I think if employees feel slighted by being fired, they're fooling themselves. The best mindset is that you could be gone tomorrow. It gives you clarity and purpose. It also happens to be the truth.
Coinbase was also extremely generous with severance. 12 weeks plus two for every one year at the company, I think. I've had the experience of being let go without notice and without severance.
Devs seem a little more grizzled this time around, so I think this mindset is slowly becoming the norm. College grads seem skittish, but they always are.
People keep pointing to Armstrong's $110M house like it's some sort of injustice. If you think billionaires should exist at all, then that's one of the least-bad injustices imaginable. It's probably true that no Armstrong, no Coinbase, and 10% of Coinbase is the prize.
People keep pointing to Armstrong's $110M house like it's some sort of injustice. If you think billionaires should exist at all, then that's one of the least-bad injustices imaginable
Ok, I'll admit it, billionaires should not exist at all, there should be a heavy wealth tax that makes it hard to become a billionaire. Will a CEO work less hard if he (and his peers) can only ever gain $100M in net worth before a wealth tax on assets kicks in?
A wealth tax implies a tax on unrealized appreciated assets, which is beyond bizarre IMHO. So you buy a house for $500k somewhere. It surges in value to $1.2 million. You therefore have an unrealized capital gain of $700k. You are NEVER going to get that money until you sell it, and when you do you are going to pay a whopping amount of capital gain tax. But a wealth tax implies you pay that capital gain tax now. Okay so let's say you do. Then a year later there is a major correction to the real estate market (hmmm ... 2008). Your $1.2 million property (on which you paid a huge amount of wealth tax) is now worth say $700k. Do you get a tax refund? You never got the income. You should never pay the tax. No different if it is a $500k property or a $1 trillion company. It is not wealth until you have it.
> A wealth tax implies a tax on unrealized appreciated assets, which is beyond bizarre IMHO.
No, it doesn't. For example, if I'm super rich and take out a loan using unrealized assets as collateral, then I could be taxed on the loan amount received. There are several such strategies that either force the sale of unrealized assets or tax other portions of the transactions when those unrealized assets are used as collateral.
What is bizarre is that somehow people making less than $200,000 a year can be heavily taxed while if you're a multi-millionaire or billionaire, suddenly things become so drastically difficult that you couldn't possibly be taxed on anything you do with your monopoly money.
The example you gave is, quite frankly, pointless in the context of discussing billionaires. Discussing real estate assets far less than $2 million is completely irrelevant to a discussion about people with net worth exceeding hundreds of millions of dollars, if not tens of billions of dollars.
> It is not wealth until you have it.
If that's true, then stop allowing people to turn it into wealth, which they do all the time.
This is actually not entirely true depending on how your structure your spending. In particular in the United States (the context for Coinbase's employees), the basis used to compute capital gains resets when the items are inherited when you die. So if you have enough wealth to take out loans on it until you die without ever needing to liquidate the wealth, your estate and heirs (again through some sophisticated accounting) reset the capital gains basis, and then can pay off the loans with the appreciated assets and completely avoid capital gains. ProPublica did a very detailed investigation on this in mid-2021 (https://www.propublica.org/article/the-secret-irs-files-trov...)
Depending on the jurisdiction, property taxes are usually a function of the property valuation. So at least if the property value goes down, theoretically so do your annual property taxes. The problem with a theoretical wealth tax, is that when the asset value goes down, too late you've already paid your wealth tax.
If my house is worth $1M in 2022, I pay tax on that $1M of value. If it goes down in value to $500K in 2023 (and is reassessed), I'd pay tax on $500K value in 2023.
If I own $1B of AMZN in 2022, I'd pay wealth tax on my $1B holdings in 2022, if the market tanks and AMZN is worth $50M in 2023, then I'd pay the wealth tax on $50M in 2023.
Just as with property taxes, a wealth tax is generally annual based on current assets.
It only feels weird because there is a concerted effort to make you feel that way. It is absolutely identical to property taxes on homes, but that doesn't make people feel icky in the same manner.
> but that doesn't make people feel icky in the same manner.
speak for yourself! a property tax makes sense in theory: you're contributing to the entity that ensures your land is safe in the first place, but basing it on valuations instead of something like flat rates based on sqft is preposterous.
I'd go so far as to say that the degree to which the knowledge of such a tax affects your decisions relating to the property is enough to constitute a violation of natural property rights.
There are no “natural property rights”, there’s what the person with the bigger stick can enforce.
But let’s take your premise. The more valuable the land, the more an entity will spend to procure it (bigger army etc), and the more you thus have to spend to defend it, thus the more it costs.
It's not as if I stole the money I bought my house with, the house I'm living in now. I paid taxes on them and keep paying taxes on the money I'm earning now. I really don't see why I have to pay a tax on something I already paid for. Taxes on taxes...
Oh crap you've discovered the loop-hole into which the billionaires are going to disappear! They are going to get massive loans to take their companies private and never have to pay that stinking wealth tax again. No more audited financial statements either. But the interest on their loans will be income tax deductible.
To be honest, we're dealing with this in the context of a really weird situation; that is the curious case of the existence of the billionaire! How strange is it indeed, that in a democracy there can arise individuals with access to such ridiculously outsized and concentrated power (relative to their individual contribution)?
When the equivalent power of millions of people can become concentrated into a single person, you get all sorts of weird consequences! Most of them not good for the public as a whole, and often with a corrupting influence on liberal democracy. It is indeed fitting then, that a solution targeted at this very rare and specific problem would look a little weird; even though it's extremely similar to the existing property tax that every home owner pays.
I mean, it also feels weird to have to pay anyone just for.. making money through labor. Why owning something should be any different than making the money to buy it in the first place? If anything, taxing money as it is earned really hurts the potential compounding effect.
Why would you get paid for owning stuff? Are you talking about dividents?
I think that’s more being paid for having given someone a whole bunch of money up front, that they can now use to more quickly earn enough money to pay you (loan in a different name).
I'm actually in this situation on my property taxes.
In San Francisco there is a 2.5 month window to appeal your property tax assessment. I did that for 2020, and was successful (the hearing was like a year+ later) and they gave me a refund.
I failed to do it for 2021, because I was under the mistaken assumption that they'd they'd also adjust my 2021 assessment after my appeal. They didn't. I guess that's on me?
I just sold that property for a loss and 15% less than my tax assessment, and I'm well past the appeal period for 2021/2022 sales tax year. So I think I'm out of luck. I just over-paid by 15%.
I thought things are capped in California, that Under Proposition 13, the annual real estate tax on a parcel of property is limited to 1% of its assessed value. This "assessed value" may be increased only by a maximum of 2% per year until, and unless, the property has a change of ownership? No such joy in Texas (yet).
It's definitely One of the reasons. I've compared some real estate prices in some low-cost areas to relatively high-cost areas, and found that once factoring in property tax, the actual cost was close to the same.
Thank goodness you did not buy that property for cents on the dollar 30 years ago and now have to also pay a fictitious wealth tax on the property when it was at the peak of its "value". Count your blessings.
Your point seems a little orthogonal. If I pay tax on X value in year 1, value goes up and now I pay X*1.1 in year 2, then back to X in year 3 because the home value lowers again, I don’t get a refund for the extra 10% paid in year 2 despite the fact that I never realized any value in the fact that my home appreciated for a year.
So in 2020 I inherit $16k and decide to buy 1 BTC for $16,082 on Nov 12, 2020. Later that day the wealth tax department is created and levies a 20% tax on all unrealized appreciated assets. Your reporting day is on the anniversary of the original asset purchase. So a year later (Nov 12, 21) Bitcoin is at $64,400. My accumulated unrealized appreciation is $48,318. I file my wealth tax return and have to borrow the $9,663.60 to pay my wealth tax. Bear in mind, I still own my 1 BTC. Have not sold it. Have not enjoyed these promising riches. Six months later BTC is $40k and sliding down in price. By Nov 12, 2022, at the end of the 12 month reporting cycle, let's say BTC collapses all the way to $5k. I sell my 1 BTC for the $5k, and now own nothing but I am "happy" to only still owe $4,663.60 on my wealth tax loan.
Sounds a lot like the AMT situation for stock options where people pay taxes on the paper value of the stock when exercised, even if they don't (or even can) sell it -- the IRS can provide a way to recover taxes paid on unrealized gain if you sell the asset at a loss from where it was taxed.
But I'd recommend selling enough of your BTC to pay taxes so you're not underwater if it goes down in value.
why do we need to keep growing gov't and adding more and more rules/programs/etc.? Certainly we don't need to keep spending more and more, cut it off and some point and stop growing it for some period..
why do we need to keep growing gov't and adding more and more rules/programs/etc.?
Here's one good reason -- decades of underinvestment in infrastructure. The top tax bracket in the 1950's when the Interstate highway system was funded was 90% - now it's 37% and even that is mostly avoided by the most wealthy.
Another reason is the impending climate disaster -- former arable land will become unfarmable, many coastal areas will become uninhabitable or need expensive flood control, etc. This is going to cause huge costs and will almost certainly require government assistance.
But our tax base is greater now than it was then. And don't even get a trucker started on explaining how many taxes they have to pay. Could it be that corporate lobbyists successfully promoted their questionable projects like the Vietnam war, the Iraq War, etc, etc, to spend our infrastructure budget instead on making defense contractors wealthy?
Perhaps too we can stop irrigating desert and grow things like almonds (and actual food) in places like Iowa (with the most class 1 farm land in the US), instead of Iowa growing animal fodder and ethanol.
Most of these "crises" are self-inflicted crises in management.
For sure, projects like war and the military industrial complex don't help. But while the tax base has grown larger, infrastructure has also grown larger. There are many many more miles of road to maintain, many more miles of cable, many more bridges. Also back then, when this infrastructure was built, they were not hit with maintenance cost. The bridge over there, then it was brand new and would be fine for 10 years with maybe just a quick inspection. Now that bridge has 50 years of rust built up on. But not only that bridge, so does that one and that one and that one. Now our infrastructure has some age and it has a cost to maintain it that was not present decades ago. And some of that rust is because previous generations just kicked the can down the road. Frankly, I am 28 with two kids and I don't want to kick the can down the road for them deal with.
A really interesting read on the rust and cost is the book "Rust: the longest war." It outlines how quickly costs escalate over time when something as simple as Rust is not dealt with and it left to build up.
Err, but you're asserting that we _need_ to grow this revenue without saying why?
Also, 90% top marginal tax wasn't really paid. Look at our historic tax revenue vs GPD. it's remarkably consistent, around ~17-20% no matter what policies we have floating around.
I am certain that we could reduce billions in spending to find money for actually important things. we do not need to keep increasing spending/revenue. we need to decrease spending and keep the same revenue. that's the easiest path.
Not if people living in 'reasonable' properties are not taxed much at all. If a family lives in a 100sqm house, probably should be nothing additional. If they live in 2000sqm mansion, they probably can afford a decent sized tax.
Of course size is not the only factor, which makes it complicated. Land or property value is probably a good proxy. If you house is >$1M it probably means you are wealthy.
Now you get one of two things in each individual case: Either people downsizing (good, frees up property for other people) or people paying tax (good for society).
The problem with this logic is that real estate values are out of control. In my city not uncommon to see stories of families who have owned a home for generation or more being forced to sell it because the value of the land went from $200k to $800k in 10 years and is now taxed as such.
If the value of the land goes up with increased economic activity, but you're not economically active enough to continue living in the area, how is it unreasonable to be expected to sell?
The other side of every "family was forced to sell" is "another family was very happy to move in".
I agree with you mostly, even though it's somewhat heartless and maybe too black and white. I'm from an area where this exact scenario is happening to a lot of home owners.
There is a point where I think it's okay to factor an unexpected large housing market increase into the equation. To raise a community's property tax unrealistically because a mass influx of buyers are willing to overextend their credit doesn't make much sense to me.
Also, I think this applies even more to our current situation and the fact that a lot of these communities had nothing to do with the politically charged economic decisions our politicians made with close to zero debate, and ultimately, the economic fallout it has created.
In my home state in the Midwest I have always thought a better way to go about it in the future would be to factor median salary and wages into the mix. That, along with an unrealistic housing market increase. I'm not sure what unrealistic would be defined as, but median value increasing 2x in five years is definitely unrealistic. At the very least things like this should be debated.
What's the purpose of buying a house if you can't stay in it more or less indefinitely? (Yes, I know people sometimes buy houses planning to only stay in one place a few years, but I would wager most don't.)
You can stay in that house as long as you pay the property taxes. If you can't pay the property taxes, that is a forcing function to get you to move. You aren't entitled to live somewhere all your life. You aren't entitled to have your taxes be subsidized by the next generation of folks so that you can keep living somewhere. It is placing the burden on the next generation of people because you happened to be there first and creates bad market incentives.
Then make it price adjusted for that to some extent. Use medians.
And being forced to sell to some degree is by design. One elderly lady hogging the land that could house 100 apartment dwellings in the middle of a city for example.
“Owning Land” is a human construct.
And it would be no worse than compulsory purchases by government for infrastructure.
Or someone leasing where the landlord wants more rent so they get kicked out.
Got it, so the widow living on a fixed income, in her modest home that was once in a lower middle class neighborhood that has now gentrified, is forced out so that someone really contributing to society (like FANG employee) can live closer to work? She now has to live somewhere else, what property was freed up exactly, (so no net new housing creation)? (Not even going to address paying tax = good for society)
I live in a "hot" real estate market, my house has appreciated nearly 50% in 2 years. It's entirely possible that it will depreciate 20% or more over the next year.
Maybe you're not aware how these "unrealized" capital gains (at scale) are indirectly realized in the form of loans taken against value of the asset.
Massive wealth doesn't operate in income or even in typical capital gains advantages you're referring to. It operates at a scale where the value of the assets are so great, banks compete to give loans to them, which are not taxed like income.
It's totally absurd to argue that loans from assets isn't income. It's used to purchase more assets, to purchase tax favorable legislation, to buy media to keep us thinking this issue is about paying capital gains on your retirement portfolio.
If Bezos will "never get that money unless he sells stock" was a true statement, then where do all the yachts and houses and other assets come from? How does he buy them? If the IRS suddenly recognized loans taken against asset wealth or any exchange of assets as income, the tax rates of the super wealthy compared to the average American would suddenly look sane.
>It's totally absurd to argue that loans from assets isn't income
That seems kinda whack to me. If I get a $500k mortgage, it's not like I received $500k of income that year-- the house belongs to the bank, and I'll be making payments for 30 years. If I stop paying my mortgage, I'll lose "my" house and have nothing to show for it except an insane tax bill (just like Elon would have to give up some of his Tesla stock if he gets margin called)
The collateralized loans trick was really only semi-viable because of historically low interest rates. SOFR will climb up to the more standard rate of 5-15% APR, which we saw with LIBOR back in the day. At that point, the one-off 23.8% capital gains tax on selling stock becomes more competitive.
A mortgage of that scale isn't even remotely close to how the mega rich operate. How is that example relevant to a discussion about multimillionaires and billionaires? Such a mortgage requires a massive down payment via cash (that was taxed), a non-trivial interest rate, and monthly payments again with taxed cash. The tax rates of such income is likely higher than the capital gains tax. The mega rich get loans in the tens of millions all the way up to billions with paintings, watches, houses, unrealized investments as collateral at ultra low interest rates. They repay the loan with money siphoned off at low tax rates, such as through dividends and even other loans, while the things they used as collateral continue to grow unchecked in value. Like seriously, the capital gains tax is much lower than the income tax rate I pay. How the hell is that not whack if not totally fucked up? Do you think it's okay that the mega rich are incentivized to continue to get richer and richer while receiving the massively preferential loans and tax rates they get? What normal person is getting rich off of a 30-year mortgage, where payments on make up double digit percentages of their monthly income?
>Do you think it's okay that the mega rich are incentivized to continue to get richer and richer while receiving the massively preferential loans and tax rates they get?
I don't think the loan and tax rates are particularly preferential.
Thanks to his twitter deal, he's had to publicize some info about how he gets his money. The interest rates on his loans range from SOFR+3% to SOFR+10%. Those rates aren't that low— even as a non-millionaire I could get similar ones from my bank (https://www.schwab.com/pledged-asset-line).
I pay 2.75% interest on my mortgage. So even Elon's best loan has an interest rate well above my mortgage. By the end of the year, his interest rate is on track to be around 3x higher than my mortgage! And like my mortgage, his loan has a large upfront payment and a minimum amount that must be repaid every year, it's not free money forever.
My effective federal tax rate is 20%. That's lower than the rate that a typical billionaire would pay on capital gains (23.8%).
They are repaid to the bank, which is obvious. No one said they are gifts. They are loaned at ridiculously low interest rates, and the government never sees an ounce of tax from the individual, which is the entire point. Like the person you replied to said, the mega-rich don't operate on income like the rest of us. Why does that make them completely immune to taxation?
Are these loans ever repaid or are you suggesting Bezos/Bill Gates etc have slowly accumulated loans to be paid in some long future. If so there must be some public info. about its stats
I would assume that, yes, these loans are often repaid via other similar loans or instruments that continue to leave unrealized gains as unrealized and avoid taxation. I doubt many multi-millionaires and billionaires publicly disclose or publish the techniques they use to siphon wealth off of society.
It is absurd to argue a loan is income. You get to keep income, you have to return the value of a loan, eventually. The process of unwinding the loan generates tax revenue.
Constant borrowing isn’t a free money machine, eventually you have to earn more to service the debt (income tax) or sell assets to pay it back (capital gains).
> You are NEVER going to get that money until you sell it, and when you do you are going to pay a whopping amount of capital gain tax.
Ignoring the hyperpreferential tax treatment of capital gains, I assume? (LTCG are taxed far less than generic income, which in turn is taxed less than labor income.)
> You never got the income
It's not an income tax, so who cares?
Assets deliver utility while held; income isn't the only utility they deliver.
All of the serious wealth tax proposals I've seen have a rather high floor. A more practical hypothetical would be a person with 10m other assets worrying being taxed on the gains from their 5th vacation home.
This hasn't stopped people from complaining about things. My grandparents are constantly complaining about how the inheritance tax is going to prevent them from willing their timeshares to the family. Even if we show them the IRS website they don't believe us when we say it doesn't kick in below $12m.
I've encountered similar cases, though nothing that drastic, and it baffles me. There are plenty of real problems to complain about with the government, why do people go around inventing fake ones?
Yes, I see your point. 'Wealth' is what rich people have, in which case taxes on it's value don't make sense! That's ludicrous! 'Property', on the other hand, is what normal people have. The value of property must be taxed, for the good of us all! Anything else would be silly.
The capital gains tax may never get paid. You can 1031 exchange the property over and over again and then the gains are zeroed out when passed down generationally.
What’s funny is youre describing the only wealth tax in common practice in the US - property taxes.
The point of wealth taxes (see Texas real estate prices) is to disincentivize rapid asset appreciation.
Texas and California are different in many ways and this is the main one (California income tax vs Texas real estate tax).
California showed (shows) that income taxes only sort of disincentivize inequality, whereas Texas shows wealth taxes very much disincentivize inequality, so much so that the government has to actively lobby to get truly high paying jobs there.
The solution to these problems is not to tax the person, but the company itself: every year a certain faction of stock is nationalized and distributed to the population of the county without which the company would not be possible.
It's the only realistic option to provide a UBI: in a world where human capital is quickly depreciating, provide people with financial capital so that they can still be a part of the resource distribution and consumption game.
> You are NEVER going to get that money until you sell it
If you need to unlock the equity you can get a HELOC. More generally, if you own an asset with a well-known pricing model you can use it as collateral for a loan.
To your second point I believe you do carry over tax losses for some time.
How about an exemption for one house/apartment?
If you use a house for personal purposes, e.g. to live there then your point stands but in case of commercial purposes the tax is something that should just enter your business calculation.
I'm not settled on this yet. I'm from the USA, and one thing that concerns me is the geopolitics of billionaires. What happens when USA taxes billionaires out of existence? Russia and China still have billionaires. Does that do something to the power relationships in the world? Is there such a thing as "our" billionaires?
The other question I have has to do with feudalism. If we let "our" billionaires exist, does that mean that we keep feudalistic pressures at bay? Or do we enhance those pressures? Is that even the right question?
Does that do something to the power relationships in the world?
The fact that you're even asking that is a reason we shouldn't have billionaires -- world power relationships shouldn't be based on the wealth of individual citizens.
For example, what did Musk really talk about when he met with the president of Brazil? Did he represent American interests, Amazon Inc's interests, or Elon Musk's interests?
yeah,true, typo on my part, I was just reading about Bezos in another post and about the Amazon rainforest in an article about the meeting. Too late to edit it now.
Why not btw? I mean, why is it worse for somebody to have power because he worked and invested for decades and made optimal decisions (and probably some luck) than for somebody to have power because he was born into the right family, knows all the right people in The Machine, has nice hair and is able to conceal his rampaging cocaine habit long enough to make himself too big to fail?
I get that "wealth gets power" is not ideal, but the alternatives we can see around don't seem to be much better. Somebody will have the power, and we as a society would need some proxy to use so that it won't lead to a disaster. Being able to create and run successful businesses (yes, I know not all rich people are self-made, etc. - it's an imperfect proxy, but to a large measure a working one) doesn't look that bad, compared to "being born with right last name" or "being born with the correct facial features"...
There is significant income mobility in the US, which is why "the one-percent" discourse consistently fails to resonate with Americans. When 73% of Americans have spent at least a year earning a top 20% income [0], focusing on the inherited wealth of others comes off as whining. As long people feel that the pie grows, and that they can move themselves forward, these observations are at best statistical curiosities. They feel very much of a piece with the deboonkers on Twitter who tell the truck owner/operator facing 50% higher gas prices that technically there's no recession.
My point is that your statistic doesn't mean anything to the everyday reality of normal Americans. If I believe that I can achieve my goals, and the facts suggest that I'm right to do so, why should I care that someone else's parents left them their money?
Banging your drum even more loudly doesn't change the fact that you are off beat.
As I suspected, it counts dollars. Moreover, it attributes any subsequent income for somebody that received an inheritance as "inherited" (up to certain exponential boundary). I.e. if you received an inheritance of $1000, spent it, and in 30 years since you became a millionaire, then the amount of wealth you have up to what you could have if you invested $1000 at certain rate would be still counted as "inherited". I am very far from being qualified to understand the dense math in the underlying article (http://www.piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2...) but with such assumption, I imagine we could arrive at 60%. But it doesn't mean what you think it means.
What do you mean? It counts ownership stakes & stocks as well.
> I imagine we could arrive at 60%. But it doesn't mean what you think it means.
It means exactly what I think it means - if you get bequeathed $1 million dollars and get 8% returns from investing this, it doesn't mean you "self-made" $3.66 million more 20 years later.
It also means that if you get “bequeathed” $1000 and use it to buy tools, start a contracting business, and expand it into a large construction corporation over 30 years, you didn’t “self-make” anything either.
not sure where you are getting this from, maybe you are making it up? but that sort of person would be categorized as self-made minus their inherited $1000 and its expected returns.
It doesn't. But on the other side, if you have 3.66 million 20 years later, it doesn't mean you got it from passively investing that same money at 8% returns. Sure, for some people it could be the case, but it's just one of the possible options.
All this calculation is doing is subtracting expected returns above what they would get from investing their capital. If they also start a business and make more money, that will not be counted as inherited wealth - unless they start a business by spending their inherited wealth and get returns below the growth rate of the economy. At that point, it's up to your interpretation whether they "self made" negative wealth or spent money on a vanity business project. I don't think it is unfair to not categorize those people as self made.
Isn't all that based on the assumption that "growth rate of the economy" is some natural process - like the universe expansion or radioactive decay - that happens regardless of what people do? It appears to me that this growth is rather the result of the effort of "self made" (to the amount of their achievement - some more, some less) people that cause it to happen, one way or another. And excluding it seems kinda wrong to me. Of course, sometimes the effort belongs to one person - e.g. the startup owner - but the benefits are shared with others - e.g. investors - and their function can be treated differently. But it's not what's happening here - here the whole investment capital is excluded altogether. I am not sure it's such a useful lens.
> There's no such thing as too big to fail in democratic politics
Are you sure? Please tell me the top 10 names on the Epstein client list. I'll wait.
> most wealthy people are wealthy because of inherited holdings and 60% of all wealth in the US is inherited.
I'd like to see your sources. They probably counts by dollars, which is pointless, since one hyper-rich individual completely skews the picture - you can have a million self-made millionaires and one Elon Musk's son - and claim that the majority of millionaires is created by being Elon Musk's son. That's an obvious nonsense. It's like calculating average income of a people in a bar where Bill Gates just walked in, and making conclusions that everybody is rich. You need to count people, not raw dollars.
Mine say:
One measure of the percentage of the wealthy who are self-made is Forbes' own Forbes 400 list. In 1984, less than half the people on The Forbes 400 list of richest Americans were self-made. By 2018, in stark contrast, this same figure had risen to 67%.
The market research firm analyzed the state of the world’s ultra-wealthy population — or those with a net worth of $30 million or more. The report, which is based on 2018 data, “showed muted growth” in the number of ultra-wealthy people that year, “rising by 0.8% to 265,490 individuals,” says Wealth-X.
Of those folks, 67.7% were self-made, while 23.7% had a combination of inherited and self-created wealth. Only 8.5% of global high-net-worth individuals were categorized as having completely inherited their wealth.
In current total surveillance panopticon, you can hide transferring a $20 note maybe, but hiding transfer of something that can be called "wealth" is virtually impossible. Especially at scale we're talking about here. Especially if you aren't Pablo Escobar or somebody of a similar caliber.
> I am concerned about the distributional equity of wealth not wealthy people
If you exclude people, I am not sure I understand what you're talking about at all.
When one becomes rich because of one IPO that went right - ok, let's say it's luck. When one creates several successful businesses in a row - no, sorry, I can't say "it's just dumb luck" anymore, it's more realistic to assume there's something else involved.
Yeah, after the first successful IPO, the traveling IPO CEO has contacts at investment banks, media houses, etc and is on a first-name basis with many key analysts. That's why they keep getting brought in to help a company IPO, after you've done one, the subsequent ones are easier.
Taleb has a more succint way of putting it[1], but no it can still be luck just like hitting black in roulette several times in a row can also be luck.
Hitting black multiple times in roulette is always luck (barring cheating).
What the tweet is saying, and it seems right, is that looking at a probability graph the only way to get the billionaire-like outcome/outlier is to dramatically increase volatility, i.e. bet on long odds. If everyone went to work, maxed out their 401k, bought blue-chip stocks, and called it a day, basically nobody would have outlier net worth. But some people choose to increase the volatility of their money (buying crypto, starting a company, options trading, whatever) and as you'd expect 99.9999% of them don't get rich and the rest of them get uber-rich.
> buying crypto, starting a company, options trading, whatever
I think these activities are quite different however. Saying starting a company is the same nature of activity as betting on an extremely volatile asset ignores all the work that goes into successfully creating a working company. Surely, there's no guarantee this work will bring result - but it's still not the same as just betting on random high-volatility assets. Even options trading is not (always) just betting, and for more successful traders probably involves certain amount of knowledge in addition to luck. But I don't think describing creating a company as completely probabilistic activity makes any sense.
The tweet (and me) aren't saying creating a company is "completely probabilistic", just that they're risky. Risky meaning there is an outsized chance vs. an established company that the new one doesn't exist in 5 years and the established one does (where "chance" means looking at outcomes in retrospect, not a roll of the dice).
