Why Inequality Matters • Hacker News Board

Re: Why Inequality Matters

#51

Post by noarchy » Thu, Oct 16, 2014, 2:10 PM UTC

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.

>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 reason the rich get to choose is because it is their money. Just as you can decide, today, to donate your money to the charity of your choosing. And really, this isn't any different from asking why the rich (or you or me) get to decide which car or house to buy.

If government is failing to give your money to areas where you think it should go, perhaps this is what is anti-democratic.

Re: Why Inequality Matters

#52

Post by venomsnake » Thu, Oct 16, 2014, 2:13 PM UTC

penprog wrote: post #18

Why would we want to tax consumption of the wealthy (or anyone)? Don't we want to promote spending? The tax code should reward those that make investments, purchases, and donations. Not punish them. They should punish those that sit on their wealth and do nothing with it.

Fair enough. 4% tax on property and capital (historical ROI on capital was 5%). So every fortune should be destroyed after generation of mismanagement or rent seeking.

Re: Why Inequality Matters

#53

Post by jasode » Thu, Oct 16, 2014, 2:13 PM UTC

couchand wrote: post #44

Shinkei wrote: post #39

Earlier quoted context omitted.

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 judgeme…

Why do people always use the term punish when talking about taxes? Taxes are levied, you're only punished if you fail to pay.

Please don't add noise to the discussion by nitpicking something that doesn't need to be nitpicked.

Shinkei already put scare quotes around the word "punished" so any reasonable person should interpret that he does not mean "punish" in a formalized legal sense. His usage was a figure-of-speech and not citing any legal doctrine.

People can use punish the same way people can use reward when then say they felt "rewarded" with a tax credit for buying a hybrid electric car or installing solar panels. This is possible even though the word "reward" is nowhere stated in official USA tax code regarding those credits.

Re: Why Inequality Matters

#54

Post by ecocentrik » Thu, Oct 16, 2014, 2:15 PM UTC

sharemywin wrote: post #11

This is where it gets complicated for me. Gates value judges the rich person spending money on a yacht and plane. Planes and yachts are pretty complicated gadgets that employ a lot of engineers and others. The plane makers technology might even contribute to some other kind of businesses similar to the space program in the sixties and seventies. Where as tech companies sitting on piles of cash because they don't know…

Simple, creating or expanding business redistributes more wealth than buying a few gadgets. Consumption has a specified economic effect (cost of product = 1$), where business is a mechanism for the redistribution of wealth (owner & employees = x$). Buying the toys is fine as long as that's not the only thing a wealthy person is doing. If they're hoarding wealth so they can just keep buying toys, then they aren't really participating in the capitalist system.

Re: Why Inequality Matters

#55

Post by [deleted] » Thu, Oct 16, 2014, 2:18 PM UTC

protonfish wrote: post #25

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…

I'm no supply-side economist, or advocate of Brave New World consumerism, but I believe that taxing the purchase of actual consumer products would not have a positive effect on the economy of the country. I believe a healthy economy is an active one. An incentive to remove money from active circulation (hoarding) could have long-term negative repercussions. And a country where the government encourages the average pe…

[deleted]

Re: Why Inequality Matters

#56

Post by mkempe » Thu, Oct 16, 2014, 2:19 PM UTC

GuiA wrote: post #46

> Take a look at the Forbes 400 list of the wealthiest Americans. About half the people on the list are entrepreneurs whose companies did very well (thanks to hard work as well as a lot of luck). Contrary to Piketty’s rentier hypothesis, I don’t see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since. In America, that old mon…

Maybe these "older countries" should try --for a century or two-- laissez-faire capitalism and a government limited to the protection of individual rights.

