[hash872]

Fun fact, but there's essentially zero correlation between income inequality & wealth inequality- and the Nordics have some of the highest wealth inequality in the world. For example in 2019 by Gini coefficient, the most unequal countries in the world were #1 the Netherlands, #2 Russia, #3 Sweden, and #4 the United States (with Denmark coming in at #8). The data is clearly pretty noisy, but as far as I can see Sweden was again more unequal than the US in 2021:

https://en.wikipedia.org/wiki/List_of_sovereign_states_by_we...

Meanwhile Southern Europe has reasonably high income inequality, but not much wealth inequality. Just kind of an underdiscussed piece, especially as many people like to issue catastrophic warnings about how wealth inequality destroys a society- then quickly change the subject when you note that the Nordics are more unequal than America

[esseph]

High inequality, but also very high on social support:

https://data.worldhappiness.report/table?_gl=1*13j5g4a*_gcl_...

[Teever]

> many people like to issue catastrophic warnings about how wealth inequality destroys a society- then quickly change the subject when you note that the Nordics are more unequal than America

A missing piece of the puzzle may be regulatory capture and a strong political/legal structure that resists the worst ambitions of cruel people whether they be wealthy or poor.

You can think of wealth like the potential energy of a spring under tension. If used properly it is capable of powering the most amazing and intricate social mechanisms but if poorly regulated it destroys social fabric and the well being of every day people.

Things like Citizens United and lobbyists representing cruel wealthy interests running unchecked over American democracy are examples of the socially destructive potential energy of wealth.

I'm also curious if there's a selection pressure in play where the more cruel wealthy people in the Nordic countries move to the US because they see more opportunity to make money and be cruel in that environment while wealthy people who have some affinity with their nation and the people of it choose to remain and don't or can't lobby for terribly antisocial policies.

[api]

People need to start getting specific about their grievances. It’s not inequality per se. People don’t care if some people have more than them. There are specific concrete things.

For Americans the big ones are: a health problem can destroy your life and your life’s savings, housing costs are too high, and college is too expensive and leaves people in debt.

Housing, health care, and tuition.

Two out of three of those are better in Europe, mostly: health care and college costs. They are better even if things are on paper more unequal.

High housing costs are a disease across the entire developed world.

[nielsbot]

Unfortunately wealth hoarding puts power and influence in the hands of the few, effectively creating a new aristocracy.

That's why we don't get legislation to fix the issues you cite year after year.

Wealth hording leads to the government working more for the wealthy instead of the working class.

There will always be wealthy and powerful people, but as Spock would say (sorry) "the needs of the many outweigh the needs of the few or the one."

[lozenge]

> It’s not inequality per se. People don’t care if some people have more than them.

Actually it is. Inequality has been correlated with high crime, lower life expectancy and lower health (even for the rich subsection of the population, compared to a more equal country). In your example, high housing cost entrenches inequality and gives generational wealth a leg up.

Trying to make a country good but inequal is like trying to push water uphill.

[zozbot234]

High housing costs are a disease of major cities in the developing world; there's plenty of places where housing is quite affordable. Yes, many of these places are at least semi-rural, but this no longer much of a limitation, seeing as high-bandwidth Internet is now available literally anywhere on the planet.

[pydry]

>People need to start getting specific about their grievances

No, people need to start understanding the root causes of their problems.

History is replete with examples of rapacious elites trying to take peasant pitchforks and redirecting them.

>For Americans the big ones are: a health problem can destroy your life

Which is a problem because that destruction of your life is immensely profitable.

Which is a problem that wont be fixed while American government is plutocratically run.

Which is a problem that wont be fixed until wealth inequality is.

[argentinian]

Why do so many voters in USA elect politicians that serve plutocrats? What's the root cause of that?

[sokoloff]

Because first past the post voting has entrenched a two-party system and both major parties enjoy massive inflows of money from the wealthy.

Then “he who pays the piper calls the tune” and here we are...

[pydry]

If you control the party machinery you can lock out most progressive candidates from the electoral system entirely.

Once you control the media you can just keep throwing mud at the few progressives that remain.

If progressives could wrest back control of party machinery and control a significant portion of the media then they would become "electable" again.

