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I always like to say that we live in an exponential meritocracy, where your accumulated merit enhances your ability to accumulate more merit, eventually resulti

by hliyan 6y ago

I always like to say that we live in an exponential meritocracy, where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.

gruez 6y ago
>Perhaps we need a linear meritocratic function. So basically, some way to prevent wealth from being passed across generations?
- nine_k 6y ago
  Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. Should anyone suggest to prevent passing as much as, say, $100k to your child (an approximate price of a university tuition), said anyone will see a massive push back from basically all strata of the society.
  - rmrfstar 6y ago
    Yeah, but they benefited from a system that coerces people to trade their labor for less than it is worth. Zuckerberg is worth >3x the annual income of all surgeons in the US. It is implausible that his net worth reflects his replacement cost. Even PG has said (to Zuckerberg) that if it wasn't him, it would have been someone else.
    - imgabe 6y ago
      The amount of value you can obtain by trading something is by definition what it is worth. If nobody is willing to pay you an amount for something, it's not worth that much. > It is implausible that his net worth reflects his replacement cost. Why should it? His net worth reflects the expected value of the portion of Facebook that he owns. Why would it have anything to do with his replacement cost?
      - sudosysgen 6y ago
        Hmm, not really. The cost of labour is actually generally agreed to be the replacement cost of the labour. As a society, the only thing that we take out of Zuckerberg is his labour, so he shouldn't get anymore than the replacement cost of his labour. In other words, if someone would have done Zuckerberg's work for less compensation - and the GP asserts it is the case - then we as a society lose by having Zuckerberg do it instead of the lower compensated alternative. In other words, when someone gets paid more than their replacement cost, there is a market inefficiency that causes loss to the vast majority.
        imgabe 6y ago
        He doesn't "get" anything. His net worth is due to ownership in the company he made. When people talk about his net worth increasing, that's due to the shares appreciating. He didn't get more of anything. He owns the same number of shares, they just became more valuable. Zuckerberg is not employed by society. We're not all collectively paying him a salary. If you're saying we should completely abolish private property, that's a different thing altogether.
        sudosysgen 6y ago
        Private property exists because it is an organization of things that is useful to society. That's why we heavily limit it using taxation and so forth. We allow people to own capital because it motivates them to do some types of work. If we allow people to concentrate more capital than necessary to motivate them to do that work, we lose.
        imgabe 6y ago
        There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?
        ardy42 6y ago
    - missedthecue 6y ago
      I feel like there's a false equivalence being made here. You're comparing wage to net worth. Zuckerberg's net worth is not a function of his replacement cost. It's the percentage of his own company that he owns, valued at market price. This happens to be worth $100B at current market levels, but it is independent of whether he continues to work at Facebook or anywhere else. It's not compensation for labour.
  - nsajko 6y ago
    Your point is truthful but not completely relevant: Bezos, at least, did receive a considerable amount of money as funding for Amazon from his family. My point is that the money received from parents most often is, in fact, an advantage. Now that I wrote it down explicitly, I wonder why is it that I have to argue this, seems quite obvious. (Note: I'm not saying the funding from parents was sufficient, or even necessary in Bezos' case.)
    - nine_k 6y ago
      I see! It's a transfer between generations, though not an inheritance (which some people suggest to tax heavily). Again, Bezos got about $300k from his family (both his parents were doctors), which, I think, is far below the level of "unjust inherited fortune" or what is usually people suggest to tax into oblivion. Yes, when your parents help you, it's helpful — it's nearly tautologically true. This is why I as a parent do help my grown-up son sometimes. Limiting this behavior is not quite realistic, and would be met with a huge backlash (justly, to my mind).
      - usrusr 6y ago
        The problem is not intergenerational help, that existed at least as much if not more in times of less inequality. The problem is the size of the spoils. Intergenerational help is only brought up as a counter to the tired "it's your fault if you aren't a billionaire" defense (which is rarely brought up by billionaires themselves but all the time by their broke admirers)
  - Rebelgecko 6y ago
