Government is the least efficient allocator of resources. For every dollar put to use, many more dollars are wasted due to incompetence or fraud. California's Proposition 30 was a wake-up call for me; despite all the political advertisements to the contrary, the many billions raised for "education" went entirely to shore up the teacher's bloated pensions and benefits fund.
Entrepreneurs are some of the most efficient allocators, because they are decision makers with a vested interest in the outcome. This concept is so rare as to practically not exist in the public sector.
I'm not opposed to higher taxes. I am opposed to throwing money, mine or anyone else's, into a black hole. Convince me that the extra tax dollars will be spent wisely and that society will see a net positive return at some point in the future, and you have my support.
>Government is the least efficient allocator of resources.
This is baseless dogma. Government may not always be the most efficient allocator, but it's not always the least efficient either. In cases of positive and negative externalities, the market does not allocate ideally.
We need to move past this dogma of "All government is bad government" so that we can separate the good from the bad. Good rules are helpful. Bad rules are harmful. When we have low expectations of our government, we will unsurprisingly have low outcomes.
I think what nugget is getting at, is there are many government programs that are mismanaged (welfare, social security, education to some extent, and others). Who legitimately feels good that they pay taxes only to see other Americans living off of Welfare, generations unemployed, living off of welfare (which btw, I consider to be fraud). People that live on welfare (no, not people who use the program as it was intended, as temporary help), don't pay taxes and the benefit from those of us that do pay taxes.
When confronted with situations like the one described above, any rational person would wonder why we want higher taxes, when we should really be focusing on reforming our broken social programs. Only then, when we take legitimate steps to reform our broken social programs, should we be considering higher taxes.
Broken by what measure? Relative to what? Is the government mismanaged compared to say Google? The federal agency I worked for was a much tighter-run ship than the startup I worked for, or the medium-sized tech company I worked for. I'd wager the federal government, or at least most of it, is better-run than most small and medium sized businesses in the US. The caliber of people in most of the agencies is just extremely high compared to what you usually see at all but the top private sector companies.
Many areas of the federal government are actually pretty good by commercial standards (at least for caliber of employee), but most state governments are by comparison pretty horrible (particularly California). However, they're much more concerned with fairness and being abused by third parties, since they aren't as constrained to succeed or die. It is better for an employee of a government entity to follow process 100% correctly and ultimately fail than to take a calculated risk outside of normal process and fail, even if the expected return on the riskier path is far higher, or odds of failure lower. Startups are exactly the opposite, since they die by default. Big businesses are somewhere in between -- a new product failing usually won't kill the business if it fails cleanly, but could if enough corners are cut.
The ultimate difference between private firms and government is that a private firm which is seriously screwed up will go out of business. A government agency can continue being dysfunctional for a long time (e.g. the Office of Thrift Supervision). The other big difference is that when a government entity is incompetent, it tends to hurt others a lot more than when a single commercial firm is incompetent.
I gave you +1 for middlebrow dismissal, you ignored the point I made and simply compared government to the private sector. I don't care how great the private sector manages their business, that is not the topic of discussion. Maybe you should stop wearing your ass as a hat and make a relevant comparison like between our governments and other governments, or between our govt today and our govt 20 years. Comparing apples and oranges isn't an argument. Still, plus 1 for Middlebrow dismissal.
This response has become the standard (non sequitur) response to proposals for progressive taxation, but it doesn't engage at all with the argument being made.
The degree to which taxes are progressive doesn't determine the total tax collected, or the amount the government expends, it determines how that burden is applied to people. What we should really be comparing is: does an individual allocate their first $100,000 of income with any different efficiency than their second, third, or fifteenth $100k of income? If you give $1000 to a person who makes $50,000 a year, and $1000 to someone who makes $1,000,000 a year, who will allocate that money better? I think most of us would feel intuitively that the person making $50,000 would use it "better", but there's fair arguments to the contrary as well (including figuring out what "better" means). But only when you ask that question are you asking about progressive taxation, not just tax burden as a whole.
