That said, with regards to the article, appealing to businesses as moral actors is only so effective. A business acting unethically but legally is most rectifiably a problem with the law, rather than the business.
Probably because most capitalists don't believe this?
>nor did the property rights regarding their shares.
Debatable. Most capitalists would say that property rights naturally exist and that "shares" are simply an agreed upon way of dividing property rights over a complexity of assets and agreements (i.e. a business).
>Taxing large profits is no more "unnatural" than protecting the right to these profits in the first place.
True. Obviously a laissez-faire capitalists would say they're both unnatural- as they would say most, if not all, concepts created via legislative action are also "unnatural." Of course, people don't typically expend effort fighting "unnatural" injustice that benefits them- especially when money is on the line, and even more so state protected stock holder money.
>A business acting unethically but legally is most rectifiably a problem with the law,
Since when is it the legislature's job to enforce morality?
Our laws are a constantly shifting mirror of our ethics (through the prism of "everyone" and "political reality")
Look at divorce, abortion, women's property rights, environmental obligations etc etc
The GP is well placed to say if a company is acting legally but unethically changing the law is often fastest and simpler fix -most eapecially for whole industries (hello banking)
I would like those capitalists to show me the "property rights" molecule.
That's what they may say. But the primary job of salesmen and the advertising industry is to create markets where none existed before. I.e. convince people to buy stuff they otherwise wouldn't even think about.
(And the more you get closer to so-called pure free markets, the more bureaucracy there is. Take Graeber's "Iron law of liberalism": "Any market reform, government initiative intended to reduce red tape and promote market forces will have the ultimate effect of increasing the total number of regulations, the total amount of paperwork, and the total number of bureaucrats the government employs.")
That said governments can change the rules and regulations.
To take an extreme example, the idea that the house belongs to someone until they sell it is constructed.
For a more real world example, what does "own" fully mean? Can you start a business there? Build a skyscraper? Oil refinery? Do you own minerals? Flight paths? Can you demolish it or is it listed? When selling a house, you are transferring rights that are pretty variable and ethereal. These rules are elastic in practice and affect wealth.
Most large markets depart from the idealisation, many much more than real estate. Financial markets, minerals telecommunications... What does Disney gain from tweaking copyright laws? How does tax law play in?
I am pro markets, but I think we need to acknowledge that they are dynamic and emergent within constructs, not natural or inherent.
Very little about the real estate market is emergent. This is an excellent example of a market created by society.
Plus their report contradicts the world bank observations: http://ourworldindata.org/VisualHistoryOf/Poverty.html#/Glob...
Which is not surprising since Oxfam has a clear political agenda.
EDIT: world bank poverty report, clearly showing the decreasing poverty rates globally: http://www.worldbank.org/content/dam/Worldbank/gmr/gmr2014/G...
Oxfam no doubt have a political agenda, we could probably debate how clear it is and what exactly it is, but their political agenda doesn't particularly influence whether this article is correct, nor do your links seem to contradict it.
They are saying the inequalities are growing, whereas the world bank report says the inequalities in income are shrinking progressively. That's a very different view.
Yep. You lift people out of poverty through growth, something capitalists are very good at.
Vs the countries in Eastern Europe with none of those advantages. Most Brazilians would kill to live like an average person from there.
How about something more relevant, like startups: Should it be fair that only 1% of startups make more than any of the other startups combined? Unicorns like Uber and Airbnb should take their profits and spread them around to startups that failed!
Yes, there is inequality, but I don't necessarily a bad thing. It's the natural form of most free marketplaces and systems.
Most money is acquired through luck, inheritance, network effects, rents, and interests on investments.
That is an absurdly huge claim to make without a source.
Inheritance -> heavily taxed about everywhere.
rents -> you need capital in the first place to secure rents, so it means that somebody has produced some work in the first place to get it.
Interests on investment exist to allow your money to be useful to other people trying new things and building their businesses. So it's a positive enabler.
