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Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxin

Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer. Also when talking about tariffs reducing demand and inflating prices, I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.

no_wizard 2y ago
He's one economist from a very conservative line of thinking. As a counter example, Thomas Piketty argues at length that taxation and wealth redistribution remain an effective way to bolster a societies resilience and lessen wealth inequality - which is still a very real issue in the world, and arguably one that the US shows can have very real negative consequences for letting it go unaddressed. As for demand and inflating prices, yeah, domestic products may be more attractive, but the economy is huge, and much of it does not have a domestic allegory. The other issue here is the tax is on all imports, not only manufactured goods, which means raw materials - which often have to be sourced elsewhere - make manufacturing more expensive even domestically
- ericmay 2y ago
  Maybe we should raise tariffs and raise taxes on the wealthy? Does it have to be framed as an either-or? > and much of it does not have a domestic allegory Well some would argue that's the problem. Maybe now we will? Idk.
  - no_wizard 2y ago
    The way its being framed in the public - and often in discussions even in this Hacker News comments section - is its an alternative to raising other taxes. Trump is selling it that way, along with simultaneous tax cuts he wants to either extend or implement, which goes to show the tariffs are not some way of addressing the national debt concerns either. While nothing does, the actual discussion around it isn't allowing any room for non-tariff tax increases regardless.
    - ericmay 2y ago
      I agree with your point about how the discussion is framed. To add to where it should be framed, in my mind, you can toss in cost cutting at the federal government in there as well. Neither tariffs nor cost cutting, unless it targets major programs such as Social Security or Medicaid, will have an effect on the national debt or the deficit. It’s all marketing.
      - no_wizard 2y ago
        Cost cutting always enters the equation, because somehow its better to eliminate benefits. Why not reform the programs? There is actually ample room for this, particularly with Social Security. Why not raise revenue via land value taxes, closing tax loopholes and other less and/or non regressive means? The social safety net in this country is already terrible, making it more terrible by cutting the programs won't be better for anyone except a slice of the wealthy
- Domenic_S 2y ago
  > taxation and wealth redistribution remain an effective way to bolster a societies resilience Tangentially: It’s wild how inconsistent the public and political reactions are to different ways of getting revenue. Take this common pattern: When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often: "That’s only 0.01% of the federal budget. It’s nothing!" But when someone proposes a tax on billionaires that would over time raise a similar amount suddenly the reaction flips: "We’ll solve inequality! Fund healthcare!" This contradiction is everywhere. How can $20 billion in government savings be "nothing," while $20 billion in new tax revenue is "transformational"? It's the same money.
  - Capricorn2481 2y ago
    I don't know who these people are that you're talking about, who only propose taxes on billionaires and not the rest of the upper class, or who have compared those two numbers and seen they are different. I would imagine you're talking about two different groups with different figures. Regardless, "taxing the rich" is not one mediocre policy, but several interdependent policies. It's not just picking the 5 richest people in the world and taking their money. The transformation doesn't come from redistributing $20 billion (wherever that figure is from) but encouraging executives to reinvest into their company instead of trying to suck as much cash out as possible. Bobby Kotick making $155 million a year while Activison lays off hundreds of employees is insane. What on God's earth could you possibly need more than $20 million a year for? That is not right no matter you slice it. That money needs to be aggressively taxed so it is instead used to keep people employed at a much lower tax rate, not in the hopes that the government can use it for spending.
  - freejazz 2y ago
    No one is suggesting only taxing billionaires to the tune of netting solely an additional $1B, that seems farcical.
  - plasmatix 2y ago
    I don't think anyone would scoff and the discovery and elimination of waste or fraud. I think the vibe you're describing is doubt that these supposed billions in waste/fraud/abuse live up to the hype. Surely there's plenty of waste in federal spending but I suspect the vast majority is not going to be blatant and easy to identify
- ccorcos 2y ago
  I asked ChatGPT to explain the arguments of Sowell and Piketty. https://chatgpt.com/share/67eebae2-df3c-800b-aba9-6e36c04810a6 https://chatgpt.com/share/67eebae2-df3c-800b-aba9-6e36c04810... I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books? > raw materials - which often have to be sourced elsewhere Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
  - no_wizard 2y ago
    >I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books? I'd say start with Capital in the Twenty-First Century by Thomas Piketty. Its a great read, if a bit thick (its a very large tome indeed and very information dense) >Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it... Its about access, cost, amount, etc. One company getting lithium is a rounding error. The entire market for lithium is bigger than Tesla and even electric cars. Then there is the entire question of how fast you can get the lithium online. Its not like most (if any) of the businesses reliant on lithium - which again, more than just auto makers certainly - take in raw lithium and produce something with it. It is typically pre-processed depending on its use. So that needs to come online too. Also, is there enough of the US workforce that can get this material online quickly? We're talking years before something comes online in sufficient quantity to be meaningful, let alone replace other sources. Then you have to ask how much of the given resource do we even have? Whats the quality? Not all lithium deposits are the same, after all. And many more questions I am not likely thinking about, and this is only in regard to lithium. Think about the raw materials for everything in our lives - gold, silver, uranium, iron etc. and you'll find in more cases than not its simply unfeasible to start mining & processing it in the US, you will have to import it. Your idea of what this takes is, frankly, a bit too simplistic to be realistic or useful until it answers all of these kinds of questions.
