Oh, by the way, Piketty wants to cap growth at $68,000 per capita, PPP adjusted. That happens to be the GDP per capita of France. Gee, what a coincidence!
How does that statement make sense? Show the quote by Picketty before attributing such non-sense. One interpretation is: world GDP/capita should not grow past $68,000 however GDP is measured and adjusted ( for "inflation" across time if we had something like a worldwide consumption basket for the "average" or "typical" ( may be median in some sense) person in the world. Really, Picketty does not want GDP per person worldwide to grow? Think again. Or be a bit more precise so I can understand what you are referring to. Is there some averaging across countries which afterall are pretty arbitrary entities ( hence there is migration of all kinds between 'countries').
I simply want to understand what you tell us Picketty is proposing means. I am not trying to pick on you.
I appreciate the call for precision. In my own forecasting, I find that when we move past the vague rhetoric and look at the actual 'Signal' like some specific GDP per capita targets we see the real engineering of the global supply chain at work
Spot on about the motives, Frank. It’s a classic case of political 'noise' drowning out the actual economic mechanics. I’ve been tracking how these structural shifts often hide behind headlines to create massive policy gaps that most investors miss.
A week or two ago, in response your piece about income inequality as discussed in the WSJ, I responded with exactly this point, "... .Second, the appropriate measure of inequality is consumption rather than wealth."
Glad you are correcting your previous oversight. Better late than never!
I fail to see how govt spending another $1 trillion is going to improve the US economy more than letting Musk invest $1 trillion directly into the economy. People like Warren, Bernie and Mandummy believe in fantasy.
Qasim Rashid , who is apparently someone up and coming on Substack and US politics wrote an extremely stupid note about taxing billionaires and trillionaires that I replied to with this - https://substack.com/@francisturner/note/c-273599687 - pointing out that the US Federal government spends $1T in under a month (IIRC it's ~2 weeks, but I haven't checked)
I agree it is far better to let Musk spend his trillion anyway he wants than let the government get another 2 weeks of funding
Irritatingly Our World In Data no longer seems to have the graph of total numbers of people in absolute poverty (the time and PPP adjusted $3/day level) that it used to have. From what I recall the number was never under 1 Billion from any time where the population was over 1.2?B in the early 19thC until the 2000s. Then in ~2010 despite there being more people than ever, the number in extreme poverty went under 1B and has stayed there ever since
All this uproar about wealth taxes in the US ( or world wide ?) when in fact we already have significant wealth taxes in the United States ( to stick with one example): called "property" or "real estate" taxes imposed by towns, counties, and other municipalities. So, surely you would argue to abolish those ( if you are opposing new, more comprehensive wealth taxes). Ironically, wealth taxes in the US in fact contribute to inequality, because they are used to pay for the services locally provided by schools ( public and at least partially also for private ones) and other municipal services like garbage collection and enforcing property rights and protecting property ( fire departments, police ) sometimes called public safety which to some degree also is supposed to enforce rules of conduct ( not to endanger other persons beyond what is acceptable by "legal codes" defining personal and civil rights. I am trying to be as abstract as possible.
Why do these property taxes strengthen inequality rather than mitigate it? Because wealthy individuals tend to move to areas where they get the school and property enforcement and protection they demand, and are willing to pay for those with a proportion of their real estate wealth ( and may also preserve them by supporting local political, school board and judicial positions to reflect those preferences). Less wealthy individuals end up in districts with lower quality of educational services, property or personal protection. The latter tends to reduce the chances ( opportunities; is there an equality of opportunities in the United States?).
Therefore a wealth tax is not necessarily redistributive, in fact it can be the source of the exact opposite.
In your essay you equalize any taxation of wealth as growth reducing or even eliminating. That does not apply to property taxation?
You also state that wealth is not equal consumption. Yes, they are 2 different things. However, there is some relationship, at least in certain aggregations. Friedman's permanent income hypothesis states that as a first approximation consumption is a "constant" or at least only slowly changing fraction of overall wealth. The flow ( consumption) is seen as a proportion "k" of the stock wealth approximating what the late Milton Friedman calls permanent income, not a bad name it seems. Therefore taxing consumption per se is not a solution for raising revenues to deliver services either then.