    It's a lot easier to make billions when you already have millions (like Elon Musk's dad, who joked about how he had too much money in his safe to be able shut the door when his gemstone mine was doing well). It's a lot riskier to be an entrepreneur when you're living paycheck to paycheck and don't have a family fortune to fall back on. Extraordinary people also often have extraordinary childhoods. Most teenagers can't borrow their dad's private jet to go sell emeralds to Tiffany&Co, but I imagine that sort of experience comes in handy for a businessman
    - nine_k 6y ago
      The fact that Musk's dad had millions does not imply that Musk himself had access to them; according to Wikipedia, their relations were not very good. But yes, being around people who have businesses and millions does give you certain experience and perspective. Despite that, Musk was heavily bullied at school; apparently dad's money could not buy him a private school, or maybe just a better school. Indeed some childhoods of billionaires are special, like that of Steve Jobs, a highly problematic adopted child who suffered at school so much his working-class family decided to move to get him to another school district. OTOH, neither Mark Zuckerberg, nor Jeff Bezos appear to have had extraordinary childhoods, or family wealth above a normal middle-class level. Many of them, though, were exposed to electronics and computers early, and their parents were wise enough to encourage it, or at least to allow. [Edited: typos.]
    - Armisael16 6y ago
      Musk’s family probably didn’t own an emerald mine. There’s only one source - Errol Musk - and everyone else who’s willing to talk about it denies it (including Elon) https://www.insidehook.com/article/history/errol-musk-elon-father-myths https://www.insidehook.com/article/history/errol-musk-elon-f... The same is true about that drivel about Tiffany.
  - jedberg 6y ago
    Gates, Zuckerberg, Bezos, and Musk were all in the top 1% before they started their companies. Jobs's family was middle class, but well off enough to own a house with an empty garage and enough money to get him started. They also fed, housed, and clothed him while he started his company.
    - missedthecue 6y ago
      Point is, hundreds of millions of people have access to a garage, food, and clothing, yet cannot mirror the success that these men have achieved.
      - jedberg 6y ago
        That's not the point at all. The point is that starting a company was not a risk for these men, because they would be just fine if they failed. And I think you're way off with that hundreds of millions number. I doubt there are that many people that can fully support their adult children, including footing the bill for all startup costs.
  - ardy42 6y ago
    >>> I always like to say that we live in an exponential meritocracy, where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function. >> So basically, some way to prevent wealth from being passed across generations? > Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. But, there are others who did. For instance, just off the top of my head: the Koch brothers, who combined inherited wealth with extensive political activism. Also, the fortunes of most "self-made" meritocrats can be traced to building exponentially on some elite inherited opportunity, then that kneecaps a lot of the moral reasoning used to justify that those people deserve full control of those fortunes (and thus shouldn't be subjected to heavy taxes).
- twblalock 6y ago
  > So basically, some way to prevent wealth from being passed across generations? That wouldn't help much. The children of the wealthy benefit from connections obtained while their parents are still alive. They receive a head start from birth. By the time they are in line to receive an inheritance, they have already had more opportunities for success than the general public.
  - nsajko 6y ago
    Your first sentence does not follow from your argumentation.
  - chii 6y ago
    > The children of the wealthy benefit from connections obtained while their parents are still alive. They receive a head start from birth. what about the children of parents who has good genes? If a child is athletic/healthy/good-looking, because their parents had good genes (and the good luck for a good combination), do you also resent that the child has a head-start? parents helping the children get ahead is natural, and should be encouraged imho.
    - lilactown 6y ago
      The difference is that we can easily redistribute wealth. It is much more difficult to redistribute "health." IMO our goal shouldn't be for everyone to be objectively equal in all ways, but rather to be provided enough resources and opportunities to live a good life. Like on the opposite end of your example, if I was born with a congenital condition, or became injured, I should still be able to live a good life with my needs met and opportunities to do good work. The fact that we don't have that today, due to lack of a social safety net and accessibility, is a problem.
    - rualca 6y ago
