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As a matter of fact, society has not a single valid reason to allow concentration of excessive wealth on some kind of restricted group or "elite" (as, by the wa

As a matter of fact, society has not a single valid reason to allow concentration of excessive wealth on some kind of restricted group or "elite" (as, by the way, also promoted erroneously by the idea of the "American Dream"). Here are a few facts to explain that this concept is not sane at all: - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). - Excessive wealth ends up being used for corruption (famous example: the Koch brothers), simply because it can. You can not get rid of corruption without getting rid of excessive wealth concentration. - Excessive wealth could "morally"/"ethically" only be justified by the existence of "really free will" (a concept which we can never reasonably take as a basis, given the fact that this concept is of religious nature, not rational thinking): Free will -> free decision -> merit of the better decision -> excessive wealth. As noted, this is how society excuses the existence of excessively rich people, and it's completely flawed and wrong. - Excessive wealth will always has the tendency to become even more excessive: it gives its holder an "unfair" advantage. - A part of excessive wealth will always be used to protect the "unfair advantage", thus eliminating equality even more.

thomasz 13y ago
> Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Hell no. http://en.wikipedia.org/wiki/Savings_identity http://en.wikipedia.org/wiki/Savings_identity
- nhaehnle 13y ago
  The savings identity is usually misinterpreted by laypeople, though. Here's a small story to illustrate why S=I can be very misleading: Company C has always produced some type gadgets, for many years. Demand for the gadget has been stable, they just keep producing to what the demand is, end of story. Sounds boring, but this is what 99% of the economy is. Now, for whatever reason (a recession, a policy change, it doesn't really matter), consumers want to save more. In doing so, they decide to reduce their purchase of C's gadget. What happens now? Well, saving S goes up. At the same time, company C involuntarily builds up an inventory of gadgets that they had already started producing but which they can no longer sell. This build-up of inventory is counted as investment in the national accounts! So I goes up, and the identity S=I is maintained. But S=I is maintained in a way that is in total conflict to the typical layperson's interpretation of the equation. So, yes, an exogenous increase in saving will tend to push up "investment" (in quotation marks because it is involuntary investment). When all is said and done, we may all well be poorer for it in real terms, because the level of economic activity may have been reduced. On the other hand, when there is an increase in voluntary investment, then I goes up. Then people's income increases, and that tends to lead to an increase in savings. So S=I is also maintained, but we tend to be richer for it in real terms due to a higher level of economic activity.
ekianjo 13y ago
> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want your money. If not, it would be a simple cost for them with no value to have it there, and they would charge you to keep your money instead of rewarding you for it. > Excessive wealth will always has the tendency to become even more excessive: it gives its holder an "unfair" advantage. Nature is unfair. We don't have the same genes. We don't share the same risks for illness or reproduction. We are not all top athletes. Stop the egalitarian bullshit. The only thing society should do is ensure everyone has the same rights in regard to the Law no matter how rich, how poor, how different you may be. Anything beyond is just a call for arms-race to make everyone the same in every aspect (and incidentally, to render everyone poor by default).
- frank_boyd 13y ago
  > Another economical fallacy. What I meant is: this money is not used to promote consumption (which it were in the hands of poor people). It's consumption (of services or products) that creates jobs. Jobs get created because there is demand for something, not because some rich elite decides they can invest (because they have money). Investment does not depend on the existence of some rich elite. "Trickle down economics" was a joke created by a couple of rich people, to justify and protect the inequality. Investment can easily be accomplished by "the crowd", and it should.
  - ekianjo 13y ago
    > Jobs get created because there is demand for something In the modern society, you are beyond the natural "needs" of the population and you don't need any of the new products that are sold to you. Obviously nobody needed a iPhone pre-2007 and now suddenly everyone has to have one. There's nothing such as "fixed demand". Demand is created by new products, designed by rich elites or companies that can manufacture them and need significant investment to make them a reality. And the "crowd" investment system already exists, by the way. It's been around for 300 years, it's called the stocks exchange.
emiliobumachar 13y ago
pg once pointed out there may be far fewer startups in a society that does not allow concentration of excessive wealth. That's at least one single valid reason. http://paulgraham.com/inequality.html http://paulgraham.com/inequality.html "People start startups in the hope of becoming much richer than they were before. And if your society tries to prevent anyone from being much richer than anyone else, it will also prevent one person from being much richer at t2 than t1."
- pyoung 13y ago
  His logic is a bit off. In a truly efficient market (big if), if taxes were raised so significantly as to have a major impact on the rewards, then you would get a corresponding reduction in risk. I.E. Instead of having a 1 in 10 chance of a startup making it (as he claims in the post) you would probably end up with a 1 in 8 chance (or something similar) as the smaller rewards would, in theory, reduce the number of competitors. You would still end up with the same number of winners however. In reality, there are a number of intangible benefits to starting a business that will overpower any reduction in startups due to higher taxes. Autonomy, excitement, and having a large impact all contribute in the decision to take the risk. Additionally, starting a business is still one of the only ways to strike it rich (unless you get lucky in the athlete/musician/actor department). So for most people with sizable ambitions, a reduction in rewards due to higher taxes will not have any meaningful impact on their decision.
- subsystem 13y ago
  It would be a much better argument without the strawman of absolute equality.
  - emiliobumachar 13y ago
    From the same reference: "This argument applies proportionately. It's not just that if you eliminate economic inequality, you get no startups. To the extent you reduce economic inequality, you decrease the number of startups."
    - 13y ago
venomsnake 13y ago
The real problem is not excessive wealth but generational transfer of such. Let someone reap the benefits. BUT then take away the majority of the wealth away upon death so he could not transfer it. Let his decendands be able to inherit total value of 100 each (whatever the poverty line is that year) and take away the rest. This way we make the emerging of elites harder and falling out of them easier.
- mantas 13y ago
  Not only wealth is transferred from generation to generation. Jewellery, old family houses, paintings and lots of other possibly expensive stuff. For many people, it's not about money. It's memories and other non-financial stuff. That 200 years old watch from your grand-grand-grand-father? Whoopsie, it's expensive these days! If you try to take away that, people won't be happy. If you try to loopholes to allow that kind of transfer, people will use that to transfer wealth to their children. Even if you don't add them, there're many ways to work around that. For example, parents may sell stuff to their children for many times less than market value. You can't deny people rights to sell stuff for whatever they want, do you? There's no law that can't be worked around. Some people want laws to hide real world from themselves. Other people accept reality.

