> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
This is a weird one. I don't think the problem with rich people is that they consume luxury goods. That's actually a good thing overall. Let them have their megayachts, megacars, golden toilets, etc. Someone has to build those.
I think the problem is when they use their unlimited funds to purchase stuff they shouldn't own. Newspapers, TV stations, social media, etc. That kind of power, often flaunted openly (see the bezos scandal when they literally wrote something along the lines of "if you screw with us we have wapo at our disposal") is not something that should be in the hands of one person. Or a family. That's way way way more dangerous to society than them snorting caviar off of models' bodies, or eat gold leaf you won't believe they're not burgers with truffles on top.
Bingo. The guy has a lot of things right, but I was floored when I read "progressive consumption tax" coming from an otherwise well written essay. Consumption taxes are regressive, and no amount of progressive lip stick will make them redistribute sufficiently to achieve the effect he wants.
I would say that any tax reform that fails to reduce asset concentration will completely fail to reduce economic inequality. Let Bezos have his newspaper, if that's all he owns. Let him game the system to evade income tax. Fine. The problem is when a very small group of people own all the newspapers plus their original business empires plus their privately owned social media companies, plus their funded PACs, their psyops, etc.
All assets must be taxed directly to such an extent that concentrated assets are redistributed naturally through market forces. Tax wealth, not work.
That isn’t what he is saying. He is saying that tax reform needs to be progressive, meaning it hits rich people more, and it hits them when they spend not when they earn.
A progressive tax will tax them more when they buy luxury items and thus make them buy fewer luxury items.
> meaning it hits rich people more, and it hits them when they spend not when they earn.
The parent of your comment made a pretty good case precisely against this. And it didn't talk about all spending, only about luxury one as exemplified by the following, rather misleading, quote from the OP:
>> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
It's not a good argument at all. "Earning" is a socially productive activity, far more so than directing resources towards the making of a huge luxury yacht for private consumption (or similar kinds of luxury spending). There really isn't any good argument for taxing earnings or saved/invested assets per se, as opposed to consumption.
>tax reform needs to be progressive, meaning it hits rich people more, and it hits them when they spend not when they earn.
This misses the point. It needs to hit them when they own not when they spend.
>A progressive tax will tax them more when they buy luxury items
Which still wont be progressive it's the yield bearing assets Jeff Bezos buys which are the main problem not the fancy candlesticks he decorates his house with.
I'm not sure megayachts have no economic downside. They create some jobs, certainly, but if the golden goose is catering to the whims of eccentric billionaires, then collectively we're losing smart and talented people who could be building things like better public transportation, or more reliable and sustainable infrastructure.
And I would wonder if overpriced luxury items in general are detrimental to the economy. It feels to simple me that transacting items with subjective added values above costs shrinks economy a bit.
To me it feels that overpriced items cause less trickle downs if they cost less to make: the delta would go into an oblivion. Trickle downs don't appear to be real, but less than already immeasurable sounds bad.
I disagree with this. Some of the more extravagant engineering prowess has divested from insane eccentric billionaires
Like the other commenter said the larger issue is the monopolization (see groq x nvidia for a glaring example) and other forms of rent seeking that clamp down on market fairness and efficiency
Mega yachts are not airplanes, computers, software or some other cutting edge or basic research technology. It's a boat that other then adding starlink hasn't meaningfully changed for decades.
Mega yachts are designed using CAD software, the prototypes are milled or even sometimes now 3d printed out of huge foam panel. Advanced hulls are constructed from a number of materials and methods. All of these things required bespoke skilled labor that cannot be replaced with robots or AI.
I think mega yachts are stupid, that doesn't mean they shouldn't exist and to act like they are the same as even 20 years ago is willfully ignorant
It feels like the quality of our eccentric billionaires has gone downhill.
We've all seen the comic where the villian tells Spider-Man "I don't want to cure cancer, I want to turn people into dinosaurs." I would respect that a hell of a lot more than whatever Bezos/Musk/Zuckerberg/etc are doing with their money. Hell, I'd settle for Howard Hughes levels of madness-mixed-with-genius.
Everyone just buys the same Billionaire Starter Pack these days consisting of ugly yachts and mansions, and the obligatory rocket company. The change is just spent on aggressive hoard-management and political machinations. Is their heart even in any of those ventures? When they wake up, so they say "I spent the first 40 years of my life selling my soul so I can do this, and it was so worth it?"
I know if you dropped twelve figures in my lap, I'd be saying things like "who can I hire to help me engineer an army of superintelligent dragon creatures" or "let's level Peoria, Arizona and rebuild it as a car-free zone with the density of midtown Mahnattan", not "let's buy Yahoo, because all the other depressing media outlets are spoken for already."
I don't think the lack of talent is preventing us from having good public transportation. Diverting smart folks from yacht building will not eliminate the problems with unions, zoning, or crime to name a few of the issues. These are difficult problems because people and their different desires are involved.
One city has a millionaire who builds a yacht for 100M dollars in a local shipyard and uses it for holidays. The neighbor city has a millionaire who spends 100M dollars to build 10 ferries he gifts to the city.
The general population is clearly better off in the second case, even if it does not matter for the workers in the shipyard.
That seems very lucky of the second city. Let's hope we get lucky with some generous billionaires soon!
I don't claim that regulations are simple, and incentives couldn't be created to result in infrastructure investment by the wealthy... but I won't hold my breath.
Cute gambit to talk about ferries, the one mode of transport that doesn't have insane land-use debates. (Although they do need waterfront property on both ends.) I'll give you a point for that one.
But let's be serious. Ferries have a very limited use in only a few cities. Even then, the appeal is limited because they're relatively slow.
I submit that the most common result of replacing one yacht with $100m of public transit spending is that the unions and the bureaucracy will eat up the $100m in a few minutes.
The theory here is that diverting more smart people into "good" careers like urban planning will be great. But if we look at the last 100 years in the United States, the rise of careers like urban planning have been correlated with an explosion in construction costs.
Yet back in the bad old days when there weren't urban planning degrees and only a few effete twits went to college, private capitalism was able to build two big urban transit systems in NYC. No book smart people. Just sandhogs and profit motive. How much did it cost to add just a few stops to the NYC subway over the last two decades?
Yes, when you don't care about the environment or safety regulations or displacing people poorer than you, infrastructure is a very easy problem to solve. Fortunately for you, we seem to be heading back towards that way of thinking.
Also, I live near a city that had one of those ridiculous, way over budget projects where sure, some money was funneled to unions and bureaucracy or whatever evil monsters you've concocted here. No amount of billionaire pet projects could match the amount of good it did across the number of people it affected. Sometimes the inefficiencies of human cooperation are greased with money, and that's perfectly fine.
Yes, sometimes that's indeed an opportunity cost. But it's also a catalyst for making things possible or affordable that otherwise wouldn't be.
Many technological progress are first explored in niche and luxury segments and only later fully developed for the masses with mass utility. Space exploration, motor racing sports, military, .... they all can seem like wasteful enterprises and yet a lot of new technologies come from these areas
Do we think news outlets owned by the government or the “warm collective” would be any better at unbiased reporting or not disseminating fake news or unjust influence? Is there any organization or entity structure today that is trustworthy enough to even handle those sorts of organizations. It appears fraud is rampant in our government, so why trust them any more than some random dude? Frankly it seems the odds might be better with one random guy not being on the take.
I think the odds are better if it's not a random guy who also already has a bunch of power (e.g. Bezos with his considerable influence buying up and weaponizing WaPo). I personally think that consolidation of power is a reasonable thing to prevent. I'm not sure how you could block someone like Zuckerberg who started his own new media, other than the government, which as you pointed out has its own issues.
Historically news outlet run as public service (with sufficient guardrails for autonomy) such as the BBC, PBS, France Television, Arte (naming only those I know well) have produce much better news coverage than the privately owned ones.
OTOH the concept of independent public institution and general checks and balances seems to have been entirely forgotten, so maybe that's not a solution for 21st century.
An alternative would be communally owned media (50/50 by readership and journalists), with simple direct tax incentive to fund them (equal amounts of $ per person)
Having first hand experience of all of the named public services, I beg to differ heavily.
These corporations tend to be heavily left-leaning, with no real guardrails preventing this. The consequence is pretty biased coverage, under the guise of a "trust-us, we are here for the greater good".
Look at the handling of Middle-East by BBC, the Zucman tax at France Television, or the current allegations of fraud in some communities in the US.
My current take is that it is really hard to get a fair unbiased coverage, unless you actually state that you will strive to hire and promote both sides. If these corporations had to publish the composition/promotion/pay of their newsroom across the political spectrum (as they do for example by gender), you may start to have fair unbiased coverage. But many journalists working there see it as their job to describe "not the reality as it happens, but rather as it ought to be" (to quote the CEO of France Television). We should acknowledge that people are biased, and measure the balance of biases rather than assert there is no bias because they serve the greater good.
Public interest stories are left-leaning only in that they tend to oppose the wielders of centralized power, and centralized power is generally a right-leaning construct.
