To Cut Down Poverty, Cut Down the Cost of Living | Hacker News Reader

To Cut Down Poverty, Cut Down the Cost of Living

citylab.com

113 pointsjseliger217 comments

I think the idea of focusing on reductions in expenses is the right thinking. I am not sure disguising it as increasing social welfare is the answer. I have been teaching all of my children, and ranting about it online occasionally, that a lot of younger people are financially illiterate, including so-called smart or tech people. I was taught live within your means. I grew up below the poverty line in a crime-ridden neighborhood in Brooklyn in the late 60s, early 70s, and now I am living in the impoverished rice fields of East Java, Indonesia by choice. My son bought his own first used car by shoveling driveways, tutoring, working for a tree company all the while maintaining an A+ average at school. Financial literacy is not just being able to balance a checkbook. It is about being able to keep a 3 month to a full year of cash flow right in front of you, whether on a piece of paper or a spreadsheet. And don't tell me it is unrealistic. I did this when I had nothing. I recieved a shoeshine stand and kit when I was eight, and did newspaper routes, sweeping floors for supermarkets part time and a bunch of other fun jobs. Yes, they were fun for me. I smiled and whistled while I did them. I didn't see them as holdovers until I could be a real scientist or write my novel or make my art. Rather I saw them as another day towards buying that telescope on a fire sale at the local hobby store, or a book I really wanted to own, not borrow from the library. Besides, I met some really interesting people while doing them, and some led to better opportunities. Teach your kids the value of a dollar, and have them know what it really means in their gut. That is how poverty will be eliminated eventually in spite of any obstacles societal or otherwise.

I worked my way through college. If my kids try to do the same it will take them more than 14 years if they match my work.

The snow you walked uphill both ways in wasn't as deep as you think.

I did too, but I left university, and did pretty good for myself despite that decision.

University is a choice unless you need the paper to be a doctor, engineer or lawyer, or other 'professional'. I personally do not subscribe to the public education system. I am home schooling my youngest here in East Java. My eldest sone is studying German, and thinking on going to Germany for university, which is very cheap even for foreigners. My daughter goes to an affordable college.

The days of elite universities and Ivy league tuition are numbered. I had the joy of somebody I met traveling telling me how much debt he had to send his son to Cornell. I simply said why not a more affordable school, to which he replied, "Because you know your kid is set for life with that piece of paper no matter how he performs as long as he graduates." I am almost gagged.

It's elitist attitudes like that I disdain, and frankly, I don't think the programs vary in proportion to the cash outlay and debt for life. I like the 'if you landed on a deserted island who would you want with you', and by that metric, I am very confident in my son, not so much in the elitist's son.

I am not sure how to take your 'snow' comment, since that comes from a comedy routine, and yes, I understand its take on hyperbole. But I can pretty much guess you cannot speak to how deep or inclined the snow was for me ;)

The problem is that the ivy league elitists control access to most of the best jobs.

Resumes from the affordable school your daughter is attending are quickly filed in the round bin.

The quality of education doesn't actually vary much, but the quality of the contacts and the doors opened is greatly improved by more prestigious schools.

The US job market is just much more competitive now than when you were young. Look at the numbers. There are about 4.5 million 22 year olds in the US. There are over 1 million new legal immigrants each year.

Basically entry level jobs are flooded. And jumping career tracks is far more difficult than you think, HR departments aren't huge believers in IQ or transferable skills.

A bad school can lead to a bad job track, and that can lead to a life long struggle.

I have jumped outside that track, and it is what I am teaching my kids to think about. What best jobs? What does it mean to be successful? I have far less money than some of my peers, but they envy my lifestyle of living minimally and in different countries. It all depends on what your goals are, and what group you run with I guess. I say question your assumptions.

As far as being more competitive, I don't buy it. 1 million, 1 billion, if you truly have common sense and some intellect, you beat out 99% of those numbers, and the common sense doesn't seemed to have scaled to make the population that now enters the market any more difficult, but that is purely limited empirical obsevation on my part.

BTW, I am still in the job market, so I am familiar with how competitive it is, and I don't rely on just established connections. I venture out of my comfort zone often. From programming, to diving to maintain and fix electrical and hydralic systems underwater, to managing installations and subsequent operations of a few world-class installations of unique equipment, and an odd assortment of other skills.

And, I did it without completing a degree.

See that was my attempt at putting me CV out there ;)

Yeah. I think it's a huge issue when people romanticize the hard work they have done in the past and expect the same from their children. It's one thing to say "my kid should be financially literate" and another thing to say "I sweeped floors at a supermarket when I was a teenager and so should my kid."

IMO our goal should be to make life better for our children, and that involves giving them opportunities and resources so that they don't have to work as hard as us, unless they absolutely have to. My dad worked through college, but paid for my college so that I could focus on my studies. I plan to do even more for my own kids in the future, maybe by paying for their grad schools as well.

I think what GP was trying to mention is that the cost of things like college have gone up immensely since then. The same strategies won't work now.

You can't live on a minimum wage job in most places in the US, let alone live + pay for school

You misread me. I don't expect my son or other children to work sweeping floors or otherwise. Each generation of my family has improved life for the next generation. From my Momo, grandma, coming over as a cleaning lady for New Yorkers, to my Dad driving a truck or other such job.

I worked through college, but dropped out voluntarily. I think there are other opportunities to learn nowadays aside from university and graduate school unless you want to be a doctor, engineer, or lawyer.

My son and daughter volunteer and work and go to school. They are both doing exceptional. My son was number one in the entire county in Chemistry this past year. I am split on whether they would be better off not working or volunteering at all. It is their choice; I didn't ask it of them. I did offer them the option of focusing solely on studies, but they like what they do. What can I say?

I have friends whose kids are given whatever they please. These are not friends who grew up where or how I did. Their kids are having all sorts of serious adaptation issues. I think it is due to having too much time and no responsibility. I work hard at my art and job, no romanticizing here. The drunk writer, or coder who just wings it, are stereotypes. The real achievers work their ass off.

I know from being a manager of hundreds, and including myself, that busy people seem to get more work done. I am not talking about the culture of no sleep, 75 hours per week. I am talking about having 30 hours of real work per week in a 40 hour week, and not 10 hours and making up for the deficit in a 75 hour week, which seems common in some companies.

Financial numeracy is definitely an issue which should be focused on. There was a story recently by the local NPR station where an organization which was teaching people new to the workforce about savings accounts, etc., found that many people used payday loans and were basically giving 30% - 40% or so of their paycheck to these high interest loan places because they just didn't know how to use a bank and set-up a savings account. These people just didn't have a better example to follow --their friends and mates had done the same so they just followed not knowing there are alternatives.

In many places, financial institutions like banks do not serve the poor. Like, in the US if you are a poor minority living in an area heavy in poor minorities, it is quite likely that banks will essentially refuse to serve you. Redlining was an example of this kind of thing. There are other, related things - low balance fees, minimum transaction sizes, the need for proof of income or a guarantor who can provide such. This is why cheque cashing places still exist in 2016 in the US - for many people, they literally will be refused service if they try to open an account so they can deposit their paycheque. Blaming this on 'poor financial literacy' is backwards - all the financial literacy in the world won't help you when banks systematically discriminate against you.

>"all the financial literacy in the world won't help you when banks systematically discriminate against you"

What the non profit did was show people how to use banking services, how to save, etc. and lo, people did. So what you say could be true some where but, it's disproven here where the non profit introduced people to the banks.

You have not given any details, so I cannot evaluate what this nonprofit was actually doing - that is, there are two questions:

1) How much were they doing? That is, where on the scale were they from (a) just literally letting people know that saving was a thing and banks existed through to (b) actually going in with people to open accounts, making personal introductions, acting as guarantors etc?

2) Who were they helping? That is, where on the scale of 'relevance to systemic discrimination that I discussed' were their clients from (c) mostly educated white college graduates with good credit history and family money (though perhaps not much personal money) living in 'good' areas through to (d) mostly poor black lower class minimum wage workers with bad credit history living in 'bad' areas?

It is a relevent counterpoint if the nonprofit is mostly doing (a) and mostly helping (d) - otherwise, it is entirely irrelevant.

That is, because doing (b) firstly does not scale, so it only fixes the problem for a few people, and secondly agrees with what I said, about how you need these things in order to bank if you fit into category (d). And because serving (c) is entirely irrelevant to the point about systemic discrimination, as (c) are people that do not face this.

So, please either show that the nonprofit was mostly doing (a) and mostly helping (d), or retract your point, as it is wrong.

I was looking for a comment just like this!

It seems when anyone talks about household expenses, just like this article, we get the same list: housing, food and transportation. I don't know why the cost of debt isn't right in the mix. Maybe it is assumed debt is paying for these other things, so when debt is paid off, the expense is just chalked up to the underlying housing, food or transportation costs. However, it ignores the fact debt carries its own costs which are significantly more expensive for the poor and the interest alone, especially on payday loans as you noted, could probably rival food and transportation costs of the poor.

And interest is a huge driver of wealth inequality. A large majority of people pay more interest than they receive in their lives, that money ends up at the top.

We need more diverse currencies that are not the debt-based fiat money we have now.

Personal debt is not the same as using a debt-based fiat currency. They are completely different things.

I live within my means but am not financially literate. It sounds like a good practice for me would be writing down my in/out cash flow - like you say, "It is about being able to keep a 3 month to a full year of cash flow right in front of you, whether on a piece of paper or a spreadsheet".

Is starting out really that simple? Writing down what comes in, and what goes out, and what you know will come in and go out?

It is simply keeping the expenses on the left rows, the time period on the columns (week, month), and keeping a running tally carried over to the next column at top. Sounds simple, but it is a powerful tool, since you see when you might actually dip to zero or below way before it happens, and you can plan. Simple keeping a balanced checkbook and writing your known expenses, is necessary, but does not provide the look ahead. You'd be surprised how many people who make more than 6 figures get caught short some months when for the year they're OK, but due to the ins and outs of cash flow, they are at a deficit one day or week out of the month. You can find plenty of templates online. I keep mine simple as compared to what my past business accounting was. I am hoping to get more deeply financially literate when it comes to things like investments for my future (kind of late now, and a fallout of how I was raised), but more so that I can at least teach all of my children. I don't subscribe to the work and retire model. I personally work to make ends meet, and work on my personal interests at night, or when I stop working and live cheap to devote more effort to the next round.

https://i.imgur.com/1rPEkGQ.png

That's pretty neat. I'll have a better look at it later. Thanks!

