Probably a Noob capitalism question...
I was reading a thread in NVG talking about economics and how they affect the poker economy and i wanted to ask something but i'll probably get more informed answers here. Here's what i was going to write:
Also while on the topic of economics maybe someone could explain this to me.
My opinion of capitalism is basically the more money you acquire the more money you will make from interest/asset appreciation etc.
So if there is a threshold of say having $1mil liquid that can earn you $50k a year to live off then everyone above that barrier is going to become progressively richer, since they are earning more than they spend. They buy up more assets increasing their passive income more and more and their fortune continues to grow.
If you're below that threshold you don't have the opportunity to acquire assets and passive income and the gap gradually gets larger between you and the rich.
This means eventually the rich get super rich and powerful and the poor are all peasants. Aka the rich poor divide growing.
So i guess my question is, is this happening and will continue to happen? Where does it end up? Revolts? You already have the big companies supporting government campaigns to ensure they aren't victim to some huge profit cuts by new laws/taxes.
Maybe I've been watching too much zeitgiest type stuff but I'm curious.
Also while on the topic of economics maybe someone could explain this to me.
My opinion of capitalism is basically the more money you acquire the more money you will make from interest/asset appreciation etc.
So if there is a threshold of say having $1mil liquid that can earn you $50k a year to live off then everyone above that barrier is going to become progressively richer, since they are earning more than they spend. They buy up more assets increasing their passive income more and more and their fortune continues to grow.
If you're below that threshold you don't have the opportunity to acquire assets and passive income and the gap gradually gets larger between you and the rich.
This means eventually the rich get super rich and powerful and the poor are all peasants. Aka the rich poor divide growing.
So i guess my question is, is this happening and will continue to happen? Where does it end up? Revolts? You already have the big companies supporting government campaigns to ensure they aren't victim to some huge profit cuts by new laws/taxes.
Maybe I've been watching too much zeitgiest type stuff but I'm curious.
Well it's not quite as simple as that as economics are a very complex thing. Some key points is that in order for the rich to keep "earning more" they have to keep reinvesting and putting their capital at risk. Investing also spurs economic growth which leads to overall ideal inherent in capitalism - a better quality of life through rewarding innovation for all. The rich also pay more taxes in a progressive tax system that is seen in most capitalistic societies.
There is debate about the wealth divide when the rich get too far ahead though as "revolts" could occur. The government tends to protect this through social safety nets, that are also seen in most capitalistic societies.
Overall the more important thing to be concerned with in capitalism (which is based on the individual's ability to choose how they earn, spend, and invest their assets) is whether or not the society overall is benefiting. Even if the poor become poorer while the rich become richer, has their been steady improvement in quality of life during that time? Is there still opportunity to join the rich through your own hard work and innovation? If the answers to those are still yes (and I believe they are) then it is acceptable to allow the rich to take on larger risks for a larger fortune. Them doing so in itself isn't what will make the poor poorer, the poor largely either don't work hard/smart enough, have some unfortunate disadvantage (disability, genetic lottery etc) or are unwilling to take on risk.
There is debate about the wealth divide when the rich get too far ahead though as "revolts" could occur. The government tends to protect this through social safety nets, that are also seen in most capitalistic societies.
Overall the more important thing to be concerned with in capitalism (which is based on the individual's ability to choose how they earn, spend, and invest their assets) is whether or not the society overall is benefiting. Even if the poor become poorer while the rich become richer, has their been steady improvement in quality of life during that time? Is there still opportunity to join the rich through your own hard work and innovation? If the answers to those are still yes (and I believe they are) then it is acceptable to allow the rich to take on larger risks for a larger fortune. Them doing so in itself isn't what will make the poor poorer, the poor largely either don't work hard/smart enough, have some unfortunate disadvantage (disability, genetic lottery etc) or are unwilling to take on risk.
I don't read much of the propaganda on either side of this topic, but what I believe is that a capitalistic society gives people a chance to succeed. You can't allow people to succeed without also allowing them to fail. Most people could save money if they wanted to, and eventually bootstrap themselves up the economic ladder. Most choose not to, for a large variety of reasons.
-you dont need a million dollars to earn more than you spend.
-even someone working at mcdonalds can spend less than they earn, and therefore have extra to acquire assets and passive income.
