The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
I’m starting to think the entire system is corrupt and we are headed for a destroyed Europe and a civil war in the US. Maybe I’m very pessimistic but this moment in history feels like the end of the American empire, what comes after this is extremely uncertain but people only seem to demand a fair piece of the wealth after a world war.
Thomas Piketty lays it all out in "Capital in the 21st Century"
Basically he compares two kinds of growth rates : the growth rate of the 'real' economy and the growth rate of wealth itself. You need the wealth rate to be low enough that rich people want to invest some of it in the real world, not leave it in the bank.
If you do tax the rich, they do very well and you also have money to pay for things like education, roads, affordable housing, medical services, scientific research .. which benefit all and lubricate the general economic market.
If you dont tax the rich, you end up with a gilded age of emperors and kings or a few robber barrons, a small rich coterie around them and the gawping masses of poor eeking it out.
Postwar 70s and 80s were a unusual period of relative lower-inequality, in which we had money in the real economy to develop things.
Garys Economics made an interesting point that inequality _itself_ is a problem - because the actual real value of the world remaining the same [ goods, energy available, land, workers, housing, technology ], when there is higher inequality, then the poor are losing a proportion of that real wealth to the rich. Extreme inequality itself starves almost all the population of a share of real wealth, for them to use their skills effectively - renovate a house, invest in stocks, get a masters degree, do a garage project, travel, have kids, install solar panels etc.
Even if you try to tax the riches, they have billions of ways to evade it. The tax laws are so complicated for a reason. Here in Australia, there were cases that some individuals that earned just about A$1M pa., and they paid ~A$980K to companies registered in Virgin Islands etc. for managing tax affairs. Such arrangement knocked down their taxable income to ~A$19K, and thus they paid probably a couple of dollars taxes if not not even a dime. Eye-opening, right? But those were not those super rich ones. You can just imagine what those super rich people can do. So the burden of the tax would be on mid-income people. I would expect the same in US.
And the reason is those same rich influence the laws to their benefit.
It would be pretty trivial to tax the wealth if a society wanted to do so. But laws are made by lobbyists, who are paid by the rich, so what should we expect.
If there were political will to tax the rich then you'd have to, in addition to changing tax law (obviously), fund IRS investigations to ensure the taxes are actually collected. Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services. If you think people will commit tax evasion, then put more resources into investigating tax evasion. Historically, money spent recovering taxes has yielded more than the cost of said investigations.
It is extremely difficult because you not only need to do it on a per-country level, but globally. Otherwise you just punish foreign companies that genuinely invest in a country with stricter tax laws (and most will just choose another country, just like it's happening in Europe). And ultimately, it depends on the will of the American administration - and they can be extremely bullish about imposing their laws on smaller countries, sometimes even using their military advantage.
> Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services.
It goes further than that, it is the exact argument made by wealthy people as to why we shouldn't tax them more aggressively. Parroting that argument is ludicrous unless you're considerably wealthy yourself.
Those loopholes were by design, complicated enough to prevent most people like us to take advantage of it but will allow those who can afford to evade lots. I'm not sure if people is just naive or playing dumb.
My point was that Tax Laws were deliberately complicated to allow some people to evade taxes. If you put that into consideration, you will find it's a lot easier to understand the status quo. Again, what you think or what I think do not matter after all.
1. Gary’s arguments for taxing the rich aren’t about taxing income. It’s about taxing wealth.
2. By his argument, most of the wealth are immovable: the rich disproportionately owns actual, physical real estates, and stocks of actual companies. As these assets are based in the country, you could tax right at the source.
Property taxes are a thing. If Joe Dirt has to pay property taxes for the home he shelters in, the wealthy should have to pay property taxes for the shares of a company that they use to secure loans for yachts and Ferraris.
Not quite. If you are ultra wealthy because you happen to own several large buildings, fleeing the country to avoid taxes is easy. Doing so with you wealth, however, isn’t.
Which is why they will leave with mobile wealth before the act goes into effect, taking away the capital workers use to earn a living. Property taxes on land and fixed structures work well as they cant run away in a practical way.
The means of production is still here, what’s left of it. Lower asset prices will benefit the poor. What should have happened during COVID is the government took a percentage of businesses to the cost of lockdown/furlough (if they were of a certain size) rather than subsidising the asset hoarding class at the expense of workers. Then you give the workers part of these businesses, spend the rest on re-industrialising. It would have caused the biggest economic boom in the UK maybe ever and with all these consumers available to buy things you’d get a lot of investment and some people would use some of this wealth (£1tn in the UK alone, about £15k for every adult and child in the UK) to start small businesses creating an even better economy.
It’s got to be worth a try rather than the disastrous economic policies that got us here.
Not totally. The wealthy are incredibly heavily invested in our economy. Take Elon Musk for example. He’s heavily invested in SpaceX, Tesla, and Twitter. If he walks away from the US, Tesla, Twitter, and SpaceX are all still here and can’t easily “run away”. Sure, they can take some “mobile wealth”, but if you are very wealthy you can’t just leave a whole economy (that’s where your wealth is).
I think a more reasonable interpretation might be "the government knows about expensive cars (i.e. that they are registered, have numberplates etc), and so charges some annual tax on the owners of those cars."
Describing wealth tax reasoning with an absurd example of the same reasoning on an individual level is an attempt to get people to understand what wealth taxes are.
The government that is supposed to work for you thinks you have accumulated too much stuff and is trying to make it legal to take a percentage of your physical wealth annually.
You only accumulated and maintain the wealth because of the government. Without the government and the economic system it cultivates, you’d never have it.
But laws shouldn't be set based on how easy they are to avoid. Lots of people drive too fast all the time, yet few argue that we should do away with speed limits. Besides, there is zero empirical evidence that suggests that raising rich people's taxes is ineffective. Yes, they are good at avoiding taxes, but professional tax collectors are probably even better at enforcing taxes. It's a question of political will, or lack thereof, due to not wanting to lose your biggest donors.
If the individual resides in Australia, how do they utilize the $980k sitting in the foreign company?
The company can buy assets in AU, such as a house, and lease it to the individual, but I'm pretty sure the ATO requires they pay the company rent at market rate, which will likely be unaffordable on a reported income of 20K pa.
A land value tax would be impossible to evade. Even a business’s assets will exist somewhere on land. In the case of intellectual property, reducing copyright and agents to 10 years should solve the problem.
Rich people generally don't keep the majority of their money as cash in a vault. When money lies in the bank, the bank invests it in the real world. Or more directly, when money lies in stocks and bonds, it is invested in the real world.
Piketty is a hack. Most billionaires don't spend anything even close to their net worth. In effect, they have a bunch of IOUs from other people and never cash them in.
The problems with Piketty's arguments are addressed in the article:
"if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made"
Yes, if rich people invested their money wisely, gave nothing to charity, spent small amounts, and left their wealth to one of their children, wealth inequality would grow unchecked.
But wealth inequality has still grown quite a bit. Your point is not a refutation, it’s just an observation that the infection has progressed more slowly than it could have if it was completely optimal.
"wealth inequality" is one of the dumbest ways of measuring the health of an economy, or to specifically aim to reduce. Unfortunately, there will always be a baseline group of people at, or near, zero wealth. The goal should simply be to reduce this number and the overall number of people living in or near poverty. Whether Warren Buffett has $50, 100, or 200 billion - which does affect wealth inequality calculations - is of zero consequence to the lives of the lowest-wealth individuals (nor did someone like SBF losing 10s of billions, help them)
It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions, or if a small handful of people can fund an effort to identify and groom a wide bench of lawyers to one day become judges who will bend the law in their favor. Not to mention plain old lobbying and campaign contributions. When wealth is power, wealth inequality is toxic to democracy.
Oh my, individual ownership of newspapers? Bezos bought it from Katharine Graham, while the Sulzberger clan has owned the NYT for over a century. Scripps, Hearst, Pulitzer... how did these names get famous? Newspapers.
Twitter is much more effective at brainwashing stupid people into believing any old crap than newspapers ever were, there were journalistic standards in the coverage for one thing.
he didn't say it's ok. He said piketty is wrong. Anyone who studied even econ 101 and combined it with a teaspoon of common sense knows piketty is an idiot and that book is garbage. He's a politician.
They're saying that self-made billionaires didn't inherit their wealth. Which means they created it. Which means that it created useful economic activity. And since rich people dont optimally pass on their wealth, those 1000 billionaires' spawn are likely to piss away that wealth while 1000 more economically active individuals create more healthy economic activity in pursuit of becoming billionaires so that they can pass on their wealth to their children to piss away, ad. Inf.
If that's the argument, then it sounds pretty flawed TBH. I mean how does not inheriting their wealth, automatically mean they created it? Is theft not also a possibility?
Yeah brilliant “businessmen” are born into rich families and destroy their wealth pretending to be real estate developers and managing to be so incompetent you bankrupt a casino where the house should always win!
The fundamental theorem of capitalism: rich people get paid for being rich in proportion to how rich they are.
This is why your savings account looks like an exponential. The thing to understand is the difference in lived experience depending on where it starts. If you are poor, the returns are a joke, you tend to ignore them. If you are middle class, the returns fund your retirement, and it seems roughly fair: you work hard and at some point you earn the right to not work any more. Only if you are rich do you see the fountain of free money (homework: calculate yearly returns for the typical 10%er, 1%er, .1%er, and centabillionaire), and of course being the beneficiary you rationalize away the possibility that this could be a problem at all. It's a tidy system.
"That's an unfair characterization of capitalism!"
So is the one you get in economics which bends over backwards to hide the "fundamental theorem" as I have stated it inside a choice of units: "under conditions of market equilibrium every financial asset has an equivalent risk-adjusted rate of return from the perspective of its marginal buyer." Did you miss the class warfare? It was all hidden inside the word "rate." Very clever.
Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood but all of us are better off than our parents at the same age and their parents are better off than their parents (with one exception).
All either studied hard in school and went on to get a degree or left school at 18 and apprenticed in a trade or got specific qualifications.
I read so much about declining wealth and how each generation is worse off that I have to assume I’m in a lucky bubble because it’s not the case for me.
None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
I feel like software has been an outlier here for a decade; the only place where traditional economic intuitions still apply (semi-smart people can work hard, learn a technical skill, find a job in their field, pay off their loans, make more than their parents, afford a house, and have a comfortable personal life and relatively fulfilling work life)
Everything I've heard from the rest of the economy is that this model is dead
Fair question, it’s a mix: IT admin, manufacturing project manager, primary school teacher, tree surgeon, mortgage advisor, doctor, something in finance, secondary school teacher, plumber, software developer, power electronics engineer, charity sector project lead
Okay, so a lot of ~£40k a year salaries (outside of medicine and finance) to afford a £400k house when your parents might have had a £20k salary to afford an £80k house? There's a real disparity when you consider what they did too. If your parents are anything like mine, they were in the pub 4 days a week, drinking and eating with friends. I can managed that just a few times a month. Wealth compared to income from my experience is significantly lower by .lost metrics.
Maybe you have an exceptional friend group because .. outside of your anecdata .. the statistically average salaries for many of those professions over large sample sets is below the median in the us and they are definitely not seeing their purchasing power increasing yearly
>they are definitely not seeing their purchasing power increasing yearly
In the US? Real Disposable Personal Income has been growing very consistently over time [1]. The rate of growth did stagnate between 2000 and 2013 but the trend has been remarkably consistent.
it claims that the average person has 50k usd in disposable yearly income - there's no way that's after housing and other non optional expenses have been accounted for.
using this measurement, if wages go up 5% but rent goes up 50%, it would still look as if people have more money to spend than before.
"the only place where traditional economic intuitions still apply"
Which economy? In the US, healthcare, public schools in some states, and B2B sales come to mind as decent jobs. But I agree with the general sentiment - there do not seem to be great choices that support a nice life. Quite a few of my friend have to work multiple jobs or double shifts to make it work.
Most healthcare jobs don’t pay particularly well. The inefficiency is going to pay the salaries of medical transcriptionists, people handling billing inside insurance and in healthcare facilities etc. Things that aren’t improving outcomes are ultimately why healthcare is expensive in the US.
Just for comparison the minimum wage nationwide in Feb 1, 1968 was 1.60$/hour that’s ~14.61$/hour when adjusted for inflation. Median household income in 1968 was 8,600$ or ~$78,504.90 inflation adjusted and that was mostly single income.
That’s the higher end of medicine, orderlies are making 16$/h. People on ambulances are often making 17$/h. Some nurses make ok money, but starting salary for a school nurse is 20$/h and median school nurse is making 30$/h...
Granted I understand what you mean, but it’s kind of like saying managers make good money while ignoring all the shift managers at fast food joints.
Can we summarize it that 'easy' or 'low skilled' jobs aren't payed better today comparing with the past? Not surprising taking into account demand and population. More worrying is that high-skilled jobs aren't rewording. As for equality.. welcome to USSR, you see how it ended. Now only a few Arabs states have greater inequality.
It also depends on who your parents are. My parents at my age were poor working class. We had a much smaller house (800 sq ft), used cheap cars, cheaper clothing, etc... My dad spent a lot of time fixing our cars (I don't even try), fixing plumbing issues, and we rarely ate out (and never DoorDash'ed!). I was lucky to get some quarters to go to the local arcade to play Pac Man.
My point -- even being slightly lower middle class now would feel like a good jump over my parents. That's just pointing out that comparisons to parental income is very relative.
Yes, you and I are outliers and so are many people here.
Those of us who work in tech, and many of the people we find ourselves bonding with and staying close to in our adulthood, are lucky to have taken up in a sector that happened to see disproportionate growth during our careers and admitted many people from modest backgrounds.
But people who didn't stumble onto that path, or perhaps hoped to follow their parents into professions that were more flat or failing (medicine, education, academia, farming, manufacturing, "the trades"). In aggregate, some of those people are still doing okay, some are doing well, and some are flailing in desperation for having made the wrong bet.
Of the people I grew up with in a modest blue collar community, I don't know anyone besides the few most ambitious and capable that were able to find the security that their parents had. And as one of those more ambitious and capable people who later circled with people of fancier backgrounds, I similarly don't know anyone who pursued things like academia or medicine and found what they expected there either.
As someone in the US that’s bounced in and out of tech, including some longish stints in blue collar jobs, it honestly blows my mind that the tech scene is so all-encompassing that many in it feel like it is representative of… anything else. I’m not talking about the tech libertarian types that think any impediment to the ultra rich vacuuming up everyone else’s wealth is tantamount to dictatorship. I’m talking about the typical happy path developer (I shy away from saying average because all us developers are above-average developers) that went to college for comp sci right after high school pretty quickly secured a junior role for maybe 6x-9x the (ridiculous) Federal Poverty Level.
To be clear: I’m not saying they’re bad people or anything— most people think their experiences are more representative than they are. But, from outside, some of the assumptions software folks make about the world just seem utterly ridiculous. Consider that on average, junior developers make more money than a first year medical resident that has a PhD in perhaps the highest demand field in the US and works shifts of 16-30 hours with many consistently logging 80 hours per week, and occasionally end up working much more. Ask that medical resident what a really bad day, and a really bad week at work looks like for them and ask a developer with the same amount of post-school experience the same question, and then consider how much more school it took… and then ask that same question to an aircraft mechanic, a chef with a culinary degree, a construction worker, a public defender, a commercial fisherman, a firefighter, a nurse… the software industry is more than an aberration — it’s a different planet. The kind of shit I’ve seen developers say they’re going to “pivot to” if the software industry falls apart is, frankly, flabbergasting. If we see the sort of sustained job losses some fear in software, there are going to be a whole lot of people learning some extremely bitter, difficult truths about the world outside.
I’m not saying we all didn’t and don’t work hard to get where we are — it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world. It’s easy to see your own contributions to your success and miss the industry and market scaffolding you could stand on to get what you did.
> it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world
It's about margins. Software has the 2nd highest margins of any sector (highest is High Finance), so it's easy to pay competitively in software compared to other fields.
Right. There’s obviously a totally valid market-based reason for it, and I am absolutely not implying that developers should receive less of that than they do. However, its an external factor which gives many developers a very skewed understanding of how much work most people expend for the amount of money they receive and agency they get at work, and how much they’re worth as workers outside of the software world with roughly the same amount of ambition and effort. Compared to most industries, software companies coddled developers and really tried to trump up the mystique of the great hacker genius. While particularly apparent in the restaurant industry, developers thinking they’ve ‘solved’ an unrelated business they’ve got no experience in using their genius software brain or assume they can simply transfer their existing skills to a new field is pretty common. I encountered one developer who thought they’d simply pivot to crime to keep their family comfortable, which is hilarious. The beginning of a career in crime is long and full of petty bullshit crimes that pay very little because you don’t have the wisdom to not get caught doing more serious crimes, and you don’t have the network to support you doing things like getting unregistered guns, fencing, etc. What I wouldn’t pay to see that guy walk into a bar in a rough part of town, order a craft beer, and try to debate the sketchiest people he saw about why he’d make a trustworthy partner in crime.
I'm just saying the only reason SWEs (and IBs) get paid the big bucks is primarily because of market economics, even if plenty of other high stress roles (eg. Nursing, EMT, Teaching) get paid a relative pittance.
I think a lot of us members of the tech industry need to cut down on our hubris and respect other industries and jobs, and understand that we are cogs inasmuch as anyone else.
I'm a little surprised by this. While I'm better off than my parents I went into a much more highly paying field (software engineer vs teacher/social worker.) If I did a similar job to them I would have no hope of ever affording a similar house to them.
They were part of a generation that benefited from enormous house price appreciation due to a combination of falling interest rates went from almost 15% down to under 5% (this is about 3x on its own) and the fall in house building which drove up prices and rents generally.
This effect is somewhat less pronounced outside of southern England.
You make a good point about higher paying fields in the younger generations. While there is a spread of occupations that I replied to another commenter with you may have hit on something. Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
Thinking of one (not me) it’s delivery driver -> enlisted service -> mid level finance (not London)
> Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
That is unarguably true of our parents' and grandparents' generations, but I don't think it is as true of people of my age or younger (born in early 1980s.)
There was a huge expansion of higher skilled jobs after the war with large numbers of people moving into the middle classes. For me and everyone I know our mothers (born 1950s) worked. We all grew up in dual income families.
My great-grandfather was a miner. His son, my grandfather enlisted in the forces during the war, seems to have been recognised as being technically apt and worked with radar, became an officer and in the early 1960s left to be a manager at an engineering company.
His daughter, my mum, became a teacher (first in family to go to college) and his son did not go to college but became an IT manager (married a teacher). All of us grandchildren went to university but basically have similar jobs to our parents' generation.
Several of my siblings and cousins own houses but they got help from parents or partners' parents and mostly bought outside the south east. Renting a flat in London as a fairly highly paid IT contractor I had to pay six months up front because my parents didn't earn enough to be guarantors.
> None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
I have a similar sample, all middle class in their 30's. The only ones who have bought houses have been given significant assistance from their parents, now none of them are poor by any stretch, but few have any significant assets.
I have a very different experience. I did all the right things, more or less, got into a good field with a secure job in the broader tech industry, and indeed I make very good money.
Despite this, I can not afford to buy the house I grew up in; a 3 bedroom SFH with a decent sized yard and a pool, around 1400 square feet, 45 minutes away from downtown without traffic in a hot real estate market. My father was able to purchase this home as a tradesman with 4 kids, being the only parent who worked outside the home.
How can you compare these experiences to a greater upward mobility which does not exist? You don’t have a baseline for comparison. What if you had 2x more leisure time with the same fiscal wealth? What if you had easier access to healthcare?
Well things worked out for you and they have worked out for me as well. For a long time I have this arrogance expressed privately usually to myself or very close people that it is all due to hard work, diligence, thrift that I reached where I am today.
But lately after reading and observing around quite a bit I come to realize due to being ended up in a fast growing sector at least a minimum level of success was guaranteed. I see same thing at my company where a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me and growth was much faster than compare to when I joined in mid 2000s.
They can talk down to me just like I can talk down to more juniors about value of hard work, drive and so on. However, joining a growing sector early was best thing career wise. No amount of hard work will help if one is starting at a middling IT job in middling company in 2025 like I did in 2005.
Well, and even the company matters. I was in IT since post-grad school (with a bit of engineering earlier). But with dot-bomb, a company that struggled through and then 2008, I was only in an "OK" position. It was really the period post 2010 that set things up a lot better.
