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Reducing Wealth Inequality: The Wealth Time Limit
- deleted 3y ago[deleted]
- blueflow 3y agoWouldn't have inflation have a similar effect? High inflation makes it unprofitable to keep large sums of money around...
- unglaublich 3y agoSo, you put it all in assets and real estate to hedge against inflation.
- dontreact 3y agoNot if your wealth is in an appreciating asset that tends to appreciate faster during inflation such as real estate
- ethanbond 3y agoEasiest and most fundamental way is Singapore’s model of having public ownership of nearly all land and leasing it out on 99 year leases. All wealth (which is definitionally excess productive power) ultimately accrues to land value, so this is the only point of intervention you need. In places with a strong concept of private ownership of land already, you can get economically identical effects from a high Land Value Tax.
- refurb 3y agoEhhh… 1/3rd of Singapore land is still freehold. There is a ton family wealth tied up in plots worth $100M+. And not to mention the government’s encouragement of property flipping. They sell public housing below market cost, then intentionally prop up open market values by limiting new public housing. There are a few places where people bought at $400k and after the 5 year lock flipped it for $1M. 99 year lease does free up property for future use, but nobody holds until lease expiration, they sell to extract the wealth, then someone buys the remaining lease at basic the NPV of the current rental rates. And in addition, Singapore is a fantastic place to transfer wealth generated overseas. Family offices are encouraged to move there, and the rule of law protects that wealth vigorously. And the capital gains tax is 0%. You can bring in vast sums of wealth and generate 100% tax free earnings through investment. It’s a pretty sweet place to be rich.
- ethanbond 3y agoTotally. The point isn’t to make someplace a bad place to be rich, nor to prevent richness. The point is to prevent total capture of the economy by the wealthy. The fact that Singapore’s economy has grown so obscenely without the apparently corequisite skyrocketing inequality is pretty remarkable (even if imperfect etc).
- fragmede 3y agoThere are poor people in Singapore. They're better hidden, and a different color, but they're there. There's also no minimum wage, for better or worse.
- cycomanic 3y agoFrom my visits to Singapore I'd say it does have skyrocketing inequality. The inequality is just "exported", i.e. all the poor are not Singaporeans, but largely from Malaysia. Essentially the extremely strict citizenship laws in Singapore make the citizenship itself extremely valuable hence less poverty.
- jhanschoo 3y agoYou really haven't seen much of S'pore if you identify M'sians as the disadvantaged in S'porean society. Global labor arbitrage is a huge component in S'pore's economy, so in addition to importing talent for it's more productive industries, S'pore is an attractive destination for less developed SEA and South Asia regions who arrive on a temporary pass for manual labor or domestic labor for a comparatively low wage that translates to comparatively more back home. A major issue regarding this is these communities' isolation and dependence on their employer during their time in S'pore, with a lack of options or recourse should issues arise. M'sian nationals, especially Malaysian Chinese, to my perception, typically work the same industries as the citizenry, and seem to be favored for permanent residency and citizenship. The citizenship process is a black box, but it is generally observed that Malaysian Chinese are the most likely and fastest to get citizenship, and it is speculated that it is for reasons of cultural affinity and racial quota.
- ffgjgf1 3y ago> All wealth (which is definitionally excess productive power) ultimately accrues to land value, so this is the only point of intervention you need. that was generally accurate prior to the mid 1800s. I don’t see at all how this would be particularly (or at all) effective on its own these days.
- ethanbond 3y agoDo people no longer pay high prices to be near locations of high productivity?
- ffgjgf1 3y agoThey do. What about the remaining 50-98% of wealth? This would do barely anything to solve the current problems related to inequality. The 99 years would just be priced in and everything would more or less stay the same. All of that Georgism stuff makes about as much sense in the context of modern economies as the gold standard.
- deleted 3y ago[deleted]
- ethanbond 3y agoYou oughta read the book :) People were already making the same argument in the late 1800s since even then wealth appeared to be detached from land. But it turns out it's not.