-people who earn more or have more don't generally restict themselves to a $50k/yr lifestyle, accumulating the rest. Generally those who have more, spend more.
-even someone working at mcdonalds can spend less than they earn, and therefore have extra to acquire assets and passive income.
-people who earn more or have more don't generally restict themselves to a $50k/yr lifestyle, accumulating the rest. Generally those who have more, spend more.
-you dont need a million dollars to earn more than you spend.
-even someone working at mcdonalds can spend less than they earn, and therefore have extra to acquire assets and passive income.
-people who earn more or have more don't generally restict themselves to a $50k/yr lifestyle, accumulating the rest. Generally those who have more, spend more.
-even someone working at mcdonalds can spend less than they earn, and therefore have extra to acquire assets and passive income.
-people who earn more or have more don't generally restict themselves to a $50k/yr lifestyle, accumulating the rest. Generally those who have more, spend more.
Noob was an understatement. You honestly believed people with a million in investable assets live on $50k?
Well I assumed he was referring to a person who has $1m liquid and is also earning an income that got him to that point in the first place. Someone with no income and $1m sitting liquid/earning 5% certainly won't be rich for very long without spending like they earn a $50k income (and this is basically never the case.)
They would be losing ground each year but unless they were quite young they should probably make it to death without going bust. The bigger problem with OP's model of human behaviour is why would anyone do anything if their lifestyle was going to be the same regardless? If busting your ass to make good money leads to the same life as someone why just gets a job working a lot fewer hours, requiring a lot less skill, and having a lot less responsibility very few people would be motivated to put in the effort to do more than that.
To be honest the figures were kinda irrelevant i was more interested in the theory behind it.
For instance i could have said People with $10mil and earn $500k per year.
The thing is that if they are constantly earning more than they spend they will get progressively richer.
I think you might be missing my point a bit Henry.
What im saying is if that super rich people and families are making $100m per year from their $5bil estate while the average Joe pauper is getting paid $10 per hour to work in Mcdonalds then where does it end? In another 100 years the top 1% will have wealths of $1000Bil+ earning hundreds of millions per day through investments, estates, assets, stocks etc while the bottom 1% will still be working for an hourly wage of pittance.
For instance i could have said People with $10mil and earn $500k per year.
The thing is that if they are constantly earning more than they spend they will get progressively richer.
I think you might be missing my point a bit Henry.
What im saying is if that super rich people and families are making $100m per year from their $5bil estate while the average Joe pauper is getting paid $10 per hour to work in Mcdonalds then where does it end? In another 100 years the top 1% will have wealths of $1000Bil+ earning hundreds of millions per day through investments, estates, assets, stocks etc while the bottom 1% will still be working for an hourly wage of pittance.
I was reading a thread in NVG talking about economics and how they affect the poker economy and i wanted to ask something but i'll probably get more informed answers here. Here's what i was going to write:
Also while on the topic of economics maybe someone could explain this to me.
My opinion of capitalism is basically the more money you acquire the more money you will make from interest/asset appreciation etc.
So if there is a threshold of say having $1mil liquid that can earn you $50k a year to live off then everyone above that barrier is going to become progressively richer, since they are earning more than they spend. They buy up more assets increasing their passive income more and more and their fortune continues to grow.
If you're below that threshold you don't have the opportunity to acquire assets and passive income and the gap gradually gets larger between you and the rich.
This means eventually the rich get super rich and powerful and the poor are all peasants. Aka the rich poor divide growing.
So i guess my question is, is this happening and will continue to happen? Where does it end up? Revolts? You already have the big companies supporting government campaigns to ensure they aren't victim to some huge profit cuts by new laws/taxes.
Maybe I've been watching too much zeitgiest type stuff but I'm curious.
Also while on the topic of economics maybe someone could explain this to me.
My opinion of capitalism is basically the more money you acquire the more money you will make from interest/asset appreciation etc.
So if there is a threshold of say having $1mil liquid that can earn you $50k a year to live off then everyone above that barrier is going to become progressively richer, since they are earning more than they spend. They buy up more assets increasing their passive income more and more and their fortune continues to grow.
If you're below that threshold you don't have the opportunity to acquire assets and passive income and the gap gradually gets larger between you and the rich.
