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Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. All the arguments about investment and j

Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. All the arguments about investment and job creators falls flat; we have gobs and gobs of excess capital desperately seeing some productive investment. Capitalists don't need any more capital at the moment. (Reminds me of the hedge fund carried interest exemption, which primarily benefits less than 100 people in the USA, with the vast majority of the benefit to the tune of > 1 billion dollars going to about ~5 people. So much so that they spent millions lobbying Congress to stop any attempt at closing the loophole and succeeded.) I wish the old Soviet Union was still around. The communist revolution scare put the fucking Fear of God into the capitalist class.

Houshalter 11y ago
Most that wealth only exists on paper sadly. If they were to actually withdraw it all at once and spend it, the value of the money itself would rapidly decrease. Likewise if you tried to tax all the wealth they are actually consuming, e.g. all their income or all their consumption, the amount doesn't come out so big either. IIRC it's between a few hundred and a few thousand dollars per person in the US.
- js8 11y ago
  But that's exactly a sign of the problem! The money represent abstract power, not specific goods and services. This IMHO runs completely against the idea of free market, and the expectation that people will either consume or invest, instead of saving money (in order to gain power by postponing the economic decision).
- usrusr 11y ago
  Yet ironically, the power derived from that wealth does not exist on paper, but is nonetheless very real.
vixen99 11y ago
I suppose you were either there and knew what it entailed or are clear on your facts? The Soviet Union at one late stage couldn't even supply sanitary towels for half its population and thus women had to tear up old clothes to take care of menstruation. But who cares as long as it put "the fucking Fear of God into the capitalist class". It didn't of course and thank goodness because the last 20 years of capitalism has seen the greatest decline in world poverty ever in the history of humanity. That's the result of letting individual humans make decisions about how they want to trade goods and services with other human beings. By the way, the Gini index ranks Bosnia, Ukraine, Ethiopia, Bangladesh, Egypt and Vietnam as more equal than the UK. But in which of these countries is it better to be poor?
- danieldk 11y ago
  I suppose you were either there and knew what it entailed or are clear on your facts? The Soviet Union at one late stage [...] I think you missed the point. As long as there was still socialist idealism in the hearts of a sizeable proportion of the Western population, there was always the fear of a revolt in your factory or even country. So, people with capital had to keep their workers happy. Now that virtually everyone in the West believes in the capitalist doctrine, not making it means that you are just a sucker who did not work hard enough, did not make the right choices, etc. So, you don't protest, you just work harder.
  - ende 11y ago
    Huh. It would be a great irony if the realization became that capitalism and socialism need each other to thrive.
    - mercer 11y ago
      However tenuous the connection may be, this makes me thing of the central 'point' of the book Trying Not To Try. The author argues that societies oscillate between favoring conservative and 'liberal' values over time, and that neither extreme is ideal. In a way, perhaps capitalism can be seen as the 'liberal' side, where there is an explosion of development and innovation at the expense of stability, social cohesion and safety. Maybe our biggest long-term challenge is figuring out a way to maintain a balance and keep either 'side' from winning or at least stabilizing the oscillation a bit.
    - knughit 11y ago
      Is it ironic? Europe's great modern wealth is socialist capitalism. The original canonical work on capitalism, Adam Smith's "On the Wealth of Nations" lays this out clearly.
amelius 11y ago
Also, how can we expect companies to be not evil, when this is a winner-takes-all economy, where a move in favor of environment or society can result in the downfall of the company? Capitalism is said to promote competition, but in reality, eventually only one or two big companies survive in a certain market (see Google, Facebook, Amazon, &c). In my view, antitrust laws should be extended so that we can have more competition.
heimatau 11y ago
I hold a similar, not exact, position as you. Namely, the trickle down is bullshit part. But reading your comment made me think and question. The mega-elite's capital is growing due to their investments and it's showing no clear signs of slowing down [1]. How are they continuously extracting income of the middle and lower classes (and upper too)? How are they feeding their wealth at a mostly positive rate? Insider trading isn't enough to answer this question. Nor is stagnant wages because some sectors are paying well. I think if economists can state how the wealthy are getting wealthier, in a granular way, then maybe the masses can find a better way to fight back. I.e. there is excessive profits to reap and only the wealthy are finding it, let's expose it and use it to the masses advantage. [1] The great recession is a clear sign where the mega-elites came out with MORE wealth than before the bubble.
- sokoloff 11y ago
  I think you could go through the Forbes 100 list and ask "where did that money originally come from?" You'll find a lot of variance, but most of them boil down to: provided a good or service that people were willing to pay money for (meaning they preferred the good or service more than the money it cost them).
  - heimatau 11y ago
    That only scratches the surface and I have done it. I think more through analysis needs to be done.
  - stuaxo 11y ago
    Who, at the front end actually did that work, and how were they compensated ?
    - adventured 11y ago
