Weekend reading: Simply the best

While I always look forward to a Money Mustache posts, I’m beginning to think he is now moving into skinflint territory. The guy likely is now a multimillionaire. He can afford to treat his kid to an unhealthy pizza in an actual restaurant every now and again. Not every monetary saving is a real life gain. Not to mention the mental overhead of calculating how much money he’s saved with each smugly wise decision.

With FIRE came the chance to ease up a little on cost control and surprise & delight those nearest and dearest to me – not double down on it.

Re: MMM. Did no one else get a “coffee is for closers” feel from the post, without the douchery that scene brings?

Regardless, massively in awe of how true MMM has stayed to his original vision despite the material wealth he’s gained since he began. Someone who is thinking about the long term in a lot of ways.

@TI Yes, I’m aware of MMM’s generosity to others and it is to be much applauded. And as you say, there is something admirable about his wider vision and refusal to submit to lifestyle inflation. I just have a little disquiet about a possible inability to spend money freely to benefit those nearest to him and the time spent on being frugal. This is a guy who apparently uses a bench vice to get the last bit of juice out of limes. I can only imagine what it must be like for MMM Jr to be wandering the streets listening to MMM rant about the wastefulness and expense of the world while enjoying a rare ice cream. Still, none of us are without fault.

More thoughts on mmm – his identity as a blogger now depends on an image of frugality, his identity as s human might depend on his charity giving, and you also have to wonder that if someone shuns lifestyle inflation if they are judgemental of others? However I think we should not feel guilty if we feel the price is worth it since we need the wealthy to spend for our economy – the rich guy who buys a yacht is creating shipbuilding jobs, hiring staff, and these people all pay tax when they earn and spend

@jimjim – putting infrastructure in before the market deems a need is kind of like building a motorway in the middle of nowhere and hoping houses and factories will build around it

Wgat kind of businesses are we talking about that would need high bandwidth and decide it was compelling to set up in a remote place? Even if an individual business benefitted would it be profitable/worthwhile for the taxman?

I’m not certain that nationalising fibre broadband is good investment. With the advent of 5G, and who knows 6G or 7G?, it will be possible to use your smartphone as a mobile hotspot and connect to that with the same high speed access. A bit like if we had nationalised steam train manufacturing companies in the 1960’s.
Nevertheless, for people and companies in more rural areas existing broadband provision is simply dire, and as for ultrafast, have a look at https://www.ispreview.co.uk/index.php/2019/03/uk-finally-joins-2019-ftth-ultrafast-broadband-country-ranking.html

Re Defensive Portfolios-it seems to me after a lifetime of investing and looking back over my shoulder that very few of us have the ability to outsmart the market
Starting again with hindsight bias I would buy a World Equity Index Fund and World Bond Index Fund -2 funds only
Low cost ,simple and easy to understand
I don’t even think that if it’s 70/30 or 30/70 matters if you start young enough
Then work hard at the day job and save as much money to then invest as you can
That’s it!
xxd09

It’s easy to see how Barry can fall into the trap of thinking he is an average earner, no doubt his friends and peers are doing similar work and have similar rewards. He opens his paper and sees footballers earning in a week what he earns in a year. He turns on the TV and sees people jetting off on exotic holidays.

What he doesn’t do it go to the ONS to see what the real median wage is (£585 per week).

We can criticise him but should realise the people posting here are the outliers, most people get this information from the media and if it turns out to be garbage then the criticism should fall on the media.

I can understand why Barry Blimp might feel like he’s not wealthy (comparison to his peers, the super-rich, etc.) but surely you must be quite out of touch to think £80k doesn’t put you in the top 50% off UK earners! If you want some global perspective – put your salary into here: [http://www.globalrichlist.net/]. If you want to see your position in the distribution of the UK for net household equivalised income, the IFS has a good tool: [https://www.ifs.org.uk/tools_and_resources/where_do_you_fit_in].

@TI – I have voted both Conservative and Lib Dems in the past but this is the first time I’ve considered voting for Labour as an option (though I still need to put some time aside to read all the manifestos properly). I just wondered what your main concerns are with the Labour party policies?

@Matthew “@jimjim – putting infrastructure in before the market deems a need is kind of like building a motorway in the middle of nowhere and hoping houses and factories will build around it”
Isn’t this called town planning. Surely this is what more modern countries do?

