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Directly via bailouts and indirectly via inflation, COVID was the biggest wealth transfer to the rich in history.
by ralph84 5y ago
Directly via bailouts and indirectly via inflation, COVID was the biggest wealth transfer to the rich in history.
- isaacremuant 5y agoIt wasn't covid. It was the policies imposed in the name of covid. Including the absolutely unnecessary lockdowns and other restrictions that very rapidly exempted the elites and those making the decisions.
- inter_netuser 5y ago1% loves pandemics.
- thinkmassive 5y ago...and all other forms of disaster capitalism
- trentnix 5y agodisaster capitalism Taking egregious sums of state aid is crony capitalism and is market manipulation. And wherever you find egregious market manipulation, you'll almost always find government doing the steering.
- ep103 5y agodisaster capitalism is a term coined by Amy Goodman to describe the efforts of the most politically influential to steer the economy towards regular crises, and then take advantage of those crises via crony capitalism
- CyberDildonics 5y agoThat would not apply here, since this was not a financial crisis or caused by systemic long term effects of direct government action.
- elliekelly 5y agoCaptain Government may be at the helm, but they’re serving is at the pleasure of those contributing to their next campaign fund. If the Yacht owners want to go to Tahiti where do you think a Yacht captain is most likely to steer the ship? It’s a cause and a symptom of “crony capitalism” — a feedback loop that perpetuates and exacerbates existing inequality.
- andrepd 5y ago>government is doing the steering That under capitalism those who accumulate massive amounts of wealth can use that wealth to “buy” the state institutions to do their bidding, is precisely (one of the) problems in capitalism.
- trentnix 5y agoOne way to address that problem is to prevent "state institutions" from being so powerful as being able to do anyone's bidding.
- anigbrowl 5y agoDysfunctional states aren't exactly thriving oases of enterprise and mutual aid, are they now? In practice they're dominated by warlords and rich people buy security and contract enforcement is a function of economic leverage, so poor people have very little economic mobility or opportunity.
- trentnix 5y agoA state’s dysfunction is not diminished by the relative largesse and power of its government.
- anigbrowl 5y agoI think you know quite well what I meant.
- neonological 5y ago[redacted]
- dang 5y agoYou can't dox other users, or attack other users, on HN. I've banned this account. Please see https://news.ycombinator.com/item?id=27430579 https://news.ycombinator.com/item?id=27430579.
- jessaustin 5y agoCan you point to an example of "capitalism" that is not also an example of "crony capitalism"? I feel that we should seek something more like "free markets" and "free enterprise". C[rony, if you insist, c]apitalists hate both of those things, and undermine them at every opportunity.
- akomtu 5y agoI remember it was mentioned in the gervais principle book: when an organization approaches its final stage, the top brass collects anything of value and jumps the ship, leaving the clueless staff. These recessions are a lot like this value extraction phase.
- inter_netuser 5y agoAbsolutely. Strip the country of assets and flee to a stable jurisdiction. Wonder where will the American elites flee. Maybe won't need to, guns and all.
- mminer237 5y agoHow does inflation help the rich? Doesn't that devalue their net worth?
- beiller 5y agoIf everyone's bank account balance goes up by 50% uniformly, lets say one person has 100,000 and another has 10,000. After the increase they now have 150,000 and 15,000 respectively. But the low end item costs also go up due to inflation, so food now costs 50% more lets say. The thinking is that this eats into the lower bracket much more than the higher one. So inflation would increase the divide between rich and poor. I think this makes sense, interested if I am wrong here please let me know your thoughts!
