Your numbers are off. If both people save $50k each from their investment/wage income, then both of them will earn 10% returns on that $50k of savings. Hence why they cancel each other out. You've only given the worker 3% returns on his savings, not 10%
Check out Zadie Smith's fascinating treatment of Justin Bieber as love object in Feel Free [1], where she argues Bieber and Buber are, after all, English versions of the same German name, so in her mind, the pop star and Jewish philosopher are spiritual cousins - both forever obsessed about personal relationships. The entire book has this sort of unorthodox and completely compelling insight and is a delight!
Obscene wealth next to in your face poverty is nothing new, nor particularly special about SF. I don't deny it's a big problem, but this is pretty much what every major city wrestles with. Nor is this unique to our time period. For example, it's well documented that in Paris through as early as the 1700's through now, that there was an enormous amount of capital concentration right beside extreme poverty and >40% of the population owning net nothing. 'Dystopian' is also a very dramatic language.. Where do you live in SF? If you live in downtown or soma and only spend time there, I can see what you mean. However if you go out to richmond or sunset for example, there are a lot more families and children there.
It's different in SF. The homeless are much more "in your face" than in any other city I've been to by a long shot e.g. in NYC the homeless mostly keep to themselves and aren't very aggressive in my experience. In SF they are very aggressive, many with mental issues, talking to themselves or yelling at others, and appear to be on drugs. I've never visited a city where they are so many homeless who are simply passed out in the middle of the sidewalk on the hard ground with people in suits stepping over them downtown. It's also more "visible" because services that cater to homeless are all located downtown.
I live in Castro, but obviously like many spend a lot of time downtown for work.
Sure, there are families in the outer neighborhoods, but it's different in the sense that those are mostly families that have lived in SF for generations. Good luck trying to raise a family as a newcomer on the reported median household income for SF of ~$78k.
Agreed - there are a lot of aggressive homeless people downtown, and in berkeley as well. Some guy was cussing me out and trying to pick a fight with me the other week when I was just walking along.
Definitely true, SF really is unlivable on a median income and that is a continual frustration I have.
> it's well documented that in Paris through as early as the 1700's through now, that there was an enormous amount of capital concentration right beside extreme poverty
1700s-present France is not what comes to mind when one says the words "stable and prosperous".
What does come to mind is executing a bunch of people then spending 150yr trying to figure out the best way to replace them.
> Obscene wealth next to in your face poverty is nothing new, nor particularly special about SF.
It is common in developing/third world nations. Income inequality is a hallmark of such nations. It would seem that the United States has dropped from a first world (creditor) nation to a third world (debtor) nation. It is a fairly recent phenomenon with very real and easily explainable reasons, which the article states numerous times over.
Any decent-sized US city has its share both wealth and poverty, but most are dominated by postwar development, so the two are separated by miles of freeway rather than feet of sidewalk.
Where inequality seems worse, you are probably seeing a successful progressive effort to prevent segregation, and vice versa. When your neighbors and everyone you encounter in daily life are all in roughly the same economic shape as you, that doesn't mean you're living in an egalitarian society. Quite the opposite.
You have triggered me, so I will rant a bit about the Fallacy of Equality of All Good Things.
Let me explain:
* Fallacy 1: First/third world = Creditor/Debtor
The financial hubs are always debtor countries, because the periphery wants to accumulate their reserves. So when England was the dominant financial power it always ran a trade deficit as everyone else wanted to acquire pound-denominated assets, which is a roundabout way of saying they wanted to be creditors to the UK. This allowed consumption goods from all over the world to flow into the UK while the rest of the world used the proceeds to acquire pound claims.
When the U.S took over, everyone started accumulating dollar assets, meaning they were creditors to the US. How did they achieve this magical feat? It's pretty easy, they just made their currencies a bit undervalued relative to the currency of the core. Nations can trash their own currencies pretty easily -- there is only a political downside, but if you can convince your countrymen to tighten their belts in exchange for being a creditor nation, then all the better, especially if you really need a reserve with which to buy foreign inputs. In other cases, they were not very democratic to begin with, so it wasn't an issue.
This is also true if you study local financial flows within a country -- a major urban area will be a debtor area and the poorer, smaller region around it will be a creditor to it, which is just another way of saying money flows out of the city and consumption goods flow into it from the land around. If you compare how much a person in a city consumes per day versus how much a person in the periphery consumes, we in the core consume quite a bit more. Restaurants, bars, custom shoes, concerts, museums -- we really live it up! How can money just flow out of a city without a printing press there? Because the periphery re-invests by purchasing assets in the core, recycling the money. So if you live in a farm or small town you will have a retirement account with stock or bonds that are claims on companies in the core -- the money you save is being sent back to the core rather than being invested in some other small town -- thus the periphery is a creditor to the core. This is true for cities as well as nations. This phenomena of net trade inflows to big cities was even true of Ancient Rome and Ancient Athens, but there it was pretty obvious that rather than having the farmers invest their money in Rome stocks, they were just taxed the loot was brought into Rome. The developed urban core is always a consumption sink while the more rural periphery tightens its belt.
This does not mean that the core is third world and the periphery is first world -- it means the opposite!
* Fallacy 2: strong currency = export power.
There is a similar fallacy with being an export power and having a "strong" currency. People like to have a "strong" currency -- e.g. who prefers weakness to strength? But people also like to be net exporters, because they want to make more income selling goods to others than they spend buying goods from others. But the stronger your currency, the more expensive your product and you become a net importer. Because assets in the core are somewhat overvalued relative to the periphery that the core is a net importer. You can see this by comparing interest rates in the periphery versus the core.
