7 ms·

> there are far more rich people than we are lead to believe This is almost certainly true — apart from oligarchs, dictators, and crypto billionaires, it's bro

> there are far more rich people than we are lead to believe This is almost certainly true — apart from oligarchs, dictators, and crypto billionaires, it's broadly understood that "500 richest" lists also miss a fair number of anonymous Omaha residents, for example. > most of us are just working to prop them up and keep them rich I think this part is probably a mischaracterization (though I could also just be misinterpreting what it means). To take the limit case, consider a wealthy dictator who stole absolutely everything he owns, and who flees his ruined country. In this scenario, the aggrieved parties are the people he stole his wealth from, as opposed to, e.g., the waitress who ends up serving him drinks on a Caribbean island. That means to the extent you believe the "prop them up" part of the theory, you must also believe that most wealth concentrations arise more from things like theft, and less from things like value creation. My experience has been that this seems untrue today and almost certainly becomes more untrue every year (but I do understand that reasonable observers may disagree).

dmcgee 5y ago
> you must also believe that most wealth concentrations arise more from things like theft, and less from things like value creation. Maybe, maybe not. [1] [1] https://www.nbcdfw.com/news/tech/cybercrime-to-top-6-trillion-in-2021-north-texas-security-firm-says/2636083/ https://www.nbcdfw.com/news/tech/cybercrime-to-top-6-trillio... As a side note I appreciate the urgency in the tone of the quoted here.
akiselev 5y ago
That contrast of value creation against theft is a false dichotomy. Reframing the latter as "value capture" or "wealth extraction" and treating it separately from value creation gives way to a far more robust analysis.
- edouard-harris 5y ago
  I agree terms like "value capture" or "wealth extraction" would probably be more descriptive. But note that I only mentioned "things like theft" in the gp, so I think we're really talking about the same sorts of activities.
  - akiselev 5y ago
    Theft is only the most extreme and one sided example of what I mean by "capture" or "extraction." The best example (and most common) is salaried employment - many people produce far more value than they are able to capture in the form of a salary because they don't have enough leverage. Value is decoupled from currency even though we far too often use the latter to measure the former (IMO, I'm not an economist).
mhuffman 5y ago
>That means to the extent you believe the "prop them up" part of the theory, you must also believe that most wealth concentrations arise more from things like theft, and less from things like value creation. My experience has been that this seems untrue today and almost certainly becomes more untrue every year (but I do understand that reasonable observers may disagree). It is pretty well demonstrated and accepted that both IQ and talent (in anything, business, sports, art, whatever) have a Gaussian (normal) distribution, but wealth does not. It has a Pareto (power) distribution. So there is something more than just offering value (ie. the results of talent or IQ or even work) that contributes to the accumulation of wealth. Some of this has to do with the "Snowball Effect" where it is easier to make more money at a faster rate, the more money you have. But even that doesn't really get to the heart of the issue. There is another surprising effect at play! In a non-sophisticated version (ie. the version everyone is taught in the beginning economics classes) of economics, there is an assumption that someone pays money that they believe is equal to value of some thing that they want. And if this is true, no wealth actually changes hands. You paid $X for something that is worth $X to you ... and maybe others and the person that sold it to you got $X of value which is what they thought it was worth selling it at. The seller is richer by $X but you are richer by something worth $X, so it is really a wash. But we have to pretend in this case that both sides know the worth of the item in question. And this is almost never the case! If we allow for whoever "misjudges" the value to be the "loser" and the other to be the "winner" in the exchange as measured by one or the other getting a little more value out of the deal than the other, then something magical happens. If you play out this scenario (and you can model it yourself in your favorite software) with many "agents" doing these deals, and if you give every single transaction a completely blind and fair chance of 50/50 of being the winner and loser in the transaction, and you do this many, many times ... one agent will always end up with ALL the money in the end! And this is without theft (as the gp comment insinuated) and is also without there necessarily being any "real value" created (as you suggested). There is very interesting and recent research in this area[1]. BTW, I used to think more like you than the GP comment (and I still don't really agree with the GP comment) but if you take the time to look into the research and understand the math behind what is going on, it is a real eye-opener and a different perspective on why wealth inequality seems to show up in basically every type of economy and society given enough time. https://www.scientificamerican.com/article/is-inequality-inevitable/ https://www.scientificamerican.com/article/is-inequality-ine...
monkeycantype 5y ago
hello Edouard, > the aggrieved parties are the people he stole his wealth from, as opposed to, e.g., the waitress who ends up serving him drinks on a Caribbean island. I understand your logic here, but I think in these scenarios we are all losing - if the dictator's money is the only game in town you have to play his game and by his rules. When the efforts of the waitress, and all the other effort and resources directed to fulfilling the dictators whims, it creates a network of economic activities around a single person's will. If that money was being spent by the population he stole it from, the choices of the spenders will be more diverse, reflecting the desires of a that whole population, this creates a more complex network of economic activity and it also means that people supplying that demand have greater choice in how they participate. it reminds me of the ant article from the other day. https://www.theatlantic.com/science/archive/2021/05/ant-tapeworm/618919/ https://www.theatlantic.com/science/archive/2021/05/ant-tape...

