4 ms·

“If poor people knew how rich rich people are, there'd be riots in the streets”

Buetol 9y ago
The url should be changed to: https://rwer.wordpress.com/2018/03/06/if-poor-people-knew-how-rich-rich-people-are-there-would-be-riots-in-the-streets/ https://rwer.wordpress.com/2018/03/06/if-poor-people-knew-ho... Also, like Piketty said in his book, this trend could be inversed and stabilized if we had more taxes on capital, that's literally the solution to world hunger / education / healthcare.
- sctb 9y ago
  Thanks, we've updated the link from https://www.marketwatch.com/story/econ-professor-says-experts-are-wrong-on-inequality-its-actually-much-worse-2018-03-06 https://www.marketwatch.com/story/econ-professor-says-expert..., which points to this.
- forapurpose 9y ago
  Could you provide some detail about what Piketty said?
  - burke 9y ago
    This is, I'm sure, butchering the details to some degree or another, but in brief: Piketty's primary thesis is that as the rate of return on capital grows, so too does inequality between holders of capital and the lower classes. The rate of return on capital has been increasing steadily since the start of the industrial revolution. In order to reduce inequality without abolishing our entire system of economy and government, the most obvious lever is to reduce the rate of return on capital. The most obvious way to do that is to tax it.
    - adamchalmers 9y ago
      Specifically, he calls for a global tax on all capital, regardless of whether it's real estate, financial assets, homes, bonds, bank accounts. That way people can't get around it by shifting their assets overseas or into different forms. Obviously this would be difficult to implement, but it can be done by individual states, then countries, then by groups like the EU, etc.
      - WkndTriathlete 9y ago
        I think this is impossible to implement without a significant fraction of the G-8 or G-20 countries electing technocrats to office. Right now I'm envisioning Merkel and Macron asking themselves what on earth is happening in the rest of the West, especially in the wake of the election results in Italy over the past couple of days.
sokoloff 9y ago
> “If we take out housing and pensions [which in another part of the article we observe 'those two categories comprise most of the so-called wealth of most Americans'] and calculate just the shares of financial or business wealth — and, thus, equities, fixed-income claims, and business assets — the degree of inequality is much, much worse. So, if we take out the first two elements of the American dream and likely the first two items that Americans save for, which we've discovered represent most of the wealth of the middle and upper middle class, we find that the remaining wealth is even more unequal. Well, duh...
- leggomylibro 9y ago
  Basic housing and a sense of security are things that we should like all of our citizens to have access to. I don't see that it's particularly unreasonable to remove those costs from consideration when we consider a person's wealth. Sure, they are enormous assets for the individual. But if the individual didn't need a place to sleep, it would be a gobsmackingly terrible investment to put most of your life's earnings into one basket like that. It's an investment made under duress, and the anticipated appreciation in value comes from the fact that future generations will be similarly forced.
  - gjm11 9y ago
    It would make some sense to subtract off a fixed amount for "basic housing" and another for a basic pension. But that's not what Ruccio wants to do. He wants to exclude all housing and pension wealth. That's crazy! It means that given two people in the exact same financial situation, if one of them decides they want to spend more of their money on a really nice house (or a house somewhere really expensive) then suddenly that person is -- for the purposes of Ruccio's calculations -- much poorer. Likewise if one of them decides they want to move a load of their money into (tax-efficient) pension funds. Nonsense: this reflects a difference in priorities and preferences, not in wealth.
    - jakelazaroff 9y ago
      This isn't about the relative wealth of two people in similar financial situations, it's about the relative wealth of hundreds of millions of people in vastly different financial situations. Sure, caps for "basic housing" and "basic pension" might make small comparisons easier. But unless 90% of Americans are (in aggregate) so overspending on housing and pensions that it substantially affects their wealth relative to the top 1%, it's not really crazy to exclude it all.
gjm11 9y ago
The actual claim seems to be: inequality looks much more extreme if instead of comparing people's total wealth you compute their wealth minus housing and pensions. I dare say that's true, but I don't see any good reason why you should do the comparison that way. (Other than a desire to make the figures look more extreme, I guess.) Suppose Alice has $500k in pension funds, a house worth $400k, and $100k in ordinary non-retirement savings. And suppose Bob has $100k in pension funds, rents rather than owns his house (a similar one to Alice's), and has $900k in ordinary non-retirement savings. Apparently Ruccio wants us to consider Bob much richer than Alice, because he has $900k in non-housing non-pension wealth whereas Alice only has $100k of that. But their real situations are extremely similar, and most likely Alice is actually better off because her pension funds will be subject to less tax.
- pranjalv123 9y ago
  Housing and pension wealth are a fundamentally different kind of wealth than, e.g. factories, farmland, businesses, rental properties etc. The clearest contrast is between a house and a factory. If you own a factory, you have economic power - you can hire workers, pay them $X dollars, and get $X+Y dollars from what they produce. The point is that housing and pension wealth doesn't produce surplus, whereas financial and business wealth does. I don't know if I fully understand the pensions argument, but I absolutely agree with the housing argument.
  - gjm11 9y ago
    I think there's an interesting distinction to be made between wealth that naturally produces more wealth (like owning a successful business, or a share of it) and wealth that doesn't (like owning a fancy house). And (something something Piketty r>g something) there is something to be said for measuring how "productive" wealth is distributed, as distinct from things like gold and housing and bank accounts. But: That isn't what Ruccio is proposing, nor is yours or anything like it the reason he gives. My pension funds are approximately 100% equities. They will, if the businesses they're invested in do well, grow. They provide me, in principle, with a tiny amount of power over those businesses (though I'm not sure I have any way to exercise it). But Ruccio wants those excluded from my net wealth when calculating his statistics. The money in my bank account is (as far as I'm concerned) just cash. I suppose my bank gets to use (most of) it for productive investments, but it makes no surplus for me. But Ruccio wants that included in my net wealth when calculating his statistics.
hackbinary 9y ago
Wait, what? If poor people knew .... ?! There were riots in England in 2011. There has been rioting in the US. Usually this rioting is kicked off by police brutality, but it seems to me that it quickly descends into looting.
maxxxxx 9y ago
You just have to look at the first graph you know that something is going extremely wrong. That trend is not sustainable and will split society apart.
- mirimir 9y ago
  > That trend is not sustainable and will split society apart. Has society ever been together? The middle class is a relatively recent thing.
  - maxxxxx 9y ago
    I think historically societies have been divided into haves and have-nots. Over the last 200 years we slowly have moved a state where it was accepted that all citizens have a stake in a country and should have a say (democracy) and it was understood that if the country does better the benefits should be distributed to all and motivate them. If we go back to the state where improvements in the economy only go to a few people and the rest stagnates we can forget about democracy and just go back to aristocracy.
    - mirimir 9y ago
      That's where we're headed, I agree. But I do believe that the degree of equity has been exaggerated. Spend much time in Central America, for example, and the gulf between classes is obvious. In the US it's far less so. Partly it's pretense. But it's also geographical segregation. It's really in your face, in parts of Manhattan.
      - maxxxxx 9y ago
        I think what counts is the trend and that doesn't look good.

