Thread

Show HN: The bottom 50% of U.S. households are short after essentials (BLS data)

38 points · 81 comments · pwmglenn

Loading the complete thread in the background. This saved snapshot is available now. Refresh

Founderarcstone · 1789486010 · focus · HN ↗
I shape economy is real
thr0w · 1789491790 · focus · HN ↗
This is vibe coded I guess? Toggling the "Happiness plateau line" does nothing.
1. gruez · 1789495535 · focus · HN ↗
  Yep, for whatever reason LLMs have a "house style" that they like to stick to, which means they all stick out like a sore thumb, and becomes a marker of slop. It's like all the sites made with bootstrap from the 2010s.
2. gruez · 1789495587 · focus · HN ↗
  >Made by Patrick Glenn by way of Claude and ChatGPT. Code under the MIT License; text and charts under CC BY 4.0.
  1. addaon · 1789496393 · focus · HN ↗
    > Code under the MIT License
    If the code is written by an LLM, then it can't be copyrighted, and a license can't be applied.
    pbasista · 1789497282 · focus · HN ↗
    Why do you believe that?
    mminer237 · 1789497629 · focus · HN ↗
    It's a basic principle of copyright that only a natural person can be an author.
    The US Copyright Office has stated such: <a href="https://www.copyright.gov/ai/Copyright-and-Artificial-Intelligence-Part-2-Copyrightability-Report.pdf" rel="nofollow">https://www.copyright.gov/ai/Copyright-and-Artificial-Intell...
    The Council of the EU has also stated such AFAIK.
    addaon · 1789500546 · focus · HN ↗
    The author is a tool, not a person. Tools cannot hold copyright. Copyright requires human authorship. Licenses depend on copyright as their essential mechanism.
    joquarky · 1789531623 · focus · HN ↗
    A camera is a tool.
    pbasista · 1789570636 · focus · HN ↗
    Exactly. The person holding the camera is the author. Even if they just point the camera and press the record button.
    In a similar way, I would not consider AI to be the "author" of the output they produce. Rather, the person prompting it should be considered the author, in my opinion.
3. pwmglenn · 1789496113 · focus · HN ↗
  fixed.
Legend2440 · 1789492602 · focus · HN ↗
I'm not denying that money is tight for a lot of people, but I'm skeptical of this page.
You could get any number you want depending on where you put the cutoff for "essential", and they don't say how they chose their definition of the term. That's very poor methodology.
maerF0x0 · 1789493208 · focus · HN ↗
An important element of the conversation is does (or how much does) it matter if any specific percentile group is getting disproportionally richer, given all (or a vast majority of) groups are? A group's lack of upward movement is not unjust if their groups actions do not justify a movement upward.
Additionally we also have to recall that the quintile's populations are not necessarily static. to illustrate the idea: members of a quintile may join an adjacent quintile in the next time period. That is, bottom members may move up, top members may move down, mid members may move either way. To the extent their movements are justified by their actions/choices is to the extent we have a fair society.
That is, if people are getting rich from sources not related to taking right actions, or people are taking good actions and getting poorer -- then we have an unjust society.
This can both apply to Rich people abusing their power to get rich, but also with poor people abusing their democratic powers to unjustly take from others that which they have not earned.
1. pwmglenn · 1789495046 · focus · HN ↗
  See figure 2.
  The issue is that income/wealth compounds over time. If people in the bottom 40% have very little to invest, they have nothing that compounds. They dont even have an opportunity to risk anything, or make a better decision.
  The prices of the essentials are largely out of any individual's control. So any lack of ability to save / invest beyond spending on those is also out of their control. It's a vicious cycle, where excess wealth compounds, and income needed to exist dries up.
  Also the rich often see a larger return to their investments than poor people, so having wealth seems to aide in your ability to make more money. Exactly the sort of thing that you implied was unjust.
  And your other points about mobility I agree with and are addressed in notes on the site.
  1. maerF0x0 · 1789496376 · focus · HN ↗
    What is the issue with wealth compounding? The bottom 40% have a very high value asset -- their agency and actions in the real world. (Working, starting a business (however small), self sufficiency et al.).
    The prices of true essentials are exceedingly small. Essential is something like sharing a room with someone, eating rice beans frozen veg mix (ie very inexpensively), wearing clothes from thrift stores, exercising outside and using a library card, medicaid. Everything beyond that is, technically, optional.
