How about we just don’t empower a central planning body to make monetary decisions that devalue wages & salaries while inflating asset prices? QE & LIRP have literally been “rich get richer, poor get poorer: the policy”. People educated enough in finance to follow the effect tend to be in the asset-holding camp so there is less complaint.
I’m not advocating high rates as good for the poor; I’m championing shaping the yield curve with a market mechanism. It might be too late for that to be anything other than disastrous though, after years of addiction to funny money.
The most frustrating part of economic arguments, right there.
There is an official policy that prices will go up exponentially, controlled by a tiny committee who implements the policy by, effectively, money printing. The official justification is a just-so story with no compelling evidence that I've ever seen. We seem to have gotten there because politicians don't like sound management any more than anyone else and just borrow and spend until the money runs out. And the outcome is asset owners get an enormous leg up over everyone else and the biggest asset owners get privileged.
Given the level of this-sounds-crazy in the policy mix there should be much better justifications for all this policy than people accept. We should routinely be seeing actual studies by real economists justifying this madness. It looks like trash policy.
You wish it was money printing. It's just plain greed. Without money printing what you'd get is even higher inflation. (Though probably only by some percentage.)
Any excuse is good to raise the price if some people really need your product and it doesn't jeopardise your demand enough.
(This is called demand inelasticity.)
No price fall is needed or done when the excuse goes away.
If you control supply side sufficiently, you can also use that to further raise prices and keep them high.
Thus equilibrium economics efficiency arguments fail.
Housing has limited but highly inelastic demand. So does food, water, healthcare, energy, fuel.
Some of these cannot be substituted easily either.
And the smarter capitalist to get maximum profit will do anything to make this demand yet more inelastic by reducing choices, especially away from their control. Be it by monopoly, cartel, tacit cartel, hostile takeovers, PR to bury options, government intervention, over or underregulation...
Assets are liabilities unless they're directly in demand or are actively capital (as in used to make things). For example, having houses nobody can buy that will disintegrate is a liability. It's even clearer with office buildings which are a bit more elastic in demand.
Unless you control most housing and can thus enhance relative demand, of course...
The justifications for current capitalism are very vacuous based on willing misinterpretation of it. Even ignoring the whole monetarist view which is a second order misinterpretation.
"In 1907 there was a financial crisis. We learned our lessons and created an institution to prevent the next crisis. So, the next time things went south in finance, in 1929 there was no crisis. There was a catastrophe instead."
Monetary policy could probably be implemented through some other means than real estate, which is what I interpreted the suggestion to mean. QE as it has existed was a real example of Friedman's "nothing so permanent as a temporary government program": a reaction to the housing bubble becoming a default tool of monetary policy.
Adding this to my reading list. I've thought for years that we should place at hard cap on wealth somewhere around $10 or $15 million. Because that's the point at which you have enough wealth to live a comfortably middle class lifestyle for the rest of your life, still pass down a substantial chunk to your children, and never have to earn another cent.
I've argued we should combine this with a move towards a worker owned economy - in which businesses are democratic institutions governed by the people who do the work involved.
But either of these changes on their own would do _substantial_ good. Going to make a note to read this book!
It's just not practical to enforce a cap though. Even with a very authoritarian world government to stop people moving assets elsewhere, there'll be too many ways around it.
So you can only have $15mil of assets? But your partner can have $15mil too, as can your kids, and parents. And if that's not enough, you can still try to hoard extra wealth in easier-to-hide forms - whether it's physical gold, bitcoin, art, fine wines, etc.
Or worse still, the super-rich will realise that they can spend many times the wealth cap per year consumable/disposable items (so long as they stay under the cap, or get back there by year-end), and become more wasteful. "Might as well spend a few million on a private jet, if I don't, I'll hit the wealth cap!".
Its not that its not practical as much as it is actively counterproductive to progress since the minimum effective size in many sectors is larger than that so you would end up force liquidating founders out of companies they start, which is a bad thing in for progress in mlst cases. You want quality founders to ma*ntain control and grow a business up to the point it starts abusing market power rather than innovating and that is often far beyond 15 mm valuation. Tje real problem is the market power and that is when heavy regulation and breakup should set in, not at some arbitrarily low asset limit.
But even in your family hypothetical, the overall inequality is still much less than between billionaires and the middle-class (nothing said of the truly destitute).
> Or worse still, the super-rich will realise that they can spend many times the wealth cap per year consumable/disposable items (so long as they stay under the cap, or get back there by year-end), and become more wasteful. "Might as well spend a few million on a private jet, if I don't, I'll hit the wealth cap!".
This is a very interesting point! I'd worry less about rich folks spending to be below the cap (that money re-enters the economy), but rather evasion by sending money back and forth between a small set. Clearly evasion would need to be monitored.
Whenever people talk about how much wealth is comfortable (or ethical) to have, its usually just a notch above their own (well within their social class status).
To be fair I don't know your wealth at all but its just an observation I've had from talking with others about this. The end result of this would be to make these people some of the wealthiest in the country by dragging the wealth curve to just above their level. It sounds like a moral hazard to me.
> Whenever people talk about how much wealth is comfortable (or ethical) to have, its usually just a notch above their own (well within their social class status).
I haven't observed that, and it's very unlikely the GP is a "notch" below $10-15 million.
I bet you've discovered the cause of this effect. I suspect we're seeing people who live comfortable lifestyles say "this seems about right" and then hedge a bit.
"Everyone driving slower than me is a slowpoke, everyone driving faster is a maniac"
This was on full display back in 2017-2018 when tax code was changed to limit the amount of State and Local taxes (SALT) that could be deducted from your Federal tax liability. The original SALT deduction, before the change, clearly benefited the wealthy, with large mortgages and living in high-tax (read: expensive) areas.
Cue articles like this one [1], which shows just how out of touch the wealthy can be:
> estimate the tax law’s impact on the value of a theoretical house in the New York City suburb of West Orange, New Jersey, purchased for $800,000 in 2017 by a theoretical family with a $250,000 annual income. Those home value and income numbers are very high by national standards — but middle class by the standards of large parts of suburban Essex County.
In 2017, $250K/HHI was in the top 5% of the entire US. Someone living in a house that cost 3X the median house, in one of the richest areas of the country, making more than 95% of everyone else considers themselves 'middle class'.
These arguments nearly always come back to the fundamental desire (greed) for "Giev moniez pl0x.", as you say the limit is above their own wealth as to not be an inconvenience to themselves while siphoning monies from those around (and presumably above) them.
It would make for better discussion if these social justice warriors were at least honest about what they actually want.
I have to laugh when $15M is considered enough wealth to "live a middle class lifestyle." I live in flyover country in a city of two million where the average household income is $60K. A 4% investment return on $15M would keep ten ordinary middle-class households afloat in my neighborhood forever without anyone ever having to work again (and without ever having to touch the investment principal). It's easy to lose track of what an immense amount of money $15M is.
The problem is some places are more desirable than others. Penthouses, even if they're not big, they are, for most people, more desirable than the bottom floor. They have a view. They're away from noise. They're often away from rats, roaches, ants which start at the bottom.
Similarly any place on the side of a hill, a cliff, a beach, ... You're unlikely to ban such places (all buildings 1 story?) Even if you managed that they're the house on the quiet street and the loud house next to the highway/trainline/airport
You could try to make such places merit based but that only turns into a different kind of bribe and cronyism. Money is at least, somewhat obtainable by anyone. Plenty of people were not rich and became rich, maybe by luck, but at least it's a higher rate of churn than central authority has ever been.
Personally I find private land ownership a kind of ridiculous concept. Our current system provides the convenient and necessary fiction of land ownership but ultimately to the extent there is an owner, it is always the state.
