The Entitlement Fallacy of the Rich

[steampunk]

One of the biggest complaints of the rich is that the less wealthy feel they are entitled to some of the wealth that exists on this planet. This would not be such a bad argument, if the wealthy actually did do the work that their dollars represent. Looking at it in a conceptual physics way, it is obvious the rich are making a fallacious claim when they act as if someone is taking from them.

Here are two arguments that support my claim that the wealthiest in our country aren't wealthy because of things they did:

1. Going with the figure that 1% of the population owns 99% of the wealth, we could ask: How can one man do what it takes 99% to do? Because this is impossible, the amount of wealth in this regard is a misrepresentation of who actually did the work. One example is the housing rental contract. Roughly 40% of the housing market is rental contracts. These contracts are written in such a way to depreciate the actual work the renters put up. The renters investment depreciates 100% every 30 days. This housing infrastructure is paid for several times over collectively by the renters, yet they never get credit for actually doing all the work necessary for the existence, maintenance, vacancy rate, and taxes of the property. This is one example of an unscientific representation of energy in contracts, which gets the laymen label: parasitic and predatory, because people are forced into this contract and because of wages and those who feel they have the right to enslave others through housing contracts.

2. Even if people may work harder, have more talent, more education, and a larger skill set, still doesn't prove that all the excess wealth should be claimed as their own. Why? It is as if they are taking credit for the existence of the orange. They have farmed the tree, but the sun did most of work. In terms of our fossil fueled concrete and steel infrastructure, the energy we see when we look across the landscape is not being done by the talented, it's being done by the oil found in the ground. It doesn't take much talent to get the oil from the earth. The talented and hard working should have higher pay and more management authority, but ownership, no! Take the energy out of the equation and you will see the mass of advancement can't be done by the those who now say they own it.

So, until the so-called wealthy figure out a plan to get everybody working who is unemployed and is on some form of entitlement (which is about 50% of America), people who are getting entitlements should not feel they are taking from any rich man. Understand, you are picking from the tree in which the sun has done most of the work to provide that fruit.

When the rich make these claims that Obama or the poor is taking from them, well, let it be known: You don't own the Earth's energy, you did not create that energy and have no responsibility for it's existence no matter what your talent is! The earth is ours to share! We are not taking from you, we are partaking of our Earth in which we are collective members and have a right to housing and food and health care in which this energy provides.

 

[spidergoat]

Yes, that's something that Karl Marx liked to point out.

 

[steampunk]

Newton pointed it out first.

 

[adoucette]

1. Going with the figure that 1% of the population owns 99% of the wealth, we could ask: How can one man do what it takes 99% to do? Because this is impossible, the amount of wealth in this regard is a misrepresentation of who actually did the work.

First of all, the top 1% does not own 99% of the wealth.

They have about 34%

Next one accumulates wealth over a lifetime, and so NO, it is not related directly to what 99 other people do, as they may have only been doing it for a year, while the other may have been accumulating that wealth for many decades.

Which is why, excepting inherited wealth, one rarely sees young people who are wealthy. They simply haven't worked that long, and are often spending as fast as they make money, even if they make a lot.

As to comparing what one does to 99, I dare say, you would go through far more than 99 people to find another who could paint the Mona Lisa as well as Leonardo, or scult David, or come up with Facebook or operate on your heart or write a great novel etc etc.
It's not just the amount of effort one expends, it's the quality and the skill that one brings to the task that can define the value one gets from an hour of one's labor.


And NO, the sun doesn't do most of the work to get you an orange.

The Farmer has to buy the farm and the equipment needed to run it. Pay the taxes and till the soil, and plant the young trees, stake and prune them as they grow, protect them from frosts and instects, feed them nutrients and water as needed, and then at the proper time climb the trees and pick the fruit, sorting the good from the bad, then carefully box them and keep them in cold storage until they are needed, then pay a driver for his time and the cost of his truck and fuel to deliver them from their storage location down in Florida (or California) to your local grocer who bought and maintains a store and pays people to unload the truck and unpack the oranges and put the good ones on the display shelf until you select it, where upon the cashier will ring up your purchase, and put said orange in a bag for you to take home and enjoy at your lesiure.

