5 ms·

Income Inequality Is Big, Wealth Inequality Is 100 Times Bigger

noahmbarr 5y ago
The other way of looking at this is via 3 groups in the US: 1) the bottom 90%, 2) the next 9.9%, 3) the top 0.1% This thinking was informed by: https://amp.theatlantic.com/amp/article/559130/ https://amp.theatlantic.com/amp/article/559130/
- naveen99 5y ago
  Shouldn’t it be: 1. Bottom 90% 2. Next 9% 3. Next 0.9% . . .
  - noahmbarr 5y ago
    Thanks! Clearly my HN markdown game could use some tightening. It looked good on entry…
- marcusverus 5y ago
  I can understand why some folks get upset about the .1%. If you ignore the whole private property aspect of it, it is pretty easy to make a "moral" against Bezos having so much money. He didn't exactly 'earn' it, after all. He just started a company that grew and grew and grew. And besides, you could take 95% of it without having any impact on his quality of life. The same is not true of the 9.9%. These aren't household names with ungodly amounts of wealth. However the article tries to spin it: > So what kind of characters are we, the 9.9 percent? We are mostly not like those flamboyant political manipulators from the 0.1 percent. We’re a well-behaved, flannel-suited crowd of lawyers, doctors, dentists, mid-level investment bankers, M.B.A.s with opaque job titles, and assorted other professionals. Presumably the inclusion of 'investment bankers' and 'M.B.A's with opaque job titles' is an attempt to convince you that these people don't actually work. The actual data say the most common jobs in the top 10% are Managers, Software Developers, Salespeople, Lawyers, Execs, Sales Managers, IT Professionals, Marketing professionals, Accountants, and physicians.[0] These folks aren't mysterious people doing god-knows-what for unseemly amounts of money. Their your neighbors. If you want to know what they make, you can google it. You'll find that it's not unreasonable. I sure as hell don't want to be a manager or a doctor. So how do they get so much richer than the 90%? It's so easily explained that it's almost tautological. They trade their labor for money, then invest it. People who make more money have more disposable income and, importantly, disposable income doesn't scale linearly. A guy who makes 100K might see 25% of his income (25K!) in disposable income. A guy who makes 50K is unlikely to have 25% of his income (12.5K) in disposable income, and someone earning the average minimum wage of ~25K is VERY unlikely to have 25% of his income (6.5K) in disposable income. Why would it be surprising that our high earner was worth much more than the others? And while these folks are undoubtedly rich, they're far from obscenely rich. The median member of the 10% is worth $2.4 Million. Let's think about that number in terms of a retirement nest-egg. Assuming that's all in liquid assets (it's not), that gives them a safe withdrawal rate (4% per year), which would mean ~230K per year in retirement income. These people are planning for reasonable retirements with comfortable but relatable lifestyles. There's nothing nefarious going on, but (as is clear in the article) it's important that you think there is. It's hard to convince you to tax your Software Developer friend, Tim, or the Doctor that you've known your whole life. The trick is to mention them without making you think about them by intentionally conflating normal white-collar folks with mysterious sounding "mid-level investment bankers" and "M.B.A.s with opaque job titles". Once we're talking about an abstract group of 'others', it's easy to convince you that they're bad. Just mention some stats about racial disparities and allude to institutional racism. They're only rich because of their White privilege! It's also helpful to pretend that not taxing someone is somehow a government handout. Isn't that just unfair? Now Tim and Dr. Philbert are far from your mind. You're angry at these cheaters, these bad people in the 9% who got their money in dubious ways! Having been lulled into a state of moral hypnosis (in which poor Tim's retirement savings has somehow been transmuted into ill-gotten gains) you're happy to vote his money out of his pockets. If you buy in hard enough, you can even do so while enjoying a sense of moral superiority! [0]https://taxfoundation.org/most-common-jobs-income-bracket/ https://taxfoundation.org/most-common-jobs-income-bracket/
  - achillesheels 5y ago
