The Richest Rich Are in a Class by Themselves

http://www.businessweek.com/articles/2014-04-03/top-tenth-of-1-percenters-reaps-all-the-riches

by applecore • 12 years ago

45 68 12 years ago

marknutter• 12 years ago

The 0.1% aren't sitting on stacks of gold bars. The money is still flowing through the economy, it's just in the form of stocks, bonds, and real-estate. I've never heard a convincing argument for why the 0.1% is harmful to society.

crusso6• 12 years ago

Even worse -- on top of the shaky ground of the argument that "income inequality is a huge evil" is built a remedy that the government is somehow going to equitably redistribute the wealth without destroying a great deal of it in the process.

Income mobility is so much more important as an economic concern over income inequality.

sdgsdgsdg• 12 years ago

This is a tired mantra. It does not bear close scrutiny. It is a meme created by the wealthy and powerful to maintain their wealth and power. It is similar to the belief inculcated by royalty that they rule by divine right.

gfodor• 12 years ago

Exactly. Nobody talks about income mobility. Income mobility in the US is the same as 20 years ago despite increasing inequality.

Income mobility for the poor is highest in the places where the infamous 1% live.

http://www.equality-of-opportunity.org/

spo81rty• 12 years ago

Their money may very well be funding lots of start ups. The wealthy employ lots of people.

hedges• 12 years ago

As long as a more equal distribution of wealth would reduce suffering, we can certainly consider wealth inequality harmful.

One would have to have rather alien values to think that luxuries for a few are preferable to food and health for all.

apineda• 12 years ago

Let's look at Venezuela to see how that is implemented. Centralized power is too toxic to be able to distribute anything "fairly".

cmdkeen• 12 years ago

Except if the act of adjusting that distribution causes economic harm you end up with a more equal society where the poor are poorer.

dabrowski• 12 years ago

As long as a more equal distribution of wealth would reduce suffering, we can certainly consider wealth inequality harmful.

First you would need to prove that.

Consider a world with perfect income equality. In such a world, there is no economic incentive to work at all.

Second, how do you plan on equalising the income without committing an act of aggression against innocent people?

One would have to have rather alien values to think that luxuries for a few are preferable to food and health for all.

That's a false dichotomy. What if, say, everyone gets poorer in the process of making it less desirable to be rich?

quasque3• 12 years ago

I feel it's more a question of why should such a small handful of people control such a massive proportion of the world's wealth and power. Especially if it's some form of dynastic wealth.

And then there is such a huge, sickening disparity between how the poorest populations of the world live - well over a billion people do not have even their basic needs met - and the excesses of the ultra-rich.

I don't have a solution, but it's galling nonetheless.

Qantourisc• 12 years ago

You made me come up with something: I don't have a problem with the rich, but not at the expense of others. (And we are not talking about everyone a luxurious car, but for some it's about not having a roof and bread.)

crusso6• 12 years ago

Especially if it's some form of dynastic wealth

Now here's where I'm NOT going to sound like a Libertarian in this thread and agree with you.

Dynastic wealth should be cannibalized in the same way that big chunks of spaghetti code should be thrown away and rewritten. Dynastic wealth is demonstrably not earned and it's harmful to the mobility of others in society.

Shinkei3• 12 years ago

How about start with this:

http://www.economist.com/blogs/lexington/2010/10/estate_tax_...

People much wiser than us founded America upon the principle that extreme wealth is incompatible with democracy.

EDIT: For emphasis, "Extreme" wealth is what I'm talking about here. Whatever arbitrary number we are choosing that allows this to happen--our potential future president courting a single citizen's favor:

http://www.bloomberg.com/news/2014-03-29/republican-presiden...

ary2• 12 years ago

People much wiser than us founded America upon the principle that extreme wealth is incompatible with democracy.

You need to go back and take a look at early American history. Many of the founding fathers were business owners and/or extremely land wealthy and had a strong interest in personal property rights as a result. They needed the middle class of the day to agree to the ratification of the constitution which led to the bill of rights.

