tag:blogger.com,1999:blog-582368152716771238.post3916766842719128242..comments2024-03-29T07:01:17.709-05:00Comments on The Grumpy Economist: Wealth and Taxes, Part VJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-582368152716771238.post-56948763196325234882021-03-21T17:39:30.566-05:002021-03-21T17:39:30.566-05:00I was directed here by a professor. I'm a publ...I was directed here by a professor. I'm a public finance student. This is the "correct" question you seek. <br /><br />https://www.amazon.com/Spirit-Level-Equality-Societies-Stronger/dp/1608193411/ref=sr_1_1?dchild=1&keywords=the+spirit+level&qid=1616366296&sr=8-1<br /><br />https://www.youtube.com/watch?v=cZ7LzE3u7BwAnonymoushttps://www.blogger.com/profile/14707538973641584564noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-3059810893302788802020-03-11T16:59:32.856-05:002020-03-11T16:59:32.856-05:00Why are the uber rich lefty leaning voters? My fat...Why are the uber rich lefty leaning voters? My father is reasonably rich and openly hates Republicans, but that's because he believes they are secretly white supremacists pushing a nefarious agenda, but that was born from his days as an immigrant to this country. Why would white coastal elite rich vote this way?James Carlylehttps://www.blogger.com/profile/06778250145758547603noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-20763593777472665062020-01-12T03:21:22.789-06:002020-01-12T03:21:22.789-06:00"Our revolution had a lot to do with paying B..."Our revolution had a lot to do with paying British taxes, not guillotining the aristocracy. [...] The Boston Tea Party was not a demand that Britain tax its aristocrats, either to send money instead of tea, or just to tax them out of existence because "inequality" was galling the Americans."<br /><br />This seems a terrible oversimplification, at best. It ignores the Classical republican language used by the revolutionaries, the attacks on not just taxes but monopolies like the East India Company, and the general sweep of "radical" movements that sprang up during and after the revolution, including manumission in some states. The op-ed statement is very vague but it doesn't seem ridiculous at all to say Americans were disgusted by perceived corruption in the English government, even if they didn't think it should be abolished entirely.Samnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-68910095159707773722020-01-11T10:46:59.180-06:002020-01-11T10:46:59.180-06:00It still faces a thorny implementation issue. We d...It still faces a thorny implementation issue. We don't even know how to appropriately value wealth. It's one of those things that gets abstracted and then taken for granted.James Carlylehttps://www.blogger.com/profile/06778250145758547603noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-81699636547656896852020-01-11T07:16:33.907-06:002020-01-11T07:16:33.907-06:00Hey James,
You may be right that is that simple -...Hey James,<br /><br />You may be right that is that simple -- off with their heads mentality. But, no, we're not down their rabbit hole, even if they gave a glimpse of what it looks like. And, yes, the researchers had (or still have) a mild case of insouciance it seems. <br /><br />This savagery you speak of, where does it come from, hmm? My guess it's a manifestation of jealously and rage. There are those with the Avenging Angel gene and these sorts of crusades justify their existence. And, like you say, there is a soft violence that goes on, these benign instruments you mention that achieve roughly the same goals.<br /><br />This IS a good segue way into the nature of exploitation. . .<br /><br />There was an article I ran across in the MIT Technology Review:<br /><br />https://www.technologyreview.com/s/613585/prisoners-dilemma-shows-how-exploitation-is-a-basic-property-of-human-society/<br /><br />Check out this interesting quote from the article:<br /><br />"'We numerically and analytically demonstrate that an exploitative relationship can be achieved despite symmetric strategy dynamics and symmetric rule of games,' they say.<br /><br />And curiously, this is a stable strategy. 'This exploitative relationship is stable, even though the exploited player, who receives a lower payoff than the exploiting player, has optimized their own strategy,' they say."