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Mixed Economy

Michael McMahon

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I tend to think a mixed economy with both generous welfare from government along with private market innovation seems to be pragmatic and viable. It captures more 'positive externalities' like education and healthcare than an exclusively private market and is more charitable. The slight problem I find with socialist thinking is that a free market isn't feudal. People are free to dollar vote and buy from cooperative businesses. Redistributive taxation seems to be working where it's tried compared to a collectivised communal sort of economy.
 
I tend to think a mixed economy with both generous welfare from government along with private market innovation seems to be pragmatic and viable. It captures more 'positive externalities' like education and healthcare than an exclusively private market and is more charitable. The slight problem I find with socialist thinking is that a free market isn't feudal. People are free to dollar vote and buy from cooperative businesses. Redistributive taxation seems to be working where it's tried compared to a collectivised communal sort of economy.

All the advanced economies currently are mixed.

There has never been a "collectivised communal sort of economy" that functioned. You cannot engineer and economy system.
 
I agree that society must of course help people who are struggling. But other aspects of socialism might be slightly pessimistic towards the economy. The emphasising of the "bourgeoisie" versus the "proletariat" is sometimes perhaps a bit too cynical!
 
I agree that society must of course help people who are struggling. But other aspects of socialism might be slightly pessimistic towards the economy. The emphasizing of the "bourgeoisie" versus the "proletariat" is sometimes perhaps a bit too cynical!

Pessimistic? Or realistic? I think realistic. There are always people who fall through the cracks of the free market.
 
Pessimistic? Or realistic? I think realistic. There are always people who fall through the cracks of the free market.

There is a very large abyss separating the cast-like view of socialism and some people "falling through the cracks."
 
“Taxation is theft is a popular slogan among libertarians.”
https://www.libertarianism.org/columns/is-taxation-theft

Let’s say someone had to pay a 35% flat tax. I don’t think that would exactly equate to them giving 35% of their working time to the government. This is because an individual could try to pass on the tax. Or else others within that same income bracket could collectively try to pass on the tax. The amount of tax that could be passed on would still be limited by their competitors who are willing to work for a lower price. So I suppose this might be one small argument in favour of a progressive tax.

“Depending on the circumstance, the burden of tax can fall more on consumers or on producers.
In the case of cigarettes, for example, demand is inelastic—because cigarettes are an addictive substance—and taxes are mainly passed along to consumers in the form of higher prices.
Tax incidence is the manner in which the tax burden is divided between buyers and sellers.
The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax.”
- khanacademy



“If we want to do more and better, we must stop seeing the state (and taxation) as the only means of doing things in society.”
https://www.google.ie/amp/s/fee.org/articles/what-if-charity-replaced-taxation/amp

Maybe there could be income tax reductions for those who want to give a sizeable amount of their income to private charities. I think there’d still need to be some tax revenue though. I don’t thin society can exclusively rely on private charity.


“While many cultures around the world practice some form of communal child-rearing, the kibbutz is the only known society in history to attempt communal sleeping.”
https://www.google.ie/amp/s/amp.theguardian.com/lifeandstyle/2011/feb/19/kibbutz-child-noam-shpancer

I think there are may be a few limits to a collective mindset. As there are millions of people in a country, nearly everyone will be strangers. People aren’t directly raised by the state either. So while I agree with redistributive taxes, I also agree with aspects of individualism.
 
The whole point of mixed model economics is to have parts of the equation in place that throttle the other, to apply the economic understandings of balance between market and planned economics. Ideally have monetary, fiscal, and trade policy that reduces the amplitude of the economic cycle for a more consistent growth pattern in the long term and escape the idea of bubble and pop economics. We know from study in this area of academics that on a long enough timeline strict capitalism is just as likely to destroy itself as strict socialism, so you apply principles of both as reason to balance the other.

All of that are the core principles of modern economics, however today's constant debates in this area boil down to where we are in that balance, on that line between the extremes, in order to handle whatever the issue is of the day.

Again, sticking with the principles of economics then all taxation is redistribution of some kind and all spending is net addition to a nation's GDP.

