[abuob]

If you're genuinely curious, a few suggestions that I personally found incredibly enlightening:

Anand Giridhardas, Winners Take All: The book is fantastic, there's also his now infamous google talk where he talks about dismantling google: https://m.youtube.com/watch?v=d_zt3kGW1NM

Thomas Piketty, Capital in the 21st century: Probably the most comprehensive (but at times also longwinded) outline on how wealth inequality comes to be, why it's not good for society and how it could be adressed

[WalterBright]

How about a summary of Piketty's argument?

We could start off with how are you worse off because of people wealthier than you?

[mlsu]

Piketty argues that if r > g, wealth will accumulate into fewer and fewer hands over time. R is the rate of return of capital (rents, stocks, bonds, etc) and g is the growth of the economy over time.

If the economy grows at a higher rate than the rate of return, the pie gets bigger at a higher rate than wealth can concentrates. If the rate of return accumulates capital at a higher rate than the growth of the economy, wealth will inevitably concentrate over time.

He uses a lot of examples and economic history to argue that r > g, except for a few small periods. I think given the amount of wealth concentration we are seeing, and the political effects thereof, it is a compelling argument. Taxation (of wealth) is the proposed solution.

[stopping]

If the top 10% of people suddenly had their wealth double overnight, it would have absolutely disastrous effects for the lower 90% of people. Prices for scarce goods (e.g. housing) would increase dramatically. The price increase dampens the overall demand for housing since a large fraction of the 90% are now priced out. The wealthy homeowners have an incentive to maintain that scarcity, and freely use their resources to preserve the status quo by preventing desperately-needed housing from being built.

Those with wealth will tend to steer the economic system more towards their own interests in a runaway feedback loop, often in ways which create no overall net welfare for society.

[srean]

Let me address the second part.

If we define wealth as it's often used colloquially -- the amount of liquid cash one has -- then your potential share of the pie of goods and services shrinks. This is true unless the pie itself grows proportionately.

Without agreeing or disagreeing with parent comment, the rate of growth of the pie certainly does not feel like it is growing as fast as accumulation of nominal wealth of some.

Historically one usually amassed monetary wealth in exchange of providing goods and services. Stock markets, high frequency arbitrage markets have broken this. Yes there is liquidity insertion, but is that liquidity worth so much ? At microsecond scale ? I don't think so.

Stock market let's one encash a perception of promised future delivery of goods and services without the need to actually deliver it. Yes the market will eventually, hopefully, price it correctly, but by then some other retail sucker is holding that bag.

When people complain about others getting disproportionately wealthy they are talking about the shrinking share of the pie.

[WalterBright]

Creating wealth means the pie gets bigger by that amount.

And no, wealth is not the amount of liquid cash you have. If that were true, I'd be dead broke.

> the rate of growth of the pie certainly does not feel like it is growing as fast as accumulation of nominal wealth of some.

Wealth creators will be growing the pie at a higher rate than those who do not create wealth.

[srean]

I agree that's the theory. It used to be mostly true in the past, but given current valuations it does not look true at all.

My worry is that we are not creating enough new wealth but just distributing it lopsidedly.

[WalterBright]

> just distributing it lopsidedly

Wealth is not being distributed. A laborer gets paid for the value he creates. There's no "distribution" going on (except by the government).

[srean]

> laborer gets paid for the value he creates

Not true at all. Most labourers have nowhere close the pricing power necessary for this to be true. Information is obfuscated (legally of course) on purpose.

[crossbody]

Is your worry based on vibes?

Because statistics clearly show median real wealth growing rapidly: https://fred.stlouisfed.org/series/MEHOINUSA672N

[srean]

That's money and not wealth and its a flow not stock and denominated in something that can depreciate, has it even been priced correctly ?

I grant you that it is very hard to measure ownership of (wealth generating) assets, hidden behind legal obfuscations.

Lorenz curve [0], GEI [1], Gini index of owned wealth generating assets would be the right thing to measure to see how understand one's share of the pie. But an enormous amount of records of such wealth is just hidden away, using laws that those very owners helped pass.