@jim – motorways (and other public services) are generally only built when there’s established demand (environment aside) – you start off with B roads/ copper wires

As cities grow the supporting commuter belts will grow, and each city probably came to prominance for a geographic reason/ resources. I think when you are far from london, you get local capitals, like Bournemouth is bigger than you’d expect, and like in the USA/ other big countries you do get regional capitals where the main one is too far away

@matthew, I assume from your comments you haven’t spent much time in the rural outreaches of the country, otherwise I think you’d have a little more sympathy for JimJim.
I live in a small market town about 25 miles from a decent sized city, and have to pay through the nose for the BT ‘superfast’ broadband, which mostly works, but not always. Mobile signal is even worse. And I’m not even in the rural hinterland. It may surprise you that businesses do exist out in the sticks, and many many people aspire to set up by themselves, particularly in remote places where there aren’t really many employers within a reasonable travel time. Clearly, markets aren’t going to work well in sparsely populated areas where costs are higher and demand lower. That doesn’t mean we should basically ignore everyone who doesn’t live in a big city.

@Matthew,

I can’t agree with you. Fast broadband is not some luxury item in today’s world, it is a fundamental piece of infrastructure. We run two businesses from a rural location, both involve sharing large files with customers, and an increasing use of virtual meetings. After a fairly recent upgrade to fibre to the premises, it has been practical to expand our geographic reach and to spend less time on ‘trains, planes and automobiles’ for client meetings.

This has increased our quality of life and our economic impact on our locality.

If the current and future world is built on fast communications, failure to provide it means people who don’t have it lose the chance to participate. Yes we could all move aour businesses to big cities, but a) we don’t want to. and b) many cities have poor broadband as well. Just listen to the complaints from people on new estates in and around London who can’t get fast broadband because it is not seen as an economically critical utility.

It is like much other infrastructure of societal benefit. The private sector might build it or it might not, but most countries have learned not to depend on private investment for mission critical infrastructure. For example, the economic advantages to the North of England of upgrading the East/West rail links are obvious (the so-called Northern Powerhouse). If it was economically viable for them, the private sector could invest in the upgrade, but they haven’t. Despite the overall benefit to the economy, we will wait a long time for private companies to invest because many of the benefits accrue elsewhere. We need Government commitment, investment and guarantees to make it happen.

If we see fast broadband as a piece of critical infrastructure (and I do) then the same argument applies.

@The Borderer – 5G and whatever comes next is essentially a ‘last mile’ solution. You have to get the signals to the masts and that needs fibre. And as we go to higher generations of mobile, the range of each mast comes down and we need more masts that need to be served with more fibre. So there is a big fibre infrastructure roll-out required for 5G anyway. In terms of absolute data capacity, fibre will always beat radio transmission. That’s why all of the world telecoms backbone is fibre. The decision on FTTP vs FTTC+copper vs mobile phone is one of cost to install and cost to operate vs capacity demand and customer price sensitivity.

We are lucky. We got FTTP by some random accident of geography, public funding and Openreach engineering plans. We would have been happy for the moment with 30Mps from FTTC, but 1-2 Mps ADSL with frequent dropouts and total failure when it rained heavily was seriously cramping our participation in today’s economy and society. We don’t even have a decent 3G signal so mobile was out of the question.

Believe me this stuff matters to the rural economy. The digital divide is real and needs to be addressed for the progress of the nation.

The word @Old Eyes… Keepin it real

@old eyes – in the same way that infrequent busses are a problem for rural businesses I can appreciate that a lack of infrastructure limits business, but surely this is a consideration when deciding where to place/keep a business? You wouldn’t put a factory on a dirt track and the expect the rest of the country to pay for a road. Likewise you wouldnt put a farm in london and say that the land is too expensive – local factors factor into the decision.

Its a good cause though to be sure, but the best cause? – the most efficient use of limited resources?
Capitalism does sadly leave people behind but ultimately decides what is worthwhile, it could well be the case that government does see intervention as worthwhile/profitable, and does see the taxes it’ll get from your growth, like it thinks with HS2

But I do think rural businesses should have the option to pay for what connectivity they do need, and expect the speeds advertised, perhaps regional pricing or breaking up openreach into regions would help somewhat

@ZXSpectrum48k
Agreed, we pay for road use, gas, electricity, water and as I have said, I would gladly pay for a decent service for fast broadband. It is a crucial service even at household level and how a business would run without it is beyond me. As is how any business would function without the road network, which is pretty much as you describe above.

