21 ms·

My own private basic income

433 points by deegles 9y ago

tiku 9y ago
So this is the part 2 to the "how to retire at 34" article from a few years back..
- Dave_TRS 9y ago
  Agree - seems to be a greatest hits of personal finance ideas with current buzzwords mixed in like "basic income" and "privilege" that aren't central to the post. Be a saver not a spender. Invest in things with strong cash flows relative to the purchase price. Use your personal connections, such as family members that can make good business partners. Take lucrative boring jobs if you can stomach them. Be lucky.
  - gutnor 9y ago
    The core of the article is luck into making way more money than you need. Use spare luck to find a honest someone that knows what to do with that money. Retire. That's not really what personal finance are about. Unless Vegas Holiday Brochure count as Personal Finance: go to a casino, win big, retire.
  - orthecreedence 9y ago
    > privilege ... [isn't] central to the post > Be lucky. Being lucky and being privileged are definitely related. Privilege isn't just the color of your skin but the opportunities you're born with (rather than earned). Basic income is also related, because it's purported as a system to fix the inequalities discussed in the article. Whether or not it will fix those inequalities is another discussion, but it's certainly relevant to the topic.
the_cat_kittles 9y ago
for the articles description: "how [the economy] rewards people who own stuff rather than people who do stuff" i cant believe i never summarized my own feelings that succinctly. of course the reality is it does both, but i think its way out of balance towards ownership rather that doing.
- dollar 9y ago
  Capitalism rewards value. "Doing stuff" is not inherently valuable.
  - the_cat_kittles 9y ago
    i smell tautological reasoning. people are paid what they deserve cause thats what the market decides? ok- if that is your premise, then i have a couple follow up q's: 1. do thieves deserve the money they steal? 2. are there people who profit from things that are legal but shouldn't be? those are abstract q's that i think point out how saying "people are paid what they deserve" is wrong. if you reject that because you draw a distinction between "deserve" and "value they create", then i think "value" is kind of meaningless. in that case, it has the literal meaning you ascribe to it (i.e. it is what you call the amount of money someone pays for something), but nothing beyond. i run into this view very often on here- that capitalism is fair because it pays you what you are worth. but thats so so lazy. you may not agree with me about how its unfair, or that its even worth worrying about, but id hope you would grant me that that premise is just a way to not think about the issue.
obstinate 9y ago
On some level, this is basically "capitalism 101." If I don't need my resources now, I can put them to work so that I can later benefit from them. This leads to me having productive assets, which pay me some return. If I could not acquire productive assets, there would be much less reason to save. And it's unclear how one would save, as banks would likely not exist either. You can solve this problem somewhat by having a centrally planned economy. But then you have the problems that hit those.
- maerF0x0 9y ago
  The benefit of productive assets is that people who otherwise would not be able to produce high value outputs are stuck making lower value ones. By working with another's assets an individual can create more value than alone, and somehow split the difference with the asset owner. Workers maybe need to start to fight for a better split, but that is beyond the scope of this article.
  - obstinate 9y ago
    Yes, yes. Or governments can enforce a more equitable split through taxes. But you still have to give some benefit to those who save, else there will be no reason to do aught but consume all one produces.
- andkon 9y ago
  The problem here isn't that capitalism lets you have productive assets that give you a return. It's that when r > g (when the rate of return of capital is greater than the growth rate of output), inequality increases dramatically. The greater the difference between r and g, the greater the rate of increase in inequality. This is laid out super bare in his example: he bought a house. That house is in an area that surely is past its prime in terms of growing rate of GDP growth. Which means r > g. And that means his assets give him relatively good returns, which in turn compound, which has the net effect of him getting far, far ahead of everyone else who lives in that area.
- dredmorbius 9y ago
  this is basically "capitalism 101." I would, well, did, actually, argue that's precisely the point. https://news.ycombinator.com/item?id=14659043 https://news.ycombinator.com/item?id=14659043
maerF0x0 9y ago
> I lucked into money. The basic point is that he gets paid more whilst not doing more "work". For those whom "Work" is the only lever they use to convert into money, they see inequitable work:cash ratios as "unfair" (a morality statement). Market economies do not function on work, but on value. He did the same work in a high value scenario. A glass of water provided in the middle of a developed city is worthless and thus free. A glass of water provided at the right time in a desert is invaluable and thus expensive. My takeaway is this: Always meet the highest value need you can, and as well create additional value by helping others to meet higher values than they current do. Low placed people may not be able to "work" their way to upper echelons, but they can invent, intuit or otherwise create high value leverage of their's and others' work. I dont see it as unfair that a person making $1 a day is unlikely to become a deca-billionaire in their lifetime (total mobility); instead I want to ensure they have some mobility so that they can always better their situation, maybe by an arbitrarily selected 2x multiplier.
- gitpusher 9y ago
  > I dont see it as unfair that a person making $1 a day is unlikely to become a deca-billionaire in their lifetime (total mobility); Do you see it as unfair that there are people stuck making $1 a day?
  - maerF0x0 9y ago
    If they literally are "stuck" . Here we get into a nasty debate about spectrum of probability vs effort and the multipliers that should be reachable by end of life. I definitely agree that a 0 probability despite maximum effort is unfair. In between is a grey area though.
    - ManFromUranus 9y ago
      Effort is irrelevant though, if they spend their effort on something that could never succeed or is useless or irrelevant to the market then their effort should obviously fail and it is not unfair. So it matters a lot what they choose to apply effort to. Generally life is an IQ test and rewards those who make optimal choices WRT events in their life.
MichaelRenor 9y ago
> My first big lucky break happened in 2009 when Georgetown University hired me as a philosophy professor on their campus in Qatar Apparently going to high school, studying and passing the SAT, applying and being accepted into university, studying, passing, and graduating university is just luck. Have we we reached peak luck yet? Is there nothing ever we can do to improve our circumstances and our lives? This is like a new age of economic predestination, where everything has been predecided for you by God and there's nothing you can do. Calvinist and BI proponents apparently have a lot in common.
- clort 9y ago
  > Apparently going to high school, studying and passing the SAT, applying and being accepted into university, studying, passing, and graduating university is just luck. some of that is the luck of being born in the right place. also, many people did all that and still did not get hired at that place
- Sodman 9y ago
  Being born into circumstances that even enable you to accomplish all of the above definitely falls into the category of luck, in my opinion. Eg if you're born to wealthier parents, you likely have more time in the evenings/weekends to study, which makes all of the above easier than say, if you were born to a poorer family and had to work 20-40 hours / week to contribute to your family's income. Next, being born with the right genetics that enable a natural talent/ability to understand a particular area well enough to get through all of that education and into a good job, is also a form of luck. Sure there's a level of discipline and effort required to get there even when you've got all of the "luck" - but part of the article's point is that there are certain people that are born into certain situations which they can literally never raise themselves out of (without some kind of very very good luck).
  - notadoc 9y ago
    > Being born into circumstances that even enable you to accomplish all of the above definitely falls into the category of luck, in my opinion. Bingo, you get it.
brianwawok 9y ago
Hey, South Bend made an article on the internet and it wasn't even about our mayor! Rental income here is a bit weird because you have in general a very poor town, with a very expensive private university with old money funding houses for students. I bought my house here for a fair bit less than it would cost to rent something half the size.
- kasey_junk 9y ago
  I live in an area where college students cause an imbalance between the cost to rent vs buy (the purchase prices in the area are lower than you'd expect given the rents). I'm constantly surprised that the market doesn't arbitrage this away. I suppose that is due to the fact that the real estate market is less efficient than others (both due to liquidity and transaction costs) and that being a landlord is harder than people suspect. In either case, its always made me leery of rental real estate as an investment vehicle.
