How much of the world economy can one person control?

[Loren Booda]

Is there a constraint as to the amount of wealth a single speculator can amass?

 

[apeiron]

Wealth closely follows a powerlaw distribution. Which is good evidence of an orderly relationship emerging in an expanding global economy.

A few years back, I was looking at the Forbes 2006 list of richest Americans, and Microsoft’s Bill Gates was top on $53 billion. Sheldon Adelson, a casino owner, at number 3 had less than half that, or $20 billion. Then 30th placed Nike founder Philip Knight has $8 billion and 300th placed winemaker Ernest Gallo has $1.3 billion.

And to afford these super rich, the number at the other end of the scale has to increase in proportion. Another billion very poor were added to the world population over the past decade.

 

[Jimmy Snyder]

Is there a constraint as to the amount of wealth a single speculator can amass?

Yes, no one person can accumulate more than 100% of total world wealth. I know, I've tried. For a married couple, it's 200%.

 

[dilletante]

And to afford these super rich, the number at the other end of the scale has to increase in proportion. Another billion very poor were added to the world population over the past decade.

With all due respect, that is a ridiculous statement. Bill Gates did not impoverish millions of people to gain his wealth, he is a net creator of wealth for millions of people.

The idea that there is a limited amount of wealth to go around, and each time someone makes a dollar, someone else has to lose a dollar, is a fallacy.

 

[russ_watters]

And to afford these super rich, the number at the other end of the scale has to increase in proportion. Another billion very poor were added to the world population over the past decade.

Both of those are false, and the first is a very common misconception about wealth. I'm not even sure why people believe it, though. If it were true, none of the modern age would be possible because there wouldn't be enough money in the world to support even a few thousand people in modern life.

The second, I don't know where you got it - did you just make it up on the spot? Heck, the world hasn't even added that many people total over that time!

Here's a graph of the world GDP per capita over the last 500 years, showing a basically geometric increase: http://en.wikipedia.org/wiki/File:World_GDP_per_capita_1500_to_2003.png

The wiki on poverty shows even the poorest parts of the world have made substantial progress even over the relatively short timeframe of the last 14 years. http://en.wikipedia.org/wiki/Poverty

For example, the poverty rate of sub-saharan Africa is the worst in the world and has dropped from 46% to 41% over 14 years. Most of the world's poverty rate drop over the last 25 years or so, though, has been in China, which has caused the global poverty rate to fall by half over that timeframe. China's alone fell from 85% to 16% over that timeframe: http://www.globalissues.org/article/26/poverty-facts-and-stats (2/3 of the way down)

Reading the graph for the $2 a day level, it looks like it dropped from about 49% to 40% between 1994 and 2004 (closest it had to the past 10 years). In 1994, the global popluation was 5.607 billion and in 2004 it was 6.391 billion, so the number of people living on $2 a day went up slightly, from 2.747 billion to 2.556 billion. Or, while the world population increased by 784 million, the number living on $2 a day went up by 191 million.

 

[russ_watters]

To the OP's question: Bill Gates is about the limit of what one person can control and his was a very special case. Bill Gates and his team didn't just create a company or an industry, they spawned a new age in human development. At the height of his wealth/influence, he was in control of the Information Age.

 

[Desiree]

The idea that there is a limited amount of wealth to go around, and each time someone makes a dollar, someone else has to lose a dollar, is a fallacy.

Not so much so in the stock market, which is pure gambling. For every dollar an investor/trader gains, there has occurred an equal amount of $$ loss by another investor/trader. Stocks just don't go up for ever, there comes the crash and recession every decade or so. It's akin to the 1st law of thermodynamics about energy; here wealth is not being created, it just takes the form of loss/profit.

 

[Jimmy Snyder]

To the OP's question: Bill Gates is about the limit of what one person can control and his was a very special case. Bill Gates and his team didn't just create a company or an industry, they spawned a new age in human development. At the height of his wealth/influence, he was in control of the Information Age.

Rockefeller, and others, surpassed Gates' limit by far.
http://www.dailywealth.com/457/A-Man-Richer-Than-Buffett-and-Gates-Combined"

 

[russ_watters]

Not so much so in the stock market, which is pure gambling. For every dollar an investor/trader gains, there has occurred an equal amount of $$ loss by another investor/trader.

That's the same misconception as above. No, the stock market is not a zero sum game. The vast majority of money invested in the stock market grows over the long term. That includes a large fraction of virtually everyone's retirement savings.