I’d like to take issue with Adam Collins’s portfolio of four ETFs. Having lived through the collapses of Icesave and Northern Rock banks, I’d advocate greater diversity to spread the risks along every link in the chain – brokers, investment houses (Vanguard, iShares etc., not wealth management!), regions of the world (probably covered by the four ETFs) and even investment wrappers (i.e. invest in unit trusts and investment trusts as well as ETFs).
Regards, Nigel

@TI (22) – Thanks for clarifying the editorial comment in brackets, I can fully see the comparison you were making. On the comments: I totally agree – it is great to have something other than B****t dominate the weekend reading thread!

@Matthew (24) – You are right on the whole that most towns/cities grow ‘organically’, however there have been a dozen or so towns in the UK that were built over the last half century specifically as a result of the New Towns Act 1946 where essentially the road and rail was built first (or already existed) and then entire new towns were built and populations relocated (usually to the displeasure of existing residents).

On the article about Marie Kondo – it does seem a bit hypocritical for her to be encouraging fans to buy more products (although I understand why she is trying to diversify the monetisation of her brand)! Surely her fans should be finding people, experiences, products, etc., that spark joy in them as opposed to buying products that spark joy in Kondo?

@freemantle I’m an 80k plus earner have been for the last 4 years and at 39 my net worth is a shade over 500k. Take out my house equity and its 330k. That change has happened relatively quickly too So actually the majority of my wealth has been generated on less than 50k earnings. Based on conversations with my peers I would agree I’m a total outlier. Incidentally I still don’t feel wealthy I guess because most of thsy wealth (about 400k)is in pensions and my property so not readily accessible

@Tony I agree he doesn’t present as a sympathetic character in the few moments he appeared on TV. But I wonder whether he may be articulating a real point?

I was paid to that level, and owned my own house but I never felt secure or well off.

Never a new(or even newish) car. My 1930s semi was in a lower market side street near Heathrow and we had no expensive lifestyle. The job, in both hours and atmosphere was pretty unpleasant.

Governments of both colours were always changing the rules. Never for my benefit. It was hard to plan, for the future. By hard work and luck I got out at a reasonable age.

I worked with or for some of the people now standing in the election, and I saw nothing that made me think they had the best interests of anyone except themselves.

Maybe chummy on the TV is expressing the cynicism we all feel.

Infrastructure development can’t just be turned on like a tap. The companies needed to do the work aren’t sitting idly waiting. There’s the requirement specs to be drawn up, the response period, the procurement reviews etc. Then their might be legal precursors ( compulsory purchase etc). When it finally gets the go ahead ( against an unduly optimistic schedule) there’s also skill shortages, material lead times etc to be considered.
Should have been put into motion years ago but….

If we take ‘Barry’, say he lives in London and his age bracket is 40-49, the median full time salary is probably something like 50k (couldn’t find specific figures, but 40-49 earn around 25% more than the overall average). 80k is still very good, clearly above the 50% mark, but the gap is closing and it starts looking less extreme in this context (yes, totally out of touch to the country as a whole). As others have said, he is also probably confusing income with wealth. Most people don’t earn 80k when they start out (if ever), and if you have only been at that level for a few years say you may not have the assets/security behind you yet to feel you should be classed as wealthy. But you have a hell of an opportunity to build assets/security most can only dream of.

Of course many people just don’t want to pay more tax….

Re. the free broadband for all. We all live in a bubble, and as such have been talking about the need for business and those who live rurally to have decent internet access.

But while @Matthew gliby talks about dole claimants playing video games, from what I understand, in order to claim Universal Credit in the first place, you have to do it online. I’ve also read you have to input your job search diary online as well.

So I would argue that those people who require Universal Credit and that don’t have decent internet infrastructure, or may not be able to afford internet, and who may similarly may be unable to travel for either medical or cost reasons, or indeed have no local library or internet cafe within a short distance anyway, would benefit enormously from having free broadband rolled out to all corners of our four countries.

I’d also be happy with a regime change that got rid of these online only rules too. But that’s probably getting a bit political. Sorry @TI.

