The point is that one time income spikes may not make you wealthy, and one time income drops won’t necessarily make you poor.
Still waiting for statistics about the number of wealthy people who are no longer wealthy.
Might be more likely here due to medical bankruptcies.
In the first piece WF linked to, Sowell says that more bottom quintile people rise to the top quintile than actually stay in the bottom quintile. He says this. There is no cite, reference or allusion to how he reaches this determination. This is characteristic of the Sowell pieces I have looked at. No substance, just smoke blowing up somewhere. That is why he is being rejected. He does not rise above the S/N.
I’ve heard this as well (particularly with regards to New York). I’m not as convinced. First of all, it gets exponentially more expensive the higher you build. And not one wants to build 40+ stories of affordable income. So what you will end up with is a city full of Manhattan pencil-towers as tall as the Empire State Building that sell for $20 million a unit.
Also, increasing density means having to increase services like road, public transportation, and utilities. Assuming you can. They ain’t making the streets of New York any wider and it took over 100 years to put in a new subway line.
And if libertarians had their way, they would develop over “underutilized” areas like Central Park.
I haven’t read that it’s exponential. It is more expensive, but even that is dependent on technique. Some of the methods they are using in China are around $100 a square foot. I mean, you’ve probably seen pictures of how they do it there. The quality isn’t great, but it’s entirely possible to make no frills apartment buildings that are tens of stories high for a low cost per square foot. Especially if the building is modular, made from pre-fabricated components from a factory.
As for infrastructure, well, you do have a point there. Higher density versions of all infrastructure exist, but it would be very difficult to retrofit it into an existing city. It almost might be cheaper to demolish a desolate part of an existing city, and rebuild it from the ground up as a new district full of skyscrapers, with a subway system pre-installed and the utility tunneling for that kind of load pre-installed.
You’d do this for an already successful city, where you know if you build it, they’ll move in.
Sure, buildings designed to last about 30 years and filled with shoddy construction. Do the research. They’re cheap because of a lot of reasons that don’t carry over to the US or other industrialized nations and they still to this day have severe quality issues. Plus they’re not factoring in the cost of land in NYC.
Hmm. Definitely for the middle class, but the relatively wealthy can afford to purchase insurance, even if they do not get it from their employment.
I know they are shoddy. Though there is a reasoned argument to be made that shorter lifespans are fine, if the cost reduction is enough, due to the time value of money.
Why does the cost of land directly matter? That’s kind of the whole point of a 50 story building, it effectively splits that land cost up 50 ways. It makes the land itself a small cost and the main cost is construction.
My thought is that compromises are possible. If we had a reasonable, national building code, and national zoning laws, we could actually develop and grow as a nation.
Maybe not exponential. But space age Chinese tech or not, buildings get more complex and require much more engineering the taller they get. Not just for the structure, but things like elevators, HVAC, electrical, plumbing and other systems get more complex the higher you go.
I did see a video of China erecting a 50 story pre-fab skyscraper in something like 19 days. Hopefully a strong wind doesn’t cause it to shatter like a tower of Legos.
Nitpick. “Exponential” no longer means exponential, but may be used for sub-exponential functions. (Yeah, although I’m not an ardent prescriptivist, I hate that too.)
[off-topic] Why does Google now make political points in its dictionary examples?
You know how a candidate can win an election with fewer votes than the other candidate? Americans are really not good at those math things.
If you include the unfunded portions of social security and medicare (that is the part of those two programs that will have to be paid from general revenue unless we either significantly reduce benefits or increase the contributions); Medicaid; income support; and the various forms of welfare from food stamps to WIC to HUD; all the state and local forms of welfare, then I think you are talking about a lot of money.
I think its worth it but its not an insignificant cost.
Social security/medicare are generally not accepted to be welfare. They are supposed to be an entitlement that is earned by paying 15% of your income for your entire working life. (it’s not 7.5%, it’s 15%, 7.5% is paid by the employer and you pay all 15% if you are self-employed)
It’s not the government giving away money for free, it’s giving workers back the money they paid in plus interest.
Now, yeah, it’s poorly managed. The government is not taking that money and investing it in index funds at 7% interest like a competent government would. (it’s called a sovereign wealth fund and other countries do it)
Instead they’re running a pyramid scheme that Bernie Madoff would be familiar with, since it’s the same scheme.
I’ve heard Welfare is a much smaller portion of GDP, around 1%, not nothing but not a significant amount compared to the benefits of protecting American citizens from starving the death.
There is an reasonably expected return from Social security and an actuarially required return and the two do not meet.
BTW can you cite what country funds its national pension system with a sovereign wealth fund that invests in index funds? I know a lot of people mistakenly believe that Norway does this because of their Government Pension Funds. However, despite its name the Government Pension Fund of Norway doesn’t actually fund their pension. Like most sovereign wealth funds its just where they are storing their oil (or natural resource wealth). I am not opposed to the Social Security Fund owning US stock but I suspect that the conservatives do (or will once they think about the consequences of the federal government owning sometimes large stakes in publicly traded companies). Government Pension Fund of Norway - Wikipedia
Our entire government budget is only between 9 and 10% of the GDP.
