Professor Bunyip coins a bon mot at my expense, saying in relation to a dispute between Sharon Beder and Leigh Cartwright over the effects of the Reagan tax cuts on revenue that
some of the itchier creatures in John Quiggin’s beard are the intellectual betters by an order of magnitude.
of one participant. Unfortunately, Prof B is not a professor of economics, and he applies the epithet to the wrong party in the dispute[1].
While there are plenty of open issues regarding the merits or otherwise of supply-side economics, the fact that the Reagan tax cuts reduced revenue is not of one them. This is an issue, like creationism for biologists, about which there is no disagreement among serious economists, although there are plenty of cranks and hacks willing to distort the data (for example by ignoring inflation and population growth) or ignore inconvenient facts (such as the fact that tax revenues only recovered when Reagan reversed course and raised taxes in 1986).
As an example of the distinction, here’s right-wing hatchetman Stephen Moore on Greg Mankiw, until recently Chairman of the Committee of Economic Advisors under Bush. Mankiw refers to Ronald Reagan’s supply-side advisers as “charlatans and cranks.”, specifically because of the claim that tax cuts increase revenue. Moore isn’t happy about this, since he is himself a prime example, but the “economists” he suggests as ideologically acceptable are so obscure as to be invisible.
fn1. I don’t mean to claim that Cartwright is the intellectual inferior of my beard fauna (not itchy at all, BTW), but his education has a long way to go on these matters.
John Quiggin 
Do you know of many people that make $5000 per hour? Its a rather extreme instance.
And if somebody has that much price power it is likely that the income tax they pay is being passed on to consumers in higher prices rather than being absorbed by the individual.
Lets stick with realistic examples. Not the top four income earners in the country.
I think an average CEO in the US makes well over $10 million/year; that’s about $5,000/hour assuming a 40-hour week. There are thousands of CEOs and tens of thousands of various other executives who are in the same pay range. Plus rich idle people who aren’t managers; they are ‘investors’. We are talking about probably a few hundred thousands people who receive significant portion of the total income and pay non-trivial portion of the total taxes.
Moreover, we could even move into $200+/hour territory and, I think, safely assume that these people won’t start drilling their own teeth and growing their own chickens. These folks probably provide over a quarter of total tax revenue.
What happens in the US, however, is that the top tax braket is being reduced (IIRC) from 40% to 35%, while the lower brackets are reduced insignificantly (i.e. 22% to 20%). Also the estate tax gets eliminated, the tax that’s paid by about 2% of the richest people. This is what people object to.
Using the 2006 tax tables as a guide I would say that in the context of the Australian tax debate when we talk about high income earners we generally mean people who earn $125000 per annum or more.
If you are saying that we should have a special income tax bracket for people who earn $10 million per annum then I would not really have much concern with your cause except to say:-
1. It would not raise much revenue.
2. It would involve an incredibly small number of Australians.
3. People who earn this sort of income as a wage would pass the cost on to their customers. If you can charge that price for your services you have a lot of pricing power.
4. People who earn this as an investment may choose to move their investments abroad or move themselves abroad.
I would not expend much energy arguing against your special income tax bracket for people earning $10 million per annum because such a tax would be highly ineffective and highly inconsequential.
I think high tax brackets should start way below $10 mil; $1 mil perhaps. Or, perhaps, a few increasingly progressive brackets, say, 60% from $.5 mil, 70% from $1m, 80$ from 1.5m, etc. Something like that.
1. I think it may raise significant revenue. If it won’t raise much revenue, then it’ll certainly modify their behavior and reduce income inequality.
2. That’s good, isn’t it?
3. I don’t get this ‘pricing power’ thing. Are you saying that in Australia prices are set by cartel or something? If not, then prices are usually a function of supply and demand and the tax rates have nothing whatsoever to do with it. Your top income tax rate may change from 35% to 95% and yet the optimum price for your particular product should theoretically stay the same.
4. If you’re a US citizen, the US government taxes your world-wide income no matter where you live, so moving abroad theoretically is not a solution. Australia is probably different in this respect. In any case, the Australians, obviously, can’t win the race to the bottom as far as the tax rates are concerned; there’s always a country with lower rates.
