10 ms·

How Everyone Got the Top 1% Wrong

103 points by ghouse 13y ago

adambard 13y ago
TL:DR; The richest rich are much richer than the least rich rich, and becoming richer still. I'm kind of struggling to find the personal relevance of a story reporting churn within the top 1%.
- jerf 13y ago
  Because of the rhetoric being used in the political arena. If "the 1%" almost entirely changes every year, well... what's the problem with that? You're always going to have a top 1%. Don't we want it to have a significant amount of turnover? Indeed, these numbers sound perhaps a bit low, if anything (is it really that unstable up there? That's not obviously good to me.). If it's not the same people all the time, it's not obviously useful to be talking about them as a distinct group. Maybe it is useful. But it's something that goes from almost self-evident, to badly in need of being established. On the other hand, the idea that a small handful of people have concentrated such vast wealth that they've disenfranchised the rest of us, a handful that is a great deal less than "the 1%", is actually a wildly more potent political story. Even this here libertarian type might be open to some significant actions taken to ensure that such concentrations of wealth are ameliorated, as a key part of my personal libertarianism is that monopoly busting is a key useful function of government, and I'd consider this to fit in, if it is true. It's still something that needs establishing, though, not mere assertion. One has a hard time not imagining the .001% cackling with glee as the press focuses on "the 1%"; it still leaves them lost in crowd of millions, hardly singling them out for any treatment, while the 1% itself is peopled with a significant number of people who apparently worked their way up the ladder, however briefly that may have been. That doesn't sound like a good set of people to target, if there's no actual "institution" there. And now, let me reiterate my first sentence; this is because of the political rhetoric being used. If it wasn't for that, this would be a relatively uninteresting question. But if it's going to become essentially part of the platform of one of the major parties, it's worth examining for truth value.
  - sigil 13y ago
    The evidence we have so far points to a higher churn rate the closer to the top you are. According to this [1], the top 1% had a churn rate of > 50% over a decade, while the top .01% had a churn rate of > 75% over the same period. The "Fortunate 400" mentioned by the article is something like the top .0001%, and had a churn rate of 99% over two decades. I'd love to see deeper analysis though. What does the churn rate look like as a function of top percentile size? Do the choice of endpoint years matter significantly? Also, as you ask, what might be the optimal churn rate economically? [1] http://www.treasury.gov/resource-center/tax-policy/Documents/Income-Mobility-1996to2005-12-07-revised-3-08.pdf http://www.treasury.gov/resource-center/tax-policy/Documents...
    - adamc 13y ago
      What percentage of the 1% ever "churn" into the 0.01% at all? Churn makes it sound like it might be random, but I don't think that is demonstrated.
      - sigil 13y ago
        If the 1% don't churn into the 0.01% when it loses 75% of its members, then where do the replacements come from? I agree though, longitudinal studies are the most interesting.
    - jerf 13y ago
      I agree, I would love to see more detailed analysis, as well as a fresh, open-minded investigation into the question of what optimal is without very, very large assumptions being made casually. (Perhaps such things exist. Links welcomed.) Step one is always always always identify the problem. As I said, I'm open to the idea that there is something that should be done here, but it is absolutely vital that we first identify the problem carefully, before we start throwing around solutions to non-problems. This is... or at least SHOULD be... a non-ideological statement. We will all most assuredly disagree about what optimal should be, and what actions we should take, but we should all be arguing from the same basis of facts, and this sort of discussion strongly suggests we are not in the possession of the facts we thought we collectively were (and/or that we were told we were, and/or that we collectively just assumed without examining... I know I didn't ask these questions personally, so this is not intended as an attack on anyone else). This is not something to be glossed over casually on the way to espousing the same ideas we would have anyhow... it's a big problem that should be solved first.
AndrewKemendo 13y ago
Where is all this leading? Is someone leading some kind of action to change this or are we just gazing at the issue making ourselves all feel terrible? Is it worth changing? It seems like this situation is pretty historically standard anyway yet there is progress on all counts.
jedberg 13y ago
I've been thinking about this for a while. Last I checked, to be in the top 1% in the US you had to have about $250K of annual income. In the Bay Area, pretty much anyone who holds the title of Director or VP (and even Senior Manager at some places) at any sizable tech company makes that much, if not a lot more. So if you work at one of those companies, you might think your Director is doing well, but you probably don't think of them as insanely wealthy.
- sokoloff 13y ago
  Because they probably aren't insanely wealthy. They just have a high income, and probably have high expenses as well. Insanely wealthy, to me, is the condition of having assets that throw off net income that puts you into the top 1% of income before you've worked 200 hours in a year. (You might have to work a bit to oversee and manage the assets, but it shouldn't represent anything like a work-a-day job.)
  - JackFr 13y ago
    The big problem with the article is that the author conflates wealth and income, and switches back and forth willy-nilly, so as to render all of his claims -- without further clarification -- meaningless.
- nilkn 13y ago
  It's apparently fairly hard to find up to date information on this, but your $250k figure is definitely too low; it might have been accurate 6-7 years ago. Everything I can find cites a number which is at least $350k and sometimes over $500k (http://economix.blogs.nytimes.com/2011/10/10/about-that-99-percent/ http://economix.blogs.nytimes.com/2011/10/10/about-that-99-p...). These numbers, of course, are the bare minimum for inclusion in this category. By definition, nearly everybody in the 1% makes more than this.
- deleted 13y ago
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- massysett 13y ago
  That's because this article, like many others, idiotically conflates "income" (money received as payments) and "wealth" (things of value in storage). Income is typically liquid; wealth, often not so much. Your Bay Area director might have high income but relatively little wealth. Gates and Buffet probably get substantial dividend income but it's their wealth that's so staggering. Grandma might have lots of wealth in her home but if she has no income to pay the taxes, trouble.
sharemywin 13y ago
The jump from 15% to 20% for capital gains should have some effect on that.
- throwaway812 13y ago
  How? They still have gobs of principal lying around making gains. Unless you mean it will help enable more progressive taxation and income redistribution via the federal government?
elsewhen 13y ago
"The 0.1 percent isn't the same group of people every year. " This makes it sound like some if not many members of this group are one-time members who have huge capital gains that calendar year; many of those could be entrepreneurs who sold their company or those that had a huge gain in some investment.
- imgabe 13y ago
  I think that makes sense. They're using the IRS list of the 400 richest tax returns. I think when you're making money at that level you can hire enough tax attorneys and accountants to make sure your actual taxable income is not among the 400 highest in the country unless you have some major event like selling a company. It would make sense then that there's a lot of turnover in that metric.
  - 001sky 13y ago
    As a point of math, that's the top 0.0001% (Or, as a percentage of the workforce: 0.0005%)
- vannevar 13y ago
  The 'churn' mentioned in the article is somewhat illusory, due by the use of a sliding scale. If you used a fixed threshold and identified those above that threshold, I think you'd see a much more stable picture at the top. The names at the peak may change, but that doesn't mean that the previous top wealth holders lost any, only that others gained faster.
DanHulton 13y ago
