7 ms·

Taxes aren't the core issue. It's more fundamental than that. Imagine taxing bill gates at 95%. He's still thousands of times more wealthy than your average ind

by Taek 9y ago

Taxes aren't the core issue. It's more fundamental than that. Imagine taxing bill gates at 95%. He's still thousands of times more wealthy than your average individual. That's not going to change much, other than that America is going to become highly avoided because of the tax pressures. The real issue is that the fundamental structure of our economy aggregates wealth towards the top. Employees who add millions of dollars in value per year to a company get paid a fraction of that. Look at per-emoloyee profits for all of the major corporations. Our economy very heavily favors people who own capital over people who do work on the ground floor. If you want to fix income inequality, you have to look at structures like the stock market, like corporate equity distribution, and pretty much everything we have in place in society that allows the rich to increase their wealth without actually working. Increasing taxes is like taking aspirin to cure Ebola. Sure, you feel better, but it's not going to make you healthy.

Joe-Z 9y ago
You have to start somewhere though. Changing the "fundamental structure of our economy" takes nothing short of a revolution.
- chrisco255 9y ago
  Wealth is not a zero sum game.
  - RyanHamilton 9y ago
    Are you sure? The earth has finite resources. Wealth is a zero sum game. Even if you want to look at things like entertainment that can be reporduced cheaply, musicians and directors need fed, food is limited, therefore even films/music are limited.
    - deleted 9y ago
      [deleted]
    - slavik81 9y ago
      Yes. If wealth were a zero-sum game, every choice would have to result in the same total amount of wealth in the world. Wealth could not be created or destroyed, only transferred. Any use of a resource would be equally as valuable as any other. That's clearly not the case. The classic example is building a house alone in the woods, but let's consider art. With different choices, a person could use the same paint to make a good or a bad painting. The choices made while painting decide if it will be a mess or something beautiful. Even if it's never shown or sold to anyone else, the person who made a beautiful painting would be wealthier for it.
      - dredmorbius 9y ago
        Wealth, generally, is destroyed with time. Much of what's seen as wealth production is instead liquidity production -- turning natural capital into financial currency. In the case of any production chain founded on fossil-fuel energy, the transformation requires a draw-down of natural capital worth many millions of times the market-price and wealth "created". Activities founded on renewable or sustainable processes are less fraught, but there's still the accounting for potential disruption or reduction: soil loss (rougly 100x the rate of creation), sink-exhaustion (waste and pollution factors), biodiversity loss (rates of extinction > speciation), and the like. There's little accounting for any of this within conventional economic theory. Ecological, biophysical, and thermoeconomics address parts. Steve Keen is starting to write mathematical descriptions of production factors in which the role of energy is taken into account.
    - eli_gottlieb 9y ago
      The only non-finite resource is knowledge, and even that runs into asymptotes of diminishing marginal utility.
      - aoeuasdf1 9y ago
        Everything is finite when you have a fixed amount of information and mass in the universe. That doesn't mean the common economic definitions of wealth are useless. The act of creating capital such as a piece of art, a new algorithm, or a manufacturing tool all change the total amount of wealth in the world.
      - dredmorbius 9y ago
        Information is also amost certainly bounded. In humans it's limited by the rate of transmissibility -- if what the next generation has to learn is greater than what the present generation can pass on, knowledge will be lost. Given various inefficiencies of educational institutions, this is all but certain to be occurring as we speak. There is a notion of a "forgetting curve". And, as you note, information can at best asymptotically achieve some maximum theoretical efficiency. It's not a limitless fount of potential.
    - chrisco255 9y ago
      The earth has finite resources. Let's go with that point for a moment. Do you think there were more resources available on planet earth 5000 years ago or today? The world population was several orders of magnitude less than today, natural resources had not yet been fully exploited, and yet, mankind was much, much poorer in terms of quality of life. What happened in the meantime? We live in the most abundant age in history. Worldwide poverty is at an all-time low. Surely wealth is growing in absolute terms and it's not just the top 1% benefiting.
- dredmorbius 9y ago
  Depressions have also worked.
pcrh 9y ago
Inheritance tax was the original solution to this. Someone could be as rich as Croesus during their lifetime, but on their death returned the money from whence it came. Their offspring could benefit from a generous endowment of a proportion of this wealth, say 10%-20%. Edit: and no sneaking about with Trusts, either.
- conanbatt 9y ago
  Inheritance taxes are always avoidable, and they could also have devastating consequences. Even if you could effectively prevent a single coin getting to the hands of your children, that would mean lavish expenditures, not investment.
  - pcrh 9y ago
    Tax avoidance is a perennial problem, to be sure. There's always an "arms race" between the taxers and the avoiders, but that isn't a reason not to have taxes in the first place.
    - conanbatt 9y ago
      In the context of evaluating a tax, the ability to avoid it and the difficulty to apply it is definitely one key design concept. A tax on people that eat their brocoli would be highly impractical!
      - pcrh 9y ago
        You're correct in that it's foolish to institute an uncollectable tax, but I don't think inheritance tax necessarily falls into that category any more than, say, capital gains taxes.
        conanbatt 9y ago
        Is paying for your kids education inheritance? Are pre-paid company contracts for a lifetime inheritance? etc etc. There are some definite difficulties in implementation. But even then, my argument is that it could be a really harmful tax if it could be applied at all.
surfmike 9y ago
How would you change it short of overthrowing capitalism? Capitalism, almost by definition, "allows the rich to increase their wealth without actually working" (although of course less wealthy people can do the same). Parent poster proposed a way to help workers by changing the incentives in the system to reinvest more into productivity/research, without throwing out the system that has made our society propsperous.
- moe-n 9y ago
  In the past there wasn't as much pressure on capitalism to be sustainable at a global level. This pressure has increased without anyone doing anything. Which means you just have to wait for one or two more 2008 level meltdowns.
- dredmorbius 9y ago
  Taxing capital itself, rent-generating assets, and inheritance. Providing for a living working wage. Providing for labour unionisation or equivalent functions. Curtailing the capability of the wealthy to seek self-serving concessions from legislatures. Supporting a vibrant programme of public schools and works. Pretty much Adam Smith's prescription in 1776.
  - conanbatt 9y ago
    Dang that doesn't sound true at all. Smith arguing for unionization? Also by classical economics, you cant afford to give less than living wage because then you would kill the people that work for it.
    - dredmorbius 9y ago
      Wealth of Nations, Book I, Chapter VIII, generally. Smith doesn'tquite say "allow unions", but he makes all the arguments in favour: As soon as land becomes private property, the landlord demands a share of almost all the produce which7 the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land....* [I]n every part of Europe, twenty workmen serve under a master for one that is independent; and the wages of labour are everywhere understood to be, what they usually are, when the labourer is one person, and the owner of the stock which employs him another....The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not, however, difficult to foresee which of the two parties must ... have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. We rarely hear ... of the combinations of masters, though frequently of those of workmen. But whoever imagines ... that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people. Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen ... But whether their combinations be offensive or defensive, they are always abundantly heard of. In order to bring the point to a speedy decision, they have always recourse to the loudest clamour, and sometimes to the most shocking violence and outrage. They are desperate, and act with the folly and extravagance of desperate men, who must either starve, or frighten their masters into an immediate compliance with their demands. The masters upon these occasions are just as clamorous upon the other side, and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen.... A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_8 https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...