<br /><br />Well, that all sounds solid and such; but, it points to the reality that one can have the opportunity to exploit and be exploited, too, even if the exploitation results in an accepted lower payout for one of the parties. That all may be true, but it doesn't address the aftermath psychologically or emotionally of what happens to people, even with repeated games, of actually *being* exploited. If you've been exploited before, it's very similar to the five stages of grief, particularly the anger phase. For the exploiter, these repeated decisions in "games" (let's call them interactions), creates an insidious feedback loop via negative reinforcement in which it's OK to behave this way and it's just part of human nature. <br /><br />I'm not entirely sure a wealth tax will achieve the utopian vision these researchers have because it really doesn't address the incentive behind exploitation in the first place. It's a form of punishment. But, that assumes all the wealthy have an evil gene that gets marketed in the media, displaying the wealthy as a cadre of Bond Villains, like the consortium of Spectre.<br /><br />Businesses start from somewhere. Gates and Allen didn't start Microsoft to be evil or indulge the evil exploitation gene! (Though some may take issue with IE/MS smashing Netscape out of existence in the 1990s via dirty tricks). Jobs and Wozniak, same deal. Even Bezos started out of his garage in Seattle. Point is, these people didn't set out to be evil, to use wealth as a means to satisfy their need/desire to exploit. Inherited wealth is a whole different animal, yet it would not be fair to assume the gains were ill-gotten.<br /><br />And, yes, there are some megalomaniacal wealthy individuals out there that give wealth a bad name. Unfortunate, but real.<br /><br />Dr. Cochrane is right - this is a political agenda, to use policy to achieve a particular outcome. This is a natural thing to use policy, to correct and modify appropriately (key word here, I know). The trick is to come up with the right policies that promote the incentive to innovate, to change, and to improve life. That's a certain kind of Normative Gordian Knot that requires a sword to untangle it all with one fell swoop, leading to a reconstitution the corpus of economic thinking that has been built up over the last 300 some odd years. <br /><br />Best,<br />MMykel G. Larsonhttps://www.blogger.com/profile/17128735421035292909noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-32908732963855646942020-01-11T03:18:49.935-06:002020-01-11T03:18:49.935-06:00I probably agree with the bulk of this excellent f...I probably agree with the bulk of this excellent five-part series.<br /><br />That said, I believe John Cochrane with his experience and fine mind could write a compelling and convincing five-part series on the insanity of payroll and wage taxes.<br /><br />Which leads to an interesting question: should productive behavior ever be taxed, whether it is working or investing?<br /><br />My own recommendation is that we tax property, consumption, pollution, perhaps Pigou taxes, and imports.<br /><br />An interesting side question is who should pay for America's enormous and global military apparatus and related benefit packages. I read about US interests in the Mideast or Latin America or Asia but I can never tell what they are. I assume it is some sort of business interests or trade interests. Shouldn't people interested in global trade pay for their own guard services? A fee-for-service arrangement?Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-1251648296079616832020-01-10T17:31:08.358-06:002020-01-10T17:31:08.358-06:00Frank P. Ramsey published a mathematical paper tit...Frank P. Ramsey published a mathematical paper titled, "A Contribution to the Theory of Taxation", 1927, that developed a theory of optimal taxation of commodities to achieve the social planner's desired level of revenue while minimizing distortionary impacts on social growth.<br /><br />The commodity having the most inelastic demand bore the greatest proportion of the tax burden. Ramsey demonstrated how the social planner could exempt some commodities from taxation while taxing other commodities to achieve the planner's revenue target. He mentions that in certain cases, instead of tax, the planner could provide a bounty (subsidy) to encourage consumption of some commodity.<br /><br />"Wealth" taxation is essentially taxation of certain commodities. Ramsey's theory may provide a theoretical basis for determining an optimal tax rate on those commodities.