my economic thought experiment

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fiksal
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my economic thought experiment

Post by fiksal » Fri, 22. Feb 19, 16:51

Our systems have various "minimum" wage systems. But none that I know of, has a maximum wage system.

What if we do that?

Would this system be beneficial in the long run to the society?

My thoughts, this will free up the hoarding of cash at the top 1% or so layer of the population. If it's forced to be reinvested in industries, infrastructure or healthcare, this will be an additional rotation of crash - which in simplest terms - a good thing for economy, is it not?
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Re: my economic thought experiment

Post by pjknibbs » Fri, 22. Feb 19, 17:11

All that would happen is that top-flight executives would get even more of their remuneration in the form of stock options and other things that aren't classed as salary.

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Re: my economic thought experiment

Post by Grimmrog » Fri, 22. Feb 19, 17:16

fiksal wrote:
Fri, 22. Feb 19, 16:51
Our systems have various "minimum" wage systems. But none that I know of, has a maximum wage system.

What if we do that?

Would this system be beneficial in the long run to the society?

My thoughts, this will free up the hoarding of cash at the top 1% or so layer of the population. If it's forced to be reinvested in industries, infrastructure or healthcare, this will be an additional rotation of crash - which in simplest terms - a good thing for economy, is it not?
Such a system would only work worldwide, otherwise people would leave a state to earn more money elsewhere.
Also, maybe a maximum wage system would lead people of influence and power to push others deeper into a slavery like labour System, because then costs of products produced would be lower so that they can afford more from the capped wage they have.
The matter is always the value of money and the value of any good which defines who is richt and wealthy and who not.
Atm, rich people keep their exclusivity by just hoarding money and increasing prices for limited important ressources so that they keep their higher status.
In a reverse scenario they would start to drastically lower those limited ressources values, but keep up the value of basic goods of need and then keep the majority of lesser powered peoples income hardly over those basic goods. this had the effect that only they have money left after those basic goods to access thise limited ressources.

if you want to more equally distribute property/wealth this way, you would have to control the value of specific things and the money while keeping that maximum wage cap.

it could also lead to massive population problems, because want that fancy mansion with a huge pool, horses and stuff, you better have a HUGE family living in it together because then you can sum up value as a family community easilier.

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Re: my economic thought experiment

Post by Alan Phipps » Fri, 22. Feb 19, 17:41

Your suggestion just sounds like an extension of current taxation systems whereby the more you earn, the higher the % tax you pay - just taken to an absurd degree.

What exactly would be the top earner's incentive to work ambitiously or even all that well any more? Also I'm sure the richer ones would employ the clever corporate and personal lawyers to make sure that tax allowances and other benefits or payments in kind were maximised and transferred around the family or corporation to their best advantage.
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Re: my economic thought experiment

Post by fiksal » Fri, 22. Feb 19, 17:51

pjknibbs wrote:
Fri, 22. Feb 19, 17:11
All that would happen is that top-flight executives would get even more of their remuneration in the form of stock options and other things that aren't classed as salary.
True, but then you cant turn them into your income via sale over the maximum. So you can hoard stock and pay for your kids if you'd like (as you would now in the same situation), but the limit will be much lower to how much you'd be able to do that.

The point is then to invest that money back into something.

Grimmrog wrote:
Fri, 22. Feb 19, 17:16
Such a system would only work worldwide, otherwise people would leave a state to earn more money elsewhere.
True few individuals/people may leave, but this won't be a threat to a company. I should be specific that businesses wouldnt have that cap, I think.

Grimmrog wrote:
Fri, 22. Feb 19, 17:16
Also, maybe a maximum wage system would lead people of influence and power to push others deeper into a slavery like labour System, because then costs of products produced would be lower so that they can afford more from the capped wage they have.
Not sure I understand. What products would decrease in price and how would it lead to slavery -like?

The hypothetical salary should be somewhere slightly above the (real) middle class salary.

Grimmrog wrote:
Fri, 22. Feb 19, 17:16
In a reverse scenario they would start to drastically lower those limited ressources values, but keep up the value of basic goods of need and then keep the majority of lesser powered peoples income hardly over those basic goods. this had the effect that only they have money left after those basic goods to access thise limited ressources.
Where the market economy works, this shouldnt happen. The prices wouldnt just rise because one person would like them to.


... or if you disagree, can we walk through it?

Grimmrog wrote:
Fri, 22. Feb 19, 17:16
if you want to more equally distribute property/wealth this way, you would have to control the value of specific things and the money while keeping that maximum wage cap.
We dont do that now without the cap, so not sure why we need to control any prices. People right now who would be below the hypothetical cap still have no way to make that income for the higher cost products right now.
So... same thing?
Grimmrog wrote:
Fri, 22. Feb 19, 17:16
it could also lead to massive population problems, because want that fancy mansion with a huge pool, horses and stuff, you better have a HUGE family living in it together because then you can sum up value as a family community easilier.
Sounds good. I dont think the practicality of the huge mansions is a concern for me here :)



Alan Phipps wrote:
Fri, 22. Feb 19, 17:41
Your suggestion just sounds like an extension of current taxation systems whereby the more you earn, the higher the % tax you pay - just taken to an absurd degree.

What exactly would be the top earner's incentive to work ambitiously or even all that well any more?
I am not sure we need to provide for top earners having a super good incentive. What's the benefit to us? But let's put a number that's high enough - lets say the number is $200k USD. (I know places like California may complain this is not high enough)


Majority of the workforce is in any country are not top earners, they are the real contributors to the economy and the ones who governments should be serving. The rich are outliers. Every rich CEO can be replaced by an equal person.