Yes I think so. I’m not the original commenter, but I’ve also landed on the idea of limiting wealth to the ballpark of $10-15 million, primarily using progressive taxation. The point is to prevent any one person or small group of people from accruing too much power within our democratic society or reaching levels where they stop using their wealth to contribute to the economy (by e.g. offshoring money).
> I've thought for years that we should place at hard cap on wealth somewhere around $10 or $15 million.
Where's the empirical evidence that such a cutoff benefits society as a whole?
> I've argued we should combine this with a move towards a worker owned economy - in which businesses are democratic institutions governed by the people who do the work involved.
I like the German system of giving labor a board seat. We should try that first before burning our entire economic model to the ground and starting over, based on a gut feeling with no hard evidence to support it.
There’s decent evidence (backing up clear intuition) that wellbeing scales with the log of income. There’s also decent evidence for losses being about twice as painful as gains are pleasurable. Moving money from richer to poorer people should therefore increase average wellbeing as long as the richer people are sufficiently richer, or as long you can make the loss feel like a foregone gain instead.
> Because that's the point at which you have enough wealth to live a comfortably middle class lifestyle for the rest of your life
15M is far from middle class by any measure. 15M affords you a big city place, a place for winter holidays, and a place for summer holidays. With still left to have spoiled little kids (and possibly spoiled grand children).
Also, 15M is not static money. If you have that much money you will certainly gain an income from just having that much money.
Yeah, my family lives very comfortably in the US, all things considered ("upper middle class"??), but still far from having $15 million in total wealth.
> I've argued we should combine this with a move towards a worker owned economy
While I'm sympathetic to this ideal, I don't think it works. All you'd do is add all the inefficiencies of politics into business-level decision making. Democratic processes should be reserved for governing shared resources, like water and air, where independent decision making has pathologies, and independent hierarchical systems are good for optimizing efficiency and value for all other goods and services. We just have to ensure there's competition and fairness for good outcomes.
> All you'd do is add all the inefficiencies of politics into business-level decision making.
While I'm sympathetic to that line of thought, I feel like it ignores the reality that most business-level decision making is already inefficient and political. Where is the competition and fairness when a sustainable business is bought out, prices increased and development halted to wring out every bit of value, and then sold off for parts to competitors when no profit is left? There are so many common business practices that are actively hollowing out the free market.
>> I've thought for years that we should place at hard cap on wealth somewhere around $10 or $15 million
Do you think your standard of living under such a system would be lower, the same, or higher than it is now?
I think it would be much lower. I think most people will stop working when they stop getting paid. Some I guess would spend money as fast as they make it on experiences and services and other things that don't increase wealth. But I think many people who would in the current system have gone on to create billions in wealth would stop at $10 million and say, "OK I hit the number, moving on to the next challenge".
> Do you think your standard of living under such a system would be lower, the same, or higher than it is now?
that would probably depend on whether you're being exploited by the current system
Imagine looking at a group of slave owners and slaves and asking a similar question with regards to ending slavery, and being all like "well let's hear both sides".
Even if that's true, I think a lot of people have a long way to go before reaching $10 million in wealth, and there always would be, so it's not like there are just a few "chosen ones" who could do so much more if they were motivated to earn $1 billion, and society will suffer otherwise.
Some things cost way more than 10 or 15 million in terms of investment.
Why shouldn't a billionaire be capable of starting a genetics lab to fund cancer research and pay for it in cash, if they are so inclined?
Also almost all of super wealthy people's "wealth" is tied up in assets that are funding entire economies. This money is creating jobs, allowing for affordable loans, the money is working for many other people... It's not as if the money wealthy people have is just in physical gold coins in their swimming pools.
>Why shouldn't a billionaire be capable of starting a genetics lab to fund cancer research and pay for it in cash, if they are so inclined?
Starting land to fund cancer research is fine, but I don't see why we need billionairs for that? Multiple people can fund it. They are going to work alone in that lab either.
>It's not as if the money wealthy people have is just in physical gold coins in their swimming pools.
And it's not as if taxing that wealth makes that fact go away.
What's different is that when all that wealth is concentrated with a few people, they get to decide what research they spend it on and which jobs are created. And that's a bad thing, it's a threath to democracy.
> Why shouldn't a billionaire be capable of starting a genetics lab to fund cancer research and pay for it in cash, if they are so inclined?
Well, why should they? What if instead of a genetics lab, they want to start a flat earth research center? Or a think tank to influence policy in their favor?
> Why shouldn't a billionaire be capable of starting a genetics lab to fund cancer research and pay for it in cash, if they are so inclined?
The answer might be "they should be able to"
But are you open to the possibility of the answer being "Despite the apparent potential benefits, it isn't beneficial overall to society or humanity to have extremely rich individuals starting research projects, and perhaps not beneficial overall to even have extremely rich individuals at all" ?
That's terrible. Suppose you want to go some amount of social good that will cost you $15M. Let's say. Develop a new drug. Maybe you want to do something crazy, like don't patent it. It's clearly great for society. But nobody will give you money to do that. Your only recourse to do it is to amass wealth yourself and fund it personally.
Now you have a created a society where that sort of social entrepreneurism is impossible.
If this good were “clearly” great for society, they wouldn’t have trouble forming a conglomerate towards achieving it. We can use the wealth that isn’t sponged up and locked away at the bottom of the sea for such initiatives.
Society has had enough of ostensibly singular “great persons” inflicting their idea of the greater good on the rest of us in exchange for love, respect, and money. The rest of us have to earn those three.
> a worker owned economy - in which businesses are democratic institutions governed by the people who do the work involved
A few notes... another way to make the economy more worker owned is to have a a portion of the shares of companies held by public entities, which then use dividends for a basic income. Public investment in companies like this could also be a way of incubating industries.
Another note: the biggest problem with businesses being democratic institutions is the pace at which decisions can be collectively made. This is an information systems problem that can be solved by software. Instead of voting for representatives who make decisions, we need an institutional programming language, and people can vote directly on implementations of modifications to this institutional code that defines every institution. Votes are essentially approvals to a PR. No need for intermediaries to misinterpret voters' intentions.
I don't have a problem with someone being a billionaire per se. Assuming, of course, the wealth was earned without worker exploitation.
However, I do take strong offense to politico-economic systems where the billionaire has more political power than a poor person. In the current system in almost every country, both individual super rich people and collectively the top 1-5% have enormously more political power than the remaining people. The system much be changed.
It seems likely that the only way to become a billionaire is through worker exploitation, collusion, cheating the system through tax evation and asset laundering, etc.
I think politico-economic interference is the crux of the problem.
For example, someone with $10 million are trying to maintain their lifestyle, they want to know what stocks, bonds, and certificates, and real estate to invest in.
Someone with $100 million are trying to leverage through venture capital, joining corporate boards, owning platforms, etc.
Someone with $1+ billion will find that the most cost effective way to keep and gain wealth is buying lobbyists, campaign donations, starting and controlling some non-profits that have tax and spending incentives, getting favors by giving politician's kids high profile jobs, and any other innumberable political grift that maintain their wealth status and that only really work at that scale.
I wouldn't care if billionaires were just hoarding some money. But they are not, and all this while they pay bad wages and have even shoved off the cost of training for their jobs onto society and the labor force who have to speculate and pay for their own training.
I've argued we should combine this with a move towards a worker owned economy - in which businesses are democratic institutions governed by the people who do the work involved.
Let folks keep their wine and art collections. Limits need to be placed on ownership of productive assets.
Employee, consumer, or even municipal ownership of firms would be a natural consequence of such a limit. No other way to offload assets fast enough, especially since the usual sources of capital would be under the same limits.
Any solutions that are in conflict with human nature will never be successful. Ambition and envy are basic human traits. At a deeper level, we are beings that measure everything (including light, sound, smell, touch and taste) by way of comparison.
