We Need a Wealth Tax

[TwiceHorn 31,695]

17 minutes ago, FondrenRoad said:

Rather than a wealth tax, which is difficult to implement, regulations to slow or prevent wealth consolidation should be implemented. The real issue is that wages have largely stagnated while revenues and profits have risen.  For public companies, you could mandate a pay scale that doesn't allow C suite employees to makes 100s of times the amount of low wage employees, and 10s of times the amount of key production employees. It is more difficult for privately held companies, but something can be figured out there as well. Owning things is not a "job" nor is it particularly productive and the "reward" of income needs to be better distributed.  Once we made a national goal of using money to make money without regard to what happens in between or what truly gets produced, it is easy to see how we ended up where we are with closed factories and poor job prospects for many. Those with existing capital just want to make more capital.  The industry is irrelevant. Employees are expenses. 

RIght.  I may not have said it particularly well upthread, but there are market structures and forces at play that make immense growth of assets possible and are deleterious to labor, the environment, and other things.

Hell, I'm not anywhere close to any of this level of wealth, but I am approaching retirement age and since the financial crisis, my "nest egg" has exploded (I suppose if you go back to 2000, it is an overall reasonable, moderate level of growth, but for the last eight years or so it's been fucking nuts).  Consider if your nest egg is 20x mine.  It's astonishing.  Contrary to popular belief, I'm not some evil robber baron.  I have mostly common or garden mutual funds and am just trying to be able to have a comfortable retirement like my parents did.

Edited March 5, 2021 by TwiceHorn

[FondrenRoad 4,378]

Just now, TwiceHorn said:

RIght.  I may not have said it particularly well upthread, but there are market structures and forces at play that make immense growth of assets possible and are deleterious to labor, the environment, and other things.

Hell, I'm not anywhere close to any of this level of wealth, but I am approaching retirement age and since the financial crisis, my "nest egg" has exploded.  Consider if your nest egg is 20x mine.  It's astonishing.  Contrary to popular belief, I'm not some evil robber baron.  I have mostly common or garden mutual funds and am just trying to be able to have a comfortable retirement like my parents did.

My grandma has a pension from AT&T and lives comfortably off it. She was an operator. Nothing fancy.  In today's job market, she'd be making minimum wage as a phone customer service rep, and would not be considered an employee so would have no benefits.  Now she votes all Republican and wonders why kids don't save. But a couple of the solutions are right there. Bring back pensions.  Add profit sharing for all employees. Ban long term contracting for low wage work. 

[TwiceHorn 31,695]

9 minutes ago, FondrenRoad said:

My grandma has a pension from AT&T and lives comfortably off it. She was an operator. Nothing fancy.  In today's job market, she'd be making minimum wage as a phone customer service rep, and would not be considered an employee so would have no benefits.  Now she votes all Republican and wonders why kids don't save. But a couple of the solutions are right there. Bring back pensions.  Add profit sharing for all employees. Ban long term contracting for low wage work. 

I guess private company pensions have fared alright for the most part, it's publicly funded pensions that seem to be FUBAR and the occasional big bankruptcy like Johns-Manville or LTV that limit or jeopardize their pensions and employee benefits.

My Dad was in mid-late career when ERISA came along.  He got a lump sum distribution from the pension plan into a 401k.  My parents were smart, but not like investment or finance pros or anything.  When that happened, they moved all their other investments to Fidelity, cashed in or stopped paying on life insurance (realized they didn't need it anymore) and wound up being pretty fucking "set," just by being what you now might call "bogleheads."  They also benefited immensely from wise housing purchases, but never had to liquidate to live. 

So I am a little less biased against 401ks than some might be.  I get that most people are too stupid to do it right, though.

Edited March 5, 2021 by TwiceHorn

[The Hot Dog Buffet 1,292]

The IRS should do your taxes for you without itemized deductions, and then send you a statement allowing you to itemize and do your own taxes if you wish to do so. That is the reform that is needed most.

[washparkhorn 9,939]

A wealth tax captures a portion of the negative externalities socilized by said creation of wealth.  

See, e.g., Walmart and Welfare https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/?sh=25a8e8c2720b

From a law and economics perspective, a wealth tax is an appropriate tool to balance accounts and attribute socialized losses accurately. 

But the exercise is academic. The wealthy control the levers of power and have carte blanche to lower their tax burden even further - whenever they see fit. (what wealthy right wingers (not any of you) fear about majoritarian rule by regular folk). 