You're welcome!

I have a friend who used to write down everything he spent money on, then tallied it up weekly to see if he was on track. Over time he stopped doing that and transitioned into what happened that day, and now he keeps an interesting and concise journal.

So if you need additional motivation, think of it as journaling. When I travel, I still write down my expenses and what I did that day. I figure it'd be useful when I'm old to tell the kids how much a 1GB prepaid SIM cost "back in my day."

But seriously, keeping track of your expenses is a fundamental step in financial literacy. Hook everything up to Mint if you can't be bothered writing daily logs.

It's a good start. Read Mr Money Mustache to continue.

if puritanical lectures solved the world's problems, we would already be living in paradise.

Clearly there are a lot of reasons why some people struggle, and it's often not because they are lazy and profligate. There are structural societal reasons which can't be solved purely by hard work.

I can't speak to the puritanical, since I am an atheist and don't believe in paradise anyway ;)

I had to overcome a lot to get where I am as posted at the top of the thread, and I don't believe people are just lazy or wasteful (had to look up profligate - thanks!).

I'm curious to see examples of 'structural societal reasons' you write about for discussion, since I can only guess, and I don't want to assume.

I do, however, think there are truly lazy and wasteful people; I have known quite a few in my decades and travels. I also think they can change.

The world is a better place though in terms of worldwide people lifted out of poverty, and other indicators. "The U.S. ranks 6th worldwide in wages, but 25th in wealth..." quoting myself from another reply above. It is because we are a debt-based society.

I saw this in my old impoverished neighborhood in Brooklyn in the 60s through the 80s, and I see it starkly in contrast here in East Java. People re-purpose stuff more readily here like my mom and dad did back home.

Well done to you for pulling yourself up by your bootstraps, and doing well in life.

The stereotypical example of what I'm talking about is the child who grows up in a poor area with terrible parents, terrible schooling and little in the way of a good example to follow.

So who's teaching the kids 'financial responsibility' and the 'virtues of hard work'? And when they grow up without those values, who's to blame? When they have kids of their own, and the cycle continues, who's to blame then?

You're lucky that you had good parents, as are your own children by the sounds of it. But not everyone is as lucky as that, and simply lecturing and blaming those who grow up without that kind of luck doesn't solve anything.

Still not buying it.

I love my parents. My mom has passed, but my dad is still living. They didn't teach me financial literacy, however, I did learn about placing bets on horses at a young age ;)

My father and mother both never completed high school. Dad was an ex-merchant marine, Golden Gloves boxer (runner up champ in NYC in the 50s). My Dad and I have a good understanding now, but there were some really bad physical times in the household, let's leave it at that without making this an Oprah show candidate.

I would say that movies and books some consider trite, contrived, romantic, boring, unrealistic, nowadays, helped give me an ideal to live towards, or heroes if you will. I think there aren't as many, but they are shunned or looked down on in current times by intellectual elites to the detriment of the good they do.

I grew up without TV, and a phone for most of my childhood. It wasn't until I was eleven that me and my friends rode the subway from Brooklyn to Manhattan without adult supervision.

Even some of the poorest in the US have internet and a semi-smartphone for immediate at-your-fingertips information. I would say they have a leg up on some of my peers there. So, aside from the tails where there are extreme cases, I am an optimist, and think it is easier to escape your roots so to speak.

[Edit] I realized after reading my response that I still carry a chip on my shoulder, but in the interests of transparency, and a lesson in humulity, I'll let the post stand as is. My apologies if any offense is given above.

>if puritanical lectures solved the world's problems, we would already be living in paradise.

Same is true of excuses.

I guess the real hurdle is getting people to understand the contradiction between

a) "schools should require financial literacy for graduation" and

b) "standardized testing is the spawn of satan".

Or just offer it generally, forget about testing for it.

How many people had any kind of accounting or personal finance in high school? More than 1 semester?

Not me. And if that's generally true for many, than that is a tragedy.

How practical, and helpful would that be for students?

And yet it doesn't seem to be a focus of our public schools.

Not to mention the death of the trade school of learning how to operate machinery and tools for woodworking and metalworking.

On a bright note, some of the engineering programs are incorporating more hands on experience, since it informs an engineer's take on what he inevitably asks to be produced.

There were monthly mandatory pep-rallies in my school growing up. No classes about financial literacy though. I guess they thought we would all join the NFL after graduating.

> I have been teaching all of my children, and ranting about it online occasionally, that a lot of younger people are financially illiterate, including so-called smart or tech people.

You are right on the money. And that is true even in third world countries(I live in one).

Financial literacy was assumed to be taught by parents. Unfortunately, not all parents are financial literate either.

Financial education isn't taught in school. I recommend showing your kids Rich Dad Poor Dad as well.

I don't have a replacement book, but Rich Dad Poor Dad is less well thought of now. I believe it has a strong push on property as investments.

It is maybe a better route to look at 'three fund portfolio' low cost ETF/mutual fund strategies.

Investment blogs such as Mr Money Mustache may also be a good road into a good long term investment strategy.

Yep, just pull yourself up by your bootstraps! Poor people are simply stupid and lazy. I would know, being an intelligent member of the upper middle class.

I think his comment and attitude would be more helpful, motivating and inspiring to most people, poor or otherwise, than your self pitying snark. Honestly.

"For Philadelphia, the biggest-ticket poverty-reduction item is expanding transportation access"

It looks like cities need to focus more on subsidized mass transportation. I live in Atlanta where the bottom line is ALWAYS scrutinized. Our mass transportation system, MARTA, must be profitable. When it's not profitable, a certain segment of society always criticizes it. They don't think of the impacts to society of providing cheap, reliable and convenient transportation.

The only impact they think when MARTA is up and running, or expanded, is that the 'unwanted' (of certain skin color) have the opportunity to come to their neighborhood to loot and plunder.

I had just read an article that my county is adding more toll lanes (http://www.ajc.com/news/news/local/work-begins-i-85-express-...). That is exactly the opposite of what this proposal is recommending. My county is charging money for express lanes to bypass traffic - essentially a privilege of the wealthy - rather than create a long term solution for everyone (and the construction is using tax payer money!)

> Our mass transportation system, MARTA, must be profitable. When it's not profitable, a certain segment of society always criticizes it. They don't think of the impacts to society of providing cheap, reliable and convenient transportation.

An easy way to shut up the idiots like these is to point out the extent to which miles traveled are subsidized for car drivers (invariably more than for transit, due to how horribly inefficient cars are). When they're forced to imagine a society without transport subsidies instead of one with only _their_ favored transport subsidies, they tend to quickly shut up.

Though of course this only works for people you know: the voting public is allowed to be as dumb and contradictory as it wants to be.

> An easy way to shut up the idiots like these is to point out the extent to which miles traveled are subsidized for car drivers (invariably more than for transit, due to how horribly inefficient cars are). When they're forced to imagine a society without transport subsidies instead of one with only _their_ favored transport subsidies, they tend to quickly shut up.

First, I don't think you're going to change anyone's mind by beginning with, "You're an idiot." Second, you're right, I can't imagine a society without transport subsidies; But, considering the state of my community's infrastructure, it's equally hard to imagine being able to subsidize even more transportation than it already does. Maybe if they were decommissioning roads in sync with new transit roll outs...

Main questions I have for discussion (mostly related to rail transit):

Will businesses that are not within walking distance of a mass transit endpoint a see a positive benefit?

Will individuals that are not within walking distance of a mass transit endpoint see a positive benefit?

Will their property values be adversely effected?

Actually the polls show the citizens want the railway expanded, but the politicians are the absent minded bigots. They need to be voted out and find a job picking up trash.

http://www.myajc.com/news/news/local-govt-politics/poll-gwin...

As a European that sounds crazy. I have no idea if our systems are profitable, but public transportation is for the greater good (makes it available to most, cuts down on pollution). Profits should be secondary. Then again, look how you guys run your healthcare.....

When I lived in China, the railway in my city cost about $2.5/trip, was 99.9% on-time, and the interiors were clean and air-conditioned. And they were making $2bn/year in profits. What a world of difference.

There are more people in China. Whether 10 people ride, or 10,000 people ride - once your infrastructure for rail is in place, your costs do not increase much. In Atlanta we have urban sprawls, where people live far from the city and drive in. The city empties out at night. We need rail that take people from the suburbs to the city to reduce the cars on the highway.

Many railways in China aren't profitable, heck only the Beijing Shanghai line is (out of the HSRs), and it costs just as much as flying (often more!). Commuter transit in China (50 Kuai and below) is almost always heavily subsidized.

We already know how to cut poverty, based on other countries like the Nordics where poverty is lower: Take more from the rich and give more to the poor.

Unfortunately, rich people love money too much, so we're not allowed to talk about the real solution, and have to talk about all these fake solutions instead.

> We already know how to cut poverty, based on other countries like the Nordics where poverty is lower: Take more from the rich and give more to the poor. Unfortunately, rich people love money too much, so we're not allowed to talk about the real solution, and have to talk about all these fake solutions instead.

We don't talk about the real solution because none of the person that want to "take more from the rich and give more to the poor" proposes one. The problem isn't what to do, but how to do it.

Courtesy of being born in a Communist country, I had to learn Karl Marx and such in middle school. And almost every single statement on this comment chain reads like my term exam questions (I'm not being facetious here). He has a whole chapter on general formula of capital, and another one on rent seeking behavior. It's all good idea ... until you actually try to implement it and the resulting government is nuts.

Take those with 100% inheritance tax idea. Are you gonna also tax gift at 100%? Cause it's obvious what will happen. Now we're adding special case that parents are not allowed to gift their house to their children?

>We don't talk about the real solution because none of the person that want to "take more from the rich and give more to the poor" proposes one.

That's just a lie. I could reel off about 20 or 30, many of which were the centerpiece of a presidential campaign.

* Raise minimum wage.

* Implement 100% LVT.

* Water down intellectual property laws.

* Water down laws that attack unions (e.g. 'right' to work).

* Strengthen laws that allow unions to organize.

* Remove carried interest rule.

* Implement a job guarantee.

* Make trade deals with other countries contingent on ^^^ this stuff happening in those countries too.

