I also think it's worth calling out that his follow-up, "Capital and Ideology" in its latter sections includes several suggestions for counteracting the trend to increasing inequality. One of these is basically that _every_ person should have a windfall inheritance when they're in their early adulthood, which would give them opportunities to pursue education, try starting a business, or whatever else. And naturally, this needs to be funded by taxes on the very wealthy.
So he supports education vouchers and healthcare vouchers for everyone? Because that's what "wealth you can spend down for some specific purposes" is, in a practical sense. That's a welcome attitude, given that these things are often dismissed ideologically.
(Also, we generally want people to have some retirement income in their old age when they can't work, and the goal of letting young folks spend down their "inheritance" seems to be in tension with that.)
I think that muddies the water as much as saying that someone who supports UBI also must support foodstamps and housing vouchers. The point is pursuing greater _equality_. We are all heirs to a society that has produced enormous value; why should a small minority of kids get a huge extra unearned boost?
Purpose-constrained assistance is not _equal_ to inheritance, in that heirs to private wealth aren't generally subject to those constraints. Money that the recipient can choose how to spend gives greater freedom than assistance in that dollar amount. E.g. my understanding is a perennial issue with housing vouchers is that landlords often don't want to accept vouchers, so they are less effective than their face-value in dollars would be.
> why should a small minority of kids get a huge extra unearned boost?
That unearned boost is already available to anyone who manages to bequeath sufficient amounts of wealth to the next generation, and conversely becomes unavailable to those who squander that wealth instead. That doesn't really change all that much if you introduce redistribution: either way, there will always be plenty of kids who will spend the money foolishy, and forfeit that "extra boost".
It's a very hard problem to solve because it involves people's culturally ingrained attitudes; but being bequeathed a sizeable inheritance in the first place at least implies that one's attitude to managing wealth has already stood the test of time.
> being bequeathed a sizeable inheritance in the first place at least implies that one's attitude to managing wealth has already stood the test of time.
I don't believe so. At best it means perhaps your parents knew how to manage wealth. It doesn't imply the child inheritors will manage it well, or better than anyone else. At worst, it might simply mean the parents had so much wealth they were unable to spend it all before dying, and so some of it went to their offspring.
The USA tax code potentiates this. First $12m tax free, step up basis allow tremendous wealth to be bequeathed without financial penalty.
Trusts, when set up correctly, can do so as well.
Once inherited, the first $90,000 (married couple) of qualified dividend income is tax free. Plus, standard $29,000 (married couple) deduction means that the first $119,000 of investment income can be tax free. You will see the wealthy either try and start a company or not work. Why work a job where about 30% of your income is taxed when you can stay home and not work. If you inherit your parents' home, you can easily live without working.
Current safe dividend yields are about 6% so all it takes is inheriting $1.5m. There are 24 million millionaires in the USA so there may be quite a few that take advantage of this. When the wealthy start giving their children their inheritance while they are still alive ........
Currently, you can give your children up to a total of $12m combined in your lifetime, before taxes have to be taken out.
> That unearned boost is already available to anyone who manages to bequeath sufficient amounts of wealth to the next generation
> but being bequeathed a sizeable inheritance in the first place at least implies that one's attitude to managing wealth has already stood the test of time
I think twice in two paragraphs you managed to conflate the person leaving the inheritance and the person receiving it. The "unearned" part of the unearned boost is clearly only available to person receiving an inheritance, rather than the person who bequeaths anything to the next generation. A person being bequeathed an inheritance does not imply anything about that person's attitude or aptitude.
> why should a small minority of kids get a huge extra unearned boost?
This is what gives incentive. You do your best, next generation of your genes lives better. If you muddy that connection too much, you got 2 problems on your hands. Some leachers will try to freeride. And some people will stop earlier than they code since they don't see incentive to work more for little gain for their direct descendants.