    Ironically, it is exactly the 9.9% you mention that are beneficiaries of what I define "Political Markets" - operating in positions of labor which are likely controlled by legislative practices, i.e. where compliance necessarily creates pseudo-monopolies for goods and services. Compared to Jeff Bezos, who has accorded more food on the tables for people you would identically label as "abstract". How then is your moral argument sound, especially after the fact of his compounding returns of earnest efforts at wealth creation? Morally speaking, it is nobler to be in the position of a Mr. Bezos who actually risked his life to prepare more food on the table for people than those who are in effect riding on the coattails of previous generations. They are all "obscenely rich" compared to where the average human mortal resides right now. Given all of their advantages, what do they do with it? What work do they do that will stand the test of time, let alone 25 years? Hopefully a "moral" argument for the independent decision making of individuals and how they create honest wealth is demonstratively absurd.
GDC7 5y ago
quality of life gap on the other hand has never been smaller. Some points off the top of my head 1) People live essentially as long as billionaires 2) You can hop on a 430M dollar plane which is the same as Biden's (actually there's good chance it's newer than Air Force One) for as low as 500$ with the only cavet that you have to share it with 400 other people 3) You can enter in a building costing 5-10 billions of dollars (think the big Vegas hotels) for free, again only cavet is that you have to share it with 2500-5000 people 4) You can drive cars costing a million dollars and it would only cost you a tiny fraction of that, hopping once a year in a Ferrari or a Lamborghini for the weekend is not far fetched 5) You have basically every means and financial product tailored to achieve your goals including all the above, ranging from lease to rent to financing purchases of electronics and vacations. Of course hedonic treadmill never stops so nothwistanding all the above the huge source of worry nowdays is the result of the following subtraction: Bill Gates' number - people's own number. It's an ego thing essentially I agree that people who are perceived as winners taking all such as Gates, Bezos and quack Musk should not say these things because it would exacerbate the above sentiments instead of disengaging it as it comes off as patronizing winners telling the population how they should feel. But regular people should go through the process on their own , when this process of self discovery happens you both start to ignore the billionaires and also those who hope to socially elevate themselves by promising to "eat the rich" such as Sanders , AOC and the like.
- siquick 5y ago
  None of those things you listed represent “quality of life” in any capacity. I highly doubt anyone who’s working two jobs/60h weeks is spending too much time thinking about driving a sports car for one weekend a year. They’re thinking that they just want a day off and that it would be great if their multi multi billionaire employer would give up some of his obscene and ultimately pointless wealth and pay them a decent wage.
  - GDC7 5y ago
    > None of those things you listed represent “quality of life” in any capacity. I highly doubt anyone who’s working two jobs/60h weeks is spending too much time thinking about driving a sports car for one weekend a year. As much as people don't want to hear it money is meant to be spent, only the perverse hedonic treadmill effect brought us in this scenario where it's used to keep the score > They’re thinking that they just want a day off and that it would be great if their multi multi billionaire employer would give up some of his obscene and ultimately pointless wealth and pay them a decent wage. Again, the gap has never been smaller. People rage would be justified if the process were to be in reverse or even slowing down, but it's only accelerating, we have just witnessed it. A person in the same age cohort as Bill Gates, received the COVID vaccine at the same time as him or maybe a couple of days earlier or later than him. It's unheard of in the history of the human specie
dfadsadsf 5y ago
Any article about wealth that does not put age at the center is garbage.
- refurb 5y ago
  Angry that old people have more time to accumulate wealth! Government needs to step in and fix that!
  - coldtea 5y ago
    Old people have the most unequal (between them) share of overall wealth than ever before. Yay, free market!
    - refurb 5y ago
      Compared to later generations, they don’t actually!
- lumost 5y ago
  This is a distraction. Elon Musk has more wealth than a person who saved 1 MM per year for 300,000 years. While an old person is likely to have 20x the saved income of their younger year's - wealth inequality is driven by capital holders amassing more capital and in turn passing it on via inheritance.
  - flavius29663 5y ago
    What's wrong with Elon Musk? He deserves it! He single handedly brought forward the EV revolution by at least 1 decade, maybe more. He improved the car emissions more than governments worldwide were not able to do for decades before him. EU made it significantly worse by betting on the wrong horse (diesel) and then pushing very hard on it and giving cancer to its citizens. Bill Gates put a computer in every home Steve Jobs put a smartphone in every hand (for better or worse) Bezos revolutionized online shopping AND cloud computing. Why wouldn't these people be billionaires? Governments could never achieve this kind of progress, they are too bureaucratic, corrupt and incompetent. Take away the billionaires' money now, and you will stop the next big innovation.
