This article leaves me wanting more. I suspect the 'why' is much more interesting.
Some thoughts:
-Billionaires primary derive their net worth from stock, which is difficult for them to sell. Paper gains, don't represent increases in cash flow. Sources of cash flow would include dividends and planned stock sales. Given the general plunge in dividend yields (4-5% pre-crisis, ~2% today) it's not hard to imagine that even billionaires have less cash at their disposal. Furthermore, given the market plunge and uncertainty the last few years, it would be hard for owners of major public companies to sell large quantities of their shares without signalling to the markets that they believe their companies are overvalued.
-Tax rates and deductions have changed. Shouldn't be a surprise that given the dramatic increase in marginal tax rates and the new limits on deductions that there would be an impact.
-Perhaps there are exogenous factors at play... maybe after a rush of great new non-profit ideas earlier in the decade, billionaires are seeing fewer ideas that excite them enough to donate significantly despite the obstacles mentioned above.
Article just strikes me as wealth bashing without even attempting to get into the more interesting part of the story.
Given the state of our societies, I think we are in desperate need of some wealth-bashing.
With our technology, nearly nobody should need to live without health-care or in poverty. But so many do. And what is even more alarming: So many people do in the rich countries.
How is this justified by the thesis that the wealth of some people make the others richer too.
It is a myth of capitalism. That's it.
What is left to the 99%: Charities of the wealthy people that earn more by just stupid investing than most of the others with good ideas or entrepreneurship can ever hope to make.
Also those here hoping to rise up to the top should know that -- it is a lottery game and most of us will simply not win. Do we really, really want a world, where the "Winners take it all" and the others have to fall?
Wrong. Tesla and SpaceX employ many thousands of people. Elon keeps his wealth as equity in these companies, and not as cash. This is producing far more jobs than your Socialist redistribution schemes.
Musk actually seems like a pretty good example of a wealthy guy creating jobs that probably wouldn't have existed, if Musk didn't have the money to risk on his vision.
All savers, even if they aren't founders/owners of companies themselves, create jobs by keeping their money in the financial system. Whether by owning stocks, bonds, private equity funds, or savings accounts, the resources are allocated to where they are needed most. When that whole system dries up, you get a credit crisis.
Obviously, yes, demand is important. Confidence crises can wreak havoc.. but simply saying demand is the only thing that's important is ludicrous when dealing with such a complex and dynamic system.
A bunch of bankers conspired to defraud credulous investors by selling them worthless mortgages as A-rated investments. This massive influx of capital into a non-productive sector of the economy nearly caused the entire system to collapse. These bankers then used the political influence bought with the money they made in order to shift the cost of their fraud onto the taxpayer.
Really, it's not that hard to understand. The only thing that is hard to understand is what this question has to do with the matter at hand.
Your entire understanding of the credit crisis is deeply flawed.
1) Savers do not create jobs. Spenders create jobs. When you get a situation where people would rather save their money than spend it (ie. Japan) then you get deflation, and the economy contracts leading to lost jobs. This is why Japan is trying desperately to increase inflation through Abenomics.
2) To explain the credit crisis would take a lot more than just a few paragraphs, but your fundamental statement that it was caused because people stopped parking their money in financial instruments is just wrong.
1) Saving in itself does not create jobs, but savers allow for jobs to be created.
2) Not my fundamental statement at all.. My point was that the supply of credit (significantly shrunk due to reasons beyond a few paragraphs) can kill jobs.
I'm a right-wing-leaning centrist, and I do not believe in the trickle down theory that you are implying. Making rich people richer, and allowing poorer people to feed off of the morsels and crumbs leftover does not create a balanced society. There will always be rich people, and there will always be poor people, but thinking that if you bias towards the rich people society will somehow get better is a horrible delusion.
I don't think anyone figures it makes the most balanced society, they just see it as the most realistic way to help the people at the bottom of the structure. Basically applying "Rising tide lifts all boats" in the opposite direction as the liberals, tops-down instead of bottoms-up.
