Comment by runako
3 hours ago
Anybody who believes ~30% of the workforce was functionally unemployed in 1999 does not know what those words mean, or was not an adult in 1999.
I get what they are trying to convey, but the stronger message is the more straightforward: there are too many jobs that do not pay enough to live on.
For me the true problem which most countries dont even acknowledge is low wealth and capital gains tax. Salaries are not enough because of land prices and the prices inflation it causes through out the economy. You bring down price of home land rent then price of everything else comes down. And their is a lot more economic activity as trillions of dollars are not parked in real estate for wealth generation.
I have had this sneaking suspicion for years now that most of the money needs to be locked up because if we actually gave it to the masses to spend we'd see massive inflation and/or environmental catastrophe (worse than the current one). I don't mean to defend the wealth gap, and I'm not trying to make a statement on how things should be. I just think there may be an unfortunate reality that we need most of the world to have less because we can't currently support a middle class globe.
this is already happening via asset price inflation.
where i live (Seattle) small businesses are trapped in a death spiral as their rents are going up, the wages they have to pay are up to even attract workers who also need to pay rent, but purchasing power has not caught up.
Oh, that’s an interesting thought. Nice way to increase GDP without doing anything actually useful, right?
>"we need most of the world to have less"
Hi Elon
A land value tax would fix rich people parking money in real estate. A wealth tax or capital gains tax would not.
better off taxing people that own more than 1 property and leave people just trying to live alone.
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If a land value tax would fix rich people from parking money in real estate, it would price regular people out of real estate.
I know LVT is the libertarian dream, but in practice it means only the rich can own real estate long-term, in most cities. It also means the rich can drive out the poor by driving up land values around them, to the point where the taxes are too much to afford.
LVT simply wouldn't be a good system, if applied in the real world.
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A wealth tax would also be beneficial in reducing wasteful stock buybacks. Without any benefits from high stock prices, boards and shareholders will be less inclined to impose those price targets on CEOs, CEOs will be less incentivised to "cheat" on quarter-based performance and the myopic share price performance view of their companies, hence will reduce stock buybacks and returning money to shareholders. That leaves very few options - either reinvest into the company or pay out dividends, and the latter is unfavorable for shareholders compared to the former.
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Economists have been championing Georgism for more than a century and we still refuse to consider it. I would argue that unreasonably expensive land prices are the most serious economic and social issue in the West today. It's a systemic problem, from which so many other issues are caused: homelessness, poverty, suppressed economic activity, inflation, class stratification, "failure to launch," fertility rates, inequality, etc.
The problem is that we've taught generations that the best retirement plan is a home, and now if we allowed home prices to fall, generations of people would be without their retirement plans. Voters don't like that very much. It's absurd that we allowed things to progress to this point, and unwinding it is going to be extremely painful. I think this only resolves when renters outnumber home owners to a material degree and vote for land value taxes. Things will get much worse before they get better.
Income from capital has a low tax rate in the US (and many other countries) because you can deduct neither losses due to inflation nor losses due to risk, both of which are substantial for capital income but non-existent for wage income. The lower tax rate is simpler than actually accounting for these differences.
Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income. Taxing them similarly without very negative consequences requires recognizing these differences in some fashion.
Taxing wealth has myriad additional problems. In the US, about 2/3 of wealth is completely non-liquid so any theoretical valuation is fiction and highly leveraged.
> losses due to inflation nor losses due to risk, both of which are substantial for capital income but non-existent for wage income.
Neither is true.
The only asset class directly hit by inflation is cash. No high net worth person in their right mind holds substantial cash for a longer period of time. If they do, it's a conscious choice and it's not clear why the tax system should help in that situation.
The risk of a wage earner is to lose their employment because the business folds. Just like the shareholder in that business. It's again unclear why the tax system should compensate both differently for this.
> In the US, about 2/3 of wealth is completely non-liquid so any theoretical valuation is fiction and highly leveraged.
That may be the case but it doesn't prevent anybody from borrowing against it, which turns that fiction and illiquidity into very real liquid dollars. That same mechanism could be used for paying your taxes as it reveals that this is merely an excuse.
>Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income.
Learning that their wage income makes them immune to inflation and is risk-free seems like it may be surprising news to many Americans.
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Asset holders do not have losses from inflation since the assets go up in price. Stock market in USA is high due to all the pumping.
The only ones screwed are middle class who have money on bank accounts. And middle + low class when buying food.
Inflation hits low and middle class the most, its a hidden tax on them. Rich are asset heavy so they dont care.
Is there a country that has implemented these ideas and where the results have been like you expected?
Is capital gains / wealth tax a fix here though? Definitely not saying it doesn't work, I have no idea. But I'd be curious to hear both sides of the argument.
Or you tax it. Or, more correctly, you remove the current protections that allow land to appreciate tax-free for decades. That would move capital out of land and free it for other uses. The current system was designed to put money/people into houses post WWII but has gone too far in promoting radical multi-generational wealth structures.
We already assess property each year for purposes of local property taxes. Treating a 10% rise in value as taxable income each year would shake up the real estate market. Speculative gentrification would certainly stop. And those sitting on empty houses would either sell or try to find renters.
> You bring down price of home land rent then price of everything else comes down
If any price for any reason goes down, that money ends up in housing. The only way to bring down housing pricing is to build more housing. This is extremely well documented.
And it's economics 101. The price is the symptom. The root cause is a shortage. Fix the shortage and the symptom follows. Try to fix the symptom and the root cause will make things worse.
I feel like the inflation of everything except wages will eventually show up in housing prices. People pay so much for existence, there’s not the same budget for housing. There’s only so much people can afford and also there’s now been a long track record of young generations having stunted starts.