In other words, if a former top-earner doesnt want to run (lets say : Amazon) because he cant earn a billion dollars anymore, someone else equally clever will.
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Re: my economic thought experiment

Post by Observe » Fri, 22. Feb 19, 21:08

Grimmrog wrote:
Fri, 22. Feb 19, 17:16
Such a system would only work worldwide, otherwise people would leave a state to earn more money elsewhere.
I agree. Whether minimum or maximum wage, it only works if it is global.

There are some things that can be based on national interests. Trade between individual nations for example. Even then, trade is most stable, when participating nations have similar wage and standards of living. We need to come up with a blend of nationalism and globalism that works together in cooperation.

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Re: my economic thought experiment

Post by pjknibbs » Fri, 22. Feb 19, 21:35

fiksal wrote:
Fri, 22. Feb 19, 17:51
True, but then you cant turn them into your income via sale over the maximum.
Which means you're effectively extending this to capital gains as well as salary. So, does this limit apply if I sell my house and buy a cheaper one? What if I discover that Grandma's vase which has been in my attic for years is worth a fortune--am I restricted in the price of that, too?

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Re: my economic thought experiment

Post by Mightysword » Fri, 22. Feb 19, 21:54

Definitely wouldn't work. A lower limit works because you don't want people to fall through the floor, and even then it's not easy. Ultimately, the #1 motive for most people to work more because we want to have more. Placing a top limit essentially tell people that up until a certain point, you can work more but can not have more, unless everyone else have caught up to you. I'm not sure if you notice but ... what you describe is essentially the communism ideal model at its core. I always maintain that any good and sustainable model has to work "naturally". Sure, you can try to design a system to promote equality, but that system must be - by design - naturally fit both the top 1% and the bottom 1%, and that they all see they're behaving in the system under the same rule set. A system where you feel an extra quirk needs to be added just to target one specific element is not a sustainable system, and will only earn scorn and break down over time.

For me it's a simple mathematical logic, if you define both the low limit and an upper limit, that means you had defined an fixed interval with the space between them. That means one way or another, you will have to assign specific value for each calibration to normalize the scale. You can use a linear or a exponential models, doesn't matter, but there will always be people who will hit the right bracket before realizing their full potential, at that point without the promise of even higher reward, you''ll have to rely on people doing for unicorn and rainbow reason like self-fullfillment. And that is if you calibrate the scale to cover the bottom, because if you calibrate the scale to make sure you cover for the people at the top getting their just reward, then someone else in the lower limit will have to suffer. That's an inherent problem with any system that define both a min and a max.

Right now the gap could be because the scaling model is based on an exponential, that after a certain milestone an individual just make way more than other while not necessary an equal amount of extra work. You can try to adjust that model, maybe with a lower base coefficient, maybe with a constant or quadratic modifier like elastic of supply and demand, maybe some kind of hybrid linear model ... etc ... whatever, but you should never put a cap at the top.

Observe wrote:
Fri, 22. Feb 19, 21:08
Grimmrog wrote:
Fri, 22. Feb 19, 17:16
Such a system would only work worldwide, otherwise people would leave a state to earn more money elsewhere.
I agree. Whether minimum or maximum wage, it only works if it is global.

There are some things that can be based on national interests. Trade between individual nations for example. Even then, trade is most stable, when participating nations have similar wage and standards of living. We need to come up with a blend of nationalism and globalism that works together in cooperation.
Here is a simple thought: if there is ever a time we reach equilibrium on a global scale, then a fairly good chance we wouldn't have this problem to begin with. It's somewhat like a catch 22 that render a lot of the idealistic moot for me: "if we can be like this than we can solve this problem" but "if we are like this then there isn't a problem to solve in the first place". Not an attempt to lead the discussion there, but I have to use it since it's the perfect example: communism will only work if everyone lives in is a saint, but if everyone in a society is already a saint, then you don't need communism.
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Re: my economic thought experiment

Post by Observe » Fri, 22. Feb 19, 22:18

pjknibbs wrote:
Fri, 22. Feb 19, 21:35
What if I discover that Grandma's vase which has been in my attic for years is worth a fortune--am I restricted in the price of that, too?
I get your point. If there was a maximum income and you were at the top, then your vase would be worth zero dollars to you.

How high would the maximum salary be? Would if be so low, that Ferrari must go out of business because no one could afford their cars? Or would the government subsidize Ferrari under funding for the arts or something? Or, we should just eliminate personal ownership of cars altogether and replace with government transportation options? Seems to me, what we are looking for, is international economic stability, while still providing opportunity for robust individual choices and national integrity.

What do we value? Things that are alive and have feelings are "real". Other things, such as money are only real in the context of the fiction we agree upon. People, animals and the living environment, could be said to have more value than any amount of money. In my mind, a minimum income represents access to the "real" things that sustain our life. At some point beyond the minimum, we enter the realm of fantasy and society should not have to pay the cost of someone having a fantasy of riches beyond measure at the expense of everyone else.

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Re: my economic thought experiment

Post by Observe » Fri, 22. Feb 19, 22:41

Mightysword wrote:
Fri, 22. Feb 19, 21:54
Here is a simple thought: if there is ever a time we reach equilibrium on a global scale, then a fairly good chance we wouldn't have this problem to begin with.
That is the pessimistic view. It may even be the correct one. It might be, that humans are coming to the end of their ability to deal with the complexities of an advanced technological civilization. I doubt the universe has some special destiny for us that will ensure our survival.

