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The top 10% owns 87% of the stocks
- blackeyeblitzar 2y agoFinancial education - spending less, saving up, and investing - is common sense but maybe needs to be taught in school. Or maybe the new sovereign wealth fund will indirectly reduce this inequality without needing every individual to take action. Not sure what other options there are.
- thomasingalls 2y agoTAX. THE. RICH. Oh right.
- 47282847 2y agoHow many poor people do you know? I mean, personally? I don’t know anyone where your advice would not be received as condescending and detached from reality.
- hagbarth 2y agoOr maybe, you know, the structure of the system concentrates wealth.
- paganel 2y agoHow can one “financially educate” himself out of the prices doubling in a matter of a few years? And that’s until we get to basic stuff like the cost of housing. Which is to say that neo-liberal patches like “you’re poor because you’re financially illiterate!” need to go, a real structural reform must be put in place in most of the Western world.
- ImHereToVote 2y ago[flagged]
- blackeyeblitzar 2y ago> How can one “financially educate” himself out of the prices doubling in a matter of a few years? By investing. Even with inflation adjustment historical market return is 6%.
- arvinsim 2y agoFinancial education is useless if you don't have capital. Most poor people are just earning enough to live day by day. Getting financial literacy would help little.
- blackeyeblitzar 2y agoI think the importance of financial education is pretty underestimated. But just to illustrate, investing $10 a month into an index fund would mean something like $100K saved up for retirement. Even if you’re poor, it is usually possible to find that $10.
- RangerScience 2y agoAFAIK, the issue isn't finding that $10/mo; although I'd still definitely agree that financial education is underestimated; I'd certainly love to have had a lot more! But, AFAIK - The issue is when something goes wrong, and you have to choose between the gas bill and mom's meds. And then you need to choose between saving that $10/mo for retirement, or for emergencies; or taking what's been saved out of the retirement fund (if that's even possible) because, well, an emergency. Had a colleague have to sell some (most?) of their BTC at $100 to make some student loan payments. As an example.
- deleted 2y ago[deleted]
- cycomanic 2y agoOn the other hand, it has been shown that financial education has very little effect on people living in poverty, but you know what has a big effect? Money, giving poor people money (not even large amounts) has the biggest and longest lasting effect on getting peoe out of poverty. The notion that poverty is a character flaw and that poor people just need to be better with their money, is just propaganda so that it's more palable to cut welfare programs. To see how ridiculous it is, you just have to think about the other ned of the spectrum, the most financially irresponsible people one can observe are typically some rich kids, does it have any influence on their financial/economic future?
- 2y ago
- KronisLV 2y ago> spending less, saving up, and investing On a personal level, sure, that's responsible (for whoever can actually afford to do that), but if everyone is living frugally and don't spend that much money at all, doesn't that have pretty horrible effects on the numerous businesses that actually need consumers?
- wiseowise 2y ago“Guhuh just fununcially aducate urself” Do they teach in school how to invest when you can barely afford food and have no disposable income? Must be easy to talk shit when sitting on your cushy white collar job. Stop simping for billionaires, it’s pathetic.
- blackeyeblitzar 2y agoIf you read the article you would see that every bracket has some disposable income. The middle 60% (which isn’t the top 10% from the headline) spends more than $1000 a year on vacation. Cut that in half and invest $500 a year into the market and you would have a few hundred thousand for retirement (way more than typical retirement savings). Also, in response to these… > “Guhuh just fununcially aducate urself” > Must be easy to talk shit when sitting on your cushy white collar job. > Stop simping for billionaires, it’s pathetic. …I suggest reading the site guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- wiseowise 2y ago> The middle 60% (which isn’t the top 10% from the headline) spends more than $1000 a year on vacation. Cut that in half and invest $500 a year into the market and you would have a few hundred thousand for retirement (way more than typical retirement savings). So middle 60% must slave away their whole life and save for retirement while 10% live their life to the fullest? $1000 isn’t even a spec on billionaire’s radar while for someone it represents a whole year of work to spend a day of rest from this dystopia.
- cycomanic 2y agoInterestingly, studies show that poor people often have much better financial planning (for the sole reason that they would often not eat otherwise) than richer people. The thing they lack is money.
- wesapien 2y agoEducation alone will not stop the wealth inequality and deteriorating living standards.
- weatherlite 2y agoSo a stock market and/or real estate crash can actually be good to reduce inequality . In fact I think its about the only way to dramatically reduce inequality. Think about young people trying to buy their 1st home now, its becoming impossible.
- 29athrowaway 2y agoThey would get bailed out with something like Quantitative easing. Congress will not let the stock market crash because they are #1 insider traders.
- bdangubic 2y agoso short-sighted, they will either exit or short it before they let it crash. they make $ either way mate
- anticensor 2y agoBut then they'd lose some amount of control.
- denkmoon 2y agoThe 2008 stock market crash famously reduced inequality. Definitely didn't increase inequality by leaving the average person (via government bailouts) holding the bag.
