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> his essay [...] reads as a loosey historical narrative manufactured to defend his belief that the fight against "economic inequality" will undermine innovatio

> his essay [...] reads as a loosey historical narrative manufactured to defend his belief that the fight against "economic inequality" will undermine innovation by disincentivizing the next Zuckerberg Well put. The argument that general taxation disincentives innovation has never made any sense to me: no matter how high the tax rate, your post-tax income still scales linearly with your gross income. If your object is to make increasing amounts of money, how does a tax give you less incentive to do so?

quadrangle 11y ago
Devil's advocate: If more income takes more work, and I'm already rich, then the extra work is only worth it to me if I get a really substantial return, not just some minor increase. (In reality, only totally naive people believe that any billionaire cares at all about making more money for the sake of the money. It's actually about power and about irrational desire to be higher in the rankings compared to other billionaires… unless they have other motivations that aren't related to their profit, of course)
- zanny 11y ago
  Which is also in contradiction to Grams perspective. Its insane to claim that you need to keep wealth concentration uncapped to incentivize innovation, because a supermajority of novel innovation comes from people at the bottom becoming rich, not the rich getting richer. Its important to distinguish enabling upward mobility through entrepreneurship and incentivizing that with reasonable taxes and stopping billionaire bank tycoons from buying houses of legislature with overseas bank accounts and ownership stake in half the multinational corporations in town. It also contributes to why that wealth concentration is a problem, because it snowballs - in an unbiased economy with modest inflation the rich must reinvest somewhere to maintain their relative wealth or lose it. When you have enough to use force of law to distort the market so you don't have to take the same degree of risk in those investments, or even make them at all, you break the system. So while wealth inequality is a symptom of globalized economic forces, that wealth inequality perpetuates itself in how it will be used to stymie innovation and promote selective growth for those first to get there.
  - mhaymo 11y ago
    > a supermajority of novel innovation comes from people at the bottom becoming rich, not the rich getting richer. Citation needed? As PG points out, most startup founders are not poor. They take the risk of innovating not because they are desperate, but because they see a large upside. Reducing that upside will certainly reduce the motivation to innovate at the margins. The only question is how much does it reduce motivation, and do the benefits outweigh the costs?
    - zanny 11y ago
      Poor is relative. We are talking about the difference between having a safety net at your parents house where they have a combined income of 300k and might have a cleaning maid every weekend versus a billionaire CEO with penthouses in four cities and his own airplane. One is middle class, the other is extremely rich.
      - mhaymo 11y ago
        So the focus on "inequality" is a focus on large wealth at the expense of thinking about poverty, to the degree that you call 6-figure earners "people at the bottom". I'm still not convinced that a "supermajority" of innovation does not involve the very rich. Much innovation today comes from companies like Google, Apple, SpaceX, lead by very wealthy leaders. Even if you were right, the point remains that limiting the upside of risk-taking also reduces the incentives for middle-class people to innovate.
        jcalvinowens 11y ago
        > Even if you were right, the point remains that limiting the upside of risk-taking also reduces the incentives for middle-class people to innovate. No, it doesn't: relative to middle-class net worth, hitting it big makes you orders of magnitude richer. Even if you taxed that level of wealth at 95%, it would still be absurdly rich compared to the mean.
        quadrangle 11y ago
Tycho 11y ago
I think the argument is more that it will disincentivize innovation in your tax jurisdiction.
ddingus 11y ago
Besides, one can pour money into the business and grow the crap out of it, largely avoiding the tax. It's a question of liquidity.

quadrangle 11y ago

Devil's advocate: If more income takes more work, and I'm already rich, then the extra work is only worth it to me if I get a really substantial return, not just some minor increase. (In reality, only totally naive people believe that any billionaire cares at all about making more money for the sake of the money. It's actually about power and about irrational desire to be higher in the rankings compared to other billionaires… unless they have other motivations that aren't related to their profit, of course)

zanny 11y ago
Which is also in contradiction to Grams perspective. Its insane to claim that you need to keep wealth concentration uncapped to incentivize innovation, because a supermajority of novel innovation comes from people at the bottom becoming rich, not the rich getting richer. Its important to distinguish enabling upward mobility through entrepreneurship and incentivizing that with reasonable taxes and stopping billionaire bank tycoons from buying houses of legislature with overseas bank accounts and ownership stake in half the multinational corporations in town. It also contributes to why that wealth concentration is a problem, because it snowballs - in an unbiased economy with modest inflation the rich must reinvest somewhere to maintain their relative wealth or lose it. When you have enough to use force of law to distort the market so you don't have to take the same degree of risk in those investments, or even make them at all, you break the system. So while wealth inequality is a symptom of globalized economic forces, that wealth inequality perpetuates itself in how it will be used to stymie innovation and promote selective growth for those first to get there.
- mhaymo 11y ago
  > a supermajority of novel innovation comes from people at the bottom becoming rich, not the rich getting richer. Citation needed? As PG points out, most startup founders are not poor. They take the risk of innovating not because they are desperate, but because they see a large upside. Reducing that upside will certainly reduce the motivation to innovate at the margins. The only question is how much does it reduce motivation, and do the benefits outweigh the costs?
  - zanny 11y ago
    Poor is relative. We are talking about the difference between having a safety net at your parents house where they have a combined income of 300k and might have a cleaning maid every weekend versus a billionaire CEO with penthouses in four cities and his own airplane. One is middle class, the other is extremely rich.
    - mhaymo 11y ago
      So the focus on "inequality" is a focus on large wealth at the expense of thinking about poverty, to the degree that you call 6-figure earners "people at the bottom". I'm still not convinced that a "supermajority" of innovation does not involve the very rich. Much innovation today comes from companies like Google, Apple, SpaceX, lead by very wealthy leaders. Even if you were right, the point remains that limiting the upside of risk-taking also reduces the incentives for middle-class people to innovate.
      - jcalvinowens 11y ago
        > Even if you were right, the point remains that limiting the upside of risk-taking also reduces the incentives for middle-class people to innovate. No, it doesn't: relative to middle-class net worth, hitting it big makes you orders of magnitude richer. Even if you taxed that level of wealth at 95%, it would still be absurdly rich compared to the mean.
      - quadrangle 11y ago

Tycho 11y ago

I think the argument is more that it will disincentivize innovation in your tax jurisdiction.

ddingus 11y ago

Besides, one can pour money into the business and grow the crap out of it, largely avoiding the tax. It's a question of liquidity.