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May 21, 2018

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I see that hairshirt replied to CharlesWT with more pith (if you'll pardon the expression) while I was composing my own comment.

--TP

First, ...

So, it's a prima facie that if the government is doing something, it can not possibly be done by any other entity. Enforcing contracts, the rule of law and maintaining property registries is at least a reasonably viable function of government. Many other things, not so much.

..., in what possible sense is the money not spent in the private sector of The Economy?

It's still a question of opportunity cost. Government is largely a consumer of wealth, not a creator. And when it does create something of value by spending money, would greater value have been created elsewhere by private actors spend the money?

Government is largely a consumer of wealth, not a creator.

So government spending on the health, welfare, safety, and education of the People is not creating wealth. Your statement is self refuting.

And when it does create something of value by spending money, would greater value have been created elsewhere by private actors spend the money?

That depends. Please tell us the 'value' of Wall Street floating bonds to endlessly finance fracking companies that have never, and most likely will never turn a profit. Better yet, sing the songs of praise for private "wealth creators" that despoil our environment- socializing the costs while privatizing the profit. I'm sure you know the song....sing it brother! Surely your opportunity cost calculus machine can enlighten us chas.

So government spending on the health, welfare, safety, and education of the People is not creating wealth.

Providing these services consumes wealth, not create it. But increases in people's health, social capital and safety will allow them to create more wealth than otherwise.

So, it's a prima facie that if the government is doing something, it can not possibly be done by any other entity. Enforcing contracts, the rule of law and maintaining property registries is at least a reasonably viable function of government. Many other things, not so much.

I don't know that anyone (certainly not anyone here) has argued that a non-governmental entity could not have, for example, funded and done the research that led to the Internet. (Or smart phone cameras - that one was from NASA.) But no rational person would think it likely. And no business, seeing how much Xerox PARC didn't do for Xerox's future, would want to try.

Providing these services consumes wealth, not create it.

do doctors, teachers, meat inspectors and soldiers not get paid?

fuck "wealth".

unless you're Scrooge McDuck, being safe, smart and healthy beats a big pile of gold coins and day of the week. anyone who says otherwise is lying.

Capital doesn't necessarily invent stuff, but inventions alone don't do anyone any good unless they can be converted into something accessible. That's what capital does.

that's what capital enables. capital per se does nothing.

capital formation does not require capitalism, or the promise of multi-million dollar paydays. nor do market economies. nor does innovation and invention, nor does material production at scale.

people do things for lots of reasons. people do really hard and demanding things for lots of reasons. people do really hard and demanding things and never make a dime from it, in more than a few cases. they aren't saints, they just enjoy doing whatever it is, or maybe it just needs doing. so they do it.

wj's post is about the concept of enough. the idea that it is harmful to pursue and accumulate wealth beyond the point where it is of any real use to you is not a "progressive left" idea, it is a traditional one. it is in fact ancient. we ignore it to our own harm, personally and as a society.

the world does not need greed, or excessive ambition, to make the wheels turn. the fact that we find it difficult to imagine any alternative speaks volumes, and what it says is not good.

Capitalism, in the strict sense, is still a relatively new thing for the human race. People did a lot of sh*t before it came along. Archimedes never got an IPO.

Ecclesiastes 5:10
Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless.

Following on these later comments -- besides the fact that there's no proof that we couldn't have had all these good things by some other mechanism than our current economic system and the driven egos of apex predator billionaires (how many driven egos got destroyed along the way instead of becoming billionaires, I wonder?), there's also no proof that all these goodies have given us a better world than some alternative pathway might have provided.

We might have been collectively healthier and happier, and who knows, even living without the spectre of climate change, if we had had fewer gadgets and fewer billionaires, but a more equitable distribution of good medical care, decent housing, and quality education.

Providing these services consumes wealth, not create it. But increases in people's health, social capital and safety will allow them to create more wealth than otherwise.

maybe it's just me, but the second sentence here kind of refutes the first.

FWIW, in my own personal world, government is responsible in part or entirely for gas, electric, water, sewer, roads and highways, schools, libraries, trash pickup and disposal, and a pretty good community center. government also requires people who work on my house, and who sell me groceries and in some cases consumer goods, and who manage my investments, and my bank and the folks who hold my mortgage and issued my credit cards, to observe basic standards of professional competence and responsibility.

in a few years, if the creek don't rise and the good lord is willing, i'll probably get my health insurance and a modest retirement stipend from the government.

i'm sure i'm leaving some stuff out.

there's probably a way for the free market to do all that. in my case, government does it, and it does a pretty damned good job.

i'm fine with it.

seeing how much Xerox PARC didn't do for Xerox's future

but look at what PARC did for Microsoft and Apple! :)

...gas, electric, water, sewer, roads and highways, schools, libraries, trash pickup and disposal

we pay to have gas delivered into a tank buried in our yard. water comes out of a hole in our yard. sewer is a different hole in our yard [i sometimes like to think of our house as a very expensive Rube Goldberg device for moving water from one side of our property to the other]. our road is private [which means its in bad shape because nobody wants to spend the money to fix it]. no kids. we pay a guy for trash pickup. none of that's by choice - we just live too far out of town.

but, not being a libertarian, i'm not seeing how paying our trash guy or gas guy directly creates wealth differently than paying the town trash guys or gas service with tax money does (if they would service our road, which they don't).

is it because the private trash guy can take the profits and buy gold coins to roll around in, while the town government can only use tax money to provide services (thereby saving taxpayers from having to buy those services directly) ?

in one case, my 'wealth' ends up in the gold coins of the trash guy. in the other case, everyone in the town benefits.

and is a healthy and safe and well-maintained town not a kind of wealth? a healthy and safe and well-maintained house is a kind of wealth, after all. a healthy and safe and well-maintained town raises the value of all the property therein by making it more attractive to live in than a neglected, shabby town.

And when it does create something of value by spending money, would greater value have been created elsewhere by private actors spend the money?

In many cases, at our current equilibrium point (which prima facie consists of governments, especially at local and state levels, starved of spending ability, while the 'private' sector is metaphorically rolling in it), I suspect not. It seems quite likely to me that the sorts of projects government does best, or does better at scale (large infrastructure projects, public amenities like parks, health and welfare, education, perhaps even housing) are more productive at the margins right now.

That's the straight answer, accepting the conventional premise of the question.

But I'd point out that there's another problem here. This whole question of "what creates greater wealth" is broken. It assumes some kind of correspondence between "greater wealth" and "greater general benefit". This in turn assumes some mechanism whereby the 'wealth' generated by these private investments, ahem, 'trickles down' to provide concrete benefits to more than a handful of individuals. These mechanisms, if they ever existed at all, are clearly broken.

And why are they broken? Because of thinking like this:

Providing these services [health, welfare, safety, and education of the People ] consumes wealth, not create it.

Motherfracking, YES they consume wealth, because that is the ultimate point of creating the fracking wealth in the first place. To create concrete benefits for the whole of society. Without that, the wealth is, as I said before, literally useless.

This is what I'm talking about with the whole cult of money business. The point of 'wealth' is not simply to create more 'wealth' ad infinitum. That's wealth the parasite, a parasite whose own growth and reproductive cycle has completely colonized and is in critical danger of starving its own host.

Even if a given private investment can nominally produce greater 'wealth' than a government one in some instance, it's pointless without the mechanisms to yoke that engine up to pull some weight. Wealth needs to be a mutualist symbiote, not a parasite. And for that we need things like labor unions, and high progressive taxes funding social services, and limits on the role of money in elections and politics...

You know, all the things we don't really have anymore, and are told we can't have because it's 'too expensive' and will interfere with wealth creation(!)


Money is a mechanism for the allocation of resources. A good way to evaluate the merits of any particular financial disposition is to ask oneself whether it tends to allocate resources well.

Please tell us the 'value' of Wall Street floating bonds to endlessly finance fracking companies that have never, and most likely will never turn a profit.

I'll have a try at answering that.