Basically they founded America on the principle that their extreme wealth was incompatible with the rest of the colonials without democracy.

pvnick3• 12 years ago

So happy to hear you say that. So much of the whole 99%/1% (or whatever arbitrary divide the pseudointellectual youth choose to focus on) fascination is fueled by envy. "Ugh, why should those corporate fat-cats have so much extra money when I can only afford the lesser quality otterbox for my new iphone?!" Inequality is not intrinsically bad. In fact, it's commonly accepted that so much extra wealth does not bring happiness, so perhaps we would do better to covet less and appreciate more.

imgabe• 12 years ago

It's not the 0.1% are harmful. There will always be 0.1%, that's how percentages work. It's the proportion of wealth they control.

Would you support a system where 1 person controls 100% of the wealth? If not, why not?

If the current situation where the 1% control 35% of the wealth is not a problem, at what point do you think it would become a problem?

refurb3• 12 years ago

Wealth inequity is only one factor. Since we're throwing around hypotheticals, which society would you prefer? One that has high income equality, but most people are poor (i.e. Bangladesh)? Or one with low income equality, but most people are middle class (i.e. America)?

Where would you like to live?

jal2784• 12 years ago

The top 0.1% is not by definition harmful to society, but harm can come from when the 0.1% controls an increasingly disproportionate share of wealth. But of course, income inequality is not bad by axiom either.

The rub of increasing income inequality is that it undermines everyone benefiting from increasing wealth and technological advance (e.g. the hope that in the limit we'll approach a star-trek society).

Overall, we want a society in which wealth for all increases -- this is the futuristic dream of us working 15 hour work days by virtue of massive productivity gains from technological advance. Yet what seems to be currently happening in our economy is that technological advance enables increasing profit for a select few.

skybrian• 12 years ago

Yes, their wealth flows through the economy in a way that benefits rich people. You can see this most obviously in charity work where many charities are largely about catering to whatever rich people want to do. (How many opera houses do we need?) We are lucky that some of those at the top are relatively far-sighted, but this is far from universal.

Buying power also affects who businesses cater to and which startup business plans seem promising. As a result, a lot more effort goes into solving rich people's problems. Businesses segment on income (Walmart versus Trader Joe's versus whatever the very rich do.)

Something like guaranteed income would also flow through the economy, but at least the first hop guarantees more attention towards the problems of the poor, due to a bit more buying power. There would still be plenty of ways to make money.

e402• 12 years ago

I've read plausible arguments that the richest fortunes do not benefit society by being in play and that much of it is parked in various places, some off shore.

zomgbbq• 12 years ago

Is it more accurate to describe wealth ranges as standard deviations from the mean rather than a linear percentage?

applecore• 12 years ago

Not really. Wealth is more accurately described by a power-law distribution.

hooande• 12 years ago

Focusing on the richest can be more gratifying than focusing on the poorest. Everyone likes to hear stories about people with lots of money. It's aspirational in the "some day, that will be me" or "can you imagine?" forms. But it's not the most productive way to understand income inequality.

The real metrics we should be looking at are how poor are the poorest people. How many gallons of milk or loaves of bread can someone buy with minimum wages? Does the current level of social mobility allow someone to escape from poverty within their life time? The issue isn't about how much more money the super rich have than the rest of us. It's about how we can help the poor to have enough to survive.

Counting other peoples' money is a vulgar pursuit. It's sad that typing a celebrity's name into google often leads to a "how much is ________ worth" autocomplete suggestion. Being fascinated with the rich is understandable, but just a little more focus on the poor would benefit us all. Our startups and apps need paying customers, and there's only so much that rich people will buy. If we can configure our economy in such a way that the middle class is larger, more people will have money to spend on all kinds of things. Then maybe more of us can move into the top 2% or 3%, while leaving the megarich alone to focus on their own funds.

jal2784• 12 years ago

When talking about income inequality it may be too narrow to only look at "how poor are the poorest people," because what's important in an inequality is the increasingly vast disparity between the poorest and the richest.

