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American Equity

blog.samaltman.com

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Re: American Equity

#381

Post by vkou »

WalterBright wrote: post #293
vkou wrote: post #181

Earlier quoted context omitted.

More importantly, it happened in a country which forced people off their land at gunpoint, into urban poverty, where they provided a huge supply of cheap, fungible, and utterly disposable factory labor. But that would run counter to the neo-liberal narrative... After all, the rule of law serves to protect investments , not the peasant forced off his land. Where was the rule of law to protect said peasants? Perhaps th…

That happened as well in S. America, but S. America did not become a superpower. There's something else at work.

South America, unlike England, did not have captive colonial markets, that it could sell its mass-manufactured goods to. South America was the captive colonial market.

Re: American Equity

#382

Post by remir »

old-gregg wrote: post #326
kome wrote: post #126

American tech élite is funny... USA can't even a normal healthcare BUT the tech élite is all about Universal Basic Income, Transhumanism, the dangers of AI, going to Mars and saving the suburbs/car lifestyle. Can't they just wake up and put their mental energy and money on something that actually make sense?

> ... put their mental energy and money on something ... When thinking of it, I am often convinced that money is a poor solution to the most challenging problems. Sam likes the idea of universal income, but to me that's like supplying extra oxygen/fuel to an engine, but if the engine is broken it won't do anything, for example I won't be surprised that if every citizen gets extra $2K a month, the cost of "healthcare"…

The problem is that money is now immaterial, numbers in a computer somewhere, but we live in a material world. Imagine your city desperately needs to build a new subway station or hospital. It has the civil engineers, the architects, the machinery, the materials and the workers but if there is no money, nothing will get done. How absurd is that?

Money should not be a problem if it's aligned with the reality of our physical world and its limits.

But the resources of the world are being wasted on multiple levels because there's "good money to be made" while important needs are not addressed.

Re: American Equity

#383

Post by dragonwriter »

alasdair_ wrote: post #374

I like the general idea. However, the problem with giving people a share of the GDP is that GDP is a terrible measure of useful economic production. As a trivial example: GDP goes up if I sneak into a car lot one night and set fire to all the cars. We need a better measure of "useful" economic production.

> As a trivial example: GDP goes up if I sneak into a car lot one night and set fire to all the cars.

Directly, it doesn't change at all. If it results in people being hired to cleanup and the card being replaced, it does if you consider things one step out, but that might not be the result and, in any case, things get more complicated as you consider more distant effects even if the one step out effects would increase GDP.

Re: American Equity

#384

Post by kevinmchugh »

blizkreeg wrote: post #114

I have a better (may be slightly insane) idea. Open up startup investing (VC rounds especially) to a wider audience through some kind of index fund. Retirement and pension funds, endowments etc are too roundabout a way of actually benefitting from the windfall in the now. While this is obviously risky, in the 2/10 chance where the startup IPOs or gets acquired, everyone stands to benefit a big deal. I recently heard…

VCs get their money from lots of sources, an article I read last year said in one year they received 30% of their funds from pensions[0]. I no longer have access to that article, but I do recall university endowments having a reportable percentage of the pie as well.

Assuming there was some way of defining an index, and there was enough liquidity to make it trackable by a fund, which are major problems for private companies:

By what definition of startup do 2/10 of them get acquired or achieve an IPO?

How would such a fund be more efficient for pensions and endowments than investing in VCs now?

Also, I think this fund would be a disfavored source of funds for founders. The big VC firms are successful in large part because they have access to the best investing options. Securing them as an investor opens doors for future rounds and for prestigious opportunities.

[0] https://news.ycombinator.com/item?id=12515731

Re: American Equity

#385

Post by oarsinsync »

majormajor wrote: post #368
cryptonector wrote: post #324

Earlier quoted context omitted.

If a lottery ticket's prices goes up, and the purse goes down and/or the odds get longer, you'll be less inclined to buy a ticket. It's the same with work. If hard work is less likely to pay off, or if you'll have to work harder, or both, you'll be less likely to work harder. Some people will work harder anyways, and many will be discouraged. Marginal effects matter. This is why dynamic analysis is important.