However, taxation is not a prerequisite to spending. Because most modern economies have a fiat money system (our dollar is not a fixed value nor is it basked by gold or some other item) then it is the other way around and the government must spend or lend in order to then tax.

Why? To stabilize aggregate demand (i.e. the economic cycle I was going on about above.) To prevent bubble and pop economics (or the boom being so good but for so few, and the collapse being so painful for all) means applying tax policy that is counter to where we are. Again, the throttle. You increase taxes as the economy is starting to boom to prevent artificial increases well above a stable growth line, and you decrease taxes when an economy is headed south in order to counter whatever fault we are experiencing with aggregate demand. In that context what is really means is "tax burden" in any sense just means what tax policy is applied to handle wherever we are in the economic cycle, how and where taxation is applied also needs to be by reason just the same as reduction has to be by reason.

Spending on the other hand is always an addition to the actual math that makes up GDP, in great times government spending should be less by percent than private consumption (consumer spending) and gross investment (business.) But in times of aggregate demand fault government spending is the only area of the GDP equation that can go up to handle whatever we are experiencing.

Now, how the government spends is also a concern but is still a need no matter where we are in the economic cycle. The government buying an F35 does not quite have the same impact as building a highway between two cities but they both are still net additions to the economy (assuming of course a few things about money and where.) And the same thing is true of healthcare, education, and all the other things we tend to spend on. The more the spending goes towards things with repeating returns the better we are. Again, reduces the amplification of the economic cycle because no matter what is going on the government is still an active participant in the economy for a plethora of reasons. Including social impact, the other area that pure market economics tends to not care about.
 
Michael McMahon, from the discussion thread, "Private industry is not always the superior solution":
Private industry is not always the superior solution:

There are people that believe “government’s the problem rather than solution. I heard Milton Friedman state that half of what our federal government’s spending is wasted. A great proportion of all other than federal spending, (including commercial and personal spending) is also “wasted”.

We, as individuals generally believe that governments’ spending for what we approve of, to the extent that’s spent in manners that we approve of, is justifiable; all other governments’ spending is less than justifiable. That’s politics. There are extremely few items of governments expense that are not controversial. Governments’ lines of expenses are criticized or subject to objections by some aggregate individuals or groups. Political disagreement occurs more so in democracies but also occurs within nations of only one political party or of extremely few leaders.

Outsourcing some specific government functions would be contrary to the public’s interest. There are some government functions that can be outsourced, but government rather than private industry provides them in a superior manner. Many other nations provide their population Wi-Fi, medical insurance, railroads and other public transportation at lesser expense and in a manner superior to that of the United States. It’s nonsense to contend that private industry does or will perform every function in a manner superior to government. ...
Respectfully, Supposn
 
Mixed economies allow the efficiencies of market driven economic decisions to coexist with social priorities driven by the needs of the society to be fair and stable. Go too far to the left and you smother productivity and innovation, diminishing your tax base. Go too far to the right and you induce structural inequities and concentration of wealth which will quickly tear the society apart. A dynamic equilibrium between the discipline of a well functioning market and the social conscience of an ethical but constrained command economy are both needed to keep a society from imploding either from economic collapse or political upheaval/collapse. Mixed economies rev up the economy without revolution resulting.

Mixed economies using progressive tax systems allow enough redistribution of income to fund regional development in areas not favoured by the market. Such taxation systems slow or stop the concentration of wealth into few hands which leads to oligarchy rather than representative democracy; so mixed economies favour political stability too. Finally well managed mixed economies lead to a better standard of living for more of the population as the larger and more efficient market economy can be carefully milked by taxation to pay for social programmes which the market would never fund and support left to its own choices..

Cheers and be well.
Evilroddy.
 
Mixed economies allow the efficiencies of market driven economic decisions to coexist with social priorities driven by the needs of the society to be fair and stable. Go too far to the left and you smother productivity and innovation, diminishing your tax base. Go too far to the right and you induce structural inequities and concentration of wealth which will quickly tear the society apart. A dynamic equilibrium between the discipline of a well functioning market and the social conscience of an ethical but constrained command economy are both needed to keep a society from imploding either from economic collapse or political upheaval/collapse. Mixed economies rev up the economy without revolution resulting.

