Just Be Rich (2021)
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On one side, it is effectively the only real tax a many in the "ownership class" are paying - relative to their wealth.
On the other side, it is a really problematic tax for entrepreneurs. It is downright horrible for startups and scaleups - critical funds that should be used to grow your company, has to be given out in dividends to founders, so that they can afford to pay the wealth tax.
And it is unfair - as it is a tax that foreign owners don't have to pay, but domestic owners have to pay. One natural consequence of this has been that the wealthy people are simply...leaving the country. (our total / combined max wealth tax is 1.1%)
For someone that actually did something to create a company (replace Elon w/ Bezos, Branson, Jobs, etc), would we be better off with them running the company or a few additional 100s of millions in the coffers of a government that spends $5 trillion a year (less than one hundredths of 1 percent)?
The question in any economy is what balance between private and public is best at allocating capital.
With high taxes, the govt is trusted with allocating capital. With low taxes, corporations are trusted with allocating capital.
What usually happens is that Govt is a natural monopoly so they end up being ineffective at allocating capital to drive higher efficiencies. And if corporations have a mono/duo poly hold on market, they end up being effective.
The best $ spent by govt is:
- building common infrastructure to make goods and services move around faster, cheaper and safer. Then let corporations compete on what goods and services to move around based on demand and supply.
- enforce transparent pricing and certain safety bars are enforced.
- enforce competition in market with anti-trust.
- Create new players by injecting investment in new industries. China is really good at creating new industries (Solar, steel, infrastructure, cars, electronics)
Essentially govt collects tax to build a safe efficient competitive market. Ensure Corporations compete in that market.
I wouldn't confine wealth to just the billionaire class; I'd say wealth is anyone with 5 million+ USD in liquid assets (specifically, that sum of money in stocks, bonds and cash).
The poorest of the poor in the United States (that have to pay tax), make around $12K per year, and pay more in tax, percentage-wise, for their work than an individual doing absolutely nothing but passively investing in the market does (10% long-term capital gains).
There's zero political will to change this because, surprise, every senator, and most members of congress, would be shooting themselves in the foot if legislation to increase captial gains tax were passed.
There's too much focus on billionaries -- the United States population as a whole consists of many, many individuals with absurd amounts of wealth that pay next to nothing for doing nothing.
At any rate, it is what it is, the American corporate wealth machine benefits, largely, the already wealthy.
Then you would in effect discourage investing. Investing, which creates jobs and promotes innovation. Is as simple as that.
If your only contribution to a company is that you've funded it, I really don't think you should enjoy the same tax benefits as an entrepreneur who put their blood and sweat into it.
Let's define it like this - if working for a company is your primary occupation, you can enjoy the lower capital gains tax from its success. This includes founders and employees with equity. For everyone else it's income tax, because they've done little else than speculate, and, well, gambling wins count as personal income.
Consider the opposite extreme, where the government subsidizes investments to 100x what they are actually worth. Would this create more jobs and innovation, or merely "bullshit investments"?
If a subsidy wouldn't create jobs and innovation, a tax wouldn't take them away.
There is also the likely possibility that the same investments would be made, but valued lower.
Any economics text book.
If I buy shares of, say, APPL today, Apple Inc. doesn't actually get that money. The person who owned those shares before does. Even if I bought up $2B worth of shares, Apple would see none of that money. It is not actually invested in the company in any way.
If you want to encourage investing, then you need to find a way to advantage shares being sold directly by the company. (And, frankly, strongly discourage stock buybacks, because that's literally the opposite of investing, and generally only benefits the wealthiest shareholders.)
It's crazy that if I have a $5k loss in year one, I can't completely offset it in year 2 if I have a 5k gain. Now I can only use 3k going forward forever.
Wait did they change the carry forward rules?
At least the way it used to work was:
* Year 1 - 50k loss, 3k offset of ordinary income 47k carry forward
* Year 2 - 60k gain, 47k zeroed out from last year's carry forward, 13k is taxed
Is that not still the case?
That is not the long-term capital gains rate in the US.
That flat tax rate certainly scales nicely the wealthier you happen to be, paying a max of 20% if you hold for more than a year and decide to cash in on this now several year massive run up in the markets.
If I invest my paycheck in the market, that money was already taxed at 30-40%. Now I make a dollar in the stock market , and it's taxed again at 20%.
This get ridiculous fast.
Progressive income taxes and wealth taxes seem to me like great mechanisms to build a middle class and to increase social stability. I.e. stabilize the wealth and income distributions (in the statistical sense) so that they do not become bimodal.
The tax experiment I'd like to see is a very progressive sales/VAT tax that exempts certain used goods, essentials (groceries, etc) and hits luxuries, sin tax (that burden public healthcare) hard. Augmented with certain tariffs, natural resources, etc. This gives people the opportunity to "choose" their own tax rate.
for the unfamiliar, the gist is taxing the value of the land, not the improvements on it. the idea being to reduce the amount of land speculation, expands the number of homes built, and lower the cost of doing business by incentivizing land owners to use the land to its fullest productive potential. eg: replacing a single-family homes with multi-family homes, surface parking for multi-level garages, or empty lots for literally anything.
add to that tax advantages for things like rewilding, below-market rentals, or other public-good use cases, and anti-nimby reforms and it could make a number of separate government programs easier to implement, if not redundant.
I'd like to see this, too, but all you'd get is companies constantly bellyaching about why is my essential product considered a luxury?? And lobbying to get them on the low tax list rather than the high tax list. Every company is going to have their little excuse about why their product isn't really a luxury.
The universal tax would be at a relatively low rate, because it would apply to all transactions. And the UBI compensates everyone for the tax on essentials.
And when they leave, they take their spend/invest/hire money with them.
I know other people with 8 figure fortunes who left, too.
I didn't know it was controversial that spending a lot of money in a local economy makes it more prosperous, and when a big spender leaves, the local economy goes down.
The Rust Belt is an example of the latter.
Do these people really spend a lot of money in the local economy? Realistically, even assuming they pay a couple dozen people $100k/year for service and indulge daily in 3 $500 meals, what will be the actual influence on the local economy?
> The Rust Belt is an example of the latter.
The Rust Belt is an example of what happens when the state allows companies to leave, build their gadgets for a tenth of the price across the Pacific, then sell them back home without serious tariffs; not an example of what happens when Mr. Studebaker or Mrs. Bethlehem Steel leave for Florida.
