15 ms·

This may be unpopular, but the hard thing in this discussion is to differentiate between consumption and investment. It does not help much to take wealth in ter

by yayr 5y ago

This may be unpopular, but the hard thing in this discussion is to differentiate between consumption and investment. It does not help much to take wealth in terms of equity paper money away from people who know how to invest it efficiently and distribute it. On the other hand, there are minimum basic needs for consumption of food, health services, shelter, education etc. I agree that the system to finance those services is broken. But then fix the system and don't only focus on punishing people when they build economically viable organisations that even help to support the economy in such a crisis.

jppope 5y ago
> "the hard thing in this discussion is to differentiate between consumption and investment" Indeed. Even harder is to acknowledge our government already has enough tax money, and further tax revenue will not be used prudently, in the best interest of our country.
- IgorPartola 5y ago
  Citation needed.
  - AnimalMuppet 5y ago
    Citation also needed for the opposite position - that the government will use the money well.
    - IgorPartola 5y ago
      Sure. But here is the thing: what consequences to billionaires face if they use their wealth in stupid and unproductive ways? At least for the government we have some recourse (elections, protests, public hearings).
      - AnimalMuppet 5y ago
        But to the degree that the reason for doing this is "the rich shouldn't have that much money", to that degree there's no pressure on the government to use the money wisely. And I don't like your question. Sure, billionaires can use their wealth badly. Why should they face consequences (other than no longer having what they have wasted)? That someone could misuse something is not a reason to take it from them and give it to someone else who could also misuse it. That is, I don't like your question because it implies that they should only be allowed to keep it if they are using it "properly". I think that the rule of law calls for a higher bar than that before taking peoples' stuff.
        IgorPartola 5y ago
        The original proposition was that essentially an oligarchy is more efficient than our current system: billionaires will waste less money than the government on inefficiencies. In that light I don’t mean consequences as punishment but rather incentive. Why should a billionaire spend money on socially useful project vs a self-serving or a socially harmful one?
      - _greim_ 5y ago
        > what consequences to billionaires face if they use their wealth in stupid and unproductive ways? Well this one's easy at least. They lose the wealth.
      - rufus_foreman 5y ago
        The difference is that governments don't spend their wealth in stupid and unproductive ways. They spend our wealth in stupid and unproductive ways.
  - jppope 5y ago
    Note: This was 5min of google search and reading abstracts/ overviews. Unfortunately I can't commit the amount of time necessary to provide a full rebuttal right now. From Representatives: - https://posey.house.gov/wasteful-spending/ - https://www.paul.senate.gov/wastereport - https://www.govinfo.gov/content/pkg/CHRG-114shrg95798/html/CHRG-114shrg95798.htm From the Media: - https://www.rd.com/list/wasteful-government-spending/ - https://www.forbes.com/sites/adamandrzejewski/2020/09/30/wheres-the-pork-us-taxpayers-funded-a-lot-of-wasteful-spending-2017-2019/?sh=4563d5523dc0 - https://www.scientificamerican.com/article/its-time-to-rein-in-inflated-military-budgets/ - https://www.nationalreview.com/news/rand-paul-outlines-54-billion-in-outlandish-government-waste-in-annual-festivus-report/ From Acadamia - https://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2020.305865 - https://www.sciencedirect.com/science/article/abs/pii/S003043871200004X
    - IgorPartola 5y ago
      Right. Waste happens in the government. None of this compares it to how wasteful an oligarchy would be, which was the original comparison.
- AnIdiotOnTheNet 5y ago
  And more money to billionaires will?
dcolkitt 5y ago
Along the points you bring up, John Cochrane had a fantastic series about why wealth taxes are such a terribly economic inefficient mechanism to raise revenue and why virtually no economists support them. https://johnhcochrane.blogspot.com/2020/01/wealth-and-taxes-overview.html https://johnhcochrane.blogspot.com/2020/01/wealth-and-taxes-...
- ruined 5y ago
  virtually no economists in a particular school. if you take a more literal view and see federal taxation as destruction of money rather than a means of raising revenue, its applications become clearer.
