In my experience, the answer is choice. Life is the sum of all your choices said Albert Camus.
I personally know at least 4 households who have heard me preach about the importance of saving money, underspending income grossly for many many years (9+), but they continue to carry massive amount of debt while living paycheck to paycheck. 1 household have additional refrigerator for all their beers, all 4 lease cars, etc.
If we can legislate away dumb choices, we can reduce wealth inequality immensely without robbing Peter to pay Paul.
some people decided to have babies early, even after being told how tough it's gonna be. some people decided to be waiter/waitresses or bartender/bartenders instead of going to college...
knowing the right thing to do vs actually doing it...
I know quite a few households where the kids are doing well not because of any bright choices but because the parents have significant wealth. I'm not even talking about better health care, better education and the *choice* to take risks, the freedom to take risks, because they have nothing to fear if they fail. I'm talking about having easy and ready access to supply chains because the dad has leverage or how they get large chains to hold their products because they make money off the dad's products and so on. Significant wealth brings competitive advantages that can pass through the generations. This can be easily seen in Europe, where some families maintain their wealth over several centuries. A rich kid can make plenty of dumb choices but still end up on top because of their family's wealth.
And how does that make you feel? Envious? Like you deserve to take what they have? How is any of what someone does for their children your business?
So, just to pretend that you actually talked about the argument instead of your ad hominem.
My comment was a reply to the argument that somehow poor people are poor because of their choices and rich people are rich because of their choices. I provided examples of how that is not necessarily the case.
On the macro, as I have noted, high inequality distorts competition, on the extreme can destroy the markets and lead to unfavorable political choices, i.e. Trump or a mirror candidate from the left suggesting high taxes (same cause).
It's not a hypothetical discussion and that's why I care, I want my kids to have a better world and it's not going in the right direction.
We all want a better world for our children. A better world includes a much larger economy with an increase in total wealth. The populism isn't a result of wealth inequality, it is a result of voter ignorance on topics such as wealth inequality. Trump was elected (putting aside how awful Hilary is) due to the vast majority of people not understanding the theory of comparative advantage and thus "thinking" with their emotions/prejudices about free trade and immigration. Likewise the support for people like Bernie or Alexandria Ocasio-Cortez is a result of complete economic ignorance on the part of the electorate who do not realize that wealth is created, not just moved around in a zero-sum game, and have no idea how markets work. I hope someone out there right now is starting a company that will increase our standard of living so much, create so many jobs, and expand our economy so much that he builds a Trillion Dollar fortune for himself. In fact I hope there are 50 or 100 such people. A better world includes massive income inequality, a better standard of living, and more wealth and opportunities for all. Reducing wealth inequality is actually making a future that is worse off for both your children and mine. Giving into voter ignorance/envy isn't helping anyone.
Sidenote:
This is an investment Board and I often wonder about the relevance on my posts in the politics section and the above Camus quote has been a guiding light but, for the first time in 52 years, there's this ominous feeling that simply won't go away.
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There is an implicit assumption about linearity or quasi-linearity in the argument above.
By raising tax on the "rich", for those who support it, there is the assumption that revenue from taxes will raise linearly, in correlation to the tax increase, which is a flawed assumption (common sense, analysis and historical evidence).
Globally, it's been shown (convincing evidence) that rising inequality has a tendency, especially when certain levels are reached, to slow down or even reverse standards of living. Countries have responded in various ways to this incredibly complex and multi-variable situation and the global correlation is not perfect but, in the US, the evidence shows a much higher and rising inequality and a much higher correlation to levelling standards of living with many components of those standards declining for a large and growing swathe of Americans. This is not a linear correlation and, in fact, likely to be an inverse correlation with higher inequality, reaching the exclusive growth category when prosperity is no longer shared.
I just re-read The Economic Consequences of the Peace, written by Mr. Keynes, and what strikes me is not that he was right but that he was ignored among the growing divide.
I admire Mr. Seth Klarman because of the way he manages money and also because of his character. Some suggest that his motivations are self-serving. I would submit that he does not need to do what he does in the public sphere.
From a recent letter:
"We would also argue that social cohesion is essential for those who have capital to invest. Businesses need a long-term horizon to plan, and social unrest makes planning more difficult. It can't be business as usual amidst constant protests, riots, shutdowns, and escalating social tensions. It is not hard to imagine worsening social unrest among a generation that is falling behind economically and feels betrayed by a massive national debt that was incurred without any obvious benefit to them. If things get bad enough, we could see taxes once again raised to confiscatory levels. We should all be rooting for (and acting to support) social cohesion and a renewal of the American dream."
To the question: "Does this matter? We think it does." I do too.
I just hope
we can come together on this but, today, I'm just a guy who needs to shovel snow and make a passageway in order to have propane gaz delivered to my house.
Have been reading on PG&E, VMD and even Mimedx and should be able to show some work soon.