> the state allows companies to leave
If you have to build a wall around your state to keep people from fleeing, you have failed.
It's not really about building a wall around your country to keep people from fleeing, but to prevent gadgets sold by people leveraging arbitrage in an unfair way to get in – or, as we call them for now millenia, tariffs.
For example, consider Bob and Fred. Bob is good at hunting, but stinks at growing blueberries. Fred grows luscious blueberries, but he's likely to blow his own foot off when hunting.
Bob brings home twice the meat he needs, and Fred grows twice the blueberries he needs, and they trade.
They are both better off than if Bob and Fred each only fended for themselves.
BTW, back in the 80s, my (British) partner at Zortech noticed that boxed software in Britain sold for twice as much as the same box in the US. So he would order large quantities of boxes from the US, mark them up, and sell them locally at a nice profit.
Eventually, other businessmen caught on and this no longer worked.
That's arbitrage in action. It benefits consumers.
On the short term and reasonable spatial scale; sure. What's currently happening in the West is that common people are discovering that on the long term and at world scale, it does not really benefits them for a myriad of reasons, among which unevenly applied norms, difference in regimes, different social models, etc.
How is Bezos extracting money from the middle class?
It's called the "Rust Belt" because it's where we had booming local manufacturing (the iron) in the postwar years that gradually declined over the course of the Cold War (turning to rust).
Hell, by 1995, some parts of the Rust Belt were already starting to recover, though others remain hollowed out to this day.
I see people moving to other states as a form of load balancing.
The taxes they pay into the local economy have produced obvious civic booms in places like Redmond and Bellevue.
BTW, the Ferrari dealer moved to be close by the Microsoft campus.
Didn't work out too well for the commoners.
Unfortunately Macron got rid of it a few years ago and replaced it with something that only applies to real estate.
If it were EU wide it might work somehow but with so many ultra rich high in politics there is no way this could happen. There is always going to be tax haven countries taking advantage of this situations.
New French gov will want to reintroduce these taxes but i think they have to find different ways.
We also don’t tax rich people more in relative terms, it’s just that it creates a threshold level of wealth where you can choose to move.
Source? I hate paying taxes.
So no, it's not just US Republicans, please stop.
Rich people here pay a flat 30% tax on capital gains so they usually pay less taxes relative to their income than a salaried person earning >45-50k SEK.
There's no wealth tax in Sweden.
I don't think you know much about Sweden's tax system (or even in general) given this comment.
[0] https://en.wikipedia.org/wiki/List_of_countries_by_number_of...
And same goes internationally, if all countries would enact laws against money laundering, or at least enforce it, then the rich wouldn't so easily move their money around.
Just because they can avoid taxes doesn't mean it is the governments fault for having taxes.
If California taxes people and businesses at insane levels, maybe we shouldn't replicate insane level of taxation everywhere else in U.S., on the off chance that it is not, in fact, an optimal level for generating wealth for the people.
Maybe Texas and Florida should be allowed to enact competing taxation schemes so that we can see which one is better.
And maybe Americans should have a freedom of movement within U.S. without having their private property confiscated by the state when they try to leave.
The justification for taxation based on residency is that you use commons like roads and school and police that the government funds so you need to contribute to funding those things.
What exactly is justifications for hitting people with more taxes when they try to leave the state?
To your argument. I guess it depends on 'fairness'. Sure, the deep south can 'Choose' to lower taxes and have really bad schools so that their un-educated population will be unaware, and un-questioning, of any risks when they to go work for the local chemical company or paper mill. This is a valid choice, lets make our people cannon fodder to lure large chemical companies to our state, (and bonus get some kick backs). But, the kids didn't choose this, they were born into it. (which maybe is why they are also anti-abortion, we can't loose our workforce).
There should be some national standards to keep some states from a race to the bottom.
I should be able to give up citizenship or move to another country and pay a cent to the US government.
It's a choice being made to limit someone else's access to resources and information, after all, including the kind of information that would give them the tools they need to understand how much you're screwing them over.
This is nonsense. California is the strongest state in the union economically, with one of the highest quality of life and income per capita. We have an affordability crisis that is related to the topic at hand - billionaires hoarding wealth and driving up the cost of living - but that's a national problem that California can't solve on it's own. Our taxes pay for the things that enable our success - roads, power, dams, parks, libraries, and all that other good stuff.
Meanwhile Floridians can't use their beaches due to red tide and dumping tires in the water. The people of Houston JUST got their power back yesterday a week after a mere Category 1 hurricane. Maybe they should raise some taxes and do something about that so their cities stop losing economic productivity multiple times a year...
1) California is so popular because it has beautiful weather and natural resources. A group of monkeys could govern the state into prosperity.
2) California has also had the highest number of power outages amongst all states.
Reagan, as part of the deal to lower the top rates, traded away those tax shelters.
The thing about tax shelter investing, however, is they only make sense as a tax shelter. They are poorly performing investments otherwise. A tax policy that encourages poor investments is not a good policy.
Keep in mind that the government in the 50s was far, far smaller than it is today. Funding the vast growth in government is inevitably going to get sucked out of the middle class.
And where US gov grew? Army. Where that money goes? To few weapon contractors = to ultra rich. Its not like US put those investments in some other pocket than top 10%
The only thing that matters is what the effective rate was. They could create a 100% tax bracket but if nobody paid it, it's just words in a book.
Musk famously decamped from California to Texas. Bezos from Washington to Florida.
These kinds of objections always come up. "But, rich people are oh so clever, and they will exploit loopholes in any law that gets written!" Well, write stronger laws. Don't include exceptions. Lawmakers need to think more than 5 minutes about what kinds of options/resources are available to people, and how those people might game their way into getting around the spirit of the law.
Ex post facto laws are illegal.
Even so, you might get the taxes once, before they leave. That's not a plan for a future.
And, It's not like they're all going to leave. Sure, a few grumpy ideologues like Musk will Go Galt and move away, but it's not like everyone subject to the tax is going to suddenly leave. People have been predicting the demise of California, New York, and so on forever, yet somehow, they have not all moved to Texas yet, and we still have plenty of high-earning taxpayers here. Maybe they like clean air and a functioning power grid, I don't know.
Math or it didn't happen!
I say that because I've seen this kind of claim many times, and usually either (A) the Federal Estate Tax has no real affect on what happens or (B) their definition of "family farm" is wildly grandiose.
https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa...
The land is worth way more than the income from farming it.
