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>I'm not sure I understand your other option. If the government doesn't have control over the flow of wealth, why do you think it will not just increasingly flo

>I'm not sure I understand your other option. If the government doesn't have control over the flow of wealth, why do you think it will not just increasingly flow to those in power? Up until roughly 1903, the US didn't have any personal income taxes. There was a small business tax, and this was it. Gates' own example of old money no longer existing didn't really point to examples such as the Waltons, but to families who have had wealth for hundreds of years due to large estates. He's correct that this wealth no longer exists. My argument would be that it no longer exists because in the 1800s, neither the wealthy nor the labor class were taxed as individuals, r and g roughly equalized and the wealthy didn't maintain their wealth. This phenomenon of extreme inequality started to occur only in the early 1900s, the same time the US first implemented a personal income tax (thus taxing labor more so than wealth, lowering g and raising r).

taeric 12y ago
Seems like a very small amount of evidence to base such a large idea on. You could probably form the same argument against the more modern consumption taxes. Since for many this translates to a sales tax, and not the early excise taxes that are covered under the same category. (Right?) Though, your argument falls more heavily on the mistake Gates seems to have also made. The type of wealth that the book refers to as "old wealth" really refers to a rentier based society. This is somewhat important, because much of what would have been the "old money" in the US was effectively disrupted by massive technology changes. It isn't that the old wealth just disappeared, it was not created in such a way that it sustained itself. This is important, because wealth in the modern US does sustain itself. Quite heavily, even.
- bsbechtel 12y ago
  >Seems like a very small amount of evidence to base such a large idea on. I acknowledge this. Keep in mind though that in economics it is extremely difficult to comprehensively analyze all the data relevant to your stated hypothesis. Gates points out several areas where Piketty's data falls short, and the amount of data Piketty collected and analyzed for his book is considered one of the strongest points of his thesis. >This is important, because wealth in the modern US does sustain itself. Quite heavily, even. Are you talking about Google, Apple, Walmart, etc, or financiers on Wall Street? Or could you expand in general on this? The companies I listed invest heavily in R&D (creating jobs and a better product for the consumer, and sustaining their wealth in the process). Aside from Warren Buffett, I'm under the impression most wealthy individuals in the financial services industry fail to maintain their wealth for the long term, although I don't have any specific examples on hand to support that point. Aside from this, if modern wealth sustains itself through natural processes, then great! We should be looking for ways to make other people just as wealthy, not figuring out ways to tear down those who have been successful.
  - taeric 12y ago
    I think some of Gates criticisms fall in the arm chair category of criticisms on this, honestly. (And to be fair, I know mine do.) I have no desire to silence any of them, and I am excited about seeing them debated. But, I am fairly skeptical about how good they are. I am genuinely interested in any discussions on this. Though, I will probably duck out of it soon, as it is beyond me. Please keep it going. Regarding the investments, I am really talking about individual investors more than the companies. Find me someone with a couple hundred k in investments, and I posit you have found someone that will remain wealthy for some time. Probably long enough to pass it on to their children. Find me someone with a million in investments, and I am even more sure. More, they are in a position to make it so that most dollars they spend directly relate to some more dollars they will make. I believe you are correct, historically. However, in recent times the wealthy are more and more made up from people that invested well. Pretty much period. Consider your average home buyer. (Well, scratch that, consider your average successful home buyer.) The banks and lenders gain more from the purchase than the purchaser does. By a pretty large margin. If we look at the ones that go bust, this is even more true. I agree that we don't need to tear down successful folk. I'm just not sure I've heard any plans that successfully help the less successful ones.
    - bsbechtel 12y ago
      >I think some of Gates criticisms fall in the arm chair category of criticisms on this, honestly. (And to be fair, I know mine do.) I have no desire to silence any of them, and I am excited about seeing them debated. But, I am fairly skeptical about how good they are. Mine as well, and neither of us have time to compile the data that Piketty has done. Appreciate your thoughtful criticisms.
      - taeric 12y ago
        Even if I had the time, not sure I have the skill. I suppose the idea would be I could build the skill with enough time. Regardless, is very fun to consider ideas on this. Thank you for the thread!
- bsbechtel 12y ago
  >This is somewhat important, because much of what would have been the "old money" in the US was effectively disrupted by massive technology changes. This is the point I am trying to make...if this old money had been reinvesting in technology over the past 150 years, it might have been possible to maintain it. Fortunately in the US, the mechanisms were not in place for the government to help these rentiers maintain their wealth, and they weren't reinvesting in technology, so they are no longer wealthy.
  - taeric 12y ago
    Right, but now we have investment vehicles where you can effectively invest in investments alone. No longer must you invest in a rail company and do all you can to make them do well. You can literally invest in the volatility of said rail company. Further, yes, you can invest in manipulating the government to make sure that company does well. But, without the government, you could likely also just invest directly in competitors to keep them down such that said company still does well. I know, this would still be preferable to keep disallowed, but the hypothesis was an abstaining government. What level of activity counts as abstaining?
    - bsbechtel 12y ago
      >>Right, but now we have investment vehicles where you can effectively invest in investments alone. This is a big problem, and one that is exacerbated by a strong legal system (read - powerful government) that enables, supports, and protects the gains made from these investment vehicles while disproportionately minimizing their downside risks. >But, without the government, you could likely also just invest directly in competitors to keep them down such that said company still does well. This is entirely possible, but remember that as an investor, your dollars are competing against other investors' dollars. More often than not, you are also investing as a shareholder with many other shareholders who have interests in seeing that company succeed. While I think what you are saying is theoretically possible, I'm not sure it would be a common occurrence, unless you have evidence to demonstrate otherwise.
  - rjsw 12y ago
    There are still people named Ford on the board of their company. I don't know US history well enough to know who else other than Carnegie was in a position to retain wealth generated by technology 150 years ago.