TLDR: System is broken. 

 

[elfenix 34,387]

2 hours ago, hornmpa96 said:

If the issue is “the rich don’t pay enough taxes”, that’s easily solved by treating capital gains and dividends as ordinary income subject to tax at marginal rates. Additionally that could be included with the proposal to Mark publicly traded assets to market annually. 
 

If the issue is “wealth inequality”, that seems much more complicated and I would venture that discussion would start with the enormous amounts of support provided to the financial markets in this country which drives inflated asset values in assets disproportionately held by the wealthy.

the reason the stock market recovered as quickly as it did is because the fed promised strong support.  that's what the fed is constituted to do.  it can't give average people higher wages or unemployment or rent abatements.  it's maybe the single most powerful institution in the entire government because it has vast financial ability and can change policy swiftly.  but there's nothing like that for the average person.  you literally need an act of congress to get people more unemployment or rent abatements or mortgage relief, etc.  and that congress has a plurality of people in it that think most people should starve. 

 

[washparkhorn 9,939]

1 minute ago, elfenix said:

the reason the stock market recovered as quickly as it did is because the fed promised strong support.  that's what the fed is constituted to do.  it can't give average people higher wages or unemployment or rent abatements.  it's maybe the single most powerful institution in the entire government because it has vast financial ability and can change policy swiftly.  but there's nothing like that for the average person.  you literally need an act of congress to get people more unemployment or rent abatements or mortgage relief, etc.  and that congress has a plurality of people in it that think most people should starve. 

 

Respectfully, the Fed's Dual Mandate provides it with all the authority it needs to combat unemployment and the negative externalities flowing from the imbalance in markets.  But your point is well taken. It chooses not to make a choice, and therefore punts its mandate to Congress.

[TwiceHorn 31,695]

55 minutes ago, washparkhorn said:

A wealth tax captures a portion of the negative externalities socilized by said creation of wealth.  

See, e.g., Walmart and Welfare https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/?sh=25a8e8c2720b

From a law and economics perspective, a wealth tax is an appropriate tool to balance accounts and attribute socialized losses accurately. 

But the exercise is academic. The wealthy control the levers of power and have carte blanche to lower their tax burden even further - whenever they see fit. (what wealthy right wingers (not any of you) fear about majoritarian rule by regular folk). 

TLDR: System is broken. 

 

Does an income tax do that?  Legit question.  

To attribute externalities, I guess you must assume that the wealth is grown by some form of investment activity and not simply accrued from income.

That's the kind of answer I was looking for.

[wildcat09 29,453]

1 hour ago, washparkhorn said:

A wealth tax captures a portion of the negative externalities socilized by said creation of wealth.  

See, e.g., Walmart and Welfare https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/?sh=25a8e8c2720b

From a law and economics perspective, a wealth tax is an appropriate tool to balance accounts and attribute socialized losses accurately. 

But the exercise is academic. The wealthy control the levers of power and have carte blanche to lower their tax burden even further - whenever they see fit. (what wealthy right wingers (not any of you) fear about majoritarian rule by regular folk). 

TLDR: System is broken. 

 

I almost want to neg you for mentioning law and economics.

[Judge Roybeanbag 11,829]

3 hours ago, hornmpa96 said:

If the issue is “the rich don’t pay enough taxes”, that’s easily solved by treating capital gains and dividends as ordinary income subject to tax at marginal rates. Additionally that could be included with the proposal to Mark publicly traded assets to market annually. 
 

If the issue is “wealth inequality”, that seems much more complicated and I would venture that discussion would start with the enormous amounts of support provided to the financial markets in this country which drives inflated asset values in assets disproportionately held by the wealthy.

Thank you.  There is no productive value in skimming money off the rise and fall of stocks on a momentary basis.   Reporting needs to move to biannual or annual instead of quarterly, and executive and board compensation needs to be tied to five year strategic plans at a minimum.  Stocks for energy companies and other “necessary” infrastructure companies need to be given special long-term growth incentives via low taxation and I could go on and on.  The computer has broken our market.  It needs fixing. 

Edited March 5, 2021 by Judge Roybeanbag

[washparkhorn 9,939]

14 minutes ago, TwiceHorn said:

Does an income tax do that?  Legit question.  

Recoup socialized negative externalities?