      They were compensated based on whatever they agreed to. What beyond that should they get? And who would decide such an arbitrary thing - what government panel of bureaucrats should that be left to? At the very front-end is the founder, who typically works without pay as necessary, and typically works far harder than their employees, while shouldering far more responsibility. Millions of businesses get started under that exact scenario every decade. Employees get paid for their labor. An entrepreneur doesn't have such legal protections or guarantees and is paid for their risk (it's critical to note that 95%+ of all new businesses fail over five years). When I create something, I do so without taking a paycheck initially - perhaps for a very extended period of time. Try convincing an employee to do that at a routine job bagging groceries. If the employee didn't like it, they were welcome to go through the extremely difficult process of starting and building a successful business instead. It's dramatically more difficult to build a business to the point where you can earn $60,000 per year, than it is to get a job making $60,000 per year. Sam Walton didn't start out being rich. If his 37th employee didn't like the terms of employment, they were welcome to compete with him if they could. He contributed a million fold more to the business succeeding than any given grocery bagger, and also took on drastically more personal risk. Beyond that, the morality of it is such that the property of Wal-Mart belonged to Sam Walton, and there's no need for entrepreneurs like him to apologize for that ownership, it belongs to them fair and square (the sole counter argument is to say that violence should be used to steal property and to mostly or entirely abolish private property rights). If an employee wants their own property, then let them create it, and let them provide the money to pay employees for their labor.
koolba 11y ago
How about taxing wealth then? That way the 99.99% can reclaim back that money via mob rule.
- koolba 11y ago
  Question to the down voters: If you think this is a bad idea, how else do suggest we redistribute the pool of capital to something more evenly distributed? Oversimplifying a bit but the choices are either, 1) Tax income 2) Tax wealth 3) Seize wealth. Option #1 clearly isn't working as long term those with wealth (i.e. capital) grow their power, influence, and wealth further. Thus increasing the divide. Option #3 doesn't work because there's an inherent "unfairness" to arbitrarily seizing the assets of others. Option #2 has it's merits. Arguably a billionaire is getting a larger value from the security/tranquility of a peaceful existence than a pauper. Should the billionaire not pay more as a result? Think of it like negative interest rates but rather than doing it on just cash in the bank, it's on total assets. If I own a bunch of stores in a city, I arguably have more incentive to prevent riots and looting.
  - JDiculous 11y ago
    (4) Tax land Land is the largest source of unearned revenue (rent-seeking). The more you tax of something, the less you get, usually to the detriment of society. The one thing this does not apply to is land. --- In theory I'm in support of taxing wealth and much prefer that to taxing income, but it's just too unrealistic. Wealth is so easy to hide (eg. offshore) and hard to value (since it's more than just counting money in the bank). The only plausible way I could see us taxing wealth effectively is if the world collectively got rid of physical cash and implemented negative interest rates on currency, but obviously that's not happening anytime soon.
    - koolba 11y ago
      What about non-land based wealth? Say an empire of digital services running on virtual servers in a data center owned by a service provider?
amluto 11y ago
Complaints about the carried interest issue bug me. (It's not an exception -- it's just how partnerships work.) IMO the problem has nothing to do with carried interest or hedge funds in particular. I think the real issue is our bizarre idea that certain types of income (long-term capital gains) are special and should be taxed less. Hedge funds (and only the kind that generate long-term gains) are just easy things to pick on. Have you noticed that pretty much every large corporation carefully avoids corporate taxes and arranges for its principals' income to be mostly long-term capital gains or qualified dividends? It's the same failure mode, minus the hedge fund. So yes, I think Congress should fix the problem, but I don't think that carried interest is the problem.
- drawkbox 11y ago
  In a perfect game system you'd probably make labor income taxes less than capital gains on investment. Yes you want to encourage investment but you also want to feed the economy with monetary velocity or cash money. The fact is lower/middle class labor income workers put more directly back into the economy than the wealthy "job creators", so who are the real job creators? Demand is the job creator! Demand comes from people that spend having cash. Capital locked up in hoarding does not help the economy as much especially in downturns. Lower/middle class spend almost all their incremental income dollar while the rich typically spend less than 5% of each incremental dollar. If the lower/middle class has cash then you have demand, demand leads to investment, and jobs/growth.
  - Anonobread 11y ago
    > In a perfect game system you'd probably make labor income taxes less than capital gains on investment Indeed you would [1]. According to some legal scholars, wages earned from labor were/are not supposed to be taxed at all in America. The tax code was designed to tax investment gains only. Just imagine if that were upheld > The fact is lower/middle class labor income workers put more directly back into the economy than the wealthy "job creators" By doing what? Consuming consumables marketed to them by Corporations? The same Corporations that would just as soon replace most of their menial labor with robots. Also, I'd curb your exuberance towards believing the lower/middle class "puts more back into the economy", because to the extent the lower/middle class is increasingly replaced by robots or cheap foreign labor, if this is your true belief then we should institute a universal income. Because that's going to "put more back into the economy". > Demand comes from people that spend But for example, planned obsolescence encourages spending. But is planned obsolescence really a tangible benefit for the "people that spend"? Also, imagine if "cash" was of fixed supply (Bitcoin) rather than inflationary. In which case, you could make paper gains over time by not spending it or investing it. Wouldn't this provide more people with financial security given the risks and complexity of investing money in general? [1]: https://en.wikipedia.org/wiki/Tax_protester_statutory_arguments https://en.wikipedia.org/wiki/Tax_protester_statutory_argume...
