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Too Hot for TED: Income Inequality (nationaljournal.com)
189 points by spenrose 1082 days ago | 223 comments



Another rich guy trying to persuade average folk that all our problems would be solved if people like him were taxed more. Never mind that the Buffet-rule (minimum 35%) would net $31 Billion over the next 11 years versus $7 Trillion in estimated deficits. (http://www.politico.com/news/stories/0312/74232.html)

Another reason this idea is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the median American, but we don't buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, we go out to eat with friends and family only occasionally.

I can't buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can't buy any new clothes or cars or enjoy any meals out.

But you can invest... Your money isn't stuffed under your mattress, is it??

That's why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.

Are they really investments or are they just political favors that over-cost and under-deliver? (See the Department of Education, TARP, Medicare, war, etc.)

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Though I support the idea that wealthy people should pay high taxes, perhaps even higher taxes than they do now, I think it's also worth noting that the US already gets 70% of all its taxes from the top 10%[1].

As long as we're keeping capitalism, I don't buy the argument that simply being rich is wrong. I'm also fairly skeptical of set limits on income, as setting those limits is very hard. What goes into it? How much money per year is the limit of a "Just" income? I don't think those questions have a definitive answer.

I think repealing the bush tax cuts is a good idea. I think we should keep the estate tax. I think the "buffet rule" isn't bad, but it's no solution. I just wonder when people will say it's enough. Rich people pay less tax today than they did a decade ago - but they're making massively more money as well. If we add all those taxes, and there's still a massive income imbalance, what then?

I think it's in everyone's interest to live in an equal society, for reasons that I don't want to get into right here. However, I'm dubious that can be achieved through targeting one social class or another. It seems like the American right is targeting the poor, while the left is targeting the wealthy. Everyone feels like a victim and just wants to keep what they have now. What a crappy situation.

Edit: I missed some words.

[1] http://www.taxfoundation.org/news/show/250.html#table6

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> I think it's also worth noting that the US already gets 70% of all its taxes from the top 10%

Yes, but they also own 70% of all the wealth[1], according to 2007 numbers (the percentage is almost certainly a little higher today), so that's perfectly proportional. If you own 70% of the wealth, you should pay 70% of the taxes.

http://www.businessinsider.com/15-charts-about-wealth-and-in...

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Actually, since almost every country in the world thinks progressive income taxes are the right thing to do, then this is an argument supporting higher taxes on the wealthy.

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Well said. To go a bit further, limits on income are likely to encourage people not to try truly hard or truly risky ventures. Paul Graham addresses this at http://paulgraham.com/gap.html

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Yeah, because high tax rates always discourage entrepreneurship </sarcasm>

Norway - with one of the highest tax rates & comprehensive welfare states on the planet - has higher rates of entrepreneurship than the USA does. http://blogs.reuters.com/felix-salmon/2011/01/20/norway-entr...

If you look at international entrepreneur rates, its pretty clear that there is no relationship between income tax rates and start-up activity (that's not to say that specific tax policies don't make a difference). http://www.internationalentrepreneurship.com/total-entrepren...

For every argument about high tax discouraging risky ventures, there is a counter-argument that high safety nets reduce the risk of start ups.

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Speaking of Norway, a recent TC article paints a different picture: http://techcrunch.com/2012/04/23/is-norway-leaving-its-tech-...

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"limits on income are likely to encourage people not to try truly hard or truly risky ventures."

When people say things like this it reminds me of religious fundamentalists who claim that a world without belief in God would be some sort of anarchist murder-on-the-streets hellscape because people wouldn't have a reason to act morally or ethically anymore.

Not only is it incredibly pessimistic to believe either of these things, but you don't have to look far to see tons and tons of real-world examples that prove that the statement is completely ridiculous.

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There's an important difference between wealth and income that PG does not go into.

Sure, I'll buy the idea that taxing income discourages work (though its impact is far more muted than some people would like to suggest).

However, I've not yet seen any argument that taxing wealth itself discourages work or wealth creation. If anything, taxing wealth keeps people from sitting on their assets and doing mere "wealth preservation".

If I were a Ramen-profitable startup entrepreneur, I'd much rather be taxed at 2% of my net wealth than at 30% (or even 15%) of my capital gains. Indeed, if I were anyone who planned on leveraging my capital to actively create wealth (c.f. Elon Musk) I should much prefer wealth taxes over capital gains taxes.

If we live in a meritocracy then anyone with a lot of wealth should be able to relatively easily average >6% ROI year-over-year.

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Very few people have money as their prime motive.

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>Though I support the idea that wealthy people should pay high taxes, perhaps even higher taxes than they do now, I think it's also worth noting that the US already gets 70% of all its taxes from the top 10%[1].

You do realize that if you make about $80K/year, you are already in the top 10% right? With that perspective, I feel that 70% of taxed income is absurdly low, the fact that 30% of all US tax dollars come from people making less than $80K/year is completely absurd to me.

Edit: According to your table, the number is actually: $112,124 I still think my point stands.

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Your point doesn't stand. Read the rest of the data. Namely, notice that according to this data, the median AGI of the United States is $32,396/year.

So half the population is making less than $32k/year. Yes, the top 10% and the top half of the population are taking on almost all of the income-tax burden.... because they (we, in my case) have almost all the income.

There's nothing fair about demanding tax money from people who are just plain poor. You tax the rich, because rich people have money.

Now, we could talk about distributing the tax burden "fairly" across the rich and the middle class, but that assumes we have large, broad middle class. Which we don't: making a "middle-class salary" like, say, $66,193/year already puts you on the border of the top 25% of the country.

And then notice that to get from the top 25% to the top 10%, you have to make almost twice as much money. Top 10% to top 5% isn't that large of an increase, but top 5% to top 1% requires more than doubling your income.

So, to be clear:

To go from median to top 25%, you need to roughly double your income. To go from 75th percentile to 90th percentile, you need to almost double your income. To go from 95th percentile to 99th percentile, you need to more-than-double your income. We're operating a tax system designed for a bell-curve income distribution when what we actually have is a power-law income distribution.

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FYI, when you look at individual median income instead of household, it's worse:

individual median income: $26,680/yr, single: $18,881/yr, married: $32,033/yr, divorced: $28,668/yr, widowed: $18,485/yr

Half the population is making less than $26,680.

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"We're operating a tax system designed for a bell-curve income distribution when what we actually have is a power-law income distribution."

Well said. I'd upvote more than once if I could.

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You say 70% of all taxes, but your link only discusses income taxes. That is horribly misleading.

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I think it's also worth noting that the US already gets 70% of all its taxes from the top 10%

Why is that worth noting? That only further demonstrates the income inequality in the United States. Furthermore, wealth is far more important to take into account than income in any discussion of taxation or inequality.

Also, I have yet to hear anyone make an argument that sounds anything like "simply being rich is wrong."

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"That only further demonstrates the income inequality in the United States. "

So is this the basic issue, then? That there's income inequality?

Because that's always going to be the case. Even in the most socialist nations, or even communist nations.

There is always a strong disparity of income and power. Always. And there always will be.

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The problem is not the disparity, but how wide it is. Inequality in the US is currently so wide, it's absurd. It's widening in Europe as well, but not as fast and not as radically as in the US in the last 30 years. This is not healthy, it's polarizing society and eroding the social contract. The only way to effectively balance this trend is through higher taxation.

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First of all, doesn't anyone see the correlation between increased government power (revenue/spending) and an increase in the income inequality gap? Look at a graph showing govt spending as a percentage of gdp vs the inequality gap.

Secondly, assuming that the "inequality gap" is necessarily a bad thing, which I don't think anyone has shown...

Why do you assume that higher taxation will decrease the income inequality gap?

If anything, higher taxation means more money (ie power) in the hands of the government. More power in the hands of the government just leads to more crony capitalism that concentrates even more money and power into fewer hands. Worse, those companies that then have access to all that money and power are the worst sorts of companies that don't even need to provide good products and services to consumers. Instead they get more bang for the buck by sucking tax dollars out of the system.

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- Secondly, assuming that the "inequality gap" is necessarily a bad thing, which I don't think anyone has shown

Actually they have.

http://www.eurekalert.org/pub_releases/2012-05/osu-iil050812...

http://www.youtube.com/watch?v=cZ7LzE3u7Bw

In face increasing Gini coefficient for 0.01 increases mortality in state for 122% after 12 years. Yes, it is a bad thing in almost all recorded metrics.

- First of all, doesn't anyone see the correlation between increased government power (revenue/spending)

Nope. I think revenue spending isn't really good metric of government power and so far no one has proved that. You are free to test your hypothesis though. I'd wager that there is quite a bit of income inequality if your gov. revenue is low but they spend a lot of money.

