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I don't know if it's a gambling binge, but I'll tell you the returns from capital seem to far outstrip the returns to labor in our modern society. Seems like y

I don't know if it's a gambling binge, but I'll tell you the returns from capital seem to far outstrip the returns to labor in our modern society. Seems like you are either part of the investor class or the lower class in America and I think people have caught on, willing to take chances to get into said investor class.

nerdponx 6y ago
I made more money on some savingss in 2020, by literally doing nothing and just watching it grow, than a lot of people earn in 9-5 jobs. I'm happy about it of course, but it seems wildly unfair. I'm not what you'd call a Marxist, but it's pretty obvious that there is a serious socioeconomic imbalance here and something needs to be different.
- chrisco255 6y ago
  Savings or investments? As for the bull market, it won't past forever. Can you also make that work in a bear market? At any rate a great number of people benefit from the markets via 401Ks and stock comp.
  - nerdponx 6y ago
    Of course it won't work in a bear market, but neither will working 9-5 if you get laid off.
- HNfriend234 6y ago
  It is easy to see it as "doing nothing" but the reality is your risked your money during a period of time which was very uncertain. Uncertainty = higher risk in terms of stocks. The reality is you took a big risk and you got a big return because you kept your money in the market. Eventually the stock market will crash and the imbalance will be corrected. People who are invested in risky stocks will likely be bankrupted as those companies fail. Likewise for people who used lots of leverage. Then the working class will be seen as smart because they made 50-100k from working while joe investor lost 500k in the market. see dot com crash for an example
  - nerdponx 6y ago
    I did not for one moment believe that my money was at significant risk, given that my investment time horizon is on the order of decades. The only circumstances I could imagine that would have caused me to lose a significant amount of money in 2020 were on the order of "global catastrophe resulting in widespread death and destruction", greater than what Covid appeared to be even at its worst. At such a point, the last thing on my mind would be the performance of my investment accounts. That's part of what bothers me about it. If I felt like I was actually taking a risk, I'd a lot feel more "entitled" to what I've received.
ErikAugust 6y ago
"returns from capital seem to far outstrip the returns to labor in our modern society" For those interested, check out Thomas Piketty’s books.
bpodgursky 6y ago
I think the interesting part about "capital returns" in the past year, is that they're almost all on paper. There's relatively little actual wealth being transferred. Almost nobody is actually realizing returns by pulling money out of the market, because there's nothing meaningful to spend the money on in 2020. Even the people pulling money out to buy a house, are mostly buying reasonably sized homes at inflated prices. Or to pay inflated education costs, which people without such large nominal wealth often wouldn't pay in the first place (or have forgiven via IDR etc). Obviously each of the new tech millionaires with 50+% gains COULD cash out and buy, I dunno, a semi-truck full of flatscreen TVs. But they won't. And if any meaningful % of them did, the paper gains would evaporate in a heartbeat. So I dunno. There's a lot of fake gains showing up in bank accounts, but I'm unconvinced that meaningful wealth accumulation has happened, or that most millionaires are actually converting that wealth into a higher standard of living. I think society is in a holding pattern, with inflated capital investment prices for lack of anything better to spend money on.
- fullshark 6y ago
  IDK the stock market has millions of sales every day, nearby homes are bought and sold every month. The asset appreciation seems genuine to me. Maybe people didn't consume as much in the past year cause of COVID and that money pumped up the asset prices a bit more than usual but it's not like things are totally detached from the laws of supply/demand.
- spaced-out 6y ago
  >There's a lot of fake gains showing up in bank accounts Being able to afford a house, or giving your kids a start in life without having any student load debt to pay off are definitely not "fake" gains. >reasonably sized homes at inflated prices How do you know they're inflated? Maybe that's just how much homes in economically productive areas are going to cost from now on. >Obviously each of the new tech millionaires with 50+% gains COULD cash out and buy, I dunno, a semi-truck full of flatscreen TVs. The ones that have sense will buy multiple homes, take exotic vacations, and retire early.
  - 6y ago
AceJohnny2 6y ago
C > L https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
HNfriend234 6y ago
Yup because we are currently in an innovation boom due to new emerging technologies. If the innovation slows down then the returns will shift in favor of labor while capital generates negatives returns.
- deegles 6y ago
  Or maybe the innovation permanently destroys labor possibilities... not many self-checkout machines are going to be replaced with humans.
derekp7 6y ago
This brings up an interesting thing I thought about, and I don't know if it was by design or just a side effect. It used to be that people's retirement was based on Social Security and a company pension plan. But now pensions have gone away, Social Security won't pay enough for most people, and we have 401K plans that encourage long-term stock market investments. Now I've always felt that increases in the stock market don't actually reflect a better economy (it may be a lagging indicator -- more people healthily employed == more consumer spending). But a lot of the higher stock prices could be related more to B2B health, not B2C, or due to things like low interest rates, etc. So the effect of 401K is that regular people care more about the stock market than they normally would, therefore vote for politicians that support business-friendly policies even if that is against the overall interest of the voter. And it also happens that people closer to or in retirement care more about the stock market than younger voters, and older people tend to vote more. So is this the main master plan behind 401K, or is it just an interesting side effect?

