They're B. And they currently get a tax break on the capital gains as long as they hold the companies for a certain number of years. And they do tend to reinvest their profits into other privately held firms.
If you're looking for the economic term for your two different kinds of rich people, you're looking for "rent seekers" (which are opposed to less well defined people as "entrepreneur" or "capitalist" or "wealth creator"). I'd look it up on Wikipedia, and you can develop it a bit more.
As for why it's relevant to the debate, typically rent seekers are sitting on some sort of privilege (in law or in the market).
I would however comment that both Warren and Bill are beyond the point where they're sensitive to financial incentives.
This is a good point. The big fish like Soros are better able to exploit their size when markets are less liquid. There are tons of anecdotes in the market about how he pushed this or that trade one way or another.
You can buy any of those things yourself, for quite a small amount of savings. In fact, most of the firms that do this are very small.
Second, you may not be able to think of why it's useful to society, but how is that relevant? Do other professions need to demonstrate "social usefulness"? I think programmes like "X-Factor" and "Keeping... Kardashians" are utterly useless. Is that a reason to ban them or tax them?
This is quite simply not true. Please look at evidence before you make sweeping statements like that. The data goes back quite far before the time of HFT.
I've just moved to Switzerland this year from the UK, and I have to agree with this. Politics seems closer to home here. You regularly get various groups sending out mail explaining their position on some local issue. Also, the politicians seem to be real people with real experience. But a huge part of the reason why it works here is that it's ingrained in the culture.
In the UK where I lived before, it felt like the politicians only cared when it was election time. The rest of the time it feels like you just said, "Let's see what our overlords do next..." The politicians themselves seem to have never done anything else, having worked in the party apparatus after uni and then proceeded to parliament when there was an opening.
That's an interesting idea, that part about trusting $person.
Without going into the technical details, you could effectively transfer your votes on any upcoming referendums to $person, who would thus be able to vote several people's votes at once. That way you can have politicians with varying degrees of representation in different areas. And if you differ from your guy on an upcoming vote, you can take his mandate away briefly.
With a system like this everyone can relax about having to read up on every little issue, give representation to one guy one one area and another on others, and still express individualized opinions on any topic.
What this voting system doesn't address, however, is constitutional weaknesses as you mentioned.
...because STEM majors are so much more demanding than others.
I would add "in relation to the rewards offered"
If an engineer made 2x as much as an business major, more people would sit down and do the hard work. I did a degree that was a combined degree of Engineering and "Economics and Management." This degree had about two-thirds of each of the two constituent degrees in it. Which meant that two-thirds of the courses were Engineering. Which meant that maybe 75% of my time was spent on Engineering.
So then I apply for internships. I get an offer from an engineering firm for for £11Kpa. I also get an offer to do marketing at an engineering firm (well-known processor producer) for 15K. During the internship I went to visit my friend in the City (of London) who is on 25K, plus apartment paid for. He told me this while we were sitting in his jacuzzi.
I read this and thought W T F. Can you document this with a link? I can't for the life of me see what the point of sitting in a physics class is if you aren't going to look at some calculus.
While studying engineering, I did however often think that along with the equations should go some qualitative description. That would help a lot. But it can surely only be an aide.
Also, interestingly, I always found US textbooks to be simpler to understand than the ones written by British authors. Lots of pictures and step-by-step logic, which is not a bad thing.
That is surely a defect of the curriculum at your institution? If there's a class where you can be clueless, it's math. If a prerequisite is missing (think calculus without algebra) you might as well not be there. I found this towards the end of my university days. Some of the optimization stuff relied on linear algebra, which I wasn't strong in. I basically hadn't spent enough time on the LA, and the optimization came right after. Made it pretty hard.
Well, wait a minute. People who end up not being taken up for a Phd can still use their Physics/Eng/etc degree to get a job in business, rather than doing research.
Dude, going bankrupt against a lender is not a bailout. Bankruptcy is a haircut against the lender, who is taking a risk. If someone can't pay back a loan to you, that's your responsibility.
This requires a bit of clarification. In your first bit you describe the bank money multiplier. But you forget that in each step, someone is trading a good/service to get the money from someone who already has the money, via the bank. Surely this means more people are working and more goods/services are supplied? If the bank couldn't multiply money, only the guy who made the original 1K would have a job.
I agree we need sensible bank reserve requirements, but not to reduce the multiplier. We need them so that we (I'm European) don't have to bail out the banks every few years. That's what's really the issue: the use of public funds to bail out private firms.
About deflation, people are scared of it because they see it as a spiral: everything will be cheaper tomorrow, paradox of thrift, disaster. Not sure it's true, just look at Japan. GDP per capita is still going up, though the economy has been sluggish and deflating for a long time.
Your tech industry example is one of higher productivity, not deflation. Deflation is about the value of money. Stuff is getting cheaper because tech firms are able to make stuff more and more effectively.
Well come on now, it's a negotiation. Like trading a house or a car, one guy wants a high price, the other wants a low price. People play the games they can (oh, there's a scratch, you'll save money bc the insulation is better, etc).
This is the real, underlying answer, and also the reason why a number of social science disciplines cannot reach the level of rigor of the hard sciences. Basically, whatever your subjects think about how the world works affects how they behave (ie how the world works).
Have a look under Soros and reflexivity for how this applies to financial markets.
Slashdot Mirror
They're B. And they currently get a tax break on the capital gains as long as they hold the companies for a certain number of years. And they do tend to reinvest their profits into other privately held firms.
Good point. So are you in favor of private equity firms getting a big tax break?
Here's a study that says it does:
http://www.bis.gov.uk/foresight/our-work/projects/current-projects/computer-trading
If you're looking for the economic term for your two different kinds of rich people, you're looking for "rent seekers" (which are opposed to less well defined people as "entrepreneur" or "capitalist" or "wealth creator"). I'd look it up on Wikipedia, and you can develop it a bit more.
