> If you buy some shares in M&S or BP on the stock market, the money you pay goes to the previous owner, not the company. You are what Keynes called a ‘functionless investor.’ When such so-called ‘investments’ pay off they extract wealth from the economy without creating anything in return.<p>This doesn't seem very coherent. How could a company ever sell stock to raise capital, if the people who bought that stock didn't have a functioning market to resell it on?<p>Obligatory link to Hans Rosling's economic play-by-play of the last 50 years: <a href="https://youtu.be/hVimVzgtD6w?t=4m12s" rel="nofollow">https://youtu.be/hVimVzgtD6w?t=4m12s</a>
Part of the reasoning here is that rentiers are not contributing to wealth creation and therefore their earnings on the rent are parasitic, therefore 'unjust and dysfuctional':<p>"Since it’s a payment for nothing that didn’t already exist, it’s a deadweight cost, and so not only unjust but also dysfunctional for the economy. "<p>The practice of renting exists as an option to owning. By renting, renters can engage in an activity with less up front capital to buying. For example, a contractor building a concrete sidewalk may choose to rent the mixer rather than owning it, so that it's cost is a cost of sale for the service, rather than a fixed cost that requires maintenance, storage and transportation. In that sense, the rental is a component of a larger transaction involving actual work being performed, and not parasitic. Moreover, by offering the mixer for rent, the 'rentier' reduces the total number of mixers that need to be produced, as it is a shared resource to contractors and they each do not need to own their own.<p>The same principle pertains to business. A fast growing startup may know they only need a space for a short time and will grow out of it. So it would make no sense to purchase the property they will inhabit for a short time. The rent they pay is an alternative to mortgage or cash, and it makes sense for their business purposes, which in theory <i>do</i> produce something of value.<p>In the example of home rental, making homes available for rent enables families to live in accommodations that they would not be able to purchase. These accommodations are not without cost to the owner: Taxes, utilities, maintenance, security and administration are all associated costs that rent payments offset. What the rentier provides in most cases, is a better quality of life than the family could have if they were forced to own the property they lived in.
TTIP is pushed by <i>corporations</i>, not individual rich people. A corporation will want that even if every one of its stockholders has a below-median wealth. More generally, organizations and people working for them will pursue their goals and these goals will be misaligned with the interests of the population at large even if nobody is involved whose net worth is particularly remarkable. If corporations are eliminated and most work is done by government agencies, then these new organizations simply become more shielded from all sorts of punishment from the population compared to corporations.<p>The rising nominal wealth of the richest people since 2008 is largely a result of asset price inflation resulting from low interest rates; the wealthy person is not more wealthy, however, holding a more expensive stock if the dividends and the profits are about the same as they used to be when interest rates were higher and stocks were cheaper, in fact the wealthy person is largely worse off since risk-free income is gone.<p>As to "unjust and dysfunctional"... aren't we all. At least a rich person can lose money in a variety of scenarios and can be intimidated by this possibility. A tenured academic pays no price whatever he does, so he's more scary that way.<p>edit: I'm not saying people aren't responsible, just that many of those responsible aren't that rich, and even if you mandate a ceiling on wealth and income, guess what, people will still want to get things done (because you will have a mechanism making them want to, otherwise nothing gets done - of course you can very much choose that, too), and guess what, people will get "their" things done at your expense.<p>In fact <i>it's people who blame the rich who claim that people aren't responsible</i> (their <i>money</i>/assets - the thing making them <i>rich</i> people on top of just "people" - is responsible.) I'm absolutely saying that <i>people</i> are responsible, and taking money from people will not solve very much.<p>This is not to say that nothing can be done; jailing wealthy criminals is a good start. A great economist whom nobody will blame for excessive concern for the welfare of the wealthy who'll be glad to show you his list of things to do, but who's nonetheless not "Pikettian", is Dean Baker.
