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The concept of "passive income" is almost a scissor concept. Or maybe only if you couple it with the categorical imperitive. On the one hand, it's so obviously

The concept of "passive income" is almost a scissor concept. Or maybe only if you couple it with the categorical imperitive. On the one hand, it's so obviously true that it would be great to have passive income. Draw the salary you're drawing now, with some growth, and not have to work. On the other hand, if everyone had access to this capability then society and civilization would grind to a halt. People make things; if people don't make things, then we don't eat, we don't drink. If the goal is to have a system where everyone can have passive income, then achieving that goal is the end of the world. The categorical imperative roughly says that something is moral only if its universal adoption would benefit society. So there is a break there. The idea of passive income is isomorphic to rent seeking, which we generally agree is a bad thing.

notatoad 2y ago
"passive income", in it's original iteration, wasn't the idea that you could make money by doing nothing. The idea was that you made something or did something that you were uniquely able to make or do, and then the result of your labour would make money for you while you put in minimal continued effort. the version of passive income where you don't do anything productive at all, ever, and just put up some initial capital in exchange for even more money back, is always a scam. some people might come out ahead sometimes, but more people will lose than win.
- andai 2y ago
  >just put up some initial capital in exchange for even more money back Isn't that how index funds work?
  - sam1r 2y ago
    Well, not many index funds succeed, in that same proportionate rate.
  - markus_zhang 2y ago
    People believe in index funds because of multi-decades of globalization and (in general) cheaper money, which has been less and less true since 10 years ago. Even if you bought some during the 90s, you still need a tremendous belief in yourself and the market to hold them for 30 years. It's not that easy. I know many people put the fund into a retirement fund, but 1) is every body consistently doing that for 30 years? and 2) what if the market sucks when you retire? I still think that's not a bad idea, maybe one of the best for lay persons.
    - philsnow 2y ago
      > People believe in index funds because of multi-decades of globalization At some point we're going to reach the heat-death of the economy and we'll be "completely globalized", I guess?
    - lotsofpulp 2y ago
      > what if the market sucks when you retire? You don’t have to liquidate all of your investments on your retirement date. If the market sucks so much for 5+ years and your government can’t get it pumped back up, you probably have a bigger problem than your retirement savings, such as food and energy and security shortages. It would be bold to bet against a government not constantly decreasing the purchasing power of its currency to prop up asset prices, especially with declining proportions of young people. The political apparatus will want to maintain old people’s position at the top of the social hierarchy, and if their purchasing power isn’t maintained so they can keep buying the fruits of others’ labor, it means the country is dissolving.
      - KK7NIL 2y ago
        > If the market sucks so much for 5+ years and your government can’t get it pumped back up, you probably have a bigger problem than your retirement savings, such as food and energy and security shortages. The S&P500 was flat or negative from 2000 to 2012. And this isn't unusual. > It would be bold to bet against a government not constantly decreasing the purchasing power of its currency to prop up asset prices, especially with declining proportions of young people. The political apparatus will want to maintain old people’s position at the top of the social hierarchy, and if their purchasing power isn’t maintained so they can keep buying the fruits of others’ labor, it means the country is dissolving. How does the government decreasing the purchasing power help old people? This is quite the opposite, retirees survive off of a fixed income (mainly from welfare and pensions but also fixed income investments since they shouldn't risk the stock market) and are the most hurt by inflation.
  - apeescape 2y ago
    It's not guaranteed that you get more money back from an index fund (unless you've found an arbitrage, but that's a corner case). Even the bigger and stabler indexes like the S&P500 have their ups and downs, both on a daily level but also over longer time spans. The long-term trend has been positive for these types of indexes, but remember that past performance doesn't guarantee future profits :)
    - Ekaros 2y ago
      One needs to look at multiple markets like for example Japan. Which really points that future growth is not guaranteed.
    - krazii 2y ago
      Sure, it is not guaranteed profit, but it is certainly not "always a scam" as previous poster put it. It is very likely a way to make profit.
- hifromwork 2y ago
  >just put up some initial capital in exchange for even more money back, is always a scam. some people might come out ahead sometimes, but more people will lose than win. How so? My all-world index funds are doing pretty well. For more risk averse, almost every buyer of USA governmental bonds gets "even more money back" in exchange for the initial capital. I don't think that's a scam either.
  - shnock 2y ago
    Not everyone can buy USA bonds. Is the population of winners and losers all humanity?
    - s1artibartfast 2y ago
      The money that is used to buy the bonds goes to the government, and then into the pockets of the citizens. The bond holders tend to be the tax prayers as well, so it is almost like a partial rebate.
  - rlayton2 2y ago
    There is a risk, however small, that your bonds won't be paid back leading to a large loss.
    - eru 2y ago
      There's also the very real risk of bigger than expected inflation.
  - khuey 2y ago
    > For more risk averse, almost every buyer of USA governmental bonds gets "even more money back" in exchange for the initial capital. In nominal terms, sure. In real terms, ask the banks that bought 30 year treasuries in Spring 2020 how that's going for them.
    - ensignavenger 2y ago
      The problem for some of those banks wasn't the 30 year treasuries, it was that they bought those treasuries with other peoples money, and other people did not commit to 30 years, so now when the other people come to get their money, the bank doesn't have it. The 30 year treasuries are still doing just fine, in accordance to the terms of the treasury when it was bought.
- markus_zhang 2y ago
  Yeah, nowadays "passive income" is basically debt interests (like bonds) or rental income, both of which actually need a lot of work. I rarely traded financial instruments so cannot say for that, but as a small landlord I wish I never entered the business. Like, all businesses need initial investment AND a lot of continuous effort and learning, and are probably boring (or VERY barricaded) because otherwise people are going to swarm in. I need to know the market, the laws and regulations, and some other stuffs, most of which are extremely boring and not really "hackable" (as for hackers) because accountants and governments already sorted everything up to make sure it's hard for small businesses to evade tax -- You can learn which parts are expenses in an afternoon, and then you have to deal with a lot of headaches. I know some people who own gas stations and large depanneurs (in QC they are independent convenient shops), which are luxurious on face, but they either have to pick a remote one (away from competition from supermarkets) or/and work 7 days without hiring an extra hand. They grind for 10 years and sell the business when time is good.
  - SirMaster 2y ago
    Rental income doesn't need any work if you are just an investor though. I don't do a single thing. The people who are managing the deal are the ones who do the work and hire the workers to work on site and such. They of course get an even better return during the sale, but I am happy with what I get for doing nothing. My rental properties are paying me a decent passive income of about 6%, and additionally the total investment about doubles in roughly 5 years. Also the tax advantages are pretty huge with the depreciation and the ability to take the money from a sale and put it into a new property with no tax. So say you start with an initial $100K investment. That pays back about 6K a year for 5 years and then turns into about 200K after 5 years which you then put into a new property and make 12K a year, and so on and so on. So if you start with 100K when you are say 25, then when you are 50, you will have around 1.6M in property assets making you about 96K a year in passive income, where the depreciation on the property value and the assets in the property outweigh the tax on the income, so that income is all tax free. And that calculation is assuming you don't put even more capital in from some other source. Of course it's a roughly average return assumption. Some properties will do better and others will do worse, but it's been my experience that it's about right. Of course this is only one of my investment baskets. I allocate roughly half of the income that I can invest into real-estate like this and the other half into low cost index funds.
- m463 2y ago
  I think "passive income" is ambiguous, and people will sell it one way, and buy it another. wikipedia seems to have a broad definition of it. https://en.wikipedia.org/wiki/Passive_income https://en.wikipedia.org/wiki/Passive_income I see people saying passive income is not always hands off. I wonder if they are right or the "hands off" definition doesn't fit their situation.
