It’s from a passage in the Vonnegut novel God Bless You, Mr. Rosewater, in which a character reveals that the secret to being rich is simply to achieve a critical mass of invested wealth after which the wealth becomes self-perpetuating.
I think this kind of factoid can be misleading. Salaries have outpaced inflation, and unemployment remains very low, so many millions of people have experienced the fruits of a growing economy. Which will be many more people than the one-percenters.
Don’t get me wrong.
I do not dispute that most of the wealth remains concentrated at the top, as does most of the growth in wealth, and that the US is still very unequal, with awful levels of poverty. All this is true.
I’m just saying that if the takeaway of a factoid like this is that most ordinary people aren’t seeing the gains of a growing economy, that isn’t true.
Yep. A rising tide lifts all boats.
Depends on what it’s being invested in.
Right now where I live, rents have been heading up for the past few years, and our local housing affordability index has plummeted. We need more multifamily housing by yesterday at the latest. Homelessness is up and renters are having their disposable income slashed by repeated rent increases, over and above increases in wages.
In response to this, the investors of the world are pouring money into town - into existing housing stock, apartments, condos and townhouses. Investment in building new housing, particularly at the low end of the market, is down. There are fewer housing or development starts planned year-over-year.
This kind of investment pattern does aid those middle-class homeowners who are looking to sell out and leave town, but it does little for people who are wanting - nay, needing - new places to live. This is not atypical for late-stage capitalism, which places more value in catering to an increasingly rarefied group of haves rather than building a broad-based economic prosperity that lifts all boats by giving the middle class the earning power it needs to build its own prosperty.
So, yeah, not all investments are equal.
I thought this was interesting to illuminate how extremely wealthy people get money to spend/live. It’s more for clarity than pure accuracy.
How does Jeff Bezos pay $0 in taxes every year and how does he get cash in his checking account? You can’t buy stuff with Amazon stock.
He’s got 200billion all in Amazon stock. If he never sold it, he’d pay no taxes and have $0 cash. In reality, he never sells it and pays $0 in taxes.
Instead, he goes to the bank and gets a $100million loan. He uses the amazon stock as collateral. That’s how he gets his cash.
But how does he pay down the loan? He goes to another bank and takes out another $100million loan to pay off the other bank loan. They eventually get repaid.
This can go on endlessly for the rest of his life. Never paying taxes (the IRS would technically view him as a debtor) and yet always flush with cash. $100million is almost a rounding error compared to his net worth. Eventually he’ll die and then the stock will finally be sold to pay off the outstanding loans and that will not be a Bezos tax problem.
*It’s a bit more complicated but that’s basically how it works. It’s incredible really. He only pays taxes if he chooses to (ie, he take an $80k salary so he can say he pays taxes).
For some reason everyone (reddit people) always say “Jeff Bezos” or “Elon Musk” when they go off on “rich” people. What about the Louis Vuitton guy, or Jack Ma? Is Jeff Bezos some kind of exemplary fraud or crook, some kind of evil villain?
I don’t have a problem with the extremely wealthy, unless they get involved in politics, which inevitably some do.
Sounds a little like in Regency-setting fiction how the great landowners have estates so valuable that they scarcely have to deal with mere money; the banks will extend them credit almost indefinitely.
Most here are American; the “Louis Vuitton guy” (Bernard Arnault) is French while Jack Ma is Chinese. So we tend to think of Americans first.
Oprah Winfrey is worth $3B, yet no one talks about going after her money for some reason.
These days you have to have two or three digits before the “billion” to be considered really rich. Single-digit billion is merely well-to-do.
I think the complaint is the existence of a system where people like Bezos are possible, even if they’re personally nice people just doing what works in the world they found themselves in.
Because she’s proletariat scum compared to them as she’s got a net worth < 2% of either of theirs.
And don’t forget when Musk got his $22B stock option payday, he paid $11B in income tax that year rather than play games to avoid taxes. But… he still ended up with $11B. And while Musk has drunk the Kool-Aid in many respects, he at least does not seem to me to be the type like Bezos to be blowing it all on a yatch so big they have to tear down the bridge to get it out to sea.
