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PaperclipPerfector  7mo ago (text post)   29308 thread views

Culture War Roundup for the week of October 2, 2023

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Just got back from month long vacation # 3 this year, perspective fully changed: Working for money is fucking stupid. Wow, is it stupid.

I've met dozens of people who travel full time from property and investment income from their grandparents; and I am probably a couple years from fully supporting myself purely from passive income (though I'll probably keep working just to get the number higher; maybe pile up some burnable cash to buy more investment property during the next crash).

The switch was sudden and totally unrelated to anything specific I had done; it is just a result of two generations of skin flint behavior and interest rates. If your family line can get together mid six figures of money in investments and assets and sit on it for 1.5 generations without anyone buying penis compensation trucks or boats or developing a gambling addiction or fentanyl addition; you can just be fucking set. (Said in the tone of a joke, but actually a big ask according to the facts.)

The people talking about class war are 100% right; I can say that for a fact now that I've experienced it from both ends. It's really nice to be on the winning side for once. I just watch the money I float in my checking accounts go up 70k every couple months and most of it goes into investments that will only be dinged if the government of the USA collapses; recission proof and inflation proof and 98% risk free. It is so fucking easy to live solely off the sweat of other peoples brows; no wonder these dudes who were born into it start thinking they can't possibly fail.

All this to say: What the fuck do we do about the fact that owning shit and renting shit is just flat out better in every way than doing shit or making shit?

It's easier, it's safer, it's more sustainable over the course of your life, and you can pass it down to your kids locked away in trust so even the frailest son can't fuck it up.

I know that my solution (radical wealth redistribution, red-black shit at large, etc and so forth) isn't popular here; but even conservatives have got to recognize there is a problem.

How do you solve it without the revolution? Is that question even coherent?

All this to say: What the fuck do we do about the fact that owning shit and renting shit is just flat out better in every way than doing shit or making shit?

Nothing.

Zero need to do anything about it.

Wow, would you mind me asking what investments you have that are both so safe and have such great returns? I see no such investment opportunities on my end, but I'd like to learn to identify and take advantage of them, if such a thing is possible. I wouldn't mind taking even one month long vacation in a year, let alone 3. I haven't had a vacation longer then 2 weeks since I started my career 8 years ago.

You know about them; the problem is your parents or grandparents needed to start snowballing them up to get a decent amount of money in there.

Most safe investments only beat inflation by a little.

That said, if you want to protect against inflation "safely" Ibonds, TIPS, treasure bonds, and other boring products backed by the government are the way to go.

The problem is that they will never beat an index fund. I know they say to never try to time the market, but damn: never try to time the market.

EDIT: I FORGOR! Look into fixed annuity. I don't understand them much and they are complicated as fuck; but all the ones we have have worked out well. This one is not good advice; it is advice to get advice from an advice-er.

What the fuck do we do about the fact that owning shit and renting shit is just flat out better in every way than doing shit or making shit?

Having things is inherently and unchangeably better than not having things. This isn't a problem and there is no solution to it.

That said you seem to be heavily discounting the risk built into real estate. Everyone is a genius investor in a real estate bull market/bubble. If this was all as easy as you say then the market would correct for it.

Working for money is fucking stupid.

I think it depends how ambitious you are. Some people work for fun, as strange as it may sound to you. Money does give them the luxury of picking a profession which align with their passions rather than their talents (not always aligned, sadly).

Also, people are social animals and there is often greater status in doing something than passively sitting around doing nothing. Perhaps this is less true in European countries like Italy which has relatively little entrepreneurial energy and a lot of inherited old money families, but my impression is that wealthy Americans work a lot. They certainly do in the area of Europe where I am based.

Most people chase the approval of others and if your social circle allows for doing nothing except living on passive income without judgement, then great. But I don't think this is true for many successful people.

Some people work for fun

These are also the same people pushing for return-to-office.

I am pushing return to office. Our junior people across my practice (probably 40 people) have utterly stagnated.

Our junior people across my practice (probably 40 people) have utterly stagnated.

Sounds like a good way for GenX to consolidate our power despite being outnumbered to me...

Not really. Lots of well-to-do people do projects-based work with fluid locations and enjoy it. You probably just have bad work experiences.

Please pay at least half attention of thinking of the problems of the red-black shit solution and massive wealth redistribuion and revolution.

Evidently that way of thinking leads to less wealth creation and other huge problems to boot.

So I reject your framing all trying to solve the problem you focus upon in exclusion of all others.

I would say in regards to that, if rent seeking is bad, you don't promote it to society in general. Your mentality is wrong.

And if being owner is good, it might play a role in encouraging wealth creation. I think for other reasons that are more important about power concentration we should break monopolies like FAANG and try to limit the power of corporate lobbies to corrupt politics.

This applies even to weapon manufacturers who are actually IIRC the biggest donors to think tanks. And people part of neocon warmongering groups, tend to get positions in said corporations.

Corporate America has been corrupted by private/public partnership and march in institutions and powerful ethnic and ideological leftist lobbies. Like the ADL which its control over advertisers. Over 90% of jobs since BLM have gone to non whites in S and P 100 according to Bloomberg.

IMO the solution is to outright ban and start criminal investigations for anything that fits for some of this super NGOs deep state monstrocities. And also seperate super corporations like blackrock in a million pieces while also investigating any attempts for them to impose totaltiarianism and enforce ideological conformity of far left type as something criminal.

Plutocracy in combination of cultural totalitarian far leftism and ethnic supremacy for groups associeted with the left, is like some kind of chimera that is rather bad.

The plutocracy can NOT do as they want but should be constrained by principles and forced to be more evenhanded in their hiring decisions over following ideological dictates.

Ideally you want a society that people try to create wealth, and even managers and owner of wealth can play a productive role by doing so effectively. This should be seperated from the mentality that powerful whether goverment or rich, or specific classes can do no wrong. A mentality that they should be constrained by strict adherence in principle needs to be enshrined and requires certain form of punishment for those who break it.

Personally, I have a much greater beef with the rich guy who uses his millions to promote evil causes over the guy sitting on them and enjoying his wealth.

Nevertheless, one leftist critique that the left has done but hasn't really effectively opposed team totalitarian consolidation of our private public partnership age, has been about the possibility of any tendency of capital to accumulate power and leading to monopoly. The leftist solution of the more radical sort or what they do in practice which is to join them and focus on promoting redistribution in favor of the left's favorite groups and calling this as Kendi has as anticapitalist, is really not a good solution.

But there might be value in restrictions limiting the growth of big capital and promoting smaller bussiness and the middle class as the way forward. Going too far in restrictive area can kill the golden goose of capitalism, but yeah I see the value of antirust, and trying to not less an arrogant plutocracy do as they want. The bedrock and what countries should primarily be run in favor of is the middle class family. While other social classes also have their place in society, so I am not adopting a framing like the marxist who thinks other classes should be eliminated in favor of the working class.

We should advantage the middle class voter, tax payer, family as a good, but we shouldn't try to mistreat the other ones.

Here are some other ideas:

  • Punish white collar crime, the Sam Bankman Fried types much more strictly. The point should be punishment to deter them.

  • I already advocated it but start treating some of the lobbying we see from these types as a crime, and as corruption, treason, etc.

  • Start to treat these types imposing their extreme ideology on society as a crime too.

  • Try to remove political commissars from institutions (The ADL has a chapter in Microsoft, Google, Facebook) and to promote both more pluralism but an overton window with restrictions too. Both the current plutocrats and people who marched in goverment institutions are too much on the political commissar front. The overton window should be more even handed and not prejudiced for left wing demographics.

  • To that end, both break up such mega corporations and FORCE public platforms to allow competition. With massive fines. Things like Substack, Gab, etc. Regulate to allow pluralism. This is in line with the much forgotten theory of democracy that dissent including extremists opposing each other leads to a more moderate end. Personally, I still favor some gatekeeping but of a more evenhanded nature. More pluralism against the prejudices of the powerful types of our society would be a good thing.

  • AA policies of plutocrats and the goverment which have obviously become rather excessive should not only be seen as racist, but an abuse of power. The issue of powerful using their power for their own ideology at expense of society. This goes contra to the rationalist alignment with them which in case of Scott Siskind let him even promoting George Soros in certain instances as a good. Anyway, large fines, prosecutions should be the recipe.

I don't think someone who is rich, or managed to capture a position of the bureocracy should do just what he wants because he has that position. Principle should rule over petty and immoral desires of powerful men. Of course this still requires men of principle to enforce this ideal.

Ban AA and start prosecutions against those who do it and allow/encourage lawsuits for those trying to enforce it through the backdoor. It goes without saying that those who exercise the dastardly proffession of being an enforcer of "diversity" who engages in immoral rent and parasitism, should actually engage in an honest job.

  • Globalism relates to the monopolization of power. An alternative should be governments encouraging local analogues to useful services and promoting innovation. So rather than Google and Americans who control google and have the ideology they do having enormous world influence, if large blocks created their own search engine, play store, etc, etc, this would limit Google's reach. This also has something to do with your point about sitting on assets since there is a difference with a mega rich super corporation and smaller ones which don't have said opportunity. This can also compensate for some of other problems I mention. If you can't remove the political comisars from Google, you can try to limit the rich of Google (and others) and promote alternatives. Practically, this would not lead to richer and more competent international companies disappearing, nor end of globalismJust make it a less totalizing force. Ideally we have less powerful and less malevolent global companies.