Stocks just don't go up for ever, there comes the crash and recession every decade or so.

Certainly, but that doesn't take away from the fact that over the very long term, the stock market averages about 8% a year in growth after inflation.

It's akin to the 1st law of thermodynamics about energy; here wealth is not being created, it just takes the form of loss/profit.

Wealth isn't generated in the stock market per se, so that's not completely wrong, but it is mostly wrong: wealth is generated by the companies that are represented in the stock market growing. The growth of a company is reflected in the stock price, which is a reflection of the perceived value of a company. Again, it isn't a zero sum game: as long as the economy grows, the stock market will grow too.

 

[russ_watters]

Rockefeller, and others, surpassed Gates' limit by far.
http://www.dailywealth.com/457/A-Man-Richer-Than-Buffett-and-Gates-Combined"

Yeah, I was thinking that was possible. A difference of 6x. And you know, when compared as a fraction of the world's wealth, the difference is probably bigger.

But they lived in a different time and Gates is probably near the limit now. The biggest difference? Gates was trust-busted and they weren't.

 

[Jimmy Snyder]

Gates was trust-busted and they weren't.

Rockefeller was. It made him even richer.

 

[apeiron]

Both of those are false, and the first is a very common misconception about wealth. .

I'll repeat what I said the last time this came up...

You need to pay attention to the mixture of human exploitation and resource exploitation that is the basis of our luxury lifestyles.

So what poverty rate are you talking about? The Millennium Development Goals for example means those living on less that a dollar a day.

Halving that by 2015 will probably be achieved (due to China becoming a factory), but whoopee. Don't insult me with whack statistics. Four billion people still get by on less than $2 a day.

Instead check out the proper inequality measures like gini coefficient if you want a sense of what is going on out there - how many sweatshop kids and peons it takes to keep a westerner in box-fresh Nikes and snap peas imported from Vietnam.

* the richest 1% owned 40% of global assets.

* the richest 10% account for 85%.

* the bottom 50% own barely 1%.

(World Institute for Development Economics Research, 2006)

And to the extent that the whole world has got richer, it is down to the extent that the whole world has been moving to a fossil fuel burning economy. Wealth isn't created by Gates and other entrepreneurs, its all based on an accelerating degradation of a cheap energy source.

I'm suprised at your admiration of Gates too. He just learned about monopolistic marketing tactics from the best, IBM.

Computer and software companies are themselves a very good example of the emergence of powerlaw wealth via the Peter principle.

 

[russ_watters]

Rockefeller was. It made him even richer.

Was he? Dang, I need to brush up on that then.

[edit] Oh, I see: when he was trust-busted, he then got proportional shares of the 34 new companies. That caused his wealth to grow. Still, MS wasn't broken up, AFAIK, they were just ordered to change their practices and punished. I don't think that really affects the issue much, though: the Sherman Act helped prevent MS from becoming more powerful.

 

[russ_watters]

I'll repeat what I said the last time this came up...

None of that addresses the two factually wrong assertions you made in your previous post. You're just trying to distract from that.

And you've added one more (that I care about - very little of that big quote was worth anything):

I'm suprised at your admiration of Gates too. He just learned about monopolistic marketing tactics from the best, IBM.

No. Bill Gates capitalized on a mistake by IBM. IBM expected that their monopoly would allow them to dominate the new PC world, but they were wrong. Microsoft gained power by providing an open software architecture on which to build comptuers. The so-called IBM PC "clones". It was only much later that MS started to wield monopoly power.

 

[Desiree]

... The vast majority of money invested in the stock market grows over the long term...wealth is generated by the companies that are represented in the stock market growing. The growth of a company is reflected in the stock price, which is a reflection of the perceived value of a company. Again, it isn't a zero sum game: as long as the economy grows, the stock market will grow too.

Wealth in not being generated in the market, it's the fictitious higher share prices that makes you believe the whole market has grown over a certain period of time. The companies which go public, are under no obligation to buy back the shares they sold to the public and every now and then they sell even more shares in order to survive. It's the new/future investors that bring more money to the table in the hope that their money will grow too.

If all the investors decide to pull their money out of the market, you see all the stocks will go to a penny in just one hectic day without affecting the performance of those companies. The companies are doing their job and people are betting on how well they are doing it, a stock price has nothing to do with the actual value of a company. People bet on the stocks as if companies were horses.