The notion that taxation should be predicated on whether the government or the person can 'better use' the person's money is damn scary.
Why is it scary? Your tax dollars go to the government because other citizens wish their tax dollars to go to the government, because they believe the government is the most efficient way to provide certain goods. Basically, they believe the government can spend their money better than they can, at least a certain amount of their money spent for certain purposes. Taxes aren't completely consensual, of course. They're government policy, and like any government policy, they can't depend on unanimous approval. However, the will of the people, as expressed through every democratic system on Earth, does support some degree of taxation and government spending. The natural question for a voter to ask when their vote affects taxation is whether it is more efficient to accomplish certain things through the government rather than through private spending -- essentially, whether the government can "better use" money for certain purposes than taxpayers can themselves. What's wrong with that?
Taxes are entirely not consensual. And that is the crux of the matter. Because they are not consensual there needs to be some sort of mechanism to limit the ability for the majority to simply appropriate money and property from the minority.
Suggesting that the only limiting factor is whether the government (even a democratically elected one) thinks it can use the money better than you can, really isn't a limit.
When the people find that they can vote themselves money, that will herald the end of the republic. -- Benjamin Franklin
You're arguing the old maker versus taker canard, which doesn't reflect reality at all. Taxation would not exist without the consent of a large number of economically productive taxpayers. If you think politics in the United States is run by poor people, or by mysterious forces that somehow nullify and overcome the economic power of a preponderance of American taxpayers, you are kidding yourself. You'd be better off engaging with American taxpayers who want the government to play a certain role and want to pay for it than pretending we don't exist. If you persist in believing that government is a conspiracy by parasites against the productive, then you are going to be perpetually confused and disappointed by American politics. Warren Buffet is trying to help you out, to clue you in to the fact that the politics surrounding government spending and revenue are not determined by the economic divisions you think they are. Accept that a large number of prosperous Americans (such as Warren Buffet) are willing taxpayers who approve of many forms of government spending, and I promise you, things will become a lot clearer. You might even be able to frame your arguments in a form that a presidential candidate wouldn't have to apologize for repeating.
I don't think the majority of people who politically support the current tax code are currently making as most of their income and a sizable portion of net worth 50-500k/yr in wage income from non-government (direct or one level removed) sources, however.
(it's primarily retirees who are now a combination of state beneficiary and investment income earners, people who work for government or direct vendors to government, and is funded by people who make most of their money as capital gains or carried interest.)
This is true for both major parties, and has been true for at least 40 years, though.
Socially and intellectually, the people I mostly identify with are professionals and other middle to upper class wage earners (doctors, lawyers, engineers); the exception being startup equity. And the people who earn wages (vs. capital gains) in this bracket pay the highest marginal taxes of anyone.
If tech people weren't able to shift income into capital gains, 50%+ taxation would be a much bigger deal.
Really? You think that tax policy is some verboten topic that is outside the scope of public debate and that anyone who dares to question the 'government' should 'leave' (or become a criminal)?
Its not really scary at all because that is what governments have always done, unless you are an advocate for no government at all in which case you are damn scary.
You want me to choose between anarchy or <insert your form of government here> where you've asserted that it doesn't matter what form of government I choose because they are all the same.
The whole point of my post is that progressive taxation is a question of which individuals pay what, not whether money stays with individuals or goes to the government. You appear to be caught up in the framing of political rhetoric.
As if 'framing' isn't an important part of communicating ideas? In this case you chose to frame the discussion in the form of the government 'giving' its money to the people. I'm rejecting that formulation. That doesn't mean I'm rejecting the idea of taxes or more specifically progressive taxes.
I offered a thought experiment, and using the example of "giving $1,000" is easier to think about than "not taking $1,000". As a thought experiment they are equivalent, with respect to the question: who utilizes resources most efficiently?