Fundamentally, maybe I don't know about Samsung having negative influence in politics of Korea, but I don't have that much to complain about companies like Sony, Samsung, etc. So if they were less ideological companies like google would be less offensive but there is something to say about the enormous power of Apple, Google, Amazon that is simply too much.

  • Obviously mass migration empowers the plutocrats who gain cheap labor, are able to offer less to locals, and get to combine their effort with authoritarian far leftists who criminalize dissent. So restricting it is a good idea. It also combines with the idea that only profit and the values of plutocrat matter. When capitalism should compromise with the promotion of other things rather than society just serving mammon. Some of these values can be nationalism which also should compromise with respecting the rights of other nations and not seeking to conquer everyone else. Another value can be international justice which goes against the interest of weapon manufacturers and corrupt "nation builders".

There is an inherent strong value to strong communities which requires rootedness, continuity, and promotion of culture related to religion, ethnic identity. So maximizing wealth creation should not be ideal and there should be a compromise that have people for example go to church in mornings, or enjoy weekends.

The things that can elevate man outside of the capitalist process tend to be related to things of a more conservative and Lindy nature.

  • To that end, promote good art, architecture, buildings that can last a long time and be admired by future generations. Society should build beauty and promote arts. Promote the kind of art that have tended to do this which hasn't been rap, modern art, more brutalist type of architecture. We need a culture of patronage of that and for goverment to encourage it with funding, regulation, and what kind of art it teaches in schools.

The rich who instead of giving his money for malevolent far left NGO, builds awesome cathedrals for example, or promotes paintings like Michelangelo's frescoes, deserves praise for making the world a better place. There is also of course more to just supporting beauty like certain technological innovation and wealth creation which should be more rooted to continuing the splendors of our ancestors creations.

This can be adjusted to an extend for different societies. World is too boring if everyone is the same. Chinese should promote more traditional type of their architecture. Arabs, the same. And so on.

And yes, some selfish motive like trying to have comfort for you and your family is going to motivate more people to gain wealth than patronage to build cathedrals, creating great work of arts that are actually admirable unlike abstract art and architecture, etc. But wealth used for good causes. Actually encouraging this might lead to more of the wealthy spending their money, because now there would be more things of worth to do so.

And also, if you are a rich guy who has done so, putting your name somewhere is well worth it. But name, not advertisement. Putting something like the symbol of Pepsi near a magnificient statue is disgusting and defiling. A plague of the patron but no tacky advertisement.

  • Going too far with taxation can ruin societies, but there is some value to progressive taxation if you don't overdo it. Reject things like flat taxes. There is also a value in again not overdoing it (because owning and inhering wealth it is an incentive for wealth creation), but having a tax system that focuses more on taxing rent than wealth creation. But even more importantly, one should be pragmatic and not rigid. Better to exclude anyone from this process who think that communism is at all an alternative that we should give another shot. If things you try and succeed in doing actually don't work well, you try to understand why and not repeat the process. A certain pragmatism and humility are good. Humility should not lead to complete inaction however.

Passive income is great if you can get it . investing in big tech is some of the easiest $ ever too. When it comes to investing, ppl make this needlessly hard. Inflation will erode returns though like from 2022-2023, but over longer timeframes real returns for stocks and real estate and investment-grade medium duration bonds is positive.

All this to say: What the fuck do we do about the fact that owning shit and renting shit is just flat out better in every way than doing shit or making shit?

it is great (except for renting, which is usually a drain, but owning real estate is great). But still, the returns from successful entrepreneurship will exceed probably any investment, save for maybe buying bitcoin early . Getting to the stage where you can live off of passive income requires some sort of grind or income source, like from a business or job (that is pretty much what the whole FIRE movement is about). Unless you inherit it.

I know that my solution (radical wealth redistribution, red-black shit at large, etc and so forth) isn't popular here; but even conservatives have got to recognize there is a problem.

What problem? That there is wealth inequality? So what. Most people do not care. Elon has millions of fans and is very popular despite his kids never needing to work. most people do not have a problem with this. Even in the 30s society was closer to revolution than now . Rich celebrities and entrepreneurs today are beloved , it's the politicians who are the most disliked.

All this to say: What the fuck do we do about the fact that owning shit and renting shit is just flat out better in every way than doing shit or making shit?

I don’t know about that. Society runs thanks to the people doing and making things, not from the people who passively own. Life without work is a dull and meaningless existence. Identity is formed by what you leave behind. You can’t take that wealth with you into the afterlife. I suspect that’s why limousine liberals adopt some kind of pet social cause that occupies their time and gives their lives a purpose.

I had a similar feeling when I (an American) visited Spain several years ago. The old wealth was encrusted in the architecture. Buildings, hundreds of years old, that draw millions of tourists in popular town centers. The people who maintain them are like caretakers. They didn’t build them. They never met or talked to those who did. They live in the shadow of their own history. Unable to build anything of their own because all the land is developed already. I would rather scratch and claw my way to a meaningful living, having known that I left my mark in the dirt.

This is an important point. There are two (possibly three) very different views of the owning class lifestyle. FatFIRE is selling the idea that you can live like a retired Boomer starting in your late twenties - plentiful toys, no responsibilities, and no constraints. But people who do that end up living a life of permanent luxury travel in low cost of living countries for a reason - it isn't socially acceptable to live with no responsibilities unless you are an actual retired Boomer or an attractive woman ("socialite" or "trophy wife"), so if you actually end up settling down somewhere you find yourself universally hated. It is also a lifestyle which lends itself to family court litigation, which is the fastest destroyer of dynastic wealth short of wars and revolutions.

The other view is that rather than allowing you to remove yourself from community, being independently wealthy either raises your status in your own community (the "gentry" model) or allows you to join a higher-status community of people who are as rich as you (the "aristocracy" model).

I just watch the money I float in my checking accounts go up 70k every couple months and most of it goes into investments that will only be dinged if the government of the USA collapses; recission proof and inflation proof and 98% risk free.

There's a lot of potential risk, and while not all of it's the sort of thing that explodes a large portion of your asset portfolio, there's some of that class along with the "whoops it's all asbestos", "how do you like dem mold spores" and "tenant from hell that you have to take to your state's supreme court to evict", or just the hailstorm- or leaky-shower-scale problem.

And people can definitely fuck it up. People fuck up the value of homes they live in! This guy swears he'll get your basement renovation done at half the cost, no permits required, and he just needs to cut some notches in this one beam. Labor's expensive for roof repairs right now, just throw some more shingles on top and it'll last another ten years no problem. What does it matter how if the washer and dryer^andsomeotherstuff^ are on the same circuit? The housing inspector said no visible knob-and-tube.

I'd also like to argue that housing as an asset has only risen so consistently because of bad broader-scale policy decisions, but a) I've been saying that for a long time and the regulatory environment can stay stupid long enough for you to stay solvent generations, and b) the last time I decided maybe the counterintuitive economic theory had a point after guessing wrong for decades, MMT self-detonated.

There's a steelman that the risks are out-of-whack with the returns, as evidenced the variety of property management businesses and the relatively low rate of FTX-scale detonations there.

But the extent that's a largely floating on the price of housing being high enough that a small cut off is coming off a large pie. There's a sense where this is revolution-complete, since those high housing prices are the result of a combination of increasing population and immense regulatory and economic pressures against building new (or even replacement) housing, especially in high-demand areas but even in stupid ones, and especially at the lower cost end of the market. But there's another sense where if you could get even a portion of the people needed to have a successful blood-in-the-streets revolution (or the Canadian solution) to get off their couch, you could also change the political calculation, or just move a lot of similarly-minded people to take over a state the Libertarian Party way.

True re. housing as asset; but not for me. I'm different in that the property I [the greater family investment pool] own is across several countries and is in desirable locations that will remain desirable even in the 85% worst case climate change scenario; and we don't actually rent most of it out. It mainly gets used by members of the pool or lent to people we know in exchange for other services or for adhoc payments; lets us avoid tenants rights or squatters rights situations by not being landlords or absentee assholes; and it's better for out karma. It doesn't scale, but we don't want it to.

Actually owning property for rent as a small time investor is a fucking pain and half; even more so if you don't live in the same building. Much easier if you have lawyers on call and float a huge amount of money than owning 2.5 rental units 600 miles apart.

I've actually managed to avoid the pitfalls of getting fucked by tradies by being a former tradie myself; but it is precarious.

That's fair, although it sounds less like One Weird Trick and more that you've got a Very Particular Set Of Skills. Which still says something, but it's something different.

like to argue that housing as an asset has only risen so consistently

But has it? Here is the St. Louis Fed's real residential property index, which was at 60 in 1971 and about 160 today. In contrast, this calculator claims that $60 invested in the SP500 would be worth $1,540 today after taxes inflation.

Which is not to say that owning housing is not a good investment; if you live in it, you save on rent, and if you don’t, you collect rent. But most of your returns are going to be from something other than the appreciation of the property.

My claim is less that housing prices have been the Single Best Return On Investment, and more that they're just very consistently rising.

Separately, I don't think the St Louis Fed's residential property price index is really an apples-to-apples comparison to stock investments or what I'm motioning around, but their documentation on what data means exactly is pretty painful. This measure is probably closer, but because it's an average of sale values rather than of all values some of the drop in 2008 is probably about decreasing velocity at the top of the market, and it does hide some of the inflation-related 'real' value drops.