Communism fails because no one has anything left to aspire to and everyone is therefore equally miserable.
Communism fails because giving everyone a voice in central planning can't scale up to an economy of millions of people. It requires a degree of central planning that permits too much corruption. The only known vaccine against corruption is high civic engagement. Every society has a given level of civic engagement; and thus a given maximum level of central planning before corruption becomes intolerable. No known large society has a high enough level of civic engagement to support the amount of central planning required by communism.
Communism works just fine for small groups (<10), and passably up to a few hundred (e.g. kibbutzim). Your argument would apply equally well at those scales, but mine doesn't. Full disclosure -- there are other arguments that contradict mine while still differentiating these cases.
Of course it doesn't super matter, because this proposal (though not a great idea) isn't communism and communism reliably fails anyway at the scales most people mean.
So are compassion and generosity. And contradiction.
The role of systems in society should be to oil the pathways for the better parts of human nature to come forth, and make the other traits less convenient.
I agree wholeheartedly with this concept. I wonder if the most realistic way to do it is to hardcap inheritance. As much as I'm uncomfortable with the power hoarding with the Bezo, Gates, Musks of the worlds, I'm much more uncomfortable with their hundred great grandchildren still being the most powerful group on the planet. An honest meritocracy type should even be able to get behind that. Bezos built something, his kids were just born into it. Cap their total inheritance at $15M and call it a day.
Because if not, people with insatiable appetites will simply seek control of those corporations rather than direct control of piles of money.
Personally I'm an advocate of the exact opposite of what seems to be proposed here: controls on corporate size rather than individual wealth. Living cells don't grow without bounds; at a certain point they get too big and are forced to divide. Simply imposing a tax on corporate size (not a limit) would accomplish this.
Industries where massive size is simply unavoidable (e.g. passenger airplane manufacturing) would simply pay the tax; any economic distortions can be nulled out by reducing the industry's VAT rate in proportion to average size-tax paid by that industry. In all other industries smaller competitors would have the persistent advantage of lower tax costs, allowing them to eventually undermine the bloated colossuses.
Yes, I think you could make the case that entities of any sort — corporations or individuals alike — should be allowed to exceed the threshold only if they’re under some kind of democratic control. And obviously that’s not a get-out that individuals can use.
Will you cap military spending? Beyond the side people take there is some human natural tendency to power that cannot be artificially capped or if it you try to artificially cap it, there is a flow with a lot of pressure that go somewhere else.
This supposes that there's some naturally-right size for a corporation to be
No, in fact, it doesn't. Please re-read the comment you're replying to.
There is no cutoff, limit, or threshhold. It doesn't prescribe a naturally-right size any more than a graduated income tax "prescribes a naturally-right amount of income".
Productive wealth is a good thing. It's what made our current society possible. Unproductive wealth is the real devil, the hoarding of inelastic goods like land, gold, and oil.
I strongly prefer a society which permits the existence of Jeff Bezos over one which does not. Of course, more strongly than that, I prefer a society which taxes inelastic goods and negative externalities and returns that wealth to the public over one which does not.
Wealth, at least the way we measure it, is inextricably tied to modernity. The system you say is a "good thing" is literally speedrunning the destruction of our biosphere. I think you'd be hard pressed to find a system more effective at destroying our world. What many see as prosperity, is irreconcilable with sustainability. I find that's an uncomfortable thought.
> Wealth, at least the way we measure it, is inextricably tied to modernity.
Only in the sense that modernity produces a lot more wealth than any other system humans have come up with.
> What many see as prosperity, is irreconcilable with sustainability.
No, it isn't. What might be is allowing people to accumulate wealth by playing zero sum games, siphoning wealth out of other people's pockets into their own, instead of producing more wealth.
I agree with you, but I think what most people fail at is applying higher-order logic. Yes it is nice that private citizens have Jeff Bezos levels of wealth instead of monarchies or plutocrats, but at what cost? Most people are just unwilling to keep thinking about opportunity costs beyond the obvious.
It's not a difficult problem to reconcile capitalism and sustainability from a technical perspective. Just a question of political will.
Carbon taxes. Water prices reflecting scarcity. Compensating people living in rain forests to not cut down their trees.
Capitalism is still the best tool we have for setting prices and incentivizing efficiency. Just needs to be guided to place appropriate prices on externalities.
You have a lot of faith, it seems, in the ability of the already rich to somehow make better decisions (by some metric) than an arbitrary political process. I don't mind if Jeff Bezos the person exists, but I have no reason whatsoever to want him to have control over the scale of resources and decision-making that he does.
> You have a lot of faith, it seems, in the ability of the already rich to somehow make better decisions
Not at all. A large fraction of the "already rich" did not get their wealth by productive efforts. They got it by convincing other people to take the wrong end of zero sum trades, thus siphoning wealth out of other people's pockets into their own. Even in the case of Jeff Bezos, who has certainly created a lot of wealth through Amazon, it's also true that his own personal wealth is not entirely due to that productive effort; a significant part of it is due to Amazon playing zero sum games with its supply chain and its workers.
In other words, the real problem is not wealth accumulation, but wealth accumulation through zero sum games, or more generally through gaming the system instead of producing. (There was a pg essay on this years ago.)
> You have a lot of faith, it seems, in the ability of the already rich to somehow make better decisions (by some metric) than an arbitrary political process
A key advantage of leaving it to the rich is that when rich people fail, they tend to end up losing their wealth and power, hurting mostly themselves — while even a political process that isn’t being corrupted or gamed by someone powerful is badly incentivized to throw buckets and buckets of good money after bad, hurting lots of people.
Elon ruining Twitter is at least his own money. The California bullet train will be an unprofitable multibillion drain on the state for decades to come …
> You have a lot of faith, it seems, in the ability of the already rich to somehow make better decisions (by some metric) than an arbitrary political process.
I have faith that an Olympic athlete is a lot better about making diet and exercise decisions than I am.
I have faith that Mick Jagger is far better at crafting a new song than I am.
I have faith that Tom Hanks could make a far better movie than I can.
The issue here is the genericity if money. I think hardly anyone would argue that he shouldn't make decisions for Amazon. He is probably the best individual for this. The issue is that controlling Amazon also comes with the possibility of getting out of it and somehow be allowed to control vast amount of resources completely independent of it and possibly built decades or even centuries before Amazon even existed.
Much better to have a large number of wealthy actors deciding how to allocate capital than just one (the government). Certainly we can do with higher taxes for the ultra wealthy though. It's hard to imagine what one can do with 100 billion dollars that you can't do with 10 billion.....
>> Unproductive wealth is the real devil, the hoarding of inelastic goods like land, gold, and oil
How would hoarding of gold, in and of itself, be bad? Say someone goes out and works and makes money, and they take the money and buy gold coins and keep them in a safe, or fill up a swimming pool so they can dive into their hoard of gold like Scrooge McDuck. They are contributing to society, and to the extent they hoard gold, asking nothing back for what they have contributed.
It's like what Charlie Munger did. Made a massive fortune, spent his whole life doing it, had an amount of money that he could have used for extravagant spending, could have bought whole islands in Hawaii, could have bought politicians. But he didn't. He earned the money, earned dividends on the money, piled up all the money in a hoard. Then he died.
Charlie Munger achieved the vast majority of his wealth not by hoarding inelastic goods but by investing and reinvesting in dividend-paying stocks and bonds, virtual tokens representing liquid fractional ownership of productive enterprise. He can "hoard" those all he wants, and we all benefit from the greater levels of capital available to said productive enterprise.
