Billionaires Build

Thank you for the comprehensive response. One overall point I'd like to make is that I think it is much more constructive to cite things that indicate the policies are having a good impact, not just sources showing that the policies exist. I have not done either in this response, however, as most of my questions/responses are about the theory, not the practice. For example, below I talk about CEO pay. You have pointed out that Germany has policies in place that reduce the gap between CEOs and their average workers, but I think first we need to determine why the gap is bad, if at all. Some gaps are fair, some are not. Anyway I have tried to be thorough with my responses, and have condensed our talking points into more cohesive groups when sensible.

-- re: unions

Right to organize is not the same as "right to force people to join a union". That is what right to work laws prevent. Anyone should be able to join a union. Any group of workers in any industry should be able to form a union. Unions should not be able to force people to join their union. This is a gross violation of individual liberty.

Right to organize and right to work are not conflicting goals. If unions need to force workers to join them, they're arguably not good unions.

I agree that unions are important. But unions are not universally good – they sometimes have serious downsides. Any push for unions need to be met with a measured understanding of this. Do you have a solution for the problem that unions with too much power are actually bad for the economy in that they stifle competition and decrease efficiency? Monopolies in general are bad, and that includes monopolies on labour.

-- re: profit sharing

You can start a coop in the US today. But a coop is not the end-all-be-all of business structures. I'm fine with people starting coops. In fact I think that's great. But requiring it has the potential to stifle innovation / (constructive) risk-taking while fixing a problem that doesn't need solving (because labour can already join coops if they want). There are many companies that want to re-invest profits into CapEx or similar, which becomes more difficult with a profit-sharing structure.

-- re: co-determination

Probably don't have a problem with this as long as it is not majority. Haven't thought enough about possible negative ramifications of such policies though. Want to steel man the counter?

-- re: CEO pay

I agree that executive compensation seems out of wack, but my real issue is that I don't understand how the problem exists, and am wholeheartedly against slapping band-aids on things until I understand the underlying cause. You seem to be taking the stance that wildly different pay is always bad, which I cannot agree with. Fair pay is pay which is proportional to the value delivered. If you are delivering 100x the value than the average worker, you should get paid 100x more. To be completely frank, I don't even think it is a requirement that people should be paid the same rate for the same work, but that is an argument we don't need to get into, as the aforementioned idea of "fair" comes before that anyway.

What I mean to say here is: assuming a free and competitive market, you'd think disproportionate executive pay (disproportionate not to other employees but to the value being delivered by the executive, as to my mind this is what fairness is about in business) would result in a company that is less competitive than one which is not overpaying its executives. So how did this come to pass? To my mind the only options are: 1. markets aren't actually competitive 2. American CEOs actually are delivering 256x the value of their average worker.

If 1, my preference would be to find ways to solve the underlying problem and make the market more competitive rather than this band-aid solution. If 2, then again I don't think there is a problem that needs solving.

There is a 3rd option that disproportionate (again, wrt value delivered, not wrt other workers) executive compensation somehow makes a company more competitive, but I don't see how that could be the case.

-- re: taxes

For someone that seems to be a bit of an idealist, you don't seem to be following through here. I don't think "tax prep's lobby is strong" is a good reason to not simplify the tax code. It's a reason it might not happen, but if simplifying the tax code is good we should strive to do that anyway. Everyone in US government always trying to find the middle ground is why we have settled on a bunch of highly mediocre yet expensive solutions to many (most?) of our biggest problems. Hell, the best tax prep is literally helping you avoid taxes, so clearly if tax avoidance is the problem then they are a big part of it. Are you actually talking about tax evasion when you say dodging? If so I agree that this should be punished, but again, this is something the US is already doing. You can serve jail-time for evasion.

With regards to progressive income taxes, I stand by my point that we already do this. Sure, Germany's brackets are higher (as are many other places), but in this case I don't think "other people do it" is a good argument. I think the de-facto "fair" way of taxing people is with a flat tax. If you choose not to do a flat tax, you need a good argument for why not. Once you have that argument, it should also be able to justify somewhat specific (evidence/reason based) brackets, not arbitrary ones.