- dismalaf 2y ago
  Remember when Piketty advised the government of François Hollande? They enacted the wealth tax and there was simply a ton of capital flight and nothing was fixed? Leading to Macron winning the elections and enacting a ton of conservative policies and leading to pretty decent economic growth...
  - Capricorn2481 2y ago
    That's not quite what happened, was it? First off, capital flight is not a good argument against high wealth taxes, it's an argument for more controls to prevent people from doing this, so they are forced to reinvest in business. The wealth tax was in for a meager 2 years, and the richest in the country started calling it "anti-business" even though they were transparently refusing to reinvest that money in their company. Anti-business is shorthand for "We can't hire the 1 high-earner executive we want to play golf with instead of the 100 lower level employees that would actually help the economy." Instead, they kept THEIR salaries and ate that tax cost, and told their employees they would suffer during these times. It was a coordinated effort to discredit something that was meant to create more jobs. Much like when Saudi Arabia artificially restricted oil until after the 2020 election. And the administration had no controls on this. So yes, high taxes on the rich by themselves are worthless, but that doesn't mean those policies coupled with tighter controls aren't essential for wealth inequality. Of course, conservative news is going to talk about this in the context of debt, and claim because the amount raised did not match the debt (moronic) that it was clearly a bad idea to tax the rich, when the real takeaway is there needs to be more controls and a bigger spotlight on how these scumbags jerk the system around. At the end of the day, they are trying to keep their yachts and their massive, unnecessary mortgages, and will fight tooth and nail to do so, and anyone falling for news stories about "oh it didn't work in 2 years, my boss said I was going to take a salary cut" is helping that agenda and nothing else.
  - no_wizard 2y ago
    As I recall, Hollande decided to ignore all the advice around him[0] >Mr Piketty’s second criticism touches on Mr Hollande’s tax policy. For years the French economist has argued for a more progressive tax system, which would merge both income tax, currently paid by only half of French households, and the “contribution sociale généralisée”, a non-progressive social charge paid by all. This too was one of Mr Hollande’s campaign promises. Yet the president has shelved any plans to overhaul the tax structure, preferring instead simply to increase taxes on the middle-classes and the rich. [0]: https://www.economist.com/europe/2015/01/02/pikettys-snub https://www.economist.com/europe/2015/01/02/pikettys-snub
skyyler 2y ago
>It doesn’t raise prices of domestic goods and actually increases demand for domestic goods. Have you ever tried to purchase electronics in Brazil? I don't know if that increased demand for domestic goods is necessarily a good thing...
- ccorcos 2y ago
  Yeah, I think all of the arguments made for and against tariffs are only partly true depending on the context. Interestingly, Lua came out of Brazil for these reasons...
vmilner 2y ago
It’s hard to see tariffs on steel (say) not raising wider domestic prices. Any domestic industry using steel (car making, house building etc) presumably now has to pay more for its steel which feeds through to consumer prices. You might increase the number of steel worker jobs but at a hidden wider cost to the wider US economy.
- SpaceNoodled 2y ago
  US homes tend to be built with lumber, not steel.
  - skyyler 2y ago
    What do you think holds the lumber together? US homes tend not to be built with Japanese techniques.
    - Domenic_S 2y ago
      We already have Section 232 tariffs on steel and aluminum imports, and have since March 2018. These new tariffs exclude steel (since we tariff it already).
      - vmilner 2y ago
        However, the widely used tariff exemptions available to US steel consumers who could claim difficulties sourcing cheap steel are now being closed.
thuanao 2y ago
Sowell would be against tariffs, he’s a free market fundamentalist. As usual, libertarianism is used as a justification for corporate fascism, mercantilism, taxes on the poor… basically the Republican agenda. Funny how that works.
cpeterso 2y ago
> It doesn’t raise prices of domestic goods and actually increases demand for domestic goods. But domestic producers will surely increase their prices to match their foreign competitors’ tariffed prices.
- ccorcos 2y ago
  Not necessarily, if there's adequate competition and no collusion. I think of Costco's Kirkland products which have a capped profit margin, for example.
  - Zamaamiro 2y ago
    Protectionism stifles competition.
myrmidon 2y ago
[flagged]
barbazoo 2y ago
> And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer How are those things related? Are poor people bribing politicians to increase taxes?
- Domenic_S 2y ago
  The argument is that increasing government revenue doesn't automatically mean We the People benefit; it usually means more pork and other ways of funneling money to benefit the people with the power to funnel it.
  - ccorcos 2y ago
    Exactly. Sowell lists many examples too in his book "Visions of the Annointed".
sn9 2y ago
And? Ask Sowell if he prefers progressive taxation and welfare or rapid spikes in tariffs sparking a global trade war. (He actually was interviewed yesterday and he was very much not a fan of the tariffs.)