But that measure does not seem to be adjusted for inflation. Per the BLS inflatiin calculator, the 26,000 average in 1970 = 211,000 today, so today's $505,000 is 2.39x the 1970 price. That is about the same (actually somewhat less) than the 2.59x increase in the real price index I linked to (60.9 to 157.9).

I spelled out that the Fed numbers I was providing did not include inflation at the end of the post above. (I'm also not sure, but I'm 99% confident the SP500 isn't adjusted for inflation either. Yes to be clear, stocks are still going to end up having larger absolute growth.)

The exact look of the chart varies a lot depending on what inflation and housing price index you use, and some of them will show drops around the 2008 and 1979 (sometimes 1989), but even those will be less volatile than the stock market, unsurprisingly, and that's what I'm pointing toward.

Which is simultaneously obvious and kinda weird! Housing prices are not obviously goods like an opera or string quartet that should be this subject to the Baumol effect, and while land values (and regulatory overhead) are part of the difference in value, you can at least imagine some counterfactual world where a flood of cheap housing brought the average house price lower even if some individual local markets still skyrocketed as they have in our world.

I'm 99% confident the SP500 isn't adjusted for inflation either.

Oops, when I said "$60 invested in the SP500 would be worth $1,540 today after taxes," I meant after inflation, not after taxes. And with dividends reinvested. See calculator here: https://ofdollarsanddata.com/sp500-calculator/

Edit:

Housing prices are not obviously goods like an opera or string quartet that should be this subject to the Baumol effect,

Real income has increased substantially over the years, and as real income increases, people can afford to pay more for important purchases such as housing, both in absolute terms and as a pct of income. So, it is not surprising that housing prices have risen slightly faster than inflation. And, of course, new houses have grown in size over time

upkeep is small compared to the returns of home appreciation and not having to rent.

I'd also like to argue that housing as an asset has only risen so consistently because of bad broader-scale policy decisions, but a)

and scarcity of desirable locations. the option always exists for people to move from expensive to cheaper areas, yet many people still like the expensive areas

rising interest rates are a problem though; risk is mitigated by going as far out in duration as possible putting as little down as possible.

owning shit and renting shit

I really suspect that's not 98% risk free, if you're talking about renting property. There are a lot of property investors who are overly leveraged and suffering right now, in the US and elsewhere. Think about it, if it was 98% risk free why wouldn't you go all in and leverage up?

Every property in the pool is owned outright; and aren't included in the low risk pile.

if you got a fixed rate a two years ago, you are doing great.

Yes, and so are lottery winners. That doesn't refute the point that investing in real estate carries risk.

Just prior to the pandemic I was toying with the idea of investing in multi family rental properties.

Thank God I didn’t. Even with the pandemic moratoriums lifted, our county deliberately underfunds eviction courts so that they hear only six cases per day. Last week I read a story of a guy who owns a house but has to live in his van because he can’t expeditiously evict the non-paying assholes he was unfortunate enough to have as tenants.

Yeah, shares are better IMO. Global companies, enormous amounts of liquidity sloshing around meaning easy, low-slippage transactions. No mucking about cleaning things up, no dealing with people, no real-life stresses and pressures, just profit and loss.

And stocks provide better returns too! https://www.investopedia.com/ask/answers/052015/which-has-performed-better-historically-stock-market-or-real-estate.asp

Because when you leverage it stops being 98% safe? Assume that you have something like 5-6 apartments/condos whatever that you inherited in good part of new york. They are all paid for and yours. Or even better - a saner city where there isn't rent control to complicate your life. As long as they cover the taxes and generate 3 months of your standard of living - you can stop working. If you leverage - suddenly you are exposed - even if you make more money, there is additional stress caused by your vulnerability. So your total QoL may decrease.

This. We aren't interested in doubling our returns if it increases risk above the no thoughts head empty level we are at now. The current level of growth and return is fine, no need to rock the boat for stary eyed yacht dreams.

I just watch the money I float in my checking accounts go up 70k every couple months and most of it goes into investments that will only be dinged if the government of the USA collapses; recission proof and inflation proof and 98% risk free.

The best-yielding thing that's close to inflation proof, recession proof, and risk free right now is a 6-month T-bill at 5.578 percent. To make 70k every couple of months from that, you need $7.2 million, which you're not going to get by sitting on mid-6 figures of investments for 1.5 generations.

I know that my solution (radical wealth redistribution, red-black shit at large, etc and so forth) isn't popular here

For some reason such solutions always seek to redistribute wealth away even from those who didn't inherit the bulk of their money. My own gain from inheritance currently stands at zero; I'm not keen on solutions which would strip me of my retirement -- the one I saved and invested for myself -- based on some sort of class envy of trust-fund kids and Hunter Biden-type failsons.

To make 70k every couple of months from that, you need $7.2 million, which you're not going to get by sitting on mid-6 figures of investments for 1.5 generations.

It's only 6% a year. Why isn't that possible? The real problem is that you're going to lose most of that 5.578% to inflation. A 2% real return per year is more realistic, which means you need $21 million and 8.7% real growth a year.

Assuming I was in this position, I would probably want to go farther out ..maybe 20+ years even if it means only 4%. the problem with those juicy 5.5% short term yields is that at any hint of job weakness/recession, they gonna drop like a rock, so will only enjoy those fat returns for about a year. With a 20-30 year bond, you lock in 4% or more for a quarter century even if real returns are slightly negative now.

For some reason such solutions always seek to redistribute wealth away even from those who didn't inherit the bulk of their money.

I think it's tall poppy syndrome.

People can accept that someone has money because they were born into an advantageous position. People can't accept that someone has money because they are smart, better, or worked harder.

Witness the insane amount of cope trying to paint Elon Musk's slightly wealthy father as some sort of plutocrat.

People can accept that someone has money because they were born into an advantageous position

or that they dislike elon musk so that is the most effective attack . the right does it for Mark Zuckerberg too "he stole facebook"

the right does it for Mark Zuckerberg too "he stole facebook"

This doesn't feel accurate to me. I don't think the right sees Zuck as untalented, merely evil. Zuckerberg isn't even really left coded either. No matter how much money he gives to far left causes, he's not really one of them. "Zuck stole Facebook" isn't right coded or left coded. It's low-IQ coded.

But I take your point that tall poppy syndrome is not confined to the left.

How do you solve it without the revolution?

You don’t. Every society has had a leisure class of gentry.

Obviously we can’t have 40% of the population be in it. But simultaneously, you can’t actually get rid of it. So I think what you’re asking is ‘how do we prevent the amassing of generational fortunes that take large portions of the most talented out of the workforce, and also make it harder for the workers to acquire assets of their own’. There’s a couple of solutions here, and the obvious one is to just let there be a recession, collapse asset prices, make a bunch of heirs have to go to work. Society doesn’t owe them a living for doing nothing anymore than it does the people on welfare.

The other solution, or part of the solution, is to make inheritance taxes positively ruinous on small families but meaningless on large ones. High fertility doesn’t accumulate generational fortunes like that, you only need a confiscatory tax regime for small families. And really only wealthy small families, at that.

Wealth is going to reduce the incentive to work of whoever has it, whether it's the rich or the poor. The advantage of letting heirs keep their wealth is that you are letting the people who earned it decide what to do with it, which increases their incentive to work. I don't understand why people think the effect of inheritance taxes would be any different than that of income taxes. They're even more distortionary and less fair because they tax equally rich people differently based on how they spend their money, and the ones who decrease income inequality by giving their wealth away to their heirs instead of spending it on themselves are punished for doing so.

Recessions don't help because the point of producing wealth is to have and spend it, not to produce it for the sake of producing it.

If you’d actually read my comment you’d know the point of my proposed inheritance taxes was to prevent the expansion of the leisured class.

I did read your comment. Why are you trying to prevent the expansion of the leisure class?

To keep the dependency ratio from getting worse than it’s already going to be.

And why does that matter if they're supporting themselves with their own money?

You don’t. Every society has had a leisure class of gentry.

Obviously we can’t have 40% of the population be in it.

Part of the problem is that economic policy in the West is based on the idea that 20+% of the population should be leisure-class gentry - namely middle-class retirees. The core premise of Boomercon thought is that an amount of wealth that could be accumulated relatively painlessly over 40 years of median-income work (30 for blue-collar union workers in legacy manufacturing or the public sector) should endow 20 years of comfortable, active retirement (including the massive healthcare expenditure needed to support it) through some combination of asset ownership, earned workplace benefits, and earned government benefits. The extreme and malignant form of Boomerconnery (and the dominant one in the UK) is that it should do this without touching the capital value of the family home you continue to occupy as empty nesters. In Continental Europe this is seen as an entitlement that should be guaranteed by the State, in the Anglosphere it is only seen as a default expectation that should be facilitated by the State. But in either case it is a huge constituency of people who are objectively rentiers and do, in fact, vote like rentiers.

The underlying confusion is conflating "class" as in inherited SES with "class" as in ones relationship to the means of production. In 1900 this didn't matter much - almost all rentiers and most entrepreneurs had higher inherited SES than almost all wage-workers. But in the modern day almost everyone is a wage-worker in their youth (it isn't socially acceptable for upper-middle class families to subsidise failsons to live a playboy lifestyle - notice that a huge part of Joe Biden's legal-but-sleazy scheming is trying to create opportunities for James and Hunter Biden to pretend they are earning the money) and everyone hopes to be a rentier in retirement, but in a way which means they can say that their ability to eat while others work is a right and not a privilege. So the generational divide in British (and, to a lesser extent, American) politics is exactly what orthodox Marxism would predict - wage-workers vote left, asset owners vote right.