Except that "issue" is not real. It's just a story like the issue of Scrooge McDuck's unsafe coin pool.
When it comes to family farms getting inherited, 99.984% of them will not owe anything at all in Federal Estate Tax [0].
[0] https://www.ers.usda.gov/amber-waves/2021/april/less-than-1-...
I come from a family of farmers. The land is worth a lot but also has large notes on them. If you see the way these farmers live, NOBODY would call them rich. They never sell and the land gets passed from generation to generation.
All the income from farming goes back into the farm (notes, taxes, supplies, maintenance).
Using my example, how is the business worth $14M if it's not making, say, $1M a year? If it's not making any money, wouldn't the value be much less? Maybe the current business value is very low, but the land is worth $14M because someone else could make more money with it. In that case, the wisest decision would be to sell it, use the proceeds to pay off the taxes and whatever liens are hanging around, and then invest the balance more productively. Say you have $10M left over after settling taxes and debts. That's still a huge windfall, and anyone living on that farm would never be poor again. Invested wisely, and that family never works a day in their life again. Hell, a risk-free 30 year US Treasury bond is paying in the neighborhood of 4.5% now. That windfall could be turned into a risk-free salary of $450,000/yr, with zero investing skills.
I think the issue is that in the 70's the cut off was lower, below 13M. And stocks/bonds were also not doing as well so the concept of selling and investing and living off that wasn't possible. And possibly a lot of farmers had loans, large debt.
I'd need to find all the pre-inflation 70's examples. I just remember at the time the farmers were kind of stuck in a catch-22. Probably does not apply to todays farmers.
But you are correct, with your numbers. If the land really is worth that much, they could sell and re-invest.
Assuming you mean debts/mortgages, those already get subtracted from the valuation of the estate [0] which means the farmers you're worried about are even further away from having to worry about the Estate Tax.
> NOBODY would call them rich.
Again, I think that get some clear estimates and go through the math, you'll see that "think of the poor farmers" is a myth promoted by certain non-farmers, where both of us would call them rich.
[0] https://www.investopedia.com/terms/a/adjusted-gross-estate.a...
If not, these farms would be wiped out and very large corporations would own them all.
Now the East and West coast voters see no value in these farms so want the government to tax them away. They also naively think that the local farmers market can supply the country's food supply.
Guess, to your point. If a family owns a dry cleaner, similar situation.
I assume that was to be expected. The more interesting question would be: Is this a net gain for Norwegians?
https://www.wsj.com/articles/france-elections-wealth-tax-new...
We can have a debate which country is more prosperous between the US and the entire EU.
However... richer != better. In a similar way that a billionaire is certainly richer than half the country, but that doesn't mean its the direction we _want_.
This one really threw me for a loop. Do startup founders making or seeking a big exit really think of themselves as "labor"?
What would it even mean for labor to “win,” if not by controlling some capital of their own? Could a union win without a pension plan?
Capital in the sense being discussed (which derives from the same critique of capitalism in which "capitalism" was coined) refers to the non-financial, non-land means of production; one's life savings are not capital, though they may (or may not) be used to acquire capital.
> It’s common to have a goal of retiring someday, and having capital is how you retire.
Having private ownership of capital is important to being able to retire within capitalism. That's a feature of capitalism, not an inherent feature of retirement.
> What would it even mean for labor to “win,” if not by controlling some capital of their own?
It expressly involves control of capital by labor collectively, which is not the same as private ownership of capital.
> Could a union win without a pension plan?
A pension plan is not capital. In a system in which private ownership of capital is a thing, and in which capital ownership is systematically favored throughout society, it will be normal for a pension fund to own capital, but the existence of such a system means that labor has not won.
Also, pension plans aren't essential to unions, they are something unions often provide because providing for retirement is a gap in the system in which they exist that they elect to plug collectively. If labor actually won, that gap would not exist.
So okay, for capital, substitute “ownership of a claim to the profits from capital.”
I think it might be fun to imagine an economic system very different than ours, but I suspect it’s going to need cultural institutions that fulfill similar roles, because they serve human needs and those needs aren’t going away.
For example, suppose that in the system you’re imagining, a retired worker goes to the store to get something to eat. Presumably, the collective has a worker making sure that nobody takes more than their fair share, or otherwise it’s all going to disappear. So the retiree has present some kind of abstract claim showing what they’re entitled to.
It’s going to serve a similar role to retirement savings. How does it work? When you retire, how secure is your claim? How much can you get, and what happens when political institutions change?
I think it’s easier to talk about such things in terms of familiar institutions that we understand well, but with the understanding that there could be different approaches, in theory.
No one is against farms and factories. Some people are against ownership of farms and factories by private parties separate from working in them.
> For example, suppose that in the system you’re imagining, a retired worker goes to the store to get something to eat.
Then they pay money for it. Which likely comes out of a retirement pension.
> So the retiree has present some kind of abstract claim showing what they’re entitled to.
That "abstract claim" is called "money", and exists separate from (and predates) capitalist property structures, and does not rely on private ownership of the means of production.
> It’s going to serve a similar role to retirement savings. How does it work? When you retire, how secure is your claim? How much can you get, and what happens when political institutions change?
No claim is resilient to change of political institutions; systems of property rights are themselves political institutions.
> I think it’s easier to talk about such things in terms of familiar institutions that we understand well
Yes, but the problem is that you are confusing entirely different institutions that do not rely on each other, simply because they happen to coexist in the system you are most familiar with (though that is not universally historically the case.)
"Capital", "money", and "some form of provision for retirement" are not the same thing.
I’m still pretty unclear on how it works, though. Who makes decisions about factories and farms and how do they get funding? What are the sources and sinks for money in this system?
(For example, one simple model has money being created via government spending and drained via taxes. The taxes create the demand for money.)
The least dissimilar version to the modern mixed economies that dominate the West currently would be a system in which the firms employing workers were (in the ideal state; real systems -- even "capitalist" ones -- are rarely platonic ideals of the underlying concept, and so in practice exceptions, e.g., for sole proprietorships of certain scale and with defined worker rights, are possible as a matter of convenience rather than right) universally labor coops; "financial capital", which is not capital in the sense being discussed, would still exist, but labor would rent financial capital rather than capital renting labor; money would be essentially unchanged from how it works in the modern West.
>> You would think, after having been on the side of labor in its fight with capital for almost two centuries, that the far left would be happy that labor has finally prevailed. But none of them seem to be. You can almost hear them saying "No, no, not that way."