boppo1 5y ago
Does anybody else think western monetary policy is largely responsible for this? If you interfere with the denominator of a time value of money formula and push down the discount rate, security prices go up disproportionately to their actual cash flows. Low interest rate policy might 'create jobs' (inefficient ones), but another direct consequence is that anyone holding ownership of cash flows watches their net worth go up while wage earners get priced out of meaningful ownership of the economy. We've been doing this for more than a decade. I'm not super-well educated on this topic (just a BA) but so far no one has helped my understanding out with a refutation.
deleted 5y ago
[deleted]
narcraft 5y ago
Two things to consider: 1) https://en.m.wikipedia.org/wiki/Stock_and_flow https://en.m.wikipedia.org/wiki/Stock_and_flow 2) https://en.m.wikipedia.org/wiki/Compound_interest https://en.m.wikipedia.org/wiki/Compound_interest
jmpman 5y ago
The top 1% own 42% of the wealth. What fraction of overall taxes are paid by the top 1%? I expect it’s significantly lower than 42%.
- csb6 5y ago
  Is the proportion of all collected taxes paid by the 1% a meaningful measure here? Wouldn’t it be more useful to compare how much the 1% pay in taxes as a proportion of their own wealth versus other classes? That way you can see the relative impact of taxation on them. I suspect that the wealthy contribute a much lower portion of their total wealth to taxes than most people in the middle class, but I’m not even sure if there are statistics on this (I will try and look later).
  - listenallyall 5y ago
    Both of you are chasing a straw man. The U.S. doesn't have a wealth tax, doesn't claim to, never did. People pay taxes on income (to the Federal govt, not talking property, sales, gasoline taxes etc which are local). The tax code was never intended to be equally weighted by someone's wealth. If you are in favor of wealth confiscation, I mean wealth tax, come out and say that, and lobby and vote for it. Don't try to wrangle the income tax into something it isn't. Of course, in the interim, you could try and cancel the two most popular tax deductions, mortgage interest and charitable donations, which benefit rich, wealthy people far more than everyone else. Let me know how that goes.
    - csb6 5y ago
      > The U.S. doesn't have a wealth tax, doesn't claim to, never did. This is true (I guess estate taxes could be considered a sort of wealth tax, although there is a lot of Republican support for removing them, so we'll see how long they remain when they get back into power). > If you are in favor of wealth confiscation, I mean wealth tax, come out and say that I mean, I would support it. I wasn't trying to hide it; I was just commenting on the parent's metric. All taxes are a kind of confiscation, given that they are mandatory. However, my sense is that you see this as a sort of robbery rather than a redistribution to the community (i.e. poor people, old people, necessary public services that enable your business to function, your wealth to continuously accumulate, your employees living costs when your business lays them off, etc.). I see no problem in redistributing a chunk of it when social problems such as poverty continue to exist. > Of course, in the interim, you could try and cancel the two most popular tax deductions, mortgage interest and charitable donations, which benefit rich, wealthy people far more than everyone else. Let me know how that goes. I'm not sure where you are getting this from. I don't really have an opinion on these specific taxes. I think encouraging charity is good, but oftentimes I think wealthy people choose to donate to causes that do not really need the money (e.g. school districts in wealthy areas). Instead, redistributing that money using taxes and sending it to places individual wealthy people/private charities can't/won't adequately support (e.g. poorer school districts, large social services, etc.) seems sensible to me. There are a lot of ways to do that. Maybe removing deductions for wealthy people would be a way. The U.S. does not tax wealthy people nearly as much as other developed countries, which also have many wealthy people who get along just fine. Of course, all of these proposals are DOA in the U.S. due to the political influence of the rich who have a class interest in reducing their tax burden, so I don't think this is a very meaningful hypothetical anyways. We are just randos on the Internet with no real say in any of this.