This isn't honestly terribly surprising. When the sky started falling, plenty of folks were happy to mention that bad times are only bad for people who can't afford to take advantage of them. When stocks are crashing? That just means they become cheaper to pick up for the very rich, who get even richer when the economy straightens out again. Meanwhile, everyone who had to dump their investments to survive has to start over with less. It shouldn't be hard to recognize that there's something terribly wrong going on here, but the tough part is trying to figure out just what to do to fix it. Hell if I know.
holograham 13y ago
this isnt new news. This has been brought up before. They question really should be "is this bad?" I have yet to see a compelling argument on why income disparity is bad. Unless you are stealing, scamming, or otherwise breaking the law to obtain enormous wealth then you deserve it. You are providing a good or service to the economy and are rewarded appropriately. If someone else can do it better than they reap the reward. Competition ensures that only the best deliverers of value are making the money. I am sure someone will cite some bankers <insert other regulated market here> raking in money with barriers to entry that are artificial...but that 99.99% of the time means that they lobbied the US Govt for regulations which protect them.
- mr_spothawk 13y ago
  > Unless you are stealing, scamming, or otherwise breaking the law to obtain enormous wealth then you deserve it. Yes. > Competition ensures that only the best deliverers of value are making the money. I'm not convinced that "competition" is occurring at that level. At least, not in any way comparable to the '2 entities competing in the market' sense. PS: I like money, a lot. And I have no problems with other people having a lot more of it than I do.
  - collyw 13y ago
    I personally believe (and studies have backed this up) that a more equal society is better for everyone. So I have a problem when people earn money excessively (I'll leave the definition of that until I have had time to think about it. in some cases it is obvious).
  - holograham 13y ago
    You are taking that second quote out of context. My next statement is agreeing that there are industries (like banking) that have a very obvious lack of competition. My next point was that lack of competition is enabled by government and not the free market.
- Fomite 13y ago
  Historically, income disparity has resulted in a decided lack of stability in the societies where it is present, with unpleasant consequences for all involved.
for_i_in_range 13y ago
It still bothers me they call it "Income Inequality".
bmmayer1 13y ago
"Income Inequality" is a complete misnomer in this case because even according to this article, the wealth gains are made from investment income ("And it's this investment income, rather than ordinary earned income, that's creating this extraordinary wealth gap"). Increased investment income is a good thing because it points to investment income for everyone else, too: your grandma's pension, your 401(k), your stock portfolio. This is just evidence of the pie getting bigger, not a small handful of robber barons running off with everyone's money, as this amusing "1%-er" talking point is always presented to be.
- pr0zac 13y ago
  Asking because I don't understand the thought process involved in these posts. Are you purposely choosing to ignore things like the first graph that shows more than 60% (almost 80%) of people having a net negative change in income over the last 30 years or just not understanding what that graph means?
rebelde 13y ago
I wonder how many of the products and services of the top 0.01% he used in creating that article. My bet: he used MS Word on a Mac, using Google at the very least. His next article could be about how the products of the 0.01% people have enhanced his life.
- jiggy2011 13y ago
  The article is about household incomes, not corporations.
  - nilkn 13y ago
    Not that I agree with his point, but corporations are run and owned by people who often derive immense incomes from the endeavor. These people are disproportionately represented in the 1%.
  - rebelde 13y ago
    I see that I'm getting down-voted. Sorry. I thought there was a link between those corporations and some people in the 0.01%.
- deleted 13y ago
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- jimmytidey 13y ago
  It doesn't immediately follow from the fact that 0.01% people have made fantastic contributions that they should have disproportionately so much more money than the average person. It seems intuitive (but not logically certain) that the person who has made the greatest contribution to the world should be the richest. But by how much isn't really clear. What would happen if Bill Gates was the richest man in the world and had $50m, instead of billions. All the incentives scale. I don't think he'd have said 'screw this, I'm not making Word for less than $2 bn'. Sure, inequality is a fair way to reward hard work and brilliance, but what level? Looking at it another way, sure Bill Gates is a fantastically insightful and driven guy with great business acumen. Is he 100,000 times better than the average person though? Because he's earned 100,000 more than the average American. Warren Buffett makes the point that if he was born in Bangladesh he would probably be as poor as he was when he was born. Circumstances matter. I realize you don't say it explicitly, but the implication of what your comment is that they is some kind of cosmic justice that made Larry Page or Steve Jobs billionaires. There isn't. The right level of remuneration is a moral question, not a feature of the natural order. If you really think these people deserve these huge concentrations of wealth, why not more? How amazing could Windows have been if we'd just paid Bill Gates another $50 billion?
thanatropism 13y ago
Meh. Two things would be problematic: 1) The composition of the 1%, 0.1%, 0.01%, etc. never changes -- not in generations. I.e. there's an entrenched aristocracy. 2) Topocracy: people are making money for their social connections rather than for their personal merits. Nature had an article on this. http://www.nature.com/srep/2014/140121/srep03784/full/srep03784.html http://www.nature.com/srep/2014/140121/srep03784/full/srep03... If not [(1) and (2)], then all is well. (It isn't, of course)
- chime 13y ago
  > 1) The composition of the 1%, 0.1%, 0.01%, etc. never changes -- not in generations. I.e. there's an entrenched aristocracy. Leave 1% out of this. Any couple making 150k each fits in that. That means anyone with a college degree, 15-20 years of experience, and senior managerial position. Also included in this are doctors, lawyers, and engineers. There is a lot to be said about mobility and meritocracy but I don't think you get to be a senior engineer or doctor solely because your parents were.
  - gbhn 13y ago
    > I don't think you get to be a senior engineer or doctor solely because your parents were. True enough. But yet... I'm a senior engineer. My parents were in the medical profession. I had a lot of help going to school (not all paid for, but I graduated without significant debt). I was encouraged in my study and shielded from a lot of disruptive factors by a stable home life, which in turn is related to the stable financial situation my parents had. I'm not disavowing responsibility -- I worked hard! But I'm also conscious that that happened in an environment that was specifically and consciously tuned (thanks, Mom and Dad!) to enable me to do it.
  - deleted 13y ago
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- the_watcher 13y ago
  As long as gains in total wealth (and thus absolute wealth gains for all parts of society) occur as they always have (ie a 10% wealth increase at all levels of wealth), income inequality will always have a strong tendency to rise. The important question is whether it is better to focus on absolute rise in wealth (Is the bottom 20% of the world today in better shape than 100 years ago, if only because that bottom 20% would likely not have survived then?) or on income inequality (is the absolute wealth gain of the bottom 20% irrelevant if there is now a greater distance between them and the top 20%?). I lean towards the former, but have never been absolutely convinced to the point of becoming dogmatic. I really haven't seen anything substantially convincing about the latter, though.
oskarth 13y ago
What about the 1% of the 0.01%? Is there any reliable data on that? Who's to say the same thing isn't happening there?
- stackcollision 13y ago
  At first I thought you were joking, but then I realized that's actually a really good question. It'd be interesting to see a breakdown that took the top 1% of successively smaller chunks until we see just how small we can get until the chart starts to flatten out. But then again, maybe the author has already done that and just didn't feel it was important to mention. Maybe 0.01% is the point at which the disparity stops being so gigantic. E.g. the difference between the 0.001% and the 0.01% is not nearly as stark as the difference between the 0.01% and the 0.1% like we see on that second chart.
  - danielharan 13y ago
