I would say with inflation, wealth inequality and skyrocketing housing, gas and grocery prices as well as super high amounts of consumer debt and families stretching to keep up it feels a lot like pre-bust 2005/2006 economy out there right now. We might not be on the cusp of a subprime mortgage bank crisis but it does feel ominous lately.
The new mortgage backed securities are the instruments trading the debt used to build AI data centers (the AAA rated debt that is anything but). The music will stop when there’s a blip in liquidity. Everyone will rush for a chair and there won’t be enough for everyone.
I don’t know when that will be but if the big ipos coming down the pike cause an everything squeeze that might do it.
Personally I think those are also symptoms. In my opinion, the cause is:
1. Easy money for far, far, far too long in the US and a complete political unwillingness to take any risk of a recession, no matter the long-term cost required to stave it off. In my mind, this explains the rich-poor gap, the rise of crypto, insane valuations, house-price inflation, the weird delta between US and rest-of-world standard of living/salaries, and probably even the migration crisis.
High prices are the result of shortages. When the government makes it hard to get a permit, or simply doesn't allow housing to be built, and add 12 million people, then prices inevitably go up.
If you're genuinely curious, a few suggestions that I personally found incredibly enlightening:
Anand Giridhardas, Winners Take All: The book is fantastic, there's also his now infamous google talk where he talks about dismantling google: https://m.youtube.com/watch?v=d_zt3kGW1NM
Thomas Piketty, Capital in the 21st century: Probably the most comprehensive (but at times also longwinded) outline on how wealth inequality comes to be, why it's not good for society and how it could be adressed
If we define wealth as it's often used colloquially -- the amount of liquid cash one has -- then your potential share of the pie of goods and services shrinks. This is true unless the pie itself grows proportionately.
Without agreeing or disagreeing with parent comment, the rate of growth of the pie certainly does not feel like it is growing as fast as accumulation of nominal wealth of some.
Historically one usually amassed monetary wealth in exchange of providing goods and services. Stock markets, high frequency arbitrage markets have broken this. Yes there is liquidity insertion, but is that liquidity worth so much ? At microsecond scale ? I don't think so.
Stock market let's one encash a perception of promised future delivery of goods and services without the need to actually deliver it. Yes the market will eventually, hopefully, price it correctly, but by then some other retail sucker is holding that bag.
When people complain about others getting disproportionately wealthy they are talking about the shrinking share of the pie.
That's money and not wealth and its a flow not stock and denominated in something that can depreciate, has it even been priced correctly ?
I grant you that it is very hard to measure ownership of (wealth generating) assets, hidden behind legal obfuscations.
Lorenz curve [0], Gini index of owned wealth generating assets would be the right thing to measure to see how understand one's share of the pie. But an enormous amount of records of such wealth is just hidden away, using laws that those very owners helped pass.
BTW I am willing to be convinced to adopt a different position if I see a well researched, credible Lorenzo curve data that has tracked the shadow wealth to some degree of accurate approximation.
If the top 10% of people suddenly had their wealth double overnight, it would have absolutely disastrous effects for the lower 90% of people. Prices for scarce goods (e.g. housing) would increase dramatically. The price increase dampens the overall demand for housing since a large fraction of the 90% are now priced out. The wealthy homeowners have an incentive to maintain that scarcity, and freely use their resources to preserve the status quo by preventing desperately-needed housing from being built.
Those with wealth will tend to steer the economic system more towards their own interests in a runaway feedback loop, often in ways which create no overall net welfare for society.
> If the top 10% of people suddenly had their wealth double overnight
Since that doesn't happen, there's not much point in worrying about the consequences. Here's why it doesn't happen:
The value of something is determined by what someone else is willing to pay for it. There would be nothing to sustain a wealth doubling, because there wouldn't be anyone willing to pay for it.
You’re missing the forest for the trees. Yeah the item cost doesn’t double, but it goes up significantly because now your addressable market has 2x money.
Piketty argues that if r > g, wealth will accumulate into fewer and fewer hands over time. R is the rate of return of capital (rents, stocks, bonds, etc) and g is the growth of the economy over time.
If the economy grows at a higher rate than the rate of return, the pie gets bigger at a higher rate than wealth can concentrates. If the rate of return accumulates capital at a higher rate than the growth of the economy, wealth will inevitably concentrate over time.
He uses a lot of examples and economic history to argue that r > g, except for a few small periods. I think given the amount of wealth concentration we are seeing, and the political effects thereof, it is a compelling argument. Taxation (of wealth) is the proposed solution.
Since wealth does not "concentrate" in a market economy, I wonder what else Picketty got wrong. (Using the word "concentrate" implies a transfer of wealth. Wealth is created, not transferred.)
It’s a rather public example but DOGE did immense damage and was facilitated by the ability to leverage wealth into power. There is a dangerous feedback cycle.
Did they steal everything outright? Someone is worse off in that transaction. (Or everyone a little bit worse off if it’s government grift).
Did they create all that value themselves? Might be fine - positive sum games do exist.
Did they create some system where a bunch of money flows just to them based on the labour of others? Maybe it depends on the details, like how much the labour is paid.
I think Piketty’s point was around capital and wealth tending to accumulate unless something forces it to disperse. This can get worse over time. The last couple hundred years were relatively “good” due to the way revolutions and WWI and WWII basically eliminated many of the wealthy families in the west, a couple times, and the post-war societies were “reset” with good equality that has slowly eroded since (due to insufficient “friction” to prevent accumulating extreme wealth over time, such as high loophole-free wealth and inheritance taxes). Or so the theory goes.
Building on that, when you get extreme wealth you get individuals with power to affect policy for their personal good. Some will choose to be selfish (it’s human nature). Policy shifts in their favour. We end up going in the opposite direction to that since the Great Depression - which really was a collectivist culture of everyone getting a share of the wealth of the nation, rather than being screwed over by rich and powerful folks. (McCarthyism somewhat put the brakes on that in the US in particular, though, which is why you can get e.g. free health care elsewhere in the west).