This means eventually the rich get super rich and powerful and the poor are all peasants. Aka the rich poor divide growing.
So i guess my question is, is this happening and will continue to happen? Where does it end up? Revolts? You already have the big companies supporting government campaigns to ensure they aren't victim to some huge profit cuts by new laws/taxes.
Maybe I've been watching too much zeitgiest type stuff but I'm curious.
Jamsym I assume you haven't studied economics a ton but to put it quite simply, consider the statement you're asking about. People make it to the super rich billionaire status through innovation and risk taking (and inheritance obviously.) I'll use some very basic examples of why this is necessary and worthwhile. In a society that isn't rewarded hugely for innovation, who would be motivated to innovate? Do you think Larry Page/Sergey Brin would spend day and night creating a way to organize and disburse vast sums of data to anyone, anywhere in the world, if they wouldn't be rewarded for doing so? Would Elon Musk risk his net worth on 3 companies that are all disruptive in nature and never been done before without the proposition of reward? Would a fund managing wealthy people's assets invest in tiny startups that balloon into life altering game changers without the prospect of reward (facebook, netflix, the list can go on.)
Case in point, life gets better for everyone, even if you chose to go down a path that led to a minimum wage job. That person still gets to enrich his brain via Google, connect with friends via Facebook, buy gas for cheaper than in most other nations thanks to energy innovation, and the list goes on again. Nobody has to be poor barring a life limiting reason, but it is often due to poor choices or a lack of work ethic that leads them to do so. Show me the hard workers who are educating themselves (which the government in the US makes it free to do so) and striving to add value to the economy that are still making minimum wage. They are few and far between because opportunity exists, and it is thanks to capitalism that this is the case.
Case in point, life gets better for everyone, even if you chose to go down a path that led to a minimum wage job. That person still gets to enrich his brain via Google, connect with friends via Facebook, buy gas for cheaper than in most other nations thanks to energy innovation, and the list goes on again. Nobody has to be poor barring a life limiting reason, but it is often due to poor choices or a lack of work ethic that leads them to do so. Show me the hard workers who are educating themselves (which the government in the US makes it free to do so) and striving to add value to the economy that are still making minimum wage. They are few and far between because opportunity exists, and it is thanks to capitalism that this is the case.
OP, the answer to your question is yes, inequality of wealth has been growing very rapidly since World War 2. The wealth distribution is now similar to what it was like in Europe 100 years ago, before the world wars and the great depression wiped out a significant portion of the continent's capital. This is the subject of a recent book called Capital in the Twenty-First Century, which is being billed as the most important economics book this year, if not the decade. The key factor that is driving inequality is the fact that capital has always returned around 5% (even going back hundreds of years) whereas now the economy (and the income from labor) grows much more slowly than that (maybe around 2%). Over the next 50-100 years, this will likely drive wealth inequality to levels that have never been seen before historically.
So if there is a threshold of say having $1mil liquid that can earn you $50k a year to live off then everyone above that barrier is going to become progressively richer, since they are earning more than they spend. They buy up more assets increasing their passive income more and more and their fortune continues to grow.
If you're below that threshold you don't have the opportunity to acquire assets and passive income and the gap gradually gets larger between you and the rich.
This means eventually the rich get super rich and powerful and the poor are all peasants. Aka the rich poor divide growing.
If you're below that threshold you don't have the opportunity to acquire assets and passive income and the gap gradually gets larger between you and the rich.
This means eventually the rich get super rich and powerful and the poor are all peasants. Aka the rich poor divide growing.
The thing is though, everyone's standard of living is continually improving, largely thanks to corporations, so there's not much of a pressing need to curtail their power.
The bigger problem with OP's model of human behaviour is why would anyone do anything if their lifestyle was going to be the same regardless? If busting your ass to make good money leads to the same life as someone why just gets a job working a lot fewer hours, requiring a lot less skill, and having a lot less responsibility very few people would be motivated to put in the effort to do more than that.
What im saying is if that super rich people and families are making $100m per year from their $5bil estate while the average Joe pauper is getting paid $10 per hour to work in Mcdonalds then where does it end? In another 100 years the top 1% will have wealths of $1000Bil+ earning hundreds of millions per day through investments, estates, assets, stocks etc while the bottom 1% will still be working for an hourly wage of pittance.