- throw0101a 5y ago
  > […] and why virtually no economists support them. You mean besides Piketty, Stiglitz (Nobel), and Krugman (Nobel)? * https://www.cnbc.com/2020/09/17/economists-stiglitz-and-piketty-us-needs-a-wealth-tax.html https://www.cnbc.com/2020/09/17/economists-stiglitz-and-pike... * https://twitter.com/paulkrugman/status/1088529094478872578 https://twitter.com/paulkrugman/status/1088529094478872578 While I'm sure he's good in his specialty, it seems like Cochrane does not understand macroeconomics and how debt-financed government spending works: * http://krugman.blogs.nytimes.com/2009/01/27/a-dark-age-of-macroeconomics-wonkish/ http://krugman.blogs.nytimes.com/2009/01/27/a-dark-age-of-ma... * http://krugman.blogs.nytimes.com/2010/02/23/brad-delongs-foolishness/ http://krugman.blogs.nytimes.com/2010/02/23/brad-delongs-foo... Further, I'm curious to know if he did a survey of economists to substantiate his claim of "no economists". Besides the three prominent ones mentioned above, there seems to be ongoing research on the subject and so it is hardly a settled matter: * https://www.brookings.edu/blog/up-front/2019/09/05/estimating-the-economic-impact-of-a-wealth-tax/ https://www.brookings.edu/blog/up-front/2019/09/05/estimatin... * https://www.nytimes.com/2020/02/21/us/politics/the-liberal-economists-behind-the-wealth-tax-debate.html https://www.nytimes.com/2020/02/21/us/politics/the-liberal-e...
  - dcolkitt 5y ago
    Only 7% of surveyed top economists disagreed with the statement that a wealth tax would be much more difficult to enforce than the existing tax code. https://www.igmchicago.org/surveys/wealth-taxes/ https://www.igmchicago.org/surveys/wealth-taxes/
eightysixfour 5y ago
While I think you hit the nail on the head, I think what we're seeing is a belief that the money being invested by billionaires is not doing anything useful, that's why people are calling for it to be taken by the government and redistributed.
- vlunkr 5y ago
  Probably because people view billionaires as mustache-twirling villains and have absolutely no idea what they do with their time or money.
  - AnIdiotOnTheNet 5y ago
    Rather we do have some idea what they do with their time and money: influence politics, lobby for regulatory capture, lobby against societally beneficial regulation, bust unions, rent-seek, astroturf, form monopolies and oligopolies, have outsized carbon footprints, avoid paying anything back to society, commit crimes and get away with them, etc. We see them as mustache-twirling villains because, well, they act like mustache-twirling villains.
    - pmoriarty 5y ago
      They also form dynasties of generations of extremely wealthy children, grand-children, and grand-grand-children, etc. It's arguable whether the people who originally accumulated all this wealth "earned" it (when many of them in large part merely took the wealth their employees made), but their descendants who just inherit their money certainly have in no way earned it. So should they get to keep it? For an insightful look in to the world of inherited wealth, see the documentary Born Rich[1], made by the heir to the Johnson & Johnson fortune, where he interviews all his other friends, who, like him, were born in to enormously wealthy families. [1] - https://www.youtube.com/watch?v=1sD3pG74Wv8 https://www.youtube.com/watch?v=1sD3pG74Wv8
  - danaris 5y ago
    Anyone who has amassed a fortune in the billions has necessarily done so through one of only two ways: exploiting the labour of very large numbers of poorly-paid people, or receiving it from those who have done so. Meanwhile, they have seen the plight of the billions of human beings who live in poverty and want, and chosen to use their vast resources almost purely to make more for themselves, rather than dedicate to alleviating such suffering even enough that their lifestyle is the slightest bit inconvenienced. The sanctity of "property ownership" is not so sacred a principle that it should take priority over wholly preventable widespread suffering and death. There is no moral argument that could possibly support this much of humanity's productive output being hoarded by so few, rather than going to improve the world in a myriad of ways.
Retric 5y ago
Traditional investing doesn’t make billionaires, they needed to be good at running a business, inherit it, etc. Which doesn’t correlate to being a great investor. So when you actually look at investments made by billionaires they tend to underperform. Part of this is simply seeking low risk diversification, but another part is many people assuming that because past risk taking worked so will future risk taking. This becomes really obvious when you start looking into former billionaires. Vast fortunes regularly evaporate.
