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> When property ownership is indefinite and transferrable between generations, then capital accumulation becomes about whoever did it first. If this is true, t

> When property ownership is indefinite and transferrable between generations, then capital accumulation becomes about whoever did it first. If this is true, the richest people in this country should be named Washington or Jefferson, or perhaps more recently, Carnegie or Vanderbilt. Instead, we have the likes of Bezos or Musk, the latter of whom wasn't even born here. Bloomberg was born to a bookkeeper, hardly the stuff of generational wealth. Empirical evidence suggests that it's actually pretty hard to remain at the top of the leaderboard across many generations. I agree with the idea that we all stand on the shoulders of giants, but I dispute the picture you paint that the wealthy are "holding all of the gains [themselves]". Salaries get paid, taxes get paid, new ecosystems are made upon which future wealth can be built. There is no compelling evidence that makes me believe that more redistribution on top of what we already have (which is already quite a bit, contrary to popular belief that the US is a low-taxes-on-the-rich, low-social-benefit nation) would result in better outcomes for the median person.

green_man_lives 3y ago
> Empirical evidence suggests that it's actually pretty hard to remain at the top of the leaderboard across many generations. I attempted to address this when I said: > Yes there is occasional disruption Also Vanderbilt and Carnegie existed during a time of much higher taxation, and also Carnegie gave away most of his wealth. It's also not hard to find examples of "old money". They don't have nearly as much as a Bezos or a Musk, but still more than the average person could ever hope to earn. Finally, I hate to attribute systemic patterns to the actions of individuals, but I think it's more so that rich kids without the same grit as their hard-scrap capitalist parents end up squandering their wealth. Even after his insane corruption, Trump's returns on his dad's money are paltry compared to buying the S&P 500, or even bonds for that matter. I would attribute the dissipation of familial wealth more to hubris and infighting than the system being hostile to generational wealth transfer. In addition, our current economic system, "shareholder capitalism" is about 40 years old. Under this paradigm it may be much easier to hold on to power. We don't know for sure, but regardless of the inter-generational aspect, think about how Bill Gates hasn't written a line of code in 40 years. To try and quantify it, think about Bill Gates' total contribution to MSFT as a percentage. Say time multiplied by talent. When there are 10 employees with the same skill level, he contributes 10% and maybe he owns 1% of the company. Seems pretty generous. At 100 engineers he is now just doing CEO duties, but his total contribution averages out to about 2% and still owns 1%. After 40 years and thousands of employees his ownership is still 1%, while his contributions are like 0.00001% of the total contribution to MSFT. This is what I mean by it being about "whoever did it first". Someone with a higher lifetime contribution to the company can be making less simply because Bill was there first. This is the nature of property ownership. You can defend it or not, but there is clearly a pattern of inequality that develops because of compounding growth's relationship with time. If that ends up harming your system somehow you need to address it. I don't think that pointing out the nature of it should be controversial. It's literally basic math. > There is no compelling evidence that makes me believe that more redistribution on top of what we already have Then you aren't looking hard enough.
- Brian_K_White 3y ago
  This is interesting. What might be some ways to put governers on that? Maybe you get to keep whatever money you make while producing, but do not get to collect a tax on all future earnings of other people? That would imply no such thing as owning part of a company. But then a moral equivalent would probably just pop up in it's place. Instead of owning shares, investors become mini lenders collecting interest on their loans.
  - green_man_lives 3y ago
    > What might be some ways to put governers on that? Probably some sort of cooperative ownership. If you could perfectly calculate the weighted contribution of every person, you would just divide ownership up by that number. A contributor who has done 1% of the total work within an organization has 1% ownership and has 1% of the profits. If that employee retires then their contribution diminishes, but this is (theoretically) countered by the growth in profitability of the company. As long as profit growth outpaces the increase in labor (this ratio is productivity) then people should be able to retire and have a growing pension, without also unfairly capitalizing on the labor of new employees. So let's say they work 20 years and do 1% of the work. In the next 20 years, the number of employees stays the same, but productivity doubles. The original worker has now done 0.5% of all the work done by the company, but if the company has doubled in profitability, they are still making the same amount of profit they were before. This also assumes no outside investment from people who aren't workers, which makes it really hard to start a business. Maybe there could be some sort of bootstrapping period where investors can make their returns, which are capped at a certain amount. Or have unlimited returns but the company must switch to a cooperative structure past a certain headcount/size. Dealing with investment is certainly tricky in this thought experiment. That is a totally theoretical solution but it's fun to explore different ways of organizing systems.
    - Brian_K_White 3y ago
      and I was also thinking that "no longer producing" is probably too simple. I may no longer be producing the thing I wrote a few years ago, but the company I used to work for is absolutely still selling it all day every day. Not trying to cry that that's unfair since that was the deal at the time was salary instead of ownership. Plus what about all the stuff I spent time on that never produced any value? I still got paid and got to keep it. Just saying as part of the theoretical conversation about other possible deals.
brg 3y ago
One empirical study of this is the Georgia land lottery of 1832. For the first generation, median wealth increased. But by the 2nd generation wealth reverted to the mean, and by the 3rd there was no measurable affect by lineage.
- green_man_lives 3y ago
  I have read "The Millionaire Next Door" and I mostly agree with its analysis of entrepreneurship and inter-generational wealth, it's hard to stay a millionaire. But I think these empirical studies are a bit silly when they describe what happens in a system that accumulates wealth in the hands of a few. Once you pass a certain critical mass, it becomes very difficult to lose power. But if you are just moving up into a slightly higher tax bracket, it's still easier to revert to the mean. By definition most people will return to the mean. The issue is what happens when people are in the long tail of ultra-wealth. How does it affect the health of our society?

