Why excessively rich people don't deserve their wealth

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Foo3333
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Why excessively rich people don't deserve their wealth

Postby Foo3333 » Sun Sep 12, 2010 4:29 am

First of all some things have to be mentioned:

-Over historical time most wealth was not gained through "hard work" most wealth was gained by exploiting others (slavery) and people and persons having bigger sticks then the other guy. Most states in existence today came into existence through bloodshed and conquering others laying the ground work political economic changes because of their monopoly on force and the legal system. Institutionalized exploitation.

-The other is large numbers, you can't get billionaire rich if you exist in a small society of 10,000 people, it's a matter of "economies" of scale, it's a nice way of saying you have large numbers of people, if we had computer systems that automatically adjusted prices based on volume of units sold, so that after a certain amount (say 100,000 units) prices were forced down to just above cost to minimize having people having too much power, we'd go a long way to solving the worlds problems. If you're a business person and you sell a million copies of x game, you can't get rich if the size of the market (i.e. people willing to buy what you're selling at x price isn't big enough).

The whole problem though is not the price mechanism itself but the ABUSE of the price mechanism, i.e. the institution of money and property is not neutral, "individual transactions" can indirectly harm others. For instance the process of gentrification is an artifact of how wealthy people indirectly harm poor people see here:

http://en.wikipedia.org/wiki/Gentrification

This all comes about by people being able to set their own prices, in other words, ideally if we want to fix problems in the world we'd have to have come up with new models to deal with the abuse of the price mechanism that comes with economies of scale.

People like to think successful or rich people "got their by hard work" it's a lie, getting rich is merely an artifact of the legal system, property system and large numbers over historical time. If you could live long enough and were confident enough to live off the grid (minimizing all expenses) you too could get rich merely by exploiting large numbers (in this case years of your lifespan).

How people get insanely rich over short periods of time has everything to do with economies of scale. legal chicanery, institutionalized loopholes and very little to do with hard work. Though people would like to believe this myth. If you doubt this, consider that $1,000,000 earning 1% interest a year in a bank account is $10,000 vs 100,000 earning 1% is only $1000.

This is how institutionalized exploitation works in large economies of scale due to geometric scaling effects and the use of money/for profit system. Ideally if you wanted to reign in inequality you'd put limits on how much an individual or group of individuals could accumulate, and you'd allow people to seize other peoples assets when they got too big.

So many problems in the world come down to too few people having too much due to artifacts or flaws in the institutions we've inherited from the past. And it has nothing to do with ideology, socialism vs capitalism. For instance is it really a better world to have billionaires and homeless people within the same society? I doubt anyone with a conscience can believe it.

One must look beyond ideology and the vagueness of ideological language and be able to criticize the institutions we've inherited from the past (especially money and property) to see how flaws in these institutions crop up and effect society in negative ways.
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Re: Why excessively rich people don't deserve their wealth

Postby Artos » Mon Sep 13, 2010 12:24 am

Really?

Seriously? Tell me you aren't being serious, because I think you're trolling.

Still, it's been a while since I've had a good economic debate, so I'll humor you. :)

Your second point is flat-out contradictory:
-if we had computer systems that automatically adjusted prices based on volume of units sold, so that after a certain amount (say 100,000 units) prices were forced down to just above cost to minimize having people having too much power, we'd go a long way to solving the worlds problems. If you're a business person and you sell a million copies of x game, you can't get rich if the size of the market (i.e. people willing to buy what you're selling at x price isn't big enough).


First, putting in a price cap would not solve any problems: it would create a shortage of whatever you are putting the price cap on. People make and sell goods for a profit, and the higher the profit the more suppliers there will be. Inversely, if you reduce the profit you will reduce the number of suppliers. People will decide it's not worth their time and effort if they won't make enough money at it. Secondly, that kind of an artificial cap would cause unstable fluctuations in demand - why should I go buy X Game now, when it might cost less in a week or two? Finally, you contradict the need for a price cap with your final statement: that people won't buy a game if it's too expensive. The market already puts a limit on what a product can sell for, without an aribtrary price cap.

Then you throw out a few other contradictory/slightly confusing statements about prices:
The whole problem though is not the price mechanism itself but the ABUSE of the price mechanism

the process of gentrification is an artifact of how wealthy people indirectly harm poor people

This all comes about by people being able to set their own prices, in other words, ideally if we want to fix problems in the world we'd have to have come up with new models to deal with the abuse of the price mechanism that comes with economies of scale.


