This is why having a social safety net is so important. If society can put a floor under how badly people can lose, they'll feel more free to try low-probability high-payoff endeavors.
This is possibly the greatest argument for social safety nets ever made, really.
The economy of today is so efficient and supply chains are so effective at moving things to people who need them, that it seems incredibly stupid to not use it to provide some kind of basic necessities to every human being, no questions asked.
If the US were to do this today, there would be more innovation, less misery, a supercharged economy as you've increased the purchasing power of millions of people overnight...It a fucking no brainer. And cutting taxes rather than providing more benefits seems like the most stupid way to run a country I've ever seen in my life.
So if you spend 14 hours a day for 5 years on a computer project that becomes useful, and a lot of people want it and pay you for it, you are willing to fork over most of that to the government since they provided you with the basic allowance that let you pursue this project, and your success is how they fund a basic allowance for everyone - you included.
While your friend, who did nothing for 5 years, maintains the same standard of living that you do.
I guess this could work, but to me, the level of "disinterest" required to be okay with this result is even more rare than genius.
Nobody on the planet has ever gone "oh fuck me I only made 300 million with my extremely successful business instead of 600 million. Well what a waste of time, I shouldn't have ever started it."
No rational person that isn't already well off would take a 1% shot at 1 billion over a 10% shot at 100 million.
Progressive taxation and social safety don't stifle economies, they make them thrive. They act as a negative tax on risk, and create a framework where actors are free to pursue higher EV bets without worrying as much about utility value. Literally the entire point is to create more pie for everyone.
Bludgers getting "free money" is just a side effect. You're not paying for them with your taxes, you're paying into an insurance fund with all the other innovators. Except this fund is +EV, subsidized by all the other countries in the global economy that aren't taking the same gains. You're the one getting the free money, and the leaners are taxing some percentage of that.
The only reason every successful country in the world isn't already doing it is because of this unintuitive "common sense" optic that you (and about a billion others, literally) are propagating: that somehow it breaks the rules of "fairness". The reality is it's got absolutely nothing to do with fairness, it's about maximizing the bottom line, just like in business. Governments don't give a shit about individual people, nor should they (at least not at the expense of society).
Also, I'd guess most first world countries could easily (and do) provide a world class social safety net without going over 50% taxation in any bracket, not even billionaires. Your example only applies if you're talking about taxation in the 70-100% range.
> While your friend, who did nothing for 5 years, maintains the same standard of living that you do.
Honestly, is this such a bad thing? Why do we incentivize innovation by promising people a basic standard of living? We reward people who take risks with something better than that anyways, so I see no problem with giving people not willing to take those risks something lesser than that “for free”.
The economy of today is so efficient and supply chains are so effective at moving things to people who need them, that it seems incredibly stupid to not use it to provide some kind of basic necessities to every human being, no questions asked.
If the US were to do this today, there would be more innovation, less misery, a supercharged economy as you've increased the purchasing power of millions of people overnight...It a fucking no brainer. And cutting taxes rather than providing more benefits seems like the most stupid way to run a country I've ever seen in my life.