13 ms·

Someone should introduce an economical concept equivalent to escape velocity in physics. If you throw an object towards space from Earth, it will always fall b

by d--b 3y ago

Someone should introduce an economical concept equivalent to escape velocity in physics. If you throw an object towards space from Earth, it will always fall back to Earth, unless you throw it with enough speed (IIRC something close to 11km/s), with which it will eventually "escape" Earth's gravity. I have a feeling that money follow the same rule: If you have some money but below a certain level, and don't do anything, that amount of money will be eaten by you, taxes, and inflation. But if you have enough money, current rates mean that taxes & inflation will erode your capital slower than the interest you'll earn from that capital alone, and so money is inevitably growing on itself. As a society, we should prevent "escape capital" to be a thing. I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold...

JKCalhoun 3y ago
> As a society, we should prevent "escape capital" to be a thing. Perhaps if you captured all of someone's wealth when they died, dole out maybe a $1M to each child/spouse.
- xyzzy123 3y ago
  Or apply increasing "drag" as wealth accumulates, i.e, wealth taxes, maybe starting at a few bps once you have $100m. Throw in some social accolades / parades / public acclaim for people who pay the most taxes.
  - riskycodes 3y ago
    I have been considering the latter (accolades and/or naming things after tax-payers) as something that is severely under-utilised in most places.
  - xenonite 3y ago
    Charity yields higher appraisal, while reducing taxes. Though this has the benefit of letting better decide what is done with the money.
    - Armisael16 3y ago
      Historically speaking the things the rich think are worth spending money on haven’t lined up with what society thinks is best all that often.
kranke155 3y ago
Thomas Picketty
m_fayer 3y ago
I think this is more commonly referred to as “fuck you money”.
- lapcat 3y ago
  "Fuck you money" is when you can just quit your job. "Fuck everyone money" is when you can just buy Twitter.
- davisoneee 3y ago
  I consider 'fuck you' money to be enough that it'll last until you die, while living comfortably. This is still an amount that you burn through in a lifetime. Something _like_ 'financial independance, retire early'. I think the parent is suggesting a money threshold beyond which you can't really feasibly spend it fast enough (without being deliberately wasteful), so 'the rich get richer'.
- MomoXenosaga 3y ago
  I was at a museum looking at a group portrait of 18th century rich people in uniform and it hit me. Not a single US billionaire will ever have to lead a regiment in war.
- ragebol 3y ago
  No, this is "not be fucked" money. Without some minimum amount, you are fucked and will never escape poverty.
test77777g 3y ago
It’s around $300,000 that’s when you can get your 9% return and have roughly median income in the US. Maybe 500,000 to be safe.
- hyperthesis 3y ago
  https://old.reddit.com/r/PovertyFIRE/ https://old.reddit.com/r/PovertyFIRE/
  - lifestyleguru 3y ago
    > PovertyFIRE/ It's like an american dream, but for poor.
- aatd86 3y ago
  9% return? What do you invest in? Risk free?
  - test77777g 3y ago
    Basically a normal 401k averages 9% historically closer to 10% these days.
    - aatd86 3y ago
      Oh! These statistics are not reliable. It depends on your asset allocation profile, time to entry, fees... Etc. That's the claim we see online in general but that's probably not necessarily true. Even backtesting using a moving-window average should show different figures.
- dagw 3y ago
  $500k is nowhere near enough to be 'safe'. One 'unfortunate event', a couple of bad years in the market or a few years of high inflation and you'll have eaten into your capital to a point where you'll either have to drastically change your lifestyle or watch your capital dwindle away long before you die.
godzillabrennus 3y ago
Humans have developed a thing called violent revolution when they feel injustice is too severe.
- Damogran6 3y ago
  I'm pretty sure that's been bred out of us. I don't see folks _successfully_ storming the gates and hanging the rich.
  - mlrtime 3y ago
    It most certainly has not been bred out of us. Take away food for about a month or so and see how quickly we return to this animalistic nature. There is no "hanging the rich" because their is no need to. The rich are getting richer, and the gap is increasing. However, the poor and middle are continuously increasing as well (Important: Assuming we stay on track after the COVID dip), there is no need to eat the rich so it doesn't happen.
huijzer 3y ago
I suspect many people are also lured into increasing this escape velocity by keeping up with the Joneses together with easy debt. It’s much easier to get rich if your assets earn, say, 10% (average index return) instead of losing 10% annually via the credit card interest over “assets” that you don’t own. Especially consumer electronics and cars are surprisingly bad “assets” if you do the math. New phones lose about 20% of value per year. So if you combine that with credit card interest, the return on investment is spectacularly bad.
hyperthesis 3y ago
aka "living within your means", used to be laudable.
- Podgajski 3y ago
  Inflation is laughing at your “means”.
- acuozzo 3y ago
  My assets have beaten inflation across the board.
wizerdrobe 3y ago
Well, I’m not exactly opposed to spending more on useful infrastructure… but I see serious political reformation as a pre-condition to any major increases in taxation regardless of the target. As I see it, we’d be stealing from the rich and giving to rich lobbying interests in some fashion. I feel, for the US, the Covid stimulus was pretty telling in how money gets allocated to us and to them.
chiefalchemist 3y ago
Capital begets capital. That's not a secret. No offense but we don't need a new economic concept. We need to adjust or priorities. Take this article, note the headline is not "The five people who gave away the highest percentage of their wealth" or "The five people who saved the most lives in 2023". Etc. You get the point. We've collectively have bought into and become fixated on a single currency of measurement. We say "success" and don't bother to preface it with "financial" as if there are no other forms of success. There are. Words create worlds. We have the words. But we don't use them to our (i.e., 99.5%) own advantage.
- dijit 3y ago
  Capital begets Capital is the literal foundation of capitalism. IE: My capital and your time are equal; thus a person who has much more capital has the buying power of many people. it's mildly irritating that we know that in a relative closed system with finite resources the inequality rises (the entire point of Monopoly is to show this), yet we forget it in our day to day lives because we can't relate the microeconomics to macroeconomics for some reason.
  - mlrtime 3y ago
    It's also mildly irritating that people still don't understand that wealth is not 0 sum.
    - chiefalchemist 3y ago
      True. But to be fair that's what they see, so there's no reason to believe otherwise. When scarcity is all you know then zero-sum is all you think. When the Top 5 double their worth, and the poorest lose - while that might be correlation - it certainly looks like cause (read: zero-sum). Per another comment I left on this thread, we need to be aware of the language the rest of us use, as it does create worlds. And we keep creating a world that favors the systems, metrics and paradigms of The Few.
      - mlrtime 3y ago
admissionsguy 3y ago
> I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because people who think like they deserve a piece of private property of someone else, when they get to power, are never satisfied with going just after the richest. They eventually imprison the whole society in a dark, Soviet reality. Someone should introduce an economical concept for this.
- xgb84j 3y ago
  There is difference between expropriation and fair taxation. The problem as far as I can tell are tax loopholes that you can only abuse above some wealth threshold.
- dukeyukey 3y ago
  Every single functional state-society there has ever been has included a "claim" on private property. Usually through taxes, tariffs, tribute, or something similar.
- tyfon 3y ago
  Du you have any historical examples of taxation policies resulting in a "dark Sovjet reality". I'm actually curious here.
- Yoric 3y ago
  Would you consider Canada, France or India to be Soviet realities?
vdaea 3y ago
>I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because I had a good father and a good mother who taught me that stealing from someone else is not okay, even if they have more things than me.
- richbell 3y ago
  It's intriguing how many people frame this as "stealing." How do you think many people become billionaires? It isn't through fair competition and treating workers well.
  - pi-e-sigma 3y ago
    "Behind every great fortune lies a great crime" - Honore de Balzac.
  - CapricornNoble 3y ago
    > How do you think many people become billionaires? Pareto Principle, offering some of the best market options on a planet with 8 billion people? Let's say I make a product that is 10% better than yours (maybe I burned more midnights engineering it, maybe I just had a radical trip on some DMT that gave me special insight, whatever). Let's say my product costs me $.90 to make, yours only costs $0.75 to make. We both sell at $1.00.....but 90% of the 8 billion people buy my obviously better product, and only 10% buy yours (maybe they hate something about me personally, or maybe my marketing simply didn't reach or convert them). I make $0.10 * (0.9 * 8B) = $720M. You make $0.25 * (0.1 * 8B) = $200M. I'm already over 3x richer than you, and ALMOST as close to billionaire as you are close to being impoverished ($0 net worth in this scenario). What part of my competition wasn't fair? What workers were mistreated? THAT SAID.....I don't disagree that many wealthy families are scummy thieves with a sheen of respectability (like the Sacklers, for example).....just, I prefer that we not instantly reach for that excuse and dismiss the entire concept of extreme wealth accumulation as "well OBVIOUSLY they've got to have done something evil, there is no other explanation, so let's collectively punish their entire class" which is how most of these conversations conclude.
makomk 3y ago
This article does not provide any actual evidence for that idea though. In particular, the richest person in the world - and I think possibly also the one whose wealth grew the most - wasn't even a billionaire until fairly recently, and the basic investment thesis that's made his companies so valuable is that they'll take a big share of the global car market, wrecking the income of existing car companies and destroying the wealth invested in them. Actually, I think all five of the people this article is about became billionaires in the last 30 years or so, displacing the previous richest people in the world as they did so. You've also got to remember that by focusing on the richest people in the world right now the article is effectively cherry-picking the people who've done the best in terms of wealth whilst ignoring those whose wealth has failed to grow so well.
