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▲ radialstub 25 days ago

> Potholes are a visible manifestation of society saying it's more efficient to prioritize capital than care.

How though. Roads are a public good and fixing them should come from the governments pocket. How can you say the problem is private industry, when the government is doing such a good job collecting our tax money. You should be asking where is that money going. And then you will see its because of mismanagement by the government. Trillions in debt, for what?

Potholes are a visible manifestation of society saying it's better to vote for people who vibe with you, than people who can provide essential services.

▲wongarsu 25 days ago | parent | next [-]

You are assuming that the obsession with maximizing profit is limited to private industry, where the post you are replying to makes no such assumption.

I agree that the government ought to work for the public good, and not doing so is mismanagement and corruption. But following the logic of the parent poster, the postulate would be that the mismatch between what the government ought to do and what it does is an outgrowth of a society that values maximizing profit over satisfying needs. Which I find hard to deny if we are a bit flexible with the question "whose profit is maximized". This is just a different way to arrive at the word corruption, but it provides a frame for possible societal causes for that widespread corruption

▲readthenotes1 25 days ago | parent [-]

The way greed applies to the public purse is mediated by zero cost accounting wherein a government agency is compelled to spend all of their year's allocation without completing their work so that they can justify getting more in the next budget cycle.

▲mmooss 25 days ago | parent | prev | next [-]

The tax rates in the US are low; that's why there is so much debt and so few services.

Anti-tax groups have long followed the 'Starve the Beast' strategy (and their opponents are completely incompetent and fall for it every time):

  1) Cut taxes
  2) Point out the resulting deficit, say we're spending 
     too much, and cut services
  3) Repeat
Now we're at point 2. It's not spending, it's lack of revenue. Some large corporations pay no tax. The US has cut IRS enforcement even though it pays for itself many, many times over. The wealthiest people pay a much lower tax rate because their typical form of income (capital gains) is taxed at a much lower rate than other people's (salary), and because their taxes are cut over and over and they have endless loopholes - e.g., trust funds!
▲inglor_cz 25 days ago | parent | next [-]

Looking at the stats, the US public spending is about 40 per cent of the American GDP, which, though lower than most of the EU, is not really "low". 40 per cent of something as huge as the American economy is huge as well. Given that the US economy is a quarter of the global economy, US public spending is one tenth of the economic output of the entire mankind. That is not low.

https://www.oecd.org/en/data/indicators/general-government-s...

BTW Swiss public spending is lower (32 per cent), and Swiss sidewalks and roads are uniformly nice. At the same time, Germany is at 48 per cent and it has a big problem with aging infrastructure, railways, bridges etc. Swiss rail authority regularly refuses delayed German trains at the border in order not to cause chaos in the reliable Swiss railway network. Given the 32 vs. 48 per cent of public spending, you would expect it to be the other way round, but it isn't. The mapping between the volume of public spending and quality of public services is not that simple.

Maybe the problem in the US is that too much money gets siphoned away by various legal or illegal means. Famously, whenever places like California or NYC try to build something like a new subway line or a new high-speed rail, their project budgets balloon into absolutely insane volumes, much higher than comparable projects in France, Italy or Japan, and the main reason is that various special interests need to be satisfied, from the construction unions to various NIMBYs.

With such a flawed model of public spending, higher taxes will only result in higher waste.

▲mmooss 25 days ago | parent [-]

I appreciate the the public spending statistic, which adds a dose of reality to the discussion. At the same time, a few cherry-picked examples (Swiss and German railways) is meaningless. It's true the US spends a lot in absolute terms, but a huge economy with 340 million people has a lot of roads and other expenses.

And the US is inefficient at building some things (subways) and probably more efficient at others. Again, it's cherry picking unless we have broader data.

> With such a flawed model of public spending, higher taxes will only result in higher waste.

As I said in the GP, there is waste (inefficiency) in everyone and everything, and larger organizations unavoidably have more. The cherry-picked examples don't prove the US and every local goverment in it are somehow less efficient, but certainly there is inefficiency.

But the statement "higher taxes will only result in higher waste" is logically wrong: higher taxes (and assumed higher spending) will lead to more waste - unavoidable for anyone and any org - but also more productivity; you can't have one without the other. E.g., if 15% of every dollar is wasted then higher taxes increase both waste and output. The US does have roads, schools, healthcare, sewers, etc., and even some urban light rail, paid for by taxes. The money does produce things, and many of those things can only be accomplished with taxes.

