[WalterBright]

> politicians steal as much money as they can

I am not talking about people who steal wealth, which is illegal. I'm not celebrating or making excuses for thieves or criminals. I'm talking about people who create wealth via the free market.

I agree that externalities are a problem, as it pushes costs onto others.

> as well as an economy that actually meets the assumptions of a “free market”: i.e. no individual buyer or seller has enough concentrated power to significantly impact the supply-demand curve all by themselves.

The free market does not require that a large player be prohibited from shifting the s-d curve. For example, ever-cheaper computers shifted the curve. And that was good for us.

[nerdsniper]

From Wikipedia:

> For classical economists such as Adam Smith, the term free market refers to a market free from all forms of economic privilege, monopolies and artificial scarcities. They say this implies that economic rents, which they describe as profits generated from a lack of perfect competition, must be reduced or eliminated as much as possible through free competition. [0]

> The definition of perfect competition is when the following conditions all hold: A large number of sellers and buyers – A large number of consumers with the willingness and ability to buy the product at a certain price, and a large number of producers with the willingness and ability to supply the product at a certain price. As a result, individuals are unable to significantly influence prices. [1]

You are free to say that you personally don't care for "free markets" and use another term to describe the type of market that you prefer. But the textbook definition of "free market" was already defined 250 years ago as a market in which "a large player be prohibited from shifting the s-d curve".

0: https://en.wikipedia.org/wiki/Free_market

1: https://en.wikipedia.org/wiki/Perfect_competition

-------------------

> I’m just not convinced that value creation and value extraction are well-linked when examining outlier cases.

>> I am not talking about people who steal wealth, which is illegal. I'm not celebrating or making excuses for thieves or criminals.

Why would anyone assume that the most extreme outliers wouldn't (generally) be breaking some rules that the mode follow; breaking those particular rules would help them become an extreme outlier. Wouldn't it follow that if some % people are breaking rules to their advantage and getting away with it, that to exceed even those other "cheaters" that the most extreme outliers nearly must also be breaking those rules? It's like watching Lance Armstrong beat all the other cheaters and saying "There's no way he could be cheating!"

It feels like a fantasy to put so much blind faith in all the most extreme outliers and assert that none of them are doing anything illegal. Should we not tax illegal behavior much more severely than legal behavior? Would that not be rational?

Also --- of COURSE you "celebrate / make excuses for thieves and criminals". Uber would be a fantastic example of a group of criminals that you celebrate and make excuses for. Before Uber, if someone (even a municipal taxi driver) tried to pick someone up at an airport who flagged them down like a taxi, they would go to jail if they hadn't paid for an exclusive "airport taxi" license. Uber arranged taxis for airport travelers all the time - and they frustrated law enforcement using actual Obstruction of Justice via their "Greyball"[2] program. You can make excuses for them that none of this was found to be illegal/criminal, but Ycombinator partners are on record saying that the Lyft founders did, in fact, believe that what they were doing could very well land them in jail [3]. YCombinator partners encouraged them to move forward.

But you'd celebrate the Uber/Lyft founders and the YCombinator partners (as would I, for breaking the taxi cartel system that was even worse for the median American). And you have not ever celebrated the taxi drivers who went to jail for picking up passengers flagging them down at the airport before Uber/Lyft.

Perhaps this is because, to some degree, "capitalist" society is somewhat like a "racist" or "sexist" society, except instead of determining an individual's worth based on their race, capitalist societies discriminate based on how much capital one has. If you control enough capital, the laws are very malleable - what's illegal or not is what those with enough capital decide should be illegal or not.

Should the Lance Armstrongs of the business world be taxed the same as those who actually are not doping, but whose names we don't recall? Given that capital accumulation yields political/legislative/executive power, that might ensure that the Lance Armstrongs get to mold the law and its enforcement to their desires.

2: https://www.nytimes.com/2017/03/03/technology/uber-greyball-...

3: https://www.youtube.com/watch?v=Hm-ZIiwiN1o&t=8m46s

[WalterBright]

When I ask google "what is a free market?" I get:

"A free market is an economic system where prices, production, and distribution of goods and services are determined purely by the laws of supply and demand, rather than by government intervention. In an idealized free market, buyers and sellers voluntarily exchange goods, and competition naturally drives innovation, efficiency, and fair pricing."