- swiftcoder 2y agoThe 2008 crash was also famously centred around mortgages, rather than pure stocks
- 7bit 2y agoIf you take away the wealth of the top 20 %, then who will take over the income that comes from the VAT? Exactly, the poor! /s
- andirk 2y agoI'm sure it's true, but is this considering 401k? Where the person has little to do with the individual stonks. > "Wealth inequality is only getting worse in this country and frankly I’m not sure what stops this train." Best trick is allowing the top 50% to hate the bottom 50% and naturally visa versa BUT ALSO have a huge portion of the bottom 50% to root and vote for the top.
- swiftcoder 2y agoIt's not really the top 50% and bottom 50% though, is it? More like top 10% and bottom 90%. Or even top 1% and bottom 99%, depending on where you draw the rich/poor dividing line
- iLoveOncall 2y agoIn the US you need to earn only $178,611 as a HOUSEHOLD to be in the top 10%. That's less than $90K per person. Comparatively, you need to earn $663,164 to be in the top 1%, and more than $3M to be in the top 0.1%. I just want to highlight this to remind that the top 10% is by far not made up exclusively of ultra-rich individuals like people on internet like to believe.
- chgs 2y agoTop 1% by income or by wealth. The former is less meaningful as it ignores your cost of living.
- iLoveOncall 2y agoIncome, like the article used.
- fancyfredbot 2y agoThe proportion of people who will be in the top 1% of annual income for at least one year of their lives is quite high. I am too lazy to look it up now but I think it's about 20%. The majority of people who earn a top 1% income only manage to do so for a short period. As a consequence the overlap between top 1% by income and by wealth is small. They are (broadly speaking) different groups.
- ImHereToVote 2y agoI think what you are trying to say is that the average American is absurdly poor.
- tonyedgecombe 2y agoIt doesn't look like that from outside America.
- jonasdegendt 2y agoWhy? Because they can buy cheap TV's at Walmart? American households have a good amount of discretionary spending, but for the ticket items that actually matter such as quality housing, healthy food and healthcare my money stretches a lot further in Western Europe, for median household income that is.
- deleted 2y ago[deleted]
- robocat 2y agoAnd how much of that is owners of tech companies that they founded? The US economy depends on those tech companies: try succeeding in a country that only has old school businesses: I remember the top stocks for France are terrifyingly old. I'm in New Zealand and we hardly have any tech stocks. Xero, RocketLabs? We often sell our successes overseas. Edit: many of https://en.wikipedia.org/wiki/List_of_wealthiest_Americans_by_net_worth#Top_25_richest_Americans https://en.wikipedia.org/wiki/List_of_wealthiest_Americans_b... are founders. Looking at: https://en.wikipedia.org/wiki/List_of_French_billionaires_by_net_worth https://en.wikipedia.org/wiki/List_of_French_billionaires_by... and too many of the businesses are over a century old, more than a few from the 1800s. Edit: The irony of rich Americans talking about wealth inequality is harsh. There's billions of people that desperately want the resources that a poor US citizen spends. If you are American and want to talk about the wealthy, look at yourself and ask how your wealth should be taken from you and given to the poor of the world...
- whiplash451 2y agoWhere are the stats for France? Asking genuinely
- u_sama 2y agoI dont have the exact stats under the hand but if you look in the CAC40. There is not a single innovative company founded independently in the last 40 years. All offshoots at best, at worst companies literally founded between 1890-1920, similar in Germany, Spain and Italy. It's kinda crazy ngl.
- whiplash451 2y agoIndeed. However this is more reflective of a problem of private capital and attractivity of EU stock markets rather than the innovation horsepower. Criteo, Datadog, Snowflake and the likes are European-based ventures but listed on the NASDAQ.
- vincnetas 2y agoFrance : top 10% own 60%, Bottom 50% own 5% USA : top 10% own 72%, Bottom 50% own 2% Sweden : top 10% own 60%, Bottom 50% own 5% Source : https://wid.world/country/france/ https://wid.world/country/france/
- deleted 2y ago[deleted]
- ookblah 2y agoI think about this from time to time and I suppose everything is cyclical in the end. Most of us would have been some peasant in the feudal age and when it gets really bad it always ends in a revolution of some sort. It's just on a global scale and timeframe now. As more of the population feels the effects of inequality they won't appeased by just fancy toys and shiny things, they will want change by force. My only solace is I'll probably be long dead by the time that happens.
- colechristensen 2y agoThere is always an exponential distribution of wealth, it isn’t rational to argue against it. What needs argument is what the exponent is.
- carlob 2y agoI'm pretty sure wealth doesn't follow an exponential distribution. Power law, log normal or stretched exponential or maybe some sort of generalized Zipf.
- colechristensen 2y agoThis, for the sake of argument, is not an important distinction.
