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Comment by dnautics | Hacker News Reader

Is that surprising? Economic expansions are largely driven by monetary (stimulus, QE<N>) and fiscal policy (bailout, contracting), as a part of deliberate politics ("we need to create jobs", e.g.). As these events are derived from centralized, hierarchical organizations (Fed, us gov't, ECB, EC), the benefits will disproportionately flow to those that have access; part of the reason why the richest are the richest is because they have had success in the past obtaining exactly that access.

It's rather ironic that the keynesian perspective in the article is that the policies "aren't targeted" but in reality they couldn't be anything but.

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Well they could increase the amount of public spending and increase the tax rates for the top brackets and it has been historically in periods where rates of income inequality have gone down.

But no, for some ridiculous reason those ideas seem to be unacceptable with the Overton Window defined by mass-media (conglomerate-owned, of course) and economists who propose small-state solutions.

Increase public spending on what? NY MTA workers making $400/hour? On teachers (who, by virtue of being college educated, are by definition better off than most of the population)? On healthcare (i.e. to doctors and drug companies)? Heck, even if you give cash directly to poor people, it'll go immediately back into the hands of the well-off in the form of rent in overpriced cities.

* NASA?

* Repairing infrastructure?

* Better public education (especially adult retraining)?

* Expanding public transportation?

* Medical R&D?

* Other tech R&D - like batteries, fusion, quantum computing, superconductors, etc

* Single payer healthcare?

1) Public Option for Healthcare

2) National Healthcare Standards that end the balkanization of the healthcare market.

3) Infrastructure maintenance deficits (we've fallen really far behind on that).

4) Basic Research in basically every field.

5) NASA.

6) Breaking oligopolies/monopolies

7) Public Affordable Housing. (i.e. High Density housing projects that otherwise charge market rates to cover costs.)

I'm not even sure why the idea of doing the first 6 things are even "political issues" that require discussion, to be frank. There is something seriously wrong when basic maintenance and balancing the scales of power to something below "lol rent seeking" qualifies as "increased public spending" because basically nothing is done in those areas.

> 1) Public Option for Healthcare

So more money goes to doctors, who are in the top 10%?

> 3) Infrastructure maintenance deficits (we've fallen really far behind on that).

So more money to MTA workers and administrators making $100/hour: https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-....

> 4) Basic Research in basically every field.

> 5) NASA.

So more money to privileged, highly-educated folks who are in the top 10%?

These proposals just benefit the top 10% instead of the top 0.1%. (It exemplifies American politics, which has largely become a war between the top 10% and the top 0.1%, with nobody looking out for the interests of the bottom half). It won't reduce the inequality that the article is talking about, which is caused by the fact that the bottom 90% have little bargaining power in a world dominated by automation and computers.

It would be far better to just give poor people money. Or better, yet, put the money in trust funds for them.

> So more money goes to doctors, who are in the top 10%?

https://www.forbes.com/sites/merrillmatthews/2015/01/05/doct...

> Medicare, which provides health coverage for seniors, pays doctors, on average, about 80 percent of what private health insurance pays. However, Medicaid, which provides health coverage for the poor, pays a much lower rate, about 56 percent.

Imagine that sort of downward pressure on prices and how that would enable the poor to help educate their children, etc. It isn't always about cutting down the wealthy. Sometimes it is just about improving the quality of life so the bottom suffers less.

You are seriously arguing Doctors are eager for a 20-44% paycut per hour worked.

Please donate 44% of your income to charity for the rest of your life if you believe this is the case. Beyond whatever contributions you make now. I will believe you if you do it.

> So more money to MTA workers making $100/hour: https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-....

http://work.chron.com/much-highway-construction-workers-make...

> About 197,920 construction workers were involved in highway construction, as of May 2011, according to the Bureau of Labor Statistics. They earned a mean $45,940 per year, or $22.09 per hour. The largest number of jobs belonged to the 73,490 construction labors who averaged an annual $38,030, or $18.28 per hour.

https://www.infrastructurereportcard.org/cat-item/dams/

To claim it has anything to do with the pay scale of subway workers is absurd.

> So more money to privileged, highly-educated folks who are in the top 10%?

