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> Wealth concentration has been a deliberate US domestic policy for decades. Wealth is not concentrated in a market society. It is created. Some people creatin

> Wealth concentration has been a deliberate US domestic policy for decades. Wealth is not concentrated in a market society. It is created. Some people creating more wealth than others is not "concentrating" wealth in their hands. Another way to put it is it is not a fixed pie, where if one gets more another necessarily gets less. If I buy some art supplies for $20, and paint a masterpiece I sell for $100,000, wealth was not "concentrated" in me.

PaulDavisThe1st 2y ago
Two societies. In each one, someone buys $20 of art supplies, paints a masterpiece and it sells for $100,000. In one society, a marginal tax rate system taxes the artist with an upper rate of 92%, and they end up retaining about $50,000 of the income, with the rest flowing back into the control of the society (via its government). In the other society, a margin tax rate system taxes the artist with an upper rate of 28%, and they end up retaining about $70,000 of the income. In this society, the artist retains control over twice as much of the income as flows back into the control of society. "Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation.
- nickpp 2y ago
  In the first society, the probability of the artist completing and selling that masterpiece is correspondingly lower, since money is a strong motivator and even artists have bills to pay. Thus the first society tends to create less value overall, since value creators are demotivated by punishing taxation. Because of that, prospective buyers for that piece of art will be overall poorer so they will bid less for it, pushing the artist's reward even lower. The first society ends up poorer than the second, from its own policy. And that’s how you get inequality between nations, which you can’t “redistribute” away. Which inequality sooner or later leads to wars, as we can clearly see these days.
  - runako 2y ago
    The example is bad because nobody thinks of $100k as "concentrated wealth" and your argument has some purchase at those numbers. At $100 million, $1 billion, $10 billion, or $100 billion, the argument you put forth does not make sense. There is no motivational quantum for attaining the second, or third, or fourth billion, much less the 200th. Incidentally, most of the people who might be considered to be concentrating wealth do not and have not done so primarily on the basis of their labor and creativity like in the example. There is no credible argument that Jim Walton ($119 billion net worth) ever built or created anything of value anywhere near commensurate with his wealth. His path from $30 billion to nearly $120 billion had nothing to do with rewarding him for value creation.
    - WalterBright 2y ago
      > There is no motivational quantum for attaining the second, or third, or fourth billion, much less the 200th. That's probably correct. However, if you tax $100b at 40%, then the person has only $60b to invest in creating more wealth.
      - PaulDavisThe1st 2y ago
        But in the meantime, the state has $40b of wealth under its control to invest. And while the $100B winner may have had some insight that contributed to the $100B, there also had to be a $100B winner in an economy structured the way ours is. Consequently, we don't really know whether there's a reason to prefer their investment choices over the ones the state will make. It currently remains unclear, for example, whether what Musk or Bezos have done with their vast wealth thus far will, in the medium or long term turn out to be a net benefit to society (it certainly has not been so in the short tem). The belief in the business genius really is overblown. Yes, some folks are better at it than others, but when we run the economy like a casino, there will always be big winners no matter what personal qualities the players bring to the game.
        WalterBright 2y ago
        > the state has $40b of wealth under its control to invest. Defense spending is not an investment in the economy, neither are entitlements. The returns on government investments that are legitimate investments, however, are quite a bit less than the returns on the investments of rich people. The reason is simple - people who get rich off of investments are very, very good at it. Government bureaucrats are not. Government investments are socialism, which have an inglorious history of poor returns. > The belief in the business genius really is overblown 4 out of 5 business ventures fail. The survivors tend to be pretty good at it. You'd be very hard pressed to find a dummy who grew a business to a billion dollars. The ones who have done it more than once are very, very rare. (Like Steve Jobs, who did it 3 times.) If you want to argue that Jobs, Gates, Musk, Bezos, etc., just fell into it, go right ahead!
  - PaulDavisThe1st 2y ago
    > In the first society, the probability of the artist completing and selling that masterpiece is correspondingly lower, since money is a strong motivator and even artists have bills to pay. I live near the (supposedly) largest art market in the USA, and I know a large number of artists here for whom two things are true: 1. they cannot make a living from just their art. 2. they will create art whether they make a living from or not. Thus, the claim that taxes on their art income act as a disincentive to create just holds zero water for me. In fact, less than zero. It betrays a fundamental lack of understanding of why all the artists I admire actually do what they do. This also applies to most of the people I admire in almost every field. I don't know of any example where the motivation was such that increased taxation would have acted as a disincentive. That's true even for Bezos @ amzn.
    - nickpp 2y ago
