Money as Reward, Money as Vote

I know that you’re not counting companies like debeers.

But I would add additional content to non rivalrous goods, price fixing:

Prescription eye glasses only cost 50 cents to produce. The mark up is about 2000%

There are dozens of major eyewear places that all collude for price fixing… technically, they’re “competing”. Eye glasses is one of the most well known.

Add to your list: price fixing

Yes, I agree. Price fixing, monopolies, asymmetric information. There are a lot of ways the market fails. My point here is more that, even where it succeeds, it undermines itself without countervailing regulation/policy.

It’s a compelling idea “constantly pushing votes back to initial conditions”

In many cases with market forces, such as innovation, once the cats out of the bag, it’s gone.

So, the regulation would even need to be more sophisticated than your initial offering.

The easiest way to solve the problem is that nobody can make more than x number percent of GDP per year. From there, you’re looking at investment redistribution.

Carleas,

I hope you saw my edit, I made it just at the time you may have been constructing a reply, and then decided not to reply.

About the easiest solution…

So, for example Carleas!

Who truly needs relative to our current GDP, more than 5 million dollars a year?

So, in a very successful company, every employee makes 5 million a year, and the rest goes to redistributive investment.

What this forces capitalism to do, is to make it more democratic.

Want to build something for a billion dollars?

You need the consent of a billion divided by at most 5 million.

That’s the perfect capitalist system.

Carleas, I’ve thought about this a lot!

Feel free to offer your rejoinders.

I am reminded of sports, particularly pre-commercialised sports.

In tennis, for example, all your previous successes and failures will seed you accordingly, but come a new tournament you are all back to ground zero. If anything, success makes it harder for you in future as you qualify to be placed against similarly successful players. This is a pure form of truly fair competition, with the exception of a fairly low barrier to attaining the best equipment, of which there isn’t much that is required, and to attract the attention of the best trainers. Sponsorship gives you no advantage beyond not having to worry about your finances.

In team sports, a new season will similarly reset everything - your previous successes and failures may put you in a higher or lower league, but again success makes it harder for you in future - this kind of mechanism is both satisfying for all and keeps itself in check. Some additional drawbacks to the above are the tendency for top teams to buy and sell individual players in accordance to what they think will benefit the team as a whole, which becomes more of a corporate brand. The chemistry between specific players is less important than general adaptability to play well with anyone. Here, the corrupting effects of the free market come into play even more to compromise fairness:

Capitalism has the exact opposite mechanism. Where success in sports makes it harder for you, success in the free market makes it easier for you. The inversion of sportsmanship.

E-sports often have an interesting fairness check, where between seasons MMRs (matchmaking rating)s or Elo ratings are contracted towards the average. This requires that the best players continually have to win back their claim to proficiency, and players stuck playing with inexperienced and/or incompetent players get a chance to play with better players who won’t ruin their overall team’s performance regardless of how well they do individually.

The common theme of the “marketplace of sports” is that they are regulated/interfered with in order to make things fairer and more satisfying for everyone in the exact way that the free market is not.

For sure. In many ways it is better for the mechanism to inherently enable those at the top who are the best at providing for everyone.

The issue is the degree to which putting all your resources in the hands of the few is proportional to the overall benefit that they provide for everyone as a result of their reward.
It’s at this point that every pro-Capitalist will shout at me about the Zero-sum fallacy, and I have to explain that I don’t think there is a zero-sum of fixed pie, just dimishing returns in addition to the tendency towards oligarchy and even monarchy (autocracy and dictatorship).

It’s a false dichotomy to either have the strongest lift everyone up or to lead from the back and enable the weak to lift themselves up and become stronger. I believe there’s an optimal threshold of doing both that an unfettered market mechanism, where success makes it easier for you and failure makes it harder for you, fails to deliver.

However, it is true that this threshold is variable. For example, in conditions of scarcity and difficulty, putting all your resources into the hands of the strongest makes more sense because the weakest will drag everyone down and the costs of being dragged down are too great. This is why most of nature selects for such systems - because they are still “in the food chain” and danger/vulnerability is rife. It’s also why Capitalism is effective for less developed economies and the less advanced periods in the history of more developed economies. However, once times become easy and resources bountiful - such as in modern western society - the benefits of diverting resources into the hands of the few no longer has the same impact, if any benefit at all - perhaps its even detrimental. The spoilt entitlement of the richest and most pampered upbringing is notoriously damaging and wasteful. It is at this point that the optimal balance swings over to enabling the less fortunate.