- carlob 2y agoI disagree, if anything we need to know what the distribution is before we make such sweeping claims. While pretty much every country has an income tax, which means that we knows fairly well who makes what, there is no equivalent for wealth. Most wealth distributions are estimates which get progressively worse as we near the top percentiles, because really big wealth is very mobile and international. So yeah before we say: "it always looks like this, it's just about what the parameters are", we need to measure it and have a clearer idea of what it looks like in different societies otherwise we won't be able to decide what the desirable parameters are like.
- daedrdev 2y agoThe share of wealth held by the 1% in the US has been constant for a decade, at 30%. You can argue thats a problem, but it has not been getting worse. https://fred.stlouisfed.org/series/WFRBST01134 https://fred.stlouisfed.org/series/WFRBST01134
- deleted 2y ago[deleted]
- apples_oranges 2y agoLiberalism has failed. Perhaps to save it Just give a few trillion to the people in msci world stock locked for ten years or so to teach them.
- nabla9 2y agoLiberalism has failed in the US. Not elsewhere.
- jeff-davis 2y agoSincere question about communism: Let's say hypothetically that the distribution of stock ownership was more even across the population, and variance was largely (but not completely) due to length of time in the workforce. And further, that the stock owned by workers is a large enough block that they effectively have controlling shares at many companies. Maybe I'm talking about a different universe, but please imagine it for a moment. Would that hypothetical world be kind of like communism in the sense that the workers own the means of production? If not, why not?
- jval43 2y agoThat's just a cooperative, and those exist in capitalism: https://en.wikipedia.org/wiki/Cooperative https://en.wikipedia.org/wiki/Cooperative. You can found one today if you want, don't need communism for that.
- nabla9 2y agoHN is binary. If not laissez-faire capitalism, lets talk about communism. Let's talk about non-hypothetical real world, like Nordic model or Europe in general. Capitalism produces growth, redistribution (free healthcare, education, etc. spreads the wealth).
- hyperno 2y agoYes, it would be so. In fact, if automation starts taking jobs from people on a larger scale, it would be a way to reduce economic inequality. That concep/idea is called: Universal Basic Dividend.
- ta12653421 2y agoSo, actually that happened once already, when the sowjet system broke: https://en.wikipedia.org/wiki/Voucher_privatization https://en.wikipedia.org/wiki/Voucher_privatization The thing is, it began like you described - but most people didnt see the value in it and sold it immediately; thats the reason why you have some oligarch caste, as this mainly got fueled by this process (sure, not the only source of their wealth but the understood back then how to play the game)
- suraci 2y ago
- _bin_ 2y agothis is the least-bad state of things. consider the financial literacy (or notable lack thereof) of the average person. consider how much worse active investing would be, particularly in light of the bubble-y market regime recently prevailing where simple rules are thrown out the window, a regime somewhat exacerbated by retail hype. and consider the massively market-distorting effects of passive indexing when scaled to its current level, let alone beyond. it's also pointless to mention this out when, if you examine returns to public versus private markets from e.g. IPOs in the past twenty years, they are so radically lower than the twenty before. that trend is by no means abating. let's not get offended that more average joes aren't playing exit liquidity to some VC/PE guy. this is somewhat to be expected given the level of hell the government has made it to be publicly listed, the response of growing private markets, and the SEC's asinine refusal to allow anyone but rich people access to those privates.
- ramon156 2y agoAlso, financial literacy is most likely part of the reason its split like this. You cant set them up for success
- eudhxhdhsb32 2y agoThat seems pretty reasonable to me. The vast majority of innovations that have consistently raised everyone's standard of living over the last centuries has also come from that 10%.
- buhrmi 2y agoYeah but not my stock
- looofooo0 2y agoKnock knock, Pareto's law.
- DeathArrow 2y agoThe problem can be solved with transition to communism. No one will own anything and there will be no wealth.
- lnsru 2y agoWrong. Small ruling class will own everything. And the majority will have nothing and no rights to have something. It has been tried before.
- ta12653421 2y agoYes, society pyramid would be a flat line with a super thin needle-spike in the middle Hate capitalism or not - it allowed more people to access / to possess something than communism or feudalism
- flr03 2y agoYou mean like today's capitalism then?
- lnsru 2y agoAren’t there any sane systems in between?
- flr03 2y agoMaybe something Keynesian
- lnsru 2y agoThanks. That was interesting discovery. Including the New Keynesian theory. However I assume now, that rational expectations do not work and the actors can be bribed. Bribed for example for selling government owned housing to private corporation. It will squeeze the tenants for profit and will do nothing to increase housing supply. Rational actor becomes selfish actor and does everything for itself. The bottom 90% get worst possible ending.
- irjustin 2y agoGenuine question - has this not been the case? It feels like this has been true just past stock market's inception.
- internet_points 2y agothe article says it's getting worse: > These numbers have all increased since 1989 as well — total wealth (60.8% to 67.3%), stocks (81.7% to 87.2%), private businesses (78.4% to 84.4%) and real estate (38.2% to 43.9%). So no. It has not always been like this.