Unfortunately, left economists who can make a case for policies like this are consistently shouted down by the 'respectable' economists who predict austerity will cause growth 7 years in a row (any day now!) and catastrophic job losses will be the only result of raising the minimum wage. Those who make being usefully wrong a profession, in other words.

>Courtesy of being born in a Communist country, I had to learn Karl Marx and such in middle school. And almost every single statement on this comment chain reads like my term exam questions (I'm not being facetious here). He has a whole chapter on general formula of capital, and another one on rent seeking behavior. It's all good idea ... until you actually try to implement it and the resulting government is nuts.

98% of his writings were a critique of capitalism. He didn't provide a detailed description of how to implement anything.

Of course, some dictators used his writings as a pretext to seize power and implement fairly bog standard authoritarian regimes and guilt by association works wonders on the feeble minded, so there's that

> 98% of his writings were a critique of capitalism. He didn't provide a detailed description of how to implement anything.

Yeah that's exactly my point. The issue is when we try to turn all those seemingly "good" things into practice, we couldn't figure out how.

Let me pick the one that I disagree the most in your list:

> Implement a job guarantee

How would you do that?

>Yeah that's exactly my point. The issue is when we try to turn all those seemingly "good" things into practice, we couldn't figure out how.

He wrote a critique of capitalism

Das Kapital was not a list of seemingly good thing that could be turned into practice. The fact that other people read the book and did misguided or horrible things is no reflection on what he wrote.

>>>Let me pick the one that I disagree the most in your list:

>>Implement a job guarantee

>How would you do that?

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

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

If you think the Lincoln Tunnel was a waste of money and you think that the private sector overproducing shoddy McMansions where nobody wants to live in 2007 was a great thing then you probably wouldn't be a fan.

Reminds me of this:

The poor spendthrift vagabond says to a rich man:

"I have discovered there is enough money in the world for all of us, if it was equally divided; this must be done, and we shall all be happy together."

"But," was the response, "if everybody was like you, it would be spent in two months, and what would you do then?"

"Oh! divide again; keep dividing, of course!"

https://www.fourmilab.ch/etexts/www/barnum/moneygetting/

This anecdote is dumb and wrong, but is a handy way to call poor people trash when you're afraid to say so directly, I guess.

And yet, that is precisely the argumentation one usually gets when proposing the "running out of other people's money" dilemma.

A case in point: https://www.youtube.com/watch?v=Zmji36q8E4o

If I say the anecdote is perceptive and right you'd expect me to give reasons wouldn't you especially if I add an unpleasantly tendentious opinion?

I think it is wrong because the people advocating cutting the pie differently are not poor, spendthrift vagabonds but people with jobs who believe that they are not getting a fair cut of the wealth they create.

In many cases, they are even people who stand to pay more if they get their wish. You don't have to personally profit from a certain policy to advocate it.

And their act of believing automatically makes it true and justified?

That is called narcissism.

From my anecdotal experience it is too often people who are themselves near or at 1% trying to justify how the "rich" are taking something away from them.

> I think it is wrong because the people advocating cutting the pie differently are not poor,

You mean, the people who are advocating for taking someone else's pie.

Where does this idea come from that the rich are "taking" from them? No one takes from you, except for the government when they collect taxes. All other relationships are consensual relationships negotiated by people who are all looking for the best deal they can find. Someone pays me for my labor, and in return for compensation I give them my labor. It's a fair deal and entered willingly. If I did not think it was a fair deal, then I could offer my labor to someone else and look for a better one, or I could start my own business and work for myself.

If you think that someone else is taking from you or paying an unfair price, then start your own business. You might end up with a different perspective on the value that business owners and capitalists have in society. When you start a business, all of the wealth you create is done with your own hand: you provide a product or service, and you convince people to give you their money in exchange for it. They do, and (hopefully) you end up with more money than it costs to create the product or service, and so you profit. The difference is, no one is taking care of you by saying, "Hey, just come into work every day and we'll pay you." The business owner needs to make sure its suppliers deliver product on time, and its clients pay what they owe on time, and handle various sorts of concerns that are easy to fail to recognize. The business owner needs to make sure their facilities are operational, and that laborers have the tools and supplies they need to do the job, otherwise work stops! There's a chance that your business can crash and you'll be left with nothing. You take on a risk that you work for years and end up with essentially nothing, because your company might be running out of money, and no one might be willing to buy your (at that point) failing, borderline worthless company. There's a lot of risk involved, especially in companies that develop new products -- the value of the product isn't known, and so you're taking on a risk that the company itself might collapse due to being immature, and a further risk that the product might not be valuable, and many more risks.

If anyone be believes that they or someone are "not getting a fair cut", then they are welcome to strike out on their own or with like minded people and create their own organization. This website frequently writes about organizations that were created by just a few people, delivered incredible value, and so grew into something great.

Furthermore, if this company founder is correct in their theory that organizations that employ laborers are not giving the laborers a fair share, then the new company that they found will be able to and will choose to pay laborers much more than any competitor will (due to recognizing their true value). In paying more for the labor, this company will be able to attract by far the best laborers and hire as many people as it needs. Competitors meanwhile will be starved for talent and will suffer. In this way, a company that fairly values and fairly compensates the work produces by its laborers will out-compete companies that undervalue their laborers. In the end, companies that value worker labor correctly will come out on top.

If you have studied economics, and you have followed this reasoning, then you should be open to the possibility that laborers are in fact fairly compensated for the value they produce. That's not to say that we should not have progressive taxes, but when you recognize this, you might look differently at the idea that peoples' value is being "stolen". They're willingly trading it at a price they negotiated. You shouldn't be sour about a deal you negotiated and accepted; and you shouldn't be mad at someone that a better deal isn't available. Perhaps I think I should be paid $1 million dollars per year, but just because I believe that doesn't make it true. A person deserves to have the compensation that they earn by providing value to others, at a rate the other people agree to willingly (and enough to say alive, whichever is greater).

It's a wrong and dumb anecdote because spending money doesn't make it vanish into thin air. It just ends up in someone else's pocket. And from there, one can indeed "keep dividing" as the poor man suggested.

It seems the poor man in that story knows more about how the economy works than the rich man.

Implying that the only difference between rich and poor is spending habits.

Where in the real world we have confounding factors such as racism, sexism, cultural norms, differing costs of transit and habitation, limited opportunities and limits on resources.

It seems to me like it's the only one that matters because it's the one that an individual has the most control over. Other confounding factors are externalities that as an individual you cannot always control but guess what you can always do? Save, save, save and if you can, innovate and reap the fruits of your discipline and hard work.

Collectivism should be avoided.

>It seems to me like it's the only one that matters

You literally have to do nothing to cash a rent check, receive share dividends or interest on a loan.

From a systems' perspective that's parasitism.

You are simplifying to the level of dishonesty.

There's really no other way to characterize non-gift exchanges of wealth that the recipient did not create.

The only thing that stops this system of parasitic wealth transfer from spinning out of control is re-redistributive taxation.

>The only thing that stops this system of parasitic wealth transfer from spinning out of control is re-redistributive taxation.

At least we're in agreement that parasitism is not a desirable outcome. We seem to disagree on what constitutes parasitic behavior.

First of all, I think that the idea of estate tax is lunacy in and of itself but now that we have it, let's think about what you're saying; that it's not okay for an individual upon death to transfer his/her wealth to a person of their choosing (whom they may have mentored to further a legacy they were passionate about) but that it is okay for the proletariat to forcibly acquire said wealth because they know better?

How is that not outright theft? I would like the opportunity to freely determine how my acquired wealth will be spent after I'm dead. If I would like to leave it to a mentee of mine to further some work I had began, then being the acquirer of said wealth, I deserve that right.

You know, this experiment is already done and dusted. Any time you advocate for egalitarianism, look at the results of "The Berlin Wall's great human experiment" then be afraid. What sort of government shoots its own people to prevent them from running away from the horrid conditions they've created? I'll tell you which one, a socialist/communist one.

>How is that not outright theft?

It's re-redistributive. Taxation somewhat compensates for the redistributive effect of the rentier economy, which you could also characterize as theft for similar reasons.

>I would like the opportunity to freely determine how my acquired wealth will be spent after I'm dead

And I would like not to have to dedicate 40% of my income to renting property from non-productive (sometimes anti-productive) members of society.

Euthananize the rentier and I'll be happy for you to keep 100% of the wealth you earned with actual work.

Until that time, no.

That non-productive/anti-productive member of society is the one that keeps your appliances running, makes sure your roof isn't leaking, and fixes your pipes when they leak. They're not just sitting back and watching the money role in. Managing property, moreover doing so profitably, is not a kick back and relax kind of job. You're welcome to buy and maintain your own property if you'd like. It would cost you about as much in the long run.

>That non-productive/anti-productive member of society is the one that keeps your appliances running, makes sure your roof isn't leaking, and fixes your pipes when they leak.

No, that's called a property management company. Around where I live they take ~10% of the rent and pass the rest on to the rentier.

Try again.

Nope, rent management companies generally take a cut for doing the _Management_ portion. That means drawing up forms, selecting renters, doing background checks etc. The landlord still has to pay for or do repairs. I wouldn't be surprised if some management companies will arrange for repairs to be done as part of what they do, but it still comes out of the landlords pocket.

In some markets they tend not to do repairs, in some they do.

If you were being generous you could argue that landlords lose another 10% of the rent to repairs.

That still leaves a big fat 80% slice of the rents coming in which is free money.

More like 20% if you don't include labour. Then take out another 40-50% for insurance on the property. Then put the rest into paying the mortgage. Which you admittedly get back, but remember you're doing all the work on the house yourself and houses do wear out over time so that will eat into your margin even more.

EDIT: Don't forget about property taxes! Those eat up a pretty big chunk of the rent too. They're usually a couple hundred a month. Let's be nice and call that 10% although it's generally much larger.

The problem with this is that even if you only just break even as a rent-seeker, you're still creating wealth for yourself and reducing the market of available properties for potential buyers, creating massive negative externalities.

Landlords are doubly parasites.

>even if you only just break even as a rent-seeker, you're still creating wealth for yourself

That sounds utterly contradictory.

Landlords provide a service by maintaining and managing properties. They assume most of the risks including damage to the property due to fire and natural disasters. They provide a means for people with little to no credit to afford a roof over their head when they can't get a loan. You are not just paying to live somewhere when you pay rent. You are paying for all of these services and more. If landlords were purely parasites they wouldn't be able to make any money. People would just go around them. Just because you don't like the need for the service they provide doesn't mean they don't provide a service.

