The Incredible Shrinking Incomes of Young Americans

[Martinus]

I can see why the banks who own the Congress would want to make sure dad's house gets sold and Jr needs to get a mortgage, but I see no reason society as a whole wouldn't want Jr to have it debt-free. We all benefit from the aggregate of having less debt and more disposable income then.

That's right. The problem is in fact that most people are thinking about these things in exactly the same terms as you do, which is both harmful and misleading. This is because the real question is when you reach the point when further accumulation of capital in the hands of one person or family ceases to be beneficial. Because I am not convinced we all benefit when Koch Jr. gets, debt-free, the same amount of capital as ten millions of mortgage-paying people.

And, as Picketty has amply demonstrated, with no intervention of the state, capital ends up being accumulated in the hands of fewer and fewer.

[MadImmortalMan]

I can see why the banks who own the Congress would want to make sure dad's house gets sold and Jr needs to get a mortgage, but I see no reason society as a whole wouldn't want Jr to have it debt-free. We all benefit from the aggregate of having less debt and more disposable income then.

That's right. The problem is in fact that most people are thinking about these things in exactly the same terms as you do, which is both harmful and misleading. This is because the real question is when you reach the point when further accumulation of capital in the hands of one person or family ceases to be beneficial. Because I am not convinced we all benefit when Koch Jr. gets, debt-free, the same amount of capital as ten millions of mortgage-paying people.

And, as Picketty has amply demonstrated, with no intervention of the state, capital ends up being accumulated in the hands of fewer and fewer.

So tax it when it gets that big. No problem.

[Martinus]

I can see why the banks who own the Congress would want to make sure dad's house gets sold and Jr needs to get a mortgage, but I see no reason society as a whole wouldn't want Jr to have it debt-free. We all benefit from the aggregate of having less debt and more disposable income then.

That's right. The problem is in fact that most people are thinking about these things in exactly the same terms as you do, which is both harmful and misleading. This is because the real question is when you reach the point when further accumulation of capital in the hands of one person or family ceases to be beneficial. Because I am not convinced we all benefit when Koch Jr. gets, debt-free, the same amount of capital as ten millions of mortgage-paying people.

And, as Picketty has amply demonstrated, with no intervention of the state, capital ends up being accumulated in the hands of fewer and fewer.

So tax it when it gets that big. No problem.

Hasn't this been my point all along? 

[Admiral Yi]

And, as Picketty has amply demonstrated, with no intervention of the state, capital ends up being accumulated in the hands of fewer and fewer.

You said you read his book, didn't you? 

The above fact certainly doesn't follow from his often mentioned finding that historically the return on capital exceeds GDP growth, and it certainly doesn't match up with observation of the world around us.

[MadImmortalMan]

State intervention doesn't seem to be stopping the accumulation, rather the opposite. 

[Jacob]

State intervention doesn't seem to be stopping the accumulation, rather the opposite. 

Wouldn't it rather depend on the type and intensity of the state intervention?

[Valmy]

I don't know. In Russia they murdered everybody middle class and above and when the Soviet Union collapsed they quickly had the most billionaires in the world.

[Martinus]

And, as Picketty has amply demonstrated, with no intervention of the state, capital ends up being accumulated in the hands of fewer and fewer.

You said you read his book, didn't you? 

The above fact certainly doesn't follow from his often mentioned finding that historically the return on capital exceeds GDP growth, and it certainly doesn't match up with observation of the world around us.

Err, yes it follows directly from that. The fact that the return on capital exceeds GDP growth means that the return on capital will always be better than return on work (as GPD = capital and work growth). It means that wealth will always, in the absence of state intervention, move from those who work to those who own capital - thus making it concentrate in fewer and fewer hands. 

[Admiral Yi]

Err, yes it follows directly from that. The fact that the return on capital exceeds GDP growth means that the return on capital will always be better than return on work (as GPD = capital and work growth). It means that wealth will always, in the absence of state intervention, move from those who work to those who own capital - thus making it concentrate in fewer and fewer hands. 

No it doesn't.  It means that those who accumulate capital will see their incomes grow faster than those who don't accumulate capital.  It says nothing at all about the number of people who accumulate capital.

[MadImmortalMan]

It means that wealth will always, in the absence of state intervention, move from those who work to those who own capital - thus making it concentrate in fewer and fewer hands.

I think making this a much bigger movement would be beneficial. Make it easier to own capital. Hard to accumulate insane amounts. It's already begun as a mass movement in retirement funds and such. But it's difficult to make your savings pay in such a low interest rate environment.

Instead the ultra rich have little new competition and public corporations just borrow cheap money to buy back stock and bump up their share prices without having to actually create anything.

[crazy canuck]

You can also leave it behind for your children and other people you care about to make their lives easier but you have shown you have no grasp of this concept

That's still deferred consumption. This is my point. And surely, unless your kids are disabled or minors when you die, they should be able to earn their living, rather than counting on daddy to support them from beyond the grave, no?

No its not.  The capital never has to be disturbed.

Thinking like yours is what got us into the mess we are in today. Let's hope Picketty's ideas will get us out of it.

You claim to have read Pickety's book but boy did you miss the point.  In an ideal world everyone would be able to save and grow their own capital.  It is not capital ownership disparity that he says is the problem.  It is income inequality and the fact that too many people cannot save never mind invest.  You don't address income inequality by having an asset tax.  You address income inequality by progressively taxing income - from all sources.

[crazy canuck]

Err, yes it follows directly from that. The fact that the return on capital exceeds GDP growth means that the return on capital will always be better than return on work (as GPD = capital and work growth). It means that wealth will always, in the absence of state intervention, move from those who work to those who own capital - thus making it concentrate in fewer and fewer hands. 

No it doesn't.  It means that those who accumulate capital will see their incomes grow faster than those who don't accumulate capital.  It says nothing at all about the number of people who accumulate capital.

I agree with the Yi on this point.  I am beginning to now understand why people mistook Pickety to be a communist when the likes of Marti begin to characterize his work in these terms.

[MadImmortalMan]

One thing I think is a problem is when you have unproductive grazing land going for 10k per acre. That's just stupid. We'll all be eating Chinese cloned warehouse meat at that rate.

Maybe we should dump fifty million acres of public land on the market at rock-bottom rates.

[LaCroix]

Because I am not convinced we all benefit when Koch Jr. gets

koch jr might save the money, but koch the third or the fourth will waste it all

[Valmy]

Because I am not convinced we all benefit when Koch Jr. gets

koch jr might save the money, but koch the third or the fourth will waste it all

You mean boost the economy through consumption!