IMO USSR was a great case study for this. Building wealth was very limited, especially in allowed ways. Thus many people just stopped caring. Do as little as you can to pass by. Drink your days aways. The state will take care of your and your kids basic needs anyway. If you work your ass off - there will be very little change to you and your kids. Unless everybody works their asses off. But turns out in such cases mass apathy wins. And society crumbles.
For the record, I do support free education. And it must be as high quality as possible. You don't want to waste talent because it was born in a poor family. But there needs to be plenty of incentive for that talent to do their best. And inheritance-heavy wealth structure doesn't ensure that either.
I didn't need education vouchers, I had a full ride off of my academic achievement. Money for effective therapy and stable housing, however...
The point of currency is the fungibility. Everyone has different needs, that (I'm told) no bureaucracy is equipped to manage. So, no, not vouchers. Cash. And then we focus on the social and communal aspects of people being equipped to make smart decisions with it.
People whine about "wealth distribution" day and night, but at the end of the day what alternative is there to combat the (continually increasing) concentration of wealth at the top? At some point there will have to be redistribution, in some form, and the sooner society comes around to that the better off we'll all be.
The alternative of last resort is always violent revolution[1]. Wealth redistribution is the olive branch.
There seems to be an open question among the wealthy and political class of how far inequality can go given the modern police state and effectiveness of technology in accomplishing the goal of maintaining or exacerbating the current political economy.
1. See historical populist grivences against aristocracy that result in social restructuring.
Overwhelmingly, violent revolution doesn't actually bring about the goals of the revolution. It just installs a new power structure with variations on all the old problems. Sometimes much worse.
So it isn't really a "last resort". It's more of a "well you didn't compromise, so now our choice is to burn the whole system down"
Wholeheartedly agree. For the peasants, revolutionary goals are rarely fulfilled. For the previous elite though, they rarely find continuity of power post revolution.
The sans-culottes didn't quite accomplish their goals(at least immediately), but Louis XVI among other elites didn't survive.
Toussaint Louverture et al didn't accomplish their goals, but the French no longer controlled Haiti.
Even Lenin and Trosky didn't accomplish their goals, but the Romanov didn't leave the Ipatiev House alive.
Like many conflicts, one side doesn't have to win for one to lose.
All true, which brings up the question how much better will the world be with a new elite. Also, maybe today’s generation of revolutionaries will do something different.
This feels true to me. So my question is - and I don't know the answer yet, though I continue to seek such - when do we, as a humanity, break this cycle? When, and how, do we override the greed impulse, the impulse for power and control and domination of others? When do we begin to leverage a superior cognitive capacity enough to gain true enlightenment and break free from the bonds of behaviour which, while necessary as we evolved, is no longer required, and replace it with an egalitarian perspective and an accompanying stewardship model of life on earth?
You don't. Biology is a weird and wonderful thing and all these behaviours are ingrained deep. You arent changing anythibg without likely making it way worse through unforeseen outcomes. What we have to do instead is harness these emotions for financially wiping out the weak wealth inheritors mich more effectively so that it is rare to get more than 3 or 4 generations of these people with no skill growing the pot. One generation of imbecile/useless person needs to be likely to wipe out the pot.This would take the form of such things as (but not limited to) drastically limiting the controls one can keep on inheritances through time so more money ends up in inheritors hands with no restrictions sooner, finding a way to make private equity mich riskier/more evemly allocated so that the expected return for rich people is lower (but skilled rich can still earn high returns), more effectibely limiting corporate market power abuse by more effectively breaking up oligopolies (dont have to go back to prerehnquist levels of trust breaking but need to jead back in that direction some), etc.
We are pretty much there already. The average person in a developed Western country is pretty much a billionaire when compared to the living conditions of even the wealthiest people in ancient history. It's only the impulse of greed and envy towards others that leads us to believe otherwise.
I'm always reminded of the video where one monkey is rewarded with a cucumber and one with a grape[1]. Certainly getting a cucumber is infinitely better than not having a cucumber, and yet the monkey protests.
