5 ms·

I can't think of another mechanism from preventing a permanent aristocratic class from passive investment

DuskStar 6y ago
I can! Spendthrift children. Or even just plummeting real yields on investment like we've been seeing over the past decade. Another commenter posted [0], which indicates that there's something besides inheritance taxes driving successive generations back towards the mean. 0: https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10 https://www.nasdaq.com/articles/generational-wealth%3A-why-d...
- throwawaygh 6y ago
  >>> Ah, yes - because of course we want people to spend all their money before they die instead of investing long-term for their children. >> I can't think of another mechanism from preventing a permanent aristocratic class from passive investment > I can! Spendthrift children. Well, in that case, it's all gonna be spent instead of invested anyways, so GGP's argument is moot and we might as well just tax it instead of having employees of public sector companies subsidize the layabout.
  - DuskStar 6y ago
    > preventing a permanent aristocratic class from passive investment Well, there's a difference between passive and active investment...
    - throwawaygh 6y ago
      > Well, there's a difference between passive and active investment... If the child of the wealthy person is bad with money, then having them actively invest that money is net harmful. And if the child of the wealthy person is not bad with money, having them actively invest that money ends up with dynasties. And we're back to the same double bind: to defend the wealth tax, you need to either a) justify dynasties or else b) explain why we should subtract from the salaries of employees at public sector companies in order to subsidize dividend payments/bond yields for one or two generations of destructive layabouts. (TBH there are reasonable arguments for family wealth and for allowing layabouts, but I don't think there's any way out of this bind. "oh don't worry, they'll piss away that money anyways" is a bad reason for not taxing someone.)
      - DuskStar 6y ago
        > "oh don't worry, they'll piss away that money anyways" is a bad reason for not taxing someone. IMO that argument is meant to counter people disliking unearned wealth. But to argue in favor of dynasties: 1. It might encourage a longer time horizon. "Leaving something good for your grandchildren", etc - and in a lot of ways people not doing this is why we have issues fighting climate change. 2. If investment ability is correlated across generations (and I'll eat my hat if it's not) then giving the children of competent investors more capital than those of incompetent investors will lead to better investments overall, and thus faster economic growth. And economic growth is everything. (2% difference in annualized growth for a century is the difference between the US and Mexico)
        throwawaygh 6y ago
        > IMO that argument is meant to counter people disliking unearned wealth. Well, sure, for a lot of people. I care less about unearned and more about unproductive. Hedonistic consumption on the weekends/a few weeks in the summer/20 years at the end of your life so that you can go build something during the rest of your life is net productive in most cases. Hedonistic consumption 24/7 for a lifetime is probably totally unproductive. > 1. It might encourage a longer time horizon. "Leaving something good for your grandchildren", etc - and in a lot of ways people not doing this is why we have issues fighting climate change. I think a huge wealth tax would be better. People would probably not let all that go to the gov. They would probably donate quite a lot. Hopefully to causes that address our most important problems (like climate change, but also healthcare, mental health, organizations to promote community fabric to fight loneliness, education, etc.). >2. If investment ability is correlated across generations (and I'll eat my hat if it's not) then giving the children of competent investors more capital than those of incompetent investors will lead to better investments overall, and thus faster economic growth. And economic growth is everything. (2% difference in annualized growth for a century is the difference between the US and Mexico) Well, the alternative is taxation. That could mean direct wealth redistribution. Or, that could mean war. Or, that could mean reinvestment in infrastructure/research/etc. Now the question becomes "do you trust the grandchildren of the rich more or less than you trust the people's government?"
deleted 6y ago
[deleted]
maerF0x0 6y ago
Is there something wrong with someone making a choice that pays off repeatedly (even up to near permanently) instead of only temporarily? Assuming no, then there is nothing wrong with passive investment. Now power via money in politics is another issue completely, but money isn't the issue, corruption is. I would wholeheartedly agree we need to fix corruption in the government. I just disagree that the fix to corruption is to make everyone marginally poorer via taxation. (at least some margin is lost to bureaucracy)
- dmarchand90 6y ago
  For me it's a tough sell to convince me that any finite action can merit an infinite reward. Maybe you can make the argument but it's a tough sell