Economists always want taxes that they call the least distortive to economic activity ( in some perfect abstract world where common services are not needed or provided freely without resource cost).
In that economic model the only non-distortive tax is a lump sum tax which is neither related to wealth, consumption, production or income. With unlimited borrowing such a lump sum tax could be a periodic lottery where the lump sum each person in the "jurisdiction" pays is determined by a game of chance which distributed the overall tax revenue needed in a random way. Why not?
So much to the heroic claims made about wealth creating "productive" investments ( that would include inherited wealth and that gained by a lottery).
If those investments are simply to dig a hole on one day and closing the hole the next day, then those investments are not necessarily "Productive". The resulting "plant" is non-existent and might only help some worms and somebody's accumulating muscles.
If the wealth is invested in plants using fossil fuels as an energy source and are emitting methane unchecked ( like most cows do), then these investments in plants and cows can potentially in some scenario literally destroy the inhabitable earth ( inhabitable for humans that is disregarding pets and other creatures for the moment). If that were true ( just hypothetically) then we could tax that wealth used to invest in those activities to mitigate, neutralize or better reduce such investments.
Lots of activities captured in GDP are simply actions to fix or reduce the damage caused by such investments ( and as such are productive), while the damaging part of the investment is not recorded as a negative ( humankind might have accumulated negative wealth by reducing the ozone layers around the globe). Hypothetically!
Is GDP/Capita a measure of productivity? A significant portion is not ( at least acknowledge that that is possible).
Simple examples are "overinvesting"in housing ( like China presumably did), although I acknowledge that a precise definition of overinvestment is difficult ( however constantly claimed by many serious economists). Ok, China is certainly not a fully competitive "Capitalistic" market economy. Which country is ? The US? The US federal government is paying investors in electricity generating wind capture projects almost one billion USD ( adding them all up). Are wind power plants productive investments- looking at states like Texas they certainly are ( and so is solar in Texas: producing electric power when needed the most: in summer for Air conditioning and so on).
Are tar sand projects in Alberta, Canada productive investments ? According to some calculations ( I will need to find those citations again) Canada and the US ( the latter as consumers and refiners of this tar to convert tar into oil and then use pipelines to transport the resulting products) the whole process of digging out, transporting and refining tar sand into useful fossil fuel takes more energy than most uses of that energy get out of the resulting refined products!
Productive investments? By the "private sector"? Alberta is so fearful that the central Canadian government may one day discover the energy wasting and environmentally dangerous activity that Alberta is having a referendum to split off from Canada!
The crux in my view is to view all wealth --> investment --> desired consumption as "productive" in some abstract economically super efficient model while totally ignoring the framework that makes an economic "jurisdiction" often loosely called a "country" actually function as such: the costless supply of a legal, consensus building political entity with social cohesion that can "produce" such outcomes within that jurisdiction and in cooperation ( hopefully not war like "cooperation, I.e. attempted coercion) --> such a costless supply simply does not exist anywhere on this globe. Striving to find models of jurisdictions with institutions and norms that generate productive outcomes without damaging other jurisdictions or the global environment ( only as an example: there are other global elements needed like voluntary organisations and institutions which allow consensus building on global concerns such as infectious deseases and peace building processes, and so on).
Unfortunately, those governance issues that can impede or foster growth, are not brought up in our "economic" debates. They play a role in wealth taxation which is feasible when wealth cannot easily run away ( such as in real estate ), but already the Chicago School view on wealthy interests capturing the state is applicable here, since the municipal wealth taxation has resulted in even more inequality by permeating the distribution of wealth across generations ( ensuring that wealthy regions in the US have better PUBLIC schools than poor municipalities have, and thus ensure unequal opportunities to thrive after developing human capital at a young age for generations to come).
