5 ms·

I'm no big fan of Laffer curve - and especially the stupid way it was used to justify the position that lower taxes are the right answer to every problem - but

• dnautics 11y ago
  Why do you think that inequality is driven by the Laffer curve? (I'm not a fan of laffer curve arguments either) Prior to 1920 there was basically zero income tax, and it's hard to argue that in the preceding era, especially 1850-1920, inequality was on the rise. Hell, one segment of the population OWNED another segment of the population. If you ask me, inequality is generated by the regressive theft of wealth from the poorest segment of the population by a state-run policy of increasing the cost of living. This artificial increase also drives the middle class into various forms of asset-based investment which effectively socialize corporate risk, while disproportionate amount of the gains go to the "capitalist" classes.
  • danmaz74 11y ago
    Just to clarify: I don't think that "inequality is driven by the Laffer curve". But I do think that lower and lower taxation on the rich since Reaganomics has greatly contributed to the growth of inequality; thus the (joking) reference to Laffer. Also to clarify, I'm against punishing marginal rates like there were at some point also in the USA, but also find crazy that Buffet's secretary pays a higher rate than Buffet's.
    • dnautics 11y ago
      Taxation on the rich doesn't change inequality very much, after all, its effects are linear. What's the difference between 1 billion and 1.2 billion? Look to see where there are compounding effects. Taxes on the rich have increased since Obama has come into the presidency, and yet income inequality still rises.
      • beat 11y ago
        Taxes on the rich have changed very little since Obama took office. During the 2012 election, one of the things that eventually came out was Mitt Romney's effective tax rate - 14%. This is less than half the effective tax rate of my own upper middle class family that earned 1/100 as much in the same year. Not much has changed since then. This is a big problem.
        • dnautics 11y ago
          why is this a big problem? And why is 'not taking from the rich' a bigger problem than 'actively stealing from the poor'?
          • beat 11y ago
            It's a social justice issue. Why does a very, very rich person like Mitt Romney pay far less in taxes than the middle class (or even the poor)?
            • dnautics 11y ago
              I am pretty sure that Mitt Romney paid more taxes than most people in this country. He certainly paid far more than me. Could you please give a concrete definition of 'social justice'? How do we know when we have achieved it, and what benchmarks do we have for accountability on those matters. Also, who gets to set these benchmarks?
              • beat 11y ago
  • randcraw 11y ago
    ??? I't VERY hard to argue that inequality wasn't on the rise in America between 1850 and 1920. Why did unions first arise ca. 1910? Why did the progressives and antitrust policies also start then? Indeed, 1850 to 1920 was the heyday of robber barons and the worst corporate excesses in America. With the new century, it soon became evident to everyone that economic inequalities were wildly out of control and something had to be done. Not unlike the rising tides of Trump and Sanders in 2016... As to the end of human ownership as a benchmark for the rise of equality... in practice, the Civil War did little to end the inequalities that arose from slavery in America. Jim Crow reigned in America for another hundred years, at least.
    • dnautics 11y ago
      You're making assertions without any evidence. There are other reasons why progressive policies took hold, as in, basic awareness of alternatives to social inequality due to a decrease of it in general. It's not like a plutocratic equivalent of "robber barons" did not exist prior, they were just aristocrats, and so their theft of capital from the lower classes was accepted as a social norm, a part of the "social contract", if you will. If you look at economic indicators, you will find the numbers do not support your assertions. The best compiled data on this can be found in Schumpeter's "Capitalism, Socialism, and Democracy" - income inequality in the US was relatively static if not improving over this time period, and this is in spite of also receiving many many economic refugees from abroad in several waves of immigration.
