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Don’t Tell Your Friends They’re Lucky

nautil.us

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Re: Don’t Tell Your Friends They’re Lucky

#211

Post by bzbarsky »

ItsDeathball wrote: post #159
awa wrote: post #144

Earlier quoted context omitted.

I am not sure why mortgage interest deduction gets such a bad rap. It allows a lot of people to be able to afford homes which they couldn't otherwise. It helps the housing market/industry and banking industry. Apart from that a lot of other countries has it. If I had to change something I would actually add a rental deduction to help those who can't afford to buy housing instead of removing mortgage interest deductio…

The mortgage interest deduction distorts the market in several ways. Making credit more available does allow people to spend more on homes, but this is then priced into the market. As you hint at, the subsidy is net neutral for homeowners, as it ultimately benefits the housing and banking industries. People who owned suburban land at the implementation of the deduction also benefited hugely, but now that prices are a…

The main reason for the mortgage interest deduction is that for corporations various expenses (like interest on debt) are in fact deductible from income for tax purposes, because we tax profits, not revenue.

So if there were no mortgage interest deduction for individuals that would simply be incentive for people to form a corporation they are sole shareholders for, for the specific purpose of buying the home. This would be especially true for people who are contracting or otherwise self-employed anyway and hence can have totally legitimate income for this corporation...

Now having the mortgage interest deduction but no imputed rent income due to the owner-occupancy, that part is arguably weird.

Re: Don’t Tell Your Friends They’re Lucky

#212

Post by real-v »

This reminds me a little bit about one of my favorite philosophers, Alain de Botton. Sometimes, he discusses meritocracy and meritocratic societies.

Basically, in a meritocratic society, such as the US, people tend to believe everyone's lot in life is deserved; luck is not considered a big factor. This creates a problem where the poor believe the rich made it through their hard work, while the rich believe that poor people deserve to be poor because they are lazy or stupid. People are where they are because they deserved to be there.

I used to place a high value in the concept of a meritocratic society, but experience is convincing me that the lack of compassion that such societies experience is not worth trade off.

Re: Don’t Tell Your Friends They’re Lucky

#213

Post by __derek__ »

emodendroket wrote: post #162
willholloway wrote: post #53

Earlier quoted context omitted.

The liberal view of this issue may have the virtue of being correct, but it's very counterproductive from the individual's standpoint. I know that the ideology espoused on sites such as dailykos.com were very detrimental to personal drive and success in my college years of 18-22. That ideology kept pounding home the idea of the unfairness of the economy, of the lower share of the pie allocated to labor vs capital and…

So your position is that we should just all believe outright falsehoods if it's "useful?"

To be ever so slightly pedantic: regardless of whether we should, we do. We're afflicted with a slew of cognitive biases.

Re: Don’t Tell Your Friends They’re Lucky

#214

Post by drewgross »

quadrangle wrote: post #207
bufordsharkley wrote: post #188

Earlier quoted context omitted.

And importantly, only enjoyed by homeowners who got the mortgage before the benefit of the tax deduction started getting capitalized into the value of the house.

wait, what? There's a $250k capital gains exemption for sale of primary home lived in 2 of past 5 years, so isn't capital gain basically irrelevant to anyone but very wealthy? Do you know something I don't? (reasonably likely)

What he means is that the deduction has been "priced in" to the price of homes/mortgages. In a similar story, a company I used to work for once offered employees a $x incentive to live close to the office. They then found that the price of homes in the area immediately went up by $x.

Re: Don’t Tell Your Friends They’re Lucky

#215

Post by Karlozkiller »

So if I believe in luck I will be more inclined to pay high taxes? I don't think that's how it works.

I mean of course people with money who realise not everyone who is poor is poor because they're lazy bums will be more inclined to help a "poor person" than they would if they believed all poor are lazy bums. But does that mean they will accept high taxation? Say I am rich and narcissistic, I believe I'm better than everyone and that my skill put me on top. I then realise that other who are skilled are poor and I want to help them become richer. Do I believe that paying the government to use my money for welfare to be the most effective use of my money to fulfil this end? Probably not in that case.

