What would happen if all the rich people left America?

[Damuri_Ajashi]

@emacknight

You guys really took a funny concept and nictpicked it to death by focusing too heavily on the physical dollar leaving the planet.

If Bill Gates withdrew all his savings, burned it along with his mansion and all his possessions, then stopped earning any income, what would happen? The point being that we lose his contributions, his physical possessions, and his tax contributions. And the wealth isn’t simply transferred to his kids or confiscated to the government coffers.

Right off the bat we should note that the Bill and Melina Gates Foundation would suddenly have a lot less money. But I’m sure that could easily be absorbed by the government, along with all the other charitable contributions the rich make, if they make any at all.

Obviously the rich are easily replaceable since they only got rich because of luck, not sure how the country would deal with a sudden loss of all those lucky people.

Something else that’s funny is the average/median wage in the US is going drop pretty fast, but on the plus side the Gini coefficient would finally be where people want it to be. And all those evil overpaid CEOs would be replaced with honest hard working Americans that hare happy to earn what the rest of their employees earn.

The median wage would barely move at all.

[Bosstone]

@Damuri_Ajashi

Except Biden would immediately become Presidnet and start earning 400K/year.

Yeah, but are we talking about a one-time event or a continuous iteration? If it’s continuous, then we’re all screwed as people get promoted to President and are immediately evacuated to Galtland.

[Mosier]

@Shodan

How would the federal government react to a drop in income tax revenues of around 40%? (cite). This does not include capital gains taxes.

Of course a lot depends on how they would “take their money with them”. Dumping all their stock holdings at once would probably crash the market unless the exchanges shut down. I doubt you could sell a lot of high-end houses at once - they would probably sit there unsold. There would be less impact on semi-regressive taxes like Social Security and Medicare, but the rich would not be available to tax to recover the Social Security funds that have been spent, so I am guessing Social Security would collapse or be radically cut back.

I would say it probably would be rather dicey times for a decade or two, until and unless we develop some more geese to lay golden eggs for us.

Regards,
Shodan

I’m pretty confident that things would be better for us than they would be on the rich people’s commune. Society lays the golden eggs for rich people, not the other way around.

[Voyager]

@Sam_Stone

I realize that this question highlights a fundamental difference between left and right - the left generally believes that the rich are undeserving of what they have, that they got where they are because they are the lucky ones who floated to the top of the system, that people are all the same, that rich people have no special abilities that justify them earning much more than others, etc.

Actually, you are saying that all rich people are smart, and practically no one who isn’t rich is worth much, while everyone else is saying that money is not an absolute indicator of talent.

The same goes for entertainment. When I said that the people you see on TV and in the movies today would be gone, I obviously wasn’t talking about the extras and the gaffers. I’m talking about the on-air talent on network TV, the big producers, the top cameramen, the best writers, etc. The people who win Emmys and Oscars for outstanding acting, directing, writing, cinematography, etc. All gone. These people didn’t get where they are and command the kinds of salaries they do because they are interchangeable with people who make less. They are where they are because they’ve proven themselves to be better at their jobs to the extent that they can command huge salaries.

Do you know the difference between an extra and a principal?
There are over 200,000 members of SAG, and to become a member you have to have worked (unlike AFTRA.) Extras, who are often non-professional, are usually not members, because it is too expensive. I’m sure there are a few really top cameramen making good money (from working all the time) but the cameramen I’ve seen on sets of TV shows didn’t look very rich to me.

if you think that a new Spielberg or a new Coppola will just rise up out of the crowd and fill the gap of excellence, ask yourself this: How come there aren’t more of them NOW? Why are their so many bad directors making a living in Hollywood if there are Spielbergs in the wings waiting their shot? Why isn’t every movie as exciting as Indiana Jones or as technically brilliant as a Kubrick film? It’s because there is a shortage of talent. Not everyone can do this stuff.