[0] https://en.wikipedia.org/wiki/Lorenz_curve

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

BTW I am willing to be convinced to adopt a different position if I see a well researched, credible Lorenz curve data that has tracked the shadow wealth to some degree of accurate approximation.

[thothless]

your first question was better.

"how does creating wealth hurt others?"

most of this "wealth" is not "created" out of thin air. nor created at all.

more like, transferred.

[satvikpendem]

Wealth is a positive not zero sum game. It is not transferred except in the most literal cases like lotteries and casinos.

[WalterBright]

Gambling is not a transference. The gambler is buying a chance to win money. It's an equal value for equal value.

Zero sum are things like taxes, where the government just takes it, or robberies.

[satvikpendem]

In casinos you transfer your money to the eventual winner, a 1:1 transfer minus the house's cut.

[crossbody]

If your logic is right, people back in the Stone Age were all like Jeff Bezos with mega yachts and stuff... It all went downhill from then - the population has increased so much and everyone has gotten so much poorer :(

[demritocracy]

looks like a lot of wealth was created out of thin air about 6 years ago https://fred.stlouisfed.org/series/M1SL

[WalterBright]

A lot of money was printed, but that is not wealth creation.

[demritocracy]

if wealth is money in this context, and printing is creation in this context, what is the difference between printing money and creating wealth? the new money went somewhere. if i remember correctly it went indiscriminately to business owners, with no stipulations on how it was spent, and then blanket forgiven with no questions asked. to my mind that is wealth creation and the root cause of the inflation we've seen since (the printing not just the PPP)

[andyferris]

That depends how they got wealthy.

Did they steal everything outright? Someone is worse off in that transaction. (Or everyone a little bit worse off if it’s government grift).

Did they create all that value themselves? Might be fine - positive sum games do exist.

Did they create some system where a bunch of money flows just to them based on the labour of others? Maybe it depends on the details, like how much the labour is paid.

I think Piketty’s point was around capital and wealth tending to accumulate unless something forces it to disperse. This can get worse over time. The last couple hundred years were relatively “good” due to the way revolutions and WWI and WWII basically eliminated many of the wealthy families in the west, a couple times, and the post-war societies were “reset” with good equality that has slowly eroded since (due to insufficient “friction” to prevent accumulating extreme wealth over time, such as high loophole-free wealth and inheritance taxes). Or so the theory goes.

Building on that, when you get extreme wealth you get individuals with power to affect policy for their personal good. Some will choose to be selfish (it’s human nature). Policy shifts in their favour. We end up going in the opposite direction to that since the Great Depression - which really was a collectivist culture of everyone getting a share of the wealth of the nation, rather than being screwed over by rich and powerful folks. (McCarthyism somewhat put the brakes on that in the US in particular, though, which is why you can get e.g. free health care elsewhere in the west).

[crummy]

I have not read Piketty. But I could imagine a society where the poor are 10% better off and the rich are 1000% better off to be a less stable society that ends up falling apart.

[norir]

> We could start off with how are you worse off because of people wealthier than you?

You are smart enough to come up with some answers of your own. It's rude to demand others to do your own thinking for you.

[rileymat2]

It’s a rather public example but DOGE did immense damage and was facilitated by the ability to leverage wealth into power. There is a dangerous feedback cycle.

[shric]

Walter, I believe the idea against wealth inequality is not purely that there are wealthier people but that their wealth should be redistributed such that the wealthier people are less wealthy (but still wealthier) and the poorer people are less poor (but still poorer).

[WalterBright]

There have been many attempts at taking from the rich and giving to the poor, and the result was always everybody was worse off except the people who ran the government.

[saulapremium]

No, that is not always the result, very far from it. You seem to believe that society is just the natural state of things, and "government" is almost just in the way. It's an incredible blindness to the privilege you enjoy.

[WalterBright]

The proper role of government is to protect people from thieves and murderers and externalities and provide national defense.

I am not an anarchist.

> privilege you enjoy

Privileges anyone enjoys living in the United States. That's why millions are always trying to come here.

[disgruntledphd2]

> The proper role of government is to protect people from thieves and murderers and externalities and provide national defense.

