The issue is simple to understand: as population grows and technology grows even faster, there should be a steady stream of wealth increase. This has been observed as is obvious to everyone. However, if we allow the bulk of this wealth to be controlled by a tiny part of the population, we are creating a huge problem to current and to future generations. A hereditary oligarchy can be terrible to our civilization, and this is what we see forming nowadays. I am not against people participating in the creation of wealth and reaping the rewards, but these differences in wealth need to be leveled over time. Unfortunately, short-sighted politics of the US and other countries are giving more and more power to wealthy people so that they can amass more money without visible contributions to society.
It's way simpler. As population grows, the 500 richest people (whoever they are) are expected to get richer even if the wealth distribution does not change. And as the society gets richer, they are expected to get richer too.
So, if there is any indication that wealth has been accumulating faster, it is not on the article. And as such, the article is valueless and a complete loss of time.
The indication you're searching for is called wealth inequality. It is a measure of how much more money the richest people have compared to the rest of the population, and it has increased significantly over the years:
There is an economist called Thomas Piketty who has made his name by studying and measuring inequality over the years. Read his book and you will get a detailed analysis of how inequality has increased in our society.
If me and the rest the million other people in my city have $100,000, some billionaire in a city somewhere else making another 100 million doesn't really have any impact on me directly. Yet it increases this inequality metric and I'm supposed to be outraged.
If the billionaire was using this position to corner the real estate market I'm trying to buy a house in, then I might be upset. But, I could also pool 1,000 of my friends together each with our $100,000 into a corporation and corner a market as well.
So why exactly is inequality relevant? Shouldn't we be focused on just raising where the bottom of the income range is rather than cutting down the tall outliers?
It seems to me like trying to make yourself wiser by killing everyone with more education than yourself.
Because democracy stops working when inequality is too great. Regulatory capture and all that.
It's waaaaay harder for you to organize and mobilize your 1000 buddies than it is for 1 billionaire to decide he wants to do something you don't want, such as lobbying politicians to give him a tax break, for example.
It's not as hard to organize people along ideological boundaries as you might think. Look at the power of the US political parties, the NRA, unions, etc.
If we want to stop regulatory capture, stop that. Don't worry if it's one person or 1000 behind a movement.
Wealth and income inequality are only bad insofar as they have an effect on consumption inequality and leisure. (Another issue is that wealthy people may use their money to get politicians to pass laws that are harmful.) When people who are richer than you spend their money on yachts, the resources (labor, materials) used to build the yachts can't be used to provide other people with cars, food, homes, computers, and drinks from Starbucks. Since billionaires have most of their money invested, income and wealth inequality matter much less than the news try to make them seem.
According to this article, though, there has been an increase of consumption inequality from 1980 to 2005 in the US according to various papers: https://web.stanford.edu/~pista/JEP.pdf. But the consumption inequality is far less outrageous than income inequality and can be estimated to have been in decline in the world at large through data from the World Bank's DataBank.
The main problem is in political representation. In a democracy, everyone should count as one vote. The natural desire of the population is to have better education and health care, for example, that can lift the standing of the whole society. When a small minority has a disproportionate amount of wealth, they can relatively easily bend politics to their personal wishes. In the US this presents itself in politicians who vote for their wealthy donors to receive tax breaks, the rise of chartered schools, and the fight against public health care.
The measure to look at is consumption inequality, not wealth inequality. It has also increased (though it is harder to measure than income inequality, but see https://www.nber.org/papers/w17982.pdf), but the progressive global wealth tax of up to 2% advocated by Piketty in Capital in the Twenty-First Century could increase consumption inequality instead of diminishing it, and is otherwise less efficient than a tax on consumption.
See “Measuring inequality: A three-headed hydra”[1] in The Economist and “Economics is all about consumption” by Scott Sumner.[2]
Maybe. I don't want this to come off bad, but maybe the work a lot of people do just isn't that important and thus doesn't warrant increases in salary? If a company needs someone to do X, and 5 viable candidates can be found for $Y -- there really is no reason to increase wages.
Anyone with some capital could've invested in Netflix, Facebook or Google several years ago and would have achieved a good return on their money.
Even if some sort of global wealth tax would be introduced (that's a big IF) to fix the accumulation of extreme wealth, would people be better off? The amounts collected, spread out over the entire population, would be relatively small. And most of this new wealth is mostly paper wealth -- the headline next year could very well be: "World's richest lost $3tn of their wealth".
How well does that argument hold up tho'? I mean, there is always _someone_ who does it cheaper. Always. In fact I know of a web developer, who actually does quite decent work and is available for as little as $5 per hour. Does that mean everyone in that skill level should get paid so little?
