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> $1 is worth much less to the rich than it is to the poor. So if we redistribute it to the poor, the whole of society will get better utility of that dollar.
by lbrandy 18y ago
> $1 is worth much less to the rich than it is to the poor. So if we redistribute it to the poor, the whole of society will get better utility of that dollar.
Erm. Whoa there. This seems to me to be fundamentally flawed in no less than two respects...
1) $1 may be less valuable to a rich man than a poor man but that -does-not- imply that it is of less value to society for it to be in the rich mans hands than in the poor mans hands. In fact, it's quite easy to argue (and is often done) that it's substantially more valuable, to society as a whole, in the rich mans hands than in the poor man's hands.
2) More broadly, and the first point follows from this point, this is a false dichotomy. Society doesn't have a fixed number of wealth and it is not a zero sum game. You cannot trade dollars 1:1 and ignore the economic impact.
> A question very relevant to us is "Will it?".
I find it interesting that you take the first proposition at face value as "self-evidently" true but feel the need to question this second proposition. I find the first one substantially more controversial than the second.
Of course increasing the marginal tax rate is going to have some quantifiable effect on the people's habits. Let's say I have a private medical practice and I have the choice between working fridays and getting taxed 70%, or I can have the practice closed up on Fridays so I can play golf, what would I do? What % of doctors would close up shop on Friday?
Whatever the answer is, it's not zero.
- Femur 18y ago>I find it interesting that you take the first proposition at face value as "self-evidently" true but feel the need to question this second proposition. Excellent point and very well written response.
- nopinsight 18y agoI agree with your counter points above. However, I'd say that for the consumption purpose, at least, it's mostly true. No one really needs $100 million house or 5 personal cars. If that $1 is invested, rather than consumed by the rich, then, it could potentially be more beneficial to the society.
- anamax 18y ago> I agree with your counter points above. However, I'd say that for the consumption purpose, at least, it's mostly true. No one really needs $100 million house or 5 personal cars. I'm pretty sure that the folks who built said house and cars appreciate the work. And, I'm pretty sure that I'm going to like some of the technology used in that $100M house. It was nice of the rich guy to pay for the prototypes.
- randallsquared 18y agoI have no idea if this will show up now that this topic is dead, but: In exactly the same way that no one needs 5 personal cars, no one needs 5 sets of clothes. I challenge you to come up with an argument for having 5 sets of clothes that isn't merely a wealth-displaced* version of the argument for 5 cars. * Wealth-displaced meaning that the only difference is our collective wealth, so that the cars argument is the same as the clothes argument would have been 200 years ago.
- abas 18y agoI'd like to hear your arguments for it being substantially more valuable for the rich man to have the dollar than the poor. At least in this economy it seems like I am constantly hearing about how it is better to put money in the hands of the less well off because they will spend it and it will help drive the economy.
- sokoloff 18y agoPutting the money to work in a manner that builds companies and creates jobs has a different long-run effect than giving it to someone who will go buy a burger with it. In the short-run, consuming helps that same dollar get spent over and over. In the long-run, creating wealth and jobs is more valuable, IMO. When raising taxes drives capital to locales which are more capital-friendly (chiefly via lower taxes), then it inevitably takes job creation with it.
- jhancock 18y agoThe answer could be "both". The economy needs both the consumption and the top-down execution. Keeping it all in balance is the real trick. This argument would be better positioned as "What is the right balance of taxation for the short term to provide a healthy economy?"
- jhancock 18y ago"In fact, it's quite easy to argue (and is often done) that it's substantially more valuable, to society as a whole, in the rich mans hands than in the poor man's hands." This is a popular argument. I've never seen any reasonable proof of it. I take the argument as wishful thinking in that most with wealth agree with it and most without disagree. "Let's say I have a private medical practice and I have the choice between working fridays and getting taxed 70%, or I can have the practice closed up on Fridays so I can play golf, what would I do? What % of doctors would close up shop on Friday?" This is also a popular argument. As for doctors, my feeling is there are not enough M.D.s. The M.D. system is rigged to keep doctors in less supply (in the U.S.). It might be a good idea for doctors to make a little less and also work less and produce more doctors to make up for the shortfall. This argument is most likely unique to doctors though.