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Wealth inequality stands at its highest since the turn of the 20th century - the so-called 'Gilded Age' - as the proportion of capital held by the world's 1,542 dollar billionaires swells yet higher. The report, undertaken by Swiss banking giant UBS and UK accounting company PwC, discusses the roles technology and globalization play in the status quo, and appears two weeks after the IMF recommended that the rich should pay more tax to address the enormous disparity.
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(Score: 2, Interesting) by khallow on Sunday October 29 2017, @12:54PM (8 children)
So consider the hypothetical situation where people are given a one in seven billion share of the wealth of the rich as it is. What's the first thing most people will do when handed that crap? Sell it for a fraction of its original valuation so that they can actually get something they could use. That deep discount is why the wealth of the rich is not as much as advertised.
(Score: 3, Interesting) by crafoo on Sunday October 29 2017, @03:07PM (1 child)
So your argument is there are too many people for the spit to work out? OK. That's an interesting direction to go looking.
All wealth is not created equal though, you are right. Wealth gained without the application of personal time and energy should be less protected and taxed more heavily. Interest (money lending), investments, rental of property: all should be heavily taxed. One person amassing huge investment portfolios and massive rental properties isn't necessarily beneficial to anyone. Drive down the incentive (and price) of business properties. Incentivize people to do useful things with their money. Make a hard days work nearly tax-free.
(Score: 1) by khallow on Sunday October 29 2017, @03:55PM
I don't agree. The relatively high ROI on investments indicates to me that we need more of that rather than some institutional discouragement. Further, what happens when you no longer work whether due to desire or illness? Investment is a way to cover that without requiring someone to become a dependent of the state.
(Score: 0) by Anonymous Coward on Sunday October 29 2017, @03:49PM (4 children)
This isn't interesting, it's moronic.
Money in a bank account is not equivalent to money invested in Uber. I can, right now, go to my banks and withdraw all of those funds and get the exact amount that I expect. If I want to sell my stock, it's dependent upon other people being willing to buy. You add up the sum of the money in a bank and that's how much wealth you generally have, it's backed by insurance and so it's a pretty accurate number. But, when it comes to a stock, the number grossly overestimates how much you could get if everybody sold their shares. That value is basically the amount of money that you could raise by selling off all the company's assets.
To conflate the two is the kind of ignorance that's led to the economic problems of the last 30 years. There are different classes of wealth for a reason. They're not all equivalent. And to make matters worse, when wealthy people are able to buy most of the stocks, it distorts the market and leads to decisions being made that ultimately undermine the long term solvency of the businesses themselves. That's where you get the greed and the money grubbing, people buying shares as small investors have the option to investigate and make decisions about the underlying assets in a way that the ultra-wealthy really can't due to the rules in place about buying such large numbers of shares. There's just not enough shares available in smaller companies for the wealthy to be able to put enough eggs in that basket to make the investment worthwhile.
Capitalism doesn't function very well if all the wealth is held by a small number of people and there isn't adequate regulation over how the wealth is dealt with. Seems like you didn't learn a damn thing from the last century worth of economic problems.
(Score: 1) by khallow on Sunday October 29 2017, @04:26PM (3 children)
I don't buy that assertion. The obvious rebuttal here is the vast institutional investments by pension funds, mutual funds, government investments/spending, and similar aggregates of other peoples' money. Wealthy people tend to make good decisions or they tend to lose their own money - it's a brutal survival of the fittest. But people who manage huge piles of other peoples' money (particularly when the input stream doesn't change when making bad decisions) can profit from making consistently bad decisions over decades.
For example, the last global recession due to the collapse of real estate markets through much of the developed world, a key aspect was the pushing off of risks of real estate (via credit default swaps) onto parties clueless and careless about the effects of such risks. A good portion of those ignorant investors were of the above institutional sort.
The obvious rebuttal here is business creation.
For example, the creation of the high tech industry over the past 70 years has resulted in a vast new basket in which to put eggs.
And the obvious rebuttals here are that neither of these preconditions is true nor threatening to be true. But even if they were true, neither is a matter of concern. We have examples (such as derivatives markets) where a small number of participants still manage to generate useful economic activity.