Despite having higher cognitive functions, that impulse still exists and can only be suppressed for so long and so far. No one has infinite capacity to maintain what they see as unfairness indefinitely, especially when it seems that humans make their own rules.
Traditional responses see that as either good (which I think is your implication) or terrible, a la "bread and circuses" where people are too complacent to demand any real changes. I would say that the "average person" is a tricky model, here in the US there are people sleeping on the sidewalk, but they have smartphones in their pockets. Are they better off than a Roman emperor? I would say no.
Thanks for pointing this out. It helped me contextualize the argument.
It is a combination of "Other People Have It Worse Than You Do" but uses the past as a point of reference.
We could just as easy compare ourselves to our presumably better off future and say that we have it worse off than them so we deserve to improve things now.
Not quite. Some things are fundamentally restricted in supply - for example and most pertinently, decent housing where people need to live. It is hard to feel like a billionaire when you have to share cramped living spaces that take most of your income.
> Overwhelmingly, violent revolution doesn't actually bring about the goals of the revolution. It just installs a new power structure with variations on all the old problems. Sometimes much worse.
There are examples either way, and sadly you seem right.
I recently read but now can’t find a discussion around this that argued that extreme times promote extreme individuals. A violent revolution is clearly an extreme time and any leader that emerges is likely to have fought hard for their position.
There is an argument that Karl Marx provided a guide for the aristocracy to work out the point that inequality would provoke a revolution then back off slightly from it.
Like yes, but also no? The aristocracy no easier to organize than the peasantry. They, through individual self-interest, graze on the commons of wealth and power and are subject to its tragedies just the same.
I'd rather die some billionaires minimum wage security squad protecting his gold plated yacht than let some violent freeloaders take my shit and install some cuban-tier communist hell-hole where there's no incentive to produce even basic grain stocks.
Life expectancy rose to a multi decade (all time at that time?) record peak during the great depression in US and starvation was exceedingly rare. Even at one of its worst the outcome was remarkably robust against starvation.
How about we start with the largest wealth holding: property.
One individual can own an entire town and charge people to live there indefinitely. This gets passed via inheritance and no longer equates to the initial building value.
On a micro scale, the timeframe for owning investment properties should be limited. They provide a service, but over a long period of time the owner is simply a leech.
Wealth redistribution and making it easier for new businesses to enter markets and compete. These often go hand-in-hand; safety nets allow people to take risks, and new competition prevents markets from colluding and ceasing competition.
Apparently he improved the conclusion in his second book.
In the first one it was bittersweet as he only stuck to historical evidences and what he found was that the only periods of decreasing economic inequalities were wars.
For people against the wealth redistribution as a concept (whether it's UBI, better welfare programs, increased minimum wage, etc), what do you think the end-game looks like for continued growth in wealth inequality?
The only answer I can see is that your customer base shrinks as fewer people are able to buy.
Or you get violent revolution as the poor are sick and tired of being priced out of even being able to afford housing and they decide they have nothing left to lose.
The Walton family wealth, for example, is a capitalised stream of rents predicated on underpaying store staff and abusing market power with suppliers. That's a wealth transfer. That's redistribution.
The Duke of Westminster is worth $11 billion because his ancestor was besties with William the Conqueror (not william the earner).
These are wealth transfers and redistributions that, ideally, ought to be undone.
I don't have that connotation for the word and I'm not sure I can find support for it either.
If I have 5 objects and five people and I give one to each that's a distribution. If I give them all to one person, that's a distribution. If I start with the first distribution and concentrate all of the items to one person, creating the second distribution that's still the same distribution.
Roughly, literally, "to give apart", i.e., to break up a resource from fewer to more owners.
I'm a big fan of poststructuralism but social spaces generally require that people understand each other. We can't just go redefining words on personal whims unless the people you're communicating with have consented to be a part of that metatextual process. This isn't that kind of space.
