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Subject: Billionaires didn't earn their wealth rss

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Shawn Fox
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https://www.marketwatch.com/story/billionaires-take-more-tha...

I thought this was a really good article, probably because it very closely aligns with my opinions and arguments that I've made in the past. This is exactly why a 50% inheritance tax for billionaires is on the low end of what the rate should be. People who are billionaires didn't get there by creating value, they got there by building businesses which were able to create monopolies or something very close to a monopoly.

Yes most of them worked really hard, but creating a monopoly is very hard work. You've got politicians to bribe, lawyers to pay, competitors to disrupt (or buy out), and so on.

Even on smaller scales of wealth in the 10s of millions, that is also generally created by localized monopolies of some sort or other. In a truly competitive free market, prices are reduced to the cost of production of the least efficient producer. That doesn't leave a lot of room for profit unless you have a way to keep other producers out of whatever market you are in.

What I really like is that the article talks about Warren Buffett, a man who frequently brags about investing in businesses which have a "moat". What is a moat, you ask? It is an advantage which makes it very difficult for competitors to enter your market. Buffett never created a single business in his entire career, all he has ever done is buy businesses which he can then deploy his already existing capital into to produce out sized profits due to the existence of economic moats.

That said, Buffett actually recognizes this and has regularly criticized the low taxes he pays and has promised not to pass his wealth on to his children.
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sfox wrote:
https://www.marketwatch.com/story/billionaires-take-more-tha...

I thought this was a really good article, probably because it very closely aligns with my opinions and arguments that I've made in the past. This is exactly why a 50% inheritance tax for billionaires is on the low end of what the rate should be. People who are billionaires didn't get there by creating value, they got there by building businesses which were able to create monopolies or something very close to a monopoly.

Yes most of them worked really hard, but creating a monopoly is very hard work. You've got politicians to bribe, lawyers to pay, competitors to disrupt (or buy out), and so on.

Even on smaller scales of wealth in the 10s of millions, that is also generally created by localized monopolies of some sort or other. In a truly competitive free market, prices are reduced to the cost of production of the least efficient producer. That doesn't leave a lot of room for profit unless you have a way to keep other producers out of whatever market you are in.

What I really like is that the article talks about Warren Buffett, a man who frequently brags about investing in businesses which have a "moat". What is a moat, you ask? It is an advantage which makes it very difficult for competitors to enter your market. Buffett never created a single business in his entire career, all he has ever done is buy businesses which he can then deploy his already existing capital into to produce out sized profits due to the existence of economic moats.

That said, Buffett actually recognizes this and has regularly criticized the low taxes he pays and has promised not to pass his wealth on to his children.
I agree, Buffett is one of the few billionaires that recognizes the problems of wealth disparity in this country, and the world in general.

Gates, for all that he is doing now with his charitable work, had a reputation for being ruthless in crushing potential competitors.

Most billionaires latch onto something new, or unique, and springboard to riches, often while crushing the competition, and sometimes doing so without regard to ethics. That said, some billionaires legitimately deserve their fortunes, and I am sure they worked hard to get where they are today.

Ah, if I only had the money back in the day, to invest in Amazon, ebay, McDonalds, Apple, etc.... But Buffett has the presence of mind to do just that, and it is why he is wealthy today.
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Rachel Simmons
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Nobody can EARN a billion dollars by being morally deserving of it. That just isn't possible.

Can somebody acquire a billion dollars while staying within the laws governing the U.S. economy? Sure. The laws governing the U.S. economy have gotten wildly disproportionate input from people who have/want to have a billion dollars. For the wealthy, the U.S. economy is one giant game of Calvinball.
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bowen wrote:
Nobody can EARN a billion dollars by being morally deserving of it. That just isn't possible.

Can somebody acquire a billion dollars while staying within the laws governing the U.S. economy? Sure. The laws governing the U.S. economy have gotten wildly disproportionate input from people who have/want to have a billion dollars. For the wealthy, the U.S. economy is one giant game of Calvinball.
Every billionaire is a policy failure.
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sfox wrote:
https://www.marketwatch.com/story/billionaires-take-more-tha...

