I'd like to think that Adam Neumann will see some manner of ill effect for paying himself $1 billion of other people's money, while delivering negative value, but then reality comes crashing in to remind me that no, he won't.
Consequences are for people who don't have a billion dollars.
I'm going to bet that he has several months of hard reflection about life and maybe write a book about it. Maybe he'll try to pull a Steve Jobs and try a few new companies to redeem himself.
But you know, the next few years of his life are going to be mildly unpleasant, and we shouldn't forget about the emotional impact about that. Maybe he'll have a very public come-to-Jesus moment that will be cathartic for everyone involved, or maybe he'll disappear from public life forever with his vast WeWork wealth and live on some estate in an exotic locale.
But either way, this failure isn't going to be easy for him. He's going to feel several emotions and not all of them will be pleasant.
I'm intentionally being tongue in cheek. Unless he's a total sociopath (which I don't think he is) he's probably going to suffer mild blowback, the kind of blowback and shitty feelings us mortals feel when we've been ousted from a job.
But it's the kind of disappointment and anger that you get over in a few months.
The only difference is he'll have a billion dollars and the ability to do whatever in life he wants.
If you were in his shoes, would you go back and do things any differently?
Empathy is essential. And his con was a truly remarkable con during a run of remarkable cons, which attracts attention. But I have trouble sparing much sympathy for someone who has 10 digits to tide them over while they figure out what's next.
If you're having trouble finding sympathetic targets in this fiasco, mayhap spare a thought to the several emotions employees whose options are underwater felt when they heard about their Superhero CEO's cash out.
Not everyone experiences conscience in the same way. He might not even have one to torment him in his moments of solitude.
And when you say "mildly unpleasant", I can only assume you mean that for the rest of his life, his sole source of genuine unpleasantness will be from his own psyche. Because he'll be worth a billion dollars. And while money can't buy happiness, it can remove every last speck of annoyance, peeve, and inferior market option.
This failure will be easier for him than for most other people who fail far less spectacularly.
Even if a thousand people make it their life's mission to persecute him at every moment of the day, he still has approximately a billion dollars more than all of them put together. All he really has to worry about is avoiding Saudi-controlled buildings and territories for the rest of his life.
> But either way, this failure isn't going to be easy for him. He's going to feel several emotions and not all of them will be pleasant.
Honest question: do you think it will be harder for him than for the rest of us that have to deal with failure and yet have to chase jobs and deal with the pressures that come from not being wealthy?
Given the level of sociopathy likely required to get where he is at, I sincerely doubt it. I cant assume he feels as I would in thus situation because I literally couldn't GET into his situation.
The thing to remember is, this all happened in the open. The people paying him all this money knew exactly what they were doing, know exactly what he was doing and even encouraged him in doing it. I for one will not be shedding any tears for Softbank's losses. Neumann may be a bit of a jerk, if the stories about him are true, but good luck to the guy. It’s not as though he hurt anybody.
He didn't? He didn't hurt his employees, his investors, his contractors, and so forth? He didn't hurt the the tech space (WeWork is not a tech company, but they're widely perceived to be) by reducing even further what little trust it still has?
I think what simonh is saying is that the employees knew what WeWork was. (They were the ones who created the spreadsheets and charts that outlined what was going on and presented it all to the investors in several separate acts of galling transparency.) The investors knew what WeWork was. All of that data was, again, transparent to the point of insult. Contractors may not have known, but certainly had access to the same information everyone else had and could have known had they actually reviewed the information.
I think the guy is a piece of excrement, probably simonh thinks he's a piece of excrement as well. However, he did what he did out in the open. He just did it with jaw dropping temerity. No one participating in this whole affair can claim to have been victimized. He asked for all of them to consent to the insane, and they gave him what he wanted, hearty consent.
It's a cautionary tale to me, of how greed can blind what are normally relatively intelligent people. Don't let greed blind you when evaluating startups.
Yes, I understand what he was saying, and I also understand the sentiment. I disagree that all of that collateral damage should be written off as "they should have seen it coming", though (although I'm OK with that stance for the major investors).
This part:
> Contractors may not have known, but certainly had access to the same information everyone else had and could have known had they actually reviewed the information.
is unreasonable, in my opinion, but perhaps I wasn't clear on what I meant by "contractors". I wasn't talking about IT contractors, but about all the rest -- the companies providing office supplies, janitorial services, and so forth.
They got work they wouldn’t have otherwise had. I’ve been made redundant before, but don’t hold any grudge. I don’t expect a contract for life, if my employer can’t or doesn’t need to pay me anymore I don’t feel they owe me an eternal salary, I’m grateful for the work and compensation I got. This attitude that any employment is immoral if it’s not for life makes no sense to me.
Consequences are for people who don't have a billion dollars.
This really hinges on how much he has upset MbS who will shortly have a trillion dollars if the Aramco IPO happens. He is a man with a ruthless reputation.
I don't really understand the hate. He didn't steal it from an old lady behind her back. If that was the case, i can understand the feelings of empathy that it would evoke to people. But capitalizing on some uber-rich person's mistakes? Cry me a river, do you think Mr Softbank cares? Yeah he might drink one cocktail more, but who cares.
What if Adam now becomes a great angel investor? Life is like that , all twists and turns , and the ToS says it's not guaranteed to be fair.
that's not the same, you have to consider the intermediaries who have a ton of responsibility for investing that money. They're not absolved from responsibility , and technically Neumann didn't lie, at all.
Not sure I would trust Adam as an angel, that could easily be the first step to an HN post about how your small startup exited at 93 million and you got nothing.
I like Matt Levine's take on this: (re: Adam Neumann)
If you want, you can imagine him as a diabolical genius who explicitly set out to short the unicorn bubble and then walked away barefoot with a jaunty whistle and $700 million of SoftBank’s money, but that does not strike me as necessary or accurate. My model doesn’t require you to think that your startup is dumb! You don’t need to worry about Neumann’s personal beliefs and motivations at all, really. You can just think of him as a product of the invisible hand of the market. A lot of money was pouring into startups, there was a lot of demand, and the demand called forth supply, and the people who supplied the supply got rich; it is elemental and straightforward and has very little to do with questions like “is this a good business model?”[0]
“Capitalism occasionally makes huge mistakes,” is part of the story, but the other part is that there are rich rewards for those who spot the mistakes and bet against them. This is a lesson specifically of financial capitalism: In most businesses you can notice a competitor doing a dumb thing and create value by doing a better thing, but the financial markets are special because you can notice a competitor doing a dumb thing and get rich by taking the other side, without creating value or doing a better thing. If you notice that people are buying dumb unicorn shares for too much money, you don’t have to invent a better way of doing business or of funding companies. You can just sell them as many as possible of the dumbest possible unicorn shares; when the bubble bursts, you collect your winnings. This sort of thing—getting rich by being smarter than your counterparties, making markets more efficient by being on the right side of bets—is a classic path to wealth creation in the financial business. Tech, traditionally, has a different ethos, one of getting rich by changing the world. But sometimes there are crossovers, and anyway maybe WeWork was never really a tech company.[1]
I mean, maybe he was a genius fraudster, but maybe he convinced himself to believe in what he was selling -- which made him all the better of a salesman.
Almost all successful con artists (as well as salesmen and marketers) believe their own stories to some degree, particularly when those stories are ridiculous.
They have to tell them with "authenticity", after all.
“Reality distortion” mindsets are kind of important for launching a startup or doing something great. It’s sort of like Vicodin for managing the pain/stress. Good, maybe necessary, in the short term, but easy to abuse and get addicted to the delusion and go full Don Quixote.
Unfortunately, you can see large consequences when it’s not given it up.
When a company is public there are short positions to be played and this is definitely 'value creating' - in the exact same manner that all financial activity is 'value creating' on some level.
It was not a 'bubble that burst' on WW, so much as it was a misunderstanding of the public's appetite for risk. There is a company there. WW is not being wiped out. Softbank may very well recover their 'losses' and then some.
It's a misunderstanding of the nature of risk and the need for some companies to take in 'fuel' that makes grasping what happened with WW a little more difficult. Also - because we love to hate on people that make 'koolaid that's just a bit to strong' - while at the same time adore those who make 'just strong enough' koolaid ... there's an element of populism going on here. Amazon's retail business has never made a dime - though there are obviously some powerful fundamentals there, it can't really be ignored, and yet, we keep Bezos very, very rich in terms of valuation.
My prediction is that in the long run, WW will be a succesfull company, it will make Softbank money, and that Newman's $1B take, in retrospect (if that's all he got) will seem on par with most startups that made it big. And I say this as someone who really doesn't like the guy, at least from what information there is publicly.
Wow, this really drives home how absurd the whole WeWork thing was. And even until recently people were talking about how apparently Masayoshi San was playing some kind of three-dimensional chess and would come out the winner from WeWork. A fool and his money are soon parted, I guess.
To statistically show skill in investment it takes a whole lot more data than the human mind assumes, so this is a common occurrence in the world of finance. John Paulson, who became famous as one of the fund managers to make a killing shorting mortgage backed securities, lost 50% in a year (much of it to Sino Forrest, a Chinese fraud) a couple years later.