That's objectively true. They're center-left or center-right. They're certainly not democratic socialists (who are the barest left of the left). The parent is complaining that there is some objectivity at all in liberal/center-right media, that it isn't calling for pure repression by force of middle eastern people and recognizes they sometimes suffer from aggression in ways that are understandable to human beings.
None of these outlets object to this repression being meted out, they only care that it is done in a way that is respectable. A left wing take would criticize the imperialist nature of these wars of aggression and genocide and examine the economic, class, and other social dimensions that cause these events to occur and call for a social revolution via means that are electoral or otherwise. A left-leaning liberal take would say something like "man it's crazy they don't respect the UN charter or even US laws". This should give some objective sense for how rightward our discourse has been drawn.
I'll be honest, I'm not an expert on this, and I don't have a perfect solution. I just think we should try to do something, even if it's not perfect.
There are some professions with codes of conduct. Some are internal, some ar legislated (i.e. fiduciary duty for lawyers, financial advisors, etc). We also have some concepts like public utility and public interest. Maybe we should look there (again, ask the experts I'm sure there are people who study this for a living). Maybe slowly bring in duties for "public interest" related fields. Maybe at the management level. Maybe come up with ownership structures that decouple power from financial incentives (a la voting shares vs. normal shares) and impose them for such businesses.
I fully agree with you that gov ownership of media would be a disaster. I'm not proposing that in any way. Just ... better ways to do it than we do today.
The easiest surefire way to lift the bottom of the economy right now is to go on a mass home building spree.
If people had their rents cut in half, it would solve most other money problems they complain about (shy of those who will just inflate their lives into being money constrained again).
Of course this will come mostly at the expense of regular middle-class homeowners, who will see the enormous paper gains of their properties in the last 5-10 years be decimated. Red or Blue, I don't care who, hates losing money and will emphatically vote against this happening.
Indeed. If you destroy housing costs [1], medical costs with single payer [2], and energy costs with renewables [3], that gets you to Abundance everyone so desperately opines about. But too much of the country is driven by the inefficiency (rent seeking, broadly speaking), that is the US system and the economy. That is all the country builds anymore. We collectively know what the foundational problems are, there is simply no political will to course correct. Increased supply will disempower the extraction system. AI replaces jobs people need to survive, but does not fix anything I've enumerated; in some cases, it even makes the problem worse (algorithmic price fixing [RealPage] and price discrimination [Instacart], for example).
I would like to imagine a world with enough housing for every human, affordable, accessible medical care for all, and cheap clean energy deployed at scale. When is AI going to deliver that?
What would people spend that excess on if they had it? Adam Smith observed that most people spent it in nicer houses. While I think there is a limit I think for most we would turn around an spend that extra on a nicer house and return to living paycheck to paycheck hoping we have enough to make the end of the month after paying for it. Nicer cars would likely take a good portion of the difference as well.
> What would people spend that excess on if they had it?
Humans do not exist to be extracted from for their basic needs imho, which is how the current system is configured, so this is not an excuse to keep extraction systems in place. Give humans a 4 day work week if the argument is "what else would you spend this money on?" with the excess. Humans do not exist for the profits of others, again, imho. I understand others have different opinions on this topic.
They don't, but they voluntarily take the risk trade-off. If you are the profit of someone else, it also means you are the liability of someone else.
Working for someone else has become so prevalent and so much the norm, that people have completely lost sight of the downsides of working for yourself.
It's not at all surprising that people opt for steady paycheck over erractic income and full liability for their mistakes/short-comings (despite the allure of fully reaping the upside). I've seen dudes making $40k/yr destroy $500k of product and still get their paycheck the following week.
What you think others should do it not relevant. The question is what will they do.
If someone wants a 5 day work week and a larger house instead of a 4 day work week who are you to force them to do otherwise? It is perfectly possible to get a 2 or 3 day work week if you want - most jobs won't offer it, but the possibility exists if you are willing for the sacrifices - most are not (though it isn't clear if they even realize the option exist)
If most jobs won't offer it, that is a problem to fix. These are just arbitrary rules, after all (in the US, the official per week work hours codified in federal statute). They can be changed. It is not an option if most cannot obtain it, or it is not easy to obtain it. We have different mental models on the topic, that's all.
The main token in POSWID seems to apply to reasonably mature instances of S for which several passes have been taken through the build loop. Once someone has edited the thing, it is reasonable to assume that the outputs are the fruits of the intentions.
> regular middle-class homeowners, who will see the enormous paper gains of their properties
As one of those homeowners, I keep hoping that housing values go down because I'm taxed on the value of my home every year, and that tax burden is crushing me. My property taxes are 2% of the (appraised) value of my house. The fact that its worth twice what I paid for it is meaningless to me when the tax bill comes - I can't really sell it and cash out the 'investment' because I need somewhere to live.
Why "can't"? You can always move out to somewhere cheaper and pocket the difference. Besides, when property tax rates are lower, housing prices are higher to begin with. It's a wash for anyone except those property owners who were lucky to get grandfathered into cheaper ownership when the tax rate fell.
Have you looked around? We actually have plenty of "housing", however most do not meet the qualities/criteria that make them desirable enough to be "homes".
Lower density, family and pet friendly. You know, the kinds of places that landlords live in. Not the places they are trying to force on others as "inevitable".
No. Mass building (while not touching inequality) will NOT solve the issue.
It’s easy to see why: there already IS enough housing around for everybody. If there wasn’t, you would see a massive amount of homeless people. And even in the US where that might be the case - the amount of empty real estate is larger than the amount of homeless people. You could easily house them if you wanted. It’s a question of distribution.
The other reason to see why this doesn’t work is: there is no country that managed to do it. Miraculously, the housing crisis has hit all (western) countries on the planet. All of them try to build their way out of it, no one succeeds. Why?
If you just mass build, the new units will be bought immediately by the rich, and the working people will have no housing still.
> It’s easy to see why: there already IS enough housing around for everybody.
Maybe in Detroit this statement is true, or a ghost town in the middle of nowhere. The fact that housing costs money mostly anywhere else is trivially evidence that there isn't enough of it to go around.
> Miraculously, the housing crisis has hit all (western) countries on the planet. All of them try to build their way out of it, no one succeeds. Why?
Very few western countries are trying to "build their way out" in a meaningful sense. Folks aren't buying that housing en masse for no reason; they just expect it to become even scarcer and more expensive in the future. If you fail to build any more, that becomes a self-fulfilling prophecy.
Most western countries have not tried. They prefer a capitalist let-the-market-decide approach, and also have tended not to cut down the mountains of red tape they've associated with building.
The handful of countries that have really tried, have succeeded. Jordan and Finland are the two I'm aware of.
If we had reasonable safety nets for healthcare, retirement, and housing I wouldn't give a flying fart about my home value... but right now it's the only safety net I have.
You are missing the bigger problem, healthcare spending. We as a society now spend more on that than our housing, and the gulf between the two widens every year.
We should do what you say, but we should also focus on pumping out more doctors, etc.
I think the sad thing is its already massively overvalued and the only thing propping up the market is the ability to get more mortgages for longer creating servitude and debt bondage like you have never seen.
The high level question of wealth concentration from new technology is an interesting question (and probably could have been just 3 sentences, since it is unanswered).
The rest of the article has some easy to read anecdotes, but it's hard to know if they are at relevant/accurate. E.g. common mistake (arguably) that I see a lot:
> In 1990, America enacted a tax on luxury consumption of goods such as expensive cars, yachts, furs and jewelry. A few years later, the tax was repealed by a coalition that included Democratic politicians worried about job loss in the yacht building industry. It’s hard to think of a more perfect example of muddled thinking about distribution. Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
Mega-yachts are money pits. A rich person purchasing a mega-yacht is probably the fastest way to redistribute a monetary supply. Taxing it has some benefit, but reduces the incentive to buy mega-yacht... Now, monetary supply and productivity/wealth are not exactly the same thing, but this seems like a basic error.
I think the whole point was that mega-yachts are money (or, from the perspective of the employee, effort) pits. Those employed shipbuilders and wait staff aren't building cruise ships and they aren't serving meals on them. The time and effort that went into those tasks will never reappear.
The median person is better off if the rich either invest that money, lose it to tax, or give it to charity. The money/effort gets redirected away from mega-yachts and other consumption and it has to go somewhere.
That money often doesn't go to someplace the common person would fine more useful. A yacht made and stored outside the US is easy to hide from US taxes if you want one, if it is a status symbol you can find plenty of others, some of which are easy to make elsewhere thus moving money out of the US.
A post about mis-generalization seems to make a huge mis-generalization, seemingly from a lack of diversity.
The author recognizes that laundromats exist, but doesn't believe that washing machines are a luxury good (his yacht example of 60% owned by the top 1% likely applies somewhere around 60% to the top 30%). This indicates the author generalizes that high density living with shared appliances don't exist or apply to a large part of the population (that density doesn't shift statistics).
A few thoughts, instead of taking 340m people, you need to account for 2% homelessness, another 8% as housing insecure, 30%+ as high density possibly sharing at the apartment/condo building or laundromat level. A small upper 1% that outsource to services.
The infamous Mitt Romney, 47% of Americans don't pay income tax quote can be really shocking when you start thinking about the average American, and the wages that they earn compared to a higher income segment you might be in.