Basic research is about growing the pie of opportunity for everyone and the fact it is not normally rewarded in a capitalistic society. Do you genuinely believe technological growth has not improved life for everyone?

> This is my point. Politics in the U.S. is a battle between the top 1% (represented by the Republicans), and the top 10% (represented by the Democrats). This spending won't reduce the inequality the article is talking about.

No.

It is a battle between the economic interests of the 1%'s vs. literally everyone else.

http://www.igmchicago.org/surveys/tax-reform-2

Independent economists whose paychecks are not cut by people with political agendas rated the latest "1%" plan 1 in favor, 37 against.

"Independent economists"

Adorable. Can you name one that is not in the 1%

If inequality goes down because the rich become less rich, is that a win?

In my view, the answer could be yes, not by itself but only depending on the side effects. Some possibilities:

1. Redistribution of wealth carries a corresponding redistribution of political power.

2. The quality of life for the bottom quartile (or choose your threshold) is increased by more than the corresponding decrease for the rich.

3. Redistribution increases consumer spending, which stimulates growth, if for instance the economy is in a state of poor demand.

Needless to say, these are all speculative on my part.

I would say by now you have a pretty good idea of what people around here think but... yeah, if the rich get a little less rich things are a lot better for everyone. It's the unbalance, not the total that makes life hell for the less well off.

How?

The people that answer yes to you might not even realize they are actually part of the richest group, particularly since software engineers are in the top 10% of income in the US.

The very top of the bracket (0.1%) is the one paying proportionally far less than the rest of the upper class, given their access to all sorts of accounting tricks and exemptions that you have when you are making money from capital gains or when you have tons of active assets to shuffle money around.

Do you have data to back that up? From what I've seen, the top 0.1% pay a far larger share of taxes than the rest.

Based on federal gov't data on total taxes paid, the top 0.01% (even higher income than you 0.1%) pay over 20% of all taxes with an average rate of over 49%.[1]

[1]https://news.ycombinator.com/item?id=15573269

Except that income distribution is skewed so much that top 1% top 0.1% it is really what matters in terms of inequality.

Every single person can claim there is someone richer than them, up until you get to the richest 10 people. If you have 100k in your bank account, the difference between you and someone living on 2 dollars a day is a vast enough inequality.

Sounds like perfect argument for ultra rich to make middle class to pick up the bill.

https://www.theguardian.com/inequality/2017/nov/14/worlds-ri...

Maybe we just see the overall trend and its global impacts, and we don’t think buying a luxury fallout shelter is the same response.

If you're asking seriously, the answer is: absolutely. The countries with the highest levels of quality of level and most socioeconomic mobility have very high levels of taxation for the wealthiest. And they are doing just fine.

GP said nothing about wealth distribution, which is what you're describing.

that includes the US, where taxation still is mostly borne by the rich

Nope, US phases out social security taxes and has vastly lower rates for capital gains etc. If you look at total earnings vs. total taxes paid including non income taxes the rich pay a lower share than the middle class.

Remember gas taxes are just as much a tax as income or property tax.

By definition rich is relative, more inequity means more rich, and yes, lower inequality means less rich.

Depends of the definition. If every piece of food in the world were burnt, there would be no relative poverty, but there would be famine and death immediately.

Both relative and absolute poverty matter and have different causes and solutions.

If no other changes occur then yes because it reduces the concentration of power.

Yes

Explain how increasing public spending will redistribute wealth. More likely than not it will go to contractors who have gotten good at obtaining grants because they were good at obtaining grants which made them wealthy and allowed them to buy consultants to help them win the next grant.

Oh come on don't make these idiotic arguments that forget that pretty much all Western European nations that have low levels of income inequality have done so through massive taxation and the creation of public goods and benefits that allow them to support a highly developed society.

Free universities, free healthcare, long paternity leaves, environmental protection and subsidies to underdeveloped areas are all factors that are proven to have helped substantially to reduce inequality and increase social mobility.

I seriously can't stop marveling at how people can defend an increasingly unequal world when there is a shrinking middle class and a more fragile position for the most vulnerable.

For the most part, Western European countries have less redistribution baked into their tax systems than the U.S. Take Germany for example. The top marginal income tax rate in Germany is about 50%. In California, it's over 50%. Corporate tax rates are similar (with Germany's being slightly lower). Capital gains rates are higher in California than in Germany (and similar between Germany and the U.S. on average). If you make $2 million per year, your tax bill is probably a bit less in Germany than in California.