      > what about the children of parents who has good genes? That's an absurd comparison. Children of parents who are poor and don't have connections can still compete, but simply cannot benefit from their parents trafficking influence. If you really want to go with a sports metaphor, your example is like barring children from having a fair shot at sports because their parents aren't rubbing elbows with the coaches.
- coderintherye 6y ago
  There's a better perspective to apply. How can we better incentivize those with wealth into investing it productively. Or perhaps, how can we incentivize the wealthy into investing in increasing the rate of growth of the real standard of living for everyone.
  - free_rms 6y ago
    Easy, crank inflation back up. Coincidentally, we've got a covid relief bill, and you can see what the wealthy and power fear above all else -- blanket grants to the people that make them less beholden while increasing inflation. Nobody actually cares about the deficit, it's all about maintaining hierarchy.
  - bsanr 6y ago
    Frankly, no. The issue is a falling share of productive growth going to the not-richest. That is the problem, not the "size of the pie," as it were. In this sense, "incentivizing wealthy into investing it productively" is nothing more than "attempting to con the wealthy into giving up a portion of their share." The alternatives are that nothing changes, or that the wealthy receive an even greater share of growth going forward. But those are prima facie counter to the goal, if you take the findings of the OP to be concerning. In any case, the wealthy are not going to fall for it. They want to maintain or expand their holdings and influence. If you're okay with that - essentially, if you subscribe to trickle-down economics, however misguided that may be - then I supposed that's fine. But either way, we have to be clear what the goal is, and who is going to be helped and and who is going to be hurt by achieving it.
  - devdas 6y ago
    A wealth tax.
ntsplnkv2 6y ago
It doesn't need to be that complicated. Just increase taxes on the ultra wealthy to restore some semblance of equality. it doesn't need to be communist russia. Just a little more money going around.
- unionjack22 6y ago
  It’s really frustrating how simple and true this is yet difficult to brand and market correctly.
  - randmeerkat 6y ago
    I don’t think it’s difficult to brand and market correctly, Bernie Sanders did a great job. Edit: Hacker News, where even mentioning Bernie Sanders gets you downvoted.
- boh 6y ago
  The ultra rich don't pay the current tax rate, why would raising a tax they don't pay have any effect? Until there's an aggressive international agreement on closing tax loopholes, raising the taxes only impacts the barely-rich (doctors, lawyers, etc).
  - bsanr 6y ago
    It can be argued that the barely-rich are also a huge part of "the problem." Collectively, they wield a great deal of influence through their wealth, networks, and savvy, and instead of using it to solve "the problem," they are largely involved in an intra-class competition to secure the next open actually-rich spot (or to simply maintain their standard of living, and particularly that of their children, regardless of merit). Fortunes that could go to feeding dozens of children, educating dozens of youths, housing dozens of homeless men and women, instead go to ensuring that a handful of people can keep up with their neighbors in vying for a spot at Yale for their boy or girl. Sure, in the process many salaries are paid, but you could also use that same amount of money and have the recipients of that aid number in the dozens or hundreds rather than be a handful or so. In the end, that spot at Yale will still be filled. The needle on the chances of it being Dr. and Mr. Irgendwas' child probably doesn't move that much, either.
Applejinx 6y ago
The exponential part ceases to be merit in any sense. It's quite arbitrary.
- yyyymmddh 6y ago
  It’s not arbitrary. It’s defined by one’s relation to the means of production. This is capitalism in a nutshell.
  - rualca 6y ago
    You're confounding stuff for no reason. There is absolutely nothing wrong with enjoying the profits of your work, which naturally including the return on investment in a company you started and put together from nothing.
    - yyyymmddh 6y ago
      There is a big difference between the product of one’s work and the profits of one’s work. The latter is a curious notion. A fundamental component of capitalism is private ownership of means of production, which allows a few people to profit from the product of other people’s labor.
      - rualca 6y ago
        > There is a big difference between the product of one’s work and the profits of one’s work. Of course. That's why you should face the fact that if no one puts in the money and the legwork to jump-start the company, there is no taxes to be made nor there is profit to be distributed.
thatfrenchguy 6y ago
"The rate of return you get on your capital increase as your capital increases" is the most interesting thing I've gotten from Piketty's book, and it's definitely been true for me.