Perhaps there is no such thing as free will. However, if humans can make choices, we may have the capacity to evolve ourselves out of the problem, into a solution. To do this, we need to define actually what is the problem and why do we have it. Some would argue that there is no problem in the first place, because it all comes down to survival of the fittest and that it is nature or God that determines whether someone is a prince or a pauper.

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Re: my economic thought experiment

Post by Mightysword » Sat, 23. Feb 19, 00:07

Observe wrote:
Fri, 22. Feb 19, 22:41
Mightysword wrote:
Fri, 22. Feb 19, 21:54
Here is a simple thought: if there is ever a time we reach equilibrium on a global scale, then a fairly good chance we wouldn't have this problem to begin with.
That is the pessimistic view. It may even be the correct one. It might be, that humans are coming to the end of their ability to deal with the complexities of an advanced technological civilization. I doubt the universe has some special destiny for us that will ensure our survival.

Perhaps there is no such thing as free will. However, if humans can make choices, we may have the capacity to evolve ourselves out of the problem, into a solution. To do this, we need to define actually what is the problem and why do we have it. Some would argue that there is no problem in the first place, because it all comes down to survival of the fittest and that it is nature or God that determines whether someone is a prince or a pauper.
Not sure how you read that but it wasn't intended to be an pessimistic point of view. :)

I didn't mean it as "we only gonna reach the solution when humanity faces its end of time". I simply point out what I consider as a "non-starter" in a lot of the idealistic argument. Say your old car is broken down, and you figure you need a wrench to fix it. Finding this wrench is like finding a solution to your problem - a broken old car. But then someone say "oh just buy a new car". Will buying a new car fix your problem? Sure it will, but your reaction to that solution is probably something like "if I'm rich enough to buy a new car, I wouldn't be trying to fix a broken old car to begin with!". So while it's one of the valid solution, it's also a pointless one.

Here, just like many of you had agreed that the first thing for this to work is to have equality on a global scale first. And while I agree, I would figure by the time we achieve equality on a global scale, we would have solve inequality on an individual level already. ;)
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Re: my economic thought experiment

Post by Morkonan » Sat, 23. Feb 19, 02:49

fiksal wrote:
Fri, 22. Feb 19, 16:51
Our systems have various "minimum" wage systems. But none that I know of, has a maximum wage system.

What if we do that?

Would this system be beneficial in the long run to the society?

My thoughts, this will free up the hoarding of cash at the top 1% or so layer of the population. If it's forced to be reinvested in industries, infrastructure or healthcare, this will be an additional rotation of crash - which in simplest terms - a good thing for economy, is it not?
TLDR at the bottom. :)

First, I want to point out something - "My thoughts, this will free up the hoarding of cash at the top 1% or so layer of the population."

You're defining that in terms of it being a problem that is to be solved. But, where is the justification that this is, indeed, a "problem that needs to be solved." Why is it a problem? And, even if was a problem, does it really exist in nature?

"Reinvested in industries, infrastructure or healthcare" - But, that's already happening. "Rich People" don't "hoard" money. Rich people invest their money in even more profitable things. That's why they're rich. :)

"Disposable Income"

That's two words you didn't link together. That is, after all, the argument here, isn't it? You're seeking what may be a ceiling on "disposable income" with the minimum income being met and a limit of how much "extra" someone can earn or even what their total worth, perhaps, might be?

So, how are you going to determine these standards are going to be judged? Will it be somewhat arbitrary or will it be absolute, judged by some other number that gets cranked out by a team of economists, somewhere?

What if I want to give my neighbor some money in appreciation for them being just plain awesome? I want to reward them and I can't think of a suitable Christmas gift, so I give them a bajillion monies. I've made my choice! And, suddenly, Teh Gubbermint tells me that's illegal and now that money I gave them to show my appreciation for them being awesome is, instead, going to be spent making a new parking lot in the middle of the mountains that does nothing, doesn't even have a road leading to it, and destroys a bajillion acres of pristine wilderness...

Who owns the money? Who owns the concept of "wealth?"

That's a big darn question. Ultimately, the issuing agency regulates it and issues it as a medium of economic exchange. They typically base its value on "something" and, in today's world, that's no longer "goats" but "purchasing power" somewhat self-regulated and reflected by the nation's overall economy. IOW - The Monies is not, in and of itself, indicative of a fixed value and "ownership" is limited to "regulation." Without a revolution, ownership would likely remain that way, too. That means that any standard declared would change over time. And, one would have to provide for that in any new set of "Wealth Regulation" or even the richest person may not be avble to afford a potato.. (Zimbabwe? What nation was it that had ridiculous inflation?)

Choice - Where is it and how much does it cost?

That's the ultimate consideration. How do my choices as a human being have worth if the government tells me that they will no longer be rewarded? What of my expertise? What of my own "value" to a society or a system?

That's why a scaling system of taxation "works." It does not place a limit on someone's choices, someone's contributions or the value that they and other people place upon their efforts in society. It simply says "At this point, there is a rule of diminishing returns." But, it also says something else: We own the Tax System and these are the things we would like you to do.

Taxes are a way a government influences economic behavior in its citizenry.

They're more than just collecting operating expenses. They are designed to influence the economy by getting people to do things with their money. That money represents a sort of "collective effort." That's reflected in the desires of the people who take advantage of certain tax incentives. And, let's say that there's a ceiling placed on wealth and value and that taxes are only created to ensure this value is not exceeded. Those taxes also often reflect cultural and social values. People who wish to do positive things, or that the culture upholds as positive, often get inducements to do so. (Up to a certain point or even because of a certain point.) For instance, one can deduct a certain portion of one's charitable contributions from their total tax obligation. Isn't that nice, too?