Here's Warren Buffet's view on wealth: "I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die."
Guys like Warren Buffet and Bill Gates are in a league of their own though I would say. It is rare to see that. The richest people in the history of the world did not act in the way they do (and were far richer than both of them are on a relative basis.) For each person who's like you can spot at least 2 who aren't. The whole Walton family heirs do very little outside of minimal efforts for publicity, despite having the means to do extraordinary things. The only person who may have acted in such a way was J.P. Morgan in his single handed bailout of the early 1900 financial crisis (before the great depression.) Even then, it was profit on his mind that he did so for if he didn't, he'd have seen his wealth evaporate as the US dollar would be worthless similar to german currency post world war 2. That said I am still a firm believer in Capitalism and the wealthy people it creates for the things they do for society as a whole.
RaineTech,
Yeah that is true. It's possible some of these super wealthy people haven't found the right charity, are not old enough to give it away yet, think their kids can grow it to something staggering, etc. But if they don't "donate" it to charity, they can still make huge, meaningful impacts by investing their capital to other endeavors, like continuing the successful operation of their company or new startups that require capital. If you get wealthy enough, there's basically nothing left to do but give it away. How many yachts do your great great great grandkids need? Eventually them, or their descendants will give it away, get it flowing back to the economy, or lose it from bad investments. The Walton kids perhaps have the means to give it away, but perhaps not the know-how.
Yeah that is true. It's possible some of these super wealthy people haven't found the right charity, are not old enough to give it away yet, think their kids can grow it to something staggering, etc. But if they don't "donate" it to charity, they can still make huge, meaningful impacts by investing their capital to other endeavors, like continuing the successful operation of their company or new startups that require capital. If you get wealthy enough, there's basically nothing left to do but give it away. How many yachts do your great great great grandkids need? Eventually them, or their descendants will give it away, get it flowing back to the economy, or lose it from bad investments. The Walton kids perhaps have the means to give it away, but perhaps not the know-how.
What im saying is if that super rich people and families are making $100m per year from their $5bil estate while the average Joe pauper is getting paid $10 per hour to work in Mcdonalds then where does it end? In another 100 years the top 1% will have wealths of $1000Bil+ earning hundreds of millions per day through investments, estates, assets, stocks etc while the bottom 1% will still be working for an hourly wage of pittance.
If you look at the richest people currently alive about 70% of them are self-made so that the rich are a result of inheritance is wrong.
So if there is a threshold of say having $1mil liquid that can earn you $50k a year to live off then everyone above that barrier is going to become progressively richer, since they are earning more than they spend. They buy up more assets increasing their passive income more and more and their fortune continues to grow.
If you're below that threshold you don't have the opportunity to acquire assets and passive income and the gap gradually gets larger between you and the rich.
Wealth growth on the bottom is actually far faster. When you can sell your labor for an amount greater than your wealth, a little saving means a rate of wealth accumulation that the rich can only dream of.
This means eventually the rich get super rich and powerful and the poor are all peasants. Aka the rich poor divide growing.
So i guess my question is, is this happening and will continue to happen?
The reality is that wealth in capitalist countries is quite well correlated with utility offered. The bottom 20% in a country like the US are not being repressed, but are instead largely worthless individuals who contribute little to society's growth and advancement. In fact, they net cost. They cost a fortune in health care, they breed unproductively (and produce/train unproductive offspring), they create no innovation, they contribute nothing to the advancement of human knowledge. In nature they would be killed off. In communist of feudal systems, they would be forever stuck as laborers and peasants. It's only in capitalism that they gain freedom, and a subsidized lifestyle far above that which they could achieve through their own efforts and planning.
This may seem unpleasant to you, but you need to understand that human talent lies on a bell curve. Advanced, prosperous technological society only exists because of the top X% (x is certainly a single digit). The bottom Y% (y is a double digit) are actually subsidized by the efforts of those more talented. This just a fact of life, from tribal groups roaming the plains to complex industrialized societies. If a system has any level of meritocracy - and it needs to, to function and prosper - wealth will accumulate to those that have the most utility, organizational skills, or planning skills. It will do so in a compounding manner. This is actually a good thing for all. Only redistribution by tax can stop it.
Where does it end up? Revolts? You already have the big companies supporting government campaigns to ensure they aren't victim to some huge profit cuts by new laws/taxes.