The tweet is saying that founders becoming massively rich is a natural outcome of probability distribution -- huge payoffs require either huge bets at a smaller win multiplier (less "risky") or comparatively smaller bets at a huge win multiplier (more "risky").
Why? A good reputation and wealthy, powerful friends are very helpful. "When you're rich, they think you really know." Further, how many people were nearly identical after that first success, but then failed to continue with a second?
I don't think anyone who says a billionaire shouldn't have power also believes that someone born into the right family should have power. Ideally those in power should be democratically elected by the people they hold power over and be protected from lobbying attempts by wealthy individuals.
Someone like Elon Musk having political influence is a bad thing because he's raging capitalist that can, will, and does exploit those below him. It's why he has such a love for his Chinese labour force. They have less rights and they will work 16 hour days in his factory making the cars that make him money.
Elon Musk is great as a wealthy private businessman, that's where capitalism firmly belongs. But he has no place in any sort of politics. Countries aren't run like businesses.
I am indoctrinated by the reality I am observing daily. And before you are tempted to tell me "oh, it's because $not_my_favorite_political_party prevents $my_favorite_political party from achieving its true potential as the paragon of democracy" - this happens regardless of your tribal squabbles.
$not_my_favorite_political_party_1 wants to destroy government besides police and military. $not_my_favorite_political_party_2 wants to increase welfare spending. Neither party is focused on good government. Mostly that is because voter dissatisfaction with government is channeled into the two competing ideological camps so that obvious, practical improvements never happen.
There's no party that has anybody elected to Congress (or to a state Congress afaik either, though there I may be missing one or two persons) that wants to even reduce substantially, let alone destroy, government. TBH, let's not be cute and drop "substantially". No major party wants to reduce the government at all. Didn't for a long while. The only disagreement is about how fast the government will be growing and who gets the benefits of the wealth transfers that would follow from that and who gets to control these trillions and get the goodies that come from controlling trillions of other people's money. There are disagreements on other subjects, but on the subject of Big Government the consensus is clear and present. No agency ever gets reduced power (or, the horror, disbanded!) whatever party is in power, the worst could happen is that one party's functionary would temporarily disrupt the implementation of other party's schemes.
At the scale of continental countries like US (or any BRIC country), it is. The decision makers are simply too far removed from the people who get to live with the policies.
Are you advocating against billionaires & capitalism, or against power relationships?
In theoretically egalitarian systems like communism, a committee makes decisions about how to allocate resources. Then whoever holds most sway over the committee holds sway over resource allocation. If you do it by direct democracy, then whoever owns the news media & ad platforms (or has money to do massive PR campaigns and ad buys) holds sway over resource allocation. You can't escape this: somebody is going to make the decisions, unless you just run the world by computers and have humans slot in for menial tasks.
The question is who they're beholden to, i.e. who they derive that power from. The problem with the person with the most sway over a committee being able to make a decision is less because:
1) The fact that it's necessary to "hold sway" is a result of the power not actually being held by that person, but being loaned to that person by the rest of the committee in a way that can be withdrawn at any time.
2) The committee members are all subject to the process that chooses them. That's the power center, and the character of that process defines the legitimacy of what the committee does. If a billionaire chooses them, the committee is a mask. If the people being governed choose them, that's the basis of popular sovereignty, and the justification for post-Enlightenment government in general.
> whoever owns the news media & ad platforms (or has money to do massive PR campaigns and ad buys) holds sway over resource allocation.
You're talking about other billionaires. The conversation is about not having billionaire.
So this boils down to if billionaires choose a committee, billionaires will run things, and if people vote for a committee and billionaires control all of the information that those people get, billionaires will run things. You can escape this if you don't have billionaires.
Power is always loaned, and always beholden to someone (or a large group of someones) else. That's what makes it power: the ability to get other people to do what you want them to. If they don't do that, you don't actually have power, while if they do, you've got the power regardless of what the formal power structures (which are often misdirections anyway) say.
The rest of your post is largely true, but also applies to billionaires. They derive their power from people being willing to trade money for the goods and services produced by the assets they own. When people cease to make that trade, their money and their power evaporate. Just look what's happened to the shareholders of Kodak, Xerox, Pan-Am, GM, Sun Microsystems, Lehman Bros, etc.
Note also that systems without billionaires have existed, and have often been worse in terms of distributing power to many people. See eg. Soviet Communism, where power rests in the Politburo, and the local party apparatchik holds outsize sway over everything regardless of competence. Or even post-WW2 U.S, when the top marginal tax rate was 90% and executive compensation was far lower because there was no point in paying a lot when the government got 90% of it. Corporations instead compensated their top execs in-kind: usage of private jets, corner offices, ability to influence what every American thought through advertising and mass culture, influence on policy makers. Orwell's 1984 and Chomsky's Manufacturing Consent were about the 1945-1980 period, not the post-Internet era. Power was significantly more centralized during that time period than it is now.
Because I don't believe that most people are really aiming to be multi-billionaires, I think most of the effort comes from people trying to reach financial independence at various levels of cost of living.
A wealth tax doesn't just affect multi-billionaires, it guts all accumulations of wealth. If anything, billionaires are most able to shrug off a wealth tax. Your average Financial Independence strategy (pursue a high income to accumulate a sizeable warchest of assets quickly, then passively live off the illiquid assets slowly) is severely gutted by a substantial wealth tax that aggressively drains saved assets.
Do you feel like a wealth tax starting at the 50,000,001th dollar of 2% until you get to a billion is "gutting all accumulations of wealth" or would harm the average financial independence strategy?
No, probably not, assuming you keep it accurately adjusted for inflation. This will likely impact the next tier of wealth: tech startup founders. Either startups will represent a tax loophole or the wealth tax will slowly drain the illiquid assets of founders and early employees during the startup phase which nowadays often have a notoriously long gestation period.
If we can't have capitalism without neofeudalist exploitation of the working class for the sake of enriching a privileged ownership class, then yes, I would very much prefer to gut capitalism.
> What happens when USA taxes billionaires out of existence?
This is a really good question.
I believe the answer is that the USA will be better able to outcompete those countries that do have them. History has shown time and again that massive inequality is a huge barrier to maximizing the productivity of all of a society's members.
It leads to cynism and corruption and breaks down cooperation. It forces a society to spend valuable resources on policing in order to keep the poor taking from the rich. It's just economically incredibly inefficient. You need some level of inequality to incentivize people but once you go beyond that, it's a net harm.
> believe the answer is that the USA will be better able to outcompete those countries that do have them
Based on what? The US already outcompetes these other countries in business success and average citizen income. What countries don’t have billionaires that are competitive?
> History has shown time and again that massive inequality is a huge barrier to maximizing the productivity of all of a society's members.
History has literally never shown this. This is the first time we’ve had massive inequality while still having a solid middle class. The jury is still out on whether the instability of the past was just because of excessive poverty and no upward mobility or because wealthy people were there.
Empirically, this is actually beyond doubt by now. Piketty et al. were in the news 10 years ago with this very topic, showing that inequality is detrimental to growth, for many countries and over very large periods of time. And there has been a bunch of additional studies after that publication that support these findings.
For every localized case, including critical ones such as the army, historically super rich and powerful people would distort the system.
There are countless examples of rich or powerful and connected people buying officer posts, for example, and meritocracies (= equality of chances) stomping all over these corruped systems.
There's little reason to believe rich people willingly or not, do not distort every market they're in. That's why they become rich, to be powerful.
> History has shown time and again that massive inequality is a huge barrier to maximizing the productivity of all of a society's members.
Has it? Restricting what opportunities individual people are permitted to follow would I assume both reduce productivity and increase inequality, but that doesn't have the inequality being the cause of the lower than theoretically possible productivity.
Also, billionaires' wealth isn't parked in a vault, right? It's invested in companies, so it's working in the economy whereas it would otherwise go to the government. It's not obvious to me that the government is going to provide more value for the public in general than industry, but I would like for that to be the case (an easy solution for inequality that doesn't shrink our economy overall).
I'm confused by this statement. If I buy shares from a company, that company has more money to spend on growth/bonuses/whatever. If I buy shares from another person, that person has money to do things with. I don't see how there is even a thing such as "parked in shares of a company"; it doesn't park there, it is immediately available for investing in other things.
Now, the money could sit in the bank, sure. But even then, the vast majority of the money "in the bank" is actually being lent out to other people, who spend it.
So unless the money is literally sitting in a vault, it's not "parked" anywhere.
I'm very open to being corrected here, so feel free to do so. My understanding of economics is decidedly limited.
Yes, so many people seem to think that billionaires are some living version of Scrooge McDuck, and their wealth is vaults full of gold coins under their houses, and they swim around in the coins before breakfast every morning.
Even then: if you take money and squirrel it away long enough in a vault then the market is essentially going to price in whether it thinks you are likely to spend it in the near future and effectively deflate the currency a bit to give everyone more buying power... like, imagine if you instead took money and literally burned it in a fire, and then try to figure out the statistical difference on supply and demand over the next five to ten years between money burned in a fire and money whose primary purpose is as a trophy swimming pool for an aging duck.
>> A lot of wealth is parked in shares of companies. I'm not sure to what extent that is actually productive...?
This is a YC-affiliated/run discussion forum. I think I speak for many entrepreneurs (former or current) that: investing is really, really important.
Investments from VCs (and form their wealthy LPs) makes entrepreneurship something that normal people can do (as opposed to only something rich people can afford to do.)
For many of us on this site, I suspect that actually contributes to our salaries.
Either directly as VC capital or indirectly via public ownership. If billionaires suddenly couldn't own public companies, stock prices would drop and we'd likely see layoffs.
And maybe that wouldn't be such a bad thing. How many of us are doing things that in a broad sense serve to benefit humanity, and how many are basically pushing ads and social-media addiction?
What do you mean by “parked” in shares of a company? Shares of a company is literally owning a part of a company. You wouldn’t say you parked your money if you bought a business
A wealth tax wouldn't change that. No billionaire is going to sit around and watch his $1B fortune be whittled away in 5 years by a 20% tax. Instead he's going to divest -- he'll put the money into other companies or charitable foundations.
You statement makes it sound like they aren't currently doing those things already. Can you point to some data that shows they aren't donating to charities and aren't diversified? I can understand if someone like Bezos is highly invested in the company he founded but overtime he will be like Gates and hold a small portion of his portfolio in Amazon and the rest broke up across many companies and charities.
Then I guess a wealth tax is not needed, billionaires are already giving away all of their money or starting new companies through direct investments, so they're no longer billionaires.
If you have a billion dollars and you invest all of it, you're still a billionaire (unless your investments tank). No billionaire keeps all of his money in cash.
If a wealth tax isn't going to change anything, then what's the point? Do we really believe that billionaires are keeping their money in scrooge-mc-duck-esque vaults rather than investing it in diversified portfolios, and that only a wealth tax (rather than the promise of returns on investment) will force them to invest?
If there was fair taxation on billionaires, and there was a wage growth where all the productivity gains didn't only stay at the top, then I think folks would be less incensed at billionaires.
You don't even need to discuss billionaires though to get some very bad effects. Take Denmark for example that taxes software engineers 50 percent of their salary (it's not unique to SWEs it's just because nearly all SWEs will make enough to fall into this bracket). I'm thoroughly examining other lower tax bracket countries to move to because why do I want to pay half of my salary until I am enfeebled and the state lets me enjoy my enfeeblement?
Let's macrosize the perspective: why do you think Unity moved HQ from DK to the USA? Could it be the crushing taxes here?
This is the issue. You really can't have it both ways. Yet many Americans love to fetishize a hatred for few very specific individuals without thinking through the whole causal chain that girds their economy.
Take Denmark for example that taxes software engineers 50 percent of their salary (it's not unique to SWEs it's just because nearly all SWEs will make enough to fall into this bracket). I'm thoroughly examining other lower tax bracket countries to move to because why do I want to pay half of my salary until I am enfeebled and the state lets me enjoy my enfeeblement?
Denmark consistently ranks in the top 5 of countries with the best quality of life. A year of parental leave, great social welfare, universal healthcare and retirement benefits, etc.
Including federal/state/local taxes, healthcare premiums, retirement contributions, disability insurance, etc, I pay close to 50% of my salary in the USA
And I'd still worry about how I'll pay the bills if I lost my job.
why do I want to pay half of my salary until I am enfeebled and the state lets me enjoy my enfeeblement?
Because that's how the state pays for the enfeebled today? Are you really suggesting you want to leave Denmark to go somewhere with lower tax rates, then when you need social healthcare, you'll move back to Denmark and take advantage of the healthcare system that you didn't pay for?
> Are you really suggesting you want to leave Denmark to go somewhere with lower tax rates, then when you need social healthcare, you'll move back to Denmark and take advantage of the healthcare system that you didn't pay for?
Isn’t that the point of their healthcare/retirement system? It’s socialist, not user pays. That it covers everyone irrespective of their tax contributions. Otherwise it would exclude the unemployed, students, disabled, low income (untaxed) people (esp housewife/househusbands) etc.
Isn’t that the point of their healthcare/retirement system
I don't think "Encourage people to move out of the country during the working years and move back to the country when they are old and need expensive healthcare coverage" is the point.
It may be the result of their system, but it's not the point. But if it became a problem, they could require that you buy back into the system after an extended absence out of the country.
> they could require that you buy back into the system after an extended absence out of the country.
And if you can’t buy back in? Won and lost your fortune overseas (or never won at all and remained poor all your life) and returned “home” destitute? What then?
Billionaires provide value as alternate sources of power to the state. Distributed sources of philanthropy that can target areas neglected by government are one thing (Carnegie’s libraries, Bill Gates work on tropical diseases, Frick’s art collection which he donated to the American people, alternate media and educational projects (Ford foundation’s continued funding of NPR, Soros’ Open Society Foundation, Koch funding of the Reason foundation and CATO etc, putting hyperbolic conspiracy theories aside these all enrich the political conversation and increase the opportunities for policy experimentation)). Secondly, billionaires have a good claim on being experienced and skilled deployers of capital. A wealth tax would have limited the capacity for private investment in EV, space flight, the acceleration of cloud computing.
There are two common ripostes to this. One is that these are wasteful vanity projects, which just proves the point that there is value to this sort of decentralized system of capital allocation where some small percentage of total available capital is in the hands of quixotic individuals who can pursue aims that a majority of the population doesn’t (yet) see the value of. The second objection is that these things should all be handled by the state. It’s fine for people to want space exploration to be entirely handled by NASA for instance, but the record is pretty clear that US (and by extension humanity’s) pace of space exploration has been absolutely transformed by the ability for private actors with substantial resources to make moves outside of an existing bureaucracy.
The US government spends upwards of $4T dollars a year, and the media class has a much larger influence on politics than and group of billionaires could buy. Because most billionaires are entrepreneurs they also typically look at ways they can deploy capital that are underserved and where the state would be an inappropriate actor in terms of required risk and innovation. A group of talented weirdos that have the resources to move the needle on neglected projects is a feature not a bug.
A wealth tax wouldn't prevent the Gates Foundation from existing, it would encourage it -- instead of keeping personal wealth that's going to be taxed, the would-be billionaire can set up a charitable foundation like the Gates Foundation to spend the money.
Since the charity is run by a board and bound to abide by its charter, it's not the same thing as the person controlling the wealth himself. The Gates Foundation is not going to buy Bill Gates a private island with a $100M super yacht to get there.
>>>Since the charity is run by a board and bound to abide by its charter, it's not the same thing as the person controlling the wealth himself
I would expect this to be a "distinction without a difference" if the billionaire is careful/competent about how he staffs the board and how he writes the charter.
> Billionaires provide value as alternate sources of power to the state.
Billionaires are the state. They would not exist if the state didn't specifically provide them with the mechanisms to amass such wealth at the expense of the rest of us.
Would you apply that same form of argument to everything else that is illegal or strongly disincentivized? “We shouldn’t ban/disincentivize x because people will just go do x in some other country” doesn’t seem like an argument I would make for a large range of x’s.
You pass laws to tax Russia and China billionaires. Then there are no billionaires in the world. That's how the US did with Russia, it passed sanctions in response to the Ukraine war.
The most productive decades in the US correspond with its highest relative tax rates, between the fifties and the eighties. Thomas Piketty:
"if you look at the long-run evolution, we’ve seen less concentration of wealth. So the top 10 percent of the wealth distribution today would have 60 percent in Europe, 70 percent in the U.S., as compared to 90 percent before World War I in Europe. This did not destroy the economy. If anything, this decline in the share of total wealth going to top 10 percent and the corresponding increase in the share going to the next 40 percent has contributed to a much faster economic growth in the 20th century than in previous centuries.
"I think partly because it allowed more people to participate, to the economy. And also partly because it came also with the rise of education. And this was the true source of productivity in the long run, rather than the enormous level of inequality that we had before World War I. This theoretical discourse that more inequality, more concentration of wealth is always better for economic growth was made, of course, throughout history by people who had large concentration of wealth, certainly in Europe before World War I.
"And this is a discourse that, in the 1980s, Ronald Reagan tried to tell Americans, basically tried to tell them, look we’ve gone too far with the New Deal, with Roosevelt, in terms of progressive taxation or wealth redistribution. We are going to cut top tax rate by two, where they’re going to go down to 28 percent or 30 percent, as compared to the 80 percent, 90 percent top tax rate under Roosevelt. So the promise that was made by Reagan during the 1980s was that cutting top tax rate might lead to more inequality, but will also lead to so much more innovation, more economic growth. And the incomes of average Americans are going to grow much faster than they used to grow.
"Except that this is not what we’ve seen at all. So if you look at the three decades after Reagan, 1990 to 2020, the growth rate of national income per capita in the U.S. was only 1.1 — 1.2 percent as compared to 2 percent, 2.5 percent in the period of 1950 to 1980, or 1950 to 1990, which itself was not particularly exceptional. It was the same — 1910 to 1950, it was about 2 —2.5 percent. 1870 to 1910, around 2 percent. So in fact, the post-Reagan period, 1990-2020 has been particularly bad in terms of growth rate of national income per capita, which at the end of the day is the best economic measure we have of the increase in productivity and this should reflect innovation, et cetera."
>>>The most productive decades in the US correspond with its highest relative tax rates, between the fifties and the eighties.
The most productive decades in the US also correspond with a period when the US was essentially the only industrial power not absolutely shattered by World War 2. In global economic terms, the post-war period was a huge anomaly, and I would be hesitant to tie too many conclusions/correlative effects to something as singular as domestic tax policy.
This is Piketty, and therefore has a pile of non-US data to point to on this front as well. (Though USians are typically quick to ignore any evidence that isn't from the US.)
There are plenty of people in the world who would think that anything over $500/month is way more than enough for one person. Should your compensation be reduced to that amount?
Does someone earning more than you hurt you?
Also… do billionaires employ people? Do you want their employees to have their jobs seized from them when the johny555 tax goes into effect?
> There are plenty of people in the world who would think that anything over $500/month is way more than enough for one person. Should your compensation be reduced to that amount?
This is an absurd slippery slope, and a bizarre appeal to "plenty of people" to boot. There is a significant and categorical difference between $500/mo and $1 billion. You undermine your own point by not addressing it.
In fact, if there were a wealth cap of $500/mo as you posit, it would take over 150000 years to accumulate $1 billion, which frankly only reinforces how excessive that amount of money is.
It's a thought exercise and by examining extreme you start to see holes in the theory.
It's the same problem when it comes to tax increases - everyone thinks raises taxes on everyone else is a great idea, themselves? Oh, not me, I'm not rich.
This even happens on HN which is a pretty well off crowd. When the SALT deduction was capped everyone complained - even the same ones that claimed "I'm fine paying higher taxes".
How do high risk ideas get executed when there are no billionaires
The same way most of them do now -- through venture capital firms. Or maybe if they had more tax revenue, the US government could sponsor more speculative research and companies.
It would be nice if there was more public funding for basic research. Why aren't the benevolent billionaires this thread is talking about paying for that?
I'm not talking about "Let's start a social media app for Aardvarks!" kind of ideas, but actual scientific research. We used to have pure research orgs like Bell Labs, but companies aren't funding pure research any more, so we need more investment from government. Not every idea should have a path to monetization before it's funded.
I should clarify, as I think we're saying the same thing in different ways.
I don't equate "skunkworks" with high risk. To me, that's not "risk" as much as "I don't care about monetization in the first place", like you're saying. I agree that research without promise of a payout is sorely missing these days.
When I say "maybe we should have less high risk", I'm thinking of fly-by-night companies that do make a social media app for aardvarks, spend a bunch of money on slick marketing so they can pump their IPO, and then pull the rug with them when they bail.
But billionaires don't become billionaires by doing skunkworks projects. They often do the latter.
It has been read somewhere that's due to the possibility to gobble up/buy competitors with no blocking by the state of such behaviour, specially since state deregulation in the 70s.
So there is the possibility the market can be made to care again.
Because taxpayers are on the hook anyway when billionaires risk too much and their companies end up getting bailed out. Except now we've collectively spent even more than we likely would have so that they could, in the meantime, buy several yachts and lawyers to make sure they can hang onto their "risked" money and assets.
And sure, you could just say "well, let's just not do bailouts then", but then that leads to things like bank closures, airline collapses, imploding automobile industries [0], etc. Basically, we can argue about specific cases, but there are some things that become too important to fail.
Ultimately, there are things that benefit society that taxes should be used to pay for. Some of those things should be done regardless of what any potential payout might be. Note that billionaires don't help solve these problems. If anything, they make them worse because they often pay a far lower percentage tax than anybody else.
[0]: Of which the US at least is highly dependent on. I want this to change, but it won't be an overnight thing by any means.
> There are plenty of people in the world who would think that anything over $500/month is way more than enough for one person. Should your compensation be reduced to that amount?
This is rhetoric that tries to confuse two totally different scenarios in order to convince the majority to oppose something that only hurts a tiny minority. Saying "one person should not have 5 generations worth of wealth" is not the same thing as saying "people should not make a middle class salary". They aren't even similar. If there was any place on earth where $1,000,000,000 was comparable to $500/month in any way, you might have a point.
> Does someone earning more than you hurt you?
Yes. Without a doubt. Wealth is freely convertible to and from political power, so outsized wealth translates into outsized political/lawmaking power, which affects us all.
Let's make an extreme example if you don't believe me: Should sextillionaires exist? Do you think that maybe, just maybe, someone having $1,000,000,000,000,000,000,000 might have a negative effect on other people's lives?
> Also… do billionaires employ people?
Some do, some don't. Some non-billionaires employ people, some don't. Employment was around long before billionaires. It's not a requirement.
To me, wealth should be like the speed of light. There should be a limit, and it should be increasingly harder and harder to approach (but never achieve) that limit as you get wealthier. Not sure how you'd actually implement such a Lorentzian economic speed limit, but it seems fair to me. Make the limit high enough where at 99% of it, you can have your needs and your family's needs fully met in the most expensive neighborhood on earth, or whatever.
Those are just round zeros. You could obtain that much money in some African countries over the last 50 years for a few dollars. The latest cryto coin could give you that many coins. But these are numbers trying to represent wealth.
Any cap you put on the top could have the effect of reducing the value of a currency meaning the buying power doesn't change. A billion cap would make your million dollar house worth $100. However you slice it you are poor and someone else is rich.
A much more reasonable proposal would simply be to ensure that billionaires actually pay the ~25%-35% everyone else pays and to put a $ cap on itemized deductions so that billionaires find it vanishingly difficult to write off 100% of their taxes. Same thing should go for corporations. Right now the standard for FANG-like companies is to achieve a $0 tax bill at the end of the year. It's disgusting when those same companies have employees making minimum wage as 1099 workers and paying a double digit percent of those wages in federal income tax.
The problem with billionaires though is they typically make and hold their money through assets, so what we really need is a bunch of reforms on how we tax assets. Namely, it should be such that if you have more than $1B in assets, taxes eat away at it pretty swiftly until it is back down to something reasonable. I think that's something we all can get behind.
> There are plenty of people in the world who would think that anything over $500/month is way more than enough for one person. Should your compensation be reduced to that amount?
Disclaimer: I live in a 3rd world country and my salary is 1/3 of what the standard US salary is.
YES, I do believe that everybody's compensation (including mine) who are in the top 10% of the population should be decreased/limited. Provided that their living costs are adjusted so that the $500/month get you similar standard of living to other nice places (say, Chile, Mexico, Spain, Portugal, etc).
The top 10% of the population hold 70% of the total wealth. That's just crazy and unsustainable. How the 90% of the population haven't turned on us is just sheer luck and a political, security system that is rigged in our favor.
I would be happy to be part of a "pay cut initiative" for all the top 10% earners, if it meant equalizing opportunities for everybody. I had the opportunity to grow up and be friends with poor people who just did not have the chance to succeed, so I don't believe the "poor people are just lazy" narrative. There's good hard working people that just never had a chance. Similarly how there is bad rich people that just want to leech from others.
I am fairly sure inequality is more extreme than that (top 10% hold 70%) at the moment, and it was less bad in the second half of the 20th century. The top US marginal income tax rate was 90% in the 1960s, and 70% in the 1970s, and it did not seem to discourage GDP growth or innovation.
We live in the most equal time in human history. The actual standard of living of the average person in most developed countries rivals that of royal families from just a couple of centuries ago.
Don't confuse monetary inequality with wealth inequality. Measure by the standard of living, not monetary units.
What are the actual differences between the life of the average American worker and Jeff Bezos? It's not that big. Jeff Bezos has the ability to buy luxuries most of us could never dream of, sure, but what about the essentials?
Nearly everyone can get fresh, nutritious meat, as well as fruits and vegetables. High quality milk and dairy products. Frozen goods. Bacterial epidemics are unheard of. Our recent viral pandemic increased annual deaths by about 10-15% over baseline — compare this to epidemics which used to wipe out entire populations. Life expectancy for all people, regardless of class, ranges between 2-3x human life expectancy in a state of nature (roughly 30 years). You can travel hundreds of miles in a day for only a few hours of labor worth of money. You can cross continents or oceans with a few day's of labor worth of money.
Sure, Bezos can have a fancier car with someone driving or his own jet with a pilot flying, but at the end of the day, you can both take off from LAX and land at JFK 6 hours later. You're both going to eat 2,000 calories of nutritious food. You both have running water. And, you're sitting here, both able to communicate with everyone in the world instantly.
Let's not buy into the political propaganda about inequality, the reality of the situation is right in front of our eyes.
> What are the actual differences between the life of the average American worker and Jeff Bezos?
Here are just a few massive differences between the life of the average American worker and Jeff Bezos that have nothing to do with buying luxury goods:
1. Jeff Bezos can get an audience with any Congressperson, any State governor, most countries's heads of state and probably the President of the US, with a telephone call and likely with less than 24 hours notice. That person will listen to and likely be influenced by what he says.
2. Jeff Bezos's public statements can move global financial markets.
3. Jeff Bezos can (and does) own and control mass media companies which can amplify and downplay political issues and shape the outcomes of elections.
4. Through philanthropy, Jeff Bezos can, if he wants, simply decide what counts as a "public good" to be funded and supported, as opposed to the public deciding through the democratic process. Bezos is capable of offering an amount of support for his causes that dwarfs government-funding. We are merely lucky that billionaire philanthropists have so far focused on good things like curing malaria and not on evil.