Investing in the stocks is no different than the Ponzi scheme Berni Madoff ran, as long as people don't panic and keep pumping money to the market, EVERYBODY is happy, the only thing that ruins this joyful ride is the sudden pull-out of funds, which reveals the whole scheme. For instance, stock market crashes of 1929 and the recent late 2008/early 2009 have proved that stock investing is nothing but participating in a collective Ponzi scheme, in which nobody is guilty, but greedy. I have stated this before on another financial forum that, the only legitimate investment would be if the companies committed to buy back all the common shares they sold to the public!

 

[apeiron]

And you've added one more (that I care about - very little of that big quote was worth anything): No. Bill Gates capitalized on a mistake by IBM. IBM expected that their monopoly would allow them to dominate the new PC world, but they were wrong. Microsoft gained power by providing an open software architecture on which to build comptuers. The so-called IBM PC "clones". It was only much later that MS started to wield monopoly power.

Your facts are "whack" as usual. I used to write in great detail about IBM's monopolistic practices (how it saw off the BUNCH, how it attempted to fight off the mainframe clones). And all about the early days of PCs and open software. Hey, I even had breakfast with Gates on the day he launched Windows in Europe (his tricky relationship with IBM was the conversation of course).

Do you not remember how IBM was trying to tie MS to OS2 and Gates had the balls to go with his own compatible operating system instead (but not open Unix) because he knew from IBM that control of the operating systems was control of the marketplace?

If MS monopolistic intentions took time to be achieved, they were certainly there from the start. And it was the trust-busters experiences with IBM that meant they were quicker to act, as far as they could, the second time round.

IBM certainly made a mistake in letting PCs get away on them (just as they did with minis and DEC). They very nearly retrieved the situation but Gates - who did not need to care about who manufactured the hardware, only who got the software royalities - could afford to use the clones to lever his way into a monopoly situation.

If MS really cared about openness, there was Unix. Both IBM and MS were pressured to make it run on their platforms and managed to make it run very poorly indeed.

 

[apeiron]

a stock price has nothing to do with the actual value of a company. People bet on the stocks as if companies were horses.

The truth is somewhere between these two extremes. Owning shares normally means getting a dividend return, so P/E ratios measure something "real".

But then you do get the speculative bubbles, the insider trades, and all the other things that turn the market into a different kind of game - one designed more to suck wealth out of the pockets of the average fool. Or at best, to mortgage future earnings and start spending them today.

And the third direction in which money is being sucked into this system is from the poor third world as I pointed out. Cheap labour, exported pollution, and all the other good stuff that Western "wealth" is based on.

@ Russ...the world may all be turning wealthy middleclass in your book, but the demographics say otherwise...

"In total, the world will add approximately 60 million people each year and reach a total of 8 billion by the 2030s. Ninety-five percent of that increase will occur in developing countries,''

Source: United States Joint Forces Command's Joint Operating Environment 2010

You ought to grab a copy and read what it says about US debt and peak oil. Pretty sobering stuff.

 

[Jimmy Snyder]

every now and then they sell even more shares in order to survive.

If all the investors decide to pull their money out of the market, you see all the stocks will go to a penny in just one hectic day without affecting the performance of those companies.

These statements are contradictory.

 

[russ_watters]

Wealth in not being generated in the market, it's the fictitious higher share prices that makes you believe the whole market has grown over a certain period of time.

I didn't say wealth is generated in the market, I said that the market prices are a reflection of the value of the companies being traded.

The companies which go public, are under no obligation to buy back the shares they sold to the public and every now and then they sell even more shares in order to survive. It's the new/future investors that bring more money to the table in the hope that their money will grow too.

That isn't true. The stock market is not a pyramid scheme.

If all the investors decide to pull their money out of the market, you see all the stocks will go to a penny in just one hectic day without affecting the performance of those companies.

That's true, but it doesn't have anything to do with the issue, much less reality.

The companies are doing their job and people are betting on how well they are doing it, a stock price has nothing to do with the actual value of a company.

Those two phrases directly contradict each other.

People bet on the stocks as if companies were horses.

Sure, but the difference is that you can win over the long term with the stock market, but you can't with horses.

Investing in the stocks is no different than the Ponzi scheme Berni Madoff ran...

That just plain isn't true.