But you often hear people demanding both a strong currency and being an export power. And sometimes they throw in first world and net creditor to boot. Even though these good things are the opposites of each other. You have to pick and choose -- do you want to export a lot with an artificially weak currency, or import a lot with an artificially strong currency? Do you want to be a financial hub and thus a debtor or a smaller node orbiting the hub and thus a creditor? You can pick and choose what you want, but you can't have it all.
Here endeth my rant on the fallacy of Equality of All Good Things.
What do you mean by recent? There's been a whole society of rentiers living solely off investment income in most countries for at least the last 300 years, if not several thousand years. It's extremely well documented, especially in Britain and France since the early 1800's (see Thomas Piketty's work on wealth distribution). The more capital one owns, in general, more income is earned from capital rather than wages. This ratio increases sharply when you look at the top 1% and 0.1% of owners.
I think the recent phenomenon is that many folks with moderate levels of income and initial capital have become convinced that they can attain financial freedom. Pickety's research does not support that, in fact, it supports the opposite conclusion: the only way to get wealthy, is to start wealthy.
That's an ironic claim on this platform. If you make $200k/year (normal high tech comp, probably not far from the average person here), save $100k/year and average 6.5% returns over 10 years, you have $1.4M.
You can then on average draw down $63k/year assuming 2% inflation to retain your purchasing power until the end of time. That's very comfortable if you're just willing to not live in the bay area or NYC.
I'm drawing a line between "software developer" and "high tech"
By high tech I ideally mean a company building novel and innovative software using new ideas and techniques, but implicitly I pretty much mean FAANG/well resourced startup in a tech hub.
And of course it reflects the "HN bubble", that's literally what I was referencing.
HN ranks in the top 1000 most popular sites in the US. How many of those visitors do you think are building “new and innovative” software?
How many of those who are building software at all do you think are not just building yet another software as a service CRUD app where the founder thinks they need “rockstar ninja” employees who can do leetCode in their sleep?
It's like that quote attributed to Steinbeck - "Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires."
Temporarily embarrassed millionaire American here. I can't make universal health care and UBI happen. The next best thing is to acquire wealth so I can some day avoid the drudgery of working life. Maybe.
What you're saying is not exactly true. It's not necessarily competition from PE firms, it's high market value of good businesses. From the letter: "In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will
permanently own. The immediate prospects for that, however, are not good: Prices are sky-high for businesses
possessing decent long-term prospects." What you're saying about competition is more true in a low growth regime (Europe pre-industrial revolution) in that too much capital kills return on capital. However growth rates are high, and will continue to be high for the foreseeable future, and return on capital in general will still be really good. Theory aside, the thesis of Berkshire is making good investments at a low price, and running businesses - of which Buffet's 'star power' is a more marginal factor in my opinion.
High market value is based on what companies (or with goods people) are willing to pay. If there is more money floating around and there are more buyers then the price you pay will increase. And I am not talking about economics taught in school either. I am talking common sense the way anyone can observe even if they never took a course or read a book.
I'm picking through the author's paper and I don't buy this conclusion. I have a bone to pick with his evidence: for example, he makes a comparison between "willingness to expend time to drive to obtain an accidentally left behind unused, new-condition notebook (vs. willingness to expend driving
time to obtain a new notebook at no financial cost)". The extent of the former he denotes as WTP-Retain and the latter WTP-Obtain. Even if these two values are equal in a study, that doesn't contradict the principle of loss aversion. In the case where a subject has already left behind his/her notebook, the loss has already happened. How can this measure loss aversion when the loss has already occurred? I think it's good the authors are trying to tease apart action vs inaction from loss/gain but these conclusions don't seem valid to me.
He did that all throughout the linked article too: "People do not rate the pain of losing $10 to be more intense than the pleasure of gaining $10." Okay. That's not loss aversion though.
"People do not report their favorite sports team losing a game will be more impactful than their favorite sports team winning a game." Same.
How to you rate pain like this? There is no metric for pain/pleasure per dollar.
And there are other factors at play. Often the thrill is the dopamine release when you make these decisions — that’s the pain. If you’re intensely interested, losing $500 in Monopoly or scoring a run in baseball may be felt profoundly.
It all depends on context, not the means by which we measure an outcome.
Well the test subject has the option to 'undo' the loss. So the loss can be seen as optional for the purposes of the experiment.
Could we settle the argument by reading the definition of loss aversion to 10 people and asking each person whether the author's experiment measures loss aversion?
in my experience, doing deep learning is a lot harder than building simpler ml models. training times are killer, need lots of data, overfitting is a challenge, hard to interpret results, lots of things can go wrong. deep learning is the future from a mathematical standpoint (with neural nets you can essentially learn arbitrary functions in some borel space or something whereas simpler ml models are basically a special case of deep learning) but it's definitely harder.
Exactly - if you want to make choices based off what's economically the best (studying CS), that's fine. But there's so much beauty in the world that is "impractical" to reach for (like studying music, art, seeing nature, etc)
Sorry you had that bad experience (I would be pissed too), but the logic of (you having a singular bad experience therefore company will likely die) is next to baseless.
No. The point is that there is zero protection for customers getting cancelled by the host at last minutes. This would be about the worst thing that can happen on your hard earned vacation, especially if you are traveling with families. Customers can't even leave a review! All the while there is asymmetry that customers will be punished if they cancelled at last moment on host.
The reason I don't believe in Airbnb simply because they lean toward the hosts, but offering no protection for the renters. In some cases, they have policy only applies to renters, but not at the hosts.
Last I checked, the host cancelled on my reservation is still listing and hosting. I believe they can do better. Even Uber lets both driver and rider rate each other.