The Great Depression was not caused by rich people. It was caused by the Fed and its failure to understand the relationship with gold and dollars, and mismanagement of the bank reserves.
WW2 was not caused by rich people, nor by inequality.
If your logic is right, people back in the Stone Age were all like Jeff Bezos with mega yachts and stuff... It all went downhill from then - the population has increased so much and everyone has gotten so much poorer :(
I have not read Piketty. But I could imagine a society where the poor are 10% better off and the rich are 1000% better off to be a less stable society that ends up falling apart.
Citation Needed (that they actually made everyone equal and it wasn't just a talking point). You may want to read a history book that talks about how Stalin denounced uravnilovka and about the existence of the nomenklatura.
"Educate yourself" is almost always a shibboleth that the speaker of the phrase actually doesn't even know how to explain it to someone. It is a phrase of moral superiority and is not interested in whether the other person actually educates themselves or not. Or they might educate themselves and come to the opposite conclusion as you, in which case, maybe you should have educated (or indoctrinated) them first.
I did, which made me come to this conclusion. You seem to think value is created by extracting money from a product, while value actually is created by the work it takes to create said product. How much money one does extract has nothing to do with a products value. In your Tailor Swift example earlier, the value was created by her recording the music, not by her selling tours.
The value is absolutely in how much you can sell it. Otherwise every startup that subscribes to the "build it and they will come" philosophy would've been successful, which is obviously not the case and is a common problem that YC specifically tells founders to look out for. There is no value in building anything if you cannot convince others it is valuable. The labor theory of value is not valid.
An obviously flaggable comment will get flagged. If you can't say anything other than that then I'm not sure why you'd reply. And anyway, if you can't understand why digging ditches all day is not valuable (after all, look at all the hard work they're doing!) then I'm not sure what to tell you. It's a shame, 4 month old account but still succumbs to comments like this, not sure how HN moderation can fix that.
> value is created by extracting money from a product
Nope. It is created by creating something valuable that other people want to pay for.
> value actually is created by the work it takes to create said product
That's the Labor Theory of Value, which is a Marxist tenet and has been thoroughly discredited. For example, a CEO can decide to take Bunker Hill, or take Sausage Hill. If he picks the more profitable hill, he created more money, with the same amount of labor.
> the value was created by her recording the music, not by her selling tours.
Nope. It was selling tickets to her concerts that made her a billionaire, not her music. That's why she did the concerts.
BTW, why do you think that some concerts charge more for tickets than other concerts? For the same amount of labor setting up the concert?
Indeed, I don't understand how anyone can seriously believe in the LTV anymore, as if someone digging holes should be as valuable in the economy, all else equal, as someone building something valuable. But that's what LTV proponents would have you believe apparently.
Walter, I believe the idea against wealth inequality is not purely that there are wealthier people but that their wealth should be redistributed such that the wealthier people are less wealthy (but still wealthier) and the poorer people are less poor (but still poorer).
There have been many attempts at taking from the rich and giving to the poor, and the result was always everybody was worse off except the people who ran the government.
No, that is not always the result, very far from it. You seem to believe that society is just the natural state of things, and "government" is almost just in the way. It's an incredible blindness to the privilege you enjoy.
Can we? Do we even know the counterfactual? Perhaps Norway would have been 2x richer (incl. their poorest people) if they implemented ultra aggressive libertarian policies.
The best we can do is learn from natural expriments like Finland and Estonia being about as rich before ww2, then by 90s the gap got massive since one was forced adopt more redistributive policies. Same with North / South Korea. Here we have at least some hope of extracting causality
In most western nations, the “people who run the government” get paid a salary similar to a good software engineer (or maybe a doctor), and progressive taxation lets the government fund social services including free healthcare and tertiary education.
Rather than use Stalin as a straw man, maybe try take your nation in direction that helps people, rather than away?
I was just thinking about it, rich people have money to spend in elections to get their representatives elected. When they do they make laws, or remove existing laws, to help rich get richer, so they have more money to spend in the next election. And so it goes.
Solution might be legislation that puts limits on how much money each person can spend on elections. But it may be too late, there are so many rich people in the congress that such laws can not pass.
The rich not only want to get richer they also want the lower classes to get poorer so they will work for less and will have to work longer hours so they will have less time and money to educate themselves, and thus will remain clueless about what is going on.
I feel a lot of the arguments being made here (one way or the other) are rooted in different ideas of what is needed to make a good society. There is some objective data (e.g. The Spirit Level) which I, personally, find persuasive. But often I think folks just have different ideas of what the ideal state is.
For some people, the best society is where everyone is approximately equal (within some range).
For others, they’re happy in a very unequal world, perhaps even one where there are no bounds on that inequality.
I think the arguments of the former amount to: wealth creation in and of itself is not the problem, the problem is with its concentration in someone’s hands and the resulting inequality it causes. In the latter’s case the arguments are more “why should anyone object if I try to climb the ladder as far as I can?”
When your part in wealth creation is having your wealth acquired by somebody else.
Wealth creation only works when the the money available to buy wealth creating instruments is significantly less than the value of those instruments.
How would markets behave if investment accounts had more cash in them than there were investment vehicles? I suspect it would be like what we see today in private equity with illiquid funds and subpar returns. The response of a market in this condition would be to look for sources of liquid funds, get them to buy the illiquid funds so that the original investors could get out leaving the new investors holding the bag of crap.
Oh wait, isn't private equity doing just that trying to make PE acceptable investment vehicle for 401ks?
> When your part in wealth creation is having your wealth acquired by somebody else.
That's called "theft". In a free market, transactions are mutually agreed upon. Equal wealth for equal wealth.
> Wealth creation only works when the the money available to buy wealth creating instruments is significantly less than the value of those instruments.