For instance, stock market crashes of 1929 and the recent late 2008/early 2009 have proved that stock investing is nothing but participating in a collective Ponzi scheme, in which nobody is guilty, but greedy.

That would be true if the stock market never recovered, but it does.

I have stated this before on another financial forum that, the only legitimate investment would be if the companies committed to buy back all the common shares they sold to the public!

Why would I care if a company wanted to buy back the stock I have? That's just plain not the purpose of stocks (you are describing bonds). Stocks are a share of ownership in the company.

 

[russ_watters]

Your facts are "whack" as usual...

I'm not going to continue following your misdirection. You made some claims, they were factually wrong, now you're trying to distract from that.

 

[WhoWee]

Wealth in not being generated in the market, it's the fictitious higher share prices that makes you believe the whole market has grown over a certain period of time. The companies which go public, are under no obligation to buy back the shares they sold to the public and every now and then they sell even more shares in order to survive. It's the new/future investors that bring more money to the table in the hope that their money will grow too.

If all the investors decide to pull their money out of the market, you see all the stocks will go to a penny in just one hectic day without affecting the performance of those companies. The companies are doing their job and people are betting on how well they are doing it, a stock price has nothing to do with the actual value of a company. People bet on the stocks as if companies were horses.

Investing in the stocks is no different than the Ponzi scheme Berni Madoff ran, as long as people don't panic and keep pumping money to the market, EVERYBODY is happy, the only thing that ruins this joyful ride is the sudden pull-out of funds, which reveals the whole scheme. For instance, stock market crashes of 1929 and the recent late 2008/early 2009 have proved that stock investing is nothing but participating in a collective Ponzi scheme, in which nobody is guilty, but greedy. I have stated this before on another financial forum that, the only legitimate investment would be if the companies committed to buy back all the common shares they sold to the public!

A sell off of the entire market is nonsense. If every stock went to a penny - it would create the greatest financial opportunity of all time for anyone who purchased shares (at a penny). Stocks represent ownership in a company - equity.

In a Ponzi scheme - there is no value.

 

[mheslep]

Rockefeller, and others, surpassed Gates' limit by far.
http://www.dailywealth.com/457/A-Man-Richer-Than-Buffett-and-Gates-Combined"

Yes thanks for that one. I guessed that today's super rich are less super than the gilded age players, but six times less? As a percent of the total wealth, now vs then it must be double / triple that again or twelve to eighteen times less.. Also as a percentage of total wealth, I guess that government now claims twelve to eighteen times more of the total pie than it did in the 19th century.

 

[mheslep]

The companies are doing their job and people are betting on how well they are doing it, a stock price has nothing to do with the actual value of a company.

Gambling on stocks aside, it is not true that the price has nothing to do with the actual value. See e.g. http://en.wikipedia.org/wiki/Dividend" .

 

[Desiree]

Why would I care if a company wanted to buy back the stock I have? That's just plain not the purpose of stocks (you are describing bonds). Stocks are a share of ownership in the company.

You are right, no one would care if a company wanted to buy back the stock as long as there are buyers out there who are willing to pay you cash(like you paid in the first place) for a piece of paper, which shows you own 1000 shares of ABCD. If for instance, one bought 1,000 shares of ABCD at $50/share and then 6 months later nobody is willing to pay them even $20,000 for those shares, then they are robbed. Because with a piece of paper in your hand that shows you own 1000 shares of ABCD, you can't go to the grocery store and pay for your groceries. You couldn't even pay for your rent or bills either. That worthless piece of paper is not cash, nor a material commodity like gold or wheat, which you could give to somebody and get something back in exchange.

My point was, the original issuer of that piece of paper (the public company) should at least be under the obligation to buy it back for the original price, which to my knowledge, this is not the case.

 

[mheslep]

If all the investors decide to pull their money out of the market, you see all the stocks will go to a penny in just one hectic day without affecting the performance of those companies.

Even in worse case calamitous situations that's not what happens across the board. A more accurate description is that the market temporarily shuts down, or collapses because the buyers and sellers can no longer agree on a price. That is, the owner of the stock knows that the stock, say a coal mining company, has real intrinsic value even if everyone in the public sphere is temporarily too scared to buy the stock above 'a penny', so the owner refuses to sell. That coal company may pay dividends every quarter, and own thousands of acres of coal fields/mines, so the to the seller the share price is never worth nothing. Similarly in a housing panic you may not find anyone willing to buy your house for more than a penny, but the house has value, you, living there, know that full well and refuse to sell and in your small instance 'collapse' the market.