taeric 12y ago

Seems like a very small amount of evidence to base such a large idea on. You could probably form the same argument against the more modern consumption taxes. Since for many this translates to a sales tax, and not the early excise taxes that are covered under the same category. (Right?) Though, your argument falls more heavily on the mistake Gates seems to have also made. The type of wealth that the book refers to as "old wealth" really refers to a rentier based society. This is somewhat important, because much of what would have been the "old money" in the US was effectively disrupted by massive technology changes. It isn't that the old wealth just disappeared, it was not created in such a way that it sustained itself. This is important, because wealth in the modern US does sustain itself. Quite heavily, even.

bsbechtel 12y ago
>Seems like a very small amount of evidence to base such a large idea on. I acknowledge this. Keep in mind though that in economics it is extremely difficult to comprehensively analyze all the data relevant to your stated hypothesis. Gates points out several areas where Piketty's data falls short, and the amount of data Piketty collected and analyzed for his book is considered one of the strongest points of his thesis. >This is important, because wealth in the modern US does sustain itself. Quite heavily, even. Are you talking about Google, Apple, Walmart, etc, or financiers on Wall Street? Or could you expand in general on this? The companies I listed invest heavily in R&D (creating jobs and a better product for the consumer, and sustaining their wealth in the process). Aside from Warren Buffett, I'm under the impression most wealthy individuals in the financial services industry fail to maintain their wealth for the long term, although I don't have any specific examples on hand to support that point. Aside from this, if modern wealth sustains itself through natural processes, then great! We should be looking for ways to make other people just as wealthy, not figuring out ways to tear down those who have been successful.
- taeric 12y ago
  I think some of Gates criticisms fall in the arm chair category of criticisms on this, honestly. (And to be fair, I know mine do.) I have no desire to silence any of them, and I am excited about seeing them debated. But, I am fairly skeptical about how good they are. I am genuinely interested in any discussions on this. Though, I will probably duck out of it soon, as it is beyond me. Please keep it going. Regarding the investments, I am really talking about individual investors more than the companies. Find me someone with a couple hundred k in investments, and I posit you have found someone that will remain wealthy for some time. Probably long enough to pass it on to their children. Find me someone with a million in investments, and I am even more sure. More, they are in a position to make it so that most dollars they spend directly relate to some more dollars they will make. I believe you are correct, historically. However, in recent times the wealthy are more and more made up from people that invested well. Pretty much period. Consider your average home buyer. (Well, scratch that, consider your average successful home buyer.) The banks and lenders gain more from the purchase than the purchaser does. By a pretty large margin. If we look at the ones that go bust, this is even more true. I agree that we don't need to tear down successful folk. I'm just not sure I've heard any plans that successfully help the less successful ones.
  - bsbechtel 12y ago
    >I think some of Gates criticisms fall in the arm chair category of criticisms on this, honestly. (And to be fair, I know mine do.) I have no desire to silence any of them, and I am excited about seeing them debated. But, I am fairly skeptical about how good they are. Mine as well, and neither of us have time to compile the data that Piketty has done. Appreciate your thoughtful criticisms.
    - taeric 12y ago
      Even if I had the time, not sure I have the skill. I suppose the idea would be I could build the skill with enough time. Regardless, is very fun to consider ideas on this. Thank you for the thread!
bsbechtel 12y ago
>This is somewhat important, because much of what would have been the "old money" in the US was effectively disrupted by massive technology changes. This is the point I am trying to make...if this old money had been reinvesting in technology over the past 150 years, it might have been possible to maintain it. Fortunately in the US, the mechanisms were not in place for the government to help these rentiers maintain their wealth, and they weren't reinvesting in technology, so they are no longer wealthy.
- taeric 12y ago
  Right, but now we have investment vehicles where you can effectively invest in investments alone. No longer must you invest in a rail company and do all you can to make them do well. You can literally invest in the volatility of said rail company. Further, yes, you can invest in manipulating the government to make sure that company does well. But, without the government, you could likely also just invest directly in competitors to keep them down such that said company still does well. I know, this would still be preferable to keep disallowed, but the hypothesis was an abstaining government. What level of activity counts as abstaining?
  - bsbechtel 12y ago
    >>Right, but now we have investment vehicles where you can effectively invest in investments alone. This is a big problem, and one that is exacerbated by a strong legal system (read - powerful government) that enables, supports, and protects the gains made from these investment vehicles while disproportionately minimizing their downside risks. >But, without the government, you could likely also just invest directly in competitors to keep them down such that said company still does well. This is entirely possible, but remember that as an investor, your dollars are competing against other investors' dollars. More often than not, you are also investing as a shareholder with many other shareholders who have interests in seeing that company succeed. While I think what you are saying is theoretically possible, I'm not sure it would be a common occurrence, unless you have evidence to demonstrate otherwise.
- rjsw 12y ago
  There are still people named Ford on the board of their company. I don't know US history well enough to know who else other than Carnegie was in a position to retain wealth generated by technology 150 years ago.