no_wizard 2y ago

He's one economist from a very conservative line of thinking. As a counter example, Thomas Piketty argues at length that taxation and wealth redistribution remain an effective way to bolster a societies resilience and lessen wealth inequality - which is still a very real issue in the world, and arguably one that the US shows can have very real negative consequences for letting it go unaddressed. As for demand and inflating prices, yeah, domestic products may be more attractive, but the economy is huge, and much of it does not have a domestic allegory. The other issue here is the tax is on all imports, not only manufactured goods, which means raw materials - which often have to be sourced elsewhere - make manufacturing more expensive even domestically

ericmay 2y ago
Maybe we should raise tariffs and raise taxes on the wealthy? Does it have to be framed as an either-or? > and much of it does not have a domestic allegory Well some would argue that's the problem. Maybe now we will? Idk.
- no_wizard 2y ago
  The way its being framed in the public - and often in discussions even in this Hacker News comments section - is its an alternative to raising other taxes. Trump is selling it that way, along with simultaneous tax cuts he wants to either extend or implement, which goes to show the tariffs are not some way of addressing the national debt concerns either. While nothing does, the actual discussion around it isn't allowing any room for non-tariff tax increases regardless.
  - ericmay 2y ago
    I agree with your point about how the discussion is framed. To add to where it should be framed, in my mind, you can toss in cost cutting at the federal government in there as well. Neither tariffs nor cost cutting, unless it targets major programs such as Social Security or Medicaid, will have an effect on the national debt or the deficit. It’s all marketing.
    - no_wizard 2y ago
      Cost cutting always enters the equation, because somehow its better to eliminate benefits. Why not reform the programs? There is actually ample room for this, particularly with Social Security. Why not raise revenue via land value taxes, closing tax loopholes and other less and/or non regressive means? The social safety net in this country is already terrible, making it more terrible by cutting the programs won't be better for anyone except a slice of the wealthy
Domenic_S 2y ago
> taxation and wealth redistribution remain an effective way to bolster a societies resilience Tangentially: It’s wild how inconsistent the public and political reactions are to different ways of getting revenue. Take this common pattern: When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often: "That’s only 0.01% of the federal budget. It’s nothing!" But when someone proposes a tax on billionaires that would over time raise a similar amount suddenly the reaction flips: "We’ll solve inequality! Fund healthcare!" This contradiction is everywhere. How can $20 billion in government savings be "nothing," while $20 billion in new tax revenue is "transformational"? It's the same money.
- Capricorn2481 2y ago
  I don't know who these people are that you're talking about, who only propose taxes on billionaires and not the rest of the upper class, or who have compared those two numbers and seen they are different. I would imagine you're talking about two different groups with different figures. Regardless, "taxing the rich" is not one mediocre policy, but several interdependent policies. It's not just picking the 5 richest people in the world and taking their money. The transformation doesn't come from redistributing $20 billion (wherever that figure is from) but encouraging executives to reinvest into their company instead of trying to suck as much cash out as possible. Bobby Kotick making $155 million a year while Activison lays off hundreds of employees is insane. What on God's earth could you possibly need more than $20 million a year for? That is not right no matter you slice it. That money needs to be aggressively taxed so it is instead used to keep people employed at a much lower tax rate, not in the hopes that the government can use it for spending.
- freejazz 2y ago
  No one is suggesting only taxing billionaires to the tune of netting solely an additional $1B, that seems farcical.
- plasmatix 2y ago
  I don't think anyone would scoff and the discovery and elimination of waste or fraud. I think the vibe you're describing is doubt that these supposed billions in waste/fraud/abuse live up to the hype. Surely there's plenty of waste in federal spending but I suspect the vast majority is not going to be blatant and easy to identify
ccorcos 2y ago
