That is the way of the world, capitalism specifically. The only way to counter is a fair tax system and good spending on education up to college level.
The work of Piketty [0] and others shows that wealth inequality has surpassed pre-WWI historical maximums. The postwar "golden age of capitalism" has given way, from the 70s until today, to a neoliberal system that simply doesn't serve most people on the planet.
It's an unfortunate fact that significant change happens rarely without large convulsions, e.g. after a major war, because I don't see this being sustainable even medium-term.
This is just wrong. If we skip the ultra rich totally and focus on normal families inheritance is THE way to help you decendants.
Right now (where i live) you pay a big tax on inheritance, this is ok if you only inherit cash. In 99% of inheritances this is not the case. You inherit family home, a cottage etc. Then you must sell because you cant afford to pay for it. Now the asset is gone forever and the next generation will most likely inherit nothing.
Its really hard to keep anything of value in the family because of this, that one house that was purchased for 60K is now somehow worth 600K (even it has all kinds of problems) and you need to take a loan just to keep it.
By taxing inheritance its sure that decendants that work basic jobs will forever be poor.
Afaik you can "abandon it", or when you decline an inheritance its automatically going to the gov, hence you would be illegal trespassing after this point.
1) set a generous threshold over which your inheritance gets taxed, inflation adjusted (e.g, 2M not including the principal residence)
2) tax 100% above it. (should only concern a fraction of a fraction of cases)
3) put all this tax's proceeds in a sovereign wealth fund
4) at 21, a citizen gets access to her redistributed generational wealth
5) profit
Why would this increase inequality? Inheritence generally goes from rich person to rich person. I would normally assume the rate of equality would stay roughly constant in the face of inheritence.
The Slate Money podcast had a recent episode of their "Money Talks" series that interviewed Ray Madoff, author of the new book The Second Estate. It was an interesting listen—could've been longer, IMO—and I appreciated the discussion about the history of the inheritance tax in the US and how it has become useless, largely through political inaction refusing to close tricks/loopholes. I'll be checking out from my library (once it's in the system!).
What terrifies me most about this is that those in power will keep getting younger, dumber and more complacent.
I feel like communism is inevitable at this point.
People know communism isn't the solution, but they will still vote for it because at least it pretends to stand for equality.
We're going to reach a point of such extreme inequality that even the pretense of equality provided by communism would be welcomed by the majority.
In a way, the pretense of equality sets a floor on inequality; because, in a communist system which calls all humans equal, any actual inequality has to be either hidden or justified... This requires effort. A system which pretends to stand for equality can only become so unequal before it loses its ability to justify itself; then it collapses.
By contrast, our current system makes no claims about human equality, quite the opposite; it exaggerates and propagandizes the inequality of humans and human ability as a means to justify its failures in terms of human resource allocation.
For example, our current system sees homelessness not as a failure of its resource-allocation capabilities but as a kind of efficiency. It does so by dehumanizing the homeless; painting them as lazy and incapable of value-creation; deceptively conflating 'value creation' with 'value extraction' in the process. Our system keeps trying to portray the 'value extraction' endeavors of the entrepreneur class as being on the same level as the 'value creation' of the working class... They will not acknowledge the reality that 'value extraction' is the main cause of wasted human potential.
It is our current system itself which fails to efficiently allocate the most valuable resource in society; people's time and energy. Our current system implies that human life is of such low intrinsic value, that some people aren't even worthy of having a roof over their heads, all while it deprives them of their right to build their own roofs (with regulations).
Our system loves to blame individuals for its oppression and it loves it even more when they blame themselves for it; it seizes any opportunity it can to demonize beaten-down intelligent people who understand the mechanics of its oppression and it idolizes egotistical idiots who have never experienced struggle and who therefore don't have much difficulty in taking full credit for everything (good) which happens to them...
It's not difficult to take full responsibility for your situation when only good things happen to you... But watch how these people behave when things go belly-up. They're off to the Caymans, never to be heard from again... The system is remarkably lenient on them.
> People know communism isn't the solution, but they will still vote for it because at least it pretends to stand for equality.
Genuinely curious - why isn't communism the solution? And in your opinion, what are some better solutions? I haven't studied much about political/economic ideologies and at this point don't even know where to start. I do agree with some of what you are saying, but I don't understand why communism wouldn't be be a step in the right direction.
Many in the US expecting an inheritance from their baby boomer parents are in for a rude shock. Why? Because their assets are going to get eaten up by retirement living and end-of-life care. If you still own your assets when you go into care, Medicaid is going to use up all those assets before paying for it and this could be tens of thousands a month with long-term medical care. You can avoid this is you plan ahead. Medicaid has a 5 year lookback on gifts so you need to transfer assets 5+ years before you need to pay for care but most people haven't done that.