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> Actually they have.

I found the youtube to be more compelling than the OSU study. The OSU study contradicted lots of other studies that found nothing conclusive for nearly the same hypothesis. The author of the study managed to fit a curve that he was apparently looking for by allowing for enormous flexibility on the time axis. That's like finding pictures in clouds. You can see what you want to see if you look at something from enough angles. To be meaningful, you would need to apply those findings to lots of other data sets to see if you're just seeing what you want to see or if there's a real likelihood of a pattern. Science isn't finding one occurrence of something that you were looking for. Science is predicting where and how you'll find something and then having others find you're right over and over.

On the Youtube lecture: The statistics seem to show correlation, but causation? Is the inequality the cause of a lack of trust? Or is it the other way around? Furthermore, I saw lots of other correlations in the data they showed. Graph homogeneity of the population's ethnical background vs trust. Look at the states and countries that scored high trust. At a glance, they seemed to be the highly ethnically/religiously/culturally unified ones.

> Nope. I think revenue spending isn't really good metric of government power

Okay, what would you suggest... Watts?

> I'd wager that there is quite a bit of income inequality if your gov. revenue is low but they spend a lot of money.

Wait, your conjecture agrees with me. Spending is high and inequality is high. The gov. revenue is almost a non-factor in terms of government power. For the part of the curve where the currency hasn't been completely devalued because of over-borrowing and printing money, the amount the government spends is all that your really need to describe government power. Lack of revenue to back it up is just a ginormous credit card bill that no one seems to remember is out there.

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That is not to say that the level of inequality is not greater than it was before or is elsewhere. The extent of inequality has grown in the states (http://www.motherjones.com/politics/2011/02/income-inequalit...) and compares unfavorably with other countries (http://en.wikipedia.org/wiki/List_of_countries_by_income_equ...).

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With a first look at that chart, what it seems to truly reflect is the size of the middle class in each nation.

Wouldn't a better solution be to increase the size of the middle class rather than decrease the size of the upper class?

Also, among the western european nations and the US, I suspect a strong correlation between immigration rates and the data on the chart.

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Problem is, a strong middle class usually rests on the strong provision and spread of certain goods. Some of these are private goods, like owning one's own house, but many of them are public goods: liveable environment, public transit, public schools, public universities, public health and health-care, etc.

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Let me put it this way. It sounds like you don't want the entire government budget to rest on taxing one class and one class alone, the upper-class. That's a pretty virtuous and equitable thought to have, very fair to people who probably have much more than you.

Problem is, if income/wealth inequality is too severe, those guys are the only ones with money to contribute. So on some level, you need a certain level of income/wealth equality just to have multiple classes/brackets with enough excess income to contribute to the national welfare.

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When the poor people are fat, it is safe to assume the middle class has money to contribute to running the country.

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They're fat because they can't afford decent food and have to eat crap.

Assumptions don't get you anywhere.

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They get fat by not having enough money for food?! Seriously?!

Do you think they spend so much on lottery tickets because the rich so unfairly keep them out of derivative trading?

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Decent food. There are two main effects at work:

If all you can afford is ramen/bread/fast food, your body makes you overeat to get enough other nutrients (eg. vitamin C, B).

The second is that your insulin goes crazy with all those simple carbs and sugars (carbs are cheap, unlike protein, fish and vegetables, and get metabolised to glucose) so you get massive blood sugar swings. The low side of those makes you eat more and get fatter.

Lottery tickets are a strawman. Or, to quote a science fiction novel that I can't quite remember: "a tax on hope."

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It's just as cheap to eat properly as it is to eat unhealthily. The difference is you need to actually put some effort in, rather than order a large Big Mac Meal.

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Complex carbohydrates are cheap. Fat is cheap. Eating simple carbohydrates is not an economic choice.

Vitamins pills and vegetables are reasonably cheap. And anyway if deficiencies caused obesity, the rate would drop off dramatically over some threshold income.

Lotteries matter because that's where poor Americans spend about 10% of their income. Taxing the rich to destruction will not fix that.

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They're not as cheap though, are they? Here are a couple of articles on poverty, obesity and cheap calories that you might find interesting:

http://www.guardian.co.uk/commentisfree/2011/dec/14/obesity-...

http://www.huffingtonpost.com/dr-mark-hyman/not-having-enoug...

10% of a poor person's income turns out to be about $25/week according to this article: http://www.dailymail.co.uk/news/article-2123448/Poorest-peop.... Hardly earth shattering or likely to lift them out of poverty if they somehow manage to save it.

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Yes, in fact good food can be extremely cheap. Beans, eggs, and butter are dirt cheap. Canned vegetables are affordable if you buy for nutrition (i.e., not empty food like green beans).

Re. lottery spending, they are losing $12 a week! That is $600 a year! That could buy premium multivitamins, an extra several eggs a day, rather a lot of cheese, with money left over for the occassional meal out.

The problem of most poor Americans is not resources, it is the deployment of them.

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Do you think they spend so much on lottery tickets because the rich so unfairly keep them out of derivative trading?

Hmm... the blatant gambling nature of both of those makes it a good analogy.

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So is this the basic issue, then? That there's income inequality?

No, not at all. Who have you ever heard make such a claim?

The issue is the size of the inequality, its growth, and the fact that historical periods with less inequality and a stronger middle class seem to correlate with strong overall growth and prosperity.

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I don't understand why the size of inequality matters. If I make $20,000 and Rich guy makes $2,000,000, how does me making $20,000 and him making $200,000,000 million make any difference?

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Here is a Ted talk that prevents data about inequality: http://www.ted.com/talks/richard_wilkinson.html

There's another take on it here: http://www.quora.com/Economic-Inequality/How-is-income-inequ.... In, that link says that the degree of inequality matters in the us because in the us, the poor are desperately poor, and the rich are fantastically rich. In other words, if the poor had a pretty good standard of living and the rich were absurdly healthy, maybe that would be ok, but that's not the situation we have.

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Because the money he spends raises the price of goods etc. Therefore your 20,000 becomes less money. This is easy too see in expensive cities. The same middle-class person would have to demand more money to live at the same standards as he/she would have elsewhere, simply because richness have driven up the prices.

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So inflation is the primary concern?

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How?

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Because economic power and political power are strongly correlated, and always have been. It's the difference between the typical rich person having 100x more political power and influence in government than the average citizen, and the same wealthy individual having 10,000x more.

Massive gaping holes in income distribution are inherently anti-democratic. That might offend a person's capitalist sensibilities but it doesn't make it any less true.

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It makes no difference to you. It makes a great difference to the politician trying to get control of $198,000,000.

The blather about a strong middle class is misdirection. If the U.S. governing.g elite cared about the middle class, they would abolish the armies of bunny rabbit inspectors, No Child Left Behind functionaries, and so forth. The American middle class is being choked to death by regulators, not billionaires.

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It's worth noting when talking about how the wealthy should pay their "fair share." That discussion should at least consider what percent of all taxes they pay.

Also, I have some friends who grew up very poor and who believe pretty strongly that it's wrong to own an excessive amount of money while others go hungry. Though I think they make good points, that's not my view.

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"(See the Department of Education, TARP, Medicare, war, etc.)"

TARP money has been paid back almost in full, depending on who you talk to. The DoE budget is like an eyedropper full in the wake of an ocean, compared to the DoD and elderly entitlements. And, if you want $FAVORITE_CANDIDATE to touch Medicare and Social Security, you go right ahead. I'm quite positive they will smile and move on, knowing where their constituent bread is buttered come election time. Believe me when I say that the elderly are the most important lobby in the US, and they don't even have to spend a dime to influence almost every branch of government.

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Targeting medicare and social security is silly anyway. They are funded via a separate tax (FICA/SECA) that only applies to the first 200K/250K of income.

And the only reason why SS/Medicare are running out of money is because the government frequently borrows against social security surpluses. You may remember, back in 2000, one of Al Gore's campaign promises was to put social security into a "lock box" with the hopes of stopping this (IMO it likely would not have buy-in from congress but it's still a good idea).

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SS is funded by separate tax, but if there's a shortcoming, it is filled from the general budget, and if there's a surplus, it goes into general spending - so this distinction is an accounting fiction, both are incomes of the same government and as long as government fulfills its obligations nobody cares how the money got there. When SS starts running negative cash flow, the govt would have to refill that. Right now the promise of the govt is to refill that up to 2.7 trln - which is the size of SS Trust Fund - but nobody doubts for a second that the govt will in fact refill any sum necessary or will change SS rules (raise taxes and/or cut benefits, which are not legally guaranteed by anything) if necessary. So "lock box" here has very little meaning except taking part of the money out of circulation for no reason - it would definitely not stop the govt from borrowing money.

