It's interesting what words are not in the article. Words like heir, inheritance, profit, interest, rentier. The word rent is there, but assumed as a tenant, not landlord.
I assume the Forbes 400 richest are in the 1%. How did the Koch brothers get their $100 billion? Where did the Waltons get their $140 billion? Where did the Mars family get their $75 billion? The article makes it sound like these people became rich when they decided whether or not to go to law school.
It's important to note how in the US how FIRE (Finance, Insurance, Real Estate) and health care affect the economy. But a lot of what puts people at the top is at which hospital they took their first breath.
The 1% is still a large number of people, and the people you refer to are the .1% or fewer. That's not to say that their methods of wealth accumulation aren't worth discussing, but apparently that wasn't the group that this article was focused on.
But even within the 1%, the income distribution is highly skewed, i.e. those 400 people are responsible for a very sizable total of the overall wealth within the 1%.
Income distribution and wealth distribution are not the same. It is perfectly possible to earn $500k/year (which would put you in the top 1% of income distribution that this article is talking about) and spend every penny of it, leaving you at the end of the year with the same amount of wealth that you had at the start of the year.
Similarly, it is possible to earn $200k/year (not in the top 1% for income) and save very aggressively.
"With a combined worth of $2.34 trillion, the Forbes 400 own more wealth than the bottom 61 percent of the country combined, a staggering 194 million people. The median American family has a net worth of $81,000. The Forbes 400 own more wealth than 36 million of these typical American families."
According to that article, the 1% are worth around $26 trillion. So to answer the Muffin's question, looks like the 400 have just over 10% of the 1%er wealth.
The quote says, "... the bottom 61 percent of the country combined, a staggering 194 million people." It's not comparing the number to the world's population.
Not much of a response. The interview treated Koch influence on politics as a forgone conclusion. (Because it is and Charles didn't seem to argue otherwise).
The point of the interview was to learn about his personal philosophy. Something of which wouldn't be of much interest were it not for his huge amount of influence (that, again, no one is arguing).
As for the final thrust of this response, on how Koch helped stopped a supreme Court nominee, it's likely nothing nefarious. It would be the same as any citizen. Contact your congress people. Difference is, they are going to really listen to the billionaire donating money to their campaign a bit more than your average Joe.
It's legal because of the Citizens United Supreme Court decision, but I hope that, before the Koch brothers pass away, we'll see a constitutional amendment overturning this egregious decision.
The idea that money = speech is toxic to democracy.
I don't see how to tackle the fundamental difficulty of regulating "soft money". We can surely do better than McCain-Feingold, which leaves the "call Senator X and tell him it makes you sad when he kicks puppies" loophole. However, it's going to be difficult at best to have meaningful legislation against "awareness" ads or even more abstract culture war stuff like what the NRA has produced lately. I think we have less of a legislative problem than a culture problem.
So, what makes newspaper exempt from this? They can publish opinion pieces on who to support, and they are spending a lot of money in producing newspaper. Surely that _should_ violate McCain-Feingold? Except it didn't, because there was a special exemption for media. What makes that fair?
Let's say I'm an individual, and I support Santa Claus for president. But I'm also a famous personality, and I spend a million dollars to put on a free speaking tour where I support Santa Claus for president. Aren't I using money to support my speech? I'm not just using my mouth, I'm using my money to pursue my first amendment rights.
It's never been illegal in the US to support an issue to the fullest extent of your financial capabilities. You can make statements into a public forum with your every last dollar.
It had been, for decades, illegal for one person to support one specific candidate/campaign. It was never quite enforced such that it made a huge difference (shell companies, PACs, etc make it easy to skirt rules and funnel campaign support) and candidates get progressively better at asking for "support" without actually making the tit-for-tat which moves it from the "lobbying" arena to "bribery".
Also, IIRC that ruling established the precedent needed for SuperPACs and moved the individual contribution threshold.
Only numbers 8 through 10 are what any reasonable person might consider even remotely "self made" and lumping "middle-class background" and "upper-class background" into 8 (so that Mark Zuckerberg could be considered 8 instead of 7) is a stretch.