thomasz 13y ago

> Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Hell no. http://en.wikipedia.org/wiki/Savings_identity http://en.wikipedia.org/wiki/Savings_identity

nhaehnle 13y ago
The savings identity is usually misinterpreted by laypeople, though. Here's a small story to illustrate why S=I can be very misleading: Company C has always produced some type gadgets, for many years. Demand for the gadget has been stable, they just keep producing to what the demand is, end of story. Sounds boring, but this is what 99% of the economy is. Now, for whatever reason (a recession, a policy change, it doesn't really matter), consumers want to save more. In doing so, they decide to reduce their purchase of C's gadget. What happens now? Well, saving S goes up. At the same time, company C involuntarily builds up an inventory of gadgets that they had already started producing but which they can no longer sell. This build-up of inventory is counted as investment in the national accounts! So I goes up, and the identity S=I is maintained. But S=I is maintained in a way that is in total conflict to the typical layperson's interpretation of the equation. So, yes, an exogenous increase in saving will tend to push up "investment" (in quotation marks because it is involuntary investment). When all is said and done, we may all well be poorer for it in real terms, because the level of economic activity may have been reduced. On the other hand, when there is an increase in voluntary investment, then I goes up. Then people's income increases, and that tends to lead to an increase in savings. So S=I is also maintained, but we tend to be richer for it in real terms due to a higher level of economic activity.

