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Uh, because we are all collectively being fleeced by a ruling class extracting obscene amounts of wealth from our work without doing anything useful themselves.
by s_kilk 9y ago
Uh, because we are all collectively being fleeced by a ruling class extracting obscene amounts of wealth from our work without doing anything useful themselves.
Never fool yourself into thinking you'll get anything back from these vampires.
- IanDrake 9y agoSo if you were given 25 million dollars you would automagically make obscene amounts of money with no effort? History shows otherwise with a very high rate of bankruptcies from lottery winners.
- maxerickson 9y agoYou could make $300,000-$400,000 per year putting that in CDs. In the top 1 or 2% of households by income for pretty much doing nothing. Maybe not a literally obscene income though.
- IanDrake 9y agoI must not have made my point well. Sure, you could do that and maybe you would. However, most people who didn't earn their money don't. Most of those same people think the rich "do nothing" and make money. It's this kind of ignorance that causes bullshit class warfare where it doesn't exist.
- maxerickson 9y agoAre lottery winners the majority among people that don't earn their money?
- IanDrake 9y agoNo, but they are a good example because they are usually not accustom to wealth and thus more likely to believe (like the OP) that wealthy people just sit on a pile of cash and buy exotic sports cars while doing hookers and blow 24/7. You don't often hear wealthy people complain about other wealthy people because they know how hard it is to stay wealthy. It is a skill to make money with money.
- maxerickson 9y agoYou switched to a statistical argument (However, most people who didn't earn their money don't.), you need statistical evidence, not examples.
- IanDrake 9y ago"70 percent of people who come into sudden money are broke within a few years, according to the National Endowment for Financial Education." Now do we get to argue over the source? Does it somehow not fit your world view that managing wealth is real work?
- maxerickson 9y agoIt takes discipline to not just piss away a million dollars (the sorts of windfalls that claim includes), it doesn't take enormous effort to set it up in low risk assets that yield income. As a cousin comment points out, it is even possible to buy management services.
- IanDrake 9y agoBut now I have 25 million and I've heard: - Dump it into the SP500 - Dump it into CDs - Give it to a money manager and hope for the best. If it doesn't work out at least you can blame him/her. Who's advise to take? It's really starting to astonish me the financial ingnorance on HN which must be attributed to younger folks who had no skin in the game in 2000 or 2007 and think investing is easy.
- jazzyk 9y agoA lot (not all) of rich people who inherited money actually do nothing, they have money people managing their wealth (for a good cut of the profits). And making money on your capital in a perma-bull stock market (casino?), engineered by the Fed is not that complicated.
- IanDrake 9y agoThe inheritors you speak of aren't making money with money, they are spending money and will have none when they're done. I don't think I ever claimed that wasn't easy. >"Perma-bull stock market". Uhg. If it were only that easy. Making money on paper is easy right? Any idiot can see through every little dip in the market over the last ten years and not get rattled and ride it all the way to the top and then have the 6th sense to see the next dip for what it is, a crash, and move all their money to another asset class just before it happens. No, that's not what happens. People ride it all the way back down and often end up with less than they started with. Then someone who knows very little about investing tells them, at least you should make 8% on average historically as consolation. Tell me when to yank my money out if it's so easy. It's not. A correction is coming, but when, how will I know, and what to do when it does?
- klibertp 9y agoWhat? "Ruling class" is not about how much you currently have, but how you got what you have and what are your means of obtaining more in the future. Winning a lottery is a one time happening, and we can write it off as a balance for the random chance of getting hit by a car.
- IanDrake 9y agoOk, let's see where this leads. How did the "ruling class" get their money and what is their means of obtaining more in the future? I certainly want in on it.
- aninhumer 9y agoYes, one could put it in an S&P index fund and by all historical trends, they would make an average of 2 million per year (8%) without doing anything. That is an obscene amount of money. Or if you're more conservative, you could put it in bonds and still be making many times the average salary, still without doing anything. (And lottery participants are highly likely to be less well informed about managing money, since otherwise they wouldn't be lottery participants.)
- IanDrake 9y agoYou're not factoring in market timing and drawdowns. Average is great if you're living 10 lives at 10 different moments in history, but we only get one. Put 25 million in the S&P 500 (qqq) in March of 2000 and draw 2 million a year on it. You are out of money inside of 4 years. There is no 100% safe place to stick that much money and live off of it. The world is too dynamic and it takes real skill and work to make money work for you.
