Seth Walsh
Iconoclast
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- Jan 12, 2020
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Hi guys,
First thing you need to realise is that there is no middle class. There is a capital class, and a working class. The mechanism is that the capital class extracts from the working class, in perpetuity; the end.
How?
r > g. The rate of growth on capital beats the rate of growth on labour. Now, with AI, labour itself is becoming commoditized and demonetized.
The extraction will get far far harsher.
You own or you owe. These are realities that persist, they don't change. Below is a graph on the rate of return of the SP500, NASDAQ, median house prices, and average wage growth, over the past 50 years.
End multiples:
If you don't own, how do you cope? Boomers buy their home for $18,000 in 1988 and now it's worth $1,200,000. Suppose you work a $40k a year job for 40 years and never spend a penny after tax, with a 100% savings rate; your entire career earnings just got cleared by JUST the house appreciation of an average boomer.
The most important thing about social class: It is not income. It is insulation.
High class means:
1. Time buffer
You can wait, choose, recover, retrain, say no.
2. Network buffer
Problems get solved through calls, referrals, introductions, family friends, soft landings.
3. Taste/code buffer
You understand what signals legitimacy: speech, clothes, schools, careers, manners, hobbies, risk posture.
4. Capital buffer
Assets, housing help, inheritance, pension, parental liquidity, no forced selling.
5. Psychological buffer
You are raised believing institutions are navigable, not hostile gods.
The brutal truth:
Middle/lower class people are often forced to optimize for survival. Upper class people are free to optimize for position.
That difference compounds for decades.
Class permanence is the way to look at it. You are renting, in debt, have loans to pay off, behind in education? You are compounding negatively. Below is a video on why it is more expensive to be poor.
You are working class / labour class. That's permanence. You are capital class. That can be permanence. Social norms or high and low socioeconomic societies evolve to PROTECT position. Your government is mainly made up of the affluent class, that is why it seems like every policy and decision seems to conflict with the working majority.
Staying labour class means your body, time, mood, and attention remain the product.
Not your capital.
Not your systems.
Not your network.
Not your intellectual property.
Not your ownership.
You sell hours. Someone else owns the machine.
The hidden traps:
1. Your income ceiling is physical.
You can only work so many hours, tolerate so much stress, commute so far, recover so fast.
2. Your “security” is conditional.
One injury, redundancy, recession, bad manager, rent spike, divorce, sick parent, or burnout can erase years.
3. Your taste gets shaped by coping.
Pints, holidays, takeaways, cars, subscriptions, status purchases. Not because people are stupid, but because the system drains them and sells relief back to them.
4. Your children inherit your constraint.
Not just money. They inherit your stress, your postcode, your network, your expectations, your accent codes, your risk limits, your lack of soft landings.
5. You are replaceable by design.
Labour markets reward scarcity. If your work can be trained, scheduled, monitored, outsourced, automated, or squeezed, you are not a partner. You are input cost.
6. You mistake income for class mobility.
A high salary without assets, ownership, network, and optionality is still glorified labour. Better labour, but labour.
7. You become dependent on permission.
Permission to get promoted. Permission to take leave. Permission to work remotely. Permission to earn more. Permission to stop.
8. Your best years get consumed before you own anything meaningful.
Energy goes into rent, commuting, bills, workplace politics, and emotional recovery. Capital formation happens too slowly.
The core horror:
Labour class means you are exposed.
Exposed to bosses.
Exposed to rent.
Exposed to prices.
Exposed to illness.
Exposed to family chaos.
Exposed to bad timing.
Exposed to one bad year.
The escape is not “work hard.”
Your jawline and eye area are not the reason YOU have to work to get nowhere, while others don't have to work to get to wherever they want.
GENETIC DETERMINISM OR ECONOMIC DETERMINISM?
First thing you need to realise is that there is no middle class. There is a capital class, and a working class. The mechanism is that the capital class extracts from the working class, in perpetuity; the end.
How?
r > g. The rate of growth on capital beats the rate of growth on labour. Now, with AI, labour itself is becoming commoditized and demonetized.
The extraction will get far far harsher.
You own or you owe. These are realities that persist, they don't change. Below is a graph on the rate of return of the SP500, NASDAQ, median house prices, and average wage growth, over the past 50 years.
End multiples:
| Series | Growth multiple |
|---|---|
| NDX price index | 196.0x |
| SPX price level | 71.5x |
| U.S. house prices | 10.6x |
| Median weekly wage (not even including inflation) | 5.0x |
If you don't own, how do you cope? Boomers buy their home for $18,000 in 1988 and now it's worth $1,200,000. Suppose you work a $40k a year job for 40 years and never spend a penny after tax, with a 100% savings rate; your entire career earnings just got cleared by JUST the house appreciation of an average boomer.
The most important thing about social class: It is not income. It is insulation.
High class means:
1. Time buffer
You can wait, choose, recover, retrain, say no.
2. Network buffer
Problems get solved through calls, referrals, introductions, family friends, soft landings.
3. Taste/code buffer
You understand what signals legitimacy: speech, clothes, schools, careers, manners, hobbies, risk posture.
4. Capital buffer
Assets, housing help, inheritance, pension, parental liquidity, no forced selling.
5. Psychological buffer
You are raised believing institutions are navigable, not hostile gods.
The brutal truth:
Middle/lower class people are often forced to optimize for survival. Upper class people are free to optimize for position.
That difference compounds for decades.
Class permanence is the way to look at it. You are renting, in debt, have loans to pay off, behind in education? You are compounding negatively. Below is a video on why it is more expensive to be poor.
You are working class / labour class. That's permanence. You are capital class. That can be permanence. Social norms or high and low socioeconomic societies evolve to PROTECT position. Your government is mainly made up of the affluent class, that is why it seems like every policy and decision seems to conflict with the working majority.
Staying labour class means your body, time, mood, and attention remain the product.
Not your capital.
Not your systems.
Not your network.
Not your intellectual property.
Not your ownership.
You sell hours. Someone else owns the machine.
The hidden traps:
1. Your income ceiling is physical.
You can only work so many hours, tolerate so much stress, commute so far, recover so fast.
2. Your “security” is conditional.
One injury, redundancy, recession, bad manager, rent spike, divorce, sick parent, or burnout can erase years.
3. Your taste gets shaped by coping.
Pints, holidays, takeaways, cars, subscriptions, status purchases. Not because people are stupid, but because the system drains them and sells relief back to them.
4. Your children inherit your constraint.
Not just money. They inherit your stress, your postcode, your network, your expectations, your accent codes, your risk limits, your lack of soft landings.
5. You are replaceable by design.
Labour markets reward scarcity. If your work can be trained, scheduled, monitored, outsourced, automated, or squeezed, you are not a partner. You are input cost.
6. You mistake income for class mobility.
A high salary without assets, ownership, network, and optionality is still glorified labour. Better labour, but labour.
7. You become dependent on permission.
Permission to get promoted. Permission to take leave. Permission to work remotely. Permission to earn more. Permission to stop.
8. Your best years get consumed before you own anything meaningful.
Energy goes into rent, commuting, bills, workplace politics, and emotional recovery. Capital formation happens too slowly.
The core horror:
Labour class means you are exposed.
Exposed to bosses.
Exposed to rent.
Exposed to prices.
Exposed to illness.
Exposed to family chaos.
Exposed to bad timing.
Exposed to one bad year.
The escape is not “work hard.”
Your jawline and eye area are not the reason YOU have to work to get nowhere, while others don't have to work to get to wherever they want.
GENETIC DETERMINISM OR ECONOMIC DETERMINISM?