Laundromats exist, but there are 100 million according to my web search which puts his estimate in the right area even if he is off by 30 million.
Most Americans would not call a washing machine a luxury good. Even in much poorer Mexico there are a lot of families living on $100/week that have a washing machine - they are an affordably luxury to many poor people.
Per a quick search, that's 0.2%, not 2%. Not sure about what "housing insecure" means, so that's harder to check. Also, that is just a one-night snapshot, and many of those won't be homeless if you check back later.
> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
While this is essentially tautological, I'm not sure you can practically tax the majority of luxury consumption. Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager)[1]. All of those differences are luxuries, and many of them are informal and thus hard to tax. If we were to successfully tax all the formal luxuries (which in and of itself becomes legislative whack-a-mole), the wealthy will have a strong incentive to shift much of their luxury consumption to informal luxuries.
Plus, I find all of the focusing on "wealth tax" and "luxury tax" and such rather mystifying when we have an extremely regressive income tax in the US. The low tax rate for long-term unearned income in the US, combined with the fact that borrowing against assets does not realize any of the gains, makes effective tax rates for the 99.9 percentile much lower than the 90th percentile.
It is possible to eliminate dynastic wealth just by ensuring the losses due to inflation and taxes exceeds investment returns at the top tax bracket.
1: Or the difference in your kid applying to a college with your name on one of the buildings versus someone else's kid applying to that school
> Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager). All of those differences are luxuries, and many of them are informal and thus hard to tax.
But businesses are incented to remove the most expensive disparities, lest they impact the company's market performance. Or maybe they keep the different treatment but expect to pay the CEO less as compensation. Either way it's win-win.
> It is possible to eliminate dynastic wealth ...
Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place (except that every once in a while quite a bit of it gets donated to charity in exchange for a very, very expensive name placard on a building, or something). To the extent that this reflects a spreading of good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place.
> Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place. To the extent that this reflects good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place.
Wealth generates income that is used to grow more wealth and spend the balance on luxuries. Reduce the ability for it to do that and you reduce luxury consumption!
Why assume that luxury consumption is the only possible use of that income? That just doesn't seem to reflect the facts. It's not like many old-money folks have billion-dollar yachts or private aircraft, or the other kinds of luxury spending that seem to be the focus here. Many of them are used to leading incredibly modest lives.
Also, it takes meaningful skill or an appetite for risky ventures (or a combination of both) to generate substantial income from that accumulated wealth - passive return rates are extremely low. That reflects socially productive endeavors we don't want to tax.
> The key to higher living standards for average people is to produce lots more output, which requires more automation.
Building and deploying that automation requires capital. As a result, it's largely the people who control that capital who benefit from it, not the individual workers whose productivity is increased by it.
There were people who added value to a manufacturing process by being highly skilled welders (earning $30/hr) who can push MIG wire at 30 inches per minute. On a good day, they actually average 20 inches per minute OEE because they also need to load and unload the fixture, take lunch breaks, and so on. Those welders become (or are replaced by) weld-jig-operators, who can load a buffer of incoming parts, unload a buffer of completed parts, and replace emptied spools of wire, clean up the work area, and so on, while the $400k weld cell with a trio of ArcMate robots pushes 80 inches of wire per minute.
Yes, that's a 4x productivity gain, but does the welder now earn $120 hour? No, the new operator now gets a pay cut back to $20/hr because you can train a replacement in a week (unlike a welder, who needs years of practice to manipulate a torch that skillfully). Meanwhile, the owner of the company profits at ~$100/hr, recoups their big capital investment after a year, and rakes in the profits after that to buy another yacht, or maybe a newspaper.
I agree that the worker becoming more productive due to some capital equipment generally won't see any benefit from doing so (unless it requires special skills to operate). But I think the argument is that the end consumer will eventually benefit from the increased productivity.
In your example, yes, the factory owner can take their $100/hr of profit. But among the various factories, some owner might take $25 of that profit and instead undercut their competition to grow their order book. Other factories respond in kind, and the consumer is getting cheaper products.
Guess what, this is a huge gain for the unskilled worker who can get trained in a week for that formerly high-skilled job. And then the capital owners are hugely incented to expand production and hire all those unskilled workers, pushing the wage floor up in the process.
>P.S. Can you even imagine 130 million washing machines?
>...more than three times around the Earth on the equator...
Nah, that's the wrong way to go about it. The total length of your blood vessels would also circle the earth twice, but I'm sure you'd prefer them to stay safely inside your body.
If each washer is 3 feet on a side, that's 6 square feet. You could easily stack them 4 high with an ordinary forklift. So that's around 7 square miles, or just 7 sections of a standard 36 section survey township. Where I live, there's enough farmland to fit all of them within a 2 mile radius, without disrupting much (well, unless you're a farmer). You'd nearly be able to fit all the dryers too.
Productivity will go up, competition will go up, profits will go down, unemployment will go up, wages will go down, a crisis will occur, consolidations and monopolies will emerge, hyper inequality will then break a system incapable of compromise. But sure, there will be a lot of washing machines.
There is a more feasible future IMO that paints AI as the washing machine, calculator, computer, spreadsheet, automation, etc. Jobs AI can complete don’t lead to people getting let go, but rather those people sit on top of the AI who can do their job much better (sometimes at larger scale, sometimes not). Better outputs for the same cost (well wage+AI costs) -> more purchasing power, more efficient business, etc.
I don’t know if this is how AI will go, but this exact thing happened to me with deep learning. I did stupid math to optimize algos in 2012, but in 2022 deep learning was 100x better than me. I just babysat the AI, as it (and llms) still can’t talk to clients, understand business/culturual nuances, navigate an org, politic, innovate, etc
Money is just a proxy for value add. When automation replaces the labor, the only remaining value add may be withholding violence. I hope we don't get there
Most Americans have space to hang clothes. They don't use it, but the space exist. Sometimes it is illegal to use that space to hang clothes, but they wouldn't even if the laws changed.
>>recall that central LA currently lacks the large stock of high-rise apartments that you see in cities like New York and Chicago.
The author entirely overlooks that NYC and Chicago are not in earthquake-prone areas and LA is right next to a major geologic fault system. Yes, skyscrapers can be safely built to withstand earthquakes, but it tends to be at least expensive, which is counter to solving affordability issues.
>>I favor a steeply progressive consumption tax.
This is generally pointing in the right direction, but a progressive transaction tax on every transaction, including finance and investments would be far better. Easier to track, harder to evade, far less intrusive into peoples' lives required by income tax. and the rate and difference between rates would be so low that structuring deals to 'optimize' taxation brackets would be pointless.
Just the volume of Equities + TRACE fixed income/structured + munis + real estate is over $200Trillion. A mere 3% tax on those would put the $6T US budget in large surplus. Add $1.7 Quadrillion of ovrerall payments and a 0.3% tax on transactions (yes, $3 per $1000) would also put the US budget in surplus. Make it progressive by setting tax rate tables based on transaction size, e.g., transaction <$10=0.01, <$100=0.1%, <$10k=0.2%, <$100k=0.3%, <$1MM=0.4%, =>$1MM=0.5% (plus big penalties for 'structuring' transactions to lower brackets).
Sky scrappers are expensive. A single story building is the cheapest thing you can build anywhere - only when land is expensive is it worth going up instead of out. There is value in density so we build skyscrapers anyway, but for nobody is it the most economical way to get square feet.
Plus, you are looking at it purely from a construction cost of the building point of view. If you build more densely, you don't need as many roads and other services, which also cost money, and once you have enough density, agglomeration means that it's economical to have local businesses nearby, fewer people need cars etc.
Roads are cheap. I know we spend billions on them, but they are still cheap compared to adding another floor.
I'm not arguing with your other points. Density is often worth the monetary costs, but don't try to pretend it isn't more expensive. (Indeed I would value the time density can save high, but there is no objective way to value a large part of my time)
A "high-rise" is anything over 6 stories; they aren't skyscrapers. The argument generally is for upzoning, not for setting height records, and that argument isn't impacted by seismology.
If we put a $10k tax on beards, that's $600 billion right there!
What's that, people might change their behaviour in response to it, in possibly unintended and negative ways? Nah we can just hand wave that away, who needs liquidity or investment.
So your claim is eliminating the massive overhead and personal/corporate intrusion of income tax will have no effect, benefits, or positive behavior change in response?
And on top of that a $5000 difference in a $1,000,000 transaction is do onerous that it will kill liquidity?
Yikes! Maybe run some numbers before posting?
Seriously, at any wealth level I'd trade income tax for a pennies-on-$1000 transaction tax any day.
Yes. Transaction taxes are a huge incentive for assets to stay put, which is quite inefficient. Income/consumption taxes are a burden on new production, but let you trade existing assets freely so as to direct them towards their highest and best use. That's usually a better arrangement, though of course less tax is preferable to more other things being equal.
>>Transaction taxes are a huge incentive for assets to stay put
I'm sure that is true at high rates. But we can look at several scenarios and see how sensitive people actually are to a transaction tax.