Your statement presumes that "value" is some construct independent of the market. The only "value" in commerce is what someone is willing to pay for it. There is no other useful definition of value.
As for how wealth is created, I buy a canvas and some paint for $50, and paint a masterpiece that Ritchie Rich buys from me for $10,000. I created that wealth. Taylor Swift figured out how to turn her song skillz into a billion dollars. She created that wealth. Musk figured out how to turn hunks of metal into rockets that are quite profitable. He created that wealth. And so on.
> How would markets behave if investment accounts had more cash in them than there were investment vehicles?
Now that is a complex topic. But I'll make a simple take on it. When there is more cash than things to buy, then the value of the cash diminishes. We call that "inflation". Wealth creation does not cause inflation.
As for private equity, nobody is making you invest in it.
In a hypothetical free market yes. But we don't have one. We have k-polies for small k.
I have come to doubt that free market is even possible. The rich will use their wealth to ensure (by corruption or otherwise) to bend the laws in their favor.
Wealth has power and they will exercise this power.
Inflation. If i print $1 trillion dollars, i buy up all the resources you need to live and dangle them in front of you and control every aspect of your life.
The inequality doesn't come from the creation of wealth so much as the destruction of it. Inflation and rising prices of staple goods (there is some covariance, but the latter seems to be outpacing the former) impact poor people disproportionately hard because staple goods are more or less fixed costs. The marginal utility of an extra dollar is much higher for someone on the poverty line vs. someone who is a multi-millionaire.
Inflation is caused by the government, not wealth creation. The US had zero net inflation from 1800-1914, despite incredible amounts of wealth creation. The inflation since 1914 is caused by government deficits.
Government deficits are not caused by rich people. They're caused by the people you voted for.
> staple goods are more or less fixed costs.
No, they're not. Their availability and price is determined by the Law of Supply and Demand.
The wealthy do not cause food prices to rise, as you can only eat so much.
Do they really? The poor have castles and servants and hardly work? No, the real poor work 60 hours a week and live out of their cars. My children, who are not poor, with good jobs still can't afford their own home -- where is their castle, sir?
It's both an illogical question and comes from a place of ignorance about a topic which one would expect folks nowadays to have some basic competence in.
First, the illogical part: the statement was about "inequality" to which you asked about wealth generation. These are two separate issues, and inequality is not, logically, necessarily tied to wealth generation. So "How does creating wealth hurt others?" is, at best, a non sequitur.
The ignorance part: there is a lot of empirical research over many decades showing the negative impact of wealth inequality on societies. With Google and AI there's really no good reason to ask such ignorant questions when in a moment you could educate yourself, and then ask an informed and thoughtful question instead.
Not at all dense. It’s axiomatic that as societal wealth increases so does the potential for wealth inequality, and in a capitalist system it is a given that inequality will also actually increase.
Perfectly reasonable to debate if there is too much wealth inequality but just hand waving at its mere existence doesn’t add anything to the discussion. The person you’re replying to was calling this out. Ironically, you’re trying to shut down the discussion in the name of perpetuating it.
Maybe you’d like to explain how you think about wealth inequality, since you say you’re interested in a more freely flowing discussion. I’m all ears.
Inequality and other such issues are universal, the French Revolution was not. What was unique about the French Revolution is not even that the government bankrupted themselves fighting wars and then tried to refill their coffers by sharply increasing taxes in a fashion that disproportionately affected the lower classes, but that this was all paired alongside widespread crop failures that sent the cost of food skyrocketing driven widespread food scarcity.
The average person couldn't care less, at least in terms of action, how much money somebody else has. If people have food in their belly and a roof over their heads, you're only going to draw out radicals. And in modern sharply divided societies those radicals will be framed (probably accurately) as being disproportionately made up of one side, and the other side will oppose them all their might and widespread public support behind such opposition.
So there will never be a popular revolution in a place like the US in its current divided state. The most probable scenario by an overwhelmingly wide margin is 'nothing', but the only other possibility would be a civil war. And I do think that's possible, but the chances are extremely remote. It would require something very extreme like one side trying to ban the other side from political office. We've probably been closer than some might expect, but we're now probably much further, rather than closer, to those times and outcomes.
The French Revolution is no longer possible. The surveillance state plus wealth mobility means the wealthy will be in New Zealand before anyone erects a guillotine, and the people that would foment a revolution are heavily surveilled and infiltrated.
PL> "I'm going to build a guillotine; be my lawyer and give me advice as if it's going to be built."
>>"... don't make it entirely functional."
PL> "It's going to be built functional."
>>"... hmm ... use a bicycle cable lock to add a safety to it – lock&key. But remember that my original advice was not to build it in the first place."
Are you sure about that? Tech cuts both ways & asymmetric drone warfare has become cheaper than ever … how hard it is it to sink some yachts or down some jets?
I could only relate to this stuff in my 20s but now I just don't care. Maybe it's cause I went from < 200k net worth to over 1M in that time. I've seen the country I was born in collapse in my lifetime. I saw my grandparents give their entire life to that country only to be left destitute. I saw my parents come to America with literally $0 and after thirty years I watched them become millionares by simply getting up and working hard.
This idea that people will rise up and replace what we've got now with better is part of the problem. You literally do not know how lucky you are to live in this time because you are living in the middle of a golden age and don't even realize it. Because when you're in the middle of a golden age it feels normal.
And for some reason there's an entire population of folks like you that wanna FAFO while they are living in literally the best time ever to be a human being. I'd sigh but I'm not surprised.
> I watched them become millionares by simply getting up and working hard.
If it was that easy, every office cleaner or bank clerk would be a millionaire.
> living in literally the best time ever to be a human being
Sure, but we're also watching the rise of a new oligarchy, and their latest innovation appears poised to put a lot of people out of work, making their lives materially worse.
