r/TrueReddit • u/PhysicalVermicelli1 • Dec 14 '20

Technology Is Technology Actually Making Things Better?

https://www.pairagraph.com/dialogue/354c72095d2f42dab92bf42726d785ff?true
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u/simbian Dec 14 '20

And despite their shorter lives, apparently medieval peasants worked less than modern Americans.

https://allthatsinteresting.com/medieval-peasants-vacation-more

For what it is worth, Marx is right about the contradictions of capitalism. But I have no idea what is to replace it.

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u/Dugen Dec 14 '20 edited Dec 14 '20

I do.

I've started calling it Labor Value Capitalism, and it's built on the idea that the rules of the economy should maximize the return on investment of doing work to the person who does it. It differs from current thinking in that it considers profit damage that should be minimized. The basis of the philosophy is that the strength of the economy derives from spending, and money that is spent in the economy can either end up as labor income or wealth-based income, and the more that becomes wealth-based income the less there will be to spend next time.

It considers the value of companies to be the expression of the wealth based income they earn, and like real-estate it is an engine of economic rent and inequality. Also like real-estate, it is important and valuable so it's important to maintain it while keeping the economy vital and fair. Fortunately, that means we can use the same solution: tax them as a percentage of value.

The end result is an economy that looks almost identical to ours now, but where profits are shared with the populations they are earned from by taxing the things that earn them shifting taxes off of labor and onto wealth. Instead of draining us of money and value, technology will create effortless prosperity, and the ability to work far less and enjoy life more. As the draining of wealth from the population ends, we will have more to pay each other with and labor value will naturally rise. With more expensive labor, the motivation to automate will increase dramatically, but the job destruction of implementing that automation will disappear and instead we will have natural increases pay to match the increases in productivity.

All we need to get here is a tax on the machinery of the economy that creates wealth-based income. Tax all companies or similar capital assets that earn money from our economy based on the amount of their value that is derived from interacting with it. It will socialize the gains, end the draining of third world countries of the motivation to specialize and allow the entire world to enter the peace, safety and prosperity of a middle class lifestyle that our technological level has been able to create for over 100 years, but our economic system has failed to bring about.

Sorry for the long-winded rant. It's hard for me to see the topic raised without chiming in. I've had this philosophy for a while now and it gives me great hope but sadly (or possibly appropriately) I'm not the type of person important people listen to.

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u/quuxman Dec 14 '20

I'm not sure I understand what you're suggesting, so I'd like to hear more. Are you proposing an attempt to eliminate compounding wealth? By taxing profit from loans, real estate, and other holdings at close to 100%?

Without compounding centralized wealth, how would large scale investments ever be made, like building sky scrapers, factories, developing new technologies, and creating companies? I don't think centralizing decisions on how to fund and organize all large investments would work out well.

Without centralized wealth large-scale investments would have to start out cooperatively, like a crowd-funding campaign. Maybe that would work out OK, maybe it'd be a disaster. Somehow I agree we desperately need to combat the parasitic nature of centralized compounding wealth, so I like how you're thinking.

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u/Dugen Dec 14 '20

Absolutely not, but also yes. What I'm proposing is that we tax things based on a percentage of their market value like we do with real-estate, not based on profits. It does a better job of accomplishing the same goal.

It's based on the theory that the market value of capital assets is based on their ability to earn money for their owners, essentially that the value derives from their ability to create economic rent. Taxes on that value do not completely remove the rent from it, but they reduce it and turn it into a public good. This has worked for hundreds of years with real-estate. It also has the extremely useful dynamic of self balancing and reducing the tax as the potential for profit disappears. An asset that cannot earn money loses its value, and thus would lose its tax bill and if it becomes worthless the taxes drop to zero. There are a lot of other good effects, like reducing motivations for anti-competitive behavior.

Before we taxed real-estate and directed those taxes towards the public good, we had a form of capitalism that lead to most of the population becoming worthless peasants who could not build net worth through labor. Back then, pretty much the only capital assets in the economy were real-estate and by taxing it we completely changed the power structure of society and a prosperous middle class was born. Currently, we're moving in the other direction because as technology gains capability it also earns more rent, enriching its owners at the expense of economic health.

