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> But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales

> But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. > For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). What you're describing is a recession do the a drop in aggregate demand. Yeah this is bad and we have monetary and fiscal policy to reverse it. And usually monetary and fiscal policy are better because if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Not to mention we are currently do not have that problem, which is why we have inflation above target. I think there are a lot of good reasons to tax the rich (and upper middle class) more, like our ballooning deficit, but creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them.

cogman10 2y ago
> This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. Yachts are wealth that would be taxed. And in fact, assuming you are taxing the rich based on their wealth/property/ and income then you are in fact incentivizing them to buy bigger factories rather than yachts. The bigger factory generates more wealth for them while not being taxed because it isn't directly owned by them. A yacht only costs them money. > All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. And what do those sheets of paper do? Do they create jobs? Do they employ people? The problem with the investment ownership model is it's completely speculative without any actual feedback into the economy. The only difference between the paper that grants ownership of microsoft and the paper that allows you to pay back debt is one has speculative value for trade. Because the value of the sheet of paper is based on what the market values that sheet of paper as, it creates perverse incentives that aren't actually economically good. For example, the last couple of years when tech businesses hired a bunch of employees because that made the stock go up, then fired a bunch of employees because that make the stock go up. Businesses are being ran not based on whether or not the goods are being sold or valuable, but rather whether or not the speculators in the market think it's good or valuable. That's a major negative distortion of the market. The entire point of stock isn't bigger factories, it's to enable bigger yachts. Stock as compensation, particularly for business owners, is one of the worst inventions of society. It is what causes enshittification. > if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Right, but as you point out, that's not what the rich are doing. They are instead buying paper that does not feed back into the economy. But further, there are only so many consumer good someone could buy before they are completely satiated. There's only so much bread one person needs. There are limits to the bed or computer someone could buy. We are at the point where the wealth literally have more money than they can spend and that's part of the problem. > Not to mention we are currently do not have that problem, which is why we have inflation above target. We have inflation above target because businesses have merged and consolidated to the point where they can aggressively raise prices not because they need to but because they have the general population over a barrel. Collusion and speculation is a big factor in a lot of the inflation. That's not universally true, after all egg price inflation has been due to herd culling for bird flu. It is however fairly true and something that businesses are bragging about during their quarterly shareholder meetings. > creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them. Where and how they spend their money matters. And part of the defense against further inflation can be more taxes/regulations. For example, vacancy taxes for residential units which would help pull back the real-estate market.
- gruez 2y ago
  > The bigger factory generates more wealth for them while not being taxed because it isn't directly owned by them. A yacht only costs them money. Everything you said is true regardless of how taxes are structured, so I don't see how that's supposed to support your claim that "taxing the rich based on their wealth/property/ and income then you are in fact incentivizing them to buy bigger factories rather than yachts". > Businesses are being ran not based on whether or not the goods are being sold or valuable, but rather whether or not the speculators in the market think it's good or valuable. I don't see what the issue is. We don't have a crystal ball that tells us "whether or not the goods are being sold or valuable", so the latter is the best we have. How else are we going to allocate capital? A central economic planning committee? >The entire point of stock isn't bigger factories, it's to enable bigger yachts. If you want to be reductive, sure. If you want to be even more reductive, you might as well go with "Everything in the world is about sex, except sex. Sex is about power". >Right, but as you point out, that's not what the rich are doing. They are instead buying paper that does not feed back into the economy. The people who invest in VCs, PE, and private credit are most definitely not "buying paper that does not feed back into the economy". VCs and PEs directly fund startups and other businesses, and private credit funds infrastructure projects and other corporate spending. Moreover, even if spending $100 to buy shares in Tesla doesn't directly cause $100 being spent on battery gigafactories or whatever, doesn't mean it "does not feed back into the economy". You're paying off a chain of investors, all the way back to the investor who participated in Tesla's IPO, who did directly fund Tesla's factories. Claiming otherwise makes as much sense as "buying an apple from the grocery store doesn't feed back into apple farmers, because you're only paying the grocery store". >We have inflation above target because businesses have merged and consolidated to the point where they can aggressively raise prices not because they need to but because they have the general population over a barrel. Collusion and speculation is a big factor in a lot of the inflation. Source? >That's not universally true, after all egg price inflation has been due to herd culling for bird flu. It is however fairly true and something that businesses are bragging about during their quarterly shareholder meetings. Executives bragging about how greedy they are is basically the equivalent of rappers bragging about all the crimes they've committed in their albums. In both cases their audiences like them to sound as greedy/criminal as possible, so they oblige. Securities law makes the former can't straight up lie about stuff, but the incentive structure is the same.

