Bill Gates on Income Inequality - Conspicuous Consumption is Bad

[Mayhem]

The real reason there's a wealth disparity is because the rich have the means of making higher yield investments that the general public doesn't have access to. For example, Warren Buffett & Co can identify an undervalued cash-starved company, infuse it significant capital, then cash out for a good yield. The average individual has access to fewer forms of investments such as institutions (brokerages and banks), stocks, etc.

Its hard to get ahead when the odds are stacked against you, even though its not unfair. Of course, there are other unfair reasons why the rich get richer too.

i would´ve written one of the real reasons.. but other than that i agree

[Deletedaccount1]

There are people in the world who work a lot harder than Bill fucking Gates and make less than 0.0001% of what he makes in a day. I like the guy, he has done great things, he took Math 55 which was a dream of mine growing up but to idolize billionaires as hard workers is a joke.

I do more work in a day than Christy Walton has done in her life and yet what I'm going to make in my lifetime what she makes in a day.

I just did the math, what she makes in an hour and a half actually.

[Gheld]

So basically now that Bill Gates has lived the high life that nobody else could possibly live, he's realized that has just left him an old man with a bunch of toys he's bored of, sitting alone in his castle, and to other such uber wealthy people in the future he decrees "Do as I say, not as I do!"

I mean, that's not to say he didn't give back before. But there's actually channels through which it is possible for a US citizen to pay extra taxes. Did he ever go through these channels to voluntarily pay this progressive consumption tax he is suggesting?

[Deletedaccount1]

So basically now that Bill Gates has lived the high life that nobody else could possibly live, he's realized that has just left him an old man with a bunch of toys he's bored of, sitting alone in his castle, and to other such uber wealthy people in the future he decrees "Do as I say, not as I do!"

I mean, that's not to say he didn't give back before. But there's actually channels through which it is possible for a US citizen to pay extra taxes. Did he ever go through these channels to voluntarily pay this progressive consumption tax he is suggesting?

I mean, does a $40 billion charity count?

[Lynarii]

The big problem with income inequality at the moment is that wealth is begetting wealth at a better return than work is begetting wealth. Not only are capital gains taxes very low, but many of the most profitable opportunities are simply not available for people who don't have a huge amount of money that they can afford to set aside for long periods of time.

Understand that income inequality, as a basic notion, is not a bad thing. It's good for society and the economy for highly prized, highly educated, highly skilled people to be paid more money. It's good incentive, for one, and also in a lot of cases is needed to pay off the costs of /getting/ to that point. Med school, for example, isn't cheap! The inequality only becomes a bad thing when it gets severe enough that it starts to stifle upward mobility, and hard work stops becoming something that gets you ahead because it can never catch up to just having money to start with. The super-rich get concerned because history has shown that there has always been a correction of some sort that has happened whenever it gets too bad, and the general feeling is that if a correction is going to happen no matter, they'd like to choose a gentle correction that mostly preserves the current framework, rather than a full scale uncontrolled breakdown. History has also shown that /nobody/ wins when that happens.

[Raeph]

I mean, does a $40 billion charity count?

To a degree yes, however a tax would be collected by a government entity and used by that entities discretion on government programs. Charity bypasses the tax structure and may not even fund any social work in the locality that the controlling/funding members live in.

The Bill and Melinda Gates foundation does quite a bit of social work, 38+billion or so according to Wikipedia, but how much of it is charitable work in the United States? (honest question)

Is it bad if the bulk of the work isn't in the United States? No. But that also means that you can't equate taxation with charity.

[Rukentuts]

I'm personally not convinced that income inequality is as big a problem people make it out to be

It's so significant that S&P warned that wealth inequality is damaging the economy.

[matt4pack]

Yeah so how many people did Microsoft layoff recently yet they makes billions in profits? You know he could have kept Microsoft a private company so not to be controlled by Wall Street. How many square feet is his home and how many acres does he own?

No matter how much money he donates he's still the poster child and all for wealth concentration. That doesn't mean what he says isn't true just that he isn't the best one to be saying it.

[thatmikeguy]

The problem is Banks and the banking systems. Everyone is looking for solutions everywhere but where the problem starts. Economy is circulation of money, banks sit on money under yet another bank, and rely on wealth and assets that are mostly not moving from the top. Countries trade gold to control rates.

[Raeph]

The problem is Banks and the banking systems. Everyone is looking for solutions everywhere but where the problem starts. Economy is circulation of money, banks sit on money under yet another bank, and rely on wealth and assets that are mostly not moving from the top. Countries trade gold to control rates.

No matter that banks take that money and either through loans or investments put that money back into the economy for a chance a profit. People have this foolish idea that a bank has all depositors money sitting in a box on location, when in fact banks actually have the bulk of their assets involved in investment opportunities.