Just the federal portion of Medicaid is ~10% of our budget (or 1% of GDP).
The amount by which the contributions to social security fall short of the actuarially required amount to pay benefits is welfare (or social safety net cost) by almost any definition. Social security doesn’t pay for itself and we shouldn’t invest the social security trust fund in dot coms to try to make it so.
The amount by which medicare falls short of the actuarial costs of medicare is welfare (or social safety net cost) by almost any definition. Medicare also doesn’t pay for itself.
I think these are worthwhile programs but we shouldn’t be clear about the cost of these programs.
It’s not storage, it’s growth. “It has over US$1 trillion in assets, including 1.3% of global stocks and shares, making it the world’s largest sovereign wealth fund.”
Second, an index fund is not just “investing in dot coms”. It is investing in the productive capital of the entire economy. There are various formulas but a government would probably do best if it had a well diversified mix of assets, chosen by an understandable and public algorithm and rebalanced periodically at a rate low enough not to affect the market in itself.
A government doesn’t have to exercise it’s voting options for shares, and it wouldn’t have a majority stake in any case. Or, alternatively, the government could exercise it’s rights, but it would need to do so using some method subject to public scrutiny. (for example, the government could have policies that it won’t support pay increases to the CEO above some dollar amount corrected for inflation, because in practice overpaying the CEO is stealing money from the shareholders)
In principle, a government could fund a massive sovereign wealth fund, so large that the return from that fund would fund the entire government. At 5% withdrawal rate, it would need to stash 4*20 = 80 trillion dollars.
Which admittedly is an absurd amount of money : supposedly the net worth of the entire USA is only about 100 trillion.
What I don’t know, though this would be an interesting question, is what the tradeoffs between “government has a massive trust fund that gives it a cut of the actions of every company in the world” and “government taxes individuals and company from earnings from their income”.
Obviously, in the latter case, income taxes reduce the performance of the economy, though by how much is debated. (and not directly, since if the government taxes 50% of all income, but then spends all of the money it collected, total spending is the same. People are just less willing to work the same amount if they only keep half)
I don’t know how “owns the majority stake of every company in the world” reduces economic performance.
I have never understood this rhetorical point about the Social Security fund being invested in Treasury securities. Plenty of people, mutual funds, etc. buy Treasury securities as investments. They aren’t the most exciting or lucrative investment instrument, but they’re considered stable and reliable, a fit investment as part of one’s portfolio. They’re not by a long shot Confederate dollars, shares in a long-bankrupt corporation, or the like. However, when it’s not a mutual fund manager but the Social Security Administration who’s buying those Treasuries, it’s suddenly a pyramid scheme?! 
Investing the American people’s retirement funds in the least exciting but solidest investment instrument ≠ fraud. :rolleyes:
No part of that refers to growth.
There is no algorithm that will ensure a sufficient payout using publicly traded securities. What happens if the market crashes like it did in 2007 and the market loses half its value? Or 1929? It took 25 years for the stock market to get back to its pre-1929 levels.
5% withdrawal rate? The average dividend rate for stocks is under 3%, you would be selling securities to meet that 5% withdrawal rate.
The average dividend payout ratio is about 17% To run at break even the government needs about 21% So we would need to own about 125% of all the stock if we ignore the drag effect of stock.
So sell securities. Or did I miss something stipulation for dividends only?
Government requires appraisals, appraisers usually approach valuation along several vectors. Appraisals are based in part on rental value but 15 times annual rent doesn’t work everywhere. I wouldn’t pay you 10 times annual rent in some places and I would be willing to pay more than 20 times annual rent in other places.
I do agree with the restrictive zoning regulations. People trying to maintain the “character of the neighborhood” should largely be ignored. I have a friend who is trying to maintain the “character” of his San Francisco but what he is really trying to do is maintain his view of the city and to some extent the exclusivity of the neighborhood.
Basic research produced by government is generally available to everyone. And when it isn’t its some sort of public private partnership. And if its not that then the FBI ought to investigate.
They’re not doing it on purpose. Generic drugs need to be tested too. But since the phamrabro scandal, there is a fast track generic drug approval process that can get drugs approved in under a year.
No, no it doesn’t, not on average. Not unless you are including the cost of developing the drug itself, and that includes the time of its executives and the money they could have been making doing other stuff (opportunity cost). And frankly a lot of those research dollars are paid for by the government as you complained about above.
There are enough residency positions for every graduating medical student. maybe not the residency they WANT but we can’t all be plastic surgeons.
Yeah so?
You really think medical training standards are the same around the world?
It would be nice if K-12 was adequate to ensure literacy basic math ability and just a DROP of critical thinking. I’d be satisfied with that.
I agree with this. We could pull federal guarantees of student loans and let the market figure out which colleges and majors are worth investing in.
https://www.payscale.com/career-news/2011/07/worst-deals-on-college
We should not encourage everyone to go to college when their time would be better spent learning a trade.
Think about it. If you have to sell securities every year, then as some point your trust fund runs empty. One way to think of stocks is that they are the present value of their future dividend stream.