The Asset Economy
August 15, 2020 9:37 PM Subscribe
What we are seeing in the present era is the growing importance of intergenerational transfer and inheritance for the determination of life chances.
Crucially, however, this is not best understood as a return to an earlier era, when property was passed on (generally among men) from one generation to another in a more or less stable and mostly uneventful way. Inheritance is no longer a simple transmission of property titles, but increasingly a strategically timed transfer of funds that need to be leveraged and put to work in the speculative logic of the asset economy.
I can't fathom these arguments about inequality that completely avoid the idea of taxing the fucking rich. Like, "o no we can't fix the absurd accumulation of wealth by billionaire capitalists wat shall we do?"
TAX THEM. Fuck sake.
posted by prismatic7 at 12:30 AM on August 16, 2020 [36 favorites]
TAX THEM. Fuck sake.
posted by prismatic7 at 12:30 AM on August 16, 2020 [36 favorites]
Taxing billionaire's income and assets is very difficult, the more efficient return comes from taxing people earning six figures (about 30 million people in America) but it's not as politically popular.
posted by Braeburn at 2:38 AM on August 16, 2020 [6 favorites]
posted by Braeburn at 2:38 AM on August 16, 2020 [6 favorites]
And of course, as the youngest woman ever elected to Congress, when Ocasio-Cortez started her term she could not afford an apartment in Washington, DC.
I hate the Cortez story, which as far as I can tell is not one perpetuated by Cortez herself. There's a certain Calvinistic moral story to it (she worked 18 hours a day! kept the political literature behind the bar!) when in reality her story is the equivalent that if we all work hard we'll end up like Patrick Mahomes with $500million contracts. No, she's by far the exception and she shouldn't have to work 18 hours a day to barely afford a shitty apartment in the Bronx she shared with her partner. That drive and intellect that got her elected is rare, and to be honest has a lot of luck involved. We hear about those hustling that don't get to the top. That's not to diminish her accomplishments at all, I want to be clear about that, but the fact even when she got elected she couldn't afford an apartment should be beyond a human interest story. Presumably that's two people looking for a 1 bedroom in DC for $2,700. And I think the large number fallacy (or whatever it is called) where we as humans can see a $8 beer as expensive compared to an $4 beer seem to not flinch when rents go from $2,700 to $4,200.
TAX THEM. Fuck sake.
Yeah it is not that easy. I worked in a creative/tech industry in NYC so I could be bias in my experience but I would say easily 25% of people I worked with had some sort of family support. Paying half the rent, paying for a cell phone or a mom coming up for a "shopping trip" means a lot. Not only does it allow people to take greater risks in their career, since they have a social safety net, they take less in pay. Taxing Mark Zuckerberg is easy, you can't hide that much money. But taxing this sort of upper-middle class mini-elites who have a dad that's a lawyer in a midwestern suburb, well it is a lot easier to hide $2,000 a month then it is to hide $50 billion. And I would guarantee the people you're hurting at the $2,000 a month disposable income level will probably start to capture people who aren't as rich as you would think.
I don't think the answer is as simple as taxing or blaming the baby boomers, I mean people passing down wealth is as old as wealth. This article can make it seem like a new phenomena but really it is just the methodology, it is fundamentally the same.
A lot of this isn't preventing wealth transfer, that's going to be a whack-a-mole, I think it is better to work the problem from a different angle: provide a social safety net so that you don't have to work 18 hour days for two people to share an apartment in the most affordable area of NYC, or really anywhere: Free health care, either monthly minimum income (which will never fly if we call it that) but something so that everyone can have a working cell phone and internet access as this isn't 1930 and you can't just show up to the docks to get a job, you need a phone and basic internet access to get and stay employed, removing incentives to own property whether that is changing how lending works based on population or something that makes it equitable for someone in the suburbs to afford their first starter home but doesn't prop up someone buying a $5million brownstone in Brooklyn to rent out for ungodly rates, get rid of background checks that are like Gattaca at this point because only in the last 20 years or so has it been economical and feasible to look up everyone's history with $20. I mean not going to be perfect but a start.
Taxing billionaire's income and assets is very difficult, the more efficient return comes from taxing people earning six figures (about 30 million people in America) but it's not as politically popular.
Are you kidding? A median one bedroom in Manhattan is ~3k without playing games of subletting or roommates. That puts you at about $140-150k. And that's not dissecting if it is a 1BR or a room that might slightly look like a bedroom if you turn your head just right. Subletting and people living 3-4 an apartment isn't even considered in this. AND Manhattan has some bad neighborhoods it isn't all Midtown or FiDi. I wouldn't be surprised if most of Brooklyn wasn't equivalent or slightly higher.
Even getting out of the NYC/SF/LA bubble you're not looking at a lot of savings in a lot of urban areas as the article points out. Unfortunately not being in a top metro area really limits not only job choices but some top job choices. If you're in STEM, media, advertising it is a difference between not having a job and having one. I'm sure there's a plethora of other industries, but again this is not something that can really be solved.
Again, I think tax more is largely a whack a mole game that should still be pursued but going at it with social benefits rather than trying to figure out who deserves to be taxed I think is more productive. And yeah I can see Hannity now, "Geoff. wants to just give money and cell phones to homeless!" while showing a poor homeless guy shooting up in a park for 30 minutes, and yes that was basically a Hannity show when Kamala got nominated.
posted by geoff. at 2:53 AM on August 16, 2020 [6 favorites]
I hate the Cortez story, which as far as I can tell is not one perpetuated by Cortez herself. There's a certain Calvinistic moral story to it (she worked 18 hours a day! kept the political literature behind the bar!) when in reality her story is the equivalent that if we all work hard we'll end up like Patrick Mahomes with $500million contracts. No, she's by far the exception and she shouldn't have to work 18 hours a day to barely afford a shitty apartment in the Bronx she shared with her partner. That drive and intellect that got her elected is rare, and to be honest has a lot of luck involved. We hear about those hustling that don't get to the top. That's not to diminish her accomplishments at all, I want to be clear about that, but the fact even when she got elected she couldn't afford an apartment should be beyond a human interest story. Presumably that's two people looking for a 1 bedroom in DC for $2,700. And I think the large number fallacy (or whatever it is called) where we as humans can see a $8 beer as expensive compared to an $4 beer seem to not flinch when rents go from $2,700 to $4,200.
TAX THEM. Fuck sake.
Yeah it is not that easy. I worked in a creative/tech industry in NYC so I could be bias in my experience but I would say easily 25% of people I worked with had some sort of family support. Paying half the rent, paying for a cell phone or a mom coming up for a "shopping trip" means a lot. Not only does it allow people to take greater risks in their career, since they have a social safety net, they take less in pay. Taxing Mark Zuckerberg is easy, you can't hide that much money. But taxing this sort of upper-middle class mini-elites who have a dad that's a lawyer in a midwestern suburb, well it is a lot easier to hide $2,000 a month then it is to hide $50 billion. And I would guarantee the people you're hurting at the $2,000 a month disposable income level will probably start to capture people who aren't as rich as you would think.
I don't think the answer is as simple as taxing or blaming the baby boomers, I mean people passing down wealth is as old as wealth. This article can make it seem like a new phenomena but really it is just the methodology, it is fundamentally the same.
A lot of this isn't preventing wealth transfer, that's going to be a whack-a-mole, I think it is better to work the problem from a different angle: provide a social safety net so that you don't have to work 18 hour days for two people to share an apartment in the most affordable area of NYC, or really anywhere: Free health care, either monthly minimum income (which will never fly if we call it that) but something so that everyone can have a working cell phone and internet access as this isn't 1930 and you can't just show up to the docks to get a job, you need a phone and basic internet access to get and stay employed, removing incentives to own property whether that is changing how lending works based on population or something that makes it equitable for someone in the suburbs to afford their first starter home but doesn't prop up someone buying a $5million brownstone in Brooklyn to rent out for ungodly rates, get rid of background checks that are like Gattaca at this point because only in the last 20 years or so has it been economical and feasible to look up everyone's history with $20. I mean not going to be perfect but a start.
Taxing billionaire's income and assets is very difficult, the more efficient return comes from taxing people earning six figures (about 30 million people in America) but it's not as politically popular.
Are you kidding? A median one bedroom in Manhattan is ~3k without playing games of subletting or roommates. That puts you at about $140-150k. And that's not dissecting if it is a 1BR or a room that might slightly look like a bedroom if you turn your head just right. Subletting and people living 3-4 an apartment isn't even considered in this. AND Manhattan has some bad neighborhoods it isn't all Midtown or FiDi. I wouldn't be surprised if most of Brooklyn wasn't equivalent or slightly higher.
Even getting out of the NYC/SF/LA bubble you're not looking at a lot of savings in a lot of urban areas as the article points out. Unfortunately not being in a top metro area really limits not only job choices but some top job choices. If you're in STEM, media, advertising it is a difference between not having a job and having one. I'm sure there's a plethora of other industries, but again this is not something that can really be solved.
Again, I think tax more is largely a whack a mole game that should still be pursued but going at it with social benefits rather than trying to figure out who deserves to be taxed I think is more productive. And yeah I can see Hannity now, "Geoff. wants to just give money and cell phones to homeless!" while showing a poor homeless guy shooting up in a park for 30 minutes, and yes that was basically a Hannity show when Kamala got nominated.
posted by geoff. at 2:53 AM on August 16, 2020 [6 favorites]
TAX THEM. Fuck sake.It really is quite easy.
Taxing billionaire's income and assets is very difficult
Yeah it is not that easy
There's not that many of them.
posted by fullerine at 3:39 AM on August 16, 2020 [24 favorites]
I didn't see any comments about how this is the result of close to 100 years of specific policy to turn housing in an appreciating asset. Taxing might be good in the short term, but in the long term changing those policies is better. Minnesota, Seattle, and now recently Portland have made great strides to change that - and cities that are not yet constrained and as such haven't had to still exist - mostly southern and southwestern.
Plenty of other places in the US housing is a depreciating asset, - the Rust Belt, nearly every small town, so in my opinion changing local policy is more important than a national policy. Then again, it's very economically and environmentally wasteful to move people en-mass from existing housing in the Rust Belt to new housing in the south.
It's really interesting that housing is one place where technological improvements haven't translated into either cheaper prices nor supply. Consider than in the old days, new cities in the US didn't grow slowly - they grew at 50k people a year. NYC grew at 500k people per decade for a long time. Some of that was overcrowding but certainly not all of it. Now NYC builds 80k units at grows at 2% but builds for 1% growth.
This is the kicker for me from the article:
-------------------------------------------------------------
"There is, then, no necessary economic end to the logic of asset price appreciation — no final reckoning with fundamental value or the real economy."
-------------------------------------------------------------
Hence, continuing with the same policies is going to have the same outcome, regardless of taxing policy, unless property taxes literally get onerous enough for the middle class to advocate for loosening of housing restrictions.
posted by The_Vegetables at 3:47 AM on August 16, 2020 [7 favorites]
Plenty of other places in the US housing is a depreciating asset, - the Rust Belt, nearly every small town, so in my opinion changing local policy is more important than a national policy. Then again, it's very economically and environmentally wasteful to move people en-mass from existing housing in the Rust Belt to new housing in the south.
It's really interesting that housing is one place where technological improvements haven't translated into either cheaper prices nor supply. Consider than in the old days, new cities in the US didn't grow slowly - they grew at 50k people a year. NYC grew at 500k people per decade for a long time. Some of that was overcrowding but certainly not all of it. Now NYC builds 80k units at grows at 2% but builds for 1% growth.
This is the kicker for me from the article:
-------------------------------------------------------------
"There is, then, no necessary economic end to the logic of asset price appreciation — no final reckoning with fundamental value or the real economy."