Focusing on the disparity is important because it highlights that there is systematic concentration of wealth, i.e. that the economic game seems to be stacked for the wealthiest: the rich really do get richer, while the poor really do get poorer.

Otherwise, when you look at the poorest of the poor, the knee-jerk rebuttal of some is just that, sure, some people are really poor, but they deserve it -- e.g. they are the deadbeats of society, or they should work harder, or they should get better educated. In constrast, the increasing disparity between the rich and poor gives evidence that something larger is going on.

I do agree that social mobility is important, as is expanding the middle class. But more than expanding the middle class, the income of the middle class should increase with the overall increase of wealth, which has not been occurring as of late.

Also, the concept of "more of us can move into the top 2% or 3%" is tautologically impossible :)

ebfe2• 12 years ago

The poor don't get poorer, though. The poor today are the richest they've been at any point in recorded history- they live longer, are more likely to own a home and cars, and are more likely to go to college than the kings of 100 years ago.

Inequality is, in and of itself, a meaningless metric- what we really care about is the absolute quality of people's lives. If the social structures that result in the highest absolute quality of people's lives (by driving economic and technological progress) require inequality, then it's absurd to suggest we abandon them for a more equal society with a lower absolute quality of life.

pron• 12 years ago

Well, I only partly agree. In a developed country, that the poor should have enough to survive is a given. But once survival is assured (and I'm not saying it is, but it's not far from it), there are other important issues to consider. Money isn't just glitz, glamour, mansions and fast cars. Money is also power. And when money is distributed unequally, so is power. Now, this is a price we have to pay, because completely egalitarian approaches seem to have failed so far, and in order to incentivize people to create, some inequality is actually good. But the question is how much. When is inequality so blatant that feudalism is near? When is inequality so atrocious that the basic values of democracy are threatened?

I don't think there are clear answers, but this is a continuous struggle in any capitalistic society. Capitalism has to be maintained, but curbed so that it doesn't run rampant.

collyw• 12 years ago

Why does capitalism have to be maintained? We are capable of sending a man to the moon, but this is the best we can come up with for wealth distribution?

Actually on second thoughts, its not really capitalism our current system. Capitalism should have failed, but the banks got bailed out by the tax payers, and we have been on emergency low interest rates for years now. This ain't capitalism or free markets.

netcan• 12 years ago

I partially agree with you but I don't think you can categorically state that the issue is any one thing.

Some people see income inequality as a problem in itself, a fundamental (literally) moral one. From that perspective, increased wealth at the top is bad for its own sake.

My concerns are mostly about money and power. I think the two are inevitably intertwined. I think both socialist & liberal (in the economic sense) ideologies put a lot of emphasis on decoupling them. Neither were successful. I don't think it's possible. Concentration of wealth and concentration of power are related problems. It's a potential threat to democracy. There are also positive feedback effects which are dangerous.

One way this manifests is closely related to the title (but not really the content) of this article. Talk about class is very coloured by the last century's political battles but one thing that is worth keeping in our lexicon is the marxist concept of "class," though without a lot of its extensions. The Marxist definition of class is more or less a group with shared economic and therefore political interest.

The modern underclasses, middle classes, millionaire and billionaire classes can have potentially divergent economic and political interest. An economic interest which represents a large part of the economy can translate into economic policy. In the case of the 0.1% it just takes a handful of individuals to create that kind of an influence.

