5 ms·

> The idea that the free market will self-correct and optimize outcomes is a well-documented fantasy. There are far too many documented instances of it actuall

> The idea that the free market will self-correct and optimize outcomes is a well-documented fantasy. There are far too many documented instances of it actually working to call it a fantasy. > Markets don’t account for externalities Markets aren't expected to account for externalities. Externalities are the things you're supposed to tax. > they concentrate wealth (and therefore political power) You're describing regulatory capture. This is why governments are supposed to have limited powers. To keep them from passing rules that enrich cronies and entrench incumbents. > they routinely underprovide merit goods like education, healthcare, and basic research (things that benefit society broadly but aren’t immediately profitable) Markets are actually pretty good at providing all of those things. There are plenty of high quality private schools, high quality private medical facilities and high quality private research labs. The real problem here is that some people can't afford those things. But now you're making the case for a UBI so people can afford those things when they otherwise couldn't, not for having the government actually operate the doctor's office. > As for how to address budget issues, the solution is simple: tax the rich. Is it so simple? The highest marginal tax rate in the US is 50.3% (37% federal + 13.3% state in California). The highest marginal tax rate in Norway is 47.4%. Meanwhile most of what the rich own are investment securities like stocks and US treasuries. What happens if you increase their taxes? They have less to invest. The stocks then go to someone not being taxed, i.e. foreign investors, so more of the future returns of US companies leave the country. Fewer treasury buyers increase the interest rate the US pays on the debt. Fewer stock buyers lower stock prices, which reduce capital gains and therefore capital gains tax revenue. Fewer stock buyers make it harder for companies to raise money, which lowers employment and wages, and therefore tax revenue again. Increasing the proportion of tax revenue that comes from "the rich" causes an extremely perverse incentive whenever you ask the Congressional Budget Office to do the numbers on how a policy that would transfer wealth from the rich to the middle class would affect tax revenue, and the policy correspondingly gets shelved. TANSTAAFL.

