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What is the issue with wealth compounding? The bottom 40% have a very high value asset -- their agency and actions in the real world. (Working, starting a busin

What is the issue with wealth compounding? The bottom 40% have a very high value asset -- their agency and actions in the real world. (Working, starting a business (however small), self sufficiency et al.). The prices of true essentials are exceedingly small. Essential is something like sharing a room with someone, eating rice beans frozen veg mix (ie very inexpensively), wearing clothes from thrift stores, exercising outside and using a library card, medicaid. Everything beyond that is, technically, optional. Having wealth aiding the overall return doesn't negate my point. Using wealth to get an unjust return does. An example of a better return would be hiring a financial advisor that (somehow) creates better returns using smarter allocations. An example of an unjust return would be creating a monopoly, buying a politician, or extracting profits from unpriced externalities (pollution and bailouts to name a couple). (These do happen in the USA, and I'm all for ending them!) There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating). I do, however, like Scott Galloway's point that we need to find new ways to get the rich to spend their money, we need the poor to start 10000 businesses that gratify the rich and extract their money. Right now they're mostly accumulating it and bidding up investible assets (eg look athe P/E multiple of the S&P 500) .

pwmglenn 19d ago
You can configure what you believe to be the correct price of essentials on the site. The defaults are BLS group average spending data. "There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating)." Do you see how there is nothing stopping insane accumulation of wealth/power? (assuming returns continue to accelerate in this manner?)
- maerF0x0 19d ago
  There's nothing wrong with the accumulation of wealth. I fully agree that Citizens united (not capitalism) has created a distortion and corrupting force in the market place. It's not the wealth that is evil/wrong/unjust/immoral. It's the use of it to corrupt power.
  - danaris 19d ago
    But there's evidence that just having that inequality (not an absolute amount of wealth, but vastly more wealth than normal people) does, indeed, distort human perception and mindset in a way that leads to...well, where we are today.
    - Gibbon1 17d ago
      The problem is with wealth comes the power to change the rules to your advantage. This is already happening for instance the large difference between capital gains tax rates and earned income ones.
  - piva00 18d ago
    Wealth is power, you're too narrowly focusing on specific applications of this power (like your mention of Citizens United) but if that wasn't a thing there'd be innumerous other ways for wealth to be leveraged as power. Power accumulation is inherently unjust and immoral, it corrupts, the utopic benevolent benefactor is extremely rare in real life because power accumulation begets power, those who have it do not want to lose it. Also wealth accumulation is inherently unjust even in your framework of meritocracy, its accumulation and compounding nature is not meritocratic.
- henrycoler 16d ago
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ninininino 19d ago
It's laughable to call housing and the big one you skipped healthcare "exceedingly small". Please spend even 1-2 minutes on the https://livingwage.mit.edu/ https://livingwage.mit.edu/ for example this calculation for Philadelphia: https://livingwage.mit.edu/metros/37980 https://livingwage.mit.edu/metros/37980
- maerF0x0 19d ago
  Housing and healthcare are both mentioned and covered. > sharing a room with someone > medicaid in the top 10 CoL metros one can share a room with another person for about $600 a month. I note that on your links the poverty wage is pretty close to the minimum wage. I'd contend that since contraceptives are widely available, including abortion in many places (or charities helping people get them in other states), we should expect the bottom quintile to not be adding to their expenses.
  - danaris 19d ago
    And you think this should be considered normal? You think that this high a percentage of people should expect to be sharing a room not by choice, for the rest of their lives?
    - maerF0x0 17d ago
      The context of the convo is the bottom quintile of earners. I do think people in the bottom quintile should not have kids (until they remedy their income issues), I do think people in the bottom quintile should take more serious measures to both preserve their cash flow, and to improve their income. I do think the bottom quintile should not be a "for life" sentence, and to the extent that I'm correct I've shared some paths for them to escape that. It's definitely worth addressing that the US could use additional social mobility and mixing, but I think we're far from "people cannot move classes if they want to" as well.
      - danaris 17d ago
        > I do think the bottom quintile should not be a "for life" sentence, and to the extent that I'm correct I've shared some paths for them to escape that. Skimming through your posts in this conversation, I really don't feel like you have. And I think one part of the problem is you don't seem to have acknowledged that, for the most part, people in this quintile do not have the tools to move out of it by choice, and this is increasingly true as inequality grows (so, for instance, if you were lucky enough—and I do mean "lucky"—to be or know someone who made it out 20, 30, 40 years ago, you cannot assume that similar options remain available today). When households are already spending literally every penny that comes in to afford rent, food, clothing, heat, medical care...which of those gets sacrificed on the off-chance that it might, some day, be enough to bootstrap themselves up out of that bottom quintile? No. That is not a realistic or compassionate way to view the situation at all. The bottom quintile is where many people will be their entire lives, and that is not going to change, so we as a society must ensure that it is a "place" where people can live healthy, comfortable lives, rather than a constantly-stressed squalid scramble.
UncleOxidant 19d ago
> we need the poor to start 10000 businesses Most new businesses fail. Then the poor are even deeper in the debt hole. Some people can/should start businesses, but a lot of people are just not entrepreneurs - I include myself in that group. I realize that there must be ways to extract money from this economy - lots of people are doing it - but I don't think any of my ideas would end up doing that (they're generally too niche), more likely I'd end up losing a bunch of money trying to do that.
- maerF0x0 18d ago
  You're making a lot of assumptions of what I meant. Gen-z seems to get this well, a lot of them are starting micro businesses where with very little capital besides their own labor and computer/phone they already own. Getting a side hustle to $2000 a month can be the difference between trajectory to bankruptcy to trajectory to millionaire. It's in that environment they're learning the skills that take them to the next level, when leverage/debt is something their equipped to dabble in. For your case, if you do want to be an entrepreneur, perhaps read the book $100 startup? Its 14 years old at this point...
  - UncleOxidant 18d ago
    I don't really want to be an entrepreneur. Like I said, I don't think I'm cut out for it.
    - maerF0x0 17d ago
      Not really a fan of Kiyosaki, but one thing he did well was educating people on the cashflow quadrants Employee, Business owner, Self employed, Investor. It sounds like you have opted out of one quadrant, but there are still 3 left for you :)
deepfriedchokes 19d ago
What good is agency without power?