Historically, countries have been openly run for the benefit of the upper classes.

bowerbird2• 12 years ago

even 0.1% overstates the real number of the ruling class.

google tells me there are some 1600+ billionaires today.

those are the guys (and a few girls) who are really dirty. you can't get (or stay) that rich without hurting people. this is the locus of greed that will sacrifice the planet rather than "give in to someone else having more than me". these are the high-stakes players, the ones who _really_ pull the strings. everyone else is just their string-puppet.

it's also a small enough number that we can closely examine every single one of these individuals to solidly _confirm_ that their avarice and power-broking is truly despicable, so we can confidently brand them as an enemy of the people. this will put them on notice, and give them an opportunity to "opt out" of their bad behaviors and gain our reprieve. let them keep their money and a lavish lifestyle, but only _if_ they can actually reign in their destructive actions.

recognizing the value of a nice sonorous phrase, i suggest "the filthy 1500", so we will set our focus appropriately.

and, given that these are world-class competitive bastards, i'd predict that many will work so they can _make_ the list.

-bowerbird

mcdougle• 12 years ago

I don't really have any proof to use to refute your statement, but it seems to me to be a massive over-generalization. What about, for example, Bill Gates, who's been using his wealth to give back, start charities, etc. and plans to give all of it away over the course of the rest of his life?

Many of the rich might look at the poor and see a large class of people basically living off of their welfare checks -- which the rich would then say that they paid through taxes -- and say that those people are lazy and greedy and are hurting the economy.

I don't think either of these cases are true. There are good and bad apples in any class of people. I would say that it seems like people with power might have a tendency to become corrupted by that power -- but this isn't just money: politicians, big-time CEOs, etc. can end up like that too.

bowerbird2• 12 years ago

-3 on that one.

i forget this is the tech hangout for the wanna-be-rich.

so now i'm sitting here trying to decide whether i can come up with something that will make you all understand how the super-duper-massively-rich have rigged the game.

poisoned the planet in their winner-take-all grudge-match, killed off animals like they were pit-bulls in a dog-fight, treated the polar ice-caps like ice-sculptures at a party, and kept throwing bigger rocks (a.k.a. bombs) at each other.

and by the time the split shifts the span, and you _might_ figure it out (or maybe not even then), it'll be too late.

way too late.

but i can't come up with anything, except just to say it, and since (as i just said) it'll be too late anyway, then i guess it doesn't even really have to be said at all, eh?

so yeah, chase your dreams, kids, and try to become rich...

probably best not to have any kids of your own, though, because you might find yourself getting attached to them, and worrying about their future, which they will never see, because the human race ran out of time before they got old.

-bowerbird

ChuckMcM• 12 years ago

Interesting, the magic number is $100M[1], at least in the Bay Area that seems to be the number most folks are shooting for when they consider themselves "rich". Clearly I have a long way to go and not much runway left :-)

[1] "To be in the top 0.01 percent—that’s the 1 Percent club’s 1 Percent club—required net worth of $100 million."

morgante3• 12 years ago

Personally, I don't have a problem with income inequality. If you work harder and are smarter than others, it seems reasonable for you to enjoy the spoils of that work.

I do, however, have a huge problem with wealth inequality. For the most part, it's attributable to inherited wealth and dynastic fortunes. Even after decades of hard work (and a salary well into the 1%), your net worth will still be a pittance to the size of people's inherited fortunes.

I have not once heard a compelling argument for why inheritance is a good thing for society. It's the opposite of social mobility and equal opportunity (supposedly American ideals) and only serves to concentrate capital in the hands of those with zero demonstrable ability to manage it effectively.

It might be politically untenable, but I'd support a 100% estate tax.

pvnick3• 12 years ago

I have not once heard a compelling argument for why inheritance is a good thing for society.

You must not have kids, do you? It may not be good for society, but do you seriously want to prohibit parents from being able to pass things down to their children? That's a bit of a monstrous proposition, don't you think? Many families attach emotional significance to tangible property (land, a house, furniture, life insurance, etc), and stealing that from them because "you didn't earn that" is morally reprehensible.

morgante3• 12 years ago

You must not have kids, do you? It may not be good for society, but do you seriously want to prohibit parents from being able to pass things down to their children?

I don't have kids yet, but I do not intend to leave anything to them once I do. I'll make sure they get a good education, but will be donating my estate to charity.

Many families attach emotional significance to tangible property (land, a house, furniture, life insurance, etc), and stealing that from them because "you didn't earn that" is morally reprehensible.