I thought this was a really good article, probably because it very closely aligns with my opinions and arguments that I've made in the past. This is exactly why a 50% inheritance tax for billionaires is on the low end of what the rate should be. People who are billionaires didn't get there by creating value, they got there by building businesses which were able to create monopolies or something very close to a monopoly.

Yes most of them worked really hard, but creating a monopoly is very hard work. You've got politicians to bribe, lawyers to pay, competitors to disrupt (or buy out), and so on.

Even on smaller scales of wealth in the 10s of millions, that is also generally created by localized monopolies of some sort or other. In a truly competitive free market, prices are reduced to the cost of production of the least efficient producer. That doesn't leave a lot of room for profit unless you have a way to keep other producers out of whatever market you are in.
I think the first part of this is true. The second is horseshit.

The sort of competitive advantage that an entrepreneur needs to make a person fortune of tens of millions of dollars in no way requires earning a monopoly or even preventing competitors from operating. It can be achieved with normal things like first mover advantage, moving down the learning curve, choosing a segment that's hard to commodify, etc.

My business is a good example -- no, I'm not worth tens of millions of dollars, but it wouldn't be impossible for me to go for a result like that. We are obviously not a monopoly -- we have lots of competition, and expect to have more. That said, what we provide isn't a commodity -- so if we continue to create better and better Quests we should be able to increase prices at an above-inflation rate.

Opening our location involved a lot of risk -- no one had successfully tried a reality gaming business of this scale in a major city. As a result, we have the upside of being first, which includes being courted by a lot of landlords, many of whom are interested in providing financing for a new location. Those would involve risk as well (leverage and what the new level of competition would be) but we also know a LOT now about how to build and operate this type of business, so we should be able to do it for less and make it at least as profitable.

If I were to go all-out on this kind of growth path and nothing bad happened and I was able to lead an organization of 300 across multiple states instead of 40+ in one location then I could retire with an eight-figure net worth. I would be lucky and would vote for my taxes to be higher than they would be now, but nothing would involve localized monopolies or any uncompetitive behavior.

Quote:
What I really like is that the article talks about Warren Buffett, a man who frequently brags about investing in businesses which have a "moat". What is a moat, you ask? It is an advantage which makes it very difficult for competitors to enter your market. Buffett never created a single business in his entire career, all he has ever done is buy businesses which he can then deploy his already existing capital into to produce out sized profits due to the existence of economic moats.
If it were that easy, lots of people would do it. Buffett doesn't just invest; he actively engages in allocating capital to the most productive resources and empowers and leads his managers to make good decisions. That said...

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That said, Buffett actually recognizes this and has regularly criticized the low taxes he pays and has promised not to pass his wealth on to his children.
This.
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Chad Ellis
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bowen wrote:
Nobody can EARN a billion dollars by being morally deserving of it. That just isn't possible.
You're not wrong, but you're not right, either. Morally deserving is a subjective judgment, as is the question of who is adding how much value when an enterprise goes from being worth $X to $Y.

I think anyone who has a billion dollars and consumes it for themselves or their family (including hoarding it as permanent family wealth) is morally bankrupt...but, again, that's just my opinion. I also have no real rebuttal to someone who says the exact same thing about someone who has a million dollars.
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Chad Ellis
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bowen wrote:
Chad_Ellis wrote:

I think anyone who has a billion dollars and consumes it for themselves or their family (including hoarding it as permanent family wealth) is morally bankrupt...but, again, that's just my opinion.
I think the Germans attempting to exterminate the jews was morally bankrupt...but, again, that's just my opinion.

Moral relativism of the sort you describe is something that lots of people SAY they believe, but I think hardly anybody actually practices. I think it is a sub-type of philosophical skepticism - but even the most dedicated skeptic still leaves a room through the door and not a window.
I hope it won't surprise you that I don't plan to continue discussion with someone who -- even to make a point -- compares earning money (even lots of it) with the Holocaust. File it up there with our recent guest who went from same-sex marriage to pedophilia, not because they were equally bad, but just to make the point. I'll explain my original point a bit more and then you're welcome to do what you like, but I won't respond further.

