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The author refers to creating economic opportunities as making watering holes. In the Florida everglades, each alligator makes a watering hole in the flat, hard

The author refers to creating economic opportunities as making watering holes. In the Florida everglades, each alligator makes a watering hole in the flat, hard limestone ground. I don't know how big the holes are. About 20 feet across and 6 feet deep? The alligator mostly lives in it for several years. The hole fills with water when it rains, and tends to stay full of water during the dry season. This is a huge benefit to all animals around it. And of course, the alligator benefits by occasionally eating one of the visitors, but fewer than you might think. But even with the alligator eating, making the watering hole is a huge net benefit to the ecosystem as a whole. I think the question boils down to, "How can the government encourage the creation of new job-creating watering holes, instead of pushing policies which increase the rent of existing watering holes?"

dsfyu404ed 8y ago
Why is it the government's job to encourage the creation of job creating watering holes? Why can't it just curtail rent seeking? It's much easier to identify bad behavior as you see it than encourage good behavior of a yet unknown form.
- kangnkodos 8y ago
  I agree that if the government only discouraged rent seeking, that would be an improvement. The article shows how the government is encouraging rent seeking.
  - snidane 8y ago
    'Rent seeking' is a straw man. Of course everybody searches for opportunities yielding rent. Nobody wants to set up a business to see its profits competed away in 2 years. They'd prefer long term stable profits. The real problem instead is unearned rent extraction. Lot of rent which is unethically taken away from workers and business is given to the extractors at the expense of those workers and businesses who provide it. Largely through taxes on labor, but also through increased prices. There is no such thing as passive income without work. It's just that the profit is collected by someone else than who provided the labor. Example 1. open source community building free stuff resulting in near trillion dollar valuations of cloud providers. Example 2. taxes collected from labor (income and sales taxes) used for public works and new infrastructure resulting in increase of land and real estate value in vicinity of the new construction. Common with a new subway or highway systems. Example 3. Communication, Pharma industry and other network systems. Any innovation funded by public money or other individuals can only benefit those who already operate the network infrastructure, because of the impossibility to compete with these established monopolies. Especially when regulations are set up to protect the incumbents from new entrants to their markets. These cases illustrate not only redistribution of value from those who provide it to those who sit on it. It also shows that the goods these people helped to create then become even more expensive for them. The more of it they produce, the more expensive it gets - higher living rents, more expensive drugs, more expensive railroad services, etc. This phenomenon is called the paradox of progress and poverty. You get it every time you set up the society in a way where the profits are extracted from the laborers and redistributed to the rentiers. Blame the system I guess. Don't tax the workers, tax the rentiers collecting their results.
    - skybrian 8y ago
      It seems like natural resources are a counterexample to your "no passive income" rule? In Alaska and Norway, the profits go into government funds that benefit everyone. Even if it were possible, would you want all the money to go to oil workers? They didn't create the oil.
      - snidane 8y ago