The other way of looking at this is via 3 groups in the US: 1) the bottom 90%, 2) the next 9.9%, 3) the top 0.1% This thinking was informed by: https://amp.theatlantic.com/amp/article/559130/ https://amp.theatlantic.com/amp/article/559130/

naveen99 5y ago
Shouldn’t it be: 1. Bottom 90% 2. Next 9% 3. Next 0.9% . . .
- noahmbarr 5y ago
  Thanks! Clearly my HN markdown game could use some tightening. It looked good on entry…
marcusverus 5y ago
I can understand why some folks get upset about the .1%. If you ignore the whole private property aspect of it, it is pretty easy to make a "moral" against Bezos having so much money. He didn't exactly 'earn' it, after all. He just started a company that grew and grew and grew. And besides, you could take 95% of it without having any impact on his quality of life. The same is not true of the 9.9%. These aren't household names with ungodly amounts of wealth. However the article tries to spin it: > So what kind of characters are we, the 9.9 percent? We are mostly not like those flamboyant political manipulators from the 0.1 percent. We’re a well-behaved, flannel-suited crowd of lawyers, doctors, dentists, mid-level investment bankers, M.B.A.s with opaque job titles, and assorted other professionals. Presumably the inclusion of 'investment bankers' and 'M.B.A's with opaque job titles' is an attempt to convince you that these people don't actually work. The actual data say the most common jobs in the top 10% are Managers, Software Developers, Salespeople, Lawyers, Execs, Sales Managers, IT Professionals, Marketing professionals, Accountants, and physicians.[0] These folks aren't mysterious people doing god-knows-what for unseemly amounts of money. Their your neighbors. If you want to know what they make, you can google it. You'll find that it's not unreasonable. I sure as hell don't want to be a manager or a doctor. So how do they get so much richer than the 90%? It's so easily explained that it's almost tautological. They trade their labor for money, then invest it. People who make more money have more disposable income and, importantly, disposable income doesn't scale linearly. A guy who makes 100K might see 25% of his income (25K!) in disposable income. A guy who makes 50K is unlikely to have 25% of his income (12.5K) in disposable income, and someone earning the average minimum wage of ~25K is VERY unlikely to have 25% of his income (6.5K) in disposable income. Why would it be surprising that our high earner was worth much more than the others? And while these folks are undoubtedly rich, they're far from obscenely rich. The median member of the 10% is worth $2.4 Million. Let's think about that number in terms of a retirement nest-egg. Assuming that's all in liquid assets (it's not), that gives them a safe withdrawal rate (4% per year), which would mean ~230K per year in retirement income. These people are planning for reasonable retirements with comfortable but relatable lifestyles. There's nothing nefarious going on, but (as is clear in the article) it's important that you think there is. It's hard to convince you to tax your Software Developer friend, Tim, or the Doctor that you've known your whole life. The trick is to mention them without making you think about them by intentionally conflating normal white-collar folks with mysterious sounding "mid-level investment bankers" and "M.B.A.s with opaque job titles". Once we're talking about an abstract group of 'others', it's easy to convince you that they're bad. Just mention some stats about racial disparities and allude to institutional racism. They're only rich because of their White privilege! It's also helpful to pretend that not taxing someone is somehow a government handout. Isn't that just unfair? Now Tim and Dr. Philbert are far from your mind. You're angry at these cheaters, these bad people in the 9% who got their money in dubious ways! Having been lulled into a state of moral hypnosis (in which poor Tim's retirement savings has somehow been transmuted into ill-gotten gains) you're happy to vote his money out of his pockets. If you buy in hard enough, you can even do so while enjoying a sense of moral superiority! [0]https://taxfoundation.org/most-common-jobs-income-bracket/ https://taxfoundation.org/most-common-jobs-income-bracket/
- achillesheels 5y ago
  Ironically, it is exactly the 9.9% you mention that are beneficiaries of what I define "Political Markets" - operating in positions of labor which are likely controlled by legislative practices, i.e. where compliance necessarily creates pseudo-monopolies for goods and services. Compared to Jeff Bezos, who has accorded more food on the tables for people you would identically label as "abstract". How then is your moral argument sound, especially after the fact of his compounding returns of earnest efforts at wealth creation? Morally speaking, it is nobler to be in the position of a Mr. Bezos who actually risked his life to prepare more food on the table for people than those who are in effect riding on the coattails of previous generations. They are all "obscenely rich" compared to where the average human mortal resides right now. Given all of their advantages, what do they do with it? What work do they do that will stand the test of time, let alone 25 years? Hopefully a "moral" argument for the independent decision making of individuals and how they create honest wealth is demonstratively absurd.

