Comment by mcntsh 4 days ago
> Then the next question is why does wealth, in practically all industrious countries seem to distribute disproportionally and not uniformly?
It's simply because money is compoundable. The more money you have the more you can make, and the more you make means less other people have.
I think you have the right idea, if poorly worded. The economy is not a zero sum game, but the idea works when you apply it not on wealth but on wealth increase. That's more or less the famous r > g formula of Piketty: when the rate of return of capital is larger than the growth rate of the economy, wealth gets more concentrated. Its application has been disputed but the basic principle certainly applies in many situations.
There's a finite amount of money. There's not a finite amount of wealth.
Having lots of wealth does not mean other people have less. If that were the case, there'd be as much wealth today as there was 1000 years ago. Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
Not trying to argue, per se. I'm saying that you gave me a lot to think about.
> There's not a finite amount of wealth.
I think there is a finite amount of wealth, at any given time, same as "money". Money is a transactable medium to measure value, rather than as a type of good on its own. The medium can change region to region and over time.
Wealth is an aggregate of all valuables you possess, including expected gains. Wealth is also subjective, because of these properties. People agree on some approximations for the purposes of transactions with money.
> Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
Depends on perspective, I would say. When the value rises in a public company, even when it's just the expectation, you have people dumping their wealth (as money) into the company. So yes, it does for large public companies. While it does grant some rights, in a practical sense it's a hole you dump money into with the expectation that you can reach in and take out some amount in the future. I can understand this is what is envisioned, when people talk about wealth as zero sum. I don't agree, but I get what they are going at.
> If that were the case, there'd be as much wealth today as there was 1000 years ago.
Wealth is partially based on expectation. The growth in population fuels increases in wealth, because that's the part of the equation that is speculative.
But relative wealth is all that matters, when it comes to lifestyle. If I have $100K net worth, and I'm living in a city where the first standard deviation net worth range is $80K to $120K, then I'm living a pretty average lifestyle, can afford my groceries and entertainment, and feel middle class.
If I have a $200K net worth, and I'm living in a city where the range is $1M to $500M, then I'm pretty much living in poverty, even though I have "more wealth" than in scenario 1.
This is also why, although my absolute wealth today is hundreds or thousands of times more than a king in the middle ages, I'm not actually living like a king today.
It's also how gentrification works. You're living somewhere and all of a sudden a bunch of very wealthy people move in, raising the prices of everything. You're no more or less wealthy than before, but everything has become slightly worse.
Can everyone be rich enough to not be food insecure or medically insecure? I'd like to think so.
Can everyone be rich enough to not be in the bottom 20%? No, no matter how rich we become.
Can everyone be rich enough to have servants? No, unless you count machines as servants. But if you do, then I'm rich enough to have several.
There is not a finite about of wealth, but the wealthy are currently using their position to reduce the amount of wealth the average person has, by driving up prices of everyday requirements so that they can make more money.
It's not an issue that they are wealthy, it's that they are abusing that position to gain even more wealth at the expense of the rest of the population.
That there is more wealth now than in the past does not even remotely imply that there is infinite wealth.
> Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
This is a strawman. The ability of people to accumulate wealth is affected by every aspect of the economic system, including the means by which those companies are acquiring wealth.
Is compounding interest why Jeff Bezos is rich? Or is it because you get three Amazon deliveries a day?
No, he's rich because (1) he had first mover advantage (credit to him) (2) he has a good sense of how to run a business (3) he exploits a large number of people to his own benefit.
Isn't there also an effect like the second billion dollar being easier to get than the first? I mean all your points are good but the fact that the system allows you to leverage your wealth to increase it is probably the most important factor to get to $250B.
Absolutely, the more money you have the more risk you can take. That's fractions-of-a-martingale level money so you can probably chalk up a win before you lose it all. Musk uses the same playbook. Losing is for small fry.
Proverb from my granny to contemplate: the devil always craps on the larger heap.