This is in addition to the lottery-like nature of modern financial success. Being born into it, happening to get into situations where you meet the right people, or making a good investment that others did not dare to risk - nobody can predict the future, regardless of the fact that predicting the future changes it, and an economic system that centres itself around the ability to do so is little different to gambling.

Absolutely.

I’m actually interested in the notion of in-built mechanisms that resolve “the rewards and votes no longer serv[ing] their initial function” without resorting to proposals such as “wealth tax, estate tax, and basic income as pro-market policies that strengthen the ability of market forces to allocate scarce resources”.

I support such things in the meantime, but I think the world of sports and esports provide a lot of empricial insight on how to make a system satisfying, fairer, and better for everyone.

The cynical part of me suspects, however, that making things better for everyone is exactly not what too many people desire. Too many people would prefer measures to keep others down, even at the cost of themselves, just to gain advantage over them by any means. It’s a rational decision for those in a better situation than they ought to be, because fairness is seen as threat to their advantage. I don’t agree, I think lifting everyone up will make things better for even them, but their requirement is to be better than other people, not better for themselves. In this case, I believe it is even more important to bring about fairness, to root out such petty sabotage.

[I found this mostly-completed reply while going through my saved drafts. It was a good conversation, but my kid was born right around that time so I forgot about it and never posted my reply. Apologies, and I hope people are interested in picking it up again]

Ecmandu, a couple nits:

I don’t like income as the determinant of the rate of taxation (because people with the same income and different wealth differ in the amount they are able to afford taxes and in the amount they benefit from the social order).

I also don’t like hard lines in economic policy. Why treat the 5-million-and-first dollar so differently from the 5 millionth? and what happens when the meaning of $5 million changes through inflation? Or, to your percent of GDP proposal, what happens as the population grows, so that the relationship between percent and per capita changes? Hard lines are hard to avoid, but where possible I prefer incentives that naturally scale. For example, rather than a hard line at $5 million, so that the tax rate goes to 100% after $5 million, instead have a rate the phases in asymptotically towards %100 but never quite reaches it, and at a rate that is continuous with the rate below $5 million.

This latter preference is partly intuition and aesthetics, so take it with some salt. But cliffs in rates of taxation tend to bunch too much activity around the cliff, instead of letting people peg the appropriate threshold for their circumstances. You lose information about where in the jump between $5m and $5m+.01 people actually start to care. Since I value the information production function of the market, I see that as suboptimal.

I basically agree, although I don’t think we need every person making $5m to make it work. Even a modest basic income has a similar effect.

Several people have also proposed something similar as a remedy for corporate money in politics: give a few hundred dollars to every individual which they can allocate to political campaigns, and you swamp anything that corporate lobbyists can do pretty quickly. Total spending on lobbying in 2018 was ~$3.5 billion, so giving every voting-age individual $150 to put towards their favored campaign would beat that by a order of magnitude.

This is close to what I would want for the economy, though it’s harder to achieve when it’s not just regressing Elos (more on that below). I think of it as wealth having a sort of gravity that increases as you move away (so, the strong nuclear force would be more accurate, but less accessible). On the low end, I’d also see a non-zero minimum below which a buoyancy-like effect lifts people upwards.

These interventions also keep the game playable. It’s not that fairness and satisfaction are ends in themselves, but that games that are unfair and unsatisfying don’t get players. And in that respect, the same idea applies to the economy: when we design a system for society, it has to be self-preserving in the sense that it keeps people engaged in the system, bought-in to its continued functioning.

I don’t have much to add here, but wanted to acknowledge that it is a good way of framing things. I also liked the point that it changes over time and by circumstances. In hard times, we might think of the external world of scarcity as playing the role that a redistributionist policy would play in more opulent times: people can only get so rich, and the stochastic mechanisms of disease and the desperation of their neighbors will tend to tear them down from time to time. And since the top is pruned frequently, there is more opportunity for those at the bottom to improve their lot through hard work and ingenuity.