skylan_q 11y ago
Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. All the arguments about investment and job creators falls flat; we have gobs and gobs of excess capital desperately seeing some productive investment. Capitalists don't need any more capital at the moment. The wealth they have isn't doing nothing. It's in investments. Secondly, if it was in nothing, that would only reduce the velocity of money, effectively making your money worth more. You could spread that money around, but the likely result of that is less investment and more consumption.
- ap22213 11y ago
  And, yet, long-term economic growth forecasts are the lowest that they've been in a really long time.
- vkou 11y ago
  Consumption drives investment. Why on earth would you spend 10 million dollars to build a widget factory, when nobody has the money to buy widgets?
  - skylan_q 11y ago
    Consumption drives investment. There's always demand. Savings fund investment. The more savings there are, the cheaper it is to find funds for investing in a project. The cheaper the capital expenditure, the easier it is to turn a profit. Or are you talking about the paradox of thrift?
    - vkou 11y ago
      The first thing you do before investing in a new market is asking the question: "What's the return on this? Will anyone buy the things I'm selling? Are the margins positive?" Having a lot of money searching for an investment won't do you any good when your widget factories don't have customers. Yes, borrowing money to build the factory will be cheap - but you still expect the factory to produce a return on your investment!
jeffbax 11y ago
It's kind of absurd to blame capitalism, when the vast majority of countries implicated are nothing close. Calling Russia or China capitalist is laughable, they are oligarchies greasing the wheels at every turn with extreme levels of corruption. The US and others aren't immune, but your entire post is ridiculous. These are nations where the government officials pull all the strings, there's nothing free market about that at all.
- jonathankoren 11y ago
  A true Scotsman always pays his taxes!
apineda 11y ago
Personally my issue is lack of freedom in choosing currency. What if I don't want to use CAD in my store, but something else, something more local. It says a lot when as a Canadian I'm not free to choose what kind of money to trade in. What if I don't trust those who manage the currency? Additionally, a TON of cash is being siphoned into redistribution programs aka grants, social, etc plus their supreme administration costs. This money is making the bureaucrats rich and the people at the bottom doing the labor with less wealth to invest. I still believe there are the political capitalists and the market capitalists, we need more of the latter and more transparency as to who exactly is the latter in order to understand who is really contributing.
- spoonie 11y ago
  I'm not aware of the CRA disallowing you from doing business in USD/EUR/GBP? And you can open bank accounts in those currencies right inside of Canada (have done it myself for GBP, USD).
deleted 11y ago
[deleted]
rebootthesystem 11y ago
> Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. Nothing is wrong or broken. Have that other 90% start and run their own businesses or go to school and get a degree in business that allows them to become a C level exec or invent a product and launch a startup. 90% of the people on this planet don't do SHIT. Because doing shit is HARD. Most are content working for someone who's willing to take risks, often with consequences to their own personal lives. And that's OK. There's nothing wrong with that. Not everyone can be an entrepreneur or C level exec. Most people prefer simpler life. For nearly a decade I lived across the street from a retired fireman. He put twenty years or so on the job and retired with a very generous pension and full benefits, for life. I watched as he amassed RV's, boats, jet ski's, Harley's, cars, etc. Living the life, as they say. At the same time, almost everyone on the same block got up at five or six in the morning to go to work every day. Office workers, customer service folks, a couple of engineers, a couple of doctors, I know them all. And, in my case, well, it was 18 hours a day 7 days a week in the garage working on developing a product. For two years the external view was that I didn't have a job or didn't go to work, when, in reality, I was doing the equivalent of five jobs and was working every waking hour. So, a couple of years later the product launches and it does very well. Seven figures per quarter very well. I decided it was time to replace our two cars, which had nearly 200K miles and were in bad shape. When the two mid-range (nothing fancy) cars appeared on my driveway the comments I got were, well, incredible. "Wow! You must have won the lottery!". "Dude! Did you rob a bank!". "You don't work, how did you buy these cars!". "Are you a drug dealer?". Nobody EVER made a comment about the fireman being set for life when he did not contribute a dime to his pension plan that paid him six figures a year and his gold-plated health plan. No, the entrepreneur was the "drug dealer" on the block. I created dozens of jobs through an incredible personal effort and sacrifice and somehow didn't deserve what I had. I was compared to the 99% purely based on my wealth. Funny how everyone sees people who make money as undeserving purely based on how much they make yet have no clue what it may have taken to get there and can't be bothered to ask. Please stop this nonsense of comparing the N percent to the M percent based on how much money they make or have. If you are going to do that, include HOW they got that money and, in particular, WHY the M percent couldn't be bothered to even try to do better, educationally or in business. Hint: You are not going to become wealthy working at McDonalds or, in general, working as a employee at 99.99% of companies. The only corner case being joining a startup that goes public and your stock options make you wealthy. Like I said, corner case. It's funny how people who often make the argument for this unfairness have their brains short-circuited when you ask them if it was unfair for Steve Jobs to become incredibly wealthy or, to use someone who's around today, Elon Musk.