None of what you've said about Bezos is dependent on him having wealth though. If you could somehow construct a functioning society without money, there would still be someone who has the exact same power/influence that you've described here.
Basically, when you remove money, something else becomes the currency you're describing. Taking away billionaires wealth might actually make it harder to identify the people who have this influence. Rather than news outlets writing articles every other day about Jeff, you'd have some shady person high up in some unelected bureaucracy getting to wield this power. How is that better?
> Jeff Bezos can get an audience with any Congressperson, any State governor, most countries's heads of state and probably the President of the US, with a telephone call
Lots of America struggles under the weight of trying to pay for basic health care and dental (50% of Americans have medical debt[1]) and for many education is utterly out of reach. 11.4% of America lives in poverty (poverty being defined as "a lack of those goods and services which are commonly taken for granted by members of mainstream society"). It's disingenuous to look at the state of things and say that because we have cellphones and cavemen didn't we're all doing fine.
They struggle more with being overweight. Most humans in most of human history struggled with having enough food and water to survive. They would trade their struggle for ours in a heartbeat.
Americans are the people who complain when the wifi goes down or someone says the wrong word.
And cavemen would have thought the Roman's life pretty good too, but I don't know how that relates to the average American and billionaires unless it's an attempt to silence people and tell them to know their place. Societal inequality can still be a very real issue even if we're collectively on average doing better than a 19th century chimney sweep.
It's not ours to take. Where did it come from? Bezos produced it at Amazon. He has a moral right to keep it.
Beyond that, though, you can only tax away 90% of billionaires' wealth once. That whole game depends on them continuing to produce the same amount of wealth, even though they won't receive any of the returns. (Remember also that most of these people reinvest the majority of this money into their ventures, meaning that taking these dollars will have a compounding negative effect on future productivity.) Look at history. Your superficially benevolent idea has been tried, it always results in mass hunger and death.
Why would they keep taking on so much responsibility? To raise your standard of living? Why should they care about you?
Any of those guys are capable of becoming a surf bum, living on $30k a year, but instead, they build massive companies that deliver incredible value to the rest of us — they get their money because we pay them for that value. Would you rather incentivize Elon Musk to keep working on Tesla or would you prefer him to retire?
> It's not ours to take. Where did it come from? Bezos produced it at Amazon. He has a moral right to keep it.
So you are advocating 0% taxes?
That argument (of type Econ 101/Ayn Rand) is misguided, because the world is not as envisaged by Econ 101 (or Ayn Rand, who famously enjoyed Social Security and Medicare).
Counter arguments:
1. Society has made available the gift of the limited liability company, to encourage risk taking and entrepreneurship.
2. Society has made available streets, canalisation, schools, defence, police, fire fighters, certain forms of insurance, etc., for a simple reason: market failures. Those goods would be provided in insufficient (suboptimal) number by the free market due to: strong positive externalities, non-excludability, adverse selection, and many other reasons.
For those (and many other reasons) government does have the right to taxation. The question then is the optimal level.
> Your superficially benevolent idea has been tried, it always results in mass hunger and death.
Yeah, the poor Northern Europeans, starving to death...
Somewhat higher income, capital gains, estate, and maybe even wealth taxes won't result in mass starvation.
> they get their money because we pay them for that value.
Again, a neat Econ 101 idea that fails to take into account reality. "salary = marginal product" is only true under entirely idealised assumptions of perfect competition [1], in particular no economies of scale and no network effects. That is most definitely not the case for today's tech companies, which quite obviously have monopolistic tendencies, thus extraction of monopoly profit (rent) which accrues, guess to whom, the boss.
And, for what it's worth, if Elon becomes a surf bum, or twitters full time, we'll still get great electric vehicles, maybe a tad later.
The problem with rich people is not that they live too comfortably, but that a person like Bezos can buy an important media property and control the political narrative that millions of people are exposed to.
Historically it was much, much worse. The only way you can make an argument for saying inequality is greater now (when global poverty/subsistence farming is at the lowest % since human settlement 12000 years ago) is to point to the sheer amount of wealth we generate compared to any other period and nit pick about it's allocation. That's fine, but if you want to go back to farming for your life, like most humans for most of history, you'll probably find it a worse life than being in a developed country middle class, even if "your wealth is technically more equal to a king than a middle class to a ceo"
The peasant was working for their master a lot less because if the master asked for more, the peasant would literally starve to death, because he wouldn't have enough hours in the day to work for himself.
The ruling class will happily soak up all spare productive capacity - and as the amount of work necessary to keep someone clothed, sheltered, and fed went down, that spare productive capacity grows, and more of it flows upwards.
Landlord was lending land to peasents - rich peasents, because bottom cast did not even have a chance to talk to landlord.
For the land peasents got, they had to work for the landlord specific number of days in a week. For some time it was 1-2-3-4-5 days per week. Most common was 3 days.
Thing is - the peasent was not obligated to do that work himself. He could have sent a son, family member or even hire someone.
That way it was super easy to keep his agreement with the landlord while mostly focus on his own farm.
Who had it terrible were bottom, poor peasents that worked for other peasents.
They did not have their own land and were at mercy of their “master peasents”.
They most likely had to work whole week or 5-6 days.
They were more of a slave than a peasent tbh, but its a hard disregarded truth.
Current middle class in our times could be translated to “master peasents” back in time. Slave peasents would be the slave-wage ppl.
When I discuss or compare medival peasents to current corporation workers I always compare master peasents to corposlaves.
And master peasents had it super better than corposlaves do now.
The subsistence farm does not wait for your days off. You will live your life according to its schedule, and it does not care about sick days or vacation.
To claim that an impoverished serf working land "had 4 days off a week" is nonsense. They worked hard af for all sunlight hours for some seasons, and had plenty of leisure in times like the winter. On average, maybe that's 4 days off, but let's not pretend that working the land is not back breaking work. It's not leisure. If you really think some 40 hour wfh coding job is harder work than farming for your life, then there's no law saying you can't buy some land and go off grid. You're welcome to subsist. Hell you could land a few million subs on youtube airing the experience, that category is all the rage these days
What source are you basing that on?
You can find countless sources that show the 0.1% owning an ever greater share:
https://www.theguardian.com/business/2014/nov/13/us-wealth-i...
"Over the past three decades, the share of household wealth owned by the top 0.1% has increased from 7% to 22%."
I'm basing that on global numbers, not national numbers. Sure, I don't doubt that in developed economies inequality is getting worse.
But in the past 4 decades, I'll remind you that around 800,000,000 Chinese (that's eight hundred million people) were lifted above the global poverty line and were able to stop subsistence farming. https://www.worldbank.org/en/news/press-release/2022/04/01/l...
So to say that global inequality is getting worse, when billion+ have been lifted out of abject poverty in that time, it's not correct to me. Things were worse 40 years ago when billion+ more humans were below the global poverty line, even if today billionaires are even richer than the middle class.
Inequality is about the ratio of high earners to low earners.
What you have linked to is a different concept, i.e. absolute income.
Income inequality in china also increased, see figure 5:
https://blogs.lse.ac.uk/businessreview/2019/04/01/income-ine...
Imagine you live in a neighbourhood of 50 people. Everyone starts earning more, that's absolute income increase. Then imagine your richer neighbours income has increased 100x faster than anyone else, that's income inequality.
There's a good video on how that $1.90 is arbitrary and too low, and if you try to come up with a poverty line from first principles, you end up more in the $5-$12 range, where it doesn't paint such a great picture. https://www.youtube.com/watch?v=fo2gwS4VpHc#t=19m16s
with minor blips where the peasants revolt and take out those above them only to settle back under the rule of someone new. it is a minor annoyance to those amassing wealth to keep in mind.
Never really happened in my country. The second tier complained at one point, and peacefully reached an agreement with the top tier (Magna Carta.) Other than that top families basically unchanged 1000 years.
> The top 10% of the population hold 70% of the total wealth.
That's basically been the case everywhere, all the time. In other countries the 'top 10%' has changed hands through revolution, war, etc, but it's still 10% controlling 70% (or whatever) - because they take the last 10%'s 70% and carry on! No goal posts moved there.
Someone asked a separate question about revolution, and I said even that's not successfully happened where I live. I wasn't making a broader point with that answer to that question.
> "all of human history" to "in my country" and only for the past "1000 years"
I mean... are you under some sort of misapprehension that before 1000 and outside of the UK there was some kind of democratic socialist consensus? Fraid not.
It's fairly simple, really. You said that wealth ratios have remained the same "for all of human history". Someone came back and pointed out that it hasn't always remained that way and there have certainly been blips. You then responded by saying "not in my country" for the past "1000 years".
Well, according to your first assertion we're not supposed to cover only your country for the past 1,000 years. We're supposed to cover all of human history - every nation, as far back as at least 10,000BCE.
> Someone came back and pointed out that it hasn't always remained that way and there have certainly been blips
The blips didn't change the ratios though. Ratios have stayed the same.
> You then responded by saying "not in my country" for the past "1000 years".
Yeah - my country hasn't really had those blips. And the blips in other countries didn't change the ratios anyway, just transferred who owned them, so it was a separate point.
> Well, according to your first assertion we're not supposed to cover only your country for the past 1,000 years.
Quite the opposite actually. "all of human history" spans at least 160,000 years and the inequality that you and the parent comment to are alluding to is a rather modern artifact.
I'm not trying to be pedantic, but this comment contributes to pernicious myths about the human condition. If you're interested in this subject I would recommend the book "The Dawn of Everything" by David Graeber and David Wengrow.
That particular ratio, if true, is not the issue. Someone being one order of magnitude richer than someone else does not necessarily damage society, the problem is how much the richest 0.1% control.
very untrue. It is well documented that income equality is more extreme now (by an order of magnitude) than it was at any point in recorded human history. The inequality is something like 100x that of french revolution times where terms like bourgeois came from. The fact that we haven't broken out in revolution yet is just a testament to how powerful the media state, corporations, and lobbying have become.
When they failed... did wealth redistribute, or was the bulk immediately claimed by someone else? What examples of civilisations without unequal wealth distribution are you thinking of?
> It doesn't though. Taxing the rich, limiting the existence of billionaires is not going to do anything for equalizing opportunities.
> If you think so, then please tell me the name of one efficiently-run government organization?
How are these two passages connected? If there's one efficiently-run government organization (there are, even in the US—benefits programs tend to be quite efficient, contrary to "common knowledge") then that proves... what? That taxing the rich would equalize opportunities? The two things have practically nothing to do with one another.
If you think so, then please tell me the name of one efficiently-run government organization?
Why is government judged on efficiency rather than service?
If there's a government agency with money to give to vision impaired people, and they set up a website (graphics heavy, non-ADA compliant of course) as the only way to sign up for the payments, that department would be extremely efficient - they might only be able to reach a fraction of their target market, but they'd do so very efficiently with little overhead and they'd even have money left over since they had so few applicants, so they could cut the budget next year!
In contrast, if that same agency took $100M of their fund to set up offices across the country, and hire outreach staff to drive to the homes of qualified applicants to help them apply, that wouldn't be very efficient, but it would provide better service.
Government is not a business and shouldn't be run like one.
Welfare is one of the least efficient government programs in the U.S.
It's rife with corruption. What makes you think it's efficient?
"It currently stands at about 25 percent, as did in the 1970s. This means the ability of the poor to sustain a higher level of income independently of transfers has not changed over time."
The problem isn't the 91% to the 99% in my opinion. In the United States, the 99th percentile for income is ~$300,000, which is a ton of money in a low cost of living (rural) area and a decent amount of money in a high cost of living (urban) area.
But these are not the "capitalist class". They don't own significant portions of a company unless they started a small business (a lawyer or doctor running their own practice). They also generally had to go through an enormous burden to get there. A doctor for example might be nearly 40 years old with $500,000+ in debt before they're making $300k, and many doctors will never make that much, period.
The funny part of "limiting income" is that it only affects the working rich, not the capitalist class. Steve Job's salary was $1 and many CEO's famously have basically no salary and compensation in stock.
So what do you do? Tax their stock sales? We do and should do more. Force them to sell their stock for the benefit of the taxpayer? Ban them from even owning large amounts of the company? Have the government automatically own part of the company? All of these sound yikes to me.
Just curious, if 10% of people holding 70% of wealth is unreasonable, how do you reconcile 1% of Spotify artists getting 90% of all "streams"?
Basically, you're saying that the current distribution is crazy/unsustainable (and maybe it is) but the distribution is actually not totally out of whack with the 80/20 rule (or Pareto principle).
Just wondering where your confidence comes from that a functioning society doesn't actually depend somewhat on that distribution? i.e. that the general populace's sense of "fair" isn't actually correctly calibrated at this distribution?
Actually, it's not simply the proportion, but the fact that over time the proportion of wealth held by the richest has been growing really fast. So, to use your analogy, I agree that a small number artists commanding the lion's share of attention can be fair, but if over time, an ever smaller number commanded an ever greater share, very soon every one would be listening to one artist and one song, and fair or not I don't think that would be good for Spotify, audiences, artists or anyone else.
I think there's a valid point here, but I also think (at least anecdotally) that we are trending in the direction of more people listening to fewer songs. (Would love to see some Spotify data on that front lol)
I would argue that it's not going to collapse to 1 artist or 1 song for a similar reason that all wealth will never be in the hands of 1 person. If the rate of change (or just raw distribution) in wealth is unhealthy, that will present itself in the form of a less healthy economy.
That will likely cause a bit of a churn and redistribution to sort of self correct. There's also the fact that wealth typically doesn't survive through generations all that well. If this didn't happen, the Rockafeller's/ Vanderbilt's/ Carnagie's from the past would still have the top wealth holdings - sure they are still incredibly well off and have a huge advantage from family name, but per a Forbes list none of them are in the top 2500 wealthiest.
There are plenty of people in the world who would think that anything over $500/month is way more than enough for one person
You're not making a serious point if you're looking at world income to guide policy in the USA, or any other first world country, you're just making up a strawman.
do billionaires employ people
I'm sure they have a small household staff, maybe security, yacht staff, private pilots, so maybe in the small hundreds.
But Tesla employees a 100,000 people, SpaceX employes 10,000 - both of those companies would exist regardless of Elon Musk's personal wealth. In fact, having so much wealth in one person is a liability to the company -- Musk can singlehandedly tank Tesla's stock.
That was clearly not the point. The point is there's always someone with a different bar for what is excessive wealth. Chances are that 80%+ of the world population would find your income staggering, the same way you consider a billionaire's wealth staggering.
Like the way all other murky subjects are settled, you just decide on one. We don't legalize murder just because some slayings are justified. The existence of grays areas does not preclude the black and white.
We already have a tiered system of taxes in the US. We don't tax everyone 50% because the average US wage is 100x that of a third world country average wage. It's possible to examine only the US wealth distribution and make choices about taxing the highest of the high earners there in isolation of all other earners in the world.
Wealth taxes seem so dumb to me. In many cases it's forcing sale of private or public company ownership from those who know the company best often to - you guessed it - institutional investors. It's bad enough how much control institutional investors have, but to force it by law seems even more ridiculous.
You had me for one second with that argument. But if you sell off your company, you would still get rich and be taxed - so why wouldn't you stay on board and your goal is not to get richer, but to create the best business you can?
The percentage doesn't matter. You have to pay taxes on the stock you own (ie, your startup). You do that by selling the stock. As the value of the company increases, you are forced to sell off increasingly large chunks of your stake to pay the bill thereby loosing ownership (control) in the process.
With an estate tax, the value is assessed once, I'd assume (at death/inheritance), then due to be paid. You might have to sell of a third or whatever of the fortune/company, and keep the majority.
Sure, over successive generations, the family might lose control of their original fortune/company, but that is compatible with the intention of the tax.
You'd lose control much, much faster than that at the sort of rates being proposed. Even 1% per annum would destroy control well within a career, let alone a generation considering exponential growth.
edit: Just noticed that you are talking about estate taxes and I'm talking about wealth taxes...
It's a nice thought, my wife had an ESOP actually. She had a stake in the 5 figures when she left the company (it takes several years to vest and we can't touch it). But the problem is as an employee I don't really like my net worth tied up in my employers stock. I'd rather have it diversified and in an index fund.
But what you propose is probably better than the alternative at least.
I used to think this, but over time I changed my mind. Plenty of capital, particularly in an increasingly digital economy, requires no land, and ignoring that privileges that digital capital even more than just not being tied to physical space does already.
Most of the wealth is in unrealized gains. How do tax that? Let's say I buy a painting for $1 and discover its a Van Gogh. Now its worth $50 million. Should I be forced to sell it to pay taxes?
Then you can borrow against the Van Gogh for the rest of your life and likely never pay taxes. Then when you die, assuming your Van Gogh minus what you borrowed to live is less than the estate tax exemption (today it sits ~$12M or $24M if married) you can pass on the $12M/$24M to your kids federal tax free. Is that fair? IDK.
Well estate tax is a different matter. I think its in the best interest of the country to tax estates heavily above a certain limit to help eliminate royalty in the US.
We already have this issue for our existing tax system. You have to declare your income and use a huge set of tax rules and laws to determine your AGI and appropriate tax bracket. Taxing billionaires changes nothing here other than deciding once your AGI has enough zeros you get more taxes applied.
Then lobby to change the tax laws, just like folks are lobbying to add billionaire taxes. The billionaire tax has nothing to do with the rich having ways of hiding wealth or income, deferring losses, etc. to reduce their tax burden. You're making an argument that obfuscates and obscures the real argument here that billionaires should not exist as they serve no utility in a society besides absorbing resources.
Then nothing changes in your fantastical scenario that I find a $1B painting in my attic and sit on it.
What we're talking about here is when people like Jeff Bezos have billions of dollars of income--direct income from gains realized in asset sales, income generated from property, stock sales, salaries, etc.--we shave a significant portion of those gains off in a wealth tax.
Well that's just another unworkable scheme. The income is already taxed at the highest rate so what you're suggesting is base the income tax rate on how much a person is worth, like if they are a billionaire make the tax rate 99%. How would the IRS determine a person's financial worth without doing a complete audit of all their assets? That could take years for a billionaire.
> billionaires are getting all the growth while middle class and the poor see their share of the economy shrink.
In your own sentence you had to use specific words "their share of the economy shrinks" can be true, while their wealth increases. The economy is not a zero sum game. The middle class could see their share of the economy increase while also having standard of living, total wealth, etc. all decreasing.
Yes. Because they can afford private schooling, legal and medical care that the bottom 90% cannot because those services are privatized and only available to the very wealthy. If the ruling class/wealthy who controlled the system could not depend on their vast wealth for great schools for their children, health and legal protection - then all of a sudden the social system would be spectacular, and everyone would benefit.
Inequality is poisonous because it creates massive disincentives to create a working socialized health, education, legal system....
I dunno - I spent 20 years using the Canadian Medical System, then moved down to the United States in 1995, and spent 20 years using the system here, with 5 years in a (mostly) socialized system in Singapore.
There doesn't really seem to be much of a tragedy of the commons when it comes to healthcare - nobody is really that excited about getting an unneeded biopsy, or hip replacement, or colonoscopy....
Agreed that full-throated capitalism seems to be the best system when it comes to allocating most resources (I absolutely do not begrudge Billionaires their Yachts, big houses, islands, private jets - have at it!) - but it's pretty sad when someone who works hard their entire life has to die 10 years early because they can't afford a decent doctor.
There's a pretty long jump from banning billionaires to capping monthly salaries at 500 dollars.
Nobody makes billions by "earning more than you", they make it my owning companies, or funds, so this has nothing to do with salaries.
But the fact is that the existence of billionaires hurts everyone, especially in poor countries, but also definitely in the US. Now I'm not talking about the ethics of some people wallowing in wealth why others are starving, the biggest problem is that when you reach a certain level of wealth you can start influencing, or even controlling, public policy. This obviously has the effect that public funds are diverted away from the public into their pockets. In the third world this process is quite direct, in the rich world it's more about enacting policies that benefit these oligarchs, at the expense of everyone else.
Someone taking the wealth that other people have produced with their labor is not earning, though. And a lot of us do think that earning 300x what the average worker does is a physical impossibility.
Awful comparison. Your number of $500 isn’t possible to live on in much of the world. It’s an artificial floor - a fair comparison would be one that everyone could live off with ease, not just your false dichotomy few.
Never mind that a billionaire could live anywhere and literally couldn’t spend all of their money if they tried.
Billionaires are highly correlated with millionaires, which don't seem to be beyond the pale for critics of wealth inequality. Countries with billionaires rank much higher on quality of life than those without. It hurts to see Bezos and Musk in yachts but the side effect of their wealth is companies like Amazon and Tesla that have a net positive effect on society in terms of products and employment.
I'm not as wealthy as them but I have never, ever had this feeling: "It hurts to see Bezos and Musk in yachts" Why does that hurt anyone? Doesn't it just help the people that make yachts and work on them?
My father worked for 35 years as a carpenter on mega yachts for insanely rich people. Yes it put food on our table in a rural area otherwise devoid of job opportunities.
Rich people spending their money isn’t really the problem. It helped put me through college.
If that was the case, it should work both ways: when Bezos "lost" $20 billions of May 1st, how many skimmed labourers suddenly were able to afford $1 million houses ?
Who’s paying less than they expected in today’s market? If anything it’s the other way round right now—lots of people are taking jobs for more money than they expected.
It doesn't matter what's "expected in today's market" from this perspective, either, since the market can be extremely skewed in terms of bargaining power.
What matters is 1) how much wealth any given employee generates, and 2) how much of that generated wealth they retain. Anything that doesn't end up in their pockets, and is not a business expense otherwise, is economic rent collected by their employer.
I don't think you want to go down this path. The majority of the workers would likely be a net loss with gains attributable to a much smaller set of workers. I don't think people would like their income clawed back because they didn't end up generate excess wealth for the company.
It's not the yachts that hurts. It's the vast amounts of political power that their wealth gives them and that they invariably use to further enrich themselves at the expense of everyone else.
The yachts aren't issue, i think the issue is more the insane amount of power that kind of money gives individual people (instead of institutions , which tend to have more checks and balances)
furthermore if many westerners woke up they would realize that many people envy them like we envy billionaires.
The average joe in america and many other places has more money in a month than many have a year, the average american or european has access to luxuries other people dream off.
We are rich by proxy of simply living in the states or in europe. Furthermore we also have more opportunities and the ability to become a millionaire too.
We are envied by many places worldwide, we need to stop being angry at what others have and be better.
I hate the anti-rich people talk because we could do far more productive things.
besides, to many people we are included in that rich category we talk own about.
> It hurts to see Bezos and Musk in yachts but the side effect of their wealth is companies like Amazon and Tesla that have a net positive effect on society in terms of products and employment.
Corporations have a net positive effect on society, so we should sit by and watch the dragons add to their hoard? They don't need a billion dollars, it's just a video game to these people. They want to increase their high scores so they can be top of the leaderboard.
Also, millionaires include people who saved a million dollars over their lifespan in order to retire. Retirees need that money if they want to live a modest lifestyle, pay for unexpected (or really expected at that age) health care costs, and support their grandchildren. It's a luxury we'd all be lucky to have and tragically many people weren't able to achieve. Add in an order of magnitude and what more do you get? What value does a person add to the world when they have a billion dollars instead of a million?
This isn't about yachts, it's about sensible policy. Corporations aren't a naturally occurring phenomenon whose autonomy we must respect; we wrote laws to allow them to exist because we thought they would be good for society. They mostly do, but when unfettered capitalism leads to bad outcomes, it needs to be fettered.
So it comes down to: is a handful of pseudo-randomly selected[0] people having wealth on the scale of billions a good outcome or a bad one? Personally I think it's pretty obviously the latter, and if you agree then I struggle to see why a wealth tax isn't the obvious solution.
0: "It isn't random, they worked harder than everyone else!" Where would Microsoft be if Gates' mom wasn't friends with IBM's John Opel? Where would Amazon be if Bezos had been born 5 years earlier, or later? Etc.
Do countries with more billionaires inherently rank higher in terms of quality of life, or do billionaires tend to live in places that already have higher quality of life (...particularly for the wealthy)?
My claim is that if these companies weren't useful than they wouldn't exist. People hate Bezos but they spend their money at Amazon. Methinks they doth protest too much!
Amazon is immensely useful, but perhaps they are no longer a net positive to society. The goods and services they provide are certainly useful. But their status as a monopoly prevents a flourishing, competitive market that could address their failings. Amazon as a product is arguably poorer in quality than it used to be: just look at the state of their spammed-out reviews, scam products sold on their platform, etc. Their logistics offerings (built on poor working conditions) and AWS have certainly improved compared to the past. But other aspects have fallen short.
Maybe we shouldn't speak of companies as being "net positive" or "net negative", but rather speak of what could be improved if there was more competition, more companies, more market. Less monopolies.
So what if their product is arguably poorer in quality than it used to be, so what if there are spammed-out reviews or whatever? You're not showing that any of their competitors are better in the eyes of most consumers, and they definitely have competitors, very large ones in fact (eg Walmart, AliExpress, eBay).
If you think Amazon is unfairly using their monopoly to keep others out and capture the market, state your claim. If you think competitors could do better, prove it with consumer choice.
Walmart or Shopify or eBay or wherever you want to shop are just a click away. If consumers think they can do better, then they will. I have already ditched Amazon for all those reasons. But you cannot speak for others.
Consumer choice is binary, but it's not always tied to quality. There are factors like information asymmetry. Superior competitors may not be able to get a word in edgewise when the dominant player is able to blanket the airwaves with its brand. A disproportionately dominant position becomes a kind of monopoly of its own when its reach and resources are so much greater than the next set of competitors.
The competitors you list also aren't head-on in competition with Amazon. Aliexpress predominantly serves non-American markets. eBay, like it, is an auction site. Shopify does not have one central market, it's completely decentralized. Walmart is the most similar to Amazon, and perhaps with its acquisition of Jet.com and its growing investments in ecommerce, it may yet prove to be a lasting competitor. Stay tuned.
No it's not always tied to quality, it's just tied to what they want. If consumers don't prioritize quality, that's their rightful choice in the market, it's no one else's place to tell them what they should prioritize.
Greater reach and resources is part & parcel of being the top consumer choice. If they blanket the airwaves, if there is some asymmetry, still who cares? You're going to have to show how consumers do not have a choice or how it doesn't help consumers.
Because regardless of how intense Amazon's marketing and reach get, their competitors are still one click away. Finding out about competitors is one search query away, one media article away, or one advertisement away. Frankly, if a consumer is unable to expend the minimal effort to find & choose an Amazon competitor to buy a product, they're basically not trying at all. And not trying is their choice.
Consumers don't have a choice if there is information asymmetry and they are unaware of better offerings. And as I have illustrated, there is no single "Amazon competitor" as they are all online retailers in different spaces. Even Walmart's e-commerce initiatives are relatively new. A cursory search of competitors yields this list (https://www.shopify.com/blog/amazon-competitors) which has eBay (auction house, not in same class), Walmart (relatively new entrant to online space), Flipkart (India), Target (brick-and-mortar, smaller footprint than Walmart), Alibaba (China and APAC), Otto (Europe), JD (China), Netflix (only a competitor in streaming), and Rakuten (Japan and APAC).
As far as anti-competitive behavior, I will defer to luminaries more informed than I
Yes they do have a choice. Information asymmetry does not remove choice, it's just an asymmetry. Are you really telling me you don't have a choice to shop beyond Amazon? Consumers can't know enough to find other ways to shop besides Amazon? Do you know a single person who thinks Amazon is the only possible shopping option, either online or in-person?