>Landlords provide a service by maintaining and managing properties.

We already established that property management companies do this for 10% of the rent.

>They assume most of the risks including damage to the property due to fire and natural disasters.

Should I charitably assume that you've just never heard of insurance?

>They provide a means for people with little to no credit

That 80% of the rent which goes into their pockets after management, insurance and repairs are taken care of is pure, unadulterated parasitism.

Just as payday loans are parasitism.

They both effect net transfers of wealth that, similar to a payday loan. Capitalism grants an entitlement to those with more money to receive an income only because they have more money.

>You are paying for all of these services and more

You are often paying and not even getting these services. Many landlords end up not fixing stuff that breaks.

>If landlords were purely parasites they wouldn't be able to make any money. People would just go around them.

Not possible while they own deeds to the land. Ownership of the land is the part that lets them be parasites.

>Just because you don't like the need for the service they provide doesn't mean they don't provide a service.

Owning land is what gives them the ability to provide a service and charge 5x what it is worth.

If land ownership were illegal and it were simply rented from the government at the exact prevailing unimproved rental value then landlords would become more like an average shop owner rather than massive leeches on productive members of society.

>We already established that property management companies do this for 10% of the rent.

Closer to 30% and that doesn't include maintenance costs and insurance which are _VERY_ significant.

>Should I charitably assume that you've just never heard of insurance?

I've been charitable by not bringing it up. It costs ~40-50% of your gross income from a rental property where I'm from.

>That 80% of the rent which goes into their pockets after...

Point me to where I can make that kind of money and I'll quit my job today. I'm sure I would have absolutely NO trouble at all getting a loan if I was pretty much guaranteed an 80% profit.

>Many landlords end up not fixing stuff that breaks.

If it's in the lease that they will (It's in mine.) Then sue them. If not, fix it or move. I've yet to see a lease that didn't include timely repairs.

>If land ownership were illegal and it were simply rented from the government...

It pretty much is. What do you think property taxes are? When you pay for land you're just providing an incentive for another party to cut their lease short.

>Not possible while they own deeds to the land. Ownership of the land is the part that lets them be parasites.

Land is cheap in a lot of places. Sometimes much cheaper than renting. The barrier to buying land varies, but sometimes renting is a better option.

Offering people a service of housing, without having them to deal with the complexities of property purchase, financing, transaction costs, maintenance and whatnot comes with it.

How dare they!

Except you can pay somebody to take care of all of the 'complexities' and still make a fat profit. I can't pay somebody to take care of setting up and running a software business and make a guaranteed large profit.

That profit is parasitically extracted. No 'work' was done to actually get it - it's merely the privilege that having money gives you.

Some landlords do do the work themselves, which simply means that not all of the income derived from their properties is parasitically extracted - only ~80%.

>fat profit

Probably not. You'll barely break even. It's not as lucrative as you think it is.

Instead, they have to deal with the complexities of finding new rental properties and moving on a regular basis in order to keep the rent in check (or just sometimes randomly because their landlord decides to sell up), convincing their landlord to actually do maintenance, put up with the fact that they're not allowed to make any modifications to the property, etc.

And life of a landlord is all rainbows and unicorns?

Get real.

Your lack of self awareness is incredible.

How are you yourself different from the vilified "rent seeker"?

Instead of consuming more value than I create, I create more value than I am compensated for. Because I derive my income from my work.

And thus you are seeking rent from those with more property than yourself.

Fantastic.

People who own yield bearing properties (e.g. landlords - not me) are extracting value from others.

You can spin that fact any way that you want but it's still a fact.

That's why I don't call it redistributive taxation. It's re-redistributive taxation.

I agree is it overly simplistic, but even factoring in your list of factors, spending habits are very key. See my other remark up top about financial literacy. The U.S. ranks 6th worldwide in wages, but 25th in wealth, since so many in the US live off of credit, and don't save as much as their Chinese counterparts for one example. Irrespective of populist banter, the top 0.1% pay about 40% of the tax revenue the Federal government collects. I think our tax system is more progressive than popular opinion makes it out to be. If you earn over $450,000 a year, you are in the top 1% by wage.

Maybe your term paper was about the (excellent!) analysis Marx gave on the failures of capitalism? Because almost all I'm reading, except the comment you replied to, are market-based approaches with a healthy dose of victim-blaming for poverty.

The "nordic model" has actually very little to do with Marxism. Marx didn't write about money, he wrote about power, specifically economic power. Experiments with that idea all failed because it's a very bad idea to randomly give people power (or, as it happened in most of those experiments, give it to the government).

There's a newer idea which people are generally advocating when they mention Scandinavia which so-called "Social democrats" came up with: just redistribute (some of) the money. Leave enough to the wealthy to leave incentives intact, give enough to the poor so they and their children can live a somewhat normal life. I believe it's worked quite well for almost all countries that have tried it.

Money, wealth, economic power are all used mostly synonymous in informal discussion like this, and I don't really like to discuss word semantic right now.

A lot of people on HN is supporting Basic Income policy (I do, too). And that's why I specifically pointed out the extreme hyperbole policy while replying to a very antagonizing comment, it wasn't a critic on the "idea". This is the kind of things that the specific matters and you need to says what exactly you are looking for.

FWIW, when I posted there were much fewer comments, and the sentiment was different than the current top comments.

Is preventing wealth transfer from parent to child not their goal? In that case one would expect that transferring house from parent to child not being allowed isn't an unwanted side effect but part of the intended one.

I'm giving my house to my nephew ... and it just happens that my brother is giving his house to my kid.

How many generations out do you plan to ban? Cause it might be a good time for me to start getting to know my extended cousins. ;)

>How many generations out do you plan to ban?

I'm guessing all of them.

Not that it really changes anything. You'll just put your major assets in other people's name long before you die so the state doesn't take them. If you raised your children right, they won't sell your house while you're still living in it.

I tend to lean toward agreeing with you, by the way, but the other side of this argument is: We already know that giving money and food to poor people doesn't resolve poverty, when the aid / social welfare stops the poverty returns because aid / welfare prevents people from innovating your way out of poverty.

Of course, which side of the argument a person lands on probably depends on their moral politics, see[1] - basically I'm referring to the progressive vs. conservative divide.

Fortunately for me I live in Australia where we have social welfare to the tune of $527.60 a fortnight for a single adult[2], and $952.80 for a couple. But of course we still have bunches of poverty, but I've never been to the US so I can't really say how it compares.

Also, I think the example of the Nordic countries is a poor comparison. The 'Nordic Countries* as a whole have a population of 26.6 million, comparable to Australia. Sweden has a population of about 10 million, the others are close to half that or much less.

In a country that has a population the size of Melbourne (4.5 million) or Sydney (4.9 million) I would imagine it would be a lot easier to want to care for other people. I think that matters a lot.

1. https://www.youtube.com/watch?v=5f9R9MtkpqM 2. https://www.humanservices.gov.au/customer/enablers/payment-r...

There's probably some parents silently crying themselves to sleep because they fear they'll be homeless soon while people here have the time and resources to bloviate about "innovating your way out of poverty."

Yes, I agree with you. I believe we need a strong social welfare system and affordable (cheap / free, as in no, or little, out of pocket expense) healthcare.

The net cost to society of not having those things is probably magnitudes of order greater than paying for them, both in the economic sense and the social costs.

Denmark have poor people too and more importantly those have less of an opportunity to make it out of their poverty once they are there.

http://www.theatlantic.com/business/archive/2016/08/the-amer...

That is not what the article says -- it is criticizing Denmark for being as bad as or almost as bad as the US (i.e. NOT worse). This about sums it up:

"Social mobility in Denmark and the U.S. seem to be remarkably similar when looking exclusively at wages—that is, before including taxes and transfers."

And I am telling you Denmark have poor people too. I.e. redistribution isn't helping against that.

I linked to the article to point to the fact that poor people also have a hard time getting out of their poornes in Denmark and it's actually worse because the high "minimum salaries" makes it almost impossible for them to get a job.

You say "and it's actually worse because the high "minimum salaries" makes it almost impossible for them to get a job." --- is that from another source or this article?

> Take more from the rich and give more to the poor.

What are you going to do when the rich dedicate their resources to avoiding that taking (which they already do for the current taxation policies)? I don't think you have a reasonable solution for that.

For real-world examples of that, look at FBAR and FATCA and related legislation. They were meant to help the IRS tax rich people, but they had some insane side effects.

For one, all US citizens and permanent residents have to file a tax return every year, even if they haven't lived in the US for years and don't owe anything to the IRS. This is a significant hassle for many people. Because of FATCA, anyone who qualifies as a "US resident for tax purposes" also has to report foreign assets and income over a certain value ($50000 if I'm not mistaken).

Another "fun" effect (of FBAR this time) is that foreign banks now have to report accounts of US citizens to the IRS, which has made many foreign banks refuse to deal with US citizens or permanent residents. I would not want to be an American expat if I had to deal with that.

Idealistic plans like "let's tax the rich and give all that money to the poor" have, in practice, significant negative consequences on people they never intended to harm (such as the middle class). How do you propose to eliminate or mitigate such unintended consequences?

> when the rich dedicate their resources to avoiding that taking

As professor of economics Mark Blyth explains[1], "The Hamptons are not a defensible position."

Similar to the problem with the Martingale betting system where (it works great until your bankroll runs out), all of that theory about taxes is suddenly irrelevant when hungry people decide that taking your stuff directly is a better solution.

> How do you propose to eliminate or mitigate such unintended consequences?

I don't. Everything has unintended consequences and no plan is perfect. We will always have to manage problems as they arise.

How do you propose to keep people from burning your house down because they are hungry, angry, and see no alternative?

[1] https://www.youtube.com/watch?v=rGvZil0qWPg#t=506

[2] https://en.wikipedia.org/wiki/Martingale_%28betting_system%2...

> I don't. Everything has unintended consequences and no plan is perfect. We will always have to manage problems as they arise.

But you do, if you (or the GP) want people to support your taxation plan and go along with it. Otherwise, it will get rejected. You need to prove that your plan is effective.

> How do you propose to keep people from burning your house down because they are hungry, angry, and see no alternative?

That's not really happening even in countries much poorer than the US. Those people are much more likely to steal my stuff than burn it down.

I think you're trying to sell a "tiger-repelling rock".

