Our Worthy Overlords

If there must be rich folks, what would you want them to be like? You might want:

  • They mostly work, instead of living lives of leisure.
  • They or their parents are mostly self made, vs. coming from long rich families. You probably sympathize more with parents wanting to help their kids than their great-great-grandkids.
  • They compete fiercely for positions in orgs that themselves compete strongly globally, assuring you their wealth isn’t from local insider clubs.
  • They don’t promote national conflicts or wars, but instead look to what’s good for the world.
  • They give most of their wealth away, to especially innovative and socially valuable charities.

In the January Atlantic, Chrystia Freeland says that that is exactly the sort of elites we now have! Yet Freeland seems more inclined to scold than to celebrate:

Today’s super-rich are … more hardworking and meritocratic, but less connected to the nations that granted them opportunity—and the countrymen they are leaving ever further behind. … [A rich guy] argued that the hollowing-out of the American middle class didn’t really matter. … “If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade.” … [Another said,] “It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.” … [Regarding] the financial crisis, … the real cuplrit, he explained, was his feckless cousin, who owned three cars and a home he could not afford. …

Someone will have to pay for the improved public education and social safety net the American middle class will need in order to navigate the wrenching transformations of the global economy. (That’s not to mention the small matter of the budget deficit.) Inevitably, a lot of that money will have to come from the wealthy. … If the plutocrats’ opposition to increases in their taxes and tighter regulation of their economic activities is understandable, it is also a mistake. The real threat facing the super-elite, at home and abroad, isn’t modestly higher taxes, but rather the possibility that inchoate public rage could cohere into a more concrete populist agenda. … In the long run, super-elites have two ways to survive: by suppressing dissent or by sharing their wealth. … Let us hope the plutocrats aren’t already too isolated to recognize this.

It doesn’t seem to matter to Freeland how deservingly the rich obtain or spend their wealth; they still must be taxed to help average Americans, even if that slows the lifting of Chinese and Indians out of poverty. It isn’t clear why she recommends the rich eagerly submit to such taxation; she suggests taxation will happen whether they like it or not. Why fear “populism” beyond its taxation? The point seems more to scold the rich, in order to reassure the rest of us that we are justified in taxing them.

How many elites are we talking about? The top 1% of households worldwide, ~37 million of them, are each at least half-millionaires, and hold ~40% of world wealth. “Thirty millionaire” households number ~100,000 (0.03% of world), and ~800 billionaires hold ~1% of world wealth (2.4 of 195T$). I’d guess Freeland’s cutoff for “elite” is somewhere in this 30M$ to 1B$ range.

Me, I celebrate these new worthier elites. We aren’t obviously justified in taking their wealth, however convenient that might be, and they might manage to avoid such takings via international competition to attract them. The US seems a bit too arrogantly unaware that we compete on this and many other margins.

If you resent this level of concentration, by new elites more confident and justified in their sense of superiority, you may really hate the new world of emulations, which I guess will arrive within roughly a century or so. After all, you may take some comfort from the fact that our elites’ fractional genetic influence on future generations is vastly smaller than their wealth faction. I doubt the top 1% in wealth has more than 2% of the grandkids, and it may be less than 1%.

But in the em transition, profit-driven scanning and copying may result in many trillions of ems who are mostly copies of the thosand most capable and adaptable humans. Members of our very capable and productive social elites should be prime candidates for profit-driven consideration, and they may in addition pay out of their own deep pockets. The vast majority (99+%) of our progeny may descend from a thousand or so (<0.0002%) of the very elite humans living at the time the em transition.

Of course if the vast majority of these ems are living near susistence level, you can’t really envy their individual wealth. But you might envy the overall wealth and influence of the total clan of descendants of each initial human. Just remember that you are descended genetically from distant ancestors who also had a quite disproportionate influence on future generations. In order for innovations to accumulate, the long run influence of whatever embodies innovations must be highly inequitable. And in the em revolution, where brains hold most innovations, a lot of history will be crammed in a rather short clock time.