Anecdotally, everyone currently living that I know, from young children to people in their late seventies, use the internet. The only person I knew who never used it personally was one of my late grandmothers. And even then, family would still show her content from the internet on their phones or tablets. I grew up before it was a thing (born late seventies), and can cope perfectly well if it goes out temporarily, but the reality is with how our current society works it is not only relied upon but needed.

P.S. Sorry for the run on sentences. I can’t help myself.

According to Rebecca Long Bailey’s speech at the University of Lancaster on 15 November 2019 “the next Labour government will deliver free full-fibre broadband to all individuals and businesses by 2030”
I do not for one moment argue with the importance of high speed connectivity to every corner of the UK.
I simply question whether nationalising Openreach is the way to achieve it, and whether full fibre is necessary in every home at the taxpayer’s expense?
@TI mea culpa for the “L” word.

@kel – 56k dial up modem should be enough for UC claim/job application, or if that keeps timing out nowadays then 10mbs should certainly be more than enough for those basic purposes

@max – I once read someone say they had physics skills instead of psychic skills!

Interesting article about how computers have arbritaged away value alpha more than growth

@Max86 … Saw that one after posting, was laughing hard myself, dropping back into the tradesman’s jokes of my earthy past subconsciously perhaps 😉

@Max86… Perhaps mine would be full of Euroseptics???

@TI, The Barry Blimp in question time, according to the I, is a Mr Rob Barber ofBury, Lancashire. Rob “Bullet” Barber, races bikes and is an I.T. consultant.

The average salary in Bury is….
https://www.payscale.com/research/UK/Location=Bury-England%3A-Manchester/Salary

[@JimJim — I edited your four posts to put them all into one. Please try and avoid one-liner posts on Monevator — with our old-fashioned comment style it’s quite clunky and distracting. Thanks! 🙂

As TA is writing ✍️ a book some of his older articles get updated and recycled and I love reading below the line on those articles. From looking at what contributors were talking about/ thinking about then ( sometimes 2009) compared to what has happened I 100pc agree with you.

@Vanguardfan In general this is true but if you are going to go on TV to make a point then your should get your figures straight first. I started off defending him early in this thread but the more I think about it the more I realise he has his head stuck up his own arse.

@TI I look forward to reading that article ! Imagine there was a campaign that ISAs had an upper limit of 250k for eg…

@JimJim – I think defending why your wealth shouldn’t be hit ( you’ve accumulated via frugality) whilst you don’t mind your income being hit goes toward what I was saying – you don’t see yourself as ‘rich’ but were someone to come for your wealth I’m not sure many people would be lining up to agree you shouldn’t pay more…

I’m not justifying his ignorance. I’m just saying that it takes conscious effort, type 2 thinking, to override our innate biases. Most people aren’t aware of that and don’t bother trying. But I’ll bet every one of us, even if we intellectually know we are really well off, have some kind of emotional attachment to the idea that we are not ‘really’ rich. I think that also is because we have an unrealistic idea that wealth transforms our emotionally felt internal human experience. As you said before, people remain essentially themselves. Don’t look to wealth to change your life or your personality!
The other bias at play here is loss aversion. Very very few people actively want to lose money to taxation. Like JimJim, I think we desperately need investment in public services and would willingly pay more, that doesn’t mean I don’t look at proposed tax increases and immediately feel a negative emotional reaction. It takes a few more seconds to remind myself that this would have absolutely no real impact on my life. Type 2 thinking again, but many people don’t realise they have to think things through beyond the gut reaction.

I remember the year I earned £80k: 1999. I’d started in 1998, on a salary of £30k with a £10k bonus. The next year my salary was £40k with a £40k bonus. My boss informed me my salary for 2000 would be £80k and, going forward, I would earn ‘real money’. I felt £80k was ‘real money’. My parents were staggered. It was 6x what my dad had ever earned in a year and I didn’t even do overtime or weekends.

Roll forward to 2019. That old boss was right. I did earn ‘real money’. Statistically, my income has put me in the 1% (and 0.1%) for almost twenty years. My wealth puts me deep into the 1%. Yet, I don’t feel wealthy. These days, I can’t imagine getting our spending down to £80k/annum, yet we view our lifestyle as at best comfortable but in no way luxurious. My colleagues see it as simply cheap and not in a good way.

