tax deductions which clutter up forms and have the own extra forms (Schedule _)). Complexity is a game to catch the unweary, confuse most people and create an official "elite qualifying miles" gambit to reduce taxes in "certain" situations. It comes down to whom has the most influence over collection, allocation and redistribution of taxation.

cm2187 11y ago
If we focus on the .01%, I am not sure what we are observing says much about inequality in our society. More to do with the fact that 50 years ago, a successful US entrepeneur would sell its products to a few millions americans, if he was lucky enough to be a national success. And if it was international (even more rare, and taking many years) a few more millions western europeans. The rest of the world was basically not a potential customer. Today a successful entrepeneur can go directly international, and with a client base that includes not only the US and Western Europe but also a huge (and quickly growing) middle class all over the world. This is several orders of magnitude the potential reach than 50 years ago. Successful entrepeneurs make billions not millions anymore. So it's not absurd that we end up with more extreme wealth in the top .01%, and I think it is kind of structural to a modern, global society. If we focus on the 1%, or rather the delta between the 1% and the 99%, I think we are rather observing skill supply/demand mismatch. In the US and Western Europe there is an oversupply of unskilled or low-skills labour, driving their wages down (relatively to skilled labour). So they will do worse than the more sought after skilled labour. It can partially be mitigated with better education. But part of it is also structural. Not everyone can be a good programmer or engineer. Unless we find a way to change IQ distributions, we may have a long term problem here that we may not be able to solve.

devdas 11y ago

The 1% is a question of wealth, not income. If you make most of your financial returns from capital gains, rather than income, you are in the 1%

cm2187 11y ago
The problem with observing wealth is that the numbers are polluted by things like real estate bubbles. In theory, if you own and live in a £1m home in London you are very wealthy, you could sell it and live off the proceeds in a cheaper place. But in practice you are not really wealthier than someone who owns a £200k home in a village. That home is likely much smaller and the population of London is not going to migrate away from London. Real estate bubbles have made parts of the population much wealthier on paper but they still live in the same houses than before the bubble. Actually income has a similar bias. You can earn twice the median salary in the UK and still not afford to live on your own in central london. Most junior bankers live in flatshare, but are on paper earning much more than an average family in a cheaper village. These bias are what I think make comparisons of nominal wealth or income between countries a pointless exercise, and in a country as vast and heterogenous as the US a difficult exercise.
- diskcat 11y ago
  well you are wealthier. you have the option of selling your home and move to a village. the villager does not. The additional option available to you is brought to you by your wealth
  - cm2187 11y ago
    But again, no one really does that. And unless people do it en masse, that population is not really wealthier.
    - effie 11y ago
      Why would selling houses en masse be necessary condition to call the owners wealthy? The mere ownership makes them wealthy, not their selling activities.

raziel2p 11y ago

If I were part of a 1% or .1%, I'd probably be making the same argument. "The 1%" is just a simplification for the benefactors of gross income and wealth inequality.

atemerev 11y ago

Hedge fund managers make that much money because they earn much more money for their clients. And less than 1-2% of them can beat the market consistently, and only these 1-2% are accordingly compensated. And it's not like there are high barriers of entry. Everybody can call local Bloomberg office and arrange for trial terminal subscription (I did it once). Or pay around $75/month for realtime market data feed and test strategies on it. Compare it to, say, becoming a dentist.

moonshinefe 11y ago

"When people (innumerately) rage against the 1%, they're not thinking of real estate agents and local doctors and lawyers and dentists and university or hospital administrators. But that's who the 1% is. " Actually that's not true at all. Even if those people are just under/barely millionaires, they're still getting most of the advantages over poor people. They're probably also not paying rents, in debt as much, and probably had higher educations.