The url should be changed to: https://rwer.wordpress.com/2018/03/06/if-poor-people-knew-how-rich-rich-people-are-there-would-be-riots-in-the-streets/ https://rwer.wordpress.com/2018/03/06/if-poor-people-knew-ho... Also, like Piketty said in his book, this trend could be inversed and stabilized if we had more taxes on capital, that's literally the solution to world hunger / education / healthcare.

sctb 9y ago
Thanks, we've updated the link from https://www.marketwatch.com/story/econ-professor-says-experts-are-wrong-on-inequality-its-actually-much-worse-2018-03-06 https://www.marketwatch.com/story/econ-professor-says-expert..., which points to this.
forapurpose 9y ago
Could you provide some detail about what Piketty said?
- burke 9y ago
  This is, I'm sure, butchering the details to some degree or another, but in brief: Piketty's primary thesis is that as the rate of return on capital grows, so too does inequality between holders of capital and the lower classes. The rate of return on capital has been increasing steadily since the start of the industrial revolution. In order to reduce inequality without abolishing our entire system of economy and government, the most obvious lever is to reduce the rate of return on capital. The most obvious way to do that is to tax it.
  - adamchalmers 9y ago
    Specifically, he calls for a global tax on all capital, regardless of whether it's real estate, financial assets, homes, bonds, bank accounts. That way people can't get around it by shifting their assets overseas or into different forms. Obviously this would be difficult to implement, but it can be done by individual states, then countries, then by groups like the EU, etc.
    - WkndTriathlete 9y ago
      I think this is impossible to implement without a significant fraction of the G-8 or G-20 countries electing technocrats to office. Right now I'm envisioning Merkel and Macron asking themselves what on earth is happening in the rest of the West, especially in the wake of the election results in Italy over the past couple of days.

sokoloff 9y ago

> “If we take out housing and pensions [which in another part of the article we observe 'those two categories comprise most of the so-called wealth of most Americans'] and calculate just the shares of financial or business wealth — and, thus, equities, fixed-income claims, and business assets — the degree of inequality is much, much worse. So, if we take out the first two elements of the American dream and likely the first two items that Americans save for, which we've discovered represent most of the wealth of the middle and upper middle class, we find that the remaining wealth is even more unequal. Well, duh...

