12 ms·

Maybe it's a result of wealth inequality and monopolization? If capital gets concentrated into less companies and less individuals, then it makes sense that inv

Maybe it's a result of wealth inequality and monopolization? If capital gets concentrated into less companies and less individuals, then it makes sense that investing and productivity will also be concentrated into less things. It will be focused on areas that those companies focus on and into areas that those individuals care about. Take a look at the Nasdaq Composite. Of the 2700 companies in it, six tech companies make up 41% of its entire market cap [0]. [0] https://www.statista.com/chart/22343/nasdaq-100-top-tech-companies/ https://www.statista.com/chart/22343/nasdaq-100-top-tech-com...

zepto 5y ago
> It will be focused on areas that those companies focus on and into areas that those individuals care about. I think it’s not about what anyone cares about. It’s about what’s competitive. Even those at the top of the wealth pyramid are subject to these forces. I think (extreme) wealth inequality is partly a consequence, rather than a cause her. Creating a global competition through literal economic globalization and the collapse of distance brought about by the internet means we have the entire world competing in a small number of linked domains, rather the than many independent competitive realms that existed before.
- dv_dt 5y ago
  In systemic feedback loops, issues can be both cause and effect. As is the case for wealth inequality here imho.
  - zepto 5y ago
    It’s part of the feedback loop but it’s not a cause. Intervening to alleviate inequality directly won’t change the other dynamics.
estro0182 5y ago
I was just going to comment with something similar, but more focused on the individual's inability to think creatively because they're just trying to survive on an increasingly inflated-away income. Poverty has a profound effect on creative thinking, and increasingly more of America creeps towards poverty. The author throws one sentence out there on this, then moves on to top-down excuses for lack of innovation.
- jelliclesfarm 5y ago
  Define Poverty. Here..let me help you: https://worldpopulationreview.com/country-rankings/poverty-rate-by-country https://worldpopulationreview.com/country-rankings/poverty-r...
redisman 5y ago
Wage growth has flatlined for 30+ years! What happened to the middle class and the American dream? There it is.
- deleted 5y ago
  [deleted]
- ryandvm 5y ago
  Moving out of the country is the new American Dream
  - throwaway894345 5y ago
    Is there any evidence that people are striving en masse to leave America? It seems like the vast majority of the world is trying to get in. The US has the 5th highest median income in the world, so I don't think mass exodus is likely. https://en.wikipedia.org/wiki/Median_income https://en.wikipedia.org/wiki/Median_income
    - ska 5y ago
      > It seems like the vast majority of the world is trying to get in. This is a common trope but only kinda-sorta true. It's definitely true that there is no sign of mass exodus. Net immigration number remain positive (3% ish) but they are well below historic highs, and currently declining YoY. See e.g. https://www.macrotrends.net/countries/USA/united-states/net-migration https://www.macrotrends.net/countries/USA/united-states/net-... It's interesting I think that per capita Canada (e.g. another "new world" immigration target) has fairly consistently been much higher, and is currently near 2x. The approx 10x population size dwarfs this in total numbers though (https://www.macrotrends.net/countries/CAN/canada/net-migration https://www.macrotrends.net/countries/CAN/canada/net-migrati...)
      - rich_sasha 5y ago
        The few times I thought about moving to America, the thing that ultimately put me off wasn’t healthcare, guns or food, but the utterly hostile immigration process. It seems that until you get a green card, the state barely tolerates your presence. So nothing to do with the fundamentals, for me anyway.
old-gregg 5y ago
> Maybe it's a result of wealth inequality and monopolization? Well, the author did compare the current rate of innovation to the dawn of the 20th century, when (according to him) we had plenty of new ideas. But wealth inequality in 1900-1920 was comparable to, if not higher, than today. The raise of the middle class in the US didn't happen until after the WW2.
- johndubchak 5y ago
