3 ms·

Tl;dr: Wealthy and poor cohorts are not necessarily stable over time, generational boundaries in particular seem to be a relatively strong predictor of change.

Tl;dr: Wealthy and poor cohorts are not necessarily stable over time, generational boundaries in particular seem to be a relatively strong predictor of change. However people who are now poor are just as poor as the poor of the 70s, while those who are now extremely wealthy are even more extremely wealthy than the rich of the 70s.

metalchianti 8y ago
I bet that compound earnings are the main contributor here. It's much easier to save more money because you're wealthy and have more money. Across generations this effect is massive.
- marricks 8y ago
  That will certainly be compounded by the demise of the estate tax. That said it’s not like intergenerational wealth is a new thing, wouldn’t that be the case way before the 70s? It seems the trickle down economics approach taken since the 70s from both Democrats and Republicans hasn’t really helped anyone but the rich.
  - metalchianti 8y ago
    The same inter-generational wealth logic would apply pre-1970s. I think that 1970 is used as a starting point because that's also when real wages started dropping relative to production output. I'm don't think it's fair to blame US politics. I bet this is a universal phenomenon.
    - marricks 8y ago
      Your argument is wealthy inequality has been rising universally since the birth of the USA? It’s not hard to find a chart and it was OK and exploded since the 70s, perhaps coincidentally with trickle down economics and neoliberalism. https://static-ssl.businessinsider.com/image/54610db56da811360c3cf8af-960-720/the-swings-in-inequality-over-the-twentieth-century-are-even-more-dramatic-when-looking-at-wealth-rather-than-income.jpg https://static-ssl.businessinsider.com/image/54610db56da8113...
    - conanbatt 8y ago
      Usually economists are obsessed with the Reagan administration, its quite remarkable.
- Floegipoky 8y ago
  *EDIT: I think I misinterpreted your point, but I'm going to leave this because I think it's valid. That probably contributes, however the reality is that most Americans (particularly below-average earners) are living paycheck to paycheck and therefore don't have opportunities to significantly contribute to savings. I suspect that the average American is far more affected by compound debt rather than compound savings. Rather, I think that there are 2 main factors driving upward mobility of low-skill/replaceable/disposable workers: 1. Over time, some are able to break into industries where they can build a career instead of working dead-end minimum-wage jobs. 2. Many busted their asses so that their kids could get a good education. Their kids saw how hard their parents struggled and were motivated to pursue stable careers.
- conanbatt 8y ago
  I think this explains a gap between a line of wealthy people and the poor classes that reach adulthood with 0 wealth. But on the other side, an upper class that have a kid that never produces and lives off the inheritance will fall behind another one that continues with the empire growing. And it turns out, most multi-millionaires have a regression to the mean: people really do spend up inheritances. If the world gets richer, we should expect that the richest will be wealthiest with the passage of time, due to the compounding effect of wealth itself, but thats not really a problem for anyone..

metalchianti 8y ago

I bet that compound earnings are the main contributor here. It's much easier to save more money because you're wealthy and have more money. Across generations this effect is massive.

marricks 8y ago
That will certainly be compounded by the demise of the estate tax. That said it’s not like intergenerational wealth is a new thing, wouldn’t that be the case way before the 70s? It seems the trickle down economics approach taken since the 70s from both Democrats and Republicans hasn’t really helped anyone but the rich.
- metalchianti 8y ago
  The same inter-generational wealth logic would apply pre-1970s. I think that 1970 is used as a starting point because that's also when real wages started dropping relative to production output. I'm don't think it's fair to blame US politics. I bet this is a universal phenomenon.
  - marricks 8y ago
    Your argument is wealthy inequality has been rising universally since the birth of the USA? It’s not hard to find a chart and it was OK and exploded since the 70s, perhaps coincidentally with trickle down economics and neoliberalism. https://static-ssl.businessinsider.com/image/54610db56da811360c3cf8af-960-720/the-swings-in-inequality-over-the-twentieth-century-are-even-more-dramatic-when-looking-at-wealth-rather-than-income.jpg https://static-ssl.businessinsider.com/image/54610db56da8113...
  - conanbatt 8y ago
    Usually economists are obsessed with the Reagan administration, its quite remarkable.
Floegipoky 8y ago
*EDIT: I think I misinterpreted your point, but I'm going to leave this because I think it's valid. That probably contributes, however the reality is that most Americans (particularly below-average earners) are living paycheck to paycheck and therefore don't have opportunities to significantly contribute to savings. I suspect that the average American is far more affected by compound debt rather than compound savings. Rather, I think that there are 2 main factors driving upward mobility of low-skill/replaceable/disposable workers: 1. Over time, some are able to break into industries where they can build a career instead of working dead-end minimum-wage jobs. 2. Many busted their asses so that their kids could get a good education. Their kids saw how hard their parents struggled and were motivated to pursue stable careers.
conanbatt 8y ago
I think this explains a gap between a line of wealthy people and the poor classes that reach adulthood with 0 wealth. But on the other side, an upper class that have a kid that never produces and lives off the inheritance will fall behind another one that continues with the empire growing. And it turns out, most multi-millionaires have a regression to the mean: people really do spend up inheritances. If the world gets richer, we should expect that the richest will be wealthiest with the passage of time, due to the compounding effect of wealth itself, but thats not really a problem for anyone..