Why do middle class people hate the 1% ??? (tax, spend, society)
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Wow that's some seriously epic stat spinning right there trying to throw in corporate taxes and so on and then it doesn't even prove your point to begin with.
Not my spin. The stats are the findings of the joint efforts of two liberal think tanks. And it does prove my point. I can't help it if people refuse to understand and acknowledge the truth that even the liberal think tanks publish.
I would only agree with that if all we had was a capitation tax (every able-bodied working age non-student adult pays the same amount), with people free to earn as little or as much as they can/wish, and free to save/invest or not save/invest as much as they choose.
You need to read The Millionaire Next Door.
What you refuse to recognize is the actual nature of wealth in this society.
There is a saying about money, it goes "When you have no money, you do all the work. When you have money, your money does the work for you."
I think many people imagine wealth in the mythologized version of wealth accumulation. I'll call it the "man who builds homes with his own hard work" story.
In that case, yes, he really does build the wealth of society. Increasing the total value held by society with his labor. But the vast majority of the wealthy do not produce wealth in this way. The vast majority of the wealth produced and owned by society, is the result of speculation and nothing more. It isn't real money, it isn't real value, its completely fake.
And while it might be true that if you get an education, work hard, and save; You might eventually accumulate a lot of wealth in the form of "stock value". But it still doesn't mean that you actually built any wealth. The wealth in question is just pieces of paper which have no intrinsic value. Nor do they necessarily even add value to society.
One of the highest paid professions in this country is a hedge-fund manager. But what wealth does he produce? Does he grow food? Does he even enable people to grow food? Does he build houses? Or enable people to build houses? What does it do? He speculates, and nothing more.
Now, there isn't anything inherently wrong with speculation. But the reality of finance is a lot different than what people think of finance. We aren't living in a day of "Austrian economics". Bankers don't really need the "reinvestment of the savings of individuals". Bankers have unlimited access to capital through the Federal Reserve system, at interest rates which would always be below market rates. Basically, they don't actually need a single dime of your savings. In fact, there is basically no point whatsoever in saving money at all. When people think they are saving money, all they are really doing is "investing". But what that means in principle, is that you are helping to bid up the value of stocks by increasing the total amount of capital being devoted to market speculation.
As I tell my friend all the time, I could make a lot of money if I wanted to. It isn't all that difficult. I just have no interest in being part of a system that is run by a bunch of crooks. I would rather spend my time tearing it down.
I'm pretty tired of playing this stupid rigged game, and instead of trying to institute a "tax per head"(IE capitation tax). Which not only would never be passed, but if it actually did, would most likely lead to the French Revolution in south Manhattan.
Rather, instead of being silly, just admit that our entire economic system is artificial. That the government, through the Federal Reserve, creates dollars by bankers borrowing money. That the new money created by those borrowed funds from the Federal Reserve, who created it out of thin air, is used generally for the sake of investments. Either in housing, or the stock market. Thus, all new money immediately goes into inflating some form of the equities market. And that, whoever has first access to this money, especially at below-market interest rates, gets to purchase effectively "undervalued" assets.
Just admit that people who are in certain advantageous positions in this financial empire, can make such ridiculous amounts of money, only because of the actions of government, or as a result of things which the government has created or enforces.
Or really, just admit that licensing laws create artificial scarcity, which drives up costs. Just admit that professional lobbies intentionally restrict the number of people allowed to pursue specific careers for the sake of maintaining artificial scarcity and thus their higher than free-market value wages. Admit that government is involved in every part of the economy. From subsidies to farmers, to subsidies to sports teams, to subsidies to alternative-energy companies. To the extent that wages, and especially wealth from investments, is simply a product of government intervention. Not the result of a free market.
If you admit that our government is what creates the actual gap between rich and poor, that without government, there would be no such thing as rich and poor. Then maybe you will begin to understand why your idiotic "capitation tax" is a really really really bad idea.
Though I still might entertain the idea as long as I was afforded an "opt-out clause". Whereby I can choose to secede from the country(with my property in tow), if I decide that I have no interest in being part of a system that I don't agree with. A system that unfairly enriches some at the expense of others because of government manipulations.
As for the issue, trust me, wealthy people are the biggest beneficiaries of our system. Why would any sane person think otherwise?