In conclusion: I strangely enough agree with John that wealth taxation in general for the extreme rich is unlikely to work, not because in an ideal economic model world it would not generate redistribution ( whether enough is another question), but because the ultra-rich will use their political power to undermine any such move in taxing their wealth by using their wealth to undermine these efforts - I.e. create enough loopholes and tax heavens to make wealth tax on extremely wealthy folks mute ( at least for the ultra rich). How? By using their "productive" investments like Peter Thiel's into the career of the current Vice President to pay off when it counts. In the end, in terms of tax incidents ( after accounting for tax shifting ) the US income tax system ends up to be about proportional to income no matter what the tax rules are ( plus by undermining the enforcement of tax rules and collection of taxes via underfunding the IRS wealthy interests make sure that even harmful rules ultimately will not actually be applied, since tax accountant manouvers by wealthy US persons will neutralize any such actions).
It is more important to think of a political governance system where the overwhelming capturing influence of the wealthy can be reduced to a more tolerable level ( revise Supreme Court decisions that declare corporations to be "persons" and thus allow for unlimited anonymous campaign contributions to political candidates via super PACs). Change the culture of campaigning: the US is the only country in the world I know where bragging by a political candidate about how much money a candidate raised is seen as a positive: everywhere else in the democratically run world such bragging is considered a clear indication that this candidate is being bribed to deliver favors after being elected to an office. That does not mean there is no corruption in other democratic countries: illegal campaign contributions are discovered all the time ( famously in the case of the long serving German Chancellor Helmut Kohl. Who's was discovered to have a secret slash fund whose donors he did not want to disclose),
Dear Cochrane, I usually like very much what you write, but here I am afraid you have been trivializing the problem.
The issue at stake when wanting to tax extreme wealth is not to eradicate poverty: it is to reduce the enormous and unprecedented forms of power concentration that plague today's world.
Some wealth disparity is acceptable, and very likely beneficial to all economic systems. Extreme inequality is only damaging, even to the economy itself, as the markets become highly biased.
Not to talk of the political aspect, where the ultra wealthy now have near complete control of the major information channels.
Redistributing and rebalancing power will be all the more fundamental in the age of exponential technological progress we are living in, as I tried to carefully explain across my works.
You are of course right that one cannot simply flatten out wealth, but complex issues like this need to be given our deepest thoughts, exactly because their complexity is overwhelming.
You want to reduce power concentration? Reduce government, that's where the real power is.
You are wrong about what the rich control. Consumers are the ultimate kings. Musk didn't get rich by wishing for it. He got rich by selling things people wanted. He reduced the cost of access to space by probably a factor of 10, something no government space program even thought of; witness the bloated SLS using Apollo-era technology.
This is knee-jerk statist defense; to continue your metaphor, a circle jerk of control freaks whose brains would disintegrate if they admitted that government is uniquely coercive.
You sure play one in the comments. Words chosen for impact, not meaning. Sentences made to say nothing while signalling fury. Assumptions made left right and center to cover as many bases as possible.
What exactly is "shallow ideological masturbation"? Of what use is recognizing that power has many sources, while refusing to recognize that governments have more coercion at their beck and call that the richest cronies? Why claim to admire what you plainly despise?
firstly in taxing wealth there is a massive display of ignorance of stocks and flows. Wealth is a stock fed by saved income that is a flow and is already taxed in most jurisdictions. so why taxing twice? simply because of envy? already sales / VAT are abuses.
secondly, if we take Prof. Nordhaus estimate of owners retaining 2.2% of the wealth created then this would mean that Musk has created 44 trillion wealth that are redistributed to the world. a bit of an hyperbole but shows how the marxist ideas are bogus. going from Bastiat to Piketty, that is the French school of economics disaster
Excellent distinction between stocks and flows. It’s that exact 'Price Drop' logic that I look for in macro shifts when the market hasn't yet priced in the fundamental re-engineering of how capital actually moves across borders.
and by the way if there so much inequality, rationally we should see poor people moving toward poorer places so they will become "more equal". in reality we are seeing the opposite. people want to live better, aspire to have more income and the tide is lifting everybody up. then comes the marxists, like Piketty, Saez, Mazzuccato, feeding the envy.
The problem is, it gets votes. Lots of them. And many of those billionaires and wanna-be trillionaires donate to universities that teach kids that nonsense and so it gets their votes. And so we get Mamdani and government grocery stores and rent control on steroids. And LA will burn again.