green_man_lives 3y ago

> Empirical evidence suggests that it's actually pretty hard to remain at the top of the leaderboard across many generations. I attempted to address this when I said: > Yes there is occasional disruption Also Vanderbilt and Carnegie existed during a time of much higher taxation, and also Carnegie gave away most of his wealth. It's also not hard to find examples of "old money". They don't have nearly as much as a Bezos or a Musk, but still more than the average person could ever hope to earn. Finally, I hate to attribute systemic patterns to the actions of individuals, but I think it's more so that rich kids without the same grit as their hard-scrap capitalist parents end up squandering their wealth. Even after his insane corruption, Trump's returns on his dad's money are paltry compared to buying the S&P 500, or even bonds for that matter. I would attribute the dissipation of familial wealth more to hubris and infighting than the system being hostile to generational wealth transfer. In addition, our current economic system, "shareholder capitalism" is about 40 years old. Under this paradigm it may be much easier to hold on to power. We don't know for sure, but regardless of the inter-generational aspect, think about how Bill Gates hasn't written a line of code in 40 years. To try and quantify it, think about Bill Gates' total contribution to MSFT as a percentage. Say time multiplied by talent. When there are 10 employees with the same skill level, he contributes 10% and maybe he owns 1% of the company. Seems pretty generous. At 100 engineers he is now just doing CEO duties, but his total contribution averages out to about 2% and still owns 1%. After 40 years and thousands of employees his ownership is still 1%, while his contributions are like 0.00001% of the total contribution to MSFT. This is what I mean by it being about "whoever did it first". Someone with a higher lifetime contribution to the company can be making less simply because Bill was there first. This is the nature of property ownership. You can defend it or not, but there is clearly a pattern of inequality that develops because of compounding growth's relationship with time. If that ends up harming your system somehow you need to address it. I don't think that pointing out the nature of it should be controversial. It's literally basic math. > There is no compelling evidence that makes me believe that more redistribution on top of what we already have Then you aren't looking hard enough.

Brian_K_White 3y ago
This is interesting. What might be some ways to put governers on that? Maybe you get to keep whatever money you make while producing, but do not get to collect a tax on all future earnings of other people? That would imply no such thing as owning part of a company. But then a moral equivalent would probably just pop up in it's place. Instead of owning shares, investors become mini lenders collecting interest on their loans.
- green_man_lives 3y ago
  > What might be some ways to put governers on that? Probably some sort of cooperative ownership. If you could perfectly calculate the weighted contribution of every person, you would just divide ownership up by that number. A contributor who has done 1% of the total work within an organization has 1% ownership and has 1% of the profits. If that employee retires then their contribution diminishes, but this is (theoretically) countered by the growth in profitability of the company. As long as profit growth outpaces the increase in labor (this ratio is productivity) then people should be able to retire and have a growing pension, without also unfairly capitalizing on the labor of new employees. So let's say they work 20 years and do 1% of the work. In the next 20 years, the number of employees stays the same, but productivity doubles. The original worker has now done 0.5% of all the work done by the company, but if the company has doubled in profitability, they are still making the same amount of profit they were before. This also assumes no outside investment from people who aren't workers, which makes it really hard to start a business. Maybe there could be some sort of bootstrapping period where investors can make their returns, which are capped at a certain amount. Or have unlimited returns but the company must switch to a cooperative structure past a certain headcount/size. Dealing with investment is certainly tricky in this thought experiment. That is a totally theoretical solution but it's fun to explore different ways of organizing systems.
  - Brian_K_White 3y ago
    and I was also thinking that "no longer producing" is probably too simple. I may no longer be producing the thing I wrote a few years ago, but the company I used to work for is absolutely still selling it all day every day. Not trying to cry that that's unfair since that was the deal at the time was salary instead of ownership. Plus what about all the stuff I spent time on that never produced any value? I still got paid and got to keep it. Just saying as part of the theoretical conversation about other possible deals.

brg 3y ago

One empirical study of this is the Georgia land lottery of 1832. For the first generation, median wealth increased. But by the 2nd generation wealth reverted to the mean, and by the 3rd there was no measurable affect by lineage.

green_man_lives 3y ago
I have read "The Millionaire Next Door" and I mostly agree with its analysis of entrepreneurship and inter-generational wealth, it's hard to stay a millionaire. But I think these empirical studies are a bit silly when they describe what happens in a system that accumulates wealth in the hands of a few. Once you pass a certain critical mass, it becomes very difficult to lose power. But if you are just moving up into a slightly higher tax bracket, it's still easier to revert to the mean. By definition most people will return to the mean. The issue is what happens when people are in the long tail of ultra-wealth. How does it affect the health of our society?