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Comment by ossobuco | Hacker News Reader

> freed of its shackles and allowed to appreciate again. Some of this would be immediate, as thousands of dollars in taxes shift away from land and back onto labour, enterprise, and commerce

Oh not again with the trickle-down story. It doesn't work, it never worked.

The only way that money trickles is in the pockets of the landowners, from there it will be used to lobby politicians or stored in some fiscal haven.

On the other hand, as long as that money is taxed it can be used by the state for the people. Build infrastructure, improve education, healthcare, etc.

That's how you get money to "trickle down". That is, of course, if the state isn't to o busy making arms manufacturers rich.

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> That's how you get money to "trickle down". That is, of course, if the state isn't to o busy making arms manufacturers rich.

If you won't trust in the state parentally taking from some and giving to others, nor trust in people making transactions between each other on what they find valuable, what do you want? Is there a third option?

I don't see any other option. We should remember that we are the state, in theory. It's the whole point of a state. If that isn't the case anymore, we should fix it.

The main problem is that nowadays states operate on the basis of the same false trickle-down fable.

They don't build stuff, they pay corporations to do it for them and expect that money to somehow flow down to the people. We can clearly see that doesn't happen as inequality keeps growing.

We aren't the state, though. The state is the governing body and its surrounding entities, funded through taxes, that controls the justice system and the military.

I don't think it's a good idea to conflate "the state" and "the country" or "society". The state is the most powerful entity in the country, but it's not the only one.

And I've probably said this elsewhere, but inequality is not important. We keep hearing about it every day, so it sounds important, but it's not. Unless it's being done deliberately to keep people down, e.g. in a feudal or 20th century socialism country, but even then the fundamental problem is authoritarianism, not inequality. Inequality is a symptom, and not always of something bad.

I don't care that Tesla owners in the early 2010s had Roadsters and I didn't. Roadsters paved the way for Model Ss, which paved the way for Model 3s, which - if the Cybertruck hadn't got in the way - paved the way for Model 2s.

I don't care that at some point in history only rich people had (terrible) glasses. Basically everyone (outside of impoverished countries whose government officials absorb the cash from overseas to help) now has access to high quality lenses - far better than those the rich people of the past could access.

Temporary inequality leads to - over time - an uplift of the fundamental things for everyone. That's the only thing that matters - the baseline now vs what it used to be. Not the difference between baseline and the rich. The rich will spend on a thousand trivial things that won't matter, but also on things that will eventually be accessible to everyone.

> We aren't the state

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

That's literally in the constitution and not just that of the USA.

> I don't care that

Rich people do care, they want the best healthcare the world can provide, the best education for their children, and want it now, not in 50 years when the "rising tide lifts all boats". Do you consider yourself inferior to them? Then why wouldn't you care?

> Temporary inequality leads to - over time - an uplift of the fundamental things for everyone

"A rising tide lifts all boats", "Trickle down" these are all aphorisms invented by rich people in order to justify their hoarding while there are people who can't afford a roof over their heads. To keep the outcasts calm, waiting for their turn to enjoy a small fraction of what others enjoy entirely now.

> > "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

> That's literally in the constitution and not just that of the USA.

I don't see how this is relevant to whether the state is synonymous with the population of a country.

> Do you consider yourself inferior to them? Then why wouldn't you care?

I don't consider "inferior" to be "I don't have a Porsche and they do". Or even "I can't force taxpayers to pay for a $10m operation and followup treatment and someone else can afford it out of the value they've created", which I think is what you're thinking I should say.

Is that what you're saying? Happy to discuss, but you seem to be talking in emotive language rather than speaking plainly, and I'm just trying to get at the a plain description of what you mean.

> I don't consider "inferior" to be "I don't have a Porsche and they do".

You keep fixating on luxury cars for some reason, I'm talking about fundamental rights recognized in the universal declaration of human rights. I couldn't care less about owning a Porsche or a Tesla.

I care about the health and education of my family and I don't want to live in a society where people die because of lack of treatments. You say "a $10m operation", I'm sorry to say that shows again you're out of touch. People die every day because they can't afford insulin, which costs about $3 per vial to produce.