Tangible Assets: Real estate, factories, farmland, and commodities.
Knowledge: Skills, education, intellectual property, and problem-solving abilities.
Time: The freedom to choose how you spend your days.
Health: Physical and mental well-being, which money cannot directly buy.
Relationships: Deep connections with family, friends, and community.
The Core Difference
You can possess millions of dollars on a deserted island and still starve to death because you have money but no wealth. Wealth is what actually produces value, sustains life, and creates personal freedom. Money is simply the currency we use to move that wealth around. While money can buy wealth, merely hoarding currency leaves you vulnerable to inflation and overlooks the holistic nature of true abundance.
Take a look at the history - impetus- of the 16th Amendment. It was driven as a tax on the "millionaires" of "The Gilded Age". One hundred years later up to 40% of every paycheck disappears into the federal coffers from which you may get a little back at the end of the year. Bad ideas don't go away.
That's not nearly the worst consequence of A16. It enabled prohibition. Previously, excise taxes on alcoholic beverages had made for much of federal revenue. And A16 did not substitute for Smoot-Hawley. A16 created a double whammy.
The motive for the wealth tax is envy.
Oh, by the way, Piketty wants to cap growth at $68,000 per capita, PPP adjusted. That happens to be the GDP per capita of France. Gee, what a coincidence!
How does that statement make sense? Show the quote by Picketty before attributing such non-sense. One interpretation is: world GDP/capita should not grow past $68,000 however GDP is measured and adjusted ( for "inflation" across time if we had something like a worldwide consumption basket for the "average" or "typical" ( may be median in some sense) person in the world. Really, Picketty does not want GDP per person worldwide to grow? Think again. Or be a bit more precise so I can understand what you are referring to. Is there some averaging across countries which afterall are pretty arbitrary entities ( hence there is migration of all kinds between 'countries').
I simply want to understand what you tell us Picketty is proposing means. I am not trying to pick on you.
Charles de Gaulle: "Every Frenchman wants to enjoy one or more privileges; that's the way he shows his passion for equality."
"No one loves money like a Communist."
I appreciate the call for precision. In my own forecasting, I find that when we move past the vague rhetoric and look at the actual 'Signal' like some specific GDP per capita targets we see the real engineering of the global supply chain at work
Spot on about the motives, Frank. It’s a classic case of political 'noise' drowning out the actual economic mechanics. I’ve been tracking how these structural shifts often hide behind headlines to create massive policy gaps that most investors miss.
A week or two ago, in response your piece about income inequality as discussed in the WSJ, I responded with exactly this point, "... .Second, the appropriate measure of inequality is consumption rather than wealth."
Glad you are correcting your previous oversight. Better late than never!
I fail to see how govt spending another $1 trillion is going to improve the US economy more than letting Musk invest $1 trillion directly into the economy. People like Warren, Bernie and Mandummy believe in fantasy.
You’ve nailed the difference between 'The Noise' of government spending and 'The Signal' of private investment.
Qasim Rashid , who is apparently someone up and coming on Substack and US politics wrote an extremely stupid note about taxing billionaires and trillionaires that I replied to with this - https://substack.com/@francisturner/note/c-273599687 - pointing out that the US Federal government spends $1T in under a month (IIRC it's ~2 weeks, but I haven't checked)
I agree it is far better to let Musk spend his trillion anyway he wants than let the government get another 2 weeks of funding
Federal budget is ~$7 trillion. 7½ weeks, two months.