leggomylibro 9y ago
Basic housing and a sense of security are things that we should like all of our citizens to have access to. I don't see that it's particularly unreasonable to remove those costs from consideration when we consider a person's wealth. Sure, they are enormous assets for the individual. But if the individual didn't need a place to sleep, it would be a gobsmackingly terrible investment to put most of your life's earnings into one basket like that. It's an investment made under duress, and the anticipated appreciation in value comes from the fact that future generations will be similarly forced.
- gjm11 9y ago
  It would make some sense to subtract off a fixed amount for "basic housing" and another for a basic pension. But that's not what Ruccio wants to do. He wants to exclude all housing and pension wealth. That's crazy! It means that given two people in the exact same financial situation, if one of them decides they want to spend more of their money on a really nice house (or a house somewhere really expensive) then suddenly that person is -- for the purposes of Ruccio's calculations -- much poorer. Likewise if one of them decides they want to move a load of their money into (tax-efficient) pension funds. Nonsense: this reflects a difference in priorities and preferences, not in wealth.
  - jakelazaroff 9y ago
    This isn't about the relative wealth of two people in similar financial situations, it's about the relative wealth of hundreds of millions of people in vastly different financial situations. Sure, caps for "basic housing" and "basic pension" might make small comparisons easier. But unless 90% of Americans are (in aggregate) so overspending on housing and pensions that it substantially affects their wealth relative to the top 1%, it's not really crazy to exclude it all.

gjm11 9y ago

The actual claim seems to be: inequality looks much more extreme if instead of comparing people's total wealth you compute their wealth minus housing and pensions. I dare say that's true, but I don't see any good reason why you should do the comparison that way. (Other than a desire to make the figures look more extreme, I guess.) Suppose Alice has $500k in pension funds, a house worth $400k, and $100k in ordinary non-retirement savings. And suppose Bob has $100k in pension funds, rents rather than owns his house (a similar one to Alice's), and has $900k in ordinary non-retirement savings. Apparently Ruccio wants us to consider Bob much richer than Alice, because he has $900k in non-housing non-pension wealth whereas Alice only has $100k of that. But their real situations are extremely similar, and most likely Alice is actually better off because her pension funds will be subject to less tax.

pranjalv123 9y ago
Housing and pension wealth are a fundamentally different kind of wealth than, e.g. factories, farmland, businesses, rental properties etc. The clearest contrast is between a house and a factory. If you own a factory, you have economic power - you can hire workers, pay them $X dollars, and get $X+Y dollars from what they produce. The point is that housing and pension wealth doesn't produce surplus, whereas financial and business wealth does. I don't know if I fully understand the pensions argument, but I absolutely agree with the housing argument.
- gjm11 9y ago
  I think there's an interesting distinction to be made between wealth that naturally produces more wealth (like owning a successful business, or a share of it) and wealth that doesn't (like owning a fancy house). And (something something Piketty r>g something) there is something to be said for measuring how "productive" wealth is distributed, as distinct from things like gold and housing and bank accounts. But: That isn't what Ruccio is proposing, nor is yours or anything like it the reason he gives. My pension funds are approximately 100% equities. They will, if the businesses they're invested in do well, grow. They provide me, in principle, with a tiny amount of power over those businesses (though I'm not sure I have any way to exercise it). But Ruccio wants those excluded from my net wealth when calculating his statistics. The money in my bank account is (as far as I'm concerned) just cash. I suppose my bank gets to use (most of) it for productive investments, but it makes no surplus for me. But Ruccio wants that included in my net wealth when calculating his statistics.

hackbinary 9y ago

Wait, what? If poor people knew .... ?! There were riots in England in 2011. There has been rioting in the US. Usually this rioting is kicked off by police brutality, but it seems to me that it quickly descends into looting.

maxxxxx 9y ago

You just have to look at the first graph you know that something is going extremely wrong. That trend is not sustainable and will split society apart.

mirimir 9y ago
> That trend is not sustainable and will split society apart. Has society ever been together? The middle class is a relatively recent thing.
- maxxxxx 9y ago
  I think historically societies have been divided into haves and have-nots. Over the last 200 years we slowly have moved a state where it was accepted that all citizens have a stake in a country and should have a say (democracy) and it was understood that if the country does better the benefits should be distributed to all and motivate them. If we go back to the state where improvements in the economy only go to a few people and the rest stagnates we can forget about democracy and just go back to aristocracy.
  - mirimir 9y ago
    That's where we're headed, I agree. But I do believe that the degree of equity has been exaggerated. Spend much time in Central America, for example, and the gulf between classes is obvious. In the US it's far less so. Partly it's pretense. But it's also geographical segregation. It's really in your face, in parts of Manhattan.
    - maxxxxx 9y ago
      I think what counts is the trend and that doesn't look good.