Before I start: one can make a good case that current regulations don't oblige frackers to meet the environmental costs they impose on us. But that's an argument about regulation, not about financing. I agree with this argument, but it's right that financiers leave regulation to government.

Now, if we never invested in projects which are unlikely to make a profit, we wouldn't invest in much. Only a small proportion of tech start-ups, or candidate drugs, or mining ventures, ever make a profit. It's not the likelihood of profit that matters, it's the expected profit - we care about the mean not the median of the distribution. (Equity and bonds are not the same in this respect, but I won't go into that in this already long post.)

So how do we decide which projects to invest in? By letting people decide where to put their own money. If Wall Street is floating fracking bonds, it's because investors are willing to buy them. And if investors are willing to buy them, it's because they think the interest rate offered is sufficient to compensate for the chance of default - they think the company's prospects are good enough.

The theory is that it's better to trust the judgement of an investor with skin in the game than to rely on internet commentators or government agents. The history of communist economies suggests that the theory, as it applies to government agents, is sound.

but, not being a libertarian, i'm not seeing how paying our trash guy or gas guy directly creates wealth differently than paying the town trash guys or gas service with tax money does (if they would service our road, which they don't).

Where I live the difference is this: the trash guy who works fo rhe town has a living wage and health benefits and protection from on the job injury.He is paying taxes and pays into SS. His job is steady and he probably has a retirement program In fact he has one of the very few middle class jobs left.He has disposable income to dispose of at local businesses.

The other trash guy is a free lancer who never knows how many jobs has a fluctuating income he will have has no insurance, has no retirement, has no access to coverage for on the job injuries, and is probably not paying taxes. And is probably cobbling together an existence based on scrambling around doing all sorts of off the books stuff for cash or trade.

So one is part of an interconnected community system that spreads money around and gives support to everyone, and the other is on his own and, apart from picking up your trash and spending money in local stores, is not contributing much to the community.

I doubt is either is producing much wealth, but one is part of a community that has some cohesiveness and the other is part of a community that is coming unravelled toward Social darwinism

it's right that financiers leave regulation to government.

I'd quibble with that, a little.

I think that's tantamount to saying that the only social responsibility an investor has is to make money. I don't think that's true, or should be true, and to the extent that we almost continuously find ourselves excusing odious, short-sighted behavior that isn't technically illegal yet with a collective shrug of our shoulders, 'well, what can you expect, their only responsibility is to make money', well, that's a problem. Cult of money again.

The history of communist economies suggests that the theory, as it applies to government agents, is sound.

I'd argue that it applies not just to government agents. There's not actually anything special about working for a government, and much of the problems that arguably apply to 'government agents' apply equally to corporate managers who have, for whatever reason, insufficient interest in, or accountability for, their actions.

(It's been observed with some justice that corporations are islands of planned economy in a sea of free enterprise. They are in many ways anathema to the genuine free enterprise the econ textbooks talk about, and to the extent that we have a greater and greater concentration of wealth and power in a smaller and smaller set of corporations and banks, I'd argue that our economy grows rather closer in resemblance to a Soviet one, not further.)

They are in many ways anathema to the genuine free enterprise the econ textbooks talk about...

Fully competitive environments, where information is perfect and complete?

A good way to evaluate the merits of any particular financial disposition is to ask oneself whether it tends to allocate resources well.

Is this really how you think it works (more than for some value of "sometimes")? Do you equate money with resources, as in, "where should I put my money to get the best return in a given period of time?" being the same as something like, "these raw materials and human resources would be best put to use to make X because it will create the most value for mankind"?

All that said, who here (other than maybe bob mcmanus) is suggesting that we eliminate private investment? Is someone here secretly yearning for a government-made iPod?

On the flip side, Pro Bono, are you suggesting, for example, that I-95 shouldn't have been built, and that it should have been left to private actors to figure out how to move people and goods up and down the East Coast? (I'm guessing not.)

Fully competitive environments, where information is perfect and complete?

Well, indeed.

On a more practical level, the example given by one of my professors back in the day was a street in the small Turkish city he'd grown up in. It was the street of shoe makers. Dozens or hundreds of small shops, with single proprietors, all making more or less the same shoes from the same materials, in the same way, for the same price.

One can probably point out some aspects of that that make it less than perfectly free or competitive in practice (social factors come to mind), but it's probably still as good an example of actual free enterprise as the real world has to offer.

The point being that when we leave that world behind for the world of Ford and Merck and Apple, we're necessarily already leaving 'free markets' behind to a certain degree. It may well be -- per McKinneyTx -- that these latter megaventures are indispensable to our way of life, but free enterprise they are not.

Check out the earlier sections of The Travels of a T-Shirt in the Global Economy for an eye-opening account of cotton-growers' insulation from labor risk, weather risk, market fluctuation risk, you name it -- all with the intertwined collaboration of ... government.

Ok, this will be in two installments because I can't switch from one tranche to the other without losing my awesome prose.

If you are one of the fat-dumb-and-happy 9.9%, e.g. a successful lawyer or a dedicated orthopedic surgeon, you can easily fool yourself into thinking that you are not "working class". Even though "working" is what you do to earn your comfortable living, you can fall into the error of identifying with the 0.1% despite the fact that they can buy or sell you 10-100 times over. You might even imagine that any discussion of "enough" is a commie plot against you.

I'd never thought about it like this. Thanks for the epiphany. I'll register as a Democrat later today.

What the hell is "excess" money? Is it money over and above what is "enough"?

Anyway, is there a difference between "capital" and concentrated "capital". If working people like janitors, lettuce pickers, lawyers and surgeons (with their subjective but finite notions of "enough") could save up some money, would that money NOT be "capital" available to be pooled into promising enterprises?

Here is the concept: I pick for myself how much of what I make is 'enough' for my needs and the excess is capital available for investment. Think of the accounting term "capital account". Anyone who is able to manage their affairs so as to create a personal surplus has capital and is free to risk/invest as they see fit. Unless the rest of us, per the topic of this thread, decide that person has too much. Because we find "too much" offensive.

1. Virtually every device and medicine used in modern medicine is the product of free enterprise and the profit motive.

It's good that you've now limited it to 90% and my prostate cancer treatment. I still think it is debatable, but it is always good to see you soften a claim. I just wish you could maybe start off with the softer version rather than try to draw people out with the outrageous statement and then backtrack. As everyone's mother used to say, it's great fun until someone gets an eye poked out...

By all means, debate me. Substantively. I'm up for it. Also, I stand by both statements. Neither statement is horseshit and I wasn't lying (Russell).

There's a certain sort of person who always cries 'jealousy' whenever anyone dares to suggest that maybe the ultra rich could afford to pay a little more taxes or whatever, but that's obviously a red herring of an argument (if not simply projection...). I'm sure you'd never take that tack!

Actually, as Ugh noted, WJ's proposal was 'near 100%'. The proposal is essentially confiscation beyond a certain point. To repeat what I've said many times when it comes to tax policy, I'm fine with a 40% marginal tax rate and I'm voting with my money not someone else's.

Imagine businessperson A who builds an enterprise around a product they know and care about. Who makes sure that everything they sell is of a high quality, that their customers are happy, that their employees are well-compensated and leave work with a sense of accomplishment.

Well, businessperson A is obviously an idiot.

Business Person A is the rule, in my experience, not the exception. Every small business owner I know who follows this model does well. including me FWIW. Consider that your construct might be a matter of ideology and preconceived notions overriding actual reality.

imagine our society and economy is like a pizza pan with a bunch of little marbles or ball bearings happily rolling around on it. We roll and bounce around in our little circles, going about our business. Then along comes a smart ass marble who figures out how to grow bigger. Like, exponentially bigger. Pretty soon, we're not all just rolling around in our own little way -- we're all stuck in one corner of the sheet, involuntarily nuzzled up against Mr. Fat Marble and the giant dent he's pressing into the pan.

The pizza you describe is actually a marble and it's quite large and holds over 7 billion people. Can you cite a specific example of someone rich pushing others out of the way, if that is what you are contending happens?