Literally nothing in the definitions you're linking to mentions anything about owners. And the definitions given at points just re-enforce the ambiguity. Definition 5 is "To apportion (more or less evenly)." I think one could reasonably read "more or less evenly" to mean "either more evenly or less evenly" or "relatively evenly".
Definitions include "An apportionment by law (of funds, property)" and critically "The apportionment of income or wealth in a population" with the example usage "The wealth distribution became extremely skewed in the kleptocracy." I.e. becoming extremely skewed didn't mean it was no longer a "distribution" in virtue of being concentrated.
And especially in a space where lots of people have a technical background, we're very likely to be thinking of the wealth distribution explicitly as a probability distribution (also listed as a separate definition), _especially_ we've already used the concept of quantiles on that distribution. Englishing flexibly, I think it's totally reasonable for "distribution" to refer to either the function assigning probability mass, _or_ to the act or process of making such a function true.
People in this thread are mostly using this word in a reasonable way. You're the one seeking to redefine words by insisting that only an entropy-increasing change is a "distribution".
That's a lot of contortion to attempt a defiance of etymology. And anyway the conversation was about redistribution, that prefix of course demanding an additional contextual layer on which the word is applied. Trying to imply that in general redistribution should be ambiguous enough to be synonymous to concentration is firstly just muddying language to make conversation harder and second taking us further from the point of the conversation anyway. Since when is it in the interest of any discussion that "words mean things" becomes controversial?
Words mean things. This word doesn't mean what you want it to mean, either according to the other people in the thread you're interacting with, or the source you decided to cite.
Etymology is not the sole determiner of meaning. We can call an area on the moon a "mare", and know this comes from the Latin for "sea", but "mare" in the context no longer means "sea".
This word does indeed mean exactly what I want it to mean, you're cherry picking other aspects of the definition to somehow overwrite the original rather than to acknowledge that we both can be right in certain ways. I'm right about what this word literally means, you're right that carelessness wins the day when it comes to language drift.
> And naturally, this needs to be funded by taxes on the very wealthy.
This is the part where the math never works out.
If you look at the richest people, they have something like tens to low hundreds of billions of dollars. Which is less than the amount of money the federal government already spends every week. If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (and no new programs) for about a year, and then there would be nothing left for next year.
The funding for programs like that never comes from the "very wealthy" because there just aren't enough of them for that. It comes from the upper-middle class. Which is fine, but let's not delude ourselves that we can get there by only taxing Bill Gates and not your local cardiologist.
Except that they already pay kind of high taxes. These are the people who make six figures but don't have a personal full-time tax accountant to engage in international tax avoidance shenanigans. They're how the state and federal governments in the US together spend around 50% of US GDP.
So the problem isn't that we don't have enough tax revenue -- holy crap does the government have a large budget -- the problem is what we're spending it on. We should be spending less on the military and means-tested assistance programs and instead use the money for a UBI.
> This is the part where the math never works out.
I think this is a bit naive because you're considering money to be fixed and treating the system as a zero sum game. In terms of revenue, the US government gets ~55% from individual income tax and 12% from corporate, with a total revenue of 403B/yr. But also turning the "dial" on tax doesn't only affect the revenue. Every "dial" turn turns other "dials" but this doesn't result in a constant value across the system, even in a fixed instance of time. There are dial configurations which dominate other dial configurations but the system is insanely coupled. Neither this argument nor the "just increase taxes" argument is great because they do not capture the nuance necessary for an effective strategy. What that is? I'm not an economist, but I can tell you the system is rather complex and there's good reason we're all talking past one another and that's because we're solving different optimization problems and even when we recognize that we generally don't recognize that we're not agreeing on coefficients of terms nor what variables are at play. I think we need to first recognize the complexity of these issues and most of he time should kinda just shut up unless we're being clear that we're discussing to learn rather than teach.
Of the criticisms to Piketty, not having done the math isn't really one of them.
