[notacoward]

> the growth rate is naturally a multiple of the labor growth rate

There's nothing natural about it. It's the result of policy choices. The whole idea that exactly the system we have is "natural" and that anything else must be "artificial" is infuriatingly dishonest. Having been created by humans, the system we have is very much shaped by ideology and self-interest. It's an evolved system, and evolution does not favor morality.

> I saved 10 years of income over 40 years. I have wealth. It's already been taxed. Do I owe society another part of my unequal wealth?

In that very particular and thoroughly unrealistic case, I would say no. OTOH, that ten years' worth of income is a pittance once inflation has been factored in. It's not creating the kind of massive inequality that the superyacht owners - remember the original topic? - personify.

[ardy42]

> There's nothing natural about it. It's the result of policy choices. The whole idea that exactly the system we have is "natural" and that anything else must be "artificial" is infuriatingly dishonest.

It can be infuriatingly dishonest, but usually it's just infuriatingly ignorant.

[kbutler]

>> the growth rate is naturally a multiple of the labor growth rate > There's nothing natural about it

How to say it differently? We've previously agreed that capital must have positive returns (discount rate/time value of money). Labor gains do not compound (each year, I can only provide 1 year of labor. Gains from labor not consumed become capital for future investment). Capital gains do compound (next year, I have original capital plus capital gains plus labor gains minus consumption to invest). Compounding naturally leads to higher rates of growth for capital than for labor, because compounding multiplies productivity and inflation gains of labor, and surplus gains from labor also become capital.

Propose a different system, please, preferably one that has a demonstrated history of raising hundreds of millions of people out of poverty.

> In that very particular and thoroughly unrealistic case, I would say no.

Good, now we have a starting point. We have established that some inequality is allowable and natural, and is caused by saving funds rather than spending on current consumption.

Now how about if we allow capital gains that just offset inflation? (Still good, right? no need for more taxes?)

How about capital gains that just match the time-value-of-money/discount rate? (I'd still say Society has claimed its predefined share, but you may differ - fine, introduce capital gains taxes)

How about if I let Henry Ford use the money for 40 years to make his factories more productive (4X), double his workers wages (2X one year, voluntarily), give his customers discounts (model N was $3000, Model T dropped from $850 to $300), largely create the American middle class, and pay lots of taxes to the government as a company, as workers, as the owner of the company, and as capital gains?

Ford paid 100% of initial capital as dividends in the first year (https://www.quora.com/How-did-Henry-Ford-start-Ford-Motor-Co...). That's the kind of return that generates great wealth for investors and society (or obscene wealth, if you prefer).

And if it turns out that left me with, say, 200 billion dollars (Henry Ford net worth adjusted for inflation), what did I do wrong?

How did it become immoral or unfair that Henry Ford paid all the taxes society required (up-front and as capital gains) while making every party better off (customers, workers, even non-parties to the transactions who benefit from the tax revenue or make money off all those worker wages)?

Please identify at what point that turned against the welfare of society? Why would having 100 or 10,000 Henry Fords that provide similar benefits to hundreds of thousands of people (and reap similar $200 billion rewards) be a bad thing, even if they could each individually buy a mega yacht or two?

Is it by crossing some arbitrary wealth threshold?

Or just when spending some of that accumulated wealth - maybe it was when Ford bought a yacht in 1917 https://www.thehenryford.org/collections-and-research/digita... It was at least partly for business purposes, so maybe he got a tax deduction. Can't find length or cost on it, so I can't tell if it crossed that 250'/$275M immoral line. Sorry.

[notacoward]

> We've previously agreed that capital must have positive returns

No, we have not. It might have positive returns, but then again it might not. There's certainly no reason for society to help it along.

> Propose a different system, please

You're trying to set up a false dichotomy here, between a system in which capital is absolutely unfettered and privileged relative to labor, vs. a welfare society where capital is not allowed to exist. Yet another dishonest freshman-debate tactic. Here in reality, there's a whole range of tax and other legal choices under which capital can still flourish without turning into oligarchy.

> How did it become immoral or unfair that Henry Ford paid all the taxes society required

Are you unaware of how Henry Ford and others like him were helped along by the government? Where did his raw resources come from, and under what property-rights regime were they mined from the commons? On what publicly subsidized transportation systems did those raw materials reach him? Most egregiously, who was paying the goons who broke union leaders' heads to keep labor costs down? The "taxes society required" were a bargain compared to the value received and externalities allowed. As great as Henry Ford might have been, if he had been taxed appropriately in the first place he wouldn't have been nearly as rich. Even more to the point, his offspring who had never had to earn their massive wealth in a meritocratic free market would not have been able to extend that wealth into a true dynasty.

I have no problem at all with people getting just as rich as they want through fair trade. What I do have a problem with is whole dynasties persisting because of corruption, privilege, and ignored externalities. In a real free market billion-dollar fortunes would still be possible, but they'd be rare and temporary.

[kbutler]

> We've previously agreed that capital must have positive returns

You had previously written: "Nobody said anything about capital returning less than inflation."

I should have said, providers of capital must "expect positive returns on average."

> You're trying to set up a false dichotomy here, between a system in which capital is absolutely unfettered and privileged relative to labor, vs. a welfare society where capital is not allowed to exist. Yet another dishonest freshman-debate tactic. Here in reality, there's a whole range of tax and other legal choices under which capital can still flourish without turning into oligarchy.