  Additionally, and admittedly without evidentiary support, we could argue that two biggest suppliers of capital investment for innovation used to come from business and Government and largely still do. However, business has focused on short-term gain for investors and concentrating wealth into the hands of its upper Executives. Government, at least in the US, has worked itself into a position of partisanship such that deadlock and preventing the other side from doing anything seems to be more important. These are both short-sighted views and approaches. Scientific discovery takes time, requires consistent investment and a longer-term vision. Quite honestly, I don't think it's a radical view to take to blame the current climate of business and Government in the US for many of the issues we see elucidated here. That being said, the solution is as complex as the problem and would require a major restructuring of both the economy and our Government, IMO.
  - granshaw 5y ago
    I wonder if a big difference between now and the start of the 20th century is precisely the insane focus on short term return, what with the feedback loops being so much quicker and visibility so much higher
    - johndubchak 5y ago
      Great question. It is partly what I suggest, I think...
  - salt-thrower 5y ago
    I think you're spot on with this analysis. I would add that the gridlock in the U.S. government isn't just happenstance, either. An ineffective government benefits Capital (at least in the short term), and thanks to lax lobbying and campaign finance laws, Capital is able to buy enough politicians to ensure that any legislation which would challenge the status quo dies before it reaches the President's desk. Gridlock serves the political and economic elite well, so they're invested in keeping it that way.
dantheman 5y ago
Maybe it's the mountains of regulation and just general nonsense.
bjtitus 5y ago
The problem with this theory is that the current top-weighting is not all that much higher than during previous historical periods. There's a decent overview [0] covering the historical S&P 500's highest concentrations of the top 10 stocks which ranged from a low of 17.5% in 2014 to a high of 25.5% in 1980. It's a little under 30% today. Needless to say, the returns over the decades following 1980 were some of the most consistently positive in history [1]. [0] https://www.yahoo.com/now/top-heavy-stock-indexes-nothing-090014114.html https://www.yahoo.com/now/top-heavy-stock-indexes-nothing-09... [1] https://www.macrotrends.net/2526/sp-500-historical-annual-returns https://www.macrotrends.net/2526/sp-500-historical-annual-re...
larsiusprime 5y ago
This is basically Thomas Piketty's conclusion, but Rognlie shows that most of the outsized returns to "capital" are actually from housing/real estate once you properly factor in depreciation of capital assets: https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/ https://www.brookings.edu/bpea-articles/deciphering-the-fall... https://www.brookings.edu/wp-content/uploads/2016/07/2015a_rognlie.pdf https://www.brookings.edu/wp-content/uploads/2016/07/2015a_r...
narcraft 5y ago
It's almost certainly not a result of wealth inequality and monopolization
honkycat 5y ago
Lol I came here to say this. For many people, there is no comfort. For many people there is no hope for a future. 99% of Americans may be running on fumes, but the 1% are running on plutonium.
- memling 5y ago
  > For many people there is no hope for a future. What is the object of that hope? I.e., what are people hoping for in the future? (Yes, this is a bit of a vague question that requires a lot of speculation. If you're willing, humor me?)
  - honkycat 5y ago
    A safe and secure world for their children to flourish in.
    - sjwalter 5y ago
      I think that's part of the problem. I think we're already living in incredibly safe times, and a focus on even more safety and security is what's causing some good chunk of the malaise we're all experiencing. I want my kids to increasingly face more insecurity and unsafety. This way they become more and more resilient and able to deal with the future without me.
      - honkycat 5y ago
        "the suburbs dream of violence. Asleep in their drowsy villas, sheltered by benevolent shopping malls, they wait patiently for the nightmares that will wake them into a more passionate world." I want you to reach out to someone who has experienced violence in their community and ask them how it made them a stronger more capable person. There are plenty. They probably will not be the "real man" you are envisioning. The worst people to meet on the battlefield in the past? It wasn't the "resilient" professional soldiers who lived through tough times. It was the kings and princes training in comfort, decked out in their armor worth a fortune surrounded by their expensive personal guard. Everyone else suffered. "hard times make hard men" is not a coherent worldview. It is propaganda to cast "other" people as effete in order to convince you some other group of people are "real men". You know. The ones who do all the exact same shit as the "girly men" but are also willing to sell you overpriced supplements and coffee. "I want my kids to increasingly face more insecurity and unsafety." What a joke. I hope your children are never unsafe and you never have to learn what a foolish thing this is to say.