- Eddy_Viscosity2 3y ago
  > article is effectively cherry-picking the people who've done the best in terms of wealth Well yes, but that's the point of the article. The systems we have in place allow for, and ensure, insane wealth concentration in a few people. It doesn't matter who they are or if they change.
hnarn 3y ago
> I totally fail to understand why this is a polarizing issue Because for most people (especially in the US), this is emotional. As soon as you start talking about “taxing the rich” many people have a prepared inventory of feelings that get activated, and these feelings are telling them that even if I’m not rich, I could be some day, and this isn’t right. If you want an example of the almost religious cult of personality around people with immense wealth, look no further than the people simping for Elon. The idea goes that surely these people are special, there’s a reason they have so much money, and by taking their money we'll accomplish nothing except crucifying these inventors that humankind relies upon. Entire books (or perhaps libraries) have been written on the subject of the routines and life patterns of extremely rich people. They’re not like us.
- rocgf 3y ago
  I definitely believe that wealthy people should be taxed at similar or higher levels than the average middle class employee, and I am definitely not some Elon fanatic. With that said, I do think that there is a reason they have so much money and that they are inventors that are pushing the boundaries. I don't understand why people refuse to accept that some people are smarter, work harder, think at a grander scale.
  - actionfromafar 3y ago
    Does that make them deserve to also be your Lords? Because this is what is happening in practice.
    - rocgf 3y ago
      Obviously not. As I said, I think taxation for anyone making say 500k+ should be comparable percentage-wise with any regular employee. That is indeed happening in practice, through the influence that money gives them, though not sure how this argument fits into the discussion.
  - lapcat 3y ago
    > work harder When's the last time you've done manual labor full time? I'm so tired of this "hard work" meme. The hardest job I've ever had was to stack shampoo bottles in boxes for shipping. After 8 hours of that, I had to curl up in the fetal position. And the job paid crap. I also don't believe that Elon Musk is smarter than the engineers who work for him and make nearly infinitely less money. In any case he's certainly not orders of magnitude smarter.
fendy3002 3y ago
Because of combined factors: people as a collective are stupid, elected lawmakers and political parties are incentived to keep the status quo, and you only need 50%+1, or less to be elected in democracy. The wealthiest only need to cater to politicians, then keeping 49% people slightly above the pull force even less, and it'll keep the condition like it is. But still there's no better governments than democracy right now.
- darkerside 3y ago
  Way less than 50% considering not everyone votes.
- memen 3y ago
  If your country is ruled by the 51% majority, do you have a democracy or a totalitarian state ruled by a majority?
thriftwy 3y ago
https://www.economist.com/democracy-in-america/2009/10/29/friedman-space https://www.economist.com/democracy-in-america/2009/10/29/fr... "Friedman space" is a short story by Viktor Pelevin describing more or less that. The gist of it is > in a parallel to the existence of an event horizon at the perimeter of gravitational black holes, the possession of extremely large sums of money sends a person into an altered zone of consciousness where, though they appear to others to be acting normally, their own perception of the universe is completely altered and incommunicable to observers
xyzzy123 3y ago
Piketty's r > g is pretty close to a coherent argument that capital accumulation has an "escape velocity". It's a political topic, so, vehemently contested.
- dgb23 3y ago
  I've yet to read that book, I've heard a lot of good things about it. The above comment is referring to: https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
infecto 3y ago
Its an interesting idea and neat way to perhaps explain it but I think it misses out the important part. People don't do a good job preparing for their future. You mentioned it but I think emphasis should be put on the person, thats where most of the money is going, not inflation or taxes. The last two certainly play a role but no where near as much as the person spending the money. Maybe I look at history with rose tinted glasses but my experience tells me people are spending more and more money. We are a consumer society on steroids. I see so many individuals driving around in $60k cars, living in massive homes, buying tons of junk on Amazon. I wonder if that has more to do with it. As for preventing escape capital. The issue is, I am not sure how you do it. It is easy to had wave and say a tax but I believe its very hard to create new rules without unintended consequences. I am not opposed to the idea but I am not sure what other consequences will be felt.
- Damogran6 3y ago
  Things getting more expensive over time is inflation, things getting bigger over time is the market responding to consumer desires...someone making so much money the interest eats the entire monitary supply is consumed is an extinction event. The mind isn't great at groking just how much money we're talking about here. The people making the money are a combination of things: Not doing it for the money, doing it to rack up a high score, doing other things while the money does it's thing. But the big takeaway is that money is effectively removed from the economy. When you can afford 200 100M yachts...you're not GOING TO BUY 200 100M yachts, so the yacht builders aren't going to use that money to further stimulate the economy. "Hey man, I made a company that pays me $200B" No, you didn't, you got in front of a money hose that shunted a crazy amount of money into your coffers due to gaming a market. You got lucky, and you can't DO anything with 99% of those funds, you just can't use it fast enough.
- lock-the-spock 3y ago
  While true to some degree that people don't prepare sufficiently, many simply cannot prepare. Taking aside the U.S. which bankrupts hundreds of thousands a year through an insane health care system (providing both highest cost and one of the lowest outcome on the quality side across the developed world), most people in most xountries have not much svsing possibilities to begin with. The best use of money is most often to invest in your housing, or your kids' education, not to mention food, regular healthcare, and basic amenities (1/10 of the world population can barely afford shoes or a toothbrush...). Where more wisdom could come in is for much of the lower and the increasingly nonexistant upper middle class. But this is a fraction of the population. If you want to tell a family with two adults working in lower wage jobs and two kids, and renting an apartment, to "save" there is usually not much margin, and their saving amounts to building up a small emergeny reserve which is eaten up by any family emergency or damage to car or housing. Little chance to save for old age ..
MyFirstSass 3y ago
This is a true observation, a part of it also comes from the threshold where you can afford a team of personal financial advisors and some lawyers for wealth management. The masses have to pay taxes but i've met plenty of wealthy people that reach this "escape velocity" when they can afford people to setup intricate schemes to absolutely minimise taxes, then their money become almost autonomous as other people are constantly working on increasing their small cut of it while you are doing very little. So while most countries have some progressive tax system on the surface, this only penalises "new money", the middle classes and the naive or inexperienced founders - the really rich pay less than everyone else, so there is in effect a regressive tax system globally favouring old money or people well connected to the law and financial complexes. A good example of these gates to the upper classes, at least in EU, is from a fundamental level like early tax brackets, because if any regular person "hits it big" in some way, a lot of the money will disappear into taxes and bureaucratic mazes, favouring the workers who average out their pay over many years staying in lower brackets or rich people who'd just put the money into a company or fund. So the "system" really doesn't like people entering the upper echelons and will do everything to siphon your money before this escape velocity.
- jampekka 3y ago
  Wealth taxes used to be quite common before the wealthy figured out how to use powerful propaganda frameworks like neoclassical economics and neoliberal ideology to make sure they keep getting even wealthier and more powerful.
  - MyFirstSass 3y ago
    True and quite ironic. The financial elite gets the mercantile middle classes hit the hardest by their bell curve tax system to rally for their own tax exemptions and deregulation also making these ideologies easy to spread in bourgeois or even petite bourgeois society while they'll never really reap the benefits. Also reading the history about the advent and transformation of neoclassical economics it seems it was exactly that, a well thought out scheme to dupe the middle and lower classes to accept a system never really intended to favour them. Classical liberalism seems almost left wing in this context, and that is not weird when realising this was a project thought by a nexus of plutocrats like Rockefeller in combination with the dawning sciences of propaganda and control of the dangerous masses that could become enamoured with socialism. A new ideology had to be spread and so the intelligentsia of the day met up very openly to discuss rebranding various older unnamable ideologies for the masses to steer them from collective power or true autonomy. It sounds very conspiratorial like this if it wasn't right there in history in the culture around Edward Bernais, american oligarchs or italian fascists talking about the need for "A new liberalism" in the 1920's and masses that could be "moulded" with ideology or phantasms created top down.
roenxi 3y ago
As a society we should aim for everyone having this thing. The best state is for everybody to be idle because they all own enough capital not to have to work. Besides, preventing this outcome is silly unless there is solid evidence that the alternative is more economically efficient. Jeff Bezos being rich doesn't diminish the quality of my life in any way. Same for all the other wealthy folk.