I asked ChatGPT to explain the arguments of Sowell and Piketty. https://chatgpt.com/share/67eebae2-df3c-800b-aba9-6e36c04810a6 https://chatgpt.com/share/67eebae2-df3c-800b-aba9-6e36c04810... I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books? > raw materials - which often have to be sourced elsewhere Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
- no_wizard 2y ago
  >I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books? I'd say start with Capital in the Twenty-First Century by Thomas Piketty. Its a great read, if a bit thick (its a very large tome indeed and very information dense) >Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it... Its about access, cost, amount, etc. One company getting lithium is a rounding error. The entire market for lithium is bigger than Tesla and even electric cars. Then there is the entire question of how fast you can get the lithium online. Its not like most (if any) of the businesses reliant on lithium - which again, more than just auto makers certainly - take in raw lithium and produce something with it. It is typically pre-processed depending on its use. So that needs to come online too. Also, is there enough of the US workforce that can get this material online quickly? We're talking years before something comes online in sufficient quantity to be meaningful, let alone replace other sources. Then you have to ask how much of the given resource do we even have? Whats the quality? Not all lithium deposits are the same, after all. And many more questions I am not likely thinking about, and this is only in regard to lithium. Think about the raw materials for everything in our lives - gold, silver, uranium, iron etc. and you'll find in more cases than not its simply unfeasible to start mining & processing it in the US, you will have to import it. Your idea of what this takes is, frankly, a bit too simplistic to be realistic or useful until it answers all of these kinds of questions.
dismalaf 2y ago
Remember when Piketty advised the government of François Hollande? They enacted the wealth tax and there was simply a ton of capital flight and nothing was fixed? Leading to Macron winning the elections and enacting a ton of conservative policies and leading to pretty decent economic growth...
- Capricorn2481 2y ago
  That's not quite what happened, was it? First off, capital flight is not a good argument against high wealth taxes, it's an argument for more controls to prevent people from doing this, so they are forced to reinvest in business. The wealth tax was in for a meager 2 years, and the richest in the country started calling it "anti-business" even though they were transparently refusing to reinvest that money in their company. Anti-business is shorthand for "We can't hire the 1 high-earner executive we want to play golf with instead of the 100 lower level employees that would actually help the economy." Instead, they kept THEIR salaries and ate that tax cost, and told their employees they would suffer during these times. It was a coordinated effort to discredit something that was meant to create more jobs. Much like when Saudi Arabia artificially restricted oil until after the 2020 election. And the administration had no controls on this. So yes, high taxes on the rich by themselves are worthless, but that doesn't mean those policies coupled with tighter controls aren't essential for wealth inequality. Of course, conservative news is going to talk about this in the context of debt, and claim because the amount raised did not match the debt (moronic) that it was clearly a bad idea to tax the rich, when the real takeaway is there needs to be more controls and a bigger spotlight on how these scumbags jerk the system around. At the end of the day, they are trying to keep their yachts and their massive, unnecessary mortgages, and will fight tooth and nail to do so, and anyone falling for news stories about "oh it didn't work in 2 years, my boss said I was going to take a salary cut" is helping that agenda and nothing else.
- no_wizard 2y ago
  As I recall, Hollande decided to ignore all the advice around him[0] >Mr Piketty’s second criticism touches on Mr Hollande’s tax policy. For years the French economist has argued for a more progressive tax system, which would merge both income tax, currently paid by only half of French households, and the “contribution sociale généralisée”, a non-progressive social charge paid by all. This too was one of Mr Hollande’s campaign promises. Yet the president has shelved any plans to overhaul the tax structure, preferring instead simply to increase taxes on the middle-classes and the rich. [0]: https://www.economist.com/europe/2015/01/02/pikettys-snub https://www.economist.com/europe/2015/01/02/pikettys-snub

