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in thailand one-tenth of 1% control 46% of the wealth.
You socialist do realize inequality has grown under obama.
And those who haven't been around long have forgotten the the lesson of time over BS, ALL pols are the darlings of Wall Street, the "inequity" has been growing under ALL of our illustrious leaders, yes, even that conservative God Ron Reagan.........
Though by sentiment I'm a lefty, I can't agree with Piketty. To begin with, we should be considering not the after-tax rate of return on capital, but the after-tax and after-inflation and after investment-fees rate of return. That is the real return. And I'm not convinced that this return is genuinely higher than the rate of economic growth. Second, "economic growth" does not account for increases in quality of life not measurable by financial means. For instance, improved sanitation and attenuation of communicable diseases doesn't necessarily show up in GDP growth, but it is a palpable improvement in quality of life - which, if monetized, would probably boost the effective rate of economic growth. Third, return on capital ought to include a risk-premium. It's a "fee" or reward for placing one's money at risk. I don't know what's a reasonable value for this fee, or how to structure it vs. the amount of risk, for not all risky ventures are worthwhile, and some are stupid and parasitic. Nevertheless, some excess of net return on capital, vs. growth rate, is reasonable compensation for the risk involved. Finally, overall growth tends to be reduced owing to instances of bad decisions and unwise behavior. If 10 people are given a windfall of $100, but two of them fritter it away, the net "growth" per capita is only $80. In other words, there's more entropy in the aggregate economy (and hence lower expected growth) than in the striving of dedicated individuals seeking to grow their capital.
Thus it's reasonable that capital should enjoy higher rate of return than the aggregate economy. But does capital actually achieve this? Here again I don't believe Piketty. There's a reason for the anecdote that great wealth doesn't survive beyond three generations. This isn't always true, but see the aforementioned ideas about entropy. How many "capitalists" manage to hold on to their capital from generation to generation, without (a) mismanaging it, and (b) dividing and subdividing amongst successive heirs?
The reason for a more assertive and more activist national government is to help stabilize market cycles and to enable the great works of public well-being that markets aren't able to perform - and not to equalize wealth.
Though by sentiment I'm a lefty, I can't agree with Piketty. To begin with, we should be considering not the after-tax rate of return on capital, but the after-tax and after-inflation and after investment-fees rate of return. That is the real return. And I'm not convinced that this return is genuinely higher than the rate of economic growth. Second, "economic growth" does not account for increases in quality of life not measurable by financial means. For instance, improved sanitation and attenuation of communicable diseases doesn't necessarily show up in GDP growth, but it is a palpable improvement in quality of life - which, if monetized, would probably boost the effective rate of economic growth. Third, return on capital ought to include a risk-premium. It's a "fee" or reward for placing one's money at risk. I don't know what's a reasonable value for this fee, or how to structure it vs. the amount of risk, for not all risky ventures are worthwhile, and some are stupid and parasitic. Nevertheless, some excess of net return on capital, vs. growth rate, is reasonable compensation for the risk involved. Finally, overall growth tends to be reduced owing to instances of bad decisions and unwise behavior. If 10 people are given a windfall of $100, but two of them fritter it away, the net "growth" per capita is only $80. In other words, there's more entropy in the aggregate economy (and hence lower expected growth) than in the striving of dedicated individuals seeking to grow their capital.
Thus it's reasonable that capital should enjoy higher rate of return than the aggregate economy. But does capital actually achieve this? Here again I don't believe Piketty. There's a reason for the anecdote that great wealth doesn't survive beyond three generations. This isn't always true, but see the aforementioned ideas about entropy. How many "capitalists" manage to hold on to their capital from generation to generation, without (a) mismanaging it, and (b) dividing and subdividing amongst successive heirs?
The reason for a more assertive and more activist national government is to help stabilize market cycles and to enable the great works of public well-being that markets aren't able to perform - and not to equalize wealth.
I'm not a lefty -- but I found your post to be quite insightful.
Could you clarify the following for me:
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...If 10 people are given a windfall of $100, but two of them fritter it away, the net "growth" per capita is only $80. In other words, there's more entropy in the aggregate economy (and hence lower expected growth) than in the striving of dedicated individuals seeking to grow their capital.
I understand the arithmetic, of course. What I don't understand is (a) what is a windfall - this is a fairly emotionally charged term, and (b) how is it that two can fritter this windfall away?
Kudos on using the word Fritter, by the way. ( I think if Facebook merged with Twitter they should name the company Fritter.)
Though by sentiment I'm a lefty, I can't agree with Piketty. To begin with, we should be considering not the after-tax rate of return on capital, but the after-tax and after-inflation and after investment-fees rate of return. That is the real return.
What makes you think those are not the numbers he is using? Have you even bothered to read the book?
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And I'm not convinced that this return is genuinely higher than the rate of economic growth.
OK, so the 700 pages of his book backed up by a simply massive amount of data doesnt seem to convince you?
