7 ms·

Labor Is a Market Distortion, we need VAT and UBI

17 points by Wilsoniumite 4mo ago

b3ing 4mo ago
Keep dreaming, we are in hyper capitalism mode, ebshitification, etc. They just spent weeks of government time state and national worrying about people on food stamps buying candy or coke, to save pennies, they watch the poor like a damn hawk but let millionaires rape children in the biggest pedo ring in history.
- Wilsoniumite 4mo ago
  That's a very sad outlook. This problem is hard because it's hard to spot, but the fix is actually surprisingly easy (at least in the short term). The scale is on the order of climate change. If the academic base of economists were to unify behind this theory, change could happen. Only a few countries need to adopt this to show merit to the idea (although, that will take like a decade to truly show). Unlike climate change though this isn't fighting growth, it can recover it, and it's much, much easier to implement. That's why I think it can be truly bipartisan.
lelanthran 4mo ago
> Why VAT? > This is a little harder but not too hard: Because it’s the mirror of UBI. The UBI will fund consumption, VAT taxes consumption. This is dumb; there's literally no other way to put it! VAT is a tax exemption on the rich; that's all it is.
- mort96 4mo ago
  100%, VAT is a regressive tax. Poor people use a large portion of their wealth on products and services. Rich people use a much, much smaller portion of their wealth on those things. Plus rich people all have companies pay for a lot of their stuff. Need a new laptop? Buy it through your company. Internet and cellular plan? Company. New cell phone? Company. Many even have their cars paid by an compaby. All those purchases through your company are VAT exempt. Poor people buy their own laptops and their own cell phones and have their own Internet subscription and cell plan and car. They pay the VAT. I'm in Norway, where the standard VAT rate is at 25%. I don't understand how such a vast regressive tax is so uncontroversial here. Get rid of it and replace it with a larger wealth and capital gains tax.
CuriouslyC 4mo ago
We're not going to get economic change until the people revolt. This doesn't need to be a revolt with guns and bombs, it could just be a refusal to pay taxes and to purchase things. The US has shown that it's extremely vulnerable to economic warfare given how little slack there is in the system for absorbing shocks, so it's the perfect avenue for asymmetric warfare.
- Wilsoniumite 4mo ago
  Perhaps, but this is actually a both a somewhat novel framing of the problem and of the solution. If academic economists agree with this theory and subsequently get behind it, it could be like climate change. Except this change isn't anti growth and is a lot simpler to fix than climate change. It can be bi-partisan, if framed right, we have to at least try.
- spwa4 4mo ago
  Aren't people going to revolt still have to work? What's the point? If the revolution succeeds they'll have zero access to imported goods, because nothing to exchange (and that includes TV's, smartphones, computers, cars, internet, ... for essentially everywhere) AND have to work way more. That's the reward the revolution can conquer. Hurray! Even if you have a magic fairy wand, and make this happen, UBI can never exceed worldwide average income. What does that mean? The global PPP average income is 2000 dollars BEFORE tax, so let's say 1200 after tax. Oh and that's PPP, not USD. So that's adjusting so rent is the same as now. Food costs the same as now. Restaurants charge the same as they do now. Why would any American at all be in favor of that?
  - CuriouslyC 4mo ago
    the end goal is to cause bad actors to go bankrupt and force politicians to bend the knee to the people rather than oligarchs with a unified show of force, not to reduce the USA to developing nation status.
    - spwa4 4mo ago
      And I guess you don't name any bad actors because of course nobody would agree who is a bad actor and who isn't.
jmclnx 4mo ago
What is needed are enforceable laws that force companies to pay a living wage. The wage paid is based upon the cost of living in various US metro regions. The wage must be updated every 6 months. And we need a single payer health system. Plus a type of tax that forces the ultra-rich to pay, if needed, a wealth tax that some countries are enabling.
- bob001 4mo ago
  That works only as long as people are employed and there are enough jobs to employ people. Simplest solution for a company is to outsource or automate jobs away as much as possible. After a couple years customers will adjust to the new norm even if it's a worse experience for them.
- freefaler 4mo ago
  All businesses run on a profit margin. It's a resource game, thinly veiled by the money layer as means of exchange. If you make the price of buying labor by decree, the owners of the business will either buy less of it (supply/demand ratio), automate it, raise the price to offset the increased cost or close the business down, because the costs are too high. Businesses are shaky constructions and when you regulate them out of existence who will be generating the taxes for the government to redistribute? About the "single payer health system", it's not a panacea. Many countries struggle with single payer systems, because there are also problems there too. The best working example for a medical system is Singapore. Compulsory medical saving account with government subsidies in that account for the poor. All prices are transparent and patients pay from that account and have premiums over the basic treatments, thus creating the market dynamics needed for the market to work and still requiring personal responsibility, by making sure the patients sees the costs and chooses himself.
