Piketty was wrong: The Rich Get Poorer: The Myth of Dynastic Wealth

[dismal]

We are in a largely demand driven economy that is becoming more demand driven every year.

And yet when you say this there will be those on the Right, and at least one I've seen on this very board, that will read that statement and look at you with a confused look on their faces and ask you to prove that we have a demand driven economy like they've never heard of such a thing and such a thing is just ridiculous on the face of it.

No matter how many failed experiments we get in places like Kansas, Wisconsin and Louisiana they will not acknowledge even a little bit that their economic policies might be wrong and should be rethought.

btw, the rest of your post was great, as always, and a pleasure to read. I didn't quote anymore of it simply because what more could I say other than, "Well said!"

I'll spare you the strawmen:

WTF is a "demand driven economy"? How would you differentiate from other types of economies?

 

[ksen]

see?

also it's not a strawman if it's true

 

[dismal]

see?

also it's not a strawman if it's true

My comment is not exactly what you claimed someone here would say, but in any case there's no need to discuss your strawmen further as I have now give you a legitimate question upon which to demonstrate the obvious trueness of your point.

WTF is a "demand driven economy"? Be as specific as possible.

What are these other types of economies we apparently are now less like or have less of?

What specifically leads "smart people" like yourself to believe we are now more of a "demand driven economy" than we were in, say, 1983?

 

[coloradoatheist]

And yet when you say this there will be those on the Right, and at least one I've seen on this very board, that will read that statement and look at you with a confused look on their faces and ask you to prove that we have a demand driven economy like they've never heard of such a thing and such a thing is just ridiculous on the face of it.

No matter how many failed experiments we get in places like Kansas, Wisconsin and Louisiana they will not acknowledge even a little bit that their economic policies might be wrong and should be rethought.

btw, the rest of your post was great, as always, and a pleasure to read. I didn't quote anymore of it simply because what more could I say other than, "Well said!"

I'll spare you the strawmen:

WTF is a "demand driven economy"? How would you differentiate from other types of economies?

You should know that only recently people wanted to buy stuff

 

[arkirk]

Started reading this but stopped here:


Why must r exceeding g be true in any healthy economy?

He is defining "healthy economy for you." Actually there is a wide range of paths that accumulated wealth follows. Many of the worst robber barrons of the 19th and early 20th century embarked on careers of philanthropy. Axulus talks about brilliant genius but I feel that is just illusion and actually these giants of industry were more like parasites on society. One can accumulate wealth and that period is more the matter of one grabbing up the reigns of leadership on processes that were going to happen anyway. These geniuses were simply people who were well positioned to profit from technologies that were nascent at the time of their rise to power. They read the "r" and the "g" and saw a way to make "r" exceed "g" for themselves and became rich. Not genius, just willingness to do whatever it takes to make that so.

 

[Loren Pechtel]

Few of the top 1% were raised in families with below median incomes.

The wealth a person is born into or "given" in other ways heavily and positively impacts their future wealth, both assets and yearly income.

No surprise--you're not likely to make it into the top 1% without good financial habits. Since good financial habits generally translate into a better socioeconomic situation this is what you would expect--the ones coming from the bottom of the pile don't know how/don't have the willpower to make it to the top.

A major reason for the point above is that wealth generates wealth. The more wealth you have the more opportunities to gain more wealth, the greater the amount gained by each opportunity, and the less the amount of effort or skill required to yield those outcomes (e.g., simply writing a check when someone else tells you to in order to acquire a high return asset.

Read The Millionaire Next Door. While people come from a decent background few of them actually inherited any substantial amount. What they got from their parents is far more good attitudes rather than money.

 

[ronburgundy]

And yet when you say this there will be those on the Right, and at least one I've seen on this very board, that will read that statement and look at you with a confused look on their faces and ask you to prove that we have a demand driven economy like they've never heard of such a thing and such a thing is just ridiculous on the face of it.

No matter how many failed experiments we get in places like Kansas, Wisconsin and Louisiana they will not acknowledge even a little bit that their economic policies might be wrong and should be rethought.

btw, the rest of your post was great, as always, and a pleasure to read. I didn't quote anymore of it simply because what more could I say other than, "Well said!"

I'll spare you the strawmen:

WTF is a "demand driven economy"? How would you differentiate from other types of economies?