But have you ever bought or sold a house? In most states there is a Real Estate transfer tax, which is essentially the same thing as I'm proposing for all transactions. These range from zero in TX and WY up to 5%. In Massachusetts it is $4.28/$1000 of valuation or 0.428% [0], while in adjacent New Hampshire it is over 3X the rate at $1.50/$100 or 1.5% [1]. I've lived in one state or the other for several decades, bought and sold houses in both, and been adjacent to friends/family buying/selling there. Yet I have NEVER heard even a single word in any discussion about hesitating to make a transaction on either side because of the transfer tax, or any difference in rates. I've never even read of anyone expressing any such hesitation, or heard of anyone even expressing theoretical hesitation.
Stockbroker fees in the 1990s were in the $40-$100/trade or /100 shares. So with a mean price of a DJI share of ~$56, a $70 fee would be a rate of 1.25% for a round lot. But to buy 20 shares, the $70/trade would be $6.25. These fees did not slow down investing and any significant investor, but they certainly prevented day-trading of small lots, which became more prevalent after fees went to zero.
Similarly, the common practice in auctions for antiques, estate sales, or industrial goods is to charge a "buyers' premium", which is basically the income for the auctioneer, behaving exactly as a transfer tax. You win the auction at $100, and the buyers' premium is 18%, so you pay $118. These premiums were typically closer to 10-12% a few decades ago and are now in the 18-20% range. At the newer higher rates, I have heard people express hesitation when considering bidding on an item they don't much care about.
In municipalities which have both state and local sales taxes like LA total 9.5% and NYC at 8.875%, people complain a lot, but it doesn't stop them buying, but may shift buying at the borders. Similarly, in Massachusetts there is a 6.25% sales tax but zero in neighboring New Hampshire, there are a surplus of stores right on the NH side of the border people nearby will drive to NH to purchase large items but surprisingly little; a wholesale club <15min south of an identical store across the border still does very strong volume of large TVs etc, with people not willing to bother driving another 15min to save 6.25%
So, yes, people are sensitive to significant fees approaching double digits. High-frequency traders would also be sensitive to low rates, but that is because they are in a high-transaction/low margin business of shaving pennies off every transaction, so that would be an issue for them, but if HFT disappeared it would be a net positive for the markets as they are basically front-running transactions and shaving profit from real investors.
But for most transactions, as long as the rates are sub-1%, a transaction tax will make zero practical difference, which is why the base needs to be across all transactions.
There are billions of computers, but only a few computers can run very large local LLMs.
So instead, imagine billions of laptops (or phones) available in store that have local LLMs installed which allows you to have intelligence-like chatbot features available with the equivalent performance of Claude Opus 4.5 or GPT-5 if not better and they are far smaller.
Thank you for telling us that efficient + performant multi-modal local AI models is the endgame; a bonus if they are smaller to fit in phones.
Centralized vs distributed feels like a largely orthogonal matter. E.g. phones are great at being clients, even for things which they could technically be the server for today, but they make pretty bad servers in terms of resource tradeoffs. Because of this, I think the endgame cares little about where the LLM runs as much as how much it costs for those devices to use one (which can be more than just money too - e.g. on phones it's battery, bandwidth, latency, privacy, or whatever else could be valued/scarce). That it's specifically on device is just one method of how to meet some of these attributes, not the exclusive method to use it.
Even as a techie tinkerer my dream is not that every device I have run its own LLM - it's that I can point them to where to find the LLM (and swap that at will). The dumber I can make my edges the more they can end up doing overall.
I'm skeptical of this. Users are not going to want to sacrifice on the quality or performance of the model for a warm fuzzy feeling about it running locally on their phone. Outside of hobbyists I can't imagine this really taking off for the same reason secure scuttlebutt never had a chance of beating Facebook.
The only exception I can imagine is very sensitive topics, AI girlfriends or maybe image processing
So, this whole analysis strikes me as the worst of "economic thought?" The first bit of failure here is "equating well-offness to output," e.g. something that can be measured by GDP.
Then it misses the other big deal, which is the utter weirdness caused by extreme on-paper wealth inequality, where the e.g. Elon Musk numbers reach levels of literal absurdity.
Money, in a sense, doesn't matter. It's "goods and services." The big question should be, does the way we do "money" effectively help everyone trade goods and services in a reasonable way. That's the only real path to "happiness."
>> A few billionaires might have additional vacation homes, but they are not going to consume a million homes, much less 10 million.
> Sumner is somehow unfamiliar with the concept of a landlord or vacant property investment.
I'm sure he is not unfamiliar with either...
Not sure what landlords have to do with anything since washing machines are often included as part of a rental (or the apartment doesn't have a washing machine, but what does that have to do with landlords?).
And vacant property investment is a small fraction of total property ownership in the US. It's more common that people have a vacation home and rent it out part of the year.
>> progressive consumption taxes
> When someone proposes one, let me know.
They have been proposed...many times. In fact, the US's system has elements of a progressive consumption tax already since people can put retirement savings in IRAs/401ks. What would make it a more complete progressive consumption tax would be to either raise the limits on contributions to these retirement accounts (and remove income limits), and also introduce accounts like these that are meant as more universal savings vehicles. This is preferred (in my view at least) to just cutting dividend and capital gains rates to 0% since that would benefit existing rich people.
Landlords provide a useful service for anyone who doesn't want to live in a house for a long time. There are pros and cons to renting vs buying. If you are against landlords you are also against anyone who buying a house is a bad decision.
Vacant property investment exists, but it is a small factor in all markets.
Presumably, the percentage of taxation is a function of the price of the item? You can have a different curve or base rate for different harmonization codes.
The word "consume" is important. Billionaires might own a million average family homes, but that's not the same thing as actually using the home. A normal family will eventually lease the house and use it, unless it's left vacant.
I'm not sure vacant property investment holds up in a world with radically higher numbers of houses getting built. The billionaires either stop investing and let house prices drop, or they keep investing until they run out of money, at which point they have no choice but to stop. This only holds up for houses themselves and not for land, but hey, you can solve that with a land tax.
> The whole point of being rich is to get away from every single human being that doesn’t have to be nice to you.
This is false. Most rich people don't want to get away from every single human. (if they did they can find plenty of places to backpack). They want to get away from a few crazy people who stalk them.
Whatever - I don't think many rich care about getting away from people in general. Most of them don't really care, and many of them like other people in general.
The point of being rich can be the luxuries you can buy, a point system, buying a better afterlife, or any of hundreds of motivations. I'm sure some care about getting away from other people, but to say that is the point is false.
That is a direct quote from the article, and thus cannot be a non-sequitor. It is used in reasoning and means the whole is standing on something false. You may decide the analysis is correct anyway, but it is fare to stop everything right there since there is a logic flaw.
> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
This is a weird one. I don't think the problem with rich people is that they consume luxury goods. That's actually a good thing overall. Let them have their megayachts, megacars, golden toilets, etc. Someone has to build those.
I think the problem is when they use their unlimited funds to purchase stuff they shouldn't own. Newspapers, TV stations, social media, etc. That kind of power, often flaunted openly (see the bezos scandal when they literally wrote something along the lines of "if you screw with us we have wapo at our disposal") is not something that should be in the hands of one person. Or a family. That's way way way more dangerous to society than them snorting caviar off of models' bodies, or eat gold leaf you won't believe they're not burgers with truffles on top.
Bingo. The guy has a lot of things right, but I was floored when I read "progressive consumption tax" coming from an otherwise well written essay. Consumption taxes are regressive, and no amount of progressive lip stick will make them redistribute sufficiently to achieve the effect he wants.
I would say that any tax reform that fails to reduce asset concentration will completely fail to reduce economic inequality. Let Bezos have his newspaper, if that's all he owns. Let him game the system to evade income tax. Fine. The problem is when a very small group of people own all the newspapers plus their original business empires plus their privately owned social media companies, plus their funded PACs, their psyops, etc.
All assets must be taxed directly to such an extent that concentrated assets are redistributed naturally through market forces. Tax wealth, not work.
That isn’t what he is saying. He is saying that tax reform needs to be progressive, meaning it hits rich people more, and it hits them when they spend not when they earn.
A progressive tax will tax them more when they buy luxury items and thus make them buy fewer luxury items.
> meaning it hits rich people more, and it hits them when they spend not when they earn.
The parent of your comment made a pretty good case precisely against this. And it didn't talk about all spending, only about luxury one as exemplified by the following, rather misleading, quote from the OP:
>> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
This is wrong and pointing it out is good.
It's not a good argument at all. "Earning" is a socially productive activity, far more so than directing resources towards the making of a huge luxury yacht for private consumption (or similar kinds of luxury spending). There really isn't any good argument for taxing earnings or saved/invested assets per se, as opposed to consumption.
>tax reform needs to be progressive, meaning it hits rich people more, and it hits them when they spend not when they earn.
This misses the point. It needs to hit them when they own not when they spend.
>A progressive tax will tax them more when they buy luxury items
Which still wont be progressive it's the yield bearing assets Jeff Bezos buys which are the main problem not the fancy candlesticks he decorates his house with.