Any credible list of "self-made this" or "successful entrepreneur that" should include a disclosure of parental wealth.
Also, Mark Zuckerberg went to high school at Phillips Exeter. Their current tuition is $39,000 per year for day students, and $50,000 for boarders, of which he was one (although he went during 1999 equivalent tuitions). On the 1-10 self-made scale they have, with 1 being inheritance and 10 being self-made, he ranks an 8.
So that is the bearing for this scale they made to keep in mind - the 8 of 10 toward "self-made" are the type of people who were going to $50,000 a year high schools.
I went to boarding school and came from a family of two church musicians. Some of my classmates came from wealthy families, others came from very modest backgrounds.
Raise your hand if you think Mark Zuckerberg got need-based financial aid. Hint: Both parents were doctors. Him being ranked at the same "self-made level" as a middle class kid that went to a state school is ludicrous.
That's true, though I like that it presents "self-made" as a scale rather than something binary. It allows acknowledging differences that would have been glossed over on a binary scale.
There are big differences between how Laurene Jobs (1), Charles Koch (5), Bill Gates (8) and Oprah Winfrey (10) became as wealthy as they are, and it reflects that.
The fact that Bill Gates and Mark Zuckerberg aren't 5 or lower means this scale is not credible. Both of these individuals had access to substantial capital and social connections, well above any meaningful definition of "middle-class", to jumpstart their businesses.
I don't think that's entirely fair - let's say your parents made $500,000 a year; if you made 90 billion, wouldn't that still be self-made? Sure, it's not as self-made as Carnegie or Rockefeller who would have been 10/10 as child-laborers turned wealthiest men in the world, but it's not exactly Trump or JP Morgan Jr., either.
When your parents are among the top 1% in the country (and, presumably, act as a risk-cushion in case you were to fail), it is difficult for me to buy that you are self-made.
Everything you say is absolutely right about the very richest 0.01% -- unearned rents and inheritances are a big problem. But there are very few such people, and what really drives the top-line inequality numbers is the redistribution of income upward to the 5% or the 1%.
Presuming you’re not trolling: take the implication of what you’re saying to it’s natural conclusion (no inheritance tax, no property tax, etc) and explain to me how we don’t end up with a feudal society in a generation or four?
In my view, there should be some correlation between hard work, smarts and financial outcome that isn’t entirely determined at birth.
A rhetorical question isn't a troll. If someone is a troll, just flag them.
> explain to me how we don’t end up with a feudal society in a generation or four
As wealthy people die, they give their money to foundations and split it among their progeny and spouses. Some of them, it turns out, aren't great with money. The richest of the rich are no longer Carnegie, Rockefeller, or Weyerhäuser. A few generations out and the fortune is already spreading out naturally. Sure, some grandchildren are regional socialites and minor celebrities, but we're not exactly worried about which politicians Paris Hilton is palling around with.
I guess I don’t understand why smart people, like you seem to be, would want to design a system that inherently rewards nepotism instead of one that rewards innovation in the present.
Your system of “natural” fortune spreading was the default for all time until the modern welfare state came along. That’s what you want to return to? Hope that stupidity somehow spreads wealth the best?
Some of these people would've called it quits a long time ago though, if not for the ability of their offspring to have it (much) better than they do. Nothing wrong with that.
Some people are born with above average intelligence, or above average physical skills. Nothing wrong with that either.
Why shouldn't people be allowed to inherit significant fortunes?
Because fortune on it's own does nothing.
(As opposed to investment in manufacturing or research.) The result is stagflation and stagnation in long term.
Generally the tax is not supposed to be on inheritance but on unreasonably frozen money. Inheritance tax is a work around.
Skills when applied are supposed to be net positive for society.
Additionally with money comes influence, media and politics. Stagnation in those areas is risky too.
Where are the Scrooge McDuck money bins? The money is invested. Or it's spent and someone else has it.