I am guessing that ksen is agreeing that all economies are demand driven and there is no other type of economy. Demand causally impacts supply much moreso and more directly than the reverse. If people desire Juice X, then this will cause people who create a supply of Juice X. But if someone creates a supply of Juice Y instead, this will not impact the desire for Juice Y, instead people will still desire Juice X and that demand will not be met.
I think ksen is trying to make the point that most conservative economic policies deny this basic fact of reality, such as any policy that seeks to increase wealth at the top by tax cuts or other means rather than directing more wealth toward the bottom. Supply-side economics ignores the fact that economies are demand-driven.
The fact that demand drives the economy implies that far more economic growth occurs if more wealth is directed toward the tens of millions of people who have massive demands they cannot meet due to lack of funds and who will immediately act upon those demand with every cent directed their way, thus growing the whole economy in a way that benefits the vast majority to a degree that giving more wealth to rich people whose strongest demands are already met cannot possible do.

 

[ksen]

 

[arkirk]

No surprise--you're not likely to make it into the top 1% without good financial habits. Since good financial habits generally translate into a better socioeconomic situation this is what you would expect--the ones coming from the bottom of the pile don't know how/don't have the willpower to make it to the top.

A major reason for the point above is that wealth generates wealth. The more wealth you have the more opportunities to gain more wealth, the greater the amount gained by each opportunity, and the less the amount of effort or skill required to yield those outcomes (e.g., simply writing a check when someone else tells you to in order to acquire a high return asset.

Read The Millionaire Next Door. While people come from a decent background few of them actually inherited any substantial amount. What they got from their parents is far more good attitudes rather than money.

We differ widely on just what constitutes a "good attitude."

 

[ksen]

Now that ron has answered you I'll go ahead play too:

see?

also it's not a strawman if it's true

My comment is not exactly what you claimed someone here would say, but in any case there's no need to discuss your strawmen further as I have now give you a legitimate question upon which to demonstrate the obvious trueness of your point.

WTF is a "demand driven economy"? Be as specific as possible.

1: People want to buy stuff, we'll call them C for Consumers
2: Other people make the stuff people want to buy, we'll call these P for Producers
3: C buys stuff from P
4: Profit!

What are these other types of economies we apparently are now less like or have less of?

There are no "other types of economies".

What specifically leads "smart people" like yourself to believe we are now more of a "demand driven economy" than we were in, say, 1983?

Nothing because smart people like me believe we've always been in a demand driven economy.

I'm wondering why other people, who are obviously smart as well, like to pretend demand in an economy isn't all that important.

 

[coloradoatheist]

Now that ron has answered you I'll go ahead play too:

My comment is not exactly what you claimed someone here would say, but in any case there's no need to discuss your strawmen further as I have now give you a legitimate question upon which to demonstrate the obvious trueness of your point.

WTF is a "demand driven economy"? Be as specific as possible.

1: People want to buy stuff, we'll call them C for Consumers
2: Other people make the stuff people want to buy, we'll call these P for Producers
3: C buys stuff from P
4: Profit!

What are these other types of economies we apparently are now less like or have less of?

There are no "other types of economies".

What specifically leads "smart people" like yourself to believe we are now more of a "demand driven economy" than we were in, say, 1983?

Nothing because smart people like me believe we've always been in a demand driven economy.

I'm wondering why other people, who are obviously smart as well, like to pretend demand in an economy isn't all that important.

And dismal can't speak more, but when people say demand, they really just mean money because how many males would have a demand to have a super model give them a daily massage?

 

[dismal]

I'll spare you the strawmen:

WTF is a "demand driven economy"? How would you differentiate from other types of economies?

I am guessing that ksen is agreeing that all economies are demand driven and there is no other type of economy.

Sorry, I am unable to reconcile "all economies are demand driven and there is no other type of economy" with "our economy is becoming increasingly demand driven" (which is supposedly some brilliant statement upon which we can all agree unless we are some sort of internet whackadoo.)

If "there is no other type of economy" how can we become increasingly the only type of economy there is?

 

[ksen]

That's because you're a hopeless pedant.

But I love ya anyways buddy! :hug:

 

[dismal]

1: People want to buy stuff, we'll call them C for Consumers
2: Other people make the stuff people want to buy, we'll call these P for Producers
3: C buys stuff from P
4: Profit!

And your argument is we are now more this than before? Based on what?

And in any case I'd change this to:

1: People want to consume stuff C we'll call them C for Consumers
2: One of the ways people try to get stuff to consume is making things people want to buy they can sell for profit, we'll call these P for Producers
3: If C is willing to buy at a given price and P is willing to sell at a given price C buys stuff from P
4: By this process limited resources are allocated to meet Consumer needs.

This is not a "Demand driven economy" this is a "market economy". It has both suppliers and demanders coming together at prices.

- - - Updated - - -

That's because you're a hopeless pedant.

But I love ya anyways buddy! :hug:

It's not pedantry to point out "we are in an increasingly demand driven economy" is meaningless drivel.

