[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.