Inheritance tax is a double tax. The money was already subject to income tax, capital gains, property tax, sales tax, etc. If the problem is that capital earnings accumulate faster than labor earnings, then we should just address that problem.
Property isn't about what it does for the rest of society. Property is a human right. Taxes generally are on voluntary actions for a reason. You choose to purchase something, own taxable property, emit carbon, etc. People don't choose to die, so it's an involuntary tax, something we should think about.
Lots of people don't care about the ethical implications for personal reasons, I guess, and that's their prerogative. But there's no moral high ground on not caring about the ethics of property rights.
There are plenty of heirs that continue to participate in business. Taking their money away isn't going change much, aside from taking their money away.
You act as if all inherited wealth is just sitting in bank accounts. Some is, some isn't, some heirs are active in and good at business, others aren't.
It is not doing as much as it should. What it does is bring profits to financiers who control it.
This as opposed to direct investment (VC or starting new enterprises). even having a controlling share in a company is not exactly the same. Working on a business is not enough of most of the money gets frozen in fixed assets or rented away to bankers.
Honestly, VC is probably one of the least attractive investment opportunities around. It's a crapshoot, very high risk, and the returns (if you even get any) are low.
It's a lot easier making money through Private Equity deals.
If I had $100m, I wouldn't be putting it in a VC fund. Not saying I wouldn't make direct investments, but I would only make those on the assumption the money is gone.
I don't think anyone makes investments in the stock market and private equity on the assumption the money is gone.
Exactly. Everyone wants to get rich at little risk. This means putting money into blue chips with their huge inefficient bureaucracies and fixed assets.
Moreover the real unasked question is, how the company benefits the society if at all.
Capitalism really promotes amoral and immoral investing. Biggest returns for lowest cost and risk to investors.
The democratic urge to use the state for preventing the transfer of wealth between generation is sickening. It shows neither a respect for property nor liberty.
Those are two different subjects, then. There is inherited money and generated money. If we think it's easy to generate money the wrong way, then there's not much point in lambasting inheritances. That's actually a legitimate way to get money, at least compared to using (unfair) power and information imbalances to always give yourself an (unfair) sweet deal.
Sam Walton's employees would not be able to generate that fortune on their own. You seem to underestimate the role of leadership, vision and other business skills in creating a company. Not to mention that many of those employees probably also made their own small fortunes along the way.
Also, you make it sound like Sam Walton somehow has a debt of gratitude to a society for it allowing him to get rich. I think that no such debt ever exists: in exchange for those billions of dollars Walton made society has already gotten something equally valuable in return, i.e. Wal-Mart mall in every city, providing cheap and easy access to all kinds of consumer goods. That's how business works: making money by providing services that society finds valuable.
The fact that leadership is necessary (which I do not deny) does not imply that some particular share of the resulting surplus value should go to said leadership. The share of surplus value captured by capital is something we get to decide as a society, and the idea that "as much as capital can manage to capture" is a natural and just share is a pervasive and pernicious lie.
But of course it implies exactly that. People should be rewarded for their skills and their contribution to the success of the company, which means that lion's share of profits goes to those on top. And no, we as a society don't get to decide that, because companies are privately owned by individuals, not by society as whole. Why should society decide how should I spend my money?
Yes, reward them for their skills and work - not what they can capture of someone else’s hard work. It is an article of faith in some quarters that someone who manages to put themselves in a position where they can skim the labor from employees or renters somehow means they are a wealth creator. Usually though, these “wealth creators” are just capturing wealth generated by someone else.
Funny to see you people discussing petty caviar-allowance inequality so fervently within your own arbitrary Western borders yet never giving much mindshare to the rampant "developing" country exploitation that is the very source of your general prosperity.
I'm a citizen of third-world country that is being sucked dry by the West for its resources and getting its people shackled to the ground by direct support for the ruling dictatorial regime.
I see what you mean and it is bad. Until we have nations merge however, there's nothing we can do even when the system is working at it's theoretical perfection. Our people live in demarcated areas with separate rule sets.
