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Billionaires, making the world a better place (for them)


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13 minutes ago, felice said:

In a millionaire-less world, nobody could afford a million-dollar house, so the value of residential real estate would plummet. Most of those millions of people would cease to be nominal millionaires without losing anything. Personally, I think it's more important to ensure everyone has access to decent housing than allowing a minority to own exceptionally nice houses. And who actually wants to invest in shares etc just for the sake of it? What people actually want is either financial security (which can be provided without requiring them to invest privately) or to get rich off other people's labour (I don't think that desire trumps people's right to not be exploited).

Suppose you want to incentivise people to the extent that if they do well, then they should be able to retire at 60 and live the rest of their lives in comfort. Assume "in comfort" means a pension of 25K a year. Life expectancy is close to 90 now, so they would need to save something like 750K to manage that, plus they would want some extra in case they lived beyond the average. (To buy an indexed linked 25K annuity at 60 cost about a million last time I checked.) And that is not even considering the value of other assets they might have, like their house.

Sadly a million is not that much money these days.

(Incidentally, I am thinking in UK pounds in this post.)

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3 minutes ago, SeanF said:

I think one needs a system in which some people can become billionaires, if one wants society to prosper.  Even social democratic Western societies have billionaires, even if they're more heavily taxed than billionaires in the USA.

Well I'm not too sure about that. I'm not going to say one way or the other. But, there are lot of reasons, particularly here in the US, to think many of our policy choices have gone awry, creating more billionaires and creating more wealth inequality than what could be justified on the grounds of economic welfare or efficiency.

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4 minutes ago, A wilding said:

Suppose you want to incentivise people to the extent that if they do well, then they should be able to retire at 60 and live the rest of their lives in comfort. Assume "in comfort" means a pension of 25K a year. Life expectancy is close to 90 now, so they would need to save something like 750K to manage that, plus they would want some extra in case they lived beyond the average. (To buy an indexed linked 25K annuity at 60 cost about a million last time I checked.) And that is not even considering the value of other assets they might have, like their house.

Sadly a million is not that much money these days.

(Incidentally, I am thinking in UK pounds in this post.)

Probably late sixties would be a more realistic retirement age now, but you are generally correct.

It's a long time since a million was worth a million.  Even the median UK household now has net assets of £278,000.  14% have assets of £1m +.

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10 minutes ago, SeanF said:

I think one needs a system in which some people can become billionaires, if one wants society to prosper.

No, you don't. You need a system in which people can be or become *millionaires* either because their homes/assets are already worth that, or because earning millions is a valid incentive for entrepreneurship - in the larger sense of the term.

A billion dollars otoh is an insane amount of money. One of the problems of this kind of discussion is that the human brain is very bad at understanding the difference between a million and a billion.
A million seconds is about 11 days. A billion seconds is about 31 years.
Another way to look at it. Let's say you're well-off and earn... I dunno 150k a year? I dunno you so I'm throwing a random number there, and you most probably earn far less than that (I do ^^). Now imagine earning three times what you earn today. How much richer would that make you feel? A lot, right? If I earned 3 times what I earn today it'd basically mean I've changed my socio-economic class in every possible way one can think of.
And that's just three times. Now try imagining what a thousand times means. You can't. Not really. We can try to imagine it, but we actually cannot.

And this is a fundamental problem. Whenever there is such a discussion on *billionaires* there is always someone who actually focuses on *millionaires*, even though it's a completely different order of things.
I've met and I know a few millionaires. They're perfectly normal people who work for a living and have hobbies I can relate to.
I've never met, and probably never will meet billionaires. As far as I'm concerned they exist in an entirely different world.
Yet another way to put it: you probably know people who earn two, three, or perhaps even ten times what you do, right? I know I do. As I said, millionaires are perfectly normal human beings.
But do you know anyone who earns a hundred times what you do? I know I don't. Because I'm middle-class, someone earning a hundred times what I make would be immensely wealthy.
A thousand times or more? That becomes impossible to comprehend. That's so much wealth I, being of rather humble origins, wouldn't even know how to manage it, how to spend it... etc. It is simply impossible for me to fathom.
And it shouldn't exist.

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19 minutes ago, SeanF said:

I think one needs a system in which some people can become billionaires, if one wants society to prosper.  Even social democratic Western societies have billionaires, even if they're more heavily taxed than billionaires in the USA.

I find this line of argument so so bizarre.

Thats the capitalist victory, when you think we need inequality and billionaires and millionaires for society to prosper. When in reality they achieve that by the labor of the inequal people. 

We dont prosper becouse of them, they prosper becouse of us, and then tell you that they are a necessity. 