- pembrook 2y agoAdjust for age demographics. Pareto wealth distribution also gets more extreme heading into retirement ages due to the nature of compounding on productive assets.
- awei 2y ago[flagged]
- nindalf 2y agoCan we all agree to flag comments that outsource their thinking to LLMs?
- awei 2y agoI used grok deepsearch for sure not to search google myself and I wanted to cite my source
- nindalf 2y agoLLMs are not a source, because they hallucinate. You need to cite a source that doesn't lie habitually. Regardless, you're embarrassing yourself. The mere fact that you'd publicly admit to giving Elon Musk money lowers my estimate of you substantially.
- raziel2p 2y ago> Grok suggests around 15% of US adults are involved in starting or running new businesses, based on recent data. This makes it sound like much of the people in the 10% are there because they started with most of the stock of the companies they created. .. or those that own stocks are more likely to be in a position to start a company. one of these possibilities seems more likely than the other if you ask me.
- awei 2y ago> .. or those that own stocks are more likely to be in a position to start a company. probably. So I guess the real debate is inheritance vs self-made and whether inheritance is good or bad.
- raziel2p 2y agodon't fall into the trap of limiting the argument to inheritance, there are far more benefits to being born into a wealthy family.
- jopsen 2y agoTop 10% is actually a lot of people! Wealth equality is not really a goal, it better to ask if the bottom 50% got wealthier in absolute terms, which the author answers in another post: https://awealthofcommonsense.com/2024/06/the-bottom-50/ https://awealthofcommonsense.com/2024/06/the-bottom-50/
- bawolff 2y agoFrom a socital stability point of view, i think it still matters. Too much inequality (especially when combined with lack of class mobility) leads to class resentment which is bad for sociatal stability. Humans get jealous even if their wealth increased in absolute terms.
- mandmandam 2y agoAs true and important as that it, there are more harmful and more direct effects wrapped up with our record inequality than jealousy and resentment, or even hate; like the capture of our political system.* And most Americans have no idea how unequal wealth distribution really is, which means that those emotions are being easily redirected onto vulnerable groups by the people actually responsible for the gross inequality: immigrants, trans people, foreign powers etc. * See, for example, the vast gulf between public opinion on issues like Israel, public healthcare, free education and housing for all, vs the opinion of the political and media class.
- bawolff 2y ago> * See, for example, the vast gulf between public opinion on issues like Israel, public healthcare, free education and housing for all, vs the opinion of the political and media class. While i agree with you generally (blaming domestic problems on unpopular minorities or foreign enemies is a playbook as old as time), im not sure i agree that those issues are based on class division. Large swathes of America seem to be genuinely opposed to public healthcare. As a non american it boggles my mind, but it seems pretty clear that a significant portion dont want that for whatever reason (i would say that similarly those other issues don't follow class divides all that much either)
- Gasp0de 2y agoI was very surprised by the holiday budget. Less than 2500$ for 80% of the population? Does that mean that no one from these 80% stays in a Hotel or AirBnB for longer than a week with their family? No one travels overseas, or if so, only every 5 years or so? 2000$ is what you can easily spend on plane tickets for a family of 4.
- rullelito 2y agoWait what, you're surprised by this?
- TobTobXX 2y agoWell yeah, European here so things might be a little different, but our family's budget for holydays was usually around 1500-2500$. As a result I've never travelled outside Europe. I've only flown to the Canary Islands twice and otherwise travelled by car. Big money saver. And also camping is cheaper compared to AirBnB and hotels. Though you can usually squeeze two weeks out of that budget.
- Gasp0de 2y agoI'm European too, and I also usually don't spend more than 2000€ on holidays per year, but when I compare myself to friends and colleagues, I always had the impression that how we go on holidays (camping, traveling by bicycle/train) was relatively uncommon. Therefore I didn't think that 80% of the population went on holidays like that.
- widforss 2y agoIt's the unusual vacations that get time in the coffee break.
- graeber_28927 2y agoOnce I caught an old acquaintance of mine recycling their Swiss holiday photos on Instagram a year or two after the fact. Basically, 2-3 classmates of mine shaped 90% of my view on what a normal family vacation is supposed to look like. Whereas actually, half my class didn't leave the country in any given year, especially if they had renovations or car repairs going on. I later learnt some of the parents were financing even the bus and cinema ticket for one of the girls on a one-afternoon class trip.
- cbeach 2y agoThe only thing that should matter is that the poorest segment of society becomes richer over time. And it has (in inflation-adjusted terms, lower income Americans have become richer over many decades).
- jliptzin 2y agoNo one cares they can afford a filet mignon once a month if their boss is spending more money on lunch than they make in an entire year
- cbeach 2y agoWhy would I care what my boss eats?
- pzo 2y agoonly sometimes on paper because they bought property decades ago that increased value but debt haven't been paid off yet. Even if debt paid off doesn't mean those people are rich - if they sell property they would have to still rent place to live at now much bigger rental cost, unless the move to cheaper country or cheaper state/town but might not find a job there.