Indeed. For me 2010-11 was when I got a full-time job as compared to contracting (small time) which was big jump for me in terms of job quality and money. Interesting enough I met many people who joined Amazon in same time frame and earning about 50% more than me in straight first job that I earned after with 8-10 years of experience. So yeah company part is important.
I wouldn't even say it was work quality; the job I had for a good period really set me up for my ultimate full-time job and I mostly liked it. But that ultimate job was a public company and even if not FAANG level comp, set me up pretty well and provided the leverage to make investments that were pretty solid during that very good period.
> a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me
Not refuting your point but there is a selection bias here. You are in contact with people who did in fact achieve VP or higher levels. Lots more also joined the industry 10 or 20 years before you and burned out, failed, hated it, got fired, whatever. The people who succeeded may not be particularly exceptional in terms of talent, brainpower, innovative thinking, etc, (lots was luck, or being in the right place at the right time, surely) but it's also not true that everyone they worked with back then became a big success.
In the US, my anecdotes seem to show that things have stayed neutral or declined slightly. It seems harder to get a decent job than our parents. It seems that fewer of us have bought homes, or delayed buying due to financial reasons. Seems like more of us are working multiple jobs too. I think the aggregate measures showed real income only trending up slightly over the past couple generations.
My dad migrated to London in the 70s and bought his first property in London around age 26. He didn't have a degree but did get a professional qualification.
I ended up getting a good degree at a top uni and started my career at Amazon but definitely couldn't have amassed the necessary amount for a down payment for a place in London by the time I was 26.
By the time my dad was 35 he had two kids and my mum was a full time mum.
This doesn't sound remotely close to the reality of my numerous banking, lawyer, accountant, engineering and doctor friends.
The only people I know who are remotely close to being able to own a property in London and have only one breadwinner work in hedge funds.
Of my friends only one set lives in London and I have no idea how they afford it, one or both of them must be on silly money and it’s pretty clear most of the money must go into the mortgage. I started my career is a very cheap part of the UK so I sort of have to carve London out of any generalisations I make.
I'm in the same position as you, but I see myself as rather lucky. I worked very hard but I also was taught hard work translates into success, many people don't see that relationship. And I happened to be interested in a lucrative career path.
> I also was taught hard work translates into success, many people don't see that relationship.
That's a typical confirmation bias: you worked hard and got successful, so you're tempted to think that it's because you worked hard. Some don't work hard and get successful, many work hard and don't get successful.
The one thing that you clearly can't rule out is luck. Tell people in Gaza that if they work hard they will end up in a situation similar as yours...
It's related because you said "you can't rule out luck" which is basically casting doubt on the whole idea of hard work having an impact on success. Well, no reasonable person would say hard work guarantees success, or that all success is luck. The truth is luck and serendipity affect all outcomes, but to use that to question the impact of a human's agency on their own life outcomes is an insidiously disempowering perspective.
Very anecdotal. You can't just look at yourself and your circle (which is similar to yourself) and extrapolate to the general population. Also most people in HN are in Tech which did well in the last 15-20 years comparing to other fields.
> Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood
> all of us are better off than our parents at the same age and their parents are better off than their parents
These are conflicting statements. Your group are all beneficiaries of generational wealth by this description. Maybe it isn’t as overt as a trust fund, but you definitely inherited wealth and opportunity from your parents.
It's hard to understand what you're saying here. Being better off than your parents implies that you are a beneficiary of generational wealth? Connect the dots for us.
OP described a group of families that accrued wealth over 3 generations "without inheriting any wealth". Assuming they weren't orphaned at birth, each generation definitely benefited from the fruits of the previous generation. Even without an overt handout like a trust fund, we still inherit wealth from our ancestors (eg: housing, health care, education, credit, social networks, etc). In this case, the "handout" would have been their upbringing. They feel "the system is working" because of this, but not everyone in the system has an ancestry like this.
Sure maybe there was some inertia from the benevolent bettering institutions of the New Deal that have given a chance to Americans.
I just think you'd have to be so willfully in denial as to miss the darkness we are descending into. To miss how bitterly the GOP and the wealthy are building empires of lies and bespoke manufactured realities to make up down and left right, to cover for horrible treacherous actions against the possibility of the individual, stacking the deck for empire and inherited wealth. (And Dems are frequently unwilling to bite the donor class that makes winning elections possible, after the courts have obstructed democratic funding reforms.) Are actively opposing the possibility of people doing good for themselves & the world.
I strongly recommend folks go read one of the darkest periods of America, before enough was enough
Adam Hochschild's American Midnight (2022) tells an amazing story of a circa-WW1 state that had radicalized against people, that had been totally overrun by well monied powers. Of Hoover using the full power of the police state to surveil as Ralph Van Demand had done during the Philippines civil war, of of the postal service run by someone using it for information control, of American Defense vigilanism.
Its not a tale of what happened next, how that broke, just a long amazing story of how dark America got, how badly the state was an extension of capital and power, and how deeply it subverted the individual, the union, any attempt for everyday humans to make any claim to life liberty, or pursuit of happiness.
We face today not quite such amassed power, but a completely warped infosphere where these bespoke realities create lifestyle beliefs where people are on board with incredible trains of lies crafting false enemies, supporting the opposite of the signalling they claim. Its different than dark; the world today is overloaded by hell's din, by monsters of abuse, doing their worst to harm us for greed and for the possibility of undoing the good of the world.
Same here, but we are in a very similar boat in our voyage through socioeconomic statuses (though I'm in Ohio River Valley US). I may be fooled by the discourse that [Xennials/Oregon Trail gen/Gen Y/Elder Millennials], but we supposedly saved more, delayed gratification, planned more, and worked more than even Gen Z (who, don't get me wrong, have it worse because of undercompensation vs purchasing power and sheer hopelessness).
In which case you were able to save a deposit within 6 years of graduating? When i was at that stage my outgoings (rent, food, council tax, car, insurance) were probably 90% of my salary.
Ah, I was wondering too but my reply button was gone, yes I would say we’ll be net > 0 around the same time as you age wise. If we hadn’t had to renovate a 60s property we’d possibly be there already but UK housing stock needs work sadly.
Yep. A good friend of mine grew up to a very poor immigrant family, both him and his sister got full rides to good schools because of grades, and at age 30 bought a house in NJ with a very good school with 4 kids after saving non stop and living with his parents and taking care of them.
The system works fine if you don't need nonstop luxuries
It’s really incredible how much people feel entitled to in the us. And by entitled, I mean they spend money on these things because it’s beneath them to think they shouldn’t have said experience or thing.
> rich have been transferring money from the poor to themselves at a dramatic rate
Anyone not familiar with it needs to look up Georgism.
This transfer happens primarily via housing costs and rent payments.
The stratification of the rich happens via investment opportunities, but the core underlying mechanism for the majority of the population is via housing costs and Ricardo's law of rent.
Yeah, you can't have an realistic economy that will eventually inflate small, entry-level houses to $1mm+ and college costs to the $100k's but still have jobs paying $10-20/hr (or less). Any kid who does the math will realize how hopeless that economy is. Even if you scrape by, one emergency turns you into a debt slave.
Housing needs to stop increasing in price for a number of generations. Surely the rich can find someplace else for their money.
For housing to stop increasing in price, a lot of it has to be built.
The YIMBY movement is pushing in the right direction, but doesn't have the political power that they need. Particularly in California. And, as long as they don't, those with houses will continue to win against those who don't.
> For housing to stop increasing in price, a lot of it has to be built.
False.
You can depress the land-based monopolistic component of housing via a land value tax. If speculating on land values stops being a good investment strategy, the price will drop.
Many economists/nobel prize winners have been quietly pointing this out for over a century at this point. Here is a pretty good primer: https://www.youtube.com/watch?v=smi_iIoKybg
As long as there are more people needing housing than housing, prices will be high. California has such a shortage, and the people side of the equation is going up faster than housing is constructed. Making the problem worse over time.
A land value tax could indeed help with housing costs - but that's because it encourages development. It is the construction that makes the really big difference here.
You’re probably right. The historical norm is that there are owners and there are workers. We seem to be regressing to that.
The difference is that medieval peasants knew their manorial lords had bigger houses and ate more meat, but the visible local differences were small and religion could operate (for worse or better) as a stabilizing force. People tolerated a caste system because they were information poor.
There’s no reason today, though, for people to put up with the kind of inequality that is not only extreme and senseless but constantly being shoved in their faces via social media. The only way the rich stay out of the guillotines is by creating new, weird cultural spectacles like litter boxes in schools (not even a real thing) for “furry kids.”
They were uninformed then, but people are misinformed now.
I think the latter is worse, because it means those in power now have an information lever they can use to manipulate the masses. When there were no broadcast or network media sources, those levers didn't exist and the powerful had fewer tools to control people.
>The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
The US is setting up to make this worse by cutting services for the average person (like the CFPB and OSHA) and continuing to give tax breaks to the wealthy...again.
This is after the same group of people set off sky-rocketing inflation by injection almost a trillion dollars of new money into the economy by way of the PPP program, of course hurting the average person more than their wealthy financial backers.
Medicaid cuts are going to be the real nightmare fuel. People think Medicaid is for the poor (which some Americans are always happy to screw over) but Medicaid is what makes it possible for many working folks’ parents to afford geriatric care. God knows what happens when the GOP succeeds in slashing it.
A huge percentage of Medicaid goes to nursing homes. Medicare does not fully cover the service. You either pay out of pocket or if you’re destitute (as many elderly people are) you get Medicaid to cover the difference.
Nothing lasts forever. The rich get most of the economic growth is inevitable. It's the Matthew effect. In general, the more assets you have, the more passive income you have, which in turn frees people up from worries about making breads for the family, and thus can spend more time on think and do things more important in the long run. Again, that would reinforce their financial status. In the meantime, the poor would have to worry about next meal, and mostly don't have the reserve for investments. Thus, they will most likely struggle to save something, and even if they do manage to save some, an unexpected event can easily wipe it out before it reaches the threshold.
If the riches were conscious enough, they would return a fair share to the poor and the eventual crash will be deferred much longer. But you know, everyone wants more money, no exception for the riches. It looks the only thing we learn from the history is that we learn nothing from history. So here we are: the same drama of empires' rise and fall, the only differences are the locations and the actors.
Things that can be produced with machines rather than labor have become more affordable over time. Electronics, travel, clothes, and even food are cheaper than they used to be relative to wages. Then there are fields like education, childcare, and construction, which have not seen substantial productivity gains. The prices of their outputs can be expected to rise at the same rate as wages. (And then there is healthcare, which is complicated.)
But what has actually happened that increased housing costs have eaten the productivity gains for many people. Largely because of deliberate policy. Desirable areas often discourage new construction. When new construction is allowed, they prioritize single-family homes. And if really pressed, rental complexes.
As a rule of thumb, if you can afford to rent, you can afford to buy. If you expect to stay longer than a couple of years, you should buy. But in many places, if you can't afford a large home, you have to rent a small apartment. Because there is a shortage of small condos to buy. If the units available for purchase grow larger while the price per square foot grows at the same rate as wages, housing becomes less affordable.
In many of the denser population areas of the US _generations_ 30, 50, maybe more YEARS worth of insufficient building has left a completely broken situation of stagnation relative to population.
A Civil War in the USA? Where would the battle lines even be drawn? There is no consensus, and there are hardly even blue or red states anymore beyond 60/40 splits. Even racially we are seeing a lot less polarization.
people don't demand wealth equality after a war, they just create massive inflation during the war and solve it by taking everyone's savings after the war...half the countries in europe post ww2 did something akin to replacing the national currency at exchanges rates of like 10:1 in some cases like germany...and germanys post-war inflation solution is hailed as an 'economic miracle' by many history books. Somethings tells me I wouldn't feel too jazzed about taking 90% of my savings, but I would also be resigned to do whatever because war is worse.
I get really worried when I see people glamorize equality post-war...post-war times are not good times for the middle class. The most equal wealth humanity has ever had is during caveman times, but that is not the goal.
war does not make things better folks, I hope that's not what OP was trying to say, but just in case let's be very very clear about how awful war is for progress and humanity.
post-war reconstruction fervor can inspire wealth creation. This is largely because there are no NIMBYs and eco-warriros sat around saying that the returning troops cant have a place to live and we cant have new infrastructure. If we can get that reconstruction fervor without a war it would solve a lot of our problems.
I just don't believe this, not because I have hard data, but it just doesn't make any sense. Sure, the central banks will do everything they can to ignite the economy and everyone will be generally working their hardest to recover from hard times, but how can an economy that gets completely halted to go full bore in war efforts ever hope to generate the wealth of an economy that isn't halted and has been making incremental improvements, uninterrupted?
> people only seem to demand a fair piece of the wealth after a world war.
I think it's more that war has a tendency to literally destroy capital which is effectively a tax on the rich. When factories get bombed, factory owners lose out more than people who don't own factories.
War is horrible but it historically has at least been somewhat of an economic equalizer.
One of the real tragedies of the pandemic was that it turned that upside down. The virus didn't touch capital but destroyed humans, and the humans hit the worst were those in "essential" but low-paying jobs who couldn't socially isolate. The effect was that the pandemic increased economic inequality.
Are you sure it's true that the pandemic increased economic inequality?
The humans worst hit were by far the elderly, and the elderly tend to have more assets than the young in industrialized countries.
Among working-age people, lower-paid "essential" workers were exposed to more risk, but by a significant margin, old people are the ones who died more.
Individual old people may have died more, but we are talking about economic inequality. They had huge gains in their wealth due to asset inflation. Working people were by far the worst hit by the devaluation of their labour.
> we are headed for a destroyed Europe and a civil war in the US
"Capital in the 21st Century" by Piketty does a good job arguing that the historical normal condition is for wealth to concentrate bc the returns on capital are greater than overall economic growth. It's depressing, but creating the kind of world that a lot of us and our parents enjoyed takes special conditions (and political will?) ... but the flip side of this view is that intense inequality can endure for long periods of time and doesn't necessarily lead to political instability.
Is this a serious reply? The poor may not have much, but every dime they do have is spent on necessities… rent, food, healthcare. So where does that money go? Who are the actual recipients of those dimes?
"Everything feels increasingly like a scam," she said. "Not only are grocery prices going up, but it's like everything has a fee and a surcharge. And I think that anger is put out at government."
Is your argument really that because things were really bad in 1905 we shouldn't complain that after many decades of progress* that we are now rapidly sliding back to things being extremely shitty again?
Because that's a really strange way to look at it.
(* driven largely by increased regulation, unionization, etc... all the dirty words for modern conservatives)
Dude Gary Stevenson is so good, great to see him shouted out on these conversations.
I've long wondered why so many economists get inequality so incredibly wrong without any hint of self-awareness whatsoever, and the answer (in part 3 of that series) was mind-blowing. So, so well put together.
I won't give the spoilers here, but do watch it. It's an experience.
The idea that an average person, working hard, can eventually own part of a nation's land and resources, setting up their family with generational wealth, is derived from the pioneer days when land was plentiful.
This was never going to be able to last forever as long as the population keeps increasing. This is why settlers left Europe etc in the first place to seek fortune overseas. And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Working hard is necessary in its own right for many reasons, but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing. So is shaming anyone who fails to achieve it as "lazy", when it was never going to be possible for more than a fraction.
Land is not scarce in the US. My road trip through Nevada to Salt Lake City convinced me of that much. What is scarce is land people actually want to live in - with safe neighborhoods, good schools, restaurants, shops, etc. Restrictive zoning and NIMBYism is definitely making this worse.
I don't think the amount of "unexplored" or "undeveloped" land is a good metric for social mobility. Economic growth is. New "frontiers" are created all the time. They do not have to be in the physical world (e.g. computers, the web, biotech, the App store, social media influencer, crypto, and now AI). Even in the physical world, frontiers can sometimes expand. Desirable land can be created in the middle of a desert (e.g. Las Vegas), we just don't want to anymore.
Despite its many flaws, I think the US is still better than pretty much anywhere else in the world.
A big part of the problem is that too many people want and/or have to live in very tiny portions of the country: major cities.
There is a lot of cheap land and even a lot of cheap houses for those willing to live in a different place. Even many of my friends in Seattle, for example, have discovered that if they move 30-60 minutes away their housing costs plummet dramatically. This has opened the door to many of them moving even farther away, unlocking an entire new world of affordability.
There was a brief moment where all of this looked like it was a very real possibility for many of us, but the rubber band is snapping back with remote work and now many are being required to move back to those few cities again to find the best jobs.
> but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing.
I don't think most people believe that you can just work hard and then have generational wealth for your heirs. That feels like a strawman argument. Generational wealth has always been a difficult feat for the few, not something we promised everyone could achieve.
However, people also underestimate the power of compounding for retirement savings. Obviously not helpful to someone working at McDonalds and trying to pay rent in a big city, but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years. Not "generational wealth" or "setting up your heirs", but enough to make big contributions to education, helping kids with emergencies, possibly leaving some non-trivial inheritance. This happens all the time and continues to happen with millenials, as it will happen with Gen Z. Again, not literally everyone but to suggest that it's out of reach is really out of alignment with the reality of what we see people earning and saving.
> but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years.
You’re off by at least a factor of ten.
40 years of $100/month savings at a generous 5% compounding is $148,242. And that’s in future dollars. Drop it to 4% and you’re down $116,606.
The real formula to consider is what percentage of your monthly spending you are savings. If it’s 100%, then every month worked is one month of retirement. If it’s 50% then two months of working is one month of retirement. If you live frugally and save 400% of your spend, each month counts as four retired months.
It’s a simple fraction with the numerator as your net savings and the denominator your total spending. And lowering the denominator scales things much faster.
Define "orginally". You might be interested to research how the Native Americans interacted, especially the Lakota. Rights by conquest was not a new idea.
There were a few hundred thousand of them across the entire continent. In the best case scenario, most of them still would have died to disease. Unless you believe a few hundred thousand people own should own an entire continent as their blood and soil birthright the land was always going to end up like this
There’s still a lot of land out there. The only problem today is nobody wants to start over with no plumbing, electricity, or other modern conveniences.
This article is saying the native Americans spread the horses faster than the Europeans spread. They still sourced the original horses from Europeans in the 1600s.
> The Americas had no horses before Europeans brought them.
> Long since debunked
I mean, the linked article says horses were introduced in the 1600s (brought by Europeans), and then spread throughout the Americas without requiring further European distribution.
Horses in North America are a weird one. I believe the current thinking is that horses started in North America, migrated to Asia, then the population died off after the continents split. So there were horses in the Americas prior to the Europeans, but also potentially before humans.
Humans and horses probably did that thing where you're looking for someone and you go to where they are then they go to where you are and you both miss eachother.
And then died out, before Cortes brought them back to the continent in 1519. Native Americans then discovered the horses before they ran into the Europeans and began spreading them across the country.
> Horses evolved in the Americas around four million years ago, but by about 10,000 years ago, they had mostly disappeared from the fossil record, per the Conversation. Spanish settlers likely first brought horses back to the Americas in 1519, when Hernán Cortés arrived on the continent in Mexico. Per the new paper, Indigenous peoples then transported horses north along trade networks.
You need pack animals for civilisations. Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement.
You've drawn this argument from Jared Diamond's Guns, Germs, and Steel. There are a few problems with the theory:
1) Diamond's argument rests on the idea that world historical developments are effectively determined by geography (and implicitly, by factors which precede the existence of a civilization). While I can't make a strong argument against historical determinism, the conclusions Diamond draws are strange. The chief problem is that Diamond is trying to make the case that the exceptional prosperity of Northern Europe and all of its colonies was effectively a fluke of geography. The problem for Diamond is that this pattern repeats over the course of about four hundred years all over the world, not just in the places where Europeans had the advantage of small pox on their side.
2) Native Americans had access to pack animals by way of the llama.
3) The Aztecs lacked access to pack animals. They still had specialized tradesmen and constituted a civilization.
The germs argument is the only one of Diamond's that I think holds any water with regards to the European conquest of North America, and perhaps I was being too brash in my original assertion (these civilizations existed, but were decimated by small pox). The issue with this argument is that it doesn't address European colonialism in Asia (where the disease factor is absent) and Subsaharan Africa (where the disease factor actually worked against Europeans).