[argentinian]

There's no escape if it is as you explain.

[sojournerc]

We didn't have any meaningful primaries in the last presidential election. The elites picked their candidates for a token vote by the people. Third parties are actively suppressed by those same elites.

Smaller state and local elections are better, but that's not where the power or money goes.

[api]

Getting specific allows people to go after their specific problems with pragmatic solutions.

The top poster was highlighting the fact that there are societies that are just as unequal (or worse) but better on many of these fronts. That doesn’t mean inequality is good. It means that it’s not a single underlying cause, and it’s not that simple.

Refusing to get specific leads to hand wavey populist demagoguery. In this case it leads to a broad unfocused crusade against “elites” and “the rich” that history shows often morphs into fascism (lots of Bernie voters went MAGA) or results in policies that land broadly on the middle and upper middle class and often spare the truly rich. Usually the result is a lot of sound and fury signifying nothing, since it’s easy to be a demagogue and pound the table about vague “underlying causes” without doing anything but virtue signaling and dog whistling to the base. No specifics means no KPIs for politicians, nothing to hold them accountable.

If you elect someone on a platform of making housing, health care, and tuition affordable and those things don’t become affordable, it’s hard to weasel out of that with posturing and bullshit.

[pydry]

>history shows often morphs into fascism (lots of Bernie voters went MAGA)

This is FUD that is very specifically DNC coded. The extremely plutocratic DNC-linked propaganda outlets that fed this absolute nonsense peddled all sorts of other nonsense conspiracy theories too (e.g. Russiagate, not that that one did them any good...).

Every single one of the DNC supporters implicitly backed fascism and Nazi-style genocide in Gaza by lending their support to the same DNC that backed it (even if they did not agree with it).

Again, plutocracy at work.

They paved the way for the equally depraved MAGA fascism that supplanted them. Trying to pin it instead on a bunch of powerless progressives, some of whom voted for "not more of the same shit" plumbs the very deepest wells of moral depravity. It is deeply shameful.

[TFYS]

> I'm also curious if there's a selection pressure in play where the more cruel wealthy people in the Nordic countries move to the US

That's an interesting thought! It would make sense that the people who care less about others and more about themselves would find it easier and more beneficial to leave. I wonder if anyone has ever done a study on the wealth, personality traits and political views of the people who leave.

[tossandthrow]

The thing about the Nordics is that you can not consume that wealth personally without being heavily taxed - when it is tied up in company assets.

[geysersam]

Not sure that's true. How do you even "consume" wealth, assuming the wealth is more significant than a few millions in the bank.

Nordic countries have high VAT but that's hardly going to hurt you.. On the other hand Sweden has less property tax than the US.

I guess if you consume services then that will be more expensive in the Nordics, since tax on salaries is high.

[coldtea]

>How do you even "consume" wealth, assuming the wealth is more significant than a few millions in the bank.

"A few millions in the bank" for hundreds of thousands or million of people would already make a nordic country the king of lesser inequality - unless (as the parent says, don't know it's true) it's tied up in company assets (and perhaps they use them as company perks even in one-person companies, to avoid the tax, thus masking better equality at the individual level).

[flakeoil]

I suppose the person means that you have to pay about 50% in taxes to take out the capital/profit from the company before you can use it as a private person.

[Y-bar]

Dividend and capital gains taxes are a flat 30% (https://en.wikipedia.org/wiki/Taxation_in_Sweden#Corporate_a...)

[pavlov]

In Finland the tax treatment for dividends is even friendlier.

If you have a 1.5M balance sheet, you can pay yourself 120k euros in dividends annually at an effective tax rate of only 7.5%.

Let’s just say that small businesses and professionals have very good lobbyists. An employee making 120k / year pays over 40% tax.

This creates a tremendous incentive for professionals to incorporate and use every trick in the books to build up a larger balance sheet on paper.

[hrududuu]

This type of comparison needs to add corporate income tax (20%) in order to be an apples to apples comparison,so 27.5. It's still a stark difference in taxation, and I know of no other country that does what Finland does for dividend taxation. In fact for earned income,things look even uglier when you add in tax-like social security contributions.