- yayr 5y ago
  but they apparently still have built a useful organisation. So why take away their power over their organisation if the share price increases?
  - Retric 5y ago
    Nothing about what I said was tax policy, I am simply trying to counter a common misconception.
bwestergard 5y ago
"It does not help much to take wealth in terms of equity paper money away from people who know how to invest it efficiently and distribute it." This assumes what needs to be proven. Namely, the degree to which the wealth of billionaries under the status quo regulatory, financial, and tax regime reflects their outsized contributions to welfare. If we make a number of assumptions (e.g. perfect information, perfect competition, equal initial endowments, etc.) it's tautologically true that great wealth would reflect outsized contribution to preference satisfaction. But these assumptions are wildly unrealistic, and conflict with both everyday experience and historical reflection. More to the point, we all want our economic system to do more than merely satisfy preferences. Opioid manufacturers cultivated and satisfied preferences to the tune of billions of dollars. The impacts on well-being of users and their communities were, to put it lightly, mixed.
- yayr 5y ago
  agreed. However, what alternatives to preference satisfaction do we have to steer an economy? Is the issue here not the miseducation and misculturization of harmful preferences?
- simonh 5y ago
  >This assumes what needs to be proven. I think it has been, dramatically, over the last 120 years. Plenty of countries have tried radical appropriation and redistribution, and it failed spectacularly every time. Meanwhile a prominent Marxist country, China, turned to capitalism and within a generation has raised hundreds of millions of people out of poverty and into urban middle class lives. Meanwhile Cuba, Venezuela and North Korea. Of course Capitalism has failure modes, because people are imperfect. All the flaws levelled at Capitalism are also found in spades in alternate economic systems because they are flaws in us. That's where accountability through liberal democracy and a decent system of laws come in. Yes that's always a work in progress and no it's not perfect, but it does work.
  - pwinnski 5y ago
    This is a radical oversimplification of what has happened and is happening in China, conflating several things into one. China is still very much a communist country, and the raising of many people out of poverty is in large part a result of the government distributing the gains that have come from "special economic zones" into rural areas on a scale that would make a "tax on billionaires" seem like a quaint half-step. Allowing people to own and control private enterprises is a big step for China, but the gains from those private enterprises are still very much under the control of the Chinese government.
w0de0 5y ago
Good god, man. This is slavish. And - I'll note - not unpopular, which is distressing. Tax isn't punishment. Ever. Especially when tax rate is already so low that the proposed "emergency tax" is still less than historical income tax rates. Tax is part of the social contract that allowed those billionaires the stability, educated workforce, infrastructure, safety from theft, etc, etc, etc, needed to build and maintain their wealth. The idea that billionaires "invest [their wealth] efficiently and distribute it" is laughably sophomoric, a parody of the Gilded Age's self-serving justification for robber barons. Billionaires invest efficiently _for the preservation of their wealth across generations of their family_, only the most credulously optimistic model of capitalism supposes that this aligns with "distribution" (whatever that means - trickling down, eh?) or with the best investments for society at large.
- yayr 5y ago
  you should read again - systems for redistribution of wealth can be good if they are not broken. Income taxes e.g. are imo a great way to do this, if they cannot be avoided. However, to tax an increase in share price without any transaction is often counterproductive.
  - w0de0 5y ago
    You're absolutely right. Once I saw you characterize a tax as a punishment, billionaires as "people who know how to invest [wealth] efficiently and distribute it," and wealth as solely the result of "build[ing] economically viable organisations," I dismissed the details of your argument.
oliwarner 5y ago
Is a 100% tax on (eg) assets over $1bn a punishment? I'm not suggesting that exactly but I'm not against a wealth cap. I'm not sure what sort of person thinks they realise genuine benefit from spending time trying to spend it. Build a hospital. Subsidise public transport in your area. Do some good.

