8 ms·
Billionaires extract wealth rather than create it
- DATACOMMANDER 7y agoReal-estate speculation is basically rent-seeking, but inheritance is not. If someone amasses a fortune by creating wealth and leaves his assets to his offspring, they are not parasitic even if they never work. What matters is how the wealth was originally accumulated.
- Porthos9K 7y agoWhy do you believe that inheritance is not parasitic or rent-seeking behavior? Large fortunes exert a gravitational effect, attracting more money and thus making their owners much more powerful than they would otherwise be. The way I see it, the unchecked growth of intergenerational wealth is how we end up with aristocracy, and I would rather prevent aristocracy from rising than try to overthrow it once it's entrenched.
- DATACOMMANDER 7y agoActually, most fortunes go to zero within a few generations. The “1% squared”—the top 0.01%—is not a monolithic group of people. I’d wager that 90% of the 0.01% had grandparents who were not even part of the 1%.
- Porthos9K 7y agoI don't find your argument persuasive.
- DATACOMMANDER 7y agoOkay.
- zelly 7y agoAnd the wealth may never have been accumulated in the first place if inheritance were illegal.
- DATACOMMANDER 7y agoAlso true. See, e.g., Breaking Bad ;)
- drpixie 7y agoIn a very fundamental way, there is no such thing as "wealth creation", there is only wealth acquisition. Wealth is a zero-sum game. No business actually makes money (well apart from a government mint:), but they do move it from elsewhere. No VC creates wealth - they get money from other people, perhaps in exchange for goods or services, but at the end of the day the total amount of money hasn't changed.
- JauntTrooper 7y agoI disagree. Wealth is not zero sum. A vaccine is worth much more than all of the sum of its parts. The value of a bridge is not just the concrete, steel and manhours it took to build it. Wealth is created when something is built, arranged, or designed in a way that is better than its inputs, in a way that benefits people.
- MR4D 7y agoYou have absolutely zero understanding of wealth. An example to prove my point: You have an apple seed. You plant the apple seed. You tend to the growing plant (soon a tree). A few years of work tending to the plant, and you get hundreds of apples every year. No money is necessary. Wealth is about abundance. Money is just one type of scorecard. Apologies for the strong tone, but the type of thinking that you just displayed has destroyed civilizations in the past.
- d-d 7y ago> You have an apple seed So where'd you get the seed? Or the land? Or the time to plant and tend to the tree?
- corporate_shi11 7y agoYou either already own or pay for the seed, the land and the man-hours to tend the tree. This both employs people and brings more abundance into the world.
- mempko 7y ago
- snidane 7y agoRent seeking is natural. That's why we get progress. Nobody would ever invest time and money to a business idea whose profits would get immediately competed away. Everybody would on the other hand invest into a business with guaranteed profits which cannot be competed away - ie. a monopoly. That's producer's perspective. Consumer would on the other hand rather see competition among producers, because lack of competition leads to overpriced shitty products. However fierce competition leads to shitty and dangerous products too, because of need to cut corners and lack od funding for long term research (eg. current day airline industry). So there must be a middle ground. Some degree of rents (profit which cannot be competed away) is necessary for progress and product quality. There are several kinds of rents that I see. 1. Short term innovation monopoly These rents are usually short termed until they get copied by others. These are perceived to be fair and even if not, they have short life span, so who cares. Wait 5-10 years before the market catches up. 2. Rents from natural monopoly. Generally all network infrastructure falls under this because the first mover has great advantage over potential successors eg. by laying railroads, sewers, power grid or network cables in geographically optimal location. Other natural monopolies are eg. law or stuff which might harm you (drugs, pharma) - people prefer goods that everybody else uses and distrust smaller unknown alternatives. 3. Government blessed monopolies. For many industries it is more profitable to strangle competition than to better their products. Eg. patents, Mergers&Acquisitions, price undercutting and especially lobbying of regulations targetted against potential competitors - often in form of 'safety' regulations supposed to protect customers. Pharma industry would be a prime example. 4. Front running is another form of guaranteed income posing as legitimate business. In finance: you are a banker and your client asks you to buy a stock for him. You buy the stock for yourself, which hikes the price and then you sell it to your customer at higher price. In housing: you know that there is a massive trend of jobs concentrating in cities. You cheaply buy all land and houses in a prospering city, because you know that it will be needed by future generations. They will pay you huge rents later on. Nobody can stop you because your 'customers' are often not even born yet. In both cases you seemingly offered your customer a service which they voluntarily paid you for, but something feels fishy about it. All in all there are good rents and bad rents. How about distinguishing between the two and reversing the weird current tax system, which collects from the good ones (income, corporate and sales taxes) and giving to the bad bad ones (subsidies, redistribution). Since often the government guarantees some company a monopoly, why shouldn't it pay for that privilege. Monopoly based taxation seems to me like quite a fair tax system.
- seibelj 7y agoWho would you rather have another $100 million dollars - the US government or Bill Gates? One has a track record of creating incredible products, the other is a literal dumpster fire, blowing $100bil ain’t nothing to the government.
- brnt 7y agoOne of those 100M is spent, on goods and services provided by working people, while the other 100M may sit idle for decades to come.
- seibelj 7y agoMy favorite argument in defense of billionaires is space. Governments made basically no progress in outer space, and then a few billionaires decide they want to go the stars, and suddenly everything happens again. And those billionaires did it with a fraction of the funds that the government could marshal - they have private sector acumen. You let the billionaires have their money because letting free people control that much capital is far superior to the government.
- LiquidSky 7y agoWhat are you talking about? Space travel is literally the worst possible argument on this front. >Governments made basically no progress in outer space Governments made ALL progress in space, ever. Space travel only exists at all because governments poured unbelievable amounts of money, resources, and people into researching and developing it over decades. These billionaires' efforts are starting on top of that. If they had to start from scratch it would be impossible. Government space programs petered out not because of a lack of "acument" or some other nonsense, but because public support for these programs ebbed as the impetus (the Cold War) went away. You really couldn't think of a worse example that completely undercuts your point.
- gamblor956 7y ago... Using decades of government funded research that let them save billions. Billionaires are good at commercializing the work of others. But they're not creators.
- tyzerdak 7y agoThis true but alternative is much worse.
- zaro 7y agoWhich alternative? It's not like there is only one alternative, and they can't all possibly be much worse.