> And there we have it. The slight injection of PG's true ideology relegated to the notes section and vague enough that some might ignore. But keep in mind this is the same guy who argued against a wealth tax. His seemingly impartial and logical writing attempts to hide his true intentions.
I thought Hackers and Painters was decent and even in those essays Paul couldn’t help him self
The difference between a lot of hackers now and PG isnt talent, it is that someone was making a good website when the internet pretty much was empty lol. Google was still a baby compared to yahoo.
edit: since i was pretty negative here, i will sing some praise.
Graham is incredibly technologically capable, knows what problems are worth investing in, and is great at leading people. Those qualities are great, and he is a world star at it.
Today you can buy a computer for $300 from the pawn shop.
You also have access to worldwide markets with the internet and fulfilled by Amazon.
It's never been easier to create a startup.
* Worldwide, wealth gaps are closing.
* Within most countries, wealth gaps are widening.
Here's how globalization works:
1. As capital, I target 8 billion instead of 350 million. That's more wealth per invention.
2. As US labor, I compete with Indian labor. Income goes down.
3. As high-end developing-world labor, I can compete with Americans for jobs. Income goes up.
4. As low-end developing-world labor, I have some trickle-down benefits, but gap to high-end labor increases.
Footnote: It also makes a lot of sense, looking globally, to look at log(wealth). See:
https://www.gapminder.org/fw/income-levels/
There has been a huge move from Category 1 (horrible life) to 2 (manageable life). That's huge. However, income going up 4x is not very visible on many figures when that income goes from $2/day to $8/day, and is being compared to someone with $100B.
https://www.noahpinion.blog/p/theres-not-that-much-wealth-in...
not only is private wealth improving, wealth that is exchangeable for other things is improving as well.
its fine for other people to work on improving its distribution while keeping a finite set of resources affordable, because I dont have the solution to that and taking other people’s private liquid or illiquid wealth doesn’t solve that either
but its very interesting to me to see how abysmal liquidity is in every market outside of some US markets, and how we got here, and how many more things can become liquid wealth. It makes me not be able to take simpler proposals of solving out of control public spending very seriously.
Would you want someone who won a lottery ticket to have power over your life at scale? Because that’s what excess wealth is, a power dynamic powered by a suboptimal system masquerading as shades of a meritocracy that does not exist.
Many of the duplexes in town were built by small builders who passed them on to family.
Now they are treated like rich landowners but in reality grandpa built the wealth.
Luck in exactly what sense ?
Yes, they did not die of dysentery on the trail, so evidently some luck was involved, but the wealth building seems very intentional and causal.
Your grandfather chose your grandmother and so too did your parents.
Your parents deciding to do something is not luck either.
I want my children to have an inheritance, the actions I take to ensure that are ongoing deliberate choices to build wealth over having fun.
You posted this comment 7 hours ago. Current you has zero impact on whether you posted it.
Time flows forwards, not backwards.
Even investing in broad equity index funds is luck (sequence risk).
https://news.ycombinator.com/item?id=40378138
https://archive.nytimes.com/www.nytimes.com/interactive/2011...
Success in life will always be a combination of luck, and hard work to set yourself up to take advantage of the luck when it arrives.
For some, the luck will never arrive. And for many, the luck will arrive, but they won't be ready for it. The only practical advice to give people is to prepare the best they can for when and if it does.
Did commercial real estate know WFH post Covid was going to obliterate CRE values? Again, bad luck.
But the housing could have just housed the family members if times were tight. For at least the first generation, it did. That's intrinsic value, not valuation according to a market.
Punishing people for not having something bad derail their business is tall poppy syndrome.
Luck is a part of why everyone continues breathing everyday rather than having sudden heart failure. We don’t need to constantly diminish people for living because they were lucky enough to not have a fatal condition.
We should be encouraging the people who were successful, even if part of it may have been luck. Any other approach punishes people doing the rest of the work that isn’t luck.
As for your question lottery winner having the power proportional to his money, is much better than bureaucrats having power to take anyone's money.
Spoiler Alert: they spend it like it was water, and when their short career is over, they have nothing.
Edit: Q: If you downvote this comment, do you believe someone like Zuckerberg was predestined to be a billionaire?
Yeah, I'd be OK with that. It's not like it would actually affect my life in any way whatsoever. We're not talking about the government taking the food out of anyone's mouth.
It's not actually a benefit to the world that we have individuals walking around with enough wealth to purchase, say, one of the major companies that acts as a backbone for communication and information-spreading worldwide. (Of course, it's also somewhat troubling that a single for-profit company can be such a backbone, but that's a separate conversation.) In fact, there's some pretty solid research indicating that it's destabilizing for entire societies to have that level of inequality.
I am in favor of progressively increasing tax brackets that eventually get up to near 100$. Spend it or lose it. And if you lose it, it goes in to the very bottom income bracket where it will be used imediately. Trick up economics if you will.
> there needs to be some additional limits on it.
Then we don't get SpaceX or Tesla.
You paid $zero for SpaceX.
What does that mean? It's millenial Marxism unmoored from any specificity or facts.
Are the wealthy lucky? Yes. Do they use their wealth to shape the world as they see fit? Yes. Is the narrative that anyone can be wealthy if they work very hard and are exceptional despite the math showing this is not true? Yes.
Many of us have been successful from nothing and know friends who have been more so. There is usually a luck element in the size of that success but it is blindingly obvious to someone who was in the crab bucket to see that actions work.
It sounds as if you have an emotional issue with the idea that people can change their own situation. I literally have a choice tomorrow whether I paint my wall, study, fix up the leak in my loft, etc, or just sit and play my Switch. People who do too much of the latter do not succeed.
And no, parents or grandparents or country or genetics or whatever are not luck either. Choosing a suitable mate is about as close to the meaning of life as we have.
On the contrary, I am simply data informed. It sounds like you're operating from a mental model that overweighs ability in outcomes. I have provided links below to help you improve and evolve this model.
https://www.scientificamerican.com/blog/beautiful-minds/the-... ("The Role of Luck in Life Success Is Far Greater Than We Realized")
https://www.technologyreview.com/2018/03/01/144958/if-youre-... | http://arxiv.org/abs/1802.07068 ("Talent vs. Luck: The Role of Randomness in Success and Failure")
https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/20... (2022 Bank of America Private Bank Study of Wealthy Americans: The impact of shifting generational attitudes amid an historic wealth transfer) [Only 27% of the ultra wealthy are self made; 70% of Americans who hold more than $3 million are over 56 years old.]
https://www.financialsamurai.com/your-wealth-is-mostly-due-t... ("Your Outsized Wealth Is Mostly Due To Luck: Be Thankful!")