- dternyak 6y ago
  I think this is true, but only to a point. It's certainly true when the comparison is 10K to invest vs 10M, as liquidity of markets is not yet a concern and the investor with 10M is suddenly "accredited", can afford to pay a financial advisor, etc. However, at 10M vs 10B, the 10M investor is much better off. Liquidity becomes a real concern - there's just not that many assets or stocks that can support that kind of allocation. Small, nimble investors can usually outperform large funds simply by being able to fully enter into positions where larger funds couldn't.
  - chii 6y ago
    That's just another way of expressing the concept that opportunities are limited. Large investors (like those with $10B) can certainly take advantage of small opportunities, but just not with their full amount. But because they are large, there may be multiple small opportunities which they participate in, and diversify on, rather than a small investor who must commit to a single small opportunity (which forces them to take on individual/concentrated risk). So it's not true that the $10M investor is better off.
    - username90 6y ago
      You are only one person, taking on more opportunities takes more of your time and subcontracting investments can only do so much. Jeff Bezos turned 300k start to 100 billions, a 300 000 times return on investment. Do you think he could have turned 100 billion to 30 quadrillions? Obviously not, it would be something like 100 billion to 1 trillion at best. Investing in yourself or projects you run is the main way to get rich, otherwise you just get average returns but if you invest in yourself you can bet on you being much better at doing things than the rest of the world expects.
  - 6y ago
glaive123 6y ago
A better way to think about this is from the "Born On Third Base" report looking at the Forbes 400. In 2012, it was estimated only 35% of the wealthiest people grew up in low or middle class--as opposed to 95% of the general population. Another way to say this is that 65% of the wealthiest people were born into the top 5%. http://d3n8a8pro7vhmx.cloudfront.net/ufe/legacy_url/410/BornOnThirdBase_2012.pdf?1448056427 http://d3n8a8pro7vhmx.cloudfront.net/ufe/legacy_url/410/Born...
throwaway189262 6y ago
There's way too much wealth worship in the US. Yeah most rich people are smart but not exponentially smarter than everyone else. A lot of wealth is luck. But wealthy people (like HN audience) don't like to hear that. I can't find a link but there's controlled studies that show the richer someone precieves they are, the more they attribute it to skill. Even in studies where outcomes are completely randomized. Usually it's something like this: grow up as a citizen of one of the richest countries in the world. Have fairly stable family situation where you did well in school. Family wealthy enough that you went to a good primary school too. Family wealthy enough to fix overbite, scoliosis, speech impediment, and most other things that would handicap you professionally. Money/connections/grades to get into a good college. Skin color, gender, and culture to not be dicriminated against. Enough intelligence to pick a well paying career (maybe top ~25%). "Gifts" from parents early in life where wealth has decades to accumulate. Things like gifted cars, college education, wedding costs, first house. Ability to take arbitrary career risks because you always have family and their gifts to fall back on. That probably describes more than half of people in well paying professions. And it's all 100% luck. The path to millions when you've already got so much going for you isn't so hard. You've already passed the barriers that stop 99% of people. Merit isn't wealth. Wealth is mostly luck and we shouldn't worship wealthy people like Gods, hanging on their every word. There's logical ways to measure class mobility and the US does badly compared to practically every wealthy country besides the UK
- usaar333 6y ago
  I don't really view the skill vs luck as a "moral" question. In the end, everything is luck - we're a product of our genes and our environment. What you do want to ask is what the proper incentives need to be to have a functional society. Fundamentally, we're just trying to define some social utility function and maximizing it.. but even ignoring political problems, it's hard to understand how wealth transfers (or any equity improving policy) alter incentives, potentially leaving society worse off if done wrong.
  - throwaway189262 6y ago
    The socialist "nanny state" democracies in europe have much lower wealth inequality, and much higher social mobility than the US. To me, it's a clear blueprint to follow.
esarbe 6y ago
What makes you think we live in a meritocracy? Wealth seems to be accumulating in the hands of already rich families that use that cash to provide their kids with a decent education that includes secret-handshake-introduction to other moneyed oligarchs to further secure all their positions on top of the wealth-extraction pyramid. There's nothing meritocratic about it.