The fact of the matter is that Europeans (and specifically Northern Europeans) happened upon a method of conquest that worked. This could have been an accident of geography, biology, or ideology, but it's absurd to pretend that the model didn't exist when it was the basis of a successful campaign to conquer the world. It had nothing to do with having access to pack animals.
The Llama is not a very good pack animal, you would know this if you ever looked at one. Pack animals are not necessary for any specialisation, but the are for the degree that brings technological advancement. If you want advanced society, you need to move lumber from forests to cities and ore from mines to furnaces. It's difficult to do this by hand.
> it was the basis of a successful campaign to conquer the world
I am referring specifically to the conquest of America here. You can see that there were several advanced societies at the time (China, India, Europe, Middle East) and it is essentially luck which of them won out. There are also many places which could not have feasibly conquered the world, America was among them precisely due to the lack of pack animals barring further societal advancement. By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
>The Llama is not a very good pack animal, you would know this if you ever looked at one.
They are pack animals with carrying capacities comparable to donkeys and slightly less than horses.
>America was among them precisely due to the lack of pack animals barring further societal advancement.
You never addressed the issue of Tenochtitlan, which was constructed without the use of pack animals, so this isn't a compelling claim to begin with. Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals (e.g. moose, caribou). Diamond makes some weak attempt to claim that the animals available were too temperamental to be domesticated, conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf.
> By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
You're making this argument because these places are islands. This was not a hindrance to the British. You'll then make the argument that you were really arguing that these places are isolated (which is maybe valid if we're talking about Polynesia, less so for Australia), to which I'd reply: "Isolated from what?" to which you'd reply: "The pack animals, the germs, and the steel," to which I'd inquire: "Why were these things found in Europe and not Australia?" and that is where we get to the root of the matter. Europe's conquests were not a matter of luck or an accident of geography. There was something in their method that simply worked better than the methods of those peoples that they conquered. I haven't reached a conclusion as to what it was in that approach that led Europe to becoming the dominant power of the last five hundred years, but there's no compelling case to be made that this method didn't exist.
I don't know who that is and have never read any of his work.
> Tenochtitlan
> Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals
Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
> conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf
If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
> Why were these things found in Europe and not Australia?
Because Europe has horses and Australia doesn't, and horses cannot swim therefore could not reach Australia. The moon also doesn't have horses for a similar reason. In fact, you'll find that horses only really inhabited areas reachable by horses, until someone put them on a boat and took them to other places (which didn't happen for Australia until quite late). You have this strange assumption that all areas are secretly equal in geography and must be equally hospitable to human flourishing, but this is not true. Europe is more hospitable than Australia, therefore humans flourished more in Europe than Australia. All you need do is assume differences in geography exist and you'll reach the conclusion that humans in more amenable areas are more likely to conquer those in less amenable areas.
> Europe's conquests were not a matter of luck or an accident of geography
You say this with precisely no proof. The closest you get is saying "other people didn't do it, and Europeans did so it couldn't have been luck". The idea that knowledge is what held other areas back, as opposed to luck or geography, is ridiculous and trivially disprovable. Knowledge exists in equal quantities for all people (unless you believe certain races are inferior to others). The difference between regions is geographical or in fortune, which could include the fortune of having a particularly skilled leader or successful sequence of conquests.
> Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
They built their city on a marsh because an eagle landed on a cactus and they interpreted this as a sign from heaven. They subsequently conquered the city-states that already existed there. It had nothing to do with considerations surrounding the ease of transport as they were a nomadic people and were initially forced to settle in a marsh on the fringes of the lake.
Further, you are getting away from your original claim, which was: "Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement." This was not the case for the Aztecs. "Ah," you say, "but we can amend my claim to include analogs to pack animals which facilitate the movement of materials, such as Tenochtitlan's canal system," at which point I would draw your attention to the Cahokia, the Pueblos, the Mayans, and the Olmecs, none of which fit this pattern, all of which formed complex civilizations that soundly refute your claim.
> If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
Dogs were domesticated thousands of years prior to the arrival of humans in North America.
> Knowledge exists in equal quantities for all people
There is no evidence of this whatsoever and plenty of evidence to disprove it.
Would you say this of the Jews during WW2, or do you have the understanding that it's a little less than tactful do describe the victims of genocide as "suckers"?
Most first nations at first contact had 0 conception of ownership, rather seeing it as some sort of stewardship (or if you put it in modern terms you could use the marxist notion of personal property where it's 'use it or lose it') as well as low enough populations that they figured there was enough to go around to share the land with settlers.
Some of the nations were large, such as the Aztec. And at least a few of them understood right by conquest. They also had extensive trade routes across the continent, seeming to disprove the lack of ownership.
You seem to be confusing the concept of "ownership" with that of "private property" (on immovables, especially). The "Marxist notion" of personal property still requires the concept of ownership.
And if there happened to be people on the land they “wanted” well then there’s guns and smallpox blankets to take care of those pesky details.
“The people there didn’t have the concept of ownership” but some pioneers sure as hell made sure to enlighten them by laying claim to that same land and then threatening anyone for encroaching on it.
genocide is an intentional act. Smallpox did 90% of the work and nobody lifted a finger, at the time nobody could have forseen the effect of smallpox on the native population.
After smallpox when the population of the Americas had been reduced by something like 90% they most certainly didn't need all the land.
> at the time nobody could have forseen the effect of smallpox on the native population
Are you really unaware that the colonials intentionally spread smallpox to the natives? This is not some obscure detail - it's in approximately all of the history textbooks in a fair bit of detail.
If the settlers had done what the first thousand or so invading cultures did and just exterminated the natives, they would have been able to cast them in whatever light they chose. Instead they gave them rather a lot of autonomous territory relative to their population, along with legal monopolies designed to prevent them from being forced into wage slavery.
The truth has always been and will always be that the people who are most technologically advanced will end up with the land, weather by force or purchase.
Simply due to the fact that it's more valuable in their hands. Driving out some campers to build a town is the rule, not an exception.
European colonization of the world is a unique enough phenomenon to not hand wave it away as business as usual. Further, the industrial intensification and financialization of this colonization through the 18th-20th centuries alone is singular on its impact on human civilization with no precedent.
Apart from the Sentinelese, I can't think of one civilization that hasn't warred and taken over land and resources from others. And we really don't have proof the Sentinelese didn't do this at some point themselves.
You can think of many examples of war and conquest, but what happened in America is more than just war. Genocide is more than just war. Framing the atrocities upon which the US was founded as merely "historically normal" is a deeply revisionist view of history. Technological development at that time allowed for many great evils which were simply not possible before.
How do you know that what happened to the natives was so much worse than the hundreds if not thousands of similar fates that must have befallen other cultures over the last several tens of thousands of years?
America isn't overpopulated. The pyramid scheme you're describing is not a Malthusian constraint but the product of bad monetary policy privileging non-productive investments in real estate. There's still no better place on earth for normal people to build wealth, unless you're playing the digital nomad game.
It does not come about magically from monetary or even fiscal policy. The demand for housing (and other construction) was and is real. People find use for, and like having much space, while being close together. What was and is lacking is supply.
It was never implied that this mechanism was magical.
If you reread the original post, the claim being made is:
> The idea that an average person, working hard, can eventually own part of a nation's land and resources, [...] was never going to be able to last forever as long as the population keeps increasing.
This is manifestly not the case. My response was that, insofar as a pyramid scheme exists, it has nothing to do with some fundamental Malthusian limit on how many people can fit in a given space; this limit exists, but is not the reason that the rich are getting richer, which instead has to do with monetary policy.
You make cheap money available to those with good credit. These people take out loans and use the money to buy real property with the expectation that they will be able to rent it out for more than the carrying cost of the loan. This causes the price of real estate to rise artificially beyond what it would if the cheap credit had not been made available. The key issue here is that this credit isn't being made available to everyone at once - you have to qualify for the loan first.
"
This is why settlers left Europe etc in the first place to seek fortune overseas."
And why you guys are looking at Mars now.
Here in latam we haven't filled the land at all, you guys have been hard working and filled with riches. But our laziness might give us more longevity, we are playing the long game with the amazon
LATAM will get a lot of remote work if the wages stay lower than the US since they're in better-for-US-company-timezones than India or others overseas. That's what my company is outsourcing to.
Doubtful. Digital nomads, short-term rental tourism, real estate investors (prompted by the former two) are increasing housing costs and CoL in all the popular destinations. Costs in some regions like Barcelona almost got equalized with costs in major US tech hubs. The same is happening in places like Buenos Aires. So its unlikely that the trend in LATAM will continue as it is.
Also, this is very bad for not only the locals as they get gentrified from living in their own city/urban centers (and in some cases even rural zones), but also the local companies: The US and other rich Western companies dump their healthcare and housing costs onto the locals through arbitration while making it harder for local companies to keep up with the CoL increase through wages, therefore increasing their expenses and reducing their competitiveness. And the reduced taxes that the nomads etc pay doesn't help it. (that is, the ones who actually pay).
Yeah, looks like the go to strategy, but I may have to pass on the gold mine and go for the higher payoff of a decent living but a more spiritually fulfilling trade diplomacy
In international trade there's complementary/productive trade, you have gold, we have silver, let's trade. And you also have redundant/substitutive trade, you have soy, we have cheaper soy, buy our soy.
I don't believe from the bottom of my heart in substitutive trade for similar reasons I don't believe in (most) inmigration. We've conquered the americas, now we have to populate it, god won't reward desertors who revert their ancestor's decision by running back to the old continent, and the excuse of "I was born in the wrong hemisphere" is also quite petty, we rolled the dice and this is what we got.
Substitutive trade isn't far from immigration, the poor want to go to the rich countries, and the rich buy the cheap labour. Where is the pride in that? In both sides. Leave your country for another with a different religion, leave your mother your brethren, and serve. Leave a war instead of fighting? Take a 1 hour bus to a fancy neighbourhood to serve coffee and wash dishes. Conversely, you can wash your own dishes, you can use a bottle of water and fill that up before you leave, we don't need a migrant washing our dishes, and we don't need to migrate to wash dishes.
So I'm trying to focus on trade that is not replaceable with local labour, hopefully countries start nailing down remote work and we start locking those behind visas.
And unfortunately india and philipinnes get that productive trade, they can cover night shifts.
We'll find stuff to export. There's not much, as Trump said "they need us more than we need them".
Local entertainment, sports and games will always be there, it's like cybertourism.
there might be an argument for redundant trade as a counterweight to an unbalanced productive export. But I don't think that works long term.
There's also localization services, in language and legal, but those are just costs of exporting really.
Lithium is probably the lesser evil, super extractive, but we gotta pay somehow.
Sorry about the super rant. Lately I've been more using forums as a way to write things that I already had drafted in my mind.
And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Land use is a complex topic, but you’re basically right. Everything good—not just land but social opportunities—is spoken-for and what we’re seeing in South Korea and Japan is probably the best solution: peaceful natural attrition and non-replacement of capital’s reserve army that is unwanted labor.
"is derived from the pioneer days when land was plentiful."
Land is still generally plentiful. The need to all live in one spot is more social/artificial and really accelerated in the late 19th and early 20th centuries due to rapid urbanization.
In the US you can buy land at quantity for, say, ~$1k/acre in places where there aren't people/infrastructure/etc...
There is no shortage of land in the US. There is a shortage of land in a few high density areas. But increasing their density makes them more attractive.
I don't think it's reasonable to make the pioneer comparison-- if you want to do what pioneers did and build something from almost nothing in the middle of nowhere with great effort then there is still an analogous route open to you.
The Puritans became settlers in the New World because they were hated and thrown out of Europe / England so they set up shop and managed to derange society to this day in the US.
I wonder about the economics of places with declining population like Japan and South Korea. I always read that declining population is bad for the economy but feels like those countries will have more opportunities for the young in the future.
of course this was never going to last forever, we have more than 8 billion people in the world, if even 0.00001% of people wanted to do what you proposed, eventually own a part of a nation’s land, thats 80 thousand people.
If I've said it once I've said it a thousand times, there is no cogent and respectable argument for why income from labor is taxed at a higher rate than income from capital.
I hope we start there, a very simple and straightforward action to take.
As predicted in Piketty's book "Capital in the Twenty-First Century". He posited that wealth trumps labour and the post-war period was an anomaly. His proposed solution is a wealth tax. I can't see those with wealth/power implementing a wealth tax, so the alternative is to invest to accumulate wealth and know that your children, who are not in a position to invest, will probably be relying on that wealth.
Capital flight is a thing. Land isn't going anywhere.
Economists including multiple Nobel laureates on both the left and right have been screaming for land value tax for almost a century for this and many other reasons.
I also enjoyed the comic book version of “ Capital and Ideology” by Picketty, Claire Alet and Benjamin Adam which follows the fortunes of a French family through the generations.
I haven’t read Piketty, but another book pointing in the same direction is The Meritocracy Trap, essentially explaining how non-meritocratic a lot of the economy is despite the common belief that it is. Wealthy parents spend a ton of resources developing the human capital of their children. It has basically eroded the middle class as a result. The author calls for an inheritance tax among other things.
Becoming? This may sound like a trope and a canard, but indeed this very publication, The Economist is partially owned and controlled by the Rothschild dynasty.
If you read the second paragraph the authors explain what they mean by "becoming".
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP, up from around 5% on average in a selection of rich countries during the middle of the 20th century. As a share of output, annual inheritance flows have doubled in France since the 1960s, and nearly trebled in Germany since the 1970s. Whether a young person can afford to buy a house and live in relative comfort is determined by inherited wealth nearly as much as it is by their own success at work. This shift has alarming economic and social consequences, because it imperils not just the meritocratic ideal, but capitalism itself.
And they do not need to be correlated even. What if rich families maintain their wealth, and meanwhile other families create wealth and become rich. How is this incompatible?
Because as wealthy families produce offspring who do not need to work or earn income in order to compete for finite resources with those who do, the cost of those resources increases, while the burden of labor and stress falls increasingly on the employed.
Eventually the man dying while making an income and spending no time with his child will grow to resent the one making the same income through family wealth who has enough time for that and more.
Thank you for passive-aggressively outlining the infinite growth mindset.
Falsely equating economic growth with cost of living metrics, and assuming that with more money everything can just continue happily. It’s been a very successful evolutionary niche for a handful of centuries.
when wealthy people have kids their wealth is diluted. Truly, one of the best parts of Elon Musk having so many fucking kids is that at least his fortune will be greatly divided and spread the second he dies
Generational wealth rarely lasts more than a generation or two. Families like the Rothschilds seem to be more the exception than the rule.
Though I am not wealthy so perhaps I truly don't know what it's like in the big club I'm not in
Sure, each one of his kids will probably only inherit a few 10's of billions. What do you think the effective difference between 10 billion and 100 billion is? You're rich AF either way.
Your evidence is that there are more billionaires when arguing there is upward mobility? We are talking about completely different things. Many of those people started out as multimillionaires and then became billionaires - almost none of them started out poor. And you're focusing on a tiny percent of the population and extrapolating that to everyone as though it's representative of anything meaningful.
The last bit is sus though. "Only inherited after making a million". Sounds like it would include born rich, high education, basic necessities covered, can work on startups without worrying about earning a salary, many such cases.
Inheriting is the root cause of all corruption. We can never, ever, have a just society based on the principle of giving our children wealth that they did not earn nor deserve.
It's almost a self fulfilling prophecy. Many people who have owned a house for the last 20 years got in at a lower price compared to their salaries. The only way younger people can get a house now is to inherit their parents wealth.
Even if I work my ass off, I won't be able to afford a house the same as my parents did. My only hope is that I inherit their house when they pass.
What most people have yet to realise is that home ownership is a quite negative phenomenon. The dual of owning a home is the ability to deny others access to housing. People who are particularly attached to the capitalist system will suggest crazy solutions like a limit on the number of houses per person, but the real solution has always been government ownership of all land. There is no advantage to privately owned land except the ability to horde it and create waste, or rent it out and create inefficiency.
I'll bite, why do you think a limit on how many homes a person can own is a bad thing? Let's clearly separate homes and other real estate here, so shop floors, factories, warehouses, etc are out of the equation. Since you mention inefficiency, how many homes can one person realistically reasonably use?
I think it is better than the current situation but worse than the optimal situation, that is government ownership. What's more, ignoring commercial land ignores that many commercial enterprises would benefit from the proposed solution in the same way people living in houses would, yet there is no mechanism by which you could limit one company to a single building of operation.
> how many homes can one person realistically reasonably use?
This question is why I consider the solution of a limit on ownership stupid. A person can reasonably use however many houses which they can afford to rent. It isn't up to me to decide what counts as reasonable use. It is simply a question of whether other people would be willing to pay more for some other purpose. Suppose someone wishes to purchase an entire abandoned town and can do so at a relatively low rate due to it being abandoned, I see no reason to deny them them this, yet a limit on home ownership would do precisely that.
One should also note that a land tax is another inferior solution to the problem. It is effectively a government lease on land which doesn't allow the rent charged to be determined by market forces. What makes total government ownership of land the most practical solution is that it most closely follows market principals. Usage of land is contingent on productive revenue from that land in excess of the revenue generated from alternative usages. Any other solution will fall short of the optimal allocation of resources which the market provides.
This is pretty basic knowledge, there is only State and Collective owned land in the PRC. Individuals can only obtain _leases_ of State owned land. Property rights of _buildings_ are distinct, but will generally follow land title/lease.
Collective ownership isn't State or Government Ownershaip (negating the "all land" part) and in China "State Ownership" is an underlying ownership that doesn't carry the weight of immediate direct ownership, hence nail houses where individual lease holding rights that are automatically renewed trump the underlying state ownership.
Point being, it's not as simple as it's made out to be and it's not dissimilar to many other countries that have a notion of underlying ownership, seperation of surface and mineral rights, cave outs for eminant domain, etc.
In this specific context it's not especially clear what the GP's "how's that working out for them" is meant to convey.
Please do some research before accusing people of "BS".
>In general, rural collectives own agricultural land and the state owns urban land. However, Article 70 of The Property Law allows for ownership of exclusive parts within an apartment building, which endorses the individual ownership of apartments.
Rural collectives own agricultural land is not "government ownership of all land" which you asserted to be true.
Moreover, the devil's in the details:
( In China, your maint.loc.gov ) According to the 2007 Property Rights Law, when the term for the right to use land for residential purposes expires, the term will be automatically renewed
Which means that residential land use rights persist, as they do in the US, and while mineral rights remain with the state it's not the case that all land ownership in the US comes with mineral rights, these may have been signed awy by prior owners or retained by the State or Federal Government whe first transferred.
Both countries are more complicated than you sweepingly make things out to be.
What is owning a home? It is having the power to legally demand other people leave it. Hence owning a home requires the ability to rent out a home, and to to rent out many homes and drive up the price. Likewise we have much land, but it has not been developed because people own it. In a system of government ownership, they would eventually be outbid on the lease for their land and it would be developed into a larger amount of affordable and higher density housing. Instead people own that land and are able to keep it underdeveloped at the cost to everyone else, then use this leverage to enrich themselves through the increase in house prices. There is no positive argument for the private ownership of land over public ownership.
Just say “ownership is theft” if thats what your argument reduces to.
That said, I think the concepts around georgism and dynamic value based taxes are a bit more interesting and address the “land banking” concerns you inserted.
I hate having to explain this to people, but a tax based on the value of something is called rent. Georgism is a system where the government owns all land and leases it out, but then the call the rent a "tax" to make it more palatable to people who are afraid of public ownership.
Thats a pretty reductive world view. I suppose “the monopoly of force and law implies control, and quote-unquote ownership, by the state.”?
So, mission accomplished? The state already compels me to pay annual taxes based on the value of my titled real estate, my car, my income, my foreign assets, etc… I guess Im just renting it all from the state?
Mind you Im no John Birch-man here. I actually pay 42% of my income in taxes, and think real property _should_ be taxed more effectively here in AU. But jumping all the way to “ownership is theft, and taxes are double secret ownership” doesnt seem particularly useful.
You are trying so desperately to put those words in my mouth, but I will not say them as I don't know what they mean.
> taxes are double secret ownership
I'm not making an ideological point here, simply pointing out that the proposed systems are isomorphic in their objectives and execution. They both aim to increase the productive use of land by charging a periodic fee to the occupants of said land based on the market value of the land. There are two differences: the first is one of language (rent vs. tax), and the second on how the rate of this fee is determined. Under socialised land, the market price of land is the same as the fee charged. Under Georgism, the fee is charged by a bunch of politicians looking at the market price of land and trying to figure it out based on that.