And the marginal effects of having 100M in the bank over 10M in the bank over 1M over 100K are all still huge for any feasible tax scheme I could imagine. What does your world look like where you'd be too taxed to bother wanting to be financially independent?

#define financially independent

That phrase means different things to different people. In some parts of the world, $50k could consider you to be financially independent. $500k in others, and in some parts, you'd need $5m - $50m.

What if I told you it cost $5/day to rent a luxury hotel room with cleaning, full board, and high speed broadband provided as standard?

What if I told you it cost $1500/month for a small studio apartment with no furnishings or anything else?

Both are true, both are real, both require different amounts of money in order to achieve financial independence.

I realise now that I haven't actually answered your question:

> What does your world look like where you'd be too taxed to bother wanting to be financially independent?

Rewriting that to be "What does your world look like where you'd be too taxed to bother generating more wealth?"

There comes a point of diminishing returns. If you work a 40 hour week already and make a decent living at 40-50%, and now get told that anything above that will get taxed at 75%, unless you're going to somehow generate more than double, you're going to spend that time doing more productive things (like spending it with your family).

Arguably, that's a net-positive for society as a whole, but may be a net-negative for the economy/GDP of the country you reside in.

Re: American Equity

#386

Post by majormajor »

oarsinsync wrote: post #385
majormajor wrote: post #368

Earlier quoted context omitted.

And the marginal effects of having 100M in the bank over 10M in the bank over 1M over 100K are all still huge for any feasible tax scheme I could imagine. What does your world look like where you'd be too taxed to bother wanting to be financially independent?

#define financially independent That phrase means different things to different people. In some parts of the world, $50k could consider you to be financially independent. $500k in others, and in some parts, you'd need $5m - $50m. What if I told you it cost $5/day to rent a luxury hotel room with cleaning, full board, and high speed broadband provided as standard? What if I told you it cost $1500/month for a small stu…

There's a header of "American" on this very post, and it's specifically talking about the US, so I'm starting there.

The biggest potential cost of someone in the US, with employer-tied healthcare, seems like medical. You could hit the unlucky jackpot and have a seven-figure+ medical bill over the course of a few years or life. So let's set "able to handle that for yourself and your family" as the baseline for being considered independent, since that's probably bigger risk than, say, "owning but then losing a multimillion-dollar-home to a flood" or somesuch.

But I also don't think this term is generally understood as poorly as you suggest.

--------

Responding to context complaints aside, you're still talking income tax, not wealth tax. My question was what this hypothetical negative-use wealth tax looks like, since the further-upthread post had suggested taxing wealth instead of using income as one of (several) proxies.

But also, my hours have not increased with my compensation in the manner you suggest. I know that every additional dollar loses 40% or whatever of it, I still would rather have it than not have it. 5%, probably wouldn't care, but would I still want more autonomy and responsibility at work for the sake of more feeling in control? Maybe. Maybe not. There are both financial and non-financial sides there, but if income was the sole basis for choosing our roles, we'd be in a very different-looking world.

So that's why I'm skeptical that a wealth tax would make me give up having big dreams—the personal safety net and toys are still incredibly appealing.

Re: American Equity

#387

Post by geofft »

derefr wrote: post #176
koolba wrote: post #20

Earlier quoted context omitted.

> Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale. That will have a lot more effect than some fiction where you get to do a bunch of make-believe bookkeeping. Or go a step further do what nobody has the balls to do: tax wealth That's what all the…

From the perspective of trying to get the budget balanced, taxing wealth is probably the single most efficient way to do it. From the perspective of the tax code as an incentive system , taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy, and thereby causes fewer GDP-building things to happen! (This is also, for a similar reason, why economists don't like corporate taxes or trade…

> taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy

If we're talking about how people feel about their tax system, I think we need to talk about how a huge portion of the US misunderstands "tax brackets", and seems to think that paying more taxes when they're "bumped to a higher tax bracket" is a thing, and that there's some strategy in avoiding getting paid marginally more than some threshold. (Since tax brackets apply to marginal income, this is incorrect; you're still taxed at the lower rate for your income up to the threshold.)