It literally is. People just have no discipline or skills with money. Go on the fire subreddit. 25k saved per year is a million after twenty years with a modest very conservative amount. And if you can double that with a spouse you're looking at a million in only ten years. People who stretch that to 20-25 years end up with 3-5 million.
New Zealand is zero defense vs a large populist uprising, especially one taking place in New Zealand.
That’s the thing social structures like money and nations only mean something when the masses decide they mean something. Billionaires only get a vote by convincing other people what to believe.
> ... federal intelligence agencies and domestic law enforcement are circulating reports with a new domestic target in mind: anti-technology extremists.
> This new effort follows President Donald Trump's National Security Presidential Memo 7, which instructs the Department of Justice to target anyone holding “anti-American,” “anti-Christian,” and "anti-capitalism” beliefs.
To be fair though in the times of French Revolution the surveillance capability was really basic compared to today, the tech capability to organize protests was lower too. Which one prevails? We know that in PRC and maybe Russia it's surveillance, but what about US?
Your theory is that the billionaires will escape popular uprising by forcing their way into a sovereign nation, and that that nation won't rise up against them? Why wouldn't we?
It was a coalition of monarchies, so terrified of the prospect of even a single popular republic rejecting the divine right to rule, that began the bloodshed and invaded France.
Blaming the Revolution for the Coalition wars is just bad history.
In case you didn't notice, the Revolution won. All contemporary republics fundamentally inherit from the French Revolution - you're surprised that the systems of govt honour and romanticize it's progenitors?
Aside, if bloodshed prevention is your only barometer for history, supporting the Coalition view of events is even sillier, because the Bourbon Restoration directly led to the Revolutions of 1830 and 1848, which was yet more bloodshed. Almost as if unjust systems are fundamentally untenable...
> In case you didn't notice, the Revolution won. All contemporary republics fundamentally inherit from the French Revolution
“Fundamentally inherent from”
is such a broad statement that it’s difficult to argue with, but the US constitution predates the French Revolution.
> so terrified of the prospect of even a single popular republic rejecting the divine right to rule
If the monarchies of Europe were so terrified of a single country rejecting the divine right to rule, why did many of them assist the United States, hinder Britain, or remain neutral in the revolutionary war?
That is a bit of revisionist history: conspiracy theories gripped the revolution, and a lot of them thought Marie-Antoinette was already organising an Austrian invasion of France (since she is Austrian), so rather than wait for the supposed inevitable to happen, France attacked first. And that's what made the coalitions form. Not that they liked the idea of a Republican France, but before France attacked, they were unlikely to do anything about it.
What's wrong with it? It shows the article, with a little banner on top, showing when it was captured. Doesn't mess with scrolling, what's not to like?
didnt the archive owner only start doing this after Patokallio revealed his identity for no good reason. Given the legal liability involved in maintaining that service, there is a threat to what Patokallio is doing so it doesn't seem entirely unsympathetic to do something in retaliation..
Author appears to take resilience and preparedness to the logical extreme and mistake it for some kind of doomsday worship. Indeed, the rise of armchair-eschatologists is at an all-time high. This article is a much better example of such thinking than the likes of Anduril and Anthropic.
Fascism needs existential threats. Nobody in their sane mind will accept their hateful ideology if they were not desperate, and in panic.
> A millenarian economy is necessarily a paranoid one.
The economy does not need to be paranoid, it becomes paranoid with inequality increases the stakes on everything, when you can be obscenely rich or depressingly poor and there is no in between. That makes reasonable people paranoid. High equality with opportunities for everyone makes people reasonable and wanting to work for the common good.
> “Merely regulating it is insufficient,” wrote Pope Leo XIV in a 40,000-word essay on AI last month. “It must be disarmed.”
Of all the messages, the Pope was far from "apocalyptic". He was trying to defend the working class and avoid discrimination and xenophobia embedded in the models. No, end of times bullshit.
> If things are so dire, why are American stocks so expensive?
Because it is disconnected from the average working class experience. "Everything is good because stocks are up" is a non sequitur (except for the people that only care about their portfolio).
I'm kind of confused. It's not clear to me how or why the line keeps going up. People are spending less because of economic insecurity, everything is more expensive because of tariffs and war, interest rates have been high for four years.
The general cultural mood feels unsustainable. Like the peak-woke period around 2022 before the pendulum swung really hard in the opposite direction.
I don't know if there's a word for it, but I feel like the US has this tendency of trying to shove cultural change down people's throats in a really top-down manner that tends to backfire.
At least one really positive outcome from this whole """AI""" movement thing is that class consciousness has been increased quite a bit from it. If you're a capitalist, it's better to be one quietly and fuck people over in secret instead of painting a huge political target on your back. They've done the opposite of this. And one key difference here is that the early 2020s DEI movement had way more people behind it. This is just a small group of rich people.
Either the market is going to crash and they'll end up getting humiliated, or there will be a wave of populist backlash. In either case, we (people working in tech, SWEs, HWEs, etc) will probably get fucked over even worse than how it's been over the last couple years.
Is there any graceful way to let the pressure out of the system and begin rebuilding trust and stability or is the only way out to immanentize the eschaton?
Legislation and court rulings have shown that shareholders get everything they want, ever. They want Southwest to stop checking 2 free bags? It happens. Etc. Ad Nauseum.
Somehow, we need legislation that says companies are beholden first to their employees, then to their customers, THEN to shareholders. I don't know how to do that. Co-ops are the only real answer maybe?
I thought the Economist used to have much higher quality articles. Where is the historical analysis?
Is it more apocalyptic now than during the cold war when kids hid under their desks? Did America really win the space race because of a presidential speech or was it the apocalyptic threat that if we lose, we will all live under communist rule? Would American manufacturing have ever caught up to Germany if it weren't for the existential threat of the world wars?
Perhaps American capitalism has always thrived on fear of the apocalypse.
