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@konsbn
Created August 19, 2020 04:01
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@sidcool1234
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This is great! Hardcore math.

@developerfred
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Awesome!

@DavidGrinberg
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DavidGrinberg commented Aug 19, 2020

This would be a great read if it wasn't for the ad hominem attacks on Graham. You make good points, stick with them. Don't detract from your argument with silly remarks like "moronically ignorant"

@jahooma
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jahooma commented Aug 19, 2020

You didn't actually compare the two alternatives.

In one world you make 10% year over year with no wealth tax. In another you make 10% year over year with a 1% wealth tax.

After 60 years, you'd have almost twice as much wealth in the world with no wealth tax. Paul Graham is right.

From my perspective, billionaires use their capital many times more efficiently than government, so the wealth tax is inefficient before you even get to the decreased incentive to create value. (E.g. Bill Gates may be 100x or more efficient as the gov in saving lives, and so people like him pay for the billionaires who waste their money.)

See this great post for a defense of billionaire philanthropy: https://slatestarcodex.com/2019/07/29/against-against-billionaire-philanthropy/

Frankly this is a case where mainstream thought, led by anti-business journalists, is very wrong, and therefore dangerous. Cheers.

@konsbn
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konsbn commented Aug 19, 2020

You didn't actually compare the two alternatives.

In one world you make 10% year over year with no wealth tax. In another you make 10% year over year with a 1% wealth tax.

After 60 years, you'd have almost twice as much wealth in the world with no wealth tax. Paul Graham is right.

From my perspective, billionaires use their capital many times more efficiently than government, so the wealth tax is inefficient before you even get to the decreased incentive to create value. (E.g. Bill Gates may be 100x or more efficient as the gov in saving lives, and so people like him pay for the billionaires who waste their money.)

See this great post for a defense of billionaire philanthropy: https://slatestarcodex.com/2019/07/29/against-against-billionaire-philanthropy/

Frankly this is a case where mainstream thought, led by anti-business journalists, is very wrong, and therefore dangerous. Cheers.

Actually there is some good research that has been done on the "efficiency" of the private sector by very capitalist institutions like the World Bank and also UNDP who have looked at the empirical data on whether private enterprises show increased efficiency and they have found no such evidence for it. So your assertion that billionaires are much more efficient with their wealth is not substantiated by empirical evidence. I am attaching the links so that you may check for yourself.
World Bank Report
UNDP Report (PDF)

@srijanshetty
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From my perspective, billionaires use their capital many times more efficiently than government, so the wealth tax is inefficient before you even get to the decreased incentive to create value. (E.g. Bill Gates may be 100x or more efficient as the gov in saving lives, and so people like him pay for the billionaires who waste their money.)

There's no doubt that Bill Gates has done tremendous good in the world. That being said, your argument has a fundamental assumption that an oligarchy will be naturally inclined to do good in the world. History paints a spotty track-record for such an argument. I believe in democratic institutions. Yes, they aren't the most efficient allocators of capital but don't forget that the internet on which most modern billionaires created a fortune was developed by the government. Logistics was built on the transport infrastructure set up by the government through funding roads, satellites and modern communication were initially funded by the government as well.

Governments have shown exceptionalism in the past and we need a systematic rethink of how can we ensure that governments can be empowered to do the same again.

@jahooma
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jahooma commented Aug 19, 2020

konsbn, thank you for the links, they are interesting.

I agree there are limits for when business is more efficient. For example, pursuing profit could lead a water utility to skimp on filtering, and worsen the health of the people that drink the water. Or a factory could use coal because it is cheaper, and meanwhile the air pollution hurts communities in many ways. These are examples of negative externalities, where the business causes harm because incentives are not aligned.

These problems occur more frequently in developing countries (from your second link):

Though greater competition often improves efficiency,
it can also worsen it where institutions are weak. In some
transition economies, increased competition created
incentives for breaking contracts, thereby reducing
efficiency (Blanchard & Kremer, 1997).

I think of business like a game: make the most money possible, given these rules. If the laws are bad, or if the government is too weak to enforce them, the outcome can be bad. I think that's the common thread in your links. For example, when a company gains too much power and shuts down its rivals -- that's a monopoly, and it's not playing by the rules.

But when the environment is set up right, it works like magic, and pushes for innovation and efficiency, where there is no such incentive for government beyond representatives trying to get reelected.

srijanshetty -- I would agree with you, though I don't actually think we are close to an oligarchy. Money in politics actually has surprisingly little effect (e.g. see Bloomberg), so billionaires mainly pursue pet projects. The diversity of ways their money gets spent, especially on risky projects, is something mostly missing from government programs.

I would also like to see more great advances like the ones you mention come out of government, but it seems to me the incentive structure doesn't necessarily push for this in the way that business does. DARPA is a pretty good attempt though!

@jstnlef
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jstnlef commented Aug 19, 2020

I have a rebuttal.
https://gist.github.com/jstnlef/d3fc0fbc9f381db50e1ee143576ef198
Essentially, I believe that you are missing Paul Graham's point. In order to PAY for the wealth tax, you need to sell your ownership in the company. That's what he's trying to say.

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