    Having wealth aiding the overall return doesn't negate my point. Using wealth to get an unjust return does. An example of a better return would be hiring a financial advisor that (somehow) creates better returns using smarter allocations. An example of an unjust return would be creating a monopoly, buying a politician, or extracting profits from unpriced externalities (pollution and bailouts to name a couple). (These do happen in the USA, and I'm all for ending them!)
    There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating).
    I do, however, like Scott Galloway's point that we need to find new ways to get the rich to spend their money, we need the poor to start 10000 businesses that gratify the rich and extract their money. Right now they're mostly accumulating it and bidding up investible assets (eg look athe P/E multiple of the S&P 500) .
    pwmglenn · 1789497018 · focus · HN ↗
    You can configure what you believe to be the correct price of essentials on the site. The defaults are BLS group average spending data.
    "There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating)."
    Do you see how there is nothing stopping insane accumulation of wealth/power? (assuming returns continue to accelerate in this manner?)
    maerF0x0 · 1789497327 · focus · HN ↗
    There's nothing wrong with the accumulation of wealth. I fully agree that Citizens united (not capitalism) has created a distortion and corrupting force in the market place.
    It's not the wealth that is evil/wrong/unjust/immoral. It's the use of it to corrupt power.
    danaris · 1789504548 · focus · HN ↗
    But there's evidence that just having that inequality (not an absolute amount of wealth, but vastly more wealth than normal people) does, indeed, distort human perception and mindset in a way that leads to...well, where we are today.
    Gibbon1 · 1789669925 · focus · HN ↗
    The problem is with wealth comes the power to change the rules to your advantage. This is already happening for instance the large difference between capital gains tax rates and earned income ones.
    piva00 · 1789542192 · focus · HN ↗
    Wealth is power, you're too narrowly focusing on specific applications of this power (like your mention of Citizens United) but if that wasn't a thing there'd be innumerous other ways for wealth to be leveraged as power.
    Power accumulation is inherently unjust and immoral, it corrupts, the utopic benevolent benefactor is extremely rare in real life because power accumulation begets power, those who have it do not want to lose it.
    Also wealth accumulation is inherently unjust even in your framework of meritocracy, its accumulation and compounding nature is not meritocratic.
    henrycoler · 1789783662 · focus · HN ↗
    [dead]
    ninininino · 1789497140 · focus · HN ↗
    It's laughable to call housing and the big one you skipped healthcare "exceedingly small".
    Please spend even 1-2 minutes on the <a href="https://livingwage.mit.edu/" rel="nofollow">https://livingwage.mit.edu/ for example this calculation for Philadelphia: <a href="https://livingwage.mit.edu/metros/37980" rel="nofollow">https://livingwage.mit.edu/metros/37980
    maerF0x0 · 1789497501 · focus · HN ↗
    Housing and healthcare are both mentioned and covered.
    > sharing a room with someone
    > medicaid
    in the top 10 CoL metros one can share a room with another person for about $600 a month.
    I note that on your links the poverty wage is pretty close to the minimum wage. I'd contend that since contraceptives are widely available, including abortion in many places (or charities helping people get them in other states), we should expect the bottom quintile to not be adding to their expenses.
    danaris · 1789504627 · focus · HN ↗
    And you think this should be considered normal?
    You think that this high a percentage of people should expect to be sharing a room not by choice, for the rest of their lives?
    maerF0x0 · 1789664540 · focus · HN ↗
    The context of the convo is the bottom quintile of earners.
    I do think people in the bottom quintile should not have kids (until they remedy their income issues), I do think people in the bottom quintile should take more serious measures to both preserve their cash flow, and to improve their income.
    I do think the bottom quintile should not be a "for life" sentence, and to the extent that I'm correct I've shared some paths for them to escape that.
    It's definitely worth addressing that the US could use additional social mobility and mixing, but I think we're far from "people cannot move classes if they want to" as well.
    danaris · 1789667200 · focus · HN ↗
    > I do think the bottom quintile should not be a "for life" sentence, and to the extent that I'm correct I've shared some paths for them to escape that.
    Skimming through your posts in this conversation, I really don't feel like you have.
    And I think one part of the problem is you don't seem to have acknowledged that, for the most part, people in this quintile do not have the tools to move out of it by choice, and this is increasingly true as inequality grows (so, for instance, if you were lucky enough—and I do mean "lucky"—to be or know someone who made it out 20, 30, 40 years ago, you cannot assume that similar options remain available today).