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> as long as government fulfills its obligations nobody cares how the money got there

I care. If they increase our debt or just start printing extra money, they have fulfilled their obligation to SS while screwing the rest of our economy pretty hard.

> has very little meaning except taking part of the money out of circulation for no reason

Very little meaning except having the government follow rules of financial discipline that any financial advisor would advise individuals and businesses to follow. If you want to save after-tax money for retirement, separate it out from the rest of your disposable income. Keep separate accounts, separate records, etc. Otherwise, you'll blur the line between your different monetary purposes and it's doubtful you'll mean your savings goals.

It's about discipline and clarity to the American public. Sure, a dollar would be a dollar if the government were responsible enough to follow sound money management principles... but when have they ever done that?

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For financial discipline it does not matter, government will borrow anyway because it can, and it will print money anyway because it can. Because borrowing and spending is politically easier than not spending. US government does not have any savings - taxpayers are its savings account. And as long as substantial amount of people think that raising taxes is a way to solve the problem of runaway government spending - this savings account will be used and abused endlessly. There's no reason for politically risky cuts if you could just borrow and tax. The sad fact is US government is addicted to deficit. And no addict was ever cured by giving them access to more of the source of their addiction.

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http://wiki.answers.com/Q/What_is_satiation_therapy

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> If they just start printing money

too late. Inflation and QE already happened.

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See here: http://projects.propublica.org/bailout/main/summary TARP spent: 414bn TARP returned: 346bn So "almost" here is a bit of a stretch. But if we look at bigger picture, of all bailouts, it's 602bn spent and 387bn returned so far. That's 214bn still out there.

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It's easy to pay TARP back in full when you can borrow at the Fed at 0% and lend at 5%. Favor. Education performance has stagnated ever since the DoEducation was created. Who benefited? Not me or my kids!

And the fact that we have third-rail (untouchable) programs in this country is NOT a strong argument in favor of more "investments".

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"Education performance has stagnated ever since the DoEducation was created. Who benefited? Not me or my kids!"

Education performance lagging in the US is not the fault of it being federated. The shining education systems by competency in Math, Science, and Reading comprehension (S. Korea, Finland, Canada, New Zeland, and Ireland) all have federated education systems. FWIW, though, I love the idea of the Finnish 7-16 compulsory school then switching to academic (university) track or vocational (tech school/apprenticeship) track. That is something we can and should do here in the states.

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> Education performance lagging in the US is not the fault of it being federated

It's not the fault of being federated, but obviously federating it here the way we did was a catastrophic waste of money and effort.

Maybe we should completely scrap the current waste of money and gradually put something else in place that works? I certainly don't trust the current power structure to do anything but continue to waste our federal education dollars.

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Countries with smaller population, smaller geographical area, or more homogenous culture are at some point more comparable to individual states in the US than the United States as a whole. "Federated" isn't very meaningful relative to other metrics when making international comparisons.

For the sake of presenting the alternative perspective advocating the abolishment of involuntary schooling, I would recommend reading the following piece by Cevin Soling: http://www.forbes.com/sites/jamesmarshallcrotty/2012/02/27/w...

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You invest whenever you buy something from a company. Perhaps it is better to have many millions of people making small investments in the form of purchases and therefor "voting" on what is better.

Rather than having a few large investors who may likely invest in stuff they never or rarely use which could have a habit of creating a bubble.

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That's 100% correct. Investing by consuming products of companies scales a lot better than invest-betting on startups and financial instruments.

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"Never mind that the Buffet-rule (minimum 35%) would net $31 Billion over the next 11 years versus $7 Trillion in estimated deficits."

Yes. Tony Robbins did a great deconstruction of this in a video, "Is taxing the rich enough? Will that solve our problems?": http://www.youtube.com/watch?v=jboTeS9Okak

(Regardless of what you think of Tony Robbins personally, this is an excellent video. I love how he breaks down exactly how much money it would take to really solve our financial issues.)

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Something is wrong with the math there. To net $31 billion over 11 years, you merely have to tax a million people an extra $2818 per year. $234/month. Surely there are a million people in the U.S. (that's about the top 0.4%) rich enough to not even notice that. You could go much higher before they even feel a pinch.

To put the $7 trillion in perspective, over 11 years, that's about $2500/year in extra tax per American citizen. Now, most citizens definitely can't afford that, it's true. But looking at it in per capita per year amounts makes the numbers look a lot more tenable to me.

When someone quotes values "over the next 11 years" I can't help but wonder about their objectivity.

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Taxing the rich isn't about solving the budget problems, it's about solving the fairness problem. It doesn't matter that it isn't enough to make a fiscal difference, people want to feel the laws are fair and the rich are paying at least as much of a percentage of their income as the middle class. That's what the Buffet rule tries to address, equality.

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Can you solve this fairness issue:

"the US already gets 70% of all its taxes from the top 10%"

The rich are getting richer not because they pay too little in taxes, they're getting richer because they rig capitalism with the help of their buddies in D.C.. Level the playing field of commerce, and you'll start to see some redistribution of wealth.

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There's nothing wrong with the rich getting richer as long as they're paying an equivalent share of their income to taxes and not getting special treatment. Crony capitalism is a different problem entirely.

And there's nothing unfair about the top 10% paying 70% of the taxes, in fact that statistic doesn't include the relevant data to even see if it's fair. It's not their share of total taxes that is relevant, it's what percentage of their income vs the percentage ordinary people pay that matters.

For example, if that 70% only represents 20% of their income, then 70% isn't enough, they aren't paying a fair share.

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You're assuming that "capitalism" doesn't naturally lead to the rich getting richer. There is absolutely no evidence on which to base the idea that capitalism doesn't naturally lead to massive wealth inequality.

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Wealth creation as well...

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This is a special case of that.

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Actually, the facts back him up. Look at this article analysing the deficit (specifically, the graph near the top): http://www.cbpp.org/cms/index.cfm?fa=view&id=3490

This shows tax cuts as the largest cause in our deficit. I won't argue that getting rid of tax cuts will get rid of the deficit, but every tax season, the money lost from these cuts doesn't go towards reducing dept. Worse, the amount lost from cuts grows each season.

"Are they really investments or are they just political favors that over-cost and under-deliver? (See the Department of Education, TARP, Medicare, war, etc.)"

The graph shows that TARP doesn't impact the budget much.

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The tax cuts weren't just for the wealthy though. You're basically just doing the Buffet-rule by only removing Bush tax cuts for the wealthy. Not going to help much.

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I realize that, but the tax cuts disproportionately benefit the rich, still (http://money.cnn.com/2012/01/03/news/economy/income_inequali...). Low income houses would still pay low taxes, just not no taxes.

Plus, the idea that ending the Bush tax cuts and giving a break to the poor are mutually exclusive is a false dichotomy. The power exists to do both.

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I never implied the rich didn't disproportionately benefit or you couldn't end the Bush tax cuts and help the poor at the same time. However, the net effect of that new tax structure wouldn't help the economy much, and therefore wouldn't help tax revenue.

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You're right. I had misread your post.

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I have to disagree. 31 billion may not wipe out the deficit, but it is a good start. The alternative minimum tax is another good start. I think there will be no single thing that eliminates our deficit, and have yet to hear negatives to the "rich" paying a bit more, especially if many of them are for it.

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We already have AMT. Which was introduced with exactly this purpose. Read its history: https://en.wikipedia.org/wiki/Alternative_minimum_tax#Histor...

It grew in an unmanageable mess of complicated rules that nobody understands and that has very little relation to its original purpose. Since it worked so nice the first time, we absolutely have to do it again.

> and have yet to hear negatives to the "rich" paying a bit more, especially if many of them are for it.

By "many of them" you mean half-dozen wannabe politicians? You are confusing the opinion of tiny vocal minority with the opinion of silent majority which doesn't do talks on TV. The reasons not to do it are plenty - grabbing more money from productive people to feed insatiable appetites of runaway government spending projects is not a sustainable model. Since most of the politicians are afraid to talk about any serious spending cuts and measures to bring deficits under control, it will not end up in anything but the same deficits with more government spending. Government can spend arbitrary sums of money, so we'd just end up in the same place very soon.

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> especially if many of them are for it.

I do not think that is the case, generally speaking.

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The main thing Buffet was trying to do was to raise the capital gains tax rate, which is only 15% right now. It would save quite a bit if it was raised back to 25%.

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Investment: noun. Political payoff made with other people's money.

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> But you can invest... Your money isn't stuffed under your mattress, is it??

But much of that investment heads out of the US to foreign companies or foreign expansion of US companies.

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If he feels strongly about it, he is also perfectly at liberty to pay extra taxes voluntarily and lead by example.