brokeAstronomer 2y ago
>> There are far too many documented instances of it actually working to call it a fantasy. Markets are a tool which can work extremely well if deployed carefully and within a sensible regulatory framework. Given that the world CO2 level keeps rising, we can't eat fish because of heavy metals and we all have forever microplastics in us, I think it's fair to question some of our assumptions. >> Markets aren't expected to account for externalities. Externalities are the things you're supposed to tax. Agreed - however taxing externalities doesn't seem to be working out in practice (in the US). >> You're describing regulatory capture. This is why governments are supposed to have limited powers. Wealth inequality can rise without regulatory capture. Government is not the source of all evil. Smaller govenrment would just lead to further concentration of wealth and power within the private sector. We need a balanced system, not blind devotion. >> Markets are actually pretty good at providing all of those things... The real problem here is that some people can't afford those thing So can the market provide those things or not? Clearly we want everyone to have an education not just the uber wealthy.
- AnthonyMouse 2y ago
  > Given that the world CO2 level keeps rising, we can't eat fish because of heavy metals and we all have forever microplastics in us, I think it's fair to question some of our assumptions. "Idiots will dump mercury in the river if you let them" is one of the assumptions. > Agreed - however taxing externalities doesn't seem to be working out in practice (in the US). It doesn't work if you don't actually do it. But notice the important distinction between "carbon tax which is fully refunded to the population as a divided" and "tax things that aren't carbon to subsidize cronies who waste money on questionable hydrogen cars and ineffective carbon capture nonsense." > Wealth inequality can rise without regulatory capture. It's mostly regulatory capture. The primary driver of wealth inequality is corporate entity size. The billionaires are the early shareholders in megacorps. The main exception is corporations violating antitrust laws, but this is still a form of regulatory capture, i.e. capturing the government to enforce contracts in restraint of trade when the government ought not to be doing that. > So can the market provide those things or not? Clearly we want everyone to have an education not just the uber wealthy. You don't have to be uber-wealthy to afford school. Most of what pays for public schools is the taxes paid by the parents of the students. Where this doesn't work is for the poorest or orphans etc., and this was traditionally handled through charity and scholarships. Ironically things government policies have been decimating by propping up real estate costs so high people can't afford space to have private community organizations, taking the money they could have donated to charity as taxes and spending it on boondoggles and military adventurism and otherwise encouraging people to rely on national governments rather than local communities.
- WalterBright 2y ago
  Wealth in a free market is not "concentrated", it is created. The total wealth in a free market country rises, which can only be explained by wealth being created rather than shifted around. > Clearly we want everyone to have an education not just the uber wealthy. Educational materials abound in this country, even for free. For example, I took some MIT courses that were on youtube, for free. I found my college textbook "Special Relativity" at a book sale for $.50. SAT prep books are available free at the library, and are often at thrift stores for a couple bucks. It's never been easier to get educated.
mbesto 2y ago
> There are far too many documented instances of it actually working to call it a fantasy. There are no documented instances of a truly free market. The parent's point I think has less to do with "it has been tried and it failed" and moreso that the idea that truly free market can exist is pure fantasy. FWIW - Costa Rica is probably the greatest example of a Libertarian's dream of a free market. I would love to show any free market absolutionist the colossal amount of time it takes to just pave 500m of a road in that country.
- AnthonyMouse 2y ago
  > There are no documented instances of a truly free market. But why is that interesting? If you enter into a contract to sell your car to someone and then instead of paying you they steal your car and kill you, that's crime, not a free market. Killing people by dumping mercury into the river is still just crime. Killing people by burning dirty coal is something that should be crime, even if it officially isn't. But this is different than banning things where each involved party is consenting, or imposing unfunded mandates or bureaucratic filing requirements. The less of those things there are, the freer the market is, and those places tend to do better than the places captured by central planners. Moreover, the main point is completely valid. If Palm's product isn't as good as an iPhone then you don't have to buy it and then they go away. If the DMV sucks, what are you going to do?
  - mbesto 2y ago
    > those places tend to do better than the places captured by central planners. There is no deterministic evidence for this and you cannot unilaterally say that. The problem here is that the market/service requires context. The main point made was that you can take any market and it will eventually self correct - this is simply untrue and we have countless examples of this.
- WalterBright 2y ago
  > There are no documented instances of a truly free market. There's no such thing as pure water, either. Nor is there any person who has not had impure thoughts. Nor can you ever cut a board to an exact length. Nor has anything created by man (or nature) been perfect. The historical reality is the more free a free market is, the better it performs. A free market does not have to be a "truly free market" in order to deliver the goods.
anon7000 2y ago
> Is it so simple? The highest marginal tax rate in the US is 50.3% (37% federal + 13.3% state in California). The highest marginal tax rate in Norway is 47.4%. Sure. It’s not simple. But you’re missing a lot of the picture too. People with high wealth and ownership can leverage massive loopholes (like taking a loan with stock as collateral) which means they pay very little effective tax on their “income”: https://www.profgalloway.com/earners-vs-owners-2/ https://www.profgalloway.com/earners-vs-owners-2/ The solution is surely not the status quo.
Brybry 2y ago
In the US, capital gains are taxed at a different rate from ordinary income, so taxing the "rich" (where the money is) doesn't necessarily have to destroy investing (not to mention a lot of retirement is tied up in investing, the rich aren't the only investors). Clinton's government balanced the budget and had a surplus by decreasing spending and increasing taxes. He backed off on some capital gains tax increases and still had the surplus. The fact of the matter is that if the US government is going to outlay X% of GDP then it needs to match X% of GDP in revenue: that's what Clinton's government did. Outlays dropped from 20.7% of GDP to 17.6% of GDP, tax revenue increased from 17.0% of GDP to 20.0% of GDP. [1] And that government did not defund Universities to do it (iirc they actually increased funding). Norway's tax revenue as a % of GDP in 2023 was 41.4%. United States was 25.2% [2] Your marginal rate comparison doesn't paint a fair comparison because a lot of their government revenue comes from VAT and a special very high petroleum tax (I couldn't find exact percentages). And I think they have fairly low income inequality[3]. [1] https://en.wikipedia.org/wiki/Economic_policy_of_the_Bill_Clinton_administration#Deficits_and_debt https://en.wikipedia.org/wiki/Economic_policy_of_the_Bill_Cl... (citing https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51129-2016outlookonecol-2.pdf https://www.cbo.gov/sites/default/files/114th-congress-2015-...) [2] https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/11/revenue-statistics-2024_6e88b46e/c87a3da5-en.pdf https://www.oecd.org/content/dam/oecd/en/publications/report... [page 15] [3] https://gateway.euro.who.int/en/hfa-explorer/gini-coefficient/norway/#8rdrJzzhx0 https://gateway.euro.who.int/en/hfa-explorer/gini-coefficien...
svara 2y ago
> Is it so simple? The highest marginal tax rate in the US is 50.3% (37% federal + 13.3% state in California). The highest marginal tax rate in Norway is 47.4%. Marginal income tax rate. People's aggregate incomes are a drop in the bucket compared to the amount of wealth in the world. I'm mostly a fan of free markets, but the way we've set up the game around the Western world, we're moving back towards a sort of feudal system made up of an asset owning upper class and then everyone else who needs to work to survive. I think what we need is a 100% marginal estate tax. Maybe something along the lines of 1M$ tax free per child and spouse. Everyone should have the right to vast financial success through free enterprise, but no one should be able to build multi generational dynasties, since it destroys the fabric of democracy over time.
atombender 2y ago
Norwegian here. It's not at all comparable. Norway has a wealth tax (about 1.09%), lots of consumption-level taxes (25% VAT, fees on gas, etc.), high capital gains tax (37.85% flat, no "qualified dividends" or tax-free bonds or Roth loopholes or anything like that).
dbdr 2y ago
> Markets aren't expected to account for externalities. Externalities are the things you're supposed to tax. > You're describing regulatory capture. This is why governments are supposed to have limited powers. To keep them from passing rules that enrich cronies and entrench incumbents. The problem is that those two principles are at odds with each other. You need the government to have enough power to fix externalities, but also limited power to avoid corruption.

