17 ms·

World's richest 500 see their wealth increase by $1T this year

188 points by rstoj 9y ago

twoodfin 9y ago
This article provides paragraph after paragraph of supporting data that the richest have gotten richer, but none that I can see supporting its claim that “billions of poorer people across the world have seen their wealth standstill or decline”.
- notyourwork 9y ago
  Is it possible for everyone’s wealth to increase? I think they might be assuming this is not possible and there if richest wealth increases by this much it had to come from the rest?
  - kachurovskiy 9y ago
    Rich people tend to have most of their worth in stock. In theory, assuming your stock got more expensive, you get richer without anyone in particular getting poorer.
    - walterbell 9y ago
      Inflation = everyone in cash got poorer
      - pdkl95 9y ago
        Or. everyone with debt - which is usually a very large portion of the population - had their burden reduced. edit: Ability to pay grows with inflation, by definition. Unless you have a particularly unusual type of debt, the principle is constant and the interest is based on the remaining principle and is therefor a pre-inflation value. Wages grow in absolute terms (even though their purchasing power is otherwise constant), so the debt is easier to pay off.
        walterbell 9y ago
        Along with their ability to repay their debt, so that's a wash.
        deleted 9y ago
        [deleted]
      - jcmoscon 9y ago
        Not if you have bitcoins, right?
    - jumsdogpetter 9y ago
      The theory is naive, dismissive, and wrong. Stock value increases are coming from optimizations within companies that reduce employee benefits and compensation. On the consumer side of things, profits also come from taking advantage of deregulation, lowering the quality and safety of consumer products and services. Executive leadership and investors are pocketing gains made from making everyone else's lives worse. Getting richer has a strong relationship with making others poorer.
      - newmanships 9y ago
        Are you saying stock value increases only come from reducing employee benefits and compensation or from lowering the quality and safety of products and services? Seems like that is simply not true across the board. If a company sells say software they could easily grow revenue and profits without changing their product or reducing employee benefits and compensation. Their earnings would be higher and their stock would go up.
      - ericd 9y ago
        How much of this opinion is coming from being involved in the management of companies vs news articles tuned to generate outrage so that they can generate clicks?
        jumsdogpetter 9y ago
        How much of your denial comes from benefiting from the immiseration of the poor?
        ericd 9y ago
        I'm serious. Do you have first hand knowledge of what you speak, or are you just looking for someone to be angry at? Also, looking at your comment history, you've literally only ever commented on the misery of the proletariat and related topics, which makes me suspect this is an astroturfing account.
      - AnimalMuppet 9y ago
  - gbacon 9y ago
    The notion that wealth is a fixed-size pie is central to the long-debunked economic error known as mercantilism.
  - foobarian 9y ago
    In real terms this could happen if productivity increased, and was able to lead to increased standard of living for everyone. This probably did happen for some large subset of the population, by some definition of "standard of living."
  - poke111 9y ago
    The central idea of capitalism is that voluntary exchange enriches both parties. So the answer to your first question is yes.
    - sametmax 9y ago
      This assumes the exchange is symmetric, and that enrichment only happens with exchanges. Neither of these are true.
      - wskinner 9y ago
        It doesn’t have to be symmetric. If there is $2 consumer and $4 producer surplus, both parties benefit. And just because enrichment, as you call it, can happen other ways than exchange, does not mean it doesn’t happen via exchange too.
        dragonwriter 9y ago
        If it is asymmetric, the superficially apparent mutual gain may be illusory, because—while many people think for moral or aesthetic reasons that this should not be the case—there is enormous empirical evidence that the actual experience of utility related to material position is very strongly driven by relative material position, which is often far more significant than absolute material position.
        Banthum 9y ago
        Parent is saying that it's better if everyone gets richer, even if some get more richer than others. So you're saying that it would be better if everyone was poorer individually, as long as they were more equally poor?
        grasshopperpurp 9y ago
        >So you're saying that it would be better if everyone was poorer individually, as long as they were more equally poor? Why are you creating this either/or? Are you proposing that if we don't allow people like Gates and the Kochs to hoard billions of dollars that everyone will be poorer individually?
  - ghostbrainalpha 9y ago
    Yes it is possible for everyone's wealth to increase. In the year 1900 Global GDP was 1 Trillion. Today it is 77 Trillion. https://en.wikipedia.org/wiki/Gross_world_product https://en.wikipedia.org/wiki/Gross_world_product In Layman's the Global Pie is growing. The number of people living in extreme poverty has fallen DRASTICALLY over the last 25 years. https://twitter.com/humanprogress/status/913901718823489538 https://twitter.com/humanprogress/status/913901718823489538 So the people with the smallest piece of the pie are slowly getting a larger piece, but the people who already have the biggest piece of pie are getting even bigger pieces faster. But because the pie is growing, it doesn't mean that their larger piece is making someone else get a smaller piece. The only people who have a proportionally smaller piece than they used to are in the middle class. Which is what happens when first world work more closely with developing nations. Taking more people out of extreme poverty but putting slight downward pressure on the middle class.
    - mtgx 9y ago
      Even if it did increase, most of that increase is just inflation anyway. And it's usually the wealthy that benefit from inflation (at least more than regular people do).
      - JumpCrisscross 9y ago
        > it's usually the wealthy that benefit from inflation Inflation is a regressive feature of modern currencies. It transfers wealth from lenders to borrowers and away from investors. The degree to which it does so is a function of the amount of wealth one has.
      - ghostbrainalpha 9y ago
        Compare the "regular" person of today to the "regular" person of 50 years ago. Is it easier or harder to afford basic foodstuffs? Do they eat out (luxury) more or less? If they own a home, is it larger or the same size? Who travels more? Who has better healthcare? Who spends more on entertainment? How much do they spend on the family pet? Who spent more time furthering their education? All of these are measures of wealth, and the modern "regular" person would be wealthier in every one of these categories. And that's not even factoring in advances in technology that make the quality of life of a person better even if there share of societal wealth goes down.
  - olalonde 9y ago
    Yes, it is definitely possible and expected. Your line of reasoning is a pretty common one and is sometimes referred to as the "zero-sum fallacy" or "fixed pie fallacy"[0]. [0] http://www.aei.org/publication/the-fixed-pie-fallacy/ http://www.aei.org/publication/the-fixed-pie-fallacy/
  - obastani 9y ago
    As many other commenters have pointed out, it is possible for net global wealth to increase (e.g., the increase in total real GDP). As far as I understand, the main reason this is possible is the development of new "technology" -- in the very general, economic sense of the word technology [0], which includes anything that increases the productivity of a single worker; this can include everything from new technology in the traditional sense to new processes (e.g., agile vs. waterfall for software development, or more optimal supply chains) and investment in infrastructure (e.g., better road networks). For example, a single farmer today can not only produce many times more crop compared to a farmer 100 years ago, but also safely and efficiently distribute this produce to consumers across the globe. In general, assuming everyone in the economy works equally hard, the total production (i.e., the global net wealth) can increase as long as technology is increasing. [0] https://en.wikipedia.org/wiki/Production_function https://en.wikipedia.org/wiki/Production_function
  - ericd 9y ago
    If I fix your bike, and in exchange, you fix my bike, we're both richer in material terms than we were before.