1st: The problem isn't the price mechanism. 3rd: No, the problem IS the price mechanism. 2nd: And gentrification? Really? You'd rather see blighted, crime-prone areas in your cities instead of economic development? If you are equating property values with the price mechanism, that is not any kind of "price abuse"; that is simply the value of something (in this case, property) changing as the demand changes.

People like to think successful or rich people "got their by hard work" it's a lie, getting rich is merely an artifact of the legal system, property system and large numbers over historical time.

How people get insanely rich over short periods of time has everything to do with economies of scale. legal chicanery, institutionalized loopholes and very little to do with hard work.


You are very right about it taking more than just working hard; to become "insanely rich" in the modern economy, you have to be smart in addition to being willing to work. The rest of your points are pure class warfare rhetoric with no basis in reality, though. Did Bill Gates get rich through legal chicanery and institutionalized loopholes? Or did he get rich because he helped multiply the productivity of every modern society in the world? Did Sam Walton get rich through the property system, or did he get rich because he challenged and revolutionized the retail industry, creating new practicies and bringing wanted goods and services into markets that had been previously been overlooked, with a fierce emphasis on value?

Ideally if you wanted to reign in inequality you'd put limits on how much an individual or group of individuals could accumulate, and you'd allow people to seize other peoples assets when they got too big


Only if you wanted everyone to live in the equivilent of a third world country. What is the incentive to produce, if you can't keep your profits? How big is too big? I think, from other posts, you live in Canada. In 1999 the median net worth for the BOTTOM TEN PERCENT of Canada was $1,000. The next group (the 30th percentile, or all the people between the bottomw 10% and bottom 30%) had a median wealth of $37,000. According to the United Nations University World Institute for Development Economics Research, you would only need $2,000 to be in the TOP HALF, globally, and $61,000 to be in the RICHEST TEN PERCENT of the world. So, the chances are very high that you yourself are one of the rich, and if you own your home you are quite probably in the top 10% of the world - does that mean you wouldn't complain if the government siezed all of your assets and shipped them to India?

And it has nothing to do with ideology, socialism vs capitalism.


Your argument has EVERYTHING to do with socialism vs. capitalism. Capitalism: "Let people keep the money they've earned, private property is private property" Socialism: "Everything belongs to the government, we get to decide how much money you can keep. There is no private property." It's a huge simplification, but it's the basics.

For instance is it really a better world to have billionaires and homeless people within the same society? I doubt anyone with a conscience can believe it.


Yes, it IS a truly better world if we allow billionaires and homeless people in the same society. If you reward success, you get more success. If you reward failure, you get more failure. That is basic human nature, elementary-level economics - you get what you ask for. If you tell people "No, you don't have to work, you don't have to take care of yourself, The Government is going to take care of everything for you" ... well, big suprise, they STOP TAKING CARE OF THEMSELVES. I can't understand how anyone with a conscience can support government welfare, trapping those people in their poverty.
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Re: Why excessively rich people don't deserve their wealth

Postby Foo3333 » Mon Sep 13, 2010 2:01 am

Your entire post is Bullshit artistry, how the systems and institutions have come down to us over history are not laws of nature. You are clearly incapable of criticizing institutions so your post means little. You've swallowed your ideology hook line and sinker, people suffer because institutions force them to suffer, not because there isn't enough to go around, especially in developed nations. This is a fact.
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Re: Why excessively rich people don't deserve their wealth

Postby Artos » Mon Sep 13, 2010 1:32 pm

Hah, very nice. It really doesn't make the Canadian education system look good if you are unable to come up with anything more developed than "You're a stupid sheep." :D

Find someone to spoon feed you a rational argument. Until then, I'm declaring myself the winner by default. /thread
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Re: Why excessively rich people don't deserve their wealth

Postby Berny_74 » Mon Sep 13, 2010 4:07 pm

You know - I was enjoying the posts of this debate but it seems to have fallen on name calling.

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Re: Why excessively rich people don't deserve their wealth

Postby pigsnoutman » Wed Sep 15, 2010 10:11 am

Foo3333 wrote:If you doubt this, consider that $1,000,000 earning 1% interest a year in a bank account is $10,000 vs 100,000 earning 1% is only $1000.