How would you allocate work? Suppose you are paying a “fair” wage above the market wage, so you have 5 equally qualified candidates apply. They are not allowed to compete on price since you already decided to pay what you consider a fair wage.
I would hire whoever produces the best quality of work for that amount of money, but if they all produce the exact same quality of work, I would hire the one who takes the least amount of money.
The reason anyone can make this kind of wage work is through consumer credit. Eliminate consumer credit, and wages will go up/prices will go down, I would bet my life on it.
Cheaper yes, but perhaps not better. I'd be happy to demand a few million a year for high quality development work from an employer, but the laws of supply and demand do apply.
People who do not contribute to society are what we call parasites. Just because your father or grand-grand-father did something useful to the world doesn't justify that you have to live like a king. Modern society destroyed the old feudal order exactly to avoid this kind of social injustice.
You don't even need to get all this righteous anger involved; the rich benefit more from the stable functioning of society than the poor precisely because they are rich. If the structures that support that wealth were to collapse they'd have a lot more to lose than the guy drowning in debt. It's not only reasonable to expect them to invest more proportionally in the continued functioning of society: it's in their best interest if they're smart enough to look past their balance sheet at the end of the year.
That's a clearly defective model from a game theoretical point of view. A certain rich person can do very little to preserve the stability of the society, so their actions would be concentrated on things that give them direct benefits, that may or may not help society. It's essentially an externality problem, everybody is marginally hurt by say pollution, but some have local gains that far outweigh the costs, motivating them to pollute, bribe politicians and regulators, skirt taxes and so on, leaving other rich or poor people to support the welfare of the society. When the scales tip in favor of the freeriders, you have a failed state that no rich profiteer could have prevented, working individually.
Working individually, yes. But realistically this is more of an iterative prisoner's dilemma than a straight prisoner's dilemma. If the rich don't hold up their part of the social contract, the poor tend to eat them (eventually). So the rich are only incentivized to screw the system if they can get away with it. The problems start happening when we let them get away with it.
Who says they're smart enough? There's a very long history of aristocracies perfectly content to exploit the lower classes, and then got all shocked when the peons wanted the wealthy executed - assuming of course the aristocrats hadn't first riled up the ignorant masses with some reason to start a war.
They only invest in those things that prop them up. Like donating to police or lawmakers, or the very poor with next to nothing to lose (and thus the most dangerous).
I completely agree that the richest should contribute to society, especially as someone in the middle class. However, let's pretend I was born into the wealthiest class. If I inherit a business, that business provides jobs (ie. wages) for people, and is a functioning part of the economic system. Does that mean I am not contributing?
Regardless of how rich I am, I still need to eat and live and put clothes on my back. Are these not contributions?
Or are you suggesting that the wealthiest are parasites simply because they should contribute more to society than someone less financially well off?
> I'd say the higher in the social rank, they ratio of contribution to taking drops exponentially, not linearly.
You mean the richer people are, the ratio of their contribution to taking grows? That does not seem possible, because that will not make the person rich in the first place.
Avoiding taxes isn't illegal though. So in a global economy I'm not sure your argument is technically justified and simply the righteous argument most people would accept as true.
If my US company shifts labor to India, do we assume it is bad simply because the US doesn't receive those wages to stimulate the US economy? Does this benefit India though?
I think your argument depends on perspective, from US point of view this situation is bad, from India's it isn't bad. From the wealthy person's doing this, it simply benefits him/her.
I don't know how to solve this and completely agree with the argument but it is technically flawed.
> why should an extremely wealthy person have to contribute to society?
If influence, specifically political influence, and wealth could be perfectly decoupled, no reason. That nexus, however, means an oligarchical class of rich idiots have the capability to project their stupidity onto national policy.
Even if they aren't projecting their stupidity, they're certainly projecting their interests. There's nothing preventing their interests from being at odds with society's interests.
Poor idiots collectively have the capability to project their stupidity onto national policy as well. Maybe we should reduce the size and scope of national policy to minimize the impact of idiots, rich or poor.
If a wealthy person earns their wealth, then they have benefitted from their contribution to society. If they are allowed to lock that wealth up multigenerationally, then they are incentivized to change the system to make it harder for others to do what they themselves have done, to the benefit of others who have also already taken advantage.
Society as a whole benefits much more when each generation has to earn the bulk of their wealth.
At minimum, a wealthy person should at least buy stuff -- that would actually be a contribution to society. But the super-wealthy have more money than they can possibly spend!
You have offered no evidence for any of your assertions for the ill effects.
When Elon Musk becomes obscenely wealthy by creating affordable electric cars and space flight, everyone else gets the benefits of affordable electric cars and space flight. Not talking trips to mars, but constellations of satellites offering super cheap worldwide internet.