Given that the two systems are essentially identical, but the second brings in undue political meddling, I see no reason to prefer it to the first solution outside of the practical situation that many people are afraid of public ownership and therefore would be more likely to vote for the worse option. Do you have any real argument for Georgism over public ownership?
Honestly, he argument you make is quite confusing as it seems to conflate ideas/terms[1], redefine language[2], and draw distinctions[3] at will. It's a bit hard to reason about something when it mixes interpretations of 'what is' with 'what could be'.
You're conveniently glossing over issues like price discovery (auctions?), periodicity (annual?), and what I suspect are some pretty large inefficiencies implied by requiring continual re-bid/repurchase of existing real property vs a small proportional tax. Im an amateur, no graduate degree in economics here, but I would wager there's a reasonable amount of literature around the benefits of surety of title and depth of markets for efficient discovery to support a distributed, private, ownership & transaction model.
WRT "scary" ownership, as I said I live in Australia. I understand what crown land is, title, registry, and how we've transitioned through those ~3 times in 200 years. That's actually another example where some proclamations[4] don't quite hold up; Land ownership in Australia _is_ owned by the crown already. I merely hold (indefinite) title, so maybe 'government ownership' isn't quite the panacea? I do find our current real property and capital rate mechanisms deficient, and would appreciate something a lot closer to an annual LVT.
When you say "... the real solution has always been government ownership of all land. There is no advantage to privately owned land ..." don't act surprised if you get lumped in with those who argue against private ownership of real property.
[1] "The dual of owning a home is the ability to deny others access to housing"
[2] "a tax based on the value of something is called rent"
[3] "Given that the two systems are essentially identical, but the second brings in undue political meddling"
[4] "...the real solution has always been government ownership of all land."
Nope. The government could own all land and have the same system for withdrawing leases as is currently employed for eminent domain. You might say the government could change that system, but it can also change eminent domain. This is not an inherent difference of the two systems. One could even envision a system where the government has no ability at all to withdraw a lease and thus occupants are more safe than they would be under eminent domain. On a practical level, the Georgist system might even be more likely to turf people out than a social land system, because presumably the land tax would increase to price people out at the market rate, where a lease agreement is more likely to have controlled increases.
Well as nice as the sentimental definition you gave is, the legal definition of home ownership revolves around a set of rights granted to you by the government over a plot of land. I could feel safe and secure with my family a t Pizza Hut, but I don't own Pizza Hut.
What about gifts? Does it follow that gifts are a form of corruption, that exchanges need to be equivalent? Or how would you, for both practical law application as well as moral purposes, distinguish an inheritance, from a gift before death, from a gift in life, from providing shelter in youth and from giving a the gift of life through a part of oneself?
This isnt abstract, modulo reasonable thresholds Gifts are taxed as income by value in most countries. Inheritance (in the US) _is_ the weird wealth transfer exception.
Just checked and in argentina there is no federal tax gift, and in some provinces it's just much lower. We also have a wealth tax so that may address the gen wealth issue in another manner.
Tax is like that different in every country and hard to compare apples to apples.
The way the ultra-wealthy manage to make it entirely taxless; super evil for sure. Even so, it's not really the root - maybe a very large branch of it.
Nonsense. In order to focus on the supposed injustice of inheritance itself, suppose that someone becomes wealthy through ethical means. If they then turn out to have a mutation that causes them to be immortal, at what point does it become just to simply take their wealth away from them? If your answer is “never”, why is it any different if they gift their wealth to their descendants? Why is gifting wealth wrong?
Most of my friends who bought a house in Seattle in their 20s or 30s used inherited funds. When I worked in mortgage lending it was basically universal that anyone younger than 30 was getting a lot of help from parents. There's a massive advantage to owning a house when you're young, especially pre-rate hike.
Almost everyone I know got several hundred thousand dollars gifted for a down payment and most of these people are from typical middle or upper middle class backgrounds. I have a top 2% income (by Canadian standards) but the best I can do is a 2 bedroom condo or a bottom of the market townhouse with a long commute
I don’t know a single neighborhood in this city where the average household in that neighborhood makes enough to live there with current prices.
I genuinely don’t know why I even work anymore. I don’t have any achievable financial goals except save as much as I can until I move away to live off my savings in a cheap area
You are onto something but I would suggest a slightly different conclusion: that the best and brightest STEM students are attracted to the shiniest jobs, which right now involve programming computers to trade money (HFT) and teaching computers to do advertising (ML-backed ads). Neither of those are fundamentally useful.
Did you go to American high school? Most kids barely pass algebra 2. Even the “smart kids” can’t really compete in college. With standard American route there’s a sub 1% chance you can make it as a researcher in a hard science.
What? I went to an American public high school, there were/are plenty of kids who are very smart. 8% of my graduating class were in the uber-advanced honors math track. This is in a flyover state outside a small city.
I also used to work in science, the reason there's so few chances to make it as a top researcher is that there is little opportunity. Look at jobs for a lot of life science majors after a BS, you will find a ton that is washing glassware in a lab, a complete waste of anyone with half a brain.
There's reasons why there is little opportunity that's not worth exploring here, but suffice to say there are a ton of very smart kids in America that choose other paths. Outside tech and specialized physicians, nerd careers are not lucrative on average. With little opportunity, smart people end up doing banal work. Why do banal work and have a mediocre salary predicated on jumping through higher than average academic hoops? Doesn't add up for most people.
I'd say the reason there is so little opportunity in science is that science as an instiution is terrible at capturing the value it creates. Thus it instead relies on charity of which there isn't enough.
Housing is the obvious problem, only way to fix this is by making it easier to build houses and some kinda land value tax (higher property taxes would work but not as well). Problem is most western countries are gerontocracies and property taxes are the most hated tax. If you didn't get lucky you might as well give up on ever owning a house.
I think we need to shift from seeing inheritance as something we benefit from.
Every positive comes with a negative, nothing is created nothing is destroyed.
Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
I won't deny that you CAN ignore the responsibilities that come from inheriting wealth, yes you can sell your father's company and life mission, but you destroy your legacy, and your children will destroy yours.
Wealth comes with its own set of problems if taken. Sure we may argue about which problems are worst, but must we? Each is born into a place, each is born into a class. And the principle of balance shall bring equity in the form of responsibility (to paraphrase Spiderman's uncle).
I just feel it's a more appropriate response to tell your parent "I will take care of it" rather than "thank you" and selling it to go on trips and snort cocaine. I'm not saying I'm free of sin and don't indulge in the pleasures of hedon, be it in a coffee (brought to me by a less attractive waiter of a distinct race from other commensals serving a publicly traded company, and made with beans grown and brought under a veil I can assume hides even more injustices) or in the wasting of my intellectual and physical talents on the pursuit and satisfaction of short term audiovisual novelty, but I will do so in guilt damnit!
>Every positive comes with a negative, nothing is created nothing is destroyed.
>Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
This is a platitude that has no bearing on reality. Technological advance in the past 2 centuries has increase our wealth and standards of living by orders of magnitude. You can come up with token objections about how each advancement had some downsides (indoor plumbing is bad because... copper mines pollute the environment?), but it's certainly not the case that "nothing is created nothing is destroyed". Technological advancement has created untold wealth.
Are you trying to say it’s harder to inherit wealth than it is to be born low income, grind a construction job, and come home to the house your parents bought 40 years ago that homes your grandparents, parents, and your family?
This is why I believe the Financial Independence movement is too rearward looking, if you have children. Parents now need to plan for the college (and graduate school) tuition and the house downpayments of their children, because the cost of both have increased by an order of magnitude in the last 50 years.
We are building a new aristocracy where people are better than others just by virtue of being born into the right family. And if we don't limit the ability to inherit this process will just accelerate.
If skills and knowledge matter less and less because technology and automation grow over time, what matters if not already existing wealth? Might be an hyperbole dictated by the current times, who knows.
A dirty little secret is that that over a third of Gen Z and Millennials get down payment help from their home-owning parents. In expensive cities, the percentage is even higher. When you add the number of parents who co-sign in order to secure the mortgage, the number could reach 2/3rds in expensive metros.
In the sense that there’s a growing class of landed gentry and nobody else can buy anything. People with houses today will be the aristocracy in a few decades
This doesn’t hold up logically. To inherit money means the generation before you saved it, but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
For inheriting wealth to be important to your success, it would either have to come much sooner or you would have to have no kids of your own
>but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
At least in theory that's not hard to pull off. From the article:
>By one calculation, if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made.
The average inheritor might be too spendthrift to stick to the plan, it's not exactly impossible as you suggest.
I suppose it’s something like inequality is inevitable so you can’t remove it; instead you can try to make it comfortable for everyone and that due diligence can help.
Perhaps a well-run military would be an example; unequal by definition but without all the parts working well it falls apart.
In United vs FEC, corporations were granted to the ability to be treated as persons - with all the rights - when it was good for them. And to enjoy the protections of being a corporation when that was good for them. This was a unilateral decision by the US Supreme Court.
The result is that corporations now choose who candidates are in the US and who gets elected. Once a candidate is elected they serve the master who got them elected. Not, We the people. Any even casual evaluation of the laws passed confirms this. Affordable medical care, which the People want and need? No. Obscene profits from corporations overcharging people for medical care? Great!
Regular people push addictive drugs? Jail. The Sackler Family, probably the biggest cause of drug overdoes deaths ever? Are they in jail? And what about the millions of stock owners who made a tidy sum? Did they lose their money, are they in jail? Nope.
We are not a democracy, we are a corpocracy. Because of a US Supreme Court decision. We need to fix this. And hint: is the word corporation in the US Constitution. Hint #2 does the 14th amendment prohibit unequal protection under the law.
In a democracy the representatives represent the will of the people. In a corpocracy they represent the will of the wealthy corpocrats and corporations. We have two corpocratic parties to choose from. Democrats and Republicans.
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP
this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
other nits, the baby boomers were an unusually large population group in an unusually prosperous and healthy period of history: we've known they would die for quite some time and we've known they would leave a lot of money. It's not "a trend" and it's not "news". It's a well known anomoly, a blip/bulge passing through the system. It's interesting but it's not alarming.
>this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
I get where you're trying to go with this (ie. "you can't compare stock vs flows!"), but you've patterned matched too aggressively. There's nothing wrong with using GDP of a country as a benchmark. Sure, it's comparing stock vs flows, but GDP of a country is nonetheless a valuable yardstick when comparing sums, for instance comparing debt to GDP levels. As long as they're not directly comparing the figures (eg. implying that the whole country is going to be inherited in 10 years time or whatever), it's fine.
part of the reason marriage was invented as a social technology was intergenerational transfer of wealth. so, inheritance has been 'nearly as important' as working for millennia.
A groundbreaking 20-year study conducted by wealth consultancy, The Williams Group, involved over 3,200 families and found that seven in 10 families tend to lose their fortune by the second generation, while nine in 10 lose it by the third generation.
This study matches my anecdotal experiences. Second and third generations of wealth don't respect money and this manifest in all kinds of bad behavior that leads to wealth destruction.
This is an interesting concept that in its abstract form applies to far more than inheritance. For example, it's a pretty thoroughly studied phenomenon that if a part of an immigration population becomes radicalized, it's usually the third generation. The reasoning if I recall correctly off the top of my head is similar to your reasoning.
We do tax wealth of course. We wealth is defined as primary residence. No need to remind me about 'services'.
Countries tax plebs by constantly changing the definitions of income, wealth.
When you look around at how expensive homes are in certain areas and continue to lose the auction because everyone else had a cash bid, realize a lot of people are getting a lot of money from their aging and dying boomer parents. Where I live nearly everyone had a lot of help from mom & dad.
In other words the rich are an increasingly large parasite that is increasingly impairing the functions of real society and subverting it to their ends. Two oligarchs are running the country right now in their own interest.
I like how they always forget to mention the elephant in the room, 8 billion in absurd amount of any living organism, by many estimates we already surpassed the number of rats in the world, but the responses about doing anything at all to reduce that number in the long-term are all emotionally charged and empty of any rational thought.
In the context of capitalism as we known scarcity increases value, such thing is true for number of employees available, the less employable people around the higher the wages and therefore the quality of life of the living.
People really should look at the work of Gary Stevenson here: https://youtu.be/TflnQb9E6lw
The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
I’m starting to think the entire system is corrupt and we are headed for a destroyed Europe and a civil war in the US. Maybe I’m very pessimistic but this moment in history feels like the end of the American empire, what comes after this is extremely uncertain but people only seem to demand a fair piece of the wealth after a world war.
Thomas Piketty lays it all out in "Capital in the 21st Century"
Basically he compares two kinds of growth rates : the growth rate of the 'real' economy and the growth rate of wealth itself. You need the wealth rate to be low enough that rich people want to invest some of it in the real world, not leave it in the bank.
If you do tax the rich, they do very well and you also have money to pay for things like education, roads, affordable housing, medical services, scientific research .. which benefit all and lubricate the general economic market.
If you dont tax the rich, you end up with a gilded age of emperors and kings or a few robber barrons, a small rich coterie around them and the gawping masses of poor eeking it out.
Postwar 70s and 80s were a unusual period of relative lower-inequality, in which we had money in the real economy to develop things.
Garys Economics made an interesting point that inequality _itself_ is a problem - because the actual real value of the world remaining the same [ goods, energy available, land, workers, housing, technology ], when there is higher inequality, then the poor are losing a proportion of that real wealth to the rich. Extreme inequality itself starves almost all the population of a share of real wealth, for them to use their skills effectively - renovate a house, invest in stocks, get a masters degree, do a garage project, travel, have kids, install solar panels etc.
Even if you try to tax the riches, they have billions of ways to evade it. The tax laws are so complicated for a reason. Here in Australia, there were cases that some individuals that earned just about A$1M pa., and they paid ~A$980K to companies registered in Virgin Islands etc. for managing tax affairs. Such arrangement knocked down their taxable income to ~A$19K, and thus they paid probably a couple of dollars taxes if not not even a dime. Eye-opening, right? But those were not those super rich ones. You can just imagine what those super rich people can do. So the burden of the tax would be on mid-income people. I would expect the same in US.
> The tax laws are so complicated for a reason.
And the reason is those same rich influence the laws to their benefit.
It would be pretty trivial to tax the wealth if a society wanted to do so. But laws are made by lobbyists, who are paid by the rich, so what should we expect.
If there were political will to tax the rich then you'd have to, in addition to changing tax law (obviously), fund IRS investigations to ensure the taxes are actually collected. Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services. If you think people will commit tax evasion, then put more resources into investigating tax evasion. Historically, money spent recovering taxes has yielded more than the cost of said investigations.
It is extremely difficult because you not only need to do it on a per-country level, but globally. Otherwise you just punish foreign companies that genuinely invest in a country with stricter tax laws (and most will just choose another country, just like it's happening in Europe). And ultimately, it depends on the will of the American administration - and they can be extremely bullish about imposing their laws on smaller countries, sometimes even using their military advantage.
> Throwing up your arms and saying "well we can't tax the rich, they're too powerful and wily, and will easily commit tax fraud to evade those taxes, and in actuality you'll bring in less money" is exactly the weak attitude that stalls efforts to fund vital services.
It goes further than that, it is the exact argument made by wealthy people as to why we shouldn't tax them more aggressively. Parroting that argument is ludicrous unless you're considerably wealthy yourself.
Those loopholes were by design, complicated enough to prevent most people like us to take advantage of it but will allow those who can afford to evade lots. I'm not sure if people is just naive or playing dumb.
If only there were some way to change a tax code... Alas, no country has ever figured out how to do that!
My point was that Tax Laws were deliberately complicated to allow some people to evade taxes. If you put that into consideration, you will find it's a lot easier to understand the status quo. Again, what you think or what I think do not matter after all.
Two points here:
1. Gary’s arguments for taxing the rich aren’t about taxing income. It’s about taxing wealth.
2. By his argument, most of the wealth are immovable: the rich disproportionately owns actual, physical real estates, and stocks of actual companies. As these assets are based in the country, you could tax right at the source.
Yep. Get your points. They can if they wish. The question is do they want to? If so, why were those loopholes there in the first place?
So the government takes physical assets? Didn't we fight a war over property rights?
My neighbor is way wealthier than me. So its ok if I take his car. He has enough he can just buy another one.
Property taxes are a thing. If Joe Dirt has to pay property taxes for the home he shelters in, the wealthy should have to pay property taxes for the shares of a company that they use to secure loans for yachts and Ferraris.
> So the government takes physical assets?
Not quite. If you are ultra wealthy because you happen to own several large buildings, fleeing the country to avoid taxes is easy. Doing so with you wealth, however, isn’t.
Which is why they will leave with mobile wealth before the act goes into effect, taking away the capital workers use to earn a living. Property taxes on land and fixed structures work well as they cant run away in a practical way.
The means of production is still here, what’s left of it. Lower asset prices will benefit the poor. What should have happened during COVID is the government took a percentage of businesses to the cost of lockdown/furlough (if they were of a certain size) rather than subsidising the asset hoarding class at the expense of workers. Then you give the workers part of these businesses, spend the rest on re-industrialising. It would have caused the biggest economic boom in the UK maybe ever and with all these consumers available to buy things you’d get a lot of investment and some people would use some of this wealth (£1tn in the UK alone, about £15k for every adult and child in the UK) to start small businesses creating an even better economy.
It’s got to be worth a try rather than the disastrous economic policies that got us here.
Not totally. The wealthy are incredibly heavily invested in our economy. Take Elon Musk for example. He’s heavily invested in SpaceX, Tesla, and Twitter. If he walks away from the US, Tesla, Twitter, and SpaceX are all still here and can’t easily “run away”. Sure, they can take some “mobile wealth”, but if you are very wealthy you can’t just leave a whole economy (that’s where your wealth is).
Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.[0]
[0] https://news.ycombinator.com/newsguidelines.html
I think a more reasonable interpretation might be "the government knows about expensive cars (i.e. that they are registered, have numberplates etc), and so charges some annual tax on the owners of those cars."
Describing wealth tax reasoning with an absurd example of the same reasoning on an individual level is an attempt to get people to understand what wealth taxes are.
The government that is supposed to work for you thinks you have accumulated too much stuff and is trying to make it legal to take a percentage of your physical wealth annually.
You only accumulated and maintain the wealth because of the government. Without the government and the economic system it cultivates, you’d never have it.
But laws shouldn't be set based on how easy they are to avoid. Lots of people drive too fast all the time, yet few argue that we should do away with speed limits. Besides, there is zero empirical evidence that suggests that raising rich people's taxes is ineffective. Yes, they are good at avoiding taxes, but professional tax collectors are probably even better at enforcing taxes. It's a question of political will, or lack thereof, due to not wanting to lose your biggest donors.
You don't cut your own fingers. And that pretty much the whole story.
Do you have a link?
If the individual resides in Australia, how do they utilize the $980k sitting in the foreign company?
The company can buy assets in AU, such as a house, and lease it to the individual, but I'm pretty sure the ATO requires they pay the company rent at market rate, which will likely be unaffordable on a reported income of 20K pa.
I remembered I read the article from Australian Financial Review, although I could not find the original link, got a more detailed one instead.
See Page #3. https://australiainstitute.org.au/wp-content/uploads/2020/12...
"You can't possibly defeat me, why do you even try?"
Come on. You have fallen for cartoon-villain level smack talk. Chew it up, spit it out. We've done this before and we can do it again.
A land value tax would be impossible to evade. Even a business’s assets will exist somewhere on land. In the case of intellectual property, reducing copyright and agents to 10 years should solve the problem.
Can that class of scams be foiled with consumption tax ?
Consumption taxes are almost always regressive, hitting the poorest the hardest. Depends on how you structure them.
Good point
Rich people generally don't keep the majority of their money as cash in a vault. When money lies in the bank, the bank invests it in the real world. Or more directly, when money lies in stocks and bonds, it is invested in the real world.
Piketty is a hack. Most billionaires don't spend anything even close to their net worth. In effect, they have a bunch of IOUs from other people and never cash them in.
The problems with Piketty's arguments are addressed in the article:
"if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made"
Yes, if rich people invested their money wisely, gave nothing to charity, spent small amounts, and left their wealth to one of their children, wealth inequality would grow unchecked.
But rich people don't do that.