I’m curious to hear your objections to these specific policies, and what alternatives you see. I’ve seen good arguments against wealth and estate taxes as unworkable, and I think a land value tax would do roughly the same thing with less overhead and less gaming.

But I also think that these policies might best be thought of as “the worst policies except for all the others”. Against the alternative of systemic malfunction and collapse, somewhat onerous taxes don’t seem so bad.

Unfortunately this seems to be how humans are wired: to care less about absolute circumstances than relative circumstances. You can see that in the modern left in the developed world, which is angry and disaffected because of billionaires, despite themselves living in a state of absolute abundance (and even relative abundance when compared with those in the third world, who are out of sight and out of mind).

But my understanding is that people aren’t as upset about being worse-off when they can see the ways in which others are adding more value, e.g. if someone does more or better work, people believe they should be better compensated. As you say, making things obviously fair will help to preserve the system.

Carleas, I’ve evolved since my last post…

This post may make you think I’m insane.

The economics part is about in the middle…

viewtopic.php?p=2760234#p2760234

A technique some games use, for example the racing game Mario Kart 64, is informally known as “rubber banding” (a type of “dynamic game difficulty balancing”).
In the case of MK64, the players who are doing the worst get a slight boost in speed relative to how behind they are, and they also receive better items if they manage to pick any up - including a weapon that homes onto first place :laughing:

Presumably this is the kind of thing you’re referring to through your “buoyancy/gravity” analogy?
Funnily enough I actually resent such measures (the original Mario Kart was so much better!) and I’m probably not alone - in probably exactly the same way as many of the richest people if all their efforts went towards endangering their ability to “race themselves”. Of course many rich people actually support “rubber banding”, and in the context of competing against others many might enjoy the added challenge of being maximally threatened the better they perform. This isn’t to say that the same would apply to me in the market economy if I was rich, because not only am I not interested in business or ostentatious material reward, I hate the idea of hoarding resources that others either need or would really appreciate. Racing against myself to see how fast I can go doesn’t hurt anyone, and I wouldn’t be interested in it if it did hurt anyone - even if merely indirectly or at least relatively. The way in which the market economy requires elevating the few so much in order to elevate everyone to the degree that it does feels like little consolation to me - and I don’t like seeing it in anyone, not just in myself - that’s why I’m a leftist. The market economy seems like a pandering to various nastinesses that only some humans exhibit, and I don’t like encouraging or rewarding such things. I want any “people at the top” to be genuinely inspiring and clearly worthy of their success, which other than several notable exceptions, doesn’t feel like it’s the case under a market economy at all.

As such, in the context of economics, I support your notion of gravity/buoyancy.

This is exactly why I see the psychology of games to be so interesting, and with so much potential towards broader applications.
It’s unfortunate that games are so widely perceived to be a waste of time, or at least inappropriate to apply to economics - I’ve no doubt that most would find the idea of applying gaming principles to economics to be a joke. But hopefully this is just an easily surmountable problem of marketing (in the least deceptive way possible of course) or at least a problem of time and generational fluctation. Though the idea that I’ll be dead by the time we get there doesn’t entirely relieve me of resentment.

Whilst “the top” is much like a babbling fountain in this sense, it certainly seems that water droplets at the top of the market are continually bounced back up and those pooling at the bottom are mostly stagnant.
I don’t support some kind of system where those at the top are thrown straight back to the bottom, I just think that - mechanically - the best/only way to draw up those at the bottom isn’t simply to make the fountain as tall as possible.

I believe I’ve come up with a compelling solution, which I laid out in a thread here.

I don’t like the idea that “humans are wired in some particular negative way” - it seems to me as though there’s a significant variation in how different humans “are wired”.
It seems to me that most humans are held hostage by pandering to how too many humans “are wired”, and even rewarding them for their socio-economically unfortunate wiring.
It’s only a lot of people who “prefer measures that keep others down, even at the cost of themselves, just to gain advantage over them by any means”. Not all of us, by any means.

