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Why Inequality Matters

gatesnotes.com

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Re: Why Inequality Matters

#31

Post by osteele »

r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

> Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances

Doesn't your use of "self-servingly" here apply to anyone who acts consistently on their beliefs?

If Gates (a) believes that philanthropy is ethical and effective, and he therefore both (b) engages in philanthropy and (c) advocates philanthropy, then (b) and (c) are separately consequent to (a) (which is a consistent principled stance); (c) is not due to (b) (which would be a self-serving rationalization).

Re: Why Inequality Matters

#32

Post by icebraining »

esfandia wrote: post #16

Philanthropy strikes me as anti-democratic. Why should the rich get to choose which causes are more deserving of their generosity? Let the elected government pool the money and make this determination.

The government can choose who is more deserving of their money; it can't choose who is more deserving of their generosity.

Re: Why Inequality Matters

#33

Post by plehoux »

Gates described three personas :

1. One guy is putting his capital into building his business 2. A woman who’s giving most of her wealth to charity 3. A third person is mostly consuming, spending a lot of money on things like a yacht and plane

All three actually spend their wealth. The problem with extreme inequality is that really wealthy people can invest, give and spent AND still sit on massive amount of wealth that get past to the next generation.

A progressive tax on consumption wouldn't be enough to fight this.

One core argument of Piketty is that the actual debate has been highly distorted by the massive wealth redistribution that happen in consequence of the first two world wars, something Gates doesn't acknowledge in his review.

[UPDATE] I overlooked the estate tax Gates proposed in his review.

Re: Why Inequality Matters

#34

Post by bsbechtel »

taeric wrote: post #19
bsbechtel wrote: post #12

>High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal. I agree with generally all of Gates' thoughts here, but there are two actors to consider when discussing how to address problems associated with inequality - the government, and those who own capital. There is an implicit assumption…

I'm not sure I understand your other option. If the government doesn't have control over the flow of wealth, why do you think it will not just increasingly flow to those in power? I understand the concern over governments that are not acting in the best interest of the people. However, abstaining from the process seems a very shaky way to actually get it to act in an appropriate way. More to the point, I thought the…

>I'm not sure I understand your other option. If the government doesn't have control over the flow of wealth, why do you think it will not just increasingly flow to those in power?

Up until roughly 1903, the US didn't have any personal income taxes. There was a small business tax, and this was it. Gates' own example of old money no longer existing didn't really point to examples such as the Waltons, but to families who have had wealth for hundreds of years due to large estates. He's correct that this wealth no longer exists. My argument would be that it no longer exists because in the 1800s, neither the wealthy nor the labor class were taxed as individuals, r and g roughly equalized and the wealthy didn't maintain their wealth. This phenomenon of extreme inequality started to occur only in the early 1900s, the same time the US first implemented a personal income tax (thus taxing labor more so than wealth, lowering g and raising r).

Re: Why Inequality Matters

#35

Post by ThomPete »

r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

The problem with Piketty (like with Marx) was not their analysis which I find conventional (in todays perspective).

The problem with Pikettys book is his solutions.

If only he had stayed away from that it would have had much bigger impact IMHO.

Re: Why Inequality Matters

#36

Post by spenrose »

Piketty cites 1914->1945 over and over in his book as the one period when r Gates: "Far more people—including many rentiers who invested their family wealth in the auto industry—saw their investments go bust in the period from 1910 to 1940, when the American auto industry shrank from 224 manufacturers down to 21. So instead of a transfer of wealth toward rentiers and other passive investors, you often get the opposite."

Re: Why Inequality Matters

#37

Post by dragonwriter »

Joeboy wrote: post #23

> I think we’d be best off with a progressive tax on consumption In theory I like the idea of a "tax on consumption", because it suggests a penalty on conspicuous consumption and wasteful spending. In practice, taxes on consumption are seen as regressive, ie. they affect the poor more than the rich. Is there a way to tax "bad" consumption, without penalizing people who "consume" a large proportion of their income sim…

You can tax "bad" consumption, but it ends up with the same kind of complexity as existing income tax with filings and tracking and specific exemptions/deductions/adjustments. As simplicity is one of the big reasons people propose a consumption tax over the existing income tax, almost no one who would want a consumption tax in the first place is interested in such an arrangement.

Personally, I'm unconvinced that there is any real practical advantage to consumption taxes, and think a better simplification is the smaller change of having a progressive tax on income without undermining progressivity by favoring capital income. At any target revenue level this enables lower taxes on working people which enables more peoe to become at least small scale capitalists, rather than taxing working people extra to reward those people who have already accumulated or inherited the wealth to live off capital rather than labor.

Re: Why Inequality Matters

#38

Post by icebraining »

plehoux wrote: post #33

Gates described three personas : 1. One guy is putting his capital into building his business 2. A woman who’s giving most of her wealth to charity 3. A third person is mostly consuming, spending a lot of money on things like a yacht and plane All three actually spend their wealth. The problem with extreme inequality is that really wealthy people can invest, give and spent AND still sit on massive amount of wealth th…

All three actually spend their wealth. The problem with extreme inequality is that really wealthy people can invest, give and spent AND still sit on massive amount of wealth that get past to the next generation.

A progressive tax on consumption wouldn't be enough to fight this.

Gates also specifically talks about an estate tax to prevent the wealth to pass to the next generation (at least, part of it).

Re: Why Inequality Matters

#39

Post by Shinkei »

r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

The problem with any consumption tax is that wealthier people spend a smaller percentage of their income on needs compared to lower classes. If you make it progressive, they will just buy their most expensive items overseas and never (or hide?) the import and avoid the tax. Anytime you try to regulate, there will be people making big money trying to find workarounds.

Anyway, taxing in this way imposes a moral judgement on the use of a person's wealth... I consider myself a pretty liberal person, but even I see a problem with 'punishing' a person for spending a million on a yacht rather than starving children. We can incentivize that by making it tax-deductible, but that does nothing to solve the problem of the income tax disparity. I work a lot of hours and my payroll taxes are much higher than capital gains taxes--as Buffett and others have pointed out, that's what's unfair but it won't change as long as the people who get their income from capital gains have the most power to influence politics.

Re: Why Inequality Matters

#40

Post by bluthru »

r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

>Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances.

It certainly helps, but in a well-designed system philanthropy wouldn't be required. Philanthropy is a symptom rather than a cure.

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