    When households are already spending literally every penny that comes in to afford rent, food, clothing, heat, medical care...which of those gets sacrificed on the off-chance that it might, some day, be enough to bootstrap themselves up out of that bottom quintile?
    No. That is not a realistic or compassionate way to view the situation at all.
    The bottom quintile is where many people will be their entire lives, and that is not going to change, so we as a society must ensure that it is a "place" where people can live healthy, comfortable lives, rather than a constantly-stressed squalid scramble.
    moate · 1789668971 · focus · HN ↗
    >>I do think people in the bottom quintile should not have kids
    I have some terrible news for you about birth rates and what this would do to society.
    >>until they remedy their income issues I'd like you to define "work", "necessary work for society to function", "low-skill jobs" and "value" (as it pertains to a human life). I have a feeling we have very different definitions and that leads us to very different conclusions about what people can do.
    >>I think we're far from "people cannot move classes if they want to" as well. Probably because you're not a social scientist/sociologist! We're talking about the bottom quintile, and it's very hard to become part of the upper crust, and it's very hard to leave American poverty[1,2]. But yea, some guy working a blue collar job can probably have kids that have white collar jobs.
    1- <a href="https://harris.uchicago.edu/news-events/news/has-class-mobility-america-really-changed-new-research-finds-complicated-answer" rel="nofollow">https://harris.uchicago.edu/news-events/news/has-class-mobil... 2- <a href="https://web.archive.org/web/20091003184000/http://www.americanprogress.org/issues/2006/04/b1579981.html" rel="nofollow">https://web.archive.org/web/20091003184000/http://www.americ...
    mrgoldenbrown · 1789520152 · focus · HN ↗
    Have you ever lived on Medicaid? It can be a full time job just trying to get coverage and then find a doctor who will take it.
    maerF0x0 · 1789664360 · focus · HN ↗
    Probably pays better than minimum wage though.
    joquarky · 1789530308 · focus · HN ↗
    You should try stepping out of that academic ivory tower occasionally and visit a run down bar/pub in a working-class town and talk to the people who make up most of the population.
    UncleOxidant · 1789497390 · focus · HN ↗
    > we need the poor to start 10000 businesses
    Most new businesses fail. Then the poor are even deeper in the debt hole. Some people can/should start businesses, but a lot of people are just not entrepreneurs - I include myself in that group. I realize that there must be ways to extract money from this economy - lots of people are doing it - but I don't think any of my ideas would end up doing that, more likely I'd end up losing a bunch of money trying to do that.
    maerF0x0 · 1789595114 · focus · HN ↗
    You're making a lot of assumptions of what I meant.
    Gen-z seems to get this well, a lot of them are starting micro businesses where with very little capital besides their own labor and computer/phone they already own.
    Getting a side hustle to $2000 a month can be the difference between trajectory to bankruptcy to trajectory to millionaire.
    It's in that environment they're learning the skills that take them to the next level, when leverage/debt is something their equipped to dabble in.
    UncleOxidant · 1789595777 · focus · HN ↗
    I don't really want to be an entrepreneur. Like I said, I don't think I'm cut out for it.
    maerF0x0 · 1789664325 · focus · HN ↗
    Not really a fan of Kiyosaki, but one thing he did well was educating people on the cashflow quadrants
    Employee, Business owner, Self employed, Investor.
    It sounds like you have opted out of one quadrant, but there are still 3 left for you :)
    deepfriedchokes · 1789509666 · focus · HN ↗
    What good is agency without power?
2. BugsJustFindMe · 1789495538 · focus · HN ↗
  > "does (or how much does) it matter if any specific percentile group is getting disproportionally richer, given all (or a vast majority of) groups are?"
  The page says that a full 50% of all people are not, so this seems like a very moot question until such a time as that changes.
  And if it ever does, we can then move on to the issue "fairness" only exists to the extent that one is willing to acknowledge that having money fundamentally and inherently leads to having more money due to the nature of compounding interest, and the more money you have the more money you get by no real action at all. You talk about "earned". How exactly have I "earned" the compounding growth on my holdings? I certainly don't work for it. It just flows in for free as the world population continues to grow and produce.