Absolutely not. That false dichotomy, and particularly capitalism "absolutely unfettered and privileged" is not in my statements. These repeated accusations of dishonesty don't contribute to a real debate.

I see capital's potential to improve returns as limited only by human creativity and the capital (physical and intellectual) available. Labor's productivity is largely determined by the capital applied. This is why modern workers produce so much more than stone age workers - they have the resources, techniques, and equipment needed to produce more than our ancestors could.

I also described capital owners paying taxes (determined by society) and assume obedience to other law, but I can't see a justification for some arbitrary upper limit on wealth because someone thinks "nobody should be able to afford X", whether X is a super yacht or a vacation home, etc. If someone makes a few million people each couple of thousand dollars better off, or a few billion people each a dollar better off, without external harm, let that person have a billion dollars.

> Are you unaware of how Henry Ford and others like him were helped along by the government?

Like when FDR banned Ford from government contracts and paid $169,000 more for 500 vehicles from a competitor because Ford wouldn't go along with the government's anti-competitive "auto code"?

But yes, all of society, including individuals and for-profit companies, benefits from good infrastructure, stable laws, enforcement of property rights, etc. And also yes, Ford did some very bad things, particularly later in his life. Violence is not acceptable.

Evidently the taxes paid at that time were sufficient to pay for those government services. We didn't start persistent ramp-ups in debt until later. I'm not sure you can prove Ford and others at the time weren't taxed appropriately.

Reward good behavior. Punish bad behavior, including bad behavior by companies and billionaires. Enforce laws. Establish taxes. Require payment of taxes. Limit political power of wealth, particularly power to enlist the government in granting, protecting, and extending wealth. Don't let people vote themselves money or buy preferential treatment.

> In a real free market billion-dollar fortunes would still be possible, but they'd be rare

Yes (caveats on the "billion-dollar" line regarding inflation and the general increase of wealth over the last centuries)

I'd also suggest that a huge fortune should only be earned by actually improving wealth for others, not through coercion, rent-seeking via government power, etc. This does play into the next item:

> and temporary.

With respect to dynasties, I agree the transfer of vast wealth across generations is concerning. I'm not sure how much well-being it provides heirs (is "never had to work a day in his life" really a blessing?). I do know that leaving a legacy is often a strong motivator for the wealthy, and I am encouraged by the Giving Pledge of Gates, Buffett, and others, to leave a legacy of good works done, rather than simply massive wealth at time of death.

[notacoward]

> These repeated accusations of dishonesty don't contribute to a real debate.

Neither do all the fallacies. I'll stop pointing them out when you stop throwing them in.

> I see capital's potential to improve returns as limited only by human creativity and the capital (physical and intellectual) available. Labor's productivity is largely determined by the capital applied. This is why modern workers produce so much more than stone age workers - they have the resources, techniques, and equipment needed to produce more than our ancestors could.

You see wrong, then. Did it ever occur to you that people might be more productive because of advances in knowledge, which are independent of capital? Because of markets in which people can exchange the fruits of their specialized labor, even if little or no capital was involved? Physical capital certainly can improve productivity in many industries, but there's way too much financial capital out there that's not really tied to the physical kind. There's no reason arbitrage, rent seeking, and flat-out betting should be taxed more favorably than making stuff.

> Like when FDR banned Ford

Yeah, like decades after Ford had already become a tycoon, and had no effect on whether he remained one. Exactly like that, except not at all.

[kbutler]

You haven't yet proposed any alternative reality that differs from what you call fallacies. You've nit-picked a few misstatements and cited the benefits of general infrastructure and advocated increased taxes on capital gains, which I haven't argued against.

>> they have the resources, techniques, and equipment needed to produce more than our ancestors could.

> Did it ever occur to you that people might be more productive because of advances in knowledge, which are independent of capital?

This is known as "knowledge capital". See, for example https://mitpress.mit.edu/books/knowledge-capital-nations

For other forms of non-privately owned capital and their effect on productivity and growth, see also https://en.wikipedia.org/wiki/Public_capital

> There's no reason arbitrage, rent seeking, and flat-out betting should be taxed more favorably than making stuff.

Agreed. Rent-seeking is harmful, speculation is likely harmful, and though arbitrage may be helpful, I doubt it's valuable enough to justify preferential treatment.

I said above "Maybe [capital gains] should not be taxed as much as labor. Maybe more. Maybe less. It's not immediately obvious that either should be taxed more." And I believe that applies even on applications of capital that are beneficial.

I do think the incentive structure of income and capital gains taxes is inferior to consumption taxes, but that's probably a different debate.

> > Like when FDR banned Ford

> Yeah, like decades after Ford had already become a tycoon, and had no effect on whether he remained one. Exactly like that, except not at all.

It was a mildly humorous aside, showing that Ford faced definite government discrimination, regardless of any unspecified government support he received. (I'd be interested if you know of any specific government assistance to Ford during Henry's lifetime that wasn't general infrastructure available to everyone).

I'm quite satisfied with the conclusion we reached a few posts above:

"I have no problem at all with people getting just as rich as they want through fair trade. What I do have a problem with is whole dynasties persisting because of corruption, privilege, and ignored externalities."

And my addendum: "I'd also suggest that a huge fortune should only be earned by actually improving wealth for others, not through coercion, rent-seeking via government power, etc. "

I'll let you have the last word.