Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#291

Post by dennisgorelik » Thu, Dec 05, 2019, 12:56 AM UTC

darawk wrote: post #257

dangerlibrary wrote: post #233

Earlier quoted context omitted.

You are mixing up correlation and causation re: married couples.

The relationship is causal. Married couples are a household. Married couples consist of two people. Two people is more than one person. Two incomes is more than one income, etc. Even though all married households are not dual income, those that are shift up the mean for the rest. This is an artifact of measurement via 'household'.

People who make more money are more likely to marry and to stay married.

Re: Economists Are Rethinking the Numbers on Inequality

#292

Post by hnick » Thu, Dec 05, 2019, 12:58 AM UTC

drdec wrote: post #91

logicchains wrote: post #41

Earlier quoted context omitted.

If inflation causes the nominal value of your hotel chain to increase 2%, you have to pay capital gains tax on this nominal gain (at least in countries where capital gains tax is not adjusted for inflation), leaving you with less real value afterwards.

That only matters if you realize the gains. If you own a business like a hotel, car wash, etc. and intend to keep it, you are not affected by value increases of the business itself. In fact, for many privately held businesses, it is not even known what the value of the business is because there is no reason to calculate it.

I'm not even sure how accurately some small businesses can be valued. A local cupcake lady or artist might run a business that makes decent money, but all the income and value is derived from their unique style. Remove them and the business is almost worthless.

If a tax on capital is instituted are there mechanisms to value such cases?

Re: Economists Are Rethinking the Numbers on Inequality

#293

Post by EGreg » Thu, Dec 05, 2019, 1:07 AM UTC

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

The Economist did not ever strike me as a right wing publication that wants to lower taxes and roll back regulations.

Re: Economists Are Rethinking the Numbers on Inequality

#294

Post by tryptophan » Thu, Dec 05, 2019, 1:11 AM UTC

tolmasky wrote: post #266

60654 wrote: post #7

This Economist article points out some of the many small academic works that quibble over details with Piketty and Saez. But that's not anything new. The major points of their work, and especially of Piketty's monumental _Capital for the 21st century_ still stand: that capital is a positive feedback loop in a way that labor is not; that mid-20th-century laws that put brakes on this feedback loop have been removed; th…

A key thing about the mid-century is that the actual manufacturing capabilities of most of the world (with the sole exception of the US basically) were completed destroyed by WWII. Britain and Germany were devastated. This means that in the 1950's the US was essentially acting as the sole industrial power at full strength serving the rest of the world. We were playing worldwide economics on easy mode: as if we were t…

>We were playing worldwide economics on easy mode: as if we were the only ones that had modern technology and fully functioning infrastructure, while all other countries wanted our goods. This is why it is bizarre to draw any conclusions about taxes or any other economic principles from this very unique period of time: you could probably put in place just about any law and still have the United States be ridiculously successful.

IIRC Pickety made this exact point in his book Capital in the 21st Century. Looking back at that time period as something to emulate or get policy ideas from is misguided for this reason. Instead of thinking of it as "a time of enlightenment when the people fought the billionaires and achieved utopia" it would probably be better to think of it as "a historical aberration which will probably never happen again".

Re: Economists Are Rethinking the Numbers on Inequality

#295

Post by beerandt » Thu, Dec 05, 2019, 1:20 AM UTC

cynusx wrote: post #282

beerandt wrote: post #268

Earlier quoted context omitted.

Besides zoning laws and building codes, dodd-frank and similar financial regulation has made speculative building of single family homes nearly impossible, if you are not 100% self-financing. Which itself is a capital feedback loop which requires a not insignificant minimum outlay to enter the market.

can you elaborate on this? I am not familiar with how dodd-frank and other regulations impact building

Basically, the government said loans are too risky to give to builders, except to build the things the government wants.

Longer version: Many people were abusing interest-only loans and similar financing. It was blamed somewhat deservingly for the 2008 crash, as banks had incentives to sell as much financing as possible and then sell-off the loans in packages to others, offloading the risk. Repackage, resell, repeat. Eventually crash.

Without getting any deeper into the politics of that, Dodd-Frank was the regulation heavy government response, part of which redefines risk levels of loans, making financing, in general, a lot harder and more expensive to get. Simultaneously, it enacted government guaranteed loan programs for lenders and builders that meet certain criteria.

Keep in mind, there was a large army of homebuilders that besides facing a recession, suddenly couldn't sufficiently finance their main product via banks, and needed to find a way to stay in a business that's high-risk, high-capital, slow-cashflow, and low margin.

The only government loan programs that allowed similar sized financing to these builders all basically require some sort of public housing participation, the most profitable and easiest of which to qualify for is mid to large scale apartment complexes that would be contractually obligated to accept tenants receiving public assistance from HUD sponsored / affiliated programs. Some programs are available for mixed use or similar developments, usually with the involvement of local government controlled block grants.

