4 ms·

Over time this means it all gets funneled into just a few families' pockets, until they own everything... Yes, this is a popular theory, but it doesn't appear

Over time this means it all gets funneled into just a few families' pockets, until they own everything... Yes, this is a popular theory, but it doesn't appear to be happening. To quote Larry Summers: > the Forbes 400 list also provides only limited support for Piketty’s ideas that fortunes are patiently accumulated through reinvestment. When Forbes compared its list of the wealthiest Americans in 1982 and 2012, it found that less than one tenth of the 1982 list was still on the list in 2012, despite the fact that a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. http://www.democracyjournal.org/33/the-inequality-puzzle.php?page=all http://www.democracyjournal.org/33/the-inequality-puzzle.php... For comparison, I'm personally achieving well over 4% returns by trading my own account. Those with the most money can't possibly do the same thing (my strategies won't scale).

peterjancelis 12y ago
Index funds do about 4% real return over time and scale very well. You are right that wealth is more dynamic than most people think but the reason is rather that the most effective way to get really rich is to leverage everything into one company, which is a strategy that hurts you on the way down as much as it can help you on the way up.
yodsanklai 12y ago
> it found that less than one tenth of the 1982 list was still on the list in 2012 It doesn't seem like a good argument. It's not because they're not at the very very top anymore that their fortune hasn't grown a lot.
- yummyfajitas 12y ago
  >a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. This part of the quote, which you snipped, is in fact a good argument that they didn't accumulate much. As I said before, that's far less than I earn from trading.
- zo1 12y ago
  Well, it could simply just mean that others have surpassed them in terms of overall wealth, sure. Not that they lost the wealth.
  - dageshi 12y ago
    Presumably very few people in that list are rich in purely cash or near cash terms. They're rich because they own businesses at the apex of their valuation? As technology changes businesses rise and fall which probably accounts for the turnover in the list.
furyg3 12y ago
The churn in the top .0001% means basically nothing as to how serious wealth accumulation is. It's a horrible indicator. Looking at the world cup results of 1982 (Italy, W. Germany, Poland, France) and 2014 (Germany, Argentina, Netherlands, Brazil), you could assume that there is a healthy amount of churn happening, so there's not really an accumulation of medals happening. Every country has a chance! In reality, there are only 8 winners and maybe 12 who have ever had a chance to win (out of 24 who have ever even made it to the top 4). There are ~196 countries in the world. The wealth distribution of FIFA medals is not good if you haven't already been a winner. http://en.wikipedia.org/wiki/FIFA_World_Cup#Teams_reaching_the_top_four http://en.wikipedia.org/wiki/FIFA_World_Cup#Teams_reaching_t...
- yummyfajitas 12y ago
  I'll give you the same reply I gave to yodsanklai, who made the same (incorrect) response: > a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. Further, your world cup analogy shows how inequality of results is not strong evidence of gboudraias' claim: "Those with the most money can... make the most money. " Owning a 2006 or 2010 world cup does not give you a greater ability to play soccer - the World cup inequality between Germany/Brazil and India/USA is purely meritocratic.
coldtea 12y ago
Well, that "few families' pockets" end up owning everything is not incompatible with WHICH those families are changing over time. Besides, 1982 was a very different time compared to 2012. China wasn't as much of a world player in manufacturing etc yet (and Japan was only beginning to get big). Plus, the whole computing explosion happened since then, throwing off many older established players, and then the Internet one. Lots of old fortunes died in those 30 years. In the last 10-15 years though?

peterjancelis 12y ago

Index funds do about 4% real return over time and scale very well. You are right that wealth is more dynamic than most people think but the reason is rather that the most effective way to get really rich is to leverage everything into one company, which is a strategy that hurts you on the way down as much as it can help you on the way up.

yodsanklai 12y ago

> it found that less than one tenth of the 1982 list was still on the list in 2012 It doesn't seem like a good argument. It's not because they're not at the very very top anymore that their fortune hasn't grown a lot.

yummyfajitas 12y ago
>a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. This part of the quote, which you snipped, is in fact a good argument that they didn't accumulate much. As I said before, that's far less than I earn from trading.
zo1 12y ago
Well, it could simply just mean that others have surpassed them in terms of overall wealth, sure. Not that they lost the wealth.
- dageshi 12y ago
  Presumably very few people in that list are rich in purely cash or near cash terms. They're rich because they own businesses at the apex of their valuation? As technology changes businesses rise and fall which probably accounts for the turnover in the list.

furyg3 12y ago

The churn in the top .0001% means basically nothing as to how serious wealth accumulation is. It's a horrible indicator. Looking at the world cup results of 1982 (Italy, W. Germany, Poland, France) and 2014 (Germany, Argentina, Netherlands, Brazil), you could assume that there is a healthy amount of churn happening, so there's not really an accumulation of medals happening. Every country has a chance! In reality, there are only 8 winners and maybe 12 who have ever had a chance to win (out of 24 who have ever even made it to the top 4). There are ~196 countries in the world. The wealth distribution of FIFA medals is not good if you haven't already been a winner. http://en.wikipedia.org/wiki/FIFA_World_Cup#Teams_reaching_the_top_four http://en.wikipedia.org/wiki/FIFA_World_Cup#Teams_reaching_t...

yummyfajitas 12y ago
I'll give you the same reply I gave to yodsanklai, who made the same (incorrect) response: > a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. Further, your world cup analogy shows how inequality of results is not strong evidence of gboudraias' claim: "Those with the most money can... make the most money. " Owning a 2006 or 2010 world cup does not give you a greater ability to play soccer - the World cup inequality between Germany/Brazil and India/USA is purely meritocratic.

coldtea 12y ago

Well, that "few families' pockets" end up owning everything is not incompatible with WHICH those families are changing over time. Besides, 1982 was a very different time compared to 2012. China wasn't as much of a world player in manufacturing etc yet (and Japan was only beginning to get big). Plus, the whole computing explosion happened since then, throwing off many older established players, and then the Internet one. Lots of old fortunes died in those 30 years. In the last 10-15 years though?