America won the space race? The only milestone where the US got there first was having boots on the moon. Every other milestone (first artificial satellite, first organism in space, first man in space, first woman, first spacewalk, first craft on the moon) was achieved by the soviets first. Taking the one arbitrary milestone where the US did come in first and declare it the finish line feels weird as heck.
> Where is the historical analysis? Is it more apocalyptic now than during the cold war when kids hid under their desks?
the Cold War apocalypse was solely military in nature which had few implications economically, whether you get nuked or not doesn't change an investors strategy, you just assume the world doesn't end and carry on. The cold war calculus was if anything maybe the most rationally (albeit scary) period of human history, but exceptionally stable.
There is a difference between billionaires being afraid of the communists, which was of course self-serving, hysteric and at times bigoted, but the communists were at least real and had killed some few ten million people. That's a very different form of apocalyptic thinking than billionaires giving lectures on the actual Anti-Christ in the Vatican.
Economic manias happen in periods of social transformation and hot war, not cold ones. And on that front we do look a lot more like we are in the 1920s, or some bizarre 19th century evangelical revivalism period rather than the 1960s.
>whether you get nuked or not doesn't change an investors strategy
I'm not sure about that, I think it would make me favor investments in science and technology, or if college age I would likely choose engineering over say art. The "Sputnik Shock" did have a cultural effect not to mention more direct methods like the National Defense Education Act.
With investments AI and robotics automation, I've long been convinced that capitalism is going to eat off its own head, even before the current AI boom.
The general public won't accept a system where only a small few have the means to get by and without much work being available to humans anymore, we'll need an alternative economic system, or face serious civil unrest.
With capitalism, for work to be done, you need the possibility of homelessness and/or other types of poverty to motivate humans to work. But that isn't required for robots.
Calling the Economist anything resembling "leftist" is emblematic of the psychosis in the system. The Economist is what the Wall Street Journal was before Murdoch bought it: Focused on encouraging long term thinking, gains, and wisdom, while reporting on the short term trends. The Economist is the absolute embodiment of the old man and the kid joke from the Sopranos:
The investor: "Hey dad, let's run down this hill and fuck that cow!"
The Economist: "Be patient, son. Let's walk down this hill and fuck 'em all."
How though...there is no reasonable way anyone could look at the oil futures price and think it isn't being manipulated, which suggests maybe a lot of the market is equally fake.
Also SpaceX is getting ready to cheat SPY so the owners can basically use everyone's retirement funds as their exit liquidity.
All the AI companies seem like they are a massive bubble that they are also going to try to dump on the market in what I'm sure will be a similar scheme.
Then in politics we seem to be driving the US empire into the ground, while Trump steals billions. In just the last year Trump stole more than 10x Pelosi's entire net worth from her entire 40 year career in politics. The corruption coming from the white house is so extreme, it is probably more than all us politicians have stolen in all of us history combined. And what is absolutely insane is that a huge portion of the population seems to be in favor of it continuing this way.
We are speedrunning the end of the US empire, when it could've been a slow US decline that could've lasted the next 40 years which would've given us a chance to turn things around.
Capital doesn't care about whether your work is "inherently valuable". That you think poor countries are somehow fundamentally different in this regard, exposed to the downsides of the market in a way that we here are not, is a defect of imagination.
What’s wrong with wealth inequality? It asked differently, if it is bad, should every individual have the exact same wealth?
I don’t know when that will be but if the big ipos coming down the pike cause an everything squeeze that might do it.
Or maybe nothing is going on. What do I know?
1. People vote for old idiots .
2. Local politics is all about milking any potential work with permits. Sky rocket housing due to that .
3. American lost engineering culture everywhere except software . Now software is dead as industry we used to know
1. Easy money for far, far, far too long in the US and a complete political unwillingness to take any risk of a recession, no matter the long-term cost required to stave it off. In my mind, this explains the rich-poor gap, the rise of crypto, insane valuations, house-price inflation, the weird delta between US and rest-of-world standard of living/salaries, and probably even the migration crisis.
microprocessor design : Apple Silicon and lately Intel Panther Lake and later?
i think this is also a syndrome not a cause
How does creating wealth hurt others?
> skyrocketing housing
High prices are the result of shortages. When the government makes it hard to get a permit, or simply doesn't allow housing to be built, and add 12 million people, then prices inevitably go up.
Anand Giridhardas, Winners Take All: The book is fantastic, there's also his now infamous google talk where he talks about dismantling google: https://m.youtube.com/watch?v=d_zt3kGW1NM
Thomas Piketty, Capital in the 21st century: Probably the most comprehensive (but at times also longwinded) outline on how wealth inequality comes to be, why it's not good for society and how it could be adressed
We could start off with how are you worse off because of people wealthier than you?
If we define wealth as it's often used colloquially -- the amount of liquid cash one has -- then your potential share of the pie of goods and services shrinks. This is true unless the pie itself grows proportionately.
Without agreeing or disagreeing with parent comment, the rate of growth of the pie certainly does not feel like it is growing as fast as accumulation of nominal wealth of some.
Historically one usually amassed monetary wealth in exchange of providing goods and services. Stock markets, high frequency arbitrage markets have broken this. Yes there is liquidity insertion, but is that liquidity worth so much ? At microsecond scale ? I don't think so.
Stock market let's one encash a perception of promised future delivery of goods and services without the need to actually deliver it. Yes the market will eventually, hopefully, price it correctly, but by then some other retail sucker is holding that bag.
When people complain about others getting disproportionately wealthy they are talking about the shrinking share of the pie.
And no, wealth is not the amount of liquid cash you have. If that were true, I'd be dead broke.
> the rate of growth of the pie certainly does not feel like it is growing as fast as accumulation of nominal wealth of some.
Wealth creators will be growing the pie at a higher rate than those who do not create wealth.
My worry is that we are not creating enough new wealth but just distributing it lopsidedly.
