Poor People Have Refrigerators Now (or: How Much Is Enough?)

Discussion in 'Politics, Etc. (Archived)' started by Kadir, Apr 29, 2017.

  1. Bucky

    Bucky Well-Known Member

    Your commentary on unions seems to be largely on-point and relevant to this thread. I'd like to see you expand on it a bit.

    Regarding Citizens United, both the "money is speech" argument and the "corporations are people for certain purposes" concept existed long before it. The actual Citizens United ruling would be more accurately summarized as "the government can't use elections as an excuse to restrict the speech of people who aren't involved in any campaigns". It led to some people trying to stay technically-not-involved while supporting a candidate, but that's a matter of the statute not having been updated after the ruling.
  2. SwiftSpear

    SwiftSpear Active Member

    The icecream man can then afford to buy 100 chocolate bars, and then the chocolate man can afford to buy 100 bananas, then the banana man can afford to buy....

    In economist circles it's a well known fact that the number of times a dollar changes hands on average over a fixed length of time is a very good measure of health of an economy.
  3. Bucky

    Bucky Well-Known Member

    Either you're simplifying a great deal or the theory breaks down very quickly under simple thought experiments.

    Case 1: I earn a $20 bill and bury it for 50 years before spending it.
    Case 2: I earn a $20 bill and set it on fire.

    In case 1, I'm decreasing the average velocity of money. In case 2, I'm not affecting the average velocity of money at all. It's hard to argue that the two actions are significantly different in terms of how they affect the overall economy, at least for the next 49 years.
  4. SwiftSpear

    SwiftSpear Active Member

    I don't see the problem. A theory that is looking at the average of something is looking at a bunch of things in aggregate, what happens to a few outliers is virtually irrelevant.

    [edit] Also, measures that look at what is happening to money account for currency destruction. Both your examples are equally bad for the economy to a tiny tiny degree.
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  5. Lemon

    Lemon Well-Known Member

    That's quite the uncharitable interpretation. Are you claiming that all poor people are highly motivated, frugal and responsible - yet just can't rise up the socioeconomic ladder because of racism?

    No matter where you are on the ladder, getting to a higher rung requires dedication to self improvement. And maintaining the next rung is usually much more challenging than the previous - requiring greater skills and greater responsibility. Only the very highest sliver of people generate so much passive income that they don't need to work and have no threat of falling.

    It wouldn't be fair to expect a poor person to be as self actualised as a wealthy person, but we can expect poor and rich people alike to make the next step in their own self-improvement journey. It's definitely important that we find ways to increase bargaining power for the poor (through unions or UBI or other means) but we also need to emphasise the importance of taking personal responsibility over your own future, regardless of your current wealth.
  6. ALavaVatChild

    ALavaVatChild Well-Known Member

    Counterpoint 1: Lots of people fail upward. Doing so is even easier the more privileged you are to start with.

    Counterpoint 2: Most successful people are 'hard-working', and few truly 'lazy' people are successful, but that's about the limit of the correlation. Work ethic is a poor predictor of success, and cultural beliefs to the contrary are heavily influenced by survivor bias.
  7. Lemon

    Lemon Well-Known Member

    I looked up "failing upwards" and I only found some anecdotal opinion pieces. Maybe the top 0.1% of people can truly "fail upwards" (since these people could "sit around and pick their nose upwards" due to huge passive incomes) but most social mobility is earned by outperforming your peers in one way or another. Do you have anything to back up your claim?

    Being "hard-working" is much less important than several other factors. Growth mindset is a big one; aspiring towards SMART goals is another. Even things like drug dependency play a big role. Poor people are much more likely to be heavy drinkers or smokers and these things drain your health, money and time. The people who put their resources towards personal growth do better than those who don't at almost every rung on the ladder.
  8. Kdansky

    Kdansky Well-Known Member

    I've always thought of wealth as something that scales quite unusually. There are roughly 5 levels to wealth. I put a rough number of yearly income for a family for Switzerland on each level.
    1. Hobo: You have no money at all. ($0)
    2. Poor: You have barely enough money to survive. ($40k)
    3. Middle class: You have enough money to live and enjoy it with a good amount of luxury. ($100k)
    4. Rich: You have enough money to not care about money. ($1m)
    5. Super-rich: You have silly money. ($100m+)
    Note that the first three are basically in the same ballpark when looked at from the latter two. The reason is a law of diminishing returns, because money does not buy the three most important things: Time, Health and Happiness.