I don't have Capital and Ideology close at hand, so I can't check how he worked it out, but consulting some other sources:
- the top 1% in the US apparently have around $45.7T in wealth [1]
- there are around 22M people in the 20-24 age bracket and 23 in the 25-29 age bracket [2]
So suppose there are 5.5M people turning 21 every year. Giving them each $100k (yes, less than the Piketty proposal for the EU, but in the ballpark, and gives us round numbers) would cost $550B/yr at present. If this were funded as a flat wealth tax only on the top 1%, it would amount to around a 1.2% wealth tax, not accounting for evasion etc. So literally, 99% of the population could pay more in taxes, the 1% would be taking a hit, but honestly so long as long-term average returns are more than 1.2% above inflation, you could still have inter-generational wealth that gets bigger over time.
Of course, many would naturally prefer for a wealth tax to be progressive; the ultra-rich should pay a larger share than the pretty-rich. This would have the impact of shrinking long term dynastic piles of wealth, but not fully eliminating them, and reducing the impact on people at the low end of the 1%.
The top 1% of households in the US starts around $10M. That sounds like a lot, but consider it includes retirement accounts, value of a home etc.
For a couple in that bracket at about retirement age (and who might own their home and be expecting to retire on their savings), those people might be looking at a household income of $300-400K per year.
I don't know, but it seems pretty unreasonable to start hitting them with an extra $120K tax bill annually.
This is again the basic point that the other poster was making.
It's so much that if you make the median US income, you have to make it for ~300 years -tax free- to save up $10M.
It's 50 years, tax free, on a good developer salary.
It's so much that with 5% interest rate you can pay those $120k in tax and still get $380k a year, placing you among the top 5% wage earners in the US, while doing nothing more than own.
Is so much, that when I dream about becoming independently wealthy, the amount I dream of is half of it.
For people in retirement age it's even more obvious that it's a lof of money. Like, how do you even spend that much money before you die?
As you probably understand by now, I definitely don't think it's unreasonable to hit them with an extra $120K bill a year, because $10M is a lot of money for any individual, or couple, to own.
I mean, sure if you completely ignore investment returns; otherwise your numbers are bogus.
The “safe” rate of retirement drawdown is generally accepted as 4% because inflation, bad years in the markets etc.
In case it isn’t obvious, taxing wealth is basically taxing the older people in society, because they had more of a chance to accumulate wealth.
Hitting people at retirement with a 25% marginal tax increase is just wrong and an unworkable policy proposal.
Piketty’s proposal may work in countries with functional pension schemes, but not in the U.S. where personal wealth accumulation is necessary to extent a solid middle class lifestyle into retirement.
Use 4% then. You're left with 280k (400-120) a year. That's 9 times the median US income, and very close to being in the top 5% income. Not to mention that capital tax is usually lower than income tax.
Even ignoring investment returns completely, $10M is enough for anyone to live extremely comfortable the rest of their life, just using this money!
Taxing the very rich (as the top 1% is) is reasonable, also when they are retired.
You speak as if the money itself can't be used, only the returns. As if it's somehow 'not a lot of money' if it's not possible to live indefinitely on the capital gains alone.
But I agree that it's unworkable, but only because this is a powerfull group (wealth is power after all). I think it's completely unrealistic for that reason alone. But it's a good idea, and $10M is a lot of money.
Would the crudest flat rate scheme be unappealing to people just above the threshold to which it applies? Sure. I don't think anyone's seriously advocating for Bezos and the successful small business owner to be paying the same rate.
AnthonyMouse created a strawman to fight; getting from "very wealthy" to "only the top 100 billionaires" is kinda crazy. To use that to assert that the math just doesn't work on using a wealth tax to fund universal inheritance is kinda untenable.
I think "wealthier than 99% of people in a rich country" is fair to call "very wealthy" but I can see how others would differ. I also hope you can see how the person with >10M in net worth would not be happy to pay 1.2% but can likely swing it (and under this crude hypothetical, stops paying it if they fall to merely being richer than 98.9% of their peers), but that the 100k would be life-changing and transformative for young people.