Mixed economies using progressive tax systems allow enough redistribution of income to fund regional development in areas not favoured by the market. Such taxation systems slow or stop the concentration of wealth into few hands which leads to oligarchy rather than representative democracy; so mixed economies favour political stability too. Finally well managed mixed economies lead to a better standard of living for more of the population as the larger and more efficient market economy can be carefully milked by taxation to pay for social programmes which the market would never fund and support left to its own choices..

Well put!

But there are certain aspects of any economy that should not be treated as "markets". Europe got that right a long, long time ago. The UK was the first to create a National Healthcare System in the early 1950s. The rest of today's European Union has done so since.

Only the US cannot see beyond an historical mistake. Both Healthcare and Tertiary Education are the primary key-elements to any successful Market Economy.

So, what does the US do? It spends more half of its annual Discretionary Income on the ... DoD! To wit, see here:
0070_discretionary_spending_categories-full.gif


Where's the war?!? National support for Education is that red-sliver on the left. And it is a miniscule expenditure when, in fact, Tertiary Education has become the key-instrument for obtaining the income necessary for a decent standard-of-living ... !
 
The whole point of mixed model economics is to have parts of the equation in place that throttle the other, to apply the economic understandings of balance between market and planned economics. Ideally have monetary, fiscal, and trade policy that reduces the amplitude of the economic cycle for a more consistent growth pattern in the long term and escape the idea of bubble and pop economics.

I can't say you are wrong. But the above is not "all right" either.

What Europe has understood, and America not understood, is the role of the Central Government. (Role meaning "task" or "duty".)

And Europe has got that role right - meaning that its National Healthcare System is the prime reason Europeans live 4/5 years longer than Americans.

And its very-low-cost Tertiary Education fees (including both public and private universities, colleges, technical training institutes, and vocational schools) is a clear necessity in this New Age of ours. The cost of a university degree in Europe varies from 1000€ euros a year to 3000-to-5000€. In the US, state post-secondary schooling tuition is an average $14K a year.

There aren't that many students - unless on a grant - that get a post-secondary degree in the US! (And where are they from? Higher income families!)

But that's the point! Tuition in a state-school should never cost more than $1000 a year for all comers. If richer, maybe a private schooling is preferable - but it is NO GUARANTY necessarily to a better level of education.

From Business Insider here:

Is it better to go to a private or public university [in the US]?

Hands down, public universities are the better buy by definition alone. Because their funding is subsidized by the state, public schools can pass on those savings to students. Private institutions rely almost entirely on tuition and the generosity of donors, which is why students wind up paying more
 
I can't say you are wrong. But the above is not "all right" either.

What Europe has understood, and America not understood, is the role of the Central Government. (Role meaning "task" or "duty".)

And Europe has got that role right - meaning that its National Healthcare System is the prime reason Europeans live 4/5 years longer than Americans.

And its very-low-cost Tertiary Education fees (including both public and private universities, colleges, technical training institutes, and vocational schools) is a clear necessity in this New Age of ours. The cost of a university degree in Europe varies from 1000€ euros a year to 3000-to-5000€. In the US, state post-secondary schooling tuition is an average $14K a year.

There aren't that many students - unless on a grant - that get a post-secondary degree in the US! (And where are they from? Higher income families!)

But that's the point! Tuition in a state-school should never cost more than $1000 a year for all comers. If richer, maybe a private schooling is preferable - but it is NO GUARANTY necessarily to a better level of education.

From Business Insider here:

We are talking about two different things, you are talking about the microeconomics of healthcare and education costs when dealing with government involvement where I am talking about macro economic functions of a mixed model.

On your subjects the only thing I would caution is the idea that one aspect is the core reason for any cost or benefit realization.

Examples, a nationalized healthcare system is a prime reason (as you might say) that costs are lower and people live longer but there are other controls in place to deal with equipment, standards, pharmaceuticals, what have you. Determinations of care and how it is applied is left to politics, even though you and I might agree on the benefit of a nationalized system. However there are other reasons that Europeans live longer on average than Americans, healthcare is one point but so is our food industry and how subsidized inputs change our diet vs. that of our European counterparts. Also, Americans tend to consume more and move less which equates to a slew of healthcare concerns impacting everything from obesity to diabetes to heart disease.