paulddraper 11y ago
Capitalism does not trend toward equality. If you were expecting that, you were wrong. Capitalism trends towards greatest total utility (in the economics sense). Capitalism would prefer 10 people with $50 and one person with $1000 over 11 people with $10. We can't be surprised when that happens.
- gmac 11y ago
  Capitalism trends towards greatest total utility (in the economics sense) That's arguably a bit misleading, since greater equality gives greater utility, for a fixed-size pie. It's pretty well established that utility is approximately proportional to the log of monetary value. So in your example of what capitalism prefers, total utility would be significantly higher if the $1500 were distributed equally over the 11 people.
- JDiculous 11y ago
  > Capitalism trends towards greatest total utility (in the economics sense). No it doesn't. Having the majority of wealth concentrated in a few people who have way more than they'll ever need, many of that wealth being unearned (eg. rent seeking, inheritences), does not maximize total utility.
- cylinder 11y ago
  What is ultimately better for capitalism: $100 in capital held by each of 100,000 people, where chances are at least one will utilize the capital to invest in an innovative new idea or trade in a marketplace, or $10,000,000 held by 1 person, where chances are that person is an heir who plays videogames all day
  - johnchristopher 11y ago
    Socialism as a bootstrap for the American lottery dream, eh ?
- golemotron 11y ago
  I think the best way to look at Capitalism is as a popularity contest. Popular products win. When technology advances to the point that it doesn't take as much labor to produce them, there are high barriers to entry, and distribution and communication of popularity are frictionless, you end up where we are - massive inequality. Technology, i.e. 'increased economic efficiency' is the cause. It leads to a world where small players either become popular quickly or lose. And 99% of small players fall into the latter category. People don't see this. They complain about inequality while they sport their iPhone apparently unconcerned that they are contributing to inequality by buying a popular product from a company that is sitting on more cash than some nations. But will they buy a phone from a small hardware startup, allowing a diverse phone market to thrive, employing an order of magnitude more people? Nope. And yet they complain about inequality, totally ignorant of its systemic nature and their part in it.
dingdingdang 11y ago
> I wish the old Soviet Union was still around. The communist revolution scare put the fucking Fear of God into the capitalist class. This is to an odd degree very right, it also forced leaders in nearby countries to take their social responsibilities seriously which lead to the Scandinavian brand of Social Democracy (which is now eroding away due to the lack of any perceived 'real' solution on the left).
jcfrei 11y ago
> Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. Honestly, I don't think so. I believe we are merely returning to a state of the world that we've always been in - with the exception of the last 70 years or so. The existence of a large middle class is a distinct phenomenon of the 20th century, and specifically of the western countries. If I'm not mistaken then such a thing as a large middle class did never exist before anywhere else. It was always this heavily skewed distribution where 99% of the people own next to nothing compared to the 1%. I dont wan't to advocate for either of these two distributions here, just stating the historical context.
- mdorazio 11y ago
  This is actually a good point that I never considered. I'm trying to think of a historical counterpoint, but the best I can come up with is the pseudo-middle class of ancient Greece. All the other long-term civilizations seem to have been composed of a royalty-level class and everyone else, from ancient Egypt through Rome and the Middle Ages.
- nugget 11y ago
  One of my favorite Professors once made the point that in Soviet Russia you could replace ''political power'' with ''wealth'' and it became a very similar system to the West. By law no Russians owned any personal property but the 1% ruling class (and really the 1% of the 1%) had more political power than everyone else combined. It was a capitalist system that used political power as its currency instead of dollars, which meant it was much less efficient (and personally cruel in many cases), but still tended towards extreme inequality. As far as America today, aren't we ever just one election away from massive wealth redistribution? As the ranks of the ''educated poor'' swell at the expense of the middle class, and we transition from an ownership economy to a sharing economy (wherein the average person now rents a condo forever and uses on-demand transpo and other services and owns very few material possessions), and access to the polls is increased as voter suppression is decreased and the impact of social media is fully realized (inevitable at some point), then we are in for some interesting times.
Shorel 11y ago
A few heads roll, the world keeps churning. And that has nothing to do with religion. I'm a lot more afraid of our current endless population growth and the extinction of many marine species. When this happens, most mouths will starve instead of a few, and there's no one else to blame, it's everyone of us.
rmellow 11y ago
Could you clarify how the investment and job creation arguments fall flat? My view is that invested money does not magically compound: While invested cash may be directly applied to financial instruments, the amount invested changes hands many times, and generates extra liquidity in the market, and will eventually, indirectly be spent on the Real Economy endeavours, where it will generate productive jobs. If these endeavours are successful, they will generate dividends for those participating in the endeavour's risk. Ultimately, those guys who have no idea of the effects their "purely financial" investments had on the market, are indirectly paid by the real economy. All of this of course considers a fair playing market, which does not happen in practise: Manipulators are parasitic and should be combatted. Not being sarcastic: Please tell me where I'm wrong.