  - eeZah7Ux 9y ago
    > Is it possible for everyone’s wealth to increase? Numerically, yes. Psychologically and socially it's completely different. As inequality rises, people whose wealth increases more slowly are effectively poorer in relative terms.
- eximius 9y ago
  While a technically valid criticism, is it really that controversial? Costs are increasing faster than wages at low income levels - which is easy when wages are largely stagnant or declining due to increased competition driven by labor surplus and automation.
  - ptaipale 9y ago
    It's not even controversial, it's wrong. Poverty, particularly extreme poverty, has been decreasing rapidly over the past 25 years. Of course, this doesn't mean that everyone is better; there are always winners and some losers, and there are setbacks here and there, but the big picture is one of great progress. For more, one should read the Human Development Reports: http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf http://hdr.undp.org/sites/default/files/2016_human_developme...
    - aalleavitch 9y ago
      This is true for worldwide poverty. This is not true for US poverty.
      - oreo81 9y ago
        In the US "poverty" now includes access to netflix. Poverty has absolutely gotten better in the US over the years.
        ABCLAW 9y ago
        Poverty also includes having your neighborhood torn apart by junkies on opioids. But I guess actually looking at the econometric data to compare apples to apples isn't worthwhile because you can stay indoors while your tires are stolen and watch Jessica Jones, so things are better than they used to be, right?
        oreo81 9y ago
        Yes things are better than they used to be. People living in bad neighborhoods spending time and money on entertainment need to prioritize better.
- rstoj 9y ago
  Good point - I wonder where that comes from, can anyone find a reference? In any case, their wealth is increasing at a much higher rate of 23% compared with the world GDP increase of 2.4% and US' GDP increase of 1.5% (https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2016&start=1961&view=chart https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2...).
  - lhkdfsakhljd 9y ago
    Yeah, but paper tigers like Zuckerberg are on that list. The top 1500 richest includes the twiddly twins and their bitcoin empire. They're all one tech bubble bursting from loosing most of their wealth.
    - sametmax 9y ago
      The same kind of rich people has existed for ever. It's fair to always take them in consideration.
- coliveira 9y ago
  The issue is simple to understand: as population grows and technology grows even faster, there should be a steady stream of wealth increase. This has been observed as is obvious to everyone. However, if we allow the bulk of this wealth to be controlled by a tiny part of the population, we are creating a huge problem to current and to future generations. A hereditary oligarchy can be terrible to our civilization, and this is what we see forming nowadays. I am not against people participating in the creation of wealth and reaping the rewards, but these differences in wealth need to be leveled over time. Unfortunately, short-sighted politics of the US and other countries are giving more and more power to wealthy people so that they can amass more money without visible contributions to society.
  - charlesdm 9y ago
    Maybe. I don't want this to come off bad, but maybe the work a lot of people do just isn't that important and thus doesn't warrant increases in salary? If a company needs someone to do X, and 5 viable candidates can be found for $Y -- there really is no reason to increase wages. Anyone with some capital could've invested in Netflix, Facebook or Google several years ago and would have achieved a good return on their money. Even if some sort of global wealth tax would be introduced (that's a big IF) to fix the accumulation of extreme wealth, would people be better off? The amounts collected, spread out over the entire population, would be relatively small. And most of this new wealth is mostly paper wealth -- the headline next year could very well be: "World's richest lost $3tn of their wealth".
    - nofilter 9y ago
      How well does that argument hold up tho'? I mean, there is always _someone_ who does it cheaper. Always. In fact I know of a web developer, who actually does quite decent work and is available for as little as $5 per hour. Does that mean everyone in that skill level should get paid so little?
      - charlesdm 9y ago
        Cheaper yes, but perhaps not better. I'd be happy to demand a few million a year for high quality development work from an employer, but the laws of supply and demand do apply.
- jondubois 9y ago
  You don't need any data to support that fact, any regular person can see for themselves that this is true just by looking at their own situation and that of their family members, friends, neighbors and acquaintances.
- krona 9y ago
  The richest have gotten richer To be exact, it seems to be saying that the richest 500 are x% richer at the end of the year, not that the 500 richest at the beginning of the year are %x richer at the end of it. These are two different things because they are two different sets of people. In decades past the richest and the poorest people don't remain in that part of the income distribution very long; this is especially true in the US.
  - bitwize 9y ago
    Actually, it's especially false in the US, because social mobility is so poor for such a "free" state.
    - krona 9y ago
      From 2001 to 2007 (just 6 years), the proportion of US households that left their income quintile were (starting at the lowest quintile) 44%, 61%, 58%, 55%, and 34%. Even by global standards that's quite high income mobility.
      - addicted 9y ago
        The choices of year bounds are interesting to say the least.
        ChrisLomont 9y ago
        Those changes are about the same for any window of the same time length for all of recent US history. St. Louis FRED has data and papers on this. One of the best studies on intergenerational mobility in the US, using all IRS records (not sure how hard they had to work to get those) shows that mobility in the US has been fairly constant for 50+ years. [1] http://www.equality-of-opportunity.org/assets/documents/mobility_trends.pdf http://www.equality-of-opportunity.org/assets/documents/mobi...
  - pg314 9y ago
    > These are two different things because they are two different sets of people. The sets mostly overlap. The top 10 of the richest people was the same in 2016 and 2017 [1]. These 10 people saw their net worth increase by $107 billion. [1] https://en.wikipedia.org/wiki/The_World%27s_Billionaires#2017 https://en.wikipedia.org/wiki/The_World%27s_Billionaires#201...
- aalleavitch 9y ago
  Wages have stagnated and the poor are not seeing an equivalent increase in their wealth. Moreover, while the jobs numbers are very high 94% of all jobs added in the last decade have been temp/contract work/self-employment. https://hbr.org/2017/10/why-wages-arent-growing-in-america https://hbr.org/2017/10/why-wages-arent-growing-in-america https://www.vox.com/policy-and-politics/2017/8/8/16112368/piketty-saez-zucman-income-growth-inequality-stagnation-chart https://www.vox.com/policy-and-politics/2017/8/8/16112368/pi... https://qz.com/851066/almost-all-the-10-million-jobs-created-since-2005-are-temporary/ https://qz.com/851066/almost-all-the-10-million-jobs-created...
  - closeparen 9y ago
    We set up an incentive scheme to vigorously punish employers for offering full time work by loading it down with obligations over the worker’s long term well being, and didn’t do anything similar for temp/contract work. What were you expecting? If we attached proportional responsibility to part time work, or just provided benefits out of the public purse instead of labor law, part time work wouldn’t be such an obviously superior choice to employers.
  - cornholio 9y ago
    On the other hand, the wages of 700 million Chinese workers has trebled in the last decade.
    - oblio 9y ago
      And humanity, as a whole, will probably reap a ton of long term benefits from it. I doubt there's much solace in this thought for someone being fired because of it, though. (Personally I don't mind a bit of hardship if it helps everyone, but I understand not everyone can be frugal or that some people can be just plain unlucky)
      - aalleavitch 9y ago
        It's also a lot harder to swallow when you're hungry and someone out there is making enough to feed 100 of you.
- 11thEarlOfMar 9y ago