bob001 4mo ago
Isn't VAT generally a regressive tax so does the exact opposite of what the author thinks it does? The rich spend less versus their income than other demographics. I guess the UBI is to offset that but that just doesn't seem like a stable system.
- tumdum_ 4mo ago
  The author addresses this exact concern.
  - bob001 4mo ago
    The same way a random redditor addresses concerns about their proof of Riemann Hypothesis.
  - cassianoleal 4mo ago
    Badly
3683826312819 4mo ago
[dead]
PowerElectronix 4mo ago
I'd say a better alternative to taxes and handouts is to normalise and incentivise to give a stake in the company/business to every worker. It's the only reasonable way to avoid the main flaws of our economy/society. Billionaires would be way worse off, as they won't freely reap the fruit of the labor of the workers that power their ideas, and the workers will be way better off, as their productivity is no longer decoupled with their pay.
- Wilsoniumite 4mo ago
  I agree, and in some sense I argue this at the end, but I didn't want to make the piece even longer. In fact if you look at the economics of this policy over the long term it leaks capital through rents, so it doesn't actually work forever. A sovereign wealth fund can solve this (essentially an expansion of the "buffer" I wrote about). That functions as almost exactly what you want, giving a stake in every company to every worker (except broader, to every citizen). If you buy the framing that labor is currently a distortion, you wouldn't want to only give stakes in companies to workers of those companies, if you do that the distortion will continue.
- ghthor 4mo ago
  There is something to be said here, the government may be democratic but almost all of us are subservient to fascist corporations. Employee owned companies is a great start to get out of this mess
julienreszka 4mo ago
the diagnosis has data behind it, but the proposed mechanism doesn’t, by your own admission
- Wilsoniumite 4mo ago
  I have a new version that uses US and Finnish consumption data to model the mechanisms effects. https://wilsoniumite.com/2026/06/14/labor-pressures-causing-market-distortion-and-a-minimally-invasive-solution/ https://wilsoniumite.com/2026/06/14/labor-pressures-causing-...
kjshsh123 4mo ago
Labor is not a market distortion and average wages not following average productivity is not evidence that it is. In a competitive market, wages should follow marginal productivity. Probably what happened is America was in an increasing returns to scale part of its production function. Now it's in the diminishing returns to scale portion. If I had to guess why, it would be due to growth boundaries of cities and lack of new cities. There's no new Manhattans. Instead Manhattan has just gotten more and more expensive to live in. Anyway, if F(Population) is the production function, then wages should be F'(Population) and total wages should be Population.F'(Population). F(Population)-Population.F'(Population) is total production minus total wages and is known as economic rent. The right thing to do would be to tax economic rent. Use a tax on land value and natural resources to fund UBI.
- Wilsoniumite 4mo ago
  That's true, I think the real problem is a liiiiittle more nuanced than just the great stagnation. But that's the graph people know. The issue can be read out in more detail from other graphs too, I'm working on an updated piece. I mention georgism at the end of the piece as well. But do you agree with the theoretical framing? People not being able to not work forces them to find something. It's like an iron ore deposit being forced to be mined rather than being mined when it's needed?
  - kjshsh123 4mo ago
    I don't really. It smells to me like the lump of labor fallacy. Labor participation results from supply and demand and it going down does not necessarily indicate less demand, but can also indicate less supply. That's what you'd expect as countries and the world become wealthier. Leisure is a normal good.
    - Wilsoniumite 4mo ago
      That's fair, they seem similar at first glance. The difference is that we are asking the economy to create jobs even when it doesn't "want" to. It still will, the lump of labor fallacy is indeed a fallacy, but that doesn't mean this isn't causing a lot of harm. We aren't draining the earth's oceans (yet) because its supply is more than the earth needs right now. One day we might, but how much we draw is decided by the economy. But for labor supply is forced, capital flows there when it shouldn't, politics chases it. The economy, ever adaptable, provides jobs where it can.
pseudalopex 4mo ago
You submitted this article with another title 6 days ago.[1] [1] https://news.ycombinator.com/item?id=48434114 https://news.ycombinator.com/item?id=48434114
- Wilsoniumite 4mo ago
  I've changed it a bit, but yeah that's true, sorry.
OutOfHere 4mo ago
VAT for essentials like food, medicine and household supplies makes zero sense; it will greatly hurt the poor. Save the VAT exclusively for luxury items like clothing, furniture, travel, etc. which the rich spend a lot on. Computers qualify as essential and must not be VATed either. --- VAT joke: Question: Why is there is no VAT in the Vatican? Answer (reversed): "!tcelloc t'nseod dog esuaceB"

17 points by Wilsoniumite 4mo ago

b3ing 4mo ago

Keep dreaming, we are in hyper capitalism mode, ebshitification, etc. They just spent weeks of government time state and national worrying about people on food stamps buying candy or coke, to save pennies, they watch the poor like a damn hawk but let millionaires rape children in the biggest pedo ring in history.