greedo 9y ago
Ignoring the logical fallacies the author makes, one thing jumped out at me. He's not buying the average home in South Bend. If he's only paying $180/year in property tax, the assessed value of his average home is around $9K. A quick look at Google shows the median price (from Zillow, so a grain of salt is recommended) of $65K. If he and his brother are buying up $9K homes, his average mortgage is under $50/month. I'm sure that he's doing the socially responsible job of only charging his tenants just a little over his full costs...
- lazerpants 9y ago
  Keep in mind, this piece is based on an older one. Looks like it dates to 2010. He probably bought up mediocre places during the end of the housing bubble for very little money.
- notadoc 9y ago
  You can easily manage to find great cap rates in much of the midwest and south, and parts of the NE.
moeymo 9y ago
Property tax is $15 per month in South Bend for a house? Wrong. Capital gains is taxed lower than income? Wrong -- sometimes it is, sometimes the other way around. Multiple factual errors.
- toomuchtodo 9y ago
  > Capital gains is taxed lower than income? This is actually true. You can make up to $75,900 on capital gains alone if you're married, and pay zero income tax on that. http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-...
- dragonwriter 9y ago
  > Capital gains is taxed lower than income? Wrong -- sometimes it is, sometimes the other way around Capital gains is always taxed equal (for short-term gains) or less (for long-term gains) than "generic" income, except for a few edge cases (e.g., in the very-low income range where additional labor income has a negative net effective tax rate due to EITC and child tax credit and long-term gains have merely zero taxes.)
OJFord 9y ago
> [in the US] people who don’t need their income are taxed less than people who do I'm not American; I don't know the tax structure. But I can't even imagine that this could possibly be true, or what is true that is meant. Without looking it up, I would assume that the USA subscribes to progressive taxation, under which the richer pay more tax in both absolute and relative terms. Even if it has a flat rate of tax, (a structure, incidentally, that makes far more intuitive sense to me) the richer are still paying more tax in absolute terms, and equal in relative terms. What Earthly metric is the author using?
- thetwentyone 9y ago
  I believe the author is referring to the lower tax on capital gains than on income in many situations. I haven't read it personally, but I understand that Thomas Piketty's “Capital” discusses this at length where there's a built-in structural favoring towards capital's rent over labor's wages.
  - tnecniv 9y ago
    Also tax havens and loopholes I suspect. Bon Jovi has some number of strawberry bushes on his estate so that he can count it as a farm for tax purposes.
- greedo 9y ago
  He's using the "I feel guilty" metric. It's useful in a lot of cases, but in his, it seems to cloud his reasoning to a large degree.
- bussierem 9y ago
  It's the American metric - In America, the richer you are, the more you're able to afford hiring shifty accountants and lawyers who hide away your money and get you out of paying taxes. The more you're able to create offshore accounts and shell companies to hide your earnings. The more you're able to pay off politicians and others to look the other way while you do this. The metric the author is using is the fantastic state American politics are in.
- 9y ago
moeymo 9y ago
Property tax is $15 per month for a house in South Bend, IN? lol. Capital gains is taxed lower than income? Wrong ("it depends"). I stopped reading there.
- PatentTroll 9y ago
  It is factually true that capital gains is taxed lower than income in the US.
hartator 9y ago
I think it's awesome to make critics about how capitalism is bad by using Qatar where basically no freedom exists and everything is controlled by the state. Not even mentioning actual slavery.
- chimprich 9y ago
  You have quite a lot of freedom in Qatar if you have money and almost none if you do not.
- jonnycomputer 9y ago
  the homes he rents out are not in Qatar. and he gets to teach for so much money in Qatar because he's a highly educated white westerner.
objectivistbrit 9y ago
He talks about the unfairness of "our economic system" but he makes his income from Qatar's economic system. Qatar likes to spend their oil money on western professors to give themselves an air of legitimacy. As for renting out property, it's never effortless or risk-free. If it was, the rate of return would drop to that of other minimum risk assets (e.g. treasury bonds).
- zanny 9y ago
  Our economic system is global even if our politics are not. The salaries Qatar pays are as influential in his life as any job he could have gotten stateside. The prices of oil and coffee beans are set internationally. Raising the minimum wage locally influences global capital flows away from your area, removing regulations directs global capital towards you. Zoning laws that restrict building and inflate property values will attract investors 5 time zones away on the other side of the planet.
DailyDreaming 9y ago
I agree with the author's points. There have been, almost certainly, Einsteins who have lived and died in poverty without ever having tasted a book. I feel like a basic income for everyone is supportable and would give people falling to an unknowable fate the lift they need to go beyond surviving. Less work seems to need to be done with tech advances today, but the only thing a job replacing robot seems to do is take the incomes of two u people and give it to the person who owns the robot. The slippery slope is that we will eventually do this for most jobs, if we survive long enough as a species, and I agree we need change to evolve as our society does.
deleted 9y ago
[deleted]
imgabe 9y ago
> No one is going to give tens of thousands of dollars every year to some guy who owned a couple of houses and said he knew how to manage more, Well, not no one. There are hard money lenders who will loan money to "some guy" to do more or less that.
erentz 9y ago
Wow I am astounded that all the comments so far are trying to tear down this person and what he is saying, and very transparently because there seems to be something threatening about this idea that he got where he has through luck. Why do people find this idea so threatening? I got where I am today due to luck. I did work hard. But I know other people who work hard too. Who are just as capable. They just didn't get assigned to the class with the really awesome, motivating teacher. Or randomly picked out of the pile by a recruiter for a call. Or happen to wind up working somewhere where they made friends with a guy who was well connected. Etc. To discount luck's role in how people get successful is a huge blind spot.
- harrumph 9y ago
  >To discount luck's role in how people get successful is a huge blind spot. That's the fantasy of meritocracy, fulfilling itself. When someone thinks that gold coins spray from their asshole every time they update a Git repo, they can comfortably presume their role is paramount in the value created. Of course, every library linked, every bit of infrastructure required, every calorie of energy delivered, every man-year of education needed by users - this all disappears in a cloud of self-regard.
- notadoc 9y ago
  > something threatening about this idea that he got where he has through luck. Why do people find this idea so threatening? Ego, mostly.
- eeZah7Ux 9y ago
  > Why do people find this idea so threatening? Because a lot of people want to believe they "earned" what they have and they weren't extremely lucky.
- kobeya 9y ago
  Because outside of winning the lottery it isn't 100% luck that results in haves vs have-nots. There is a degree of luck involved, but there is also preparation and opportunism (aka making your own luck). True universal basic income completely ignores this aspect, as does absolutist critiques of the rentier system we have today. Is it fucked up that a line arbitrarily drawn in the sand resulted in the division into piss-poor and uber-wealthy? Yes, but that's a ridiculous over simplification and it's not obvious that the solution is to socialize the distribution of wealth. That is communism by another name and I don't recall that working out very well for anybody in the 20th century.
tunesmith 9y ago
What I got out of this was the suggestion to fund Basic Income by taxing unearned income. I'd like to read more on how the numbers would actually work out. If that were the only funding source of BI, then how much impact would that be on the rich, and how much benefit would that be for the people that could use BI?
- harryh 9y ago
  The US collects about $1.5 trillion from income taxes per year. A bit of googling leads me to believe that about 10% of that is from capital gains so that's 150 billion. Let's say we 2x capital gains rates and (magically!) earnings from capital gains don't go down. So we have $150B for our Basic Income. There are about 300 million Americans (I rounded down to make the math easy). $150 Billion / 300 Million = $500 each per year.
- dollar 9y ago
  There is no such thing as "unearned income". Assets are risky.
  - harryh 9y ago
    Unearned income is a technical term. Here is the IRS definition: https://www.irs.gov/publications/p17/ch31.html#en_US_2016_publink100046613 https://www.irs.gov/publications/p17/ch31.html#en_US_2016_pu...
bigtunacan 9y ago
