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I’m not against wealthy people, and America has always had a Tycoon class… But allowing a single person to go from $20B to $130B in assets in 10 years feels li

I’m not against wealthy people, and America has always had a Tycoon class… But allowing a single person to go from $20B to $130B in assets in 10 years feels like a pretty obvious policy failure.

thefourthchime 1y ago
Why? It's not like this money is in a giant vault filled with money and he swims around it. All of this money is being put to use in the U.S. economy.
- jedberg 1y ago
  Almost all of that was an increase in stock price. That's about as close as you can get to just sitting in a vault. If he were selling it and using the money for something else, that would be one thing, but he's really not using much of it. This is not to say it's his fault. That's how our laws are written. But that is the point of OP. That our policies should be forcing him to sell and put that money back into the economy.
  - harperlee 1y ago
    Owning stock is the polar opposite of having money in a vault - it is giving money to the economy. Specifically to a part of the economy that is a money-generating machine: a company. Put in circulation precisely to be invested on the economy.
    - ryandrake 1y ago
      When you buy a stock, "the economy" is not getting the money. Some other investor is getting it, who may or may not be putting that money to use. They may just turn around and buy another stock, giving that money to another investor, who buys a different stock, and on and on and on, with no other actual economic activity happening.
      - alexey-salmin 1y ago
        If the stock market worked the way you imagine, it wouldn't exist.
        steve1977 1y ago
        It’s a pretty accurate description of how the stock market works. How would you describe it? The only time money actually flows to the company is when stock is initially offered. A company might be valued billions in the stock market, but this is not money that the company can work with.
        alexey-salmin 1y ago
        > The only time money actually flows to the company is when stock is initially offered. > A company might be valued billions in the stock market, but this is not money that the company can work with. Both of these statements are demonstrably false. Why do you think companies go public (which is quite troublesome) in the first place? Just vanity to see the billions they don't have access to? Or to allow investors to make money without helping the company in any way? It's clear why investors would come to a purely speculative market with no intrinsic value (e.g. crypto) but it's unclear why a company would offer their shares to be traded like a shitcoin. Being public is the instrument for the company first and foremost. There's the IPO, then companies continuously issue and buyback stocks depending on the cashflow. Look e.g. at the graph of Tesla's outstanding shares [1]. Then companies also sell bonds or borrow money using their own stock as the collateral. The bigger valuation you have the more capital you have access to. Not to mention that even in the OP's simplistic view of the market there is an actual "new value" aspect: if you buy stocks from a VC or a founder, they use it to fund the next startup. [1] https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-outstanding https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-...
        steve1977 1y ago
        I'm not seeing how this is contradicting to what I said. IPO is initial offering of stock. That's when money flows to the company. Fair point about using stock as collateral though.
  - andrewflnr 1y ago
    > Almost all of that was an increase in stock price. That's about as close as you can get to just sitting in a vault. It would be at least as accurate to say it's as close as money can get to not existing at all. Policy should probably not be "forcing" people to realize gains that, in many cases (maybe not MS, but policy has to work for everyone), may as well be Monopoly money.
- syntaxing 1y ago
  Not sure if you’re really curious but it’s because it means the US is going from using tax to sustain itself to borrowing money (hence the ballon of debt). When your government relies on borrowing money, the rich always win no matter how you slice it because typically, you borrow money from them somehow. This reliance is the beginning of oligarchy and bad policies that strongly favor the rich from this endless cycle of debt. It’s been true for any developed nations like Four Asian Tigers and been true for nations with strong historic roots like the UK. How do you think the British “royals” sustain themselves?
- ryandrake 1y ago
  Investor dollars are not kept in a giant vault, but they are also not necessarily "being put to use the U.S. economy." If I buy $1000 of Microsoft stock, Microsoft doesn't suddenly have $1000 more to fund their projects. Some other investor gets it because he sold, and he's not necessarily putting that money to actual use either. It's all just numbers getting updated in a giant database somewhere, over and over until someone cashes out and actually spends that money to buy groceries or something. I guess some might consider those database updates and the growth itself to be "put to use" but I don't.
  - thefourthchime 1y ago
    That's fine. Let's assume that the money is simply stored somewhere as numbers in a database. It would be irresponsible for them not to at least put into some sort of savings account or money market getting interest rate. That interest is generated by people borrowing against it, is it not? Realistically large companies don't do this. They put their money in hedge funds, which are much less risk averse, which would assume that they are more actively putting the money into the economy.