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But you can invest... Your money isn't stuffed under your mattress, is it??

Investment generates profits. It doesn't add to aggregate demand, but subtracts from it.

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Why should the government "invest" then?

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Because government "investments" are not for-profit investments in excludable (private/club) goods. They're non-profit "investments" in protecting commons goods and providing public goods.

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So, when does one prove causation? Because by any economic metric, the times when we've been fiscally strong is when the top marginal tax rate was higher than 36% currently. When they lowered it in 2001 from 40% while going to war, it created net zero jobs during the entirety of the Bush administration (and starting leaking jobs en masse during the crisis in 2008).

One could argue that Reagan's administration saw some powerful growth, adding 15 million net jobs; but, again, he maintained a >50% top marginal tax rate average through his tenure.

The Clinton administration growth rate was even more powerful (arguably) than Reagan's, seeing 23 million net jobs during his tenure, and that was when top marginal rates were nearly 40%.

An outlier, and a very powerful one, is when we saw the largest uplift from post-war growth phase to absolute juggernaut boomtime, was during the 50s, when top marginal tax rates were 90%. Somehow, I doubt we'll ever go back to that time (both in growth and taxation), but we can see that the times of growth was when top marginal tax rates were over 40%. Dip below, no room to grow.

IMHO (with evidence), of course.

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Aren't there two issues here

* how much (usually as a % GDP) should / does a govt take?

* how does that tax burden get shared out

the first is an issue of services provided by govt, but thesecond is an issue of fairness.

If you want more services you need to pay. As a % of GDP the USA takes about 26-28 % whereas pretty much every other Western country is between 35 and 45%.

My take on that is welfare costs. Full health and pension support for all the USA is going to be expensive, and will probably bring the US in line with Europe

the issue now is fairness - but even taut is really about ability. The easy targets are the middle classes - they have money but rarely enough to take advantage of tax loopholes

but if all the money is now held by the richest 2% then the richest 2 % will pay. The alterntive is no government

we all live by the 1930s maxim - I rob banks because that's where the money is. If the richest people in society have the money, that's where the bank robbers / IRS will go.

Fair has little to do with it

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> Full health and pension support for all the USA is going to be expensive, and will probably bring the US in line with Europe

btw, the US government already spends more per capita on health care than the Canadian government does, yet Canada has a (mostly) public health care system and the US has private system where even people with insurance can go bankrupt from medical costs.

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

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> he maintained a >50% top marginal tax rate average through his tenure.

Why would you average a tax rate over various year? Seems a deceptive thing to do.

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I've heard a number of people (Grover Norquist included) make the claim that although the top marginal tax rates were higher, there were a far greater number of tax exemptions available. I have no idea how true this is, and I'm not aware of anyone who's studied the actual income, wealth, and taxes of America's rich over the decades.

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In addition, the point at which the top tax rate kicks in has varied quite a bit throughout the 1900's. For instance, in the 1950's, when we had a top marginal tax rates over 90%, the top bracket also kicked in at 400k, which would be nearly 4 million in todays dollars. That's why merely looking at the top marginal rate is kind of misleading.

http://ntu.org/tax-basics/history-of-federal-individual-1.ht...

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90% of the top bracket..? That seems like honest robbery to me, like saying "I'm sorry. You're not allowed to make a lot of money. The government needs this money."

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Only if you think people paid all of it without writing anything off.

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Why should it be possible to write it all off? These systems seem to be completely in disagreement with each other? Why not keep it less than 50%, just make it harder to write things off O.o

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Because, in liberal (small-l, read: the West) democracies, the notion that taxation policy should be used to encourage productive behaviours and discourage unproductive ones is deeply-enshrined. Thus do we give tax breaks to people who start companies, create jobs, or invest in same, and further penalize with a luxury tax those who just go and buy a big fuck-off yacht. We give tax breaks to local farmers, but tax cigarettes and booze.

If we had the kind of tax structure you propose, we'd equally reward those who invest their money in growing companies, and those who blow it on hookers and blow. Some libertarians would claim this as a just tax system, and that the free market would determine how and where people invest, but this is not an idea that has much purchase among economists, social scientists, or the political elite.

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Asking Grover Norquist for advice on economics is like asking Pat Robertson to explain what causes hurricanes and earthquakes (hint: he says it's something about the sexual orientation of some people).

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Agreed, looking at top marginal rate seems weird, why not look at effective tax rates for the Top 1, 5 and 10% instead?

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because it doesn't give you the answer you want

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What answer would that be? Because looking here[1], the effective tax rate during our largest job growth (Clinton Administration) was also when we saw the largest effective tax rates for the 10, 5, and 1%.

I guess I have to correlate until we run out of data, then checkmate or something.

[1] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

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this debate is so complicated that you can easily take data to support any side of the argument

for eg. the effective rates don't match up for the 80s but they do for the 90s. they also don't take into account capital gains, which is what most of the top 5, 1% etc. pay

then if I was arguing the other side of the debat I would say that this data hasn't been normalized for purchasing power

etc. etc. ad nauseam

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BS.

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While I wholeheartedly agree with the reasoning presented in the talk, I can see why TED chose not to distribute it. It presents a pretty conventional argument for progressive taxation, without bringing any new facts or insight to the table. Historically, there is no evidence of a significant correlation between top tax rates and economic growth. Whether you believe taxes help or hurt the economy is strictly a matter of faith---conservatives hold one opinion unsupported by the facts, liberals another. Unfortunately this talk doesn't shed any additional light on the matter.

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Perhaps it is not a very new or well supported argument, but this is not why TED chose not to show it. The TED curator basically admits that he doesn't agree with the idea and that he also finds it too partisan to distribute. I would be worried if it is really being cut because the curator doesn't agree with it. Now as to whether it is partisan or not, this is not the first TED talk that has that "issue", there are TED talks about creationism, atheism, global warming, contraception, etc.

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Eh, no. He agrees with the idea, and exactly because it's too partisan, doesn't want to distribute it. As he should.

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Not to mention that people may reasonably disagree on the definition of "strong economy," and if having a "strong economy" is even a high priority compared to, say, personal liberty or socioeconomic equality.

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I don't know about 'strictly a matter of faith'. There is some pretty good evidence that 100% taxation (i.e. 100% of your earnings belong to the state and not to you) doesn't work to well.

I'm not suggesting that there aren't reasonable arguments about what the marginal tax rate curve should look like (flat, curved, etc.) to optimize various economic metrics--just that there are some configurations that we can rule out as unworkable without much real controversy.

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I'm sorry but, higher taxes aren't going to solve anything. At the end of the day, our spending will just not stop. We are just adding fuel to the fire.

We need to:

• Invest in the future: We need to invent, produce, and export new renewable energy sources. We need to invest in robotic manufacturing because cheap people labor is not sustainable in any country - robotic is where it will go.

• We need to heavily tax imports like many other countries in the world do. And have American made things become competitive - we have sold our souls to Asia.

• Drastically cut bullshit spending. There are billions spent every year on...bullshit.

• Invest further in Entrepreneurship, and start bringing smart people from other countries here.

Those are big 4.

The big problem is our countries expenses vs. income is too high. At the end of the day, a country is a business. And right now, we are a company that is not running well. We need to clean out the board of directors (Congress) and start fresh.

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Wait a minute: you say that our expenses versus income is too high, but then also say that higher taxes won't solve anything? Unless you're arguing that higher taxes won't increase government income (which is a totally specious argument that people make all the time, but which isn't backed up in the least by any actual historical analyses), then higher taxes absolutely could solve the deficit problem. Federal tax revenues as a share of overall GDP are historically low right now, and merely letting the Bush tax cuts expire for good would solve almost all of the "deficit crisis." For example see http://economix.blogs.nytimes.com/2011/07/26/are-the-bush-ta... or http://baselinescenario.com/2011/10/03/how-big-is-the-long-t...

So I guess it depends on what problem you want to solve, but if you're worried about the federal deficit, then higher taxes (even in the form of just eliminating the bush tax cuts) will absolutely help to solve that problem.

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The point is, if the government manages its money poorly, it should make better decisions rather than taking on more money.

If I tell you, "Fred is always running out of money; in fact, he's deep in credit card debt," your immediate response is not going to be "He should get a raise so he can pay off that debt" or "Here, give this money to Fred."

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Perhaps Fred is underpaid and needs a raise?

I'm not sure where you're going with that analogy. It all depends on whether Fred's spending his money wisely or not.

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If Fred's boss comes and offers him a raise, you would tell Fred not to take it? No, of course you wouldn't. If Fred were working up the nerve to ask for a raise or apply for a better paying (or second) job, you would shut him down? No, of course you wouldn't, because any of those would help him in his efforts to re-balance his books. And I assume you would know that due to you not being an idiot. Well, I guess I also need to assume you have Fred's best interests at heart too.