Houshalter 11y ago

Most that wealth only exists on paper sadly. If they were to actually withdraw it all at once and spend it, the value of the money itself would rapidly decrease. Likewise if you tried to tax all the wealth they are actually consuming, e.g. all their income or all their consumption, the amount doesn't come out so big either. IIRC it's between a few hundred and a few thousand dollars per person in the US.

js8 11y ago
But that's exactly a sign of the problem! The money represent abstract power, not specific goods and services. This IMHO runs completely against the idea of free market, and the expectation that people will either consume or invest, instead of saving money (in order to gain power by postponing the economic decision).
usrusr 11y ago
Yet ironically, the power derived from that wealth does not exist on paper, but is nonetheless very real.

vixen99 11y ago

I suppose you were either there and knew what it entailed or are clear on your facts? The Soviet Union at one late stage couldn't even supply sanitary towels for half its population and thus women had to tear up old clothes to take care of menstruation. But who cares as long as it put "the fucking Fear of God into the capitalist class". It didn't of course and thank goodness because the last 20 years of capitalism has seen the greatest decline in world poverty ever in the history of humanity. That's the result of letting individual humans make decisions about how they want to trade goods and services with other human beings. By the way, the Gini index ranks Bosnia, Ukraine, Ethiopia, Bangladesh, Egypt and Vietnam as more equal than the UK. But in which of these countries is it better to be poor?

danieldk 11y ago
I suppose you were either there and knew what it entailed or are clear on your facts? The Soviet Union at one late stage [...] I think you missed the point. As long as there was still socialist idealism in the hearts of a sizeable proportion of the Western population, there was always the fear of a revolt in your factory or even country. So, people with capital had to keep their workers happy. Now that virtually everyone in the West believes in the capitalist doctrine, not making it means that you are just a sucker who did not work hard enough, did not make the right choices, etc. So, you don't protest, you just work harder.
- ende 11y ago
  Huh. It would be a great irony if the realization became that capitalism and socialism need each other to thrive.
  - mercer 11y ago
    However tenuous the connection may be, this makes me thing of the central 'point' of the book Trying Not To Try. The author argues that societies oscillate between favoring conservative and 'liberal' values over time, and that neither extreme is ideal. In a way, perhaps capitalism can be seen as the 'liberal' side, where there is an explosion of development and innovation at the expense of stability, social cohesion and safety. Maybe our biggest long-term challenge is figuring out a way to maintain a balance and keep either 'side' from winning or at least stabilizing the oscillation a bit.
  - knughit 11y ago
    Is it ironic? Europe's great modern wealth is socialist capitalism. The original canonical work on capitalism, Adam Smith's "On the Wealth of Nations" lays this out clearly.

amelius 11y ago

Also, how can we expect companies to be not evil, when this is a winner-takes-all economy, where a move in favor of environment or society can result in the downfall of the company? Capitalism is said to promote competition, but in reality, eventually only one or two big companies survive in a certain market (see Google, Facebook, Amazon, &c). In my view, antitrust laws should be extended so that we can have more competition.

heimatau 11y ago

I hold a similar, not exact, position as you. Namely, the trickle down is bullshit part. But reading your comment made me think and question. The mega-elite's capital is growing due to their investments and it's showing no clear signs of slowing down [1]. How are they continuously extracting income of the middle and lower classes (and upper too)? How are they feeding their wealth at a mostly positive rate? Insider trading isn't enough to answer this question. Nor is stagnant wages because some sectors are paying well. I think if economists can state how the wealthy are getting wealthier, in a granular way, then maybe the masses can find a better way to fight back. I.e. there is excessive profits to reap and only the wealthy are finding it, let's expose it and use it to the masses advantage. [1] The great recession is a clear sign where the mega-elites came out with MORE wealth than before the bubble.

sokoloff 11y ago
I think you could go through the Forbes 100 list and ask "where did that money originally come from?" You'll find a lot of variance, but most of them boil down to: provided a good or service that people were willing to pay money for (meaning they preferred the good or service more than the money it cost them).
- heimatau 11y ago
  That only scratches the surface and I have done it. I think more through analysis needs to be done.
- stuaxo 11y ago
  Who, at the front end actually did that work, and how were they compensated ?
  - adventured 11y ago
    They were compensated based on whatever they agreed to. What beyond that should they get? And who would decide such an arbitrary thing - what government panel of bureaucrats should that be left to? At the very front-end is the founder, who typically works without pay as necessary, and typically works far harder than their employees, while shouldering far more responsibility. Millions of businesses get started under that exact scenario every decade. Employees get paid for their labor. An entrepreneur doesn't have such legal protections or guarantees and is paid for their risk (it's critical to note that 95%+ of all new businesses fail over five years). When I create something, I do so without taking a paycheck initially - perhaps for a very extended period of time. Try convincing an employee to do that at a routine job bagging groceries. If the employee didn't like it, they were welcome to go through the extremely difficult process of starting and building a successful business instead. It's dramatically more difficult to build a business to the point where you can earn $60,000 per year, than it is to get a job making $60,000 per year. Sam Walton didn't start out being rich. If his 37th employee didn't like the terms of employment, they were welcome to compete with him if they could. He contributed a million fold more to the business succeeding than any given grocery bagger, and also took on drastically more personal risk. Beyond that, the morality of it is such that the property of Wal-Mart belonged to Sam Walton, and there's no need for entrepreneurs like him to apologize for that ownership, it belongs to them fair and square (the sole counter argument is to say that violence should be used to steal property and to mostly or entirely abolish private property rights). If an employee wants their own property, then let them create it, and let them provide the money to pay employees for their labor.

