Wealth being the integration of gains - consumption over time makes it a poor metric for looking at society as a whole.
Something like 50% of Americans will be millionaires at some point in their lives—upper quintile per this chart, typically later in their earnings years. Almost all of them started “poor” as young adults, per this chart’s definition.
Look at that last bar; consider just the annual yield or interest payment on that wealth; soon, it's going to be more than all other bars combined. If people understood the situation, they would all stop working and start making lists of who these people are and work for them. That's the only logical (legal) thing to do. Every other job or career is a waste of time.
Given that the Shiller P/E ratio is now 40 (under 3% of the value of the assets), the yield is actually a pretty small fraction of that last bar... but even then, I'm saying one year's yield could exceed the worth of all the others if things continue.
But IMO, it's already the case that the economy is centered around the free money/proceeds received by top 0.1%. This is why we saw all that nonsense with COVID, DEI, Wokeism, etc... This is what happens when a small number of elites decide to spend a bit of 'spare change' on politics and social activism. Imagine how bad it's going to get after that wealth has compounded in 10 years...
Though this is also a slightly misleading metric. Plenty of “poor” people are only temporarily poor. When I graduated grad school before starting at Google all those years ago, I had a negative net worth.
edit: sorry, bringing a SV perspective, realize my comment doesn’t apply to everyone
edit edit: really a lot to think about here! Thanks for all the insightful comments and discussion. Really gets me a new perspective of the broader online world and of my early-FAANG irl bubble of friends. Thank you!
I dont think that's in the books for everyone
Maybe if you are in SV. I know this post is about the US but tech in EU definitely doesn’t put you in the 10m€ bracket
(Though to Singapore, not to the US. Salaries are higher than in the EU (though less than in SV), taxes are a lot lower than in either. Quality of life is higher than in the US for me.)
I think it's an interesting thought, I'm not sure I have a hot take here or anything. The likes of Jeff Bezos and Elon Musk are clearly good at amassing wealth (and interested in amassing wealth) but I suspect a lot less is attributable to skill than many would think.
- Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets. - Even the LHS of that chart Americans are some of the wealthiest in the world. A lot of the middle class from many other countries would love to be on the LHS of that chart. - No one is expected to build wealth on a 40 hour minimum wage job. It is the bare minimum and most people get paid more. - Americans don't want wealth. Our spending habits are abysmal. I suspect if you gave every American $500K the chart would revert back to this in like 12 months
Services that have an incentive to serve said americans, because it is them who own them.
You are completely right that this capital is super useful for society. It would just be infinitely more useful if it was in the hands of society.
Why would that be worse? What online services are so important that it's better to have them than to lift some people above the poverty line? Rich people spending is the next best thing after taxing them - it distributes their money and provides jobs. It would strictly improve the society if Bezos spent lots of money and folded his servers and warehouses - in so many different ways...
The coordination win that came from “thou shalt not covet” is substantial and we forget it at our own peril.
Retirement age keeps increasing, public healthcare keep getting defunded. My tax money is getting used to enrich war mongers and my cost of life keeps increasing as a result of all of that.
Also my constitutional rights are ignored daily.
You understand why I might not be feeling very happy that YOU are doing great?
> “What we think” and “Ideal”
> In 2011, Michael Norton and Dan Ariely asked more than 5,000 Americans how they thought wealth was split between the five fifths of households, and how they would ideally split it. The Companion spreads those five shares across all 100 percentiles of the 2026 wealth total in a smooth curve (Appendix 3). Many different curves fit five numbers, so these two shapes are only illustrations. The actual bars come from percentile-level data. These two curves do not.
If one asks "how much, say, Elon Musk, is worth" we see some crazy numbers with kirjillions of zeros. But those are not "his" money, this is how much his companies are estimated to have. Yes, he has large personal fortune, but it is nowhere near those huge billions of billions amounts.
Second, staying with Elon example, his companies are paying people and other companies that pay people, so there is huge army of people who have food in the fridge because of Elon Musk (I've seen some estimates around ~1 million people overall). Again, they are nowhere near to be as wealthy as Elon, but still, they have a decent live thanks to his companies.
There are very solid arguments backing up the same general points that require time to communicate and require good faith attempts to understand from the other party. But you probably don't want those either.