3. BoorishBears · 1789495552 · focus · HN ↗
  Past a point of wealth, it seems a lot easier to increase wealth through things of no intrinsic value to society.
  If I have enough money, I can buy a lot of businesses (or be in a controlling position) and run them poorly (read: efficently) and as wealth concentrates the capital for a new entrant to compete becomes scarcer and regulation on new competition mysteriously materializes, and without any new competition I can raise prices and no one can really do anything.
  And now I have more money to do this more times in more places, and wealth is more concentrated, and legislation just seems to go my way more and so on.
  That vague playbook is being applied to just about everything today.
  Spirit Airlines went through two bankruptcies, and the people who lead the first one were liquidating it while it was still running to pay themselves back for the first one, and turning debt they had forfeited for equity back into debt to increase how much they'd take out of the remains.
  I mean you can't even escape that playbook in childrens sports! That playbook is being run into making children sports league a profit squeezing cartel as we speak.
  It's just such a simple playbook that if we really go all in on the idea that anything that's technically legal to make money will be allowed, then having more money and basic "high agency" mindset will lead to making money in increasingly perverse ways.
  To me the end game seems to be a race between authoritarianism (will these high-agency wealthy types just be able to keep the poorer class under lock and key with TikTok feeds to placate) and collapse (maybe they don't get the poor under deep enough control before the poor realize they've been given a deal that justifies trying to raze it all and start again)(edit: or maybe better framing, they realize they collectively have no meaningful part in the wealth and raze it)
  1. maerF0x0 · 1789497052 · focus · HN ↗
    To me everything you've identified is either 1) Corruption or 2) Consumers being sheep.
    If the kids sports is a profit seeking cartel that you do not agree with, then do not give them your money. If enough customers do that they will not be profitable and will cease to exist once they can no longer extract investor capital from the very class this post seems to dislike.
    Really roughly speaking the American consumer needs to stop being so complacent and naive, the American voter needs to get a good bit more politically active, and people need to stop choosing comfort over action. the average 2.5 hrs a day on social media could easily be spent to make their lives much better.
    goatlover · 1789498076 · focus · HN ↗
    The market is not able to fix corruption. Regulation is needed. For example, exploitative labor practices weren't ended in the early 20th century because of customer preference. Laws had to be passed.
    Obscurity4340 · 1789563729 · focus · HN ↗
    You seem to think corruption is this rare or quaint glitch that you can mitigate by simply naming it, that its not inherent to or an inevitable consequence of your worldview.
    Power asymmetry for thee, not me
4. catigula · 1789495971 · focus · HN ↗
  >A group's lack of movement is not unjust if their groups actions do justify a movement upward.
  I assume you mean "do not justify" and the bottom line is that this type of thinking is fundamentally erroneous.
  We agree to live in a society of this construction not so everyone can pull themselves up by their bootstraps (asinine conception that misunderstands structural vs individual agency) but because it is of collective benefit.
  If it it not of collective benefit, the social agreement needs to be renegotiated.
  There's no chance everyone will agree to live in an arrangement where a minority of the population accrues all of the benefit because they go out of their way to execute financial scams, but I'm willing to litigate that publicly, which we're doing here.
  1. maerF0x0 · 1789496742 · focus · HN ↗
    correct on the typo, edited it to fix.
    My whole point is that to the extent accumulated wealth is happening by playing by the rules, there is no injustice in accumulating wealth, nor in accumulating more than those who did not do the actions which relate to wealth building. (And there's a randomness factor involved so it mostly has to be taken on average, on average starting a business is profitable, but also lots of them fail)
    catigula · 1789497023 · focus · HN ↗
    If the rules technically allow a loophole that allows a minority group to accrue wealth over the majority, why would they agree or consent to be in that system?
    Society isn't some abstract collection of rules that must be followed. Those rules are actively negotiated for majority benefit, and we agree that each person has an equal voice in the west.
    If that collection of rules is failing, it's considered unjust and something to amend.
    "That's just smart" because someone found a loophole or did a scam to accrue wealth isn't an acceptable negotiated state of affairs to most people.
    maerF0x0 · 1789497657 · focus · HN ↗
    > Those rules are actively negotiated for majority benefit
    This is a presumed goal/value. A more conservative take is that the rules are actively enforced based on values or justice.