Also not sure how the supply will be affected by boomers exiting the market. I know there will be no surge in supply, but I’m not certain there’s enough buyers at the prices they would expect. If that’s the case, supply will build and prices will drop.
I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth. For half a century, in France, it's been told that real estate was the safest/best investment for households; everyone was passively peer pressured each year, whatever the macroeconomic situation at the moment, to buy. This is a Ponzi scheme, so even the middle class households that recently bought their own shitty flat in Paris will never vote for such a tax because their overpriced asset would lose value and it's often their only lifelong investment.
The same fear will happen if you just target investors owning multiple real estate with this tax, or simply forbid by law from owning several flats in high demand areas. The right wing would scream that the hard working French guy won't be able to invest his hard won money, but the very rich foreigners from Saudi Arabia or investments funds from USA will find a loophole thanks to their infinite money and buy all the french real estate.
Hell, most people in my country are against inheritance tax despite a huge part of them not rich enough to pay it, meanwhile inequalities are rising because of inherited wealth. So taxing the land won't happen, the bourgeoisie has been too effective in its propaganda.
> I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth
Most places do tax real estate. I was surprised to look it up and find that Paris has some of the lowest property tax rates in the world.
Land Value Tax would be a little different, though. It's a proposal to replace most or all taxes with a simple tax on the estimated value of the land. One of the key features of LVT is that if land becomes valuable over time, the tax on that land becomes so high that the owner is forced to sell it. The idea is that the LVT ensures optimal usage of the land by forcing people who own land in valuable areas to use it for a business. So if you buy a house and the area becomes popular 10 years later, your tax bill might get so high that you have to sell it to a developer who will build a high-rise on it, or a grocery store that can afford the high tax rate.
It would never be accepted in practice when everyone's 70 year old parents were being forced to sell their modest forever homes. There's also a major problem where the structures aren't considered at all, so one person with a $2 million home living next to someone with a $200,000 100-year old home would pay the same tax rate if they're on the same size lot, because it only cares about the value of the land.
I don't know why Land Value Tax has become the default solution to everything on the internet, because I think most people would actually hate what it did to society. Having progressive taxes that scale with people's income, spending, and size of their home is good for making the tax burden proportional to wealth and consumption. Replacing it all with a tax that just taxes how much your property is worth ignores everything except the value of your land, which is completely out of your control over several decades of life as the world changes around you.
Soo was it more or less than that? Don’t leave us hanging like that!
Significantly less. Wanted a job? Walk through any neighborhood being built with a tape measure in your pocket. You'd have a job doing something before you made it past the 4th house. Had a car? Delivering food paid enough to afford a modest apartment.
> there are too many jobs that do not pay enough to live on.
I know this is argued as a reason for high unemployment on the internet, but it does not match my experience in the real world at all. Having a job that pays a little is more income than no job at all. People stuck with low paying jobs often have multiple jobs as a result.
Job and slavery are two very different things. I love free markets too but not to the level of autism (for lack of better word) and ignoring how things actually work in the physical world. Shallow economic theory doesn't create happy and functional families. Economic theory that is mostly rigged to serve the rich, entrenched, and powerful anyways.
Many jobs require additional expenses: car, commute, babysitting, living in expensive city, no insurance for work related injuries...
So "not enough to live on" often means, it does not even pay job related expenses! Employees are subsidizing their employers!
My partner had a good job offer, but is at home! Buying extra car, petrol, child care... We would loose 150euro a month...
Just because the job doesn’t pay your expenses doesn’t mean someone else out there won’t take it and be happy they have it.
You seem to be confused about the point people are making. The point is that from about 1945 until around 2000 in the USA there really wasn't such a thing as "a job that doesn't pay enough to live on".
People owned houses and cars by working at grocery stores. A single income from any white collar job supported a stay-at-home spouse. Teenagers bought cars by working part time. College kids paid their tuition and living expenses for the full year by working summers.
That today's below-poverty-line job still leaves someone better off than being completely destitute is beside the point.
I understand that argument, but what does it have to do with the unemployment rate?
You seem to be confused about the point I'm making, which is that low-paying jobs drive people to take on more employment, not less.
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You're just cherry-picking though. Things were massively different in 1945 in tons of ways. For example Jim Crow was still active for one. Food prices were MASSIVELY higher for another.
This could also easily be measured via what is declared in taxes.
> there are too many jobs that do not pay enough to live on.
That may be the case in the US, but not so in other countries.
For example in Australia minimum wage is $26.44/hr. But If you don’t have a job, you can get between $740 and $1047 every two weeks as welfare, forever.
Employers know this. Employees know this. So a job has to pay decently more than that or else nobody will do it.
One really nice economic factor of the dole is that it disappears at a rate of 50c for each $1 of earnings above $150 and at 60c above $256, so there's no welfare cliff.
This does mean that you're effectively only earning 40c for every $1 you earn in that middle band, but that's still less of a disincentive than just taking the whole payment away above a certain threshold.
I think we could move to a UBI surprisingly easily by giving everyone the dole and then taxing their income a bit more.
> So a job has to pay decently more than that or else nobody will do it.
Yeah, though the problem in the U.S. is we have a constant influx of workers perfectly happy to serve as scabs, and no mainstream political party is willing to address the problem in any meaningful way.
Turns out supply and demand also applies to labor, and artificially restricting the supply increases the demand for your own labor, allowing you to live a better life at the expense of large corporations having to pay more for salaries than executive bonuses. Whoda thunk.
Sounds like more at the expense of immigrants than companies? Scabs? What is this, the 1950s?
Can you explain what you're saying? Do you mean that in 1999 fewer people worked low paying jobs?
That data is in the article, "true unemployment" was higher in 1999. The last few years are the best years on the graph.
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