So your analogy doesn't just do work for your position; it clearly cuts both ways.

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>>>Drastically cut bullshit spending. There are billions spent every year on...bullshit.

Look, I'm no defender of gov't waste, but you can't blanketly say "bullshit" without specific examples. One's man bullshit -- the two Steves with their "toy computer" -- is another man's gold (Markkula, who saw the promise and invested early). Is NASA bullshit? Is protecting the environment bullshit? GPS satellites? The Coast Guard? Food inspection? I see the news headlines like everyone else trumpeting what look like screwy studies. What we never ever hear is any follow-up that one "stupid" study connected to a non-stupid study that led to a breakthrough. A breakthrough that most likely was just handed over to some private company to exploit for profit without any compensation coming back to taxpayers (this has been the case for decades with private companies taking government-tabulated data and reselling it as for-profit databases). This latter giveaway to private enterprise with original funding by working people is the ultimate bullshit to me.

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A business is like a machine whose function is to produce profit. Anything else that it may happen to produce (products, services, jobs, taxes, environmental damage, whatever) is really only a side effect.

So no, a country (or government) is not the same as a business.

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At the end of the day, a country is a business.

No, it's not. It needs to manage its finances responsibly, but that is quite different from being a profit-generating business.

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Countries are the largest companies that exist on the planet.

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Being Singaporean and living in an environment which resembles a real corporate state, I can assure you, countries should not be administered like a company.

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Quite simply, no. The goal of a country is not to amass wealth in the government.

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Not all companies that operate are for profit.

BUT, The goal of a country is to amass wealth, is it not?

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No, not at all. If anything, the goal of a fiscally responsible country should be to break even. Match spending to revenue generation while providing the most optimal services to your citizens.

The problem lies in that determining optimal services is a no-win game as it differs greatly in most geographically areas and person-to-person.

Corporations are far more focused on a particular set of goals and have a far smaller audience to satisfy (shareholders) who all generally want more wealth.

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No, it is not. GDP is not a measure of the happiness of the people.

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No.

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So the spending will not stop, and your suggestion is more spending?

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It's a good argument, but expressed using political code words (job creators has been co-opted) and without numbers to back it up.

I feel he blew his chance to get the message out. I also feel that most TED watchers already know this argument.

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Niall Ferguson talking about how the wealth disparity of the "West" relative to the rest of the world is justified with his typical economic moralism.

http://www.ted.com/talks/niall_ferguson_the_6_killer_apps_of...

Wonderfully, it is part of the "Rethinking Poverty" Theme:

http://www.ted.com/themes/rethinking_poverty.html

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It seems to me that many of Ferguson's heavy-lifting abstractions/generalizations go just as under-quantified and un-backed-up as Hanauer's. And several times, when Ferguson does show numbers, the "why did he pare down the dataset?" or choose that particular measure questions go unremarked. For instance, he mentions the difference between land-ownership in North and South America, but leaves out the wealthy European countries which were explicitly part of his explanandum.

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I never get tired of Niall Ferguson.

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So if either political party chooses to start throwing bullshit back and forth on some ideological hot button issue then TED decides that this subject is now off limits?

Don't we want the people at TED to be able to share good arguments concerning precisely the things that are most important and most misunderstood (which hot button political issues are, since people now choose an opinion based on tribalism rather than reason)

So that reasoning is bullshit. I don't want democrats or republicans choosing which topics are now off limits for debate because they are now political. For fucks sake, political topics are the ones that need debate. What else does "political topic" mean other than "this is important to our society and there is disagreement".

So TED talks are "Riveting talks by remarkable people on subjects that have not been deemed off limits by one of the two big political parties in the US".

Nevermind the fact that this clearly has nothing to do with political controversy as described, everyone knows there are talks about evolution, climate change and cosmology. The only difference is that there are likely people at TED who might disagree with this one.

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There’s one idea, though, that TED’s organizers recently decided was too controversial to spread: the notion that widening income inequality is a bad thing for America, and that as a result, the rich should pay more in taxes.

I'd suggest it's not too controversial but too pedestrian. Or maybe I'm seeing this through European eyes; ideologically, this topic/argument is mainstream here, even if politicians fail to do much about it.

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I think you are seeing this through European eyes. This is the kind of thing that gets you yelled at, threatened and told you're the "kind of [people] ruining america" if you talk about it in the US.

It's not controversial among people who are educated in the subject, but among the general amerian public it's incredibly controversial.

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The problem is that the feedback loop between US and Europe ends up being very unbalanced: American thinkers are hugely influential in Europe, but European ones get disqualified in the US almost by default because they're "socialists". This is a problem for us Europeans as much as for you.

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They aren't disqualified by any thinkers you would want to listen to, but yes, in general they are.

Americans, in broadly general terms, aren't interested in non-American things. Or intellectual anything. So yeah, combine those two together and you get the worst of those two general trends.

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I was shocked how hard it is to find any books about ordoliberalism in North America, even though it was a driver of economic thought and policy in Germany for decades.

The only book I found was at a major university's library, in German.

It was a "WTF" moment.

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The thing is, even if you ask the rich to pay more in taxes, that doesn't go to poor people. It goes to the government.

If you want poor people to get richer, tax them less (or remove them from tax altogether). Don't re-circulate the money via self-interested politicians to waste.

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Inequality is a stupid measure. What matters is absolute poverty. If I have a comfortable standard of living, what do I care if Bill Gates has a million times more money than me?

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Inequality of wealth means inequality of power. High levels of inequality mean a small number of people have vastly disproportionate power to shape society in their own interest, at the expense of the majority. Now whether or not you think that is a problem depends on whether you care about things like self determination, democracy and social justice.

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Rich people don't act as a cabal though. For every Koch there's a Soros. So while individual billionaires do have a lot of power, probably more than they should, it's still very strongly tempered by the mob, so to speak.

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You think there is a one to one ratio between Koch and Soros type billionaires?

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Not exactly, but then again the country is neither as libertarian as Koch would like or as progressive as Soros would like. And frankly, there are things that Koch and Soros probably agree on that aren't the status quo either, so how do you explain that?

The fact is, there are as many viewpoints as there are billionaires, and that's what keeps them from forming a cabal. If you want to find someone who can form a cabal to bend the system for private profit, look for a corn farmer.

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Why do corn farmers have more homogenous viewpoints than billionaires?

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They've managed to get the government to subsidize them heavily, price their competitor, cane sugar, out of the market, and support corn-based ethanol production. Of course, HFCS is worse for you and doesn't taste as good, corn in general isn't a particularly healthy staple food, and it makes no technical sense to make ethanol fuel out of corn in the first place.

The point is, policy isn't corrupted by billionaires, it's corrupted by large, politically powerful blocs, which may or may not have individual rich people in charge. It helps if the blocs are geographically concentrated, because the political system works state-by-state.

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"because the political system works state-by-state."

Hamilton is rolling in his grave...

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Corn farmers all get their money in the same way. Billionaires? Not so much.

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Well the corn farmers have helped the economy by getting ethanol into all of the gas. Doing that has lowered mileage (so we spend more) and destroyed engines (so we pay for more service). This doesn't count the extra stuff I now have to buy to keep the ethanol from destroying my engines.

At least many gas stations are starting to offer completely ethanol free gas now, although at a premium.

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Corn farmers who grow corn for human consumption, feed and ethanol are all the same? Small family farmers are the same as giant agri-business farms? Corn farmers in Iowa are the same as corn farmers in New York?

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Their interests are aligned. I'm just making an empirical argument: corn farmers have managed to get themselves a damn good deal from Uncle Sam at the expense of practically everyone else in the world, while George Soros hasn't.

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Iowa primaries...

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Technically, there's two Kochs and one Soros. The whole brothers thing. ;-)

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You'd think, but as it turns out, inequality has strong negative effects to the point that even the rich in an inequal country do worse than the more poor in a more equal country.

TED talk about it: http://www.ted.com/talks/richard_wilkinson.html

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I haven't seen either talk, but I am really curious now about why TED would post Wilkinson's talk but not Hanauer's, if they both address the subject income inequality.

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From reading the transcript of Hanauer's, Wilkinson's talk is just way better. He has A LOT of actual data, in fact the whole talk is data, data, data, on obesity, happiness, violence & homocide, lifespan, infant mortality, trust, teenage pregnancy, addiction, child wellbeing, mental illness, highschool dropout, social mobility; all on a country level and on a US state level. He also shows that inequality is the problem and that GNP per capita hardly matters ... while Hanauer's talk is 99% rhetoric. Even though the message is roughly the same, Wilkinson's talk definitely is a lot more objective rather than subjective political assertions, so it's a lot harder to argue that he's simply pushing a political agenda.