Perhaps not coincidentally, Finnish companies are also an outlier in paying extremely high dividends.

[olejorgenb]

In Norway it's 37.8%. Though you do get "skjermingsrente" (about the same rate as the central bank rate) on the amount you originally invested (ie.: not on any untaxed gains you've had).

[tossandthrow]

This is clever. In particular in inflationary times you are being taxed on non-real gains - this seems to alleviate that.

[flakeoil]

For stocks on the stock market, yes, but not if it is your own private company. Then the taxes are much higher.

[ath92]

That’s after corporate income tax of about 20%

[JumpCrisscross]

Plus 25% VAT when you spend it.

[Y-bar]

No, some things in Sweden are 0% VAT, others 6%, others 12%, and the rest 25%.

https://www.skatteverket.se/servicelankar/otherlanguages/eng...

[fakedang]

Not to mention, flaunting wealth by conspicuous consumption also comes with its own kind of social stigma, even in upper class circles.

[emptysongglass]

Doesn't mean it isn't done. The Lego family was caught flying their private jet all over the world so they sold it and now have exclusive renting rights to a plane in a hangar operated by another company.

[tossandthrow]

There is a strict separation between business and personal consumption.

If the Lego family uses business jets to go on vacation, then they need to 1) pay market rate for using the jets and 2) pay full income taxes, VAT etc.

Anyhow, when you are rich enough this tripling in cost does not really matter - but it does reflect in the income equality statistics.

[ahoka]

Yes, everything is about the looks in Scandinavia.

[sollewitt]

There’s that study that found Italian families who were wealthy during the renaissance are still wealthy.

Sweden had a very powerful monarchy (the dominant Baltic power at one point) and an aristocracy but never a revolution. I’d expect a lot of wealth inequality based on inherited wealth.

[mesofile]

A number of articles and at least one well-known study have been published highlighting the fact that the ranks of the wealthiest landowning families in Britain are nearly unchanged since Norman times — e.g. https://www.medievalists.net/2014/11/englands-1-remained-sin...

[lifestyleguru]

The British wealth inequality in these rankings was probably delegated to overseas territories in the Caribbean.

[whimsicalism]

it’s absolutely insane that the brits never did land reform or seemingly have any interest in it

[quickthrowman]

Considering the fact that the royal family owns an astounding amount of real estate, it doesn’t surprise me at all.

[lifestyleguru]

Sweden's wealth inequality was initiated by Thirty Years' War and The Deluge and then only accumulated not impacted by any violent revolution or brutal invasion.

[impossiblefork]

The Deluge didn't cause wealth inequality in Sweden. Some military leaders were, during Swedish wars, rewarded with increased land holdings, but these were later reduced. Sweden's wealth was also created late. Sweden was a poor country until the early 1900eds.

[whizzter]

One thing to note is that the idealized Sweden and many benefits remain because we had a much lower wealth inequality 30 years ago but (mainly) right-wing governments have been very "successful" at removing the barriers that kept the wealth inequality low.

- Inheritance tax was abolished in 2005 - Wealth taxation was abolished in 2007 - "income tax reduction" was initiated in 2007

Meanwhile our schools have gotten larger classes and worse results, especially the income tax reduction was insidious since it was a nationally mandated tax reduction that mainly hits the tax revenue of cities and regions (ie, political entities that had no part in the laws that lowered their tax revenue).

Basically, Sweden has been speed-running into re-making our society into a mini-US and even surpassed the US in some regards.

Sweden 2025 isn't the same as in 1985, and policies enacted around 2005 are the ones that are really starting to hit with their secondary effects today (Iirc Denmark has had fairly many right-wing governments over this period as well).

[roenxi]

> - Wealth taxation was abolished in 2007

I did notice once that IKEA's governance scheme looked like an unusually sophisticated anti-tax structure. It now makes sense why the Swedes would be really interested in dodging taxes.

[alephnerd]

The foundation based governance model is common all over Northern Europe because of the reason you pointed out ;).

SAAB, Bosch, ThyssenKrup, and others are similarly structured.

[whizzter]

SAAB is publicly traded, however a majority(or nearly) of voting shares are held more or less directly by the Wallenberg family, they have investment/"power companies" as well as their family foundation(s) and control quite a few major companies here.