    To use a very simple example: Whether you have a mansion with 25 rooms, or 1 room, you can still only use one room at a time. The first extra room you can afford give you +100% choices. The 25th extra room you can afford gives you 2% more choice. The first car you buy gives you mobility. The second car gives you a toy. The tenth car gives you a showroom (doesn't do shit). Clearly, there's some diminishing returns at work. You can't buy friends and family, nor can money fix every illness known to man, nor can it allow you to live two hundred years. Having enough money to buy antibiotics and not go blind from Chlamydia is a great investment of $100, but no amount of money will reliably cure pancreatic cancer.

    Money does not scale.

    What I'm trying to say: As a society, we should strive to give everyone enough money to get to category 3, because that is the sweet spot for joy vs cost. "Poor people have refrigerators" is correct: It refers to the fact that our poor people are in category 2, not 1. Implying that 2/5 is good enough, however, is misdirection.
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  9. Bucky

    Bucky Well-Known Member

    Did you mean to say that the latter four are basically in the same ballpark from the first one? You argue that once a family has everything they actually need their further money is used on minor stuff.

    p.s. is Switzerland really that much more expensive than the United States? $100k would put you in the top 20% here.
  10. ALavaVatChild

    ALavaVatChild Well-Known Member

    The economic term for this is 'marginal utility'. Pretty much all goods/services work this way but it is indeed a very useful way to think about income and wealth.

    How did you get that from the text..

    Switzerland is notoriously expensive.
  11. Kdansky

    Kdansky Well-Known Member

    There is still a very big difference between having barely enough to not die of hunger and being able to enjoy holidays, or quit your horrible job without fearing for your life to find a new one immediately, or being able to afford a child and so on. $100k or $250k is marginal. Bot have a car, both have health care, and so on, the latter just has a Tesla while the former drives a Skoda. Still, both are just cars.

    Median income for a person is $50k (so $100k as a family is median income). My rent is $1800 for a 90sqm appartement, outside of the city, and that's ~$200 below market value. I pay $200+$400 for two people in health care per month. A kilogram of meat is $30 (chicken) to $90 (beef filet) in the grocery store. A 300ml bottle of shampoo is $6. Yes, Switzerland is ludicrously expensive. www.leshop.ch - these are very normal grocery store prices if you want to take a look.
  12. ALavaVatChild

    ALavaVatChild Well-Known Member

    There's also an increasingly strong evidence base showing that environmental stress, of which relative privation is a major component, literally changes gene expression and brain development in children.
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  13. keithburgun

    keithburgun Administrator, Lead Designer Staff Member

    No. I mean the people in Hillbilly Elegy are all white for one thing. My argument is that there are systemic problems that inhibit economic mobility - one of which is racism, but not for white people.

    Also RE: the title of this thread. I feel a lot more comfortable asking "how much is enough" for people at the high end of incomes and wealth. To me I think we should be talking about banning billionaires, not whether "a person has a fridge, that's enough".
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  14. Bucky

    Bucky Well-Known Member

    I think banning billionaires is silly, but that's based on why they're billionaires in the first place.

    Most of America's billionaires are founders or co-founders of very successful businesses. But they typically end up with only a few percent of the value their business generates; for every dollar they profit, their employees get about ten dollars, the government gets several (varies widely) dollars in taxes and customers get $20+ value from their products. We could use more of these billionaires, because their presence benefits so many other people.

    The second and third most common categories are investors and heirs. Some heirs build on the founders' legacy to the point where they deserve to be in the previous category in their own right. The remaining billionaire heirs, and investors, are a side effect of how various financial systems work. It's impossible to get rid of them without screwing over family businesses and capital markets, respectively. And the values of the privately held family business model and of capital markets to the overall economy is large enough that putting a few hundred billion dollars into the pockets of billionaires seems reasonable. That's not to say, though, that there isn't a better way to run capital markets.

