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Bill gates is impressive. It's a hard subject to stay objective with. The validity of the data has some level of uncertainty (by its nature). The interpretatio

by netcan 12y ago

Bill gates is impressive. It's a hard subject to stay objective with. The validity of the data has some level of uncertainty (by its nature). The interpretation of the data too. I have yet to find an explanation (by Pickety or others) that made me understand the mechanics of the "Snowball Effect" at the centre of it all: 'r > g.' Once you get into the soup of morality and policy, well… I like how he starts with the things he broadly agrees with. Even just agreeing that extremely uneven distribution is a problem and why, gives us a starting point. I personally take a slightly Marxist view on this. I don't think that extremely uneven distribution is politically stable, or compatible with democracy. I am slightly doubtful of taxation as a solution. Taxation is stuck really. The problem is that most tax regimes are designed to maximize tax revenue while minimizing damage to the economy. Consumption/sales taxes, income taxes and other middle class taxes are convenient in that they are very hard for people to avoid and they don't affect behavior much. marginal income tax of up to 60% is generally assumed to have a negligible effect on how much people work. A 1% annual tax on wealth equates to a $10m annual cost of living in a country for a billionaire. Would they move (themselves and/or their wealth) to avoid it? Can some of that $10m be used to find ways of avoiding the rest of it? I think that ultimately, wealth accumulation needs to change in order to change the structure of the economy. Also, I like that Gates considers cultural norms, not just policy. What Gates & Buffet have committed to is a partial solution. If 20-30% of billionaires do this, it might be enough to change overall distribution somewhat. In any case, more questions than answers.

123testaccount 12y ago
With regard to the mechanics of the "Snowball Effect", my understanding is that the flat tax on capital gains vs the progressive tax on income is one cause in the US. I would speculate that one other mechanic has to do with time. For the vast majority of people there is a hard cap on wage income based on the hours they can possibly work in a day. People who have money to invest can put that to work for them offline, so to speak. And at a certain threshhold a person can put their money to use to pay for specialized labor (tax attorneys, finance managers etc) to receive an even greater return.
- netcan 12y ago
  r = return on capital. g = overall economic growth. If capital returns 6% this year and the economy grows b 4%, it means that capital + this year's return grew by more than the economy did overall. This leaves a smaller share for labour. But I'd like to have a better understanding of the year over year mechanics. Anyone have a good explanation. I'm willing to put in some effort.

by netcan 12y ago

123testaccount 12y ago

With regard to the mechanics of the "Snowball Effect", my understanding is that the flat tax on capital gains vs the progressive tax on income is one cause in the US. I would speculate that one other mechanic has to do with time. For the vast majority of people there is a hard cap on wage income based on the hours they can possibly work in a day. People who have money to invest can put that to work for them offline, so to speak. And at a certain threshhold a person can put their money to use to pay for specialized labor (tax attorneys, finance managers etc) to receive an even greater return.

netcan 12y ago
r = return on capital. g = overall economic growth. If capital returns 6% this year and the economy grows b 4%, it means that capital + this year's return grew by more than the economy did overall. This leaves a smaller share for labour. But I'd like to have a better understanding of the year over year mechanics. Anyone have a good explanation. I'm willing to put in some effort.