> And no, parents or grandparents or country or genetics or whatever are not luck either.
https://www.pewtrusts.org/en/about/news-room/press-releases-... ("Parental Income Has Outsized Influence on Children’s Economic Future")
https://documents1.worldbank.org/curated/en/7122514681658661... ("Global inequality of opportunity: How much of our income is determined by where we live?")
https://www.psychologytoday.com/us/blog/the-origins-of-menta... | https://www.sciencedirect.com/science/article/pii/S000292972... ("Genes Influence Children’s Success, Directly and Indirectly")
> Choosing a suitable mate is about as close to the meaning of life as we have.
~43% of first marriages fail, ~60% of second marriages, ~73% third marriages.
https://www.forbes.com/advisor/legal/divorce/divorce-statist...
Good luck.
I'm confused because to me, everything you have posted backs up the idea that these things are in fact actions and not luck based.
Country of residence is not luck based, it's either pre-determined or chosen by parents.
27% self made is huge, I would have expected it to be lower.
Parental income having an effect on children's is also not an example of luck. If I work hard so that my children do well, that is not luck based.
Genes influence success, so choose good genes.
43% of marriages failing simply shows that many people don't take it as seriously as they used to due to things like no fault divorce. So choose well. Your partner, at least the type of person they are, should not be luck based. Your marriage definitely should not feel like a 4 in 10 dice roll, if it does you have really messed up.
I think you and I (really, me and most left wing media) have a different definition of luck. Luck is rolling a die and getting a number, these things are more like causative factors.
But still, there exist plenty of people who have been born into adversity and study and work hard, network and press the right buttons. That isn't luck, a lottery win is luck.
I dunno. It all just feels like a way to absolve one's self from responsibility to me. I did the washing up yesterday, so today I don't have to do it. Is today me lucky that yesterday me did it? Only in the colloquial sense.
> Country of residence is not luck based, it's either pre-determined or chosen by parents.
So you have very little to do with it; you can probably choose this after you finish school, but this is dependent on the place you would like to emigrate to letting you in, thus it's mostly not up to you.
> Parental income having an effect on children's is also not an example of luck. If I work hard so that my children do well, that is not luck based.
If I get the resources to do well because my parents worked hard, that is really not something I choose, so it's "luck".
> Genes influence success, so choose good genes.
One can hardly choose their own genes, can they?
> But still, there exist plenty of people who have been born into adversity and study and work hard, network and press the right buttons.
This is true. They would have had an easier time and achieved more if they did not have to dig out of the basement first before building up.
Nobody is saying that you cannot be smart and diligent enough to change your lot in life, we are just saying it is hard, getting harder every day, and it should not be.
> The wealth of America’s billionaires was estimated at around $5.2 trillion in 2023, while federal government spending was about $6.4 trillion. Confiscating every last penny from Jeff Bezos, Elon Musk, and all the other billionaires wouldn’t fund the U.S. government for one year. And of course you could only do it once.
Ok so just 750 persons can replace all form of taxation in the USA that's incredible. It's not like just replacing taxes from all 330m persons but all the companies too ...
And the USA budget is not the most efficient per capita (something around 20k ?), if you do the same for France you are closer to 6k.
"I think income is a lot more important than wealth."
If you keep receiving all the income you want and I'll get exclusive rights to all of your wealth, surely you got the better side of this deal then? Or is there more nuance at play and blankets statements about the relative importance of income and wealth are simply pointless.
"if you have a house, no one owes you that house"?
In this case of property ownership, your rights granted to you by society is the result of an agreement by the society you're a part of not to use the resource that you've been granted exclusive rights to. The allocation of control over resources is the essence of economics. It's the whole point of the field of study. I cannot believe he's setting up an argument about how that doesn't really matter because there isn't a lot of resource control without legally associated debts.
I think so, because you can use the income on consumables. Like say you got a no-limit credit card. You go on exotic vacations at tropical resorts. All you have are some (economically worthless) photos of yourself having a great time. When the credit card company comes calling, you turn out your pockets and say "sorry, I'm broke", and walk away to your next plane flight. Definitely seems like a good deal to me, not so much for the credit card company.
The simple fact is that most people are wealth-neutral or even wealth-destroying in that e.g. they wreck their car and just buy another.
As this article explains: the US could confiscate all US billionaires' wealth and that would only pay for one year of public US spendings. Not to mention that confiscating that much wealth would crash the very value of that wealth, so they'd get less than that.
That's what I meant in my comment when I wrote that we know how it's going to end up: they won't stop at confiscating the billionaires' wealth. The state shall immediately run out of that. They'll then come after the middle class' savings (which the EU is preparing at the moment, should be coming out in a few months).
I like to talk about incentives. We have a massive under supply of housing across the developed world, in part because so much labor is training for desk jobs rather than construction jobs.
If you want to solve the housing problem, you need to change the incentives for young people to shun construction jobs. That means more money and eventually status for manual laborers and less money and eventually status for desk jockeys.
That's just one example.
Simply paying people more (and just fyi, we already do this. Get a quote for a kitchen remodel in any major metro and you'll realize real quick that there's carpenters making more than mid level SWEs) isn't going to motivate young people to break their bodies, work all day in the sun and shorten the length of their careers by 10-15 years compared to a desk job. There's a ton of reasons why young people don't want to dedicate their life to manual labor (and for good reason), neither money or nor status are the sole drivers here. Its simply not a great existence and is less rewarding all around, no matter how much you make. This is sort of why I don't see the argument against looser immigration policies, as the incentives you're mentioning actually exist in those communities, but that is a whole other can of worms I'm not going to get into.
The free market is the solution here, what's holding it back is zoning.
The construction jobs even if in demand, usually can be filled with ppl from poorer countries, so it's not such a big problem
Consider an environment where a million engineers are all working on their own startups. 99% of them fail and reward the work put into them with nothing. Some subset of the remainder makes barely enough to survive; a smaller subset makes enough to have a successful business; a smaller subset makes millions, and a smaller subset makes the vast majority of the money available. If the effort put into the thing follows a mostly linear line, but the reward is exponential, is this really a good system? Do the people at the top of this structure deserve the wealth they gain, even if they genuinely the best at what they do?