by hliyan 6y ago

gruez 6y ago

>Perhaps we need a linear meritocratic function. So basically, some way to prevent wealth from being passed across generations?

nine_k 6y ago
Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. Should anyone suggest to prevent passing as much as, say, $100k to your child (an approximate price of a university tuition), said anyone will see a massive push back from basically all strata of the society.
- rmrfstar 6y ago
  Yeah, but they benefited from a system that coerces people to trade their labor for less than it is worth. Zuckerberg is worth >3x the annual income of all surgeons in the US. It is implausible that his net worth reflects his replacement cost. Even PG has said (to Zuckerberg) that if it wasn't him, it would have been someone else.
  - imgabe 6y ago
    The amount of value you can obtain by trading something is by definition what it is worth. If nobody is willing to pay you an amount for something, it's not worth that much. > It is implausible that his net worth reflects his replacement cost. Why should it? His net worth reflects the expected value of the portion of Facebook that he owns. Why would it have anything to do with his replacement cost?
    - sudosysgen 6y ago
      Hmm, not really. The cost of labour is actually generally agreed to be the replacement cost of the labour. As a society, the only thing that we take out of Zuckerberg is his labour, so he shouldn't get anymore than the replacement cost of his labour. In other words, if someone would have done Zuckerberg's work for less compensation - and the GP asserts it is the case - then we as a society lose by having Zuckerberg do it instead of the lower compensated alternative. In other words, when someone gets paid more than their replacement cost, there is a market inefficiency that causes loss to the vast majority.
      - imgabe 6y ago
        He doesn't "get" anything. His net worth is due to ownership in the company he made. When people talk about his net worth increasing, that's due to the shares appreciating. He didn't get more of anything. He owns the same number of shares, they just became more valuable. Zuckerberg is not employed by society. We're not all collectively paying him a salary. If you're saying we should completely abolish private property, that's a different thing altogether.
        sudosysgen 6y ago
        Private property exists because it is an organization of things that is useful to society. That's why we heavily limit it using taxation and so forth. We allow people to own capital because it motivates them to do some types of work. If we allow people to concentrate more capital than necessary to motivate them to do that work, we lose.
        imgabe 6y ago
        There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?
        ardy42 6y ago
  - missedthecue 6y ago
    I feel like there's a false equivalence being made here. You're comparing wage to net worth. Zuckerberg's net worth is not a function of his replacement cost. It's the percentage of his own company that he owns, valued at market price. This happens to be worth $100B at current market levels, but it is independent of whether he continues to work at Facebook or anywhere else. It's not compensation for labour.
- nsajko 6y ago
  Your point is truthful but not completely relevant: Bezos, at least, did receive a considerable amount of money as funding for Amazon from his family. My point is that the money received from parents most often is, in fact, an advantage. Now that I wrote it down explicitly, I wonder why is it that I have to argue this, seems quite obvious. (Note: I'm not saying the funding from parents was sufficient, or even necessary in Bezos' case.)
  - nine_k 6y ago
    I see! It's a transfer between generations, though not an inheritance (which some people suggest to tax heavily). Again, Bezos got about $300k from his family (both his parents were doctors), which, I think, is far below the level of "unjust inherited fortune" or what is usually people suggest to tax into oblivion. Yes, when your parents help you, it's helpful — it's nearly tautologically true. This is why I as a parent do help my grown-up son sometimes. Limiting this behavior is not quite realistic, and would be met with a huge backlash (justly, to my mind).
    - usrusr 6y ago
      The problem is not intergenerational help, that existed at least as much if not more in times of less inequality. The problem is the size of the spoils. Intergenerational help is only brought up as a counter to the tired "it's your fault if you aren't a billionaire" defense (which is rarely brought up by billionaires themselves but all the time by their broke admirers)
- Rebelgecko 6y ago
  It's a lot easier to make billions when you already have millions (like Elon Musk's dad, who joked about how he had too much money in his safe to be able shut the door when his gemstone mine was doing well). It's a lot riskier to be an entrepreneur when you're living paycheck to paycheck and don't have a family fortune to fall back on. Extraordinary people also often have extraordinary childhoods. Most teenagers can't borrow their dad's private jet to go sell emeralds to Tiffany&Co, but I imagine that sort of experience comes in handy for a businessman
  - nine_k 6y ago
    The fact that Musk's dad had millions does not imply that Musk himself had access to them; according to Wikipedia, their relations were not very good. But yes, being around people who have businesses and millions does give you certain experience and perspective. Despite that, Musk was heavily bullied at school; apparently dad's money could not buy him a private school, or maybe just a better school. Indeed some childhoods of billionaires are special, like that of Steve Jobs, a highly problematic adopted child who suffered at school so much his working-class family decided to move to get him to another school district. OTOH, neither Mark Zuckerberg, nor Jeff Bezos appear to have had extraordinary childhoods, or family wealth above a normal middle-class level. Many of them, though, were exposed to electronics and computers early, and their parents were wise enough to encourage it, or at least to allow. [Edited: typos.]