With inflation above 1%, the rich guys loosing more here.
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Re: Why excessively rich people don't deserve their wealth

Postby jamoecw » Sun Oct 21, 2012 2:55 am

the OP skipped over quite a bit of economic stuff in regards to large amounts of money from a single source/person. finding some method that counters all of the issues with lots of money from a single source/person is pretty much what most socioeconomics is about. i have yet to hear of a way that truly did make an improvement on the general modern assumption of how economics works in america (which does differ on how it does actually work, but that is mainly due to politics). ultimately the main premise of his post (as the amount of money a person has increases, the less effect his hard work has on generation of capital).

the second guy to post says that is due to intelligence, making the work worth more, which is true, but still suffers the same fate as the amount of capital increases. he also states that competition drives the price down, so if a person charges too much competition arises to drive the price down, but this assumes that capital is a negligible factor. sometimes it is a negligible factor, other times it is an important factor.

as a person amasses more wealth, the ability for others to compete with his purchasing power diminishes. normally this is diminished due to the fact that one person can only consume so much. sometimes a person can consume all of something within a certain distance, which means that whatever they consumed has to be shipped in at extra cost if others want that thing. the thing can be anything worth something, not necessarily money. money is pretty fluid, but property is not, neither is image or even trust which is generally not associated with capital, yet are known to be worth a dollar amount.

there is a moral issue with putting a dollar amount on a person's life, which also is a resource that is paid for. what most people don't realize is that when you manage to put a price on a person's time you can then find out how much a commute will cost you labor wise, not just monetary cost via gas, wear on your car, etc. when you then put these factors together, you get an inconvenience cost of which is something which is rarely taken into consideration with free market models.

so if a person buys all of the property in town x, he then can control how much extra people need to make if they work in that town, as well as how much extra money businesses need to make to do business in the town. now if he is bad at economics and increases it at a steady rate without regard to local economics, during down times people will spend more each time, and save less during the upswings each time. which means that people will be forced to move away, based on their intelligence (rate at which they recognize the need to move away), availability for them to overcome the hardships of moving, and the availability of places to move to. as people and businesses move away, the ability for others to move diminishes, since they have less to do so, and it costs more to do so.

when a situation like this happens the property owner then can make deals with the people, doing them a favor by having them pay in installments, accumulating interest on the unpaid balance, allowing the people stuck in town x to live, but not accumulate enough money to leave. the money gained from town x's rent would in fact go to purchasing property in another town, which we shall call town y. town y is far enough away so that the people don't know the property owner, therefore the same thing can happen to town y as what happened to town x.

scary problem, especially since the only way a free market fix to this problem is someone else with loads of capital buying the property of the property owner and being better at economics, not to mention that the property owner would have to sell the land to this new rich guy. now it doesn't sound too realistic, unless you take into account that rent and land value is based on an average of the area, so that the property owner wouldn't have to own all of the property to cause this effect, simply a large amount. if we dismiss this issue do to laws and rulings that favor the rentee, consider that the principal demonstrated simply has to do with market saturation, and thus isn't stuck to just property, just things that require startup costs, and the higher the startup cost the easier it is for this effect to happen.

so in short:
capital x generation = (time [finite supply] + intelligence/skill [diminishing returns] + capital y[increasing returns in most cases])/total capital x in region or market
so as one generates capital it becomes easier and more efficient to generate more capital, and you typically generate a different sort of capital than is used in the generation of the capital.
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Re: Why excessively rich people don't deserve their wealth

Postby jeffryfisher » Mon Nov 12, 2012 11:04 pm

The freedom to set one's own prices can't by itself violate another's rights. If you don't like somebody's price, then you just don't buy (or sell). A freely set price is harmless until the gov't gives it monopoly power.

True, most of history was coercive victimization. However, that is totally irrelevant to those of us who today live in a free society. What is relevant is that the OP would replace today's freedoms with his own brand of coercion, and then the rest of us would suffer (unless we happen to be among his friends and family). Or, maybe he's a munificent dictator, in which case we have only to fear the knife-wielding assassin who would replace him.

I'd rather keep my freedom. I won't resent those who own more than I, as long as they acquired their wealth because of productivity, not force of arms.
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Re: Why excessively rich people don't deserve their wealth

Postby darris321 » Sat Oct 26, 2013 11:07 am

The problem is not wealth, but unearned wealth. In the present system, a person is able to monopolize something the creation of which he/she had nothing to do with.
Example: land.
Land was not created by anybody, and yet the use of land is a necessity for existence.
You are entitled to the fruits of your labor. Capital can be said to be a fruit of your labor because if you pay for it, the money must have come from some voluntary exchange somewhere down the line.
Land, however, is not the fruit of your labor (and remember as you read this that gentrification makes land values go up).

Nobody created land, therefore nobody can own land. If you want to monopolize land, you owe to the community a ground rent because in claiming that land, you are stealing from what was in the commons before.