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Is that an appeal to authority? Just because something is on TED, doesn't make it true.

I'm sure you could find studies that disagree with this.

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That's not an appeal to authority. It's a link to information. If you manage to find any contradicting studies, please do post them here. That said, his data seems pretty solid, unless he's flat out lying (unlikely). Keep an open mind!

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Your position is correct, but nonetheless fails to account for human nature. It's all fine and dandy to have a system where, through 100% morally justified means, 1% holds all assets. Then you get an uprising of the other 99% and the whole country/system falls on its face. Morally, I don't agree with income redistribution for the sake of egalitarianism either; but pragmatically, one cannot but acknowledge its importance for the stability of a social system. And in the end, that trumps dogmatism.

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You may not care, and I certainly wouldn't care, but the desire for absolute socioeconomic equality is extremely common. There's a word for it: "egalitarianism." Egalitarianism is a fundamental principle behind many political systems, from socialism to modern American liberalism.

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Because he has million times more power than you, power over things you hold near and dear. It is fortunate that Gates/Buffett are using their influence for good but not everyone is doing the same.

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If I can buy "power" over somebody then that's the problem, not the income inequality.

Furthermore, I don't see how fixing the income inequality fixes the root problem there.

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>I don't see how fixing the income inequality fixes the root problem there.

It doesn't, but it might make the lives of millions of people better in the medium term, and possibly result in knock on legislative changes that give more power to working people: repeal of anti-labour laws and so on. Which makes further real change to the system more likely and possible.

You will find many far left wing types have little interest in proposals to fiddle with the tax system, for the reasons you describe: it doesn't fix the real problem. And in a funny way it may well be against the interests of the proletariat: it prolongs the slow death of the current system. That doesn't mean the far left doesn't talk about income inequality of course, but they do so with a different aim: to increase awareness among the working class of their exploitation, with eventual revolutionary goals.

People have been debating the relative merits of gradual reform/revolutionary change for a long time now…

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If I have a comfortable standard of living, what do I care if Bill Gates has a million times more money than me?

Because people by their nature are jealous. Many people even hate when their friends do better than them for some reason.

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The issue is that a very small number of very wealthy people are holding onto a very large amount of money. Any money that isn't being used to buy, sell, or invest in something is effectively just taken right out of the economy. Everyone is poorer because this money is "gone" from the system. All this wealth is locked away as a number in a computer.

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If the money is in bank accounts, then it is contributing to the economy. One of the worst economic problems of recent years has actually been the lack of money just sitting in reserve to give the banks stability.

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I almost agree with this. Of course it's a very small percentage of US wealth that's literally sitting locked up doing nothing. Money in a bank is doing something, being lent out or invested somewhere.

There's some wealth that's genuinely locked up, sitting in items that provide no utility for example. Say fine art locked in someone's vault or basement. But it's not all that much as a percentage.

Where the bigger problem in recent years has been is all the wealth tied up in what is essentially sophisticated gambling mechanisms in the financial markets. Money tied up in ways that aren't providing any true value to the economy (mumbo jumbo justifications aside). I'd be all for rules that stopped that sort of thing with funds subject to public bailouts. Your own money, your own risk, fine go ahead. Your money but risk assumed by the government? No. No thanks.

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> If the money is in bank accounts, then it is contributing to the economy.

It is, but only in the most limited fashion. Money sitting in bank accounts is doing very little to improve unemployment. Buying physical goods would be much better for that.

> One of the worst economic problems of recent years has actually been the lack of money just sitting in reserve to give the banks stability.

In a way, that's true although I wouldn't frame it that way. The banks could make loans and then sell those loans as investments -- they didn't need any money on hand for that. Increasing deposits, for example, wouldn't change anything.

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So arguably investment activity can merrily continue with low capital ratios at the banks (assuming they can effectively manage the securitisation of loans and/or the market stays hungry for them), but what happens when you reach an economic crisis? Such as in Greece right now where there are runs on banks. That's where having more deposits helps and where the potential downside is catastrophic rather than merely non-optimal.

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You, as an individual, may not care. Unfortunately, historical evidence and social science evidence suggests that (bearing in mind that you as an individual may not care) when income inequality grows too great, other parts of society begin to suffer and eventually break down. This even affects things like the average health outcomes for the people living in the unequal the society.

There's a strong correlation that indicates that poorer health outcomes, higher crime, poorer standard of living all go hand in hand with greater income inequality.

Again, you may not care, for your own sake, but the country is a fair bit larger than you, and this problem does affect us all, whether we care or not.

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I'd say it's the other way round: the greater the suffering of a society (poor health outcomes, higher crime etc.) the greater the inequality. Your ability to protect yourself grows with your income. Therefore those who earn less are more likely to loose which widens inequality.

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FYI, we couldn't tax the super rich enough to end poverty let alone give everyone a comfortable living.

Income equality is not about solving all problems. It's just trying to rectify one of the most egregious ones.

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Half the taxpayers of the United States make less than $32k/year. How's that a comfortable standard of living?

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But if you are saying $32k is not a comfortable standard of living, then that is a statement about absolute poverty.

$32k would still not be a comfortable standard whether Bill Gates had earnt $1million or $1billion.

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It reads like an "Reader's respond" column on the op-ed page in a local newspaper. The guy makes utterly standard and conventional arguments and then rests on an appeal to his authority as an whiz-bang investor.

Hardly too hot for TED, more likely to set people to snoozing.

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TED: Ideas worth spreading, so long as they don't challenge the power of the 1%.

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The idea of "tax the rich" is hardly needs or worth spreading - you can't open a newspaper or turn on the TV without seeing another extremely well paid TV pundit preaching it to you. It's not new, not original, not revealing and not illuminating. It's something you can read in any speech of any left-wing politician. I'm glad TED refuses to become a platform for election-campaign speeches and resists hijacking its platform for opportunist political purposes - be it left wing or right wing or any other wing politics. There are more appropriate forums for that.

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So all the libertarian sea-steading, private space missions and transhumanist Singularity madness isn't politics but just neutral science, right?

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I have very little idea what you are talking about, because your apparent attempt of being sarcastic makes it your point a bit unclear, especially when you at the same time try to put words in my mouth and assign to me points that I never made. But if you're talking about Transhumanism described here: https://en.wikipedia.org/wiki/Transhumanism then indeed I can see very little connection to current politics - I don't know any prominent Transhumanist politician and any currently debated law that had any Transhumanist intentions or ideas behind it. If you know any, please feel free to point them out, it would be very interesting to consider.

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Ooo. I like that. "Ideas worth spreading... to the peasants."

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I can't believe my eyes actually. As I was opening this comments page, I thought that majority will represent vastly different opinion here. But since that's not the case, I decided to speak up.

Nick Hanauer cannot be more wrong. Taxing rich people means punishing someone for his success. There is no argument that could justify such Robin Hood's behaviour. In fact that's what was (or is) happening in the communism. So regression at it's finest. I think that someone hasn't had his history homework done. The things is that the root of the problem is somewhere else. If you think about evolution for a second. Weaker species are removed, stronger survive. It leads to creating better and better species. On the other hand, if we helped weaker species to survive as well, then not only this natural filter is effectively stopped, but also ironically, the situation is even worse for the stronger ones. That would inevitably make the whole ecosystem poor.

To wrap it up, if God (or some other kind of Force) decided to help poor species, we, humans, would never exist. Why don't you just support the idea, that put you into existence?

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> Taxing rich people means punishing someone for his success.

Why is taxing seen as punitive? Is it punitive when we tax middle class people? It's just a mechanism to collect funds for things that are better done with public money than private money. Since the rich stand to gain more from many of the investments, they should pay more. All those companies that make physical widgets? They have to be shipped, largely via roads. Their business and their continued success relies on well constructed roads, of course they should pay for them in the proportion that they use them.

> There is no argument that could justify such Robin Hood's behaviour. In fact that's what was (or is) happening in the communism. So regression at it's finest. I think that someone hasn't had his history homework done.

Please, if you think the only options are state-socialism and laissez-faire capitalism then it's you who hasn't done their homework. Reading Atlas Shrugged doesn't count.

This is all boilerplate American-libertarian thinking. You don't understand evolution beyond "survival of the fittest", so don't use it to justify your arguments. Cancer is very successful at reproducing, it sucks up resources and bullies around the "weaker" cells, that doesn't mean it's a positive thing or something that will lead to long-term system-wide prosperity.

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First, if you want to talk Darwinism you need to get your terms right.

