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To Understand Rising Inequality, Consider Janitors

nytimes.com

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Re: To Understand Rising Inequality, Consider Janitors

#631

Post by WalterBright »

RealityNow wrote: post #570
WalterBright wrote: post #212

Earlier quoted context omitted.

> Parking money in index/hedge funds is not "investing it back in the economy". 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.

Buying a stock on the secondary stock market is not investing in the economy. Buy that logic, high-frequency traders are investing in the economy. > 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…

> Buying a stock on the secondary stock market is not investing in the economy.

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.

Re: To Understand Rising Inequality, Consider Janitors

#632

Post by WalterBright »

sokoloff wrote: post #497
pcrh wrote: post #196

Earlier quoted context omitted.

I suspect a lot of it has been invested in overseas locations, including manufacturing operations globally. It may be that the money did indeed "trickle down", but not into the US.

I agree. If the US makes it even less attractive to invest capital here, do we think we'll get more or less capital investment and job creation here?

Yup. Investment flows to where the most returns are, and taxes loom large in such calculations. But that isn't the point here, which is it is invested, not stuffed in a mattress.

Re: To Understand Rising Inequality, Consider Janitors

#633

Post by chromatic »

rsync wrote: post #568
chromatic wrote: post #509

Earlier quoted context omitted.

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. Honest question -- how does the Austrian school reconcile the slow growth of the US economy during and immediatel…

"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'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 ?

Why buy Disney today when you can buy Disney and Ford tomorrow?

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.

Re: To Understand Rising Inequality, Consider Janitors

#634

Post by albinofrenchy »

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.

You can have a tax system by applying it to earned, applying it to accumulated, or by doing a little bit of both.

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.

Re: To Understand Rising Inequality, Consider Janitors

#635

Post by banned1 »

barrkel wrote: post #603
banned1 wrote: post #410

Earlier quoted context omitted.

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.

The returns to capital (capital gains specifically) are taxed at a much lower rate than income, and they're not taxed at all until they're realized, which means they can be timed to offset losses. Then the government is effectively handing out a subsidy to people with lots of capital, even more so than the lower tax rate. "The market" not attractive enough - there's nowhere to put your money other than "the market" (…

https://taxfoundation.org/why-capital-gains-are-taxed-lower-...

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?

Re: To Understand Rising Inequality, Consider Janitors

#636

Post by albinofrenchy »

banned1 wrote: post #410
barrkel wrote: post #401

Earlier quoted context omitted.

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.

> At some point the market won't be attractive enough.

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.

Re: To Understand Rising Inequality, Consider Janitors

#637

Post by banned1 »

albinofrenchy wrote: post #636
banned1 wrote: post #410

Earlier quoted context omitted.

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.

> At some point the market won't be attractive enough. 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.

I think the main argument is previous taxation.

https://taxfoundation.org/why-capital-gains-are-taxed-lower-...

Re: To Understand Rising Inequality, Consider Janitors

#638

Post by pjmorris »

aninhumer wrote: post #269
pjmorris wrote: post #236

Earlier quoted context omitted.

Do you know the history of Speenhamland? The empirical results of that experiment in a basic income was that it acted as a subsidy to employers, enabling them to pay below subsistence wages that were made up for by the government-funded UBI. There's a parallel to how food stamps and other support enable large corporations today to pay less in wages, as the difference will be made up through taxpayer funding. I don't…

So if I understand correctly, the Speenhamland System was a wage supplement system, not a UBI system. That is, if people stopped working, they stopped getting the extra money. This means that employers are free to slash wages and let the supplement make up the difference. 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 i…

With UBI, the employer now can pay (wage-UBI) for every employee, shifting the wage burden off the employer and onto the state by a factor of UBI x population. With a jobs guarantee, an 'employer of last resort', the government sets the floor on wages through hiring, giving everyone who wants a job but can't find one in the open market at whatever base wage parallels UBI. The government only has to pay for base wage x unemployed rather than UBI x population. This also yields labor for the government for 'New Deal' type projects, and employers now have to do better than the base wage/job conditions to hire, raising the velocity of money. More importantly, everyone has the dignity of a job if they want it as well as the money needed for basic needs.

Are there guarantees that UBI will always be comparable to a living wage?

Re: To Understand Rising Inequality, Consider Janitors

#639

Post by closeparen »

Sniffnoy wrote: post #353
esarbe wrote: post #321

What strikes me the most when looking at many of the comments here is the blatant disregard for human suffering that extreme inequality and the resulting poverty cause. The current economical status quo is accepted as a given and all the harm it causes is dismissed with the shrug of a shoulder. "It can't be helped, the poor sods should have made better life choices to avoid ending up as janitor" is the attitude by wh…

> What strikes me the most when looking at many of the comments here is the blatant disregard for human suffering that extreme inequality and the resulting poverty cause. 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 r…

I highly recommend this talk [0] by Kevin Murphy. Rising inequality can be explained by the rising wage premium for higher-skilled workers. In the 60s, a college graduate made only 40% more than a high school graduate; this number climbed and is now more than 80%.

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.

[0] https://www.youtube.com/embed/KevV_A6N-6o

Re: To Understand Rising Inequality, Consider Janitors

#640

Post by closeparen »

point78 wrote: post #433
oh_sigh wrote: post #430

Earlier quoted context omitted.

How does inequality in itself cause suffering? If all super rich people were magically erased from the earth, would the poor have it any better?

And their wealth was distributed evenly? Hell yeah the poor would have it better, is this a trick question?

You can only distribute it evenly the one time.
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