How a given nation deals with higher education costs is another animal. The method of applying costs to everyone and keeping the tuition low for those who obtain that degree is the common result for nations over on the other side of the pond. The education itself is comparable between the models but the micro economics of how costs are determined is wildly different given how America goes at this. And to be honest our education system is not near as private (or market) enterprise as you would be lead to believe. Education debt, how it is organized and handled as specialized debt (US law,) the means in which private universities escalate costs through lack of competition, all are means that make our model honestly a fiasco.

Lots of little economic influencers all causing some level of price distortion.

Which goes a long way in explaining why Education costs in this nation tend to beat out the costs of inflation to the point that we see costs continue to go up when the economy is in retraction. That is not market economics, it is planned... and further it is distortion oriented.
 
Lots of little economic influencers all causing some level of price distortion.

Many of your points are well-taken and thank you for the intelligent response.

However, though born in the US I have lived in Europe for a very considerable span of time. I can assure you that (at least the French) are taking to the bad-habits of Americans. The overweight problem has become "socialized" in France.

Tis a pity, they are naturally an attractive people. Especially the women ...

PS: Not that many "French" moved to the US in the 18th century or thereafter. (Language is like an anchor that you drag with you when you change countries!) Most migrants from Europe to North America were from countries that were far poorer. People were escaping that poverty and the US was an easy entry.
PPS: New Orleans likes to think its origins are "French", but that could not be further from the historical factual evidence. The only place in the New World that is "factually French speaking" is the eastern part of Canada. (And some have even come to live in France, but the numbers are far lower than, say, the Brits.)
PPPS: I've said it here before so I will say it again. There are two places in France where the American flag flies day and night. One is upon the US embassy in Paris. And the other is at the grave of ... Lafayette. (If interested, see here.)
 
WRETCHED WILL

Mixed economies using progressive tax systems allow enough redistribution of income to fund regional development in areas not favoured by the market. Such taxation systems slow or stop the concentration of wealth into few hands which leads to oligarchy rather than representative democracy; so mixed economies favour political stability too. Finally well managed mixed economies lead to a better standard of living for more of the population as the larger and more efficient market economy can be carefully milked by taxation to pay for social programmes which the market would never fund and support left to its own choices..

Very well put, and it's a shame that most of America has not come around to that point-of-view. Because it is well worth the effort! I have lived in Europe for more than thirty-years and each time I go stateside to visit family I am rendered aghast at the cost of Health Insurance.

There are no Very Grave discomforts in Europe when Total Demand slackens and Unemployment skyrockets. There are a good many people in Europe (and particularly the southern countries) that get furious about the situation. But neither do they pick up a gun and shoot others to show how distraught they've become.

There are guns all over the place in America. Many people who should not die will do so as a consequence. That's a great shame. Gun deaths in France, not related to hunting, have been next to zero for over 15 years since handguns were banned (as well as any fully automatic weapon). Still, the Bataclan (a nightclub) in Paris, France was attacked some time ago killing hundreds of people. By, of course, militant Muslim fanatics. Which was repeated recently by yet another fanatic who made his way out of North Africa into Italy and crossed over into the southeast of France to kill three people attending a Sunday mass in Nice, France. Not to mention the fanatic who killed a teacher a month before for showing portraits of Muhammad to his class, which is banned in the Muslim religion.

So, where there's the wretched-will there's also the way - religious nuttery has a long way to go regardless of the religion and the supposed belief in a "True God" ...
 
The slight problem I find with socialist thinking is that a free market isn't feudal. People are free to dollar vote and buy from cooperative businesses. Redistributive taxation seems to be working where it's tried compared to a collectivised communal sort of economy.

It's true what you say. But, as any economist will tell you - not all goods and services are available at prices that suit everybody. or should they be.

Which is why, particularly, Europe has instituted both National Healthcare Systems as well as far less expensive (than the US) post-secondary education. There is nothing absurd about furthering a healthy population whereupon Tertiary-Level education becomes available to all.