Can someone clarify this piece for me? I don't understand how the author is able to completely avoid taxation on the rents. >My wife and I don’t need the money we make from owning most of the business. We live off the salaries of our jobs, and reinvest virtually our entire share of the business. These reinvestments count as “losses,” and so officially we have never made any income or paid income taxes on our share of the business.
- aerovistae 9y ago
  If they took any sort of money from their business, it would be taxed as income. But if the money just stays inside the business and is used to buy more rental buildings-- what's there to tax? So the business keeps growing and growing. Case A: the owners take a paycheck of $100,000. It gets taxed at 30%, they get $70k. Case B: the owners take no paycheck but instead buy a $100,000 property through the business with the business's earnings. They pay no tax but now own a $100,000 property which will now augment the business's earnings further. Down the road years later, they finally take a paycheck at $300,000, which is taxed down to like $180,000 or something. Still more than 2.5x the Case A payout, and let's not forget they own that much more property now on top of everything else.
  - erikcw 9y ago
    But in Case B, wouldn't they have to pay the corporate income tax on that $100,000 before they buy the next property (39.1% in 2017)? I thought each property is a capital expense which gets depreciated over time. So you can't buy a second property with your profits and deduct it as an expense in the current year. Am I missing something?
    - aerovistae 9y ago
      You're probably not missing something. I could be wrong.
  - harryh 9y ago
    This isn't true in the United States if the business is organized as an LLC which is definitely the most common way of handling residential real estate. I, like bigtunacan, am very curious about this part of the story. It doesn't really add up. EDIT: thinking about this more I suppose that one possibility is that the operator brother is taking basically all of the rent as income and the financier brother, instead of making a return from rent, is hoping to make a return from appreciation (selling the houses later for a profit). TBH this doesn't seem super likely to me either, but it's possible. I really don't think that the author is correctly explaining his tax situation (which is fine. it wasn't the main thrust of the post).
rrggrr 9y ago
Gosh. OP made me sad with his thesis. "1. For owners, work is optional." ... As an owner I wish this were true. For me and most owners I know work is mandatory, and its 60 hour weeks and a lot of sleepless nights. There is no safety net. There is no unemployment. I get no workman's compensation. I have no employment law protections. Its, as one HN comment said some time ago, "a suffering contest" a lot of the time. "2. ...your stuff will keep on making money forever." ... Again, I wish this were true. Lifetime income producing investments are hard to find where volatility, fees, inflation, taxes and life's circumstances don't erode value. Sure, the truly wealthy are set. But most business owners are not truly wealthy, and the exit strategies just aren't there in many industries. "3. We can get entrepreneurship without the enormous rewards to ownership we have today" ... Anyone whose dealt with the day-to-day grind of owning a business would be especially offended by this comment. A firehose of pain, suffering and risk flows to the owner in the form of litigation, regulators, employees, vendors, customers, bank officers, etc., etc. I've equated it to a "lazy susan" dispensing aggravation in every conceivable form. Its the reward - if you can get it - that makes it worthwhile. Try just getting divorced as an owner and you become an instant convert to rewarding ownership. Yes, rent-seeking monopolies are bad. Yes, more needs to be done to create opportunities for wealth creation by employees - to give them the freedom to say "no". No, punishing ownership isn't the answer. UPDATE x2: I'm really not confusing types of owners. The author's thesis is broad not only in the article, but in his works in general. Access to passive income investments (eg. REIT's) is among the few places small business owners can go to rent-seek. Rent seeking is bad under a few sets of conditions but doesn't deserve author's indictment.
- maerF0x0 9y ago
  I think OP is not talking about the kind of owners you're thinking of. "Owner" of a startup, or "Owner" of a unvested equity package etc. are not his intended group. I think its more like people who can easily meet their needs/wants even while holding something like a dividend fund or w/e. Owner of sufficient passive income assets that any extra effort or income or ROI is only gravy.
- ktta 9y ago
  You are mixing together business owners and rentiers (property owners). Very different things. Property owners don't need to work 60-hour weeks unless they are the sole handyman for 100+ houses.
Mz 9y ago
TLDR Guy in financially comfortable position feels guilty, decides his education, willingness to live in Qatar, etc shouldn't really be worth this much, completely discounts the idea that anything actually matters, it is all merely "luck" and that's it. Sounds like an existential crisis, not really a good commentary on the concept of basic income.
- jhall1468 9y ago
  TLDR Guy reads an interesting article that threatens his idea of success, incorrectly summarizes the article and resorts to personal attacks against the author. Sounds like threatening core beliefs makes you defensive, not really a good commentary on the article itself.
  - Mz 9y ago
    FYI: I am a woman. I am homeless. I get a lot of flak from people because I am not pro UBI when people seem to think I should be simply because I am homeless. Instead, I believe we need to view our current situation as The Second Industrial Revolution and do whatever the next evolutionary step is to make paid work a lighter burden while raising quality of living for the masses. I am pro gig work done right. Also, your comment is basically a personal attack.
    - mod 9y ago
      > Also, your comment is basically a personal attack. Isn't yours? (The first one) He used your comment as a framework.
      - Mz 9y ago
        Mine is a criticism of the actual article. The reply to mine is a personal attack against me, a member of this site. This is generally understood to be a violation of the site guidelines, though they don't explicitly say "no ad hominems." In Comments Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity. When disagreeing, please reply to the argument instead of calling names. E.g. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
pavement 9y ago
nor is there a combination of bad choices that could conceivably put me in their position from my starting point. Guess again.
- zanny 9y ago
  An American born citizen will (statistically) never be an indentured servant / migrant slave in oil rich countries.
  - pavement 9y ago
    I can conceive of a combination of bad choices that could place a person in such a predicament. Unlikely choices, but choices, when taken, certainly resulting in the described outcome. It's not an inaccessible scenario, but unlikely to be anything other than a forced outcome for someone like the author. For those in mind, who actually face the true reality, it's usually accidental.
edpichler 9y ago
The article is about something that should be obvious, capitalism: money goes to the capital owner. Of course this has a lot of problems, but it's the best we have today. On this system, the rules of the game are: we need to work and spend less than we earn, and use the money to accumulate more capital, an not buying more things.
- harryh 9y ago
  In the US, the vast majority of gross national income goes to labor not capital. FWIW.
  - kasey_junk 9y ago
    I believe you and my instincts agree with you, but how are you quantifying that?
    - harryh 9y ago
      Scott Sumner has a great blog post that gets into this (and some other semi related topics): http://www.themoneyillusion.com/?p=30566 http://www.themoneyillusion.com/?p=30566
  - int_19h 9y ago
    Of course, there's also a lot more laborers than capitalists. By orders of magnitude. How about per capita for each group?
    - harryh 9y ago
      BLS says about 153 million Americans are currently working(1). Gallup says 52% of American Adults are invested in the stock market(2). There are about 235 million adult Americans. 52% of that is 122 million. 153 million laborers vs 122 million stockholders Pretty close! And that's just stockholders. There are, of course, many other forms of capital. 1. https://data.bls.gov/timeseries/LNS12000000 https://data.bls.gov/timeseries/LNS12000000 2. http://www.gallup.com/poll/190883/half-americans-own-stocks-matching-record-low.aspx http://www.gallup.com/poll/190883/half-americans-own-stocks-...
stuaxo 9y ago
Seems to state the obvious to me, but looking at the comments on the article, I'm in a minority.
- antisthenes 9y ago
  People with a solid grasp of economics are, sadly, a minority.
Spooky23 9y ago
This guy sounds like a real shithead. He makes his living teaching the children of totalitarian aristocrats at a faux university, is saving for the future on the backs of the poor back at home, and gets a kick out of having indentured servants at his beck and call. I wouldn't shed a tear when his little empire of dirt collapses.
dredmorbius 9y ago