- aninhumer 9y agoAs far as I can see, QQQ seems to perform a fair bit worse than the S&P 500 itself? Maybe it's an unfair metric, or maybe it's just a fair commentary about the risks of index funds. But in any case, I said you'd make that much on average, not that you could withdraw that much every year. In reality, you would draw down a smaller fraction of that (but still an immense salary for no work). And since your capital would be growing on average, you could increase your drawdown over time accordingly.
- IanDrake 9y agoSorry, how does one invest in the SP500 with "no work" without using an index fund? I need to draw 2 million a year because my Porsche, Hummer, NetJets subscription, mansion and constant vacations are expensive and you said I'd have 2mill on average. I don't work and I need to pay these bills with my 8% average. So what do you recommend I do in 2001? I'm supposed to be living large like you promised but the market tanked. Am I now supposed to live off of 100k when you said 2 million? I already bought this stuff on a payment plan! Seriously, think about it. You have 25 million and someone tells you you'll make 8% on average, but you can't actually spend it? Try to really think what you could do with 25 million and no effort. Not much.
- psyc 9y agoI completely agree that there is a ruling class, and that they extract an obscene amount of rent just because they can. I also happen to think they create a ton of value. I just don't believe that justifies them making us 'human capital'.
- jazzyk 9y agoExplain to me the "value" of Goldman Sachs telling their customers to buy derivatives, while shorting them at the same time. Pretty please.
- Karunamon 9y agoOne, or even many examples of bad behavior does not invalidate the general argument of the wealthy creating value. Don't forget you're on a site owned by wealthy people whose day job is giving money to other people to bootstrap their companies. You don't get much more creating value than that.
- sambull 9y agoCreating that value destroys the earth.
- Pica_soO 9y agoBeggars cant be choosers. You forgot to demonize the opposition as lazy welfare riders. :D To add a little meat to this vampire of a political exchange. Nobody is interested in the usual defense mechanisms.. lets open the hard shell and look at the heart. And here it is: "I know you are right, but i have just so much invested into the current system, and can with my family at debt-gunpoint mount no enthusiasm as i could once when i was a tweenager. Why should i throw my hat in a ring, who as history shows often tramples hats and wearers on both sides? And how many couch revolutionary's are there, who wave the banner on the internet, but would throw a fit, if somebody would occupy their parking lot in real life. "
- jazzyk 9y agoA few issues though: - more and more capital is being tied up in parasitic activity (encouraged by monetary and fiscal policies), instead of being invested in startups, infrastructure, etc. - all profits/capital gains are distributed to capital holders (out of proportion)
- hyperpape 9y agoWe had a ruling class in the 90s as well, but wages increased. So the question is what is different about today?
- spiralpolitik 9y agoThe ruling class is much greedier than they were in the 90s.
- s_kilk 9y agoThey also have concrete proof (by way of the reaction to the 2008 crisis) that they have essentially unlimited license to be as greedy as they like, and the public will just take it.
- logfromblammo 9y agoA modern Robespierre might know that his Thermidor is coming, but if you push him far enough, he might grow to believe that price is a bargain. Were I in the ownership class, I wouldn't exactly try to temper my avarice in absolute terms, but I would at least try to remain less conspicuously wealthy than my peers. As they say, you don't need to outrun the tiger, if you can outrun your friend.
- jazzyk 9y agoGlobalization is a wet dream for the ruling class: - global demand markets to sell to - global labor markets to pick from I guess saying that makes me a xenophobe or some such, but I guess I will have to live with it :-)
- openasocket 9y agoI am of the opinion that globalization is unfairly maligned. Globalization increases competition and consumer choice, which drives down prices and spurs innovation to compete. Tariffs do nothing but put up barriers to entry into certain marketplaces and favoring certain companies. Globalization seeks simply to level the playing field. Companies may benefit from increased access to new markets and cheaper sources of goods and labor, but the consumer benefits as well with better products at cheaper prices. Developing nations have benefited by being able to open their doors to foreign investment. Companies pay these workers a pittance relative to workers in the developed nation, but more than those workers would be able to make otherwise. Companies also invest money into infrastructure and education in these nations. The standard of living in developing nations that have entered the global marketplace has improved dramatically. And increased international trade binds nations together, reducing international conflict. Globalization can stop wars! Globalization is not perfect, it has problems. It has hurt certain groups in the developed world, and things must be done to balance the situation. But it is still an impressive force for good that benefits a wide array of groups, and I don't like it when people just write it off.
- trueSlav 9y agoThe only question that remains is if you're just a scummy marxist or a full blown communist. #itwasjustbadlyimplemented #castrowasachampionofsocialjustice