koolba 11y ago

How about taxing wealth then? That way the 99.99% can reclaim back that money via mob rule.

koolba 11y ago
Question to the down voters: If you think this is a bad idea, how else do suggest we redistribute the pool of capital to something more evenly distributed? Oversimplifying a bit but the choices are either, 1) Tax income 2) Tax wealth 3) Seize wealth. Option #1 clearly isn't working as long term those with wealth (i.e. capital) grow their power, influence, and wealth further. Thus increasing the divide. Option #3 doesn't work because there's an inherent "unfairness" to arbitrarily seizing the assets of others. Option #2 has it's merits. Arguably a billionaire is getting a larger value from the security/tranquility of a peaceful existence than a pauper. Should the billionaire not pay more as a result? Think of it like negative interest rates but rather than doing it on just cash in the bank, it's on total assets. If I own a bunch of stores in a city, I arguably have more incentive to prevent riots and looting.
- JDiculous 11y ago
  (4) Tax land Land is the largest source of unearned revenue (rent-seeking). The more you tax of something, the less you get, usually to the detriment of society. The one thing this does not apply to is land. --- In theory I'm in support of taxing wealth and much prefer that to taxing income, but it's just too unrealistic. Wealth is so easy to hide (eg. offshore) and hard to value (since it's more than just counting money in the bank). The only plausible way I could see us taxing wealth effectively is if the world collectively got rid of physical cash and implemented negative interest rates on currency, but obviously that's not happening anytime soon.
  - koolba 11y ago
    What about non-land based wealth? Say an empire of digital services running on virtual servers in a data center owned by a service provider?

amluto 11y ago

Complaints about the carried interest issue bug me. (It's not an exception -- it's just how partnerships work.) IMO the problem has nothing to do with carried interest or hedge funds in particular. I think the real issue is our bizarre idea that certain types of income (long-term capital gains) are special and should be taxed less. Hedge funds (and only the kind that generate long-term gains) are just easy things to pick on. Have you noticed that pretty much every large corporation carefully avoids corporate taxes and arranges for its principals' income to be mostly long-term capital gains or qualified dividends? It's the same failure mode, minus the hedge fund. So yes, I think Congress should fix the problem, but I don't think that carried interest is the problem.

drawkbox 11y ago
In a perfect game system you'd probably make labor income taxes less than capital gains on investment. Yes you want to encourage investment but you also want to feed the economy with monetary velocity or cash money. The fact is lower/middle class labor income workers put more directly back into the economy than the wealthy "job creators", so who are the real job creators? Demand is the job creator! Demand comes from people that spend having cash. Capital locked up in hoarding does not help the economy as much especially in downturns. Lower/middle class spend almost all their incremental income dollar while the rich typically spend less than 5% of each incremental dollar. If the lower/middle class has cash then you have demand, demand leads to investment, and jobs/growth.
- Anonobread 11y ago
  > In a perfect game system you'd probably make labor income taxes less than capital gains on investment Indeed you would [1]. According to some legal scholars, wages earned from labor were/are not supposed to be taxed at all in America. The tax code was designed to tax investment gains only. Just imagine if that were upheld > The fact is lower/middle class labor income workers put more directly back into the economy than the wealthy "job creators" By doing what? Consuming consumables marketed to them by Corporations? The same Corporations that would just as soon replace most of their menial labor with robots. Also, I'd curb your exuberance towards believing the lower/middle class "puts more back into the economy", because to the extent the lower/middle class is increasingly replaced by robots or cheap foreign labor, if this is your true belief then we should institute a universal income. Because that's going to "put more back into the economy". > Demand comes from people that spend But for example, planned obsolescence encourages spending. But is planned obsolescence really a tangible benefit for the "people that spend"? Also, imagine if "cash" was of fixed supply (Bitcoin) rather than inflationary. In which case, you could make paper gains over time by not spending it or investing it. Wouldn't this provide more people with financial security given the risks and complexity of investing money in general? [1]: https://en.wikipedia.org/wiki/Tax_protester_statutory_arguments https://en.wikipedia.org/wiki/Tax_protester_statutory_argume...

