To Understand Rising Inequality, Consider Janitors(nytimes.com) |
To Understand Rising Inequality, Consider Janitors(nytimes.com) |
Interesting... I'm developer at a comparably tiny company, I get paid slightly less than her per hour but a larger salary overall, and my rent is less than half of hers (and it's not considered cheap around here).
I know i'm not paid top notch but all I read here is it's hard to be a janitor in expensive places.
[EDIT]
Maybe this is not a fair comparison, I'm not paid hourly, and all I have revealed here is that I work rather a lot of hours. She does 44ish hour weeks, and to be fair as a cleaner you are unlikely to physically be able to work more (consistently).
The ratio of pay to rent is ridiculous though, (that is a fair comparison) my rent is way under half hers. If housing is that expensive in that area then janitors should be paid more...
>> pays $2,300 monthly for a two-bedroom apartment where she and her
>> four children live. Before overtime and taxes, her $16.60 an hour
>> works out to $34,520 a year. Her rent alone is $27,600 a year,
>> leaving less than $600 a month once the rent is paid.
Assuming she's only losing 20% to taxes and other deductions, she can't even cover rent. How is she paying her rent? Is there another person or public assistance?
"I look at the big tech companies, and they practice a 21st-century form of welfare capitalism, with foosball tables and free sushi and all that,” Rick Wartzman, senior adviser at the Drucker Institute and author of “The End of Loyalty,” said. “But it’s for a relatively few folks. It’s great if you’re a software engineer."
From a Janitor to CTO in under 10 years - I wish I could dream that. I started playing with code around 6yo and now 33..
Could it be that it was really rare period of time where such thing was possible?
Outsourcing is about reducing costs. It's not good or evil. But it depersonalizes decisions on which service to choose and narrows the decision making criteria down to cost. Costs for service jobs are driven by people. So, when a company is choosing their janitorial service and they choose the lowest cost service, that means the service that pays the lowest wages or that cuts the most corners will typically win the contact.
Depersonalizing the buying decision and commoditizing human labor aren't good or evil by themselves. But, turning people's welfare into a math problem certainly leaves us open to making decisions we wouldn't have made if we saw the consequences through a human lense instead of only an economic lense. At best, it causes suboptimal outcomes for an individual while maximizing the aggregate benefit.
We can fight against it all we want, but everytime we buy a t-shirt, an apple, or an iPhone, there's a supply chain behind it built on the lowest cost provider. We are all part of that process. I hope I'm not evil for buying a cheap t-shirt. But I know I enabled some shady behavior that made it $1 cheaper.
sure. but it's a potential option as opposed to being let go flat out.
If Kodak went belly up before that "rags to riches" story of a janitor becoming an exec proceeded beyond the janitor stage - she'd be looking for another job elsewhere, whereas in contractor's case there's a chance of getting reassigned to another "project".
It's not as much about "depersonalizing" as it is about convenience of not having to deal with the domain that has nothing to do with core business. The cost factor is also not linear - in terms of straight up cash figures sometimes it costs the same or more to outsource maintenance, security etc vs hiring your own.
Works both ways - car dealership for example isn't going to hire a web designer for their site full time.
And because of it we'll never be able to rework income inequality - because we've all wanted to be on top of it since childhood.
* Automation advances in every industry. It is like AI - there is no sudden on switch when everything is automatic and post-scarcity is suddenly achieved. It is a slow march of small improvements and optimizations over time. Productivity per human labor hour has increased a hundredfold in the last century on the backs of this automation and innovation.
* A combination of social organization, peer pressure, the variable range in the quality of a persons parents, the variability in wealth of a family, the trends towards and away from high median wealth, the prevalence of anti-intellectualism, the laws at the time, the laws in the past, the general availability of materials, the competitive market internationally, and ones own biology contribute to the prevalence or absence of an educated populace. No society has figured out how to take every human born and turn them into a scholar, however. We all have the disenfranchised who are not educated (in fields the market deems valuable) but still need avenues to survive. This creates our unskilled labor market.
* The laws of your country influence how wealth moves throughout it. The laws of other countries also influence the behavior of private actors in your economy when interacting with foreign ones. The market is global - business decisions are not made based on arbitrary lines on a map, they are made based on the planetary market forces and trends of all seven billion+ people. Thus, you cannot set local policy (that influences wealth inequality) in a vacuum.
* Aside fiscal policy, you also have, relatively independent of other variables, how open your society is to innovation and entrepreneurship. This is another cultural marker, but if your country supports and incentivizes startups you can offset the problem of a waxing classical labor market. It also has the converse effect of generating jobs through its successes.
* Finally, and least significantly, is fiscal policy. In some countries the lack of a trustable market or rule of law can make this much more meaningful, but if your company has a functioning internationally connected economy nowadays all your fiscal policy is doing is pushing the boat rather than building it. Policies like favoring investment over salary favor increasing inequality, but are not the cause of it - they just accelerate it.
The TLDR is automation, education, globalization, entrepreneurism / innovation, and fiscal Policy, but there are more, and these alone are just as abstract trends as wealth inequality is above them, just as much as how the future of humanity itself is just a abstraction above that.
Together all these effects, and more, influence the total market and control how prosperous or despondent people are. When citing historical wage averages as having stagnated in the US in the seventies it is not one aspect in isolation - from what this article talks about in regards to corporations only hiring immediately for its core competency and outsourcing other labor - but the combination of all of them. Rising automation reduces the need for labor. Rising populations increase the supply of labor. Fiscal policy favors wealth centralization. Globalization favors economies of scale. Giant companies throwing around more money means more influence - which means more regulatory capture. Regulatory capture means exploitation. Exploitation is always parasitic - it suffocates growth and prosperity to fill few pockets. Exploitation and rent seeking go hand in hand. Regulatory policy and capture come back again, creating rentiers markets to pillage and exploit more. Globalization reduces the sovereignty of individual nations, making it near impossible to fight back with just one government run by its people.
It feels inevitable. That as we advance in our ability to make so much from so little, that the real beneficiaries of it have to be those who were first movers on it, that were sociopathic enough to discard anyone else in the pursuit of power. To condemn billions to suffering and to suffocate markets and drain pocketbooks to make fractions of a cent more, to centralize resources just slightly faster into your control and domain of influence. Like global warming, like space colonization, like scientific innovation, none of these are the purview of one slice of Earth's surface area. None are limited in scope to a few people. They matter to everyone, but we have no functional system of making everyone matter in regards to them. These market forces are operating beyond the bounds of one country - beyond the walls of Kodak and Apple. They are operating on the entirety of humanity and all their macroeconomic behaviors are dictated by the entirety of the accessible market capital can reach. But what is supposed to keep them in line, constrain capitalism to be to the benefit of both workers and capitalists and not just the later, is still isolated to thin strips of land subdivided by thousand year old traditions.
Focusing on the individual pieces of the puzzle remains valuable, but something as pervasive as rising inequality - of understanding the movements of markets, of a global economy that is beyond the complete knowledge of any one person anymore (it is simply moving too fast) - is the product of a billion causal relationships, not just whether companies want to invest in their employees now to prosper their local economies in the medium term.
That would be commendable had the company done well, but perhaps having a janitor CTO contributed to their downfall...?
"Oh you live in a 300k dollar house? Confiscated! We are moving you to a tiny house valued at 60k with all others who think like you"
I wonder if that would help folks come up with more sensical solutions. We could vote on the ideas, and the winners get the ideas implemented on themselves first!
At least in Firefox, if you press Space or PageDown (to scroll down a "page"), on the linked article, you'll lose several lines of the text, as they're obscured by the header. Illustrating:
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Chrome isn't afflicted by this (on the linked article), due to the fact that its page scroll is slightly shorter than Firefox's (on a webpage without any sticky headers, Firefox gives you about 1.5 lines of context from the previous "page"/screen, when you page-scroll; Chrome gives you about 5). However, if the height of the sticky header were greater (as often is the case), Chrome would also be affected.
This is obviously in addition to the annoyance of the sticky header wasting vertical screen space, but the latter is just an aesthetic preference, while the former is broken functionality.
Yes, I know that on Firefox I can just use reader mode, but it seems sad that after almost 30 years of the development of the web, going back to a design that could easily have existed in the 90s, is an improvement.
"It can't be helped, the poor sods should have made better life choices to avoid ending up as janitor" is the attitude by which the matter is dismissed - as if requiring everyone to be a member of the educated elite just to be able earn a decent living.
There is so much wealth out there. This wealth is the product of society's common strive. Why not try to change the world instead of just submitting to the way things are?
If everyone had better options, fewer would be willing to be janitors, and the need for janitors would cause janitorial wages to increase.
Basically, society is partly competitive.
It's not the core job, it's the fact that there's zero growth or mobility even possible that is the issue.
You and I, maybe we made the right decisions. I'm doing pretty well for myself as a software engineer.
But when I see the misfortune of others -- people who saw the bottoms fall out of their careers -- let's just say it makes me hesitant to whistle past graveyards.
Apologies to pick on you without addressing your main point, but this sentence is an example of an error I see a lot yet I rarely see addressed.
Specifically, you're claiming a chain of causation where by inequality causes poverty. But in fact the relation between these two isn't causal at all, but rather logical.
(Well, not actually. Inequality is independent of poverty -- you could have no poverty but lots of inequality, or no inequality but lots of poverty. The assumption that inequality and poverty are so closely linked seems to me to be be basically assuming that we live in a zero-sum world. But let's just continue with that assumption right now, because that's not the point I want to address.)
Point is, why put the arrow of causation that way? Why not the other way around? Of course either way you put it's still not actually a causal relation -- but I think putting it the other way around is a much more useful way of thinking (mathematicians still think in terms of things causing things, because it's a useful way of thinking, even though mathematics doesn't actually have causation). I think there's something wrong with the assumption that inequality is somehow primary, and poverty just an effect.
You see this a lot in other contexts too -- people claiming "A causes B" when in fact the correct relation is "B is an example of A". (OK, that's not exactly the same error as here, but it's closely related -- mistaking a logical relation for a causal one, and putting the arrow of "virtual causation" in the wrong direction. As if someone said "all-cause mortality causes accidental deaths"; how silly would that be?) Watch out for this!
>Apologies to pick on you without addressing your main point, but this sentence is an example of an error I see a lot yet I rarely see addressed.
You're not picking on me - you're picking on something I wrote. This is perfectly fine!
Would you think it more appropriate to talk of poverty and inequality being elements in a feedback loop?
This is relating to your parenthetical, not your quibble with causation, of course. But inequality of income is different to inequality of wealth, and there can be a causal link there.
The demand for, and productivity of, high-skilled workers is increasing rapidly, while the supply is not increasing very much. The masses have responded to these price signals by going to college more, but aren't actually coming out the other side with higher skills, or even diplomas, probably due to deficits in K12.
Notably, this is not a story about the top and bottom 1%. The premium has widened enormously across the board, i.e. between the 25th and 75th percentiles.
As you said it essentially comes down to 'they should've made better choices and got a better career path!' while having everything handed to them at birth. It's the sort of thing that really made it apparent how different my upbringing was from my coworkers because I experienced that sort of deep poverty.
1. The meritocracy tied into Christian belief - that person has sinned (whatever you interpret sin to be), therefore of course their life is like that.
2. The ignorance of never having experienced a life where your merit doesn't influence your personal success. One sickness, accident, etc, usually starts to 'cure' this mindset.
These highly individualist supermen don't need society or anyone else for their success. They stand alone. Celebrating themselves while seeing others suffer and blaming them for their suffering is simply the natural order of things. Empathy is completely absent in this impoverished binary world view of success and failure.
But life and human beings cannot just be reduced to a primitive ideology of success and failure, especially when the successful are riding on generations of privilege. It's obscene for those starting a 100M race at 90M to lecture others on achievement.
While these self centred achievers stroke their egos millions if not billions of human brains are wasted just trying to survive, their intellectual output never given the opportunity to shine. And its not just their loss but a social catastrophe because its only leisure and stability that allowed our tryst with science to begin.
Luckily, most of the things we as a society value as being a "good" thing to do are in fact really good things to do as an individual looking out for one's own self interest.
Have you or I benefited greatly from the work of Jobs & Woz, Gates, Einstein, Pasteur, etc? I'd say yes.
Would it stand to reason that we would benefit significantly from future contributions from similar people?
Well, if that is true, we should probably support social programs like good access to education and healthcare, so that those potential innovators have fewer obstacles in their path.
