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Comment by yummyfajitas | Hacker News Reader

The problem is that it's hard to create a high status item. Say you invent the "US Govt. Certified Top 0.1% Badge" - do you really think Peter Thiel, John Paulson or Alex Rodriguez will really give a crap?

Taxing existing luxury status symbols could work, and is very likely a good idea. Creating new status symbols is likely to fail horribly.

Also, the tax on certain neighborhoods neglects the very large non-status reason why those neighborhoods are valuable: proximity to something cool. Manhattan is expensive not just because it raises your status to live there, but also because if you work at Goldman Sachs, you are willing to pay $3000/month rent + ridiculous NYC income taxes to avoid a 1 hour commute.

I suppose we could also bring back the Sumptuary laws:

http://en.wikipedia.org/wiki/Sumptuary_law

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A special ID that gives you status isn't so hard to imagine: it is basically like the Black Card, which is actually pretty shitty in terms of benefits but rich people (and people who want to appear rich) want anyways because it is a status symbol you can whip out when ever you want.

One could imagine an ID card that gives you the right not to be violated & degraded in TSA screening lines...

The top %0.1 card that basically give's tourist visa-free Permanent Residency status in nearly every country in the world? Kind of like clear/nexus cards for immigration? That would be an awesome 'status' badge.

Would they give a crap? Possibly, when you consider that the badge would symbolize an investment in the infrastructure that supports everyone's lives.

You could maybe reward the wealthy in the same way people currently reward philanthropists -- offer to name things for them.

My tax plan is to eliminate income tax up to $90,000. After that, income is taxed at 100%. The government awards tax credits for everyone making less than that, so that everyone's salary + tax credits = $90,000.

"But wait," you say "How will we incentivize entrepreneurs if they can't earn more money?" For everyone making over $90,000 (approx. 11% of the population), their pretax salary is used to assign them national ranking that's publicly available, much like a ladder tournament, which could be subdivided into regions, industries, etc.

The rationale for this system is that we use one system - money - for two unrelated social purposes: reducing suffering and establishing status which incentivizes production. In my system, these purposes are less coupled.

The $90,000 number was calculated by dividing the total US income by the number of workers, so this would need to be adjusted yearly. If this system was applied globally, the average salary would be $25,000 which is quite a step up for billions of people. It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class.

Ok - if your system is ever enacted, I'm cutting my work hours back by 50% or more.

I'm also hoping that not everyone does this, because if everyone did, there would be far less than $90k/person floating around. But that won't happen, right?

It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class.

This assumes that the total cost of providing the same middle-class resources to everyone in the world is equal to the present marginal cost of doing so.

That's fine, you'd get 50% of the tax credit.

Sounds a little bit like the NFL: http://www.realfootball365.com/articles/nfl/14905

The major sports leagues in the U.S. (football/basketball/baseball) are definitely an interesting microcosm of various economic systems.

You might want to go read Atlas Shrugged.

If the plan provides for everyone to earn 90k regardless of what they actually do, there is no incentive to be productive at all, (much less to be productive enough to account for those who produce very little). Having my name on a list as the X most productive person is not incentive. Being able to spend the money I earn, is.

What do you need to spend money on that you can't afford with $90K? And why do you want to buy it over something that you could afford?

In my experience, virtually everything that falls into that category is some sort of status symbol. The grandparent poster is suggesting replacing these implicit status symbols with an explicit one.

The part about his proposal that I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years, and then do something more interesting during that time. But if you're earning $90K regardless, that wouldn't matter, because you'd be able to do the more interesting stuff anyway.

Actually, that leads to the real problem in his proposal: you lose the information-carrying capacity of money. I'm basically ambivalent about most of my income over a number that's a lot less than $90K; I don't spend it anyway. But if I'm faced with two jobs that look equally interesting, I'll take the one that pays more; the additional money is a proxy for how much that business is valued by the marketplace, and I'd rather work on things that will make lots of people happy. Same with when I start a business: there're lots of projects that are interesting, but profit is a way of telling which ones are interesting and useful to others.

OTOH, a stack ranking does that as well. The problem with the stack ranking is that you can't pass along that surplus down the value chain. So, for example, if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to, because the government would take the money you would otherwise have paid the graphic designer.

> I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years

I was thinking that people could work part-time and earn 50% of standard income. Median household income is around $50k right now, so this is a decent standard of living.

> if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to

A two-person household where both members worked full time would be making 3.6x the current median household income, which is way more than they need. This surplus could be used as investment capital, where it would be distributed and decentralized, so it would be much easier to do Kickstarter-style funding. If we accept $75k at the point where money stops having an impact on happiness, individuals would have 20% above that line to play with for those kinds of things. Essentially, the stack ranking converts your surplus productivity into status for you, and distributed evenly to your friends and neighbors, who have the power to return it to you if they think your project is socially or economically valuable.

