I still don’t understand this idea that labor supposedly has some sort of intrinsic value. The value is derived from the labor being done in the context of a system created by someone else. As others have said, if you want to reap the full value of your labor, you’re free to go it alone.
In option 3 the system benefits from every member’s labor contributions, AND every member benefits from the “context of a system created by someone else”
This assertion (regardless of the dollar value) bugs me, because it never considers the cost of living. Sure, if I lived in Vietnam, $150k would make me a relative millionaire.
But I don't live in (for example) Vietnam. A vast majority of people working a job that pays $150k don't live in a similar place either.
When property ownership is indefinite and transferrable between generations, then capital accumulation becomes about whoever did it first. Yes there is occasional disruption, but a guy like Micheal Bloomberg did the labor 40 years ago and has had people working for him ever since.
I think the idea is that we ALL stand on the shoulders of giants, and rather than holding all of the gains ourselves, they should be spread so as to give other people the opportunity to make something of themselves.
If this is true, the richest people in this country should be named Washington or Jefferson, or perhaps more recently, Carnegie or Vanderbilt. Instead, we have the likes of Bezos or Musk, the latter of whom wasn't even born here. Bloomberg was born to a bookkeeper, hardly the stuff of generational wealth. Empirical evidence suggests that it's actually pretty hard to remain at the top of the leaderboard across many generations.
I agree with the idea that we all stand on the shoulders of giants, but I dispute the picture you paint that the wealthy are "holding all of the gains [themselves]". Salaries get paid, taxes get paid, new ecosystems are made upon which future wealth can be built. There is no compelling evidence that makes me believe that more redistribution on top of what we already have (which is already quite a bit, contrary to popular belief that the US is a low-taxes-on-the-rich, low-social-benefit nation) would result in better outcomes for the median person.
I attempted to address this when I said:
> Yes there is occasional disruption
Also Vanderbilt and Carnegie existed during a time of much higher taxation, and also Carnegie gave away most of his wealth. It's also not hard to find examples of "old money". They don't have nearly as much as a Bezos or a Musk, but still more than the average person could ever hope to earn. Finally, I hate to attribute systemic patterns to the actions of individuals, but I think it's more so that rich kids without the same grit as their hard-scrap capitalist parents end up squandering their wealth. Even after his insane corruption, Trump's returns on his dad's money are paltry compared to buying the S&P 500, or even bonds for that matter. I would attribute the dissipation of familial wealth more to hubris and infighting than the system being hostile to generational wealth transfer.
In addition, our current economic system, "shareholder capitalism" is about 40 years old. Under this paradigm it may be much easier to hold on to power. We don't know for sure, but regardless of the inter-generational aspect, think about how Bill Gates hasn't written a line of code in 40 years.
To try and quantify it, think about Bill Gates' total contribution to MSFT as a percentage. Say time multiplied by talent. When there are 10 employees with the same skill level, he contributes 10% and maybe he owns 1% of the company. Seems pretty generous. At 100 engineers he is now just doing CEO duties, but his total contribution averages out to about 2% and still owns 1%. After 40 years and thousands of employees his ownership is still 1%, while his contributions are like 0.00001% of the total contribution to MSFT. This is what I mean by it being about "whoever did it first". Someone with a higher lifetime contribution to the company can be making less simply because Bill was there first.
This is the nature of property ownership. You can defend it or not, but there is clearly a pattern of inequality that develops because of compounding growth's relationship with time. If that ends up harming your system somehow you need to address it. I don't think that pointing out the nature of it should be controversial. It's literally basic math.
> There is no compelling evidence that makes me believe that more redistribution on top of what we already have
Then you aren't looking hard enough.
That would imply no such thing as owning part of a company. But then a moral equivalent would probably just pop up in it's place. Instead of owning shares, investors become mini lenders collecting interest on their loans.
Probably some sort of cooperative ownership. If you could perfectly calculate the weighted contribution of every person, you would just divide ownership up by that number. A contributor who has done 1% of the total work within an organization has 1% ownership and has 1% of the profits. If that employee retires then their contribution diminishes, but this is (theoretically) countered by the growth in profitability of the company. As long as profit growth outpaces the increase in labor (this ratio is productivity) then people should be able to retire and have a growing pension, without also unfairly capitalizing on the labor of new employees.
So let's say they work 20 years and do 1% of the work. In the next 20 years, the number of employees stays the same, but productivity doubles. The original worker has now done 0.5% of all the work done by the company, but if the company has doubled in profitability, they are still making the same amount of profit they were before.
This also assumes no outside investment from people who aren't workers, which makes it really hard to start a business. Maybe there could be some sort of bootstrapping period where investors can make their returns, which are capped at a certain amount. Or have unlimited returns but the company must switch to a cooperative structure past a certain headcount/size. Dealing with investment is certainly tricky in this thought experiment.
That is a totally theoretical solution but it's fun to explore different ways of organizing systems.
Not trying to cry that that's unfair since that was the deal at the time was salary instead of ownership. Plus what about all the stuff I spent time on that never produced any value? I still got paid and got to keep it.
Just saying as part of the theoretical conversation about other possible deals.
Cornelius Vanderbilt lived from 1794 to 1877, when there was no income tax; Andrew Carnegie lived in the US from 1848 to 1919, and he would only have paid income tax in the last six years of his life. Government receipts and expenditures were single-digit percent of GDP back then.
