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[LordBucket]

However put a prohibitive tax on spending above $200k a year. Like 99%.

Is this sarcasm that I somehow completely missed?

How do you track that? Are you going to require that every single transaction that takes place has the buyer recorded and that information relayed to a central body? Do you understand the burden this places on business? How do you vet transactions? Do you require that people submit picture ID and that businesses keep a copy of that ID? Are people under age 16 without ID no longer allowed to make purchases? Or do you first create a police state and issue mandatory "purchasing licenses" to everyone at some arbitrarily young age? Do you really want to go there?

Would the tax be collected at point of sale, therefore requiring a system whereby businesses can identify a customer's running spending total, or do you collect the tax at year end thereby requiring buyers to track everything and simply trust that they won't omit things?

What about people who get stuck near the threshold? They spend up to their $200,000 limit by the end of November, and now come December first, a gallon of milk costs $200? Are you only taxing goods, or are you taxing all transactions? Once you reach your limit, do your mortgage or rent paying go up by a factor of 100? Or do you create a system of exceptions and all the required bureaucracy and tracking mechanisms required for it? income tax deductions re complicated enough, but now you want people to track every single purchase they make?

Do you realize the that you're diminishing velocity of money and simultaneously creating a market for intermediary buyers? Once you reach your $200,000 limit, there's pretty much no point even trying to buy anything legally anymore with that kind of tax rate. So you end up creating a market for people to receive cash and make purchases using their limit, for a fee. Either that or people simply stop spending their money to avoid the tax, thereby reduce money circulation.

It's only complicated if you make it complicated.

Yes. So why are you making it complicated? There are much better, and simpler solutions.

Speaking of solutions, what problem does yours solve? Your proposal seems to be "punish the rich" rhetoric. Nowhere are you even proposing helping anyone.

If you want a society where everyone lives in abundance, taking abundance away from people seems like a terrible way to accomplish that.

[Bohandas]

Divvying up business will have its own host of problem too.  I guarantee you that the moment the state steps in and seizes a business, the former owners are going to stop contributing their part to the profit-making efforts of that business. Imagine, just for a moment, that the state, acting through force, seizes all businesses in the country, and even with the best of intentions begins redistributing profits from those businesses evenly.

And hey, that's not the only possibility. But I'm the only one talking specifics instead of hand waving everything. So if you don't like my scenario, that's fine. Propose one of your own.

In the meantime, what do you think would happen if businesses were seized like that?

 * You're the owner and chef at a Mom and Pop restaurant. As of yesterday you had the mortgage on your building half paid off, and things were looking good. As of today, you no longer own the business and all your profits are seized and redistributed. How do you feel about this?
 * You're a Fantasic Sams hair salon franchisee. You invested $70,000 of your own money on your first year for franchise rights, rent on a building, remodeling, marketing, etc. After you first year you brought in $35,000 in revenue, and you expect to break even on you initial investment by the end of year two. On day 1 of year 2, your business is seized and the government begins redistributing all your revenue to the population at large. Do you continue going in to work, or do you walk? If you walk, who's going to run the salon?
 * You're the CEO of tech firm that brings in billions of dollars of revenue every year and is sitting on a $5 billion war chest. Legislation is going through congress to seize all business assets in the country. It's looking like it's going to pass. Do you leave your assets inside the United States, or do you transfer everything out of the country to prevent seizure?
 * You're an international Japanese car company with hundreds of millions of dollars worth of manufacturing plants in the US. Your plants are seized and all your profit in the country is redistributed to people who aren't you. Do you go along with this, or do you withdraw all of your management staff back to Japan, let the factory fail, refuse to ever do business inside the US ever again, and start an international boycott to encourage other countries to do the same?

People need to think about stuff like this if we're going to talk about wealth redistribution.

If you want to have a basic income or negative income tax there are ways of making those work. "Wealth redistribution" has a crazy long list of problems with it

What we need is an international screw-business treaty to close the trap on them. Unfortunately most of the world's governments are so inconceivably corrupt that we frequently see treaties get made of the opposite type

[mainiac]

How do you track that?

Imperfectly but competently enough.  People will cheat the system a little, that's okay, people will cheat any system a little.  Proposals to achieve something like this using a system of stamps and depreciating money date back to the 19th century.  Achieving it in the era of debit cards would be child's pay.  Cashless societies aren't exactly a crazy thing, Scandinavia is almost there already.