    Wealth distribution follows a power law, so I'd expect the difference to be even more pronounced. The same with income as well.
  - sp332 13y ago
    Why would there be a few people at the top who all make similar amounts of money? I don't think that's plausible.
stygiansonic 13y ago
One of the graphs displayed[1] really should have a logarithmic y-axis, especially since it's evidently being used to demonstrate relative growth. 1. http://cdn.theatlantic.com/newsroom/img/posts/Screen%20Shot%202014-03-29%20at%209.23.25%20PM.png http://cdn.theatlantic.com/newsroom/img/posts/Screen%20Shot%...
paul_f 13y ago
This sounds like a typical power law distribution. Nothing really unusual or unexpected about that.
- cowsandmilk 13y ago
  the time series shows that the distribution has changed over time. It is this change in distribution that people are opposed to.
  - lotharbot 13y ago
    A lot of people are opposed to there being a distribution more extreme than their emotions tell them is reasonable. Consider what most Americans say the "ideal" level of wealth inequality would be: http://danariely.com/2010/09/30/wealth-inequality/ http://danariely.com/2010/09/30/wealth-inequality/ and http://www.slate.com/articles/news_and_politics/politics/2010/09/theoretical_egalitarians.html http://www.slate.com/articles/news_and_politics/politics/201... Now consider how much wealth inequality there would be in an excessively fair society: http://www.daemonology.net/blog/2011-01-10-inequality-in-equalland.html http://www.daemonology.net/blog/2011-01-10-inequality-in-equ... Clearly, people are determining their "ideal" without doing the math. This makes it hard to take their opposition to "this change in distribution" seriously as well.
  - jsun 13y ago
    What this really shows is an increase in the frequency of 1-time events such as IPOs or sales. There is no value, one way or the other, in using cross-sectional data (this article) to describe longitudinal shifts (the rich get richer). It's just irrelevant.
- sp332 13y ago
  It's not a power law. The problem here is that the top fraction are the only ones increasing their wealth. Everyone else is stuck.
briantakita 13y ago
I just read this eyeopening little novel (http://marshallbrain.com/manna1.htm http://marshallbrain.com/manna1.htm). The premise is America evolving technology + wealth/income inequality vs another state evolving technology + all citizens have "shares" (thus ownership) & relative wealth equality.
- JimboOmega 13y ago
  I keep seeing this "meme" - the "Star Trek Eutopia" vs. the massive inequality ("Elysium" being the usual fictional example). What's interesting is that this argument ignores the "apocalyptic" scenarios I see in other contexts. They typically revolve around increasing scarcity, societal collapse due to depleted resources, etc. They overlap only in one place; I've seen one "apocalyptic' one that argued the stratification of society means that collapse will occur because the rich/powerful are isolated from feeling the effects of the scarcity until it's too late. But regardless; we can't have both - one where the earth's resources are depleted, and another where the bounty is so great everyone can enjoy a middle class standard of living, often without economically useful employment.
  - briantakita 13y ago
    Great idea. I wonder if we could commission such a book...
cpwright 13y ago
The article starts out saying that this group (the top .01%) has income that is flying away from everyone else. As with most of these articles decrying the income distribution, there is the implication that there is something nefarious about this. At the end of the article, however, we learn that there is a lot of churn in the .01% from year to year, which indicates that some people are making a lot of money, but they aren't always the same people. I doubt that most years they are hurting terribly, but it is still a very different picture than the same people earning that much money year after year.
- adamc 13y ago
  I'd like to know what percentage of the top 1% ever gets into the top 0.01%.
- vannevar 13y ago
  I doubt that most years they are hurting terribly... They wouldn't have to 'hurt' at all, in fact they could experience personal records for income every year, year after year, and still drop out of the top 400 (or top .01%), since it's a sliding scale.
jfasi 13y ago
Whenever I read an article about income inequality, I can't help but ponder the phrase "the rich get richer." Consider the process by which people acquire extreme wealth: invest your money in various vehicles, hopefully collect gains (money, prestige, experience), reinvest the gains. This process doesn't by any means guarantee wealth, but it can be very kind to those blessed with good judgement, good fortune, and initial excess capital. In a discussion of income inequality, the most relevant factor is excess capital. For those on the bottom of the ladder, whose money goes toward basic expenses, this potentially virtuous cycle is completely out of reach. Their money is best spent on purchasing stability rather than attempting to secure wealth. For those in the middle nurturing already-comfortable lives, the upside of shooting the moon in an attempt to gain wealth is often outweighed by the risk of sustaining financially disruptive losses, as well as the discomfort inherent in turning away from a lifestyle that pleases them. [1] Then there are the wealthy. I'm not talking about the faux-wealthy whose lifestyle preferences drive them to buy Maseratis and condos on credit and spending the rest of their lives wearing golden handcuffs. I'm talking about those who have money left over after they've secured themselves a comfortable lifestyle. They have excess capital. Ten thousand dollars can go into the stock market, a hundred thousand dollars can go into a small business, a million dollars can go into a more sizable business, ten million can go into multiple sizable businesses, etc. The opportunities for growth scale with the size of your disposable income. If you take this view, it suddenly becomes stupidly obvious why the one percent of the one percent makes so much more than the ninety-nine percent of the one percent: they had more to begin with. I'm all but certain if you zoom in on the the one percent of the one percent of the one percent, you'll see a similar disparity. Unrelated corollary: This also helps to explain both why traditional entrepreneurs are older, and why tech entrepreneurs tend to be younger: non-tech leaders spend their lives amassing wealth, techies are so in demand they get a good dose of it when they're young. Although the acquisition appetites of behemoths like Google and Facebook certainly don't hurt. [1] I'm so certain someone will respond to this comment by quoting that one study where happiness flattens around like $75,000 that I won't even bother finding it myself.
- microcolonel 13y ago
  Keep in mind that many people who believe they're hitting the limits of their means simply don't have the personal will(not that it's their fault) to pick up that book which would tell them they could save enough and invest pretty well with some basic knowledge. And typically they wouldn't need to sacrifice quality of life. I know lots of young people here in Canada at least work paycheck-to-paycheck but instead of buying stocks or at least saving, they will spend their unaccounted money on booze and video games(if they have any at all), it wouldn't take much for them to save up a couple thousand bucks and invest in something better for themselves. They just don't want to, or don't know how to make that sort of decision. Then of course there are people who are ACTUALLY poor, that's where my empathy starts. I recently helped a homeless man work the computers at the local library(not that I consider that a significant act in itself), and I know just how hard it is to work with people who are seriously SOL; they're even resistant to help. That said, I don't think being harder on billionaires is going to help people down on their luck, it's only going to serve the egos of those who have no idea what it means to be in either of those positions. EDIT: It seems people misunderstood what I meant by investment. I include in this investing in things like transportation, raw materials, and (if applicable) time off to pursue greater potential, and not just playing markets and buying shares.
symmetricsaurus 13y ago
Lies, damned lies, and statistics! The differing quantities on the y axes of the graphs make them quite misleading. In particular between the first and tend second where the first is a relative increase and the second is in absolute income. This gives the immediate impression that the 0.01% is pulling ahead of the 0.1% at a high rate. Looking instead at the last graph we see that the 0.1% is keeping up kinda OK. This change in quantities also makes it impossible to compare the first and second graph at all. Using graphs is supposed to aid understanding, not impede it.
kingkawn 13y ago