I do wish the wealthy of today were more familiar with the concept of noblesse oblige, and laud Carnegie's devotion to philanthropy, but you couldn't be more wrong with your statement that those people lived in a time of much higher taxation. On the contrary, American government of those times was very, very small, compared to the almost 40% of GDP that it is now.
> think about how Bill Gates hasn't written a line of code in 40 years
> Someone with a higher lifetime contribution to the company can be making less simply because Bill was there first.
Your engineering manager or CTO doesn't write code yet is paid more than you. There's value in directing labor and capital, and putting them together in a prudent way.
If Bill Gates wasn't there to be first, would there be a Microsoft that an employee would be contributing to? Risk and reward go hand in hand, and someone getting paid a handsome salary like clockwork is agreeing to take a small risk for a small slice of the output.
Henry Ford didn't toil away at the assembly line putting cars together; he came up with the whole idea and employed people to execute his vision, without which none of it would have existed to begin with. Seems like implicit to your argument is the idea that the capitalists are neither necessary nor sufficient to these great commercial successes, and it would have spontaneously erupted among the proletariat without them.
> Then you aren't looking hard enough.
OK, let me look harder. It's actually pretty hard, because the US is by most measures one of the richest countries in the world, even for the average person. For median disposable income per person (adjusted for purchasing power), the US tops the list; there is no country where the median person has more money to spend on what they choose to spend it on.
For another measure, look at the GDP (again, PPP) per capita; there are a handful (literally) of countries higher than the US -- Ireland, Luxembourg, Liechtenstein, Singapore, Qatar, Monaco, Macau, UAE, Bermuda, Switzerland, Isle of Man, and Norway. Most of them are some combination of a tiny tax haven or a petro-state, with Ireland, Singapore, and Switzerland being exceptions, all three of which have a lower government expenditure as a fraction of GDP than the US.
Ireland is famous for low corporate taxes; the average worker in Switzerland pays a lower tax rate than the average worker here; and Singapore is basically a tax haven, with no capital gains tax and low top tax rates, and a remarkably efficient government at only 15% of GDP (seriously, this is the best in the developed world).
Where is your evidence that higher taxation and more redistribution would lead to a better outcome for the median person in the US?
My bad, I was under the impression that the corporate tax rate was higher in the 1910s->1920s
> Your engineering manager or CTO doesn't write code yet is paid more than you. There's value in directing labor and capital, and putting them together in a prudent way.
I think the main question is how much of this can be measured and what is it worth? Sure it has value but I personally don't think the value is quantitatively different in a way that justifies the huge pay difference between execs and laborers, nor qualitatively different in a way that makes CEO pay be in ownership. I think that these distinctions are more to enforce a class system. If the idea is that a CEO's performance is tied to share price, therefore they should be rewarded in shares, then why doesn't that logic extend to all workers?
> For another measure, look at the GDP (again, PPP) per capita
GDP per capita doesn't really mean much because of averaging, I will address the median though:
> For median disposable income per person (adjusted for purchasing power), the US tops the list
Here are the numbers I found where US is third:
https://www.oecd-ilibrary.org/sites/45ae3dae-en/index.html?i....
Disposable income is post-tax. I would like to see normalization where we take things like education, healthcare, housing, and childcare costs that are covered by social democracies and add that to their disposable income, or subtract it from ours. We could even factor in household debt. Even better would be to take that normalized score and divide it by working hours. There's also the question of personal freedoms, how much agency does an individual have in their workplace, in the home the own or rent, wrt healthcare, etc. There is more to qol than just having money to spend.
> Most of them are some combination of a tiny tax haven or a petro-state
I think that the US being the world's reserve currency affords us some sort of status akin to being a tax haven or petro state, no?
> Where is your evidence that higher taxation and more redistribution would lead to a better outcome for the median person in the US?
I think this is a bit of a loaded question. I think the median person is decently well-off in the US barring some medical catastrophe. I think the question should be how to improve the social mobility chances for those below the median. I can't be bothered to look them up now but there are plenty of studies where you can see the effects of social spending on the earning power and life outcomes of people. It's a pretty simple idea that if you give poor people access to the same education and networking opportunities as wealthy people, they will perform better. Anecdotally, I find it a lot easier to take risky career moves now that I have a safety net of savings under me than I did when I was making $12/hr.
Lastly I think you only need to look back as far as the 40s-60s under managerial capitalism to see the effects of higher taxation and more investment in productive sectors of the economy plus housing/schooling. I think most people here would agree that our current economy has been propped up by debt and currency manipulation.
> I think the question should be how to improve the social mobility chances for those below the median
but we differ on the "how", as well as having a more (me) or less (you) optimistic view on the current state of things in the country.
Perhaps it's fair to say that you see income and wealth inequality as the proximate cause of what ails us, and an expanded role of government, funded through more progressive/redistributive taxation, as the best way to afford better chances for those most poorly off; whereas I see the worsening of the social fabric seen in the steep rise in single-parent households and increasing permissiveness towards behavior previously deemed sinful (such as drug use) as the proximate cause, and that bigger government will only ultimately hinder the ability of those most poorly off to help themselves.
You may be interested in Thomas Sowell's book, A Conflict of Visions, for a truly elegant analysis of this type of dichotomy.
But I think these empirical studies are a bit silly when they describe what happens in a system that accumulates wealth in the hands of a few. Once you pass a certain critical mass, it becomes very difficult to lose power. But if you are just moving up into a slightly higher tax bracket, it's still easier to revert to the mean. By definition most people will return to the mean.
The issue is what happens when people are in the long tail of ultra-wealth. How does it affect the health of our society?