  Indeed, according to World Bank, the number of people living in poverty is decreasing. % from 1820 - 2015: https://ourworldindata.org/slides/world-poverty/#/declining-world-poverty-1820-2015-step2 https://ourworldindata.org/slides/world-poverty/#/declining-... Distribution 1988: https://ourworldindata.org/slides/world-poverty/#/Global-Income-Distribution-1988 https://ourworldindata.org/slides/world-poverty/#/Global-Inc... Distribution 2011: https://ourworldindata.org/slides/world-poverty/#/Global-Income-Distribution-2011 https://ourworldindata.org/slides/world-poverty/#/Global-Inc...
- dclowd9901 9y ago
  If you're burying your head in the sand, you're missing the headlies that wages have been stagnant for decades.
  - umeshunni 9y ago
    Nearly a billion people have been pulled out of poverty in India and China over the last 25 years. Their wages have at least tripled on average in real terms in the last 20 years. So, it's you who's burying your head in the "America first" sand. The middle class in the US had enjoyed the fruits of global inequality resulting from colonialism and WW2 during the second half of the 20th century. As the gap in skills and education between the average American and the rest of the world have disappeared, the former US middle class will see their income gap with the rest of the world also disappear. A teacher, factory worker or a store clerk in the US isn't 20x more productive than a teacher, factory worker or a store clerk in India or China and there's not reason for that wage gap to exist any more.
    - oblio 9y ago
      Yeah, but things might not go swimmingly. We will see violence, protectionism, plain old isolationism rise. The developed countries are still developed and their citizens will fight back.
    - dclowd9901 9y ago
      Are you really sitting here and telling me that people merely being brought out of destitution is progress? We have far different views on progress.
      - ptaipale 9y ago
        I am not entirely sure if you are trolling. People being brought out of destitution is progress, absolutely. It's the very first and most important step of progress. If people don't have enough to eat, even their brain won't develop properly. The lower layers of Maslow hierarchy are absolutely essential. After that, more progress is needed, but having food, essential health and physical security is definitely the fundamental thing for any other types of progress, such as education.
- Mikeb85 9y ago
  As the wealth gets more concentrated at the top, the wealth 'share' of poorer people declines even if their wealth nominally rises.
- dbingham 9y ago
  It's a pretty well understood and accepted fact at this point. It's been a major talking point in economic and political circles for the past 5 - 10 years. The sources below are from a quick Google search. They mostly reference income stagnation and are about the US. But income stagnation leads to wealth stagnation and there are similar trends world wide. Thomas Picketty's Capital in the 21st Century is largely about this issue, as is Robert Reich's documentary Inequality for All. There are those who challenge the conclusions drawn in both, but few seriously contest the data they point to. [1] http://www.epi.org/publication/charting-wage-stagnation/ http://www.epi.org/publication/charting-wage-stagnation/ [2] https://www.npr.org/sections/money/2014/10/02/349863761/40-years-of-income-inequality-in-america-in-graphs https://www.npr.org/sections/money/2014/10/02/349863761/40-y... [3] https://www.economist.com/blogs/freeexchange/2013/09/incomes https://www.economist.com/blogs/freeexchange/2013/09/incomes [4] http://www.nytimes.com/2013/01/13/sunday-review/americas-productivity-climbs-but-wages-stagnate.html http://www.nytimes.com/2013/01/13/sunday-review/americas-pro...
- rayiner 9y ago
  That claim is not only unsupported, it's almost certainly false. The last few decades haven't been great for the middle class in wealthy countries, but it's been fantastic for "poorer people across the world." U.S. GDP per capita is up 60% since 2000. Bangladesh's is up 235%. India is up 288%. Thailand is up 195%. Poorer countries that have been able to cobble together enough rule of law to participate in capitalism have benefited tremendously from it.
  - andai 9y ago
    GOAL 1: ERADICATE EXTREME POVERTY & HUNGER Target 1.A: Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day The target of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline. More than 1 billion people have been lifted out of extreme poverty since 1990. In 1990, nearly half of the population in the developing regions lived on less than $1.25 a day. This rate dropped to 14 per cent in 2015. http://www.un.org/millenniumgoals/poverty.shtml http://www.un.org/millenniumgoals/poverty.shtml
Radim 9y ago
Curious are the ways in which a world born of binary, "carries over" and manifests the very same patterns in broader social settings, into seemingly unrelated levels of abstraction. Similarity across scales. Binary winner-take-all, all-or-nothing markets? There seem to be deeper natural forces at play; the proposed evil divide between the rich and poor just incidental symptom. Surface ripples in a powerful river.
- jamcohen 9y ago
  I think it's just a consequence of the fact that having money enables the acquisition of more money. It explains the long tail in wealth distribution.
  - Radim 9y ago
    Sure, but that's been the case for thousands of years. The novelty is in the global nature of the competition, the physical and informational proximity that accelerate evolution of patterns. That's what makes them spread so quickly and prominently, across seemingly unrelated scales and disciplines. Another curious manifestation is how humans are changing the way they treat each other, how they structure their (human) relationships. Did humans tame the computers, or did computers tame the humans?
lcfcjs2 9y ago
Don't worry guys, it will trickle down to you eventually. 2018 is the year, it will literally crush you.
sintaxi 9y ago
In other words, the 500 wealthiest people added a trillion dollars of value to the economy this year. Edit: you all that are down-voting need to learn how the economy works.
- EliRivers 9y ago
  The creation of wealth, in various forms, is what adds "value" to the economy; rich people ending up owning/controlling that wealth isn't the same thing as those rich people having created that wealth. Edit: Don't passive-aggressively revel in victimhood. If you feel misunderstood, explain better - don't blame your audience.
  - sintaxi 9y ago
    Providing capital to those with talent IS providing value. Thats why entrepreneurs exchange a portion of their company for the capital - capital has value and helps the entrepreneur. Money doesn't appreciate in value by doing nothing. Once you have wealth you can use it to make more wealth by taking risk based on the demands of the market.
    - EliRivers 9y ago
      That is a much better comment than your previous one. I would counter that right now, money is ridiculously cheap. Interest rates are breathtakingly low. There are enormous amounts of money running around begging to be borrowed. As such, if this system you posit was accurate, then the very wealthy would be seeing the smallest returns on their money for decades, as they effectively competed to be the lender/investor to the people creating wealth. But that's not what we're seeing. It's also not what we see with investing in the stock market; that provides nothing to a company beyond the first time a stock is sold (barring a secondary argument that there is value in demonstrating that people are trading shares in the company which makes everyone feel good about the company and there's a value in that), but the rich are seeing some fantastic returns on their money in the stock market, extracting a nice steady stream of dividends and capital value increases, without having given a penny to the company named on the stock. As an aside and speaking purely from my own experiences, I draw more each year from the stock market than my country's median salary, and I'm generating no wealth whatsoever for that (although I expect some would argue that by not selling all my shares, I'm providing value and that's what I'm being rewarded for). I could retire and get by for the rest of my life, entirely on the backs of others. The rich do the same to a breathtaking degree.
tw1010 9y ago
So what? Inequality should only matter to you personally if it means the lower bound on income, the poorest of the poor, is going down. If the richest is getting richer, maybe that means the poorest are becoming poorer as a consequence, but not necessarily, in fact, most likely not.
- staticassertion 9y ago
  It matters to me personally that a small group of people have such a massive amount of power. It's already completely uneven regarding voting power - I can vote once in an election, but if I had a trillion dollars I could vote once, and then I could pay lobbyists, and fund advertisements, etc. I, as a single person or small group, with a trillion dollars, can have a massive influence. This is regardless of how poor anyone else is. No one should have this kind of money, it's really absurd.