Maybe I've been watching too much zeitgiest type stuff but I'm curious.
Yet, the opposite has happened. Most of the peasant classes live in a communist/socialist/anarchist type countries. In the capitalist countries, most of the poor live like comparative kings, and the difference between the lives of the poor and the rich is actually quite small compared to the difference in other countries. Why do you think that is? Hint: it's the advantage of capitalism.
In capitalism, there's a tension between average utility of life, profits, asset rental costs and wages that keeps the lives of the poor much closer to the lives of the rich than in any other system.
In capitalism, there's a tension between average utility of life, profits, asset rental costs and wages that keeps the lives of the poor much closer to the lives of the rich than in any other system.
No, it ends in the continual improvement of society, and benefits for all. On top of the mechanism above, the unequal tax burden on the rich (the rich pay most tax, the poor actually get tax paid to them) means that there is a strong redistributive mechanism to the poor, far larger than the compounding effect you talk about. Add inflation into the mix, and the bias is strongly toward removing money from the rich and giving it to the poor.
France's highest paid people in regards to income are taxed at 35%?
http://en.wikipedia.org/wiki/List_of...s_by_tax_rates
France literally has the highest effective tax rate for high incomes of any country in the world.
God I hate it when people just blatantly spew bull **** out of their ass.
http://en.wikipedia.org/wiki/List_of...s_by_tax_rates
France literally has the highest effective tax rate for high incomes of any country in the world.
God I hate it when people just blatantly spew bull **** out of their ass.
France's highest paid people in regards to income are taxed at 35%?
http://en.wikipedia.org/wiki/List_of...s_by_tax_rates
France literally has the highest effective tax rate for high incomes of any country in the world.
God I hate it when people just blatantly spew bull **** out of their ass.
http://en.wikipedia.org/wiki/List_of...s_by_tax_rates
France literally has the highest effective tax rate for high incomes of any country in the world.
God I hate it when people just blatantly spew bull **** out of their ass.
It's how warren buffet recently remarked that his secretary paid more in taxes as a percentage than he does
Most countries have regressive taxes at the top of the income hierarchy.
In France for example, the bottom 50% of society is taxed at a rate of 40-45 percent, while the top 0.1 percent of society only pays a rate of 35. The US is similar and the effect is probably even more pronounced.
Even with the low capital gains, the poor are far better off tax wise. What's more, you're not counting the vast amounts of money which flow from the rich to the poor. Medicare, social security, all kinds of pensions, are money taken from the rich and productive to subsidize the poor. The poor are substantial net parasites of the capable, industrious, organized, intelligent and creative.
You can argue that the middle class takes on a disproportionate burden of tax, and this is probably true, but the middle class aren't poor. They also have access to exactly the same investments as the rich, and can grow those more far more rapidly than the rich due to the size of their wages to the net worth. There is no wealth accumulation disadvantage to middle class; on the contrary, they are majorly advantaged in terms of their rate of wealth growth. And the poor are subsidized, heavily, and have much better lives than they would have if left to their own devices. Who exactly is worse off??
The idea that wealth grows by itself is a just nonsense. Wealth flows to the intelligent, the creative, the productive, the organized, the desirable. That these people keep accumulating and shepherding it better than others is not a bad thing. It's just reality, and it doesn't come from capitalism. Capitalism merely shares that talent more equitably. And make no mistake, wealth does depends on skill. I can't find the studies, but wealth turns over incredibly rapidly - most fortunes are lost within 2-3 generations. You'd be shocked at how mobile it is. When the skill is gone, the money disappears too, taken up by people who are more competent. Here's an article about that:
http://www.fa-mag.com/news/why-wealt...ears-8227.html
Quoting from Piketty (2014) p. 496:
"The recent rise of tax competition in a world of free-flowing capital has led many governments to exempt capital income from the progressive income tax. This is particularly true in Europe, whose relatively small states have thus far proved incapable of achieving a coordinated tax policy. The result is an endless race to the bottom, leading, for example, to cuts in corporate tax rates and to the exemption of interest, dividends, and other financial revenues from the taxes to which labor income are subject. One consequence of this is that in most countries taxes have (or will soon) become regressive at the top of the income hierarchy"
He goes on to discuss how the top 5 percent of the income hierarchy in France pays a lower effective rate than the bottom 50 percent. This is according to a detailed study of French taxes in 2010.
