Thread by @Noahpinion

1/Here's a @bopinion post about class resentment!

One reason Americans are mad at rich people right now could be that the system seems rigged so that rich people never fail.

bloomberg.com/opinion/articl…

2/Here is a famous picture of super-rich investor Fred Bell, who lost everything in the 1929 crash, reduced to selling apples on the street.

Do you think something like this could happen today?

3/Today, when a crisis hits, the middle class and poor seem to take the hit, while the rich sail on unperturbed.

4/Economist and tech startup bro Irving Fisher, who made millions from inventing the rolodex, lost most of his wealth in a crash he confidently predicted wouldn't come. (Don't worry, he was bailed out by his old-money wife)

Who is his modern equivalent?

time.com/3207128/stock-…

5/Modern financial markets make this sort of loss highly unlikely. Everyone knows you need to diversify some of your wealth. And now you can diversify not just across stocks, but across countries.

Today it would take a truly global catastrophe to bring down the super-rich.

6/Now add in the bailouts (including monetary stealth-bailouts). The super-rich guys whose bad decisions caused the 2008 financial crisis and smashed the livelihoods and nest eggs of millions of Americans generally walked away with their golden parachutes intact.

7/Of course, it's not true that rich people bear NO risk in the modern economy.

Most fall out of the 1%, or off of the Forbes 400 list, at some point.

But going from super-rich to just-rich doesn't seem like THAT big of a risk.

money.cnn.com/2016/01/07/new…

8/But true riches-to-rags stories are rare in our modern economy.

Basically, you have to commit some huge crime like a Ponzi scheme or corporate fraud in order to truly be brought low.

(And remember, prosecutions for the financial crisis were basically nonexistent!)

9/In the modern economy, middle-class people face HUGE risks.

Medical bankruptcy.

Unemployment.

Getting fired for smoking weed to cope with the stress.

The asymmetry of risk between the wealthy and the middle-class is pretty glaring.

10/So what do we do about it?

We can reduce rich people's wealth with taxes, but that doesn't address the asymmetry of risk.

And allowing macro volatility to return to our economy doesn't sound like a good option either.

So how do we address "risk inequality"?

11/My answer: De-risk the middle class.

Implement national health insurance so no one has medical bankruptcies.

Promote full employment so unemployment isn't a big danger.

If the system will always be rigged in favor of the rich, rig it in favor of the middle class too.

12/Anyway, I think "risk inequality" might be an underrated source of class resentment, and we should think harder about how to reduce it.

(end)

bloomberg.com/opinion/articl…