keewee7 5y ago
>Take a look at the Nasdaq Composite. Of the 2700 companies in it, six tech companies make up 41% of its entire market cap That is not saying much. NASDAQ Composite includes everyone and their grandma. The rest is just Pareto's principle in action.
iriri8 5y ago
Of course it’s wealth inequality Wealth is agency Those who have it have diverse opportunities for agency at their disposal Those that don’t have paycheck to paycheck and inflation concerns When are the science minded going to look beyond cultural ephemera and realize the emotional depths at which relativity impacts life Ignorant people can’t know to fight for healthcare if they’re never allowed to experience good healthcare It’s such a joke this culture would call itself science minded while clearly building a traditional wealth caste
cturner 5y ago
fewer
thewarrior 5y ago
There’s an angle that a lot of these discussions tend to miss. We are running out of easy energy. The step change in civilization we observed in the past 200 years was because we found an abundant source of energy. Ideas don’t build sky scrapers energy does. If you don’t believe me you can look up the per capita energy consumption per American and observe that it is basically stagnant since 1970. Which is also curiously the date since when the American dream started to fade. We got around this by outsourcing some activities to economies with a low energy intensity, loading up on debt and improving the energy efficiency of our devices. But these cannot result in the kind of step change improvements that we got used to over the last century. Why have we seen such amazing progress in computing and the internet ? Moores law allows us to extract twice as much compute for the same energy every 18 months. The energy burned by a transistor scales with its area. This is nothing short of miraculous. It’s as if your car doubled its mileage every 2 years. This has allowed computing to cheat the stagnation in energy we have been seeing elsewhere. When compute gets cheaper transporting information gets cheaper as well as it is computers that transport the information. Hence the biggest growth industry continues to be technology and the internet. Batteries or solar panels do not double every 18 months. Batteries have barely moved in comparison. The newer iPhones feel heavier after they made the battery bigger. There was a fear for a time that “Peak Oil” would lead to some kind of a total collapse. The reality is more of a slow burn stagnation as we wring the oil out of ever deeper deposits. The much heralded green transition got a dose of reality this year in Europe as they realized how reliant they are on natural gas to not freeze to death. Building tens of thousands of Nuclear plants is far from trivial although it is in theory possible. We will in general struggle to maintain the standards of living we currently have especially as we expand it to the broader population. This is a harsh truth many don’t want to confront. Perhaps the elites realize this and have decided to squeeze every last drop out of the orange so they can experience the growth that was once the norm for all first worlders. The elites being the top 2-5 %. The entire third world that was looted and colonized is also now stepping up to claim its fair share of global resources. The more they develop the higher energy prices will go. And yet it is inevitable. Hence I struggle to see how first world living standards will not stagnate even in the presence of interesting new technologies and breakthroughs. The meta verse might be the answer as a simulation of prosperity may be cheaper than actual prosperity. It might also explain why everything is moving into the virtual world. Energy constraints apply a lot less here. And don’t get me started on Climate Change.
guerrilla 5y ago
I'm always up for an anti-capitalist take but I should remind you that Bell Labs was the spawn of an actual and massive monopoly. You'd have to explain that.
specialist 5y ago
Prior monopolies invested. Because of tax code. And corporate remits were limited. Probably a few other reasons. All those guard rails were eliminated. So current monopolies do stock buybacks. All that excess idle wealth, too much capital chasing too few investments, has to go somewhere. Causing asset bubbles. Stocks, real estate, cryptocurrencies, artwork. If we want more investment, we have to address idle wealth. Disincentivize hoarding wealth. Keep the money moving. Reduce the impedance mismatch between funds (too big) and investment opportunities (too small); like apply the YC strategy far and wide.
France_is_bacon 5y ago
[dead]