skyyler 2y ago

>It doesn’t raise prices of domestic goods and actually increases demand for domestic goods. Have you ever tried to purchase electronics in Brazil? I don't know if that increased demand for domestic goods is necessarily a good thing...

ccorcos 2y ago
Yeah, I think all of the arguments made for and against tariffs are only partly true depending on the context. Interestingly, Lua came out of Brazil for these reasons...

vmilner 2y ago

It’s hard to see tariffs on steel (say) not raising wider domestic prices. Any domestic industry using steel (car making, house building etc) presumably now has to pay more for its steel which feeds through to consumer prices. You might increase the number of steel worker jobs but at a hidden wider cost to the wider US economy.

SpaceNoodled 2y ago
US homes tend to be built with lumber, not steel.
- skyyler 2y ago
  What do you think holds the lumber together? US homes tend not to be built with Japanese techniques.
  - Domenic_S 2y ago
    We already have Section 232 tariffs on steel and aluminum imports, and have since March 2018. These new tariffs exclude steel (since we tariff it already).
    - vmilner 2y ago
      However, the widely used tariff exemptions available to US steel consumers who could claim difficulties sourcing cheap steel are now being closed.

thuanao 2y ago

Sowell would be against tariffs, he’s a free market fundamentalist. As usual, libertarianism is used as a justification for corporate fascism, mercantilism, taxes on the poor… basically the Republican agenda. Funny how that works.

cpeterso 2y ago

> It doesn’t raise prices of domestic goods and actually increases demand for domestic goods. But domestic producers will surely increase their prices to match their foreign competitors’ tariffed prices.

ccorcos 2y ago
Not necessarily, if there's adequate competition and no collusion. I think of Costco's Kirkland products which have a capped profit margin, for example.
- Zamaamiro 2y ago
  Protectionism stifles competition.

myrmidon 2y ago

[flagged]

barbazoo 2y ago

> And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer How are those things related? Are poor people bribing politicians to increase taxes?

Domenic_S 2y ago
The argument is that increasing government revenue doesn't automatically mean We the People benefit; it usually means more pork and other ways of funneling money to benefit the people with the power to funnel it.
- ccorcos 2y ago
  Exactly. Sowell lists many examples too in his book "Visions of the Annointed".

sn9 2y ago

And? Ask Sowell if he prefers progressive taxation and welfare or rapid spikes in tariffs sparking a global trade war. (He actually was interviewed yesterday and he was very much not a fan of the tariffs.)