- nerdponx 2y ago
  > put up some initial capital in exchange for even more money back The "even more money back" part is, in principle, compensation for you gathering the capital together and taking on the risk of losing. Not that it works out that way in practice.
  - eru 2y ago
    Also just compensation for the opportunity cost of not having access to your capital for a while.
- miki123211 2y ago
  > the version of passive income where you don't do anything productive at all, ever, and just put up some initial capital in exchange for even more money back, is always a scam No, that's just investing. This is how savings accounts work, this is how CDs work, this is how treasury bonds work, this is how passive investing (e.g. via ETFs on index funds) works, and there are many, many more examples. If you're keeping your retirement savings in an IRA / other local equivalent, whether owned privately or by your government, the same processes happen behind the scenes. You put in capital, you lock that capital away for a while, you get back more capital later. The differences here are in terms of possible returns. Bonds have (relatively) low returns but almost 0 risk, index funds have significantly higher returns but are also higher risk, though it's still pretty low if your time horizon is multiple decades, and there are crazy investments (think Bitcoin) with possibly eye-watering returns, but also an enormous amount of risk. Now investments with "guaranteed" eye-watering returns (think >10% per year) and apparently 0 risk? Yeah, definitely a scam.
  - immibis 2y ago
    If everyone does it, the world grinds to a halt and everyone dies.
    - simmerup 2y ago
      Well, everyone can’t do it because not everyone has access to capital
    - georgeecollins 2y ago
      What really happens: if everyone tries to acquire a particular income producing asset, the asset gets so expensive that the return is not worth the risk plus the time value of the money it could generate. Stocks in the 1920's, Tokyo real estate in the 1990s, US housing the mid 2000's...
      - eru 2y ago
        There was a US housing bust in the late 2000s, but there was never a bubble in the mid 2000s. Contrary to popular opinion. Otherwise I agree that in principle and in general all else being equal increasing prices lead to lower returns.
- jayd16 2y ago
  > more people will lose than win. It's not necessarily zero sum. If money is invested to produce value instead of simply moving it around then everyone can benefit.
  - schmidtleonard 2y ago
    Yes, though it's important to note that the economic notion of value is weighted according to wealth and therefore more than a bit weird. Feeding an orphan creates no "value" because they have no money to pay you with, while merging companies into a mega-monopoly that can shake down the rest of the economy creates loads of "value" because it pays rich investors huge dividends. Of course, there are plenty of honest ways to create value and get paid for it, and that's pretty cool. Both extremes exist, most things are in the messy middle, and reasonable minds can differ about which way the system leans and what should be done about it, if anything. Another piece of important context is that the US is a developed economy, not a growth economy. If the pie is growing at 2% and the capital slice of the pie is growing at 10%, anyone who lives in the remainder and argues that their slice is being grown is a fool.
    - Aeolun 2y ago
      > Feeding an orphan creates no "value" because they have no money to pay you with Only because it’s illegal to make them work? I imagine it could be quite lucrative.
      - yoyohello13 2y ago
        Big bad government enforcing those pesky human rights.
    - jayd16 2y ago
      I think people understand that, for example, investing in schools generates more value than you put in.
      - eru 2y ago
- kmeisthax 2y ago
  The original iteration of passive income was feudalism. It itself was a set of interconnecting passive income schemes[0], ultimately derived from your ability to own the most economically valuable land. This scheme hinges upon your ability to enclose and exclude access to that land by force - not prior labor paying off over time. Of course, the only passive income schemes that work today are the "prior labor" type. But that's because of copyright and patent law, which exist specifically with the idea that you can make something valuable now and charge the public for it later. A creative work or an invention is itself land being excluded by force, but this is a magical abstract land of nearly infinite size[1]. It's enclosers are empowered not through direct force, but through the blessing of a legal priesthood. Ok, I suppose if we're including force and feudalism, we probably should also include, say, organized crime. But in that case the labor isn't stored, it's slaved: you find suckers and scam them into doing crimes to your benefit, then get them to continue working for you, because if they ever leave you can just kill them, or sick the Feds on them. Y'know, I'm starting to think passive income is actually just a funny way to say theft... [0] The two schemes I'm thinking of are manorialism, and something akin to modern rent extraction or "chokepoint capitalism" in which you own a road or river and can charge money to people passing through your land. I forget the name of the latter, and there's probably additional relationships I'm not counting. I know the Holy Roman Empire was lousy with the latter kind. [1] Since there's far more of this creativity land than there is land on Earth, it's far harder to find land that people want or have to pay for. That's why entertainment is such a ridiculously hit-driven business and why entertainment companies hate rights reversion so much.
- throwaway2037 2y ago
  About your second paragraph, to be fair, most passive income schemes involve starting capital (a large amount). Then, this capital is invested into _relatively_ safe or low-vol assets (investment property, gov't bonds, utility stocks for divs), and passive income is received. Alternatively, you could buy something like a stable, middle-aged oil or natural gas rig. Or managed, commercial forest. Or rights to media to receive royalties. Yes, scams can exist in any investment scheme, but the previously mentioned ones are accessible, and safe for 1-5% of people with sufficient capital. What bothers me the most about the endless YouTube videos and "financial advice" blog posts about passive income: They fail to explain how you acquire the initial capital! Frequently, they saved millions from a previous job, like a Wall Street trader/salesperson or a senior FAANG engineer. I liked this video from Plain Bagel, "The Passive Income Scam": https://www.youtube.com/watch?v=AqZbO8Ojhmw https://www.youtube.com/watch?v=AqZbO8Ojhmw
the_sleaze_ 2y ago
With respect, I think you have it entirely backwards. (First, "passive income" means "almost hands off, but not entirely") Progress in technology is making things - better quality, less effort. Amazon Warehouses for example. Just a few years ago they took at least a few dozen people in rotation, now takes a man and a dog - the man to feed the dog and the dog to bite the man if he falls asleep. Since so much can be done with so little effort it seems natural that if wealth doesn't concentrate at the top then most people would have essentially passive income streams.
andai 2y ago
>If the goal is to have a system where everyone can have passive income, then achieving that goal is the end of the world. If AI and robotics continue to be developed, then eventually most human labor becomes uneconomical by comparison. At that point, the system provides passive income on a mass scale (UBI) to prevent its own violent destruction. At least, that's the good ending.
- ElFitz 2y ago
  To me, a major obstacle on the path to UBI is that it seems to conflict with the interests of those who benefit from the current status quo. If everyone receives a sufficient basic income, who will fix their toilets or clean their yachts? If the answer is ’no one’, then I’m afraid we’ll need significant advances in automation and robotics—or pitchforks—before we see UBI implemented. But my point of view may be simplistic, and wrong.
  - ryandrake 2y ago
    Technology is quickly helping to eliminate the "pitchfork" option. By the time we are in a world where human labor is unnecessary or worth nearly nothing, the elite will have all the automated surveillance and robo-policing technology they need to prevent rioting and pitchforks, and more secure ways to remain safely isolated from the rabble. When it comes to "what Sci-Fi future we're headed towards" I would bet on something like Elysium.
    - ElFitz 2y ago
      It might indeed be easier to develop automated surveillance, reinforce police states, and isolate themselves, than create working robot-plumbers, automated 3 star worthy kitchens, and self-cleaning boat decks. And it might be cheaper for them than UBI.
  - andai 2y ago
    To clarify, the "human labor no longer exists in a meaningful way" thing depends (as far as I can tell) on "robots are able to perform all human labor", so their yacht would be cleaned by robots. Though I imagine they might hire humans anyway, as some kind of status symbol! (Artisanal, like hand-crafted items today.)
seizethecheese 2y ago
> The categorical imperative roughly says that something is moral only if its universal adoption would benefit society. Really? I actually don’t think that’s right at all. For example: nobody should be a philosopher, because if I everyone were, society would collapse. Surely, Kant did not believe that. My understanding is that the categorical imperative is more like: it’s only moral if you would accept a random roll of the dice into any of society’s roles. In this case, I’m not sure society would be better off if passive income did not exist, but perhaps it should be “earned” passive income, in the entrepreneurial sense, rather than just pure rents for high status people.