-------------------------------------------------------------
Hence, continuing with the same policies is going to have the same outcome, regardless of taxing policy, unless property taxes literally get onerous enough for the middle class to advocate for loosening of housing restrictions.
posted by The_Vegetables at 3:47 AM on August 16, 2020 [7 favorites]
But then the middle class would probably more likely vote to lower those taxes rather than subdivide their property to stay on the ladder.
posted by The_Vegetables at 3:48 AM on August 16, 2020 [3 favorites]
posted by The_Vegetables at 3:48 AM on August 16, 2020 [3 favorites]
Maybe it's just that I just haven't slept enough + didn't major in Econ + have obviously not read the entire book, but I find this piece sort of frustrating.
The authors say not once but twice that "rentier" is necessarily pejorative. Why? It's an accurate descriptor for people who generate wealth from assets (economic rent) rather than via waged labor. What else would they like us to call them? "Asset-holder" doesn't adequately convey their role and position in the current economy. There is indeed "moral opprobrium" attached to the term in some circles, because there's an increasingly broadly shared conviction that the asset economy in its current form, or rather its societal consequences, are morally repugnant, not because lefty Millennials decided to repurpose it as a mean word (à la "OK boomer") after reading too much Marx.
"The growing awareness that owning assets often pays more than working for a living has not yet been translated into a new understanding of class and inequality."
Are they talking about mainstream/prominent economists and sociologists not yet having caught onto/clearly formulated this idea? (Which I am also not really sure is the case?) Because it sure as shit has occurred to me, as well as a number of authors, bloggers, and MeFi commenters I've read over the past several years. At this point most of the people I know in my age cohort know at least intuitively that access to assets is THE number one determinant of long-term quality of life as well as professional prospects, not to mention health and myriad other factors. Especially for those of us born after 1980.
"This new logic of inequality has mixed “hypercapitalist” logics of financialization with “feudal” logics of inheritance to reshape the social class structure as a whole."
Zero argument from me, but again, this idea is not really new?
"But one of the main points of critique of these policies has been that this transmission mechanism is in fact not working very well, and that in practice quantitative easing has propped up the values of financial assets without translating in higher rates of employment and growth. That is to say, quantitative easing is often seen as working to enrich the owners of financial assets (often pejoratively referred to as “rentiers”) at the expense of those who have to work for a living."
Does this mean they do not accept the critique of QE's non-effectiveness and advantaging of the moneyed classes as valid? This is what the slightly weasel-y phrasing "often seen as" would suggest. Except that's...demonstrably...what it's doing? Just because the architects of the policy may not have been gleefully rubbing their hands and twirling their luxuriant mustaches as they drew it up, or because entrenched societal structures doom QE to failure as a mechanism for reinvigorating the broader economy, doesn't mean it hasn't by now clearly been shown to be a bust. We have to operate in the world we currently have. That it might obtain the desired effect in some fictional other world without this one's flaws, or that path dependency from decades of neoliberal policymaking currently seems to be forcing governments' hands, is immaterial in evaluating its efficacy. We can crash and burn now or later, but it's coming if we can't pull our heads out of our asses.
"This policy conundrum is only comprehensible if we understand how a middle-class politics of asset democratization has ended up undermining the conditions of its own viability."
Again I might be full of shit or oversimplifying, but they seem to be agreeing with me here that modern neoliberal capitalism is asphyxiating under its own weight due to rampant inequality and the attendant lack of solidarity between "constituencies".
The tension between "catering to the expectations" of the middle class and expanding access to the asset economy for those currently locked out exists because middle-class homeowners/investors/speculators demand that outsiders be thrown under the bus lest their own assets lose value and they slip down the ladder to join the great unwashed. We are currently in a vicious downward spiral of increasingly desperate, terror-driven individualism and greed. Not even greed: fear of the utter immiseration already experienced by billions of people living at the bottom of the pyramid. (Side note: yes, this phenomenon has reached extremes in the US due to its near-total lack of a safety net, but it's starting to happen here in France too.)
"The economic and political volatilities that increasingly characterize the millennial generation emerge as growing numbers of young people see no path forward to the good life that previous generations were promised."
Incorrect. We no longer see a path forward at all.
posted by peakes at 4:23 AM on August 16, 2020 [14 favorites]
The authors say not once but twice that "rentier" is necessarily pejorative. Why? It's an accurate descriptor for people who generate wealth from assets (economic rent) rather than via waged labor. What else would they like us to call them? "Asset-holder" doesn't adequately convey their role and position in the current economy. There is indeed "moral opprobrium" attached to the term in some circles, because there's an increasingly broadly shared conviction that the asset economy in its current form, or rather its societal consequences, are morally repugnant, not because lefty Millennials decided to repurpose it as a mean word (à la "OK boomer") after reading too much Marx.
"The growing awareness that owning assets often pays more than working for a living has not yet been translated into a new understanding of class and inequality."
Are they talking about mainstream/prominent economists and sociologists not yet having caught onto/clearly formulated this idea? (Which I am also not really sure is the case?) Because it sure as shit has occurred to me, as well as a number of authors, bloggers, and MeFi commenters I've read over the past several years. At this point most of the people I know in my age cohort know at least intuitively that access to assets is THE number one determinant of long-term quality of life as well as professional prospects, not to mention health and myriad other factors. Especially for those of us born after 1980.
"This new logic of inequality has mixed “hypercapitalist” logics of financialization with “feudal” logics of inheritance to reshape the social class structure as a whole."
Zero argument from me, but again, this idea is not really new?
"But one of the main points of critique of these policies has been that this transmission mechanism is in fact not working very well, and that in practice quantitative easing has propped up the values of financial assets without translating in higher rates of employment and growth. That is to say, quantitative easing is often seen as working to enrich the owners of financial assets (often pejoratively referred to as “rentiers”) at the expense of those who have to work for a living."
Does this mean they do not accept the critique of QE's non-effectiveness and advantaging of the moneyed classes as valid? This is what the slightly weasel-y phrasing "often seen as" would suggest. Except that's...demonstrably...what it's doing? Just because the architects of the policy may not have been gleefully rubbing their hands and twirling their luxuriant mustaches as they drew it up, or because entrenched societal structures doom QE to failure as a mechanism for reinvigorating the broader economy, doesn't mean it hasn't by now clearly been shown to be a bust. We have to operate in the world we currently have. That it might obtain the desired effect in some fictional other world without this one's flaws, or that path dependency from decades of neoliberal policymaking currently seems to be forcing governments' hands, is immaterial in evaluating its efficacy. We can crash and burn now or later, but it's coming if we can't pull our heads out of our asses.
"This policy conundrum is only comprehensible if we understand how a middle-class politics of asset democratization has ended up undermining the conditions of its own viability."
Again I might be full of shit or oversimplifying, but they seem to be agreeing with me here that modern neoliberal capitalism is asphyxiating under its own weight due to rampant inequality and the attendant lack of solidarity between "constituencies".
The tension between "catering to the expectations" of the middle class and expanding access to the asset economy for those currently locked out exists because middle-class homeowners/investors/speculators demand that outsiders be thrown under the bus lest their own assets lose value and they slip down the ladder to join the great unwashed. We are currently in a vicious downward spiral of increasingly desperate, terror-driven individualism and greed. Not even greed: fear of the utter immiseration already experienced by billions of people living at the bottom of the pyramid. (Side note: yes, this phenomenon has reached extremes in the US due to its near-total lack of a safety net, but it's starting to happen here in France too.)
"The economic and political volatilities that increasingly characterize the millennial generation emerge as growing numbers of young people see no path forward to the good life that previous generations were promised."
Incorrect. We no longer see a path forward at all.
posted by peakes at 4:23 AM on August 16, 2020 [14 favorites]
We could tax billionaires at levels comparable to times of historic prosperity in the US, similarly return the income and capital gains tax scales to historic settings where they provided a more progressive tax structure that helped prevent significant income inequality, tax all inheritance above some $x value, and reconfigure housing to not be an investment good. We don't have to choose just one!
posted by eviemath at 5:20 AM on August 16, 2020 [25 favorites]
posted by eviemath at 5:20 AM on August 16, 2020 [25 favorites]
provide a social safety net so that you don't have to work 18 hour days for two people to share an apartment in the most affordable area of NYC
I mean we're not proposing to throw the tax dollars in the trash!
posted by atoxyl at 5:20 AM on August 16, 2020 [9 favorites]
I mean we're not proposing to throw the tax dollars in the trash!
posted by atoxyl at 5:20 AM on August 16, 2020 [9 favorites]
(I know the MMT folks might say the spending comes first but I'm generally inclined to view this as a cleverly inverted framing of the same basic relationships).
posted by atoxyl at 5:22 AM on August 16, 2020 [1 favorite]
posted by atoxyl at 5:22 AM on August 16, 2020 [1 favorite]
Except that's...demonstrably...what it's doing?
QE is actually doing a pretty good job at employing people, just at low wages. Our employment numbers, given our economic output and the rest of economic policies are way above what one would expect. QE can't really fix that though. Legislators have to step in to do the really heavy lifting.
posted by The_Vegetables at 5:23 AM on August 16, 2020 [1 favorite]
QE is actually doing a pretty good job at employing people, just at low wages. Our employment numbers, given our economic output and the rest of economic policies are way above what one would expect. QE can't really fix that though. Legislators have to step in to do the really heavy lifting.
posted by The_Vegetables at 5:23 AM on August 16, 2020 [1 favorite]
Because this happens every time we talk about economics on Metafilter, a gentle reminder that even though you personally don't know how to survive with very little money in a major metropolitan area of the US, most people who live there do and in fact are doing so right now.
From the current census data:
"QuickFacts
New York city, New York
Income & Poverty
Median household income (in 2018 dollars), 2014-2018 $60,762
Per capita income in past 12 months (in 2018 dollars), 2014-2018 $37,693"
posted by hydropsyche at 5:38 AM on August 16, 2020 [11 favorites]
From the current census data:
"QuickFacts
New York city, New York
Income & Poverty
Median household income (in 2018 dollars), 2014-2018 $60,762
Per capita income in past 12 months (in 2018 dollars), 2014-2018 $37,693"
posted by hydropsyche at 5:38 AM on August 16, 2020 [11 favorites]
Hydropsyche - income statistics for New York City are absolutely bogus at every level. There's a massive cash economy creating unreported income for workers and owners alike. High taxes encourage people to shift reported income to capital from earned and from earned in NYC to earned elsewhere, and to understate foreign income if a U.S. tax person. Foreigners who aren't U.S. tax persons don't even have to report their foreign income at all. Government income supports and substitutions are generous and also poorly input into income statistics. And, yes, lots of students and young people working in the arts etc. are hugely buoyed up by gifts from parents which are also not reportable income by the recipient.
Importantly, this is the most parismonious explanation of "extremely high relative to income" rent / home purchase prices in New York -- they aren't as high when people's actual incomes are considered.
posted by MattD at 6:04 AM on August 16, 2020 [10 favorites]
Importantly, this is the most parismonious explanation of "extremely high relative to income" rent / home purchase prices in New York -- they aren't as high when people's actual incomes are considered.
posted by MattD at 6:04 AM on August 16, 2020 [10 favorites]
It really is quite easy.
There's not that many of them.
The removal of the threat of mob justice by law and order has create a moral hazard where the rich feel compelled to pay nothing towards the upkeep of society.
posted by Your Childhood Pet Rock at 7:16 AM on August 16, 2020 [9 favorites]
There's not that many of them.
The removal of the threat of mob justice by law and order has create a moral hazard where the rich feel compelled to pay nothing towards the upkeep of society.
posted by Your Childhood Pet Rock at 7:16 AM on August 16, 2020 [9 favorites]
I find this piece sort of frustrating.
Me too! Like what assets are they talking about, besides housing? And what solutions do they propose (presumably as well as taxing and spending, but specific to addressing this problem in particular?) I am guessing the answers to my questions lie elsewhere in their book. But my biggest issue was, if you're going to talk about how different demographic constituencies are differently impacted by the reliance on financialized inherited assets, then race, rather than age, is the biggest factor in inequality. Since the gap in who holds assets is deeply divided by race. Makes me wonder if slavery reparations would be most impactful if they came in the form of that 40 acres, or some other appreciating asset.
