5 ms·

After a 30-Year Run, Rise of the Super-Rich Hits a Wall

35 points by peter123 17y ago

bprater 17y ago
$100mm to $4mm? Ouch.
- sharpn 17y ago
  Fair comment, but just how tangible was that $100mm valuation? McAfee anti-virus software appears to have grown primarily through paying for pre-installed trial version placement on new pcs - not through being a 'better product'.
  - dhouston 17y ago
    Article said a couple years after going public he sold his remaining stake, bringing his total gains to $100mm (presumably cash.)
    - dkersten 17y ago
      The he probably invested in banks (AIG?) and property and got recessioned down to $4M. Or something like that, anyway.
      - knightinblue 17y ago
        If you read the article, it says he invested heavily in Lehman Brothers.
ars 17y ago
This is bad for the health care proposal because Obama wants the rich to pay for it. Edit: Downmods for a factually correct statement, without any comments? Wow, healthcare is a seriously political thing. Edit2: And even more downmods. Here's a link showing what I wrote is correct: http://www.necn.com/Boston/Politics/2009/07/22/Obama-Middle-class-will-not/1248309662.html http://www.necn.com/Boston/Politics/2009/07/22/Obama-Middle-...
- timr 17y ago
  They're voting you down, at least in part, because you're personalizing and over-simplifying the debate. Had you said: "This is bad for the current health care proposals that are working their way though congress, because they tend to rely on taxes on upper-income citizens" you would have communicated the same point, and sounded much less like a troll.
  - ars 17y ago
    Is that true though? I know that Obama said it. But I have not heard that said about the proposals. It could be, but I have not heard that, so I can't say it. But, thanks for at least letting me know what was wrong with the tone of my post.
  - anamax 17y ago
    Yes, Obama is a person, but he's a very relevant in this discussion. That relevance means that he rates a mention whether he's a person or a breadbox.
- fallentimes 17y ago
  I don't think people are down voting you on the basis of perceived correctness. Hacker News and politics just don't mix well, thankfully.
- anigbrowl 17y ago
  I think you make a good point, though it seems to me that Congressional Democrats (and their voting base) are more enamored of handing the bill to the wealthy than the White House, which has a good few pragmatic people in it. Sadly, factual statements on political matters often alienate both sides in the debate - without context, they may assume the worst about your motives.
bfung 17y ago
<sarcasm>I bet they reprinted this article and substituted 1999 with 2007.</sarcasm> Comparing a 30 year trend vs. a 2 year trend is a bit short sighted, especially when there were other dips in some previous years when the rich were on the rise.
wglb 17y ago
And another spectacular venture rise and fall: http://www.chicagobusiness.com/cgi-bin/news.pl?id=35025 http://www.chicagobusiness.com/cgi-bin/news.pl?id=35025
pg 17y ago
"As a result, economists and other analysts say, a 30-year period in which the super-rich became both wealthier and more numerous may now be ending." I'm pretty sure it isn't. The increasing power of technology is probably the biggest force driving variation in wealth, and I don't see any signs that technological progress is slowing.
- ewjordan 17y ago
  I'm not sure exactly what new information we're supposed to get from this article: obviously, when the stock market busts, those with the highest exposures to it are going to be hurt more in percentage terms than those with very little exposure. That this has happened does not indicate any systemic change that's likely to alter the overall concentration of wealth. There are potentially some such systemic changes occurring, of course - the middle-millionaire worker bees in the finance industry (particularly the gamblers...oops, I mean traders :) ) are probably going to see a leaner few years ahead. But the more normal pieces of our economy, where wealth is gained via production instead of positioning, are not changing in any fundamental manner. Re: your comment, I just re-read http://www.paulgraham.com/gap.html http://www.paulgraham.com/gap.html, and it brought up a very important point regarding distribution of wealth, one that I'd not considered before. It's a real shame that we don't have any numerical way to measure overall wealth level across time periods, all we can do is measure relative distributions at a single time. Trivially, there's got to be an ideal distribution of resources at a given time that will maximize the expected value of total wealth as we move forward (this is true even if that "total wealth" number is calculated with some penalty for massive inequality). But what I hadn't considered before is that this optimal distribution may change significantly as the baseline rises. The usual assumption, one I've been guilty of in the past, is that a constantly shifting distribution of wealth implies that even if we hit that optimum, we're going to move right past it. But it's quite possible that with the leverage of technology coming into play, the distribution that optimizes overall wealth could continue to concentrate a higher and higher percentage of said wealth in fewer hands, and the "steady state" equilibrium that the physicist in me is desperate to solve for is actually shifting upwards over time. I wonder if there are any existing economic models that explicitly account for this effect (not an economist, so I'm not sure); it would be very nice to have a realistic model to see concretely the means by which an income gap might not be such a bad thing for everyone, and to be able to see the relative effect of controlling that gap via taxes. After all, if the net effect of chopping half the income of the top 0.01% of earners is only to reduce the net economic output by .5%, many people would find this to be a fair tradeoff, since there is some societal utility in equity. But if it's going to reduce overall output by 5% to do such a thing, forget it, we're all going to be worse off in the end.
trader 17y ago
This article is very naive and poorly researched. Obviously there are less people with a net worth of over 30 million now!?!?!? Hmm I wonder why? Obviously mcdonalds workers are not invested in large corporations, so when equities fall rich people get hit, but this doesnt mean the end of rich people. I guess this is why the NYT might be going bankrupt soon itself.
mhb 17y ago
How does this even begin to make sense: Among them is whether harder times for the rich will ultimately benefit the middle class and the poor, given that the huge recent increase in top incomes coincided with slow income growth for almost every other group
- nazgulnarsil 17y ago
  because everyone in the fucking world still believes in zero-sum mercantilism. people are only a couple hundred years behind. maybe in another 50 years the marginal revolution will finally seep into the public conscious. the concept of everyone getting richer or everyone getting poorer is completely alien to most people.