dmcgee 5y ago

> you must also believe that most wealth concentrations arise more from things like theft, and less from things like value creation. Maybe, maybe not. [1] [1] https://www.nbcdfw.com/news/tech/cybercrime-to-top-6-trillion-in-2021-north-texas-security-firm-says/2636083/ https://www.nbcdfw.com/news/tech/cybercrime-to-top-6-trillio... As a side note I appreciate the urgency in the tone of the quoted here.

akiselev 5y ago

That contrast of value creation against theft is a false dichotomy. Reframing the latter as "value capture" or "wealth extraction" and treating it separately from value creation gives way to a far more robust analysis.

edouard-harris 5y ago
I agree terms like "value capture" or "wealth extraction" would probably be more descriptive. But note that I only mentioned "things like theft" in the gp, so I think we're really talking about the same sorts of activities.
- akiselev 5y ago
  Theft is only the most extreme and one sided example of what I mean by "capture" or "extraction." The best example (and most common) is salaried employment - many people produce far more value than they are able to capture in the form of a salary because they don't have enough leverage. Value is decoupled from currency even though we far too often use the latter to measure the former (IMO, I'm not an economist).

mhuffman 5y ago

>That means to the extent you believe the "prop them up" part of the theory, you must also believe that most wealth concentrations arise more from things like theft, and less from things like value creation. My experience has been that this seems untrue today and almost certainly becomes more untrue every year (but I do understand that reasonable observers may disagree). It is pretty well demonstrated and accepted that both IQ and talent (in anything, business, sports, art, whatever) have a Gaussian (normal) distribution, but wealth does not. It has a Pareto (power) distribution. So there is something more than just offering value (ie. the results of talent or IQ or even work) that contributes to the accumulation of wealth. Some of this has to do with the "Snowball Effect" where it is easier to make more money at a faster rate, the more money you have. But even that doesn't really get to the heart of the issue. There is another surprising effect at play! In a non-sophisticated version (ie. the version everyone is taught in the beginning economics classes) of economics, there is an assumption that someone pays money that they believe is equal to value of some thing that they want. And if this is true, no wealth actually changes hands. You paid $X for something that is worth $X to you ... and maybe others and the person that sold it to you got $X of value which is what they thought it was worth selling it at. The seller is richer by $X but you are richer by something worth $X, so it is really a wash. But we have to pretend in this case that both sides know the worth of the item in question. And this is almost never the case! If we allow for whoever "misjudges" the value to be the "loser" and the other to be the "winner" in the exchange as measured by one or the other getting a little more value out of the deal than the other, then something magical happens. If you play out this scenario (and you can model it yourself in your favorite software) with many "agents" doing these deals, and if you give every single transaction a completely blind and fair chance of 50/50 of being the winner and loser in the transaction, and you do this many, many times ... one agent will always end up with ALL the money in the end! And this is without theft (as the gp comment insinuated) and is also without there necessarily being any "real value" created (as you suggested). There is very interesting and recent research in this area[1]. BTW, I used to think more like you than the GP comment (and I still don't really agree with the GP comment) but if you take the time to look into the research and understand the math behind what is going on, it is a real eye-opener and a different perspective on why wealth inequality seems to show up in basically every type of economy and society given enough time. https://www.scientificamerican.com/article/is-inequality-inevitable/ https://www.scientificamerican.com/article/is-inequality-ine...

monkeycantype 5y ago

hello Edouard, > the aggrieved parties are the people he stole his wealth from, as opposed to, e.g., the waitress who ends up serving him drinks on a Caribbean island. I understand your logic here, but I think in these scenarios we are all losing - if the dictator's money is the only game in town you have to play his game and by his rules. When the efforts of the waitress, and all the other effort and resources directed to fulfilling the dictators whims, it creates a network of economic activities around a single person's will. If that money was being spent by the population he stole it from, the choices of the spenders will be more diverse, reflecting the desires of a that whole population, this creates a more complex network of economic activity and it also means that people supplying that demand have greater choice in how they participate. it reminds me of the ant article from the other day. https://www.theatlantic.com/science/archive/2021/05/ant-tapeworm/618919/ https://www.theatlantic.com/science/archive/2021/05/ant-tape...