But, when the government loses the ability to influence certain economic behaviors or instill certain values and other behaviors in its citizens? At that point, the government may gain a lot of "Wealth" but it completely loses the abilty to influence the economic behavior of its citizenry...

The first time you want people to save for their children's college fund, you're not going to get many takers. You will find some smart people putting aside some money without a tax inducement to do so, but that's about it. The rest will just go out and buy waffle irons and dild...os.

TLDR: A minimal standard of living must be maintained and, IMO, it must also include a minimum amount of "disposable income." It must not be limited only to the barest essentials but must include things like entertainment, savings, investment opportunities that can generate additional income, etc. And, the only ceiling that must be maintained isn't the accumulation of wealth, but the inducements in tax law that influence what is done with that accumulated wealth for the betterment of the nation as a whole, including investments and savings funds and financial instruments designed to put working capital into the hands of people that can make it work.

Any self-limiting system in what we consider to be a rational, sensible, world is a terrifying thing to contemplate with ramifications that far extend beyond someone feeling good about not having anyone around them that is "too rich." IMO, on Day 1 of this new system, the whole place would burn to the ground... We'd have to have an entirely new form of government for this and even a new sort of cultural and social sense of order. An "ant farm" comes to mind. This would be great for an ant-farm.

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Re: my economic thought experiment

Post by fiksal » Mon, 25. Feb 19, 16:01

pjknibbs wrote:
Fri, 22. Feb 19, 21:35
fiksal wrote:
Fri, 22. Feb 19, 17:51
True, but then you cant turn them into your income via sale over the maximum.
Which means you're effectively extending this to capital gains as well as salary. So, does this limit apply if I sell my house and buy a cheaper one? What if I discover that Grandma's vase which has been in my attic for years is worth a fortune--am I restricted in the price of that, too?
Good question; I'd say that the overflow income would roll over to the next year.

Mightysword wrote:
Fri, 22. Feb 19, 21:54
I'm not sure if you notice but ... what you describe is essentially the communism ideal model at its core.
Communism is not the goal or intention :)
Mightysword wrote:
Fri, 22. Feb 19, 21:54
I always maintain that any good and sustainable model has to work "naturally". Sure, you can try to design a system to promote equality, but that system must be - by design - naturally fit both the top 1% and the bottom 1%, and that they all see they're behaving in the system under the same rule set. A system where you feel an extra quirk needs to be added just to target one specific element is not a sustainable system, and will only earn scorn and break down over time.
I'll have to think about how this can come to be naturally. Probably would need incentives and perks.
Mightysword wrote:
Fri, 22. Feb 19, 21:54
For me it's a simple mathematical logic, if you define both the low limit and an upper limit, that means you had defined an fixed interval with the space between them. That means one way or another, you will have to assign specific value for each calibration to normalize the scale. You can use a linear or a exponential models, doesn't matter, but there will always be people who will hit the right bracket before realizing their full potential, at that point without the promise of even higher reward, you''ll have to rely on people doing for unicorn and rainbow reason like self-fullfillment.
I dont disagree. But who are those people and what are those jobs?

I proposed $200k earlier, but what if that limit is $500k? This will cover over 90% in USA, for example.
Mightysword wrote:
Fri, 22. Feb 19, 21:54
And that is if you calibrate the scale to cover the bottom, because if you calibrate the scale to make sure you cover for the people at the top getting their just reward, then someone else in the lower limit will have to suffer. That's an inherent problem with any system that define both a min and a max.
Are you saying that a system without both min and max is better? or just with the min is better?
Mightysword wrote:
Fri, 22. Feb 19, 21:54
Right now the gap could be because the scaling model is based on an exponential, that after a certain milestone an individual just make way more than other while not necessary an equal amount of extra work. You can try to adjust that model, maybe with a lower base coefficient, maybe with a constant or quadratic modifier like elastic of supply and demand, maybe some kind of hybrid linear model ... etc ... whatever, but you should never put a cap at the top.
Mathematics is all well and good, but how does this translate to income? As a tax? or something else?


Observe wrote:
Fri, 22. Feb 19, 22:18
pjknibbs wrote:
Fri, 22. Feb 19, 21:35
What if I discover that Grandma's vase which has been in my attic for years is worth a fortune--am I restricted in the price of that, too?
I get your point. If there was a maximum income and you were at the top, then your vase would be worth zero dollars to you.

How high would the maximum salary be? Would if be so low, that Ferrari must go out of business because no one could afford their cars? Or would the government subsidize Ferrari under funding for the arts or something? Or, we should just eliminate personal ownership of cars altogether and replace with government transportation options? Seems to me, what we are looking for, is international economic stability, while still providing opportunity for robust individual choices and national integrity.

What do we value? Things that are alive and have feelings are "real". Other things, such as money are only real in the context of the fiction we agree upon. People, animals and the living environment, could be said to have more value than any amount of money. In my mind, a minimum income represents access to the "real" things that sustain our life. At some point beyond the minimum, we enter the realm of fantasy and society should not have to pay the cost of someone having a fantasy of riches beyond measure at the expense of everyone else.
A number can be more carefully picked. I handwaved at $200k. Which covers basically top-middle class in US (in expensive areas even).
If we bring to $500 - then it's almost all population of US will fall under that number. Not sure how this will look like in Europe.

Ferrari as business is not a concern I think, - a completely luxury brand with unrealistic value, compared to basically any other car of the same construction. They'll survive on something else marketable.

re: what do we value.
The market still handles this and the prices are still free to be set.

