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Author Topic: When is a person “rich”?
Sven
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posted 25 September 2007 02:45 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
There are (at least) several hundred threads in which “the rich” are being discussed on babble. Some examples:

Growing gap between the rich and the poor

Gap between the Rich and the Rest

Biofuel for the rich, starvation for the poor

Hundreds of rich pay no tax

We need to do something about the rich

And (of course):

We need to do something about the rich again

But, curiously, few ever want to attempt to define “rich”.

A person who makes $50,000 may view a person who makes $150,000 or $250,000 as “rich”. But, that strikes me more as being envious that establishing a useful definition because it puts someone who makes $150,000 in the same category as a billionaire. A billionaire can purchase:

An $11 million watch (there are thousands of watches that costs in excess of $100,000 each).

A new $1.7 million Bugatti Veyron sports car.

A home on twenty-four acres “complete with 12 guest cottages, two barns and four staff buildings” for $54 million.

Buying a $16 million “tear down” to build a larger house on a lot.

A $103 million yacht (there are over 6,000 yachts sailing the world that are over 80 feet in length).

Now, take a person making $200,000 who works 60-hour weeks. After taxes, the person would take home about $110,000 (or about $35 per hour). It strikes me as absurd to call that person one of “the rich” while one of the “non-rich” takes home, say, $10 an hour and, on the other hand, a billionaire earns $300,000 a day on $1B invested at an 11% return.

So, instead of buying anything near the luxuries listed above, the person making $200,000 a year might splurge on buying lower-bowl season tickets to the Canucks, a new set of golf clubs, or a $5,000 watch.

Yet, they frequently get trashed as being one of “the rich” by people who buy hemp-clothes, work at a hoity-toity coffee shop for minimum wage, read only library books, and don’t get cable TV.

So, how do babbler’s define “rich”?


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
N.Beltov
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posted 25 September 2007 03:01 PM      Profile for N.Beltov   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Gosh, that's easy Sven. Every good Marxist-Leninist knows that the rich are the ones that, following the glorious Canadian socialist revolution, will be made to pray pay. Next question.
From: Vancouver Island | Registered: May 2003  |  IP: Logged
Sven
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posted 25 September 2007 03:03 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by N.Beltov:
Gosh, that's easy Sven. Every good Marxist-Leninist knows that the rich are the ones that, following the glorious Canadian socialist revolution, will be made to pray pay. Next question.

Following the "glorious Canadian socialist revolution", there won't be anyone left to pay, N.Beltov.

So, in the mean time...


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Nanuq
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posted 25 September 2007 03:05 PM      Profile for Nanuq   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I remember a news spread on Bill Gates as he was doing one of his third world junkets for his foundation. He had just spoken with an extremely impoverished women living in Africa and a reporter told her later that he was the richest man in the world. She shrugged and said that all Westerners are rich as far as she was concerned.
From: Toronto | Registered: Feb 2005  |  IP: Logged
N.Beltov
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posted 25 September 2007 03:06 PM      Profile for N.Beltov   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Well, I was just thinking that an inane reply was perfect for such an inane question. Good luck with your quest for a definition.
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Fidel
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posted 25 September 2007 03:25 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
You know you're rich when you can live off compound interest, rent, rely on government contracts and offshore tax havens to maintain your opulent lifestyle. These high net worthers will typically maintain lavish mansions in the Caribbean, drawbridge communities in N. America and French Riviera. And they complain incessantly about Canada and the U.S.A's socialist tax systems.
From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
Fidel
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posted 25 September 2007 03:30 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:

Following the "glorious Canadian socialist revolution", there won't be anyone left to pay, N.Beltov.

So, in the mean time...


So in the meantime, socialism for the rich is bankrupting America.


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
Webgear
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posted 25 September 2007 03:36 PM      Profile for Webgear     Send New Private Message      Edit/Delete Post  Reply With Quote 
For myself; being at home with my wife and children is being rich. The fact that I never witness my daughter’s birth or heard my son first word has made me feel poor inside.

Money is a great evil in my view, it drives people to a lifestyle that they do not need or should care for.


From: Montgomery's Tavern | Registered: May 2005  |  IP: Logged
Fidel
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posted 25 September 2007 03:42 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
And that's exactly the way the rich want us to view wealth. They want us to believe they earned their money, and that we should be happy without well-funded socialized medicine, infrastructure and education systems. The capitalist system relies on these things to varying degrees. And as they are defunded, so goes capitalism down the toilet.

Socialism was the secret weapon for both sides during the cold war.