And the reason why I'm such a critic of our system, is that I find it fundamentally immoral, and it even breeds greater immorality. And not for the reasons you would think. Not because there are rich and poor. Not because some have more than others. I could really care less if I was a pauper. And I'm not overly concerned with living forever. I could die tomorrow for all I care.
My major complaint about our system, is that it glorifies and puts into positions of power the absolute worst kinds of people. Our system rewards the worst personality traits that exist in man. I feel like our system not only doesn't reward virtue, but is even hostile towards it.
Last edited by Redshadowz; 02-06-2015 at 06:50 AM..
What you refuse to recognize is the actual nature of wealth in this society.
There is a saying about money, it goes "When you have no money, you do all the work. When you have money, your money does the work for you."
Which literally has nothing to do with the fact that 80% of millionaires earned their own wealth. You really need to read The Millionaire Next Door, last updated in 2010.
Which literally has nothing to do with the fact that 80% of millionaires earned their own wealth. You really need to read The Millionaire Next Door, last updated in 2010.
I think you are misunderstanding the nature of "earning wealth".
Look at it this way, I know a guy with millions of dollars. He made his wealth by "flipping houses". Part of it was just exploiting the housing bubble when it was hot(the housing bubble was a product of government intervention, Federal Reserve low-interest rate loans, Fannie and Freddie, Community reinvestment act, etc).
He also made a lot of money buying "foreclosures" at "sheriff auctions" by working out deals with the other investors not to bid against each other. Allowing them all to snag up properties artificially cheap.
He told me he made $40,000 on one property, and all he did was mow the front lawn and then put it up for sale.
He was making upwards of a million a year, and he was doing almost no actual work.
I have another friend who has several million invested in rental properties, and he just hires a property manager to handle pretty much everything. He checks up on his rentals periodically, but largely just collects the money and blows it in Vegas.
I have another friend who knows a lot about stocks. And last time I checked, he said he was making $50,000 a year doing something having to do with options on the stocks. Something about if the stock goes up or down in price, he could collect the difference because he was somehow retaining the right to the options even after he sold the stocks.
The point is, the term "earning wealth" is very misplaced in regards to how the vast majority of people get their wealth.
When I think of "earning wealth", I think of "making something of inherent value". The vast majority of people who are accumulating wealth, aren't really making anything.
For instance, a few years back, I had about $100k invested in a stock called AGNC. It was yielding nearly 20% a year on its quarterly dividends. Basically, I was making about ~$20k a year doing nothing. Did I earn that money?
What was AGNC anyway? Why was I invested in it? Well, it was an MREIT. Basically, it was a broker in "mortgage-backed securities". I jumped into it because it was rated as buy because the Fed was going to keep interest rates really low for the foreseeable future and I didn't see a lot of other options. I got in at about ~$27, I received five $1.40 dividends, and then got out at around ~$29(total value increase from $27 to $36, or about 25% in about 1.3 years).
I remember I was pretty upset, because the stock jumped to like $36 within a few months after I sold it. But I made more money off that stock than a lot of people make in a couple years of work. And I didn't do anything. Nor was the company I invested in really making anything either.
I took part of that money, I bought five acres at auction, and turned around and sold it for a $20k profit within about two months. Didn't really do much work, other than sit through a few days at a tax auction, and then have to write up a "quit-claim deed" at the county building.
The point is, I don't think I earned any of it. I didn't really produce anything of value, I just extracted the value that other people created. And I actually feel more guilty about it than anything.
If I was to give you some advice that I didn't see listed in the synopsis of the book you linked. That is, always listen to other people with ideas. When I go to an auction, I love listening to the people talking about their plans. It gives you "angles" that you might not have thought about.
I promise you, there are so many ways to make money if you know how, without much effort at all. The main thing is, you normally need a significant amount of capital to get started.
I would love to become friends with anyone on the senate finance committee. Nothing I like more than buying on a rumor, especially if that rumor comes from a government insider.
I think you are misunderstanding the nature of "earning wealth".
Look at it this way, I know a guy with millions of dollars. He made his wealth by "flipping houses". Part of it was just exploiting the housing bubble when it was hot(the housing bubble was a product of government intervention, Federal Reserve low-interest rate loans, Fannie and Freddie, Community reinvestment act, etc).
He also made a lot of money buying "foreclosures" at "sheriff auctions" by working out deals with the other investors not to bid against each other. Allowing them all to snag up properties artificially cheap.