  - charlesdm 9y ago
    Didn't Trump get elected with 1/7th the budget of Hillary Clinton?
    - staticassertion 9y ago
      I don't think boiling any single political event down to money is going to be meaningful. I can't imagine anyone denying that lobbyists exist and that large amounts of money can buy you a lot of political power.
      - pmc1 9y ago
        > large amounts of money can buy you a lot of political power. That is not true. Hillary spent the most money in any American campaign (nearly $1 Billion) and still lost. Strategy matters more than money https://www.vox.com/policy-and-politics/2017/3/8/14848636/hillary-clinton-tv-ads https://www.vox.com/policy-and-politics/2017/3/8/14848636/hi...
        9y ago
aerophilic 9y ago
There was an interesting study posted (I believe here) on how a flat 10% re-distribution (10% taxed from everyone, then redistributed evenly across everyone, aka basic income), created a more stable "society" in simulation. It did this by helping support a larger "middle class". Does anyone know the link/can point me to the study? Google is failing me at the moment...
- yazaddaruvala 9y ago
  The biggest issue with any sort of basic income is that landlords and grocery store owners will just ever-increase their prices. How do we combat that?
  - closeparen 9y ago
    Since big city landlords are no longer in an exclusive position to sell the ability to make a living, I would expect rents to crater as people can move without so much concern for commutable jobs.
    - yazaddaruvala 9y ago
      I don’t know about you but myself and the people I know love the city cuz of convenience, social reasons, and jobs. Even today I could spend 3x less on rent if I moved and endured a 30min commute. I don’t. Having a job is not the primary priority for why I’m paying high rent.
  - soperj 9y ago
    Competition.
    - yazaddaruvala 9y ago
      :) where is the competition in SF to stop landlords from ever increasing rents? Thought experiment: If we redistributed all the liquid capital that currently exists, one year later the people who own infrastructure will end up the 1% again. You can see this through some basic economics. People have more money, they are willing to spend more money. Meanwhile, supply remains constant. What happens? Prices go up. Everyone has to eat, everyone has to buy medicine, everyone needs to sleep, everyone needs the internet. Everyone “needs” to gamble. The people who own that infrastructure would be the richest again.
Fej 9y ago
> advisers to the super-rich are warning them of a “strike back” from the squeezed majority That's an understatement. When revolutions come, the rich are always the first at the guillotine. Of course, that's rather unlikely, but these people have so much money that they can afford to make that consideration.
xandar11 9y ago
Top 500 YouTubers see their subscribers_count increase by 100 million this year. Meanwhile, I got 0 increase in subscribers. It's not fair! Just imagine how much influence these popular YouTubers have compared to regular folks, the impact they have on cultural and political life. Should we allow a tiny group of YouTubers to have such a massive subscribers_count and influence? I say NO! Behind every popular YouTube channel lies a great crime.
dogruck 9y ago
Upvote this if you were at least 95% confident the markets would crash if Donald Trump became the POTUS.
- jacquesm 9y ago
  Let's wait until he's done.
- dang 9y ago
  Please don't do this here.
volgo 9y ago
As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly accepted safe withdraw rate of 4%, if you inherit $3 million (which is not even that much), you can safely collect $120,000 of capital gains/dividend income every year without doing anything. This also frees you up to work on other things that will acquire you even more wealth. People whose parents didn't leave them a large inheritance have to rely on salary, which is taxed at a higher rate and more difficult to earn. In effect, late stage capitalism becomes the anti-thesis of the spirit of capitalism - devoid of competition, free innovation, and upward mobility. In an ideal capitalism society, the most talented should earn the most, but the compounding effect of capital makes it so that whoever holds wealth the longest earns the most.
- regulation_d 9y ago
  In principle, I agree with you. But setting the capital gains rate is a bit of a balancing act. If the rate is too high, then this disincentivizes people from putting their money in the market, which is also not what we want.
- Danihan 9y ago
  I agree with much of what you said, yet I just don't see it as all that bad of a situation. I still think there is a lot of upward mobility even in that scenario -- the smarter people I know earn good salaries and have nice lifestyles. Nicer than their parents, in most cases, mainly because consumer technology constantly gets better and cheaper. And there is still opportunity for risk takers to start their own companies, and it's really not all that hard with some traction to get acquired by a bigger player. Of course, people with a lot of capital get rewarded for holding onto it / being conservative with it, but that's just common sense, not throwing good money after bad. It's like we're all supposed to say, "Yeah! Late stage capitalism is so awful!" and nod along, but it doesn't feel awful to me at all. I have a 2016 Mazda that cost $18k and it's just awesome for the price. I bought a brand new iPhone SE for $150. I bought a 50 inch TV on black Friday for $200. My parents as kids didn't have running water in their houses. I'm not all about materialism, but I'm really at a loss for what exactly I'm supposed to be feeling outraged about. I don't even really make that high of a salary, just average middle class.
barnfire 9y ago
If the wealthy had any interest in self-preservation, they would advocate higher taxes on themselves or some sort of UBI. But I'm sure Sam Walton's kids think they deserve everything they have.
erikb 9y ago
And I'm sitting here being happy that my "stock fortune" approaches four digits.
vbuwivbiu 9y ago
A small percentage of bank accounts should be randomly swapped each year, and the owners of the swapped accounts become part of a reality TV show to follow how they dealt with their change of fortune
- jacquesm 9y ago
  That's called the lottery. A typical lottery winner will be back where they started after a few years.
  - vbuwivbiu 9y ago
    no I mean the reverse! A random rich person looses all their money
logicallee 9y ago
$1tn / 500 = $2 bn $2 bn / 7.6 billion = 0.263 Another way to think about it is that the 500 oligarchs of the world were able to capture a worldwide average of 26.63¢ from each person. In the course of 365 days it's as though each person in the world bought each of the 500 oligarchs in the world a full $0.26/$1.50 = nearly 1/5th of a single vending machine 20 ounce bottle of coke. Multiply that by 500 and you can have a very proper sit-down meal anywhere in the world. Of course, maybe they generated $500, or $1000, or $3,000 in wealth to do so. After all, the worldwide real income increased by well over twice that. But it's that fifth of a bottle of coke that bothers me, personally. Why should bill gates get a quarter from me? He obviously didn't work for it as much as I did. If anything he should be paying me. Why, you ask? What did I make that he uses? Why, I might as well ask: what do the 500 oligarchs of the world make that anyone uses - wait, don't answer that, I have a point to make here and it would kind of ruin it to know the answer. My point is, the rich need to stop getting richer. It's just not right. /s [1] http://www.ilo.org/global/research/global-reports/global-wage-report/2016/lang--en/index.htm http://www.ilo.org/global/research/global-reports/global-wag...
stretchwithme 9y ago
That's how it is when the Federal Reserve creates an asset bubble to deal with an asset bubble collapse. This is NOT something a capitalist country should be doing. It's not the job of government to make your investments work out. It's YOURS.
jknoepfler 9y ago
This isn't interesting at all, and should not be a headline in a respectable newspaper. The wealth gains are on par with market gains. The absolute dollar value of the gains is almost certainly not headline worthy. The richest individuals lost trillions a few years ago in the crash, they gain trillions in a boom. That's exactly what one would expect. I'm fiercely opposed to the regressive turn the economy has taken, but I'm just as fiercely opposed to hysterical garbage journalism. We won't correct the broken social contract by heaping nonsense upon injustice. I'm all ears for constructive policies to tie earnings for the least wealthy to market gains, since the real problem is lack of ability to invest wages in the market, but I don't see that on offer here.

