11 ms·

Study Suggests Inequality Can Be Fixed with Wealth Redistribution, Not Tax Cuts

67 points by lnguyen 9y ago

moduspol 9y ago
Well, at least we know now, thanks to math. Who knew it was this simple?
- kbd 9y ago
  For those who missed it, the original title was "Math Suggests..."
  - deleted 9y ago
    [deleted]
interstitial 9y ago
Multiply by ZERO, everything solved.
billytetrud 9y ago
This has been known literally for centuries. Its called the second fundamental theorem of welfare economics. I wrote about it in the "Soluctions to Sub-optimal Pareto Optimums" section of my article here: https://governology.wordpress.com/2016/09/04/the-role-of-government-part-2/ https://governology.wordpress.com/2016/09/04/the-role-of-gov...
- munk-a 9y ago
  No, I just talked with some centrist and right wing congressmen. They know that the only true solution is trickle down economics, we're just not trickling hard enough right now.
CyberDildonics 9y ago
I don't think solving inequality in a purely mathematical way was the problem. Maybe the author should have spent him time doing something more valuable, like pretending to squish a far away person's head between his fingers by squinting one eye.
jopsen 9y ago
We won't see wealth redistribution with Trump, not even minimum wage hikes. So I guess the take away is: buy gold. Because after the next crash, the Fed won't be able to bail out the economy by lowering the interest rate. Am I wrong?
- sputknick 9y ago
  They could return to printing money right? That will work until another countries currency becomes more powerful than ours? I'm assuming that any recession in the US would more-or-less be a global recession.
- yourapostasy 9y ago
  > Because after the next crash, the Fed won't be able to bail out the economy by lowering the interest rate. Am I wrong? I suspect you might be wrong with this next crash, as the USD would have to get trashed to a degree and on a short timescale no one thinks possible today before we hit gold-scale monetary reset bottom scenarios. What surprised me about the 2008 crash was it revealed to an extent I never thought possible before how invested traders over the entire world are in USD denomination. I thought there would be ferocious push-back manifesting in the FX and bond markets, with knock-on downdrafts on US equities, from the QE's and bailouts. I was wrong. Some people rail against "regulatory capture", but I think "model capture" is overlooked; so much of our economic infrastructure is so heavily entwined with a USD-based economic representation model that a short, sharp shock is apparently unlikely to happen. We'll likely see a decades-long transition to another model like when the GBP was displaced by the USD, this time hopefully not with punctuated and moved along with horrific world wars and economic dislocations like last time. This is ironic to me, because I had thought with all the computer-aided modeling we have available today, that contingency plans are in place at the large trading houses to relatively quickly (within 3-5 years) switch away from USD-denominated transactions, should the US start to monkey around too much with the money supply.
- KGIII 9y ago
  If it reaches the point where the USD isn't a viable trade mechanism, your gold isn't going to help you. Someone is just going to take your food and water. They won't bother with the gold. I guess you could melt it into bullets.
beingmyself2 9y ago
Right, let's start by redistributing the wealth held by people in silicon valley making more than 50k a year. Think of all the people we could lift out of poverty if all us tech folks just gave up our wealth! I'm sure we could do without that second helping of avocado toast each day. The solution is obviously to steal from the wealthy and give it to the poor.
- norswap 9y ago
  What's so ridiculous about that? That's pretty much how it works in many "welfare" states across Europe (I'm from Belgium). I don't find the thought of not being able to afford healthcare if bad luck strikes very appealing.
  - nicolashahn 9y ago
    It's not ridiculous at all, in fact some of us are paying 45% of our salary in taxes already!
    - lobf 9y ago
      I'm not in tech and I'm not making nearly the salaries that most of you guys are making- I'm paying 40% of my checks in taxes. So yeah, if you're making double what I'm making, maybe pay in a bit more. What's so crazy about that?
      - twiceaday 9y ago
        Roads and bridges are not bought with tax percentages, they are bought with tax dollars. Somebody making twice as much as you paying the same tax rate is paying twice as much tax as you.
        munk-a 9y ago
        Somebody making twice as much as me can afford to pay more than twice as much as me in taxes and still make more money than me. Money has diminishing returns anyways.
kelnos 9y ago
> Good luck convincing Trump about any of it, though. s/Trump/conservatives/ Conservatives (even poor conservatives) seem to be against wealth redistribution of this nature and try to label it as "welfare" and "handouts", which they find distasteful, even when it's the healthiest thing for the economy as a whole. They can't seem to get past the idea that "hard work = wealth", and that giving people breaks is morally bankrupt. They seem to think that all this is a zero-sum game, and that giving aid to the lowest-income people will necessarily take something away from them.
- jjuel 9y ago
  Which I don't get because they seem to be in favor of "handouts" (tax cuts, bailouts, etc.) for the richest of the rich thinking that will drive the economy.
  - kelnos 9y ago
    Agreed. People conveniently forget that a producer-only economy doesn't work. If consumers don't have the financial ability to consume, you're screwed.
    - uoaei 9y ago
      The reason our economy is working now is because of the huge amount of speculation that fuels the investment sector. Wealth creation is no longer predicated on how much stuff is being sold, just on how much people bet will be sold.
- kmicklas 9y ago
  Rich people have done an absolutely astounding job of convincing poor conservatives that this nonsense makes sense.
  - munk-a 9y ago