More quotes from Freeland:

The rich different from you and me. … today’s super-rich are also different from yesterday’s: more hardworking and meritocratic, but less connected to the nations that granted them opportunity—and the countrymen they are leaving ever further behind. …  Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. … they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. … The rise of the new plutocracy is inextricably connected to two phenomena: the revolution in information technology and the liberalization of global trade. … As companies become bigger, the global environment more competitive, and the rate of disruptive technological innovation ever faster, the value to shareholders of attracting the best possible CEO increases correspondingly.  …

“Fat cats who owe it to their grandfathers are not getting all of the gains. … A lot of it is going to innovators this time around.” … Few of today’s plutocrats were born into the sort of abject poverty that can close off opportunity altogether— a strong early education is pretty much a precondition—but the bulk of their wealth is generally the fruit of hustle and intelligence …  The real community life of the 21st-century plutocracy occurs on the international conference circuit. …  in this age of elites who delight in such phrases as outside the box and killer app, arguably the most coveted status symbol isn’t a yacht, a racehorse, or a knighthood; it’s a philanthropic foundation—and, more than that, one actively managed in ways that show its sponsor has big ideas for reshaping the world.

The super-wealthy have long recognized that philanthropy, in addition to its moral rewards, can also serve as a pathway to social acceptance and even immortality: Andrew “The Man Who Dies Rich Dies Disgraced” Carnegie transformed himself from robber baron to secular saint with his hospitals, concert halls, libraries, and university. … A measure of the importance of public engagement for today’s super-rich is the zeal with which even emerging-market plutocrats are developing their own foundations and think tanks. … America’s business elite is something of a latecomer to this transnational community. … There is a growing sense that American businesses that don’t internationalize aggressively risk being left behind.  … “If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade.” … “It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.” … [Regarding] the financial crisis … The real cuplrit, he explained, was his feckless cousin, who owned three cars and a home he could not afford. …

There is also the simple fact that someone will have to pay for the improved public education and social safety net the American middle class will need in order to navigate the wrenching transformations of the global economy. (That’s not to mention the small matter of the budget deficit.) Inevitably, a lot of that money will have to come from the wealthy—after all, as the bank robbers say, that’s where the money is. … Many of the plutocracy’s rationalizations have more than a bit of truth to them: as a class, they are generally more hardworking and meritocratic than their forebears; their philanthropic efforts are innovative and important; and the recent losses of the American middle class have in many cases entailed gains for the rest of the world. … If the plutocrats’ opposition to increases in their taxes and tighter regulation of their economic activities is understandable, it is also a mistake. The real threat facing the super-elite, at home and abroad, isn’t modestly higher taxes, but rather the possibility that inchoate public rage could cohere into a more concrete populist agenda. … In the long run, super-elites have two ways to survive: by suppressing dissent or by sharing their wealth. … Let us hope the plutocrats aren’t already too isolated to recognize this.

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  • http://theviewfromhell.blogspot.com Sister Y

    The question may be phrased: how much of the sting of inequality can be relieved with procedural fairness?

    Some of the studies of inequality comparing, e.g., Europe to America and Latin America to the States find Europeans and Latin Americans harmed more by inequality, and one interpretation of this is that the American myth of economic mobility (procedural fairness) mediates some of the harms of inequality. But not all, of course. Purely “fair” inequality is still crappy for status-concerned humans.

    • Robert Koslover

      Economic mobility in the USA is not a myth.

      • http://theviewfromhell.blogspot.com Sister Y

        I don’t mean “myth” in the sense that it’s not true, but in the sense that it is a widely shared cultural belief (that may be true to some degree).

      • http://theviewfromhell.blogspot.com Sister Y
      • Matt Knowles

        That’s an interesting definition of “myth”…

      • Cezary

        @Matt Knowles:
        http://en.wikipedia.org/wiki/Mythology

        “The term “myth” is often used colloquially to refer to a false story,[3][4] but academic use of the term generally does not pass judgment on truth or falsity.[4][5] In the study of folklore, a myth is a sacred narrative explaining how the world and humankind came to be in their present form.[5][6][7] Many scholars in other fields use the term “myth” in somewhat different ways.[7][8][9] In a very broad sense, the word can refer to any traditional story.[10]”

        How would you then call in popular American English such a “widely shared cultural belief”? From my experience in Europe this usage for “myth” is prevalent.

      • http://www.hopeanon.typepad.com Hopefully Anonymous

        Maybe not, it’s folk notions of free will and unbounded personal potential that seem more saliently mythic to me.