Yes, it is very difficult to actually judge skill versus just survivor-ship bias. I worked for a hedge fund that had around $20B under management, lost 60% in 2008, then made all of that back in 18-24 months. Now, they're worth 50% more than loss. Are they skilled? I don't know.
That's the funny thing about Billions-with-a-b: normal thinking about money and value just doesn't work IMO.
The Vision Fund is going to lose ~$19 billion. But Masa Son still controls over $80 billion. That's more wealth and power than almost any human being will ever have in history, ever.
At that point the numbers don't even matter. Maybe Neumann took Masa Son for $50 billion. Who cares? A person can live in the USA for their whole lives without working on as little as $3-5 million. Throwing billions around like this, especially when it's digital/paper money in the form of stocks and big corporate deals, really puts the absurdity sprinkles on top of this whole turd bowl.
It's this kind of thing that makes people lose confidence in the system. Most people out here are sweating medical bills in the low $10,000's, while the news is talking about billions being gained and lost in the span of a few weeks - so fast it makes you wonder if that amount of wealth really even existed in the first place.
How much has to be "lost" between digital transactions before the numbers become completely meaningless? A trillion? A quadrillion?
Not really. Adding up all the shares that they own, and saying that they have that much money, is completely incorrect. If any of them tried to liquidate even a small part of their shareholding the price would go swiftly to zero.
Yes, but a little bit every year != all at once. Selling off a bit every year, you can likely find a welcome market. Sell everything at once, the market will tank/disappear or go for an extreme loss. He probably wouldn't even be able to find a buyer(s) if he decided to sell off completely today.
The price would go down, sure, but the chance of it going to zero are... very close to zero. People aren't investing because these folks have shares, they're investing (at least in part) in the underlying value and forward numbers for the company.
I guarantee that 100% of any of their shares would be swiftly picked up if they were sold at a 5%+ discount to the 52-week low stock price.
I would equally guarantee that they won´t be, simply because there isn´t actually enough actual money to buy them all.
Markets are a real time pricing mechanism - they operate on instantaneous availability of both money and shares. Put enough shares out on the supply side, is the equivalent of flooding the demand side with money a. la. hyperinflation. In both cases, the good in question becomes effectively valueless.
> Most people out here are sweating medical bills in the low $10,000's, while the news is talking about billions being gained and lost in the span of a few weeks - so fast it makes you wonder if that amount of wealth really even existed in the first place.
If people lose confidence in the system because of that it’s because they can’t multiply. Billionaires are very rich compared to middle class people, but there are very few of them, and lots of middle class people. Elizabeth Warren’s new health plan will cost $50 trillion over ten years. Middle class Americans make $8 trillion a year, compared to about $130 billion for America’s too 400 taxpayers.[1] Confiscating the total wealth of every billionaire in America (about $3-3.5 trillion) would pay for Warren’s health plan for well under a year.[2]
We spend way too much time worrying about the wealth of a small group of people that, in the end, doesn’t add up to that large a fraction of total wealth or income. This is, in my view, the biggest reason why America can’t have nice things. Over on the other side of the pond, they don’t worry as much about figuring out how to tax billionaires. Because they know that, in the aggregate, it’s the middle class that has most of the money.
> If people lose confidence in the system because of that it’s because they can’t multiply. Elizabeth Warren’s new health plan will cost $50 trillion over ten years. Middle class Americans make $8 trillion a year, compared to about $130 billion for America’s billionaires.
To anyone who might take this as an indication Warren's plan will increase HC spending, if we do nothing average yearly HC spending for the 2020s in the US is going to be over 5T anyway. It was at ~3.65T last year, and growing fast.
People obsessed with "how will we pay for it" just don't understand. The skewed distribution of wealth creates a situation where people don't have time and energy left over from their hustle to take care of themselves and to take care of each other in basic ways. People are sacrificing to the gods of capitalism. Correcting the skewed distribution of wealth would shift agency back to people to mind the business of living life up close, rather than having their life energy extracted.
This is part of a degrowth mindset, and it will freak people out who flee from the shame of not winning, who cannot handle pauses or idle time, who must have control over other peopes' lives. But we can't have those people running this planet into the fire. They're gonna have to learn to be alright.
>The skewed distribution of wealth creates a situation where people don't have time and energy left over from their hustle to take care of themselves and to take care of each other in basic ways.
Can you help me understand this better? Because I see this sentiment often. I'm just gonna do some quick math... Bezos + Gates + Musk + Zuckerberg = let's round up to $300 Billion. Divide that evenly among the 327 million US population. I'd get $917. Do you believe that I will take better care of myself or be a better father in the long run if I get a one-time bonus of $917?
I find it a bit naive that the whole system would work like some sort of highway robbery :-) I'm pretty sure that's not what's meant when people talk of "wealth redistribution". Your argument looks like a strawman to me.
I'm not trying to make an argument, I'm trying to understand what the GP means in practice. I know people sometimes use questions passive aggressively, but that wasn't my intent. A more even distribution of all the wealth looks like people having a few thousand dollars of wealth. Much less if we're equalizing the whole world and not just the US. What are we imagining happens?
I'm from a former Communist state (one of those states that became Communist at Soviet-tank-barrel-point :-) ). So Communism doesn't have much appeal to me.
My personal perspective is that equalizing things fully doesn't work. You want incentives to motivate people. However, it's quite amazing what motivates people - after all, for the average billionaire going from $62bn to $63bn isn't really some sort of milestone, unless they somehow surpass some other billionaire. Sometimes the things that motivate people are a lot more fine grained that it seems. So pure financial motivation is rarely the main incentive.
On the other hand, such huge imbalances do eat away at democratic principles.
My personal opinion is that at some point, companies should be treated as utilities/companies of vital national interest. After all, that's how rich people make most of their money, through shares, not through salaries.
So, basically, once a company is taller than X, the country this company is based on gets a certain share of the company, 5%, 10%, 20%, it doesn't matter. I'd also make these shares non-voting. Even better, I'd force these companies to give out a certain percentage of these shares to employees (after all, they're "the people").
We'd have fewer billionaires, we'd have more stable middle class people, we'd have higher state revenues, we'd have less of a disconnect between totally private companies, regular people and governments.
As the owner of a company, you have a choice: create a huge company and have to share the spoils or stay small and nimble and have greater control.
Let's imagine the US govt takes 10% of the shares of Amazon. These are non-voting shares. Amazon doesn't pay a dividend as far as I know, so what is the point? The government doesn't have control over the company, the government doesn't get any revenue. The government can't sell the shares because then it just has to come confiscate 10% more shares from Amazon.
How do I, as a regular citizen, benefit from this? Is there some mechanism I'm not seeing? Because it feels like it's just a meaningless paper transfer.
What is the difference between Amazon giving me, an imaginary Amazon employee, $100 in cash vs $100 in stock? Amazon is a publicly traded company, so any employee can choose to buy stock. Is the idea to force the employees to hold the stock without being allowed to sell it? If they can't sell it, what value do they get from it?
As an investment strategy, I never hold stock in a company I'm working for. That puts too many eggs in one basket. If the company fails for some reason, not only have I lost my job but I've also lost my retirement savings. I would personally oppose being compensated in company stock and would sell it ASAP if given the option.
Right now, people with a lot of money basically dictate how people with not enough money use their time. How do they do this? By effectively withholding housing and food unless the people with not enough money do the work that the people with more money tell them to do... Often at the cost of taking care of their kids, of their bodies, of their mental health, of their living spaces. Money as a tool for distributing resources and collective decision making is at odds with money as a tool for domination, exploitation and extortion.
Modifying the distribution of wealth isn't about chopping up the richest peoples money and handing it out to everyone else. It's about altering the flows of the dynamical system so that power is continually distributed in an equitable way, one that optimizes more peoples' ability to thrive and co-create healthy lives.
It's about changing the meaning of having vs not having money, it's about reducing the intensity of the leverage people have over one another, and about freeing people to have basic autonomy and agency in their lives.
> Do you believe that I will take better care of myself or be a better father in the long run if I get a one-time bonus of $917?
Your POV fails to take into account the utility and time-value of the redistributed dollars. It's the difference between some unelected doofus having tons of power because of their stationary dollars, or building a universal pre-k and/or healthcare system.
I know I'd personally work less if I wasn't "blessed with the opportunity of choice" of terrible insurance plans offered by my employer where an emergency appendectomy leads to $5k in bills... or if I could work 75% time and reduce daycare hours.
It's still not clear to me how we are going to get the outcome you're looking for.
If the wealth is redistributed to the people (the mechanism isn't important) then that amounts to a few thousand dollars per person. This isn't the kind of money that would allow wide-spread reduction in work hours. My expectation is that most people will liquify that wealth and spend it over a long weekend. Do you have a different expectation?
If rather than being given directly to the people, instead the state keeps that money, are you predicting that Donald Trump will use it to build you a new school?
Regarding reduction of work hours, I’m a subscriber to the prevalence of “bullshit jobs” theory. Remove the power from corporate overlords via redistribution and put those resources under more democratic control. As a bonus people will take ownership over their schedule.
Sure, with less people working we may not have forty choices of toilet paper or same day delivery of counterfeit trinkets... but I’m more than ok with that. It will be necessary to reduce carbon emissions, anyway.
Lost in points like this, where you’re trying to scare people by saying a large number, is that the distinction between a Medicare for All type of system and the current private system is less about how much it costs and much more about who the middleman is.
