Show HN: The bottom 50% of U.S. households are short after essentials (BLS data)(whats-left-over.pages.dev) |
Show HN: The bottom 50% of U.S. households are short after essentials (BLS data)(whats-left-over.pages.dev) |
Additionally we also have to recall that the quintile's populations are not necessarily static. to illustrate the idea: members of a quintile may join an adjacent quintile in the next time period. That is, bottom members may move up, top members may move down, mid members may move either way. To the extent their movements are justified by their actions/choices is to the extent we have a fair society.
That is, if people are getting rich from sources not related to taking right actions, or people are taking good actions and getting poorer -- then we have an unjust society.
This can both apply to Rich people abusing their power to get rich, but also with poor people abusing their democratic powers to unjustly take from others that which they have not earned.
The issue is that income/wealth compounds over time. If people in the bottom 40% have very little to invest, they have nothing that compounds. They dont even have an opportunity to risk anything, or make a better decision.
The prices of the essentials are largely out of any individual's control. So any lack of ability to save / invest beyond spending on those is also out of their control. It's a vicious cycle, where excess wealth compounds, and income needed to exist dries up.
Also the rich often see a larger return to their investments than poor people, so having wealth seems to aide in your ability to make more money. Exactly the sort of thing that you implied was unjust.
And your other points about mobility I agree with and are addressed in notes on the site.
The prices of true essentials are exceedingly small. Essential is something like sharing a room with someone, eating rice beans frozen veg mix (ie very inexpensively), wearing clothes from thrift stores, exercising outside and using a library card, medicaid. Everything beyond that is, technically, optional.
Having wealth aiding the overall return doesn't negate my point. Using wealth to get an unjust return does. An example of a better return would be hiring a financial advisor that (somehow) creates better returns using smarter allocations. An example of an unjust return would be creating a monopoly, buying a politician, or extracting profits from unpriced externalities (pollution and bailouts to name a couple). (These do happen in the USA, and I'm all for ending them!)
There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating).
I do, however, like Scott Galloway's point that we need to find new ways to get the rich to spend their money, we need the poor to start 10000 businesses that gratify the rich and extract their money. Right now they're mostly accumulating it and bidding up investible assets (eg look athe P/E multiple of the S&P 500) .
The page says that at least 50% of all people are not, so this seems like a very moot question until such a time as that changes.
And if it ever does change, we can then move on to the issue that "fairness" only exists to the extent that one is willing to acknowledge that having money fundamentally and inherently leads to having more money due to the nature of compounding growth, and the more money you have the more money you get by no real action at all.
You talk about "earned", but how exactly have I "earned" the compounding growth on my holdings? I certainly don't work for it. It just flows in for free as the world population continues to grow and produce. I can do literally nothing at all but drink margaritas on the beach and my assets will grow more per year than an average person ever makes by labor. Would you say that I "earn" it? I call it "getting" not "earning". There's nothing fair about it.
> but also with poor people abusing their democratic powers to unjustly take from others that which they have not earned
How would they abuse their democratic powers? It's their decision to vote either way. So who says that's unjust? Certainly it's not abusing their democratic powers.
Abusing of power happens on the other end of the spectrum, especially in the US thanks to citizens united.... Surely all those super PAC dollars don't buy any influence... As a result, the voice of a single rich person might be stronger than a whole quintile of the population. So chances are that they are unjustly given things that aren't theirs (i.e. advantageous contracts, laws that help them etcetera).
Fully agree Citizen's united has resulted in legalized corruption. But 2 wrongs do not make a right, ethically.
There's nothing unjust about a rich person getting superior results through access to better resources though. Eg hiring a better tax accountant or financial advisor.
If you start a perfectly fair society where everyone has exactly the same amount of money and you play a game were people interact and with equal random chance (i.e. each exchange you get a 50/50 chance of earning 1 buck or losing one), after a few exchanges you get a Boltzmann-Gibbs (exponential) distribution.