[lifestyleguru]

> IKEA's governance scheme

They are non profit charity designing furniture for the humanity, what taxes are you talking about?

[emptysongglass]

Exactly and I'm glad to see this the top comment.

I live in Denmark. I am Danish. Too many people nurse fantasies of the Nordics as some kind of socialist utopia.

The fact is Denmark grows more corrupt by the day. They keep pushing the retirement age so I will be working until I'm 72. Healthcare quality has been dropping for more than 40 years now. The wealthy own the majority of land. We are currently home to a government that is leading the EU in its push for a surveillance mandate that is frankly terrifying in its scope. That same government pushed through the most garbage mega-project I have personally ever witnessed—that we the taxpayers are supposed to fund—despite voter outcry. Digital tenders get sold in backroom deals to a single company that is so ethically bankrupt they've been called out numerous times for workplace violations by our unions.

We're all fucked in the global slide toward authoritarianism and the wealthy's capture of the world economy. And while they get fat supping on our labor we're at each other's throats for who can be crowned the greatest victim.

[miohtama]

It's unlikely you will have any retirement except your own savings, as the unfunded pension funds start to collapse globally. Maybe Danish is different but you can check from local sources.

https://en.m.wikipedia.org/wiki/Pensions_crisis

[tim333]

I think it will be ok due to two factors. One even if funds go bust care of old people is basically done by young people chipping in and helping and that can go on. Two, regarding aging populations, against that we'll have AI and robots doing stuff before most people retire.

[coldtea]

>One even if funds go bust care of old people is basically done by young people chipping in and helping and that can go on.

If you mean "young people" in general, the fertility rate ensures they'll be less and less, and thus a heavier and heavier burdern to chip in for older people.

If you mean young people that are family, an increased (over 30%) number of old people won't have children or will have estranged children, and no help.

As for "AI and robots" don't bet on those either. It takes people to maintain an economy and an infrastructure that makes and deploys robots at any significant scale, and those will be scarce, and the demographic hit will make both productivity and consumption contract too. Societies increasingly can't even fix potholes and basic public services.

[tim333]

I was having a look after that at the current state of AI robots and they are coming along, eg. this is a figure robot folding towels https://x.com/minchoi/status/1961798845584613649

You don't have to extrapolate that much improvement for them to start having an impact and I imagine factories in China will churn them out like they do most other tech.

[miohtama]

Whether or not there are enough young people does not matter.

The plan was to have fully funded pensions, bootstrapping them after the start. You cannot have infinite growth any case, as eventually we run out of space and resources. It must come to end at some decade.

However funding pensions full was never executed. It was too easy for politicians not to pass taxes, social benefit costs and such to do this, because boomers would have complained decades ago when they were still in the fullest earning potential.

[coldtea]

So it does matter. Contracting economy, aging population, worse social dynamisc, political and institutional inertia, productivity drops, etc. Robots aren't going to offset but a tiny part of this.

And between payroll taxes and the fact that stocks, 401ks, etc depend on economic growth, things will turn real shitty...

[teiferer]

> Two, regarding aging populations, against that we'll have AI and robots doing stuff before most people retire.

We also have immigration against that. Lots of people in their late 10s or early 20s ready to start contributing to the economy. But most western countries have to much right wing populism going on to realize that that's a solution and work on proper integration efforts. Easier to pull the criminal foreigners card and collect votes at the next election.

[wolvesechoes]

Yes yes, and we already work 2 days per day as all these prophets of technosalvation predicted.

[pendenthistory]

I've been heavily saving for retirement from the day I started working, and approaching FIRE before 40 (living in the Nordics). I've been telling some close friends that even if they don't aim for early retirement, they need to at least have a backup option for regular retirement, but they can't seem to sympathize enough with their 70 year old self who is forced to keep working. And who is going to hire a 70 year old human in 30 years? What economic value could they possibly provide in 2055?

Everyone here needs to make money and save everything they can right now. If you're not saving 50%+ of your income you AGMI

[pjmlp]

I can tell from Germany, maybe some will hire, because unless they can replace workers with robots, like it is happening in some supermarkets, they will get whatever they can.

