Comment by jpadkins
9 days ago
Do you have a historical example of "Little bit of taxes now and accelerate easier"? I can't think of any.
9 days ago
Do you have a historical example of "Little bit of taxes now and accelerate easier"? I can't think of any.
If you replace "taxes" with more general "investment", it's everywhere. A good example is Amazon that has reworked itself from an online bookstore into a global supplier of everything by ruthlessly reinvesting the profits.
Taxes don't usually work as efficiently because the state is usually a much more sloppy investor. But it's far from hopeless, see DARPA.
If you're looking for periods of high taxes and growing prosperity, 1950s in the US is a popular example. It's not a great example though, because the US was the principal winner of WWII, the only large industrial country relatively unscathed by it.
With the odd story that we paid the price for it in the long term.
This book
https://www.amazon.com/Zero-Sum-Society-Distribution-Possibi...
tells the compelling story that the Mellon family teamed up with the steelworker's union to use protectionism to protect the American steel industry's investments in obsolete open hearth steel furnaces that couldn't compete on a fair market with the basic oxygen furnace process adopted by countries that had their obsolete furnaces blown up. The rest of US industry, such as our car industry, were dragged down by this because they were using expensive and inferior materials. I think this book had a huge impact in terms of convincing policymakers everywhere that tariffs are bad.
Funny the Mellon family went on to further political mischief
https://en.wikipedia.org/wiki/Richard_Mellon_Scaife#Oppositi...
Ha, we gutted our manufacturing base, so if we bring it back it will now be state of the art! Not sure if that will work out for us, but hey their is some precedence.
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I'll take a look at that story later. I'm curious though, why is US metallurgy consistently top-notch if the processes are inferior? When I use wrenches, bicycle frames, etc from most other countries I have no end of troubles with weld delamination, stress fractures compounding into catastrophic failures, and whatnot, even including enormous wrenches just snapping in half with forces far below what something a tenth the size with American steel could handle.
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> the state is usually a much more sloppy investor
I don’t find this to be true
The state invests in important things that have 2nd and 3rd order positive benefit but aren’t immediately profitable. Money in a food bank is a “lost” investment.
Alternatively the state plays power games and gets a little too attached to its military toys.
State agencies are often good at choosing right long-term targets. State agencies are often bad at the actual procurement, because of the pork-barrelling and red tape. E.g. both private companies and NASA agree that spaceflight is a worthy target, but NASA ends up with the Space Shuttle (a nice design ruined by various committees) and SLS, while private companies come up with Falcon-9.
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Yeah, our use of our military force provides some of the most obvious cases of "bad investment". Vietnam, Iraq, etc
And there are many others that might've been a positive investment from a strictly financial perspective, but not from a moral one: see Banana Republics and all those times the CIA backed military juntas.
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> Taxes don't usually work as efficiently because the state is usually a much more sloppy investor. But it's far from hopeless, see DARPA.
Be careful. The data does not confirm that narrative. You mentioned the 1950s, which is a poignant example of reality conflicting with sponsored narrative. Pre WOII, the wealthy class orbiting the monopolists, and by extension their installed politicians, had no other ideas than to keep lowering taxes for the rich on and on, even if it only deepened the endless economic crisis. Many of them had fallen in the trap of believing their own narratives, something we know as the Cult of Wealth.
Meanwhile, average Americans lived on food stamps. Politically deadlocked in quasi-religious ideas of "bad governments versus wise business men", America kept falling deeper. Meanwhile, with just 175,000 serving on active duty, the U.S. Army was the 18th biggest in the world[1], poorly equipped, poorly trained. Right wing isolationism had brought the country in a precarious position. Then two things happened. Roosevelt and WOII.
In a unique moment, the state took matters in their own hands. The sheer excellence in planning, efficiency, speed and execution of the state baffled the republicans, putting the oligarchic model of the economy to shame. The economy grew tremendously as well, something the oligarchy could not pull of. It is not well-known that WOII depended largely on state-operated industries, because the former class quickly understood how much the state's performance threatened their narratives. So they invested in disinformation campaigns, claiming the efforts and achievements of the government as their own.
1. https://www.politico.com/magazine/story/2019/06/06/how-world...
What does WOII mean?
I assume you are talking about WW2 and at first thought it was a typo.
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BTW the New Deal tried central planning and quickly rejected it. I'd say that the intense application of the antitrust law in the late 1930s was a key factor that helped end the Great Depression. The war, and wartime government powers, were also key: the amount of federal government overreach and and reforms do not compare to what e.g. the second Trump administration has attempted. It was mostly done by people who got their positions in the administration more due to merit and care about the country than loyalty, and it showed.
The post-war era, under Truman and Eisenhower administrations, reaped the benefits of the US being the wealthiest and most intact winner of WWII. At that time, the highest income tax rate bracket was 91%, but the effective rate was below 50%.
> It's not a great example though, because the US was the principal winner of WWII, the only large industrial country relatively unscathed by it.
The US is also shaping up to be the principal winner in Artificial Intelligence.
If, like everyone is postulating, this has the same transformative impact to Robotics as it does to software, we're probably looking at prosperity that will make the 1950s look like table stakes.
Are you sure that in today's reality the fruits of the AI race will be harvested by "the people"?
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Early on in the AI boom NVidia was highly valued as it was seen as the shovel-maker for research and development. It certainly was instrumental early on but now there are a few viable options for training hardware - and, to me at least, it's unclear whether training hardware is actually the critical infrastructure or if it will be something like power capacity (which the US is lagging behind significantly in), education, or even cooling efficiency.
I think it's extremely early to try and call who the principal winner will be especially with all the global shifts happening.
> The US is also shaping up to be the principal winner in Artificial Intelligence.
There is no early mover advantage in AI in the same way that there was in all the other industries. That's the one thing that AI proponents in general seem not to have clued in to.
What will happen is that it eventually drags everything down because it takes the value out of the bulk of the service and knowledge economies. So you'll get places that are 'ahead' in the disruption. But the bottom will fall out of the revenue streams, which is one of the reasons these companies are all completely panicked and are wrecking the products that they had to stuff AI in there in every way possible hoping that one of them will take.
Model training is only an edge in a world where free models do not exist, once those are 'good enough' good luck with your AI and your rapidly outdated hardware.
The typical investors horizon is short, but not that short.
Post World War II USA.
If that is not an example of how taxing rich people and investing in infrastructure can accelerate progress, then I don't what could be (with of course the caveat that those investments were focused in a specific group of people and not society as a whole).
Miracle of Wörgl [0]
[0] https://unterguggenberger.org/the-free-economy-experiment-of...