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Are you upset r >> g? What if you had to retire on savings that were sitting in a bank account earning .1% APY? If you make on average, $100k a year over a sho

by elamje 7y ago

Are you upset r >> g? What if you had to retire on savings that were sitting in a bank account earning .1% APY? If you make on average, $100k a year over a short 30 year career, saving only 10% at .1% APY, what are your savings? $314.5k. What if you invest instead and earn on average 8%? $1.2MM How about over 40 years? $418k vs $2.8MM. Compound interest has and will continue to be a major driver for wealth throughout the world. Reducing its benefit to a moral argument of the rich getting richer is sad. Many of the richest Americans are taking part in the giving pledge, allowing their wealth to build and take advantage of compound interest over their lifetime and giving a large portion of it back. The alternative is giving 40+% to the government each year, who will not be earning compound interest with it. https://givingpledge.org/PledgerList.aspx https://givingpledge.org/PledgerList.aspx Compound interest coupled with the fact that people can’t take their wealth to the grave makes for a natural ability for money to both amass quickly and then be transferred back to the public or to heirs or wherever else.

afpx 7y ago
What would happen if there was an almost 100% estate tax (assuming that loopholes could be controlled)? Would it be all that bad?
- elamje 7y ago
  Well, I'm not sure if it would be bad per say, but essentially, you you be taking away the freedom for people to do with that money as they please after they pass. In many cases, people in the US agree that private organizations, such as non-profits, charities, etc. do a slightly better job than the US govrnmt at allocating large amounts of capital. I would personally prefer a person passionate about cancer research to allocate $1B rather than short sighted, sometimes pork-barreling, legislators.
AgentOrange1234 7y ago
Your compound interest is generated by the hard work of other people, and when you transfer it to your heirs you’re just creating aristocrats. I don’t see the public good here.
- elamje 7y ago
  I’m not saying heirs are good or bad, some end up going on to make even bigger economic impact and some completely bust. Regardless, the giving pledge and other philanthropic things are changing the game for the argument against billionaires. Hard to hate someone that’s going to give 95+% of their net worth to cancer research, homelessness, etc. For some of us on HN that work in Tech, we are making great salaries on the backs of the the people that built the building we work in, or the computers we use for our job. You could say that the factory worker in China that built our PC deserves some of the wealth that we amassed via our computers/servers/etc. Follow it down the rabbit hole and you will see that everyone on this forum has benefitted from the hard work of others, and those people benefitted from the hard work of those that built their factories, homes, etc.
  - 127 7y ago
    The whole idea of people being paid different amount of money for their work is how much they produce. It's nonsensical to say low skilled workers should be paid as much as high skilled workers. Yes everyone benefits from everyone elses hard work. We transfer value through money. People participate in a voluntary system where the prices are controlled by supply and demand.
    - deleted 7y ago
      [deleted]
- barry-cotter 7y ago
  Their hard work is enabled by you saving instead of consuming the product of your labour. When you transfer it to your heirs you’re giving them a temporary leg up which dissipates over time because people spend or invest money. If they spend it it’s not a long term problem, they don’t have it any more. If they invest it either they’re bad at it in which case their relative position will decline, so it’s not a problem, or they’re good at it, so they’re contributing to economic growth by efficiently allocating resources. The public good is that secure property rights are a great way of increasing economic growth which enables human flourishing. Would you rather live in a world as rich as the 1910s USA, with equal wealth per person, or now, with antibiotics, air conditioning, cheap easy and safe travel and practically free high quality entertainment available 24 hours a day? In 1904 one of the most powerful men in the world, the US President, Calvin Coolidge, has his son die of an infected blister. I’d be hard pressed to choose between living as an average Ukrainian today or Rockefeller or Carnegie back then. Economic growth does enormous good to huge swathes of people and confiscatory taxation jeopardises that.

by elamje 7y ago

afpx 7y ago

What would happen if there was an almost 100% estate tax (assuming that loopholes could be controlled)? Would it be all that bad?

elamje 7y ago
Well, I'm not sure if it would be bad per say, but essentially, you you be taking away the freedom for people to do with that money as they please after they pass. In many cases, people in the US agree that private organizations, such as non-profits, charities, etc. do a slightly better job than the US govrnmt at allocating large amounts of capital. I would personally prefer a person passionate about cancer research to allocate $1B rather than short sighted, sometimes pork-barreling, legislators.

AgentOrange1234 7y ago

Your compound interest is generated by the hard work of other people, and when you transfer it to your heirs you’re just creating aristocrats. I don’t see the public good here.

elamje 7y ago
I’m not saying heirs are good or bad, some end up going on to make even bigger economic impact and some completely bust. Regardless, the giving pledge and other philanthropic things are changing the game for the argument against billionaires. Hard to hate someone that’s going to give 95+% of their net worth to cancer research, homelessness, etc. For some of us on HN that work in Tech, we are making great salaries on the backs of the the people that built the building we work in, or the computers we use for our job. You could say that the factory worker in China that built our PC deserves some of the wealth that we amassed via our computers/servers/etc. Follow it down the rabbit hole and you will see that everyone on this forum has benefitted from the hard work of others, and those people benefitted from the hard work of those that built their factories, homes, etc.
- 127 7y ago
  The whole idea of people being paid different amount of money for their work is how much they produce. It's nonsensical to say low skilled workers should be paid as much as high skilled workers. Yes everyone benefits from everyone elses hard work. We transfer value through money. People participate in a voluntary system where the prices are controlled by supply and demand.
  - deleted 7y ago
    [deleted]
barry-cotter 7y ago
Their hard work is enabled by you saving instead of consuming the product of your labour. When you transfer it to your heirs you’re giving them a temporary leg up which dissipates over time because people spend or invest money. If they spend it it’s not a long term problem, they don’t have it any more. If they invest it either they’re bad at it in which case their relative position will decline, so it’s not a problem, or they’re good at it, so they’re contributing to economic growth by efficiently allocating resources. The public good is that secure property rights are a great way of increasing economic growth which enables human flourishing. Would you rather live in a world as rich as the 1910s USA, with equal wealth per person, or now, with antibiotics, air conditioning, cheap easy and safe travel and practically free high quality entertainment available 24 hours a day? In 1904 one of the most powerful men in the world, the US President, Calvin Coolidge, has his son die of an infected blister. I’d be hard pressed to choose between living as an average Ukrainian today or Rockefeller or Carnegie back then. Economic growth does enormous good to huge swathes of people and confiscatory taxation jeopardises that.