Because statistics clearly show median real wealth growing rapidly: https://fred.stlouisfed.org/series/MEHOINUSA672N
I grant you that it is very hard to measure ownership of (wealth generating) assets, hidden behind legal obfuscations.
Lorenz curve [0], Gini index of owned wealth generating assets would be the right thing to measure to see how understand one's share of the pie. But an enormous amount of records of such wealth is just hidden away, using laws that those very owners helped pass.
[0] https://en.wikipedia.org/wiki/Lorenz_curve
BTW I am willing to be convinced to adopt a different position if I see a well researched, credible Lorenzo curve data that has tracked the shadow wealth to some degree of accurate approximation.
Those with wealth will tend to steer the economic system more towards their own interests in a runaway feedback loop, often in ways which create no overall net welfare for society.
Since that doesn't happen, there's not much point in worrying about the consequences. Here's why it doesn't happen:
The value of something is determined by what someone else is willing to pay for it. There would be nothing to sustain a wealth doubling, because there wouldn't be anyone willing to pay for it.
It’s a money aristocratic system, and that’s really bad for anyone not belonging to the aristocracy.
And if they continue on this path, we might see heads roll.
If the economy grows at a higher rate than the rate of return, the pie gets bigger at a higher rate than wealth can concentrates. If the rate of return accumulates capital at a higher rate than the growth of the economy, wealth will inevitably concentrate over time.
He uses a lot of examples and economic history to argue that r > g, except for a few small periods. I think given the amount of wealth concentration we are seeing, and the political effects thereof, it is a compelling argument. Taxation (of wealth) is the proposed solution.
You are smart enough to come up with some answers of your own. It's rude to demand others to do your own thinking for you.
Musk volunteered his services, took no pay, and voluntarily left after 90 days.
Did they steal everything outright? Someone is worse off in that transaction. (Or everyone a little bit worse off if it’s government grift).
Did they create all that value themselves? Might be fine - positive sum games do exist.
Did they create some system where a bunch of money flows just to them based on the labour of others? Maybe it depends on the details, like how much the labour is paid.
I think Piketty’s point was around capital and wealth tending to accumulate unless something forces it to disperse. This can get worse over time. The last couple hundred years were relatively “good” due to the way revolutions and WWI and WWII basically eliminated many of the wealthy families in the west, a couple times, and the post-war societies were “reset” with good equality that has slowly eroded since (due to insufficient “friction” to prevent accumulating extreme wealth over time, such as high loophole-free wealth and inheritance taxes). Or so the theory goes.
Building on that, when you get extreme wealth you get individuals with power to affect policy for their personal good. Some will choose to be selfish (it’s human nature). Policy shifts in their favour. We end up going in the opposite direction to that since the Great Depression - which really was a collectivist culture of everyone getting a share of the wealth of the nation, rather than being screwed over by rich and powerful folks. (McCarthyism somewhat put the brakes on that in the US in particular, though, which is why you can get e.g. free health care elsewhere in the west).
In a market economy, theft is illegal.
The Great Depression was not caused by rich people. It was caused by the Fed and its failure to understand the relationship with gold and dollars, and mismanagement of the bank reserves.
WW2 was not caused by rich people, nor by inequality.
"how does creating wealth hurt others?"
most of this "wealth" is not "created" out of thin air. nor created at all.
more like, transferred.
Zero sum are things like taxes, where the government just takes it, or robberies.
https://www.persuasion.community/p/why-i-refuse-to-educate-m...
Nope. It is created by creating something valuable that other people want to pay for.
> value actually is created by the work it takes to create said product
That's the Labor Theory of Value, which is a Marxist tenet and has been thoroughly discredited. For example, a CEO can decide to take Bunker Hill, or take Sausage Hill. If he picks the more profitable hill, he created more money, with the same amount of labor.
> the value was created by her recording the music, not by her selling tours.
Nope. It was selling tickets to her concerts that made her a billionaire, not her music. That's why she did the concerts.
BTW, why do you think that some concerts charge more for tickets than other concerts? For the same amount of labor setting up the concert?
I am not an anarchist.
> privilege you enjoy
Privileges anyone enjoys living in the United States. That's why millions are always trying to come here.
The best we can do is learn from natural expriments like Finland and Estonia being about as rich before ww2, then by 90s the gap got massive since one was forced adopt more redistributive policies. Same with North / South Korea. Here we have at least some hope of extracting causality
In most western nations, the “people who run the government” get paid a salary similar to a good software engineer (or maybe a doctor), and progressive taxation lets the government fund social services including free healthcare and tertiary education.
Rather than use Stalin as a straw man, maybe try take your nation in direction that helps people, rather than away?
Solution might be legislation that puts limits on how much money each person can spend on elections. But it may be too late, there are so many rich people in the congress that such laws can not pass.
The rich not only want to get richer they also want the lower classes to get poorer so they will work for less and will have to work longer hours so they will have less time and money to educate themselves, and thus will remain clueless about what is going on.
Creating wealth doesn't. Extracting wealth does. We have long switched from a creating economy to an extracting economy.
I feel a lot of the arguments being made here (one way or the other) are rooted in different ideas of what is needed to make a good society. There is some objective data (e.g. The Spirit Level) which I, personally, find persuasive. But often I think folks just have different ideas of what the ideal state is.
For some people, the best society is where everyone is approximately equal (within some range).
For others, they’re happy in a very unequal world, perhaps even one where there are no bounds on that inequality.
I think the arguments of the former amount to: wealth creation in and of itself is not the problem, the problem is with its concentration in someone’s hands and the resulting inequality it causes. In the latter’s case the arguments are more “why should anyone object if I try to climb the ladder as far as I can?”
Explain the mechanism for that in a free market.
There is a sleight of hand in your words there.
You focus on wealth creation, when the issue is wealth concentration.
Wealth creation only works when the the money available to buy wealth creating instruments is significantly less than the value of those instruments.