1. Reducing inequality by cutting people down seems rather negative to me. Better to focus on building people up.
2. Yes. It is better to persecute a small number of people rather than a large number. Still not nice though. Especially if the motive is just to cut people down.
3. I am saying that every supplier that is taxed attempts to pass the tax on to their customers through higher prices. The GST is paid a bit by the supplier and a bit by the consumersbut we never quite know the ratio. It is no different with other taxes.
4. It is true that we don’t need to have the lowest tax rate. However having the highest aint too clever either. For one class of people you are advocating that we implement taxes well above international norms.
How do you think we should tax people who earn between $100k and $200k per annum? I would find a discussion on this far more revealing and useful.
A person with income of millions of dollars (I’m thinking about US executives here) well deserves to be cut down. They are thieves. This kind of thievery is legal, but progressive taxation is also legal, so they have no reason to complain. These people make every month about as much as an average worker will make in his/her lifetime; I don’t see how this can be justified in a healthy society. It is nice to cut them down.
Prices are formed (or at least supposed to be) by supply and demand. The cost of a product has nothing to do with the tax rate that affects only rich people and if you raise the price, then I will enter the market and start producing and selling the same product for less; and you will lose. Theoretically at least, I don’t see any correlation between top tax rates and prices. Except that prices for the most poshly things (like yacht) will probably come down due to lower demand.
$100-$200K? These are working people – engineers, doctors, software developers, small businesses. Their taxes need to be as low as possible (assuming that the minimum wage pays $30K/year or so); I think 25% effective rate should probably be sufficient.
Being an executive does not make somebody a thief anymore than being a mechanic makes somebody a paedophile. The executive’s only “crime” seems to be that they are earning a high income.
Yes, progressive income tax is legal. Nobody is arguing against that. Just because something is legal doesn’t mean we have to like it or cannot complain about it. Have you never complained about a law in your life?
You admit that the reason you want to hurt high income people is simply so that the high income people are hurt. I find that immoral. What sort of person wants to cause hurt just for the sake of causing hurt?
It would be interesting if you also want to hurt high-income tennis players and actors for their crime of being high-income earners. Or, for that matter, whether you want to hurt attractive people for their crime of excessive attractiveness… or geniouses for their crime of excessive intelligence.
Prices are formed by supply and demand. Supply is determined by the marginal cost. Marginal cost is influenced by the tax rate. Therefore, the tax rate influences the price level. That was Terje’s point.
As to the original point — abstracting from issues of externalities, any tax that changes behaviour decreases efficiency, and all taxes change behaviour. You may think that such a loss is worth paying for the supposed benefit of hurting people… but that is a different debate.
John, being an executive does not make somebody a thief, that’s true, but being an executive who pays himself tens of millions certainly does; and this has nothing whatsoever to do with being attractive.
I don’t want to hurt actors or anyone else; you can’t seriously suggest that taxing someone’s income from $10 million to $1 million should be characterized as ‘hurting’. I’d rather call it ‘allowing them to keep a helluva lot of money’.
What I’m talking about is economic justice. A lot of people view economic justice as a moral issue too.
We have the economic system that’s fueled by greed, people are motivated by financial rewards. That’s fine with me, as long as it works. The system has flaws, however: some people work hard and live in poverty, others get rewarded by tens of millions every year for no apparent reason. And that’s a problem, problem with this system. Progressive taxation is one of the ways to fix this problem, it’s a typical liberal solution. There are other ways too – more powerful unions, for example. Every solution might have its own little flaws as well, but that’s just how it is, it doesn’t mean we should just give up and let the system run amok and destroy itself.
Why do you think that any tax that changes behaviour decreases efficiency? This is far from obvious. Taxes are collected and then spent on something, fundamental R&D, for example or highways, or, say, subsidized childcare for families; don’t you think some of these things might, in fact, increase efficiency?
Thanks.
No abb1, paying yourself lots of money does not make you a thief. A theif takes something that is not theirs through coercion/violence/deceit. An executive receives money through voluntary arrangements.
Of course that has nothing to do with being attractive. I never said that executive salaries were linked to attractiveness. Weird.