      Taking advantage of self-driven people and stealing the results of their hard work is something communist dictators tried quite hard. Also brainwashing people to work their asses off for some other reason than the selfish one. It didn’t work. The society produced less and less value, crappier and crappier quality, uglier and uglier and grayer and grayer.
      - PaulDavisThe1st 2y ago
        If you think that Bezos was motivated to create amazon because the taxes were just-so, you're delusional. There are numerous books on this topic. Obviously not everyone agrees with them, but Alfie Kohn's "Punished by Rewards" is an excellent starting point for reading about what we know about the connections between motivation, creativity and rewards.
      - PaulDavisThe1st 2y ago
        Also, none of my artist friends would say that they were being "taking advantage of". I have no idea why you'd try to connect the situation I've described in the US art world to communist dictators, other to make some facile point that isn't relevant or even correct.
- mmooss 2y ago
  > "Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation. I agree with most of what you say, but the pre-tax results of income are not some single natural outcome, but the results of policies about business, economy, education, healthcare, international relations, trade, immigration, monetary policy (of course), regulation, government budget, etc. - pretty much everything. Those things can be adjusted to result in less or more wealth concentration. They also depend heavily on capital gains tax in particular.
  - PaulDavisThe1st 2y ago
    While the fact that the artist ended up selling a piece of art for $100k is absolutely reliant on the full totality of the social context .. what happens next is where wealth concentration does or does not happen. And that is (to a good approximation) almost entirely the realm of tax policy. That is why I gave two different societies as examples - both have managed to construct a social context where this happens, but what happens next is different in each of them. Put more crudely, wealth concentration is about not taxing high levels of income at high marginal rates. It is not about the specifics of how those high levels of income arise, who they happen to, etc. etc.
mindslight 2y ago
When people talk about wealth concentration, they're not talking about artists with high-variance paydays. They're focusing on all of the captive-market middlemen that have been allowed to set up shop playing negative sum games via regulatory capture, externalities, lack of anti-trust enforcement, etc.
- WalterBright 2y ago
  When people like Sanders talk about wealth concentration in billionaires like Musk, how did Musk make his money with negative sum games, regulatory capture, etc.?
  - mindslight 2y ago
    Oh boy. There have been tomes written on how Musk's companies are set up around capturing government subsidies. If you're earnestly interested, such analyses are not hard to find. The stock market itself is a shining example of regulatory capture - a perma-bubble due to fake "fiscal responsibility" political marketing that causes massive streams of newly printed money to be handed out to banks to dump into the asset bubble (that newly printed money representing the gains from technology and offshoring that would have otherwise caused price deflation) But sure, I'll also agree that some of Musk's riches are due to actual wealth creation - before the crippling social media addiction and subsequent spiral into lunacy, anyway. But that's all focusing on the problematic ways wealth concentration can arise (the context it was originally brought up in). The other critique (likely what you're referencing about Sanders) is about the corrosive effects that concentrated wealth tends to have. And surely you can see how that applies pretty strongly to Musk...
    - WalterBright 2y ago
      So how much subsidy did Musk receive for SpaceX? (The answer is $0.) SpaceX is worth around $390 billion. > some of Musk's riches are due to actual wealth creation Very generous of you! LOL
      - 2y ago
BoiledCabbage 2y ago
> Wealth is not concentrated in a market society. Respectfully, you should do some reading of basic economics. Absent of external forces to correct for it, wealth absolutely concentrates in unregulated markets.
- WalterBright 2y ago
  For economics, I prefer history to academic theory. (But I have read Friedman's "Monetary History of the United States", and books by economist C. Northcote Parkinson, "Capitalism" by Reisman, etc. My dad also had a degree in economics from MIT and an MBA from Harvard and a doctorate in economicis and taught finance in college. We had many many long talks about economics. And yeah, I did take econ 101 at Caltech from a Marxist professor. My dad would have had him for lunch.) > wealth absolutely concentrates in unregulated markets The US had more or less unregulated markets for well over a century since its founding. The result? The most stupendous wealth creation, pushing scores of millions of people from poverty into the middle class and beyond. There was no "transfer" of wealth from the poor people to the wealthy (there couldn't have been, because they, being poor, didn't have wealth).
  - forgetfreeman 2y ago
    "There was no "transfer" of wealth from the poor people to the wealthy (there couldn't have been, because they, being poor, didn't have wealth)." You're ignoring value created through labor. The poor may not have wealth but they have their labor to sell on the open market. The returns on that exchange have been steadily declining since the post-war period thanks to flat wages and inflation. Meanwhile increases in productivity (as demonstrated by increases in GDP) by definition have to go somewhere. Since it isn't going into working folks savings accounts then it's accumulating somewhere. Also worth considering, the middle class has been declining for the last 40 years.
    - WalterBright 2y ago
      > have to go somewhere. Consider the vast increase in government spending and entitlements. As for the declines, the US free market has steadily become less and less free market.