Re: Why Inequality Matters

#57

Post by netcan » Thu, Oct 16, 2014, 2:19 PM UTC

Bill gates is impressive. It's a hard subject to stay objective with. The validity of the data has some level of uncertainty (by its nature). The interpretation of the data too. I have yet to find an explanation (by Pickety or others) that made me understand the mechanics of the "Snowball Effect" at the centre of it all: 'r > g.' Once you get into the soup of morality and policy, well…

I like how he starts with the things he broadly agrees with. Even just agreeing that extremely uneven distribution is a problem and why, gives us a starting point. I personally take a slightly Marxist view on this. I don't think that extremely uneven distribution is politically stable, or compatible with democracy.

I am slightly doubtful of taxation as a solution. Taxation is stuck really. The problem is that most tax regimes are designed to maximize tax revenue while minimizing damage to the economy.

Consumption/sales taxes, income taxes and other middle class taxes are convenient in that they are very hard for people to avoid and they don't affect behavior much. marginal income tax of up to 60% is generally assumed to have a negligible effect on how much people work.

A 1% annual tax on wealth equates to a $10m annual cost of living in a country for a billionaire. Would they move (themselves and/or their wealth) to avoid it? Can some of that $10m be used to find ways of avoiding the rest of it?

I think that ultimately, wealth accumulation needs to change in order to change the structure of the economy.

Also, I like that Gates considers cultural norms, not just policy. What Gates & Buffet have committed to is a partial solution. If 20-30% of billionaires do this, it might be enough to change overall distribution somewhat.

In any case, more questions than answers.

Re: Why Inequality Matters

#58

Post by bsbechtel » Thu, Oct 16, 2014, 2:21 PM UTC

taeric wrote: post #47

bsbechtel wrote: post #34

Earlier quoted context omitted.

>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 w…

Seems like a very small amount of evidence to base such a large idea on. You could probably form the same argument against the more modern consumption taxes. Since for many this translates to a sales tax, and not the early excise taxes that are covered under the same category. (Right?) Though, your argument falls more heavily on the mistake Gates seems to have also made. The type of wealth that the book refers to as…

>Seems like a very small amount of evidence to base such a large idea on.

I acknowledge this. Keep in mind though that in economics it is extremely difficult to comprehensively analyze all the data relevant to your stated hypothesis. Gates points out several areas where Piketty's data falls short, and the amount of data Piketty collected and analyzed for his book is considered one of the strongest points of his thesis.

>This is important, because wealth in the modern US does sustain itself. Quite heavily, even.

Are you talking about Google, Apple, Walmart, etc, or financiers on Wall Street? Or could you expand in general on this? The companies I listed invest heavily in R&D (creating jobs and a better product for the consumer, and sustaining their wealth in the process). Aside from Warren Buffett, I'm under the impression most wealthy individuals in the financial services industry fail to maintain their wealth for the long term, although I don't have any specific examples on hand to support that point. Aside from this, if modern wealth sustains itself through natural processes, then great! We should be looking for ways to make other people just as wealthy, not figuring out ways to tear down those who have been successful.

Re: Why Inequality Matters

#59

Post by AngrySkillzz » Thu, Oct 16, 2014, 2:21 PM UTC

chollida1 wrote: post #4

Just a heads up about the book. Its dense, like a Nassim Taleb book dense. it took me over a month to get through it so if you choose to read it, its not a weekend read. If you want the highlights, this economist article does as decent a job of summarizing 400+ pages as you can hope for in 4 paragraphs. http://www.economist.com/blogs/economist-explains/2014/05/ec... As for the content, the main take away, is his r >…

I'm not sure if it's fair to compare what is essentially a textbook to a series of books by a dude whose style is crafted expressly to make him seem smart.

Re: Why Inequality Matters

#60

Post by bigdubs » Thu, Oct 16, 2014, 2:21 PM UTC

I haven't read the book, and not sure Gates reaction covers this.

It's fine to have a progressive tax. That progressive tax becomes useless if you gut entitlement spending and instead spend on programs or services where the money ends up back in major corporations hands (defense spending, private contracting etc.)

In order for a progressive tax to be corrective it has to put the money to work for people in the lower end of the tax curve.