That or just raise interest rates to force these people to sell more equity
Can you explain why would we be better off when the rich flee? I see this "we gonna be better off without them" sentiment quite often, but never an explanation how would we be better off? What metrics have you used?
1) Endowments, Trusts, and nonprofits
2) The Estate TaxIt seems to obvious to me, like just start it at something like $5M. Nobody will be affected who can't afford it. It's like they're trying to implement it in a way that makes people hate it.
Increase wages.
If you "fool" a hundred thousand individuals to work for a company on a wage and through their work the company ends up been valued at a billion, you become a billionaire. Wouldn't they deserve a bigger cut of the fruit of their labor?
The fastest way to distribute wealth isn't taxes on wealth, it's a better distribution of the wealth generated by labor on the contract that the employee signs.
Let's take a personal anecdote for an example: I joined a startup when it was early-stage, stayed for a few years, and exercised my stock options when I left. The startup is now "successful", but still private; my shares have also surely been heavily diluted. I have no idea when I'll be able to sell those shares or how much they're really worth. I have no way of turning those shares into quality-of-life improvements for any foreseeable future. Do they make me "wealthy"?
I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff. I think the real problem is how much of the wealth is allowed to stay off public markets. Cargill is worth more than $50 billion and its stock is not available on public markets. The growth in wealth of most AI companies - Anthropic, OpenAI - happened off of public markets, and so none of it trickled into the American middle class by their retirement accounts. Venture capital is keeping companies private for longer because, quite simply, none of the investors need the cash to pay for their cost of living, so they're quite happy to let paper gains continue to live on paper.
If your company has revenues of $X million a year or more, you should be forced to make public financial reports (effectively forcing you to list stock on a public market). Period. I think economists will naturally disagree on how much X should be, and that's fine, but I have little doubt that there should be a line like that, somewhere. Concerns about public markets forcing short-term thinking are a different problem, one addressed by mission-lock implements (Eric Ries's recent book Incorruptible is great here). Public markets ensure that gains in wealth are shared more broadly across the economy and increase tax collection by incentivizing more frequent buying and selling of the underlying stock, since those are taxable events.
You also have this with houses in California (and more and more, the entire country) - a family in a house that they pay $x per month on is not likely to really feel different if you tell them the house is worth $250k or $500k or $5m - because the price will likely be "in line" with those around them and so actually getting access to the "wealth" is difficult - the only real way is to move far away.
I feel a big part of the problem is we've made the world great for those who know how to navigate it, but horrible for those who don't (or can't). If you are disciplined from the beginning, always save 10% of what you make into retirement 410(k)s, 10% into rainy-day funds, spend less than 30% on housing, you're going to do quite well - but that's a small portion. Seventy years ago you could be a near literal moron, work at the factory, and live a good life - because the company handled your pension and healthcare without asking you to make decisions that frankly most people aren't capable of making - and it was difficult to leverage yourself to death.
Most people don't give a shit about wealth inequality if they can live a good if humble life without undue stress.
Elon Musk existing doesn't bother me as long as I can provide for my family and feel I'm getting a "decent deal". But if I'm overworked, underpaid, drowning in debt, and prices are rising, his existence is going to be a lot more annoying.
(One of the problems of publicly-traded companies is manager's capitalism - https://ia601506.us.archive.org/26/items/bogle-managerial-ca... - both really come down to nobody actually owning something in the meaning of taking responsibility to the thing, because ownership is so diluted it basically has no meaning.)
So the median household in the US has 3 working adults? Is $211k household according to that page.
Outstanding observation.
Since most people’s income comes from salary, it is very easy to read this graph wrong and it is a bit misleading. Say you are some dev who makes $500k per year, but likes to rent, doesn’t drive and is not very bothered with stocks. Their Net Worth - unless I understand this wrong, if I do please correct me - the would around zero, maybe less with student loans, so they would be amongst the poor. Ok, they probably would have a lot of savings in this scenario, but maybe they like to ride on a horse with no name and spend most of their income. Still I would not call them poor.
Does it change the picture? Not really, because Musk et al. are so way beyond everyone else that the graph is extremely top heavy. It is a nice data visualisation regardless.
That being said, one accident or illness that strips away that doctor's ability to earn, leaving them in a soul crushing amount of debt that can't be discharged via bankruptcy. Their debt obligations are real.