This isnt a conversation about a minimum wage, but the idea is that yes, a person should be able to afford shelter and food.

Morkonan wrote:
Sat, 23. Feb 19, 02:49
TLDR at the bottom. :)
I feel like I need two windows opened side by side with your posts ;)
Morkonan wrote:
Sat, 23. Feb 19, 02:49
First, I want to point out something - "My thoughts, this will free up the hoarding of cash at the top 1% or so layer of the population."

You're defining that in terms of it being a problem that is to be solved. But, where is the justification that this is, indeed, a "problem that needs to be solved." Why is it a problem? And, even if was a problem, does it really exist in nature?
Fair question. The idea is indeed about redistributing the wealth. The unchecked way (removing taxes for example), leads certainly to ever increasing gap in societies.
Morkonan wrote:
Sat, 23. Feb 19, 02:49
"Reinvested in industries, infrastructure or healthcare" - But, that's already happening. "Rich People" don't "hoard" money. Rich people invest their money in even more profitable things. That's why they're rich. :)
Not in ways that always matter. If I am wrong however, and the money of top 1% is improving infrastructure and healthcare with all its might then I'll eat my words. Right now that seems like impossible thing to look up.

Morkonan wrote:
Sat, 23. Feb 19, 02:49
So, how are you going to determine these standards are going to be judged? Will it be somewhat arbitrary or will it be absolute, judged by some other number that gets cranked out by a team of economists, somewhere?
I'd probably grab a number that covers top middle class and adds a significant % on top of it.
But yes, some economists would need to crunch the numbers.
Morkonan wrote:
Sat, 23. Feb 19, 02:49
What if I want to give my neighbor some money in appreciation for them being just plain awesome? I want to reward them and I can't think of a suitable Christmas gift, so I give them a bajillion monies. I've made my choice! And, suddenly, Teh Gubbermint tells me that's illegal and now that money I gave them to show my appreciation for them being awesome is, instead, going to be spent making a new parking lot in the middle of the mountains that does nothing, doesn't even have a road leading to it, and destroys a bajillion acres of pristine wilderness...
Depends. I've been vague on what happens with overflow because I am not 100% sure on the better direction here either. I am open to ideas.
One idea was that the overflow money goes to the next year, and the next. The bajillion that you just gave, if it stays with the neighbor sets him off for a quite a comfortable time.
If that's the direction we take, then the difference between bajillion and the yearly income can be invested until the cash is needed again. For example.
Morkonan wrote:
Sat, 23. Feb 19, 02:49
Who owns the money? Who owns the concept of "wealth?"
Same as before.

Do you worry about inflation in this scenario? Usually everything gets adjusted anyways, from taxes to interest rates.
Morkonan wrote:
Sat, 23. Feb 19, 02:49
That's the ultimate consideration. How do my choices as a human being have worth if the government tells me that they will no longer be rewarded? What of my expertise? What of my own "value" to a society or a system?
So it's a psychological question - is the person feeling that they have value?
Morkonan wrote:
Sat, 23. Feb 19, 02:49
That's why a scaling system of taxation "works." It does not place a limit on someone's choices, someone's contributions or the value that they and other people place upon their efforts in society. It simply says "At this point, there is a rule of diminishing returns." But, it also says something else: We own the Tax System and these are the things we would like you to do.

Speaking of math, the hard cap can be accomplished with a steep-er progressive income tax as well. Would that be a better approach?
Morkonan wrote:
Sat, 23. Feb 19, 02:49
They're more than just collecting operating expenses. They are designed to influence the economy by getting people to do things with their money.
I am all for it. The cap idea would force spending (even if that spending with just reinvesting part that I mentioned earlier, versus a hard socialist-style redistribution of wealth).
Morkonan wrote:
Sat, 23. Feb 19, 02:49
The first time you want people to save for their children's college fund, you're not going to get many takers. You will find some smart people putting aside some money without a tax inducement to do so, but that's about it. The rest will just go out and buy waffle irons and dild...os.
I follow you.



Ok,

I am willing to amend the cap idea with the differently scaled progressive income tax.
This may or may not include the overflow idea I mentioned previously... need to think if this will be useful.

Morkonan wrote:
Sat, 23. Feb 19, 02:49
the inducements in tax law that influence what is done with that accumulated wealth for the betterment of the nation as a whole, including investments and savings funds and financial instruments designed to put working capital into the hands of people that can make it work.

Any self-limiting system in what we consider to be a rational, sensible, world is a terrifying thing to contemplate with ramifications that far extend beyond someone feeling good about not having anyone around them that is "too rich." IMO, on Day 1 of this new system, the whole place would burn to the ground... We'd have to have an entirely new form of government for this and even a new sort of cultural and social sense of order. An "ant farm" comes to mind. This would be great for an ant-farm.
Am I reading you right that you dont think the progressive tax is a good idea?
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Re: my economic thought experiment

Post by Grimmrog » Mon, 25. Feb 19, 17:48

wrote a shit ton of stuff, forum decided to log me out in the background and so the text is lost, won't type it again.

short, nature of humans is competition, people with power will try to put others below them for human social status differences, thats why things I said will happen.

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Re: my economic thought experiment

Post by fiksal » Mon, 25. Feb 19, 18:09

Grimmrog wrote:
Mon, 25. Feb 19, 17:48
wrote a shit ton of stuff, forum decided to log me out in the background and so the text is lost, won't type it again.

short, nature of humans is competition, people with power will try to put others below them for human social status differences, thats why things I said will happen.
That is unfortunate!