But this has left a sizable gap between small business residential builders and the larger scale required to take on government sponsored projects.

The exceptions to this are generally contractors that have their own sources of capital, or builders that were already big enough to have existing appropriately sized collateral. But it's very applicable, in the context of barriers to business growth, especially capital.

When you pass an apartment construction site, start paying attention to how many of them have signs that include a HUD logo. It's a substantial percentage.

Re: Economists Are Rethinking the Numbers on Inequality

#296

Post by karpierz » Thu, Dec 05, 2019, 1:21 AM UTC

Invictus0 wrote: post #146

airstrike wrote: post #96

Earlier quoted context omitted.

R&D in general (but, in particular, engineering, innovative software development and other highly-trained CS-based roles, life sciences research), highly-trained managerial roles in finance, accounting, operations management

The jobs you listed are all information worker jobs. Service jobs are things like hairdresser, waiter, receptionist, etc.

The parent poster is referring to the three-sector model of the economy: primary (resource extraction, agriculture), secondary (manufacturing, processing), tertiary (services). Education, R&D, knowledge workers, secretaries all fall under this.

Re: Economists Are Rethinking the Numbers on Inequality

#297

Post by corporate_shi11 » Thu, Dec 05, 2019, 1:26 AM UTC

matchbok wrote: post #284

corporate_shi11 wrote: post #247

Earlier quoted context omitted.

The problem with education in America is not government and policy, but individuals, families and culture. Many school districts across the country have horrid graduation rates and median test scores. The amount of money you pour into these districts has very little impact on student outcomes. How different would wage growth and average wages look like if the people in these districts took school seriously? The numbe…

It's hard to take school seriously if you have to work 3 jobs to provide for your child.

Yet the Chinese seem to accomplish it.

Re: Economists Are Rethinking the Numbers on Inequality

#298

Post by mc32 » Thu, Dec 05, 2019, 1:32 AM UTC

corporate_shi11 wrote: post #297

matchbok wrote: post #284

Earlier quoted context omitted.

It's hard to take school seriously if you have to work 3 jobs to provide for your child.

Yet the Chinese seem to accomplish it.

Yep, I’ve seen it. Families scraping up money from all kinds of places and driving old beaters just to make sure they can send their kids to after school cram school. A lot of it is culture.

I mean, some parents are well off but many are just really eking it out, never the less any extra money goes into education rather than new scooters or vacations or clothes, etc.

Re: Economists Are Rethinking the Numbers on Inequality

#299

Post by ars » Thu, Dec 05, 2019, 1:33 AM UTC

harryh wrote: post #162

js2 wrote: post #98

Earlier quoted context omitted.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

Property taxes are neither wealth or consumption taxes. Those are not the only two options.

You could just as easily charge the mortgage holder the property tax, and that mortgage holder will then charge the that amount as an extra fee on the mortgage. What does that do to your argument?

Seem to me Property tax is basically a toll. Just like you pay a toll to use a road, you pay a toll to use a house.

Re: Economists Are Rethinking the Numbers on Inequality

#300

Post by mdorazio » Thu, Dec 05, 2019, 1:33 AM UTC

Domenic_S wrote: post #234

JimboOmega wrote: post #230

Earlier quoted context omitted.

Except in California we had proposition 13, so that property taxes are severely hamstrung; I wonder how much impact that alone has on the overall analysis given the size of California as part of the US economy. I really think we should bring them back but it's anathema. The usual argument has something to do with a little grandma living on a fixed income who suddenly can't afford taxes on the home she's owned for 40…

I'd have to do the math but to me it seems like ridiculous housing prices make up for prop 13, while also pushing the tax burden to those best equipped to handle it (people in the position to afford to buy expensive houses) So while grandma's only paying taxes on a tax-appraised value of $200k for a home worth $1mm on the open market, people who buy today are paying tax on $1mm+ for homes that "should be" (or would b…

Not really. See some of the charts here [1]. Key quotes to show the effect:

"The year before Proposition 13 passed, property taxes comprised over 90 percent of cities’ and counties’ local tax revenue. Today, that share is less than two–thirds."

"Cities’ and counties’ tax revenue per person has declined since Proposition 13. However, looking across all California local governments’ per–person revenue—excluding state and federal funds—revenues increased 36 percent since Proposition 13. In comparison, similar per–person revenues for local governments across the country increased by almost 70 percent over the same period."

Basically the state had to struggle to make up the tax revenue difference via other fees and assessments, and it never caught up to where it was before or to where it is in other states without such a measure.

[1] https://lao.ca.gov/Publications/Report/3497#What_Happened_to...