It shifts the burden to wage earners.

[elfenix 34,387]

22 minutes ago, washparkhorn said:

Respectfully, the Fed's Dual Mandate provides it with all the authority it needs to combat unemployment and the negative externalities flowing from the imbalance in markets.  But your point is well taken. It chooses not to make a choice, and therefore punts its mandate to Congress.

the fed's dual mandate mandates that it strongly considers the effects on employment when it pulls on its levers (or, uses the keyboard in jay powell's office), but it doesn't give it any levers to deal with employment or sustenance directly. 

[washparkhorn 9,939]

5 minutes ago, Judge Roybeanbag said:

There is no productive value in skimming money off the rise and fall of stocks. 

We tax casino winnings. What is the difference?

[Judge Roybeanbag 11,829]

Just now, washparkhorn said:

We tax casino winnings. What is the difference?

The percentage.  

[washparkhorn 9,939]

2 minutes ago, elfenix said:

the fed's dual mandate mandates that it strongly considers the effects on employment when it pulls on its levers (or, uses the keyboard in jay powell's office), but it doesn't give it any levers to deal with employment or sustenance directly. 

The Fed sees its dual authority differently, but I appreciate what you are saying in the strictest reading of the dual mandate.

[elfenix 34,387]

what power does the fed have that can deal with employment directly?  maybe i'm missing something here but i don't think it has one.  all of its levers directly deal with capital. 

[TwiceHorn 31,695]

9 minutes ago, washparkhorn said:

Recoup socialized negative externalities?

It shifts the burden to wage earners.

Well, I mean increased tax burden on people with larger salaries/income would seem to recapture some of the externalities that result in that larger salary/income? No? I don't know.

[Judge Roybeanbag 11,829]

7 minutes ago, washparkhorn said:

We tax casino winnings. What is the difference?

Also gambling, like paying the pole tax for checking out strippers in Texas, is optional.   Retirement accounts aren’t, specifically non-pension accounts in states where pensions and unions are verboten, except for government officials.  

[washparkhorn 9,939]

2 minutes ago, elfenix said:

what power does the fed have that can deal with employment directly?  maybe i'm missing something here but i don't think it has one.  all of its levers directly deal with capital. 

The idea that the Federal Reserve can do nothing with employment is a rather new concept (1968) as introduced by the Friedman and implemented by the libertarian neoliberals. 

https://www.aeaweb.org/aer/top20/58.1.1-17.pdf

To your question, the Fed could open a lending window for the unemployed, as it does with other troubled sectors and entities. 

[elfenix 34,387]

2 minutes ago, washparkhorn said:

The idea that the Federal Reserve can do nothing with employment is a rather new concept (1968) as introduced by the Friedman and implemented by the libertarian neoliberals. 

who said the fed can do nothing with employment?

[washparkhorn 9,939]

7 minutes ago, TwiceHorn said:

Well, I mean increased tax burden on people with larger salaries/income would seem to recapture some of the externalities that result in that larger salary/income? No? I don't know.

That might be helpful to tamper inflation caused by money burning a hole in one's pocket.

If we are getting down to the Adam Smith view of the world, we would tax the rentier class (those who make money off of an economy without working). 

[washparkhorn 9,939]

2 minutes ago, elfenix said:

who said the fed can do nothing with employment?

Please elaborate. I appear to have misread your question. Thank you.

[elfenix 34,387]

2 minutes ago, washparkhorn said:

Please elaborate. I appear to have misread your question. Thank you.

i said i don't believe that its levers work directly on employment.  or sustenance, for that matter. 

Edited March 5, 2021 by elfenix

[washparkhorn 9,939]

49 minutes ago, wildcat09 said:

I almost want to neg you for mentioning law and economics.

It has been bastardized with everything else in the sausage-making world, so your reaction is well-founded. 

[washparkhorn 9,939]

6 minutes ago, elfenix said:

i said i don't believe that its levers work directly on employment.  or sustenance, for that matter. 

The Fed did it with the Main Street Lending Program (lending window). Right?

Are we speaking past each other (it may be me, not you). If so, apologies. 

[Firemans4Horn 18,312]

Really interesting study. Confirms my suspicion on a local level (Dallas). Gentrifying areas in west Dallas and Oak Cliff have taxes rising rapidly on old homes owned by BIPOC while Preston Hollow homes can go half a decade without any increase. 
 