This is missing the point I think of the original distinction between 1% and 99%. The people below the cutoff live in a state of economic vulnerability that is ever-accelerating. The people above the line do not. If the goal was to critique power itself then yes the further divisions are necessary. I have not gotten a sense though that this is about ending inequality itself, but rather in limiting how far one should be allowed to fall in a civilized society, and how responsive a democratically elected government should be to the majority of the population's needs.
microcolonel 13y ago
What a moronic idea, that a thousandth of a population can actually have a statistically significant effect on the entire population. Equally moronic is the assumption that wealth is finite at any given moment, and that it can be evenly distributed, this seems very close to entirely false. Junk journalism is driving unnecessary divisions in the U.S. culture, where it seems people used to have respect for achievers rather than resentment, and they would actually aspire to do better so they could spend that wealth the way they saw fit. Not a day goes by without another story of resentful abuse toward people by mere association with "the 1%"(which we've already discussed to be an absurd idea). For example, there was a story on HN not too long ago about police brutality in the bay area toward people who seemed to local cops like the same kid billionaires they see on TV, as though living where some tech giants came from makes you somebody so terrible they deserve to be locked in solitary for a day after asking basic questions to their captors. How is the U.S. ever going to move forward if they carry nothing but hatred for people who happen to be capable of investing? Whether by personal growth, or by accident of birth, these are the kinds of people they should be seeking sincere help from, rather than trampling on their rights over petty coin. We can all go on the internet and well up all the irrational hatred we want, pick your poison. You can go be a radical feminist on the internet and you'll spend hours building irrational hatred for men. You can go join radical transgender group and spend hours building irrational hatred for the majority of the human population. You can go on the internet and be a radical religious person(not going to bother being specific here) and justify all sorts of horrible atrocities in your mind. But if you personally hate the fairly normal people that occupy these lots in life, regardless of their personal merits, be they "the 1%", or men, or people with heterosexual relationships, or people who don't agree with your religious views, then you're a monster. You're not even self-serving, you're destructive to everyone including yourself.
- saraid216 13y ago
  > What a moronic idea, that a thousandth of a population can actually have a statistically significant effect on the entire population. So, monarchy never happened?
- JamisonM 13y ago
  I read the first sentence above and was pretty sure this was a sarcastic comment but by the time I got to the end I was saddened to realize it was serious. The perception that a major problem with current American society is "resentful abuse" towards the wealthy is strange because from a historical perspective to me it seems like this is the time the wealthy have been treated with the most reverence.
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- berkay 13y ago
  I'm afraid you've missed the point. Based on the data 1% is NOT "offenders" as you put it. That iss what's interesting. Take another look at the last graph. The share of wealth for the 1% except the 0.1% has NOT changed in the last 50 years (~11%). Yet during same time period share of wealth for the 0.1% has quadrupled.
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downandout 13y ago
In general, each dollar one has makes it easier to obtain the next dollar. That's what this chart shows - wealth accumulation accelerates as wealth grows. The rich aren't necessarily doing anything wrong to achieve that effect - it's just how a capitalist system works. If society finds this type of inequality to be objectionable, then it is society's responsibility to implement laws and policies that encourage those holding the money to reinvest it in a way that gives others access to that capital.
- film42 13y ago
  Exactly. When you have more capital, you have more opportunities to invest. I remember a good friend of mine who's quite wealthy was talking to my brother-in-law and I at lunch. My brother-in-law had recently closed on a house he was intending to flip. My friend then said to my brother-in-law, "Next time you see an offer like that come through, call me. I can get you that money within 24 hours." Somewhat stunned at with my friend's offer, I then realized that the more capital you have, the more investments routes you have to your disposal.
forgottenpaswrd 13y ago
I wouldn't call it "investment money". Have you seen the graphs going down(tech bubble burst 2001 and 2008). I will call it "Money press printing money", or "let's save those that make poor decisions in the past so they don't bankrupt" money, "let's give this people free public money at 0% interest rates so they can lend to the public at high interest rates" money. "privatizing the profit, making public the loses" money. Those people had basically sh#t as assets, but the central banks bought their sh#t with good money so they do not collapse the economy. The bailouts mean the public is underwater now and revolutions are coming all around the planet. The problems are not solved, those that make bad investments have been rewarded taking money from those that create wealth. But everything has a limit, Japan is paying 56% of their taxes in debt payment and growing. China bubble is bursting soon.
Eleutheria 13y ago
Innocence. When people in the 1% prints a trillion dollars a year and hand it over to his cronies, it has nothing to do with working hard and having accumulated capital to invest and grow wealthy. It has to do with theft, in a grand scale.
spo81rty 13y ago
So the 0.01% would be something like only 30,000 people or families.
FD3SA 13y ago
I'm actually really looking forward to the day that technical people become more financially literate. There's a reason why Elon Musk is such an unstoppable force in the business world. Technical people have such a deep love of science and tech that they sometimes forget about the economic and political realities of modern western societies: capital rules all. Understanding and managing time and capital is the most important task any individual is faced with in the western world. As I've said many times, every single person reading HN most likely undervalues their time, and ends up severely miscalculating their opportunity costs as a result. The nature of capitalism is such that taking risk is the only path forward, regardless of how many failures it results in. As the commenters above have noted, very few become billionaires by working 9 to 5 for someone else. Work for yourself, and with equals (as co-founders). Never work as an employee. If you need to contract your services out, do it as a consultant on a milestone or hourly basis. Take absolute control of your time. No overtime, no crunch time, no favors. Understand the system we operate in, and optimize for it. Don't be sucked in by stupid hype, marketing, "culture", free pop, ping pong tables, personality cults, or any such nonsense. Your time is worth just as much as the CEO's. I'm hoping that once the tech world wakes up to this reality, we'll start exerting far more influence over big corps, big finance, and big government. This is the only way we can really change the world for the better. Not by being employees to big corps, but by running the show. The Hacker mentality espouses efficiency and ingenuity. It's nigh time we applied this to our lives. It's not enough for me to do it on my own, everyone here needs to do this so that we can collectively exert influence to enact real change. P.S. I know it may be hard to herd cats, but I've seen the community here rally around many great ideas. I want gigabit fiber everywhere, renewable energy cities, preventive genetic medicine for all, and colonies on Mars. Why haven't these happened? Because the people in charge have no vision, and are caught by the institutional quagmire of a country established 300 years ago. Just because this is the way it is, doesn't mean that it will always have to be this way.
- pilom 13y ago
  > I've seen the community here rally around many great ideas. I want gigabit fiber everywhere, renewable energy cities, preventive genetic medicine for all, and colonies on Mars. Why haven't these happened? Because the people in charge have no vision, and are caught by the institutional quagmire of a country established 300 years ago. I would argue that those things haven't happened because no one (including us technical people) have developed business models for those activities.