More and more systems today are winner-take-all. Entertainment is notorious for a tiny number of multi-millionaire artists/actors/comedians/etc., while the vast majority of people that try to make it end up with a succession of part-time jobs that never ends. Even if there's no nepotism or corruption, is a system where the people at the top get everything and the bottom gets nothing a good one?
There's something disturbing about PG's take to me - as if only the most successful are deserving, or worthy - that this warped reward structure isn't inherently unjust. It feels like the kind of justifications nobility and royalty relied on, but for modern times - "I worked hard, I found the market, I did everything right, so naturally I deserve more wealth than a human can use in a thousand lifetimes."
So to be honest, I find almost every single one of PG's points worthless. I don't care how easy it is to start a startup if the chance of real money from it is one in a million. I don't care about how much faster growth is when its billions of dollars for a few dozen people. I don't care if the new wealth is genuinely new instead of inherited, if all we get from it is yet another tiny group of obscenely wealthy people - meet the new boss, same as the old boss. And I especially dislike the idea that the "far left" should be happy that "labor has won". Having a system that picks a few hundred of the "most worthy" each year and adds them to the capital class is by no means what I could consider labor winning.
so this sort of messaging reminds me of the cutthroat competitiveness that folks from working-class backgrounds, especially in developing countries, get drilled down on from a young age.
too bad it is not something everyone can achieve at the same time.
Doesn't look like it: median income in 2019 was $44K, in 2001 it was $31K. That's adjusted for inflation. Source: https://en.wikipedia.org/wiki/Income_in_the_United_States
I don't like it when the facts look wrong after two minutes' googling.
> While wages for women have increased greatly, median earnings of male wage earners have remained stagnant since the late 1970s. Household income, however, has risen due to the increasing number of households with more than one income earner and women's increased presence in the labor force.
Not speculating on what those stats are, and I'm sure they're out there somewhere, but certainly less available or SEO'd.
For example looking at the number of median salaries required to buy a house tells a different story.
> But middle-class incomes have not grown at the rate of upper-tier incomes. From 1970 to 2018, the median middle-class income increased from $58,100 to $86,600, a gain of 49%.10 This was considerably less than the 64% increase for upper-income households, whose median income increased from $126,100 in 1970 to $207,400 in 2018. Households in the lower-income tier experienced a gain of 43%, from $20,000 in 1970 to $28,700 in 2018. (Incomes are expressed in 2018 dollars.)
https://www.pewresearch.org/social-trends/2020/01/09/trends-...
The graphs in the blog posted are from this pew article.
Okay, though, let's just look at the chart you link. Let's assume that "inflation adjusted dollars" tracks purchasing power parity perfectly over that period and look at these numbers in relative terms, because that's what actually matters for stuff like "Who is competing to buy the limited housing stock available" or other things that actually matter to people and aren't just numerical games
31k to 44k? Cool. Seems like a lot. That's a 33% increase in the median income over that period! Over the same period, the top 20% bucket on the same chart grew from about 67k to about 103k, or by about 50%. The .0001% income bucket grew from 30m to about 60m, or about 100%. Keep in mind that the marginal value of extra dollars is considerably higher the fewer dollars you're making. So over this period of time, the Gini Coefficient, which measures inequality, has drastically increased, which is what you'd expect given the argument the article is making
Now, maybe your point is that the one number, the median income, that you're talking about has gone, I dunno, vaguely up in some period of time. It seems like this misses the point of the article in favor of nitpicking about a minor factual error. "Look!", you might say, "they said median income went down when really it went up!" That seems to be your entire argument here, and it's fucking stupid, because if you're going to fixate on a minor factual nitpick, at least get your facts right. 2001 is generously a whole decade and some change out from the 80s
Here's median income going back to 1975 which shows an even larger increase: https://fred.stlouisfed.org/series/MEPAINUSA672N
to me, you are doing the nitpicking. picking 2001 was generous, the growth is far greater if you look back to the 80s.
If we're just going by vibes, the overwhelming vibe (which is also supported by the numbers) is that income inequality is increasing and that this is a huge problem, and it seems like most of the people who don't feel this way are pretty decidedly in the small portion of the population for whom this is working out. It doesn't surprise me that people here don't vibe with that. Based on the forum alone, I'd bet all the people in this thread are at least in the 80th percentile of US household income (adjusted for local purchasing power if you happen to live elsewhere). If this wasn't the vibe in 2021, Paul Graham wouldn't have been writing bullshit to try to dismiss said vibe, and this person wouldn't be responding to him
but you're doing a disservice with completely bogus claims like "incomes for lower and middle-class families have fallen since the 80s". it only makes it harder to talk about the real issues and facts, because why would the other side stick to them now? the trust between sides gets further eroded and the gap widens
there's enough real data that we don't have to start making stuff up. the author could have easily pointed to housing instead like you. i think it's actually extremely important to get these facts right. enough to argue about on an internet forum on a sunday evening
Not really. Bill Gates isn't bidding up the prices of homes or groceries in your neighborhood.
Also, it's a huge factor in people's material living conditions, and a cost that has risen far faster than "inflation"
Yes, housing is far too expensive. And the main reason for that is state and local governments forcibly preventing people from building more housing, which is hard to blame on free markets.
most of the people who don't feel this way are pretty decidedly in the small portion of the population for whom this is working out
The point of the "minor factual nitpick" that median incomes are increasing rather than decreasing is exactly that capitalism works out pretty well for lots of people other than the wealthy.
Also, reducing the entire question of whether something has gone wrong and what and what one might do about it to a binary of "capitalism good" or "capitalism bad" is pretty pointless. Lots of things we could call capitalism have worked out really differently from each other, and looking at what the aggregate trends are and what policies might drive them and how they might be adjusted to better people's situations is a lot more useful than pretending that this is about "capitalism" versus "not capitalism", which so far as I can tell you are the first person in the thread to do, including the author of the linked article
It's amazing how petty they are, behaviors frequently seen in 5 year old children, and in leftist adults.
Waaaah waaah, the size of his cake is bigger. Waaaaah
If the rich are taxed more, will the government equitably distribute that money to the middle class?
Defense contractors make hundreds of millions of dollars from government funds.
We just assumed that tax money will go to the middle class but it's also likely to go to another rich person.
and then those salaries get taxed again
and then they pay for government meteorologists
and then those salaries get taxed again
and then they pay for construction
Government spending is a fantastic deal because they automatically get a huge discount in the form of being able to tax what they give you.