It doesn't matter if there isn't a direct Amazon competitor. All large companies compete on multiple fronts. It does not mean there is no competition in shopping.
I don't respond to essay dumps like this. If you want to say something, you're going to have to say it or quote it.
Most people do consider Amazon as the default and online shopping retailer for general goods, as opposed to specialized needs such as secondhand products (eBay, Craigslist, Facebook Marketplace) or specialized products (Wayfair for furniture, boutique retailers).
If you refuse to engage further in this conversation, that is your prerogative and it is noted. We can consider this matter closed.
Ok, a lot of people see them as the default retailer, but they still have a choice where to shop. They can and do still shop elsewhere. A default perception does not remove their choice. Still not a single example where consumers actually lack a choice.
Essay dumping is not conversation. Although it is also your prerogative to avoid conversation as well.
> If Amazon detected lower prices on other sites, it would bury their products in Amazon search results, where they got most of their sales. Some of the merchants were eager to grow their sales on other sites, but Amazon’s policies prevented them from offering lower prices elsewhere to draw shoppers away.
> Amazon constantly scans rivals’ prices to see if they’re lower. When it discovers a product is cheaper on, say, Walmart.com, Amazon alerts the company selling the item and then makes the product harder to find and buy on its own marketplace -- effectively penalizing the merchant. In many cases, the merchant opts to raise the price on the rival site rather than risk losing sales on Amazon.
> Merchants have long complained that Amazon wields outsize influence over their businesses. Besides paying higher fees, many now have to buy advertising to stand out on the increasingly cluttered site. Some report giving Amazon 40% or more of each transaction, up from 20% a few years ago.
> Some merchants are keen to increase their sales on Walmart, which charges less to sell products on its marketplace. But sellers say the price alerts are forcing them to maintain allegiance to Amazon and making it harder to diversify their businesses. Walmart routinely fields requests from merchants to raise prices on its marketplace because they worry a lower price on Walmart will jeopardize their sales on Amazon, says a Walmart manager, who requested anonymity to speak freely about an internal matter.
That's a stretch, Amazon's policies are entirely optional, you don't have to sell on Amazon. It was the seller's self-interested choice to prioritize Amazon placement because consumers love Amazon.
The fact is that consumers continually choose to entrust Amazon the power to pick on their behalf, making it their consumer choice. If sellers leave, consumers often choose Amazon over the seller. Amazon can only "bury" merchants in their search results because consumers continue to be satisfied with what Amazon finds for them. If consumers found Amazon's search results lacking, they can find the missing sellers on other websites. Practically every consumer knows how to buy things online outside of Amazon, a lot of them do it all the time.
Personally, I choose to buy many better and cheaper things outside Amazon. I do not choose Amazon to find any of my stuff. That choice has always been extremely easily available to any consumer, but they don't choose it. Consumers aren't being denied a choice, they have chosen: they chose Amazon's higher fee marketplace.
Be that as it may, it's best to table this conversation until there is more clarity from the DOJ. Without empirical findings, this is just value judgment after value judgment. Let the courts decide. Since that article from last year, Congress has even sought an additional probe for Amazon allegedly obstructing investigations.
There were a lot many years from the time of Amazon's inception till they became a monopoly. It seems like your "what could be" experiment has already been done. There was plenty of opportunity, but nobody managed to build a better competitor to them.
It is a separate argument, but 'more competition' isn't a magical fix to everything. This sort of gating mechanism relies on the end user/consumer having good knowledge, sound judgement, etc. Also what is best for the consumer isn't best for the society. A wild example - For me, as the consumer I'm happy to get an iPhone for $200, but that might mean that Apple pays their employees below US minimum wage.
People spend money on Amazon because it is convenient? However, I don't consider it to be net positive in current society. In many countries like India, many mom & pop stores are closed due to Amazon. They are destroyed thousands of business. Amazon is funneling money into its company which would have been distributed to multiple people. Seeing this drastic implications even CCP tried to clamp services like Amazon, Alibaba in China so they won't be too powerful.
So, I think you need to prove how Amazon is net positive in society?
You could argue the same for the likes of Philip Morris or the Sackler families business. Just that people are very willing to buy a product doesn’t imply that it’s good. So I wouldn’t raise the fact that folks buying Amazon or Tesla products as a pointer that their products are any good perse.
I think so. Cigarettes are enjoyable and Oxycodone is on the World Health Organization's Essential Medicine list.[1] You can also drive your Tesla off a cliff, or attack someone with a knife you bought from Amazon. The possibility of risky behavior doesn't necessarily make a thing useless.
In the interest of full disclosure I enjoy the occasional cigar.
For me, I am convinced that they create jobs, spend money in the economy, help provide valuable goods and services to society, etc. Amazon is famous for not hoarding money but re-investing their profits. Most 401ks invest in index funds that are buoyed by the tech stocks. I don't have ready citations but I believe these to be relatively uncontroversial statements. This whole talk about "net positive" and what is "net" is a pointless discussion that is going nowhere. There is no way to prove anything unless we have an alternative universe without Amazon to study.
States provide the infrastructure and educate the workforce which enables the job creations. Jobs would be created without the rich. See responses sibling post (https://news.ycombinator.com/item?id=31743755) about the issue with 401(k) (or pension funds in non-USA countries).
This is indeed a very controversial statement because the rich are living a lifestyle which is at best unsustainable for the planet. They emit more greenhouse gas into the atmosphere for their own lavish lifestyles. They exploit poor labor conditions and lobby against every minor improvement. They don’t contribute to our shared funds like regular people, decreasing the state’s funds for more infrastructure which would have created more jobs. And they cause stress with their increased wealth disparity. Many research has shown perceived inequality is a significant stress producer. We may very well be bettor off without them.
>States provide the infrastructure and educate the workforce which enables the job creations.
Yes, there is a nice division of responsibilities. But ultimately, governments are doing the jobs they get paid for. And they're not only wasteful with our money (spending on wars, defense, etc), ironically (in a sad way) they pay government workers poorly - See teachers' salaries.
>Jobs would be created without the rich.
Jobs were created at all stages in history in all kinds of social and economic conditions. Also, plenty of rich people got rich after starting companies and creating jobs. We're incentivizing people who like money to create jobs, among other things.
Those are not responses to my comment, so specifically what part of my comment was inaccurate? I can correct any misunderstandings, or improve my comment to fix any errors on my part.
I do love that we have viable electric cars and that I can order something on amazon and have it at my door in 2 days. Seriously, try living in a developing country and have ANYTHING delivered...
It is worth noting that measures of quality of life are often conflated with wealth, even to a degree that they quite often use straight up economic metrics (like GDP) in their models.
On top of that our global capitalist situation heavily favor exploitation in cheaper labor markets. So if you are a millionaire CEO in a rich country you are very likely to exploit your workers in poorer countries (or more likely, the workers of your providers and contractors) which overall increases the QOL in your country while decreasing it in your worker’s country. Your correlation might be a cross causation.
Not to mention little old ladies, 50 year old ex fire fighters and retired unionized school teachers get full generous pensions because of stock market value of companies created by billionaires
Very little stock market wealth is held by pension funds on behalf of workers, as opposed to the already wealthy. See https://www.pensionsage.com/pa/Pension-scheme-holding-less-t..., for example. And the value on these schemes are disproportionately held by those who own and/or run companies rather than those who work in them: the Small Self-Administered Scheme is a popular means of UK tax avoidance for business owners who would like their capital gains tax free, and assets held in these schemes (on trust for the owner) will also be included in these figures.
Returns on capital flow, unsurprisingly, to those with capital. And the concentration of capital in fewer and fewer hands is precisely the issue that people are objecting to.
> But 401(k) plans can still take a significant hit in market downturns. In 2008, for instance, as the S&P 500 dropped 37 percent, the average 401(k) account balance for those who were in their 50s fell 24 percent.
> People with retirement accounts are keeping more of their assets in stocks now, as opposed to bonds or a mix of other investments. “There has been a growing complacency of people keeping most of their nest eggs in stocks,” said Monique Morrissey, who specializes in retirement at the left-leaning think tank Economic Policy Institute. “There has been a fundamental misunderstanding — returns do not always average out.”
> “It’s not just the loss from January; it’s what happens going forward,” she said. “If you were counting on the amount that you have in your 401(k) to continually grow, well, then you may never get to what you had planned for.”
Tying retirement plans to the market only looks good when there's a continuous bull market, less so when the bottom falls out.
> Ok, I'll admit it, billionaires should not exist at all, there should be a heavy wealth tax that makes it hard to become a billionaire. Will a CEO work less hard if he (and his peers) can only ever gain $100M in net worth before a wealth tax on assets kicks in?
In my experience from having known a couple of mega-rich CEOs, yes. Even those who are not principally driven by the money or three-commas social signaling, they still want to leverage their accumulated assets into changing the world in some way. Take that away from them and they lose motivation, yes.
Cool. They can retire and one of the thousands of other people who can (and want to) do their job can step in. If that starts causing problems, companies need to work on training programs for their leadership. It'd be an amazing side-effect if this pushed us toward it being more common to "rise through the ranks" and end up CEO. And if it caused us to start generating tens of people with a $100m net worth for every one one billionaire we'd have had otherwise.
There's a gulf between sam altman and jeff bezos. We can still have rich people with the leverage to act efficiently without giving them the ability to buy entire nations if needed.
What gives these individuals some sort of divine right over citizens in a democracy? I feel like people are ignoring that human history already went through this period in the era of monarchies and divine rule.
It was a disaster then, it's a disaster now, and it'll be a disaster in the future.
Why stop at 100M? Why not 50M? Why not 10M? Why not 250k?
Trying to control the amount of wealth one "should" have is misguided. We should have ways to limit the amount of power that can be concentrated. If we did that, we would have a better shot at having a more equitable society: https://news.ycombinator.com/item?id=31317641
"- no business entity can have more than 150 people."
How is that supposed to work with any labor intensive process?
E.g. I work on a construction project where there are over 220 field craft workers on day shift alone. Office staff and inspectors are another 100 or so. Night shift adds yet more.
Yes, or your company will have to invest in automation. Both alternatives are good.
Third option, we stop working on such large projects, and focus our collective efforts on making our societies and our environments more human-scaled. Again, it is an option that I see as good.
At first brush, it seems that any gains in automation will immediately be offset by duplication of administrative minutiae in all these new, smaller business entities. Administration, payroll, regulatory compliance, safety programs, training programs etc etc this is the absolute opposite of improved productive ability, is it not?
As to the third option, 'human scale' is just cresting 8 billion individuals. We will never escape the need for massive infrastructure projects.
> Administration, payroll, regulatory compliance, safety programs, training programs...
These can be outsourced, automated and/or reduced in scope. Each company would be a lot more specialized in their function, so it wouldn't make sense to keep the same set of regulations and policies that we use for larger corporations.
> We will never escape the need for massive infrastructure projects.
Au contraire, I think that we only push for "massive infrastructure projects" because we are addicted to growth. Governments push for growth as a way to keep financing their debts, corporations push for growth as a way to justify their existence.
If we were limited in our ability to grow and established that things needed to be settled organically, cities would be more dispersed but still dense and suburbia would not exist. Global trade would be impacted, but we would be forced to re-learn how to manufacture things locally. Governments would have to figure out ways to sustain the populations with tighter constraints, but we would not get things like the European dependency on Russian gas, etc.
I'm okay with a poor, powerful person. That means they have their power through some means other than wealth accumulation; popular election or something. People who are powerful because of money usually didn't even get the money themselves. It's the new hereditary monarchy. Get rid of all the money, and you get rid of the undue power as well.
> Get rid of all the money, and you get rid of the undue power as well.
That's philosophically, historically and biologically incorrect. Not to mention that it is incredibly naive.
Fights for power happen everywhere in nature. Occasional imbalances are not the problem. The problem is when a certain group or individual manages to concentrate so much power that they get control over groups.
> That means they have their power through some means other than wealth accumulation; popular election or something.
Although I could challenge you on this idea (quick, tell me one "poor" politician who was elected and continued poor after taking office), this is not the type of "power" that we are talking about, is it? In any reasonable democracy, the only "power" from an elected officer is the one vested by the people, for the people. Any elected officer that abuses their position for their own personal gain should be removed from office.
The "power" we are talking about here is the power to do things uncontested, or to get other people to act in ways that are against their own interests and values. This is more visible with rich businessmen like Bezos and Musk, but it also happens via conglomerates like Disney that use their media and news properties to openly mold society in ways that serve them, or the Union leader who puts any of their opponents on a no-work list.
He was only poor relative to other presidents. But even before it he was a judge, and after it he managed to turn his memoirs into very lucrative book deals.
Taxing billionaires is a simplistic knee-jerk reaction that doesn't address the actual problems people have. It just feeds people's hate.
Consider that people have a lot of problems with Amazon's practices. So suddenly, everyone is yelling to tax the hell out of Bezos. But no one has the drive to actually plug the holes that allowed him to make so much money in the first place. All kinds of employee injustices, environmental abuses, and whatever else pops up in the news all the time.
I don't expect a billionaire tax to have any impact on Amazon's business practices, that doesn't make any sense. Amazon's treatment of employees is a separate issue from a wealth tax.
I just don't think that any one person should have the kind of power that comes from amassing a $100B+ fortune.
> there should be a heavy wealth tax that makes it hard to become a billionaire
Why does everyone want to tax the billionaires? What are you going to get out of it? Do you think taxing the billionaires is actually going to help the poor people?
If so, riddle me this: Name one efficiently-run government organization.
The government is going to take all that new tax money from the billionaires and do what with it? Do you believe the government can efficiently manage the tax revenue to help the poor?. SF gov spends $60k/year per tent for the homeless [1] ..that's called a mismanagement of tax revenue (and probably massive corruption).
Well, its easy then: dont give it to government organisations, just give the money to other people directly in the form of a basic income.
Set up a commercial bank owned by all the people of the US of A (you get one share when born and the share is non-fungible/non-tradeable) then let this bank fund small and medium bussinesses only. They are responsible for the majority of the work anyway. Tax land as well. Profits go to the shareholders and a well pages CEO, who also pays a hefty income tax. Rinse repeat. Set the maximum to a set multiple of the minimum. So you could become a billionaire theoretically, you Just have to make all Americans millionairs first.
I actually like the idea. Unfortunately it will never happen, because ultimately the government decides what happens, and this plan doesn't help the government. Maybe make the current president the CEO of this bank or something and it could get some momentum. But then we have whatever idiot got elected most recently using the bank as a political weapon.
Maybe it is less about the tax revenue and more about preventing power imbalance. Why is it good to have so much power concentrated in the hands of one person?
I firmly believe Musk, Gates, and Buffet to name a few do more good with their money than if any government got their hands on it. Not all the billionaires are bad.
I firmly believe Musk, Gates, and Buffet to name a few do more good with their money than if any government got their hands on it. Not all the billionaires are bad.
A side effect of a wealth tax is that instead of wealthy people building wealth that's just going to be taxed away, it would incentivize funding charitable foundations like the Gates Foundation. Bill Gates has done a lot of good with his foundation, but that doesn't meant that one person should control that much money.
Looks like you need to look Shenanigans done by Musk, Gates etc. I don't know that much about Warren Buffet, but the main point is when you are billionaries you can earn kindness etc.. They hire PR agency so that gullible people like them.
They are really not better than government because these people are the one who lobbies government to vest their selfish desires.
> Looks like you need to look Shenanigans done by Musk, Gates etc
You should check out the shenanigans that the US government gets away with. Whatever bad things Musk, Gates and crew is small fry compared to the government.
"USPS's operating revenue was $77 billion for the 2021 budget year, an increase of $3.9 billion, or 5.3%. It reported a 2020 net loss of $9.2 billion."
There are 2 different metrics and I think you effectively shift from one to other as it suits you..
Metric 1: They provide an efficient service. Posts reach on time (rain or shine), they have systems and process that make the organization not waste effort.
Metric 2: They earn more money that what is spent by them.
By metric 1, postal service, railways and public transport in most places, a large part of governmental services (DMV), medicare in US are efficient. Depending on your neighborhood, even police, fire and ambulance are efficient.
by metric 2, most government services will not be efficient.. however, the government is not a business and I would argue that because people confuse 2 with 1 is why US does not have a better quality of life. The job of government is service using tax dollars.
Take public transport for example. In my mind, it should be mostly subsidized and effectively free. Trying to make it a profit center makes it a "non-public" transport and you end up with limited services which has secondary effect of reducing mobility and restraining the economy.
Funnily enough, virtually all health insurance systems world wide have a higher government component than the US one, and better outcomes at a lower cost.
Well, there should be some objective parameters to determine such things.
We can't vote/sex/drink/gamble because it is assumed that young people sucks. Maybe looking at the statistics government decided 18 years is good? I think if 12 year old can pass driving test then they should be allowed to drive. If 30 years can't pass, they must not be allowed to drive.
So, how about we find objective paramters to determine what should be the best border to determine the elites? May be it is 100x minimum_salary? There are plenty of option I guess.
You know it's this kind of stuff that actually makes the tax code so complicated, but because you insist:
An amount of wealth that would provide you a top %0.1 lifestyle if you were to retire today based on a standard 60/40 portfolio (to be adjusted every N years to reflect new data) and actuary tables.
It doesn't have to be this exact policy, but this isn't hard to think something like this up.
A) inflation b) try to buy a house for 1M in a hcol place. Why would you set the max wealth less than that of a house, something that most humans have been able to own for most of human history, now out of reach for a generation.
You need to realize that absolute numbers are meaningless, they are all relative to costs and inflation. Trying to lock down fiat absolutes is a moving target.
What is a realistic wealth limit for BTC, out of 21M?
Should nobody own more than 1/21Mth the Bitcoin? Less? More?
"Probably" seems the key word here. Many people have a slight preference for a policy with wide ranging ramifications. It's better to be unconvicted on matters that are inconsequential, like whether tea or coffee is the superior beverage.
> Will a CEO work less hard if he (and his peers) can only ever gain $100M in net worth before a wealth tax on assets kicks in?
Yes. You would increasingly see founders depart their companies as soon as a heavy wealth tax kicks in. It’s difficult to prove that this would have large net negative impact on overall well-being, but I imagine it would.
Wealth taxes are an administrative nightmare. It’s very difficult to reasonably price private assets in an illiquid market. Figuring out how much to charge and collecting it can cost more than you bring in. Patrick Boyle touches on this in…
Then another entrepreneur who hasn't yet made $100M can start a business in the same space. If the market can bear both businesses, then they both win. If it can't, then they're in direct competition and we're still better off.
This actually sounds better than what we have now: monopoly as the end goal.
Then why don't we set the cutoff at £10k instead so that the very poorest have a chance?
Or set the cutoff at just above the poorest person's net worth. When they make some money they won't be the poorest any more and next year it will be updated to the new poorest person's net worth. That way we make sure everybody has a fair chance at getting rich.
Or is it possible that those who have a demonstrated history of wealth creation are actually better at it, and we're all better off if they continue to do more of it?
What you're describing would actually be much closer to a meritocracy than what we have now. The fact that your proposition frightens people shows that they don't actually want a meritocracy at all.
Many of those wealth creators you describe would get annhilated in the markets if they were on a level playing field with everyone around the world.
Reminds of a CEO’s tweet yesterday that software engineers making $400k+ are the real problem, and it got lots of likes. Today we day a billion is too much. Where do you draw the line (obviously, start with the billionaires and not with the workers), and who gets to decide?
I don't think reaction to a twitter post is a good judge of how it would be received here -- many of the software engineers here are probably already earning over $400K in total comp. Well, at least before the recent market drop.
I don't think engineering salaries are "the real problem" but, they certainly are "a" problem for many companies whose business models don't print cash the same way FAANG companies do but try to compete on comp, and that's what the tweet was getting at.
You mean MAGMA (Microsoft, Apple, Google, Meta, Amazon) companies?
It seems Netflix doesn't have a sustainable business model as they have too many direct competitors in the field, price increases in their own plans and little to no diversification in other sectors. Unlink the others MAGMA companies, Netflix is not in multiple sectors to get in more cash and are stuck in a single niche.
Hence, why out of the FAANG companies, stock compensation at Netflix crashed and they had no choice but to announce layoffs.
> Will a CEO work less hard if he (and his peers) can only ever gain $100M in net worth before a wealth tax on assets kicks in?
I empathize with the quick back-of-the-napkin math ("if we could just take Bezos' money and give it to the poor..."). But I think there's an important nuance here.
You're making it sound like the only group of people that would be affected by this are the folks with $0 in net worth, so that the upside is $100m. In reality, anyone who's ever earned the first $100m (not inherited or won in a lottery), only ended up accelerating their ambition and likelihood of doing a lot more. Case in point - all of the Paypal mafia - they are all working their asses off every single day, and none of them would have had the upside that you're talking about.
In short, your proposal would basically mean that you're going to force into retirement anyone who demonstrates to be a 1000x doer. In the worst case scenario, the opportunities those people would have created would be lost for a long amount of time (eg: creating a domestic automaker that turns the ICE industry upside down). At best, you would be expecting from unproven people who have not yet validated their abilities to execute on those opportunities with the same level of success as the 1000x doers.
So it seems to me that the question is not so much "what could we do with Bezos' money," but more "how much of Bezos' money are we comfortable with not being generated at all to ensure that he never has more than $100m."
Recognize that you — and everyone else — are relying on him to work just as hard, to take on just as much responsibility, while sacrificing more and more for every incremental dollar of value he creates.
Your question implies a hope that the CEO will continue to take on massive responsibility and produce massive wealth, even when the main beneficiary of his productiveness will be the government, not him.
If he doesn't choose to work harder, every incremental dollar disappears and the scheme fails. What happens then?
This assumes that CEOs of massive heavily profitable company provide meaningful and productive contribution to the company, which is very much up for debate.
Just as a mechanical question, say you create a website, things go well, and now your website is worth $X billion. What should happen next? Is it still yours, or do you have to sell it?
When the federal government taxes people, it's not collecting money, it's deleting money. That makes the money of people who are taxed less inherently more valuable. In this regard, if the federal government were to tax people — especially the rich — considerably more than it prints money, then that would be a very effective anti-inflationary measure and a hell of a lot more friendly to the poor than raising interest rates.
Yes. For certain definitions of "less hard" - he probably would work the same time, but he would have less new projects, less new investments, etc. - some companies that we know now would not exist, because there would be nobody having that kind of money laying around to be spent on crazy projects. Coinbase would probably not exist, because people who were crazy enough to spend money on that kind of extremely risky investments would not have that money around. It's not that those people would be poor - no, they probably would still have nice mansions from those $100M they were allowed to keep. But they wouldn't have enough money "they don't need" to throw them around on highly risky and completely insane projects like making a platform that trades "currency" which relies on bunch of computers repeatedly running hash functions.
The best argument I can think of for why humans should not have wealth disparities at levels of 500,000,000,000:1 is that Tax Induced Psychosis appears to be a thing.
Having to write 10 digit checks to the government makes people behave irrationally. We are just not evolved for it and likely never will be.
Most self-made billionaires in western countries exist because they have made something valuable that the public can’t stop buying or investing in. The public are just as selfish humans trying to do what is best for themselves, just like the billionaires.
Think of J.K. Rowling. She is a billionaire because parents are selfish and want to give their kids the best stories to read and watch.
Bill Gates made his wealth because people and companies wanted to use his software for PCs, and investors want a return on their stock investment.
Society can’t stop giving these modern billionaires money because what they have to offer is such a good deal.
The only way to make Bezos stop accumulating wealth is to have everyone stop using Amazon and sell Amazon stocks, which is impossible at this point.
My two cents:
Introduce a wealth tax that only kicks in after $1B or even $10B so people still have plenty of motivation to work and get rich.
You are allowed to keep control of a company, (e.g. Elon can keep control of Tesla), but then the stock has to be structured in a way that all financial gains are in a separate vehicle that will be taxed 100% as soon as the stock is sold.
Finally (and most crucially), the money raised by this “tax” will not go to a governments pot but directly be distributed as cash to all Americans to make sure that it can’t be wasted by bureaucrats nor used for partisan purposes.
Basically, if $500B is raised in wealth tax in 2022, by mid 2023 every American gets ~$1500 in cash to spend.
As always, why is the magic number a billion dollars? And how do you draw the line in regards to stock ownership, prevent a founder from owning a certain amount of stock once its value exceeds a billion dollars?
As always, pick one and deal with it. This whole "billionaires are geniuses and figure out the world's hardest problems but simultaneously can't figure out how to be taxed" shtick has run its course. Of course, no solution will be perfect. That's life and how everyone else deals with things.
There are several ways to accomplish taxing the mega-rich that don't require rewriting the laws of the universe. It's just that nobody in charge, because they're either the mega-rich themselves or puppets of the mega-rich, wants to address it.
Middle-class folks are taxed at 20-35%, so it literally works all the time for everyone else. Inequality continues to rise and wealth continues to concentrate. This is because taxes that used to work and be in place for the rich are no longer there. The wealthy used to pay much more tax.
Are you seriously okay with the ultra rich living by completely different rules than everyone else? I think it's probably underestimated how much they get away with not paying.
Having a billion dollars is a side effect of our current system. Much more useful to focus on system level incentive than to focus on a small minority at the top.
If there's people with budgets for yacht, then there are a much larger group of people with budgets for fancy houses.
And an even larger group of people whose incentive is to see the price of their homes rise, contrary to the societal goal or providing affordable homes for everyone.
If you implement a nationwide land value tax, I believe the wealth disparity will start to disappears and there may be less billionaires, but everyone will benefit.
> Much more useful to focus on system level incentive than to focus on a small minority at the top.
The issue is that the minority at the top can easily hinder development of system level incentive to cement their power, once they have achieved such a power imbalance.
There should be an exponential wealth tax past a certain point. It's absurd anyone thinks it is sane to let people amass infinite wealth, eventually it just obviously fundamentally breaks democracy.
To pay the wealth tax you would need to reduce your ownership in the company to pay the tax until eventually you are just another minor shareholder with a leadership position (for now at least). And eventually is not long (under Warren's proposal it would be ~5 years before jeff bezos was no longer a controlling shareholder).
So the question really becomes, will the outcomes for the company be as good when no one leading it owns it or benefits directly from its success.
Is wealth tax paid on unrealized gains? If not, these billionaires would only pay the wealth tax when they liquidate their position in the company they founded. Until then, it's just paper wealth and not taxed.
By current COIN marketcap he is barely a billionaire. I figure by the end of the month and another rate hike, he will no longer qualify as a billionaire.
These billionaires don’t have a billion dollars in cash. They have a huge chunk of a company shares that are currently valued at >1 billion.
So what you’re proposing is just that a company’s shares are taken away from the founders/execs as the company grows. It’s not just that you’re taking wealth away from them, but you’re fundamentally forcing them to sell off control of the company.
Well, I'm not proposing that people and companies do anything specific, it's up to them how to handle it. Maybe they'll choose to use less stock based compensation and more cash, maybe CEO's will end up with less compensation in general and the companies will retain more of that money for their own operations.
but you’re fundamentally forcing them to sell off control of the company
That part is true. Billionaires can retain control of their company by being good leaders and providing value to the company, not because they started it 20 years ago and retained a huge amount of stock.