103 points by ghouse 13y ago

TL:DR; The richest rich are much richer than the least rich rich, and becoming richer still. I'm kind of struggling to find the personal relevance of a story reporting churn within the top 1%.

jerf 13y ago
Because of the rhetoric being used in the political arena. If "the 1%" almost entirely changes every year, well... what's the problem with that? You're always going to have a top 1%. Don't we want it to have a significant amount of turnover? Indeed, these numbers sound perhaps a bit low, if anything (is it really that unstable up there? That's not obviously good to me.). If it's not the same people all the time, it's not obviously useful to be talking about them as a distinct group. Maybe it is useful. But it's something that goes from almost self-evident, to badly in need of being established. On the other hand, the idea that a small handful of people have concentrated such vast wealth that they've disenfranchised the rest of us, a handful that is a great deal less than "the 1%", is actually a wildly more potent political story. Even this here libertarian type might be open to some significant actions taken to ensure that such concentrations of wealth are ameliorated, as a key part of my personal libertarianism is that monopoly busting is a key useful function of government, and I'd consider this to fit in, if it is true. It's still something that needs establishing, though, not mere assertion. One has a hard time not imagining the .001% cackling with glee as the press focuses on "the 1%"; it still leaves them lost in crowd of millions, hardly singling them out for any treatment, while the 1% itself is peopled with a significant number of people who apparently worked their way up the ladder, however briefly that may have been. That doesn't sound like a good set of people to target, if there's no actual "institution" there. And now, let me reiterate my first sentence; this is because of the political rhetoric being used. If it wasn't for that, this would be a relatively uninteresting question. But if it's going to become essentially part of the platform of one of the major parties, it's worth examining for truth value.
- sigil 13y ago
  The evidence we have so far points to a higher churn rate the closer to the top you are. According to this [1], the top 1% had a churn rate of > 50% over a decade, while the top .01% had a churn rate of > 75% over the same period. The "Fortunate 400" mentioned by the article is something like the top .0001%, and had a churn rate of 99% over two decades. I'd love to see deeper analysis though. What does the churn rate look like as a function of top percentile size? Do the choice of endpoint years matter significantly? Also, as you ask, what might be the optimal churn rate economically? [1] http://www.treasury.gov/resource-center/tax-policy/Documents/Income-Mobility-1996to2005-12-07-revised-3-08.pdf http://www.treasury.gov/resource-center/tax-policy/Documents...
  - adamc 13y ago
    What percentage of the 1% ever "churn" into the 0.01% at all? Churn makes it sound like it might be random, but I don't think that is demonstrated.
    - sigil 13y ago
      If the 1% don't churn into the 0.01% when it loses 75% of its members, then where do the replacements come from? I agree though, longitudinal studies are the most interesting.
  - jerf 13y ago
    I agree, I would love to see more detailed analysis, as well as a fresh, open-minded investigation into the question of what optimal is without very, very large assumptions being made casually. (Perhaps such things exist. Links welcomed.) Step one is always always always identify the problem. As I said, I'm open to the idea that there is something that should be done here, but it is absolutely vital that we first identify the problem carefully, before we start throwing around solutions to non-problems. This is... or at least SHOULD be... a non-ideological statement. We will all most assuredly disagree about what optimal should be, and what actions we should take, but we should all be arguing from the same basis of facts, and this sort of discussion strongly suggests we are not in the possession of the facts we thought we collectively were (and/or that we were told we were, and/or that we collectively just assumed without examining... I know I didn't ask these questions personally, so this is not intended as an attack on anyone else). This is not something to be glossed over casually on the way to espousing the same ideas we would have anyhow... it's a big problem that should be solved first.

AndrewKemendo 13y ago

Where is all this leading? Is someone leading some kind of action to change this or are we just gazing at the issue making ourselves all feel terrible? Is it worth changing? It seems like this situation is pretty historically standard anyway yet there is progress on all counts.

jedberg 13y ago

I've been thinking about this for a while. Last I checked, to be in the top 1% in the US you had to have about $250K of annual income. In the Bay Area, pretty much anyone who holds the title of Director or VP (and even Senior Manager at some places) at any sizable tech company makes that much, if not a lot more. So if you work at one of those companies, you might think your Director is doing well, but you probably don't think of them as insanely wealthy.

sokoloff 13y ago
Because they probably aren't insanely wealthy. They just have a high income, and probably have high expenses as well. Insanely wealthy, to me, is the condition of having assets that throw off net income that puts you into the top 1% of income before you've worked 200 hours in a year. (You might have to work a bit to oversee and manage the assets, but it shouldn't represent anything like a work-a-day job.)
- JackFr 13y ago
  The big problem with the article is that the author conflates wealth and income, and switches back and forth willy-nilly, so as to render all of his claims -- without further clarification -- meaningless.
nilkn 13y ago
It's apparently fairly hard to find up to date information on this, but your $250k figure is definitely too low; it might have been accurate 6-7 years ago. Everything I can find cites a number which is at least $350k and sometimes over $500k (http://economix.blogs.nytimes.com/2011/10/10/about-that-99-percent/ http://economix.blogs.nytimes.com/2011/10/10/about-that-99-p...). These numbers, of course, are the bare minimum for inclusion in this category. By definition, nearly everybody in the 1% makes more than this.
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massysett 13y ago
That's because this article, like many others, idiotically conflates "income" (money received as payments) and "wealth" (things of value in storage). Income is typically liquid; wealth, often not so much. Your Bay Area director might have high income but relatively little wealth. Gates and Buffet probably get substantial dividend income but it's their wealth that's so staggering. Grandma might have lots of wealth in her home but if she has no income to pay the taxes, trouble.

sharemywin 13y ago

The jump from 15% to 20% for capital gains should have some effect on that.

throwaway812 13y ago
How? They still have gobs of principal lying around making gains. Unless you mean it will help enable more progressive taxation and income redistribution via the federal government?

elsewhen 13y ago

"The 0.1 percent isn't the same group of people every year. " This makes it sound like some if not many members of this group are one-time members who have huge capital gains that calendar year; many of those could be entrepreneurs who sold their company or those that had a huge gain in some investment.

imgabe 13y ago
I think that makes sense. They're using the IRS list of the 400 richest tax returns. I think when you're making money at that level you can hire enough tax attorneys and accountants to make sure your actual taxable income is not among the 400 highest in the country unless you have some major event like selling a company. It would make sense then that there's a lot of turnover in that metric.
- 001sky 13y ago
  As a point of math, that's the top 0.0001% (Or, as a percentage of the workforce: 0.0005%)
vannevar 13y ago
The 'churn' mentioned in the article is somewhat illusory, due by the use of a sliding scale. If you used a fixed threshold and identified those above that threshold, I think you'd see a much more stable picture at the top. The names at the peak may change, but that doesn't mean that the previous top wealth holders lost any, only that others gained faster.

