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Comment by hpoe | Hacker News Reader

So to me the whole argument around inequality seems like a red herring simply because it focuses not on absolute improvement but relative comparison, feels a bit like a crab in the bucket mentality to me.

Now I understand the argument of why should so and so have $5 billion when other people are starving or can't afford their medicine, but to me that is a problem around people not having access to healthcare or food which seems incredibly orthogonal to how much money Jeff Bezos has.

I just don't get it, the whole idea of economic inequality to me seems like it is just trying to avoid talking about real issues. I mean sure wealth was more equitably distributed in fudeal europe but I'd much rather live now. As long as the absolute standard of living is generally rising why does inequality matter? Genuinely would love to hear the reasoning behind this.

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One of the more compelling arguments in my eyes is that wealth concentration is very difficult to separate from power concentration (which is the point of money in a way), so wealth inequality can have a direct effect on liberty. Think of the difference between being able to afford lawyers or not, or make political campaign contributions (i.e. buying political influence), to say nothing of outright bribes and other, more cinematic ways of turning money into power.

The argument about standard of living kind of misses the point. Yes, standard of living is increasing, but it could be even better, so why aren't we doing that? That question at least deserves an answer (though to be clear I don't think a "wealth tax" is likely to be that answer).

I do think that leftist political theorists are too fond of dealing with abstractions rather than concrete details, a bit like corporate buzzword jargon (semi-useful for describing problems, if not solutions), or code that has been factored to FactoryBeanManager levels. They often have good arguments underneath it all, but I don't know why they expect people not already on board with their agenda to take their terminology seriously.

Indeed, look at how people talk about wealth, as if it's untouchable: If we tax the rich, they will move to another country, or take away our jobs. Even a perceived threat is a threat. It's as if talking about taxation is a form of lese majeste.

There's something I noticed some time ago, brought into relief by the COVID crisis: We can apparently talk about any means of dealing with the crisis except dipping into private wealth. When it comes to paying for the crisis, working people can choose to pay for it with their livelihoods or their lives.

We can apparently ask people to sacrifice their lives for the sake of "the economy," but suggesting that people sacrifice their wealth is seen as too absurd or reckless to even consider.

I think we can all agree the tax system in most countries is very unfair.

My suggestion to make it fair is to simply abolish all taxes in nations with sovereign currencies. The government just prints the money it needs for it's budget each year and uses it.

Inflation is basically your tax rate and everyone can look at the government budget and plan accordingly.

This has the added benefit of getting rid of the entire redundant industry of tax CPAs and tax lawyers, freeing hundreds of thousands of smart people to actually produce new wealth in the economy.

It makes all illegal activities taxed just like legal activities.

It combines all the benefits people are wishing for when they promote a flat tax or wealth tax or simpler taxes into one easy system. Even a child could understand this tax code intuitively.

I've considered this as well.

It has one big problem, which is huge headaches around lending at interest. This is surmountable if the rate of issuance is reasonably predictable, but compound interest is already difficult for many people to understand, this would make it worse.

The problem that eventually the numbers get silly isn't a problem, because, first of all, it happened: a coke should cost a nickel, not a buck. Second, just drop a zero from time to time, easy, and an opportunity to change up the look of the currency.

There is economic theory and research supporting some of this under label “modern monetary theory” (https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory)*

My fundamental problem with the whole concept is that it is predicated on the idea that a nation is able to borrow in its own currency. If that is not true, seriously bad consequences (like hyper inflation) occur. Proponents say “well the US can borrow in its own currency, we don’t have to worry about that”. Real problem is that without monetary discipline, there eventually does becomes a point where other countries DO stop using your currency as a reserve currency, and they do stop being willing to make loans in your currency. And that point is not well known. And is most likely to happen when your country is already in crisis. So formally relying on printing money to pay for things remains a hugely risky endeavor in my mind.

* I’ll note that the limited proponents of modern monetary theory I’ve heard of do not advocate for the elimination of taxes or unlimited printing or money. Thier argument is that the deficit is meaningless of itself, we should reduce the deficit (via taxation) if inflation has gone outside a target range and increase the deficit if it has gone under the target range.

This is an interesting idea. I wonder what behaviour it would incentivise?

In theory it is regressive as it is flat rate, but given how easy tax is to avoid our current system is more regressive.

This wouldn't work without a way to compel people to be paid in government currency and accept it as a form of payment. One of the inherent values of the sovereign currency is that you have to use it to pay taxes with. Without taxes, there would be little use for holding the government currency. People and businesses would probably start trading in gold or cryptocurrencies rather than holding the devaluing government currency.

I think you're proposing Modern Monetary Theory (https://en.wikipedia.org/wiki/Modern_Monetary_Theory) or a variant of it. There have been numerous critiques written of MMT written over time - some examples:

- https://www.pragcap.com/modern-monetary-theory-mmt-critique/

- https://www.investors.com/news/economy/modern-monetary-theor...

- https://fee.org/articles/modern-monetary-theory-is-a-recipe-...

It has also been discussed on HN previously (https://news.ycombinator.com/item?id=19450959).

I suspect the political appeal of this would be limited because inflation doesn't hit everyone to the same degree - and there's not way to control that degree of impact.

With taxes and spending you can far more easily pick out who you're hurting and who you're helping. Those tools are knife while what you're suggesting is for politicians to use a rock.

Also as a practical matter having the government need to raise taxes to pay for spending is a (for government any way) relatively immediate form of feedback. Taxes go up and those who are taxed start complaining right when they hear what the tax bill will be. Inflating costs is imprecise - the "cost" comes on slowly and the "fix" for it - almost always raising interest rates is very painful and happens very quickly. So painful that politicians have historical needed a buffer - an appointed federal reserve in the US - to actually do it.