[ 25 September 2007: Message edited by: Fidel ]


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
1234567
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posted 25 September 2007 05:10 PM      Profile for 1234567     Send New Private Message      Edit/Delete Post  Reply With Quote 
Rich is raising your kids so that they are confident in who they are and what they can do, rich is feeling fine after cleaning the house, rich is feeling fine after a long walk in the snow hearing your mukluks crunch in the snow. Rich is watching the northern lights dancing across the sky, rich ishaving enought money to pay all your bills and then having some left over for a treat. Rich is sitting around the kitchen table with family and having a really good belly laugh. That's rich to me. I'll probably die poor in money but I'll be rich in experiences and you know what, experiencs is what I came here for not money.
From: speak up, even if your voice shakes | Registered: Aug 2007  |  IP: Logged
Sven
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posted 25 September 2007 06:42 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Webgear:
For myself; being at home with my wife and children is being rich. The fact that I never witness my daughter’s birth or heard my son first word has made me feel poor inside.

quote:
Originally posted by 1234567:
Rich is raising your kids so that they are confident in who they are and what they can do, rich is feeling fine after cleaning the house, rich is feeling fine after a long walk in the snow hearing your mukluks crunch in the snow. Rich is watching the northern lights dancing across the sky, rich ishaving enought money to pay all your bills and then having some left over for a treat. Rich is sitting around the kitchen table with family and having a really good belly laugh. That's rich to me. I'll probably die poor in money but I'll be rich in experiences and you know what, experiencs is what I came here for not money.

Those are good examples of a rich life. I think of similar things: health, family, friends, helping others, learning, nature.

But, I suspect that when people say "We have to do something about the rich," they probably aren't talking about people who are living "rich lives". It's hard to tax that, no?

I like this Bill Gates example noted above by Nanuq. I think it illustrates a common definition of "rich": Anyone with more money than the definer has. But, it's not a very useful definition because it typically would include those who are slightly more "rich" than the definer, significantly more "rich" than the definer, all the way up to those who our thousands, if not millions, of times more "rich" than the definer.

No, what I'm trying to get a bead on is who are the "rich" when there are posts about "doing something" about them or that they don't pay enough taxes or the like.

That's a definition very, very few want to tackle, it would seem...

[ 25 September 2007: Message edited by: Sven ]


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Sven
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posted 26 September 2007 05:00 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Fidel:
You know you're rich when you can live off compound interest, rent, rely on government contracts and offshore tax havens to maintain your opulent lifestyle. These high net worthers will typically maintain lavish mansions in the Caribbean, drawbridge communities in N. America and French Riviera. And they complain incessantly about Canada and the U.S.A's socialist tax systems.

For a qualitative definition, I think that's pretty good, Fidel. And, I would agree with nearly all of it (essentially, being able to live a very opulent lifestyle and being able to maintain that lifestyle by living solely off of investments, which would have to be very substantial).


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Sven
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posted 26 September 2007 05:09 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by N.Beltov:
Well, I was just thinking that an inane reply was perfect for such an inane question. Good luck with your quest for a definition.

Why is that an "inane" question, N.Beltov? You actively participated in at least one of the threads I linked to in the OP and I'm sure that I could find many other threads in which you have discussed "the rich". It would be interesting and helpful to know what you (and others) might mean by "the rich".


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
N.Beltov
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posted 26 September 2007 07:11 AM      Profile for N.Beltov   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
"Rich" is a subjective term and an ordinary dictionary will suffice. I'm more interested in objective terms like "class", "labour", "capital" and so on. Unfortunately, it's been my experience on babble that a discussion of social class, for example, is hogged by people who spend their time arguing that "it doesn't exist" and derail every thread they can.
From: Vancouver Island | Registered: May 2003  |  IP: Logged
scooter
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posted 26 September 2007 08:09 AM      Profile for scooter     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
So, how do babbler’s define “rich”?

How Rabble treated Audra. Now that was "rich".

No seriously, a triple chocolate chip cookie dipped in rich dark chocolate followed up with a big glass of chocolate milk. That's rich.

[ 26 September 2007: Message edited by: scooter ]


From: High River | Registered: Apr 2004  |  IP: Logged
Michelle
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posted 26 September 2007 08:14 AM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by N.Beltov:
"Rich" is a subjective term and an ordinary dictionary will suffice. I'm more interested in objective terms like "class", "labour", "capital" and so on. Unfortunately, it's been my experience on babble that a discussion of social class, for example, is hogged by people who spend their time arguing that "it doesn't exist" and derail every thread they can.

Exactly.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Alexandra Kitty
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posted 26 September 2007 08:30 AM      Profile for Alexandra Kitty   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Some people are really good at PRETENDING to be rich, when in fact it's just a shell game. The Kovals were such a case. With pyramid and Ponzi schemes, fancy paperwork, and magicians that cast their spells for WorldComm and Enron, it's tough to say who is really rich and who knows where there is money for the taking.

So someone can look like they're rich, they act like their rich, but they are anything but.

I think a lot of those types can be more dangerous than the ones who really are rich. Governments and industries have been toppled thanks to people like that.


From: Hamilton, Ontario Canada | Registered: Sep 2007  |  IP: Logged
N.Beltov
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posted 26 September 2007 08:50 AM      Profile for N.Beltov   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
1900, the film epic directed by Bertolucci, depicts a greedy Fascist henchman, played by Canadian Donald Sutherland, who murders a rich family and appropriates their wealth on his way to power. The film, however, I am glad to note, artistically portrays the more interesting question of social class in Italy and is the better for it. Five out of five.
From: Vancouver Island | Registered: May 2003  |  IP: Logged
West Coast Greeny
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posted 26 September 2007 10:08 AM      Profile for West Coast Greeny     Send New Private Message      Edit/Delete Post  Reply With Quote 
Wealth has nothing to do with your material gains, but rather has everything to do with the purity of your own heart.