Now, if gold or other precious metals are necessary for the production of desirable goods, the hoarding of such assets increases the price of those goods in a zero-sum fashion. Of course, I'd never want to deny someone the pleasure of swimming in a pile of gold coins like Scrooge McDuck. I'm just saying that they shouldn't be able to profit as much off of keeping the pile locked away in their mansion. Rather, they should repay society for its losses in the form of a land value tax.
Hoarding gold isn't inherently bad, but many super rich people who arguably don't deserve nearly as much wealth as they have (worker exploitation, buying politicians, inheritance money, etc.), especially when juxtaposed with the terrible wealth inequality gap that they have the greatest ability to amend (through not exploiting, donating wealth or being taxed, not buying politicians to favor them, etc.). If everyone had a good baseline of living and politicians won't be bought to revert things, then no, I don't see a major issue with gold hoarders. But that's not the world we live in today.
This is basically Georgism: a tax on idle assets like land paired with very low or non-existent taxes on income and capital gains. Land value taxes would be on the land only and not things like buildings on it, so this would heavily incentivize maximally efficient use of land.
I'm generally a fan though I would also add pollution taxes and short term capital gains (gambling) taxes.
> This is basically Georgism: a tax on idle assets like land paired with very low or non-existent taxes on income and capital gains.
Ah, so you've seen the cat! Yes, this is precisely what I was getting at.
> I'm generally a fan though I would also add pollution taxes and short term capital gains (gambling) taxes.
The former is known as a Pigouvian tax[2], and I yearn for such taxes with no less of my heart than I yearn for land value taxes. The latter, however, seems almost completely unnecessary. Why not allow people to gamble on noise? And if they're making a profit, it's more likely than not that they're adding signal and contributing to price discovery, along with providing short-term liquidity to all market participants! I don't mind anyone getting paid for that.
> a society which taxes inelastic goods and negative externalities and returns that wealth to the public over one which does not.
The problem is that this kind of society, even if we assume for the sake of argument that it would be preferable, is not really achievable politically. The only way to implement it is to have a government that has the power to coercively tax people, and all history shows that governments will not use that power to redistribute wealth to the public at large; instead they will use it to enrich themselves and their preferred special interests.
But it’s not productive wealth is it? It’s just stock. It’s Locked up value that he hordes like a dragon. That money isn’t actually being used to generate anything. Even when it is spent, it’s just financial products that generate money through financial transactions instead of actual goods and services.
This has been the case since the 1980s when capital gains started being taxed below income, and the carried interest loophole was created. In fact, this is a well known economic phenomenon. Some would go as far as to say that it is an intentional outcome of the policy.
In the end, the problem with Bezos and the rest of the oligarchs is the same problem with monopolies, it’s a command economy. Only instead of being dictated by some unelected government bureaucrats in a totalitarian state, it’s a a bunch unelected rich dudes with dreams of a totalitarian state.
> But it’s not productive wealth is it? It’s just stock. It’s Locked up value that he hordes like a dragon. That money isn’t actually being used to generate anything.
Oh, but it is! That value isn't locked up, it's invested in the company. That investment raises the level of capital available to the company, allowing them to hire more employees and offer more goods and services. That's all real value for real people, and yes, if it works out, capitalists get paid for making it possible.
We already live in a world where one can own the means of production. The likes of Vanguard and Robinhood broker access. With a few clicks, you too can become a more productive capitalist.
> the hoarding of inelastic goods like land, gold, and oil.
What do you mean by "hoarding"? I don't think any living person owns enough land, gold or oil to represent even tiny percentage of the overall market. The whole Russia, for comparison, owns 12% of oil market. So if you personally owned all the oil in Russia (by any measure an achievement far beyond the wildest dreams even of the richest Russian oligarchs, who still have to share among many others) you'd still be just one of the players. So I don't think those mystical "hoarders" really are as scary as you seem to think they are.
Just because hoarding is popular doesn't mean it hurts society any less. We all pay for the inefficiencies it produces, whether or not it's distributed. (Granted, distributed hoarding is better than centralized hoarding as demonstrated by the likes of De Beers et al.)
> Unproductive wealth is the real devil, the hoarding of inelastic goods like land, gold, and oil.
They're not wealth if they're hoarded. Undeveloped land, or gold and oil in the ground, are no use to anybody. They're only wealth if they're used. And that requires lots of productive effort to develop the land, or to get the gold and oil out of the ground and into productive use. I agree that unproductive wealth is the real problem, but we need to be careful how we define it.
Maybe I'm getting my terms mixed up, but wealth includes anything with value, no? So long as somebody else wants to develop that land, or mine that gold, or tap that oil, it is wealth. At least, that's my understanding.
"Funny" things will happen, when the labor factor is removed from the three factors of production by AGI. ~Jeff can finally have the planet all for himself.
Indeed, but only insofar as he can accumulate military power. Relevantly, incompletely taxed land ownership is a means of renting such power from the state, hence my gesturing toward a land value tax and universal basic income.
My take becomes a lot more interesting when you consider that only 77 million Americans own land[1] while more than double that number, 158 million, own stocks[2] (and millions more own other elastic liquid assets).
Yes, it's a wildly popular and literally ancient meme that land ownership is the path to wealth, but people aren't stupid. When the structure of the economy changes, human behavior follows. Current landowners don't even get screwed over, they just stop accumulating additional wealth from hoarding land. More likely than not, they'll sell that land for roughly whatever it was worth when the tax came into effect to enterprising developers who will buy it and attempt to turn it into something more productive for a profit. After all, land value taxes only apply to the space occupied by the land itself, not any improvements on that land like apartments or offices. Coupled with zoning reforms, we'd see apartment complexes replace single-family housing and train stations replace parking lots as suburban sprawl transformed into walkable paradise.
What things of importance has Bezos done? End world hunger? Or are we celebrating the death of local stores and malls? What about a society that prevents kids from starving instead of making bombs and satellites for world wars?
Bezos' AWS made cloud computing viable, leading to the last two decades of economic growth without per capita energy consumption (due to datacenter energy efficiency).
Bezos' Amazon lowers the cost and availability of goods of all kinds drastically, enriching everyone (and especially the poorer among us).
The State makes bombs and drops bombs, not Bezos. Bezos deploys capital in ways which have proved to fill market needs. Markets are people. His money is meeting the needs of the people while taxes build bombs.
Society has collectively voted that Amazon massively improves their lives. If they didn't think so, they'd still be choosing to shop at Sears and Kmart and hosting their software on HP enterprise servers in a musty office basement.
That's all the clear and evident result of the market system which is very democratic. People vote with their dollars every day. The winners of these billions of daily democratic votes rise to the top and losers die out.
He built a company employing over a million people, created novel goods and services, including services my job depends on (AWS).
The wealth of a man like Bezos isn't a pile of gold he wallows in like Scrooge McDuck, it exists in his shareholder control of a vast set of companies full of employees and doing productive work. These companies would not exist without his ability to identify new markets, build efficient companies, and raise capital and deploy it effectively.
Take away the ability to do that, and who is going to found the new companies? Who is going to fund and control them? Who is going to identify the new goods and services of the future, and make them happen?
There is an alternative, and that's run the economy as a bureaucratic extension of government. Run companies as extensions of government departments and place economic planning under political control. It's been tried over and over.
The problem I have with extreme, gratuitous wealth, and the inequality that creates it, is that it is fundamentally anti-democratic. It is well known by anyone with a pulse that money = political power, which means those with the most money, have the most political power, and given how just how much wealth so few people in the world have now, an infinitesimally tiny fraction of the population of most democratic countries have essentially entirely captured the political apparatuses of the countries in which they reside. Meaning the interests of the majority of the people in most countries are no longer being represented by their elected officials, instead the people being elected solely represent the interest of wealthy elites who can afford to make huge political "Donations" and pay lobbyist's salaries.