- pge 2y ago
  Your definition is much closer to Rawls’s vision of a just society and the “veil of ignorance.” While heavily influenced by Kant, Rawls comes much later. Kant’s Categorical Imperative was an attempt to define moral laws (without resorting to a deity). The article has it right, though I might change the wording slightly to say that a “rule” or “law” that I use to guide my behavior is only moral if its universal adoption would make the world better. Choosing to be a philosopher is not a rule. Something like, “I should never lie” is a rule which one could evaluate with Kant’s approach, by asking whether if everyone followed that rule, society be better off or not.
  - immibis 2y ago
    A rule can also be: "people who enjoy philosophy and are good at philosophy should become philosophers"
- thrance 2y ago
  Kant's moral system is by no means perfect. His own definition is: "Act only according to that maxim whereby you can at the same time will that it should become a universal law." Obviously we'd all starve to death if everyone became full time philosophers, but wouldn't the world be a better place if everyone took some time to ponder the big questions?
nyc_data_geek1 2y ago
Passive income for all is post scarcity, luxury space communism, ala Star Trek.
tomcar288 2y ago
that might be true for completely passive income. but, how about growing a fruit tree. An apple tree for example can produce 200 lbs of apples per year about 500$ a year and all you have to do is pick them off the tree and water them if you don't get enough rain.
Terr_ 2y ago
> is almost a scissor concept I was curious but can't seem to find much on that phrase except as a player-movement tactic in US Football. Perhaps autocorrect-gone-wrong from something else?
- QuadmasterXLII 2y ago
  It comes from this short story: https://slatestarcodex.com/2018/10/30/sort-by-controversial/ https://slatestarcodex.com/2018/10/30/sort-by-controversial/ Basically, a scissor statement is a series of words optimized to split a group of people along a novel faultline, and then make them fight.
jayd16 2y ago
I don't think passive income requires the abolishment of non-passive reward structures. You'll never hit a point where people will starve before working even if they're pulling in some amount of presumably useless currency. It's hard for me to imagine a scenario you're talking about.
parsimo2010 2y ago
there are two broad categories of "passive income" that people often talk about, with differing effects on society. 1. You have a product that takes little effort for you to maintain, but people find it valuable and pay for its use. In HN terms, this might be a small software project that can be maintained with just a couple hours each month. This is not bad for society- you are offering something that people find valuable, and you get lucky because it's easy for you! A key point is that you are not exploiting people to make this income. We all have varying skills and we make gains from trade. If you are good at programming and I am not, I can pay you to do something that is easy for you but would have been hard for me. This is how we increase our productivity as a society- let each person focus on the things they are good at and avoid the things that are hard. So this type of passive income is okay. We'll probably never see a society where every need is met through people's low effort projects (nobody has a side project that builds major roads or infrastructure), but you aren't harming society by doing it. 2. You have a product that you charge for and you add no value, but for some reason people have to buy from you. In economic terms, we are talking about rent-seeking. Imagine if, right before a hurricane came through, you bought every single 2x4 from all the Home Depots and Lowes' stores in the local area, and sold them to people at twice the original price trying to repair their houses after the hurricane. You did not improve the value of the 2x4s and if not for you, people could have bought them for less money. You exploited the limited local supply of 2x4s and added nothing, but extracted money from people who had no other choice. This is bad for society. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
thrance 2y ago
It's funny how often you hear "put your money to work". Money doesn't work, people do! If you receive a monthly income by doing nothing, you're taking from someone else's work.
- sokoloff 2y ago
  While technically true, this could still be a great trade for all involved. If you invest in shares in a company, you are a link in the chain to that company existing at all, employing people, serving customers, and paying a dividend to shareholders. Employees have a job and income without the need to come up with the initial capital to start the venture and the associated risk of no income for a while. If you invest in real estate, you are providing the capital that allows someone to have shelter (and maybe allowing a property management firm to also employ people). Tenants have shelter without the need to buy an entire lifetime of a house that they only want to live in for a few years and without the hassles of being tied down to a specific address (in the event their relationship status or family size evolves or a job improvement arrives 50 or 200 miles away) or buying and selling houses frequently as these changes tend to happen frequently early in adult life. Neither is something that you had to wipe sweat off your brow this particular month, but it is a deployment of foregone consumption in the past that allowed you to make those investments. Now that previously foregone consumption is being returned to you.
  - spacebanana7 2y ago
    Another tangible example is renting a tractor to a farmer that couldn’t otherwise afford one. Their income from crop production goes up (even after tractor rental expenses) and society also gets more food.
    - mcmoor 2y ago
      Communists will say this is still rent seeking and the tractor should be seized and given to the farmer.
      - deleted 2y ago
tgv 2y ago
I think the categorical imperative stops you from harming others, but not from profiting. It is based on free will, after all, so it's not against the individual per se. But to continue your other line of reasoning: there's always someone who profits, and obviously not everybody can profit. There is always a difference. Therefor it cannot be immoral, because it is unavoidable. It is however right to strive for minimal consequences of this difference (in wealth).
moffkalast 2y ago
That's only true if things like you know, automation, don't exist. The payphone example isn't that bad honestly. What people are paying for is sending around information. You could pay a person to run around and tell it in person, or you could build a network of telephones and charge for their usage. The latter is faster, easier, cheaper, more convenient, and doesn't take any people to run despite being a major boon to society. Yet it's completely passive outside occasional maintenance. I suppose the question is if it's ethically correct to pay the maintainer vastly more than it actually takes to maintain the public good just because they "own" it. At least currently in our society it seems we've collectively decided it's worth overpaying for the benefit since the rewards tend to be good enough (otherwise everything would be nationalized).
imgabe 2y ago
> If the goal is to have a system where everyone can have passive income, then achieving that goal is the end of the world. Not if we build robots to make things.
derf_ 2y ago
> On the other hand, if everyone had access to this capability then society and civilization would grind to a halt. On the contrary, everyone does use this capability. It is what makes the concept of "retirement" possible. You borrow money when you are young and do not have much of value to contribute to society (for education, for purchasing a home, maybe for starting other ventures), you earn money during your productive years to pay those loans back and accumulate wealth (in personal or government retirement accounts, in Social Security or other government plans, in a pension), and at some point you are able to invest or lend or that money to others (or have others do so for you in the case of things like pension funds) and live off of the return, hopefully before you become so infirm you are no longer able to work. I hope we can agree that allowing people to retire before they die is a net benefit to society. Claiming anyone can do that while they are still young with no risk is where you should start to get suspicious. Why should it be easy to get rich?
- throwaway2037 2y ago
  > It is what makes the concept of "retirement" possible. Sorry, I disagree. What makes retirement possible in highly advanced economies is a national pension. In the US and many other rich countries, a huge portion of elderly, retired people only live from national pension. It is scary how many poor, elderly people exist when you look closely. The vast majority of Americans will retire with zero or "peanuts" in their 401K, or spend it down very quickly, then become 100% dependent upon national pension ("Social Security") or their family/children/charity. On a personal note, each time one of my co-workers shares about their retirement savings, I am shocked by the tiny amounts. They will retire into "virtual" poverty compared to their current compensation. They are living for today, not tomorrow.
simonebrunozzi 2y ago
I would agree with you, but you seem to forget the concept of "cohorts" applied to this. You could have people from age 20 to 40 working for everyone else; and people from 40 onwards to live on passive income. You would still have ~60% of the current workforce. Not impossible.
MiguelVieira 2y ago
