4 ms·

What a surprise that the first example given is someone who spends years honing his craft and then months on a movie set like Robert Downey Jr., as opposed to s

What a surprise that the first example given is someone who spends years honing his craft and then months on a movie set like Robert Downey Jr., as opposed to say, the Walton heirs. Mankiw is arguing with a wall. I'd much prefer Downey get his cut of the wealth he worked to help create, than the heirs who lay about and collect dividend checks from Time-Warner, Disney and the others who take a cut from Downey's labors. Mankiw erects a straw man and then tears it up. The problem is with the heirs who expropriate surplus labor value from those of us who work. The problem is not doctors, or actors, or engineers, or people paid highly because they invested a long amount of time to train themselves. The problem is not that doctor's train for years and are then paid well, the problem is with heirs who never work, yet then live the high life off of those who do work, by expropriating their surplus labor time.

tolmasky 13y ago
Do we know how many of the rich are "legitimate" (under your definition, like Mr Robert Downey Jr.), vs "illegitimate" (like the Walton heirs)? In other words, if its highly skewed towards "new money", then does it matter worrying about the old? I don't know the answer to this, I'm genuinely curious, because the opposite argument can be made that bringing up rich heirs is a straw man if most people with money earned it on their own. Similarly, with things like the giving pledge, where literally the richest people on earth have pledged to give most of their wealth to charity, is the problem of "leaching" heirs going to be even less of a concern in the next generation?
- WalterBright 13y ago
  According to "The Millionaire Next Door" 85% of American millionaires are self-made.
  - dredmorbius 13y ago
    That doesn't answer the question "how much wealth is earned vs. inherited", however. For the Forbes 400, 40% of members inherited a "sizeable asset from a spouse or family member." http://www.cnbc.com/id/49167533 http://www.cnbc.com/id/49167533
    - WalterBright 13y ago
      "sizeable" could mean anything - the statistic is meaningless. But sure, many successful people had help getting started. And many others did not. I read some years back that Microsoft had created around 10,000 millionaires just in the Seattle area. I'm curious what you think of that.
      - dredmorbius 13y ago
        It's precisely as meaningless as yours have been. How about instead of throwing additional red herrings and strawmen at the debate you consider substantiating (or debunking) either your or my statements with more data. As for my 40% and "sizeable", there's a research paper IIRC behind that stat, and if I get a chance to clear some tabs to the point I can look it up, I may just do that. As for Microsoft: a criminal monopoly syndicate turned out to be highly profitable for those who were employed by it. That's not particularly surprising. At a deeper level: what aspect of Microsoft's contribution to the net economy consisted of rent-seeking (effectively and by design forcing all PC computer vendors into shipping a license per CPU, destroying competing OS, office suite, and browser vendors), and how much served to unleash additional real economic activity by way of reducing the frictions in managing, processing, and utilizing information, and how would that have compared with a conceivable alternative universe: say, one in which the BSD unices had been widely and freely available on PCs in the 1980s rather than the mid/late 1990s as eventually happened with Linux. Yes, I'm aware that Linux was released in 1991, but it really only started reaching useful potential and use by 1995-1997 or so. That's a deeper question, but it gets at the root of the matter: what is mere reallocation and/or creation of wealth tokens ("making money" and "moving it around" contra-respectively) and what is real wealth generation?
        WalterBright 13y ago
        I'd define "real wealth generation" as purchasing inputs and doing something with those inputs that enables one to charge a higher price for the output, where both the input and output prices are set by free negotiation.
- hayksaakian 13y ago
  if you accept the "spend money to make money" philosophy, the despite 85% being new money, the Huber wealthy still decide who joins their club. If Robert Downey junior pissed off someone super rich on his way to the top, he would not see the light of day.
- firstOrder 13y ago
  The last major study on US inheritance that I know of was done in conjunction with the US Bureau of Labor Statistics ( http://www.bls.gov/ore/pdf/ec110030.pdf http://www.bls.gov/ore/pdf/ec110030.pdf ). That study considers inheritance for all Americans, with some notes on the wealthy. It can be complemented by other government studies, such as the Survey of Consumer Finances, which shows wealth distribution, of what sort (stocks, bonds, home equity) etc.
gaius 13y ago
Any supermodel or footballer or actor "inherited" their wealth too... In their DNA. Should we punitively tax them back into equality too?