DanHulton 13y ago

This isn't honestly terribly surprising. When the sky started falling, plenty of folks were happy to mention that bad times are only bad for people who can't afford to take advantage of them. When stocks are crashing? That just means they become cheaper to pick up for the very rich, who get even richer when the economy straightens out again. Meanwhile, everyone who had to dump their investments to survive has to start over with less. It shouldn't be hard to recognize that there's something terribly wrong going on here, but the tough part is trying to figure out just what to do to fix it. Hell if I know.

holograham 13y ago

this isnt new news. This has been brought up before. They question really should be "is this bad?" I have yet to see a compelling argument on why income disparity is bad. Unless you are stealing, scamming, or otherwise breaking the law to obtain enormous wealth then you deserve it. You are providing a good or service to the economy and are rewarded appropriately. If someone else can do it better than they reap the reward. Competition ensures that only the best deliverers of value are making the money. I am sure someone will cite some bankers <insert other regulated market here> raking in money with barriers to entry that are artificial...but that 99.99% of the time means that they lobbied the US Govt for regulations which protect them.

mr_spothawk 13y ago
> Unless you are stealing, scamming, or otherwise breaking the law to obtain enormous wealth then you deserve it. Yes. > Competition ensures that only the best deliverers of value are making the money. I'm not convinced that "competition" is occurring at that level. At least, not in any way comparable to the '2 entities competing in the market' sense. PS: I like money, a lot. And I have no problems with other people having a lot more of it than I do.
- collyw 13y ago
  I personally believe (and studies have backed this up) that a more equal society is better for everyone. So I have a problem when people earn money excessively (I'll leave the definition of that until I have had time to think about it. in some cases it is obvious).
- holograham 13y ago
  You are taking that second quote out of context. My next statement is agreeing that there are industries (like banking) that have a very obvious lack of competition. My next point was that lack of competition is enabled by government and not the free market.
Fomite 13y ago
Historically, income disparity has resulted in a decided lack of stability in the societies where it is present, with unpleasant consequences for all involved.

for_i_in_range 13y ago

It still bothers me they call it "Income Inequality".

bmmayer1 13y ago

"Income Inequality" is a complete misnomer in this case because even according to this article, the wealth gains are made from investment income ("And it's this investment income, rather than ordinary earned income, that's creating this extraordinary wealth gap"). Increased investment income is a good thing because it points to investment income for everyone else, too: your grandma's pension, your 401(k), your stock portfolio. This is just evidence of the pie getting bigger, not a small handful of robber barons running off with everyone's money, as this amusing "1%-er" talking point is always presented to be.

pr0zac 13y ago
Asking because I don't understand the thought process involved in these posts. Are you purposely choosing to ignore things like the first graph that shows more than 60% (almost 80%) of people having a net negative change in income over the last 30 years or just not understanding what that graph means?

rebelde 13y ago

I wonder how many of the products and services of the top 0.01% he used in creating that article. My bet: he used MS Word on a Mac, using Google at the very least. His next article could be about how the products of the 0.01% people have enhanced his life.

jiggy2011 13y ago
The article is about household incomes, not corporations.
- nilkn 13y ago
  Not that I agree with his point, but corporations are run and owned by people who often derive immense incomes from the endeavor. These people are disproportionately represented in the 1%.
- rebelde 13y ago
  I see that I'm getting down-voted. Sorry. I thought there was a link between those corporations and some people in the 0.01%.
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jimmytidey 13y ago
It doesn't immediately follow from the fact that 0.01% people have made fantastic contributions that they should have disproportionately so much more money than the average person. It seems intuitive (but not logically certain) that the person who has made the greatest contribution to the world should be the richest. But by how much isn't really clear. What would happen if Bill Gates was the richest man in the world and had $50m, instead of billions. All the incentives scale. I don't think he'd have said 'screw this, I'm not making Word for less than $2 bn'. Sure, inequality is a fair way to reward hard work and brilliance, but what level? Looking at it another way, sure Bill Gates is a fantastically insightful and driven guy with great business acumen. Is he 100,000 times better than the average person though? Because he's earned 100,000 more than the average American. Warren Buffett makes the point that if he was born in Bangladesh he would probably be as poor as he was when he was born. Circumstances matter. I realize you don't say it explicitly, but the implication of what your comment is that they is some kind of cosmic justice that made Larry Page or Steve Jobs billionaires. There isn't. The right level of remuneration is a moral question, not a feature of the natural order. If you really think these people deserve these huge concentrations of wealth, why not more? How amazing could Windows have been if we'd just paid Bill Gates another $50 billion?

thanatropism 13y ago

Meh. Two things would be problematic: 1) The composition of the 1%, 0.1%, 0.01%, etc. never changes -- not in generations. I.e. there's an entrenched aristocracy. 2) Topocracy: people are making money for their social connections rather than for their personal merits. Nature had an article on this. http://www.nature.com/srep/2014/140121/srep03784/full/srep03784.html http://www.nature.com/srep/2014/140121/srep03784/full/srep03... If not [(1) and (2)], then all is well. (It isn't, of course)

chime 13y ago
> 1) The composition of the 1%, 0.1%, 0.01%, etc. never changes -- not in generations. I.e. there's an entrenched aristocracy. Leave 1% out of this. Any couple making 150k each fits in that. That means anyone with a college degree, 15-20 years of experience, and senior managerial position. Also included in this are doctors, lawyers, and engineers. There is a lot to be said about mobility and meritocracy but I don't think you get to be a senior engineer or doctor solely because your parents were.
- gbhn 13y ago
  > I don't think you get to be a senior engineer or doctor solely because your parents were. True enough. But yet... I'm a senior engineer. My parents were in the medical profession. I had a lot of help going to school (not all paid for, but I graduated without significant debt). I was encouraged in my study and shielded from a lot of disruptive factors by a stable home life, which in turn is related to the stable financial situation my parents had. I'm not disavowing responsibility -- I worked hard! But I'm also conscious that that happened in an environment that was specifically and consciously tuned (thanks, Mom and Dad!) to enable me to do it.
- deleted 13y ago
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the_watcher 13y ago
As long as gains in total wealth (and thus absolute wealth gains for all parts of society) occur as they always have (ie a 10% wealth increase at all levels of wealth), income inequality will always have a strong tendency to rise. The important question is whether it is better to focus on absolute rise in wealth (Is the bottom 20% of the world today in better shape than 100 years ago, if only because that bottom 20% would likely not have survived then?) or on income inequality (is the absolute wealth gain of the bottom 20% irrelevant if there is now a greater distance between them and the top 20%?). I lean towards the former, but have never been absolutely convinced to the point of becoming dogmatic. I really haven't seen anything substantially convincing about the latter, though.

oskarth 13y ago

What about the 1% of the 0.01%? Is there any reliable data on that? Who's to say the same thing isn't happening there?

stackcollision 13y ago
At first I thought you were joking, but then I realized that's actually a really good question. It'd be interesting to see a breakdown that took the top 1% of successively smaller chunks until we see just how small we can get until the chart starts to flatten out. But then again, maybe the author has already done that and just didn't feel it was important to mention. Maybe 0.01% is the point at which the disparity stops being so gigantic. E.g. the difference between the 0.001% and the 0.01% is not nearly as stark as the difference between the 0.01% and the 0.1% like we see on that second chart.
- danielharan 13y ago
  Wealth distribution follows a power law, so I'd expect the difference to be even more pronounced. The same with income as well.
- sp332 13y ago
  Why would there be a few people at the top who all make similar amounts of money? I don't think that's plausible.

