• Tech
    9
    A man's money is a record of other men's willigness to trade for his past work output. I believe it is useful to keep this in mind when thinking about income inequality and taxation.

    Proposition 1: Money represents "other-willingness to trade for work outputs".

    Proposition 2: There are discussions about income inequality and taxation where it is gainful to replace "money" with "other-willingness to trade for work outputs".

    I suggest two cases where P2 is true.

    Case A.
    1. People in group X have too much money.
    2. People in group X have too much "other-willigness to trade for their work outputs". (Apply P2)
    3. Work done by group X is too highly demanded by other people. (Improve style)

    The new reading encourages,
    • What criteria decide work products are too highly demanded?
    • What criteria decide that an individual demands a work product too highly?
    • When the criteria for excessive demand are met, who if anyone ought to
      curtail this demand?

    Case B.
    1. The government should raise taxes on group Y.
    2. The government should fund itself by taking more money from group Y.
    (Expand "raise taxes" into "fund itself by taking more money")
    3. The government should fund itself by taking more "other-willigness to trade for work outputs" from group Y. (Apply P2)
    4. More government activities should be funded by group Y's trades. (Improve style)

    The new reading encourages,
    • What properties of group Y's trades make it a good candidate for funding
      government activities?
    • Am I considering properties of group Y itself rather than group Y's trades?

    Case C.
    1. The government should increase the minimum wage.
    2. The government should increase the minimum money paid to employees by firms.
    (Expand "minimum wage" into "minimum money paid to employees by firms")
    3. The government should increase the minimum "other-willingness to trade for work outputs" paid to employees by firms. (Apply P2)
    4. The government should require more willigness from firms for employee labor. (Improve style)

    The new reading encourages,
    • If an agent is 'required' to be 'willing', is it correct to describe the agent as 'willing'?

    For each case I find questions that were not easily discoverable in the initial formulation.
  • Isaac
    2.2k
    A man's money is a record of other men's willigness to trade for his past work output.Tech

    What about inheritance?

    Plus

    If an agent is 'required' to be 'willing', is it correct to describe the agent as 'willing'?Tech

    No - so that rather undermines the whole project doesn't it?
  • Tech
    9
    What about inheritance?Isaac

    The inherited money is the donor's record. I think this amendment preserves the regime,

    "Money is a record of men's willingness to trade for another man's work output."

    No - so that rather undermines the whole project doesn't it?Isaac

    To the contrary, I suggest it undermines the coherency of statements like "The government should increase the minimum wage".
  • Pfhorrest
    1.9k
    What about inheritance?Isaac

    Or any other form of unearned income.

    This entire project begs the question by basically saying "What if we treat all income as earned income? Therefore everyone deserves everything they get, QED."

    Money is debt: a dollar bill is an IOU. Maybe I owe you because you legitimately did something for me and that's my sign of gratitude or your fairly agreed upon compensation. Maybe I just legally owe you because you had the power to do something bad to me if I didn't agree to owe you. Maybe I owe you because someone with more power than either of us just declared that I do.
  • Isaac
    2.2k
    The inherited money is the donor's record. I think this amendment preserves the regimeTech

    No, because you say

    Work done by group X is too highly demanded by other peopleTech

    and

    More government activities should be funded by group Y's tradesTech

    are useful rephrasings, but neither apply to inherited money. If the amount of money being declared 'too much' is inherited, then it is not translatable into "Work done by group X is too highly demanded by other people" The people being described as having 'too much' money are not the same people as those who did the work to acquire it.

    If the money the government is taxing is inherited then it cannot be translated into "More government activities should be funded by group Y's trades" because the group being taxed (group Y) are not being taxed on the basis of their trades, but on the basis of trades by a completely different group (their predecessors).

    To the contrary, I suggest it undermines the coherency of statements like "The government should increase the minimum wage".Tech

    How so? You say

    The government should require more willigness from firms for employee labor.Tech

    but if willingness includes involuntary willing, then the government enforcing that willing on behalf of the employees is no longer surprising. Why would property owners be allowed to enforce 'willing' (by removing all other options but to pay for their services), but governments not allowed to similarly enforce 'willing' by giving employers no option but to pay a certain price for labour?
  • Isaac
    2.2k
    Or any other form of unearned income.Pfhorrest

