The Washington Center for Equitable Growth publishes economic research on inequality, market power, wealth taxes, and labor.
Commenters cite it in debates about Piketty, land versus capital returns, wealth taxation, and evidence that austerity does not reduce debt.
What you describe in your last paragraph and what I’m describing are actually very very different things.
These types of loans are absolutely used as part of tax avoidance strategies employed by net worth individuals of a certain asset class. It is unlikely anyone on HN is doing this successfully if at all. As I repeatedly indicated it’s used successfully by people in a certain asset class, and it’s part of a broader strategy regarding how wealth is managed for the individuals that are able to take advantage of this.
I also linked several articles on how these things work, here’s another that talks about the tax loophole specifically: https://equitablegrowth.org/closing-the-billionaire-borrowing-loophole-would-strengthen-the-progressivity-of-the-u-s-tax-code/
I did not say it’s the only way people live off their wealth though. That is something I never stated or indicated
Now as far as the rates go I wish I could find the article that that talks about it from earlier this year, but yeah if you really are super high net worth you aren’t paying 7%, but even if we take that off the table for the sake of argument, if you expect to net more than interest paid by a significant enough margin the loans still make sense, and for the class of folks I’m talking about they will almost always be able to outpace the rate by a significant margin
To wave a hand and dismiss the entirety of Europe's wage policy as 'different in many ways' is disingenuous. What Europe represents is a systemic approach to wage inflation at the low end; but this is also true for other countries with strong minimum wage guarantees (like Japan).
Every-time they've been put in place in this systematic way it's led to greater economic mobility, greater employment rates and a lowering of the burden on social welfare systems; whilst having little demonstrable impact on long-term economic growth, and in fact, there's recent evidence to suggest they have net positive impacts on growth[0][1][2][3]
What Seattle represents is a small isolated experiment within larger state, regional and federal contexts that effected its outcome. That's not to dismiss it's value, far from it, but to take as it some kind of definitive evidence is to weigh a grain of sand against a beach of contradictory evidence.
[0]: https://equitablegrowth.org/working-papers/distributional-minimum-wage/
[1]: http://www.lse.ac.uk/business-and-consultancy/consulting/assets/documents/Low-Pay-and-In-Work-Poverty.pdf
[2]: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/601139/The_impact_of_the_NMW_on_employment_-_a_meta-analysis.pdf
[3]: https://www.nber.org/papers/w25434
Search for Jared Diamond (polymath author of many great books) on agriculture as a mistake, e.g.
https://equitablegrowth.org/agriculture-the-worst-mistake-in-the-history-of-the-human-race-todays-economic-history/
https://www.discovermagazine.com/planet-earth/the-worst-mistake-in-the-history-of-the-human-race
Agriculture made us a lot unhealthier and shorter in stature (monoculture/unbalanced diets), and it also lead to massive power imbalances -- modern people spend more of their lives working.
This is a very mainstream observation -- it's also supported by Sapiens, the popular human history book of the last 5 years (recommended by Obama, Gates, etc.).
David Graeber's recent book argues that many early human societies purposely avoided agriculture, and then got "trapped" into the inequality of agriculture.
The argument is that there is enough for everybody, but agriculture leads to power imbalances, which make most people's lives miserable.
It's true that they were more miserable say in the 1500's in Europe than today. We have "recovered" from Europe of the 1500's, but that doesn't mean that this is the best time ever!
Mainly because USA developed multiple geographic clusters where software developers are in high demand (Bay Area for consumer tech, New York for finance etc.) and the funding ecosystem is both deep-pocketed and culturally supports paying for talent. Traditionally European VCs and founders both operated under the assumption that startups need to save money rather than spend to get the best. And consequently those startups don’t grow into big companies that would pay for talent.
It’s worth noting that the meteoric rise of Bay Area software engineer salaries is a fairly new phenomenon. In the mid 2000s, salaries were actively suppressed by a wage cartel that included Steve Jobs. The companies paid out a $324M settlement to employees [1].
Mark Zuckerberg is often said to have been the crucial CEO who broke the cartel. Facebook started paying higher salaries and hiring aggressively from Google and others who had been suppressing wages.
[1] http://www.equitablegrowth.org/aftermath-wage-collusion-silicon-valley/
That's a theory that only models certain market conditions. In practice there is an information asymmetry (contrary to the presuppositions of the Nash Equilibrium) and often the employer side has a small number of companies so coordination is easier. Check out this settlement from the 2000s in Silicon Valley[1]. This involves highly desired, well educated employees so imagine how it is in other fields.
In my own experience I've had several prospective employers at conferences say that they were interested in poaching me but mentioned that they were wary to start a poaching war. They knew the CEO of my company and were conscious of the fact that he would likely make an effort to respond in kind. The Nash Equilibrium is an interesting concept but reality is complex and messy.
[1] https://equitablegrowth.org/aftermath-wage-collusion-silicon-valley/
The "Ugh, Capitalism"[0] articles always seem to assume that capitalism started in the last 20 years or so. Which is obviously false. If the company lost its culture of safety that's definitely bad, but of course that culture developed under capitalism in the first place. How does a constant factor (capitalism) explain a change?
The finance industry is a much larger part of the US economy than it has been in the past [1], which does seem like a problem and likely the cause of many of these issues. I'm not sure about the right solution, but it's definitely not to end capitalism.
[0] https://www.infinitescroll.us/p/ugh-capitalism
[1] https://equitablegrowth.org/the-rising-financialization-of-the-u-s-economy-harms-workers-and-their-families-threatening-a-strong-recovery/, Figure 1