- wildrhythms 3y ago
  Surely the goal of society would be egalitarianism? In which the entire concept of money- a vehicle of inequality- would be no longer needed. The concept of capital as you described it would not need to exist at all.
  - roenxi 3y ago
    How could that even be a theoretical possibility? Nobody having to work is a possible outcome. Societal equality as far as I can see isn't. If nothing else, we could all start equal and then someone starts working because they are bored and accumulate more stuff. It isn't a useful goal anyway. If you have all that you need, someone else having more than that isn't a problem.
- lapcat 3y ago
  > As a society we should aim for everyone having this thing. The best state is for everybody to be idle because they all own enough capital not to have to work. By "capital" do you mean "intelligent robots"? Because otherwise, who is going to do the work when everyone is idle?
  - roenxi 3y ago
    I mean capital. You could have asked the same question in 1823 and the answer turned out to be "no". Unintelligent capital is so productive that most people were forced out of all known jobs in the 1800s. The answer in 2023 could be yes or no.
    - 3y ago
latexr 3y ago
> I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because one day it could be you on the other side. You’re gonna pull yerself by your bootstraps and are totally going to become one those filthy rich people. Everyone can make it in America. All you need is hard work and country music. You wouldn’t want to tax your soon-to-be fellow rich men, now would you? What are you, a commie? A socialist? Why, one day that could be yourself you’re taxing there, buddy. Take the government’s filthy hands out of your money. Yeehaw!
- JKCalhoun 3y ago
  > Because one day it could be you on the other side. I appreciate the sarcasm of your comment, but seriously though... if I end up with Bezos wealth, found myself on the other side, I would part with $176B if you just leave me the remaining $0.9B. I mean I might bitch about it, but, yeah, I'll survive.
  - latexr 3y ago
    It makes more sense to not end up with Bezos wealth in the first place. Part with it as it reaches above your threshold, not after amassing some unspecified large multiplier. I have zero doubt there are many of us who have no desire to own that much money to the detriment of our fellow human beings, but the point is there are also many people who do not think like that and want it all. They phantasise about being able to snub other people in an undetermined (and unlikely) future when they’re rich, even as they dislike being shunned now. That’s why (to the point of the original comment) there’s polarisation of opinion even thought rationally most people should be on the same side.
csomar 3y ago
>I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because 99.5% of the people are not on the same side. There is a class of bureaucrats and military that benefits from this status quo. It's currently happy, as it can easily stage a coup. (most billionaires are old people). The money is going to the right people; the reality is that 60-70% of the world population is disposable. In the US, 40% are already inactive. 20-30% are probably holding jobs that we can live without. Most of the other 30-40% could be out sourced though the "elites" are now re-thinking that because they can't trust off-shore stuff like before. But that's the US, a developed country. The rest of the world is poor and useless and no one is quite interested in doing anything about it. (Except for China, though they are a bit obsessed about control to the detriment of their goals).
- Damogran6 3y ago
  You can't sell your product if there's nobody that can buy it. I suspect the lower 70% you're talking about spend their money to keep the economy going. UBI? I dunno...jury is still out on that science experiment. Automation has made a vast majority of our jobs irrelevant, and ChatGPT looks to make a much larger component similarly irrelevant, but you can't sell your crops if people can't buy your crops.
  - CapricornNoble 3y ago
    > You can't sell your product if there's nobody that can buy it. Our current model is capitalists get rich selling piles of cheap stuff to the labor class. I think the future might be petite bourgeoisie selling high-end, long-lasting products to each other. Picture the guy who has his own AI company selling AI to the guy who has a robot company, who sells robots to the guy who owns a coachbuilder such as [1] or [2], who sells cars to the AI guy and the robot guy. Then the car guy buys a watch from a watchsmith in Switzerland. Watch guy doesn't have any robots but maybe he uses AI to help him design new watches, which he builds by hand himself. Then all four of these guys eat by buying meat from a guy who uses robotic cattlehands to coral his herd of free-range grass-fed bison or something. Each of these five people work at the companies they own. They have no laborers underneath them that aren't AI or robots. They are just exchanging a small amount of high-value goods and services between each other. The HUMAN labor class is gonna die or be subsidized just enough to keep from revolting. [1] https://singervehicledesign.com/ https://singervehicledesign.com/ [2]https://www.fj.co/ https://www.fj.co/
insickness 3y ago
> As a society, we should prevent "escape capital" to be a thing. Why, though? You always hear people say that one person having too much wealth is a problem but rarely hear a good reason. Just because one person is richer, does not mean another is poorer. Wealth is not a limited pie where everyone only gets one piece of it. Wealth is created. If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth.
- wildrhythms 3y ago
  'Wealth' is too nebulous a term to discuss anything socioeconomic related. When 'wealth' is measured in material- land, housing, money... these are all finite. You seem to be creatively measuring 'wealth' as immaterial things like ideas and actions. Be precise.
  - jampekka 3y ago
    Money isn't finite or material and it's worthless in itself unlike e.g. land and housing.
- BiteCode_dev 3y ago
  It does, because power is bought with money and if you buy a vote, the richest win. Also, resources are not infinite. Eg: There is a limit to the number of the best doctors and their time. Fresh air is locally finite, and jets do pollute more per person. So despite the fact that in theory we are not playing a zero sum game, practically at the scale of one life, many things can be approximated as such.
- bryanrasmussen 3y ago
  >If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth. how would that be proved - that is to say there is probably a reasonably causal line to say that their ideas and actions brought up the standard of living for themselves, but the causal line to determine ideas and actions bringing up standard of living for other people would probably be difficult to calculate.
herbst 3y ago
Also to the other side ... Most people are doomed to live from paycheck to paycheck. There is no room for improvement or optimization. Once you have your yearly needs on a bank account and more to come plus enough time you can invest in random ideas when they come, buy things in bulk and safe a lot of money or go for the expensive thing to safe money in long term. Basically there is a 'point poor' where you are doomed to stay poor, where you have to little to change anything about it.
jampekka 3y ago
Something like "concentration of capital" that was extensively analyzed by a certain relatively influential German-born economist in the 19th century? I too fail to understand why it's so polarizing for the 99.5% not benefitting from it.
- SeanLuke 3y ago
  Concentration of capital isn't polarizing, it's a perfectly cromulent criticism. What's polarizing was the promotion of an economic/politcal system which to date has had a perfect record of turning into a totalitarian dictatorship.
  - jampekka 3y ago
    Or something like a welfare state. Most western European countries have implemented roughly all Demands of the Communist Party in Germany, although some of these have been rolled back in the neoliberal era. https://www.marxists.org/archive/marx/works/1848/03/24.htm https://www.marxists.org/archive/marx/works/1848/03/24.htm
    - DonsDiscountGas 3y ago
      The countries with the most comprehensive welfare states all have capitalist economies. Since communism destroys wealth (and lives) rather than create any, there doesn't end up being a lot to spread around.
      - jampekka 3y ago
        Soviet Union (Marxism-Leninism) created a lot of wealth. I don't think it's a good implementation of socialism but your claim that "communism destroys wealth (and lives) rather than create" is just plain false. https://www.jstor.org/stable/45311779 https://www.jstor.org/stable/45311779
      - rickydroll 3y ago
        Most descriptions of the evils of communism usually describe Fascism. As we all know, fascism destroys wealth and lives, except for the oligarchs that manage to float to the top.
giantg2 3y ago
"But if you have enough money, current rates mean that taxes & inflation will erode your capital slower than the interest you'll earn from that capital alone, and so money is inevitably growing on itself." If it were based on interest, this is unlikely to be a problem unless interests rated exceeded tax rates. The real issue is that most of the net worth is equity. These unrealized gains are not taxed. In some cases, a lot of the value is driven by speculation and not actually tied to the current profits of the company. This is why wealth taxes are brought up, or at least changes to capital gains taxes. "As a society, we should prevent "escape capital" to be a thing." This assumes that the ultrawealthy do not serve a purpose. Yeah, taxes should be increased on the top end, but probably not to the point of completwly eliminating the ultrawealthy. These people tend to use thier capital to fund other ventures. This can be important to startups and other organizations. Oftentimes they donate large amounts of money to charities or start charities in areas the government has neglected. There are alternatives to these, but I'm not convinced they are actually better. I think we just need to tweak capital gains tax on the ultrawealthy.
- Geezus_42 3y ago
  I'm not convinced rich people are useful.
  - jampekka 3y ago
    I'm convinced they are harmful.
  - giantg2 3y ago
    I'm not convinced that people in general are truly useful, but that brings about an entirely different philosophical discussion what what is actually useful and why humans should be considered as such.
- JKCalhoun 3y ago
