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To Understand Rising Inequality, Consider Janitors

nytimes.com

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Re: To Understand Rising Inequality, Consider Janitors

#651

Post by jaggederest »

Chris2048 wrote: post #627
URSpider94 wrote: post #596

Earlier quoted context omitted.

Rewind 50 years, and it would be highly typical for a janitor to support a wife and 3 kids on HIS salary - families were larger, and mothers didn't work. The fact that a working single mom can't support her four kids today is indicative in and of itself.

Would that janitor have many vacations too? And decent college funds? Healthcare?

Yes, yes, and yes. Janitorial staff at a Ford plant in ~1965 would make enough to own their own house, vacation once a year (probably not by plane but...), and college was percentage-wise ridiculously cheaper - 30x if my calculations are correct, which they probably aren't, but hey. Healthcare would have unquestionably been provided by their employer. And all that on only a single income for a family of four, no less.

Re: To Understand Rising Inequality, Consider Janitors

#652

Post by albinofrenchy »

banned1 wrote: post #637
albinofrenchy wrote: post #636

Earlier quoted context omitted.

> 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-...

That is an argument; I just don't think it is a particularly good one. In particular, I think it muddies the water a bit between various forms of things that are taxed as capital gains.

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.

Re: To Understand Rising Inequality, Consider Janitors

#653

Post by lordCarbonFiber »

monktastic1 wrote: post #644
lordCarbonFiber wrote: post #467

Earlier quoted context omitted.

I mean that's the point. The difference between someone that ends up as a janitor and someone that ends up as a software engineer has a lot more to do with their parent's money and the color of their skin than any variation in intelligence. Pretending differently just leads you to the comforting arms of the "just world fallacy".

As someone above asked: have you spent significant time teaching / tutoring? There are enormous differences in how quickly people learn mathematical concepts, even given varied teaching methods. Becoming a software engineer requires both intelligence and luck (though one might also argue that intelligence, being the result of genes and environment, is also primarily luck).

I'm not a professional educator no. And I do think there's a whole separate discussion to be had about how generally awful most software education is that Im not going to get into.

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.

Re: To Understand Rising Inequality, Consider Janitors

#654

Post by conanbatt »

dredmorbius wrote: post #624
conanbatt wrote: post #563

Earlier quoted context omitted.

Dang that doesn't sound true at all. Smith arguing for unionization? Also by classical economics, you cant afford to give less than living wage because then you would kill the people that work for it.

Wealth of Nations , Book I, Chapter VIII, generally. Smith doesn'tquite say "allow unions", but he makes all the arguments in favour: As soon as land becomes private property, the landlord demands a share of almost all the produce which 7 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, twen…

I remember.

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.

Re: To Understand Rising Inequality, Consider Janitors

#655

Post by conanbatt »

dredmorbius wrote: post #625
conanbatt wrote: post #563

Earlier quoted context omitted.

Dang that doesn't sound true at all. Smith arguing for unionization? Also by classical economics, you cant afford to give less than living wage because then you would kill the people that work for it.

Regards wages below subsistence, I strongly recommend you read Smith's account of China. Also WoN 1.8. So long as there's a surplus population, employers will not want for labour.

Yes, that people kill their own children, pretty gross. I wonder if that was accurate: how could he have gotten this kind of information back then?

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)

Re: To Understand Rising Inequality, Consider Janitors

#656

Post by conanbatt »

frgtpsswrdlame wrote: post #610
conanbatt wrote: post #581

Earlier quoted context omitted.

The idea of inheritance taxes are that once you are dead, you don't care about paying taxes. However, leaving wealth for your children is a huge economic incentive. As Friedman puts it: "People go to an irrational length to provide their kids a better life than they will ever get". If you could effectively put 100% tax on inheritance(which you can't in practice), it means your utility of leaving wealth around becomes…

Yeah I'm totally okay with that, a certain point society has to serve its people and not just the abstract view of growth at all costs. Consumption is good for the economy and inheritance taxes are necessary to provide equality of opportunity.

> Consumption is good for the economy

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.

Re: To Understand Rising Inequality, Consider Janitors

#657

Post by sokoloff »

pdfernhout wrote: post #628
sokoloff wrote: post #472

Earlier quoted context omitted.

> The real problem though isn't wealth inequality, it's income inequality. 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 fo…

You might be interested in an essay I wrote in 2009 which mentions a wealth tax (perhaps with the government insuring and protecting declared wealth): "Basic income from a millionaire's perspective?" http://www.pdfernhout.net/basic-income-from-a-millionaires-p... We can of course quibble about the details... Mostly just trying to shift the way of thinking and talking about a UBI...

Thanks for the relevant blog post link. My gut feel is that 6% wealth tax destroys retirement savings and that anything over about 2% in fact does so. (I'm planning on a 3.5% withdrawal rate in retirement, so a 2% additional wealth tax increases by >50% the amount of money I need to squirrel away for retirement. $24K in UBI replaces $685K of that savings need, though almost surely brings along inflation with it and I'm projecting to need a substantial multiple of $1MM to retire.)

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).

Re: To Understand Rising Inequality, Consider Janitors

#658

Post by sokoloff »

closeparen wrote: post #641
sokoloff wrote: post #472

Earlier quoted context omitted.

> The real problem though isn't wealth inequality, it's income inequality. 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 fo…

Consider, for example, that we do exactly the opposite by providing tax shelters for retirement savings, and that this is the only way grandparents get to retire.

Yes, but 25-70 basis points of wealth tax is order of magnitude the same as mutual fund expenses. (I don't say this lightly, as I believe seizing of wealth to be a serious matter, worthy of careful contemplation before implementing such a plan.) I believe a modest wealth tax like this would have a subtle drag on wealth accumulation which is beneficial to society.

Re: To Understand Rising Inequality, Consider Janitors

#659

Post by dredmorbius »

conanbatt wrote: post #655
dredmorbius wrote: post #625

Earlier quoted context omitted.

Regards wages below subsistence, I strongly recommend you read Smith's account of China. Also WoN 1.8. So long as there's a surplus population, employers will not want for labour.

Yes, that people kill their own children, pretty gross. I wonder if that was accurate: how could he have gotten this kind of information back then? 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…

The British East India Company as a thing by 1776 (its stock collapse, a few years earlier, is highly likely to have cloured Smith's thinking on joint stock companies generally).

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):

https://en.m.wikipedia.org/wiki/Iron_law_of_wages

Re: To Understand Rising Inequality, Consider Janitors

#660

Post by RealityNow »

pjmorris wrote: post #638
aninhumer wrote: post #269

Earlier quoted context omitted.

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…

This is counteracted by the fact that employees now have the option of walking away from their jobs, and thus employers would have to raise wages to draw them in. Wages might rise in the type of jobs that nobody actually wants to do (eg. janitor), though wages may very well decrease in the jobs that everybody wants.

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)

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