Redistributing money from someone who literally has more than they can put to any practical use can nevertheless be great help in providing important things for people who have less, and thus make the average person better off (see the above about how on average, Americans have not been getting better off - and very possibly have been going backwards - for several decades).

This was, I think, the main thrust of the OP. And it's an extremely salient point.

Who gets to decide how much is too much? How long do you think the uber rich will continue in that fashion if you take their money away from them? This is a one shot deal--confiscate and then see what's left next time.

Can the government create a net positive benefit by taking the money away from its owners instead of leaving it in the private sector?

Sure. It happens all the time. A big chunk of our best medical and tech stuff is the byproduct of defense and other spending. Mostly defense, though. As others have noted, essential infrastructure provides the common base for commerce and basic necessities, e.g. water. I'm a big fan of peace and think that you get that by deterrence rather than unilateral disarmament, so I'm a fan of a stout national defense.

Let me try to make a point here: you need capital to start a business, build a factory, what have you. Pretty much every material thing we touch in our lives was build/produced by someone intending to make a profit. Capping income, capping wealth has the effect of capping the economy. Which doesn't mean that there isn't a huge pile of essential activities that can only be done collectively. Which actually, is not the point I'm trying to discuss, which is WJ's ultimate point of virtual confiscation beyond a certain level of attainment.

"How gov't spends our money" is a different topic than "McKinney makes too much money, cap him at X." I'm focused on the latter proposition and I'm using my name tongue in cheek for those who sometimes take me literally.

I ask one and only one thing of the commentariat: do not mischaracterize things I say to make your own points.

stand on your own two feet, please.

your claim was not limited to "the equipment for LJ's prostate cancer treatment", it extended to virtually all medical advances.

which was, and is, horseshit.

tell lies if you like, don't enlist me in them.

Well, Russell, not really. In the original post, I said "virtually all devices and medicines" and in this post I said "90% of all equipment" and then I went on to say that pretty much anything tangible that we buy was produced by the private sector, so I'm pretty sure I'm saying almost the same thing substantively in both instances and I'm quite sure I'm correct, but you or LJ are free to point out a medicine or a device or a piece of equipment in use anywhere in the US or Japan to treat any condition including prostate cancer that is not produced in the private sector. In fact, I'd be hugely impressed if you or LJ could identify a single tangible item used in the US that isn't from the private sector (I don't know enough about Japan to include it in this challenge). I grant and always have granted that innovation comes from a variety of quarters.

Hey, where did Lockheed get all this money, anyway?

This is a good example of my point above. However, it raises its own set of issues, e.g. crony capitalism, rent seeking, winner-picking etc, but that is tangential to WJ's post IMO.

i frankly don't give a crap how much people make. live your life. i do care that so much of our public policy is focused on enabling the accumulation of ridiculous amounts of money, and i do care that people with great wealth are in many ways "more equal" than the rest of us in areas of public life.

BobbyP and you both make this point. BP makes it all the time. What policies are y'all talking about? Could someone do a post that addresses some of the leading offenders? I'd like to have that conversation.

and for what it's worth, capitalism, with it's insistence that capital be a privileged factor of production, is not a requirement for a market economy, nor for that matter for capital formation.

I'm not sure what this means. You either have capital or you don't. If you don't, you don't have what you need to buy the equipment or whatever to start a business. If it is privilege to be allowed to keep what you make, then I suppose I'm arguing for privilege. Seems more like a right to me.

I've always found it amusing when people use one hand to point a disapproving finger at anyone on welfare while using the other hand to take a government price support check.

Unless the rest of us, per the topic of this thread, decide that person has too much. Because we find "too much" offensive.

I don't think "offensive" is quite the right word. On a societal level, since it's not about any given person, "too much" is more about dysfunction. It can also be absurd at some point, on a personal level.

I'd also note that "the rest of us" decide all sorts of things. I'd prefer it not to be in the way the French Revolution went, just for one example. Heads in baskets are more offensive than people having "too much" wealth.

SAVE THE RICH!!!

I've always found it amusing when people use one hand to point a disapproving finger at anyone on welfare while using the other hand to take a government price support check.

self-reliant farmers are self-reliant!

Who gets to decide how much is too much?

voters do.

It's not like we didn't have a 90% marginal rate in the past - with a robust economy. Yes, very few people paid the top rate. Isn't that what you'd expect? Why didn't the economy fall to pieces?

What policies are y'all talking about?

Between euphoric bouts of dreaming of the abolition of private property and the advent of pure communism, I am willing to abide by a market system that is more or less fair for all, curbs and/or rectifies market failures (of which there are many), and does not allow private actors to burden others with the costs of market externalities.

For an introductory primer on public policies that promote wealth inequality, try reading Dean Baker's rigged. It's free. No wealth required.

I'm not sure what this means.

Well, you either have workers or you don't.

I grant and always have granted that innovation comes from a variety of quarters.

I rest my case.

What policies are y'all talking about?

Capital gains taxed at about half the rate of earned income.

If a business folds and it owes money to its employees, and also owes money to creditors, creditors get paid, employees pound sand.

Right off the top of my head.

I'm not sure what this means.

It means what it says.

Capitalism is not the only economic form that supports capital formation and a market economy.

People do things other ways. Those ways work, too.

I am neither for nor against capitalism. I am against insisting that it is the only way to do things, or the best way to do things. I am very much against assuming that every good thing is the product of capitalism.

It's good for some things, less good for others. We get to choose how we want to live.

Who gets to decide how much is too much?

Who gets to decide any of this stuff?

Who decided that 39.6% was the magical right number for a top marginal rate, and not 70%?

Who decided that capital gains should be taxed at half the rate of earned income?

The way we do it here is, we vote, and policy flows from that.

Government is largely a consumer of wealth, not a creator. And when it does create something of value by spending money, would greater value have been created elsewhere by private actors spend the money?

Another interesting topic for a separate post and discussion. I disagree, but to some extent it's a matter of semantics. Government is largely a reallocator of wealth, mostly in the form of transfer payments, which I categorize differently from services, e.g. national defense, fire department, police and other collective endeavors that could exist separately from welfare, Medicare, Medicaid, etc.

Providing these services consumes wealth, not create it. But increases in people's health, social capital and safety will allow them to create more wealth than otherwise.

There is plenty of private sector activity generated by these expenditures. It isn't as if a dollar spent on Medicare disappears after it goes to a doctor or a hospital.

that's what capital enables. capital per se does nothing.

"Enabling" is not "nothing".

capital formation does not require capitalism, or the promise of multi-million dollar paydays. nor do market economies. nor does innovation and invention, nor does material production at scale.

I'm not sure this statement can be supported empirically if it even makes sense. Capital formation is capitalism. Market economies are capitalism. Innovation and invention are the end product of market needs and human creativity. But, whatever.


people do things for lots of reasons. people do really hard and demanding things for lots of reasons. people do really hard and demanding things and never make a dime from it, in more than a few cases. they aren't saints, they just enjoy doing whatever it is, or maybe it just needs doing. so they do it.

wj's post is about the concept of enough. the idea that it is harmful to pursue and accumulate wealth beyond the point where it is of any real use to you is not a "progressive left" idea, it is a traditional one. it is in fact ancient. we ignore it to our own harm, personally and as a society.

the world does not need greed, or excessive ambition, to make the wheels turn. the fact that we find it difficult to imagine any alternative speaks volumes, and what it says is not good.

Everything you say is true. Here is some more true stuff: people ought to be nice to each other. People ought help other people. People shouldn't gossip about others. People shouldn't manipulate other people. People shouldn't lie.

Here are some things that some people think are good ideas and others don't: people should not have sexual intercourse prior to marriage; people should only have sexual intercourse with people they love and intend to marry; people should not offend other people; people should respect other people's opinions.

And so on and so on. You don't like excessive accumulation of wealth and think it's unhealthy, etc. I disapprove of vegetarians*. But, regardless of what you like and what I like, why should our views be foisted on someone else?

