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Post by Disciple of Fate on May 17, 2023 12:08:53 GMT -5
Haven't we sort of reached that stage in a certain way? Some of the richest people (and the current title holder of richest person) on earth are rich through their luxury goods companies that only a very small percentage of the population can afford. This small percentage of the population is so efficient at pumping around imaginary money that they just conjure more of it. Just look at Musk, a lot of his value is hot air based on the stock market, yet with that hot air he got an imaginary 44 billion to spend on a social media company. We have reached the stage that money, even in the abstract sense, has become almost completely meaningless for the top layer.
You can become/get more wealthy by selling to that 2% than you could ever dream of by selling to the 98%.
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Post by easye on May 17, 2023 13:03:58 GMT -5
Ugh, a self-perpetuating 1% class is the worst of all possible outcomes.
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Post by Haighus on May 17, 2023 13:09:06 GMT -5
Sounds like feudalism.
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Post by Emblematic Wolfblade on May 17, 2023 15:52:44 GMT -5
Haven't we sort of reached that stage in a certain way? Some of the richest people (and the current title holder of richest person) on earth are rich through their luxury goods companies that only a very small percentage of the population can afford. This small percentage of the population is so efficient at pumping around imaginary money that they just conjure more of it. Just look at Musk, a lot of his value is hot air based on the stock market, yet with that hot air he got an imaginary 44 billion to spend on a social media company. We have reached the stage that money, even in the abstract sense, has become almost completely meaningless for the top layer. You can become/get more wealthy by selling to that 2% than you could ever dream of by selling to the 98%. Isn't this basically the 80/20 rule? "80% of X comes from 20% of the population" (and 80% of that comes from 20% of that 20% and so on)? |
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Post by herzlos on May 17, 2023 16:11:58 GMT -5
Haven't we sort of reached that stage in a certain way? Some of the richest people (and the current title holder of richest person) on earth are rich through their luxury goods companies that only a very small percentage of the population can afford. This small percentage of the population is so efficient at pumping around imaginary money that they just conjure more of it. Just look at Musk, a lot of his value is hot air based on the stock market, yet with that hot air he got an imaginary 44 billion to spend on a social media company. We have reached the stage that money, even in the abstract sense, has become almost completely meaningless for the top layer. You can become/get more wealthy by selling to that 2% than you could ever dream of by selling to the 98%.
Not quite. Whilst the 1% horde the vast bulk of the wealth, way beyond their need or beyond the comprehension of most, the other 99% are more or less surviving fine. There's still a decent sized middle class and somehow people can still afford to buy/rent homes (how I don't know), feed them selves and spend some leisure money.
With the cost of living increases a huge number of people moved from "just about coping" to "not coping", but there's still a lot of money in the system buying goods and services which funnel money to the capitalists.
Assuming this trend continues, we'll eventually hit a critical point where so few people are buying particular items that the markets for them dry up, and money just stops flowing.
What'd happen if 80% of the population could no longer afford to run a car? Or to have Netflix? Or eat out, use bars and clubs, etc?
If there's no-one buying goods, there's no jobs making and selling the goods. Sure you can presumably still sell supercars to the super rich, but you don't need much staff if you're only selling 100 cars a year.
You'd eventually end up with subsistance farmers and landlords, which is pretty much feudalism again.
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Post by bobtheinquisitor on May 17, 2023 17:14:30 GMT -5
Industrialized farming might have something to say about that.
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Post by Disciple of Fate on May 17, 2023 17:27:41 GMT -5
But you don't need a middle class to have the fabulously wealthy. Companies are making record profits and the rich are getting richer, even though we see the declining trends for younger generations. Long term sustainability is not a consideration, it's about sucking dry the host and retreating to their castles (i.e. walled communities and/or places like Dubai). Sure, it might hamper their ability to make even more money, but they will just end up like dragons on their hoards.
How much of the middle class exists of the baby boomer generation and how many of the next generations still depend on that generational wealth to cling to said middle class? Housing prices have vastly outpaced income, personal debt of the middle class has increased significantly and cost of living increases have left many people with stagnating incomes.
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Post by herzlos on May 18, 2023 1:36:41 GMT -5
True, but you presumably need enough people spending money to make money.
It'll be interesting (in a detached historical way) to see what happens when normal people can't afford to buy or rent houses. I'm assuming that either (a) we'll revert to shared or multi-generational homes until groups of people can afford something, (c) we see something like Japanese style 100-year mortgages or (c) the market will calm enough that it becomes affordable again.