If each agent wealth chance of increasing depends on what they already have, you get a pareto distribution.
It's extremely hard to avoid at large scale.
I assume you mean "do not justify" and the bottom line is that this type of thinking is fundamentally erroneous.
We agree to live in a society of this construction not so everyone can pull themselves up by their bootstraps (asinine conception that misunderstands structural vs individual agency) but because it is of collective benefit.
If it it not of collective benefit, the social agreement needs to be renegotiated.
There's no chance everyone will agree to live in an arrangement where a minority of the population accrues all of the benefit because they go out of their way to execute financial scams, but I'm willing to litigate that publicly, which we're doing here.
My whole point is that to the extent accumulated wealth is happening by playing by the rules, there is no injustice in accumulating wealth, nor in accumulating more than those who did not do the actions which relate to wealth building. (And there's a randomness factor involved so it mostly has to be taken on average, on average starting a business is profitable, but also lots of them fail)
If I have enough money, I can buy a lot of businesses (or be in a controlling position) and run them poorly (read: efficently) and as wealth concentrates the capital for a new entrant to compete becomes scarcer and regulation on new competition mysteriously materializes, and without any new competition I can raise prices and no one can really do anything.
And now I have more money to do this more times in more places, and wealth is more concentrated, and legislation just seems to go my way more and so on.
That vague playbook is being applied to just about everything today.
Spirit Airlines went through two bankruptcies, and the people who lead the first one were liquidating it while it was still running to pay themselves back for the first one, and turning debt they had forfeited for equity back into debt to increase how much they'd take out of the remains.
I mean you can't even escape that playbook in childrens sports! That playbook is being run into making children sports league a profit squeezing cartel as we speak.
It's just such a simple playbook that if we really go all in on the idea that anything that's technically legal to make money will be allowed, then having more money and basic "high agency" mindset will lead to making money in increasingly perverse ways.
To me the end game seems to be a race between authoritarianism (will these high-agency wealthy types just be able to keep the poorer class under lock and key with TikTok feeds to placate) and collapse (maybe they don't get the poor under deep enough control before the poor realize they've been given a deal that justifies trying to raze it all and start again)(edit: or maybe better framing, they realize they collectively have no meaningful part in the wealth and raze it)
If the kids sports is a profit seeking cartel that you do not agree with, then do not give them your money. If enough customers do that they will not be profitable and will cease to exist once they can no longer extract investor capital from the very class this post seems to dislike.
Really roughly speaking the American consumer needs to stop being so complacent and naive, the American voter needs to get a good bit more politically active, and people need to stop choosing comfort over action. the average 2.5 hrs a day on social media could easily be spent to make their lives much better.
Yes it matters very significantly. Rising income/wealth inequality causes all sorts of social problems. It's corrosive to society. This has been studied pretty significantly. The kicker is that it even slows economic growth! So all the classic libertarian arguments about incentives to work and marginal utility of labor turn out to just.. not be supported by the data at all.
Which means there are no good reasons to promote income inequality whatsoever (that are supported by data). It persists purely for cultural reasons and presumably very effective propaganda.
That's about twice as much as the lower 50% of the population (2% of the world's wealth)... a class consisting of 4 billion people.
Why do people pretend "right actions" has anything to do with it. "Right actions" aren't even possible at that scale of difference. How does "earning" even make sense at these proportions? you think 3500 people are doing that much more than 4 billion others?
The P/E Ratio of the S&P 500 is at a historic high level. Interpreted another way, there rarely is a better time to create a profitable business -- You can get paid $30ish dollars per annual dollar of profit you create.
On the flip side, it's never been so expensive to be an investor of capital. In order to get a return you have to wait 30 years (or 10 if you take growth rates into account), just to see your initial investment. An expensive stock market makes current consumption more rational for investors.
If they truly are poor, they’re surely living YOLO.
In other words, yes, they may pay 5x the price for a meal in an amusement park that they visit once a year. That does not mean they are willing to pay anything close to that for a meal every week or every day.