Does a society that revolves around mass production tend to innovate faster when the masses have stronger spending power? Makes sense - so perhaps fiscal policies that mitigate income inequality would be wise - from an innovation standpoint (completely ignoring the moral case).
Yes, there are dumb people out there who read Rand and overlooked (a) that she was reacting to having lived through the awful aftermath of the Russian revolution and (b) was writing fiction in dystopian universes (before she got a bit too cray cray and just started writing philosophy). You can read Orwell and not think there's actually talking animals. And a lot of the proclaimed Randians happen to forget that in her most nuanced work, Atlas Shrugged, the populist movement was the lesser villain to the larger villian of crony capitalism, lobbying, and government intervention on behalf of those interests.
It's actually quite refreshing to look at socialist policies from a perspective of selfishness, because if you ask yourself the question of "will these policies benefit me even if I'm not a direct beneficiary?" - the amazing thing is that the answer is"yes" given a long and broad perspective. We shouldn't as a society make the case for these policies because of moral arguments, but can and should make the case on the basis of their impact on economic growth and the rate of progress.
Most investors prefer reinvestment to dividends for long term holdings. And that's exactly what social programs, and policies addressing income inequality, are. They are a reinvestment into the country instead of a dividend (aka tax cut) paid out annually. Let's make that case using the language and reasoning they already understand.
I think this is a structural problem. When your only source of wealth is your own time and labour, there's a limit to wealth creation and accumulation. The rich isn't limited to just their own time or labour, but is able to take many people's time and labour as part of their own.
One of the essential patterns of history is the vacillation between freedom and equality as societal ideals. A freer society is a more unequal society, and vice versa. It's a fairly paradoxical and nuanced idea because we (particularly Americans) don't tend to think of those principles as existing in tension with one another.
Furthermore, once a civilization reaches a certain threshold, it follows that a great majority of people become unproductive deadweight. Technology accelerates that deterioration.
These aren't terribly inspiring human truths, but I find they do hint at the futility of bemoaning the condition or hoping for emergent and sweeping policy solutions.
Better to empathize where possible, feel eminently thankful for our good fortune, and donate whatever surplus of time and capital we might have to a helpful cause.
That's doing some reductio ad absurdum on your argument but you are saying we should just give up trying to fight something that bad and give some minor help when possible, correct? We can try to do better
The sad reality is that this is not actually possible. This kind of inequality is a constant and cannot be changed. There is a segment of society that cannot pull themselves up by their bootstraps so to speak, and the way a society treats and cares for these people is the true yardstick of compassion and fairness.
Human life has positive ROI, as evidenced by the fact that our species has done better in the world over time. The largest returns are highly unpredictable too - the majority of "origin" stories for the greatest contributors to moving our species forward have come from modest beginnings.
So disadvantaging large swaths of the population with poor access to quality education or healthcare biases the system against the masses, and as a result, reduces the productive potential of that population segment. A janitor today may not be the next Steve Jobs. But his kid might, if given access to a good education and not burdened by needing to accept a "safe" work choice to support his parents.
In addition, that janitor is likely putting a much larger portion of his wealth back into the economy directly by purchasing "things." And in a global economy that revolves around mass production, it would make sense that economic policies favoring the spending power of the masses would be a key factor in the pace of innovation and moving industry at large forward.
If only Wall Street can afford 4k TVs, they'll be watching a lot of upscaled 1080p content. It's not until the janitors, electricians, etc (i.e. the masses) can afford the sets that they'll see the majority of content switch over to 4k. (This is a knowingly superficial but illustrative example of a larger principle).
Even in my own case - I have a pre-existing medical condition. If it weren't for Obamacare, I wouldn't have been able to co-found my startup, which last year (first operational year) did $350k in sales, and this year looks like it may hit $700k. I'd have needed a job that provided good group health insurance, and our company simply wouldn't exist.
We like to talk in the entrepreneur community about the need to take risks to be successful. But too often the community turns a blind eye to the fact that if you cut away enough of the public safety nets, the only people that will be taking risks are the people that either (a) have a personal safety net already, or (b) have such poor judgement in risk assessment that they are destined to fail.
Social programs and policies aren't "entitlements" or things we should be doing from simply a moral standpoint - they are economic "growth" programs and make a great deal of sense if you look at the broader picture and with a perspective of 10, 50, 100 years instead of fiscal quarters.
Income inequality unchecked is going to destroy our national competitiveness the same way an executive cutting themselves a massive salary and underfunding corporate reinvestment is going to drive that company into the ground. We're cutting national reinvestment in order to further advantage the previously successful (several generations past in many cases), at the cost of the potentially future successful.
If all super rich people were magically erased from the earth, would the poor have it any better?
The majority of income the top 0.1% make is from investments and gets taxed as capital gains, only about 15% of their income is taxed as ordinary income. [2][3]
We have an economic system where it's dramatically easier to make money the more money you already have. If you have $50M, you can park it in an index fund to get 4% returns and make $2M every year just off of your investment returns (which then gets taxed at 15% instead of 35% for ordinary income). If you don't spend all of that $2M, you'll continue to make more money just by having more money.
By taxing income instead of wealth, we're also essentially penalizing labor and rewarding wealth. We shouldn't penalize something that actually contributes to the economy and instead ask people who have more (not earn more necessarily) to contribute via taxes.
1. http://www.nytimes.com/2012/11/19/opinion/to-reduce-inequali...
2.http://www.businessinsider.com/the-critical-difference-betwe...
3. https://www.forbes.com/sites/robertlenzner/2011/11/20/the-to...
The two major research universities are propping up the city's advancement opportunities, but doing so with tuition increases and recruitment of full-price paying foreign students, which makes the place more vibrant, but has also alienated many.
The largest employer in town now is the University of Rochester Medical Center, which provides many of the middle income and higher income jobs but is also making a habit of buying up 'distressed' hospitals.
The collapse of Kodak and exodus of money and talent has cratered the city public school system, which has a 47.5% on-time graduation rate. The only shining spot in terms of education is an Arts school, with great links to the still world-class Eastman School of Music.
Rochester itself is also a great example of 'white flight' in the post-Kodak era, though it began long before that.
Can any economists / sociologists in here point me to studies / research in this area?
Janitors at Apple in 2017 can barely pay rents and they will never own their home, likely owned by the Kodak janitors from 1987.
Feel free to replace janitors with any other job title.
> Ms. Ramos, the Apple janitor, lives down the road in San Jose. She pays $2,300 monthly for a two-bedroom apartment where she and her four children live. Before overtime and taxes, her $16.60 an hour works out to $34,520 a year. Her rent alone is $27,600 a year, leaving less than $600 a month once the rent is paid.
$2300 a month for a two-bedroom apartment. Service workers like janitors can barely afford to live here at all.
The list could go on and on... my point is, moving is hard, especially so for those with little disposable income.
All of those types of people are pretty much gone into retirement now. We don't have that type of advancement because most of those entry tasks in both IT and business are farmed out to a permanent underclass -- a contract bodyshops with mostly South Asians on work visas.
I'm not college educated, I've made a comfortable living as a coder. It took over ten years of self-teaching in my 20's while working a FT job but I knew this is what I wanted to do. So I agree with the statement but there's more than one way to become educated. Academia is just one way and possibly not the best way.
It may also be misleading to compare a contractor cleaner today to an employee cleaner 30 years ago. I don't know the industry but perhaps the modern job is easier to get and seen as lower status than it was in the past? Maybe someone who's a cleaner today would have been unemployed in the 1980s? In that case, the article is comparing lower socioeconomic status (SES) people to higher SES people and complaining that the lower one is worse off, which is a tautology.
I'd say there's more technical skill (certifications and iso standards) to adhere to in cleaning today, than 30 years ago - and each worker clean larger areas (and probably works harder than 30 years ago, suffering under tight micromanaged schedules). That's my impression (though mostly in Norway). Note that cleaners might be better, more efficient and doing a more demanding job, and still have lower status...
Honestly, that is a large part of why i broke free and enlisted. I'm now in an organization that sees increasing skills and promotion as essential. If i fail at my job (pilot) i wont be fired but given a different role. Call it a throwback to the 60s if you want, but im less stressed now than i ever was as a consultant. (And forget everything you think you know about the military. The rcaf isnt anything like american movies.)
Apple's software is based on open source BSD. They sub-contract the building of their phones to China, and they are made mostly with Korean chips and displays.
Apple can import cheap indentured workers from overseas on H1B visas.
They avoid US tax by pushing their profits through Ireland.
Kodak was a far more progressive company that invested in their employees. Apple is now the world's biggest company, Kodak is dead.
Kodak have missed digital revolution and stayed on analog for too long, that's why it's dead. Treating its employees better had nothing to do with that (except maybe hasten downfall a little).
I was a contractor of a contractor of a contractor of the Navy.
Me <- Contractor (payroll company) <- Contractor <- Contractor <- Navy
Each step took a bit off the top, I made $17/hr no vacation, no health insurance, no sick time.
At one point my contractor (they signed my checks, a faceless shell) who I never met or communicated with called me at work and tried to reduce my pay. I felt so angry and upset. I ended up arguing that I would quit if they touched my pay.
I learned when I quit that:
Me ($17/hr) <- Contractor ($35/hr) <- Contractor ($55/hr) <- Contractor (???)
Its all about liability, health insurance is a liability, sick time is a liability, vacation is a liability, and the possibility of paying for layoffs is a liability.
Trickle down.
Also related,I was also working part time in retail where I learned that over 80% of the staff was part time to avoid paying health or vacation or sick time...
This is common practice in retail. These companies have huge workforces of part time people, they avoid giving people enough hours to be full time... Its terrible and needs to be fixed.
That is the outsourced companies causing inequality. They are the ones paying people terribly, not the company contracting with the outsourcing companies.
This article wants to blame major companies for inequality while conveniently ignoring the existence of the outsourcing companies which are the ones setting the pay for these employees. Stop doing that, raise the minimum wage and benefits that outsourcing companies must pay their employees/contractors, and fix the bloody problem at its source.
The training doesn't have to be in a traditional university, either. It does have to lead to a high-wage, in-demand job.
There are things that one can criticize Amazon for, certainly, but their support for the personal education and development of their employees seems to quite a bit better than the norm.
Similarly, Apple Store employees can work their way up to HQ.
I think there's a false tendency to blame Apple for this predicament. It's not Apple's responsibility to provide for the welfare of our country's citizens, it's our responsibility - and it's only through our government that we can really change things. No vacation, benefits, and 80% of one's paycheck going to rent is our government's responsibility to fix, not Apple's.
The most obvious policy here would be some sort of universal basic income. This would naturally prop up wages for the low-paying jobs like janitor that nobody wants to do.
Having to work under those precarious conditions for such lousy pay (relative to cost of living) and no prospects for advancement must be a downright miserable experience, the literal definition of wage slavery. 6pm-2am shift means she probably never even sees her kids during the week. All for a meager $600/month in disposable income after rent is paid (which when you're a contractor without vacation and benefits isn't much). And she'd never be allowed to complain about it because she'd be told that she should be grateful to have a job, there are people in Africa starving, she should've studied harder in school, and she shouldn't have had kids. What a world we live in.
Many oppose universal basic income on ideological grounds, but enough with this ideologically-driven bullshit that ignores the unnecessary suffering of the wage slaves at the bottom. Nobody in a first world country should have to live a lowly life like that janitor.
The argument against a wealth tax, is that it penalizes savers, and rewards spenders. Which is not what we want as a society. It's better for both the individual and for society if people invested their money into productive enterprises, instead of spending it on luxury goods.
If the goal is to provide a more egalitarian quality of life across society, this can be perfectly achieved through an income tax alone. Specifically, by treating capital gains the same way as salaries, and by increasing the marginal tax rates for high earners.
I disagree. Wealth provides financial security to an even greater degree than high current income. Wealth provides the means to move your family to a place where they will be safe and thrive. Wealth provides a means to start the next generation with a leg up, financially, socially, and academically. High current income can go away next year for most people and is often not portable to a new city or country. High current wealth is far more durable.
I don't think it's the billionaires that are the only "problem". Those with 50+ million USD also live a life essentially devoid of the concerns of financial catastrophe.
I see an incredible amount of logistical challenges in implementing an annual wealth tax (though some countries already do so), but far fewer philosophical problems, even though I am overwhelmingly likely to be one of those targeted by a wealth tax (low single digit millionaire household from 25 years of working, saving, and investing).
I think it good social policy to institute an additional amount of drag on wealth accumulation, preferably by directly taxing it (annually or upon transfer), rather than further penalizing productive income-generating activities that are already taxed at nearly 50%.
