4 ms·

The argument of linear transfers, which is "my work could feed five people," seems logically false since there is a very real marginal productivity incentive. I

by tomrod 4y ago

The argument of linear transfers, which is "my work could feed five people," seems logically false since there is a very real marginal productivity incentive. If your job pays you 20% of your current salary, do you want to work as hard? Typically, though of course not always, the answer will be no. You'll work less, you'll take on less high-effort-required activities, and so on. This effectively means transfers are subadditive and you couldn't perform such algebra across a society. EDIT: Note for the numerous driveby downvoters that have failed to engage in discussion, thereby decreasing the quality of conversation. I am not against using wealth transfers where appropriate. My comment simply calls out that "my work is enough to feed five people" does not equate to "my work will feed five people through wealth transfers."

s1artibartfast 4y ago
I think you have a fair point, but it is important to note that the drop off in effort and utility depend on whether the worker is directly involved in the support of others. That is to say, it is very different if I take 20% of my time and directly give it to someone as support versus if I just trust that 20% of my time is taxed and somehow makes it too to one of 350 million people in the country.
- tomrod 4y ago
  Correct. There are decreasing returns to scale on taxation (which also justifies the Laffer curve/supply side/Voodoo economics, but that's another set of philosophical problems). The literature on optimal taxation is large and interesting.
  - s1artibartfast 4y ago
    I agree that someone could make an argument about losses and effectiveness, but my point was even simpler than that. When it comes to someone's willingness to work more to help another, I think contact and proximity to the recipient plays a big factor in what people are willing to do.
  - PaulDavisThe1st 4y ago
    the laffer curve is an abstraction, a thought experiment with no axis labelling, and no understanding of whether the axes scales are linear or not. it is therefore completely useless when it comes to making policy, because it provides absolutely no information on whether an X% tax will increase or decrease revenues. there are possible (imaginary) scenarios where the actual shape of the curve will result in increasing tax revenues up to above 90% taxation, and others where revenues drop with anything above 0% taxation. nothing about the concept of "decreasing returns to scale on taxation" is quantitative, and it is therefore essentially useless. I mean, sure, you can make the theoretical argument that "surely above some level of taxation, any further increase will result in decreased revenues", but since it is impossible to know what that level is, the argument is pointless.
    - tomrod 4y ago
      Indeed. Though there are studies that seek to estimate this in various ways (e.g. "no happier once you have $75k in wealth").
    - mech765 4y ago
      It seems to me that you have confused "decreasing returns" vs "negative returns."
      - PaulDavisThe1st 4y ago
        in what sense?
      - tomrod 4y ago
        Negative returns could indeed happen in cases of enforcement cost increases, but otherwise I think you're right.
kerkeslager 4y ago
> If your job pays you 20% of your current salary, do you want to work as hard? Typically, though of course not always, the answer will be no. If my job pays me 20% of my current salary, and gives the other 80% to the CEO, no, I would not work as hard. That's the situation we're in. That's what "quiet quitting" is. It's bizarre to look at the current incredible pay imbalances in America and assume that a more equitable society would give less incentives for the average person.
- tomrod 4y ago
  Not quite the same analogies and drivers from my earlier comment (your tangent on CEO to worker pay ratio versus the discussion on high taxation rates).
  - kqr 4y ago
    I think you might be missing their point. I'm already paid (less than) 20 % of the value of my output, because someone who is already very rich pockets the rest. If I could continue working as much as I do and get paid the same and also know that the other 80 % of my output feeds the homeless and seriously ill, that would be amazing. I would very likely work even harder.
  - kerkeslager 4y ago
    That's exactly the point. If you're worried that people won't produce enough because they aren't paid enough, fine. Even if we buy your view of the world where everyone's a sociopath and the only thing that motivates people is money, why are you insisting that the money to motivate people to produce has to be obtained by helping people less? Can't we help people, and pay CEOs less? Ultimately, you're not arguing that workers need to be paid to be motivated, because I'm not arguing against that. You're arguing that we can't help people because we have to pay CEOs exorbitantly.

by tomrod 4y ago

s1artibartfast 4y ago

I think you have a fair point, but it is important to note that the drop off in effort and utility depend on whether the worker is directly involved in the support of others. That is to say, it is very different if I take 20% of my time and directly give it to someone as support versus if I just trust that 20% of my time is taxed and somehow makes it too to one of 350 million people in the country.

tomrod 4y ago
Correct. There are decreasing returns to scale on taxation (which also justifies the Laffer curve/supply side/Voodoo economics, but that's another set of philosophical problems). The literature on optimal taxation is large and interesting.
- s1artibartfast 4y ago
  I agree that someone could make an argument about losses and effectiveness, but my point was even simpler than that. When it comes to someone's willingness to work more to help another, I think contact and proximity to the recipient plays a big factor in what people are willing to do.
- PaulDavisThe1st 4y ago
  the laffer curve is an abstraction, a thought experiment with no axis labelling, and no understanding of whether the axes scales are linear or not. it is therefore completely useless when it comes to making policy, because it provides absolutely no information on whether an X% tax will increase or decrease revenues. there are possible (imaginary) scenarios where the actual shape of the curve will result in increasing tax revenues up to above 90% taxation, and others where revenues drop with anything above 0% taxation. nothing about the concept of "decreasing returns to scale on taxation" is quantitative, and it is therefore essentially useless. I mean, sure, you can make the theoretical argument that "surely above some level of taxation, any further increase will result in decreased revenues", but since it is impossible to know what that level is, the argument is pointless.
  - tomrod 4y ago
    Indeed. Though there are studies that seek to estimate this in various ways (e.g. "no happier once you have $75k in wealth").
  - mech765 4y ago
    It seems to me that you have confused "decreasing returns" vs "negative returns."
    - PaulDavisThe1st 4y ago
      in what sense?
    - tomrod 4y ago
      Negative returns could indeed happen in cases of enforcement cost increases, but otherwise I think you're right.

kerkeslager 4y ago

> If your job pays you 20% of your current salary, do you want to work as hard? Typically, though of course not always, the answer will be no. If my job pays me 20% of my current salary, and gives the other 80% to the CEO, no, I would not work as hard. That's the situation we're in. That's what "quiet quitting" is. It's bizarre to look at the current incredible pay imbalances in America and assume that a more equitable society would give less incentives for the average person.

tomrod 4y ago
Not quite the same analogies and drivers from my earlier comment (your tangent on CEO to worker pay ratio versus the discussion on high taxation rates).
- kqr 4y ago
  I think you might be missing their point. I'm already paid (less than) 20 % of the value of my output, because someone who is already very rich pockets the rest. If I could continue working as much as I do and get paid the same and also know that the other 80 % of my output feeds the homeless and seriously ill, that would be amazing. I would very likely work even harder.
- kerkeslager 4y ago
  That's exactly the point. If you're worried that people won't produce enough because they aren't paid enough, fine. Even if we buy your view of the world where everyone's a sociopath and the only thing that motivates people is money, why are you insisting that the money to motivate people to produce has to be obtained by helping people less? Can't we help people, and pay CEOs less? Ultimately, you're not arguing that workers need to be paid to be motivated, because I'm not arguing against that. You're arguing that we can't help people because we have to pay CEOs exorbitantly.