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The problems with Piketty's arguments are addressed in the article: "if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of

The problems with Piketty's arguments are addressed in the article: "if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made" Yes, if rich people invested their money wisely, gave nothing to charity, spent small amounts, and left their wealth to one of their children, wealth inequality would grow unchecked. But rich people don't do that.

matthewdgreen 2y ago
But wealth inequality has still grown quite a bit. Your point is not a refutation, it’s just an observation that the infection has progressed more slowly than it could have if it was completely optimal.
- rufus_foreman 2y ago
  >> Your point is not a refutation "there are fewer than 1,000 billionaires and the vast majority of them are self-made" That's a refutation, Piketty made assertions not just about the outcome, but about the process by which that outcome would happen.
  - smallmancontrov 2y ago
    So long as rich-get-richer mechanics play out inside of a single generation they are unquestionably OK? What even is this argument?
    - danielmarkbruce 2y ago
      he didn't say it's ok. He said piketty is wrong. Anyone who studied even econ 101 and combined it with a teaspoon of common sense knows piketty is an idiot and that book is garbage. He's a politician.
      - smallmancontrov 2y ago
        No, inheritance isn't the only dubious method of accumulation that Piketty described. Try again.
        danielmarkbruce 2y ago
        Maybe actually take econ 101 so you can get the thrust of the book rather than getting lost in the details. His thesis, in that book, is that r > g and that over many years that difference results in very large accumulations of wealth. No one disputes that there are various means that r is achieved. It doesn't change the thesis, which is wrong. r is not greater than g for any reasonable amount of time for individuals/families because humans have an amazing ability to behave stupidly and reduce r below g.
  - Rury 2y ago
    Explain your argument because it's not at all clear to me. I do not see how that statement refutes the arguments the above poster gave.
    - tesch1 2y ago
      They're saying that self-made billionaires didn't inherit their wealth. Which means they created it. Which means that it created useful economic activity. And since rich people dont optimally pass on their wealth, those 1000 billionaires' spawn are likely to piss away that wealth while 1000 more economically active individuals create more healthy economic activity in pursuit of becoming billionaires so that they can pass on their wealth to their children to piss away, ad. Inf.
      - Rury 2y ago
        If that's the argument, then it sounds pretty flawed TBH. I mean how does not inheriting their wealth, automatically mean they created it? Is theft not also a possibility?
      - ludicrousdispla 2y ago
        The billionaires' spawn pissing their wealth away would likely generate a lot of economic activity.
    - rufus_foreman 2y ago
      Piketty’s argument was not just that income inequality would increase, but that it would increase because the return on capital is greater than the growth rate of the economy, so, in his words, "It is almost inevitable that inherited wealth will dominate wealth amassed from a lifetime's labor by a wide margin". But inherited wealth does not dominate wealth amassed from a lifetime's labor. The largest fortunes today are dominated by people who built businesses, not by people who inherited their wealth. So if "there are fewer than 1,000 billionaires and the vast majority of them are self-made", that is a direct refutation of Pikkety's thesis. It is hard to overstate just how bad Pikkety's arguments are. His argument assumes single inheritance of fortunes, it assumes that wealthy people don't donate significant sums to charity, it assumes that inheritors of wealth will invest that wealth as wisely as the person who created it, along with many, many other false assumptions. The most egregious one in my opinion is that it assumes the wealthy don't spend their money. If a billionaire makes a 5% return on his billion dollars and spends $50 million dollars a year, does wealth inequality increase? No, it does not. It's a ridiculous theory, it is directly contradicted by the facts, and I have no idea why it is taken seriously by people here other than just as an opportunity to participate in a 2 minutes hate against rich people.
- listenallyall 2y ago