zepto 5y ago

> It will be focused on areas that those companies focus on and into areas that those individuals care about. I think it’s not about what anyone cares about. It’s about what’s competitive. Even those at the top of the wealth pyramid are subject to these forces. I think (extreme) wealth inequality is partly a consequence, rather than a cause her. Creating a global competition through literal economic globalization and the collapse of distance brought about by the internet means we have the entire world competing in a small number of linked domains, rather the than many independent competitive realms that existed before.

dv_dt 5y ago
In systemic feedback loops, issues can be both cause and effect. As is the case for wealth inequality here imho.
- zepto 5y ago
  It’s part of the feedback loop but it’s not a cause. Intervening to alleviate inequality directly won’t change the other dynamics.

estro0182 5y ago

I was just going to comment with something similar, but more focused on the individual's inability to think creatively because they're just trying to survive on an increasingly inflated-away income. Poverty has a profound effect on creative thinking, and increasingly more of America creeps towards poverty. The author throws one sentence out there on this, then moves on to top-down excuses for lack of innovation.

jelliclesfarm 5y ago
Define Poverty. Here..let me help you: https://worldpopulationreview.com/country-rankings/poverty-rate-by-country https://worldpopulationreview.com/country-rankings/poverty-r...

redisman 5y ago

Wage growth has flatlined for 30+ years! What happened to the middle class and the American dream? There it is.

deleted 5y ago
[deleted]
ryandvm 5y ago
Moving out of the country is the new American Dream
- throwaway894345 5y ago
  Is there any evidence that people are striving en masse to leave America? It seems like the vast majority of the world is trying to get in. The US has the 5th highest median income in the world, so I don't think mass exodus is likely. https://en.wikipedia.org/wiki/Median_income https://en.wikipedia.org/wiki/Median_income
  - ska 5y ago
    > It seems like the vast majority of the world is trying to get in. This is a common trope but only kinda-sorta true. It's definitely true that there is no sign of mass exodus. Net immigration number remain positive (3% ish) but they are well below historic highs, and currently declining YoY. See e.g. https://www.macrotrends.net/countries/USA/united-states/net-migration https://www.macrotrends.net/countries/USA/united-states/net-... It's interesting I think that per capita Canada (e.g. another "new world" immigration target) has fairly consistently been much higher, and is currently near 2x. The approx 10x population size dwarfs this in total numbers though (https://www.macrotrends.net/countries/CAN/canada/net-migration https://www.macrotrends.net/countries/CAN/canada/net-migrati...)
    - rich_sasha 5y ago
      The few times I thought about moving to America, the thing that ultimately put me off wasn’t healthcare, guns or food, but the utterly hostile immigration process. It seems that until you get a green card, the state barely tolerates your presence. So nothing to do with the fundamentals, for me anyway.

old-gregg 5y ago

> Maybe it's a result of wealth inequality and monopolization? Well, the author did compare the current rate of innovation to the dawn of the 20th century, when (according to him) we had plenty of new ideas. But wealth inequality in 1900-1920 was comparable to, if not higher, than today. The raise of the middle class in the US didn't happen until after the WW2.