Some good points though, especially the part about profit as an index of what makes people happy. The problem with our current system is that this is only true if your profits come from people who make less than $75k. 40% of consumer spending is driven by people in the top 10% ($82,500 annual income), so it's fair to say that that spending is misallocated and doesn't contribute to overall happiness.

"What do you need to spend money on that you can't afford with $90K?"

Salary caps are, in my opinion, a backwards view. When someone says "basketball players shouldn't be able to make $10 million a year," what they're really saying is "people shouldn't be willing to spend $50 on game tickets," or "more of the income the team makes should go to the coach," or something like that. The money is flowing in already, based on the market's decisions. Shouldn't the players get a big chunk of it? They're making it all possible, after all.

Similarly, trying to cap the salary of a doctor or a CEO or whatever is really saying "nobody should value your services enough to give you that much money." But... they do. How can you keep people from paying what they're willing to pay? And if they can't pay more, how can they compete for the best doctor or CEO or programmer or whatever? They will find other ways to compensate.

And what would you do with existing billionaires? Rip them of their money, like when USSR was formed? Or leave them their money to freeze the status quo forever?

> The government awards tax credits for everyone making less than that [...]

> [...] dividing the total US income by the number of workers [...]

So, for that $90k figure to be attainable, you need those who aren't "workers" not to get any of this money. Which means that becoming a "worker" will suddenly mean getting an extra $90k/year, whatever the job. Which means that there will almost certainly suddenly be a lot more "workers". Which means you can't manage $90k/year after all.

Also: Your system relies on taking away a great deal of money from rich people in order to give it to a larger number of people who would otherwise be much less well off. I have no problem at all with this as a general approach, but the more you do it the harder those rich people are going to try to avoid paying; and rich people can generally afford a lot of expert assistance with not paying, arrange for a great deal of lobbying to get the rules changed, etc. -- which means that you probably can't get nearly as much money out of them as just looking at their salaries suggests. For instance, duh, suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year. Suddenly 90% of that tax revenue has gone. Whoops, everyone else's annual salary is now $9k/year.

Also: as others have pointed out, it is ... not obvious ... that being given a low number in some official government ranking would be as strong a motivator as actually getting rich. Yes, one reason why people want to get rich is because wealth brings high status. But there is some reason to think that they also want to get rich because wealth brings large houses, good food, nice holidays, fast cars, and all the other stuff that one can buy if one has enough money.

> Which means that there will almost certainly suddenly be a lot more "workers".

You mean a low unemployment rate?

> Your system relies on taking away a great deal of money from rich people... the more you do it the harder those rich people are going to try to avoid paying

Not really, no. Money in excess of $90k isn't confiscated, it's still used to purchase status just as it is today. The only difference is that it's purchased from the government instead of BMW, De Beers, etc. Status markers are essentially arbitrary anyway, why not just have a single number? It's much more efficient.

> suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year

They could do that, and it would lower everyone's rank. This would cause some people to quit those jobs and find other jobs that offered more status, lowering supply and causing the price to go up again. If salaries drop because of market forces, the savings would be used to invest in the business: hiring other employees, improving operating efficiency, R&D, etc.

> they also want to get rich because wealth brings large houses, etc.

Any income above $75k doesn't contribute to personal happiness, and standard income is already 20% above that. Luxury goods don't contribute to happiness, they're just a wasteful and inefficient way of signaling status. That money that could be used to improve lives or fund innovation.

Status markers are much more complicated than you imagine, and they tend to be extremely expensive to produce. If you think that the govt. could make a status marker that rich people actually care about, you're dreaming.

The finer things in life really are finer, and it becomes nonlinearly more expensive to produce them the finer they are.

A $500 meal at Per Se in NYC isn't just for signalling, if it is at all. It's an extremely memorable experience.

Actually, I think status markers created by the government would be far, far more appealing to the wealthy. It's like Hegel's master-slave dialectic - a master doesn't feel like a real master because he knows all the struggles and difficulties of maintaining his position. If he really is a master, not just an ordinary man who finds himself with power, why does he have to work so hard to maintain it? The only time he really sees himself as a master is when he catches a glimpse of himself as his slave sees him, and paradoxically, this makes him dependent on the slave's recognition of him. The master is desperate to impress him and provoke envy. That's why in all Ayn Rand novels, the protagonist's problem isn't just the fact that the masses interfere with his projects and thwart his greatness - the problem is that they do this because they don't recognize him as superior. That's what really burns. The whole purpose of going Galt is to force society to recognize them.

If the rich are so desperate for our approval, why not give it to them? They don't need to play stupid and wasteful status games to seduce us into admiring them, they can compete with each other, we'll add up the score, everyone gets ranked and that will be the end of it. OK, maybe there will be an awards ceremony on TV every year.

The main obstacle to this system is that most of the rich wouldn't go for it because they'd never admit that they crave recognition from people they consider inferior.