GDC7 5y ago

quality of life gap on the other hand has never been smaller. Some points off the top of my head 1) People live essentially as long as billionaires 2) You can hop on a 430M dollar plane which is the same as Biden's (actually there's good chance it's newer than Air Force One) for as low as 500$ with the only cavet that you have to share it with 400 other people 3) You can enter in a building costing 5-10 billions of dollars (think the big Vegas hotels) for free, again only cavet is that you have to share it with 2500-5000 people 4) You can drive cars costing a million dollars and it would only cost you a tiny fraction of that, hopping once a year in a Ferrari or a Lamborghini for the weekend is not far fetched 5) You have basically every means and financial product tailored to achieve your goals including all the above, ranging from lease to rent to financing purchases of electronics and vacations. Of course hedonic treadmill never stops so nothwistanding all the above the huge source of worry nowdays is the result of the following subtraction: Bill Gates' number - people's own number. It's an ego thing essentially I agree that people who are perceived as winners taking all such as Gates, Bezos and quack Musk should not say these things because it would exacerbate the above sentiments instead of disengaging it as it comes off as patronizing winners telling the population how they should feel. But regular people should go through the process on their own , when this process of self discovery happens you both start to ignore the billionaires and also those who hope to socially elevate themselves by promising to "eat the rich" such as Sanders , AOC and the like.

siquick 5y ago
None of those things you listed represent “quality of life” in any capacity. I highly doubt anyone who’s working two jobs/60h weeks is spending too much time thinking about driving a sports car for one weekend a year. They’re thinking that they just want a day off and that it would be great if their multi multi billionaire employer would give up some of his obscene and ultimately pointless wealth and pay them a decent wage.
- GDC7 5y ago
  > None of those things you listed represent “quality of life” in any capacity. I highly doubt anyone who’s working two jobs/60h weeks is spending too much time thinking about driving a sports car for one weekend a year. As much as people don't want to hear it money is meant to be spent, only the perverse hedonic treadmill effect brought us in this scenario where it's used to keep the score > They’re thinking that they just want a day off and that it would be great if their multi multi billionaire employer would give up some of his obscene and ultimately pointless wealth and pay them a decent wage. Again, the gap has never been smaller. People rage would be justified if the process were to be in reverse or even slowing down, but it's only accelerating, we have just witnessed it. A person in the same age cohort as Bill Gates, received the COVID vaccine at the same time as him or maybe a couple of days earlier or later than him. It's unheard of in the history of the human specie

dfadsadsf 5y ago

Any article about wealth that does not put age at the center is garbage.

refurb 5y ago
Angry that old people have more time to accumulate wealth! Government needs to step in and fix that!
- coldtea 5y ago
  Old people have the most unequal (between them) share of overall wealth than ever before. Yay, free market!
  - refurb 5y ago
    Compared to later generations, they don’t actually!
lumost 5y ago
This is a distraction. Elon Musk has more wealth than a person who saved 1 MM per year for 300,000 years. While an old person is likely to have 20x the saved income of their younger year's - wealth inequality is driven by capital holders amassing more capital and in turn passing it on via inheritance.
- flavius29663 5y ago
  What's wrong with Elon Musk? He deserves it! He single handedly brought forward the EV revolution by at least 1 decade, maybe more. He improved the car emissions more than governments worldwide were not able to do for decades before him. EU made it significantly worse by betting on the wrong horse (diesel) and then pushing very hard on it and giving cancer to its citizens. Bill Gates put a computer in every home Steve Jobs put a smartphone in every hand (for better or worse) Bezos revolutionized online shopping AND cloud computing. Why wouldn't these people be billionaires? Governments could never achieve this kind of progress, they are too bureaucratic, corrupt and incompetent. Take away the billionaires' money now, and you will stop the next big innovation.

