6 ms·

and a basic sandwich costs 3x that of in denmark :)

AnthonyMouse 2y ago
That's the premise, isn't it? The local sandwich shop owner, a small business, makes more money relative to the global price of an iPhone or a solar panel so there is less wealth inequality. The only useful increase in equality is the one that makes ordinary people better off. Making them poorer just to spite the rich by a larger amount is absurd.
- fifilura 2y ago
  The idea behind subsidising re-education is that it benefits the society in the long run. I guess I have no proof that it isn't what makes Scandinavian GDP/capita lower.
  - AnthonyMouse 2y ago
    It isn't funding education in itself that lowers GDP, it's high tax rates. Investors put money where it gets the best returns. Suppose one country has a 20% tax rate and the other has a 60% tax rate, i.e. they keep 80% of the returns instead of 40%. Then they don't invest in the second country unless the returns are twice as high to begin with, and in most cases they're not. Governments making beneficial use of tax dollars can counteract some of that, because the investments would increase productivity there (e.g. more educated workforce), but for that to work the government would have to make net positive investments against the losses resulting from higher tax rates. That's notoriously difficult and governments more often fail than succeed at doing it efficiently, and there is a strong incentive for corruption. If any significant amount of tax money is directed to cronies or politically connected constituencies, the possibility of not causing net harm quickly plummets. Moreover, government spending has diminishing returns. Collecting enough in taxes to have a basic government that can at least enforce laws against violence and provide transportation infrastructure has very high returns. The first $10M you spend on police might cause the number of unsolved murders to go from 1000 to 500. The next $10M you spend might cause it to go from 500 to 450, because the remaining ones are harder to solve, and because there are fewer remaining to solve. At some point additional spending isn't getting enough of a benefit to be worth the cost. And the same for infrastructure and education and all the rest of it. The exact breakeven point is obviously a matter of some debate, but there is generally a negative correlation between higher tax rates and GDP per capita, implying that most current governments are either taxing at inefficiently high levels because the marginal government program isn't worth the cost, or that there are productive investments governments could be making with the existing money but instead they're allocating it to something else, e.g. because of government corruption or mismanagement.
    - fifilura 2y ago
      > There is generally a negative correlation between higher tax rates and GDP per capita There are lots of reasons for high/low GDP per capita, but I would like to see proof of this to believe it. Why is Denmark so high up for example, generally considered the country in the world with the highest tax pressure, and without any substantial natural resources. Cherry picking of course, but your claim is very sweeping, so I'd put the pressure on you to prove it. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
      - AnthonyMouse 2y ago
        > Why is Denmark so high up for example, generally considered the country in the world with the highest tax pressure, and without any substantial natural resources. It isn't the country with the highest tax pressure, e.g. Denmark government revenue is 36% of GDP, approximately equal to the UK, vs. 44% for France or 48% for Greece: https://en.wikipedia.org/wiki/List_of_countries_by_government_budget https://en.wikipedia.org/wiki/List_of_countries_by_governmen... But the major source of variance in the numbers is that it not only matters what the tax rate is, it also matters how effectively you spend the money. Suppose a government with the level of competence of Denmark would have an optimal tax rate of 20%, i.e. that's the point at which the low-hanging fruit is gone and additional spending starts to become net negative. That doesn't mean it's enormously net negative, when the government is more competent and efficient than average the loss could be small, so that Denmark at 36% might still only be slightly worse than breakeven compared to the lower tax rate. Meanwhile a different government has the 20% tax rate, but three quarters of the money is lost to corruption or incompetence instead of funding the beneficial programs it should have been, so they could be worse off because high levels of corruption and waste can be as bad as high taxes. The worst case is, of course, when you do both and have a high tax rate which goes to a government with a high level of corruption, which is what you see in e.g. Greece. But this is also what tends to happen in any place with a less efficient government that tries to solve it by raising taxes. The inefficiency that was the cause of the problem to begin with then gets more money to set on fire and that makes it even worse.