On the basis of what your comment, the US should cut all taxes because they are all waste. That's probably not what you mean but that's what some anti-tax groups say and what they do - cut everything regardless of outcome, which is what has been done on a national level recently. The simplistic answers are dangerous and not useful.

▲inglor_cz 25 days ago | parent [-]

"On the basis of what your comment, the US should cut all taxes because they are all waste."

Nope, I didn't express a conviction that this is a linear function from 0 to 100. My statement should rather read as "If, at current, the American public sector is unable to provide good roads and sidewalks while redistributing 40 per cent of the domestic GDP, I find it hard to believe that the situation would improve much if it redistributed 45 per cent instead."

Good roads and sidewalks aren't that expensive. The Romans and the Incas could maintain them with a more primitive economy, and a well-run modern city should have no old potholes anywhere.

▲pseudohadamard 24 days ago | parent | prev | next [-]

Many years ago a US friend told me that the way to tell the true state of a nation's finances is to look at its infrastructure, because when money is tight that's the first thing that gets cut. Don't look at the imaginary numbers in the stock market, look at the roads, sidewalks, bridges, railway lines.

I was kinda shocked, when working in South Africa, to find that the roads and sidewalks there were often in much better shape than ones I'd seen in the US. And from the other side, the only place I've ever seen roads as patched and potholed as ones in US cities was in rural Russia.

▲tmoertel 25 days ago | parent | prev [-]

> The wealthiest people pay a much lower tax rate because their typical form of income (capital gains) is taxed at a much lower rate than other people's (salary)...

A different way to think about this would be to say that a lower tax rate for capital gains is a trick (incentive) to get the wealthiest people to invest their wealth in the market, which provides capital for people trying to grow the economy and provide jobs, rather than spend their wealth on luxuries for themselves. In this way, we have an economy focused more on the needs and wants of regular people, and less on producing what wealthy people want.

Can you spot a flaw in that line of reasoning?

▲amavect 25 days ago | parent | next [-]

Low capital gains tax incentivizes investment and venture capital, so the rich can grow their wealth faster than the poor, while creating a job market. Compare that to spending wealth on luxuries, a money sink that also creates a job market and grows the economy (people have to make the luxuries). The former creates more liquid assets (stock) with no clear connection towards meeting the needs of regular people. The latter creates more solid assets with no clear connection towards meeting the needs of regular people.

I vaguely remember Adam Smith talking about directing the vanity of the rich towards spending great amounts of money on proper objects in exchange for recognition. 4:00 https://www.youtube.com/watch?v=ejJRhn53X2M

▲tmoertel 25 days ago | parent [-]

> Low capital gains tax incentivizes investment and venture capital, so the rich can grow their wealth faster than the poor, while creating a job market.

You forgot the most important part. Let me add it for you: "Low capital gains tax incentivizes investment..., while creating a job market, [and, more importantly, providing goods and services that are beneficial to society as a whole]."

> The former creates more liquid assets (stock) with no clear connection towards meeting the needs of regular people. The latter creates more solid assets with no clear connection towards meeting the needs of regular people.

These claims are demonstrably false. Paper assets provide no tangible benefits. You cannot eat a stock certificate, nor can you use it to heal an infection, nor can you ask it to repair your refrigerator. To receive a tangible benefit such as these, you must consume a good or service. And what is the economy but a machine that produces the goods and services that the people within it consume? Therefore, it is the mix of goods and services consumed (which equals that produced) that determines how society benefits. And, as you've already admitted, a low capital gains tax incentivizes the wealthy to buy paper assets instead of luxuries for themselves. But luxuries are real goods and services, aren't they? In other words, doesn't that policy incentivize wealthy people to consume less and, therefore, claim a reduced share of economic benefits? Consequently, doesn't an increased share of economic benefits go to "regular people"?

▲amavect 25 days ago | parent [-]

>[and, more importantly, providing goods and services that are beneficial to society as a whole].

I think enshittification, cost externalization, and rent-seeking behavior cancel this out, muddying the connection towards meeting the needs of regular people. For example, we needed cap-and-trade to internalize the costs of acid rain back onto power plants.

>These claims are demonstrably false. Paper assets provide no tangible benefits.