To be fair, Bezos and Musk have revolutionized the way we live. A Tesla is an amazing car, the cost of launches is half what it used to be, and Amazon is useful for all those trivial little things that were impossible to find in brick-and-mortar stores. The bigger problem I see is folks like Buffet - basically targetting companies that take a hit on profits from considering more than the next quarter. To be fair, it’s not so much those guys, I would suggest, as it is overpaid CEO’s - hired help who get paid a thousand times more than the front line owrkers and make much of their money from stock options - necessitating a higher stock price now over planning for the long term.
I saw some discussion of this that said US tax law allowed the inheritance transfer of this stock without taxes, thus eliminating any reckoning.
Public companies’ boards choose the CEO, and the shareholders choose the board members. It seems like a club mentality, really. EG Lou Holtz was on the board of like 3 big companies.
They claim ad nauseum it’s “to retain talent” or whatever.
Musk is the proverbial gift horse and the wannabe troll nonpareil. That’s a problematic billionaire
This does reach to the heart of the issue, but it is broader and more fundamental than just billionaires. Stuff (companies, real estate, and especially IP) are controlled by parties who seek to manipulate it to extract maximum profit out of the resource, yet they have absolutely no connection to the actual resource they are tapping from. The manipulators are only interested in gross value output, often neglecting the peripheral issues related to their business decisions.
Hence, one might argue that street crime is an effect of absentee landlords and corporate executives pushing for more profit, but it is easier to blame thugs than to address the culture of dissociation imposed by remote capitalism. This is really not different from the environmental side effects of natural resource extraction, where it eats too much into the bottom line to do the work in a sustainable and responsible way.
So, one of the effects of wealth concentration is that the producers are able to shape the culture with relentless messaging that pounds into the minds of the public that we really need what they are doing, like the car companies pushing everyone toward the type of vehicles that make them the most money.
The argument that the wealthy - the builders, the creators, the employers - deserve their wealth because without them the workers would not have their jobs has been made since capitalism and industrialism merged at the beginning of the 19th century.
It’s bogus, of course. Any look at history or the world around you will establish that almost instantly. The argument depends on the false dilemma of working for the wealthy or starvation. As I wrote before, American society worked fine during years when companies were satisfied with reaping less than every possible penny. The rich were still rich, they lived well, created the Jet Set, and moved to huge houses in the suburbs.
The argument that poor Americans are wealthier than the poor in other countries is the same argument in different guise, another false dilemma between taking available jobs - Americans - or starving - people in South Sudan. What should be compared is the comparative buying power of, let’s say, the bottom 50% now and their buying power in the past. That has manifestly decreased, as wages have not kept pace with inflation, even the 2% or 3% average pre-Covid.
History shows that in previous eras with sinking buying power (a catch-all phrase to include houses and hamburgers) workers agitated for unions and political representation until the bosses caved inch by inch to a livable position. I believe that we’re in a similar era. The smart billionaires, like Gates and Buffett, recognize this and are trying to find ways to keep their heads when the peasants revolt. Charity won’t be enough, though: it never has been.
That’s correct. It could on in the same way to his heirs and so on. No taxes.
I was trying hard to not use any financial wording to get a nice story across. In that story, the last bank would have some stock transferred to it to pay off the outstanding loan and that would be taxed toward Bezos (he’s effectively selling his stock for the loaned money). So I said “sold” because it’s simpler to understand than “transferred”.
Why did I use Bezos? No reason. My rich guy growing up was Bill Gates but it seems most people use Bezos these day. That’s the only reason - nothing evil or bad or anything like that. Just unimaginably wealthy. To conceive of $1billion is pretty nuts - you can stack it all in a warehouse, no interest, spend $1million every year, year after year, and you wouldn’t run out until the year 3,024 (about 35 generations).
To kind of address the OP, the top 1% is not “rich” in a normal way, it’s kind of unimaginable, unrelatable, and mostly beyond the rules.
Bezos: $211.3 billion
Musk:: $261,9 billion
Vuitton: Dead
Jack Ma: $24 billion.
These are all given in U.S. dollars. The more they’re worth, the more the complaining. There’s no point in complaining about a dead person. Vuitton died in 1892.
I suspect Carlos Slim has a far greater wealth disparity (in his country) than Bezos.
As I said, the “Louis Vuitton guy” is almost certainly meant to refer to Bernard Arnault, majority owner of LVMH, which owns Louis Vuitton along with many other luxury brands. He’s worth something like $180 billion.