Like when I was poor living in a trailer park with my parents going out to eat at Olive Garden or Red Lobster was a special occasion. We got to go to the “nice” restaurant and splurge. I doubt anyone who frequents HN from the US considers those to be “nice” or “high quality” restaurants. To some on HN Disney World is or could be an annual trip. For most others it’s a major event. I’m sure a significant amount of debt is accrued in a many cases to make their vacation a reality.
If the code is written by an LLM, then it can't be copyrighted, and a license can't be applied.
The other way round is much much worse - imagine if rich people don't invest but rather just consume. It _takes_ away money from poor instead of building more wealth for everyone.
So the overall point being made here is not that true
Now an even better outcome would be that rich people didn't get rich in the first place. This would mean lower inequality, which in the data correlates with higher growth. This is demonstrated convincingly in Piketty's work.
Overall, if youw ant to maximize growth for the poor (or really, growth for all of society at an equal pace, say), then you would want to dramatically raise taxes on rich people and eliminate the class entirely (IE, no more rich people). That would massively stimulate growth and of course skyrocket the wealth of currently poor people.
It's a bit sad that the solution is so simple and has no downsides.
The median household income is $83,730: https://fred.stlouisfed.org/series/MEHOINUSA646N
The average for the bottom 50% of households is $30,000-something. Would take too much effort to figure out the exact figure for a comment, but still way higher what this site says, and I still feel like this is more effort than went into this misinformation site.
Its own linked source says that for 2022 the bottom quintile makes $26.2k before taxes and transfers and $44.8k after, while this site says $17.2k after. No wonder it's coming up with such wacky conclusions like saying a majority of America is going into debt while only buying the bare essentials and nothing else. If you use the correct income numbers, even the bottom quintile averages out to having $16k extra after essentials.
If a base rate that the society agrees on is e.g. n %, then, in my opinion, everyone should pay that n %. But in reality the poor people pay n % because they have no time to even think about optimizing it. As they often work around the clock to make ends meet. While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %. And then there are super rich, some of whom, such as Donald Trump, pay almost no taxes at all.
This is, in my opinion, wrong and significantly contributes to wealth inequality. And therefore I believe that it needs fixing.
Of course the other problem with the projection is that BLS average expenses aren’t super accurate to project what people are spending on at those income percentiles :)
I just thought it was a better illustration, easier for the average person to comprehend without those.
I didnt mean to do any advocating. Just provided the info because I wanted to see how it'd affect things.
Source for this claim? All the claims I've seen involve treating unrealized gains as income, which is questionable methodology. For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?
For example this article: https://www.propublica.org/article/billionaires-net-investme...
The specific mechanism may vary by country. It often involves personal service companies through which the people are paid rather than being paid directly as employees. This usually means that they pay significantly less social insurance and health insurance than what they would have paid if they were regular employees.
To clarify, I am using the term taxes in a very generic way where it covers not only the income taxes but also all kinds of fees collectable by the government. Including social insurance and health insurance.
Yes, though it requires some intelligent accounting. For instance, the ability for tax payers to defer certain obligations. However, the principle of "all income should be treated equal" is a necessary prerequisite to having a fair society. As it currently stands, the richest people don't pay much tax at all. Effective taxes on the billionaire class are like 8%-24%, less to way way less than the median tax payer.
IMO it's helpful to think this through to the post-wealth-tax equilibrium. In such a world, financial services will adapt and develop mechanisms for handling these seemingly tricky tax situations. IMO focusing on the minutia of how this is going to work is not useful in evaluating the macro effects of the policy.
Power asymmetry for thee, not me
Society isn't some abstract collection of rules that must be followed. Those rules are actively negotiated for majority benefit, and we agree that each person has an equal voice in the west.
If that collection of rules is failing, it's considered unjust and something to amend.
"That's just smart" because someone found a loophole or did a scam to accrue wealth isn't an acceptable negotiated state of affairs to most people.
