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Making money is not the same as creating wealth


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2016 May 1, 1:07pm   3,660 views  16 comments

by tovarichpeter   ➕follow (6)   💰tip   ignore  

http://evonomics.com/they-dont-just-hide-their-money/

I read this article and found it very interesting, thought it might be something for you. The article is called They Don’t Just Hide Their Money. Economist Says Most of Billionaire Wealth is Unearned. and is located at http://evonomics.com/they-dont

#rentseeking #georgism

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1   Dan8267   2016 May 1, 3:40pm  

Economist Says Most of Billionaire Wealth is Unearned.

And that is precisely why we need to get rid of capitalism. Billionaires are all parasites. They produce no wealth. In fact, they drastically reduce wealth creation by disrupting the virtual cycle of real workers producing and consuming.

2   NDrLoR   2016 May 1, 3:43pm  

Although I didn't like Ross Perot, that was the point he made about the shenanigans of the leveraged buyouters during the 80's--he said they're not really creating anything they're just pushing numbers around.

3   Patrick   2016 May 1, 4:02pm  

good, the article points out the one thing that no billionaire wants to talk about.

A key empirical question in the inequality debate is to what extent rich people derive their wealth from “rents”, which is windfall income they did not produce, as opposed to activities creating true economic benefit.

non-productive rent seeking should be taxed 100%

productive work should be taxed at 0%

this is the principle of https://en.wikipedia.org/wiki/Georgism

it can be done, we just need the political will. it starts with educational articles like the original post.

4   Strategist   2016 May 1, 7:13pm  

Dan foolishly states:
"And that is precisely why we need to get rid of capitalism. Billionaires are all parasites. They produce no wealth. In fact, they drastically reduce wealth creation by disrupting the virtual cycle of real workers producing and consuming."

Most of their wealth comes from the stock ownership of their company. Go ahead should down every major company, reduce everyone's 401K's to zero, get 10's of millions unemployed, and turn America into Venezuela.

5   Strategist   2016 May 1, 7:14pm  

jazz music says

virtuous cycle of real workers producing and consuming.

Dan8267 says

virtual cycle of real workers producing and consuming.

Even more foolish than Dan's statements.

6   tatupu70   2016 May 1, 7:18pm  

Strategist says

Most of their wealth comes from the stock ownership of their company. Go ahead should down every major company, reduce everyone's 401K's to zero, get 10's of millions unemployed, and turn America into Venezuela.

You'd be much better off paying the workers according to their ability to create wealth in the company. That way billionaire parasites would get nothing and the lower level workers that create wealth are paid.

7   indigenous   2016 May 1, 8:30pm  

Irando says

good, the article points out the one thing that no billionaire wants to talk about.

A key empirical question in the inequality debate is to what extent rich people derive their wealth from “rents”, which is windfall income they did not produce, as opposed to activities creating true economic benefit.

It seems to me that you can do 3 things with money. 1 spend it, 2 save it, 3 invest it.

The latter is how a small business becomes a big business. As much as government has F'd up the Horatio Algers story it is still the driving force in the economy.

One of the factors in why the economy has taken so long to recover since 2008 is a lack of small business investment.

The monopolies he talks about are a myth. The only monopolies exist because of government. Even Rockefeller's story that Lips likes to talk about only existed because of preexisting taxes on Camphene i.e. 400% which created an opportunity for kerosene that Rockefeller provided, even then his success had faded dramatically by the time Roosevelt got around to regulating him.

The Georgian ideas right or wrong would discourage investment. Not to mention that private property is one of the cornerstones of the US. I don't think it is a coincidence that China started allowing private property 20 years ago as their economy boomed.

8   Patrick   2016 May 1, 8:46pm  

indigenous says

The Georgian ideas right or wrong would discourage investment. Not to mention that private property is one of the cornerstones of the US. I don't think it is a coincidence that China started allowing private property 20 years ago as their economy boomed.

i don't see why investment would be discouraged, as long as the land value tax was fairly predictable.

note that china essentially does have a form of georgism in that the chinese government owns all the land, and everyone leases land from them.

9   indigenous   2016 May 1, 9:16pm  

rando says

i don't see why investment would be discouraged, as long as the land value tax was fairly predictable.