If you want to get away with spouting meaningless drivel and not being called on it become a middle school teacher or something.

 

[ksen]

And your argument is we are now more this than before? Based on what?

And in any case I'd change this to:

1: People want to consume stuff C we'll call them C for Consumers
2: One of the ways people try to get stuff to consume is making things people want to buy they can sell for profit, we'll call these P for Producers
3: If C is willing to buy at a given price and P is willing to sell at a given price C buys stuff from P
4: By this process limited resources are allocated to meet Consumer needs.

This is not a "Demand driven economy" this is a "market economy". It has both suppliers and demanders coming together at prices.

Uh huh, and it is the consumers that drive the economy. Their spending makes up the majority of the economic activity.

That's because you're a hopeless pedant.

But I love ya anyways buddy! :hug:

It's not pedantry to point out "we are in an increasingly demand driven economy" is meaningless drivel.

Well, since consumer spending as a percentage of GDP has gone from 62% in 1960 to 71% a couple of years ago then it is not meaningless drivel to say "we are in an increasingly demand driven economy."

 

[dismal]

Well, since consumer spending as a percentage of GDP has gone from 62% in 1960 to 71% a couple of years ago then it is not meaningless drivel to say "we are in an increasingly demand driven economy."

Yes, it is still meaningless drivel.

Assuming these facts are true one could accurately say: consumer spending is becoming an increasing share of the US GDP.

One can not say "we are increasingly in a demand driven economy". All of GDP is produced by someone. All of GDP is meeting someone's demand for something. GDP represents suppliers and demanders coming together at prices.

 

[ronburgundy]

No surprise--you're not likely to make it into the top 1% without good financial habits. Since good financial habits generally translate into a better socioeconomic situation this is what you would expect--the ones coming from the bottom of the pile don't know how/don't have the willpower to make it to the top.

It isn't a surprise because wealth determines the inheritance of countless factors that all causally determine future earnings.
"Good financial" habits are only a small part of it and they matter much more once you already have some amount of wealthy to make decisions about. The impact is multiply mediated and includes just the actual impact of wealth on creating future wealth. If I inherit 20k and you 100k and we make the same investment with a 500% return, then I now have 100k and you have 500k. We did the exact same thing and you did nothing to "earn" any more than me, and yet I earned only 80k and you earned 400k. Money makes money, thus small advantages become exponentially larger ones over time even without any differences in how those starting finances are used. Other causal pathways include the gift of superior education which has a lifetime of impacts that can never be "made up". Family stressors related to finances and health are other mediators, as are community stressors like crime.
Higher family income directly impacts all of these which impact the developing child in ways that make potential future earnings lower. Parental wealth has direct impacts even after the children leave home. Poorer parents have more health issues, plus living and dying arrangement issues that they have no money to cover and that the child must do and pay for themselves, reducing the time and the saving they have to invest toward future wealth.
Finally, there is inheritance of "social advantages", which include everything from your parents well-off friends doing favors for you (wealthy people including "self made" have stories full of these) as well as just simple inheritance of physical traits that give you advantages from race to being taller or more "attractive" which are all proven to cause financial advantages.

A major reason for the point above is that wealth generates wealth. The more wealth you have the more opportunities to gain more wealth, the greater the amount gained by each opportunity, and the less the amount of effort or skill required to yield those outcomes (e.g., simply writing a check when someone else tells you to in order to acquire a high return asset.

Read The Millionaire Next Door. While people come from a decent background few of them actually inherited any substantial amount. What they got from their parents is far more good attitudes rather than money.

Read actual science. Everything I describe above is scientifically supported to be related to wealth (some directly caused by it) and all it impacts future wealth as an adult. They inherit not just lump sums in a bank account, but countless other assets that are causally impacted by their parents wealth, some material and even physical traits that confer social advantages, but others in the form of better education, less environmental stress and worries, more people in positions to give favors, etc.. Plus they inherit siblings that are wealthier and all the advantages that brings. Plus, they inherit a safety net that allows them to risk long term payoff without worrying short-term losses that they know their family can cover.
Also, you are missing the main point that small amount of actual liquid $ inherited becomes an exponential advantage over time, even when the person does nothing any wiser or financially prudent.

 

[Togo]

One of the scenes I remember from my MBA was the discussion of the personal qualities needed to become an entrepreneur.

1) Money
Failing that,
2) Relatives with Money
Failing that
3) Willingness to save a large amount of your income, which means a high income
Failing that
4) You need to be realistic, you're not personally rich enough to be an entrepreneur.

I owe my large salary and comfortable lifestyle to my (expensive) education, and financing early on in life that allowed me to shop around for jobs that would improve my career, rather than pay the bills.