See also https://en.wikipedia.org/wiki/Paradox_of_thrift https://en.wikipedia.org/wiki/Paradox_of_thrift
BurningFrog 2y ago
The categorical imperative is a useful philosophical tool, but it's very easily misused. I'll go to the grocery store tomorrow. Is that moral? Well if all 8 billion people also went to that grocery store at the same time, it would be a horrific tragedy, probably with billions dead. The actual principle is about whether the principle or maxim behind the action can be consistently applied as a universal law.
kortilla 2y ago
I don’t think people generally agree that rent is a bad thing. Providing housing has value
sbochins 2y ago
It’s pretty easy for me to envision a world where nobody makes anything and nothing comes to a halt. It’s just a matter of adding automation in places where we didn’t previously have it.
lumost 2y ago
I suspect the appeal of this in its present state is that passive income confers a sense of security to millennials. Our jobs are inherently temporary, and at some point in tech fields - it is likely that you won't have an easy time finding the next one. Given that loss of income would lead to massive penalties in lifestyle up to expulsion from life's basics... It's obvious why the winning strategy would be to acquire a secure income stream within your control.
dataflow 2y ago
Basically every sentence I read in this comment has an enormous hole in the logic or premise. > On the other hand, if everyone had access to this capability then society and civilization would grind to a halt. This is a non-sequitur. The world isn't binary. Whether this happens depends entirely on how much passive income people can generate, and a whole host of other factors that are unaccounted for. > People make things; if people don't make things, then we don't eat, we don't drink. Again, your premise is flawed. Giving everyone (say) a dollar a month doesn't mean people will stop making things. It depends how much they earn, and a ton of other factors. > The categorical imperative roughly says that something is moral only if its universal adoption would benefit society. No, that's not what it says. What is says is that the rules you live by should be universally applicable. Positive or negative effects on society are beside the point. > So there is a break there. This is a giant leap in your logic. You have neither shown that this wouldn't benefit society, nor that there would be a break if it didn't.
lawrenceyan 2y ago
Don't let this make you shy away from the idea of investing though! Remember that fiat currency as a general concept ensures that your base unit of value is constantly depreciating. Even if there was zero growth in the overall economy, because of how we've structured our financial system, asset prices as a whole will always go up because they are pegged to a depreciating unit of value.
caturopath 2y ago
> if everyone had access to this capability then society and civilization would grind to a halt No it wouldn't. The scenario is not an actual one. Passive income comes from someone benefiting from something you own and paying for it. It must still be benefiting for them to pay for it. If things had ground to a halt, no one would be getting anything, so they wouldn't pay for it. It's like if I said that people running faster and faster would eventually result in them running faster than the speed of light. No it wouldn't: I'm just extrapolating a model out of its domain of applicability. > Or maybe only if you couple it with the categorical imperitive. It also requires taking 'collecting passive income' as a moral act. If I took 'being a car mechanic' as a moral act, I could explain how awful it would be if everyone became car mechanics: there would be no farmers or nurses. But that's a poor analysis of the morality of occupation. This application is absurd and your application is not, but there is a decision on your part that wasn't among your premises.
farts_mckensy 2y ago
Just call it what it is, rent seeking behavior. It's parasitic.
Gigachad 2y ago
Most "passive income" schemes are really just front loading all of the work. Producing way more than you consume in return, and then collecting the benefit later.
kortilla 2y ago
With this narrow definition nearly any income is “immoral”. If everyone became a heart surgeon society would grind to a halt as well. The amount of labor, active or passive, isn’t really relevant in an absolute sense. It’s about meeting society’s demands. I happily pay for electricity that is fully generated by machines. Yet if everyone built solar or wind we’d be fucked. Your argument is really trying to push the “income without direct labor is immoral” narrative. But there is nothing there to really support it other than an example of a massive imbalance wiping out society, which is not specific to labor.
xivzgrev 2y ago
Imagine a future where every person owns a personal robot who does their current job for them, and the person gets paid. That’s not inherently evil is it? It sounds pretty nice. The evil comes in people squeezing others. Whoever make the robots obviously have a lot of power, corporations would quickly find ways to cut out the “parasitic” humans and get the robot labor, etc.
kdmccormick 2y ago
I agree with your parallel to rent seeking. Rent seeking is indeed both (a) arguably immoral and (b) seemingly inescapable in a society which respects property rights. The theory of Georgism [1] suggests a way that we could eliminate rent seeking: by taxing ownership of all common resources at the value of the rent they would demand. That way, property owners, telephone operators, etc. would be rewarded for their labor in development and upkeep of the property, but would not be rewarded for ownership of the property itself. [1] https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
- bufferoverflow 2y ago
  Rent seeking is not immoral. You own something. You choose to let others use it for a fee per month or per day. Some other person voluntarily thinks your deal is good and agrees to pay to use your something. Sure, you can come up with some obscure examples of rent seeking being immoral, like charging a dehydrated dying person $1000 per glass of water, but that's not what we're discussing here. If you disagree, let's make a deal where I get to use all of your stuff for free forever.
  - BriggyDwiggs42 2y ago
    I’d argue rent seeking, whether moral or not, leads to a bad system with a class of people with vast wealth and no need to work, and a class of people largely without access to the same manner of income who have to labor for a living.
  - samatman 2y ago
    You're misinformed. You're describing rental, it's an understandable mistake, but despite the shared etymology, rent seeking is something entirely different. It is by definition any scheme which extracts wealth without providing value. Renting apartments, or equipment, is not rent seeking. Putting a barrier in a river and refusing to allow passage of cargo without a tax, that, is rent seeking. If you agree with me that a scheme to extract the wealth of others, while providing no value in return, is immoral, then rent seeking is, in fact, immoral.
  - 2y ago
coding123 2y ago
Actually I believe it did break the world but we haven't noticed yet.
ipsum2 2y ago
What is a "scissor concept"? Google returns no results.
- CaptainFever 2y ago
  Maybe it is a reference to this? https://slatestarcodex.com/2018/10/30/sort-by-controversial/ https://slatestarcodex.com/2018/10/30/sort-by-controversial/
bdjsiqoocwk 2y ago
[dead]
martin82 2y ago
Nonsense. If everyone in society had a passive income (ie because we can program robots and they do the producing) it would be amazing. Everyone is causing production, earning money, and then spending that money on the things that everyone else decided to produce.
android521 2y ago
hopefully, in the future, robots will do most work in society. Humans can just learn, exercise, eat, create/build/consume for fun and curiosity.
- portaouflop 2y ago
  Hopefully this dystopia will never come to pass.
tarkin2 2y ago
Reinvesting money from stocks and shares is passive income, right? It's hard to say investing is immoral. It benefits society if universally adopted, albeit only as a part of an individuals economic activity. Passive income as the only economic activity doesn't pass the categorical imperative test though: it just creates a stratified hierarchy of owners and workers.
mxkopy 2y ago
As others have stated I don’t believe this is a good faith definition of passive income. What do you do with your time now that you don’t have to work? If you decided to sleep all day and spend money on consumption, I would call you ill. At some point you’ll probably want to do something productive, not because you want to get paid but because that’s just what people tend to do at some point. I do think a society where this is the only type of work being done is possible. It’s not free money or perpetual motion, just efficient at matching people’s natural inclinations to demand (and automation could fill in the gaps).
deleted 2y ago
[deleted]
throwaway2037 2y ago
I like your point. When I see the term "passive income", I immediately convert it to "rent seeking". _Some_ amount of rent seeking will always exist in any capitalist system, but there is a limit where it becomes inefficient. However, most capitalist systems are self-adapting enough, such that when too much of one type of rent seeking appears, eventually new joiners are priced out with zero or negative returns. A simple example to understand is rental property: In many big cities, the ROE on rental cashflow can be nearly zero. (However, there is still a good chance for capital appreciation.)
- fragmede 2y ago
  The original definition that's been hopelessly muddied (language evolves, so eh; I find the etymology interesting) of rent-seeking was that of powerful business men using politics to get benefits. Like a subsidy for their product or some regulation passed that favors them.

