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And if you're getting a $365k bonus you are likely already so rich that the money is only going for luxury things while for someone making $7.25 it's quite lite

• johnchristopher 7y ago
  Isn't money used to buy luxury things supposed to stimulate the economy that would then stimulate the job markets and then trickle down to people ? /s edit: forgot the /s
  • hedonic_ 7y ago
    Yes and no. Give someone earning $7.50/hour more money and it gets spent and put back into the economy like you said. Give someone earning a base salary of say 500k more money and it gets put into a bank to earn them even more money, taking it out of the equation.
    • adrianN 7y ago
      I don't support trickle down economics, but it's not the case that money in banks is just sitting around in a vault. The banks actually do stuff with the money. For example it's loaned out to real world businesses.
      • mschuster91 7y ago
        > The banks actually do stuff with the money. For example it's loaned out to real world businesses. Traditional loan business is not the core business of banks any more, at least not where the big profits come from.
      • neffy 7y ago
        No it's not - banks are statistical multiplexers. They don't take money and lend it out. They create money, lend that, and then remove that money as the capital (loan amount) is repaid - or when the loan goes into default.
    • C1sc0cat 7y ago
      Hypothetically here you would invest the 500k which is putting money into the economy. Your right that socially its better for society for a lower paid person to have the $ how ever certainly in the UK some of that increase would get clawed back by reduction in benefits.
      • ForHackernews 7y ago
        How does buying $500k worth of stock ("investing the money") stimulate the economy? Haven't I just purchased a paper asset from the seller? I guess you could argue that the seller who liquidated their position is now free to spend that cash on something productive.
        • formercoder 7y ago
          That’s the argument for buybacks and dividends. If companies don’t have any NPV positive projects to take then the cash must go out to shareholders who do.
        • C1sc0cat 7y ago
          Aside from the fact that companies need investors there is also the question of investing in IPO's etc.
      • skohan 7y ago
        As far as investments, I'm no economist, but I'm skeptical that the money spent purchasing securities has an equal impact as someone buying goods and services locally. It seems like a disproportionate amount would go right back to other members of the investor class, who are going to use it on other securities, or else high-margin luxury items, and very little of that is actually going to escape that bubble. I think you could argue that replacing benefits with direct income is still a "win" for society. If they're able, it's more efficient for people to meet their own needs than to be provided for through a bureaucratic process with lots of administrative overhead.
    • slv77 7y ago
      Some ideas for the US investor. Invest the money with a payday lender to loan it out to your under-paid employees so you can grab even more of their paycheck! Buy a block of housing that houses your under-paid employees and raise rents so you can get even more of their paycheck! Invest in sub-prime auto loans so that your underpaid employees can get to work. Make money on them while the commute! Of course make sure that you diversify if you need to lay them off! Invest is short term unsecured credit card debt of your under-paid employees. To goose the returns put them on a high deductible health plan and leverage what you lend to them with their own health account savings (free money). If you are generous give them a 401K match (which is required by law if you have the same) and leverage up using that money too! Many of your underpaid employees will be on food stamps and located in areas without those fancy suburban grocery stores. Invest a quicky-mart and rake in the food stamp money at high margins! Don’t forget the liquor and lotto tickets as income boosters! If you underpaid employees can’t numb at least you can sell them a bit of hope! Lastly have you thought about the medical field? A lot of your under paid employees are on Medicaid and I’m hearing good things about insulin!
      • kthejoker2 7y ago
        The return of the company store ...
        • acct1771 7y ago
          ...return? Walmart, Amazon.
    • erfgh 7y ago
      Nobody puts that money in a bank. They invest it in a mutual fund or similar, so it ends up funding businesses and their employees.
      • Droobfest 7y ago
        Investing in a mutual fund only directly funds other shareholders
  • mcv 7y ago
    Money for luxury things doesn't do nearly as much as money for necessities, because luxury things are optional. The person with the money can easily decide to postpone the purchase and save the money instead. Or spend the money abroad, which doesn't do much for the local economy. People who are short on necessities will immediately buy them when they get the money for them, because they are necessities. Money for the poor is an extremely reliable way to stimulate the economy, much more so than money for the rich.
    • Chris2048 7y ago
      Maybe saving money is as important as "stimulating" the economy? Maybe the type of economy is important too, i.e. luxury items that push the envelope wrt novel manufacturing methods or R&D
      • mcv 7y ago
        Maybe, or maybe not. I think the first concern is that everybody should be able to eat, have a roof over their heads, and have the freedom to focus on other things. I think it's definitely healthy for a society if the poor are able to save some money so their life doesn't immediately collapse on a rainy day. Once that's sorted, I'm all for investigating all the maybes.