I think my rhetorical bait worked: you seem to agree with incentivizing luxury spending on real goods and services (instead of incentivizing capital gains)? Adam Smith argues to take that vanity and drive it towards public recognition. For example, many universities put the names of rich donors on the opulent buildings they donate to build. That's good! (My college's music building was amazing!)

>In other words, doesn't that policy incentivize wealthy people to consume less and, therefore, claim a reduced share of economic benefits? Consequently, doesn't an increased share of economic benefits go to "regular people"?

I thought trade doesn't make a zero-sum game? Money supply is a zero-sum game (I think), and I want money sinks to spread the money. We want them to spend their stored money to generate more tangible wealth for all. Luxury goods often push the limits to what can be done, advancing technology and generating wealth while also depleting their money stores. But while investments and venture capital might also advance technology and generate wealth, they continue to concentrate the money supply to the rich. Not good!

▲tmoertel 25 days ago | parent [-]

> I think enshittification, cost externalization, and rent-seeking behavior cancel [general societal benefits] out.

While I agree that the factors you cited are drags on the economy, I think historical evidence suggests strongly that they do not cancel out net benefit to society in general. The fact that poor people today benefit from refrigeration, air conditioning, electronic computers, vaccinations, safe anesthesia, cancer drugs, dialysis, HDTVs, cell phones, and a host of other things that the wealthiest people of yesteryear could not have purchased with all their wealth, suggests that the net trend of the economy has been to produce benefits for all of society, including regular people.

> you seem to agree with incentivizing luxury spending on real goods and services (instead of incentivizing capital gains)?

No, that is the opposite of my original claim. My claim, put simply, is that a low capital gains tax shifts the economy's output away from luxuries and toward meeting the needs of regular people.

> I thought trade doesn't make a zero-sum game?

But resource allocation is a zero-sum game. In any given year, there are only so many productively employable atoms and human hours. If less of those resources are being used to produce luxuries for wealthy people, they can be employed to produce goods and services for regular people.

▲amavect 25 days ago | parent [-]

Very interesting perspective. Let me try and repeat it back. Resource allocation is a zero-sum game within any given year, resource production increases yearly as technology increases, technology increases more as capital increases, so a low capital gains tax will increase resource production more than a high capital gains tax.

If I got that right, here's my best shot at a contradiction. If resource allocation is a zero-sum game, money (liquid assets) determines resource allocation, and low capital gains tax further concentrates money to the wealthy (I would need to prove this, and in recent years the distribution of wealth has increased towards the wealthy), then the wealthy gain a greater share of resource allocation next year.

This might not result in problems, as historically the increases in resource production have increased regular people's resource allocation in absolute terms, but I see no necessity in this trend. I might argue that the poor can lose resource allocation in the zero-sum game, but I'd need to prove that (something like, inflation hurts poor people more than the rich? incomplete thoughts). I could also argue that currents trends place financial assets (intangible) above production assets (tangible), slowing the benefit to regular people.

I claim that if the wealthy were to put their money in luxuries (things that don't give capital gains), they would control more allocation in a given year, but then they would decrease their share of resource allocation the next year. I also claim that resource production would increase just fine, as technology initially benefiting luxury production expands toward general production.

▲tmoertel 25 days ago | parent [-]

First, thanks for continuing this interesting conversation!

> Let me try and repeat it back. Resource allocation is a zero-sum game within any given year, resource production increases yearly as technology increases, technology increases more as capital increases, so a low capital gains tax will increase resource production more than a high capital gains tax.

Actually, this line of reasoning is tangential to the thrust of my argument. Let’s get to it now:

> If I got that right, here's my best shot at a contradiction. If resource allocation is a zero-sum game, money (liquid assets) determines resource allocation, …

Okay, here’s what I think you’re missing. Money does not determine resource allocation. But spending money does! Only by spending money do you get to consume goods and services. Therefore, by getting wealthy people not to spend but to invest almost all of their wealth, we get them to give up their claim on where today’s resources are allocated. They control wealth but not resource allocations.

> … and low capital gains tax further concentrates money to the wealthy, …

I believe that this claim is more or less true.

> … then the wealthy gain a greater share of resource allocation next year.

But this claim does not follow. Wealthy people gain a greater share of the wealth allocation next year, but they do not spend that wealth, nor the new wealth they gain each year. They spend only a tiny fraction of it – and invest the rest. Thus, most of this “extra” wealth that wealthy people gain is invested, with resource allocations from that wealth to be determined by spending across the population in general, not by the wealthy who invested it.