* In M4A, Americans will pay ~$30T/10yr to providers through the government as a middleman.
* In the current private system, Americans will pay ~$30T/10yr to providers through whichever company their employer has selected as a middleman.
The only cost question re: M4A is whether Americans will spend slightly more or slightly less overall when costs are increased because coverage is extended to 10% more people, and costs are decreased by:
- massive efficiency gains of a single payer,
- elimination of profit to shareholders who siphon money away from care,
- better preventative care that reduces or eliminates more expensive catastrophic care.
And additional intangible benefits like:
- not having your healthcare decided by your employer,
- having the ability to be an entrepreneur and/or start a small business while having the security of healthcare,
- the fact that small business will be able to better compete with huge corporations for desirable employees because they won’t have to offer health benefits themselves.
My point wasn’t to take a dig at M4A. (I'm a proponent of universal healthcare, though I'd prefer extending ACA.) I mentioned it because OP talked about sweating medical bills. The point is that the cost of providing healthcare to everyone is vastly more than the wealth of even billionaires. (By the way, the expert estimate linked from Warren's own site is $52 trillion/10 years, not $30 trillion.)
No, but her plan isn't the only one out there. Bernie's plan was estimated I believe at 23 billion over 10 years, which a right wing think tank actually (accidently) proved would cost less than we're paying now.
But in 25 years how much does the system improve, what if it's like 50T over the 1st 10 years, then 30T the 2nd because of gains in efficiency? There's a lot of 'in the air' variables as well, where it could end up being 30 or 40T over 10 years if the efficiencies are higher than expected or if we can better negotiate terms w/ drug companies.
If we legalize weed and shrooms and tax them at the national level, that itself would also be a great way to gain money for healthcare. We also can easily halve our military spending and still have a strong national defense. Also adding a VAT may be a good idea, we could even give discounts to citizens so immigrants and visitors travelling in America also help offset our healthcare costs. For instance say vat is 4%, and we charge 12% for non-citizens it would A. discourage illegal immigration, and B. it would stop people worrying about immigrants because they'd have to pay higher VAT than everyone else, so they'd be tax payers and not just 'using the system'...
The other thing about rayiner's post is that the language he uses is quite informative of his political views. Notice how he uses the phrase "confiscate wealth" to describe taxation, as opposed to, say, "paying their fair share".
My political views are pro-taxation and pro-public services. (Except we should have the Swedes or Singaporeans come over to run our public services.) Which is why I think waging a class war against billionaires for a piddling $275 billion in additional revenue, while not increasing taxes on people making up to $250,000, is pure insanity. European countries have figured out how to pay for public services with middle class taxes. We should follow their lead instead of dreaming about wealth taxes.
Also, I used “confiscate” in the context of literally taking all of billionaires’ money.
Warren’s wealth tax doubles to 6% at the billionaire level. (France’s and Sweden's highest wealth tax was 1.5% until they got rid of it.)
Warren’s calculations just prove why the whole fixation on billionaires and income inequality is a distraction. You're talking about a wealth tax that is unconstitutional, at levels that are completely unprecedented. You're talking about risking capital flight, and setting political capital on fire, to move the United States far to the left of Europe. (What a great campaign ad for Donald Trump! Warren is proposing to do something that even France realized was a bad idea.) And for what? Is it going to pay for M4A? Or balance the budget? No. Not even theoretically.
I say this all as someone who wants universal healthcare to be implemented (even though I'm pessimistic about it saving any money). I think Warren's proposal with respect to employer-side payments is actually pretty clever. But the wealth tax is a huge political liability, and it could take M4A with it. And when that happens, it won't be the fault of billionaires (the wealth tax wasn't going to raise the necessary revenue anyway). It'll be the fault of people making $200,000 who think they are "middle class" and shouldn't have to pay the same level of taxes their counterparts in Europe pay.
Why is the Warren head tax (the "employer-side payments", which will be taken out of the hides of employees the same way health insurance costs already are) "clever"? Aren't head taxes generally problematic?
I like the idea of keeping things similar to what people are already paying as a starting point. Although I hadn’t realized that it would end up being a head tax rather than a payroll tax.
This is maddening. The problem with the US healthcare system is that we're paying ~$30T/10yr†, not who we're paying it to. The idea that locking those exorbitant costs in would be a win is baffling.
The efficiency gains of single payer are overrated. We pay more than other countries do in admin overhead, but admin overhead itself is a small fraction of total costs, and as a percentage of our spend, admin costs would necessarily rise, probably dramatically, if Medicare starts covering 30 year olds in addition to 68 year olds.
† I'm just taking your number here, not interrogating it.
Indeed. We already effectively have single payer system for large segments of the population, the Medicare itself. It still didn't push the costs down to European levels for Medicare recipients.
The US needs cheaper healthcare, but single payer won't achieve that.
Part of the reason for that is that Medicare is forbidden by law to negotiate prices the way other insurance companies can as a result of the GOP's Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
It can't be much of the reason, because prescription drugs are, contrary to popular opinion, actually a relatively small component of US healthcare spending.
> We spend way too much time worrying about the wealth of a small group of people that, in the end, doesn’t add up to that large a fraction of total wealth or income.
People focus on billionaires due to the fact that they are the most stark representation of the deeply unequal society in which they live. Wealth inequality is very real, please refer to the following: https://www.stlouisfed.org/open-vault/2019/august/wealth-ine... It's a rhetorical device
> Middle class Americans make $8 trillion a year, compared to about $130 billion for America’s billionaires.
So the group of people who leverage capital to sustain themselves and don't have to work have lower net income than the group of people who have to work to have a roof over their head?
> $50 trillion
I love how these numbers increasingly grow. First it was 36 trillion from the well-known Cato institute. Mind you, this was actually going to save money in the long term, so we have to bump up the number. The United states spend almost 2x per capita what Canada does on healthcare, so it seems pretty odd that we'd use current pricing systems to estimate the cost when the original M4A bill expressly increases leverage to negotiate. $50 trillion is a spook.
> People focus on billionaires due to the fact that they are the most stark representation of the deeply unequal society in which they live. Wealth inequality is very real, please refer to the following: https://www.stlouisfed.org/open-vault/2019/august/wealth-ine.... It's a rhetorical device
It's a rhetorical device that distracts from real problems and real solutions. Look at Warren's wealth tax proposal. It's blatantly unconstitutional and without precedent in the OECD. And what's the upshot? Just $275 billion in revenue per year. Compared to the $1 trillion or more we could raise by implementing a VAT, like every other OECD country has, or bringing payroll taxes in line with other OECD countries.
The top 400 taxpayers earned $127 billion in 2014, let's say an even $150 billion in 2018. There were 70 million returns filed by the bottom 50%. If you took all billionaires' income and redistributed it among the bottom 50%, they'd have about $2,000 a year more, or a bit more than 10%. But look at the top 50% minus the top 1%. (Even Sanders considers the 98th percentile to be "middle class" given his tax plan wouldn't raise taxes on people with household incomes under $250,000.) They have $7 trillion in income, versus about $1.1 trillion in income for the bottom half. If you want to talk about income inequality, that's the root of it. And that's the most significant kind of income inequality in terms of impact on peoples' daily lives. Billionaires aren't the ones driving up housing prices in urban neighborhoods and driving out people of color. Billionaires also aren't the ones that would be directly affected by the increases in VAT and payroll taxes that would be required to move to a more European model of taxation and public services.
If you took all personal income ($10 trillion) and divided it evenly among all filers (140 million), you get about $71,000. If you or your household make more than that, you benefit from inequality.
> So the group of people who leverage capital to sustain themselves and don't have to work have lower net income than the group of people who have to work to have a roof over their head?
Credit to Warren, her analysis doesn't assume that Medicare for All will result in massive cost savings, which I think is highly unlikely given the American political system.
> So the group of people who leverage capital to sustain themselves and don't have to work have lower net income than the group of people who have to work to have a roof over their head?
He’s talking about the aggregate income earned by the group. So the delta in individual incomes is offset by the massive delta in group sizes.
Huh, this is interesting. I completely missed the fact that these two groups are massively differently sized. So his 8 trillion vs 130 billion is laughable. If you define the "middle class" as roughly 50 percent of the population (this is pretty low considering how this word is actually used), then the billionaires 130 billion greatly outstrips the 8 trillion per person. There's just shy of 600 billionaires in the US vs roughly 160 million "middle class" then the per individual income is 50k vs 222k. Pretty Stark even when you completely disregard the wealth elephant in the room
Whether you look at things per-person or per-group is a matter of adopting a punitive outlook versus a practical outlook. If your goal is punitive, sure, it's relevant that the average billionaire makes hundreds of millions of dollars per year, while the average middle class person might make $80,000.
But I don't think Americans are punitive. They're not deeply troubled by the mere fact that there is someone out there with $8 billion. To the extent they care about billionaires, they're concerned about whether they're paying a fair amount to support the county that gave them so much. And from that perspective, what matters is the aggregate income of the group. And $130-150 billion just isn't much compared to the $6-7 trillion in annual government spending in the U.S.
Politicians thrive by disguising the punitive outlook as a practical outlook. They point to how much money Zuckerberg or Bezos have, and quickly pivot to how they could pay for universal healthcare, universal education, etc. A necessary aspect of that strategy is keeping people ignorant of the fact that even confiscating the total income of every billionaire would only pay for say 25% of U.S. higher education spending, or 4% of U.S. health spending.