ralusek 11y ago
But that's okay. I don't think anybody that is rallying against the 1% is mad that there are people who aren't poor. They're mad that there are families sitting on tens of billions of dollars. They are mad that hedge fund managers are making tens of billions of dollars a year, and banks are able to gamble their mortgages and assets into oblivion, only to be saved by their tax dollars. Nobody is mad at the concept of being able to improve your situation with hard work.

feelix 11y ago

Since it's impossible to fully track the wealth of the worlds wealthiest people, I'm just going to go ahead and speculate. 0.0001% of 6 billion = 6000 people. I would say that 6000 people easily control anywhere between 20% and 50% of the worlds wealth. Especially considering that if you research "How many billionaires are there?" You come up with something like this: "A total of 1,645 people made the 2014 billionaire list, representing combined wealth of $6.4 trillion." So taking the top 1000 billionaires, or perhaps even the top 100 or so, and then you have the families who really have enough money to control things. These would be the people that are impossible to get much information on, but who definitely hold a lot of sway over the planet. I think these families are the ones we should be concerned with. Either them or once again a small proportion of them, numbering anywhere between 5 families and 100 families.

id 11y ago
> I would say that 6000 people easily control anywhere between 20% and 50% of the worlds wealth. The 62 richest people in the world own as much as the poorest 3.6billion. In 2010 it was 388. The 1% owns more than the rest of the world. https://www.oxfam.org/en/pressroom/pressreleases/2016-01-18/62-people-own-same-half-world-reveals-oxfam-davos-report https://www.oxfam.org/en/pressroom/pressreleases/2016-01-18/...
- deleted 11y ago
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- tablewatcher 11y ago
  Completely hypothetical but what would happen if those 62 people were "taken out" so to speak, would debt forgiveness happen or would there be more equality in the world or how do you see it play out?
- asuffield 11y ago
  Look closer at that data. Both the 62 richest people in the world and the 3.6bn poorest own a tiny tiny fraction of the world's wealth. All you're really doing here is observing that the 3.6bn poorest people are really poor. This does not support your statement that "the 1%" owns more than the rest of the world. However, that statement happens to be true. If you look at the Credit Suisse wealth report that those oxfam figures are cherry picked from, you'll find that the 1% (globally) comprises about half the population of the US. It's you, in other words.

Ericson2314 11y ago

Yes that's true, the 0.1% percent is phenomenally richer by definition a bigger contributor to inequality, and for the most part enriches itself entirely differently. That said, just as inequality is deemed unfair (I understand that's not the reason to oppose it), protectionism of these "guilded" industries can be deemed unfair in its own right. More practically, the inflation of doctor's compensation could inflate healthcare costs to the the point of contributing to inequality more as a leech on the poor than boon to the rich. tl;dr, the things this article points out are definitely bad, if only for the immediate justifications given rather than the article's thesis.

pmorici 11y ago

You should go look at current statistics. $250k does not put in in the 1% you need to make closer to $380k to breach that mark. Doctors work in an industry where compensation is strongly influenced by government policy. The government is the largest single payer for healthcare services due to Medicare and Medicaid which makeup roughly 40% of heath care costs in the US. The AMA lobbies the government heavily to ensure favorable rates on procedures paid for by those programs and thus ensures a high income for their members. So in the sense that a lot of their economic prosperity is derived from their political influence they aren't all that different from any other wealthy person who lobbies the government for tax breaks and other economic advantages.

jessriedel 11y ago
That's $380k household income. A large fraction of the folks making $250k have spouses making at least $130k, so I don't think the grandparent is particularly wrong.
- pmorici 11y ago
  When you talk about tax policy that generally applies to households not incomes from individual jobs.
- Alex3917 11y ago
  Right, and per capita income doesn't make sense to use as a metric... Unless you think infants are oppressed due to having high unemployment or whatever. (Since per capita income includes infants, retirees, etc.)