So you feel the cap will reduce competition in where it matters?
Ok, lets say it's so.

Does the progressive tax have the same impact?
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Re: my economic thought experiment

Post by Grimmrog » Mon, 25. Feb 19, 18:23

fiksal wrote:
Mon, 25. Feb 19, 18:09
Grimmrog wrote:
Mon, 25. Feb 19, 17:48
wrote a shit ton of stuff, forum decided to log me out in the background and so the text is lost, won't type it again.

short, nature of humans is competition, people with power will try to put others below them for human social status differences, thats why things I said will happen.
That is unfortunate!

So you feel the cap will reduce competition in where it matters?
Ok, lets say it's so.

Does the progressive tax have the same impact?
No I don't it will just shift the competition elsewhere.

The progression tax has the "charme" of allowing people to get more so they might not shift those methods for competition. But lets be honest, Many of these people have their loopholes for tax evasion. And we could aks why do multimillionares risk jail to save even more on taxes that exceed their income past what's needed? Well because it's exactly that competiton. It's not logical, it's just humans nature of comopetition to have more than the other (some call it greed).


A good example is in germany most (classical) concert, opera and theater stuff is heavily discounted. That was made (or at least said to be the reason) to make sure people (specifically students and pupils) can participate in cultural goods. But the absolute majority using those Institutions are usually upper class people. Just a good example of how the government "supports" specific people who usually do not even majorily utilise those institutions. Why do thes people even get that discount as well if they are so wealthy? That seems to be much a self serving thing for a sepcific class of people made by that same sepcific class of people.

And something similar would happen in your example, if said higher powered class cannot advance past the plebs they will use their power to push the blebs below them.

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Re: my economic thought experiment

Post by Mightysword » Tue, 26. Feb 19, 02:26

fiksal wrote:
Mon, 25. Feb 19, 16:01
Communism is not the goal or intention :)
What matter is the result and not the intention. I'm simply saying in principal that's exactly what your proposal look like.
I dont disagree. But who are those people and what are those jobs?

I proposed $200k earlier, but what if that limit is $500k? This will cover over 90% in USA, for example.
And here is the problem. Most of the time when people come up with something like this, they have a very specific target in mind: usually the big bad evil CEOs making their underserve rich through the exploitation of others!! Not saying it's your thought in this, but that's usually the case. But here is the thing, the top earners are not just those people, there are many who are even adorned by the public. Below is a series of examples of why your idea would never work:

- 200k or 500k, it's easier to hit that number than you think. Alot of "average" professional sport players can hit those number within a month. The top one can actually hit it with just one week. And that is only their basic wage before you talk about sponsorship/image right which tend to double or triple that. They are not exploiting anyone, a lot of them actually start off poor or even on the street until their talents is discovered. What they earn is simply due to how the public decide that their talent is worth, and it's hard to argue these players are taking from anyone else by earning so much.

- Let's take an example: last year Taylor Swift make 54 million in revenue in ONE week on her tour, by the end of the tour it was like around 400million over 6 months. After all said and done, I figure she probably took home about 40-50millions after tax. And that's just from the tour, not counting all the other derivative like album sale, image right ...etc... And again, she's not exploiting anyone for it, people LOVE to go to her concert. And for being the most popular singer in the US ATM, the ticket price was pretty reasonable too. So, what we gonna do with all of her money? Under your proposal I see a few options:

+ Sorry miss Swift, since you're capped out at 500k a year, that's what you gonna keep, we will be taking that 39.5 to 49.5 million for socialist cause, thank you very much and have a nice day. I would call it highway robbery.
+ Or, we won't take your money from you. But we gonna hold to them and disperse 500k a year, kinda like winning the lottery. Now here's the problem: that means unless Swift fancy to hold another concert tour for free, there is no reason to do another one till she die, since it'll take roughly 100 years to disperse that money. So sorry fans, the tour was a once a life time opportunity!


- Yes, it's a high end example. But even if an good artist can get 2millions dollar for an album sale, that means there is no need to release a new album every 4 years. Also like I said most of these people have a lot of derivative income through investment, so basically here you also kill off that investment drive. Also, if the earning is cap at 500k, it also mean there is no reason to spend time and afford to organize a show that is worth more than that. So you'll kill off the creative there.

- Also referring to what I meant this system will also affect the bottom end negatively too, not just the top end it's targeting. For example, without a cap and value is freely assigned, you can decide "this is the best work on the market and it's worth 5mil currently", then you can give 2-4million for next best, and trickle down the scale. But when you say "this is the best work and it's capped at 500k", than the side effect here means you also cap any lesser work, because no one will pay 500k for the best work and then same amount for something inferior.

One of the most fatal flaws of most socialism system is it makes a very bad assumption: I see a person earning 2mil, if I cap it at 500k it means I can take away the extra 1.5mil for socialist cause. The problem is after the first time, you will not see that 1.5mil for the taking next time, that person you took the money from will mostly stop making money after that 500k. Yes, it can creates an equality at the beginning, but after you end up with a situation where everyone have less in the long run. The problem with these kind of proposal is that you're very focus in solving an acute problem, but when you take a step back and look at the wider pictures there are so many side effects that ripple through the system. ;)

And here is my unpopular opinion: you can not run a cap base on the "average". A person working 8h a day, earning good wage will be a happy and productive person, but will also be unlikely be the person that will propel society to the next level. Historically people who had taken the society to the next level be it in the matter of economy, technology or other area have always been exceptional individual putting in exceptional effort with exceptional talents. You can not put a cap on them, and even if you care, it would be hard-press to argue who has the "right" to do it, unless you're better than them. That's why it's not hard to see why people tend to think socialist are simply jealous people. Now I won't say I agree with that assessment, I'm just saying it's easy to see why people think like that. For me I often see the loudest advocators for socialism are those I will have the least amount of trust in handling money, since I often found their model severe lacking in the logical and sustainability department :)

My first reaction to any proposal: can you please sit down and show me your math on paper. :D
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Re: my economic thought experiment

Post by fiksal » Tue, 26. Feb 19, 17:23

@Mightysword
I have no math for this, since I am an engineer not an economist
And I won't argue with your points because I see your reasoning. I'll have to go back to drawing board to continue this, and maybe some math indeed.