 

[edward]

Gambling on stocks aside, it is not true that the price has nothing to do with the actual value. See e.g. http://en.wikipedia.org/wiki/Dividend" .

The high speed trades have changed everthing. They don't use a value of any kind. They look for a trend and grab thousands of shares in a fraction of asecond.

http://www.chron.com/disp/story.mpl/business/steffy/7000954.html

 

[russ_watters]

That worthless piece of paper is not cash, nor a material commodity like gold or wheat, which you could give to somebody and get something back in exchange.

That's the source of your misunderstanding. The piece of paper is not any more worthless than the piece of paper that says you own a car or a house. Like the piece of paper that says you own a car, a stock is a piece of paper that says you own a tangeable thing: a company. For many/most companies, that means you own part of the building it resides in, the land it sits on - if its an oil company, you own the oil wells.

It just isn't reasonable to say that it could all come crashing down. A house that is today worth $250,000 simply can't suddenly be worth $1. So too with a stock.

My point was, the original issuer of that piece of paper (the public company) should at least be under the obligation to buy it back for the original price, which to my knowledge, this is not the case.

It's not the case because what you describe isn't what stocks are/how they work. There's just no need.

 

[apeiron]

I'm not going to continue following your misdirection. You made some claims, they were factually wrong, now you're trying to distract from that.

As I said in the post you deleted, this was the response to your misdirected attempts to focus on historical GDP rather than current wealth distribution as the issue in question. That was the OP, if I need to remind you.

* the richest 1% owned 40% of global assets.

* the richest 10% account for 85%.

* the bottom 50% own barely 1%.

(World Institute for Development Economics Research, 2006)

So reputable data. Evidence for a powerlaw distribution. Where is your counter-argument (apart from infractions and deletions)?

And if you want to belly-ache about population growth over the last decade, I repeat what you deleted. Yes it is only .7 billion, not 1 billion. It took 14 years for 1 billion. But that still does not change the nature of the argument.

 

[russ_watters]

And if you want to belly-ache about population growth over the last decade, I repeat what you deleted. Yes it is only .7 billion, not 1 billion. It took 14 years for 1 billion. But that still does not change the nature of the argument.

Well, you are correct in the last sentence: it doesn't change the nature of the argument. Your argument is still a factually wrong claim. What you claimed is not merely 1 billion in population growth, but 1 billion "very poor people". That claim is still vastly wrong: it is wrong by more than a factor of 5.

Your first claim was "And to afford these super rich, the number at the other end of the scale has to increase in proportion."...which is just another way of saying that the poverty rate is rising. Since I showed in my debunking of the second claim that the poverty rate is, in fact, falling, this claim is therefore also clearly false.

For the data you posted, what's the connection between that and your previous claims? It doesn't address them at all. It's just flooding.

 

[Desiree]

Watch this newly released documentary. I find it very informative and educational.


http://www.babelgum.com/browser.php#grid/SEARCH,channelID:180638,order:FEATURED

and this one too:
http://www.pbs.org/wgbh/americanexperience/films/crash/player/ [links fixed. - Russ]

 

[magpies]

How do you define wealth?

 

[russ_watters]

How do you define wealth?

The dictionary definition is fine: "a great quantity or store of money, valuable possessions, property, or other riches".

And that was not intended to be coy. Did you really mean to ask where the lines are set between "poor" and "wealthy"?

 

[apeiron]

The claims you made were:
1. "And to afford these super rich, the number at the other end of the scale has to increase in proportion."
2. "Another billion very poor were added to the world population over the past decade."

It's not just an exaggeration, it is still a wrong claim! You're still claiming that all of those people are "very poor". As the stats on poverty rate show, that is clearly factually wrong.

The wrong-ness of your second claim informs on the first claim: "the other end of the scale has to increase in proportion" is just another way of saying the poverty rate is rising. Ie, if the rich are not getting richer, the ratio would stay the same (according to your claim). Since the rich are getting richer, the poor must be getting poorer. So the poverty rate must be increasing. But it isn't. It is decreasing. Fast.

You are labouring under a number of misapprehensions. I made no claim that the poor had to get poorer, just that there had to be more of them. They may even double their average wealth from $1 to $2 a day and it not affect the powerlaw equilibrium that the system settles to.