> You keep fixating on luxury cars for some reason, I'm talking about fundamental rights recognized in the universal declaration of human rights. I couldn't care less about owning a Porsche or a Tesla.

I'm not fixating - there's no point introducing pop psychology. They're just an easy way to explain a mechanism. I also mentioned hyper-expensive medical treatments, and corrective lenses. If you only saw luxury cars in that list, I don't think you should be diagnosing anyone else with fixation.

> People die every day because they can't afford insulin, which costs about $3 per vial to produce.

This isn't a human rights issue; nor is it a rich people bad issue. It's an economics/corruption/bad regulations issue. People get rich by making something lots of people want for $3 a go. People want to do that.

> It's an economics/corruption/bad regulations issue

And who's going to fix that if not the state?

In a functional democracy, the state is working in the best interest of the people. And your assertion that GP is arguing that the state is "synonymous with the population" is a straw man, as they didn't say that.

Let's look at the phrase "value they've created" that you used. That's a bit of an idealistic way of thinking. After all those with money and power in society have historically used that money and power to get more money and power. Does a king sitting on a throne produce more "value" than the farmers that feed his cities? Does the hedge fund manager choosing stocks to buy and companies to liquidate produce more value than doctors who save people's lives?

> We should remember that we are the state, in theory. It's the whole point of a state. If that isn't the case anymore, we should fix it.

Who is the "we" in this?

Us. It's a figure of speech, no need to take it so literally.

> funded through taxes

Whatever your views, this is simply wrong.

A state that controls its own currency doesn’t need taxes.

They only exist to control inflation. We could achieve the same thing with high interest rate, printing all the money we need and having zero tax on anything.

Taking out loans creates money, including when private banks do it. That’s what national debt does too.

The currency only has value because of taxes.

What do you mean - if US government cuts taxes, value of USD goes down?

Definitely. There would be more dollars in circulation for a start. Ultimately the government is the final "sink" for dollars in the system. That and loan repayments (but unlike taxes, loan repayments could be made in any currency).

This is the first time I've encountered anybody else who has figured this out and says it openly.

For those who wonder how: If it wasn't for taxes being collected in the currency of the government, people and businesses would conduct their affairs in other currencies that do not decrease in value from inflation. That's also the reason why there will never be any simple taxation system, such as land value tax or whatnot. In order to keep everybody using the government currency, the taxes demanded in that currency has to be applied to every and any economic activity imaginable, otherwise people will flock to other currencies after having paid their dues, and the government currency value collapses.

This is also the reason why the public sector workforce is of an enormous size, even in supposedly capitalist countries. Public sector workers cannot choose another currency for their paycheck.

This is the reason why most third world countries cannot create a stable government currency: Their tax collection is not effective or comprehensive enough. Unless all the population is put under government issued money by rigorous taxation, they will choose other currency.

> This is the first time I've encountered anybody else who has figured [taxes keep currency value up] out and says it openly.

Wut? This is one of the basic principles of Modern Monetary Theory, and reams upon reams have been written on it.

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

I'm not saying the same thing as the Wikipedia page. They say that taxes can counter inflation by reducing spending. But this comes from the erroneous belief that inflation is created by spending (or even worse, by labour wages). Inflation is created by an increase in the money supply, which mainly comes from completely different debt than consumer spending.

I'm not saying like them that increased taxes reduce inflation and props up the currency value in this way. The evidence is against this. What I'm saying is that a comprehensive taxation system that gets into every imaginable nook and cranny of economic activity or life in general, is what is required to give the government currency any value at all. Without having complicated taxes on basically everything, the currency would be worthless or worth much less, as we see in the third world. The US of course has the option to bully other countries to use their currency, by military means. But this is not true for the euro or pound, for example.

This is an interesting theory. Basically, as I understand it, you already want to do these things, but since the government can compel you to pay tax on them in its currency, you stick to that currency out of convenience/necessity. If the taxation system is not comprehensive (or you can evade it), you will use the official currency as little as possible, diminishing the amount of useful things transacted in it and thus its value.