I save a lot of money on 0% capital gains taxes here.
I regularly check London jobs and interview for them, but the numbers haven't made sense so far.
(Or as more likely, you've been in SV since Apple was a twinkle in the garage and your house is worth north of $5m.)
For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Anyway, off to buy some $10 bananas.
This is all getting more annoying with capital gains taxes (and inflation, since capital gains taxes are usually levied on nominal gains).
I moved to a place with simpler taxes, including no capital gains taxes.
> If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Depends on how much you want to live off.
> Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
I don't think the original commenter was talking about juniors who just started?
If I were to liquidate my whole existence, I'd probably end up at maybe 300k€? Maybe? And that is already rather high up here in Germany.
The ratio of getting shit done per dollar seems a bit low. Even with Germany continuing to be.. uh.. not exactly on top of its game.
There is no way this is true. FAANG pays well, but that is still an eye popping amount of wealth unless you're an executive or absolute top-echelon engineer.
You're doing it wrong!
I expect most people here to certainly be nowhere near that.
Nothing against you OP but this the perfect highlight how out of touch HN can be from the reality.
Except for one guy, but he's 16 and will probably be the richest on paper once his AI agent startup's pre-Seed Series Z closes.
In yen perhaps.
You would be surprised. Not only because, as you point out, recent graduates often have a negative net worth, but also because people tend to increase their spending in lockstep with their income.
Saving millions takes the intersection of multiple factors: sufficient disposable income, prioritizing investing over lifestyle, long-term discipline to stick to the plan, and luck to keep it all going smoothly.
Even in a SV world I'm trying to get my head around the logical leap that gets you to this number. Median comp in SV is <500k - that's 20 years in the business to earn $10m ignoring taxes & your actual living expenditure. Obviously we can jump that with equity, but that's still not moving the dial far enough for the "majority" to be up at those heights.
I don't see how we're getting anywhere near these figures without generational wealth (assume this is the answer).
Obviously even in SV "most people" have not already finished doing this.
Around 17% of CA residents live below the poverty line, which means MILLIONS of adults that are not students. Elderly are a significant chunk of that number.
https://www.ppic.org/publication/poverty-in-california/
https://calbudgetcenter.org/resources/young-californians-fac...
Some European making 3k/month net probably wept reading this.
I'm not sure your mental model holds. A lot of Europe has higher standards of living than the USA. And a lot of Asian countries have made huge strides in the last few decades. Also consider the difference between Mississippi and Massachusetts. I wouldn't say that anyone gainfully employed in Mississippi is "rich beyond the world's wildest dreams".
If he manages to not spend anything, like on housing, or food.
You're looking at the tower above but maybe you should look at the valley below.
But you’re probably one health scare away from it, you just don’t realize it.
1. Outsized political influence (in theory can be mitigated by laws controlling corporate spending, but obviously those laws themselves are subject to manipulation by the rich and powerful)
2. Distortion in who the economy serves. The beauty of capitalism is that it's a problem-detection and problem-solving system. If a narrow set of people have a huge portion of money, the economy becomes unduly optimized toward satisfying their wants and needs.
3. Despite best efforts, we ultimately must share a lot of the same commons. Even being a billionaire in NYC or San Francisco can't really give you a walk to work or your child's school that feels as safe as it does in a more equal society that takes better care of its unwell and poor.
What is interesting is that this was true centuries ago too. Life as a noble in the middle ages was stressful as hell and you couldn't even decide on your own lovelife. Read Seneca and the first thing he writes is that Augustus (whom he knew personally) was constantly complaining about his busy life and dreaming of a retirement that never arrived.
Rank order of preference to be top 10% in for me: US > Vietnam > South Africa
So your method does not disabuse me of my belief. It’s quite clear that equality has not made Vietnam more desirable than the US. In fact, there are some 400k foreign born in Vietnam (<1%) vs the US having 15% foreign born (a stark enough difference made worse by forcing foreign-born to be from non-neighbors). So I must reasonably conclude that my rank order is likely shared by others and that others too are not, in fact, lured by equality.
There is an old immortal tweet: cars have windows and go; houses have windows and don’t go; so it’s not the windows that make things go.