We invest in the US more than half our National Discretionary Spending in the DoD, and diddly-shat nationally in Tertiary Education. In France, sending my kids to university cost me $2000 each per school year. (In the US, that sum is now seven time larger annually.)
 
I agree that society must of course help people who are struggling. But other aspects of socialism might be slightly pessimistic towards the economy. The emphasising of the "bourgeoisie" versus the "proletariat" is sometimes perhaps a bit too cynical!

Socialism per se died a long, long time ago. It employed an economic philosophy that included government ownership of the means of production. That exists nowhere in the world today - and by that I mean "socialism". So, let's get our words right.

What exists today (in Europe, that consists of 440 million voters) are Social Democracies. It was employed in such a manner to include the key elements of both Socialism and Democracy. Which can indeed cohabit if a nation is willing to assume that the economy must benefit all members and not just mostly a select few. (Which, ipso facto, means much more taxation of higher incomes.)

No, incomes need not be all the same. The failure of socialism showed the world how correct that statement may be. But neither must they be ridiculously (top-compared-to-bottom) and hideously unfair. And that is precisely the case in the US. Why?

Because some time ago Reckless Ronnie changed upper-income taxation just because he won an election) in which upper-income taxation was NOT a particularly key subject of debate. Which started in the US the ongoing rampage to upper-incomes. And another branch of economic-science called Income Fairness. This particular two-word phrase is best explained by two French economists (in English) this pdf-document here. (Note that the document is dated "2006" so the concept is nothing new.)

Defining economic concepts, however, is one thing. Implementing them is quite another.
So, what is Income Fairness and which countries meet that criteria either fairly or do not unfairly.

Lo and behold, that work has been done! Here is what Income Fairness (or Unfairness) looks from a nation-by-nation OECD-graphic: here. Note that the highest value (of unfairness) is attributed to Uncle Sam with an Inequality Value of 0.39. France has a value of 0.29 and so does Germany. In fact, the US is the highest value of any developed country - all other countries with higher values are not comparable in nature. The UK, however, is not far behind the US at 0.37.

The EU countries (of which the UK is no longer a member) have values ranging from 0.26 to 0.33.


So, what do YOU make of that ... ?
 
Public ownership of the means of production means that the activities of all spheres of the national economy are directed in the interests of the entire society, while at the same time, the distribution of material goods takes into account the labor contribution of everyone. Capitalists are sick of this simplicity.
 
Public ownership of the means of production means that the activities of all spheres of the national economy are directed in the interests of the entire society, while at the same time, the distribution of material goods takes into account the labor contribution of everyone. Capitalists are sick of this simplicity.

The key-reason Socialism never worked is precisely what you give above. Nobody wants to innovate if they earn the money as Joe Blogs who parks cars at a restaurant.

The best reason for public-ownership of any service is the common-necessity of that service to all&sundry and the fact that competition would likely diminish the number of users who could afford it.

I don't from where it comes, but the notion that competition ipso-facto offers automatically the lowest-cost price to the most people is assinine. What matters most is the nature of the service and its utility (or necessity) to people.

And at the bottom of the totem-pole, people need first and foremost to be able to afford a place to live and feed-themselves decently. And there are some parts of America where that has become Mission Impossible ... !
 
Last edited:
The key-reason Socialism never worked is precisely what you give above. Nobody wants to innovate if they earn the money as Joe Blogs who parks cars at a restaurant.
"... the distribution of material goods takes into account the labor contribution of everyone. "
No one says that the benefits are distributed equally under socialism. "To each according to his work."
 
I tend to think a mixed economy with both generous welfare from government along with private market innovation seems to be pragmatic and viable. It captures more 'positive externalities' like education and healthcare than an exclusively private market and is more charitable. The slight problem I find with socialist thinking is that a free market isn't feudal. People are free to dollar vote and buy from cooperative businesses. Redistributive taxation seems to be working where it's tried compared to a collectivised communal sort of economy.
Michael McMahon, transcribed from the thread, “Private industry is not always the superior solution”:
… There are people that believe “government’s the problem rather than solution. I heard Milton Friedman state that half of what our federal government’s spending is wasted. A great proportion of all other than federal spending, (including commercial and personal spending) is also “wasted”.


