Are you sure about that? Sure, not the top elite, but there's still a significant gap between upper middle class and lower in for example Sweden, which I believe is one of the more equal countries. FAANG level salaries would significantly widen that gap.
Agree with this take, being in the upper 10% of salaries in Sweden gave me perspective on how wide of a gap there is between myself, some friends working other office jobs (accountants, architects) and some in more blue collar work. I don't feel like I deserve a much higher salary than what I have for this society, I'll be honest and say that sometimes I feel ashamed of earning so much more than some friends given that my job isn't really that important for society.
Oh yes, familiar. I'm in Sweden, I definitely make good money by Swedish standards, and also have excellent benefits through work. This is, frankly, not proportionate to the value I provide to society. I work on some nice software that certainly adds convenience to the lives of many people in multiple countries. But it's by no means critical, and I generate less value for society than anyone working in healthcare, than competent teachers, and than many other workers who make significantly less.
Plus my job is safer and more comfortable than many others. I sit in my office, I think and I type. Unlike the emergency services, I don't risk my life or health, nor does anyone's life depend on my work. Unlike construction workers, assembly line operators and many others, my office environment is free of hazards.
Your salary is not about value for society, it's about value for your company.
Software as they say is eating the world. The software you write replaces tons of manual processes generally. Finally it come down to supply and demand. If lots of people know how to program (well) the salary goes down.
You should never feel embarrassed by making a good wage. If you wish, you can always use that wealth to give back to society and your community.
Being from the Netherlands, I recognize this shame. High positions in the workforce are often shamed, talked about as "easy money", as if it's inherently corrupt, people don't acknowledge their risks and responsibilities. Whether that warrants those high salaries or not, I'm not commenting on that debate. Public functions or private organizations in which the government invests, must cap salaries at what the prime minister makes, which is "only" around 200k euros, a fraction of what american CEOs make. This includes public television talent; imagine your US network television nightly news anchors being capped at 200k. (I understand those are private, just making the comparison because they're the highest watched shows in either nation. Private television in the Netherlands is not subject to the cap, but also has not the highest ratings.)
Now that I live in the USA, I've never heard anyone talk like that about a successful CEO. Envy yes, aspiration too, admiration yes.
And yet Netherlands has the highest wealth inequality in the world (https://en.wikipedia.org/wiki/List_of_countries_by_wealth_eq...) so one could interpret this cap and the cultural attitude you described as pretty much a scam by the capital owning class to maximize their returns.
Yep. I also never understood why Europeans focus so much on income inequality ("OMG, programmers and managers get paid too much, tax them more!") and not wealth inequality where old, established families can keep rolling their wealth from generation to generation nearly tax-free and see their assets apreciate substantially while the working class bares the brunt of taxation and are getting squeezed every year more and more by wage stagnation and inflating real-estate prices.
It's a real mystery to me why people aren't up in arms about wealth inequality instead but I guess as long as the working class is provided with a minimum of comfort (food, shelter, healthcare, education, sex) and are kept busy with the ratrace for the next big career move during the day and with an endless stream of available entertainment and consumerism in the evening, they're too busy to notice, care or bother to do anything about it.
Yes exactly. People get up in arms about things they are told to get up in arms about. Many people either don't know how much of Europe's wealth is concentrated in old families, or don't care because they're not told to care.
For example, BMW. It is simply ugh. At least with US companies you know they'll do right by shareholders for better or for worse. If you invest in a German company you might as well be pissing your money away because they'll always do what's right for the heirs.
> It's a real mystery to me why people aren't up in arms about wealth inequality
You have quite a few Dutch political parties talking about this, PVDA, The green party, the socialist party etc. The socialist party (SP) actually suggests giving all employees shares in the companies they work for. But these left wing parties, while not unpopular, have the whole ultra capitalist system working agaisnt them. What can the SP do if their legislation simply causes business and the rich move to another company? It's an impossible battle. You need international cooperation for it to work, and there is no such cooperation.
That's one of the saddest things about extremism. People get disenfranchised by their existing leaders. Then they are desperate for new political blood because they don't understand the underlying problems. Clueless people who promise exactly what you want to hear start leading parties and fight the wrong battle.
Income inequality is driven by wealth inequality. The wealthiest people don't get compensated in dollars, they get compensated in equity and if that equity is going up, companies can afford to pay more to their executives.
Wealth inequality is driven by domestic economic demand shifting away. It is either concentrating in a few economic hot spots (urbanization), moving to other countries (globalization) and through central bank money that sits around in asset markets. There are probably lots of other factors but they are increasingly less impactful.
Urbanization is not necessarily a bad thing if there is enough housing and people can move to the new location, except not enough housing is built and existing residents hate the new arrivals.
Globalization is not necessarily a bad thing if it also drives foreign demand. Turns out, the Chinese really love buying foreign real estate but nobody is building the luxury apartments they want. So they have to buy less luxurious housing and drive up prices in the middle and affordable segment of the housing market.
Central bank money is not necessarily a bad thing if the money is used effectively. The government can help the economy by providing cheaper funding to companies during bad years when there is lots of work to be done. But what if the economy isn't in a bad year and merely refusing to grow? It means that there is already enough funding but not enough demand for services and workers. In that case you also have to apply the government stimulus on the demand side as well. But that's not what central banks do. They can't do it by definition because that's not their responsibility. The central banks are separated from the rest of government because the government can just abuse it's money printing powers to fund endless debt and cause hyperinflation. However, when it's the central bank that is doing the endless printing people don't seem to care, somehow most economists care even less and will assert that even moderate demand side stimulus will eventually lead to the slippery slope of hyperinflation.
