The Death of the Middle-Class Musician

But, if empirically our current system for net wealth creation tends to also produce wealth concentration, it makes sense to consider ways of modifying the system to mitigate some of the wealth concentration while maintaining as much of the wealth creation as possible.

The target you should look for is how much wealth gets created for the least well-off (or for some low percentile representative person). Just don't worry about what the rich people doing at all. No need to punish them.

Where is the "wealth created for the least well off" going to come from?

Necessarily, that must be wealth that did' go to the rich instead (it could have!). So, necessarily, you are "punishing" them by doing so.

You mainly seem to be against some kind of hypothetical robinhoodesque style redistribution because you worry it's unfair to the rich. Any solution, though, will have to take this shape, whether it targets the existing wealth or wealth generated going forward. It's all about redistribution of access no matter how you slice

You don't need to be so protective of the rich. They are doing just fine and they have plenty of resource and mechanisms in place to protect themselves. If the world's wealthiest people were made even just a tiny bit less wealth by redistribution of assets they would still be living like absolute kings.

> Where is the "wealth created for the least well off" going to come from?

Well, mostly where everyone's wealth is coming from: from the fruits of their own labour.

> You mainly seem to be against some kind of hypothetical robinhoodesque style redistribution because you worry it's unfair to the rich.

No, I haven't started worrying about fairness, yet. No, I'm afraid that a tax system designed by what sounds good instead of what works will leave the poor even worse off.

Check out https://en.wikipedia.org/wiki/Tax_incidence for an example: who you officially levy the taxes on isn't necessarily the person shouldering the economic burden.

You clearly believe you're very objective and applying very "rational" thinking to the problem. It's about the dollar value of the income of the least well-off, so what are these stupid people even talking about inequality? Don't they realise making a poor person 10% worse off and Bezos 11% worse off reduces inequality but lowers the floor (the pedestrian argument you've made several times in this thread)?

But please consider that the problem is slightly (i.e. a lot) more complicated than you think. Economics is a very very hard discipline and perhaps more closely related to philosophy than the natural sciences. There have been countless books written on the topic of inequality by people smarter than you or me, so it's highly it's all so simple as your dismissive "just do X" line imagines it to be.

A simple, almost trivial observation: very high inequality of wealth also means very high inequality of power, meaning the rich elite can and will influence the political process to enrich themselves further at the expense of the "low percentile" less well-off, which will be denied political power. This is one example of why you should care about inequality.

Only tiny fraction of a billionaire's wealth tends to be the fruit of their personal labor. It's the labor of their employees and machines that create the wealth. To my understanding, this is broadly accepted.

Now, billionaires do supply a different key ingredient to the wealth creation - risk. Without investment and risk, wealth cannot be created. In terms of $ investment, billionaires take on the vast majority of the risk and deserve the bulk of the rewards, the argument goes. Workers take on far less risk with their guaranteed* paycheck .

But which is the bigger risk? A billionaire's $100,000,000? Or your home, your health, and your retirement savings were you to lose your job in a bad market?

I'm interested in company structures that incentivize distributing risk, profit, and power across a larger group than we tend to see in modern companies.

> I'm interested in company structures that incentivize distributing risk, profit, and power across a larger group than we tend to see in modern companies.

Please feel free to start your own company or cooperative.

> But please consider that the problem is slightly (i.e. a lot) more complicated than you think. Economics is a very very hard discipline [...]

Yes, and that's why I am saying that it's far from an obvious conclusion that making rich people worse off is a good thing for poor people.

And once you admit that this ain't trivial, you can look at topics like deadweight losses or tax incidence.

Different tax and redistribution system have different effects. It's not just 'more tax = more revenue to redistribute'.

For example, I actually think you can drive overall tax rates (eg as percentage of GDP) a lot higher than they are today in most countries without harming the economy, _if_ you switch to something as efficient as land value taxes for the vast majority of your government revenue (and lower other taxes). Property taxes are a second best approximation.

In contrast, capital gains taxes and income taxes are less efficient. Tariffs are even worse (by a large margin!), even if they could theoretically raise some revenue. Stamp duties or other taxes on transactions are also pretty bad. And silly things like price controls just hurt the economy without raising any revenue at all.

But that's all vastly simplified. As you suggest, there's lots of theory and practice you can investigate for the actual effects. They might also differ in different times and places.

> There have been countless books written on the topic of inequality by people smarter than you or me, so it's highly it's all so simple as your dismissive "just do X" line imagines it to be.

That's why I'm saying exactly the opposite: I'm arguing against the naive 'just tax the rich'.

> But which is the bigger risk? A billionaire's $100,000,000? Or your home, your health, and your retirement savings were you to lose your job in a bad market?

This parallels the diminishing marginal utility of wealth, which states that with extreme wealth, you can't buy any more to get more utility or happiness.

In a way, the risk phenomenon picks up where that phenomenon leaves off, where the need for normal "utility" gives way to the desire for amassing power over society at large.

The mistake they make is not realizing how much of their wealth and welfare relies on the welfare of the masses.

> I'm interested in company structures that incentivize distributing risk, profit, and power across a larger group than we tend to see in modern companies.

Ironically this is a tiny bit of what we saw with employee stock options in the early days of the internet industry, reflected in the historically outsized power and voice of workers. Arguably, that is a part of the rationale behind the big tech layoffs - to put labor back in its place.

It seems pretty straightforward to me.

Wealth redistribution has this positive effect: If you take $1000 from a billionaire and give it to a very poor person, total happiness increases.

It also has a negative effect, high level of redistribution can inhibit production.

The optimal level of redistribution depends on what you're optimizing, it's usually a mix of societal happiness and some notion of fairness. (I personally would want to optimize happiness and prosperity.)

Working on it ;)

The bigger relative risk is precisely why the billionaire is so rich - their surplus wealth may be wagered against longer odds when it would be suicidally reckless to yolo your life's savings into a start-up. Those sorts of bets are the Venture Capital strategy.

The relative value of money being lower is what enables riskier investments and essentially what 'justifies' inequality in a bloodless utilitarian sort of way. You know how in economics trades may be net positives due to different valuations between individuals? The same applies in current certain money vs future risky unbound returns. That taking such bets is consistently a successful strategy breeds inequity even without any winner-takes-all effects or high barriers to entry.

Hypothetically if the VCs kept on 'gambling' on failed start-ups and always losing without any offsetting huge wins, not quitting because they think a win is just around the corner, it would be a trend that reduces inequity. As it puts money into the pockets of employees and smaller suppliers of neccessary capital production goods.

I am afraid you would find it harder to get larger groups of people to agree to the high growth potential, high risk enterprises because they tend to lack the spare capital to be able to afford to risk it. I think ironically the most probable tolerable risk profile for larger groups (who are presumably more precarious) is something big and secure being sold out of by larger players. (Small traders panic buying and selling and doing worse is its own separate problem.)

One form of company structure that technically does paying labor well better are partnetships typically used by law firms. It works for them because they have no real capital requirements and have high per hour productivity and labor expenses as the lion’s share of profits go to the lawyers whose names are in the company name.

> This parallels the diminishing marginal utility of wealth, which states that with extreme wealth, you can't buy any more to get more utility or happiness.

You can buy more. The utility just diminishes, but doesn't go to zero.

> Ironically this is a tiny bit of what we saw with employee stock options in the early days of the internet industry, reflected in the historically outsized power and voice of workers. Arguably, that is a part of the rationale behind the big tech layoffs - to put labor back in its place.

Compare and contrast https://slatestarcodex.com/2014/09/14/does-class-warfare-hav...