Wilsoniumite 4mo ago
That's a very sad outlook. This problem is hard because it's hard to spot, but the fix is actually surprisingly easy (at least in the short term). The scale is on the order of climate change. If the academic base of economists were to unify behind this theory, change could happen. Only a few countries need to adopt this to show merit to the idea (although, that will take like a decade to truly show). Unlike climate change though this isn't fighting growth, it can recover it, and it's much, much easier to implement. That's why I think it can be truly bipartisan.

lelanthran 4mo ago

> Why VAT? > This is a little harder but not too hard: Because it’s the mirror of UBI. The UBI will fund consumption, VAT taxes consumption. This is dumb; there's literally no other way to put it! VAT is a tax exemption on the rich; that's all it is.

mort96 4mo ago
100%, VAT is a regressive tax. Poor people use a large portion of their wealth on products and services. Rich people use a much, much smaller portion of their wealth on those things. Plus rich people all have companies pay for a lot of their stuff. Need a new laptop? Buy it through your company. Internet and cellular plan? Company. New cell phone? Company. Many even have their cars paid by an compaby. All those purchases through your company are VAT exempt. Poor people buy their own laptops and their own cell phones and have their own Internet subscription and cell plan and car. They pay the VAT. I'm in Norway, where the standard VAT rate is at 25%. I don't understand how such a vast regressive tax is so uncontroversial here. Get rid of it and replace it with a larger wealth and capital gains tax.

CuriouslyC 4mo ago

We're not going to get economic change until the people revolt. This doesn't need to be a revolt with guns and bombs, it could just be a refusal to pay taxes and to purchase things. The US has shown that it's extremely vulnerable to economic warfare given how little slack there is in the system for absorbing shocks, so it's the perfect avenue for asymmetric warfare.

Wilsoniumite 4mo ago
Perhaps, but this is actually a both a somewhat novel framing of the problem and of the solution. If academic economists agree with this theory and subsequently get behind it, it could be like climate change. Except this change isn't anti growth and is a lot simpler to fix than climate change. It can be bi-partisan, if framed right, we have to at least try.
spwa4 4mo ago
Aren't people going to revolt still have to work? What's the point? If the revolution succeeds they'll have zero access to imported goods, because nothing to exchange (and that includes TV's, smartphones, computers, cars, internet, ... for essentially everywhere) AND have to work way more. That's the reward the revolution can conquer. Hurray! Even if you have a magic fairy wand, and make this happen, UBI can never exceed worldwide average income. What does that mean? The global PPP average income is 2000 dollars BEFORE tax, so let's say 1200 after tax. Oh and that's PPP, not USD. So that's adjusting so rent is the same as now. Food costs the same as now. Restaurants charge the same as they do now. Why would any American at all be in favor of that?
- CuriouslyC 4mo ago
  the end goal is to cause bad actors to go bankrupt and force politicians to bend the knee to the people rather than oligarchs with a unified show of force, not to reduce the USA to developing nation status.
  - spwa4 4mo ago
    And I guess you don't name any bad actors because of course nobody would agree who is a bad actor and who isn't.

jmclnx 4mo ago

What is needed are enforceable laws that force companies to pay a living wage. The wage paid is based upon the cost of living in various US metro regions. The wage must be updated every 6 months. And we need a single payer health system. Plus a type of tax that forces the ultra-rich to pay, if needed, a wealth tax that some countries are enabling.

bob001 4mo ago
That works only as long as people are employed and there are enough jobs to employ people. Simplest solution for a company is to outsource or automate jobs away as much as possible. After a couple years customers will adjust to the new norm even if it's a worse experience for them.
freefaler 4mo ago
All businesses run on a profit margin. It's a resource game, thinly veiled by the money layer as means of exchange. If you make the price of buying labor by decree, the owners of the business will either buy less of it (supply/demand ratio), automate it, raise the price to offset the increased cost or close the business down, because the costs are too high. Businesses are shaky constructions and when you regulate them out of existence who will be generating the taxes for the government to redistribute? About the "single payer health system", it's not a panacea. Many countries struggle with single payer systems, because there are also problems there too. The best working example for a medical system is Singapore. Compulsory medical saving account with government subsidies in that account for the poor. All prices are transparent and patients pay from that account and have premiums over the basic treatments, thus creating the market dynamics needed for the market to work and still requiring personal responsibility, by making sure the patients sees the costs and chooses himself.