By introducing variability of how much the government takes total it adds another question that is being used to persistently distract from the question of progressivity. When people say "the wealthy should bear a larger portion of the burden" a typical response is "we should be spending less on government!" – which is no response at all, just a distraction.
You said: "The notion that taxation should be predicated on whether the government or the person can 'better use' the person's money is damn scary." – which is EXACTLY what I was pointedly NOT asking. The degree of progressivity in a system does not determine whether a person or the government has the person's money, but WHICH people have how much money.
OK, I'll accept that you weren't intending to suggest that the government has primary claim on your income but you seem unaware of how your framing has been used by others to actually make that claim.
I can accept theoretically that you can separate the progressive structure of the federal income tax from spending decisions but in reality it is pretty hard to solve our budget problems by simply taxing the 'rich'--at least if you use the $250,000 figure that is most commonly used.
Now we're demanding that progressivity must balance the budget too? This is car salesman accounting, muddling unrelated choices together to distract from individual choices that can be rationally considered.
You keep giving these pundit talking points – the talking points of pundits have been rehashed enough, we shouldn't be using them here, it's not a productive form of discussion. Are we men or are we pundits? I, sir, am a man! ;)
Huh? I'm not at all suggesting that the budget deficit can/should be solved by tweaking the progressivity of the federal tax system. In fact I'm saying the opposite--it is very hard to solve the budget deficit in that way because what we have a spending problem, not a revenue problem.
"Entrepreneurs are some of the most efficient allocators, because they are decision makers with a vested interest in the outcome. This concept is so rare as to practically not exist in the public sector."
What a shitty, smug attitude to have towards the many very bright and motivated people who work in the public sector. They're not all perfect, but neither are all entrepreneurs. Not by a long shot.
I didn't say that folks in the public sector are lazy or stupid, I said that there is rarely a direct connection between their performance on the job and their financial upside. Public sector workers are much more concerned about downside protection (i.e. avoid controversial decisions, cover your ass). In many cases, and I've seen this first hand, inaction is safer than action, whereas the opposite is usually true in business and especially in startups.
You're right -- I've never seen anyone in the private sector avoid controversial decisions or cover their ass. We should hand over all our nation's money to Bill Nguyen.
'Entrepreneurs' are terrible at allocating capital. Just compare the ROI from venture capital funds vs the S&P 500 over the last 20 years to get some idea. And no the vast majority of CEO's of a fortune 500 company are not Entrepreneurs for any reasonable definition of the term.
PS: It's important to include failures and opportunity costs when you talk about Entrepreneurs or your basically saying lottery winners are great at allocating capital.
Where did you get the idea that "the many billions raised for 'education' went entirely to shore up the teacher's bloated pensions and benefits fund?" (emphasis added)
It is a mistake to try to analyze spending in this way.
Dollars are fungible. Dollars directed to one particular budget item (education budgets in your example) simply frees up other dollars to be used elsewhere (pensions and benefits in the parent comment).
Government is the least efficient allocator of resources? Says who? How many wealthy individuals are sitting on piles of money right now because they are unsure of the economic climate and therefore are not going to invest? Who better than the government to take it away from them and then invest it into public infrastructure and consequently stimulate the economy?
It's very difficult to be "sitting on piles of money" in the way you imply unless you've literally perched yourself atop a chair constructed from stacks of US dollar bills.
When a millionaire earns an extra million dollars, he or she puts it somewhere - into stocks, or bonds, or other investments, and sometimes, rarely, keeps it in a bank account for years on end where it sits and earns no interest. With the exception of the bank account, all of these are capital re-investments that stimulate the economy in some way.
Wealthy people don't "sit on piles of money". That money is either held in a bank or invested. If it's in a bank, it is able to be loaned out to others looking for access to capital now. If its invested, it's being used as capital in a business (assuming it's and equity investment).