  • Matthew W. Fuller

    Yes, there are many who obtained their positions of transnational wealth through hard work but hard work alone did not allow their rise.

    There are no shortages of middle class men and women working 80 to 100 hour work weeks, so clearly the problem isn’t hard work but instead power. Again, it isn’t purely merit that determines riches. Statistically this is only one ingredient, and not even a necessary one!

    This 20 something, who is destined to become middle class, supports the future revolt against the elite. And no, I don’t support more free healthcare. I support the merit argument, I just don’t buy the hype that the super rich did it mainly by themselves!

  • http://www.teapartynews.net George

    But not all, of course. Purely “fair” inequality is still crappy for status-concerned humans.

    Envy, like self-congratulations, is not a good basis for public policy or private morality. As public policy, envy brings the class warfare of socialism and related social ills. As private morality, envy just makes you miserable by leaving you stuck on the hedonic treadmill.

    All of this moaning about inequality is the actual harm of inequality, not the inequality itself. Remove the moaning and the harm is gone. Anything else is just rationalization for the bad behavior of redistribution of wealth (theft) justified by the Church of Liberalism.

    • lxm

      Well, there’s envy and then there’s fawning. And there’s lots of fawning going on in this post.

      Let’s start with the title: “Our Worthy Overlords.” And then there’s this: “Me, I celebrate these new worthier elites.” And this: “The rich [are] different from you and me” (What, they don’t shit?)

      And how about this:” We aren’t obviously justified in taking their wealth, however convenient that might be, and they might manage to avoid such takings via international competition to attract them. The US seems a bit too arrogantly unaware that we compete on this and many other margins.” This is beyond fawning, almost prostrate. It’s embarrassing.

      And here’s the policy prescriptions that come out of fawning: ” It sounds harsh, but maybe people in the middle class need to decide to take a pay cut. …” Let them eat cake, sayeth the new royalty!

      • http://www.hopeanon.typepad.com Hopefully Anonymous

        I’m sympathetic to the idea that the American/Western middle class is more of a rent-seeking entity than the the subset of the superrich that are elitely technocratic (Brin, Jobs, Ventner).

        But I agree with you that there’s a difference between policing against inefficient resource management (dumb Western middle classes managing too much of the world’s resources) and dialectical theatre role-seeking (in this case, the role of defender of the supperich).

  • nazgulnarsil

    what reason is there to believe there won’t be sharp discontinuities in earning power in an efficient labor market? that this will always be framed as a class conflict and unfair should be taken into account.

  • dave

    Most of the increase in inequality comes from what we might call the asymmetric information industries. The traditional FIRE sectors plus likely health care, education, and government. The biggest culprit here is the finance sector. If you get rid of the fantastic growth in the finance sector you get rid of most of the increase in inequality.

    So the question is whether elites in those industries are providing value to the economy. Remember, value does not equal work. You can spend 70 hours a week trading derivatives and that is a lot of work, it can even create a lot of revenue, but it doesn’t mean value has been created.

    I think most people see that the new elite makes its money exploiting asymmetric information and power dynamics, often with the aide of corrupt government. If such is the case why would one respect a huckster or charlatan, no matter how slick, intelligent, or how hard they hustle.

    If these activities were generating value it truly would “trickle down”, and people would be ok with ever rising income at the top. However, since most of today’s inequality is of the trickle up variety, powerful people using their power to corrupt government and exploit people, nobody is on board.

    • michael vassar

      This seems like the most reasonable concern.

    • Abelard Lindsey

      I agree. A lot of this involves rent-seeking more than actual wealth creation. I think many Americans would agree with this. There is a lot of anger directed at Wall Street, largely because we had to bail them out. However, people who made their money by legitimate entrepreneurship (Bill Gates, Steve Jobs) still attract much respect.

      Freeland’s article fails to make this distinction.

    • http://don.geddis.org/ Don Geddis

      “You can spend 70 hours a week trading derivatives … but it doesn’t mean value has been created.”

      Perhaps true, but you should be careful not to make the opposite mistake. People (like you?) often assume that “paper pushers” add no value to society, but the reality is far more complex. It is far from clear that derivatives trading does not significantly benefit society.