That's what I'm talking about.

The wikipedia Perfect_competition reference does not mention "free market".

Google says Adam Smith never mentioned the term "perfect competition".

[nerdsniper]

Indeed, it appears I was miseducated to believe there was more of a consensus that "free market" assumes approximately "perfect competition", when in reality there is a less of a consensus than I was taught -- e.g. modern followers/revivalists of "Austrian economics" are quite opposed to the idea of perfect competition being a condition of a free market.

[capr]

Yup, because perfect competition is fundamentally the same as the salary cap, except for companies instead of employees. Specialization leads to natural monopolies at company level just as it does at personal level. Besides, the term monopoly only makes sense when it's state-enforced. In a free market it loses meaning since every company has a monopoly on their exact product.

[WalterBright]

> assert that none of them are doing anything illegal.

I explicitly made no such claim: "I am not talking about people who steal wealth, which is illegal."

[nerdsniper]

Noted, but you do glorify Elon Musk:

> Keep in mind that Mush created 4000 millionaires the day SPCX was IPO'd.

while also asserting that:

> I am not talking about people who steal wealth, which is illegal. I'm not celebrating or making excuses for thieves or criminals.

Elon Musk is a great example of that "Lance Armstrong" concept. It would beggar belief for him to have beat everyone else that cheats at business, without breaking laws/regulations himself.

Some news [0] from today:

> The lawsuit alleged that by not disclosing the stock purchases before the legal deadline, Musk was able to keep buying shares at artificially low prices and underpay Twitter investors by at least $150 million for those shares.

> US District Judge Sparkle Sooknanan said she “has significant misgivings about the settlement” between Musk and the Securities and Exchange Commission (SEC), and described “red flags” in the SEC’s decision-making. This isn’t surprising given that she previously questioned whether the deal is tainted by corruption.

It starts to sound a lot like "the Lance Armstrongs molding the law and its enforcement to their personal desires" as posited in my previous post.

0: https://arstechnica.com/tech-policy/2026/07/judge-doesnt-lik...

[WalterBright]

Ironically, Musk tried to back out of the Twitter deal, and the court forced him to continue with it.

Twitter is not the source of Musk's wealth. We don't know if it is profitable to him or not, many allege he loses money on it.

A lawsuit is not a criminal proceeding.

[nerdsniper]

Profitable or not, this sounds a lot like excusing someone who stole $150 million from others by not following the law - that, even if he did steal it by breaking the law, this $150M is not the source of his wealth. It appears to the judge of the court as well as to the press and to many observers from the public that he utilized that vast wealth to avoid any significant consequences for this great theft.

You do make excuses for those with capital who break the law, and even here you judge people's actions differently based on how much capital they have - if that $150M were the source of his wealth, your arguments would be different! Even though the actions would have been the same.

Would it be honest to simply state that those with vast wealth are the smartest, fittest, best humans among us and deserve deference from the rest of society? Vast wealth could then be a very convenient proxy for who should be granted the most power in our society, because they are the smartest, fittest, and best of us. They are smarter and better, so they would be the most adept at wielding that power - thus we should grant them as much power as possible so that it is all concentrated in the best hands.

My core thesis remains the same: An individual's captured/extracted value likely exceeds net value creation when examining the individual outliers who capture the most value. Therefore it is reasonable to tax them at a higher rate, to recapture some of that excess extracted wealth which went above and beyond their net wealth creation.

I would also say that even in the purest hypothetical case, it is reasonable for a society to decide not to grant 100% of all net created value to the individuals who created it, and for the society to capture some of it for broader societal purposes. I think reasonable people can agree that there would be real problems inherent in living in a world where the most extreme limit of income inequality is manifested - most of those problems would be related to concentrating power in the hands of those who break the rules to maximally enrich themselves.

This is all in line with my original assertion that the optimal choice between "maximizing greed is best!!" and "everyone should earn exactly the same as everyone else no matter what!" is....probably somewhere in between those two extremes.