> I claim that if the wealthy were to put their money in luxuries (things that don't give capital gains), they would control more allocation in a given year, but then they would decrease their share of resource allocation the next year. I also claim that resource production would increase just fine, as technology initially benefiting luxury production expands toward general production.

Let’s say that the wealthiest 1% of people control half of all wealth. If we forced them to spend that wealth, much of the economy’s resources would be redirected to provide goods and services to the top 1% of people. For a very long time, the remaining 99% of people, especially the lower 80%, would find it very hard to purchase goods and services, for their spending would be dwarfed. Resource production would increase, but I doubt it would be “just fine.” Factories producing mega-yachts, doctors providing exotic cosmetic surgeries, and master chefs preparing one-of-a-kind meals with luxury ingredients such as hand-massaged beef fed grasses from the richest soils on Earth… These are not easily adapted to produce things that regular people need.

By getting those wealthy people to invest their wealth instead, we get them to give up their ability to dictate where today’s resources go. In exchange, they (as a group) get the promise of earning more wealth tomorrow from their investments.

I agree, however, that concentration of wealth is a problem for society. When a small number of people can, in effect, buy the government with pocket change, that’s not good. But a low tax rate on capital gains is only one contributing factor to the concentration-of-wealth problem.

▲amavect 25 days ago | parent [-]

>thanks for continuing this interesting conversation!

Cheers!

>Money does not determine resource allocation. But spending money does!

Very good point. Investors have some say as to where the money goes, but you're right. Often said that the economy runs on debt.

>They spend only a tiny fraction of it – and invest the rest.

Well said. I suppose their wealth only represents a potential for resource allocation.

>If we forced them to spend that wealth, much of the economy’s resources would be redirected to provide goods and services to the top 1% of people.

Under most theories of value, this extreme demand and labor would cause the price of such luxury goods and services to skyrocket! The money would quickly distribute to the hands of those who provided such goods. Then the masses can spend the money.

I now see our discussion as a classic debate of supply-side vs demand-side economics. I'll steal "the unity of means and ends" from the anarchists for this: I fully believe that the masses must have the resource allocation potential in order to achieve greater wealth for all. That exists in a positive feedback loop with businesses, increasing technology and production, and increasing the general standard of living. But, investing gives the resource allocation power to the businesses. With enough wealth and power, large businesses can keep the investment cycle flowing between businesses and owners, underpaying the workers and buying out competitors. At the most extreme result, a vertically closed system where the workers must meet the needs of the business (company towns).

>These are not easily adapted to produce things that regular people need.

So many goods start out as expensive luxury goods. Refrigeration, commercial airlines, air conditioning, computers, HDTVs, cell phones...

>When a small number of people can, in effect, buy the government with pocket change, that’s not good.

Then they morph government policy towards further enriching themselves, hurting the masses in the process. Very bad!

Would you advocate for a 0% capital gains tax? Or a capital gains tax-break? How would you calculate the ideal number? (I would place capital gains tax included in income tax.)

▲tmoertel 24 days ago | parent [-]

> Would you advocate for a 0% capital gains tax? Or a capital gains tax-break? How would you calculate the ideal number? (I would place capital gains tax included in income tax.)

I wouldn't advocate for any particular tax rate for capital gains without it being part of comprehensive fiscal and government reform. The point I was trying to get across in my original comment was that, when people talk about raising the capital gains tax because they think it's an obvious way to tax the rich without affecting working people and that the only reason we're not already doing it is because the rich have rigged the system, the reality is way more complicated. There are no easy fixes. Changing the capital gains tax substantially (outside of more widespread reforms) is likely to have unwanted consequences. And even with widespread reforms, we're likely to suffer unwanted consequences.

Reality is way more complex than talking points.

▲amavect 24 days ago | parent [-]

Of course, proper systems analysis would really require modelling and simulation.

Thanks for chatting.

▲mmooss 25 days ago | parent | prev [-]

I'm not taking a test (feel free to answer yourself) but my view is that it's the same old talking point: Help the wealthy, and the Nth order effects will benefit others. The only thing these policies deliver on reliably is the 1st order effect - helping the wealthy.

(I think that's a good way to analyse any policy - the 1st order effects are the ones you can count on; the Nth order effects are just BS that magically costs nothing, but gets others to go along - 'the people will pay for this stadium for my privately owned franchise (1st order) and it will bring business to the community (2nd order).' That's repeated over and over, and the 2nd order effect is well known to not happen, but it sometimes gets enough votes from those uneducated in the issue.)