He told me he made $40,000 on one property, and all he did was mow the front lawn and then put it up for sale.
He was making upwards of a million a year, and he was doing almost no actual work.
You just described a lot of work.
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I have another friend who has several million invested in rental properties, and he just hires a property manager to handle pretty much everything.
Where did he get the millions to invest?
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I have another friend who knows a lot about stocks. And last time I checked, he said he was making $50,000 a year doing something having to do with options on the stocks.
Also work.
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The point is, the term "earning wealth" is very misplaced in regards to how the vast majority of people get their wealth.
When I think of "earning wealth", I think of "making something of inherent value".
There's your mistake. People also earn wealth via living below their means in various ways, some of which require extra work when they do without something to save/invest instead.
Benjamin Franklin in Poor Richard's Proverbs: "A penny saved is twopence dear" (often misquoted as "A penny saved is a penny earned")
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For instance, a few years back, I had about $100k invested in a stock called AGNC.
Where did you get that $100k? Did it magically appear out of nowhere?
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I promise you, there are so many ways to make money if you know how, without much effort at all. The main thing is, you normally need a significant amount of capital to get started.
You have an odd definition of work. Any effort expended at all is... work. Some people work smartly, and therefore their work requires less effort.
Every time I see someone talk about jobs, I really have to question their knowledge of economics or their grasp on reality.
First, jobs are not absolute, they are dynamic. Basically, there are an infinite number of jobs. If you just went and looked outside, I would bet you could find thousands, or hundreds of thousands of hours of work that would be beneficial but isn't being done. If you own a home, I would bet you could find thousands of hours worth a work that needs to be done within any given year. Especially if you wanted to grow your own garden.
Now, the reason why that work isn't being done, is related to the cost of hiring someone else to do it vs the value someone places on their own time.
If everyone had equal skills and equal incomes, there would be no point in hiring someone else to do work, you would just do it yourself. If everyone did their own work, there would be no exchange of currency. And no exchange of currency means no incomes to tax, no sales to tax, no nothing to tax. Obviously this creates a variety of problems, especially for governments who need tax money.
As a result, our government has spent most of the last couple hundred years creating a system which drives people to "work for someone else". Of course, for someone to want to hire someone else, he must value his own labor far more than he values the labor of others. Thus, in order for anyone to be hired by anyone else, one has to earn far more than the other. Thus is why you are often told that "the rich create jobs".
But the general concept of "jobs" assumes that this relationship is actually beneficial to society as a whole. And it more importantly assumes that this relationship is voluntary, and is simply the natural outcome of market economics. But nothing can be further from the truth.
The truth is, our government operates largely as a business. Its goal is to increase its own revenues, and it structures society in a way that maximizes "apparent profits", regardless of whose hands they fall into(though it does try to "correct" it somewhat with redistribution).
This is why you hear people constantly talking about our GDP and economic growth. They repeat it all-day everyday until it is a weird obsession. Doing everything they can to increase the apparent size our of economy.
I remember someone talking about how a "stay-at-home mom" would be worth like $50,000 a year(if you consider the value of her cooking, cleaning, babysitting, among other things). But what good is a stay-at-home mom to the "state"? None at all, its far better to encourage her to work outside of the home, then you can tax her, and she will increase GDP.
What good is "homeschool" for the state? No one is getting "paid" in that arrangement. What good is even communal welfare assistance? That isn't "economic activity". Someone doing their own electrical or plumbing? Someone building their own house? How about we force them to hire a "professional" instead. That'll bump up economic activity.
Basically, the system increasingly forces us to "work for someone else" to survive. The system artificially inflates the costs of almost everything, making it nearly impossible for anyone to own anything. And even if you do own something, like a house or a car, you are forced to pay a number of taxes, fees, and even insurance on a regular basis. Thus, you must constantly stay working, usually for someone else, just to stay afloat. Thus everyone must always be out "begging for jobs", and thanking the rich people for being so nice in providing us the jobs which we wouldn't need if it wasn't for the manipulations of the government in the market.
If we all worked for ourselves, we'd all be building our own homes, growing our own crops, making our own clothes, etc.
If you want to live like a settler on the prairie, be my guest. In the meantime, I'll enjoy a much easier life with the conveniences I like to have while being "forced to work for someone else".
