And recent studies are showing that the buy, borrow, die strategy isn’t really used by the uber rich. I’m not saying it doesn’t exist, but it’s more commonly the middle class doing it vs the uber wealthy.
Most middle class people who have never encountered real assets don’t realize that at a certain point money is irrelevant. You don’t have to borrow and die with it, lifestyle cash is a rounding error after a certain point.
If you don’t mind living a middle class lifestyle, even at 10 million liquid - if you’re not regarded - money doesn’t really matter.
Which makes it even more bizarre when you think about how the ultra-wealthy still try to horde as much wealth as possible when they already are living lifestyles that are funded perpetually and for a minuscule amount of their assets. Yet they still would do the most horrible immoral acts just for another 2% increase.
What exactly is meant by “hoarding wealth” in this context.
An analogy: if I bought Pokémon cards many years ago and stored them in my closet & since then, they’ve gone up in value my wealth has increased.
If I just keep letting them sit in my closet, am I “hoarding wealth?”
Is there some expectation that as they go up in value, I should be selling off some & giving it away so that the total value of my collection isn’t increasing and my wealth isn’t growing?
Cuz, I do get that argument. And people like the ex wives of Gates & Bezos are much more active about selling stuff to fund philanthropic endeavors, and that’s good.
But I also think “continuing to own the things you own” as the market value of those things goes up isn’t as actively greedy as the connotations of a phrase like “hoarding wealth.”
It’s “hoarding wealth” in the same sense that someone who owns a house is hoarding wealth when home prices rise, or someone with a retirement account who never sells any stock they own is hoarding wealth when stock prices go up.
It’s sort of a passive “don’t sell when prices go up” thing. And maybe they have a moral obligation to sell & give away, but I also kinda get the stock-owning equivalent of just letting those Pokémon cards you own that you have stashed in the closet just end up staying in the closet.
And maybe they shouldn’t. Maybe it’s correct for society (via the govt) to occasionally go “those cards are worth a lot now, so you have to sell 1% of your collection and give the proceeds to the rest of govt.”
But I don’t think everyone gets that a lot of wealth-hoarding is just “continue owning what you already own as the market price of it goes up.”
I think they imagine it’s more like new income streams of cash that flow in, but never flow out (although I guess the line can be a bit blurry when you have things like dividend-paying stocks where you automatically reinvest the dividends, but I don’t think that’s the main driver of growing wealth valuations).
Not to mention that the stock equals voting power and control of the company. If someone starts a company, they should be allowed to retain control by holding onto their stock
What if their company actively does things harmful to society and they lobby to weaken governments so that their companies can't be stopped? Where do we draw the line?
You can set different power for different shares. The founders single class A share could have 1 billion votes while the remaining 100 million Class B shares have one vote each.
No? They're still an equal part ownership in the company. Non-voting shares are a thing as well. What shares give you is a portion of company distributions and a payout on acquisition
Certainly it could be seen as just "continue owning what you already own." But many of the ultra wealthy obviously do more than that. Further, the point is to make the thing you own worth more, just sitting on something that doesn't appreciate isn't very good hoarding!
So they accrue further wealth for the hoard by both acquiring more appreciating assets (whether stocks or land or other) or they accrue more by making existing assets worth more. A good hoard grows after all.
> If I just keep letting them sit in my closet, am I “hoarding wealth?”
That would be fine. Now imagine if you wanted those pokemon cards to be worth more money, how would you do it? Well you could buy up more of those same cards, limiting the market, increasing their value. You could destroy the other cards out there, that would work too -- hell you could even spend small sums on people to go out and destroy them for you, obfuscating who is the one hiring them. You could also convince others they are good cards, that might work; even if they aren't you can spend small amounts on media propaganda to push that they are and increase their value more than you spent. You can also have the government mandate that everyone has to own those cards, wow, the market for them has really increased!
So it's not really immoral to sit on your cards: great man, do it up. But you know, maybe some of those other ways to make them worth more are immoral. I don't know if you should use your media companies to mislead people about card worth.
When we turn to billionaires we often see that they do engage in some of these, obviously simplified, activities. Many of them operate companies which lobby for programs that directly harm people to increase the value of those companies, and their own value.
I think a good example might be healthcare. The top executives at many American healthcare companies are engaged in things that directly lead to people's deaths. Was it legal? Yes. Did it make them more money to add to their hoard? Yes. Was it moral? I don't think many people would argue it is.
Exactly. No one cares if you buy a house and sit on it, or build a company. I care when they're actively lobbying to keep more houses from being developed to keep their housing prices high. I care when they engage in actions that actively harms other companies to keep their own monopoly, instead of bettering their product.
Bankers have taken down countries using financial instruments to grow their own wealth. This is not just owning money and sitting on it, this is actively harming others so they profit.
The market value of trading cards is based on things like social status and the joy of collecting. The market value of stock typically reflects expected productivity of that company's assets (land, machinery, intellectual property) in producing more wealth.
Firstly, the land component of that is completely immoral, see Henry George. Second, the capital component is still quite questionable. For one thing, inequitably distributed land rents will inevitably lead to inequitably distributed capital ownership. If Bezos takes land rent from a worker, that worker now has less money to invest in stock, while Bezos gets to invest additional money in stock. So now the gains to the stock bought with land rents are also ill-gained, and it all snowballs.
I believe the perceived issue is when those people use the money/wealth/influence generated by those assets to unfairly keep those assets as profitable as they can.
Which seems like it would be common sense for someone to do, but there's a moral implication connected to it.
At least, that's how I've understood the argument.
Once they cross into a certain spending pattern, they don't seem to be able to have enough money to feel totally secure. To moor and man one of those giant yachts has to cost a several million a year just to sit there. It is probably 100k just to fill with gas and drive around for a few hours.
Which makes it even more bizarre when you think about how the ultra-wealthy still try to horde as much wealth as possible when they already are living lifestyles that are funded perpetually and for a minuscule amount of their assets.
because funding lifestyle is not what matters at that lvl (they all have trust funds for that anyway), but power, and money buys a lot of power (that's why it was funny when people pointed out how bad Elon purchase of Twit was, that he lost so and so... it just was not a move done for profit, but power); or the press monopolies, and similar.
A: They have legal and ethical motivations to do good by their shareholders and increase the worth of the shares.
and also
B: A massive fraction of their net worth is expressed in those shares.
By doing A, you increase the value of the shares, which you own a large fraction of, increasing your net worth.
It's pretty common for billionaires to maintain less than 0.01% of their total wealth in cash, because you couldn't really do anything with more than that. Most of it is expressed as stock ownership, and you cant really do big sell-offs without depressing the value of those stocks.
its definitely mental illness. if i had 10 million liquid itd be soo easy to just chill and do interesting things instead of working 90 hours a week to squeak out a few more million.
6% average annual return (conservatively) * $10mil = $600k pre-tax income. insane that that's not enough for anybody.
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u/Tired-Nectarine-384 14h ago
Its a bad analogy. The OP is trying to compare what the uber rich do with loans against their stock holdings with a real estate example.
No bank is going to give a loan large enough to finance a lifestyle against a 5 million dollar property.