That’s a cogent point, and we do have to worry about the dependency ratio mostly because of retirees.

Elon has 10 kids.

Total wealth tax at a high threshold, and no loopholes. This would possibly be anti-constitutional though. it would also mean that the govt. would assume equity ownership of companies. If Bill Gates was to die, who would get his shares under a wealth tax?

A wealth tax is just a tax on deferred consumption. Why should equally well-off people pay different tax rates based on when they choose to consume their earnings?

Force sale of X% of shares he held by his estate on the open public market at whatever the price was at his death (or some randomized time before it to prevent gaming) and the government collects its cut as those sell. Seems like a simple enough solution but I'm probably missing something.

Your missing the part where you just created a huge incentive for the government to kill its wealthiest citizens for a bump in tax revenue.

It is a scary thought, but man that would be a hilarious sci-fi dystopian scenario. Become part of a black alphabet agency where your one and only job is to assassinate high net-worth billionaires to help fund the back breaking amount of debt the USA has taken on.

If you're a billionaire, you have to have a 24/7 bodyguard and gain practical, tactical skills yourself or risk being taken out by the government. I wonder if this has already been done...?

It has happened, just not in the US. China and Russia have had their periodic purges and confiscations from rich individuals.

Hmm, well I'll take this as my daily reminder that we have it better in the U.S. than I'd thought.

I think most other commenters are missing the probably unintended point in the last paragraph.

Theres nothing "wrong" with generational wealth. There is something wrong with assets making more money than producing things.. Because incentives no shit! And I dont think this is the natural state of a truly free market.

No, that was the point.

In my peasant farmer mind, generational wealth is adding 20 acers of pasture to the farm and putting a nice steel roof on the barn; not a mysterious check for 10k that shows up in the mail every month no matter what you do.

There is something wrong with assets making more money than producing things.. Because incentives no shit!

What incentives? Working and having assets aren't competing uses of resources.

It does not have to be good or bad or natural or fake. There will always be some creators/makers, some leisure class. not everyone wants to be a plutocrat.

Usually those sort of assets have non-obvious risks attached that can rear up and wipe out the gains without much warning.

If you were holding large amounts of real estate from 2001-2007 you probably felt like you were getting rich for practically no effort.

How would that work? Mid six-figures is $500,000. Assuming a real growth rate of 4% (it could be higher, but I think this is reasonable given how low real interest rates have been lately), and assuming 45 years of growth, that gives you $2.9 million.

Each generation, you'll pay capital gains tax, which in Canada (I don't know how it works in the US) would be about 25%. In the US and many other countries, you also have inheritance tax. That's equivalent to about 1% a year. Is there a way to avoid this with a trust?

Then you have to pay half in income tax, which leaves you with 1.5% to live off of each year. That's just $44,000 year to be split between you and your siblings, spouse, and children.

but even conservatives have got to recognize there is a problem.

I don't see why it's a problem.

it could last forever depending on how many kids, inflation, returns,. living expenses, etc. it depends on the inputs . A small, tight-knit family and minimal expenses and high returns can keep it from being diluted.

You'd need to either only have one kid or you could have two if you made sure they married into equally rich families. To have more, you'd have to spend even less. It's not enough to not work and have a comfortable life, unless you assume higher returns.

Historically, returns have been higher, but they've fallen significantly, and there is always some risk of losing it.

Family wealth tends not to last more than a few generations.

Currently U.S. exempts the first $13 million ($26 million for a married couple) of wealth transferred that way from any taxation.

Even capital gains tax?

Except capital gains from tax-deferred accounts. If you inherit an IRA you pay taxes on the distributions, but if you inherit appreciated stock the basis is reset on death.

Plus $30,000 a year tax free, and you can transfer the $26 million before you die so that it can compound nicely. You gradually give the money to your grandchildren before you die. By the time you die and have to pay inheritance tax, they already have a gigantic nest egg built up from the tax free $26 million + $30k/year you left them.

This is just stuff off the top of my head. Better strategies no doubt exist.

The problem is that the wealthy are great at skirting inheritance taxes, but anything we do to stop them will catch the not-truly-wealthy farmers and small business owners in its snare.

There are some real zany strategies for maximizing the tax-free value of assets transferred during your life for eventually distribution to your descendants.

I think the grand mack daddy of all tax 'cheats' has to be Peter Thiel managing to slide 5 billion into a Roth IRA which means it has no tax whenever he chooses to withdraw it later in life.

That's insane. Saving people a click...

He got sweetheart deals on private company stock and bought small amounts which turned into huge amounts.

Sometimes I marvel at how shortsighted and uncreative lawmakers can be when they write laws. For the love of God, put a cap on every law. Doesn't matter how high, just add a cap. I'm sure if someone said "maybe we should cap Roths at $100 million" people would have laughed. But here we are.

Like, for example, if the original Social Security law said "under no circumstances shall Social Security spending be more than 1% of GDP", people in 1934 would have laughed. "Lol, that will never happen". And here are again.

Thiel did not get a “sweetheart deals on private company stock and bought small amounts”. He created this stock by founding a company, and made it a lot more valuable through his efforts.

Even worse. Thank you for the clarification.

I know that my solution (radical wealth redistribution, red-black shit at large, etc and so forth) isn't popular here; but even conservatives have got to recognize there is a problem.

How do you solve it without the revolution? Is that question even coherent?

Not really, because you didn't actually describe a problem that class-revolution would solve, or even a problem.

You described a consequence of a long series of pro-social behaviors that were contingent on a number of factors of other people beyond your control doing good behavior. Because you had a family line that could get together mid-six figures of money in investments AND sit on it for 1.5 generations AND-NOT lose it unproductively, along with several other AND's and AND-NOT functions thrown in. (Such as no one else, such as the government or class revolutionaries, stealing the money during the 1.5 generations, not having catastrophic impacts that require you to expend the investments, that macro-economic trends don't devalue the investments, etc.)

Not everyone has the fortune of those things. Even fewer who do have those things avoid fucking things up for their own or others inheritance. The classs warriors are frequently part of the later in making things worse, not better, for those preconditions to hold true.

However, this doesn't describe a problem, this is just a statement of reality. There are always a lot of a people who would happily 'solve' the problem of only some people being able to acrue wealth-inheritance enabling people to live off investments. It just consistently is in the form or to the effect of ensuring no one can.

I know that my solution (radical wealth redistribution, red-black shit at large, etc and so forth) isn't popular here; but even conservatives have got to recognize there is a problem.

Can you elaborate on this a bit? Haven't seen your full take.

Overall, I feel you man. Working a paycheck job that you don't find fulfilling is awful. For certain personality types like myself, it is downright torturous. And I don't say that lightly.

It's sad that so many people, especially on the right, cannot understand this basic fact. I completely agree that there is dignity in working for something meaningful, and gaining discipline and teaching yourself to do things you don't enjoy in the short term for long term gain is a crucial skill. Yet all of that can be true, while still saying that the modern model of a 9-5 job that is most likely utterly meaningless to the employee is one of the most broken and evil systems man has ever created. Yes it doesn't have the outright violence and evils of the past, but it's far more insidious in how justifiable it is, and how it slowly breaks people's spirits over time.

As to fixing it... well, who the fuck knows? I like to think if we genuinely build good AI and robots, hopefully we can automate away much of the work. Unfortunately the trend seems to be that as we get better tech to theoretically make our lives easier and better, instead we just end up demanding more stuff from ourselves and each other, then burning out.

I think the only realistic solution I can see would be some combination of a better understanding of how early childhood trauma impacts people's ability to do useful work, and gene therapy. Then we slowly get everyone regardless of race or family wealth on a close to level playing field, and we can have a true meritocracy. The people who don't want to work can pursue art or whatever the hell, and the people who do want to work can own starships and planets and have galactic empires. That's the dream, at least.

Working a paycheck job that you don't find fulfilling is awful.

Maybe I'm an idiot or too Pollyanna, but I've worked a bunch of jobs ranging from farm labor to Walmart to mopping floors to financial analysis and I've never thought any of them were awful. Most had bad days occasionally but never beyond that. I've had less than wonderful bosses and wonderful bosses and prefer the latter but even then there have always been things about the job that were at least decent.

After about 10 days vacation I'm still enjoying myself but am usually starting to get bored pretty quickly.

The closest I've come to non-accidental death is working a waggie job that had me legitimately considering assaulting a guy for being in my way at Home Depot just because the idea of going back to work was so utterly unbearable prison or getting shot by the cops sounded better.

This might seem like an exaggeration; it is not. The only thing that saved me was school mandated anger management classes from 7th grade.

i think salaried work is liberating in the sense it gives you autonomy. you can say " i have work, I cannot do XYZ" and everyone understands, without the guilt trip of having to make up an excuse for not attending a wedding or some other shit that you don't want to do

without the guilt trip of having to make up an excuse for not attending a wedding or some other shit that you don't want to do

The thing I don't want to do is work, because I'd rather be doing various things that a dependency on work is keeping me from doing (like exploring the world or full-time intellectual pursuits), so this doesn't really seem like autonomy to me.

As I mentioned in my post, it depends heavily on the temperament of the person in question. Personally I cannot understand the perspective of someone who is okay with working meaningless jobs when the world is so beautiful and has so much to spend your time on.

If feels almost like a truism, when it comes to 'free market' economies, that assets/wealth and money will tend to flow to those who are best suited to manage them productively, and away from those who aren't.