I've said it before and I'll say it again, but one of the most effective changes we could make in the world is to get money out of politics, as its the only real way democracy can be put back in the hands of the people.
Well said.
I'm reminded of Professor Lawrence Lessig (of "Creative Commons" fame), whose staunch belief is that in the U.S., in order to make progress on any of the big-ticket problems we all face, we have to Fix Congress First. See https://en.m.wikipedia.org/wiki/Change_Congress
Reducing the influence of $ in politics is at the heart of the matter.
The relationship between money and political power is vastly overestimated.
In the US, the mega billionaires are hated in Washington by left and right alike. Bloomberg spent a fortune on his own campaign and didn't win a single state in the primaries.
Even if you look abroad, the billionaires are not the ones with political power. In places like Russia and China, billionaires have to suck up to the politicians or they risk getting disappeared, disbarred, or thrown from windows.
No, people don't know this. The degree of economic and historical naiveté has really skyrocketed in recent decades.
"Let's just try a planned society one more time, THIS time will be different, look how nice and kind we are!" is a perfectly reasonable statement to many educated people today.
It's really an indictment of the education system.
The reality is, we are planning our current society. It's just wrapped up in "markets are the natural order" rhetoric to obfuscate the fact that our current outcomes are intended.
You are mocking people using a false dichotomy. Complaining that some individuals shouldn't be able to control trillion in wealth don't imply a push for centrally planned economies.
In my Former Soviet Country, this is a fairly common thing that (sensible) older generation intellectuals remind to Gen Y/Gen Z lefties. There was a short period of "dude, communism is quite hip" in some circles roughly a decade ago, but this seemed more like an overblown, cynical nostalgic game, because we still have Soviet era artifacts lying around everywhere.
As of today, I think Russia's idiotic invasion to Ukraine has destroyed those mind-games of a functioning society with very strong central planning. Even if it might truly include thoughtful, interesting ideas in countries that by now have a long, unbroken tradition with democracy, I guess people of the former Soviet Bloc are extra careful these days. YMMV, of course.
Organized by an employer, capital, and management. The orchestration, decision making, done well, is the difference between a highly valuable well functioning company, and dysfunctional paralysis. There are now multiple examples in history (pre-1989 Poland, Soviet Union, DPRK, etc.) that show the communal ownership of industry by labor does not create a high standard of living, enabled by plentiful goods, services, and innovation.
Look at each valuable item that you use often, now look up the salary of the leader of the company that made it.
Edit: You wouldn't have that item without that compensation. This should be more traumatic than people make it out to be. You wouldn't have your iphones, twitters, facebooks, vr goggles, steams, ikea tables, etc.
They're actively destroying jobs at this very moment, not creating them. If I had a nickel for every "we're making record profits, oh and we're also laying off 10% of our employees" announcement, I'd be a billionaire.
Your usage of the word "hoarding" implies a Scrooge McDuck view of wealth where its just stashed away in some vault - never put to use. Yet nothing could be further from the truth.
This is the same mistake Lawrence Van Dough makes in Richie Rich. He assumes the massive vault must be full of gold bars and diamonds, the wealth of the family. But it's not. It's invested in banks and stocks etc. The money is not just sitting there, it's producing other activity in the economy.
As I understand it, very few entrepreneurs ever said “this is interesting but if I can’t be a billionaire what’s the point?”.
Which are the examples driven by extreme wealth (note: not just regular 1%er wealth and not people who became extremely wealthy - I mean people who expressed that the reason they created something was because they knew it would make them extremely top-0.01% wealthy)?
I had a lucky exit and no longer need to work. I now only consider working on something if it could increase my net worth by an order of magnitude or so — because if it won’t make me a billionaire why bother working?
I’d rather do art or open source or go fishing.
(That’s not quite what you asked but I don’t know how many actual billionaires will read your comment so figured I’d chime in — to me it doesn’t seem unreasonable that calling wealth would change what people work on and how much they produce.)
Are you suggesting Edison would have invented everything he did if he wasn't allowed to get rich? You chose an extremely funny example if that's what you're trying to say.
Edison was famous for caring about money more than other inventors. One of his most famous quotes was “Anything that won't sell, I don't want to invent. Its sale is proof of utility, and utility is success.” The guy helped found some of the largest companies of his era and died as one of the richest men in the world.
Can't wait to replace starlink with a new take on back yard furnaces. This is just a re-marketing of the same socialist ideas that have empirically failed every time.
People with positive inability to create wealth self-appoint to control the people that have demonstrable ability to create wealth. Doing so is the only way for the former to end up in control of wealth, again because they are incapable of generating it themselves.
It's a bit amusing that no one about the commie paradox - the group of people that profess the greatest ability to central plan and redistribute wealth is entirely devoid of individuals with a track record of creating wealth. A reasonable person would expect a strong correlation there.
There’s a lot of comments in here straw manning a book that I would guess very few have actually read. I don’t know if it’s a good argument or not but I’m sure the author is intelligent enough to have considered incentives and the case of central planning in the USSR and it’s not dunking on the author to just blindly bring these cases up as if they disqualify their whole argument. If this three paragraph summary of a 300 page book is so enraging then there’s maybe some deep seated biases to confront first.
Approximately no one commenting here has read the book; it's only been out for a day, and while I'm a big fan of "actually read the fucking article before commenting", expecting people to purchase and read an entire book before commenting is a bit much.
IMHO this is a bad submission; not because the book or the premise of it is good or bad, but because all most of us can do is discus the title and (very) brief premise.
Yeah that’s a fair point. It would be much more valuable to at least wait until someone in the world has had a chance to read the book and post a more detailed review of it. As it stands right now there’s nothing to talk about now other than the boogeymen we invent in our mind of the people who have the opposite stance on this than us.
I honestly wouldn’t be surprised if someone involved with marketing the book posted this knowing that it would provoke some kind of response from the community.
We should place a hard cap on political ambitions like these. These utopians will be the end of us with their ridiculous schemes involving always what other people should do.
I don't understand why we celebrate the (false) utopian ambitions of the rich who very much make decisions for other people - coercively too bc we need to eat (and they also use lawsuits, media, govt, and assassinations if you cross them).
I didn't say "ban the idea". I said "ban the ambition to control the lives of others".
The best counter to these jumped-up mini-Mao's is to spread the power far and wide; to have lots of little decision-makers rather than a few grand ones; to have those little decision-makers make tons of small but important decisions every day, rather than trusting everything to one election every few years.
When you say "billionaire utopian" a couple of people spring to mind:
- Bezos
- Musk
- et al
These can be removed by market power, even during their own lifetimes. I bet you anything that in a generation or two, their fortune will be mostly dissipated.
The vast majority of rich people are much less rich than these two; their money will dissipate even quicker. Most of them made their fortunes in their own lifetimes; many will lose it in the same timeframe. They have to keep performing economically (work + investment) to keep their money.
But: I will also bet you anything that in a generation or two, the state will be larger than it is today, and will have assigned to itself more rights and prerogatives, and will somehow have inserted itself into our daily lives in an even more intimate way, whether anybody likes it or not.
Readit News
I’m not advocating high rates as good for the poor; I’m championing shaping the yield curve with a market mechanism. It might be too late for that to be anything other than disastrous though, after years of addiction to funny money.
There is an official policy that prices will go up exponentially, controlled by a tiny committee who implements the policy by, effectively, money printing. The official justification is a just-so story with no compelling evidence that I've ever seen. We seem to have gotten there because politicians don't like sound management any more than anyone else and just borrow and spend until the money runs out. And the outcome is asset owners get an enormous leg up over everyone else and the biggest asset owners get privileged.
