Capital in the Twenty-First Century

[skiballs]

sure it is.

Just cuz you cum into money don't get all smug about it.

[hutash]

To have a net worth of over a million dollars is not easy to come by at all.

sure it is.

I thought you just have to buy a house in California and then wait.

Yep, by this standard I am a millionaire, but to have any cash I would have to sell my house and move next to Blurred, (it just isn't worth it.)

[Buster Highmen]

88% of millionaires in America are first generation, and we have more than ever.

This is a meaningless and misrepresentative statistic. A meaningful statistic would include the total population and relative dollars.

See "Gini index".

Pretty much anywhere one looks with any degree of attention, one can find evidence that capital is the least distributed in America right now than ever before.

(edit) see http://www2.ucsc.edu/whorulesamerica/power/wealth.html for example.

[Sirshredalot]

To have a net worth of over a million dollars is not easy to come by at all.

You really need to take a look at your household savings rate. I'm in my early 30s and I don't think retirement at what I consider to be a middle class lifestyle will be possible for me without a net worth over 1 million in today's dollars.

[hutash]

The hookers and blow alone needed during retirement would eat up a million dollars in net worth in no time.

[XavierD]

Saving/investing 10-30% a year, while working hard and you should be able to get a million over the course of a career.

It helps if you are not an idiot, or binge spender. This however gets to my issue with Mankiw's response: People who save/accumulate wealth are generally more conservative in how the spend it. It also gets to my issue with Piketty's proposal; it discourages savings, and retirement planning. It would be possible to set it up so that lower income folks are less impacted, however I think a national consumption tax would be a better proposal.

[Buster Highmen]

Saving/investing 10-30% a year, while working hard and you should be able to get a million over the course of a career.

It helps if you are not an idiot, or binge spender. This however gets to my issue with Mankiw's response: People who save/accumulate wealth are generally more conservative in how the spend it. It also gets to my issue with Piketty's proposal; it discourages savings, and retirement planning. It would be possible to set it up so that lower income folks are less impacted, however I think a national consumption tax would be a better proposal.

So the current distribution of wealth is because everyone nowadays is a poor financial planner?

How does Piketty's proposal (not that I agree with it) discourage savings and retirement planning? It would seem that a higher tax rate would encourage even more planning and scrimping.

[PNWbrit]

everyone nowadays is a poor financial planner?

It sure helps the business model.

An awful lot of companies making an awful lot of money from the poorly informed individual retirement investors that we've been persuaded being is in our best interest.

[Sirshredalot]

So the current distribution of wealth is because everyone nowadays is a poor financial planner?

How does Piketty's proposal (not that I agree with it) discourage savings and retirement planning? It would seem that a higher tax rate would encourage even more planning and scrimping.

To be clear, the people with real money wouldn't bother wiping their asses with middle class retirement savings. The notion that you can get actual rich by today's standards through w2 income and prudent saving is laughable.

[Buster Highmen]

More cuntry wisdom: blame the chickens for the state of the coop.

[XavierD]

How does Piketty's proposal (not that I agree with it) discourage savings and retirement planning? It would seem that a higher tax rate would encourage even more planning and scrimping.

As I understand (from the NPR interview I linked) Piketty's proposal is a tax on wealth. You get taxed on what you own. So If you save 20,000 (as apposed to spending it on consumables) that is 20,000 more you are getting taxed on. If you save that 20,000 for another year, you get taxed on it again. If the tax rate is less then the interest earned or ROI on the saved/invested wealth, it becomes more prudent to spend the wealth.

I see the potential for this to help redistribute the wealth by encouraging the wealthy to spend more, a group that generally spends a lower proportion of their income, and this will increase economic activity. I still think an earned income tax credit, coupled with a consumption tax, would produce a more effective safety net, and increase in overall quality of life. This is coming from my personal perspective of what is important. I would prioritize increasing the overall quality of life of the poor over achieving a 'fair' income distribution. I don't see a need to 'punish' people for making a lot of money.

There is a key difference between the middle 80% deciding that the top 30% should pay more to help prop up the bottom 5-20% than the bottom 80% deciding the to 1% needs to pay for the bottom 50%.

[XavierD]

To be clear, the people with real money wouldn't bother wiping their asses with middle class retirement savings. The notion that you can get actual rich by today's standards through w2 income and prudent saving is laughable.

Obviously; however you can become more than comfortable, and live at a quality of life significantly higher (available healthcare, subsistence, technology) than the top 0.05% were living at 40 years ago.

[Buster Highmen]

As I understand (from the NPR interview I linked) Piketty's proposal is a tax on wealth. You get taxed on what you own. So If you save 20,000 (as apposed to spending it on consumables) that is 20,000 more you are getting taxed on. If you save that 20,000 for another year, you get taxed on it again. If the tax rate is less then the interest earned or ROI on the saved/invested wealth, it becomes more prudent to spend the wealth.