Such simplistic analysis as you presented always discounts all the work and effort of all the people along the way that it takes for you to be able to trade the value of a minute or two of your labor for something as neat as a fresh orange grown in a state 1,000 miles or more from your home, and do it in the dead of friggin winter.


As to your similar BS about rental contracts.
Obviously you've never bought a house.
For most of us it takes 30 years to buy a house, and most of the money we pay is interest to the lender, taxes on the property, insurance and the never ending costs to maintain the property, which added together is far more than the cost of the actual property.

When one rents, one typically pays quite a bit less than the cost of buying, and likewise the renter has made no long term committment and doesn't pay for any upkeep, insurance or taxes on the property.

So while the renter does not accure equity, the renter also doesn't take on any risk, make a long term committment or pay nearly so much as to deserve any equity.

If you don't like it, then save your money and buy instead of renting.

 

[quadraphonics]

Which is why, excepting inherited wealth, one rarely sees young people who are wealthy. They simply haven't worked that long, and are often spending as fast as they make money, even if they make a lot.

If you're asserting that the wealth disparity illustrated in those graphs is simply a function of wealth accumulation over people's lifetimes, you should be able to prove that scientifically. I.e., dig up the data and show that there's a strong correlation between age and which wealth percentile you're in, and that most people will eventually make it into the upper percentiles if they live long enough.

All you've done so far is wave your hands. For all we know, the life-cycle component of the disparity is insignificant.

When one rents, one typically pays quite a bit less than the cost of buying,

Only in housing bubble conditions. Otherwise, the cost of renting and the cost of buying an equivalent place track very closely. It's obvious why this occurs: when they go out of sync, it creates a huge incentive to go against the trend (either live in an underpriced rental while houses are overvalued, or scoop up a cheap house while rents are inflated). Some manner of systematic financial distortion is required for rents and mortgage costs to diverge significantly for any extended period of time. Absent that, the only thing to differentiate the markets is the requirement that you save up a down payment to buy, and make a long-term commitment to the property.

Although, when I say "cost of renting" and "cost of buying" above, I mean on a near-term basis - eventually (on the scale of decades), the cost of renting is drastically higher. This is because your mortgage never increases, and eventually stops, while rents just continue increasing with inflation indefinitely.

and likewise the renter has made no long term committment and doesn't pay for any upkeep, insurance or taxes on the property.

You've obviously never been a landlord. The rental rate will be high enough to cover the mortgage payments, upkeep, insurance and taxes. If you can't charge that much for a rental, then you're in housing bubble conditions and shouldn't have spent your money on a losing proposition like purchasing a rental property. Renters might not write the actual checks for the insurance and taxes and so on, but you can be damned sure that they're the ones paying for that stuff.

There's also the fact that some percentage of rental properties are owned outright, or at least only encumbered by small payments for a mortgage taken out many years ago. In such cases, a landlord can charge enough to cover all mortgage costs, insurance, upkeep and taxes and make a nice profit to boot.

So while the renter does not accure equity, the renter also doesn't take on any risk, make a long term committment or pay nearly so much as to deserve any equity.

True enough, except for the "pay nearly so much" part, which is false. You should have said "come up with a down payment," as that's the other big market-entrance cost that entitles homeowners.

If you don't like it, then save your money and buy instead of renting.

That assumes that housing prices don't increase faster than a person can save a down payment. Which is an okay assumption these days, but is not in the kind of bubble conditions (housing prices outpacing rents) that you seem to assume are normative.

 

[adoucette]

 

[Buddha12]

Health is the greatest gift, contentment the greatest wealth, faithfulness the best relationship.

Buddha



He is richest who is content with the least, for content is the wealth of nature.

Socrates

 

[quadraphonics]

Well, that's a start. But you haven't actually connected that data to the earlier data on overall wealth distribution, nor addressed the question of how demographic changes might conspire with it to affect statistics.