Motherfracking, YES they consume wealth, because that is the ultimate point of creating the fracking wealth in the first place. To create concrete benefits for the whole of society. Without that, the wealth is, as I said before, literally useless.

This is what I'm talking about with the whole cult of money business. The point of 'wealth' is not simply to create more 'wealth' ad infinitum. That's wealth the parasite, a parasite whose own growth and reproductive cycle has completely colonized and is in critical danger of starving its own host.

Even if a given private investment can nominally produce greater 'wealth' than a government one in some instance, it's pointless without the mechanisms to yoke that engine up to pull some weight. Wealth needs to be a mutualist symbiote, not a parasite. And for that we need things like labor unions, and high progressive taxes funding social services, and limits on the role of money in elections and politics...

You know, all the things we don't really have anymore, and are told we can't have because it's 'too expensive' and will interfere with wealth creation(!)

Ok, this is pretty theoretical. Wealth is the end product of getting more than you spend. That's all it is. I'm in the school that thinks, beyond a certain point, it's hubris or excessive or whatever, to keep trying to make more. However, my "certain point" and many others' is likely different. In fact, absent a minor economic miracle, I will likely fall far short of that "certain point" where I would say adios for all time to working for a living. Wealth isn't supposed to do anything. The real argument here is for wealth redistribution/reallocation. Which is also a topic worthy of its own post.

Where I live the difference is this: the trash guy who works fo rhe town has a living wage and health benefits and protection from on the job injury.He is paying taxes and pays into SS. His job is steady and he probably has a retirement program In fact he has one of the very few middle class jobs left.He has disposable income to dispose of at local businesses.

If the trash guy manages his/her affairs so as to have a bit left over, or if he/she works a second job or marries someone who is employed and can create a surplus, that surplus is wealth. Of if he/she uses his/her pay to go to night school and then winds up being a CPA or getting a better job that allows for a surplus at some point, wealth is again created. All good.

The point being that when we leave that world behind for the world of Ford and Merck and Apple, we're necessarily already leaving 'free markets' behind to a certain degree. It may well be -- per McKinneyTx -- that these latter megaventures are indispensable to our way of life, but free enterprise they are not.

Sure they are. There is plenty of competition. And, for good or not, there are some enterprises that have to be huge in order to get stuff we really need, like bulldozers and tractors and 737's and stuff like that.


*Actually, I don't disapprove of vegetarians. More tongue in cheek.

If I live next to a beautiful park, do I have more wealth than someone who lives next to a garbage dump, all other things being equal?

Who gets to decide how much is too much?

voters do.

So, two wolves and a sheep deciding what's for lunch.

Who gets to decide how much is too much?

voters do.

Can voters decide that women can't have abortions? That black people can't vote?

It's not like we didn't have a 90% marginal rate in the past - with a robust economy. Yes, very few people paid the top rate. Isn't that what you'd expect? Why didn't the economy fall to pieces?

Actually, those rates were put into effect during the Depression and they did not stimulate a vibrant economy. WWII stimulated a vibrant economy. When the war ended, only one country was left with an industrial base of any real consequence and that was us. Being the only game in town beats the system by definition. Now, we have to compete. So, things are different.

Capital gains taxed at about half the rate of earned income.

In what way does this favor any one person over another? Anyone who buys stock or any other capital asset and holds it for a year and a day gets the same tax treatment.

If a business folds and it owes money to its employees, and also owes money to creditors, creditors get paid, employees pound sand.

This benefits the wealthy in what way, assuming it's even correct?

Can voters decide that women can't have abortions? That black people can't vote?

if you'd like to argue that taxes are unconstitutional, please proceed, counselor.

I'd be hugely impressed if you or LJ could identify a single tangible item used in the US that isn't from the private sector...

License plates :^)

Can voters decide that women can't have abortions? That black people can't vote?

Are you saying that people have an inalienable right to particular tax rates?

Actually, those rates were put into effect during the Depression and they did not stimulate a vibrant economy. WWII stimulated a vibrant economy. When the war ended, only one country was left with an industrial base of any real consequence and that was us. Being the only game in town beats the system by definition. Now, we have to compete. So, things are different.

The argument isn't that a high marginal tax rate on high income will stimulate the economy. The argument is that it will do or allow some number of good things without bad economic consequences.

In what way does this favor any one person over another? Anyone who buys stock or any other capital asset and holds it for a year and a day gets the same tax treatment.

Wouldn't the same be true if capital gains were taxed at the same or even higher rates than income? Couldn't you ask the same question regardless of the tax regime in place, so long as it didn't treat people differently on any basis other than the types and levels of income or wealth?

I think we should have a tax code that specifically targets McKinney for higher tax rates than everyone else. Maybe his friends, family, colleagues, and clients, too.

That's what we were all really talking about, right? That was the subtext.

If I live next to a beautiful park, do I have more wealth than someone who lives next to a garbage dump, all other things being equal?

Can you sell your property for more than the other guy can sell his? The difference would be the measure of living next to the park. Like good schools drive up real estate prices.

I'd be hugely impressed if you or LJ could identify a single tangible item used in the US that isn't from the private sector

cash.

air

Sure they are. There is plenty of competition. And, for good or not, there are some enterprises that have to be huge in order to get stuff we really need, like bulldozers and tractors and 737's and stuff like that.

I mean, it's funny you mention 737s. Last I checked 737s were made by Boeing. There are no more than half a dozen or a dozen companies in the world (Airbus, Embraer, Bombardier, etc.) that could fairly be said to compete with Boeing in the passenger jet space, likely narrowing to only one or two at the upper end of that market. AFAIK, ALL of them are pretty intimately tied into some kind of system of intimate government support in their respective countries, ranging from outright ownership (e.g., United Aircraft Corporation) to supplementation via defense contracts or R&D support.

This is NOT a free market in anything like the sense of the street of shoe shops.

Is that sort of quasi-monopolistic-quasi-nationalized arrangement necessary to produce large passenger jets efficiently? Possibly so.

But you can't have it both ways: if a huge pre-existing industrial base and/or intimate and cozy relationships with national governments is a necessary condition for a given industry to function effectively, then that is by definition not an industrial sector with, for example, low barriers to entry and exit, or probably many of the other conditions necessary for free markets to form.

And of course, even on a smaller scale, the point is that even a medium-small sized corporation is, internally, not a free enterprise at all. It's literally a bureaucracy.

So I'll readily concede that such scales of organization are probably necessary to efficiently produce stuff on an industrial scale. Bureaucracies FTW!

(And yes, there is some sense in which the competition of one such bureaucracy with others provides, at least theoretically, a useful outside check on some of the excesses an unimpeded bureaucratic system can otherwise become mired in. But those checks become less and less effective the larger and more entrenched the enterprise becomes, or the fewer other players with which it meaningfully competes. See, e.g., cable companies, or the auto industry.)

land
rivers
ocean
lakes

WWII stimulated a vibrant economy.

Yes. The government took over pretty much the entire economy and spent hugely for war material.....a fiscal footing opposed by "conservatives" ever since. This spending was coupled with forced savings (price controls, buy war bonds) that created a situation of huge pent up demand once hostilities ceased.

As for our being the only economy "standing", well, foreign trade was not that big a part of our economy during the 40's thru the 60's. We basically assisted the creation foreign competition as an ancillary part of our anti Soviet Union Cold War foreign policy.

Now, we have to compete

Who is "we" kimosabe? U.S. factory workers have to compete. You, being an attorney do not. You are part of the coddled professional class.

Can voters decide that women can't have abortions? That black people can't vote?

In fact, they could. It's in the Constitution...something, something....Amendments. You're an attorney, correct?

Business Person A is the rule, in my experience, not the exception. Every small business owner I know who follows this model does well. including me FWIW.

The point is not that they are necessarily rare.*

The point is: what the heck do you mean by "doing well" exactly? E.g., would you automatically consider businessperson B to be doing better than A, assuming that, say, B brings home $20 million a year and A only $1 mil?