Banks don't really loan out money these days, either -- they generally have been keeping it on deposit with the fed, or in government securities, rather than making commercial loans.
And, banks are a lot less efficient at deploying capital than enterprises internally, or private investors, even in good times.
Why do you think they are sitting on these piles of money rather than investing it? It's because of the incessant sabre-rattling from the left over the past six years about raising taxes and ramping up even more regulation. It has a chilling effect.
oh Please. What a silly excuse. How about they've cut back on investing because they've been bitten twice in the span of one decade by two bubbles (one in housing, one in tech) & they figured out it's better to be more discriminating about capital allocation. simply stated when given a choice between wealth destruction & capital preservation, the latter is more desirable. Has it occurred to you that maybe, just maybe there aren't enough good enterprises to invest into. You're APPLE sitting on 125 Billion $ in cash, would buy Autonomy ?
That kind.
Just to be clear, I'm mostly talking about companies drastically scaling back their plans for growth in recent years, which obviously impacts private investors in the equity markets as well. Countless CEOs have gone on the record saying they've postponed hiring and capital investments because of the current tax and regulatory environment, in addition to the general dysfunction of Washington.
As you point out, Apple is sitting on over 100 billion, and countless other companies are sitting on amounts of capital that were previously unheard of. You can't honestly argue that it's a coincidence that all of these companies are simultaneously gun-shy to invest in growth.
It's funny how quickly people forget. There is one inevitable end result of such severe disproportionate concentrations of wealth. I'm sure we're nowhere near that point yet, but those who argue against redistribution are guaranteeing we will get there at some point.
I take you to mean that people forget that this is the inevitable outcome, but is there proof of that? China and ancient egypt for extremely stable examples of societies with hugely disproproriate distribution of wealth. Is it possible that revolutionary France and Russia are the outliers of history?
Look, before PG rightfully jumps in here like the SkiFree Yeti and tells us both to knock it off, let's see if we can squash this:
http://xkcd.com/667/
I'll concede that my last comment was inappropriate (it's super-basic Python, not a proof).
Can you at least concede that loose talk of beheading capitalists is, at the very least, counter-productive to what we should all want, which is a robust recovery?
Are you really advocating that people like PG and Elon Musk should be murdered without due process for being successful?
If not, why say so? Even solely as a rhetorical device, it's extremely distasteful, polarizing, and makes a rational person discount anything else you might have to say on the matter.
Or maybe you and people like you have no intention of really following through with these threats - they're just attempts to bully political opponents into adopting your tax policies. So, we're just talking soft-extortion here, not outright plans of murder and violence.
How about "evil" financiers like Warren Buffett (or is he "one of the good ones"?), or the other bankers and financiers - many of whom heavily donated to Obama, some of whom even served in his administration. Should the chopping block be reserved just for them? Do they get a pass if they donated to the right political parties and organizations?
This extreme demonization of capitalism is really troubling to me, and I think it helps explain the sluggishness of the economic recovery. The holders of capital are a bit spooked, and rightfully so.
Uh huh. The name of your method was "proof". I've been on HN for four years and you think I don't know how to read and write python? I'm a lisp hacker who came to this place back when it was about lisp hacking for hackers. Now, right wing business douches like you come along spouting talking points straight out of the corporate PR department.
First of all, I did not threaten anyone with the guillotine. The simple fact of the matter is that if the wealthy keep spouting bullshit designed to fuck the poor (which is all that your kind of speech is) then they are going to get guillotined. Don't think the reincarnation of Robespierre is not chomping at the bit to chop your neck.
Naturally, I have no interest in killing pg or myself or any other rich people. However, I have an interest in the survival and success of the human species.
These CEOs that you cite should be afraid. Their poor hearts are chilled at the possibility of a tax raise on their 14% tax burdens. Boo hoo! I am making the point that a tax raise on a billionaire is warm and balmy next to the ice cold steel that you get on the chopping block.