I feel more stressed about my financial position than I did in 1999. I worry about losing that wealth and financial security always feels just over that horizon. I’m basically far more paranoid. But another old boss told me once “I’m paying you to be paranoid” so perhaps it just comes with the territory.

@TI. Spot on. Except for the £80k category sending their kids to private school. That doesn’t really kick in until you get into the £150k or £500k category. Fees for 2 children at say Brighton College is over £80k. That’s £140k of pre-tax income.

That sort of represents the issue. A family with one breadwinner on £80k simply isn’t able to afford items like private education. They might be comfortable but somehow they find they can’t afford luxury without going into debt. Statistically, they are in the 5% percentile but they don’t feel “rich”; they don’t even feel upper middle class. That’s because they are not upper middle class. The middle class is being hollowed out.

The issue here is wealth inequality. If you model wealth inequality as a Wiener process, in the most naive model, the wealth distribution never stabilizes: asymptotically all wealth accrues to a small minority (‘feudalism’). So you need to add in a term to represent wealth redistribution, essentially a mean-reversion term that attracts wealth back to the mean. If you are rich it pulls your wealth lower. If you are poor it pulls your wealth higher. If you then fit that model to historic data, then what is notable is the sign of that redistribution term went negative in the 80s. Trickle down became trickle up.

The neo-liberal economic model is based on a fiat currency system with price stability (i.e. there is only a limited constraint on the creation of money; the primary constraint is the price of money). That system has been hugely successful at generating global economic growth, pulling billions out of absolute poverty. Nonetheless, there is an inherent feedback loop in the money creation system that allows those with negative net wealth to go into further debt, requiring lower interest rates to make it sustainable, which raises asset prices. On a relative basis, that loop causes wealth levels inside populations to bifurcate into poor and rich, slowly eroding the middle class.

@ZX, you make my point completely. You know you are wealthy, but you don’t FEEL it.
We are all the same, it’s the way our brains are wired.
This brings us back to MMM. The only way to feel wealthy is to practice gratitude. And frankly you don’t actually have to be objectively wealthy to do that.
And some self awareness helps – noticing that more money makes you feel more rather than less stressed should lead to some conclusions.

I am half way through a wet cold bike ride around Coniston and the surrounding hills, so far I have waved at many fellow cyclists, gone over the fell and around the east of the lake and have stopped for coffe and poached eggs. I feel wealthy. And would still with a little less.

@Nas – If you have tax credits/universal credit, contribute to a pension, you’ll decrease your gross income in the eyes of hmrc, increasing the benefit on top of the standard tax uplift, and avoiding the uc savings threshold. Also you will be accustomed to living more efficiently than many readers, and so don’t need as much to retire, especially if you’re not renting. If you own a house perhaps own it as tennants in common with a will to pass it on directly to children (if it goes to spouse its vulnerable to care home fees)

I do believe that some level of early retirement is possible and you have time for risk, but if it doesn’t pay off in time you may want to consider aiming for a comfortable retirement rather than an early one – you can cram more living into fewer years that way

@AnAdmirer Isn’t the reason the top 10% pay the majority of taxes because the top 10% have managed to make themselves so wealthy at the expense of everybody else. It seems to me many of these problems have their roots in our high levels of inequality.

I never bought that idea of envy politics, it always seemed like a cheap shot to me, especially when many of the politicians advancing ideas for improving the lives of those at the bottom aren’t particularly poor.

@Nas – I’ve been on here every so often over past few years – took a break when it was non stop nonsense on Brexit – but I don’t think it’s an early retirement site. More about having comfortable retirement around ordinary retirement age I think.

@Matthew. 43% of all adults in the UK don’t pay any income tax. With 4 in 10 not paying any income tax, it follows that the higher paid will be paying a significant chunk of the overall income tax take. The top 1%, with an income above £160k, receive 14% of national income but pay 27% of all income tax.

The boundary to get into the top 0.1% is not very high, just £650k. This is the floor for compensation that equity partners at large law firm or accountancy firms (both LLPs). It’s also around the floor for compensation for SIF-coded (significant influence function) staff at investment banks. A hedge fund portfolio manager making a modest $5-10mm in P&L would get paid around that. It’s definately not the type of compensation that FTSE 100 CEOs get, which averages more like £3-4mm.

@Matthew I would say it’s easier to live efficiently when you don’t have much choice about the matter but I take your point that I could retire on much less than some, eg only £16k assuming the 80% rule.