When it comes to the rich vs poor in Western society we are ostensibly equal and many people are upset because reality doesn't reflect that. When it comes to the US vs say Burkino Faso, what would the correct course of action be? There's exploitative actions being taken by individuals and companies against developing nations that could stop, but then what happens? I don't think sweatshops are good but no western company is going to source goods from them if they aren't cheap as the quality isn't the same. We could try to help other nations get to the same quality of life, but many have made it explicitly clear that they don't want interference from foreign powers.
Do we act paternalistic and do what we think is right for other people which removes their autonomy? Do we avoid that and avoid exploiting them, but leave them in the dust because they have nothing we want or need if they are using regulation and price arbitrage to gain business? Do we continue as we currently do which sends money into these countries which should help them develop, but tends to be spread unevenly and causes a lot of human despair?
I can't tell what the right answer is, I can't tell if there even is a right answer
1. Exploitative actions taken by individuals and companies are nothing compared to the ones taken by your governments. Europe is running cheap education improvement programs here as we speak, and other such show-tell crap, but they also sign exploitative deals and house corrupt blood money of my dictator in your banking systems - giving him free-pass to do as he likes, as long as the deals are signed and people are silenced. It's realpolitik all the way down.
2. We do want interference, interference against your current interference.
3. Just let us establish our own instutitions, stop helping and making deals with criminals, stop putting on the mask of being humanitarian and then exploiting the living shit out of us.
4. Work visas - please make them available for the skilled and offer us some channel for escape. We are majorly landlocked because our passports don't even grant us a tourist visas to anywhere other than bumhole Somalia or Afghanistan.
I could go on for ages but you people have so vastly different view on these issues I don't even feel like it would be worth my time.
I'm European and, like almost all, don't want my government making deals with dictators. If there's some press coverage about the things you say at least we can make enough noise that it gets the attention of politicians.
Regarding 4, I'm curious why it's in this list with the others. It certainly makes life better for the individual, but doesn't losing all its top talent to foreign countries hurt developing countries?
As I said, vastly different views, to the point of being annoying.
We, as a country, are not in the business of "country-building" but rather survival and that of avoiding pain. Our government doesn't need talented individuals - they just need brainwashed populace and stability for their power. Thinkers are direct infraction to the system and usually are not tolareted.
Also, what do you expect disarray of talented individuals with no power to concentrate power to do alone in a society that doesn't recognize nor like them?
I think the "casual game theory" of (4) is, if you want to improve those places, let them have work visas. There are people in certain countries who can be empowered through work visas to pursue their calling (pastors in churches, teaching mathematics in universities, sizing contact lenses of the rich and idle or whatever). Those who choose not to apply for the visas will maybe try something at home, knowing they can get that work visa if what they try doesn't work. And maybe in the trying they will find a different calling than they thought. In succeeding at the things they try at home they might lower the need for work visas.
Yea, you shouldn't be writing it. It's generalized criticism of an entire part of the world.
Your preposterous, jingoistic, anti-Western sentiment has no place in intelligent discussions. You don't even identify what country you are from or if you were even born/raised there.
And also, from your other comments - you live in the West. The very prosperity you are enjoying you are condemning that others have it around you. You are a hypocrite and reading further statements from you is useless.
@leashless has a very good talk about this. His thesis is basically that even when Westerners talk about economic collapse they are talking about living in the same conditions that the people that grow your coffee currently live in, and refers to "militarized islands of prosperity" that came out colonialism, etc. A great talk.
What resources are being sucked at what price per unit resource, and what amount of that price is kept in-country for investment and for paying the laborers?
Is your argument that "the West" isn't paying enough? Or that the money being paid isn't making its ways into the right pockets, or, ... what?
EDIT: To be clear ... I simply don't understand your summary of the complex phenomenon of "being sucked by the West".
Is inequality a feature or a bug of capitalism? Seems like the general thinking is that its a feature in-so-much as it encourages innovation, entrepreneurship, etc. It seems like it becomes a bug when it reaches a level in which it creates a positive feedback loop of more inequality.