      “most of today’s inequality is … powerful people using their power to corrupt government and exploit people”

      And really, this is completely orthogonal to whether the financial sector adds value to society or not. Derivatives trading might or might not add value; such traders might or might not corrupt government (just like any other industry).

      Do you really have any actual knowledge about what you’re talking about, or are you just throwing unsupported negative stereotypes at your enemy tribe, because you’re jealous of their wealth?

      • dave

        Absolute lols,

        I push paper for a living and I was on a derivatives desk for a major Wall Street bank.

        Attacking the source of criticism is always the last refuge of the scoundrel.

      • http://www.hopeanon.typepad.com Hopefully Anonymous

        Dave,
        If what you say is true, that the financial sector is rent-seeking rather than creating value, how come they are so poorly challenged by other sectors? Value is coming from somewhere. Who’s getting ripped off? Manufacturers? Miners? Public administrators? High fertility-encouraging religions?

        I like Mr. Ygleasis’ frame that a lot of subpopulation conflict is economic sector pitted against each other, rather than exploiting overlords vs. exploited masses.

        In my understanding the financial sector offers value when it improves the efficiency with which capital is allocated, allowing society to optimize its wealth and minimize its financial risk. I imagine some portions of the financial sector do this better than others, and that where there’s pure rent-seeking waste that goes unchallenged, its due to mass bias problems larger than a financial elite tricking a dumb mass population (just like I think it’s inaccurate to reduce waste in the educational and health care sectors to a smart elite tricking a dumb mass public). There’s chicanery, but I don’t think chicanery alone sustains such macrosocial formulations (or even the bulk of it, I think it’s just nibbling in the margins).

      • dave

        Hopefully Anonymous,

        The biggest losers in financial markets are savers, especially small time savers, and taxpayers. If you save in dollars you have to invest them. Anything the finance sector takes off the top above and beyond what is necessary for finding good investments (rent) is wealth that you rightfully deserve but cannot consume. Taxpayer liability is rather explicit through bailouts.

        You could also argue that even those that don’t save end up losers in that a country with badly allocated capital doesn’t produce as much for its citizens to consume. So even if you don’t have any stocks you might have lost your job in the recession.

        Yes, people are always trying to break into the sector to share in the rent seeking spoils. The rise of hedge funds and other shadow banking entities shows that. While that increases competition for rent it doesn’t necessarily reduce it, it may even increase overall rent levels. And in crisis its clear that the biggest insiders (Goldmen, JP Morgan, Citi) have a place above relatively upstart firms (Bear Sterns, Lehmen). Most bailout funds were used for banks to acquire other banks, so I think you can see how competition is dealt with.

      • http://www.hopeanon.typepad.com Hopefully Anonymous

        Dave,
        Your analysis feels fresh to me and I like it, but I’d like some more pinpoint accuracy on who the virtuous producers are who are getting ripped off in your model, and who are the relatively virtuous within the financial sector.

        You said the virtuous producers are small savers, taxpayers and some ambiguously defined non-taxpayers.

        Those don’t sound to me like populations at the far left tail of America -taxpayers in 2011 sounds relatively elite to me (although I don’t know how payroll and sales taxes wash out, though I don’t think payroll is being used for finance sector bailouts?), particularly with regards to income taxes.

        So are you basically saying that people with degrees in finance are ripping off people with degrees in (non-financial) engineering? And is it a rip off or a collective stupidity resulting in an overall systemic efficiency drag?

        The model I’m working with here is engineers smart about creating value stupidly overpaying for medical care to signal that they care, stupidly overpaying for education to show that they care and to participate in a zero sum family status competition with each other, and stupidly overpaying for financial services because an alternate trait population has done a better job overcoming coordination costs to extract rent from the engineers in exchange for macrosocial financial management.

        What do you think of the model?

      • dave

        You don’t need to over think this. Are Wall Streeters that went to Harvard generally smarter then the people they steal from, sure. That explains some of it. Wealth flows upwards from the 401k middle class schmuck to the mediocore state college mutual fund manager ripping him off to the wall street trader ripping him off. But the IQ differential is really a side show. Most of the problem can be attributed to market failures.