by Taek 9y ago

Joe-Z 9y ago

You have to start somewhere though. Changing the "fundamental structure of our economy" takes nothing short of a revolution.

chrisco255 9y ago
Wealth is not a zero sum game.
- RyanHamilton 9y ago
  Are you sure? The earth has finite resources. Wealth is a zero sum game. Even if you want to look at things like entertainment that can be reporduced cheaply, musicians and directors need fed, food is limited, therefore even films/music are limited.
  - deleted 9y ago
    [deleted]
  - slavik81 9y ago
    Yes. If wealth were a zero-sum game, every choice would have to result in the same total amount of wealth in the world. Wealth could not be created or destroyed, only transferred. Any use of a resource would be equally as valuable as any other. That's clearly not the case. The classic example is building a house alone in the woods, but let's consider art. With different choices, a person could use the same paint to make a good or a bad painting. The choices made while painting decide if it will be a mess or something beautiful. Even if it's never shown or sold to anyone else, the person who made a beautiful painting would be wealthier for it.
    - dredmorbius 9y ago
      Wealth, generally, is destroyed with time. Much of what's seen as wealth production is instead liquidity production -- turning natural capital into financial currency. In the case of any production chain founded on fossil-fuel energy, the transformation requires a draw-down of natural capital worth many millions of times the market-price and wealth "created". Activities founded on renewable or sustainable processes are less fraught, but there's still the accounting for potential disruption or reduction: soil loss (rougly 100x the rate of creation), sink-exhaustion (waste and pollution factors), biodiversity loss (rates of extinction > speciation), and the like. There's little accounting for any of this within conventional economic theory. Ecological, biophysical, and thermoeconomics address parts. Steve Keen is starting to write mathematical descriptions of production factors in which the role of energy is taken into account.
  - eli_gottlieb 9y ago
    The only non-finite resource is knowledge, and even that runs into asymptotes of diminishing marginal utility.
    - aoeuasdf1 9y ago
      Everything is finite when you have a fixed amount of information and mass in the universe. That doesn't mean the common economic definitions of wealth are useless. The act of creating capital such as a piece of art, a new algorithm, or a manufacturing tool all change the total amount of wealth in the world.
    - dredmorbius 9y ago
      Information is also amost certainly bounded. In humans it's limited by the rate of transmissibility -- if what the next generation has to learn is greater than what the present generation can pass on, knowledge will be lost. Given various inefficiencies of educational institutions, this is all but certain to be occurring as we speak. There is a notion of a "forgetting curve". And, as you note, information can at best asymptotically achieve some maximum theoretical efficiency. It's not a limitless fount of potential.
  - chrisco255 9y ago
    The earth has finite resources. Let's go with that point for a moment. Do you think there were more resources available on planet earth 5000 years ago or today? The world population was several orders of magnitude less than today, natural resources had not yet been fully exploited, and yet, mankind was much, much poorer in terms of quality of life. What happened in the meantime? We live in the most abundant age in history. Worldwide poverty is at an all-time low. Surely wealth is growing in absolute terms and it's not just the top 1% benefiting.
dredmorbius 9y ago
Depressions have also worked.