I'm not holding my breath for (c) to happen though. I'm already scratching my head about how anyone can afford a house without inter-generational wealth.
I'm looking at buying a house the size of my parents (that they'd paid off by my age despite me earning more than them combined now) and it's staggeringly difficult, I'm also helping one of my new staff on a pretty good wage and it's virtually impossible.
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Post by maddocgrotsnik on May 18, 2023 2:14:11 GMT -5
Just for clarity, I assume we’re using generational wealth in the broadest term, such as “when my Dad passes, my half of his estate should enable me to buy a modest one or two bedroom flat lock, stock and barrel” inheritance, and not just the usage i more commonly see of “Musk is an utter fuckwit who has earned fuck all himself, but has rich parents so can only fail upwards”? Not looking to criticise, just making sure I’m on roughly the some page  |
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Post by Disciple of Fate on May 18, 2023 3:19:50 GMT -5
True, but you presumably need enough people spending money to make money. Depends how you divide spending money. Paying rent/mortgage, buying food, buying fuel and paying for electricity and such is still spending. There is a baseline spending drain that even a good deal of the middle class loses a significant chunck of their income to, before even starting on the 'luxury' goods aspect. It just depends on what side of the divide you as a would be rich person is making your money from. Edit: the rest of it is combined below. |
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Post by Disciple of Fate on May 18, 2023 3:31:52 GMT -5
Just for clarity, I assume we’re using generational wealth in the broadest term, such as “when my Dad passes, my half of his estate should enable me to buy a modest one or two bedroom flat lock, stock and barrel” inheritance, and not just the usage i more commonly see of “Musk is an utter fuckwit who has earned fuck all himself, but has rich parents so can only fail upwards”? Not looking to criticise, just making sure I’m on roughly the some page Generational wealth of the middle class, so your example of the dad. But it is more than just when they pass. Being able to live with your parent(s) into adulthood to save money is also a privilege of generational wealth, instead of having to contribute because it would be unaffordable to your parent(s). Them helping out financially with certain purchases or perhaps your mortgage also comes down to generational wealth. But how many of the post baby boomer generations are simply middle class due to inertia and bad definitions? The definition of middle class is just a calculation against the median income, but 50-60 years ago the median income was comparatively much higher in purchase power, because income has not kept up with price increases in the last decades. How many of us will be able to significantly support our children or they their's? Eventually a lot of the middle class will simply shrink into the working class (while those already in that class are just pushed past the poverty line), because the definition of middle/working class is worthless if median income is not also measured against cost of living. Most of us here would likely be considered middle class. But how many of us can say that this would be achievable on a single income, instead of both partners having to work to have even a chance at a similar lifestyle to our middle class baby boomer parents? |
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Post by maddocgrotsnik on May 18, 2023 4:47:18 GMT -5
Fair. And I think that is something to keep in mind. Gonna dust off an old, much used anecdote once again.
Around 11 years ago now, I got the best news of my life. I’d successfully applied for my current job (well, current employer, I’ve gone up in the world from humble origins) and my wage was about to double.
However. There was a problem. See, my previous job was 40 hours a week on minimum wage or just above. £13,200.00 a yea before tax. Once I’d paid rent, bills, bought food? I had maybe £250.00 disposable income. Not too shabby and certainly more than some have. But the problem was my first month’s transport to the new job, which was up in London, that was £450.00. Despite being about to double my wage, and thus greatly increase my disposable income and tax due, many in my position simply couldn’t have made that jump.
Bank of Mum and Dad to the rescue, as they bought me my first month’s season ticket as a gift. After that I could get a season ticket loan from the employer, and the problem resolved itself.
Fast forward 11ish years, and I’m about to be earning just shy of £40,000.00 a year.
That Generational Wealth sure did come in handy for me to Do It For Myself after just a wee uplift. But I do wonder how many folk from less advantaged backgrounds have had to forgo such a big jump in earnings because they’re priced out of public transport.
And I really cannot explain just how beneficial this job has been for me. Not only am I earning really decent money, but that in turn means I have a comfortable flat, comfortable lifestyle, disposable income for relaxing things and hobbies, self esteem (no, really), private pension which is going really well,
For 11 years (well, nearly. 11 in August, so near as dammit) I’ve not simply worked to put a roof over my head and food on my table. I get tangible benefits from my efforts. Short breaks. Spa days. Able to go to restaurants with friends. My home is full of Precious Pretty Things. I am by no means wealthy, but I don’t have to worry about bills. I don’t need to count every Penny (though of course there remain benefits in doing so. I just don’t) . I’m….comfortable.