That's the premise, isn't it? The local sandwich shop owner, a small business, makes more money relative to the global price of an iPhone or a solar panel so there is less wealth inequality. The only useful increase in equality is the one that makes ordinary people better off. Making them poorer just to spite the rich by a larger amount is absurd.

fifilura 2y ago
The idea behind subsidising re-education is that it benefits the society in the long run. I guess I have no proof that it isn't what makes Scandinavian GDP/capita lower.
- AnthonyMouse 2y ago
  It isn't funding education in itself that lowers GDP, it's high tax rates. Investors put money where it gets the best returns. Suppose one country has a 20% tax rate and the other has a 60% tax rate, i.e. they keep 80% of the returns instead of 40%. Then they don't invest in the second country unless the returns are twice as high to begin with, and in most cases they're not. Governments making beneficial use of tax dollars can counteract some of that, because the investments would increase productivity there (e.g. more educated workforce), but for that to work the government would have to make net positive investments against the losses resulting from higher tax rates. That's notoriously difficult and governments more often fail than succeed at doing it efficiently, and there is a strong incentive for corruption. If any significant amount of tax money is directed to cronies or politically connected constituencies, the possibility of not causing net harm quickly plummets. Moreover, government spending has diminishing returns. Collecting enough in taxes to have a basic government that can at least enforce laws against violence and provide transportation infrastructure has very high returns. The first $10M you spend on police might cause the number of unsolved murders to go from 1000 to 500. The next $10M you spend might cause it to go from 500 to 450, because the remaining ones are harder to solve, and because there are fewer remaining to solve. At some point additional spending isn't getting enough of a benefit to be worth the cost. And the same for infrastructure and education and all the rest of it. The exact breakeven point is obviously a matter of some debate, but there is generally a negative correlation between higher tax rates and GDP per capita, implying that most current governments are either taxing at inefficiently high levels because the marginal government program isn't worth the cost, or that there are productive investments governments could be making with the existing money but instead they're allocating it to something else, e.g. because of government corruption or mismanagement.
  - fifilura 2y ago
    > There is generally a negative correlation between higher tax rates and GDP per capita There are lots of reasons for high/low GDP per capita, but I would like to see proof of this to believe it. Why is Denmark so high up for example, generally considered the country in the world with the highest tax pressure, and without any substantial natural resources. Cherry picking of course, but your claim is very sweeping, so I'd put the pressure on you to prove it. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
    - AnthonyMouse 2y ago
      > Why is Denmark so high up for example, generally considered the country in the world with the highest tax pressure, and without any substantial natural resources. It isn't the country with the highest tax pressure, e.g. Denmark government revenue is 36% of GDP, approximately equal to the UK, vs. 44% for France or 48% for Greece: https://en.wikipedia.org/wiki/List_of_countries_by_government_budget https://en.wikipedia.org/wiki/List_of_countries_by_governmen... But the major source of variance in the numbers is that it not only matters what the tax rate is, it also matters how effectively you spend the money. Suppose a government with the level of competence of Denmark would have an optimal tax rate of 20%, i.e. that's the point at which the low-hanging fruit is gone and additional spending starts to become net negative. That doesn't mean it's enormously net negative, when the government is more competent and efficient than average the loss could be small, so that Denmark at 36% might still only be slightly worse than breakeven compared to the lower tax rate. Meanwhile a different government has the 20% tax rate, but three quarters of the money is lost to corruption or incompetence instead of funding the beneficial programs it should have been, so they could be worse off because high levels of corruption and waste can be as bad as high taxes. The worst case is, of course, when you do both and have a high tax rate which goes to a government with a high level of corruption, which is what you see in e.g. Greece. But this is also what tends to happen in any place with a less efficient government that tries to solve it by raising taxes. The inefficiency that was the cause of the problem to begin with then gets more money to set on fire and that makes it even worse.