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> In any case, the "wealth disparity" discussion is almost always badly anchored. The first thing to understand about wealth disparity is that it maps pretty mu

> In any case, the "wealth disparity" discussion is almost always badly anchored. The first thing to understand about wealth disparity is that it maps pretty much to wealth. More wealth, more wealth disparity... almost universally. Many or most people have no wealth, depending on your semantics of "wealth." Therefore, if the value/quantity of wealth rises, wealth disparity rises. I agree with you but it remains a problematic point. The issue is the power imbalance it creates and outlines. Because in and of itself, wealth is of little interest. Economy is first and foremost the study of exchanges. If the wealthy stayed amongst themselves with their wealth parked peacefully and little interaction with the rest of the system, you could pretend they didn’t exist and from the point of view of the economy experienced by the majority of the people that would mostly be true. That’s mostly what’s happening actually which is why people don’t riot. It is both a blessing and a curse because as usual throughout history when an aristocracy arise, their main fear is that the general population realise they are not actually providing that much value and could be dispensed with. That’s why they use the power they own - the ability to put the system out of balance - to lobby in their favour, keep control of the political system and information apparatus in order to keep being able to extract value from the system. From my point of view, we are in situation which has a lot to do with the Old Regime. Aristocrats used to explain that they could not be dispensed with because they had superior value and were needed to administer and guide while exploiting the collective labours of the population. Modern large shareholders and executives explain that they can’t be dispensed with due to their superior ability to manage and impart a strategy while exploiting the collective labour of their employees tolling for meager wages.