- newbie578 2y agoAs a person born in the middle class, I am quite sad to see it's extinction in realtime. Not sure what is the solution to this.
- thomasingalls 2y agoWe could tax the wealthy
- marcyb5st 2y agoAs long as there are countries that allow for tax avoidance it's not gonna work. If my income is in the 10s of millions I am better off paying a few millions to some firm to handle every single thing for me to hyper optimize my life. They make you change residence on paper and buy fictitious tickets to prove you have been in country x at least y days during the fiscal year, and much more. You still end up saving way more than paying 20/30% of taxes on those 10s of millions. There should be a global minimum tax, but trying to make every single ruling party in the world agree to that is a fool's errand. I think that what the little that got leaked by the Panama's papers few years ago is just the tip of the iceberg.
- ahaferburg 2y agoSince 2019, large corporations the world over have been forced to open up their books to fiscal entities in their respective countries. Every country could tax what these companies earn in their country, and also add some penalty for evaded taxes booked in other countries. We can do the same with billionaires and their assets. The tax evasion industry (for corporations as well as for individuals) needs way more regulation and penalties. These firms inflict a net negative cost on society.
- thomasingalls 2y agoI think the evidence shows this isn't exactly true.
- hagbarth 2y agoHigher top marginal income tax rate (was much higher in the 50s, 60s, 70s). Higher capital gains tax. And then use the income from that to distribute wealth through things like single payer health care, affordable housing etc. So the basic needed expenses don't take up such a large portion of the budget for middle income households. Also: stronger unions.
- kqr 2y agoSurely this must be to some degree influenced by the prevalence of ETFs that give small-scale investors access to diversification, at the cost of no direct ownership for the small-scale investor?
- rsanek 2y agoi doubt it. $100 in AAPL and $100 in VTI are counted the same way in the stat.
- deleted 2y ago[deleted]
- throwawayffffas 2y agoThe top 10% owns the 66% of everything. https://www.statista.com/statistics/203961/wealth-distribution-for-the-us/ https://www.statista.com/statistics/203961/wealth-distributi...
- kvgr 2y agoWell, i don't see what is wrong with it. Apart that common people don't invest even a bit. This is what happens always with everything. Some people find joy in accumulating stock and others in drinking beer every evening.
- yuppiepuppie 2y agoWhile this may be a jarring response to many, I dont find this response to be far off from my reality. My father is compulsive about accumulating wealth via stocks, property, etc. My father in law could not care less about wealth accumulation, and would rather have lunch with friends outside of work. I dont know who is happiest, but from the outside they both appear very content and satisfied.
- wolvesechoes 2y agoTo invest, you need to have a surplus, and receive some form of education, not necessarily on investing per se, that would enable you to think in certain ways. Asking why is it wrong is similar to asking why it was wrong that most people couldn't read or write, for many of them were quite happy being illiterate.
- qnleigh 2y agoPoverty exists because people choose to drink beer instead of investing their wealth in the stock market? That's really the only explanation you can think of? If only all those people living paycheck to paycheck works just have the sense to put their money in the S&P 500! #endworldhunger
- Pooge 2y ago> That's really the only explanation you can think of? Another is the fact that many choose to own luxury items or buy drugs (tobacco, alcohol are included) instead of... you know... saving. And then self-proclaim to live "paycheck to paycheck"⋆. Middle class gets poorer and the rich get richer because inflation is literally eating away the former's life savings while the other has doubled his net worth in just 10 years. ⋆I am not discrediting those that are truly living paycheck to paycheck. But a lot of people blaming the system and getting poorer are usually spending a shitton of money on useless things. Financially literate people prefer to save and invest this money because they understand the cost of opportunity.
- fxwin 2y agoIn any kind of non-uniform distribution of any good, the top x % will always own a disproportionate (wrt to headcount) amount of it (In economic systems, this mathematical fact is further amplified by other factors such as financial literacy and leverage). What's always missing to me in these types of discussions is what this value should be at, and what the distribution should look like qualitatively (i.e. what should the ideal Lorenz curve look like). Is there any discussion/research/case study analysis where this is explored? I.e. overall citizen satisfaction/economic productivity and how it relates to wealth distribution?
- angusturner 2y agoI personally think we should resist the temptation to separate out values from the discussion. Like, even if it was the case that some extremely high-level of inequality turned out to be "optimal" in some GDP-maximizing way, the question still ought to hinge on some notion of fairness or justice (in my view). (Although, I guess if your metric is "citizen satisfaction" maybe that's not as terrible). In any case, there are lots of case studies showing what happens at the extreme inequality end of the spectrum. As I mentioned in another comment, my favorites come from Piketty "Capital in the 21st Century" and Acemoglu & Robinson "Why Nations Fail". In the latter, the case study on the rise and fall of Venice is particularly fascinating - huge economic growth due to inclusive economic institutions that promoted social mobility, followed by a downturn once the aristocracy moved to entrench their own interests at society's expense. This seems to be the central thesis of the book, although I'm only a few chapters in. The parallels with modern US politics are pretty hard to ignore though.