The guy who takes out a mortgage on his house to go to the Casino and bet it all on black might win some % of the time, but on average, over the long run, he'll lose his money, the house gets foreclosed and sold, and thus both his money and his house get shuffled off to somebody who will be better at managing them productively.

So it isn't inherently surprising that families with the discipline and patience to accumulate wealth over time will generally maintain that wealth whilst others that don't have such time preference will probably bleed wealth and never have a point in time where their accumulated wealth outstrips their overall consumption.

But if your wealth is all dependent on holding assets and earning 'passive' income that is downstream of some other productive activity, you are actually absorbing quite a bit of risk that those assets/income sources could unexpectedly go to zero. Or possibly worse, go negative. This is what happens to banks that make too many bad loans. ON PAPER they've got thousands of income streams and 'assets' worth millions. But too many of those go into default, the books become unbalanced, and people get antsy and you can see a bank run happen real quick.

There are obvious steps you can take to mitigate risk. Own homes that are geographically dispersed so they won't all be impacted by the same natural disaster. But what do you do about black swans that cause the entire real estate market to come crashing down at once? There's never a 'foolproof' investment that doesn't present some downside risk, even if unseen.

The risk of living solely off your accumulated wealth is that said wealth is subject to fluctuations in economic conditions entirely beyond your control. And there's always a chance that you take a hit that you can't easily recover from.

Even if you have a doomsday bunker filled with gold bars, ammo, and stockpiled food, you still risk some other event happening that cuts off your access to it, rendering it valueless to you.

If you work for a living, you will always be able to earn money via your particular trade, unless that entire trade gets obsoleted, and even then you can retrain and keep rolling.

If you think you've accumulated enough wealth to immunize yourself from the need to work... perhaps you should think long and hard about what sort of events or series of events could wipe out that wealth hoard all at once.

Unless the financial managerial class all gets together and decides to create an asset bubble through legal and financial trickery, so they never have to pay the piper. Which is essentially what has been happening the last couple decades.

Right, and that would be a departure from "free market" economies, in my mind.

So very valid to identify it as an issue, but the deeper question of "why do some people have to work for a living and other people manage to accumulate enough wealth to escape the rat race" is pretty well answered by

"some people are more patient, disciplined, and better at identifying financial opportunities/avoiding financial traps, wealth will tend to flow to these people."

I have no issue with people retiring after truly contributing to society. That being said, the market economy we have set up absolutely does not reward virtue or truly giving back to society. In many cases I think that most of the rich nowadays make their fortunes by dumping massive negative externalities on the rest of society.

That is one aspect of why it is unjust.

That being said, the market economy we have set up absolutely does not reward virtue or truly giving back to society.

I would like you to give a specific example of somebody who has gotten rich in such a way that they have dumped 'externalizes' on the rest of society that weren't made up for by the immense value that was also provided by their activities.

I don't know about rewarding 'virtue' but as a broad, general rule, anyone who made billions of dollars in the U.S. did so by creating a business which convinced millions of people to hand over money voluntarily.

And if you convince millions of people to hand over money... then almost by definition there is a HUGE societal benefit being accrued.

Just because your preferences aren't necessarily maximized doesn't mean that the preferences of society aren't well reflected by the economy they live in.

Sure. Steve Jobs is an excellent example. Often hailed as a hero of the technocratic class, I’m firmly of the belief that the smartphone is the single most disastrous invention of the last 50 years.

I can be sympathetic to that view, although I'd say social media is the real problem there.

But I don't see how you can suggest that smartphones, and the ability to have a computer with access to the near-sum of total human knowledge, hasn't been a boon for mankind in general, creating tons of value across the planet.

I might prefer to live in a world where Social Media was banned or never invented, wouldn't say the same for smartphones in general.

Smart phones are super stimuli that destroy physical, real time human connection. Which has been shown time and time again to be one of the most important predictors of human health and happiness.

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Can you say more of how you experienced the other end of the class war?

Mainly just how easy it is to cut stress totally out of your life just by floating a large amount of cash.

I don't have to worry about my car breaking down, the roof of my house, accidentally missing a bill and incurring fees, whatever.

I imagine as you get even more money it gets even more easy; I still bargain hunt and am cost conscious. Add a couple zeros and that small amount of friction would disappear also.

From an individual's perspective, I'd emphatically agree. Traveling, vibing, or intellectual masturbation full time is sad and a waste of talent. Amazing food may as well be paste, great novels be paper, and 'experiences' be clicker games if you don't build off of them into a career or purpose, try complex things that might fail, play a part in the patchwork that is society. Selfishly or altruistically, the depth in the latter - building or fighting for something that, even if only to a small extent, is your own and depends on your skill - outstrips whatever the former has to offer. Not that the former is bad, it's important and has its place, but to only do that is, in essence, having great sex but no children. (I expect disagreement here, and it's for a given level of talent - traveling is experientially better than sorting packages at a warehouse, but warehouse workers don't have this option)

But from a collective perspective, this isn't a pressing problem. Even among the very competent or smart, for everyone who's never worked all their life due to family wealth, there are 5 people who worked some of their life and retired early (both new and old rich), and for every one of those there are 10 people with standard careers. (That's just off intuition, I couldn't find easily accessible data). There just aren't that many people who full-time travel and aren't employed from 20-55. So radical wealth redistribution might get these people back in the workforce, but nobody would notice the increased productivity. But even in each individual case, 'society' isn't really worse off - just by econ 101, when the trust fund kid's grandpa got rich on printers, the transaction between him and society of money for goods/services was mutually beneficial! Every individual deemed it in their personal interest to give the grandpa a claim on a specific amount of future labor in exchange for the printer. This remains mutually beneficial even if the kid, not the grandpa, spend the future labor credits. This still could be rent-seeking, maybe it's only barely beneficial for the consumer - but, in practice, most of the surplus goes to the consumer, not to the capitalist. Imagine how much of your income you'd pay for a laptop and the internet if your only alternative was no electronics at all. When Big Tech and you divide up that economic surplus, you get that, and they get a few grand.

Also, I think toplevel posts like this are perfectly fine. This isn't the best example of the class but they're interesting, they start discussion, I'd rather see another one of these than another news cycle post, so I'd encourage people to post more like this. Probably with more characterization/details though, a few paragraphs (or more) telling a story about some of these people would be great.

Not that the former is bad, it's important and has its place, but to only do that is, in essence, having great sex but no children.

Not for nothing, I would bet there's a HUGE crossover in the types who want to accumulate a ton of wealth as fast as possible then coast off the interest and those who declare they want to live childfree. Both kind of speak to the same sort of core mentality "life is for me to live, and any constraints that require me to do things at the behest of other people (a boss, or a child) is unacceptable."

Also, as I've gotten older I've REALLY soured on the idea of 'traveling' in the abstract as a hobby. Because I've begun to notice that most locales that are 'worth visiting' start optimizing into tourist traps, well designed to extract as much money from the average person as they can while returning minimal/ephemeral value.

Like the OP is pointing out, owning an asset that benefits from heavy tourism means you can coast off other people's labor. Owning the asset makes you money. Visiting and spending money there makes you a bit of a sucker, therefore.

As you say, if I could instead spend that time, effort, and money building something, I think the fulfillment will greatly outweigh that of being the billionth person to, e.g. photograph the Grand Canyon or hike Mount Fuji.

That said, for purposes of human happiness, some environments are definitely more conducive to comfort and pleasant feelings than others. Places that are beautiful and comfortable in the summer can become frozen wastelands in winter, and the there's a similar issue with places that are pleasant in Winter.

And moving yourself around to exploit the benefits of different locales is sensible from a purely Hedonic perspective.

As you say, if I could instead spend that time, effort, and money building something, I think the fulfillment will greatly outweigh that of being the billionth person to, e.g. photograph the Grand Canyon or hike Mount Fuji.

The Grand Canyon is awesome, in the true meaning of the word. Seeing it at least once definitely beats working all the time, even if you are building something.

Not sure. Seeing it one time would surely be awe-inspiring.

I've been to Montana and seen much of Yellowstone, similar kind of feeling of reverence for the sheer majesty of nature.

But once you've done it... what are you left with?

What legacy does it leave of your existence?

Ashes to ashes; dust to dust; most of us will be utterly forgotten within a generation or two, no matter what we do. Spending all our energy trying to avoid that fate is futile, it's not unreasonable to spend time living in the present.

I just categorically disagree that this logic holds as a means to not care about the future.

I can say, that if the records existed, I, personally would like to search my genetic ancestry back 1000 years (at least!) and learn a bit about every single human being whose genes ended up in my genome.

And, we pretty much have the necessary technology such that, in 1000 years, someone in the future could look up information about YOU and thereby 'remember' your existence well beyond 2 generations out.

And there are certainly things you can do now to bump up the odds that someone will remember you further out.

Yes, that doesn't 'matter' to you once you're dead, but taking this nihilist position doesn't give you any reason to prefer any outcome over any other!

So hey, I won't try and convince you that one outcome matters over the other. I'll continue working to marginally increase the chances that the outcomes I prefer come about. From your logic, it's no more a waste of time to do that than to live for the present.

In short, accepting that life is ephemeral is one thing, but choosing to live as though the future won't exist is, if you believe what I do, a COPE.

Anyhow, I leave you with some distilled Hopium: Isaac Asimov's 'The Last Question.'

What legacy does it leave of your existence?

Is leaving a legacy of your existence your ultimate goal in life? Can you give me some reason why it should be mine? After all, I certainly won't be here to know about it.