    A value could be that we do not support ill gotten gains, to the extent that the majority votes for free things paid for by the minority it could "benefit the majority" and still violate the value
    catigula · 1789498331 · focus · HN ↗
    I can't think of any known moral system where "willingness and persistence to execute various clever scams and accrue resources" is identified as a value worth prioritizing or protecting.
    I've actually gone through the rolodex of all known moral systems and none of them endorse the conception that a minority, who just earned it rightfully, is allowed to accrue outsize resources while other groups do not.
    So, again; as I said earlier, I open the floor for discussion. This is the moral certainty that the process by which we adjudicate the social order will not be favorable to an unjust conception. The simple light of day ends most of these discussions.
    piva00 · 1789566690 · focus · HN ↗
    > A value could be that we do not support ill gotten gains, to the extent that the majority votes for free things paid for by the minority it could "benefit the majority" and still violate the value
    You are entering into a circular argument:
    > My whole point is that to the extent accumulated wealth is happening by playing by the rules, there is no injustice in accumulating wealth, nor in accumulating more than those who did not do the actions which relate to wealth building
    Ill gotten gains would need to be defined as "not playing by the rules" but you already prescribed that the rules supersede that so there's no way to potentially redefine that such accumulation was ill gotten. Your argumentation makes us stuck in the status quo which is visibly not working for the benefit of the majority, which is objectively true by inspecting the discrepancies between the increase of productivity vs increase of wealth between different cohorts of society.
    Isn't an ill gotten gain to extract a disproportionate amount from the gains of productivity? One can still be filthy rich in a society that distributed it more evenly, not equally but at least more evenly. In Western societies this distribution has been severely skewed to the top in the past 40 years, why is that the people labouring with increased productivity do not see the fruits from it? Isn't that an injustice, unfairness, etc.?
5. hvb2 · 1789496035 · focus · HN ↗
  I like your post a lot, in that you're describing how this doesn't say anything about anyone's chances really. However...
  > but also with poor people abusing their democratic powers to unjustly take from others that which they have not earned
  How would they abuse their democratic powers? It's their decision to vote either way. So who says that's unjust? Certainly it's not abusing their democratic powers.
  Abusing of power happens on the other end of the spectrum, especially in the US thanks to citizens united.... Surely all those super PAC dollars don't buy any influence... As a result, the voice of a single rich person might be stronger than a whole quintile of the population. So chances are that they are unjustly given things that aren't theirs (i.e. advantageous contracts, laws that help them etcetera).
  1. maerF0x0 · 1789496520 · focus · HN ↗
    I hold, i guess as a basic principle, that tyranny of the majority is an unjust failure case of democratic systems.
    Fully agree Citizen's united has resulted in legalized corruption. But 2 wrongs do not make a right, ethically.
    There's nothing unjust about a rich person getting superior results through access to better resources though. Eg hiring a better tax accountant or financial advisor.
    Obscurity4340 · 1789562989 · focus · HN ↗
    Why should the tax code be structured in a way that a rich person can pay less in taxes than a poorer person or someone who cant access such expertise? Is it just that a rich person can buy admission for their dumbass kid to a prestigious university too?
    Please, tell us all about how they deserve preferential treatment and its right that shit always flows downhill, never uphill, that for those to whom much has been given, less will be expected
    maerF0x0 · 1789595337 · focus · HN ↗
    While you might be talking about the exceptional cases where rich are paying a lower marginal rate than 1%-er W2 earners, for the basic tax brackets the more you earn you exponentially pay more than those who earn less.
    Fair tax is either Flat tax (We all pay 10% of our income) and user pays (You want infrastructure for your business? then pay for it).
    Obscurity4340 · 1789662035 · focus · HN ↗
    Look, Warren Buffet should not pay less tax than his secretary. That is corruption of the tax code. Lets start with that. Also the nonsense where ultrarich can live off ultra low interest credit that effectively allows them to pay no or little income tax
    maerF0x0 · 1789664690 · focus · HN ↗
    Fully agree he should not pay less tax % than his secretary, however I also would contend he should not pay more either. that is if his secretary is paying 20% so should he.
    I do think he should pay more absolute tax than his secretary... 20% of billions is lots more than 20% of $100k .
    What I'm talking about is progressive tax rates where the % goes up the more you make. I do not think Warren buffet should pay 25% of billions just because his income has more zeros than his secretary's .
    Obscurity4340 · 1790269855 · focus · HN ↗
    They should find what he/they live off and find a way to analagously tax it so they feel some burn and urgency.
