The basic point is that he gets paid more whilst not doing more "work". For those whom "Work" is the only lever they use to convert into money, they see inequitable work:cash ratios as "unfair" (a morality statement).
Market economies do not function on work, but on value. He did the same work in a high value scenario. A glass of water provided in the middle of a developed city is worthless and thus free. A glass of water provided at the right time in a desert is invaluable and thus expensive.
My takeaway is this: Always meet the highest value need you can, and as well create additional value by helping others to meet higher values than they current do. Low placed people may not be able to "work" their way to upper echelons, but they can invent, intuit or otherwise create high value leverage of their's and others' work. I dont see it as unfair that a person making $1 a day is unlikely to become a deca-billionaire in their lifetime (total mobility); instead I want to ensure they have some mobility so that they can always better their situation, maybe by an arbitrarily selected 2x multiplier.
The author specifically mentions the people making about $7 a day doing manual labor in Qatar, and that they were a lot shorter than he was primarily due to lack of nutrition. Do you believe that these people should only be able to aspire to making $14 a day? Maybe not all of these individuals are hard workers (by nature. I'm sure they are essentially forced to be hard workers to survive) or smart, but a lot probably are, and it's because of an unfair system that didn't give them access to food and education that they have to work in Qatar to make a living.
You may see this is simple economics, but I see this as a modern form of slavery: keep people poor, underfed, and uneducated so that they will always be a cheap source of grunt labor.
Poor, underfed, and uneducated is the default position for human beings. We were born into this world, as a species, with nothing.
There is no conspiracy to "enslave" anyone, nearly all public health and wealth measures over the last 100 years are overwhelming up and to the right. That growth did not happened through magic or luck and certainly not from some misapplication of noble intentions (see communism), but through the slow accumulation of societal benefits, over time, across an open market economy.
It is not and will never be "fair", there will never be equality of outcomes, but jesus, we've faired a lot better under this system than by the whims of kings and politburos trying to distribute "fairness" with a clumsy iron fist.
Some people are born with nothing, others are born with just about everything. Many laws, regulations, etc exist so that JUST existing with nothing is not feasible.
It is nigh impossible to live in this world like the birds do, flying from one food source to the next, roosting wherever you find comfort. Those with means have entire departments to police the underclass off of their property and setup obstacles to make sure riff-raff does not even get on the public property next to their private property (just look at how public transport is set up in big cities).
We protect those with means, ensuring those without cannot even live without selling their labor. Die or work. It's a little like slavery (I KNOW there are large differences between traditional slavery), you must be able to see that?
>but through the slow accumulation of societal benefits, over time, across an open market economy.
Pretty sure most of the improvements we have made for the common man, at least in the US, have come at the behest of those born with nothing standing up and saying "we won't work unless the rewards are distributed better/we get a 40 hour work week/we get cleaner and less dangerous work conditions/etc."
>It is not and will never be "fair", there will never be equality of outcomes,
No one wants equality of outcomes, equality of outcomes would not seem fair to most people. Instead we want equality of opportunity.
We can improve, most of us know it, and even though most improvement will only effect our kids or grandkids, I will still keep bitching that we need to improve until we're AS GREAT AS WE CAN BE.
Yes. These improvements were won through the most thoroughly and deeply market behavior possible: raising the price on what you're selling.
Labor price-gouging capital is a beautiful sight to see. Usually only capital remembers it can do that.
And don't forget that a big part of why many Western countries started to invest more into welfare is because after 1917, their governments realized that the alternative could well be an armed uprising, and that they need to keep their citizens sufficiently content to prevent that - even if that means they have to force the wealthy to share more of their income.
(Note, I'm not saying that Soviets somehow achieved better results. The point is solely that the threat of a socialist/communist revolution was a significant factor in capitalist countries shifting away from unregulated capitalism and towards welfare state.)
This was a pleasure to read, although it made me wonder what the optimal unit of labor is to still have a functioning competitive market. If all capital was controlled by one entity, no market could exist -- that's basically why the US has anti-trust laws. The same is true for labor. Seems like for each market there must be an optimal unit of labor (number of workers in a union, for example), to balance well-being of an individual worker with functioning of the market. Hard problem, though.
Rubbish. Nothing stops you from wandering off into the wilderness, except for the fact that it's a crap way to live. You just feel entitled to the benefits of modern civilisation, without the costs.
As a species, once we reached apex predator status, we were already born with the entire Earth's resources as our inheritance, not nothing. Somehow those got divided up and almost never was it via the mechanisms of an open market economy -- only in exceptional circumstances did those mechanisms provide a modicum of mobility, especially during technological transitions. The rest of the uplift was through outright redistribution, either through the occasional enlightened king's edict, the politburo's fist, or the exercise of raw political power in the legislatures of the world.
An unfettered open market economy that gets farther and farther from initial conditions ends in a revolution.
Have you had a look at 19th century philosopher Peter Kropotkin's The Conquest of Bread? Here's an excerpt:
>For thousands of years millions of men have laboured to clear the forests, to drain the marshes, and to open up highways by land and water. Every rood of soil we cultivate in Europe has been watered by the sweat of several races of men. Every acre has its story of enforced labour, of intolerable toil, of the people’s sufferings. Every mile of railway, every yard of tunnel, has received its share of human blood.
>The shafts of the mine still bear on their rocky walls the marks made by the pick of the workman who toiled to excavate them. The space between each prop in the underground galleries might be marked as a miner’s grave; and who can tell what each of these graves has cost, in tears, in privations, in unspeakable wretchedness to the family who depended on the scanty wage of the worker cut off in his prime by fire-damp, rock-fall, or flood?
>In virtue of this monstrous system, the son of the worker, on entering life, finds no field which he may till, no machine which he may tend, no mine in which he may dig, without accepting to leave a great part of what he will produce to a master. He must sell his labour for a scant and uncertain wage. His father and his grandfather have toiled to drain this field, to build this mill, to perfect this machine. They gave to the work the full measure of their strength, and what more could they give? But their heir comes into the world poorer than the lowest savage. If he obtains leave to till the fields, it is on condition of surrendering a quarter of the produce to his master, and another quarter to the government and the middlemen. And this tax, levied upon him by the State, the capitalist, the lord of the manor, and the middleman, is always increasing; it rarely leaves him the power to improve his system of culture. If he turns to industry, he is allowed to work — though not always even that — only on condition that he yield a half or two-thirds of the product to him whom the land recognizes as the owner of the machine.
I'd really recommend a read, I used to think as you did, that we are born poor. In reality, we are born with the riches of the world around us, yet ungraspable.
Its feels a bit myopic to pretend like the the miner mining iron ore 150 years ago used in the creation of a steam engine somehow only benefits from his direct wage, and not indirectly from the product he's helping to create. Yes, the direct monetary benefits accrue to the owners, but by and large those owners produce things of value (increasingly so) to society in a way that that makes that miner's great-grandson far far better off than a "lowest savage" today. I think this is the same false litany that tells us the world is getting worse and worse (especially for the poor), whereas data tells us the exact opposite.
So not everyone gets to be an owner and be directly rewarded, and that work is certainly hard, but we do all seem to share in the collective benefits ownership creates.
