Pro-government spending advocates don’t like to emphasize this because people become a lot less supportive of these things when they see members of their own community getting hit.
That's very much untrue. What is true is that no one even bothers reducing the favorable tax treatment of the ultrawealthy, only taxing high-end labor income and pretending. As long as both long-term capital gains and pass-through business income are extremely tax-favored, it doesn't matter what rates or brackets you set for normal income, you arent really taxing the ultrawealthy. You could raise tremendous revenue by eliminating those favorable categories and treating all income as income, and only raising nominal rates by adding new brackets above the current top bracket. The reason that isn't done isn't that you can't raise enough revenue that way, its because the ultrawealthy are very good at propagandizing that the forms of income they earn vastly disproportionately ought to be untouchable.
The USA cannot even properly finance the IRS to go after the super wealthy tax cheats. Their bought-and-paid-for politicians would rather the IRS stick it to the little guys, ffs.
I think Biden has tried get ahead of that issue with his no higher taxes on 400k pledge. We'll wait to see the reality though.
I'm sorry but to me this attitude hasn't worked out all that well for the common man in the US (no vacation, parental leave, health care etc), but still you believe in the propaganda by default.
What are examples of this happening?
Having a big pile of leverageable assets, even if you have little income, gives you a lot of insulation from many of the costs and risks we all come across in life. For example, freedom from paying rent, freedom from having to obtain and service debt, and freedom from having to worry about job security.
Meanwhile your doctors and lawyers give 40% of their income to the state and still have student debt, mortgages, may be forced to live in a high CoL area, and may have to live with high stress.
And every day people don't really understand wealth. There's a dumb competition advertised on TV here in the UK where you can win a £3M ($4.2M) house on the coast, and a sports car. While it's glamorous, upending your life to move to live in this home is deeply impractical for most people. The cost of maintaining and protecting it would likely cost the entirety of a median UK salary. That's not freedom.
It's a fair guess that vast majority of Bezos's wealth is in Amazon equities. Which are valued as such by the participants in US equity market. A thought exercise, what would happen if he were to liquidate all of that $180+B in equities? Safe to say he will get less than $180B in cash that could he could use for charities, moonshot projects etc.,
There's also a matter of confidence. How will the markets react if the founder of Amazon were to liquidate his Amazon holdings? So it seems to me that not all of his wealth is usable. Does it mean we need better ways of gauging wealth? Especially when trying to assert things like "X% of his wealth is enough to house all homeless veterans for an year". His wealth is locked up in some form which though is valued in USD won't translate 1-1 to other forms of wealth.
If you don't assume that it makes no sense to assume he'd want to liquidate it all at once.
Liquidity != wealth
Illiquid wealth != unreal wealth.
It's really odd how many people seem to have been led to believe it is equivalent though... I'm curious to know where they all picked up this misconception.
That being said he has gone through a divorce, he did lose a good chunk of his assets pretty quickly. Sure it was just a reallocation of assets, but unless you specifically want all of that money in cash you don't need do actually sell it. Banks for example will give you cash against the value of shares, allowing you access to liquid funds while you're slowly selling the equity.
Anything specific cause you want to spend all of that money on will probably have a limit at which you can spend at, there just isn't enough stuff in the world or people offering services to absorb all that wealth instantly. Trying to cure all the world's diseases will very quickly consume all lab and relevant researcher capacity, which will only grow at the rate people start skill retraining to this new lucrative career.
So I'm not sure it matters? I mean assuming the underlying share value doesn't freefall for some reason.
https://github.com/MKorostoff/1-pixel-wealth/blob/master/THE...
Bezos has been selling his shares for years.
The market is still betting that Amazon can exploit more people faster every year and earn money (i.e. profit) from them.
Bezos is the richest, so we don't have examples quite at that scale. That said, we have some pretty big (eg gates, buffet) announcing liquidation & donation without anything bad happening. So, he probably could sell his amazon shares and do something else with them.
You are approaching some "it's complicated" questions that occur at scale though. It's true, for example, that if Bezos wanted to liquidate immediately, that volume of shares is probably more than the market could buy. It might temporarily crash the stock, if handled wrong. Finance people know how to do this right though, so I think we can say that all of that wealth is usable.