If inequality were as critical we’d expect a perfect rank ordering of distant migrant population attempts matching it. The numbers are so vastly different that one cannot conclude equality is of great importance to most.
You or the farmer you buy food from competes for farmland with Bil Gates. You or the one providing your house builder with wood competes for lumber forest with Alex Karp.
The list goes on and on.
It appears trough technological innovation the standards of life rise in many ways but trough innequality it can affect the standards/ affordability of our basic needs.
But everyone else can’t afford basic necessities or furniture anymore. And so being a farmer or a woodworker or whatever becomes a less attractive job, less people will do it, and you will have a harder time finding someone fixing your plumbing. Or pay a premium.
Instead, the ultra-wealthy are demanding extreme luxury, and so a would-be farmer is now a hotel page boy carrying around some rich dudes’ luggage, hoping for a tip.
I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself.
The point should be to raise the floor, not put in place a ceiling.
If anything, “raising the floor” is the Trojan horse.
Because most people are (IMO wrongfully) jealous of the rich. They have a problem with the rich even if it's legitimately earned wealth.
I have no desire to be rich, certainly not as rich as the far right 1% column. I find that level of wealth nauseating and embarrassing. But regardless, "legitimately earned wealth" is doing a lot of work in that last sentence. Perhaps (doubtful) it's possible to earn that much while being legally legitimate, although that speaks more to how fucked up our system is than anything else, but certainly not possible to do so in a morally legitimate way.
More money doesn't create more things to buy or more people making things, its just means more money competing for the same things to buy. Other people having more does diminish your share, of the cake. Yes, we can make the cake larger, but the best way to do that is for more people to get more opportunity to fulfil their potential, by getting a reasonable share to do so.
Not even ‘to have’, just ‘to be worth, if all of their shares could be sold at the price of the recent ones’. It’s a number only loosely (albeit obviously positively) correlated with actual spending power.
The whole point is that he shouldn't be able to exert autocratic control over large swathes of the economy and control that many people's lives.
It’s more hidden now. We all have rights and freedoms and whatnot. But there are still people who “own stuff”, and people who don’t. With shades of gray in between those two extremes. It’s good to be cognizant of the system you inhabit relative to what has existed throughout history so you can make good decisions and position yourself accordingly.
> his companies are paying people and other companies that pay people
Yes, his companies, not him. He's not doing much, except distracting part of his workforce to work on vanity projects such as flying cars or mile-long vaccuum tubes, or spending some of his vast wealth to buy politicians that will further the cause of wealth inequality. Get rid of him, and the system works much better for everyone. Him and others like him.
That’s why it is extremely difficult to make even modest improvements in a dug-in system.
In practice its basically an additional 2% "drag" on market returns as its a yearly tax; not capital gains on sale.
Sole reason we turned down a job there. I don't hate the idea of a wealth tax, but having it kick in at €120,000 is nuts. IMO it's not even functioning as a wealth tax, its a barrier to the middle class accumulating even meager non-property wealth.
But, let's say, they do. And they also have to stay out. Wouldn't that be.. kinda nice actually?
Your taxes would stay the same either way. Yes, of course, there would be less luxury spending, but the millions of normal people still exist. And they spend and they produce.
Why not let the ultra wealthy just leave and idk go to mars or something? Kick them out, seize their assets, run society without them if they do not want to be part of it anyway.
I found a study saying the effect was minuscule in Norway, Sweden and Denmark https://taxjustice.net/wp-content/uploads/2024/08/Taxing-ext...
The “they’ll just leave” argument doesn’t really hold up in this case.
Top salary earners, who do manage to save somewhat for retirement end up getting punished by these wealth taxes as well, especially since, generally, you need money in order to be able to move money around, in order to be able to save money on these sorts of taxes.
Think again. The demand from rich to park wealth in X, Y, Z makes prices go up. Just imagine that the RAM prices fueled by AI spending is a housing market. More money rich have, less affordable the life for the rest is.
And don't forget that speed of their wealth growth is way faster than anyone who sells their labour.
Ah. And we did not even talk about "hidden" wealth thingy... All these numbers are official ones.
pif•50m ago
rjbwork•49m ago
Those are your choices. Choose freely!
not-kinsale-joe•46m ago
martincmartin•45m ago
LtWorf•36m ago