notatoad 2y ago

"passive income", in it's original iteration, wasn't the idea that you could make money by doing nothing. The idea was that you made something or did something that you were uniquely able to make or do, and then the result of your labour would make money for you while you put in minimal continued effort. the version of passive income where you don't do anything productive at all, ever, and just put up some initial capital in exchange for even more money back, is always a scam. some people might come out ahead sometimes, but more people will lose than win.

andai 2y ago
>just put up some initial capital in exchange for even more money back Isn't that how index funds work?
- sam1r 2y ago
  Well, not many index funds succeed, in that same proportionate rate.
- markus_zhang 2y ago
  People believe in index funds because of multi-decades of globalization and (in general) cheaper money, which has been less and less true since 10 years ago. Even if you bought some during the 90s, you still need a tremendous belief in yourself and the market to hold them for 30 years. It's not that easy. I know many people put the fund into a retirement fund, but 1) is every body consistently doing that for 30 years? and 2) what if the market sucks when you retire? I still think that's not a bad idea, maybe one of the best for lay persons.
  - philsnow 2y ago
    > People believe in index funds because of multi-decades of globalization At some point we're going to reach the heat-death of the economy and we'll be "completely globalized", I guess?
  - lotsofpulp 2y ago
    > what if the market sucks when you retire? You don’t have to liquidate all of your investments on your retirement date. If the market sucks so much for 5+ years and your government can’t get it pumped back up, you probably have a bigger problem than your retirement savings, such as food and energy and security shortages. It would be bold to bet against a government not constantly decreasing the purchasing power of its currency to prop up asset prices, especially with declining proportions of young people. The political apparatus will want to maintain old people’s position at the top of the social hierarchy, and if their purchasing power isn’t maintained so they can keep buying the fruits of others’ labor, it means the country is dissolving.
    - KK7NIL 2y ago
      > If the market sucks so much for 5+ years and your government can’t get it pumped back up, you probably have a bigger problem than your retirement savings, such as food and energy and security shortages. The S&P500 was flat or negative from 2000 to 2012. And this isn't unusual. > It would be bold to bet against a government not constantly decreasing the purchasing power of its currency to prop up asset prices, especially with declining proportions of young people. The political apparatus will want to maintain old people’s position at the top of the social hierarchy, and if their purchasing power isn’t maintained so they can keep buying the fruits of others’ labor, it means the country is dissolving. How does the government decreasing the purchasing power help old people? This is quite the opposite, retirees survive off of a fixed income (mainly from welfare and pensions but also fixed income investments since they shouldn't risk the stock market) and are the most hurt by inflation.
- apeescape 2y ago
  It's not guaranteed that you get more money back from an index fund (unless you've found an arbitrage, but that's a corner case). Even the bigger and stabler indexes like the S&P500 have their ups and downs, both on a daily level but also over longer time spans. The long-term trend has been positive for these types of indexes, but remember that past performance doesn't guarantee future profits :)
  - Ekaros 2y ago
    One needs to look at multiple markets like for example Japan. Which really points that future growth is not guaranteed.
  - krazii 2y ago
    Sure, it is not guaranteed profit, but it is certainly not "always a scam" as previous poster put it. It is very likely a way to make profit.
hifromwork 2y ago
>just put up some initial capital in exchange for even more money back, is always a scam. some people might come out ahead sometimes, but more people will lose than win. How so? My all-world index funds are doing pretty well. For more risk averse, almost every buyer of USA governmental bonds gets "even more money back" in exchange for the initial capital. I don't think that's a scam either.
- shnock 2y ago
  Not everyone can buy USA bonds. Is the population of winners and losers all humanity?
  - s1artibartfast 2y ago
    The money that is used to buy the bonds goes to the government, and then into the pockets of the citizens. The bond holders tend to be the tax prayers as well, so it is almost like a partial rebate.
- rlayton2 2y ago
  There is a risk, however small, that your bonds won't be paid back leading to a large loss.
  - eru 2y ago
    There's also the very real risk of bigger than expected inflation.
- khuey 2y ago
  > For more risk averse, almost every buyer of USA governmental bonds gets "even more money back" in exchange for the initial capital. In nominal terms, sure. In real terms, ask the banks that bought 30 year treasuries in Spring 2020 how that's going for them.
  - ensignavenger 2y ago
    The problem for some of those banks wasn't the 30 year treasuries, it was that they bought those treasuries with other peoples money, and other people did not commit to 30 years, so now when the other people come to get their money, the bank doesn't have it. The 30 year treasuries are still doing just fine, in accordance to the terms of the treasury when it was bought.
markus_zhang 2y ago
Yeah, nowadays "passive income" is basically debt interests (like bonds) or rental income, both of which actually need a lot of work. I rarely traded financial instruments so cannot say for that, but as a small landlord I wish I never entered the business. Like, all businesses need initial investment AND a lot of continuous effort and learning, and are probably boring (or VERY barricaded) because otherwise people are going to swarm in. I need to know the market, the laws and regulations, and some other stuffs, most of which are extremely boring and not really "hackable" (as for hackers) because accountants and governments already sorted everything up to make sure it's hard for small businesses to evade tax -- You can learn which parts are expenses in an afternoon, and then you have to deal with a lot of headaches. I know some people who own gas stations and large depanneurs (in QC they are independent convenient shops), which are luxurious on face, but they either have to pick a remote one (away from competition from supermarkets) or/and work 7 days without hiring an extra hand. They grind for 10 years and sell the business when time is good.
- SirMaster 2y ago
  Rental income doesn't need any work if you are just an investor though. I don't do a single thing. The people who are managing the deal are the ones who do the work and hire the workers to work on site and such. They of course get an even better return during the sale, but I am happy with what I get for doing nothing. My rental properties are paying me a decent passive income of about 6%, and additionally the total investment about doubles in roughly 5 years. Also the tax advantages are pretty huge with the depreciation and the ability to take the money from a sale and put it into a new property with no tax. So say you start with an initial $100K investment. That pays back about 6K a year for 5 years and then turns into about 200K after 5 years which you then put into a new property and make 12K a year, and so on and so on. So if you start with 100K when you are say 25, then when you are 50, you will have around 1.6M in property assets making you about 96K a year in passive income, where the depreciation on the property value and the assets in the property outweigh the tax on the income, so that income is all tax free. And that calculation is assuming you don't put even more capital in from some other source. Of course it's a roughly average return assumption. Some properties will do better and others will do worse, but it's been my experience that it's about right. Of course this is only one of my investment baskets. I allocate roughly half of the income that I can invest into real-estate like this and the other half into low cost index funds.
m463 2y ago
I think "passive income" is ambiguous, and people will sell it one way, and buy it another. wikipedia seems to have a broad definition of it. https://en.wikipedia.org/wiki/Passive_income https://en.wikipedia.org/wiki/Passive_income I see people saying passive income is not always hands off. I wonder if they are right or the "hands off" definition doesn't fit their situation.
nerdponx 2y ago
> put up some initial capital in exchange for even more money back The "even more money back" part is, in principle, compensation for you gathering the capital together and taking on the risk of losing. Not that it works out that way in practice.
- eru 2y ago
  Also just compensation for the opportunity cost of not having access to your capital for a while.
miki123211 2y ago
> the version of passive income where you don't do anything productive at all, ever, and just put up some initial capital in exchange for even more money back, is always a scam No, that's just investing. This is how savings accounts work, this is how CDs work, this is how treasury bonds work, this is how passive investing (e.g. via ETFs on index funds) works, and there are many, many more examples. If you're keeping your retirement savings in an IRA / other local equivalent, whether owned privately or by your government, the same processes happen behind the scenes. You put in capital, you lock that capital away for a while, you get back more capital later. The differences here are in terms of possible returns. Bonds have (relatively) low returns but almost 0 risk, index funds have significantly higher returns but are also higher risk, though it's still pretty low if your time horizon is multiple decades, and there are crazy investments (think Bitcoin) with possibly eye-watering returns, but also an enormous amount of risk. Now investments with "guaranteed" eye-watering returns (think >10% per year) and apparently 0 risk? Yeah, definitely a scam.
- immibis 2y ago
  If everyone does it, the world grinds to a halt and everyone dies.
  - simmerup 2y ago
    Well, everyone can’t do it because not everyone has access to capital
  - georgeecollins 2y ago
    What really happens: if everyone tries to acquire a particular income producing asset, the asset gets so expensive that the return is not worth the risk plus the time value of the money it could generate. Stocks in the 1920's, Tokyo real estate in the 1990s, US housing the mid 2000's...
    - eru 2y ago
      There was a US housing bust in the late 2000s, but there was never a bubble in the mid 2000s. Contrary to popular opinion. Otherwise I agree that in principle and in general all else being equal increasing prices lead to lower returns.
jayd16 2y ago
> more people will lose than win. It's not necessarily zero sum. If money is invested to produce value instead of simply moving it around then everyone can benefit.
- schmidtleonard 2y ago
  Yes, though it's important to note that the economic notion of value is weighted according to wealth and therefore more than a bit weird. Feeding an orphan creates no "value" because they have no money to pay you with, while merging companies into a mega-monopoly that can shake down the rest of the economy creates loads of "value" because it pays rich investors huge dividends. Of course, there are plenty of honest ways to create value and get paid for it, and that's pretty cool. Both extremes exist, most things are in the messy middle, and reasonable minds can differ about which way the system leans and what should be done about it, if anything. Another piece of important context is that the US is a developed economy, not a growth economy. If the pie is growing at 2% and the capital slice of the pie is growing at 10%, anyone who lives in the remainder and argues that their slice is being grown is a fool.
  - Aeolun 2y ago
    > Feeding an orphan creates no "value" because they have no money to pay you with Only because it’s illegal to make them work? I imagine it could be quite lucrative.
    - yoyohello13 2y ago
      Big bad government enforcing those pesky human rights.
  - jayd16 2y ago
    I think people understand that, for example, investing in schools generates more value than you put in.
    - eru 2y ago
kmeisthax 2y ago
The original iteration of passive income was feudalism. It itself was a set of interconnecting passive income schemes[0], ultimately derived from your ability to own the most economically valuable land. This scheme hinges upon your ability to enclose and exclude access to that land by force - not prior labor paying off over time. Of course, the only passive income schemes that work today are the "prior labor" type. But that's because of copyright and patent law, which exist specifically with the idea that you can make something valuable now and charge the public for it later. A creative work or an invention is itself land being excluded by force, but this is a magical abstract land of nearly infinite size[1]. It's enclosers are empowered not through direct force, but through the blessing of a legal priesthood. Ok, I suppose if we're including force and feudalism, we probably should also include, say, organized crime. But in that case the labor isn't stored, it's slaved: you find suckers and scam them into doing crimes to your benefit, then get them to continue working for you, because if they ever leave you can just kill them, or sick the Feds on them. Y'know, I'm starting to think passive income is actually just a funny way to say theft... [0] The two schemes I'm thinking of are manorialism, and something akin to modern rent extraction or "chokepoint capitalism" in which you own a road or river and can charge money to people passing through your land. I forget the name of the latter, and there's probably additional relationships I'm not counting. I know the Holy Roman Empire was lousy with the latter kind. [1] Since there's far more of this creativity land than there is land on Earth, it's far harder to find land that people want or have to pay for. That's why entertainment is such a ridiculously hit-driven business and why entertainment companies hate rights reversion so much.
throwaway2037 2y ago
About your second paragraph, to be fair, most passive income schemes involve starting capital (a large amount). Then, this capital is invested into _relatively_ safe or low-vol assets (investment property, gov't bonds, utility stocks for divs), and passive income is received. Alternatively, you could buy something like a stable, middle-aged oil or natural gas rig. Or managed, commercial forest. Or rights to media to receive royalties. Yes, scams can exist in any investment scheme, but the previously mentioned ones are accessible, and safe for 1-5% of people with sufficient capital. What bothers me the most about the endless YouTube videos and "financial advice" blog posts about passive income: They fail to explain how you acquire the initial capital! Frequently, they saved millions from a previous job, like a Wall Street trader/salesperson or a senior FAANG engineer. I liked this video from Plain Bagel, "The Passive Income Scam": https://www.youtube.com/watch?v=AqZbO8Ojhmw https://www.youtube.com/watch?v=AqZbO8Ojhmw