    Indeed. Economic structures distribute resources. One of those structures is supply and demand (the basis of the OP). It's not even the most important one. As the old Fry and Laurie sketch goes - 'The Market' is like Santa Claus, most people eventually grow up and stop believing in it.
  • Tech
    9
    Maybe I just legally owe you because you had the power to do something bad to me if I didn't agree to owe you. Maybe I owe you because someone with more power than either of us just declared that I doPfhorrest

    I agree, in practice some income is better thought of as "unearned". To turn the issue back to you, what features must a society have in order for "most" income to be "earned"? Then given such a society, is my regime a useful tool for policy analysis?
  • Tech
    9
    If the amount of money being declared 'too much' is inherited, then it is not translatable into "Work done by group X is too highly demanded by other people" The people being described as having 'too much' money are not the same people as those who did the work to acquire it.Isaac

    Assume the original money maker acquired the money justly. Then I suggest the money as a record of a man's work output stands regardless of who has the money. Maybe you believe the record is destroyed by unjust transfers of the money? But then you'd have to assert that voluntary donations are unjust.

    If the money the government is taxing is inherited then it cannot be translated into "More government activities should be funded by group Y's trades" because the group being taxed (group Y) are not being taxed on the basis of their trades, but on the basis of trades by a completely different group (their predecessors).Isaac

    My regime is surely imperfect, but do you agree that the money is such a record before the transfer (inheritance)?

    Why would property owners be allowed to enforce 'willing' (by removing all other options but to pay for their services), but governments not allowed to similarly enforce 'willing' by giving employers no option but to pay a certain price for labour?Isaac

    Property owners did and do not create the scarcity of property. The scarcity is a property of the material world. The amount of inhabitable land is finite and each person could find some alternative use for it.

    Additionally, does your prior justify any and all government "enforced willingness" on firms? How do you decide which such "arrangements" are just?

    Indeed. Economic structures distribute resources. One of those structures is supply and demand (the basis of the OP).Isaac

    To what degree is the "supply and demand structure" real? In my view, only resources, agents and their decisions are real. Supply and demand is a map for reasoning about these real things. But it is not like a physical law which "makes" things happen.

    It's not even the most important one. As the old Fry and Laurie sketch goes - 'The Market' is like Santa Claus, most people eventually grow up and stop believing in it.Isaac

    Like my Uncle Bob says, if you aren't a conservative by 30 the Doc missed an extra chromosome.
  • Isaac
    2.2k
    Assume the original money maker acquired the money justly.Tech

    I refer you back to @Pfhorrest

    "What if we treat all income as earned income? Therefore everyone deserves everything they get, QED."Pfhorrest

    You're just begging the question. Why would we assume the money was acquired justly? Why would assume the transfer was just?

    do you agree that the money is such a record before the transfer (inheritance)?Tech

    No, because it's rarely the result of a single transfer. It's will usually be the result of several hundred transfers since the original property was acquired by murder or violent supplanting of the previous owner.

    Property owners did and do not create the scarcity of property.Tech

    Of course they do. If, as a property owner, I withhold unproductive land from someone who needs it to grow crops I am creating artificial scarcity, the true availability of land for productivity is not as it seems because property owners retain land for no purpose other than to increase its value. Why else do Russian Oligarchs own entire tower blocks in London which are completely empty?

    Additionally, does your prior justify any and all government "enforced willingness" on firms? How do you decide which such "arrangements" are just?Tech

    That's the point. There already needs to be some judgement outside of market values to determine how just an economic structure is, so why invoke market forces in the first place?. People need houses and all property is currently owned, so the owners of that property can collectively charge whatever they can get away with (the amount the most generous among them is willing to accept) to the would-be homeowner. The amount the home-seeker will pay, therefore, has nothing to do with their 'willingness' (any more than being forced to do something at gunpoint has). It has to do with the minimum generosity of the group of people who own the resource they need (in this case property). If every single property owner were so inclined to demand £x for the property, then that's how much it would cost. It has absolutely zero to do with the home-seeker's willingness to pay, they have no option but to pay whatever is demanded or die of exposure.

    Once you accept that cabals can set the price of some resource on the basis of collective power, then 'the government' becomes no less entitled to do so. If you want to place some moral control over the government's ability to set prices, then the same moral control should apply to those who own resources.
  • Tech
    9
    You're just begging the question. Why would we assume the money was acquired justly? Why would assume the transfer was just?Isaac

    Your enquiry has led to a better formulation of the regime: "Assume that all money has and will be justly earned. How is my reasoning about taxation and income inequality affected?"

    Usefully, policy recommendations are partitioned into those contingent on unjust distribution of money and those not.