I don't think this is a remotely justifiable belief. We have the highest prisoner rate per capita, we sanction anyone the second they step out of line, and the entire two prior decades have been shaped by a collective trauma that pushed us into seeking retributive justice against anyone--regardless of their actual role.
I fail to remember which Puerto Rican uprising this was during, but there was a mother who was jailed for the crime of making her husband and children breakfast. When slavery was finally ended, the 10 years of reconstruction was met immediately with horrific acts of terrorism and reactionary violence to reassert white supremacy.
Punitive Justice is a core tenet of the American civil religion.
You needlessly brought a divisive politician figure into your argument, while conveniently omitting the current cost of healthcare, statistics about how often and to what magnitude peopledo not recieve care, common knowledge stats about the inefficiencies of our current capitalist system. Do you want to debate the the alternatives to our broken healthcare system killing countless people or just make a vague cherry picked point about how the combined wealth of the richest Americans "isn't that much?"
It's especially interesting, because although a billion dollars is a staggering amount of money for one person to possess, if you distributed the wealth of the world out to every single person evenly, it would only be something like $50,000 per person (based on some quick Googling), which is a life changing amount of money, to be sure, but it's a one time deal. It's not $50,000 per year of income, it's $50,000, period. The amount of wealth created per year is a fraction of that. Were it all distributed equally, basically everyone in the developed world would be taking a massive hit in quality of life, and every single person in the world would still be sweating medical bills in the low $10,000's.
I agree that the numbers become meaningless past a certain point, especially where we're talking about valuations, where it's basically a bunch of people's vague agreement on a price and there are incentives to make it look one way or another, but we also have really bad intuitions about just how much wealth there is out there.
In the limit of a single individual wealth works in a naive fashion where such distribution is possible. But on the scale of the economy, such a thing is not possible without inventing a better distribution mechanism than capital itself. If you redistribute each peace of your car's engine to each passenger, you will be forced to walk. Even as a thought experiment, evenly distributing the wealth of the world is not possible. As the wealth is produced by the incentives inherent in gradients of inequality.
Thus the project of the modern socialist is to develop redistributive structures that maintain such incentives. There are echos of this in George and Harberger, but little in modern Jacobin-style socialism, whose proposals amount to gifting the means of production to the sorts of people that staff an HR department.
Yeah I agree it's not remotely practical and that there would be all sorts of crazy consequences, I just think the thought experiment is useful as an intuition check for how much wealth there is. As an aside, I don't agree that wealth is produced by the incentives inherent in inequality. Wealth is created when people make things and do stuff, which often happens because people want more than what they have, and that doesn't require inequality at all, just a desire to have a better life, however defined.
Back to the main point, we see someone worth $100b and we think there's plenty for everyone, but even in a best case scenario, where we can magically distribute an equal share of all the wealth to everyone and it all holds its value, there's nowhere near enough for everyone to have the standard of living we have become accustomed to in the richest parts of the world.
Those incentives can't exist if any improvement in the quality of life must be distributed evenly among 7 billion people before it may be claimed.
It's true that most people are more interested in absolute quality of life than they are in the relative status granted by inequality, but the one implies the other.
You can make a case for less inequality, of course; but now we're quibbling about the price, as it were.
I mean, the thought experiment isn't about the logistics of redistribution, it's about the sheer amount of wealth. These counterpoints amount to saying that actually redistributing wealth like that would have terrible unintended consequences, which I agree with, and I think just serves to underscore that there is much less total wealth than most people think there is.
Say a billionaire gave away all his money to middle class families. He targeted those in the range of say 40-80k. In the end he chose people who were entrepreneurial. That's essentially 100k to 1,000,000 families w/ an entrepreneurial bent.
Say just 25% are successful in re-investing that money by buying small businesses w/ cashflow off flippa, or buying rental property, etc... Or starting a SaaS business, and that 25% is able to increase their income to 1 million.
Then that 1 million+ * 250,000, means his investment of 100B brought 250B to the economy. The other 75% who weren't so lucky in business, maybe they also invested and still built up a nice nest egg for retirement, or maybe they bought a home so they had a guaranteed roof over their head if hard times hit.
Many of the 75% might be able to get their net worth to 250-500k because of the 1-time gift.
This is all speculation.... In the real world it might be more like 10% are successful, but maybe 1-3% are super successful (become billionaires themselves).
If we had a cap on how much capital you could hold, then that would at least guarantee it funnels back to the bottom echelons of society. Though, I think the best cap would simply be a CEO cap of 150x average salaries (including contractors/offshore/etc). The CEO could earn whatever they wanted, as long as they simply gave everyone on their payroll a raise to meet their new bonus.
The other fact is that 90% of the successful people ARE successful because they didn't have to worry about money. When you struggle to put food on the table, it's hard to think about anything else or work on a side project. There was a good twitter feed/conversation back and forth w/ some people in SV a few months ago that basically was about one person saying 'anyone can make it', and the others saying 'those same people started at their parent's basement, they weren't exactly homeless or struggling'.
Actually it was Paul Graham who said:"The next time someone claims that starting startups is for rich kids, remind them that Airbnb happened because its founders literally could not pay their rent,"
Matthew Prince, the founder and CEO of Cloudflare replied: "Oh Paul, you know better. I had to borrow money from my mom to pay my taxes when we were starting Cloudflare. But I certainly came from a relatively privileged background, and so did the AirBnB founders. It’s hard to take risks if you don’t have a safety net. #bereal,"
I'm not saying we can ever 100% make everything equitable. Not until we have robots doing 100% of the work and < 10% employment and the means to just let people have what they want or need to be happy, in a world where money isn't even a thing we value anymore, or even use.
But if we could just give everyone a floor, or safety net then we can see a lot more combined global progress. Imagine if every child had food on the table just in America and a roof, and healthcare, and could focus on being a kid and getting an education. Imagine if just doing this created 1 million new scientists over the next 50 years that wouldn't have originally existed.
What could they find or discover? The goal shouldn't be take everything but.. take enough that the game isn't forever slanted out of control. That's what GBI or a negative income tax would do. Hell just single-payer healthcare might be enough for some families -- if they didn't have to pay medical bills or copays.
Except some countries 10k is like 100k in U.S.A if you calculated for local costs of living and adjusted you could get away w/ giving 2-3 billion $1k, and then higher amounts to those in the U.S.A. -- you could skip China because they're already a socialist country and should have all their needs met, and skip bad actors like N. Korea, Iran, etc... Might be able to get it up to something like 150k-200k per person in developed world.
But money gets spent it all will end up back in the top 1%'s hands. They have funnels in place to ensure that money funnels up into their hands. Which is why GBI makes more sense, by giving money gradually/recurring it keeps cycling. The poorer families getting GBI would spend 100% locally essentially keeping the money in the local economy.
Not to be a jerk, but I feel this perspective is meaningless from the get go. Redistribution/politics is about the marginal utility of a dollar and the time-value of the application. A dollar in a billionaire's account is worthless. Using those dollars to build a universal pre-k or healthcare system will generate more wealth than a one-time $50k payout.
I don't think it's that simple. Sure, money in a billionaire's possession probably isn't going to be used for consumption, but it's not like that money is chilling in a matress somewhere; it is invested. Those funds are a source of capital for public companies, seed funding for small businesses, VC investments for growing companies, charitable contributions potentially, even funds for countries through bonds etc. I'm going to stay away from making pronouncements on how this money ought to be used; I'm merely pointing out that the situation is more nuanced than how you have framed it.
I think you made great points in your comment above, but I would point out that the thought experiment indicates that the resources they control are actually not that vast, compared to the wealth that would actually be required to raise everyone in the world to, say, the current average American standard of living more than temporarily. It may be moral to take that money and put it to better use, but it would run out a lot faster than most people think.
Perhaps, but I believe this leads into the issue of the waste inherent in the current American standard of living. The waste (big house, meat every day, giant cars, plastic everywhere, etc.) is, as you know, due to the low cost of extracting fossil fuels. I am optimistic that a lot of this waste can be eliminated without changing our quality of life significantly. The structure of our lives may change, but that's the exact thing I'm arguing for, anyway.
>At that point the numbers don't even matter. Maybe Neumann took Masa Son for $50 billion. Who cares?
The numbers don't matter to whom? I have to imagine the numbers matter to Neumann, Masa Son, WeWork stakeholders & WeWork employees. It is never meaningless.
As seen over the past few decades, $50k doesn't go as far as it used to, and I see no reason not to expect the same in the future compared to now. In 30 years $50k might be poverty level income.
Really? $5M is $100k a year for 50 years. I can live comfortably off of $35k a year a long as I'm not in San Fransisco or something. With just $1M I could live indefinitely off investment income, which would be like $50k a year. Double those expenses to support a family, and you're still under budget.
Either one is fine. $35k post tax is super comfy and easy to do, while $35k pre-tax is a little trickier, and would be 15-20% tax rate depending on your state. Monthly budget of $1100 rent and utils, $300 food, $150 car, $60 entertainment, $300 misc, plus $150 for (bad) health insurance. That's $25k/year. Not exactly a comfortable lifestyle but a few hundred dollars extra in a few categories wouldn't dig into $5M much.