- fxwin 2y agoI haven't read the examples you mentioned, do they point toward the source of the instability being extreme inequality, or the lower (economic) classes being unable to survive in dignified conditions? (read: can we tolerate great inequality if it comes with increased standards of living for everyone?)
- angusturner 2y ago
- mandmandam 2y agoThis is kinda misleading as to just how bad inequality is (ie, at record level and rising, with global irreversible consequences starting to hit us). To see how bad wealth inequality in the US is, look at this graph [0] from 2023 and see if you feel any different. 0 - https://www.visualcapitalist.com/wealth-distribution-in-america/ https://www.visualcapitalist.com/wealth-distribution-in-amer...
- ArthurStacks 2y ago[flagged]
- angusturner 2y agoWhen I was at uni I read Thomas Piketty's "Capital in the 21st Century", and parts of his newer "Capital and Ideology" (although I never quite got through that one). The big takeaway for me was that wealth inequality never improves without some major catastrophe (war, revolution, plague etc). The proposed model is really intuitive and compelling (tldr; return on capital has historically always been higher than real growth, which guarantees indefinite concentration of wealth until there's a crisis). Last year's Nobel Economics Prize winners, Acemoglu and Robinson, tell a similar story in "Why Nations Fail", which I am working through at the moment. Although in their case, they seem be suggesting a more causal link between erosion of political and economic institutions and the collapse of empires. I wish these ideas were more broadly accessible and understood. The real risk of total societal collapse should transcend any partisan fighting about ideal tax rates, government inflation/unemployment targets etc. Everyone has a common interest in there not being a violent upheaval (arguably the rich most of all). Last I checked the numbers, current wealth inequality seems about as bad as it was before the great depression. And its not enough to just say "well, absolute wealth is more important". As others have pointed out, its not stable to have such huge relative wealth disparities. And that's before you even consider corruption.
- Mandelmus 2y agoThe book "The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century" by Walter Scheidel makes a similar argument: > Are mass violence and catastrophes the only forces that can seriously decrease economic inequality? To judge by thousands of years of history, the answer is yes. Tracing the global history of inequality from the Stone Age to today, Walter Scheidel shows that inequality never dies peacefully. Inequality declines when carnage and disaster strike and increases when peace and stability return. The Great Leveler is the first book to chart the crucial role of violent shocks in reducing inequality over the full sweep of human history around the world. [1] https://press.princeton.edu/books/paperback/9780691183251/the-great-leveler https://press.princeton.edu/books/paperback/9780691183251/th...
- demaga 2y agoI would also recommend "The Dawn of Everything" by David Graeber and David Wengrow. It explores "the roots" of inequality. A lot of interesting insights there.
- jonplackett 2y agoThis guys has been saying this for ages https://m.youtube.com/garyseconomics https://m.youtube.com/garyseconomics
- ahaferburg 2y agoI am taking a deep dive into inequality thanks to Gary Stevenson. He has a lot of educational videos on his channel. Highly recommended. Here's how I would sum up his main argument: Ordinary people have less money and can no longer afford to buy property. Governments have less money, infrastructure everywhere is eroding. So where does all the wealth go? The only possible answer is to the very rich, who are doing better than ever, while everyone else is down financially. To be clear, this is not about the entrepreneur who made a couple million bucks and has three houses. It's about the top 0.1 % who are sucking everyone else dry, permanently: The poor, the middle class, and the government. We need to do something to reverse this trend. And soon.
- fancyfredbot 2y agoI really enjoy Gary Stevenson - both his YouTube channel and his book - but his very convincing message that wealth inequality is a problem isn't really accompanied by any particularly good solutions. Tax the wealthy yes, but how do you do it exactly? How much does it raise? How should the revenue be spent?
- Apreche 2y agoYou have to raise taxes on the wealthy so heavily that they begin to sell their assets. This brings asset prices down. Meanwhile, lower taxes on normal people, who will have more money and be able to buy those assets. This reverses the wealth transfer. It doesn’t matter how much tax you raise. It just matters that it is enough to reverse the transfer of wealth back to the working class. How specifically doesn’t matter as long as it’s enough. The way I see it, the best ideas, other than all out socialism, is to have progressive taxes that start low and have extremely steep curves. Just one example, we could have a progressive property tax. For people who own a single reasonably sized home that they actually live in, the property tax would be very low and reasonable. However, if people own multiple properties, properties they don’t live in, or extremely large properties, the tax rate would increase and then skyrocket to the point where a wealthy person has no choice but to sell those properties or lose money. All that selling will bring down the price of real estate. At the same time, nobody will be in a position to buy that real estate except for those who don’t already have much, because for anyone else the tax will be too high for it to work out. If they don’t sell, they pay enormous tax, which is also acceptable. Either way we reverse the transfer of wealth. Apply this same progressive scale to capital gains tax and estate tax. Also income tax, but less so. Effectively this puts a cap on wealth. If a person tries to own more than their fair share of things, they won’t make more money. Of course you still allow people to be quite rich. There will be multi-millionaires with fancy cars and mansions. There will still be movie stars, sports team owners, and bankers. They will still live lives of luxury and want for nothing. They just won’t control our entire society. How do you spend it? You spend it on anything that benefits labor and makes everyone’s lives better. You don’t use it on a fossil fuel subsidy. You don’t use it on defense contracts. You use it on universal health care, social security, education, FEMA, infrastructure. Pretty much you do the exact opposite of whatever DOGE is doing.
