| > 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"? |
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| ▲ | 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. |
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