by yayr 5y ago

jppope 5y ago

> "the hard thing in this discussion is to differentiate between consumption and investment" Indeed. Even harder is to acknowledge our government already has enough tax money, and further tax revenue will not be used prudently, in the best interest of our country.

IgorPartola 5y ago
Citation needed.
- AnimalMuppet 5y ago
  Citation also needed for the opposite position - that the government will use the money well.
  - IgorPartola 5y ago
    Sure. But here is the thing: what consequences to billionaires face if they use their wealth in stupid and unproductive ways? At least for the government we have some recourse (elections, protests, public hearings).
    - AnimalMuppet 5y ago
      But to the degree that the reason for doing this is "the rich shouldn't have that much money", to that degree there's no pressure on the government to use the money wisely. And I don't like your question. Sure, billionaires can use their wealth badly. Why should they face consequences (other than no longer having what they have wasted)? That someone could misuse something is not a reason to take it from them and give it to someone else who could also misuse it. That is, I don't like your question because it implies that they should only be allowed to keep it if they are using it "properly". I think that the rule of law calls for a higher bar than that before taking peoples' stuff.
      - IgorPartola 5y ago
        The original proposition was that essentially an oligarchy is more efficient than our current system: billionaires will waste less money than the government on inefficiencies. In that light I don’t mean consequences as punishment but rather incentive. Why should a billionaire spend money on socially useful project vs a self-serving or a socially harmful one?
    - _greim_ 5y ago
      > what consequences to billionaires face if they use their wealth in stupid and unproductive ways? Well this one's easy at least. They lose the wealth.
    - rufus_foreman 5y ago
      The difference is that governments don't spend their wealth in stupid and unproductive ways. They spend our wealth in stupid and unproductive ways.
- jppope 5y ago
  Note: This was 5min of google search and reading abstracts/ overviews. Unfortunately I can't commit the amount of time necessary to provide a full rebuttal right now. From Representatives: - https://posey.house.gov/wasteful-spending/ - https://www.paul.senate.gov/wastereport - https://www.govinfo.gov/content/pkg/CHRG-114shrg95798/html/CHRG-114shrg95798.htm From the Media: - https://www.rd.com/list/wasteful-government-spending/ - https://www.forbes.com/sites/adamandrzejewski/2020/09/30/wheres-the-pork-us-taxpayers-funded-a-lot-of-wasteful-spending-2017-2019/?sh=4563d5523dc0 - https://www.scientificamerican.com/article/its-time-to-rein-in-inflated-military-budgets/ - https://www.nationalreview.com/news/rand-paul-outlines-54-billion-in-outlandish-government-waste-in-annual-festivus-report/ From Acadamia - https://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2020.305865 - https://www.sciencedirect.com/science/article/abs/pii/S003043871200004X
  - IgorPartola 5y ago
    Right. Waste happens in the government. None of this compares it to how wasteful an oligarchy would be, which was the original comparison.
AnIdiotOnTheNet 5y ago
And more money to billionaires will?

dcolkitt 5y ago

Along the points you bring up, John Cochrane had a fantastic series about why wealth taxes are such a terribly economic inefficient mechanism to raise revenue and why virtually no economists support them. https://johnhcochrane.blogspot.com/2020/01/wealth-and-taxes-overview.html https://johnhcochrane.blogspot.com/2020/01/wealth-and-taxes-...