 

[DonkeyCigars 143]

2 hours ago, Firemans4Horn said:

Really interesting study. Confirms my suspicion on a local level (Dallas). Gentrifying areas in west Dallas and Oak Cliff have taxes rising rapidly on old homes owned by BIPOC while Preston Hollow homes can go half a decade without any increase. 
 

 

Do you think some of it might be BIPOC or, generally poor folk, are not as knowledgable on how to fight back tax increases and the tools to push back? Seemingly everyone I know, and there are plenty of threads here, that exchange intel on how to appeal and advocate for your own best interests-- I wonder if that exists in BIPOC neighborhoods...and if not? Business opportunity!

[TwiceHorn 31,695]

12 minutes ago, DonkeyCigars said:

Do you think some of it might be BIPOC or, generally poor folk, are not as knowledgable on how to fight back tax increases and the tools to push back? Seemingly everyone I know, and there are plenty of threads here, that exchange intel on how to appeal and advocate for your own best interests-- I wonder if that exists in BIPOC neighborhoods...and if not? Business opportunity!

Not really.

For poors living in "commodity" homes, appraisal is an easy business and comps are plentiful.  Their appraisals are accurate.  No amount of protesting or appealing is going to change things much.  That mostly extends validly into pretty affluent neighborhoods, but not the tip top.

In really affluent areas, for Dallas I'm guesstimating values in excess of $10M in "estate" areas, there aren't a lot of good comps because houses and lots and amenities are so varied and unique.  And the wealthy owners are incented to file actual lawsuits to challenge valuation using those variations to the maximum extent possible.  When the tax savings could be hundreds of thousands, that gives you a substantial litigation budget.  There was an old story in the Observer about how Perot kept his multi-acre estate on Strait Ln almost the same in appraisal for more than a decade, when common sense indicated that it had doubled or tripled in FMV over the period.

 

[DonkeyCigars 143]

12 minutes ago, TwiceHorn said:

Not really.

For poors living in "commodity" homes, appraisal is an easy business and comps are plentiful.  Their appraisals are accurate.  No amount of protesting or appealing is going to change things much.  That mostly extends validly into pretty affluent neighborhoods, but not the tip top.

In really affluent areas, for Dallas I'm guesstimating values in excess of $10M in "estate" areas, there aren't a lot of good comps because houses and lots and amenities are so varied and unique.  And the wealthy owners are incented to file actual lawsuits to challenge valuation using those variations to the maximum extent possible.  When the tax savings could be hundreds of thousands, that gives you a substantial litigation budget.  There was an old story in the Observer about how Perot kept his multi-acre estate on Strait Ln almost the same in appraisal for more than a decade, when common sense indicated that it had doubled or tripled in FMV over the period.

 

Interesting and the OP said Preston Hollow which hits close to home because I ate at Sevy's Grill today with some PH guys for lunch which was pretty good, and one of the topics of conversation was real estate and their investments and talking about the strategy and what struck me was they were on two opposite strategic ends:

1 guy owns half-a-dozen new builds, puts big down payments on them as he views it like putting money in the bank, as appreciating assets, in up-and-coming areas where sprawl is continuing out. They have already appreciated as assets greatly and he has tax headache to try and fight every year, etc. Also when he goes to build them, he never gets any discounts or rebates or what have you because they hate he's an investor.

The other guy owns like 60 crappy houses near Fair Park and South Dallas. Section 8, so he's guaranteed money from the government, but the renters don't respect the property like the other ones do, and beyond all that there is no appreciation-- he said like literally zero appreciation YoY for a few years now. This relegates this strategy to necessarily being a volume play.

So the question is: Is the Fair Park and South Dallas crap area not a BIPOC area that is subject to tax increases since the asset didn't appreciate? Seems like that would be good for BIPOC unless they have a zero-appreciation property but the city is still raising property taxes YoY, and the BIPOC folks in this area aren't aware of levers to pull to get those increases frozen or decreased or appealed. 

Edited March 12, 2021 by DonkeyCigars

[Brew 3,049]

So we can’t even accurately value properties to assess property tax when done by state run assessors, but we can value those houses, businesses, etc accurately for a wealth tax? Makes sense to me.