- ffgjgf1 3y ago> But it turns out it's not. Right. That’s certainly a very convincing argument.. > People were already making the same argument in the late 1800s And they were already partially correct. > You oughta read the book :) What book?
- notahacker 3y agoIf you're an average early-mid career person you pay more than your net worth to be near locations of high productivity. If you're a billionaire, you pay a small fraction of your net worth. If your wealth is hereditary and you don't actually produce anything yourself, you don't even need to live in a high productivity location Depends on who you think should be paying the most, I guess...
- bryanrasmussen 3y agoHow does that theory explain this https://smartwealth.sg/income-inequality-singapore/ https://smartwealth.sg/income-inequality-singapore/
- ethanbond 3y agoSkyrocketing wealth, skyrocketing quality of life, and decreasing wealth inequality? It explains it as-is. It’s an economic powerhouse with almost zero drag on its markets (thus skyrocketing wealth) that also semi-effectively mitigates productivity capture by the upper classes.
- bryanrasmussen 3y agoThanks
- dontreact 3y agoThis is a nice policy but unless you start immediately backdating it (which would be far more disruptive than a standard sized wealth tax of some kind and would in effect be a one time enormous wealth tax) since the effects would take a very long time to kick in, how can we be sure that the rules won’t sinply get eliminated 100 years from now once a few ultra powerful billionaires in even more full control of the system decide “actually no let’s not do it” So yes this is a nice equilibrium state but I don’t see the vision of this as necessarily helpful for moving to a better state. What are the policies that can be implemented in the next 10 years to address this problem?
- notahacker 3y agoThis is a surprisingly weak theory for an ex trader with an Econ degree from LSE. Rich people tend to store less of their wealth in physical property than the middle classes. This is much, much worse news for the inheritors of a small family house (or indeed someone that buys a short lease because it's all they can afford) than the Musk/Bezos dynasties. Unless you're setting term limits for share ownership, and that comes with complications of its own...
- unglaublich 3y agoThat's only because the banks and government leverage the "middle class" into borrowing a decade's salary to invest in the housing pyramid.
- notahacker 3y agoThe middle class make their own decision to borrow a decade's salary because that's better than paying the decade's salary on rent and not owning the house at the end of it.
- Eddy_Viscosity2 3y agoThe middle class did not decide that there should only be these two choices. This was put upon them.
- notahacker 3y agoSure, if you don't already own a house you have a choice of renting or buying one, or not having a house but still needing somewhere to live. What would you propose as an alternative?
- johnrob 3y agoBuild more homes.
- unglaublich 3y agoInheritance causes discrepancies in economic contributions and wealth. You can work 50 hours a week, cleaning and maintaining, but the wealth you will build is peanuts compared to a typical top 10% inheritance. This will demotivate people from providing services to society. Why "work your ass off" if you'll never, ever be able to obtain a nice property that inheritees get while doing nothing?
- verteu 3y agoHow much is a "typical top 10% inheritance" in the US? According to this, it's under $175k, which hardly guarantees a lifetime of luxury: https://www.federalreserve.gov/econres/notes/feds-notes/wealth-and-income-concentration-in-the-scf-20200928.html https://www.federalreserve.gov/econres/notes/feds-notes/weal... (That number does seem low to me, since it also claims that families in the top decile (excluding top 1%) have ~$4mm in wealth.)
- ada1981 3y agoIf the wealthy spend on wealth producing assets, how does that help?
- JoeAltmaier 3y agoIt keeps the slaves busy doing something for minimum wage! They should be grateful!
- crote 3y agoI don't see the 150-year system working. What's the start date? How do you deal with assets increasing in value? What about assets being transformed to another form? If I inherit 100M, invest it and turn it into 110M, am I allowed to keep the 10M when I have to pay back the original 100M? If I become an employee of My Dads Money Inc. and get paid 100M / year for doing nothing, can I keep all of it?