Is leaving a legacy of your existence your ultimate goal in life?

To the extent there is any coherent goal that one can pursue, leaving behind some legacy of your own to influence future generations is pretty much the only thing any organism can do that matters.

That is how 'life' sustains itself. It's pretty much the only reason anything you like about your life even exists. So however you choose to live your life (unless it is constant agony, I suppose), be thankful that there were people before you who cared about what happened in the future.

Can you give me some reason why it should be mine?

No!

But if you pursue goals that do not leave legacies, and I pursue goals that DO leave legacies, only one of our value systems/biological heritage is likely to propogate into the future and have impact on how that future unfolds.

Which is to say, your kind get out-competed in the natural selection race, and so its going to be a future dominated by legacy-leavers who will be very thankful that all their ancestors were legacy-leavers.

I'm thankful my ancestors were legacy-leavers, so it isn't particularly strange to me that I should want to leave a legacy.

If that isn't enough of a reason, I won't attempt any further to change your mind, and we have no quarrel anyway. Just don't interfere with other people who want to leave legacies!

Your argument is circular: you've decided that propagation of genes matters so by your definition it's "the only thing that matters".

That's not quite what I'm saying.

Propagation of genes matters if there is to be any future where intelligent life exists at all.

I don't begrudge the nihilists who don't think there's anything 'special' about intelligent life or humans in particular, and who think that the universe is utterly apathetic to our continued existence.

However, I doubt that they can have any real certainty in that regard.

I think it is preferable to have someone (intelligent and conscious) around to experience the future and see where it's going, than to not have anyone around at all. So in order to ensure that there is someone around, I can either figure out how to live forever, or do things that will help ensure that intelligent life exists in the future.

One of the most succinct explanations for why you might want to keep plugging along in spite of it all, was delivered by Lex Fucking Luthor in the Justice League Animated Series.

"Objectively speaking, nothing matters! So go forth and do stuff that matters... to you."

My other favored response to people who say "why bother" is Asimov's The Last Question.

How do you solve it without the revolution?

If your family line can get together mid six figures of money in investments and assets and sit on it for 1.5 generations without anyone buying penis compensation trucks or boats or developing a gambling addiction or fentanyl addition; you can just be fucking set. (Said in the tone of a joke, but actually a big ask according to the facts.)

You already answered your own question: don't self-sabotage and you can just be fucking set. Maybe the question you're asking is how to solve people self-sabotaging

Well, that doesn't solve the problem - the emergence of a semi permanent rentier/leisure aristocracy. Personally I'm inclined to say that this sort of thing is possibly unavoidable in any kind of complex economy with a free market and for various reasons our economy wouldn't allow too many people to do this.

Well, that doesn't solve the problem - the emergence of a semi permanent rentier/leisure aristocracy.

This problem doesn't exist in any meaningful capacity, and if it does it's self correcting. Regression to the mean and all that.

I'm watching multiple upper-middle rentier families implode as we speak by a single addict or the adoption of a psychopath or a cripplingly expensive sickness. None of these reasons are fair, but bad luck comes for everyone. The number of families with enough wealth to weather even these caliber storms is less than a rounding error.

It's a "problem" in the sense that it makes clear how much culture leads into luck. If you have a strong nuclear family where each child has to be successful to reap the benefits of the previous generation, then you get to pass wealth down. If your parents can't control their finances or let you slide into taking heroin, the ship is going down.

I don't know if the existence of petty rentiers is a problem, but there are some people who do see it that way, and I think a lot of rentierism in an economy is potentially dangerous.

Ah! I'm with you now. How do we get more people/everyone into the leisure aristocracy? It seems like (until 50 years ago or so) this had been solving itself, you're never going to get everyone in (because of self-sabotage), but that class had been expanding wildly.

How do you curb the excesses of the (pick a word really) illegitimate leisure aristocracy? Tax the shit out of it. We know taxes discourage behavior so, off the top of my head example, you get 6 houses property tax free but house #7 is taxed at something unfathomable like 10% a year. This will create other problems of course (people buying all of their relatives exactly 6 houses, what is a house, etc) but 99.9% of us are on the same team on this one and that or something similar would theoretically drive investment away from property.

I don't really know if that class has expanded wildly. If you consider the Victorian age, it was considered seemly and even normal to simply live off unearned income from property. Not all who did so were very rich. I recall reading somewhere that as much as 50% of the adult population of Spain were not in the labor force. Note that this was in a country that was also quite poor by European standards and would remain so until the 1950s. So it's not even that inequality bought them prosperity.

The only person I ever knew with more than 6 houses (I think he had 9) wasn't particularly wealthy and certainly wasn't "leisure aristocracy". He was a landlord who did a large part of his own maintenance and still had a salaried job.

Yeah, that's another gnarly problem. I know someone similar who owned a dozen or so quadplexes and died quite young from the stress. How about a combo law, either 6 properties or $10 million value combined, whichever is last?

How about not trying to use the tax code to micromanage people's lifestyles?

Well, that doesn't solve the problem - the emergence of a semi permanent rentier/leisure aristocracy.

How about offering solutions in addition to criticisms?

It hasn't even been established that either this "semi permanent rentier/leisure aristocracy" exists or that if it does, that it's a problem needing solving. Instead, the spectre of it is being used to push for more punitive taxation (which, as it happens, will generally fall not only or even mainly on these 'leisure aristocrats')

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This is 90% of the question.

The other 10% is "how do you prevent a particular class of parasitic types (politicians) from mucking with things and 'stealing' large amounts of wealth for unproductive uses."

There's two ways to approach this, you can try to reduce capital's share of income or you can try to spread capital's share of income more evenly through society.

Spreading out capital's share of income is conceptually easy. Just have some sort of wealth/inheritance/income tax that puts money into a Sovereign Wealth Fund, every citizen gets a non-transferable share and receives a dividend. Over time the Sovereign Wealth Fund becomes a larger and larger share of total investment capital and most of the capital share of national income is spread evenly among the population. There are myriad political difficulties in funding the SWF and the population would have to resist the temptation to drain the fund rather than live on the dividends, but conceptually it's pretty simple.

Solving r>g seems harder. You can artificially reduce r with taxes but that discourages investment. You can try to ramp up g, and obviously more economic growth is good, but reliably producing new technological breakthroughs so that we return to 20th century rates of growth seems unlikely.

but reliably producing new technological breakthroughs so that we return to 20th century rates of growth seems unlikely.

In this respect, current AI developments feel like a make-or-break moment.

I don't understand why anyone expects AI to make that much of a splash. It's probably going to be the same story as computers and the like internet. Undoubtedly revolutionary technologies, whose gains went mostly to feed bureaucracy

Internet actually brought enormous amount of consumer surplus, which simply is not reflected in GDP. If you tried to value the stuff that we today get for effectively free, like ability to stream any movie you want for peanuts, or free long-distance video calls, or free mailing, or play sophisticated video games etc according to how much these costed in, say, 1970, you’d observe that we consume thousands of dollars worth of services for free.

Yeah, I remember what a big deal long distance calls were. Hell, you could rack up quite a bill just with local calls. Bank transfers were a pain in the ass, now they're instantaneous. Even governments are starting to digitize, and you can get some administrative tasks done in 5 minutes from your home, instead needing an hour or two it would take you to get to whatever office, and get it done there. That's my point! By all rights this, and many things we have not mentioned, should have resulted in exponential increases in getting actual shit done, it didn't. We still can't get people to be able to rent a place on a single income, let alone support a family. We have a few cool gizmos to show for it, and that's that.

Because we're seeing two portents:

  1. AI is becoming equal to or better than humans in more and more domains.

  2. The number of domains it is getting better than humans at is increasing faster than expected.

Which for most 'experts' in the field, show that AI is now going to contribute a LOT more to the economy as we figure out how to exploit these capabilities.

Right now the most obvious gains seem to be in the programming space. Where a programmer can 10x their productivity by sloughing off a lot of their work onto the AI.

ChatGPT is already scary good at a lot of tasks. ChatGPT, hooked up to other AIs that are scary good at particular tasks will probably be an all purpose tool.

And this is without entertaining the "AGI goes FOOM" side of the equation.

I myself just recently fed a PDF of a user manual for one of my household appliances to Anthropic's "Claude" Ai and asked it to help me troubleshoot, and it got me to a step by step procedure to both identify and fix the problem I was experiencing.

This doesn't fully 'replace' the role of a repairman, of course, but it saved me a noticeable amount of time and possibly money, and that sort of benefit compounds over time.

Imagine for instance if we could replace most Teachers with an interactive AI bot.

Which for most 'experts' in the field, show that AI is now going to contribute a LOT more to the economy as we figure out how to exploit these capabilities.

Right now the most obvious gains seem to be in the programming space. Where a programmer can 10x their productivity by sloughing off a lot of their work onto the AI.

My point is that computers did that too, for many fields. The internet did it again. It did not result in a return to 20th century growth rates. We have fundamentally the same lifestyles as we did pre- the digital / internet revolutions. I'm saying that whatever sucked up the gain from them is likely to suck up the gains from AI.

Yes, but in this case, the change is potentially going to lead to self-perpetuating improvements as each augmentation to our capabilities immediately unlocks further ones.

Think something closer to the industrial revolution.

Why is it a problem? Yes I agree it is absolutely unfair that any random failson who had successful grandparents/parents can live their life while your average smart dude has to slave away for decades, but this is a case where the existence of the unfairness creates an environment where there is economic growth and eventually everyone's living standards are better than the counterfactual.