It doesn't come up often, but I have seen a decent amount of 70+ people doing what they can, as cashiers, kiosks, hospitals, doctor offices, bus drivers,...or in general any job where youth isn't into applying for learning on the job, or even so where demand isn't getting fulfilled.

[rdm_blackhole]

> I can tell from Germany, maybe some will hire, because unless they can replace workers with robots, like it is happening in some supermarkets, they will get whatever they can.

No, they will do what they have done in the last 20 years which is import people from the middle-east or northern Africa to do the jobs and pay them the lowest wage possible.

My wife works in healthcare in Sweden and more than 50% of the people who work on the hospital wards/in age care these days are either newly arrived migrants or descendants of recent migrants.

Unfortunately most of these people are under-qualified, barely speak Swedish but they are cheap.

That puts a lot of pressure to keep the wages of everyone down because they keep bringing more and more people from abroad. This isn't even a fix because as soon as they get their permanent residencies or citizenship (for the ones who do not have it), these people move on to something else because the jobs are just awful with long hours on your feet and being treated like a servant by the patients/residents.

[pjmlp]

Unfortunately that is why many European countries are going back to a reality I thought it was gone, back when I was a kid, being the first generation being born after carnation revolution.

[pendenthistory]

Yeah, you basically need private insurance to get a competent doctor.

[sudosysgen]

This is not going to work forever. Eventually conditions can get bad enough that upper middle class MENA people won't prefer a lower class European position.

[coldtea]

>I can tell from Germany, maybe some will hire, because unless they can replace workers with robots, like it is happening in some supermarkets, they will get whatever they can.

What's more likely going forward is that they'll downscale their operations in a contracting economy, than hire 70 years olds or needing robots for the same jobs. And if it needs be, they'll get immigrants for most jobs.

[pjmlp]

It all depends on how stronger right wing parties keep getting across Europe.

[tmtvl]

I only know one of those initialisms.

FIRE -> Financial Independency, Retire Early.

AGMI -> Are Gonna Make It?

[jackothy]

The usual one is "NGMI" (Not Gonna Make It)

But you just have to assume based on context here that he intends to say "Aren't Gonna Make It"

[mpweiher]

> the most garbage mega-project I have personally ever witnessed

Which project was that?

[agurk]

They probably mean Lynetteholmen, which is a giant artificial peninsula to be built on reclaimed land off Copenhagen.

Curiously there's no English wiki page for it, but machine translation is good these days:

https://da.wikipedia.org/wiki/Lynetteholmen

[emptysongglass]

That's the one! Here's a good overview by a Dane on its folly: https://youtu.be/K4icpF0S5BM?si=zjB2qkB-wy-VQu58

[undebuggable]

I guess the Danish mega project is kamelåså.

[Atomic_Torrfisk]

> Too many people nurse fantasies of the Nordics as some kind of socialist utopia.

Yes pretty much, and hello form Norway.

[Atomic_Torrfisk]

rather than down-voting opinions you don't like. You could tell me why I am wrong.

[a0-prw]

Yes, but at least Mette Frederiksen got her photo-op in an F16 cockpit with Zelensky!

[fifilura]

Supporting Ukraine against Moscovite aggression is important for all of Europe. Otherwise next they will come for other countries in Europe, as proven by them many times before.

This is extremely little money compare to the alternative.

[wolvesechoes]

> important for all of Europe

What makes it important for Ireland, Portugal, Spain, Italy or Liechtenstein?

[VagabundoP]

Irish person here. We feel it is important to support the international rule of law. Big countries should not be allowed to invade and take their smaller neighbours. Due to our history we are very sensitive to imperialism.

[fifilura]

"Lisbon should be Russian says Kremlin propagandist"

https://www.theportugalnews.com/news/2023-11-28/lisbon-shoul...

If Russia.cobquers Ukraine they will use the people of Ukraine against the rest of Europe.

[wolvesechoes]

But you should be aware that russian foreign policy is not decided in the television. TV propaganda serves internal purposes. And there is a policy and strategy on Kremlin, not just crazy evil Putin trying to destroy the world of Good.