Read this essay (which is, as it goes, pretty good), then go back and take a look at, say, the first book of Adam Smith's Wealth of Nations. In particular the prices of commodities, labour, stock, and rent, as well as the factors influencing wages of labour (chapter 10). https://en.m.wikisource.org/wiki/The_Wealth_of_Nations https://en.m.wikisource.org/wiki/The_Wealth_of_Nations It doesn't hurt to consider Ricardo as well. From Ricardo, we get the Iron Law of Wages, and the Law of Rent. Key to understand is that these move in opposite directions: * Wages tend to the minimum subsistence level, all else equal. * Rent rises to claim the surplus value afforded. That is, wages are based on the input costs, whilst rent is based on the output value (use value). The third element, price (sometimes "exchange value"), is what's at question. (I distinguish cost, value, and price as three distinct concepts. This is a long-standing question, and in my view, a grossly confused one, in economics. They're related, but not deterministically. In the long term, C <= P < V. Bentham's "utility" is an exceptionally red herring. More, very much in development: https://redd.it/48rd02 https://redd.it/48rd02) Note that this means that rent is determined by the pricing behaviour. If you're a "business owner" but you're not capable of extracting rents, you're either selling commodities or labour, you're not collecting rent. The term here is in the sense of economic rent. Simply "owning a business", without the economic circumstances which give rentier power, isn't sufficient -- don't confuse what it is you're doing with the systemic construct in which you're doing it. Weiderquist emphasises this point specifically, several commenters here clearly haven't grasped it. Another elided discussion: rents are associated with access control, and can be thought of as authority over some (virtual or physical) gate. They're a natural element of any networked structure, in which nodes and links exist, most especially where some nodes have higher value, or control more flows. I believe though can't yet show that all cases of rent involve a fundamentally networked structure, again, virtual or real. My concern is that this may be a reflexive definition, I'm trying to determine that it is or isn't. Another element of this is compensation for labour. Smith lays out five elements determining this, and I find them durable and comprehensive. In the Widerquist's case, the combination of requisite skills, and comparative unattractiveness, of teaching in Qatar, allow him to claim both a high wage and favourable working conditions (including a lighter-than-typical workload). This falls straight out of Smith. That is, he earns his salary "by doing a job few others are both willing and able to do". If you're looking at the macro view, realise that these don't scale. That is, the innate and acquired capabilities to teach at University level are not widely distributed through the workforce, and the lack of appeal of various sorts of work is sufficient to dissuade (or prevent, or disqualify) others from taking part in it. There are other elements here as well: the complimentarity of time and skills, on the one hand, with money, on the other (the classic business partnership). Tax structures (and who they benefit). The relationship of wealth and political power. Smith again: "Wealth, as Mr Hobbes says, is power." One of the shortest and clearest sentences in WoN, incidentally.
dugluak 9y ago
Its not two big lucky breaks it should be actually three big lucky breaks. Being born as a human is the first lucky break every human being on the earth gets. If you think about it 'merit' is man made. Nature most of the time works on pure chance.
jacknews 9y ago
Owning land is certainly a private basic income. Consider that land prices (and therefore rents) basically reflect the surrounding economy. By buying land you are essentially profiting from the work of everyone else in that economy, forever, and only taxed minuscule property taxes. IMHO https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George had the correct solution; tax land (though not the structures developed on it) at it's full market rental value. And the concept should apply to ownership in all resources.
samnwa 9y ago
There can only be so many people at the top.
ableton 9y ago
If you live in America you can do what you want. You can study hard and get a scholarship to college even if you are really poor as a kid. I know a poor Mexican immigrant who's kids all got college degrees for free. It doesn't really matter if you grow up poor (in America). There are many people who are very rich precisely because being poor as kids drove them to work hard. What does matter is if you grew up in a stable family. If you don't have that you get really whacked out paychologically, and it can affect people for their whole lives. People look to the government to tax and spend to solve social problems. However, oftentimes the government is the cause of such problems in the first place. For example, we see a huge number of people in prison today. Well studies show that 60% of people in prison grew up without a father in the home. The government today actively promotes divorce and children out of wedlock through paying single mothers. The "compassion" has raised a generation of young people who are lost. America has more money than ever but our families are falling apart, torn up by divorce and pornography, and our young people are paying the price. The government should focus on supporting strong families, and you would watch and see so many major social problems evaporate. I know that I am where I am today because of my dads positive influence on me. Without his support I would be nowhere right now. Every kid needs a loving family. It's time the government starts trying to promote that. Of course in Quatar they have serious human rights issues that need to be resolved. I'm just talking about in America.
- state_less 9y ago
  > I know a poor Mexican immigrant who's kids all got college degrees for free. I know many upper middle class kids who got college degrees for free (parental scholarship). > It doesn't really matter if you grow up poor (in America) Like I said above, and the author claims, it does seem to matter quite a bit if you grow up poor or not poor. > There are many people who are very rich precisely because being poor as kids drove them to work hard. There are probably many more who are rich precisely because being rich as kids drove them to being rich as adults. > However, oftentimes the government is the cause of such problems in the first place. Oftentimes you drive on the roads the government provisioned, visit the parks past presidents enacted, live in the security our GI WW2 vets created, so on and so on.
arwhatever 9y ago
Well success is either based entirely on luck or entirely on merit, and I'm sure we'll figure out which of the two it is real soon now.
dlwdlw 9y ago
I'm having a lot of fun lately thinking about everything in cryptotokens: Everyone gets 3 basicMealTokens and 1 basicFun token. However, in SF, there are only sfMealTokens which require 20 basicMealTokens. In Vietnam, 1 vietnameseChickenPlatterToken is only half a basicMealToken. Tech workers are paid in techWorkTokens which can be exchanged for 200 basicMealTokens each or 100 basicFunTokens, or 1/1000th of a Tesla token. Token transfers have friction so it is advantageous to maintain a surplus of tokens most easily transferrable (least hops) to what you want. To ease this, SF maintains a sfBasicToken and makes the market to transfer tokens from all over the world to sfBasicTokens. sfBasicTokens have an advantage in that you can pay for things easily instead of paying 67.34 redditStatusTokens. Some old geezer is willing to sell his house for a legacy usdToken, a token so old it had a physical representation and no historical memory. The basicFoodToken ideas doesn't pan out. SF starts giving out sfBasicFoodTokens instead. However large numbers of people realize an arbitrage mistake and live like kings in Thailand, taking advantage of the buying power of sfTokens due to the Thailand people wanting to make it big with their startup dreams in the Bay Area. ¯\_(ツ)_/¯
etergri 9y ago
You'll all will talk and conclude absolutely nothing. IQ distribution is cancer and you're all getting confused with one another.
astrostl 9y ago
"We have a basic income – a permanently growing basic income – not just for life, but forever." Eh? Nobody has ever had this, and nobody ever will.
RealityNow 9y ago
Fantastic article. Some takeaways: * Our economic system claims to reward "work", but the reality is that it rewards ownership and extracting economic rents. * Increasing value does not necessitate that being the result of one's "work". For example, land values rising are the result of other peoples' work (eg. neighboring properties, government policies, general economy). The landowner is compensated through the labor of others. * Economic rents aren't taxed enough ("The business pays property taxes, but they average about $15 per house, per month – minuscule compared to the rent we make.") * Labor is taxed too high relative to capital gains * "Luck" plays a huge factor, and luck and hard work aren't mutually exclusive. If I'm born into a poor family in a ghetto, naturally I'm going to have less opportunities than being in an upper class family with enough funds to perpetually support me (eg. Mark Zuckerberg, Bill Gates) * We need a Universal Basic Income, ideally funded by taxes on economic rent (eg. land value tax) Our economic system is like a big game of monopoly where all the properties are already owned. You start off with whatever money/property you inherit from your parents, and have to work yourself up. Meanwhile, the rentiers are profiting off the backs of the laborers without doing anything. Sure it's possible to add "properties" to the board (ie. starting businesses), but that doesn't scale. At least Monopoly had a UBI in the form of the $200 you get every time you pass "Go".