- kkfx 3y agoIs the author another voluntary or paid PR of the WEF "in 2030 you'll own nothing"? Because well, people do works for themselves AND their families, to leave a legacy behind them. Cut this and you only get people interesting in their own lifespan and no more. The result is a failing society who do not try to evolve anymore and in practice you'll get some who own anything and all the rest their slave. NO THANKS. Instead we MUST incentivize ownership, making people works again to improve their life, modern society have chased to do so and as a result they can't evolve anymore because knowing the target is sharing economy, "in 2030 you'll own nothing" (meaning clearly the WEF et al. want to own anything) means "I do not want to work for nothing".
- cycomanic 3y agoWhat is WEF? Also it seems like you missed the whole point. The problem is not that less people want to own, or that people are lazy (productivity has constantly increased over the last century).
- kkfx 3y agoWorld Economic Forum, the (in)famous https://youtu.be/Hx3DhoLFO4s https://youtu.be/Hx3DhoLFO4s to be followed by the now-deleted speech of Klaus Schwab (was https://youtu.be/NWHDgXhMkgs https://youtu.be/NWHDgXhMkgs if someone have a copy) at G20/2022 about sharing economy, the end of private property JUST for 99%, the smart cities, and we know modern Fordlandia like Telosa, Arkadag, Prospera, Innopolis, ... where people inside own nothing, decide nothing and have to work to earn enough to pay services they need to live. A kind of "fun" labor camp. Because that's the real point. Live just few with total ownership and all others as their slaves, happy in the Canon model https://www.theverge.com/2021/6/17/22538160/ai-camera-smile-recognition-office-workers-china-canon https://www.theverge.com/2021/6/17/22538160/ai-camera-smile-... or like https://youtu.be/NXyzpMDtpSE https://youtu.be/NXyzpMDtpSE because that's what we talk about. A democracy is composed by humans, FREE Citizens, peer to peer, not by some "expert" rulers who pasture the masses. In a democracy any one form a family, potential more than one, some no one, genes travel, ideas travel, the work of anyone change hand a generation after another. This determine the whole society movement. In the no-ownership for almost all model, like China BTW, people are ISOLATED humans in a factory, they can only work, they do not decide where the society goes, they do not have families they LIE to themselves in a kind of game, or matrix (the movie), working following the ruling class decision instead of determine them through Democracy. Statistically only few get and remain rich as a family for more than two or three generations, enterprises owned by single families are damn rare for medium or larger ones, there is not only no need to do more, there is actually a need to do LESS against the ownership. Infinite growth can be substituted with infinite evolution, if we respect private ownership and push the middle class, or we can goes to a new middle age, as we do today following the Schwab/nazi model (because YES, the WEF model is the nazi German economy model witch is the China model, differences are minor) and https://www.theguardian.com/world/2021/nov/17/nazis-based-their-elite-schools-on-top-british-private-schools https://www.theguardian.com/world/2021/nov/17/nazis-based-th... to the sake of a new large plebs who work like the middle age one, and few very rich that profit from the mass works and ignorance.
- notacoward 3y agoThis is not all that different in effect compared to a simple wealth (and estate) tax. If you squint a bit, it's a deferred 100% tax. The main reason to prefer this one AFAICT is that it makes easier to implement the first part (no tax) now and head off the forfeiture at some politically convenient moment before it happens. Kind of like all of "effective altruism" where the short-term effect of a few people getting rich is very real but the long-term effect of helping society is only theoretical and (intentionally) unlikely to materialize. Not on board with that. Just make people pay their taxes already.
- slillibri 3y agoI'm a bit confused on how this would work. My cousin's farm originally belonged to my great uncle. It's been a working farm, in our family, for nearly 150, if not more. So if the 150 years has passed, does he need to vacate the farm? My uncle currently lives on my grandfather's farm, and that has been in our family for the same amount of time. Neither of these people are very wealthy. This type of thing is pretty common where I grew up. Middle class people inherit working farms and continue working them.
- sumuyuda 3y ago> I prefer allowing the wealthy to spend their own money, as it is more compassionate, less extreme, less dramatic, and doesn’t involve state intervention. Pretty sure the wealthiest people in the world didn’t get there by being a nice person. They most likely exploited (likely legally) people and the environment to acquire their wealth. Why give them compassion and not the people they harmed?