Ultimately history will just repeat. A war is a quick and easy way to get rid of excess workers. It is also a quick and easy way to provide demand side stimulus in a political environment where more sensible options are considered impossible. It's like political capital is like money. Once you have run out you are going to be extremely desperate and are willing to do anything no matter how stupid. Running out of political capital is the reason why Keynesian gold digging is even a thing in the first place. All good options have been exhausted, anything that follows is batshit insane but it is also the only thing that can be done.
Well taxes on the rich are not low in NL, so it's not a scam. The current asset bubble just distorted everything in a bad way, and finding new taxes on wealth is hard since wealth flees very easily.
But I agree wealth inequality should be talked about more than income inequality.
British, for contrast. I attribute most of my success to luck. I was born with aptitudes, in a stable family, white male. I'm definitely not worth what I'm paid from a societal point of view. I find the idea of being multiple times the median wage for chilling in front of a computer solving puzzles bizarre.
The idea of talking about money is slightly awkward anyway, and I guess I'd say embarrassed rather than ashamed? Different culture and motivation, but a datapoint for you :)
The wealth inequality gini coefficient is not very useful and misleading. You could have a country where people choose to take on debt when they are young, and all of them end up with the same higher level of wealth later in life. This would be a very equal society, but could have a very high wealth inequality gini coefficient. To actually judge the wealth inequality of a society the analysis should be done cross-sectionally, comparing within age cohorts. [https://www.sv.uio.no/esop/english/publications/articles/201...]
Yes, I am quite sure. The typical FAANG developer is not earning $200k base and $200k RSUs per year. It's more like $130k - $180k and maybe $80k to $150k RSU. You have to be pretty senior to reach top 5% income at FAANG in the US--it isn't as common as HN would have you believe.
There's a gap between FAANG and, say, a janitor's salary; that's just not debatable. The gap is much smaller than between Mr. FAANG and Mr. Top 5%, and for all intents and purposes Mr. FAANG is Mr. Janitor when compared to Mr. Top 1%. That some FAANG employees are in the top 1% doesn't negate this.
I guess it all comes down to which unequality we're talking about. Sure, if does not significantly affect the difference between the very top and the rest. But there are a lot of differences between different brackets from the ones at the bottom up to 99% too.
Those differences between the lower brackets exist more because of the power those in the top have. Raising incomes of those in the lower brackets might increase the gaps between some of them: but those gaps are much smaller than between any of them and the top.
They do? How can you be so sure there are causation between the two? Lessen the gap between the 99% seems to affect the general consensus (since 99% share a more similar type of life and experience status /money wise), making it easier to change the rules for the top 1%.
To me this feels like falling into perfect is the enemy of great trap. Just because this topic might be affecting you (assuming you're a software dev), and because it doesn't affect the top 1%, doesn't make it smart to widen the gap between the 99%.
Not really true. Being a dev in sweden does not put you in the mid-upper class (lawyers, doctors, footballers, celebrieties, bankers, management consulting)
In Ireland, software developers with similar levels of experience earn significantly more than doctors, lawyers, management consultants and most bankers. There's only a tiny number of footballers, celebrities, bankers, and non-software consultants who earn more than the software developers as a class.
I like Germany for an example. The top tax bracket (Spitzensteuersatz) is 42% and is reached when you earn a laughable 57k€ a year, something that will never allow you to afford an apartment in a city for a family. The next higher tax rate is 45% for income above 279k€ a year (Rich tax). Source: https://einkommensteuerrechner.com.de/Steuersatz.php
And then the German finance ministry keeps trying to squeeze blood from the turnip even further every year by dreaming up new taxes, while actively discouraging investing (Olaf, the finance minister, claims not to invest in the stock market and keeps his money in a savings account while at the same time pushing negative interest rates) with Transaction taxes and no tax-advantaged savings account. You could consider that maybe conservative Germany encourages investment in real estate. Nope, you get to pay 6% sales tax and 1% notary fees when you buy a home, with no breaks for first-time home buyers, and you can't write the interest off on your taxes either.
Ireland does not have low taxes for individuals compared to continental Europe.
Even compared to Sweden, personal taxation is comparable for high-earners, although Ireland's much more progressive and redistributive scheme results in lower taxes for low-earners, and thus a smaller tax base.
I can tell you that I’m a not terribly highly paid software dev (by US standards) in Ireland and my marginal tax rate is about 50%, and it could go up a few points if I made more. Add 40% tax on cap gains as well. And bank interest. (I get < 1 eur a year in interest, and they send 40% of it odd to revenue. Why bother? Hell if I know.)
Hmm, it's anecdotal, but my colleagues who moved from Ireland and UK to Austria say that back there it was basically a tax heaven for tech workers compared to the income taxes they pay here so... maybe you could be wrong?
Ireland is bang on the EU average for taxation of high earners. It seems Austria has higher (although not massively so) taxation of high earners - source below.
Ireland has the most progressive taxation system in the EU, so low-earners do indeed pay less personal incomes taxes than any country other than Cyprus and Estonia.
Ireland is definitely not a tax haven for tech workers - you're the only person I've ever come across to hold that opinion. The UK may be closer to that, as self-employment is much more attractively taxed there than Ireland.
Based on my insights (I'm actively recruiting software engineers, my dad used to run a health clinic as a doctor, I'm educated and have many friends within management consulting - in Sweden) that's at least not true for doctors - at least it's in the same ballpark (in contrast with FAANG-level salaries).