I'm not sure megayachts have no economic downside. They create some jobs, certainly, but if the golden goose is catering to the whims of eccentric billionaires, then collectively we're losing smart and talented people who could be building things like better public transportation, or more reliable and sustainable infrastructure.
And I would wonder if overpriced luxury items in general are detrimental to the economy. It feels to simple me that transacting items with subjective added values above costs shrinks economy a bit.
To me it feels that overpriced items cause less trickle downs if they cost less to make: the delta would go into an oblivion. Trickle downs don't appear to be real, but less than already immeasurable sounds bad.
I disagree with this. Some of the more extravagant engineering prowess has divested from insane eccentric billionaires
Like the other commenter said the larger issue is the monopolization (see groq x nvidia for a glaring example) and other forms of rent seeking that clamp down on market fairness and efficiency
Mega yachts are not airplanes, computers, software or some other cutting edge or basic research technology. It's a boat that other then adding starlink hasn't meaningfully changed for decades.
Mega yachts are designed using CAD software, the prototypes are milled or even sometimes now 3d printed out of huge foam panel. Advanced hulls are constructed from a number of materials and methods. All of these things required bespoke skilled labor that cannot be replaced with robots or AI.
I think mega yachts are stupid, that doesn't mean they shouldn't exist and to act like they are the same as even 20 years ago is willfully ignorant
It feels like the quality of our eccentric billionaires has gone downhill.
We've all seen the comic where the villian tells Spider-Man "I don't want to cure cancer, I want to turn people into dinosaurs." I would respect that a hell of a lot more than whatever Bezos/Musk/Zuckerberg/etc are doing with their money. Hell, I'd settle for Howard Hughes levels of madness-mixed-with-genius.
Everyone just buys the same Billionaire Starter Pack these days consisting of ugly yachts and mansions, and the obligatory rocket company. The change is just spent on aggressive hoard-management and political machinations. Is their heart even in any of those ventures? When they wake up, so they say "I spent the first 40 years of my life selling my soul so I can do this, and it was so worth it?"
I know if you dropped twelve figures in my lap, I'd be saying things like "who can I hire to help me engineer an army of superintelligent dragon creatures" or "let's level Peoria, Arizona and rebuild it as a car-free zone with the density of midtown Mahnattan", not "let's buy Yahoo, because all the other depressing media outlets are spoken for already."
You're imagining a nonexistent problem.
Luxury yachts and public transit make approximately 0 talent impact on the world.
Building each is an extremely tiny industry.
These are also very average talent required jobs.
I don't think the lack of talent is preventing us from having good public transportation. Diverting smart folks from yacht building will not eliminate the problems with unions, zoning, or crime to name a few of the issues. These are difficult problems because people and their different desires are involved.
One city has a millionaire who builds a yacht for 100M dollars in a local shipyard and uses it for holidays. The neighbor city has a millionaire who spends 100M dollars to build 10 ferries he gifts to the city. The general population is clearly better off in the second case, even if it does not matter for the workers in the shipyard.
That seems very lucky of the second city. Let's hope we get lucky with some generous billionaires soon!
I don't claim that regulations are simple, and incentives couldn't be created to result in infrastructure investment by the wealthy... but I won't hold my breath.
Cute gambit to talk about ferries, the one mode of transport that doesn't have insane land-use debates. (Although they do need waterfront property on both ends.) I'll give you a point for that one.
But let's be serious. Ferries have a very limited use in only a few cities. Even then, the appeal is limited because they're relatively slow.
I submit that the most common result of replacing one yacht with $100m of public transit spending is that the unions and the bureaucracy will eat up the $100m in a few minutes.
The theory here is that diverting more smart people into "good" careers like urban planning will be great. But if we look at the last 100 years in the United States, the rise of careers like urban planning have been correlated with an explosion in construction costs.
Yet back in the bad old days when there weren't urban planning degrees and only a few effete twits went to college, private capitalism was able to build two big urban transit systems in NYC. No book smart people. Just sandhogs and profit motive. How much did it cost to add just a few stops to the NYC subway over the last two decades?
Yes, when you don't care about the environment or safety regulations or displacing people poorer than you, infrastructure is a very easy problem to solve. Fortunately for you, we seem to be heading back towards that way of thinking.
Also, I live near a city that had one of those ridiculous, way over budget projects where sure, some money was funneled to unions and bureaucracy or whatever evil monsters you've concocted here. No amount of billionaire pet projects could match the amount of good it did across the number of people it affected. Sometimes the inefficiencies of human cooperation are greased with money, and that's perfectly fine.
Is 75% of the country zoned SFH because of safety regulations or environmental reasons?
Why even make a distinction of category spend.
> Someone has to build those.
Well, yes? That means those "someones" are not building something else instead.
Yes, sometimes that's indeed an opportunity cost. But it's also a catalyst for making things possible or affordable that otherwise wouldn't be.
Many technological progress are first explored in niche and luxury segments and only later fully developed for the masses with mass utility. Space exploration, motor racing sports, military, .... they all can seem like wasteful enterprises and yet a lot of new technologies come from these areas
The whole idea is to make the rich people poorer, even if just a little.
The money taken from 1000 or 2000 rich people may be used for the rest of the 130000 ones
Do we think news outlets owned by the government or the “warm collective” would be any better at unbiased reporting or not disseminating fake news or unjust influence? Is there any organization or entity structure today that is trustworthy enough to even handle those sorts of organizations. It appears fraud is rampant in our government, so why trust them any more than some random dude? Frankly it seems the odds might be better with one random guy not being on the take.
I think the odds are better if it's not a random guy who also already has a bunch of power (e.g. Bezos with his considerable influence buying up and weaponizing WaPo). I personally think that consolidation of power is a reasonable thing to prevent. I'm not sure how you could block someone like Zuckerberg who started his own new media, other than the government, which as you pointed out has its own issues.
Historically news outlet run as public service (with sufficient guardrails for autonomy) such as the BBC, PBS, France Television, Arte (naming only those I know well) have produce much better news coverage than the privately owned ones.
OTOH the concept of independent public institution and general checks and balances seems to have been entirely forgotten, so maybe that's not a solution for 21st century.
An alternative would be communally owned media (50/50 by readership and journalists), with simple direct tax incentive to fund them (equal amounts of $ per person)
Having first hand experience of all of the named public services, I beg to differ heavily. These corporations tend to be heavily left-leaning, with no real guardrails preventing this. The consequence is pretty biased coverage, under the guise of a "trust-us, we are here for the greater good".
Look at the handling of Middle-East by BBC, the Zucman tax at France Television, or the current allegations of fraud in some communities in the US.
My current take is that it is really hard to get a fair unbiased coverage, unless you actually state that you will strive to hire and promote both sides. If these corporations had to publish the composition/promotion/pay of their newsroom across the political spectrum (as they do for example by gender), you may start to have fair unbiased coverage. But many journalists working there see it as their job to describe "not the reality as it happens, but rather as it ought to be" (to quote the CEO of France Television). We should acknowledge that people are biased, and measure the balance of biases rather than assert there is no bias because they serve the greater good.
Public interest stories are left-leaning only in that they tend to oppose the wielders of centralized power, and centralized power is generally a right-leaning construct.
This is a very funny take since all of these stations are anti-communist. This is inter-right wing sectarianism.
So everyone to the right of tankies gets lumped together as "right wing" in your view of the political spectrum? That's not very helpful.
That's objectively true. They're center-left or center-right. They're certainly not democratic socialists (who are the barest left of the left). The parent is complaining that there is some objectivity at all in liberal/center-right media, that it isn't calling for pure repression by force of middle eastern people and recognizes they sometimes suffer from aggression in ways that are understandable to human beings.
None of these outlets object to this repression being meted out, they only care that it is done in a way that is respectable. A left wing take would criticize the imperialist nature of these wars of aggression and genocide and examine the economic, class, and other social dimensions that cause these events to occur and call for a social revolution via means that are electoral or otherwise. A left-leaning liberal take would say something like "man it's crazy they don't respect the UN charter or even US laws". This should give some objective sense for how rightward our discourse has been drawn.
I'll be honest, I'm not an expert on this, and I don't have a perfect solution. I just think we should try to do something, even if it's not perfect.
There are some professions with codes of conduct. Some are internal, some ar legislated (i.e. fiduciary duty for lawyers, financial advisors, etc). We also have some concepts like public utility and public interest. Maybe we should look there (again, ask the experts I'm sure there are people who study this for a living). Maybe slowly bring in duties for "public interest" related fields. Maybe at the management level. Maybe come up with ownership structures that decouple power from financial incentives (a la voting shares vs. normal shares) and impose them for such businesses.
I fully agree with you that gov ownership of media would be a disaster. I'm not proposing that in any way. Just ... better ways to do it than we do today.
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The easiest surefire way to lift the bottom of the economy right now is to go on a mass home building spree.
If people had their rents cut in half, it would solve most other money problems they complain about (shy of those who will just inflate their lives into being money constrained again).
Of course this will come mostly at the expense of regular middle-class homeowners, who will see the enormous paper gains of their properties in the last 5-10 years be decimated. Red or Blue, I don't care who, hates losing money and will emphatically vote against this happening.
