Jan

29

 1. Average returns on equities are, to pick a number at random, 7%. But if business was untaxed that might become 10% and if sales taxes disappeared and fell to the bottom line, that might become 14%. Over fifty years, the difference reinvested would be over 20x more capital and we could all take things easy.

2. The British government likes to take "payments on account" from its non-PAYE taxpayers, thus taking prepayments on tax due before the year end. With a 2% cost of capital and vast working capital resources, this seems somewhat ungracious behaviour. Unless perhaps it has been noted by the government that most small businesses fail under a vast burden of taxes, domestic and European regulations, import and export duties, etc. and like a retail forex broker who well knows all his Ma & Pa clients will eventually liquidate under monstrous vig, in all cases novates client collateral as early as possible.

3. It has been noted that a handful of rich people control as much wealth as billions of poor do. But most of the world's poorest people have no savings at all, and thus if you summate a partial set with its values chosen to be very close to zero and compare it to another set who's numbers are not, you will obviously see a large inequality. You could just as validly say that a regular US citizen with $1,000 of savings has a thousand times as much wealth as someone in the Congo who is down to his last dollar, and present this too as being fetid and greedy.

4. "The 1%'s" per capita wealth is calculated as a capitalised mean sum, with the average net worth of "the 1%" in the US being around $15-20m. But every hundredth person you meet does not have a balance sheet close to that, as the mean and median are very different. Thus the media creates a perception of "the 1%'s" situation that is totally unrelated to reality.

5. It is a great shame that there are so many poor in the world. But what have the free markets wrought in this respect? By the power law of the distribution of wealth, just Bill Gates' and Warren Buffett's wealth alone must represent a significant percentage of "the 1%s" stash. It so happens that these two individuals have donated, or earmarked for the future, close to 100% of their accrued savings to philanthropic causes. Bill Gates is one of the most accomplished businessmen on the planet and he has thrown his labour, intellect and organisational skills in for free. In contrast, had they been taxed to the utmost on the way, might it be reasonable to expect that their funds would have dissipated across a variety of government departments of dubious efficiency?

7. Indeed, if "the 1%" control around $20tr of the USA's $60tr of wealth, and Buffett and Gates are packing $150bn between them, that's already 0.75% of the dough being hotly debated that is in fact earmarked for charitable purposes.

8. If one continued this calculation all the way down the wealth tree, excluding capital that's either pledged for philanthropic purposes or being reinvested in fixed capital in order to create better living standards for the population (something consistently hidden in the hedonic adaptation of inflation statistics), what percentage of their wealth do the megarich actually consume?

9. Are the megarich not in fact spending most of their lives competing for their table ranking on the Forbes.com website, each download of which is worth about 0.001 cents? Should we not be grateful for this self-deception on their and their no-doubt heavily plastic-surgeried wives and girlfriends behalves?

10. These notes may or may not have been sponsored by the Koch Brothers.

Gary Rogan writes:

There seem to be at least two aspects to the "growing wealth disparity": (a) To what degree the "elite" controls new wealth creation through illicit/illegal/immoral means (b) To what degree the highly intelligent/educated/those of "proper" disposition are able to earn more than the rest simply because they are better suited to thrive in today's economy. Usually, the vast majority of those who talk about this subject of the "growing inequality" have an agenda to capitalize on wealth redistribution rhetoric and want to attribute wealth inequality to the simple existence of capitalism, and have no intention to solve "the problem" nor even care about it otherwise. 


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