  I wonder if the ultrawealthy have doubly served their purpose in the last three years. I don't disagree the ultrawealthy serve a purpose, just wondering, as most of us do — how much ultrawealth is enough? In theory at least, the idea of taxes is to use our societies collective excess money to pay for things that we as a society would benefit from. Perhaps it's infrastructure, perhaps it's a modern high speed rail system, perhaps space exploration. Instead though we have chosen to allow the billionaires to be the arbiter of where their excess capital goes.
guerrilla 3y ago
We alreasy have this. It's called a positive feedback loop. Wealth creates wealth and debt creates debt.
Geezus_42 3y ago
Because we've been trained to believe that we can be one of those people one day if only we work hard enough. It's not true, but it's the American dream.
Kon5ole 3y ago
>As a society, we should prevent "escape capital" to be a thing. It should be impossible to survive from saved money? Wouldn't that mean that everybody has to work until they die? >I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... For me it's mostly the "work until you die" part. ;-)
- Armisael16 3y ago
  “Your total money is decreasing” is not the same thing as “all your money is gone” - it’s leading in that direction, but if it takes 20 or 30 years to get there that’s usually enough for people to retire on.
  - Kon5ole 3y ago
    20-30 years of savings is a fortune already though, how do we make it so that all professions allow for such savings to be accumulated if we don't allow for interest rates or dividends? And if the 20-30 years isn't enough, do we re-employ 80-year olds that have been retired for 20-30 years? I'm nowhere near the mentioned 0.5% and still don't think this is a good idea. In fact I think society should do the opposite, "escape velocity" should be made attainable by more people, not fewer. If people can retire by 50 (instead of 70 or whatever it will be after another decade of this economy) more young people will get employed at better salaries, and 50 year olds can still come up with cool things do do with their lives.
- throwbadubadu 3y ago
  > It should be impossible to survive from saved money? Wouldn't that mean that everybody has to work until they die? Come on, it depends on the duration, and it is long stretch from parent poster's thought to your "cannot live of saved money" for some time (though would claim, the states that have/had this guaranteed by the state had it more right anyway, basic survivability for retire time should not depend on savings in modern society, only luxury). I mean the opposite, what you seem to want, that you can live indefinitely off a certain amount of saved money, we all know cannot be similarly true for everybody?
dgb23 3y ago
What you describe has something to do with this: Being poor is expensive. Everyone who struggled financially at some point in their time intuitively knows how much harder it is to make (and keep) money if you're poor. Saving your first 10 bucks is _way_ harder than saving your first 100 bucks so to speak. And this is even more true if you're losing money / are behind. Paying off a dollar of debt is monumentally harder than saving a dollar. And it is much more taxing and stressful to boot. If you don't pay off that dollar, someone (perhaps the police even) will come knocking. This is one of the reasons why I believe a society should collectively provide the basics (like a family does) for everyone as long as that's possible. Even completely ignoring the ethical concerns. We would progress much faster if nobody had to worry about fundamental issues like shelter, food, basic transportation, education and so on. Imagine all the Einsteins and Picassos we are missing out on, because they struggle to pay their rent and can't afford education. Even ignoring the geniuses, think of all the little compounding things that would happen. All the craftspeople who don't have time to tinker. All the nurses who don't have time (and energy) for bedside manners etc. A lot of things we produce (and put a lot of energy into) would be less necessary, because they didn't have to fight the symptoms of a broken system.
- jareklupinski 3y ago
  > if nobody had to worry about fundamental issues like shelter, food, basic transportation, education and so on unfortunately, the people who are able to make this a reality tomorrow also hold to a strange viewpoint: they truly believe that, in the absence of some pressure, a person who has their basic needs provided will ultimately venture to do nothing completely failing to see the greatest irony of their belief, that even doing nothing would arguably be a better life than the debt-ridden existence you mentioned...
  - dgb23 3y ago
    This viewpoint existed (to a more extreme degree) in the 18th and 19th century too. "If we give everyone the vote then...", "If workers have protections then...", "If women had equal rights then..." etc. It's interesting how stubbornly this false and negative image of humanity has persisted even though every time we made progress the opposite was found to be true. Yes, we are lazy, greedy and dumb. But we are also disciplined, helpful and smart to a much higher degree. Not because someone holds a whip, but because we just want to. We should maybe stop optimizing society to cater to the few people (or circumstances) where this isn't the case.
steve1977 3y ago
> As a society, we should prevent "escape capital" to be a thing. Why stop at “escape”?
drcongo 3y ago
The whole concept of the "American Dream" in the states, and the one and only selling point of the tories in the UK, is to make that 99.5% think they could one day be in the 0.5%. They won't of course, but the fact that they think it could happen means they support low taxes for the rich in case they ever become rich.
fingerlocks 3y ago
This is a known concept in economics. A person with only one dollar will have a very difficult time turning that into 1 + x dollars. Probably impossivle. A hundred dollars is slightly more likely to generate positive ROI, but still improbable. Zero dollars has a strong gravitational pull. When I was undergrad 20 years ago, we had to calculate the “escape” velocity which was ~7.5 million at the time, where one dollar is more likely to become more than one for an average person’s expenditures. It was probably the point where a T-bill investment return passes median net income, something like that. It definitely wasn’t exactly rocket science like the rest of the metaphor.
DonsDiscountGas 3y ago
> eaten by you, taxes, and inflation Taxes and inflation one can measure (reasonably) objectively, but personal spending is always going to vary wildly. Say one gets 10% in the stock market over the long term, let's say inflation is 4% so that's 6% after inflation, and say 4% after taxes[0]. Median personal income is $40k, and median family income is $75k (2022 dollars). That means an individual would need $1M in savings, and a family would need $1.875M. Which is a fair bit of money, and anybody who accumulates it will probably be accustomed to a higher-than-median lifestyle. >As a society, we should prevent "escape capital" to be a thing. No, we shouldn't, because in normal language this is called "retirement". Somebody who has saved enough to retire has reached "escape capital", and this is something we should be trying to encourage more broadly. As you say this is out of reach for most, so what we should be trying to do is get more people to reach this threshold, not less. Many have suggested a wealth tax; I'm personally in favor but I think it's unconstitutional (in the US)[2]. [0] If one is funding their lifestyle they would need to sell stock/collect dividends, which would be taxable. [1] https://www.census.gov/quickfacts/fact/table/US/SEX255222 https://www.census.gov/quickfacts/fact/table/US/SEX255222 [2] I am not a lawyer or constitutional law expert. Although I'd be willing to bet that the current SCOTUS would find it unconstitutional.
- d--b 3y ago
  No escape capital has nothing to do with retirement. Retirement is: you set aside as much as you think you need between the time you stop working and the time you die. Escape capital is: the amount of money necessary so that interests >> what you consume
juancn 3y ago
It's a statistical phenomenon. It's pareto inequality. Check this video, specially the "trading game" simulation (about 5:24 into it): https://www.youtube.com/watch?v=BZMBdRfbk6A https://www.youtube.com/watch?v=BZMBdRfbk6A
maxcoder4 3y ago
I agree with your main point but >why this is a polarizing issue as 99.5% of people are on the same side of the threshold are we? I earn way less than mid-level programmer in SV and I'm pretty sure I'm on the "rich" side of threshold already. Granted I'm relatively frugal, live alone, and live in a (capital of a) low cost of living country but fact is a fact. I'm sure every single homeowner in California can achieve financial independency (if they sell their property and move somewhere cheap).
readthenotes1 3y ago
My great granddaddy said: It's a good thing when your money starts working for you instead of you working for your money. -- Escape velocity is when you can actually set some money aside to invest in a profitable venture and have the discipline to not spend what you have.
voisin 3y ago
The US used to have this: https://en.m.wikipedia.org/wiki/Revenue_Act_of_1935 https://en.m.wikipedia.org/wiki/Revenue_Act_of_1935 75% marginal tax rate on income over $1 million (in 1935) which is 22,241,021.90 today. Crazy to think how “low” that is relative to the top incomes today.
yafinder 3y ago
I think this is just an "r>g" rule made famous by Piketty. When r (return on investment) is bigger than g (overall economy's growth), the rich get richer. It's unsustainable in a pure mathematical sense, the rich cannot own more than 100% of economy, so at some moment this system breaks, and one can only hope that it doesn't break violently. Piketty somehow wrote a 1000 page book about that, and a slightly controversial one, but an idea is very simple and, I think, hard to argue against.
- 2-718-281-828 3y ago
  i'm not an economist, so ... but i think it would be possible for few people to own everything given that their wealth isn't just money in a bank but all sorts of assets with a life of their own. such a person then effectively represents something similar to a state or country. united companies of amazon ...
maxerickson 3y ago
You also generally gain access to better investments as the amount you are investing goes up.
kwhitefoot 3y ago
> 99.5% of people are on the same side of the threshold.. But those are merely "temporarily embarrassed capitalists", John Steinbeck But Jacobin.com disagrees: https://jacobin.com/2018/05/americans-class-politics-piston https://jacobin.com/2018/05/americans-class-politics-piston
codegrappler 3y ago
What exactly do you think wealthy people do with their money? Buy a big vault and swim around in it like Scrooge McDuck? They invest in new businesses, donate to charities. Heck, Bill Gates’ foundation is curing malaria in Africa. What makes you think the government getting the money is going to be more effective? I think it will largely just swell the bureaucracy and lead to more waste, not less.

