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I don't believe that inequality justifies violence to force people to give up the currency they receive in private trade (to pay an income tax). I also don't b
by aminok 10y ago
I don't believe that inequality justifies violence to force people to give up the currency they receive in private trade (to pay an income tax).
I also don't believe that inequality is a natural outcome of a market economy. The market will favor efficiency above all things, because it is an iterative process that rewards good utilizers/investors of capital with greater allocations of capital, and it is not efficient for 5 people to own and direct as much capital as 150 million people. More individual owners of capital means much more attention being given in the management of each unit of capital, resulting in higher returns on it.
The sources of income inequality need to be found in the government either not fulfilling its responsibility to manage the commons in the interest of the public, or in authoritarian prohibitions that disproportionately harm the less wealthy and the poor.
Free-market inhibiting factors that could be contributing to income disparity:
* high fixed-costs for participating in business. Fixed costs, unlike variable costs, punish small businesses. Regulations are known in the economics field as a source of fixed costs. A very basic example: you can't offer stock in your company on a stock exchange without having millions of dollars to pay lawyers. This excludes millions of small businesses from one of the best sources of capital: the public stock market. More on regulations causing an upward distribution of income: Working Paper: The Upward Redistribution of Income: Are Rents the Story?: http://cepr.net/publications/reports/working-paper-the-upward-redistribution-of-income-are-rents-the-story http://cepr.net/publications/reports/working-paper-the-upwar...
* high market transaction costs as a result of regulations and taxes. Why do high market transaction costs contribute to income disparity? Because non-market transactions internal to an organization are not subject to the costs imposed by regulations and taxes. This will result in large corporations having a competitive advantage over small ones that rely on market transactions for a greater portion of their activity. For example, a large corporation doesn't need to pay a sales tax to have its accounting department do an accounting job for it. A small corporation that pays an external company to do it does.