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Second, "economic growth" does not account for increases in quality of life not measurable by financial means. For instance, improved sanitation and attenuation of communicable diseases doesn't necessarily show up in GDP growth, but it is a palpable improvement in quality of life - which, if monetized, would probably boost the effective rate of economic growth.
Oh look! The poor have refrigerators! inequality is relative, not absolute. A important consideration.
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Third, return on capital ought to include a risk-premium. It's a "fee" or reward for placing one's money at risk. I don't know what's a reasonable value for this fee, or how to structure it vs. the amount of risk, for not all risky ventures are worthwhile, and some are stupid and parasitic. Nevertheless, some excess of net return on capital, vs. growth rate, is reasonable compensation for the risk involved. Finally, overall growth tends to be reduced owing to instances of bad decisions and unwise behavior. If 10 people are given a windfall of $100, but two of them fritter it away, the net "growth" per capita is only $80. In other words, there's more entropy in the aggregate economy (and hence lower expected growth) than in the striving of dedicated individuals seeking to grow their capital.
It does include this. Im not sure why you assume it does not, the difference is this-those with sufficient capital can have enough hedging to avoid any risk of complete loss, and the growth in capital that is discussed is the average growth, which anyone with sufficient capital is making....because while 1 in 10 bets will fail, the other 9 provide the average income....and thus no real risk.
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Thus it's reasonable that capital should enjoy higher rate of return than the aggregate economy. But does capital actually achieve this? Here again I don't believe Piketty. There's a reason for the anecdote that great wealth doesn't survive beyond three generations. This isn't always true, but see the aforementioned ideas about entropy. How many "capitalists" manage to hold on to their capital from generation to generation, without (a) mismanaging it, and (b) dividing and subdividing amongst successive heirs?
You do hit on something with this. But once your capital reaches a certain point, you almost have to work to mismanage it this badly. The idea that wealth doesn't exist beyond 3 generations works fine...up to a point. beyond that point the amount of wealth becomes great enough to be able to survive successive heirs splitting it, (and often trusts remove that as a possibility as well). Take a look at the Walton family for a example.
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The reason for a more assertive and more activist national government is to help stabilize market cycles and to enable the great works of public well-being that markets aren't able to perform - and not to equalize wealth.
Extreme levels of wealth inequality have been shown to be increasingly damaging for a country. Thinking that the concentration of wealth and power is somehow a good thing misses centuries of data.
Most great wealth is ultimately appropriated in some way by force of law. If everyone lived on their own island , independent with their own agency, one would not see it at this level. Both the left and the right lie their ass off about this fact. Most "economists" are nothing but lobbyists representing an interest, especially their own.
The results of the survey of leading economists is telling.
Okay.
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Originally Posted by greywar
What makes you think those are not the numbers he is using? Have you even bothered to read the book?
This is the Economics forum, not the Science Fiction forum, got it?
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Originally Posted by greywar
OK, so the 700 pages of his book backed up by a simply massive amount of data doesnt seem to convince you?
Your government says there are 1,539 separate economies, but that doesn't convince you.
Your government says there are 800+ Skill-sets, and still you're not convinced.
Your government claims $4.55/hour is a "Living Wage", while simultaneously showing that $26.75/hour is not a Living Wage, yet you're not convinced.
But you're totally convinced Pinketty's useless irrelevant data wrapped around subjective nonsense.
So, um, if Pinketty said there were 1,539 separate economies, then you'd believe him, right?
I'll send him an e-mail just for you.
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Originally Posted by greywar
Extreme levels of wealth inequality have been shown to be increasingly damaging for a country. Thinking that the concentration of wealth and power is somehow a good thing misses centuries of data.
Pinketty's data does not support that conclusion, and worse than that, there's no evidence "Wealth Inequality" plays any role.
By the way, did you ever manage to find any of the US government websites that tell you how much "Wealth" really exists?
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Originally Posted by ohio_peasant
To begin with, we should be considering not the after-tax rate of return on capital, but the after-tax and after-inflation and after investment-fees rate of return. That is the real return. And I'm not convinced that this return is genuinely higher than the rate of economic growth.
It isn't.
It may be in isolated instances, such as with venture Capital. In fact, I would expect and even be disappointed if venture Capital did not have at least a slightly higher rate of return than economic growth.
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Originally Posted by ohio_peasant
Second, "economic growth" does not account for increases in quality of life not measurable by financial means. For instance, improved sanitation and attenuation of communicable diseases doesn't necessarily show up in GDP growth, but it is a palpable improvement in quality of life - which, if monetized, would probably boost the effective rate of economic growth.
Uh, yes, and you could include "safety" and other things as well.
Every penny that you don't spend on stupidity is a penny that could be used to a greater advantage somewhere else.