Anyway, despite these objections, I found the observation that access to assets is much more important to individual survival now than access to income, and more than it was even 20 years ago, to be true and not one I had thought much about before reading this.
posted by latkes at 7:56 AM on August 16, 2020 [3 favorites]
Me too! Like what assets are they talking about, besides housing? And what solutions do they propose (presumably as well as taxing and spending, but specific to addressing this problem in particular?) I am guessing the answers to my questions lie elsewhere in their book. But my biggest issue was, if you're going to talk about how different demographic constituencies are differently impacted by the reliance on financialized inherited assets, then race, rather than age, is the biggest factor in inequality. Since the gap in who holds assets is deeply divided by race. Makes me wonder if slavery reparations would be most impactful if they came in the form of that 40 acres, or some other appreciating asset.
Anyway, despite these objections, I found the observation that access to assets is much more important to individual survival now than access to income, and more than it was even 20 years ago, to be true and not one I had thought much about before reading this.
posted by latkes at 7:56 AM on August 16, 2020 [3 favorites]
@MattD/hydropyche: another aspect of this is that some nontrivial number of those people are in their 50s, 60s and 70s and and have lived in their homes for decades. Real estate is the primary reason why NYC (and SF, etc) is so unaffordable for the non-rich, but this was not the case in 1990. It is perfectly plausible for a 60-year-old to have bought a place - or been renting in the long-term with rent stabilization - on a middle-class income 30 years ago and remained there, and still be able to afford a decent life on a 60k income today.
This is not mutually exclusive to MattD's point, but it bears repeating that "median current rental price" does not represent the price that everyone, or even most people, actually pays for housing.
Of course that, in turn, does not mean that the high cost of housing is not a problem. It definitely is.
Does this mean they do not accept the critique of QE's non-effectiveness and advantaging of the moneyed classes as valid?
QE is effective. The problem with QE, like with the bank bailouts, is not the policy itself, it's that other things also had to be done *on top* of those policies, and those things were not done. It is true that we bailed out the financiers and rentiers and mostly left everyone else out to dry. And it is true that we had to bail those people out, as icky as it was. But we could have done that and done things for the rest of society, and we largely didn't, and that's the problem. And does the fact that we didn't say something about power? Yes, it does.
posted by breakin' the law at 8:22 AM on August 16, 2020 [5 favorites]
This is not mutually exclusive to MattD's point, but it bears repeating that "median current rental price" does not represent the price that everyone, or even most people, actually pays for housing.
Of course that, in turn, does not mean that the high cost of housing is not a problem. It definitely is.
Does this mean they do not accept the critique of QE's non-effectiveness and advantaging of the moneyed classes as valid?
QE is effective. The problem with QE, like with the bank bailouts, is not the policy itself, it's that other things also had to be done *on top* of those policies, and those things were not done. It is true that we bailed out the financiers and rentiers and mostly left everyone else out to dry. And it is true that we had to bail those people out, as icky as it was. But we could have done that and done things for the rest of society, and we largely didn't, and that's the problem. And does the fact that we didn't say something about power? Yes, it does.
posted by breakin' the law at 8:22 AM on August 16, 2020 [5 favorites]
Incorrect. We no longer see a path forward at all.
Exactly. As a Millennial, the only idea of a "good life" I have anymore is not starving on the streets when I'm old. And that's just a hope, I'm literally expecting to starve on the streets if I don't somehow get a hold of some helium and an exit bag before then.
That's the "good life."
posted by deadaluspark at 8:22 AM on August 16, 2020 [6 favorites]
Exactly. As a Millennial, the only idea of a "good life" I have anymore is not starving on the streets when I'm old. And that's just a hope, I'm literally expecting to starve on the streets if I don't somehow get a hold of some helium and an exit bag before then.
That's the "good life."
posted by deadaluspark at 8:22 AM on August 16, 2020 [6 favorites]
Reflecting on my comment above, it is also possible for our hypothetical middle-class 60-year-old who bought a place in 1990 to have benefitted greatly from the asset-price inflation this piece addresses, which would enable them to move to ever-nicer places even if their income didn't rise very much. So you could be a person who has a relatively modest income, but you got on the housing ladder in the 80s or 90s and so you've got a nice house (or apartment, or whatever) today.
There are people who have actually benefitted from this dynamic, and they're not all rich fat cats, or even all upper-middle-class doctors who help out with their kids' rent (though some of them are that). Which is a big part of the reason why this is such a hard problem.
posted by breakin' the law at 8:29 AM on August 16, 2020 [6 favorites]
There are people who have actually benefitted from this dynamic, and they're not all rich fat cats, or even all upper-middle-class doctors who help out with their kids' rent (though some of them are that). Which is a big part of the reason why this is such a hard problem.
posted by breakin' the law at 8:29 AM on August 16, 2020 [6 favorites]
Taxing the rich is not complicated, at all. You take their fucking money. If we know they're millionaries/billionaires, they have stuff. Take it. Not "income". Take their wealth. Boo fucking hoo if that shits on anyone's ideas about capitalistic wet dreams or their own "temporarily embarrassed millionaire" status.
posted by maxwelton at 8:57 AM on August 16, 2020 [8 favorites]
posted by maxwelton at 8:57 AM on August 16, 2020 [8 favorites]
High marginal tax rates, extremely high estate taxes, and rent needs to be illegal. There is far more than enough wealth in the world to save it from itself, once the hoarding and parasitism is behind us.
posted by mhoye at 9:18 AM on August 16, 2020 [4 favorites]
posted by mhoye at 9:18 AM on August 16, 2020 [4 favorites]
Take their wealth
I don't have any wealth, I just have a small variable daily stipend given to me by Hydrostyle Elevator Systems Inc., duly incorporated on the Isle of Man in accordance with all local tax regulations. HES, itself, is owned by Pocketdyne Energetics, incorporated in Antigua, and so on. My car and driver are separately funded by MegaDuck and TRS90 Systemics, incorporated in Delaware and Oregon respectively, with most of their assets being held in a South Dakota Trust except for a portion held in a Wyoming Trust, and a still-smaller portion held on their separate behalfs in Switzerland.
You think I'm joking? Go ahead, try to figure out who owns all of the flats at One Hyde Park. You can't. Nobody can.
Fixing this is going to require global agreement. It's doable, but it's a hell of a lot more complicated than just taking stuff; it's probably more complicated than the UN itself.
posted by aramaic at 9:30 AM on August 16, 2020 [13 favorites]
I don't have any wealth, I just have a small variable daily stipend given to me by Hydrostyle Elevator Systems Inc., duly incorporated on the Isle of Man in accordance with all local tax regulations. HES, itself, is owned by Pocketdyne Energetics, incorporated in Antigua, and so on. My car and driver are separately funded by MegaDuck and TRS90 Systemics, incorporated in Delaware and Oregon respectively, with most of their assets being held in a South Dakota Trust except for a portion held in a Wyoming Trust, and a still-smaller portion held on their separate behalfs in Switzerland.
You think I'm joking? Go ahead, try to figure out who owns all of the flats at One Hyde Park. You can't. Nobody can.
Fixing this is going to require global agreement. It's doable, but it's a hell of a lot more complicated than just taking stuff; it's probably more complicated than the UN itself.
posted by aramaic at 9:30 AM on August 16, 2020 [13 favorites]
Actually, it's not more complicated than taking stuff. You can't figure out who the fuck owns it and its in your country? You just take it, what are they going to do if they're a rich asshat in another country? March in with their personal army and take it back?
Same shit extends to the idea thatt "if we tax the rich they will just leave."
Yeah, well, we have a military. Fucking arrest them. Drain them of every asset and penny they have.
When they literally are penniless, worth nothing, they are more than welcome to go to any other country they wish. They're a "great man." I'm sure they can build another empire from the bottom up in a world that fucking hates their living guts.
posted by deadaluspark at 9:52 AM on August 16, 2020 [11 favorites]
Same shit extends to the idea thatt "if we tax the rich they will just leave."
Yeah, well, we have a military. Fucking arrest them. Drain them of every asset and penny they have.
When they literally are penniless, worth nothing, they are more than welcome to go to any other country they wish. They're a "great man." I'm sure they can build another empire from the bottom up in a world that fucking hates their living guts.
posted by deadaluspark at 9:52 AM on August 16, 2020 [11 favorites]
The arguments here against taxation are ridiculous. It's not easy to tax rich people, but it can be done. You spend properly on forensic accountants and the investigative wing of the IRS, you pass laws with prison sentences for avoidance, you pass AMT-like rules that escalate into the upper brackets, you make illegal various sorts of incorporations in tax-sheltering countries, etc. All of these rules already exist, they are just deliberately weak, not enforced, and the agency is hugely underfunded and under-staffed. It's not magic to fix it, just the standard activities of a massive governmental system which has billions of dollars at its disposal if it wants to.
And as others have said, if that somehow didn't work on a systemic level (though it would), you do a light version of Saudi Arabia: arrest them all, bring them to a nice federal penitentiary, and leave them there until they hand over their swiss bank numbers. Which is exactly what we do with white-collar crime that we do enforce.
posted by chortly at 9:57 AM on August 16, 2020 [11 favorites]
And as others have said, if that somehow didn't work on a systemic level (though it would), you do a light version of Saudi Arabia: arrest them all, bring them to a nice federal penitentiary, and leave them there until they hand over their swiss bank numbers. Which is exactly what we do with white-collar crime that we do enforce.
posted by chortly at 9:57 AM on August 16, 2020 [11 favorites]
QE is effective. The problem with QE, like with the bank bailouts, is not the policy itself, it's that other things also had to be done *on top* of those policies, and those things were not done. It is true that we bailed out the financiers and rentiers and mostly left everyone else out to dry. And it is true that we had to bail those people out, as icky as it was. But we could have done that and done things for the rest of society, and we largely didn't, and that's the problem. And does the fact that we didn't say something about power? Yes, it does.
Exactly. QE created zero inflation (and barely kept us out of a deflationary spiral) because none of it got to the pockets of the people that needed it. Sure it kept the markets high but working class people don't have liquid stocks and bonds. They have it all locked up in pensions if at all. When you hear Bezos of putting another zero on his fucking bank account, that's QE. Nobody in the world can spend that amount of money so what happens? It just sits. It fucking sits. Doing nothing.
Money is oil which lubriactes the cogs of the economy. Wealth locked up in the bank accounts of billionaires who collect money for sport is economic glue around the cogs. Economic activity is money moving. Hoarding large amounts of money like a fucking dragon should be preached as detrimental for the economy by every progressive talking head and politician 24/7. "It's the economy, stupid. If billionaires hoard it, nobody can spend it."
Why don't we do this already? Republicans don't see the problem in this because they still "believe" (and believe is doing a lot of heavy lifting there) that supply side economics is actually a thing and that it works. The whole paradigm agrees with their greed and avarice so why would they change it? They're doing fine. They're rolling in fed notes.
posted by Your Childhood Pet Rock at 10:12 AM on August 16, 2020 [5 favorites]
Exactly. QE created zero inflation (and barely kept us out of a deflationary spiral) because none of it got to the pockets of the people that needed it. Sure it kept the markets high but working class people don't have liquid stocks and bonds. They have it all locked up in pensions if at all. When you hear Bezos of putting another zero on his fucking bank account, that's QE. Nobody in the world can spend that amount of money so what happens? It just sits. It fucking sits. Doing nothing.
Money is oil which lubriactes the cogs of the economy. Wealth locked up in the bank accounts of billionaires who collect money for sport is economic glue around the cogs. Economic activity is money moving. Hoarding large amounts of money like a fucking dragon should be preached as detrimental for the economy by every progressive talking head and politician 24/7. "It's the economy, stupid. If billionaires hoard it, nobody can spend it."