ruined 5y ago
virtually no economists in a particular school. if you take a more literal view and see federal taxation as destruction of money rather than a means of raising revenue, its applications become clearer.
throw0101a 5y ago
> […] and why virtually no economists support them. You mean besides Piketty, Stiglitz (Nobel), and Krugman (Nobel)? * https://www.cnbc.com/2020/09/17/economists-stiglitz-and-piketty-us-needs-a-wealth-tax.html https://www.cnbc.com/2020/09/17/economists-stiglitz-and-pike... * https://twitter.com/paulkrugman/status/1088529094478872578 https://twitter.com/paulkrugman/status/1088529094478872578 While I'm sure he's good in his specialty, it seems like Cochrane does not understand macroeconomics and how debt-financed government spending works: * http://krugman.blogs.nytimes.com/2009/01/27/a-dark-age-of-macroeconomics-wonkish/ http://krugman.blogs.nytimes.com/2009/01/27/a-dark-age-of-ma... * http://krugman.blogs.nytimes.com/2010/02/23/brad-delongs-foolishness/ http://krugman.blogs.nytimes.com/2010/02/23/brad-delongs-foo... Further, I'm curious to know if he did a survey of economists to substantiate his claim of "no economists". Besides the three prominent ones mentioned above, there seems to be ongoing research on the subject and so it is hardly a settled matter: * https://www.brookings.edu/blog/up-front/2019/09/05/estimating-the-economic-impact-of-a-wealth-tax/ https://www.brookings.edu/blog/up-front/2019/09/05/estimatin... * https://www.nytimes.com/2020/02/21/us/politics/the-liberal-economists-behind-the-wealth-tax-debate.html https://www.nytimes.com/2020/02/21/us/politics/the-liberal-e...
- dcolkitt 5y ago
  Only 7% of surveyed top economists disagreed with the statement that a wealth tax would be much more difficult to enforce than the existing tax code. https://www.igmchicago.org/surveys/wealth-taxes/ https://www.igmchicago.org/surveys/wealth-taxes/

eightysixfour 5y ago

While I think you hit the nail on the head, I think what we're seeing is a belief that the money being invested by billionaires is not doing anything useful, that's why people are calling for it to be taken by the government and redistributed.

vlunkr 5y ago
Probably because people view billionaires as mustache-twirling villains and have absolutely no idea what they do with their time or money.
- AnIdiotOnTheNet 5y ago
  Rather we do have some idea what they do with their time and money: influence politics, lobby for regulatory capture, lobby against societally beneficial regulation, bust unions, rent-seek, astroturf, form monopolies and oligopolies, have outsized carbon footprints, avoid paying anything back to society, commit crimes and get away with them, etc. We see them as mustache-twirling villains because, well, they act like mustache-twirling villains.
  - pmoriarty 5y ago
    They also form dynasties of generations of extremely wealthy children, grand-children, and grand-grand-children, etc. It's arguable whether the people who originally accumulated all this wealth "earned" it (when many of them in large part merely took the wealth their employees made), but their descendants who just inherit their money certainly have in no way earned it. So should they get to keep it? For an insightful look in to the world of inherited wealth, see the documentary Born Rich[1], made by the heir to the Johnson & Johnson fortune, where he interviews all his other friends, who, like him, were born in to enormously wealthy families. [1] - https://www.youtube.com/watch?v=1sD3pG74Wv8 https://www.youtube.com/watch?v=1sD3pG74Wv8
- danaris 5y ago
  Anyone who has amassed a fortune in the billions has necessarily done so through one of only two ways: exploiting the labour of very large numbers of poorly-paid people, or receiving it from those who have done so. Meanwhile, they have seen the plight of the billions of human beings who live in poverty and want, and chosen to use their vast resources almost purely to make more for themselves, rather than dedicate to alleviating such suffering even enough that their lifestyle is the slightest bit inconvenienced. The sanctity of "property ownership" is not so sacred a principle that it should take priority over wholly preventable widespread suffering and death. There is no moral argument that could possibly support this much of humanity's productive output being hoarded by so few, rather than going to improve the world in a myriad of ways.