But if you want to punish rich people because they are lucky enough to be rich… then why wouldn’t you punish attractive people who have advantages because they were lucky enough to be attractive. At least wealth is linked with work. There is no justifying beauty inequality, so the attractive should be punished.
Of course taking somebody’s money is hurting them. Further, you said you wanted to hurt them (cut them down). And by saying “allowing” you seem to imply that the government owns all of our money and just “lets” us keep some of it when it is generous. That implies that the government owns all of our labour and all of our voluntary decisions. They used to have a word for that — and it wasn’t a good word.
I agree that justice is a moral issue. It is not moral to hurt somebody just for the sake of hurting them.
I just can’t see any justice in hurting people because they have been successful. Perhaps our political system will require us to take money from successful people to fund other programs… but is seems downright perverted to take the money simply to make sure a successful person doesn’t have it. That is just spiteful.
The economic system isn’t fueled by greed. It is fueled by voluntary interaction… whether motivated by financial reward or other non-financial reasons.
People get paid more either from (1) hard work; or (2) good luck. I can’t see any inherent reason to punish people for either. And if you want to punish good luck, then remember that you’re also punishing hard work… which goes directly against your stated preference to reward hard work.
I can’t see why you think executive incomes are undeserved, but that Pat Rafter deserved his income for playing the sport he loves. Both are being rewarded voluntarily for offering things that other people want. Just because the reason isn’t apparent to you is not reason to punish these people.
So I’m afraid I can’t see what this evil problem is that you’re trying to solve. You admit that all “solutions” have problems … but the original desease seems to be nothing other than envy.
And there is no reason to think that the system will destroy itself if we don’t punish successful people. Quite the opposite in my opinion.
Your final comment is a discussion of the efficiency of spending, not tax. Sure, spending can be appropriate. That is the reason to raise tax (as opposed to raising tax simply to hurt successful people). But that doesn’t stop the tax being inefficient. When considering spending decisions you have to weigh the benefits against the costs.
Changing human behaviour away from what they otherwise want to do (in absense of externalities) is by definition inefficient. It’s not my opinion — it’s the definition. If you want an apple more than an orange, but I change the system so that you end up with an orange… then you are worse off.
>An executive receives money through voluntary arrangements.
I hope Ken Lay calls you as a character witness.
John,
I don’t mind people getting paid for being attractive or lucky or even for spending their day playing golf with other execs and bullshitting Wall street analysts. I do, however, object to them being paid tens of millions of dollars for these – or any other qualities and/or activities. It’s unreasonable and extremely harmful.
There are plenty of voluntary arrangements that are deemed harmful and banned in civilized society – you can’t use child labor, can’t sell your kidney, can’t sell yourself to slavery, price gouging is illegal too.
I don’t see how this would imply that the government owns all of our labour and all of our voluntary decisions. Society via the government imposes rules that are deemed useful and fair. One of the fundamental rules would usually say that you can’t take advantage of people by physical coercion. Other rules should prevent you from taking advantage of people using other forms of coercion, I don’t see anything particularly eccentric here.
I still don’t see why changing human behaviour away from what they otherwise want to do is by definition inefficient. What exactly do you call ‘efficiency’? Suppose I wanted to get drunk, but taxes on alcohol are so high that I decided to go fix my roof instead. What’s more efficient here?
QUOTE: Suppose I wanted to get drunk, but taxes on alcohol are so high that I decided to go fix my roof instead. What’s more efficient here?
RESPONSE: I am not quite sure why you want to be drunk. However you will not get drunk from roof fixing. Roof fixing is an extremely inefficient way to get drunk. So your example proves the point very nicely.
Taxes make it harder for people to get what they want from life.
Oh, I see. Well, human beings often have relatively complex psychology, they might have multiple and conflicting goals, long-term ambitions and immediate urges. In this example, my strong urge to get drunk collides with my intention to have my roof fixed. Alcohol tax tilts the balance towards the roof-fixing. Tomorrow, when it’s raining, I’ll be happy about it. How do you figure the efficiency thing here?