seibelj 5y ago
A major difference now is the majority of those with vast wealth earned it themselves through creating new enterprises. The aristocrats of old received it through birth or politicking. The rich today are far more effective and organizationally superior considering it was those exact skills that made them their wealth.
- fumar 5y ago
  Are you arguing that the wealth class today isn’t politicking to maintain power and wealth either to a corporation or themselves?
  - Jensson 5y ago
    They do, but as we have seen in the past 30 years they often still fail to do that.
    - fumar 5y ago
      Given the rise of lobbyist spending, I am not convinced they failed. https://www.statista.com/statistics/257337/total-lobbying-spending-in-the-us/ https://www.statista.com/statistics/257337/total-lobbying-sp...
  - fitchjo 5y ago
    I think he is arguing the exact opposite.
- sveme 5y ago
  Most, if not all of the rich entrepreneurs come from wealthy families. If you start rich it is so much easier to spend time on founding companies.
  - sokoloff 5y ago
    If you are surrounded by entrepreneurs, you’re also more likely to contemplate doing that yourself. I suspect there’s an inherent positive correlation here.
- hiptobecubic 5y ago
  No? There are more wealthy people today who earned it without being bootstrapped by an insanely good starting position than ever before, but to suggest that it's the _majority_ is to ignore everything people have been complaining about in the streets for the last two years. A huge predictor, if not the single biggest predictor, of wealth is still just whether or not your parents are wealthy, especially at the top. E.g. https://cew.georgetown.edu/cew-reports/schooled2lose/ https://cew.georgetown.edu/cew-reports/schooled2lose/. Even the wealth-x report that I assume you are thinking of points to people like besoz and buffet and zuck, all of whom argue a very clear "wow I got super lucky to be born when and where I did and to whom," message. Buffet literally calls it "winning the ovarian lottery." Do some people overcome their initial bad luck and generate wealth for themselves? Of course there are some. But it is not "the majority of those with vast wealth." That's head-in-sand silicon valley tech utopia wankery. I thought the movie Knives Out did a great job of parodying this "Rich people are ENTREPRENEURS that EARNED IT!" idea.
opportune 5y ago
This is not necessarily true because wealth parked in such a manner doesn’t enter the economy. We have a general problem in that people do not consume enough to grow our economy. Now, endlessly increasing consumption sounds bad, but it’s basically required for the economy to keep growing in real terms, since it’s the main component of GDP. Most wealthy people, not even billionaires but lots of run-of-the-mill hundred-thousandaires and petit millionaires, save a lot of their money including their ROI, or at the very least spend money less quickly than they make it. If people spent money more or said “enough” earlier in their wealth accumulation journey, asset prices would be lower and the economy would be bigger. This is good in a lot of ways because capital goods like land really ought to be inexpensive to allow the economy to grow. Same with stocks. Assuming a constant risk-free rate of return (ie treasuries) it’s actually better for equities to have a lower P/E ratio - it’s cheaper to purchase cash flow. I think this general lack of propensity to spend, or basically hoarding, is caused by our perpetually low interest rates and also general government policy that is leading to inflated asset prices. But there is also a cultural aspect to it though. There are a lot of “middle class millionaires” these days with $10m+ fortunes who basically don’t spend it. It’s their right to do so, but it’s stifling growth for the reasons I’ve outlined
- cloverich 5y ago
  Aren't savings required to support loans -- business, home, etc? Does that imply saved money actually is doing something?
  - netcan 5y ago
    No, strictly. EG, the ECB recently "loaned" EU member states quite a lot of euros. They do this every year, with the amount determined by public deficits. The amount is not determined by the amount of savings in ECB savings accounts. They can loan as much as they need, subject to EU law. Public surpluses (deposits by EU member states into their national ECB savings account) are not common. The public doesn't make up the difference. There's no auction of ECB bonds before budget season to balance savings and loans. Banks access funds in a similar way, though the EU chain is more complex that the UK or US'. There are often rules that dictate a balance between savings and access to central bank funds. Basically though, banks can loan as much as their regulators allow them to... for the same reason that states can.
lifeisstillgood 5y ago
* VCs are a commodity because Capital is so prevalent * Entrepreneurs are a commodity because talent is so prevalent So, the market should look like "lots o small companies funded by cheap money" but it does not. And is that because Jeff Bezos is basically Marie Antoinette?
gilmore606 5y ago
> Aristocrats used to explain that they could not be dispensed with because they had superior value and were needed to administer and guide while exploiting the collective labours of the population. Modern large shareholders and executives explain that they can’t be dispensed with due to their superior ability Isn't this evidence that the aristocrats were right? We beheaded them and new aristocrats sprang up in the same place, almost as if there must and will always be people in such positions.
- danaris 5y ago
  No; it's evidence that some people will attempt to become that class of society, even after it's been abolished, so that they can have power over others.
- OrderlyTiamat 5y ago
  I'd say it's evidence that the class is self creating, but not specifically that the class is necessary for society to function. It could be for instance that it must necessarily exist, but only as a byproduct of society (e.g. some people have slightly more resources and therefore an advantage to press to get more resources etc.) Or possibly it's just a consequence of the kinds of society we've had up till now. Perhaps in [your favorite utopia] it's not necessary nor beneficial.
- MereInterest 5y ago
  Or that the positions are self-reinforcing, and whoever gets that position first holds it. Which is exactly why the systems that support aristocrats need to be dismantled, and not just the current crop of aristocrats.

seibelj 5y ago

A major difference now is the majority of those with vast wealth earned it themselves through creating new enterprises. The aristocrats of old received it through birth or politicking. The rich today are far more effective and organizationally superior considering it was those exact skills that made them their wealth.

fumar 5y ago
Are you arguing that the wealth class today isn’t politicking to maintain power and wealth either to a corporation or themselves?
- Jensson 5y ago
  They do, but as we have seen in the past 30 years they often still fail to do that.
  - fumar 5y ago
    Given the rise of lobbyist spending, I am not convinced they failed. https://www.statista.com/statistics/257337/total-lobbying-spending-in-the-us/ https://www.statista.com/statistics/257337/total-lobbying-sp...
- fitchjo 5y ago
  I think he is arguing the exact opposite.
sveme 5y ago
Most, if not all of the rich entrepreneurs come from wealthy families. If you start rich it is so much easier to spend time on founding companies.
- sokoloff 5y ago
  If you are surrounded by entrepreneurs, you’re also more likely to contemplate doing that yourself. I suspect there’s an inherent positive correlation here.
hiptobecubic 5y ago
No? There are more wealthy people today who earned it without being bootstrapped by an insanely good starting position than ever before, but to suggest that it's the _majority_ is to ignore everything people have been complaining about in the streets for the last two years. A huge predictor, if not the single biggest predictor, of wealth is still just whether or not your parents are wealthy, especially at the top. E.g. https://cew.georgetown.edu/cew-reports/schooled2lose/ https://cew.georgetown.edu/cew-reports/schooled2lose/. Even the wealth-x report that I assume you are thinking of points to people like besoz and buffet and zuck, all of whom argue a very clear "wow I got super lucky to be born when and where I did and to whom," message. Buffet literally calls it "winning the ovarian lottery." Do some people overcome their initial bad luck and generate wealth for themselves? Of course there are some. But it is not "the majority of those with vast wealth." That's head-in-sand silicon valley tech utopia wankery. I thought the movie Knives Out did a great job of parodying this "Rich people are ENTREPRENEURS that EARNED IT!" idea.