  "wealth inequality" is one of the dumbest ways of measuring the health of an economy, or to specifically aim to reduce. Unfortunately, there will always be a baseline group of people at, or near, zero wealth. The goal should simply be to reduce this number and the overall number of people living in or near poverty. Whether Warren Buffett has $50, 100, or 200 billion - which does affect wealth inequality calculations - is of zero consequence to the lives of the lowest-wealth individuals (nor did someone like SBF losing 10s of billions, help them)
  - istjohn 2y ago
    It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions, or if a small handful of people can fund an effort to identify and groom a wide bench of lawyers to one day become judges who will bend the law in their favor. Not to mention plain old lobbying and campaign contributions. When wealth is power, wealth inequality is toxic to democracy.
    - listenallyall 2y ago
      Oh my, individual ownership of newspapers? Bezos bought it from Katharine Graham, while the Sulzberger clan has owned the NYT for over a century. Scripps, Hearst, Pulitzer... how did these names get famous? Newspapers.
      - andy_ppp 2y ago
        Twitter is much more effective at brainwashing stupid people into believing any old crap than newspapers ever were, there were journalistic standards in the coverage for one thing.
        southernplaces7 2y ago
        So you've managed to blend elitist ideas of some people being less or more "qualified" to disseminate certain opinions than others who don't share your ideological preferences with supposedly egalitarian ideas of reducing concentration of power. Also, journalistic standards, historically, were little or not at all better than anything you see online today. Yellow journalism was a major part of media since long before the internet and newspapers pandering to very specific, dishonest biases was also pervasive, but with few genuinely unfiltered alternative viewpoints being available. The difference today is that a real plurality of opinions is finally possible and can be globally made visible. The media gatekeepers hate this and thus create contrived arguments about an imaginary golden standard of media integrity and mass misinformation.
- akvadrako 2y ago
  Wealth inequality hasn't grown since 1900. https://wid.world/news-article/inequality-across-700-years/ https://wid.world/news-article/inequality-across-700-years/
  - matthewdgreen 2y ago
    Why do people post stuff like this. If your ideology depends on misleading people about bad things that are obviously happening, just get a better ideology!
  - pqtyw 2y ago
    No. It decreased massively and then went up again so now we're back at where it was back in 1900. This significantly challenges the "if America’s rich families in 1900 had invested passively in the stockmarket" e.g. the equivalent of S&P 500 if adjusted by inflation was in 1982 was well below it's 1929 peak. Almost all growth happened after that.
- Ray20 2y ago
  >But wealth inequality has still grown quite a bit. This is called stability. The more stable the system - the more value have investments.
snapplebobapple 2y ago
Rich peoples descendants dont do that...
- rufus_foreman 2y ago
  Thanks for that correction.
andy_ppp 2y ago
Yeah brilliant “businessmen” are born into rich families and destroy their wealth pretending to be real estate developers and managing to be so incompetent you bankrupt a casino where the house should always win!
deleted 2y ago
[deleted]
pqtyw 2y ago
> 1900 had invested passively in the stockmarket, spent 2% of their wealth How is that possible, though? e.g. according to https://ofdollarsanddata.com/sp500-calculator/ https://ofdollarsanddata.com/sp500-calculator/ adjusted by inflation the stock market only grew by 34.10% between 1900 and 1982 when adjusted and even if dividends were reinvested. And that's total growth, annualized was barely 0.36% Their wealth wouldn't have increase at all during that period, especially if they wanted to spend 2% each year. Of course it accelerated massively in the 80s (1900-2024 was 2.48% annualized) but using the average would make no sense. If you were still very rich in 1982 you would have made a massive amount of money since then. e.g. somebody like Trump invested all of his inherited wealth (and everything his dad gave him before) into the stock market instead of pretending that he was a very "successful" businessman he would have been much, much richer than he was in 2016 and wouldn't have had to be so ashamed about realising his tax returns.