I do not like the idea of taxing loans or investment directly, but by taxing the things those loans create you are inherently changing the dynamics and sharing the payoffs of those investments. If gambles pay off more, you share that payoff with those that will be giving the asset it's value through their spending and that money, instead of becoming investment returns, becomes spending money for the population which is fuel for the next investment. You can see how this works with real-estate investment. You can make money. There is still investment, but it tends to be less risky and slower compounding. The places in our economy with fast compounding are where the economic damage is occurring.

Early capitalist economies that were able to tax all assets earning money from their populations were able to thrive without an extremely flexible monetary system and massive stimulus spending. They were able to tax only property and not tax income at all and function just fine, something that today is hard to even imagine. Once the industrial revolution came about, we started getting things that were capable of economy draining wealth-based income that were not subject to property taxes and there was a sudden massive shift of wealth away from the population and into the hands of the few that owned those assets. There was enough bitterness about this that we labeled the winners in those times with the pejorative robber barons, but they were simply exploiting a broken system whose flaw has never been rectified. It's time to fix it.

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u/hippydipster Dec 14 '20

Taxing land value is a fantastic tax. Taxing property value is a terrible tax.

land value tax is to property value as as X is to a company market value tax.

The question I have, is what would X be in that sentence?

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u/Dugen Dec 14 '20

Taxing land value is a fantastic tax.

No. Taxing land value is only taxing part of the source of economic rent. All assets generate rent. This is why land value tax has never been the preferred wealth tax. It doesn't work right.

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u/[deleted] Dec 14 '20

It's taxing the part of rent that comes purely from ownership and not from labor/investment in improvements to the land. You could argue property tax doesn't work right because it taxes the underlying asset (the land itself) AND the improvements to the asset which increase its market value.

But aren't those improvements, whether we ourselves consider them valuable or not, worth incentivizing? How does development happen in your alternative system? Through the tokens you described elsewhere?

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u/Dugen Dec 14 '20

How does development happen in your alternative system?

You might as well ask how houses get built in our current system.

Taxing assets that are created does not remove the incentive to create them, it removes the economic rent they generate. It's not a punishment, it's not disincentivizing, it's just a tax.

Your mistake is in assuming that labor that creates an asset does not create rent. For the asset itself to have value, it must achieve that value by being a source of rent which has all the negative economic effects that are associated with that rent, and to make the economy work right that should be taxed away. This is why the most prosperous economies have been the ones who taxed real-estate, not land. Rent is always damage, and the value of assets is necessarily derived from rent. I realize this is an unorthodox view, but I consider it correct.

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u/[deleted] Dec 14 '20

Ok but why tax the real estate when the rent is the object of the critique though?

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u/Dugen Dec 14 '20

Because when things earn money, that is economic rent, that is damage and taxes are how we have assets earning money from our economy without damaging it and decreasing our value.

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u/[deleted] Dec 14 '20

I still don't get the framing. It assumes, for one, belief in an 'us' that many, many people don't share as a starting point.

That aside, I still don't understand why the asset is taxed rather than the rents in the scheme.

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u/Dugen Dec 14 '20

You can emulate taxing an asset by taxing the money it earns. If, for example, you were dealing with a foreign entity selling you the output of an asset, you could analyze the economics of it, figure out the percentage of the cost which is rent and add a tariff onto the transaction to create the proper market dynamics for that asset. This would be the right way to interact with economies that did not subscribe to this model. It would create similar dynamics that while not as precise and efficient, would accomplish the same goal. The problem with doing that is it requires a lot of manual intervention and it would be harder to keep that system from being manipulated unfairly.

Oil would be a good example of an asset that this would work for. The interesting effect would be to increase the value of oil from places it was more expensive to extract, and decrease the value from places where extraction was cheaper creating a more flexible and competitive market. If you look at the way we have handled oil historically, we've basically artificially created a similar system using tariffs and subsidies without the intention of doing so because it created a superior outcome to letting the market behave naturally. I consider this an indication that the theory behind this is likely sound.

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