    There are a few other assorted ways to become a billionaire. A semi-common one is real estate. A few CEOs manage it, but not as commonly as you think - and yes, an excellent CEO is absolutely worth a billion dollars to a large company. And a few employees, such as Ryan Graves of Uber and Michael Jordan of the NBA, manage to get there by doing extraordinarily valuable work.
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  15. Erenan

    Erenan Well-Known Member

    FYI we did talk about it a little bit. Bucky's post above, plus a few posts starting here.

    P.S. Fun fact, I went to high school with Ryan Graves. I don't really know him personally though because I was rather non-social in those days.
  16. Kdansky

    Kdansky Well-Known Member

    Those companies would work just fine without the billionaires. The billionaires are a result, not a cause! Bill Gates is not a god. He was at the right place at the right time, and managed to accidentally sell a mediocre piece of software to the right person, which turned him filthy rich. His humanitarian work (after he got rich) is far more commendable than writing a couple lines of code for DOS.

    That is just bullshit, fed to you by CEOs. Take a giant corporation that runs well over a long period of time, like a Swiss bank. Then have a look at how many CEOs they go through: You'll see they are completely replaceable, and most of their upturns and downturns are completely disconnected from the actual CEO.
  17. Bucky

    Bucky Well-Known Member

    The possibility of becoming a billionaire* is a driving force behind new business creation. The founders cause their business to be successful (among other factors), which causes the founders to become rich (along with paying many other people).

    The CEOs I've talked to definitely aren't in the billion-dollar category. And I agree that many companies could benefit from downgrading to a cheaper, but carefully selected, CEO.

    The main problem with the CEO talent market is simply that most companies can't tell a great CEO from a mediocre one ahead of time. Or even for their first few years. So they tend to go for expensive CEOs instead...

    On the other hand, with a bit of research I could point you to a dozen great CEOs that replaced worse ones and were certainly worth billions. The first examples to come to mind are Steve Jobs (starting Apple's iPod line) and Louis Gerstner (pulling IBM out of a financial tailspin).

    In the long run, the general ability to select good CEOs matters more than the talent of any one CEO. Better still are companies that can train their own replacement CEOs to better than the market average.

    *I'd argue that the $100 million mark is a more significant incentive, and the billionaire founders are the inevitable cases that significantly overshoot it.
  18. Kdansky

    Kdansky Well-Known Member

    Steve Jobs was actually cheap:

    The whole point that we can easily find multi billion CEOs that are shit and also some that are good basically proves that the outlandish wages are not important. Good CEOs will be good, and nobody needs to pay them more than a couple million to live a decently lavish lifestyle with their zero free time. Hell I know more than one person working as the boss of thousands that did not get more than 250k a year, and they did a damn fine job. Even the Swiss Prime Minister (we don't have that job, but an equivalent) earns a little less than 500k, and if anything I want those guys to be more qualified than the CEO of UBS.

    Blatantly untrue. People create businesses because they want to be their own master or because they have a good new business plan for a niche nobody else is filling. People who just want money go into finance and stock trades, because that is far more reliable to get you rich quick. People who are in it just for the money also will be exceptionally bad CEOs.

    Even if it was true, promising ten million yearly income (literally one hundred times more than what you need to live in great comfort, more than enough money to never work again if you so desire after just six months) is way more than enough motivation. Whether you promise me 10m or 10b really does not make a difference. However those last "pointless" hundred of millions are enough money to basically solve all the problems. If we'd take just half of what the top 1% make, we could easily pay for health care, education and infrastructure for everyone else (the top 1% make so much money, they make 20% of US GDP in 2009, which is utterly mindboggling). And you know what? The 1% would not even feel that they lost anything, because they could still afford whatever the fuck they want.

    Half of the top 1%'s income would be like throwing 10% of GDP towards something useful like health care (in the US that's like $5k annually per person: Enough to get rid of literally all other taxes instead: Imagine that, zero tax rate for everyone who is not a millionaire). Instead the modern kings get to buy yachts that include two helipads and a submarine for giggles. Google "most expensive yachts" if you think I'm making this up.

    My point is: We (as a planet/society) have SO MUCH money, we could easily solve all problems that can be solved with money. But the rich people waste it on frivolous bullshit instead of solving world hunger or even allowing their cleaning personal to get access to cancer treatment. It's a fucking disgrace of ungodly proportions.
    Last edited: May 31, 2017
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  19. garcia1000

    garcia1000 Guest

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