  - deleted 1y ago
    [deleted]
  - skeezyboy 1y ago
    > It's all just numbers getting updated in a giant database somewhere, over and over until someone cashes out and actually spends that money to buy groceries or something. send me your numbers then edgelord... o wait theyre not just numbers now that Ive asked for some. Go read up on futures markets - they were invented to service a legitimate, real world problem - yes deriviative markets of today have become abstract but its no as black and white as capitalists vs us.
deleted 1y ago
[deleted]
luketheobscure 1y ago
I don't disagree with the sentiment, but Ballmer essentially made that money by simply not selling his Microsoft stock.
- missedthecue 1y ago
  I disagree with the sentiment. Who is made worse off, who is made poorer because he held Microsoft shares? OP describes it as a "policy failure"... what kind of social wrong does a "policy" which would have forced him to sell his shares in 2015 correct?
  - dijit 1y ago
    If you’re asking with genuine curiosity: whatever venture was not invested in because it went to buying Tech Titan stocks instead. Concentrated wealth doesn’t circulate well, which leads to inflation. I thought we all had some economic chops on this forum?
    - missedthecue 1y ago
      Wealth doesn't circulate. Currency circulates. They aren't the same thing. And a "concentration of wealth" can't lead to inflation or debasement, I'm not sure what that sentence means.
    - specialist 1y ago
      Yes and: Our economy now has fewer young(er) small- to mid-sized companies. The kind that have historically been the engines for creating jobs, for creating wealth (vs merely transferring it), and innovation. I was excited by all new green energy startups due to Biden Admin's policies (BIL, IRA, etc). Oh well... I know you know all this; I'm just compelled to repeatedly point out the obvious.
    - Kranar 1y ago
      Concentrated wealth along with a lack of currency circulation results in deflation, not inflation: https://en.m.wikipedia.org/wiki/Velocity_of_money https://en.m.wikipedia.org/wiki/Velocity_of_money Pretty ironic that you'd call out economic chops when this is a very basic and well understood principle. Perhaps be more cautious and less confident in your presuppositions going forward.
alexey-salmin 1y ago
Who exactly do you suggest to manage these $130B better than him? Government? Pension fund? An example of a company managed by pension funds is Intel. The whole point of capitalism is to put chunks of economy under control of capable people. If they managed to get rich then on average they're much better at that than the general population. This is not an unpleasant side-effect, this is the main reason the whole system exists, remove it and it's not capitalism anymore.
- triceratops 1y ago
  > An example of a company managed by pension funds is Intel. What does this even mean? Pension funds have a lot of board seats? I only see one person from Blackrock on their board right now. Why would it be bad for a pension fund to have influence on running a company? Are their incentives somehow mis-aligned with other investors?
  - alexey-salmin 1y ago
    > What does this even mean? Pension funds have a lot of board seats? I only see one person from Blackrock on their board right now. The Board members are appointed by the Intel Corporate Governance & Nominating Committee, the chair of the committee is Barbara G. Novick, co-founder of BlackRock. The board is de-facto run by the trio of BlackRock, Vanguard and State Street, smaller investors follow their lead. > Why would it be bad for a pension fund to have influence on running a company? Are their incentives somehow mis-aligned with other investors? Alignment of interest is not magical: it's necessary to achieve results but it isn't sufficient. You need actual talents, vision, execution to make things happen, not just interest. Pension funds have no vision beyond "stock go up", no strategy other than "more revenue, less costs". In the end they are roughly as good at running things as are socialist states: economy is owned by everyone so no one in particular, run by people who never proved that can run a lemonade stand. In fact a successful socialist state (if they ever existed) would be indistinguishable from a huge pension fund that swallowed the whole economy.
    - triceratops 1y ago
DoesntMatter22 1y ago
It always strikes me as interesting that this entire community was founded around startups and providing value to customers and making money in return, however it's now mostly dominated by those who think it's wrong to provide value and get money in return
- anonymous_user9 1y ago
  Shareholders do not provide value, workers do. After he retired, Steve Ballmer did not provide $110B of value to Microsoft customers, but he received that wealth anyway.
  - missedthecue 1y ago
    There is absolutely value in providing risk capital. That's literally the lifeblood of commercial innovation.
    - steve1977 1y ago
      But this only happens when stock is initially offered. Not when it’s traded afterwards.
      - DoesntMatter22 1y ago
        That is completely untrue. Companies frequently own their own stock, and issue more when the price is high it continues to be quite valuable to the company
        steve1977 1y ago
        They can buy back shares and keep them in treasury, that's correct. But they need cash to buy them back first and it only actually results in a positive flow of money if they are able to sell it at a profit later. And when they issue more, then this initial offering again (of new stock).
refurb 1y ago
How so? The value of Microsoft exploded. It seems to me that someone's compensation being directly linked to the value they helped create is exactly how you want people compensated.