johndubchak 5y ago
Additionally, and admittedly without evidentiary support, we could argue that two biggest suppliers of capital investment for innovation used to come from business and Government and largely still do. However, business has focused on short-term gain for investors and concentrating wealth into the hands of its upper Executives. Government, at least in the US, has worked itself into a position of partisanship such that deadlock and preventing the other side from doing anything seems to be more important. These are both short-sighted views and approaches. Scientific discovery takes time, requires consistent investment and a longer-term vision. Quite honestly, I don't think it's a radical view to take to blame the current climate of business and Government in the US for many of the issues we see elucidated here. That being said, the solution is as complex as the problem and would require a major restructuring of both the economy and our Government, IMO.
- granshaw 5y ago
  I wonder if a big difference between now and the start of the 20th century is precisely the insane focus on short term return, what with the feedback loops being so much quicker and visibility so much higher
  - johndubchak 5y ago
    Great question. It is partly what I suggest, I think...
- salt-thrower 5y ago
  I think you're spot on with this analysis. I would add that the gridlock in the U.S. government isn't just happenstance, either. An ineffective government benefits Capital (at least in the short term), and thanks to lax lobbying and campaign finance laws, Capital is able to buy enough politicians to ensure that any legislation which would challenge the status quo dies before it reaches the President's desk. Gridlock serves the political and economic elite well, so they're invested in keeping it that way.

dantheman 5y ago

Maybe it's the mountains of regulation and just general nonsense.

bjtitus 5y ago

The problem with this theory is that the current top-weighting is not all that much higher than during previous historical periods. There's a decent overview [0] covering the historical S&P 500's highest concentrations of the top 10 stocks which ranged from a low of 17.5% in 2014 to a high of 25.5% in 1980. It's a little under 30% today. Needless to say, the returns over the decades following 1980 were some of the most consistently positive in history [1]. [0] https://www.yahoo.com/now/top-heavy-stock-indexes-nothing-090014114.html https://www.yahoo.com/now/top-heavy-stock-indexes-nothing-09... [1] https://www.macrotrends.net/2526/sp-500-historical-annual-returns https://www.macrotrends.net/2526/sp-500-historical-annual-re...

larsiusprime 5y ago

This is basically Thomas Piketty's conclusion, but Rognlie shows that most of the outsized returns to "capital" are actually from housing/real estate once you properly factor in depreciation of capital assets: https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/ https://www.brookings.edu/bpea-articles/deciphering-the-fall... https://www.brookings.edu/wp-content/uploads/2016/07/2015a_rognlie.pdf https://www.brookings.edu/wp-content/uploads/2016/07/2015a_r...

narcraft 5y ago

It's almost certainly not a result of wealth inequality and monopolization

honkycat 5y ago

Lol I came here to say this. For many people, there is no comfort. For many people there is no hope for a future. 99% of Americans may be running on fumes, but the 1% are running on plutonium.

memling 5y ago
> For many people there is no hope for a future. What is the object of that hope? I.e., what are people hoping for in the future? (Yes, this is a bit of a vague question that requires a lot of speculation. If you're willing, humor me?)
- honkycat 5y ago
  A safe and secure world for their children to flourish in.
  - sjwalter 5y ago
    I think that's part of the problem. I think we're already living in incredibly safe times, and a focus on even more safety and security is what's causing some good chunk of the malaise we're all experiencing. I want my kids to increasingly face more insecurity and unsafety. This way they become more and more resilient and able to deal with the future without me.
    - honkycat 5y ago
      "the suburbs dream of violence. Asleep in their drowsy villas, sheltered by benevolent shopping malls, they wait patiently for the nightmares that will wake them into a more passionate world." I want you to reach out to someone who has experienced violence in their community and ask them how it made them a stronger more capable person. There are plenty. They probably will not be the "real man" you are envisioning. The worst people to meet on the battlefield in the past? It wasn't the "resilient" professional soldiers who lived through tough times. It was the kings and princes training in comfort, decked out in their armor worth a fortune surrounded by their expensive personal guard. Everyone else suffered. "hard times make hard men" is not a coherent worldview. It is propaganda to cast "other" people as effete in order to convince you some other group of people are "real men". You know. The ones who do all the exact same shit as the "girly men" but are also willing to sell you overpriced supplements and coffee. "I want my kids to increasingly face more insecurity and unsafety." What a joke. I hope your children are never unsafe and you never have to learn what a foolish thing this is to say.