But the tax burden overall, of course, is higher in Germany. That extra money comes from the middle class. Here are the tax brackets for a single person (in Euros):

    0%  up to 7,664
    15% 7,665- 52,153
    42% 52,154 - 250,000
    45% 250,001 and over

Then Germans pay various health insurance and pension contributions that are, like our FICA taxes, subject to wage caps, which puts most of the burden of their healthcare and retirement system on the middle class. They also pay 19% VAT, which again puts most of the burden on the middle class.

If Trump proposed implementing a tax plan that distributed the burden of taxation the way Germany's does, people would be apoplectic.

Indeed. Yes, there are people that have very high incomes. However, there aren't that many of them. The gov't has no choice but to increase the burden on the middle class if they want to raise serious revenue.

It reminds me of an interview with a candidate in the Canadian election back in the 1990's. This was the NDP party (left wing).

The candidate said his platform was to raise taxes for the rich. The intrepid reporter asked "what is rich?". The candidate in a moment of honesty said "A family of four making more than $60K per year".

People went apeshit with that comment.

It's true to a significant extent in the US as well that to raise significant revenue --- for instance, to create a new entitlement program for health care --- taxes have to be raised from the middle class.

You think that's sustainable? Ithink you will find that even though all of the countries in Europe have basically free social services, the divide between the rich and poor is not decreasing in all of them. What does correlate with it is institutional corruption and confiscatory monetary policy ( the nordics are not on the euro, which is for now better than the pound). People in the nordics are doing way better than in Europe they in turn are doing better than the British

The funny thing is that the world itself is not increasingly unequal, the global gini coefficient is coming down, mostly due to arbitrage - migration away from countries with corruption and poor, confiscatory monetary policy to ones where the confiscation is slow enough to be generational.

The Nordics are doing way better precisely because they have the highest taxation rate and the largest states.

Statoil is a massive mixed enterprise and it's doing just fine, and unlike the rest of the countries where wealth from oil gets funneled overseas or goes to a few corporations, it goes into the largest sovereign fund in the planet to safeguard people's wealth.

The Nordic nations have the proportionally massive states and nobody's saying that they would be better off with fewer public services... because they wouldn't, and it's obvious to anyone who wants to make the debate global.

I'm genuinely curious about how states with high redistribution rates fair with regard to their impact on the broader world. For example, are the Nordics over or under-represented in Nobel Prizes? Is there some metric that takes into account population, perhaps GDP per capita, and patents filed or scientific papers written?

How about immigration policy, both statutory and real-world. I do know that the Nordics are largely mono-cultures where something like 98% of the people are the same color and religion. If the Nordics are such great places to be, and if they have statutorily open borders (they are in the EU, right?), why are they not flooded with poor people from other nations? Are they socially hostile to immigrants?

Today in Oslo it was -5C and had 6 hours of sunlight. There may be other reasons that the Nordic countries are hostile to outsiders.

you're neglecting the fact that the nordics have the lowest rate of inflation among all of the countries in europe, in other words, the state steals the least from its (poorest) people.

Inflation is not theft.

If you genuinely believe that:

1) Please use a deflationary currency (like bitcoin) for all your transactions.

2) Study the impact of deflation on Japan. Or the deflations in the US that almost always coincided with a depression with one (arguable) exception. Keep in mind, that arguable exception was one of half a dozen such events.

Correlation is not causation. your arrow of causality is wrong. Of course deflations are correlated with modern economic contractions. In the era of central banking, contractions happen after the social capacity for debt has been stretched to the limit because tptb have tried to goose the economy too hard, and defaults exceed the rate of debt creation, leading to a contraction of the money supply.

I suggest studying the free banking era and the us during the 1800s. How did the country ever survive without inflation??? They even managed to royally screw things up with a civil war and a completely insane bimetallic standard, without implosion.

I suggest you study the effect of inflation on Japan. How's that lost decade going? Well, at least we got a lot of pansocial angst among the < 30 crowd (and some interesting anime) out of it.

