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What if incomes grew like GDP?

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Re: What if incomes grew like GDP?

#51

Post by metabagel »

imgabe wrote: post #38
sudosysgen wrote: post #33

Earlier quoted context omitted.

Private property exists because it is an organization of things that is useful to society. That's why we heavily limit it using taxation and so forth. We allow people to own capital because it motivates them to do some types of work. If we allow people to concentrate more capital than necessary to motivate them to do that work, we lose.

There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?

LLCs and copyright law are rather arbitrary constructs which our laws have created in the belief that they promote some benefit to society - be it better allocation of capital, rewarding creators/inventors, etc.

Shares of stock, the secondary stock market - these are also arbitrary constructs which have been created to serve some purpose.

There’s some magical thinking regarding capitalism - that it practically runs itself; that is ensures efficient allocation of capital.

Capitalism may tend to decentralize economic decision-making, and it may tend to align production incentives with actual demand. But, that doesn’t mean it’s efficient. Efficiency would mean that incentives would nearly match the minimum to ensure satisfaction of demand. What we in America have is a system which highly rewards people who control the labor of others. Our society values wealth, not work.

Re: What if incomes grew like GDP?

#52

Post by jedberg »

nine_k wrote: post #13
gruez wrote: post #5

Earlier quoted context omitted.

>Perhaps we need a linear meritocratic function. So basically, some way to prevent wealth from being passed across generations?

Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. Should anyone suggest to prevent passing as much as, say, $100k to your child (an approximate price of a university tuition), said an…

Gates, Zuckerberg, Bezos, and Musk were all in the top 1% before they started their companies. Jobs's family was middle class, but well off enough to own a house with an empty garage and enough money to get him started. They also fed, housed, and clothed him while he started his company.

Re: What if incomes grew like GDP?

#53

Post by missedthecue »

thatfrenchguy wrote: post #18
hliyan wrote: post #4

I always like to say that we live in an exponential meritocracy , where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.

"The rate of return you get on your capital increase as your capital increases" is the most interesting thing I've gotten from Piketty's book, and it's definitely been true for me.

If this were true, institutional investors would only invest in the biggest hedge funds, ignoring the smaller ones. They don't, because the biggest hedge funds seldom have the best returns.

Re: What if incomes grew like GDP?

#54

Post by dragonwriter »

boh wrote: post #12
ntsplnkv2 wrote: post #7

Earlier quoted context omitted.

It doesn't need to be that complicated. Just increase taxes on the ultra wealthy to restore some semblance of equality. it doesn't need to be communist russia. Just a little more money going around.

The ultra rich don't pay the current tax rate, why would raising a tax they don't pay have any effect? Until there's an aggressive international agreement on closing tax loopholes, raising the taxes only impacts the barely-rich (doctors, lawyers, etc).

> The ultra rich don't pay the current tax rate, why would raising a tax they don't pay have any effect?

The ultra rich don't pay the current nominal income tax rate, because their income isn’t of the kind subject to income taxes, much less the additional taxes levied on labor income. The simple solution to that is to wipe away the distinctions about source of income in taxation policy (for payroll taxes, that means also eliminating limitations in source of income that qualifies for benefits and the quantity of annual income taxed, but that doesn't prevent, e.g., additional “bend points” in benefit formulas to limit the benefit impact of larger incomes.)

> Until there's an aggressive international agreement on closing tax loopholes, raising the taxes only impacts the barely-rich (doctors, lawyers, etc).

That's only true if you raise taxes on the kind and amount of income that doctors and lawyers typically make. Equalizing taxes on capital and labor income by doing away with payroll tax limits and favorable treatment of long-term capital gains while dealing with non-repeatable income (like most long-term capital gains for any but the ultra-rich) by allowing both advance tax recognition of anticipated gains and deferment of windfall gains over a period of years would impact the haut bourgeoisie, but have only modest, and mixed, impacts on the barely rich.

Re: What if incomes grew like GDP?

#55

Post by missedthecue »

jedberg wrote: post #52
nine_k wrote: post #13

Earlier quoted context omitted.

Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. Should anyone suggest to prevent passing as much as, say, $100k to your child (an approximate price of a university tuition), said an…

Gates, Zuckerberg, Bezos, and Musk were all in the top 1% before they started their companies. Jobs's family was middle class, but well off enough to own a house with an empty garage and enough money to get him started. They also fed, housed, and clothed him while he started his company.