As with anything, i've noticed the discussion is really about how much, not should it exist at all. Almost every debate in American politics is painted as black and white, whereas the actual debate is where we fall on a spectrum. It seems like everyone disagrees so much, but really I think we are haggling over a slight deviation to the right or to the left and because we have to talk about everything in such black and white terms, the real discussion gets lost. We all agree on much more than we disagree on.
"Human beings are born with different capacities. If they are free, they are not equal. And if they are equal, they are not free." -- Aleksandr Solzhenitsyn
It's crazy to me how both capitalist authoritarians and state communist authoritarians will argue that "equal" means "the same". Communists argue this in order to convince you that in order to be equal you have to be equally subservient to the state. Capitalists will argue this to convince you that you can never expect equality since that would mean state communism.
Except all (positive) outcomes are opportunities in another context. It's a continuous process.
The most obvious place to see this is looking at parents' economic outcomes versus their kids' development opportunities, but it doesn't even have to be generational.
If you have a sack of money (outcome), you automatically have many more options (opportunity) for creating a larger stack of money. Imagine a fair and random gambling game: Insolvent players are removed from the game, so the player with the deepest pockets at the beginning has the best opportunity of winning everything.
Yes, and the big disconnect seems to be an inability to recognize that access to health care, education, child care, and even a poverty safety net are fantastic ways to give people opportunity. I really think the basic philosophical divides between conservative and liberal America is not as great as it seems- people are just really easily distracted by a media and political system that profits tremendously by making people hate and fear each other.
Respectfully, did you read the article? The article argues that it is not capitalism -- competition in a free market -- driving the gap between the top 1% and the rest. Rather it is the efforts on the part of the 1% to monopolize, to drive out competition and protect their position that is the cause.
Which is actually the typical end state of real capitalism as opposed to imaginary capitalist models. Cartel (explicit or implicit collusion) or monopoly. This is because for any single agent cooperation is beneficial even if it is not for the efficiency of the system as a whole. Bigger agents have more potential there. (Purchase removes an agent and competition from the system.) Agents collude on each transaction when they probe the market for expected price. Including for services and labour.
The other systems have this bug as well. Somme people have an intense drive to accumulate power, no matter the cost to others, or rationalize the cost away. Worst are those of them with bad ideas or totally irresponsible.
It's a feature, not of capitalism, but of human interactions in general. (It should not have escaped our attention that any time an "alternative to capitalism" is tried it inevitably winds up with wealth and power even more heavily concentrated, this time in the hands of the people whose job it was to ensure that wealth and power were shared fairly.)
And, to a large extent, of animals. I suppose there are some animal species where all members are more or less equal, but they're probably mostly solitary animals which rarely interact with each other. In social species, massive inequalities, particularly between males, are the norm.
It's normal for articles like this to conflate income and wealth whenever it's convenient to whatever point they're trying to make.
For example, one might see an article complaining that some percentage of wealthy people didn't pay income tax last year. But an income tax is a tax on income, not wealth, and it's commonplace for wealthy people to have a bad year and lose money.
The wording also (deliberately?) suggests that "they" in 1980 is the same as "they" in 2014, which of course is far afield of the truth.
Americans enter and fall out of the 1% all the time. Some significant fraction of 1%'ers are there for the one and only year they sell their home, for example.
"Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category."
Is this change in distribution over time being measured using income tax returns? In the 1950s the highest marginal rate was about 90%, and there were many loopholes and special rules. How do we know those rich people back then were accurately declaring income above $250,000?
I'm surprised the words "capital gains" are not mentioned at all in the article. It's already well known that the richest of the 1% did not get there purely through a high wage/salary.
Some might blame loose monetary policy for providing easy money for the 1% in the USA (if you can borrow money and speculate for free, why not, after all), but if that's the case Japan really stands out; they've been QE'ing since their '80s bubble popped and they've managed to keep a relatively good Gini coefficient relative to the rest of the developed world (they're more egalitarian than their East Asian peers). You'd think that having two lost decades with your economy stuck in neutral, the Japanese 1% would just leave their country in the dust.