zb 11y ago

It's not your local doctor making $250k that is in the 1%, it's the doctor who set up a diagnostic company and ordered lots of unnecessary tests and is demanding kickbacks from other healthcare suppliers, whose rent-seeking is pulling in several million a year: http://www.newyorker.com/magazine/2009/06/01/the-cost-conundrum http://www.newyorker.com/magazine/2009/06/01/the-cost-conund... If your point was that nurse practitioners won't help that siutation a lot, then I agree (although I think nurse practitioners are still a great idea for other reasons). But I believe it's wrong to suggest this is not a real problem. Similarly, salaries for top college and hospital administrators are routinely equally and exceeding that of your $30M hedge fund manager. Perhaps even worse, they justify this based on the size of the organisations they manage, which are easily inflated by hiring lots of non-teaching, non-clinical administration staff (not to mention mergers, which also give hospitals especially more market power to extract rents). It's all financed by easy money from student loans and from insurance/Medicare that doesn't have a choice. So I totally disagree that looking at the 1% is unhelpful, because all of the things above are real problems that need to be solved even if you think inequality doesn't matter. Anyone born after about 1980 and anyone who has medical insurance or pays taxes is getting fleeced, and they're not getting better services for their money. Fixing that will make a much bigger difference in most people's lives than confiscating a bit from the hedge fund manager (though of course there's no shortage of screwed up incentives in finance to fix either).

bpodgursky 11y ago

And on top of that, a doctor is only in the 1% for a fraction of their actual career. Four years of school, many of residency, maybe specialty, those salaries are to a large degree paying off accumulated debt and opportunity cost. It would be cruel to try to take even more of that highly delayed income in taxes.

bsbechtel 11y ago
I agree with you regarding taxes, although I don't anyone can honestly say that having more doctors and other highly educated professionals is bad for society. Requiring 12+ years of education to do some of the menial tasks doctors do, that could be done cheaper by someone with less schooling, would also be beneficial to everyone. The same goes for requiring a 4 year college degree that costs +$50,000 for many non-professional jobs.
- tamana 11y ago
  This is how medicine works today. Most US health-care is provided by nurses and Physicians Assistants which have roughly the education that doctors had 70 years ago.

wmil 11y ago

The "1%" is actually an interesting choice of number. Most NYC media types are friends with very wealthy people. They needed to pick a number large enough that it didn't seem like they were attacking people they know.

tamana 11y ago
That's ridiculous. They say "1%" because it is easy to write and pronounce. It is a figurative number. When people complain about billionaires, they don't think that $1.1Billionaires are monsters and $0.9Billionaires are middle class.

voidlogic 11y ago

>The analysis is broken by the focus on the top 1%. They should be looking at the top 0.1%, or smaller. I think sometimes a picture really does say 1,000 words. This short info-graphic video makes is pretty clear how dramatically top heavy wealth distribution in the U.S. is: https://youtu.be/QPKKQnijnsM https://youtu.be/QPKKQnijnsM It also does a nice job of comparing the "ideal", to the "perception" to the actual.

voidlogic 11y ago

> I think sometimes a picture really does say 1,000 words. This short info-graphic video makes is pretty clear how dramatically top heavy wealth distribution in the U.S. is: https://youtu.be/QPKKQnijnsM https://youtu.be/QPKKQnijnsM It also does a nice job of comparing the "ideal", to the "perception" to the actual.

forgetsusername 11y ago

>It's absurd to put together hedge fund managers making $30 million a year with the established doctor who works two blocks from your house making $250k. There will always be problems when trying to draw these lines. Of course putting someone who makes $30MM vs $250k is absurd. What about $1MM vs $250k? $300k vs $250k? There's an inordinate amount of conversation about this subject on HackerNews, which has some irony, since I'm sure the demographics here skew "wealthy". Everyone wants to believe they're in the "99%", but the fact is the vast majority of the population in America, and more so the world, would consider people here the 1%. $250k is more than most people need, in terms of sharing the wealth, even in a household. If there's a populist shift, your doctor may find some empathy for that kind of salary; the guy who coded the latest photo app won't.