The big difference between Qatar/middle-east and the U.S. is that in the U.S. the business culture does not have as much recent history of indentured servitude, and has ever-diminishing use of unsafe practices (e.g., dangerous pesticides applied by farm workers without adequate protection). My father-in-law saw over the past 20 or 30 years many such Latin American workers come through furniture and manufacturing plants in North Carolina where he managed H.R. ... and they were paid very fairly and worked very hard, conscientiously, thoroughly. A fair number were found to have registered with false Social Security numbers and had to move on, but my father-in-law says it always was a loss for the plant. Those in the U.S. illegally still had to hazard the trip, and face deportation always ... but they mostly can leave any employment situation, or go back home, at any time.
Those workers stuck in Qatar / middle-east are unfortunate suckers reeled in by bastards and an uncaring system both in their countries of origin and in Qatar.
So ... on to the interesting part ... what are those Latin American workers in the U.S. doing with the majority of their wages? >>> They're by-and-large remitting that money back home to plow into joint RENT-SEEKING ventures with family / friends back home. They endure the hazardous journey, sub-standard housing, time away from family and their own comfortable culture, and two or three simultaneous jobs, because they have the initiative and need to build the nest egg so they can escape the "wage slavery". <<<
I'm curious about your use of the phrase, joint "rent-seeking" ventures. I looked up the definition of rent-seeking on Wikipedia: "seeking to increase one's share of existing wealth without creating new wealth", which tend to "result in reduced economic efficiency". Was that implied in your use of the phrase? If so, what kind of ventures did you have in mind? I imagine that migrant workers send their money home to invest, typically by starting businesses (or buying land..?) with family and friends - which isn't necessarily "rent-seeking"?
Provided that I am willing to concede this point for the sake of the argument: what makes you think that your redistribution model will actually allow everyone to achieve their maximum potential?
Given that similar redistribution systems have been tried before, where governing bodies were thinking they actually know what's good for "everyone/society", but all of them miserably failed, what differentiates your proposed approach from what have been already implemented?
 I don't even know what "achieving maximum potential" means. Is it achieving someone's goals in life? Producing the most widgets possible? Killing as many unbelievers as possible to get into heaven?
Of course, simply providing these services doesn't always cut it. Look at the generational poverty in the US "ghettoes" for obvious confirmation of this. But in general it's a good thing to do and it benefits people. It's certainly not impossible and definitely does not always miserably fail.
For maximum potential, I mostly mean the ability to do what you want in terms of jobs with only intelligence and work holding you back, not the circumstances you were born in.
What's your take on the current student loans situation where almost everyone is able to obtain resources to go to a limited number of colleges and pay for whichever degree they like? Should we expand this and instead of loaning money give it away for free, if this goes towards achieving maximum potential? In your opinion, how much would a regular 4 year degree cost in such a case?
Another model might be to increase subsidy for fields with more guaranteed profit centers, while decreasing the amount of subsidy for fields in which a career profit is less likely, such that loans are more likely to be paid off. This again may make college cheaper, and/or more accessible, but may fail to yield enough trained workers to deliver in necessary but unprofitable fields.
That said, I'm not just trying to poop on the idea, but to highlight that "cost" is not the only rubric of accessibility, and that "cheaper" doesn't necessarily yield the results you're looking for, and may actually result in contrary outcomes from what we expect.
If my value is $10 per day and someone makes my value $20 per day, there is $10 per day worth of value for us to negotiate over. We _both_ have an incentive to maximize my potential.
>we should ...
thats a morality statement but without a canonical source of ethics that some do not ascribe to. But, I would assume that "self interest" is more or less universal, and thus we can build systems that use self interest to ensure good outcomes for all.
To act as if the market will magically fix this is lazy and not realistic.
Also yes of course I used "should", as I am giving my opinion on this situation.
To act as though governments can magically fix this is lazy and not realistic.
Well, yeah; for one thing, given that Austrian economics is more normative than predictive, I'm not sure what such a simulation would do.
That's absolutely true, and if anything the assumptive concepts that underly how government creates regulations are more dependent on "economic" principles than the assumptive concepts that underly how businesses work.
"people don't always do the most rational thing" is so often used as an excuse for government to intervene and make choices for people. As if government itself is not made and run by people who also don't necessarily (individually or collectively) make 'rational' decisions, only now given a really big stick.
There are other ways besides government to provide for people, even when doing so does not fulfill an obviously incorrect model of human as the hyperrational self-maximizer.
Humans are naturally competitive. Humans have tribal instincts (which include a default hostility to known outgroups). Humans have a fundamental tendency to hoard resources to ward off the mortal dangers of scarcity and decay, visible in our dietary inclinations just as much as in the way we handle the abstraction of money. Like most other successful animals, we have an instinct to secure resources not just for ourselves but for the generations that will follow after us.
These are inborn instincts and impulses, installed by millions of years of evolution. They cannot be hand-waved away. As a species, we are stuck with them, for better or worse.
Throughout the 20th century, we see the rise and fall of economic policy that refuses to acknowledge these realities. This willful blindness inflicts a large amount of suffering on the populations that fall for the delusion that we are now superhuman.
The argument is not that physical impulse does not need restraint, nor that society shouldn't have structure and authority. It is merely that our social systems need to exist as background processes that optimize and refine our basic natures instead of trying to pretend like they don't exist.
Just as denial of the underlying structure of computer systems will, at best, seriously impede performance, denial of the underlying structures of human psychology will, at best, bottleneck any society.
Hardcore socialist redistribution systems are so denialist that they result in the equivalent of a nation wide Blue Screen of Death shortly after bootup. Let's take notice of the blood and agony of the 20th century and not install SOCIALISM.DLL anymore.
In the words of jack nicolsons character in as good as it gets sell crazy someplace else we're all stocked up here.
Useful social systems contemplate typical human behavior and account for it in a reasonable way, instead of pretending that it won't apply.
When you create a central chokepoint for all ownership and economic resources, the distributors show massive favoritism for the ingroup (generally government bureaucrats and their relatives), while the rest of the population is essentially left to starve.
Anyone who claims the purity of their political philosophy or their strength of character or the quality of the education of their central planners will prevent this from occurring under their implementation of centralized resource distribution is essentially claiming to hold a trump card over human biology, and they should be immediately discounted, because that's not how it works. Instead, we keep trying to reboot it, hopeful that this time, the superhumans are in charge.
It is disappointing to see that juvenile dismissals like yours are apparently now countenanced on HN, especially when they're the result of a misreading in the first place.
Although I totally agree with this, individuality also plays a big role in development. The unfairness for someone is the good luck of another one thanks to his parents or grandparents. All conditions been equal, individuality will always makes society unequal. I think we should at least guarantee a worthy life to everyone.
But then what you do with someone that can't make a living but don't want to get educated? If you give him enough to live, he will still be a second class citizen.
Yes, a piece of property earns rent because it has 'value' to someone else; however, who gets to earn that value? At some point, this piece of land was 'unowned', and then someone came along and said 'I own this'. Do we let them keep that forever? Do they have to pay society a fee for being able to claim it as their own? Can they give it to their kids for perpetuity? Can they do anything they want with it? What about the air above it, or the ground below?
These are all very important questions, and there isn't some 'true' moral answer to them that is the right way to govern property rights. There are easier moral arguments to make about ownership of property I produce, but not about land or natural resources.