Whatever the reason was, that a family or people where able to accumulate that much wealth: I believe, there should be an upper limit.
It is not okay for people like Bill Gates (i do think he is a good person) or Mark Zuckerberg to have that much power on such a small planet.
It is awesome that someone like Bill Gates spends tons of money for research etc. but he should not be able to make such huge decisions in a modern democratic society.
There is a good reason to allow people to accumulate wealth. Why shouldn't someone be allowed to not spend all his/her money for alcohol, party and cars or whatever and instead put the money into real estate for there children. But something like 5-10 Million per Child is still super reasonable.
Perhaps that leads the way to a more fair feature where it is not necessary for anyone anymore to horde money for the familiy heritage.
Seems like 5 richest US citizens own less than 0,5% of all US assets.
I'd be lot more worried about organizations. JP Morgan chase and General Electric are not exactly democratic either. Both are way richer than Gates. And while church of latter day saints is not quite in the same league, it's incredibly wealthy and not at all democratic.
If you assume that Gates foundation gets 5% profits and distributes that, then it can share about 2,1 billion/year. American Red Cross gets to distribute 2,7 billion/year. Who does their homework better, Bill gates or the average guy who donates to Red Cross? And yet Red Cross is still not exactly democratic.
It doesn't seem very straight forward how you should count assets or income and deduct the monetary power from there.
I think at the end of the day it approaches dystopian levels of "what can we do?" against these people if they were to behave in ways that the majority of society deems irresponsible.
If Gate's wanted to he could cause immense harm in the country.
It can be argued that some like the Koch's and Mercer's are doing that harm: depending on your political views.
What could be done? These people are literally untouchable. I think the Mercer's would be untouchable even by the US government, if they played their hands in a smart way.
...Unless we'd want to send the army after them, they could just hide on their yachts :)
Anyway, there's no realistic revolution you can have against these people, is my point. If that fear doesn't exist, well, they can do what they want, yes?
I know that what keeps my worst urges "in check" is because it is not healthy for me to act on those actions.
I'm talking about stuff like "pissing off my prior employer" and "saying fuck you to my boss."
I do not know what kind of impulses the .01% have ... I am afraid what I may say or do to that old employer's company if I didn't have to worry about repercussions!
Yeah, but what should you fear from organizations? It's easy to scrutinize an individual. It's lot more difficult to scrutinize an organization. It's actually difficult to even stay interested in them.
I'd claim that if Gates would have wanted to cause maximum harm, he would not have earned millions of dollars first. Just found an organization and go evil. It's more straight forward, less suspicious and more effective. Just look at Scientology.
I think I have to learn this attitude. That every problem is in fact real, but problems are not equal in relevance. That's respecting people and their issues, while staying sane.
You should pick your battles. And the society should pick their battles. That way you get to have the cake and eat it too.
>Whatever the reason was, that a family or people where able to accumulate that much wealth: I believe, there should be an upper limit.
And what should that upper limit be? Who decides what it is, and how do we ensure that people powerful enough to get close to that limit don't simply play financial games to skirt these rules?
If the source of my wealth is unrealized capital coming from ownership of a company I founded, what am I supposed to do if my wealth nears the cap? What is to prevent bad actors from inflating my stock price to force me to sell? If I hold my companies privately, who decides what they are worth and by proxy how much wealth I possess?
I don't know. Somebody needs to make those huge decisions, and it is not always clear if that should be by democratic means (here is to you, Trump and Brexit).
Trump and Brexit are the result of people with too much money making terrible decisions for the rest of us. They're not evidence that rich people should have more power.
But incidentally, someone's ability to make a lot of money (or worse: inherit it) doesn't imply that they have any preferential ability to spend it in a way that benefits society. And when someone has the unchecked power to spend massive sums of money on themselves in ridiculous and frivolous ways, it's pretty clear that they have too much power. Because whoever should be making those decisions should certainly not be doing that.
Bill Gates rented a yacht for $5M/week. How is this not a clear waste? How much suffering could have been avoided at that cost? At least put it in some kind of public trust where such behavior can be properly considered corruption.