First: wealth inequality is the result of persistent and pervasive income inequality.
Second: there are frequently individuals with very-highly-fluctuating incomes. Performing or creative individuals in particular -- actors, writers, filmmakers, musicians, athletes -- may have a few good, and many lean years. Taxing their good periods excessively would actually be counterproductive.
Taxing nonproductive wealth -- withheld or idle capital -- would put it to productive use. That's the fundamental principle of a land tax, as advocated by David Ricardo and Henry George. That concept fails to properly account for the withdrawal or degradation of natural capital, often at tremendous rates relative to the financial profit booked, and a case where natural capital is simply an off-books aspect of activities.
Ensuring that all citizens can meet the fundamental needs of life is crucial -- something Adam Smith, David Ricardo, Robert Malthus, Karl Marx, and John Stuart Mill each advocated for. "A man must live by his work" -- Smith.
Sure, that is a reductionist argument but so was yours.
The real argument against taxing wealth is that it isn't really feasible; you'd just encourage banking in other countries or buying up a lot of land.
I also agree that capital gains being taxed at a lower rate is insane and makes sense only when you realize that's how politicians tend to get wealth.
The real fuel of the economy is money being spent on Apple products, walmart, amazon, --hell even yachts/airplanes (somebody has to build those)..
To fight income inequality, I think we need to tax at the point of investment.. --if you buy anything you're taxed on it..this includes investments/stocks/bonds/etc... just flat consumption taxes... give a UBI to offset the poorer folks...
But have a mandatory flat tax...do away w/ the IRS/income tax. If you're not a U.S. citizen and not getting UBI sorry--but you're sales tax will not be subsidized by UBI--and if you're here illegally/unpapered -- you're now a tax payer congrats we can stop trying to deport everyone since now we make more tax money off of them!
A world with a few super-heavy investors may not be as effective as a world with a more distributed (democratic) investor base. Fewer investing eyeballs, more tunnel vision.
And more to your point, we already have a defacto wealth tax in the US because inflation is not deductible. If you hold a bond paying 2% per year, and inflation is also 2% per year, you pay tax on those gains even though you've made a post-tax loss in purchasing power. At 2% long term inflation, the defacto wealth tax works out to be the 2% multiplied by your capital gains rate, or from 0.47% to 0.74% for high earners depending on what state they live in.
We have actual wealth taxes, too, in the form of property taxes.
What are some solutions you're aware of that are equally effective and less invasive?
This spring I cut very high pine because it shadowed my entire backyard and I want to grow more smaller trees on the perimeter.
But you can have varying levels of inequality and the extremes are probably not healthy. My suggestion above wouldn't create perfect equality, it just fixes the broken incentives we currently have that reward us for hoarding wealth and penalize us for earning it.
What about just printing money? Not ideal obviously, but there'd be no way to avoid the inflation "tax".
So we already invade your privacy to appraise the former, and the later has to be be public because companies need to know who owns what shares and the trading platforms need to associate users to shares they own. Both can be used by government to provide ownership details.
You would also want to wealth tax companies for total global cash-on-hand assets they have as well. Those are also required to be public record already. That way private business executives cannot tax haven their own stuff under an LLC, and companies like Google / FB are punished for hoarding hundreds of billions in offshore accounts they have no intent to spend or bring back into the states.
Of course, this is all saying "government should do X" which is just for entertainment, pretty much. The US is in no condition to act in the will of the people at all right now anyway, so its all speculation - you would have to fix the broken democracy first.
Those with capital / assets can leverage up, borrow more money, and then pay it back with lesser inflated dollars.
Buying property?
If a major function of government is to protect our property (land, savings, boats, cars, etc...), then it could be said the more property we have the more we benefit from government protection and the more we should pay.
Another function of government is to facilitate trade. For this service, ALL transactions should be taxed (including payroll).
If you look at the totality of this, the actual tax rates would be nominal for every "normal" individual, thus it wouldn't necessarily be regressive. We're talking about a 1% tax rate on property and ALL transactions.
To me this makes sense on so many levels. It captures money from everyone participating in the system and it captures it relative to the person's level of benefit from the system.
The hardest part would be tracking. However, if the tax is nominal and the punishment for cheating is high, then it seems like it wouldn't need outrageously intrusive controls.
If Starbucks owns coffee plantations, roasters, logistics, stores, the cup of coffee you get might be untaxed prior to you paying for it. If a competing coffee company performs the exact same steps, except uses third party farmers, logistics, roasters, and rents their storefront, that cup of coffee was taxed 5+ times before you bought it.
I don't see the societal benefit to encourage vertical aggregation like that.
If you want to tax wealth gains as ordinary income there should be an acknowledgment of inflation. In practice you end up with roughly the same amount of money going to taxes and a much more complicated system. In this example it would raise the investment income tax revenue by 33%, not the 233% difference in tax rates. But the index fund 4% and the 1.7% inflation were pulled out of orifices and our predictive capabilities are so reflected.
A janitor working as a contractor may not have the chances the people in Kodak had back in the day. But at least he/she still gets to work a shift, gets paid for overtime. There is nothing stopping that person from pursuing their passion and create wealth. The reward of the wealth may be monetary or not.
On the other hand, let's think about the "privileged" workers. The more you get paid, the less life you have. In our current state of capitalism, if the employer pays you a lot, he/she wants to own you and use you until nothing of you is left. The current system doesn't care about long term, it's all about the short term. The people who break are replaced, and because people break, the workload gets heavier. But there is an unlimited demand of new workers fresh out of school willing to work under the same conditions. The work starts in the morning at 9 am, you can't be late, but you can't leave until the work is done. You go home, sleep for a few hours and start again. Sometimes you work on weekends and you definitely take a laptop to your holiday (if you have one).
If you work this hard, generate wealth and you know that if you stop working, all that you've endured would be for nothing, that would be inhumane.
https://www.vanityfair.com/news/2017/09/the-obscure-economis...
* Wealth (accumulated capitol)
* Income (acquired capitol)
* Consumption (utilized capitol)
* Double taxation (which side is taxed, both?)
* Inequality / Regressive (generic taxes target the poor/middle)
* 'sitting on capitol' isn't taxed
* Taxes exist to fund the public good.
* Taxes should target undesired (by the community) behavior
* Incentives should target desired behavior
* You are what you measure and how you react (punish/reward)
Income: A maximum income target and a 'minimum' income target. These two numbers would be plugged in to a single non-linear formula that applies to all. The more someone makes, the more they're taxed (they would always take home more, but for every dollar over they'd take home less of that dollar). B.I.G. could be built in to this formula as a third number (mostly raising the floor); but to me the minimum number already sounds like it is this number.
Wealth: Some savings is a good idea. Having a year or two of runway (disaster preparedness). Saving to move in to a house. Investing* in active things (stocks/bonds/etc) for retirement. Owning your own means of production / transportation / housing (within reason).
Wealth is more static, when wealth suddenly shows up it should be taxed as income. When it's held over time it should be taxed at a much lower rate, but still taxed (every period, IE year). Society should agree on a divisor that is fair, and how much different types of wealth are discounted. 'wealth' (divided down) would thus be figured in to the total tax liability on the compound curve I described in the income section.
The real issue is that the fundamental structure of our economy aggregates wealth towards the top. Employees who add millions of dollars in value per year to a company get paid a fraction of that. Look at per-emoloyee profits for all of the major corporations. Our economy very heavily favors people who own capital over people who do work on the ground floor.
If you want to fix income inequality, you have to look at structures like the stock market, like corporate equity distribution, and pretty much everything we have in place in society that allows the rich to increase their wealth without actually working.
Increasing taxes is like taking aspirin to cure Ebola. Sure, you feel better, but it's not going to make you healthy.
Their offspring could benefit from a generous endowment of a proportion of this wealth, say 10%-20%.
Edit: and no sneaking about with Trusts, either.
Parent poster proposed a way to help workers by changing the incentives in the system to reinvest more into productivity/research, without throwing out the system that has made our society propsperous.
It's actually quite terrifying that people would advocate for taking up to 90% of someone's income. We need to work on solving inequality but this simply isn't the answer.
Edit: It's also important to remember that taking more money away from the rich, and feeding it into an already broken and inefficient system (our government) does not equate to lifting people out of poverty.
This is a major misconception I see on both sides of the argument, (but definitely more of an issue on the "rah rah Laissez-faire crowd") the worry isn't really about the "1%" who are doctors and engineers who make ~$250K/year after working hard, the worry is really the people who make 20 million dollars a year with nowhere near a proportional value add.
I would be quite happy to earn more, and then 400K a year, as you say, even if he was taxed at 90%.
(sometime WolframAlpha doesn't display the chart you might need to reload the page until it does, then click on the button that say "Linear scale" to display in a linear scale instead of a log scale)
Perhaps say the severing of our money from gold maybe?
Look it's rather simple. You can wax and wane about tax policy until you are blue in the face. The answer lies in the currency, not taxation.
I give this example every single time these stories surface.
Take a pre-1965 quarter when our money still was constitutional and made with silver. 6.25 grams of silver in that quarter. That silver content has a melt value today, right now, of $3.37.
Items that silver quarter can buy today:
A gallon and a half of gas = .25 cents
1 gallon of milk = .25 cents
1 loaf of bread = .25 cents
The point illustrated is, the problem is your currency is worthless, it has been devalued by the banking cartel of the federal reserve to the point of almost complete worthlessness. And every year prices go up it's your currency losing more value, more purchasing power. It's not rocket science. You have been robbed by bankers. They own you. Washington and company learned their lesson after the continental dollar. Fiat currencies are fraud, and worthless. They always have been and always will be. Our dollar is no different. That's why the constitution has as the supreme law of the land that our currency must be backed by gold or silver. Which can't ever be valued at zero. Because it has intrinsic value. Fiat currency always throughout history, always, hits zero.
But isn't that just a reflection (and after-effect) of a more fundamental, underlying cause -- that is, the extent to which low- (and medium-) skill labor itself has become devalued, in recent decades -- along with, of course, the very class of persons taking those jobs? Along with a host of other changes in attitudes (sharply) favoring the welfare of the high-skilled -- and above all, of the rentiers -- over the welfare of those who actually do the bulk of the work that keeps our civilization actually running?
Which is presumably what motivated the actual votes on the particular pieces of legislation you (quite validly) cite.
http://www.nytimes.com/2007/11/12/technology/12google.html?m...
Remember that this NY Times article is designed to push emotional buttons. Their entire story revolves around comparing Apple against Kodak. There aren't really any deeper studies or figures provided. You could as well compare a contractor who worked at Kodak with a masseuse at Google and reach the opposite conclusion.
So the choice is more like:
* keep cafeteria workers on the payroll
* hire a specialized company to run the cafeteria
...the middle ground would be to require all vendors provide minimum benefits of some sort (vacation, sick days, etc.). But that wouldn't make it feasible to offer a temp event worker a data maintenance role. That would basically be poaching another company's worker.
So was she partly responsible for Kodak missing the boat on digital cameras?
Suspect that's still the case, though the other trend of increasing inequality means that more and more at the bottom are slipping out of middle class, while a very select few at the top are headed toward cryoretirement in their ice palaces overlooking a scenic valley on some private jovian moon.
I've read that marital status of you biological parents and the marital statuses of the parents in your neighborhood are also great predictors.
See: http://www.emilkirkegaard.dk/en/wp-content/uploads/Intellige...
But actually, I would go the opposite way and say we need to look at multigenerational inequality. Which is to say that our current inequality metrics might look really good even if you were bound to being only 1 quintile higher or lower than your grandparents, every individual would oscillate in a small range through their life but once accumulated it would show up in the data as lots of mobility. What I'd be really interested in seeing is how likely a family is to climb out of poverty over a few generations and then to stick there or how likely a rich family is to sink into poverty and stick there.
https://www.nytimes.com/interactive/2017/08/07/opinion/leonh...
TL;DR In 1980 low income workers saw their incomes rise faster than high income workers, now the vast majority of income gains go to extremely high paid workers.
[1] https://www.theatlantic.com/business/archive/2016/07/social-...
Through technology, some people are able to produce much more than others, so inequality is inevitable unless there is a balancing force (aka taxation).
"This work is essential to the health of the population, but because of something to do with marginal economics and supply and demand and weak labor laws and class power and reserve supply of labor, I don't have to pay a proper wage, or even treat them like human beings!"
All the things every country in the world does except one.