Given the level of this-sounds-crazy in the policy mix there should be much better justifications for all this policy than people accept. We should routinely be seeing actual studies by real economists justifying this madness. It looks like trash policy.
Any excuse is good to raise the price if some people really need your product and it doesn't jeopardise your demand enough. (This is called demand inelasticity.)
No price fall is needed or done when the excuse goes away.
If you control supply side sufficiently, you can also use that to further raise prices and keep them high. Thus equilibrium economics efficiency arguments fail.
Housing has limited but highly inelastic demand. So does food, water, healthcare, energy, fuel. Some of these cannot be substituted easily either.
And the smarter capitalist to get maximum profit will do anything to make this demand yet more inelastic by reducing choices, especially away from their control. Be it by monopoly, cartel, tacit cartel, hostile takeovers, PR to bury options, government intervention, over or underregulation...
Assets are liabilities unless they're directly in demand or are actively capital (as in used to make things). For example, having houses nobody can buy that will disintegrate is a liability. It's even clearer with office buildings which are a bit more elastic in demand. Unless you control most housing and can thus enhance relative demand, of course...
The justifications for current capitalism are very vacuous based on willing misinterpretation of it. Even ignoring the whole monetarist view which is a second order misinterpretation.
For people that might argue with this statement, I’d highly suggest reading the book The Panic of 1907.
And if you’re wondering I’m bringing up a book about 1907 instead of 1929, then that should lead you to go read the book.
"In 1907 there was a financial crisis. We learned our lessons and created an institution to prevent the next crisis. So, the next time things went south in finance, in 1929 there was no crisis. There was a catastrophe instead."
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Fiscal policy is the only tool through which equity can be managed. Monetary policy is pointless.
A dollar today is always going to be worth more than a dollar tomorrow.
I've argued we should combine this with a move towards a worker owned economy - in which businesses are democratic institutions governed by the people who do the work involved.
But either of these changes on their own would do _substantial_ good. Going to make a note to read this book!
So you can only have $15mil of assets? But your partner can have $15mil too, as can your kids, and parents. And if that's not enough, you can still try to hoard extra wealth in easier-to-hide forms - whether it's physical gold, bitcoin, art, fine wines, etc.
Or worse still, the super-rich will realise that they can spend many times the wealth cap per year consumable/disposable items (so long as they stay under the cap, or get back there by year-end), and become more wasteful. "Might as well spend a few million on a private jet, if I don't, I'll hit the wealth cap!".
> Or worse still, the super-rich will realise that they can spend many times the wealth cap per year consumable/disposable items (so long as they stay under the cap, or get back there by year-end), and become more wasteful. "Might as well spend a few million on a private jet, if I don't, I'll hit the wealth cap!".
This is a very interesting point! I'd worry less about rich folks spending to be below the cap (that money re-enters the economy), but rather evasion by sending money back and forth between a small set. Clearly evasion would need to be monitored.
To be fair I don't know your wealth at all but its just an observation I've had from talking with others about this. The end result of this would be to make these people some of the wealthiest in the country by dragging the wealth curve to just above their level. It sounds like a moral hazard to me.
I haven't observed that, and it's very unlikely the GP is a "notch" below $10-15 million.
I bet you've discovered the cause of this effect. I suspect we're seeing people who live comfortable lifestyles say "this seems about right" and then hedge a bit.
This was on full display back in 2017-2018 when tax code was changed to limit the amount of State and Local taxes (SALT) that could be deducted from your Federal tax liability. The original SALT deduction, before the change, clearly benefited the wealthy, with large mortgages and living in high-tax (read: expensive) areas.
Cue articles like this one [1], which shows just how out of touch the wealthy can be:
> estimate the tax law’s impact on the value of a theoretical house in the New York City suburb of West Orange, New Jersey, purchased for $800,000 in 2017 by a theoretical family with a $250,000 annual income. Those home value and income numbers are very high by national standards — but middle class by the standards of large parts of suburban Essex County.
In 2017, $250K/HHI was in the top 5% of the entire US. Someone living in a house that cost 3X the median house, in one of the richest areas of the country, making more than 95% of everyone else considers themselves 'middle class'.
[1] https://www.propublica.org/article/trumps-trillion-dollar-hi...
I'm a tech worker in the public sector.
To be blunt: tax me more, please.
It would make for better discussion if these social justice warriors were at least honest about what they actually want.
Similarly any place on the side of a hill, a cliff, a beach, ... You're unlikely to ban such places (all buildings 1 story?) Even if you managed that they're the house on the quiet street and the loud house next to the highway/trainline/airport
You could try to make such places merit based but that only turns into a different kind of bribe and cronyism. Money is at least, somewhat obtainable by anyone. Plenty of people were not rich and became rich, maybe by luck, but at least it's a higher rate of churn than central authority has ever been.
It's not really all that uncommon for a company with a sole owner or a partnership to be worth in excess of $15 Million.
Wouldn’t a tax system that steeply ramps up, includes property and tends to it’s loopholes (family trusts, property etc) achieve most of this?
Where's the empirical evidence that such a cutoff benefits society as a whole?
> I've argued we should combine this with a move towards a worker owned economy - in which businesses are democratic institutions governed by the people who do the work involved.
I like the German system of giving labor a board seat. We should try that first before burning our entire economic model to the ground and starting over, based on a gut feeling with no hard evidence to support it.
I also like the sound of the German system.
> Because that's the point at which you have enough wealth to live a comfortably middle class lifestyle for the rest of your life
15M is far from middle class by any measure. 15M affords you a big city place, a place for winter holidays, and a place for summer holidays. With still left to have spoiled little kids (and possibly spoiled grand children).
Also, 15M is not static money. If you have that much money you will certainly gain an income from just having that much money.
While I'm sympathetic to this ideal, I don't think it works. All you'd do is add all the inefficiencies of politics into business-level decision making. Democratic processes should be reserved for governing shared resources, like water and air, where independent decision making has pathologies, and independent hierarchical systems are good for optimizing efficiency and value for all other goods and services. We just have to ensure there's competition and fairness for good outcomes.
While I'm sympathetic to that line of thought, I feel like it ignores the reality that most business-level decision making is already inefficient and political. Where is the competition and fairness when a sustainable business is bought out, prices increased and development halted to wring out every bit of value, and then sold off for parts to competitors when no profit is left? There are so many common business practices that are actively hollowing out the free market.
The only change here is who limiting who allowed to own shares to people work are directly involved.
Do you think your standard of living under such a system would be lower, the same, or higher than it is now?
I think it would be much lower. I think most people will stop working when they stop getting paid. Some I guess would spend money as fast as they make it on experiences and services and other things that don't increase wealth. But I think many people who would in the current system have gone on to create billions in wealth would stop at $10 million and say, "OK I hit the number, moving on to the next challenge".
that would probably depend on whether you're being exploited by the current system
Imagine looking at a group of slave owners and slaves and asking a similar question with regards to ending slavery, and being all like "well let's hear both sides".
Why shouldn't a billionaire be capable of starting a genetics lab to fund cancer research and pay for it in cash, if they are so inclined?
Also almost all of super wealthy people's "wealth" is tied up in assets that are funding entire economies. This money is creating jobs, allowing for affordable loans, the money is working for many other people... It's not as if the money wealthy people have is just in physical gold coins in their swimming pools.
Starting land to fund cancer research is fine, but I don't see why we need billionairs for that? Multiple people can fund it. They are going to work alone in that lab either.
>It's not as if the money wealthy people have is just in physical gold coins in their swimming pools.
And it's not as if taxing that wealth makes that fact go away.
What's different is that when all that wealth is concentrated with a few people, they get to decide what research they spend it on and which jobs are created. And that's a bad thing, it's a threath to democracy.