That said, some cash to pay down more of my tuition and housing expenses wouldn't hurt.

And a Nintendo Wii. Those are cool.


From: Ewe of eh. | Registered: Sep 2004  |  IP: Logged
1234567
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posted 26 September 2007 10:31 AM      Profile for 1234567     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
And a Nintendo Wii. Those are cool.

Then you'll love this little guy. He loves Wii too, but for different reasons.

laughing baby


From: speak up, even if your voice shakes | Registered: Aug 2007  |  IP: Logged
N.Beltov
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posted 26 September 2007 10:48 AM      Profile for N.Beltov   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
What a mature sounding laugh. That's quite amazing.
From: Vancouver Island | Registered: May 2003  |  IP: Logged
1234567
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posted 26 September 2007 10:51 AM      Profile for 1234567     Send New Private Message      Edit/Delete Post  Reply With Quote 
I like this one better.


belly laughing baby

oh, I am so off topic. But really this is "rich" stuff. There's nothing better than listening to a baby laugh


From: speak up, even if your voice shakes | Registered: Aug 2007  |  IP: Logged
Alexandra Kitty
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posted 26 September 2007 10:57 AM      Profile for Alexandra Kitty   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by West Coast Greeny:
[QB]Wealth has nothing to do with your material gains, but rather has everything to do with the purity of your own heart.
QB]

Feh. Tell that to the bill collectors...


From: Hamilton, Ontario Canada | Registered: Sep 2007  |  IP: Logged
Fidel
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posted 26 September 2007 11:02 AM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by N.Beltov:
1900, the film epic directed by Bertolucci, depicts a greedy Fascist henchman, played by Canadian Donald Sutherland, who murders a rich family and appropriates their wealth on his way to power. The film, however, I am glad to note, artistically portrays the more interesting question of social class in Italy and is the better for it. Five out of five.

Ah, primitive accumulation.

Willy Hamilton once described them as plunderers, thieves, rapists and murderers. Then they desired respectability and called themselves royalty. Canada and the U.S. are home to modern economic royals.

Prince Phil once said to the Scottish that to raise one child in the welfare state, it costs 40,000 quid. Willy retorted that as soon as Princess Anne was born and opened her mouth it cost taxpayers 40, 000 pounds.

[ 26 September 2007: Message edited by: Fidel ]


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
Pogo
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posted 26 September 2007 11:10 AM      Profile for Pogo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Now, take a person making $200,000 who works 60-hour weeks. After taxes, the person would take home about $110,000 (or about $35 per hour). It strikes me as absurd to call that person one of “the rich” while one of the “non-rich” takes home, say, $10 an hour and, on the other hand, a billionaire earns $300,000 a day on $1B invested at an 11% return.

Someone who makes $200K is rich. It doesn't matter whether they are working all their waking hours.


From: Richmond BC | Registered: Aug 2002  |  IP: Logged
Alexandra Kitty
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posted 26 September 2007 11:32 AM      Profile for Alexandra Kitty   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Pogo:

Someone who makes $200K is rich. It doesn't matter whether they are working all their waking hours.


Not if they owe $500 000. Wealth is relative and can be an interesting game of smoke and mirrors. People can be "rich on paper," which is a nice way of saying they really can't cough up the dough.

Wealth is just one of those things that peeople never question when someone else claims to have it. The cars can be leased, the house rented, and all those other little games can be played without anyone questioning where did this alleged money come from or does it rightfully belong to person who claims to own it.


From: Hamilton, Ontario Canada | Registered: Sep 2007  |  IP: Logged
Lard Tunderin' Jeezus
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posted 26 September 2007 11:58 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
Now, take a person making $200,000 who works 60-hour weeks. After taxes, the person would take home about $110,000 (or about $35 per hour).


Wrong. Even with absolutely no deductions (which would be highly unusual in that tax bracket), said individual takes home approximately $133K.

The upper-middle/lower-upper classes love to exaggerate their tax burden.


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Sven
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posted 26 September 2007 12:31 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Lard Tunderin' Jeezus:
Wrong. Even with absolutely no deductions (which would be highly unusual in that tax bracket), said individual takes home approximately $133K.

I've always used a 45% effective tax rate as a rough rule of thumb (to include federal income taxes, state income taxes, social security taxes, medicare/medicaid taxes--all taxes that are assessed on income). But, I'll have to double check. A more accurate effective tax rate might be closer to 40%. Even so, the hourly after-tax rate, in my example, would be closer to $38 rather than $35.


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
kropotkin1951
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posted 26 September 2007 01:17 PM      Profile for kropotkin1951   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Canada has varying tax regimes, federal and provincial that take off income tax. The result is different for each province and obviously different than the USA.
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Sven
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posted 26 September 2007 03:37 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by kropotkin1951:
Canada has varying tax regimes, federal and provincial that take off income tax. The result is different for each province and obviously different than the USA.

kropotkin1951, have you ever seen a comparison between the effective total tax rates on Canadians' income versus Americans' income? I've always been under the impression (based on nothing in particular) that the Canadian tax rates are higher, but I don't know. We don't have anything like the GST (some states have sales taxes, but they are relatively low--in Minnesota it's about 6.5%, while others have no sales taxes at all)...but that's not based on income.