Why don't we do this already? Republicans don't see the problem in this because they still "believe" (and believe is doing a lot of heavy lifting there) that supply side economics is actually a thing and that it works. The whole paradigm agrees with their greed and avarice so why would they change it? They're doing fine. They're rolling in fed notes.
posted by Your Childhood Pet Rock at 10:12 AM on August 16, 2020 [5 favorites]
I don't have any wealth, I just have a small variable daily stipend given to me by Hydrostyle Elevator Systems Inc., duly incorporated on the Isle of Man in accordance with all local tax regulations. HES, itself, is owned by Pocketdyne Energetics, incorporated in Antigua, and so on. My car and driver are separately funded by MegaDuck and TRS90 Systemics, incorporated in Delaware and Oregon respectively, with most of their assets being held in a South Dakota Trust except for a portion held in a Wyoming Trust, and a still-smaller portion held on their separate behalfs in Switzerland.
Great. We're going to put a fringe benefits tax on all of that consumption that's not paid for by the recipient. Top marginal rate of tax. If a company wants to fund something for someone it's income-in-kind and will be taxed to the fucking gills. Oh and your in-kind receipts are double counted by the IRS as your income-in-kind for taxation purposes. So we're going to tax that stipend at the top marginal rate.
The car and driver? We're going to make the company pay top marginal rate on top of that. The car's registration? If it's owned by a company we're going to make you register it as commercial so you pay double the rate of residential registrations. Your house? Owned by a company? We're just going to double the property tax rate. The company can get a tax break from their country for it. Oh you're in Bermuda where the corporate tax rate is zero? Too. Fucking. Bad.
Anything worth over $500,000 we're going to put an extra 30 mils on top of your typical rate and the value will be decided by a state government agency of BUREAUCRATS and publish every houses's tax value in a ledger. Yes. We're going to make it so difficult for you to politically maneuver your payments down.
We could make it so much a pain in the ass for billionaires to try and get any money they "earn" out as non-income that they'll have to hand down stock in the companies instead of cash.
Which we'll then tax at the top marginal rate of income based on the value of the company the day of the death. If the company is private the government gets the percentage of shares willed to the descendants. Put them in an overseas trust? Go for it. We'll take the shares at the time of transfer away from the decedent. Any money coming into the country from an overseas trust we're going to treat as untaxed income and slam it with the top rate of marginal tax. Any goods purchased by the trust? Fringe benefits tax at the top rate of marginal tax thank you very much.
You can lock up the capital but we can also exclude tax avoidant countries from the world financial system. Cayman Islands? Bermuda? No more SWIFT for you. Even if you try, we're going to cut down the margins so you can't walk away completely tax free and we're going to wealth tax any property you bring in or buy personally.
This whole "we can't tax the billionaires" is bullshit. We can tax the living fuck out of them. We just don't because 40% of the proles are demanding that we don't as they are our "JoB cReAtOrs".
No. This needs to stop. They are evil dragons that hoard gold in piles and keep the village poor. Just like the fairy tales. They need to be slain and their wealth redistributed to the village. Just like fairy tales.
posted by Your Childhood Pet Rock at 10:31 AM on August 16, 2020 [24 favorites]
Great. We're going to put a fringe benefits tax on all of that consumption that's not paid for by the recipient. Top marginal rate of tax. If a company wants to fund something for someone it's income-in-kind and will be taxed to the fucking gills. Oh and your in-kind receipts are double counted by the IRS as your income-in-kind for taxation purposes. So we're going to tax that stipend at the top marginal rate.
The car and driver? We're going to make the company pay top marginal rate on top of that. The car's registration? If it's owned by a company we're going to make you register it as commercial so you pay double the rate of residential registrations. Your house? Owned by a company? We're just going to double the property tax rate. The company can get a tax break from their country for it. Oh you're in Bermuda where the corporate tax rate is zero? Too. Fucking. Bad.
Anything worth over $500,000 we're going to put an extra 30 mils on top of your typical rate and the value will be decided by a state government agency of BUREAUCRATS and publish every houses's tax value in a ledger. Yes. We're going to make it so difficult for you to politically maneuver your payments down.
We could make it so much a pain in the ass for billionaires to try and get any money they "earn" out as non-income that they'll have to hand down stock in the companies instead of cash.
Which we'll then tax at the top marginal rate of income based on the value of the company the day of the death. If the company is private the government gets the percentage of shares willed to the descendants. Put them in an overseas trust? Go for it. We'll take the shares at the time of transfer away from the decedent. Any money coming into the country from an overseas trust we're going to treat as untaxed income and slam it with the top rate of marginal tax. Any goods purchased by the trust? Fringe benefits tax at the top rate of marginal tax thank you very much.
You can lock up the capital but we can also exclude tax avoidant countries from the world financial system. Cayman Islands? Bermuda? No more SWIFT for you. Even if you try, we're going to cut down the margins so you can't walk away completely tax free and we're going to wealth tax any property you bring in or buy personally.
This whole "we can't tax the billionaires" is bullshit. We can tax the living fuck out of them. We just don't because 40% of the proles are demanding that we don't as they are our "JoB cReAtOrs".
No. This needs to stop. They are evil dragons that hoard gold in piles and keep the village poor. Just like the fairy tales. They need to be slain and their wealth redistributed to the village. Just like fairy tales.
posted by Your Childhood Pet Rock at 10:31 AM on August 16, 2020 [24 favorites]
As an addendum to my point above, one major reason effective high taxes seem so impossible in the US -- despite many other countries managing it -- is because Democrats have been almost as complicit in the dismantling of the tax rate as Republicans. Carter, Clinton, Obama; O'Neill, Foley, Pelosi; Byrd, Daschle, Reid -- all of them were totally fine with allowing the top rates to be dismantled and largely silent about reinstating them. Nobody in power has wanted to tax the rich since at least 1970, and when Democratic leaders haven't actively supported lower taxes, they have portrayed higher taxes in much the way Republicans do: logistically infeasible, ineffectual, and contrary to the will of the people. That's false, but it's a convincing picture when 100% of top elected officials are unified behind it for 50 years.
posted by chortly at 10:33 AM on August 16, 2020 [11 favorites]
posted by chortly at 10:33 AM on August 16, 2020 [11 favorites]
I swear if I can get taxed every year by the USG on money earned by my superannuation back in Australia, which I can't access until I'm 65, to which I've never contributed a single dollar I've earned on US soil then billionaires can get taxed the same god damned way.
posted by Your Childhood Pet Rock at 10:36 AM on August 16, 2020 [12 favorites]
posted by Your Childhood Pet Rock at 10:36 AM on August 16, 2020 [12 favorites]
Yes, reinstating the estate tax is crucial. Avoidance is a real problem, but it can be addressed. There are literally hundreds of economists and tax lawyers who work in this area and can tell policymakers how to do it as best as possible if they're actually interested. See Restoring the federal estate tax is a proven way to raise revenue and address wealth inequality
posted by Mr.Know-it-some at 10:45 AM on August 16, 2020 [6 favorites]
posted by Mr.Know-it-some at 10:45 AM on August 16, 2020 [6 favorites]
I'm not clear about how taxing the rich improves the system of wealth redistribution among the general population. Where will you put the money? This (my) frame of mind makes it easier to understand why Gens X & Y might be drawn to some form of socialism. I'm pretty sure just putting a chicken in every pot doesn't address material inequity in our country. Let me be clear that federal funding is a huge sinkhole. Our tax dollars have a way of turning out mixed results; contractors love government contracts, and we (the public) don't always get the best bang for the tax buck. Much more money needs to get back to our citizens, in the form of affordable house, health care, and the other benifits of a highly organized and theoretically affluent country. Simply dragging in a few more buckets of money doesn't address its redistribution.
Framing the situation as "rentiers vs those who work for a living" seems a bit precious. Aren't those who get their income from stock investments also benifiting from the labors of those who work for a living, even while they, themselves, work for a living to tap into our credit economy? We are swimming in cognitive dissonance, trying to figure out how to re-slice the economic pie so that we'll get a larger piece, knowing full well that others who feed there will get a proportionally (or not proportionally) smaller slice.
In my inner heart I love to see predatory capitalists get their come-uppance. Sock it to them. Drive them to their knees and make them vow to repent before you take away their wealth and make them live among the hoi palloi they've callusly exploited. In many ways they create rules that form The Problem, but they in themselves aren't the problem. The problem is the "system" on which they feed, and the propaganda that lets it flourish. The "horrors of Communism" cited in passing should not be understated, for sure. But the smoldering mess that's our version of Capitalism is just as pervasive, and even less subject to reconstruction than the commies ever were.
Ours is, and always has been, a credit economy. Credit make the machine work. Accumulating debtors is a badge of merit, representing those who believe in you (the corporation, the country). Servicing the credit is the lubricant--this is how we pat our debtors on the head and tell them, "Don't worry, it's all good." Our version of captialism is searching for a new source of lubricant, and having a hard time finding one.
posted by mule98J at 10:47 AM on August 16, 2020 [2 favorites]
Framing the situation as "rentiers vs those who work for a living" seems a bit precious. Aren't those who get their income from stock investments also benifiting from the labors of those who work for a living, even while they, themselves, work for a living to tap into our credit economy? We are swimming in cognitive dissonance, trying to figure out how to re-slice the economic pie so that we'll get a larger piece, knowing full well that others who feed there will get a proportionally (or not proportionally) smaller slice.
In my inner heart I love to see predatory capitalists get their come-uppance. Sock it to them. Drive them to their knees and make them vow to repent before you take away their wealth and make them live among the hoi palloi they've callusly exploited. In many ways they create rules that form The Problem, but they in themselves aren't the problem. The problem is the "system" on which they feed, and the propaganda that lets it flourish. The "horrors of Communism" cited in passing should not be understated, for sure. But the smoldering mess that's our version of Capitalism is just as pervasive, and even less subject to reconstruction than the commies ever were.
Ours is, and always has been, a credit economy. Credit make the machine work. Accumulating debtors is a badge of merit, representing those who believe in you (the corporation, the country). Servicing the credit is the lubricant--this is how we pat our debtors on the head and tell them, "Don't worry, it's all good." Our version of captialism is searching for a new source of lubricant, and having a hard time finding one.
posted by mule98J at 10:47 AM on August 16, 2020 [2 favorites]
You can lock up the capital but we can also exclude tax avoidant countries from the world financial system
I'll believe you just as soon as anyone manages to rein in South Dakota trusts. South Dakota. That's all. Just South Dakota trusts, never mind the corporate tax laws in the rest of the world. Go ahead, see how far you get.
One low-population state, in one country, oughta be easy, right?
posted by aramaic at 10:54 AM on August 16, 2020 [5 favorites]
I'll believe you just as soon as anyone manages to rein in South Dakota trusts. South Dakota. That's all. Just South Dakota trusts, never mind the corporate tax laws in the rest of the world. Go ahead, see how far you get.
One low-population state, in one country, oughta be easy, right?
posted by aramaic at 10:54 AM on August 16, 2020 [5 favorites]
We are swimming in cognitive dissonance, trying to figure out how to re-slice the economic pie so that we'll get a larger piece, knowing full well that others who feed there will get a proportionally (or not proportionally) smaller slice.
That assumes that the size of the economy remains exactly the same. Economic activity drives wealth creation. The more economic acitivity, the more wealth, the pie gets bigger. If the billionaires are sequestering cash that could be otherwise driving economic activity then pulling that money out of sequestration, using it to pay ordinary people to build roads, bridges, paying government workers (teachers I'm looking at you) more, paying for healthcare for the entire populous. Where's that money going to go? On consumption. If you get a raise you can buy that new TV you want. Or you can move your family into a house with rooms for everyone. Or you can go on a trip to Barbados. Or hell, you can just buy enough food and some heat.