The stats I quoted to you say that four billion people still get by on less than $2 a day. If I could wave a wand and make it $4 a day, would that make four billion people, the larger share of the Earth's population, middleclass?

If the richest 1% owned 40% of global assets and the bottom 50% own barely 1%, does that not scream powerlaw to anyone who understands the term?

Then if you were really getting into a serious discussion on these issues, you would look at GDP and ask how that actually reflects anything ultimately meaningful here.

One of my points is about how globalisation is increasing social poverty - we export the polllution involved in making our sweatshop goods to the third world. It is a cost we don't pay, but poor countries will.

We also export all sort of social memes to make them more like us (Cocal Cola, McDonalds, Mylie Cyryus) that also are impoverishing them socially.

Again, I ask what qualifications do you have to be stating so categorically that I am simply wrong here? Do you work in poverty studies or global economics?

I certainly could be wrong about the powerlaw distribution of wealth (and the need for an expanding system that *must* increase the width at the base of the pyramid so as to increase its height - many more of the relatively poor to support a few more of the relatively super rich). But it is a concrete model. And there is suggestive data I presented from credible sources. So that is what you have to argue against here.

Again, to put it simply, do you think that the achievable scale of individual wealth is not connected to the scale of baseline poverty? That to build a higher pyramid, you must have a wider base.

It is a separate argument whether the pyramid as a whole is levitating to some higher overall plane of wealth. And I never denied that it isn't doing so.

But here I raised the other issue of peak fossil fuels. You want to (or seem to, your posts are never that clear) claim that GDP growth reflects human creative ingenuity. We really do deserve the money we earn because we work harder, work smarter, invent new stuff of intrinsic value.

But my counter-argument has been that while there could be some genuine wealth creation of this type, the over-whelming story is really that we are blowing a fossil fuel legacy. So it is fake prosperity because we have allowed a century of Western development on a wrongly-priced commodity. Oil and coal and gas should never have been so cheap.

We have effectively stolen from our children's prosperity (and all those born last century and this in the "catch-up" developing world). So the levitation of the pyramid, such as it has occured, has been on a passing fuel supply - soon to run out and drop the whole economic heap back on the launchpad.

Now you might want to ban me from having these views. But I have researched them and even get paid for publishing them.

If you don't want to engage in these issue personally, that's fine. But misrepresenting them, or suppressing them, is quite another matter.

 

[apeiron]

Now Russ, you have infracted me and deleted posts on the basis of your belief that I am willfully misdirecting the argument to avoid being proved somehow wrong.

So I have provided you with a model and data and references. Of course, there is still plenty that could be debated. I could still be wrong or exaggerating.

But your charge here is "intentional misdirection" and I don't see any substance to that.

I hope therefore you are man enough to rescind the infraction and undelete my posts. Play by the rules, as you say.

 

[OmCheeto]

Yes, no one person can accumulate more than 100% of total world wealth. I know, I've tried. For a married couple, it's 200%.

Unless of course you deal in over the counter derivatives, in which case it goes to 1288%.

http://www.bis.org/statistics/derstats.htm"
http://blogs.wsj.com/wealth/2008/04/01/worlds-millionaires-have-50-trillion/"
go speculate...

 

[magpies]

No I was asking how do you define wealth because I personally don't value it like it seems most people do.

 

[CRGreathouse]

So I have provided you with a model and data and references. Of course, there is still plenty that could be debated. I could still be wrong or exaggerating.

You seem not to have provided evidence for your core claims ("proportional" increase in poverty needed for super-rich, number of "very poor" increased by 1e9 over the last decade, entrepreneurs do not create wealth), nor retracted them. From my (up to this point uninvolved) perspective, you are being evasive. Perhaps you had information backing these claims in deleted posts, though, so I don't want to judge prematurely.

I'd also like to know which facts from Russ' post #14 you're calling "whack", and what you feel of Desiree's post #15. If you don't mind.

 

[CRGreathouse]

I personally don't value it like it seems most people do.

Could you expand on this? In my mental framework this is difficult to evaluate -- it seems like someone saying "I don't value pounds sterling as much as most people do". That is, in my understanding, money is worth precisely what you can get for it, and you can get the same things with it that anyone else can.

Am I misunderstanding? Sorry, it's hard to do this without nonverbal language.

 

[magpies]

Money owns you more then you own it most the time. Not saying that having lots of money so you can do awsome worldly things isn't great but I'd rather do something that benefits the world.

