The Death of the Middle-Class Musician

> What economic inequality would you deem small enough?

I'd like the one small enough that I won't die from my (treatable) first major medical event due to being unable to fund 100% of treatment costs.

I'd also like one small enough that me and the kids didn't spend most of the 2010s in hunger-level poverty.

That'd be a start.

Nothing of what you said has anything to do with equality at all. It's about the absolute level of prosperity of yourself (and presumably everyone else).

So if everyone got 10x richer overnight, but the top 1% got 1000x richer, that would increase inequality by any reasonable metric, but it would help with the benchmarks you mentioned.

If absolute prosperity is what matters, how is the US the richest country in the world, while being pretty much the only one where medical bankruptcy is a thing?

No it wouldn't. Inflation would skyrocket and baseline prices would be at least 10x higher. And that's not how UBI works, no one is some multiplier richer because it exists.

The top 1% getting 1000x richer is a problem, because trickle down economics is bullshit. Money that exists as part of a pile of gold in a dragon's den does not move the economy.

The US isn't the richest country in the world (per capita). What makes you think so? However, Americans are on _average_ pretty rich per capita.

And in any case, I'm saying absolute prosperity of individual people matters. Not the average per capita absolute prosperity of a country.

So people who go into medical bankruptcy in the US are obviously not individually rich. And I hope you and me agree, that if you could find a way to make them better off, that would be a good thing?

Whereas if you found a way to make them worse off by 20%, but make Mr Zuckerberg worse off by 50%, that would not be advisable, even if it technically decreases inequality.

I was not making a statement about UBI. I was purely talking about inequality.

The price level is driven by what the central bank does with the money printer. UBI wouldn't raise prices, if the central bank does their job even halfway competently. (Even the mediocre real world performance of the Fed or ECB would suffice to _not_ have prices raise by 10x in eg a year of UBI.)

> And that's not how UBI works, no one is some multiplier richer because it exists.

I was not meaning to imply that UBI would make people richer on average. My comment was purely about inequality being a bad measure.

UBI plus the taxes that finance it are a redistribution scheme. It doesn't make people richer on average. At best you can hope that the tax is very efficient and has low or no deadweight losses (like land value taxes), so that on average UBI doesn't make your society worse off.

> The top 1% getting 1000x richer is a problem, because trickle down economics is bullshit. Money that exists as part of a pile of gold in a dragon's den does not move the economy.

Huh? If what you said were true, the top 1% getting 1000x richer would merely not do anything, but it wouldn't be a problem per se.

Btw, it's not a problem if someone just hoard some money: the central bank will notice that inflation is below target, and print more. (Later, when you spend from your hoard, the central bank will notice that, and correspondingly shrink the money supply.) Sticking money in a hoard is equivalent to giving an interest free loan to the central bank, because they can temporarily emit more money, while yours is out of circulation.

However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.

It's the richest country in absolute terms, and the richest per-capita if you exclude small countries.

As a side note, it really shouldn't be possible to edit comments two hours after they've been posted and after they've had replies. Particularly without showing any indication of that.

No one is suggesting to "make Mr Zuckerberg worse off".

The inequality problem is about access to material resources. Money is just an abstraction. No one is seriously suggesting to refuse zuckerberg access to good things on principle or to just diminish and not redistribute his wealth, that's preposterous.

The point is that access to capital is access to resources. The people that hoard capital necessarily end up hoarding important resources and they use this imbalance to then extract further capital from others and further their position, thus in turn gives them power. The problem is all about bringing more balance to this situation so that we avoid a return to feudalism in which a handful of people have control over all the resources and power and everyone is is basically just beholden to their whims.

> However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.

exactly. Which is the problem. You seem to actually have all the ingredients to be able to understand why this is a problem, but some kind of sympathy for the rich (lol) seems to prevent you from actually using logic to see the problem.

How does 'hoarding' capital look like? What do you mean by that?

Sorry, I don't understand what problem you are seeing from people owning shares in eg publicly traded companies.

In poorer countries, instead of medical bankruptcy, there just isn't medicine available. The poor in sub-saharan africa are not receiving first class government funded medical care.

The top 1% aren't sitting on a pile of gold in a dragon's den, their wealth is mostly invested. The amount of money Jeff Bezos owns in houses and boats is small in comparison to the amount of his wealth that is represented by stock in amazon; that money in amazon's hands is absolutely cycling through the economy.

Your analysis is spot on. UBI funded by taxes is redistribution.

Is that a bad thing? It would obviously have some negative effects. We'd immediately see damage to luxury brands and yacht sales. The art markets would crash. Stock markets would feel some pain.

The upside though? My hunch is that making most people feel secure enough to risk starting/joining businesses is fuel for a strong and innovative economy. The fact that so few of us are able to take those risks is a constraint on growth.

> small in comparison to the amount of his wealth that is represented by stock in amazon

That wealth should also be taxed.

What makes stock ownership somehow holy that should be protected from taxation?

We should stop conflating what a company generates as a consequence of their activity with the glorified gambling of the stock market.

> UBI plus the taxes that finance it are a redistribution scheme.

Yes. That is desirable.

> However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.

And those too should be taxed. If it is wealth, it should be taxed.

Not a problem. But above a certain threshold it should be considered taxable wealth too.

Stock ownership isn't protected from taxation: there's capital gains tax to be paid (in many countries).

> We should stop conflating what a company generates as a consequence of their activity with the glorified gambling of the stock market.

Well, that might be a valid point for some people, but it's pointless for Zuckerberg or Bezos or Bill Gates or even Musk: those guys have been mostly holding their companies' stocks for ages. They don't buy and sell all the time. No 'glorified gambling the stock market' there.