        • Chris2048 7y ago
          Depends. Maybe not all "poor" are the same. Some choose not to stay in school, what do you do then? Guarantee food and shelter anyway? Why work my way up through the humiliation of McJob when I can stay home and prove my worth in Xbox?
          • mcv 7y ago
            Are we still talking about stimulating the economy? Then yes, making sure they have money to spend will ensure they spend it, increase demand, and grow the economy. But yes, reject humiliating jobs. I'm not sure why you'd actively want people to be miserable. But if you want a bigger picture: create better opportunities, and make sure they are accessible to everybody. The whole reason people withdraw from society into either drugs or gaming or whatever, is that, from their perspective, society has nothing to offer them but humiliation and misery. Heaping more humiliation and misery on them is not going to fix anything. And if rich kids drop out of school and spend their time partying, they're also guaranteed food and shelter, and quite a bit of wealth on top of that.
  • kprjo 7y ago
    At this point every time I read the "trickle down" argument I just think the person is trolling.
  • tinus_hn 7y ago
    ‘Trickle down’ theory is obviously just a bullshit excuse for people enriching themselves but companies can’t exist without investors.
  • dmos62 7y ago
    This shouldn't be downvoted, because Trickle-down economics, or rather politics, is a big part of today's world, and it needs to be discussed. It tries to justify socioeconomic stratification and deregulation, which is nuts in this late-stage capitalist society. It shouldn't be supported, in my opinion at least, but it should be critiqued and discussed. It's too important to be downvoted out of the thread.
• bigred100 7y ago
  Yeah indeed. I wonder why more rich Americans don’t feel shame and embarrassment at such purchases.
  • throwaway55554 7y ago
    They do. Then they go shopping to make themselves feel better.
  • bitexploder 7y ago
    There are studies that show being wealthy somehow decreases empathy.any people just stop noticing. https://www.scientificamerican.com/article/how-wealth-reduces-compassion/?redirect=1 https://www.scientificamerican.com/article/how-wealth-reduce...
    • SkyBelow 7y ago
      The studies do not show that. >In order to figure out whether selfishness leads to wealth (rather than vice versa), Piff and his colleagues ran a study where they manipulated people’s class feelings. The researchers asked participants to spend a few minutes comparing themselves either to people better off or worse off than themselves financially. Afterwards, participants were shown a jar of candy and told that they could take home as much as they wanted. They were also told that the leftover candy would be given to children in a nearby laboratory. Those participants who had spent time thinking about how much better off they were compared to others ended up taking significantly more candy for themselves--leaving less behind for the children. Trying to take a single minor difference in behavior in a controlled setting and apply it to an entire demographic is bad psychology. Imagine someone doing this with a demographic distinction other than SES.
  • EliRivers 7y ago
    I understand that a popular philosophy is that they're rich because they deserve it; they're simply better people. There's no shame to be had; it's simply the natural order of things, it's morally right.
    • 7y ago
• rakoo 7y ago
  If it even goes into luxury buying, rather than to an investment account that will only enrich them and whoever is managing the account.
  • taneq 7y ago
    That's the thing, once you reach a certain level of net worth it's actually relatively hard to become poor again. You have to actively make really poor financial decisions over a long period of time. Buy a boat for $100,000 and it'll cost you money to maintain and run. Buy a boat for $100 million and it'll earn you money if you lease it out or take passengers during the 11 months of the year that you're not using it.
    • bluGill 7y ago
      Maybe. It is hard to making money leasing your boat. You need to pay the crew and such. If the market of people wanting to lease a boat is down one year you still have to pay those people. Note that a boat is a bad example on your part. There are lots of other things you can do that are more likely to earn money. For that matter if you can afford a $100 million boat, the crew cost is a line item that you can ignore and thus your boat sits in port 11 months just so you can have your boat. If you really like that boat it isn't a big deal that you are losing that much money.
      • challenger22 7y ago
        Interesting bit I learned a while back- boat operating costs run about 10% of capital expense, regardless of size of boat.
  • agent008t 7y ago
    You seem confused. It is much, much better for the world if the money is invested than if it is spent on frivolous personal consumption.