<br /><br />An alternative approach is to levy a one-time tax on all wealth of the nation with the proceeds paid into the Treasury. The relative distribution of wealth remains unchanged, but the absolute level of wealth is reduced more at the highest wealth percentiles. A basic exemption could be incorporated to exempt the lowest to middle wealth percentiles from the tax. Such a tax is unlikely to meet a constitutional challenge, however.Old Eagle Eyehttps://www.blogger.com/profile/05270080708077871311noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-89469161423393863592020-01-10T17:11:43.894-06:002020-01-10T17:11:43.894-06:00"I think a lot of the political trench warfar..."I think a lot of the political trench warfare when it comes to wealth taxes points to a reality that access to opportunity is what matters in the end. "<br /><br />I used to believe this, but I don't think it accurately describes the position of their most fervent, outspoken champions. I think it really is as simple as - get rid of the super rich. Where the bolsheviks felt violence was the primary tool for the job, they probably see wealth taxes and confiscation as more benign instruments for roughly the same goal. I won't lump the two groups together, but it conjures up a strange kind of savagery that I never expected to see from two trained economists. I didn't even believe it myself till he posted the quotes. They were harrowing. James Carlylehttps://www.blogger.com/profile/06778250145758547603noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-56296618723033690892020-01-10T16:40:39.523-06:002020-01-10T16:40:39.523-06:00Roger Pielke, Jr., U. of Colorado, has documented ...Roger Pielke, Jr., U. of Colorado, has documented how Michael Bloomberg, Hank Paulson, and Tom Stayer, all billionaires, have manipulated the dialog on climate change to produce a sophisticated propaganda movement replete with peer-reviewed academic journal publications turning a worst-case scenario projection into a "business-as-usual" scenario projection of the forecasted economic and social effects of climate change. Pielke, R., Jr.: “How Billionaires Tom Steyer and Michael Bloomberg Corrupted Climate Science” URL: https://www.forbes.com/sites/rogerpielke/2020/01/02/how-billionaires-tom-steyer-and-michael-bloomberg-corrupted-climate-science/#8464778702c6 .<br /><br />An undergraduate sociology professor that taught a course in political philosophy during the early 1970s made two points that have remained with me to this day: (1) if capitalism is the hypothesis and communism the antithesis, then the synthesis is either "cap-com" or "com-cap" depending on where the society starts from; and, (2) the most potent revolutionaries are not found amongst the poor and underprivileged, but are most often found amongst the rich and extremely wealthy elites.<br /><br />Also, Vilfrado Pareto, the Italian engineer and economist, studied population and income statistics and published various papers on the subject. He concluded that should a society confiscate the wealth of the wealthiest members of the society and redistribute it across all segments of the population, then within one or two generations the wealth will be concentrated again in a small segment of the population and the unequal distribution of wealth would be about the same as before the confiscation occured.Old Eagle Eyehttps://www.blogger.com/profile/05270080708077871311noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-43737284385133785652020-01-10T16:26:25.830-06:002020-01-10T16:26:25.830-06:00Both Zucman and Saez are French citizens. Saez was...Both Zucman and Saez are French citizens. Saez was born in Spain, but is French. Saez is a naturalized American citizen.Old Eagle Eyehttps://www.blogger.com/profile/05270080708077871311noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-44143930946072493932020-01-10T15:22:04.108-06:002020-01-10T15:22:04.108-06:00Thanks for writing this series!
I would like to s...Thanks for writing this series!<br /><br />I would like to see Reich say that to Oprah's face.Dzhaughnnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80909133988540751632020-01-10T14:52:02.671-06:002020-01-10T14:52:02.671-06:00The Democrats sell tax increases by telling us how...The Democrats sell tax increases by telling us how much money will be raised and all the good they will do with it. This pitch assumes that those paying the taxes are static - they will not change their behaviors based on the new taxes, but continue to do the same things and just pay the taxes. However, people are, instead, dynamic, and will change their behaviors to avoid the new taxes. Thus, the income estimates of new taxes are always higher than reality. At some point, the people who fall for these pitches of what new taxes will do for them, need to understand this and be wise to future such new taxes panacea stories. One can only hope.rmthttps://www.blogger.com/profile/15447809760422783418noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-54910392979663213132020-01-10T14:49:31.558-06:002020-01-10T14:49:31.558-06:00Well. I read all five parts.