  - Armisael16 6y ago
    Musk’s family probably didn’t own an emerald mine. There’s only one source - Errol Musk - and everyone else who’s willing to talk about it denies it (including Elon) https://www.insidehook.com/article/history/errol-musk-elon-father-myths https://www.insidehook.com/article/history/errol-musk-elon-f... The same is true about that drivel about Tiffany.
- jedberg 6y ago
  Gates, Zuckerberg, Bezos, and Musk were all in the top 1% before they started their companies. Jobs's family was middle class, but well off enough to own a house with an empty garage and enough money to get him started. They also fed, housed, and clothed him while he started his company.
  - missedthecue 6y ago
    Point is, hundreds of millions of people have access to a garage, food, and clothing, yet cannot mirror the success that these men have achieved.
    - jedberg 6y ago
      That's not the point at all. The point is that starting a company was not a risk for these men, because they would be just fine if they failed. And I think you're way off with that hundreds of millions number. I doubt there are that many people that can fully support their adult children, including footing the bill for all startup costs.
- ardy42 6y ago
  >>> I always like to say that we live in an exponential meritocracy, where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function. >> So basically, some way to prevent wealth from being passed across generations? > Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. But, there are others who did. For instance, just off the top of my head: the Koch brothers, who combined inherited wealth with extensive political activism. Also, the fortunes of most "self-made" meritocrats can be traced to building exponentially on some elite inherited opportunity, then that kneecaps a lot of the moral reasoning used to justify that those people deserve full control of those fortunes (and thus shouldn't be subjected to heavy taxes).
twblalock 6y ago
> So basically, some way to prevent wealth from being passed across generations? That wouldn't help much. The children of the wealthy benefit from connections obtained while their parents are still alive. They receive a head start from birth. By the time they are in line to receive an inheritance, they have already had more opportunities for success than the general public.
- nsajko 6y ago
  Your first sentence does not follow from your argumentation.
- chii 6y ago
  > The children of the wealthy benefit from connections obtained while their parents are still alive. They receive a head start from birth. what about the children of parents who has good genes? If a child is athletic/healthy/good-looking, because their parents had good genes (and the good luck for a good combination), do you also resent that the child has a head-start? parents helping the children get ahead is natural, and should be encouraged imho.
  - lilactown 6y ago
    The difference is that we can easily redistribute wealth. It is much more difficult to redistribute "health." IMO our goal shouldn't be for everyone to be objectively equal in all ways, but rather to be provided enough resources and opportunities to live a good life. Like on the opposite end of your example, if I was born with a congenital condition, or became injured, I should still be able to live a good life with my needs met and opportunities to do good work. The fact that we don't have that today, due to lack of a social safety net and accessibility, is a problem.
  - rualca 6y ago
    > what about the children of parents who has good genes? That's an absurd comparison. Children of parents who are poor and don't have connections can still compete, but simply cannot benefit from their parents trafficking influence. If you really want to go with a sports metaphor, your example is like barring children from having a fair shot at sports because their parents aren't rubbing elbows with the coaches.
coderintherye 6y ago
There's a better perspective to apply. How can we better incentivize those with wealth into investing it productively. Or perhaps, how can we incentivize the wealthy into investing in increasing the rate of growth of the real standard of living for everyone.
- free_rms 6y ago
  Easy, crank inflation back up. Coincidentally, we've got a covid relief bill, and you can see what the wealthy and power fear above all else -- blanket grants to the people that make them less beholden while increasing inflation. Nobody actually cares about the deficit, it's all about maintaining hierarchy.
- bsanr 6y ago
  Frankly, no. The issue is a falling share of productive growth going to the not-richest. That is the problem, not the "size of the pie," as it were. In this sense, "incentivizing wealthy into investing it productively" is nothing more than "attempting to con the wealthy into giving up a portion of their share." The alternatives are that nothing changes, or that the wealthy receive an even greater share of growth going forward. But those are prima facie counter to the goal, if you take the findings of the OP to be concerning. In any case, the wealthy are not going to fall for it. They want to maintain or expand their holdings and influence. If you're okay with that - essentially, if you subscribe to trickle-down economics, however misguided that may be - then I supposed that's fine. But either way, we have to be clear what the goal is, and who is going to be helped and and who is going to be hurt by achieving it.
- devdas 6y ago
  A wealth tax.