As for why it's relevant to the debate, typically rent seekers are sitting on some sort of privilege (in law or in the market).
I would however comment that both Warren and Bill are beyond the point where they're sensitive to financial incentives.
This is a good point. The big fish like Soros are better able to exploit their size when markets are less liquid. There are tons of anecdotes in the market about how he pushed this or that trade one way or another.
You can buy any of those things yourself, for quite a small amount of savings. In fact, most of the firms that do this are very small.
Second, you may not be able to think of why it's useful to society, but how is that relevant? Do other professions need to demonstrate "social usefulness"? I think programmes like "X-Factor" and "Keeping ... Kardashians" are utterly useless. Is that a reason to ban them or tax them?
This is quite simply not true. Please look at evidence before you make sweeping statements like that. The data goes back quite far before the time of HFT.
I've just moved to Switzerland this year from the UK, and I have to agree with this. Politics seems closer to home here. You regularly get various groups sending out mail explaining their position on some local issue. Also, the politicians seem to be real people with real experience. But a huge part of the reason why it works here is that it's ingrained in the culture.
In the UK where I lived before, it felt like the politicians only cared when it was election time. The rest of the time it feels like you just said, "Let's see what our overlords do next..." The politicians themselves seem to have never done anything else, having worked in the party apparatus after uni and then proceeded to parliament when there was an opening.
It also has the advantage that the body of laws won't be ever growing. Politicians would have to prioritize which laws are actually important.
That's an interesting idea, that part about trusting $person.
Without going into the technical details, you could effectively transfer your votes on any upcoming referendums to $person, who would thus be able to vote several people's votes at once. That way you can have politicians with varying degrees of representation in different areas. And if you differ from your guy on an upcoming vote, you can take his mandate away briefly.
With a system like this everyone can relax about having to read up on every little issue, give representation to one guy one one area and another on others, and still express individualized opinions on any topic.
What this voting system doesn't address, however, is constitutional weaknesses as you mentioned.
Ridiculous. In some ways that's even harder than learning things the hard way...
...because STEM majors are so much more demanding than others.
I would add "in relation to the rewards offered"
If an engineer made 2x as much as an business major, more people would sit down and do the hard work. I did a degree that was a combined degree of Engineering and "Economics and Management." This degree had about two-thirds of each of the two constituent degrees in it. Which meant that two-thirds of the courses were Engineering. Which meant that maybe 75% of my time was spent on Engineering.
So then I apply for internships. I get an offer from an engineering firm for for £11Kpa. I also get an offer to do marketing at an engineering firm (well-known processor producer) for 15K. During the internship I went to visit my friend in the City (of London) who is on 25K, plus apartment paid for. He told me this while we were sitting in his jacuzzi.
Basically, society has voted.
I read this and thought W T F. Can you document this with a link? I can't for the life of me see what the point of sitting in a physics class is if you aren't going to look at some calculus.
While studying engineering, I did however often think that along with the equations should go some qualitative description. That would help a lot. But it can surely only be an aide.
Also, interestingly, I always found US textbooks to be simpler to understand than the ones written by British authors. Lots of pictures and step-by-step logic, which is not a bad thing.
That is surely a defect of the curriculum at your institution? If there's a class where you can be clueless, it's math. If a prerequisite is missing (think calculus without algebra) you might as well not be there. I found this towards the end of my university days. Some of the optimization stuff relied on linear algebra, which I wasn't strong in. I basically hadn't spent enough time on the LA, and the optimization came right after. Made it pretty hard.
This has the benefit that you can keep standards high, without using various forms of discrimination. Those are real issues in some places.
Well, wait a minute. People who end up not being taken up for a Phd can still use their Physics/Eng/etc degree to get a job in business, rather than doing research.
But surely it's the job of high schools to provide the ability to do all those things you're talking about?
Dude, going bankrupt against a lender is not a bailout. Bankruptcy is a haircut against the lender, who is taking a risk. If someone can't pay back a loan to you, that's your responsibility.
Debt should be expensive. (in general, some is too high and some is too low right now) Debt that is too cheap encourages poor decision making.
Any price that's wrong will make the market supply either too much or too little of whatever it is.
This requires a bit of clarification. In your first bit you describe the bank money multiplier. But you forget that in each step, someone is trading a good/service to get the money from someone who already has the money, via the bank. Surely this means more people are working and more goods/services are supplied? If the bank couldn't multiply money, only the guy who made the original 1K would have a job.
I agree we need sensible bank reserve requirements, but not to reduce the multiplier. We need them so that we (I'm European) don't have to bail out the banks every few years. That's what's really the issue: the use of public funds to bail out private firms.
About deflation, people are scared of it because they see it as a spiral: everything will be cheaper tomorrow, paradox of thrift, disaster. Not sure it's true, just look at Japan. GDP per capita is still going up, though the economy has been sluggish and deflating for a long time.
Your tech industry example is one of higher productivity, not deflation. Deflation is about the value of money. Stuff is getting cheaper because tech firms are able to make stuff more and more effectively.
Well come on now, it's a negotiation. Like trading a house or a car, one guy wants a high price, the other wants a low price. People play the games they can (oh, there's a scratch, you'll save money bc the insulation is better, etc).
That sounds more like a happy accident than a ritual suicide...
when you can just go back in time and recheck your results?
What would be the way most befitting a nerd?
This is the real, underlying answer, and also the reason why a number of social science disciplines cannot reach the level of rigor of the hard sciences. Basically, whatever your subjects think about how the world works affects how they behave (ie how the world works).
Have a look under Soros and reflexivity for how this applies to financial markets.