I'm also guessing the mechanics working on those jets and the pilots flying those jets aren't too keen about being Little House On The Prairie".
If we all worked for ourselves, we'd all be building our own homes, growing our own crops, making our own clothes, etc.
If you want to live like a settler on the prairie, be my guest. In the meantime, I'll enjoy a much easier life with the conveniences I like to have while being "forced to work for someone else".
I'm also guessing the mechanics working on those jets and the pilots flying those jets aren't too keen about being Little House On The Prairie".
Exactly. The complete failure of so many to understand how much the wealthy stimulate the economy is really mindboggling. How can people be so financially and economically illiterate? Oh, yeah... public schools.
He got started from money from his father. Then built it up into millions by exploiting sheriff auctions/foreclosures. He got started back in the 80's, and said the laws/rules back then were a lot easier to make money with. Now all bids start at like 2/3rds the appraised value, so you can't get nearly as good a deal. Now he sticks primarily to tax auctions and direct buys.
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Originally Posted by InformedConsent
There's your mistake. People also earn wealth via living below their means in various ways, some of which require extra work when they do without something to save/invest instead.
I think we just have a difference of opinion about what wealth is, and how you earn it.
I don't really agree with the idea that money is wealth. To me, wealth is to improve something. It is to create something more useful than what you started with.
If you buy a property, do nothing to improve it, then sell it for a profit. You aren't improving it, you aren't making it more useful. You are merely exploiting a system to extract the fruits of other people's labor.
Let me explain it like this, I got my start in business when I was playing a video game called "World of Warcraft". I was creating in-game items through professions, selling them for gold, then selling the in-game gold/currency for real money through paypal.
Anyway, I remember I had a code of ethics, where I would imagine myself not as someone exploiting a market. But rather, someone providing a service.
I had friends of mine in the game who never produced anything, but would merely find stuff that was being sold cheap on the in-game auction house, and then buy it and jack up the price. They weren't producing anything of value, nor were they providing a service, they were just trying to exploit a system for their own gain, but in the process they drove up the costs for other people.
To give you a real-life example of this same kind of behavior. I had a friend of mine who would find people giving away "free stuff" on craigslist. He would go grab the free stuff, then sell it after a few days for a profit. Sometimes he would get stuff that was worth a lot, like he would get refrigerators, stoves, dishwashers, etc.
And while it is true that he did have to "work" to get those free items, since he had to pay attention to craigslist and drive to pick these things up. In reality, he merely took something that was free away from someone who might have needed it, and then jacked up the price.
I remember reading an article about some band who was having a concert, and band wanted to keep the price of the tickets down so that people could afford to see his "last concert". Anyway, they have these automated programs that can buy tickets really quickly using a variety of credit cards. And I guess like less than a minute after the concert tickets went on sale, they were all bought up by those automated programs. Then the people who bought them all up, turned around and jacked up the price of the tickets from like $25 a ticket, to like $200 a ticket.
Did they do "Work"? Yes. But did they create anything of value? No.
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Originally Posted by InformedConsent
Where did you get that $100k? Did it magically appear out of nowhere?
Part of it I had already, but the vast majority came from a life-insurance policy that I was the beneficiary of when my mother passed away.
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Originally Posted by InformedConsent
You have an odd definition of work. Any effort expended at all is... work. Some people work smartly, and therefore their work requires less effort.
I wasn't really talking about work necessarily. I was really talking about the creation of wealth, and whether people really deserve it.
Look at it like this, everyone always jokes about how "If I won the lottery, I would invest it and live off the interest". They aren't really wrong. If you were to toss some money in an S&P 500 fund. The average return on investment would be over 10% a year. If you had $100 million, you would make more than $10 million a year in a return on investment.
The way you seem to look at the world, appears as if you believe the simple act of driving to the store and buying a ticket is the equivalent of doing work. Or the act of purchasing S&P mutual funds is the equivalent of doing work. That effectively, any road that earns you money, if you had to lift even one finger in the pursuit of that money, then you did work, and therefore you earned it.
I'm not really sure if I can agree with your sentiment. I believe that some money is far more earned than others. And some money isn't really earned at all.
If you have wealth that you didn't really earn, then as a general rule, you benefited at the expense of someone else.
In the case of the whole "living off the interest of an investment". What you are doing, is taking advantage of a system which enables you to live indefinitely off the labor of others.