[TwiceHorn 31,695]

3 hours ago, DonkeyCigars said:

Interesting and the OP said Preston Hollow which hits close to home because I ate at Sevy's Grill today with some PH guys for lunch which was pretty good, and one of the topics of conversation was real estate and their investments and talking about the strategy and what struck me was they were on two opposite strategic ends:

1 guy owns half-a-dozen new builds, puts big down payments on them as he views it like putting money in the bank, as appreciating assets, in up-and-coming areas where sprawl is continuing out. They have already appreciated as assets greatly and he has tax headache to try and fight every year, etc. Also when he goes to build them, he never gets any discounts or rebates or what have you because they hate he's an investor.

The other guy owns like 60 crappy houses near Fair Park and South Dallas. Section 8, so he's guaranteed money from the government, but the renters don't respect the property like the other ones do, and beyond all that there is no appreciation-- he said like literally zero appreciation YoY for a few years now. This relegates this strategy to necessarily being a volume play.

So the question is: Is the Fair Park and South Dallas crap area not a BIPOC area that is subject to tax increases since the asset didn't appreciate? Seems like that would be good for BIPOC unless they have a zero-appreciation property but the city is still raising property taxes YoY, and the BIPOC folks in this area aren't aware of levers to pull to get those increases frozen or decreased or appealed. 

I missed the Preston Hollow part.  Most of the Park Cities and most of Preston Hollow comprise pretty similar houses (sq ft, age, construction quality, amenities) on pretty similar lots, even if they are very nice homes.  I'd guess the appraisals are probably within 10-20% accurate.  But yeah that does generate some inequity.  Seems like they raise appraisals every few years to frighteningly close to FMV, then let them ride for a few years.  Even at that level, protests don't change much and there's no point in filing a district court action for $25k to get a $3000 break on your taxes.

The real inequity comes with the big dogs, whose appraisals are probably getting close to 50% low in a lot of cases.

My mother-in-law sold her commodity home in a deteriorating area (not bad, just very stagnant, little new construction) in east Dallas and it sold for 10-15% more than her appraisal, which hadn't changed materially in at least a couple of years. It's not Balch Springs, but it's not a hood full of power brokers with fancy houses either.

Edited March 13, 2021 by TwiceHorn

[Mrs Whiggins 13,050]

Bwwwaaaaahahahahaha. Sit down Larry.

 

[Mrs Whiggins 13,050]

I'm indulging in a little 'owning,' of the right wing pundits right now. I shouldn't, I really shouldn't, but dang I admit I share Jong-Fast's sentiment....click to see the full display with Turley's tweet.

 

[LABEVO 928]

 

[wildcat09 29,453]

16 hours ago, LABEVO said:

 

File this one under "no fucking shit."

[DonkeyCigars 143]

Thought this was funny/interesting:

CEOs who fly planes avoid taxes:

Quote

We find evidence that CEOs’ hobby of flying airplanes is associated with significantly lower effective tax rates and a greater propensity to engage in the most aggressive forms of tax avoidance such as tax sheltering. The effect is economically as well as statistically significant. Cross-sectional tests reveal that the baseline results are not sensitive to managerial remuneration incentives, suggesting that intrinsic incentives derived from endowed traits are not easily moderated by extrinsic motivation from compensation contracts. However, our analysis shows that the baseline result only holds in settings where managers are subject to high levels of monitoring by institutional shareholders, suggesting that strong managerial oversight helps direct managerial thrill-seeking tendencies towards value creating endeavors. Taken together, our paper highlights the significant role that CEOs thrill-seeking tendencies play in driving corporate tax planning activities.

That’s the abstract to “CEO Endowed Trait and Corporate Tax Avoidance: Evidence from Pilot CEOs,” by Ghasan Baghdadi, Edward Podolski and Madhu Veeraraghavan. I like the notion that thrill-seeking CEOs will seek the thrill of avoiding taxes, but only if they “are subject to high levels of monitoring by institutional shareholders.” Otherwise they will just get their thrills by, uh, flying airplanes all the time? But if their shareholders keep an eye on them and force them to stay in the office and do work, they will have to get their thrills at work, by avoiding taxes.

[Nice Guy Eddie 13,554]

On 3/12/2021 at 2:36 PM, DonkeyCigars said:

Do you think some of it might be BIPOC or, generally poor folk, are not as knowledgable on how to fight back tax increases and the tools to push back? Seemingly everyone I know, and there are plenty of threads here, that exchange intel on how to appeal and advocate for your own best interests-- I wonder if that exists in BIPOC neighborhoods...and if not? Business opportunity!