@BBlimp If I don’t have to continue working past the pension age then I’d settle for that as early retirement. I only wonder whether the relatively small sums I can set aside would create a pot that would generate the £7k pa to top-up the state pension. Maybe it’s just too little, too late for a comfortable old age.

I guess you started saving in your 20s to get to that 250k on a low income? Starting from scratch at the age of 40 seems an uphill task.

What we really need is a reverse £Tax lookup.

I paid £x in tax what percentile does this equate to? Does such a tool exist?

The £income percentile v tax £paid percentile would be interesting to see and chart by population profile.

Barry from Bolton may find himself in the top 5% of earnings but in the top 3% of tax pounds – many wealthier people with dividends and capital gains income would be in a lower £tax percentile v £income percentile.

I’m not sure what the fair answer is – but I’m starting to err on the side of flat %income tax….and even closer alignment of unearned income being taxed similarly to earned income.

B

Well I sent both my children through private schools from the ages of 3 to 18, then 1 through university. My wife and I both smoke and our total household income between us only exceeded 100k every now and then. At the peak of the expense season I was earning about 40k and the school fees for the children amounted to 17k pa. I believe it is a bit harder now, but if you want all that plus upmarket cars every few years you might struggle. It’s a matter of priorities ( oh, and family pressure 🙁 ).
At the pretty standard company I have just retired from, only recent graduates earned less than 30k. Median would be 45k at a guess. Plenty above 80k. This isn’t London.

Also I’m concerned that @Nas said “to top up the state pension” – do you have a company pension? As you dont want to miss out on employer contributions, even if it invests in inferior funds

Nas could defer the state pension if necessary to increase it, its one way we all can have more income in retirement

“The value of a thing is the price that thing will bring” – this is economics 101. And yet, in my opinion, not only wrong in concept but nowadays totally distorted.
How, for example, can a banker have more value than a doctor? If you had a heart attack would you call for a banker?
Or a pop star, footballer, celebrity, ‘media influencer’ (whatever the hell that is) earn so much more than the most valued professions in society?
I think society has lost its compass on what really matters, and is becoming more and more dissatisfied with the status quo, an example being Barry Blimp from Bury’s outburst on QT. He clearly believed it was not right that he should be considered as one of the top 5% when the evidence all around him shows he can’t possibly be.
And that evidence is continously being propogated by the press and online media.
We simply can’t ‘keep up with the Kardashians’, but are being impelled to try, an endless downward spiral of dissatisfaction.

@borderer-
“How, for example, can a banker have more value than a doctor? If you had a heart attack would you call for a banker?
Or a pop star, footballer, celebrity, ‘media influencer’ (whatever the hell that is) earn so much more than the most valued professions in society?”

The theory is that the banker provides a service that many of the people that society highly values (the rich) do highly value themselves , and/or by providing services to a huge number of the less well off too (think how much we appreciate the ability to take out a mortgage, or to have a current account, or to have credit when you need it)

The doctor on the other hand (or teacher) provides a profound service to a smaller number of people, and if these people are less wealthy (ie not so highly valued by capitalist society) – then helping them is doing less good than helping a private patient who provides a service that is highly valued, financially.

The pop star or footballer provides tiny snippets of happiness to millions, which in sum total is more good to humanity’s quality of life than helping a handful of people. The social media influencer(or hedge fund manager) sells a dream.

The kid who inherits has been highly valued by one of society’s highly valuable people.
Unskilled work is more valuable in its role/ necessity than it appears but individual workers are easily replaced, which makes them appear less value individually, so you have more elasticity of price with employers in truth willing to pay more for these services if there were a massive staff shortage for some reason…

@Matthew, Extrapolating from that, and believing that value does not equal wealth but today’s society is behaving like it does, Inherited and un-earned wealth will only feed the divide between rich and poor and lead to inequalities. As the amount of wealth in our society grows (It seems to have for a very long time now due to technological development) so under this system inequalities must. Wars seem to sort this out by reducing the number of people who are available to do the actual physical work and driving the value of that work higher. Personally I think it is a little extreme to let it get to that state and advocate state intervention to prevent it.