188 points by rstoj 9y ago

This article provides paragraph after paragraph of supporting data that the richest have gotten richer, but none that I can see supporting its claim that “billions of poorer people across the world have seen their wealth standstill or decline”.

notyourwork 9y ago
Is it possible for everyone’s wealth to increase? I think they might be assuming this is not possible and there if richest wealth increases by this much it had to come from the rest?
- kachurovskiy 9y ago
  Rich people tend to have most of their worth in stock. In theory, assuming your stock got more expensive, you get richer without anyone in particular getting poorer.
  - walterbell 9y ago
    Inflation = everyone in cash got poorer
    - pdkl95 9y ago
      Or. everyone with debt - which is usually a very large portion of the population - had their burden reduced. edit: Ability to pay grows with inflation, by definition. Unless you have a particularly unusual type of debt, the principle is constant and the interest is based on the remaining principle and is therefor a pre-inflation value. Wages grow in absolute terms (even though their purchasing power is otherwise constant), so the debt is easier to pay off.
      - walterbell 9y ago
        Along with their ability to repay their debt, so that's a wash.
        deleted 9y ago
        [deleted]
    - jcmoscon 9y ago
      Not if you have bitcoins, right?
  - jumsdogpetter 9y ago
    The theory is naive, dismissive, and wrong. Stock value increases are coming from optimizations within companies that reduce employee benefits and compensation. On the consumer side of things, profits also come from taking advantage of deregulation, lowering the quality and safety of consumer products and services. Executive leadership and investors are pocketing gains made from making everyone else's lives worse. Getting richer has a strong relationship with making others poorer.
    - newmanships 9y ago
      Are you saying stock value increases only come from reducing employee benefits and compensation or from lowering the quality and safety of products and services? Seems like that is simply not true across the board. If a company sells say software they could easily grow revenue and profits without changing their product or reducing employee benefits and compensation. Their earnings would be higher and their stock would go up.
    - ericd 9y ago
      How much of this opinion is coming from being involved in the management of companies vs news articles tuned to generate outrage so that they can generate clicks?
      - jumsdogpetter 9y ago
        How much of your denial comes from benefiting from the immiseration of the poor?
        ericd 9y ago
        I'm serious. Do you have first hand knowledge of what you speak, or are you just looking for someone to be angry at? Also, looking at your comment history, you've literally only ever commented on the misery of the proletariat and related topics, which makes me suspect this is an astroturfing account.
    - AnimalMuppet 9y ago
- gbacon 9y ago
  The notion that wealth is a fixed-size pie is central to the long-debunked economic error known as mercantilism.
- foobarian 9y ago
  In real terms this could happen if productivity increased, and was able to lead to increased standard of living for everyone. This probably did happen for some large subset of the population, by some definition of "standard of living."
- poke111 9y ago
  The central idea of capitalism is that voluntary exchange enriches both parties. So the answer to your first question is yes.
  - sametmax 9y ago
    This assumes the exchange is symmetric, and that enrichment only happens with exchanges. Neither of these are true.
    - wskinner 9y ago
      It doesn’t have to be symmetric. If there is $2 consumer and $4 producer surplus, both parties benefit. And just because enrichment, as you call it, can happen other ways than exchange, does not mean it doesn’t happen via exchange too.
      - dragonwriter 9y ago
        If it is asymmetric, the superficially apparent mutual gain may be illusory, because—while many people think for moral or aesthetic reasons that this should not be the case—there is enormous empirical evidence that the actual experience of utility related to material position is very strongly driven by relative material position, which is often far more significant than absolute material position.
        Banthum 9y ago
        Parent is saying that it's better if everyone gets richer, even if some get more richer than others. So you're saying that it would be better if everyone was poorer individually, as long as they were more equally poor?
        grasshopperpurp 9y ago
        >So you're saying that it would be better if everyone was poorer individually, as long as they were more equally poor? Why are you creating this either/or? Are you proposing that if we don't allow people like Gates and the Kochs to hoard billions of dollars that everyone will be poorer individually?
- ghostbrainalpha 9y ago
  Yes it is possible for everyone's wealth to increase. In the year 1900 Global GDP was 1 Trillion. Today it is 77 Trillion. https://en.wikipedia.org/wiki/Gross_world_product https://en.wikipedia.org/wiki/Gross_world_product In Layman's the Global Pie is growing. The number of people living in extreme poverty has fallen DRASTICALLY over the last 25 years. https://twitter.com/humanprogress/status/913901718823489538 https://twitter.com/humanprogress/status/913901718823489538 So the people with the smallest piece of the pie are slowly getting a larger piece, but the people who already have the biggest piece of pie are getting even bigger pieces faster. But because the pie is growing, it doesn't mean that their larger piece is making someone else get a smaller piece. The only people who have a proportionally smaller piece than they used to are in the middle class. Which is what happens when first world work more closely with developing nations. Taking more people out of extreme poverty but putting slight downward pressure on the middle class.
  - mtgx 9y ago
    Even if it did increase, most of that increase is just inflation anyway. And it's usually the wealthy that benefit from inflation (at least more than regular people do).
    - JumpCrisscross 9y ago
      > it's usually the wealthy that benefit from inflation Inflation is a regressive feature of modern currencies. It transfers wealth from lenders to borrowers and away from investors. The degree to which it does so is a function of the amount of wealth one has.
    - ghostbrainalpha 9y ago
      Compare the "regular" person of today to the "regular" person of 50 years ago. Is it easier or harder to afford basic foodstuffs? Do they eat out (luxury) more or less? If they own a home, is it larger or the same size? Who travels more? Who has better healthcare? Who spends more on entertainment? How much do they spend on the family pet? Who spent more time furthering their education? All of these are measures of wealth, and the modern "regular" person would be wealthier in every one of these categories. And that's not even factoring in advances in technology that make the quality of life of a person better even if there share of societal wealth goes down.
- olalonde 9y ago
  Yes, it is definitely possible and expected. Your line of reasoning is a pretty common one and is sometimes referred to as the "zero-sum fallacy" or "fixed pie fallacy"[0]. [0] http://www.aei.org/publication/the-fixed-pie-fallacy/ http://www.aei.org/publication/the-fixed-pie-fallacy/
- obastani 9y ago
  As many other commenters have pointed out, it is possible for net global wealth to increase (e.g., the increase in total real GDP). As far as I understand, the main reason this is possible is the development of new "technology" -- in the very general, economic sense of the word technology [0], which includes anything that increases the productivity of a single worker; this can include everything from new technology in the traditional sense to new processes (e.g., agile vs. waterfall for software development, or more optimal supply chains) and investment in infrastructure (e.g., better road networks). For example, a single farmer today can not only produce many times more crop compared to a farmer 100 years ago, but also safely and efficiently distribute this produce to consumers across the globe. In general, assuming everyone in the economy works equally hard, the total production (i.e., the global net wealth) can increase as long as technology is increasing. [0] https://en.wikipedia.org/wiki/Production_function https://en.wikipedia.org/wiki/Production_function
- ericd 9y ago
  If I fix your bike, and in exchange, you fix my bike, we're both richer in material terms than we were before.
- eeZah7Ux 9y ago
  > Is it possible for everyone’s wealth to increase? Numerically, yes. Psychologically and socially it's completely different. As inequality rises, people whose wealth increases more slowly are effectively poorer in relative terms.
eximius 9y ago
While a technically valid criticism, is it really that controversial? Costs are increasing faster than wages at low income levels - which is easy when wages are largely stagnant or declining due to increased competition driven by labor surplus and automation.
- ptaipale 9y ago
  It's not even controversial, it's wrong. Poverty, particularly extreme poverty, has been decreasing rapidly over the past 25 years. Of course, this doesn't mean that everyone is better; there are always winners and some losers, and there are setbacks here and there, but the big picture is one of great progress. For more, one should read the Human Development Reports: http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf http://hdr.undp.org/sites/default/files/2016_human_developme...
  - aalleavitch 9y ago
    This is true for worldwide poverty. This is not true for US poverty.
    - oreo81 9y ago
      In the US "poverty" now includes access to netflix. Poverty has absolutely gotten better in the US over the years.
      - ABCLAW 9y ago
        Poverty also includes having your neighborhood torn apart by junkies on opioids. But I guess actually looking at the econometric data to compare apples to apples isn't worthwhile because you can stay indoors while your tires are stolen and watch Jessica Jones, so things are better than they used to be, right?
        oreo81 9y ago
        Yes things are better than they used to be. People living in bad neighborhoods spending time and money on entertainment need to prioritize better.
rstoj 9y ago
Good point - I wonder where that comes from, can anyone find a reference? In any case, their wealth is increasing at a much higher rate of 23% compared with the world GDP increase of 2.4% and US' GDP increase of 1.5% (https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2016&start=1961&view=chart https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2...).
- lhkdfsakhljd 9y ago