Everyone's situation is different, but I wouldn't be so quick to assume yours is reflective of most.
I take home 20k/30k, etr of 35%.
Everything else seems pretty far under average, or in the case of rent, unrealistic. My prices are reflective of a high tax/cost of living city in the northeast.
Just rent on a studio within a thirty minute drive averages $1k, only including trash, snow.
Add $100 for basic cable internet.
Double that car cost, 150 almost covers gas and insurance. Doesn't include paid parking. Some jobs and Some parts of the area can get public transport to workfor them, I can't.
$60 is pretty low for a decent cell phone plan. Be more like 120 in reality.
health cares an extra $800/mo (after insurance pays) if I were to follow my health care providers reccomendations.
Well, the current poverty line for individuals is about $12k per year. Making that for about 80 years is about $1M in a lifetime. So the numbers quoted represent living at about 3x to 5x the poverty line on average. Or something like $35k-$70k per year, which seems doable with a fair amount of comfort (especially at the high end of that range) in most parts of the country.
Invest 3 million in the stock market. A safe withdrawal rate (historically, you would never go bankrupt if you did this, so you could survive 2008 without even worrying) is 3.5% per year.
3.5% of 3 million is 105k. That puts you in the 87th percentile of Americans.
Invest conservatively and pull out 2-3% per year. This should provide you with, conservatively, 50k-100k per year in post-tax cash (inflation adjusted) to spend as you like. Historically, you should be able to withdraw at this rate "indefinitely" with very low risk of zeroing out your funds.
WeWork/Uber/Airbnb... it's interesting how WeWork is classified as tech IPO next to these (e.g. Softbank used its "technology fund" to invest in WeWork). How did this happen? Isn't it an obvious real estate company? Is it because WeWork appealed to tech startups and remote workers?
It's an interesting point. If drivers are employees, I'd call them a transportation company. If they aren't, I'd call them a tech company. Analogous logic for Airbnb. But it seems like too subtle a distinction to be reasonable. More likely, "tech company" just isn't a super useful label anymore, with the grey area growing and growing.
I tend to view tech companies as companies that consider custom tech a competitive advantage and attempt to maintain in-house competency.
If you're a grocery chain and you contract out most of your technical needs then you aren't a tech company. But if you're a grocery chain and you hire and maintain a large technical team to provide you with various custom pieces of technology, you're both a grocery chain and a tech company.
This could be any piece of tech: from custom software to custom refrigeration systems.
I hate when people say that WeWork is not a tech company. WeWork is a real estate tech company. They make a ton of internal tools that help them to automate the business, which is exactly what technology is for - affect real life experiences. In a sense, they are a pure tech business.
By that definition you won’t find many non tech companies. What company that’s not super small doesn’t build internal tools and doesn’t try to automate things ? By your definition all car companies are tech companies, so are insurances, banks and pretty much everybody else.
> By that definition you won’t find many non tech companies.
You will. It's easy. There are thousands of non-tech companies around you. Your local grocery store, laundries, car services, barbershops, etc. They do not hire software engineers, they do not build internal tools. Some of them do rely on third party software, but it's different.
Pretty much every bank is a tech company nowadays. Insurances? Same thing. If Oscar or Chase fires all of its engineers, the business is dead. By my definition, a tech company is a company whose business won't sustain long without its engineering team.
Except in terms of tech being the core of their product, which is what a tech company is. A hospital uses a network and banks make a ton of internal tools. This does not make them pure tech businesses.
I object to the word "steal" being used to describe Adam Neumann's actions. He did not take anything by force or deception (as far as I know). If I take a piece of dog shit, spray paint it gold and sell it as a bar of gold, you could argue that is "stealing" (or at least fraud). If I say "this is a piece of dog shit that I spray painted gold but I am selling it for the price of gold" and an adult of otherwise sound mind accepts the deal, that is not stealing. What Neumann did is more like the latter scenario.
Ah, but nowhere in the description of the product being sold did you discuss unlocking superpowers and elevating global consciousness. That's the deception alluded to in the OP, as far as I can tell.
That's slightly underselling where he was going. Ive said before, there is some genius to his strategic acquisitions. It was looking like he was building an "Office 365 / Adobe Creative Cloud of Building Management Systems."
But, they are giving up, and venture capital is reducing the company to the value of its parts, not its potential, before that Building Management Suite gets assembled. There is a future where their software stack becomes the de facto standard for all building management, the Outlook/Excel of owning property. WeWork could pivot from a real estate company to a property ownership enablement company.
Thats not so much spray painted shit as "im using free cash flow from real estate to build this grand well defined vision, (with a coat of hippie mysticism paint) do you want to come along for the ride, for better or worse?" Because he is an executive, talking to executives, his pitch always came off as vague. But the actions of the company, and the parts they were assembling, paint a much more strategically sound and intelligent portrait.
Adam was/is a promoter extraordinaire. He promoted a utopian future ideal state to his investors and created an investment frenzy though build outs of cool, edgy office space. He created a show and the investors came in droves. He negotiated the investment rounds well and benefited from demand for his product that caused the investors to let their guard down so as to not miss out. The Fear of Missing out (FOMO) is a terribly strong force in the VC community. Adam has set himself and his family up for generations and its all likely legal.
I'm more concerned about the discrimination in finance/lending, which is thoroughly entrenched at this point.
Anyone can borrow $50,000 for a new car, $500,000 for a new home, or $5,000,000 in venture capital if they are connected enough. But there is simply no money available for anything outside of mainstream status quo thinking. That's why the Ubers and Airbnbs and WeWorks in these times are founded on hustling and even skirting laws in some cases.
That's great and everything (I guess?), but I am personally tired of the hustling/hacking mentality. I'd like to see real progress in the standard of living for everyone in the world. That's founded on the idea of self-actualization, that everyone has the modest resources needed to start their own business or invent the things that help themselves and their communities.
How many people here have been on verge of financial ruin trying to get their ideas off the ground? I've been up, I've been down, but overall I've basically been running on empty for over 20 years. I'm tired of it. I didn't expect my career to turn out this way. And I'm deeply concerned about a looming recession forcing otherwise capable, intelligent people to scrape by underemployed, doing menial work to make rent because there isn't enough capital flowing. Because it's all locked up in a few wealthy peoples' hands, who have a very Laissez-faire view of economics.
All of the above is why I'm almost certain now that hard times are coming as early as next year. I've already been through it twice with the dot com bust and housing bubble popping, and we're overdue for the next downturn.
^^^ Note that this wasn't always the case. There were protections in place like the Glass-Steagall Act that lessened these boom-bust cycles, which were overturned by the Gramm–Leach–Bliley Act and others. What we've been going through with this vast increase in wealth inequality is by design.
I was born in 1977 so I remember when it wasn't this way. But many of you reading this now were born after the corruption was instated and might not realize how honestly affluent middle class Americans felt in the 1980s and 1990s.
It can be that way again, but please, look beyond private sector solutions to these problems. The government is We the People, not some specter out to get us. I know that many of you live in Silicon Valley and other big cities that suffer from high taxes or government micromanagement, but I live in Idaho and have seen how the lack of government can lead to widespread poverty and environmental degradation.
Laws can change and movements do happen, which is why I'm optimistic that reforms are also coming and that we might finally see some relief in the 2020s.
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[ 4.9 ms ] story [ 189 ms ] threadConsequences are for people who don't have a billion dollars.
https://www.brainyquote.com/quotes/j_paul_getty_129274
But you know, the next few years of his life are going to be mildly unpleasant, and we shouldn't forget about the emotional impact about that. Maybe he'll have a very public come-to-Jesus moment that will be cathartic for everyone involved, or maybe he'll disappear from public life forever with his vast WeWork wealth and live on some estate in an exotic locale.
But either way, this failure isn't going to be easy for him. He's going to feel several emotions and not all of them will be pleasant.
What's he gonna lose? Friends who invested with him? He can buy new ones.
Feel bad? You can literally hire a whole team of therapists for life.
He can sit in his mansions and not be in the public eye forever, it's not like being in the public eye is some sort of requirement for living.
Heck, he might even find a new following among people who want to emulate how he grabbed all that money.
But it's the kind of disappointment and anger that you get over in a few months.
The only difference is he'll have a billion dollars and the ability to do whatever in life he wants.
If you were in his shoes, would you go back and do things any differently?
I wouldn't have been in his shoes, because I have a shred of decency.
Maybe not hire a famous DJ for the announcement of layoffs.
If this were reddit I would link to /r/aboringdystopia.
If you're having trouble finding sympathetic targets in this fiasco, mayhap spare a thought to the several emotions employees whose options are underwater felt when they heard about their Superhero CEO's cash out.
And when you say "mildly unpleasant", I can only assume you mean that for the rest of his life, his sole source of genuine unpleasantness will be from his own psyche. Because he'll be worth a billion dollars. And while money can't buy happiness, it can remove every last speck of annoyance, peeve, and inferior market option.
This failure will be easier for him than for most other people who fail far less spectacularly.
Even if a thousand people make it their life's mission to persecute him at every moment of the day, he still has approximately a billion dollars more than all of them put together. All he really has to worry about is avoiding Saudi-controlled buildings and territories for the rest of his life.