Economic activity drives wealth creation. Republicans don't seem to get that because it's not supply side economics and it's why Republicans crap their pants at the mention of wealth redistribution. We're not talking about a zero sum game. If the middle class gets flooded with cash they're gonna spend it which is going to create more wealth for people still.
posted by Your Childhood Pet Rock at 10:55 AM on August 16, 2020 [5 favorites]
That assumes that the size of the economy remains exactly the same. Economic activity drives wealth creation. The more economic acitivity, the more wealth, the pie gets bigger. If the billionaires are sequestering cash that could be otherwise driving economic activity then pulling that money out of sequestration, using it to pay ordinary people to build roads, bridges, paying government workers (teachers I'm looking at you) more, paying for healthcare for the entire populous. Where's that money going to go? On consumption. If you get a raise you can buy that new TV you want. Or you can move your family into a house with rooms for everyone. Or you can go on a trip to Barbados. Or hell, you can just buy enough food and some heat.
Economic activity drives wealth creation. Republicans don't seem to get that because it's not supply side economics and it's why Republicans crap their pants at the mention of wealth redistribution. We're not talking about a zero sum game. If the middle class gets flooded with cash they're gonna spend it which is going to create more wealth for people still.
posted by Your Childhood Pet Rock at 10:55 AM on August 16, 2020 [5 favorites]
It's not easy to tax rich people, but it can be done. You spend properly on forensic accountants and the investigative wing of the IRS
Obama actually tried this! It turns out that billionaires can afford to spend astronomical amounts of money on lawyers and accountants, and in particular they can afford to spend more on people with the skill set necessary to run audits on billionaires and pursue their wealth than the IRS can ever dream of. So they gave up and started pursuing low-income people instead, who can't afford to defend themselves, which is why the easiest way to get yourself audited these days is to claim the Earned Income Tax Credit.
posted by Pope Guilty at 11:38 AM on August 16, 2020 [7 favorites]
Obama actually tried this! It turns out that billionaires can afford to spend astronomical amounts of money on lawyers and accountants, and in particular they can afford to spend more on people with the skill set necessary to run audits on billionaires and pursue their wealth than the IRS can ever dream of. So they gave up and started pursuing low-income people instead, who can't afford to defend themselves, which is why the easiest way to get yourself audited these days is to claim the Earned Income Tax Credit.
posted by Pope Guilty at 11:38 AM on August 16, 2020 [7 favorites]
South Dakota's kind of big (200,000km squared), why not try clamping down on Delaware (6,446 km squared)? That shouldn't be hard, right? Or the City of London. The rot doesn't start in Bermuda or St Kitts and Nevis, it's at home. Combating tax avoidance and money laundering is really really hard both in practice, for the reason Pope Guilty explained. It's not an even playing field and people living in Moneyland are in a different universe to you and me.
Let me be clear: I favour highly authoritarian measures to combat tax avoidance, in spite of my attachment to personal liberty. I'm not going to pretend they would be popular though.
I want to read this book, in part to see if they talk more about the history of passing down assets, and some solutions. Two of the three authors have written this article (link) based on the same book in the context of COVID.
posted by Braeburn at 12:49 PM on August 16, 2020 [3 favorites]
Let me be clear: I favour highly authoritarian measures to combat tax avoidance, in spite of my attachment to personal liberty. I'm not going to pretend they would be popular though.
I want to read this book, in part to see if they talk more about the history of passing down assets, and some solutions. Two of the three authors have written this article (link) based on the same book in the context of COVID.
posted by Braeburn at 12:49 PM on August 16, 2020 [3 favorites]
Hydropsyche - income statistics for New York City are absolutely bogus at every level....
I'm sure you must have a citation for that rather bold claim and all its supporting claims.
Do the many reasons for this not apply to other major metropolitan areas?
As far as I can tell, based on everything I've read, an awful lot of people throughout the country are living in abject poverty, while an awful lot of wealthy people think they're "middle class" and spend a lot of time complaining about how hard their lives are. And whenever we suggest those wealthy people could maybe pay capital gains taxes on the income they earn by just leaving money lying around, they start yelling about how they're not really wealthy at all.
posted by hydropsyche at 12:53 PM on August 16, 2020 [7 favorites]
I'm sure you must have a citation for that rather bold claim and all its supporting claims.
Do the many reasons for this not apply to other major metropolitan areas?
As far as I can tell, based on everything I've read, an awful lot of people throughout the country are living in abject poverty, while an awful lot of wealthy people think they're "middle class" and spend a lot of time complaining about how hard their lives are. And whenever we suggest those wealthy people could maybe pay capital gains taxes on the income they earn by just leaving money lying around, they start yelling about how they're not really wealthy at all.
posted by hydropsyche at 12:53 PM on August 16, 2020 [7 favorites]
they start yelling about how they're not really wealthy at all.
I've tried to explain to people a million times.
Electric cars won't solve climate change because people like me buy, own and use vehicles that are over 20 years old. My current vehicle is a 1998. Part of the reason is because I can do things like change my own oil or change the thermostat without needing a mechanic, and thus reducing the overall overhead cost of the vehicle. It cost about $2500 used.
Unless I'm some fucking SCHMUCK who got roped into a brand new car with a fucking monthly payment, the idea that an electric car will ever be affordable to someone like me in my lifetime when I only have probably twenty years of life left.
I almost came to blows with a well-to-do friend who just couldn't fucking wrap his mind around the concept that fucking poor people can't save the fucking world because we can't fucking afford shit.
It's like people forgot that the Yellow Vests in France was fucking poor people who couldn't afford the gas tax that inordinately affected them and their inability to just rush out and get a fucking electric vehicle.
Even my fucking sister is talking about hoping for home prices to come down so she can get somewhere cheaper. Every time she brings it up I not-so-gently remind her she's riding on someone else's fucking suffering and I am disgusted by it. But she's soooo pooooor with her six figure fucking salary. What a fucking crock of shit.
posted by deadaluspark at 1:39 PM on August 16, 2020 [1 favorite]
I've tried to explain to people a million times.
Electric cars won't solve climate change because people like me buy, own and use vehicles that are over 20 years old. My current vehicle is a 1998. Part of the reason is because I can do things like change my own oil or change the thermostat without needing a mechanic, and thus reducing the overall overhead cost of the vehicle. It cost about $2500 used.
Unless I'm some fucking SCHMUCK who got roped into a brand new car with a fucking monthly payment, the idea that an electric car will ever be affordable to someone like me in my lifetime when I only have probably twenty years of life left.
I almost came to blows with a well-to-do friend who just couldn't fucking wrap his mind around the concept that fucking poor people can't save the fucking world because we can't fucking afford shit.
It's like people forgot that the Yellow Vests in France was fucking poor people who couldn't afford the gas tax that inordinately affected them and their inability to just rush out and get a fucking electric vehicle.
Even my fucking sister is talking about hoping for home prices to come down so she can get somewhere cheaper. Every time she brings it up I not-so-gently remind her she's riding on someone else's fucking suffering and I am disgusted by it. But she's soooo pooooor with her six figure fucking salary. What a fucking crock of shit.
posted by deadaluspark at 1:39 PM on August 16, 2020 [1 favorite]
... and in particular they can afford to spend more on people with the skill set necessary to run audits on billionaires and pursue their wealth than the IRS can ever dream of
Nonsense.
The Federal government collected 3 and half trillion dollars last year.
They can absolutely, and without any exception, outspend any billionaire on the planet.
They could, if they chose, wrap every billionaire in the country up in so much red tape and legal wrangling that the private jet industry would reap record profits from all the flights to and from depositions.
The problem is not lack of money or resources, the problem is political will as described in the first few sentences of your link:
"But with big money — and Congress — arrayed against the team, it never had a chance."
If you can't actually bring the full power of your office to the table, you've lost before you started.
You can't win a crooked game.
posted by madajb at 5:12 PM on August 16, 2020 [9 favorites]
Nonsense.
The Federal government collected 3 and half trillion dollars last year.
They can absolutely, and without any exception, outspend any billionaire on the planet.
They could, if they chose, wrap every billionaire in the country up in so much red tape and legal wrangling that the private jet industry would reap record profits from all the flights to and from depositions.
The problem is not lack of money or resources, the problem is political will as described in the first few sentences of your link:
"But with big money — and Congress — arrayed against the team, it never had a chance."
If you can't actually bring the full power of your office to the table, you've lost before you started.
You can't win a crooked game.
posted by madajb at 5:12 PM on August 16, 2020 [9 favorites]
Taxation isn't enough. We need a wealth cap. Any money, either liquid or assets, that exceed the cap is immediately confiscated by the government and repurposed in such a way that benefits everyone.
posted by Beholder at 5:38 PM on August 16, 2020
posted by Beholder at 5:38 PM on August 16, 2020
Hydropsyche - income statistics for New York City are absolutely bogus at every level. There's a massive cash economy creating unreported income for workers and owners alike. High taxes encourage people to shift reported income to capital from earned and from earned in NYC to earned elsewhere, and to understate foreign income if a U.S. tax person. Foreigners who aren't U.S. tax persons don't even have to report their foreign income at all. Government income supports and substitutions are generous and also poorly input into income statistics. And, yes, lots of students and young people working in the arts etc. are hugely buoyed up by gifts from parents which are also not reportable income by the recipient.
Sorry, I missed this thread earlier today, so I'm a tad late to the party, but: dude, what? I don't doubt that there's a whole lot of under-the-table wheeling-and-dealing happening everywhere, and I wouldn't even be surprised to learn that a lot of poor people do it to make ends meet. That said, the assertion in question is that the median family in NYC makes $60K. Are you seriously suggesting that millions of people living in the city are shifting income to capital, or concealing their dividend income from their country of origin, or somehow laundering the money reported on their 1040's to make it look like it was earned across the border in New Jersey? You're talking about tax-avoidance schemes that are available to literally the top 1% of earners, because it's so frightfully expensive that it's only worth it if your $1 million investment in creative bookkeeping will save you $2 million in taxes. It is completely, utterly, and laughably unavailable to the majority of the city's inhabitants, who are earning $12 an hour as short-order cooks.
This is not a "people are fleeing the city because of taxes!" problem. This is a "people sleep four to a bedroom to live near where the jobs are" problem.
posted by Mayor West at 5:45 PM on August 16, 2020 [6 favorites]
Sorry, I missed this thread earlier today, so I'm a tad late to the party, but: dude, what? I don't doubt that there's a whole lot of under-the-table wheeling-and-dealing happening everywhere, and I wouldn't even be surprised to learn that a lot of poor people do it to make ends meet. That said, the assertion in question is that the median family in NYC makes $60K. Are you seriously suggesting that millions of people living in the city are shifting income to capital, or concealing their dividend income from their country of origin, or somehow laundering the money reported on their 1040's to make it look like it was earned across the border in New Jersey? You're talking about tax-avoidance schemes that are available to literally the top 1% of earners, because it's so frightfully expensive that it's only worth it if your $1 million investment in creative bookkeeping will save you $2 million in taxes. It is completely, utterly, and laughably unavailable to the majority of the city's inhabitants, who are earning $12 an hour as short-order cooks.
This is not a "people are fleeing the city because of taxes!" problem. This is a "people sleep four to a bedroom to live near where the jobs are" problem.
posted by Mayor West at 5:45 PM on August 16, 2020 [6 favorites]
Taxation isn't enough. We need a wealth cap. Any money, either liquid or assets, that exceed the cap is immediately confiscated by the government and repurposed in such a way that benefits everyone.
I'm all for the no billionaires plan. When you hit $999,999,999.99 of wealth you get a trophy that says "I won capitalism" and any wealth above that is just confiscated.
posted by Your Childhood Pet Rock at 5:48 PM on August 16, 2020 [3 favorites]
I'm all for the no billionaires plan. When you hit $999,999,999.99 of wealth you get a trophy that says "I won capitalism" and any wealth above that is just confiscated.
posted by Your Childhood Pet Rock at 5:48 PM on August 16, 2020 [3 favorites]
Of course it's possible to tax the rich, it's been done before, it's been done in other countries.