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Post by skyth on May 18, 2023 6:57:18 GMT -5
I'm one of the fortunate ones. Grew up poor, but my parents got lucky and put in some hard work so they are now wealthy. This has allowed me to have a paid-off house and I get money every month from my parents as well. I have a decent job (Though my wife is disabled and can't work). But I shudder to think of the position I'd be in if I wasn't so lucky.
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Post by Haighus on May 18, 2023 7:26:20 GMT -5
Just for clarity, I assume we’re using generational wealth in the broadest term, such as “when my Dad passes, my half of his estate should enable me to buy a modest one or two bedroom flat lock, stock and barrel” inheritance, and not just the usage i more commonly see of “Musk is an utter fuckwit who has earned fuck all himself, but has rich parents so can only fail upwards”? Not looking to criticise, just making sure I’m on roughly the some page Generational wealth of the middle class, so your example of the dad. But it is more than just when they pass. Being able to live with your parent(s) into adulthood to save money is also a privilege of generational wealth, instead of having to contribute because it would be unaffordable to your parent(s). Them helping out financially with certain purchases or perhaps your mortgage also comes down to generational wealth. But how many of the post baby boomer generations are simply middle class due to inertia and bad definitions? The definition of middle class is just a calculation against the median income, but 50-60 years ago the median income was comparatively much higher in purchase power, because income has not kept up with price increases in the last decades. How many of us will be able to significantly support our children or they their's? Eventually a lot of the middle class will simply shrink into the working class (while those already in that class are just pushed past the poverty line), because the definition of middle/working class is worthless if median income is not also measured against cost of living. Most of us here would likely be considered middle class. But how many of us can say that this would be achievable on a single income, instead of both partners having to work to have even a chance at a similar lifestyle to our middle class baby boomer parents? I am pretty much a middle class stereotype, and the only reason I am likely to have a standard of living remotely close to my parents is because neither me or my partner want kids. I don't know how people afford children. Having said that, the only way we will be able to get an affordable mortgage on two professional wages before 30 is significant help from my parents for the deposit. Edit: not sure about class being solely determined by income, it has much more social complexity to it in my mind. But then class in the UK is a beast with a lot of history behind it. |
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Post by herzlos on May 18, 2023 7:27:05 GMT -5
By inter-generational wealth I just mean help from older family members; whether that's cash, rent free accommodation, or whatever. It doesn't have to be an inheritance. In my case I inherited about £10k which enough to scrape by a deposit on a mortgage which I couldn't have afforded otherwise without spending years living with my parents. I suspect the emeralds Musk smuggled into the US were worth far more than that alone.
I don't think I've seen a single story about anyone under 30 buying a house that didn't involve help from parents, and I honestly can't see how they could manage it unless they had a partner and both earned good money. Even raising £10k deposit for a £100k house is a big ask before you factor in that the £100k house will be £110k before you've raised that £10k and now you need an £11k deposit. It's also completely ignoring how much other expenses there are to buying a house and moving, so you probably need another £5k for legal fees and logistics and before you know it you're at a single persons entirely annual income after tax just to get started.
The only reason we can afford a bigger house is that the equity in this one will (hopefully) cover the deposit. I've barely got rainy day money in savings never mind house deposit money.
My understanding was that the traditional definition of middle class was of people who worked but had some passive income and thus not reliant on the job, whilst the working class were those who were 1 or 2 pay cycles from devastation. I'm not sure that quite fits now, and it's likely more aligned with blue collar / white collar, in which case I'm firmly middle class despite having less money than some traditional working class jobs. How I wish I'd trained to be a tradesman.
In my case, whilst I earn pretty well, I've got no passive income and about 2 months wages in savings, so I'm firmly working class albeit some way away from the bread line.
We deliberately took a significant pay cut in order for my wife to stay home and look after the kids, which we managed but had to live pretty frugally (and still do) to get back out of the financial hole we dug. We always had money available so never did without any necessities, or fall behind on bills etc. but we did without holidays, nice cars, a bigger house etc that we'd likely have spent the money on if we both remained working.
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