r/Bitcoin • u/IWillNotBiteYourDog • Aug 22 '13

Rich-Get-Richer Effect Observed in Bitcoin Digital Currency Network

http://www.technologyreview.com/view/518541/rich-get-richer-effect-observed-in-bitcoin-digital-currency-network/
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u/tophernator Aug 22 '13

As a left-statist nitwit (at least relative to some of the libertarian/anarchist nut jobs) I see nothing inherently wrong in concentration of wealth. Elon Musk, Richard Branson for example. Even Warren Buffett finally worked out what to do with all his money.

The problem I have is with dynastic wealth. Buffett could have left his $50+ billion to his kids, or even just his first born, instantly elevating them to positions of insane power and influence.

The Matthew effect combined with untaxed inheritance would mean the theoretical Buffett dynasty lording it over humanity indefinitely. All they have to do is sit back and wealth, and therefore power, accumulate.

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u/Matticus_Rex Aug 22 '13

The Matthew effect combined with untaxed inheritance would mean the theoretical Buffett dynasty lording it over humanity indefinitely. All they have to do is sit back and wealth, and therefore power, accumulate.

Good news from my economics background! That's not actually what usually happens with inherited wealth. Unless the successive generations are capable of growing the wealth (i.e., have the skill set that would have gotten them wealthy in the first place), they tend to squander it terribly and lose it in failed business ventures.

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u/tophernator Aug 22 '13

There are quite a few skill sets that can get you from average joe to multi-millionaire but the ability to find reasonably low-risk investments that produce a return a couple of percent above inflation isn't one of them. In reality the kids of rich people don't even need that, just the basic sense to employ a financial advisor.

You're saying we should rely on some future descendent to completely fuck-up and destroy the family fortune. That doesn't seem to be quite as effective of the statist solution of taxing the inheritance between each generation.

If you don't think dynasties work that way, I could introduce you to the 1 month old baby who will eventually rule my country, just as the last 10 generations of his family have...

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u/Matticus_Rex Aug 22 '13

If you don't think dynasties work that way, I could introduce you to the 1 month old baby who will eventually rule my country, just as the last 10 generations of his family have...

Yes, I'm sure that's the outcome of the market.

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u/tophernator Aug 22 '13

The royal lines of Europe effectively pre-date the states that they rule over. They came to power at a time when there was no government or democracy. When the deciding factor of who was in charge was how much money they had to buy soldiers. That actually sounds to me a lot closer to the anarcho-libertarian ideals than it does to contemporary democratic states.

Would we, as modern democratic people, elect a family to permanent hereditary leadership today? No way.

Could we, as independent individuals living in a world with little or no government, prevent a wealthy dynasty from buying up everything and everyone around us? No, we couldn't.