And what of the dealings of wealth needs to be regulated? I can see how markets and similar transactions should be regulated, such as prevention of fraud, externalities, and creation of monopolies and cartels. But the wealth itself doesn't need regulation. It's no business of ours how many mansions, boats, or fancy cars some rich person has. Attempts to regulate that often backfire badly. Loopholes are frequently easy to come by. And whole industries, such as the luxury boat building industry of the US have greatly shrunk because some moral midget decided that rich people should be penalized for desiring fancy boats made in the US.
Perhaps, you would have been better served by giving real world examples then?
(Score: 2) by fyngyrz on Sunday October 29 2017, @04:59PM
Speaking as someone who put a lot of tech into the market, you're welcome. :)
(Score: 0) by Anonymous Coward on Sunday October 29 2017, @07:20PM (1 child)
There's little point in arguing with you, you are so fucking incompetent that you can't even comprehend that you're wrong. Not a single one of your points actually contains any truth to it.
Those institutional investors are only slightly less bad than the individuals with personal holdings of large sums of money. They distort the market in more or less the same way. But, increasingly, the people with holdings with those investors are rich anyways, if things continue the way they are, that's just going to get worse.
Business creation doesn't even remotely address the point about small cap stocks and other small businesses. Large holders of capital are restricted in how they can invest in small companies because they have such a huge effect on the share price.
As for capitalism, what color sky do you see, because you're not inhabiting the reality that the rest of us are. We're seeing market failures going on all over the place because companies are only motivated by profits with no consideration about the consequences of how they're operating. Capitalism doesn't work when the regulators are owned by the same people that own all the companies.
As for your last point, I've read enough posts by you to know that the lack of real world examples isn't the problem here. The problem here is that you fail miserably to understand how economics work and will grasp at any excuse to pretend like these realities aren't real. Providing examples for you to outright ignore wouldn't change that fact.
(Score: 1) by khallow on Sunday October 29 2017, @08:19PM
You can only find truth if you look for it. Perhaps some day you'll be aware of just how full of shit you are in this post. One can hope.
All these rich are so terrible with money... but how are they growing that money so fast then? As to the market distortion (buying or selling a lot of something causes the market to shift in a direction adverse to the large buyer or seller as they make their transaction) of the rich and institutional investors which always works against them, that's one of the ways wealth gets a little more equalized. No reason to complain here about something working as intended.
I hope some day you realize how stupid that statement was. While most small businesses fail, and of those that succeed, most never grow larger, we still have a lot of large businesses today that started as small businesses a few decades ago. The "large holder of capital" can invest in those businesses. Further, if it truly were hard to find stuff to invest in, there wouldn't be such a high return on investment. Skilled investors can consistently find investments in the 7-10% to invest in, after adjusting for risk. For example, large investors have had over the past 70 years: HP, Xerox, Motorola, Intel, Apple, Microsoft, Oracle, Google, Uber, Facebook, and many other high tech and internet based companies that started life as a small company. The valuation of these companies collective is two or three trillion dollars.
But this stuff is like a olive grove. You have to care for the field for many years in order to reap the rewards. In particular, rather than derp on about how there aren't enough businesses to invest in, we should wonder why that is supposedly a problem.
Company failures != market failures. Typical market failures are externalities and being unable to find a good at any price. Some consider cartels and monopolies market failures as well. These do happen all the time in real world markets. But a business failing? It's normal operation of these markets. They don't exist to guarantee success.
As to the regulation failure, it's no better when the regulators are owned by government either. For example, the Grenfell Tower fire [wikipedia.org] was so lethal because no one held the government-controlled towers to the regulated safety standard. Regulation won't work, no matter the system, when the regulators are controlled by the regulated. It doesn't matter the system - so no use singling out capitalism for special attention.
Notice, yet again, not a single real world example to back your mostly empty assertions. And a bad case of projection to top it off. You've gone through so much effort to make excuses. It wouldn't be much harder to reason.
I suppose we'll have to go through yet another round of whining - claims of no truth in my posts and assertions completely divorced from reality about how rich people supposedly operate.
(Score: 1) by khallow on Monday October 30 2017, @01:05AM