Right, and the risk aspect is only a second order effect. The main effect applies even when you restrict yourself to low-risk investments: it's simply that the more you have, the more you can invest so the more you make on average. But yeah, higher risk tolerance means you can also aim for higher returns.
Don’t forget the giant investment from his parents.
Lots of people with great ideas, skills, and work ethic don’t have $250,000 lying around to invest.
His parents invested about $500,000 in today's money in their 50s. At that age, 10% of Americans have a financial net worth (excluding home equity) of over $2 million. People in America invest that kind of money in small businesses all the time. That’s on the low end of what it costs to open a Dunkin Donuts, and half of what it costs to open a McDonalds. The kids of the Indian guy who owns the Dunkin’ Donuts down the street aren’t exactly scions of wealth.
And Bezos's biological dad was a unicyclist, his mom got pregnant with him at 16 and later dropped out of college, and his stepdad was a Cuban refugee who got an education and became an engineer for Exxon. Going from zero to billionaire in two generations actually says something remarkable about our system.
Think about it another way. If the government doled out $500k to fund business ideas, do you think that investment would be available to kids of refugees? Of course not. There would be gatekeeping behind credentials and connections, and it would be open to a lot less than 10% of the population.
[1] In terms of birth lottery, having top 10% parents is like being born smart enough to get a 1290 on the SAT or having a 120 IQ. Not exactly rarified aid! https://research.collegeboard.org/reports/sat-suite/understa...
This reply has very strong "the average human does not eat 10 spiders a day; the average was thrown off by Spiders Georg who eats 10000 spiders a day" energy.
Amazon does not have an exceedingly high profit margin, and my understanding is that a lot of it comes from stuff like AWS, not Amazon deliveries - correct me if I'm wrong here. So I'm not sure that "three amazon deliveries a day" - if this is even common - is why that man is personally rich. Even if it were a big source of revenue, that would go into Amazon's coffers, not necessarily his directly.
Another way to look at this: Even if Amazon is wildly successful, does that mean Jeff Bezos specifically should become filthy rich as a result, instead of all its employees and investors? How should the gains from successful entrepreneurship be distributed?
> why that man is personally rich. Even if it were a big source of revenue, that would go into Amazon's coffers, not necessarily his directly.
Jeff Bezos owns 9% of Amazon. So 9% of the expected value of the money going "into Amazon's coffers" indefinitely into the future is counted as part of his current "wealth." It's not money under his mattress.
Is your argument that people shouldn't be allowed to own 9% of a company that they started?
People should not be allowed to accumulate capital beyond $X, yes. What natural law means they should? Society created the conditions for that person to be so successful; in fact, the person only had the minor part in that success. Once you reach $X, you get a certificate saying you won at life and society is really grateful, and society gets the rest of the rewards while they dedicate their life to philanthropy or torturing kittens or whatever it is they do as a hobby.
> Another way to look at this: Even if Amazon is wildly successful, does that mean Jeff Bezos specifically should become filthy rich as a result, instead of all its employees and investors? How should the gains from successful entrepreneurship be distributed?
The answer depends on how should the losses from unsuccessful entrepreneurship be distributed?
Why are people getting three deliveries a day from a company that was founded as a bookseller? How many books do they need?
This is like asking why are people buying so much stuff from a company that was founded as compiler/language tool seller. How much compiler do they need.
The above would be Microsoft for context. For some reason your comment assumes that what a company was "founded as" should dictate what they do decades later.
I think you've just explained how compounding wealth made Jeff Bezos rich.
Which is exactly the same as "my wealth was constant and my neighbor's grew"
Which is exactly the same as "my neighbor's the same and my wealth decreased"
Which is exactly the same as "getting siphoned to the rich"
Money have no intrinsic value: its only value is relative the others (and also depends on what can be bought ..)
Or the wealthy are pulling up the average and most of the rest are not “growing the economy” with increased productivity.
"U.S workers just took home their smallest share of capital since 1947"
https://fortune.com/2026/01/13/us-workers-smallest-labor-sha...