 

[OmCheeto]

No I was asking how do you define wealth because I personally don't value it like it seems most people do.

eppraisal.com says my house is worth $106,309
if you multiply that by everyone in the world you get $712 trillion dollars.

Ha! That must be how wall street did it. They turned the entire planet into a derivative!

Now all ve need is one central bank, mit one person in charge, und zhe OP vill be enzered.

 

[russ_watters]

You are labouring under a number of misapprehensions. I made no claim that the poor had to get poorer, just that there had to be more of them.

I was trying to give you the benefit of the doubt because that was one of the two ways by which your claim could have been true:
1. People have moved from 'not poor' to poor.
2. 1 billion "very poor people" have been added at the bottom.

Since I wasn't clear on which you meant (or if you meant both, as that is very common with people making such arguments), I provided statistics to directly contradict both possibilities. Your second claim was obviously #2. Your first claim could have been based on either #1 or #2.

And again, I refuse to expand my discussion with you beyond this until/unless you address it properly. Expanding/moving beyond it is a clear attempt by you to bury the issue of your factually wrong claims. More to the point, the reason these claims are so important is they are core to the entire philosophy. If the poor are getting vastly richer (and they are) instead of getting poorer or having more poor added (however you want to say it) then these leftist ideologies fall apart.

 

[magpies]

How do you define vastly richer?

 

[russ_watters]

How do you define vastly richer?

I would consider a doubling a group's wealth or income over, say, a 20 or 30 year period to be "vastly richer". I judge improvements or declines by percentage change.

 

[mheslep]

Y... If for instance, one bought 1,000 shares of ABCD at $50/share and then 6 months later nobody is willing to pay them even $20,000 for those shares, then they are robbed.

The buyer lost money if they sold at $20/share. How is this theft (i.e. 'robbed')?

Because with a piece of paper in your hand that shows you own 1000 shares of ABCD, you can't go to the grocery store and pay for your groceries.

One can take the quarterly dividend checks from ABCD to the grocery store.

 

[mheslep]

From a review in The Nation of Kevin Phillips book Wealth and Democracy: A Political History of the American Rich

http://www.thenation.com/article/gilded-age-ii
Year, Ratio to average US wealth
1790: 4,000:1, Elias Derby
1868: 80,000:1, Vanderbilt
1912: 1,250,000:1, Rockefeller
1940: 850,000:1, Rockefeller
1962: 138,000:1, Getty
1992: 185,000:1, Walton
1999: 1,416,000:1, Gates

I find Phillips unreliable, so these figures bare some checking ...

Edit:
Philips figures:
http://books.google.com/books?id=sP...hillips&pg=PA38#v=onepage&q=1,416,000&f=false

Phillips lists Rockefeller's peak 1940 fortune as $1.5 billion (1940 dollars). The http://data.bls.gov/cgi-bin/cpicalc.pl"

 

[apeiron]

More to the point, the reason these claims are so important is they are core to the entire philosophy. If the poor are getting vastly richer (and they are) instead of getting poorer or having more poor added (however you want to say it) then these leftist ideologies fall apart.

Aha, now it is all very clear. I have the wrong shade of political opinion in your eyes, and so I deserve to have my comments infracted and deleted rather than responded to honestly. Of course, that has been obvious all along, but it is good of you to come out with it now.

I see that you have not removed the infraction so you clearly still believe that you are acting with legitimacy in this discussion. I don't see why I should respond to you further under these coercive conditions and your continued implied threat. But I don't give a stuff so either way, so I will .

Define what you mean by vastly richer. If you repeat that a doubling of income is "vast" in this context, then we can all have another good chortle.

In a gaussian statistical regime, 200% is indeed a vast increase. In a powerlaw regime, it is nothing. Well nothing very much. You could double my income and I wouldn't feel I had entered the league of Bill Gates, or even the c-list of the rich. You could halve it, and I wouldn't feel that poor by the standards of my society, let alone someone from the developing world.

So define vast in a way that doesn't sound insulting to those actually in poverty.

Then when you've done that, answer the original point. How is wealth distributed except as a powerlaw? I've suggested a concrete model. If you can put your political biases aside, what model of the distribution do you claim?

This is a concrete question, so no ducking again.