  Yeah, but paper tigers like Zuckerberg are on that list. The top 1500 richest includes the twiddly twins and their bitcoin empire. They're all one tech bubble bursting from loosing most of their wealth.
  - sametmax 9y ago
    The same kind of rich people has existed for ever. It's fair to always take them in consideration.
coliveira 9y ago
The issue is simple to understand: as population grows and technology grows even faster, there should be a steady stream of wealth increase. This has been observed as is obvious to everyone. However, if we allow the bulk of this wealth to be controlled by a tiny part of the population, we are creating a huge problem to current and to future generations. A hereditary oligarchy can be terrible to our civilization, and this is what we see forming nowadays. I am not against people participating in the creation of wealth and reaping the rewards, but these differences in wealth need to be leveled over time. Unfortunately, short-sighted politics of the US and other countries are giving more and more power to wealthy people so that they can amass more money without visible contributions to society.
- charlesdm 9y ago
  Maybe. I don't want this to come off bad, but maybe the work a lot of people do just isn't that important and thus doesn't warrant increases in salary? If a company needs someone to do X, and 5 viable candidates can be found for $Y -- there really is no reason to increase wages. Anyone with some capital could've invested in Netflix, Facebook or Google several years ago and would have achieved a good return on their money. Even if some sort of global wealth tax would be introduced (that's a big IF) to fix the accumulation of extreme wealth, would people be better off? The amounts collected, spread out over the entire population, would be relatively small. And most of this new wealth is mostly paper wealth -- the headline next year could very well be: "World's richest lost $3tn of their wealth".
  - nofilter 9y ago
    How well does that argument hold up tho'? I mean, there is always _someone_ who does it cheaper. Always. In fact I know of a web developer, who actually does quite decent work and is available for as little as $5 per hour. Does that mean everyone in that skill level should get paid so little?
    - charlesdm 9y ago
      Cheaper yes, but perhaps not better. I'd be happy to demand a few million a year for high quality development work from an employer, but the laws of supply and demand do apply.
jondubois 9y ago
You don't need any data to support that fact, any regular person can see for themselves that this is true just by looking at their own situation and that of their family members, friends, neighbors and acquaintances.
krona 9y ago
The richest have gotten richer To be exact, it seems to be saying that the richest 500 are x% richer at the end of the year, not that the 500 richest at the beginning of the year are %x richer at the end of it. These are two different things because they are two different sets of people. In decades past the richest and the poorest people don't remain in that part of the income distribution very long; this is especially true in the US.
- bitwize 9y ago
  Actually, it's especially false in the US, because social mobility is so poor for such a "free" state.
  - krona 9y ago
    From 2001 to 2007 (just 6 years), the proportion of US households that left their income quintile were (starting at the lowest quintile) 44%, 61%, 58%, 55%, and 34%. Even by global standards that's quite high income mobility.
    - addicted 9y ago
      The choices of year bounds are interesting to say the least.
      - ChrisLomont 9y ago
        Those changes are about the same for any window of the same time length for all of recent US history. St. Louis FRED has data and papers on this. One of the best studies on intergenerational mobility in the US, using all IRS records (not sure how hard they had to work to get those) shows that mobility in the US has been fairly constant for 50+ years. [1] http://www.equality-of-opportunity.org/assets/documents/mobility_trends.pdf http://www.equality-of-opportunity.org/assets/documents/mobi...
- pg314 9y ago
  > These are two different things because they are two different sets of people. The sets mostly overlap. The top 10 of the richest people was the same in 2016 and 2017 [1]. These 10 people saw their net worth increase by $107 billion. [1] https://en.wikipedia.org/wiki/The_World%27s_Billionaires#2017 https://en.wikipedia.org/wiki/The_World%27s_Billionaires#201...
aalleavitch 9y ago
Wages have stagnated and the poor are not seeing an equivalent increase in their wealth. Moreover, while the jobs numbers are very high 94% of all jobs added in the last decade have been temp/contract work/self-employment. https://hbr.org/2017/10/why-wages-arent-growing-in-america https://hbr.org/2017/10/why-wages-arent-growing-in-america https://www.vox.com/policy-and-politics/2017/8/8/16112368/piketty-saez-zucman-income-growth-inequality-stagnation-chart https://www.vox.com/policy-and-politics/2017/8/8/16112368/pi... https://qz.com/851066/almost-all-the-10-million-jobs-created-since-2005-are-temporary/ https://qz.com/851066/almost-all-the-10-million-jobs-created...
- closeparen 9y ago
  We set up an incentive scheme to vigorously punish employers for offering full time work by loading it down with obligations over the worker’s long term well being, and didn’t do anything similar for temp/contract work. What were you expecting? If we attached proportional responsibility to part time work, or just provided benefits out of the public purse instead of labor law, part time work wouldn’t be such an obviously superior choice to employers.
- cornholio 9y ago
  On the other hand, the wages of 700 million Chinese workers has trebled in the last decade.
  - oblio 9y ago
    And humanity, as a whole, will probably reap a ton of long term benefits from it. I doubt there's much solace in this thought for someone being fired because of it, though. (Personally I don't mind a bit of hardship if it helps everyone, but I understand not everyone can be frugal or that some people can be just plain unlucky)
    - aalleavitch 9y ago
      It's also a lot harder to swallow when you're hungry and someone out there is making enough to feed 100 of you.
11thEarlOfMar 9y ago
Indeed, according to World Bank, the number of people living in poverty is decreasing. % from 1820 - 2015: https://ourworldindata.org/slides/world-poverty/#/declining-world-poverty-1820-2015-step2 https://ourworldindata.org/slides/world-poverty/#/declining-... Distribution 1988: https://ourworldindata.org/slides/world-poverty/#/Global-Income-Distribution-1988 https://ourworldindata.org/slides/world-poverty/#/Global-Inc... Distribution 2011: https://ourworldindata.org/slides/world-poverty/#/Global-Income-Distribution-2011 https://ourworldindata.org/slides/world-poverty/#/Global-Inc...
dclowd9901 9y ago
If you're burying your head in the sand, you're missing the headlies that wages have been stagnant for decades.
- umeshunni 9y ago
  Nearly a billion people have been pulled out of poverty in India and China over the last 25 years. Their wages have at least tripled on average in real terms in the last 20 years. So, it's you who's burying your head in the "America first" sand. The middle class in the US had enjoyed the fruits of global inequality resulting from colonialism and WW2 during the second half of the 20th century. As the gap in skills and education between the average American and the rest of the world have disappeared, the former US middle class will see their income gap with the rest of the world also disappear. A teacher, factory worker or a store clerk in the US isn't 20x more productive than a teacher, factory worker or a store clerk in India or China and there's not reason for that wage gap to exist any more.
  - oblio 9y ago
    Yeah, but things might not go swimmingly. We will see violence, protectionism, plain old isolationism rise. The developed countries are still developed and their citizens will fight back.
  - dclowd9901 9y ago
    Are you really sitting here and telling me that people merely being brought out of destitution is progress? We have far different views on progress.
    - ptaipale 9y ago
      I am not entirely sure if you are trolling. People being brought out of destitution is progress, absolutely. It's the very first and most important step of progress. If people don't have enough to eat, even their brain won't develop properly. The lower layers of Maslow hierarchy are absolutely essential. After that, more progress is needed, but having food, essential health and physical security is definitely the fundamental thing for any other types of progress, such as education.
Mikeb85 9y ago
As the wealth gets more concentrated at the top, the wealth 'share' of poorer people declines even if their wealth nominally rises.
dbingham 9y ago
It's a pretty well understood and accepted fact at this point. It's been a major talking point in economic and political circles for the past 5 - 10 years. The sources below are from a quick Google search. They mostly reference income stagnation and are about the US. But income stagnation leads to wealth stagnation and there are similar trends world wide. Thomas Picketty's Capital in the 21st Century is largely about this issue, as is Robert Reich's documentary Inequality for All. There are those who challenge the conclusions drawn in both, but few seriously contest the data they point to. [1] http://www.epi.org/publication/charting-wage-stagnation/ http://www.epi.org/publication/charting-wage-stagnation/ [2] https://www.npr.org/sections/money/2014/10/02/349863761/40-years-of-income-inequality-in-america-in-graphs https://www.npr.org/sections/money/2014/10/02/349863761/40-y... [3] https://www.economist.com/blogs/freeexchange/2013/09/incomes https://www.economist.com/blogs/freeexchange/2013/09/incomes [4] http://www.nytimes.com/2013/01/13/sunday-review/americas-productivity-climbs-but-wages-stagnate.html http://www.nytimes.com/2013/01/13/sunday-review/americas-pro...
rayiner 9y ago
That claim is not only unsupported, it's almost certainly false. The last few decades haven't been great for the middle class in wealthy countries, but it's been fantastic for "poorer people across the world." U.S. GDP per capita is up 60% since 2000. Bangladesh's is up 235%. India is up 288%. Thailand is up 195%. Poorer countries that have been able to cobble together enough rule of law to participate in capitalism have benefited tremendously from it.
- andai 9y ago
  GOAL 1: ERADICATE EXTREME POVERTY & HUNGER Target 1.A: Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day The target of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline. More than 1 billion people have been lifted out of extreme poverty since 1990. In 1990, nearly half of the population in the developing regions lived on less than $1.25 a day. This rate dropped to 14 per cent in 2015. http://www.un.org/millenniumgoals/poverty.shtml http://www.un.org/millenniumgoals/poverty.shtml

