As Ray Dalio has mentioned, you should measure results on how it impacts the bottom 51% of the people (the majority) it's a lot more illustrative than looking at the average.

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samiv 2 hours ago | parent | next [-]

Yep. I'm not an economist but my social democratic common sense would tell me to look at the bottom 10% income bracket and see how they're doing.

Incidentally these people are the best economic citizens because if you give them money they'll spend every cent of it because they need to buy food and energy, use health care and pay rent.

In other words if a rich person gets a million they (if they're sane) spend a fraction of it and put the rest in assets, stock market, property, etc. If you give 1000 poor people each 1000e every cent will go into local economy immediately.

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IshKebab 2 hours ago | parent | next [-]

Bottom 10% are outliers though. Bottom 50% is much more reasonable.

	▲	bryanlarsen 2 hours ago \| parent [-]
		Treatment of bottom 10% and treatment of bottom 50% are both interesting metrics, but for very different reasons, and they are often contradictory. The "bottom 50%" is a measure of how well you make it possible for everybody to succeed without extraordinary help. The "bottom 10%" is a measure of extraordinary help.

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onraglanroad 2 hours ago | parent | prev | next [-]

The capitalist response to that would be that the investment in companies is better because it makes everyone richer in the long term by increasing overall wealth.

I'm not sure I buy it but it's an effect to consider.

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kubb 2 hours ago | parent [-]

That does sometimes happen - investment does cause development. The mistake is to assume that's always what happens, and that everybody can benefit from the development.

	▲	onraglanroad 15 minutes ago \| parent [-]
		Oh I agree with you. I suspect it happens less than is the conventional wisdom, but I might be wrong.

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ajmurmann 2 hours ago | parent | prev [-]

[flagged]

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kubb 2 hours ago | parent | next [-]

You're conflating compounding market value with economic growth. One counterexample is when inflation raises prices, but not economic output. Asset prices grow but there's no growth.

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ajmurmann an hour ago | parent [-]

What do you think happens with the money that goes into stock? It doesn't simply vanish. It ultimately gets invested in salaries, construction of data centers and factories.

	▲	kubb an hour ago \| parent [-]
		That's most certainly not what happens! The money that goes into buying a stock is being transferred to the people who sold you the stock (which, outside of the IPO are almost always market players). A company with a high stock price can "save money" by paying employees in stock, borrowing money cheaper, but it's NOT a primary way of funding the company.

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wqaatwt 2 hours ago | parent | prev | next [-]

Or hoarding real estate.. which is not particularly productive since it turns out higher prices don’t really stimulate supply sufficiently.

Also its not exactly obvious how much inflated stock market valuations benefit the economy that much or at all.

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paulryanrogers 2 hours ago | parent | prev [-]

Then why is so much money going into real estate and greater-fool crypto?

	▲	ajmurmann an hour ago \| parent [-]
		BTC market cap is $1.2T. S&P 500 market cap is about $66T. Why would we not want for money to flow into real estate? It's an area with massive demand and money flowing in to create supply is exactly what we need and is productive. What is not productive is the NIMBY scum that's preventing supply from being met.

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zhoBEENG 2 hours ago | parent | prev | next [-]

Should we perhaps look at the top 51% instead? Why pick one perspective over the other?

I’m not familiar with Dalio outside some weird pseudo-academic paper he wrote where he attempts to provide a new grand theory of economics based on “transactions”, but I would be interested to hear this perspective supported.

Edit: samiv above answered my question

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rcxdude 2 hours ago | parent | next [-]

Well, if you're looking at the bottom X%, then you can be confident that the rest of the population are in a better position.

	▲	wqaatwt 2 hours ago \| parent [-]
		Technically yes but its not that straightforward. Take a country like Sweden for example everyone is reasonably well off (if not exactly thriving) since income inequality is quite low. At the same time wealth inequality is extremely high since the rich pulled the ladder after them and there are hardly any options for the middle class to accumulate much wealth. In turn that probably doesn’t help productivity and innovation that much. Why work harder if you won’t get anything in return? Which is a general vibe vibe in Scandinavian work culture. Then again they (well Denmark at least since a petrostate like Norway doesn’t count and Sweden hasn’t been stellar and the Danish government is hellbent on turning the EU into a fascist dystopia so maybe its not a price worth paying..) are doing quite well economically compared to most other European countries.

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abirch an hour ago | parent | prev [-]

Ray Dalio created one of the most successful hedge funds ever and as he calls himself "a professional capitalist." The guy even helped with launching the Chickent McNugget (advising McDonald's with Poultry futures)

If you look at the top 51% things are going extremely well, but as this article shows it can hide a lot. I loved his explanation of how the economic machine works: https://www.youtube.com/watch?v=PHe0bXAIuk0 his book Principles is pretty good too.

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radu_floricica 2 hours ago | parent | prev | next [-]

Considering how skewed tax participation is, this would be a very one sided view. Just tax the top 49% more, no matter what's their current level of taxation, and redistribute to the lower 51%. It'll always make this criteria look like a success.

Problem is, this creates systemic effects. If you look longer term, a society that does this will end up a lot poorer than one that doesn't. Even for the bottom 51% you were optimizing. Because there are two variables to control: the redistribution, and the actual productivity. If you just focus on splitting wealth, you stop growing wealth.

Growing wealth on the other hand will make everybody richer, including the botton 51%. Simply participating in a richer economy has advantages. Plus the smaller redistribution percentage will actually end up bigger in absolute terms.

	▲	Garlef an hour ago \| parent [-]
		> If you look longer term, a society that does this will end up a lot poorer than one that doesn't. Got data to back that up? (On the serious level, I'm really curious; But on the polemic level I'll call BS - I highly doubt there ever was such a period in any capitalist country ever)

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amelius 2 hours ago | parent | prev | next [-]

The median is usually used for this; it throws away outliers on both sides.

	▲	rcxdude 2 hours ago \| parent \| next [-]
		This is not quite the same as the median: it is possible for the bottom 50% to improve but for the median to stay the same (i.e. imagine if everyone in the bottom 50% suddenly equaled the best of them). But the median is a lot better than the mean for not being distorted by large changes in the top and bottom percentiles.
	▲	mannykannot 2 hours ago \| parent \| prev [-]
		This seems to tacitly assume that the outliers on either side have equivalent weight with respect to whatever is being investigated, while the explicit premise behind this proposal is that in this case they do not.

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neves 2 hours ago | parent | prev [-]

Sometimes I think economists don't know what a median is.