the_sleaze_ 2y ago

With respect, I think you have it entirely backwards. (First, "passive income" means "almost hands off, but not entirely") Progress in technology is making things - better quality, less effort. Amazon Warehouses for example. Just a few years ago they took at least a few dozen people in rotation, now takes a man and a dog - the man to feed the dog and the dog to bite the man if he falls asleep. Since so much can be done with so little effort it seems natural that if wealth doesn't concentrate at the top then most people would have essentially passive income streams.

andai 2y ago

>If the goal is to have a system where everyone can have passive income, then achieving that goal is the end of the world. If AI and robotics continue to be developed, then eventually most human labor becomes uneconomical by comparison. At that point, the system provides passive income on a mass scale (UBI) to prevent its own violent destruction. At least, that's the good ending.

ElFitz 2y ago
To me, a major obstacle on the path to UBI is that it seems to conflict with the interests of those who benefit from the current status quo. If everyone receives a sufficient basic income, who will fix their toilets or clean their yachts? If the answer is ’no one’, then I’m afraid we’ll need significant advances in automation and robotics—or pitchforks—before we see UBI implemented. But my point of view may be simplistic, and wrong.
- ryandrake 2y ago
  Technology is quickly helping to eliminate the "pitchfork" option. By the time we are in a world where human labor is unnecessary or worth nearly nothing, the elite will have all the automated surveillance and robo-policing technology they need to prevent rioting and pitchforks, and more secure ways to remain safely isolated from the rabble. When it comes to "what Sci-Fi future we're headed towards" I would bet on something like Elysium.
  - ElFitz 2y ago
    It might indeed be easier to develop automated surveillance, reinforce police states, and isolate themselves, than create working robot-plumbers, automated 3 star worthy kitchens, and self-cleaning boat decks. And it might be cheaper for them than UBI.
- andai 2y ago
  To clarify, the "human labor no longer exists in a meaningful way" thing depends (as far as I can tell) on "robots are able to perform all human labor", so their yacht would be cleaned by robots. Though I imagine they might hire humans anyway, as some kind of status symbol! (Artisanal, like hand-crafted items today.)

seizethecheese 2y ago

> The categorical imperative roughly says that something is moral only if its universal adoption would benefit society. Really? I actually don’t think that’s right at all. For example: nobody should be a philosopher, because if I everyone were, society would collapse. Surely, Kant did not believe that. My understanding is that the categorical imperative is more like: it’s only moral if you would accept a random roll of the dice into any of society’s roles. In this case, I’m not sure society would be better off if passive income did not exist, but perhaps it should be “earned” passive income, in the entrepreneurial sense, rather than just pure rents for high status people.