PaulDavisThe1st 2y ago

Two societies. In each one, someone buys $20 of art supplies, paints a masterpiece and it sells for $100,000. In one society, a marginal tax rate system taxes the artist with an upper rate of 92%, and they end up retaining about $50,000 of the income, with the rest flowing back into the control of the society (via its government). In the other society, a margin tax rate system taxes the artist with an upper rate of 28%, and they end up retaining about $70,000 of the income. In this society, the artist retains control over twice as much of the income as flows back into the control of society. "Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation.

nickpp 2y ago
In the first society, the probability of the artist completing and selling that masterpiece is correspondingly lower, since money is a strong motivator and even artists have bills to pay. Thus the first society tends to create less value overall, since value creators are demotivated by punishing taxation. Because of that, prospective buyers for that piece of art will be overall poorer so they will bid less for it, pushing the artist's reward even lower. The first society ends up poorer than the second, from its own policy. And that’s how you get inequality between nations, which you can’t “redistribute” away. Which inequality sooner or later leads to wars, as we can clearly see these days.
- runako 2y ago
  The example is bad because nobody thinks of $100k as "concentrated wealth" and your argument has some purchase at those numbers. At $100 million, $1 billion, $10 billion, or $100 billion, the argument you put forth does not make sense. There is no motivational quantum for attaining the second, or third, or fourth billion, much less the 200th. Incidentally, most of the people who might be considered to be concentrating wealth do not and have not done so primarily on the basis of their labor and creativity like in the example. There is no credible argument that Jim Walton ($119 billion net worth) ever built or created anything of value anywhere near commensurate with his wealth. His path from $30 billion to nearly $120 billion had nothing to do with rewarding him for value creation.
  - WalterBright 2y ago
    > There is no motivational quantum for attaining the second, or third, or fourth billion, much less the 200th. That's probably correct. However, if you tax $100b at 40%, then the person has only $60b to invest in creating more wealth.
    - PaulDavisThe1st 2y ago
      But in the meantime, the state has $40b of wealth under its control to invest. And while the $100B winner may have had some insight that contributed to the $100B, there also had to be a $100B winner in an economy structured the way ours is. Consequently, we don't really know whether there's a reason to prefer their investment choices over the ones the state will make. It currently remains unclear, for example, whether what Musk or Bezos have done with their vast wealth thus far will, in the medium or long term turn out to be a net benefit to society (it certainly has not been so in the short tem). The belief in the business genius really is overblown. Yes, some folks are better at it than others, but when we run the economy like a casino, there will always be big winners no matter what personal qualities the players bring to the game.
      - WalterBright 2y ago
        > the state has $40b of wealth under its control to invest. Defense spending is not an investment in the economy, neither are entitlements. The returns on government investments that are legitimate investments, however, are quite a bit less than the returns on the investments of rich people. The reason is simple - people who get rich off of investments are very, very good at it. Government bureaucrats are not. Government investments are socialism, which have an inglorious history of poor returns. > The belief in the business genius really is overblown 4 out of 5 business ventures fail. The survivors tend to be pretty good at it. You'd be very hard pressed to find a dummy who grew a business to a billion dollars. The ones who have done it more than once are very, very rare. (Like Steve Jobs, who did it 3 times.) If you want to argue that Jobs, Gates, Musk, Bezos, etc., just fell into it, go right ahead!
- PaulDavisThe1st 2y ago
  > In the first society, the probability of the artist completing and selling that masterpiece is correspondingly lower, since money is a strong motivator and even artists have bills to pay. I live near the (supposedly) largest art market in the USA, and I know a large number of artists here for whom two things are true: 1. they cannot make a living from just their art. 2. they will create art whether they make a living from or not. Thus, the claim that taxes on their art income act as a disincentive to create just holds zero water for me. In fact, less than zero. It betrays a fundamental lack of understanding of why all the artists I admire actually do what they do. This also applies to most of the people I admire in almost every field. I don't know of any example where the motivation was such that increased taxation would have acted as a disincentive. That's true even for Bezos @ amzn.
  - nickpp 2y ago
    Taking advantage of self-driven people and stealing the results of their hard work is something communist dictators tried quite hard. Also brainwashing people to work their asses off for some other reason than the selfish one. It didn’t work. The society produced less and less value, crappier and crappier quality, uglier and uglier and grayer and grayer.
    - PaulDavisThe1st 2y ago
      If you think that Bezos was motivated to create amazon because the taxes were just-so, you're delusional. There are numerous books on this topic. Obviously not everyone agrees with them, but Alfie Kohn's "Punished by Rewards" is an excellent starting point for reading about what we know about the connections between motivation, creativity and rewards.
    - PaulDavisThe1st 2y ago
      Also, none of my artist friends would say that they were being "taking advantage of". I have no idea why you'd try to connect the situation I've described in the US art world to communist dictators, other to make some facile point that isn't relevant or even correct.
mmooss 2y ago
> "Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation. I agree with most of what you say, but the pre-tax results of income are not some single natural outcome, but the results of policies about business, economy, education, healthcare, international relations, trade, immigration, monetary policy (of course), regulation, government budget, etc. - pretty much everything. Those things can be adjusted to result in less or more wealth concentration. They also depend heavily on capital gains tax in particular.
- PaulDavisThe1st 2y ago
  While the fact that the artist ended up selling a piece of art for $100k is absolutely reliant on the full totality of the social context .. what happens next is where wealth concentration does or does not happen. And that is (to a good approximation) almost entirely the realm of tax policy. That is why I gave two different societies as examples - both have managed to construct a social context where this happens, but what happens next is different in each of them. Put more crudely, wealth concentration is about not taxing high levels of income at high marginal rates. It is not about the specifics of how those high levels of income arise, who they happen to, etc. etc.