Honest question: do you think it will be harder for him than for the rest of us that have to deal with failure and yet have to chase jobs and deal with the pressures that come from not being wealthy?
Given the level of sociopathy likely required to get where he is at, I sincerely doubt it. I cant assume he feels as I would in thus situation because I literally couldn't GET into his situation.
I really, seriously doubt this. He's laughing all the way to the bank.
He didn't? He didn't hurt his employees, his investors, his contractors, and so forth? He didn't hurt the the tech space (WeWork is not a tech company, but they're widely perceived to be) by reducing even further what little trust it still has?
They will as soon as they have enough cash to pay severance: https://techcrunch.com/2019/10/03/wework-layoffs/
I think the guy is a piece of excrement, probably simonh thinks he's a piece of excrement as well. However, he did what he did out in the open. He just did it with jaw dropping temerity. No one participating in this whole affair can claim to have been victimized. He asked for all of them to consent to the insane, and they gave him what he wanted, hearty consent.
It's a cautionary tale to me, of how greed can blind what are normally relatively intelligent people. Don't let greed blind you when evaluating startups.
This part:
> Contractors may not have known, but certainly had access to the same information everyone else had and could have known had they actually reviewed the information.
is unreasonable, in my opinion, but perhaps I wasn't clear on what I meant by "contractors". I wasn't talking about IT contractors, but about all the rest -- the companies providing office supplies, janitorial services, and so forth.
Nothing I said expressed this attitude.
This really hinges on how much he has upset MbS who will shortly have a trillion dollars if the Aramco IPO happens. He is a man with a ruthless reputation.
What if Adam now becomes a great angel investor? Life is like that , all twists and turns , and the ToS says it's not guaranteed to be fair.
He tried to. Had the IPO gone through it would have fleeced billions from "institutional investors" (i.e. pensions and 401ks).
If you want, you can imagine him as a diabolical genius who explicitly set out to short the unicorn bubble and then walked away barefoot with a jaunty whistle and $700 million of SoftBank’s money, but that does not strike me as necessary or accurate. My model doesn’t require you to think that your startup is dumb! You don’t need to worry about Neumann’s personal beliefs and motivations at all, really. You can just think of him as a product of the invisible hand of the market. A lot of money was pouring into startups, there was a lot of demand, and the demand called forth supply, and the people who supplied the supply got rich; it is elemental and straightforward and has very little to do with questions like “is this a good business model?”[0]
“Capitalism occasionally makes huge mistakes,” is part of the story, but the other part is that there are rich rewards for those who spot the mistakes and bet against them. This is a lesson specifically of financial capitalism: In most businesses you can notice a competitor doing a dumb thing and create value by doing a better thing, but the financial markets are special because you can notice a competitor doing a dumb thing and get rich by taking the other side, without creating value or doing a better thing. If you notice that people are buying dumb unicorn shares for too much money, you don’t have to invent a better way of doing business or of funding companies. You can just sell them as many as possible of the dumbest possible unicorn shares; when the bubble bursts, you collect your winnings. This sort of thing—getting rich by being smarter than your counterparties, making markets more efficient by being on the right side of bets—is a classic path to wealth creation in the financial business. Tech, traditionally, has a different ethos, one of getting rich by changing the world. But sometimes there are crossovers, and anyway maybe WeWork was never really a tech company.[1]
[0] - https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr...
[1] - https://www.bloomberg.com/opinion/articles/2019-10-23/how-do...
They have to tell them with "authenticity", after all.
Unfortunately, you can see large consequences when it’s not given it up.
It was not a 'bubble that burst' on WW, so much as it was a misunderstanding of the public's appetite for risk. There is a company there. WW is not being wiped out. Softbank may very well recover their 'losses' and then some.
It's a misunderstanding of the nature of risk and the need for some companies to take in 'fuel' that makes grasping what happened with WW a little more difficult. Also - because we love to hate on people that make 'koolaid that's just a bit to strong' - while at the same time adore those who make 'just strong enough' koolaid ... there's an element of populism going on here. Amazon's retail business has never made a dime - though there are obviously some powerful fundamentals there, it can't really be ignored, and yet, we keep Bezos very, very rich in terms of valuation.
My prediction is that in the long run, WW will be a succesfull company, it will make Softbank money, and that Newman's $1B take, in retrospect (if that's all he got) will seem on par with most startups that made it big. And I say this as someone who really doesn't like the guy, at least from what information there is publicly.
Also, the post title is a nice nod to an Audrey Hepburn/Peter O'Toole movie dripping with '60s cool: https://www.imdb.com/title/tt0060522/
Even the wisest can be a fool sometimes. And a fool can sometimes spout wisdom.
We are only human after all.
The Vision Fund is going to lose ~$19 billion. But Masa Son still controls over $80 billion. That's more wealth and power than almost any human being will ever have in history, ever.
At that point the numbers don't even matter. Maybe Neumann took Masa Son for $50 billion. Who cares? A person can live in the USA for their whole lives without working on as little as $3-5 million. Throwing billions around like this, especially when it's digital/paper money in the form of stocks and big corporate deals, really puts the absurdity sprinkles on top of this whole turd bowl.
It's this kind of thing that makes people lose confidence in the system. Most people out here are sweating medical bills in the low $10,000's, while the news is talking about billions being gained and lost in the span of a few weeks - so fast it makes you wonder if that amount of wealth really even existed in the first place.
How much has to be "lost" between digital transactions before the numbers become completely meaningless? A trillion? A quadrillion?
billionaires are incompatible with democracy
btw take a look at Gates' portfolio. He's as liquid as it get's at that level.
I guarantee that 100% of any of their shares would be swiftly picked up if they were sold at a 5%+ discount to the 52-week low stock price.
Markets are a real time pricing mechanism - they operate on instantaneous availability of both money and shares. Put enough shares out on the supply side, is the equivalent of flooding the demand side with money a. la. hyperinflation. In both cases, the good in question becomes effectively valueless.
If people lose confidence in the system because of that it’s because they can’t multiply. Billionaires are very rich compared to middle class people, but there are very few of them, and lots of middle class people. Elizabeth Warren’s new health plan will cost $50 trillion over ten years. Middle class Americans make $8 trillion a year, compared to about $130 billion for America’s too 400 taxpayers.[1] Confiscating the total wealth of every billionaire in America (about $3-3.5 trillion) would pay for Warren’s health plan for well under a year.[2]
We spend way too much time worrying about the wealth of a small group of people that, in the end, doesn’t add up to that large a fraction of total wealth or income. This is, in my view, the biggest reason why America can’t have nice things. Over on the other side of the pond, they don’t worry as much about figuring out how to tax billionaires. Because they know that, in the aggregate, it’s the middle class that has most of the money.
[1] https://www.taxpolicycenter.org/statistics/returns-taxpayers.... Rough proxy for billionaires.
[2] https://www.usatoday.com/story/money/2019/10/03/forbes-400-a.... Top 400 billionaire have $3 trillion. Another 220 billionaires not included, but due to the cut off they have at most another $600 billion.
Currently healthcare will be 52trill over ten years
Warrens plan from two estimates is 52-59 trill over ten years.
Billionaire thing seems wrong. Forbes 400 richest americans has 2.96 trillion total between them. Lowest person on the list has networth of 2.8 bill
To anyone who might take this as an indication Warren's plan will increase HC spending, if we do nothing average yearly HC spending for the 2020s in the US is going to be over 5T anyway. It was at ~3.65T last year, and growing fast.
This is part of a degrowth mindset, and it will freak people out who flee from the shame of not winning, who cannot handle pauses or idle time, who must have control over other peopes' lives. But we can't have those people running this planet into the fire. They're gonna have to learn to be alright.
Can you help me understand this better? Because I see this sentiment often. I'm just gonna do some quick math... Bezos + Gates + Musk + Zuckerberg = let's round up to $300 Billion. Divide that evenly among the 327 million US population. I'd get $917. Do you believe that I will take better care of myself or be a better father in the long run if I get a one-time bonus of $917?
My personal perspective is that equalizing things fully doesn't work. You want incentives to motivate people. However, it's quite amazing what motivates people - after all, for the average billionaire going from $62bn to $63bn isn't really some sort of milestone, unless they somehow surpass some other billionaire. Sometimes the things that motivate people are a lot more fine grained that it seems. So pure financial motivation is rarely the main incentive.
On the other hand, such huge imbalances do eat away at democratic principles.
My personal opinion is that at some point, companies should be treated as utilities/companies of vital national interest. After all, that's how rich people make most of their money, through shares, not through salaries.
So, basically, once a company is taller than X, the country this company is based on gets a certain share of the company, 5%, 10%, 20%, it doesn't matter. I'd also make these shares non-voting. Even better, I'd force these companies to give out a certain percentage of these shares to employees (after all, they're "the people").
We'd have fewer billionaires, we'd have more stable middle class people, we'd have higher state revenues, we'd have less of a disconnect between totally private companies, regular people and governments.
As the owner of a company, you have a choice: create a huge company and have to share the spoils or stay small and nimble and have greater control.
How do I, as a regular citizen, benefit from this? Is there some mechanism I'm not seeing? Because it feels like it's just a meaningless paper transfer.
Secondly, that's why I was also thinking of a variant where employees get shares, too.