stygiansonic 13y ago

One of the graphs displayed[1] really should have a logarithmic y-axis, especially since it's evidently being used to demonstrate relative growth. 1. http://cdn.theatlantic.com/newsroom/img/posts/Screen%20Shot%202014-03-29%20at%209.23.25%20PM.png http://cdn.theatlantic.com/newsroom/img/posts/Screen%20Shot%...

paul_f 13y ago

This sounds like a typical power law distribution. Nothing really unusual or unexpected about that.

cowsandmilk 13y ago
the time series shows that the distribution has changed over time. It is this change in distribution that people are opposed to.
- lotharbot 13y ago
  A lot of people are opposed to there being a distribution more extreme than their emotions tell them is reasonable. Consider what most Americans say the "ideal" level of wealth inequality would be: http://danariely.com/2010/09/30/wealth-inequality/ http://danariely.com/2010/09/30/wealth-inequality/ and http://www.slate.com/articles/news_and_politics/politics/2010/09/theoretical_egalitarians.html http://www.slate.com/articles/news_and_politics/politics/201... Now consider how much wealth inequality there would be in an excessively fair society: http://www.daemonology.net/blog/2011-01-10-inequality-in-equalland.html http://www.daemonology.net/blog/2011-01-10-inequality-in-equ... Clearly, people are determining their "ideal" without doing the math. This makes it hard to take their opposition to "this change in distribution" seriously as well.
- jsun 13y ago
  What this really shows is an increase in the frequency of 1-time events such as IPOs or sales. There is no value, one way or the other, in using cross-sectional data (this article) to describe longitudinal shifts (the rich get richer). It's just irrelevant.
sp332 13y ago
It's not a power law. The problem here is that the top fraction are the only ones increasing their wealth. Everyone else is stuck.

briantakita 13y ago

I just read this eyeopening little novel (http://marshallbrain.com/manna1.htm http://marshallbrain.com/manna1.htm). The premise is America evolving technology + wealth/income inequality vs another state evolving technology + all citizens have "shares" (thus ownership) & relative wealth equality.

JimboOmega 13y ago
I keep seeing this "meme" - the "Star Trek Eutopia" vs. the massive inequality ("Elysium" being the usual fictional example). What's interesting is that this argument ignores the "apocalyptic" scenarios I see in other contexts. They typically revolve around increasing scarcity, societal collapse due to depleted resources, etc. They overlap only in one place; I've seen one "apocalyptic' one that argued the stratification of society means that collapse will occur because the rich/powerful are isolated from feeling the effects of the scarcity until it's too late. But regardless; we can't have both - one where the earth's resources are depleted, and another where the bounty is so great everyone can enjoy a middle class standard of living, often without economically useful employment.
- briantakita 13y ago
  Great idea. I wonder if we could commission such a book...

cpwright 13y ago

The article starts out saying that this group (the top .01%) has income that is flying away from everyone else. As with most of these articles decrying the income distribution, there is the implication that there is something nefarious about this. At the end of the article, however, we learn that there is a lot of churn in the .01% from year to year, which indicates that some people are making a lot of money, but they aren't always the same people. I doubt that most years they are hurting terribly, but it is still a very different picture than the same people earning that much money year after year.

adamc 13y ago
I'd like to know what percentage of the top 1% ever gets into the top 0.01%.
vannevar 13y ago
I doubt that most years they are hurting terribly... They wouldn't have to 'hurt' at all, in fact they could experience personal records for income every year, year after year, and still drop out of the top 400 (or top .01%), since it's a sliding scale.

jfasi 13y ago

Whenever I read an article about income inequality, I can't help but ponder the phrase "the rich get richer." Consider the process by which people acquire extreme wealth: invest your money in various vehicles, hopefully collect gains (money, prestige, experience), reinvest the gains. This process doesn't by any means guarantee wealth, but it can be very kind to those blessed with good judgement, good fortune, and initial excess capital. In a discussion of income inequality, the most relevant factor is excess capital. For those on the bottom of the ladder, whose money goes toward basic expenses, this potentially virtuous cycle is completely out of reach. Their money is best spent on purchasing stability rather than attempting to secure wealth. For those in the middle nurturing already-comfortable lives, the upside of shooting the moon in an attempt to gain wealth is often outweighed by the risk of sustaining financially disruptive losses, as well as the discomfort inherent in turning away from a lifestyle that pleases them. [1] Then there are the wealthy. I'm not talking about the faux-wealthy whose lifestyle preferences drive them to buy Maseratis and condos on credit and spending the rest of their lives wearing golden handcuffs. I'm talking about those who have money left over after they've secured themselves a comfortable lifestyle. They have excess capital. Ten thousand dollars can go into the stock market, a hundred thousand dollars can go into a small business, a million dollars can go into a more sizable business, ten million can go into multiple sizable businesses, etc. The opportunities for growth scale with the size of your disposable income. If you take this view, it suddenly becomes stupidly obvious why the one percent of the one percent makes so much more than the ninety-nine percent of the one percent: they had more to begin with. I'm all but certain if you zoom in on the the one percent of the one percent of the one percent, you'll see a similar disparity. Unrelated corollary: This also helps to explain both why traditional entrepreneurs are older, and why tech entrepreneurs tend to be younger: non-tech leaders spend their lives amassing wealth, techies are so in demand they get a good dose of it when they're young. Although the acquisition appetites of behemoths like Google and Facebook certainly don't hurt. [1] I'm so certain someone will respond to this comment by quoting that one study where happiness flattens around like $75,000 that I won't even bother finding it myself.

microcolonel 13y ago
Keep in mind that many people who believe they're hitting the limits of their means simply don't have the personal will(not that it's their fault) to pick up that book which would tell them they could save enough and invest pretty well with some basic knowledge. And typically they wouldn't need to sacrifice quality of life. I know lots of young people here in Canada at least work paycheck-to-paycheck but instead of buying stocks or at least saving, they will spend their unaccounted money on booze and video games(if they have any at all), it wouldn't take much for them to save up a couple thousand bucks and invest in something better for themselves. They just don't want to, or don't know how to make that sort of decision. Then of course there are people who are ACTUALLY poor, that's where my empathy starts. I recently helped a homeless man work the computers at the local library(not that I consider that a significant act in itself), and I know just how hard it is to work with people who are seriously SOL; they're even resistant to help. That said, I don't think being harder on billionaires is going to help people down on their luck, it's only going to serve the egos of those who have no idea what it means to be in either of those positions. EDIT: It seems people misunderstood what I meant by investment. I include in this investing in things like transportation, raw materials, and (if applicable) time off to pursue greater potential, and not just playing markets and buying shares.