brokeAstronomer 2y ago

>> There are far too many documented instances of it actually working to call it a fantasy. Markets are a tool which can work extremely well if deployed carefully and within a sensible regulatory framework. Given that the world CO2 level keeps rising, we can't eat fish because of heavy metals and we all have forever microplastics in us, I think it's fair to question some of our assumptions. >> Markets aren't expected to account for externalities. Externalities are the things you're supposed to tax. Agreed - however taxing externalities doesn't seem to be working out in practice (in the US). >> You're describing regulatory capture. This is why governments are supposed to have limited powers. Wealth inequality can rise without regulatory capture. Government is not the source of all evil. Smaller govenrment would just lead to further concentration of wealth and power within the private sector. We need a balanced system, not blind devotion. >> Markets are actually pretty good at providing all of those things... The real problem here is that some people can't afford those thing So can the market provide those things or not? Clearly we want everyone to have an education not just the uber wealthy.

AnthonyMouse 2y ago
> Given that the world CO2 level keeps rising, we can't eat fish because of heavy metals and we all have forever microplastics in us, I think it's fair to question some of our assumptions. "Idiots will dump mercury in the river if you let them" is one of the assumptions. > Agreed - however taxing externalities doesn't seem to be working out in practice (in the US). It doesn't work if you don't actually do it. But notice the important distinction between "carbon tax which is fully refunded to the population as a divided" and "tax things that aren't carbon to subsidize cronies who waste money on questionable hydrogen cars and ineffective carbon capture nonsense." > Wealth inequality can rise without regulatory capture. It's mostly regulatory capture. The primary driver of wealth inequality is corporate entity size. The billionaires are the early shareholders in megacorps. The main exception is corporations violating antitrust laws, but this is still a form of regulatory capture, i.e. capturing the government to enforce contracts in restraint of trade when the government ought not to be doing that. > So can the market provide those things or not? Clearly we want everyone to have an education not just the uber wealthy. You don't have to be uber-wealthy to afford school. Most of what pays for public schools is the taxes paid by the parents of the students. Where this doesn't work is for the poorest or orphans etc., and this was traditionally handled through charity and scholarships. Ironically things government policies have been decimating by propping up real estate costs so high people can't afford space to have private community organizations, taking the money they could have donated to charity as taxes and spending it on boondoggles and military adventurism and otherwise encouraging people to rely on national governments rather than local communities.
WalterBright 2y ago
Wealth in a free market is not "concentrated", it is created. The total wealth in a free market country rises, which can only be explained by wealth being created rather than shifted around. > Clearly we want everyone to have an education not just the uber wealthy. Educational materials abound in this country, even for free. For example, I took some MIT courses that were on youtube, for free. I found my college textbook "Special Relativity" at a book sale for $.50. SAT prep books are available free at the library, and are often at thrift stores for a couple bucks. It's never been easier to get educated.

mbesto 2y ago

> There are far too many documented instances of it actually working to call it a fantasy. There are no documented instances of a truly free market. The parent's point I think has less to do with "it has been tried and it failed" and moreso that the idea that truly free market can exist is pure fantasy. FWIW - Costa Rica is probably the greatest example of a Libertarian's dream of a free market. I would love to show any free market absolutionist the colossal amount of time it takes to just pave 500m of a road in that country.