Based on every single piece of study, this is categorically false. The only people that have benefited, most recently since the credit crisis, was the rich. That means that the "rising tide" barely lifts poor peoples' boats, while it raises rich people's boats significantly. If that were the case, then do you still think that trickle down economics is worthwhile? Or is there a more efficient allocation scheme where poor people benefit just as much as rich people?
You're cherry picking a period which actually helps to make sliverstorm's point: The last few years have been categorized by significant increases in taxes, and regulatory burden, which cause uncertainty in the business environment and more pain for the middle class.
Unfortunately, historically, all the evidence supports the 'rising tide lifts all boats' argument. While growth 'at the bottom' has slowed compared to the top, it's still growing. There are plenty of theories for why this is the case, but the data is is there.
So presumably if billionaires reinvest the wealth they have accumulated in new jobs rather than keeping it to themselves then we will live in a better society? (At least in your model)
For the economists here, could someone explain why wealth hoarding is a bad thing? It seems to me that it would just cause the hoarded currency to deflate in value. We understand this and accept this as normal in bitcoin for instance - if I burn a disk with lots of BTC on it, I've lost value, but the market will shed no tears. Why is hoarding wealth different from just removing it from the system?
Because wealth that someone possesses can not be possessed by another person. If one person has 99% of all money in the world, everybody else will have to less to live on. The one person will be able to buy anything else on the world -- thus depleting the others. Or another scenario: Because money is hoarded in few hands, the value of the money goes down ... thus everybody else will loose their wealth.
Things are of course more complicated. But it is a fact, that the resources of the world are limited. Thus if few people hoard things, the others have less ... this effect might come sooner or later, but it will come.
No such thing as wealth hoarding in practical terms. You'd have to keep cash under your mattress to actually be wealth hoarding.
What is popularly perceived to be wealth hoarding (people worth millions/billions) are really doing no such thing. Virtually all of that wealth is invested in one way or another. Stocks, bonds and even savings accounts result in economic value being moved to those who can use it most effectively (i.e., VCs, cities building bridges, companies expanding, etc.).
Only partly true. Buy "investing" the wealth increases -- and thus the inequality in the world.
Of course in the brochures of Capitalism you see only the positives. But more and more the negatives are available too. VC companies roaming the world for land to buy and press out for investments. Local farmers can not anymore afford the prices for land and thus have to surrender -- and become paid employees. Many people become slaves of these VC companies -- they by companies for profit and when the profit is gone, they dump the companies. It is happening all over the world. The profit margin has to increase ever more to appease the investors.
This profit sensation has brought us thus far, that wealth gets more and more unequal divided and many people are exploited in sweat-shops in poor companies but more and more also in rich countries as in Germany.
Please don't tell us about the high-colored brochure Capitalism!
Inequality can not be corrected by charities. It is just a band-aid for the conscience.
When Roosevelt launched the New Deal in the 30s, he prepared the country for new chances for many (if not to say most) of the people and thus for a decades of wealth for all. Reagan and his successors on the other hand dumped the country into an era of greed and misfortune for the 99%.
Of course, this says nothing about how efficient the allocation of money to charitable causes. Without knowing either way, I assume the rich and poor's allocation are equally efficient.
Not necessarily. You can donate to environmental causes, social causes, educational institutions, disease/health research, etc. I don't have any exact data, but a lot of charitable donations aren't focused on helping the poor directly.
Some thoughts: -Billionaires primary derive their net worth from stock, which is difficult for them to sell. Paper gains, don't represent increases in cash flow. Sources of cash flow would include dividends and planned stock sales. Given the general plunge in dividend yields (4-5% pre-crisis, ~2% today) it's not hard to imagine that even billionaires have less cash at their disposal. Furthermore, given the market plunge and uncertainty the last few years, it would be hard for owners of major public companies to sell large quantities of their shares without signalling to the markets that they believe their companies are overvalued.
-Tax rates and deductions have changed. Shouldn't be a surprise that given the dramatic increase in marginal tax rates and the new limits on deductions that there would be an impact.
-Perhaps there are exogenous factors at play... maybe after a rush of great new non-profit ideas earlier in the decade, billionaires are seeing fewer ideas that excite them enough to donate significantly despite the obstacles mentioned above.
Article just strikes me as wealth bashing without even attempting to get into the more interesting part of the story.