If you were writing this in 1973, you’d be consigning Lucas and Spielberg to incompetence. I doubt Lucas made a ton on THX1138, or Spielberg a ton on Duel. My daughter worked with some people who are now name stars who’d you recognize, but who back then were making scale and residuals like everyone else.
As for why there aren’t more now - obviously because there are a limited number of openings. No one can predict which movie is going to be a hit. Spielberg makes a lot of money, but so does Michael Bay.

The same is true in business. Steve Jobs is the most obvious example - when he left Apple, to be replaced by a CEO from Pepsi (under the theory that a CEO is a CEO), Apple tanked. A lot of analysts thought it was actually going to die. Then Jobs came back, and turned the company around. It’s now the most profitable company in the world, and Jobs’ fingerprints are all over every success they’ve had.

Jobs deserves every penny he gets. But there are plenty of CEOs who don’t, and who make a lot more than $250K.

The opposite example is Microsoft. Since Gates stepped down, Microsoft has floundered. It’s now run by a guy who has no particular vision, and the company is fractured by many middle managers and division heads without a singular driving leader at the top. And it shows. Their product line meanders all over the place, they build workmanlike software that doesn’t inspire anyone, and they’re basically in a holding pattern trading on the market share they have as their main value.

Thanks for making my point. You think Ballmer wouldn’t qualify for the trip? By a lot. For every Gates on that spaceship there are 10 Ballmers, and probably 100 people who make Ballmer look like a genius. You seem to be saying that if we get rid of all the geniuses, we don’t have any more geniuses, but you haven’t shown that no one not making $250K right now is a genius, or that all who are making it are geniuses.
Ballmer might well be blocking someone who could turn Microsoft around from the top spot, after all.

[/QUOTE]

[Bri2k]

Well, if all the rich folks left, we might finally get a government that is truly by, of and for the people.

Bri2k

[emacknight]

@Lemur866

Yes, if I spent hours creating a Big Mac, and then threw the Big Mac in the trash, we’ve lost value. But not if I create a coupon for a Big Mac, and then give it away, and the person I give it to throws the coupon away. I’ve lost nothing, .

You’re still wrong about this, because money isn’t “created” it’s earned. You can’t just “create” a coupon, and more than I can photocopy a twenty dollar bill. You had to do something for that coupon, meaning you gave up either a possession you valued less than a Big Mac, or a portion of your time. And once you’ve spent that time, it’s gone, the only thing remaining is the money you’ve earned.

So I guess you’re technically correct, if I photocopy a bunch of money, then burn those copies, nothing is lost.

I think the problem here is that you missed one key principle during your economic training:
time = money

[Zeriel]

@emacknight

You’re still wrong about this, because money isn’t “created” it’s earned. You can’t just “create” a coupon, and more than I can photocopy a twenty dollar bill. You had to do something for that coupon, meaning you gave up either a possession you valued less than a Big Mac, or a portion of your time. And once you’ve spent that time, it’s gone, the only thing remaining is the money you’ve earned.

Except that there are a certain quantity of coupons in the economy, and if a bunch of dummies burning all their coupons threatens the economy, of course the government is going to print more coupons.

Since the only risk of doing so (inflation) only happens if they change the total amount at the end of the burning and printing party.

[emacknight]

@Sam_Stone

I realize that this question highlights a fundamental difference between left and right - the left generally believes that the rich are undeserving of what they have, that they got where they are because they are the lucky ones who floated to the top of the system, that people are all the same, that rich people have no special abilities that justify them earning much more than others, etc.

And criminals too, don’t forget that. Lucky, sociopath, criminals.

If only we could hasten their departure I wouldn’t get so many phone calls and emails from experts tricking me into making bad decisions.

[Little_Nemo]

@Sam_Stone

In other words, the number of top positions out there is a function of how many top performers there are. The numbers are constrained by supply, rather than the numbers being fixed and the supply unlimited.

In general, there is always room for excellence. If a new Wayne Gretzky were born today, he could find his way into the NHL, and he wouldn’t be displacing the best player currently in the game - he’d be displacing one of the weaker ones. The fact that every NHL team isn’t full of Gretzkys would indicate that players at that level are actually in rather short supply. The fact that there are so many lemons in the business world would indicate that there’s actually a shortage of Jack Welches and people like Steve Jobs.