I’m not against wealthy people, and America has always had a Tycoon class… But allowing a single person to go from $20B to $130B in assets in 10 years feels like a pretty obvious policy failure.

thefourthchime 1y ago

Why? It's not like this money is in a giant vault filled with money and he swims around it. All of this money is being put to use in the U.S. economy.

jedberg 1y ago
Almost all of that was an increase in stock price. That's about as close as you can get to just sitting in a vault. If he were selling it and using the money for something else, that would be one thing, but he's really not using much of it. This is not to say it's his fault. That's how our laws are written. But that is the point of OP. That our policies should be forcing him to sell and put that money back into the economy.
- harperlee 1y ago
  Owning stock is the polar opposite of having money in a vault - it is giving money to the economy. Specifically to a part of the economy that is a money-generating machine: a company. Put in circulation precisely to be invested on the economy.
  - ryandrake 1y ago
    When you buy a stock, "the economy" is not getting the money. Some other investor is getting it, who may or may not be putting that money to use. They may just turn around and buy another stock, giving that money to another investor, who buys a different stock, and on and on and on, with no other actual economic activity happening.
    - alexey-salmin 1y ago
      If the stock market worked the way you imagine, it wouldn't exist.
      - steve1977 1y ago
        It’s a pretty accurate description of how the stock market works. How would you describe it? The only time money actually flows to the company is when stock is initially offered. A company might be valued billions in the stock market, but this is not money that the company can work with.
        alexey-salmin 1y ago
        > The only time money actually flows to the company is when stock is initially offered. > A company might be valued billions in the stock market, but this is not money that the company can work with. Both of these statements are demonstrably false. Why do you think companies go public (which is quite troublesome) in the first place? Just vanity to see the billions they don't have access to? Or to allow investors to make money without helping the company in any way? It's clear why investors would come to a purely speculative market with no intrinsic value (e.g. crypto) but it's unclear why a company would offer their shares to be traded like a shitcoin. Being public is the instrument for the company first and foremost. There's the IPO, then companies continuously issue and buyback stocks depending on the cashflow. Look e.g. at the graph of Tesla's outstanding shares [1]. Then companies also sell bonds or borrow money using their own stock as the collateral. The bigger valuation you have the more capital you have access to. Not to mention that even in the OP's simplistic view of the market there is an actual "new value" aspect: if you buy stocks from a VC or a founder, they use it to fund the next startup. [1] https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-outstanding https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-...
        steve1977 1y ago
        I'm not seeing how this is contradicting to what I said. IPO is initial offering of stock. That's when money flows to the company. Fair point about using stock as collateral though.
- andrewflnr 1y ago
  > Almost all of that was an increase in stock price. That's about as close as you can get to just sitting in a vault. It would be at least as accurate to say it's as close as money can get to not existing at all. Policy should probably not be "forcing" people to realize gains that, in many cases (maybe not MS, but policy has to work for everyone), may as well be Monopoly money.
syntaxing 1y ago
Not sure if you’re really curious but it’s because it means the US is going from using tax to sustain itself to borrowing money (hence the ballon of debt). When your government relies on borrowing money, the rich always win no matter how you slice it because typically, you borrow money from them somehow. This reliance is the beginning of oligarchy and bad policies that strongly favor the rich from this endless cycle of debt. It’s been true for any developed nations like Four Asian Tigers and been true for nations with strong historic roots like the UK. How do you think the British “royals” sustain themselves?
ryandrake 1y ago
Investor dollars are not kept in a giant vault, but they are also not necessarily "being put to use the U.S. economy." If I buy $1000 of Microsoft stock, Microsoft doesn't suddenly have $1000 more to fund their projects. Some other investor gets it because he sold, and he's not necessarily putting that money to actual use either. It's all just numbers getting updated in a giant database somewhere, over and over until someone cashes out and actually spends that money to buy groceries or something. I guess some might consider those database updates and the growth itself to be "put to use" but I don't.
- thefourthchime 1y ago
  That's fine. Let's assume that the money is simply stored somewhere as numbers in a database. It would be irresponsible for them not to at least put into some sort of savings account or money market getting interest rate. That interest is generated by people borrowing against it, is it not? Realistically large companies don't do this. They put their money in hedge funds, which are much less risk averse, which would assume that they are more actively putting the money into the economy.
- deleted 1y ago
  [deleted]
- skeezyboy 1y ago
  > It's all just numbers getting updated in a giant database somewhere, over and over until someone cashes out and actually spends that money to buy groceries or something. send me your numbers then edgelord... o wait theyre not just numbers now that Ive asked for some. Go read up on futures markets - they were invented to service a legitimate, real world problem - yes deriviative markets of today have become abstract but its no as black and white as capitalists vs us.