> Well, I'm not proposing that people and companies do anything specific, it's up to them how to handle it.
There is no other way. I don’t think you understand how shares of a company work. There isn’t some secret treasure chest of cash the owners have to pay that burden. They just have to sell off portions of the company because that’s what has value. This eventually results in a loss of control and dim-witted bureaucrats like the fund managers at black rock start to dictate direction.
The whole stance is antithetical to innovation all for the sake of wanting to take something because it has a high potential value.
I'm just a run of the mill average joe, who has a rock that has been in my family for generations. Turns out some weird little cult likes my rock and wants to buy it for $1B.
Should I be forced to sell my rock, because I'm getting a $500M tax bill from the government because some weird little cult said they would pay $1B for it - regardless of whether I want to sell my rock?
There's a great thought proposal on how to tax assets fairly. In this system, you are taxed at the self-assessed worth of an asset. However, if somebody bids over that price, you are obliged either to sell it to them, or raise your self-assessment.
It's somewhat of a game (joke perhaps), usually used in the context of ways to fairly assess land value.
Why is the rock yours? How did your family attain ownership of it? If the rock means little to you, why should you have it rather than the cult that actually values it? What if the cult wants to preserve the rock but you want to destroy it even though that will cause great pain to those who care about it? Why should you have permanent ownership of a rock just because your parents had it?
> Why is the rock yours? How did your family attain ownership of it?
The rock is mine because my family bought land a few hundred years ago, and the previous owner thought the rock was ugly and let it for us.
> If the rock means little to you, why should you have it rather than the cult that actually values it?
The rock means a lot to me, because it reminds me of my ancestors. I value it, but I just don't have a billion dollars to attach to it as its value.
> What if the cult wants to preserve the rock but you want to destroy it even though that will cause great pain to those who care about it?
I dunno. I think it is my rock and I can do with it what I want. But I don't want to destroy it, I just want to keep it where it has been for the past 200 years, near my family home's fireplace.
> Why should you have permanent ownership of a rock just because your parents had it?
Because that's how ownership works. If anyone can come take anything from you at any point, then I don't think you can ever be considered to own something.
You set the table to abolish the notion of property. It's hard to extrapolate what effects that would have on modern societies... it hasn't really been tried. I'm not saying it's an inherently bad idea, but the proponents of that kind of idea always seem to paint rosy visions based on extrapolations from inappropriate samples.
Maybe you can say you don't have to fully abolish property. But it remains especially hard to predict what second order behaviors any particular implementation would bring about, and what steady state would result from them.
Per your example, if the expected ruling of society would be that gp doesn't get to keep the rock because they don't "care" about it... well, maybe people in their position would suddenly find themselves caring about the rock very greatly. Not even cynically -- if the choice presented to you is "value or no value", the limbic system suddenly becomes very persuasive.
Should I be forced to sell my rock, because I'm getting a $500M tax bill from the government because some weird little cult said they would pay $1B for it - regardless of whether I want to sell my rock?
If you don't want to sell your rock, then set up a family trust to hold the rock with the provision that it can never be sold, then the rock will have effectively zero taxable value and you can keep it in the family forever.
If you don't want to do that because you might want to sell it some day, then it's not really a family heirloom, it's an investment.
Or, put the rock in a trust, tell the cult that they can take ownership in 100 years and have access to it once a year for ceremonies if they'll pay you $100M today.
So here is the thing. Your rock, your wish. It is wierd when you get to take interest free lines of credit on the 1B valuation on the rock and never pay the 500m in taxes :)
Either the rock gets sold and the income is realized and the taxes are paid then, or the rock ends up being worthless and the loan margin called for possession of the rock and the remaining value is taxed as income. Either way the taxes get paid in the end.
I have the rock, it is now worth 1 billion dollars. I take out a 50 million dollar loan from the rock and put it into the stock market, which lets say has 2% average real returns over interest (probably low if i have 1 billion in collateral).
I pass the rock on to my children and die 20 years later. The 50 million is now worth 74 million.
Both the rock and 74 million are stepped up to their current value when I pass it on to my children. The children repay the loan with their 50 million and now have 24 million and the 1 billion dollar rock still, tax free.
The tax code, today, in practice, already frowns very much on tax deference, and tries to inhibit it when possible. The AMT-schedule is purposely designed to pull tax forward, and precisely discourage strategies for tax deference e.g. to counter the abuses that would arise by using stock-based (or cult rocks) compensation to avoid income tax.
Property tax (which is a wealth tax) is another way to siphon off tax on unrealized wealth.
I'm not disagreeing with you. I only added that, from a tax collector perspective, tax deference and tax avoidance are on the same spectrum, and they will seek out mechanisms to make deference impossible. I gave an example of one of these mechanisms at the federal level (AMT) and one at the municipal level (property tax). But yes, doesn't mean there are other strategies to defer ("avoid") taxes still left.
So taking the avoidance vs deference analogy. If I borrow money for car, house, boat, plane tickets, but never have to pay it back where does that leave my obligations?
Can you explain how it is a strawman? I've never seen any kind of wealth tax proposed that takes into account how the wealth was acquired, or what form the wealth was in.
A wealth tax scenario, like all taxes in real life, will have its share of exceptions, carve-outs, and loopholes. Meaning the wealth assessment process will inevitably be far more involved than "a weird little cult offered a billion dollars for it."
Now, from a parable perspective, does the post mirror the principle of how wealth taxes work? Maybe, if you're willing to equate the entire market (or whatever communal entity we're using for the basis of assessment) to a weird little cult.
Ok, it is not a weird little cult, but literally everyone in the world who wants my rock because it is so beautiful. I don't see how that tangibly affects any part of the parable - which is forcing me to sell something I own because someone else with more money than I have wants it.
Presumably physical collectible assets (maybe also virtual ones too for the NFT crowd) will be assessed differently from more liquid assets for the basis of evaluating a wealth tax, especially in the event of surging valuations from the collectibles market. If real life taxes, like say property tax in California, can be reined in by measures like Proposition 13, then there's no reason why a real-life wealth tax won't be subject to all sorts of internal controls and effects from lobbying. Thus protecting the "run of the mill average Joe" from having to suddenly sell his mythical rock.
What about surging valuations in the equities market? If I'm worth $1B for a few moments because of a surging valuation, and then the government takes $900M of that, and then the stock crashes back to 1/100th of its peak, do I get my shares back?
Just as current income taxes have a hard deadline in which financial assets are assessed, your extreme edge case is only applicable one day a year, rendering it ever the more trivial.
Not to mention, the calculation for wealth would probably be based on something less temporary than a fleeting moment in the markets.
Finally, the government would not directly take shares, so they would always be owned by you. Presumably with the stock price so much reduced you can simply purchase more at a pittance.
I'm not sure if I would particularly care that it was just an edge case that caused me to miss out on $99M.
They wouldn't take shares, but I would be forced to sell shares in order to pay the tax bill, because I don't actually have that money just laying around. So I had 10M shares @ $1/share, share prices go up to $100/share. I get hit with a $900M tax bill and sell 9M shares in order to pay it. Price goes back down to $1/share, leaving me with 1M shares. How exactly should I purchase more at a pittance? I spent all the money I didn't even have paying the tax bill, there's nothing left in my bank account to buy any shares.
So it is no longer "Billionaires shouldn't exist", but "Billionaires who build a successful business shouldn't exist, but if you uncover a hidden treasure trove you can be a billionaire"
If you find a treasure trove worth billions of dollars, it is probably also of such archeological, historical, and cultural significance you are doing an immense service to humanity that you deserve it
Maybe it is just someone's old pile of gold. Like the San José galleon. Sure, it will be cool when it is raised, but I'm not exactly sure that it is going to change the world by bringing it up rather than just leaving it there.
By this same standard, maybe Amazon is doing an immense service to humanity, and that is why so many people use the site daily, and actually enjoy doing so. So maybe Bezos should get to keep his billions as well.
Maybe I never weighed in on the question of whether there should be billionaires or not, but you have simply projected a strawman upon me, which is fitting because this whole thread was started because I said the aforementioned parable was a strawman.
Currently, gold retails at $1808 an ounce. So it would take over 15.6 metric tons of gold to be even worth a billion dollars. That is substantially more than an "old pile", and probably of historical worth, like contained in a ruined temple or wartime vault or something
Sorry, it's hard to keep track of who believes what when I get multiple replies to my response to a single person, where there is no continuity of viewpoint between the responders. I don't think one can really have any kind of cohesive conversation that way because literally everyone is arguing something completely different. I just assumed you agreed with OP.
The San Jose galleon as I mentioned is estimated to have about $17B of gold on it. I don't think very much is going to change about the world when it is raised.
Niels Bohr said, “There are trivial truths and there are great truths. The opposite of a trivial truth is plainly false. The opposite of a great truth is also true.” And indeed, every conversation is a web of many truths, all worth examining. Ponder upon it, and one day it shall set you free.
Whether you're receiving the value of the asset or not, you're locking up the value of the asset and preventing a larger group of people from benefiting from the value of the asset, which is sort of the point of a wealth tax.
The actual value being locked up is surely held by the cult, not the owner of the rock? They're the ones who claim to have a bn to spend on a rock after all, the other guy just has a rock. Why can't the cult spend their money on something better than the rock in the first place?
In actuality it's not a rock of course. For a founder of a company the situation is more like you've spent most of your life building something you believe in and suddenly you have to sell it because a group of strangers believe that your thing is worth more money than you've ever seen in your life, and the government wants taxes based on that belief. That seems fundamentally unfair and wrong at least to me.
What is the locked up value of the rock? I like it because it reminds me of my grandfather, and the cult that will buy it will lock it in their storage room.
My point is: With a wealth tax, anyone with money can take anything they want from anyone without money, even if the person without money doesn't value something in the same way that the person with money does.
This is a contrived example that you've twisted yourself in knots to try and justify. There isn't a person on this planet that wouldn't sell an heirloom for $1 Billion unless the heirloom was actually worth ballpark $1 Billion.
The people that wouldn't sell it for a $1 Billion are the people that would give it a way for free, ie: those that have little value for money.
No it's really not. It's an illustrative example of how a wealth tax would (fail to) work. The issue at the core is that items only have value while they are exchanged. Fiat is the only thing with the characteristic of persistent value. So trying to tax standing wealth is fraught because wealth doesn't actually exist in that form.
Then simply don't tax fixed assets. Sure, sure, then people will simply avoid taxes by converting cash and other assets into properties that are not directly taxable, but that's just how these cat-and-mouse games go.
That's what you should be doing because the government should be extracting taxes on the exchange of fiat for for assets and then back to fiat. That's how things already work in fact. People are just angry that other people find value in e.g. Elon Musk and Jeff Bezos when they otherwise don't and want to tax away their entire existence because justice. The alleged problem is those people still have billions even after paying taxes on the acquisition of assets. I'm all for fixing tax loopholes so people can't hide money and avoid existing taxes. How about starting there and actually taxing the tangible before trying to tax the intangible? Companies can and in fact are supposed to grow in value. If the company you own becomes super valuable, you win. If we are unhappy how valuable some companies can become, then you need to cap that and actually break the companies up or progressively more heavily tax profits (which are tangible) such that the company can only become so valuable to investors/owners after which it ceases to provide any additional value because it makes too much money. But since everyone hates Bezos while happily paying for their yearly prime membership, that won't happen. And indeed, Amazon doesn't make incredible amounts of money, it's just ubiquitous and provides a lot of utility which is what makes it valuable. Bezos fought investors for years and years pushing his narrative and strategy of minimizing short term profits to build a company that people literally can't live without and it worked. Crazy. Maybe the government should just buy Amazon...
Can you explain how it is a strawman? Someone else accused it of being a strawman, but then could only claim that it is "contrived", which is not the same as a strawman.
So where's the strawman? Would the person in this scenario not be affected by a proposed wealth tax?
Also, I don't really get how it is "simping for billionaires" in the slightest. If I said that billionaires shouldn't be pulled from their mansions and lynched, am I simping for them too?
It's not a straw man, I believe a better idiom would be 'the tail wagging the dog', i.e. you're using an extreme edge case to argue against the big picture proposal. A real tax would include the small picture details: payment plans, equity swaps, valuation tribunals, etc to cover the oddball cases. But none of that would matter, you would sell it and net the $500M.
Even with payment plants ,equity swaps, valuation tribunals, it would still be the case that someone with more money than me can force me to sell anything I own to them, by placing a value higher than I can pay on it?
I find it odd that you think that amidst this world of legal tomfoolery and loopholes - a wealth tax could not be conceived that doesn’t force artificial valuations and liquidations.
No. The rock is worth vastly more to the owner than the cult which is why they won't sell it. However, the value is intrinsic... it's priceless. It's worth infinitely much to the owner regardless of how much anybody else thinks it should be worth. Therefore, it's impossibly to tax the owner infinitely for their intrinsically valuable rock...
This means that if your business grows to a multi billion dollar valuation, you are reward for your success by immediately losing controlling share of your business.
This might mean that motivated found might work less hard to make their businesses as competitive and big as possible, and could slow down the pace of innovation.
The world would be a better place with fewer monolithic walled gardens. It would encourage CEOs to build $999M businesses that interoperate with other businesses on the free market rather than acting like a cartel controlled within a single organization.
After $100 million dollars it becomes very hard to spend money on consumption. Having that much money is so you can do things that Blackrock and Vanguard don't want you to do, because they would own your company when you had to sell to pay wealth taxes.
What you say may sound good in theory. But how will you implement it?
Everyone who is worth billions has their worth in shares. so if it goes beyond a billion, you tax it away. What if it falls, will you give it back? so you will keep redistributing and giving it back?
The issue with that thinking is that not having billionaires isn’t going to automatically redistribute that wealth onto others. The most likely scenario is that that wealth would’ve never been created… and neither will the jobs that came with it.
By that same logic, why should USA salaries be higher than the rest of the developed world? Will you work less hard if you can only get $70,000 versus $200,000? The CEO is an employee. The owners of the company hire him/her to do a job.
I think the wealth question is phrased wrongly: how much wealth is somebody allowed to have? Rather the question should be: how is such excessive wealth generated in the first place?
Billionaire level wealth comes into existence by means of a concept that is alien and bizarre when you think more deeply about it:
"Percentage-based future-facing ownership".
Also known as "shares". Emphasis on the word "percentage". You're the 30% majority shareholder and founder of a startup worth some 1 million USD in total.
10 years later, it's turned into an empire. You're still the 30% shareholder but now of something worth 1 trillion.
Superficially this looks reasonable to people but it is in fact bizarre. You scale up wealth from 300K to 300B just by the societal agreement that there is such a thing as percentage-based ownership of a variable thing. Which is a concept that is entirely made up and does not exist in physical reality. In a way it is future-capitalism. You lay claim on value that doesn't even exist yet nor will it actually be produced by you typically.
This jump from 300K to 300B can't be justified or explained by "hard work", risk or any other personal attribute.
Imagine you go fishing with friends. It's your boat. You paid for it and need to maintain it. So the friends agree to give 50% of fish caught that day to you, to cover costs and as a reward.
The next day you meet your friends again and declare: by the way, actually 50% of all fish in the pacific ocean are mine.
I appreciate the sentiment, but I'm more comfortable with wealth in the hands of progressive billionaires than a government that's likely to go on a regressive tear every four years.
I mean it in the dictionary definition of the term: a person advocating or implementing social reform or new, liberal ideas. I'm aware there are conservative billionaires. I don't think that negates my view that you're more likely to see long term progress on many issues through private funding. US government budgets swing wildly every few years depending on what ideology is in power. By design, that's a conservative force (in the traditional sense). My government is simply not designed to do a lot of the things we sometimes want it to do, like cure malaria.
We need more billionaires to exist. They create wealth through enterprise.
It is astounding how many people naively just think "Too much money = bad". Billionaires don't really have cash sitting in their houses. They created companies, often from scratch, that wouldn't otherwise exist.
GDP per capita grew because the wealth was created, not stolen. The entire pie got larger. We lifted people out of poverty from 90% in 19th century to what it is today 10% through capitalism and trade.
We need more billionaires to create wealth and propel society forward.
Crony billionaires, politicians, inheritance wealth, etc. need to be condemned and we usually throw the baby with the bath water along with the whole tub.
Billionaire hate is getting out of control because people are convinced naively. I suspect some malaise in economics education.
Has there ever been a study on how many "productive" billionaires there are, as compared to those who are simply rent-seekers?
Or a study that has shown that billionaires ("job creators") are those who are the primary driving force for wealth creation?
Or are the much-bandied Gates/Musk entrepreneur-industrialist types just a minority of billionaires, many of whom are just wealthy heirs or hedge fund owners or whatever
You don't need an economics education to understand the implication of wealth being concentrated in the hands of a few people. This idea that billionaires generate wealth is myth.
I would like all levels of wealth to be treated the same. Why do we penalize people for being successful? If I knew you and, by some stroke of luck, you happened to become monocle and top hat wealthy I would congratulate you on your success. I would even buy you dinner to celebrate. I would not demand a share of your wealth just because you have a lot of money.
There are some systemic issues that cause wealth inequality. We should focus on fixing those issue to enable more people to enjoy success. Not trying to take from the most successful individuals in the grand game of life.
I assume you mean "relative to people that are less successful". The answer is because the marginal value of wealth decreases the more you have.
If you're poor, $1,000 is the difference between your kid seeing the doctor or not. If you're rich, it's a nice meal out.
> There are some systemic issues that cause wealth inequality. We should focus on fixing those issue to enable more people to enjoy success.
The core systemic issue is that wealth is a positive feedback loop. The more you have, the more you can leverage it without losing it in order to get more.
Treating all levels of wealth the same is directly incompatible with resolving this positive feedback loop. You need a counterbalance that scales with the level of wealth, because the magnitive of the positive feedback loop does.
So? Are we not all to be treated equally under the law? It doesn't matter that higher income earners are able to pay more in taxes. The government is required to treat all individuals equally.
Fix the problems that exacerbate wealth inequality.
Remove regulations that inhibit competition.
No business is too big to fail. (Most big banks would have been destroyed in 2008)
Stop manipulating the currency to the benefit of the investor class.
How wealthy are you? If you don’t like me asking a question then it’s a bit hypocritical to make comments about others wealth. If your net worth is over 100k USD I think you should only have 10k and the rest be stripped away from you and give the needy? You don’t like that tough your freedom isn’t yours.
I’m honestly not trying to be confrontational but you shouldn’t just impinge on peoples freedom to acquire wealth. Those who do shouldn’t have any. Those who have some level and wealth and try it. Well they are just pulling up the ladder behind them.
why? So instead we have government officials with more money to hand to random cronies and massively wasted via graft?
What I like about billionaires is they cut through the red tape and often through the inefficiencies. I actually like they don't need consensus to decide what to use their money for. I don't agree that taxing that money away from them is a net positive for society.
It’s not about whether humans think it’s moral or right or whatever that there are people with exponential wealth. It’s just how exponentials work and no amount of policy will fix things like this. There will always be holes because the demand and income are exponential and the money has to go somewhere. You can try to enforce communism and redistribution to employees but imo that just makes the problem worse with the top leaders of nations finding ways to get even more of the pie for themselves.
The other thing to keep in kind is that while having 100mm is a lot of money, it probably does not change your life in exponential ways compared to 10mm, so you can consider some of the wealth essentially “burnt”. Don’t worry too much about specific numbers, as long as normal people have enough purchasing power to survive and be happy.
you are making the incredibly naive assumption that taxes is capital that is properly allocated once seized. more often it isn't used well. what gives the government the right to wastes someone else's hard earned money?
That it wasn't hard-earned money but simply a product of exploiting what society provided to them: skilled labour and collective time to build their vision.
They might manage this vision, take on more risk, etc., nothing about that is work enough for them to be rewarded orders of magnitude what they pay others to exploit them. It's a very basic morality issue, better that society wastes the product of exploitation than a single individual.
Christ on a skateboard!? All the temporarily displaced billionaires in this thread are something else.
If you require more than 100M in net worth to be "motivated" to work. There's a larger problem with you. Being a CEO/leader doesn't require some skill set that's given to you from some mythical watery being just because you're special.
An odd way to attack the problem would be to demean the personal liberties of someone else based on nothing other than your own personal feelings. I don't see how either of these lines of argument achieve any useful or realistic end state.
It's a topic almost perfectly designed for a useless shouting match.
Meanwhile. In the 1950's, citizens in the US were expected to pay around 50% of the cost of running the government. Corporations paid 25% of the share and the rest were import and other use taxes.
Today, citizens are expected to pay 85%. Corporations pay a mere 7%, and they enjoy reductions in the other tax categories more readily than citizens and consumers do.
The elite business class billionaire CEO is just a symptom of this problem, and a fraction of the overall class anyways. Tiger Woods just joined the three comma club recently.. what was his original sin?
No not in some sense but legally. And what the OP was saying that the tax burden is split unequally between individuals and corporations. While corporations enjoy the legal benefits of personhood, the same doesn't apply to them when it comes to taxation.
The extent of the point I'm trying to make is sense people are the only things making decisions any tax you can levy on a cooperation can be equivalently thought of as a bunch of taxes on individual people. The situations are the same
100M in net worth would motivate me, but one of the differences between me and a talented CEO is that I don't already have 100M in net worth. Gates had well over 100M when Microsoft went public in 1986, Bezos had more than a billion when Amazon went public in 1998, Musk made 150M on Ebay's Paypal acquisition in 2002. We may disagree on whether we're better off that they continued working, but I don't think they would have done so as a public service after they capped out lifetime income.
> I don't think they would have done so as a public service after they capped out lifetime income.
That is definitely the big question. Given that Gates is busy donating most of his cash to charity, there are counterexamples.
But even biting the bullet and accepting the premise, it’s not immediately obvious that losing all of the work from current billionaires would be a bad trade in exchange for substantially reduced inequality.
My counterpoint is that most billionaires don’t seem to be continuing to work hard primarily to get another billion. It’s more for the fun/fulfillment and status. If they can still have fun and status even without controlling as much wealth they will probably still go for it.
Why should so few individuals have outsized social, political and economic power over the whole country? Why not tax them more and let elected officials representatives decide how best to spend the money?
>Why n̶o̶t̶ ̶t̶a̶x̶ ̶t̶h̶e̶m̶ ̶m̶o̶r̶e̶ ̶a̶n̶d̶ let elected officials representatives decide how best to spend the money?
>Why should so few individuals have outsized social, political and economic power over the whole country?
Regardless of which political party you root for I'd be shocked if your really thought elected representatives do a good job of spending money, especially to the point you think they should be given MUCH MORE money.
They're elected for their political platforms and ideology, not their ability to manage budgets, evidenced by alarming deficit spending. Overwhelmingly across the world, governments have a proven track record of wastefulness, inefficiency and bloat.
In the last few years, elected officials (in the USA) spent over $10 billion on a wall. The previous admin's COVID relief bill included billions towards missiles, warships and other military spending. The current admin's $1T+ infrastructure bill allocates less than half of that amount towards roads, highways, bridges, tunnels, etc.
It includes billions in corporate subsidies and items like over $500M to Alaska including $100M for an airport when no other airport in the country even received $10M (AL senator Shelby is the ranking member of the Appropriations Committee). Middleburg VA gets $2M for a new town hall, and Palo Alto CA gets $3M for their history museum. Giving these people _more_ money is madness.
Because they created an outsized amount of value and jobs for society. You can say those would have happened anyway but that's a pretend world we never saw working yet.
The power and budget of the government makes billionaires look poor.
Blaming billionaires is failure to see that the money is already available, it's just that the voters refuse to stand up. Why would more money in the government's hands change anything?
Because billionaires are already having undue influence over politics and are funding policies that don’t always have the support of the voters. Why not tax them more and let the representatives of the people make decisions independently for better or for worse.
Ask any competitive person how much fun they have competing when nothing is on the line (e.g. playing simulated poker or cash poker) and I think you have your answer.
You make a few errors here. First, your example is something most people don't find particularly fulfilling in the first place. Second, they could give away a portion of their wealth and then there would be money on the line. Third, the fact that there isn't money on the line doesn't mean there is nothing on the line.
The fun and, the status and the power come from controlling wealth to build or do things. As soon as you limit control, it stops being fun and they stop generating value.
If you think 100 million dollar houses are egregious, you could try to make building them illegal. But then they'll just buy one in another country, or a yacht, or something similar.
Isn’t Gates richer now than he was 10 years ago (including the Bill and Melinda Gates foundation)? If he’s going to give away his wealth, he should probably get started.
Zuckerberg has more money than God at this point, yet he still shows up every day. Is he really motivated by tacking on another bunch of billions? I suspect not.
So you're saying all of those figures were more motivated by money rather than building something of value. Do you truly think they were more motivated by money than by glory, a competitive spirit, a desire for legacy?
Money is how they measure glory, its how the competition is scored, and it’s how they buy legacy.
There are people who are not motivated by money, but they’re not billionaires. They’re professors, priests, politicians, etc. Pope Francis has achieved more glory and fame than nearly any billionaire CEO.
Yes, the billions is hugely motivational to those who have them.
> Money is how they measure glory, its how the competition is scored
They can still own the trillion dollar company for glory and fame; they just can't cash out.
Also I don't think there should be a cap, but the tax rate should go up indefinitely, causing diminishing returns for higher earners. I pay a higher percentage of tax if my employer pays me more, but I still prefer higher paying jobs.
I'm a big fan of 100% taxation on anything above 999M, but my continuation here is that anyone that earns more than that gets a trophy for every additional 1B they earn put on display in a big museum in a city of their choice (Museums selectively scattered around the US).
If you could push a button once an hour that gave $1,000 to you and $99,000 to the government you are saying you'd feel like you're being punished for pushing it?
Let's not pretend that billionares are working 1.44 million hours a week to earn 18000 times what the janitor earns working two jobs in an 80 hour week. The quality of a billionaires 'work' is different than 'real work' so what you feel intuitevely about work may not be a great touchstone for how billionaires should be taxed.
There is no button. That framing is dumb because it implies no risk and no alternative locations where capital can be applied with the same risk and lower taxation.
Let's say I earn over the threshold, and I can now either choose to continue to try and innovate and add value to society, or retire to a private island and just become a carbon contributor, I mean, why work myself into the ground if I can no longer benefit?
Most people have assets not liquidity too, so it's like saying, if you own too much, you have to stop. Well, what if Elon stopped and we reverted back to dropping rockets into the ocean? What if Bill Gates stopped and never did any of the philanthropy that he does?
I feel like this is used by people as a cheap excuse for a problem they can't solve.
> What if Bill Gates stopped and never did any of the philanthropy that he does?
Not sure what your point is here--Bill Gates is not getting paid to do his philanthropy...he is in fact trying to give his money away. Are you arguing that it's a greater benefit to society for him to acquire his billions and then give some portion of it away after the fact?
It's an interesting thought experiment--how might the world be different had Gates's assets been capped at $1B back in 1987 or whenever, and whatever earnings he made been allocated to a social wealth fund?
I mean, why work myself into the ground if I can no longer benefit?
That's a good question for the current situation -- why does Bezos still go to work? Once you have $100B, what tangible benefit do you get from more? Surely he's not doing it for the money, another $1B, or even $100B isn't going to change his lifestyle.
It may not change his lifestyle, but it’s still a motivating achievement.
If a world-class marathon runner is 4 minutes ahead in a race, and can see the finish line, do they start walking? Or do they try to push themselves even harder to see how much more they can win by?