But of course, the fact that such people earn millions of dollars should be the evidence you need to understand that there is a shortage of them. People don’t just hand huge salaries to other people out of charity. They pay them what they have to pay to get their services, and if those services were not rare, the pay for them would not be high.

As you note, there are lemons in the business world. If your reasoning were correct and businessmen got paid what they were worth, we should be able to judge worth by salaries.

It does work that way in sports. If I know a quarterback or pitcher on one team is being being paid five times as much as another team’s quarterback or pitcher, I can reasonably assume the difference in pay is reflective of a difference in talent. Not always of course but there’s a clear connection.

Now here’s the twenty corporations that made the most profits in the last year:

Exxon Mobil
AT&T
Chevron
Microsoft
J.P. Morgan Chase & Co
Wal-Mart Stores
IBM
Apple
Johnson & Johnson
Berkshire Hathaway
Procter & Gamble
Wells Fargo
General Electric
Intel
ConocoPhillips
Coca-Cola
Citigroup
Hewlett-Packard
Goldman Sachs Group
Pfizer

And here’s the twenty corporations that had the highest paid executives in the last year:

Viacom - Philippe Dauman
Occidental Petroleum - Ray Irani
Oracle - Lawrence Ellison
DIRECTV - Michael White
Stanley Black & Decker - John Lundgren
Comcast - Brian Roberts
Walt Disney - Robert Iger
Ford Motor - Alan Mulally
IBM - Samuel Palmisano
Emerson Electric - David Farr
Starbucks - Howard Schultz
Johnson & Johnson - William Weldon
Philip Morris International - Louis Camilleri
AT&T - Randall Stephenson
Abbott Laboratories - Miles White
3M - George Buckley
United Technologies - Louis Chenevert
Bank of New York Mellon - Robert Kelly
Coca-Cola - Muhtar Kent
Lockheed Martin - Robert Steves

There’s only four corporations that are on both lists. If executive pay is linked to profits, you’d expect to see a higher correlation.

[Damuri_Ajashi]

@Lemur866

Of course not. We aren’t doomed to income inequality, we can change our society to eliminate it. We just have to live with the consequences of our decisions. We could tax all income over $250,000 a year at 95%, and confiscate all estates over $1,000,000. There you go, income inequality eliminated in one go. It would be easy.

Of course, we might not like the results of our little scheme.

http://www.census.gov/hhes/www/income/data/historical/inequality/index.html

Historically we have not had this level of income inequality.

[Damuri_Ajashi]

@gallan

If I’m understanding you correctly, you’re saying that “wealth” only applies to your material possessions and has nothing to do with the buying power of your money?

If I have 1 billion dollars in cash, and no other assets, I’m not wealthy? And if I burn that 1 billions dollars and am left with nothing, my net worth hasn’t changed at all?

No but if you burned all that money then SOCIETY is no poorer for it.

[Damuri_Ajashi]

@Der_Trihs

No they haven’t. They live off of the people who create wealth, or outright defraud them to get it. They get the credit for creating the wealth the way they get everything else: they steal it from those who deserve it.

Its not stealing. Our system distributed wealth according to who can capture the value created by cosiety. The wealthy are simply better at capturing that value and in the effort to capture that value, they often create much value as well; but there are just too many folks who do little more than capture value or capture value far in excess of the value they create.

[Damuri_Ajashi]

@emacknight

Kind of makes you wonder why they don’t put in a competing bid and offer to save your company millions per year. If so many people are willing to be a CEO/executives for a fraction of the price, why doesn’t the average wage fall?

Collussion.

If we remove all the top 1% of the NBA/NFL/NHL/MLB players would anything change? There are still plenty of people willing to play pro sports. Hard to imagine why leagues need salary caps. I know I’d be perfectly willing to pay the same ticket price to watch a bunch of amateurs, after all, their heart will be in it right?

It would be like watching college sports and nobody thinks thats any fun at all. Nope, nobody would pay to see a bunch of amateurs.