The alternative to this world is not one where we have the same amount of "stuff" just distributed better, it's one where everyone is much poorer and living a worse life, at least a few decades later. The reason you can still live a pretty comfy life even if you have to work full time is because there was a lot of inequality a few generations back that provided the impetus for people to strive for new developments that to benefit themselves (but which had beneficial side effects for all of society generations down the line). Why do you want more equality now so that you can deny to future generations the fruits of the same tree that you are now enjoying?

I will take a world that is unfair but very comfortable for many people over one which is fair but equally nasty to all.

We’re 50 years into the biggest asset pricing bubble ever. @jeroboam is correct, but only partially; the US saw many asset prices (especially residential property) stagnate or fall between roughly 1890 and 1965 and it was only in very major wars for a small portion of that period (17-18, 41-45).

What’s key is that expectation of asset price growth is rudely interrupted, whether by the long depression of the early 20th century or the agricultural depression in England. The US should have let the 2018 crash happen, that was the natural point where the market was moving toward a crash. We’ve now spent 5 years in a bizarre Frankenstein market.

Why is it a bad thing that asset prices are high? That seems like a good thing to me.

it is the 'stealing from the future' meme. If long term returns are X and present returns are X+x, then later investors will be worse off if returns mean-revert to X.

What assumptions would lead to this scenario and why do associate it with higher asset prices? Holding absolute returns constant, higher short-term returns should cause asset prices to fall.

I don’t know that it’s a bad thing, but 50 years of high asset price growth obviously increases inequality.

Do you want to incentivize people to make things or to buy things and hold them?

Ignoring that the prices are so high because you aeent allowed to make enough of them because those who are holding it are getting too high on their own supply to let it be any oher way.

The whole point of wealth creation is to have wealth. If we were less wealthy, we might produce more, but we'd necessarily be worse off.

Circular reasoning. Wealth is the things you have in absolute, not relative. Expensive assets is relative. We want more assets in total.

I'm not following you. The point of wealth is to be able to spend it on things. We produce things, then we have them, then we use them up. That use we get is why we worked to produce them. How is that circular reasoning?

You're saying that once we have things, we don't want to work as hard to produce more things, so we should have less stuff. But having less stuff defeats the purpose of producing it. The entire point is to have stuff we can use, not to produce it for the sake of producing.

I'm saying that wealth quite literally is having MORE things that we want. And more things implies cheaper, not more expensive.

Why is it a bad thing that asset prices are high? That seems like a good thing to me.

This is a bad thing because it implies by definition we don't have enough assets. We are asset poor. Things that we truly are wealthy in and have an abundance of are cheap.

Wealth is measured in terms of what goods and services it can buy. Higher real asset prices have more purchasing power and make society richer, controlling for the quantity of those assets.

Asset prices can be high because the quantity of assets is low or because the demand for assets is high.

We are clearly in the second situation, and that's clearly what's implied by "asset pricing bubble", which is a good situation to be in. It raises the value of existing wealth, which increases our purchasing power and causes more wealth to be created.

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Yes, a point I was hinting at is that low volatility increases income inequality.

Let's say there are 2 sequences of annual returns that both have the same total return.

Sequence 1 is 10%, 10%, 10%, 10%, 10%.

Sequence 2 is 40%, -70%, 100%, 50%, 28%

The total return in both cases is 61%, but in sequence 1 leveraged investors will make huge returns, whereas in sequence 2 they will go to zero.

The current economic environment has been called "The Great Moderation". Combined with low interest rates it has allowed leveraged investors to make insane returns. I'll bring up again that TQQQ is up nearly 10,000% since 2010.

That is the #1 cause of wealth inequality increasing, definitely far more than any changes to tax policy.

I'll bring up again that TQQQ is up nearly 10,000% since 2010.

leverage and the fact that large tech companies have gotten very good over the past decade at making huge profits and being at the center of economic activity and being unchallenged politically , like regulation. High interest rates does not hurt that much given that these companies are so dominant and have little or no debt, and that rising interest rates and inflation is more like a shifting of the y-axis than potentially costly for business. Advertisers bid higher on meta/Google ads, and those costs are passed down to consumers, who earn higher wages, etc.

It's not just the returns, it's the consistency of the returns that allows TQQQ to flourish. I'm not going to look up the prospectus again right now, but the returns of TQQQ vary massively by volatility. The lower the volatility, the greater the returns.

The elimination of the business cycle by the Federal Reserve and Keynesian stimulus have let leveraged speculators flourish.

This is one way in which low interest rates have contributed to excess return for TQQQ investors.

The other way is simply that low yielding bonds are such shitty investments that people chase returns and drive up the price of speculative investments such as QQQ, Bitcoin, wine, art, baseball cards, homes. Okay, pretty much everything.

I got a solid lesson in this fact watching Crypto Markets over the past 7 years.

From an outside perspective, if you invested in Bitcoin when it was low, and held it, you've made out like a bandit, just insane wealth accumulation (assuming you cash in). But i would BET that the 'average' Bitcoiner (to say nothing of the average crypto-trader degen) either made minimal gains or even lost money over that time for the exact reason you say. They blew themselves up in a volatile market.

And I say this as someone who DID buy Bitcoin early in it's life, but cashed out before it hit recent ATH's to maneuver myself into a better-paying job because I got sick and tired of worrying that my primary source of net worth could drop by half (or more!) overnight.

So there are still a lot of insanely wealthy bitcoiners out there, but I bet the GINI coefficient rivals Brazil.

I'm not clear what the problem is. Do you feel that it's just viscerally unfair that some people need to work and some people don't? That people who have wealth should have it confiscated until they're in a position of needing to work again? I promise, I'm not being deliberately obtuse here. Designing policies with the goal of enabling anyone willing to work to have a reasonably decent life seems like a good starting point to me, but that doesn't suggest that there wouldn't be or shouldn't be capital-holders that have arrived at a position where personal labor is no longer necessary for them to draw their living. If the problem is the unsustainability of the rate of return on capital, tweaking some of the more audacious tax policies seems like a plausible approach, but I would need to know what exactly we're trying to fix and what the goal is before really undertaking a discussion of where to go.

In the most pithy form - is retirement just plain immoral?

Do you feel that it's just viscerally unfair that some people need to work and some people don't?

How could you deny that this is viscerally unfair? Seems the most blatant example ever. Not that we know how to fix the problem, but damn it's unfair as hell.

So what about it is unfair?

Come to think of it what is your understanding of fairness here?

Fairness is an individual having to put into society before taking out and enjoying themselves. At least until we have a state of affairs where that can be an individual choice.

It's unfair that a rich scion can simply coast off the work of others and never have to struggle or put in, while the vast majority strain and buckle under their responsibilities.

So fairness in this sense is only submission and dependence to a given social group?

What of the Randian argument? What of the unfairness of society leeching on the gifted?

What of, in this conception, the unfairness of inequality between states? It is unfair in this sense that Western countries get to have the infrastructure built by their older generations whilst the third world does not?

Not to fall into clichés but can you explain how this is not literally "from each according to their ability, to each according to his needs" state socialism?

The socialists have a strong point. I doubt they’d be so popular otherwise.

The Randian argument is hogwash to me. Objectivism and objectivity as a whole are flawed viewpoints. Religious systems are the only way we can make sense of the complexity of society. I’m simply arguing that the modern world has drastically decoupled wealth, power and status from actual virtue.

It's unfair that a person can work all their life, save their assets, then get run over by a bus (or die of a heart attack) too. Doesn't mean there has to be some government solution to that.

We have driving laws and healthcare precisely as the government solution to those problems.

The government should and does work to prevent people getting run over by buses. We fight against the arbitrariness of disease and ill health in pretty much every facet, as @self_made_human can attest.

Pretty much all of society in some sense is working towards making things more 'fair,' otherwise we are just in a state of nature with the mighty taking what they will from the rest.

I think you're assuming a lot here, many proponents of civilization and the escape from the state of nature believe in procedural fairness, and explicitly decry this sort of equalizing.

It's the whole giant gap between the French and English traditions of Liberalism. And a convincing argument can be made that they are inherently at odds because enacting cosmic justice is almost always procedurally unfair.

It depends on whether you value inherent human dignity more versus human work and discipline.

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If pressed on it, I'll agree that it's unfair, but it's not a sentiment that I have a strong gut feeling on. My reason for asking isn't strong disagreement on the point, it's that I'm trying to get at where the sentiment that Something Must Be Done is coming from and whether it stems primarily from thinking about outcomes or mostly from a strong gut feeling that it sucks that Blake Vanderworth IV has a trust fund.

It's partially the gut feeling of rich scions getting to coast on unearned wealth. Underlying that is the fact, to my mind, that most of the rich do not actually benefit society. Our market is far from perfect in that way. Many make their fortunes off the backs of others, or by dumping horrid amounts of negative externality into the rest of society, simply because the externalities cannot easily be quantified.

Many see rich people and ascribe their wealth not to their intelligence or hard work or even luck but to the imposition of negative externalities on others... simply because the externalities cannot easily be quantified.

Again, there is nuance to be had here. Many rich people bust their ass and absolutely deserve the wealth that they have generated, from a cosmic sense. Then again, I tend to think that the way our society is set up is so rotten to its core that even the most 'beneficial' wealth generation will have tons of negative aspects. The most common of which is to destroy human connection, religion, generally the things which make life worth living.