Or you might get drunk in spite of the alcohol tax and then tomorrow find that the tax has left you unable to afford breakfast. How do you figure the efficiency thing here?
Generally I think individuals are better left to balance their short term and long term needs and wants. With a little life practice most of us manage to determine the path best suited to our personal aspirations and tastes.
Terje, I certainly agree that individuals are better off left alone, I just don’t think this is relevant to the taxation issue.
Paying rent, for example, also negatively affects my ‘efficiency’ (in the sense you’re using this word here), but hey, such is life. Frankly, I thought your example of decreased productivity (fixing your own fence) was a much better argument than this odd ‘efficiency’.
QUOTE: Frankly, I thought your example of decreased productivity (fixing your own fence) was a much better argument…
RESPONSE: The fence fixing argument is less esoteric. So yes I agree.
There is nothing harmful about high executive pay. There is no reason to punish them just for the sake of punishing them.
I think price gouging and selling your kidney should be legal. Slavery goes to inalienable rights and children (and insane people) are excluded from full participation in the economy (and in democracy, and driving etc). But those are sidetracks.
If you want to stop a voluntary agreement you should have to show why it is harmful. And you have given no reason why high executive pay is harmful except that you just want to punish them. Envy.
The implication that the government owns our labour came from your comment that the government “allows” us to keep our own income. You should read what I write more carefully.
There is no coercion used by executives. Any more than there is coercion from Pat Rafter or Brad Pitt.
Unless there is an externality, it is more efficient for you to do what you want to do. For example, tonight I want to get drunk. If the government instead got me to go surfing, eat potatoes or fix roofs tonight I would be less happy.
Paying rent does not effect your efficiency. It is a price. Nobody (least of all Terje and myself) are saying that all prices represent inefficient distortions! What we are saying is that when the government distorts the price, efficiency is reduced.
Well, paying taxes is also a price, how is it different? You want to use an apartment – you have to pay rent, you want to use facilities of civilized society – you have to pay taxes. You can probably find a country where there are no taxes or taxes are much-much lower, but will you like it there?
High executive pay is harmful first of all because it’s grossly unjust, unfair. For an economic system to be supported by a vast majority of participants, it has to be demonstrably just, otherwise it’ll eventually lose support and collapse. And the whole society will collapse, it happened before. I don’t want it to collapse.
There are other problems, for example: concentration of wealth in the hands of few is simply bad for the economy. It’s extremely unhealthy from almost any angle.
Now, if these people could print some kind of toy money for themselves, keep them in toy banks, trade toy stocks and be happy, I would never want to take their toy money away from them – see? I don’t want to punish anybody. But they take huge amounts of real money – that means less real money for everybody else, including me. This means that I am not being paid fully for the work I do. This means that steal from me.
What’s wrong with “allowing to keep”? Property is a social construct, some societies don’t allow individuals any property whatsoever; on the other extreme private property is considered absolute. Somewhere in-between, there must be a social order that protects private property, but doesn’t allow high concentration of wealth in the hands of individuals.
No, paying tax is not a price. Tax is not voluntary. If you disagree — try not paying it. This is a pretty basic point.
You have given no reason why executive pay is unfair or unjest, other than saying you want to harm them… just coz.
You say that concentration of wealth in the hands of a few is bad — but give no evidence that this is a particular problem now, or that it is even true. Real arguments require more than idol claims.
You say that more money for some means less for others. This is just untrue as a point of fact.
It is just untrue that executives steal from you. Steal is a real word with a real meaning… and executives do not steal from you.
It is just untrue that you are underpaid because of executive high incomes. The determinents of your wage have nothing to do with executive wages.
These issues aren’t my opinion. They are fact. Your claims are totally divorced from reality, which makes it difficult to pursue intellegent conversation.
You say you don’t want to punish anybody. But you actually said that you want to cut them down (it is nice to cut them down). Sounds like punishment to me.
You mention societies that have no private property. Such societies efectively keep their citizens as slaves. Do you think this is a good thing?
John, tax is just as voluntary as rent. Renounce your citizenship and move out of the country, that’s all there is to it.