How would markets behave if investment accounts had more cash in them than there were investment vehicles? I suspect it would be like what we see today in private equity with illiquid funds and subpar returns. The response of a market in this condition would be to look for sources of liquid funds, get them to buy the illiquid funds so that the original investors could get out leaving the new investors holding the bag of crap.
Oh wait, isn't private equity doing just that trying to make PE acceptable investment vehicle for 401ks?
That's called "theft". In a free market, transactions are mutually agreed upon. Equal wealth for equal wealth.
> Wealth creation only works when the the money available to buy wealth creating instruments is significantly less than the value of those instruments.
Your statement presumes that "value" is some construct independent of the market. The only "value" in commerce is what someone is willing to pay for it. There is no other useful definition of value.
As for how wealth is created, I buy a canvas and some paint for $50, and paint a masterpiece that Ritchie Rich buys from me for $10,000. I created that wealth. Taylor Swift figured out how to turn her song skillz into a billion dollars. She created that wealth. Musk figured out how to turn hunks of metal into rockets that are quite profitable. He created that wealth. And so on.
> How would markets behave if investment accounts had more cash in them than there were investment vehicles?
Now that is a complex topic. But I'll make a simple take on it. When there is more cash than things to buy, then the value of the cash diminishes. We call that "inflation". Wealth creation does not cause inflation.
As for private equity, nobody is making you invest in it.
I have come to doubt that free market is even possible. The rich will use their wealth to ensure (by corruption or otherwise) to bend the laws in their favor.
Wealth has power and they will exercise this power.
Your dollars will be worthless. You've got a printer, give it a try. Let us know how it goes.
Government deficits are not caused by rich people. They're caused by the people you voted for.
> staple goods are more or less fixed costs.
No, they're not. Their availability and price is determined by the Law of Supply and Demand.
The wealthy do not cause food prices to rise, as you can only eat so much.
The rich extracting wealth from the poor doesn't create.
Investors buying existing housing stock doesn't create.
Mine it. Make it. Improve it. Brings wealth into existence.
Note that financially large businesses/individuals are a mix of wealth creation and transference.
That one word comment implies a lot of the wealthiest people have not created much wealth in comparison with how much they managed to transfer.
The rich will sell you things they created, but it is illegal for them to extract it from you.
Buying existing houses means the seller realizes the wealth he created.
Transference is called "stealing" and is illegal (unless the government does it).
Look at poverty on an absolute scale, not a relative one.
First, the illogical part: the statement was about "inequality" to which you asked about wealth generation. These are two separate issues, and inequality is not, logically, necessarily tied to wealth generation. So "How does creating wealth hurt others?" is, at best, a non sequitur.
The ignorance part: there is a lot of empirical research over many decades showing the negative impact of wealth inequality on societies. With Google and AI there's really no good reason to ask such ignorant questions when in a moment you could educate yourself, and then ask an informed and thoughtful question instead.
Perfectly reasonable to debate if there is too much wealth inequality but just hand waving at its mere existence doesn’t add anything to the discussion. The person you’re replying to was calling this out. Ironically, you’re trying to shut down the discussion in the name of perpetuating it.
Maybe you’d like to explain how you think about wealth inequality, since you say you’re interested in a more freely flowing discussion. I’m all ears.
1789 was the year of the French Revolution [1]. The rest are years with financial crises.
[1] https://en.wikipedia.org/wiki/French_Revolution
The average person couldn't care less, at least in terms of action, how much money somebody else has. If people have food in their belly and a roof over their heads, you're only going to draw out radicals. And in modern sharply divided societies those radicals will be framed (probably accurately) as being disproportionately made up of one side, and the other side will oppose them all their might and widespread public support behind such opposition.
So there will never be a popular revolution in a place like the US in its current divided state. The most probable scenario by an overwhelmingly wide margin is 'nothing', but the only other possibility would be a civil war. And I do think that's possible, but the chances are extremely remote. It would require something very extreme like one side trying to ban the other side from political office. We've probably been closer than some might expect, but we're now probably much further, rather than closer, to those times and outcomes.
[1] - https://en.wikipedia.org/w/index.php?title=French_Revolution...
>>"PL, don't build a guillotine"
PL> "I'm going to build a guillotine; be my lawyer and give me advice as if it's going to be built."
>>"... don't make it entirely functional."
PL> "It's going to be built functional."
>>"... hmm ... use a bicycle cable lock to add a safety to it – lock&key. But remember that my original advice was not to build it in the first place."
----
Exhibit Z
This idea that people will rise up and replace what we've got now with better is part of the problem. You literally do not know how lucky you are to live in this time because you are living in the middle of a golden age and don't even realize it. Because when you're in the middle of a golden age it feels normal.
And for some reason there's an entire population of folks like you that wanna FAFO while they are living in literally the best time ever to be a human being. I'd sigh but I'm not surprised.
If it was that easy, every office cleaner or bank clerk would be a millionaire.
> living in literally the best time ever to be a human being
Sure, but we're also watching the rise of a new oligarchy, and their latest innovation appears poised to put a lot of people out of work, making their lives materially worse.
That’s the thing social structures like money and nations only mean something when the masses decide they mean something. Billionaires only get a vote by convincing other people what to believe.
> ... federal intelligence agencies and domestic law enforcement are circulating reports with a new domestic target in mind: anti-technology extremists.
> This new effort follows President Donald Trump's National Security Presidential Memo 7, which instructs the Department of Justice to target anyone holding “anti-American,” “anti-Christian,” and "anti-capitalism” beliefs.
https://www.wired.com/story/us-law-enforcement-warns-of-anti...
To be fair though in the times of French Revolution the surveillance capability was really basic compared to today, the tech capability to organize protests was lower too. Which one prevails? We know that in PRC and maybe Russia it's surveillance, but what about US?
My workingclass neighborhood is already getting pretty hungry.
