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> You're spinning all over the place trying not to address that. Except where I addressed it above: "capital is a productivity multiplier, so...the growth rat

> You're spinning all over the place trying not to address that. Except where I addressed it above: "capital is a productivity multiplier, so...the growth rate is naturally a multiple of the labor growth rate...at least as fast as inflation...You'd expect labor growth rate to only match inflation..." So labor only grows as fast as inflation (unless it's getting a larger piece of the pie) and capital investment is a multiple of that, and returns at least as much as inflation, or it doesn't exist. Sorry if that wasn't clear. The "already taxed" comment followed a "savings in a mattress" example, so no appreciation, no capital gains. I saved 10 years of income over 40 years. I have wealth. It's already been taxed. Do I owe society another part of my unequal wealth? > Why shouldn't capital gains be taxed at least as much as labor? Maybe they should not be taxed as much as labor. Maybe more. Maybe less. It's not immediately obvious that either should be taxed more. Thus the reason for the wealth inequality even with zero capital gains example (capital loss after inflation). Reasons to tax capital gains less would be to promote investing, because we want to encourage people to save for and invest in the future, and because that is the mechanism to create wealth & jobs for the country. Reasons to tax capital gains more are mostly that the rich can afford it more (taxing luxury spending rather than necessities). Also if seeking tax revenue, it's like Willie Sutton's career choice of robbing banks - that's where the money is. What I'd like to know is, what's the best tax strategy to increase the overall standard of living in, say, 100 years? Unfortunately, economists differ strongly in answering that questions - but most people just say "more! less!" but have no "the ideal is X". > > The fact of wealth disparity does not imply unfairness. > It implies fairness even less I can agree with that - wealth disparity implies neither fairness nor unfairness.

notacoward 8y ago
> the growth rate is naturally a multiple of the labor growth rate There's nothing natural about it. It's the result of policy choices. The whole idea that exactly the system we have is "natural" and that anything else must be "artificial" is infuriatingly dishonest. Having been created by humans, the system we have is very much shaped by ideology and self-interest. It's an evolved system, and evolution does not favor morality. > I saved 10 years of income over 40 years. I have wealth. It's already been taxed. Do I owe society another part of my unequal wealth? In that very particular and thoroughly unrealistic case, I would say no. OTOH, that ten years' worth of income is a pittance once inflation has been factored in. It's not creating the kind of massive inequality that the superyacht owners - remember the original topic? - personify.
- ardy42 8y ago
  > There's nothing natural about it. It's the result of policy choices. The whole idea that exactly the system we have is "natural" and that anything else must be "artificial" is infuriatingly dishonest. It can be infuriatingly dishonest, but usually it's just infuriatingly ignorant.
- kbutler 8y ago
  >> the growth rate is naturally a multiple of the labor growth rate > There's nothing natural about it How to say it differently? We've previously agreed that capital must have positive returns (discount rate/time value of money). Labor gains do not compound (each year, I can only provide 1 year of labor. Gains from labor not consumed become capital for future investment). Capital gains do compound (next year, I have original capital plus capital gains plus labor gains minus consumption to invest). Compounding naturally leads to higher rates of growth for capital than for labor, because compounding multiplies productivity and inflation gains of labor, and surplus gains from labor also become capital. Propose a different system, please, preferably one that has a demonstrated history of raising hundreds of millions of people out of poverty. > In that very particular and thoroughly unrealistic case, I would say no. Good, now we have a starting point. We have established that some inequality is allowable and natural, and is caused by saving funds rather than spending on current consumption. Now how about if we allow capital gains that just offset inflation? (Still good, right? no need for more taxes?) How about capital gains that just match the time-value-of-money/discount rate? (I'd still say Society has claimed its predefined share, but you may differ - fine, introduce capital gains taxes) How about if I let Henry Ford use the money for 40 years to make his factories more productive (4X), double his workers wages (2X one year, voluntarily), give his customers discounts (model N was $3000, Model T dropped from $850 to $300), largely create the American middle class, and pay lots of taxes to the government as a company, as workers, as the owner of the company, and as capital gains? Ford paid 100% of initial capital as dividends in the first year (https://www.quora.com/How-did-Henry-Ford-start-Ford-Motor-Company https://www.quora.com/How-did-Henry-Ford-start-Ford-Motor-Co...). That's the kind of return that generates great wealth for investors and society (or obscene wealth, if you prefer). And if it turns out that left me with, say, 200 billion dollars (Henry Ford net worth adjusted for inflation), what did I do wrong? How did it become immoral or unfair that Henry Ford paid all the taxes society required (up-front and as capital gains) while making every party better off (customers, workers, even non-parties to the transactions who benefit from the tax revenue or make money off all those worker wages)? Please identify at what point that turned against the welfare of society? Why would having 100 or 10,000 Henry Fords that provide similar benefits to hundreds of thousands of people (and reap similar $200 billion rewards) be a bad thing, even if they could each individually buy a mega yacht or two? Is it by crossing some arbitrary wealth threshold? Or just when spending some of that accumulated wealth - maybe it was when Ford bought a yacht in 1917 https://www.thehenryford.org/collections-and-research/digital-collections/artifact/261020/#slide=gs-225584 https://www.thehenryford.org/collections-and-research/digita... It was at least partly for business purposes, so maybe he got a tax deduction. Can't find length or cost on it, so I can't tell if it crossed that 250'/$275M immoral line. Sorry.