But wealth inequality has still grown quite a bit. Your point is not a refutation, it’s just an observation that the infection has progressed more slowly than it could have if it was completely optimal.
Wealth inequality hasn't grown since 1900.
https://wid.world/news-article/inequality-across-700-years/
"wealth inequality" is one of the dumbest ways of measuring the health of an economy, or to specifically aim to reduce. Unfortunately, there will always be a baseline group of people at, or near, zero wealth. The goal should simply be to reduce this number and the overall number of people living in or near poverty. Whether Warren Buffett has $50, 100, or 200 billion - which does affect wealth inequality calculations - is of zero consequence to the lives of the lowest-wealth individuals (nor did someone like SBF losing 10s of billions, help them)
It matters if one person can buy Twitter on a whim and use it to pursue his ideological goals, or if one person can buy The Washington Post and dictate it's editorial positions, or if a small handful of people can fund an effort to identify and groom a wide bench of lawyers to one day become judges who will bend the law in their favor. Not to mention plain old lobbying and campaign contributions. When wealth is power, wealth inequality is toxic to democracy.
Oh my, individual ownership of newspapers? Bezos bought it from Katharine Graham, while the Sulzberger clan has owned the NYT for over a century. Scripps, Hearst, Pulitzer... how did these names get famous? Newspapers.
Twitter is much more effective at brainwashing stupid people into believing any old crap than newspapers ever were, there were journalistic standards in the coverage for one thing.
>> Your point is not a refutation
"there are fewer than 1,000 billionaires and the vast majority of them are self-made"
That's a refutation, Piketty made assertions not just about the outcome, but about the process by which that outcome would happen.
So long as rich-get-richer mechanics play out inside of a single generation they are unquestionably OK? What even is this argument?
he didn't say it's ok. He said piketty is wrong. Anyone who studied even econ 101 and combined it with a teaspoon of common sense knows piketty is an idiot and that book is garbage. He's a politician.
Explain your argument because it's not at all clear to me. I do not see how that statement refutes the arguments the above poster gave.
They're saying that self-made billionaires didn't inherit their wealth. Which means they created it. Which means that it created useful economic activity. And since rich people dont optimally pass on their wealth, those 1000 billionaires' spawn are likely to piss away that wealth while 1000 more economically active individuals create more healthy economic activity in pursuit of becoming billionaires so that they can pass on their wealth to their children to piss away, ad. Inf.
If that's the argument, then it sounds pretty flawed TBH. I mean how does not inheriting their wealth, automatically mean they created it? Is theft not also a possibility?
Rich peoples descendants dont do that...
Thanks for that correction.
Yeah brilliant “businessmen” are born into rich families and destroy their wealth pretending to be real estate developers and managing to be so incompetent you bankrupt a casino where the house should always win!
> the growth rate of wealth itself
The fundamental theorem of capitalism: rich people get paid for being rich in proportion to how rich they are.
This is why your savings account looks like an exponential. The thing to understand is the difference in lived experience depending on where it starts. If you are poor, the returns are a joke, you tend to ignore them. If you are middle class, the returns fund your retirement, and it seems roughly fair: you work hard and at some point you earn the right to not work any more. Only if you are rich do you see the fountain of free money (homework: calculate yearly returns for the typical 10%er, 1%er, .1%er, and centabillionaire), and of course being the beneficiary you rationalize away the possibility that this could be a problem at all. It's a tidy system.
"That's an unfair characterization of capitalism!"
So is the one you get in economics which bends over backwards to hide the "fundamental theorem" as I have stated it inside a choice of units: "under conditions of market equilibrium every financial asset has an equivalent risk-adjusted rate of return from the perspective of its marginal buyer." Did you miss the class warfare? It was all hidden inside the word "rate." Very clever.
Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood but all of us are better off than our parents at the same age and their parents are better off than their parents (with one exception).
All either studied hard in school and went on to get a degree or left school at 18 and apprenticed in a trade or got specific qualifications.
I read so much about declining wealth and how each generation is worse off that I have to assume I’m in a lucky bubble because it’s not the case for me.
None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
Which fields?
I feel like software has been an outlier here for a decade; the only place where traditional economic intuitions still apply (semi-smart people can work hard, learn a technical skill, find a job in their field, pay off their loans, make more than their parents, afford a house, and have a comfortable personal life and relatively fulfilling work life)
Everything I've heard from the rest of the economy is that this model is dead
Fair question, it’s a mix: IT admin, manufacturing project manager, primary school teacher, tree surgeon, mortgage advisor, doctor, something in finance, secondary school teacher, plumber, software developer, power electronics engineer, charity sector project lead
So a real mix
Okay, so a lot of ~£40k a year salaries (outside of medicine and finance) to afford a £400k house when your parents might have had a £20k salary to afford an £80k house? There's a real disparity when you consider what they did too. If your parents are anything like mine, they were in the pub 4 days a week, drinking and eating with friends. I can managed that just a few times a month. Wealth compared to income from my experience is significantly lower by .lost metrics.
Maybe you have an exceptional friend group because .. outside of your anecdata .. the statistically average salaries for many of those professions over large sample sets is below the median in the us and they are definitely not seeing their purchasing power increasing yearly
>they are definitely not seeing their purchasing power increasing yearly
In the US? Real Disposable Personal Income has been growing very consistently over time [1]. The rate of growth did stagnate between 2000 and 2013 but the trend has been remarkably consistent.
[1] https://fred.stlouisfed.org/series/DSPIC96
the per capita version of your graph: https://fred.stlouisfed.org/series/A229RX0
it claims that the average person has 50k usd in disposable yearly income - there's no way that's after housing and other non optional expenses have been accounted for.
using this measurement, if wages go up 5% but rent goes up 50%, it would still look as if people have more money to spend than before.
"the only place where traditional economic intuitions still apply"
Which economy? In the US, healthcare, public schools in some states, and B2B sales come to mind as decent jobs. But I agree with the general sentiment - there do not seem to be great choices that support a nice life. Quite a few of my friend have to work multiple jobs or double shifts to make it work.
Most healthcare jobs don’t pay particularly well. The inefficiency is going to pay the salaries of medical transcriptionists, people handling billing inside insurance and in healthcare facilities etc. Things that aren’t improving outcomes are ultimately why healthcare is expensive in the US.
Just for comparison the minimum wage nationwide in Feb 1, 1968 was 1.60$/hour that’s ~14.61$/hour when adjusted for inflation. Median household income in 1968 was 8,600$ or ~$78,504.90 inflation adjusted and that was mostly single income.
https://www.census.gov/library/publications/1969/demo/p60-66...
https://www.usinflationcalculator.com/
I wasn't really talking about the billing, but more about doctors, nurses, medical manufacturing, etc.
That’s the higher end of medicine, orderlies are making 16$/h. People on ambulances are often making 17$/h. Some nurses make ok money, but starting salary for a school nurse is 20$/h and median school nurse is making 30$/h...
Granted I understand what you mean, but it’s kind of like saying managers make good money while ignoring all the shift managers at fast food joints.
Can we summarize it that 'easy' or 'low skilled' jobs aren't payed better today comparing with the past? Not surprising taking into account demand and population. More worrying is that high-skilled jobs aren't rewording. As for equality.. welcome to USSR, you see how it ended. Now only a few Arabs states have greater inequality.
It also depends on who your parents are. My parents at my age were poor working class. We had a much smaller house (800 sq ft), used cheap cars, cheaper clothing, etc... My dad spent a lot of time fixing our cars (I don't even try), fixing plumbing issues, and we rarely ate out (and never DoorDash'ed!). I was lucky to get some quarters to go to the local arcade to play Pac Man.
My point -- even being slightly lower middle class now would feel like a good jump over my parents. That's just pointing out that comparisons to parental income is very relative.
Yes, you and I are outliers and so are many people here.
Those of us who work in tech, and many of the people we find ourselves bonding with and staying close to in our adulthood, are lucky to have taken up in a sector that happened to see disproportionate growth during our careers and admitted many people from modest backgrounds.
But people who didn't stumble onto that path, or perhaps hoped to follow their parents into professions that were more flat or failing (medicine, education, academia, farming, manufacturing, "the trades"). In aggregate, some of those people are still doing okay, some are doing well, and some are flailing in desperation for having made the wrong bet.
Of the people I grew up with in a modest blue collar community, I don't know anyone besides the few most ambitious and capable that were able to find the security that their parents had. And as one of those more ambitious and capable people who later circled with people of fancier backgrounds, I similarly don't know anyone who pursued things like academia or medicine and found what they expected there either.
Appreciate what you have! Many don't share it.
As someone in the US that’s bounced in and out of tech, including some longish stints in blue collar jobs, it honestly blows my mind that the tech scene is so all-encompassing that many in it feel like it is representative of… anything else. I’m not talking about the tech libertarian types that think any impediment to the ultra rich vacuuming up everyone else’s wealth is tantamount to dictatorship. I’m talking about the typical happy path developer (I shy away from saying average because all us developers are above-average developers) that went to college for comp sci right after high school pretty quickly secured a junior role for maybe 6x-9x the (ridiculous) Federal Poverty Level.
To be clear: I’m not saying they’re bad people or anything— most people think their experiences are more representative than they are. But, from outside, some of the assumptions software folks make about the world just seem utterly ridiculous. Consider that on average, junior developers make more money than a first year medical resident that has a PhD in perhaps the highest demand field in the US and works shifts of 16-30 hours with many consistently logging 80 hours per week, and occasionally end up working much more. Ask that medical resident what a really bad day, and a really bad week at work looks like for them and ask a developer with the same amount of post-school experience the same question, and then consider how much more school it took… and then ask that same question to an aircraft mechanic, a chef with a culinary degree, a construction worker, a public defender, a commercial fisherman, a firefighter, a nurse… the software industry is more than an aberration — it’s a different planet. The kind of shit I’ve seen developers say they’re going to “pivot to” if the software industry falls apart is, frankly, flabbergasting. If we see the sort of sustained job losses some fear in software, there are going to be a whole lot of people learning some extremely bitter, difficult truths about the world outside.
I’m not saying we all didn’t and don’t work hard to get where we are — it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world. It’s easy to see your own contributions to your success and miss the industry and market scaffolding you could stand on to get what you did.
> it’s just that what developers get vs what’s expected of us and what we had to do to get there is very different than what it is for almost the entire rest of the working world
It's about margins. Software has the 2nd highest margins of any sector (highest is High Finance), so it's easy to pay competitively in software compared to other fields.
Right. There’s obviously a totally valid market-based reason for it, and I am absolutely not implying that developers should receive less of that than they do. However, its an external factor which gives many developers a very skewed understanding of how much work most people expend for the amount of money they receive and agency they get at work, and how much they’re worth as workers outside of the software world with roughly the same amount of ambition and effort. Compared to most industries, software companies coddled developers and really tried to trump up the mystique of the great hacker genius. While particularly apparent in the restaurant industry, developers thinking they’ve ‘solved’ an unrelated business they’ve got no experience in using their genius software brain or assume they can simply transfer their existing skills to a new field is pretty common. I encountered one developer who thought they’d simply pivot to crime to keep their family comfortable, which is hilarious. The beginning of a career in crime is long and full of petty bullshit crimes that pay very little because you don’t have the wisdom to not get caught doing more serious crimes, and you don’t have the network to support you doing things like getting unregistered guns, fencing, etc. What I wouldn’t pay to see that guy walk into a bar in a rough part of town, order a craft beer, and try to debate the sketchiest people he saw about why he’d make a trustworthy partner in crime.
I'm in agreement with you!
I'm just saying the only reason SWEs (and IBs) get paid the big bucks is primarily because of market economics, even if plenty of other high stress roles (eg. Nursing, EMT, Teaching) get paid a relative pittance.
I think a lot of us members of the tech industry need to cut down on our hubris and respect other industries and jobs, and understand that we are cogs inasmuch as anyone else.
Right right. I imagine it was much the same for mechanical engineers during the Industrial Revolution.
I'm a little surprised by this. While I'm better off than my parents I went into a much more highly paying field (software engineer vs teacher/social worker.) If I did a similar job to them I would have no hope of ever affording a similar house to them.
They were part of a generation that benefited from enormous house price appreciation due to a combination of falling interest rates went from almost 15% down to under 5% (this is about 3x on its own) and the fall in house building which drove up prices and rents generally.
This effect is somewhat less pronounced outside of southern England.
You make a good point about higher paying fields in the younger generations. While there is a spread of occupations that I replied to another commenter with you may have hit on something. Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
Thinking of one (not me) it’s delivery driver -> enlisted service -> mid level finance (not London)
Hmmm, food for thought, thank you
> Nearly everyone has an occupation in a higher paying field than their parents/grandparents and everyone is dual income whereas, I assume, this was less so in the previous generations.
That is unarguably true of our parents' and grandparents' generations, but I don't think it is as true of people of my age or younger (born in early 1980s.)
There was a huge expansion of higher skilled jobs after the war with large numbers of people moving into the middle classes. For me and everyone I know our mothers (born 1950s) worked. We all grew up in dual income families.
My great-grandfather was a miner. His son, my grandfather enlisted in the forces during the war, seems to have been recognised as being technically apt and worked with radar, became an officer and in the early 1960s left to be a manager at an engineering company.
His daughter, my mum, became a teacher (first in family to go to college) and his son did not go to college but became an IT manager (married a teacher). All of us grandchildren went to university but basically have similar jobs to our parents' generation.
Several of my siblings and cousins own houses but they got help from parents or partners' parents and mostly bought outside the south east. Renting a flat in London as a fairly highly paid IT contractor I had to pay six months up front because my parents didn't earn enough to be guarantors.
> None of us are rich but the system appears to be working from a sample of say 30 people aged 25 to 45 from different parts and backgrounds in the UK.
I have a similar sample, all middle class in their 30's. The only ones who have bought houses have been given significant assistance from their parents, now none of them are poor by any stretch, but few have any significant assets.
I have a very different experience. I did all the right things, more or less, got into a good field with a secure job in the broader tech industry, and indeed I make very good money.
Despite this, I can not afford to buy the house I grew up in; a 3 bedroom SFH with a decent sized yard and a pool, around 1400 square feet, 45 minutes away from downtown without traffic in a hot real estate market. My father was able to purchase this home as a tradesman with 4 kids, being the only parent who worked outside the home.
How can you compare these experiences to a greater upward mobility which does not exist? You don’t have a baseline for comparison. What if you had 2x more leisure time with the same fiscal wealth? What if you had easier access to healthcare?
what if we lived forever and money grew on trees
Well things worked out for you and they have worked out for me as well. For a long time I have this arrogance expressed privately usually to myself or very close people that it is all due to hard work, diligence, thrift that I reached where I am today.
But lately after reading and observing around quite a bit I come to realize due to being ended up in a fast growing sector at least a minimum level of success was guaranteed. I see same thing at my company where a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me and growth was much faster than compare to when I joined in mid 2000s.
They can talk down to me just like I can talk down to more juniors about value of hard work, drive and so on. However, joining a growing sector early was best thing career wise. No amount of hard work will help if one is starting at a middling IT job in middling company in 2025 like I did in 2005.
Well, and even the company matters. I was in IT since post-grad school (with a bit of engineering earlier). But with dot-bomb, a company that struggled through and then 2008, I was only in an "OK" position. It was really the period post 2010 that set things up a lot better.
Indeed. For me 2010-11 was when I got a full-time job as compared to contracting (small time) which was big jump for me in terms of job quality and money. Interesting enough I met many people who joined Amazon in same time frame and earning about 50% more than me in straight first job that I earned after with 8-10 years of experience. So yeah company part is important.
I wouldn't even say it was work quality; the job I had for a good period really set me up for my ultimate full-time job and I mostly liked it. But that ultimate job was a public company and even if not FAANG level comp, set me up pretty well and provided the leverage to make investments that were pretty solid during that very good period.
> a lot of VPs, Sr VPs and above reached to that level primarily they started a decade or two earlier than me
Not refuting your point but there is a selection bias here. You are in contact with people who did in fact achieve VP or higher levels. Lots more also joined the industry 10 or 20 years before you and burned out, failed, hated it, got fired, whatever. The people who succeeded may not be particularly exceptional in terms of talent, brainpower, innovative thinking, etc, (lots was luck, or being in the right place at the right time, surely) but it's also not true that everyone they worked with back then became a big success.
"in the UK"
In the US, my anecdotes seem to show that things have stayed neutral or declined slightly. It seems harder to get a decent job than our parents. It seems that fewer of us have bought homes, or delayed buying due to financial reasons. Seems like more of us are working multiple jobs too. I think the aggregate measures showed real income only trending up slightly over the past couple generations.
My dad migrated to London in the 70s and bought his first property in London around age 26. He didn't have a degree but did get a professional qualification.
I ended up getting a good degree at a top uni and started my career at Amazon but definitely couldn't have amassed the necessary amount for a down payment for a place in London by the time I was 26.
By the time my dad was 35 he had two kids and my mum was a full time mum.
This doesn't sound remotely close to the reality of my numerous banking, lawyer, accountant, engineering and doctor friends.
The only people I know who are remotely close to being able to own a property in London and have only one breadwinner work in hedge funds.
Of my friends only one set lives in London and I have no idea how they afford it, one or both of them must be on silly money and it’s pretty clear most of the money must go into the mortgage. I started my career is a very cheap part of the UK so I sort of have to carve London out of any generalisations I make.
I'm in the same position as you, but I see myself as rather lucky. I worked very hard but I also was taught hard work translates into success, many people don't see that relationship. And I happened to be interested in a lucrative career path.
> I also was taught hard work translates into success, many people don't see that relationship.
That's a typical confirmation bias: you worked hard and got successful, so you're tempted to think that it's because you worked hard. Some don't work hard and get successful, many work hard and don't get successful.
The one thing that you clearly can't rule out is luck. Tell people in Gaza that if they work hard they will end up in a situation similar as yours...
some work hard and get successful; some work hard and fail
all who don't try fail
I fail to see how this is related to what I said.
It's related because you said "you can't rule out luck" which is basically casting doubt on the whole idea of hard work having an impact on success. Well, no reasonable person would say hard work guarantees success, or that all success is luck. The truth is luck and serendipity affect all outcomes, but to use that to question the impact of a human's agency on their own life outcomes is an insidiously disempowering perspective.
Very anecdotal. You can't just look at yourself and your circle (which is similar to yourself) and extrapolate to the general population. Also most people in HN are in Tech which did well in the last 15-20 years comparing to other fields.
> Perhaps my friends and I are outliers, none of us inherited any wealth or were given trust funds or lump sums when hitting adulthood
> all of us are better off than our parents at the same age and their parents are better off than their parents
These are conflicting statements. Your group are all beneficiaries of generational wealth by this description. Maybe it isn’t as overt as a trust fund, but you definitely inherited wealth and opportunity from your parents.
It's hard to understand what you're saying here. Being better off than your parents implies that you are a beneficiary of generational wealth? Connect the dots for us.
OP described a group of families that accrued wealth over 3 generations "without inheriting any wealth". Assuming they weren't orphaned at birth, each generation definitely benefited from the fruits of the previous generation. Even without an overt handout like a trust fund, we still inherit wealth from our ancestors (eg: housing, health care, education, credit, social networks, etc). In this case, the "handout" would have been their upbringing. They feel "the system is working" because of this, but not everyone in the system has an ancestry like this.
Oh get off your high horse.
I’m not on a high horse.
While I don’t doubt things have worked out well for you, how many of you are able to afford owning real estate?
Sure maybe there was some inertia from the benevolent bettering institutions of the New Deal that have given a chance to Americans.
I just think you'd have to be so willfully in denial as to miss the darkness we are descending into. To miss how bitterly the GOP and the wealthy are building empires of lies and bespoke manufactured realities to make up down and left right, to cover for horrible treacherous actions against the possibility of the individual, stacking the deck for empire and inherited wealth. (And Dems are frequently unwilling to bite the donor class that makes winning elections possible, after the courts have obstructed democratic funding reforms.) Are actively opposing the possibility of people doing good for themselves & the world.
I strongly recommend folks go read one of the darkest periods of America, before enough was enough Adam Hochschild's American Midnight (2022) tells an amazing story of a circa-WW1 state that had radicalized against people, that had been totally overrun by well monied powers. Of Hoover using the full power of the police state to surveil as Ralph Van Demand had done during the Philippines civil war, of of the postal service run by someone using it for information control, of American Defense vigilanism.