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Stephen Gordon
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posted 26 September 2007 04:21 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
There have been quite a few recent studies about the people at the upper end of the income distribution. One paper I like is by McMaster's Mike Veall and Berkeley's Emmanuel Saetz: 87-page pdf. The reason I like it so much is that they've put all the results on-line: here's the excel file.

It's full of fascinating information, including marginal and average tax rates for people at the very top of the income distribution.

eta: One tidbit that I blogged about: it's reasonably well-known that the income share of the top decile of the income distribution has increased its share of total income. But this study shows that it's even more concentrated than that: the income share of those in the 90-99.9% fractile hasn't moved much at all; it's all in the top 0.1% - that is, those making well over $500,000/year.

What's even more interesting is the way that the very rich are generating all that income: by working for other people. In 1946, capital holdings accounted for 53% of the income of those in the top 0.01%, and 27% was wage income; the other 20% was entreneurial income from self-employment. In 2000, the very rich generated only 25% of their income from capital, and 74% was in the form of wage income; entrepreneurs who work for themselves have almost completely disappeared from the ranks of the very rich.

Lots of other stuff, too. If you're interested in this issue, there are all kinds of interesting things there.

[ 26 September 2007: Message edited by: Stephen Gordon ]


From: . | Registered: Oct 2003  |  IP: Logged
Frustrated Mess
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posted 26 September 2007 05:13 PM      Profile for Frustrated Mess   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
What is the yardstick for measuring wealth? What if instead of bank accounts, cars, and TVs, we measured the health, happiness, and of the individual and their value, as a person, in their community?

To me, the error is what we choose to measure is that which slowly but deliberately kills both us and our biosphere.

We need to redefine wealth.


From: doom without the gloom | Registered: Feb 2005  |  IP: Logged
Boarsbreath
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posted 27 September 2007 08:37 PM      Profile for Boarsbreath   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I think it's a good question, and an interesting one taken philosophically (not necessarily the same as sociologically or economically).

From experience, the main divide is between poor and not poor. You're not poor if you know where you're sleeping tonight and what you're going to eat, and you have every reason to think that this will continue. (Include family if applicable.)

Then there's comfortable. That's when you can imagine saving up for anything you actually are thinking of doing or buying. (Comfortable in Montreal as a waiter, I could save tips over a year in the early 1980s and spend half a year travelling around Europe. I met English guys who even when they were employed could not save anything.)

Then there's rich. That's when you honestly don't think much about prices and costs. I'm rich now, on the equivalent of about $45,000/year, but of course that's relative to an unacquisitive lifestyle. (It helps never to enter stereo stores.)

Finally, very rich/super-rich, etc, which is not being obliged to earn money.

(Sociologically, the definitions are all relative to people the subject takes to be comparable, and the richer you get the richer your models become, which is clearly a hopeless cycle, and that's all there is to say about that.)


From: South Seas, ex Montreal | Registered: Jul 2005  |  IP: Logged
Lard Tunderin' Jeezus
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posted 27 September 2007 09:26 PM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by kropotkin1951:
Canada has varying tax regimes, federal and provincial that take off income tax. The result is different for each province and obviously different than the USA.
True. I used the Ontario figure as it covers a great plurality of taxpayers, and sits around the middle of provincial tax burdens.

From: ... | Registered: Aug 2001  |  IP: Logged
Lard Tunderin' Jeezus
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posted 27 September 2007 11:10 PM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
What's even more interesting is the way that the very rich are generating all that income: by working for other people. In 1946, capital holdings accounted for 53% of the income of those in the top 0.01%, and 27% was wage income; the other 20% was entreneurial income from self-employment. In 2000, the very rich generated only 25% of their income from capital, and 74% was in the form of wage income; entrepreneurs who work for themselves have almost completely disappeared from the ranks of the very rich.
In other words, the super rich live in the rarified world of OPM (other people's money), where expense accounts and stock options pay for their extravagant lifestyles. Sadly, they think that because they call their filthy lucre 'wages' that they've actually earned it, rather than stolen it from their employees and their hapless stockholder's RRSPs.

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Stephen Gordon
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posted 28 September 2007 02:30 AM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
That's about right. And I think it has important implications for how we want to design policies to reverse this trend. The old model in which the super-rich were owners of large capital holdings was a reasonable approximation for reality in 1946. But it's not anymore.

[ 28 September 2007: Message edited by: Stephen Gordon ]


From: . | Registered: Oct 2003  |  IP: Logged
Sven
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posted 28 September 2007 08:14 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
I've always used a 45% effective tax rate as a rough rule of thumb (to include federal income taxes, state income taxes, social security taxes, medicare/medicaid taxes--all taxes that are assessed on income). But, I'll have to double check. A more accurate effective tax rate might be closer to 40%. Even so, the hourly after-tax rate, in my example, would be closer to $38 rather than $35.

I took a closer look and it is more like 40%, if a person is maximizing 401(k) contributions (in the US, a person can invest up to 10% of their pre-tax income in an employer-sponsored retirement program--which most employers then match a portion of the employee's contribution--and that income is not taxed until withdrawn at retirement). If a person doesn't do that, their taxes on the same gross income would be higher.