by d--b 3y ago

JKCalhoun 3y ago

> As a society, we should prevent "escape capital" to be a thing. Perhaps if you captured all of someone's wealth when they died, dole out maybe a $1M to each child/spouse.

xyzzy123 3y ago
Or apply increasing "drag" as wealth accumulates, i.e, wealth taxes, maybe starting at a few bps once you have $100m. Throw in some social accolades / parades / public acclaim for people who pay the most taxes.
- riskycodes 3y ago
  I have been considering the latter (accolades and/or naming things after tax-payers) as something that is severely under-utilised in most places.
- xenonite 3y ago
  Charity yields higher appraisal, while reducing taxes. Though this has the benefit of letting better decide what is done with the money.
  - Armisael16 3y ago
    Historically speaking the things the rich think are worth spending money on haven’t lined up with what society thinks is best all that often.

kranke155 3y ago

Thomas Picketty

m_fayer 3y ago

I think this is more commonly referred to as “fuck you money”.

lapcat 3y ago
"Fuck you money" is when you can just quit your job. "Fuck everyone money" is when you can just buy Twitter.
davisoneee 3y ago
I consider 'fuck you' money to be enough that it'll last until you die, while living comfortably. This is still an amount that you burn through in a lifetime. Something _like_ 'financial independance, retire early'. I think the parent is suggesting a money threshold beyond which you can't really feasibly spend it fast enough (without being deliberately wasteful), so 'the rich get richer'.
MomoXenosaga 3y ago
I was at a museum looking at a group portrait of 18th century rich people in uniform and it hit me. Not a single US billionaire will ever have to lead a regiment in war.
ragebol 3y ago
No, this is "not be fucked" money. Without some minimum amount, you are fucked and will never escape poverty.

test77777g 3y ago

It’s around $300,000 that’s when you can get your 9% return and have roughly median income in the US. Maybe 500,000 to be safe.

hyperthesis 3y ago
https://old.reddit.com/r/PovertyFIRE/ https://old.reddit.com/r/PovertyFIRE/
- lifestyleguru 3y ago
  > PovertyFIRE/ It's like an american dream, but for poor.
aatd86 3y ago
9% return? What do you invest in? Risk free?
- test77777g 3y ago
  Basically a normal 401k averages 9% historically closer to 10% these days.
  - aatd86 3y ago
    Oh! These statistics are not reliable. It depends on your asset allocation profile, time to entry, fees... Etc. That's the claim we see online in general but that's probably not necessarily true. Even backtesting using a moving-window average should show different figures.
dagw 3y ago
$500k is nowhere near enough to be 'safe'. One 'unfortunate event', a couple of bad years in the market or a few years of high inflation and you'll have eaten into your capital to a point where you'll either have to drastically change your lifestyle or watch your capital dwindle away long before you die.

godzillabrennus 3y ago

Humans have developed a thing called violent revolution when they feel injustice is too severe.

Damogran6 3y ago
I'm pretty sure that's been bred out of us. I don't see folks _successfully_ storming the gates and hanging the rich.
- mlrtime 3y ago
  It most certainly has not been bred out of us. Take away food for about a month or so and see how quickly we return to this animalistic nature. There is no "hanging the rich" because their is no need to. The rich are getting richer, and the gap is increasing. However, the poor and middle are continuously increasing as well (Important: Assuming we stay on track after the COVID dip), there is no need to eat the rich so it doesn't happen.

huijzer 3y ago

I suspect many people are also lured into increasing this escape velocity by keeping up with the Joneses together with easy debt. It’s much easier to get rich if your assets earn, say, 10% (average index return) instead of losing 10% annually via the credit card interest over “assets” that you don’t own. Especially consumer electronics and cars are surprisingly bad “assets” if you do the math. New phones lose about 20% of value per year. So if you combine that with credit card interest, the return on investment is spectacularly bad.

hyperthesis 3y ago

aka "living within your means", used to be laudable.

Podgajski 3y ago
Inflation is laughing at your “means”.
acuozzo 3y ago
My assets have beaten inflation across the board.

wizerdrobe 3y ago

Well, I’m not exactly opposed to spending more on useful infrastructure… but I see serious political reformation as a pre-condition to any major increases in taxation regardless of the target. As I see it, we’d be stealing from the rich and giving to rich lobbying interests in some fashion. I feel, for the US, the Covid stimulus was pretty telling in how money gets allocated to us and to them.

chiefalchemist 3y ago

Capital begets capital. That's not a secret. No offense but we don't need a new economic concept. We need to adjust or priorities. Take this article, note the headline is not "The five people who gave away the highest percentage of their wealth" or "The five people who saved the most lives in 2023". Etc. You get the point. We've collectively have bought into and become fixated on a single currency of measurement. We say "success" and don't bother to preface it with "financial" as if there are no other forms of success. There are. Words create worlds. We have the words. But we don't use them to our (i.e., 99.5%) own advantage.

dijit 3y ago
Capital begets Capital is the literal foundation of capitalism. IE: My capital and your time are equal; thus a person who has much more capital has the buying power of many people. it's mildly irritating that we know that in a relative closed system with finite resources the inequality rises (the entire point of Monopoly is to show this), yet we forget it in our day to day lives because we can't relate the microeconomics to macroeconomics for some reason.
- mlrtime 3y ago
  It's also mildly irritating that people still don't understand that wealth is not 0 sum.
  - chiefalchemist 3y ago
    True. But to be fair that's what they see, so there's no reason to believe otherwise. When scarcity is all you know then zero-sum is all you think. When the Top 5 double their worth, and the poorest lose - while that might be correlation - it certainly looks like cause (read: zero-sum). Per another comment I left on this thread, we need to be aware of the language the rest of us use, as it does create worlds. And we keep creating a world that favors the systems, metrics and paradigms of The Few.
    - mlrtime 3y ago

admissionsguy 3y ago

> I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because people who think like they deserve a piece of private property of someone else, when they get to power, are never satisfied with going just after the richest. They eventually imprison the whole society in a dark, Soviet reality. Someone should introduce an economical concept for this.

xgb84j 3y ago
There is difference between expropriation and fair taxation. The problem as far as I can tell are tax loopholes that you can only abuse above some wealth threshold.
dukeyukey 3y ago
Every single functional state-society there has ever been has included a "claim" on private property. Usually through taxes, tariffs, tribute, or something similar.
tyfon 3y ago
Du you have any historical examples of taxation policies resulting in a "dark Sovjet reality". I'm actually curious here.
Yoric 3y ago
Would you consider Canada, France or India to be Soviet realities?

vdaea 3y ago

>I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because I had a good father and a good mother who taught me that stealing from someone else is not okay, even if they have more things than me.

richbell 3y ago
It's intriguing how many people frame this as "stealing." How do you think many people become billionaires? It isn't through fair competition and treating workers well.
- pi-e-sigma 3y ago
  "Behind every great fortune lies a great crime" - Honore de Balzac.
- CapricornNoble 3y ago
  > How do you think many people become billionaires? Pareto Principle, offering some of the best market options on a planet with 8 billion people? Let's say I make a product that is 10% better than yours (maybe I burned more midnights engineering it, maybe I just had a radical trip on some DMT that gave me special insight, whatever). Let's say my product costs me $.90 to make, yours only costs $0.75 to make. We both sell at $1.00.....but 90% of the 8 billion people buy my obviously better product, and only 10% buy yours (maybe they hate something about me personally, or maybe my marketing simply didn't reach or convert them). I make $0.10 * (0.9 * 8B) = $720M. You make $0.25 * (0.1 * 8B) = $200M. I'm already over 3x richer than you, and ALMOST as close to billionaire as you are close to being impoverished ($0 net worth in this scenario). What part of my competition wasn't fair? What workers were mistreated? THAT SAID.....I don't disagree that many wealthy families are scummy thieves with a sheen of respectability (like the Sacklers, for example).....just, I prefer that we not instantly reach for that excuse and dismiss the entire concept of extreme wealth accumulation as "well OBVIOUSLY they've got to have done something evil, there is no other explanation, so let's collectively punish their entire class" which is how most of these conversations conclude.

makomk 3y ago

This article does not provide any actual evidence for that idea though. In particular, the richest person in the world - and I think possibly also the one whose wealth grew the most - wasn't even a billionaire until fairly recently, and the basic investment thesis that's made his companies so valuable is that they'll take a big share of the global car market, wrecking the income of existing car companies and destroying the wealth invested in them. Actually, I think all five of the people this article is about became billionaires in the last 30 years or so, displacing the previous richest people in the world as they did so. You've also got to remember that by focusing on the richest people in the world right now the article is effectively cherry-picking the people who've done the best in terms of wealth whilst ignoring those whose wealth has failed to grow so well.

