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It is because of tournament theory that people are requesting billionaires to be taxed more. http://ingrimayne.com/econ/resouceProblems/Tournament.html http://
by codexon 17y ago
It is because of tournament theory that people are requesting billionaires to be taxed more.
http://ingrimayne.com/econ/resouceProblems/Tournament.html http://ingrimayne.com/econ/resouceProblems/Tournament.html
The differences between individuals (say top 10,000) in certain skills becomes negligible due to the sheer amount of people in the world. However, due to winner take all systems, it is possible for someone that works 0.01% harder or luckier to take 100% of the reward. This is why it is possible for wage disparities to increase beyond ratios of 1000 to 1 without someone having to work 1000 times harder.
The reasoning behind increasing the tax rate on the super wealthy is for several reasons
1) It is easier to accumulate money the wealthier you are. This creates a negative incentive for the super rich to work as hard since it becomes easier to simply buy out competition and form monopoly status. Or crush everyone else due to economies of scale rather than true innovation.
2) This conundrum is well known in many companies where they try to pay their employees as much as they can, but not too much, or else they retire early. If you believe in the mantra that the richest people are the most productive, then it is obviously in society's best interest to keep them productive.
3) The more percentage of total wealth you have, the more US infrastructure you use and rely on. For example: Exxon heavily relies on the US military and government sponsored roads. Tech companies like Google and Microsoft heavily relies on the nationalized electric grid, subsidized education, the invention of the Internet, and subsidized telecoms that allowed people to use it. The average Joe does not have as much to lose if these tax subsidized services were to disappear tomorrow.
4) The tournament theory I mentioned above. The vast differences in wealth are due to situation or luck, and not because someone truly works 1000 times harder than you.
- brg 17y agoIn reality humans are not so different from each other in terms of production and skill... Perhaps you simply don't have experience, but this is certainly not true. There are clear deviations from the norm. Once you start your own business or start to manage groups this becomes quite clear.
- codexon 17y agoNot when there are billions of people in the world in you are looking at the top 100,000 or so. The differences are quite small. This number is far larger and uncorrelated with the number of billionaires in the world. And even when you cite coding studies, the magnitude is somewhere between 25:1 not 1000:1. http://www.codinghorror.com/blog/archives/000072.html http://www.codinghorror.com/blog/archives/000072.html
- brg 17y agoThank you for that link, but it goes to prove the point. The article mentions that in debugging time, the difference is 25:1. In terms of hours, that is a bug getting identified in one hour versus 3 working days. The difference is staggering. Consider the difference in coding time from the article, 5:1. The higher end of the curve completes in one quarter what it takes an average programmer over a year. In terms of development lifecycle, a project will be cut due to reorganized priorities before a group of average programmers even begin to think about a beta while a group of the strongest will have been working on version 4. Looking for a 1000:1, 100:1, etc is a meaningless standard. If you meet a man twice your size, wouldn't that difference seem staggering? But it is only 2:1.
- codexon 17y ago1000:1 is a meaningful standard. There is a point where it becomes unbelievable to say someone is 1000 times better than the top 100,000 people out of however many billion are on the planet right now. A look at any competitive sport or Olympics will show that top athletes are winning by a razor's edge in the milliseconds. Would you believe it if someone claimed to be a million times better at a certain skill than the top people in the world? The magnitude of difference definitely matters, and let's not delude ourselves into inflating these ratios higher than they actually are.