People are competitive, and are always motivated by achieving “more”, even if it doesn’t change the outcome for them. Does society benefit by billionaires pushing for more? I’m not sure, but I don’t think that the answer is clearly “no”.
So then, just like a marathon, instead of a timeclock to beat, the government can have an agency that tracks lifetime wealthy -- then the wealthy can brag over who would have had the largest pot of gold if they didn't dispose of the money immediately for tax reasons.
Does society benefit by billionaires pushing for more? I’m not sure, but I don’t think that the answer is clearly “no”.
I think the correct question is "Is there a net benefit to society", not any benefit at all.
we can also flip a question: how do you prevent a scenario where bezos or musk achieve so much wealth that they can purchase everything? to own all corporations and if somebody will create a competitor that competitor gets destroyed by shady practices so it gets impossible to have free market?
What is the goal of capitalism? Is it not: "Capitalism is often thought of as an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society. The essential feature of capitalism is the motive to make a profit." [1]
Why 999M? And is that yearly annual income or does it include all assets? In any case, surely nobody _needs_ one billion dollars. Why not 100% taxation on anything over 1M? Actually even that is outlandish, people can go their whole lives without ever earning that much. Just cap it at 100k.
What's your current net worth? How about we set the level to be somewhere less than what you personally are worth?
There are a universe of people who earn and have a net worth much less than you who would be very happy with that ceiling figure. But would you?
Western politicians who float this idea are hilarious too - they're all multi-millionaires themselves, but a wealth tax is always proposed at a level that is "slightly more than what I have", never below.
What's your current net worth? How about we set the level to be somewhere less than what you personally are worth?
If you set the limit much lower than my net worth, the government is going to have to support me.
But I'd think that someone with "only" $100M of net worth could scrape by on their own.
But most of my net worth came from taxable ordinary income that was invested into retirement accounts that are tax advantaged and untouchable until I retire. If Bezos was drawing a salary of 3 billion dollars for the past 30 years, paying 37% income tax on that income, then we probably wouldn't be talking about a "wealth tax"
> If you set the limit much lower than my net worth, the government is going to have to support me.
Doesn't have to be much lower, just low enough to free you of the wealth you don't _need_.
> But I'd think that someone with "only" $100M of net worth could scrape by on their own.
Certainly. Someone with $10k of net worth and a minimum wage job could scrape by too. Nobody _needs_ more than that, surely?
> But most of my net worth came from taxable ordinary income that was invested into retirement accounts that are tax advantaged and untouchable until I retire.
Sounds very wealthy and privileged, to be honest. Surely you don't _need_ that it could be much better spent now helping less advantaged people who have never worked and don't have any savings or retirement. If, when you retire, you need further assistance after selling your house and other possessions, the government would be glad to step in and provide you a subsistence income and housing thanks to this wonderful redistribution scheme.
You mean any annual income over 990M or wealth?
The problem with taxing wealth at 100% means either they have to pay to continue earning or they lose a portion of their business and eventually the ability to earn more.
Given that successful technologies have mostly been developed by corporations which have appreciated in value from their innovation, do you favor a Luddite lifestyle, eschewing technology? Or do you think investors would rush to put their capital at risk for no return? I believe the technologies on which we are enjoying this conversation would never have emerged if a wealth tax hit silicon valley after WW II.
as much as I enjoy longing for the time when using the internet meant browsing 5-6 boards that weren't all that populated, private companies "ruined the internet" by giving the average person access to it.
you can argue that has been a net negative for the Internet, but it is clearly better for society generally.
If you start a company and that company becomes succesfull you will end up rich.
> Being a CEO/leader doesn't require some skill set that's given to you from some mythical watery being just because you're special.
Controlling a company requires shares, and shares are networth, it is good that companies are controlled by people who most understand them, and those are the people who started/built them.
There seems to be an illogical hate to people who have build companies that ended up being successfull.
If you are a small business ( non mega successfull company ), everyone is with you, "Small businesses are the backbone of our economy ", but then you win.
Controlling a company requires shares, and shares are networth, it is good that companies are controlled by people who most understand them, and those are the people who started/built them.
Voting shares don't have to have monetary value. Rememeber Google's IPO where the founders had stock with 10 votes per share, or Berkshire Hathaway's Class B stock with 1/10000th the voting rights as class A?
So a founder could retain control of a company without becoming personally rich.
Aren't those classes of stock with voting power worth a lot more? I'm not sure how you'd possibly avoid being rich on paper if you have a majority voting power for Google.
Not necessarily, for example Facebook supervoting shares were setup to convert to normal shares if transfered, making them only more valuable to the original holder.
Okay, interesting. I'm guessing those people typically had many normal shares too, right? Otherwise if they're given a fairly small financial stake, and have no skin in the game -- I'm guessing that most investors wouldn't like that?
> Voting shares don't have to have monetary value.
I would think the power to control a large company would be worth at least something even if it is decoupled from the right to get part of any money they decide to give to stockholders.
> Voting shares don't have to have monetary value.
:facepalm:
If you control a company worth $1T, someone is going to be willing to buy your share. If you're implying that voting shares don't have to be transferable, the question becomes how do you pick the next leader? The current owner gets to appoint the next in line? That's basically monarchy. The history I was taught says that only those at the top thrive under monarchy.
How is that different than the current situation? If I own a controlling share of a company, I don't have to sell my shares to the highest bidder, I can decide to transfer them to my grandmother. Why does it matter if money is exchanged or not?
> There seems to be an illogical hate to people who have build companies that ended up being successfull [sic].
Companies are comprised of people and people do not like giving up control they have fought for, whether it is reasonable or not. It is difficult for many to avoid the temptation to use a position of power unethically to retain it. Nobody wants to be RIM/Blackberry, but it's neither okay for a company like Qualcomm to make immensely inequitable deals that are tantamount to extortion because they own patents on essential technology.
If you're the only game in town, you have a responsibility to act reasonably, but many do not and often the founders/execs seem to think they are entitled to keep their success.
Yes, you earned your success, but keeping it is another fight.
>Controlling a company requires shares, and shares are networth, it is good that companies are controlled by people who most understand them, and those are the people who started/built them.
Yes, indeed this is how things work in this particular system, so you are kind of making a circular argument.
For instance, I disagree with the whole concept of joint-stock companies.
A lot of people seem to be in the mindset that it'll never be them so it should never be anyone else. It's not just in the US, here in the Uk we have the same mindset too.
A lot of people dislike/hate Elon Musk for example, and usually they focus on two things: his tweets, and his wealth. Conveniently forgetting that prior to his work at SpaceX and Tesla (which he's driven) reusable rockets weren't a thing and EVs were restricted to oddities laughed at on Top Gear.
It seems to be the way, people look at the wealth and think "well that shouldn't happen". But it doesn't come from no where, it doesn't just appear.
For anyone who thinks this wealth shouldn't appear, let me ask this: if someone could discover a cure for all cancers — how much should they be allowed to earn for it? I.E. What price would you put on the cure for all cancers?
Ive done basic research, even worked in a lab that was doing cancer related research.
Whatever you do now, anything, is not just your own genius but its the accumulated genius of society. It would be quite literally impossible for anyone that "cures cancer" to have done it on their own. Not only it is extremely unlikely that they could do all work just by themselves (though possible) but they will have to rely on the work others have put through out the years... Work that in most cases has been funded through tax money!
So why would one person at the end of the line get to benefit so much from the collective work put by all of humanity to that point?
I think most of this sentiment comes not because of wealth in itself but how it was achieved.
majority of billion dollar companies are associated with bad behaviour : anticompetitive practices, shady deals, government subsidies etc. amazon got billions in subsidies just for opening second headquarters.
amazon is selling ripoffs of big brands. worker rights abuses. microsoft did many things to eliminate competition. list goes on and on. and I’m not even talking about uber’s shady projects to avoid government agencies.
so when success gets achieved by scams and shady behaviour, probably it’s not much to celebrate and reward.
> amazon got billions in subsidies just for opening second headquarters
Because it’s going to spend far more there. Nearly all large commercial builds get similar deals in tax deferrals because having employment is still a big net win for the locality.
> For anyone who thinks this wealth shouldn't appear, let me ask this: if someone could discover a cure for all cancers — how much should they be allowed to earn for it?
Say 50 million?
> I.E. What price would you put on the cure for all cancers?
100 billion?
You've asked two separate questions there, but you're implying that the answer to one is the same as the other.
Just because you are capable of extracting a certain amount of wealth in exchange for something, does not mean that you should be able to.
It can makes sense if you take the position that medicine patents should be heavily reformed.
Shoulders and giants - there's no way you actually fully independently discover a cancer-curing pill. And even if you did, its existence would not and should not belong fully to you.
Most of wealth is in stock, which also represents control. If you tax heavily that would lead to loss or control. That's not necessarily a good thing for anyone.
Besides, you can only buy a okay superyacht for 100M, definitely not the best /s
If people are worried about this then we can simply permit founders who pay taxes via ownership to retain magnified voting rights. We've already invented the idea of non-voting shares. Why is this some sort of thing that could never be solved?
Well if they are forced to sell their shares to pay taxes, what happens to the stock market then? Now this causes the company’s stock value to go down due to dilution of shares, since each share is worth a smaller slice of the company, and there are more shares available on the open market.
How do we compensate everyone who was holding that company in their 401k hoping to retire? The government billionaire taxation has actually hurt the middle class (& upper class but non-billionaires) too in this case, by taking away value of their retirement funds and personal investments.
Do we pay the shareholders the money that was taken from the billionaire to make up the difference? Because then you’ve just created dividends, which already exists, but just with more steps and beurocratic overhead
Does it mean something specific, or is it just a variant of “Jesus Christ!”? Just curious. Tried Google, nothing turned up on the first page. Not even urban dict.
It's not working. Jeff Bezos said he can't think of anything to do with his money other than build rockets while people die in his warehouses. Too much money makes people out of touch. I don't think billionaires are evil, I just think they don't know what life is like for people who still have a concept of "cost of living."
How is one anecdotal story with conflicting accounts told in a sensational way so meaningful to you? How did Jeff Bezos and his fugly girlfriend and his billions cause a heart attack? Am I confused or are you?
it is poor argument. you cant see wifi but it exists.
if your friends are fine does not mean that there are no issues there. plenty of news articles were published about inhumane working conditions where people cannot go to toilet even.
There are two kinds of commenters in a flame war. First, the people lead by their emotion, who pretend their emotions can be rationalized as factual and logical. Then, the people who are easily baited into telling them they're idiots.
Just woke up with a slight hangover. Life is amazing. I will have some coffee and play with my beautiful child. Then I will go surfing. The good life is free from envy and pity. Full of admiration of those who have qualities that lead them to success. Jeff Bezos company was beautiful in the way it sent me gifts I needed for a relative’s graduation. I am grateful that he had the wisdom and courage to start it.
Admiration of others leads us to the good path. Envy and pity are tools of the darkness.
That's an arbitrary cut off and it's not just about whether they will work less hard or not. It's about effective capital allocation. If they earned their wealth through smart capital allocation, why would you want to remove capital from proven allocators and forcibly move it to the least effective allocators?
TLDR. Elon makes vastly better use of capital than the government does. He turned $180M into SpaceX and Tesla. They turn $180M into some bombs and maybe an unfinished train station if we're lucky.
1. The objective of public policy is to maximize the efficiency of capital allocation.
2. Who is efficient at capital allocation is independent of public policy.
3. Efficiency of capital allocation is measured by stock market capitalization.
1) would assume that building a Lamborghini Veneno Roadster is a better allocation of capital than building 10 homes. Or treating 100,000 cases of malaria.
2) would assume that someone who benefits from government subsidies is intrinsically better at capital allocation than someone who doesn't.
3) would assume that tulips sellers were really, really, good capital allocators for a while, and then suddenly were terrible capital allocators. Or that the number of cars produced isn't really a relevant metric for an auto company.
Very good points. Externalities and other market failures are also better addressed by governments than capital markets, as is well understood and was conceded even by Milton Friedman.
> they earned their wealth through smart capital allocation, why would you want to remove capital from proven allocators and forcibly move it to the least effective allocators?
1. You'd certainly want to remove it before they pass it on to their children -> 60% of all wealth in the US is inherited, mostly by the very wealthy.
2. Those most likely to scoop up redistributed capital are the efficient capital allocators at current time, which is better than calcified structure of efficient capital allocator from 1970 who has just put their money into index funds and passed their wealth on to their children.
3. Diminishing marginal utility of the dollar means strong first-order utility gains from redistribution of wealth which would need very large second-order impact on capital allocation effectiveness (and impact on behavior) to harm net utility.
SpaceX was funded by government contracts awarded to SpaceX. 'Ol Musky doesn't wave a magic wand for discerning capital deployment. He just gets lucky.
Luck doesn't itself explain being able to repeat that level of complex achievement. You need >99 percentile in energy, intelligence and curiosity to pull that off.
Right, because this single person takes all of the credit for SpaceX. Musk didn't found SpaceX. He just invested money. Big difference. He's also, despite what you're implying here, not a rocket scientist. Nor should he take sole the credit for thousands of scientists' and engineers' work. Do you attribute all of your company's achievements to your CEO or principal shareholders? Are you not concerned with being drawn up into a cult of personality?
Anecdote: I had an old co-worker who was given 6 month's notice that he'd be let go from a previous job, and his manager at the time helped him look for a new gig + gave him shining reviews and references. After the 6 month period was up, they still gave him several months of severance, even after he had found a new gig. Some companies/managers actually do care about you, and it seems like Coinbase is roughly in that court.
Getting laid off with zero warning and no severance can be a life-ruining event if it's at a bad time logistically in someone's life. It could be way worse. Always have your resume updated, and take interviews every now and again just in case.
> Some companies/managers actually do care about you, and it seems like Coinbase is roughly in that court.
Do they really tho? They rescinded offers to many foreign students on OPT visas who had turned down Ph.D programs and such, putting them in a pickle. And they did it over email.
In case it wasn't obvious, there are social contracts between folks that are established outside of the written contract. Things like, "you should try to give 2 weeks notice when possible" and "you should not hire and change your mind in a matter of months, before the person has worked for you, but after they had already turned down other hard-won options."
Folks who violate social contract are called assholes. You don't go to jail for being an asshole but some folks won't want to work with you and that's okay.
I've been chatting with some friends whose company shut down recently, basically with no warning. They are getting recruited like crazy. In my opinion that's much preferable than to being left go as part of the 20% lowest performing employees. This reads like a "culling of the herd because we can use the alleged upcoming recession as an excuse" event. I'm not sure the generous severance makes up for the "you are not in the top 80%" label.
It has the appearance of companies trying to cause a recession instead of waiting for one to occur. Coinbase admits it can't predict the future but are being precautionary in case there is a recession? If their plan is to take a worst case view then why not just cash out the whole company and shut it down on the precautionary principle? If this is an attempt to put a scare into workers to keep wages low it may backfire since worker shortages seem to be large and other companies may easily absorb a lot of workers, making it hard to get workers back later (and it takes time to train new ones). It could encourage people to leave on their own if they start hearing of the better jobs others are getting after being forced to leave, and it shows zero commitment to workers (so workers should reciprocate). It might be necessary to actually destroy many companies before this fear tactic can have some generic effect. People who died in the pandemic, got long covid, retired, or felt abused are probably not coming back (though hopefully long covid proves not to be forever.) Lay off workers during a worker shortage and you had better count on not being able to get them back easily.
Not always, and not if they are competently planned and executed. I will grant you that, in the current climate, that they are probably not competently planned nor executed.
You should always be prepared for your job to be pulled out from under you. There is no major city in the US where a software engineer with experience shouldn’t be in the top quartile of income earners for their location and have a 3-6 months emergency fund.
You should always have an updated resume, career document, be interview ready and have an active network.
Wow that severance is incredible! They reached out to me awhile ago but thought their whole platform being tied to crypto was extremely risky. Engineers need to save for bad times and have months and months of cash for downtimes as in 3-4 months there will be alot of people looking for jobs.
Fun fact in 2009 I interviewed at google and the HM said that 500 people applied to the job I was interviewed at(onsite) and there were 3 others that were also brought onto the onsite, so 4 out of 500 getting a chance to interview, with only one making it. Lets hope it doesn't get that bad again.
Right, I got an incredible remote startup job in 2009 after two 30 minutes general phone interviews. It was my longest unemployment period ever of about 4 months. This time can't be as bad as 2008.
> the HM said that 500 people applied to the job I was interviewed at
As someone who interviewed candidates in big tech, this sounds like a lot but you have to understand most people who apply are truly not qualified in any way. About a third of people who get to the onsite fail really hard (I get people have off days).
Especially when you have a brand like Google, people apply just to apply all the time w/o considering if the big G is a good fit at all.
The state of California requires that Employees are paid for 60 work days (8 weeks) if there is a layoff at this scale. I assume that's where the majority of these employees are located. They're offering an extra month/month and a half likely on the condition they sign some sort of NDA/Right to sue the company for wrongful termination.
Whether billionaires should exist or should be able to buy hundred million dollar homes aside, the timing just plain looks bad. As mentioned in the other discussion thread, the price of his home is "enough to give everyone who was laid off slightly a severance of more than $120,000".
Obviously Armstrong was never going to give a dime of his personal net worth to an employee, much less a former one, but there are such a thing as optics and public opinion. The juxtaposition of that purchase with layoffs at his company just doesn't look good.
> Coinbase was also extremely generous with severance. 12 weeks plus two for every one year at the company, I think [...] Three and a half months of dev salary is pretty incredible.
...literally this is the minimum they can get away with in some jurisdictions. It's illegal in plenty of countries to conduct mass layoffs without either a consultation period or putting people on garden leave (i.e, severance).
The WARN act in California is a good example [1]. They must give 60 days notice, but the way to get around this (it seems) is to lay off without warning and give 60 days pay.
Ok let me take a stab at it. I actually am on the fence on this so purely a thought exercise for me. Plus as someone getting into midlife crisis this has been on top of mind for me.
How about take (in no order):
1. 1 or 2 fancy cars/suvs
2. Be able to travel business class (say once a month) for vacations and stay in decent hotels
3. Nice education (say 2 degrees at a top college)
4. Nice house (say 2 rooms per family member in a "decent" neighborhood) (add things like backyard, poop etc if you like)
5. Obviously enough money to pay taxes
6. Oh and ensure health-issue-free lifestyle
7. (Hobby or two)
8. (Ultra Branded clothing?)
See what it takes to get all of the above and double it. Or even 3x it. Ymmv ofcourse. I am not a traveller so fancy hotels or biz class is not a big deal. I am also not a car person so 1 and 2 are not big deals for now (things can always change).
I still can't see this needing billionaire status?
What if I have all that, but also have a great idea for a business. Let's say I want to try it out, but to do so I'll need to hire some industrial space, expensive equipment, 5-10 engineers, and some business / marketing people to get it going. Should I have to risk my standard of living to do that?
That's a great point. I wasn't suggesting people shouldn't desire things. We talk as if billionaires are not a zero sum game. But is that really true? #billionaires has gone up but the basic line around housing, education, healthcare, pollution have all been declining no? If I was to venture a hypothesis, will the billionaire's ability to realize the billions actually be viable if it wasn't for the workers who desperately need to cover (the stripped down basic form of) needs 1-7 above?
Can you describe the new governmental Department of Hobby Restrictions? I study music history, transcribe old popular songs, and play many different instruments. Does this count as one hobby called music or does it count as three different hobbies?
What would be the penalty for an asshole like me having three hobbies instead of the two allowed under your plan?
Am I allowed to have one flute, or if I play professionally am I allowed to have two in case one is broken? Am I allowed to have an alto flute and a bass flute as well, or am I limited to just the garden-variety soprano flute?
So the #hobbies is really up to you. At some point personal responsibility would need to kick in to support things beyond some level of basic necessities no?
Add social expenses -- what it takes to fit into a society or community.
Add a buffer for risk and uncertainty about the future.
And then consider what role location has on the whole package. If you want proximity to one of the global hubs / power centers, then you're looking at doing this all in a top-tier cost market.
Then you easily push into tens of millions. Breaking a hundred million to super thoroughly check those boxes isn't a stretch.
This is before considering an agenda / passion that you want to see changed in the world. And before any ambitious desires from family members and close friends.
Postulating that anyone needs 100M is simply absurd. Just because there is insanity in house pricing doesn't mean that this needs to reflect into incomes.
I worry about the unaccounted soft power of someone with that much money. Through lobbying and market consolidation, the extremely wealthy hold disproportionate political and economic power. At least with corrupt politicians, in a liberal democracy there is some amount to which they are accountable to the people. The power of the wealthy is without account except through government action. laisse-faire capitalists like to hand wave and imagine this power is "not a problem" when it very clearly is, with people like the Kochs wielding their power to sow political propaganda. They did not "earn" that power, or at the very least I don't think people deserve that power even if they were skillful businessmen. For me, it has nothing to do with sour grapes, I don't care that they have more money then I can imagine, other than they can use that money to have a greater voice than me.
I agree with this. I don't care when someone has 1000 cars or 100 houses and owns a jet plane or whatever. I do care about how it enables them to unfairly direct other peoples lives to their personal agenda. I also care when people have too little that they can barely feed themselves and have nowhere to live.
I feel like there must be some way these two problems can help solve eachother.
There is obviously no exact dollar amount. I don't believe everyone should have the same amount, but there should probably be some lower and upper limit. Maybe it is possible to calculate the difference between the two. Perhaps the upper limit would be 10000x that of the lower limit. Just as an example. There being a lower limit also implies some kind of universal basic income. Theoretically partially supplied by the upper limits excess.
What happens to the excess is what’s interesting. And if it’s in volatile assets, how do you shave off the top? E.g. your stocks go way above the limit in a bubble but then crash by 50% right after you got taxed.
Yeah. I guess that model implies that the govt will take a percent ownership of whatever you own. I think it would destroy the prospect of high risk high reward ventures like Tesla. Maybe the tax rate can be divided by a volatility metric so investors in high risk ventures aren’t severely punished randomly.
Do you feel random government employees would be more productive and knowledgeable than the owners of the business whose shares were taken away by this scheme? Do you feel good businesses would continue to be good when handled by bureaucrats? Bonus points for the name of a bureaucracy that has done this kind of thing well.
No I don’t support this. I keep trying to figure out how it could work, so I can understand the point of view of the people who propose it. I haven’t seen any salient proposal.
There is obviously an exact upper dollar amount. You described it yourself: $1 billion.
Do you think restricting the amount of money people can make and therefore pay taxes on is a good way to pay for universal basic income? Elon Musk will famously pay something like $12 billion this year. What’s the best way to sustain welfare programs that you like without a large tax base?
I think billionaires should exist.. but to answer anyway:
the most fair approach is probably starting with "how little money should people be allowed to have" (UBI) and then what ever is leftover is fair game.
I don’t know who your “we” is, but in the USA it is precisely why we do not have a democracy. We have a republic in the USA. The Senate and electoral college help temper the intoxicating effects that a pure democracy would produce .
In a taxonomy of government types, sure. Practically speaking, the difference between a pure democracy and a republic is enormous. The framers of the constitution were explicitly aware of this.
The issue is assuming people who are anti billionaire are anywhere remotely close to the ideology in that book. It’s a good story, but a billion dollars is staggering and hardly anywhere near desiring ballet dancers to wear chains.
If there is a slight here, I suspect it's the belief that Coinbase was effectively a pump and dump on behalf of the founders and some investors - for which the employees were along for the ride.
That Armstrong liquidated a large position and moved it into real estate, plus the lackluster stock performance compared to what coinbase was likely promising employees leads to this feeling. For a while, coinbase was competing with the top firms in the world on Compensation - the employees probably missed out by joining.
But that's the breaks, I doubt many employees would have been happier if the founders and core investors in coinbase were taking a bath to.
>The best mindset is that you could be gone tomorrow.
Can't disagree more. At my last job, I was in a senior position for 7 years, one of the earliest engineering hires. I loved my team, my CEO, the direction of our company, and advertised us to friends.
Then, one Friday, a close coworker was let go without me having any warning or say over the matter. Not during a layoff, just fired one day. After that week, I was practically paranoid 24/7. My boss loved me and I was getting raises, but the anxiety of whether I'd be let go disabled my work progress.
I didn't want to risk "fucking it up" so I became ultra-conservative with my code pushes, review cycles exploded, and I just kept putting off cutting out/replacing features.
It was so stressful that I recognized my personal psychology was deteriorating weekly. My anxiety-driven depression further disabled my progress to a practical halt. I quit the job.
The best work I did was when I was thinking about the actual work, not survival instincts.
If I have to be ready for a lay-off tomorrow. I'm basically going to be spending time leetcoding instead of actually working on the hardest problems or thinking about them. Being an engineer doesn't mean you work a 9 - 5 job, your work creeps up on you during off-hours all the time.
Also, if I'm leetcoding consistently, I'm going to be switching jobs as soon as I get a large enough bump.
This industry doesn't reward loyalty and you're recommending that engineers be ready to leave on any given day.
That's a big "if". It's pretty dang hard to amass that much wealth without robbing the people around you.
That's indeed pretty generous severance-wise, but that $110,000,000 happens to be enough to keep each and every one of those laid-off employees on the payroll for another year (assuming $100k/year salary).
Well, assuming $100k total cost of employment to the company. My guess is that the per-employee total cost of employment to Coinbase is at least twice that.
Places I've worked, I'm not aware they ever had severance, stock options or RSUs, or free snacks. One job had free keurig cups, and one job had free coffee in the form of a couple of pots in the morning that got pretty burnt tasting later in the day. Government and government contractors have had zero free stuff - there's a keurig machine where I work if you want to buy your own k-cups.
Then again, I've never been laid off. The most "office space" like jobs that pay the worst sometimes are aware that they can't easily hire people and so shrink by attrition over time. "Good times" mean a non-zero 401k match. Not so good times mean they remove the option of buying company stock in the 401k, because you might sue if it ruins your retirement hopes.
I'm not saying this is all that terrible, because I don't think it is. It just puts the tech layoffs that get publicity in perspective. If you get laid off at a normal company, you might - gasp - have to file for unemployment!
People who need stability do trade it for salary. The union where I work can't even strike, but our pay is up over 10% from a year ago.
> The best mindset is that you could be gone tomorrow. It gives you clarity and purpose.
Probably the best advice you can give someone in the tech industry. Even when I'm happy and content in a position, I'm still constantly looking and interviewing.
I got burned pretty bad at two startups in a row where the founders were pitching rainbows and unicorns and one company just went bust and I showed up one day and they sent everybody home - no severance, no reference, nothing. The other scenario, one of the founders fled the country with the money and left everybody high and dry.
Both were eye opening enough where now I have multiple backup plans, I network like crazy, I listen to what people are saying, I watch and see who's leaving the company. If you see higher executives leaving en masse, its a lot different then a few low level sales people. In both of the above situations, I missed a lot of red flags I would've caught today.
> Coinbase was also extremely generous with severance.
Regardless of what one thinks of Coinbase, their decision to offer employees generous severance deserves massive praise. If you were on the fence about working at Coinbase, currently or in the future, it should be a major point in their favor.
If nothing else, it shows competence. Too many incompetent CEOs (and their boards) wait too long and then do layoffs with little or no severance. Instead of the responsible thing and laying people off early enough to give them a proper severance.