This is almost certainly causing people to behave in ways that are economically irrational for themselves far more than any tax on large wealth (let's say, for the purpose of argument, $100M or more) would be. Yet there is no campaign to fix people's understanding of tax brackets so that more people feel incentivized to make more money.

If we're talking about an actual rational response to the tax system, I would much rather have $102M in the bank and get taxed on half my savings over $100M than have $99M in the bank and get taxed on half my savings over $100M.

> and thereby causes fewer GDP-building things to happen!

Why does a tax on wealth cause fewer GDP-building things to happen? The rational thing to do given a tax on wealth is to spend your extra wealth on services you're interested in, donate it to charities you support, etc., all of which seems like it increases GDP more than investing it for yourself would: it produces additional revenue for organizations, which produces jobs, which grows the economy.

I'd believe this argument for a tax on income, since it disincentivizes people from making more money, which means they're not spending that money because they didn't make it, and also they're voluntarily refusing to do profitable work they otherwise would have done. (I don't think I agree with the argument, but at least I understand how it works.)

Re: American Equity

#388

Post by eru »

derefr wrote: post #176
koolba wrote: post #20

Earlier quoted context omitted.

> Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale. That will have a lot more effect than some fiction where you get to do a bunch of make-believe bookkeeping. Or go a step further do what nobody has the balls to do: tax wealth That's what all the…

From the perspective of trying to get the budget balanced, taxing wealth is probably the single most efficient way to do it. From the perspective of the tax code as an incentive system , taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy, and thereby causes fewer GDP-building things to happen! (This is also, for a similar reason, why economists don't like corporate taxes or trade…

Taxing land value is even better: not only does it not punish any economic activity, so doesn't have any dead weight cost; it actively encourages better land use, and thus might even benefit the economy.

Also land is hard to hide, and relatively easy to value. So it's really hard to evade the tax. If you are going to tax wealth, and want that to include assets like equity in private companies, you are going to have to value those assets.

Re: American Equity

#389

Post by eru »

RivieraKid wrote: post #46
smeyer wrote: post #29

Earlier quoted context omitted.

>do what nobody has the balls to do: tax wealth Just to clarify, nobody in the US is doing this, but it's not unheard of elsewhere. For example, Norway has a wealth tax of about 0.85% and there are some other examples at https://en.wikipedia.org/wiki/Wealth_tax#Current_examples .

The drawback of taxing wealth is that it distorts markets, it discourages saving. EDIT: Can't comment ("You're posting too fast, blah blah blah"). Here are some replies to the comments bellow: > It's encouraging people to make their money be productive instead of stashing it under a mattress. When you have money in the bank, you're effectively lending most of it to other people. Your money is "productive", which is e…

That Wikipedia page links to a interesting piece: "Taxing Land is Better Than Neutral: Land Taxes, Land Speculation and the Timing of Development" (https://books.google.co.uk/books/about/Taxing_Land_is_Better...)

Re: American Equity

#390

Post by robotresearcher »

jerf wrote: post #100
throwawayjava wrote: post #18

Earlier quoted context omitted.

This idea is basically UBI couched in capitalist terms. If every American gets a share of GDP, and GDP is concentrated, then that means that either 1) the share of GDP that each person gets is tiny and inconsequential (see: GOP-style tax cuts) or else 2) you need progressive taxation. Another difference, aside from wording/marketing, is that the UBI is implemented as a progressive redistribution of future wealth gene…

This would address one (but not all) of my fundamental complaints about UBI though: What do you do when due to some disaster, you must pull back your UBI payments? Consider significant war losses, for instance. In this case the answer is that GDP would go down and so would the payment. (Though maybe we can't tie it to GDP per se, since in a war situation you can't afford to see your GDP rise due to forced constructio…

We reduce welfare spending when times are hard. Same deal. Not a substantial argument against welfare or UBI.
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