> Bill Gates rented a yacht for $5M/week. How is this not a clear waste?
Those $5M don't just get lit on fire. They transfer to some other set of people who can then decide what to do with it, and then onto some other set of people. Maybe the yacht's owner donates all proceeds to feed starving children.
It is still a waste in the sense that productive people spent their time building and maintaining a boat for the benefit of a few rich guys. It would represent reduced waste if the money was instead spent to hire those productive people to build infrastructure for their own communities.
Not trying to argue that luxury goods are pure evil, but there is a degree of selfishness in having luxury goods for yourself when there are people who lack the basics.
So you advocate firing all the hard working folks who designed, built, maintain, repair, clean, and operate that boat, and take care of the passengers? They they too will lack the basics, and the money you just protected from "waste" will need to be used to provide for them.
I think you get that wrong. Trump and Brexit are the direct result of democratic decisions in countries with a long history of democracy. Denying that isn't helping.
Yes, democratic decisions resulting from massive propaganda campaigns, funded by some extremely wealthy personalities. Obviously the problem here is democracy, not the very few overtly corrupt and overly powerful people undermining it.
And these overtly corrupt and overly powerful people exist within old democracies. You might have a nice and naive imagination of what democracy could be, but you shouldn't deny what it is RIGHT NOW.
"Workers at the 90th percentile of the income distribution for professionals make 3.5 times the earnings of the typical (median) worker in all occupations in the United States. Only Mexico and Israel, which have very high inequality, compensate professionals so disproportionately. In Switzerland, the Netherlands, Finland and Denmark, the ratio is about 2 to 1."
It's hard to find comparable numbers, but aren't the median wages higher in all those countries?
The article vaguely makes it sound like it's just a matter of paying highly-paid professionals less, but would that lift the bottom or just concentrate the money to an even thinner slice of the population?
> It's hard to find comparable numbers, but aren't the median wages higher in all those countries?
Last I looked no; the bottom 30% is where Denmark does better than the US. The median wages are similar, maybe slightly higher in the US.
> The article vaguely makes it sound like it's just a matter of paying highly-paid professionals less, but would that lift the bottom or just concentrate the money to an even thinner slice of the population?
Good question. Probably you have to hit the super rich 0.001% with massive taxes, or an aggressive estate tax (preventing wealth from accumulating across generations).
But even with that, good regulation that facilitates competition is probably necessary. I wouldn't be surprised if that makes a bigger splash than the top 0.001%.
Note: there is good and bad regulation. Denmark is heavily regulated, but a lot of it is efficient and fosters competition.
It's necessary to be careful with such articles. The correct figures to use should be "total employee compensation", which includes the value of employee benefits. These average about 30% on top of salary in the US.
>Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition.
>The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives.
Not a surprising result at all when you consider that the bottom of the top 1% has an income of high 6 figures to somewhat above $1M. That number is something very achievable for the most successful "professionals" -- doctors, lawyers, bankers (not HF managers), traders, and there are a lot of these people out there!
It's a natural consequence that if you look for a large number of people earning $1M, you'll end up with highly successful "professionals" rather than outlier level wealth from business ownership, which is much more rare.
First, you're assuming that all these "professionals" are not also business owners, which is often false; doctors and lawyers earning enough to put them in the top 1% are most likely owners of or partners in a private practice.
Second, if we restrict "business ownership" to those who are not "professionals", the fact that it is rare is a consequence of regulation, not an independent fact. Regulatory barriers don't just benefit "professionals" who have the requisite qualifications; they also hamstring people trying to start businesses not in those particular "professional" sectors.
So the result is only "not surprising" if you take the level of regulation we have now for granted.
What I find interesting is that it is in the 'professions'.
I would have thought it was massively wealthy equity owners/holders, hedge fund managers etc..
But yes - if we are paying doctors $1M/year then this will happen.