Perhaps it’s the case that when it comes to the more powerful “loss aversion”, humans tend to care more about “absolute circumstances”, and when it comes to the less powerful “propect of gain”, humans tend to care more about “relative circumstances”. If there is a “human wiring”, I don’t think it’s unfortunate that this probably sums some of it up - it seems more inevitable that all life as a whole would adopt this behaviour.

I agree that people aren’t as upset if they see others being rewarded for transparently adding more value.
Why then do have so much “private business” dominating the top of this business of “adding value”, where by definition nobody except lawyers and auditors can see what’s going on and what makes the beneficiaries so deserving of their rewards?
The whole reason government is so distrusted by so many people is because they can actually see how incompetent people can be, and everyone is visibly accountable. That’s just life though - many people are just bad, but it seems the perception of only the public sector suffers, where the perception of the private sector is that it’s attracting all the best people who are therefore so much more competent and do the job a so much better - when anyone who’s worked in the private sector knows there’s an unmanagable abundance of incompetence and understaffing to cut down on costs (for the sake of profits) there too. Like you say about the third world being “out of sight and out of mind”, it seems that the inability to see what goes on in private business (combined with some hand-wavey pseudologic) is enough to save its reputation as so distinct from the public sector.

So is it worth the privacy of the private sector just to maintain the public perception of it, if it means we can’t see and appreciate the best of what goes on to make certain people so successful?
It’s largely loss aversion no doubt that makes many at the top paranoid about transparency in case people might deem them unworthy of their riches.

“Everyone” knows that that corporate welfare is what makes people successful. Siphoning money from the vast poor to bail out every company that would otherwise be bankrupt otherwise.

I find it funny that the Reagan administration used to berate “welfare moms”, who added all together (combined) only make as much money as the three wealthiest people in the US.

It’s fucking disgusting.

Actually this statistic sounded impressive. It’s not!

The three wealthiest people in the US own more wealth than the bottom 120 million people (not including homelessness!)

What this means, is that the top three wealthiest people in the US own more wealth than the bottom 1/3rd of the US population!!

I think my post is responsive to much of your argument there, but I’ll say a bit more. Capping companies from paying more than $X runs into problems where people 1) work for multiple companies; 2) get compensated in other ways, e.g. company car, house, plane; 3) people make money from non-company endeavors, e.g. buying an selling commodities; 4) people store their wealth in other forms, e.g. houses, artworks, precious metals; 5) people barter for the things in #4 instead of taking payment in cash.

I also maintain that cliffs are bad, of which I’ll say more in the first part of my response to Silhouette.

I don’t know that. In fact, I don’t think that’s true, in which case no one “knows” that.

This is a great example of the type you note later on when discussing the value of games to economics. And it happens to be a game I’m familiar with, so even better.

So we two separate interventions in the MK64 to level the playing field, and for me they feel very different. There’s the “rubber banding” (“RB”), where the players in the rear are given a boost to help them keep up with the leaders. And there is the “blue shell” (“BS”, how appropriate), where players in the rear get an item that specifically damages the player in the front. I find RB to be a better way to level the playing field than BS. BS feels arbitrary and unfair. Two racers neck and neck for first will see one of them lose for no reason other than that they are winning in the moment the BS happens. That randomness is frustrating. By contrast, RB feels less unfair, even though it also makes objectively worse driving still competitive with objectively better driving. I think it feels less unfair because it’s a little smoother, it’s not arbitrary or unpredictable, and it still requires that racers have some skill to get into the lead.

I’ve seen the term “Blue Shell Effect” used in other eSports, noteably CS:GO, a team FPS game that has a between-round meta-strategic element of buying upgraded weapons using funds earned for in-game accomplishments. Losing teams get more money to buy guns, which makes each match more even. It’s called the Blue Shell Effect because it helps the loser compete, but it does so in a less intrusive way than either BS or RB in MK64.

I think it has to do with not interfering with the goals of the game, or the criterion for better play. CS:GO is first and foremost a first-person shooter, not an economic strategy game. Those elements spice up the game, but interfering with them leaves the core of the game untouched. By contrast, MK64 is a racing game, and BS and RB take away from that: RB just makes racing poorly less determinative of placement, but BS actively punishing being the best racer, and thereby makes the optimal strategy one of slowing down to stay in second until as late in the race as possible.