 

On 3/12/2021 at 3:03 PM, TwiceHorn said:

Not really.

For poors living in "commodity" homes, appraisal is an easy business and comps are plentiful.  Their appraisals are accurate.  No amount of protesting or appealing is going to change things much.  That mostly extends validly into pretty affluent neighborhoods, but not the tip top.

In really affluent areas, for Dallas I'm guesstimating values in excess of $10M in "estate" areas, there aren't a lot of good comps because houses and lots and amenities are so varied and unique.  And the wealthy owners are incented to file actual lawsuits to challenge valuation using those variations to the maximum extent possible.  When the tax savings could be hundreds of thousands, that gives you a substantial litigation budget.  There was an old story in the Observer about how Perot kept his multi-acre estate on Strait Ln almost the same in appraisal for more than a decade, when common sense indicated that it had doubled or tripled in FMV over the period.

 

When I've fought my home valuation in person in Harris County, I show up with plenty of information and an attitude that I'm not leaving without getting what I want.  It's a stereotype but many in lower economic situations are more prone to defer to authority. They may think the appraisal district contractor is someone they can't overrule. I think of that person as someone that I'm going to somewhat force my opinion especially if I feel I'm being reasonable.

[DonkeyCigars 143]

Billionaire Haters Don't Look, Forbes's new billionaire list came out:

Quote

 

Together, the 2,755 billionaires that make up Forbes’s new World Billionaires List are worth more than $13 trillion. That's higher than the GDP of every country except the US and China. 

Out of the rich list’s top 10 spots, seven are household names in emerging tech. In descending $$$ order: Jeff Bezos, Elon Musk, Bill Gates, Mark Zuckerberg, Larry Ellison, Larry Page, and Sergey Brin. 

A significant portion of the list’s newly minted billionaires are in tech, too: David Baszucki of Roblox, Chamath Palihapitiya of SPAC fame, and a handful of leaders in crypto.

 

 

[Biff Tannen 45,774]

On 4/6/2021 at 12:28 PM, Nice Guy Eddie said:

 

When I've fought my home valuation in person in Harris County, I show up with plenty of information and an attitude that I'm not leaving without getting what I want.  It's a stereotype but many in lower economic situations are more prone to defer to authority. They may think the appraisal district contractor is someone they can't overrule. I think of that person as someone that I'm going to somewhat force my opinion especially if I feel I'm being reasonable.

Username does not check out. 

[DonkeyCigars 143]

Interesting read on how people make money these days. Call outs:

Quote

In 1982 the most common source of wealth was inheritance. Of the 100 richest people, 60 inherited from an ancestor. There were 10 du Pont heirs alone. By 2020 the number of heirs had been cut in half, accounting for only 27 of the biggest 100 fortunes.

Why would the percentage of heirs decrease? Not because inheritance taxes increased. In fact, they decreased significantly during this period. The reason the percentage of heirs has decreased is not that fewer people are inheriting great fortunes, but that more people are making them.

How are people making these new fortunes? Roughly 3/4 by starting companies and 1/4 by investing

and

Quote

In 1982, there were two dominant sources of new wealth: oil and real estate. Of the 40 new fortunes in 1982, at least 24 were due primarily to oil or real estate. Now only a small number are: of the 73 new fortunes in 2020, 4 were due to real estate and only 2 to oil.

By 2020 the biggest source of new wealth was what are sometimes called "tech" companies. Of the 73 new fortunes, about 30 derive from such companies. These are particularly common among the richest of the rich: 8 of the top 10 fortunes in 2020 were new fortunes of this type.

Arguably it's slightly misleading to treat tech as a category. Isn't Amazon really a retailer, and Tesla a car maker? Yes and no. Maybe in 50 years, when what we call tech is taken for granted, it won't seem right to put these two businesses in the same category. But at the moment at least, there is definitely something they share in common that distinguishes them. What retailer starts AWS? What car maker is run by someone who also has a rocket company?

and

Quote

Why are people starting so many more new companies than they used to, and why are they getting so rich from it? The answer to the first question, curiously enough, is that it's misphrased. We shouldn't be asking why people are starting companies, but why they're starting companies again. 

In 1892, the New York Herald Tribune compiled a list of all the millionaires in America. They found 4047 of them. How many had inherited their wealth then? Only about 20% — less than the proportion of heirs today. And when you investigate the sources of the new fortunes, 1892 looks even more like today. Hugh Rockoff found that "many of the richest ... gained their initial edge from the new technology of mass production."