Not sure what you were trying to demonstrate.
Startups already distribute wealth a lot. Investors invest in many startups in order to get to that 1%. So even though they make a lot of money on Uber, they've also lost a lot of money on 99 other startups you haven't heard of.
Some investors do only invest in one startup, but no one is making them do that. So if they lose it is their own fault, and if they win it's only fair. They agreed to enter the lottery, that's a lot different than someone being born poor and stuck there. No one agreed to the lottery of birth.
People want to, and agree to, give him that money. What other measure of 'deserve' could there possibly be?
>Or that the world is better off with that money going to him instead of someplace else?
It doesn't matter. The world will be fine either way. People though? Tom Cruise is a person. The people paying him are people. They evidently think the arrangement is pretty good.
Their headline is based on a report by Credit Suisse [1] which defines net worth as: "the marketable value of financial assets plus non-financial assets (principally housing and land) less debts."
Consider two people who will earn exactly the same amount of money at every stage of their lives. But one is 18 and has just started working, the other is 65 and has just retired. Is the 65 year old really 1000x richer than the 18 year old, because the 18 year old has saved $100 so far and the 65 year old has had time to save $100,000? Is this really 1000x inequality? For the purposes of determining inequality, these people should be considered equal, because it's simply the case that one person is older and has had more time to save.
A fair assessment of a person's wealth, at least when determining fairness and inequality, should include more than this. It should include an estimate of their future earnings potential plus the social security/welfare state entitlements and state pensions that they are entitled to.
Otherwise you have hundreds of millions of people in the West with negative "wealth" who in reality will enjoy a far wealthier life than someone in the developing world with small positive financial assets and no debt.
Someone with $100 in assets and no debt does not get to claim that they are single handedly "richer" than the combined net worth of tens of millions of university graduates that each have a total career earnings potential of millions of dollars, but who each still have outstanding student debt and thus negative net worth.
Also see this article on the "the wealthy living paycheck to paycheck" [2] which points out that people that will enjoy very wealthy lifestyles are spending rather than saving their income, and therefore really are rich yet will be written off as being far "poorer" than others in terms of financial assets.
[1] http://publications.credit-suisse.com/tasks/render/file/inde... [2] http://www.theguardian.com/business/2015/dec/25/wealthy-amer...
Income, consumption or utility have a case. That said, wealth by this definition is most relevant in certain contexts. If you're worried about political consequences, for example. When the majority of property-wealth belongs to a small minority the majority have less reason to preserve property rights, for example.
There are of course very serious implications when, for example, asset bubbles and unfunded state liabilities will create unfairness between generations. That's an example of real inequality. There are many other forms of real inequality. Fake inequality is when two people with comparable earnings and abilities to purchase assets are treated as not equal simply because one is older and has had longer to save.
Compare that to urban low-income families in middle-to-highly developed countries. No roof or food unless you pay for it, paycheck-to-paycheck. Few opportunities to accumulate wealth. No clan/community to help out.
While the first will do an order of magnitude worse on income studies, I'm not sure the latter are overall in a better position, economically.
Similarly, increasing access to healthcare would extend people's working lives. This is a fantastic outcome. But this would increase the number of years that people would be able to save over, and so this again would be flagged as rising inequality because some people will have been able to save for longer. Instead of people retiring at 50 with far greater savings than 18 year olds, you'd have people retiring at 60 with even greater still savings than 18 year olds. Yet those 18 year olds will when they are 60 achieve the same "wealth", so those 18 year olds are not being "wronged" by this inequality.
The primary adjustment that needs to be made is simply to start counting earnings potential as an asset, instead of ignoring it and claiming as a result that people are worse off than they really are.
I have been banging this around my head for a while since PG's infamous essay. There are plenty of reasons to see wildly successful people as talented, special etc. But nowhere near enough to believe them to be superhuman. Nor as rare as might be expected.