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Sven
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posted 29 September 2007 12:24 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Frustrated Mess:
What is the yardstick for measuring wealth? What if instead of bank accounts, cars, and TVs, we measured the health, happiness, and of the individual and their value, as a person, in their community?

quote:
Originally posted by Webgear:
For myself; being at home with my wife and children is being rich. The fact that I never witness my daughter’s birth or heard my son first word has made me feel poor inside.

quote:
Originally posted by 1234567:
Rich is raising your kids so that they are confident in who they are and what they can do, rich is feeling fine after cleaning the house, rich is feeling fine after a long walk in the snow hearing your mukluks crunch in the snow. Rich is watching the northern lights dancing across the sky, rich ishaving enought money to pay all your bills and then having some left over for a treat. Rich is sitting around the kitchen table with family and having a really good belly laugh. That's rich to me. I'll probably die poor in money but I'll be rich in experiences and you know what, experiencs is what I came here for not money.

quote:
Originally posted by West Coast Greeny:
Wealth has nothing to do with your material gains, but rather has everything to do with the purity of your own heart.

These posts all describe what a “rich”, meaningful life is.

But, when there are threads like, “We have to do something about the rich”, I somehow don’t think those threads are discussing people who have rich, meaningful lives.

Instead, those threads, essentially, assert that “the rich” don’t deserve what they have, should be taxed into oblivion, or the like. In that context, few, other than Fidel (“You know you're rich when you can live off compound interest, rent, rely on government contracts and offshore tax havens to maintain your opulent lifestyle. These high net worthers will typically maintain lavish mansions in the Caribbean, drawbridge communities in N. America and French Riviera. And they complain incessantly about Canada and the U.S.A's socialist tax systems.”) and Pogo (“Someone who makes $200K is rich. It doesn't matter whether they are working all their waking hours.”) have dared to define exactly who “the rich” are that “something” must be “done about”.

Why all of the talk about “the rich” but the great reluctance to define who “the rich” are?


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Stephen Gordon
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posted 29 September 2007 01:19 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
I don't have any difficulty making the comparison 'more rich' vs 'less rich'. But 'The Rich' is - to say the least - an ill-defined concept.
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Sven
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posted 29 September 2007 01:31 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Stephen Gordon:
I don't have any difficulty making the comparison 'more rich' vs 'less rich'. But 'The Rich' is - to say the least - an ill-defined concept.

I think that absolutely correct. Wealth is relative and varies by degrees. I think it's much easier to define "poor" than "rich", although even definitions of "poor" are necessarily subjective. I have read U.N. discussions about whether "poor" should be defined as living off of $1 per day or $2 per day.

Yet, while recognizing the difficulty of defining "rich", there are hundreds and hundreds of references to "the rich" on babble and it's hard to know whether a person using that term is referring to someone making $10,000 per year (which is "rich" to those living off of either $1 or $2 per day) or someone making $200,000 (Pogo's definition) or someone with a billion dollars.

Personally, my definition of "rich" is closer to Fidel's initial attempt to define the term. Essentially, someone who does not need to work; can travel pretty much wherever they want, whenever they want; never has to think twice about writing a check for pretty much anything; and, basically, has no financial worries whatsoever.


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Nanuq
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posted 29 September 2007 02:39 PM      Profile for Nanuq   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Personally, my definition of "rich" is closer to Fidel's initial attempt to define the term. Essentially, someone who does not need to work; can travel pretty much wherever they want, whenever they want; never has to think twice about writing a check for pretty much anything; and, basically, has no financial worries whatsoever.

In other words, anyone who is comfortably retired.


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DrConway
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posted 29 September 2007 03:56 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
And how many seniors, today, will enjoy a "comfortable retirement"? Odds are a lot of them will blow their retirement funds on medical bills for expenses not covered by Canadian Medicare.

I agree with Pogo. Anyone who can clear $200k a year is doing swimmingly well, no matter if they complain they work 70 hours a week and blah blah. I'd be hard pressed to turn down 12 hours a day if I knew I could make that much in a year.

The only reason someone making even $100k a year squawks in protest at being labelled 'rich' is because they've mortgaged themselves to the hilt and don't want to have to be asked to pay the piper when people ask for them to foot the bill 'cuz the poor can't consume any more to pay the GST and PST for the government's coffers.

Governments cost money, and them that has the money should be paying the bill. Even Adam Smith said so.


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Sven
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posted 29 September 2007 08:39 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Nanuq:

In other words, anyone who is comfortably retired.


Well, what I describe is a bit more than merely being "comfortably" retired.

And, my definition would encompass not only retirees but those people who choose to continue to work even though they could live very, very well without working. One of my sig other's senior partners is 93 years old. He's very well off. But, he enjoys his work so much that he continues to work about three days a week. His mind is a sharp as ever and if someone in the firm has a particularly difficult and complex tax matter to examine, he dives into the research like a 25 year old associate. Quite amazing, really.

[ 29 September 2007: Message edited by: Sven ]


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Sven
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posted 29 September 2007 08:51 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by DrConway:
I agree with Pogo. Anyone who can clear $200k a year is doing swimmingly well, no matter if they complain they work 70 hours a week and blah blah. I'd be hard pressed to turn down 12 hours a day if I knew I could make that much in a year.