        Asymmetric information and principal agent problems explain most of the problems in finance. Lets take your average 401k participant. Maybe he is an expert at plumbing or some such stuff, and he gets his 5% weekly deduction and employer match into his 401k. He never got any education in finance, and it doesn’t really make any sense for him to. Proper investing could take a lifetime for him to learn, and its not like he has that much in his 401k. If he really wants to improve his life he should focus on being a better plumber. The guy managing his 401k knows that, so he charges him a few percent to “manage” his investments, even though he doesn’t add much value.

        Now let’s look at the incentives for the mutual fund manager. He gets a bonus if he outperforms some benchmark, so he has a strong incentive to start trading. He doesn’t mind risk because if he doesn’t do well its not his money, he doesn’t share the downside, just the upside. Even if he under performs for a few years he will probably get another job at a different investment company doing the same thing. So when some slick Wall Street guy calls him up with a trade idea he is all over it. He’s willing to play around with other peoples money for the chance to get some compensation. He doesn’t have to be dumber then the Wall Street guy (though it helps) he just needs the wrong incentives.

        Finance is a very abstract sector. Its very easy to end up with market failures when everyone acts in their own interest.

    • Jeffrey Soreff

      I agree. One simple measure of how well the country is being run is to look at themedian real income. It peaked at $52,587 in 1999 and dropped to $49,777 in 2009. This isn’t a question of relative wages, this isn’t envy of the superrich, this is simply showing that the economy, controlled by our elites, is not serving the median American as well as it did a decade ago.

  • Evan

    If you resent this level of concentration, by new elites more confident and justified in their sense of superiority, you may really hate the new world of emulations, which I guess will arrive within roughly a century or so. After all, you may take some comfort from the fact that our elites’ fractional genetic influence on future generations is vastly smaller than their wealth faction. I doubt the top 1% in wealth has more than 2% of the grandkids, and it may be less than 1%.

    But in the em transition, profit-driven scanning and copying may result in many trillions of ems who are mostly copies of the thosand most capable and adaptable humans. Members of our very capable and productive social elites should be prime candidates for profit-driven consideration, and they may in addition pay out of their own deep pockets. The vast majority (99+%) of our progeny may descend from a thousand or so (<0.0002%) of the very elite humans living at the time the em transition.

    Couldn’t the Me Em just study what psychological traits make the Rich Ems so successful and then modify my programming to so I could have some of those traits too? I suppose that’s another way of being descended from the rich, except by assimilation instead of reproduction. But if ems are still reasonable psychologically similar to humans it would probably be less galling. Psychologically it would map onto copying the behavior of the successful to be more like them, which is something people today do all the time.

    • Proper Dave

      That’s not really Robin’s vision, after all life would be similar as now, just virtual. (Virtual offices, robot bodies). This is more like the “Vile Ofspring” idea of Charles Stross, everybody is in a modification arms race to keep competing in the “Economics 2.0″.
      Robin’s “utopia” is purely Darwininian in contrast.

  • Miles Jacob

    Perhaps this list of what people think they want from their elites is the opposite of what they actually want.

    a few quotes from Nicolas Gomez Davila:

    “In societies where everybody believes they are equal, the inevitable superiority of a few makes the rest feel like failures. Inversely, in societies where inequality is the norm, each person settles into his own distinct place, without feeling the urge, nor even conceiving the possibility, of comparing himself to others. Only a hierarchical structure is compassionate towards the mediocre and the meek.”

    “There are fewer ambitious individuals in the world today than individuals who believe they are morally obliged to be ambitious”

    “No one rebels against authority, but only against those who usurp it”

    • michael vassar

      I think that these quotes seem insightful. Any responses to the earlier studies Sister Y mentioned claiming the opposite?

    • Abelard Lindsey

      Do realize that Nicolas Gomez Davila was one of the European descent people in Columbia and, thus, had to justify why those of his background and class should be on top. This is rent-seeking parasitism, as is all form of hierarchy that seeks to inhibit upward mobility.

      The quotes cited are nothing more than a justification of rent-seeking parasitism.

      • michael vassar

        The issue is not why the author says such and such but rather why such and such sounds insightful. People can’t be terribly rhetorically brilliant in a one liner.

      • Abelard Lindsey

        Its not insightful at all. Its all sophistry.