The important point to notice here (I have seen comments previously posted that talk about the "1 percent") is that a middle-class American and people in other countries with similar levels of prosperity is very close to the world 1 percent level of income and of wealth. The simple fact of the matter is that today's "average" people in developed countries are staggeringly rich compared to most of human experience for most of history.<p><a href="https://www.gapminder.org/videos/dont-panic-end-poverty/" rel="nofollow">https://www.gapminder.org/videos/dont-panic-end-poverty/</a>
There are a few things I disagree with.<p>1) Income from rent is not unearned. The reason it is called unearned is because nothing new was created. However, many services are this way. For example, fees paid to lawyers, or insurance fees and so on. Income earned from rent is income that comes from providing a service which is shelter or land for other uses.<p>2) Investment income is not parasitic. A share is a portion of a company. If someone buys a share, they are buying into ownership at a price they think is worthwhile. The prices of the shares are largely based on the value of the company. The value of a company can continue to go up and so profits come from the company being more valuable, not parasitically. Also, many shares provide dividends which is income and the right to vote.<p>3) It doesn't make any sense to me that rentiers free ride on the labour of others. Do they not have to pay for the goods and services they use?
Honestly, I do not even care about how "fair" the wealth distribution is. They have their billions. All I want is some job security. I think most average people feel the same way.
From a developer perspective many aspects of the current system (with respect to resource usage and allocation) look like technical debt. Governments may try to make ends meet with limited budgets and come up with sometimes nonsensical or just not really thought out solutions to problems. Meanwhile the world learns about the Panama papers and related things, getting the impression, that not everybody is happy with contributing back to the community at large.<p>The simple minded software developers solution would be to radically cut out the cruft (complex laws and tax systems) and implement a simplified version, that would be harder to game and easier to debug.
HN tends to be extremely reactionary to posts like this. Perhaps because the tech/startup scene is all about getting rich quick, or perhaps because HN has come to partially reflect the personal views of PG.<p>There will be a reckoning. The world is 'unsustainably unequal' at the moment. There are huge problems on the horizon - superbugs, climate change, resource depletion, environmental degradation, overpopulation. These problems can only be solved when governments act in the interests of all of humankind. This will not happen when the 1% hold all the money and all the power (which is the same thing).<p>I hope we can reign in the rentiering, tax-avoiding, propaganda-publishing rich and reclaim democracy before Something Bad happens. Otherwise, when the SHTF, the 1% will deservedly shoulder all the blame. And that will be the reckoning.
My theory is it's a cartel of cartels. It was always a possibility given all the markets naturally seem to develop oligopolies and shift to cartel-like behavior. Buying off politicians to protect profit or market share was also common. So, what happened is that they started acting collectively for whatever interests them. They still compete or argue for other things but certain laws and trends are valuable for all rich capitalists.<p>Project Censored published a great report that surveys many of the organizations, their boards, and so on. First report whose theory is very similar to my own research.<p><a href="http://projectcensored.org/the-global-1-exposing-the-transnational-ruling-class/" rel="nofollow">http://projectcensored.org/the-global-1-exposing-the-transna...</a><p>As you can see, the boards have considerable overlap where people who appear to be competing in one sector are working together in another. There's also a clear incentive, per doctrine of maximizing selfish gain, for board members and CEO's to all give each other ridiculously high compensation while driving it down for laborers. The reason: they can. Why else?<p>So, it's a combination of corrupt politicians, elites at CEO/board level, and media whose boards work similarly. The worst part is that the media is critical to changing the situation but has financial incentive to avoid that ever happening. That's why they so deviously self-censor on these issues to the point Americans can't get mad enough about the specific problem to do something with specific solutions. Media never presents either. Instead, works on side issues or total distractions (esp shootings or celebs) that prevent threats to stability of plutocracy.<p>EDIT: Given not everyone likes this source, I'd be interested in any similar data and analysis from academics published in a peer-reviewed journal. No paywalls, though. Can't fight elitism with more elitism. ;)
How does the title: "We need to challenge the myth that the rich are specially-talented wealth creators"<p>Become: "The very rich are unjust and dysfunctional" ?