If these CEOs, the richest in all of history, keep acting like idiots they are going to get us all killed. And we'll deserve it. Fuck us if we are so myopic and pathetic that we can't create a rational vision of a human future to build and instead surrender all our autonomy to some metaphysical libertarian nonsense that is widely ridiculed by Nobel Prize winning economists.
In conclusion, welcome to HN. There are a lot more people here than just corporate blowhards and their nerd-slaves. Hacker culture still has some blood in its veins.
This post written in Vim on Ubuntu (not that I'm a fan of Ubuntu or anything. But apt sure is nice!).
Okay, thank you for confirming that there is no reasoning with you forensic. I'll save PG the trouble of yelling at us and end my part in this here.
Also, just to clarify, I've been an independent freelance programmer/serial entrepreneur for over 10 years - I've never worked for or held an interest in a big corporation, and my bank account balance looks a lot more like an OWS member than a VC. I'm just not gullible enough to fall for this class warfare nonsense, or blame others for my success or lack thereof.
Tell you what: when OWS rounds you up, I'll have a talk with my fellow plebs and see if I can get you a pass.
If you don't recognize the high privilege of working as an entrepreneur in the first world for 10 years, you are just clueless. There are people starving to death because of the first world economic policy that you advocate, or at least that you perpetuate.
I'm not an Occupier. I advocate meritocracy. And meritocracy doesn't happen when you deny opportunity to the majority through economic policy that keeps the plutocracy entrenched.
Occupy is a great example of how sad the underclass is. Look at how pathetic they are. They are completely irrational and lost and have no idea what to even do. Of course, they're just sheep. But if the Goldman Sachs of the world keep growing the numbers of that herd (and all signs point to yes) then eventually there will be enough sheep for a Fuhrer to come along and point them at the enemy.
>How many wealthy individuals are sitting on piles of money right now because they are unsure of the economic climate and therefore are not going to invest?
They have the guns normally. Force tends to be its own right.
That said, Californians complaining about government isn't surprising, they have the worst possible state government of the union. Their bias is understandable, but entirely their own doing.
"Potentially, a government is the most dangerous threat to man's rights: it holds a legal monopoly on the use of physical force against legally disarmed victims."
Like everything Ayn Rand, that's completely upside down, since government is also the only entity that has ever succeeded in guaranteeing people's rights.
So government is the best friend of man's rights, while libertarianism is the biggest enemy. Libertarianism = corporate feudalism.
What is "property" other than a state-enforced claim to ownership? If the state (read: society) decides to take some back it is well within its "right" to do so, as your only claim to property is based on decree of society.
I am a fan actually, and I don't think my views are incompatible with his. I do have reservations of the typical use of "natural law" arguments though. One can construct a natural law argument for just about any premise one wants.
That has nothing to do with the article. No matter how inefficient the government is, they still need money. And the article is about who pays how big part of that money.
>For every dollar put to use, many more dollars are wasted due to incompetence or fraud. California's Proposition 30 was a wake-up call for me...
You needed a wake-up call after the shenanigans we've seen in Sacramento over the last decade? They won't even spend the extra money. They'll use it as leverage to issue bonds. Tax increases in California have become mere guarantees taxes will be raised yet further at some future date.
I'm with you. Until the federal gov can prove it is willing to even attempt a balanced budget, is willing to stop giving handouts (to both the wealthy and the lazy), and proves it will actually invest in something other than bad cars and banks, then there's no reason they should get anything more than they already do.
If you keep feeding a monster, all you get is a bigger monster.
Your argument assumes that people making spending decisions care about the debt. 30 years of government run by both sides of the aisle demonstrate that revenue and expenditures are entirely decoupled.
Whether you feed or don't feed the monster doesn't impact the monster's size. If you stop funding government, all you get is a larger debt.