Becoming a billionaire (or member of top 1% or what have you) is not something that can only be achieved by a certain fraction of the population, like being over 6'6'
There must be market distortions that fail to share out the vast wealth of the Russian oilfields? Similarly for not sharing the license fees of MSWord or the markup on Amazon books.
Maybe PG is right and we need thousands more entrepreneurs out for themselves, and we shall see the inequalities of the world sort themselves out through "market" action.
Which would mean still we need politicos action (why not more female entrepreneurs? What about highly regulated industries?)
In the end the inequalities of power destroys any linear correlation between skill and income that might otherwise manifest.
Traditionally we've been looking at the lower end of the power distribution to mitigate this (unions, minimum wage, micro loans and so forth) it might be prudent to look at the other end (property laws, corporations, finance and so forth) with similar intentions.
Network effects. Microsoft being a textbook example of a company built on them.
I know plenty of people in their 60s who simply busted their asses at middle-class jobs while saving their pennies who are members of this "global elite."
The median income in the USA is $52,000. Assuming that a middle-class job pays 3* that amount, and that someone can reasonably save 30% of their salary for the last 20 years they work, that amounts to about $1m saved. Probably a lot less because a person's salary isn't at it's peak for much of their career. Even factoring for a household with 2 incomes at that level you don't get to $2.7m.
I imagine the people you know are members of the elite as you say, but they got there by by having elite jobs and by investing their elite incomes. If you think they're in the "middle-class" you have a somewhat distorted view of the world.
You'd probably also be surprised at just how many millionaires who used to work in factories there are. 40 years of union wages, plus pension, plus investing in a mutual fund. I obviously can't prove it here, but I'm from a blue-collar factory city and trust me, some of those people have multi-million dollar retirement funds.
Granted, you can't replicate that kind of success today, but there are people who didn't work "elite" jobs in possession of millions.
Saving $30K/yr and getting a 5% return on your investment gets you very close to $2.5M after a 30 year career. Sure that's in the upper range of middle class, but it's by no means wealthy.
Still as far as 60 year olds go, that is actually pretty good. There are many 60 year olds who did not pinch pennies or did and had some medical disaster wipe their savings.
Yes, something I like pointing out to my friends who never worked in a factory complaining that there are no more good factory jobs.
Global poverty is declining in part because that work left America.
(FTA) Lady Lynn Forester de Rothschild [...] said: “Oxfam’s report is just the latest evidence that inequality has reached shocking extremes, and continues to grow. It is time for the global leaders of modern capitalism, in addition to our politicians, to work to change the system to make it more inclusive, more equitable and more sustainable."
His wife, I learned recently, is Emma Georgina Rothschild.
So: not all that improbable.
- Lynn Forester de Rothschild, Chief Executive Officer of E.L. Rothschild has what interest in fighting inequallity? A look at the list of investments of E.L. Rothschild http://www.elrothschild.com/investments paints a picture of an investment fund. So, the very 1% that is getting richer by moving money around while working population earns the dividends. Funny thing, one of the companies listed is The Economist Group. It would be interesting to know, how favourable/critical of Oxfam is The Economist.
- Oxfam had a budget of €947.1 million for the period 1st April 2013 - 31th March 2014. Almost a billion euros! And who has given them that much money? https://www.oxfam.org/en/annual-and-financial-reports has that data. Or, at least, that is what I have hoped for. The list of donors om page 68 of the annual report for 2013 - 2014 is just a birds-eye view.
- In its report, Oxfam says very little about growing inequallity in developed countries. Does that mean, that only developing world has inequallity problems?
The poor are not very invested in the system (they should be, of course, since without an economy their fate would be far worse, but human nature means you're not going to be happy having less than everyone else, even if destroying the system would make sure you have much less). This is the basis of Marxism, and of course it's true. In a way jealousy gets in the way of rational thought.