For those who say this is the only way people get ahead, you are correct but you're missing the point. That shouldn't be the case and it's non sustainable. In the 1990s, the average house price in London was £70k. Now it's >£700k. It doesn't have to be this way. It shouldn't be this way (for a healthy society).
I've come to believe that this century will see a point where there's simply nothing left to exploit, nothing left to transfer from the working class to the ultra-wealthy. And as has always been the case historically, that's going to end with a more violent form of wealth redistribution (eg French revolution, Russian revolution).
Wealth inequality is not an intrinsic bad, and it's not even worth striving to reduce. The only thing that matters is the average (pick your average) standard of living.
There's no point paying a fortune to have all the people who created the most value leave your country just so you can reduce a pointless metric, especially when all it does is get the state more money to spend on itself rather than reduce your costs or increase what you get for your costs.
Where do you think the money that is accrued by the most wealthy will be spent/invested/parked? What will its effects be on the broader economy?
Assuming that the money is all used for altruistic purpose, I could agree with your point. But we know that this money is often used for not so altruistic purposes like investing in PE which asset strip the productive parts of economy or use the money to influence politics and elected representatives via lobbying.
That feels like it should be true, but it's not. Humans are hierarchical social animals, not logical loners. Their well being and happiness is tied to the group.
> the people who created the most value leave your country
You mean the workers? Why would they leave if inequality is reduced, that would mean their standard of living would increase?
Anyone who wants to leave is free to, people are tired of the threats, just do it already. The people who leave will be spiting their own faces, and the people who stay behind will fill the demand vacuum.
Average standard of living can rise even if it decreases for 99.9% of people. Median standard of living is what you want to increase, and increasing wealth inequality does not help with that.
I disagree, wealth inequality is an intrinsic bad. Just look at the power wielded by the likes of Musk, Ellison, Thiel... They are able to bend the rules in a way that negatively impacts the general population's material conditions, and are leading the country straight into authoritarianism.
Don't be fooled, those people don't create any value. They could disappear tomorrow and the world would be none the poorer. Quite the contrary in fact. Wealth is created by working, not owning, never forget this basic fact.
Aside: Inheritance laws are one of those little thought of things that end up making huge differences in a society.
The classic one is the changes in Sparta’s inheritance system that essentially caused their downfall.
Originally every citizen had an equal plot of land, the economic base that allowed him to be a hoplite (Sparta help ~80% of their population as slaves, helots, as state property). But as Spartan men died in wars, inheritance laws were forced to let daughters inherit and merge estates through marriage, wealth, and land, and thus it all concentrated fast. By Aristotle’s time, nearly half the land was owned by women outright, and the number of citizens had then fallen to a few hundred as citizenship was tied to these land plots. The result was that the city that once fielded the most formidable army in Greece simply ran out of Spartiates to fill the ranks. Perversely, they all kept this going instead of breaking up the consolidated plots, as citizenship was tied to freedom and voting power. So, the less of them there were the better off the rich were, as they had more voting power and wealth at home (wealth was land, as Sparta forbid money in it's borders, well, sorta). So, power domestically was inverse to foreign power. And we all know when countries get into these situations they always go towards domestic power over national security.
Thank you for this perspective. It's very clarifying.. through this lens it makes a lot of sense that periods after large scale military endeavors lead to egalitarian moments. All these citizen soldiers so to speak will demand their share and elites will feel it is owed
Looking at the discussion I’m struck by how there are really two “goods” that are conflicting in people’s minds. Many of those of us who are parents embrace the idea of sacrificing to make our kids lives easier and better than our own. We recognize how what our parents have provided us has helped us and want to give even more to our own children/grandchildren. It seems to be a general principle of society that we should enact policies that encourage people to sacrifice for their children?
But also the accumulation of wealth drives so many negative issues in society that we want to lessen. And extreme wealth seems to make things even worse.
32 comments
[ 3.7 ms ] story [ 51.8 ms ] threadIt's an unfortunate fact that significant change happens rarely without large convulsions, e.g. after a major war, because I don't see this being sustainable even medium-term.
[0] https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce... and subsequent
Right now (where i live) you pay a big tax on inheritance, this is ok if you only inherit cash. In 99% of inheritances this is not the case. You inherit family home, a cottage etc. Then you must sell because you cant afford to pay for it. Now the asset is gone forever and the next generation will most likely inherit nothing.
Its really hard to keep anything of value in the family because of this, that one house that was purchased for 60K is now somehow worth 600K (even it has all kinds of problems) and you need to take a loan just to keep it.
By taxing inheritance its sure that decendants that work basic jobs will forever be poor.
If inheritance isn't there to prune out variants, the virus mutates and propagates.
People who start off wealthy go on to accumulate and centralize even more wealth.
if returns on inherited wealth outperform growth, then the percentage of growth captured by the wealthy grows over time, exacerbating inequality
estate taxes can help mitigate that, but they are "anti-American"
[0] https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
I feel like communism is inevitable at this point. People know communism isn't the solution, but they will still vote for it because at least it pretends to stand for equality.