boppo1 5y ago

Does anybody else think western monetary policy is largely responsible for this? If you interfere with the denominator of a time value of money formula and push down the discount rate, security prices go up disproportionately to their actual cash flows. Low interest rate policy might 'create jobs' (inefficient ones), but another direct consequence is that anyone holding ownership of cash flows watches their net worth go up while wage earners get priced out of meaningful ownership of the economy. We've been doing this for more than a decade. I'm not super-well educated on this topic (just a BA) but so far no one has helped my understanding out with a refutation.

deleted 5y ago

[deleted]

narcraft 5y ago

Two things to consider: 1) https://en.m.wikipedia.org/wiki/Stock_and_flow https://en.m.wikipedia.org/wiki/Stock_and_flow 2) https://en.m.wikipedia.org/wiki/Compound_interest https://en.m.wikipedia.org/wiki/Compound_interest

jmpman 5y ago

The top 1% own 42% of the wealth. What fraction of overall taxes are paid by the top 1%? I expect it’s significantly lower than 42%.

csb6 5y ago
Is the proportion of all collected taxes paid by the 1% a meaningful measure here? Wouldn’t it be more useful to compare how much the 1% pay in taxes as a proportion of their own wealth versus other classes? That way you can see the relative impact of taxation on them. I suspect that the wealthy contribute a much lower portion of their total wealth to taxes than most people in the middle class, but I’m not even sure if there are statistics on this (I will try and look later).
- listenallyall 5y ago
  Both of you are chasing a straw man. The U.S. doesn't have a wealth tax, doesn't claim to, never did. People pay taxes on income (to the Federal govt, not talking property, sales, gasoline taxes etc which are local). The tax code was never intended to be equally weighted by someone's wealth. If you are in favor of wealth confiscation, I mean wealth tax, come out and say that, and lobby and vote for it. Don't try to wrangle the income tax into something it isn't. Of course, in the interim, you could try and cancel the two most popular tax deductions, mortgage interest and charitable donations, which benefit rich, wealthy people far more than everyone else. Let me know how that goes.
  - csb6 5y ago
    > The U.S. doesn't have a wealth tax, doesn't claim to, never did. This is true (I guess estate taxes could be considered a sort of wealth tax, although there is a lot of Republican support for removing them, so we'll see how long they remain when they get back into power). > If you are in favor of wealth confiscation, I mean wealth tax, come out and say that I mean, I would support it. I wasn't trying to hide it; I was just commenting on the parent's metric. All taxes are a kind of confiscation, given that they are mandatory. However, my sense is that you see this as a sort of robbery rather than a redistribution to the community (i.e. poor people, old people, necessary public services that enable your business to function, your wealth to continuously accumulate, your employees living costs when your business lays them off, etc.). I see no problem in redistributing a chunk of it when social problems such as poverty continue to exist. > Of course, in the interim, you could try and cancel the two most popular tax deductions, mortgage interest and charitable donations, which benefit rich, wealthy people far more than everyone else. Let me know how that goes. I'm not sure where you are getting this from. I don't really have an opinion on these specific taxes. I think encouraging charity is good, but oftentimes I think wealthy people choose to donate to causes that do not really need the money (e.g. school districts in wealthy areas). Instead, redistributing that money using taxes and sending it to places individual wealthy people/private charities can't/won't adequately support (e.g. poorer school districts, large social services, etc.) seems sensible to me. There are a lot of ways to do that. Maybe removing deductions for wealthy people would be a way. The U.S. does not tax wealthy people nearly as much as other developed countries, which also have many wealthy people who get along just fine. Of course, all of these proposals are DOA in the U.S. due to the political influence of the rich who have a class interest in reducing their tax burden, so I don't think this is a very meaningful hypothetical anyways. We are just randos on the Internet with no real say in any of this.