Now I then also implicitly claimed that the slope of the powerlaw has not changed over the past decade or so in any significant fashion. This is a more debateable point. It could be that the powerlaw has swung in a way to widen the gap between top and bottom, or the other to close it. I merely took the null hypothesis that there has probably been no change, or slight change only.

So you can see this is science, not political philosophy. It would seem you might want to argue that the gap between top and bottom has in fact narrowed due to the success of the economic system and globalisation in bringing the poor bottom strata up. Well perhaps you can present evidence to contradict the null hypothesis. I would be interested (mildly).

As it happens, I know the gini coefficient of my own society and how it has changed quite precisely in terms of political philosophy - widening as the right has been in power and narrowing as the left has been in power. Perhaps there are global figures that contradict this local proven trend.

Overall, my society is also materially richer. The poor have more than they use to in terms of cars and TVs. They also have more debt and poorer health. But the question actually being discussed was the distribution of wealth - how rich can the richest person be. Again, the answer is powerlaw not gaussian. But I forgot, you weren't arguing for any statistical model here. You just want me to believe that free market capitalism is making the world a better place for everyone (as opposed to the rampant exploitation of cheap fossil fuels with its one-time eroei sweet deal being the prime source of the riches).

I'm sure you will continue not to answer these substantive points as in the past, but instead select some isolated quote, fire a quick retort, then disappear.

But before you go, please remove that unjust, politically-motivated, infraction for the good name of the ideologies you happen to favour.

 

[apeiron]

One of Russ's complaints is that it is mistaken to presume that population growth is about the addition of the very poor (ie: those at or below poverty line). But where are the stats to suggest otherwise?

Instead, this is a typical summary from those who research these issues.

According to the 2006 Revision, the world population is expected to rise in the next 43 years by 2.5 billion, to reach a total of 9.2 billion in 2050. The increase is equivalent to the total world population in 1950. Essentially all of the growth will take place in the less developed countries, and will be concentrated among the poorest populations in urban areas.

By contrast, the overall population of the more developed countries is likely to show little change over the next 43 years, remaining at about 1.2 billion. Fertility is below replacement level in all 45 developed countries or areas, as well as in 28 developing countries including China. The population of developed regions is ageing and would actually decline were it not for migration. The populations of Germany, Italy, Japan and most of the successor states of the former Soviet Union are expected to be lower in 2050 than they are today.

http://www.unfpa.org/pds/trends.htm

My main contention from the start is that wealth distribution follows a powerlaw. The secondary observation was that to maintain a powerlaw in an expanding system, any increase at the top has to be matched by an increase at the bottom. Simple physics really.

Russ has yet to address either of these two points with any clarity.

He provided links to show GPD following a geometric curve (yes, the system is indeed expanding) and another page which he claimed showed dramatic evidence of a drop in poverty over the past decade.

http://www.globalissues.org/article/26/poverty-facts-and-stats

On inspection, this showed that poverty levels have remained essentially flat, once you take China out of the equation. And it is correct to take out China because China has become tied to the Western consumer machine (they make it cheaply for us now while despoiling their landscape and quietly becoming owners of their customers - think the US can afford China yanking away the props under the dollar).

Otherwise, the whole page is evidence of powerlaw wealth distribution. Which is not a political point, simply a fact.

More than 80 percent of the world’s population lives in countries where income differentials are widening

The poorest 40 percent of the world’s population accounts for 5 percent of global income. The richest 20 percent accounts for three-quarters of world income

Number of children in the world 2.2 billion - Number in poverty 1 billion

In 2005, one out of three urban dwellers (approximately 1 billion people) was living in slum conditions.

In 2005, the wealthiest 20% of the world accounted for 76.6% of total private consumption. The poorest fifth just 1.5%:

The poorest 10% accounted for just 0.5% and the wealthiest 10% accounted for 59% of all the consumption:

The world’s billionaires — just 497 people (approximately 0.000008% of the world’s population) — were worth $3.5 trillion (over 7% of world GDP).

about 0.13% of the world’s population controlled 25% of the world’s financial assets in 2004.Source 21

The wealthiest nation on Earth has the widest gap between rich and poor of any industrialized nation.

In 1960, the 20% of the world’s people in the richest countries had 30 times the income of the poorest 20% — in 1997, 74 times as much.Source 26

Low income countries (2.4 billion people) accounted for just $1.6 trillion of global GDP (3.3%)

 

[Evo]

This thread is too full of misinformation and has gone off topic.

Closed.