        I don't see how natural resources alone would make a passive income. Energy has to be exerted to extract the resource. By human labor or by machine. Then the extraction operation needs protection. If they left an oil well unprotected in Alaska forest somewhere then soon bandits would take over it and collect the profits. Nowadays this is resolved by private ownership of land which is maintained and provided by the government. Then of course the payment for this protection for exclusive rights of use needs to be paid to said government. Simply by collecting a land tax priced at a percentage of market value of that land. Workers and business collect profits due to their labor and government collects the natural resource rents. Any excess the government collects in the tax can be then reinvested into public works or paid as a dividend to citizens. Like in Alaska and Norway.
        skybrian 8y ago
        There is certainly work involved, but it's passive income to the citizens, who didn't work for it and aren't the ones guarding it. I agree that it's fine. (I am in favor of basic income.) But I'm wondering, how do you think we distinguish between good and bad income streams? You seemed to be making a moral distinction.
        snidane 8y ago
        Well people actually guard it indirectly. They could at any time randomly decide to go on a rampage and start taking over other people's property. Which actually happens when things boil over, eg. during revolutions. So they should be paid for remaining calm and keeping order. I don't think we need to make the distinction between good and bad incomes. However we as a society should be concerned about giving somebody certain privileges without getting any compensation for it. That makes the society inherently unequal, because one group of people is forced to provide the privileges or services for another group of people. Eg. people born in generation 2 are forced to accept and maintain private property privileges on land for those born in generation 1 even though they were never invited to discussions of land distribution in gen 1. Simply stated, the infinite-length land rights are unethical to people in later generations. Continuous payment system would be ethical. This alone could then help resolve other issues in other monopoly related problems as people would have more options to decide how to allocate their life, as you well know it is the case of basic income and when people are not stifled by excess taxes and excess rent payments.
- sgt101 8y ago
  This is zero sum thinking, if nothing new is added eventually you get to a steady state and all growth ceases. I'd further argue that in fact there will be gradual erosion of the job supporting capabilities of the current set of wealth generators.
  - AnimalMuppet 8y ago
    If nothing new is added. But people want to add new things all the time. If you make it less difficult, more new things get added. If you decrease the rent-seeking of existing stuff, that makes it easier (less expensive) for people to create new things. So you can encourage growth just by removing (or even reducing) rent seeking by existing entities.
    - sgt101 8y ago
      Yes that makes sense to me - reducing rent seeking increases the motivation for innovation.
- gizmo686 8y ago
  Watering holes are a massive positive externality. In our current system, the government and charities are the only institutions that are set up to deal with externalities. Without them we are stuck with watering holes for which private entities are capable of extracting enough of the generated value (aka, rent). If you make rent seeking harder, you decrease the portion of the value which can be captured by the private entity, further restricting the watering holes which private entities are capable of building.
- nostrademons 8y ago
  It's not easier to prevent bad behavior than to encourage good behavior. There are an infinite number of potential rent-seeking behaviors that selfish actors can dream up in a world of free contracts. If you ban some of them, new ones will just spring up. You have to flood the channel so that selfish actors are too busy doing pro-social things to have time to do anti-social ones.
- maxerickson 8y ago
  It doesn't have to be a matter of principle. If the government can make pragmatic, effective investments, then it probably should. (and if you think about it for a minute, if the government can't do that, it shouldn't exist at all. Politics is about defining what is pragmatic and what effective means.)