Eddy_Viscosity2 3y ago
> article is effectively cherry-picking the people who've done the best in terms of wealth Well yes, but that's the point of the article. The systems we have in place allow for, and ensure, insane wealth concentration in a few people. It doesn't matter who they are or if they change.

hnarn 3y ago

> I totally fail to understand why this is a polarizing issue Because for most people (especially in the US), this is emotional. As soon as you start talking about “taxing the rich” many people have a prepared inventory of feelings that get activated, and these feelings are telling them that even if I’m not rich, I could be some day, and this isn’t right. If you want an example of the almost religious cult of personality around people with immense wealth, look no further than the people simping for Elon. The idea goes that surely these people are special, there’s a reason they have so much money, and by taking their money we'll accomplish nothing except crucifying these inventors that humankind relies upon. Entire books (or perhaps libraries) have been written on the subject of the routines and life patterns of extremely rich people. They’re not like us.

rocgf 3y ago
I definitely believe that wealthy people should be taxed at similar or higher levels than the average middle class employee, and I am definitely not some Elon fanatic. With that said, I do think that there is a reason they have so much money and that they are inventors that are pushing the boundaries. I don't understand why people refuse to accept that some people are smarter, work harder, think at a grander scale.
- actionfromafar 3y ago
  Does that make them deserve to also be your Lords? Because this is what is happening in practice.
  - rocgf 3y ago
    Obviously not. As I said, I think taxation for anyone making say 500k+ should be comparable percentage-wise with any regular employee. That is indeed happening in practice, through the influence that money gives them, though not sure how this argument fits into the discussion.
- lapcat 3y ago
  > work harder When's the last time you've done manual labor full time? I'm so tired of this "hard work" meme. The hardest job I've ever had was to stack shampoo bottles in boxes for shipping. After 8 hours of that, I had to curl up in the fetal position. And the job paid crap. I also don't believe that Elon Musk is smarter than the engineers who work for him and make nearly infinitely less money. In any case he's certainly not orders of magnitude smarter.

fendy3002 3y ago

Because of combined factors: people as a collective are stupid, elected lawmakers and political parties are incentived to keep the status quo, and you only need 50%+1, or less to be elected in democracy. The wealthiest only need to cater to politicians, then keeping 49% people slightly above the pull force even less, and it'll keep the condition like it is. But still there's no better governments than democracy right now.

darkerside 3y ago
Way less than 50% considering not everyone votes.
memen 3y ago
If your country is ruled by the 51% majority, do you have a democracy or a totalitarian state ruled by a majority?

thriftwy 3y ago

https://www.economist.com/democracy-in-america/2009/10/29/friedman-space https://www.economist.com/democracy-in-america/2009/10/29/fr... "Friedman space" is a short story by Viktor Pelevin describing more or less that. The gist of it is > in a parallel to the existence of an event horizon at the perimeter of gravitational black holes, the possession of extremely large sums of money sends a person into an altered zone of consciousness where, though they appear to others to be acting normally, their own perception of the universe is completely altered and incommunicable to observers

xyzzy123 3y ago

Piketty's r > g is pretty close to a coherent argument that capital accumulation has an "escape velocity". It's a political topic, so, vehemently contested.

dgb23 3y ago
I've yet to read that book, I've heard a lot of good things about it. The above comment is referring to: https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

infecto 3y ago

Its an interesting idea and neat way to perhaps explain it but I think it misses out the important part. People don't do a good job preparing for their future. You mentioned it but I think emphasis should be put on the person, thats where most of the money is going, not inflation or taxes. The last two certainly play a role but no where near as much as the person spending the money. Maybe I look at history with rose tinted glasses but my experience tells me people are spending more and more money. We are a consumer society on steroids. I see so many individuals driving around in $60k cars, living in massive homes, buying tons of junk on Amazon. I wonder if that has more to do with it. As for preventing escape capital. The issue is, I am not sure how you do it. It is easy to had wave and say a tax but I believe its very hard to create new rules without unintended consequences. I am not opposed to the idea but I am not sure what other consequences will be felt.

Damogran6 3y ago
Things getting more expensive over time is inflation, things getting bigger over time is the market responding to consumer desires...someone making so much money the interest eats the entire monitary supply is consumed is an extinction event. The mind isn't great at groking just how much money we're talking about here. The people making the money are a combination of things: Not doing it for the money, doing it to rack up a high score, doing other things while the money does it's thing. But the big takeaway is that money is effectively removed from the economy. When you can afford 200 100M yachts...you're not GOING TO BUY 200 100M yachts, so the yacht builders aren't going to use that money to further stimulate the economy. "Hey man, I made a company that pays me $200B" No, you didn't, you got in front of a money hose that shunted a crazy amount of money into your coffers due to gaming a market. You got lucky, and you can't DO anything with 99% of those funds, you just can't use it fast enough.
lock-the-spock 3y ago
While true to some degree that people don't prepare sufficiently, many simply cannot prepare. Taking aside the U.S. which bankrupts hundreds of thousands a year through an insane health care system (providing both highest cost and one of the lowest outcome on the quality side across the developed world), most people in most xountries have not much svsing possibilities to begin with. The best use of money is most often to invest in your housing, or your kids' education, not to mention food, regular healthcare, and basic amenities (1/10 of the world population can barely afford shoes or a toothbrush...). Where more wisdom could come in is for much of the lower and the increasingly nonexistant upper middle class. But this is a fraction of the population. If you want to tell a family with two adults working in lower wage jobs and two kids, and renting an apartment, to "save" there is usually not much margin, and their saving amounts to building up a small emergeny reserve which is eaten up by any family emergency or damage to car or housing. Little chance to save for old age ..

MyFirstSass 3y ago

This is a true observation, a part of it also comes from the threshold where you can afford a team of personal financial advisors and some lawyers for wealth management. The masses have to pay taxes but i've met plenty of wealthy people that reach this "escape velocity" when they can afford people to setup intricate schemes to absolutely minimise taxes, then their money become almost autonomous as other people are constantly working on increasing their small cut of it while you are doing very little. So while most countries have some progressive tax system on the surface, this only penalises "new money", the middle classes and the naive or inexperienced founders - the really rich pay less than everyone else, so there is in effect a regressive tax system globally favouring old money or people well connected to the law and financial complexes. A good example of these gates to the upper classes, at least in EU, is from a fundamental level like early tax brackets, because if any regular person "hits it big" in some way, a lot of the money will disappear into taxes and bureaucratic mazes, favouring the workers who average out their pay over many years staying in lower brackets or rich people who'd just put the money into a company or fund. So the "system" really doesn't like people entering the upper echelons and will do everything to siphon your money before this escape velocity.

jampekka 3y ago
Wealth taxes used to be quite common before the wealthy figured out how to use powerful propaganda frameworks like neoclassical economics and neoliberal ideology to make sure they keep getting even wealthier and more powerful.
- MyFirstSass 3y ago
  True and quite ironic. The financial elite gets the mercantile middle classes hit the hardest by their bell curve tax system to rally for their own tax exemptions and deregulation also making these ideologies easy to spread in bourgeois or even petite bourgeois society while they'll never really reap the benefits. Also reading the history about the advent and transformation of neoclassical economics it seems it was exactly that, a well thought out scheme to dupe the middle and lower classes to accept a system never really intended to favour them. Classical liberalism seems almost left wing in this context, and that is not weird when realising this was a project thought by a nexus of plutocrats like Rockefeller in combination with the dawning sciences of propaganda and control of the dangerous masses that could become enamoured with socialism. A new ideology had to be spread and so the intelligentsia of the day met up very openly to discuss rebranding various older unnamable ideologies for the masses to steer them from collective power or true autonomy. It sounds very conspiratorial like this if it wasn't right there in history in the culture around Edward Bernais, american oligarchs or italian fascists talking about the need for "A new liberalism" in the 1920's and masses that could be "moulded" with ideology or phantasms created top down.

roenxi 3y ago

As a society we should aim for everyone having this thing. The best state is for everybody to be idle because they all own enough capital not to have to work. Besides, preventing this outcome is silly unless there is solid evidence that the alternative is more economically efficient. Jeff Bezos being rich doesn't diminish the quality of my life in any way. Same for all the other wealthy folk.

wildrhythms 3y ago
Surely the goal of society would be egalitarianism? In which the entire concept of money- a vehicle of inequality- would be no longer needed. The concept of capital as you described it would not need to exist at all.
- roenxi 3y ago
  How could that even be a theoretical possibility? Nobody having to work is a possible outcome. Societal equality as far as I can see isn't. If nothing else, we could all start equal and then someone starts working because they are bored and accumulate more stuff. It isn't a useful goal anyway. If you have all that you need, someone else having more than that isn't a problem.
lapcat 3y ago
> As a society we should aim for everyone having this thing. The best state is for everybody to be idle because they all own enough capital not to have to work. By "capital" do you mean "intelligent robots"? Because otherwise, who is going to do the work when everyone is idle?
- roenxi 3y ago
  I mean capital. You could have asked the same question in 1823 and the answer turned out to be "no". Unintelligent capital is so productive that most people were forced out of all known jobs in the 1800s. The answer in 2023 could be yes or no.
  - 3y ago

latexr 3y ago

> I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because one day it could be you on the other side. You’re gonna pull yerself by your bootstraps and are totally going to become one those filthy rich people. Everyone can make it in America. All you need is hard work and country music. You wouldn’t want to tax your soon-to-be fellow rich men, now would you? What are you, a commie? A socialist? Why, one day that could be yourself you’re taxing there, buddy. Take the government’s filthy hands out of your money. Yeehaw!