[Damuri_Ajashi]

@Bosstone

Yeah, but are we talking about a one-time event or a continuous iteration? If it’s continuous, then we’re all screwed as people get promoted to President and are immediately evacuated to Galtland.

If it was continuous iterations we would eventually be shipping off teh dogcatcher.

[Damuri_Ajashi]

@Shodan

Their spaceship runs on tungsten. Gates borrows against his Microsoft holdings, corners the market on tungsten, and loads it onto the ship. …If it is true that the rich own so much of the country’s wealth, and they take that with them, then America is one fuck of a lot poorer in assets as well as in human capital. Sam Stone makes a good point as usual - the top performers in practically every field are gone. They may not be completely irreplaceable, at least not in the medium run, but I also don’t think they are no different from anyone else.

Regards,
Shodan

If the rich were actually able to take their productive capital with them then sure but that’s an acknowledgement taht it is the capital and not the people themlseves that we really need.

[jayjay]

@Damuri_Ajashi

Collussion.

This. (Well, collusion)

It would be nice if we could have some regulation that says you can’t be the CEO of one company and simultaneously be on the BoD of another. If that doesn’t say “incipient cartel”, I don’t know what does.

[emacknight]

@Little_Nemo

There’s only four corporations that are on both lists. If executive pay is linked to profits, you’d expect to see a higher correlation.

But corporate profit isn’t necessarily a reflection of performance.

To your example of athletes, you drew a connection between their performance and their salary, not to their “profit” which would be what’s left over after expenses, such that the highest paid athlete might also have an extremely high cost associated with his sport.

Your list also compared businesses of different size and within different industries, which makes as much sense as ranking all athletes by their salaries, and then saying Kobe Bryant is a better athlete than Craig Alexander. Neither can do what the other can, but both are better than the vast majority of others in their sport.

But then, this entire exercise is pointless, since people either value CEOs or they don’t, and that pretty clearly falls along political lines.

If you (the general you) can’t understand why different players in the NBA get paid different rates, than the idea of a CEO’s pay will seem equally as confusing.

I myself struggle to understand why the guy that finishes the race first is considered the fastest and given the largest prize. Seems like his time should be adjusted for the fact that he was luckier than everyone else, and have 39% of his time taken and distributed to the slower racers.

Baseball would be way better a way better sport if the Phillies and Red Sox gave some of their wins to the Mariners and the Padres.

[Bosstone]

@emacknight

But then, this entire exercise is pointless, since people either value CEOs or they don’t, and that pretty clearly falls along political lines.

I don’t think it’s a difference between valuing CEOs or not. I think it’s a difference between valuing them and venerating them.

I myself struggle to understand why the guy that finishes the race first is considered the fastest and given the largest prize. Seems like his time should be adjusted for the fact that he was luckier than everyone else, and have 39% of his time taken and distributed to the slower racers.

Strawmen all over the place. A race is held on an even playing field. There are few factors involved other than the training and innate ability of the athlete. Outside of track and field, things are a little more complicated.

Really, it’s not the slower athletes I’m personally concerned about as it is the trainer.

[emacknight]

@Zeriel

Except that there are a certain quantity of coupons in the economy, and if a bunch of dummies burning all their coupons threatens the economy, of course the government is going to print more coupons.

Since the only risk of doing so (inflation) only happens if they change the total amount at the end of the burning and printing party.

Sounds good in theory, but put this into context of modern American politics. How long would it take for “the government” to figure out what the correct course of action would be? And how much longer would it take to actually take that action?

Remember that most of the politicians have been raptured as well, so first you need to form a new government, which includes replacing any of the higher paid government employees. The guys working at the treasury are gone as well.

And what’s to say the government prints the right amount of money?

[emacknight]

@Bri2k

Well, if all the rich folks left, we might finally get a government that is truly by, of and for the people.

Bri2k

Yup, all the people that weren’t good enough during last dozen or so elections. The ones “the people” didn’t want to vote for last time.

We’ll also finally have book stores full of really great novels that people would have read if there wasn’t anything better. And by bookstores I mean the internet.

Speaking of the internet, I for one will miss some of my favourite porn stars…