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Work disincentives hit the near-poor hardest (2022)

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Re: Work disincentives hit the near-poor hardest (2022)

#121

Post by littlestymaar »

zozbot234 wrote: post #111
littlestymaar wrote: post #109

Earlier quoted context omitted.

> Labor income is very important at the top end. The work a CEO performs in her superintendence of a large company generates what's economically labor income, even when paid as stock grants, options or the like. Basically all professional income (including that of devs) is labor income, not capital income. If the CEO has a significant voting power in his company, then it's capital income even if the said income is “a…

The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views. For instance, much of the real-world political advocacy of UBI or cash transfers towards low-income folks is downstream from arguments about the predicted efficacy of this as a kind of redistribution; the arguments are not themselves politically motivated. The argument for taxing pure re…

> The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views

The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works. Same for the idea that individual income reflect the value they create to society.

The idea that you ought not to tax capital is also politically motivated.

Anything can be said to be “optimal” if you pick the hypothesis accordingly, and that's exactly what's being done here… It may work on paper for a world populated by a spherical John Galt in vacuum, but it tells you nothing about the real world.

Re: Work disincentives hit the near-poor hardest (2022)

#122

Post by zozbot234 »

littlestymaar wrote: post #121
zozbot234 wrote: post #111

Earlier quoted context omitted.

The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views. For instance, much of the real-world political advocacy of UBI or cash transfers towards low-income folks is downstream from arguments about the predicted efficacy of this as a kind of redistribution; the arguments are not themselves politically motivated. The argument for taxing pure re…

> The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works. Same for the idea that individual income reflect the value they create to societ…

> The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works.

People generally tend to work in exchange for money, and the more money they earn thereby, the more effort they'll want to put in their work. (This broad idea is sometimes known as "efficiency wages"; it often leads to paying workers more than they could directly compete for on the market!) Some independently rich folks may obviously choose not to work in any high-paid job at all, but given that they are, it makes sense to ask what motivates them.

> Same for the idea that individual income reflect the value they create to society.

That's obviously not true, since positive externalities, negative externalities and pure transfer rents all exist. Some people might well end up creating more value to society than their income accounts for, others less.

(I actually stated above that the zero-taxes-on-capital result is somewhat unrealistic on its own and there are arguments that do push the other way, so the current notion of what should be taxed may in fact be roughly adaptive. In practice, it's often more important not to push too far away from optimality with punitive levels of taxation than to precisely match the outcome of any given theoretical model.)

Re: Work disincentives hit the near-poor hardest (2022)

#123

Post by littlestymaar »

zozbot234 wrote: post #122
littlestymaar wrote: post #121

Earlier quoted context omitted.

> The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works. Same for the idea that individual income reflect the value they create to societ…

> The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works. People generally tend to work in exchange for money, and the more money they earn thereby, the more effort they'll want to put in their work. (This broad idea is sometimes known as "efficiency wages"; it often l…

> People generally tend to work in exchange for money,

When they need it. Healthy retired people regularly do work for free in various charities and community work. Working people also don't usually seek to maximize their income, but balance it with plenty of factors.

> and the more money they earn thereby, the more effort they'll want to put in their work. (This broad idea is sometimes known as "efficiency wages"; it often leads to paying workers more than they could directly compete for on the market!)

This only works up to a point, you can't pay a taxi driver a million bucks in the hope of getting to destination 10 000 times faster. People do work better and harder when they feel they are fairly compensated vs when they feel they are being abused but that's it.

> Some independently rich folks may obviously choose not to work in any high-paid job at all, but given that they are, it makes sense to ask what motivates them.

And the answer is not the income proper, but everything that comes with such jobs and income, particularly “I'm making more money than Bob”. As long as Bob and him are being taxed similarly, then the actual amount makes little difference.

As I said above the marginal utility of money converges to zero the more money you have: a million dollar would change the life of the median US worker but wouldn't even be noticed by Tim Cook. (And even a billion doesn't change Jeff Bezos perception of worth an inch).

> In practice, it's often more important not to push too far away from optimality with punitive levels of taxation than to precisely match the outcome of any given theoretical mode

The concept of “punitive taxation” is in itself a political one, and again I can build a model in which the optimal income taxation is 100% above 1M and then say “we shouldn't push too far from the optimal” and that would be equally nonsense.

Re: Work disincentives hit the near-poor hardest (2022)

#124

Post by drekipus »

mmooss wrote: post #113
drekipus wrote: post #63

Earlier quoted context omitted.

I guess it really is too broad of a sector to think of any clear cut solutions. I'll tap out, but my main shtick is the poverty programming but. I think k that perpetuates. I would agree with housing first. Definitely something that goes a long way. But it's also not clear cut (IE: too many recovering drug addicts in the same neighbourhood will bring each other down..) While some people might only be on welfare tempo…

> I don't mind the idea of letting certain elements die. > takes me on good faith The first overwhelmingly rules out the second. It just makes you a psychopath (if true, which I doubt) or very much not in good faith. Maybe some people would be ok with letting you or me die - would that be ok? Would it be clever and cool to post on HN? You don't need to play the victim to identify yourself. One thing victims do, howev…

Ego death is necessary. I think that is perhaps that is the essence.

(the rest of it is projection and labelling so I'll try not to respond)

Re: Work disincentives hit the near-poor hardest (2022)

#125

Post by alephnerd »

eru wrote: post #120
alephnerd wrote: post #117

Earlier quoted context omitted.

> I wish in the US more areas of policy would be decided at the state level, and I wish more state government would flip coins to decide on their policy. (Even better, if we can push it down to county level.) The overwhelming majority of policy is decided at the state and local level in the US so long as it's not foreign policy or monetary policy related. Whatever is decided on the Hill has no bearing once administra…

I wish you were right. NYC can't even charge people for their using their roads (whether that's driving or parking) without the state and federal governments getting involved.

NYC is an outlier because it was in receivership in the 1970s-80s and near bankruptcy [0]

[0] - https://rockinst.org/blog/behind-the-fiscal-curtain-forgotte...

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