You don't have to take his word for it (although you should). Warren Buffett says he pays 17.4% tax on his income. The richest woman in France (heiress to the L'Oreal fortune) has made similar comments about her own effective tax rate.
The idea that wealth grows by itself is a just nonsense. Wealth flows to the intelligent, the creative, the productive, the organized, the desirable. That these people keep accumulating and shepherding it better than others is not a bad thing. It's just reality, and it doesn't come from capitalism. Capitalism merely shares that talent more equitably. And make no mistake, wealth does depends on skill. I can't find the studies, but wealth turns over incredibly rapidly - most fortunes are lost within 2-3 generations. You'd be shocked at how mobile it is. When the skill is gone, the money disappears too, taken up by people who are more competent. Here's an article about that:
http://www.fa-mag.com/news/why-wealt...ears-8227.html
http://www.fa-mag.com/news/why-wealt...ears-8227.html
Again quoting Piketty p. 440:
"Once a fortune is established, the capital grows according to a dynamic of its own, and it can continue to grow at a rapid pace for decades simply because of its size. Note, in particular, that once a fortune passes a certain threshold, size effects due to economies of scale in the management of the portfolio and opportunities for risk are reinforced by the fact that nearly all the income on this capital can be plowed back into investment. An individual with this level of wealth can easily live magnificently on an amount equivalent to only a few tenths of percent of his capital each year, and he can therefore invest nearly all his income."
This subject is much too complex to draw useful conclusions from Wikipedia and magazine articles. Regardless of whether you agree with its recommendations for global taxation, I don't think it's possible to claim an educated opinion on the issue of wealth inequality without having read Capital In the Twenty-First Century. The book contradicts about 90% of what you seem to believe about inequality. It would agree however that capitalism is still the best way to run an economy.
Janabis doing some work ITT
There are numerous flaws in the above post. I'll start with the references.
Bill Gates vs. Steve Jobs and the difference in wealth vs. innovation. Firstly this is highly subjective as to who was more innovative. Bill Gates succeeded in making computers user-friendly to the mainstream decades ago. Apple was NEVER even close to as user-friendly until after 2000 (and I am someone who owned/used a Macintontosh during elementary school as well as an early IBM Aptiva running windows - the mac sucked.) Without Windows, the developed world may not be even close to as computer literate as they are today, and both companies largely reused ideas from each other. Secondly, Steve Jobs failed when he was at Apple. He was ousted, unlike Bill Gates, and relinquished his own company. Bill Gates maintained huge ownership of Microsoft until the latter part of his life in which he began numerous investments outside of it to continue to grow wealth. Steve Jobs invested in nothing personally that he wasn't a deep part of (Pixar being an example.) Bill Gates was a pioneer of software while Steve Jobs was a pioneer of product design. Bill Gates (or at least his ability to listen to his board) was far more efficient financially and from a business perspective. They ran things like a business, maximized profits, return on capital, minimized expenses, improved efficiency. Steve Jobs, on the other hand, almost single handedly completely bankrupted Apple in doing literally the exact opposite. You cannot state one was more talented and innovative than the other and therefore their net worth should be different.
Beyond that, capital does not just grow on its own. It gives someone the ability to grow it on their own, with risk and reward controls based on their choosing/investment into their own ideas. Any way you slice it, capital does NOT grow "on its own." Sure it can be easier to invest it conservatively and not spend as much as you are accumulating giving one the ability to continuously grow it, but that can be said for anyone, in any income class. Even a poor person making $18,000/year working hard at no talent jobs, living in their rent controlled/subsidized apartment, with their heating subsidized, and monthly $200 SNAP payments (supplemental nutritional assurance program), and free health/dental/vision care, can save money. They pay very little in taxes depending on where they live, and have very little in expenses.
I did a quick example using a basic 2014 tax spreadsheet on a truly lazy single/unmarried US citizen working one near minimum wage job that has no benefits, living in a no state income tax state (nevada) for simplicity, with no assumed student loan interest payments/deductions and no "special" exemptions or credits (beyond the earned income credit/normal exemptions/deductions.) Nevada min wage is 8.25/hr for a job with no benefits and I added a quarter to it so companies can continue their claim of "we don't pay minimum wages." A basic $8.50/hr 35 hours/week employee takes home $443.83 every 2 weeks after fed/fica/credits/deductions which equates to $11,539.58 per year.