There's also the other side, what Bezos would spend that wealth on? You can only buy what exists. Say Bezos decides to solve homelessness and housing scarcity in his state forever. He sells his amazon shares (slowly, carefully) and buys half a million houses. There aren't that many houses for sale, so rices would skyrocket. Say he decides to build instead, to avoid that. The state only has so many builders, roofers, cement shops, cranes... only so much capacity to produce houses. Building or buying half a million houses in Washington quickly is probably near impossible. You might cause detrimental side effects by trying. Normal people couldn't buy a homes, because Bezos has bid up the price of everything. OTOH, builders and pre existing property investors will get rich. Inflation probably happens.
This is the kind of problem governments often face. At some scale, common sense economic concepts/abstractions like the cost of building a house break down and underlying realities leak in. Only so many houses exist.There's only so much labour, materials, capacity to produce.
A rung or two higher up the meta ladder, a common demonstration of macroeconomic weirdness is the "paradox of choice." What would happen to an economy if everyone saves 100% of their money? All shops & restaurants are empty. There's no work. Businesses fail, default on loans. Share prices crash. It's simply impossible for a whole economy to save. Saving (and more controversially, borrowing) doesn't exist at macroeconomic scale. An economy can't save or borrow. Shutting down car factories today doesn't make it produce more cars tomorrow. So, we can't all save for a car this year to buy one next year.
> ....only has so many builders, roofers, cement shops, cranes... only so much capacity to produce houses....only so much labour, materials, capacity to produce.
IMO the underlying problem to solve is mobilisng this capacity. And the $$ to do so needn't come from rich people. The US anyway has been running budget deficit, there's also this ~$2T infrastructure bill. Some of that money could be used to solve housing/health/education problems and as an added benefit it'll provide jobs to the US citizens. I'm sure this will have 2nd order adverse effects but they I guess they won't be as disruptive.
I am not saying inequality is a problem; but taxing rich doesn't seem to solve it. It will lead to endless debate and lost time. It will take the focus away from the underling problems which is rotting basic human needs -- food/health/housing/education. The government should address underlying causes that lead to inequality and spend on infrastructure in a big way.
You should also consider that Bezos can access his wealth in more ways than simply selling his stock. It can be used as security against debt for example. Should Bezos decide he wanted to he could borrow many billions of dollars secured against some of his Amazon stock today (assuming his contracts with Amazon don't preclude doing that). Bezos could also donate stock to a charitable trust, which could then sell it with much less market disruption. Or he could use dozens of other financial mechanisms available for accessing his wealth.
The bigger problem is what are you going to with that money? Obviously not consumption. You are not going to buy more tshirts and burgers.
You are going to invest in pet projects, like google glass or Bezos cockrocket [1]. Or finance some causes, like Gate's attack on malaria - good stuff.
That's not unique the the ultra rich, though. Many people have most of their wealth locked in a house. If they needed to sell at very short notice they would have to sell at a significant discount.
I'm not sure that implies there should be a regime change in Amazonland, though. In some ways it implies the opposite. Annex Amazonland, overthrow King Bezos, and you're faced with the challenge of administering the damn thing yourself.
Why don’t we overthrow the king, then reward those that remain to keep the whole thing going.
Jeff Bezos can have $200bn+ in the bank without affecting the economy. The effect of seizing these $200bn and distributing them is the same as quantitatively easing them into the economy. Some people exert power through work or politics. Some people have none and want to exert power through "journalism" and "shaping opinions". It's all fun and games until these people are elected (through populism probably coupled by a recession); which is when you need to prepare your luggage and get the hell out of such a place.
They may overlap, and Bezos may be both, but wealth and capital on their own are orthogonal to justice.
https://pbs.twimg.com/media/EHKZRLcW4AA1aju?format=jpg&name=...
Land is a public good. We have to compete for it but that doesn't mean private individuals should get a cut of the public wealth around the plot of land merely by owning it. It only makes sense to tax it or to turn it over to public ownership (the transition would obviously take decades).