Contrary to hysteric media narrative, decision makers in Kremlin are not mad, crazy or whatever, and believing this brings more harm than good. Russia isn't strong enough to seriously threaten Western Europe, and they are aware of it. Moreover, they have not much to gain by trying to conquer Lisbon versus monstrous costs they would need to bear, even if we ignore the fact they wouldn't be able to not only reach Lisbon, but Berlin as well. Europe is no longer a center of the world, regardless if we like it or not.

That doesn't mean Russia cannot harm interests of countries of Western Europe, carry out sabotage acts, sow and fuel internal strife etc. They can, and they do. But it is not an existential threat.

[dahart]

> there's essentially zero correlation between income inequality & wealth inequality

Out of curiosity, how is this measured, and is it due to mega rich people not having taxable incomes? Do you have a source for this? Certainly there must be some correlation between making money have having it…

[fulafel]

Rest of the nordic country ranks from that page: Finland #56, Iceland #73, Norway #121

[keybored]

> Just kind of an underdiscussed piece, especially as many people like to issue catastrophic warnings about how wealth inequality destroys a society- then quickly change the subject when you note that the Nordics are more unequal than America

Ask someone from the Nordics about housing prices. Do you think they’ll change the subject?

[ruthvik947]

How did the Netherlands go from 0.9 in 2019 to 0.75 in 2021!? You'd need nothing short of a mini-revolution to do that in those timescales

[pu_pe]

The link you shared has data from 2021, which looks completely different than what you shared - and Sweden comes at 12th, but all the other nordic countries are buried way down in the ranking. It's frankly very hard to believe that the nordic countries are more unequal than America when it comes to income, wealth, well-being or pretty much any statistic you can think of.

[fifilura]

There is a asterisk in the table that says that the numbers are a mix between wealth inequality and income inequality. I think it makes it very volatile and hard to interpret.

[zozbot234]

> Fun fact, but there's essentially zero correlation between income inequality & wealth inequality- and the Nordics have some of the highest wealth inequality in the world.

If there's so little correlation between income inequality and wealth inequality, why are we even supposed to care about wealth inequality? That wealth is essentially frozen in place. It's hopefully being invested in sensible ways, but no one sensible is going to spend it down anytime soon. The thing with wealth is that once you spend it, it's gone for good - so wealth accumulation, especially on any kind of multi-generational scale, tends to be associated with remarkable frugality.

[nosianu]

This take seems to take "wealth" in a Disney Scrooge McDuck cartoon way - having "money". That is not what the truly wealthy have though. Their wealth expressed in terms of money is an abstraction. What they really have is control over real assets. I deliberately say "control", because that is what counts, and ownership is not even that important, often many times indirect, sometimes not even that.

The most direct money-equivalent is passive money generating assets like papers with a direct money value, instead of a real world asset. The important stuff is in the real world though, even those papers rely on that.

Owning a money generating real world asset like a successful company is not the same as having some bank account worth half a billion. The disadvantage, the company can go broke. The advantage though is that it generates a stream of money for as long as you manage to keep the business running successfully.

Here is the point where many "let's redistribute wealth" - something I'm certainly not against - fail: How would you redistribute ownership of companies? I don't see a good outcome of handing control over a company from few hands to many hands. They'll turn into manager-led enterprises and will have less entrepreneurship. Everything becomes a public company, and then wealth will re-concentrate into few hands over time anyway, because only few people are really into this kind of thing and thinking.

Instead, there needs to be someway to make it possible for many more people to get reliable incomes, instead of having a lot of control over the economy and the streams of money among few. Getting a bunch of money of assets will not help most people, only for a short time, until those few who love that kind of thing require most assets over time.

The prevailing view among the elites seems to be though that the economy needs most people dependent and mostly broke, to force them into the workplaces of the corporations at - for them - low enough cost (salaries).

The solution can't be though to break up either the firms or even just the ownership. Ownership by committee is unlikely to be successful. The large corps, when they even have a really well-distributed ownership, and not just a few core owners and a large tail of mini-owners with no real power, are not a model that all companies and organizations can or should follow.