    > Rich people have done an absolutely astounding job of convincing poor conservatives that this nonsense makes sense. I don't know why this was down voted, the process of slowly rephrasing the meaning of the American dream to mean "let's let a select few get super wealthy" from "working together everyone can become rich" is one of the biggest marketing scams in recent history.
willitpamp573 9y ago
I like how it's a foregone conclusion that inequality is a "problem" that needs to be "fixed".
- deleted 9y ago
  [deleted]
- nicolashahn 9y ago
  I could also write an article about how you can make two lengths of rope the same by cutting the longer one and tying it to the shorter one. I don't think it'd be news though.
  - hexane360 9y ago
    You also strike me as the person who'd write an article about how printing money makes everyone richer, because it's like "lengthening a rope". Economics is far from intuitive, and using a metaphor to hide all the complexity doesn't change that. This is typical HN arrogance at its finest. https://xkcd.com/1831/ https://xkcd.com/1831/ also: https://xkcd.com/793/ https://xkcd.com/793/
- jernfrost 9y ago
  Because it is. Ask yourself what is the point of any society? Capitalism is not a goal unto itself, it is a tool to reach another goal. Now different societies might decide on different goals. Let me use an exaggeration to clarify my point. If one man in a country is fantastically rich while everybody else is dirt poor, then that society is a failure. My assumption would be that most societies would decide that happiness and well being for as broad set of people is that is the goal of society. en massing piles of wealth with nobody to spend it on is rather pointless. Of course some inequality is fine, but that is not the point. The point is that ever increasing inequality is a problem.
  - nicolashahn 9y ago
    I don't think anyone but the most extreme socialists would say that everyone should be completely equal. The rest of us just can't agree on how inequal it's ok for us to be.
kmicklas 9y ago
Study Suggests Malnutrition Can Be Fixed With Food, Not Crop Hoarding
deleted 9y ago
[deleted]
ge96 9y ago
I am in poverty myself. But when I see this I view it as punishment to those who figured out how to "succeed in life" with regard to acquiring wealth. I realize some things like the tax loopholes of avoiding paying taxes but even so the concept of taxing more when you make more seems like punishment. But I understand too, how much does a person need/what about others that are in need. But then again maybe if they have so much wealth that you can't compete/ever hope to catch up/get on their level. Just seems to me if it's easier to be poor/not get taxed much then why try to get out of it. Believe me I'm still trying my life sucks, uncertainty fear etc...
- rosser 9y ago
  The vast majority of the "rich" are beneficiaries of generational wealth. They didn't "figure out how to succeed"; they were literally handed everything they have, without ever having to earn a damned thing. If your definition of "success" is "being born to the right parents", you're advocating an even more unequal society than the one we already have. That is straight-up feudal. EDIT: phrasing.
  - jerkstate 9y ago
    Do you have a reference for that assertion? According to some quick searches, it seems like that was true in the 70s and earlier, but in the recent decade the majority of millionaires and billionaires are now self-made. Of course, that googling is confirmation bias, so I'm interested in data from the other perspective. http://www.thomasjstanley.com/2014/05/america-where-millionaires-are-self-made/ http://www.thomasjstanley.com/2014/05/america-where-milliona...
    - rosser 9y ago
      My information also comes from Piketty. I appreciate that my confirmation bias is possibly (probably) also in play. The campaign to smear his work, and muddy the waters around his conclusions, probably makes anything short of re-analyzing all of the primary sources one's self an exercise in appealing to authorities whose positions support one's own.
DiffEq 9y ago
Communism has been tried already and has resulted in failed states and miserable people....the most recent example is Valenzuela...why is this so hard to see?
- XR0CSWV3h3kZWg 9y ago
  Venezuela did far more than wealth redistribution. https://en.wikipedia.org/wiki/Shortages_in_Venezuela#Potential_causes https://en.wikipedia.org/wiki/Shortages_in_Venezuela#Potenti... https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch%C3%A1vez_administration#Price_controls https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch... Price fixing, printing money and corruption are far different than wealth redistribution.
sbuttgereit 9y ago
So when exactly do you accept "inequality"? When do you stop in your efforts? So you take the money of those that have it, no matter how they came by it, and give it to those that don't, regardless of any individual virtue or merit. But you haven't solved inequality. People that live in the cities arguably have access to greater resources (opportunity/leisure/health care/etc) than those that live in rural areas. Perhaps we force some people to live in work in places that they might not otherwise choose to in order to create greater equality? Or do we say we accept the inequality of the urban vs. the rural? The list goes on and the measures to achieve an egalitarian outcome become more draconian. Certainly, with a sufficient use of physical force (or the threat thereof) you can achieve all sorts of "equality"... and all the proponents of such egalitarian proposals here are suggesting is that using brute force against those that wouldn't voluntarily play along is OK. Nothing more intellectually sophisticated than saying, "don't agree, we'll take it." But in all of this, once you accept that force is a legitimate means to enforce "equality" in this way, you have a hard time keeping those that have appointed themselves lord protectors of the poor (or other victim class) from becoming the new elite. Oh well, here's to the pursuit of egalitarianism! http://www.seasite.niu.edu/khmer/ledgerwood/Khmer_Rouge.htm http://www.seasite.niu.edu/khmer/ledgerwood/Khmer_Rouge.htm
- frgtpsswrdlame 9y ago
  Oh come on, Khmer Rouge comparisons for progressive taxation? Step off the rhetoric.