35 points by peter123 17y ago

bprater 17y ago

$100mm to $4mm? Ouch.

sharpn 17y ago
Fair comment, but just how tangible was that $100mm valuation? McAfee anti-virus software appears to have grown primarily through paying for pre-installed trial version placement on new pcs - not through being a 'better product'.
- dhouston 17y ago
  Article said a couple years after going public he sold his remaining stake, bringing his total gains to $100mm (presumably cash.)
  - dkersten 17y ago
    The he probably invested in banks (AIG?) and property and got recessioned down to $4M. Or something like that, anyway.
    - knightinblue 17y ago
      If you read the article, it says he invested heavily in Lehman Brothers.

ars 17y ago

This is bad for the health care proposal because Obama wants the rich to pay for it. Edit: Downmods for a factually correct statement, without any comments? Wow, healthcare is a seriously political thing. Edit2: And even more downmods. Here's a link showing what I wrote is correct: http://www.necn.com/Boston/Politics/2009/07/22/Obama-Middle-class-will-not/1248309662.html http://www.necn.com/Boston/Politics/2009/07/22/Obama-Middle-...

timr 17y ago
They're voting you down, at least in part, because you're personalizing and over-simplifying the debate. Had you said: "This is bad for the current health care proposals that are working their way though congress, because they tend to rely on taxes on upper-income citizens" you would have communicated the same point, and sounded much less like a troll.
- ars 17y ago
  Is that true though? I know that Obama said it. But I have not heard that said about the proposals. It could be, but I have not heard that, so I can't say it. But, thanks for at least letting me know what was wrong with the tone of my post.
- anamax 17y ago
  Yes, Obama is a person, but he's a very relevant in this discussion. That relevance means that he rates a mention whether he's a person or a breadbox.
fallentimes 17y ago
I don't think people are down voting you on the basis of perceived correctness. Hacker News and politics just don't mix well, thankfully.
anigbrowl 17y ago
I think you make a good point, though it seems to me that Congressional Democrats (and their voting base) are more enamored of handing the bill to the wealthy than the White House, which has a good few pragmatic people in it. Sadly, factual statements on political matters often alienate both sides in the debate - without context, they may assume the worst about your motives.