The executive pay is unjust because it’s disproportionally high. Fairness assume proprtionality between combination of effort/contribution and reward. An executive whose pay is 500 times higher than that of the average worker clearly is rewarded disproportionally, it’s quite obvious. If you think the reward is proprtional, that would be your opinion (and rather eccentric one), not a fact.
That concentration of wealth in the hands of a few is bad also seems like a very trivial, common sense observation. I’m surprised you’re asking for a proof, this is very contrarian of you.
John, I agree that more money for some doesn’t necessarily mean less for others. But in this particular case it sure does. Cronyism that results in CEOs’ hyper compensations doesn’t produce anything good, just more corruption.
Since they get money they don’t deserve (as I think I demonstrated here), there are several possibilites: either they steal from the emplyees or from the shareholders, or from the consumer or from all three groups. Either way they steal from me, I am an employee, a shareholder and a consumer.
OK, if you insist that I want to punish someone, so be it – let’s say I am a vindictive guy who wants to punish the rich. I don’t think this is relevant here: I’m not trying to persuade you to become vindictive, am I?
No, I don’t think ‘no private property’ is a good thing. Wasn’t it clear what I said: no private property is one extreme, absolute private property is the other extreme, something in the middle might be a good compromise.
Tax is not as voluntary as rent unless you assume that the government owns all of australia and private property does not exist. Is that your position?
For what’s its worth — I have left the country. I still pay tax (though I’m working on that).
Being high does not prove the unjustness of an income. Note Pat Rafter or Brad Pitt. Or somebody who is hard working.
You again just insist that it is bad to have rich people. There have always been rich people and the world hasn’t exploded yet. History seems to be against you on this one.
No — high exeuctive pay does not mean less for you. No matter how much you hate them out of envy. You seem to think you have demonstrated over-payment for executives (though you are strangely silent about pat rafter)… but you have done nothing of the sort.
Once again I should point out that the word “steal” has a very specific meaning… and it does not mean to be employed voluntarily as an executive in a business.
If you can prove corruption with a particular executive — please go ahead. That is obviously a different issue.
Finally — you once again bastardise the debate with your final paragraph. You referred to countries with no private property as though to make a point. I pointed out that such countries were crap. Now you seem to agree… which undermines you original reference to such countries.
Some sort of compromise of private property may be necessary… but we should not compromise our freedom just for fun. There should be good reasons that we hand over power, control, money etc to the government. With regards to kicking executives for fun — you still haven’t provided good reasons. Except envy. Which I don’t accept as a good reason.
QUOTE: You can probably find a country where there are no taxes or taxes are much-much lower, but will you like it there?
RESPONSE: This is not likely. I can not think of any places that have no taxes. Etheopia taxes its people to death as does Niger. There are a few nations without income tax, but none without taxation.
When there were still frontiers (like the wild west) it was possible to find such places. And people did move into those places in very large numbers. A large number of Mormons headed into the American wilderness specifically to avoid government (and tax). It worked for a while until about a decade later the government arrived, charged them and their communities back taxes and sent them all bankrupt.
test
John, of course Australian government has sovereignty over Australian territory, that’s a given. I don’t see why it should mean that private property doesn’t exist. Quite the contrary, in fact: private property can only exist because there is a sovereign government.
It’s true that high income does not prove the unjustness of an income. I agree that someone who is working harder and/or contribute more should have higher income; but 500 times higher is simply unreasonable, even if we assume that they do contribute more, which is certainly not true.
John, they use their position to take property that shouldn’t belong to them. I call it stealing.
Now, John, let’s say for the sake of argument that you’re correct: I hate them out of envy. But that would only go to prove the main point I made earlier: their compensations breed resentment and will eventually destroy the system. As I believe (even if misguidedly in your view) that these people are stealing from me, I probably won’t be a very loyal employee; in fact I’ll probably be chatting with you all day instead of working. As more and more people start feeling and acting the same way, the system will fall apart. Isn’t it a bit of a problem by itself? Or do you think I am a rare exception?
