7 ms·

People do like free shit. This is why the wealthy like being wealthy. They get to live comfortable lives while their money earns them more money.

brbsix 10y ago
That's like saying "This is why farmers like being fed. They get to live comfortable lives while their crop earns them more crop." Your money doesn't earn you more money doing nothing. In a free market, you need to use it efficiently and in a way that provides value to other people. If you are careless or unlucky you will lose it. To clarify, it's not free money.
- notahacker 10y ago
  Over a certain wealth threshold, it takes overambitious or actively destructive portfolio management to not receive more real interest on it than a highly skilled professional can expect to earn in salary for working regular hours. (including the highly skilled professional that's being paid to manage the money)
- aninhumer 10y ago
  Yes, the money is doing something, but its owners are not. Sure, they have to decide how to invest it, but how difficult is that really? Markets have long trended upwards, so any reasonably diverse portfolio is likely to do just fine, and many of the wealthy can even afford someone to do that for them. And even if they were making decisions for themselves, the amount they earn is primarily based on the amount they have to invest, not the quality of their choices. Are the choices of someone who earns 1% on $1billion really 100x as valuable to society as someone who earns 10% on $1million?
ArkyBeagle 10y ago
The wealthy make money in one of two ways ( most likely a mix ). We munge these two together in the concept "profit". If the wealthy make money by consumer surplus, then that money is honorably had and we want them to make more of it. They are doing well by doing good. If the money is made by rent-seeking, then we should tax it. Now all you have to do is figure out rent-seeking. :)
- aninhumer 10y ago
  Perhaps this is your point, but what exactly is the difference? Whether you're building a factory or building a house, you're you're getting a regular income as a reward for creating utility generating capacity. What makes one honourable, and the other "rent-seeking"?
  - ArkyBeagle 10y ago
    "Honorable" means "creates consumer surplus". Rents are complicated to talk about, but the canonical example from Ricardo is land that is worth more because of where it is causing it to be more productive. Take a parking lot in Manhattan - it'll be worth more and derive more income than the same area in Kansas farmland. The owner does nothing to add this value - the value is created by the other people and buildings surrounding this parking lot. Since this value is socially created, it's more justifiable to tax it on behalf of that society. Since our alternative is to tax labor, it seems more equitable to tax rents. This might be a problem with say, Micheal Jordan, who trades on his name for income that's pretty clearly his but it's still income from rents - the desire of others to use his fame creates the value, not anything he does in particular. Nobody said this has to be easy.
    - aninhumer 10y ago
      And a factory which produces cars becomes more valuable than one that produces buggies without the owner doing anything either. Why is realising that people are going to want cars in future more valuable than realising people are going to want parking in Manhattan in future? EDIT: IMO the problem is that the rewards for creating capital are indefinite, and that this just becomes more noticeable when you're talking about housing.
      - ArkyBeagle 10y ago
        No, the choice to produce cars is not nothing. It's an act; owning land ( as opposed to buying it ) is not an act. Yes, there's a certain uncomfortable similarity to physiocracy. Like I say, it's not a really easy thing to reason about. I can't really do it either past a rudimentary level. Your example "parking in Manhattan" is pretty good, but the car itself provides its own utility. The utility for the parking lot is proved from others owning cars. Likewise, gasoline provides its own utility. But oil underground? Probably rents. Rents-thinking comes from Ricardo, but it's strongly associated with Henry George. Fascinating guy; "Poverty and Progress" is a worthy read.

brbsix 10y ago

That's like saying "This is why farmers like being fed. They get to live comfortable lives while their crop earns them more crop." Your money doesn't earn you more money doing nothing. In a free market, you need to use it efficiently and in a way that provides value to other people. If you are careless or unlucky you will lose it. To clarify, it's not free money.

notahacker 10y ago
Over a certain wealth threshold, it takes overambitious or actively destructive portfolio management to not receive more real interest on it than a highly skilled professional can expect to earn in salary for working regular hours. (including the highly skilled professional that's being paid to manage the money)
aninhumer 10y ago
Yes, the money is doing something, but its owners are not. Sure, they have to decide how to invest it, but how difficult is that really? Markets have long trended upwards, so any reasonably diverse portfolio is likely to do just fine, and many of the wealthy can even afford someone to do that for them. And even if they were making decisions for themselves, the amount they earn is primarily based on the amount they have to invest, not the quality of their choices. Are the choices of someone who earns 1% on $1billion really 100x as valuable to society as someone who earns 10% on $1million?

ArkyBeagle 10y ago

The wealthy make money in one of two ways ( most likely a mix ). We munge these two together in the concept "profit". If the wealthy make money by consumer surplus, then that money is honorably had and we want them to make more of it. They are doing well by doing good. If the money is made by rent-seeking, then we should tax it. Now all you have to do is figure out rent-seeking. :)

aninhumer 10y ago
Perhaps this is your point, but what exactly is the difference? Whether you're building a factory or building a house, you're you're getting a regular income as a reward for creating utility generating capacity. What makes one honourable, and the other "rent-seeking"?
- ArkyBeagle 10y ago
  "Honorable" means "creates consumer surplus". Rents are complicated to talk about, but the canonical example from Ricardo is land that is worth more because of where it is causing it to be more productive. Take a parking lot in Manhattan - it'll be worth more and derive more income than the same area in Kansas farmland. The owner does nothing to add this value - the value is created by the other people and buildings surrounding this parking lot. Since this value is socially created, it's more justifiable to tax it on behalf of that society. Since our alternative is to tax labor, it seems more equitable to tax rents. This might be a problem with say, Micheal Jordan, who trades on his name for income that's pretty clearly his but it's still income from rents - the desire of others to use his fame creates the value, not anything he does in particular. Nobody said this has to be easy.
  - aninhumer 10y ago
    And a factory which produces cars becomes more valuable than one that produces buggies without the owner doing anything either. Why is realising that people are going to want cars in future more valuable than realising people are going to want parking in Manhattan in future? EDIT: IMO the problem is that the rewards for creating capital are indefinite, and that this just becomes more noticeable when you're talking about housing.
    - ArkyBeagle 10y ago
      No, the choice to produce cars is not nothing. It's an act; owning land ( as opposed to buying it ) is not an act. Yes, there's a certain uncomfortable similarity to physiocracy. Like I say, it's not a really easy thing to reason about. I can't really do it either past a rudimentary level. Your example "parking in Manhattan" is pretty good, but the car itself provides its own utility. The utility for the parking lot is proved from others owning cars. Likewise, gasoline provides its own utility. But oil underground? Probably rents. Rents-thinking comes from Ricardo, but it's strongly associated with Henry George. Fascinating guy; "Poverty and Progress" is a worthy read.