Tax of 100% is generally going to discourage investment. I sure the libbys have some new bazaar idea on land ownership but Locke says that it is when you mix your labor with the land that it becomes yours. Or purchase of course. rando says

note that china essentially does have a form of georgism in that the chinese government owns all the land, and everyone leases land from them.

I'm not sure I would want to use a communist country as a paradigm. It seems to me that a better tax system would be geared towards consumption. Like a sales tax but instead of the rest of the taxes. Because that discourages spending and encourages saving.

10   Patrick   2016 May 1, 9:23pm  

indigenous says

Tax of 100% is generally going to discourage investment.

a tax of 100% on rent derived solely from land ownership will not affect productive investment in the least. simply buying land is not productive investment.

think about it: no one created the land. the investment is entirely in the building and infrastructure. income from those should be completely untaxed: 0%

indigenous says

Locke says that it is when you mix your labor with the land that it becomes yours.

you cannot ever mix labor and land. labor is one thing and land is an entirely different thing.

the rent to tax at 100% is the rent on unimproved land. the tax should remain identical even after the land is improved. this is an incentive to improve it.

indigenous says

I'm not sure I would want to use a communist country as a paradigm.

china is communist in name only at this point.

indigenous says

a better tax system would be geared towards consumption

i disagree. why penalize commerce? commerce is a good thing.

the appropriate object of taxation is always rent-seeking. NOTE CAREFULLY that i am not talking about, say, the entire rent on a house. i'm talking about the completely unjustified rent on the land, which owner did absolutely nothing to earn. there is also the rent on the building, which the owner should keep 100% of because he built it or maintains it.

please read this article, it will help clarify what i mean by "rent-seeking": https://en.wikipedia.org/wiki/Rent-seeking

11   indigenous   2016 May 1, 9:41pm  

rando says

a tax of 100% on rent derived solely from land ownership will not affect productive investment in the least.

Maybe maybe not.

rando says

you cannot ever mix labor and land. labor is one thing and land is an entirely different thing.

He means improvements.

rando says

the rent to tax at 100% is the rent on unimproved land.

Yup I understand.

.rando says

i disagree. why penalize commerce? commerce is a good thing.

The penalty would be on the theft called taxes. This countries spending is out of control, if not for the reserve currency status there would be riots or runaway inflation.

Commerce is a good thing. Reducing government spending is imperative. IOW this country is capitalist in name only.

The bigger concern is subsidized rent seeking. Think Elon Musk, corporations benefiting from charities (which kill small business in the countries receiving the "aid", ADM an ethanol, that is the problem. If you eliminated corporate welfare the budget would be balanced.

12   Bellingham Bill   2016 May 1, 9:42pm  

"Locke says that it is when you mix your labor with the land that it becomes yours."

Last I checked Locke was irrelevant today. Well, except for the:

https://en.wikipedia.org/wiki/Lockean_proviso

13   Bellingham Bill   2016 May 1, 9:42pm  

yeah I recently read that rent-seeking article and was pleasantly surprised that it defined rents as getting something for nothing, not the rent of "economic rent".

14   curious2   2016 May 1, 11:19pm  

rando says

as long as the land value tax was fairly predictable.

Then you're back to Prop 13, at least for the expected design life of the investment. Much investment related to improving land tends not to be portable or even salable. The situation might change somewhat if manufactured housing, automated construction, and recycling concrete reduce the total cost of improving the land. Part of the investment though will always be non-portable and non-salable: even if you could carry off the stones at stonehenge at zero cost to some other place, they might not line up the same way with the solstices and tell you when to plant your crops. That's only a metaphor, the point is you invest time in learning how to function in a particular place, and displacing people can be a lot more disruptive and traumatic than displacing water.

15   Dan8267   2016 May 2, 2:36am  

jazz music says

virtuous

True. I spend too much time coding. Everything's looking virtual.

16   Strategist   2016 May 2, 9:22am  

tatupu70 says

Strategist says

Most of their wealth comes from the stock ownership of their company. Go ahead should down every major company, reduce everyone's 401K's to zero, get 10's of millions unemployed, and turn America into Venezuela.

You'd be much better off paying the workers according to their ability to create wealth in the company. That way billionaire parasites would get nothing and the lower level workers that create wealth are paid.

Competition among businesses ensures workers get paid, based on their ability to create wealth. Why else do you think different occupations get paid different wages?

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