Speaking of solutions, what problem does yours solve?

I wasn't trying to solve a problem, I was trying to answer the question of how it could be done if people wanted it to be done.

Do you realize the that you're diminishing velocity of money

Uh yeah, that's the central mechanism to the adjustment.

[Sheb]

Posting To Necro

[Loud Whispers]

posting to watch communists wrecking nations

[Shazbot]

Posting to Holodomor.

[Loud Whispers]

Too soon

[TheBiggerFish]

... Seriously, I just got ninja'd while posting to say that nothing's going on?  Really?

[Muz]

Malaysia has been doing 'income redistribution' for a while.

What they do is that they prioritize a certain group for public university spots, land discounts, grants (up to $500k), government jobs.

After 30-50 years, it helped with wealth distribution a little, but all of a sudden corruption went sky high. It was a rare few, sucking up to the gov bodies who gave out these grants, getting million dollar projects. This happened so often that the "filthy rich, handsome 25-year-old who got a million dollar project" became a trope in Malaysian drama.

Prices actually fell for a period of time, but things like corruption kicked in hard very recently. Then inflation went crazy, currency dropped, toll prices doubled over the last 2 years.

As with communism, the corruption happens when you trust someone to redistribute all this wealth and they simply redistribute it into their own pockets.

Assuming that income redistribution is possible - I think Silicon Valley is an excellent example of a lot of power falling into the hands of the former poor. Land prices go up, a lot of prices go up, insane inflation happens. But salaries for skilled people go up too. In the end, things are good.. you do get ridiculous things like people taking and sending laundry at a premium and improved delivery of groceries, but I can't tell if it's long term workstyle shift or a temporary luxury.

[Shazbot]

Nobody redistributed money to silicon valley start-ups. The power shift was caused by a technological innovation that changed the value of certain skills. The adjustment of income was thus merit-based, and the market reacted accordingly. A merit-less redistribution of income would have quite different effects.

Consider that a drunk imbecile in Silicon Valley, having no increased merit after the start-up boom, received no great improvement to his income (save increased charity, perhaps, from more affluent neighbors). Now give the drunk all the wage increases of his start-up tycoon neighbor. He will still be a drunk imbecile, very likely worse than before, with all the public subsidies to his vices and no pressure from a charity organization to deserve it. He will, almost certainly, squander his money.

But his tycoon neighbor will have seen all his work be for naught, his drunk neighbor living in wild excess because of another man's hard work, and will be played the fool. He won't continue enslaving himself to enrich someone so undeserving. And that's the primary error of income redistribution; it completely shatters the incentives and norms that build wealth in the first place.  Furthermore it does nothing to solve inequality; the tycoon still has all of the "human capital". He, or his successor, will accumulate the same wealth in time, because he still has those properties that accumulated wealth in the first place.

None of this is new. The Greeks toyed with wealth redistribution several times, and the end result of all their economic reshuffling was re-stratification every time. The problem today is that re-distributing ancient capital, like farm land and olive trees, is much different from re-distributing railroads and billion-dollar factories. Wheat and olives can be produced by nearly anyone, I doubt anyone alive could produce something useful with 1/10th of a CnC machine. But of course, that's wealth, not income. If we redistribute income, then anyone who works is a chump. Back to the dark ages we go.

[wierd]

I know this was rhetorical, but it depends strongly on which 1/10th of the NC machine I was given.

Did I get the microcontroller?  Perhaps the high precision drive assembly?

Just the table? Part of the enclosure?

Depending on what exactly I was delivered, I may or may not be able to make something useful or valuable from that 1/10th.  The real question, is if what I can make from the redistributed part, is of equal or greater value to 1/10th the pricetag of a CNC machine.

That latter one is far more difficult to pull off.

[mainiac]

He will still be a drunk imbecile, very likely worse than before,

As my development economics professor said "It's sad that the great insight of the discipline is 'giving poor people money makes them not be poor anymore' but it's true."