When I'm doing volunteer work, I'm working for the interest of the disadvantaged. My synagogue collectively works for the interest of the disadvantaged through their social action programs. My town's interfaith food bank is run very well and addresses a collective problem without taking a dime of government support.
Government plays a role in helping the disadvantaged but it doesn't play the only role, it's not necessarily the most effective role, and since it involves taking money from people involuntarily, we should make damn sure the help's truly necessary and there's not a better, voluntary way to do it first.
It's disingenuous to say you're working FOR the disadvantaged. They aren't directing your activity and they have no power in the matter.
Government actually responds to the desires of the disadvantaged so the difference is infinite.
Volunteer organizations only serve a very, very narrow sliver of the disadvantaged, and they usually don't work to eradicate the disadvantaged but rather to exploit them to perpetuate their institutions.
The customer of the volunteer organization is the donor or charitable person. They dictate the behaviour of the organization. The product is the disadvantaged person, who is used in sales pitches and so on to convince the customer to hand over their credit card information.
Just because the disadvantaged are used by private charities to extract donations from the wealthy doesn't mean that the volunteer organizations are working FOR the disadvantaged.
Simple fact of the matter is that working for the disadvantaged would include a lot more responsiveness, a lot more prevention, a lot more intelligence, a lot LESS volunteer work and a lot more professional work. (volunteer work is poverty tourism 99% of the time--the poor don't need people handing out soup at soup kitchens. They just need money to buy their own soup and a social system that gives them some opportunity to become self-sufficient.)
First, if government has been responding to the desires of the disadvantaged all along, it would seem that a good portion of the poor and disadvantaged want to stay poor and disadvantaged. I don't believe that's the case - so either the government hasn't been responding to the desires of the disadvantaged or the government has been rather ineffective at it.
Second, your description of a volunteer organization is so ridiculously counter to reality, I'm certain you've never spent time working for one. Here's how something like a county food bank actually works: civic organizations (mostly churches, but also groups like the Rotary and Lions Club) organize food drives and solicit donations. Grocery stores and restaurants donate food as well. Volunteers sort and bag groceries and man the food bank during pickup hours - anyone who wants the food gets the food. (Other volunteers drive food to elderly or disabled people who can't make it in.)
No one is paid, no one even has the ability to handle credit cards, and no disadvantaged people are paraded around in fundraising pitches. Donations of food mainly come from everyday people, and are widespread throughout the community. We serve a lot of people in our county, not a 'very, very narrow sliver'. You calling the work done by volunteers 'poverty tourism' is just you being an ass.
As for whether the food bank encompasses 'prevention' - no, it does not. There are plenty of other community organizations that do, though. The biggest and most effective are probably the marriage counseling and parenting classes provided by local churches to their members.
Perhaps, when I say something quite abstract, I'm MAKING A POINT instead of, you know, ignorant of very mundane facts like what you are blabbing.
God the literalism in the software industry is just pathetic. It's like all you ever read is technical documentation.
I'm imagining you reading Camus and then trying to educate him on the dictionary definition of "absurd"
"Excuse me sir, but let me educate you about this extremely fucking obvious fact that everyone already knows while I completely miss your point because I'm dense as lead"
Government is the only entity that works for the disadvantaged.
The Red Cross, the Salvation Army, the Catholic school and hospital network (CRS), Doctors without Borders, Lutheran World Federation, the ACLU, etc etc etc.
The product of doctor's without borders is better health for the disadvantaged. The product of the red cross disaster relief is comfort and care in times of distress. The EAPN main goal is to elevate the disadvantaged above their current situation and prevent the cycle of poverty.
Entrepreneurs are some of the most efficient allocators, because they are decision makers with a vested interest in the outcome. This concept is so rare as to practically not exist in the public sector.
I'm not opposed to higher taxes. I am opposed to throwing money, mine or anyone else's, into a black hole. Convince me that the extra tax dollars will be spent wisely and that society will see a net positive return at some point in the future, and you have my support.