AnthonyMouse 2y ago
> There are no documented instances of a truly free market. But why is that interesting? If you enter into a contract to sell your car to someone and then instead of paying you they steal your car and kill you, that's crime, not a free market. Killing people by dumping mercury into the river is still just crime. Killing people by burning dirty coal is something that should be crime, even if it officially isn't. But this is different than banning things where each involved party is consenting, or imposing unfunded mandates or bureaucratic filing requirements. The less of those things there are, the freer the market is, and those places tend to do better than the places captured by central planners. Moreover, the main point is completely valid. If Palm's product isn't as good as an iPhone then you don't have to buy it and then they go away. If the DMV sucks, what are you going to do?
- mbesto 2y ago
  > those places tend to do better than the places captured by central planners. There is no deterministic evidence for this and you cannot unilaterally say that. The problem here is that the market/service requires context. The main point made was that you can take any market and it will eventually self correct - this is simply untrue and we have countless examples of this.
WalterBright 2y ago
> There are no documented instances of a truly free market. There's no such thing as pure water, either. Nor is there any person who has not had impure thoughts. Nor can you ever cut a board to an exact length. Nor has anything created by man (or nature) been perfect. The historical reality is the more free a free market is, the better it performs. A free market does not have to be a "truly free market" in order to deliver the goods.

anon7000 2y ago

> Is it so simple? The highest marginal tax rate in the US is 50.3% (37% federal + 13.3% state in California). The highest marginal tax rate in Norway is 47.4%. Sure. It’s not simple. But you’re missing a lot of the picture too. People with high wealth and ownership can leverage massive loopholes (like taking a loan with stock as collateral) which means they pay very little effective tax on their “income”: https://www.profgalloway.com/earners-vs-owners-2/ https://www.profgalloway.com/earners-vs-owners-2/ The solution is surely not the status quo.

Brybry 2y ago

In the US, capital gains are taxed at a different rate from ordinary income, so taxing the "rich" (where the money is) doesn't necessarily have to destroy investing (not to mention a lot of retirement is tied up in investing, the rich aren't the only investors). Clinton's government balanced the budget and had a surplus by decreasing spending and increasing taxes. He backed off on some capital gains tax increases and still had the surplus. The fact of the matter is that if the US government is going to outlay X% of GDP then it needs to match X% of GDP in revenue: that's what Clinton's government did. Outlays dropped from 20.7% of GDP to 17.6% of GDP, tax revenue increased from 17.0% of GDP to 20.0% of GDP. [1] And that government did not defund Universities to do it (iirc they actually increased funding). Norway's tax revenue as a % of GDP in 2023 was 41.4%. United States was 25.2% [2] Your marginal rate comparison doesn't paint a fair comparison because a lot of their government revenue comes from VAT and a special very high petroleum tax (I couldn't find exact percentages). And I think they have fairly low income inequality[3]. [1] https://en.wikipedia.org/wiki/Economic_policy_of_the_Bill_Clinton_administration#Deficits_and_debt https://en.wikipedia.org/wiki/Economic_policy_of_the_Bill_Cl... (citing https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51129-2016outlookonecol-2.pdf https://www.cbo.gov/sites/default/files/114th-congress-2015-...) [2] https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/11/revenue-statistics-2024_6e88b46e/c87a3da5-en.pdf https://www.oecd.org/content/dam/oecd/en/publications/report... [page 15] [3] https://gateway.euro.who.int/en/hfa-explorer/gini-coefficient/norway/#8rdrJzzhx0 https://gateway.euro.who.int/en/hfa-explorer/gini-coefficien...

svara 2y ago

> Is it so simple? The highest marginal tax rate in the US is 50.3% (37% federal + 13.3% state in California). The highest marginal tax rate in Norway is 47.4%. Marginal income tax rate. People's aggregate incomes are a drop in the bucket compared to the amount of wealth in the world. I'm mostly a fan of free markets, but the way we've set up the game around the Western world, we're moving back towards a sort of feudal system made up of an asset owning upper class and then everyone else who needs to work to survive. I think what we need is a 100% marginal estate tax. Maybe something along the lines of 1M$ tax free per child and spouse. Everyone should have the right to vast financial success through free enterprise, but no one should be able to build multi generational dynasties, since it destroys the fabric of democracy over time.

atombender 2y ago

Norwegian here. It's not at all comparable. Norway has a wealth tax (about 1.09%), lots of consumption-level taxes (25% VAT, fees on gas, etc.), high capital gains tax (37.85% flat, no "qualified dividends" or tax-free bonds or Roth loopholes or anything like that).

dbdr 2y ago

> Markets aren't expected to account for externalities. Externalities are the things you're supposed to tax. > You're describing regulatory capture. This is why governments are supposed to have limited powers. To keep them from passing rules that enrich cronies and entrench incumbents. The problem is that those two principles are at odds with each other. You need the government to have enough power to fix externalities, but also limited power to avoid corruption.