Consider a fast food restaurant with one cleaner, two people at the tills, three people in the kitchen, and one manager. Remove any of them and the lines will become too long, the place will become unacceptably dirty, etc. However, none of the employees is "producing" more than any other.
Author's point is not about decrease in pay but about the social changes that came about as a result of prioritizing the outsourcing of non-core-competency work to contractors, which increased competition and had the effect of reducing effective pay.
In other words, income inequality has increased as contract work has increased, and the reason why is because a large part of social mobility is due to networking and connections, which are far stronger at companies which prefer in-sourcing compared to companies which prefer out-sourcing, since out-sourcing naturally creates an "us vs. them" dynamic at companies which is difficult to overcome.
The implied conclusion is, if market forces are biased towards out-sourcing, then the government should incentivize in-sourcing as a means of combatting inequality.
If you read through the comments, one of them points out a perhaps less popular explanation - Ms Ramos apparently does not speak English. Large quantities of low skill immigration will inevitably make life tougher for people like her. But that would not be an explanation that'd be acceptable to the Times.
And even in coding, more companies are slowly requiring formal education as a prerequisite for even applying for jobs. We know someone like you can be just as productive as someone from a great school, but that won't matter if you're cut from the selection process.
That's because the law doesn't allow it.
You can do it, but why? It's easier to just go through the college grinder and pay off your loan over the next decade. Plus you might meet a cofounder.
I was so surprised when my father told me that back in the 80s, in a small city in the interior of Brazil, in a public school, he was taught BASIC as part of the school curriculum.
Over twenty years later, in a prestigious private high school in the capital city, coding was only mentioned once by a school director when shaming students for only using computers for "foolish tasks", while completely ignoring the fact his school didn't give a single coding class, not even as extra curriculum.
Programming should have the same importance status as maths in school, if not more.
I do wish US K-12 teachers were better compensated.
EDIT: readability.
It amazes me that it isn't the case, I assumed most High Schools if not grade schools were teaching some programming by now.
You can work remotely ofc. in this case or even try and change country (which is not always simple without diploma too).
As large companies, like Apple, race to shuffle employees to these companies in order to save money, everyone gets hurt but Apple. The money gets locked away from the middle class and Apple pretends that they don't have any full time positions that lack advancement opportunities and decent pay.
Apple gets quality janitors and security guards while paying the outsourcing company more.
The outsourcing companies are the actual ones running the race to the bottom. Stop that, and Apple will have to reconsider (at which point, we get to argue all over again if their new solution is morally acceptable)
Generally speaking, outsourced staff make around 15-20% of the billing rate.
If you want to hold major companies accountable for the outsourcing companies they hire, fine, make a regulatory push for that, but you have to fix the outsourcing companies first before you can seriously argue for that or you're just making major companies pay for the problems of outsourcing companies.
Would you seriously argue for taxing people for buying from animal-cruel farms without actually doing anything to those animal-cruel farms?
That's the problem. Outsourcing companies are not FIRST in line to be fixed according to this article.
That should still have a floor through labor laws. If it doesn't, that too needs to change.
>Company contracting the outsourcing company does not usually pay outsourcing company unmeasured rates where OSC then keeps large margin from contractors.
Higher minimum takes from that margin. OSC can then choose to charge the client more or pay themselves less.
I didn't cite "the market" at all because I actually suggested regulation which is contrary to "the market" argument often thrown around.
But socially, no, I would blame the outsourcing companies way before I would blame major companies for hiring those outsourcing companies.
This is all very convenient because janitors and security guards have to be physically present. Jumping across sovereign borders is when a "market" argument works better because the US cannot tell China to treat Foxconn employees better with any real teeth.
With UBI, people get the money regardless, so employers have to compete with what people can get without working. If you only offer them a meagre income boost for a gruelling work week, you're going to struggle to attract people.
This applies basically everywhere. And a failure to really understand it leads to all sorts of erroneous conclusions about the rust belt.
Pop culture insists on a very silly perception of the non-coastal parts of the country. There's still a lot of opportunity elsewhere -- at drastically lower costs of living.
Moving isn't easy, but everything else in their lives will be easier once they do. One impediment to this, as I see it, is that the culture is telling them the opposite of this. And that's actively harmful to their long-term prospects.
I'm saying more broadly that we're all probably at the mercy of an inescapable cycle that may not end until humanity is willing to cooperate perfectly at the global/species level of abstraction.
'The Lessons of History' also comments that competition is also inherent to our biological nature. There's a passage about how we usually only cooperate in order to compete at plural granularities (e.g. families, corporations, nations, religions). This has obvious implications for the tradeoff between freedom and equality.
If a position does not pay well enough for someone to have a family and raise and educate two or three children, it can be said not to pay for itself: which is to say, not to pay for its renewal from generation to generation. This is the real standard by which we must consider the wages paid to those positions, like waiters and teachers and janitors, which are perennial.
Why is it? A job is better than welfare, therefore it has value. The requirement that jobs are 'renewable' is only required of the average job, not every job.
Accepting the idea that renewability is either slightly more than 1.0 or slightly less, if the "average job" is renewable it suggests most of the common jobs have to be renewable in practice.
We could argue this in another way, which is to say that the average "career life course" or let's just say "life course" has to be renewable. This is where we encounter the idea that people should be setting themselves up for promotions -- but most people don't get promotions. It's not how life works. Promotions don't address the concern for the average life course.
“Because, if you’re honest with yourself, if you step away and look at what this world is and what it’s becoming… we’re really not far from a reality where everyone is condemned to the pits. Everyone is lost. Maybe not this generation. Maybe not the next. But surely, somehow, if you cherish anyone, anything, any legacy at all, you can’t let them win, destroy it all, and erect some… mockery in its place. Rewritten history, modified, subjugated, and broken people.”
[0] https://twigserial.wordpress.com/2017/08/26/crown-of-thorns-...
Organize a small band of hardened cadres and wait for your opportunity. Major war not going as well as planned or other crisis, few million frustrated citizens with arms and your small cadre have a chance to take over largest country on Earth.
Combine both - thirty years of exhausting war plus new religion and you can take over everything from Afghanistan to Morocco in just few years.
Refuse violence and keep repeating your arguments despite oppression - it might take shorter then you think - like British leaving India or Soviet Union leaving Central Europe and Central Asia.
Just few examples of impossible and unthinkable happening.
"it's not what you earn it's what you keep" - someone on the internet
There is unrest in the forest
There is trouble with the trees
For the maples want more sunlight
And the oaks ignore their pleas
The trouble with the maples
And they're quite convinced they're right
They say the oaks are just too lofty
And they grab up all the light
But the oaks can't help their feelings
If they like the way they're made
And they wonder why the maples
Can't be happy in their shade?
There is trouble in the forest
And the creatures all have fled
As the maples scream 'oppression!'
And the oaks, just shake their heads
So the maples formed a union
And demanded equal rights
'The oaks are just too greedy
We will make them give us light'
Now there's no more oak oppression
For they passed a noble law
And the trees are all kept equal
By hatchet, axe, and sawAlso the IMF's stance on inflation and inequality is moving from hyperinflation to sustainable inflation leads to reduced inequality but there aren't advantages to moving to a lower inflation than that.
I am not a follower or a fan of Ayn Rand but I really don't see any other category within which to place:
Steve Jobs, Arnold Schwarzenegger, Elon Musk ... perhaps even Donald Trump ? George Lucas ?
They seem to fit the archetype ...
However, take Monaco. There appears to be significant wealth and income disparity among residents of Monaco and yet nothing that we would reasonably identify as poverty.
That doesn't mean that this would make the world a better place.
The world should absolutely try and help the poor and solve their problems, but this has nothing at all to do with inequality".
But equality of opportunity seems a good idea.
The only other option I can see is that some tiny percentage of the country or of Apple would disappear. But what part, specifically?
This comment to me is characteristic of thinking of ownership in far too simplistic terms. Very rich people don't actually own productive things, they just own rights to income streams.
There are certain exceptions, such as the Koch brothers who do own their companies. If those companies disappeared that would also be a net benefit to US citizens.
By eliminating the tax shelters and correspondingly lowering the tax rates, Reagan brought about much more efficient allocation of investment capital.
Well what do you expect? Journalists write news articles, not peer-reviewed studies that obey the scientific method.
A lack of English skills would certainly contribute to social isolation within an American company, so if anything, it helps drive home the point that social isolation exacerbates income inequality. I don't think anybody is making the argument that Apple bears responsibility for giving Ms. Ramos English fluency, and it's part of the reason why there aren't easy solutions. But you can't even think about solving the problem until you can start to think about its root causes.
The main features of janitorial work is few barriers to entry. There is fair demand, but there is plentiful supply which is why it is relatively low paid.
If Janitors could only replace Janitors, then being "non-renewable" would reduce supply, increasing wage, and maintaining balance.
In reality, the main feature of Janitorial work is most people otherwise lacking qualifications can do it; i.e. anyone. So it's not true that the renewability of janitorial work has a direct affect on supply.
Instead, it depends on overall supply of unskilled labour.
I thought about this for a while after you wrote it.
In a stable setting, where there is not a large and pre-existing supply of prey, prey animals tend to have large broods. Many off their offspring are preyed upon or otherwise unable to reproduce, but just enough make it in each generation and likewise manage to have large broods.
This is not a behaviour that seems plausible with modern people. The amount of time required to educate someone prior to their entering workforce is enormous now -- we can't afford to do something like what prey animals do, with regards to work.
Where does the unskilled labor come from?
Trent is more similar to Good Will Hunting than this story.
The people that developed email and whatnot produced more than the people who deliver mail, etc.
If there are two layers in my coffee bean acquisition I'm losing the profit made at every layer, so of course I would want to own those layers and capture that profit before we even add a 1% tax.
But vertical integration comes at a risk, which is why only the biggest players will attempt it.
Now, add a 1% transaction to those two layers. You're now losing 2.01%. But at each layer you're already losing 15% net profit made by your supplier. I'm not sure you would change your perspective on vertical integration for 2% when you're already leaving 15-20% on the table.
I wonder if we wouldn't see a shift in grocery store form with the substance remaining as today.
Rather than buying a bottle of Coke from Star Market, you might be buying a consigned bottle of Coke, with Star Market serving only as the marketplace (avoiding Star buying the bottle from Coke), and where Coke is paid directly by you as part of the transaction. Grocers operate on a terribly thin net margin as it is. They would have a lot of incentive to avoid additional transactions in the supply chain (and there's some societal benefit to keeping grocery prices low).
I'm not so much arguing against [though I do oppose a transaction tax] as I am brainstorming how the implementation of such a tax would create different behaviors in the market to compensate or avoid the tax.
But I'm not an economist and am somewhat skeptical of macro-economics in general, which seems a bit like reading tea leaves.
Even if you if you don't buy into supply side economics, I think "Money doesn't do anyone but the holder any good sitting in an offshore account" is somewhat misleading. Savers and investors, through loans and capital, certainly help someone.
The economic principle you're looking for is "velocity of money". If you think of a GDP in terms of a multiplier in how often/fast money circulates, then you can analyze whether investment or spending is more important.
The second economic principle to look into after that is "marginal propensity to consume".
The vast majority of money people invest doesn't go into giving companies capital, though.
It goes into people selling pieces of companies to each other. The very first time the share was bought, the company got some capital, and the vast majority of money people invest is not going into initial purchases of shares.
If they had no janitors the productivity for other workers would be 0 (think of the smell), so I would argue janitors are essential personnel.
And what do they tell me?
That once this ends, they're headed to Whole Foods for another shift. Or that they'll sleep in their car for a few hours tonight before heading to the next job, not seeing their kids. Or that they're struggling to pay for their mom's medical bills and have no clue how they'll ever get out of it.
This NY Times article pushes buttons so well because it resonates deeply with what I, and many others, have been hearing every day since they've set foot in Silicon Valley.
My point is that "janitor who became CTO" is not really a common story at any company, even at Kodak.
"The results demonstrate that intelligence is a powerful predictor of success but, on the whole, not an overwhelmingly better predictor than parental SES or grades."
Price is not about total value provided to society but about the marginal value of one more diamond, 1 more gallon of water, 1 more janitor or 1 more programmer.
I say all of this because there has been a significant upward tick over the last 5 years. Roughly speaking new grads are now making the same as what people with 5 years of experience made 5 years ago.
The interview process is intimidating, but many people would likely be able to get through it if they did a couple months of intensive interview prep beforehand.
Also, consider moving to the Bay Area, or another major city.