Yes! That's exactly how I meant. And it doesn't matter too much if the taxes are high or low, what's important is that they are collected on every activity. I think the prime example is sales taxes in the different states in the US. They are so low (0%-7%) as to be marginal, and collecting them surely costs the consumer economy much more than the gains the state governments have from them.

The rational policy would be to abolish sales taxes and transfer that tax burden by increasing other taxes – but the purpose of the sales tax is primarily to make sure business is always conducted in the government currency, and thereby giving the US Dollar a value. Try to use a foreign currency, bullion, or whatnot to purchase consumer goods in any big box store and you'll be shown the door. The same in most of Europe. Then try to use your foreign dollars or euros to buy consumer goods in the third world, and your money will be more than welcome.

> collecting them surely costs the consumer economy much more than the gains the state governments have from them

Undoubtedly, but why would the tax collection apparatus care about that? They still gain more money than they would if they didn't do it.

They would gain even more by increasing sales tax to 30%, but yet they haven't.

> Inflation is created by an increase in the money supply

This is wrong again, it’s velocity of money, not net supply. Inflation is possible with a fixed supply of money, I.e. gold

If we disagree on this there can be no fruitful exchange.

Equation of exchange is a cornerstone of economics

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

The monetary side is Quantity of Money times Velocity of money. Both affect inflation. It is therefore Possible to have inflation with fixed money supply.

You may argue it is not likely, or it is not relevant, but to argue it is impossible is like arguing about physics but disbelieving in the laws of motion.

I'm a beginner here - how does this make sense? Why would spending money lots affect inflation?

My simple conceptualisation:

If I sell my heap of junk car to my neighbour for $10000 this week, which he buys for sentimental reasons, and he sells it back to me for $10000 next week, for sentimental reasons, and we continue doing this every week, what would drive inflation?

Conversely, if the government doubled the money supply, suddenly people from outside are earning much more money than they used to for the same work, and to them $10000 is worth half what it was, enough to get them to bid $12000 and get the car. They might only do that once, but the price has inflated.

Also why cryptocurrency will never replace fiat currency. Not that it was ever really meant to, but you know.

A cryptocurrency where all the voting nodes are run by the state could fulfill the same objective. The problem is that cryptocurrencies as we know them are based upon a publicly verifiable ledger. Inevitably, the state would want an "off the books" way to move money around, which would lead to a shadow currency, and the resulting disequilibrium would destabilize either the state or the "official" currency.

Public ledger is also a privacy (and potentially fungibility) nightmare.

> If you won't trust in the state parentally taking from some and giving to others

That's not how it works. The state is tasked with keeping the public good - such as basic infrastructure. "Parentally (...) giving to others" imply that the government taxes your money to do welfare only (and you implied it in a derogatory manner for that matter, which shows your inclinations).

Welfare is important, but not the only function of a government.

> nor trust in people making transactions between each other on what they find valuable

Those should absolutely be regulated and taxed. "people making transactions between each other on what they find valuable" are looking only for their private benefit, society be damned.

> imply that the government taxes your money to do welfare only

No - this is in the context of the constrasting "trickle down" theory (also derogatory). I took that to mean that instead of trickling down, we should be taking from people who produce the most value and giving it to others. Not we should replace trickle down theory with infrastructure spending - those are not related.

> "people making transactions between each other on what they find valuable" are looking only for their private benefit, society be damned.

Those people are society. Babysitters earning some pocket money; local tradespeople doing jobs; actual community things like churches and running clubs and schools and game cafes; local produce creators. Stuff to spend on locally. That's what makes up society, and those transactions are how it happens.

Society is not a bureaucrat allocating some funds to spend on a committee to decide how round bananas are allowed to be, or whether all children should learn new math or old math, the teacher's opinion be damned. The state is not society.

> taking from people who produce the most value and giving it to others.

Nice hand-wave. This presumes some people produce most value, and they bear the burden of carrying others (who receive value).

This is all very vague. I disagree with this notion pf how government works until you can be clearer of who you are talking about.