I can! Spendthrift children. Or even just plummeting real yields on investment like we've been seeing over the past decade. Another commenter posted [0], which indicates that there's something besides inheritance taxes driving successive generations back towards the mean. 0: https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10 https://www.nasdaq.com/articles/generational-wealth%3A-why-d...

throwawaygh 6y ago
>>> Ah, yes - because of course we want people to spend all their money before they die instead of investing long-term for their children. >> I can't think of another mechanism from preventing a permanent aristocratic class from passive investment > I can! Spendthrift children. Well, in that case, it's all gonna be spent instead of invested anyways, so GGP's argument is moot and we might as well just tax it instead of having employees of public sector companies subsidize the layabout.
- DuskStar 6y ago
  > preventing a permanent aristocratic class from passive investment Well, there's a difference between passive and active investment...
  - throwawaygh 6y ago
    > Well, there's a difference between passive and active investment... If the child of the wealthy person is bad with money, then having them actively invest that money is net harmful. And if the child of the wealthy person is not bad with money, having them actively invest that money ends up with dynasties. And we're back to the same double bind: to defend the wealth tax, you need to either a) justify dynasties or else b) explain why we should subtract from the salaries of employees at public sector companies in order to subsidize dividend payments/bond yields for one or two generations of destructive layabouts. (TBH there are reasonable arguments for family wealth and for allowing layabouts, but I don't think there's any way out of this bind. "oh don't worry, they'll piss away that money anyways" is a bad reason for not taxing someone.)
    - DuskStar 6y ago
      > "oh don't worry, they'll piss away that money anyways" is a bad reason for not taxing someone. IMO that argument is meant to counter people disliking unearned wealth. But to argue in favor of dynasties: 1. It might encourage a longer time horizon. "Leaving something good for your grandchildren", etc - and in a lot of ways people not doing this is why we have issues fighting climate change. 2. If investment ability is correlated across generations (and I'll eat my hat if it's not) then giving the children of competent investors more capital than those of incompetent investors will lead to better investments overall, and thus faster economic growth. And economic growth is everything. (2% difference in annualized growth for a century is the difference between the US and Mexico)
      - throwawaygh 6y ago
        > IMO that argument is meant to counter people disliking unearned wealth. Well, sure, for a lot of people. I care less about unearned and more about unproductive. Hedonistic consumption on the weekends/a few weeks in the summer/20 years at the end of your life so that you can go build something during the rest of your life is net productive in most cases. Hedonistic consumption 24/7 for a lifetime is probably totally unproductive. > 1. It might encourage a longer time horizon. "Leaving something good for your grandchildren", etc - and in a lot of ways people not doing this is why we have issues fighting climate change. I think a huge wealth tax would be better. People would probably not let all that go to the gov. They would probably donate quite a lot. Hopefully to causes that address our most important problems (like climate change, but also healthcare, mental health, organizations to promote community fabric to fight loneliness, education, etc.). >2. If investment ability is correlated across generations (and I'll eat my hat if it's not) then giving the children of competent investors more capital than those of incompetent investors will lead to better investments overall, and thus faster economic growth. And economic growth is everything. (2% difference in annualized growth for a century is the difference between the US and Mexico) Well, the alternative is taxation. That could mean direct wealth redistribution. Or, that could mean war. Or, that could mean reinvestment in infrastructure/research/etc. Now the question becomes "do you trust the grandchildren of the rich more or less than you trust the people's government?"

deleted 6y ago

[deleted]

maerF0x0 6y ago

Is there something wrong with someone making a choice that pays off repeatedly (even up to near permanently) instead of only temporarily? Assuming no, then there is nothing wrong with passive investment. Now power via money in politics is another issue completely, but money isn't the issue, corruption is. I would wholeheartedly agree we need to fix corruption in the government. I just disagree that the fix to corruption is to make everyone marginally poorer via taxation. (at least some margin is lost to bureaucracy)

dmarchand90 6y ago
For me it's a tough sell to convince me that any finite action can merit an infinite reward. Maybe you can make the argument but it's a tough sell