The fact that people accumulate wealth over their careers doesn't explain why inequality has been increasing steadily since the 1970's, after being stable for a long time before that. It looks like you are trying to change the subject, and not offer a compelling explanation for the topical issue.

Meanwhile, the data you cite there shows some very interesting trends: the median wealth of every group under age 55 has taken a hit over those decades, including a huge hit for the youngest cohort. Meanwhile, the oldest cohort has seen its share greatly expand.

Also note that in the 1984 data, the oldest (retired) cohort has a lower net worth than the second-oldest (still working) cohort. This makes sense - you save up during your working years, and then spend it down during your retirement. Yet somehow these days the retirees are still increasing their net worth - what happened?

Of course, the source article has some things to say about all that:

Although this report does not delve deeply into how wealth is distributed overall, it is notable that the share of households at the top and bottom of the wealth curve has grown. As shown above, a growing share of all households (and shares of all age groups) has no wealth or negative wealth.​

These age-specific trends in net worth mean that the gap between older and younger American households increased dramatically from 1984 to 2009​

Or, see a related article:

Median family wealth has grown in recent decades. The biggest gains by far have been made by those in upper income groups.

The median net worth of families (all assets minus all debt) has risen by 50% over the past two decades, from $69,902 in 1983 to $104,645 in 2004 (all figures inflation-adjusted to 2008 dollars). But this growth has been spread unevenly through the income tiers. For the top income group, median family wealth has more than doubled during this time period, rising by 123% to $439,390 in 2004. For the middle income group, median wealth increased by only 29%, rising to $98,286 in 2004. For the lower income group, median wealth increased by just 24%, rising to $16,000 in 2004.​

 

[adoucette]

It indeed proves my point:

Which is why, excepting inherited wealth, one rarely sees young people who are wealthy

It is indeed rather rare to see someone below 35 who is wealthy, and that's why the average net worth is less than half the price of a cheap car.

But in the next decade of life, people on average do start to build wealth, and their net worth increases TEN times over what it was.

Then in the next decade of life, it grows to TWENTY FIVE times what it was when they were less than 35.

And it increases again in each succeeding decade.

Wealth is clearly something which accumulates over time as one works, gets better at one's job and makes enough to both save and invest.

 

[steampunk]

First of all, the top 1% does not own 99% of the wealth.

They have about 34%

I will admit, I think the 99% and 1% argument is more sloganization than accuracy. But, even your graph shows that roughly 20% own 80% of the wealth. This still is a significant disparity.

I have summarized your points. The valid reasons for this disparity you claim are:

1. People have worked longer; therefore they own more of the wealth.
2. People have more skills, higher quality of skill/talent that makes them comparatively worth more per hour; therefore they own more of the wealth.

This argument sounds great. I would agree 100% if there wasn't one factor that I refuse not to ignore: oil.

Let us briefly go on a small mind experiment. Imagine this 20% in your chart, who have all these superior skill and talents. Now, let me be the magician and snap my fingers and make the oil disappear. Now, this concrete and infrastructure is gone and we are back to a pre-industrialized society. If this twenty percent is really worth as much as you say, why can't get this wealth in a pre-industrialized world? Because they are not worth that much! It's only because of the oil, not because of their talents or skills! You have not proven they deserve this wealth that energy makes available.

This ones obviously guilty of the biggest problematic entitlement psychology are the 20% you have claimed have 80% of the wealth, not the occupiers, or the Obamacrats, which many are claiming.

BTW, the renters pay for all costs involved in the places they rent, otherwise the investment in rental properties never could pay off. The risk you claim is not a risk at all. Did you ignore that last few years of bailouts? A collective ownership of the rental properties would be the most conservative and stable way to secure gambling and exploitation of this property. Having a centralized policy would give us more leverage to stabilized things, but now we have no real control with the existing predatory capitalistic anarchy. The entropy that's channeled to the parasites could be channeled to ownership and the government.

An example on how your acceptance of the Rental Contract is Bullshit: Imagine that we paid off China with rental properties. Americans would be in eternal debt. Exploitative policies have led us to a 16 Trillion dollar debt and until we make a fundamental philosophical changes, it will not be turned around.