- belter 2y agoThe more interesting statistic is that the 3 richest Americans hold more wealth than the bottom 50% of the US. So, to not inconvenience these 3 individuals, you wont make a significant impact to the bottom 50% of US citizens. https://www.forbes.com/sites/noahkirsch/2017/11/09/the-3-richest-americans-hold-more-wealth-than-bottom-50-of-country-study-finds/ https://www.forbes.com/sites/noahkirsch/2017/11/09/the-3-ric...
- rsanek 2y agothis is a meaningless metric. if you have a positive net worth, you hold more wealth than the bottom 25% combined. https://www.nasdaq.com/articles/whats-your-net-worth-25-of-a https://www.nasdaq.com/articles/whats-your-net-worth-25-of-a...
- gandalfian 2y agoAh but consider if the rich own 87% and the poor 13% and pension funds 40% and foreigners 17% then there is 157% to go around! Or maybe it's 87% of the rich directly own equities? Or maybe this is a wind up for clicks and gibberish. (I am also commenting ignorantly).
- gniv 2y agoThe title uses the stock stat because it's so unbalanced. But to me the scariest statistic is the other one mentioned in the article: "the top 10% also accounts for 50% of all consumer spending". This seems extremely fragile. Small changes in the behavior of the well-off can have big negative consequences for the entire country.
- WastedCucumber 2y agoAnd of all the metrics, spending has increased the most in the examined time period. Up from 36% in 1989.
- jasdi 2y agoAlso when scaling tech/platforms this is a big factor in how many people can actually pay. Every scaled up platforms then gets trapped into collecting/selling personal data and flooding the field with Ads (and obviously in these ad auctions the 10% can outbid the majority so Ad prices keep rising).
- piokoch 2y agoYup, Joseph M. Juran noticed that in the 1940-ies and called that Pareto principle.
- flexie 2y agoTop 10 percent of who? According to this source, 40 percent of US stock is owned by foreigners: https://taxpolicycenter.org/taxvox/who-owns-us-stock-foreigners-and-rich-americans https://taxpolicycenter.org/taxvox/who-owns-us-stock-foreign...
- jstummbillig 2y agoIs that much, relatively? How much of everything does the top 10% own?
- pembrook 2y agoAny system that allows humans agency will end up with a Pareto-style distribution in that thing (non-linear). Doesn’t matter if it’s wealth, HN upvotes, Crime, Traffic accidents, Productivity, Tetris scores, academic papers published, etc. As for the slight drift in US wealth distribution since 1980, it’s wholly explained by the change in age demographics. Since 1980 we’ve gone from a nation of people 30 years old to 40 years old. 10 years is a lot of time when it comes to compounding returns on productive assets (stocks, etc). Due to compounding, wealth held by each age group also gets more Pareto-extreme heading into retirement age. Adjust that out, and this is mostly a nothing burger. But emotionally people don’t feel that way so nothing I say will change that. Narrative zeitgeist always wins over objective reality. Average Americans are wealthier than they've ever been. Another chart to drive this home, the percentage of Americans who have a passport since 1989 (Note, this is also influenced by age demographics, but not as dramatically as wealth): https://www.statista.com/statistics/804430/us-citzens-owning-a-passport/ https://www.statista.com/statistics/804430/us-citzens-owning...
- ahaferburg 2y agoIt's not a slight drift, it's a massive change since the 1950's. Looking at averages is completely irrelevant when talking about inequality. Here's a video from 12 years ago: Wealth Inequality in America https://www.youtube.com/watch?v=QPKKQnijnsM https://www.youtube.com/watch?v=QPKKQnijnsM
- pembrook 2y agoIf we're moving the goalposts to the 1950's, why not instead compare the 1920's to now? Hey why not the 1880's? My point is that pareto distributions ("inequality") are not some evil to be eliminated, they're the direct memetic outcome of how humans work. We can of course cut all the tall poppies to make everyone equal, but that's just cutting off your nose to spite one's face. Allowing inequality to exist is why average Americans are the wealthiest people on the planet. Turns out all those tall poppies drive the productivity gains that accrue to all of us (hence why we've gone from near-zero Americans holding passports to 50% of people during the same time frame that inequality has increased). I know, it doesn't fit with the narrative you have in your head so I won't convince you otherwise.