But who gets to rent out the apartment building? Well, the one who put an apartment building there, that's who. Why should anyone else get to?
Now, I am not saying that the building itself doesn't have value, or that the person who built and owns the building shouldn't be compensated for that investment and work, but it is disingenuous to pretend that the majority of the value is from the building and not the land itself (at least for most places where rent is high)
I am not in any way, shape, or form arguing that we should seize all private property in some kind of communist revolution; I am simply saying we need to think about how we divide up the value of something like real estate to fairly compensate and encourage development without promoting unfair and ineffecient rent seeking.
In most areas, yes. There is a property tax that is charged as a percentage of the land's value. If the owner fails to pay this fee to society, society revokes his ownership, forcefully seizes the land if necessary, and resells the property to another person who is willing to pay the imposed fee.
We also do have taxes on income produced by capital - that's capital gains - but, as the article points out, we tax them significantly lower than regular sweat-of-the-brow income, and offer more loopholes. In effect, our economic system incentivizes rent-seeking over labor.
Using the phrase "They provide more value" as an umbrella phrase for why people get rich is understandable, but something just doesn't seem quite right about it.
They value their own, certainly, but that value is reflected by the enormous sums we collectively pay to have our garbage removed. The garbage industry is worth a lot more than Oprah.
You also pay (indirectly) your garbage worker a lot more than you pay (indirectly) Oprah, so things might be working out closer to how you value them than you'd expect.
(pardon the napkin math) If you live in a town of, say, 25k people and your town has 10 garbage collectors (napkin math: each pair covers 1000 people's trash every weekday) each earning minimum wage 15k/year (if it takes 1min to pick up trash for an average household of 2, we get just over the standard 2k work-hour year. To me this sounds like fast operation and low house size. But the low end of the trash costs demonstrates the point), then each person in town is paying $6 to their garbage collectors. Even more considering benefits and non-labor costs. If healthcare, garbage truck maintenance and, I dunno, landfill fees (are those a thing?) cost the city a mere 100k/year, every person is paying $10 for garbage collection.
So in the napkin scenario, for each individual, garbage collectors are valued at 10x what Oprah is. And that's with all my napkin math assumptions choosing the lowest costs. Plausible scenarios could go as high as 100x individual value for garbage collection over Oprah mic talking. But Oprah can do her less-individually-important job for 1000x more people. It's an issue of reach.
If Oprah dies tomorrow society lives on and for the most part nothing changes.
If all the sewer treatment plant workers die there is a scramble to replace these invaluable workers to abate a national health crisis.
Why does Oprah make more than these individuals?
Is it because she provides "More value" ?
If you believe she does.... then fine.
If society, through implicit acceptance does...then fine.
I don't, and I don't understand the logic. I believe I understand some of the psychology around it...but not the logic.
If I build a local website and sell access to it for $10 in, say, Monaco (population: approx. 38,000 people) then I'll be making less money in comparison to the same situation but where the entire US is the market for said website.
The sewer treatment plant workers don't matter to me, unless I'm living in the town where this stuff is going down. If I'm not however, those workers have zero value to me.
"...predicts that employment in this industry will increase 7 percent, adding 9,400 new jobs by 2024... Median Salary $33,800"
If we assume median salary ~ average salary, then $33,800* (9,400/.07) = $4.5bn. Oprah net worth is estimated at around $3bn.
In other words, if the average person was forced to choose to either "get rid of" Oprah Winfrey or 2/3's of the countries garbage collection workers, which one would the average person pick?
You could easily replace Oprah with some other person. I am simply using her as an example because she is wealthy, popular and her creative output isn't easily quantifiable the way someone like Bill Gates might be.
Also your above comment even says that "to the person paying them."
I pay Oprah and the garbage man, respectively, what they're worth to me.
I guess it hurts your feelings that Oprah has more value than your local garbage man, but it's just a fact.
You can probably come up with the reasons yourself: personality, name recognition, how easily replaced, etc.
This is marginal value, the stuff that someone would give up in order to have one more of a thing.
A celebrity often makes money because, for whatever reason, nobody can easily and reliably produce an equivalent one on demand.
Folks working for wages in less-glamorous positions are doing valuable things for society, but fundamentally their pay is based on how easily society could replace them.
And you are guessing wrong. From what I've read she is probably one of the better people I would like to see in the role if "Billionaire"
I live in the middle of nowhere, don't have trash service, so I used to take it to the dump myself. Then my dad retired, and now I pay him a few bucks a month to take mine when he takes his. If this wasn't an option, I'd go back to doing it myself. This is why your local garbage man doesn't make as much money as Oprah. It's simple math and econ 101 supply and demand.
If your garbage man cost the community $80k per year, there would probably be 100 other dudes, all just as good at collecting refuse, offering to take his job and only charge $50k. That doesn't mean the disposal of all that waste disposal is not worth $80k (or $250k) to the community, but competition allows the community to pay less than the value it places on the service.
I bet there are also 1000 people lining up to underbid Oprah on whatever deals it is she is making with her partners(broadcast networks? advertisers?). But none of those people will attract nearly as many eyeballs. From the partner's perspective, it's simply a matter of choosing which TV personality will bring the most revenue (over and above their fee), and that's Oprah.
Garbage collecting is not winner take all. No single garbage collector can corner the market because the role doesn't require unique talent in the same way that being a famous talk show host does. Oprah's value is her unique personality, brand, style, mannerisms, business savvy, etc rather than any sort of utility (like removing up your rotting trash) that she may or may not provide.
* It's possible that garbage collectors as a whole create more "value" than Oprah Winfrey. The difference is that the value created by garbage collectors is dispersed amongst millions of garbagemen and other people, while Oprah Winfrey gets to keep most of her value.
* There's an oversupply of people willing and able to pick up garbage relative to the supply of jobs. This puts downward pressure on the wages, ensuring that the compensation for their work is less than the true value generated.
She can't appear on camera 24-7, but that media empire she now owns chugs along even while she sleeps. That's why owners win.
Your garbage pickup person doesn't even own the route they clear. They can be replaced at the drop of a hat by someone else, or by a semi-automated garbage truck. They cannot effectively capture the value they do create. The guy who "owns" the routes via their contracts with the municipal/county council is the one that can suck most of that up.
It isn't those who create value that get rich, but those who can best capture created value.
The point being made that the rentier class, usually applauded for their success, in many cases does not take the risks so widely ascribed to it, and creates wealth for select few beneficiaries simply by having more wealth.
Surely you will agree that in a given locale, the amount of land is a fixed amount. A single entity is able to extract more value from land simply by denying others use of it, which is of dubious value to the society at large. I won't go so far as to declare property = theft, but you can't help but wonder about the negative externalities of a few parties owning the vast majority of land and developments in a given area.
Without ill intentions, people are forced to pay rent, allowing the rentier class to accumulate more and more wealth by simply doing nothing. This is in contrast to innovative companies that provide real value to customers and create wealth for all involved (e.g. a farmer buying a piece of machinery to produce more food)
The article is mainly about a subset of capitalism where money is produced for the owner class without the tangible value exchange for the people from whom that money is extracted, and about how surprisingly well it scales.