> Coinbase was also extremely generous with severance. 12 weeks plus two for every one year at the company, I think.
3-3.5 months resignation/notice period is hardly worth mentioning, pretty standard in Europe, 2 or 3 months being the usual minimum. Sure, no need to come to work and still getting salary is nice, but in the end you will get same money by European standards. And for mass layoffs standards are even stricter, so this seems like completely ordinary layoff by European standards.
It's like saying 2 years warranty is extremely generous and great, while it's the legal minimum in Europe nobody would bother to talk about, heck even 3 years feels pretty mediocre nowadays. Half of my recently bought things like washing machine, headphones or hair trimmer have 5 years warranty (after registration).
> I've had the experience of being let go without notice and without severance.
That just means you sign crappy contracts, have very low standards and don't value yourself, if any company does this to you after probation period. And it's possibly illegal even in United Slaveries of America.
> Three and a half months of dev salary is pretty incredible.
14 weeks ain't 3.5 months any way you look at it, at best it's a few days over 3 months. Originally mentioned 12 weeks are not even 3 months.
Is that the guy who posted a Twitter rant response to some leaked grievance last week? That fucking guy has a $110m house!? Seems like an injustice to me, holy shit
> The best mindset is that you could be gone tomorrow.
I find this a bit too cynical.., that said, it's also a good mental spot to not let your job define you define your job as much as possible. You try to make everything that you enjoy on a daily basis(hopefully you still have that possibility). Tasks that grow your skillset, new things, any reason.. so that if you're let go.. there's very few days you didn't profit.
Making sound life decisions that bet on your continued employment at a company. It's rare that people think they'll be let go from a job amd indebt themselves as though it's impossible.
> Three and a half months of dev salary is pretty incredible.
Completely agree. Layoffs suck and I hope no one reading this ever has to go through them. But, it could have been done a lot worse than this, that is for sure.
Well every one of us has earned $68 billion more than Elon this year. "Tesla stock is down roughly 44% year to date, causing Musk's fortune to drop from $270.1 billion in January to just $201 billion as of Friday." [1]
If they start hiring around christmas they saved no money and would have been better off keeping the employees. It looks like we are in store for a long down period.
at a company which provides finance software where you buy/sell securities starts with B, i told manager i had covid and next thing she said, here is liz from HR and i learned i'm fired right then.. i knew i was under review for missing few deadlines, but didn't think i'd be let go right so abruptly and right after i had covid, mind you i used 3 my OWN PTOs, not even sick days.
> If you think billionaires should exist at all, then that's one of the least-bad injustices imaginable.
I highly disagree. The existence of these billionaires and their untold influence on the U.S. government and policies while being unelected persons is extremely dangerous to what little democracy is left and people at large. I view most billionaires as national security threats, and I think the government should as well.
But I don't think it's so much the firing, as it is the Coinbase telling new hires "Offers won't be revoked". But then, not only revoking said offers, but then additionally firing 1,000+ people.
They're experiencing a bit of a PR relations nightmare ATM. Curious to see if this might hurt them with hiring going forward.
>I think if employees feel slighted by being fired, they're fooling themselves. The best mindset is that you could be gone tomorrow. It gives you clarity and purpose. It also happens to be the truth.
sorry but this reads like you drank the whole bowl of US corporate kool-aid. the insecurity and stress the comes from not knowing if you'll have a job tomorrow in literal insanity. 14 weeks severance shouldn't be seen an some benevolent gift from a god-brain billionaire, it should be the bare minimum if they still have the right to fire me in a whim
It actually came about due to labor shortages during WWII. So many people were drafted into the military or voluntarily joining that employers were having trouble finding enough workers.
To prevent this from leading to rampant inflation the US passed laws that regulated wages and prices, such as the Emergency Price Control Act of 1942 and the Stabilization Act of 1942.
Insurance and pension benefits were not counted as wages, and so employers that could no longer legally raise wages to get people people to come work for them instead started offering health coverage.
Americans, who before this had largely been on their own when it came to healthcare, liked this, and so even after the wage controls ended unions bargained to keep those benefits and over the next decade or two expand them to include vision and dental benefits.
By the early '60s it was clear that there was a serious problem inherent in this. Employer sponsored health insurance had become that basis for nearly the entire American healthcare system. People who then left that system such as when they retired often found they could not afford to buy their own insurance. And so Medicare and Medicaid were created to try to handle people who could not get employer provided health insurance.
We almost got major healthcare reform in the early '70s. Senator Kennedy proposed a single-payer system that would be available to every American. President Nixon proposed a system that pretty close to the ACA (aka Obamacare). Then Watergate happened and pushed healthcare reform to the back burner were it sat for around 40 years.
Right? I was on Medicaid for about half a year because of weird bureaucratic reasons.
It was the best health care plan I've ever had in the US. No deductible, copays were literally $1 or $2. I had access to the entire Kaiser system for routine stuff. You literally can't buy an insurance plan as good as the medicaid that I got.
Of course, now I live in Canada. That's even better.
Mind you, this was in Colorado, which took a vey progressive stance on Obamacare. I'm sure that there are places where medicaid is close to useless.
There is such a thing as employee and corporate bargaining power. Many SV companies adopt gold plated health insurance policies on top of competitive wages. I suspect hat this extra bit of health insurance helps prevent the perception the employer is overbidding on labor.
Similarly large corporations can negotiate to get better insurance rates, and larger insurance providers negotiate to get more cost effective care.
(One of) the problems with the health system in the US is that once you exit this negotiation scheme, prices go insane. A hospital might list a procedure for 2 million dollars only to take home 50k from the insurance provider. I don't believe anyone has a handle on what the true cost of any health procedure is.
Get paid for two months to party/holiday/rest, the have another whole month (paid) to lazily job hunt in a crazy hot market and walk into the next place with a 10-30k raise. Happened to me a few times, was fucking awesome.
Lack of healthcare would have been a worry but I’m in the U.K. where we get it free.
How hard is it to fund your own US insurance on a tech salary to tide you over?
The problem is the market is losing heat by the hour. There’s absolutely no guarantee there’s anyone hiring in a couple months. This year is very unlike the past ones. Closest analogue would be 2007 into 2008… until it’s 2001. Stay alert, eyes on the ball at all times.
> How hard is it to fund your own US insurance on a tech salary to tide you over?
Healthcare is NOT cheap if you want to maintain the same plan. I had to pay $2K a month for a family plan under COBRA several years ago. This is the same as a mortgage payment for me. Typically your employer bears the majority of your insurance cost, but you pay all of it under COBRA.
Not necessarily. There’s deductibles that need to be met, Copays, and co-insurance (what you pay after the deductible), rather you’re in network or out of network, etc.
For example, I had pneumonia some time ago and was in the hospital for about 10 days. The hospital billed by insurance something silly like $100,000. I ended up having to pay something like $4,000 out of pocket. I consider myself one of the lucky ones. It’s really important to review an employer’s health plans before accepting a job offer.
You will still have to pay your yearly deductible which is normally in the thousands of dollars. Then you also get to pay co-pays for every service regardless of where your deductible stands.
Don't forget that the insurance company gets to decide what is necessary, not your doctor.
The reason to have guaranteed severance for a long-ish time (3 months or so) is to soften your landing when the market/economy does not guarantee you a more well-paid job within that time. We might be entering one of those times, we might not, either way you should be prepared for it. If your employer has already made sure that you are prepared for it then that is less stress for you, which is good for everyone. It also means more predictable (although maybe higher) costs for the employer, which is usually good for them too.
It seems like tech-workers assume that things will always be easy on them when history clearly doesn't bear that out.
In the US there is something called COBRA, which allows you to continue the company plan for a year by paying the full amount (most companies will pay all/some of it while you are employed). It really depends on what kind of coverage and whether it's an individual or a family but it ranges from several hundred to over $1000 per month.
The whole system sucks really, but in today's economy I think most of these people will be just fine just because so many companies are hiring.
Depends on your age and dependents, but in the US the cost of health insurance can easily be in the same price range as housing. Employees are often not aware of the actual cost since most or all of the premiums are often paid by the employer.
Even if doing huge amounts of hiring during good times and quickly pivoting to doing large layoffs during bad times is ethical, it sure does seem wasteful and not indicative of great leadership. Although it does seem to be the norm now, if recent years are any indication.
Well it’s not clear that anyone could have predicted the timing of this downturn. Just a few months ago people were painting a very rosy picture for the future. In that context, metering investment can have a huge opportunity cost as well.
I’m not advocating for CB - just suggesting that it’s harder to predict the future than you are implying.
We knew that rates going up was inevitable, and that crypto is essentially a sponge for excess liquidity. We knew that inflation was inevitable (to an extent) given the Fed's actions over the last two years. Upon observation of the current macroeconomic environment, it appears that either markets did not properly price in rate hikes, or there is something far worse happening that will ultimately trigger a valuations reset.
That's still a very employer-centric view. If the company reasonably expects a downturn at some point, it should be preparing with right-sized sustainable hiring. It's not "metering investment" but rather "building a sustainable business". Rushing to hire as many people as possible, then firing during a downturn, creates the impression that employees are cannon fodder.
Exact timing? No. General direction? There are people who made that call in November, plenty more joined January-February. Note the question is where does this end and those same people are the first to admit nobody knows, because the fed doesn’t know - and the answer is, when the fed pivots.
Someone could come along and ruin your life by framing you for some morally-awful social-presumption-of-guilt crime. Or a nuclear war could start tomorrow with a strike on your city. Or a tiny little meteorite could happen to fall directly on you. Or God could stop+terminate the VM containing the universe mid-run.
The insecurity and stress are the human condition, my friend. That's what it means to be sentient.
You are arguing that because very negative but also very unlikely events that we can't control, may happen, we shouldn't as society try to improve the conditions of our lives?
No? What I'm saying is that there is no such thing as true security; and so you've just got to learn to live with the feeling of insecurity, regardless of what social safety nets you put into place. Even in a much better world, you will be fundamentally insecure.
Let me rephrase my original post: "We all die someday — and potentially sooner than you expect. There's no guarantee that any particular person will survive the next 24 hours. Even living in a bunker in the middle of nowhere, you could still have a heart attack!"
This is entirely distinct from the question of whether you should advocate for societal policies that make quality-of-life more robust/fault-tolerant to small upsets. I'm all for that.
My point is more that even if you do achieve a social-welfare utopia, you'll still likely be insecure and stressed, because mortality.
And, therefore, "insecurity" and "stress" aren't good indicators of anything other than having an overriding awareness of one's own mortality. So it's not sensible to base policy decisions on trying to lower them. Base your policy positions on rational utility-maximization, not on trying to achieve personal emotional well-being. You want emotional well-being? Go to therapy.
We (theoretically) have control to improve and enhance workers' rights, and can make legislative changes to increase job security, or decouple the ability to live and subsist with employment.
What the fuck? So one should actively go out and seek more of it? To me, BECAUSE things are uncertain, there's even more value in things that can be made certain. Then, we at least have the hope of being free to devote our limited, anxiety-riddled, conflict-avoidant, procrastinating brains on the parts that matter. I don't want to have to worry about things like health insurance or the wham-baam-thank-you-ma'am nature of US Capitalist idiocracy.
This is not a hypothetical in Britain. Many categories of workers cannot be fired on a whim, nor can they quit on a whim. Many people prefer that trade-off.
For example, in 2012, at Timeout, Aksel Van der Wal was promoted to CEO. He had previously been the CTO, and now we needed a new CTO. We made an offer to a person who had a great reputation as an engineering manager at another company. But he was on a contract he could not get out of, nor would his employer let go of him. So we had to wait 9 months, while he finished that contract, before he could join us.
Yes? The power imbalance there is obvious. Employers have much greater access to wealth, capital, and lobbyists. As an individual I have no such agency. So yes, trading away risk in exchange for fixed contracts is a great deal in most circumstances. Most of modern finance exists to exchange risk for dollars in some sense.
I would, yes. 30 day terms would work for me as it does for many business to business agreements. I dont agree with the other commentators entitlement to 14 weeks of severance pay in any situation, however
i don't think that's equivalent. it's tremendously easier for a company to fill a position than a person get another position somewhere else. this is a billion+ company. some developers probably live paycheck to paycheck.
You still have your career and can get another job somewhere else. If your whole industry has collapsed so you have no alternatives, then that's a risk to prepare for in your general life plans. The world doesn't owe you comfort and security but you can easily create it for yourself if that's what you want. Also, obviously don't work at a crypto startup if you want that either!
I've done this for myself. I can't be fired, and I have 3 different "career" directions I'm going in at the same time. I'm not a high flier in any of them, but at least one is bound to always be available. That's comfort and security.
Teacher is a fairly safe fall-back. I also happened to get lucky building a succecssful commercial software product, and have another degree and a little experience in engineering. I'm not overworked but I should make it clear that I'm not senior or particularly successful in any of those fields, buy also have no worries about money.
What glorious risk-free world do you live in? The low volatile relatively risk free last decade and a half just vanished the next 5 - 10 years is going to be a much rougher ride.
14 week severance bare minimum at a private company? That sounds very rich.
According to this[0], the absolute most generous package is the Netherlands, which offers 1/3 of your monthly salary for each year of employment. To receive 14 weeks of salary, you'd need to work at a company for 10 years. Coinbase was founded in 2012.
Other "European" countries have much worse severance packages. So what Coinbase offered seems to be better than even the best country in Europe.
Long notice periods typically soften the blow in Germany. After the first six months (where both sides can call it quits with two weeks notice and without cause) the notice period is four weeks to the 15th or last day of the month (and firing people without cause is no longer possible). There are some circumstances when that notice period is not relevant (if the employee is caught stealing, for example), but those don’t matter here.
From 2-5 years it’s one month (to the last day of the month), from 5-8 years it’s two months, eventually maxing out at seven months after twenty years. That’s the notice period for the employer. It can and often is asymmetric but can never be shorter for the employer than for the employee.
However, these are the legal minimums. Many employers will have longer notice periods in their contracts which apply to both sides. Something like three months or so isn’t uncommon.
Severance pay can even lead to problems with the mandatory unemployment insurance (which in most cases will pay you 60 – without kids – or 67 percent – with kids – of your last net earnings for a year) that can reduce the payout from that insurance (and then it becomes a game of calculating severance vs unemployment insurance, which can be annoying).
Different countries have different laws, but at least in sweden it is common to be part of an income guarantee program (a-kassa, usually via a union but can also be outside of it: https://en.wikipedia.org/wiki/Unemployment_funds_in_Sweden). You get around 80% of your income for the first two thirds-ish of a year (200 days) and 70% for the rest of the year.
It's obviously good that this is handled outside the employers control.
After that you get the normal unemployment benefits from the state which is capped at a low but livable level.
It is (in sweden) abnormal (and illegal) for companies to just fire people without cause, and the valid causes are pretty restricted. One of the few valid causes are lack-of-work (arbetsbrist), but even that triggers negotiations between the employer, the employee and the union, and is usually a last-in, first-out thing. The employment contracts are always including a fixed notice (I think it's 3 months regulated by LAS, can be lower if your on a trial employment up to 6 months).
As an example, the klarna downsizing was major news in sweden a second time because of their obviously illegal way of handling firings.
> Other "European" countries have much worse severance packages.
> which offers 1/3 of your monthly salary for each year of employment. To receive 14 weeks of salary, you'd need to work at a company for 3.5 years,
1/3rd of a month is 1.44 weeks. To get 14 weeks, that would be 10 years.
You're right in that Europe generally provides less severance, but they do tend to sign fixed term, renewing employment contracts with rather lengthy notice periods for either side to terminate it. E.g. in Switzerland, statutory minimum after 1 year of employment is end-of-calendar-month + 2 months of notice, but typical agreements extend this.
Also, there's the whole concept where regulators are involved with layoffs and negotiate for payments and assistance in many jurisdictions.
Yes, anecdotally, no recent evidence, though expect to gather some in the next year or two.
The last time my company laid people off it have very generous severance packages, way above the legally required 1/3 months depending on duration of employment.
In Europe you have guaranteed minimum wage, can't be fired without good reason, healthcare, all sorts of other help if you lose your job, public transport/cheap means of getting around. It's not even close for the typical worker.
Its difficult to compare because the cultures and industries are completely different. Im not even sure what a typical worker means anymore - what category are you talking about?
I think the parent's statement was descriptive, not normative. The writing was on the wall when unions became scarce and "at-will employment" became the norm.
The fact that things shouldn't be like this doesn't change the fact that they are like this.
Unfortunate that workers have internalized the idea that they are disposable tools and not long-term assets. It wasn't that long ago that large corporations like IBM and GE prided themselves on how many people they employed, how much salary they paid and even how much in tax $ they gave to the gov't[1].
What exactly is the issue? Company predicts that the market is not going their way, and they are tightening their belt. Sucks to be on the receiving end, but are they supposed to keep all employees forever, business conditions be damned?
Crypto is a fucking scam in the first place, so obviously I don't expect the CEO to have any sort of integrity at all, but deliberately overhiring people when they KNEW what their burn rate was... it's a whole new level of scum. Armstrong went from just another crypto dipshit to actively ruining people's livelihoods while taking a massive golden parachute.
Non of this is okay, it's not acceptable, and Coinbase (and the crypto industry as a whole) should be ashamed.
In the end I care about the stock going up, and now it finally seems to be doing that. The point of a company is to generate wealth for the owners and nothing else. Employees need to negotiate with the contracts according to that.
The comment I replied to was making a normative statement, not a descriptive one. If we were talking about the realities of the world (which we weren't), then I would have agreed with you.
Go back and read the HN thread from the Coinbase DPO [1]. Their valuation was insane then, before the war in Ukraine, inflation, or Omicron. The top comments on that thread shock me. Even at that time I expected every other comment to be about how overvalued they were, but it just wasn't the case.
Wonder if people could've been made to see this then. I went full on Chicken Little [2] and mostly just got treated like I was yelling at children to get off my lawn.
Having a lot of employees does not necessarily make customer service good. Telecoms and large retail banks top the list for the largest number of customer service employees, but often are notorious for bad service.
Why? Presumably your product works, so at best you'd only have like 1% (20) customers with issues on any given day. 1 customer service agent should be able to attend to 20 issues in a 7-8 hour shift.
For example I do personal customer support for ~40,000 folks who take one of my video courses (programming and tech related).
I often write personalized multi-sentence responses to their issues and follow up to reply back to them as many times as needed to get it fixed within minutes or hours of a request coming in.
I think the big difference there is it's my business. The best possible customer experience outcome is the only option in my mind, if it would even hint at being anything less then I wouldn't have this business anymore.
The big difference is that you aren't involved with peoples' finances. There is a whole other level beyond the crazy you attract in services and retail.
That's true, but upset developers are up on the list of "how can I word this to be the most passive / aggressive as humanly possible".
To be fair I think customer support in general is a hostile environment for the receiver. Everyone coming at you is usually dealing with an unexpected issue in some way that's preventing them from being able to do what they wanted to do. There's been a huge range of things I've seen. Everything from super nice folks including huge amounts of details and are calm to nothing more than "it's not working" and in 1 case a death threat because Docker wouldn't run on his Windows box. I don't think it was a serious threat (I'm still alive), but he wasn't trying to be funny. He was really upset.
I don't let those things phase me. I help everyone equally regardless of how they treat me. From doing this for 5+ years I've learned that people act way differently initially when unexpected things happen but more often than not they calm down and apologize afterwards.
docker desktop stopped working on my windows box yesterday.
tried clearing my containers, didn't work. factory reset, didn't work. uninstall reinstall, didn't work.
finally the reset kubernetes button was ungreyed and that worked but i still don't know why if i already reset everything.
lost my dev data.
not happy with docker desktop, but haven't issued any death threats yet.
Do they really have that many customers or do they just claim that? Also per their website that's only 'verified users' which is a super nebulous term, and also exactly what I'd expect from a crypto exchange.
For many legal requirements, you need to provide monthly statements of accounts. You need to show balance at each closing period. Every financial account in world does this.
The blind stupidity of some developers continues to amaze me. They’ll really go work at a company that per its fundamentals truly wouldn’t exist in any other industry and at any other time because “that’s how tech is”, and then act surprised when reality hits.
I don't understand why Coinbase is feeling such a crunch. They are just middleman in buying and selling. Their advantage is supposed to be that they make money whether crypto goes up or down. How can they screw this up?
Your question assumes money custodians behave in an honest fashion.
An honest bank or exchange would simply keep your coins stored safely for you. But many places aren't honest, and make their money not from the transaction fees but by lending out the coins you've got stored there to someone else. As long as people don't all ask for their coins back at the same time, this works great for them. Your coins will be entered into some investment scheme, to make them return a percentage rather than just sitting there doing 'nothing'.
One does have to be careful however not to lend out those coins to someone who just runs clean off with them, or invest them in some scam that accidentally tanked to zero. Otherwise that money they claim to hold may not exist any more, which causes a problem if the customers ever ask for their money back all at once.
They see something really bad on their books that's separate from their core business. Just like how Lehman Brothers was a profitable bank that got shredded by one risky trading strategy.
These stablecoins have been devoured one by one, and each time they fall more people start trying to get their money out. USDC will experience a run and it might not be survivable without liquidating user account holdings, which will be a massive extinction event for retail crypto.
You neglect to mention that Tether's alleged assets have not had a reputable audit published in a long time. And that the people who control it have already demonstrated an ability and willingness to utilize those assets for whatever they please.
"The order further finds that Tether and Bitfinex’s combined assets included funds held by third-parties, including at least 29 arrangements that were not documented through any agreement or contract, and that Tether transferred Tether reserve funds to Bitfinex, including when Bitfinex needed help responding to a “liquidity crisis.”"
When money market funds were all about to break the buck in 2008 the Treasury department stepped in with a $50 billion insurance program and the Fed started buying commercial paper to prop them up. Will they do the same for USDC?
I don't know, and you should include that in your personal risk model. "basically a money market fund" is certainly not intended to suggest a certain level of safety. It is a comment on the structure of the asset.
Can we start citing our sources for this? I've seen myriad comments on HN lately about stablecoins here citing zero sources and invoking arguments that may have been relevant in 2017, but not in 2022. This is really an injustice to any sort of quality discussion.
If Coinbase is operating USDC as full reserve, as they have claimed, is there any risk from it? Seems like there would only be risk if they lied about how they are running it.
Unlike the other fly-by-night stablecoin shops, Coinbase's leadership, and their wealth is fully within reach of Uncle Sam's prosecutors.
I doubt USDC is undercollateralized. I don't doubt that there are situations where it could depeg, but I don't think anyone ought to be going to jail if it does.
USDC is, supposedly, fully collateralized by cash & equivalents. If true then the collateral should be well insulated from market conditions and there should be no reason to liquidate account holdings.
Given that their business is just a “buy sell” platform, they are trimming around to get just that
They have lots of other features like “NFTs, lending” etc and other investments in their UX (separating out to currency vs smart contracts vs defi) I’m sure all that A/B testing to get that will be squeezed now too
All i can think is they had bad forecasts based off trade volume during COVID when people had a ton of stimulus cash and nothing to do all day. Another possibility is something involving solvency in case a crypto selloff + run happens which seems possible any day now.
Their expenses are based on predicted growth in the volume of transactions. They're making money no matter if crypto goes up or down, but they stop making money when people stop trading.
They make money on trading, sure, but it's a % not a flat fee. The same # of trades can occur for the same # of coins but if the market cap of those trades is 50% lower then they're making a lot less money.
They are no longer in a position to charge exuberant fees due to competition. And they depend on new inflows, in a bear market inflows are low - mostly out flows. Pie is shrinking.
Exchanges are fractional reserve banks now. They have cryptocurrency loans, savings accounts, the works. Customer funds are not simply stored at the exchange, much of it is actually tied up in their own investments which can fail, exposing customers to risk.
They make money on price too. They have a % fee, so their dollar-denominated revenue for a given trade with the same # of coins but 50% lower dollar-denominated exchange rate is still 50% lower.
They pay people in fiat currency, their expenses are denominated in fiat currency. It doesn't matter if they traded 1M bitcoins daily 6 month ago and still trade 1M daily today, their dollar-denominated fees on that trade has plummeted.
Yes, you're not completely wrong, but there will be fewer people saying "I have $10k." In the current market conditions.
That's only part of the trading though. Volatility isn't measured in that way either, so as volatility goes down-- or stays the same as coin prices go down-- Coinbase still loses money. It's usually measure in the % of the coin traded. So volatility could remain stable at, say, 2% but when the dollar denominated market cap is 50% lower than it was 6 months ago then Coinbase is collecting 50% less in fees. In order for revenue to remain the same, volatility would have to double.
People that had $10k invested already and kept it in the market now have much less than $10k. They may still have 10 ETH depending on when they bought in, but when they trade those ETH Coinbase is making 75% lower in fees than if they traded them 12 months ago.
Coinbase simply cannot make the same revenue in dollar denominated fees when the dollar denominated value of those trades goes down, and it has gone down a lot.
that’s true, volume driven by money already in the system will fall due to prices going down.
volume driven by new money coming in will be reduced by the phenomenon i mentioned (price down, less hype, less money coming in).
So if we break volume down in 2 groups the first would experience what you’re saying and the second would experience what i’m saying. It’s the same with stocks but to a much lesser extent, especially because 401ks and institutions are required to buy no matter what
Why would you ever run a company at this stage so close to the edge that a 10% reduction in payroll makes a meaningful difference to your bottom line even after adjusting for the immense morale and PR hit? Seems so wildly irresponsible. Did they really fail to plan for such an obviously plausible scenario as what we are experiencing now? Or was the explicit plan always "eh, we'll just throw some people overboard"?
Not to mention, what the fuck are you doing if you're not in an obsolete industry but each extra employee is not making you money?
It must have been hard for them to come up with an ad over the last couple months that they knew would be relevant/accurate no matter what happened in the markets. I wonder if they had a different ad prepped and then subbed this one in because of what happened. It was a visually simple ad and presumably could have been created at the last minute.
Bold claims like this is what make people look like idiots when things turn around.
With experience though, you can tell that people who make bold claims like this were always idiots gambling away their credibility, hoping the 50/50 lands in their favour.
In case you didn't get the reference, the Coinbase commercial entirely consists of comments saying "Crypto is dead" with various timestamps going back ten years, and then ... "Long live crypto".
I'm struggling to find a good analogy to these crypto boom/bust cycles, where the market continues to survive/thrive after the busts. The closest I can come up with is real estate, but there is a core underlying value in real estate in that people need space to live/work/shop/whatever -- so when speculative bubbles burst, there is pretty significant underlying demand. I have a hard time drawing that parallel the crypto. Certainly there are valuable use-cases but the main use-case still seems to be as a speculative investment.
Not an asset class, but I'd draw parallels to Texas Hold 'Em. In 2003, Chris Moneymaker wins $2.5 million at the WSOP as an amateur who qualified through the internet; within a year, everyone is talking about hold 'em, their bankroll strategy, having poker nights with their buddies, how they're playing 12 tables at once online, etc. Culminates in massive mainstream acceptance, ads for Pokerstars running on major networks, and a major plot arc in a James Bond movie. But it turns out that nearly everyone is a loser in online poker; after all, at a 6 person table, only 1 person wins (well, 2nd place usually gets their entry fee back, but still). Very few people become Chris Moneymakers; most just lose a bit of cash, some their life savings.
