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To Understand Rising Inequality, Consider Janitors

nytimes.com

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Re: To Understand Rising Inequality, Consider Janitors

#401

Post by barrkel »

banned1 wrote: post #380
albinofrenchy wrote: post #359

Earlier quoted context omitted.

The argument against income tax is that it penalizes earners, and rewards not working. 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 politici…

Assuming wealth is earned, why would you want to tax it? It already was taxed when the individual was working. Inherited wealth is another matter.

Are returns to capital earned?

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.

Re: To Understand Rising Inequality, Consider Janitors

#402

Post by eli_gottlieb »

aoeuasdf1 wrote: post #345
eli_gottlieb wrote: post #285

Earlier quoted context omitted.

Why should people be incentivized to take home more than 400k/year? Why not reinvest that money in the business and have the executives take home only $150k/year?

Suppose you have two options: - 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…

Hypothetical scenarios are only valuable insofar as they're close to reality.

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.

Re: To Understand Rising Inequality, Consider Janitors

#403

Post by lordCarbonFiber »

trapperkeeper74 wrote: post #351
solidsnack9000 wrote: post #325

Earlier quoted context omitted.

As long as we accept the need for people to be janitors, we must accept that becoming a janitor is not a "mistake", it's a useful thing that we all want to see happen for some people. We can't on the one hand say, that we need people to do this job and on the other hand say, "tough luck" to those that do it.

Robots aren't capable of doing everything people can do yet, but as they become more capable, what and how are displaced unskilled workers supposed to do if they can't get any job at all? Starve to death under a bridge? Not everyone can handle social or intellectual labor. I think this is why UBI is essential: prevent riots and meet people's basic needs so they're not pennyless and sleeping rough.

Your statement "not everyone can handle social or intellectual labor" is a larger sociological problem. If we insist that the only people allowed to participate in the labor market are college educated white guys, maybe; I don't see that statusquo continuing.

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.

Re: To Understand Rising Inequality, Consider Janitors

#404

Post by barrkel »

RealityNow wrote: post #187
choxi wrote: post #180

We should tax wealth, not income. [1] 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 invest…

I agree, but how would we enforce a wealth tax? Seems like it'd be really easy for rich people to hide their money in assets. What about just printing money? Not ideal obviously, but there'd be no way to avoid the inflation "tax".

Most wealthy people don't keep their wealth in currency. Profit generating entities keep on generating profit even with inflation - input prices go up but so do sale prices. Inflation had a bigger affect when it changes, rather than when it is staying steady. If anything a higher inflation rate would mostly hurt homeowners because prices would be less supported by cheaper money.

Re: To Understand Rising Inequality, Consider Janitors

#405

Post by frgtpsswrdlame »

humanrebar wrote: post #399
frgtpsswrdlame wrote: post #392

Earlier quoted context omitted.

Your position is that increasing the estate tax would do nothing to help segregation? Or that it wouldn't do enough and we should also do more?

I'm not confident enough to make a definite prediction, but it seems plausible that it could make some forms of inequality worse. Attempts to level out education, for example, have resulted in the truly wealthy finding other outlets (private schools, expensive zip codes) to create the educational experience they want for their children.

In education we never actually integrated though. A few locations were integrated but only for a little while. It seems more like that the truly wealthy found those outlets regardless of what else was happening in education. It also seems strange to say: we shouldn't tax rich people because somehow, through a plausible method that I can't explain or predict, it will make rich people better off and poor people worse off.

Re: To Understand Rising Inequality, Consider Janitors

#406

Post by dredmorbius »

slavik81 wrote: post #246
RyanHamilton wrote: post #204

Earlier quoted context omitted.

Are you sure? 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.

Yes. If wealth were a zero-sum game, every choice would have to result in the same total amount of wealth in the world. Wealth could not be created or destroyed, only transferred. Any use of a resource would be equally as valuable as any other. 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 m…

Wealth, generally, is destroyed with time.

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.

Re: To Understand Rising Inequality, Consider Janitors

#407

Post by roenxi »

alansammarone wrote: post #360
whack wrote: post #305

Earlier quoted context omitted.

The real problem though isn't wealth inequality, it's income inequality. If someone has a billion dollars that's invested in various stocks, and never tries to withdraw that money, leave him alone. The day he decides to sell his investments and start buying private jets, that's the time to tax him on his income. The argument against a wealth tax, is that it penalizes savers, and rewards spenders. Which is not what we…

Could you please expand on why its necessarily better for the average Joe to invest money (without knowing beforehand whats gonna be a "productive enterprise" of course) instead of fuelling the economy directly by buying goods? (honest question)

This doesn't quite go to the substance of your question; but it is relevant. At this point the US debt is pretty staggering at both a personal and national level.

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.

Re: To Understand Rising Inequality, Consider Janitors

#408

Post by terminalcommand »

choxi wrote: post #180

We should tax wealth, not income. [1] 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 invest…

Taxing wealth may be counter-productive. The way our economy should work is that you get rewarded for the wealth you generate. If you cannot store the value for the things you've done, there would be no incentive to produce.

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.

Re: To Understand Rising Inequality, Consider Janitors

#409

Post by dredmorbius »

eli_gottlieb wrote: post #287
RyanHamilton wrote: post #204

Earlier quoted context omitted.

Are you sure? 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.

The only non-finite resource is knowledge, and even that runs into asymptotes of diminishing marginal utility.

Information is also amost certainly bounded. In humans it's limited by the rate of transmissibility -- if what the next generation has to learn is greater than what the present generation can pass on, knowledge will be lost.

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.

Re: To Understand Rising Inequality, Consider Janitors

#410

Post by banned1 »

barrkel wrote: post #401
banned1 wrote: post #380

Earlier quoted context omitted.

Assuming wealth is earned, why would you want to tax it? It already was taxed when the individual was working. Inherited wealth is another matter.

Are returns to capital earned? 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.

The original capital was. The returns are already taxed. Are you proposing that returns are taxed at some other different rate? At some point the market won't be attractive enough.
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