I'm no senior f...Well. I read all five parts. <br /><br />I'm no senior fellow at the Hoover Institution, but here's my stab and thoughts on it all.<br /><br />In a strange twist of irony, it seems strange to formulate an economic guillotine to save capitalism from itself; after all, decapitation (pun intended) tends to be permanent.<br /><br />It's certainly a normative question: What to *do* with wealth? Wealth is both property and a resource at the same time. After some mild contemplation, wealth is necessary, but it is not inherently evil (look at Bill Gates as an example). NPR ran a piece last year having to do with philanthrocapitalism: the basic idea is that billionaires and their ilk may do charitable stuff, but it's based on their own preferences of what they would like to see happen. They use the tax laws to mitigate their tax burden, but they also have their pet projects, which may not align with certain political ideologies. Social Security and Medicare were examples cited in which public social programs have been far more “successful” than any philanthropic project funded by billionaires. (And again – Gates understands what wealth can do if it is deployed properly. I remember seeing an interview some 10 or so years ago where Gates describes what he does through the Gates Foundation dwarfs in comparison to what governments have the ability to do.)<br />What I am also hearing in all of this of establishing a wealth tax is that there is some idea that Paretto Improvements are out there that can be realized if only this wealth tax fueled them. Well, sounds really optimistic, doesn’t it? Measurement is a problem as Dr. Cochrane has established with measuring wealth.<br />Of course the wealthy want to protect their wealth. Disincentives can cripple economies (Central Planning, anyone?) <br />I think a lot of the political trench warfare when it comes to wealth taxes points to a reality that access to opportunity is what matters in the end. Without access to health, nutrition, education, knowledge, training, skills, and people, it is very difficult to build anything resembling a “life.” Again, measurement issues. However, it’s a lot easier to get access to these things if you have resources and connections (physical, human, and social capital). Fairness, again, may be a normative construct, but it is a reality that people feel, beyond just knowing cognitively. That is why these sorts of issues that revolve around the nature of rivalry and access to resources to participate IN that rivalry can cause real problems. It’s not so much Keeping Up With The Joneses, but it’s similar in nature. <br />All political failures are economic in nature and vice versa. Sure, tautological, but as Dr. Cochrane references, the War for Independence was triggered by taxes, not calling for the annihilation of the aristocracy. Why did France have its issues, hmm? Or Russia in the 1900s? Even after 100 years after the end of the Civil War, the US still had issues with guaranteeing and enforcing equal access (yep, and we still do today).<br />Side Reading: “Success and Luck” by Robert Frank. It’s an interesting read how winner-take-all-markets emerge and are conquered – but Frank also calls for a consumption tax at the end of his book. But what is really hidden in there (and I think Frank takes it as a given) that the people who start and build successful businesses isn’t just a function of luck, which leads to the next read: “The Luck Factor.” Basically, people who are optimistic, friendly, and opportunistic end up being successful. Why? One, because they have more opportunities to make valuable connections, and two, because it takes people to build a business or an institution. And, no, this is not a segue way into Marx!<br /><br />Best,<br />MMykel G. Larsonhttps://www.blogger.com/profile/17128735421035292909noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-11888448909377841932020-01-10T14:30:45.096-06:002020-01-10T14:30:45.096-06:00Am I the only one who found Saez's quote at th...Am I the only one who found Saez's quote at the end and the one at the beginning as completely contradictory? In the latter, he's concerned about the types of billionaires. In the former he is agnostic about the types. Damn them all! <br /><br />It's also frightening that this has become the zeitgeist among Uber leftists. As sad as the xenophobia is among Uber rightists.<br />James Carlylehttps://www.blogger.com/profile/06778250145758547603noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-85835484220691741802020-01-10T13:35:54.479-06:002020-01-10T13:35:54.479-06:00Part V and included references points out the prob...Part V and included references points out the problems and true”political” purpose of a wealth tax, which is morally, economically, and Constitutionally unsound. A system that assumes wealth at a certain level must be ill-gotten, that a tax can fairly be targeted to a small specific group, and that this new system would avoid prior problems (evasion,loopholes,cronyism etc.) seems naive and/or ideologically blinded.Anonymoushttps://www.blogger.com/profile/08627600478499736954noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-53086019715258709952020-01-10T12:19:25.794-06:002020-01-10T12:19:25.794-06:00Your lost source:
https://www.washingtonexaminer....Your lost source:<br /><br />https://www.washingtonexaminer.com/policy/economy/the-berkeley-economists-advising-both-warren-and-sanders-on-their-groundbreaking-wealth-tax-proposalsAnonymoushttps://www.blogger.com/profile/02009665706512488001noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-24060127942942072212020-01-10T12:16:25.768-06:002020-01-10T12:16:25.768-06:00See Richard Wrangham, The Goodness Paradox, for th...See Richard Wrangham, The Goodness Paradox, for the evolutionary origin of this political position. The roots go deep.Normanhttps://www.blogger.com/profile/17573687140337856397noreply@blogger.com