> Those people are society.

So is a drug dealer. Or a con artist. Among many others.

The state exists in part to regulate what is allowed or not.

Babysitters, Local tradespeople, their clients, etc and so forth benefit from it.

> Nice hand-wave. This presumes some people produce most value, and they bear the burden of carrying others (who receive value).

I mean, that's actually how it works, only the people who produce most value are the workers, and the people who receive most of it are the capital owners.

I agree, to an extent.

I seriously doubt that's the dynamic GP was referring to.

>>"people making transactions between each other on what they find valuable" are looking only for their private benefit, society be damned.

We absolutely should not be restricting any mutually voluntary interaction, regardless of the motivations of those party to that interaction.

Note that "mutually voluntary" means no other party having their rights violated by that interaction, which would preclude actions like polluting

> Note that "mutually voluntary" means no other party having their rights violated by that interaction, which would preclude actions like polluting

I don't think this is a rights issue, because it's too difficult to understand. Even simple transactions require contracts, and imagine all the (changing) regulations on what is or isn't deemed acceptable, and how that could be misused. Does noise pollution count? How much CO2 can I breath out before I'm violating your rights? Rights have to be simple; the stuff that will change needs to be laws.

In principle, noise and CO2 emission could be restricted, but of course the justifiability of the specific noise/CO2 emission restriction depends on the details.

In principle, interactions that any reasonable person agrees are mutually voluntary, should absolutely not be restricted. This is a human rights issue.

The devastating COVID lockdowns show what happens when we accept the notion that human rights can be infringed for the "greater good". That justification is what the PRC in China uses for all of its heavy handed intrusions in personal liberties, from limits on free speech to religious and ideological control.

The only morally consistent argument against the authoritarianism, that is more substantive than "what that state does is wrong, because we don't do it", is one based on the principle that mutually voluntary interactions shouldn't be restricted.

It's not about taking versus not taking. The rules of the game that we've put in place favor the haves. The end state of that is a return to fiefs and serfs, if we don't see a revolution first.

We need to create new rules to the game that give the advantage to the small. That lets us keep a "free market" without the homogenization and consolidation. For example, consider progressive taxes based on business size/revenue/etc. If there was a 90% top level corporate tax rate based on company size/revenue, we'd reverse the trend towards mergers and consolidations literally overnight. If most government regulations were relaxed for small businesses (say <= 20 employees) it would provide a massive boost to entrepreneurship. Instead we have rules that favor the big guys.

It would boost entrepreneurship, but would mean any business that requires 1000 people to function at all may never be built. I don't think it's worth only listing the pros of a change.

Can you provide an example of something that couldn't be built by a cooperative formed by a number of smaller companies, each trying to solve a part of the problem in an economically viable way?

I don't think there is anything that can't be built. It's me a matter of the increased expense and inefficiency making things too expensive to be practical.

Lots of products society would benefit from are cut already with the current status quo as they wouldn't bring enough profits or VC style growth.

- Products that significantly benefit from vertical integration like Tesla and iPhone

- Apple throwing around their 800lb gorilla weight to have better user privacy and bankroll TSMC’s latest process node

- Apple being able to afford gigantic SoC dies in iPhone, compared to android where manufacturers nickel and dime on the SoC and users get flaming pieces of shit clocked to high heaven

All those things could be accomplished by a group of businesses entering collective purchasing agreements, without giving one company the power to punish governments.

i like that apple has the power to punish the EU over chat control, for example

Especially since there is no new value generated that could trickle down. Such "rent seeking" is only redistribution towards lend owners.

The end state for trickle down economics is serfs and fiefdoms. We're seeing it now.

I think you must have misread the comment. The comment is very clearly anti-landowner and saying if an LVT were repealed, labour and enterprise would be taxed instead, which is bad.

Nothing to do with trickle down.

Indeed, tax is the single most effective measure so far we've found to trickle money out of the rich, and sometimes to the benefit of the poor.

I read that part not as "trickle-down", but as "the tax would have to be collected from other sources".

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