This is one of the really good parts of capitalism. It concentrates power with people who want and need the system to succeed and who have very little power to use force to secure specific outcomes.
You may agree to this to varying extents, but just compare China's attempts to stabilize it's currency with the US ones. China : 208 people in the financial industry (and counting) "disappeared", a lot of them with reports of the police asking for them right before their disappearance. US: so far 1 person arrested, and a lot of people agree that it's for a good reason, not just the government. You might say "but the US gave boatloads of money to the banks/rich !". Well, yes. But there's no difference there, so did Europe, so did China ... [1]
[1] http://www.ft.com/intl/cms/s/0/4568598e-8731-11e2-9dd7-00144...
I started to think "injustice" when I saw the article, but 2.7 million will barely buy a nice house in some parts of the US. I suppose in some ways wealth is still relative.
I guess I'm more curious about what percentage of world assets the .001% control.
https://www.credit-suisse.com/uk/en/about-us/research/resear...
They put the 1% line at $760k, and that's net worth: include the value of your home, subtract your debts.
I'm pretty unhappy about this oxfam article. It talks about "the richest 1%" and "the billionaires" alongside each other as if these groups were even remotely similar. This is furthering the myth of some kind of group of "shady rich people" who are behind the global financial conspiracy. Reality check: if you're reading this, you're almost certainly in the top 10% ($68,845 in total assets). According to the same data set, the median wealth in the US is $50k, so about half the population is in the top ten percent. You are the rich people this article is talking about.
Comparing the "richest 80 billionaires" to the bottom 50% is similarly misleading, because the bottom 50% has about 0.5% of the global wealth (which I think roughly answers your question about the top 0.001%). If you lined up the top 80 billionaires, shot them all, and redistributed all their wealth to the bottom 50%, then those people would still be in extreme poverty.
There are serious global wealth inequality problems, and this oxfam article doesn't really talk about them at all, and instead tries to perpetuate a popular meme. I strongly suggest that people skip it and read the Credit Suisse report instead - the data tells a much more interesting story.
Here are the numbers which the oxfam article doesn't mention, and should:
85.65% of the global wealth is held by the top 10% of the population, which is 477m people, of which 113m are in the US, with second place going to Japan at 58m.
32.3% of global wealth is held by the middle class (defined as $50k to $500k wealth); 92.4% is held by the middle class or above. 37% is in the US. Africa, India, and Latin America together represent about 4%.
If you further divide that 1% you'll find it like you suggest is much worse than that. 0.001% seems more likely.
[1] "What Oxfam won’t tell you about capitalism and poverty"
http://blogs.spectator.co.uk/2016/01/what-oxfam-wont-tell-yo...
Heck, even i do. So i own as much as 2 400 000 000 people do in total. https://www.oxfam.org/sites/www.oxfam.org/files/file_attachm...
At least a court helped the poorest person on earth last year: "In March 2014, a French high court upheld Kerviel's prison sentence but ruled he would not have to repay €4.9bn" https://en.wikipedia.org/wiki/J%C3%A9r%C3%B4me_Kerviel So there is still hope left.
My problems:
1. Percentages: the article talks in percentages, as if something tangible was lost from 50-45%. Here is the table of wealth by year in total vs the bottom 50%:
year Total($bil) 50% ($bn)
2000 $117,052.00 $702.31
2001 $113,390.00 $793.73
2002 $122,757.00 $859.30
2003 $147,566.00 $1,032.96
2004 $166,018.00 $1,162.13
2005 $171,182.00 $1,198.27
2006 $195,941.00 $1,763.47
2007 $220,043.00 $2,200.43
2008 $189,877.00 $1,708.89
2009 $205,656.00 $1,850.90
2010 $216,084.00 $2,593.01
2011 $224,382.00 $2,243.82
2012 $238,089.00 $2,142.80
2013 $255,620.00 $1,789.34
2014 $263,242.00 $1,842.69
+224.89% +262.38%
Besides which, isn't that F^$%^&$ing amazing! That the bottom 50% areover 2 and a half times richer. That is world changing for the people it affects, surely? Yet the story is the rich have more. Really, "Rich have more" is the story? I can't wait for "water is wet" as installment 2.