Radim 9y ago

Curious are the ways in which a world born of binary, "carries over" and manifests the very same patterns in broader social settings, into seemingly unrelated levels of abstraction. Similarity across scales. Binary winner-take-all, all-or-nothing markets? There seem to be deeper natural forces at play; the proposed evil divide between the rich and poor just incidental symptom. Surface ripples in a powerful river.

jamcohen 9y ago
I think it's just a consequence of the fact that having money enables the acquisition of more money. It explains the long tail in wealth distribution.
- Radim 9y ago
  Sure, but that's been the case for thousands of years. The novelty is in the global nature of the competition, the physical and informational proximity that accelerate evolution of patterns. That's what makes them spread so quickly and prominently, across seemingly unrelated scales and disciplines. Another curious manifestation is how humans are changing the way they treat each other, how they structure their (human) relationships. Did humans tame the computers, or did computers tame the humans?

lcfcjs2 9y ago

Don't worry guys, it will trickle down to you eventually. 2018 is the year, it will literally crush you.

sintaxi 9y ago

In other words, the 500 wealthiest people added a trillion dollars of value to the economy this year. Edit: you all that are down-voting need to learn how the economy works.

EliRivers 9y ago
The creation of wealth, in various forms, is what adds "value" to the economy; rich people ending up owning/controlling that wealth isn't the same thing as those rich people having created that wealth. Edit: Don't passive-aggressively revel in victimhood. If you feel misunderstood, explain better - don't blame your audience.
- sintaxi 9y ago
  Providing capital to those with talent IS providing value. Thats why entrepreneurs exchange a portion of their company for the capital - capital has value and helps the entrepreneur. Money doesn't appreciate in value by doing nothing. Once you have wealth you can use it to make more wealth by taking risk based on the demands of the market.
  - EliRivers 9y ago
    That is a much better comment than your previous one. I would counter that right now, money is ridiculously cheap. Interest rates are breathtakingly low. There are enormous amounts of money running around begging to be borrowed. As such, if this system you posit was accurate, then the very wealthy would be seeing the smallest returns on their money for decades, as they effectively competed to be the lender/investor to the people creating wealth. But that's not what we're seeing. It's also not what we see with investing in the stock market; that provides nothing to a company beyond the first time a stock is sold (barring a secondary argument that there is value in demonstrating that people are trading shares in the company which makes everyone feel good about the company and there's a value in that), but the rich are seeing some fantastic returns on their money in the stock market, extracting a nice steady stream of dividends and capital value increases, without having given a penny to the company named on the stock. As an aside and speaking purely from my own experiences, I draw more each year from the stock market than my country's median salary, and I'm generating no wealth whatsoever for that (although I expect some would argue that by not selling all my shares, I'm providing value and that's what I'm being rewarded for). I could retire and get by for the rest of my life, entirely on the backs of others. The rich do the same to a breathtaking degree.

tw1010 9y ago

So what? Inequality should only matter to you personally if it means the lower bound on income, the poorest of the poor, is going down. If the richest is getting richer, maybe that means the poorest are becoming poorer as a consequence, but not necessarily, in fact, most likely not.