433 points by deegles 9y ago

tiku 9y ago

So this is the part 2 to the "how to retire at 34" article from a few years back..

Dave_TRS 9y ago
Agree - seems to be a greatest hits of personal finance ideas with current buzzwords mixed in like "basic income" and "privilege" that aren't central to the post. Be a saver not a spender. Invest in things with strong cash flows relative to the purchase price. Use your personal connections, such as family members that can make good business partners. Take lucrative boring jobs if you can stomach them. Be lucky.
- gutnor 9y ago
  The core of the article is luck into making way more money than you need. Use spare luck to find a honest someone that knows what to do with that money. Retire. That's not really what personal finance are about. Unless Vegas Holiday Brochure count as Personal Finance: go to a casino, win big, retire.
- orthecreedence 9y ago
  > privilege ... [isn't] central to the post > Be lucky. Being lucky and being privileged are definitely related. Privilege isn't just the color of your skin but the opportunities you're born with (rather than earned). Basic income is also related, because it's purported as a system to fix the inequalities discussed in the article. Whether or not it will fix those inequalities is another discussion, but it's certainly relevant to the topic.

the_cat_kittles 9y ago

for the articles description: "how [the economy] rewards people who own stuff rather than people who do stuff" i cant believe i never summarized my own feelings that succinctly. of course the reality is it does both, but i think its way out of balance towards ownership rather that doing.

dollar 9y ago
Capitalism rewards value. "Doing stuff" is not inherently valuable.
- the_cat_kittles 9y ago
  i smell tautological reasoning. people are paid what they deserve cause thats what the market decides? ok- if that is your premise, then i have a couple follow up q's: 1. do thieves deserve the money they steal? 2. are there people who profit from things that are legal but shouldn't be? those are abstract q's that i think point out how saying "people are paid what they deserve" is wrong. if you reject that because you draw a distinction between "deserve" and "value they create", then i think "value" is kind of meaningless. in that case, it has the literal meaning you ascribe to it (i.e. it is what you call the amount of money someone pays for something), but nothing beyond. i run into this view very often on here- that capitalism is fair because it pays you what you are worth. but thats so so lazy. you may not agree with me about how its unfair, or that its even worth worrying about, but id hope you would grant me that that premise is just a way to not think about the issue.

obstinate 9y ago

On some level, this is basically "capitalism 101." If I don't need my resources now, I can put them to work so that I can later benefit from them. This leads to me having productive assets, which pay me some return. If I could not acquire productive assets, there would be much less reason to save. And it's unclear how one would save, as banks would likely not exist either. You can solve this problem somewhat by having a centrally planned economy. But then you have the problems that hit those.

maerF0x0 9y ago
The benefit of productive assets is that people who otherwise would not be able to produce high value outputs are stuck making lower value ones. By working with another's assets an individual can create more value than alone, and somehow split the difference with the asset owner. Workers maybe need to start to fight for a better split, but that is beyond the scope of this article.
- obstinate 9y ago
  Yes, yes. Or governments can enforce a more equitable split through taxes. But you still have to give some benefit to those who save, else there will be no reason to do aught but consume all one produces.
andkon 9y ago
The problem here isn't that capitalism lets you have productive assets that give you a return. It's that when r > g (when the rate of return of capital is greater than the growth rate of output), inequality increases dramatically. The greater the difference between r and g, the greater the rate of increase in inequality. This is laid out super bare in his example: he bought a house. That house is in an area that surely is past its prime in terms of growing rate of GDP growth. Which means r > g. And that means his assets give him relatively good returns, which in turn compound, which has the net effect of him getting far, far ahead of everyone else who lives in that area.
dredmorbius 9y ago
this is basically "capitalism 101." I would, well, did, actually, argue that's precisely the point. https://news.ycombinator.com/item?id=14659043 https://news.ycombinator.com/item?id=14659043

maerF0x0 9y ago

> I lucked into money. The basic point is that he gets paid more whilst not doing more "work". For those whom "Work" is the only lever they use to convert into money, they see inequitable work:cash ratios as "unfair" (a morality statement). Market economies do not function on work, but on value. He did the same work in a high value scenario. A glass of water provided in the middle of a developed city is worthless and thus free. A glass of water provided at the right time in a desert is invaluable and thus expensive. My takeaway is this: Always meet the highest value need you can, and as well create additional value by helping others to meet higher values than they current do. Low placed people may not be able to "work" their way to upper echelons, but they can invent, intuit or otherwise create high value leverage of their's and others' work. I dont see it as unfair that a person making $1 a day is unlikely to become a deca-billionaire in their lifetime (total mobility); instead I want to ensure they have some mobility so that they can always better their situation, maybe by an arbitrarily selected 2x multiplier.

gitpusher 9y ago
> I dont see it as unfair that a person making $1 a day is unlikely to become a deca-billionaire in their lifetime (total mobility); Do you see it as unfair that there are people stuck making $1 a day?
- maerF0x0 9y ago
  If they literally are "stuck" . Here we get into a nasty debate about spectrum of probability vs effort and the multipliers that should be reachable by end of life. I definitely agree that a 0 probability despite maximum effort is unfair. In between is a grey area though.
  - ManFromUranus 9y ago
    Effort is irrelevant though, if they spend their effort on something that could never succeed or is useless or irrelevant to the market then their effort should obviously fail and it is not unfair. So it matters a lot what they choose to apply effort to. Generally life is an IQ test and rewards those who make optimal choices WRT events in their life.

MichaelRenor 9y ago

> My first big lucky break happened in 2009 when Georgetown University hired me as a philosophy professor on their campus in Qatar Apparently going to high school, studying and passing the SAT, applying and being accepted into university, studying, passing, and graduating university is just luck. Have we we reached peak luck yet? Is there nothing ever we can do to improve our circumstances and our lives? This is like a new age of economic predestination, where everything has been predecided for you by God and there's nothing you can do. Calvinist and BI proponents apparently have a lot in common.

clort 9y ago
> Apparently going to high school, studying and passing the SAT, applying and being accepted into university, studying, passing, and graduating university is just luck. some of that is the luck of being born in the right place. also, many people did all that and still did not get hired at that place
Sodman 9y ago
Being born into circumstances that even enable you to accomplish all of the above definitely falls into the category of luck, in my opinion. Eg if you're born to wealthier parents, you likely have more time in the evenings/weekends to study, which makes all of the above easier than say, if you were born to a poorer family and had to work 20-40 hours / week to contribute to your family's income. Next, being born with the right genetics that enable a natural talent/ability to understand a particular area well enough to get through all of that education and into a good job, is also a form of luck. Sure there's a level of discipline and effort required to get there even when you've got all of the "luck" - but part of the article's point is that there are certain people that are born into certain situations which they can literally never raise themselves out of (without some kind of very very good luck).
- notadoc 9y ago
  > Being born into circumstances that even enable you to accomplish all of the above definitely falls into the category of luck, in my opinion. Bingo, you get it.

brianwawok 9y ago

Hey, South Bend made an article on the internet and it wasn't even about our mayor! Rental income here is a bit weird because you have in general a very poor town, with a very expensive private university with old money funding houses for students. I bought my house here for a fair bit less than it would cost to rent something half the size.

kasey_junk 9y ago
I live in an area where college students cause an imbalance between the cost to rent vs buy (the purchase prices in the area are lower than you'd expect given the rents). I'm constantly surprised that the market doesn't arbitrage this away. I suppose that is due to the fact that the real estate market is less efficient than others (both due to liquidity and transaction costs) and that being a landlord is harder than people suspect. In either case, its always made me leery of rental real estate as an investment vehicle.