The only reason someone making even $100k a year squawks in protest at being labelled 'rich' is because they've mortgaged themselves to the hilt and don't want to have to be asked to pay the piper when people ask for them to foot the bill 'cuz the poor can't consume any more to pay the GST and PST for the government's coffers.


But, they still have to work hard (and, in your example, very long hours). So, in that respect, they are much more akin to an auto worker working 8-hour shifts for sixty grand a year than they are to those who need not work at all. Because they have to work to live, I wouldn't classify those people as part of "the rich".

ETA: To classify them as "the rich" is like classifying someone who makes $15,000 a year as be "rich" because about three billion people in the world live on $2 a day or less. Compared to $2 a day, they are relatively "rich" but they still have to work to live.

[ 29 September 2007: Message edited by: Sven ]


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
DrConway
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posted 30 September 2007 01:09 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
Median income for Canadian adult income earners: $32,000 a year.

You were saying, again?


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Sven
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posted 30 September 2007 05:25 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by DrConway:
Median income for Canadian adult income earners: $32,000 a year.

You were saying, again?


And...what?


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
unionist
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posted 30 September 2007 06:58 AM      Profile for unionist     Send New Private Message      Edit/Delete Post  Reply With Quote 
I'm with N.Beltov. "Rich" isn't what you earn. It's what you own.
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Lard Tunderin' Jeezus
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posted 30 September 2007 07:47 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by unionist:
I'm with N.Beltov. "Rich" isn't what you earn. It's what you own.
...or control. Conrad Black never really owned enough to be one of the 'Canadian Establishment', but for a few years, he gained control of enough to play in the realm of the international hyper-elite.

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Sven
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posted 30 September 2007 01:55 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by unionist:
I'm with N.Beltov. "Rich" isn't what you earn. It's what you own.

I agree with that. To determine "rich", one must really look at the net worth of an individual. Having, say, $150,000 in cash is not really "rich". At 10% interest, you'd have an income of $15,000. Not much to stop working and live off of. It's got to be substantially more than that.

[ 30 September 2007: Message edited by: Sven ]


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abnormal
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posted 30 September 2007 04:09 PM      Profile for abnormal   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Having, say, $150,000 in cash is not really "rich". At 10% interest, you'd have an income of $15,000.

Given that T-bills are paying less than half that, 10% is a pretty respectable return.

And I do agree that it's important to differentiate between income and wealth. But it'w worth noting that it's not always easy to figure out which is which.


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Sven
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posted 30 September 2007 04:25 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by abnormal:
Given that T-bills are paying less than half that, 10% is a pretty respectable return.

I think that's true. When a person is young, investing in stocks makes sense and I would ballpark a 10% long-term annual return. But, during retirement (or when getting close to retirement), I would shift more of my savings into bonds and much safer stock funds). So, yeah, at retirement, having $250,000 saved is not being "rich", because if you are getting about a 6% annual return, you'll have income off of that investment of about $15,000 per year. $500,000 would generate income of about $30,000 per year. Again, in my mind anyway, not "rich". But, as discussed in this thread, it's not unattainable, particularly for someone young who starts saving now.


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jrootham
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posted 30 September 2007 11:08 PM      Profile for jrootham     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:

I think that's true. When a person is young, investing in stocks makes sense and I would ballpark a 10% long-term annual return.


Not even close. The only way to get that kind of return over the long term is wait to see which companies did really well and then go back and invest in them. The going back part is hard.

Any strategy that pays more than the increase in GDP (approximately) will eventually hit a bankruptcy. Otherwise, someone following that strategy would eventually own everything. Which professor Gordon has pointed out above, isn't how the world is currently working.

As an aside to Stephen, the current state of income sources is a consequence of the maturing of the change in control of corporations that John Kenneth Galbraith described back in the 60's. See "The New Industrial State" if my memory serves me well.


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Sven
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posted 01 October 2007 09:21 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by jrootham:
Any strategy that pays more than the increase in GDP (approximately) will eventually hit a bankruptcy. Otherwise, someone following that strategy would eventually own everything. Which professor Gordon has pointed out above, isn't how the world is currently working.

Have you looked at the average annual increase in the value of stocks over the last eight decades? It's about 10%.

I think that what you are saying is akin to saying that a company's profit cannot increase at a rate in excess of the rate of increase in the company's revenues. And, that is obviously false.


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Lard Tunderin' Jeezus
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posted 01 October 2007 09:41 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
That represents real post-war growth, and then rising investment over the past few decades as the boomers tried to prepare for retirement. Within the next decade that will decline dramatically, as they cash out.
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Sven
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posted 01 October 2007 09:43 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
Have you looked at the average annual increase in the value of stocks over the last eight decades? It's about 10%.

Take a look at this data that examines average returns on investments in stocks, treasury bills, and treasury bonds between 1928 and 2006 (so it even takes into account the monumental stock market crash of 1929):

Stocks had a long-term average annual rate of return of 9.86% ($100 invested in 1928 in a broad-based stock index would be worth $168,886.53 today).