In the United States for instance (http://en.wikipedia.org/wiki/Reserve...#United_States) a small bank could theoretically have zero liquid capital on hand, while even the largest banks are required to only have 10% liquid capital on hand.

[thatmikeguy]

No matter that banks take that money and either through loans or investments put that money back into the economy for a chance a profit. People have this foolish idea that a bank has all depositors money sitting in a box on location, when in fact banks actually have the bulk of their assets involved in investment opportunities.

In the United States for instance (http://en.wikipedia.org/wiki/Reserve...#United_States) a small bank could theoretically have zero liquid capital on hand, while even the largest banks are required to only have 10% liquid capital on hand.

At a 1:10 plus rate of assets, and almost zero liability!

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Also, "small bank" as you say, answers to the larger bank. The problem flows from the top not the bottom.

Most of the money as a whole is also at the top, this is the bulk of the problem. Track gold exchange worldwide over time. Lol

Simply put.. "It's good to be King"

[Raeph]

At a 1:10 plus rate of assets, and almost zero liability!

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Also, "small bank" as you say, answers to the larger bank. The problem flows from the top not the bottom.

Well but that is an issue with poor or lax regulation, not an issue of banks "sitting on money" like you stated previously.

I'd personally like to go back to the Glass-Steagall era and prevent commercial and securities banks from integrating in investment opportunities. It would slow down banking sector growth and profits but at the same time remove quite a bit of risk from the system as well.

[thatmikeguy]

But it is about sitting assets at the top and the higher up you go Banks where the problem starts. Lookup their requirements. Most people do not know there is a flow of banks from the top down, what each one does, and what one belongs to who.

Who controls the rate, or better question would be why? It's the control of global rates. Because we are a global economy.

People wondering where "gold" went in many nations, at many times in the past? Or how did this large amount just show up in a country? Look at the amounts over time, then look back at the dates it went missing.

We can NOT fix ourselves in a global economy without fixing how Banks work from the top.

[Sledfang]

The OP is correct that income equality is not the biggest problem. Having a luxury tax that only effects the ultra rich gets closer to the true problem which is the wealth gap. The only problem is that if rich people can avoid it or if it touches the middle classes than it is pointless.

[thatmikeguy]

These "changes" would be like a drop of rain in the ocean. As soon as it happens, it will be blended into the much larger banking problem that becomes stronger.

Many people shrug and say we can't do anything about it. If everyone thinks that then they are correct.

[Deleted]

After reading that article I have to ask are you not taxed for consumption in the USA?

In the UK we have VAT which is a flat 20% tax that applies to the vast majority of goods sold within the UK, I believe only a few food goods which are considered essentials are exempt.

[Daethz]

Not true.
The one spending all his money on yachts and private planes is pushing his money back into the economy, feeding it.

Sadly most charity's are money-holes, enter money, zero results, I'm surprised bill gates hasent noticed.

Real issue is alot of rich people are literally sitting on their money not doing ANYTHING with it.
And now we have alot of loose useless money sitting in a few peoples pockets doing nothing but reducing the value of the dollar.

[Mainer]

The OP is correct that income equality is not the biggest problem. Having a luxury tax that only effects the ultra rich gets closer to the true problem which is the wealth gap. The only problem is that if rich people can avoid it or if it touches the middle classes than it is pointless.

Maybe I'm missing something, but income inequality and wealth gap is the same issue? I agree that being able to avoid high income taxes is an issue as well.

Not true.
The one spending all his money on yachts and private planes is pushing his money back into the economy, feeding it.

Sadly most charity's are money-holes, enter money, zero results, I'm surprised bill gates hasent noticed.

Real issue is alot of rich people are literally sitting on their money not doing ANYTHING with it.
And now we have alot of loose useless money sitting in a few peoples pockets doing nothing but reducing the value of the dollar.

I agree with some of your points, except one. Although luxury planes and yachts feed the economy, they will never replace a healthy middle class. While a few rich people can buy a couple of planes/yachts, they aren't doing so on a regular basis. Compare that to a middle class which is spending a good chunk of their income on necessities and luxuries, which fuels the economy much more than extra pricey luxuries.

In regards to the charity part, I agree they are money holes. What I also have an issue with, is how donating to a charity can reduce your taxes. Charity is just that: giving to others without benefit to yourself. As soon as you put a tangible/monetary gain on it, it ceases to be charity.

[BabelOn]

I agree with some of your points, except one. Although luxury planes and yachts feed the economy, they will never replace a healthy middle class. While a few rich people can buy a couple of planes/yachts, they aren't doing so on a regular basis. Compare that to a middle class which is spending a good chunk of their income on necessities and luxuries, which fuels the economy much more than extra pricey luxuries.