Does "unjust and dysfunctional" = "u r a fag" [DH0]?<p><a href="http://paulgraham.com/disagree.html" rel="nofollow">http://paulgraham.com/disagree.html</a><p>Let me try and do a little better: I would argue that this kind of rhetoric is not significantly different from social movements in various countries of the 20th century, the end results were not quite as benign as its supporters anticipated:
'During the land reform, a significant numbers of landlords and well-to-do peasants were beaten to death at mass meetings organised by the Communist Party as land was taken from them and given to poorer peasants.[169] The Campaign to Suppress Counter-revolutionaries,[170] involved public executions that targeted mainly former Kuomintang officials, businessmen accused of "disturbing" the market, former employees of Western companies and intellectuals whose loyalty was suspect.[171] In 1976, the U.S. State department estimated as many as a million were killed in the land reform, and 800,000 killed in the counter-revolutionary campaign.[172]<p>Mao himself claimed that a total of 700,000 people were killed in attacks on "counter-revolutionaries" during the years 1950–52.[173] However, because there was a policy to select "at least one landlord, and usually several, in virtually every village for public execution",[174] the number of deaths range between 2 million[174][175] and 5 million.[176][177] In addition, at least 1.5 million people,[178] perhaps as many as 4 to 6 million,[179] were sent to "reform through labour" camps where many perished.[179] Mao played a personal role in organizing the mass repressions and established a system of execution quotas,[180] which were often exceeded.[170] He defended these killings as necessary for the securing of power.[181]'
[typo edited]
<a href="https://en.m.wikipedia.org/wiki/Mao_Zedong" rel="nofollow">https://en.m.wikipedia.org/wiki/Mao_Zedong</a>
This is a rather poor article.<p>In particular, it seems to imply that the wealthy are inherently rentiers. By the logic of this article, virtually all investors are "functionless investors" since they are not directly investing in a business by buying shares from the business. Of course, this neglects the fact that having a market for shares is in fact necessary for anyone to buy shares in the first place.<p>Also, it would be nice to have a definition of how exactly the wealthy are "dysfunctional." They seem to be pretty functional at accumulating wealth. But they're also pretty functional at expanding and building a wealthy society—Apple made Steve Jobs very rich, but it also made all of us a little wealthier as well.<p>As for justice, today's rich are more meritocratic than any in the past.
About "rent seeking" and "passive income":
Everybody gets old. Technology companies don't hire the old. And in technology, old is > 45. Which isn't that old given that my life expectancy is about 85.
So, darn right I'm "rent seeking". And I save like mad so I can generate "passive income". I assume that I will be pushed out of the workforce very soon - and I don't want to live on welfare for 40 years. Nor do I want to be restocking the shelves at Target when I'm 80.
> If you buy some shares in M&S or BP on the stock market, the money you pay goes to the previous owner, not the company. You are what Keynes called a ‘functionless investor.’ When such so-called ‘investments’ pay off they extract wealth from the economy without creating anything in return.<p>Ummm, no: when you pay off the previous owner you reimburse him for the risk he took. What's this guy's solution — not allowing folks to sell their assets? That seems a bit extreme, and liable to destroy the economy utterly.
No problem with that. Its a system. Rich stays rich, poor stays poor. Exceptions only proves the validity of this general rule.<p><a href="http://www.spiegel.de/static/happ/_pattern/story/foundation/v2/pub/j65309.html" rel="nofollow">http://www.spiegel.de/static/happ/_pattern/story/foundation/...</a><p>My favourite joke about 'How you managed to become a millionaire' has a morale that power and wealth is always inherited. Gates maybe a 'self-made' multibillionaire, but his very functioning in this quality only makes "rich stays rich" principle to stand. I would be fascinated would Gates finance social revolution in Mexico, to make people there less poor. Will never happen, because once you rich, you support agenda of the rich.
Got a 403, here's a copy,
<a href="https://web.archive.org/web/20160227170731/http://blogs.lse.ac.uk/politicsandpolicy/we-need-to-challenge-the-myth-that-the-rich-are-specially-talented-wealth-creators/" rel="nofollow">https://web.archive.org/web/20160227170731/http://blogs.lse....</a>
Very rich are just average people; meaning there's a mix of types of people that are very rich; aka billion or more.<p>Feel like most people have never known anyone super rich or for that matter, very poor.<p>Lastly, while it's true that there are more super wealth individuals than likely any point in history currently - the quality of life is also better on average too.
remember 1917 in Russia, and how much the SovietUnion did for the world and its nations until 1991, by just removing the rich and concentrating power with government, led by proper ideology. Stalin got the country of illiterate peasants with ploughs and left it with 100% literacy, and the nukes.
Being separated from other people causes brain damage. This truth works on many levels.<p><a href="https://www.reddit.com/r/AskReddit/comments/4lianf/whats_a_dead_giveaway_that_someone_has_come_from/" rel="nofollow">https://www.reddit.com/r/AskReddit/comments/4lianf/whats_a_d...</a><p>Read through that reddit thread, can you relate ? Empathy certainly is a function of social distance. The very rich are very distant, have very little empathy, and are therefore mentally ill.