ntsplnkv2 6y ago

It doesn't need to be that complicated. Just increase taxes on the ultra wealthy to restore some semblance of equality. it doesn't need to be communist russia. Just a little more money going around.

unionjack22 6y ago
It’s really frustrating how simple and true this is yet difficult to brand and market correctly.
- randmeerkat 6y ago
  I don’t think it’s difficult to brand and market correctly, Bernie Sanders did a great job. Edit: Hacker News, where even mentioning Bernie Sanders gets you downvoted.
boh 6y ago
The ultra rich don't pay the current tax rate, why would raising a tax they don't pay have any effect? Until there's an aggressive international agreement on closing tax loopholes, raising the taxes only impacts the barely-rich (doctors, lawyers, etc).
- bsanr 6y ago
  It can be argued that the barely-rich are also a huge part of "the problem." Collectively, they wield a great deal of influence through their wealth, networks, and savvy, and instead of using it to solve "the problem," they are largely involved in an intra-class competition to secure the next open actually-rich spot (or to simply maintain their standard of living, and particularly that of their children, regardless of merit). Fortunes that could go to feeding dozens of children, educating dozens of youths, housing dozens of homeless men and women, instead go to ensuring that a handful of people can keep up with their neighbors in vying for a spot at Yale for their boy or girl. Sure, in the process many salaries are paid, but you could also use that same amount of money and have the recipients of that aid number in the dozens or hundreds rather than be a handful or so. In the end, that spot at Yale will still be filled. The needle on the chances of it being Dr. and Mr. Irgendwas' child probably doesn't move that much, either.

Applejinx 6y ago

The exponential part ceases to be merit in any sense. It's quite arbitrary.

yyyymmddh 6y ago
It’s not arbitrary. It’s defined by one’s relation to the means of production. This is capitalism in a nutshell.
- rualca 6y ago
  You're confounding stuff for no reason. There is absolutely nothing wrong with enjoying the profits of your work, which naturally including the return on investment in a company you started and put together from nothing.
  - yyyymmddh 6y ago
    There is a big difference between the product of one’s work and the profits of one’s work. The latter is a curious notion. A fundamental component of capitalism is private ownership of means of production, which allows a few people to profit from the product of other people’s labor.
    - rualca 6y ago
      > There is a big difference between the product of one’s work and the profits of one’s work. Of course. That's why you should face the fact that if no one puts in the money and the legwork to jump-start the company, there is no taxes to be made nor there is profit to be distributed.

thatfrenchguy 6y ago

"The rate of return you get on your capital increase as your capital increases" is the most interesting thing I've gotten from Piketty's book, and it's definitely been true for me.