However, before we wrap this up, do you have an opinion on the progressive tax?

Mightysword wrote:
Tue, 26. Feb 19, 02:26
- Yes, it's a high end example. But even if an good artist can get 2millions dollar for an album sale, that means there is no need to release a new album every 4 years. Also like I said most of these people have a lot of derivative income through investment, so basically here you also kill off that investment drive. Also, if the earning is cap at 500k, it also mean there is no reason to spend time and afford to organize a show that is worth more than that. So you'll kill off the creative there.
I understand an example, but in this specific case I am not sure I am sympathetic ... if Taylor Swift doesn't want to do a concert because it'll cost her in taxes too much, I think I'll not necessarily feed bad or feel anything.

But that's just me and my playlist of music that doesnt include too many of big bands.
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Re: my economic thought experiment

Post by Mightysword » Wed, 27. Feb 19, 00:45


I understand an example, but in this specific case I am not sure I am sympathetic ... if Taylor Swift doesn't want to do a concert because it'll cost her in taxes too much, I think I'll not necessarily feed bad or feel anything.
And you just examplified the problem that I was talking about. :D

It was unsure if you have the same mindset in this proposal as the typical people who usually come up with these things, but now I can confirm that you do. And that is:
The problem with these kind of proposal is that you're very focus in solving an acute problem, but when you take a step back and look at the wider pictures there are so many side effects that ripple through the system. ;)
And the reason is because you draw the proposal under a prejudice, grudging opinion that people with that kind of earning "is" a problem. I think another poster had challenged you on that point about how to define something as a "problem" (think it was Mork?). This is also why I emphasized a "natural" system, not one that tailor to fix a specific thing. Sympathetic? If you think that's what I was asking for on behalf of people like Swift, you totally missed the point, or the bigger picture. So to spell it out: let say Swift does one tour like that per year, and we'll give her a run of 10 years.

- First, it's a problem with the demand. If you are a fan, do you want to go to another concert, or if you had missed the previous, do you want another opportunity to go? If you have a favorite artist, do you want that artist to just produce one song, and never again? By taking the motivation and incentive for an artist to produce, you also in affect take away people's legitimate demand for their need. If an artisan's compensation is capped at 100 products, and the demand is 300, then it leaves 200 people not getting what they need "regardless" of you're sympathetic to the artisan or not. So by capping compensation, you THINK you only deny one specific target, while reality is you also deprived a lot more people as a side effect.

- Second, when you say you're not sympathetic to Swift, to me it clearly demonstrated you only focus on her (hence the prejudice), and because of that, you lost sight of the bigger issue. Like I said, Swift took home ~40million last year from her tour, and if we give her a 10 year run, that mean we're denying her an extra 360million over 10 years. Yes I understand, she already have 40mil, why should anyone care she can't earn another 360mil, woo woo cry me a river. But you missed out the other side of the equation: the revenue of the tour was 400million, so if Swift took home ~40mil for herself ... where do you think the other 360mil went? To put it shortly, it goes back to the "society", be it the taxmen or other participant of the economy. It's not about Swift not earning 360mil over 10 years, but by denying her that, you also eliminated 3.6 BILLIONS of output that would have gone into the economy. And again, too often time people focus on the short term gratification of denying the 360mil to the "evil high earner" and shoot themselves in the foot by burning that 3.6bil.

People with this kind of talent like Swift is an extremely valuable resource in any society. Any good system and society must be able to motivate these people to continuously produce and contribute. If you say "you don't care if these people can be arsed to do something" ... then I'm sorry, the plan is already shorted sighted at the basic level. It's the same for a teacher in the classroom, a foreman at the dockyard, a manager of a sport team or a general leading an army, saying you don't care if your best individuals can not be motivated just prove you're a bad leader. I only use Swift as an example because I think Art is the most neutral when it come to prejudice (as opposed to using a CEO as an example), but don't think this is something only limited to artist, you can find examples like Swift in every single field of society.

What I have been saying so far is not merely conjecture, they are historical fact, and given your background I believe you would be familiar to some of them. During the cold war era, the main problem that lead to the Soviet block collapse were simply the lack of motivation to produce. It's true back then, and it's still true for most modern communism these days (read Venezuela, Brazil, Argentina ...etc...). The demand is always there, often time the resource is not what lacking, but one constant that remain in short supply is "motivation" to produce, that's why they all end up in one common crisis: commodities shortage. Looking further back beyond the time when all of this capitalism/communism conversation even exist and you'll see the same pattern. During the Medieval age craftsmen/artist or any producers society were operating on an obligatory basic to the ruling class. The Renaissance era saw a flourish in all fields be it science, art, politic, culture ...etc... because when these producers were appreciated more under patronage system. Wikipidia has a pretty good quote on why Florence was considered to be the birth place of the Renaissance era.
Cultural conditions in Florence