At a nearby hospital in Canada, technology improvements have allowed doctors to diagnose using x-rays a lot faster ... but the Unions have kept pay scale the same. The doctor at the Orangevill hospital earns over a million dollars a year, and he works from home. Swipe, swipe, swipe, swipe - done.
Faster tech = more money for the doctor. Savings not passed on to taxpayers.
Innovators thought they were improving healthcare, but they really were throwing more surpluses onto the value chain, to be captured by those with the most power: doctors, possibly drug companies.
One would think a private system would be more efficient ... but it's probably just as bad in the US.
> One would think a private system would be more efficient ... but it's probably just as bad in the US.
The US health care system is not a "private system". It's a mishmash of private and public which combines the worst features of both. The reason we have it in the US is that during WW II, the government controlled wages, so businesses trying to compete for employees had to offer something else as an incentive, and they mainly picked health care benefits. Then, when the war was over and the government stopped controlling wages, instead of going back to competing on wages and dropping employer-provided health benefits, the system of employer-provided health benefits kept on growing. Which now meant it had to be regulated by the government, and so on, and so on...
Let's not forget that health care is a great point of leverage for employers, too. Because often, your spouse is also insured on that same plan, and leaving a job is not palatable if either one is dealing with significant illness.
If you wanted to create a legal equivalent of indentured servitude, company healthcare plus high healthcare cost would be a great solution. I don't think that was the plan, but it sure works out that way.
Employer provided health care stuck around because it was paid for with pre-tax dollars, while buying it individually was with post-tax dollars. This hugely incentivizes employer paid plans.
It has become so entrenched it has more or less morphed into a "right" that employers should pay for it.
> The doctor at the Orangevill hospital earns over a million dollars a year, and he works from home. Swipe, swipe, swipe, swipe - done.
What kind of doctor is this, radiologist? I'm not aware of any mobile apps in use clinically, but a radiologist's job is to look at images on a computer screen. It doesn't matter where they do it from. Very little of it is automated.
> One would think a private system would be more efficient ... but it's probably just as bad in the US.
Canada is one of three countries in the world in which the government has a monopoly on healthcare payment. The other two are Cuba and North Korea.
The United States has the least efficient healthcare system in the G20. Canada's is second least efficient. All of the others have two tier systems.
TLDR: the public secret is that if you take away the top 0.01% who started businesses like Amazon, Microsoft, Google, etc, the big driver of inequality is not capitalism/economy/...
The big driver of inequality ( 0.01% to 1% ) is ... government regulation. Directly, as in the government hires tens of thousands of highly paid people. And, more offensive at least to me, government regulation giving massive advantages to specific businesses (most recent "wtf" example I think would be equifax, with the government rallying behind them and (worst of all) effectively forcing large banks to buy from them). Businesses pushed like this by governments include Boeing, Oil companies, Tesla, SpaceX, ... But this is only the very upper layer. There is a huge "second" layer that includes large parts of the legal space, the health care space, the education space, where hundreds of thousands of people make $400k+ per year because ... well because the government says so.
Which of course very much opposes most of the viewpoints taken on this site. Given that this is what gives over half of the 1% owes their wealth directly or indirectly to taxes (or in the case of things like equifax "hidden taxes". Taxes, as in government forces you to pay, but you pay in your mortgage bill, you pay in charges on your bank account, etc ...) ... there is a strong case to be made that more taxes ... will increase inequality. At least as long as the government doesn't slim down a LOT.
This is such an interesting article, attempting to answer one of the biggest questions of the 21st century in one fell swoop. However, I'm not sure all of the reasoning and analysis holds up. For example, software engineers with salaries over 390K are far from rare in the US, and Switzerland has both large numbers of bankers per capita and private doctors with incredibly high incomes.
I assume the Forbes 400 richest are in the 1%. How did the Koch brothers get their $100 billion? Where did the Waltons get their $140 billion? Where did the Mars family get their $75 billion? The article makes it sound like these people became rich when they decided whether or not to go to law school.
It's important to note how in the US how FIRE (Finance, Insurance, Real Estate) and health care affect the economy. But a lot of what puts people at the top is at which hospital they took their first breath.