JKCalhoun 3y ago
> Because one day it could be you on the other side. I appreciate the sarcasm of your comment, but seriously though... if I end up with Bezos wealth, found myself on the other side, I would part with $176B if you just leave me the remaining $0.9B. I mean I might bitch about it, but, yeah, I'll survive.
- latexr 3y ago
  It makes more sense to not end up with Bezos wealth in the first place. Part with it as it reaches above your threshold, not after amassing some unspecified large multiplier. I have zero doubt there are many of us who have no desire to own that much money to the detriment of our fellow human beings, but the point is there are also many people who do not think like that and want it all. They phantasise about being able to snub other people in an undetermined (and unlikely) future when they’re rich, even as they dislike being shunned now. That’s why (to the point of the original comment) there’s polarisation of opinion even thought rationally most people should be on the same side.

csomar 3y ago

>I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... Because 99.5% of the people are not on the same side. There is a class of bureaucrats and military that benefits from this status quo. It's currently happy, as it can easily stage a coup. (most billionaires are old people). The money is going to the right people; the reality is that 60-70% of the world population is disposable. In the US, 40% are already inactive. 20-30% are probably holding jobs that we can live without. Most of the other 30-40% could be out sourced though the "elites" are now re-thinking that because they can't trust off-shore stuff like before. But that's the US, a developed country. The rest of the world is poor and useless and no one is quite interested in doing anything about it. (Except for China, though they are a bit obsessed about control to the detriment of their goals).

Damogran6 3y ago
You can't sell your product if there's nobody that can buy it. I suspect the lower 70% you're talking about spend their money to keep the economy going. UBI? I dunno...jury is still out on that science experiment. Automation has made a vast majority of our jobs irrelevant, and ChatGPT looks to make a much larger component similarly irrelevant, but you can't sell your crops if people can't buy your crops.
- CapricornNoble 3y ago
  > You can't sell your product if there's nobody that can buy it. Our current model is capitalists get rich selling piles of cheap stuff to the labor class. I think the future might be petite bourgeoisie selling high-end, long-lasting products to each other. Picture the guy who has his own AI company selling AI to the guy who has a robot company, who sells robots to the guy who owns a coachbuilder such as [1] or [2], who sells cars to the AI guy and the robot guy. Then the car guy buys a watch from a watchsmith in Switzerland. Watch guy doesn't have any robots but maybe he uses AI to help him design new watches, which he builds by hand himself. Then all four of these guys eat by buying meat from a guy who uses robotic cattlehands to coral his herd of free-range grass-fed bison or something. Each of these five people work at the companies they own. They have no laborers underneath them that aren't AI or robots. They are just exchanging a small amount of high-value goods and services between each other. The HUMAN labor class is gonna die or be subsidized just enough to keep from revolting. [1] https://singervehicledesign.com/ https://singervehicledesign.com/ [2]https://www.fj.co/ https://www.fj.co/

insickness 3y ago

> As a society, we should prevent "escape capital" to be a thing. Why, though? You always hear people say that one person having too much wealth is a problem but rarely hear a good reason. Just because one person is richer, does not mean another is poorer. Wealth is not a limited pie where everyone only gets one piece of it. Wealth is created. If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth.

wildrhythms 3y ago
'Wealth' is too nebulous a term to discuss anything socioeconomic related. When 'wealth' is measured in material- land, housing, money... these are all finite. You seem to be creatively measuring 'wealth' as immaterial things like ideas and actions. Be precise.
- jampekka 3y ago
  Money isn't finite or material and it's worthless in itself unlike e.g. land and housing.
BiteCode_dev 3y ago
It does, because power is bought with money and if you buy a vote, the richest win. Also, resources are not infinite. Eg: There is a limit to the number of the best doctors and their time. Fresh air is locally finite, and jets do pollute more per person. So despite the fact that in theory we are not playing a zero sum game, practically at the scale of one life, many things can be approximated as such.
bryanrasmussen 3y ago
>If one person's ideas and actions brings up the standard of living for everyone else, I'm fine with that person having more wealth. how would that be proved - that is to say there is probably a reasonably causal line to say that their ideas and actions brought up the standard of living for themselves, but the causal line to determine ideas and actions bringing up standard of living for other people would probably be difficult to calculate.

herbst 3y ago

Also to the other side ... Most people are doomed to live from paycheck to paycheck. There is no room for improvement or optimization. Once you have your yearly needs on a bank account and more to come plus enough time you can invest in random ideas when they come, buy things in bulk and safe a lot of money or go for the expensive thing to safe money in long term. Basically there is a 'point poor' where you are doomed to stay poor, where you have to little to change anything about it.

jampekka 3y ago

Something like "concentration of capital" that was extensively analyzed by a certain relatively influential German-born economist in the 19th century? I too fail to understand why it's so polarizing for the 99.5% not benefitting from it.

SeanLuke 3y ago
Concentration of capital isn't polarizing, it's a perfectly cromulent criticism. What's polarizing was the promotion of an economic/politcal system which to date has had a perfect record of turning into a totalitarian dictatorship.
- jampekka 3y ago
  Or something like a welfare state. Most western European countries have implemented roughly all Demands of the Communist Party in Germany, although some of these have been rolled back in the neoliberal era. https://www.marxists.org/archive/marx/works/1848/03/24.htm https://www.marxists.org/archive/marx/works/1848/03/24.htm
  - DonsDiscountGas 3y ago
    The countries with the most comprehensive welfare states all have capitalist economies. Since communism destroys wealth (and lives) rather than create any, there doesn't end up being a lot to spread around.
    - jampekka 3y ago
      Soviet Union (Marxism-Leninism) created a lot of wealth. I don't think it's a good implementation of socialism but your claim that "communism destroys wealth (and lives) rather than create" is just plain false. https://www.jstor.org/stable/45311779 https://www.jstor.org/stable/45311779
    - rickydroll 3y ago
      Most descriptions of the evils of communism usually describe Fascism. As we all know, fascism destroys wealth and lives, except for the oligarchs that manage to float to the top.

giantg2 3y ago

"But if you have enough money, current rates mean that taxes & inflation will erode your capital slower than the interest you'll earn from that capital alone, and so money is inevitably growing on itself." If it were based on interest, this is unlikely to be a problem unless interests rated exceeded tax rates. The real issue is that most of the net worth is equity. These unrealized gains are not taxed. In some cases, a lot of the value is driven by speculation and not actually tied to the current profits of the company. This is why wealth taxes are brought up, or at least changes to capital gains taxes. "As a society, we should prevent "escape capital" to be a thing." This assumes that the ultrawealthy do not serve a purpose. Yeah, taxes should be increased on the top end, but probably not to the point of completwly eliminating the ultrawealthy. These people tend to use thier capital to fund other ventures. This can be important to startups and other organizations. Oftentimes they donate large amounts of money to charities or start charities in areas the government has neglected. There are alternatives to these, but I'm not convinced they are actually better. I think we just need to tweak capital gains tax on the ultrawealthy.

Geezus_42 3y ago
I'm not convinced rich people are useful.
- jampekka 3y ago
  I'm convinced they are harmful.
- giantg2 3y ago
  I'm not convinced that people in general are truly useful, but that brings about an entirely different philosophical discussion what what is actually useful and why humans should be considered as such.
JKCalhoun 3y ago
I wonder if the ultrawealthy have doubly served their purpose in the last three years. I don't disagree the ultrawealthy serve a purpose, just wondering, as most of us do — how much ultrawealth is enough? In theory at least, the idea of taxes is to use our societies collective excess money to pay for things that we as a society would benefit from. Perhaps it's infrastructure, perhaps it's a modern high speed rail system, perhaps space exploration. Instead though we have chosen to allow the billionaires to be the arbiter of where their excess capital goes.

guerrilla 3y ago

We alreasy have this. It's called a positive feedback loop. Wealth creates wealth and debt creates debt.

