4 ms·

This sort of debate is always difficult because of definitional challenges. When we talk about inequality, are we talking about billionaires? About the top 0.01

by md_ 5y ago

This sort of debate is always difficult because of definitional challenges. When we talk about inequality, are we talking about billionaires? About the top 0.01%? The top 1%? The top decile? Interestingly—and I don’t know what to make of this—the US seems to have a fairly high percentage of “ultra rich” whose wealth is not primarily inherited (https://www.forbes.com/sites/niallmccarthy/2016/10/10/where-the-super-rich-inherit-their-wealth-infographic/ https://www.forbes.com/sites/niallmccarthy/2016/10/10/where-...). On the other hand, across the entire population, the US does relatively poorly on inter generational earnings elasticity (i.e., in the US, what your parents earn is a very good predictor of what you will earn) (https://www.oecd.org/centrodemexico/medios/44582910.pdf https://www.oecd.org/centrodemexico/medios/44582910.pdf). I think any such debate thus needs a stronger foundational discussion of what metrics matter.

WalterBright 5y ago
High marginal tax rates do have the effect of impeding people moving up. > what your parents earn is a very good predictor of what you will earn This makes perfect sense to me, as peoples' state in life is the sum of their choices. Successful parents proactively teach or passively show their kids habits and methods to being successful. This is why I've advocated that the public schools should teach, as part of the core curriculum, basic accounting and finance. And even how to run a business. This would be a very cost-effective way to help the poor.
- md_ 5y ago
  High income tax rates vs taxes on capital earnings do that, irrespective of how progressive the income tax rate is, no? I assume the point you are making is that taxing income at a higher rate than returns on capital favors earnings from already-accrued wealth over wealth accural. As to heritability of earnings, I think there are a number of potential causes: * Parents pass on knowledge, skills, and values that are valuable. * Parents pass on actual wealth, or social standing that can help accrue wealth (like helping their kids make business contacts or find internships). * Parents buy their kids improved education or similar (e.g. childhood nutrition, college test prep, etc). * Structural biases (racism, classism) tend to reflect attributes that are somewhat or fully inherited (ethnicity, accent, perceived social class). * Earnings reflect things that are biologically inherited (intelligence, greed, etc). I don't find the last point very compelling but I'm including it for completeness. But what I think this list demonstrates is that it's somewhat hard to understand just how pernicious the causes of low intergenerational social mobility may be—the first and last points seem kind of "working as intended" (in a meritocracy); the second and third points are troublesome, and the fourth point is deeply problematic.
  - WalterBright 5y ago
    > pernicious The real pernicious thing is the assumption that one cannot improve one's state by improving ones choices and actions. People are not doomed to be poor because their parents are poor. But if a person assumes this to be true, they are indeed dooming themselves to poverty.

by md_ 5y ago

WalterBright 5y ago

High marginal tax rates do have the effect of impeding people moving up. > what your parents earn is a very good predictor of what you will earn This makes perfect sense to me, as peoples' state in life is the sum of their choices. Successful parents proactively teach or passively show their kids habits and methods to being successful. This is why I've advocated that the public schools should teach, as part of the core curriculum, basic accounting and finance. And even how to run a business. This would be a very cost-effective way to help the poor.

md_ 5y ago
High income tax rates vs taxes on capital earnings do that, irrespective of how progressive the income tax rate is, no? I assume the point you are making is that taxing income at a higher rate than returns on capital favors earnings from already-accrued wealth over wealth accural. As to heritability of earnings, I think there are a number of potential causes: * Parents pass on knowledge, skills, and values that are valuable. * Parents pass on actual wealth, or social standing that can help accrue wealth (like helping their kids make business contacts or find internships). * Parents buy their kids improved education or similar (e.g. childhood nutrition, college test prep, etc). * Structural biases (racism, classism) tend to reflect attributes that are somewhat or fully inherited (ethnicity, accent, perceived social class). * Earnings reflect things that are biologically inherited (intelligence, greed, etc). I don't find the last point very compelling but I'm including it for completeness. But what I think this list demonstrates is that it's somewhat hard to understand just how pernicious the causes of low intergenerational social mobility may be—the first and last points seem kind of "working as intended" (in a meritocracy); the second and third points are troublesome, and the fourth point is deeply problematic.
- WalterBright 5y ago
  > pernicious The real pernicious thing is the assumption that one cannot improve one's state by improving ones choices and actions. People are not doomed to be poor because their parents are poor. But if a person assumes this to be true, they are indeed dooming themselves to poverty.