It has long been a matter of debate why the Renaissance began in Florence, and not elsewhere in Italy. Scholars have noted several features unique to Florentine cultural life that may have caused such a cultural movement. Many have emphasized the role played by the Medici, a banking family and later ducal ruling house, in patronizing and stimulating the arts.Lorenzo de' Medici (1449–1492) was the catalyst for an enormous amount of arts patronage, encouraging his countrymen to commission works from the leading artists of Florence , including Leonardo da Vinci, Sandro Botticelli, and Michelangelo Buonarroti.[6] Works by Neri di Bicci, Botticelli, da Vinci and Filippino Lippi had been commissioned additionally by the convent di San Donato agli Scopeti of the Augustinians order in Florence.[42]

The Renaissance was certainly underway before Lorenzo de' Medici came to power – indeed, before the Medici family itself achieved hegemony in Florentine society. Some historians have postulated that Florence was the birthplace of the Renaissance as a result of luck, i.e. because "Great Men" were born there by chance:[43] Leonardo da Vinci, Botticelli and Michelangelo were all born in Tuscany. Arguing that such chance seems improbable, other historians have contended that these "Great Men" were only able to rise to prominence because of the prevailing cultural conditions at the time.[44]

There is also another problem that was well documented during the Soviet era, and I know it exist everywhere in the Soviet block be it China, Vietnam, Korea, or Russia. I don't know the English word for it, so a roughly translated from my own is "bleeding gray matter and muscle". It referred to the phenomenon where we kept losing talented individual to the Western block. Sending a scientist to an international conference, an athlete to an international competition, or a singer to an summit and half of the time they would find a way to stay out and not coming back. If you think people like Swift will just sit on that first 40mil and get fat for the rest of her life, you'll be mistaken. They will just simple pack up and go to a place where their talents can be utilized and appropriately compensate. So no, she will still earn that 360mil in the next 10 years, the only things you did would be denying your own country the access to the 3.6bil addon that could have been yours. ;)


I'm closing this post by re-emphasize the danger of having a prejudice and grudging perception when working on something a solution. And it's true for any kind of problem really. You can not be fighting for racial equality and believe it's a sin to be white. You can not be fighting for gender equality and believe all men are pig. Sure, those prejudice might give you some immediate effect on the counter, but they will never be sustainable. Because they narrow your view, and make you lose sight of the bigger picture. You solved it for the short term, but you actually adding to it over the long term :)
Reading comprehension is hard.
Reading with prejudice makes comprehension harder.

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Re: my economic thought experiment

Post by fiksal » Wed, 27. Feb 19, 04:12

And here I fell prey to the "Post a reply > Write it, Submit > Please Login again > Your post is now blank" feature.

Take 2. This might be shorter...
Mightysword wrote:
Wed, 27. Feb 19, 00:45
And you just examplified the problem that I was talking about. :D
I think you are reading too much into my personal opinion of Swift and what I see as her value. Lets concentrate on the economics of her concerts.
Mightysword wrote:
Wed, 27. Feb 19, 00:45
It's not about Swift not earning 360mil over 10 years, but by denying her that, you also eliminated 3.6 BILLIONS of output that would have gone into the economy. And again, too often time people focus on the short term gratification of denying the 360mil to the "evil high earner" and shoot themselves in the foot by burning that 3.6bil.
That's an economics reason.

I want to remind you that I've previous amended the plan to a version of progressive tax. I've not looked into numbers, but for the sake of keeping this discussion going, lets say it's higher than the one right now in US.


Swift's tax money, and what she spends indeed feed the economy. While what she spends is more localized. What she puts into taxes will be directed (hopefully) to where needed.


Her quitting the music scene can play out the same way in just a couple variations of the two concepts discussed so far.

- the paycheck cap is too low for her (lets say the same $500k), she quits.
- she stays, if it's 36million and not taxed.

- the progressive tax is too high for her tax bracket, she quits.
- she stays, if it's not, and also not taxed.


I think I'll get back to the idea of taxing.

Mightysword wrote:
Wed, 27. Feb 19, 00:45
People with this kind of talent like Swift is an extremely valuable resource in any society. Any good system and society must be able to motivate these people to continuously produce and contribute.
Just to be clear, we recognize her worth because of being a high earner, not because of quality music? (Because we in general as a society and our governments dont recognize musicians much except for selected few)

So, I agree, the taxes she pays are indeed worthy. It was a bit hasty for me to imply that the taxes arent valuable, if I did.
the main problem that lead to the Soviet block collapse were simply the lack of motivation to produce
I cant say that, certainly not any accepted reason that I know of.
I am familiar with a similar reason. But a one that was pointed to me as a more significant reason - is mismanaged production and lack of competition.
And specifically, building large and expensive factories that could out produce a lot of others on a huge scale, which had little reason to innovate, having no competition. Except for innovation in the volume and speed of production. That however cant last forever.

Mightysword wrote:
Wed, 27. Feb 19, 00:45

I'm closing this post by re-emphasize the danger of having a prejudice and grudging perception when working on something a solution.
I'll look into it and work on it ;)



Next amended plan then. Keeping taxes in mind.

- Define a bracket that pays no income tax.

- Put it as well somewhere above top-middle class (in US). Possibly one for all, but can be looked at per region.
- I'd also look into the same bracket not paying a sales tax as well, as that specific tax makes more difference to the lower income people than higher.

- Tax incentives if really needed can be done via grants.

- Calculate the tax difference, and adjust the tax brackets of everyone above to the new value.
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