Upvoted for discussion, but this is a pretty junky article with opinions more than facts. Most of the facts (wow look at that per capita wealth increase!) make me question if the author understands basic math. Wow, the average went up! I wonder why he chose not to show the median and standard deviation?
One main point seems to be that the middle class is actually rich if you add up our home values and social security benefits. Those things aren’t liquid like AMZN or META stock, nor can I use them as collateral for loans to buy a yacht or manipulate elections (I guess I could get deeper in debt and risk losing my house with a HELOC).
Quote from the article:
“capital taxation should target income rather than wealth or inheritances”.
Does the author not understand that billionaires have dozens of loopholes performed by dozens of accountants and lawyers to make them have minimal income on paper?
LorenPechtel · 4m ago
Describing it as junky is an understatement!
The reality (which this article doesn't mention) is that all income brackets have risen, but that there is more increase in the higher brackets. And it doesn't even touch on why this is happening: technology. In the old days the high skill worker was held back by all time spent on low skill tasks. Now our machines have taken over a lot of the low skill stuff, the actual value created by the high skill worker has risen faster than the overall average. Of course wages have spread out more! For that not to have happened would require very high taxation.
And, yes, we see celebrities making very big bucks. Once again, an inevitable result of technology. The "value" they produce is mostly an up-front cost, the per customer cost is low. Technology lets them reach an awful lot more customers, thus the customers will focus more on those they consider best. There also is an issue with the shift in the balance of power--it used to be the studios basically owned the careers of their stars. That considerably reduced the disparity but was it a good thing?!
As for loopholes: yes, they exist--but nowhere near like they used to. But if they can hide income do you not think they could also hide wealth? And inheritance is based on wealth. Loopholes are no reason to tax wealth or inheritance. And when you tax wealth you have the problem of that wealth often being extremely concentrated in the corporation that someone controls, they likely can't pay a wealth tax without selling off their company. But their company is valuable because they're running it well--you're going to destroy value this way.
As for Piketty--I tried to read his book. I couldn't stomach more than a few chapters because he kept making a fundamental mistake: assuming that as the form of wealth changed that it was still the same group controlling the wealth. No, fortunes rarely last more than a few generations.
There's also the fact that wealth "inequality" has a huge time component to it. Those starting their careers likely have little if any wealth and easily can have negative wealth (student loans.) By the time they retire any high skill worker should be a millionaire. (The next dollar of spending never provides as much value as the current dollar of spending. Thus your maximum value from your income will come if you spend at a fixed rate--and for a high skill worker to do that they will need to be a millionaire by the time they retire.) Those who want to portray it as a huge problem consistently avoid looking at this.
mystified5016 · 2h ago
All animals are equal, but you see, pigs are more equal than other animals!
riehwvfbk · 1h ago
Many of these articles are being written, probably because there's a paying customer. The late Soviet Union had an army of publicists whose job was to dismiss real and growing concerns with "but we just had a record crop and milk production is up".
Lots of western academics have seemingly started writing for Pravda these days. They are (deliberately?) missing the point: human perception of economic wellbeing is relative, not absolute. Antibiotics and running water are nice, but they are expected bare minimum.
One main point seems to be that the middle class is actually rich if you add up our home values and social security benefits. Those things aren’t liquid like AMZN or META stock, nor can I use them as collateral for loans to buy a yacht or manipulate elections (I guess I could get deeper in debt and risk losing my house with a HELOC).
Quote from the article: “capital taxation should target income rather than wealth or inheritances”.
Does the author not understand that billionaires have dozens of loopholes performed by dozens of accountants and lawyers to make them have minimal income on paper?
The reality (which this article doesn't mention) is that all income brackets have risen, but that there is more increase in the higher brackets. And it doesn't even touch on why this is happening: technology. In the old days the high skill worker was held back by all time spent on low skill tasks. Now our machines have taken over a lot of the low skill stuff, the actual value created by the high skill worker has risen faster than the overall average. Of course wages have spread out more! For that not to have happened would require very high taxation.
And, yes, we see celebrities making very big bucks. Once again, an inevitable result of technology. The "value" they produce is mostly an up-front cost, the per customer cost is low. Technology lets them reach an awful lot more customers, thus the customers will focus more on those they consider best. There also is an issue with the shift in the balance of power--it used to be the studios basically owned the careers of their stars. That considerably reduced the disparity but was it a good thing?!
As for loopholes: yes, they exist--but nowhere near like they used to. But if they can hide income do you not think they could also hide wealth? And inheritance is based on wealth. Loopholes are no reason to tax wealth or inheritance. And when you tax wealth you have the problem of that wealth often being extremely concentrated in the corporation that someone controls, they likely can't pay a wealth tax without selling off their company. But their company is valuable because they're running it well--you're going to destroy value this way.
As for Piketty--I tried to read his book. I couldn't stomach more than a few chapters because he kept making a fundamental mistake: assuming that as the form of wealth changed that it was still the same group controlling the wealth. No, fortunes rarely last more than a few generations.
There's also the fact that wealth "inequality" has a huge time component to it. Those starting their careers likely have little if any wealth and easily can have negative wealth (student loans.) By the time they retire any high skill worker should be a millionaire. (The next dollar of spending never provides as much value as the current dollar of spending. Thus your maximum value from your income will come if you spend at a fixed rate--and for a high skill worker to do that they will need to be a millionaire by the time they retire.) Those who want to portray it as a huge problem consistently avoid looking at this.
Lots of western academics have seemingly started writing for Pravda these days. They are (deliberately?) missing the point: human perception of economic wellbeing is relative, not absolute. Antibiotics and running water are nice, but they are expected bare minimum.