"It's not the strongest who survive, nor the most intelligent, but the ones most adaptable to change." Charles Darwin.

By (incorrectly) calling someone who isn't rich "weak" you're placing your personal judgements on them, because that's not at all what Darwin was talking about.

<tangent> I do find it interesting that you consider taxing people "punishment". Does that mean you consider government, or at least funding of the government, a form a punishment?</tangent>

What if the current system is rigged (by loopholes and allowances for swiss banking) so that the rich can avoid paying what the rest of the population does? Wouldn't that mean the "weaker" species were the ones actually being punished? So by raising the effective rate on the rich wouldn't you simply be restoring order to the system?

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It's not about punishing success, it's about realizing that the market is not perfect at distributing wealth, and that wealth is not created in a vacuum.

To the first point, are bankers, the founders of instagram, athletes, and movie stars really contributing so much to the world that they are worth hundreds of doctors, or thousands of teachers?

To the second, would you be successful if it weren't for those doctors, teachers, garbage men, police officers, mail carriers, etc.?

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Mail carriers? garbage men?? I actually do think my success has little to do with them.

People are paid what the market says they are worth, at least in the private sector. There's only one LeBron James and only one Bill Gates. They may stand on the shoulders of giants, but they each provide more value than what it costs us collectively to have them entertain us and create software. That's called consumer surplus. Mass markets produce mass income disparity- the few winners get the fat end of the distribution curve- but we would be far worse off with out that consumer surplus they provide.

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Are you saying we should let the poor die off? Sure natural selection could help create "better" human beings. I really do agree. However, I don't agree on your choice of selection pressure. The economic system as it stands also creates a lot of negatives. Pollution and generally screwing people over are some obvious examples. These do not make healthier smarter people. I hate seeing economics compared to evolution, and I'm not sure you understand either.

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"Taxing rich people " I'm guessing you're not implying not taxing rich people entirely?

How about taxing all people at the same rate, regardless of how they earn their income? I think that's what the bigger discussion is about.

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>To wrap it up, if God (or some other kind of Force) decided to help poor species, we, humans, would never exist. Why don't you just support the idea, that put you into existence?

So do you not have a problem with someone using brute strength to take the property and wealth of someone else?

Are you against people receiving treatments for curable diseases?

Social cooperation & concepts of fairness have also played a huge part in the success of the human species.

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Ah, Social Darwinism. Still alive after so many years.

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Right, don't back up. Just diss.

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I've been just watching this discussion unfold up till now - and I've been impressed at the level of analysis coming from both sides - arguments that are at least in some minor way backed up by numbers.

But your comment is offensive. Dangerously so.

Your view is actually incredibly typical throughout history - its latest incarnation is Social Darwinism, where one mistakenly applies a biological and genetics principle to economics and morality.

Social Darwinism has been the tool with which countless people have been oppressed, abused, and killed. The pro-slavery crowd used that argument - that colored people were genetically inferior, and that if they were meant be to free, they'd already be. This line of thinking was also popular amongst the Eugenics movement in the early 20th century, which had clear and strong ties to the Nazi party (boy this argument just Godwins itself).

With its colorful history, social Darwinism is nowadays inseparable from racism and fascism.

But your claim is even more specious than this lot of despicable people. At least the slavers and the Nazis made arguments that certain races deserved their lot due to "inferior" genetics, but your appeal to Darwin/evolution doesn't even involve the least bit of biology. It's just pure hand-waving by applying one completely unrelated field to another, with zero facts to even attempt to back it up.

Shame on you.

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Don't forget sexism and homophobia. Not giving women the vote and being mean to gays has been justified on the basis that it's the natural order of things as revealed by God and/or natural selection.

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>> "Taxing rich people means punishing someone for his success."

That is a false conclusion. In particular, inheritances. Certainly you don't consider being born to rich parents a form of success?

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It's not about punishing the wealthy, it's about realizing the enormous benefits the wealthy receive from society.

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Point of order - Robin Hood was against excessive state taxation - the Sherriff of Nottingham, King John etc. Not against rich people per se.

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The case for a progressive tax scheme is that it, may reduce one incentive for the most financially successful monkeys to plunder the less financially successful monkeys, including those monkeys who may be just as smart; but, maybe got started later.

To those of you who are pretending that you've done it all on your own without nobody's help and get your hands off of mine it's all mine mine mine! You're deluding yourself.

I can understand why TED don't want to touch his talk. It would be interesting to note how consistent TED are in this respect.

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What is odd to me is the parocial yardstick that the TED curator is reportedly using to judge what's controversial. "We already have Melinda Gates on contraception"

With whom other than the socially conservative wing of the US Republican party is birth control "controversial"? A few thousand people in Vatican City, some other religious leaders of their ilk, and a scattering of anti-colonialist thinkers.

I would have thought TED would have taken a more cosmopolitan view of what counts as controversy.

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His point is 100% right, but his argument is inappropriate for wide distribution. He's not sharing the results of a scientific study, he's not sharing a personal growthful experience, he's stating his perspective and inviting others to agree with him.

It's persuasive but that's because I already agree with him. I'd like to see it backed with real data so it could be persuasive to all. Then it would be more of an "idea worth spreading" rather than "a really good idea".

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I don't have a big problem with income inequality, compared to wealth inequality (averaged over a long time). Consumption taxes and "death tax" (or at least a strong social convention toward donating assets in excess of a certain level, rather than heirs inheriting them) would go a long way. Income inequality is largely due to differences in economic contribution, and encouraging people at the far right of the power curve to do more (and be more numerous) produces positive externalities.

The main quick fixes to the tax code which I'd like to see are immediately taxing carry as income, getting rid of deductions for employer health insurance and mortgage interest, and a national sales tax or VAT (ie consumption tax), ideally highly progressive or exempting the first 50k/yr or something. Then, look at lowering income tax rates to something like 25% flat and setting lt capital gains and dividends at slightly less (20%) or the same as income but indexed for inflation. Get rid of the AMT, and maybe lower corporate rates to try to get firms to repatriate more and avoid abusive tax structuring like the double Irish sandwich and such.

A more transparent tax code, even if revenue neutral, would boost economic activity. A more transparent tax code, taxing things with negative externalities and not discouraging positive externalities, raising more income while cutting expenditures greatly, would be even better.

Not that there is much chance of any of this happening.

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Here's the text and slides to the talk. I'm sure the video will come out eventually.

http://www.democraticunderground.com/101628527

I think it's pretty ridiculous TED would not post this video. They really shouldn't be censoring things like this unless someone is just completely making things up in their talk in which case they did a poor job of picking their speaker.

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Post the damn talk and let people make up their own minds. This is a PR disaster.

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Why is this on Hacker news?

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Because I submitted it and it got some upvotes. I submit a fair number of hey-pay-attention-to-the-political-economy-of-our-wealth links, and this is the first (?) that's gotten traction. It may be the last, and if so that's fine.

Why did I submit it? My tremendous admiration for and personal gratitude to pg and the HN community is tempered by a sense that the community, composed as it is of human beings, tends to think that it deserves the good things that happen to its members. In the case of the extraordinary wealth, the good things that happen effect what we might call the political economy of ideas in the community. I thought this incident might cause a few HNers to think about that: not Hanauer's ideas, but how deals are actually closed in the proverbial marketplace of ideas in which we are all participating.

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Discussions like this sometimes stagger me personally. Did Dickens write for nothing? Does everyone really wish to be Scrooge or Bounderby? Did Jack London write The People of the Abyss and waste his time? How many times must we relive that age before the lessons we learned from it at that time are permanent and inarguable?

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Why would you think that fictional stories that would be anecdotal if real should inform anyone of anything?

Real economic issues require solid statistical analysis based upon proven economic models. Anything less is just a projection of emotional bias that means little to society and would never solve anything.

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OMG. Have you also algorithmically quantified love too? And tell me what a "proven economic model" is. One where the rich have to hire working class cops in their off-hours -- depriving said cops' families of their presence -- so they can feel safe in common spaces? One in which private security and private prisons are the fastest growing employers? I've got news for you, pal, and you can shove this up your algorithms: People are not machines and, as messy as you might find this fact to be, have emotional components. Someone in the lower rungs of society might not be able to explain with a PowerPoint presentation the precise manner in which he or she is being screwed, but emotionally they can show you.

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> OMG.

I'll leave that there to speak for itself.

> Have you also algorithmically quantified love too?

I can certainly see where an emotional person who doesn't know much about economics would try to turn this into an emotional issue. It's not. It's an economic issue. The whole reason why we step from one financial mess to the next is that we don't make political decisions based upon economic forces such as supply & demand. Political decisions are typically made to benefit the power of politicians. They do so by making emotional arguments to people who don't really understand much about economics but who know how to pull a voting lever. Congratulations, that means you.