Furthermore, the value of a site is wholly caused by the community around that site and not by the owner of the site itself. So if in 1680 you purchased a plot of land in the middle of nowhere for $1 and passed it on through your bloodline until today where it turns out Times Square has popped up around it, that land will be worth hundreds of millions of dollars without you or your posterity having done a single ounce of work.

I believe that the government could be funded without taxation or with very little taxation by charging for temporary government granted monopolies. i.e. you can't own land, you're merely renting it from everyone else.

There are several benefits to this.
1. Our current tax system subsidizes vacant lots and discourages development which leads to homelessness, unemployment, and high rents.
-------a. A property tax means that if you want to improve your property, you're going to pay more money to the taxman. A land value "tax" would mean that you would be encouraged to use that land to highest economic effect. You would want more tenants in less area so you would build UP instead of OUT. It would also make the problem of vacant plots of land disappear because the owner would either "use it or lose it". This would have the effect of lowering land values which lower rent by increasing the supply of rentable units. Lower rent means lower homelessness and lower poverty.
--------b. Lower rent also leads to fewer mortgages which means that a "real-estate crisis" would have almost no damage whatsoever. It smooths the boom-and-bust part of real-estate.
2. It fixes our current backwards system:
-------a. At present, your income, property, and sales taxes pay for public services. So your income, property, and sales taxes build some school or other infrastructure in your city. What happens next? Land values in the area around that infrastructure go up. So the landowner who owns land near that infrastructure pockets the increased value. In other words, the work of the public is being harvested by the private landowners AND the work of the private (income, sales, property) is being harvested by the public in the form of taxation. With land rent collection, infrastructure becomes self-financing.
It's utter nonsense.

I prefer a 95% "tax" on land (so the market still decides the price) which is collected monthly and assessed often so any changes will be reflected in monthly rent. If someone builds a sewage treatment plant nearby, land values go down for everyone, so their monthly bill goes down, too. They are rewarded for their sacrifice.

All government monopolies should be rented out in order to fund government. That includes land, but it also includes the electromagnetic spectrum. Did you know Verizon owns light in the United States? Not visible light, mind you, but light nonetheless. Surely if anyone owns light, it's everyone.
I believe the electromagnetic spectrum should be leased out to the highest bidder.

All natural resources are common resources, so the exploitation of them should come at a fee. Alaska actually does this with oil. The state of Alaska has declared that all oil in Alaska belongs to the residents of Alaska so when someone wants to drill, they pay $X. That money lessens the tax burden and whatever is left over gets split up among all the residents equally. We could do it will ALL natural monopolies.

I also believe copyrights and patents should be paid for on a graduating cost. You could hold the copyright forever, if you wanted, but it becomes more and more expensive the longer you do. Even if it starts at $20/year and doubles every year thereafter, it would be $20 million in 20 years.

Finally, I support a system of a dwindling number of emissions permits sold to the highest bidder. The earth belongs to all of us, so anyone who pollutes it has to answer to all of us.

Anything left-over after the collection of rent from government-granted monopolies would be split up among everyone equally as in the case of Alaska. This would encourage people to become politically active and watch how the government spent its revenue.
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Re: Why excessively rich people don't deserve their wealth

Postby darris321 » Sat Oct 26, 2013 11:13 am

jeffryfisher wrote:The freedom to set one's own prices can't by itself violate another's rights. If you don't like somebody's price, then you just don't buy (or sell). A freely set price is harmless until the gov't gives it monopoly power.

True, most of history was coercive victimization. However, that is totally irrelevant to those of us who today live in a free society. What is relevant is that the OP would replace today's freedoms with his own brand of coercion, and then the rest of us would suffer (unless we happen to be among his friends and family). Or, maybe he's a munificent dictator, in which case we have only to fear the knife-wielding assassin who would replace him.

I'd rather keep my freedom. I won't resent those who own more than I, as long as they acquired their wealth because of productivity, not force of arms.


How can that possibly be irrelevant?
If you steal land from the Native Americans and then keep it for 300 years, they still don't have it and now they're poor and you still do have it and now you're rich. You yourself, perhaps not, but it is certainly violence/privilege that put you there, not voluntary exchange. That's why I posted what I did.
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Re: Why excessively rich people don't deserve their wealth

Postby Matt Beaumont » Tue Oct 21, 2014 5:30 am

jamoecw wrote:so in short:
capital x generation = (time [finite supply] + intelligence/skill [diminishing returns] + capital y[increasing returns in most cases])/total capital x in region or market
so as one generates capital it becomes easier and more efficient to generate more capital, and you typically generate a different sort of capital than is used in the generation of the capital.


As with the rest of your post - "nail on head" sir ;)

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