This. The rich can only consume so much. The Walton heirs control as much wealth as the bottom 1/3rd of the US population. Who can generate more economic activity, the 6 Walton heirs or 100 million people?

Lets say you have 2 people, Jane and Joe. Joe earns $50k per year and Jane earns $10 million. Joe buys a car, spends $35k on it. To generate the same economic activity compared to income Jane would have to buy 200 cars. Now we can assume Jane buys a nicer car, maybe its worth $100k, so she'd "only" have to buy 66 of them to generate the same economic activity as Joe. But that's unlikely. Jane may own 3 or 4x as many cars as Joe but at the end of the day she only needs so many. And once the car is bought they each only need so much gas, so many oil changes, tuneups, etc.

Or if they eat out, Joe goes to a midscale restaurant, spends $35/person. Jane goes to a nice upscale place and spends $100/person. Again Jane makes 200x what Joe does. Even if Jane goes out to eat 5 times for every time Joe does she won't ever spend 200x what Joe spends on meals out. You only need so much food.

Income inequality/wealth concentration isn't necessarily bad in itself, or at least its expected and tolerable. There has always been rich people and poor people and there always will be. Of course lets dispatch with the idea that the rich work harder then the poor. Some of the hardest working people you will ever meet are poor. The Walton heirs didn't create and build Walmart, their father did. They were just lucky enough to win the genetic lottery and be his kids. Their housekeepers work harder then they ever will. But that's fine, yaay for them.

The problems we are seeing are with the levels that the wealth is concentrating. In the last several decades the rich have seen massive increases in their income while the rest of us have seen no growth at all. American corporations have never been as profitable as they are now. Worker productivity has never been higher then it is right now. Yet the rewards of that extra productivity and profitability are not being shared with the average worker, they are exclusively going to the rich. Increasingly workers are seen as a cost to be minimized, not a resource to be invested in. More and more large companies are paying wages that a person can't live on. Walmart recently announced that they were ending their insurance plan for part time workers. Perversely this will actually be good for the workers because they will be able to access "Obamacare" and get better insurance at a lower price due to the tax credits that will be available to them. But on the other hand this puts an even higher burden on the taxpayers who have to fund those credits. Meanwhile the Walton family will become even richer.

[Espe]

This. The rich can only consume so much. The Walton heirs control as much wealth as the bottom 1/3rd of the US population. Who can generate more economic activity, the 6 Walton heirs or 100 million people?

Lets say you have 2 people, Jane and Joe. Joe earns $50k per year and Jane earns $10 million. Joe buys a car, spends $35k on it. To generate the same economic activity compared to income Jane would have to buy 200 cars. Now we can assume Jane buys a nicer car, maybe its worth $100k, so she'd "only" have to buy 66 of them to generate the same economic activity as Joe. But that's unlikely. Jane may own 3 or 4x as many cars as Joe but at the end of the day she only needs so many. And once the car is bought they each only need so much gas, so many oil changes, tuneups, etc.

Or if they eat out, Joe goes to a midscale restaurant, spends $35/person. Jane goes to a nice upscale place and spends $100/person. Again Jane makes 200x what Joe does. Even if Jane goes out to eat 5 times for every time Joe does she won't ever spend 200x what Joe spends on meals out. You only need so much food.

Income inequality/wealth concentration isn't necessarily bad in itself, or at least its expected and tolerable. There has always been rich people and poor people and there always will be. Of course lets dispatch with the idea that the rich work harder then the poor. Some of the hardest working people you will ever meet are poor. The Walton heirs didn't create and build Walmart, their father did. They were just lucky enough to win the genetic lottery and be his kids. Their housekeepers work harder then they ever will. But that's fine, yaay for them.

The problems we are seeing are with the levels that the wealth is concentrating. In the last several decades the rich have seen massive increases in their income while the rest of us have seen no growth at all. American corporations have never been as profitable as they are now. Worker productivity has never been higher then it is right now. Yet the rewards of that extra productivity and profitability are not being shared with the average worker, they are exclusively going to the rich. Increasingly workers are seen as a cost to be minimized, not a resource to be invested in. More and more large companies are paying wages that a person can't live on. Walmart recently announced that they were ending their insurance plan for part time workers. Perversely this will actually be good for the workers because they will be able to access "Obamacare" and get better insurance at a lower price due to the tax credits that will be available to them. But on the other hand this puts an even higher burden on the taxpayers who have to fund those credits. Meanwhile the Walton family will become even richer.

Great post, but I find it sad that you're trying to talk sense to trolls who either benefit from the status quo or desperately want to be kept in their place.