deleted 1y ago

[deleted]

luketheobscure 1y ago

I don't disagree with the sentiment, but Ballmer essentially made that money by simply not selling his Microsoft stock.

missedthecue 1y ago
I disagree with the sentiment. Who is made worse off, who is made poorer because he held Microsoft shares? OP describes it as a "policy failure"... what kind of social wrong does a "policy" which would have forced him to sell his shares in 2015 correct?
- dijit 1y ago
  If you’re asking with genuine curiosity: whatever venture was not invested in because it went to buying Tech Titan stocks instead. Concentrated wealth doesn’t circulate well, which leads to inflation. I thought we all had some economic chops on this forum?
  - missedthecue 1y ago
    Wealth doesn't circulate. Currency circulates. They aren't the same thing. And a "concentration of wealth" can't lead to inflation or debasement, I'm not sure what that sentence means.
  - specialist 1y ago
    Yes and: Our economy now has fewer young(er) small- to mid-sized companies. The kind that have historically been the engines for creating jobs, for creating wealth (vs merely transferring it), and innovation. I was excited by all new green energy startups due to Biden Admin's policies (BIL, IRA, etc). Oh well... I know you know all this; I'm just compelled to repeatedly point out the obvious.
  - Kranar 1y ago
    Concentrated wealth along with a lack of currency circulation results in deflation, not inflation: https://en.m.wikipedia.org/wiki/Velocity_of_money https://en.m.wikipedia.org/wiki/Velocity_of_money Pretty ironic that you'd call out economic chops when this is a very basic and well understood principle. Perhaps be more cautious and less confident in your presuppositions going forward.

alexey-salmin 1y ago

Who exactly do you suggest to manage these $130B better than him? Government? Pension fund? An example of a company managed by pension funds is Intel. The whole point of capitalism is to put chunks of economy under control of capable people. If they managed to get rich then on average they're much better at that than the general population. This is not an unpleasant side-effect, this is the main reason the whole system exists, remove it and it's not capitalism anymore.

triceratops 1y ago
> An example of a company managed by pension funds is Intel. What does this even mean? Pension funds have a lot of board seats? I only see one person from Blackrock on their board right now. Why would it be bad for a pension fund to have influence on running a company? Are their incentives somehow mis-aligned with other investors?
- alexey-salmin 1y ago
  > What does this even mean? Pension funds have a lot of board seats? I only see one person from Blackrock on their board right now. The Board members are appointed by the Intel Corporate Governance & Nominating Committee, the chair of the committee is Barbara G. Novick, co-founder of BlackRock. The board is de-facto run by the trio of BlackRock, Vanguard and State Street, smaller investors follow their lead. > Why would it be bad for a pension fund to have influence on running a company? Are their incentives somehow mis-aligned with other investors? Alignment of interest is not magical: it's necessary to achieve results but it isn't sufficient. You need actual talents, vision, execution to make things happen, not just interest. Pension funds have no vision beyond "stock go up", no strategy other than "more revenue, less costs". In the end they are roughly as good at running things as are socialist states: economy is owned by everyone so no one in particular, run by people who never proved that can run a lemonade stand. In fact a successful socialist state (if they ever existed) would be indistinguishable from a huge pension fund that swallowed the whole economy.
  - triceratops 1y ago

DoesntMatter22 1y ago

It always strikes me as interesting that this entire community was founded around startups and providing value to customers and making money in return, however it's now mostly dominated by those who think it's wrong to provide value and get money in return

anonymous_user9 1y ago
Shareholders do not provide value, workers do. After he retired, Steve Ballmer did not provide $110B of value to Microsoft customers, but he received that wealth anyway.
- missedthecue 1y ago
  There is absolutely value in providing risk capital. That's literally the lifeblood of commercial innovation.
  - steve1977 1y ago
    But this only happens when stock is initially offered. Not when it’s traded afterwards.
    - DoesntMatter22 1y ago
      That is completely untrue. Companies frequently own their own stock, and issue more when the price is high it continues to be quite valuable to the company
      - steve1977 1y ago
        They can buy back shares and keep them in treasury, that's correct. But they need cash to buy them back first and it only actually results in a positive flow of money if they are able to sell it at a profit later. And when they issue more, then this initial offering again (of new stock).

refurb 1y ago

How so? The value of Microsoft exploded. It seems to me that someone's compensation being directly linked to the value they helped create is exactly how you want people compensated.