Do you see it as unfair that there are people stuck making $1 a day?
This article gives a bit of background about that figure: http://www.bbc.com/news/magazine-17312819
I was talking about the second part of the comment: $1 doesn’t provide you shelter/food/etc.
I definitely agree that a 0 probability despite maximum effort is unfair. In between is a grey area though.
Do you think that if you'd been born in a slum you would have a decent chance of winning in the IQ test & optimal choice events in your life? I would imagine that almost anyone reading these comments has been unbelievably fortunate to be born into relatively wealthy circumstances & had things like "books" around to help bolster their IQ.
A strong signal IQ is not, maybe a nice tailwind, but that doesn't help much if you are born in the bogs.
Perhaps you failed the IQ test too?
Rather, the phrase rent-seeking refers to seeking money without actually providing any economic value. It would be more accurate to view such payments as taxes (often levied by a private entity). Adam Smith categorizes income into profit, wages, and rent. Rent-seeking refers to the last one of these.
In a traditional residential lease, the landlord is responsible for the maintenance and upkeep of the property along with property taxes and, sometimes, some of the utility payments. Residential rent is based upon the value of the property as a residence, along with maintenance, taxes, etc that the landlord is responsible for. The income the landlord receive, according to Adam Smith's classification, is profit rather than rent.
Capital owners typically receive profit by controlling profitable assets such as stocks, bonds, and real estate.
You might imagine a residential lease where you agree to perform maintenance and upkeep and pay property taxes in return for a reduction in the lease cost. But this wouldn't reduce your lease cost to $0 - you're still paying for the privilege of being allowed to live there, so doesn't this fall under the traditional definition of "economic rent"?
Is there anything specifically you think the author has done to "keep the poor in their diminished condition"? Or is the act of owning rental property oppressing? What should the author do in his circumstance? He could stop investing in rental property, but would his investment in other areas be oppressive? Should he quit teaching rich people in Qatar so that he doesn't earn enough to engage in investments?
How would you suggest slave-labor in Qatar, who's lives are literally disposable to our global society, create this leverage? [serious]
The slave who manages an important man's affairs is himself an important man.
Concubines frequently wield power through their well-placed lovers. At the historical extreme, Wu Zetian was a concubine who worked her way up to being formally crowned emperor.
The Mamluk Turks were slaves. This didn't stop them from taking control of the government and even enacting a requirement that the Sultan be a Mamluk (children of Mamluks, not being slaves, were not eligible).
Chinese eunuchs were also slaves, and also took control of the government on multiple occasions.
No, this is uncommon, for the same reason beasts of burden were generally not worked half to death, beaten, and generally abused. They are valuable.
That was seen as a major problem by slaveholders, though, not a feature. If they'd known how to stop the slaves from dying, they would have.
Sorry, I wasn't looking to shoot you down. I read some very interesting research into this some years ago and I basically participate here to get some chance to talk with people.
Because what you just wrote sounds an awful like a defence of slavery.
What's awful about slavery is not the treatment of the slave. It's the fact that they are slaves in the first place.
>> How have slaves ever historically created leverage?
They do it in all of the ways that other people do.
> Because what you just wrote sounds an awful [lot?] like a defence of slavery.
I will note that in another thread from today, https://news.ycombinator.com/item?id=14651019, you can see people speaking with approval of a company that funds training for its employees with a provision that, should they leave the company within a longish period of getting the training, they owe a large lump sum to repay the training costs. This differs in no way from a traditional contract of slavery, under which, if you want to leave your current employer, you must pay them a large lump sum.
We don't say someone who has taken out a loan is a slave to their lender. And giving that person the option to pay that loan off more efficiently via labour doesn't make it slavery.
There are plenty of high-value activities that go undervalued -- a general class of these are termed public goods. There's also the confusion of financial value with economic value.
If a good cannot either capture the value it creates (nonrivalousness, non-excludability), or if it creates economic value, but not to a class of direct users who have what Adam Smith called "expressed demand", that is, discretionary or available liquidity, then it produces no financial value, and, in a market system, is underprovisioned.
At the micro level, your decisionmaking is going to be determined by financial aspects. At a macro level, we should focus far more on overall economic value. Alternatively, structuring the micro world to reflect the macro more appropriately (basic income, employer of last resort, generalised support of public goods) might work.
Both are exceedingly difficult politically.
I think given the distinction you're making, it would be better to say these activities are underpriced.
But I agree with your point. Far too many proponents of capitalism seem to believe the economy is somehow inherently fair because all prices reflect utility creation.
Another factor here is that demand is distorted by wealth. Things that provide value to rich people will be priced higher than things that provide equivalent value to poor people. A yacht seems unlikely to be as valuable to its individual owner as an equivalently priced amount of food is to many different people.
Some of these are underpriced, in the sense that the price doesn't repay the contribution.
Some are overpriced, in the sense that those who would benefit highly from access cannot afford them. (Though that might also be considered an inssuficient provision of income or spending power.)
The overall outcome is that a resource allocation which would improve net social common weal isn't made, that is, the goods or services are underprovisioned as a whole.
Basically, the claim is "money is not wealth" (or as put above, money is not value). Money is a tool, used for three things:
1. making it easy to trade if you can't barter (i.e., be a medium of exchange)
2. store wealth (i.e., store value)
3. measure wealth (i.e., be a unit of account)
Wealth on the other hand deals with actually making the economy better off. Creating a startup that makes widgets faster and cheaper then ships them out over the interwebs moves the needle forward. Both of these scenarios create wealth.
I think there's still an argument to be made over the apparent inequality between how much work is required to create a certain amount of wealth. And certainly, owning wealth while doing no work is another story entirely.
If you travel a real desert, you'll realize that water is always offered for free to people in need. As is bread. And that is the very idea of basic income: Provide essentials for free.
 Disclaimer: I did about 20k miles by car in Western Sahara and the south of Morocco in the last 4 years.
We live on a planet of finite resources, without controlling the number of people drawing from said resources you will over load the system, this and human nature are fundamental issues with the idea of Universal Basic Income
By the time water and bread are this rare you have long stopped thinking in economic terms, armed yourself and probably got killed. If it is a temporary outage, you can count on people to help each other.
> Without controlling the number of people drawing from said resources you will over load the system
From an economic point of view we don't have to worry about food and water, just about its distribution.
Realizing that I'm going halfway Godwin on you here: "Controlling the number of people drawing from said resources" is a very.. weird thing to say when the resources in question are water and bread.
You are over-generalizing the "basic necessities/basic income" to "resources". People who only have their "basic income" won't be able to purchase rare resources, they just won't have to worry about a roof over their head, water and bread. Why does everyone assume that people don't want more? You want to go on a holiday? You work. You want that bigger TV, a car or just a new game? You work.
That's an asinine assumption, UBI is never restricted to simply bread and water, you ignore the reality that UBI is free to be used, however. Arguing for a basic sustenance program is entirely different than UBI models.
No reason to bother delving deeper into demographic issues
That's the whole point of the article.
"Those rules are not some natural feature of the universe. People made them. People can change them."
In the developed world today's poor live like kings of old. In 1000 yrs I would imagine that their poor will live better than our wealthy "Playboys" of today. I see nothing wrong with people being in different places, so long as they have the ability to better their circumstances.