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19 hours ago, Kalbear said:

If you're requiring donations from several thousand people, you're several thousand times more democratic. I don't see how this is difficult. 

You're still a tiny fraction of the overall population, wielding power. See my point about arbitrary limits on what is considered "acceptable" individual influence. And of course whoever is in charge of that NGO is wielding that influence. 

19 hours ago, Kalbear said:

There are a whole lot of ways to do this otherwise, including requiring companies to be mostly owned by their employees, have absurdly high wealth taxes, ban big firms entirely, etc.

We could have giant cooperatives now - there's no fundamental barriers to starting them, plentiful capital, etc. The fact that we don't have large numbers of them (that most of them are either conversions from regular firms or the singular Mondragon) suggests that either most folks don't actually want them, or they simply not capable of generating new big firms. If guys like Bezos and Gates were actually parasites in this situation, we wouldn't be having this discussion, because why would their employees ever work for them instead of starting their own cooperative? 

Absurdly high wealth taxes and banning big firms are basically the same thing, and both are terrible. Larger firms have lower prices, pay more on average than smaller firms, are generally more productive and innovative, and so forth. 

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20 hours ago, Kalbear said:

There are a whole lot of ways to do this otherwise, including requiring companies to be mostly owned by their employees, have absurdly high wealth taxes, ban big firms entirely, etc. You're right that unmolested capitalism results in billionaires and massively poor people; I'm suggesting that unmolested (or at least less molested) capitalism is a major problem. 

This is certainly true and yet... if it was as beneficial as it appears to be, wouldn't somebody have tried it by now and built a better society which everyone else can emulate? Here's a wiki page with the number of billionaires by country. As you can see, the entire G20 is represented as well as a broad spectrum of ideologies and political systems including nominally Communist China, all of the Scandinavian countries idealized by some Americans as moderately socialist, various Islamic states and pretty much everyone else with even a modicum of global influence. There are a few famous countries missing (e.g. Iran and North Korea), but this is mainly because the truly wealthy there don't publicize their wealth.

So what gives? Why doesn't anyone tax them or require employee ownership or something of the sort? Part of it is undoubtedly that existing billionaires resist such legislation, but I suspect another part of it is that having a single mind with ultimate control of a multinational corporation can be better than delegating this to a group. Of course, that doesn't explain why we allow people who lack any aptitude or desire for such a role to inherit billions; that has to be simply because the wealthy are powerful enough to make it so.

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45 minutes ago, Spring Bass said:

You're still a tiny fraction of the overall population, wielding power. See my point about arbitrary limits on what is considered "acceptable" individual influence. And of course whoever is in charge of that NGO is wielding that influence. 

We could have giant cooperatives now - there's no fundamental barriers to starting them, plentiful capital, etc. The fact that we don't have large numbers of them (that most of them are either conversions from regular firms or the singular Mondragon) suggests that either most folks don't actually want them, or they simply not capable of generating new big firms. If guys like Bezos and Gates were actually parasites in this situation, we wouldn't be having this discussion, because why would their employees ever work for them instead of starting their own cooperative?

Because they're giant corporations with tons of money they can throw around in order to destroy smaller competitors? Let's say someone starts a cooperative that competes with Amazon, it won't last even if it objectively offers a better service than Amazon. Because Amazon can use it's size and wealth to price out its competitors. Or it can destroy it's competitors ability to even get the basic supplies it requires to run. Want to compete with Walmart? Good fucking luck when they can even bend their suppliers to their will. Walmart's existence distorts the supply chain. It wields more power than small countries.

Much like people don't understand how huge the difference between a million and a billion is, they don't understand the scale that these huge corporations work at. You can't just start you're own business and hope to out compete them. It would be like expecting your local t-ball team to beat the Boston Red Sox.

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55 minutes ago, Spring Bass said:

You're still a tiny fraction of the overall population, wielding power. See my point about arbitrary limits on what is considered "acceptable" individual influence. And of course whoever is in charge of that NGO is wielding that influence. 

Why does someone have to be in 'charge' of that NGO? Why does there have to be a specific, undemocratic leader for these things? 

There is always going to be a way for people to wield power. What we should desire is power with oversight. It is simply going to have more oversight in general if you have to ask 10,000 people for $1000 instead of one person for $10m; even more so if that one person is just going to decide to go ahead and do the thing and not ask anyone else for help or support. 

55 minutes ago, Spring Bass said:

We could have giant cooperatives now - there's no fundamental barriers to starting them, plentiful capital, etc. The fact that we don't have large numbers of them (that most of them are either conversions from regular firms or the singular Mondragon) suggests that either most folks don't actually want them, or they simply not capable of generating new big firms.

