Extreme Cases of Unfairness in the World





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Jerry's Weekly Newsletter

August 1 · Issue #24 · View online

I'm Jerry, a software engineer, YouTuber, and blogger. Every weekend I write about some thoughts, life lessons, and interesting things I came by for the week. I'd love for you to join.

Hello friends,
I’ll take this week to state the obvious: the world isn’t fair. Not by a long shot.
Nor will it ever become fair, no matter how hard we try.
We can thank randomness and entropy for the current state of the world’s extreme unfairness. The fact that you are where you are today is totally out of your control—you didn’t get to choose who you were born to or which part of the world you were born in.
I’m not even arguing that the world should be fair. While I do believe in equal opportunity, I don’t believe in equality. People shouldn’t be equal by default. (I wonder if that last statement struck a nerve.)
I’m not talking about talent. I’m referring to work ethic. Some people work harder than others, and therefore deserve to be rewarded with more than those who worked less hard.
Even so, the unfairness can sometimes get a bit too much.
Opioid Crisis
Opioids, aka painkiller drugs, are medically used to numb pain. However, opioids can also be addictive, and if mis-prescribed, can cause overdosage in patients.
That’s exactly what happened. Over 400,000 people have died in the US from opioid overdoses. And as you can see in the chart below, there’s a huge spike in opioid-related overdoes compared to other drugs just in the last 5 years!
The whole supply chain is messed up, from the pharmaceutical companies (like Purdue Pharma) that manufacture the drugs, all the way to how doctors over-prescribe opioids to patients who don’t truly need it.
In 2019, state governments filed lawsuits against Purdue, and in early 2021, it looked like they were going to face justice. But with Purdue dangling $4.5B in the face of cash-poor state attorneys, 15 states signed on to settle.
Buy, Borrow, Die
This is the ultimate tax loophole that the rich use to avoid taxes. Technically, anyone can do it. But the more assets you have, the more you can take advantage of it. Here’s how it roughly works:
Step 1: you buy appreciating assets, like stocks and real estate.
Step 2: you borrow cash, using your assets as collateral. This means if you can’t pay back the loan, the bank can take your assets.
Unlike wage income (an employee’s earnings), borrowed money isn’t taxed. So while the employee is cash-rich and asset-poor, most of their money is taxed. For a founder who might be cash-poor and asset-rich (tons of equity but not much cash), if they follow steps 1 & 2, most of their money isn’t taxed.
They will have to pay interest, but interest rates are only a fraction of tax rates. Current personal loan rates are sitting under 3% while tax rates can go as high as 37%.
Step 3: you die. This is the ultimate exit strategy.
If you own assets, you don’t get taxed until you sell. Selling is one form of exit. When you sell, you pay taxes on the capital gains. So if I buy 1 share of Apple at $100 today and in 2 years it grows to $150, if I sell at that time, I get taxed for the $50 of capital gains I’ve made.
However, if I hold forever and die, my family will inherit my shares. Let’s say I survive for another 50 years, and the share price is now at $1,000. If I sold while alive, that would be a capital gains of $900.
But due to a tax loophole known as “step-up”, when my assets transfer to my inheritors, the new cost basis is adjusted to the time of my death. That means from the tax perspective, it looks like my inheritors bought this Apple share at $1,000, even though they paid nothing and it was actually I who paid $100 way back.
And the cycle can actually infinitely continue.
Because thanks to my hard work, my offspring have an incredulous amount of wealth via these assets, and they can simply borrow and not really pay any taxes.
I hope by now I’ve persuaded you of the extreme unfairness that exists in this world.
If I may be a little existential—the world is a lost cause. Even if we manage to plug these problems, others will inevitably show up, and I’m willing to bet they are even more offensive.
Besides, everything is meaningless under the sun anyway (Ecclesiastes Ch1). The world is temporary no matter how you look at it, for we will all die one day.
That’s why I’d rather place my hope in something eternal. That’s why I believe in Jesus.
For without my faith, life would be pretty depressing.
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