My view on investing wealth - in my case in Australia but is applicable everywhere - is that every single investing decision is driven by the tax landscape MORE SO than the actual asset being invested in.
Capital gains being taxed at half marginal rate? Dividend franking credits? Negative gearing deductions on personal income? If an investing method doesn't take advantage of tax deductions like these, it's basically a non-starter.
So yeah, those comments about fringe benefits above - Australia reformed its tax law and, exactly like Your Childhood Pet Rock suggested, we apply the maximum fringe benefit tax to any non-salary benefits given to an employee. Say an employee earns $80,000 per year, and their marginal tax is 32.5%. If they're given a company car as a "perk" - say the benefit is worth $6,000 per year - that $6,000 is taxed at the maximum rate of 45%, paid for by the employer. It makes it more logical for the employer to directly increase the salary of their employee by $6,000 (taxed at 32.5%) and for them to lease their own vehicle.
Yet Australia doesn't have a gift tax or inheritance tax. Does having fringe benefit tax offset not having a gift or inheritance tax? I don't really know.
posted by xdvesper at 5:48 PM on August 16, 2020 [1 favorite]
My view on investing wealth - in my case in Australia but is applicable everywhere - is that every single investing decision is driven by the tax landscape MORE SO than the actual asset being invested in.
Capital gains being taxed at half marginal rate? Dividend franking credits? Negative gearing deductions on personal income? If an investing method doesn't take advantage of tax deductions like these, it's basically a non-starter.
So yeah, those comments about fringe benefits above - Australia reformed its tax law and, exactly like Your Childhood Pet Rock suggested, we apply the maximum fringe benefit tax to any non-salary benefits given to an employee. Say an employee earns $80,000 per year, and their marginal tax is 32.5%. If they're given a company car as a "perk" - say the benefit is worth $6,000 per year - that $6,000 is taxed at the maximum rate of 45%, paid for by the employer. It makes it more logical for the employer to directly increase the salary of their employee by $6,000 (taxed at 32.5%) and for them to lease their own vehicle.
Yet Australia doesn't have a gift tax or inheritance tax. Does having fringe benefit tax offset not having a gift or inheritance tax? I don't really know.
posted by xdvesper at 5:48 PM on August 16, 2020 [1 favorite]
I've just spent seven years writing a (niche specialist academic) book about how interest worked in early modern Europe, partly inspired by reading Graeber and Piketty almost a decade ago. And while I found a lot to think about in this LARB piece, this quote (also quoted in the post) enraged me: "Inheritance is no longer a simple transmission of property titles..."
When was inheritance ever a simple transmission of property titles? Read some Austen.
posted by sy at 5:48 PM on August 16, 2020 [5 favorites]
When was inheritance ever a simple transmission of property titles? Read some Austen.
posted by sy at 5:48 PM on August 16, 2020 [5 favorites]
So yeah, those comments about fringe benefits above - Australia reformed its tax law and, exactly like Your Childhood Pet Rock suggested, we apply the maximum fringe benefit tax to any non-salary benefits given to an employee.
Where do you think I got the idea from?
posted by Your Childhood Pet Rock at 5:49 PM on August 16, 2020
Where do you think I got the idea from?
posted by Your Childhood Pet Rock at 5:49 PM on August 16, 2020
Capital gains being taxed at half marginal rate? Dividend franking credits? Negative gearing deductions on personal income? If an investing method doesn't take advantage of tax deductions like these, it's basically a non-starter.
My folks paid A$900K for a house out in fucking Two Rocks and we still think negative gearing is a good idea because it sends the house prices into the stratosphere. Meanwhile the average home price in Perth was $750K. Seven hundred and fucking fifty thousand dollars, half a million bucks American, for a house in Perth. 10x the average salary. How can anyone think that's anywhere even remotely fair or sustainable?
Meanwhile the ABC is letting the CEO of Aussie Homes basically say if we get rid of it there would be a massive recession. The ABC is left wing my ass.
posted by Your Childhood Pet Rock at 5:59 PM on August 16, 2020 [1 favorite]
My folks paid A$900K for a house out in fucking Two Rocks and we still think negative gearing is a good idea because it sends the house prices into the stratosphere. Meanwhile the average home price in Perth was $750K. Seven hundred and fucking fifty thousand dollars, half a million bucks American, for a house in Perth. 10x the average salary. How can anyone think that's anywhere even remotely fair or sustainable?
Meanwhile the ABC is letting the CEO of Aussie Homes basically say if we get rid of it there would be a massive recession. The ABC is left wing my ass.
posted by Your Childhood Pet Rock at 5:59 PM on August 16, 2020 [1 favorite]
I skipped most of the article, and the writing style is pretty atrocious, but it looks like the authors went through all that to conclude why socialism is the only viable answer to everything going on now.
They go by way of arguing a very technical point that many economists (represented in the article ranging from Summers to Piketty, plus also mainstream The Economist audience) are wrong about capitalism, in that capitalism is not economically breaking down or undergoing a transition but rather working perfectly, giving rise to class conflict (and that's why they conclude in the article socialism is the only answer).
I don't know how novel their argument is, but it's definitely an interesting point to think about especially how their line of reasoning references and ties together a whole bunch of observed recent socioeconomic phenomena, e.g. the rentier stuff, the millenials, housing/tax policy, political polarization, etc.
posted by polymodus at 6:10 PM on August 16, 2020 [1 favorite]
They go by way of arguing a very technical point that many economists (represented in the article ranging from Summers to Piketty, plus also mainstream The Economist audience) are wrong about capitalism, in that capitalism is not economically breaking down or undergoing a transition but rather working perfectly, giving rise to class conflict (and that's why they conclude in the article socialism is the only answer).
I don't know how novel their argument is, but it's definitely an interesting point to think about especially how their line of reasoning references and ties together a whole bunch of observed recent socioeconomic phenomena, e.g. the rentier stuff, the millenials, housing/tax policy, political polarization, etc.
posted by polymodus at 6:10 PM on August 16, 2020 [1 favorite]
sy - that struck me too! First, they’re ignoring the convergence of inheritance and capitalism, and second, why ignore it when we know how badly it turned out?
I’d say Balzac and A. Trollope we’re clearer about it as novelists, though.
posted by clew at 7:15 PM on August 16, 2020
I’d say Balzac and A. Trollope we’re clearer about it as novelists, though.
posted by clew at 7:15 PM on August 16, 2020
There's a massive cash economy creating unreported income for workers and owners alike.
...
Government income supports and substitutions are generous and also poorly input into income statistics. And, yes, lots of students and young people working in the arts etc. are hugely buoyed up by gifts from parents which are also not reportable income by the recipient.
...
Importantly, this is the most parismonious explanation of "extremely high relative to income" rent / home purchase prices in New York -- they aren't as high when people's actual incomes are considered.
Uh, what world do you live in? Poor people exist, and NYC has a huge homeless population, which doesn't count the people living in over-crowded apartments, slums, apartments that don't meet housing standards and aren't actually legal to rent except the tenants are too afraid to complain because the alternative is homelessness, apartments that don't have basic utilities, etc.
And nowhere in North America can government income supports be even remotely described as "generous".
There's a reason there's a "the rent is too damn high" political party in NYC. It's because an awful lot of people can't afford rent for what are general considered standard habitable conditions. The "parsimonious" explanation is that a lot of people in NYC are not adequately housed - or fed, or clothed.
posted by eviemath at 8:40 PM on August 16, 2020 [2 favorites]
...
Government income supports and substitutions are generous and also poorly input into income statistics. And, yes, lots of students and young people working in the arts etc. are hugely buoyed up by gifts from parents which are also not reportable income by the recipient.
...
Importantly, this is the most parismonious explanation of "extremely high relative to income" rent / home purchase prices in New York -- they aren't as high when people's actual incomes are considered.
Uh, what world do you live in? Poor people exist, and NYC has a huge homeless population, which doesn't count the people living in over-crowded apartments, slums, apartments that don't meet housing standards and aren't actually legal to rent except the tenants are too afraid to complain because the alternative is homelessness, apartments that don't have basic utilities, etc.
And nowhere in North America can government income supports be even remotely described as "generous".
There's a reason there's a "the rent is too damn high" political party in NYC. It's because an awful lot of people can't afford rent for what are general considered standard habitable conditions. The "parsimonious" explanation is that a lot of people in NYC are not adequately housed - or fed, or clothed.
posted by eviemath at 8:40 PM on August 16, 2020 [2 favorites]
“Escalating Plunder,” Robert Brenner, The New Left Review, Num. 123, May/June 2020 (Cf.)
posted by ob1quixote at 8:49 PM on August 16, 2020 [2 favorites]
posted by ob1quixote at 8:49 PM on August 16, 2020 [2 favorites]
I'm not clear about how taxing the rich improves the system of wealth redistribution among the general population. Where will you put the money?
The thing about extreme wealth is that it is so toxic, not only would society be improved if we literally burned the taxes collected from the ultra-rich, I think there's a decent argument to be made that it would be a (beloved by economists) pareto improvement, and in fact everyone would be better off. First because inequality would be reduced, second because it would be a form of (very mild) negative inflation, and third because wealth is so utterly toxic that its owners would be better and probably happier people without it. There's no need to burn it since it can always be spent, but even if you believed that all of government spending was corrupt, just burning that money would be better than leaving it in the hands of the rich.
posted by chortly at 8:54 PM on August 16, 2020 [6 favorites]
The thing about extreme wealth is that it is so toxic, not only would society be improved if we literally burned the taxes collected from the ultra-rich, I think there's a decent argument to be made that it would be a (beloved by economists) pareto improvement, and in fact everyone would be better off. First because inequality would be reduced, second because it would be a form of (very mild) negative inflation, and third because wealth is so utterly toxic that its owners would be better and probably happier people without it. There's no need to burn it since it can always be spent, but even if you believed that all of government spending was corrupt, just burning that money would be better than leaving it in the hands of the rich.
posted by chortly at 8:54 PM on August 16, 2020 [6 favorites]
Sy, I'm very curious about your book!
posted by latkes at 9:11 PM on August 16, 2020 [1 favorite]
posted by latkes at 9:11 PM on August 16, 2020 [1 favorite]
We are swimming in cognitive dissonance, trying to figure out how to re-slice the economic pie so that we'll get a larger piece, knowing full well that others who feed there will get a proportionally (or not proportionally) smaller slice.
...That assumes that the size of the economy remains exactly the same. Economic activity drives wealth creation. The more economic acitivity, the more wealth, the pie gets bigger...
I agree. But what if most of us in the middle of the curve don't get the benifit of the increase in overall wealth?
Wages for the middle and lower-middle classes aren't keeping pace, so the middle class' portion of the pie doesn't proportionally increase. Other entities, and the upper 1%ers, are taking the increase for themselves. I am ensconsed firmly in the middle class by virtue of a decent, if modest pension, and a killer health care plan. At my income level, my primary assest is my house.
If houses continue to become more expensive, people at my income level have to set our sights lower when looking to buy a home. A young couple with my income will struggle to keep their kids fed and clothed, and attend to their dental work and so on. (I am old, and my grown son has a good job, so my expenses are minimal.) Forty years ago my income would have given the hypothetical couple ample room to save for their kid's education. Not any more. That's the smaller slice of pie.
It's not just assets in themselves. Something else. My assets are my house, and a couple of mid-dollar guitars. A wealthy person's assets may look more like gobs of real estate, private jets, an island in the Pacific, a hotel chain. I don't believe the latter's assets figure into this pie theory the same way my house does.
posted by mule98J at 10:28 PM on August 16, 2020 [3 favorites]
...That assumes that the size of the economy remains exactly the same. Economic activity drives wealth creation. The more economic acitivity, the more wealth, the pie gets bigger...
I agree. But what if most of us in the middle of the curve don't get the benifit of the increase in overall wealth?