The ability (and actuality) of improving circumstances is more or less happiness, happy lives are definitionally worth living.
This is nothing like a king, who could have a large family, and was well fed, had permanent shelter, didn't pay rent, etc etc. How ridiculous.
It turns out electricity, air con, motor vehicles, and the internet are not the source of happiness, as much as advertising would like us to think otherwise. I bet your average homeless person in America would happily trade for a life in time past if it meant family, community, offspring, and the like. So much of our work today is meaningless, the same can't be said for our evolutionary history as apex predators.
Along many facets, yes, life is much better. But let's not pretend that we haven't regressed in many ways, for much of the population on Earth.
The New Republic has a pithy way of putting this: money doesn't buy happiness, but poverty increases sadness. In other words, you may not be happy just because you have 3 square meals a day and a roof over your head, but you would be a lot less happy if you didn't.
80% of the hierarchy of needs is immaterial, so at best your argument is weak. In many cases people will actually sacrifice physiological needs to fulfill the spiritual, intellectual and social ones (flipping the need pyramid)
I admit its hyperbole. But some things are comparatively like magic. Cellphones/computers, vaccinations, Internet, democracy for example.
i also dont dismiss standard of living arguments, i think they are valid. but i think they aren't the whole picture. i think alot of how we feel depends on how we compare to those around us. 100 thirsty people in a desert are much more pissed off if you add 1 person with excess water standing right next to them not giving them any. so, some consideration to the overall shape of the distribution of wealth is necessary in my opinion.
The analogy isn't entirely correct. If the thirsty people got all the water they could drink and a guy joined that owned a lake... They shouldn't really complain.
It's literally better for everyone, even if the wealth distribution is worse.
and tis is why I feel that there is an active oppression of access to quality education. The sentiment you share above is NOT shared by MANY and likely most of the deca-billionaire class...
Keeping people stupid has value to those who would benefit from stupidity (governments, institutions, corporations and entrenched wealth) -- thus platitudes and "foundations" with very very slow if any progressive impact are the true status quo...
The trick is to keep people holding themselves down by providing them the baggage to keep their minds off the unlimited and focused on the limitations.
I got where I am today due to luck. I did work hard. But I know other people who work hard too. Who are just as capable. They just didn't get assigned to the class with the really awesome, motivating teacher. Or randomly picked out of the pile by a recruiter for a call. Or happen to wind up working somewhere where they made friends with a guy who was well connected. Etc.
To discount luck's role in how people get successful is a huge blind spot.
That's the fantasy of meritocracy, fulfilling itself. When someone thinks that gold coins spray from their asshole every time they update a Git repo, they can comfortably presume their role is paramount in the value created. Of course, every library linked, every bit of infrastructure required, every calorie of energy delivered, every man-year of education needed by users - this all disappears in a cloud of self-regard.
Because a lot of people want to believe they "earned" what they have and they weren't extremely lucky.
"1. For owners, work is optional."
... As an owner I wish this were true. For me and most owners I know work is mandatory, and its 60 hour weeks and a lot of sleepless nights. There is no safety net. There is no unemployment. I get no workman's compensation. I have no employment law protections. Its, as one HN comment said some time ago, "a suffering contest" a lot of the time.
"2. ...your stuff will keep on making money forever."
... Again, I wish this were true. Lifetime income producing investments are hard to find where volatility, fees, inflation, taxes and life's circumstances don't erode value. Sure, the truly wealthy are set. But most business owners are not truly wealthy, and the exit strategies just aren't there in many industries.
"3. We can get entrepreneurship without the enormous rewards to ownership we have today"
... Anyone whose dealt with the day-to-day grind of owning a business would be especially offended by this comment. A firehose of pain, suffering and risk flows to the owner in the form of litigation, regulators, employees, vendors, customers, bank officers, etc., etc. I've equated it to a "lazy susan" dispensing aggravation in every conceivable form. Its the reward - if you can get it - that makes it worthwhile. Try just getting divorced as an owner and you become an instant convert to rewarding ownership.
Yes, rent-seeking monopolies are bad. Yes, more needs to be done to create opportunities for wealth creation by employees - to give them the freedom to say "no". No, punishing ownership isn't the answer.
UPDATE x2: I'm really not confusing types of owners. The author's thesis is broad not only in the article, but in his works in general. Access to passive income investments (eg. REIT's) is among the few places small business owners can go to rent-seek. Rent seeking is bad under a few sets of conditions but doesn't deserve author's indictment.
For the companies that comprise most of the economy (less than half of U.S. GDP is attributable to small businesses), ownership and operatorship are distinct roles. The CEO of GE is not the company's owner; the shareholders who own GE don't face the travails of operating it.
Given that it's currently taxed less than income from labor, I don't see what's so controversial about that notion.
I think its more like people who can easily meet their needs/wants even while holding something like a dividend fund or w/e. Owner of sufficient passive income assets that any extra effort or income or ROI is only gravy.
The tradeoff is that if you use a property management company, most of the profit from your properties flows to them, because they don't work for free. There is also a non-negligible risk involved in moving your control of your assets over to a barely-interested third party.
Truly passive income is rare, and it always involves a dollar-and-cents tradeoff in how much profit and oversight you're willing to forfeit to others in exchange for open time.
Very few people are Scrooge McDucks with all the time in the world to swim around in a vault full of gold coins, and of those rare people who could, even fewer actually find that to be a worthwhile use of their time.
The key takeaway here is that everyone has got their problems and concerns, and in this competitive world, it is naive to assume that anyone can maintain their position without significant effort.
Sure, but the $/hour return is much higher that the average job. 'A lot' isn't a good quantifier. I bet the same people who live in the house he rents work a lot more for a lot less money.
>Very few people are Scrooge McDucks with all the time in the world to swim around in a vault full of gold coins
True, but there are a lot more people who comfortably live off money their investments and properties make. This isn't about the 1%.
>The key takeaway here is that everyone has got their problems and concerns, and in this competitive world, it is naive to assume that anyone can maintain their position without significant effort.
Key takeaway from where? The author point still stands. The takeway from the article is that people don't get paid according to their hardwork, rather it is a lot of luck.
It is naive to assume anyone can maintain their position without significant effort, sure. But it is also naive to declare that without knowing for certain. I personally know people who work less than hour a week and make as much as the average software engineer in the US.
This whole thread is sad to read. Most comments take a single part of the article then start to bash the author or question the validity of his thesis. Many on here didn't even bother to read the article properly, which I assume the topmost parent of this comment chain is also a part of.
Life isn't fair, and many people have trouble with coping with that fact. I just didn't think HN would have trouble with that too.
The author also advocates for the employee's "right to say no". On this point I agree, in that employees should be able to accumulate wealth and have options. There should not be a one-way street.
The many ideas that people had a couple centuries ago don't hold up so well anymore. The population of the world when the book you refer to was published (17 century) was 8% of what it is currently. Resource utilization was a fraction of what it is today.
Today natural resources are dwindling and powerful people are quicker than ever at capturing anything of value. There is an imbalance in what one can do with their best efforts today, and that's not fair.
Acknowledging the faults in our current society is a better path to take rather than advocating for the arguments put forward by someone who probably couldn't fathom today's world.
A lot of work goes into property ownership. It's just not very expensive.