I'm not a moral relativist, but I am a moral subjectivist. That doesn't mean that I don't hold moral opinions or condemn things that I think are wrong. It does mean that I don't describe morality in objective forms. I don't think it's particularly meaningful to claim what someone deserves to earn -- it's trivial to imagine a scenario where someone earns a billion dollars and I think they're on fine moral grounds to do so. (An obvious example would be if a living artist's work was in such demand that their paintings sold for $100 million each -- and they painted 12 so they had a billion pre-tax income after auction fees and expenses.)

For me the immorality comes either from earning it unethically (which I think we'd all agree is common, but I certainly don't think is inherent) or from hoarding it. I hold hoarding families in contempt but admire Warren Buffet. YMMV.
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bowen wrote:
Chad_Ellis wrote:

I hope it won't surprise you that I don't plan to continue discussion with someone who -- even to make a point -- compares earning money (even lots of it) with the Holocaust.
That is not my point.
Quote:
I'm not a moral relativist, but I am a moral subjectivist. That doesn't mean that I don't hold moral opinions or condemn things that I think are wrong. It does mean that I don't describe morality in objective forms.
My point is that people who argue for moral subjectivism or relativism very seldom LIVE that way. You will ACT as though the Holocaust is objectively wrong, regardless of what meta-ethical position you nominally hold.
Unsolicited point of order:

Chad is saying he's a "moral subjectivist" but NOT a "moral relativist." Bowen is branching into the underlying meta-ethics. Before you go that far I think Chad needs to define what he means by being a "moral subjectivist." Just so everyone is on the same page.

Edit: I just realized who you both are. I have owned products from both of you and enjoyed them. Innovative games definitely, but which I now recognize have certain similarities...
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sfox wrote:
https://www.marketwatch.com/story/billionaires-take-more-tha...

I thought this was a really good article, probably because it very closely aligns with my opinions and arguments that I've made in the past. This is exactly why a 50% inheritance tax for billionaires is on the low end of what the rate should be. People who are billionaires didn't get there by creating value, they got there by building businesses which were able to create monopolies or something very close to a monopoly.

Yes most of them worked really hard, but creating a monopoly is very hard work. You've got politicians to bribe, lawyers to pay, competitors to disrupt (or buy out), and so on.

Even on smaller scales of wealth in the 10s of millions, that is also generally created by localized monopolies of some sort or other. In a truly competitive free market, prices are reduced to the cost of production of the least efficient producer. That doesn't leave a lot of room for profit unless you have a way to keep other producers out of whatever market you are in.

What I really like is that the article talks about Warren Buffett, a man who frequently brags about investing in businesses which have a "moat". What is a moat, you ask? It is an advantage which makes it very difficult for competitors to enter your market. Buffett never created a single business in his entire career, all he has ever done is buy businesses which he can then deploy his already existing capital into to produce out sized profits due to the existence of economic moats.

That said, Buffett actually recognizes this and has regularly criticized the low taxes he pays and has promised not to pass his wealth on to his children.
I'm afraid that applying a 50% inheritance tax on billionaires would merely give them motivation to seek out a way around it. Feels like a waste of time.

I wish I had that problem, though.
 
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AHShole wrote:
Edit: I just realized who you both are. I have owned products from both of you and enjoyed them. Innovative games definitely, but which I now recognize have certain similarities...
Ha.

Chad and I would likely be more likely to have an interesting and worthwhile discussion on game design than this topic, truth be told. Not sure I was even wise with this philosophical digression. More a choice made by impulse than sober reflection.

[Digressive posts deleted. I think the thread was better without them.]
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Chad Ellis
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AHShole wrote:
Chad is saying he's a "moral subjectivist" but NOT a "moral relativist." Bowen is branching into the underlying meta-ethics. Before you go that far I think Chad needs to define what he means by being a "moral subjectivist." Just so everyone is on the same page.

Edit: I just realized who you both are. I have owned products from both of you and enjoyed them. Innovative games definitely, but which I now recognize have certain similarities...
Cool.