Imagine for a moment that you could actually "live forever". Then if you could live off your investment. Then what that means, is that others would be providing you their labor, forever, and you would never have to do any work ever again.
He got started from money from his father. Then built it up into millions by exploiting sheriff auctions/foreclosures.
That's work. He had to research the auctions, go to them, bid successfully against others, etc. There's also paperwork that needs to be completed and filed after such auctions. That's all work. It's not effortless.
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I had friends of mine in the game who never produced anything, but would merely find stuff that was being sold cheap on the in-game auction house, and then buy it and jack up the price.
You just described work. They researched, bought, and resold for a profit.
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To give you a real-life example of this same kind of behavior. I had a friend of mine who would find people giving away "free stuff" on craigslist. He would go grab the free stuff, then sell it after a few days for a profit.
Also work. Wouldn't happen if your friend didn't make the effort to find "free stuff," go and get it, and then resell it.
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I remember reading an article about some band who was having a concert, and band wanted to keep the price of the tickets down so that people could afford to see his "last concert". Anyway, they have these automated programs that can buy tickets really quickly using a variety of credit cards. And I guess like less than a minute after the concert tickets went on sale, they were all bought up by those automated programs.
And those automated programs appeared out of nowhere? Or did someone work to write the code?
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Part of it I had already, but the vast majority came from a life-insurance policy that I was the beneficiary of when my mother passed away.
And someone worked to pay the insurance premiums.
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In the case of the whole "living off the interest of an investment". What you are doing, is taking advantage of a system which enables you to live indefinitely off the labor of others.
You fail to realize that such investment PROVIDES work for others. Please tell me you aren't that economically ignorant. Please.
Ahh see, you're doing it wrong. Do what they do. Drive/Fly to someplace nice, and meet with someone for a couple minutes. Your maui trip is now fully covered.
Plus they can argue that the enhanced speed allows them time to deal with work related things.
It really is a different world.
Greywar, you are delusional. I can't speak for anyone else but that's not how it works in my world. First and foremost, I HAVE ETHICS so I would never schedule a business trip to meet anyone for a few minutes in order to enjoy a paid for vacay. Doing stuff like that will bring you bad juju and karma will strike at some point.
IF I were going on a business trip to a place that had an attraction that I'd like to see i.e. Memphis has Graceland, I'd have to actually have the TIME to visit said attraction which I don't, why? Because I'm too freaking busy trying to make money. If I'm not working, I'm not making money.
Secondly, the only expenses that are paid for are those related to actual BUSINESS being done. If I decide to stay an extra day, my rental car, my hotel, my meals, admission to said attraction would come out of MY pocket and I'd have to use a vacation day on top of that.
A lot of folks slamming successful people do not realize what it takes to be in that boat. In my case, I easily work 16-18 hour days (I'm salary so no overtime for me). I spend roughly 2 weeks out of every month (many times more) traveling and living out of hotels and suitcases, away from my family.
My field is extremely competitive so it's a constant and stressful battle making sure I'm up on the latest technology, best practices and regulatory requirements to stay competitive and relevant while at the same time juggling THOUSANDS of customers to ensure that I am consistently meeting or exceeding their expectations of me and my services in order to retain their business. I could go on and on as this is just the tip of the iceberg but I won't.
On top of all of this, I get slammed because folks don't think I pay "my fair share" when in reality, I pay more in taxes than most of the people I know make in a year. I don't cheat on my taxes and I don't b*tch about them either. I rationalize my tax bill by constantly telling myself the more taxes I pay the more successful I am. Most people would have a stroke after looking at my tax bill. I don't have a fancy, expensive CPA to do my taxes. Me and TurboTax are buds and I know every single "loophole" out there and, if applicable, I use them just like everybody else does. I didn't make the rules or the tax code, but I do take LEGAL advantage where I can and I STILL pay an insane amount in taxes every year.
When I was poor I didn't pay ANY federal income taxes and, like so many others on this board, I was butthurt over those who had money and I also believed "they didn't EARN it" and "they don't pay their fair share" (ironic that I felt this way considering I paid ZERO) until I became one of those people and learned how hard it REALLY is to not only get where I am but stay here and hopefully go further.
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Any effort expended at all is... work. Some people work smartly, and therefore their work requires less effort.