67 points by lnguyen 9y ago

moduspol 9y ago

Well, at least we know now, thanks to math. Who knew it was this simple?

kbd 9y ago
For those who missed it, the original title was "Math Suggests..."
- deleted 9y ago
  [deleted]

interstitial 9y ago

Multiply by ZERO, everything solved.

billytetrud 9y ago

This has been known literally for centuries. Its called the second fundamental theorem of welfare economics. I wrote about it in the "Soluctions to Sub-optimal Pareto Optimums" section of my article here: https://governology.wordpress.com/2016/09/04/the-role-of-government-part-2/ https://governology.wordpress.com/2016/09/04/the-role-of-gov...

munk-a 9y ago
No, I just talked with some centrist and right wing congressmen. They know that the only true solution is trickle down economics, we're just not trickling hard enough right now.

CyberDildonics 9y ago

I don't think solving inequality in a purely mathematical way was the problem. Maybe the author should have spent him time doing something more valuable, like pretending to squish a far away person's head between his fingers by squinting one eye.

jopsen 9y ago

We won't see wealth redistribution with Trump, not even minimum wage hikes. So I guess the take away is: buy gold. Because after the next crash, the Fed won't be able to bail out the economy by lowering the interest rate. Am I wrong?

sputknick 9y ago
They could return to printing money right? That will work until another countries currency becomes more powerful than ours? I'm assuming that any recession in the US would more-or-less be a global recession.
yourapostasy 9y ago
> Because after the next crash, the Fed won't be able to bail out the economy by lowering the interest rate. Am I wrong? I suspect you might be wrong with this next crash, as the USD would have to get trashed to a degree and on a short timescale no one thinks possible today before we hit gold-scale monetary reset bottom scenarios. What surprised me about the 2008 crash was it revealed to an extent I never thought possible before how invested traders over the entire world are in USD denomination. I thought there would be ferocious push-back manifesting in the FX and bond markets, with knock-on downdrafts on US equities, from the QE's and bailouts. I was wrong. Some people rail against "regulatory capture", but I think "model capture" is overlooked; so much of our economic infrastructure is so heavily entwined with a USD-based economic representation model that a short, sharp shock is apparently unlikely to happen. We'll likely see a decades-long transition to another model like when the GBP was displaced by the USD, this time hopefully not with punctuated and moved along with horrific world wars and economic dislocations like last time. This is ironic to me, because I had thought with all the computer-aided modeling we have available today, that contingency plans are in place at the large trading houses to relatively quickly (within 3-5 years) switch away from USD-denominated transactions, should the US start to monkey around too much with the money supply.
KGIII 9y ago
If it reaches the point where the USD isn't a viable trade mechanism, your gold isn't going to help you. Someone is just going to take your food and water. They won't bother with the gold. I guess you could melt it into bullets.