Well, why should they? What if instead of a genetics lab, they want to start a flat earth research center? Or a think tank to influence policy in their favor?
The answer might be "they should be able to"
But are you open to the possibility of the answer being "Despite the apparent potential benefits, it isn't beneficial overall to society or humanity to have extremely rich individuals starting research projects, and perhaps not beneficial overall to even have extremely rich individuals at all" ?
Now you have a created a society where that sort of social entrepreneurism is impossible.
Society has had enough of ostensibly singular “great persons” inflicting their idea of the greater good on the rest of us in exchange for love, respect, and money. The rest of us have to earn those three.
A few notes... another way to make the economy more worker owned is to have a a portion of the shares of companies held by public entities, which then use dividends for a basic income. Public investment in companies like this could also be a way of incubating industries.
Another note: the biggest problem with businesses being democratic institutions is the pace at which decisions can be collectively made. This is an information systems problem that can be solved by software. Instead of voting for representatives who make decisions, we need an institutional programming language, and people can vote directly on implementations of modifications to this institutional code that defines every institution. Votes are essentially approvals to a PR. No need for intermediaries to misinterpret voters' intentions.
However, I do take strong offense to politico-economic systems where the billionaire has more political power than a poor person. In the current system in almost every country, both individual super rich people and collectively the top 1-5% have enormously more political power than the remaining people. The system much be changed.
I think politico-economic interference is the crux of the problem.
For example, someone with $10 million are trying to maintain their lifestyle, they want to know what stocks, bonds, and certificates, and real estate to invest in.
Someone with $100 million are trying to leverage through venture capital, joining corporate boards, owning platforms, etc.
Someone with $1+ billion will find that the most cost effective way to keep and gain wealth is buying lobbyists, campaign donations, starting and controlling some non-profits that have tax and spending incentives, getting favors by giving politician's kids high profile jobs, and any other innumberable political grift that maintain their wealth status and that only really work at that scale.
I wouldn't care if billionaires were just hoarding some money. But they are not, and all this while they pay bad wages and have even shoved off the cost of training for their jobs onto society and the labor force who have to speculate and pay for their own training.
100%
Employee, consumer, or even municipal ownership of firms would be a natural consequence of such a limit. No other way to offload assets fast enough, especially since the usual sources of capital would be under the same limits.
Communism fails because no one has anything left to aspire to and everyone is therefore equally miserable.
The best definition I've ever found is "altruistic and cooperative with an in-group, competitive and aggressive towards out-groups".
And that doesn't say much at all on this particular point.
Communism works just fine for small groups (<10), and passably up to a few hundred (e.g. kibbutzim). Your argument would apply equally well at those scales, but mine doesn't. Full disclosure -- there are other arguments that contradict mine while still differentiating these cases.
Of course it doesn't super matter, because this proposal (though not a great idea) isn't communism and communism reliably fails anyway at the scales most people mean.
So are compassion and generosity. And contradiction.
The role of systems in society should be to oil the pathways for the better parts of human nature to come forth, and make the other traits less convenient.
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> Ambition and envy are basic human traits
No they are not
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Because if not, people with insatiable appetites will simply seek control of those corporations rather than direct control of piles of money.
Personally I'm an advocate of the exact opposite of what seems to be proposed here: controls on corporate size rather than individual wealth. Living cells don't grow without bounds; at a certain point they get too big and are forced to divide. Simply imposing a tax on corporate size (not a limit) would accomplish this.
Industries where massive size is simply unavoidable (e.g. passenger airplane manufacturing) would simply pay the tax; any economic distortions can be nulled out by reducing the industry's VAT rate in proportion to average size-tax paid by that industry. In all other industries smaller competitors would have the persistent advantage of lower tax costs, allowing them to eventually undermine the bloated colossuses.
I think this has been tried already, unfortunately.
I don't see why that would be true, and abundant evidence that both large and small corporations add value to the world.
No, in fact, it doesn't. Please re-read the comment you're replying to.
There is no cutoff, limit, or threshhold. It doesn't prescribe a naturally-right size any more than a graduated income tax "prescribes a naturally-right amount of income".
I strongly prefer a society which permits the existence of Jeff Bezos over one which does not. Of course, more strongly than that, I prefer a society which taxes inelastic goods and negative externalities and returns that wealth to the public over one which does not.
Only in the sense that modernity produces a lot more wealth than any other system humans have come up with.
> What many see as prosperity, is irreconcilable with sustainability.
No, it isn't. What might be is allowing people to accumulate wealth by playing zero sum games, siphoning wealth out of other people's pockets into their own, instead of producing more wealth.
The reason is straightforward - people take care of things that they own, they don't take care of things they don't.
For example, which is threatened with extinction - ocean fish, or cows?
Are you more careful with your boss's money, or your money?
And so on.
Carbon taxes. Water prices reflecting scarcity. Compensating people living in rain forests to not cut down their trees.
Capitalism is still the best tool we have for setting prices and incentivizing efficiency. Just needs to be guided to place appropriate prices on externalities.
You have a lot of faith, it seems, in the ability of the already rich to somehow make better decisions (by some metric) than an arbitrary political process. I don't mind if Jeff Bezos the person exists, but I have no reason whatsoever to want him to have control over the scale of resources and decision-making that he does.
Not at all. A large fraction of the "already rich" did not get their wealth by productive efforts. They got it by convincing other people to take the wrong end of zero sum trades, thus siphoning wealth out of other people's pockets into their own. Even in the case of Jeff Bezos, who has certainly created a lot of wealth through Amazon, it's also true that his own personal wealth is not entirely due to that productive effort; a significant part of it is due to Amazon playing zero sum games with its supply chain and its workers.
In other words, the real problem is not wealth accumulation, but wealth accumulation through zero sum games, or more generally through gaming the system instead of producing. (There was a pg essay on this years ago.)
A key advantage of leaving it to the rich is that when rich people fail, they tend to end up losing their wealth and power, hurting mostly themselves — while even a political process that isn’t being corrupted or gamed by someone powerful is badly incentivized to throw buckets and buckets of good money after bad, hurting lots of people.
Elon ruining Twitter is at least his own money. The California bullet train will be an unprofitable multibillion drain on the state for decades to come …
I have faith that an Olympic athlete is a lot better about making diet and exercise decisions than I am.
I have faith that Mick Jagger is far better at crafting a new song than I am.
I have faith that Tom Hanks could make a far better movie than I can.
How would hoarding of gold, in and of itself, be bad? Say someone goes out and works and makes money, and they take the money and buy gold coins and keep them in a safe, or fill up a swimming pool so they can dive into their hoard of gold like Scrooge McDuck. They are contributing to society, and to the extent they hoard gold, asking nothing back for what they have contributed.
It's like what Charlie Munger did. Made a massive fortune, spent his whole life doing it, had an amount of money that he could have used for extravagant spending, could have bought whole islands in Hawaii, could have bought politicians. But he didn't. He earned the money, earned dividends on the money, piled up all the money in a hoard. Then he died.
Now, if gold or other precious metals are necessary for the production of desirable goods, the hoarding of such assets increases the price of those goods in a zero-sum fashion. Of course, I'd never want to deny someone the pleasure of swimming in a pile of gold coins like Scrooge McDuck. I'm just saying that they shouldn't be able to profit as much off of keeping the pile locked away in their mansion. Rather, they should repay society for its losses in the form of a land value tax.
I'm generally a fan though I would also add pollution taxes and short term capital gains (gambling) taxes.
Ah, so you've seen the cat! Yes, this is precisely what I was getting at.
> I'm generally a fan though I would also add pollution taxes and short term capital gains (gambling) taxes.