I don’t think this is inherent in a market economy. Our economy is significantly captured, and past winners have structured the laws to make keeping wealth easier than making wealth.

But setting that aside, I think the left (of which I consider myself a part) is often too eager to cut off the nose to spite the face. The difference between a 2% growth rate and a 1% growth rate is enormous over time, and we should be reluctant to choose the latter just because it also means a smaller increase in inequality.

Being “at the top” can mean more than one thing, because people get paid in different ways. People who earn lots of money might also earn lots of disdain. People who earn genuine admiration might not get paid much to do it. That makes sense because people will be willing to accept lower compensation to play a role that pays in admiration, since people like being admired, but will need extra money to compensate for doing unpopular work. That gets back to the original point: lots of unpopular work is socially valuable, and it’s fine to compensate those people more, but in it becomes a problem repeated games with the prickly people who are willing to be unpopular for money get massively more votes in what is valuable.

I recently learned of the concept of ergodicity, and I think it’s a desirable feature in an economy. In short, a system is ergodic when the distribution of a collection in any instant is the same as the distribution of any member of the collection over time. A fair society would be ergodic over generations, so that the status of ones wealth/class at birth were independent of the status of ones wealth/class as an adult, and the probability distribution for any individual mirrors the distribution of wealth in society.

I haven’t read your Pareto Distribution of Wealth (but I will), but from a quick look it seems similar to this idea (if only in the way it considers the structure of society independent of values and policy).

I don’t disagree that there is variation, and there aren’t really any human universals, but there are things we should expect the average human to do, and ways we should shape society in light of those expectations. Humans are, after all, not blank slates, we inherit some ‘wiring’ dictated by the circumstances of our evolution. And we can see similar wiring in our closest animal relatives, who show similar preferences on average (despite, again, significant variation).

And of course this is not to excuse that behavior: one way to encourage people to suppress instinctive selfishness is to punish it through law, policy, and culture. But in shaping those, we should be aware of what people will tend to do, what instincts we’ll need to counteract, and what policies will work with those instincts to maximize buy-in and optimize outcomes.

I’d also point out that these ‘wiring’ tendencies are not all toward selfishness. We also see innate cooperative and pro-social tendencies, like a visceral distaste for unfairness and desire to help members of the community. Humans are social animals, and we’ve evolved to be part of a collective, and to support that collective even to our own detriment, and to punish others who don’t support the collective.

This is part of why I’ve long been a skeptic of privacy and secrecy as a policy, but to push back a little: many of the factors that make choices rational are opaque from the outside not only because of secrecy of facts, but because a surface-level understanding of the facts doesn’t give an accurate understanding of the dynamics of an organization that an insiders deep understanding provides.

We can see something similar going on when we look at the choices of the poor who live in a state of precarity, who often make choices that are hard for those with more economic security to understand. For example, buying and wearing gold jewelry seems extravagant for someone who lives paycheck to paycheck, but when we consider that choice in light of a lack of a secure place to store wealth (e.g. shared/insecure housing, not banks, etc.), the relatively liquidity of gold, and the social signaling function of displays of wealth, those decisions become easier to understand. Without considering the full picture, it’s easy to conclude that people are making a bad decision and should be punished for their bad choices, but in fact those decisions are the rational reaction to a situation we may not fully understand.

This is somewhat at odds with the goal of “making things obviously fair”, and I’m not sure what the takeaway is for policy makers, other than some humility that we might not actually know what fairness looks like. Indeed, to generate the perception of fairness, we might need to make society deeply unfair.

Carleas, you said it yourself!

You disagree that corporate welfare is the ONLY thing that makes people “mega-rich”, but then state that the mega-rich make the laws that allow it to be easier (certain in my book) to keep wealth than to make it.

The only argument you offered that I see as having import to what I offered was that people have multiple jobs… everything else can be explained by having a co-op economy or registered as part of the salary.

To this argument I offer two things:

1.) if you’re making 5-10 million dollars a year, you have no need for two jobs!

2.) the Internal Revenue Service can track whether you’re making more than 10 million a year with current gdp percentage and cut it off at 10 million per annum.

