5 ms·

While, overall, I enjoyed reading this post, I feel that this statement - > 1 in 10 dollars of income produced in this country is paid out to the richest 1% wi

by dvdhnt 10y ago

While, overall, I enjoyed reading this post, I feel that this statement - > 1 in 10 dollars of income produced in this country is paid out to the richest 1% without them having to work for it. is misleading. I think this type of attitude makes it more difficult to find common ground. Yes, that income is not produced through recent work, but it is produced as a bi-product of previous work. The issue is that once a person accumulates enough wealth, the difficulty to generate value falls while the opportunities to do so rise.

crooked-v 10y ago
You've overlooked how much of this wealth is inherited across generations.
- smokeyj 10y ago
  That means they're preserving it and reinvesting it so more wealth can be created. This is a good thing.
  - stretchwithme 10y ago
    If we consumed all of that nasty wealth, there'd be none to borrow to get a house or education. None for startups. People get rich by not consuming everything as soon as they get it. This is a great thing for everybody. And it's not just rich that accumulate. A person making minimum wage and just saving the same amount withheld by the US social security tax would have hundreds of thousands of dollars accumulated if they kept it in the stock market for their entire working career. I was curious about this a few years ago and put together this spreadsheet, using this tax rate, rate of return and minimum wage over a 40 year period. https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5avibx_DqZEXIZk-Wd9SpSIc/edit?usp=sharing https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5...
  - chromatic 10y ago
    What's the marginal propensity to consume and the velocity of those dollars?
- dcherman 10y ago
  That's what the Estate Tax is for. There are ways to circumvent that via things like charitable foundations, however that's a very different debate. The author is confusing income from dividends (either of the stock or bond variety) and interest income with income simply for existing. He chooses to use Alaska, an oil rich and low population state, as a model for the rest of the country. He states that the government would somehow build up a "big wealth fund" that would deliver "returns" without specifying where those returns would come from or the amount of those returns. A fund of the size required can't easily generate large returns since that amount of money is enough to distort markets. Simple back of the napkin math is that based on the 2013 census, we have 242,470,820 adults living in the US. If we pay each of them $12,000 per year, that's $2,909,649,840,000 in additional mandatory spending every single year. That's more than Medicare and Social security combined, and that has no cost of living adjustments built in. The basic math shows that this idea is simply unrealistic as far as I can tell.
  - jljljl 10y ago
    There's a few assumptions built into your basic math. Does the benefit need to be $12,000/year? Can we phase out Social Security ($888B) Health Care spending ($602B) and other safety net services ($362B) as we phase in basic income? Setting the annual benefit to an average of $7,000 and phasing out other safety net services get's the basic math a lot closer, while theoretically helping more people than the current system. I'm not saying Basic Income is a definite win, but back of the envelope assumptions are usually too simple to dismiss or validate an idea.
    - jimmyswimmy 10y ago
      Your proposal gets the math a lot closer, although I thought social security paid more than 7k/yr... so now grandma has to take a haircut on her income and pay for Healthcare out of pocket too. I'm no social security lover but that seems extreme. The allure of UBI is interesting but I've never figured out how the math works out without making sizable reductions in quality of life for significant chunks of the population. The money has to come from somewhere... I think UBI works out to be worse than zero sum economically. Anyway I've always been a firm believer that if you can't come up with a compelling and largely accurate back of the envelope justification for your story, you're not going to get many adherents.
- djrogers 10y ago
  Perhaps that's becuse it's not true? 80% of American millionaires are first generation rich, meaning only one in five of them have inherited their wealth. Setting that fact aside, why should my work not directly benefit my children? Providing for ones offspring is a universal motivation. [1] http://www.investopedia.com/financial-edge/0810/7-millionaire-myths.aspx http://www.investopedia.com/financial-edge/0810/7-millionair...
  - jljljl 10y ago
    Being a millionaire does not include you in the top 1% these days: http://www.cleveland.com/business/index.ssf/2016/03/us_millionaires_club_adds_3000.html http://www.cleveland.com/business/index.ssf/2016/03/us_milli... "More than 10 million U.S. households have a net worth of $1 million or more, a record high representing nearly 9 percent of all households in the country. That may sound like a small percentage, but it's one in 11 households. Instead of leading an extravagant life filled with luxuries and indulgences, a millionaire could be in your neighborhood." To be in the top 1%, you need to have a net worth somewhere between $5M - $25M (1.2 million households out of 124 million in the US)
- adnzzzzZ 10y ago
  You've formed your opinion without looking at data. 80% of millionaires are self-made. 60-70% of billionaires are self-made.