staticassertion 9y ago
It matters to me personally that a small group of people have such a massive amount of power. It's already completely uneven regarding voting power - I can vote once in an election, but if I had a trillion dollars I could vote once, and then I could pay lobbyists, and fund advertisements, etc. I, as a single person or small group, with a trillion dollars, can have a massive influence. This is regardless of how poor anyone else is. No one should have this kind of money, it's really absurd.
- charlesdm 9y ago
  Didn't Trump get elected with 1/7th the budget of Hillary Clinton?
  - staticassertion 9y ago
    I don't think boiling any single political event down to money is going to be meaningful. I can't imagine anyone denying that lobbyists exist and that large amounts of money can buy you a lot of political power.
    - pmc1 9y ago
      > large amounts of money can buy you a lot of political power. That is not true. Hillary spent the most money in any American campaign (nearly $1 Billion) and still lost. Strategy matters more than money https://www.vox.com/policy-and-politics/2017/3/8/14848636/hillary-clinton-tv-ads https://www.vox.com/policy-and-politics/2017/3/8/14848636/hi...
      - 9y ago

aerophilic 9y ago

There was an interesting study posted (I believe here) on how a flat 10% re-distribution (10% taxed from everyone, then redistributed evenly across everyone, aka basic income), created a more stable "society" in simulation. It did this by helping support a larger "middle class". Does anyone know the link/can point me to the study? Google is failing me at the moment...

yazaddaruvala 9y ago
The biggest issue with any sort of basic income is that landlords and grocery store owners will just ever-increase their prices. How do we combat that?
- closeparen 9y ago
  Since big city landlords are no longer in an exclusive position to sell the ability to make a living, I would expect rents to crater as people can move without so much concern for commutable jobs.
  - yazaddaruvala 9y ago
    I don’t know about you but myself and the people I know love the city cuz of convenience, social reasons, and jobs. Even today I could spend 3x less on rent if I moved and endured a 30min commute. I don’t. Having a job is not the primary priority for why I’m paying high rent.
- soperj 9y ago
  Competition.
  - yazaddaruvala 9y ago
    :) where is the competition in SF to stop landlords from ever increasing rents? Thought experiment: If we redistributed all the liquid capital that currently exists, one year later the people who own infrastructure will end up the 1% again. You can see this through some basic economics. People have more money, they are willing to spend more money. Meanwhile, supply remains constant. What happens? Prices go up. Everyone has to eat, everyone has to buy medicine, everyone needs to sleep, everyone needs the internet. Everyone “needs” to gamble. The people who own that infrastructure would be the richest again.

Fej 9y ago

> advisers to the super-rich are warning them of a “strike back” from the squeezed majority That's an understatement. When revolutions come, the rich are always the first at the guillotine. Of course, that's rather unlikely, but these people have so much money that they can afford to make that consideration.

xandar11 9y ago

Top 500 YouTubers see their subscribers_count increase by 100 million this year. Meanwhile, I got 0 increase in subscribers. It's not fair! Just imagine how much influence these popular YouTubers have compared to regular folks, the impact they have on cultural and political life. Should we allow a tiny group of YouTubers to have such a massive subscribers_count and influence? I say NO! Behind every popular YouTube channel lies a great crime.

dogruck 9y ago

Upvote this if you were at least 95% confident the markets would crash if Donald Trump became the POTUS.

jacquesm 9y ago
Let's wait until he's done.
dang 9y ago
Please don't do this here.

volgo 9y ago

As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly accepted safe withdraw rate of 4%, if you inherit $3 million (which is not even that much), you can safely collect $120,000 of capital gains/dividend income every year without doing anything. This also frees you up to work on other things that will acquire you even more wealth. People whose parents didn't leave them a large inheritance have to rely on salary, which is taxed at a higher rate and more difficult to earn. In effect, late stage capitalism becomes the anti-thesis of the spirit of capitalism - devoid of competition, free innovation, and upward mobility. In an ideal capitalism society, the most talented should earn the most, but the compounding effect of capital makes it so that whoever holds wealth the longest earns the most.

regulation_d 9y ago
In principle, I agree with you. But setting the capital gains rate is a bit of a balancing act. If the rate is too high, then this disincentivizes people from putting their money in the market, which is also not what we want.
Danihan 9y ago
I agree with much of what you said, yet I just don't see it as all that bad of a situation. I still think there is a lot of upward mobility even in that scenario -- the smarter people I know earn good salaries and have nice lifestyles. Nicer than their parents, in most cases, mainly because consumer technology constantly gets better and cheaper. And there is still opportunity for risk takers to start their own companies, and it's really not all that hard with some traction to get acquired by a bigger player. Of course, people with a lot of capital get rewarded for holding onto it / being conservative with it, but that's just common sense, not throwing good money after bad. It's like we're all supposed to say, "Yeah! Late stage capitalism is so awful!" and nod along, but it doesn't feel awful to me at all. I have a 2016 Mazda that cost $18k and it's just awesome for the price. I bought a brand new iPhone SE for $150. I bought a 50 inch TV on black Friday for $200. My parents as kids didn't have running water in their houses. I'm not all about materialism, but I'm really at a loss for what exactly I'm supposed to be feeling outraged about. I don't even really make that high of a salary, just average middle class.

barnfire 9y ago

If the wealthy had any interest in self-preservation, they would advocate higher taxes on themselves or some sort of UBI. But I'm sure Sam Walton's kids think they deserve everything they have.

erikb 9y ago

And I'm sitting here being happy that my "stock fortune" approaches four digits.

vbuwivbiu 9y ago

A small percentage of bank accounts should be randomly swapped each year, and the owners of the swapped accounts become part of a reality TV show to follow how they dealt with their change of fortune

jacquesm 9y ago
That's called the lottery. A typical lottery winner will be back where they started after a few years.
- vbuwivbiu 9y ago
  no I mean the reverse! A random rich person looses all their money

logicallee 9y ago

$1tn / 500 = $2 bn $2 bn / 7.6 billion = 0.263 Another way to think about it is that the 500 oligarchs of the world were able to capture a worldwide average of 26.63¢ from each person. In the course of 365 days it's as though each person in the world bought each of the 500 oligarchs in the world a full $0.26/$1.50 = nearly 1/5th of a single vending machine 20 ounce bottle of coke. Multiply that by 500 and you can have a very proper sit-down meal anywhere in the world. Of course, maybe they generated $500, or $1000, or $3,000 in wealth to do so. After all, the worldwide real income increased by well over twice that. But it's that fifth of a bottle of coke that bothers me, personally. Why should bill gates get a quarter from me? He obviously didn't work for it as much as I did. If anything he should be paying me. Why, you ask? What did I make that he uses? Why, I might as well ask: what do the 500 oligarchs of the world make that anyone uses - wait, don't answer that, I have a point to make here and it would kind of ruin it to know the answer. My point is, the rich need to stop getting richer. It's just not right. /s [1] http://www.ilo.org/global/research/global-reports/global-wage-report/2016/lang--en/index.htm http://www.ilo.org/global/research/global-reports/global-wag...

stretchwithme 9y ago

That's how it is when the Federal Reserve creates an asset bubble to deal with an asset bubble collapse. This is NOT something a capitalist country should be doing. It's not the job of government to make your investments work out. It's YOURS.

jknoepfler 9y ago

This isn't interesting at all, and should not be a headline in a respectable newspaper. The wealth gains are on par with market gains. The absolute dollar value of the gains is almost certainly not headline worthy. The richest individuals lost trillions a few years ago in the crash, they gain trillions in a boom. That's exactly what one would expect. I'm fiercely opposed to the regressive turn the economy has taken, but I'm just as fiercely opposed to hysterical garbage journalism. We won't correct the broken social contract by heaping nonsense upon injustice. I'm all ears for constructive policies to tie earnings for the least wealthy to market gains, since the real problem is lack of ability to invest wages in the market, but I don't see that on offer here.