Its not a tale of what happened next, how that broke, just a long amazing story of how dark America got, how badly the state was an extension of capital and power, and how deeply it subverted the individual, the union, any attempt for everyday humans to make any claim to life liberty, or pursuit of happiness.
We face today not quite such amassed power, but a completely warped infosphere where these bespoke realities create lifestyle beliefs where people are on board with incredible trains of lies crafting false enemies, supporting the opposite of the signalling they claim. Its different than dark; the world today is overloaded by hell's din, by monsters of abuse, doing their worst to harm us for greed and for the possibility of undoing the good of the world.
Whether or not you're really outliers, it would be very surprising if "my friends and I" were representative of the general population.
Same here, but we are in a very similar boat in our voyage through socioeconomic statuses (though I'm in Ohio River Valley US). I may be fooled by the discourse that [Xennials/Oregon Trail gen/Gen Y/Elder Millennials], but we supposedly saved more, delayed gratification, planned more, and worked more than even Gen Z (who, don't get me wrong, have it worse because of undercompensation vs purchasing power and sheer hopelessness).
I doubt we're typical, is my point.
did you buy a house? when?
Yes, 2014 with a 95% mortgage
is you're birth year 87?
In which case you were able to save a deposit within 6 years of graduating? When i was at that stage my outgoings (rent, food, council tax, car, insurance) were probably 90% of my salary.
Where are you and how long did it take to save up for a downpayment?
First house was in the North of England, took 4 years to save up enough.
Are you in the black as a household overall?
We aren't yet. Our projection is that we will be in 5-7 years. I'm turning forty soon.
Just to give you an anchor point.
What does “in the black” mean at a household level? Total assets minus loan balances being positive?
Sorry, yes. I was thinking net worth > 0.
Ah, I was wondering too but my reply button was gone, yes I would say we’ll be net > 0 around the same time as you age wise. If we hadn’t had to renovate a 60s property we’d possibly be there already but UK housing stock needs work sadly.
> Perhaps my friends and I are outliers
That's it, you're outliers.
Yep. A good friend of mine grew up to a very poor immigrant family, both him and his sister got full rides to good schools because of grades, and at age 30 bought a house in NJ with a very good school with 4 kids after saving non stop and living with his parents and taking care of them.
The system works fine if you don't need nonstop luxuries
It’s really incredible how much people feel entitled to in the us. And by entitled, I mean they spend money on these things because it’s beneath them to think they shouldn’t have said experience or thing.
You all studied so hard but never heard about https://en.wikipedia.org/wiki/Sampling_bias?
> rich have been transferring money from the poor to themselves at a dramatic rate
Anyone not familiar with it needs to look up Georgism.
This transfer happens primarily via housing costs and rent payments.
The stratification of the rich happens via investment opportunities, but the core underlying mechanism for the majority of the population is via housing costs and Ricardo's law of rent.
Yeah, you can't have an realistic economy that will eventually inflate small, entry-level houses to $1mm+ and college costs to the $100k's but still have jobs paying $10-20/hr (or less). Any kid who does the math will realize how hopeless that economy is. Even if you scrape by, one emergency turns you into a debt slave.
Housing needs to stop increasing in price for a number of generations. Surely the rich can find someplace else for their money.
For housing to stop increasing in price, a lot of it has to be built.
The YIMBY movement is pushing in the right direction, but doesn't have the political power that they need. Particularly in California. And, as long as they don't, those with houses will continue to win against those who don't.
> For housing to stop increasing in price, a lot of it has to be built.
False.
You can depress the land-based monopolistic component of housing via a land value tax. If speculating on land values stops being a good investment strategy, the price will drop.
Many economists/nobel prize winners have been quietly pointing this out for over a century at this point. Here is a pretty good primer: https://www.youtube.com/watch?v=smi_iIoKybg
As long as there are more people needing housing than housing, prices will be high. California has such a shortage, and the people side of the equation is going up faster than housing is constructed. Making the problem worse over time.
A land value tax could indeed help with housing costs - but that's because it encourages development. It is the construction that makes the really big difference here.
And then there's Australia.
You’re probably right. The historical norm is that there are owners and there are workers. We seem to be regressing to that.
The difference is that medieval peasants knew their manorial lords had bigger houses and ate more meat, but the visible local differences were small and religion could operate (for worse or better) as a stabilizing force. People tolerated a caste system because they were information poor.
There’s no reason today, though, for people to put up with the kind of inequality that is not only extreme and senseless but constantly being shoved in their faces via social media. The only way the rich stay out of the guillotines is by creating new, weird cultural spectacles like litter boxes in schools (not even a real thing) for “furry kids.”
They were uninformed then, but people are misinformed now.
I think the latter is worse, because it means those in power now have an information lever they can use to manipulate the masses. When there were no broadcast or network media sources, those levers didn't exist and the powerful had fewer tools to control people.
Or diverting nascent discontentment toward a manufactured enemy (that does the same in his own fiefdom), 1984's style.
>The truth is economic growth hasn’t been occurring in real terms for most people for a long time and the rich have been transferring money from the poor to themselves at a dramatic rate.
The US is setting up to make this worse by cutting services for the average person (like the CFPB and OSHA) and continuing to give tax breaks to the wealthy...again.
This is after the same group of people set off sky-rocketing inflation by injection almost a trillion dollars of new money into the economy by way of the PPP program, of course hurting the average person more than their wealthy financial backers.
Medicaid cuts are going to be the real nightmare fuel. People think Medicaid is for the poor (which some Americans are always happy to screw over) but Medicaid is what makes it possible for many working folks’ parents to afford geriatric care. God knows what happens when the GOP succeeds in slashing it.
My guess is that all of this moronic fiscal policy causes a significant recession by the next presidential election.
Medicaid is indeed for persons under the poverty line. Medicare is for people 65 and older. Not that I think they'll stop at Medicaid.
A huge percentage of Medicaid goes to nursing homes. Medicare does not fully cover the service. You either pay out of pocket or if you’re destitute (as many elderly people are) you get Medicaid to cover the difference.
Nothing lasts forever. The rich get most of the economic growth is inevitable. It's the Matthew effect. In general, the more assets you have, the more passive income you have, which in turn frees people up from worries about making breads for the family, and thus can spend more time on think and do things more important in the long run. Again, that would reinforce their financial status. In the meantime, the poor would have to worry about next meal, and mostly don't have the reserve for investments. Thus, they will most likely struggle to save something, and even if they do manage to save some, an unexpected event can easily wipe it out before it reaches the threshold.
If the riches were conscious enough, they would return a fair share to the poor and the eventual crash will be deferred much longer. But you know, everyone wants more money, no exception for the riches. It looks the only thing we learn from the history is that we learn nothing from history. So here we are: the same drama of empires' rise and fall, the only differences are the locations and the actors.
I don't think it's that simple.
Things that can be produced with machines rather than labor have become more affordable over time. Electronics, travel, clothes, and even food are cheaper than they used to be relative to wages. Then there are fields like education, childcare, and construction, which have not seen substantial productivity gains. The prices of their outputs can be expected to rise at the same rate as wages. (And then there is healthcare, which is complicated.)
But what has actually happened that increased housing costs have eaten the productivity gains for many people. Largely because of deliberate policy. Desirable areas often discourage new construction. When new construction is allowed, they prioritize single-family homes. And if really pressed, rental complexes.
As a rule of thumb, if you can afford to rent, you can afford to buy. If you expect to stay longer than a couple of years, you should buy. But in many places, if you can't afford a large home, you have to rent a small apartment. Because there is a shortage of small condos to buy. If the units available for purchase grow larger while the price per square foot grows at the same rate as wages, housing becomes less affordable.
In many of the denser population areas of the US _generations_ 30, 50, maybe more YEARS worth of insufficient building has left a completely broken situation of stagnation relative to population.
A Civil War in the USA? Where would the battle lines even be drawn? There is no consensus, and there are hardly even blue or red states anymore beyond 60/40 splits. Even racially we are seeing a lot less polarization.
people don't demand wealth equality after a war, they just create massive inflation during the war and solve it by taking everyone's savings after the war...half the countries in europe post ww2 did something akin to replacing the national currency at exchanges rates of like 10:1 in some cases like germany...and germanys post-war inflation solution is hailed as an 'economic miracle' by many history books. Somethings tells me I wouldn't feel too jazzed about taking 90% of my savings, but I would also be resigned to do whatever because war is worse.
I get really worried when I see people glamorize equality post-war...post-war times are not good times for the middle class. The most equal wealth humanity has ever had is during caveman times, but that is not the goal.
war does not make things better folks, I hope that's not what OP was trying to say, but just in case let's be very very clear about how awful war is for progress and humanity.
post-war reconstruction fervor can inspire wealth creation. This is largely because there are no NIMBYs and eco-warriros sat around saying that the returning troops cant have a place to live and we cant have new infrastructure. If we can get that reconstruction fervor without a war it would solve a lot of our problems.
I just don't believe this, not because I have hard data, but it just doesn't make any sense. Sure, the central banks will do everything they can to ignite the economy and everyone will be generally working their hardest to recover from hard times, but how can an economy that gets completely halted to go full bore in war efforts ever hope to generate the wealth of an economy that isn't halted and has been making incremental improvements, uninterrupted?
Money is power, and power needs to be in checks.
"Billionare" is not a word which should exist.
An easier solution would be money not being power.
We are not far off from trillionaires. Saying billionaires shouldn’t exist at this point sounds pretty radical to spin in positively
> people only seem to demand a fair piece of the wealth after a world war.
I think it's more that war has a tendency to literally destroy capital which is effectively a tax on the rich. When factories get bombed, factory owners lose out more than people who don't own factories.
War is horrible but it historically has at least been somewhat of an economic equalizer.
One of the real tragedies of the pandemic was that it turned that upside down. The virus didn't touch capital but destroyed humans, and the humans hit the worst were those in "essential" but low-paying jobs who couldn't socially isolate. The effect was that the pandemic increased economic inequality.
Are you sure it's true that the pandemic increased economic inequality?
The humans worst hit were by far the elderly, and the elderly tend to have more assets than the young in industrialized countries.
Among working-age people, lower-paid "essential" workers were exposed to more risk, but by a significant margin, old people are the ones who died more.
Individual old people may have died more, but we are talking about economic inequality. They had huge gains in their wealth due to asset inflation. Working people were by far the worst hit by the devaluation of their labour.
> we are headed for a destroyed Europe and a civil war in the US
"Capital in the 21st Century" by Piketty does a good job arguing that the historical normal condition is for wealth to concentrate bc the returns on capital are greater than overall economic growth. It's depressing, but creating the kind of world that a lot of us and our parents enjoyed takes special conditions (and political will?) ... but the flip side of this view is that intense inequality can endure for long periods of time and doesn't necessarily lead to political instability.
By definition, the poor don't have money. How are you transferring wealth away from people who don't have any?
Is this a serious reply? The poor may not have much, but every dime they do have is spent on necessities… rent, food, healthcare. So where does that money go? Who are the actual recipients of those dimes?
Are you defining the rich as “every single person who sells any good or service”?
Where did the poor get their dimes in the first place?
The same Gary Stevenson whose memoir claims Financial Times debunked?
https://archive.is/DguLm
It's like AOC'c comments to NPR the other day
"Everything feels increasingly like a scam," she said. "Not only are grocery prices going up, but it's like everything has a fee and a surcharge. And I think that anger is put out at government."
AOC is against taxes and other countries paying their fair share?
She realized prices are going up just now?
AOC needs to read "The Jungle" by Upton Sinclair. There is nothing new under the sun.
Is your argument really that because things were really bad in 1905 we shouldn't complain that after many decades of progress* that we are now rapidly sliding back to things being extremely shitty again?
Because that's a really strange way to look at it.
(* driven largely by increased regulation, unionization, etc... all the dirty words for modern conservatives)
>> Is your argument really that because things were really bad in 1905 we shouldn't complain...
No that is not my argument really.
+1 for @garyseconomics
Dude Gary Stevenson is so good, great to see him shouted out on these conversations.
I've long wondered why so many economists get inequality so incredibly wrong without any hint of self-awareness whatsoever, and the answer (in part 3 of that series) was mind-blowing. So, so well put together.
I won't give the spoilers here, but do watch it. It's an experience.
The idea that an average person, working hard, can eventually own part of a nation's land and resources, setting up their family with generational wealth, is derived from the pioneer days when land was plentiful.
This was never going to be able to last forever as long as the population keeps increasing. This is why settlers left Europe etc in the first place to seek fortune overseas. And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Working hard is necessary in its own right for many reasons, but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing. So is shaming anyone who fails to achieve it as "lazy", when it was never going to be possible for more than a fraction.
Land is not scarce in the US. My road trip through Nevada to Salt Lake City convinced me of that much. What is scarce is land people actually want to live in - with safe neighborhoods, good schools, restaurants, shops, etc. Restrictive zoning and NIMBYism is definitely making this worse.
I don't think the amount of "unexplored" or "undeveloped" land is a good metric for social mobility. Economic growth is. New "frontiers" are created all the time. They do not have to be in the physical world (e.g. computers, the web, biotech, the App store, social media influencer, crypto, and now AI). Even in the physical world, frontiers can sometimes expand. Desirable land can be created in the middle of a desert (e.g. Las Vegas), we just don't want to anymore.
Despite its many flaws, I think the US is still better than pretty much anywhere else in the world.
Doesn’t BLM control chunks of land that are desirable but not allowed for settlement?
The point is San Francisco has tons of land (with houses already built on it) that is desirable but not allow for redevelopment.
A big part of the problem is that too many people want and/or have to live in very tiny portions of the country: major cities.
There is a lot of cheap land and even a lot of cheap houses for those willing to live in a different place. Even many of my friends in Seattle, for example, have discovered that if they move 30-60 minutes away their housing costs plummet dramatically. This has opened the door to many of them moving even farther away, unlocking an entire new world of affordability.
There was a brief moment where all of this looked like it was a very real possibility for many of us, but the rubber band is snapping back with remote work and now many are being required to move back to those few cities again to find the best jobs.
> but promising everyone that if they "work" hard enough, they too can set up their heirs, is pure marketing.
I don't think most people believe that you can just work hard and then have generational wealth for your heirs. That feels like a strawman argument. Generational wealth has always been a difficult feat for the few, not something we promised everyone could achieve.
However, people also underestimate the power of compounding for retirement savings. Obviously not helpful to someone working at McDonalds and trying to pay rent in a big city, but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years. Not "generational wealth" or "setting up your heirs", but enough to make big contributions to education, helping kids with emergencies, possibly leaving some non-trivial inheritance. This happens all the time and continues to happen with millenials, as it will happen with Gen Z. Again, not literally everyone but to suggest that it's out of reach is really out of alignment with the reality of what we see people earning and saving.
> but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years.
You’re off by at least a factor of ten.
40 years of $100/month savings at a generous 5% compounding is $148,242. And that’s in future dollars. Drop it to 4% and you’re down $116,606.
The real formula to consider is what percentage of your monthly spending you are savings. If it’s 100%, then every month worked is one month of retirement. If it’s 50% then two months of working is one month of retirement. If you live frugally and save 400% of your spend, each month counts as four retired months.
It’s a simple fraction with the numerator as your net savings and the denominator your total spending. And lowering the denominator scales things much faster.
5% is not generous. 5% is conservative. 10% is historical for the S&P 500. 12% is generous.
7% is historical for S&P500, but that's with 3% average inflation. His point is that 5% real returns are, in fact, generous.
> the pioneer days when land was plentiful.
I think you mean to say "When we could steal land from the people who were originally on that land"
Define "orginally". You might be interested to research how the Native Americans interacted, especially the Lakota. Rights by conquest was not a new idea.
There were a few hundred thousand of them across the entire continent. In the best case scenario, most of them still would have died to disease. Unless you believe a few hundred thousand people own should own an entire continent as their blood and soil birthright the land was always going to end up like this
There’s still a lot of land out there. The only problem today is nobody wants to start over with no plumbing, electricity, or other modern conveniences.
We can still steal land from people who were originally on that land, happens all the time in America.
- Land Appropriation for "Public Need" with Direct Transfer to Wealthy: https://fastercapital.com/content/Land-appropriation--The-In...
- Heirs property, property tax sales, and Torrens Acts (article focuses on black people, yet works equally well on all skin colors): https://inequality.org/article/black-land-theft-racial-wealt...
- Wealth City / Suburb secession to leave poor areas to pay bills, and then buy them in destitution: https://www.bloomberg.com/news/features/2022-02-11/atlanta-s...
- Rezone areas to make new cities, take all the businesses and good land, and leave the remaining "city" with the bills (another Atlanta idea): https://www.google.com/maps/place/Union+City,+GA/@33.6158433...
- Sell vacant land out from under land owners with false listings: https://www.fbi.gov/contact-us/field-offices/newark/news/fra...
- Purposely Induced Foreclosure, Bankruptcy or surprise tax assessments to cause a forced sale: https://www.businessethicsnetwork.org/forced-sale-implicatio...
If the land had been the basis of North American prosperity there would have been civilizations there capable of resisting European colonialism.
The Americas had no horses before Europeans brought them.
Long since debunked
https://www.smithsonianmag.com/smart-news/native-americans-s...
This article is saying the native Americans spread the horses faster than the Europeans spread. They still sourced the original horses from Europeans in the 1600s.
> Spanish settlers likely first brought horses back to the Americas in 1519
This seems very compatible with what I just said.
> The Americas had no horses before Europeans brought them.
> Long since debunked
I mean, the linked article says horses were introduced in the 1600s (brought by Europeans), and then spread throughout the Americas without requiring further European distribution.
Horses in North America are a weird one. I believe the current thinking is that horses started in North America, migrated to Asia, then the population died off after the continents split. So there were horses in the Americas prior to the Europeans, but also potentially before humans.
Humans and horses probably did that thing where you're looking for someone and you go to where they are then they go to where you are and you both miss eachother.
The article says the horses were in the Americas millions of years ago.
And then died out, before Cortes brought them back to the continent in 1519. Native Americans then discovered the horses before they ran into the Europeans and began spreading them across the country.
> Horses evolved in the Americas around four million years ago, but by about 10,000 years ago, they had mostly disappeared from the fossil record, per the Conversation. Spanish settlers likely first brought horses back to the Americas in 1519, when Hernán Cortés arrived on the continent in Mexico. Per the new paper, Indigenous peoples then transported horses north along trade networks.
Don't forget to read the whole article!
GPs claim was that there were no horses in the Anericas prior to Europeans, full stop. That is quite clearly incorrect.
Others disagree.
https://www.smithsonianmag.com/smart-news/native-americans-s...
> Spanish settlers likely first brought horses back to the Americas in 1519
No they don't.
I uh, source?
https://www.smithsonianmag.com/smart-news/native-americans-s...
I think the issue was whether they were hunted to extinction or not
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You need pack animals for civilisations. Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement.
You've drawn this argument from Jared Diamond's Guns, Germs, and Steel. There are a few problems with the theory:
1) Diamond's argument rests on the idea that world historical developments are effectively determined by geography (and implicitly, by factors which precede the existence of a civilization). While I can't make a strong argument against historical determinism, the conclusions Diamond draws are strange. The chief problem is that Diamond is trying to make the case that the exceptional prosperity of Northern Europe and all of its colonies was effectively a fluke of geography. The problem for Diamond is that this pattern repeats over the course of about four hundred years all over the world, not just in the places where Europeans had the advantage of small pox on their side.
2) Native Americans had access to pack animals by way of the llama.
3) The Aztecs lacked access to pack animals. They still had specialized tradesmen and constituted a civilization.
The germs argument is the only one of Diamond's that I think holds any water with regards to the European conquest of North America, and perhaps I was being too brash in my original assertion (these civilizations existed, but were decimated by small pox). The issue with this argument is that it doesn't address European colonialism in Asia (where the disease factor is absent) and Subsaharan Africa (where the disease factor actually worked against Europeans).
The fact of the matter is that Europeans (and specifically Northern Europeans) happened upon a method of conquest that worked. This could have been an accident of geography, biology, or ideology, but it's absurd to pretend that the model didn't exist when it was the basis of a successful campaign to conquer the world. It had nothing to do with having access to pack animals.