- keepamovin 2y agoThe rest of us are gaining ground! Didn't it used to be 90% of stocks?! We are catching up! Peak optimism :) - granted, from a global economic perspective I am probably in 'the top 10%' depending on how it's calculated - tho am stock-free
- schnitzelstoat 2y agoGiven they don't have such a high percentage of total wealth and an even lower percentage of real estate, it seems this is largely due to financial education. I know a lot of working class people with significant savings (more than I have) but they tend to just put it in a savings account at a bank or perhaps invest in a property to let out. Many people see the stock market as a casino even though you have far less risk in index funds than you do by renting out property.
- totetsu 2y agosee also Peter Turchin's 'wealth pump' https://impact-investor.com/book-review-end-times-by-peter-turchin/ https://impact-investor.com/book-review-end-times-by-peter-t...
- testhest 2y agoThe people in the 10% changes wildly over time, on average people about to retire have way more than people about to start their first job.
- Synaesthesia 2y agoNo most of them inherit their wealth and keep it in the family.
- marvin 2y agoIs the top half of the comments on this forum for entrepreneurs really discussing the communist revolution revisited?
- JensRantil 2y ago> Short of a financial crisis I don’t really see what slows this trend. Vote left and increase taxes for the rich?
- callamdelaney 2y agoYou'd rather the poor were poorer given the rich were less rich?
- JensRantil 2y agoI don't understand your question.
- HDThoreaun 2y agohttps://www.youtube.com/watch?v=pdR7WW3XR9c https://www.youtube.com/watch?v=pdR7WW3XR9c
- submeta 2y ago- Total Global Wealth: $454 trillion - Annual Global GDP: $105 trillion - Cost to Feed Everyone for a Year: $10 trillion The issue is not a lack of money but rather distribution, logistics, and political will.
- jstummbillig 2y agoHm, half-agree. Distribution and logistics and political will are a challenge. But so is lack of abundance (because that is part of what makes the other parts challenging).
- scarface_74 2y agoFor reference since people on HN seem to have a skewed idea of what income you need for each percentile. Individual - top quintile - $120k - top 10% - $165k Household - top quintile - $167K - top 10% - 235K Source: https://dqydj.com/income-percentile-calculator/ https://dqydj.com/income-percentile-calculator/
- insane_dreamer 2y agoPiketty was right. And yet, there are a lot of people who refuse to believe that inequality is getting worse or that it's actually a problem. (Coincidentally, those people are not in the bottom 50%.)
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- j7ake 2y agoWill there be a time when people depend on the stock market (pension, mortgage) so much that it becomes too big to fail?
- robjan 2y agoMost pensions hold mostly stocks
- yubblegum 2y agoMy fellow Americans. This is my take on the situation, my opinion: Right now, the Oligarchs (yes, we have them) are in the process of dismantling the public sector. During this process they have access to all the know-how and data. (That is a form of public-IP theft in broad daylight, btw.) Then, when quite predictably the shit hits the fan -- as we all know many of these components of the public estate are critical services -- these same oligarchs will create private companies and "our government" will contract out these very same services to the private sector. And yes, having thrown both baby and the bathwater into the jobless market, they also are building up the uber rolodex of competent ex-civil servants. Many, naturally, will end up working for the very same oligarchs that fired them. It is an error in my opinion to utilize a partisan lens when considering what is happening to our nation. Trump, Elon, Thiel, and their youth shock troops are floatsome that are riding a wave that is cresting now, but the wave was set in motion during 90s when barriers erected to prevent concentration of Media and Finance in few hands were taken down by the governer from Cocaine Central. The red-blue circus is just that in my opinion.
- johnea 2y agoWell, it's sad to read an article where the author agrees with me 8-/ It's only going to get worse. The biggest reason it can't be stopped is because 1/2 of the bottom 90% of the population is screaming to get rid of social security, because... it's socialism! Never mind that they have $0 saved for retirement. When you combine a sociopathic wealth class, and a multi-decade education deprived working class, it's a win-win for ever increasing wealth inequality. For many in the top 10%, this is considered a good thing...
- tempera 2y agoThe top 10% of tennis players have 80% of ATP points.
- cykros 2y agoWhat part of "people with access to credit at low rates have an unfair market position" is so hard to understand? The Cantillon effect isn't about an actual money printer; it's about who gets to spend newly issued broad money (ie, bank-issued credit) first. Those who have more assets can extend more leverage, generally at lower rates, than anyone else, meaning that not only do they have more dollars, but that the dollars they spend are actually worth more than the ones the average person gets, because they're spent before they've had the chance to have any inflationary impact upon price. As long as you have anything less than full reserve banking (and even there, the interest could be an issue if left unchecked -- perhaps why Islam and Christianity both ban its practice), this corruption of sound money will skew the playing field.