This is a presumed goal/value. A more conservative take is that the rules are actively enforced based on values or justice.
A value could be that we do not support ill gotten gains, to the extent that the majority votes for free things paid for by the minority it could "benefit the majority" and still violate the value
I've actually gone through the rolodex of all known moral systems and none of them endorse the conception that a minority, who just earned it rightfully, is allowed to accrue outsize resources while other groups do not.
So, again; as I said earlier, I open the floor for discussion. This is the moral certainty that the process by which we adjudicate the social order will not be favorable to an unjust conception. The simple light of day ends most of these discussions.
You are entering into a circular argument:
> My whole point is that to the extent accumulated wealth is happening by playing by the rules, there is no injustice in accumulating wealth, nor in accumulating more than those who did not do the actions which relate to wealth building
Ill gotten gains would need to be defined as "not playing by the rules" but you already prescribed that the rules supersede that so there's no way to potentially redefine that such accumulation was ill gotten. Your argumentation makes us stuck in the status quo which is visibly not working for the benefit of the majority, which is objectively true by inspecting the discrepancies between the increase of productivity vs increase of wealth between different cohorts of society.
Isn't an ill gotten gain to extract a disproportionate amount from the gains of productivity? One can still be filthy rich in a society that distributed it more evenly, not equally but at least more evenly. In Western societies this distribution has been severely skewed to the top in the past 40 years, why is that the people labouring with increased productivity do not see the fruits from it? Isn't that an injustice, unfairness, etc.?
Please, tell us all about how they deserve preferential treatment and its right that shit always flows downhill, never uphill, that for those to whom much has been given, less will be expected
Fair tax is either Flat tax (We all pay 10% of our income) and user pays (You want infrastructure for your business? then pay for it).
The US Copyright Office has stated such: https://www.copyright.gov/ai/Copyright-and-Artificial-Intell...
The Council of the EU has also stated such AFAIK.
but let's not pretend that "right" has anything to do with it... that's like the scale of a single bacterium doing the right thing to turn itself into a school bus
While in reality, where you take into account the statistics of business success vs failures, this is one of the riskiest things a person can do if you don't have any access to a safety net in the very likely scenario your business will fail.
A business can fail for many reasons completely out of control from an individual's agency, a person who needs to provide for a family might not have the risk appetite for plunging their families' lives into that, it's impossible for everyone in a society to become a successful business owner. You are advocating for an impossible situation, and by negating that a majority of society won't have the means to access the successful-business-owner class while gatekeeping the fruits a society collectively built to only that class you are being inherently unjust.
No successful business can exist in a vacuum, the better educated a society is the better chances a business owner can find skilled people to build successful products, the better chances there are for these workers to innovate, and create a disproportionate return to investments.
You completely left out that these business are only possible because of the society that supports them, it's an extremely extractivist mindset which I deeply challenge you to think deeper about...
I'm not saying go take $100K loan and buy a warehouse of t-shirts hoping they sell.
I'm saying use your time to create products and services which you sell and keep 100% of your delivered value (assuming you price well), rather than sharing the profit margin with your bosses hierarchy. From there you can begin to employ others, potentially simultaneously funding others' escape from the rat race too.
This person is a father of two, works two jobs at odd shifts but has to refuse some shifts because his wife also works part-time, 1-2 days a week he has to take care of the kids. Childcare is expensive and they can't afford it, they get some help from friends and family sometimes but can't rely on it.
Give me your best business idea that is worth the risk of time and money invested for this family.
In a similar way, I would not consider AI to be the "author" of the output they produce. Rather, the person prompting it should be considered the author, in my opinion.
I do think he should pay more absolute tax than his secretary... 20% of billions is lots more than 20% of $100k .
What I'm talking about is progressive tax rates where the % goes up the more you make. I do not think Warren buffet should pay 25% of billions just because his income has more zeros than his secretary's .
To the extent that people might say "Yeah but he uses more roads than the rest of us!", IMO that should be covered by user pays to tie the cost to the user. Gas tax is one such way this can be done. Business taxes are a bit crude but also could work.