Geezus_42 3y ago

Because we've been trained to believe that we can be one of those people one day if only we work hard enough. It's not true, but it's the American dream.

Kon5ole 3y ago

>As a society, we should prevent "escape capital" to be a thing. It should be impossible to survive from saved money? Wouldn't that mean that everybody has to work until they die? >I totally fail to understand why this is a polarizing issue as 99.5% of people are on the same side of the threshold... For me it's mostly the "work until you die" part. ;-)

Armisael16 3y ago
“Your total money is decreasing” is not the same thing as “all your money is gone” - it’s leading in that direction, but if it takes 20 or 30 years to get there that’s usually enough for people to retire on.
- Kon5ole 3y ago
  20-30 years of savings is a fortune already though, how do we make it so that all professions allow for such savings to be accumulated if we don't allow for interest rates or dividends? And if the 20-30 years isn't enough, do we re-employ 80-year olds that have been retired for 20-30 years? I'm nowhere near the mentioned 0.5% and still don't think this is a good idea. In fact I think society should do the opposite, "escape velocity" should be made attainable by more people, not fewer. If people can retire by 50 (instead of 70 or whatever it will be after another decade of this economy) more young people will get employed at better salaries, and 50 year olds can still come up with cool things do do with their lives.
throwbadubadu 3y ago
> It should be impossible to survive from saved money? Wouldn't that mean that everybody has to work until they die? Come on, it depends on the duration, and it is long stretch from parent poster's thought to your "cannot live of saved money" for some time (though would claim, the states that have/had this guaranteed by the state had it more right anyway, basic survivability for retire time should not depend on savings in modern society, only luxury). I mean the opposite, what you seem to want, that you can live indefinitely off a certain amount of saved money, we all know cannot be similarly true for everybody?

dgb23 3y ago

What you describe has something to do with this: Being poor is expensive. Everyone who struggled financially at some point in their time intuitively knows how much harder it is to make (and keep) money if you're poor. Saving your first 10 bucks is _way_ harder than saving your first 100 bucks so to speak. And this is even more true if you're losing money / are behind. Paying off a dollar of debt is monumentally harder than saving a dollar. And it is much more taxing and stressful to boot. If you don't pay off that dollar, someone (perhaps the police even) will come knocking. This is one of the reasons why I believe a society should collectively provide the basics (like a family does) for everyone as long as that's possible. Even completely ignoring the ethical concerns. We would progress much faster if nobody had to worry about fundamental issues like shelter, food, basic transportation, education and so on. Imagine all the Einsteins and Picassos we are missing out on, because they struggle to pay their rent and can't afford education. Even ignoring the geniuses, think of all the little compounding things that would happen. All the craftspeople who don't have time to tinker. All the nurses who don't have time (and energy) for bedside manners etc. A lot of things we produce (and put a lot of energy into) would be less necessary, because they didn't have to fight the symptoms of a broken system.

jareklupinski 3y ago
> if nobody had to worry about fundamental issues like shelter, food, basic transportation, education and so on unfortunately, the people who are able to make this a reality tomorrow also hold to a strange viewpoint: they truly believe that, in the absence of some pressure, a person who has their basic needs provided will ultimately venture to do nothing completely failing to see the greatest irony of their belief, that even doing nothing would arguably be a better life than the debt-ridden existence you mentioned...
- dgb23 3y ago
  This viewpoint existed (to a more extreme degree) in the 18th and 19th century too. "If we give everyone the vote then...", "If workers have protections then...", "If women had equal rights then..." etc. It's interesting how stubbornly this false and negative image of humanity has persisted even though every time we made progress the opposite was found to be true. Yes, we are lazy, greedy and dumb. But we are also disciplined, helpful and smart to a much higher degree. Not because someone holds a whip, but because we just want to. We should maybe stop optimizing society to cater to the few people (or circumstances) where this isn't the case.

steve1977 3y ago

> As a society, we should prevent "escape capital" to be a thing. Why stop at “escape”?

drcongo 3y ago

The whole concept of the "American Dream" in the states, and the one and only selling point of the tories in the UK, is to make that 99.5% think they could one day be in the 0.5%. They won't of course, but the fact that they think it could happen means they support low taxes for the rich in case they ever become rich.

fingerlocks 3y ago

This is a known concept in economics. A person with only one dollar will have a very difficult time turning that into 1 + x dollars. Probably impossivle. A hundred dollars is slightly more likely to generate positive ROI, but still improbable. Zero dollars has a strong gravitational pull. When I was undergrad 20 years ago, we had to calculate the “escape” velocity which was ~7.5 million at the time, where one dollar is more likely to become more than one for an average person’s expenditures. It was probably the point where a T-bill investment return passes median net income, something like that. It definitely wasn’t exactly rocket science like the rest of the metaphor.

DonsDiscountGas 3y ago

> eaten by you, taxes, and inflation Taxes and inflation one can measure (reasonably) objectively, but personal spending is always going to vary wildly. Say one gets 10% in the stock market over the long term, let's say inflation is 4% so that's 6% after inflation, and say 4% after taxes[0]. Median personal income is $40k, and median family income is $75k (2022 dollars). That means an individual would need $1M in savings, and a family would need $1.875M. Which is a fair bit of money, and anybody who accumulates it will probably be accustomed to a higher-than-median lifestyle. >As a society, we should prevent "escape capital" to be a thing. No, we shouldn't, because in normal language this is called "retirement". Somebody who has saved enough to retire has reached "escape capital", and this is something we should be trying to encourage more broadly. As you say this is out of reach for most, so what we should be trying to do is get more people to reach this threshold, not less. Many have suggested a wealth tax; I'm personally in favor but I think it's unconstitutional (in the US)[2]. [0] If one is funding their lifestyle they would need to sell stock/collect dividends, which would be taxable. [1] https://www.census.gov/quickfacts/fact/table/US/SEX255222 https://www.census.gov/quickfacts/fact/table/US/SEX255222 [2] I am not a lawyer or constitutional law expert. Although I'd be willing to bet that the current SCOTUS would find it unconstitutional.

d--b 3y ago
No escape capital has nothing to do with retirement. Retirement is: you set aside as much as you think you need between the time you stop working and the time you die. Escape capital is: the amount of money necessary so that interests >> what you consume

juancn 3y ago

It's a statistical phenomenon. It's pareto inequality. Check this video, specially the "trading game" simulation (about 5:24 into it): https://www.youtube.com/watch?v=BZMBdRfbk6A https://www.youtube.com/watch?v=BZMBdRfbk6A

maxcoder4 3y ago

I agree with your main point but >why this is a polarizing issue as 99.5% of people are on the same side of the threshold are we? I earn way less than mid-level programmer in SV and I'm pretty sure I'm on the "rich" side of threshold already. Granted I'm relatively frugal, live alone, and live in a (capital of a) low cost of living country but fact is a fact. I'm sure every single homeowner in California can achieve financial independency (if they sell their property and move somewhere cheap).

readthenotes1 3y ago

My great granddaddy said: It's a good thing when your money starts working for you instead of you working for your money. -- Escape velocity is when you can actually set some money aside to invest in a profitable venture and have the discipline to not spend what you have.

voisin 3y ago

The US used to have this: https://en.m.wikipedia.org/wiki/Revenue_Act_of_1935 https://en.m.wikipedia.org/wiki/Revenue_Act_of_1935 75% marginal tax rate on income over $1 million (in 1935) which is 22,241,021.90 today. Crazy to think how “low” that is relative to the top incomes today.

yafinder 3y ago

I think this is just an "r>g" rule made famous by Piketty. When r (return on investment) is bigger than g (overall economy's growth), the rich get richer. It's unsustainable in a pure mathematical sense, the rich cannot own more than 100% of economy, so at some moment this system breaks, and one can only hope that it doesn't break violently. Piketty somehow wrote a 1000 page book about that, and a slightly controversial one, but an idea is very simple and, I think, hard to argue against.

2-718-281-828 3y ago
i'm not an economist, so ... but i think it would be possible for few people to own everything given that their wealth isn't just money in a bank but all sorts of assets with a life of their own. such a person then effectively represents something similar to a state or country. united companies of amazon ...

maxerickson 3y ago

You also generally gain access to better investments as the amount you are investing goes up.

kwhitefoot 3y ago

> 99.5% of people are on the same side of the threshold.. But those are merely "temporarily embarrassed capitalists", John Steinbeck But Jacobin.com disagrees: https://jacobin.com/2018/05/americans-class-politics-piston https://jacobin.com/2018/05/americans-class-politics-piston

codegrappler 3y ago

What exactly do you think wealthy people do with their money? Buy a big vault and swim around in it like Scrooge McDuck? They invest in new businesses, donate to charities. Heck, Bill Gates’ foundation is curing malaria in Africa. What makes you think the government getting the money is going to be more effective? I think it will largely just swell the bureaucracy and lead to more waste, not less.