I often chat with my wife (Chinese, runs her own business) about relative wealth in her home country. She’s easily 1%, but living in big east coast Chinese cities, it often feels like we’re pretty average, even sub-average. The hundreds of millions of rural and urban poor are almost hidden from view.
There's no upper limit and the right edge of the income distribution looks almost exponential. Mere multimillionaires feel like paupers next to the billionaires.
Millionaire is actually just a x100 factor from a middle class saving account.
Each time, the real difference is not the physical goods anyway. From middle class to millionaire, it's the logistic that changes the most. You can live free of many constraints.
From millionaires to billionaires, it's more a matter of impact in the world. Having 100 luxury cars must be fun, but I can't imagine it changing your life that much.
> Having 100 luxury cars must be fun, but I can't imagine it changing your life that much.
But it's the gap from flying first class to owning private jets. Or renting a large yacht or owning a small one to owning a super-yacht with two helicopter pads and a sub (like e.g. Paul Allen's "Octopus" [1]).
Again, all that doesn't change your life much. The difference in quality of like is nowhere close to the gap you bridge when you can stop trying to make a living and doing daily chores. You hit diminishing returns.
But being able to influence politics, the economy, and knowing personnally many people that can, is a huge difference in what life you can experience.
I do agree it hits diminishing returns, but I do also still think the difference is quite stark. Each level up it affects which things you have the freedom to just do vs. which things you need to plan. You still hit those barriers where you have to plan and budget as a millionaire for things that are relatively within what regular people might dream of.
At some point additional wealth stops buying you significant comfort, but starts buying you significant power.
And to be honest, I think the area where that happens is a problem. I'm fine with people enjoying a life of comfort, I'm not so fine with people buying significant over others, over the society in which we live, simply because they have more money. It's a danger to democracy.
Any kind of concentrated power is a danger to democracy, but you can't setup any system that can counter that, because it will just concentrate somewhere else.
The only way to avoid this problem is for the people to actively, on their day to day live, think and act toward the society they want to co-create. Power to the people implies responsability for the people.
And we are nowhere near that. People don't want the responsability. They have enough on their plate already with their personnal life issues. They don't want to have to choose every day what to buy, what to read, what to watch. They don't want to include the entire what they think society should be in the process of choosing education, home or a job.
So they vote to delegate the power and responsability once in a while and call the resulting oligarchy a democracy. Semantics is way easier than implementing the real solution.
It's all obscene. IMHO we're headed for guillotine territory if things continue the way they have the past ~40 years or so in the West. And climate change is only going to make it more likely to go up like a tinderbox.
Marx predicted that it would take capitalism no longer having more markets to expand into causing further competition to hit labor costs to start throwing capitalism into crises. Whether or not he was right about that part, he also severely under-estimated how long it would take for capitalism to fully expand into every corner of the globe. Continued expansion has allowed for offsetting a lot of cost-cutting.
It's not so much that the system has incredible resilience, as it is that the after-shocks of feudalism and colonialism are still incomplete: we still have dozens of countries shacking off the post-colonial conflicts and building basic infrastructure that allows for rapid initial growth in commerce.
We'll find out once the last groups of developing countries start seeing growth drop back to the levels of developed countries. That is likely to be decades still, as many parts of Africa in particular just entered the steep growth over the last decade or so.
Eventually, any kind of growth is limited in a closed system, so it makes sense that it will be the dawn of capitalism, provided we don't escape in space before.
But I'm surprised, almost disapointed, that we need to reach this extreem. I was expecting injustice, greed, health issues and the ponzi scheme aspect of our economic system to be the kicker. It never happened.
I’ve worked with a few billionaires and a bunch of multi-millionaires and having had this conversation, can tell that the inflection point is where your lifestyle untethers from your finances.
For example, if you just had twins and live in a big city paying for those kids education/uprbringing is going to cost maybe ~$2-4m (NPV) even if you have $10m, that is really meaningful number to you, and less so at $30m, $300m, $1b etc.
Once you hit that inflection point (which is different for everyone) the conversation changes from how do I aforrd to [pay for my kid’s education] to what do I want to do with my life, what do I enjoy doing, what is my legacy going to be....
This feels true in Manhattan, too, where most people here are affluent compared to the rest of the nation. However, in NYC, being average amongst the people doesn’t feel like a bad thing. That’s what I like about NYC anyways.
This article seems to focus on top 1% by income. Very few of the top 1% earners in any developed country are also in the top 1% of wealthy people. The truly wealthy tend to be so because of their capital/assets. Salary is an utterly tax inefficient way to convert your life's work into personal wealth, versus other forms of income/compensation.
Having a country-wide 1% must pull it down in some cases.
For instance in the UK if you bought the $4.1m London home on a 25 year, 3% mortgage, with a 25% deposit you'd pay about $170k per year. But after tax your $290k "top-1%" income would be about $185k -- only just enough to even cover your mortgage, forget about school fees.
I wonder what the London, NY, LA etc 1% numbers are? Surely that's a fairer comparison to e.g. Singapore anyway, since it's a city-state.
At least according to this site [0] (which references a 2013 report [1]) for instance, to be in the 1% in New York state you have to be making at least $517,557. However, the average annual income of those in the 1% is $2,006,632.
In Mississippi, though, you only have to be making $264,952 to be in the 1% and the average annual income of the 1% in MS is $565,813.
Of course, you have to consider cost of living and what not, but 1% is definitely not the same everywhere.
This reflects top 1% of income yet I'm not sure this is the best metric. It's much easier to measure income than wealth....many of those in the top 1% of income are probably not in the top 1% in terms of wealth.
The tax information is way off, at least for Canada. I'm guessing they are quoting federal taxes only, ignoring provincial taxes. In Ontario/Toronto, the highest combined marginal taxes are around 54% [0]
I've been in Bahrain and UAE for many years, income and wealth inequality is a real problem. A lot of the high earners are either sheikhs, landed nobility and business people who have large businesses in oil, energy, etc. who had opportunities open to them and could grab it while Bahrain or UAE was still undeveloped. It is also why their high earners is so high up in rankings. This coupled with the fact that these places are tax havens or pay much less tax because the govt can rely on oil revenue means you can keep a lot more of your income.
However, it seems there has been an economic downturn recently and taxes have been increasing so the economic landscape of Middle Eastern countries could change.
Interesting that in Mumbai someone who just reaches the top 1% of earners must pay 44% of their income to send one child to a private school, while in Australia it is only 8%.
I am not sure if that number is accurate (or which super-exclusive school they've taken as reference). Private School fees depend on the institution and the grade you're in, and varies from $5-25K.
Given the population size and density, competition is not nearly the same, and hence, top education is probably more expensive compared to the local wealth in India.
Yes, I had that same impression reading that chart. The top marginal tax rate in California is 13.3% and the top federal rate is 37%, so the top total tax on earned income is 50.3%.
