On Socio-Economic Classes

Dated Jul 4, 2020; last modified on Sun, 21 Nov 2021

On the Phenomenon of Bullshit Jobs

Capitalism is meant to eliminate bullshit jobs, yet layoffs tend to fall on people making, moving, fixing and maintaining things, but not on the salaried paper pushers that effectively work 15 hours a week.

​From a political standpoint, a happy productive population with free time on their hands is mortal to the ruling class. Moreover, work is considered a moral value in itself.

If 1% of the population controls most of the disposable wealth, what we call ‘the market’ reflects what they think is useful.

Assigning a value to a person’s job is hard, but answering the question, “What if X ceased to exist?” is insightful. Nurses, garbage collectors, mechanics vs. private equity CEOs, lobbyists, PR researchers, actuaries, telemarketers?

Real productive workers are exploited. The unemployed are universally reviled. The majority are basically paid to do nothing in positions that make them identify with the perspectives of the ruling class, and simmer resent against workers that have clear and undeniable social value.

Our Lot in Life

Not recognizing your blessings feeds into the dark side of capitalism and meritocracy: success is a choice, and that those who haven’t achieved success are not unlucky, but unworthy.

I’m relatively lucky. I don’t know how much of the techie hubris that I bear. I have unresolved feelings about meritocracy and fairness. Race is usually used as a proxy for bridging the gap, e.g. affirmative action at colleges. But who is affirmative action better suited for - a rich black kid or a poor white kid? I’m in the camp that believes wealth is a bigger divider than race.

\(\Delta\) “wealth is a bigger divider than race” misses the point that racism adds yet another obstacle. The hypothetical should not be rich black kid vs. poor white kid, but rather, poor black kid vs. poor white kid.

Growing up in the US. More $$$ for entrepreneurs, freedom to challenge institutions, not going bankrupt if company fails.

Um, but I’ve also heard the argument that Nordic countries are forgiving to entrepreneurs given their large social benefits net, e.g. universal health care. Maybe Scott means that the company goes bankrupt but the individual is protected, but isn’t that standard everywhere?

Being born at an opportune time, e.g. white heterosexual male when Dow Jones increased 445% on average during prime working years; getting +$100m for startups in the 90s in SF.

Scott had a pie chart from Richard Kerby breaking down VC diversity numbers:

By Race By Gender By Race & Gender
White - 74% Male - 89% White Male - 67%
Asian - 23% Female - 11% Asian Male - 19%
Black - 2% White Female - 7%
Latino - 1% Asian Female - 4%
Black Male - 2%
Hispanic Male - 1%

​I was skeptical of VC firms for PoC, but this chart is alarming. I wonder how skewed the numbers would be if viewed by parental income. How would one even get such data?

An elite education. For the class of 2013, Dartmouth, Princeton, Yale, Penn, and Brown had more students from the top 1% of the income scale than the bottom 60%.

The statistic is from 2013. In 2021, Colleges now flaunt how many FLI students they have in the incoming cohorts.

Pitchforks for the Billionaires?

It’s a classic trope in Reddit threads. Billionaire X does Y. Commenters assemble into two camps, but mostly rehashing arguments in previous threads. Let’s weigh and consider the arguments.

The highest federal marginal rate in the US is 37% for income over $518,401. San Francisco has the highest income tax bracket at 51.8%. Finland tops at 65%. Japan has the highest inheritance tax rate at 55%. America’s inheritance tax rate is 40%.

Undeserved wealth, e.g. government bailouts, multi-million bonuses in context of lesser bonuses for lower-ranked employees.

  • This is poignant when placed in context of people suffering elsewhere, e.g. extreme poverty, starvation, disease, refugees, etc.

Peter Singer’s “Famine , Affluence, and Morality” is an influential paper on the obligation of affluent persons to humanitarian causes.

  • Much of the wealth is in equity. It’s paper money, so how can we tax it?

It being paper money doesn’t make it inaccessible. The market cap of the US stock market is $35tr and $122tr of stock changes hands annually. US billionaires have less than $4tr in stocks, so it wouldn’t exactly crash the market.

  • One proposal (championed by Warren in the US in 2020) is a wealth/capital/equity tax. For example, in Switzerland, residents with more than $101,010 in assets pay wealth tax on net assets with the top rate ranging from 0.13% to 0.94%.

Piketty’s “Capital in the Twenty-First Century” is considered influential in this space. The issue is highly contested. For instance, a 1.0% wealth tax for assets above $50m vs. a typical successful startup will lead to a 41% tax of the stock after 60 years, and some consider this excessive.

Billionaires do not exist without exploitation of others.

  • Ignoring anecdata of exploitative vs. helpful billionaires, the cumulative change in real wages was +6.5% for the 10th percentile, +8.8% for the 50th percentile, and 41.3% for the 90th percentile.

The pie is getting bigger for every one, but for some, it’s getting bigger much faster.

It’s an absurd amount of money. If you’re making $40k/year, it’d take you 25k years to get to just $1b.

  • However, people don’t become billionaires by getting a wage. Counter-example: Invest $1 for 1% return per year, compounded. After 25k years, you’ll have have more than $\(10^{98}\)b.

  • A more apt illustration would be something like: If spending $1m every month, one would need 83 years and 4 months to exhaust $1b.

However, wealth begets wealth. Invest the $1b in an instrument that returns at least 1.2% per year, and perpetually spend $1m/month.

  • The combined net worth of all US billionaires in Dec 2020 was $4.011tr . If this wealth were to be redistributed to the 255m Americans aged 18+, each would get $15,720.

In 2020 Q3, the top 10% had $80.7tr. Assuming 255m => 100%ß, the average net worth of the top 10% is $3.1m.

In 2017, the lowest 20% of income earners had a median net worth of $4,883, while the top 20% of earners had a median net worth of at least $500k.

Billionaires are a result of a system that provides things that we value, e.g. computers, phones, fast shipping, web indexing, socialization, etc.

References

  1. On the Phenomenon of Bullshit Jobs: A Work Rant. Daniel Graeber. http://www.strike.coop/bullshit-jobs/ . Aug 1, 2013.
  2. Third Base. Scott Galloway. https://www.profgalloway.com/third-base/ . Dec 13, 2019.
  3. Real Wage Trends, 1979 to 2019. Donovan, Sarah; Bradley, David. Federation of American Scientists. https://fas.org/sgp/crs/misc/R45090.pdf . Dec 8, 2020.
  4. The Paper Billionaire Argument. Korostoff, Matt. https://github.com/MKorostoff/1-pixel-wealth/blob/master/THE_PAPER_BILLIONAIRE.md . Jul 16, 2020.
  5. Modeling a Wealth Tax. Graham, Paul. http://paulgraham.com/wtax.html . https://news.ycombinator.com/item?id=24198172 . 2020. Accessed Feb 8, 2021.