We, as individuals generally believe that governments’ spending for what we approve of, to the extent that’s spent in manners that we approve of, is justifiable; all other governments’ spending is less than justifiable. That’s politics. There are extremely few items of governments expense that are not controversial. Governments’ lines of expenses are criticized or subject to objections by some aggregate individuals or groups. Political disagreement occurs more so in democracies but also occurs within nations of only one political party or of extremely few leaders.

Outsourcing some specific government functions would be contrary to the public’s interest. There are some government functions that can be outsourced, but government rather than private industry provides them in a superior manner. Many other nations provide their population Wi-Fi, medical insurance, railroads and other public transportation at lesser expense and in a manner superior to that of the United States. It’s nonsense to contend that private industry does or will perform every function in a manner superior to government. …
 
"... the distribution of material goods takes into account the labor contribution of everyone. "

Prove it, not just state it. It is not the least bit event what you have written. Far too simplistic.

No one says that the benefits are distributed equally under socialism. "To each according to his work."

No, not equally but equitably. That subtlety seems to escape you.

Of course the fact that everybody earns the same salary is nonsensical, which was the key-factor provoking the downfall of socialism. But it's opposite is not much better, which most nations (notably the USA) refuse to admit or even recognize.

Which is why economists have devised the notion of Income Disparity or Inequality, defined as:
The observable fact that income is distributed unevenly throughout a population. The less equitable the distribution, the higher income inequality becomes.

Income inequality is often accompanied by wealth inequality, which is the starkly uneven distribution of wealth. Populations can be divided up in different ways to show different levels and forms of income inequality such as income inequality by sex or race. Different measures, such as the Gini coefficient, can be used to analyze the level of income inequality in a population.

Income Disparity amongst major evolved nations notably of the OECD seen in this chart here. Note the US seventh from the highest value. Note that "fairness" would show a chart that was about the same percentage for all nations on the chart. Can't be done?

Oh yes it can. By means of a taxation-system that "equilibrates" the chart by taxing higher levels far more progressively. Reckless Ronnie destroyed whatever semblance of "fairness" in taxation when he began the drop-down in upper-income taxation. As shown here. Note particularly what happened when RR was in office from 1981 to 1989. (Why do you think there are so many statues of him? He's become a "saint" in the US!)

We may think that we are living in a "Fair Economy", but we aren't - the charts show the truth. The thieves are those who benefit from a highly warped upper-income taxation schedule. Can it be made more fair but the US still maintain an graded after-tax income evolution from the poor to the average to the rich incomes?

Yes, that is possible, just not probable if we keep voting the Replicants majorities in LaLaLand on the Potomac ...
 
SERVICES CRITICAL TO A DECENT EXISTENCE

Public ownership of the means of production means that the activities of all spheres of the national economy are directed in the interests of the entire society, while at the same time, the distribution of material goods takes into account the labor contribution of everyone. Capitalists are sick of this simplicity.

First, definition of the word "capitalism":
A mechanism* that employs wealth to invest in trade and industry for individual or collective profit in accordance with the principles of capitalism.

What are the principles of capitalism? Definitions abound. I like best this one from Investopedia (here):
Excerpt:
Modern economies in much of Western society today are organized under the banner of capitalism. Some of the most important aspects of a capitalist system are private property, private control of the factors of production, accumulation of capital, and competition.

Put simply, a capitalist system is controlled by market forces, while a communist system is controlled by the government.

Arch-Capitalists are fixated on only one objective: The personal accumulation of capital (ie "wealth"). With which they propagate their families by means of death-wills that pass the capital to whomever they wish to leave it.

They could not give a damn about anybody else. But, why do I say "arch-capitalists". Because, anyone who decides that they will work to earn a living based upon a Open Market Economy becomes ipso-facto a "capitalist". How you may wish to accumulate and then release (upon death) your "capital assets" is your business (and the government if taxation is involved).

It's as simple as that which is why I don't understand the brouhaha regarding the definition.