It really depends on how you view the overarching modern capitalist societal structure. I'm not a Marxist by any means, and I think market economies are an incredible tool. But at this point they have ceased being a tool and become our master, for all intents and purposes.

If you look at a rich person and say "Hey, they must have gotten rich by imposing negative externalities on society, let's take their assets", then even if you theoretically admit the existence of rich people who "absolutely deserve the wealth that they have generated", that's not nuance, it's a cynical demand for leveling. If you're wearing a blindfold while searching for your virtuous rich man, you certainly don't want to find him.

I have never once said we should take rich people's assets, I'm not a Marxist or a redistributionist. However I can understand why so many are eager to paint me with that brush.

I'd simply like to raise awareness that wealth and money do not equal virtue, and in many cases are anti-correlated. Instead of redistributing wealth, I think a better path would be having a conversation about negative externalities of the market and trying to figure out how to price those in.

On top of that, I'd like to see a scaling back of certain areas like religion and the sacred from markets entirely, although I'll admit having both at once would be a difficult challenge.

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I don't see how smart people working hard becoming rich not to have to work is unfair.

I think it's unfair, and that is me.

I didn't do anything to deserve a high enough IQ or a low compulsion to gamble or a lack of desire to alter my state of concious; that shit just happened to fall out that way.

If I sit here and say, "The cosmic hapenstance that alowes my pleasent life is fine and just" why can't someone say "the cosmic hapenstance of me shooting you in the head and taking you shit is also fine and just", bassicaly.

Because you actually do have control over whether you shoot someone in the head. The universe being deterministic doesn't change that.

If you assume that 'becoming rich' automatically equals benefitting society and that there is no possible way to become rich while being a net negative on our world, then sure it's fair. Unfortunately our world is not set up that way.

No, I'm only assuming that the average rich person becomes rich in a way that is a net benefit to society.

In the most pithy form - is retirement just plain immoral?

If you're retiring in your prime, maybe. More Boxer less Napoleon.

The path of least resistance for talented people is DINKing your way to FIRE at 40 and maybe getting a golden retriever or a couple of cats. Playing video games, smoking weed, phoning it in at your job (if you have to work) and taking a couple months of vacation a year.* I know an unfortunately large number of people who fall into this bin.

This is very much not the behavior we want to incentivize. We need people to do the hard work of having children and raising them well - or perhaps more realistically, decreasing the financial and social burden, but that's another story. We'd all be poorer if Elon Musk had spent his 20s/30s blitzed in Ibiza doing lines of coke off hookers, or whatever it is fun people do at raves. The American frontier wasn't tamed by childless, unemployed scions of wealthy families, good times create weak men, insert your preferred aphorism about rich, lazy fucks here.

*I'm not so tedious as to argue that vacation itself is immoral, but c'mon. Everyone should try to accomplish something worthwhile with their lives, everyone should see what their body is physically capable of in their prime and we need to cultivate a sense of ambition and civic responsibility.

We'd all be poorer if Elon Musk had spent his 20s/30s blitzed in Ibiza doing lines of coke off hookers, or whatever it is fun people do at raves.

I think the popular sentiment is that if Elon hadn't been around to ramp up Tesla, SpaceX, and whatever else he's dipping fingers in, some other capable person could have done the exact same thing. Because apparently profitable business ideas grow on trees, and just need to be plucked and driven to success.

I don't agree with the idea that Elon is that easily replaceable on the individual company level, and I don't think people grasp how insane it is for ONE GUY to be pushing this much wealth around in so many different companies, AND staying at least a step or two in front of his various competitors who ALSO have a lot of wealth to throw around.

It's the famous 'his engineers do all the work' argument, to which I respond 'why not just sack all of NASA's engineers and hire new ones'? If the effectiveness of a company is decided by the skills and efficiency of its rank and file employees, then it follows that NASA struggling to get back to the Moon is due to the incompetence of its workforce, not problems with leadership and management.

The above is silly, good engineers and researchers are necessary but not sufficient for top-tier, cost-efficient space capabilities.

We'd all be poorer if Elon Musk had spent his 20s/30s blitzed in Ibiza doing lines of coke off hookers, or whatever it is fun people do at raves.

Absolutely. And as a reminder to those people who keep saying that Elon got his wealth handed to him by his parents and so what he has achieved isn't a big deal, the fact that he chose to do what he did rather than doing coke off hookers is a point in favour of him being someone to respect. You don't show character by working hard if the alternative is that you die to starvation, but you do show character if you work hard when the alternative is endless blackjack and hookers for the rest of your life.

What's the problem? You made a lot of economic contributions while taking back little in return for a long time, and now you have a surplus accumulated. By deferring your consumption, you allow the diversion of resources towards investment, which improves productivity and makes workers better off. The wealth you enjoy now is the fruit of your past labors. This is everything working exactly as it should.

A small minority of people get to skip the first part, because their parents deferred consumption to the next generation. It's not fair, but it's not really a problem. They're not hurting anyone, and their accumulated capital benefits workers, again through higher productivity. Seize the accumulated capital and give it to the masses to spend on present consumption, and that will divert resources away from investment, slowing economic growth.

The fairness is the problem, I guess.

It just feels kinda shitty to get more benefits out of parasitism three steps removed than actually improving the world.

All this to say: What the fuck do we do about the fact that owning shit and renting shit is just flat out better in every way than doing shit or making shit?

How do you solve it without the revolution? Is that question even coherent?

Income inequality goes up over time when there's not a major economic downturn or war. The U.S. has now gone a (nearly unprecedented in history) 75 years without either of those things happening. As you point out, all that's needed to be rich is to invest your money and not be a fuckup for 1.5 generations and let compound returns do the rest.

How to solve it without a revolution? Bring back the business cycle.

We haven't had a recession in 15 fucking years. And interest rates were kept artificially low for 14 of those years. With no substantial downturns, anyone with leveraged investments cashed in. TQQQ (the triple-levered NASDAQ fund) is up nearly 100x since inception in 2010. Speculators won out big time. To prevent inequality from growing too high, we need to flush speculators regularly. People who make bad bets need to lose badly.

High interest rates for a long period of time (a decade at least) would flush the speculators and lower income inequality to tolerable levels. Sadly, I don't think it's possible with the governments debt being what it is.

Income inequality hasn't been increasing once you account for taxes and transfers. https://johnhcochrane.blogspot.com/2021/04/inequality-mirage.html?m=1

Thanks. That's a great pushback to the standard narrative and I think it's largely true. My guess is that it this would not apply if we look at wealth inequality.

As I've brought up before on this forum, people are often confused about inequality due to the fixation on income. The top 1% of income changes every year due to windfalls. I believe that something like 7% of earners will be in the top 1% in one year during their life. Meanwhile, an heiress with a $75 million net worth might never appear in the top 1% by income since it's all in tax-sheltered investments. The heiress is rich. The plumber who sells his practice and makes $600,000 at the end of his career is not.

The rise in wealth inequality is due to low financial volatility and low interest rates.

Income inequality I'm not sure about, or it might not even exist net transfers.

Here's more on the problems with how we think about inequality. https://www.themoneyillusion.com/income-and-wealth-inequality-data-nonsense-on-stilts/

How does this relate to the discussion at hand specifically? Not a criticism, just want to move the discussion forward for people who are reading along.

I'm just making a more general point that a lot of the arguments that say that income inequality is really high are wrong.

Does this have to take the form of recessions as they have been in the past? They tend to do a lot of harm to productive economic activity, even if they disproportionately culling bad investments. An ideal economy should just have some rate of creative destruction that doesn't strike fear into everyone's hearts. I have no idea what the difference between here and there is, though.

In an idealized world this is how Keynesian economics work.

The government makes sure that there's a stable money supply, it keeps its fingers out of most businesses, but takes steps to boost aggregate demand during downturns (as failing businesses go under) to 'smooth out' the business cycle so that there's never any point where EVERYONE is feeling the pinch at the same time.

And interest rates were kept artificially low for 14 of those years.

I see this claim a lot, and it's based on a misunderstanding of what the Fed actually does. If the Fed tries to lower interest rates below the natural rate of interest and hold them there, we get inflation. Now, not after 14 years.

What the Fed actually does is help markets clear faster by targeting the natural rate of interest, i.e. the rate at which the amount of money people want to lend is equal to the amount other people want to borrow. This results in savings being efficiently channeled into investments. If the Fed sets rates too high, there are excess savings that don't get borrowed, causing a recession. If the Fed sets rates too low, it causes inflation.

The fact that inflation was unusually low in the 2010s tells us that the Fed was more or less correctly targeting the natural interest rate, or even a bit above it; the natural interest rate may have actually been negative in the early 2010s.

The huge spike in inflation in 2021 was not the chickens coming come to roost after 14 years of artificially low interest rates. It was the result of a sharp increase in the money supply that made the early rounds of QE look like anthills, combined with excessive stimulus, and pandemic savings burning holes in the pockets of middle-class consumers.

You say rates should be as low as possible without causing inflation. I say they should be as high as possible without causing unemployment. Who's right? The Fed has a lot of room to make decisions based on vibes, not just their dual mandate. Reminder me again why they lowered rates in 2019 into record low unemployment?

But yes, I was oversimplifying and lumping QE/QT in with interest rates.

As long as it is due to a high savings rate and not a low demand for capital, a low interest rate is good because it increases asset prices, making us richer, and makes more potential investments profitable, expanding the capital stock, which increases productivity and the demand for labour, raising incomes.

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