Indeed. If you destroy housing costs [1], medical costs with single payer [2], and energy costs with renewables [3], that gets you to Abundance everyone so desperately opines about. But too much of the country is driven by the inefficiency (rent seeking, broadly speaking), that is the US system and the economy. That is all the country builds anymore. We collectively know what the foundational problems are, there is simply no political will to course correct. Increased supply will disempower the extraction system. AI replaces jobs people need to survive, but does not fix anything I've enumerated; in some cases, it even makes the problem worse (algorithmic price fixing [RealPage] and price discrimination [Instacart], for example).
I would like to imagine a world with enough housing for every human, affordable, accessible medical care for all, and cheap clean energy deployed at scale. When is AI going to deliver that?
https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
[1] https://news.ycombinator.com/item?id=43119657 (housing cost citations)
[2] Health Care Costs and Affordability - https://www.kff.org/health-costs/health-policy-101-health-ca... - October 8th, 2025
[3] U.S. electricity prices continue steady increase - https://www.eia.gov/todayinenergy/detail.php?id=65284 - May 14th, 2025
What would people spend that excess on if they had it? Adam Smith observed that most people spent it in nicer houses. While I think there is a limit I think for most we would turn around an spend that extra on a nicer house and return to living paycheck to paycheck hoping we have enough to make the end of the month after paying for it. Nicer cars would likely take a good portion of the difference as well.
> What would people spend that excess on if they had it?
Humans do not exist to be extracted from for their basic needs imho, which is how the current system is configured, so this is not an excuse to keep extraction systems in place. Give humans a 4 day work week if the argument is "what else would you spend this money on?" with the excess. Humans do not exist for the profits of others, again, imho. I understand others have different opinions on this topic.
https://4dayweek.com/ | https://workfour.org/ | https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
It might even help with the cratering fertility rate across the developed world.
https://wtfhappenedin1971.com/
https://thezvi.substack.com/p/fertility-roundup-5-causation
"What if we put all of this effort in and all that happens is people live better lives!?" sounds...silly, no?
>Humans do not exist for the profits of others
They don't, but they voluntarily take the risk trade-off. If you are the profit of someone else, it also means you are the liability of someone else.
Working for someone else has become so prevalent and so much the norm, that people have completely lost sight of the downsides of working for yourself.
It's not at all surprising that people opt for steady paycheck over erractic income and full liability for their mistakes/short-comings (despite the allure of fully reaping the upside). I've seen dudes making $40k/yr destroy $500k of product and still get their paycheck the following week.
What you think others should do it not relevant. The question is what will they do.
If someone wants a 5 day work week and a larger house instead of a 4 day work week who are you to force them to do otherwise? It is perfectly possible to get a 2 or 3 day work week if you want - most jobs won't offer it, but the possibility exists if you are willing for the sacrifices - most are not (though it isn't clear if they even realize the option exist)
If most jobs won't offer it, that is a problem to fix. These are just arbitrary rules, after all (in the US, the official per week work hours codified in federal statute). They can be changed. It is not an option if most cannot obtain it, or it is not easy to obtain it. We have different mental models on the topic, that's all.
I don't understand POSIWID at all. "Purpose" is inherently good intention and moral judgement.
The main token in POSWID seems to apply to reasonably mature instances of S for which several passes have been taken through the build loop. Once someone has edited the thing, it is reasonable to assume that the outputs are the fruits of the intentions.
Oh, so it's more like "the purpose of a system emerges".
Yes.
> regular middle-class homeowners, who will see the enormous paper gains of their properties
As one of those homeowners, I keep hoping that housing values go down because I'm taxed on the value of my home every year, and that tax burden is crushing me. My property taxes are 2% of the (appraised) value of my house. The fact that its worth twice what I paid for it is meaningless to me when the tax bill comes - I can't really sell it and cash out the 'investment' because I need somewhere to live.
Why "can't"? You can always move out to somewhere cheaper and pocket the difference. Besides, when property tax rates are lower, housing prices are higher to begin with. It's a wash for anyone except those property owners who were lucky to get grandfathered into cheaper ownership when the tax rate fell.
Have you looked around? We actually have plenty of "housing", however most do not meet the qualities/criteria that make them desirable enough to be "homes".
Lower density, family and pet friendly. You know, the kinds of places that landlords live in. Not the places they are trying to force on others as "inevitable".
No. Mass building (while not touching inequality) will NOT solve the issue.
It’s easy to see why: there already IS enough housing around for everybody. If there wasn’t, you would see a massive amount of homeless people. And even in the US where that might be the case - the amount of empty real estate is larger than the amount of homeless people. You could easily house them if you wanted. It’s a question of distribution.
The other reason to see why this doesn’t work is: there is no country that managed to do it. Miraculously, the housing crisis has hit all (western) countries on the planet. All of them try to build their way out of it, no one succeeds. Why?
If you just mass build, the new units will be bought immediately by the rich, and the working people will have no housing still.
> It’s easy to see why: there already IS enough housing around for everybody.
Maybe in Detroit this statement is true, or a ghost town in the middle of nowhere. The fact that housing costs money mostly anywhere else is trivially evidence that there isn't enough of it to go around.
> Miraculously, the housing crisis has hit all (western) countries on the planet. All of them try to build their way out of it, no one succeeds. Why?
Very few western countries are trying to "build their way out" in a meaningful sense. Folks aren't buying that housing en masse for no reason; they just expect it to become even scarcer and more expensive in the future. If you fail to build any more, that becomes a self-fulfilling prophecy.
Most western countries have not tried. They prefer a capitalist let-the-market-decide approach, and also have tended not to cut down the mountains of red tape they've associated with building.
The handful of countries that have really tried, have succeeded. Jordan and Finland are the two I'm aware of.
If we had reasonable safety nets for healthcare, retirement, and housing I wouldn't give a flying fart about my home value... but right now it's the only safety net I have.
Blackrock will just buy all the new homes you build and charge exorbitant rent.
If they charge "exorbitant" rent no one's going to rent from them. They're constrained by broader market conditions.
> If they charge "exorbitant" rent no one's going to rent from them.
We will. There are just not enough bridges for everyone to live under. /s
Trying to corner a healthy market is famously a bad idea.
If we did, what's to stop the rich from buying it all anyway?
Property taxes that need to be paid regardless of occupancy. They become more of a liability if you can't keep it rented 12 months of the year.
If the idea is they're needed then why wouldn't they get rented?
Unless something gets done about economic equality, the rich are in a position to benefit the most.
You are missing the bigger problem, healthcare spending. We as a society now spend more on that than our housing, and the gulf between the two widens every year.
We should do what you say, but we should also focus on pumping out more doctors, etc.
Wait, then who will the Boomers unload their overpriced real estate to?
I think the sad thing is its already massively overvalued and the only thing propping up the market is the ability to get more mortgages for longer creating servitude and debt bondage like you have never seen.
Giving millions of non-citizens loans to buy houses is sure fire way to sink the bottom and middle of the economy.
Maybe undo that injustice first.
The high level question of wealth concentration from new technology is an interesting question (and probably could have been just 3 sentences, since it is unanswered).
The rest of the article has some easy to read anecdotes, but it's hard to know if they are at relevant/accurate. E.g. common mistake (arguably) that I see a lot:
> In 1990, America enacted a tax on luxury consumption of goods such as expensive cars, yachts, furs and jewelry. A few years later, the tax was repealed by a coalition that included Democratic politicians worried about job loss in the yacht building industry. It’s hard to think of a more perfect example of muddled thinking about distribution. Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
Mega-yachts are money pits. A rich person purchasing a mega-yacht is probably the fastest way to redistribute a monetary supply. Taxing it has some benefit, but reduces the incentive to buy mega-yacht... Now, monetary supply and productivity/wealth are not exactly the same thing, but this seems like a basic error.
I think the whole point was that mega-yachts are money (or, from the perspective of the employee, effort) pits. Those employed shipbuilders and wait staff aren't building cruise ships and they aren't serving meals on them. The time and effort that went into those tasks will never reappear.
The median person is better off if the rich either invest that money, lose it to tax, or give it to charity. The money/effort gets redirected away from mega-yachts and other consumption and it has to go somewhere.
That money often doesn't go to someplace the common person would fine more useful. A yacht made and stored outside the US is easy to hide from US taxes if you want one, if it is a status symbol you can find plenty of others, some of which are easy to make elsewhere thus moving money out of the US.
A post about mis-generalization seems to make a huge mis-generalization, seemingly from a lack of diversity.
The author recognizes that laundromats exist, but doesn't believe that washing machines are a luxury good (his yacht example of 60% owned by the top 1% likely applies somewhere around 60% to the top 30%). This indicates the author generalizes that high density living with shared appliances don't exist or apply to a large part of the population (that density doesn't shift statistics).
A few thoughts, instead of taking 340m people, you need to account for 2% homelessness, another 8% as housing insecure, 30%+ as high density possibly sharing at the apartment/condo building or laundromat level. A small upper 1% that outsource to services.
The infamous Mitt Romney, 47% of Americans don't pay income tax quote can be really shocking when you start thinking about the average American, and the wages that they earn compared to a higher income segment you might be in.