----
* One of the central touchstones of this discussion is the fact that real people do indeed do stuff for a variety of reasons other than simply making the most money possible. It's not surprising that many people would continue to want to run responsible businesses. Nevertheless, it's a problem that there exist people who do not run responsible businesses, and that these latter are generally regarded as just as -- if not more -- successful than the former.

WWII stimulated a vibrant economy. When the war ended, only one country was left with an industrial base of any real consequence and that was us.

The war stimulated the economy only in the broken window fallacy sense. It destroyed a tremendous amount of human capital and wealth leaving the world very much poorer than it was before the war began, including the US.

The industrial base later became a competitive disadvantage as countries like Germany and Japan were able to start from near scratch with new, more productive capital assets and grow their economies while their governments were too weak to interfere much.

Hong Kong went from a third world to a rich first world country in a couple of generations because the English rulers enforced basic rule of law and then had tea while mostly leaving everyone alone.

Look, we all overstate. It is your doubling down that looks so idiotic. Don't know if you are looking to Trump for argumentation tips or not, but this

I'm pretty sure I'm saying almost the same thing substantively in both instances

I'm pretty sure you are not.

If I were to claim that virtually all languages had feature X and another linguist said horseshit, and I then came back later and offhandedly referenced the conversation and said 'When I was talking about Romance languages and said 90% of them had feature X, linguist X said my claim was horseshit', I expect I would get ripped to shreds and I believe I would deserve it. After all, it sure looks like I'm trying to set up an impression that the other linguist is making a kneejerk reaction to a perhaps reasonable claim, when in fact, I got called out for talking out of my ass. But perhaps linguists have higher standards of honesty then you are used to.

Prostate cancer is an interesting case because it strikes men and the time to be concerned is after you turn 50. So, as they say, there's gold in them thar hills. It's therefore unsurprising that there are a lot of people and companies seeing what kind of treatments they can produce and being motivated by how much money they could potentially make. Certainly something I'd be interested in discussing.

But your argument isn't that, it's that you first argue that in medicine, no one anywhere does anything that isn't for profit. You then tamp down to 90% for prostate cancer treatments cause it was in the context of my surgery.

Then, when us wild eyed leftist commies start complaining about things like this

https://hbr.org/2017/04/the-cost-of-drugs-for-rare-diseases-is-threatening-the-u-s-health-care-system

you can say 'a-ha, didn't I say that all medical innovation is from the private sector! Gotcha!' So we get repartee like this, when you quote hairshirt saying

Hey, where did Lockheed get all this money, anyway?

and you write

This is a good example of my point above.

If you don't see that this is bullshit argumentation, you really ought to stop and consider. It does both you and the conversation no favors.

As I said, everyone overstates things from time to time and a simple 'gee, let me step back a bit from my claim' would be so refreshing. But instead, we get things like this move of the goalposts:

you or LJ are free to point out a medicine or a device or a piece of equipment in use anywhere in the US or Japan to treat any condition including prostate cancer that is not produced in the private sector. (emph mine)

So to falsify your statement, we have to find a Dr. Brown who, instead of a time machine, is either welding together a DaVinci robot surgery system to let Marty McFly use for free or formulating, making and giving away, free of charge, doses of some medicine that will work on Michael J Fox's Parkinson's disease. Of course, in the story, Doc Brown has to get the money to make his time machine from Libyan terrorists, so Back to the Future is arguably more realistic than your line.

Just to harp on this a little more, none of this is the same as what you started with, which was, repeated here for convenience sake:
Virtually every device and medicine used in modern medicine is the product of free enterprise and the profit motive.(again emphasis mine)

This is about the idea, which you morph into a question about production. Now, I expect you can do your best Bill Clinton imitation 'ahh, it depends on what you mean when you say "being the product of"' and maybe you can convince yourself that works, but if I were to say 'this fantasy is the product of your febrile imagination', I expect you would understand it to mean that it came out of your head, not that you somehow took the idea from someone else and then reshaped it.

I'd also point out that I rarely wade in on these issues of taxation and government funding cause I think that the details for all this stuff are pretty important, and I don't really know enough of them. This is not to suggest that people shouldn't talk about them, it's just not my cup of tea. So your constant efforts to try and create a leftist conspiracy over redistribution of wealth or denigration of the private sector (and note that the OP is by neither me nor Russell) are rather tiresome, especially when it is in the form of 'I'd be hugely impressed if you or LJ could...'

tldr, stop making shitty arguments. You are embarrassing yourself.

In fact, I'd be hugely impressed if you or LJ could identify a single tangible item used in the US that isn't from the private sector...

Besides all the other answers people have offered, the answer to this question is a foregone conclusion, because this is how our culture produces things. So of course it's how most things will be produced.

* One of the central touchstones of this discussion is the fact that real people do indeed do stuff for a variety of reasons other than simply making the most money possible.

Indeed. Most small businesses are in fact somebody buying themselves a job where they can "be the boss". Most are undercapitalized. Most are gone within 5 years.

I have also noticed that none of our conservative interlocutors invoke actually existing micro-economic classical pure competition market theory...you know, the theory that holds that (economic) profits are competed away, for example.

Just a general statement aimed at no one in particular:

The way the system works, income above a certain level allows the accumulation of wealth. Wealth above a certain level allows one to gain further income. This is a positive feedback loop.

I'd say it is currently not sufficiently attenuated, thus the increasing concentration of wealth and income. A larger and larger share of national income continues to concentrate in fewer and fewer hands, mostly the ones who are already the wealthiest.

At some point, the system breaks down. There is insufficient demand for whatever capital might produce. People suffer and violence erupts.

Why is this good? Just because we make it possible for some number of people to have individual net worth in excess of, say, $100M (just to throw a number out without much analysis)?

The industrial base later became a competitive disadvantage as countries like Germany and Japan were able to start from near scratch with new, more productive capital assets and grow their economies while their governments were too weak to interfere much.

There is so much horseshit packed into this claim that I do not even know where to begin. The growth of Japan's post war economy, to take just one example, was fueled by low cost exports coupled with highly protected domestic markets. The US allowed, even encouraged this policy.

Capital formation is capitalism. Market economies are capitalism.

both capital formation and market economies existed before - centuries or millenia before - capitalism as an economic doctrine.

so, no.

how much of that wealth at the top is essentially fictional? if the DJIA loses 50% of its value tomorrow, how much of their Wednesday wealth do the top 1% have on Friday?

If I live next to a beautiful park, do I have more wealth than someone who lives next to a garbage dump, all other things being equal?

Probably, assuming you own your home.

if you'd like to argue that taxes are unconstitutional, please proceed, counselor.

Not arguing that at all. If we didn't have a constitution, why would it be ok for voters to decide how much someone can make and keep but not to allow votes on abortion or how to treat people of different colors? The principle is telling other people what they can and cannot do. Why one and not all?

cash.

Ok, good one.

air

Not so good. Clearly, I'm asking about tangible items produced by human activity.

This:

Look, we all overstate. It is your doubling down that looks so idiotic. Don't know if you are looking to Trump for argumentation tips or not, but this

and this:

tldr, stop making shitty arguments. You are embarrassing yourself.

LJ, you are truly a delightful human being. Thanks for the thoughtful and substantive, non ad hominem response. I am a better person for this.

Never again will I say "the Mustang is a product of Ford Motor Company". I will only say "Ford Motor Company produces the Mustang." Because one is a lie and the other is a true statement.

Why one and not all?

we already have taxes, that point is presumably settled. all we're arguing about is the rate. this has nothing to do with racism.

both capital formation and market economies existed before - centuries or millenia before - capitalism as an economic doctrine.

Serious question: can you give me some examples? Are you thinking of the transition from feudalism via the Renaissance?

how much of that wealth at the top is essentially fictional?

Excellent point. Somebody buys a painting for 50 million--does that painting remain worth 50 million? To me it's like buying a car but paying 100 times list price. Or a mega-mansion--it's only worth what someone will pay for it. At some point, the number of dumbasses with that kind of money would seem to run out, one would think. The Dow is different, but it's certainly not etched in stone that the market couldn't plunge and remain depressed for some considerable time, reducing "wealth" considerably in the process.