What? I'm sorry but that went straight over my head. You said
>... As an owner I wish this were true. For me and most owners I know work is mandatory, and its 60 hour weeks and a lot of sleepless nights. There is no safety net. There is no unemployment. I get no workman's compensation. I have no employment law protections. Its, as one HN comment said some time ago, "a suffering contest" a lot of the time.
Which looks very much like something a startup owner, or atleast a new business owner would say. I can assure you a property owner will sing a very different tune.
>And, that rent-seeking is very much taxed, contrary to the author's contention, at multiple levels and in many ways.
The author didn't deny that. He just said how he was re-investing the income therefore isn't going to get taxed on the rent. This again tells me that you didn't read the article properly.
Owning real estate means that your income is market rent - carrying cost - amortized capital expenses.
My coworker owns about a dozen 2-4 family properties and spends about 10 hours a week on them. Most tenants are section 8, which means he's paid on time by the government and gets above market rate for marginal property. He probably nets around $250k.
I totally agree with your points, but only when talking about the traditional/entrepreneurial sense of "business owner." The article is talking more about owning equity in a business, whether that's real estate (which is his example), or just investing in businesses. He even explicitly states that:
> Owners do not have to be entrepreneurs. They don’t even have to be competent. They can hire competent people to manage their money for them. The amount of 'entrepreneurship' in my story was miniscule.
In other words, if you're very wealthy, you can invest in diversified REITs and have exposure to the real estate market. You do not (and cannot, really) work on these projects, and your investments -- ownership of real estate through REITs -- will keep making money. That's not to say it's without risk, of course: the market could crash, the funds could fail to return on investment, the business could collapse.
Again, I think that for the HN crowd, your critiques are totally valid and I agree 100%. I just think this article is more about "hey, if you're really wealthy, your money can work for you!"
Not that that's particularly groundbreaking.
At least that is kind of a safety net? albeit a crappy one.
Consider that land prices (and therefore rents) basically reflect the surrounding economy. By buying land you are essentially profiting from the work of everyone else in that economy, forever, and only taxed minuscule property taxes.
IMHO https://en.wikipedia.org/wiki/Henry_George had the correct solution; tax land (though not the structures developed on it) at it's full market rental value. And the concept should apply to ownership in all resources.
Apparently going to high school, studying and passing the SAT, applying and being accepted into university, studying, passing, and graduating university is just luck.
Have we we reached peak luck yet? Is there nothing ever we can do to improve our circumstances and our lives?
This is like a new age of economic predestination, where everything has been predecided for you by God and there's nothing you can do. Calvinist and BI proponents apparently have a lot in common.
Eg if you're born to wealthier parents, you likely have more time in the evenings/weekends to study, which makes all of the above easier than say, if you were born to a poorer family and had to work 20-40 hours / week to contribute to your family's income.
Next, being born with the right genetics that enable a natural talent/ability to understand a particular area well enough to get through all of that education and into a good job, is also a form of luck.
Sure there's a level of discipline and effort required to get there even when you've got all of the "luck" - but part of the article's point is that there are certain people that are born into certain situations which they can literally never raise themselves out of (without some kind of very very good luck).
Bingo, you get it.
'Apparently going to high school, studying and passing the SAT, applying and being accepted into university, studying, passing, and graduating university is just luck.'"
let's finish the paragraph, shall we:
"My first big lucky break happened in 2009 when Georgetown University hired me as a philosophy professor on their campus in Qatar. Georgetown-Qatar, which is funded entirely by the Qatar government, has to pay an enormous premium to get faculty to agree to live and work in Qatar. I get paid three times as much as my wife. I teach half as many classes. She’s a full professor. I’m only an associate."
hey, quite a lot of people go to high school, pass their sats, get into a university and earn a degree, but almost none of them are offered a professorship in qatar, where they earn three times as much for half the work. quite a fortuitous circumstance, and one which wasn't in control of the author. so, luck.
Perhaps he is lucky enough to have parents that could afford college for him so he could invest in property rather than "invest" at getting to a $0 debt level.
It's also luck that the university exists in the first place. The system we exist in has build infrastructure for people to better themselves, and to turn around after earning millions of dollars and say "I did this all by myself" is disingenuous (or at the very least, incredibly ignorant).
I'd attribute most people's position in life to 5-10% "bootstraps" and 90-95% circumstances.
some of that is the luck of being born in the right place.
also, many people did all that and still did not get hired at that place
I genuinely thought you were sarcastic. Being born in circumstances that allow you to do that is luck, even in the developed world.
On the subject of the article, I thought this was going to be someone with a large capital surplus providing a basic income to someone "unluckier" than them to argue the benefits of basic income, rather than advocating to increase taxes (but probably still not on them since he made a point of saying how he hardly pays any).
0 - http://content.time.com/time/magazine/article/0,9171,801396,...
Well all of those things do have a lot to do with what kind of opportunities in life you started out with. Look at the SAT  or college graduation rates .
> Is there nothing ever we can do to improve our circumstances and our lives?
I think this is a hyperbolic reading of of this article. Obviously the author knows they worked hard. They just know that they had opportunities which other hard working people didn't have. What's wrong with that?
I'm not American; I don't know the tax structure. But I can't even imagine that this could possibly be true, or what is true that is meant.
Without looking it up, I would assume that the USA subscribes to progressive taxation, under which the richer pay more tax in both absolute and relative terms.
Even if it has a flat rate of tax, (a structure, incidentally, that makes far more intuitive sense to me) the richer are still paying more tax in absolute terms, and equal in relative terms.
What Earthly metric is the author using?
Taxes on investments, as this author is likely alluding to, are taxed at a different rate that can sometimes be lower than, say, someone in the top 20% is paying, even though the person earning the money through investments may be making millions and have a net worth of $1 billion. Warren Buffet posts his taxes each year, if you want to see a simple example of this. There are various arguments for and against this, but most of them are too simple and focus on the extremes. Overall though, this could be improved and optimized.
US taxes are weird (I think?) in that there are the posted rates, and then we all deduct lots of things (mortgage interest, charitable contributions, etc) and end up with an effective rate that is sometimes significantly lower.
Person A is a football player and makes $1 million in salary per year. This is all taxed progressively, meaning that Uncle Sam takes off 39.6% of most of his income. As a result, he pays close to $400k in taxes.
Person B is an investor. He invests in Applied Materials, and they have a very good year. His stock is now worth $1 million more than it was at the beginning of the year. Some of it, he sells - he's gotta eat, after all. That sold stock is taxed like income. Note that as long as he isn't living like a rockstar, he probably didn't sell enough to put him into the top tax bracket; he's just paying his expenses.
The remainder is taxed at about 20% - capital gains is taxed at a lower rate. Thus, because he can control how much of the stock he sells, Person B ends up paying somewhere around 60% of the tax that Person A pays.
This system screws over people who make most of their income through salary and benefits those who make most of their "income" through investments.
If you buy a share of stock (or any other asset) you don't pay any taxes until you sell it (or you die) and realize the income. That income is called a Capital Gain and is taxed either at Short Term or Long Term rates. Short Term gains (under 1 year) are (more or less) taxes just like regular income. Long Term gains (over 1 year) are taxed at a lower rate.