    Everyone else is on a hamster wheel, why should they get to opt out of that common experience?
6. micromacrofoot · 1789496223 · focus · HN ↗
  The global billionaire class now numbers roughly 3,500 people and collectively controls around $15–20 trillion in wealth. That's about the annual GDP of China.
  That's about twice as much as the lower 50% of the population (2% of the world's wealth)... a class consisting of 4 billion people.
  Why do people pretend "right actions" has anything to do with it. "Right actions" aren't even possible at that scale of difference. How does "earning" even make sense at these proportions? you think 3500 people are doing that much more than 4 billion others?
  1. maerF0x0 · 1789497233 · focus · HN ↗
    The capital of those 3500 might be.
    The P/E Ratio of the S&P 500 is at a historic high level. Interpreted another way, there rarely is a better time to create a profitable business -- You can get paid $30ish dollars per annual dollar of profit you create.
    On the flip side, it's never been so expensive to be an investor of capital. In order to get a return you have to wait 30 years (or 10 if you take growth rates into account), just to see your initial investment. An expensive stock market makes current consumption more rational for investors.
    micromacrofoot · 1789498834 · focus · HN ↗
    that capital might also be doing a lot more if not bottlenecked by the 0.000001% of the population controlling it
    but let's not pretend that "right" has anything to do with it
    piva00 · 1789567404 · focus · HN ↗
    > The P/E Ratio of the S&P 500 is at a historic high level. Interpreted another way, there rarely is a better time to create a profitable business -- You can get paid $30ish dollars per annual dollar of profit you create.
    While in reality, where you take into account the statistics of business success vs failures, this is one of the riskiest things a person can do if you don't have any access to a safety net in the very likely scenario your business will fail.
    A business can fail for many reasons completely out of control from an individual's agency, a person who needs to provide for a family might not have the risk appetite for plunging their families' lives into that, it's impossible for everyone in a society to become a successful business owner. You are advocating for an impossible situation, and by negating that a majority of society won't have the means to access the successful-business-owner class while gatekeeping the fruits a society collectively built to only that class you are being inherently unjust.
    No successful business can exist in a vacuum, the better educated a society is the better chances a business owner can find skilled people to build successful products, the better chances there are for these workers to innovate, and create a disproportionate return to investments.
    You completely left out that these business are only possible because of the society that supports them, it's an extremely extractivist mindset which I deeply challenge you to think deeper about...
    maerF0x0 · 1789595500 · focus · HN ↗
    SNAP, medicaid, foodbanks... plus don't risk what you cant afford to lose, beyond your own time.
    I'm not saying go take $100K loan and buy a warehouse of t-shirts hoping they sell.
    I'm saying use your time to create products and services which you sell and keep 100% of your delivered value (assuming you price well), rather than sharing the profit margin with your bosses hierarchy. From there you can begin to employ others, potentially simultaneously funding others' escape from the rat race too.
    piva00 · 1789598243 · focus · HN ↗
    Sure, what kind of business should a person who has US$ 5k in total liquid savings can start that they can keep 100% of the delivered value?
    This person is a father of two, works two jobs at odd shifts but has to refuse some shifts because his wife also works part-time, 1-2 days a week he has to take care of the kids. Childcare is expensive and they can't afford it, they get some help from friends and family sometimes but can't rely on it.
    Give me your best business idea that is worth the risk of time and money invested for this family.
7. juancn · 1789496430 · focus · HN ↗
  Wealth inequality is mainly a statistical phenomena.
  If you start a perfectly fair society where everyone has exactly the same amount of money and you play a game were people interact and with equal random chance (i.e. each exchange you get a 50/50 chance of earning 1 buck or losing one), after a few exchanges you get a Boltzmann-Gibbs (exponential) distribution.
  If each agent wealth chance of increasing depends on what they already have, you get a pareto distribution.
  It's extremely hard to avoid at large scale.
8. danny_codes · 1789592697 · focus · HN ↗
  > Does (or how much does) it matter if any specific percentile group is getting disproportionally richer, given all (or a vast majority of) groups are?
  Yes it matters very significantly. Rising income/wealth inequality causes all sorts of social problems. It's corrosive to society. This has been studied pretty significantly. The kicker is that it even slows economic growth! So all the classic libertarian arguments about incentives to work and marginal utility of labor turn out to just.. not be supported by the data at all.