skylan_q 11y ago

Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. All the arguments about investment and job creators falls flat; we have gobs and gobs of excess capital desperately seeing some productive investment. Capitalists don't need any more capital at the moment. The wealth they have isn't doing nothing. It's in investments. Secondly, if it was in nothing, that would only reduce the velocity of money, effectively making your money worth more. You could spread that money around, but the likely result of that is less investment and more consumption.

ap22213 11y ago
And, yet, long-term economic growth forecasts are the lowest that they've been in a really long time.
vkou 11y ago
Consumption drives investment. Why on earth would you spend 10 million dollars to build a widget factory, when nobody has the money to buy widgets?
- skylan_q 11y ago
  Consumption drives investment. There's always demand. Savings fund investment. The more savings there are, the cheaper it is to find funds for investing in a project. The cheaper the capital expenditure, the easier it is to turn a profit. Or are you talking about the paradox of thrift?
  - vkou 11y ago
    The first thing you do before investing in a new market is asking the question: "What's the return on this? Will anyone buy the things I'm selling? Are the margins positive?" Having a lot of money searching for an investment won't do you any good when your widget factories don't have customers. Yes, borrowing money to build the factory will be cheap - but you still expect the factory to produce a return on your investment!

jeffbax 11y ago

It's kind of absurd to blame capitalism, when the vast majority of countries implicated are nothing close. Calling Russia or China capitalist is laughable, they are oligarchies greasing the wheels at every turn with extreme levels of corruption. The US and others aren't immune, but your entire post is ridiculous. These are nations where the government officials pull all the strings, there's nothing free market about that at all.

jonathankoren 11y ago
A true Scotsman always pays his taxes!

apineda 11y ago

Personally my issue is lack of freedom in choosing currency. What if I don't want to use CAD in my store, but something else, something more local. It says a lot when as a Canadian I'm not free to choose what kind of money to trade in. What if I don't trust those who manage the currency? Additionally, a TON of cash is being siphoned into redistribution programs aka grants, social, etc plus their supreme administration costs. This money is making the bureaucrats rich and the people at the bottom doing the labor with less wealth to invest. I still believe there are the political capitalists and the market capitalists, we need more of the latter and more transparency as to who exactly is the latter in order to understand who is really contributing.

spoonie 11y ago
I'm not aware of the CRA disallowing you from doing business in USD/EUR/GBP? And you can open bank accounts in those currencies right inside of Canada (have done it myself for GBP, USD).

deleted 11y ago

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rebootthesystem 11y ago

> Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. Nothing is wrong or broken. Have that other 90% start and run their own businesses or go to school and get a degree in business that allows them to become a C level exec or invent a product and launch a startup. 90% of the people on this planet don't do SHIT. Because doing shit is HARD. Most are content working for someone who's willing to take risks, often with consequences to their own personal lives. And that's OK. There's nothing wrong with that. Not everyone can be an entrepreneur or C level exec. Most people prefer simpler life. For nearly a decade I lived across the street from a retired fireman. He put twenty years or so on the job and retired with a very generous pension and full benefits, for life. I watched as he amassed RV's, boats, jet ski's, Harley's, cars, etc. Living the life, as they say. At the same time, almost everyone on the same block got up at five or six in the morning to go to work every day. Office workers, customer service folks, a couple of engineers, a couple of doctors, I know them all. And, in my case, well, it was 18 hours a day 7 days a week in the garage working on developing a product. For two years the external view was that I didn't have a job or didn't go to work, when, in reality, I was doing the equivalent of five jobs and was working every waking hour. So, a couple of years later the product launches and it does very well. Seven figures per quarter very well. I decided it was time to replace our two cars, which had nearly 200K miles and were in bad shape. When the two mid-range (nothing fancy) cars appeared on my driveway the comments I got were, well, incredible. "Wow! You must have won the lottery!". "Dude! Did you rob a bank!". "You don't work, how did you buy these cars!". "Are you a drug dealer?". Nobody EVER made a comment about the fireman being set for life when he did not contribute a dime to his pension plan that paid him six figures a year and his gold-plated health plan. No, the entrepreneur was the "drug dealer" on the block. I created dozens of jobs through an incredible personal effort and sacrifice and somehow didn't deserve what I had. I was compared to the 99% purely based on my wealth. Funny how everyone sees people who make money as undeserving purely based on how much they make yet have no clue what it may have taken to get there and can't be bothered to ask. Please stop this nonsense of comparing the N percent to the M percent based on how much money they make or have. If you are going to do that, include HOW they got that money and, in particular, WHY the M percent couldn't be bothered to even try to do better, educationally or in business. Hint: You are not going to become wealthy working at McDonalds or, in general, working as a employee at 99.99% of companies. The only corner case being joining a startup that goes public and your stock options make you wealthy. Like I said, corner case. It's funny how people who often make the argument for this unfairness have their brains short-circuited when you ask them if it was unfair for Steve Jobs to become incredibly wealthy or, to use someone who's around today, Elon Musk.