    • sheeshkebab 7y ago
• vishnugupta 7y ago
  > you are likely already so rich that the money is only going for luxury things while for someone making $7.25 it's quite literally the difference between living in a car or not This is a great insight which unfortunately doesn't get much attention in the inequality debate. I'm now rich enough to be in the top 0.5% of the world. The marginal utility/value of money is so low for me that I've begun valuing my time and optimizing for it. I, however, do think about it once in a while. I could give away a non-trivial amount of money without getting materially impacted. The same money though will make a massive difference to someone below or around the poverty line. E.g., sponsoring a student, helping a business loan, etc., The capital that's getting accumulated in the richest top 1% people is such a massive waste that could help a huge portion of humanity. Purely from a utilization (of money), perspective inequality is a suboptimal state, a massive one at that.
  • turk73 7y ago
    I'm not quite where you are wealth-wise but definitely I have had that moment several times recently where I am re-evaluating hiring out work I would have just done myself in the past. I didn't have some big windfall, but pretty much earned and saved my way to wealth. Now it is hard to not do things like fix my own cars as well as bring my own lunch. I do them out of habit now. That's the discipline. Anyways, you don't want idiots working on your cars and you don't want to eat at restaurants all the time. It makes no sense to me why the CEO and higher ups of the company I work at still work there. They are already set for life many times over. I can only speculate that they share a character flaw that they all see as virtuous. However it isn't--they are impeding someone's chance to "make it" in life, especially the older executives who could have stepped aside a decade ago or more. Even if you just look at the absurd salaries, it doesn't paint a pleasant portrait of greed in America. There is a great absurdity to life in America. We basically work for the appearance of something that ends up being eaten away to a large degree. Taxes and inflation keep the goalposts moving away but we don't rebel because it's a magic trick and who doesn't like magic? I don't work because I enjoy it but because it is a means to an end that is a better formula than some other arrangement. I would happily volunteer my time, travel, read, or simply do nothing if I could.
    • 7y ago
• erfgh 7y ago
  Someone is making this luxury thing.
• Kalium 7y ago
  > I wonder if you could apply this to the rest of American society... At very large-scale companies, it doesn't always work as well as coud be hoped. A company ten times the size of this company may not have ten times as many extremely-highly-paid executives, but it probably has ten times as many people further down the pyramid. For example, the CEO of United Airlines is compensated $18 million-ish. There are 88,000 employees of United. That's $200 dollars per employee per year. You'd have to find a lot more money than that before you started seeing benefits to average employees on the same scale as here. Even if you assume all the highly-compensated execs can account for 5x-10x that, you're still well short of $14k/yr.
  • mercer 7y ago
    What if you were to add up the income of not just the CEO, but all high level management or, say, those who make more than 500.000 a year? Honest question that I'm not sure how to answer myself, but I suspect the benefit to the lower ranks would be much more than the $200 a year.
    • bluGill 7y ago
      Still not much. I didn't bother to look it up (it probably isn't public), but doubt more than 10 people at United make more than $500,000/year, so the amount isn't significant. Now if you said $200,000/year I would expect a significant amount of people make that. However now you are getting into the middle class where lifestyles have expanded to spend most of that money, and they would feel the pinch.
      • saalweachter 7y ago
        The latest SEC filing does not include executive compensation, having disclosed it at the latest shareholder meeting. The 2015 SEC filing includes 8 named individuals in its executive compensation program. In 2015, they received between $500,000 and $1.25M in base salary, and between $1 million and $10.7M in long-term incentives. In addition, they received between 110% and 150% of their base salary in annual incentives (bonuses). Two of them received additional monthly cash payments of $100,000 and $40,000 for temporary duties in addition to their normal post. Granted, that's only the top 8 individuals at the company, but if the lowest-compensated individual among those 8 is taking home >$2M I'm fairly certain that there are a lot more than 10 making more than $500k. It's also still the case that that pile of money is not much divided among 88,000 people, but you could still raise the income of the lowest-compensated 10k employees by several thousand dollars, or fund employee daycare, or something other than give it to a small group of people.
• _bxg1 7y ago
  At that point people don't value money for what it can buy them, they value it for what it looks like in their accounts. That's the problem. I'm not rich per se, but I make enough that I can give away 10% of my pre-tax income to nonprofits without it materially impacting my quality of life, so that's what I do. If my society won't distribute wealth in a sane way, then I'll do it for them. If anyone else has similar feelings, consider taking a percentage off the top of your own salary and allocating it to charities that will help the less fortunate.