The former is known as a Pigouvian tax[2], and I yearn for such taxes with no less of my heart than I yearn for land value taxes. The latter, however, seems almost completely unnecessary. Why not allow people to gamble on noise? And if they're making a profit, it's more likely than not that they're adding signal and contributing to price discovery, along with providing short-term liquidity to all market participants! I don't mind anyone getting paid for that.
[1] https://www.henrygeorge.org/catsup.htm
[2] https://en.wikipedia.org/wiki/Pigouvian_tax
The problem is that this kind of society, even if we assume for the sake of argument that it would be preferable, is not really achievable politically. The only way to implement it is to have a government that has the power to coercively tax people, and all history shows that governments will not use that power to redistribute wealth to the public at large; instead they will use it to enrich themselves and their preferred special interests.
Recently there has been a down swing in willingness to fund new programs that redistribute wealth. But that could change.
This has been the case since the 1980s when capital gains started being taxed below income, and the carried interest loophole was created. In fact, this is a well known economic phenomenon. Some would go as far as to say that it is an intentional outcome of the policy.
In the end, the problem with Bezos and the rest of the oligarchs is the same problem with monopolies, it’s a command economy. Only instead of being dictated by some unelected government bureaucrats in a totalitarian state, it’s a a bunch unelected rich dudes with dreams of a totalitarian state.
It’s an unhealthy economy.
Oh, but it is! That value isn't locked up, it's invested in the company. That investment raises the level of capital available to the company, allowing them to hire more employees and offer more goods and services. That's all real value for real people, and yes, if it works out, capitalists get paid for making it possible.
We already live in a world where one can own the means of production. The likes of Vanguard and Robinhood broker access. With a few clicks, you too can become a more productive capitalist.
What do you mean by "hoarding"? I don't think any living person owns enough land, gold or oil to represent even tiny percentage of the overall market. The whole Russia, for comparison, owns 12% of oil market. So if you personally owned all the oil in Russia (by any measure an achievement far beyond the wildest dreams even of the richest Russian oligarchs, who still have to share among many others) you'd still be just one of the players. So I don't think those mystical "hoarders" really are as scary as you seem to think they are.
They're not wealth if they're hoarded. Undeveloped land, or gold and oil in the ground, are no use to anybody. They're only wealth if they're used. And that requires lots of productive effort to develop the land, or to get the gold and oil out of the ground and into productive use. I agree that unproductive wealth is the real problem, but we need to be careful how we define it.
If you’ve got property, as in, the asset most normal folks own end to end and drives their wealth - negative externality.
Interesting take.
Yes, it's a wildly popular and literally ancient meme that land ownership is the path to wealth, but people aren't stupid. When the structure of the economy changes, human behavior follows. Current landowners don't even get screwed over, they just stop accumulating additional wealth from hoarding land. More likely than not, they'll sell that land for roughly whatever it was worth when the tax came into effect to enterprising developers who will buy it and attempt to turn it into something more productive for a profit. After all, land value taxes only apply to the space occupied by the land itself, not any improvements on that land like apartments or offices. Coupled with zoning reforms, we'd see apartment complexes replace single-family housing and train stations replace parking lots as suburban sprawl transformed into walkable paradise.
[1] https://ubique.americangeo.org/map-of-the-week/map-of-the-we...
[2] https://www.fool.com/research/how-many-americans-own-stock/
- your mind on capitalism.
What things of importance has Bezos done? End world hunger? Or are we celebrating the death of local stores and malls? What about a society that prevents kids from starving instead of making bombs and satellites for world wars?
Bezos' Amazon lowers the cost and availability of goods of all kinds drastically, enriching everyone (and especially the poorer among us).
The State makes bombs and drops bombs, not Bezos. Bezos deploys capital in ways which have proved to fill market needs. Markets are people. His money is meeting the needs of the people while taxes build bombs.
That's all the clear and evident result of the market system which is very democratic. People vote with their dollars every day. The winners of these billions of daily democratic votes rise to the top and losers die out.
Can you expand? What did Bezos contribute to society?
The wealth of a man like Bezos isn't a pile of gold he wallows in like Scrooge McDuck, it exists in his shareholder control of a vast set of companies full of employees and doing productive work. These companies would not exist without his ability to identify new markets, build efficient companies, and raise capital and deploy it effectively.
Take away the ability to do that, and who is going to found the new companies? Who is going to fund and control them? Who is going to identify the new goods and services of the future, and make them happen?
There is an alternative, and that's run the economy as a bureaucratic extension of government. Run companies as extensions of government departments and place economic planning under political control. It's been tried over and over.
I've said it before and I'll say it again, but one of the most effective changes we could make in the world is to get money out of politics, as its the only real way democracy can be put back in the hands of the people.
Reducing the influence of $ in politics is at the heart of the matter.
In the US, the mega billionaires are hated in Washington by left and right alike. Bloomberg spent a fortune on his own campaign and didn't win a single state in the primaries.
Even if you look abroad, the billionaires are not the ones with political power. In places like Russia and China, billionaires have to suck up to the politicians or they risk getting disappeared, disbarred, or thrown from windows.
"Let's just try a planned society one more time, THIS time will be different, look how nice and kind we are!" is a perfectly reasonable statement to many educated people today.
It's really an indictment of the education system.
As of today, I think Russia's idiotic invasion to Ukraine has destroyed those mind-games of a functioning society with very strong central planning. Even if it might truly include thoughtful, interesting ideas in countries that by now have a long, unbroken tradition with democracy, I guess people of the former Soviet Bloc are extra careful these days. YMMV, of course.
Edit: You wouldn't have that item without that compensation. This should be more traumatic than people make it out to be. You wouldn't have your iphones, twitters, facebooks, vr goggles, steams, ikea tables, etc.
Which are the examples driven by extreme wealth (note: not just regular 1%er wealth and not people who became extremely wealthy - I mean people who expressed that the reason they created something was because they knew it would make them extremely top-0.01% wealthy)?
I’d rather do art or open source or go fishing.
(That’s not quite what you asked but I don’t know how many actual billionaires will read your comment so figured I’d chime in — to me it doesn’t seem unreasonable that calling wealth would change what people work on and how much they produce.)
Edison was famous for caring about money more than other inventors. One of his most famous quotes was “Anything that won't sell, I don't want to invent. Its sale is proof of utility, and utility is success.” The guy helped found some of the largest companies of his era and died as one of the richest men in the world.
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People with positive inability to create wealth self-appoint to control the people that have demonstrable ability to create wealth. Doing so is the only way for the former to end up in control of wealth, again because they are incapable of generating it themselves.
It's a bit amusing that no one about the commie paradox - the group of people that profess the greatest ability to central plan and redistribute wealth is entirely devoid of individuals with a track record of creating wealth. A reasonable person would expect a strong correlation there.
IMHO this is a bad submission; not because the book or the premise of it is good or bad, but because all most of us can do is discus the title and (very) brief premise.
I honestly wouldn’t be surprised if someone involved with marketing the book posted this knowing that it would provoke some kind of response from the community.
The best counter to these jumped-up mini-Mao's is to spread the power far and wide; to have lots of little decision-makers rather than a few grand ones; to have those little decision-makers make tons of small but important decisions every day, rather than trusting everything to one election every few years.
Doubleplusungood crimethink?
- Bezos
- Musk
- et al
These can be removed by market power, even during their own lifetimes. I bet you anything that in a generation or two, their fortune will be mostly dissipated.
The vast majority of rich people are much less rich than these two; their money will dissipate even quicker. Most of them made their fortunes in their own lifetimes; many will lose it in the same timeframe. They have to keep performing economically (work + investment) to keep their money.
But: I will also bet you anything that in a generation or two, the state will be larger than it is today, and will have assigned to itself more rights and prerogatives, and will somehow have inserted itself into our daily lives in an even more intimate way, whether anybody likes it or not.