That's why privatization is theoretically far below optimal.
After all, when there's a big fuckin' hole in the road at least you can call someone, which wouldn't be true if Google were building roads.
I havent found anyone I can call to come fix a road from the government in my town however I can get anything the private industry offers, delivered, often immediately.
Good point. We don't even know that the money will stay in the country.
Billions will be allocated for building electric chargers and almost no chargers will be built.
Billions will be allocated for connecting poor people to internet and no people will be connected.
Hundreds of millions will be spent on homeless and will result in increasing homelessness.
A public toilet will be built for $2.5 million.
McKinsey will be paid $4 million for a study telling NY that garbage bins are better than plastic garbage bags.
$11 billion will be spent on 57 miles of rail tracks.
Those are just examples of government waste I can recall from memory.
Discussing levels of taxation is just a sideshow. Sound and fury signifying nothing.
The real problem is that government grows without bounds, more of our money goes to just paying the salaries of bureaucrats and contrary to what you might expect, more bureaucrats leads to making things more difficult and costly for non-government and to just breath-taking inefficiencies and waste of money by government.
At the same time students should be allowed to bankrupt out of their loans like any other loan on the planet.
Student loans are the only loan one is not able to bankrupt out of and it's literal debt slavery.
These analyses never mention the fact that the consumption of wealth by the government has vastly expanded. Where does one think that wealth came from?
The article assumes that wealth inequality is bad, but never explains it.
The thing is, people all have different abilities and make different choices in life. These lead inevitably to different results. In order to make everyone equal, peoples' freedoms must be taken away.
I'll give an example where everyone was equal. The USSR. That worked out great, right?
As far as I can tell, "look how well it worked for the USSR" is just a trope that's trotted out by people who don't want to accept that alternatives to the status quo might be possible.
Also, why are the FAANG companies all American companies?
It's like asking why are the Fortune 500 companies all American companies. In contrast, Fortune Global 500, using the same criteria but in a wider pool, has companies from other counties.
And every one of those FAANGs would not exist without ASML, a European company.
You obviously don’t know what you’re talking about. I’m checking out of this thread.
There are probably hundreds of reasons why SV snowballed this hard
There's a housing problem everywhere and your vaunted free market hasn't been able to solve the problem, but that's okay because we can just blame the victims for wanting life, liberty, and the pursuit of their happiness in a place of their choosing, in a manner of their choosing. As if anyone in their right mind would choose to live like they do in the video linked above.
It's been very successful.
A video of skid row doesn't change that.
Drunks and drug addicts choose their poor lives.
You are a despicable person, Walter Bright.
Extreme inequality leads to crime, social instability and eventually major civil unrest. As with everything, it's about moderation. Unrestrained capitalism is just as bad as unrestrained communism, the ideal balance is somewhere in between.
As for sources, here are a few (just a web search away):
https://www.pewresearch.org/social-trends/2020/01/09/trends-...
https://inequality.org/facts/wealth-inequality/
https://www.brookings.edu/articles/rising-inequality-a-major...
https://www.oecd.org/en/data/indicators/income-inequality.ht...
Historical example, please.
Besides, it was a feudal society with nobles and peasants, with different laws attached to each. That's bound to cause resentment.
There’s an interesting economic science paper from awhile ago where the researchers examined an economic simulation as wealth inequality increased, and their finding was that it’s like temperature in that it causes phase transitions. At some level of wealth inequality, agents stopped being able to trade (most agents didn’t have the funds to trade most goods), causing a “freeze” - going from liquid(ity) to solid.
By the way, I don't know the answer to this. I myself am a landlord. But if we're getting into morality, let's fully examine this.
11.5% of Americans are below the poverty line. The same economic system that makes is possible to become rich enforces a roughly 5% unemployment rate. This unemployment rate is necessary to prevent a wage price spiral. There are people who are paid a lot of money (Federal Reserve), whose job it is to pull levers and turn dials until the unemployment rate is at that magic 5%. They actively ensure people can't make a living, to allow you the chance to accumulate wealth.
You may not be directly responsible for their poverty– but their poverty makes your accumulation of wealth possible. Without a 5% unemployment rate, the delicate balance of the economy cascades into oblivion in a wage-price spiral.
So here's my moral question– do you then owe them anything? Do you owe society anything?
Maybe there is something wrong with "just being rich" if you don't attempt to use some of your money for the betterment of your community and society that is actively made worse to allow you to get rich.
If you want to get rich, get rich. But don't fool yourself into thinking that it's morally good. It can be, but it's probably not. Because it's probably at the expense of others in some direct or indirect way.
By the way I'm pulling punches here. This is a very gentle response to try and get you to think differently about your ethics.
---
If you're the sort of person that always needs to feel morally right, then I would say getting rich probably isn't for you. Any moral argument you can come up to protect your ego would be fragile, and easily undone.
Out of curiosity where can I find the unabridged version of this?
A liquor store opens up next door to your home– economic activity goes up, but drunks sing sea shanties at 2am keeping your family awake, resulting in you losing your job due to bad performance, then property values plummeting.
An oil company moves into town and starts fracking. Quarterly profits are high, and the town's economic activity rises, because it has more patronage at the local pub. There are more jobs, and everyone buys themselves a new pickup. But people get sick, and the water goes brown. A charity purchases hundreds of thousands of plastic bottles of water. Economic activity goes up. Microplastics, people start taking extra time to shower/bathe, wash dishes, and health problems. Profits are up, but did society actually benefit? In the long run, people will move away from the town, leaving it in economic ruin. All because the company did not care about externalities.
One example of this concept is Broken Window Economics. If you broke a window, economic activity/GDP would go up because someone would be employed to fix the broken window. But was anything of value produced? Did society truly benefit?
OP is essentially ignoring externalities. He is making the most of a system designed to benefit him at the expense of poorer people, and washing his hands of any guilt because the effect is invisible to him. But that's a fallacy. The rich get advantages that nobody else gets, like being able to avoid tax in totality (essentially getting a free ride, while everyone else pays for society). There are many other ways that society is wholly optimised to make things better/easier for the rich.
I digress. To answer your question, without pointing out socialist authors (who are right on the money with their criticisms of capitalism), I can really only tell you my own thoughts about it.
I'll leave you with this quote on the tragedy of the commons:
> Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit – in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all. -- Garrett Hardin, The Tragedy of the Commons
I pulled myself up by my bootstraps once and now I'm the richest person alive.