pcrh 9y ago

Inheritance tax was the original solution to this. Someone could be as rich as Croesus during their lifetime, but on their death returned the money from whence it came. Their offspring could benefit from a generous endowment of a proportion of this wealth, say 10%-20%. Edit: and no sneaking about with Trusts, either.

conanbatt 9y ago
Inheritance taxes are always avoidable, and they could also have devastating consequences. Even if you could effectively prevent a single coin getting to the hands of your children, that would mean lavish expenditures, not investment.
- pcrh 9y ago
  Tax avoidance is a perennial problem, to be sure. There's always an "arms race" between the taxers and the avoiders, but that isn't a reason not to have taxes in the first place.
  - conanbatt 9y ago
    In the context of evaluating a tax, the ability to avoid it and the difficulty to apply it is definitely one key design concept. A tax on people that eat their brocoli would be highly impractical!
    - pcrh 9y ago
      You're correct in that it's foolish to institute an uncollectable tax, but I don't think inheritance tax necessarily falls into that category any more than, say, capital gains taxes.
      - conanbatt 9y ago
        Is paying for your kids education inheritance? Are pre-paid company contracts for a lifetime inheritance? etc etc. There are some definite difficulties in implementation. But even then, my argument is that it could be a really harmful tax if it could be applied at all.

surfmike 9y ago

How would you change it short of overthrowing capitalism? Capitalism, almost by definition, "allows the rich to increase their wealth without actually working" (although of course less wealthy people can do the same). Parent poster proposed a way to help workers by changing the incentives in the system to reinvest more into productivity/research, without throwing out the system that has made our society propsperous.

moe-n 9y ago
In the past there wasn't as much pressure on capitalism to be sustainable at a global level. This pressure has increased without anyone doing anything. Which means you just have to wait for one or two more 2008 level meltdowns.
dredmorbius 9y ago
Taxing capital itself, rent-generating assets, and inheritance. Providing for a living working wage. Providing for labour unionisation or equivalent functions. Curtailing the capability of the wealthy to seek self-serving concessions from legislatures. Supporting a vibrant programme of public schools and works. Pretty much Adam Smith's prescription in 1776.
- conanbatt 9y ago
  Dang that doesn't sound true at all. Smith arguing for unionization? Also by classical economics, you cant afford to give less than living wage because then you would kill the people that work for it.
  - dredmorbius 9y ago
    Wealth of Nations, Book I, Chapter VIII, generally. Smith doesn'tquite say "allow unions", but he makes all the arguments in favour: As soon as land becomes private property, the landlord demands a share of almost all the produce which7 the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land....* [I]n every part of Europe, twenty workmen serve under a master for one that is independent; and the wages of labour are everywhere understood to be, what they usually are, when the labourer is one person, and the owner of the stock which employs him another....The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not, however, difficult to foresee which of the two parties must ... have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. We rarely hear ... of the combinations of masters, though frequently of those of workmen. But whoever imagines ... that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people. Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen ... But whether their combinations be offensive or defensive, they are always abundantly heard of. In order to bring the point to a speedy decision, they have always recourse to the loudest clamour, and sometimes to the most shocking violence and outrage. They are desperate, and act with the folly and extravagance of desperate men, who must either starve, or frighten their masters into an immediate compliance with their demands. The masters upon these occasions are just as clamorous upon the other side, and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen.... A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/Chapter_8 https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...