Oops I sit corrected. Still doesn't alter the overall argument though
Irritatingly Our World In Data no longer seems to have the graph of total numbers of people in absolute poverty (the time and PPP adjusted $3/day level) that it used to have. From what I recall the number was never under 1 Billion from any time where the population was over 1.2?B in the early 19thC until the 2000s. Then in ~2010 despite there being more people than ever, the number in extreme poverty went under 1B and has stayed there ever since
All this uproar about wealth taxes in the US ( or world wide ?) when in fact we already have significant wealth taxes in the United States ( to stick with one example): called "property" or "real estate" taxes imposed by towns, counties, and other municipalities. So, surely you would argue to abolish those ( if you are opposing new, more comprehensive wealth taxes). Ironically, wealth taxes in the US in fact contribute to inequality, because they are used to pay for the services locally provided by schools ( public and at least partially also for private ones) and other municipal services like garbage collection and enforcing property rights and protecting property ( fire departments, police ) sometimes called public safety which to some degree also is supposed to enforce rules of conduct ( not to endanger other persons beyond what is acceptable by "legal codes" defining personal and civil rights. I am trying to be as abstract as possible.
Why do these property taxes strengthen inequality rather than mitigate it? Because wealthy individuals tend to move to areas where they get the school and property enforcement and protection they demand, and are willing to pay for those with a proportion of their real estate wealth ( and may also preserve them by supporting local political, school board and judicial positions to reflect those preferences). Less wealthy individuals end up in districts with lower quality of educational services, property or personal protection. The latter tends to reduce the chances ( opportunities; is there an equality of opportunities in the United States?).
Therefore a wealth tax is not necessarily redistributive, in fact it can be the source of the exact opposite.
In your essay you equalize any taxation of wealth as growth reducing or even eliminating. That does not apply to property taxation?
You also state that wealth is not equal consumption. Yes, they are 2 different things. However, there is some relationship, at least in certain aggregations. Friedman's permanent income hypothesis states that as a first approximation consumption is a "constant" or at least only slowly changing fraction of overall wealth. The flow ( consumption) is seen as a proportion "k" of the stock wealth approximating what the late Milton Friedman calls permanent income, not a bad name it seems. Therefore taxing consumption per se is not a solution for raising revenues to deliver services either then.
Economists always want taxes that they call the least distortive to economic activity ( in some perfect abstract world where common services are not needed or provided freely without resource cost).
In that economic model the only non-distortive tax is a lump sum tax which is neither related to wealth, consumption, production or income. With unlimited borrowing such a lump sum tax could be a periodic lottery where the lump sum each person in the "jurisdiction" pays is determined by a game of chance which distributed the overall tax revenue needed in a random way. Why not?
So much to the heroic claims made about wealth creating "productive" investments ( that would include inherited wealth and that gained by a lottery).
If those investments are simply to dig a hole on one day and closing the hole the next day, then those investments are not necessarily "Productive". The resulting "plant" is non-existent and might only help some worms and somebody's accumulating muscles.
If the wealth is invested in plants using fossil fuels as an energy source and are emitting methane unchecked ( like most cows do), then these investments in plants and cows can potentially in some scenario literally destroy the inhabitable earth ( inhabitable for humans that is disregarding pets and other creatures for the moment). If that were true ( just hypothetically) then we could tax that wealth used to invest in those activities to mitigate, neutralize or better reduce such investments.
Lots of activities captured in GDP are simply actions to fix or reduce the damage caused by such investments ( and as such are productive), while the damaging part of the investment is not recorded as a negative ( humankind might have accumulated negative wealth by reducing the ozone layers around the globe). Hypothetically!
Is GDP/Capita a measure of productivity? A significant portion is not ( at least acknowledge that that is possible).
Simple examples are "overinvesting"in housing ( like China presumably did), although I acknowledge that a precise definition of overinvestment is difficult ( however constantly claimed by many serious economists). Ok, China is certainly not a fully competitive "Capitalistic" market economy. Which country is ? The US? The US federal government is paying investors in electricity generating wind capture projects almost one billion USD ( adding them all up). Are wind power plants productive investments- looking at states like Texas they certainly are ( and so is solar in Texas: producing electric power when needed the most: in summer for Air conditioning and so on).
Are tar sand projects in Alberta, Canada productive investments ? According to some calculations ( I will need to find those citations again) Canada and the US ( the latter as consumers and refiners of this tar to convert tar into oil and then use pipelines to transport the resulting products) the whole process of digging out, transporting and refining tar sand into useful fossil fuel takes more energy than most uses of that energy get out of the resulting refined products!
