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There is a correlation between income and wealth. But it’s far from perfect. When you factor in things like inheritance (e.g. inherit a median home in CA that’s

There is a correlation between income and wealth. But it’s far from perfect. When you factor in things like inheritance (e.g. inherit a median home in CA that’s fully paid off from your parents, that’s worth $600k - it takes a really long time earning $100k/yr to save that much!) there are lots of low to middle income earners that have more wealth than some higher income earners.

hiddencost 3y ago
When you inherit $100M in property that comes with fairly large income streams. A $600k house barely registers in the wealth / inequality spectrum the parent is talking about.
- balderdash 3y ago
  You’re missing my point - the imputed rent on a $600k home is like $4k/mo ($48k/year) or ~$60k pre tax. Who would you rather be someone making making $40k/yr with a $600k home free and clear, or someone making $80k/yr? You don’t need to talk about the super rich to see that the median California home dramatically changes the “income” distribution
scarmig 3y ago
Wage income is nearly irrelevant in understanding wealth inequality. It's easy for the working class (which we are!) to see someone else working and making $10M a year and to think, wow, that's where inequality comes from! But that's a rounding error when it comes to wealth inequality. It's capital formation driving it. A wage income in the top 0.01% is extraordinarily well-off, but it would never put you in the top 0.01% of wealth.
- therealdrag0 3y ago
  Isn’t getting “put” in the top 0.01 wealth essentially just winning the capitalism lottery by betting all your labor and assets on a single venture and having it skyrocket? There was an interesting blog post that said if the early janitors of Amazon took their wages in stock and held it they’d be hundred millionaires. In one sense the mega rich are way overvalued, but in another they “just” played a game we all typically agree too and they wagered harder than most think is sane and got lucky.
  - scarmig 3y ago
    Hard work, intelligence, and preexisting resources are typically prerequisites, and then a whole lot of luck comes into play. I suspect taking their wages in stock wasn't an option actually offered to janitors, and even if it had been, they wouldn't have taken it: unmarketable equity doesn't put a roof over your head or put food on the table. Bezos, on the other hand, could afford to take below market compensation (at least liquidity-wise) because he had a pile of money already from his time in finance.
    - therealdrag0 3y ago
      Totally agree. It’s just an analogy to illustrate the gamboling nature of getting rich and how the starting conditions are more widely available than many people think, it’s just start to finish is very risky low chance of success. For example, as an average well paid engineer, I could afford to gamble with a lot of money and my company even offers reduced pay for extra stock plans but I don’t take it and I sell every RSU I get the moment it vests. And that choice means I’ll never get rich off the stock.

hiddencost 3y ago

When you inherit $100M in property that comes with fairly large income streams. A $600k house barely registers in the wealth / inequality spectrum the parent is talking about.

balderdash 3y ago
You’re missing my point - the imputed rent on a $600k home is like $4k/mo ($48k/year) or ~$60k pre tax. Who would you rather be someone making making $40k/yr with a $600k home free and clear, or someone making $80k/yr? You don’t need to talk about the super rich to see that the median California home dramatically changes the “income” distribution

scarmig 3y ago

Wage income is nearly irrelevant in understanding wealth inequality. It's easy for the working class (which we are!) to see someone else working and making $10M a year and to think, wow, that's where inequality comes from! But that's a rounding error when it comes to wealth inequality. It's capital formation driving it. A wage income in the top 0.01% is extraordinarily well-off, but it would never put you in the top 0.01% of wealth.

therealdrag0 3y ago
Isn’t getting “put” in the top 0.01 wealth essentially just winning the capitalism lottery by betting all your labor and assets on a single venture and having it skyrocket? There was an interesting blog post that said if the early janitors of Amazon took their wages in stock and held it they’d be hundred millionaires. In one sense the mega rich are way overvalued, but in another they “just” played a game we all typically agree too and they wagered harder than most think is sane and got lucky.
- scarmig 3y ago
  Hard work, intelligence, and preexisting resources are typically prerequisites, and then a whole lot of luck comes into play. I suspect taking their wages in stock wasn't an option actually offered to janitors, and even if it had been, they wouldn't have taken it: unmarketable equity doesn't put a roof over your head or put food on the table. Bezos, on the other hand, could afford to take below market compensation (at least liquidity-wise) because he had a pile of money already from his time in finance.
  - therealdrag0 3y ago
    Totally agree. It’s just an analogy to illustrate the gamboling nature of getting rich and how the starting conditions are more widely available than many people think, it’s just start to finish is very risky low chance of success. For example, as an average well paid engineer, I could afford to gamble with a lot of money and my company even offers reduced pay for extra stock plans but I don’t take it and I sell every RSU I get the moment it vests. And that choice means I’ll never get rich off the stock.