      • bobwaycott 11y ago
        > There are other reasons why progressive policies took hold, as in, basic awareness of alternatives to social inequality due to a decrease of it in general. You cannot be serious. Progressive policies did not emerge in late-19th-century America, much less take hold, because there was a decrease in social inequality in general. This is the exact opposite of what the historical record shows us. Progressive policies emerged out of an increasingly wider recognition of social, political, and economic inequalities nationwide in the latter 19th century. This is what prompted farmers to band together with the labor movement to fight the railroads and banks, movements that were inherently critical of capitalism itself, and not just inequality of condition or remuneration. It wasn't a decrease in social inequality that fueled the drive for expanding suffrage. I simply cannot understand how one can hand-wave progressive achievements away when each of them were, sometimes violently, fought for and only secured after years, sometimes decades, of effort. America has been very reliable in making people work very hard to gain equality. > It's not like a plutocratic equivalent of "robber barons" did not exist prior, they were just aristocrats, and so their theft of capital from the lower classes was accepted as a social norm, a part of the "social contract", if you will. I'm beginning to wonder if you've studied much history at all. In what periods of modern history have aristocrats and "their theft of capital from the lower classes" been "accepted as a social norm, a part of the 'social contract'..."? Definitely not much since the 17th century in many Western nations. And always shakily before then, requiring either a balancing act on behalf of the aristocrats, or blatant displays and threats of force to protect it. Even when it wasn't subject to outright rebellion against its existence, it has always been a problem, and never been simply accepted. > If you look at economic indicators, you will find the numbers do not support your assertions. The best compiled data on this can be found in Schumpeter's "Capitalism, Socialism, and Democracy" - income inequality in the US was relatively static if not improving over this time period... This is absolutely false. There are a plethora of historians and economists one can read further to understand these historical trends--Claudia Goldin, Thomas Piketty, Emmanuel Saez, Robert Margo, Simon Kuznets, Wojciech Kopczuk, Tony Judt, and many more. Until the interwar decades of the 20th century, income inequality was shown, as far back as a century, to have done little but rise. It's not even a fact disputed by any serious economist or historian of the period.
  • bobwaycott 11y ago
    Your arguments in this thread seem to be a bit all over the place, and not entirely cogent with regard to what specifically you are attempting to say. It sounds like in this comment and others further down-thread, that you're suggesting there was not an increase in economic inequality prior to 1920. This is nonsense. > Prior to 1920 there was basically zero income tax, and it's hard to argue that in the preceding era, especially 1850-1920, inequality was on the rise. Hell, one segment of the population OWNED another segment of the population. First off, just in your chosen period of 1850-1920, slavery only existed for 15 of those 70 years. I don't think it has anything at all to do with evaluating the state of income inequality in the period--except to have drastically increased its relative levels when the whole of enslaved Americans were made free and joined the ranks of the working masses. What happened after 1865 is an indisputably clear narrative of the newly recognized widening gulf between the wealthy and the masses, elevated to the national stage as a critically important civic conversation. Given the history of the post-Civil-War to pre-WWII era, it is really not difficult at all to argue that inequality was rising--and widely recognize as such. In fact, suggesting that it wasn't is almost laughably ignorant of the period's history. The increased wealth of pre- and early-industrial capitalists was widely acknowledged at the time to have deleterious effects on social, political, and economic spheres. It was overwhelmingly part of the national dialogue, and fed into the rise of populist movements, social and political agitation, establishment and positive public reception of unions among the working class, political campaigns, local political machinery manipulations, and so much more. The gulf that separated the wealthy from the masses between the Civil War and WWI was a big fucking deal. This inequality of economic conditions, and the resulting power imbalances, along with the ability to purchase and maneuver the state and national forces to protect capitalist interests led to riots in the streets, creation of new political parties, and overwhelmingly massive changes to the social, economic, and political landscape during this period. I know of no historians of America since 1850-1950 who would, even in jest, suggest income inequality in the late-19th and early-20th century did anything but rise. The only exception to this widely recognized and documented state of affairs occurs after 1918--a notable decrease in the interwar period, a marked plummeting during WWII, a steadying greater equality in the post-war decades, until inequality began rising again in the 1970s. Hell, I'm actually amazed that anyone seriously disputes any of this. It's American history 101--a constant, meandering power struggle between the wealthy and everyone else. This has been a staple of American political, social, and economic life since colonial times. We have, as a nation, had this argument before ... many times.