Point is, hundreds of millions of people have access to a garage, food, and clothing, yet cannot mirror the success that these men have achieved.

Re: What if incomes grew like GDP?

#56

Post by missedthecue »

rmrfstar wrote: post #16
nine_k wrote: post #13

Earlier quoted context omitted.

Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. Should anyone suggest to prevent passing as much as, say, $100k to your child (an approximate price of a university tuition), said an…

Yeah, but they benefited from a system that coerces people to trade their labor for less than it is worth. Zuckerberg is worth >3x the annual income of all surgeons in the US. It is implausible that his net worth reflects his replacement cost. Even PG has said (to Zuckerberg) that if it wasn't him, it would have been someone else.

I feel like there's a false equivalence being made here. You're comparing wage to net worth. Zuckerberg's net worth is not a function of his replacement cost. It's the percentage of his own company that he owns, valued at market price. This happens to be worth $100B at current market levels, but it is independent of whether he continues to work at Facebook or anywhere else. It's not compensation for labour.

Re: What if incomes grew like GDP?

#57

Post by missedthecue »

ntsplnkv2 wrote: post #7
hliyan wrote: post #4

I always like to say that we live in an exponential meritocracy , where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.

It doesn't need to be that complicated. Just increase taxes on the ultra wealthy to restore some semblance of equality. it doesn't need to be communist russia. Just a little more money going around.

Punitive taxes on a minority group to satiate the flames of envy? That doesn't sound like productive policy.

Re: What if incomes grew like GDP?

#58

Post by akamaka »

boh wrote: post #22

Macro-analyses like this aren't particularly representative of any relevant point. For one thing GDP is a poor measure of the general increases of wealth. The US's pivot to services isn't represented in GDP since it only accurately measures physical production (Microsoft/Google/Facebook etc. aren't accurately represented). The actual increases that wind up going into salaries (particularly at the top half) are heavil…

Services make up 80% of US GDP, so it is definitely being measured to a large degree.

I think you have a valid point to make about GDP being a poor measure of certain things, but I think you would find it worthwhile to study more about what exactly it is measuring and why it is still so useful.

Re: What if incomes grew like GDP?

#59

Post by sudosysgen »

rtx wrote: post #36
sudosysgen wrote: post #28

Earlier quoted context omitted.

Hmm, not really. The cost of labour is actually generally agreed to be the replacement cost of the labour. As a society, the only thing that we take out of Zuckerberg is his labour, so he shouldn't get anymore than the replacement cost of his labour. In other words, if someone would have done Zuckerberg's work for less compensation - and the GP asserts it is the case - then we as a society lose by having Zuckerberg d…

What you wrote is very scary. As someone who grew under a communist party rule, I have come to realize that there is no way to rationalize with communist. I think McCarthy came to the same realization.

This is literally the argument for why communism hasn't worked. Without private property it was impossible to motivate people to do some kinds of work - taking on risk, organizing production, and some kinds of innovation - to a sufficient degree and without many drawbacks.

If someone found a way to motivate people to do those kinds of labour properly - and force doesn't work well for many reasons, so it would have to be non-violent, but without having to allow ownership of capital and wealth concentration, why wouldn't we consider it? The Communists of old thought they found a way to do so and were wrong, but if someone today found a way to do it that doesn't cause many drawbacks, it would be foolish and dogmatic not to consider it, and if it works well, implement it.

Re: What if incomes grew like GDP?

#60

Post by sudosysgen »

imgabe wrote: post #38
sudosysgen wrote: post #33

Earlier quoted context omitted.

Private property exists because it is an organization of things that is useful to society. That's why we heavily limit it using taxation and so forth. We allow people to own capital because it motivates them to do some types of work. If we allow people to concentrate more capital than necessary to motivate them to do that work, we lose.

There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?

"We" is the People, the Sovereign, the Government, whatever you like, whatever makes laws that allow for private property and regulates it. We suppose they have some divine insight into the ideal allocation of capital because empirically, so far, this system has shown to be the best way to allocate capital in many situations, so we allow it.

Outside of it, capitalist ideology also has the idea of the divine invisible hand of the free market, which is certainly an exageration, but in the real world markets with the proper conditions and regulations are pretty good at allocating capital.

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