Productive investments? By the "private sector"? Alberta is so fearful that the central Canadian government may one day discover the energy wasting and environmentally dangerous activity that Alberta is having a referendum to split off from Canada!
The crux in my view is to view all wealth --> investment --> desired consumption as "productive" in some abstract economically super efficient model while totally ignoring the framework that makes an economic "jurisdiction" often loosely called a "country" actually function as such: the costless supply of a legal, consensus building political entity with social cohesion that can "produce" such outcomes within that jurisdiction and in cooperation ( hopefully not war like "cooperation, I.e. attempted coercion) --> such a costless supply simply does not exist anywhere on this globe. Striving to find models of jurisdictions with institutions and norms that generate productive outcomes without damaging other jurisdictions or the global environment ( only as an example: there are other global elements needed like voluntary organisations and institutions which allow consensus building on global concerns such as infectious deseases and peace building processes, and so on).
Unfortunately, those governance issues that can impede or foster growth, are not brought up in our "economic" debates. They play a role in wealth taxation which is feasible when wealth cannot easily run away ( such as in real estate ), but already the Chicago School view on wealthy interests capturing the state is applicable here, since the municipal wealth taxation has resulted in even more inequality by permeating the distribution of wealth across generations ( ensuring that wealthy regions in the US have better PUBLIC schools than poor municipalities have, and thus ensure unequal opportunities to thrive after developing human capital at a young age for generations to come).
In conclusion: I strangely enough agree with John that wealth taxation in general for the extreme rich is unlikely to work, not because in an ideal economic model world it would not generate redistribution ( whether enough is another question), but because the ultra-rich will use their political power to undermine any such move in taxing their wealth by using their wealth to undermine these efforts - I.e. create enough loopholes and tax heavens to make wealth tax on extremely wealthy folks mute ( at least for the ultra rich). How? By using their "productive" investments like Peter Thiel's into the career of the current Vice President to pay off when it counts. In the end, in terms of tax incidents ( after accounting for tax shifting ) the US income tax system ends up to be about proportional to income no matter what the tax rules are ( plus by undermining the enforcement of tax rules and collection of taxes via underfunding the IRS wealthy interests make sure that even harmful rules ultimately will not actually be applied, since tax accountant manouvers by wealthy US persons will neutralize any such actions).
It is more important to think of a political governance system where the overwhelming capturing influence of the wealthy can be reduced to a more tolerable level ( revise Supreme Court decisions that declare corporations to be "persons" and thus allow for unlimited anonymous campaign contributions to political candidates via super PACs). Change the culture of campaigning: the US is the only country in the world I know where bragging by a political candidate about how much money a candidate raised is seen as a positive: everywhere else in the democratically run world such bragging is considered a clear indication that this candidate is being bribed to deliver favors after being elected to an office. That does not mean there is no corruption in other democratic countries: illegal campaign contributions are discovered all the time ( famously in the case of the long serving German Chancellor Helmut Kohl. Who's was discovered to have a secret slash fund whose donors he did not want to disclose),
Sorry for some typos! I hope they don't destroy the line of thinking ( are "unproductive"). May try to fix them tomorrow.
The big flawed assumption made here is that giving money for people to consume doesn't lead to that money going to businesses that invest in capital
(and of course the obvious assumption that more capital is "worth it" even when people starve)
Dear Cochrane, I usually like very much what you write, but here I am afraid you have been trivializing the problem.
The issue at stake when wanting to tax extreme wealth is not to eradicate poverty: it is to reduce the enormous and unprecedented forms of power concentration that plague today's world.
Some wealth disparity is acceptable, and very likely beneficial to all economic systems. Extreme inequality is only damaging, even to the economy itself, as the markets become highly biased.
Not to talk of the political aspect, where the ultra wealthy now have near complete control of the major information channels.
Redistributing and rebalancing power will be all the more fundamental in the age of exponential technological progress we are living in, as I tried to carefully explain across my works.
You are of course right that one cannot simply flatten out wealth, but complex issues like this need to be given our deepest thoughts, exactly because their complexity is overwhelming.
You want to reduce power concentration? Reduce government, that's where the real power is.