pge 2y ago
Your definition is much closer to Rawls’s vision of a just society and the “veil of ignorance.” While heavily influenced by Kant, Rawls comes much later. Kant’s Categorical Imperative was an attempt to define moral laws (without resorting to a deity). The article has it right, though I might change the wording slightly to say that a “rule” or “law” that I use to guide my behavior is only moral if its universal adoption would make the world better. Choosing to be a philosopher is not a rule. Something like, “I should never lie” is a rule which one could evaluate with Kant’s approach, by asking whether if everyone followed that rule, society be better off or not.
- immibis 2y ago
  A rule can also be: "people who enjoy philosophy and are good at philosophy should become philosophers"
thrance 2y ago
Kant's moral system is by no means perfect. His own definition is: "Act only according to that maxim whereby you can at the same time will that it should become a universal law." Obviously we'd all starve to death if everyone became full time philosophers, but wouldn't the world be a better place if everyone took some time to ponder the big questions?

nyc_data_geek1 2y ago

Passive income for all is post scarcity, luxury space communism, ala Star Trek.

tomcar288 2y ago

that might be true for completely passive income. but, how about growing a fruit tree. An apple tree for example can produce 200 lbs of apples per year about 500$ a year and all you have to do is pick them off the tree and water them if you don't get enough rain.

Terr_ 2y ago

> is almost a scissor concept I was curious but can't seem to find much on that phrase except as a player-movement tactic in US Football. Perhaps autocorrect-gone-wrong from something else?

QuadmasterXLII 2y ago
It comes from this short story: https://slatestarcodex.com/2018/10/30/sort-by-controversial/ https://slatestarcodex.com/2018/10/30/sort-by-controversial/ Basically, a scissor statement is a series of words optimized to split a group of people along a novel faultline, and then make them fight.

jayd16 2y ago

I don't think passive income requires the abolishment of non-passive reward structures. You'll never hit a point where people will starve before working even if they're pulling in some amount of presumably useless currency. It's hard for me to imagine a scenario you're talking about.

parsimo2010 2y ago

there are two broad categories of "passive income" that people often talk about, with differing effects on society. 1. You have a product that takes little effort for you to maintain, but people find it valuable and pay for its use. In HN terms, this might be a small software project that can be maintained with just a couple hours each month. This is not bad for society- you are offering something that people find valuable, and you get lucky because it's easy for you! A key point is that you are not exploiting people to make this income. We all have varying skills and we make gains from trade. If you are good at programming and I am not, I can pay you to do something that is easy for you but would have been hard for me. This is how we increase our productivity as a society- let each person focus on the things they are good at and avoid the things that are hard. So this type of passive income is okay. We'll probably never see a society where every need is met through people's low effort projects (nobody has a side project that builds major roads or infrastructure), but you aren't harming society by doing it. 2. You have a product that you charge for and you add no value, but for some reason people have to buy from you. In economic terms, we are talking about rent-seeking. Imagine if, right before a hurricane came through, you bought every single 2x4 from all the Home Depots and Lowes' stores in the local area, and sold them to people at twice the original price trying to repair their houses after the hurricane. You did not improve the value of the 2x4s and if not for you, people could have bought them for less money. You exploited the limited local supply of 2x4s and added nothing, but extracted money from people who had no other choice. This is bad for society. https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking

thrance 2y ago

It's funny how often you hear "put your money to work". Money doesn't work, people do! If you receive a monthly income by doing nothing, you're taking from someone else's work.

sokoloff 2y ago
While technically true, this could still be a great trade for all involved. If you invest in shares in a company, you are a link in the chain to that company existing at all, employing people, serving customers, and paying a dividend to shareholders. Employees have a job and income without the need to come up with the initial capital to start the venture and the associated risk of no income for a while. If you invest in real estate, you are providing the capital that allows someone to have shelter (and maybe allowing a property management firm to also employ people). Tenants have shelter without the need to buy an entire lifetime of a house that they only want to live in for a few years and without the hassles of being tied down to a specific address (in the event their relationship status or family size evolves or a job improvement arrives 50 or 200 miles away) or buying and selling houses frequently as these changes tend to happen frequently early in adult life. Neither is something that you had to wipe sweat off your brow this particular month, but it is a deployment of foregone consumption in the past that allowed you to make those investments. Now that previously foregone consumption is being returned to you.
- spacebanana7 2y ago
  Another tangible example is renting a tractor to a farmer that couldn’t otherwise afford one. Their income from crop production goes up (even after tractor rental expenses) and society also gets more food.
  - mcmoor 2y ago
    Communists will say this is still rent seeking and the tractor should be seized and given to the farmer.
    - deleted 2y ago

tgv 2y ago

I think the categorical imperative stops you from harming others, but not from profiting. It is based on free will, after all, so it's not against the individual per se. But to continue your other line of reasoning: there's always someone who profits, and obviously not everybody can profit. There is always a difference. Therefor it cannot be immoral, because it is unavoidable. It is however right to strive for minimal consequences of this difference (in wealth).

moffkalast 2y ago

That's only true if things like you know, automation, don't exist. The payphone example isn't that bad honestly. What people are paying for is sending around information. You could pay a person to run around and tell it in person, or you could build a network of telephones and charge for their usage. The latter is faster, easier, cheaper, more convenient, and doesn't take any people to run despite being a major boon to society. Yet it's completely passive outside occasional maintenance. I suppose the question is if it's ethically correct to pay the maintainer vastly more than it actually takes to maintain the public good just because they "own" it. At least currently in our society it seems we've collectively decided it's worth overpaying for the benefit since the rewards tend to be good enough (otherwise everything would be nationalized).

imgabe 2y ago

> If the goal is to have a system where everyone can have passive income, then achieving that goal is the end of the world. Not if we build robots to make things.

derf_ 2y ago

> On the other hand, if everyone had access to this capability then society and civilization would grind to a halt. On the contrary, everyone does use this capability. It is what makes the concept of "retirement" possible. You borrow money when you are young and do not have much of value to contribute to society (for education, for purchasing a home, maybe for starting other ventures), you earn money during your productive years to pay those loans back and accumulate wealth (in personal or government retirement accounts, in Social Security or other government plans, in a pension), and at some point you are able to invest or lend or that money to others (or have others do so for you in the case of things like pension funds) and live off of the return, hopefully before you become so infirm you are no longer able to work. I hope we can agree that allowing people to retire before they die is a net benefit to society. Claiming anyone can do that while they are still young with no risk is where you should start to get suspicious. Why should it be easy to get rich?

throwaway2037 2y ago
> It is what makes the concept of "retirement" possible. Sorry, I disagree. What makes retirement possible in highly advanced economies is a national pension. In the US and many other rich countries, a huge portion of elderly, retired people only live from national pension. It is scary how many poor, elderly people exist when you look closely. The vast majority of Americans will retire with zero or "peanuts" in their 401K, or spend it down very quickly, then become 100% dependent upon national pension ("Social Security") or their family/children/charity. On a personal note, each time one of my co-workers shares about their retirement savings, I am shocked by the tiny amounts. They will retire into "virtual" poverty compared to their current compensation. They are living for today, not tomorrow.

simonebrunozzi 2y ago

I would agree with you, but you seem to forget the concept of "cohorts" applied to this. You could have people from age 20 to 40 working for everyone else; and people from 40 onwards to live on passive income. You would still have ~60% of the current workforce. Not impossible.