It's no more "morally reprehensible" than any other taxation. In fact, compared to "stealing" my personal wages (ie. income taxes), it's significantly more moral—it was never there's in the first place.

refurb3• 12 years ago

I guess the question is, when is your money your money? I like to think once I've paid my income taxes and all the other taxes levied on my income, that the rest is mine. I own it and I'm free to do with as I like.

What estate taxes say is "none of it is your money. once you've paid your income taxes, we'll let you keep some of it, but if you die, we're taking the rest of it".

So individuals who want to pass down their family business to their child? Tough, the gov't gets it all. Want to make sure your surviving spouse and kids will be taken care of? Well that wouldn't be fair. The gov't takes it all.

I take the opposite stance, inheritance taxes make no sense at all.

morgante3• 12 years ago

I guess the question is, when is your money your money?

It is indeed your money once you've paid taxes on it. But leaving it to your children is a transfer, just as your employer paying you was also a transfer.

As far as I'm concerned, payments to individuals based on zero productive activity should be taxed at 100%.

EDIT: clarity

e402• 12 years ago

I agree with the sentiment, but I think a 100% estate tax is never going to fly. I'm definitely for steeply increasing it as wealth goes up, however. Maybe it goes to 100% at some level (a billion?).

tcgv• 12 years ago

From my point of view inheritance is a good thing because it ensures your family and loved ones will have a comfortable life once you pass away (kind of a life insurance).

Nevertheless it also bothers that people who inherit large fortunes can live a luxurious life without having to do real work a single day in their lifetimes.

Maybe putting a limit on how much wealth can be inherited by a single person would work better than a 100% estate tax. But this also raises another question, would you trust the government to manage your life's wealth after you die? I sure wouldn't!

jamesblonde2• 12 years ago

We are neither revolted nor have we revolted.

In 2014, the 85 richest people have wealth equal to that of the poorest 3.5 billion — half of the world’s population [Oxfam report 2013]. The wealth of the richest one percent of people in the world is 65 times the total wealth of the bottom half of the world's population. And history will remember the IT industry as the poster-boy for the economic inequality that defines our age.

But, we, the workers of the IT industry, are neither revolted nor have we revolted. Instead, we have happily bought into the myth that we too could become as wealthy as Mark Zuckerberg. Our golden goose algorithm goes as follows: (1) get experience (be poor), (2) found a company and work hard (be poor for a bit longer), then (3) sell the company (get rich). Then we can either retire or return to step (2) as an investor (the highest of castes, exceeding even founders).

We are as stupid as the general population who believe we all can aspire to be members of the one-percenters.

pvnick3• 12 years ago

We are as stupid as the general population who believe we all can aspire to be members of the one-percenters.

Why would you want to be? You think having that much wealth would make you happy? Why not be satisfied with living a comfortable life of plenty?

jamesblonde2• 12 years ago

Plenty of social studies show that median happiness is lower in societies with relatively higher income inequality. So, while you may be the exception and can be happy while your neighbours have more than you, most people aren't.

gyardley• 12 years ago

Like a lot of our political discourse these days, this is just dickering over the precise definition of 'kulak'.

kenster07• 12 years ago

I would argue that the wealthy are doing what they have an incentive to do, which is to hoard wealth. The problem is, rather than their wealth "trickling down" throughout the economy from their clouds, it is sitting in their bank accounts or estates, earning interest. Can you blame them? They are simply adapting to the incentives put in place by our economic system.

Rather than make any dead-end accusations about wealthy people being good vs. evil, the focus should be on altering the system such that people are given the right incentives to do what is best for the economy as a whole.

mmorett• 12 years ago

Yet another thread full of HNers sitting back and contemplating various ways to take other people's money like a Soviet central planning committee. Can you fuckers stop worrying about how much money someone else makes or whether they got it thru inheritance. It's not your money. It's none of your business.

The Richest Rich Are in a Class by Themselves

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