There are generally pretty good reasons for the different rates and the US is not at all unusual in this way. Virtually all countries have similar setups. The UK (where OP is from) does this.
It's also worth nothing since the blog author was talking about real estate that rent collected from residential real estate is NOT a capital gain, but is ordinary income.
And you could, you know, lose money in the stock market.
Wealthy people don't have to spend their capital. They have enough income through e.g. dividends. E.g. Warren Buffett bought (through Berkshire Hathaway) Coca-Cola in 1989, and has never sold a single share. He has indicated he plans to keep holding on to them forever. Hence, he will never pay taxes on the capital gains.
> And you could, you know, lose money in the stock market.
That is true. But how is that relevant?
The metric the author is using is the fantastic state American politics are in.
>My wife and I don’t need the money we make from owning most of the business. We live off the salaries of our jobs, and reinvest virtually our entire share of the business. These reinvestments count as “losses,” and so officially we have never made any income or paid income taxes on our share of the business.
Case A: the owners take a paycheck of $100,000. It gets taxed at 30%, they get $70k.
Case B: the owners take no paycheck but instead buy a $100,000 property through the business with the business's earnings. They pay no tax but now own a $100,000 property which will now augment the business's earnings further. Down the road years later, they finally take a paycheck at $300,000, which is taxed down to like $180,000 or something. Still more than 2.5x the Case A payout, and let's not forget they own that much more property now on top of everything else.
EDIT: thinking about this more I suppose that one possibility is that the operator brother is taking basically all of the rent as income and the financier brother, instead of making a return from rent, is hoping to make a return from appreciation (selling the houses later for a profit). TBH this doesn't seem super likely to me either, but it's possible.
I really don't think that the author is correctly explaining his tax situation (which is fine. it wasn't the main thrust of the post).
Guy in financially comfortable position feels guilty, decides his education, willingness to live in Qatar, etc shouldn't really be worth this much, completely discounts the idea that anything actually matters, it is all merely "luck" and that's it.
Sounds like an existential crisis, not really a good commentary on the concept of basic income.
Guy reads an interesting article that threatens his idea of success, incorrectly summarizes the article and resorts to personal attacks against the author.
Sounds like threatening core beliefs makes you defensive, not really a good commentary on the article itself.
Also, your comment is basically a personal attack.
Isn't yours? (The first one)
He used your comment as a framework.
Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity.
When disagreeing, please reply to the argument instead of calling names. E.g. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."
No it wasn't. You literally claimed the author had a mental break down. That's not an attack on the article, it was a direct attack on him. I literally formed my comment exactly as you did to relay that point.
You seemed to have taken such issue with the idea that the guy is lucky, you attacked him personally rather than attack his point. I don't entirely agree with the author. I don't entirely disagree with him. But if you want to make a point, attack his conclusions, not him.
It's fine for people to think basic income will be a good solution to the situation before us. I don't happen to agree with that position. But personal guilt and appealing to some just world fallacy is not a substantive argument for why we should try to make this happen.
At no point in the article does he say that. He simply stated he was lucky. He was born in a country that made it such that he would NEVER be able to end up like the workers he encountered. Thats absolutely true. That makes him (and you) lucky and certainly more successful relative to them.
> his article is also not really well backed is a valid criticism
This is a story about something personal, its not a scientific piece. His "backing" is simply that being born where he was, in part, is the reason he is where he is. That's not subjective, that's an absolute fact.
> This piece looks to me like someone venting emotionally about their guilt at feeling they don't really deserve more than others.
You are free to interpret it that way, but he never actually indicated anything you took from it. It seems your own perspective on basic income highly skewed your perspective before you started to read it, and everything he said was used to justify your preconceived notion.
> Many people feel guilty for being born into wealth and privilege.
I would imagine the majority don't.
> That guilt is not some kind of objective evidence that basic income will solve the problems we currently face
No, studies (some of which have recently began) will indicate whether or not basic income will work. This is an article about someones personal experience, once again, not a scholarly article or study.
> It's fine for people to think basic income will be a good solution to the situation before us. I don't happen to agree with that position.
Unlike you I think it's something that needs to be studied before I draw any conclusions. The irony here is your just as guilty as what you accuse the author of: you emotionally respond to something with zero evidence for (or in your case against) it.
Then you come in and mirror my language and start off with "guy..." I am an active participant on HN and open about my gender. You referring to me as a guy tells me you don't actually recognize me or know who I am. It also tells me you didn't so much as click through to my profile. It is trivially easy to determine my gender and you didn't do that much. That means you know literally NOTHING about me, thus all statements that follow your description of me as a guy are made up out of thin air. They aren't any kind of valid criticism with any kind of basis in actual facts.
As for UBI, I am not closed minded about it. I am willing to consider a good argument for it. In fact, I would love to see a good argument for it. But I don't think an experiment like the one being done by Sam Altman tells us anything useful. It is obvious on the face of it that if a small subset of people get extra funds for a specified period or time, they will tend to do better than most people around them. This is not real world conditions for what will happen if UBI becomes a reality.
I think there are much better proxies to look at for trying to infer what will happen with UBI and these are real world examples. This includes things like what happens when someone wins the lottery (2/3s are bankrupt within 5 years) and actual historical efforts to share and share alike (communism, which was supposed to be a peasant paradise, but was a disaster). I have had pertinent classes in things like Social Psychology for trying to gauge what is likely to work with actual human beings in actual reality, not some experiment. I also write about my thoughts on UBI and related matters here:
Rental income here is a bit weird because you have in general a very poor town, with a very expensive private university with old money funding houses for students. I bought my house here for a fair bit less than it would cost to rent something half the size.
I'm constantly surprised that the market doesn't arbitrage this away. I suppose that is due to the fact that the real estate market is less efficient than others (both due to liquidity and transaction costs) and that being a landlord is harder than people suspect.
In either case, its always made me leery of rental real estate as an investment vehicle.
As for renting out property, it's never effortless or risk-free. If it was, the rate of return would drop to that of other minimum risk assets (e.g. treasury bonds).
If I could not acquire productive assets, there would be much less reason to save. And it's unclear how one would save, as banks would likely not exist either. You can solve this problem somewhat by having a centrally planned economy. But then you have the problems that hit those.
This is laid out super bare in his example: he bought a house. That house is in an area that surely is past its prime in terms of growing rate of GDP growth. Which means r > g. And that means his assets give him relatively good returns, which in turn compound, which has the net effect of him getting far, far ahead of everyone else who lives in that area.
I would, well, did, actually, argue that's precisely the point.
* Our economic system claims to reward "work", but the reality is that it rewards ownership and extracting economic rents.
* Increasing value does not necessitate that being the result of one's "work". For example, land values rising are the result of other peoples' work (eg. neighboring properties, government policies, general economy). The landowner is compensated through the labor of others.
* Economic rents aren't taxed enough ("The business pays property taxes, but they average about $15 per house, per month – minuscule compared to the rent we make.")