They use their market dominance to reduce the income of authors resulting in less choice and lower quality books for you to read, while increasing the price of available books.
They use their vast wealth to buy out or strike deals with competitors, preventing any challenge to their hold on the industry.
As market maker and participant they use their exclusive market data to undercut their own providers resulting in more hoarded wealth for them but a less creative and productive society for all.
They engage in continual astro-turfing which alters public debate away from whatever is really going on and toward what the mega wealthy owners want people to believe.
And much much more.
Add to that that the legal framework (talking about the USA) is seriously skewed to favor employers and disadvantages workers and any attempts to unionize. This has to stop.
Putting the employer on the hook for more aspects of the employee's well-being (healthcare, living wage) only increases the gap between employed and unemployed, therefore increasing the bargaining power of employers. I think it's better to have society provide a basic standard of living (most importantly housing and healthcare) to all poor people, employed or not.
Isn't it weird how it is possible to prevent other people from working by simply withholding money? Meanwhile we expect the people who couldn't work as a result of this withholding of money to keep working, we consider them lazy and not worthy of sympathy.
If I'm a single mom with 3 kids, is the "living salary" the same as a single 20 year old who lives at home?
If “rent-seeking” contributes to people becoming wealthy then the two notions don’t remain orthogonal. The chances of finding more rent seeker among the wealthy is far higher than more rent seekers among the non-wealthy.
Additionally the size of “problems” that a single low-wealth rent-seeker causes is not equivalent to the amount of “problem” created by a single high-wealth rent seeker.
(there is debate about which activities qualify, but the gist is obvious)
Human behavior is driven by contagious imitation (monkey-see monkey-do), and we all pile into the same behaviors at the same time, so this inequality will always exist. No matter how equitable the system.
Of all the content on the internet, 1% of it gets 99% of the traffic. Of all the movies on Netflix, 1% get 99% of the eyeballs. Of all the businesses on earth, 1% get 99% of the customers. Of all the stocks in the stock market, a tiny percentage generate ALL of the returns. I could go on and on.
Fundamentally, value-creation in a connected world results in an exponential (log) function, not a linear one.
And people’s brains turn to mush when trying to comprehend exponential vs. linear growth.
You can look at similar wealth curves in the supposedly more equitable nordics to see how similar they are if scaled up to a population the size of the US. On an exponential curve, extending the x-axis 100X further results in equally extreme outcomes like Jeff Bezos.
Basically, everything humans do results in extreme inequality.
So while we should certainly raise taxes on the mega-rich, the goal shouldn’t be eliminating exponential inequality altogether. Because it’s a base property of humanity.
Better would it be do explain with a standard distribution (what wealth isn't). Lets assume that 1 SD of income corresponds to 10 cm. So 3SD or 60cm, basically your screen size, corresponds to 99.7% of the population.
Some random data from the internet: "The median household income in Franklin County Ohio is about $43,000 although the average household income is closer to $54,000. The standard deviation of household incomes is about $30,000. You pick a random sample of 50 households. What is the chance the average household income in your sample is over $60,000?" https://online.stat.psu.edu/stat100/lesson/8/8.3
Household income may be even two earners. But assuming broadly 50k, sd 50k per person to make it easier and taking into account more affluent areas, only a few people make more than 200k per year.
Now lets assume Bill Gates or the Oligarch of your choice makes 10% ROE on his wealth. If he has 100 Billion, this is 10 Billion a year. This should be 200,000 Standard Deviations. If one SD corresponds to 10 cm, this should be 20 km on our scale.
So we can see the income of 99.7% of the population on our screen, but Bill Gates income would be 20 km away.
(Hope I made no mistake, feel free to correct)
PennState used an extraordinary bad example to teach the normal distribution, they chose a case where you have a fat tail distribution.
Bezos would never be able to immediately realise that amount of assets in to useful cash. So saying no human deserves this amount of wealth is kind of already fulfilled? He may have 2 or 3 billion as cash maybe.