Alternately, it suggests that you're not accurate, and that there are significant barriers to entry in creating giant cooperatives. For starters, capitalists don't want giant collective groups, don't invest in them, and actively go after them when they can. They want singular leaders - preferably, they want other billionaires in charge. 

55 minutes ago, Spring Bass said:

If guys like Bezos and Gates were actually parasites in this situation, we wouldn't be having this discussion, because why would their employees ever work for them instead of starting their own cooperative? 

And you see that more in the tech industry than almost anywhere else - via startups. I think you answered your own question there. A whole lot of their employees end up not working for them. 

55 minutes ago, Spring Bass said:

Absurdly high wealth taxes and banning big firms are basically the same thing, and both are terrible. Larger firms have lower prices, pay more on average than smaller firms, are generally more productive and innovative, and so forth. 

Larger firms also have massive monoculture failure modes in the economy, and become hugely problematic if that industry fails or if that company in particular does badly. They can be more efficient when things are doing well, and they can also be equally more deadly when things go badly. 

Also, most of the 'large firms' in question that are more innovative that you'd care to name - Amazon, Microsoft, Facebook - started out as incredibly small companies with significantly better innovation and production. They also paid significantly more (in stock and other things) than they do now. Tesla is arguably the most innovative car maker on the planet right now, and they started out incredibly small by comparison to the other companies. 

Now there are some arguments for making companies pretty big; the modern economy does work well when you have massive supply chains from all over, just-in-time shipping, etc. (We can argue about the harm of THAT too, but whatever). That said, you don't have to be absurdly huge in order to have those things as benefits. There's no reason that Amazon needs to be as big as it is other than 'that's the way it is', and there's especially no reason that Amazon the bookseller can't be broken up from Amazon the web services and Amazon the home decor line and Amazon the fulfillment system. 

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2 hours ago, TrueMetis said:

Because they're giant corporations with tons of money they can throw around in order to destroy smaller competitors?

And there weren't giant companies when the existing set of giant firms took off? Walmart started off in the hyper-competitive discount retail market. Facebook started when MySpace was already a company with a couple hundred million users in essentially the same type of business. Amazon was up against Barnes and Nobles and Borders, not to mention any other site starting up to sell anything on the web.  Google was wading into a crowded search engine field dominated by Yahoo. 

 

2 hours ago, TrueMetis said:

Want to compete with Walmart? Good fucking luck when they can even bend their suppliers to their will. Walmart's existence distorts the supply chain. It wields more power than small countries.

And yet literally a ton of them do. Walmart doesn't even have a majority share in retail in the US or elsewhere, never mind a monopoly. 

 

2 hours ago, TrueMetis said:

Because they're giant corporations with tons of money they can throw around in order to destroy smaller competitors?

You missed the point - why are Walmart's employees still working for Walmart (or Amazon's for them), when they could all quit and start up a cooperative that they own? They have the expertise and the knowledge of how to run the company, and capital is cheap. What is the Walton family gonna do if all their staff quits? They're not like feudal aristocrats - they can't send out the knights and men-at-arms to kill a bunch of them and force them to return to the metaphorical fields. They can't even send out the Pinkertons to beat people, like the robber barons of the Gilded Age. 

 

2 hours ago, Kalbear said:

Alternately, it suggests that you're not accurate, and that there are significant barriers to entry in creating giant cooperatives. For starters, capitalists don't want giant collective groups, don't invest in them, and actively go after them when they can. They want singular leaders - preferably, they want other billionaires in charge. 

There's no evidence of that. And in any case, you missed my point - why would they even have a choice? If the employees of the big firms all quit and form their own worker-owned cooperatives, there's no other rival investments in the immediate future. 

 

2 hours ago, Kalbear said:

There's no reason that Amazon needs to be as big as it is other than 'that's the way it is', and there's especially no reason that Amazon the bookseller can't be broken up from Amazon the web services and Amazon the home decor line and Amazon the fulfillment system. 

There's also no particular reason to break them up. Amazon's not even a monopoly (or close to it) in online retail, never mind retail in general. The company is quite popular in the US, and it recycles its profits back into the firm for further growth and expansion rather than shoveling it out as buybacks to line the pockets of investors. 

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I think some people get caught up on the "millionaire" or the "billionaire" and think the number/the line itself is what matters, but its not. The problem is the disparity in wealth, not the particular line that is drawn to prevent it - of course where that line is will vary based on the value of the current currency etc. As others have (imo) done a good job of articulating, billionaires live in a completely different world and their very existence is severely damaging to our democratic systems. If you want to retain billionaires at the very least you need to figure out a way to diminish their political influence and good luck finding a way to do that.