[zozbot234]

> What they really have is control over real assets. I deliberately say "control", because that is what counts, and ownership is not even that important, often many times indirect, sometimes not even that.

Control is fungible to a large extent. If a company is badly run, someone can launch a takeover bid and get that control for themselves. All that matters is that they're generally expected to do better at running the company, so that it's more likely to generate money in the long run and less likely to do broke.

[rcxdude]

It also matters that they have access to the money to do the takeover. That can happen in many ways but generally requires they have at least a few percent of it themselves, which for most companies and most people is way out of reach.

(Also with a privately owned company there's not really any means to do this in a hostile manner)

[dahart]

Low correlation (if that’s even true) isn’t a reason not to care about wealth inequality, that’s silly. It might be a reason we should focus more on wealth inequality than income inequality, but it’s pretty naive to frame wealth as “frozen” with the only options being spend, save, or invest. The definition of capitalism is that wealth begets more wealth; capital is the fuel and the leverage to claim profits. One might call that “invest”, but that’s misleading and you’ve downplayed it. There’s a broad array of ways for the wealthy to leverage wealth in order to collect more. You can use it to start companies. You can use it to buy other people’s companies. You can borrow against it to get loans for money you can spend without paying taxes. You can influence politics and business in many ways to lean conditions to favor your own investments and thwart others. That’s just to name a few, there are lots more. Having wealth without “spending” it still buys incomes, influence, power, and more wealth.

Given that having wealth earns money and accumulates wealth faster than not having wealth, believing that multi-generational wealth is somehow frugal is pretty funny to me. Sure spending looks “frugal” when your spending is offset by a passive income, when you have so much money you can opulently buy anything you want in the world and it doesn’t even put a dent in your interest income. The mega rich sometimes put their purchases (planes, yachts, mansions) to work earning money. They have a large set of options that they use in practice for enjoying their wealth while paying dramatically lower taxes. Other words that could replace your used of frugal are ‘incentivized’, ‘unfair’, and ‘greedy’. The multi-generational billionaires certainly are not living like paupers nor pinching pennies.

Some confounding factors against comparing income inequality and wealth inequality are that rich people tend to report very low incomes, which is well known and part of the way they get around taxes. For the middle class who is not going to pass on multi-generational wealth, in countries where taxes are high and the social safety net is large, it might make sense to not accumulate. For the middle classes, income is what you care about before you retire, and wealth is what you care about after retiring. If post-retirement living is covered, and if inheritance taxes are high, it might well make the most sense to spend income & share money with family before retiring.

[zozbot234]

> ...You can borrow against it to get loans for money you can spend without paying taxes. ...

Are you assuming that loans don't need to be paid back at some point? What you're listing is ways of either investing wealth (that is, using it productively to make more wealth - which is far from easy or free of risk) or spending it down. Some ways of spending wealth down may be tax-advantaged in some locales, but this is offset by the fact that taxing income places an extra tax burden on the time-based and precautionary value of that same accumulated wealth. I.e. wealth that's being invested in a risky, long-term venture is in fact quite heavily taxed.

[rcxdude]

The rough tax avoidance strategy here is to take out loans with your assets as collateral, and keep rolling those loans forward until you die, at which point they can be paid off and then onto your heirs with relatively little tax. This doesn't give you access to all of your wealth as cash (since the collateral is risky so you need to put up some amount more than you're borrowing), but what you do get you get without paying anywhere near as much tax, the interest on such loans is very low, and you still keep control of whatever asset you're borrowing against and whatever gains/income it might produce.

[dahart]

> Are you assuming that loans don’t need to be paid back at some point?

No, what I said is you don’t have to pay taxes on those loans. Obviously a loan is paid back. The tax avoidance scheme here is that a loan is not income and you can use held stock (that hasn’t been taxed) as collateral for short term loans.

> this is offset by the fact that taxing income places an extra tax burden on the time-based and precautionary value of that same accumulated wealth.

Not sure what you’re referring to. Again, the mega rich often don’t have significant “incomes” from a taxation point of view, regardless of how much money they make or spend.

[jpfromlondon]

>why are we even supposed to care about wealth inequality

Precisely, it's a nonsense metric that doesn't anything about poverty at all which is something that truly matters.