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It depends on what goods you are looking at. Sure, people can "afford" an iPhone but where I live a modest house costs around 14x median full-time male salary.

It depends on what goods you are looking at. Sure, people can "afford" an iPhone but where I live a modest house costs around 14x median full-time male salary. The wealth inequality is from a small number of people capturing all this wealth. 40% of Australia's population live in either Sydney or Melbourne, and these two cities are among the top 5 least affordable in the world [1]. 1 - https://www.afr.com/companies/financial-services/australian-property-still-world-s-most-expensive-despite-sharp-falls-20190508-p51l5x https://www.afr.com/companies/financial-services/australian-...

dmytroi 7y ago
Numbers don't match though. It looks like there is physically not enough money to buy everything that is sold. For example: - There is a ballpark estimate that sum of all physical money in the world is 90.4$ trillion, let's distribute it equally to all 7.53 billion people: we get 12k$ per person. This is not enough to buy an apartment in most parts of the world. - There is an estimate that 1% has 303.9$ billion, let's distribute it equally to US population of 327.2 million people: we get 928$ per person. Barely enough to buy status smartphone. So I don't see how wealth distribution can solve anything. Even if we equalize wealth and prices at a same time, free market will quickly spiral down to similar pricing that we have today (things are barely purchasable, or not at all).
- calmworm 7y ago
  Why just physical money?
  - irishcoffee 7y ago
    s/physical/virtually-tangiable/g
  - perl4ever 7y ago
    I have no idea why or what exactly physical money is, since money mostly isn't physical, but it seems to me that it might not disrupt society too much if we redistributed all of the stock in companies in the S&P 500 equally. We already have widely diversified ownership, with index funds and pension funds, so why not take it all the way? However, the total value of the S&P 500 (which is probably about half the world stock markets value) is about $26 trillion, so that is about $3400 per person or maybe double or triple for a family. And the dividend of 1.75% means an income of $60/year if you hold on to the stock. So I think doing this redistribution would result in everybody to whom $3400 is a lot immediately selling (assuming they were allowed to). I'm not sure what the distribution of capital would end up being. Someone would buy, say "Barren Wuffet" who fortunately had all their investments in cash, bonds, and small cap stocks. So ownership would end up being concentrated again, but maybe not as concentrated. Anyone who has a lot of money saved for retirement in a large-cap fund would be unhappy, but why should you be better off than an average citizen of the world? It seems like a fine experiment to me. Edit: but just to spell it out, obviously politically impossible given the consequences for first world people who are relatively privileged but don't think of themselves that way. The median IRA balance (note, not the average that is skewed by the rich) is somewhere around $20-30K, so redistribution would affect those people like a 90% market crash.
- cycomanic 7y ago
  I'm not sure where your numbers come from, but your off by 2 orders of magnitude (are you talking income?). According to Wikipedia the wealth of the top 1% is 29 trillion (https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_Uni...).
  - MaximumYComb 7y ago
    The wealth of the top 4 richest people is ~300 billion, he's way off.
  - dmytroi 7y ago
    I've took it from [0]. It does seems like numbers are very approximate everywhere, but even than, let's take 29 trillion and distribute it between 327 million population: we get 88.6k$ per person, still not enough to buy housing in most parts of US. - [0] https://www.businessinsider.com/the-1-percent-dont-know-what-to-do-with-money-2019-6 https://www.businessinsider.com/the-1-percent-dont-know-what...
    - cambalache 7y ago
      Only if you think of single-occupancy homes. A married couple with 2 kids will be around 350k USD, peanuts for California but enough to buy a home for the family in many places in the US.
- barrkel 7y ago
  You don't understand what money is. To a first approximation, money is a intermediary unit for converting and exchanging value; it's not a large proportion of wealth by itself. The world could make do with very little money if it could move faster. Quantity of money times velocity of money times unit of time gives you the total monetary transactions over a time period; if you increase the velocity, then you can decrease the quantity, and nothing else would change. https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money
- xg15 7y ago
  > So I don't see how wealth distribution can solve anything. Even if we equalize wealth and prices at a same time, free market will quickly spiral down to similar pricing that we have today (things are barely purchasable, or not at all). Could you explain how you got to that conclusion? It does not seem logical to me at all. Current prices are in part a result of high inequality: It makes economic sense to sell a house for 10x the median income because they are still groups of people so high above the median that they can afford to pay that price - and of course as a business you'd very much like to sell to those people if in any way possible. In a society with more equal income, the highest price for which you could find a buyer would likely be a lot closer to the median.
  - geofft 7y ago
    This, in a nutshell, is why I (a highly paid software developer in NYC) would personally benefit from aggressive action on income and wealth inequality. There are enough people in this city who make tens or hundreds of times the salary I make that landlords and sellers are happy targeting them, and I'm competing against the prices they can pay. As a thought experiment: cap my salary to $50K/year and cap everyone else's to $50K/year too and market forces will quickly make me a much more competitive buyer. I wouldn't even be sad about the money I'd no longer be making, because right now a good chunk is going into rent, and an even larger chunk is going into savings so I can buy a home at NYC prices. So it's not like I get to spend it on other things. If I didn't have the money but I also didn't have to spend that money on housing, I'd be equally well off. (And all of this is leaving aside that other people would be better off, which is net good for society, etc. etc. Even the first-order effects alone are selfishly valuable.)
    - grugagag 7y ago
      I live in NYC too and am in the same situation as you and would benefit from aggressive action on income and wealth inequality too. You’re absolutely right in your thinking, income inequality makes the money agressively flow towards the ones who own most of it.
dragandj 7y ago
And yet, they can afford to live in two cities that are among the top 5 least affordable in the world. Is that a sign of them being poor or rich?