  • http://www.uweb.ucsb.edu/~criedel/ Jess Riedel

    After all, you may take some comfort from the fact that our elites’ fractional genetic influence on future generations is vastly smaller than their wealth faction.

    Since the availability of birth control leads to much smaller families and more consumption per person, it would seem that most people care far more about personal wealth than genetic influence. So I don’t think people find much comfort where you suggest.

  • Cezary

    Couldn’t you all stop philosophizing about the current superrich and start the practices of geoarbitrage they use? There are several portals dedicated to online outsourcing (described on Wikipedia) – you can use this one http://www.odesk.com/ for example. Robin could find himself a ghost blogger and get himself into actual building of brain emulation technology. ;) Why would you need to redesign the redistribution system if in the current system and with help of the Internet you could multiply your income by outsourcing even small jobs? Even an ethical case study of all this could be sublet to Botswana for example. ;)

  • Matthew C.

    Dave’s comment is dead on.

    I guess Robin didn’t notice the bankster bailouts and the QE2 Ponzinomic Federal reserve money printing extravaganza which punishes the prudent and bails out the wastrels on Wall Street. Savers get 0% interest on their money and the poor and middle class are facing insane 10-30%+ inflation rates on their food, clothing and energy costs while buyers in the already absurdly overvalued equity markets are being rewarded (so far) by the Fed deliberately blowing a stock bubble. Meanwhile the government is running utterly unprecedented continuous deficits at 15% of GDP which is destined to blow up the economy either through a blowing out of interest rates, hyperinflationary money printing, or a massive depression if that spigot of runaway spending gets shut off by adult leadership in Washington.

    The people at the top making and benefiting from these decisions deserve nothing but contempt and scorn (and for those bankster frauds who deliberately used their positions to steal and cheat, they deserve to rot in prison for the rest of their lives).

  • John Maxwell IV

    “Of course if the vast majority of these ems are living near susistence level, you can’t really envy their individual wealth.”

    It seems fairly plausible to me that they will be living comfortably above subsistence level given the supposed existence of research suggesting that sub-40 hour work weeks are optimal for knowledge workers.

    http://lunar.lostgarden.com/Rules%20of%20Productivity.pdf

    At the very least, it seems like ems will likely receive the sort of treatment Google gives its employees.

    Robin, have you written anything about em human rights? Will I really be allowed to keep ems as slaves as long as I own the hardware they’re running on?

  • mbk

    to Miles Jacob: now *that* sounds much more plausible. Reminds me of Philip Slater’s points, that it’s actually more anxiety inducing to believe you can fulfill your potential, like your job, and do anything you want in life that to feel like you just have to go through the motions in an arbitrary hierarchy. Because in the first case you just might ending up feeling not only unsatisfied with your life but also feeling guilty about not having achieved your potential.

    In any case my first thought was, people will actually resent hard working rags to riches types more than hereditary aristocracy. Firstly, they can compare themselves socially to these kinds of rich – and lose out. Second, you don’t really think too hard about people in a different social category to begin with. That is of course because in your mind they’re not a mirror of yourself, your friends. They’re not your competition, therefore they’re not interesting. We are only interested in what helps or hinders us, ourselves: potential collaborators or potential competitors.

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  • bbleeker

    @mbk: “people will actually resent hard working rags to riches types more” – I’ve read somewhere that that depends on how old you are. Younger people will find those stories inspiring (“Hey, maybe I could do that too”), older people will find them depressing (“It’s too late for me now”).

  • http://www.hopeanon.typepad.com Hopefully Anonymous

    If I’m not part of the future, it seems arbitrary to me if it’s em clones of Steve Jobs, von neumann replicators, bezerker waste, or some kind of entropic end state. Prof. Hanson, I get the aesthetics of a future without either of us is salient and exciting to you -which adds to my general sense of doom.

  • Abelard Lindsey

    If today’s wealth is mostly self-made, as opposed to the inherited wealth of yesteryear, does that not imply that upward mobility is real? Afterall, if upward mobility did not exist, how would it be possible that so much of today’s wealth be self-made?

    This is the fundamental reason why I thought the Freeland article was so full of it.