Is the NFL all about competition?
Is it a capitalist enterprise?
Is it a free-market enterprise?

I only ask because the NFL owners (rich capitalists, by anybody's definition) have decided that NFL players (rich working stiffs, as even McKinney might agree) are not allowed to demonstrate anything but "patriotism" on the field.

http://www.bostonglobe.com/sports/patriots/2018/05/23/nfl-owners-discussing-ways-handle-national-anthem-protests/F6qhnPxjUcRX6y97Bg5ddJ/story.html

--TP

Pretty much every material thing we touch in our lives was build/produced by someone intending to make a profit. Capping income, capping wealth has the effect of capping the economy.

Perhaps I'm just excessively slow this morning. But I'm having trouble seeing how the first sentence leads to the second.

Actually, I'm not seeing anything to substantiate the second sentence. Sure, it you cap total wealth you cap the economy. But we are talking here about capping individual wealth -- whole different discussion. Unless you think that somehow only the wealth of the super rich matters.

we already have taxes, that point is presumably settled. all we're arguing about is the rate. this has nothing to do with racism.

Yes and my point is a bit different, more like a thought experiment. Let's say we hit the reset button and had no income tax or taxing scheme at all and no 14th amendment. Against that background, what principle distinguishes permitting voters to tell a person he/she can only acquire X but will not allow voters to tell women they can't have abortions or blacks that they can't own property?

...so much horseshit...

Quite a bit granted.

Wirtschaftswunder (Economic Miracle)

Japanese Economic Miracle

Probably, assuming you own your home.

I guess I was trying to make some kind of allusion to the idea of wealth not necessarily being limited to monetary wealth or personal possessions. Likewise, I make a distinction between quality of life and standard of living, since cheap TVs and phones are often said to justify our current economic state.

If we didn't have a constitution, why would it be ok for voters to decide how much someone can make and keep but not to allow votes on abortion or how to treat people of different colors? The principle is telling other people what they can and cannot do. Why one and not all?

We do have a constitution, and some things are in it and some things aren't for a bunch of reasons (if I can be so technical and specific about it). That aside, when telling people what they can and can't do, which is pretty much what law is, you generally have to justify preventing someone from doing something on the basis that allowing it would do enough harm to someone else (or lots of other people) that you can't allow it and still have a functioning free and fair society (assuming a free and fair society is what you want).

Are you really saying that the constitution is the only thing that creates a distinction between near confiscatory tax rates at very high incomes on one hand and racial discrimination on the other? Is that the moral argument you want to make, based on the generalization that "you're just telling people what to do, so what the difference?"

...are you suggesting, for example, that I-95 shouldn't have been built, and that it should have been left to private actors to figure out how to move people and goods up and down the East Coast?...

No. Government should build infrastructure. Financial markets should allocate capital to speculative ventures.

how much of that wealth at the top is essentially fictional?

The wealth isn't fictional but its evaluation may be since a large component of things like stock prices are based on expectations, not current value.

To expand a bit on the tax-rate thing, I would also make the argument that no one would be accumulating the sort of wealth they can in the ways they can in the first place without a functioning system of government in place and all the underpinnings the government provides, so it's justifiable for the government to limit (or at least tax heavily at some point) the income or wealth someone might only attain with the government's infrastructure and institutions in place.

Capital gains taxed at about half the rate of earned income.

In what way does this favor any one person over another? Anyone who buys stock or any other capital asset and holds it for a year and a day gets the same tax treatment.

Most obviously, someone who cannot afford to buy stock or other capital asset doesn't get the same tax treatment, and so has less chance to be able to afford to do so in the future. Someone who already can afford to do so (i.e. is more wealthy) gets a leg up on accumulating yet more wealth.

Sure, someone who could buy stocks, but chooses to go on a cruise, has no complaint that someone else has done so. But we are talking about all the folks who earn a salary too low to do either. They not only are discriminated against in the tax rates, they are also discriminated against in that a far bigger portion of their income goes to taxes (Social Security) than those who make above some arbitrary threshold. (One which, note, is not closely related to the amount that would have to be saved to actually pay for their retirement/Medicare.)

In short, if you start from something far distant from a level playing field, you can't really argue that, once you get onto the high plateau, everybody gets treated the same.

(assuming a free and fair society is what you want)

It would be very difficult to have both.

Financial markets should allocate capital to speculative ventures.

Okay. But who said government (and only government?) should allocate capital to speculative ventures, or that financial markets shouldn't? (Is R&D a speculative venture?)

I'm getting lost here. I thought we were talking about how high to tax income or wealth, given the marginal utility of money, and whether or not doing so would somehow put an end to capital investment. Maybe I have to re-read the thread.

Government should build infrastructure. Financial markets should allocate capital to speculative ventures.

And yet, a lot of what we now regard as basic, necessary, infrastructure started life a speculative ventures. Speculation by government, perhaps, but speculative in the sense that it wasn't clear (indeed, was loudly disputed) whether it was needed at all.

The distinction is nowhere near as clear as the above would suggest.

Most obviously, someone who cannot afford to buy stock or other capital asset doesn't get the same tax treatment, and so has less chance to be able to afford to do so in the future. Someone who already can afford to do so (i.e. is more wealthy) gets a leg up on accumulating yet more wealth.

Don't take the bait. McKinney's not framing it the way you are. But McKinney's question about how a given tax rate on a given type of income favors one person over another is meaningless, because it applies regardless of the tax rate. It has no bearing on the issue at hand.

(assuming a free and fair society is what you want)

It would be very difficult to have both.

Well, it might be difficult to have completely free and completely fair at the same time. But it is definitely possible to have a mix.

That mix can go all the way down to totally unfree and totally unfair. So some level of getting both is clearly possible. Although certainly you can argue about the mix. (Libertarians, at least, loudly make the case for going all in on one axis. The rest of us don't have to buy into their ideal type formulation.)

Not so good. Clearly, I'm asking about tangible items produced by human activity.

Courts?

Don't take the bait. McKinney's not framing it the way you are. But McKinney's question about how a given tax rate on a given type of income favors one person over another is meaningless

If someone is making a sincere, good faith, effort to explain his position, I'm willing to engage. Heck, I'll even engage with McManus occasionally. For all that I consider his views totally divorced from objective reality.

If McKinney was just trolling, you might have a point. But my sense is that he is doing no such thing.

Perhaps I'm just excessively slow this morning. But I'm having trouble seeing how the first sentence leads to the second.

Actually, I'm not seeing anything to substantiate the second sentence. Sure, it you cap total wealth you cap the economy. But we are talking here about capping individual wealth -- whole different discussion. Unless you think that somehow only the wealth of the super rich matters.

Ok, if you cap individual wealth, then by definition, you've capped the size of any individual's economic undertaking. No privately owned company could ever have a net worth greater than your individual-allowed amount of wealth. Everything else gets confiscated with your 100% tax. That is one example. The larger picture is that if everyone is capped at X then your economy is never more than X times the population. So, if you cap everyone individually, you've capped everyone in the aggregate.

Ok, if you cap individual wealth, then by definition, you've capped the size of any individual's economic undertaking.

What if we just capped individual wealth at death via a 100% estate tax over amount X?

Ok, if you cap individual wealth, then by definition, you've capped the size of any individual's economic undertaking. No privately owned company could ever have a net worth greater than your individual-allowed amount of wealth. Everything else gets confiscated with your 100% tax. That is one example. The larger picture is that if everyone is capped at X then your economy is never more than X times the population. So, if you cap everyone individually, you've capped everyone in the aggregate.

I mean, I'm not actually necessarily in favor of a hard cap, but these objections are silly. You're probably doing more to convince me to support it!

Of course privately owned companies could be larger than the individual wealth cap. Just no individually owned private companies.

And of course, none of the details for this proposal, such as it is, have been quantified - it could well be that the sensible place to set this cap is determined to be hundreds of millions of dollars, or that the cap is on personal income, not necessarily business capital, etc.