by dvdhnt 10y ago

crooked-v 10y ago

You've overlooked how much of this wealth is inherited across generations.

smokeyj 10y ago
That means they're preserving it and reinvesting it so more wealth can be created. This is a good thing.
- stretchwithme 10y ago
  If we consumed all of that nasty wealth, there'd be none to borrow to get a house or education. None for startups. People get rich by not consuming everything as soon as they get it. This is a great thing for everybody. And it's not just rich that accumulate. A person making minimum wage and just saving the same amount withheld by the US social security tax would have hundreds of thousands of dollars accumulated if they kept it in the stock market for their entire working career. I was curious about this a few years ago and put together this spreadsheet, using this tax rate, rate of return and minimum wage over a 40 year period. https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5avibx_DqZEXIZk-Wd9SpSIc/edit?usp=sharing https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5...
- chromatic 10y ago
  What's the marginal propensity to consume and the velocity of those dollars?
dcherman 10y ago
That's what the Estate Tax is for. There are ways to circumvent that via things like charitable foundations, however that's a very different debate. The author is confusing income from dividends (either of the stock or bond variety) and interest income with income simply for existing. He chooses to use Alaska, an oil rich and low population state, as a model for the rest of the country. He states that the government would somehow build up a "big wealth fund" that would deliver "returns" without specifying where those returns would come from or the amount of those returns. A fund of the size required can't easily generate large returns since that amount of money is enough to distort markets. Simple back of the napkin math is that based on the 2013 census, we have 242,470,820 adults living in the US. If we pay each of them $12,000 per year, that's $2,909,649,840,000 in additional mandatory spending every single year. That's more than Medicare and Social security combined, and that has no cost of living adjustments built in. The basic math shows that this idea is simply unrealistic as far as I can tell.
- jljljl 10y ago
  There's a few assumptions built into your basic math. Does the benefit need to be $12,000/year? Can we phase out Social Security ($888B) Health Care spending ($602B) and other safety net services ($362B) as we phase in basic income? Setting the annual benefit to an average of $7,000 and phasing out other safety net services get's the basic math a lot closer, while theoretically helping more people than the current system. I'm not saying Basic Income is a definite win, but back of the envelope assumptions are usually too simple to dismiss or validate an idea.
  - jimmyswimmy 10y ago
    Your proposal gets the math a lot closer, although I thought social security paid more than 7k/yr... so now grandma has to take a haircut on her income and pay for Healthcare out of pocket too. I'm no social security lover but that seems extreme. The allure of UBI is interesting but I've never figured out how the math works out without making sizable reductions in quality of life for significant chunks of the population. The money has to come from somewhere... I think UBI works out to be worse than zero sum economically. Anyway I've always been a firm believer that if you can't come up with a compelling and largely accurate back of the envelope justification for your story, you're not going to get many adherents.
djrogers 10y ago
Perhaps that's becuse it's not true? 80% of American millionaires are first generation rich, meaning only one in five of them have inherited their wealth. Setting that fact aside, why should my work not directly benefit my children? Providing for ones offspring is a universal motivation. [1] http://www.investopedia.com/financial-edge/0810/7-millionaire-myths.aspx http://www.investopedia.com/financial-edge/0810/7-millionair...
- jljljl 10y ago
  Being a millionaire does not include you in the top 1% these days: http://www.cleveland.com/business/index.ssf/2016/03/us_millionaires_club_adds_3000.html http://www.cleveland.com/business/index.ssf/2016/03/us_milli... "More than 10 million U.S. households have a net worth of $1 million or more, a record high representing nearly 9 percent of all households in the country. That may sound like a small percentage, but it's one in 11 households. Instead of leading an extravagant life filled with luxuries and indulgences, a millionaire could be in your neighborhood." To be in the top 1%, you need to have a net worth somewhere between $5M - $25M (1.2 million households out of 124 million in the US)
adnzzzzZ 10y ago
You've formed your opinion without looking at data. 80% of millionaires are self-made. 60-70% of billionaires are self-made.