Laundromats exist, but there are 100 million according to my web search which puts his estimate in the right area even if he is off by 30 million.
Most Americans would not call a washing machine a luxury good. Even in much poorer Mexico there are a lot of families living on $100/week that have a washing machine - they are an affordably luxury to many poor people.
If the statistical "right area" is within 30%, then 60m is similarly in the correct area.
But the context is most important, are AI's worst strategies worse than 30% off because of gross generalizations?
Depends on the context. Sometimes I need to be correct to withing 0.0000001%. Sometimes I can be off by 500% and still be close enough.
> 2% homelessness, another 8% as housing insecure
Per a quick search, that's 0.2%, not 2%. Not sure about what "housing insecure" means, so that's harder to check. Also, that is just a one-night snapshot, and many of those won't be homeless if you check back later.
> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
While this is essentially tautological, I'm not sure you can practically tax the majority of luxury consumption. Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager)[1]. All of those differences are luxuries, and many of them are informal and thus hard to tax. If we were to successfully tax all the formal luxuries (which in and of itself becomes legislative whack-a-mole), the wealthy will have a strong incentive to shift much of their luxury consumption to informal luxuries.
Plus, I find all of the focusing on "wealth tax" and "luxury tax" and such rather mystifying when we have an extremely regressive income tax in the US. The low tax rate for long-term unearned income in the US, combined with the fact that borrowing against assets does not realize any of the gains, makes effective tax rates for the 99.9 percentile much lower than the 90th percentile.
It is possible to eliminate dynastic wealth just by ensuring the losses due to inflation and taxes exceeds investment returns at the top tax bracket.
1: Or the difference in your kid applying to a college with your name on one of the buildings versus someone else's kid applying to that school
> Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager). All of those differences are luxuries, and many of them are informal and thus hard to tax.
But businesses are incented to remove the most expensive disparities, lest they impact the company's market performance. Or maybe they keep the different treatment but expect to pay the CEO less as compensation. Either way it's win-win.
> It is possible to eliminate dynastic wealth ...
Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place (except that every once in a while quite a bit of it gets donated to charity in exchange for a very, very expensive name placard on a building, or something). To the extent that this reflects a spreading of good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place.
> Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place. To the extent that this reflects good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place.
Wealth generates income that is used to grow more wealth and spend the balance on luxuries. Reduce the ability for it to do that and you reduce luxury consumption!
Why assume that luxury consumption is the only possible use of that income? That just doesn't seem to reflect the facts. It's not like many old-money folks have billion-dollar yachts or private aircraft, or the other kinds of luxury spending that seem to be the focus here. Many of them are used to leading incredibly modest lives.
Also, it takes meaningful skill or an appetite for risky ventures (or a combination of both) to generate substantial income from that accumulated wealth - passive return rates are extremely low. That reflects socially productive endeavors we don't want to tax.
> The key to higher living standards for average people is to produce lots more output, which requires more automation.
Building and deploying that automation requires capital. As a result, it's largely the people who control that capital who benefit from it, not the individual workers whose productivity is increased by it.
There were people who added value to a manufacturing process by being highly skilled welders (earning $30/hr) who can push MIG wire at 30 inches per minute. On a good day, they actually average 20 inches per minute OEE because they also need to load and unload the fixture, take lunch breaks, and so on. Those welders become (or are replaced by) weld-jig-operators, who can load a buffer of incoming parts, unload a buffer of completed parts, and replace emptied spools of wire, clean up the work area, and so on, while the $400k weld cell with a trio of ArcMate robots pushes 80 inches of wire per minute.
Yes, that's a 4x productivity gain, but does the welder now earn $120 hour? No, the new operator now gets a pay cut back to $20/hr because you can train a replacement in a week (unlike a welder, who needs years of practice to manipulate a torch that skillfully). Meanwhile, the owner of the company profits at ~$100/hr, recoups their big capital investment after a year, and rakes in the profits after that to buy another yacht, or maybe a newspaper.
I agree that the worker becoming more productive due to some capital equipment generally won't see any benefit from doing so (unless it requires special skills to operate). But I think the argument is that the end consumer will eventually benefit from the increased productivity.
In your example, yes, the factory owner can take their $100/hr of profit. But among the various factories, some owner might take $25 of that profit and instead undercut their competition to grow their order book. Other factories respond in kind, and the consumer is getting cheaper products.
> because you can train a replacement in a week
Guess what, this is a huge gain for the unskilled worker who can get trained in a week for that formerly high-skilled job. And then the capital owners are hugely incented to expand production and hire all those unskilled workers, pushing the wage floor up in the process.
>On many distributional issues, I’m to the left of the Democrats.
Which could still land you squarely on the economic right.
>P.S. Can you even imagine 130 million washing machines? >...more than three times around the Earth on the equator...
Nah, that's the wrong way to go about it. The total length of your blood vessels would also circle the earth twice, but I'm sure you'd prefer them to stay safely inside your body.
If each washer is 3 feet on a side, that's 6 square feet. You could easily stack them 4 high with an ordinary forklift. So that's around 7 square miles, or just 7 sections of a standard 36 section survey township. Where I live, there's enough farmland to fit all of them within a 2 mile radius, without disrupting much (well, unless you're a farmer). You'd nearly be able to fit all the dryers too.
3 feet times 3 feet is 9 square feet
Well that was a dumb mistake. 10.5 square miles then.
Productivity will go up, competition will go up, profits will go down, unemployment will go up, wages will go down, a crisis will occur, consolidations and monopolies will emerge, hyper inequality will then break a system incapable of compromise. But sure, there will be a lot of washing machines.
A tangential thought: say AI makes a huge dent into labor. Wages will collapse across the board. Who is left to profit from?
There is a more feasible future IMO that paints AI as the washing machine, calculator, computer, spreadsheet, automation, etc. Jobs AI can complete don’t lead to people getting let go, but rather those people sit on top of the AI who can do their job much better (sometimes at larger scale, sometimes not). Better outputs for the same cost (well wage+AI costs) -> more purchasing power, more efficient business, etc.
I don’t know if this is how AI will go, but this exact thing happened to me with deep learning. I did stupid math to optimize algos in 2012, but in 2022 deep learning was 100x better than me. I just babysat the AI, as it (and llms) still can’t talk to clients, understand business/culturual nuances, navigate an org, politic, innovate, etc
I think a few people will live like kings while the rest of us live in Terrafoam.
Money is just a proxy for value add. When automation replaces the labor, the only remaining value add may be withholding violence. I hope we don't get there
> Who is left to profit from?
That's already the case where most of the economy is AI-related stock market speculation rather than being based on actual investment fundamentals.
> Why output is what matters
Now imagine the amount of paperclips AI could make.
> Matt Yglesias keeps telling us that America is richer than Europe because we have many more dryers
Or perhaps America is poorer because they lack an outside space to hang clothes?
Most Americans have space to hang clothes. They don't use it, but the space exist. Sometimes it is illegal to use that space to hang clothes, but they wouldn't even if the laws changed.
I wouldn't relish doing that in the winter, having to work around weather, or having the day star's UV light destroy my clothes.
> Sometimes it is illegal to use that space to hang clothes
Ahh, land of the free
Based on my knowlege of New York apartment buildings, there are shared laundry rooms, thus New York City has fewer dryers per capita than Alabama.
Clearly South Dakota is richer than New York City?
I don't know New York. I know where I live most apartments are shared laundry rooms, but a few list washer/dryer in the apartment as a feature.
>>recall that central LA currently lacks the large stock of high-rise apartments that you see in cities like New York and Chicago.
The author entirely overlooks that NYC and Chicago are not in earthquake-prone areas and LA is right next to a major geologic fault system. Yes, skyscrapers can be safely built to withstand earthquakes, but it tends to be at least expensive, which is counter to solving affordability issues.
>>I favor a steeply progressive consumption tax.
This is generally pointing in the right direction, but a progressive transaction tax on every transaction, including finance and investments would be far better. Easier to track, harder to evade, far less intrusive into peoples' lives required by income tax. and the rate and difference between rates would be so low that structuring deals to 'optimize' taxation brackets would be pointless.
Just the volume of Equities + TRACE fixed income/structured + munis + real estate is over $200Trillion. A mere 3% tax on those would put the $6T US budget in large surplus. Add $1.7 Quadrillion of ovrerall payments and a 0.3% tax on transactions (yes, $3 per $1000) would also put the US budget in surplus. Make it progressive by setting tax rate tables based on transaction size, e.g., transaction <$10=0.01, <$100=0.1%, <$10k=0.2%, <$100k=0.3%, <$1MM=0.4%, =>$1MM=0.5% (plus big penalties for 'structuring' transactions to lower brackets).
Not impressed with the article
> The author entirely overlooks that NYC and Chicago are not in earthquake-prone areas and LA is right next to a major geologic fault system.
Maybe you should visit Japan sometime. Does downtown Tokyo look more like NYC/Chicago or LA?
Sky scrappers are expensive. A single story building is the cheapest thing you can build anywhere - only when land is expensive is it worth going up instead of out. There is value in density so we build skyscrapers anyway, but for nobody is it the most economical way to get square feet.