@Matthew. Agreed. But the children of the wealthy are only valued by the parents of those children, not necessarily by society, wealth breeds wealth. Trickle down economics may have some mechanism but I would argue it is a flawed one that has only resulted in the increasing inequalities of today’s society. Rights issues are used to increase liquidity, secondary markets are more akin to buying a property and renting it, a poor analogy perhaps but I am at work and could not think of a better one off cuff. Money eventually takes on a life of it’s own and precludes any need to produce to tackle the demands from society. In FIRE we look to get to a point where, for some, we no longer feel the need to produce as we do not need the reward. For others it gives a chance to give back by voluntary work, which, could be counterproductive in driving down some of the lower salaries. Two edges to every sword?

@jimjim – the secondary markets give confidence to rights issues, like the secondary car market gives confidence to buyers of new cars that wgat they’re buying has value. The secondary market helps establish the price in a rights issue 🙂

I think errors of judgement do get made with inheritances, due to proximity bias we value those around us more, but morally you could say that an inheritee is more likely to put money to riskier, productive use in the markets, and that once money is invested it is available to companies to access through rights issues, so if they’re not drawing on that perhaps the rich aren’t spending

Fwiw if the rich aren’t spending and are overinvested in unproductive bonds, inflation steadily redistributes that.
Also whoever does sell the asset then goes on to spend/invest I presume

I think we tend to over focus on the extremes of the tiniest minorities

@matthew I’m guessing you’re not a parent? Due to ‘proximity bias’, they make ‘errors of judgement’ in favour of their offspring all the time 😉

Life is not an economic textbook, thankfully.

@Matthew: One point I forgot @Jim – voluteering is a good thing, but if it’s not valued enough to be paid perhaos it does not do as much good for society as the desk job?

I think there’s some valid points in your post, but you’re equating financial value with good for society; something I think the vast majority of people would question if not entirely reject as a premise.

Harold Shipman was paid quite generously, lawyers and marketeers denying the impact of smoking for decades after they were proven past doubt made out like bandits…

Even at a less hyperbolic level it seems like a stretch to suggest that someone giving MMR vaccines as part of a charity effort in an impoverished country is doing less “good for society” than a paid nurse in a wealthy country without explicitly basing your argument on the premise that the wealth of the person you are helping is proportionate to the good you are doing.

@Matthew “indeed I am and I am prepared to make less moral choices for his benefit, as he is to me a surer bet of a good thing than most of society”
To play devil’s advocate, surely this is intervention on your part to help buffer the vagaries of the free market, favoring your own progeny. Why is this different from state intervention to favour the less fortunate geographically for instance 😉
@John… “it seems like a stretch to suggest that someone giving MMR vaccines as part of a charity effort in an impoverished country is doing less “good for society” than a paid nurse in a wealthy country”
Devils advocate again… Would it not be even better if a paid local employee on the ground in that country were used???

@jimjim – good point! I can’t deny there are capitalist reasons to vote in a socialist government to exploit, its difficult to calculate what will yield best – I suppose socialism short term, capitalism long term

You could also argue that brutally the kids getting vaccinated had less forecaseted productivity, due to less infrastructure, health and education, but I think at the extremes it gets difficult to justify, because the morality behind capitalism is only a means to an end – of generically good outcomes for most – how far does the ends justify the means? – at some point I suppose it could break down, in ultra extreme cases like that

@TI That index sounds unwieldy as is. I don’t blame you for giving up. But that’s my point, with over 300+ links on here, it’s not easy to find stuff. The completion of the book will probably be the impetus you need to make a basic beginner’s page though, in anticipation of all the new readers you will attract off the back of the book.

@the Borderer… I agree that from many perspectives that this situation is skewed. This has been going on in society for ever and it is to do with scarcity. Is gold useful? yes, but it is scarce so it is used less as a consumable and more as an asset (I don’t get gold so I don’t invest in it). Economics would have us look at a supply/demand graph to see the “value”. One thing in life I try not to involve myself in is the valuing of things because of scarcity. Talent is also a scarce thing, valuing it is impossible at the extremes. Advertising is as you say, built to drive demand, but the genie is out of the bottle on that one, try putting it back. I tend to only watch T.V. nowadays without adverts as they irk me, and my wants are pretty fulfilled at the basic level so I am content. The power of the workers coming out on strike frightens people with wealth as they know it would be bad for them but they rely upon the abundance of labour (and anti strike regulations) to control this.

@Matthew (116)
I give up.