> sell

I'm offering advice. You're free to ignore it.

> That's not really happening even in countries much poorer than the US.

Events like Occupy were important warning signs. As the video I linked to discusses, the rise of populism (Trump, etc.) and the rejection of traditional institutions (e.g. brexit) are further examples of people rejecting the status quo.

Do you actually have any direct experience in living at or below the poverty line in the US? Recent experience is important, as the situation has been changing. Or are you observations made from a position of privilege? If the latter, you might want better data.

The bigger problem, though, is that you seem to be looking for signs of the open revolt I was describing. By the time that happens, we are well past the time these problems might be fixed with social programs. I'm suggesting that our current ship of state is heading towards an economic minefield; "I haven't seen any explosions" is not a particularly useful observation.

> I'm offering advice. You're free to ignore it.

You're presenting a political view. That's not just "advice".

> Do you actually have any direct experience in living at or below the poverty line in the US? Recent experience is important, as the situation has been changing. Or are you observations made from a position of privilege? If the latter, you might want better data.

I grew up in a post-communist Eastern European country, and have a lot of experience with that (my parents were on the poor side). I'm currently a middle-class programmer, so I wouldn't say I'm privileged (although you might disagree).

I believe I have plenty of data and experience with poverty. I'm also very skeptical of redistribution, after seeing what communism actually did to my own country.

There is a concept called velocity of capital. The IMF believes that the current wealth distribution lowers that velocity, and thus weakens the economy [0]. How you distribute that money can be a matter of debate but the fact that it would be beneficial for most people to do so is not.

[0]http://www.economist.com/blogs/economist-explains/2015/06/ec...

Don't Nordic countries have some national investment fund that has about $1 million / citizen right now? What's the US surplus per citizen right now?

That's Norway. The other Nordic countries weren't lucky enough to have significant numbers of oil.

And even Norway is in trouble and may tap into its Sovereign Wealth fund much sooner than expected.

http://www.bloomberg.com/news/articles/2015-10-05/norway-see...

Norway has a giant sovereign wealth fund. Denmark, Finland and Sweden don't. https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...

> We already know how to cut poverty, based on other countries like the Nordics where poverty is lower: Take more from the rich and give more to the poor.

1) Does this solution scale to countries that have no rich? Forbes billionaires list is heavily concentrated around a dozen or so countries, what rich targets are there to take from in large portions of African continent, for example?

2) Does this solution work long-term? How do you expect not to run out of rich after three or more iterations of the same?

1) Every country has its classes of "rich" and "poor". Billionaires would be an easy target to rob outright, but I suggest the GP meant something like progressive taxation, where those with more would pay more back into the society they benefit from. Also, the poor of another country are no less people to help than those in your own (and man would to well to transcend national identities anyway, but that's different can of worms).

2) What do you think happens to the money, that it gets burned? The money will continue in circulation (ie. the previously poor will now pay for their food instead of stealing it etc.), and if you were rich before the money will obviously keep coming back, as more people have the wealth to purchase your services.

The rich aren't just sitting on a giant pile of liquid assets. Basically all of their money is invested. It's circulating right now. It's the infrastructure and businesses the poor are buying from. You can't redistribute wealth like that because if you do there quickly won't be services to buy from. You don't improve a poor mans situation by dismantling the grocery store he goes to. Even if you give him a slice of what you take, you've removed infrastructure that he relies on. He'll be set for a week or two, but when he needs to buy food again the grocery store won't be able to provide the way it used to.

> if you were rich before the money will obviously keep coming back, as more people have the wealth to purchase your services

In a scenario where the original rich person was a landlord, factory owner or a farmer, the property progressively got taken away to cover the tax bills and either sold to a bunch of third parties or just taken over by a government agency, as those property auctions take a while to set up, find respective buyers and run.

The "services" thesis works for someone charging per engagement, like a doctor, as they can probably operate with relatively small overhead, but for a bunch of occupations the property that's responsible for building wealth is also the tool of building that wealth.

Obviously with absurd property taxes this would be an issue.

Rob outright? Do you really believe that billionaires create so much value for the world (because they can't work hard enough to justify their exceptional wealth)? Mark Zuckerburgs contributions were more valuable than Tim Berners Lee?

1) That is either a lie, or you should close your borders because someone is 'stealing' from you (or at least try to prevent out flux of wealth). OR (unlikely) nobody is working. Having export of course helps, but that means someone outside your country is getting poorer.

That's all well and good, unless you are the one being taken from. Why should someone's effort be rewarded with thievery?

You know I can't agree with you more. That's why we need a 100% inheritance tax. So someone's effort doesn't go to someone who doesn't deserve it.

I'm not sure if you're being farcical, but I actually strongly support a 100% inheritance tax. It might be challenging to enforce, but it seems like the most equitable solution by far.

There's nothing wrong with people earning lots of money from their own work, but they shouldn't be able to pass that on to heirs who have done literally nothing to earn it.

This is definitely more complicated than that.

In the most basic sense, how much should I be allowed to do what I want with my own money?

A step more complex; giving to your kids is, AFAIK, one of the biggest drivers in why people try to make money during their lifetimes.

A step more liberal: Inheritance (the accumulation of wealth by a family), again, AFAIK, is an important part of upwards mobility.

The current setup is definitely sub-optimal. 100% would also be sub optimal, and, I'd argue, worse than what we've got here, because it's another thing that rich people could dodge that not-rich people couldn't.

> In the most basic sense, how much should I be allowed to do what I want with my own money?

It's not your money once you're dead. As far as I'm concerned, dead people don't have any rights.

> A step more liberal: Inheritance (the accumulation of wealth by a family), again, AFAIK, is an important part of upwards mobility.

On the contrary, I think it hurts economic mobility a lot more than it helps. If you're competing for opportunities with people who inherited millions of dollars (without doing anything themselves), it's a lot harder to advance yourself.

Non-rich people don't generally leave enough of an estate for it to matter in the first case. We could easily exclude the first $100k for that matter.

> Non-rich...

Right. Like I mean, it's more complicated than a straight 100%.

For example: What if I transfer my wealth to my family BEFORE my death? What if I set up a trust to manage properties so that my descendants don't own it, but benefit from it? (What if those properties produce their own cash-flow, which goes to my descendants, but they still don't own the property?).

Let's take another example. Let's take Cliff's Variety store in the Haight. Do you think it's worth more than $100k? Do you think they bought/built it for <$100? (hint: no, it's been around in one form or another since before WWII). It's been in that family for generations; it's still in that family. Should it stay in that family? If the current owners die suddenly, before they can transfer ownership, what should happen?

What if my parent owns a company, and I work for that company adding substantial value - like, say, Dr Bronner's soap company? How much of that company's value do I deserve as inheritance, or by ownership, given my contribution?

People live a long time now. I don't have to have the millions of dollars to make you compete for opportunities against my with the benefit of that. Parents (and grandparents, and reasonably, great-great-grand parents) can pay for my education. Or buy me houses. Or not buy me houses - buy themselves houses - and then let me stay there; and this problems is just going to get worse as longevity increases.

As mentioned earlier, you're going to have to completely ban (ie tax 100%) gift-giving too. Or any sale of property that government auditors haven't determined is completely equitable. A trustee would have to be appointed immediately upon diagnosis of terminal disease - someone might "give away the farm" so to speak.

I don't want to live in your world.

Yes, we would have to tax cumulative gifts aggressively as well. To deal with things like real estate gifts, we could force the recipient to pay taxes on the difference between the grand list price and the purchase price.

I don't particularly like living in a world where my hard work is confiscated at a high rate while someone who just has the good fortune of wealthy parents can receive millions tax free.

And you would also get to tax charity just as heavily. Because charity is all about giving gifts.

I have no interest in living in your dream world of justice. As it would have been a totalitarian nightmare where everybody would be worse off.

Ideally charities should benefit people besides your progeny.

I really don't understand why you're so vehemently protective of inherited wealth. Do you think it's abhorrent that Bill Gates is voluntarily donating most of his wealth to charity instead of leaving it to his children?

Why do you think an inheritance tax is "totalitarian?" At least, why is it any worse than income taxes?

You are being disingenuous when comparing "willfully donating" and 100% inheritance tax.

I don't care what people do with their property out of their own free will.

I do care when people are trying to instate authoritarian totalitarian governments.

I oppose inheritance tax - as that inheritance has already been taxed at least once.

I have plenty of good solid arguments on my side.

And I would advise you to put a bit more thinking into your ideas.

There's no need to get into ad hominem attacks.

If you have so many "good solid arguments" on your side, I'd love to hear them. Or answer my question of why they're so much worse than income taxes.

Why do you think that an inheritance tax implies an "authoritarian totalitarian government?" It's a total non sequitur. Does Denmark have an authoritarian government because they impose a high income tax?

Inheritance tax per say does not imply authoritarian totalitarian government. 100% inheritance tax does. Work out the details yourself.

Your conflation of income and inheritance tax is disingenuous.

My crown argument against inheritance tax is that the property being inherited has already been taxed before.

Another would be that taxing inheritance destroys capital base, which no society really wants.

Third would be that governments are really bad at managing capital. There are plenty of issues in the nordic models, where there are already signs that their massive welfare states are going to implode in the next couple of decades.

p.s.: How is me remarking that you have poorly thought out positions an ad-hominem?

> Inheritance tax per say does not imply authoritarian totalitarian government. 100% inheritance tax does. Work out the details yourself.

Why? What is the taxation level where the government is automatically authoritarian? 99%? 90%? 80%?

You can't just assert things and then not provide a causal chain.

What makes double taxation an unmitigated evil? Sales taxes are double taxes, as are taxes on corporate dividends. Yet I don't hear people railing about how they're symptomatic of an authoritarian regime.

> Another would be that taxing inheritance destroys capital base, which no society really wants.

How does it "destroy" capital base? Redistribution of wealth does not equal destruction of wealth.

I agree that many governments do manage their capital poorly. Instead of having government hold on to the capital, I'd say we should collect all estate taxes and channel them into an annual basic income for all citizens. Let the living decide how to use the money.

> p.s.: How is me remarking that you have poorly thought out positions an ad-hominem?

It's not attacking the merits of the argument but instead the thinking of the arguer. I have actually thought about this quite a bit.