Now we can break down how this person is really "livin" for their lack of economic effort to society, and we'll use these benefits again from Nevada, which happens to be on the immensely stingy side as I am aware of the NY/NYC ones. I'm also going to use estimates from having lived in Nevada for 8 months myself, aware of rental costs for pure ****, moderate **** and up to very nice places, as well as other related expenses.
- Rent/Utilities: We'll go with $450/month for a mediocre 1 br. (Believe me it gets cheaper and ****tier, and a roommate in a small 2 br would be even cheaper, but I happen to know a person paying this and although its roughly the same size as my NYC apt, its nicer across the board, and 3x cheaper.)
- Travel: Multiple approaches to this as there is public transportation depending on where you live, but we'll just find a middle ground average for those owning a ****ty car having to pay insurance/gas vs. those using public transportation and say $250/mo.
- Food: $300/mo.
Total: $1000/month.
Now we get to add this person's free benefit **** that certainly isn't getting paid for out of his pocket, but instead the huge transfer of wealth from the rich to people like this. This person happens to qualify for every type of benefit offered.
- Average Nevada LIHEAP (energy assistance) benefit of ~$20/month.
- SNAP benefit of $189/month.
- 100% free health, dental, and vision with no copay on anything, and OTC medications prescribed now become free too.
- Not included here but if this person did choose to go to a state college like UNLV (though this applies to any state university where the person is a resident of that state) the tuition costs, nationwide, around $5400/year ($5382 for UNLV.) Given this person's info he qualifies for a full Pell Grant of $5500/year which is free money not requiring payback and would also qualify them for another tax deduction of American Opportunity Tax Credit (no income taxes for this person.)
Final breakdown: $961.63/month in take home pay.
Expenses: Rent/Utilities of $450-$20=$430/month. Transportation = $250/month. Food of $300-$189=$111/month. Total of $791/month which is being generous on both food and transpot given I can and have done both for much cheaper (transpot currently much cheaper.) This leaves $170.93 for discretionary usage to spend or invest. This is a person doing the absolute bare ****ing minimum to get by, and his life is really not that miserable, and he still has plenty of opportunities and ways to drastically improve everything be it college or working a 2nd job etc. If they changed nothing for life and scrapped together $100/month for retirement earning 8% annually, they would retire with $427,140 + $3,737/month in inflation adjusted estimated social security benefits.
Lastly, you continue to refer to Warren Buffet and his taxation. You do realize that Warren Buffet is unlike any other obscenely wealthy person in basically all of history? The man drives a decade old Volvo, has lived in the same small house (smaller than my parents even) for 40+ years, and is extremely frugal and extremely charitable. He donates a huge amount to offset his income taxes. He has also never sold any shares of his company, which also pays no dividends, thus not subjecting himself to those taxes until/if ever he does so. He just holds the stock of a company that buys/holds/sells a bunch of other companies and employs in aggregate some 300k+ people.
Bill Gates vs. Steve Jobs and the difference in wealth vs. innovation. Firstly this is highly subjective as to who was more innovative. Bill Gates succeeded in making computers user-friendly to the mainstream decades ago. Apple was NEVER even close to as user-friendly until after 2000 (and I am someone who owned/used a Macintontosh during elementary school as well as an early IBM Aptiva running windows - the mac sucked.) Without Windows, the developed world may not be even close to as computer literate as they are today, and both companies largely reused ideas from each other. Secondly, Steve Jobs failed when he was at Apple. He was ousted, unlike Bill Gates, and relinquished his own company. Bill Gates maintained huge ownership of Microsoft until the latter part of his life in which he began numerous investments outside of it to continue to grow wealth. Steve Jobs invested in nothing personally that he wasn't a deep part of (Pixar being an example.) Bill Gates was a pioneer of software while Steve Jobs was a pioneer of product design. Bill Gates (or at least his ability to listen to his board) was far more efficient financially and from a business perspective. They ran things like a business, maximized profits, return on capital, minimized expenses, improved efficiency. Steve Jobs, on the other hand, almost single handedly completely bankrupted Apple in doing literally the exact opposite. You cannot state one was more talented and innovative than the other and therefore their net worth should be different.