Wages for the middle and lower-middle classes aren't keeping pace, so the middle class' portion of the pie doesn't proportionally increase. Other entities, and the upper 1%ers, are taking the increase for themselves. I am ensconsed firmly in the middle class by virtue of a decent, if modest pension, and a killer health care plan. At my income level, my primary assest is my house.
If houses continue to become more expensive, people at my income level have to set our sights lower when looking to buy a home. A young couple with my income will struggle to keep their kids fed and clothed, and attend to their dental work and so on. (I am old, and my grown son has a good job, so my expenses are minimal.) Forty years ago my income would have given the hypothetical couple ample room to save for their kid's education. Not any more. That's the smaller slice of pie.
It's not just assets in themselves. Something else. My assets are my house, and a couple of mid-dollar guitars. A wealthy person's assets may look more like gobs of real estate, private jets, an island in the Pacific, a hotel chain. I don't believe the latter's assets figure into this pie theory the same way my house does.
posted by mule98J at 10:28 PM on August 16, 2020 [3 favorites]
fwiw...
@DeanBaker13: "look, we won't get campaign finance reform in a meaningful way. The bad guys will not agree to be idiots, they will get around it. We have to go the other way, give normal people money to spend -- can be done at state or even local level"
Combating the Political Power of the Rich: Wealth Taxes and Seattle Election Vouchers - "It is certainly true that the rich and very rich enjoy enormous political power under our current system, but it does not follow that attacking their wealth is the most effective way to restore a more functional democracy. To see this point, just imagine the most optimistic plausible scenario."
also btw...
@Noahpinion: "Do you want real equality of opportunity, as opposed to just rhetoric? If so, start off every young American with a minimum amount of initial wealth! Here are two ideas for how to do that:"
America Needs a Government Wealth Program - "Baby bonds or housing head-starts could make more people financially secure."
oh and...
@Noahpinion: "the simple, quick, easy, reliable, low-risk way to fix our entire messed-up health care system overnight: Lower the Medicare coverage age to 0."
Universal Medicare Is the Best Fix for America's Health Care - "It's not Medicare for All. It's better."
posted by kliuless at 11:16 PM on August 16, 2020 [2 favorites]
@DeanBaker13: "look, we won't get campaign finance reform in a meaningful way. The bad guys will not agree to be idiots, they will get around it. We have to go the other way, give normal people money to spend -- can be done at state or even local level"
Combating the Political Power of the Rich: Wealth Taxes and Seattle Election Vouchers - "It is certainly true that the rich and very rich enjoy enormous political power under our current system, but it does not follow that attacking their wealth is the most effective way to restore a more functional democracy. To see this point, just imagine the most optimistic plausible scenario."
also btw...
@Noahpinion: "Do you want real equality of opportunity, as opposed to just rhetoric? If so, start off every young American with a minimum amount of initial wealth! Here are two ideas for how to do that:"
America Needs a Government Wealth Program - "Baby bonds or housing head-starts could make more people financially secure."
oh and...
@Noahpinion: "the simple, quick, easy, reliable, low-risk way to fix our entire messed-up health care system overnight: Lower the Medicare coverage age to 0."
Universal Medicare Is the Best Fix for America's Health Care - "It's not Medicare for All. It's better."
posted by kliuless at 11:16 PM on August 16, 2020 [2 favorites]
like public assets/goods ('state capacity') are also things that people ignore to their own detriment :P
@dolanecon: "Countries that have strong democratic procedures tend to have higher-quality governments, with a few exceptions. Higher QoG, in turn, is associated with greater satisfaction of basic needs and greater personal freedom."
Quality of Government: A Statistical Portrait - "Noel D. Johnson and Mark Koyama call state capacity…'an ability of a state to collect taxes, enforce law and order, and provide public goods.' ...even when we control for the effects of GDP per capita, better governments tend to be larger"
What is American Conservatism? - "Today's conservatism is merely... the rejects of the post–Cold War order... a few oddball financiers... extractive industries... declining sectors... businesses reliant on low-wage... labor, and... social conservatives who have been... totally marginalized."
posted by kliuless at 11:42 PM on August 16, 2020 [1 favorite]
@dolanecon: "Countries that have strong democratic procedures tend to have higher-quality governments, with a few exceptions. Higher QoG, in turn, is associated with greater satisfaction of basic needs and greater personal freedom."
Quality of Government: A Statistical Portrait - "Noel D. Johnson and Mark Koyama call state capacity…'an ability of a state to collect taxes, enforce law and order, and provide public goods.' ...even when we control for the effects of GDP per capita, better governments tend to be larger"
What is American Conservatism? - "Today's conservatism is merely... the rejects of the post–Cold War order... a few oddball financiers... extractive industries... declining sectors... businesses reliant on low-wage... labor, and... social conservatives who have been... totally marginalized."
posted by kliuless at 11:42 PM on August 16, 2020 [1 favorite]
Are they talking about mainstream/prominent economists and sociologists not yet having caught onto/clearly formulated this idea? (Which I am also not really sure is the case?) Because it sure as shit has occurred to me, as well as a number of authors, bloggers, and MeFi commenters I've read over the past several years. At this point most of the people I know in my age cohort know at least intuitively that access to assets is THE number one determinant of long-term quality of life as well as professional prospects, not to mention health and myriad other factors. Especially for those of us born after 1980.
The point is that while we all know this, most writing on inequality still starts with income inequality and then brings in wealth inequality as an additional "and this is even worse" perspective. The author's point seems to be that this is the wrong way around. Wealth is now driving so much unearned income that we should talk about it first rather than second and even income is now really about how well that income source allows you to plug into the wealth escalator.
posted by atrazine at 1:43 AM on August 17, 2020 [4 favorites]
The point is that while we all know this, most writing on inequality still starts with income inequality and then brings in wealth inequality as an additional "and this is even worse" perspective. The author's point seems to be that this is the wrong way around. Wealth is now driving so much unearned income that we should talk about it first rather than second and even income is now really about how well that income source allows you to plug into the wealth escalator.
posted by atrazine at 1:43 AM on August 17, 2020 [4 favorites]
It is worth noting that all the authors are basically modern Marxian sociologists doing work in critical theory; even this article has key sentences that refer to Marx if you're already familiar with certain phrases. What they're saying to the economists is that the economists' argument are limited because they are using the wrong level of abstraction, and aren't Marxist enough, and the proper thing to do is a return to analysis using class conflict, and therefore conclude in the essay that socialism is the only way out.
posted by polymodus at 2:09 AM on August 17, 2020 [2 favorites]
posted by polymodus at 2:09 AM on August 17, 2020 [2 favorites]
On estate and inheritance tax, death duties were one of the main ways in which British aristocrats lost wealth and power between the late 19th century and the middle of the 20th century.
posted by plonkee at 5:05 AM on August 17, 2020
posted by plonkee at 5:05 AM on August 17, 2020
(Marx also did some work in economic theory, which may be relevant to other economists and economic questions.)
posted by eviemath at 5:05 AM on August 17, 2020 [1 favorite]
posted by eviemath at 5:05 AM on August 17, 2020 [1 favorite]
Yes, and these sociologists and others like them are basically carrying on Marx's work on political economy (e.g. for the first author, by way of Deleuze), in an intellectual and academic setting where mainstream economists largely do not find Marx and Capital scientifically relevant. The two disciplines today are addressing socioeconomics from opposing thrusts, and the article shows this e.g. in their comments on Piketty, etc. It's an important piece of context, there are two distinct schools of thought due to historical lineage, and this explains the strange/odd arguments the authors seem to be using as well as their ending remarks gently critiquing the economists' explanation of capitalism.
posted by polymodus at 5:59 AM on August 17, 2020
posted by polymodus at 5:59 AM on August 17, 2020
On estate and inheritance tax, death duties were one of the main ways in which British aristocrats lost wealth and power between the late 19th century and the middle of the 20th century.
I've long advocated for a 100% estate tax after the first $10M. If you're children aren't worthless, they'll earn their own fortunes.
posted by mikelieman at 8:54 AM on August 17, 2020
I've long advocated for a 100% estate tax after the first $10M. If you're children aren't worthless, they'll earn their own fortunes.
posted by mikelieman at 8:54 AM on August 17, 2020
I agree. But what if most of us in the middle of the curve don't get the benifit of the increase in overall wealth?
Wages for the middle and lower-middle classes aren't keeping pace, so the middle class' portion of the pie doesn't proportionally increase. Other entities, and the upper 1%ers, are taking the increase for themselves. I am ensconsed firmly in the middle class by virtue of a decent, if modest pension, and a killer health care plan. At my income level, my primary assest is my house.
If the private sector has to compete with other private sectors or the government in wages they'll be forced up. Walmart in North Dakota pays above average compared to the rest of its stores because of the oil industry taking away any surplus labor that would work for peanuts in retail. Imagine if the government was paying out $30/hr for union road working jobs using the confiscated funds of the ultrarich.
posted by Your Childhood Pet Rock at 1:11 PM on August 17, 2020 [1 favorite]
Wages for the middle and lower-middle classes aren't keeping pace, so the middle class' portion of the pie doesn't proportionally increase. Other entities, and the upper 1%ers, are taking the increase for themselves. I am ensconsed firmly in the middle class by virtue of a decent, if modest pension, and a killer health care plan. At my income level, my primary assest is my house.
If the private sector has to compete with other private sectors or the government in wages they'll be forced up. Walmart in North Dakota pays above average compared to the rest of its stores because of the oil industry taking away any surplus labor that would work for peanuts in retail. Imagine if the government was paying out $30/hr for union road working jobs using the confiscated funds of the ultrarich.
posted by Your Childhood Pet Rock at 1:11 PM on August 17, 2020 [1 favorite]
High demand doesn't necessarily just drive up wages: It can also drive down employment. The 1970s Econ 101 text would say that any increase in minimum wages would push down employment, because employers were paying the marginal worker their marginal product: That is, how much additional profit they earned for the firm. An increase in minimum wage would just mean that the least productive worker would be fired. Over the last few decades, it's become clearer that isn't true - because of market power and other factors, small increases in minimum wages have small or no effect on employment.
That doesn't mean that a $30 minimum wage would result in $30 private wages with the same level of employment. Walmart is just not going to pay everyone $30. And there are good reasons to want low-skilled workers to be employed in the private sector as well as the public.
Fortunately, there's a simple answer: wage subsidies. Let Walmart pay $10 (or $15) an hour, and have the government pay the difference. In fact, a negative income tax has been proposed by some obscure wacko lefties, like a sweaty, socially-awkward Quaker named Dick Nixon.
posted by Mr.Know-it-some at 1:37 PM on August 17, 2020 [1 favorite]
That doesn't mean that a $30 minimum wage would result in $30 private wages with the same level of employment. Walmart is just not going to pay everyone $30. And there are good reasons to want low-skilled workers to be employed in the private sector as well as the public.
Fortunately, there's a simple answer: wage subsidies. Let Walmart pay $10 (or $15) an hour, and have the government pay the difference. In fact, a negative income tax has been proposed by some obscure wacko lefties, like a sweaty, socially-awkward Quaker named Dick Nixon.
posted by Mr.Know-it-some at 1:37 PM on August 17, 2020 [1 favorite]
They do that in Australia. You get Family Tax Benefit A and B if you have kids and low income. A is per-child for all families under a certain amount, B is a fixed top-up payment for one income stream families. It's also tied to the immunization schedule being followed so either vaccinate your kids or lose your middle class welfare stream.
My parents would get their FTB A and B payments every fortnight (two weeks for the yanks here) and it let them proceed into the middle class as their incomes increased along with their seniority. Once Mum went back to work we still got a partial FTB A payment for us three kids. Once my folks started earning over the limit, the payment started to dry up and eventually disappeared once they were into upper middle-class territory.