notacoward 8y ago

> the growth rate is naturally a multiple of the labor growth rate There's nothing natural about it. It's the result of policy choices. The whole idea that exactly the system we have is "natural" and that anything else must be "artificial" is infuriatingly dishonest. Having been created by humans, the system we have is very much shaped by ideology and self-interest. It's an evolved system, and evolution does not favor morality. > I saved 10 years of income over 40 years. I have wealth. It's already been taxed. Do I owe society another part of my unequal wealth? In that very particular and thoroughly unrealistic case, I would say no. OTOH, that ten years' worth of income is a pittance once inflation has been factored in. It's not creating the kind of massive inequality that the superyacht owners - remember the original topic? - personify.

ardy42 8y ago
> There's nothing natural about it. It's the result of policy choices. The whole idea that exactly the system we have is "natural" and that anything else must be "artificial" is infuriatingly dishonest. It can be infuriatingly dishonest, but usually it's just infuriatingly ignorant.
kbutler 8y ago
>> the growth rate is naturally a multiple of the labor growth rate > There's nothing natural about it How to say it differently? We've previously agreed that capital must have positive returns (discount rate/time value of money). Labor gains do not compound (each year, I can only provide 1 year of labor. Gains from labor not consumed become capital for future investment). Capital gains do compound (next year, I have original capital plus capital gains plus labor gains minus consumption to invest). Compounding naturally leads to higher rates of growth for capital than for labor, because compounding multiplies productivity and inflation gains of labor, and surplus gains from labor also become capital. Propose a different system, please, preferably one that has a demonstrated history of raising hundreds of millions of people out of poverty. > In that very particular and thoroughly unrealistic case, I would say no. Good, now we have a starting point. We have established that some inequality is allowable and natural, and is caused by saving funds rather than spending on current consumption. Now how about if we allow capital gains that just offset inflation? (Still good, right? no need for more taxes?) How about capital gains that just match the time-value-of-money/discount rate? (I'd still say Society has claimed its predefined share, but you may differ - fine, introduce capital gains taxes) How about if I let Henry Ford use the money for 40 years to make his factories more productive (4X), double his workers wages (2X one year, voluntarily), give his customers discounts (model N was $3000, Model T dropped from $850 to $300), largely create the American middle class, and pay lots of taxes to the government as a company, as workers, as the owner of the company, and as capital gains? Ford paid 100% of initial capital as dividends in the first year (https://www.quora.com/How-did-Henry-Ford-start-Ford-Motor-Company https://www.quora.com/How-did-Henry-Ford-start-Ford-Motor-Co...). That's the kind of return that generates great wealth for investors and society (or obscene wealth, if you prefer). And if it turns out that left me with, say, 200 billion dollars (Henry Ford net worth adjusted for inflation), what did I do wrong? How did it become immoral or unfair that Henry Ford paid all the taxes society required (up-front and as capital gains) while making every party better off (customers, workers, even non-parties to the transactions who benefit from the tax revenue or make money off all those worker wages)? Please identify at what point that turned against the welfare of society? Why would having 100 or 10,000 Henry Fords that provide similar benefits to hundreds of thousands of people (and reap similar $200 billion rewards) be a bad thing, even if they could each individually buy a mega yacht or two? Is it by crossing some arbitrary wealth threshold? Or just when spending some of that accumulated wealth - maybe it was when Ford bought a yacht in 1917 https://www.thehenryford.org/collections-and-research/digital-collections/artifact/261020/#slide=gs-225584 https://www.thehenryford.org/collections-and-research/digita... It was at least partly for business purposes, so maybe he got a tax deduction. Can't find length or cost on it, so I can't tell if it crossed that 250'/$275M immoral line. Sorry.