I wonder if you're confusing reality with Rand novels. As far as I'm aware (since I'm not one of them), most wealthy people aren't trying to impress anybody. They're just enjoying their lives, relatively quietly. The incentive provided by wealth is not status, but enjoyment. A BMW is much more enjoyable to drive than a Buick. Go ahead and pry all the logos off my car, it'll still be more fun to drive.

What's more, "status" is only a proxy for wealth and power. Status is only as useful as the additional influence it brings. Consider it from an evolutionary biology perspective: higher status means higher capability to support mates and offspring. If you take away the additional wealth that brings higher status, then the higher status is lost as well, as it doesn't actually signal a higher capability to provide.

I was just going to mention BMW - when I drive one, I'm definitely not thinking about other people, just the machine and the road.

Right, but why do you even need a proxy, why isn't it enough to just have money and power? It's because other people need to know.

I love my old M3, but I wonder if it falls in a special category distinct from other luxury items--as Aldous Huxley said, "speed provides the one genuinely modern pleasure."

I think you have a pretty simplistic view of rich people - on average, they're much more complex than just wanting to show off to the masses. I fall into the same trap with a lot of things, but it's important to realize that a lot of them are extremely smart, and there are a lot of motivations there.

But with your original point on luxury goods, luxury goods are usually subjectively, if not objectively better than less expensive alternatives, even when noone knows which one costs more. Your govt. ID, if it's only a pure status symbol and carries no weight, might be valued by some, but truly rich people wouldn't care. They don't need validation from "people they consider inferior". You're describing a small subset there. In general, they just want the best of everything, and the marginal utility of the money they're giving up is meaningless in comparison.

That's why in all Ayn Rand novels, the protagonist's problem isn't just the fact that the masses interfere with his projects and thwart his greatness - the problem is that they do this because they don't recognize him as superior.

I have no idea why so many people feel the need to comment on Ayn Rand without reading it.

If you read the Fountainhead to the end, you'd realize that Roark was completely happy toiling in anonymity, as long as his building was built properly.

A farmer who has difficulty plowing straight lines because his oxen are recalcitrant doesn't get his feelings hurt and write lengthy books in oxen language for the oxen to read whining about how he is a superior type of animal and why can't they just realize that! Then the farmers says "I'm tired of being unappreciated!" and leaves the farm in a huff just to show the oxen that if without him, there'd be no-one to feed them or clean out the stables. The reason this doesn't happen is that the farmer really is superior to the oxen, so he doesn't need to prove anything - for him, recalcitrant oxen are just one of many obstacles involved in farming.

Despite all claims to the contrary, the very fact that Rand even bothered to write a book at all betrays her secret, perhaps unconscious need for recognition. Here, the medium is a message - if Rand's audience is the superior people, why did she choose to communicate her ideas in the format most accessible to the "oxen" of society, the novel, instead of a dense philosophical treatise? She even helped to make the movie version of The Fountainhead, an even more accessible format.

Study cognitive neuroscience. Much of the reason that $500 meal at Per Se is such an amazingly memorable experience is because it's so expensive; evolution has taught your brain to feel good about signalling status.

I really don't know where you get the idea that 75k is some sort of big compensation... earning 75k puts lots of limits on what one can do, hobbies/businesses one can start, and how secure one is in the future.

Status - is derived from what one can get with money. For instance, being able to fly anywhere in the world and stay at an amazing hotel and eat great food, etc at the drop of a hat.

I see that you are trying to get in the spirit of coming up with the "bad version". Communism has been tried before, and it didn't work very well.

Like, say, China?

You think the chinese system -- with hundreds of millions of people living in squalor -- works?

It certainly functions.

Lots of functioninal things lower quality of life. That's not a very rigid or useful test.

China is not really a communist country as originally envisioned. Certainly, there are large disparities in income between the party elite/entrepreneurs and some random farmer.

That's true; however, to claim communism does not work whereas it works better than anything else is a little bit arrogant.

You're not offering any real evidence for your side, so it seems pretty arrogant to expect anyone to give you any credence. You claim it "works better than anything else," while citing a country that has brought a fraction of its population out of absolute squalor by abandoning communist ideology — that is very specious.

The laffer curve would indicate that people would stop working and contributing once they stop getting incentivized. I would stop every year, once I hit the threshold.

Completely flattening income is a horrible idea. Everyone would try to get the easiest job possible, because the income is the same. Yes, some people do their job because they love it. But most people bust their butt so they can make a good living.

"But in my system, everyone makes a good living," you say. What about inherently scarce resources? There is limited beachside property. Who will get it? Currently, busting your tail through medical school gives you a better chance than dropping out of high school. How would you decide when everyone makes the same?

And the income equality would be an illusion, anyway: some skills are inherently more valuable than others. Transactions would just go off the grid. You need a roofing job done? The roofer is all booked up. Oh, you can barter with your web design skills? Well, that's more valuable than the guy who offered yard service, so you win. But darn if bartering isn't awkward - if only we had some system to store this inherent value...

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