Paul Graham is forced to appear non-scientific because there is no science, that justifies our current economic conditions. There's the whole field of economics, sure, but that only studies what does happen in our current economy, not how we should run an economy. The only things available to justify our current economic conditions are pseudoscience and appeal to power.
A world where people get rich by starting tech companies that make a mark on the world that appeals to current rich people isn't much better than a world where people get rich by being the children of current rich people. In both cases you get rich by helping the rich class perpetuate itself, not by actually making the world better.
Noahpinion's article misses a point: it talks about how there isn't that much actual wealth and most "wealth" is fake zero-sum financial instruments and since there isn't much actual wealth there isn't much point taxing it. But it ignores that taxing zero-sum financial instrument wealth still alters the world, in a way that many find desirable: simultaneously deleting a positive-value financial instrument from a rich person and its counterpart negative-value financial instrument from a poor person may not change the total net wealth, but it reduces inequality.
but there is.
lots and lots and manipulation and misdirection honed thru the ages and written in plain view in traditions and old symbols.
there's a reason old lord of the mannors had dog and horse breeds on their walls, while having power of who marries who on their domains. but modern science will never touch those points. still, there's lot of science on why you agree to the boom bust cycle and all that.
The problem with that mindset is that we know how it's going to end up: it's not only the 0.1% or 1% that are going to suffer the wealth tax. It's the 30%.
At first the "tax on billionaire" was supposed to be that: a tax on billionaires. But then there are already publications explaining how "taxing anyone who has more than a million (a million, not a billion) would bring x in revenue for the various countries".
Also note that it's never about distributing that money to the poor: it's always about the state getting more money. Money which is then spent in state-friendly companies.
For example the EU is hard at work now imposing a mandatory, EU-wide, tax on all its citizens to "finance EU projects". It's not a tax to give money to poor people. It's a tax to give money to companies like Thales and Airbus and a shitload of sycophantic companies that'd be bankrupt if not for the state' intervention.
Just look at how government are managing the insane money they get: do you think they're doing a good job when they're at, say, 130% debt-to-GDP ratio? Why would I want to encourage such irresponsible spenders by giving them even more?
When a country like France, which is badly in debt and has huge deficits, has about 60% of its GDP that is tied to public spending, it's not the fault of "the rich" if the country is not doing well. It's the fault of the people governing that country.
So, no, thanks but no thanks. I don't want any "let's tax the rich" discourse because I know that it's the middle-class, not the rich, that's going to end up getting owned.
Just like fighting the four horsemen of the infocalypse is an excuse used by the states to gain every more power, attacking the rich is an excuse for the state to gain ever more power. It's not about helping the poor.
Governments (or maybe voters) don't seem to understand incentives: New Zealand government and its taxation structure discourages building or growing a profitable business. Why should anyone build a business when any winnings will be slowly taken from you over the years? However the NZ government plays/pretends to be supporting innovation - lots of innovation "dress-up play" (the sham appearance of innovation) and taxpayer money dumped into ineffective programmes: e.g. https://youngenterprise.org.nz/ https://www.canterbury.ac.nz/study/academic-study/business/a...
Some countries lead political changes - I'm not sure New Zealand is one of those - but the crap we do could be the crap your government does next...
Because the payout might be better than wage labor and you only pay the tax if you win big?
The problem is that the risks are high: the usual figures are less than 1 in 10 businesses succeed or that a 30:1 payout is the minimum sensible financial payout (VC figure).
Winning is hard even though we don't have a CGT. Marginal tax at 39% doesn't encourage marginal business building. And once you have the house and the bach, the marginal utility of money drops for an individual: the marginal happyness from the next million is a lot lower than the first million (also see "income satiation"). The discount rate, and the personal cost are other huge factors, and the average person doesn't like a financial winner.
Investing money and time in a high risk activity like starting a business is not fiancially sensible from what I have seen. We do it to chase status, not because it makes sense on a spreadsheet.
PG does make a reasonable point here. Capital is much less of a barrier than in the past for starting a business. A small group of people with no outside investment can do a lot of damage.
Nothing could make that more clear than the past year and a half. For tech workers we had FAANG layoffs, hiring freezes, lowball offers if any offers at all etc. Contrast this to the tech stock market since the beginning of last year - a FAANG index like IGN doubled, NVDA up 800%. Like Shakespeare said - the leanness that afflicts us, the object of our misery, is an inventory to particularize their abundance; our sufferance is a gain to them.
And if the workers aren't getting stock options, they can still buy stocks on the open market. How much would $10,000 invested into AMZN at the IPO be worth today?
$13,000,000
Well that's my point - people who do the work and create the wealth don't get that wealth in wages, it is parasitically expropriated by stockholders.
I am arguing on the side of those who work, that the wealth they create is kept by them. You argue for idleness and parasitism - that those who don't do the work can be rewarded via these various mechanisms, by being parasites on those who do work.
Business needs two other things:
1. capital
2. taking a risk
in order to function. To get capital requires a source of capital, which are investors. Investors take a risk in exchange for possible gain.
No gain => no investors => no capital => no business
Let's say you want to start a business. Where are you going to get the startup capital from?
Without capital in this system labour can still provide value, it's harder, and slower but a group of people getting together and creating something is still possible (albeit much slower). Without labour capital has almost no value.
All of that has value and the only "capital" needed were the basic resources of some wood, food, and water, if you stretch the meaning of capital.
Capital cannot, ever, create value by itself, it has to come from labour. Capital can only help the process to be faster.
Even in a potential distant future where everything is made by machines, labour is required, just not human labour.
There's absolute no value from capital without labour.
Please, prove me wrong.
QED
Don't be an asshole, every single time I attempted to have a discussion on this topic with you you've been a dismissive asshole, instead of some of your more usual thoughtful comments you retract into this dogmatic stupidity.
Again: what can capital do without labour?
You are only taking a significant risk in production investment in an unplanned economy.
So it is tautological, circular reasoning. Capitalists want an unplanned economy and then say they deserve their profits for the risks of an unplanned economy.
(Theroretically - of course, the US economy is not unplanned, but semi-planned - we type on chips paid for by US military spending sent to Fairchild, over IP packets on a network created by DARPA handing taxpayer money over to BBN etc.)
Any investment that is a "sure thing" is going to have a very low payoff. Sure things also tend to have a track record of imploding.