paulddraper 11y ago

Capitalism does not trend toward equality. If you were expecting that, you were wrong. Capitalism trends towards greatest total utility (in the economics sense). Capitalism would prefer 10 people with $50 and one person with $1000 over 11 people with $10. We can't be surprised when that happens.

gmac 11y ago
Capitalism trends towards greatest total utility (in the economics sense) That's arguably a bit misleading, since greater equality gives greater utility, for a fixed-size pie. It's pretty well established that utility is approximately proportional to the log of monetary value. So in your example of what capitalism prefers, total utility would be significantly higher if the $1500 were distributed equally over the 11 people.
JDiculous 11y ago
> Capitalism trends towards greatest total utility (in the economics sense). No it doesn't. Having the majority of wealth concentrated in a few people who have way more than they'll ever need, many of that wealth being unearned (eg. rent seeking, inheritences), does not maximize total utility.
cylinder 11y ago
What is ultimately better for capitalism: $100 in capital held by each of 100,000 people, where chances are at least one will utilize the capital to invest in an innovative new idea or trade in a marketplace, or $10,000,000 held by 1 person, where chances are that person is an heir who plays videogames all day
- johnchristopher 11y ago
  Socialism as a bootstrap for the American lottery dream, eh ?
golemotron 11y ago
I think the best way to look at Capitalism is as a popularity contest. Popular products win. When technology advances to the point that it doesn't take as much labor to produce them, there are high barriers to entry, and distribution and communication of popularity are frictionless, you end up where we are - massive inequality. Technology, i.e. 'increased economic efficiency' is the cause. It leads to a world where small players either become popular quickly or lose. And 99% of small players fall into the latter category. People don't see this. They complain about inequality while they sport their iPhone apparently unconcerned that they are contributing to inequality by buying a popular product from a company that is sitting on more cash than some nations. But will they buy a phone from a small hardware startup, allowing a diverse phone market to thrive, employing an order of magnitude more people? Nope. And yet they complain about inequality, totally ignorant of its systemic nature and their part in it.

dingdingdang 11y ago

> I wish the old Soviet Union was still around. The communist revolution scare put the fucking Fear of God into the capitalist class. This is to an odd degree very right, it also forced leaders in nearby countries to take their social responsibilities seriously which lead to the Scandinavian brand of Social Democracy (which is now eroding away due to the lack of any perceived 'real' solution on the left).

jcfrei 11y ago

> Something is wrong and broken with "modern capitalism" if a mere 90,000 people have more wealth than 90% of the planet. Honestly, I don't think so. I believe we are merely returning to a state of the world that we've always been in - with the exception of the last 70 years or so. The existence of a large middle class is a distinct phenomenon of the 20th century, and specifically of the western countries. If I'm not mistaken then such a thing as a large middle class did never exist before anywhere else. It was always this heavily skewed distribution where 99% of the people own next to nothing compared to the 1%. I dont wan't to advocate for either of these two distributions here, just stating the historical context.

mdorazio 11y ago
This is actually a good point that I never considered. I'm trying to think of a historical counterpoint, but the best I can come up with is the pseudo-middle class of ancient Greece. All the other long-term civilizations seem to have been composed of a royalty-level class and everyone else, from ancient Egypt through Rome and the Middle Ages.
nugget 11y ago
One of my favorite Professors once made the point that in Soviet Russia you could replace ''political power'' with ''wealth'' and it became a very similar system to the West. By law no Russians owned any personal property but the 1% ruling class (and really the 1% of the 1%) had more political power than everyone else combined. It was a capitalist system that used political power as its currency instead of dollars, which meant it was much less efficient (and personally cruel in many cases), but still tended towards extreme inequality. As far as America today, aren't we ever just one election away from massive wealth redistribution? As the ranks of the ''educated poor'' swell at the expense of the middle class, and we transition from an ownership economy to a sharing economy (wherein the average person now rents a condo forever and uses on-demand transpo and other services and owns very few material possessions), and access to the polls is increased as voter suppression is decreased and the impact of social media is fully realized (inevitable at some point), then we are in for some interesting times.

Shorel 11y ago

A few heads roll, the world keeps churning. And that has nothing to do with religion. I'm a lot more afraid of our current endless population growth and the extinction of many marine species. When this happens, most mouths will starve instead of a few, and there's no one else to blame, it's everyone of us.

rmellow 11y ago

Could you clarify how the investment and job creation arguments fall flat? My view is that invested money does not magically compound: While invested cash may be directly applied to financial instruments, the amount invested changes hands many times, and generates extra liquidity in the market, and will eventually, indirectly be spent on the Real Economy endeavours, where it will generate productive jobs. If these endeavours are successful, they will generate dividends for those participating in the endeavour's risk. Ultimately, those guys who have no idea of the effects their "purely financial" investments had on the market, are indirectly paid by the real economy. All of this of course considers a fair playing market, which does not happen in practise: Manipulators are parasitic and should be combatted. Not being sarcastic: Please tell me where I'm wrong.