* Labor is taxed too high relative to capital gains
* "Luck" plays a huge factor, and luck and hard work aren't mutually exclusive. If I'm born into a poor family in a ghetto, naturally I'm going to have less opportunities than being in an upper class family with enough funds to perpetually support me (eg. Mark Zuckerberg, Bill Gates)
* We need a Universal Basic Income, ideally funded by taxes on economic rent (eg. land value tax)
Our economic system is like a big game of monopoly where all the properties are already owned. You start off with whatever money/property you inherit from your parents, and have to work yourself up. Meanwhile, the rentiers are profiting off the backs of the laborers without doing anything. Sure it's possible to add "properties" to the board (ie. starting businesses), but that doesn't scale.
At least Monopoly had a UBI in the form of the $200 you get every time you pass "Go".
That's not really what personal finance are about. Unless Vegas Holiday Brochure count as Personal Finance: go to a casino, win big, retire.
> Be lucky.
Being lucky and being privileged are definitely related. Privilege isn't just the color of your skin but the opportunities you're born with (rather than earned).
Basic income is also related, because it's purported as a system to fix the inequalities discussed in the article. Whether or not it will fix those inequalities is another discussion, but it's certainly relevant to the topic.
Of course this has a lot of problems, but it's the best we have today. On this system, the rules of the game are: we need to work and spend less than we earn, and use the money to accumulate more capital, an not buying more things.
How about per capita for each group?
153 million laborers vs
122 million stockholders
A worker owning a handful of shares of stock isn't a capitalist, or even petit bourgeoisie.
Everyone gets 3 basicMealTokens and 1 basicFun token.
However, in SF, there are only sfMealTokens which require 20 basicMealTokens.
In Vietnam, 1 vietnameseChickenPlatterToken is only half a basicMealToken.
Tech workers are paid in techWorkTokens which can be exchanged for 200 basicMealTokens each or 100 basicFunTokens, or 1/1000th of a Tesla token.
Token transfers have friction so it is advantageous to maintain a surplus of tokens most easily transferrable (least hops) to what you want.
To ease this, SF maintains a sfBasicToken and makes the market to transfer tokens from all over the world to sfBasicTokens. sfBasicTokens have an advantage in that you can pay for things easily instead of paying 67.34 redditStatusTokens.
Some old geezer is willing to sell his house for a legacy usdToken, a token so old it had a physical representation and no historical memory.
The basicFoodToken ideas doesn't pan out. SF starts giving out sfBasicFoodTokens instead. However large numbers of people realize an arbitrage mistake and live like kings in Thailand, taking advantage of the buying power of sfTokens due to the Thailand people wanting to make it big with their startup dreams in the Bay Area.
Well, not no one. There are hard money lenders who will loan money to "some guy" to do more or less that.
So we have $150B for our Basic Income. There are about 300 million Americans (I rounded down to make the math easy). $150 Billion / 300 Million = $500 each per year.
It doesn't hurt to consider Ricardo as well.
From Ricardo, we get the Iron Law of Wages, and the Law of Rent. Key to understand is that these move in opposite directions:
* Wages tend to the minimum subsistence level, all else equal.
* Rent rises to claim the surplus value afforded.
That is, wages are based on the input costs, whilst rent is based on the output value (use value). The third element, price (sometimes "exchange value"), is what's at question.
(I distinguish cost, value, and price as three distinct concepts. This is a long-standing question, and in my view, a grossly confused one, in economics. They're related, but not deterministically. In the long term, C <= P < V. Bentham's "utility" is an exceptionally red herring. More, very much in development: https://redd.it/48rd02)
Note that this means that rent is determined by the pricing behaviour. If you're a "business owner" but you're not capable of extracting rents, you're either selling commodities or labour, you're not collecting rent. The term here is in the sense of economic rent. Simply "owning a business", without the economic circumstances which give rentier power, isn't sufficient -- don't confuse what it is you're doing with the systemic construct in which you're doing it. Weiderquist emphasises this point specifically, several commenters here clearly haven't grasped it.
Another elided discussion: rents are associated with access control, and can be thought of as authority over some (virtual or physical) gate. They're a natural element of any networked structure, in which nodes and links exist, most especially where some nodes have higher value, or control more flows. I believe though can't yet show that all cases of rent involve a fundamentally networked structure, again, virtual or real. My concern is that this may be a reflexive definition, I'm trying to determine that it is or isn't.
Another element of this is compensation for labour. Smith lays out five elements determining this, and I find them durable and comprehensive. In the Widerquist's case, the combination of requisite skills, and comparative unattractiveness, of teaching in Qatar, allow him to claim both a high wage and favourable working conditions (including a lighter-than-typical workload). This falls straight out of Smith. That is, he earns his salary "by doing a job few others are both willing and able to do".
If you're looking at the macro view, realise that these don't scale. That is, the innate and acquired capabilities to teach at University level are not widely distributed through the workforce, and the lack of appeal of various sorts of work is sufficient to dissuade (or prevent, or disqualify) others from taking part in it.
There are other elements here as well: the complimentarity of time and skills, on the one hand, with money, on the other (the classic business partnership). Tax structures (and who they benefit). The relationship of wealth and political power. Smith again: "Wealth, as Mr Hobbes says, is power." One of the shortest and clearest sentences in WoN, incidentally.
Eh? Nobody has ever had this, and nobody ever will.
nor is there a combination of bad
choices that could conceivably put
me in their position from my starting
It's not an inaccessible scenario, but unlikely to be anything other than a forced outcome for someone like the author. For those in mind, who actually face the true reality, it's usually accidental.
He makes his living teaching the children of totalitarian aristocrats at a faux university, is saving for the future on the backs of the poor back at home, and gets a kick out of having indentured servants at his beck and call.
I wouldn't shed a tear when his little empire of dirt collapses.
Of course in Quatar they have serious human rights issues that need to be resolved. I'm just talking about in America.
I know many upper middle class kids who got college degrees for free (parental scholarship).
> It doesn't really matter if you grow up poor (in America)
Like I said above, and the author claims, it does seem to matter quite a bit if you grow up poor or not poor.
> There are many people who are very rich precisely because being poor as kids drove them to work hard.
There are probably many more who are rich precisely because being rich as kids drove them to being rich as adults.
> However, oftentimes the government is the cause of such problems in the first place.
Oftentimes you drive on the roads the government provisioned, visit the parks past presidents enacted, live in the security our GI WW2 vets created, so on and so on.
i cant believe i never summarized my own feelings that succinctly. of course the reality is it does both, but i think its way out of balance towards ownership rather that doing.
1. do thieves deserve the money they steal?
2. are there people who profit from things that are legal but shouldn't be?
those are abstract q's that i think point out how saying "people are paid what they deserve" is wrong. if you reject that because you draw a distinction between "deserve" and "value they create", then i think "value" is kind of meaningless. in that case, it has the literal meaning you ascribe to it (i.e. it is what you call the amount of money someone pays for something), but nothing beyond.
i run into this view very often on here- that capitalism is fair because it pays you what you are worth. but thats so so lazy. you may not agree with me about how its unfair, or that its even worth worrying about, but id hope you would grant me that that premise is just a way to not think about the issue.
Capital gains is always taxed equal (for short-term gains) or less (for long-term gains) than "generic" income, except for a few edge cases (e.g., in the very-low income range where additional labor income has a negative net effective tax rate due to EITC and child tax credit and long-term gains have merely zero taxes.)
This is actually true. You can make up to $75,900 on capital gains alone if you're married, and pay zero income tax on that.