- donmcronald 5y agoI don't think so. Both still have the same percentage of the money, so it should be even. If a rich person thinks inflation is coming they can buy fixed assets, invest in resource companies, invest in companies that provide critical services (food supply, communications, etc.). The problem for the poor is that it's hard to invest in things that benefit from inflation, especially if you don't have any money to invest. It's unlikely the paycheck-to-paycheck wages of poor people are going to go up enough to cover any kind of increase in (ex:) housing prices. Or you have people like my parents whose (defined benefit) pensions aren't going to do well against inflation. They'll get to watch the value of their retirement income drop like a rock at the same time they've seen millionaires with "small" businesses pocket hundreds of thousands of "bailout" dollars they didn't really need. Those millionaires will be the ones creating inflation by buying up fixed assets with their free government money. My parents will at least benefit from increased value in their house. Me and the generations after me that can't afford houses and don't have many fixed assets will get screwed really badly. I can see it coming and there's not much I can do for myself :-(
- tchalla 5y agoYou're essentially describing the Cantillon Effect :-)
- 5y ago
- slowhand09 5y agoI saw people buying firearms with stimulus checks more than anything else. I saw a couple buy 2 identical $1300 handguns at once. They were joking about the stim checks. And annoyed they'd have to wait a week to pick up their purchases.
- ipaddr 5y agoPerhaps they were hedging on what direction everything was going to go. I stocked up on everything but firearms thinking water and food would probably get me first.
- jakearmitage 5y agoWhat's the problem with purchasing safety devices during unstable times?
- jessaustin 5y agoThe problem, of course, was that the poors were purchasing safety.
- daddylongstroke 5y agoThe problem is the deeply seeded psychology of fear driven by the media. Americans are the most fearful people I think I've come across. The concept of resiliency of all kinds seems to be largely foreign here, except out in the 'sticks'.
- skocznymroczny 5y agoMost of the 99% are proud of being vaccinated, so they don't seem to have a problem with the situation.
- daddylongstroke 5y agoFajne imię! I agree, most of the 99% don't seem to be too disturbed by the hyperinflation. Actually, we've spent a record on durable goods last year with the handouts! Keep the machine printing! Brrrrr....
- slowhand09 5y agoNot rich here. Wife's company got COVID loans. They were forgiven. Company had to prove money was spent on rent, salaries, benefits. Company didn't make money on it. Employees were able to keep their jobs. No bonuses involved there.
- aeturnum 5y agoThe COVID relief has helped the rich in the same way that the mortgage tax deduction 'mostly' helps the rich[1]: the majority of the dollars go to aid wealthy people, despite the number of non-wealthy beneficiaries being much higher. [1] https://thehill.com/opinion/finance/358922-mortgage-interest-deduction-mostly-benefits-the-rich-end-it https://thehill.com/opinion/finance/358922-mortgage-interest...
- Karunamon 5y agoThat always struck me as an ass-backwards way of looking at taxes. $100 saved by someone near the poverty line is a big deal to them, $100 saved by someone making six figures is not near as much. The recent doubling of the standard deduction is probably one of the biggest (in terms of impact) tax cuts to the lower/middle earners (read: the vast majority of people) in a long time.
- treeman79 5y agoLow earners don’t pay federal income tax. Bottom 50% make up 3% Top 1% paid 40% of taxes. https://taxfoundation.org/publications/latest-federal-income-tax-data/ https://taxfoundation.org/publications/latest-federal-income...
- aeturnum 5y agoI agree that poor-er people have much higher marginal utility for $1, but I think that observation supports this critique! The 'cost' of spending $1,000,000 on a wealthy person should be measured in terms of how much utility less-wealthy recipients would get out of that money. In the same way, your example with the standard deduction also, I think, supports this critique: either standard deduction is marginal once you reach a high enough level of income, but at lower levels of income it is much, much better (and results in higher tax rebates for poor people). It's an example of a tax policy that does the reverse of the mortgage tax deduction - it becomes less proportionally beneficial at higher levels of income. P.s. I may have misread your comment, and if we are actually in agreement I apologize!
- ChrisLomont 5y ago>via inflation The poor tend to be net borrowers. The rich tend to be net lenders. Inflation makes the poor less in debt by lowering the real value of payback. Inflation helps borrowers.