Henry George proposed this in the 1800's [0]
I'm not familiar with this being a requirement for foreign, private companies. (Reading between the lines, I'd expect a marked increase in investments in foreign, private companies under such a taxation scheme.)
Wars of I BC century and Roman laws that put people into slavery for debts had brought hundreds of thousands of slaves into economy bringing cost of labour close to zero. Conquest of Egypt and North Africa flooded markets with cheap grain.
That market disruption made artisan shops and small farms unable to sustain/compete on the market with larger enterprises based on slave labour.
Majority of citizens of lower class had been then entitled to free food and free entertainment (bread and circus). It was necessary for keeping their votes and for keeping appearances of the republic. (Even what we call Roman Empire were still nominally a Republic with Senate and elections held for various offices every year at Fields of Mars).
I recommend everyone reading Rubicon by Tom Holland. https://www.amazon.com/Rubicon-Tom-Holland/dp/1400078970
The hoops some members of this forum will jump through to convince themselves that building CRUD apps is some zenith of intellectual might just continues to astound me.
Maybe if jobs for all skill-sets were still growing (in availability and compensation) it'd be easier to write off a good portion of the population as mentally inferior, but now that knowledge jobs are gaining a monopoly on living wages/salaries I don't think it's as easy to be that glib.
We need to do better as a society.
We're not that glib when it comes to children and early education, and I don't think we should change attitude just because a person has reached adulthood. Laziness and/or the attribution fallacy seems to get the better of a lot of us on HN.
Presuming we want people to have good lives who aren’t able or inclined to do jobs requiring much higher intellectual demands than janitorial ones (and I certainly do want us to presume that!), we need to figure out how to in the short term allow people doing those jobs to have good lives and in the long term allow them to have good lives while robots do those jobs.
Perhaps I’m misunderstanding your comment.
This economic system isn't working for the vast majority of Americans, hence the support for Bernie and Trump.
Have you ever been in any kind of teaching role, or observed some students at tutoring labs? Some people are just unteachable/not cut out for it.
then they can become janitors.
https://en.wikipedia.org/wiki/Moravec%27s_paradox
but you're right, ubi is essential. not everyone can handle janitorial work. ;)
manufacturing went away, agriculture went away, mining went away, all through automation. coincidently, this corresponded to growth in the people working in tech and other intellectual labor. but it's sloppy thinking to say that automation causes growth in intellectual labor, which seems to be the presumption. automation causes whatever it automates to shrink. intellectual labor will be automated-- possibly before janitorial work.
Provided their estate will not hit the federal exemption (it will clearly not) or state exemption amount (ditto), there is nothing to compel them to prepare a balance sheet with fair market values.
Much wealth, though is held in relatively liquid assets or in illiquid assets with valuation processes already established in a lot of cases (real estate valuation for property tax assessment as an example). You won't be able to get perfect values on artwork, collector cars, and other one-of-kind collectibles.
That doesn't make a wealth tax entirely unworkable, though, in my estimation.
Inherited wealth is another matter.
Certainly it's not easy getting outsize returns reliably, but the idea that the return is earned in a way that scales with the amount invested sounds very dubious to me.
Inherited wealth was already taxed at one point too. All money is taxed multiple times as it moves throughout the economy. That by itself isn't a good reason to dismiss any tax plan.
Theoretically there are good economic arguments to back up a 'wealth' tax as a replacement of income tax or an adjustment to it. In theory, it could discourage keeping enormous reserves and keep money flowing through the economy -- it'd essentially incentive corporations hiring and building out operations rather than sitting on a rainy day fund or paying dividends.
As I said though, in practice it just isn't entirely feasible even if you decided it was a policy worth pursuing.
Yes, but unless you're talking about a wealth tax in excess of 10%, this is not going to change. Someone with multiple millions of dollars in diversified investments will always be financially secure, unless we're considering drastic measures like a communist revolution.
Regarding all the benefits of wealth you mentioned, note how these benefits only arise when the investor liquidates his investment. Hence my point that instead of taxing wealth when it is being productively invested, tax the wealth at the point of liquidation instead.
I'm also in favor of high estate taxes, but that's an entirely different tangent.
An annual wealth tax of 10% would wipe out most wealth concentrations within 50 years. I think such a level is absurdly too high, though.
Looking at Switzerland as an example, I think 0.25% to maybe as much as 1% range is far more reasonable (roughly in range with their wealth taxation today) with a per-household exemption of $1MM or thereabouts [to prevent nuisance calculations over $10 in taxes].
> note how these benefits only arise when the investor liquidates his investment
"essentially devoid of the concerns of financial catastrophe" is a tremendous benefit that confers to the wealth holder without need of spending the wealth.
We can of course quibble about the details... Mostly just trying to shift the way of thinking and talking about a UBI...
I also think that UBI in its first version needs to be more like $600/mo/adult. It's going to be austere for sure, but a figure much higher is not supportable (and so DoA when proposed).
I suspect Apple will then go and find another contracting company.
If I instead look at the log graph, it looks more like the value of currency was approximately stable before 1900, and then started to trend upwards some time after that. I'm not sure how to interpret that, but if you were intending to point to the end of the gold standard, this data doesn't really support that. There is a slight surge around 1970, but only relative to a general trend.
And when I look at the average rate of inflation from 1970 to 2017, it is 4.01% per year: http://www.wolframalpha.com/input/?i=1000+1970+dollars+in+20...
Both of them are exponential growths, but with quite different rates.
As I said, there was a surge around 1970, so yes, if you take a period that includes that surge, it will probably have a higher rate than one that does not.
The F-150 is the best selling vehicle in the US, and they're certainly not all going to people in the construction industry.
And $50k/yr is more than enough to save money in most parts of the country. That's a good salary.
What economy doesn't have inequality?
- Work for MEGACORP and produce $400k/year of value
- Develop a new business which has a 30% chance of succeeding. If it succeeds, you estimate it will be worth $50M.
Suppose the marginal tax rate for income above $400k/year is 40%, and you want to maximize your expected earnings (say, to donate to a charity you think is particularly effective). Which option is rational?
Now suppose the marginal tax rate for income above $400k/year is 100%. Now no matter how high we change that $50M number to be, it's always better to just work for $MEGACORP, because you get a guaranteed paycheck.
This is known as a distortion, and is the true cost of taxes. I personally don't care too much where the wealth people creates goes, and I'd like to see less income inequality - but let's not kill the golden goose while we're at it. There are far less distortionary taxes than extremely high income tax rates.
In real life, if I'm taking home $400k/year in salary it's because I'm creating $1 million/year in revenue. Also in real life, a start-up business that will be worth $50 million usually has more like a 1% chance of success, so it's expected value is actually just about 25% more than the proposed salaried job -- less than my value-per-year at my job, actually.
Finally, in real life, most people don't want to maximize expected income -- its buying power in terms of personal needs decreases logarithmically.
Tax law really has little effect once we use a less imaginative scenario.
You mention people are risk averse (logarithmic utility of money). I posit that that is only true for non-altruists. An altruist prefers to save 10000 lives nearly exactly 10 times as much as they prefer to save 1000 lives. Given a secure enough financial base off of which the logarithmic personal rewards factor is a non-issue, this is the primary driver for plenty of people that I personally know.
Providing for a living working wage. Providing for labour unionisation or equivalent functions. Curtailing the capability of the wealthy to seek self-serving concessions from legislatures. Supporting a vibrant programme of public schools and works.
Pretty much Adam Smith's prescription in 1776.
Also by classical economics, you cant afford to give less than living wage because then you would kill the people that work for it.
So long as there's a surplus population, employers will not want for labour.
As soon as land becomes private property, the landlord demands a share of almost all the produce which7 the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land....*
[I]n every part of Europe, twenty workmen serve under a master for one that is independent; and the wages of labour are everywhere understood to be, what they usually are, when the labourer is one person, and the owner of the stock which employs him another....The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.
It is not, however, difficult to foresee which of the two parties must ... have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer.
We rarely hear ... of the combinations of masters, though frequently of those of workmen. But whoever imagines ... that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of.
Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people. Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen ... But whether their combinations be offensive or defensive, they are always abundantly heard of. In order to bring the point to a speedy decision, they have always recourse to the loudest clamour, and sometimes to the most shocking violence and outrage. They are desperate, and act with the folly and extravagance of desperate men, who must either starve, or frighten their masters into an immediate compliance with their demands. The masters upon these occasions are just as clamorous upon the other side, and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen....
A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.
https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...
The earth has finite resources. Wealth is a zero sum game. Even if you want to look at things like entertainment that can be reporduced cheaply, musicians and directors need fed, food is limited, therefore even films/music are limited.
That's clearly not the case. The classic example is building a house alone in the woods, but let's consider art. With different choices, a person could use the same paint to make a good or a bad painting. The choices made while painting decide if it will be a mess or something beautiful. Even if it's never shown or sold to anyone else, the person who made a beautiful painting would be wealthier for it.
What happened in the meantime? We live in the most abundant age in history. Worldwide poverty is at an all-time low. Surely wealth is growing in absolute terms and it's not just the top 1% benefiting.
Interestingly, the top U.S. tax rate from 1951–1963 was >90%, and it was >50% during the half-century from 1932–1986 – https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
See "Competition & Monopoly In Medical Care" by Frech, pg. 54 for a detailed discussion.
Are there guarantees that UBI will always be comparable to a living wage?
UBI and government job programs aren't mutually exclusive. I do think the government should create more jobs for the public good, especially in scientific research and development. But either way, I think a UBI is necessary so that people have the option of working for themselves rather than being forced to answer to someone else. UBI is like the libertarian approach, while government jobs are the more authoritarian approach. I think both should coexist.
I guess there's no guarantee that UBI would be a living wage. Regardless, I think we need a UBI. Money is one's claim on society's resources, and since we're all shareholders in this economy, we should receive a citizen's dividend, even if that amount isn't that much (eg. Alaska's Permanent Fund)
I don't see how either a UBI or a job guarantee limits employees from walking away from their jobs. The presence of a job, or an income, hasn't stopped many people from starting their own thing.
> But either way, I think a UBI is necessary so that people have the option of working for themselves rather than being forced to answer to someone else.
The option to work for yourself isn't taken away by a jobs guarantee. I can see how the presence of a UBI would permit people to do things no one would pay for otherwise. As idyllic as I really do think that sounds, I suspect that examples of people doing things no one would pay for would be used over time by UBI opponents to drive down the value of the UBI to below a living wage.
Another change since then was the rise of the corporate raider. Used to be that you could run a public company without profit as the primary motive. Parable of the Mexican fisherman, and such. (https://bemorewithless.com/the-story-of-the-mexican-fisherma...) But now people like Carl Icahn (and Mitt Romney in his private sector days) actually hunt for companies that are not maximizing return to investors, and remake them into companies that do. Apple actually had to fend off Carl Icahn recently. (http://www.marketwatch.com/story/carl-icahns-2-billion-apple...)
You need fewer janitors now because modern chemicals allow cleaning same space quicker (and probably tools also changed a bit, while maybe in the U.S. in 1980s, modern ones have already been in place).
You need more engineers. And they impact work more because development and marketing (which also became a branch of engineering, see: growth hackers) is more important now than production.
You can always train enough janitors, not so easy with engineers.
Same thing about nearly all low-skilled workers. They are easy to train and their supply is nearly infinite, demand isn't, and demand for high-skilled is high plus they make so much profit you can actually afford paying them a ton of money, which wasn't possible back in 1980s.
It is that proverbial bifurcation of workforce. Outsourcing has nothing to do with it. It is just technological change. There is no way out of it (at least no way which won't cripple economic growth - which is already not so good).
The 'average Joe' is, by the numbers, consuming more than they are producing. There are two ways this can be sustainable:
1) Transfer from economically productive to economically unproductive individuals
2) Net economic consumers become net economic producers. In practice, this would almost certainly look like spending less and investing more.
The argument of my grandparent seems to be that incentivising the _reverse_ of (2), ie net producers to become net consumers, is a terrible idea that will make the fundamentals of the problem worse. That argument is good as a matter of principle. It is particularly relevant in the current context of America.
Saving is paramount to growth in the classic economic model.
Another word for savings is "deferred consumption". If I earned 1000 dollars this month, and spent 700, I have 300 in savings, or, put another way, I deferred consuming 300 of those dollars.
Now, 300 in a checking account doesn't do anyone any good but me, but if I took half of that money and invested it w/the bank at a 7%/year interest rate, I'd be investing $150/month, and once I started getting that return back, I'd be getting $160.50 back.