dternyak 6y ago
I think this is true, but only to a point. It's certainly true when the comparison is 10K to invest vs 10M, as liquidity of markets is not yet a concern and the investor with 10M is suddenly "accredited", can afford to pay a financial advisor, etc. However, at 10M vs 10B, the 10M investor is much better off. Liquidity becomes a real concern - there's just not that many assets or stocks that can support that kind of allocation. Small, nimble investors can usually outperform large funds simply by being able to fully enter into positions where larger funds couldn't.
- chii 6y ago
  That's just another way of expressing the concept that opportunities are limited. Large investors (like those with $10B) can certainly take advantage of small opportunities, but just not with their full amount. But because they are large, there may be multiple small opportunities which they participate in, and diversify on, rather than a small investor who must commit to a single small opportunity (which forces them to take on individual/concentrated risk). So it's not true that the $10M investor is better off.
  - username90 6y ago
    You are only one person, taking on more opportunities takes more of your time and subcontracting investments can only do so much. Jeff Bezos turned 300k start to 100 billions, a 300 000 times return on investment. Do you think he could have turned 100 billion to 30 quadrillions? Obviously not, it would be something like 100 billion to 1 trillion at best. Investing in yourself or projects you run is the main way to get rich, otherwise you just get average returns but if you invest in yourself you can bet on you being much better at doing things than the rest of the world expects.
- 6y ago

glaive123 6y ago

A better way to think about this is from the "Born On Third Base" report looking at the Forbes 400. In 2012, it was estimated only 35% of the wealthiest people grew up in low or middle class--as opposed to 95% of the general population. Another way to say this is that 65% of the wealthiest people were born into the top 5%. http://d3n8a8pro7vhmx.cloudfront.net/ufe/legacy_url/410/BornOnThirdBase_2012.pdf?1448056427 http://d3n8a8pro7vhmx.cloudfront.net/ufe/legacy_url/410/Born...

throwaway189262 6y ago

There's way too much wealth worship in the US. Yeah most rich people are smart but not exponentially smarter than everyone else. A lot of wealth is luck. But wealthy people (like HN audience) don't like to hear that. I can't find a link but there's controlled studies that show the richer someone precieves they are, the more they attribute it to skill. Even in studies where outcomes are completely randomized. Usually it's something like this: grow up as a citizen of one of the richest countries in the world. Have fairly stable family situation where you did well in school. Family wealthy enough that you went to a good primary school too. Family wealthy enough to fix overbite, scoliosis, speech impediment, and most other things that would handicap you professionally. Money/connections/grades to get into a good college. Skin color, gender, and culture to not be dicriminated against. Enough intelligence to pick a well paying career (maybe top ~25%). "Gifts" from parents early in life where wealth has decades to accumulate. Things like gifted cars, college education, wedding costs, first house. Ability to take arbitrary career risks because you always have family and their gifts to fall back on. That probably describes more than half of people in well paying professions. And it's all 100% luck. The path to millions when you've already got so much going for you isn't so hard. You've already passed the barriers that stop 99% of people. Merit isn't wealth. Wealth is mostly luck and we shouldn't worship wealthy people like Gods, hanging on their every word. There's logical ways to measure class mobility and the US does badly compared to practically every wealthy country besides the UK

usaar333 6y ago
I don't really view the skill vs luck as a "moral" question. In the end, everything is luck - we're a product of our genes and our environment. What you do want to ask is what the proper incentives need to be to have a functional society. Fundamentally, we're just trying to define some social utility function and maximizing it.. but even ignoring political problems, it's hard to understand how wealth transfers (or any equity improving policy) alter incentives, potentially leaving society worse off if done wrong.
- throwaway189262 6y ago
  The socialist "nanny state" democracies in europe have much lower wealth inequality, and much higher social mobility than the US. To me, it's a clear blueprint to follow.

esarbe 6y ago

What makes you think we live in a meritocracy? Wealth seems to be accumulating in the hands of already rich families that use that cash to provide their kids with a decent education that includes secret-handshake-introduction to other moneyed oligarchs to further secure all their positions on top of the wealth-extraction pyramid. There's nothing meritocratic about it.