pwmglenn 19d ago

You can configure what you believe to be the correct price of essentials on the site. The defaults are BLS group average spending data. "There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating)." Do you see how there is nothing stopping insane accumulation of wealth/power? (assuming returns continue to accelerate in this manner?)

maerF0x0 19d ago
There's nothing wrong with the accumulation of wealth. I fully agree that Citizens united (not capitalism) has created a distortion and corrupting force in the market place. It's not the wealth that is evil/wrong/unjust/immoral. It's the use of it to corrupt power.
- danaris 19d ago
  But there's evidence that just having that inequality (not an absolute amount of wealth, but vastly more wealth than normal people) does, indeed, distort human perception and mindset in a way that leads to...well, where we are today.
  - Gibbon1 17d ago
    The problem is with wealth comes the power to change the rules to your advantage. This is already happening for instance the large difference between capital gains tax rates and earned income ones.
- piva00 18d ago
  Wealth is power, you're too narrowly focusing on specific applications of this power (like your mention of Citizens United) but if that wasn't a thing there'd be innumerous other ways for wealth to be leveraged as power. Power accumulation is inherently unjust and immoral, it corrupts, the utopic benevolent benefactor is extremely rare in real life because power accumulation begets power, those who have it do not want to lose it. Also wealth accumulation is inherently unjust even in your framework of meritocracy, its accumulation and compounding nature is not meritocratic.
henrycoler 16d ago
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ninininino 19d ago

It's laughable to call housing and the big one you skipped healthcare "exceedingly small". Please spend even 1-2 minutes on the https://livingwage.mit.edu/ https://livingwage.mit.edu/ for example this calculation for Philadelphia: https://livingwage.mit.edu/metros/37980 https://livingwage.mit.edu/metros/37980

maerF0x0 19d ago
Housing and healthcare are both mentioned and covered. > sharing a room with someone > medicaid in the top 10 CoL metros one can share a room with another person for about $600 a month. I note that on your links the poverty wage is pretty close to the minimum wage. I'd contend that since contraceptives are widely available, including abortion in many places (or charities helping people get them in other states), we should expect the bottom quintile to not be adding to their expenses.
- danaris 19d ago
  And you think this should be considered normal? You think that this high a percentage of people should expect to be sharing a room not by choice, for the rest of their lives?
  - maerF0x0 17d ago
    The context of the convo is the bottom quintile of earners. I do think people in the bottom quintile should not have kids (until they remedy their income issues), I do think people in the bottom quintile should take more serious measures to both preserve their cash flow, and to improve their income. I do think the bottom quintile should not be a "for life" sentence, and to the extent that I'm correct I've shared some paths for them to escape that. It's definitely worth addressing that the US could use additional social mobility and mixing, but I think we're far from "people cannot move classes if they want to" as well.
    - danaris 17d ago
      > I do think the bottom quintile should not be a "for life" sentence, and to the extent that I'm correct I've shared some paths for them to escape that. Skimming through your posts in this conversation, I really don't feel like you have. And I think one part of the problem is you don't seem to have acknowledged that, for the most part, people in this quintile do not have the tools to move out of it by choice, and this is increasingly true as inequality grows (so, for instance, if you were lucky enough—and I do mean "lucky"—to be or know someone who made it out 20, 30, 40 years ago, you cannot assume that similar options remain available today). When households are already spending literally every penny that comes in to afford rent, food, clothing, heat, medical care...which of those gets sacrificed on the off-chance that it might, some day, be enough to bootstrap themselves up out of that bottom quintile? No. That is not a realistic or compassionate way to view the situation at all. The bottom quintile is where many people will be their entire lives, and that is not going to change, so we as a society must ensure that it is a "place" where people can live healthy, comfortable lives, rather than a constantly-stressed squalid scramble.

UncleOxidant 19d ago

> we need the poor to start 10000 businesses Most new businesses fail. Then the poor are even deeper in the debt hole. Some people can/should start businesses, but a lot of people are just not entrepreneurs - I include myself in that group. I realize that there must be ways to extract money from this economy - lots of people are doing it - but I don't think any of my ideas would end up doing that (they're generally too niche), more likely I'd end up losing a bunch of money trying to do that.

maerF0x0 18d ago
You're making a lot of assumptions of what I meant. Gen-z seems to get this well, a lot of them are starting micro businesses where with very little capital besides their own labor and computer/phone they already own. Getting a side hustle to $2000 a month can be the difference between trajectory to bankruptcy to trajectory to millionaire. It's in that environment they're learning the skills that take them to the next level, when leverage/debt is something their equipped to dabble in. For your case, if you do want to be an entrepreneur, perhaps read the book $100 startup? Its 14 years old at this point...
- UncleOxidant 18d ago
  I don't really want to be an entrepreneur. Like I said, I don't think I'm cut out for it.
  - maerF0x0 17d ago
    Not really a fan of Kiyosaki, but one thing he did well was educating people on the cashflow quadrants Employee, Business owner, Self employed, Investor. It sounds like you have opted out of one quadrant, but there are still 3 left for you :)

deepfriedchokes 19d ago

What good is agency without power?