-- re: minimum wage

I stand by the idea that states can determine their own minimum wage and that this isn't something the US federal government needs to concern itself with. If states are not doing so, residents need to make a change in their own state. To this end though (supporting the idea of states with real autonomy), I do think it is important that the federal government has policies in place (not exactly certain what form they would take) that allow people to more easily "vote with their feet", i.e. move to another state if their current one isn't treating them well. Competition is often pretty great at improving things, and I think that includes competition between states. I'm still fine with a US federal minimum wage, but I don't think it should be pegged to an average US CoL, as again, different regions have wildly different CoLs. Pegged to inflation / purchasing power makes sense though.

-- re: at-will employment

Disagree strongly with this one. If I can hire someone for any reason, I should be able to fire someone for any reason. Just like you can start a job for any reason and you should be able to quit for any reason. Besides, even when you try to prevent this with regulation, most of the time you end up being able to fire people anyway by finding some stupid reason that's valid, which you just have to sit on for a while. There is no possible way such a policy is good for the economy and therefore society. You end up with HR people who's job is to just find excuses to fire the people that you want to fire anyway, and that certainly isn't productive. It also requires involving more bureaucracy to provide the oversight in judging when reasons are valid or not.

I think one of the big reasons Silicon Valley is in California and not anywhere else in the world is Cali's great combination of 1. at-will employment 2. unenforceable non-competes. It is a great combo that supports individual liberty while also encouraging innovation. You can fire me for any reason, but I can immediately go to a competitor and put my skills to good use. Together it is a great balance. One without the other and you have serious downsides:

• At-will, w/o non-competes: good. Mobility encourages competition and innovation, relationship between employer/employee is a balanced one.

• At-will + non-competes: bad – employers can screw employees even when they're not working for them, violates individual liberty without the worker getting anything for it.

• No at-will, w/o non-competes: bad – chilling effect on hiring + training. Employers don't want to invest in employees if they will struggle to fire them without a corresponding incentive for the employee to stay where they are.

• No at-will + non-competes: bad – stifles competition/innovation by discouraging mobility of the workforce on all fronts.

>You were being pedantic about how the New Deal raised revenue.

How is it pedantic. It's completely relevant. I want to know if it was successful, where the money came from and how it got there...

Much in the same way people preach a wealth tax would bring in "billions" without realizing that probably wouldn't put a dent in anything considering the overall budget.

>If you have examples in the United States or the United Kingdom, sure I'll take a look at them. Otherwise, I don't really see the point, when no other country has had global financial controls comparable to the US/UK in the last 100 years.

ahaha man, isn't that kinda ironic though? Maybe because the US/UK has seen the consequences of an FTT and realized that maybe its not a good idea. This is like saying "I don't want to see anything unless its from the last 50 years, since so much has changed since then"

>Further, I've already said that FTT is only one approach, and not one which I have specifically advocated for at any point in this thread. You are arguing against yourself on that one.

Where did I ever say you were? I'm using FTT as an example of an "effort to tax the rich" that completely backfired because the people behind it assumed they were dealing with a vacuum.

>We already tax wealth, so it's not clear at all why you think it's so catastrophic.

Because it is a waste of energy at best and something that could have catastrophic consequences at worst.

>It sure doesn't seem like you've done real research if you haven't been able to come around on the existence (and non-apocalyptic nature of) property and estate taxes.

I'm not a fan of those either for the most part. However, there's a big difference between property tax and trying to tax something worth $50b one day and then $100b a half a year later.

It seems ok until someone in your family is diagnosed with a chronic health condition...

> You can burn the money in a furnace for all I care, as long as the ratio between the richest and poorest goes down substantially.

How does making everyone worse off make things better? For example, inequality skyrocketed in China after they liberalized their economy [0]. Why would it be better for everyone to be equally miserable and starving? I really don't understand this mentality.

[0] https://en.wikipedia.org/wiki/Chinese_economic_reform

Interesting.

The OECD have a better report :

https://www.oecd.org/centrodemexico/medios/44582910.pdf

From page 5 Australia ranks #2 and Canada #5 and the US is #10.

That's on intergenerational income quintile mobility.