Treasury bills had a long-term average annual rate of return of 3.85% ($100 invested in 1928 in treasury bills would be worth $1,984.43 today).

Treasury bonds had a long-term average annual rate of return of 4.95% ($100 invested in 1928 in treasury bonds would be worth $4,542.87 today).


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Lard Tunderin' Jeezus
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posted 01 October 2007 09:48 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
So proud of yourself for actually looking something up that you needed to post it twice?
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Lard Tunderin' Jeezus
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posted 01 October 2007 09:51 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
BTW, the '.ca' in the URL here is there to indicate that this is a Canadian site.

U.S. stats are all well and good, but less than directly applicable.


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Sven
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posted 01 October 2007 09:57 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Lard Tunderin' Jeezus:
BTW, the '.ca' in the URL here is there to indicate that this is a Canadian site.

U.S. stats are all well and good, but less than directly applicable.


One need not be an American to invest in a broad-based stock index. A Canadian can own stock in any publicly-traded company in the world. So, yes, this index would be relevant to Canadians.


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Lard Tunderin' Jeezus
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posted 01 October 2007 10:05 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
To get the benefit of tax deferral for investments here, it must be directed through a registered savings plan - and a certain percentage of Canadian holdings are required.
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Sven
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posted 01 October 2007 10:11 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Lard Tunderin' Jeezus:
To get the benefit of tax deferral for investments here, it must be directed through a registered savings plan - and a certain percentage of Canadian holdings are required.

So, have Canadian companies performed significantly worse, over time, that American companies? I'd like to see the data supporting your implicit assumption.


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Lard Tunderin' Jeezus
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posted 01 October 2007 10:13 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I don't think I'm obliged to do your research for you.
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Sven
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posted 01 October 2007 10:22 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Lard Tunderin' Jeezus:
I don't think I'm obliged to do your research for you.

Okay. So, I looked at the attached from the Canadian Revenue Agency and see the following: "Shares of a corporation listed on a prescribed stock exchange in or outside Canada are qualified investments for a plan trust."

In addition, unless I missed it, I don't see any requirement that a certain percentage of RRSP investments must be in a "Canadian holding". Got a link for that? Of course, you're not "obliged to do [my] research for [me]", but it looks like you haven't even done your own research...

[ 01 October 2007: Message edited by: Sven ]


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
Lard Tunderin' Jeezus
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posted 01 October 2007 10:33 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Answers to all your questions.

I note that you didn't bother to deal with my primary point - that a 10% return on the markets is an entirely unreasonable expectation in the near future, due to defunding by retirement. Less than GDP is a more likely scenario, 5 years out.


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DrConway
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posted 01 October 2007 10:35 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
There used to be a limitation on the foreign content of an RRSP, but now there isn't, as I understand it.

Also, Sven, you're forgetting that over shorter horizons, stock volatility can worsen the rate of return. For example, if you went into the market in 1973, you basically got back to where you started by 1982.

[ 01 October 2007: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Lard Tunderin' Jeezus
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posted 01 October 2007 10:38 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Since 2005 only, though the banks introduced mutual fund 'instruments' allowing the rules to be circumvented as early as 1999. Still, strict rules existed for the vast majority of the timeline that Sven wants to discuss here.
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Sven
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posted 01 October 2007 10:50 AM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Lard Tunderin' Jeezus:
I note that you didn't bother to deal with my primary point - that a 10% return on the markets is an entirely unreasonable expectation in the near future, due to defunding by retirement.

I’m happy to address that. The “baby boom” phenomenon may or may not result in downward pressure on stocks. That’s a significant point of debate among economists. But, even if it does, that doesn’t mean it’s the only factor that will affect stock values. This is a global economy. Invest in a broad-based global equity fund.

quote:
Originally posted by Lard Tunderin' Jeezus:
Less than GDP is a more likely scenario, 5 years out.

First of all, “5 years out” isn’t long-term investing from the perspective of a 25-year-old. Secondly, if you feel that the rate of increase in stocks will be less than GDP, then you are free to not invest in stocks. That’s the great thing about economic free choice.


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RosaL
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posted 01 October 2007 07:34 PM      Profile for RosaL     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:

First of all, “5 years out” isn’t long-term investing from the perspective of a 25-year-old. Secondly, if you feel that the rate of increase in stocks will be less than GDP, then you are free to not invest in stocks. That’s the great thing about economic free choice.


And what about all the people who, lacking capital, don't have "economic free choice" (and who, in fact, occupy that unenviable position as a result of the exercise of "economic free choice" by those who do)?


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jrootham
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posted 01 October 2007 07:47 PM      Profile for jrootham     Send New Private Message      Edit/Delete Post  Reply With Quote 
The problem with using stock indices is that the composition of any index is not constant over time. Stocks get dropped from the index. New stocks join the index. If a significant percentage of investors simply tried to buy the index they could not sell at the price the stock left the index nor could they buy at the price the stock joined the index.

So the return described by the index is not achievable by real investors.


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Sven
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posted 01 October 2007 07:52 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by jrootham:
The problem with using stock indices is that the composition of any index is not constant over time. Stocks get dropped from the index. New stocks join the index. If a significant percentage of investors simply tried to buy the index they could not sell at the price the stock left the index nor could they buy at the price the stock joined the index.