More importantly, why is the story not the drop from 2010 to 2014? What was that?
So I sought out the source: https://publications.credit-suisse.com/tasks/render/file/?fi... and it appears that the wealth in the bottom 50% is made up mostly of mostly of two things (see figure 8, page 12): 1. Poor nations - e.g. Africa and, largest of all, India which accounts "... for over a quarter of people in the bottom half of the distribution". 2. Ruch Americans in debt - the tail seems skewed that way, to me at least.
If we take just India, they had a massive currency exchange problem vs the USD since 2010. In 2010, it was 46.21 rupee to the dollar, in December 2014 it was 62.8 (http://www.x-rates.com/average/?from=USD&to=INR&amount=1&yea...). That is a drop of about a third in value. That is likely at least part of the reason for the wealth drop.
2. The percentage projection carries on from what looks like an historical anomaly between 2010 and 2014. If the currency exchange reverses course, and India claws back even 10% of the gap, the percentage to the 1% will likely reverse to some degree.
3. The data set for the rich changes dramatically. The minimum to be top 80 in 2014, would be top 15 in 2004. Zuckerberg appears out of nowhere in 2011, adding a few billion (his wealth versus the 81st position) to the total from nowhere. If Wallmart's founder had survived, we'd have a top 80 with 4 more billionaires in it, making it an even larger a total. That's not really indicative of anything (other than rich people can die too).
Look, I get Oxfam's political agenda, but I think a +262.38% increase in wealth for the bottom 50% - even after what looks like a currency disaster since 2010 - is amazing in and of itself, and any comparison to an arbitrary set of extremely wealthy is just political machinations.
- the meaning of words - the specificity of the argument (say, actor income versus a country versus the global economy) - the ethical assumptions underlying our argument - the actual facts
Personally I've been raised, developed my thoughts and occupy an environment that can be considered strongly on 'the left' of the spectrum (yes, also vague). That said, I really try to properly understand the 'other' side(s).
But it's difficult, considering that my entire world view is built on assumptions, arguments, lines of reasoning that are built on 'facts' and 'knowledge' that is 'leftist'. My left-wing viewpoint is like a realist painting while my right-wing viewpoint is more like a crude child's drawing. So obviously I'm more likely to reject the latter, and judge its proponents harshly, because it seems so stupid and primitive.
So I guess my question is... How would I best go about developing a more nuanced picture of the 'other' side(s) so that I can try to find 'truth' that is not conveniently aligned with my upbringing and current viewpoints, however difficult (or impossible) that might be?
I've been trying to subscribe to blogs that don't align with my views. I've also been trying to look into philosophical views that seem to further this, but I find it difficult because I don't really know what axioms underly these views so alien to me. So I don't always know where to look. I've been trying to respectfully read economic or social arguments (including pg's recent essay) that I have some fundamental issues with, but it all falls apart through sheer complexity and ambiguity (see: the discussions here where half the time people seem to discuss what pg actually said). And whenever some discussion does go into 'facts', I'd really have to read the sources where half the time I would need to study that particular field to even understand the abstract, not to mention that I can't really check the accuracy of these facts in the first place (and we all know that the further we get from the 'natural' sciences, the more ambiguous and slanted these facts become).
Here's the thing. I was raised an Evangelical Christian, and now I'm (basically) an atheist. The difference between these two paradigms is huge. I've believed both these sides with full conviction, so I know in quite a bit of detail how to defend many beliefs from either side. I feel that as a result, I can often pinpoint at which point in an argument things diverge, and I also feel I can reasonably choose in which direction to go. It also feels a bit schizophrenic and uncomfortable.