What that does for the bank is gives it capitol to loan out to businesses.
If someone went to the bank and got a loan of $150, with a promise of paying it back at 9% in a year, they'd borrow that $150, pay the bank back $163.50 in a year, and the bank would pay me, the original creator of those funds, $160.50. They'd get a profit of $3.00, which is the difference between loaning that money out at 9%, and paying me back at 7%.
If the bank couldn't create money out of thin air, and doesn't fraudulently loan out customer's deposits, the only way to obtain a loan would be if someone else deferred consumption.
Obviously, banks can create money out of thin air (by loaning out funds on deposit), and when they do so, they don't have to give the money back with any interest, so they do. They can loan out $150 at 5% (cheaper than anyone else, perhaps!) and they can keep all of the profit, or $7.50. (more than twice the earlier profit of a non-fraudulent loan.)
I suspect OP subscribes to a more "savings-based economic growth" theory, in contrast to a "consumption-based economic growth" theory.
I obviously am an advocate of the savings-based approach vs. consumption-based approach.
That said, the banks + federal oversight encourage money to be created out of thin air, which makes it easy to spend money, and makes it impossible to incentivize deferred consumption. So, everyone spends money, no limits on it, and we all get to ride the waves between economic booms and economic crashes.
The crash is an inevitable response to the boom, and any policy that wants to have booms without crashes is a logical fallacy.
I hope this helps a bit! I can gather some more sources if you're curious, but the basic gist is in accordance to the Austrian school of economics. Read more on that, and you'll encounter much better explanations than mine!
:wave:
To give one example that goes back a little further, companies used to handle the whole payroll process themselves. Now they use ADP or whoever.
There's also been a lot of automation/self-service of mundane tasks. You don't really have the stereotypical "starting the mailroom" job any longer nor do you have the steno pool.
Those workers should be full time workers for the cleaning firm, but it doesn't mean that they are full time workers for Apple.
However, more often, the contractors are onsite and doing exactly what other Apple employees do and are managed by fulltime employees of Apple. In this case the law says those contractors should have been classified as employees of Apple not the contracting firm, even if their employment contract says otherwise. see Vizcaino v. Microsoft Corp
I really want to know what BigCorp will chose the first between a company paying janitors above minimum wage and a company offering them to cut their cost on janitors by 30% (but janitors gets only enough to scrape by). My experience is that they will jump on the cheaper offer (so someone can get a bonus), and the janitors can go fuck themselves - and so can the quality of their work. It happens all the time, and not only with janitors.
Arguing that the fault rests (only) with the outsourcing companies is the same thing as arguing the fault of people getting low salaries rests (only) on those people. It may be technically true, but it seems pretty naive to me.
The customer could choose to consider the treatment of the workers a priority in selecting service providers, and the service provider could choose to refuse to exploit their workers just to secure deals, but neither of them have any real incentive to do so. It's not illegal to shop primarily by price. It's not illegal to hire PT workers even when FT would be viable.
I do agree, though, that the problem is a lack of regulation; unfettered capitalism really does have a evil end game.
That said, I agree with your point, just bad example.
You seem to be assuming that Starting a Business is always better, more of an achievement, more awesome, than not starting one. I see no reason for this to be true. Maximizing revenue tends to have more to do with building market power than with achieving anything at all.
You're also deliberately shifting the goalposts here. You started out by saying that progressive taxes were bad because they penalize making more money. Now you're saying they're bad because they incentivize complacency and mediocrity, which are life-achievement qualities rather than economic quantities.
It looks like your underlying belief is: "people who make lots of money are heroes, and we need to encourage more people to be heroes, irrespective of what's good for the rest of society."
>Given a secure enough financial base off of which the logarithmic personal rewards factor is a non-issue, this is the primary driver for plenty of people that I personally know.
To be frank, it's their primary excuse for what they really wanted to do, which was to make as much money as possible. After all, how many are giving away their extra money to the most efficient administrator of human-welfare programs around, the state?
Given various inefficiencies of educational institutions, this is all but certain to be occurring as we speak. There is a notion of a "forgetting curve".
And, as you note, information can at best asymptotically achieve some maximum theoretical efficiency. It's not a limitless fount of potential.
Honest question -- how does the Austrian school reconcile the slow growth of the US economy during and immediately after QE with enormous corporate warchests such as Apple's cash stockpile?
I'll accept that some of this is tax shenanigans to defer US repatriation... but only some of it.
I'm not an Austrian economist but I don't know why it's so far fetched that Apple is simply saving the money for the inevitable fire sale ...
Why buy Disney today when you can buy Disney and Ford tomorrow ?
Imagine if banks couldn't 'print their own money', then businesses would depend on people investing to get funding and demand far outstrips supply. So we'd have economic contractions on a massive scale.
If you could effectively put 100% tax on inheritance(which you can't in practice), it means your utility of leaving wealth around becomes 0. Now you want to spend that wealth as much as possible, and it turns into consumption. You would sell and spend everything you have for lavish expenses, which means a reduction in capital investment, which means slower economic growth.
A tax on people that eat their brocoli would be highly impractical!
Gail's story may be inspiring but it may also be unique, even in the 80s.
How can somebody have the mind to take classes when they haven't had a holiday in years? Or when they work from 6p.m. to 2a.m.?
How is this different from anyone else who works full time? In fact, a random college course would be more likely to be before 6pm than after?
Much of what's seen as wealth production is instead liquidity production -- turning natural capital into financial currency. In the case of any production chain founded on fossil-fuel energy, the transformation requires a draw-down of natural capital worth many millions of times the market-price and wealth "created".
Activities founded on renewable or sustainable processes are less fraught, but there's still the accounting for potential disruption or reduction: soil loss (rougly 100x the rate of creation), sink-exhaustion (waste and pollution factors), biodiversity loss (rates of extinction > speciation), and the like.
There's little accounting for any of this within conventional economic theory. Ecological, biophysical, and thermoeconomics address parts. Steve Keen is starting to write mathematical descriptions of production factors in which the role of energy is taken into account.
This is only true if wages don't go up to match it, and if they don't, then we should be asking why not. People should be insisting on raises at least in line with inflation, and if they're not able to get even that, then it suggests a power imbalance.
And besides, currency devaluation isn't some secret conspiracy, or even an inherent property of fiat currency, it's the explicit and stated aim of our monetary policy. Most economists seem to believe a constant low level of inflation is a good thing and so that's what we do. If you disagree, you should argue with that directly. And if you want a stable currency value, I would suggest monetary policy would be far more effective at achieving that than the gold standard.
To be blunt, that really is SV cuckoo-land thinking.
In 22 years of employment, 18 in IT with Fortune 100s, I have never had a job in which that was possible.
Why would a company voluntarily increase its personnel costs by the rate of inflation?
Because you have a society where not doing so would be rightly recognised as a defacto wage cut, and considered outrageous by your employees. This is generally the case in Europe, and I'm arguing that this not being the case in the US is exactly the problem.
Also FWIW, I don't think tech companies are remotely representative. It's an industry with high employee turnover, and where people are expected to argue for their own raises.
Nonetheless, I work in tech, and I got an inflation based salary bump last year, which was applied in addition to a performance based raise, and I'm expecting one this year as well. But then, I don't work in the US.
You know, because you actually fought for your interests instead of accepting your lot as a constantly-devalued cost center.
The gold-backing was dead by 1970. Petro-dolarisation occurred in 1974. The UK all but went broke in 1979. The USSR did go broke in 1987-89, courtesy the US and Saudi Arabia (something Putin may well have in mind now).
Money is weird. And the gold standard and "end the Fed" nonsense is ... complete bullshit.
1. We want slight 1%-2% inflation to prevent hoarding from slowing the economy to a crawl. Why invest or buy something today when the cash stuffed in my mattress will buy something better in 6 months.
2. If you agree with the first statement, why tie the rate of growth of money to how fast you can dig a metal out of the ground? Let "experts" survey the economy and decide how much more money there should be this year as opposed to last year.
I am not saying I agree completely with either statement, but that is one argument against a gold tied currency.
So I just assume it's Wall Street vampires down voting or those who hear the word constitution and down vote because clearly that makes me wrong or insane.
Let's say that on Jan 1, 1970, you took your pre-1964 quarter and pulled out the 6.25 grams of silver in at the price of $12.37 a troy ounce. You'd get $2.48.
If you put that $2.48 in a money market earning just half the fed discount rate for the last 47 years, it'd be worth $7.99 today. The silver would be worth $3.37. (The currency would likely be a lot more that $7.99, because the difference between money market rates and fed discount rate historically hasn't been as high as the very conservative 50% markdown I used here.)
There are a lot of moving parts in an economy that affect cost of living. A lot of stuff has changed since 1970 beyond going off the gold standard. Massive productivity changes, energy and raw material price shocks, demographic changes, policies and laws changing behaviors all across the individual and business landscape. It's difficult to isolate one individual factor as the sole cause.
However, small sample size notwithstanding, I have been involved with mentoring in an outreach program targeted at people with little to no CS experience. And these students were coding circles around "CS" grads in under 6 weeks. Sure the theoretical foundations aren't there yet, but, do you really need that much math to stand up an app, build a website, or do any of the work expected of a junior dev?
I 100% agree with you in that most people don't have the aptitude to become the next John Carmack, but, at least in my experience, that's not where the jobs are anyway. You don't need to be Linus to generate business value using Linux, and you don't need to be James Gosling to working Java enterprise apps. The jobs of the future need an army of people to modernize infrastructure and build using existing tools. These are the middle class anchors of the 21st century; I'd say look no farther than the "analyst" pipelines of the American finance industry to see this happening.
- slavery
- the civil war
- the industrial revolution
- two world wars
- huge growth in population and in the economy, which makes it inherently less volatile
- a bunch of other important events that would obviously affect currency prices
Planned economies such as the USSR clearly impinge on human liberty, tend to be undemocratic, and are usually very inefficient, and I think almost everybody would agree with you that they aren't a good alternative to the current U.S political and economic system.
I disagree that they impinge on human freedom, at least I don't think they do compared to capitalist economy. I see no reason why they should be undemocratic. And you'll find nobody in favour of a 5 year plan as the USSR had; there have been massive advances in economic planning methods, as elaborated by Cockshott et al.
I love the irony of saying it is "inefficient" especially when we compare it to how currently under capitalism firms compete by doing the same research, repeating the same mistakes, often extremely inefficiently, in the name of profit. This is one of the most inefficient things I have heard of.
The USSR planning model isn't a good alternative. But I think that some economic planning model, whatever it may be, should not be ruled out, especially as it can feature as part of lower-stage Communism.
Some levels of inequality are healthy and motivating, extreme social inequality with large groups of population feeling left behind by the social system is undermining stability and a recipe for revolution.
Or, I'd modify that to say they eat the upper middle class, because the truly rich just bolt at the first sign of trouble.
I don't really agree with this. Taxes are distortive and doesn't necesarily help inequality. It might even make it worse. But also, there is taxation as a progressive system of government funding, as there is taxation as in "You will never own more than X, because the government will seize it".
In terms of solutions, I'm not a professional economist, but as I read different authors and books, it really seems like we don't understand why we have inequality in the first place. Even Piketty's Capital feels more like explaining that its going on than why. So I'm jitterish about any solution that doesn't help resolve the core cause, for the which there doesn't seem to be consensus
The CEO's pays is a small but funny example about that: CEO's pays increased enormously after by a law thought to dimishing their returns, made their salaries public, and increased CEO's ambition and bargaining power. The very idea to dock their pay increased it.
But those are small bits at the macro-economic level.
In Argentina, the state collects a heft tax on property transfers when the propietor dies. So basically all property is donated from parents to children in-life.
Poorer property owners that cant afford or dont know better, or people stricken with tragedy in an early death are likely the ones that pay the most of that tax.
Conclusion, 'death taxes' are paid by the poorer half and hence worsens inequality.
On results: lets say that I were to tell you that all the money in your bank account is going to be worth 0 tomorrow. Are you going to invest that money in long term capital growth? Are you going to donate it to the government? I'd say the most reasonable reaction is drugs and hookers all the way!
The latter is definitely not great economic policy.
Who are you to make that decision for someone?
And, frankly, you're delusional if you think an estate tax is non distortive. The entire meaning of wealth would change for the elderly.