* https://www.youtube.com/watch?v=7xUYbI64QHI
That'd be _your_ strawman that _you_ typed.
In the factual world, how many non NZ born billionaires already have residences in New Zealand?
It really need to be romantizied much less!
Blaming the Revolution for the Coalition wars is just bad history.
In case you didn't notice, the Revolution won. All contemporary republics fundamentally inherit from the French Revolution - you're surprised that the systems of govt honour and romanticize it's progenitors?
Aside, if bloodshed prevention is your only barometer for history, supporting the Coalition view of events is even sillier, because the Bourbon Restoration directly led to the Revolutions of 1830 and 1848, which was yet more bloodshed. Almost as if unjust systems are fundamentally untenable...
“Fundamentally inherent from” is such a broad statement that it’s difficult to argue with, but the US constitution predates the French Revolution.
> so terrified of the prospect of even a single popular republic rejecting the divine right to rule
If the monarchies of Europe were so terrified of a single country rejecting the divine right to rule, why did many of them assist the United States, hinder Britain, or remain neutral in the revolutionary war?
> A millenarian economy is necessarily a paranoid one.
The economy does not need to be paranoid, it becomes paranoid with inequality increases the stakes on everything, when you can be obscenely rich or depressingly poor and there is no in between. That makes reasonable people paranoid. High equality with opportunities for everyone makes people reasonable and wanting to work for the common good.
> “Merely regulating it is insufficient,” wrote Pope Leo XIV in a 40,000-word essay on AI last month. “It must be disarmed.”
Of all the messages, the Pope was far from "apocalyptic". He was trying to defend the working class and avoid discrimination and xenophobia embedded in the models. No, end of times bullshit.
> If things are so dire, why are American stocks so expensive?
Because it is disconnected from the average working class experience. "Everything is good because stocks are up" is a non sequitur (except for the people that only care about their portfolio).
Wish this was true, but clearly not. Unless you define existential as “inconvenience”
The general cultural mood feels unsustainable. Like the peak-woke period around 2022 before the pendulum swung really hard in the opposite direction.
I don't know if there's a word for it, but I feel like the US has this tendency of trying to shove cultural change down people's throats in a really top-down manner that tends to backfire.
At least one really positive outcome from this whole """AI""" movement thing is that class consciousness has been increased quite a bit from it. If you're a capitalist, it's better to be one quietly and fuck people over in secret instead of painting a huge political target on your back. They've done the opposite of this. And one key difference here is that the early 2020s DEI movement had way more people behind it. This is just a small group of rich people.
Either the market is going to crash and they'll end up getting humiliated, or there will be a wave of populist backlash. In either case, we (people working in tech, SWEs, HWEs, etc) will probably get fucked over even worse than how it's been over the last couple years.
Somehow, we need legislation that says companies are beholden first to their employees, then to their customers, THEN to shareholders. I don't know how to do that. Co-ops are the only real answer maybe?
In order of overriding priority
1. Obey the Law 2. Support our members 3. Support our employees 4. Support our suppliers 5. If we do the above, we'll reward shareholders
Is it more apocalyptic now than during the cold war when kids hid under their desks? Did America really win the space race because of a presidential speech or was it the apocalyptic threat that if we lose, we will all live under communist rule? Would American manufacturing have ever caught up to Germany if it weren't for the existential threat of the world wars?
Perhaps American capitalism has always thrived on fear of the apocalypse.
The regular stuff is still well written, IMO.
the Cold War apocalypse was solely military in nature which had few implications economically, whether you get nuked or not doesn't change an investors strategy, you just assume the world doesn't end and carry on. The cold war calculus was if anything maybe the most rationally (albeit scary) period of human history, but exceptionally stable.
There is a difference between billionaires being afraid of the communists, which was of course self-serving, hysteric and at times bigoted, but the communists were at least real and had killed some few ten million people. That's a very different form of apocalyptic thinking than billionaires giving lectures on the actual Anti-Christ in the Vatican.
Economic manias happen in periods of social transformation and hot war, not cold ones. And on that front we do look a lot more like we are in the 1920s, or some bizarre 19th century evangelical revivalism period rather than the 1960s.
I'm not sure about that, I think it would make me favor investments in science and technology, or if college age I would likely choose engineering over say art. The "Sputnik Shock" did have a cultural effect not to mention more direct methods like the National Defense Education Act.
The general public won't accept a system where only a small few have the means to get by and without much work being available to humans anymore, we'll need an alternative economic system, or face serious civil unrest.
With capitalism, for work to be done, you need the possibility of homelessness and/or other types of poverty to motivate humans to work. But that isn't required for robots.
The investor: "Hey dad, let's run down this hill and fuck that cow!"
The Economist: "Be patient, son. Let's walk down this hill and fuck 'em all."
Also SpaceX is getting ready to cheat SPY so the owners can basically use everyone's retirement funds as their exit liquidity.
All the AI companies seem like they are a massive bubble that they are also going to try to dump on the market in what I'm sure will be a similar scheme.
Then in politics we seem to be driving the US empire into the ground, while Trump steals billions. In just the last year Trump stole more than 10x Pelosi's entire net worth from her entire 40 year career in politics. The corruption coming from the white house is so extreme, it is probably more than all us politicians have stolen in all of us history combined. And what is absolutely insane is that a huge portion of the population seems to be in favor of it continuing this way.
We are speedrunning the end of the US empire, when it could've been a slow US decline that could've lasted the next 40 years which would've given us a chance to turn things around.
Humanity runs off of romance. This is not sexual romantic love but rather the thrill of other human people.
An AI cannot provide this. This interaction has value. Technology frees us from having to deal with the mundane so we can deal with the exemplary.
Just go to a poorer country and see that it is not possible there. America is friggin awesome.
Capital doesn't care about whether your work is "inherently valuable". That you think poor countries are somehow fundamentally different in this regard, exposed to the downsides of the market in a way that we here are not, is a defect of imagination.