It isn't orthogonal anymore when it comes to housing. Money seeks returns and uses private housing as an investment vehicle.

A bit of inequality is good. A lot of inequality is bad.

If you let inequality grow, due to the way capital begets capital and wealth concentrates you end up with increasing inequality till a few people (let’s call them kings) own 99% of the wealth, and the rest of the people (perhaps we could call them serfs or dead souls) live hand to mouth on very low income.

This is why we have progressive taxes, but those don’t work so well because you can entirely avoid income tax if you have enough capital.

IMO we should tax income a bit less and capital a bit more.

Eh, ideas have a life of their own, independent of how much sense they make. And the meme that "the rich have too much money" is a popular one. It helps that it has a kernel of truth: it is much harder to make your first million than it is the second, even if for the simple reason that you can afford a competent secretary, accountant and lawyer. So in this respect I do get the appeal.

I disagree with blaming the rich and looking at taxing them for a whole host of other reasons that don't really have much to do with fairness:

- best way to distribute resources in a society is to give more to those that have proven they can use them best. And "who has more money" is a decent heuristic for "who can make more with the money he has". It's not perfect, of course, and it's trivial to think of exceptions, but it's very handy compared to any alternatives.

- "raising the tax" and "collecting more tax" are not the same thing, especially when you deal with people that have competent accountants and can move their wealth around.

- I'd much rather hear talk of lowering the for work, than raising the tax for the rich. It would directly encourage creating jobs and getting money in the pockets of the people.

- I'd also (and this is my old pet peeve) rather have higher tax for things which are valuable because of commons. Land, for example: a piece of land in Manhattan is 90% valuable because of its location, and 10% because of what's built on it. And its location is valuable because of New York city in aggregate. This would be a very common sense thing to tax, up until the point where cities actually spread to avoid higher taxes. But I'd also try to legislate this wider, to other things where commons create most of the value. Think how much value Facebook gets due to the actual software, and how much due to many people using it.

I think it's not as much that rich people being rich is a problem but the more they amass the faster they amass more and they eventually become a resource sink at the expense of the rest of us. Proper taxation is not looking to eradicate rich people, it would simply make them pay their fair share of taxes (if collected). I am a middle class worker and I pay proportionally a lot more taxes than the uber-rich, is that fair? If I were a billionaire and employed an army of lawyers and accountants to help me avoid paying taxes would that be fair to you? How about tax heavens? Regardless of what's fair or not, when the gap increases beyond certain limits instability ensues. If we don't do anything - and if you have a different solution bring it to the table - we could end up in a much worse situation in which all of us, rich and the poor, would have a lot more to lose

And in fact, that's a pretty reasonable approach to take.

Almost 50 years ago philosopher John Rawls posited "social and economic inequalities, for example inequalities of wealth and authority, are just only if they result in compensating benefits for everyone, and in particular for the least advantaged members of society."

The real question becomes: is the inequality we're dealing with today compensated for by benefits to the rest of society? It's tough to tell.

> not having access to healthcare or food which seems incredibly orthogonal to how much money Jeff Bezos has.

How much food and healthcare do you think Bezos could buy with his extra $180 billion?

The US government spends roughly $11k per person pr year for health care. So back of the envelope math gives me that Bezos's $180 billion could but everybody in the US an extra 5% worth of health care for 1 year.

To answer your question directly, that $180B would fund 7.5 years of the SNAP program following the increase in benefits during the pandemic (https://www.usda.gov/media/press-releases/2020/04/22/usda-in...). But that assumes you could actually liquidate all $180B and have the same purchasing power as what it represents today. That isn't actually possible since Amazon's stock would crash once Bezos starts to sell large quantities of stock.

And to compare these big numbers against proposed spending, Medicare for All could cost $3.4T/year (https://www.theatlantic.com/politics/archive/2019/10/high-co...) and Green New Deal could cost $18T-$93T over a decade (https://www.factcheck.org/2019/03/how-much-will-the-green-ne...). So if we're generous and take the low end, we're looking at around $5T in new spending a year.

All the billionaires in the US combined only have a wealth of $4T (https://news.yahoo.com/wealth-us-billionaires-soars-during-2...). You could take 100% of it away and the Government would spend it all in an instant - after all, look at the state of our deficits and debts (https://usdebtclock.org/). And once all this spending is done, we will have removed the biggest incentive for future entrepreneurs to dream big, take risks, and build. And with government inefficiency, we probably wouldn't have much to show for that spending either, except slightly less envy among the masses who are complaining about inequality despite having great standards of living.

Totally agree. Inequality shouldn't matter if people's purchasing power and quality of life has improved significantly regardless. Life expectancy in the US has improved dramatically over time (https://www.statista.com/statistics/1040079/life-expectancy-...). The US also has one of the highest GDP PPP per capita in the world despite being one of the largest by population (https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)...). And worldwide, extreme poverty has also gone down significantly over time (https://fee.org/articles/extreme-poverty-rates-plummet-under...).

The tendency of younger generations to demonize America's economic systems and conditions really seems to be the result of widespread envy as well as ignorance to how poorly alternative systems function. Perhaps this is because socialist/Marxist nations were once the subject of recent history, but now are turning into forgotten ancient history. My feeling is that this envious focus on inequality is also a symptom of the relative luxury of this time period. A populace whose needs are met can afford to attend college for years, getting degrees that aren't valuable, then argue that they are victims, and then spend excessive time on manufactured outrage in a life that is remarkably easy.

Real poverty is incredibly rare in America. Anyone who has traveled to developing countries knows this. We have a system that innovates remarkably well and has lifted quality of life worldwide. This focus on relative inequality does not make sense.

Standard of living has stagnated in most of our lifetimes, causing extreme disillusionment and blind rage

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