Retric 5y ago

Traditional investing doesn’t make billionaires, they needed to be good at running a business, inherit it, etc. Which doesn’t correlate to being a great investor. So when you actually look at investments made by billionaires they tend to underperform. Part of this is simply seeking low risk diversification, but another part is many people assuming that because past risk taking worked so will future risk taking. This becomes really obvious when you start looking into former billionaires. Vast fortunes regularly evaporate.

yayr 5y ago
but they apparently still have built a useful organisation. So why take away their power over their organisation if the share price increases?
- Retric 5y ago
  Nothing about what I said was tax policy, I am simply trying to counter a common misconception.

bwestergard 5y ago

"It does not help much to take wealth in terms of equity paper money away from people who know how to invest it efficiently and distribute it." This assumes what needs to be proven. Namely, the degree to which the wealth of billionaries under the status quo regulatory, financial, and tax regime reflects their outsized contributions to welfare. If we make a number of assumptions (e.g. perfect information, perfect competition, equal initial endowments, etc.) it's tautologically true that great wealth would reflect outsized contribution to preference satisfaction. But these assumptions are wildly unrealistic, and conflict with both everyday experience and historical reflection. More to the point, we all want our economic system to do more than merely satisfy preferences. Opioid manufacturers cultivated and satisfied preferences to the tune of billions of dollars. The impacts on well-being of users and their communities were, to put it lightly, mixed.

yayr 5y ago
agreed. However, what alternatives to preference satisfaction do we have to steer an economy? Is the issue here not the miseducation and misculturization of harmful preferences?
simonh 5y ago
>This assumes what needs to be proven. I think it has been, dramatically, over the last 120 years. Plenty of countries have tried radical appropriation and redistribution, and it failed spectacularly every time. Meanwhile a prominent Marxist country, China, turned to capitalism and within a generation has raised hundreds of millions of people out of poverty and into urban middle class lives. Meanwhile Cuba, Venezuela and North Korea. Of course Capitalism has failure modes, because people are imperfect. All the flaws levelled at Capitalism are also found in spades in alternate economic systems because they are flaws in us. That's where accountability through liberal democracy and a decent system of laws come in. Yes that's always a work in progress and no it's not perfect, but it does work.
- pwinnski 5y ago
  This is a radical oversimplification of what has happened and is happening in China, conflating several things into one. China is still very much a communist country, and the raising of many people out of poverty is in large part a result of the government distributing the gains that have come from "special economic zones" into rural areas on a scale that would make a "tax on billionaires" seem like a quaint half-step. Allowing people to own and control private enterprises is a big step for China, but the gains from those private enterprises are still very much under the control of the Chinese government.

w0de0 5y ago

Good god, man. This is slavish. And - I'll note - not unpopular, which is distressing. Tax isn't punishment. Ever. Especially when tax rate is already so low that the proposed "emergency tax" is still less than historical income tax rates. Tax is part of the social contract that allowed those billionaires the stability, educated workforce, infrastructure, safety from theft, etc, etc, etc, needed to build and maintain their wealth. The idea that billionaires "invest [their wealth] efficiently and distribute it" is laughably sophomoric, a parody of the Gilded Age's self-serving justification for robber barons. Billionaires invest efficiently _for the preservation of their wealth across generations of their family_, only the most credulously optimistic model of capitalism supposes that this aligns with "distribution" (whatever that means - trickling down, eh?) or with the best investments for society at large.

yayr 5y ago
you should read again - systems for redistribution of wealth can be good if they are not broken. Income taxes e.g. are imo a great way to do this, if they cannot be avoided. However, to tax an increase in share price without any transaction is often counterproductive.
- w0de0 5y ago
  You're absolutely right. Once I saw you characterize a tax as a punishment, billionaires as "people who know how to invest [wealth] efficiently and distribute it," and wealth as solely the result of "build[ing] economically viable organisations," I dismissed the details of your argument.

oliwarner 5y ago

Is a 100% tax on (eg) assets over $1bn a punishment? I'm not suggesting that exactly but I'm not against a wealth cap. I'm not sure what sort of person thinks they realise genuine benefit from spending time trying to spend it. Build a hospital. Subsidise public transport in your area. Do some good.