So the return described by the index is not achievable by real investors.


I don't understand what you're saying. Do you understand what an indexed mutual fund is? You don't by and sell individual stocks that comprise the index. That is what people had to do prior to the advent of mutual funds a few decades ago. Now, you simply buy shares of the indexed fund.


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Sven
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posted 01 October 2007 07:59 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by RosaL:

And what about all the people who, lacking capital, don't have "economic free choice" (and who, in fact, occupy that unenviable position as a result of the exercise of "economic free choice" by those who do)?


Please expand on that, RosaL. Are you thinking that someone who can put away 100 bucks a month shouldn't do it because there are some people who cannot do that?


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RosaL
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posted 01 October 2007 08:30 PM      Profile for RosaL     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:

Please expand on that, RosaL. Are you thinking that someone who can put away 100 bucks a month shouldn't do it because there are some people who cannot do that?


I have grasped your technique: Respond to anything with, "Are you saying/thinking [insert something fairly ridiculous]?

You laud "economic freechoice". Again, "what about all the people who, lacking capital, don't have 'economic free choice' (and who, in fact, occupy that unenviable position as a result of the exercise of 'economic free choice' by those who do)?"

[ 01 October 2007: Message edited by: RosaL ]


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DrConway
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posted 01 October 2007 09:00 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
You can buy an index fund, but jrootham makes an important point - the measurement value of an index is distorted if the composition changes fairly noticeably over time. Jim Stanford made this point in Paper Boom when he noted that there is actually quite a lot of jockeying by major companies to get on the stock indexes because the sales volume of their shares goes up and it looks good to the CEO and the shareholder meetings, even though such churnings of stock have nothing to do with the day to day activities of the company.
From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Sven
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posted 01 October 2007 09:03 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
No, I'm serious, RosaL. I do want to hear what your thoughts are (and I won't try to put words in your mouth).

Obviously, there are people who do not over-consume (even though they consume all that they make). Some are in that spot due to poor decisions and some are in that position due to circumstances they cannot control.

One of my nephews is an example of the former. He was a reasonably bright kid (but now a mid-twenty-something) who dropped out of school during tenth grade. The world is out to get him, if you listened to him...but he's as lazy as hell. His apartment is an absolute pig pen (dirty dishes sit around for weeks, old pizza boxes are strewn about the living room). All he wants to do is sit around and smoke weed. He will likely never have any free cash to invest.

A woman with a couple of kids whose husband runs out on them may be a good example of the latter. She may have no family to lend a hand and may be scratching for every dime, all through no fault of her own. She deserves help until she can get on her feet...and it may take a long time.

So, there are definitely going to be people who can't save anything. They are going to have to rely on the government for support.


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Sven
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posted 01 October 2007 09:06 PM      Profile for Sven     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by DrConway:
You can buy an index fund, but jrootham makes an important point - the measurement value of an index is distorted if the composition changes fairly noticeably over time. Jim Stanford made this point in Paper Boom when he noted that there is actually quite a lot of jockeying by major companies to get on the stock indexes because the sales volume of their shares goes up and it looks good to the CEO and the shareholder meetings, even though such churnings of stock have nothing to do with the day to day activities of the company.

There is "jockeying" to get on the S&P 500? How, exactly, do you jockey to be part of the S&P 500?

ETA: Are you confusing stock indices with stock exchanges?

[ 01 October 2007: Message edited by: Sven ]


From: Eleutherophobics of the World...Unite!!!!! | Registered: Jul 2005  |  IP: Logged
DrConway
rabble-rouser
Babbler # 490

posted 01 October 2007 10:36 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
There is "jockeying" to get on the S&P 500? How, exactly, do you jockey to be part of the S&P 500?

ETA: Are you confusing stock indices with stock exchanges?

[ 01 October 2007: Message edited by: Sven ]


Take the TSE 300 for example. The composition of which companies are used to make up that index has changed over time.

Or take the NASDAQ. Same thing. Companies have lobbied to be made part of that index before; for example I believe Intel was placed on the NASDAQ list in 1999.

Uh, you DO know what an index mutual fund is, right? You give your money to a company which then buys shares in exact proportion to the composition of, say, the TSE 300. In effect, then, your shares will mimic the performance of this index over time, which is usually used to benchmark how the whole exchange is behaving.

There's a reason mutual fund managers like to claim they outperform the indexes, you know.

Actually, I don't like your attitude. It seems to me that you think it's impossible for left-wingers to actually know about the mechanics of the paper economy, and it's showing. Cease being patronizing at once.

[ 01 October 2007: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Lard Tunderin' Jeezus
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posted 02 October 2007 03:46 AM      Profile for Lard Tunderin' Jeezus   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sven:
No, I'm serious, RosaL. I do want to hear what your thoughts are (and I won't try to put words in your mouth).

You really haven't listened to anyone here. You're far too busy formulating your 'rebuttal' to understand what anyone is trying to tell you.

Tell you what - limit yourself to a certain number of posts a day (decide how many for yourself), and give yourself some serious time to think before you reply to anyone. You might get more out of your time here, and might waste less of everyone else's.


From: ... | Registered: Aug 2001  |  IP: Logged

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