THAT'S HOW WELFARE FOR FAMILIES SHOULD WORK.
posted by Your Childhood Pet Rock at 1:55 PM on August 17, 2020 [1 favorite]
My parents would get their FTB A and B payments every fortnight (two weeks for the yanks here) and it let them proceed into the middle class as their incomes increased along with their seniority. Once Mum went back to work we still got a partial FTB A payment for us three kids. Once my folks started earning over the limit, the payment started to dry up and eventually disappeared once they were into upper middle-class territory.
THAT'S HOW WELFARE FOR FAMILIES SHOULD WORK.
posted by Your Childhood Pet Rock at 1:55 PM on August 17, 2020 [1 favorite]
My parents would get their FTB A and B payments every fortnight (two weeks for the yanks here) and it let them proceed into the middle class as their incomes increased along with their seniority. Once Mum went back to work we still got a partial FTB A payment for us three kids. Once my folks started earning over the limit, the payment started to dry up and eventually disappeared once they were into upper middle-class territory.
This sounds like Negative Income Tax with Extra Steps.
I mean, it's a good thing, though. The extra steps aren't necessarily a bad thing.
posted by deadaluspark at 2:48 PM on August 17, 2020
This sounds like Negative Income Tax with Extra Steps.
I mean, it's a good thing, though. The extra steps aren't necessarily a bad thing.
posted by deadaluspark at 2:48 PM on August 17, 2020
High demand doesn't necessarily just drive up wages: It can also drive down employment. The 1970s Econ 101 text would say that any increase in minimum wages would push down employment, because employers were paying the marginal worker their marginal product:
Yeah, well Eco 101 is a bunch of made up nonsense at the macro economy level and people (I don't mean you here) should stop pretending like it does. Pushed up minimum wages increases consumption by minimum wage earners, which increases purchasing in the whole economy. There is actually very little proof that a minimum wage of $30 (or whatever) would have any negative effect on employment in the US. At some ridiculous point (say $100) it would definitely cause inflation, but there are different types of inflation, and so that's actually not a definite negative.
"And there are good reasons to want low-skilled workers to be employed in the private sector as well as the public. "
Yes, but low skill does not imply 'low wages'. If you meant 'low waged' and not low skilled, then the upper middle class wanting higher wages is not a good reason. There might be some marginal products that aren't created by people with high minimum wages, and there might be some automation that replaces people, but that's theoretical towards negative effects on employment.
Fortunately, there's a simple answer: wage subsidies. Let Walmart pay $10 (or $15) an hour, and have the government pay the difference.
We already have that, we already do that. It sucks, and the 'government payment' is always going to subject to political whims, less so than Wal-Mart.
posted by The_Vegetables at 7:57 AM on August 18, 2020
Yeah, well Eco 101 is a bunch of made up nonsense at the macro economy level and people (I don't mean you here) should stop pretending like it does. Pushed up minimum wages increases consumption by minimum wage earners, which increases purchasing in the whole economy. There is actually very little proof that a minimum wage of $30 (or whatever) would have any negative effect on employment in the US. At some ridiculous point (say $100) it would definitely cause inflation, but there are different types of inflation, and so that's actually not a definite negative.
"And there are good reasons to want low-skilled workers to be employed in the private sector as well as the public. "
Yes, but low skill does not imply 'low wages'. If you meant 'low waged' and not low skilled, then the upper middle class wanting higher wages is not a good reason. There might be some marginal products that aren't created by people with high minimum wages, and there might be some automation that replaces people, but that's theoretical towards negative effects on employment.
Fortunately, there's a simple answer: wage subsidies. Let Walmart pay $10 (or $15) an hour, and have the government pay the difference.
We already have that, we already do that. It sucks, and the 'government payment' is always going to subject to political whims, less so than Wal-Mart.
posted by The_Vegetables at 7:57 AM on August 18, 2020
I hate the Cortez story, which as far as I can tell is not one perpetuated by Cortez herself.
AOC's surname is Ocasio-Cortez, not Cortez. The commenter you're responding to got it right.
posted by Lyme Drop at 10:34 AM on August 18, 2020
AOC's surname is Ocasio-Cortez, not Cortez. The commenter you're responding to got it right.
posted by Lyme Drop at 10:34 AM on August 18, 2020
There is actually very little proof that a minimum wage of $30 (or whatever) would have any negative effect on employment in the US.
This is true, but it's true in the same sense as "There is actually very little proof that continuing our current path of fossil fuel output will result in climate change." That is, we can't prove it, but the overwhelming consensus among economists is that that sort of increase would substantially reduce employment. (See, e.g, p.9 of this report.) You're welcome to disagree, but others should be aware of the context.
("Low-skilled" is standard economic jargon, but I'll try to avoid it in the future.)
posted by Mr.Know-it-some at 10:39 AM on August 18, 2020
This is true, but it's true in the same sense as "There is actually very little proof that continuing our current path of fossil fuel output will result in climate change." That is, we can't prove it, but the overwhelming consensus among economists is that that sort of increase would substantially reduce employment. (See, e.g, p.9 of this report.) You're welcome to disagree, but others should be aware of the context.
("Low-skilled" is standard economic jargon, but I'll try to avoid it in the future.)
posted by Mr.Know-it-some at 10:39 AM on August 18, 2020
overwhelming consensus among economists
Economics is far more a religion than a science, they go through fads every few years. These few years it's MMT...
The economy works by having people do productive work for each other like a micro-version of comparative advantage in international trade. Doesn't matter if person A is better at both gardening and building fences in absolute terms than person B - society still benefits if we determine that person B is comparatively better at building fences, and we allocate person A to gardening and person B to building fences. We collectively achieve far more working together that way compared to making person A build a garden AND a fence (since he's better at both), while person B does nothing.
Money is the lubricant that facilitates trade, and in the example above, it doesn't matter whether wages are $10 or $100 per hour - we still end up with more gardens and fences in total if both A and B work compared to having A employed and B unemployed. Sure some products get more expensive, but the wages of many people have gone up as well by that exact amount. Nothing has changed in totality - money is value agnostic.
In fact, the distribution of wealth would change, weighted towards less wealthy people who are more like to spend it rather than hoard it, so it's very plausible we'll see an increase in demand, and a fall in unemployment.
posted by xdvesper at 5:01 PM on August 18, 2020
Economics is far more a religion than a science, they go through fads every few years. These few years it's MMT...
The economy works by having people do productive work for each other like a micro-version of comparative advantage in international trade. Doesn't matter if person A is better at both gardening and building fences in absolute terms than person B - society still benefits if we determine that person B is comparatively better at building fences, and we allocate person A to gardening and person B to building fences. We collectively achieve far more working together that way compared to making person A build a garden AND a fence (since he's better at both), while person B does nothing.
Money is the lubricant that facilitates trade, and in the example above, it doesn't matter whether wages are $10 or $100 per hour - we still end up with more gardens and fences in total if both A and B work compared to having A employed and B unemployed. Sure some products get more expensive, but the wages of many people have gone up as well by that exact amount. Nothing has changed in totality - money is value agnostic.
In fact, the distribution of wealth would change, weighted towards less wealthy people who are more like to spend it rather than hoard it, so it's very plausible we'll see an increase in demand, and a fall in unemployment.
posted by xdvesper at 5:01 PM on August 18, 2020
If you are paying your gardener $10 an hour, and the government forces you to pay her $100 an hour, are you going to continue to employ her, or will you do the gardening yourself? I would start weeding.
Some people would pay $100, so some gardeners would be employed, but many would no longer be. And since gardening was their best option before the increase, it's hard to see how many would get jobs elsewhere.
And MMT is not the current fad. The best way to know what mainstream economists think is to look at the Chicago Booth survey. Of the economists in that survey, 100% disagree with MMT (though only 3/4 disagree strongly.) That's not proof that MMT is wrong, but it does show that it is a fringe view among economists.
posted by Mr.Know-it-some at 7:32 AM on August 19, 2020
Some people would pay $100, so some gardeners would be employed, but many would no longer be. And since gardening was their best option before the increase, it's hard to see how many would get jobs elsewhere.
And MMT is not the current fad. The best way to know what mainstream economists think is to look at the Chicago Booth survey. Of the economists in that survey, 100% disagree with MMT (though only 3/4 disagree strongly.) That's not proof that MMT is wrong, but it does show that it is a fringe view among economists.
posted by Mr.Know-it-some at 7:32 AM on August 19, 2020
That poll asks about positions that aren't really a good representation of what MM Theorists propose though.
Question B: Countries that borrow in their own currency can finance as much real government spending as they want by creating money
Ok, that is something MMT proponents would propose but the second part of the statement should be:
...subject to sufficient idle production capacity
In other words, when there is high unemployment and idle production capacity, then borrowing to finance real government spending is not constrained since the money creation will not lead to inflation.
posted by atrazine at 8:17 AM on August 19, 2020
Question B: Countries that borrow in their own currency can finance as much real government spending as they want by creating money
Ok, that is something MMT proponents would propose but the second part of the statement should be:
...subject to sufficient idle production capacity
In other words, when there is high unemployment and idle production capacity, then borrowing to finance real government spending is not constrained since the money creation will not lead to inflation.
posted by atrazine at 8:17 AM on August 19, 2020
Check page 9 of the CBO report. About 65% of workers in the US earn $10 an hour or less, and they think that possibly losing about 1.3 m (refuted in cities like SF and Seattle, and curiously not mentioned at all) jobs if they increase it to $15 is too high a price to pay. It's basically what this thread is about.
Also 22 of 50 states have a minimum wage in the $10 range, so what do these guys recommend raising the Federal minimum wage to? $10.
That's is some leadership man.
posted by The_Vegetables at 12:54 PM on August 19, 2020
Also 22 of 50 states have a minimum wage in the $10 range, so what do these guys recommend raising the Federal minimum wage to? $10.
That's is some leadership man.
posted by The_Vegetables at 12:54 PM on August 19, 2020
That report doesn't say it's too high a price to pay, just estimates the numbers.
Some think it's worth it: "CBO report shows broad benefits from higher minimum wage"
Others don't: "CBO Reports 3.7 Million Jobs Will Be Destroyed By $15 Minimum Wage"
And as you might expect there was criticism of the estimates: "the recent analysis from the Congressional Budget Office unjustifiably discounts the new, more empirically rigorous research, leading it to underestimate the benefits and overestimate the harms of raising the minimum wage."
posted by Mr.Know-it-some at 1:04 PM on August 19, 2020 [1 favorite]
Some think it's worth it: "CBO report shows broad benefits from higher minimum wage"
Others don't: "CBO Reports 3.7 Million Jobs Will Be Destroyed By $15 Minimum Wage"
And as you might expect there was criticism of the estimates: "the recent analysis from the Congressional Budget Office unjustifiably discounts the new, more empirically rigorous research, leading it to underestimate the benefits and overestimate the harms of raising the minimum wage."
posted by Mr.Know-it-some at 1:04 PM on August 19, 2020 [1 favorite]
If you are paying your gardener $10 an hour, and the government forces you to pay her $100 an hour, are you going to continue to employ her, or will you do the gardening yourself? I would start weeding.
I'll continue to employing them, because either
a) I was earning similar money to my gardener, and my wages have gone up 10x as well, so there's no issue there
b) I was already rich, and I can still afford to employ them, because I have better things to do with my time than tend to my garden. This achieves wealth redistribution
posted by xdvesper at 6:23 PM on August 19, 2020
I'll continue to employing them, because either
a) I was earning similar money to my gardener, and my wages have gone up 10x as well, so there's no issue there
b) I was already rich, and I can still afford to employ them, because I have better things to do with my time than tend to my garden. This achieves wealth redistribution
posted by xdvesper at 6:23 PM on August 19, 2020
The 1,200-Euro Experiment: Longitudinal Study on Unconditional Basic Income Launches in Germany
posted by XMLicious at 7:04 PM on August 29, 2020
posted by XMLicious at 7:04 PM on August 29, 2020
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