Piketty's proposals for a wealth tax have varied over the years, but have at points in the past included 1% above 1M euros, 2% above 5M euros, 5-10% above 1B euros. He's trying to re-imagine a more equal society; the redistribution can't be small.
> the top 1% in the US apparently have around $45.7T in wealth
"The top 1%" mostly isn't billionaires, it's cardiologists and lawyers and programmers. It's people who labor for money, not people who inherited it. Most of that wealth is their homes and retirement accounts.
This is the problem I have with these proposals: They get sold as applying to dynastic wealth but in actual fact end up applying to many people who sacrificed years of their lives to go to school or start a business.
> So literally, 99% of the population could pay more in taxes, the 1% would be taking a hit, but honestly so long as long-term average returns are more than 1.2% above inflation, you could still have inter-generational wealth that gets bigger over time.
That's the point. There is no reason to use a wealth tax instead of the existing taxes that we already have unless you're going to use a confiscatory rate.
Existing taxes could -- and already do -- generate enough revenue to fund that kind of program, if we would stop wasting the money on less efficient existing expenditures.
But a confiscatory wealth tax would be self-defeating. It would generate less money, because it would give the wealthy a perverse incentive to spend rather than invest, depriving the government of all the future tax revenue on their investment activity -- which long-term exceeds the amount of the principal.
You have to get at the problem from the other end. What you want isn't to make it harder for wealthy people to make money, it's to make it easier for ordinary people to make money. Reduce barriers to entry so anyone can start a business -- and that business can compete with dynastic incumbents, and dethrone them. Increase competitiveness of markets so capital gets lower margins and more of the surplus goes to customers and workers.
Just taking the money doesn't fix it. You have to address the structural economic conditions that led to that result to begin with.
Taxing the very wealthy heavily isn’t intended to fund the state. That argument is a red herring. It should be done to reduce the concentration of power that comes with dynastic wealth, which corrupts society. Arguments to maintain our status quo are typically ideological.
Note also that Bill Gates is giving away a vast majority of his wealth for philanthropic purposes. So if you tax Bill Gates, it turns out you're actually taking mostly every cent of that money from starving kids in Africa and elsewhere. That's something to think about for sure.
The math doesn't work out by design due to favorably shaped policies. A sizable amount of wealth is hidden away extra-jurisdictionally or consists of intentionally undervalued assets or isn't captured in statistics.
Lots of very wealthy people keep wealth in tax shelters, but that reduces their tax burden, not their net worth. Bill Gates doesn't secretly have a trillion dollars.
> If you taxed the top 100 billionaires at a rate of 100%, it would fund the existing federal government (and no new programs) for about a year, and then there would be nothing left for next year.
The point to taxing billionaires is not that "the government needs their money to spend". The government will spend the money anyway regardless of whether it has it. The point to taxing billionaires is to even things out and nudge society to be more equal counter to market forces continuously concentrating wealth. I'd fully support a tax on billionaires where the money just gets burned in a furnace.
> The point to taxing billionaires is to even things out and nudge society to be more equal counter to market forces continuously concentrating wealth. I'd fully support a tax on billionaires where the money just gets burned in a furnace.
Then you're going about it the wrong way.
The main thing having billions of dollars gets you is the ability to choose who runs a large corporation. If you take away the money but not the corporation, all you're doing is transferring the power to run that corporation to some Wall St assholes instead of the founders. The corporation is still just as big and whoever is put in charge of it still has just as much power.
The thing that actually concentrates wealth is large corporations. The solution, then, isn't taxes, it's antitrust and fighting against regulatory capture. It's to make corporations smaller and more numerous, so they each have less power.
Which would not only solve the actual problem, it would also solve the nominal problem of billionaires having too much money, because the way you get billionaires is by having corporations that are too big. It causes the people who got in when they were small to have "too much money". Don't let them get that big and that doesn't happen anymore.
