Comment by wyre | Hacker News Reader

Comment by wyre | Hacker News Reader

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This is contradictory to how I understand economics. The consumption of "stuff" contributes to GDP, which is one of the first things people use to correlate to quality of life.

Also, spending money and the consumption of stuff isn't "taking something from society". It is someone's job to grow, harvest, process, transport, and sell apples. Spending a dollar to purchase an apple supports all of those people directly. Those people spend their money on stuff and it circulates. Nothing is being "taken" things are bought and sold on a free-market.

I am arguing that hoarding wealth is the share that one takes from society. You are right that Musk doesn't have 250k shoes or houses, but that's why its problematic, it is wealth that could be spent circulating through the economy, it is wealth that is a claim on future labor and resources, it is the power over his companies, employees, industry, and society. All of these are a much larger "take" from society than buying an apple, a pair of shoes, a house, or any other good or service.

Agreed, but

> The consumption of "stuff" contributes to GDP, which is one of the first things people use to correlate to quality of life.

It's one of the first things governments use to correlate to quality of life, and imo it's a good way to get away with papering over inequality. A country's GDP can be stable or slowly growing and it won't be in recession, and yet much of that GDP can be produced by one generation of people who are in a class that's multiple orders of magnitude wealthier because the newest generation of people has to pay them to have a roof over their head and subsidize their retirement. The GDP comes from the appreciation of their property value and the rental income, while a massive proportion of working age people are just able to consume and work, largely for those same people. Very wildly different qualities of life even below what Mag World would consider Rich, maybe not in the moment when someone can but themselves some literal or metaphorical candy, but in terms of viable upward mobility and precariousness long-term.

In order to buy the house I live in the basement of, not even owned by a much older generation person in this case (seemingly a single mom, but an investment banker afaik), I would need to be able to sustain a $2m+ mortgage and come up with a $400k+ down payment, it will never be possible, and even though I never wanted that for my future, it's depressing that it's just laughably and insanely out of reach, GDP kind of hides that this is the case for many.

Agreed. I know GDP is not the strongest signal for high quality of life, but its easy to calculate. My point wasn't that a high GDP means that the people there will have a high quality of life; it is easily manipulated with rents like you bring up. Thank you for adding the nuance that I did not include.

You’re slipping into a version of the broken window fallacy here. Consumption isn’t automatically good for society just because it “creates activity.” When you eat an apple, the apple - and all the labor and resources behind it - are gone. Same with luxury goods: the more resource-intensive they are, the more real wealth they permanently use up compared with simpler alternatives.

What actually increases long-run prosperity isn’t consumption itself, but efficient use of resources and investment - choices that expand the stock of tools, knowledge, and productive capacity in the future. New wealth is created when resources are not immediately consumed, but are instead used to boost productivity.

That’s why wealthy people who don’t spend all their wealth aren’t “hoarding” in the economic sense. Their capital is usually invested - financing factories, startups, research, tools, and infrastructure that generate more output. And when they die with wealth still invested, the state captures a chunk through estate and capital-gains taxes.

A better way to think about wealth is as decision-making power over how resources are allocated - toward current consumption (including luxuries) or toward future production (investment). Capitalism tends to concentrate that decision power in the hands of those who are best at growing capital, which raises total prosperity but also increases inequality.

Consumption uses up wealth; investment grows it. People like Musk have a lot of wealth because they’ve been good at growing it. We should absolutely guard against wealth hijacking politics - but it would be shortsighted to treat their continued investment as a net negative for society.

You're misapplying the broken window fallacy. I'm not arguing consumption is good because it creates value, I'm arguing that it is not "taking from society" as the OP claimed. Consumption is the entire point of production.

Wrt your points about wealth holding and investment, you're assuming the allocation of a billionaire's wealth is efficient and productive. This ignores that private returns are not social returns, it assumes that growing capital is what is best for society, and frames the question as investment vs consumption, when the question is "who controls investment decisions?" Your argument smells very similar to Reagan's trickle-down economics which has been disproved through decades of data showing tax cuts don't generate promised growth. Inequality continues to increase, while median wages stagnate.

I agree invested capital finances production, but I disagree that extreme concentration optimizes for this. Broad and diverse investment mechanisms would allocate capital more effectively than a small number of individuals basing their decisions on private returns.

Consider the equation of exchange: MV=PQ (money supply x velocity of money = nominal GDP). As wealth concentrates, velocity in the real economy decreases. Billionaire capital cycles through financial assets instead of cycling through the real economy (wages buy goods and services which pay wages). A lower velocity means either lower GDP or central banks must increase the money supply, risking asset bubbles (hmm, sounds likes whats happening right now ). Evidence suggests a dollar is stronger in the hands of the working class creating immediate economic activity and supporting local businesses, compared to a dollar in an asset portfolio.

I agree that consumption is the point of production in the long run, but that does not mean consumption is neutral in terms of tradeoffs. When someone consumes, the underlying real resources are gone and cannot be used for other purposes. That is the core of the broken window point: activity can rise while net wealth falls if resources are used in less productive ways than the alternatives. Saying consumption is not "taking from society" skips over the opportunity cost of what could have been built with the same labor and capital.

On who controls investment, it is fair to worry about political influence, but it does not follow that highly concentrated private wealth is mostly idle or socially useless. Large fortunes are usually claims on productive assets that employ people and produce goods and services. Capital markets already involve broad and diverse mechanisms like index funds, pensions, and institutional investors that pool the savings of millions of non wealthy people and allocate them based on expected returns. That is not perfect, but it is not simply a handful of billionaires directing everything according to whim.

The equation of exchange point also overstates the role of velocity in judging what is good for the economy. A dollar that flows into an asset is not disappearing from the real economy. It is funding someone else who is selling equity or debt and who will use that for wages, R&D, or capital spending. Lower velocity at the cash register can be consistent with higher long run output if more of today’s income is channeled into projects that raise productivity tomorrow. High velocity tied to fragile consumption and low investment can look good in the short term but leave people poorer over time.

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