I used to think of Bill Gates as a positive influence, but I've seen a number of people speaking up more recently about the harm that his charity's approach is doing to health systems in the countries that he's attempting to help - undermining public systems and driving the neoliberal model of health care, whether that's an intentional goal or not. I haven't read too far into it, but I wanted to acknowledge that as always reality is complicated.

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1 hour ago, karaddin said:

If you want to retain billionaires at the very least you need to figure out a way to diminish their political influence and good luck finding a way to do that.

You just need a countervailing force and institutions that weaken any attempt to turn money directly into political power. Unions, basically, plus easier voting rights and the safety net. Most rich countries do a much better job of that than the US, even though they got billionaires too. 

I was pointing out the shortcomings of cooperatives earlier, but I actually do think there is some merit in having employees elect part of the board of publicly traded companies. And of course their rights to unionize should be protected. 

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8 hours ago, Conflicting Thought said:

I find this line of argument so so bizarre.

Thats the capitalist victory, when you think we need inequality and billionaires and millionaires for society to prosper. When in reality they achieve that by the labor of the inequal people. 

We dont prosper becouse of them, they prosper becouse of us, and then tell you that they are a necessity. 

I make no secret of the fact that I think that generally, capitalism is a good thing, which has given us a standard of living that past societies could only dream of.

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I think there is almost no empirical evidence for the "incentives" argument. Very few inventors become filthy rich. Nowadays, most innovations and inventions are team work done by people who work in R&D or even at statesponsored institutes and universities and are usually well paid but not even close to earning enough to become multi-millionaires. And just recall which institutions developed e.g. the www and mp3.

There was probably a time in the late 19th and early 20th century when more inventors and innovators could serve as examples of the ridiculous "John Galt" idea, i.e. there was a closer connection between a single person having a brilliant idea and reaping the rewards. But most inventors were not rich back then either and could someone just remind us what did Rockefeller, Vanderbilt and most of the barons of the last gilded age etc. invent?

The only "evidence" is that a caricature of a socialist system stifles entrepreneurship and invention. But if this shows anything at all then only that some monetary (or other) incentive is needed. Not the opportunity to make millions or billions.

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13 hours ago, Ormond said:

Well, although Rowling's net worth may have dropped below a billion dollars for a few years after 2012 due to her own charitable giving, most recent estimates put her over a billion again.

Of course the "billion dollars" figure is arbitrary and I'm sure there are many billionaires worth a lot more than she is. 

The point with Messi and Rowling is that they are by far the best case for the libertarian pov that they are "entitled" to their wealth (and taxing would be theft etc.) because they did not get rich by exploiting other football players or authors or dependent workers. The printer gets paid the same amount regardless of the book he is printing and Rowling clearly is not exploiting the printer (like the boss of the printing company might be) by keeping more of the commonly created wealth for her and thus becoming filthy rich.

But Franklin's argument is sufficiently general to justify taxing even wealth that has not clearly been gained by exploiting the labor of others. Rowling did not create a culture where almost everyone can read, she did not invent cheap methods of printing and binding etc. to make mass market books possible etc. Her wealth is dependent on what generations of others invented, established and sustained. And obviously she benefitted disproportionally from these structures and institutions of society. So it is in no way unjust to tax her in proportion to these benefits she reaped.

(Of course the same dependence and disproportionate gain is true for Gates etc. but in their case one could also use broadly Marxist arguments that the don't deserve their wealth because they obviously did not pay their employees who contributed to creating it, enough, otherwise they would not be a thousand times ore more as wealthy as their typical employee. But this line of argument is weak for cases like Rowling.)

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2 hours ago, SeanF said:

I make no secret of the fact that I think that generally, capitalism is a good thing, which has given us a standard of living that past societies could only dream of.

I'm personally not a socialist in the sense that I think that all capital should be publicly owned. Of course, I might be a socialist under other definitions. Here in the United States certain sorts of people have a real bad habit of changing the meaning of that word as it suits them. They like to play calvin ball with that word.

I don’t think it’s a secret that I'm more influenced by JM Keynes than Karl Marx. 

I like markets and think they can do a lot of good. I'd just point out though that being pro market and being pro business aren't always the same thing.

But, here in the United States in particular, likely followed by the rest of the Anglo speaking world there is a there is a very strong ideology of free market fundamentalism, often pushed by people that have a financial interest in doing so. An excellent work on this topic is James Kwak's Economism. I'd recommend reading it.