I am not going to engage in this discussion anymore as you have convinced me that you are arguing in bad faith.

p.s.: for readers - see what Milton Friedman had to say on the very topic, to a person that seems very much on the same level as some of the contributors to this thread: https://www.youtube.com/watch?v=MRpEV2tmYz4

If Mark Zuckerberg and his wife is hit by a truck tomorrow. Is the US government taking over FB? Cause I don't see the kid getting $50 billion to pay the tax bill.

Obviously, he can sell stock to pay the tax bill. Or the government could directly take ownership and sell the stock.

We have an existing estate tax. It's not a novel concept.

The economic incentives that come with high estate tax encourage rent-seeking and quick cash-outs versus long-term building.

Russian oligarchy is an illustration of this - the inheritance tax is effectively 100%, with the understanding that the property can be taken and re-gifted away any day, so most enterprises are stripped of their cash as soon as possible with money redirected towards conspicuous consumption.

Stripping enterprises of their cash quickly is hardly an example of rent-seeking. If money is directed towards conspicuous consumption, it recirculates into the economy. I definitely consider that superior to inflating unearned fortunes.

The Russian example seems to be more a testament to the danger of unstable political regimes, not the problems of a high inheritance tax.

You're proposing that a) Selling $50 billion worth of stock in a company, b) Government takes ownership of Facebook, or some combination thereof of the two actions.

Yes, it is novel to do that.

I didn't suggest that the government should own Facebook over the long term. It should simply impose a tax on the estate, which would require that stock be liquidated to meet that obligation.

There's already a 40% inheritance tax. How do you think it works in the status quo?

The difference is in the number. 40% means that I can realistically leverage my own share of the stock to get money and pay the tax. 100% means that I walk away and the government can figure out what to deal with the ownership.

I don't know why you think it would be so hard for the government to deal with the ownership. There are plenty of people who would be interested in buying Facebook stock.

Plenty of estates have to be liquidated to settle debts and taxes today. It's hardly unprecedented.

No it isn't precedented. Ownership of a company is a lot different than real estates or other physical wealth.

It would take years to sell off $50 billion of stocks without crashing the company. Even if they are patience and manage to do that, alot of people, myself included, would have trouble with the government being in de-facto control of the company.

If you dismissed either of the two reasons above, I guess I don't see a point in continuing the discussion.

Uh, do you honestly think that estates never include equity holdings?

I agree. It's not worth continuing this discussion if you believe that it takes 10 years to sell off $50 billion of stocks.

Basically we need to make a choice between inheritance and meritocracy, as the two are at odds with each other. Personally I would choose meritocracy (even though I will likely end up above average through inheritance eventually).

If this was the genuine cause of economic distortions, and wealthy people are mutually exclusive with economic mobility, wouldn't the states with high amount of wealthy people (NY, CA) slowly but surely lose any economic advantages to the states with low amount of wealthy people, but extremely high potentials of economic mobility (MS, WV)?

First of all, I never said "wealthy people are mutually exclusive with economic mobility." For one thing, I think earned wealth is actually very helpful for economic mobility and is actually a huge part of why places like NY/CA succeed—successful entrepreneurs continue to invest in the ecosystem and funnel money towards new entrepreneurs. Moreover, something could be a depressant on economic mobility without eliminating economic mobility entirely.

The stability of capital is in fact a huge part of how NY/CA remain successful—if you're ambitious, you have to move towards the capital to access it.

Also, keep in mind we're in the context of a thread where people are already discussing how to soak the rich. I'd much rather tax estates than dramatically increase taxes for people who have earned their money.

Good point, I misread on mutual exclusivity.

For what it's worth high estate taxes don't seem to correlate with economic growth (neither are zero estate taxes, to be fair) - I am reading this graph http://taxfoundation.org/article/estate-and-inheritance-taxe... and Japan, for example, being high on the GDP ranking is kinda dead in the water as far as economic growth ranking.

I think eventually the estates succumb to "three generations" rule, so the problem might be self-correcting.

My argument isn't necessarily an economic one. I don't particularly think that a high estate tax will stimulate the economy, but I also don't think it will hurt.

The advantage of a high estate tax is more a social one of removing unearned wealth and freeing up some money to spend on social programs.

But you're right that it might be more efficient to make the tax 95% so the beneficiary has an incentive to handle the liquidation so they can get their 5%.

The US already has a fairly aggressive inheritance tax. It's pretty much 40% after the first $5.4M. The US has the 4th highest inheritance tax in the world.

https://en.m.wikipedia.org/wiki/Estate_tax_in_the_United_Sta...

Note that Clinton's published tax plan calls for increasing the rate to 45% and lowering the threshold to $3.5m. No matter who wins the election I'd expect this tax to at best remain static and more likely to increase over time.

Taxation is not thievery. You and I are living in a society which have been created by the collective work of our forefathers. You aren't responsible for 100% of the value you create since a lot of the value of the work you perform are supported by things others have created for you and which aren't reflected in your salary.

Taxation is just that taxation. If you want to be free of the "thievery" just don't participate in the economy created by the rest of society. Don't use computers which fundamental development have been largely funded by government. Don't use the internet which was largely funded by governments.

You can't have your cake and eat it.

Go live somewhere where very little taxes have been collected. You might find it not so well developed and with a few inconveniences.

And you stop telling people who have funded the governments what to and not to do.

Sound fair?

I'm not telling anyone what they have to do. I am telling you what they have done and why you can't claim 100% of your salary is based on your own working.

I know for a fact that my forefathers have tried to avoid governments and their meddling fingers as much as possible and have fought really hard in various ways to keep the government of their lives as much as possible.

Thus I owe it to them to keep fighting the government creep towards authoritarian totalitarianism.

What have your forefathers been doing that you are now arguing that 100% of what I have earned and paid taxes on already, should get taxed again at some later date - as a punishment for me not spending it all?

You are confusing two very different things.

I too don't want government to be too big or too all encompassing but that has nothing to do with whether some sort of taxation could be considered ok.

One things is certain though. If you had to pay for everything yourself you wouldn't be able to afford it. The price of many of the things we consider obvious today are based on many years of accumulated hard work by others than your forefathers which you benefit from today.

So we can discuss whether we pay too much tax, I am fine with that discussion.

But positioning it as all taxation being thievery is both incorrect and simplistic.

Taxation at gunpoint is thievery, no amount of rhetoric can change that.

And don't get me wrong. I have no problems with participating in a community. I have a problem with government setting up barriers and maintaining a monopoly on community.

I have no apriori issue with government offering services, I have an issue with being forced to pay and consume those services, regardless of how (in)efficient they may be.

I am also very much aware that I am only at the end of a long line of people striving for a better future. And nearly all my personal efforts are directed towards fulfilling my obligation towards my forefathers as towards my descendants.

And resisting crazy talk about totalitarian governments as a savior for all our problems is a part of that.

Don't get me wrong - the manifesto above has hardly anything to do with your position, I am merely explaining my own position.

There is no such thing as taxation at gunpoint. That kind of rhetoric is both juvenile, false and largely ignoring reality.

You can choose to pay your taxes or you can choose to move somewhere else where you aren't taxed. You don't have the right to anything anymore than anyone else do. If you don't like the society you live in move somewhere you like or start your own.

Amen!

Taxation inherently involves coercion which entrenches a power dynamic; power tends to aggregate, so the dynamic gets worse and worse until it becomes unsustainable.

Taxes are not voluntary contributions.

Taxes are what you pay to live in a civilized society. You are more than welcome to find another society or start your own somewhere else.

That's backward. People's right to be and to be a part of their communities do not come from their presumed submission to a coercive power. The issue is not collaboration and contribution. The issue is coercion.

I'm of native descent. I was on this continent before this government and there's no way it could exist with my consent.

Peoples rights are either taken, defended or given. There is no such thing as a natural right to anything for any of us.

The US government don't have the right to control the US continent anymore than the British do England or Swedish Sweden and so on. They took it and is defending it through the sheer use of power.

There is no justice in how land is distributed, no right or wrong only the power to claim and hold it.

And so it goes with taxation; there is no right or wrong taxation, it's the price to live in a society for any of us unless we can find a way to change it through the system, build our own or find some isolated place where no one will bother us.

Neither homesteading nor claims of natural laws changes that.

Well, that's rather cynical. Might makes right?

You are welcome to propose some objective/natural "right" criteria. If you do you probably should send it to the Nobel Price committee because that would basically be changing all of philosophy and a number of other areas.

So yeah I guess unfortunately might is the final word in right.

I feel like that's too simplistic a way to look at it. In this country we've passed many laws to weaken and even remove entirely a previously strong union system. Did all the workers who are today making less money and/or have less benefits as the result of union busting have their money "taken away?" Some estimates suggest that the lack of enforcement of immigration laws have lowered the income of people without a high school diploma by as much as 7%. The rest of us saved a ton of money. Did those poor people have their 7% "taken" by the wealthy business owners who hire those illegal immigrants?

Quite. Owners of capital and land must stop their ongoing thievery from workers.

You can look at is as "theft", sure, but in many ways that's not 100% accurate. The idea that "the rich" have earned 100% of their wealth is a hypothesis, not a fact. It's a hypothesis that would only be true if the market were also 100% free and fair. It would only be true if no amount of government regulation or law ever unfairly advantaged those who already had wealth and power. It would only be true if there were absolutely no power imbalance between workers and employers, etc. None of those things are true, so we can fairly confidently say that some portion of the wealth of most of the rich has not been gained fairly.

So then the next question is, obviously, how do you fix that? How do you ensure that the market, regulations, employment, etc. are all perfectly fair and free? And the answer there is, you very much cannot. At best it's an enormously difficult problem beyond the scale of any problem that has been tackled by human civilization to date, at worst it's fundamentally intractable.

The next question then becomes, so how do we make it more fair in the easiest way we can in the near-term? And the answer there is wealth redistribution. Power and wealth perverts fairness of markets, including labor markets, and it perverts our systems of laws and governance. That's not to say that wealth is purely evil, there are many up sides to the accumulation of wealth, and personally I'm a big fan of "capitalism" (for lack of a better word). But we need to recognize that it is very much not only a flawed and imperfect system but a system that inherently contains many aspects that are poisonous to the operation of a peaceful and sane free society. The longer we ignore that, which we have for almost 4 decades, the worse those inherently problematic aspects become, and the more those who see the truth (that the system is very much rigged against the little guy) become increasingly intolerant of the continuation of the system that they perceive is systematically putting them at a disadvantage, and that leads to "very bad things".