You are wrong about what the rich control. Consumers are the ultimate kings. Musk didn't get rich by wishing for it. He got rich by selling things people wanted. He reduced the cost of access to space by probably a factor of 10, something no government space program even thought of; witness the bloated SLS using Apollo-era technology.
This is shallow ideological masturbation. Reality is, "too much power" can come from lots of different places.
This is knee-jerk statist defense; to continue your metaphor, a circle jerk of control freaks whose brains would disintegrate if they admitted that government is uniquely coercive.
I am not a statist but I admire your willingness to flat-out make shit up in order to rationalize your worst ideologue indulgences.
You sure play one in the comments. Words chosen for impact, not meaning. Sentences made to say nothing while signalling fury. Assumptions made left right and center to cover as many bases as possible.
What exactly is "shallow ideological masturbation"? Of what use is recognizing that power has many sources, while refusing to recognize that governments have more coercion at their beck and call that the richest cronies? Why claim to admire what you plainly despise?
Jacopo,
Please move to Cuba, North Korea or Nicaragua. Your kind of places.
firstly in taxing wealth there is a massive display of ignorance of stocks and flows. Wealth is a stock fed by saved income that is a flow and is already taxed in most jurisdictions. so why taxing twice? simply because of envy? already sales / VAT are abuses.
secondly, if we take Prof. Nordhaus estimate of owners retaining 2.2% of the wealth created then this would mean that Musk has created 44 trillion wealth that are redistributed to the world. a bit of an hyperbole but shows how the marxist ideas are bogus. going from Bastiat to Piketty, that is the French school of economics disaster
Excellent distinction between stocks and flows. It’s that exact 'Price Drop' logic that I look for in macro shifts when the market hasn't yet priced in the fundamental re-engineering of how capital actually moves across borders.
and by the way if there so much inequality, rationally we should see poor people moving toward poorer places so they will become "more equal". in reality we are seeing the opposite. people want to live better, aspire to have more income and the tide is lifting everybody up. then comes the marxists, like Piketty, Saez, Mazzuccato, feeding the envy.
The problem is, it gets votes. Lots of them. And many of those billionaires and wanna-be trillionaires donate to universities that teach kids that nonsense and so it gets their votes. And so we get Mamdani and government grocery stores and rent control on steroids. And LA will burn again.
Money is not wealth.
What is Wealth?
Tangible Assets: Real estate, factories, farmland, and commodities.
Knowledge: Skills, education, intellectual property, and problem-solving abilities.
Time: The freedom to choose how you spend your days.
Health: Physical and mental well-being, which money cannot directly buy.
Relationships: Deep connections with family, friends, and community.
The Core Difference
You can possess millions of dollars on a deserted island and still starve to death because you have money but no wealth. Wealth is what actually produces value, sustains life, and creates personal freedom. Money is simply the currency we use to move that wealth around. While money can buy wealth, merely hoarding currency leaves you vulnerable to inflation and overlooks the holistic nature of true abundance.
Take a look at the history - impetus- of the 16th Amendment. It was driven as a tax on the "millionaires" of "The Gilded Age". One hundred years later up to 40% of every paycheck disappears into the federal coffers from which you may get a little back at the end of the year. Bad ideas don't go away.
That's not nearly the worst consequence of A16. It enabled prohibition. Previously, excise taxes on alcoholic beverages had made for much of federal revenue. And A16 did not substitute for Smoot-Hawley. A16 created a double whammy.
it's a trap
we fall for it if we enter into a debate about tax and wealth and poverty and concentration of power
etc., etc.
it has nothing to do with any of that
it's about vanity, self love, attention seeking, and power gained in that way, leveraging the common person's ignorance to personal advantage
they have succeeded
they got what they want
they are a cancer on the soul
With all that is said in the comments, are there any more things to be said.
Hasn't this been debated since time immemorial?
Is the real question perhaps, what is the purpose of Life, Wealth, and THE PURSUIT OF HAPPINESS?
Perhaps of competence and incompetence? Of equality? Of individual freedom?
Wolfgang Richter looks like a parody account
It is. The fact that John fell for it is a bit alarming.