In any case, I brought up stock ownership as a concrete example of wealth that doesn't just site 'idle' in a vault somewhere. It's a claim on a productive enterprise that is only worth something because it serves customers and employs people etc.

> We'd immediately see damage to luxury brands and yacht sales. The art markets would crash. Stock markets would feel some pain.

How do you make these confident predictions?

I think it would depend a lot on how the UBI is, and exactly how you design the taxes to finance it (and how high those taxes are going to be).

I keep significant fraction of my wealth in eg my kidneys and healthy organs. Should they be taxed?

How about taxing Brad Pitt for his good looks?

This is a total red herring. We're not talking about sub-Saharan Africa. As Americans who want to fix your country, you should be looking at countries with similar standards of living, such as every single European country. You can even pick the rich ones, like the Scandinavian countries, Netherlands, or Germany.

The alternative to the current situation in the US is not abject poverty.

> However, Americans are on _average_ pretty rich per capita.

Better to use the median, because the average is heavily skewed by the ultra-rich.

Don't be silly. Smoking one cigarette is generally not problematic. Smoking thousands will tend to give you lung cancer.

Nobody is arguing that people shouldn't own stocks. People are arguing that asset concentration taken to extremes is like smoking too many cigs: so enough and you force bad outcomes on society and the economic system.

My assumption is that UBI is a significant transfer of wealth from the richest to the rest. Isn't that the whole point? Exactly how to structure the taxes that pay for it is naturally a key question.

Given that, it's pretty safe to assume markets that cater exclusively to the ultra-wealthy will be harmed by reduced demand as their customer base shrinks. Higher tax rates will also exert downward pressure ob stock values as companies make less profit and investors tighten their belts. (Especially if there's a wealth tax.)

Jeff Bezos can spend 50 million dollars on his wedding. Since that's a small amount of money compared to the amount of his stock in amazon, I think Jeff can actually afford to have his taxes raised on whatever he has on hand.

Look, its pretty simple. Here's a microcosm example: There is a German ship-builder that exclusively builds luxury yachts. They have ~2,000 highly skilled craftsmen, engineers, etc.

This company only exists because wealth is concentrated enough to support a market for it.

That company consumes about 4 million skilled-labor-hours a year to provide this service.

This means that skilled-labor-hours are more scarce/expensive for _everyone_, because the on any given year, there are only so many skilled-labor hours that exist. These labor hours require about three decades of investment from society to produce (public education/childcare/etc).

Bezos may not buy a super-yacht every year, but as a class, the super rich consume an insane labor hours.

> So if everyone got 10x richer overnight, but the top 1% got 1000x richer, that would increase inequality by any reasonable metric, but it would help with the benchmarks you mentioned.

The metrics are a problem when the result was my kids and I regularly having no food for most of a decade. During this time we contributed to society, performed civic duties and cared for others.

And we were just one hungry family of way too many to count. An ethical distribution model wouldn't be okay with that.

> However, Americans are on _average_ pretty rich per capita.

Because it is very expensive to live in America.

"Consume" labor hours? What does that even mean? Those laborers get paid, and then they spend the money they get. That money is circulating through the economy.

> "Consume" labor hours? What does that even mean? Those laborers get paid, and then they spend the money they get. That money is circulating through the economy.

Money isn't stuff. Yes, those craftsmen get paid, but when one of them has something he needs done, some service provided, or some physical resource, he ends up paying more for the labor, because he is competing in the same labor market as everyone else.

Don't you think spending the working time of 4 million labor hours a year, building megayachts, is perhaps not the most productive/ROI generating activity for society at large? You could for example, with ~4 million skilled labor hours a year, build a lot of housing. You could build factories that provide for the needs the people. Hell, you could just give people time-off to, y'know, live and enjoy life (and perhaps, uh, have _children_, which the current system seems to be very efficient at disincentivizing).

> he ends up paying more for the labor, because he is competing in the same labor market as everyone else

You'll have to explain that more. Ship builders aren't competing with plumbers.

>Don't you think spending the working time of 4 million labor hours a year, building megayachts, is perhaps not the most productive/ROI generating activity for society at large

Well, that's a drop in the bucket. But you could apply this reasoning to any form of luxury goods. Where do you draw the line? Nice clothes? Fancy watches? Sports cars? Five-star restaurants? Are any of these "the most productive/ROI generating activity for society at large?" Who decides what goods and services are worthy?

> and perhaps, uh, have _children_

You think people are having fewer children because luxury yachts are being built?

Medical bankruptcies are vastly overstated.[1] And while the US may be unique in our exposure to medical debt, we're doing much better than other developed countries in terms of overall household debt, which would seem be a more useful metric if you're concerned about the impact of debt on prosperity.[0]

[0] https://www.oecd.org/en/data/indicators/household-debt.html [1] https://news.ycombinator.com/item?id=30793926

> You'll have to explain that more. Ship builders aren't competing with plumbers.

Sure, on any given year. But the current economic organization of society wasn't born yesterday. On a longer timescale? Absolutely are.

> Well, that's a drop in the bucket. But you could apply this reasoning to any form of luxury goods.

Yes.

> Where do you draw the line? Nice clothes? Fancy watches? Sports cars? Five-star restaurants? Are any of these "the most productive/ROI generating activity for society at large?" Who decides what goods and services are worthy?

The neat thing about market economies is that you don't actually have to draw a line anywhere. You can just reduce income & wealth inequality via taxes and markets will sort it out. If you had taxed capital gains such that Bezos would have had to liquidate 10x - 100x in Amazon stock to buy his yacht, he likely would have settled for a smaller, but still perfectly acceptable yacht, and so on down the wealth ladder.

> You think people are having fewer children because luxury yachts are being built?

Yes I think income/wealth inequality + the amount of labor hours demanded from people to just stay in place is why people are having fewer children.