> has not been gained fairly.

This is a... let's go with "subjective" - this is a subjective interpretation of "fairness". It is totally fair to profit from the effective functioning of civilization. I think what you're actually trying to say is it's not fair to claim credit for that wealth without sharing credit with the system that created the situation within which you could make it.

I tend to think of wealth in the current system like water and hydropower, except that "natural" resting place of wealth is in one big pile (at the top), instead of one big pile at the bottom (oceans). (I could go into why, but I think, observationally, it's pretty clear what the steady-state trends towards).

With that in mind, power is extracted (and work done by that power) as water moves towards it's resting state. Other systems (that are importing entropy) then work against that trend (evaporation), keeping the cycle going.

Wealth accumulates. Something outside the system of wealth (such as government) needs to "import entropy" back into the economy so that work can be extracted as wealth moves back towards it's resting state.

Does that make sense?

(Please, poke holes in my model!)

I think you're missing the point. I'm not arguing that those who have profited from the functioning of the economy owe something to the system that enables that economy to function well (regulation, road building, fire departments, standards bodies, what-have-you), that's an entirely separate argument (and a good one at that). I'm arguing that the vast majority of "the rich" have, in some sense, cheated their way to that wealth, period. I'm saying that they have used the power they have gained from their wealth to take advantage, and take money that is not deserved. Money that would not be theirs if we lived in a fantasyland world where markets were perfectly fair and efficient, where regulatory regimes where incorruptible, and so forth. We don't live in such a world, our world is messy, our world is one where there are numerous advantages and numerous lines of corrupt influence that flow from being in positions of power and wealth.

And we would be fools, utter fools, to deny that, no matter how much we treasure the ideals of free market economies. In fact, if we do value the free market we must be aware of these things, because they are a major reason why people might fight against the model of the free market and they are a major corruption of the ideals of the free market itself. Regulatory capture, for example, is very much an enemy of the free market, but it very much exists, and pretending it doesn't won't make it go away.

As such the idea that taxing wealth is necessarily "theft" is ludicrous. Not only can it be seen as a "fee" for being allowed to operate in a civilized society with many robust services and infrastructure (the argument you seem to claim I'm making) but it is also a means of correcting the inherent corruption and unfairness in the system. It's a fudge factor that attempts to correct (via Kentucky windage) for the problems that would otherwise require likely tens or hundreds of trillions of dollars of concerted effort (or more!) to fix properly to any reasonable degree. So in lieu of spending significant fractions of the world's GDP it's vastly easier and at least somewhat effective to simply engage in wealth redistribution.

Let's look at some facts. We know that wage theft (where employers illegally avoid paying employees what they are due) exists, and accounts for a few tens of billions of dollars in lost wages every year in the US alone. We know that discrimination (based on race, gender, religion, sexual orientation, etc.) in employment and housing exists. We know that many instances of health and safety violations exist in many corporations across the world on a daily basis. We know of many examples of predatory business practices (such as predatory lending, municipal fine collection, etc.) that have bled money out of people in poverty. We have seen consistent weakening of labor laws and union power. We know that corporate tax breaks and corporate welfare are widespread at all levels of government, to the tune of hundreds of billions of dollars a year in tax revenue. All of these things are instances where people at the bottom are being unfairly taken advantage of while money is flowing into the pockets of those at the top. Look at the VW emissions scandal. Where a company violated the law across numerous countries in order to line its own pockets. And the consequences of that? Likely a significant number of deaths due to emissions levels higher than they should be.

Again, it's impossible right now to fix every single one of those problems, but those problems still exist, and in many cases they are becoming severe enough to weaken the very foundation of our society. These problems are the reason why people in the UK voted for Brexit, they're the reason people turned out in droves for Bernie Sanders and for Donald Trump. They're a big part of the reason why there has been an unprecedented increase in the mortality rates of white, middle aged Americans over the last several years, in contravention of all accepted wisdom about advances in medical care and so forth. The public is not always going to respond in the best way possible to these issues, because for the most part they don't fully understand them, but they do feel the pain, and sometimes that will result in them latching on to anyone or any cause that proclaims to explain their pain and offer a solution.

As to your model, again that seems to rest on the theory of the fairness of the economy. Natural accumulation of wealth is an issue, certainly, and there are good and bad aspects to it, and the bad aspects need to be countered. But I'd say that's a second order problem compared to the one we're facing right now.

There's this old saw about "the rich getting rich and the poor getting poorer", and for much of the industrialized age it wasn't actually very true. The rich got richer, but the poor got richer too, as the pie got bigger. For the last 4 decades the pie has continued to get bigger as well, but the rich managed to not only take their (also growing) slice of the pie, but also take some of everyone else's slices as well. And we've stumbled into a state where the poor are actually getting poorer even while the whole economy grows by leaps and bounds. And a state that has persisted for more than a single generation as well. That's untenable.

You can't make a profit from your efforts without infrastructure, and you can't build and maintain infrastructure without a lot of people. Paying the people who support your infrastructure with the money you made off it isn't thievery, it's an investment in your society and culture.

It's not thievery, it's taxation. If you advantage from the system you should pay back into it.

It can be both.

Taxation is neither moral nor amoral.

It's just tax which depending on it's size and how it's used and where have consequences good and bad depending on who you ask.

There isn't some objective version of tax or non-tax.

This is where shit goes off the rails before it's even begun. "Take" needs to be so much more well explained, because on its face, I agree with you!

But, when looked at on balance, simple things like fair working wages also help redistribute wealth down the ladder but aren't burdened with the hyperbole of the rich being mugged by the poor.

The argument is forever framed as three sets of hands - one with cash, one in the middle that pries the cash from the first set and hands it to the third. We don't need to talk about direct redistribution by force. Fair market practices and regulations that prevent one from taking unfair advantage of another do the trick just fine.

This week is national homelessness week in Australia. I attended a panel by a bunch of charities here in Melbourne earlier in the week, and one of the things that kept coming up was the need to do more about affordable housing.

In Australia at least the major population centres are very expensive to live in (and there isn't much in the way of regional centres to offer alternatives).

It's such a risk for lower socio-economic groups that a bad run of luck can put them into a position of losing their accommodation.

Interestingly, some of the stats being shared by the panel indicated that the amount of money expended on dealing with the problems surrounding a given homeless individual are actually more than it would theoretically take to remove them from homelessness more directly (don't know how accurate that is).

I don't know the numbers for Australia since we don't have the same healthcare issues, but there are a lot of studies in the US that have said that: this article contains several examples http://www.motherjones.com/politics/2015/02/housing-first-so...

There's plenty of work in the regional centres (for example Bendigo) for people who have mid-level skills and salary expectations. These cities are hardly the sticks. The truth is people like living in the capital cities because of the amenities, but the amenities are what drives up the housing prices!

So, while I agree that the housing prices in Melbourne and Sydney are insane, currently, they would still be quite expensive even in an ideal situation, so wouldn't it make more sense to make regional centres better able to handle / more attractive to lower socio-economic groups / homeless people who can't afford to live in the capital cities?

Bendigo, for example, is two hours from Melbourne on the train (which costs less than $20). Seems to me like an ideal place to offer low-cost housing...

> people who have mid-level skills and salary expectations.

The really difficult homeless population doesn't have either of those.

That aside, to make Bendigo attractive, you need to move/duplicate all of the social services infrastructure and family connections that people have in Melbourne (which are the 'amenities' that are important to the borderline homeless group). If their kids are in high school in Frankston then many people would rather stay homeless in Melbourne than move to Bendigo. Then if they have existing food bank connections, court dates, legal clinics, etc - it's a big risk to leave this for some temporary housing and a theoretical job.

If they'd rather stay homeless when other options are available there's not much you can do for them is there...

Of course there is, it starts with not pretending that just because they're homeless they must have no commitments, no attachments, no fear of new and unknown scenarios etc. If the only possible option you can think of is "let's ship them off to another city" then you can't have put more than 1 seconds thought into the topic.

>Of course there is, it starts with not pretending that just because they're homeless they must have no commitments, no attachments, no fear of new and unknown scenarios etc.

Everyone has commitments and attachments, but looking after your own well being should generally take priority. If you prioritize those attachments first you do so by choice. Fear of new and unknown scenarios should not be keeping people homeless.

It's a failing strategy to build your social services around some kind of condescending shit around "maybe homeless people should be better and mentally stronger and then they would see the cornucopia of opportunity that is available to them". And not to get too abstract - nobody has even solved homelessness in Bendigo for the locals, let alone for people shipped out from Melbourne! This entire topic is a stupid hypothetical that is not a realistic solution in any way except that it really easily ends up as a justification to dismiss homeless people as causing their own problems.

That pretty well agrees with what I'm saying...

Pretty sure we're not saying the same thing when your comment was "there's not much you can do for them" and mine is that there is plenty you can do that doesn't rely on them giving up everything they do have to take your help.

Yes, if you're homeless because you want to be that's your choice, I'm not going to try to convince you otherwise. What I'm saying is that it's dumb to assume most people are homeless because they made bad decisions. Rarely are people homeless by choice. Hence the whole "Fear of new and unknown scenarios should not be keeping people homeless." bit.

Edit: I admit, it is a bit unclear. I can see why you thought what you did.

No discussion about the biggest cost for poor people: rent.

And the fix is simple (not easy): eliminate rent control and zoning laws.

The rent in Tokyo has gone down despite an increasing population in a very dense city with scarce land availability. Why? No rent control and very lax zoning laws.

I think rent control is not very relevant to this discussion of poverty. Most cities in the US do not have rent control. This includes high-rent cities like Boston and Seattle.

Getting rid of rent control in SF would decrease market rates, but market rates are so high it's hard to see how they could go down enough that anyone near what we define as "poverty" could afford to live there. I think current low-income residents would be evicted en-masse (because their rent just went from $1000 to $3000), while medium-income and more frugal high-income people would relocate from the suburbs to the city (because market rate went from $4000 to $3000). As a software developer I could afford a better house but you might not be able to get the world's best burrito in the Mission anymore.

Obviously there is an ideological split over whether that would be a good change or a bad one. The living expenses of current residents are currently subsidized at the expense of landlords. It's a microcosm of wealth redistribution in general and pretty much zero-sum.

However, increasing supply is not zero sum. It increases the total number of people that get a place to live. It's more attachment vs. progress than poor vs. rich. I think we have a chance to build a winning coallition on this issue.