I think in the 1980s the Reagan administration called it 'trickle-down economics', such an incredibly revealing name!

▲tmoertel 25 days ago | parent [-]

Okay, but you didn't refute the line of reasoning. You called it "the same old talking point" and then jumped to the conclusion that "the only thing these policies deliver on reliably is the 1st order effect - helping the wealthy." But you didn't show that your claim was true. Or that the claim you were responding to was false.

Can you offer a substantive argument that getting the wealthy to invest their wealth instead of spending it on themselves is a policy that benefits only the wealthy and makes life worse for everyone else?

▲mmooss 25 days ago | parent | next [-]

You might have overlooked this part: "I'm not taking a test (feel free to answer yourself)".

▲tmoertel 25 days ago | parent [-]

I didn't ignore that part. I interpreted it as your way of saying that you intended to state your opinion without offering supporting argument.

▲mmooss 25 days ago | parent [-]

You misinterpreted it: It meant I (and others) aren't here to take your tests nor are interested in your grades.

▲tmoertel 25 days ago | parent [-]

If that's what you think is happening – tests and grades – when people come to a site whose purpose is to foster thoughtful and substantive discussions, and then on that site they share ideas and invite criticism of them, you might consider whether you're missing something.

▲mmooss 25 days ago | parent [-]

It was only your comment.

▲tmoertel 24 days ago | parent [-]

I'm curious. What specifically about my comment made you believe it was a test and that I would be assigning grades to responses, as opposed to an idea for which I invited criticism?

▲orwin 25 days ago | parent | prev | next [-]

> Can you offer a substantive argument that getting the wealthy to invest their wealth instead of spending it on themselves is a policy that benefits only the wealthy and makes life worse for everyone else?

Not gp, but if the investment is made in either a non-productive asset, or in the secondary market toi buy share in a company that is downsizing/stabilizing their investments (share buyback is very often a good tell), then the wealth does not benefit society in general but either inflate a bubble, or separate the owning class from the working class.

▲tmoertel 25 days ago | parent [-]

> Not gp, but if the investment is made in either a non-productive asset, or in the secondary market toi buy share in a company that is downsizing/stabilizing their investments..., then the wealth does not benefit society in general but either inflate a bubble, or separate the owning class from the working class.

That if is doing a lot of lifting. What percentage of investments do you believe satisfy that if condition? If that percentage is p, then do you agree that it's generally beneficial for society, for approximately 100% − p percent of the time, when wealthy people decide to invest in the economy instead of spend on themselves?

(Further, even when companies downsize, don't they release their resources, such as people and equipment, back to the market? And doesn't the evidence of economic history suggest that, on the whole, the market tends to take up resources, including those released from downsizing companies, and use them produce goods and services that benefit both the owning class and the working class? For example, for most of history, even the wealthiest of the owning class lacked electricity, air conditioning, refrigeration, radio, television, electronic computers, the internet, cell phones, HDTVs, antibiotics, vaccines, generic drugs, medical imaging, DNA testing, video conferences with health care professionals, and so on. Today, don't even working people benefit from these things? So, even when your if condition holds, the claimed consequence, that such investments "either inflate a bubble, or separate the owning class from the working class" seems hard to believe.)

▲orwin 24 days ago | parent [-]

More than two third of all public investments are on the secondary market, and this do not benefit investments or the 'real' economy. It's this beneficial to society at best 33% of the time (I'm counting MIC in 'benefic for society' only for the sake of the argument to be clear).

While a worker is beneficial to society 100% of the time.

▲ranger_danger 25 days ago | parent | prev | next [-]

[dead]

▲dwb 25 days ago | parent | prev [-]

False dichotomy. We should tax the lot of them until they are not wealthy any more.

▲_DeadFred_ 25 days ago | parent | prev [-]

>Trillions in debt, for what?

In the US, the Republican party for the last 40 years has had a policy of starve the beast. They actively choose policies that provide worse services/break the governments ability to provide services/pile on unsustainable debt so that they can make the very same argument you are. Government is broken (yes, because Republicans have chosen to intentionally break it for 40 years. It is hard for a country to function when half of politics is intent on making the country worse in order to reach their political agenda).

https://en.wikipedia.org/wiki/Starve_the_beast