ekianjo 13y ago

> - Excessive wealth is usually hoarded (in bank accounts), not used: But if you want the economy to work the most (creating jobs, etc.), you need to make money circulate as much as possible (which is not what rich people usually do). Another economical fallacy. When you put money in the bank, it's not standing there doing nothing. Savings are invested, loaned, used to create additional value. That's why banks want your money. If not, it would be a simple cost for them with no value to have it there, and they would charge you to keep your money instead of rewarding you for it. > Excessive wealth will always has the tendency to become even more excessive: it gives its holder an "unfair" advantage. Nature is unfair. We don't have the same genes. We don't share the same risks for illness or reproduction. We are not all top athletes. Stop the egalitarian bullshit. The only thing society should do is ensure everyone has the same rights in regard to the Law no matter how rich, how poor, how different you may be. Anything beyond is just a call for arms-race to make everyone the same in every aspect (and incidentally, to render everyone poor by default).

frank_boyd 13y ago
> Another economical fallacy. What I meant is: this money is not used to promote consumption (which it were in the hands of poor people). It's consumption (of services or products) that creates jobs. Jobs get created because there is demand for something, not because some rich elite decides they can invest (because they have money). Investment does not depend on the existence of some rich elite. "Trickle down economics" was a joke created by a couple of rich people, to justify and protect the inequality. Investment can easily be accomplished by "the crowd", and it should.
- ekianjo 13y ago
  > Jobs get created because there is demand for something In the modern society, you are beyond the natural "needs" of the population and you don't need any of the new products that are sold to you. Obviously nobody needed a iPhone pre-2007 and now suddenly everyone has to have one. There's nothing such as "fixed demand". Demand is created by new products, designed by rich elites or companies that can manufacture them and need significant investment to make them a reality. And the "crowd" investment system already exists, by the way. It's been around for 300 years, it's called the stocks exchange.

emiliobumachar 13y ago

pg once pointed out there may be far fewer startups in a society that does not allow concentration of excessive wealth. That's at least one single valid reason. http://paulgraham.com/inequality.html http://paulgraham.com/inequality.html "People start startups in the hope of becoming much richer than they were before. And if your society tries to prevent anyone from being much richer than anyone else, it will also prevent one person from being much richer at t2 than t1."

pyoung 13y ago
His logic is a bit off. In a truly efficient market (big if), if taxes were raised so significantly as to have a major impact on the rewards, then you would get a corresponding reduction in risk. I.E. Instead of having a 1 in 10 chance of a startup making it (as he claims in the post) you would probably end up with a 1 in 8 chance (or something similar) as the smaller rewards would, in theory, reduce the number of competitors. You would still end up with the same number of winners however. In reality, there are a number of intangible benefits to starting a business that will overpower any reduction in startups due to higher taxes. Autonomy, excitement, and having a large impact all contribute in the decision to take the risk. Additionally, starting a business is still one of the only ways to strike it rich (unless you get lucky in the athlete/musician/actor department). So for most people with sizable ambitions, a reduction in rewards due to higher taxes will not have any meaningful impact on their decision.
subsystem 13y ago
It would be a much better argument without the strawman of absolute equality.
- emiliobumachar 13y ago
  From the same reference: "This argument applies proportionately. It's not just that if you eliminate economic inequality, you get no startups. To the extent you reduce economic inequality, you decrease the number of startups."
  - 13y ago

venomsnake 13y ago

The real problem is not excessive wealth but generational transfer of such. Let someone reap the benefits. BUT then take away the majority of the wealth away upon death so he could not transfer it. Let his decendands be able to inherit total value of 100 each (whatever the poverty line is that year) and take away the rest. This way we make the emerging of elites harder and falling out of them easier.

mantas 13y ago
Not only wealth is transferred from generation to generation. Jewellery, old family houses, paintings and lots of other possibly expensive stuff. For many people, it's not about money. It's memories and other non-financial stuff. That 200 years old watch from your grand-grand-grand-father? Whoopsie, it's expensive these days! If you try to take away that, people won't be happy. If you try to loopholes to allow that kind of transfer, people will use that to transfer wealth to their children. Even if you don't add them, there're many ways to work around that. For example, parents may sell stuff to their children for many times less than market value. You can't deny people rights to sell stuff for whatever they want, do you? There's no law that can't be worked around. Some people want laws to hide real world from themselves. Other people accept reality.