  • syllogism

    But how true are those assertions at the top of the article? Do you have statistics that show:

    * Social mobility comparison between countries with low and high taxation;
    * Distribution of parental incomes for the super-rich;
    * How many super-rich are philanthropic (distinguishing low-utility philanthropy such as endowments to the arts from strategically high-utility philanthropy such as the Gates foundation).

    I’ve seen some statistics that suggest that social mobility is higher in countries with good social services, because you need strong public education and ready university access system that also provides some robustness to adversity (e.g., one illness to a parent shouldn’t wreck the child’s chances). These are the conditions provided by “socialist” countries such as Australia, Denmark, Sweden, etc.

    I suggest that America is better at converting the rich into the super-rich than the rest of the world, but is not better at turning the poor into the rich than other OECD countries.

    My theory is that America creates super-rich due to lower regulation. Regulation is potentially beneficial in moving the economy out of prisoner’s dilemmas and making externalities count, but it’s also easy to have regulation hurt more than it helps. So America is less robust for the lack of risk averse regulation found elsewhere, but also benefits in important ways.

  • Hosni Mubarak 2045

    I am addressing the uploads of Egypt today in Tahrir Square and across the country. I am addressing you all from the heart, the original’s dialogue with his copies…

  • sabril

    wealth is far. poverty is near.

  • josh

    justice =/ fairness

  • http://www.gwern.net/ gwern

    This arguments seems like a pretty good one to prove that modern elites are less worthy of expropriation than past elites, which is an interesting argument to make.

    On the other hand, you seem to regard this as an argument that they are not worthy of expropriation at all (‘We aren’t obviously justified in taking their wealth, however convenient that might be, and they might manage to avoid such takings via international competition to attract them.’), which doesn’t follow from these elites being better than past elites.

    Proving they are less worth of expropriation is not the same thing as proving they are not worthy of expropriation at all. (Not a few above comments are implicitly making this comment – ‘yes, they’re not so bad but they’re still bad enough; witness X or Y’.)

  • richard silliker

    As my good buddy Al (Einstien) says, “all there is in the universe is work”.

    In regard to the people who find themselves working 70 hrs. a week. That is what it takes to keep the surrealism together in order to shape the value.

    As to the question if hedge funds create value. The answer is that they DO NOT in any way. What they do is build a container that takes value away from others.

    • http://don.geddis.org/ Don Geddis

      Do you have any supporting data or arguments for your strong assertion about hedge funds?

      • richard silliker

        show me the lever or mechanism that creates any value.

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  • http:/juridicalcoherence.blogspot.com Stephen R. Diamond

    Someone’s got to be blind not to see that the reason wealth has concentrated at the top is the decline of labor unions. So, if envy is what it takes for workers to take back the wealth they create, let’s have more envy.

  • Dave

    No one would write an article saying that things are going relatively well,even though much data she sites says they are. She also plays down the fact that the rich pay a vast percentage of income taxes and their businesses pay a lot of taxes. Theses taxes pay for the public infrastructure and entitlements that many of us enjoy. We also get to buy the goodies these rich people produce. Yet the sky is falling. People are unequal. Yawn.

  • DK

    “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,”

    From my perspective as an American, this particular overlord doesn’t sound very worthy to me.

    • Proper Dave

      LOL, if the US Government has its population’s interests at heart, there will apparently be drone strikes on Davos. That there is not should tell you allot :). Also what about the “rising tides lift all boats” mantra?

      I think Robin doesn’t know the characteristics of some of these “elites”. Some of them is definetly not very nice or very “worthy”.

  • http://xenophrenia.blogspot.com/ Xenophrenia

    I’ve just one quote to all of this ‘rich people work so very hard’ …

    “When a man tells you that he got rich through hard work, ask him whose.”-Don Marquis

  • richard silliker

    Question?

    Can anyone here draw a parallel between Hedge Funds and the actions of the castle owners on the Rhine. The time period I am unsure of…..say 1400 AD

  • Mitchell Porter

    Data on the stratification of US wealth, rendered in simple diagrams:

    http://www.zerohedge.com/article/visual-reminder-us-social-stratification

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  • Larry

    Regarding your idea that other countries might compete rich people to move to them (they ‘might manage to avoid such takings via international competition to attract them “), the US has gone a long way toward preventing this by enacting a law to tax people with high net worth who give up their citizenship as if they were still citizens for ten years after they give up their citizenship.

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