symmetricsaurus 13y ago

Lies, damned lies, and statistics! The differing quantities on the y axes of the graphs make them quite misleading. In particular between the first and tend second where the first is a relative increase and the second is in absolute income. This gives the immediate impression that the 0.01% is pulling ahead of the 0.1% at a high rate. Looking instead at the last graph we see that the 0.1% is keeping up kinda OK. This change in quantities also makes it impossible to compare the first and second graph at all. Using graphs is supposed to aid understanding, not impede it.

kingkawn 13y ago

This is missing the point I think of the original distinction between 1% and 99%. The people below the cutoff live in a state of economic vulnerability that is ever-accelerating. The people above the line do not. If the goal was to critique power itself then yes the further divisions are necessary. I have not gotten a sense though that this is about ending inequality itself, but rather in limiting how far one should be allowed to fall in a civilized society, and how responsive a democratically elected government should be to the majority of the population's needs.

microcolonel 13y ago

What a moronic idea, that a thousandth of a population can actually have a statistically significant effect on the entire population. Equally moronic is the assumption that wealth is finite at any given moment, and that it can be evenly distributed, this seems very close to entirely false. Junk journalism is driving unnecessary divisions in the U.S. culture, where it seems people used to have respect for achievers rather than resentment, and they would actually aspire to do better so they could spend that wealth the way they saw fit. Not a day goes by without another story of resentful abuse toward people by mere association with "the 1%"(which we've already discussed to be an absurd idea). For example, there was a story on HN not too long ago about police brutality in the bay area toward people who seemed to local cops like the same kid billionaires they see on TV, as though living where some tech giants came from makes you somebody so terrible they deserve to be locked in solitary for a day after asking basic questions to their captors. How is the U.S. ever going to move forward if they carry nothing but hatred for people who happen to be capable of investing? Whether by personal growth, or by accident of birth, these are the kinds of people they should be seeking sincere help from, rather than trampling on their rights over petty coin. We can all go on the internet and well up all the irrational hatred we want, pick your poison. You can go be a radical feminist on the internet and you'll spend hours building irrational hatred for men. You can go join radical transgender group and spend hours building irrational hatred for the majority of the human population. You can go on the internet and be a radical religious person(not going to bother being specific here) and justify all sorts of horrible atrocities in your mind. But if you personally hate the fairly normal people that occupy these lots in life, regardless of their personal merits, be they "the 1%", or men, or people with heterosexual relationships, or people who don't agree with your religious views, then you're a monster. You're not even self-serving, you're destructive to everyone including yourself.

saraid216 13y ago
> What a moronic idea, that a thousandth of a population can actually have a statistically significant effect on the entire population. So, monarchy never happened?
JamisonM 13y ago
I read the first sentence above and was pretty sure this was a sarcastic comment but by the time I got to the end I was saddened to realize it was serious. The perception that a major problem with current American society is "resentful abuse" towards the wealthy is strange because from a historical perspective to me it seems like this is the time the wealthy have been treated with the most reverence.

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berkay 13y ago
I'm afraid you've missed the point. Based on the data 1% is NOT "offenders" as you put it. That iss what's interesting. Take another look at the last graph. The share of wealth for the 1% except the 0.1% has NOT changed in the last 50 years (~11%). Yet during same time period share of wealth for the 0.1% has quadrupled.
- deleted 13y ago
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downandout 13y ago

In general, each dollar one has makes it easier to obtain the next dollar. That's what this chart shows - wealth accumulation accelerates as wealth grows. The rich aren't necessarily doing anything wrong to achieve that effect - it's just how a capitalist system works. If society finds this type of inequality to be objectionable, then it is society's responsibility to implement laws and policies that encourage those holding the money to reinvest it in a way that gives others access to that capital.

film42 13y ago
Exactly. When you have more capital, you have more opportunities to invest. I remember a good friend of mine who's quite wealthy was talking to my brother-in-law and I at lunch. My brother-in-law had recently closed on a house he was intending to flip. My friend then said to my brother-in-law, "Next time you see an offer like that come through, call me. I can get you that money within 24 hours." Somewhat stunned at with my friend's offer, I then realized that the more capital you have, the more investments routes you have to your disposal.

forgottenpaswrd 13y ago

I wouldn't call it "investment money". Have you seen the graphs going down(tech bubble burst 2001 and 2008). I will call it "Money press printing money", or "let's save those that make poor decisions in the past so they don't bankrupt" money, "let's give this people free public money at 0% interest rates so they can lend to the public at high interest rates" money. "privatizing the profit, making public the loses" money. Those people had basically sh#t as assets, but the central banks bought their sh#t with good money so they do not collapse the economy. The bailouts mean the public is underwater now and revolutions are coming all around the planet. The problems are not solved, those that make bad investments have been rewarded taking money from those that create wealth. But everything has a limit, Japan is paying 56% of their taxes in debt payment and growing. China bubble is bursting soon.

Eleutheria 13y ago

Innocence. When people in the 1% prints a trillion dollars a year and hand it over to his cronies, it has nothing to do with working hard and having accumulated capital to invest and grow wealthy. It has to do with theft, in a grand scale.

spo81rty 13y ago

So the 0.01% would be something like only 30,000 people or families.

FD3SA 13y ago

I'm actually really looking forward to the day that technical people become more financially literate. There's a reason why Elon Musk is such an unstoppable force in the business world. Technical people have such a deep love of science and tech that they sometimes forget about the economic and political realities of modern western societies: capital rules all. Understanding and managing time and capital is the most important task any individual is faced with in the western world. As I've said many times, every single person reading HN most likely undervalues their time, and ends up severely miscalculating their opportunity costs as a result. The nature of capitalism is such that taking risk is the only path forward, regardless of how many failures it results in. As the commenters above have noted, very few become billionaires by working 9 to 5 for someone else. Work for yourself, and with equals (as co-founders). Never work as an employee. If you need to contract your services out, do it as a consultant on a milestone or hourly basis. Take absolute control of your time. No overtime, no crunch time, no favors. Understand the system we operate in, and optimize for it. Don't be sucked in by stupid hype, marketing, "culture", free pop, ping pong tables, personality cults, or any such nonsense. Your time is worth just as much as the CEO's. I'm hoping that once the tech world wakes up to this reality, we'll start exerting far more influence over big corps, big finance, and big government. This is the only way we can really change the world for the better. Not by being employees to big corps, but by running the show. The Hacker mentality espouses efficiency and ingenuity. It's nigh time we applied this to our lives. It's not enough for me to do it on my own, everyone here needs to do this so that we can collectively exert influence to enact real change. P.S. I know it may be hard to herd cats, but I've seen the community here rally around many great ideas. I want gigabit fiber everywhere, renewable energy cities, preventive genetic medicine for all, and colonies on Mars. Why haven't these happened? Because the people in charge have no vision, and are caught by the institutional quagmire of a country established 300 years ago. Just because this is the way it is, doesn't mean that it will always have to be this way.

pilom 13y ago
> I've seen the community here rally around many great ideas. I want gigabit fiber everywhere, renewable energy cities, preventive genetic medicine for all, and colonies on Mars. Why haven't these happened? Because the people in charge have no vision, and are caught by the institutional quagmire of a country established 300 years ago. I would argue that those things haven't happened because no one (including us technical people) have developed business models for those activities.