Comment by jgeada
10 hours ago
This type of idea is never popular with the people that have large stores of the prior government backed currency. The rich never want to have their wealth in any way threatened, and they have the reach and influence to make the government protect their assets, even if it comes at the cost of causing misery to pretty much everyone else.
There ought to be a better balance, and the US found it in the period between the end of WWII and the 1970s. High marginal taxes on extreme wealth, high inheritance taxes and zealous antitrust and anti-monopoly enforcement all kept people's wealth and power disparity somewhat in check.
The rich do not, in general, possess Scrooge McDuck vaults full of "prior government backed currency". The assets of the wealthy are generally real assets and business investments.
Cash is such a poor investment that the word "investment" typically means trying to find something more productive than holding cash. Neither do alternatives to cash have a reliable history of benefitting the poor. In the US there's been lots of attempts at local currencies; they tend to fail naturally without government interference. Recently, cryptographic alternatives to cash have mostly served to benefit crypto barons and scammers.
Common misconception IMO.
High marginal taxes and high inheritance taxes do not affect the rich - they eliminate competition for them.
I do agree on antitrust and antimonopoly though.
If they don't affect the rich, why have the rock didn't so much time, effort, and money eroding such taxes over decades?
Eroding them is beneficial to other groups of society, not the rich.
It's like with corporations. Corporations love complex legal systems, as they are the only ones with money to deal with them. Simplification actually benefits smaller enterprises.
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How come they eliminate competition? What if inheritance taxes are progressive?
Yeah, it seems like most people assume there is a reach and scope of taxation that isn't really possible. Wealth can be expatriated, it can be in non-fungible objects (paintings, &c), it can be in goods held in common such that no transfers occur (for example, a house that people live in together and jointly own).
There isn't anywhere an index or lookup table of all legal rights a particular person has to wealth (or, in truth, to "things", since anything can be worth something and contribute to wealth). There are things they may have a right to that they don't even know about.
They can hide wealth (at their own risk) but it prevent them from extracting money from the country:
The cannot own houses, factories, monopolistic contracts o media. It makes harder to influence politics ( in a legal way).
The housing issue is specially important because city space is limited and the demand is very inelastic
That's true, but most of those can be cracked down on simply by saying that any undeclared wealth is forfeit. Also, the great proportion of most rich people's actual wealth is in forms that are easier to trace (e.g., shares of corporations, real estate).
Money is important as a vector for power. It doesn't matter that much whether a person has a bunch of paintings in a Swiss vault when they're an institutional investor directing a substantial sector of the economy. And that industrial power is relatively easy to divest them of, as compared to vault paintings.
I'd be curious to know more, this is quite unintuitive
Generally, there are no systems that are 100% bulletproof. This applies to everything. So, the more power you have, the more likely you are to exploit the existing loops.
Who is actually affected? Those less powerful. Progressive tax system hits the middle class (actual middle class, la petite bourgeoisie, not the modern bullshit redefinition of the term) hardest, making it harder for them to make it rich and compete with actual rich people.
As the effect, rich protect inheritance by trusts and avoid taxes by not having income (plenty of tricks available with borrowing), while people like doctors, lawyers, small business owners fund the state and hit hard limits on what can they make.
Don't believe me? Check how much of the tax income comes from top brackets. You may be surprised. Pro tip: system is very skewed to the top.
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> the US found it in the period between the end of WWII and the 1970s. High marginal taxes on extreme wealth, high inheritance taxes and zealous antitrust and anti-monopoly enforcement all kept people's wealth and power disparity somewhat in check.
This.
People like to say Capitalism won the cold war, but in reality it was the welfare state with its massive redistribution and limits on concentration of power that won.
The current economic and social model isn't even desirable enough to prevent people from fantasizing Putin's Russia, it would have stood no chance against the USSR in the 50s.
Social welfare spending only goes up as percentage of GDP. https://ourworldindata.org/grapher/social-spending-oecd-long.... What data do you use to distinguish the "current economic system"? Notably of course, assuming the variations of the US system even mattered, the USSR collapsed after the 80ies (deregulation and liberalization having started even earlier under Carter, not after post war US economy stagnated in the 60ies-70ies.