tolmasky 13y ago

Do we know how many of the rich are "legitimate" (under your definition, like Mr Robert Downey Jr.), vs "illegitimate" (like the Walton heirs)? In other words, if its highly skewed towards "new money", then does it matter worrying about the old? I don't know the answer to this, I'm genuinely curious, because the opposite argument can be made that bringing up rich heirs is a straw man if most people with money earned it on their own. Similarly, with things like the giving pledge, where literally the richest people on earth have pledged to give most of their wealth to charity, is the problem of "leaching" heirs going to be even less of a concern in the next generation?

WalterBright 13y ago
According to "The Millionaire Next Door" 85% of American millionaires are self-made.
- dredmorbius 13y ago
  That doesn't answer the question "how much wealth is earned vs. inherited", however. For the Forbes 400, 40% of members inherited a "sizeable asset from a spouse or family member." http://www.cnbc.com/id/49167533 http://www.cnbc.com/id/49167533
  - WalterBright 13y ago
    "sizeable" could mean anything - the statistic is meaningless. But sure, many successful people had help getting started. And many others did not. I read some years back that Microsoft had created around 10,000 millionaires just in the Seattle area. I'm curious what you think of that.
    - dredmorbius 13y ago
      It's precisely as meaningless as yours have been. How about instead of throwing additional red herrings and strawmen at the debate you consider substantiating (or debunking) either your or my statements with more data. As for my 40% and "sizeable", there's a research paper IIRC behind that stat, and if I get a chance to clear some tabs to the point I can look it up, I may just do that. As for Microsoft: a criminal monopoly syndicate turned out to be highly profitable for those who were employed by it. That's not particularly surprising. At a deeper level: what aspect of Microsoft's contribution to the net economy consisted of rent-seeking (effectively and by design forcing all PC computer vendors into shipping a license per CPU, destroying competing OS, office suite, and browser vendors), and how much served to unleash additional real economic activity by way of reducing the frictions in managing, processing, and utilizing information, and how would that have compared with a conceivable alternative universe: say, one in which the BSD unices had been widely and freely available on PCs in the 1980s rather than the mid/late 1990s as eventually happened with Linux. Yes, I'm aware that Linux was released in 1991, but it really only started reaching useful potential and use by 1995-1997 or so. That's a deeper question, but it gets at the root of the matter: what is mere reallocation and/or creation of wealth tokens ("making money" and "moving it around" contra-respectively) and what is real wealth generation?
      - WalterBright 13y ago
        I'd define "real wealth generation" as purchasing inputs and doing something with those inputs that enables one to charge a higher price for the output, where both the input and output prices are set by free negotiation.
hayksaakian 13y ago
if you accept the "spend money to make money" philosophy, the despite 85% being new money, the Huber wealthy still decide who joins their club. If Robert Downey junior pissed off someone super rich on his way to the top, he would not see the light of day.
firstOrder 13y ago
The last major study on US inheritance that I know of was done in conjunction with the US Bureau of Labor Statistics ( http://www.bls.gov/ore/pdf/ec110030.pdf http://www.bls.gov/ore/pdf/ec110030.pdf ). That study considers inheritance for all Americans, with some notes on the wealthy. It can be complemented by other government studies, such as the Survey of Consumer Finances, which shows wealth distribution, of what sort (stocks, bonds, home equity) etc.

gaius 13y ago

Any supermodel or footballer or actor "inherited" their wealth too... In their DNA. Should we punitively tax them back into equality too?