Rent control does not prevent development, at least in SF, because it does not apply to new construction. If we can get enough construction going that market rates are decreasing, maybe then it will be time to figure out how to keep Mr. "I've lived in this apartment in the Pacific Heights since I graduated from law school and am richer than my landlord" (Esq.) from saving fat stacks of cash for the rest of his life, without screwing that family who runs a tacqueria in the Mission.

> The living expenses of current residents are currently subsidized at the expense of landlords.

I don't know why this is such a common assertion. Rent control raises the average rent for vacant units, which means a lot of the burden is falling not on landlords, but on _tenants_ (those tenants who aren't lucky enough to have stayed in the same unit for a long time). Landlords had to buy into the building at some point, and the cost of the building is adjusted for the fact that it's rent control: this means that rent control at most (on average) contributes _volatility_ to landlord's balance sheets, not costs (though this does translate to some "frictional" costs).

Rent control in San Francisco only applies to property that was built before rent control laws was passed (1979). So any building that was built at that time (a majority of the city's housing stock) has had an owner lose a lot of money from rent control, either by receiving less rent or by selling their property for less that it would otherwise have been worth. The fact that someone else may have purchased the encumbered property at a discounted price that takes the reduced rent into account doesn't change that.

I don't know if I'm clear, here are some analogies:

Chemical plant contaminated nearby housing development, some homeowners sell at a discounted rate to investors who hope to profit after a successful cleanup.

Pension funds buy Argentine bonds in the 90's. When it becomes clear Argentina is unwilling to pay it's debts, some sell to a vulture fund who has a better chance of collecting.

In both cases, some of the current owners of distressed assets are not sympathetic. That doesn't change the fact that a major loss of housing/bond interest/rent is occurring.

Do you have any sources hinting at this causation? I tried searching, and most of the articles I came across mentioned that Japan had a housing bubble, and now it's popped.

http://www.japantimes.co.jp/news/2016/01/29/business/economy...

Thats hardly the reason since the exact opposite happens in NY where rent has gone way up at places which doesn't have rent control.

That's because some places have rent control and others don't. You have to make it like Tokyo where nowhere in the whole city had them.

Please point to any evidence of that claim.

I'm sorry I mentioned rent control, that's a minor effect. The big factor is the lax zoning.

The best thing I heard about dealing with poverty, is to half the maximum allowed work week. If you made full time 20h a week for a lot more jobs, forcing employers to pay double or triple for extra, then you'd inevitably force people to share jobs. Employers would need to employ twice as many employees, but it would not cost them more. It's an easier sell then higher tax, since people get to have more free time. It also adapts better, since all the offer and demand and market laws would apply. No unjust or artificial taking more from some but not others.

I wish this was try, but for my country and I suspect most, hiring 2 employees is more expensive, even before mentioning any overhead. Maybe we should pay companies for each person they employ ?

Add mass transit infrastructure. Strip rent control. Strip zoning that limits density. This dramatically increases supply over a wide geographical range, giving broad choice. Stop focusing on social programs, let market competition itself drive down prices.

These things are pretty well understood at this point.

"Applied" education is the best path for the poor. Don't teach the 3-Rs. Teach them how to fix their problems: 1) fight the cycle of poverty 2) weaken gangs 3) reduce crime and drug usage 4) renovate local housing, schools, and infrastructure 5) create and run local businesses 6) employee all teenagers after school and during the summers, etc.

Once they have pass those classes, they can learn the other stuff.

And this is how we should pay for it. Sell treasury bonds like we would to raise funds to improve our national infrastructure. In other words, invest in poor people in such a way that you can repay the investment from their future taxes. Specifically, pay poor people to work their ass off to fight poverty. (No person should be paid to do nothing; that is a horrible idea.) Allow the wealthy who want to reduce their taxes to keep $x in taxes for every $y they invest in hiring poor people to fight the causes of poverty. In fact, we should create poverty fighting companies who complete and measure their success by the quality of life improvements they cause. The higher performing companies lower the taxes of their investors.

(This isn't even expensive. Paying a teenager to avoid a life of crime costs $1000s/year and putting them in jail costs $10,000s/year. Furthermore, providing teenagers with IUDs costs $100s and saves $1000s.)

Just pointing out some assumptions you're making in your post:

1. Poor people are stupid/uneducated ("Applied education is the best path for the poor")

2. Poor people are lazy ("pay poor people to work their ass off")

3. Poor people are criminals ("reduce crime...")

4. ...and junkies ("...and drug usage")

5. The broken window theory is right ("renovate ...")

Agreed, I made gross assumptions based on my crazy background and experiences. I grew up in public housing (80% welfare families) in East New York (Brooklyn) during the 80s when that tiny (crack infested) neighborhood had the highest murder rate in all of NYC. For the last 3 years, I currently fund the education, teach and mentor several people in the 3rd world who make less than $10/day. The poor people I grew with and I now try to help are ...

1. Smarter than me but don't know how to end the cycle of poverty (one had a baby recently at age of 19 and both parents are unemployed).

2. Are not lazy but work in dead-end 60-hour/week jobs where they are not learning the skills that allow them to make enough to escape poverty and have no time to learn new skills.

3. Are not criminals but have accepted their fate and are not working to change their neighborhoods to reduce the temptation of their kids to enter a life of crime.

4. Are not drug users but drug related crime and extreme violence surrounds them (they have seen dead bodies in the streets on their way to work).

Other kinds of poverty exists. My proposal should be adapted to work in the situations I've not experienced.

This reads like a huge tautology. If you cut down bills people have to pay, they'll have to pay less. Brilliant..?

> The good news is that reducing poverty by cutting monthly expenses would be a big boost for people on the lower end of the economic spectrum, without hurting the middle or the top

Oh, well if you also assume you have a source of money appearing out of thin air (!), then, well, this is just pure genius.

Notice how one of the largest expenses for the poor are energy and transportation. Then note the cost of renewables driving down the cost of energy, and electric cars on a steep cost curve decline.

Technology is deflating costs (to the chagrin of central banks trying to stoke inflation). We must continue to innovate.

Remember, there is no need for poverty if clean energy and automation can provide for everyone's basic needs. We are almost there.

Okay, but what does that have to do with the article? It brings nothing to the table.

Of course we should innovate and keep bringing costs of everything down; this will happen with or without city planning.

But it does! If you're performing city planning, you should be requiring the installation of solar panels on low income housing. You should be ensuring electric vehicles can be supported (as simple as making a weather proof NEMA dryer plug available for each vehicle parking spot). You must ensure that low income citizens can directly benefit from these cost-reduction technologies.

EDIT:

The only three resources that have been inflating in cost are real estate (can be fixed with policy), education, and healthcare. Those last two can also have their costs driven down with technology.

It's first principles all the way down.

I agree with you, I'm just disappointed with the article I guess -- it seems to dress up completely banal information as research/news.

For instance it basically says that a largely fixed dollar amount that doesn't vary that much by house, electricity consumption, looks large if you make $10,000 a year but looks tiny if you make $100,000 a year.

I guess having denser cities where cars aren't needed would help too.

If you do that then they'll just build less low income housing...

Then we build low income housing ourselves:

http://www.nbcnews.com/business/business-news/these-tiny-hou...

Good. Do it, but raising the cost of building low income housing is going to lower the rate that it's build at.

Not necessarily, if you can offset the higher cost (leading to lower ongoing costs) with cheap financing.

And where's that going to come from? The money has to come from somewhere. Somebody will be paying that extra cost and they won't like it.

I think the point is that the cost of living is exceeding the income of working for most Americans.

The claim have always been that the market makes things cheaper which I would hold is still true. Yet more and more people become working poor because their income doesn't follow the increase in cost of basic necessities.

So something is out of sync and it's worth investigating what that might be.

> This reads like a huge tautology. If you cut down bills people have to pay, they'll have to pay less. Brilliant..?

Au contraire; this is the very essence of what capitalism is. If you employ time preference and amalgamate CAPITAL through savings, chances are that you will be able to use that capital to invest in something – yourself (through skill acquisition), a business, your children, etc. When this is done iteratively, one outcome is often guaranteed; wealth creation. As a millennial myself, I'll be the first to admit that when I learnt of Adam Smith's philosophy on free markets and how self-interest is the best way to fuel an economy, I was irked as many others are. However, I've come to agree that economically you'll have a better outcome if you go with praxeology. A rarity is when you come across an article advocating for forms of laissez faire and fiscal responsibility especially on hacker news. It's refreshing.

In Sydney where the cost of living is high, a typical non-skilled wage is ~$20. The result is all service based industries, cafes to full service laundromats, are relatively expensive. However if one is willing to forego the luxuries, it is a livable wage.

In this way, a higher minimum wage ultimately leads to a fairer redistribution of income and is in my opinion a possible solution.

Reducing the cost of living implies downward wage pressures, which has the opposite effect.

This study (and they are quite transparent about it) doesn't focus on the number one cost, housing. There is some room for technological innovation there but it's mostly a policy issue.

The best-paying jobs in the US are highly concentrated in a few areas, and at the same time cost of housing is skyrocketing in those areas. We could do a lot to improve people's wellbeing by figuring out how to make housing much more affordable. (Technology can help with transit, building techniques, and better remote collaboration software; but policy is required for zoning/planning, and for transit as well).

'Consumer confidence' and growth rates currently big news in UK. Basically, the economy, or at least the numbers used to measure it at present, depends on people borrowing money to buy stuff.

"Living within your means" is almost impossible (housing) and regarded as somewhat unpatriotic. Strange times.

Back to OA specifically: I take it that the emphasis on transport access implies long commutes to jobs? Any research on the impact of commute time on social factors?

This article: http://www.economist.com/blogs/gulliver/2011/06/perils-commu... One of the standouts is a 40% greater divorce rate for couples, although that statistic is slightly misleading. 14% of couples with at least a 45 minute a day commute divorced in 5 years of the study, 10% of couples divorced that had a commute less than 45 minutes.

Prevent https://en.m.wikipedia.org/wiki/Tax_avoidance and https://en.m.wikipedia.org/wiki/Tax_evasion

"A city cannot just give every resident more money”

So the answer then is some sort of "rebates", which are basically stamps under a different name (food stamps, "energy stamps", "transportation stamps").

Sounds like 'supply side economics' to me. Great to see Hayek relevant again!

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