• onion2k 11y ago
  With total equality, productivity and innovation plummet, because most of those who are able and willing to work more and/or better resent the freeloaders that enjoy what the actual producers produce without putting in the effort, and become demotivated. Do they? Most people I know are happy knowing that they're doing useful things. That happiness isn't impacted in any way by other people not doing useful things. In fact, if I'm honest, I'm considerably happier about living in a society with people who opt out of work to live on welfare supported by taxation than people who make huge sums of money but avoid tax themselves. I don't think I'm alone in that (although, that said, I live in Europe rather than the U.S., so that may make a difference.)
  • danmaz74 11y ago
    I'm also from (western) Europe and we for sure don't live in "totally equal" societies :) Eastern European communism created a much more equal society, but it's difficult to argue that people there enjoyed a better quality of life than we did in the West.
    • r00fus 11y ago
      > Eastern European communism created a much more equal society I question that assertion. The problem is that in communism, (not unlike our financiers in capitalism) the people closer to the resources or decision-making process were inherently more well off - in fact, probably closely modeling a power-curve. Part of this is human nature, the other part is lack of technology for transparency.
      • danmaz74 11y ago
        From what I know from people who actually lived under communism: yes, there were those who had more and those who had less. But the inequality was still much lower than even in the most social-democratic Northern European countries (this is not to say they were better societies, just that they actually were less unequal).
    • Mikeb85 11y ago
• technotony 11y ago
  I think what we need is a metric for government policy that isn't GDP growth. Instead it should be GDP of the bottom X% of the population. I used to think X% was 10% but now I think maybe X=50% or even X=90% might be the right answer. This is by nature redistributive, but it accepts inequality if it raises those at the bottom. As an addendum I think this metric should be global wealth not national wealth but that's not going to happen in the current world of nation states.
• cobaltblue 11y ago
  What is this total inequality you talk about? It seems like you're picking the inequality of 0 and infinity. But we live in a finite world, this total inequality is impossible. Furthermore, whether we introduce an infinite inequality or a finite inequality, there's no reason the lower bound should be at 0 (where people starve and die). Suppose we have a society whose inequality range generally falls within 1 and 1,000,000. 1 is a sustenance standard of living, any unfortunate event could totally wipe you out, but it's pretty much maintainable with little effort provided that unfortunate event doesn't happen. Somewhere around 3 being the poverty line and somewhere around 8 being a decent standard of living so long as you're working to maintain it, and somewhere around 50-100 is enough for most people to effectively have that same decent standard of living as 8 but without having to maintain it so hard e.g. through a job. What's wrong with this lower bound increasing by 1 every year (with its associated low level of upkeep remaining the same) while the upper bound increases by 2 every year? The inequality is growing with each year, but in 2 years there is no one below the poverty line, and in 7 years everyone has a decent standard of living but they don't really have to put in effort for it. Why is inequality the issue here?
• gnarbarian 11y ago
  IMO we have to break things into good inequality (innovation derived) and bad inequality (rent seeking derived). Without innovative uber rich people we wouldn't see companies like Tesla or SpaceX or programs like YC. Assuming that rent-seeking is root cause of rising (bad) inequality What is the best way to solve that? IMO more rules and regulations would exasperate the problem as it will create more complexity and loopholes to exploit. In practice, the more regulations that exist the higher the barrier to entry is for potentially disruptive startups. The problems Uber has faced is a good example of this. It doesn't have to be this way though, it's feasible for there to be regulation that discourages anticompetitive behaviour. Unfortunately the lobbyists always seem to write these bills. Simplified regulatory structures with fewer exceptions might be better. With a focus on discouraging anti-competitive and rent seeking behaviour. But this is painting with a very wide brush across industries. It's a really tough problem. How can you promote competition in an industry while discouraging rent-seeking? How do you create regulations that cannot be gamed and don't further exasperate barriers to entry? edit: I'd like to add that the statistics from the article are ridiculous. and that attributing innovative growth only to growth that can be explained by patents is very wrong headed for software and in fact backwards. Software patents could be thought of as a form of rent seeking behaviour by large entrenched companies and patent trolls to wield against one another and startups. This doesn't change my stance on how solving rent-seeking is a tough problem.