John, I don’t know anything about the world of tennis players. I doubt their incomes are anywhere near US CEOs. Hollywood, on the other hand, is, obviously, one of the most corrupt institutions in the western world, all based on cronyism. Is Angelina Jolie a famous actress because she is a talent of because she is a daughter of Jon Voight? Michael Douglas? Kiefer Sutherland? Jamie Lee Curtis? The list goes on and on. This cronism and corrution ruined this industry, it now doesn’t produce anything but cheap kitsch. So, there you go.
I don’t know what your problem is with final pharagraph.
John H. said “Changing human behaviour away from what they otherwise want to do (in absense of externalities) is by definition inefficient.”
The absence of externalities is not a sufficient condition for people’s private choices to be economically efficient – which I presume is the type of efficiency that John is speaking of. Inefficiency can also arise from internal costs that are not properly accounted for in individual’s decision making. Bounded rationality, immature discount rates and other cognitive limitations can all lead individuals to make non-utility maximising choices. Of course, getting drunk is not necessarily sub-optimal from the individuals’ (or community’s) perspective – as John pointed out in response to abb1. But nor can we simply take “revealed preferences” as indicating personal welfare maximisation.
abb1,
I know I am not going to convince you, so I do not know why John and I do it – but we feel the need to try.
While a person on a very large salary may not physically swing a pick 500 times more effectively than a person on a ‘normal’ wage, there may well be reasons why they get paid that much other than simple theft.
For example – should a person who took a company that was failing, with massive losses, large job cuts looming and investors who were going to lose their money under the current management and then turned it around to a situation where there were no job cuts, no losses and a strong dividend then be paid $30,000 per annum and given a note of thanks?
I do not presume that all of them deserve the money, just as I do not maintain that everyone on a ‘normal’ wage should be paid what they are. No market is perfectly efficient. If you try to set an arbitrary level of ‘too large’ a salary you will overlook the situation where a person has created an enormous amount of value – even if that is a statistical outlier.
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I can hear you preparing a counterblast and all I can say is that this may be the reason why you will probably never earn a large amount – you react to others success in a negative way. Instead of saying “I think I could do that” and then going out and building a business you stand around the water cooler and gripe.
>A large number of Mormons headed into the American wilderness specifically to avoid government (and tax).
No, they moved to Utah to avoid the AMERICAN government and to attempt to set up their own theocracy instead.
Andrew, actually I have earned large amounts during the internet boom of the 90s. My federal income tax bill for the year 2000 when I cashed most of my stock options was way over $100K; I paid it without any bitterness that you guys seem to exhibit paying your, probably much smaller, bills.
I agree that one’s outlook is affected somewhat by his/her personal circumstances, but let’s not exaggerate here: plenty of famous people who are identified with economic egalitarianism were privileged, rich and successful: Tolstoy, Che, Engels, Kropotkin, etc.
As far as your hypothetical example of miraculous turnaround: yes, sure, this imaginary great manager should be rewarded – 10-15 times the average pay would seem reasonable. Let me remind you, however, that this example has nothing to do with reality; CEO compensations have absolutely nothing to do with their performance, they always get their millions, whatever the results are. You have to pay them tens of millions just to make them go away.
Typical scenario I observed in the 1990s’ internet/software industry: someone would start a company working out his basement, the company grows, they hire a bunch of corporate suits, go public, the suits run company into the ground and get away with the loot. I’ve seen this happening again and again, so enough bullshit, please.
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If you try to set an arbitrary level of ‘too large’ a salary you will overlook the situation where a person has created an enormous amount of value – even if that is a statistical outlier.
I’m an atheist, I don’t believe in super-heroes who create enormous amount of value out of nothing.
Also, these heroes of yours – why do they always happen to be corporate managers with access to corporate treasury and crony board of directors? Why is it that people who actually create something never get rewarded with tens of millions of dollars? Think about it.
Thanks.
When capitalist system’s working the way it suppose to work, the rewards we’re talking about should simply be impossible. Entrepreneurs are supposed to be squeezed between fierce competition and fierce labor demands for higher wages. Under this pressure the entrepreneur is supposed to come up with innovations – just to be able to survive. That’s the model.