MiguelVieira 2y ago

See also https://en.wikipedia.org/wiki/Paradox_of_thrift https://en.wikipedia.org/wiki/Paradox_of_thrift

BurningFrog 2y ago

The categorical imperative is a useful philosophical tool, but it's very easily misused. I'll go to the grocery store tomorrow. Is that moral? Well if all 8 billion people also went to that grocery store at the same time, it would be a horrific tragedy, probably with billions dead. The actual principle is about whether the principle or maxim behind the action can be consistently applied as a universal law.

kortilla 2y ago

I don’t think people generally agree that rent is a bad thing. Providing housing has value

sbochins 2y ago

It’s pretty easy for me to envision a world where nobody makes anything and nothing comes to a halt. It’s just a matter of adding automation in places where we didn’t previously have it.

lumost 2y ago

I suspect the appeal of this in its present state is that passive income confers a sense of security to millennials. Our jobs are inherently temporary, and at some point in tech fields - it is likely that you won't have an easy time finding the next one. Given that loss of income would lead to massive penalties in lifestyle up to expulsion from life's basics... It's obvious why the winning strategy would be to acquire a secure income stream within your control.

dataflow 2y ago

Basically every sentence I read in this comment has an enormous hole in the logic or premise. > On the other hand, if everyone had access to this capability then society and civilization would grind to a halt. This is a non-sequitur. The world isn't binary. Whether this happens depends entirely on how much passive income people can generate, and a whole host of other factors that are unaccounted for. > People make things; if people don't make things, then we don't eat, we don't drink. Again, your premise is flawed. Giving everyone (say) a dollar a month doesn't mean people will stop making things. It depends how much they earn, and a ton of other factors. > The categorical imperative roughly says that something is moral only if its universal adoption would benefit society. No, that's not what it says. What is says is that the rules you live by should be universally applicable. Positive or negative effects on society are beside the point. > So there is a break there. This is a giant leap in your logic. You have neither shown that this wouldn't benefit society, nor that there would be a break if it didn't.

lawrenceyan 2y ago

Don't let this make you shy away from the idea of investing though! Remember that fiat currency as a general concept ensures that your base unit of value is constantly depreciating. Even if there was zero growth in the overall economy, because of how we've structured our financial system, asset prices as a whole will always go up because they are pegged to a depreciating unit of value.

caturopath 2y ago

> if everyone had access to this capability then society and civilization would grind to a halt No it wouldn't. The scenario is not an actual one. Passive income comes from someone benefiting from something you own and paying for it. It must still be benefiting for them to pay for it. If things had ground to a halt, no one would be getting anything, so they wouldn't pay for it. It's like if I said that people running faster and faster would eventually result in them running faster than the speed of light. No it wouldn't: I'm just extrapolating a model out of its domain of applicability. > Or maybe only if you couple it with the categorical imperitive. It also requires taking 'collecting passive income' as a moral act. If I took 'being a car mechanic' as a moral act, I could explain how awful it would be if everyone became car mechanics: there would be no farmers or nurses. But that's a poor analysis of the morality of occupation. This application is absurd and your application is not, but there is a decision on your part that wasn't among your premises.

farts_mckensy 2y ago

Just call it what it is, rent seeking behavior. It's parasitic.

Gigachad 2y ago

Most "passive income" schemes are really just front loading all of the work. Producing way more than you consume in return, and then collecting the benefit later.

kortilla 2y ago

With this narrow definition nearly any income is “immoral”. If everyone became a heart surgeon society would grind to a halt as well. The amount of labor, active or passive, isn’t really relevant in an absolute sense. It’s about meeting society’s demands. I happily pay for electricity that is fully generated by machines. Yet if everyone built solar or wind we’d be fucked. Your argument is really trying to push the “income without direct labor is immoral” narrative. But there is nothing there to really support it other than an example of a massive imbalance wiping out society, which is not specific to labor.

xivzgrev 2y ago

Imagine a future where every person owns a personal robot who does their current job for them, and the person gets paid. That’s not inherently evil is it? It sounds pretty nice. The evil comes in people squeezing others. Whoever make the robots obviously have a lot of power, corporations would quickly find ways to cut out the “parasitic” humans and get the robot labor, etc.

kdmccormick 2y ago

I agree with your parallel to rent seeking. Rent seeking is indeed both (a) arguably immoral and (b) seemingly inescapable in a society which respects property rights. The theory of Georgism [1] suggests a way that we could eliminate rent seeking: by taxing ownership of all common resources at the value of the rent they would demand. That way, property owners, telephone operators, etc. would be rewarded for their labor in development and upkeep of the property, but would not be rewarded for ownership of the property itself. [1] https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism

bufferoverflow 2y ago
Rent seeking is not immoral. You own something. You choose to let others use it for a fee per month or per day. Some other person voluntarily thinks your deal is good and agrees to pay to use your something. Sure, you can come up with some obscure examples of rent seeking being immoral, like charging a dehydrated dying person $1000 per glass of water, but that's not what we're discussing here. If you disagree, let's make a deal where I get to use all of your stuff for free forever.
- BriggyDwiggs42 2y ago
  I’d argue rent seeking, whether moral or not, leads to a bad system with a class of people with vast wealth and no need to work, and a class of people largely without access to the same manner of income who have to labor for a living.
- samatman 2y ago
  You're misinformed. You're describing rental, it's an understandable mistake, but despite the shared etymology, rent seeking is something entirely different. It is by definition any scheme which extracts wealth without providing value. Renting apartments, or equipment, is not rent seeking. Putting a barrier in a river and refusing to allow passage of cargo without a tax, that, is rent seeking. If you agree with me that a scheme to extract the wealth of others, while providing no value in return, is immoral, then rent seeking is, in fact, immoral.
- 2y ago

coding123 2y ago

Actually I believe it did break the world but we haven't noticed yet.

ipsum2 2y ago

What is a "scissor concept"? Google returns no results.

CaptainFever 2y ago
Maybe it is a reference to this? https://slatestarcodex.com/2018/10/30/sort-by-controversial/ https://slatestarcodex.com/2018/10/30/sort-by-controversial/

bdjsiqoocwk 2y ago

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martin82 2y ago

Nonsense. If everyone in society had a passive income (ie because we can program robots and they do the producing) it would be amazing. Everyone is causing production, earning money, and then spending that money on the things that everyone else decided to produce.

android521 2y ago

hopefully, in the future, robots will do most work in society. Humans can just learn, exercise, eat, create/build/consume for fun and curiosity.

portaouflop 2y ago
Hopefully this dystopia will never come to pass.

tarkin2 2y ago

Reinvesting money from stocks and shares is passive income, right? It's hard to say investing is immoral. It benefits society if universally adopted, albeit only as a part of an individuals economic activity. Passive income as the only economic activity doesn't pass the categorical imperative test though: it just creates a stratified hierarchy of owners and workers.

mxkopy 2y ago

As others have stated I don’t believe this is a good faith definition of passive income. What do you do with your time now that you don’t have to work? If you decided to sleep all day and spend money on consumption, I would call you ill. At some point you’ll probably want to do something productive, not because you want to get paid but because that’s just what people tend to do at some point. I do think a society where this is the only type of work being done is possible. It’s not free money or perpetual motion, just efficient at matching people’s natural inclinations to demand (and automation could fill in the gaps).

deleted 2y ago

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throwaway2037 2y ago

I like your point. When I see the term "passive income", I immediately convert it to "rent seeking". _Some_ amount of rent seeking will always exist in any capitalist system, but there is a limit where it becomes inefficient. However, most capitalist systems are self-adapting enough, such that when too much of one type of rent seeking appears, eventually new joiners are priced out with zero or negative returns. A simple example to understand is rental property: In many big cities, the ROE on rental cashflow can be nearly zero. (However, there is still a good chance for capital appreciation.)

fragmede 2y ago
The original definition that's been hopelessly muddied (language evolves, so eh; I find the etymology interesting) of rent-seeking was that of powerful business men using politics to get benefits. Like a subsidy for their product or some regulation passed that favors them.