  Which means there are no good reasons to promote income inequality whatsoever (that are supported by data). It persists purely for cultural reasons and presumably very effective propaganda.
the_doctah · 1789494339 · focus · HN ↗
I know what will fix this - endless immigration!
arjie · 1789495211 · focus · HN ↗
Okay, this site is becoming unreadable slop.
1. dgellow · 1789495827 · focus · HN ↗
  Flag and move on
orange_joe · 1789495554 · focus · HN ↗
i’m pretty skeptical of this analysis because it (by default) hides the effect of welfare and advocates for a wealth tax. Hiding the existing social safety net in order to advocate for taxes feels very propagandistic.
1. bpodgursky · 1789496116 · focus · HN ↗
  More than propagandistic, it calls into question whether they are actually trying to solve a problem at all. The US has considerable support for low income families. That's a good thing, if you don't want to even see whether it works, what's your goal?
2. pwmglenn · 1789496461 · focus · HN ↗
  good point. taxes and welfare should probably be on by default. ill change that.
  I just thought it was a better illustration, easier for the average person to comprehend without those.
  I didnt mean to do any advocating. Just provided the info because I wanted to see how it'd affect things.
thatfrenchguy · 1789496016 · focus · HN ↗
I mean, Piketty showed this a decade ago in capital in the 21th century: the higher your income percentile and wealth percentile, the higher saving rate and the higher returns on your investment (which is negative for folks at the bottom of the distribution).
Of course the other problem with the projection is that BLS average expenses aren’t super accurate to project what people are spending on at those income percentiles :)
1. dgellow · 1789496617 · focus · HN ↗
  I don’t think that many people have read Piketty given how dense his work is. I’m glad I share my native language with him which makes it a bit easier to understand some of his points, but his writing is really difficult to grasp IMHO
  1. danny_codes · 1789593196 · focus · HN ↗
    IMO he's extremely clear, just verbose. Though I read the English translation so maybe that's clearer than the French.
simianwords · 1789496884 · focus · HN ↗
This is hiding the real truth. Rich people invest more money and its a good thing that they invest because the investment goes into productive areas which ends up back into consumption.
The other way round is much much worse - imagine if rich people don't invest but rather just consume. It _takes_ away money from poor instead of building more wealth for everyone.
So the overall point being made here is not that true
1. goatlover · 1789497772 · focus · HN ↗
  This is just trickle down economics, which has led to great wealth inequality while the middle and lower class wages have stagnated as inflation has gone up. What really helps is strong social safety nets and programs that help struggling people. The Nordic model leads to better societal outcomes.
2. goatlover · 1789497893 · focus · HN ↗
  This is just trickle down economics, which has led to great wealth inequality while the middle and lower class wages have stagnated as inflation has gone up and more people have to rent instead of owning their own porpoerty. What really helps is strong social safety nets and programs that help struggling people. The Nordic model leads to better societal outcomes.
3. danny_codes · 1789593460 · focus · HN ↗
  Well no, if rich people just consumed then the money would flow back into the economy via their consumption. This would generate economic growth. Whether that growth is greater or lesser than their capital investments would presumably be hard to measure. But to assume growth resultant from investments will always exceed growth from consumption requires evidence.
  Now an even better outcome would be that rich people didn't get rich in the first place. This would mean lower inequality, which in the data correlates with higher growth. This is demonstrated convincingly in Piketty's work.
  Overall, if youw ant to maximize growth for the poor (or really, growth for all of society at an equal pace, say), then you would want to dramatically raise taxes on rich people and eliminate the class entirely (IE, no more rich people). That would massively stimulate growth and of course skyrocket the wealth of currently poor people.
  It's a bit sad that the solution is so simple and has no downsides.
Arx14 · 1789497079 · focus · HN ↗
[dead]
RickJWagner · 1789497536 · focus · HN ↗
A visit to Disney World introduces some questions that bring doubts to this article. The park is overrun with young families, with a great many speaking English as a second language. They don’t seem to be top percenters, but they’ve got cash for tickets and food. ( The food seems to be priced about 5x what I’d imagine it to be at a real store. )
If they truly are poor, they’re surely living YOLO.
1. maerF0x0 · 1789497756 · focus · HN ↗
  It's my observation over time that there has been a sharp increase in the what people would call the "bare minimum" life. I think it's a combination of credit, a loss of stoicism, and social media pushing a distortion of reality.