beingmyself2 9y ago

Right, let's start by redistributing the wealth held by people in silicon valley making more than 50k a year. Think of all the people we could lift out of poverty if all us tech folks just gave up our wealth! I'm sure we could do without that second helping of avocado toast each day. The solution is obviously to steal from the wealthy and give it to the poor.

norswap 9y ago
What's so ridiculous about that? That's pretty much how it works in many "welfare" states across Europe (I'm from Belgium). I don't find the thought of not being able to afford healthcare if bad luck strikes very appealing.
- nicolashahn 9y ago
  It's not ridiculous at all, in fact some of us are paying 45% of our salary in taxes already!
  - lobf 9y ago
    I'm not in tech and I'm not making nearly the salaries that most of you guys are making- I'm paying 40% of my checks in taxes. So yeah, if you're making double what I'm making, maybe pay in a bit more. What's so crazy about that?
    - twiceaday 9y ago
      Roads and bridges are not bought with tax percentages, they are bought with tax dollars. Somebody making twice as much as you paying the same tax rate is paying twice as much tax as you.
      - munk-a 9y ago
        Somebody making twice as much as me can afford to pay more than twice as much as me in taxes and still make more money than me. Money has diminishing returns anyways.

kelnos 9y ago

> Good luck convincing Trump about any of it, though. s/Trump/conservatives/ Conservatives (even poor conservatives) seem to be against wealth redistribution of this nature and try to label it as "welfare" and "handouts", which they find distasteful, even when it's the healthiest thing for the economy as a whole. They can't seem to get past the idea that "hard work = wealth", and that giving people breaks is morally bankrupt. They seem to think that all this is a zero-sum game, and that giving aid to the lowest-income people will necessarily take something away from them.

jjuel 9y ago
Which I don't get because they seem to be in favor of "handouts" (tax cuts, bailouts, etc.) for the richest of the rich thinking that will drive the economy.
- kelnos 9y ago
  Agreed. People conveniently forget that a producer-only economy doesn't work. If consumers don't have the financial ability to consume, you're screwed.
  - uoaei 9y ago
    The reason our economy is working now is because of the huge amount of speculation that fuels the investment sector. Wealth creation is no longer predicated on how much stuff is being sold, just on how much people bet will be sold.
kmicklas 9y ago
Rich people have done an absolutely astounding job of convincing poor conservatives that this nonsense makes sense.
- munk-a 9y ago
  > Rich people have done an absolutely astounding job of convincing poor conservatives that this nonsense makes sense. I don't know why this was down voted, the process of slowly rephrasing the meaning of the American dream to mean "let's let a select few get super wealthy" from "working together everyone can become rich" is one of the biggest marketing scams in recent history.

willitpamp573 9y ago

I like how it's a foregone conclusion that inequality is a "problem" that needs to be "fixed".

deleted 9y ago
[deleted]
nicolashahn 9y ago
I could also write an article about how you can make two lengths of rope the same by cutting the longer one and tying it to the shorter one. I don't think it'd be news though.
- hexane360 9y ago
  You also strike me as the person who'd write an article about how printing money makes everyone richer, because it's like "lengthening a rope". Economics is far from intuitive, and using a metaphor to hide all the complexity doesn't change that. This is typical HN arrogance at its finest. https://xkcd.com/1831/ https://xkcd.com/1831/ also: https://xkcd.com/793/ https://xkcd.com/793/
jernfrost 9y ago
Because it is. Ask yourself what is the point of any society? Capitalism is not a goal unto itself, it is a tool to reach another goal. Now different societies might decide on different goals. Let me use an exaggeration to clarify my point. If one man in a country is fantastically rich while everybody else is dirt poor, then that society is a failure. My assumption would be that most societies would decide that happiness and well being for as broad set of people is that is the goal of society. en massing piles of wealth with nobody to spend it on is rather pointless. Of course some inequality is fine, but that is not the point. The point is that ever increasing inequality is a problem.
- nicolashahn 9y ago
  I don't think anyone but the most extreme socialists would say that everyone should be completely equal. The rest of us just can't agree on how inequal it's ok for us to be.

