record inequality

[c1ue]

Re: record inequality

By my definition, a "junior rentier" is someone who collects a level of income similar to what I earn today, only from passive sources.

ASH,

Don't get me wrong, I understand what you are saying nor am I disparaging your goal.

My point is simply that rentiers are not simply those who rent out. Rentiers are those who use their accumulation of a preponderance of capital to extract value out of all others.

The form may be cash rent, it may be free labor (a la 'putting out'), it may be a free ride on other's spending. There are many other forms.

As an example: note that interest payments on cash deposits in banks used to be 'passive income'. Ditto bonds and their coupons. The reasons why these don't work anymore are well documented in iTulip.

Many people today consider real estate to be a 'rentier' type income. I disagree; my view is that those 'small fry' who got into real estate early enough (70s and 80s) are not true rentiers because they did not create nor promote the situation which led to their present economic status, rather were free riders on the actions of the true rentiers.

Why does this matter? Because unlike the true rentiers, these people are really feeding on those coming into the game later much as in a pyramid scheme.

And why does this matter? Because the creators of the pyramid scheme can change it or end it at will or the scheme may collapse involuntarily due to economic reality.

The popping of the real estate bubble in the past few years is an excellent example - how many of the afflicted were also seeking to be come rentiers in the cash rent sense?

Consider this in your consideration.

[jk]

Re: record inequality

I don't care what we call it, though. My point is simply that I think I have about one generation to decouple my income from the value of my labor to others. That's not much different from someone who seeks to retire on a nest egg that is large enough they don't have to draw down the principal (even inflation-adjusted). The only caveat is I'm thinking in terms of supporting a family off of passive income, rather than just a retired person.

ash, you have exactly one generation to live your life. and whatever you achieve and however much you accumulate, it will not be clear how much you'll be able to pass on in a lasting way. you will give your kids as good a start as you can, and whatever help you can offer [when help is appropriate], but that's it. so i'm not exactly sure what it is you're trying to attain, or whether it is - even in theory - attainable.

[ASH]

Re: record inequality

ash, you have exactly one generation to live your life. and whatever you achieve and however much you accumulate, it will not be clear how much you'll be able to pass on in a lasting way. you will give your kids as good a start as you can, and whatever help you can offer [when help is appropriate], but that's it. so i'm not exactly sure what it is you're trying to attain, or whether it is - even in theory - attainable.

I agree with all that you say. Let me explain what I'm trying to attain, using the terms you suggested.

My parents gave me "as good a start" as they could. For my generation, that meant a good education -- training that increased the value of my labor so that if I applied myself, I would generally be able to find a job and earn a "good" wage.

The topic of this sub-thread is the declining value of labor in the context of globalization. I don't regard the matter as proven, but I share Flintlock's impression that equilibrium in the labor market lies at a lower level for American workers -- including highly educated folks like myself, in the end. So, fearing that a top-notch education and such smarts as my kids may inherit will not be enough to guarantee that their future labor will be valued highly enough to support the standard of living I enjoy, what is "as good a start" as I can give them? Well, to the extent that capital is better able to claim productivity gains and maintain income in the context of weaker pricing power for labor, the answer is that I should give my kids as much capital as I can, and the skills required to manage that capital. After that, yes -- they're on their own.

Does this change what most parents would try to do? Probably not. I think most parents would try both to educate their children and then pass on whatever wealth they are able to accumulate. However, in the context of Flintlock's post, my assessment is that my ability to pass on significant capital to my children may actually be necessary for them to enjoy the standard of living that I have. In the case of my own parents (who, thankfully, are both still alive), they can be reasonably sure that having given me a good education, I will be comfortable regardless of whether they leave me a dime. That is why I thought my desire to pass on capital to my children was worthy of comment.

[jk]

Re: record inequality

I agree with all that you say. Let me explain what I'm trying to attain, using the terms you suggested.

My parents gave me "as good a start" as they could. For my generation, that meant a good education -- training that increased the value of my labor so that if I applied myself, I would generally be able to find a job and earn a "good" wage.

The topic of this sub-thread is the declining value of labor in the context of globalization. I don't regard the matter as proven, but I share Flintlock's impression that equilibrium in the labor market lies at a lower level for American workers -- including highly educated folks like myself, in the end. So, fearing that a top-notch education and such smarts as my kids may inherit will not be enough to guarantee that their future labor will be valued highly enough to support the standard of living I enjoy, what is "as good a start" as I can give them? Well, to the extent that capital is better able to claim productivity gains and maintain income in the context of weaker pricing power for labor, the answer is that I should give my kids as much capital as I can, and the skills required to manage that capital. After that, yes -- they're on their own.

Does this change what most parents would try to do? Probably not. I think most parents would try both to educate their children and then pass on whatever wealth they are able to accumulate. However, in the context of Flintlock's post, my assessment is that my ability to pass on significant capital to my children may actually be necessary for them to enjoy the standard of living that I have. In the case of my own parents (who, thankfully, are both still alive), they can be reasonably sure that having given me a good education, I will be comfortable regardless of whether they leave me a dime. That is why I thought my desire to pass on capital to my children was worthy of comment.

most studies show that once people have the basics, in terms of the material conditions for a healthy life, wealth doesn't matter much in terms of happiness. so i'm not sure whether "standard of living" as ordinarily defined [granite counter tops?] even matters.

in my own case, my 3 kids - ages 24, 28, 30 - are on tracks that i think may result in fairly different income/wealth levels, but i think they all will be at least ok materially. i hope they will be happy [that term sounds sappy and empty, but i'll use it for now]. so i think that beyond the basics, it's values that will count, not prices. from what i know of you from your posts, your kids will do just fine.

[ASH]

Re: record inequality

most studies show that once people have the basics, in terms of the material conditions for a healthy life, wealth doesn't matter much in terms of happiness. so i'm not sure whether "standard of living" as ordinarily defined [granite counter tops?] even matters.

in my own case, my 3 kids - ages 24, 28, 30 - are on tracks that i think may result in fairly different income/wealth levels, but i think they all will be at least ok materially. i hope they will be happy [that term sounds sappy and empty, but i'll use it for now]. so i think that beyond the basics, it's values that will count, not prices. from what i know of you from your posts, your kids will do just fine.

Thanks jk -- from what I know of you from your posts, that means a lot (and makes me feel better).

(And probably, from my posts, you are also aware I have a penchant for worrying excessively about worst-case scenarios.)

[raja]

Re: record inequality

Thanks jk -- from what I know of you from your posts, that means a lot (and makes me feel better).

(And probably, from my posts, you are also aware I have a penchant for worrying excessively about worst-case scenarios.)

Perhaps your worrying could only be considered truly excessive if the worst-case scenarios do not come to pass :eek: With that in mind, let's hope your worries are excessive ;)

And, I would say that your worries are only statistically excessive if you devote more worry to each scenario than its probability deserves. I think at least a little worry is due TEOTWAWKI scenario

By the way, in our recent dialogue I did write a response to your last post, but I see that my response somehow did not get posted. Probably my fault . . . I've been busy preparing for worst-case scenarios (truly).

I'll get to it . . . .