Land IS somewhat expensive in LA though.
Plus, you are looking at it purely from a construction cost of the building point of view. If you build more densely, you don't need as many roads and other services, which also cost money, and once you have enough density, agglomeration means that it's economical to have local businesses nearby, fewer people need cars etc.
Roads are cheap. I know we spend billions on them, but they are still cheap compared to adding another floor.
I'm not arguing with your other points. Density is often worth the monetary costs, but don't try to pretend it isn't more expensive. (Indeed I would value the time density can save high, but there is no objective way to value a large part of my time)
A "high-rise" is anything over 6 stories; they aren't skyscrapers. The argument generally is for upzoning, not for setting height records, and that argument isn't impacted by seismology.
If we put a $10k tax on beards, that's $600 billion right there!
What's that, people might change their behaviour in response to it, in possibly unintended and negative ways? Nah we can just hand wave that away, who needs liquidity or investment.
So your claim is eliminating the massive overhead and personal/corporate intrusion of income tax will have no effect, benefits, or positive behavior change in response?
And on top of that a $5000 difference in a $1,000,000 transaction is do onerous that it will kill liquidity?
Yikes! Maybe run some numbers before posting?
Seriously, at any wealth level I'd trade income tax for a pennies-on-$1000 transaction tax any day.
Yes. Transaction taxes are a huge incentive for assets to stay put, which is quite inefficient. Income/consumption taxes are a burden on new production, but let you trade existing assets freely so as to direct them towards their highest and best use. That's usually a better arrangement, though of course less tax is preferable to more other things being equal.
>>Transaction taxes are a huge incentive for assets to stay put
I'm sure that is true at high rates. But we can look at several scenarios and see how sensitive people actually are to a transaction tax.
But have you ever bought or sold a house? In most states there is a Real Estate transfer tax, which is essentially the same thing as I'm proposing for all transactions. These range from zero in TX and WY up to 5%. In Massachusetts it is $4.28/$1000 of valuation or 0.428% [0], while in adjacent New Hampshire it is over 3X the rate at $1.50/$100 or 1.5% [1]. I've lived in one state or the other for several decades, bought and sold houses in both, and been adjacent to friends/family buying/selling there. Yet I have NEVER heard even a single word in any discussion about hesitating to make a transaction on either side because of the transfer tax, or any difference in rates. I've never even read of anyone expressing any such hesitation, or heard of anyone even expressing theoretical hesitation.
Stockbroker fees in the 1990s were in the $40-$100/trade or /100 shares. So with a mean price of a DJI share of ~$56, a $70 fee would be a rate of 1.25% for a round lot. But to buy 20 shares, the $70/trade would be $6.25. These fees did not slow down investing and any significant investor, but they certainly prevented day-trading of small lots, which became more prevalent after fees went to zero.
Similarly, the common practice in auctions for antiques, estate sales, or industrial goods is to charge a "buyers' premium", which is basically the income for the auctioneer, behaving exactly as a transfer tax. You win the auction at $100, and the buyers' premium is 18%, so you pay $118. These premiums were typically closer to 10-12% a few decades ago and are now in the 18-20% range. At the newer higher rates, I have heard people express hesitation when considering bidding on an item they don't much care about.
In municipalities which have both state and local sales taxes like LA total 9.5% and NYC at 8.875%, people complain a lot, but it doesn't stop them buying, but may shift buying at the borders. Similarly, in Massachusetts there is a 6.25% sales tax but zero in neighboring New Hampshire, there are a surplus of stores right on the NH side of the border people nearby will drive to NH to purchase large items but surprisingly little; a wholesale club <15min south of an identical store across the border still does very strong volume of large TVs etc, with people not willing to bother driving another 15min to save 6.25%
So, yes, people are sensitive to significant fees approaching double digits. High-frequency traders would also be sensitive to low rates, but that is because they are in a high-transaction/low margin business of shaving pennies off every transaction, so that would be an issue for them, but if HFT disappeared it would be a net positive for the markets as they are basically front-running transactions and shaving profit from real investors.
But for most transactions, as long as the rates are sub-1%, a transaction tax will make zero practical difference, which is why the base needs to be across all transactions.
[0] https://massrealestatenews.com/transfer-tax/
[1] https://legalclarity.org/new-hampshire-transfer-tax-what-buy...
There are billions of computers, but only a few computers can run very large local LLMs.
So instead, imagine billions of laptops (or phones) available in store that have local LLMs installed which allows you to have intelligence-like chatbot features available with the equivalent performance of Claude Opus 4.5 or GPT-5 if not better and they are far smaller.
Thank you for telling us that efficient + performant multi-modal local AI models is the endgame; a bonus if they are smaller to fit in phones.
Centralized vs distributed feels like a largely orthogonal matter. E.g. phones are great at being clients, even for things which they could technically be the server for today, but they make pretty bad servers in terms of resource tradeoffs. Because of this, I think the endgame cares little about where the LLM runs as much as how much it costs for those devices to use one (which can be more than just money too - e.g. on phones it's battery, bandwidth, latency, privacy, or whatever else could be valued/scarce). That it's specifically on device is just one method of how to meet some of these attributes, not the exclusive method to use it.
Even as a techie tinkerer my dream is not that every device I have run its own LLM - it's that I can point them to where to find the LLM (and swap that at will). The dumber I can make my edges the more they can end up doing overall.
I'm skeptical of this. Users are not going to want to sacrifice on the quality or performance of the model for a warm fuzzy feeling about it running locally on their phone. Outside of hobbyists I can't imagine this really taking off for the same reason secure scuttlebutt never had a chance of beating Facebook.
The only exception I can imagine is very sensitive topics, AI girlfriends or maybe image processing
So, this whole analysis strikes me as the worst of "economic thought?" The first bit of failure here is "equating well-offness to output," e.g. something that can be measured by GDP.
Then it misses the other big deal, which is the utter weirdness caused by extreme on-paper wealth inequality, where the e.g. Elon Musk numbers reach levels of literal absurdity.
Money, in a sense, doesn't matter. It's "goods and services." The big question should be, does the way we do "money" effectively help everyone trade goods and services in a reasonable way. That's the only real path to "happiness."
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> A few billionaires might have additional vacation homes, but they are not going to consume a million homes, much less 10 million.
Sumner is somehow unfamiliar with the concept of a landlord or vacant property investment.
> progressive consumption taxes
When someone proposes one, let me know.
>> A few billionaires might have additional vacation homes, but they are not going to consume a million homes, much less 10 million.
> Sumner is somehow unfamiliar with the concept of a landlord or vacant property investment.
I'm sure he is not unfamiliar with either...
Not sure what landlords have to do with anything since washing machines are often included as part of a rental (or the apartment doesn't have a washing machine, but what does that have to do with landlords?).
And vacant property investment is a small fraction of total property ownership in the US. It's more common that people have a vacation home and rent it out part of the year.
>> progressive consumption taxes
> When someone proposes one, let me know.
They have been proposed...many times. In fact, the US's system has elements of a progressive consumption tax already since people can put retirement savings in IRAs/401ks. What would make it a more complete progressive consumption tax would be to either raise the limits on contributions to these retirement accounts (and remove income limits), and also introduce accounts like these that are meant as more universal savings vehicles. This is preferred (in my view at least) to just cutting dividend and capital gains rates to 0% since that would benefit existing rich people.
Landlords provide a useful service for anyone who doesn't want to live in a house for a long time. There are pros and cons to renting vs buying. If you are against landlords you are also against anyone who buying a house is a bad decision.
Vacant property investment exists, but it is a small factor in all markets.
Presumably, the percentage of taxation is a function of the price of the item? You can have a different curve or base rate for different harmonization codes.
The word "consume" is important. Billionaires might own a million average family homes, but that's not the same thing as actually using the home. A normal family will eventually lease the house and use it, unless it's left vacant.
I'm not sure vacant property investment holds up in a world with radically higher numbers of houses getting built. The billionaires either stop investing and let house prices drop, or they keep investing until they run out of money, at which point they have no choice but to stop. This only holds up for houses themselves and not for land, but hey, you can solve that with a land tax.
in-vogue trite. The question for these thought-writers at this stage is simply incompetence or malic.
> The whole point of being rich is to get away from every single human being that doesn’t have to be nice to you.
This is false. Most rich people don't want to get away from every single human. (if they did they can find plenty of places to backpack). They want to get away from a few crazy people who stalk them.
Sounds like you’ve failed to “…get away from every single human being that doesn’t have to be nice to you”
Whatever - I don't think many rich care about getting away from people in general. Most of them don't really care, and many of them like other people in general.
The point of being rich can be the luxuries you can buy, a point system, buying a better afterlife, or any of hundreds of motivations. I'm sure some care about getting away from other people, but to say that is the point is false.
This comment is a total non-sequitor to the topic
That is a direct quote from the article, and thus cannot be a non-sequitor. It is used in reasoning and means the whole is standing on something false. You may decide the analysis is correct anyway, but it is fare to stop everything right there since there is a logic flaw.
You’re refuting a straw man. Re-read what you quoted.