One cannot treat wealth like a zero sum game. More importantly, we need to rid ourselves of this growing crabs in a bucket mentality, because we all suffer when we hold society's best back. Is it "fair" in the sense of absolute wealth? No, but people shouldn't be so focused on their neighbor's plate then theirs is full enough that they can spend hours complaining online about how much more money the 1% have. Perhaps we should redefine fair wealth distribution to rightfully consider merit, which is shockingly absent from the majority view here.
Care to explain?
None of these are solutions to inequality. Tax-backed redistribution efforts (think new deal) have had no measurable positive impact on absolute or relative poverty; nor have minimum wage laws. The idea of corrupting the CEO compensation and hiring practice at the national level is about as boneheaded as they come.
All of these actions decrease efficiency, and none of them have a significant positive impact on poverty.
I just don't see the point of insisting we "do something!" when none of the similar "solutions" we've tried have made for any positive change, and all of them have measurably cost us in efficiency and growth. The "do something!" model of governance is cruel and deficient; if it would be better, all things considered, to do nothing, then do nothing!
Granted Scandinavian countries, now more just Norway and Denmark, tend to have very low potential for poverty in general. The rate would likely be comparatively low even without the programmes. Norway and Denmark have both considerably reduced entitlements over the years to relieve the enormous stress they put on the economy.
Well before any of these programmes became so comprehensive, Norway, Denmark, and Sweden were very productive and comparatively equal.
Because it currently has 2 of those (minimum wage and a health insurance mandate) at the federal level.
You can probably guess this puts banks in a very privileged position. Hence the high requirements for being able to start a bank of your own, and the government regulation intended to control inflation and fraud.
As a shareholder, because that money could be put to productive use today, rather than waiting for a future which may not come. To my mind, that's why the pressure for Apple to pay a dividend finally built up to the point that Apple now pays dividends.
That the employers monopolize and combine and have advantages over the worker is established, but not that doing the same on the other side would be beneficial. He mentions in spirit on in parallel that any measure to try to reduce that power of monopolization would be either ineffectual or make it worse.
Within the Smithy naivete, one could argue that unionization would mean that by necessity, employers would be require to conspire to be able to deal with unions. Of course, I don't think he had the word for union, certainly not the concept we have today, but he clearly condemns how employers are also able to use force against the gathering of workers.
But he explains the advantage, the unfairness of circumstance, of law, of practice, and of effect.
Elsewhere he's far more direct in challenging economic power.
And if you read the followers of Smith, particularly Mill, that endorsement is far clearer still.
> The option to work for yourself isn't taken away by a jobs guarantee.
Obviously. Job guarantee programs however still don't allow you to truly walk away from your job unless you're able to financially support yourself, whereas a UBI does.
A UBI that's actually enough to replace a job has the benefits you describe, at the cost of UBI times the population. A UBI that's not enough to replace a job doesn't have the benefits you describe, has the negatives I describe, and costs almost as much.
I doubt hedonist consumption is what Keynes had in mind.
> inheritance taxes are necessary to provide equality of opportunity.
Lets take this to the extreme: lets say that your father could not provide you with anything but minimum substance until your coming of age (18?). Anything given to you by your parents would be taxed away. This means that you now cannot go to any college that is not provided to you by credit. But you have no assets and no income, so nobody will loan you any money. Plus, you don't have money for rent, so you need to work immediately to pay for your own place.
Maybe you feel sympathy for the millions of people that actually live that, but how is forcing everyone to go through that be better for society at large?
Or think what it would mean for the state to actually do that: what if you had to build any infrastructure built by a previous generation from scratch, because "its not fair the SF bridge is nicer than the Brookly bridge, its inherited".
The emotional answer I have against advocating inheritance tax is that the goal is not to be fair, its to be better. And certainly fair by destruction, by removing everything, is not better.
(Still an honest question. I've never understood this about the Austrian school.)
To be fair, Austrian school of economics is more occultism than anything else in the field, while Chicago School Economics (Milton Friedman&co) have more accepted models and economic ideas. The 'neoliberal' model as far as I understand can't really explain corporate cash hoarding. The situation today is very unique: historically cheapness of money could easily provoke inflation, which would promptly push any cash hoarder to spend.
If the U.S. had a small spike in inflation the whole thing could change quickly.
[1] ignoring the whole subject about luck and what it means to earn something when two equivalent folks just have different dice rolls go their way, etc. Or especially in the context what it means to earn something when you just inherited it. (I have a bunch of friends who have inheritance coming their way and just totally expect it, they lead very different lives because of that than those I know who don't have that.)
It would have negative consequences besides that. Many, many people do things for "legacy". It's a powerful motivator. Taking away all wealth would eliminate something that encourages good long-term decision making.
It would hurt people who aren't the rich people. What would happen if Sam Walton's net worth was taxed when he died? Massive disruption to Walmart employees at a minimum. How would the net worth be calculated? Well, given his net worth, he'd be irresponsible not to have an army of lawyers and lobbyists making sure the number is as small as possible.
So, given the above, the idea isn't that simple.
Finally, there are ethical implications to that sort of policy. It implies that citizens earn at the pleasure of the government, not that the government rules by the consent of its citizens.
If you're a contracted employee, there's zero investment in you as an employee. You come in, do the task, and leave.
In the Bay Area schools my kids attend, they are working hard to emphasize this growth mindset. I think it's huge component in job mobility, whether it be upward or sideways.
Not everyone is a 'striver.' Some folks just want to pay their bills and enjoy what time they can with their family and friends.
There is an inherent value to a currency system, and that value amplified by network effects. The government definitely anchors that network (through many mechanisms, not just taxation), but there's still a lot of inertia there regardless.
What other (governmental) mechanisms do you view as anchoring the currency?
Well, the primary reason is that US dollars are declared by government fiat (hence the term) to be "legal tender for all debts public and private". You can't legally refuse to take US dollars (in the United States, obviously ... other countries give their own currencies a similar status). That seems only tangentially related to whether the dollars come from taxes or printing presses.
Government accepting payment for public debts in legal tender... is taxes. They're the first market maker for a fiat currency. It's certainly possible to just run printing presses, but that typically leads to hyperinflation and the replacement of the currency.
[0] https://en.wikipedia.org/wiki/Chartalism [1] https://en.wikipedia.org/wiki/Modern_Monetary_Theory
I voted for Bernie personally -- not a full out socialist... but I do think single payer + ubi + free college makes sense -- take the stress out of living paycheck to paycheck... at least somewhat... Not saying make everyone a millionaire and inflate the crap out of thnigs...but there needs to be some equilibrium...
One good policy might be capped CEO pay at say 200 * average employee salary. In this way - for CEO to get a raise, average salary must go up -- this can happen either by raising across the board or by moving more people to management and increasing upward mobility. Any money the CEO makes over 200* from that company is taxed at 100% including benefits, stocks, etc...
I'm currently very impressed by the work of Prof. Richard Wolff, an economist that heavily criticizes Capitalism and tries to make actual practical changes in the lives of people starting from their workplaces.
Here is a talk he made in front of Google employees (the irony): https://youtu.be/ynbgMKclWWc
I do like UBI though along with (the pragmatist in me) believes gov't should work like agile dev teams... push changes up to a github like interface for bills.. the all bills should be VERY succinct and serve 1 goal, and that they should be repealable pretty easily like reverting a change on github... I think we have WAY too much bloat, and omnibuses just don't make sense at all and should be illegal.
Congressmen make very good money and benefits -- and have lots of perks so they should be required to work as hard as the next guy in America - -40 hours per week IN congress discussing bills and voting - -anything to 'market' themselves for future elections is NOT part of their job and outside their 'paid' duties and should be done on their own time.
I think automation, etc will disrupt the entire fabric of society soon, and honestly I hope we can move back to middle-age work days... they worked maybe 20 hours a week, if that and some weeks not at all - if farming the winter was pretty much just don't freeze to death... While their lives weren't long, I have to think they enjoyed life more than we do today.
If I could live for free (no rent, free food, free electricity, etc), I probably would quit. I don't have much savings and my quality of life would drop a little, but I would probably take 6-12 months vacation and just dick about, playing video games and concentrating on my hobbies.
But China is a very extreme case: in general, if you dont have enough money to support a family, you wouldnt have a family, and lower wages would affect the demographic growth of the lowest earning members of society. The logical corollary for this is that you always will have people in the lowest earning spectrum, because if they earned more they would have more children, increase surplus and reduce wages. We don't have a reserve army concept yet at WoN, unfortunately.
(btw Marx seems to agree 100% with this concept of lowest earning spectrum/demographics)
In 1672, the English East India Company finally secured a trading post in Taiwan - ten years after the Dutch East India Company had been expelled from the island by the Chinese. The Company was soon engaged in direct and regular trade with the Chinese from that base and was permitted to make regular voyages to Amoy, Chusan and Canton. By the turn of the century, the Company's base for the China trade was transferred from Taiwan to its "factory" at Canton. With its Royal Charter, the Company was granted the privilege of monopoly of trade in the East Indies until 1833.
From 1700 onwards, most foreign traders were confined in Canton, where rigid restrictions were imposed through the practice of Co-hong, a guild of Chinese merchants, the sole recognized agency between foreign and Chinese merchants.
http://www.bl.uk/reshelp/findhelpregion/asia/china/guidesour...
You can also find David Ricardo and Malthus in agreement on wages. Ricardo gives us the subsistence theory of wages (I associate this as the Iron Law of Wages though that may be incorrect ... ah, J.K. Galbraith, whom I've read, makes that attribution):
Nice exchange of messages! Glad to be able to talk about things written 250 years ago with random internet strangers.
There are some definite difficulties in implementation. But even then, my argument is that it could be a really harmful tax if it could be applied at all.
One would have to balance the "harm" caused to the children of wealthy people for not inheriting wealth (mostly when they are around 50-60 yr old themselves), with the harm caused to society at large.
Agreed.
> and there's less of that here than in most other countries.
I've seen evidence that the US is actually not doing that well on this scale, particularly measured against other wealthy democracies.
What's particularly painful for people is that there's less equality of opportunity here than there was 40 years ago. I do think we need to do something about this, though it's not entirely clear what.
Here is an interesting point:
http://stuartschneiderman.blogspot.com/2016/11/the-problem-w...
First, it's much easier to get a rough idea of how many people states have killed than markets, to be sure. But many wars are fought and nations are conquered (and, for that matter, created) for market-driven reasons: oil, tea, diamonds, slaves, to name a few egregious examples off the top of my head. Millions of people have died throughout history that would not have if states were not acting to protect, expand, or create markets.
Second, while it's probably harder to get a rough idea of how many people states have saved than markets have, the number is not inconsequential. I certainly wouldn't suggest states are forces for unrequited good--there's copious valid criticism of them across the political spectrum--but I would suggest that they're hardly forces for unrequited evil, either.
"The market" not attractive enough - there's nowhere to put your money other than "the market" (including bonds, commodities, real estate etc.) unless you keep it in currency, and that's even more susceptible to government takings.
Is there a limit you see in taxes?
Do you have investments yourself? Maybe you donated all of your investments to the government after realizing how little you were being taxed?
Your last question is silly. The reason why I can simultaneously support higher taxes, yet not voluntarily donate money to the government, is because advocacy of higher taxes can raise far more money for government than my personal donations. Raising money to fund government is a collective action problem; if government relied on donations to run, it would fail because of freeloaders - in essence, a tragedy of the commons. But by collectively enforcing mandatory taxes we can make government work.
We are _nowhere_ near that point. And no one is saying tax capital gains at 100%; but I've never seen a convincing argument that it shouldn't be at _least_ the same as income tax.
https://taxfoundation.org/why-capital-gains-are-taxed-lower-...
That article goes out of its way to paint a picture of someone purchasing stock in a C corp with money earned from earned income and then eventually sold.
And yes, the corporation would pay a corporate tax rate (although almost certainly south of 30%), and then when that stock is sold, there is likely a 15% hit on the gains.
It is an unconvincing argument though; since salaries from a c corp are taxed too; if previous taxation was a deal breaker c corps wouldn't exist at all.
It is also unconvincing since capital gains are only taxed at the time of realization, it is an entirely different mechanism. As taxes goes, I can't choose to hold off paying taxes on income for a decade and invest that money; essentially compounding that money. But that is exactly how long-held unrealized capital gains work.
And insult to injury -- the entire idea of 'carried interest' is a give away to hedge funders. Even if you kept a low capital gains rate, carried interest as a concept should just be removed from the tax code.
And the real solution isn't a 100% tax but 100% tax over some lower amount, say $50,000 along with lowering the yearly gift tax exemption.
Inherited wealth is anathema to meritocracies.