Nor is it obvious to me that what has been proposed is to be a static cap, never adjusted for economic growth. Yet you assume this must be the case!

Better strawmen, please.

Are you really saying that the constitution is the only thing that creates a distinction between near confiscatory tax rates at very high incomes on one hand and racial discrimination on the other? Is that the moral argument you want to make, based on the generalization that "you're just telling people what to do, so what the difference?"

I hope that's not what I'm saying but thanks for asking for a clarification. I do appreciate that. I am trying to get an understanding--perhaps this is just too abstract, but I don't think so--of what reasoned principle allows voters to limit anyone's wealth ("you can only have so much and no more")and not be equally arbitrary with others in a different context, "No, you can't vote. No, you can't have an abortion.")

Don't take the bait. McKinney's not framing it the way you are. But McKinney's question about how a given tax rate on a given type of income favors one person over another is meaningless, because it applies regardless of the tax rate. It has no bearing on the issue at hand.

Actually, it was a digression. I raised the side issue with Russell and BP, inquiring as to specifics of what public policies perpetuate the wealthy. I got my answer. I don't agree with them but they both responded, which I appreciate. I articulated one of the bases for my disagreement, i.e. cap gains applies to anyone's cap gains, not just the wealthy.

I'm getting lost here. I thought we were talking about how high to tax income or wealth, given the marginal utility of money, and whether or not doing so would somehow put an end to capital investment. Maybe I have to re-read the thread.

We all probably have our own take on what we are discussing. I mainly disagree with the notion of capping someone's wealth for the reasons I've stated from my initial comment up to now. A corollary to my thinking is the propriety of deciding for someone else what amount of the money they earn can be kept. Big surprise: I think taking it on ourselves to limit what someone can otherwise legally do is problematic, to say the least. Counterproductive from a policy standpoint, and problematic from a personal freedom standpoint.

If I may say, the give and take, for the most part, reminds me of our pre-Trump discussions.

Ok, if you cap individual wealth, then by definition, you've capped the size of any individual's economic undertaking. No privately owned company could ever have a net worth greater than your individual-allowed amount of wealth. Everything else gets confiscated with your 100% tax.

I think I may have been unclear. I was talking about a high (I was actually thinking about 98%) tax rate on income. That isn't a cap on wealth, per se.

Neither (at least as I, as a non-tax-accountant, understand the tax law) does it cap the size of privately owned firms -- to the extent that they have been grown by the current owner. If I start a firm (worth zero) and grow it into a billion dollar company, that billion dollars wasn't income to me. It was, mostly, an artifact of increased cashflow rather than net income to the owner(s). Especially if, as is possible, it's an S corp.

McTX: So, if you cap everyone individually, you've capped everyone in the aggregate.

Now that's a true but exceptionally silly argument.

If we "capped" every American at $1 million of annual income, we would be capping GDP at $300 trillion.

If we "capped" every American at $1 billion of net worth, we would be capping US wealth at ... well, you do the math.

--TP

of what reasoned principle allows voters to limit anyone's wealth ("you can only have so much and no more")and not be equally arbitrary with others in a different context, "No, you can't vote. No, you can't have an abortion.")

I'm only dimly able to even see your objection here.

I mean, let's turn the question around: What principle allows a government to restrict anyone to merely one vote when their intelligence, ambition or resources might allow them to wield so many more?

If that seems like a silly question, then perhaps you can see my perspective on yours. 'You can only have so much and not more' is actually kind of a fundamental principle of democracy.

And of course the original question you asked was why voters could not say that black people could not vote. To which the answer is obviously the principle of equal protection. We (finally) figured out that there's no valid reason for the government to distinguish between black people and other sorts of people for the purposes of civic participation, so we (in theory, if not in practice) don't.

Interestingly, that doesn't automatically extend to other kinds of restrictions on voting. We don't (yet) extend the franchise to children under the age of 18, for example. Equal protection doesn't apply because
we collectively allow that there are (arguably) legitimate reasons to not want young children to vote. The voters, through their representatives, certainly could decide to change this age -- either down, or, indeed up, or remove it entirely -- and I don't think there's any a priori reason to think that such changes would be immoral.

And that's for a fundamental modification of the franchise.

Changes in property and tax law seem rather more easily justifiable.

Certainly, I would agree that anyone wanting to make such a change should present a positive case for it, but that's exactly the argument being made here. I think there are indeed a variety of reasons to think that 'excessive' wealth and income are indeed negative drains on society.

Assuming enough others agree, there isn't anything remotely unprincipled or immoral about putting those judgments of cost and benefit into law.

If McKinney was just trolling, you might have a point. But my sense is that he is doing no such thing.

Thank you for this. Much appreciated.

Of course privately owned companies could be larger than the individual wealth cap. Just no individually owned private companies.

Ok, I see your point, but you're really making my point. If Henry Ford or Sam Walton or Bill Gates had decided to not incorporate, how large would their companies be? No larger than the amount the voters would allow an individual to keep.

or that the cap is on personal income, not necessarily business capital, etc.

I'm pretty sure there is no meaningful distinction between the two, "business capital" not being a recognized term of art or accounting concept AFAIK.

Courts?

Built by the private sector, paid for with public funds. Ditto the pens, paper, computers, etc. Good try, though.

What if we just capped individual wealth at death via a 100% estate tax over amount X?

It would be problematic for several reasons but I'm not nearly sophisticated enough in economics to do more than give some examples of the downside. Let's assume an estate cap of 25M. Let's further assume an estate of 250M, of which 200M is a going business concern employing 300 well paid employees. If the government imposes a 100% tax on that business, it would have to be sold or broken up to pay the tax. I'm not sure what good comes of that. That's my one example, off the top of my head.

Big surprise: I think taking it on ourselves to limit what someone can otherwise legally do is problematic, to say the least. Counterproductive from a policy standpoint, and problematic from a personal freedom standpoint.

Question for you: When driving down the freeway, what is the maximum speed you go?

I'm betting (at least if Texas freeways are anything like those in California) there are long stretches where going 10, 20, or even 30 mph over the posted limit doesn't pose any real safety hazard. But are those speed limits some kind of affront to your personal freedom? Are they legally problematic?

Sure, you and your fellow drivers may ignore them on occasion. (Here, the long freeways run 10-15 mph above the posted limits.) But if you get a ticket for doing so, are you affronted?

And if not, how would money be any different, from a legal stantpoint, from speed?

Now that's a true but exceptionally silly argument.

If we "capped" every American at $1 million of annual income, we would be capping GDP at $300 trillion.

If we "capped" every American at $1 billion of net worth, we would be capping US wealth at ... well, you do the math

Silly is subjective. Yes, if every citizen, newborn through hospice had 1M, you would be correct; however, children don't work and therefore can't make a living and the only way for an adult to accumulate 1M is to have a job that allows for saving that amount after taxes. There won't be an employer who can pay those wages because the employer is likewise capped out. So, maybe not so silly.

Courts?

Built by the private sector, paid for with public funds. Ditto the pens, paper, computers, etc. Good try, though.

Brilliant evasion, counselor! But you know darned well he meant the courts as an institution, not the physical plant.

If we "capped" every American at $1 million of annual income, we would be capping GDP at $300 trillion.

per year, no less.

The good would be to break up dynastic and concentrated wealth. Which is not inherently an evil all by itself, but what I think is driving part of this discussion is the use to which the wealth is put, or could be put.

I'm not sure why the 3rd, 4th, 5th, etc. generation of Fords, Rockefellers, Hiltons, Marriotts, Goodyears, Lauders, Pritzkers, Kennedys, etc. living on Grandpa/ma's or older's money does any good either.

And honestly, in today's environment, having to sell the business shouldn't be an issue, at least from an ability to get the cash standpoint. The business could continue as a going concern, 300 employees and all.

If Henry Ford or Sam Walton or Bill Gates had decided to not incorporate, how large would their companies be? No larger than the amount the voters would allow an individual to keep.

I think many here might see that as something that goes in the plus column for the proposal, not the minus column.

All you're really arguing there is that a radically different arrangement of wealth distribution would not result in a world that looks like the status quo.