And anyone with a whit of sense can see that it just encourages more saving, not less. And Piketty acknowledges such a mechanism is a pipe dream and not really any solution.

I see the potential for this to help redistribute the wealth by encouraging the wealthy to spend more, a group that generally spends a lower proportion of their income, and this will increase economic activity. I still think an earned income tax credit, coupled with a consumption tax, would produce a more effective safety net, and increase in overall quality of life. This is coming from my personal perspective of what is important. I would prioritize increasing the overall quality of life of the poor over achieving a 'fair' income distribution. I don't see a need to 'punish' people for making a lot of money.

A consumption tax unfairly loads the poor, everyone knows that. I never understand this (punitive) tax hangup despite having been subject to enormous tax rates at various points.

There is a key difference between the middle 80% deciding that the top 30% should pay more to help prop up the bottom 5-20% than the bottom 80% deciding the to 1% needs to pay for the bottom 50%.

Your math is a little weak there buddy.

People seem to be focusing on Piketty's, like Marx's, solutions. I'm not partial to eithers solutions.

As for me, I think what's interesting is their identification of the problems like class warfare and the increasing financial gradient, the increasing inequality in wealth. You can blow blue in the face that it's not happening, but there's just too much data and argument to demonstrate a very sound theory that it is happening. You cannot capitalize your work like your parents did. Saving 10% for a single earner family income is a modern fantasy.

[Buster Highmen]

Obviously; however you can become more than comfortable, and live at a quality of life significantly higher (available healthcare, subsistence, technology) than the top 0.05% were living at 40 years ago.

98.7634227684 % of all statistic are made up at the moment.

[assman]

Capitalism has done pretty well by me. I think I'm sticking with it.

[Sirshredalot]

Obviously; however you can become more than comfortable, and live at a quality of life significantly higher (available healthcare, subsistence, technology) than the top 0.05% were living at 40 years ago.

Bullshit.

[Buster Highmen]

Another opera singer? mee meee me mee meee meee meeeeeeeeeeeeeeeeeeeeeeeeeeeeee!

[digitaldeath]

be sure to learn farming skills before the collapse

i plan to moonlight as a weapons trader

[Benny Profane]

Bullshit.

Christ, I'm not sure how you're defining rich, but a dual income couple earning well, saving 12% from a young age and living at their means would be doing pretty good at 60. Well within the top 5% of their age group. No first class and Ferraris, but, still.

[Buster Highmen]

Benny that's atrocious grammar. They would be doing "well".

It still doesn't shunt aside Piketty's major point: that the financial security of the middle class is taking a major dive. Remember the 60s when a single income could swing it all: house, college, vacation cabin, etc?

Now even floating the college for the kid is out of the question.

[XavierD]

Bullshit.

Really?
Most folks are walking around with computer in their pocket, that is capable of communicating with just about anyone in the world, and accessing huge qualities of information.
You can go to the grocery store and buy fresh fruit and vegetables any time of the year, relatively inexpensively. People of almost any income bracket can afford more calories than they need.
Most Americans have access to health care (pre ACA) for debilitating and terminal illnesses that were unavailable 40 years ago.
Most Americans are able to use jet travel to go see friends/family or new places on vacation.
it goes on and on.

[XavierD]

Now even floating the college for the kid is out of the question.

Is that due to a decrease in middle class financial security, or a rise in college tuition disproportionate to inflation driven by increases in demand for college, and availability of government backed loans?

[Buster Highmen]

Really?
Most folks are walking around with computer in their pocket, that is capable of communicating with just about anyone in the world, and accessing huge qualities of information.
You can go to the grocery store and buy fresh fruit and vegetables any time of the year, relatively inexpensively. People of almost any income bracket can afford more calories than they need.
Most Americans have access to health care (pre ACA) for debilitating and terminal illnesses that were unavailable 40 years ago.
Most Americans are able to use jet travel to go see friends/family or new places on vacation.
it goes on and on.

There were no pocket computers 40 years ago unless your count sliderulers and HP calculators.
Fresh fruits and veggies have been widely available since the 50s to everyone.
Levels of health care now weren't available 40 years ago to anyone.
I flew in a jet in the 60s.

So ?

[Buster Highmen]

Is that due to a decrease in middle class financial security, or a rise in college tuition disproportionate to inflation driven by increases in demand for college, and availability of government backed loans?

What's the difference?

[XavierD]

There were no pocket computers 40 years ago unless your count sliderulers and HP calculators.
Levels of health care now weren't available 40 years ago to anyone.

Exactly. Capitalism, with high rewards for investment and innovation, has progressed the quality of life for the average American to the point where people would not believe what we have access too now.

Had we implemented higher taxes on wealth and investment income 40 years would the middle 50% be living at a similar, higher, or lower quality of life then they do today?