greedo 9y ago

Ignoring the logical fallacies the author makes, one thing jumped out at me. He's not buying the average home in South Bend. If he's only paying $180/year in property tax, the assessed value of his average home is around $9K. A quick look at Google shows the median price (from Zillow, so a grain of salt is recommended) of $65K. If he and his brother are buying up $9K homes, his average mortgage is under $50/month. I'm sure that he's doing the socially responsible job of only charging his tenants just a little over his full costs...

lazerpants 9y ago
Keep in mind, this piece is based on an older one. Looks like it dates to 2010. He probably bought up mediocre places during the end of the housing bubble for very little money.
notadoc 9y ago
You can easily manage to find great cap rates in much of the midwest and south, and parts of the NE.

moeymo 9y ago

Property tax is $15 per month in South Bend for a house? Wrong. Capital gains is taxed lower than income? Wrong -- sometimes it is, sometimes the other way around. Multiple factual errors.

toomuchtodo 9y ago
> Capital gains is taxed lower than income? This is actually true. You can make up to $75,900 on capital gains alone if you're married, and pay zero income tax on that. http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-...
dragonwriter 9y ago
> Capital gains is taxed lower than income? Wrong -- sometimes it is, sometimes the other way around Capital gains is always taxed equal (for short-term gains) or less (for long-term gains) than "generic" income, except for a few edge cases (e.g., in the very-low income range where additional labor income has a negative net effective tax rate due to EITC and child tax credit and long-term gains have merely zero taxes.)

OJFord 9y ago

> [in the US] people who don’t need their income are taxed less than people who do I'm not American; I don't know the tax structure. But I can't even imagine that this could possibly be true, or what is true that is meant. Without looking it up, I would assume that the USA subscribes to progressive taxation, under which the richer pay more tax in both absolute and relative terms. Even if it has a flat rate of tax, (a structure, incidentally, that makes far more intuitive sense to me) the richer are still paying more tax in absolute terms, and equal in relative terms. What Earthly metric is the author using?

thetwentyone 9y ago
I believe the author is referring to the lower tax on capital gains than on income in many situations. I haven't read it personally, but I understand that Thomas Piketty's “Capital” discusses this at length where there's a built-in structural favoring towards capital's rent over labor's wages.
- tnecniv 9y ago
  Also tax havens and loopholes I suspect. Bon Jovi has some number of strawberry bushes on his estate so that he can count it as a farm for tax purposes.
greedo 9y ago
He's using the "I feel guilty" metric. It's useful in a lot of cases, but in his, it seems to cloud his reasoning to a large degree.
bussierem 9y ago
It's the American metric - In America, the richer you are, the more you're able to afford hiring shifty accountants and lawyers who hide away your money and get you out of paying taxes. The more you're able to create offshore accounts and shell companies to hide your earnings. The more you're able to pay off politicians and others to look the other way while you do this. The metric the author is using is the fantastic state American politics are in.
9y ago

moeymo 9y ago

Property tax is $15 per month for a house in South Bend, IN? lol. Capital gains is taxed lower than income? Wrong ("it depends"). I stopped reading there.

PatentTroll 9y ago
It is factually true that capital gains is taxed lower than income in the US.

hartator 9y ago

I think it's awesome to make critics about how capitalism is bad by using Qatar where basically no freedom exists and everything is controlled by the state. Not even mentioning actual slavery.

chimprich 9y ago
You have quite a lot of freedom in Qatar if you have money and almost none if you do not.
jonnycomputer 9y ago
the homes he rents out are not in Qatar. and he gets to teach for so much money in Qatar because he's a highly educated white westerner.

objectivistbrit 9y ago

He talks about the unfairness of "our economic system" but he makes his income from Qatar's economic system. Qatar likes to spend their oil money on western professors to give themselves an air of legitimacy. As for renting out property, it's never effortless or risk-free. If it was, the rate of return would drop to that of other minimum risk assets (e.g. treasury bonds).

zanny 9y ago
Our economic system is global even if our politics are not. The salaries Qatar pays are as influential in his life as any job he could have gotten stateside. The prices of oil and coffee beans are set internationally. Raising the minimum wage locally influences global capital flows away from your area, removing regulations directs global capital towards you. Zoning laws that restrict building and inflate property values will attract investors 5 time zones away on the other side of the planet.

DailyDreaming 9y ago

I agree with the author's points. There have been, almost certainly, Einsteins who have lived and died in poverty without ever having tasted a book. I feel like a basic income for everyone is supportable and would give people falling to an unknowable fate the lift they need to go beyond surviving. Less work seems to need to be done with tech advances today, but the only thing a job replacing robot seems to do is take the incomes of two u people and give it to the person who owns the robot. The slippery slope is that we will eventually do this for most jobs, if we survive long enough as a species, and I agree we need change to evolve as our society does.

deleted 9y ago

[deleted]

imgabe 9y ago

> No one is going to give tens of thousands of dollars every year to some guy who owned a couple of houses and said he knew how to manage more, Well, not no one. There are hard money lenders who will loan money to "some guy" to do more or less that.

erentz 9y ago

Wow I am astounded that all the comments so far are trying to tear down this person and what he is saying, and very transparently because there seems to be something threatening about this idea that he got where he has through luck. Why do people find this idea so threatening? I got where I am today due to luck. I did work hard. But I know other people who work hard too. Who are just as capable. They just didn't get assigned to the class with the really awesome, motivating teacher. Or randomly picked out of the pile by a recruiter for a call. Or happen to wind up working somewhere where they made friends with a guy who was well connected. Etc. To discount luck's role in how people get successful is a huge blind spot.

harrumph 9y ago
>To discount luck's role in how people get successful is a huge blind spot. That's the fantasy of meritocracy, fulfilling itself. When someone thinks that gold coins spray from their asshole every time they update a Git repo, they can comfortably presume their role is paramount in the value created. Of course, every library linked, every bit of infrastructure required, every calorie of energy delivered, every man-year of education needed by users - this all disappears in a cloud of self-regard.
notadoc 9y ago
> something threatening about this idea that he got where he has through luck. Why do people find this idea so threatening? Ego, mostly.
eeZah7Ux 9y ago
> Why do people find this idea so threatening? Because a lot of people want to believe they "earned" what they have and they weren't extremely lucky.
kobeya 9y ago
Because outside of winning the lottery it isn't 100% luck that results in haves vs have-nots. There is a degree of luck involved, but there is also preparation and opportunism (aka making your own luck). True universal basic income completely ignores this aspect, as does absolutist critiques of the rentier system we have today. Is it fucked up that a line arbitrarily drawn in the sand resulted in the division into piss-poor and uber-wealthy? Yes, but that's a ridiculous over simplification and it's not obvious that the solution is to socialize the distribution of wealth. That is communism by another name and I don't recall that working out very well for anybody in the 20th century.

tunesmith 9y ago

What I got out of this was the suggestion to fund Basic Income by taxing unearned income. I'd like to read more on how the numbers would actually work out. If that were the only funding source of BI, then how much impact would that be on the rich, and how much benefit would that be for the people that could use BI?

harryh 9y ago
The US collects about $1.5 trillion from income taxes per year. A bit of googling leads me to believe that about 10% of that is from capital gains so that's 150 billion. Let's say we 2x capital gains rates and (magically!) earnings from capital gains don't go down. So we have $150B for our Basic Income. There are about 300 million Americans (I rounded down to make the math easy). $150 Billion / 300 Million = $500 each per year.
dollar 9y ago
There is no such thing as "unearned income". Assets are risky.
- harryh 9y ago
  Unearned income is a technical term. Here is the IRS definition: https://www.irs.gov/publications/p17/ch31.html#en_US_2016_publink100046613 https://www.irs.gov/publications/p17/ch31.html#en_US_2016_pu...