2. pbasista · 1789498659 · focus · HN ↗
  The Disney World visitors are a specific group of people. The vast majority of them do not go there every week, nor every month. So the behavior you observe in there is not representative of the routine behavior of those people.
  In other words, yes, they may pay 5x the price for a meal in an amusement park that they visit once a year. That does not mean they are willing to pay anything close to that for a meal every week or every day.
  1. tstrimple · 1789573596 · focus · HN ↗
    Most families I personally know who have gone it’s far from an annual trip. This will be their once in a lifetime or maybe once in a decade trip to Disney World. Literally saved up and planned for years for that “dream” family vacation.
3. xboxnolifes · 1789505156 · focus · HN ↗
  Evaluating the financial situation of the middle class by visiting Disney World is about as canonical example of sampling bias as you can get. The people who are at Disney World are the people who can afford to be at Disney World.
pbasista · 1789498130 · focus · HN ↗
What does not help, in my opinion, is that the wealthy people often have enough resources to optimize their taxes to a point where they pay much lower rate than their fair share. While the others cannot afford to do that and pay the full rate. That in itself creates inequality.
If a base rate that the society agrees on is e.g. n %, then, in my opinion, everyone should pay that n %. But in reality the poor people pay n % because they have no time to even think about optimizing it. As they often work around the clock to make ends meet. While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %. And then there are super rich, some of whom, such as Donald Trump, pay almost no taxes at all.
This is, in my opinion, wrong and significantly contributes to wealth inequality. And therefore I believe that it needs fixing.
1. gruez · 1789501324 · focus · HN ↗
  >While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %.
  Source for this claim? All the claims I've seen involve treating unrealized gains as income, which is questionable methodology. For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?
  1. pbasista · 1789537115 · focus · HN ↗
    > Source for this claim?
    For example this article: <a href="https://www.propublica.org/article/billionaires-net-investment-income-tax" rel="nofollow">https://www.propublica.org/article/billionaires-net-investme...
    The specific mechanism may vary by country. It often involves personal service companies through which the people are paid rather than being paid directly as employees. This usually means that they pay significantly less social insurance and health insurance than what they would have paid if they were regular employees.
    To clarify, I am using the term taxes in a very generic way where it covers not only the income taxes but also all kinds of fees collectable by the government. Including social insurance and health insurance.
  2. danny_codes · 1789593156 · focus · HN ↗
    > For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?
    Yes, though it requires some intelligent accounting. For instance, the ability for tax payers to defer certain obligations. However, the principle of "all income should be treated equal" is a necessary prerequisite to having a fair society. As it currently stands, the richest people don't pay much tax at all. Effective taxes on the billionaire class are like 8%-24%, less to way way less than the median tax payer.
    IMO it's helpful to think this through to the post-wealth-tax equilibrium. In such a world, financial services will adapt and develop mechanisms for handling these seemingly tricky tax situations. IMO focusing on the minutia of how this is going to work is not useful in evaluating the macro effects of the policy.
mminer237 · 1789498193 · focus · HN ↗
Very hard to parse and not very helpful. Cutting through the slop, the "bottom 50% of households" average income is said to be $22,907 without any expenses‽ The middle 20% making $60,298‽ That's...very, very obviously incorrect.
The median household income is $83,730: <a href="https://fred.stlouisfed.org/series/MEHOINUSA646N" rel="nofollow">https://fred.stlouisfed.org/series/MEHOINUSA646N
The average for the bottom 50% of households is $30,000-something. Would take too much effort to figure out the exact figure for a comment, but still way higher what this site says, and I still feel like this is more effort than went into this misinformation site.
1. pwmglenn · 1789498413 · focus · HN ↗
  There is a per person and per household toggle. That is where the lower numbers are coming from. I'll try and make that more clear.
  1. mminer237 · 1789498910 · focus · HN ↗
    Yes, I was initially confused by the title and the content talking about two different things. I've edited my post with the correct numbers now. Even the household numbers are wrong, and the taxes and benefits numbers are very wrong.
    pwmglenn · 1789499675 · focus · HN ↗
    [dead]
henrycoler · 1789783566 · focus · HN ↗
[dead]

Open on Hacker News to reply ↗

Unofficial Hacker News client; not affiliated with Y Combinator.