Inflation as a variable for income inequality is dwarfed by tons of other factors. No serious economist is going to say that it's a terrible thing. A lot of countries have had to deal with inflation rates above 5% and they could still grow and lower inequality.

I don't understand how you can make that assertion. The effects of inflation are compounding and disproportionately bad for the poor. Have you ever been poor? The price of everyday goods was definitely a cause of worry for me on a daily basis. And you shouldn't take anything from "seroius economists" on the issue, most of them are from the 1% and totally clueless.

Maybe but I know they are doing the best they can to increase inflation, to little avail.

>the nordics are not on the euro, which is for now better than the pound.

You have no idea what you are talking about. Finland uses the euro. Denmark is pegged to the euro, a peg which cannot be broken like Switzerland's because it is 100% politically controlled. Norway is not in the EU so why would it use the euro? Iceland is also not in the EU.

Besides being completely wrong, why does the nordics being on the euro even matter for this discussion?

Stay tuned over the next five years. Most of the European welfare systems are teetering on the brink. The pension funds are busted, the healthcare systems are having huge budget problems, and yields are shooting up on the municipal and national bonds.

Eventually you run out of other people's money. Remember that Greece looked pretty good ten years ago.

This applies to the entire planet (except for countries with growing populations, and that is a substantially worse problem), and European states have much greater safeguards and are in general far more stable than most other places in the world.

It really is worse in Europe on the fiscal front. About half of German municipalities have busted pension funds, for example. The problem is also huge in America, but it's an order worse and more imminent in Europe. Ceteris paribus the USA will probably blow up around 2025 or so, but instead hopefully in the wake of Europe's more imminent fiscal crises we can correct course somehow to avoid their fate.

Oh, we've been hearing the same (German pension funds are underfunded, Germany is about to collapse) things for the last 2 decades at least. Did Germany collapse? Oh no, but sure will in two years... or whatever.

Same with US. By now it should have turned to 1997 with Curt Russell being president &c, but it did not really happen.

BTW same with any stock that someone on the internet has bought or shorted. Sure it's going down... about to collapse!!! Going up... buy now!!

To be fair, Detroit more or less conformed to the hype, a la Robocop, at least for a while. Cali is doomed long term with the water situation (Caddilac Desert is a great read), the future of Louisiana is unclear, and so on. The predictions have been off as to timing, but the trajectory seems accurate.

>> Most of the European welfare systems are teetering on the brink.

Thanks. I love getting some hot macroeconomic advice from a random person on an internet forum. Especially if it does not provide any sort of backing analysis, that is just the best way to do it.

So what’s the limit to taxes? Half the people in the country don’t pay any federal income tax.

It makes sense to have the poorest not pay taxes when the marginal utility of every dollar they lose to taxes is so high and when the poor and middle class are the engines of consumerism.

A dollar taxes to the top 1% that owns more than 50% of all assets, in contrast, loses far less from taxation.

The problem with this line of argument is the moral base it stands on: pure utilitarianism.

It stands on the idea that the tax is more effective to leevy and that it will produce less suffering (to the rich that pay it). But unfortunately, reality shows you the actual utilitarian application: the rich spend lots of resources to avoid, lobby and protect themselves from taxation, making it hard to grab and cause lot of apparent pain. But a sales tax on food, and a tax on income hits the poor, which can't defend themselves as well, and don't perceive the pain attributable to the tax.

If your stance is that taxes should be utilitarian, you already have an application.

Well, given that the CEOs of the many multinationals who are benefited by the latest tax cuts in the US have explicitly said that they will not use the extra money for investments but rather just to increase profits, it stands to show that people will not necessarily engage in productive investments given more free capital unless absolutely necessary to compete, which is line with what some economists have mentioned on this.

If the government taxed that money away, maybe half of it would go to new military planes, so its not really that efficient either.

That is exclusively a problem with American conservatives that could be fixed when the populace realizes that they should be asking for the correct entitlement programs. For some reason this was never a point of debate 20 years ago.

Increase of the military budget has been bipartisan, its the one thing that never stopped growing in decades budget-wise.

Thats where money goes today, so if you raise taxes you have to take into account that the military will still eat a chunk of it. Its yet another argument of why raising taxes is not the solution to poverty.

That is only true for income tax, not payroll tax and sales tax.

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