bob001 4mo ago

Isn't VAT generally a regressive tax so does the exact opposite of what the author thinks it does? The rich spend less versus their income than other demographics. I guess the UBI is to offset that but that just doesn't seem like a stable system.

tumdum_ 4mo ago
The author addresses this exact concern.
- bob001 4mo ago
  The same way a random redditor addresses concerns about their proof of Riemann Hypothesis.
- cassianoleal 4mo ago
  Badly

3683826312819 4mo ago

[dead]

PowerElectronix 4mo ago

I'd say a better alternative to taxes and handouts is to normalise and incentivise to give a stake in the company/business to every worker. It's the only reasonable way to avoid the main flaws of our economy/society. Billionaires would be way worse off, as they won't freely reap the fruit of the labor of the workers that power their ideas, and the workers will be way better off, as their productivity is no longer decoupled with their pay.

Wilsoniumite 4mo ago
I agree, and in some sense I argue this at the end, but I didn't want to make the piece even longer. In fact if you look at the economics of this policy over the long term it leaks capital through rents, so it doesn't actually work forever. A sovereign wealth fund can solve this (essentially an expansion of the "buffer" I wrote about). That functions as almost exactly what you want, giving a stake in every company to every worker (except broader, to every citizen). If you buy the framing that labor is currently a distortion, you wouldn't want to only give stakes in companies to workers of those companies, if you do that the distortion will continue.
ghthor 4mo ago
There is something to be said here, the government may be democratic but almost all of us are subservient to fascist corporations. Employee owned companies is a great start to get out of this mess

julienreszka 4mo ago

the diagnosis has data behind it, but the proposed mechanism doesn’t, by your own admission

Wilsoniumite 4mo ago
I have a new version that uses US and Finnish consumption data to model the mechanisms effects. https://wilsoniumite.com/2026/06/14/labor-pressures-causing-market-distortion-and-a-minimally-invasive-solution/ https://wilsoniumite.com/2026/06/14/labor-pressures-causing-...

kjshsh123 4mo ago

Labor is not a market distortion and average wages not following average productivity is not evidence that it is. In a competitive market, wages should follow marginal productivity. Probably what happened is America was in an increasing returns to scale part of its production function. Now it's in the diminishing returns to scale portion. If I had to guess why, it would be due to growth boundaries of cities and lack of new cities. There's no new Manhattans. Instead Manhattan has just gotten more and more expensive to live in. Anyway, if F(Population) is the production function, then wages should be F'(Population) and total wages should be Population.F'(Population). F(Population)-Population.F'(Population) is total production minus total wages and is known as economic rent. The right thing to do would be to tax economic rent. Use a tax on land value and natural resources to fund UBI.

Wilsoniumite 4mo ago
That's true, I think the real problem is a liiiiittle more nuanced than just the great stagnation. But that's the graph people know. The issue can be read out in more detail from other graphs too, I'm working on an updated piece. I mention georgism at the end of the piece as well. But do you agree with the theoretical framing? People not being able to not work forces them to find something. It's like an iron ore deposit being forced to be mined rather than being mined when it's needed?
- kjshsh123 4mo ago
  I don't really. It smells to me like the lump of labor fallacy. Labor participation results from supply and demand and it going down does not necessarily indicate less demand, but can also indicate less supply. That's what you'd expect as countries and the world become wealthier. Leisure is a normal good.
  - Wilsoniumite 4mo ago
    That's fair, they seem similar at first glance. The difference is that we are asking the economy to create jobs even when it doesn't "want" to. It still will, the lump of labor fallacy is indeed a fallacy, but that doesn't mean this isn't causing a lot of harm. We aren't draining the earth's oceans (yet) because its supply is more than the earth needs right now. One day we might, but how much we draw is decided by the economy. But for labor supply is forced, capital flows there when it shouldn't, politics chases it. The economy, ever adaptable, provides jobs where it can.

pseudalopex 4mo ago

You submitted this article with another title 6 days ago.[1] [1] https://news.ycombinator.com/item?id=48434114 https://news.ycombinator.com/item?id=48434114

Wilsoniumite 4mo ago
I've changed it a bit, but yeah that's true, sorry.

OutOfHere 4mo ago

VAT for essentials like food, medicine and household supplies makes zero sense; it will greatly hurt the poor. Save the VAT exclusively for luxury items like clothing, furniture, travel, etc. which the rich spend a lot on. Computers qualify as essential and must not be VATed either. --- VAT joke: Question: Why is there is no VAT in the Vatican? Answer (reversed): "!tcelloc t'nseod dog esuaceB"