The basic upshot of it is that certain sorts of people want to apply the purely competitive partial equilibrium model where it doesn't apply. It's like people learn about that model, which is sometimes appropriate as a model, and then forget about everything else they learned in an economics course. Fact is there are plenty of standard economic justifications for government interference in the economy. Just for example: Here in the United States many of our drugs are covered by patents. Hence there are there are a lot of monopolies in the US drug market. Basic economics teaches that if the government can set prices in such a situation, it can increase welfare. Yet, you'd never hear that acknowledged from the free market fundamentalist crowd though.

The usual source of conservative mistakes are always assuming:
1) Perfect competition
Well, this doesn't always apply. Particularly where there are informational problems about prices and so forth.
2) Using a Partial Equilibrium Model where  it doesn't apply.
Partial equilibrium models are a handy analytical too. But, they are an approximation of reality. In order to get a completely realistic model you'd have to put not only every price on every market into the model, you would also have to put the expected price in the future of every market into the model too. In some cases, this extra realism just isn't worth it. But when the market gets big enough, then using a partial equilibrium model isn't appropriated. Where this has practical application as far as public policy is concerned is the debate over minimum wages. Fact is that people that want to argue that raising minimum wages will cause job losses are using the competitive partial equilibrium model and are making a mistake.

During the Great Recession you had all sorts of people arguing basically the "market would correct itself". But where in the hell were people getting this from?  Well evidently it was based on the Arrow-Debreu model of general equilibrium. For a primer on this topic, you can read here:

https://www.amazon.com/Microeconomic-Theory-Andreu-Mas-Colell/dp/0195073401

But the fact is that the Arrow-Debreu model makes a lot of strong assumptions that just doesn't apply in the real world. Once those assumptions are removed, then a multitude of equilibrium are possible, some of them likely more desirable than others. The upshot of this is that it creates a role for government intervention into the economy.

Of course I’d just note that some of the people that were arguing that the “market would correct itself” back in the day have now changed their tune, now that a guy they didn’t like as President is gone. Evidently, they didn’t believe in their own free market fundamentalist rhetoric, but it was only meant to be used cynically as a political weapon.

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1 hour ago, Jo498 said:

The point with Messi and Rowling is that they are by far the best case for the libertarian pov that they are "entitled" to their wealth (and taxing would be theft etc.) because they did not get rich by exploiting other football players or authors or dependent workers. The printer gets paid the same amount regardless of the book he is printing and Rowling clearly is not exploiting the printer (like the boss of the printing company might be) by keeping more of the commonly created wealth for her and thus becoming filthy rich.

But Franklin's argument is sufficiently general to justify taxing even wealth that has not clearly been gained by exploiting the labor of others. Rowling did not create a culture where almost everyone can read, she did not invent cheap methods of printing and binding etc. to make mass market books possible etc. Her wealth is dependent on what generations of others invented, established and sustained. And obviously she benefitted disproportionally from these structures and institutions of society. So it is in no way unjust to tax her in proportion to these benefits she reaped.

(Of course the same dependence and disproportionate gain is true for Gates etc. but in their case one could also use broadly Marxist arguments that the don't deserve their wealth because they obviously did not pay their employees who contributed to creating it, enough, otherwise they would not be a thousand times ore more as wealthy as their typical employee. But this line of argument is weak for cases like Rowling.)

But Rowling only keeps a fairly small fraction of the wealth that she generates, and that fraction is taxed.  Her royalties are perhaps 10% of her sales, and that 10% faces tax at 40%.  So, in purely material terms, a great many people are indeed benefitting from what she creates. 

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6 hours ago, Spring Bass said:

You missed the point - why are Walmart's employees still working for Walmart (or Amazon's for them), when they could all quit and start up a cooperative that they own? They have the expertise and the knowledge of how to run the company, and capital is cheap. What is the Walton family gonna do if all their staff quits?

:lmao: If their staff quits, they'll hire replacements who need the money. The would-be co-op would go in search of a massive investment to build a rival to Walmart from scratch; assuming they actually managed to get the money somehow before all starving to death (they wouldn't), Walmart would commit everything to crushing them; they'd have no way of matching Walmart's prices. And planning a secret mass resignation of a couple of million people would be impossible anyway; anyone showing the slightest sign of even thinking about plotting such a thing would be out the door before they could blink.

2 hours ago, SeanF said:

I make no secret of the fact that I think that generally, capitalism is a good thing, which has given us a standard of living that past societies could only dream of.

Oh yes, it's all down to capitalism, nothing to do with the incredible advances in technology we've made in recent centuries.

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