The Llama is not a very good pack animal, you would know this if you ever looked at one. Pack animals are not necessary for any specialisation, but the are for the degree that brings technological advancement. If you want advanced society, you need to move lumber from forests to cities and ore from mines to furnaces. It's difficult to do this by hand.
> it was the basis of a successful campaign to conquer the world
I am referring specifically to the conquest of America here. You can see that there were several advanced societies at the time (China, India, Europe, Middle East) and it is essentially luck which of them won out. There are also many places which could not have feasibly conquered the world, America was among them precisely due to the lack of pack animals barring further societal advancement. By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
>The Llama is not a very good pack animal, you would know this if you ever looked at one.
They are pack animals with carrying capacities comparable to donkeys and slightly less than horses.
>America was among them precisely due to the lack of pack animals barring further societal advancement.
You never addressed the issue of Tenochtitlan, which was constructed without the use of pack animals, so this isn't a compelling claim to begin with. Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals (e.g. moose, caribou). Diamond makes some weak attempt to claim that the animals available were too temperamental to be domesticated, conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf.
> By the same token, aboriginal Australians and Polynesian islanders had little chance dominating the world.
You're making this argument because these places are islands. This was not a hindrance to the British. You'll then make the argument that you were really arguing that these places are isolated (which is maybe valid if we're talking about Polynesia, less so for Australia), to which I'd reply: "Isolated from what?" to which you'd reply: "The pack animals, the germs, and the steel," to which I'd inquire: "Why were these things found in Europe and not Australia?" and that is where we get to the root of the matter. Europe's conquests were not a matter of luck or an accident of geography. There was something in their method that simply worked better than the methods of those peoples that they conquered. I haven't reached a conclusion as to what it was in that approach that led Europe to becoming the dominant power of the last five hundred years, but there's no compelling case to be made that this method didn't exist.
> Jared Diamond
I don't know who that is and have never read any of his work.
> Tenochtitlan
> Even so, North America had plenty of candidates for domestication that would have made serviceable pack animals
Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
> conveniently forgetting that the ancestor of man's flesh-eating best friend is the wolf
If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
> Why were these things found in Europe and not Australia?
Because Europe has horses and Australia doesn't, and horses cannot swim therefore could not reach Australia. The moon also doesn't have horses for a similar reason. In fact, you'll find that horses only really inhabited areas reachable by horses, until someone put them on a boat and took them to other places (which didn't happen for Australia until quite late). You have this strange assumption that all areas are secretly equal in geography and must be equally hospitable to human flourishing, but this is not true. Europe is more hospitable than Australia, therefore humans flourished more in Europe than Australia. All you need do is assume differences in geography exist and you'll reach the conclusion that humans in more amenable areas are more likely to conquer those in less amenable areas.
> Europe's conquests were not a matter of luck or an accident of geography
You say this with precisely no proof. The closest you get is saying "other people didn't do it, and Europeans did so it couldn't have been luck". The idea that knowledge is what held other areas back, as opposed to luck or geography, is ridiculous and trivially disprovable. Knowledge exists in equal quantities for all people (unless you believe certain races are inferior to others). The difference between regions is geographical or in fortune, which could include the fortune of having a particularly skilled leader or successful sequence of conquests.
> Weirdly enough, Tenochtitlan is the rebuttal to this question. Why do you think they built a city on a lake? It's because they didn't have any pack animals so boats were the best way to move stuff around. This is a disadvantage that makes everything else much harder and therefore slows development.
They built their city on a marsh because an eagle landed on a cactus and they interpreted this as a sign from heaven. They subsequently conquered the city-states that already existed there. It had nothing to do with considerations surrounding the ease of transport as they were a nomadic people and were initially forced to settle in a marsh on the fringes of the lake.
Further, you are getting away from your original claim, which was: "Transport is the backbone of industry and is required for the high degree of specialisation in trades that produces technological advancement." This was not the case for the Aztecs. "Ah," you say, "but we can amend my claim to include analogs to pack animals which facilitate the movement of materials, such as Tenochtitlan's canal system," at which point I would draw your attention to the Cahokia, the Pueblos, the Mayans, and the Olmecs, none of which fit this pattern, all of which formed complex civilizations that soundly refute your claim.
> If literal millions of Native Americans could not domesticate the other animals, but they could domesticate dogs, I'm going to guess that the other animals are harder to domesticate than dogs. You might not feel that this is the case, but your feelings don't stack up to the practical results of a thousands-of-years-long experiment run on an entire continent where these animals could not be domesticated.
Dogs were domesticated thousands of years prior to the arrival of humans in North America.
> Knowledge exists in equal quantities for all people
There is no evidence of this whatsoever and plenty of evidence to disprove it.
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Would you say this of the Jews during WW2, or do you have the understanding that it's a little less than tactful do describe the victims of genocide as "suckers"?
what
Most first nations at first contact had 0 conception of ownership, rather seeing it as some sort of stewardship (or if you put it in modern terms you could use the marxist notion of personal property where it's 'use it or lose it') as well as low enough populations that they figured there was enough to go around to share the land with settlers.
Even if the land was "shared", settlers still stole it for themselves.
Source?
Some of the nations were large, such as the Aztec. And at least a few of them understood right by conquest. They also had extensive trade routes across the continent, seeming to disprove the lack of ownership.
You seem to be confusing the concept of "ownership" with that of "private property" (on immovables, especially). The "Marxist notion" of personal property still requires the concept of ownership.
And if there happened to be people on the land they “wanted” well then there’s guns and smallpox blankets to take care of those pesky details.
“The people there didn’t have the concept of ownership” but some pioneers sure as hell made sure to enlighten them by laying claim to that same land and then threatening anyone for encroaching on it.
Except it was not shared, it was almost a genocide.
Nothing almost about it. This and the smallpox thing the sibling brought up are what we tell ourselves to feel better about what the truth is.
genocide is an intentional act. Smallpox did 90% of the work and nobody lifted a finger, at the time nobody could have forseen the effect of smallpox on the native population.
After smallpox when the population of the Americas had been reduced by something like 90% they most certainly didn't need all the land.
> at the time nobody could have forseen the effect of smallpox on the native population
Are you really unaware that the colonials intentionally spread smallpox to the natives? This is not some obscure detail - it's in approximately all of the history textbooks in a fair bit of detail.
Sure, some tried, but smallpox and other diseases were doing a great job on their own. It didn't need a few blankets to make it a real pandemic.
If the settlers had done what the first thousand or so invading cultures did and just exterminated the natives, they would have been able to cast them in whatever light they chose. Instead they gave them rather a lot of autonomous territory relative to their population, along with legal monopolies designed to prevent them from being forced into wage slavery.
Oops!
And yet we took 100% of it, and forcibly relocated the survivors.
If you steal something from someone who stole something, I'm not going to cry for the original thief.
The truth has always been and will always be that the people who are most technologically advanced will end up with the land, weather by force or purchase.
Simply due to the fact that it's more valuable in their hands. Driving out some campers to build a town is the rule, not an exception.
More valuable? More valuable… to whom?
In human affairs there is no such thing as absolute value.
The reason is simply that it is inevitable as much as gravity is inevitable.
Making a moral law against gravity isn’t going to get you very far.
> "When we could steal land from the people who were originally on that land"
That's every single society ever. This has been the civilizational algorithm. It predates our species.
That same tactic is alive and well today.
A gross oversimplification of anthropology.
European colonization of the world is a unique enough phenomenon to not hand wave it away as business as usual. Further, the industrial intensification and financialization of this colonization through the 18th-20th centuries alone is singular on its impact on human civilization with no precedent.
I don't think so. How many genocides can you think of on the scale of the Native American genocide? Such events seem rare to me.
Rare in absolute numbers, but not rare on a percentage basis.
That was, what, a 95% extermination? Native Americans probably committed 100% exterminations e.g. https://en.wikipedia.org/wiki/Dorset_culture
Apart from the Sentinelese, I can't think of one civilization that hasn't warred and taken over land and resources from others. And we really don't have proof the Sentinelese didn't do this at some point themselves.
History was full of violence.
You can think of many examples of war and conquest, but what happened in America is more than just war. Genocide is more than just war. Framing the atrocities upon which the US was founded as merely "historically normal" is a deeply revisionist view of history. Technological development at that time allowed for many great evils which were simply not possible before.
How do you know that what happened to the natives was so much worse than the hundreds if not thousands of similar fates that must have befallen other cultures over the last several tens of thousands of years?
America isn't overpopulated. The pyramid scheme you're describing is not a Malthusian constraint but the product of bad monetary policy privileging non-productive investments in real estate. There's still no better place on earth for normal people to build wealth, unless you're playing the digital nomad game.
America has enough room to build many new cities in useful locations, yet it doesn't. Why is that?
It does not come about magically from monetary or even fiscal policy. The demand for housing (and other construction) was and is real. People find use for, and like having much space, while being close together. What was and is lacking is supply.
It was never implied that this mechanism was magical.
If you reread the original post, the claim being made is:
> The idea that an average person, working hard, can eventually own part of a nation's land and resources, [...] was never going to be able to last forever as long as the population keeps increasing.
This is manifestly not the case. My response was that, insofar as a pyramid scheme exists, it has nothing to do with some fundamental Malthusian limit on how many people can fit in a given space; this limit exists, but is not the reason that the rich are getting richer, which instead has to do with monetary policy.
You make cheap money available to those with good credit. These people take out loans and use the money to buy real property with the expectation that they will be able to rent it out for more than the carrying cost of the loan. This causes the price of real estate to rise artificially beyond what it would if the cheap credit had not been made available. The key issue here is that this credit isn't being made available to everyone at once - you have to qualify for the loan first.
> bad monetary policy
Bad zoning policy, more like.
" This is why settlers left Europe etc in the first place to seek fortune overseas."
And why you guys are looking at Mars now.
Here in latam we haven't filled the land at all, you guys have been hard working and filled with riches. But our laziness might give us more longevity, we are playing the long game with the amazon
LATAM will get a lot of remote work if the wages stay lower than the US since they're in better-for-US-company-timezones than India or others overseas. That's what my company is outsourcing to.
Doubtful. Digital nomads, short-term rental tourism, real estate investors (prompted by the former two) are increasing housing costs and CoL in all the popular destinations. Costs in some regions like Barcelona almost got equalized with costs in major US tech hubs. The same is happening in places like Buenos Aires. So its unlikely that the trend in LATAM will continue as it is.
Also, this is very bad for not only the locals as they get gentrified from living in their own city/urban centers (and in some cases even rural zones), but also the local companies: The US and other rich Western companies dump their healthcare and housing costs onto the locals through arbitration while making it harder for local companies to keep up with the CoL increase through wages, therefore increasing their expenses and reducing their competitiveness. And the reduced taxes that the nomads etc pay doesn't help it. (that is, the ones who actually pay).
Yeah, looks like the go to strategy, but I may have to pass on the gold mine and go for the higher payoff of a decent living but a more spiritually fulfilling trade diplomacy
In international trade there's complementary/productive trade, you have gold, we have silver, let's trade. And you also have redundant/substitutive trade, you have soy, we have cheaper soy, buy our soy.
I don't believe from the bottom of my heart in substitutive trade for similar reasons I don't believe in (most) inmigration. We've conquered the americas, now we have to populate it, god won't reward desertors who revert their ancestor's decision by running back to the old continent, and the excuse of "I was born in the wrong hemisphere" is also quite petty, we rolled the dice and this is what we got.
Substitutive trade isn't far from immigration, the poor want to go to the rich countries, and the rich buy the cheap labour. Where is the pride in that? In both sides. Leave your country for another with a different religion, leave your mother your brethren, and serve. Leave a war instead of fighting? Take a 1 hour bus to a fancy neighbourhood to serve coffee and wash dishes. Conversely, you can wash your own dishes, you can use a bottle of water and fill that up before you leave, we don't need a migrant washing our dishes, and we don't need to migrate to wash dishes.
So I'm trying to focus on trade that is not replaceable with local labour, hopefully countries start nailing down remote work and we start locking those behind visas.
And unfortunately india and philipinnes get that productive trade, they can cover night shifts.
We'll find stuff to export. There's not much, as Trump said "they need us more than we need them".
Local entertainment, sports and games will always be there, it's like cybertourism.
there might be an argument for redundant trade as a counterweight to an unbalanced productive export. But I don't think that works long term.
There's also localization services, in language and legal, but those are just costs of exporting really.
Lithium is probably the lesser evil, super extractive, but we gotta pay somehow.
Sorry about the super rant. Lately I've been more using forums as a way to write things that I already had drafted in my mind.
The homestead act only ended in the 1970s. We were happily handing out land for free if people were willing to live there and work it quite recently.
If there had still been a big demand for it, the program would probably still be running. They granted an extension to Alaska for that reason.
land is still plentiful in the u. s. just maybe not where you want to be, similar to what a pioneer town might look like
And since there is no un-owned land remaining, the market price for land will match or exceed regional population growth worldwide forever, unless a whole lot of people start dying.
Land use is a complex topic, but you’re basically right. Everything good—not just land but social opportunities—is spoken-for and what we’re seeing in South Korea and Japan is probably the best solution: peaceful natural attrition and non-replacement of capital’s reserve army that is unwanted labor.
Land value tax would solve this.
"is derived from the pioneer days when land was plentiful."
Land is still generally plentiful. The need to all live in one spot is more social/artificial and really accelerated in the late 19th and early 20th centuries due to rapid urbanization.
I want to agree with you but I don't see the difference between land and any other kind of asset ownership.
In the US you can buy land at quantity for, say, ~$1k/acre in places where there aren't people/infrastructure/etc...
There is no shortage of land in the US. There is a shortage of land in a few high density areas. But increasing their density makes them more attractive.
I don't think it's reasonable to make the pioneer comparison-- if you want to do what pioneers did and build something from almost nothing in the middle of nowhere with great effort then there is still an analogous route open to you.
The Puritans became settlers in the New World because they were hated and thrown out of Europe / England so they set up shop and managed to derange society to this day in the US.
I wonder about the economics of places with declining population like Japan and South Korea. I always read that declining population is bad for the economy but feels like those countries will have more opportunities for the young in the future.
It does not have to be the "pioneer days", just saying this from Japan...
of course this was never going to last forever, we have more than 8 billion people in the world, if even 0.00001% of people wanted to do what you proposed, eventually own a part of a nation’s land, thats 80 thousand people.
that’s just not happening
If I've said it once I've said it a thousand times, there is no cogent and respectable argument for why income from labor is taxed at a higher rate than income from capital.
I hope we start there, a very simple and straightforward action to take.
As predicted in Piketty's book "Capital in the Twenty-First Century". He posited that wealth trumps labour and the post-war period was an anomaly. His proposed solution is a wealth tax. I can't see those with wealth/power implementing a wealth tax, so the alternative is to invest to accumulate wealth and know that your children, who are not in a position to invest, will probably be relying on that wealth.
I'd prefer a land value tax personally.
Capital flight is a thing. Land isn't going anywhere.
Economists including multiple Nobel laureates on both the left and right have been screaming for land value tax for almost a century for this and many other reasons.
Same. I've been somewhat Georgist pilled lately.
I also enjoyed the comic book version of “ Capital and Ideology” by Picketty, Claire Alet and Benjamin Adam which follows the fortunes of a French family through the generations.
I haven’t read Piketty, but another book pointing in the same direction is The Meritocracy Trap, essentially explaining how non-meritocratic a lot of the economy is despite the common belief that it is. Wealthy parents spend a ton of resources developing the human capital of their children. It has basically eroded the middle class as a result. The author calls for an inheritance tax among other things.
Becoming? This may sound like a trope and a canard, but indeed this very publication, The Economist is partially owned and controlled by the Rothschild dynasty.
If you read the second paragraph the authors explain what they mean by "becoming".
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP, up from around 5% on average in a selection of rich countries during the middle of the 20th century. As a share of output, annual inheritance flows have doubled in France since the 1960s, and nearly trebled in Germany since the 1970s. Whether a young person can afford to buy a house and live in relative comfort is determined by inherited wealth nearly as much as it is by their own success at work. This shift has alarming economic and social consequences, because it imperils not just the meritocratic ideal, but capitalism itself.
Yeah wealthy families exist.
But also there is a lot of upwards mobility.
And they do not need to be correlated even. What if rich families maintain their wealth, and meanwhile other families create wealth and become rich. How is this incompatible?
Because as wealthy families produce offspring who do not need to work or earn income in order to compete for finite resources with those who do, the cost of those resources increases, while the burden of labor and stress falls increasingly on the employed.
Eventually the man dying while making an income and spending no time with his child will grow to resent the one making the same income through family wealth who has enough time for that and more.
Might you be conflating finite for static? Or more charitably, implying and assuming the growth rate is smaller or equal to consumption.
I'm not saying it is or isn't, but that would need to be the case for your argument.
Also the ratio of wealthy to non wealthy needs to be quite high.
Also wealth needs to be transferred and maintained, and not spoiled or lost.
I think those are the assumptions.
But yeah, under those conditions, the competition for resources would mean in order to move upwards someone needs to come down.
But it would need to be a zero sum economy
Thank you for passive-aggressively outlining the infinite growth mindset.
Falsely equating economic growth with cost of living metrics, and assuming that with more money everything can just continue happily. It’s been a very successful evolutionary niche for a handful of centuries.
when wealthy people have kids their wealth is diluted. Truly, one of the best parts of Elon Musk having so many fucking kids is that at least his fortune will be greatly divided and spread the second he dies
Generational wealth rarely lasts more than a generation or two. Families like the Rothschilds seem to be more the exception than the rule.
Though I am not wealthy so perhaps I truly don't know what it's like in the big club I'm not in
Sure, each one of his kids will probably only inherit a few 10's of billions. What do you think the effective difference between 10 billion and 100 billion is? You're rich AF either way.
Also it's not enough in my experience to just give the money, also time. And not too much money, gates famously gave 10m "only" to each child
> But also there is a lot of upwards mobility.
There's increasingly less in the USA. In fact, most people today will end up worse off than their parents.
https://www.weforum.org/stories/2020/09/social-mobility-upwa...
I think this is a statistics and definitions question
There can be a lot of upwards mobility (say 10%), and there can be a lot of statics (say 90%)
The datapoint I remembered is that a huge fraction of billionaires wer3 first generation billionaires.
But that may not mean much for the greater part of the population.
So we may be saying things that sound contradictory, but are congruent.
Your evidence is that there are more billionaires when arguing there is upward mobility? We are talking about completely different things. Many of those people started out as multimillionaires and then became billionaires - almost none of them started out poor. And you're focusing on a tiny percent of the population and extrapolating that to everyone as though it's representative of anything meaningful.
https://youtube.com/shorts/MqA-hUeYvb0
Millionaires too.
The last bit is sus though. "Only inherited after making a million". Sounds like it would include born rich, high education, basic necessities covered, can work on startups without worrying about earning a salary, many such cases.
[dead]
So why do rich families need to own all the media? All the think firms? Why do they lobby?
Avenues to upward mobility are blocked by these rich people through various methods.
Inheriting is the root cause of all corruption. We can never, ever, have a just society based on the principle of giving our children wealth that they did not earn nor deserve.
It's almost a self fulfilling prophecy. Many people who have owned a house for the last 20 years got in at a lower price compared to their salaries. The only way younger people can get a house now is to inherit their parents wealth.
Even if I work my ass off, I won't be able to afford a house the same as my parents did. My only hope is that I inherit their house when they pass.
What most people have yet to realise is that home ownership is a quite negative phenomenon. The dual of owning a home is the ability to deny others access to housing. People who are particularly attached to the capitalist system will suggest crazy solutions like a limit on the number of houses per person, but the real solution has always been government ownership of all land. There is no advantage to privately owned land except the ability to horde it and create waste, or rent it out and create inefficiency.
I'll bite, why do you think a limit on how many homes a person can own is a bad thing? Let's clearly separate homes and other real estate here, so shop floors, factories, warehouses, etc are out of the equation. Since you mention inefficiency, how many homes can one person realistically reasonably use?
I think it is better than the current situation but worse than the optimal situation, that is government ownership. What's more, ignoring commercial land ignores that many commercial enterprises would benefit from the proposed solution in the same way people living in houses would, yet there is no mechanism by which you could limit one company to a single building of operation.
> how many homes can one person realistically reasonably use?