bigtunacan 9y ago

Can someone clarify this piece for me? I don't understand how the author is able to completely avoid taxation on the rents. >My wife and I don’t need the money we make from owning most of the business. We live off the salaries of our jobs, and reinvest virtually our entire share of the business. These reinvestments count as “losses,” and so officially we have never made any income or paid income taxes on our share of the business.

aerovistae 9y ago
If they took any sort of money from their business, it would be taxed as income. But if the money just stays inside the business and is used to buy more rental buildings-- what's there to tax? So the business keeps growing and growing. Case A: the owners take a paycheck of $100,000. It gets taxed at 30%, they get $70k. Case B: the owners take no paycheck but instead buy a $100,000 property through the business with the business's earnings. They pay no tax but now own a $100,000 property which will now augment the business's earnings further. Down the road years later, they finally take a paycheck at $300,000, which is taxed down to like $180,000 or something. Still more than 2.5x the Case A payout, and let's not forget they own that much more property now on top of everything else.
- erikcw 9y ago
  But in Case B, wouldn't they have to pay the corporate income tax on that $100,000 before they buy the next property (39.1% in 2017)? I thought each property is a capital expense which gets depreciated over time. So you can't buy a second property with your profits and deduct it as an expense in the current year. Am I missing something?
  - aerovistae 9y ago
    You're probably not missing something. I could be wrong.
- harryh 9y ago
  This isn't true in the United States if the business is organized as an LLC which is definitely the most common way of handling residential real estate. I, like bigtunacan, am very curious about this part of the story. It doesn't really add up. EDIT: thinking about this more I suppose that one possibility is that the operator brother is taking basically all of the rent as income and the financier brother, instead of making a return from rent, is hoping to make a return from appreciation (selling the houses later for a profit). TBH this doesn't seem super likely to me either, but it's possible. I really don't think that the author is correctly explaining his tax situation (which is fine. it wasn't the main thrust of the post).

rrggrr 9y ago

Gosh. OP made me sad with his thesis. "1. For owners, work is optional." ... As an owner I wish this were true. For me and most owners I know work is mandatory, and its 60 hour weeks and a lot of sleepless nights. There is no safety net. There is no unemployment. I get no workman's compensation. I have no employment law protections. Its, as one HN comment said some time ago, "a suffering contest" a lot of the time. "2. ...your stuff will keep on making money forever." ... Again, I wish this were true. Lifetime income producing investments are hard to find where volatility, fees, inflation, taxes and life's circumstances don't erode value. Sure, the truly wealthy are set. But most business owners are not truly wealthy, and the exit strategies just aren't there in many industries. "3. We can get entrepreneurship without the enormous rewards to ownership we have today" ... Anyone whose dealt with the day-to-day grind of owning a business would be especially offended by this comment. A firehose of pain, suffering and risk flows to the owner in the form of litigation, regulators, employees, vendors, customers, bank officers, etc., etc. I've equated it to a "lazy susan" dispensing aggravation in every conceivable form. Its the reward - if you can get it - that makes it worthwhile. Try just getting divorced as an owner and you become an instant convert to rewarding ownership. Yes, rent-seeking monopolies are bad. Yes, more needs to be done to create opportunities for wealth creation by employees - to give them the freedom to say "no". No, punishing ownership isn't the answer. UPDATE x2: I'm really not confusing types of owners. The author's thesis is broad not only in the article, but in his works in general. Access to passive income investments (eg. REIT's) is among the few places small business owners can go to rent-seek. Rent seeking is bad under a few sets of conditions but doesn't deserve author's indictment.

maerF0x0 9y ago
I think OP is not talking about the kind of owners you're thinking of. "Owner" of a startup, or "Owner" of a unvested equity package etc. are not his intended group. I think its more like people who can easily meet their needs/wants even while holding something like a dividend fund or w/e. Owner of sufficient passive income assets that any extra effort or income or ROI is only gravy.
ktta 9y ago
You are mixing together business owners and rentiers (property owners). Very different things. Property owners don't need to work 60-hour weeks unless they are the sole handyman for 100+ houses.

Mz 9y ago

TLDR Guy in financially comfortable position feels guilty, decides his education, willingness to live in Qatar, etc shouldn't really be worth this much, completely discounts the idea that anything actually matters, it is all merely "luck" and that's it. Sounds like an existential crisis, not really a good commentary on the concept of basic income.

jhall1468 9y ago
TLDR Guy reads an interesting article that threatens his idea of success, incorrectly summarizes the article and resorts to personal attacks against the author. Sounds like threatening core beliefs makes you defensive, not really a good commentary on the article itself.
- Mz 9y ago
  FYI: I am a woman. I am homeless. I get a lot of flak from people because I am not pro UBI when people seem to think I should be simply because I am homeless. Instead, I believe we need to view our current situation as The Second Industrial Revolution and do whatever the next evolutionary step is to make paid work a lighter burden while raising quality of living for the masses. I am pro gig work done right. Also, your comment is basically a personal attack.
  - mod 9y ago
    > Also, your comment is basically a personal attack. Isn't yours? (The first one) He used your comment as a framework.
    - Mz 9y ago
      Mine is a criticism of the actual article. The reply to mine is a personal attack against me, a member of this site. This is generally understood to be a violation of the site guidelines, though they don't explicitly say "no ad hominems." In Comments Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity. When disagreeing, please reply to the argument instead of calling names. E.g. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

pavement 9y ago

nor is there a combination of bad choices that could conceivably put me in their position from my starting point. Guess again.

zanny 9y ago
An American born citizen will (statistically) never be an indentured servant / migrant slave in oil rich countries.
- pavement 9y ago
  I can conceive of a combination of bad choices that could place a person in such a predicament. Unlikely choices, but choices, when taken, certainly resulting in the described outcome. It's not an inaccessible scenario, but unlikely to be anything other than a forced outcome for someone like the author. For those in mind, who actually face the true reality, it's usually accidental.

edpichler 9y ago

The article is about something that should be obvious, capitalism: money goes to the capital owner. Of course this has a lot of problems, but it's the best we have today. On this system, the rules of the game are: we need to work and spend less than we earn, and use the money to accumulate more capital, an not buying more things.

harryh 9y ago
In the US, the vast majority of gross national income goes to labor not capital. FWIW.
- kasey_junk 9y ago
  I believe you and my instincts agree with you, but how are you quantifying that?
  - harryh 9y ago
    Scott Sumner has a great blog post that gets into this (and some other semi related topics): http://www.themoneyillusion.com/?p=30566 http://www.themoneyillusion.com/?p=30566
- int_19h 9y ago
  Of course, there's also a lot more laborers than capitalists. By orders of magnitude. How about per capita for each group?
  - harryh 9y ago
    BLS says about 153 million Americans are currently working(1). Gallup says 52% of American Adults are invested in the stock market(2). There are about 235 million adult Americans. 52% of that is 122 million. 153 million laborers vs 122 million stockholders Pretty close! And that's just stockholders. There are, of course, many other forms of capital. 1. https://data.bls.gov/timeseries/LNS12000000 https://data.bls.gov/timeseries/LNS12000000 2. http://www.gallup.com/poll/190883/half-americans-own-stocks-matching-record-low.aspx http://www.gallup.com/poll/190883/half-americans-own-stocks-...

stuaxo 9y ago

Seems to state the obvious to me, but looking at the comments on the article, I'm in a minority.

antisthenes 9y ago
People with a solid grasp of economics are, sadly, a minority.