> People are not machines and, as messy as you might find this fact to be, have emotional components.

And this has precisely what to do with the economic health of the country?

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> OMG.

> I'll leave that there to speak for itself.

It was a trap.

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Is it possible that by not publishing the talk they'll draw more attention to it? He should re-record and publish the talk on his own and use the "Streisand Effect" in his favor.

http://en.wikipedia.org/wiki/Streisand_effect

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He should also use that re-record as a chance to put in more data to support his point.

And flesh out his thinking. For instance, that bit about:

> "If the typical American family still got today the same share of income they earned in 1980, they would earn about 25% more and have an astounding $13,000 more a year. Where would the economy be if that were the case?"

I would love to see some stabs (pessimistic, median, and optimistic) at following out the economic effects of that question. What is a reasonable ratio of the $13k which would be put toward more spending, and how would that effect the demand seen by businesses, and thus the number of jobs supported?

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I would also say any attempt to discuss causation would be great. It's very light on that, and doesn't address any of the huge macro issues to contend with.

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As others have said, there is not a lot of substantiation in the talk to shed new light on frequently-discussed topics.

It feels intellectually shaky to assert that the economy will go back to growing, if only the middle class can go back to spending, which we can achieve by giving more money to the government.

Here's a different and more TED-like viewpoint: Perhaps economic growth actually requires movers and shakers. The US has had a good share of them. These people aren't going to be your archetypal rich fat cats, nor your average Joe living paycheck to paycheck. If they are rewarded with wealth, that is a good thing. And sure, some of that wealth can go into a pot to use for the common welfare.

If we want more consumer spending, let's give people better things to spend money on, things that help them in their own quest of fulfillment and creating value.

If businesses are reluctant to hire, it's only because they need to make correspondingly more money to make the hire worthwhile. As we know from start-up land, many tasks can't be done better by throwing more people at them, especially creative tasks. We're still trying to solve the problem of how individuals can cooperate and merge their individual strengths towards big goals. A full-time human ought to be a very valuable asset to a company, though, and many companies can be viewed as engines that take human effort and turn it into value, creating money.

Economic growth is not to be taken for granted. It requires innovation, optimism, and positive energy that comes from individuals. There are many things rich and non-rich people can do with their time and money to help, besides just giving their money to the government. Take something you're good at and provide a service, or make something and sell it. Lend a cup of sugar to your neighbor. Earn what you're worth. Invest in good businesses. Pay someone to do something for you. And on and on.

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Shame on the news media for not asking meaningful questions to people who make claims on either side of the US political spectrum. I feel as though a culture of timidity to ask questions that lead to clarifying answers is turning into a culture that politicizes the truth.

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Does anyone have global wealth/tax numbers? I'd argue that the US is not a closed system. So the % the world governments take vs GDP. This might be helpful to see if what he is suggesting is plausible.

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He would have done so much better to shop his Gardens of Democracy book around. That at least presents some new ideas that aren't talked about enough. Like vannevar, I fully agree with Nick but the talk is completely pointless.

http://www.amazon.com/The-Gardens-Democracy-Citizenship-Gove...

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Relevant answer I found on Quora: http://www.quora.com/Who-creates-wealth-Entrepreneurs-invest...

The world is more complex than a lot of the arguments that people have on this issue.

One side appears quite facile and naive in their hero worship of entrepreneurs/investors at seeing/creating the future (when the chances are they merely bump into it along with many others).

These are almost universally young people who are nurtured/protected by their families/society or already successful people who think they are the sole cause of their success (it's usually a combination of internal AND external factors).

The other side is too oppressive and cynical, stating that entrepreneurs don't create jobs, but extract wealth. These are usually unprotected people, the poor, and the unsuccessful who just don't understand why they are trodden upon and treated like vermin to be ignored.

The world isn't black or white. It looks like it is extraordinary complex with many shades of gray.

Hence the best way to look at this issue is thus: If you were the down trodden upon, the poor, the unlucky, the unhealthy - How would you like the tax system to treat you?

Would you like them to say:

No, your situation is ALL your fault - the rich matter, we shouldn't tax them and let them create jobs for little all you.

OR

Yes, the rich are extraordinarily lucky to have what they have, and it would be best to share that around.

Because as you all know: You had a 50% chance of being born in the rest of the world, in the darkest poverty, where nothing you did, said, or who you are meant anything because of your situation.

Born in America: Billionaire.

Born in Afghanistan: Your dead.

What you can achieve has doesn't correlate strongly with what actually happens to you - you are made by your situation.

We float with the times and environment around us - not the other way around.

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Interestingly enough, the framing of the Quora question leaves out "the buyers" as part of the critical circle for wealth creation. That is the role that, I thought, Hanauer's talk was pointing out is played by the middle class. Perhaps the Quora question meant to capture them as "the workers", but that, according to my interpretation of the talk, mislabels their most critical role.

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I hate the term "the 1%" it's just a bunch of malarkey. Whether you got your money through savvy investing or hard work, it doesn't matter. What you earn, you should KEEP. I detest handouts, especially when someone tries to give them to me. Each person should get according to their work (or their ability to work. The disabled are the only ones remotely eligible for handouts, IMO).

Now I'll just watch as my karma plummets for speaking my mind on something. Oh well I guess.

Edit: I do think though that TED is wise not to wade into this battle. It is a very politically charged topic, especially right now.

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"Savvy investing or hard work"

So, you are up for some kind of strong inheritance tax to ensure that people have to work hard or invest savvily rather than just inherit money from their family.

'Cos, you know, inherited money is neither gotten "according to their work" or "earned", but rather received purely on the basis of random genetics.

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Everybody should be free to do with their money as they please. This includes that one should be free to give money to their children as they please. The side effect that this creates a bunch of children who are rich without having earned the money, doesn't take away from that.

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If his concept was that people become wealthy because they were "successful" and exceeded the effort of others, thus they deserve to be wealthy then I absolutely think inheritance takes away from that concept.

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Life insurance companies are the largest lobbies for increased death and inheritance taxes:

http://www.forbes.com/sites/hanisarji/2010/12/01/life-insura...

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So is the fact that you have a home as a child. I don't see that your argument holds water. The fact that you live where you live is pure genetics as well. Why don't you ship your money to starving ethiopians?

If you're going to argue that, then you have to be willing to give up what you have too. If you're going to talk about the 1% in America, you have to talk about the USA as the 1%, because, let's face it -- if you live in the US, you've got a hell of a chance of being better off than most of the world.

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> So is the fact that you have a home as a child.

Now you're getting it. Educational opportunities, nutrition, etc. It is exactly these institutional inequalities which lead to the un-meritocratic wealth distributions which are causing such instability.

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> Why don't you ship your money to starving ethiopians?

We do, actually. http://www.voanews.com/content/ethiopia-is-top-uk-aid-recipi...

Also, you posed a false dichotomy "Whether you got your money through savvy investing or hard work" and when you were called out on this by having other options for people's money sources pointed out, said that you "don't see" and changed the subject to something emotionally charged.

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I call bullshit on your malarkey.

I get not liking "the 1%" but you do the exact same thing by using the word "handouts". You swapped one co-opted term for another. One can only assume you really mean "welfare" when you say "handouts", and that to me means you have no idea what welfare is or what it does for the families and people that need it.

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I call shenanigans on your bullshit.

You swapped one co-opted term for another.

With this logic, there won't be any words left to describe anything that haven't been "co-opted". A handout is a handout.

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The 1% is the 1%.

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Your car breaks down, your cellphone gets no signal. You'd be pretty happy for a "handout" you'd self-describe as "assistance" or "help" or a "good deed."

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Does it mean I have the right to take a car and a cellphone from any nearby person that looks rich enough to afford another one? After all, I need it clearly more than he does, so forcefully taking it from him is completely justified. In fact, if he objects, I'm completely justified to call him a greedy pig - I gave him an opportunity to do a good deed, and he dares to object? Despicable.

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Really, do you tend to see everything in the form of "take" instead of in the form of "give"?

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Because when people give voluntarily, there's no state involved. People can and do give without any need for the state to intervene. When the state intervenes, it always takes. It can not give anything without forcefully taking it from somebody first.

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When the government taxes the rich to spread it to the poor, it is taking.

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Here's the text of the actual speech, linked to from the article.

http://roundtable.nationaljournal.com/2012/05/the-inequality...

To be honest, it seems to be basic common sense, if this is too controversial for TED then they are seriously losing their way.

As for saying they had Melinda Gates talking about contraception around the same time and thinking that it was a reasonable excuse for backtracking. Well to me, that just doesn't even start to make the slightest bit of sense as an argument.

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