mindslight 2y ago

When people talk about wealth concentration, they're not talking about artists with high-variance paydays. They're focusing on all of the captive-market middlemen that have been allowed to set up shop playing negative sum games via regulatory capture, externalities, lack of anti-trust enforcement, etc.

WalterBright 2y ago
When people like Sanders talk about wealth concentration in billionaires like Musk, how did Musk make his money with negative sum games, regulatory capture, etc.?
- mindslight 2y ago
  Oh boy. There have been tomes written on how Musk's companies are set up around capturing government subsidies. If you're earnestly interested, such analyses are not hard to find. The stock market itself is a shining example of regulatory capture - a perma-bubble due to fake "fiscal responsibility" political marketing that causes massive streams of newly printed money to be handed out to banks to dump into the asset bubble (that newly printed money representing the gains from technology and offshoring that would have otherwise caused price deflation) But sure, I'll also agree that some of Musk's riches are due to actual wealth creation - before the crippling social media addiction and subsequent spiral into lunacy, anyway. But that's all focusing on the problematic ways wealth concentration can arise (the context it was originally brought up in). The other critique (likely what you're referencing about Sanders) is about the corrosive effects that concentrated wealth tends to have. And surely you can see how that applies pretty strongly to Musk...
  - WalterBright 2y ago
    So how much subsidy did Musk receive for SpaceX? (The answer is $0.) SpaceX is worth around $390 billion. > some of Musk's riches are due to actual wealth creation Very generous of you! LOL
    - 2y ago

BoiledCabbage 2y ago

> Wealth is not concentrated in a market society. Respectfully, you should do some reading of basic economics. Absent of external forces to correct for it, wealth absolutely concentrates in unregulated markets.

WalterBright 2y ago
For economics, I prefer history to academic theory. (But I have read Friedman's "Monetary History of the United States", and books by economist C. Northcote Parkinson, "Capitalism" by Reisman, etc. My dad also had a degree in economics from MIT and an MBA from Harvard and a doctorate in economicis and taught finance in college. We had many many long talks about economics. And yeah, I did take econ 101 at Caltech from a Marxist professor. My dad would have had him for lunch.) > wealth absolutely concentrates in unregulated markets The US had more or less unregulated markets for well over a century since its founding. The result? The most stupendous wealth creation, pushing scores of millions of people from poverty into the middle class and beyond. There was no "transfer" of wealth from the poor people to the wealthy (there couldn't have been, because they, being poor, didn't have wealth).
- forgetfreeman 2y ago
  "There was no "transfer" of wealth from the poor people to the wealthy (there couldn't have been, because they, being poor, didn't have wealth)." You're ignoring value created through labor. The poor may not have wealth but they have their labor to sell on the open market. The returns on that exchange have been steadily declining since the post-war period thanks to flat wages and inflation. Meanwhile increases in productivity (as demonstrated by increases in GDP) by definition have to go somewhere. Since it isn't going into working folks savings accounts then it's accumulating somewhere. Also worth considering, the middle class has been declining for the last 40 years.
  - WalterBright 2y ago
    > have to go somewhere. Consider the vast increase in government spending and entitlements. As for the declines, the US free market has steadily become less and less free market.