By moral subjectivism, I mean that morality is based on values and values are inherently subjective.

Bowen seems to think that there is a difference between how a moral subjectivist and a moral objectivist will act with respect to something like the Holocaust. That's incorrect. I don't have to think that my values are objective in order to act on them.

Bowen, if you'd like to discuss the philosophical distinction of moral subjectivism and objectivism, I'm happy to do that. I have no beef with you; I'm just not going to continue the billionaire topic after the holocaust analogy. My reply missed the word "the" between continue and discussion...I wasn't intending to say that I wouldn't talk with you about anything.
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looleypalooley wrote:
I'm afraid that applying a 50% inheritance tax on billionaires would merely give them motivation to seek out a way around it.
That’s why you need deep democratic reform, so that the wealthy can’t play Calvinball with the tax laws.
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I personally know a few billionaires personally: Not enough to call them close friends, but enough to understand them more than a little.

Most of the ones I know didn't get there by doing things I consider morally repugnant, or abusing monopolistic practices. Two, for example, got there by offering a great product that has a bunch of competitors, but the competitors are all worse. The profit margins aren't huge, but scale is enormous. You could do business without their product, but what you get for what you pay is absolutely worth it. It's the basic form of capitalism and value: If in a trade you win $100 in value and I win $1, but I make a million trades a day, everyone is happy with their trades. If the competitors all offer $90 in value for $5, the disappearance of the top dog would leave everyone poorer. The business opportunity that lets someone become a billionaire in this way is obviously better for the world than it not existing.

Now, should a billionaire like this be taxed to hell? Sure! It gets tricky when a lot of the money is stuck in shares to their company, as part of the value to the world is good leadership on said company: Cutting their level of control of the company would IMO make the world worse. And yet, I do not believe that one can have a billion without having some extra social responsibilities: Property is good because it leads to far more efficient use of resources than the alternative, but I don't see it as any kind of natural right. At those levels, social irresponsibility could very well harm the world more than having property helps. I don't think that we have, in the modern world, figured out what the right way is to make sure that large accumulations of wealth are well used, whether they are stored in Google's coffers or the contents of a giant money bin owned by a rich guy.
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Rachel Simmons
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Chad_Ellis wrote:
Bowen, if you'd like to discuss the philosophical distinction of moral subjectivism and objectivism, I'm happy to do that.
Another time, another thread, maybe, but I’ve already regretted diverting this particular thread into that topic. Doing so was not great forum etiquette on my part.
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AHShole wrote:
bowen wrote:
Nobody can EARN a billion dollars by being morally deserving of it. That just isn't possible.

Can somebody acquire a billion dollars while staying within the laws governing the U.S. economy? Sure. The laws governing the U.S. economy have gotten wildly disproportionate input from people who have/want to have a billion dollars. For the wealthy, the U.S. economy is one giant game of Calvinball.
Every billionaire is a policy failure.
Damn straight. Twenty six billionaires own as much wealth as half the world. Tell me something ain't amiss.
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What that article misses for the most part is that today's billionaires did not earn their wealth by selling great products and pocketing the profits from that. Instead, they convinced others that buying shares of their companies is worth those billions. It kind of defeats the narrative of "selling a great product and deserving the profits from that".
 
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Has anyone else noticed that all the 1% talk has been more or less abandoned in favor of the "billionaire class"?
 
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cormor321 wrote:
Has anyone else noticed that all the 1% talk has been more or less abandoned in favor of the "billionaire class"?
There are less than three thousand billionaires at present. 1% of our population would be seventy million and a pinch.

Anyone else think these numbers and terms are sort of squishy? The "1%" are four orders of magnitude lesser in number than arithmetic would indicate.

It doesn't matter... few use the real numbers; they pick the best emotional fit to their agenda, like Mitt Romney's 48% takers.

One aspect of the situation often glossed over is that one can accumulate a billion dollars safely in the United States. Our relatively stable society takes on the enforcement of the rule of law, at no small cost. This is a significant gift to the wealthy, one among many.
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Quote:
Billionaires didn't earn their wealth
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