- fastball 5y agoNot sure this is true. A wealthy person might have a mortgage on a $1M home while the poor are more likely to be renting. To whit, US mortgage debt in 2020 was at $10T while the debt that the poor are more likely to have (Credit Card / Personal Loan / Auto Loan) is a combined $2.5T[1]. The wealthy are often highly leveraged in a variety of ways. Just look at some of the world's richest people – they generally fund themselves through loans taken out against their equity holdings (stocks in the case of Bezos / Musk / etc). So the ultra-wealthy like Musk are actually winning twice: once when everyone rushes to buy stocks like Tesla because they're worried about inflation and such, increasing the value of his holdings substantially. Then again when the inflation actually hits, because he is funding himself with loans, which are now easier to repay. [1] https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/ https://www.experian.com/blogs/ask-experian/research/consume...
- gher-shyu3i 5y agoYet people still think having a financial system based on usury is an acceptable idea. Quite baffling to say the least.
- ChrisLomont 5y agoThe vast majority of investment capital is from rich person lending. Do you think the poor are lending all the money in the world? Or is it lent from those with the capability?
- donmcronald 5y ago> The poor tend to be net borrowers. Wages for the poor won't go up because they don't have any leverage in terms of negotiating. With no fixed assets and no negotiating power to demand higher wages, the value of the real payback won't change for them, but the cost of living will go up. It'll help a few people who got lucky and bought houses within the last couple of years, but the truly poor (no assets) are about to get much poorer in terms of purchasing power.
- adamrezich 5y agowatch out, go any further down that train of thought and you'll be a "conspiracy theorist"
- jessaustin 5y agoThis was version 2. Version 1 was the "great recession", when several investment banks found themselves insolvent after cluelessly underwriting an overvaluation of American homes. It had been their custom to play a sort of musical chairs with overvalued assets, unloading them on clients and other victims, but eventually they forgot how that game typically ends. After a small amount of public discussion, it was decided that a certain favored subgroup of the investment banks would be bailed out by the public but that their debtors would all lose their homes. This time around, that modicum of public discussion was avoided but we all gave those who can afford teams of lobbyists and lawyers lots of money anyway. For version 3, we can expect automatic deductions from the checking accounts of the bottom half of the income bracket, with automatic credit card transactions against those without checking accounts, to be transferred directly to entertainment allowances for Bezos, Musk, Gates, Buffett, MbL, and various estranged spouses thereof. "Representative government" seems fine until one looks more closely at who is actually represented.
- zapita 5y ago> “Representative government" seems fine until one looks more closely at who is actually represented. Why ruin an otherwise reasonable argument with an out-of-nowhere jab at representative democracy? If anything, without legitimate elected officials in charge, the problem would have been more acute.
- daddylongstroke 5y agoAhhh yes. The old "the-ones-who-caused-the-problems-will-fix-them-honest" routine. Never gets old, and it's been playing out for thousands of years!!! What a sale job.
- austincheney 5y agoNot exactly. I happen to work for a bank. My employer was minimally directly effected by the housing market crash, but due to the intermingling that comprises the financial industry everybody was seriously hurt indirectly. They were forced to purchase, by the federal government, a major stock brokerage that was in serious trouble for pennies on the dollar and assume all their troubled assets. > Representative government" seems fine until one looks more closely at who is actually represented. When looking at current politics I find your statement incredibly strange. I used to think the Republican Party represented the wealthy and special interests (certain business interests as both major parties have their special interest priorities). That was years ago when they were the stronger and more dominant of the two US major parties, back when they had values and weren’t so hypocritical about them. But now they seemed to have strangely thrown away dominance for a failed bet on populism to energize some new core constituents to the disgust of everyone else. I have trouble finding who is actually represented by that, but then I guess a lot of people have that trouble which explains that parties atrophy.
- tlogan 5y agoAnd this is one reason that we do not need to worry about inflation. All the money given to “not so wealthy” is already spent and gone.
- coliveira 5y agoThe combined indirect result of the housing crisis and the COVID crisis is that the upper class doesn't fear recessions anymore. They now have the bail out machine very well tested and oiled. At any sign of recessions they will force governments to bail out their bad investments and let the population die of starvation if necessary.