cogman10 2y ago

> This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. Yachts are wealth that would be taxed. And in fact, assuming you are taxing the rich based on their wealth/property/ and income then you are in fact incentivizing them to buy bigger factories rather than yachts. The bigger factory generates more wealth for them while not being taxed because it isn't directly owned by them. A yacht only costs them money. > All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. And what do those sheets of paper do? Do they create jobs? Do they employ people? The problem with the investment ownership model is it's completely speculative without any actual feedback into the economy. The only difference between the paper that grants ownership of microsoft and the paper that allows you to pay back debt is one has speculative value for trade. Because the value of the sheet of paper is based on what the market values that sheet of paper as, it creates perverse incentives that aren't actually economically good. For example, the last couple of years when tech businesses hired a bunch of employees because that made the stock go up, then fired a bunch of employees because that make the stock go up. Businesses are being ran not based on whether or not the goods are being sold or valuable, but rather whether or not the speculators in the market think it's good or valuable. That's a major negative distortion of the market. The entire point of stock isn't bigger factories, it's to enable bigger yachts. Stock as compensation, particularly for business owners, is one of the worst inventions of society. It is what causes enshittification. > if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Right, but as you point out, that's not what the rich are doing. They are instead buying paper that does not feed back into the economy. But further, there are only so many consumer good someone could buy before they are completely satiated. There's only so much bread one person needs. There are limits to the bed or computer someone could buy. We are at the point where the wealth literally have more money than they can spend and that's part of the problem. > Not to mention we are currently do not have that problem, which is why we have inflation above target. We have inflation above target because businesses have merged and consolidated to the point where they can aggressively raise prices not because they need to but because they have the general population over a barrel. Collusion and speculation is a big factor in a lot of the inflation. That's not universally true, after all egg price inflation has been due to herd culling for bird flu. It is however fairly true and something that businesses are bragging about during their quarterly shareholder meetings. > creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them. Where and how they spend their money matters. And part of the defense against further inflation can be more taxes/regulations. For example, vacancy taxes for residential units which would help pull back the real-estate market.

gruez 2y ago
> The bigger factory generates more wealth for them while not being taxed because it isn't directly owned by them. A yacht only costs them money. Everything you said is true regardless of how taxes are structured, so I don't see how that's supposed to support your claim that "taxing the rich based on their wealth/property/ and income then you are in fact incentivizing them to buy bigger factories rather than yachts". > Businesses are being ran not based on whether or not the goods are being sold or valuable, but rather whether or not the speculators in the market think it's good or valuable. I don't see what the issue is. We don't have a crystal ball that tells us "whether or not the goods are being sold or valuable", so the latter is the best we have. How else are we going to allocate capital? A central economic planning committee? >The entire point of stock isn't bigger factories, it's to enable bigger yachts. If you want to be reductive, sure. If you want to be even more reductive, you might as well go with "Everything in the world is about sex, except sex. Sex is about power". >Right, but as you point out, that's not what the rich are doing. They are instead buying paper that does not feed back into the economy. The people who invest in VCs, PE, and private credit are most definitely not "buying paper that does not feed back into the economy". VCs and PEs directly fund startups and other businesses, and private credit funds infrastructure projects and other corporate spending. Moreover, even if spending $100 to buy shares in Tesla doesn't directly cause $100 being spent on battery gigafactories or whatever, doesn't mean it "does not feed back into the economy". You're paying off a chain of investors, all the way back to the investor who participated in Tesla's IPO, who did directly fund Tesla's factories. Claiming otherwise makes as much sense as "buying an apple from the grocery store doesn't feed back into apple farmers, because you're only paying the grocery store". >We have inflation above target because businesses have merged and consolidated to the point where they can aggressively raise prices not because they need to but because they have the general population over a barrel. Collusion and speculation is a big factor in a lot of the inflation. Source? >That's not universally true, after all egg price inflation has been due to herd culling for bird flu. It is however fairly true and something that businesses are bragging about during their quarterly shareholder meetings. Executives bragging about how greedy they are is basically the equivalent of rappers bragging about all the crimes they've committed in their albums. In both cases their audiences like them to sound as greedy/criminal as possible, so they oblige. Securities law makes the former can't straight up lie about stuff, but the incentive structure is the same.