To which the reply is: no duh.

The interesting argument is whether this alternative path is worse in some way, particularly for the average person, either worker or businessman, who is not a Gates or a Walton. You're not presenting a case on that front either way.

I'm pretty sure there is no meaningful distinction between the two, "business capital" not being a recognized term of art or accounting concept AFAIK.

Well, for starters, one is a flow, and one is a stock. But wj's reply of 2:39 is basically what I was getting at, and probably clearer about it.

If the government imposes a 100% tax on that business, it would have to be sold or broken up to pay the tax. I'm not sure what good comes of that. That's my one example, off the top of my head.

Pro: a bunch of revenue to do things with for the public

Pro: heirs who need to actually do something productive rather than live off the residue of something someone else did.

Cons: None in particular that I can see.

Let's assume an estate cap of 25M. Let's further assume an estate of 250M, of which 200M is a going business concern employing 300 well paid employees. If the government imposes a 100% tax on that business, it would have to be sold or broken up to pay the tax.

Clearly you aren't talking about the kind of business which is a one-man show -- regardless of how many assistants he has. Because if you were, it would be out of business anyway with his demise.

But if it isn't that kind of one man show, it can keep running without him. Which means that there is no reason to break it up. Any more than you call in the wreckers for his house if his heirs are not going to live there.

Maybe it takes a while for that kind of estate sale to get organized and executed. But since the business can keep running without him, it just keeps piling up value until the sale finally happens.

The wealth isn't fictional but its evaluation may be since a large component of things like stock prices are based on expectations, not current value.

This strikes me as a distinction without a difference.

McKinney,

Some "going business concern employing 300 well-paid employees" probably gets sold every day of the week in the US. What's the big whoop?

"What good comes of that"? The $225M tax revenue that you postulate becomes available to pay "the private sector" to build a courthouse you can practice in. Off the top of my head.

--TP

And Ugh got there first.

Question for you: When driving down the freeway, what is the maximum speed you go?

8-9 over the posted limit, assuming daylight driving, no rain and good visibility. I adjust downward as conditions warrant. DPS almost never stops anyone within 10 MPH of the posted limit.

I'm betting (at least if Texas freeways are anything like those in California) there are long stretches where going 10, 20, or even 30 mph over the posted limit doesn't pose any real safety hazard. But are those speed limits some kind of affront to your personal freedom?

Not at all--it isn't my road. It belongs to the state for the benefit of the traveling public to whom I owe a common law and statutory duty of care not to cause an accident by driving at an unsafe speed.

Are they legally problematic?

Not even remotely. A drivers license is precisely what it says it is: a license to drive on publicly owned and maintained roads. A condition of the license is compliance with the rules laid down by the owner, i.e. the state or subdivision thereof.

Sure, you and your fellow drivers may ignore them on occasion. (Here, the long freeways run 10-15 mph above the posted limits.) But if you get a ticket for doing so, are you affronted?

I don't like getting tickets, but I've never gotten one I didn't deserve.

And if not, how would money be any different, from a legal stantpoint, from speed?

I earned the money legally and paid the tax on it, therefore it is mine. Having that money puts no one at risk. It harms no one. If I had an airplane, I could fly it as fast as it would go. The only reason for speed limits is to protect people from each other and themselves. And, speed limits apply to everyone equally.

I could probably list more differences, but this is a fair representation.

I earned the money legally and paid the tax on it, therefore it is mine. Having that money puts no one at risk. It harms no one.

These are sort of the facts under debate though, aren't they?

Not at all--it isn't my road. It belongs to the state

And that money doesn't belong to you personally either. Cf the penalties for deliberately destroying the currency (nevermind counterfeiting).

Indeed, the entire (private) money is an artifact of the government.** And doesn't function without it.

** Yes, there was a time when there was private coinage. (Or coinage by multiple tiny governments.) Didn't work well, even with the small economies of the day -- see the costs of an entire industry of money changers. Wouldn't work even more so now.

The lack of transfer payments to achieve pareto efficiency is a big problem here

McTX: ... the only way for an adult to accumulate 1M is to have a job that allows for saving that amount after taxes.

"Accumulate 1M" is either a typo on your part, or a misunderstanding of the difference between $1M annual income and $1B accumulated wealth.

Anyway, I'd still be interested in your views on the NFL owners' mandatory-"patriotism" rule in the context of capitalism, concentrated wealth, free markets, and so forth.

--TP

Having that money puts no one at risk. It harms no one.

Looks like you are making a moral claim, not a political or economic one?

This strikes me as a distinction without a difference.

"Wealth is determined by taking the total market value of all physical and intangible assets owned, then subtracting all debts. Essentially, wealth is the accumulation of resources."

Perhaps. Are stock prices the market value of the resources they represent? Or the expected future market value of the resources?

Post entitled "enough" on the day Obama and Netflix announced their long term deal (without revealing the terms, because the terms are I suppose really complicated...1st refusal, int'l rights...and for tax reasons. Media projects are great tax shelters.)

Forget it folks. We are riding this train all the way to hell.

Brilliant evasion, counselor! But you know darned well he meant the courts as an institution, not the physical plant.

Ok, but if you read my many comments, I have repeatedly referred to tangible products or items produced by human beings. A court is not a tangible item produced by human beings, or at least not as I am trying to frame my arguments. A court is a judge empowered to try matters within the court's jurisdiction, which is a human being. A case could be tried anywhere, including under a tree.

The good would be to break up dynastic and concentrated wealth. Which is not inherently an evil all by itself, but what I think is driving part of this discussion is the use to which the wealth is put, or could be put.

I'm not sure why the 3rd, 4th, 5th, etc. generation of Fords, Rockefellers, Hiltons, Marriotts, Goodyears, Lauders, Pritzkers, Kennedys, etc. living on Grandpa/ma's or older's money does any good either.

And honestly, in today's environment, having to sell the business shouldn't be an issue, at least from an ability to get the cash standpoint. The business could continue as a going concern, 300 employees and all.

Well, several things. First,we're talking about a going concern. I picked that for a reason. The Kennedy's aren't operating the family business. They sit back and collect from a trust. In my example, because of our hypothetical estate tax, if we add to the fact pattern that it is a family business, the family cannot continue to own the business, if that is what it chooses to do. Because we've decided that having too much is a bad thing, we now require that someone else own that company. Seems coercive and arbitrary to me.

Some "going business concern employing 300 well-paid employees" probably gets sold every day of the week in the US. What's the big whoop?

It could be highly problematic for the 300 employees. Because it's a forced sale, the value will be diminished. But, to the larger point, I began my answer by saying I'm not sufficiently sophisticated to give a solid answer. I intuit it would be problematic on a macro basis but I can't document my position because I lack the knowledge to do so.

What good comes of that"? The $225M tax revenue that you postulate becomes available to pay "the private sector" to build a courthouse you can practice in. Off the top of my head.

I think a similar point was made some years back, the subtext being that I'm a beneficiary of the very system I criticize. Leaving aside my much repeated consent to a 40% tax bracket and my equally clear position that I'm fine with most if not all traditional governmental roles, at best, courthouses are to trial lawyers what highways are to anyone who has to travel from point A to point B to make their living. But even that takes it too far: Courthouses are not for lawyers. They are for courts. I think this number is close to correct, only about 10% of us do civil litigation. Courthouses exist, primarily to give criminal defendants a trial under law and secondarily to give citizens a forum in which they can, if they choose, enforce their civil, legal rights against other citizens or the state. Hiring a lawyer is optional for natural persons. Advisable but optional. Every natural person has the right to act pro se.

I'm just going to copy and paste something I wrote earlier, since it seems to have found new currency (no pun intended!).

To expand a bit on the tax-rate thing, I would also make the argument that no one would be accumulating the sort of wealth they can in the ways they can in the first place without a functioning system of government in place and all the underpinnings the government provides, so it's justifiable for the government to limit (or at least tax heavily at some point) the income or wealth someone might only attain with the government's infrastructure and institutions in place.

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