"There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating)."
It's not the wealth that is evil/wrong/unjust/immoral. It's the use of it to corrupt power.
Power accumulation is inherently unjust and immoral, it corrupts, the utopic benevolent benefactor is extremely rare in real life because power accumulation begets power, those who have it do not want to lose it.
Also wealth accumulation is inherently unjust even in your framework of meritocracy, its accumulation and compounding nature is not meritocratic.
Most new businesses fail. Then the poor are even deeper in the debt hole. Some people can/should start businesses, but a lot of people are just not entrepreneurs - I include myself in that group. I realize that there must be ways to extract money from this economy - lots of people are doing it - but I don't think any of my ideas would end up doing that (they're generally too niche), more likely I'd end up losing a bunch of money trying to do that.
Gen-z seems to get this well, a lot of them are starting micro businesses where with very little capital besides their own labor and computer/phone they already own.
Getting a side hustle to $2000 a month can be the difference between trajectory to bankruptcy to trajectory to millionaire.
It's in that environment they're learning the skills that take them to the next level, when leverage/debt is something their equipped to dabble in.
For your case, if you do want to be an entrepreneur, perhaps read the book $100 startup? Its 14 years old at this point...
Please spend even 1-2 minutes on the https://livingwage.mit.edu/ for example this calculation for Philadelphia: https://livingwage.mit.edu/metros/37980
> sharing a room with someone
> medicaid
in the top 10 CoL metros one can share a room with another person for about $600 a month.
I note that on your links the poverty wage is pretty close to the minimum wage. I'd contend that since contraceptives are widely available, including abortion in many places (or charities helping people get them in other states), we should expect the bottom quintile to not be adding to their expenses.
You think that this high a percentage of people should expect to be sharing a room not by choice, for the rest of their lives?
Employee, Business owner, Self employed, Investor.
It sounds like you have opted out of one quadrant, but there are still 3 left for you :)
I do think people in the bottom quintile should not have kids (until they remedy their income issues), I do think people in the bottom quintile should take more serious measures to both preserve their cash flow, and to improve their income.
I do think the bottom quintile should not be a "for life" sentence, and to the extent that I'm correct I've shared some paths for them to escape that.
It's definitely worth addressing that the US could use additional social mobility and mixing, but I think we're far from "people cannot move classes if they want to" as well.
I have some terrible news for you about birth rates and what this would do to society.
>>until they remedy their income issues I'd like you to define "work", "necessary work for society to function", "low-skill jobs" and "value" (as it pertains to a human life). I have a feeling we have very different definitions and that leads us to very different conclusions about what people can do.
>>I think we're far from "people cannot move classes if they want to" as well. Probably because you're not a social scientist/sociologist! We're talking about the bottom quintile, and it's very hard to become part of the upper crust, and it's very hard to leave American poverty[1,2]. But yea, some guy working a blue collar job can probably have kids that have white collar jobs.
1- https://harris.uchicago.edu/news-events/news/has-class-mobil... 2- https://web.archive.org/web/20091003184000/http://www.americ...
Skimming through your posts in this conversation, I really don't feel like you have.
And I think one part of the problem is you don't seem to have acknowledged that, for the most part, people in this quintile do not have the tools to move out of it by choice, and this is increasingly true as inequality grows (so, for instance, if you were lucky enough—and I do mean "lucky"—to be or know someone who made it out 20, 30, 40 years ago, you cannot assume that similar options remain available today).
When households are already spending literally every penny that comes in to afford rent, food, clothing, heat, medical care...which of those gets sacrificed on the off-chance that it might, some day, be enough to bootstrap themselves up out of that bottom quintile?
No. That is not a realistic or compassionate way to view the situation at all.
The bottom quintile is where many people will be their entire lives, and that is not going to change, so we as a society must ensure that it is a "place" where people can live healthy, comfortable lives, rather than a constantly-stressed squalid scramble.