Look at where hold 'em is now. It still exists, of course, but you don't see poker tournaments broadcast live on ESPN anymore. It's not even a very popular livestreaming category. It definitely went through a boom, then huge bust, and then a slide into... not really irrelevancy, just kind of a continued existence.
IMO, crypto is headed for the same fate. It will still be fun for a subset of people to gamble on altcoins, to pump and dump and run schemes of dubious legality. And just like I wouldn't count out a poker resurgence sometime in the next decade, I wouldn't count out another crypto spike in the future. People never stop loving easy money.
The main factor in the drop of online poker was the USA crackdown on poker sites. It remains wildly popular in jurisdictions where it is still legal and is making a comeback in some US states that have since re-opened it.
I'm in a region where online poker is legal (Canada) and can assure you it's not wildly popular, at least for my own definition of wildly. I've had a lot more conversations with people about crypto than poker in the past 2 years. Worldwide Google Trends matches the US trend of interest in Hold Em being down ~98% since 2004.
People may be underestimating how popular hold em was in the mid-2000s. As another comment in this thread said, it was even more popular than crypto is now, and that's without the extensive use of social media that we have today.
Poker is not even remotely as popular as it was in the mid-00s. Google Trends shows "texas hold em" currently at 1% of its peak in mid-2004, and the more general "poker" at about 14%. It definitely still exists, there are still tournaments, and it's still played by people around the world, but it's not a part of the cultural zeitgeist like it was ~20 years ago.
This is correct - in the '00s everyone was playing online, or playing after work, or knew someone who was playing. It was big - bigger than crypto is even now. It really was a fad that caught people's attention, combined with lax regulations enabling online play - it was a firestorm.
It’s like betting and gambling. The losers keep coming back thinking they can time it correctly this time around. The game is basically putting money in to get it higher, and timing the top. Crypto being largely meaningless in terms of value is a perfect medium for the game.
Since we're just randomly linking unrelated things, FedEx turned their business around after their CEO saved it from bankruptcy at the blackjack table[0].
That's about as useful as pointing to some equally unrelated thing that did turn around. The truth is nobody here knows either way, and if you did you'd be in the process of becoming very wealthy on that knowledge. Let me make a wild guess that you will not actually be putting your money where your mouth is on this?
I mean the end state of crypto isn’t a very positive one. Either it will crash catastrophically or it will slowly fizzle out until the majority of people just forget about it. Either way, at some point virtually nobody will be using it.
If that's the case, that end state will also coincide with government bans, and non-criminals leaving the space. Which will be catastrophic to both crypto's valuations, and to anyone doing business around it.
There wasn't exactly a huge amount of interest in the startup/Wall Street space for building speculative financial instruments around, say, ISIS-issued 5-year bonds.
Speculative assets rarely crash, despite people wanting the drama of it all. If ETH went to $100, enough people would buy it in the hopes it would skyrocket again and make them fabulously wealthy, pushing the price up, but lower than last time, until it cycled back and so on until it fizzles out.
Because it doesn't seem like Crypto is a good inflation hedge. If you're worried about inflation from unwise increases in the fiat money supply, then it seems like you want something with intrinsic value (real estate, other tangible assets, inflation protected bonds, etc), but crypto is the opposite of that. It's too volatile to be an actual currency so what is it exactly other than a purely speculative asset?
Nothing has intrinsic value. All value comes from subjective interpretation of what is valuable.
Assets with a cash flow have something you can calculate by discounting future income. But at what rate? The market rate? Some people have a higher time preference compared to the market rate, while others have a lower one. In any case, that preference is not negative as in the EU. Nobody wants to receive money later instead of now.
"Other tangible assets" are also a risky bet. Oil hit a negative price in 2020. If supply adjusts to demand, prices should go down as technology makes it cheaper and cheaper to produce things.
Even food is subjective. You can eat for optimal health, but few people are doing that, and instead eat much too much meat. Meat requires much more land per gram of protein.
What happens if people stop SUBJECTIVELY choosing branded sugar water? Coca Cola goes down, which is what "value" investor Warren Buffett owns as 6.71% of Berkshire.
Everything is a risky bet and there is always subjectivity involved in prices, but what I mean by "intrinsic value" is that the the asset has so tangible use that is valuable to people directly. Oil has intrinsic value because people can use it to generate electricity. As you say, equities have (theoretically) some cash flow associated with them so you are buying a cut of future profits.
But what is the theoretically correct price of Bitcoin? In some sense it's just like every other asset, the right price is what someone else will pay for it. But what you actually care about is what someone will pay for it 1/5/10 years from now (especially if you plan to use it as a store of value). And how do you even begin to model that?
Why they need these many people for an exchange is puzzling. I’m sure there are many things to do, but shouldn’t they grow their headcount organically and slowly?
Is it an exchange or more like a lead gen company? I thought coinbase's business model was to advertise heavily to get newbie crypto investors on their platform and then to charge wildly inflated commissions compared to other exchanges. Kind of like a Rocket mortgage for crypto. Unfortunately in that business model gross revenue directly tracks the price of bitcoin.
What is Netflix doing differently? I know they had some internal struggles between different media faces (prestige content versus chasing the masses), are you referring to them paying high salaries but having a smaller workforce?
On a more serious note and the likely answer to the question: customer support for 100000000 customers (as has been pointed out elsewhere in this thread)
> shouldn’t they grow their headcount organically and slowly?
You would think so, but a lot of companies who are/were venture backed don't think this way.
There is a tremendous pressure to use funding to accelerate growth, which can work fine in a good economy, but can be a disaster in a recession when no amount of capital can speed up growth.
Blitz-scaling is still the primary mindset at a lot of startups (at least where I've worked or the companies I've come into contact with). They may use some other term but the "grab market share as fast as possible and worry about profitability later" is the general strategy.
I think this leads to a lot of companies making bad calls like over hiring or building awkward products. I'm not saying blitz-scaling can't be a strategy, I just think it's treated as the only strategy that matters and people end up in hammer/nail situations.
In a rapidly growing company you also have the new layer of managers jostling for position - if you get three new engineers (which we badly needed to keep the servers running) then I will want three new engineers to match (to do God knows what, but hell if I'm gonna let your headcount get bigger than mine).
Well, sure. I think they were going with the wave of success and simply didn't stop. I've seen companies grow very self-indulgent because of their success many times over.
The fun bit is that in the USA, you can (almost everywhere) whimsically fire anyone without cause and without any transition pay. So what's to stop a company from just hiring a bunch of people while they're growing, and just kicking them out whenever?
I think they already realised it was out of proportions, but you look really (REALLY!) bad if you fire 1000+ people when business is going well.
You only look slightly less really bad if you do so with an implied reason that you then simply don't communicate to anyone.
They also presumably have hefty cyber, legal and financial audit teams to protect their assets, and position themselves in preparation for any changes in the landscape (which has been pretty rocky to say the least).
Didn’t see any mention of engineers, or any specific part of their workforce. Could have been regional regulatory experts, marketing, admin, gardeners…
On the other hand they could've been growing much more modestly, and then there wouldn't be any layoffs. Not much different to other IPOing companies, many are doing layoffs now. Crypto has little to do with it.
People were gainfully employed during that period, and are receiving generous severance by any measure. The alternative is that those people aren’t employed at all, or working in another job that might be just as risky. Crypto has a lot to do with it: The industry itself is known for its volatility, so there’s some expectation that they took up the role with an understanding of the risks to those tenure.
This isn’t a McDonald’s or Walmart hiring unskilled labour at low rates, knowing full well that people are replaceable.
the most ridiculous thing is: they tried to recruit me 8 months ago. it was all unicorn and rainbows and bullshit this is the future. so if just 8 months ago, the CEO who has a 110 MILLION DOLLARS house couldn't see 12 months into the future, and required 18% reduction in headcount because of some unforseen crypto winter, who really is at fault here?
what a fool that CEO is, and glad I turned the job down and feel bad for the people who were sold the cool aid.
8 months ago inflation looked much more manageable, the Delta surge was ebbing & Omicron not yet casting it's shadow, and the Russian invasion of Ukraine hadn't upset Western geopolitics & kicked an already suffering economy in its commodity balls.
It appears they were hiring far too aggressively even at that time, but I think the CEO can be forgiven for not anticipating the current state of affairs.
Can you please explain why you believe a CEO should be able to see into the future and correctly account for all of the interactions of the global economy? If you can't, I guess just complain about billionaires instead or something.
Genuine question: At what point do we actually declare that we are in recession. Do we wait for GDP figures out these signs are enough to assume we are in bear markets now.
Recession is a loosely defined economic term where the exact definition depends on who's reporting it, traditionally, it's meant 2 quarters of decline in GDP growth. But now:
The NBER defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales
But recession is a macroeconomic term that may not reflect the actual impact on consumers -- conusumers could be suffering through an economic downturn that's not technically a "recession".
Yeah, recession start and ends can only really be determined accurately in retrospect. And like you said it's marked by the decline meaning it starts when growth hits its high point and ends when it hits a low point. In terms "feeling" like a recession, it'll be more like midway through the descent until midway into a recovery. A stock market crash is frequently a leading indicator of a GDP recession though not always. We could be seeing the early signs of recession for the past six months, but we won't really know for a while.
Some crypto collapsing does not mean it is a recession. The exploding prices for real goods and less and less people being able to afford basic things are the indicator for that.
Real GDP has to shrink for it to be a recession. GDP in the United States is currently growing strongly. The Conference Board is not predicting a recession in the U.S. in 2022, and they just updated their forecasts a few days ago.
Sure. And if GDP goes negative, and if employment falls etc etc then people will start saying recession. I was just trying to answer the GPs question, not predict whether or not this is a recession!
By the way the official declaration by the U.S. bureaucracies of the onset of a recession typically lags the actual onset by a year or so.
When growth actually slows. The stock market has little to do with whether we are in a recession. If it fell by 10K points tomorrow, most stocks would still be wildly overvalued.
This prognosis was the final straw caused me to exit the market as it sounded like Brian wasn’t expecting a recovery in any reasonable time period.
Furthermore, I felt that other asset classes were overvalued when I got into crypto and I hardly think that’s it’s currently the same.
It also turned out to not be the inflation hedge I originally assumed it would be. Part of my current assertion is that cryptos value is tied to retail investors - the same who need to pull out of the market to deal with Very real expenses.
Let’s also give credit where credit is due. Brian may also be using the economy as cover. Give credit where credit is due - FTX came in and ate their lunch. Hats of to them.
> It also turned out to not be the inflation hedge I originally assumed it would be.
This is a common misconception. I've never understood why people have had such unrealistic expectations of Bitcoin's price performance during the initial phase of inflation.
There are two types of people who buy Bitcoin: one that holds it for the long term and the other that treats it as a speculative investment, perhaps even swing trading with it. Access to cheap borrowing and a dramatic increase in the money supply has overpriced Bitcoin as speculators buy in. It has to correct.
Now, as the money supply begins to shrink and access to cheap debt comes to an end, speculators are forced out of the market. They need cash to cover their debts. Thus, as all markets begin to fall, Bitcoin is going to fall with them. A lot of us have always expected this to be the case. Eventually, once the speculators are washed out, we'll hit a floor. We might be there already. We might have a way to go. But there will be a floor.
The correction across all markets we've seen so far is just a market adjustment back to reality. Meanwhile, the debt bubble hasn't really started to "pop" just yet. We've seen record levels of debt lately, corporate debt in particular. Now we will begin to see over-leveraged companies begin defaulting on their debt as they head into bankruptcy. This will be the real crash. The full scope of this is unknowable. But there's reason to believe it will be historic.
Meanwhile, Bitcoin has no debt. Bitcoin doesn't care. Bitcoin will just keep on being Bitcoin. At some point, people will begin to notice that Bitcoin is the only thing that's not falling anymore. This will be the moment of change.
> Now we will begin to see over-leveraged companies begin defaulting on their debt as they head into bankruptcy. This will be the real crash. The full scope of this is unknowable
Leverage and cash flow figures are available for all publicly traded companies. The market already knows and already has it priced in.
Decreasing cash flow might pose problems. We'll have to wait and see.
I see they cut off access for staff before telling them. not an atypical move, but I wonder if they were actually able to revoke all access, given there's systems like Kubernetes where some auth. types can't be revoked once granted.
Most people will have worked on laptops that have the software installed that allows them to completely brick the device.
It just makes me wonder what they'll be doing with 1000+ laptops and other devices. Do they expect people to send it back? Probably yes. I'd personally just declare: "I have low money and I had to fire your laptop service, thanks for the work of getting it to me, I'll be keeping it now."
I mean, that's what they do with the work of their employees. "I have low money and I had to fire you and 1000+ others, thanks for the work of making my company big, I'll be keeping it now."
> I'd personally just declare: "I have low money and I had to fire your laptop service, thanks for the work of getting it to me, I'll be keeping it now."
I think you could then expect a knock on your door from a couple of police officers. [1]
Airbnb allowed folks to keep their laptops after their recent round of layoffs. Presumably these laptops are managed by IT with the ability to remote wipe.
If not, I feel sorry for the folks in charge of rounding up all this hardware to likely sit around and rot.
As long as their cluster API servers aren't on the Internet.... which is a default for AKS, EKS, and GKE :) (there's 1.3M servers identified as Kubernetes directly on the Internet according to Shodan's latest stats).
I feel like people ignore that most areas of a business grow in lock step with its size and that IT is the exception not the rule.
Like insurance companies and banks are just as much “tech” as anything else in crypto and nobody balks at them having skyscrapers plural worth of employees.
NPR has just aired a short interview with a former Coinbase PM. She is a founder of a crypto fund now and has never been that optimistic like now with crypto expanding, NFT, many more developers coming into crypto, etc.
hmm. looks like the total mentality of an entrepreneur changes when the company becomes public. with VC funds, the entrepreneur focuses on execution and builds and with IPO, its ok for entrepreneurs to lose vigor and can buy millions worth property and also lay off employees.
In the end, it has nothing to do with open society or for the people. its all about money and its just greed.
If Armstrong was the sole CTO, COO, CPO, CLO, designer, marketer, advertiser, programmer, and researcher, then yes, all money should go to him. But Coinbase was made what it is by many people, the majority of which have nothing close to wealth Armstrong enjoys. Why shouldn’t those people be given money?
I agree there should be some incentive for entrepreneurs and the people who make “the business side” work, but doesn’t the degree of difference between Armstrong and his average employee strike you as unfair?
Let’s be conservative and say Armstrong has just a net worth of the house he bought: 150,000,000. If the average employee’s salary is 150,000, Armstrong makes 1,000 times more than them. Does this seem fair? Does he deserve higher compensation for his entrepreneurial skills? Absolutely. But 1,000? It’s hard for us to imagine the scale of 1,000 times greater than something but it seems excessive (and remember, this is being extremely conservative). Does he really work 1,000 times harder than the average employee?
These aren’t rhetorical questions by the way. I genuinely want to know, what do you think?
No, I don't expect to get profit share from the company I work at unless it's written in the contract. Are you serious? I don't care if the owners work 0 hours a week. It's their company and if I wasn't happy with my compensation I would look for another job.
Great analogy actually. The founders own the lottery ticket, but they pay employees cold hard cash despite the fact that the lottery ticket will likely be worthless. When the founder lose the lottery, and lose all of the unpaid hours and resources they personally put into buying the ticket, they don't demand employees reimburse them and share in the losses. But on the rare chance that they win the lottery, we have to have conversations like this about how "unfair" it is that they owned the ticket, despite paying everyone what they agreed to be paid.
So the point that the parent was making was "go buy your own ticket," not "go win the lottery."
The parent was making no point but was making an unreasonable argument in line of "No one can criticize, but if you believe that then why don't you make a profit?".
Similar to people who say "if crypto is a scam, why don't you short it?"
There are various reasons why people choose to or not choose to become an entrepreneur or why people choose to or not to short something. It doesn't mean just because a person doesn't want to be an entrepreneur, then capitalism is perfect.
The argument is a strawman where-in the original discussion was about billionaire entrepreneurs and how much is a fair reward to them.
We understand the entrepreneur deserve to be rewarded but the original question is up to what extent. Like how in some EU countries, CEO pay is capped.
They deserve to be rewarded by what the market will bear. By introducing ceilings on their income you'd be stifling people's will to "buy the lottery ticket". I can't wrap my head around why people think they know better than the market.
This logic is nonsense; no one is allowed to criticize capitalism's flaws?
It's like a movie critic cannot criticize a movie, since the film-maker can just state "why don't you just make a better movie?"; A diner cannot criticize the chef because chef can say "why don't just prepare a better meal?", etc..
Bringing the personal into it is unrealistic since not everyone is equipped to be a movie maker, chef or entrepreneur but that doesn't mean those jobs are immune from criticism.
Even Warren Buffet has spoken about the excesses of capitalism and pointed-out that the rich are taxed too little as just one example of capitalism's flaws.
Capitalism is still the best system but that doesn't mean it's perfect or can no longer be improved.
Why stop at criticizing? Go prove people wrong and make a company that does things drastically differently. That's why people are tired with the "I'm just criticizing!" attitude. Instead of talking and telling everyone else they need to change, go show everyone that you know better.
So I guess no one can criticize anymore? If my car is broken, then I have to make my own car?
It's a strawman and a diversion to just be talking about the general concept of fair compensation to CEOs and founders and then to just reply with "why don't you make your own company if you think the pay is too high"?
It's not a strawman, you just aren't understanding the fundamental lesson in the idea of starting your own company. "Fair" is what the participating parties agree is fair when they form the agreement. You appear to be speaking from one side of the agreement (the employee side). Starting your own company will give you drastically different view about risks and costs that were previously hidden to you as an employee, and you'll come out with a better understanding of how "fair" is negotiated between the participating parties.
It is a strawman because he brought in the personal by saying "why don't you start your own company if you think pay is too high?" Exactly the same as film maker just saying "why don't you make your own movie if you want to criticize mine?"
Same as crypto defenders "why don't you short crypto if you think it is a scam?"
Anyway, I'm repeating myself already, good conversation, Thanks.
“bringing in the personal” as you put it is a great tool here that separates the wheat from the chaff. It’s very easy to say “I work hard, sometimes for long hours, I don’t see much difference between what I do and founders, surely they shouldn’t be paid that much more than me”, but the reality is that it _is_ that much harder and riskier and beneficial to society, and the profits reaped are evidence.
So you’re more than welcome to criticize, but they’re “cheap seats” comments to a certain degree.
To stay objective about it though, the financial incentive brings a lot of innovation which helps all of society. They’re not taking your piece of the pie, they just baked some more.
Programmers wages in America are for the vast majority of the world obscene as well.
It depends where do you draw the line, American programmer is most likely the 1% for the world.
Don’t really see the relevance here? America is also more expensive than the majority of the world. I’m not comparing the wealth of impoverished people to the average American programmer. I am comparing the wealth of Coinbase employees to the wealth of the Coinbase CEO, whose company is successful only because of those employees. If the American programmer is global 1%, then Armstrong would be global 0.001% so the inequality isn’t changed.
You ignored my response to your post completely and re-iterated the exact same point, so I don't think you are listening or actually care to hear what I think, because if you did, you would know that I already answered you.
This is the most fundamental tenant of capitalism. The output is perpetually distributed according to initial risk taken, not according to amount of day-to-day work performed. The property of capital is that it keeps growing (more or less) effortlessly. So you just need to capture initial capital and pay employees only returns from capital, not the capital itself. Fun fact: Bill Gates has made vastly more money just sitting around in his "retirement" than working his ass off for 30 years in Microsoft every day.
What risk did he take, gimme a fucking break. Worst possible outcome for him was he has to settle for a $400k job at a FAANG after his startup fails. Boo fuckin hoo
Of course he did enough to deserve some fuck you money, but hundreds of millions? Slap yourself, fool, cos you dreaming
The risk was in the opportunity cost. How much was he making in the first ~9 years pre IPO? As you said he could have made a comfortable salary working 40hrs/week at many other companies but likely took a significant pay cut for many years to found a startup.
Coinbase was valued at 86B a year ago, so hundreds of millions would have been ~.2% of that valuation.
With the context of what wealth inequality is doing to society and what political power raw money brings to people, I posit there is a line where it is wrong.
If 1 million people want to give 1 person 10 dollars, and your response is "we should control how those 1 million spend their 10 dollars", and not "we should prevent politicians from selling their influence", then you're hurting the people you want to help.
Bezos is probably the most unpopular person in Washington. We don't have a president Bloomberg. I submit to you that you are vastly overestimating the amount of political power having money automatically brings someone.
Power and office are two different things. Someone can exercise a great deal of power in advancing or killing legislation while never holding office and allowing all the office holders to call them names on TV.
Powerful people have long weaponised self-deprecation as a means of letting off steam and blunting more serious attacks. (That theme is elaborated very well in the LRB here: https://www.lrb.co.uk/the-paper/v35/n14/jonathan-coe/sinking....) Michael Bloomberg is actually a great example, in how his campaign relied so heavily on irony and self-deprecation to defuse the (anticipated) discomfort around electing an old white billionaire.
It’s entirely possible that he has used his unique position to make further gains on the crypto market. He may have also secured a loan on the basis of a future sale.
No surprise, just like Uber , Airbnb etc..coinbase has been overstaffed ever since they raised a major amount of capital many years ago...
Hence , I don’t see what 5K people can be doing at coinbase since some startups in Europe are doing the same with like 100 people...
It’s been known for years : startups overhire and lay-off when recession comes up.
With the “nazi revolution” in the 50’ , most startups rely exclusively on “Social Darwinism” , to solve problems or improve products , by having them fight internally and let the best ideas come to executives. Of course only employees who know how to navigate corporate politics are able to reach them and win those fights..
Those 1000 were not part of it, but they will have no problem finding another position somewhere else.
Top competitors in a scam. Just like NFTs. And boys like pg are into this (both Coinbase and some NFT company that I forgot its name). And you are defending them. And you don't see any problem. And that is the problem.
No values was created here. Just moving value around. Usually into the pockets of some already very rich people.
Sort of, it's all very abstracted but at the end of the day the investments generally represent value being produced. Goods being created, services being rendered. Crypto, for the most part, is proof that someone, somewhere had a computer that did a thing.
You confuse personal opinions about crypto with business success.
Coinbase is a massive success. It has a 100 million users and is the best known crypto exchange for retail. They did pick the winner.
This layoff creates a lot of emotional attention but doesn't mean that much in business terms. They were overhiring anyway and all of tech is massively down. It's a small undoing of growing too fast.
Coinbase operates under the protectionist policy of the US and still only has 1/10th of the volume that Binance has (with the same amount of employees). I never got what the fuss is about Coinbase compared to all exchanges, except for the "silicon valley bro" angle
When you posted anything negative and mentioned YC in the headline, the mods edited the headline. When Coinbase went dark during the first crypto winter (or was it the second?), asking for some/any help here was ridiculed by the YC powers that be (i.e pg)
In my opinion this is what greed does to people. Doesn't matter your background. Armstrong was here on HN pointing out his vision of free exchange of currency at close to zero rates. He wanted to fight "the big guys", including credit cards mafia and PayPal mafia. What A WONDERFUL goal.
What he ended up with, is obnoxious exchange rates @ Coinbase (triple what credit cards charge), hundreds of thousands of ruined lives, lots of suicides, and $100 million dollar mansion.
What A RECORD.
Don't get me wrong - I would love to live Armstrong's life (although I wouldn't be this shrewd), but as someone who believes in heaven and hell, I definitely would not want to die as Armstrong.
Though my perspective is that you're taking some of this stuff really extreme, you are a talented visual writer and I enjoyed reading this comment a lot lol
They are doing layoffs because crypto is a speculative bubble fueled by liquidity. And now that liquidity is disappearing crypto is rapidly losing value.
You can't attribute suicides of people investing in crypto to Armstrong. I think Armstrong had a great vision and ok execution (I would give grade D but not F). Overhiring was irresponsible. Out of control costs were unneccessory. But you have to understand that founders in this space have enormous pressure to grow, try new ideas and new products as they are constantly at risk by other players (Cashapp, Paypal etc).
Before Coinbase, investing in crypto was super murkey even without all the volatility. They were able to make crypto accessible and provide marketplace that is not full of scams (so far). For people who controlled their risk by not exceeding crypto investment beyod 1% of their networth, it was great way to get in the market. If Ukrain war + COVID didn't exist, they had a decent chance realizing vision. If they can survive the storm, I think they would still be the most trusted crypto marketplace.
Do you even use Coinbase? Every time I login I am being swamp by flashy ads of just another shitcoin with big banner telling me that I can make a fortune. Most of these coins - if not all [the judgment is still out] are worthless and will never be more than 5% of what they are now, before they fell 99.99999%.
Whether Armstrong is pushing this shitcoins because he doesn't know better, or doesn't really care - its equally evil.
I honestly thought the pandemic would be the trigger for a recession. Clearly that wasn't the case (or at least it was a delayed effect). This doesn't seem to be a case where a single event triggered a recession (eg subprime in 2008). It seems to be a combination of events.
Inflation is a big one. This one is interesting because the two biggest factors (housing and gas) are completely artificial price hikes. Housing is a double whammy because we had artificially cheaper housing in the last 2 years because of the pandemic. That makes price hikes seem worse than they are (note: there still are significant price hieks in rents). There's pent up demand from the pandemic. There's some institutional buying of homes (which honestly should be outlawed). But really it's just price hikes "because we can".
Gas was triggered by Ukraine but that's just another "because we can" situation. The Biden administration could ban exports of refined petroleum products if they really wanted to apply downward pressure to gas prices. It's not that Biden has a bad energy policy. He seems to have no energy policy.
And then there's crypto. What a lot of people are learning is that the only thing holding up the crypto bubble was the collective belief in continued speculative gains. That's literally it, even for the (supposed) stablecoins.
I personally see crypto as a massive waste of energy (eg Bitcoin energy usage is about the same as Sweden's) for very little utility so I personally hoped the bubble would burst because crypto is such a massive example of a solution desperately searching for a problem. I can't say this was or is inevitable. Collective delusion can last a really long time. But I hope the bubble does burst.
Obviously this sucks if you work (or, rather, worked) for Coinbase. At least they're getting some severance. It may be a rough time for finding a new job, even for software engineers, for a couple of years, something that hasn't really been true for >12 years.
> But really it's just price hikes "because we can".
This is just an absolutely wrong-headed understanding of what is causing inflation that is premised on some corporate benevolence that existed prior to 2020 that no longer exists. [0] The question to ask is "why are prices able to be raised now"? The answer is contracting supply and surging demand.
> I honestly thought the pandemic would be the trigger for a recession
Um, did you miss the 2020 recession? It was the sharpest decline in GDP and employment in national history. It was also met with an historic government response to stave off poverty. And you can absolutely still point to the current inflation as unwinding from pandemic.
Coinbase was also extremely generous with severance. 12 weeks plus two for every one year at the company, I think. I've had the experience of being let go without notice and without severance.
Devs seem a little more grizzled this time around, so I think this mindset is slowly becoming the norm. College grads seem skittish, but they always are.
People keep pointing to Armstrong's $110M house like it's some sort of injustice. If you think billionaires should exist at all, then that's one of the least-bad injustices imaginable. It's probably true that no Armstrong, no Coinbase, and 10% of Coinbase is the prize.
EDIT: It's actually 14 weeks: https://blog.coinbase.com/a-message-from-coinbase-ceo-and-co...
Three and a half months of dev salary is pretty incredible.