kmicklas 9y ago

Study Suggests Malnutrition Can Be Fixed With Food, Not Crop Hoarding

deleted 9y ago

[deleted]

ge96 9y ago

I am in poverty myself. But when I see this I view it as punishment to those who figured out how to "succeed in life" with regard to acquiring wealth. I realize some things like the tax loopholes of avoiding paying taxes but even so the concept of taxing more when you make more seems like punishment. But I understand too, how much does a person need/what about others that are in need. But then again maybe if they have so much wealth that you can't compete/ever hope to catch up/get on their level. Just seems to me if it's easier to be poor/not get taxed much then why try to get out of it. Believe me I'm still trying my life sucks, uncertainty fear etc...

rosser 9y ago
The vast majority of the "rich" are beneficiaries of generational wealth. They didn't "figure out how to succeed"; they were literally handed everything they have, without ever having to earn a damned thing. If your definition of "success" is "being born to the right parents", you're advocating an even more unequal society than the one we already have. That is straight-up feudal. EDIT: phrasing.
- jerkstate 9y ago
  Do you have a reference for that assertion? According to some quick searches, it seems like that was true in the 70s and earlier, but in the recent decade the majority of millionaires and billionaires are now self-made. Of course, that googling is confirmation bias, so I'm interested in data from the other perspective. http://www.thomasjstanley.com/2014/05/america-where-millionaires-are-self-made/ http://www.thomasjstanley.com/2014/05/america-where-milliona...
  - rosser 9y ago
    My information also comes from Piketty. I appreciate that my confirmation bias is possibly (probably) also in play. The campaign to smear his work, and muddy the waters around his conclusions, probably makes anything short of re-analyzing all of the primary sources one's self an exercise in appealing to authorities whose positions support one's own.

DiffEq 9y ago

Communism has been tried already and has resulted in failed states and miserable people....the most recent example is Valenzuela...why is this so hard to see?

XR0CSWV3h3kZWg 9y ago
Venezuela did far more than wealth redistribution. https://en.wikipedia.org/wiki/Shortages_in_Venezuela#Potential_causes https://en.wikipedia.org/wiki/Shortages_in_Venezuela#Potenti... https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch%C3%A1vez_administration#Price_controls https://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch... Price fixing, printing money and corruption are far different than wealth redistribution.

sbuttgereit 9y ago

So when exactly do you accept "inequality"? When do you stop in your efforts? So you take the money of those that have it, no matter how they came by it, and give it to those that don't, regardless of any individual virtue or merit. But you haven't solved inequality. People that live in the cities arguably have access to greater resources (opportunity/leisure/health care/etc) than those that live in rural areas. Perhaps we force some people to live in work in places that they might not otherwise choose to in order to create greater equality? Or do we say we accept the inequality of the urban vs. the rural? The list goes on and the measures to achieve an egalitarian outcome become more draconian. Certainly, with a sufficient use of physical force (or the threat thereof) you can achieve all sorts of "equality"... and all the proponents of such egalitarian proposals here are suggesting is that using brute force against those that wouldn't voluntarily play along is OK. Nothing more intellectually sophisticated than saying, "don't agree, we'll take it." But in all of this, once you accept that force is a legitimate means to enforce "equality" in this way, you have a hard time keeping those that have appointed themselves lord protectors of the poor (or other victim class) from becoming the new elite. Oh well, here's to the pursuit of egalitarianism! http://www.seasite.niu.edu/khmer/ledgerwood/Khmer_Rouge.htm http://www.seasite.niu.edu/khmer/ledgerwood/Khmer_Rouge.htm

frgtpsswrdlame 9y ago
Oh come on, Khmer Rouge comparisons for progressive taxation? Step off the rhetoric.