dsfyu404ed 8y ago

Why is it the government's job to encourage the creation of job creating watering holes? Why can't it just curtail rent seeking? It's much easier to identify bad behavior as you see it than encourage good behavior of a yet unknown form.

kangnkodos 8y ago
I agree that if the government only discouraged rent seeking, that would be an improvement. The article shows how the government is encouraging rent seeking.
- snidane 8y ago
  'Rent seeking' is a straw man. Of course everybody searches for opportunities yielding rent. Nobody wants to set up a business to see its profits competed away in 2 years. They'd prefer long term stable profits. The real problem instead is unearned rent extraction. Lot of rent which is unethically taken away from workers and business is given to the extractors at the expense of those workers and businesses who provide it. Largely through taxes on labor, but also through increased prices. There is no such thing as passive income without work. It's just that the profit is collected by someone else than who provided the labor. Example 1. open source community building free stuff resulting in near trillion dollar valuations of cloud providers. Example 2. taxes collected from labor (income and sales taxes) used for public works and new infrastructure resulting in increase of land and real estate value in vicinity of the new construction. Common with a new subway or highway systems. Example 3. Communication, Pharma industry and other network systems. Any innovation funded by public money or other individuals can only benefit those who already operate the network infrastructure, because of the impossibility to compete with these established monopolies. Especially when regulations are set up to protect the incumbents from new entrants to their markets. These cases illustrate not only redistribution of value from those who provide it to those who sit on it. It also shows that the goods these people helped to create then become even more expensive for them. The more of it they produce, the more expensive it gets - higher living rents, more expensive drugs, more expensive railroad services, etc. This phenomenon is called the paradox of progress and poverty. You get it every time you set up the society in a way where the profits are extracted from the laborers and redistributed to the rentiers. Blame the system I guess. Don't tax the workers, tax the rentiers collecting their results.
  - skybrian 8y ago
    It seems like natural resources are a counterexample to your "no passive income" rule? In Alaska and Norway, the profits go into government funds that benefit everyone. Even if it were possible, would you want all the money to go to oil workers? They didn't create the oil.
    - snidane 8y ago
      I don't see how natural resources alone would make a passive income. Energy has to be exerted to extract the resource. By human labor or by machine. Then the extraction operation needs protection. If they left an oil well unprotected in Alaska forest somewhere then soon bandits would take over it and collect the profits. Nowadays this is resolved by private ownership of land which is maintained and provided by the government. Then of course the payment for this protection for exclusive rights of use needs to be paid to said government. Simply by collecting a land tax priced at a percentage of market value of that land. Workers and business collect profits due to their labor and government collects the natural resource rents. Any excess the government collects in the tax can be then reinvested into public works or paid as a dividend to citizens. Like in Alaska and Norway.
      - skybrian 8y ago
        There is certainly work involved, but it's passive income to the citizens, who didn't work for it and aren't the ones guarding it. I agree that it's fine. (I am in favor of basic income.) But I'm wondering, how do you think we distinguish between good and bad income streams? You seemed to be making a moral distinction.
        snidane 8y ago
        Well people actually guard it indirectly. They could at any time randomly decide to go on a rampage and start taking over other people's property. Which actually happens when things boil over, eg. during revolutions. So they should be paid for remaining calm and keeping order. I don't think we need to make the distinction between good and bad incomes. However we as a society should be concerned about giving somebody certain privileges without getting any compensation for it. That makes the society inherently unequal, because one group of people is forced to provide the privileges or services for another group of people. Eg. people born in generation 2 are forced to accept and maintain private property privileges on land for those born in generation 1 even though they were never invited to discussions of land distribution in gen 1. Simply stated, the infinite-length land rights are unethical to people in later generations. Continuous payment system would be ethical. This alone could then help resolve other issues in other monopoly related problems as people would have more options to decide how to allocate their life, as you well know it is the case of basic income and when people are not stifled by excess taxes and excess rent payments.
sgt101 8y ago
This is zero sum thinking, if nothing new is added eventually you get to a steady state and all growth ceases. I'd further argue that in fact there will be gradual erosion of the job supporting capabilities of the current set of wealth generators.
- AnimalMuppet 8y ago
  If nothing new is added. But people want to add new things all the time. If you make it less difficult, more new things get added. If you decrease the rent-seeking of existing stuff, that makes it easier (less expensive) for people to create new things. So you can encourage growth just by removing (or even reducing) rent seeking by existing entities.
  - sgt101 8y ago
    Yes that makes sense to me - reducing rent seeking increases the motivation for innovation.
gizmo686 8y ago
Watering holes are a massive positive externality. In our current system, the government and charities are the only institutions that are set up to deal with externalities. Without them we are stuck with watering holes for which private entities are capable of extracting enough of the generated value (aka, rent). If you make rent seeking harder, you decrease the portion of the value which can be captured by the private entity, further restricting the watering holes which private entities are capable of building.
nostrademons 8y ago
It's not easier to prevent bad behavior than to encourage good behavior. There are an infinite number of potential rent-seeking behaviors that selfish actors can dream up in a world of free contracts. If you ban some of them, new ones will just spring up. You have to flood the channel so that selfish actors are too busy doing pro-social things to have time to do anti-social ones.
maxerickson 8y ago
It doesn't have to be a matter of principle. If the government can make pragmatic, effective investments, then it probably should. (and if you think about it for a minute, if the government can't do that, it shouldn't exist at all. Politics is about defining what is pragmatic and what effective means.)