matthewdgreen 2y ago

But wealth inequality has still grown quite a bit. Your point is not a refutation, it’s just an observation that the infection has progressed more slowly than it could have if it was completely optimal.

rufus_foreman 2y ago
>> Your point is not a refutation "there are fewer than 1,000 billionaires and the vast majority of them are self-made" That's a refutation, Piketty made assertions not just about the outcome, but about the process by which that outcome would happen.
- smallmancontrov 2y ago
  So long as rich-get-richer mechanics play out inside of a single generation they are unquestionably OK? What even is this argument?
  - danielmarkbruce 2y ago
    he didn't say it's ok. He said piketty is wrong. Anyone who studied even econ 101 and combined it with a teaspoon of common sense knows piketty is an idiot and that book is garbage. He's a politician.
    - smallmancontrov 2y ago
      No, inheritance isn't the only dubious method of accumulation that Piketty described. Try again.
      - danielmarkbruce 2y ago
        Maybe actually take econ 101 so you can get the thrust of the book rather than getting lost in the details. His thesis, in that book, is that r > g and that over many years that difference results in very large accumulations of wealth. No one disputes that there are various means that r is achieved. It doesn't change the thesis, which is wrong. r is not greater than g for any reasonable amount of time for individuals/families because humans have an amazing ability to behave stupidly and reduce r below g.
- Rury 2y ago
  Explain your argument because it's not at all clear to me. I do not see how that statement refutes the arguments the above poster gave.
  - tesch1 2y ago
    They're saying that self-made billionaires didn't inherit their wealth. Which means they created it. Which means that it created useful economic activity. And since rich people dont optimally pass on their wealth, those 1000 billionaires' spawn are likely to piss away that wealth while 1000 more economically active individuals create more healthy economic activity in pursuit of becoming billionaires so that they can pass on their wealth to their children to piss away, ad. Inf.
    - Rury 2y ago
      If that's the argument, then it sounds pretty flawed TBH. I mean how does not inheriting their wealth, automatically mean they created it? Is theft not also a possibility?
    - ludicrousdispla 2y ago
      The billionaires' spawn pissing their wealth away would likely generate a lot of economic activity.
  - rufus_foreman 2y ago
    Piketty’s argument was not just that income inequality would increase, but that it would increase because the return on capital is greater than the growth rate of the economy, so, in his words, "It is almost inevitable that inherited wealth will dominate wealth amassed from a lifetime's labor by a wide margin". But inherited wealth does not dominate wealth amassed from a lifetime's labor. The largest fortunes today are dominated by people who built businesses, not by people who inherited their wealth. So if "there are fewer than 1,000 billionaires and the vast majority of them are self-made", that is a direct refutation of Pikkety's thesis. It is hard to overstate just how bad Pikkety's arguments are. His argument assumes single inheritance of fortunes, it assumes that wealthy people don't donate significant sums to charity, it assumes that inheritors of wealth will invest that wealth as wisely as the person who created it, along with many, many other false assumptions. The most egregious one in my opinion is that it assumes the wealthy don't spend their money. If a billionaire makes a 5% return on his billion dollars and spends $50 million dollars a year, does wealth inequality increase? No, it does not. It's a ridiculous theory, it is directly contradicted by the facts, and I have no idea why it is taken seriously by people here other than just as an opportunity to participate in a 2 minutes hate against rich people.
listenallyall 2y ago
"wealth inequality" is one of the dumbest ways of measuring the health of an economy, or to specifically aim to reduce. Unfortunately, there will always be a baseline group of people at, or near, zero wealth. The goal should simply be to reduce this number and the overall number of people living in or near poverty. Whether Warren Buffett has $50, 100, or 200 billion - which does affect wealth inequality calculations - is of zero consequence to the lives of the lowest-wealth individuals (nor did someone like SBF losing 10s of billions, help them)
- istjohn 2y ago
  It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions, or if a small handful of people can fund an effort to identify and groom a wide bench of lawyers to one day become judges who will bend the law in their favor. Not to mention plain old lobbying and campaign contributions. When wealth is power, wealth inequality is toxic to democracy.
  - listenallyall 2y ago
    Oh my, individual ownership of newspapers? Bezos bought it from Katharine Graham, while the Sulzberger clan has owned the NYT for over a century. Scripps, Hearst, Pulitzer... how did these names get famous? Newspapers.
    - andy_ppp 2y ago
      Twitter is much more effective at brainwashing stupid people into believing any old crap than newspapers ever were, there were journalistic standards in the coverage for one thing.
      - southernplaces7 2y ago
        So you've managed to blend elitist ideas of some people being less or more "qualified" to disseminate certain opinions than others who don't share your ideological preferences with supposedly egalitarian ideas of reducing concentration of power. Also, journalistic standards, historically, were little or not at all better than anything you see online today. Yellow journalism was a major part of media since long before the internet and newspapers pandering to very specific, dishonest biases was also pervasive, but with few genuinely unfiltered alternative viewpoints being available. The difference today is that a real plurality of opinions is finally possible and can be globally made visible. The media gatekeepers hate this and thus create contrived arguments about an imaginary golden standard of media integrity and mass misinformation.
akvadrako 2y ago
Wealth inequality hasn't grown since 1900. https://wid.world/news-article/inequality-across-700-years/ https://wid.world/news-article/inequality-across-700-years/
- matthewdgreen 2y ago
  Why do people post stuff like this. If your ideology depends on misleading people about bad things that are obviously happening, just get a better ideology!
- pqtyw 2y ago
  No. It decreased massively and then went up again so now we're back at where it was back in 1900. This significantly challenges the "if America’s rich families in 1900 had invested passively in the stockmarket" e.g. the equivalent of S&P 500 if adjusted by inflation was in 1982 was well below it's 1929 peak. Almost all growth happened after that.
Ray20 2y ago
>But wealth inequality has still grown quite a bit. This is called stability. The more stable the system - the more value have investments.

snapplebobapple 2y ago

Rich peoples descendants dont do that...

rufus_foreman 2y ago
Thanks for that correction.

andy_ppp 2y ago

Yeah brilliant “businessmen” are born into rich families and destroy their wealth pretending to be real estate developers and managing to be so incompetent you bankrupt a casino where the house should always win!

deleted 2y ago

[deleted]

pqtyw 2y ago

> 1900 had invested passively in the stockmarket, spent 2% of their wealth How is that possible, though? e.g. according to https://ofdollarsanddata.com/sp500-calculator/ https://ofdollarsanddata.com/sp500-calculator/ adjusted by inflation the stock market only grew by 34.10% between 1900 and 1982 when adjusted and even if dividends were reinvested. And that's total growth, annualized was barely 0.36% Their wealth wouldn't have increase at all during that period, especially if they wanted to spend 2% each year. Of course it accelerated massively in the 80s (1900-2024 was 2.48% annualized) but using the average would make no sense. If you were still very rich in 1982 you would have made a massive amount of money since then. e.g. somebody like Trump invested all of his inherited wealth (and everything his dad gave him before) into the stock market instead of pretending that he was a very "successful" businessman he would have been much, much richer than he was in 2016 and wouldn't have had to be so ashamed about realising his tax returns.