As an investment strategy, I never hold stock in a company I'm working for. That puts too many eggs in one basket. If the company fails for some reason, not only have I lost my job but I've also lost my retirement savings. I would personally oppose being compensated in company stock and would sell it ASAP if given the option.
I'm not saying it's the best option or something I studied deeply, but we need something better.
Otherwise, with automation, we're back to feudalism.
Modifying the distribution of wealth isn't about chopping up the richest peoples money and handing it out to everyone else. It's about altering the flows of the dynamical system so that power is continually distributed in an equitable way, one that optimizes more peoples' ability to thrive and co-create healthy lives.
It's about changing the meaning of having vs not having money, it's about reducing the intensity of the leverage people have over one another, and about freeing people to have basic autonomy and agency in their lives.
Your POV fails to take into account the utility and time-value of the redistributed dollars. It's the difference between some unelected doofus having tons of power because of their stationary dollars, or building a universal pre-k and/or healthcare system.
I know I'd personally work less if I wasn't "blessed with the opportunity of choice" of terrible insurance plans offered by my employer where an emergency appendectomy leads to $5k in bills... or if I could work 75% time and reduce daycare hours.
If the wealth is redistributed to the people (the mechanism isn't important) then that amounts to a few thousand dollars per person. This isn't the kind of money that would allow wide-spread reduction in work hours. My expectation is that most people will liquify that wealth and spend it over a long weekend. Do you have a different expectation?
If rather than being given directly to the people, instead the state keeps that money, are you predicting that Donald Trump will use it to build you a new school?
Sure, with less people working we may not have forty choices of toilet paper or same day delivery of counterfeit trinkets... but I’m more than ok with that. It will be necessary to reduce carbon emissions, anyway.
* In M4A, Americans will pay ~$30T/10yr to providers through the government as a middleman.
* In the current private system, Americans will pay ~$30T/10yr to providers through whichever company their employer has selected as a middleman.
The only cost question re: M4A is whether Americans will spend slightly more or slightly less overall when costs are increased because coverage is extended to 10% more people, and costs are decreased by:
- massive efficiency gains of a single payer,
- elimination of profit to shareholders who siphon money away from care,
- better preventative care that reduces or eliminates more expensive catastrophic care.
And additional intangible benefits like:
- not having your healthcare decided by your employer,
- having the ability to be an entrepreneur and/or start a small business while having the security of healthcare,
- the fact that small business will be able to better compete with huge corporations for desirable employees because they won’t have to offer health benefits themselves.
But in 25 years how much does the system improve, what if it's like 50T over the 1st 10 years, then 30T the 2nd because of gains in efficiency? There's a lot of 'in the air' variables as well, where it could end up being 30 or 40T over 10 years if the efficiencies are higher than expected or if we can better negotiate terms w/ drug companies.
If we legalize weed and shrooms and tax them at the national level, that itself would also be a great way to gain money for healthcare. We also can easily halve our military spending and still have a strong national defense. Also adding a VAT may be a good idea, we could even give discounts to citizens so immigrants and visitors travelling in America also help offset our healthcare costs. For instance say vat is 4%, and we charge 12% for non-citizens it would A. discourage illegal immigration, and B. it would stop people worrying about immigrants because they'd have to pay higher VAT than everyone else, so they'd be tax payers and not just 'using the system'...
Also, I used “confiscate” in the context of literally taking all of billionaires’ money.
Her math adds up.
https://www.washingtonpost.com/politics/2019/11/05/warrens-p...
https://www.nytimes.com/2019/11/01/opinion/did-warren-pass-t...
Warren’s calculations just prove why the whole fixation on billionaires and income inequality is a distraction. You're talking about a wealth tax that is unconstitutional, at levels that are completely unprecedented. You're talking about risking capital flight, and setting political capital on fire, to move the United States far to the left of Europe. (What a great campaign ad for Donald Trump! Warren is proposing to do something that even France realized was a bad idea.) And for what? Is it going to pay for M4A? Or balance the budget? No. Not even theoretically.
I say this all as someone who wants universal healthcare to be implemented (even though I'm pessimistic about it saving any money). I think Warren's proposal with respect to employer-side payments is actually pretty clever. But the wealth tax is a huge political liability, and it could take M4A with it. And when that happens, it won't be the fault of billionaires (the wealth tax wasn't going to raise the necessary revenue anyway). It'll be the fault of people making $200,000 who think they are "middle class" and shouldn't have to pay the same level of taxes their counterparts in Europe pay.
The efficiency gains of single payer are overrated. We pay more than other countries do in admin overhead, but admin overhead itself is a small fraction of total costs, and as a percentage of our spend, admin costs would necessarily rise, probably dramatically, if Medicare starts covering 30 year olds in addition to 68 year olds.
† I'm just taking your number here, not interrogating it.
The US needs cheaper healthcare, but single payer won't achieve that.
People focus on billionaires due to the fact that they are the most stark representation of the deeply unequal society in which they live. Wealth inequality is very real, please refer to the following: https://www.stlouisfed.org/open-vault/2019/august/wealth-ine... It's a rhetorical device
> Middle class Americans make $8 trillion a year, compared to about $130 billion for America’s billionaires.
So the group of people who leverage capital to sustain themselves and don't have to work have lower net income than the group of people who have to work to have a roof over their head?
> $50 trillion
I love how these numbers increasingly grow. First it was 36 trillion from the well-known Cato institute. Mind you, this was actually going to save money in the long term, so we have to bump up the number. The United states spend almost 2x per capita what Canada does on healthcare, so it seems pretty odd that we'd use current pricing systems to estimate the cost when the original M4A bill expressly increases leverage to negotiate. $50 trillion is a spook.
It's a rhetorical device that distracts from real problems and real solutions. Look at Warren's wealth tax proposal. It's blatantly unconstitutional and without precedent in the OECD. And what's the upshot? Just $275 billion in revenue per year. Compared to the $1 trillion or more we could raise by implementing a VAT, like every other OECD country has, or bringing payroll taxes in line with other OECD countries.
Focusing on billionaires also distracts from the nature of our "deeply unequal society." Look at the U.S. income distribution: https://taxfoundation.org/summary-latest-federal-income-tax-... https://www.aei.org/carpe-diem/fair-share-top-400-us-taxpaye....
The top 400 taxpayers earned $127 billion in 2014, let's say an even $150 billion in 2018. There were 70 million returns filed by the bottom 50%. If you took all billionaires' income and redistributed it among the bottom 50%, they'd have about $2,000 a year more, or a bit more than 10%. But look at the top 50% minus the top 1%. (Even Sanders considers the 98th percentile to be "middle class" given his tax plan wouldn't raise taxes on people with household incomes under $250,000.) They have $7 trillion in income, versus about $1.1 trillion in income for the bottom half. If you want to talk about income inequality, that's the root of it. And that's the most significant kind of income inequality in terms of impact on peoples' daily lives. Billionaires aren't the ones driving up housing prices in urban neighborhoods and driving out people of color. Billionaires also aren't the ones that would be directly affected by the increases in VAT and payroll taxes that would be required to move to a more European model of taxation and public services.
If you took all personal income ($10 trillion) and divided it evenly among all filers (140 million), you get about $71,000. If you or your household make more than that, you benefit from inequality.
> So the group of people who leverage capital to sustain themselves and don't have to work have lower net income than the group of people who have to work to have a roof over their head?
Zuckerberg doesn't work? Buffet doesn't work? Kylie Jenner doesn't work?
> I love how these numbers increasingly grow.
The $50 trillion number was calculated by Warren's own experts: https://assets.ctfassets.net/4ubxbgy9463z/2Tg9oB55ICu2vtYBaK... (linked from: https://elizabethwarren.com/plans/paying-for-m4a)
Credit to Warren, her analysis doesn't assume that Medicare for All will result in massive cost savings, which I think is highly unlikely given the American political system.
One of these things is not like the other. Don't be so slippery, please.
He’s talking about the aggregate income earned by the group. So the delta in individual incomes is offset by the massive delta in group sizes.
But I don't think Americans are punitive. They're not deeply troubled by the mere fact that there is someone out there with $8 billion. To the extent they care about billionaires, they're concerned about whether they're paying a fair amount to support the county that gave them so much. And from that perspective, what matters is the aggregate income of the group. And $130-150 billion just isn't much compared to the $6-7 trillion in annual government spending in the U.S.
Politicians thrive by disguising the punitive outlook as a practical outlook. They point to how much money Zuckerberg or Bezos have, and quickly pivot to how they could pay for universal healthcare, universal education, etc. A necessary aspect of that strategy is keeping people ignorant of the fact that even confiscating the total income of every billionaire would only pay for say 25% of U.S. higher education spending, or 4% of U.S. health spending.
I don't think this is a remotely justifiable belief. We have the highest prisoner rate per capita, we sanction anyone the second they step out of line, and the entire two prior decades have been shaped by a collective trauma that pushed us into seeking retributive justice against anyone--regardless of their actual role.
I fail to remember which Puerto Rican uprising this was during, but there was a mother who was jailed for the crime of making her husband and children breakfast. When slavery was finally ended, the 10 years of reconstruction was met immediately with horrific acts of terrorism and reactionary violence to reassert white supremacy.
Punitive Justice is a core tenet of the American civil religion.
