Ideas on Wealth by Woke Academics

 

The FIRE community is grateful for the works of many sociologists in the past. The most important work is The Millionaire Next Door by Thomas Stanley. Sadly the field of sociology has been co-opted by left-winged bleeding hearts who'd rather find excuses to soak the rich and distribute their wealth to others. To these guys,  it is immoral to profit from conducting a business and climbing up the economic ladder, but it is perfectly fine to use taxation to take wealth from others who earned their money legitimately.  

As much as I hate this current generation of woke social scientists (especially the more self-righteous academics in NTU), I try very hard to keep up with their works because the moment people start feeling hope is lost or social mobility is non-existent, they will invoke these papers to support wealth redistribution. At the moment, we're seeing attempts by the US to coordinate a tax hike for all G20 countries. 

I think the book Wealth by Yuval Elmelech does an adequate job summarising the latest developments to study the accumulation of wealth. I managed to complete the book in two days but it's not an enjoyable read because it's written in a really boring manner. Also. readers who think that it can shed some light on how wealth is accumulated should ignore this book and read Thomas Stanley instead.

There are three barely useful ideas to keep in view.

a) Wealth inequality will be more central than income inequality

I suspect the left is trying to convince governments to invent a new form of tax that targets your wealth level instead of your income level. In many Western countries, welfare systems are unsustainable and consumption and income tax are already really high. The welfare queens, being lazy bums as they are, now want wealthy taxpayers to pay a portion of their wealth to the government coffers. Another-words, a 0.5% wealth taxation would ensure that a millionaire pays $5,000 on top of paying higher income taxes and GST. In Singapore, property taxes are a stealthy form of wealth taxation.

Sociologists are backed by data that shows that even though income inequality can be kept under control by income taxation, wealth inequality remains high. Expect a lot of research to take place here over the next few years. 

Wealth taxation is fine if it is one-shot, and allows a country to get out of a mess like the pandemic. If a wealth tax is levied every year, people will lose their motivation to innovate and to improve their lot in life. Who wants to work hard when all the money they work for will be used to subsidise all the welfare queens in society?

b) Risk transfer from companies to employees

Sociologists are obsessed with the transition from defined benefit plans to defined contribution plans. The idea is that company pensions use to guarantee a fixed benefit/return for their workers but companies do not wish to take that risk anymore. They prefer to get employees into defined contribution plans where employees choose where their money can be invested. 

I don't see anything wrong with pushing the risk to employees - Employees need to pick up some basic investing skills to do better than their peers, it's their money after all. There will be some employees who will make even more money if they have the right investing skills. Also, I doubt the professionals who manage these defined benefit programs know any better. In a low-interest-rate environment, they'd probably find excuses to lower their returns anyway to keep their funds sustainable.

What is ludicrous is woke Singaporeans lamenting about defined contribution plans when this cannot be recontextualised here. Our CPF program is a defined benefit plan and the political left is always complaining about it. 

c) Cumulative Advantage and Disadvantage of wealth

I don't understand why is this a thing?

Suppose you come from a wealthy family and you decide to study law. If NUS can't take you in, you can fly to the UK and get some Law degree but your parents got your back. They can pull some strings to force their lawyer vendors to take you in for practice training. So because you are wealthy, you get social and cultural advantages beyond the value of your wealth. Even better, you can pass these social advantages onto your kids.

Maybe the sociologist professors have a point. 

But I'd also point out to the sociology professor that she probably committed assortative mating and dated another degree holder (often another PhD), and also contributes to inequality in her own special way. Her kids may inherit her intelligence and conscientiousness. Why are sociologists not promoting equal sexual access where well-educated women grant sexual access to BBFAs, men with below-average height, and INCELS?

Societies have actually come a long way. In the 70-80s, if your vehicle accidentally overtakes a royal in another SE Asian country, you may get beaten up because... the dude you overtook was a royal.

This is a Euro Board game problem. One aspect of successful game design is that players who are on the losing end must have a game mechanic for them to get back on top because otherwise, the game is no fun. People want to gamify the real world. 

Anyway, these ideas are still in the incubation stage in academia and I think serious investors should study them carefully. One day some opposition Phd politician may take these ideas out for a test drive so rather than hear repeated calls for a minimum wage, we may be hearing innovative ideas like wealth taxation. 

If everyone is getting rich in Singapore and advancing together, the opposition MP will just become a joke on social media. 

However, once younger Singaporeans feel stuck and can't advance in life, the torches and pitchforks will come for Singapore investors and landlords first.