This question is why I consider the solution of a limit on ownership stupid. A person can reasonably use however many houses which they can afford to rent. It isn't up to me to decide what counts as reasonable use. It is simply a question of whether other people would be willing to pay more for some other purpose. Suppose someone wishes to purchase an entire abandoned town and can do so at a relatively low rate due to it being abandoned, I see no reason to deny them them this, yet a limit on home ownership would do precisely that.
One should also note that a land tax is another inferior solution to the problem. It is effectively a government lease on land which doesn't allow the rent charged to be determined by market forces. What makes total government ownership of land the most practical solution is that it most closely follows market principals. Usage of land is contingent on productive revenue from that land in excess of the revenue generated from alternative usages. Any other solution will fall short of the optimal allocation of resources which the market provides.
>but the real solution has always been government ownership of all land.
They have that in China. How's that working out for them?
Sounds made up .. how do you explain nail houses in China?
https://www.theguardian.com/cities/gallery/2014/apr/15/china...
Maybe take the BS elsewhere?
This is pretty basic knowledge, there is only State and Collective owned land in the PRC. Individuals can only obtain _leases_ of State owned land. Property rights of _buildings_ are distinct, but will generally follow land title/lease.
https://english.www.gov.cn/services/investment/2014/08/23/co...
Collective ownership isn't State or Government Ownershaip (negating the "all land" part) and in China "State Ownership" is an underlying ownership that doesn't carry the weight of immediate direct ownership, hence nail houses where individual lease holding rights that are automatically renewed trump the underlying state ownership.
Point being, it's not as simple as it's made out to be and it's not dissimilar to many other countries that have a notion of underlying ownership, seperation of surface and mineral rights, cave outs for eminant domain, etc.
In this specific context it's not especially clear what the GP's "how's that working out for them" is meant to convey.
Please do some research before accusing people of "BS".
>In general, rural collectives own agricultural land and the state owns urban land. However, Article 70 of The Property Law allows for ownership of exclusive parts within an apartment building, which endorses the individual ownership of apartments.
https://en.wikipedia.org/wiki/Property_law_in_China
>Individuals cannot privately own land in China but may obtain transferrable land-use rights for a number of years for a fee.
https://maint.loc.gov/law/help/real-property-law/china-real-...
Rural collectives own agricultural land is not "government ownership of all land" which you asserted to be true.
Moreover, the devil's in the details:
Which means that residential land use rights persist, as they do in the US, and while mineral rights remain with the state it's not the case that all land ownership in the US comes with mineral rights, these may have been signed awy by prior owners or retained by the State or Federal Government whe first transferred.Both countries are more complicated than you sweepingly make things out to be.
> The dual of owning a home is the ability to deny others access to housing.
How do you figure? Are we out of land? I would argue we are not, at all.
What is owning a home? It is having the power to legally demand other people leave it. Hence owning a home requires the ability to rent out a home, and to to rent out many homes and drive up the price. Likewise we have much land, but it has not been developed because people own it. In a system of government ownership, they would eventually be outbid on the lease for their land and it would be developed into a larger amount of affordable and higher density housing. Instead people own that land and are able to keep it underdeveloped at the cost to everyone else, then use this leverage to enrich themselves through the increase in house prices. There is no positive argument for the private ownership of land over public ownership.
Just say “ownership is theft” if thats what your argument reduces to. That said, I think the concepts around georgism and dynamic value based taxes are a bit more interesting and address the “land banking” concerns you inserted.
> dynamic value based taxes
I hate having to explain this to people, but a tax based on the value of something is called rent. Georgism is a system where the government owns all land and leases it out, but then the call the rent a "tax" to make it more palatable to people who are afraid of public ownership.
Thats a pretty reductive world view. I suppose “the monopoly of force and law implies control, and quote-unquote ownership, by the state.”?
So, mission accomplished? The state already compels me to pay annual taxes based on the value of my titled real estate, my car, my income, my foreign assets, etc… I guess Im just renting it all from the state?
Mind you Im no John Birch-man here. I actually pay 42% of my income in taxes, and think real property _should_ be taxed more effectively here in AU. But jumping all the way to “ownership is theft, and taxes are double secret ownership” doesnt seem particularly useful.
> Ownership is theft
You are trying so desperately to put those words in my mouth, but I will not say them as I don't know what they mean.
> taxes are double secret ownership
I'm not making an ideological point here, simply pointing out that the proposed systems are isomorphic in their objectives and execution. They both aim to increase the productive use of land by charging a periodic fee to the occupants of said land based on the market value of the land. There are two differences: the first is one of language (rent vs. tax), and the second on how the rate of this fee is determined. Under socialised land, the market price of land is the same as the fee charged. Under Georgism, the fee is charged by a bunch of politicians looking at the market price of land and trying to figure it out based on that.
Given that the two systems are essentially identical, but the second brings in undue political meddling, I see no reason to prefer it to the first solution outside of the practical situation that many people are afraid of public ownership and therefore would be more likely to vote for the worse option. Do you have any real argument for Georgism over public ownership?
Honestly, he argument you make is quite confusing as it seems to conflate ideas/terms[1], redefine language[2], and draw distinctions[3] at will. It's a bit hard to reason about something when it mixes interpretations of 'what is' with 'what could be'.
You're conveniently glossing over issues like price discovery (auctions?), periodicity (annual?), and what I suspect are some pretty large inefficiencies implied by requiring continual re-bid/repurchase of existing real property vs a small proportional tax. Im an amateur, no graduate degree in economics here, but I would wager there's a reasonable amount of literature around the benefits of surety of title and depth of markets for efficient discovery to support a distributed, private, ownership & transaction model.
WRT "scary" ownership, as I said I live in Australia. I understand what crown land is, title, registry, and how we've transitioned through those ~3 times in 200 years. That's actually another example where some proclamations[4] don't quite hold up; Land ownership in Australia _is_ owned by the crown already. I merely hold (indefinite) title, so maybe 'government ownership' isn't quite the panacea? I do find our current real property and capital rate mechanisms deficient, and would appreciate something a lot closer to an annual LVT.
When you say "... the real solution has always been government ownership of all land. There is no advantage to privately owned land ..." don't act surprised if you get lumped in with those who argue against private ownership of real property.
[1] "The dual of owning a home is the ability to deny others access to housing" [2] "a tax based on the value of something is called rent" [3] "Given that the two systems are essentially identical, but the second brings in undue political meddling" [4] "...the real solution has always been government ownership of all land."
One difference is that the government can choose not to renew a lease on land it owns. Eminent domain exists but it is a lot more messy.
Nope. The government could own all land and have the same system for withdrawing leases as is currently employed for eminent domain. You might say the government could change that system, but it can also change eminent domain. This is not an inherent difference of the two systems. One could even envision a system where the government has no ability at all to withdraw a lease and thus occupants are more safe than they would be under eminent domain. On a practical level, the Georgist system might even be more likely to turf people out than a social land system, because presumably the land tax would increase to price people out at the market rate, where a lease agreement is more likely to have controlled increases.
> What is owning a home? It is having the power to legally demand other people leave it.
A home is where people feel safe and secure with their family, or by themselves.
I reject the premise of your re-definition of owning a home.
Well as nice as the sentimental definition you gave is, the legal definition of home ownership revolves around a set of rights granted to you by the government over a plot of land. I could feel safe and secure with my family a t Pizza Hut, but I don't own Pizza Hut.
What about gifts? Does it follow that gifts are a form of corruption, that exchanges need to be equivalent? Or how would you, for both practical law application as well as moral purposes, distinguish an inheritance, from a gift before death, from a gift in life, from providing shelter in youth and from giving a the gift of life through a part of oneself?
This isnt abstract, modulo reasonable thresholds Gifts are taxed as income by value in most countries. Inheritance (in the US) _is_ the weird wealth transfer exception.
Interesting.
Just checked and in argentina there is no federal tax gift, and in some provinces it's just much lower. We also have a wealth tax so that may address the gen wealth issue in another manner.
Tax is like that different in every country and hard to compare apples to apples.
Entirely fair point, and it always makes internet discussions more complicated without innumerable caveats.
A gift is one person giving something to another. An inheritance is ultimately someone else's kids giving your kid something.
> Inheriting is the root cause of all corruption.
The way the ultra-wealthy manage to make it entirely taxless; super evil for sure. Even so, it's not really the root - maybe a very large branch of it.
Nonsense. In order to focus on the supposed injustice of inheritance itself, suppose that someone becomes wealthy through ethical means. If they then turn out to have a mutation that causes them to be immortal, at what point does it become just to simply take their wealth away from them? If your answer is “never”, why is it any different if they gift their wealth to their descendants? Why is gifting wealth wrong?
Most of my friends who bought a house in Seattle in their 20s or 30s used inherited funds. When I worked in mortgage lending it was basically universal that anyone younger than 30 was getting a lot of help from parents. There's a massive advantage to owning a house when you're young, especially pre-rate hike.
Just getting into a home loan pre-rate rises is the biggest advantage, due to the fixed-rate nature of home loans in the US.
This article is another restating of the fact that wealth inequality is the greatest its ever been.
Almost everyone I know got several hundred thousand dollars gifted for a down payment and most of these people are from typical middle or upper middle class backgrounds. I have a top 2% income (by Canadian standards) but the best I can do is a 2 bedroom condo or a bottom of the market townhouse with a long commute
I don’t know a single neighborhood in this city where the average household in that neighborhood makes enough to live there with current prices.
I genuinely don’t know why I even work anymore. I don’t have any achievable financial goals except save as much as I can until I move away to live off my savings in a cheap area
https://archive.ph/kAVoo
What value can most US educated bring to the economy? I count myself included.
They’re not hardcore enough to do meaningful research.
They’re too expensive to work in factories. (And not going to compete with Chinese slave labor)
What’s left? Hard to automate or offshore labor: service, or menial labor.
Surely you can’t become wealthy that way? I just happened to blunder my way into tech despite subpar education.
You are onto something but I would suggest a slightly different conclusion: that the best and brightest STEM students are attracted to the shiniest jobs, which right now involve programming computers to trade money (HFT) and teaching computers to do advertising (ML-backed ads). Neither of those are fundamentally useful.
Ads are waning. Due to ATT and centralization.
America is not hardcore enough to do meaningful research? huh?
Did you go to American high school? Most kids barely pass algebra 2. Even the “smart kids” can’t really compete in college. With standard American route there’s a sub 1% chance you can make it as a researcher in a hard science.
The original question was about what value educated people can bring to the economy. You are asking about most people.
And I reject your characterization of the capabilities of American students. There are plenty of incredibly bright ones.
What? I went to an American public high school, there were/are plenty of kids who are very smart. 8% of my graduating class were in the uber-advanced honors math track. This is in a flyover state outside a small city.
I also used to work in science, the reason there's so few chances to make it as a top researcher is that there is little opportunity. Look at jobs for a lot of life science majors after a BS, you will find a ton that is washing glassware in a lab, a complete waste of anyone with half a brain.
There's reasons why there is little opportunity that's not worth exploring here, but suffice to say there are a ton of very smart kids in America that choose other paths. Outside tech and specialized physicians, nerd careers are not lucrative on average. With little opportunity, smart people end up doing banal work. Why do banal work and have a mediocre salary predicated on jumping through higher than average academic hoops? Doesn't add up for most people.
What’s uber advanced here? I was in the calculus BC class and double majored in math and physics in college.
My performance in the Putnam (I got a 2…) and in grad school are all the proof I need that I couldn’t compete.
BTW I was the best student in my flyover state public school.
I'd say the reason there is so little opportunity in science is that science as an instiution is terrible at capturing the value it creates. Thus it instead relies on charity of which there isn't enough.
That’s better than a system where future janitors are still expected to grind math problems instead of having a childhood
Housing is the obvious problem, only way to fix this is by making it easier to build houses and some kinda land value tax (higher property taxes would work but not as well). Problem is most western countries are gerontocracies and property taxes are the most hated tax. If you didn't get lucky you might as well give up on ever owning a house.
Relevant Calvin and Hobbes: https://www.gocomics.com/calvinandhobbes/1991/11/29
I think we need to shift from seeing inheritance as something we benefit from.
Every positive comes with a negative, nothing is created nothing is destroyed.
Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
I won't deny that you CAN ignore the responsibilities that come from inheriting wealth, yes you can sell your father's company and life mission, but you destroy your legacy, and your children will destroy yours.
Wealth comes with its own set of problems if taken. Sure we may argue about which problems are worst, but must we? Each is born into a place, each is born into a class. And the principle of balance shall bring equity in the form of responsibility (to paraphrase Spiderman's uncle).
I just feel it's a more appropriate response to tell your parent "I will take care of it" rather than "thank you" and selling it to go on trips and snort cocaine. I'm not saying I'm free of sin and don't indulge in the pleasures of hedon, be it in a coffee (brought to me by a less attractive waiter of a distinct race from other commensals serving a publicly traded company, and made with beans grown and brought under a veil I can assume hides even more injustices) or in the wasting of my intellectual and physical talents on the pursuit and satisfaction of short term audiovisual novelty, but I will do so in guilt damnit!
>Every positive comes with a negative, nothing is created nothing is destroyed.
>Chemistry found it to be so in the physical domain, confucians in the spiritual domain, and accountants in the wealth domain.
This is a platitude that has no bearing on reality. Technological advance in the past 2 centuries has increase our wealth and standards of living by orders of magnitude. You can come up with token objections about how each advancement had some downsides (indoor plumbing is bad because... copper mines pollute the environment?), but it's certainly not the case that "nothing is created nothing is destroyed". Technological advancement has created untold wealth.
Are you trying to say it’s harder to inherit wealth than it is to be born low income, grind a construction job, and come home to the house your parents bought 40 years ago that homes your grandparents, parents, and your family?
This is why I believe the Financial Independence movement is too rearward looking, if you have children. Parents now need to plan for the college (and graduate school) tuition and the house downpayments of their children, because the cost of both have increased by an order of magnitude in the last 50 years.
We are building a new aristocracy where people are better than others just by virtue of being born into the right family. And if we don't limit the ability to inherit this process will just accelerate.
Same as it always was.
If skills and knowledge matter less and less because technology and automation grow over time, what matters if not already existing wealth? Might be an hyperbole dictated by the current times, who knows.
A dirty little secret is that that over a third of Gen Z and Millennials get down payment help from their home-owning parents. In expensive cities, the percentage is even higher. When you add the number of parents who co-sign in order to secure the mortgage, the number could reach 2/3rds in expensive metros.
It’s the new feudalism.
https://investors.redfin.com/news-events/press-releases/deta...
> It’s the new feudalism.
In a sense that basic housing now is luxury - yes.
In the sense that there’s a growing class of landed gentry and nobody else can buy anything. People with houses today will be the aristocracy in a few decades
> People with houses today will be the aristocracy in a few decades
Not really. Peasants were mostly owning their houses, that did't make them aristocracy.
I genuinely do not see how owning a 1970s-built bungalow translates me into the aristocracy in a few decades.
https://archive.is/RKUl4
This doesn’t hold up logically. To inherit money means the generation before you saved it, but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
For inheriting wealth to be important to your success, it would either have to come much sooner or you would have to have no kids of your own
>but for it to be generational wealth you must then pass on more than you inherited. Further it doesn’t serve as a major investment, because your parents only die ~25 years before you do, meaning it can’t be used to start a business or something similar.
At least in theory that's not hard to pull off. From the article:
>By one calculation, if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made.
The average inheritor might be too spendthrift to stick to the plan, it's not exactly impossible as you suggest.
What is opposing theory to this? I.e., idea that inequality bad
Maybe I’m in a bubble that I seem to hear this and while I do agree I would still like to know what the opposing idea is here.
I suppose it’s something like inequality is inevitable so you can’t remove it; instead you can try to make it comfortable for everyone and that due diligence can help.
Perhaps a well-run military would be an example; unequal by definition but without all the parts working well it falls apart.
https://archive.is/M5kId
In United vs FEC, corporations were granted to the ability to be treated as persons - with all the rights - when it was good for them. And to enjoy the protections of being a corporation when that was good for them. This was a unilateral decision by the US Supreme Court.
The result is that corporations now choose who candidates are in the US and who gets elected. Once a candidate is elected they serve the master who got them elected. Not, We the people. Any even casual evaluation of the laws passed confirms this. Affordable medical care, which the People want and need? No. Obscene profits from corporations overcharging people for medical care? Great!
Regular people push addictive drugs? Jail. The Sackler Family, probably the biggest cause of drug overdoes deaths ever? Are they in jail? And what about the millions of stock owners who made a tidy sum? Did they lose their money, are they in jail? Nope.
We are not a democracy, we are a corpocracy. Because of a US Supreme Court decision. We need to fix this. And hint: is the word corporation in the US Constitution. Hint #2 does the 14th amendment prohibit unequal protection under the law.
In a democracy the representatives represent the will of the people. In a corpocracy they represent the will of the wealthy corpocrats and corporations. We have two corpocratic parties to choose from. Democrats and Republicans.
We need to fix this.
>People in advanced economies stand to inherit around $6trn this year—about 10% of GDP
this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
other nits, the baby boomers were an unusually large population group in an unusually prosperous and healthy period of history: we've known they would die for quite some time and we've known they would leave a lot of money. It's not "a trend" and it's not "news". It's a well known anomoly, a blip/bulge passing through the system. It's interesting but it's not alarming.
>this is mixing apples and oranges. Let's say the stock market yields 10% annual returns on average (it doesn't, but it's a round number in the ballpark). Let's say you inherit a million dollars. That million dollars invested in the stock market would return $100,000 to you as annual income. THAT number is comparable to GDP which is a measure of income. So, in other words, "people in advanced economies stand to earn annually from their inheritances less than 1% of GDP (yawn) not 10%"
I get where you're trying to go with this (ie. "you can't compare stock vs flows!"), but you've patterned matched too aggressively. There's nothing wrong with using GDP of a country as a benchmark. Sure, it's comparing stock vs flows, but GDP of a country is nonetheless a valuable yardstick when comparing sums, for instance comparing debt to GDP levels. As long as they're not directly comparing the figures (eg. implying that the whole country is going to be inherited in 10 years time or whatever), it's fine.
The Economist agreeing with Piketty???
The world has truly gone mad!
part of the reason marriage was invented as a social technology was intergenerational transfer of wealth. so, inheritance has been 'nearly as important' as working for millennia.
So wealth wasn’t all merit then?
Who would say…
A groundbreaking 20-year study conducted by wealth consultancy, The Williams Group, involved over 3,200 families and found that seven in 10 families tend to lose their fortune by the second generation, while nine in 10 lose it by the third generation.
This study matches my anecdotal experiences. Second and third generations of wealth don't respect money and this manifest in all kinds of bad behavior that leads to wealth destruction.
This is an interesting concept that in its abstract form applies to far more than inheritance. For example, it's a pretty thoroughly studied phenomenon that if a part of an immigration population becomes radicalized, it's usually the third generation. The reasoning if I recall correctly off the top of my head is similar to your reasoning.
In a stable society where you dont tax wealth, this is the inevitable outcome.
We do tax wealth of course. We wealth is defined as primary residence. No need to remind me about 'services'. Countries tax plebs by constantly changing the definitions of income, wealth.
When you look around at how expensive homes are in certain areas and continue to lose the auction because everyone else had a cash bid, realize a lot of people are getting a lot of money from their aging and dying boomer parents. Where I live nearly everyone had a lot of help from mom & dad.
Money flowing out from the real estate sales on the coasts are also a big contributor.
Californians have been flooding Idaho, Nevada, Utah etc. They buy their homes and 2 new cars then have money left over to invest in the markets.
Indeed. I don’t think people outside the coasts realize how much more the large set of top earners make.
Shit, I would have chosen richer parents if you'd just told me before I was born.
In other words the rich are an increasingly large parasite that is increasingly impairing the functions of real society and subverting it to their ends. Two oligarchs are running the country right now in their own interest.
The purpose of a system is what it does. The system is working as intended. This is not a problem for capitalism, this has always been the goal.
As long as most millionaires are self-made, we are ok.
My dad worked at a gas station and I run a tech company.
Fuck off with your paywall...
I like how they always forget to mention the elephant in the room, 8 billion in absurd amount of any living organism, by many estimates we already surpassed the number of rats in the world, but the responses about doing anything at all to reduce that number in the long-term are all emotionally charged and empty of any rational thought.
In the context of capitalism as we known scarcity increases value, such thing is true for number of employees available, the less employable people around the higher the wages and therefore the quality of life of the living.