- zer8k 3y ago> Keynes’s dream that we could all work for only 15 hours a week could finally be true – with only one small, simple (but transformative) change. What the author fails to mention is Keynesian economics is how we ended up saddled with absurd debt. The "wealthy" are allowed to utilize this debt cheaply under Keynes. For all the author talks about fixing the alleged wealth inequality caused by inheritance this single conclusion undermines a lot of work in the previous paragraphs. My family matters more to me than any sort of baseless economic theory. If I knew my descendants would be forced to spend their inheritance I'd justify spending the money on exploiting any loophole available to avoid that. As it turns out, this is exactly what would happen under the proposed system and turning people into serfs with 99 year leases won't fix it. The theoretical "good citizen" doesn't exist and people will naturally do whatever it takes to preserve themselves and their wealth. The problem IS Keynesian economics that allowed such a disparity to exist. Taxing more won't fix it. I already pay enough tax as it is to wonder why the hell I even work. Imagine not even owning property your family can use in perpetuity. This is an absurdity that is advocating for feudalism where your lord is the government (which is already the case anyway).
- snapplebobapple 3y agoThis article is totally out to lunch. Ignoring the myriad of obvious problems with a wealth time limit (and the obvious problems with current copyright law), lets just look at the worldview underlying that. They claim the world's wealthy suck up the wealth of everyone else by causing lower wages, high house prices and a lack of jobs in certain areas. Then, instead of going into the mechanism of how that might happen they just decide the solution is copying the broken copyright regime and applying it to wealth. This is lazy and/or stupid. The mechanism that allows the wealthy to do the subset of the claims that are plausible (as opposed to out to lunch) is market power. They own or control companies that can abuse market power to extract rents. The solution therefore, isn't some screwed up extra beaurocracy to add a broken copyright regime to wealth. The solution is break up the market power abusing companies! Bring antitrust back to near pre rehnquist supreme court levels and start breaking up the amazons, microsofts, exxons, bayers, facebooks, conde nasts, etc of the world.
- kthejoker2 3y agoWe already have a wealth decay function, it's called taxation and when properly applied can absolutely redistribute wealth ie "reduce inequality."
- xracy 3y agoI feel like you have to be pretty far from reality to think that if this would impact the wealthy in any meaningful way, that they would also let it happen. This person's view of "voluntary spending" vs. "involuntary taxation" is so whacky also. 1st off, if the gov't makes you sell it after 100 years, it's not "voluntary". 2nd, in what world would you not just... transfer it to another person you know, and have them transfer it back. 3rd, How many wealthy families actually own the same piece of property for >100 years? Wealth = Power, if you want money from the wealthy to leave the hands of the wealthy, the gov't is just going to have to take it from them. Now, you can decide what you want to tax, OR you can do what we've done in America, and just pretend this isn't a problem. Some possible 'what's (in rough order of how much I think they actually solve the problem): 1. Treat Capital Gains, and Stock compensation like the income it is and tax it accordingly (I know this won't be popular on hacker news, but this is how CEOs get overpaid). 2. Increase Marginal income tax back to what it was when the US had less wealth inequality (1965 had 70%) 3. Change the inheritance tax over $5M to be like 95% (you get $0.05 on the dollar for every dollar you inherit past $5M) 4. Wealth Tax (probably strictly worse than every other option, cause "stonks", but it's not nothing) How to make this change is the real '?', because while we could enact this change it won't happen as long as the people with the money can convince us that it's actually in our best interest for them to have the money. In an election year, I would start by voting out anyone who has removed the word "tax" from their legislative vocabulary. After that, I would vote out anyone who doesn't vote to increase taxes on the rich. (I'm not specifying parties here, but anyone who takes money from Grover Norquist is a problem). "like being at a firefighter conference and no one's allowed to talk about water." [1] [1] https://www.youtube.com/watch?v=P8ijiLqfXP0 https://www.youtube.com/watch?v=P8ijiLqfXP0