So it's not 2020 that's the anomaly here, but 1982. The real question is why so few people had gotten rich from starting companies in 1982. And the answer is that even as the Herald Tribune's list was being compiled, a wave of consolidation was sweeping through the American economy. In the late 19th and early 20th centuries, financiers like J. P. Morgan combined thousands of smaller companies into a few hundred giant ones with commanding economies of scale. By the end of World War II, as Michael Lind writes, "the major sectors of the economy were either organized as government-backed cartels or dominated by a few oligopolistic corporations."

In 1960, most of the people who start startups today would have gone to work for one of them. You could get rich from starting your own company in 1890 and in 2020, but in 1960 it was not really a viable option. You couldn't break through the oligopolies to get at the markets. So the prestigious route in 1960 was not to start your own company, but to work your way up the corporate ladder at an existing one. 

I'll say it again and louder for those in the back:

"The Middle Class" as we've come to define it and understand it (and salivate for the return of "it") is an artificial construct, created and propped up by the government that is inherently unscalable.

Edited April 19, 2021 by DonkeyCigars

[elfenix 34,387]

ah yes, the robber-baron age.  clearly the height of american civilization.

and you should link your source:

http://paulgraham.com/richnow.html?curator=MediaREDEF

 

anyway, claiming that the middle class is unscalable or unsustainable is just propagating a defeatist attitude to benefit the super wealthy.  same with claims that we could only do it post-war. 

Edited April 19, 2021 by elfenix

[Nivek 17,051]

We want a robust middle class in speeches.  

[Neonmoon 38,130]

7 minutes ago, Nivek said:

We want a robust middle class in speeches.  

Isn’t this the fucking truth 

[DonkeyCigars 143]

36 minutes ago, elfenix said:

ah yes, the robber-baron age.  clearly the height of american civilization.

and you should link your source:

http://paulgraham.com/richnow.html?curator=MediaREDEF

 

anyway, claiming that the middle class is unscalable or unsustainable is just propagating a defeatist attitude to benefit the super wealthy.  same with claims that we could only do it post-war. 

I disagree. 

[elfenix 34,387]

10 minutes ago, DonkeyCigars said:

I disagree. 

glad we cleared that up.

[elfenix 34,387]

oh and lets not forget that all those robber barons were living off government subsidy.  the railroads were built on the back of government subsidy, handing out land, literally buying part of mexico, etc.  railroads as a categroy are not profitable.  never have been.  their wealthy owners were just as artificial as the middle class you're pooh-poohing.

Edited April 19, 2021 by elfenix

[DonkeyCigars 143]

40 minutes ago, elfenix said:

oh and lets not forget that all those robber barons were living off government subsidy.  the railroads were built on the back of government subsidy, handing out land, literally buying part of mexico, etc.  railroads as a categroy are not profitable.  never have been.  their wealthy owners were just as artificial as the middle class you're pooh-poohing.

You are the only one talking about Robber Barons. Again, You could get rich from starting your own company in 1890 and in 2020, but in 1960 it was not really a viable option. You couldn't break through the oligopolies to get at the markets. So the prestigious route in 1960 was not to start your own company, but to work your way up the corporate ladder at an existing one. 

[elfenix 34,387]

7 minutes ago, DonkeyCigars said:

You are the only one talking about Robber Barons. Again, You could get rich from starting your own company in 1890 and in 2020, but in 1960 it was not really a viable option. You couldn't break through the oligopolies to get at the markets. So the prestigious route in 1960 was not to start your own company, but to work your way up the corporate ladder at an existing one. 

 

[DonkeyCigars 143]

No, I understand that part (using the year to reference them), but in no other way does it really make sense to use them the outliers here. You are referencing them but they do nothing to refute the point and data. Unless you are trying to disagree with the premise and author, but you haven't stated that so IDK?

[wildcat09 29,453]

53 minutes ago, elfenix said:

oh and lets not forget that all those robber barons were living off government subsidy.  the railroads were built on the back of government subsidy, handing out land, literally buying part of mexico, etc.  railroads as a categroy are not profitable.  never have been.  their wealthy owners were just as artificial as the middle class you're pooh-poohing.

All fortunes are subsidized in dozens of different ways.