I agree that the numbers become meaningless past a certain point, especially where we're talking about valuations, where it's basically a bunch of people's vague agreement on a price and there are incentives to make it look one way or another, but we also have really bad intuitions about just how much wealth there is out there.
In the limit of a single individual wealth works in a naive fashion where such distribution is possible. But on the scale of the economy, such a thing is not possible without inventing a better distribution mechanism than capital itself. If you redistribute each peace of your car's engine to each passenger, you will be forced to walk. Even as a thought experiment, evenly distributing the wealth of the world is not possible. As the wealth is produced by the incentives inherent in gradients of inequality.
Thus the project of the modern socialist is to develop redistributive structures that maintain such incentives. There are echos of this in George and Harberger, but little in modern Jacobin-style socialism, whose proposals amount to gifting the means of production to the sorts of people that staff an HR department.
Back to the main point, we see someone worth $100b and we think there's plenty for everyone, but even in a best case scenario, where we can magically distribute an equal share of all the wealth to everyone and it all holds its value, there's nowhere near enough for everyone to have the standard of living we have become accustomed to in the richest parts of the world.
It's true that most people are more interested in absolute quality of life than they are in the relative status granted by inequality, but the one implies the other.
You can make a case for less inequality, of course; but now we're quibbling about the price, as it were.
Say just 25% are successful in re-investing that money by buying small businesses w/ cashflow off flippa, or buying rental property, etc... Or starting a SaaS business, and that 25% is able to increase their income to 1 million.
Then that 1 million+ * 250,000, means his investment of 100B brought 250B to the economy. The other 75% who weren't so lucky in business, maybe they also invested and still built up a nice nest egg for retirement, or maybe they bought a home so they had a guaranteed roof over their head if hard times hit.
Many of the 75% might be able to get their net worth to 250-500k because of the 1-time gift.
This is all speculation.... In the real world it might be more like 10% are successful, but maybe 1-3% are super successful (become billionaires themselves).
If we had a cap on how much capital you could hold, then that would at least guarantee it funnels back to the bottom echelons of society. Though, I think the best cap would simply be a CEO cap of 150x average salaries (including contractors/offshore/etc). The CEO could earn whatever they wanted, as long as they simply gave everyone on their payroll a raise to meet their new bonus.
The other fact is that 90% of the successful people ARE successful because they didn't have to worry about money. When you struggle to put food on the table, it's hard to think about anything else or work on a side project. There was a good twitter feed/conversation back and forth w/ some people in SV a few months ago that basically was about one person saying 'anyone can make it', and the others saying 'those same people started at their parent's basement, they weren't exactly homeless or struggling'.
Actually it was Paul Graham who said:"The next time someone claims that starting startups is for rich kids, remind them that Airbnb happened because its founders literally could not pay their rent,"
Matthew Prince, the founder and CEO of Cloudflare replied: "Oh Paul, you know better. I had to borrow money from my mom to pay my taxes when we were starting Cloudflare. But I certainly came from a relatively privileged background, and so did the AirBnB founders. It’s hard to take risks if you don’t have a safety net. #bereal,"
Source: https://twitter.com/paulg/status/1129897694984646657
I'm not saying we can ever 100% make everything equitable. Not until we have robots doing 100% of the work and < 10% employment and the means to just let people have what they want or need to be happy, in a world where money isn't even a thing we value anymore, or even use.
But if we could just give everyone a floor, or safety net then we can see a lot more combined global progress. Imagine if every child had food on the table just in America and a roof, and healthcare, and could focus on being a kid and getting an education. Imagine if just doing this created 1 million new scientists over the next 50 years that wouldn't have originally existed.
What could they find or discover? The goal shouldn't be take everything but.. take enough that the game isn't forever slanted out of control. That's what GBI or a negative income tax would do. Hell just single-payer healthcare might be enough for some families -- if they didn't have to pay medical bills or copays.
Global money: $90,400,000,000,000
Global population: 7,742,131,000
Money per person: ~$11,650
But money gets spent it all will end up back in the top 1%'s hands. They have funnels in place to ensure that money funnels up into their hands. Which is why GBI makes more sense, by giving money gradually/recurring it keeps cycling. The poorer families getting GBI would spend 100% locally essentially keeping the money in the local economy.
In some parts of the US, 100k would make you crazy wealthy. In other parts of the US, it wouldn't even make you middle class.
If you have everyone money, they would buy and sell goods and services instead of hoarding it.
Their money are put to good work. They don’t just put the money under a mattress.
Personally, I believe this is immoral.
Bring on the fully automated luxury communism!
The numbers don't matter to whom? I have to imagine the numbers matter to Neumann, Masa Son, WeWork stakeholders & WeWork employees. It is never meaningless.
And it will be decent for that price if you can just buy a good house and vehicle.
I think you'd do fine.
I take home 20k/30k, etr of 35%.
Everything else seems pretty far under average, or in the case of rent, unrealistic. My prices are reflective of a high tax/cost of living city in the northeast.
Just rent on a studio within a thirty minute drive averages $1k, only including trash, snow.
Add $100 for basic cable internet.
Double that car cost, 150 almost covers gas and insurance. Doesn't include paid parking. Some jobs and Some parts of the area can get public transport to workfor them, I can't.
$60 is pretty low for a decent cell phone plan. Be more like 120 in reality.
health cares an extra $800/mo (after insurance pays) if I were to follow my health care providers reccomendations.
3.5% of 3 million is 105k. That puts you in the 87th percentile of Americans.
A billion seconds is 31.7 years.
staggering difference.
Isn't AirBnB an obvious hospitality company?
AirBnB is not buying houses to rent, it's a web middleman.
Amazon does sell stuff directly, so it's retail not tech.
All these 3 companies are well categorized, WeWork is not, WeWork buys properties to rent, it's just that, nothing that Regus isn't.
If you're a grocery chain and you contract out most of your technical needs then you aren't a tech company. But if you're a grocery chain and you hire and maintain a large technical team to provide you with various custom pieces of technology, you're both a grocery chain and a tech company.
This could be any piece of tech: from custom software to custom refrigeration systems.
You will. It's easy. There are thousands of non-tech companies around you. Your local grocery store, laundries, car services, barbershops, etc. They do not hire software engineers, they do not build internal tools. Some of them do rely on third party software, but it's different.
Pretty much every bank is a tech company nowadays. Insurances? Same thing. If Oscar or Chase fires all of its engineers, the business is dead. By my definition, a tech company is a company whose business won't sustain long without its engineering team.
But, they are giving up, and venture capital is reducing the company to the value of its parts, not its potential, before that Building Management Suite gets assembled. There is a future where their software stack becomes the de facto standard for all building management, the Outlook/Excel of owning property. WeWork could pivot from a real estate company to a property ownership enablement company.
Thats not so much spray painted shit as "im using free cash flow from real estate to build this grand well defined vision, (with a coat of hippie mysticism paint) do you want to come along for the ride, for better or worse?" Because he is an executive, talking to executives, his pitch always came off as vague. But the actions of the company, and the parts they were assembling, paint a much more strategically sound and intelligent portrait.
It doesn't take a genius to see this opportunity but it does take an incredibly lucky person to be in a position to exploit it.
If Adam Neumann doesn't end up in jail after all this, then I will concede that he is not an idiot.
Anyone can borrow $50,000 for a new car, $500,000 for a new home, or $5,000,000 in venture capital if they are connected enough. But there is simply no money available for anything outside of mainstream status quo thinking. That's why the Ubers and Airbnbs and WeWorks in these times are founded on hustling and even skirting laws in some cases.
That's great and everything (I guess?), but I am personally tired of the hustling/hacking mentality. I'd like to see real progress in the standard of living for everyone in the world. That's founded on the idea of self-actualization, that everyone has the modest resources needed to start their own business or invent the things that help themselves and their communities.
How many people here have been on verge of financial ruin trying to get their ideas off the ground? I've been up, I've been down, but overall I've basically been running on empty for over 20 years. I'm tired of it. I didn't expect my career to turn out this way. And I'm deeply concerned about a looming recession forcing otherwise capable, intelligent people to scrape by underemployed, doing menial work to make rent because there isn't enough capital flowing. Because it's all locked up in a few wealthy peoples' hands, who have a very Laissez-faire view of economics.
All of the above is why I'm almost certain now that hard times are coming as early as next year. I've already been through it twice with the dot com bust and housing bubble popping, and we're overdue for the next downturn.
^^^ Note that this wasn't always the case. There were protections in place like the Glass-Steagall Act that lessened these boom-bust cycles, which were overturned by the Gramm–Leach–Bliley Act and others. What we've been going through with this vast increase in wealth inequality is by design.
I was born in 1977 so I remember when it wasn't this way. But many of you reading this now were born after the corruption was instated and might not realize how honestly affluent middle class Americans felt in the 1980s and 1990s.
It can be that way again, but please, look beyond private sector solutions to these problems. The government is We the People, not some specter out to get us. I know that many of you live in Silicon Valley and other big cities that suffer from high taxes or government micromanagement, but I live in Idaho and have seen how the lack of government can lead to widespread poverty and environmental degradation.
Laws can change and movements do happen, which is why I'm optimistic that reforms are also coming and that we might finally see some relief in the 2020s.
To actually get anything, you should ask for 10-15 million in seed capital.