    No, because it's rarely the result of a single transfer. It's will usually be the result of several hundred transfers since the original property was acquired by murder or violent supplanting of the previous owner.Isaac

    If you are suspicious that I like the idea of an "unspoiled chain of just transactions", you're right. But I can hardly ignore evidence to the contrary (conquest, police seizures, securities fraud). Strategically, I notice two things: 1) Solutions aiming to fix bad links often have large costs of their own, 2) Often the (perceived) thief and victim are dead, so there are no good candidates for punishment or compensation.

    If, as a property owner, I withhold unproductive land from someone who needs it to grow crops I am creating artificial scarcity, the true availability of land for productivity is not as it seems because property owners retain land for no purpose other than to increase its value. Why else do Russian Oligarchs own entire tower blocks in London which are completely empty?Isaac

    This emerges from your general view on who should and shouldn't be permitted to own particular scarce resources. Can you expand this view? It will improve my understanding of your comment.

    People need houses and all property is currently owned, so the owners of that property can collectively charge whatever they can get away with (the amount the most generous among them is willing to accept) to the would-be homeowner.Isaac

    All material goods needed or wanted are currently owned by someone else. This is not unique to property.

    The amount the home-seeker will pay, therefore, has nothing to do with their 'willingness' (any more than being forced to do something at gunpoint has). It has to do with the minimum generosity of the group of people who own the resource they need (in this case property). If every single property owner were so inclined to demand £x for the property, then that's how much it would cost. It has absolutely zero to do with the home-seeker's willingness to pay, they have no option but to pay whatever is demanded or die of exposure.Isaac

    Yes, it is possible for firms to form cabals. But the incentive for members to silently defect makes cabals unstable. This instability remains until government begins punishing defectors with fines and jail time.
  • Isaac
    2.2k
    Usefully, policy recommendations are partitioned into those contingent on unjust distribution of money and those not.Tech

    Yeah, I think this could be a useful way to look at it, but I doubt much beyond basic reward for labour and ideas would pass muster.

    1) Solutions aiming to fix bad links often have large costs of their own, 2) Often the (perceived) thief and victim are dead, so there are no good candidates for punishment or compensation.Tech

    Agreed, but I don't think a presumption of just transaction is the solution to either problem. Some system will be in place, we cannot have 'no system', so (1) is going to have to be dealt with whatever we do, inaction has no less risk of large cost than action. We may not be able to identify thief or victim, but it is a trivial matter to identify those who benefit from such transactions having taken place and those who are harmed by them. In the absence of an identified thief and victim, what could possibly prevent us from simply assuming those who suffer now are de facto victims?

    This emerges from your general view on who should and shouldn't be permitted to own particular scarce resources. Can you expand this view? It will improve my understanding of your comment.Tech

    Personally I don't agree with land ownership at all and I think that joint ownership of natural resources, such as the air and soil, demands joint responsibility. But my actual comment wasn't really derived from this at all. It was merely to undermine the idea that natural scarcity determines economic value. Economic value is best thought of as the maximum return the seller can generate. This might be done by market manipulation, monopolies, lobbying for legal benefits, speculation, withholding investment, manipulating debt... Natural scarcity of the resource barely gets a look in. Read up about how De Beers manipulated the diamond market, its a really good case study.

    All material goods needed or wanted are currently owned by someone else. This is not unique to property.Tech

    Yes, my comment applies to most resources.


    it is possible for firms to form cabals. But the incentive for members to silently defect make cabals unstable. This instability remains until government begins punishing defectors with fines and jail time.Tech

    Legal monopolies and the 'cabals' I was loosely referring to are not quite one and the same. No matter who 'defects' as you put it, the price of the resource they collectively own will still be set my the minimum that person is willing to receive, not the amount the purchaser is willing to pay. Their willingness to pay doesn't figure in the calculations at all because they simply must, on pain of death, pay whatever the minimum available price is.

    Say all landowners set the price of fields at £6,000 an acre. One landowner thinks he might rake in all the sales by accepting £5,500. That then is the price of land. The willingness of farmers to pay that price never entered the equation, they simply have to because they must have land to make food to eat.
  • Tech
    9
    Is income inequality necessarily unjust?

    We may not be able to identify thief or victim, but it is a trivial matter to identify those who benefit from such transactions having taken place and those who are harmed by them. In the absence of an identified thief and victim, what could possibly prevent us from simply assuming those who suffer now are de facto victims?Isaac

    This point "it's trivial to identify who benefits and suffers from past transactions", is asserting that wealthy people have benefited and poor people have been injured?