What we should be discussing IS the "Duality of Capitalism" - meaning Social Democracies in which taxation is employed to obtain the funds to build methods and means that permit governments to perform certain key functions that are deemed "not fit for a free-market competition". For instance, Healthcare and Education and a number of other such services that may become critically necessary for a decent existence as human-beings ... !

*Should read an "economic mechanism".
 
The "diversity of choice" you get under capitalism, 11 companies own nearly every product you buy at the grocery store.

EpJmlKAU0AEnu7r
 
“Wealth refers to the net worth of a household, i.e. all of its assets minus of all its liabilities, Stanley Fallaw explained. Household income is merely realized income to be reported on one's personal income tax return...
In reality, a millionaire's income is only 8.2% of their wealth, she found through her research.”

I read that Bill Gates is worth roughly $133 billion as of Jan. 13, 2021. I think that there’s an enormous difference between reinvesting money and spending it on yourself. For instance, if Bill Gates took out his 133 billion dollars and spent it on creating a series of artificial islands on the Pacific Ocean, then that would be a major net loss to society as that money could never be recouped. Those hypothetical islands would be worthless and would lose their overall value when it came to inheritance tax. On the other hand reinvesting the profits back into the company or into other private shares would help the economy function. Microsoft as a private company would need billions of dollars to build their infrastructure and employ people. Perhaps one way to think about it is that there’s a difference between controlling how money is spent and then using that money for personal recreation. Private companies as a collective whole might need to have billions while any one individual doesn’t need to spend that amount on themselves. There’s lots of complicated taxes like capital gains tax and corporate tax. These type of taxes are necessary but let’s just say for the sake of argument that these taxes won’t apply. So in that case we’d have to dissociate Bill Gates’ income from Microsoft’s “GDP”. Then Bill Gates would pay the same progressive rate of income tax as the rest of society when he tries to convert Microsoft’s wealth into his own personal income. So he could pay a lot of income tax on his disposable money without affecting the incentives of the company at large. The real value of his usable income is a lot less than the wealth he controls.



1612610100870.jpeg
 
SURPRISE! SURPRISE!

I read that Bill Gates is worth roughly $133 billion as of Jan. 13, 2021. I think that there’s an enormous difference between reinvesting money and spending it on yourself. For instance, if Bill Gates took out his 133 billion dollars and spent it on creating a series of artificial islands on the Pacific Ocean, then that would be a major net loss to society as that money could never be recouped.

There is only one way to assure "fairness" or "equitability" in any economy - and it is by means of taxation. Which does not infer that we tax the rich to feed the poor!

If a country wants to assure that the poor have the means to sustain themselves (in poverty) it can institute a minimum-subsidy payment to individuals and families that "earn" less than a certain amount. From here: How much money a single person needs to earn to get by:
Depending on where you live in the United States, the amount you need to make to get by can vary by a lot. While a single person can manage on just over $23,000 a year in Indiana, for example, it takes at least $30,000 a year to make ends meet in California, and even more in New York.

That’s according to updated data from MIT’s living wage calculator, which determines the minimum amount necessary to meet basic needs without dipping into poverty or relying on outside help. The model takes into account factors such as food, housing and health insurance, in addition to other regular costs, and don’t include conveniences or luxuries such as restaurant meals, vacations or money left over for investments.

It is evident from the above that there is no "common basic-value for below standard cost-of-living" across the US. Nonetheless, each state can know fairly well how much it costs basically to get by in most of its cities and towns. It can therefore have a very good idea of what is a decent Minimum Income that can be assured by the state (if funded also by the US government).

Which is a a big IF because such a national system of basic income assurance has never be tried. The US has a hodgepodge of state individual/family subsidy systems. Neither is such employed in Europe - though government subsidies there are far more progressive than in the US.

What's the tradeoff? Crime-levels, that's what. Whether a people want more crime or not (silly notion!), the rate of criminality is closely linked to personal/family income. Don't believe that?

Then try this list of countries descending in order (from highest to lowest) crime-rates. Surprise, surprise! High-paying economies demonstrate also higher crime rates ... !
 
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