The wealth of the ultra-wealthy doesn't exist in bank accounts or vaults of gold, but in assets, and largely assets which have appreciated. The $13 billion dollar single-day appreciation in Bezos's wealth wasn't from someone cutting him a check, but as a result of an increase in the value of his holdings (largely Amazon, Inc., stock).
And liquidating those holdings would not result in receiving the full closing-bell price for that day --- a movement the size of Bezos's on the market would itself influence the price. (A very similar situation exists for other novel assets, notably cryptocurrencies, whose "market value" is something of a polite fiction.)
At the same time ...
... the ultra-wealthy can excercise their wealth without liquidating or spending it, largely by using it as collateral against loans or for investments in other areas. At sufficient scale, the mere threat of making a move in some direction (investing in an industry or market or backing a politician, party, or legislative initiative).
In both instances, the key point is that money doesn't behave at these scales as most people reading this are given to understand. Much as with relativistic physics and quantum mechanics, our quotidian experiences don't give us the proper intuition for these phenomena.
0: https://github.com/MKorostoff/1-pixel-wealth/blob/master/THE...
I'm insanely poor by these standards but wealthfront will front me hard cash using my account as collateral with one click i think up to 30%. Super cheap interest rate.
Bezos has way more favorable banking. Even if he was 'only' worth $10-15 billion I bet he could get 2-3 billion in hard cash overnight.
He might not hold a lot of cash, but he doesn't need to he can get it immediately without selling.
Tons of private equity M&As have happened at much larger valuation.
These billionaires aren't amassing wealth to spend it on things, they're gathering it for power, leverage, status, prestige, legacy reasons etc, and using it to influence and control the world to further their own agenda.
As far as what to do about it? The only solution could be to break up Amazon, Google, Apple, etc. Taxation is not it. The Federal government and the Fed controls the money printer and influences how high these stock valuations are getting. They're a large part of the problem.
We can't print trillions of dollars without side effects in supply, demand and price mechanics. In this case, dollars are chasing productive growth assets as yields in bonds hit the floor and go under zero in some countries.
The growth in inequality correlates with the growth in the national debt, and monetary supply growth.
Why would he want to? Who tries to spend 100 billion all at the same time? Nobody wants 100 billion in cash in their bank account either.
I think you're confusing liquidity and wealth.
As a human society, we produce and we consume things. It sucks if some people consume a lot and not enough is left for others. I'd rather see us pile on people who overconsume rather than on those who overproduce.
Jeff's not the enemy - he's been amazingly successful within the rules that we as a society have made. Some of these rules are oppressive and bad and we should fix them.
People don't really have an understanding of how much wealth has been coalescing in the last thirty years and this is a good start as showing them how skewed things really are.
Seriously; this is dangerous. Concentrating that much wealth in such few hands is bound to have negative consequences. And all of us professionals really should get onboard trying to tackle this.
https://www.federalreserve.gov/econres/notes/feds-notes/disp...
White: +$200,000 Black: -$751,000 Hispanic: -$588,000
Puts your numbers in perspective
Source: https://www.govinfo.gov/content/pkg/BUDGET-2014-BUD/pdf/BUDG...
no hits on the numbers you provided.
I would be more than happy to pay $500 to another Bezos that provides my life was as much value.
Amazon is so convenient!
Not one single solitary exclusive and extraordinarily privileged human being.
1 thousand seconds = 16.6 minutes
1 million seconds = 11 days, 13 hours
1 billion seconds = 32 years
1 trillion seconds = 31,688 years
Also, with the text-length budget of that site I think it's a shame it doesn't explain what wealth, profit, liquidity and cash-on-hand is.
Better visualisations imo:
- Tom Scott: A Million Dollars vs A Billion Dollars, Visualized: A Road Trip https://www.youtube.com/watch?v=8YUWDrLazCg
- How rich are Jeff Bezos and Elon Musk in Minecraft terms https://www.youtube.com/watch?v=PvttV8EIoGA
Why not?
it took me a lot longer to scroll through bezos orannge than 185x the 1 Billion Blue rectangle.
"Money" made an impression at the time. I DDG'd "xkcd money" to pull the URL.
Other times I just suspect that there's a relevant xkcd and try some keywords.