Well, this is were we clearly disagree. I am very certain that if i knew that i was going to die in 6 months, id be burning all my money into some kickass 6 months with "Burguers" and "Premium Tinder accounts". Consumption vs Investment is a core battle between Keynesian and Chicago School economics, so it depends on which you subscribe.
> meritocracies.
I actually do wonder who argues in favor of meritocracies. Sure as hell not liberal-economics.
"Get what we deserve? I hope to god we don't get what we deserve" - Milton Friedman.
> And the real solution isn't a 100% tax but 100% tax over some lower amount, say $50,000 along with lowering the yearly gift tax exemption.
This just compromises the original concept of equality of opportunity: if you do that, anyone below 50k will be in an unfavourable position relatively. So what you did with that limit is imposing something on a group, intended to be a minority that wouldnt be able to repeal such rule. The fact that these rules end up like this has been extensively exposed by people like MF.
I.e. giving poor people money doesn't end up with the poor spending more money.
That said, on wages, I get the impression he's not all that far from Smith.
And likewise, appreciate the discussion.
This is another variation on the "rich people hoard cash" theory, which is completely false. Rich people invest all of their money back into the economy. Even bank deposits are invested back into the economy (when the bank loans it out).
Scrooge McDuck cash vaults do not exist.
The reason Apple, etc., invest a lot of their cash overseas is not because those are better investments, but because the US corporate taxes are so much higher those foreign investments become more attractive.
Level the taxes, and the money will be reinvested back in the US.
Of course it is. What do you think those funds invest in? Piles of cash?
> Bank lending is driven by demand, not deposits.
If that were true, banks wouldn't need deposits and certainly wouldn't offer free checking. They're not charities.
"investing" != "giving it out". "growing economy" != "less inequality".
Money in bank accounts is loaned to others and "thrust back" into the economy.
Money in other investments (stocks, bonds) also funds economic activity.
Your argument only makes sense if the wealthy are hoarding cash under their mattresses, which is not what they do.
I meant a mistake by society, i.e. it's a mistake to put people in a dead-end job, functionally ever.
Having taxes to have circulatory value sounds pretty dumb to me.
It's arguable whether giving government more money results in government working better.
By some accounts government is a demonstration of waist and an exercise in excess.
Government departments are always chronically underfunded, primarily because no government department PR employee ever got promoted by saying "we have enough money".
Apple got initial funding of only 250k, and that was split between equity and loan, very feasible even with a 400k yearly cap. (And I'd also note that 10% of "any money over that" still adds up given some of the salaries paid to top execs)
Secondly, Google's initial funding was only 100k in 98` dollars. The significant 25m round was from kleiner perkins and sequoia, and I certainly imagine that corporate funds for investment would not be held to the same limits as personal income tax.
Finally, facebook was bootstrapped out of their own pocket until they got a 500k invesmtent from thiel in 04 $'s. Once again the "big" investment a year later came from a firm.
In all of these cases the initial seed/bootstrapping money would come FAR under the 400k limit expressed, adjusted for inflation, and that assumes people wouldn't both save over multiple years, or that we wouldn't see more reliance on companies rather than individuals in early stage investment if the tax code shifted such that it was more advantageous.
I defend this largely because in my own readings of history I've attributed a large amount of the current economic state to events of the late 70's and 80s, the tax code changes being a major one of them, and I think your points unfairly detract from the validity of reintroducing such tax structures.
When I worked at a hardware store we had a brochure we could order in a gold-plated Ducane grill for $4 million.
That recent graph showing the top 1% having a 6% wealth growth rate is wholly unsustainable for any society. So there's something to be said for trying to level it off.
In other words, nothing like that.
The point is incentives. People doing work and providing value is a good thing that we don't want to discourage.
There is zero point in doing extra work if it will be taxed at 90%. People would just work for half a year, then take the rest off.
I think everyone deserves to be able to have vacation time, especially single parents.
Its like saying that you are going to base justice on "protecting good people and punishing bad people".
I can be swayed otherwise if I was shown what a meritocratic system would look like, but most of the times I heard that word it was as a criticism of laissez-fair capitalism that would rarely claim to be meritocratic.
That's exactly what our justice system is... Sometimes we fail at abstracting our morality to the courts but that's exactly what our goal is.
>I can be swayed otherwise if I was shown what a meritocratic system would look like, but most of the times I heard that word it was as a criticism of laissez-fair capitalism that would rarely claim to be meritocratic.
So your logic is "people usually use meritocracy as a knock against capitalism" and then establish your premise? "meritocracy is bad"? Doesn't make any sense. A perfectly meritocratic system doesn't exist and probably never will but systems which try to promote equality of opportunity are generally good. Our defense of "meritocracy" comes from the Rawlsian veil of ignorance. Behind it, it becomes obvious you would want to live in a society which provides a relatively equal chance for everybody and which, if you seize that chance, will reward you.
And your definition of "fair playing field" is skewed because, again, you treat economics as a zero sum game. You are making the classic mistake of conflating equality of outcome with equality of opportunity.
In any case, this class warfare inspired policy of exhaustively taxing wealth won't fix a mismanaged budget or a broken scholarly culture. You are simply punishing the people who seem to have benefited most in the context of the system while ignoring merit.
Further, it is absolutely absurd to suggest that modern people in poverty dont live "good" lives. They have refrigeration, air conditioning, entertainment, access to the internet, emergency healthcare, they live like kings once did. Once again this is a problem of looking at other peoples' lives and concluding that only in comparison you deserve more for simply existing.
Taxation will not fix what is fundamentally a cultural problem.
Aside: Look at how absurd the entire argument is! We dont question in absolute terms how our poor are living, we focus entirely on the fact that the wealth is distributed unevenly. Like children complaining that their classmates have extra candy. The whole mindset is petty.
Don't you think that inheritance is a pretty bad way of achieving that? After all, traits like intelligence (which probably dominates the ability to use resources efficiently) are only about 50% heritable.
Outcome and opportunity is a false dichotomy. But if we were to go along with it, isn't a tax on inherited wealth a great way to maintain equality of opportunity?
About merit, I think I know about merit. If you take the public transport at 5:30 in the morning you will see a lot of people that go to work for years for a ridiculous small pay and, that if they stopped doing that, society as we know would stop. That, I think, have a lot of merit.
On the other hand, in any standard corporation, you can find people with huge wages, with company car, that never pay a lunch because they put in the expenses account and that employ its time in political movements to try to go up in the ladder.
Of course, if you think that markets give everyone whatever they deserve, or you have not been in the public transport at 5:30, then, what I'm saying doesn't make any sense.
Leaving the metric to optimize to the optimization process doesn't look a good idea, the same way it's not a good idea to leave the thermostat to choose the temperature.
In my experience, the only people that think that the thermostat it's who should choose the temperature, it's the people that feels very comfortable with the current one and don't care about the comfort of the others in the house. Or, maybe, also the people that grew up in a house without thermostat and thinks, correctly, that anything is better.
> One would have to balance the "harm" caused to the children of wealthy people for not inheriting wealth (mostly when they are around 50-60 yr old themselves), with the harm caused to society at large.
I wonder if we could think of other examples of how harming a minority of people can be good for society at large. But regardless of the moral standpoint of the remark you said, you also have to account the harm it does to society to make people spend extra time hiding their wealth and spending it more frivolously.
Many people spend inherited wealth frivolously. Business acumen isn't known to be genetically determined, whereas political influence is certainly affected by wealth and pedigree, see George Bush the first and the second.
There is harm to the donor to abolishing inheritance. I don't want to live in a world where "I farm this land, just as my father, his father, and his father for 5 generations has done." is not possible.
> If that were true, banks wouldn't need deposits
That doesn't follow from what I said. Banks are required by law to back their loans up with reserves. So when they don't have enough reserves, they borrow on the interbank lending market or from the central bank.
http://www.bankofengland.co.uk/publications/Documents/quarte...
Of course it is. Buying a piece of a company is investing in it.
> Buy that logic, high-frequency traders are investing in the economy.
And they are - even if they hold a particular stock for a millisecond. The aggregate invested across the market is what matters.
It's a bit like calculus. All those infinitesimal bits add up to real amounts.
> That doesn't follow from what I said.
Maybe you can explain why banks offer free checking.
The original comment was implying that rich people contribute to the economy by investing their spare savings back into it. I'm not claiming that there's no benefit to buying secondary stocks and derivatives on them, just that this is not even remotely the same in terms of creating economic growth as actually investing in creating new business opportunities and such. It's kind of like saying that trust fund kids who don't work contribute to the economy by spending money. And often this "investment" in the stock market is the mere fueling of bubbles.
HF traders don't hold for long, so why are they equivalent?
I'd note however that my original point was to emphasize the smallness of most of the initial investments. One does not need to be a billion dollar entity to have enough diversification in high risk investments to make it a worthwhile component of your portfolio.
(I'd also defend America's ingenuity prior to the advent of VC; we were a pioneer in the sciences and technology long before venture capital was a thing. This is an entirely separate discussion about the viability of various forms of tech. growth stimulus that I'm neither qualified nor desirous to have, but I mention it to suggest that if we've found success in other systems before, there may be reason to experiment further when we observe a clearly deleterious trend in the current state.)
Why? Why is that the magic number that is insane??
Why dont we spend more federal funds on gifted children? We watch the trainwreck that is our school system as we fail to match pupils in other countries at senior high school level. The issue is, again, not taxation, on the contrary, we are not spending enough where it counts because of the greed of the entitled.
To know what they are investing in, consult the Apple Annual Report, which says. Even if the balance sheet says "cash", what they mean is "bank deposits". Bank deposits get loaned out to others, and those others spend it.
Nobody borrows money in order to hoard a pile of currency.
If the wealth continues the trend to concentrate at the top then there will be an increasingly large and unhappy group of people who will elect increasingly non-mainstream politicians who promise to help them, eventually leading to who knows what kind of unpleasantries for all.
100%. Nobody has a Scrooge McDuck cash vault. Bank deposits are also spent, in the form of depositor's money being loaned out by the bank.
Obviously the classic depositing/loaning service of banks is essential for progress. But hundreds of billions of those deposits are going to making the rich richer. It would be nice if we could come up with a way to provide capital to people who need it while also maintaining a strong middle class. I don't know how to do this but it's worth talking about.
What I really want to know is how much of people's savings (passively invested in banks and things like index funds) is going to fund things like the new Facebook vs. how much is not really doing that much.
>I don't want to live in a world where "I farm this land, just as my father, his father, and his father for 5 generations has done." is not possible.
Why not? A man works hard to support himself but allowing four generations of free-riders seems like a pretty bad idea. It strikes me as a sort of neo-monarchism. In the past we had royalty blessed by god and passed through blood and now we have the economic elite blessed by capital and passed through blood.
So, they do circulate through the broader economy. There's no silo of cash sitting somewhere paying dividends.
An article that focusses on inequality due to low income should perhaps pick an example with a more typical family situation.
To live a life free of consequences? As in have more kids, same quality of life?
How will that work?
> everyone deserves..
And who pays?
To live a fulfilling life without the constant fear of not being able to adequately provide for yourself or your offspring?
>And who pays?
Since it'd be us, collectively, as a society who would benefit it'd make sense for us, collectively, as a society to pay.
And this comes, for free, with no obligations? What is the standard for a "fulfilling life"? One child? A hundred? If I think my life will be fulfilled by skydiving, or playing XBox, or hookers and blow - should the state pay for those as well?
> it'd be us, collectively, as a society who would benefit
What you are describing is a market, but with no feedback or control; When someone ends up a burden on society due to a poor upbringing, does "society" get a refund?
If we are paying for people to bring up children, it would make more sense if the we initiated it; rather than people self-select for parenthood and get child welfare as an individual right.
People tend to invest in things with a high rate of return. That high rate signals it is doing things that people want done and are willing to pay for. I.e. it helps society.
> a way to provide capital to people who need it
That's exactly what banks do. My bank branch is plastered with posters trying to sell a loan to everyone who walks in.
> passively invested in banks and things like index funds
If you're arguing those are not productive investments, I don't think that's very defensible.
> how much is not really doing that much.
If you're arguing that rich people tend to invest in low performing investments, that doesn't make much pragmatic sense. People get rich by investing in highly performing investments, not dogs.
Banks want people to take out loans because they collect fees and offload the risk via MBS. They give people loans who can't afford them and that's not good for anyone, but then they know they'll get bailed out again if something goes south. None of this is sustainable, healthy, or productive.
That's not a good argument for raising taxes, though.