nerdponx 6y ago

I made more money on some savingss in 2020, by literally doing nothing and just watching it grow, than a lot of people earn in 9-5 jobs. I'm happy about it of course, but it seems wildly unfair. I'm not what you'd call a Marxist, but it's pretty obvious that there is a serious socioeconomic imbalance here and something needs to be different.

chrisco255 6y ago
Savings or investments? As for the bull market, it won't past forever. Can you also make that work in a bear market? At any rate a great number of people benefit from the markets via 401Ks and stock comp.
- nerdponx 6y ago
  Of course it won't work in a bear market, but neither will working 9-5 if you get laid off.
HNfriend234 6y ago
It is easy to see it as "doing nothing" but the reality is your risked your money during a period of time which was very uncertain. Uncertainty = higher risk in terms of stocks. The reality is you took a big risk and you got a big return because you kept your money in the market. Eventually the stock market will crash and the imbalance will be corrected. People who are invested in risky stocks will likely be bankrupted as those companies fail. Likewise for people who used lots of leverage. Then the working class will be seen as smart because they made 50-100k from working while joe investor lost 500k in the market. see dot com crash for an example
- nerdponx 6y ago
  I did not for one moment believe that my money was at significant risk, given that my investment time horizon is on the order of decades. The only circumstances I could imagine that would have caused me to lose a significant amount of money in 2020 were on the order of "global catastrophe resulting in widespread death and destruction", greater than what Covid appeared to be even at its worst. At such a point, the last thing on my mind would be the performance of my investment accounts. That's part of what bothers me about it. If I felt like I was actually taking a risk, I'd a lot feel more "entitled" to what I've received.

ErikAugust 6y ago

"returns from capital seem to far outstrip the returns to labor in our modern society" For those interested, check out Thomas Piketty’s books.

bpodgursky 6y ago

I think the interesting part about "capital returns" in the past year, is that they're almost all on paper. There's relatively little actual wealth being transferred. Almost nobody is actually realizing returns by pulling money out of the market, because there's nothing meaningful to spend the money on in 2020. Even the people pulling money out to buy a house, are mostly buying reasonably sized homes at inflated prices. Or to pay inflated education costs, which people without such large nominal wealth often wouldn't pay in the first place (or have forgiven via IDR etc). Obviously each of the new tech millionaires with 50+% gains COULD cash out and buy, I dunno, a semi-truck full of flatscreen TVs. But they won't. And if any meaningful % of them did, the paper gains would evaporate in a heartbeat. So I dunno. There's a lot of fake gains showing up in bank accounts, but I'm unconvinced that meaningful wealth accumulation has happened, or that most millionaires are actually converting that wealth into a higher standard of living. I think society is in a holding pattern, with inflated capital investment prices for lack of anything better to spend money on.

fullshark 6y ago
IDK the stock market has millions of sales every day, nearby homes are bought and sold every month. The asset appreciation seems genuine to me. Maybe people didn't consume as much in the past year cause of COVID and that money pumped up the asset prices a bit more than usual but it's not like things are totally detached from the laws of supply/demand.
spaced-out 6y ago
>There's a lot of fake gains showing up in bank accounts Being able to afford a house, or giving your kids a start in life without having any student load debt to pay off are definitely not "fake" gains. >reasonably sized homes at inflated prices How do you know they're inflated? Maybe that's just how much homes in economically productive areas are going to cost from now on. >Obviously each of the new tech millionaires with 50+% gains COULD cash out and buy, I dunno, a semi-truck full of flatscreen TVs. The ones that have sense will buy multiple homes, take exotic vacations, and retire early.
- 6y ago

AceJohnny2 6y ago

C > L https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

HNfriend234 6y ago

Yup because we are currently in an innovation boom due to new emerging technologies. If the innovation slows down then the returns will shift in favor of labor while capital generates negatives returns.

deegles 6y ago
Or maybe the innovation permanently destroys labor possibilities... not many self-checkout machines are going to be replaced with humans.

derekp7 6y ago

This brings up an interesting thing I thought about, and I don't know if it was by design or just a side effect. It used to be that people's retirement was based on Social Security and a company pension plan. But now pensions have gone away, Social Security won't pay enough for most people, and we have 401K plans that encourage long-term stock market investments. Now I've always felt that increases in the stock market don't actually reflect a better economy (it may be a lagging indicator -- more people healthily employed == more consumer spending). But a lot of the higher stock prices could be related more to B2B health, not B2C, or due to things like low interest rates, etc. So the effect of 401K is that regular people care more about the stock market than they normally would, therefore vote for politicians that support business-friendly policies even if that is against the overall interest of the voter. And it also happens that people closer to or in retirement care more about the stock market than younger voters, and older people tend to vote more. So is this the main master plan behind 401K, or is it just an interesting side effect?