This is a 19th century regalian viewpoint (which is fine). Taken to its logical conclusion, education and healthcare services should not be provided by the government. I think that this is a wildly unpopular viewpoint, and is really unlikely to lead to good outcomes in our kind of society.

[fragmede]

The French had a few thoughts about this, back in the day.

FDR's New Deal raised taxes on the wealthy, and gave to the poor. Seems to have done America well. Post-war Japan, South Korea, and Taiwan land redistribution did well. And of course, there's the Nordic countries. Norway happens too have oil, but that doesn't explain Sweden and Denmark.

[wvenable]

Although some people due want to literally take from the rich and give to the poor, the actual problem with wealth inequality is that game is rigged.

Capitalism not natural order; it has rules and winners and losers. It's actually more like sports. With sport, the goal is to create entertainment by rewarding physical excellence, mental excellence, and successful risk taking. Similarly, the goal of capitalism to create a better society by rewarding physical excellence, mental excellence, and successful risk taking.

What happens to a sport when players cheat or exploit the rules to win? It's no longer entertaining! When the best players can no longer win that's boring. And, in sport, when that happens the rules are changed or enforced better to bring it back in line.

Capitalism is the same. We are reaching the point where we are no longer properly rewarding excellence that is benefiting society. So the rules need to be enforced and rules need to be changed to bring that back in line. Inequality of this magnitude shows that rewards have outstripped the benefits to society and needs to be corrected.

[crummy]

Are you arguing against the concept of progress taxation entirely?

[fragmede]

The French had a few thoughts about this, back in the day.

[srean]

Norway seems to be doing swell.

[crossbody]

Well, if Norway managed to pull it off, we can just ignore all the countless counter examples

[srean]

Another way is to learn from what Norway is doing right and see what can be replicated. Norway is not a sole example though, just a prominent one.

[WalterBright]

It's nice to live on top of an ocean of oil to cover the deficits.

[srean]

Indeed.

It has rarely (if at all) worked out for any other country though. One or the other super power will make sure that does not happen.

US scuttling Iran's nationalisation of their oil being one example.

Even without geopolitical meddling, landfall discoveries of wealth at national scale has been frightfully difficult to manage well or to realize the value of. Your currency strengthens, your other industries lose out the on the price war, your economy gets skewed and sensitive to the health of one sector. In general it has been a curse than a boon.

Norway has so far pulled this of phenomenally well.

[andyferris]

That’s incorrect.

In most western nations, the “people who run the government” get paid a salary similar to a good software engineer (or maybe a doctor), and progressive taxation lets the government fund social services including free healthcare and tertiary education.

Rather than use Stalin as a straw man, maybe try take your nation in direction that helps people, rather than away?

[fragmede]

I'm not worse off, just because some chucklefuck has a yacht or a jet. I'm worse off when their wealth lets them out bid me for things that are scarce. Housing is currently in short supply in in-demand areas. Access to doctors is another one. The rich still only get one vote, but let's be real, being rich means buying tons of ads pushing a rich person's agenda in the run up to an election. Also tax codes. The rich get to put their kids in private schools, rather than having better public schools. That goes for other public goods too.

[WalterBright]

I already pointed out that housing shortages are caused by government policy.

See Palisades, for example.

[galaxyLogic]

I was just thinking about it, rich people have money to spend in elections to get their representatives elected. When they do they make laws, or remove existing laws, to help rich get richer, so they have more money to spend in the next election. And so it goes.

Solution might be legislation that puts limits on how much money each person can spend on elections. But it may be too late, there are so many rich people in the congress that such laws can not pass.

The rich not only want to get richer they also want the lower classes to get poorer so they will work for less and will have to work longer hours so they will have less time and money to educate themselves, and thus will remain clueless about what is going on.

[WalterBright]

I'd prefer term limits.

[galaxyLogic]

Definitetly, except people to which the term-limits would apply really don't like term-limits. And they are in power.

But I don't want to souond too pessimistic, there are lots of good people and progress is inevitable. AI gets put down a lot but I think it will make people much smarter.

[28304283409234]

And also check "Escape from capitalism" by Mattei.

https://youtu.be/9M_dq_0ljsc?si=xkqtCs4YRor-NTyz