keewee7 5y ago

>Take a look at the Nasdaq Composite. Of the 2700 companies in it, six tech companies make up 41% of its entire market cap That is not saying much. NASDAQ Composite includes everyone and their grandma. The rest is just Pareto's principle in action.

iriri8 5y ago

Of course it’s wealth inequality Wealth is agency Those who have it have diverse opportunities for agency at their disposal Those that don’t have paycheck to paycheck and inflation concerns When are the science minded going to look beyond cultural ephemera and realize the emotional depths at which relativity impacts life Ignorant people can’t know to fight for healthcare if they’re never allowed to experience good healthcare It’s such a joke this culture would call itself science minded while clearly building a traditional wealth caste

cturner 5y ago

fewer

thewarrior 5y ago

There’s an angle that a lot of these discussions tend to miss. We are running out of easy energy. The step change in civilization we observed in the past 200 years was because we found an abundant source of energy. Ideas don’t build sky scrapers energy does. If you don’t believe me you can look up the per capita energy consumption per American and observe that it is basically stagnant since 1970. Which is also curiously the date since when the American dream started to fade. We got around this by outsourcing some activities to economies with a low energy intensity, loading up on debt and improving the energy efficiency of our devices. But these cannot result in the kind of step change improvements that we got used to over the last century. Why have we seen such amazing progress in computing and the internet ? Moores law allows us to extract twice as much compute for the same energy every 18 months. The energy burned by a transistor scales with its area. This is nothing short of miraculous. It’s as if your car doubled its mileage every 2 years. This has allowed computing to cheat the stagnation in energy we have been seeing elsewhere. When compute gets cheaper transporting information gets cheaper as well as it is computers that transport the information. Hence the biggest growth industry continues to be technology and the internet. Batteries or solar panels do not double every 18 months. Batteries have barely moved in comparison. The newer iPhones feel heavier after they made the battery bigger. There was a fear for a time that “Peak Oil” would lead to some kind of a total collapse. The reality is more of a slow burn stagnation as we wring the oil out of ever deeper deposits. The much heralded green transition got a dose of reality this year in Europe as they realized how reliant they are on natural gas to not freeze to death. Building tens of thousands of Nuclear plants is far from trivial although it is in theory possible. We will in general struggle to maintain the standards of living we currently have especially as we expand it to the broader population. This is a harsh truth many don’t want to confront. Perhaps the elites realize this and have decided to squeeze every last drop out of the orange so they can experience the growth that was once the norm for all first worlders. The elites being the top 2-5 %. The entire third world that was looted and colonized is also now stepping up to claim its fair share of global resources. The more they develop the higher energy prices will go. And yet it is inevitable. Hence I struggle to see how first world living standards will not stagnate even in the presence of interesting new technologies and breakthroughs. The meta verse might be the answer as a simulation of prosperity may be cheaper than actual prosperity. It might also explain why everything is moving into the virtual world. Energy constraints apply a lot less here. And don’t get me started on Climate Change.

guerrilla 5y ago

I'm always up for an anti-capitalist take but I should remind you that Bell Labs was the spawn of an actual and massive monopoly. You'd have to explain that.

specialist 5y ago

Prior monopolies invested. Because of tax code. And corporate remits were limited. Probably a few other reasons. All those guard rails were eliminated. So current monopolies do stock buybacks. All that excess idle wealth, too much capital chasing too few investments, has to go somewhere. Causing asset bubbles. Stocks, real estate, cryptocurrencies, artwork. If we want more investment, we have to address idle wealth. Disincentivize hoarding wealth. Keep the money moving. Reduce the impedance mismatch between funds (too big) and investment opportunities (too small); like apply the YC strategy far and wide.

France_is_bacon 5y ago

[dead]