Furthermore some people are lucky, some unlucky. This does not mean that no effort but mere luck goes into building an empire. If luck was the only factor then sure, this argument or taxation might hold. But there's a lot more than luck to it, which is much more in the control of the individual.

Re: Don’t Tell Your Friends They’re Lucky

#216

Post by laughingman2 »

snarf21 wrote: post #95
ergothus wrote: post #33

My father and I have somewhat productive political conversations: He's fiscally conservative, I tend towards the liberal side of the scale. Drilling in to find what we really disagree about, it seems to boil down to two concepts: (1) I view success as a matter of luck that your effort can make better or worse. He views effort as the single most important deciding factor in success in life (2) I'm willing to tolerate…

There is also the biggest luck factor of all, that being how/when/where you were born. Most of us were born in the US into a family. We did nothing to deserve that but it already makes us in the top 1% richest people globally. What would our path look like if we had been born in rural Nicaragua instead? I'm not "woe is me" but I was raised in a super conservative family, taught to avoid risk and that a steady paychec…

Rawls suggests that you imagine yourself in an original position behind a veil of ignorance. Behind this veil, you know nothing of yourself and your natural abilities, or your position in society. You know nothing of your sex, race, nationality, or individual tastes.

https://en.wikipedia.org/wiki/Veil_of_ignorance

Re: Don’t Tell Your Friends They’re Lucky

#217

Post by marklgr »

hnal943 wrote: post #175
Frondo wrote: post #149

Earlier quoted context omitted.

Agreed that the government should reward hard work, but I'm always uncomfortable with the discussion around what is hard work. Some poor people I know, they work harder than most of us desk monkeys, because they're doing back-breaking labor day after day. Holding down two, three jobs, shuffling around town on the bus to work 60, 80 hours a week for very little money. This is not even an uncommon story. People working…

Value creation is what we want to reward, I think.

This often is a euphemism for "making money is good". Except for the worst cases of rents (or scams), if you're making money, this means someone found what you do valuable, so hey, you're creating value. The tacit corollary is, if you're not making money, you're not creating much value (not logically correct obviously, but here it goes).

So one should define how you measure value, and what cost (social, externalities etc.) we should be ready to accept for each type of value.

Re: Don’t Tell Your Friends They’re Lucky

#218

Post by WalterSear »

ergothus wrote: post #33

My father and I have somewhat productive political conversations: He's fiscally conservative, I tend towards the liberal side of the scale. Drilling in to find what we really disagree about, it seems to boil down to two concepts: (1) I view success as a matter of luck that your effort can make better or worse. He views effort as the single most important deciding factor in success in life (2) I'm willing to tolerate…

This also suggestsa subtle long term strategy for shifting people's political persuasions. Convince them that luck or effort has more or less to with outcome, and perhaps their political convictions will soften or harden to match.

Re: Don’t Tell Your Friends They’re Lucky

#219

Post by WalterSear »

lostsock wrote: post #205
snarf21 wrote: post #95

Earlier quoted context omitted.

There is also the biggest luck factor of all, that being how/when/where you were born. Most of us were born in the US into a family. We did nothing to deserve that but it already makes us in the top 1% richest people globally. What would our path look like if we had been born in rural Nicaragua instead? I'm not "woe is me" but I was raised in a super conservative family, taught to avoid risk and that a steady paychec…

I've often heard that it's lucky to be born in a certain place to certain parents, but I think this is a really narrow view of luck. It may be individually lucky to the person born somewhere (i.e. they had no involvement or choice in where they were born and to whom) but I'm not sure why you would isolate luck to the individual level. That persons parents made decisions about when, where and how their child would be…

Someone else's decision is still luck, however - it's beyond your control.
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