Actually, let’s get inside the minds of the aristocrats…

They need society to believe that a kid working out of their parents basement can become a billionaire — let me ask you this (they lose nothing by doing this) — do you really think that a bill gates or a mark zuckeberg couldn’t have been stolen from the aristocratic class back then?

Aristocrats gain MORE stability (from revolution) by ALLOWING this to occur.

It in no way means that wealth gains aren’t all subsidized by our taxes. Sure, let Bezos be the richest business person on earth, doesn’t matter to the aristocrats. In fact, it’s part of their Business model! To allow this to happen. Once these people join “the club”, they stay there. Siphoning off the tax payers to stay rich—- part of that siphoning is the laws.

I think there’s a difference between saying that the laws have an influence and saying that “corporate welfare is what makes people successful”, but maybe we need to unpack those terms a bit.

First, by “corporate welfare”, I mean things like targeted tax breaks for corporations or other things that increase the rents captured by corporations. I wouldn’t include the corporate form itself, i.e. the legal fiction of corporate personhood that separates a company from its owners. Corporate personhood is useful for coordinating individual activity and reducing transaction costs, so they actually create value and don’t merely capture rents. I also wouldn’t use the term to describe corporations that are created to exploit opportunities created by regulatory policies (which is a different case from where an existing corporation lobbies regulators to create new regulations that lock-in its existing place in the market, which I think do think qualifies as a form of corporate welfare).

The other fuzzy terms are in the phrase, “what makes people successful.” Are we talking about but-for causation? If by “successful” we mean something so that only the richest person on earth qualifies, and by “makes” we mean the but-for causation, then if corporate welfare has increased Jeff Bezos’ wealth by 2%, we could say that corporate welfare is what makes him successful. But I think those are not the natural definitions. If instead by “successful” we mean >70th percentile, and by “makes” we mean some stricter form of causation such that corporate welfare was both necessary and sufficient, then it seems obviously false to say that corporate welfare makes people successful in that sense.

Corporate welfare exists, it plays a role in picking winners and losers, and an even larger role in amplifying the returns to winning, but to say that it is the only or primary or even plurality cause of success – for a what the average person would describe as success – is too strong.

This is hand-wavey, to say the least. We don’t have a “co-op economy”, we’ve never had one, no society close to the scale of the modern international order – or any single-digit fraction thereof – has had anything close to what I can only imagine you intend by a “co-op economy”. To say that what I’m pointing out aren’t problems because they can be easily resolved by upending civilization and replacing it with a poorly specified and untested alternative is… not a strong rebuttal.

Sure, taxes are meant to secure individuals in the persons and possessions. They subsidize the commons.

Carleas,

You are aware that the mega rich pay no taxes, right? They’re just following “the law” (with slime bag lawyers)

They launder money through the caymans or some such bullshit.

But you get a guy like Willie Nelson or Wesley Snipes who both know income tax is unconstitutional and the (illegal - unconstitutional) IRS rains hell on them… but NOT the billionaires!! You start to understand that the taxpayers are PAYING!!.. For the laws as well! That’s corporate welfare as well.

In 2018, the to 1% by income paid >37% of all federal income taxes. The top 5% by income paid more than half of all taxes (>58%). (From here, seems consistent with data here’; this article sadly does not link to the data it’s based on, but has the top .1% by income paying ~22% of all taxes.

So no, I am not aware of that, and neither are you.

You’ve taken some outlandish positions over the years, but I never would have pegged you for a Sovereign Citizen! What a boring way to have outlandish beliefs!

Carleas, take it from trump himself (who says he pays no taxes) and that he’s just following the laws as written because he’s a smart alpha male.

I’m assuming your “negative” in negative 22% was a typo.

Have you never heard of tax loopholes?

You mean that all the super rich who could use them decide not to?

Maybe we’re not talking about the same tax bracket.

There are only about 1000 people on earth as rich as trump. Even if trump payed for “the wall” out of his own pocket, he’d still be one of the thousand richest people on earth (oh poor trump sobs)

read above post as well

Carleas, if you don’t believe me, read this New York Times article…

google.com/amp/s/www.nytime … s.amp.html