Once you see people being regularly paid tens of millions of dollars, you know that something’s gone terribly wrong. Companies have grown huge. There are no entrepreneurs anymore, only speculators. All the decision are made by salaried managers who take no risk, their golden parachutes are always ready. The labor power is virtually non-existent, at least in the US. All fucked up and no way out.
I agree with you that there is something not right in the operation of public companies. To some extent shareholders have lost control of their property (probably through apathy) and many companies have been captured by the interests of managers (in the same way that Telstra was once captured by unions).
There is definitely an agent principle problem at work.
However I don’t agree with the cure proposed. Government as an agent is also flawed.
I think we still have a way to go in terms of corporate governance.
When it comes to entrepreneurs and their ability to make bucket loads I think that this is true only so long as they are providing true value. Labour is only one component in the value of a company. Capital is another. The entrepreneurs brings structure which is sometimes the key differentiator.
Bigger companies can often be no more profitable than small companies (in percentage terms) and yet they are worth more than their size would warrant simply because of added liquidity in their stock. This is often the motivation for mergers.
Some structures can be copied whilst others occupy a position of first mover advantage. I could probably have a website created that is better than eBay however it is highly unlikely that I could turn it into a hub where so many people would meet to do business. I could easily reproduce the business model created by e-gold but their ten year head start creates a significant advantage.
Even though the first mover advantage is hard for others to copy, it is still something that does provide genuine value to customers.
Business is 95% about co-operation (with employees, suppliers, partners and customers) and only 5% about competition. The notion that business is or should be all about competion is I suspect a rather modern construct.
Actually, I agree that redistribution via progessive taxation is a rather crude, ineffective and questionable mechanism. I’d prefer some sort of syndicalist solution. But progessive taxation is better than nothing.
abb1 — you don`t seem to know what private property is. It means being able to control it and use it at you see fit without having anybody take it from you. If somebody `allow` you to use property, then that implies that *they* own it.
And private property does not require a sovereign.
If executives didn`t add value, they would be sacked.
Executives take nothing by force, no matter how much you hate them. The definition of stealing was set before you or I started this debate.
Just because you hate does`t mean that everybody does. The evidence on wealth causing hate is mixed at best and unlikely to be true in my opinion. History doesn`t support you.
My problem with your last sentence (not the last sentence now) is that you seem to willfully not understand me and change the topic and consider that a point has been made.
QUOTE: I’d prefer some sort of syndicalist solution.
RESPONSE: Please elaborate on what this means?
John,
property is a social construct. You can own something only if people around you agree that it should belong to you. Do you think you own your car and your house by some decree of God or the forces of nature? Well, if there’s no government, people from the nearest urban ghetto (if you have those where you live) will probably disagree and defy God and nature.
You can’t be saying these things seriously. Come on.
I never heard of the word ‘stealing’ defined as ‘taking something by force’.
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Terje,
unions. Mandatory presence of union representatives on the board of directors, or something like that.
The best example of Syndicalism is probably the Mondragon co-operatives in Spain.
The Co-operatives are owned by the workers. New workers, after a probationary period, get a loan to buy shares. Ownership of shares by non-workers is either banned or restricted.
http://www.justpeace.org/mondragon.htm
What has 120 different companies, 42,000 worker-owners, 43 schools, one college, does more than 4.8 billion dollars of business annually in manufacturing, services, retail and wholesale distribution, administers more than $5 billion in financial assets, and has a business plan that is animated by the principles of the social doctrine of the Roman Catholic Church?
Answer: the Mondragon Cooperatives of Spain. In 1941, a bishop sent a young priest to teach in a vocational school in Spain’s “Basque Country.” In addition to the technical curriculum, young Father Jose Maria Arizmediarrieta taught the social doctrine of the Catholic Church to his students. Some of the students began a small cooperative that built kerosene stoves. In 1959, they started what we would today call a credit union. Today, the associated Mondragon Cooperatives manufacture automobile parts, electronic components, valves, taps, appliances. They have a full line of retail outlets (small & large) offering consumer products, food, appliances, and a wholesale food business catering to restaurants. Their bank has more than 100 branches, they offer a full range of insurance, and take care of their own social security and health insurance programs. They are not only holding their own within the “globalizing” economy, they are expanding.