bfung 17y ago

<sarcasm>I bet they reprinted this article and substituted 1999 with 2007.</sarcasm> Comparing a 30 year trend vs. a 2 year trend is a bit short sighted, especially when there were other dips in some previous years when the rich were on the rise.

wglb 17y ago

And another spectacular venture rise and fall: http://www.chicagobusiness.com/cgi-bin/news.pl?id=35025 http://www.chicagobusiness.com/cgi-bin/news.pl?id=35025

pg 17y ago

"As a result, economists and other analysts say, a 30-year period in which the super-rich became both wealthier and more numerous may now be ending." I'm pretty sure it isn't. The increasing power of technology is probably the biggest force driving variation in wealth, and I don't see any signs that technological progress is slowing.

ewjordan 17y ago
I'm not sure exactly what new information we're supposed to get from this article: obviously, when the stock market busts, those with the highest exposures to it are going to be hurt more in percentage terms than those with very little exposure. That this has happened does not indicate any systemic change that's likely to alter the overall concentration of wealth. There are potentially some such systemic changes occurring, of course - the middle-millionaire worker bees in the finance industry (particularly the gamblers...oops, I mean traders :) ) are probably going to see a leaner few years ahead. But the more normal pieces of our economy, where wealth is gained via production instead of positioning, are not changing in any fundamental manner. Re: your comment, I just re-read http://www.paulgraham.com/gap.html http://www.paulgraham.com/gap.html, and it brought up a very important point regarding distribution of wealth, one that I'd not considered before. It's a real shame that we don't have any numerical way to measure overall wealth level across time periods, all we can do is measure relative distributions at a single time. Trivially, there's got to be an ideal distribution of resources at a given time that will maximize the expected value of total wealth as we move forward (this is true even if that "total wealth" number is calculated with some penalty for massive inequality). But what I hadn't considered before is that this optimal distribution may change significantly as the baseline rises. The usual assumption, one I've been guilty of in the past, is that a constantly shifting distribution of wealth implies that even if we hit that optimum, we're going to move right past it. But it's quite possible that with the leverage of technology coming into play, the distribution that optimizes overall wealth could continue to concentrate a higher and higher percentage of said wealth in fewer hands, and the "steady state" equilibrium that the physicist in me is desperate to solve for is actually shifting upwards over time. I wonder if there are any existing economic models that explicitly account for this effect (not an economist, so I'm not sure); it would be very nice to have a realistic model to see concretely the means by which an income gap might not be such a bad thing for everyone, and to be able to see the relative effect of controlling that gap via taxes. After all, if the net effect of chopping half the income of the top 0.01% of earners is only to reduce the net economic output by .5%, many people would find this to be a fair tradeoff, since there is some societal utility in equity. But if it's going to reduce overall output by 5% to do such a thing, forget it, we're all going to be worse off in the end.

trader 17y ago

This article is very naive and poorly researched. Obviously there are less people with a net worth of over 30 million now!?!?!? Hmm I wonder why? Obviously mcdonalds workers are not invested in large corporations, so when equities fall rich people get hit, but this doesnt mean the end of rich people. I guess this is why the NYT might be going bankrupt soon itself.

mhb 17y ago

How does this even begin to make sense: Among them is whether harder times for the rich will ultimately benefit the middle class and the poor, given that the huge recent increase in top incomes coincided with slow income growth for almost every other group

nazgulnarsil 17y ago
because everyone in the fucking world still believes in zero-sum mercantilism. people are only a couple hundred years behind. maybe in another 50 years the marginal revolution will finally seep into the public conscious. the concept of everyone getting richer or everyone getting poorer is completely alien to most people.