Up through the early 1980s, the practice was to have guard-rails end at an abutment, such as a bridge or concrete culvert or retaining wall. Your car leaves the road, strikes the guard-rail and then careens down the guard-rail until coming to a sudden stop at the abutment. Something simple as attaching the end of the guard-rail onto the abutment, allows vehicles to continue in motion.
That little thing has saved $Billions in wasted Capital.
A Cost-Benefit Analysis is probably the closest you could come to ever monetizing those concepts.
Quote:
Originally Posted by ohio_peasant
Third, return on capital ought to include a risk-premium. It's a "fee" or reward for placing one's money at risk. I don't know what's a reasonable value for this fee, or how to structure it vs. the amount of risk, for not all risky ventures are worthwhile, and some are stupid and parasitic. Nevertheless, some excess of net return on capital, vs. growth rate, is reasonable compensation for the risk involved.
It already does.....that's the interest rate.
The Market determines the interest rate, assuming you have a Free Market.
This is a matter of Opportunity Costs.
You have Capital in the form of Cash/Credit that you are not using at the moment. It may be to everyone's advantage -- including yours -- to make that Capital available for others to use on a short-term or long-term basis (as you see fit or agree).
So, what's it worth to you to allow others to use your Capital?
That's the interest rate you charge.
The interest you charge will include fees and taxes, plus your desired rate of return.
That will of course be heavily influenced by the level of risk involved.
Look at an established business with a solid track record that desires to expand and needs $500,000. Why should they pay 9% to the bank, when they can pay you 6.5%? After taxes and such, your net is 5.75%.
That's not the same as a start-up with no history and management has no experience.
Since no institution will loan them money, the interest rate is effectively 100%, making your offer of 16.25% quite generous, right?
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Originally Posted by ohio_peasant
Finally, overall growth tends to be reduced owing to instances of bad decisions and unwise behavior. If 10 people are given a windfall of $100, but two of them fritter it away, the net "growth" per capita is only $80. In other words, there's more entropy in the aggregate economy (and hence lower expected growth) than in the striving of dedicated individuals seeking to grow their capital.
Okay, but bad decisions and unwise behavior are rewarded in America.
That means your net "growth" per capita is actually less than $80.
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Originally Posted by jertheber
...but, the wealthy and powerful get that way from a systemic kind of taking, be it the taking by government....
For those most concerned about income and wealth inequality, I wonder what distribution of income they prefer and how they come to that particular conclusion.
How do you decide that what we have now is bad and what you want is good? Do people on the left just get to arbitrarily decide what the proper distribution is because...well , because they are just wiser than everyone else?
I guess Piketty thinks he is wiser, but why? Who appointed him to this lofty position?
Ahh yes the wall of text responses from Mircea. Let us begin.
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Originally Posted by Mircea
Okay.
We begin by agreeing. nice...
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This is the Economics forum, not the Science Fiction forum, got it?
Sadly it instently degrades into personal atacks. Whats worse is, they have nothing to do with what I said which was "What makes you think those are not the numbers he is using? Have you even bothered to read the book?" Its a relevant question since reading the book would indicate where the data was. The only thing I can think of is that Mircea refuses to accept the provided data. It would be nice to know what he thinks is fiction regarding what I was saying, but that doesn't happen.
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Your government says there are 1,539 separate economies, but that doesn't convince you.
Your government says there are 800+ Skill-sets, and still you're not convinced.
Your government claims $4.55/hour is a "Living Wage", while simultaneously showing that $26.75/hour is not a Living Wage, yet you're not convinced.
But you're totally convinced Pinketty's useless irrelevant data wrapped around subjective nonsense.
So, um, if Pinketty said there were 1,539 separate economies, then you'd believe him, right?
I'll send him an e-mail just for you.
None of this is relevant to what I stated. Its just wandering off into a discussion of minimum wage, and multiple economies, all the while ignoring the actual topic.
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Pinketty's data does not support that conclusion, and worse than that, there's no evidence "Wealth Inequality" plays any role.
Which again isnt what I said. Or about what I said. Although its close enough it deserves a reply.
Multiple economists have indicated that wealth inequality is bad. It does not take a phd to understand that removing the purchasing power from members of a economy that is 70% based upon their purchases to function will end poorly. And yes Thomas Piketty does indicate this.
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By the way, did you ever manage to find any of the US government websites that tell you how much "Wealth" really exists?
this is a repeated personal attack. Basically Mircea hopes to draw me into a argument about how wealth is only worth what you can sell it for. I have no interest in the argument so he throws this out every post....Even if its in regards to the science of how nuclear fusion works. No I am not kidding.
snipped the rest as it was posting in response to someone else.....
TLDR - it was all personal attacks or nonsense, with one relevant bit about piketty not saying that wealth inequality was bad. I responded that not only had he said so, but multiple economists agree.
... Multiple economists have indicated that wealth inequality is bad...
And, multiple economists point out the wealth inequality isn't bad at all. Indeed, an incentive to perform is a wonderful thing.
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