But the only reason I can do this is that I've basically studied theology and I've been immersed in this now-alien point of view for about 25 years, not counting the period of overlap where I was very confused about matters.
Obviously I cannot do that with an issue such as this. So what can I do, aside from try to assume that the viewpoint alien to my own is probably not as stupid or superficial as it seems? How can I assess a commenter's viewpoint when I don't have any knowledge of their background, honestly, or expertise as a person (which I do feel is important. we need to take shortcuts at some point).
It's incredibly frustrating, but I don't want to get stuck in convictions that I just happen to have chanced into, basically.
This might sound strange, but is there any chance you would be willing to check up on my resolve in about a month? Just a quick email would be enough. It's just that with everything else going on in my life currently, I'm likely to forget even if I set a reminder or task...
(and I understand if you don't feel like doing this of course)
The biggest differences in economic debates are not between people who have different viewpoints. The biggest differences are between people who have actually studied economics and know what they're talking about, and most people, who are saying things that don't make sense, and basing most of their arguments on misunderstandings and wishful thinking.
I find that just reading a lot of "real" economics from real economists will usually make everything you read much, much clearer, whether you come at it from the "left" or the "right". I also tend to find that most economists are significantly to the "right" of the standard populace, which would make it even better for your needs. (This could just be my biased reading habits, but I think not - I have other thoughts on the subject but they're not for now).
Now, how can you go about reading real economists? The best way is to actually study economics, which you can do either via online videos (plenty of them available) or reading a textbook. I recommend Mankiw's "Principles of Economics" textbook, it's very readable.
If you don't have the time/inclination for reading a whole textbook, the next best thing is to read more "introduction to economics" books. A few that I highly recommend:
1. Basic Economics - Thomas Sowell. Brilliant book, was my first introduction to real economics. Most people will say it's heavily biased to the "right", so could be good for your usecase, but keep it in mind.
2. Naked Economics - Charled Wheelan. A bit shorter and lighter than Sowell, but a great book. I think it's a lot more balanced.
3. Great Courses courses on economics (audiobooks). A good one to start with is "Economics" by Timothy Taylor.
After this you can dive deeper into specific questions/areas you care about, e.g. there are brilliant courses by the Great Courses on how the stock market works, etc. Very useful to know what's actually going on in the world.
If they invest it or hell, even put it in a savings account, the money is having a positive impact on the economy. If they buy a ridiculous $50M yacht? That money flows to the company that built it.
Here's an analysis showing that capital is earning more than labor mostly due to housing prices:
http://www.brookings.edu/about/projects/bpea/papers/2015/lan...
When you have a millionaire who is "rich" because they own their house (no mortgage) and the house is worth more than a million dollars, they might still be living paycheck to paycheck. The difference being they could leverage their house if they needed money on short notice.
That said, it would be interesting to see what shooting down rent-seeking taxes would do here. If for example you allowed copyrights to expire in a reasonable time, then you could have people put on a play and keep the profits. Something they can't do today.
Why all the downvotes? HN'ers like yachts and empty mansions, huh?
"Richest 73 Million People Will Own More Than All The Rest by 2016"
I've mentioned this before, but if you want to know why this is, read Debt: the First 5000 Years.
It's life changing
But in my opinion the whole 99-vs-1 narrative is bonkers.
EDIT: Let me clarify to the downvoting PC frat boys: 99% vs 1% is a shit metric that doesn't address the issue of inequality. The only thing it enables is moronic populism.
Imagine if we take all the wealth of the 1% and distribute it uniformly among the rest of the 99%. Do you really think this will lead to an equal distribution of income?
Rising inequality on its own is not a problem.
The most efficient society would be one where money and resources goes where it's needed and that it would create virtuous cycles(e.g.: take people out of misery -> they become economic agents -> everyone's work serves needs of someone else -> development -> world GDP increases -> humankind is able to do more things -> society gets star-wars-like capabilities -> more people more happy)