We're going to reach a point of such extreme inequality that even the pretense of equality provided by communism would be welcomed by the majority.
In a way, the pretense of equality sets a floor on inequality; because, in a communist system which calls all humans equal, any actual inequality has to be either hidden or justified... This requires effort. A system which pretends to stand for equality can only become so unequal before it loses its ability to justify itself; then it collapses.
By contrast, our current system makes no claims about human equality, quite the opposite; it exaggerates and propagandizes the inequality of humans and human ability as a means to justify its failures in terms of human resource allocation.
For example, our current system sees homelessness not as a failure of its resource-allocation capabilities but as a kind of efficiency. It does so by dehumanizing the homeless; painting them as lazy and incapable of value-creation; deceptively conflating 'value creation' with 'value extraction' in the process. Our system keeps trying to portray the 'value extraction' endeavors of the entrepreneur class as being on the same level as the 'value creation' of the working class... They will not acknowledge the reality that 'value extraction' is the main cause of wasted human potential.
It is our current system itself which fails to efficiently allocate the most valuable resource in society; people's time and energy. Our current system implies that human life is of such low intrinsic value, that some people aren't even worthy of having a roof over their heads, all while it deprives them of their right to build their own roofs (with regulations).
Our system loves to blame individuals for its oppression and it loves it even more when they blame themselves for it; it seizes any opportunity it can to demonize beaten-down intelligent people who understand the mechanics of its oppression and it idolizes egotistical idiots who have never experienced struggle and who therefore don't have much difficulty in taking full credit for everything (good) which happens to them...
It's not difficult to take full responsibility for your situation when only good things happen to you... But watch how these people behave when things go belly-up. They're off to the Caymans, never to be heard from again... The system is remarkably lenient on them.
Genuinely curious - why isn't communism the solution? And in your opinion, what are some better solutions? I haven't studied much about political/economic ideologies and at this point don't even know where to start. I do agree with some of what you are saying, but I don't understand why communism wouldn't be be a step in the right direction.
For those who say this is the only way people get ahead, you are correct but you're missing the point. That shouldn't be the case and it's non sustainable. In the 1990s, the average house price in London was £70k. Now it's >£700k. It doesn't have to be this way. It shouldn't be this way (for a healthy society).
I've come to believe that this century will see a point where there's simply nothing left to exploit, nothing left to transfer from the working class to the ultra-wealthy. And as has always been the case historically, that's going to end with a more violent form of wealth redistribution (eg French revolution, Russian revolution).
There's no point paying a fortune to have all the people who created the most value leave your country just so you can reduce a pointless metric, especially when all it does is get the state more money to spend on itself rather than reduce your costs or increase what you get for your costs.
Assuming that the money is all used for altruistic purpose, I could agree with your point. But we know that this money is often used for not so altruistic purposes like investing in PE which asset strip the productive parts of economy or use the money to influence politics and elected representatives via lobbying.
You mean the workers? Why would they leave if inequality is reduced, that would mean their standard of living would increase?
Anyone who wants to leave is free to, people are tired of the threats, just do it already. The people who leave will be spiting their own faces, and the people who stay behind will fill the demand vacuum.
Do you really think a world with extreme power inequality is anything good?
Don't be fooled, those people don't create any value. They could disappear tomorrow and the world would be none the poorer. Quite the contrary in fact. Wealth is created by working, not owning, never forget this basic fact.
moreover this supposes that wealth does not buy political power, which is also blatantly false.
this is the fastest way to hell in modern societies.
It's in the 263th position, alongside posts from 4 days ago, and keep rapidly going down. Really weird.
The classic one is the changes in Sparta’s inheritance system that essentially caused their downfall.
Originally every citizen had an equal plot of land, the economic base that allowed him to be a hoplite (Sparta help ~80% of their population as slaves, helots, as state property). But as Spartan men died in wars, inheritance laws were forced to let daughters inherit and merge estates through marriage, wealth, and land, and thus it all concentrated fast. By Aristotle’s time, nearly half the land was owned by women outright, and the number of citizens had then fallen to a few hundred as citizenship was tied to these land plots. The result was that the city that once fielded the most formidable army in Greece simply ran out of Spartiates to fill the ranks. Perversely, they all kept this going instead of breaking up the consolidated plots, as citizenship was tied to freedom and voting power. So, the less of them there were the better off the rich were, as they had more voting power and wealth at home (wealth was land, as Sparta forbid money in it's borders, well, sorta). So, power domestically was inverse to foreign power. And we all know when countries get into these situations they always go towards domestic power over national security.
But also the accumulation of wealth drives so many negative issues in society that we want to lessen. And extreme wealth seems to make things even worse.