opportune 5y ago

This is not necessarily true because wealth parked in such a manner doesn’t enter the economy. We have a general problem in that people do not consume enough to grow our economy. Now, endlessly increasing consumption sounds bad, but it’s basically required for the economy to keep growing in real terms, since it’s the main component of GDP. Most wealthy people, not even billionaires but lots of run-of-the-mill hundred-thousandaires and petit millionaires, save a lot of their money including their ROI, or at the very least spend money less quickly than they make it. If people spent money more or said “enough” earlier in their wealth accumulation journey, asset prices would be lower and the economy would be bigger. This is good in a lot of ways because capital goods like land really ought to be inexpensive to allow the economy to grow. Same with stocks. Assuming a constant risk-free rate of return (ie treasuries) it’s actually better for equities to have a lower P/E ratio - it’s cheaper to purchase cash flow. I think this general lack of propensity to spend, or basically hoarding, is caused by our perpetually low interest rates and also general government policy that is leading to inflated asset prices. But there is also a cultural aspect to it though. There are a lot of “middle class millionaires” these days with $10m+ fortunes who basically don’t spend it. It’s their right to do so, but it’s stifling growth for the reasons I’ve outlined

cloverich 5y ago
Aren't savings required to support loans -- business, home, etc? Does that imply saved money actually is doing something?
- netcan 5y ago
  No, strictly. EG, the ECB recently "loaned" EU member states quite a lot of euros. They do this every year, with the amount determined by public deficits. The amount is not determined by the amount of savings in ECB savings accounts. They can loan as much as they need, subject to EU law. Public surpluses (deposits by EU member states into their national ECB savings account) are not common. The public doesn't make up the difference. There's no auction of ECB bonds before budget season to balance savings and loans. Banks access funds in a similar way, though the EU chain is more complex that the UK or US'. There are often rules that dictate a balance between savings and access to central bank funds. Basically though, banks can loan as much as their regulators allow them to... for the same reason that states can.

lifeisstillgood 5y ago

* VCs are a commodity because Capital is so prevalent * Entrepreneurs are a commodity because talent is so prevalent So, the market should look like "lots o small companies funded by cheap money" but it does not. And is that because Jeff Bezos is basically Marie Antoinette?

gilmore606 5y ago

> Aristocrats used to explain that they could not be dispensed with because they had superior value and were needed to administer and guide while exploiting the collective labours of the population. Modern large shareholders and executives explain that they can’t be dispensed with due to their superior ability Isn't this evidence that the aristocrats were right? We beheaded them and new aristocrats sprang up in the same place, almost as if there must and will always be people in such positions.

danaris 5y ago
No; it's evidence that some people will attempt to become that class of society, even after it's been abolished, so that they can have power over others.
OrderlyTiamat 5y ago
I'd say it's evidence that the class is self creating, but not specifically that the class is necessary for society to function. It could be for instance that it must necessarily exist, but only as a byproduct of society (e.g. some people have slightly more resources and therefore an advantage to press to get more resources etc.) Or possibly it's just a consequence of the kinds of society we've had up till now. Perhaps in [your favorite utopia] it's not necessary nor beneficial.
MereInterest 5y ago
Or that the positions are self-reinforcing, and whoever gets that position first holds it. Which is exactly why the systems that support aristocrats need to be dismantled, and not just the current crop of aristocrats.