    Economic value is best thought of as the maximum return the seller can generate.Isaac

    Free market prices are such that quantity supplied and quantity demand are the same. Real markets are unfree to varying degrees. The distance of real prices from equilibrium prices is a function of unfreeness. Why is your view superior?

    the price of the resource they collectively own will still be set my the minimum that person is willing to receive, not the amount the purchaser is willing to pay. Their willingness to pay doesn't figure in the calculations at all because they simply must, on pain of death, pay whatever the minimum available price is.Isaac

    If the seller doesn't turn his property investment into a positive return, then he doesn't make money, so hunger kills him. If the buyer doesn't acquire housing, then exposure kills him. What is the salient difference between buyer and seller position?

    Say all landowners set the price of fields at £6,000 an acre. One landowner thinks he might rake in all the sales by accepting £5,500. That then is the price of land. The willingness of farmers to pay that price never entered the equation, they simply have to because they must have land to make food to eat.Isaac

    The willingness of farmers to pay £5,500 rather than £6,000 is exactly what influences the lower price. The defecting landowner thinks, "Farmers are more willing to pay £5,500 than £6,000, so I will lower my price to increase the likelihood of a sale." It's incontestable that more people are willing to buy a product at a lower price than a higher price. Are you pointing out that the lower price is too expensive for some farmer-buyers?

    Assume a single landlord owns all farmable properties. He decides to sell each acre plot for £0.001. Most farmer-buyers can "afford" land. Unfortunately, the "line" to buy is so long that most farmer-buyers never get land. What model do you suggest for distributing usage of farmland?
  • Isaac
    2.2k
    This point "it's trivial to identify who benefits and suffers from past transactions", is asserting that wealthy people have benefited and poor people have been injured?Tech

    No, just that it's more likely than not. A person born wealthy is more likely to remain wealthy. A person born poor is more likely to remain poor, so it is more likely than not that any current wealth disparity is the result of previous wealth disparity than it is the result of something like effort or intelligence.

    Governments can only make policies on the basis of averaging (not a case by case basis) so government policy is better assuming wealth disparity is unjust than that it is just.

    Free market prices are such that quantity supplied and quantity demand are the same. Real markets are unfree to varying degrees. The distance of real prices from equilibrium prices is a function of unfreeness. Why is your view superior?Tech

    Hopefully I've been explaining that. But in summary it comes down to three factors.

    1.Demand has a lower threshold, we have certain basic needs and we can be forced, on pain of death, to pay whatever price we must to obtain them. There is no point at which people will consider bread 'too expensive'.

    2. Demand is not a naturally occurring feature. Culture creates demand and pre-existing wealth provides more influence over culture than others.

    3. The moment there is even so much as a single law, that will benefit some supply over another, laws affect supply and demand, the wealthy affect laws.

    If the seller doesn't turn his property investment into a positive return, then he doesn't make money, so hunger kills him. If the buyer doesn't acquire housing, then exposure kills him. What is the salient difference between buyer and seller position?Tech

    Nothing. I don't think I mentioned a salient difference in that respect. I was simply pointing out that the demand for essential goods cannot be zero and so the suppliers of those essential goods can use this fact to fix the price. At no point will it become 'too expensive' to buy.

    Are you pointing out that the lower price is too expensive for some farmer-buyers?Tech

    Yes. That's the point I'm making. If no other landowner is willing to sell for less than £5500 then that is the price land will sell for, it is set by the lowest amount the landowners as a group are willing to sell for. At no point in time will the wouldbe home-owners say "I'm not paying that", they have no choice they have to have shelter, so their demand has nothing whatsoever to do with the price.

    Assume a single landlord owns all farmable properties. He decides to sell each acre plot for £0.001. Most farmer-buyers can "afford" land. Unfortunately, the "line" to buy is so long that most farmer-buyers never get land.Tech

    Yes. This would theoretically happen. Farmland itself in that sense is not an essential commodity, I'm talking about essential commodities, property particularly. There is no "line is too long" issues. Absolutely every person needs a house, the line is exactly the population of the country, it may get longer if the landowner sets the price too low (people might decide they want two or three houses), but the opposite is not true, the line will never ever get shorter no matter what price the landowners set. This is the disparity. The landowners, as a group, can set whatever price they like on houses and at no point in time will that figure be pulled down by any 'willingness to pay' restrictions. As such, its reasonable to say that the buyers 'willingness to pay' has no influence on the price.
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