dmytroi 7y ago

Numbers don't match though. It looks like there is physically not enough money to buy everything that is sold. For example: - There is a ballpark estimate that sum of all physical money in the world is 90.4$ trillion, let's distribute it equally to all 7.53 billion people: we get 12k$ per person. This is not enough to buy an apartment in most parts of the world. - There is an estimate that 1% has 303.9$ billion, let's distribute it equally to US population of 327.2 million people: we get 928$ per person. Barely enough to buy status smartphone. So I don't see how wealth distribution can solve anything. Even if we equalize wealth and prices at a same time, free market will quickly spiral down to similar pricing that we have today (things are barely purchasable, or not at all).

calmworm 7y ago
Why just physical money?
- irishcoffee 7y ago
  s/physical/virtually-tangiable/g
- perl4ever 7y ago
  I have no idea why or what exactly physical money is, since money mostly isn't physical, but it seems to me that it might not disrupt society too much if we redistributed all of the stock in companies in the S&P 500 equally. We already have widely diversified ownership, with index funds and pension funds, so why not take it all the way? However, the total value of the S&P 500 (which is probably about half the world stock markets value) is about $26 trillion, so that is about $3400 per person or maybe double or triple for a family. And the dividend of 1.75% means an income of $60/year if you hold on to the stock. So I think doing this redistribution would result in everybody to whom $3400 is a lot immediately selling (assuming they were allowed to). I'm not sure what the distribution of capital would end up being. Someone would buy, say "Barren Wuffet" who fortunately had all their investments in cash, bonds, and small cap stocks. So ownership would end up being concentrated again, but maybe not as concentrated. Anyone who has a lot of money saved for retirement in a large-cap fund would be unhappy, but why should you be better off than an average citizen of the world? It seems like a fine experiment to me. Edit: but just to spell it out, obviously politically impossible given the consequences for first world people who are relatively privileged but don't think of themselves that way. The median IRA balance (note, not the average that is skewed by the rich) is somewhere around $20-30K, so redistribution would affect those people like a 90% market crash.
cycomanic 7y ago
I'm not sure where your numbers come from, but your off by 2 orders of magnitude (are you talking income?). According to Wikipedia the wealth of the top 1% is 29 trillion (https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_Uni...).
- MaximumYComb 7y ago
  The wealth of the top 4 richest people is ~300 billion, he's way off.
- dmytroi 7y ago
  I've took it from [0]. It does seems like numbers are very approximate everywhere, but even than, let's take 29 trillion and distribute it between 327 million population: we get 88.6k$ per person, still not enough to buy housing in most parts of US. - [0] https://www.businessinsider.com/the-1-percent-dont-know-what-to-do-with-money-2019-6 https://www.businessinsider.com/the-1-percent-dont-know-what...
  - cambalache 7y ago
    Only if you think of single-occupancy homes. A married couple with 2 kids will be around 350k USD, peanuts for California but enough to buy a home for the family in many places in the US.
barrkel 7y ago
You don't understand what money is. To a first approximation, money is a intermediary unit for converting and exchanging value; it's not a large proportion of wealth by itself. The world could make do with very little money if it could move faster. Quantity of money times velocity of money times unit of time gives you the total monetary transactions over a time period; if you increase the velocity, then you can decrease the quantity, and nothing else would change. https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money
xg15 7y ago
> So I don't see how wealth distribution can solve anything. Even if we equalize wealth and prices at a same time, free market will quickly spiral down to similar pricing that we have today (things are barely purchasable, or not at all). Could you explain how you got to that conclusion? It does not seem logical to me at all. Current prices are in part a result of high inequality: It makes economic sense to sell a house for 10x the median income because they are still groups of people so high above the median that they can afford to pay that price - and of course as a business you'd very much like to sell to those people if in any way possible. In a society with more equal income, the highest price for which you could find a buyer would likely be a lot closer to the median.
- geofft 7y ago
  This, in a nutshell, is why I (a highly paid software developer in NYC) would personally benefit from aggressive action on income and wealth inequality. There are enough people in this city who make tens or hundreds of times the salary I make that landlords and sellers are happy targeting them, and I'm competing against the prices they can pay. As a thought experiment: cap my salary to $50K/year and cap everyone else's to $50K/year too and market forces will quickly make me a much more competitive buyer. I wouldn't even be sad about the money I'd no longer be making, because right now a good chunk is going into rent, and an even larger chunk is going into savings so I can buy a home at NYC prices. So it's not like I get to spend it on other things. If I didn't have the money but I also didn't have to spend that money on housing, I'd be equally well off. (And all of this is leaving aside that other people would be better off, which is net good for society, etc. etc. Even the first-order effects alone are selfishly valuable.)
  - grugagag 7y ago
    I live in NYC too and am in the same situation as you and would benefit from aggressive action on income and wealth inequality too. You’re absolutely right in your thinking, income inequality makes the money agressively flow towards the ones who own most of it.

dragandj 7y ago

And yet, they can afford to live in two cities that are among the top 5 least affordable in the world. Is that a sign of them being poor or rich?