Spooky23 9y ago

This guy sounds like a real shithead. He makes his living teaching the children of totalitarian aristocrats at a faux university, is saving for the future on the backs of the poor back at home, and gets a kick out of having indentured servants at his beck and call. I wouldn't shed a tear when his little empire of dirt collapses.

dredmorbius 9y ago

Read this essay (which is, as it goes, pretty good), then go back and take a look at, say, the first book of Adam Smith's Wealth of Nations. In particular the prices of commodities, labour, stock, and rent, as well as the factors influencing wages of labour (chapter 10). https://en.m.wikisource.org/wiki/The_Wealth_of_Nations https://en.m.wikisource.org/wiki/The_Wealth_of_Nations It doesn't hurt to consider Ricardo as well. From Ricardo, we get the Iron Law of Wages, and the Law of Rent. Key to understand is that these move in opposite directions: * Wages tend to the minimum subsistence level, all else equal. * Rent rises to claim the surplus value afforded. That is, wages are based on the input costs, whilst rent is based on the output value (use value). The third element, price (sometimes "exchange value"), is what's at question. (I distinguish cost, value, and price as three distinct concepts. This is a long-standing question, and in my view, a grossly confused one, in economics. They're related, but not deterministically. In the long term, C <= P < V. Bentham's "utility" is an exceptionally red herring. More, very much in development: https://redd.it/48rd02 https://redd.it/48rd02) Note that this means that rent is determined by the pricing behaviour. If you're a "business owner" but you're not capable of extracting rents, you're either selling commodities or labour, you're not collecting rent. The term here is in the sense of economic rent. Simply "owning a business", without the economic circumstances which give rentier power, isn't sufficient -- don't confuse what it is you're doing with the systemic construct in which you're doing it. Weiderquist emphasises this point specifically, several commenters here clearly haven't grasped it. Another elided discussion: rents are associated with access control, and can be thought of as authority over some (virtual or physical) gate. They're a natural element of any networked structure, in which nodes and links exist, most especially where some nodes have higher value, or control more flows. I believe though can't yet show that all cases of rent involve a fundamentally networked structure, again, virtual or real. My concern is that this may be a reflexive definition, I'm trying to determine that it is or isn't. Another element of this is compensation for labour. Smith lays out five elements determining this, and I find them durable and comprehensive. In the Widerquist's case, the combination of requisite skills, and comparative unattractiveness, of teaching in Qatar, allow him to claim both a high wage and favourable working conditions (including a lighter-than-typical workload). This falls straight out of Smith. That is, he earns his salary "by doing a job few others are both willing and able to do". If you're looking at the macro view, realise that these don't scale. That is, the innate and acquired capabilities to teach at University level are not widely distributed through the workforce, and the lack of appeal of various sorts of work is sufficient to dissuade (or prevent, or disqualify) others from taking part in it. There are other elements here as well: the complimentarity of time and skills, on the one hand, with money, on the other (the classic business partnership). Tax structures (and who they benefit). The relationship of wealth and political power. Smith again: "Wealth, as Mr Hobbes says, is power." One of the shortest and clearest sentences in WoN, incidentally.

dugluak 9y ago

Its not two big lucky breaks it should be actually three big lucky breaks. Being born as a human is the first lucky break every human being on the earth gets. If you think about it 'merit' is man made. Nature most of the time works on pure chance.

jacknews 9y ago

Owning land is certainly a private basic income. Consider that land prices (and therefore rents) basically reflect the surrounding economy. By buying land you are essentially profiting from the work of everyone else in that economy, forever, and only taxed minuscule property taxes. IMHO https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George had the correct solution; tax land (though not the structures developed on it) at it's full market rental value. And the concept should apply to ownership in all resources.

samnwa 9y ago

There can only be so many people at the top.

ableton 9y ago

If you live in America you can do what you want. You can study hard and get a scholarship to college even if you are really poor as a kid. I know a poor Mexican immigrant who's kids all got college degrees for free. It doesn't really matter if you grow up poor (in America). There are many people who are very rich precisely because being poor as kids drove them to work hard. What does matter is if you grew up in a stable family. If you don't have that you get really whacked out paychologically, and it can affect people for their whole lives. People look to the government to tax and spend to solve social problems. However, oftentimes the government is the cause of such problems in the first place. For example, we see a huge number of people in prison today. Well studies show that 60% of people in prison grew up without a father in the home. The government today actively promotes divorce and children out of wedlock through paying single mothers. The "compassion" has raised a generation of young people who are lost. America has more money than ever but our families are falling apart, torn up by divorce and pornography, and our young people are paying the price. The government should focus on supporting strong families, and you would watch and see so many major social problems evaporate. I know that I am where I am today because of my dads positive influence on me. Without his support I would be nowhere right now. Every kid needs a loving family. It's time the government starts trying to promote that. Of course in Quatar they have serious human rights issues that need to be resolved. I'm just talking about in America.

state_less 9y ago
> I know a poor Mexican immigrant who's kids all got college degrees for free. I know many upper middle class kids who got college degrees for free (parental scholarship). > It doesn't really matter if you grow up poor (in America) Like I said above, and the author claims, it does seem to matter quite a bit if you grow up poor or not poor. > There are many people who are very rich precisely because being poor as kids drove them to work hard. There are probably many more who are rich precisely because being rich as kids drove them to being rich as adults. > However, oftentimes the government is the cause of such problems in the first place. Oftentimes you drive on the roads the government provisioned, visit the parks past presidents enacted, live in the security our GI WW2 vets created, so on and so on.

arwhatever 9y ago

Well success is either based entirely on luck or entirely on merit, and I'm sure we'll figure out which of the two it is real soon now.

dlwdlw 9y ago

I'm having a lot of fun lately thinking about everything in cryptotokens: Everyone gets 3 basicMealTokens and 1 basicFun token. However, in SF, there are only sfMealTokens which require 20 basicMealTokens. In Vietnam, 1 vietnameseChickenPlatterToken is only half a basicMealToken. Tech workers are paid in techWorkTokens which can be exchanged for 200 basicMealTokens each or 100 basicFunTokens, or 1/1000th of a Tesla token. Token transfers have friction so it is advantageous to maintain a surplus of tokens most easily transferrable (least hops) to what you want. To ease this, SF maintains a sfBasicToken and makes the market to transfer tokens from all over the world to sfBasicTokens. sfBasicTokens have an advantage in that you can pay for things easily instead of paying 67.34 redditStatusTokens. Some old geezer is willing to sell his house for a legacy usdToken, a token so old it had a physical representation and no historical memory. The basicFoodToken ideas doesn't pan out. SF starts giving out sfBasicFoodTokens instead. However large numbers of people realize an arbitrage mistake and live like kings in Thailand, taking advantage of the buying power of sfTokens due to the Thailand people wanting to make it big with their startup dreams in the Bay Area. ¯\_(ツ)_/¯

etergri 9y ago

You'll all will talk and conclude absolutely nothing. IQ distribution is cancer and you're all getting confused with one another.

astrostl 9y ago

"We have a basic income – a permanently growing basic income – not just for life, but forever." Eh? Nobody has ever had this, and nobody ever will.

RealityNow 9y ago

Fantastic article. Some takeaways: * Our economic system claims to reward "work", but the reality is that it rewards ownership and extracting economic rents. * Increasing value does not necessitate that being the result of one's "work". For example, land values rising are the result of other peoples' work (eg. neighboring properties, government policies, general economy). The landowner is compensated through the labor of others. * Economic rents aren't taxed enough ("The business pays property taxes, but they average about $15 per house, per month – minuscule compared to the rent we make.") * Labor is taxed too high relative to capital gains * "Luck" plays a huge factor, and luck and hard work aren't mutually exclusive. If I'm born into a poor family in a ghetto, naturally I'm going to have less opportunities than being in an upper class family with enough funds to perpetually support me (eg. Mark Zuckerberg, Bill Gates) * We need a Universal Basic Income, ideally funded by taxes on economic rent (eg. land value tax) Our economic system is like a big game of monopoly where all the properties are already owned. You start off with whatever money/property you inherit from your parents, and have to work yourself up. Meanwhile, the rentiers are profiting off the backs of the laborers without doing anything. Sure it's possible to add "properties" to the board (ie. starting businesses), but that doesn't scale. At least Monopoly had a UBI in the form of the $200 you get every time you pass "Go".