Beyond that, capital does not just grow on its own. It gives someone the ability to grow it on their own, with risk and reward controls based on their choosing/investment into their own ideas. Any way you slice it, capital does NOT grow "on its own." Sure it can be easier to invest it conservatively and not spend as much as you are accumulating giving one the ability to continuously grow it, but that can be said for anyone, in any income class. Even a poor person making $18,000/year working hard at no talent jobs, living in their rent controlled/subsidized apartment, with their heating subsidized, and monthly $200 SNAP payments (supplemental nutritional assurance program), and free health/dental/vision care, can save money. They pay very little in taxes depending on where they live, and have very little in expenses.
I did a quick example using a basic 2014 tax spreadsheet on a truly lazy single/unmarried US citizen working one near minimum wage job that has no benefits, living in a no state income tax state (nevada) for simplicity, with no assumed student loan interest payments/deductions and no "special" exemptions or credits (beyond the earned income credit/normal exemptions/deductions.) Nevada min wage is 8.25/hr for a job with no benefits and I added a quarter to it so companies can continue their claim of "we don't pay minimum wages." A basic $8.50/hr 35 hours/week employee takes home $443.83 every 2 weeks after fed/fica/credits/deductions which equates to $11,539.58 per year.
Now we can break down how this person is really "livin" for their lack of economic effort to society, and we'll use these benefits again from Nevada, which happens to be on the immensely stingy side as I am aware of the NY/NYC ones. I'm also going to use estimates from having lived in Nevada for 8 months myself, aware of rental costs for pure ****, moderate **** and up to very nice places, as well as other related expenses.
- Rent/Utilities: We'll go with $450/month for a mediocre 1 br. (Believe me it gets cheaper and ****tier, and a roommate in a small 2 br would be even cheaper, but I happen to know a person paying this and although its roughly the same size as my NYC apt, its nicer across the board, and 3x cheaper.)
- Travel: Multiple approaches to this as there is public transportation depending on where you live, but we'll just find a middle ground average for those owning a ****ty car having to pay insurance/gas vs. those using public transportation and say $250/mo.
- Food: $300/mo.
Total: $1000/month.
Now we get to add this person's free benefit **** that certainly isn't getting paid for out of his pocket, but instead the huge transfer of wealth from the rich to people like this. This person happens to qualify for every type of benefit offered.
- Average Nevada LIHEAP (energy assistance) benefit of ~$20/month.
- SNAP benefit of $189/month.
- 100% free health, dental, and vision with no copay on anything, and OTC medications prescribed now become free too.
- Not included here but if this person did choose to go to a state college like UNLV (though this applies to any state university where the person is a resident of that state) the tuition costs, nationwide, around $5400/year ($5382 for UNLV.) Given this person's info he qualifies for a full Pell Grant of $5500/year which is free money not requiring payback and would also qualify them for another tax deduction of American Opportunity Tax Credit (no income taxes for this person.)
Final breakdown: $961.63/month in take home pay.
Expenses: Rent/Utilities of $450-$20=$430/month. Transportation = $250/month. Food of $300-$189=$111/month. Total of $791/month which is being generous on both food and transpot given I can and have done both for much cheaper (transpot currently much cheaper.) This leaves $170.93 for discretionary usage to spend or invest. This is a person doing the absolute bare ****ing minimum to get by, and his life is really not that miserable, and he still has plenty of opportunities and ways to drastically improve everything be it college or working a 2nd job etc. If they changed nothing for life and scrapped together $100/month for retirement earning 8% annually, they would retire with $427,140 + $3,737/month in inflation adjusted estimated social security benefits.
Lastly, you continue to refer to Warren Buffet and his taxation. You do realize that Warren Buffet is unlike any other obscenely wealthy person in basically all of history? The man drives a decade old Volvo, has lived in the same small house (smaller than my parents even) for 40+ years, and is extremely frugal and extremely charitable. He donates a huge amount to offset his income taxes. He has also never sold any shares of his company, which also pays no dividends, thus not subjecting himself to those taxes until/if ever he does so. He just holds the stock of a company that buys/holds/sells a bunch of other companies and employs in aggregate some 300k+ people.
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