[tathougies]

> This is why the slogan "Billionaires should not exist" is not without merit. A net worth of 100mil still means generational wealth. But once you're in the billions, the gap to all the other employees in your company becomes just crazy - but none of the billions would have been possible without their labor.

On the other hand, suppose you employ 30,000 people each with 10,000 in savings from working at your company. Without your initial labor to get everything set up and get the business going, none of their combined $300 million in assets would have been possible without your labor, so actually your net worth seems ever more justified.

[mijamo]

You don't know that though. They could have just worked somewhere else and earned as much. It's not like you're creating money out of thin air.

[ChrisLomont]

>It's not like you're creating money out of thin air.

No, but money (and value) is created out of ideas, of labor, and adding value to products.

When an IPO happens, for example, and a company owner holding 50% of the company is suddenly valued at $20B, that value did not come from taking $20B from other people. It's the value of the company. It is value simply created out of thin air, that didn't exist before.

If the next day, someone prices the stock 30% higher through market forces, the owners value shoots up 30% also. That 30% increase in a single day was not taken from anyone - it is made up out of thin air.

When a craftsman buys a piece of wood for $10, crafts it such that others value it at $1000, that craftsman just added $900 of value. It might have taken a week, or might have taken 15 minutes. It's not simply some labor value per hour times hours. The amount of value is created out of thin air, but it took some labor to allow that increase to happen. The labor amount and value added is somewhat related, but varies greatly across all endeavors.

And saying the employees could have just worked somewhere else is shuffling the truth - to have somewhere to work, someone has to start a company, which often takes significant money and risk to begin with, before thousands of workers can have a stable job. That money too was created previously through invention, innovation, labor, and previous investment.

[anigbrowl]

When an IPO happens, for example, and a company owner holding 50% of the company is suddenly valued at $20B, that value did not come from taking $20B from other people.

Unless you were the first to market in a completely new field, it's very possible that some of a firm's worth comes from gaining market share from existing players. That's the whole 'disruption' effect. This might be more economically efficient from one perspective, but that's not necessarily better - both because perfectly efficient systems lack slack, and because people are bad at valuing things.

So take Amazon back when it specialized in selling books. Good part - Amazon has pretty much any book you want, yay. Bad part - it kills brick-and-mortar bookstores. even today, while I'll go to Amazon for a specific book I want, I'll usually wait until I've looked around some other bookstores first. Not only do I like the chance discovery of books I might not otherwise have picked up in bookstores, I like bookstores themselves, especially used bookstores. And I don't like the fact that there are not as many bookstores as there used to be.

And saying the employees could have just worked somewhere else is shuffling the truth - to have somewhere to work, someone has to start a company, which often takes significant money and risk to begin with

So what? Make co-op financing better, figure out a tired grant system for allocating startup capital from a public pool. You're just underlining the article's hypothesis - rich people often get that way because they start out with or have access to more capital than others of equal or greater ability, rather than through any inherent virtue.

In a previous life where I worked at a boutique computer supplier, I got a client who was running a small stock market research/analysis business with only a few employees, and needed high power workstations. I'm not a big people person, and I was looking at his operation and thinking that I'd prefer it to what I was doing, and (from seeing his work product and helping him get going technically) that it was well within my capabilities. So I put in a bit of extra effort to get friendly with him and to figure out how he got his operation off the ground. Turned out his dad was an investment banker and had given him a million $ to set up (at a time when that was a much more significant investment than it is now). I also learned that his biggest obstacle was not his competitors but the chip he had on his shoulder about how his brother was the favorite son and had been given $10 million.

That was the day I realized that wealth isn't a meritocracy.

[ChrisLomont]

>Unless you were the first to market in a completely new field, it's very possible that some of a firm's worth comes from gaining market share from existing players.

It is possible, but you can simply check that the size of the US and world economy has grown tremendously, so that argument doesn't explain the growth.

>So what? Make co-op financing better,

There are plenty of ESOP companies. If they consistently did well enough, then the excess capital they generate could be used to start more employee owned companies.

That this doesn't happen perhaps points to an inefficiency in this process for company creation. Perhaps simply having workers is not enough to drive the economy. It shouldn't be a surprise that when an investor takes a risk to allocate capital to a fledgling company, that the investor would expect a return for resulting growth.

Creating companies without investment is possible, but likely less capable overall.

>That was the day I realized that wealth isn't a meritocracy.

Nothing is a meritocracy - everyone has luck and genetics. Income correlates both with IQ and hours worked, and I suspect most would consider the latter factor merit, and some consider the former merit too.

But wealth, correlating with many things one can control, is also not simply a random variable completely detached from merit.

[1] https://www.sciencedirect.com/science/article/abs/pii/S01602... [2] https://www.nber.org/digest/jul06/w11895.html

[viklove]

> It is possible, but you can simply check that the size of the US and world economy has grown tremendously, so that argument doesn't explain the growth.

Can it keep growing forever? If not, how much longer can it keep growing? Should we alter our economic system to account for the change in economic environment?

[edanm]

> Can it keep growing forever? If not, how much longer can it keep growing?

I mean, I guess the strict answer to the first question is "no", but the answer to the second question is - it can keep growing for so long that it really doesn't matter.

There's no real reason to think that we've reached the end of innovation - we keep innovating, we keep finding ways to squeeze more stuff out of less material and labor - the economy keeps growing.

There are people that argue that innovation has slowed down - but I don't think everyone agrees, and even if they do, the mechanism is not well understood. And most importantly, even if it slowed down, it doesn't mean that innovation stopped.

> Should we alter our economic system to account for the change in economic environment?

Well it depends on what the change is and what our goals are. Most people who want the "economic system" changed have, I think, different goals than the ones who want it kept the same (e.g. what is more important - growth or equality? There are real, honest debates one can have about this, but if people land on different sides of this, obviously they may want different changes enacted).

[ChrisLomont]

> Can it keep growing forever?

Why not? Can people keep adding value to things? Only once there is no possible to add value to anything would an economy have to stop growing. I suppose in some heat death of the universe scenarios, this may happen, but we’ve got billions of years before even our local sun destroys earth, and I suspect mankind will have changed significantly if we make it that far.

Why do you imply economies cannot grow for the long term foreseeable future?

[tathougies]

Actually yes.. Production of goods does indeed create money out of thin air (and raw materials).

They could have earned just as much elsewhere. However since we are not in a situation of labor shortages yet, every income providing job is still important. If your employees worked elsewhere they may be as rich as they are with you, but the guy whose job they replaced would have to look for another job.

[gl00pp]

>...assets would have been possible without your labor, so actually your net worth seems ever more justified.

What? No, how is it justified?

Try again.

[robocat]

You are arguing against the article.

If Bill Gates didn't exist we could all easily be using Osbournes instead of PCs, or something equivalent would have occurred.