People have a weird mental aversion to the idea that charity would make people take care of themselves more but that's what we've seen.  Give homes to homeless mentally ill people in the US and they commit fewer crimes and take care of themselves more.  Give a poor woman in the developing world livestock and she works for more hours each week.  Buy someone in a dysentery stricken region 10 cents of medicine and they'll work for several more days in a year on average.  Pay an adult to keep their kid in school and productivity of the adults in the region goes up.  Indonesia even ran an alternative experiment where they paid the adults in one region regardless of whether the kids went to school and they still saw school attendance and adult productivity rise.  Most of the best data is from poor countries because that's where you are allowed to run controlled experiments on people's livelihood.  But the cases we do have from the developed world doesn't give us much reason to doubt the lessons apply everywhere.

It's certainly possible for a badly designed program to create moral hazard through redistribution.  But that's true of badly designed programs in general, not redistribution programs.

[wierd]

^^
And it only needs to happen some tiny percent of the time to be true too.

The devil in the details, is if more economic activity happens as a result of the redistribution, compared to not. Try not to fall for broken window fallacies, and their equivalents. Its bad.

In the short term, people that previously had less financial liquidity will spend that money. That money then goes into any number of industries, and pays people that are working-- Some percentage of those people will spend money on starting their own enterprise, and some fraction of those will succeed. 

When the networth of these improvements and additions to the economy exceed the economic value of the capital that was redistributed from hoarders of capital, then redistribution is successful.

[Shazbot]

If you have 1/10th of a CnC machine, you may be able to make some sort of primitive lathe with an electric motor and the tool heads. If you have a whole CnC machine, you can make more CnC machine parts, engine parts, or pipe fittings. Assuming, of course, that you have feedstock and electrical power; you won't. Dividing up a cherry tree between a farmer and a carpenter is impossible. Even if the farmer can plant a thousand new cherry trees with his half, you still would have better results with a live tree next year. Dividing up capital often times destroys it. Take a well-managed family farm and divide it in half. Half a tractor and half a combine is as useful as one tractor and no combine, and you will have half the land you can plow or harvest in a given season. Both farms will fail. European history reflects this; Westphalian law gave the farm to the eldest son, and the continued divisions of Charlemagne's empire among heirs in German resulted in a feudal patchwork of weak states.

The redistribution of wealth by democracies is their historical means of self-destruction. Athens is a case in point.

[wierd]

Your analogy fails.. on many levels.

1) I can create a whole lot more than a primitive lathe. You would be surprised what you can make out of coils of copper wire, and know-how.

2) Cherry trees, like other fruit trees, and especially members of the prunus genus, can and often are propagated by cuttings.  Further, a tree propagated by cuttings is able to bear fruit much faster than one produced from seed. (the quality of the fruit is significantly more consistent as well.) Your typical fruit tree takes 5 years to become old enough to flower.  A tree propagated from a cutting however, will attempt to flower before it even has grown roots! With good care, it can produce a small number of cherries in just a single year.

A good, healthy cherry tree can theoretically produce hundreds of such divisions, leaving the trunk to the carpenter. (he does not care about the twigs anyway.)

What I was referring to in my post, however, is that your typical CNC machine costs upwards of a million dollars for a small one. (assuming it is a legit CNC machine, and not a converted conventional mill with cheap electronics.) That is because it has a LOT of engineering hours invested into its design, and its parts have to endure a toxic mix of high humidity, high heat, corrosiveness, and systemic neglect. (Businesses that buy them often try to drive them outside engineering tolerances, because "The machine can take it, and time is money. We gotta meet this order by tomorrow!" etc.)  I very seriously doubt that what I could fashion from 1/10th of a 1.5 million dollar CNC machine would have a legitimate retail price of 150,000$.

But, thanks to the power of statistical averages, we dont really need to worry about that. CNC machines are at least partially price-inflated because of their specialist niche in manufacturing, the limited number of legitimate manufacturers, and other such market forces. (Case in point, for a prior employer who was seeking to upgrade their CNC fleet, the price they were given by pretty much everyone for a CMOS SRAM upgrade from 150kb to 2mb for the controller was going to be 3000$ per unit. I looked up the SRAM modules in question. They cost 25 cents each, and only needed 8 per system. Do the math there.)  This means that the prices of CNC machines is not indicative of other physical goods in the marketplace-- Many are actually going to permit me to make significantly more than 1/10 the pricetag of the original item, on my product made from 1/10 of its constituent parts.   If enough of these other goods exist in the market, we can totally make up for the lost equity, and become overall profitable.