Income, Taxes, and Work

[Night Strike]

Patches, I'm aware of how banking works. However, in the same statement you say that you give control of the money over to the bank, which means they do have money to give out to others in loans, etc. They are only allowed to give out a certain amount of their money in loans, which is why they always want more people to open savings or checking accounts with them. The goal of every individual should be to get themselves out of debt, but credit should still be available for use when necessary.

[Phatscotty]

John Below #1 works a normal 40 hours a week job, earns 50k a year. He get's taxed at a 25% tax rate.

Jane Blows #2 works a long 50 hours a week job, earning 150k a year. She get's taxed at a 28% tax rate.

Joe Blow #3 works his ass off, 60 hours a week, does damn good for himself, and ends up making 400k a year. He get's taxed at a 35% tax rate.

Mr Rich does nothing all year but party, relax on the beach, and snort blow. He makes 3.5 million dollars due to his fat stack of cash. He gets taxed at a 15% tax rate.

This seems completely backwards. Shouldn't Mr Rich get taxed at a %50 tax rate?

If Mr. Rich doesn't work....why would he pay income taxes???? Is this how we should treat our retirees?

[Phatscotty]

No because it's misleading to state that Mr. Rich "does nothing but party." His saving and consumption decisions affect others.

Irrelevant. Everybody's savings and consumption decisions affect others. The fact is Mr. Rich isn't working. He doesn't have a job.

then.....why would he pay income taxes?

wtf

[Phatscotty]

No because it's misleading to state that Mr. Rich "does nothing but party." His saving and consumption decisions affect others.

Irrelevant. Everybody's savings and consumption decisions affect others. The fact is Mr. Rich isn't working. He doesn't have a job.

Does consuming and saving some mix of $1 billion dollars affect others more than consuming and saving a grand total of $10?

the point is that the extremely rich people do not consume, that is what's killing the economy. the stockpiling of money by a small minority hurts the majority.

You don't know what person x or y or z does with their money, and I'm not so sure you have the right to tell person x or y or z how they have to spend their money.

Can you extrapolate on your point that extremely rich people do not consume? Also, do you think that rich people hanging onto their money is killing the economy worse than the millions of homeowners who maxed out their triple and quadruple refinanced mortgages in the name of consumption, then walked away from the house when the value went underwater?

[Maugena]

John Below #1 works a normal 40 hours a week job, earns 50k a year. He get's taxed at a 25% tax rate.

Jane Blows #2 works a long 50 hours a week job, earning 150k a year. She get's taxed at a 28% tax rate.

Joe Blow #3 works his ass off, 60 hours a week, does damn good for himself, and ends up making 400k a year. He get's taxed at a 35% tax rate.

Mr Rich does nothing all year but party, relax on the beach, and snort blow. He makes 3.5 million dollars due to his fat stack of cash. He gets taxed at a 15% tax rate.

This seems completely backwards. Shouldn't Mr Rich get taxed at a %50 tax rate?

If Mr. Rich doesn't work....why would he pay income taxes???? Is this how we should treat our retirees?

Should money be able to earn itself?

[Phatscotty]

John Below #1 works a normal 40 hours a week job, earns 50k a year. He get's taxed at a 25% tax rate.

Jane Blows #2 works a long 50 hours a week job, earning 150k a year. She get's taxed at a 28% tax rate.

Joe Blow #3 works his ass off, 60 hours a week, does damn good for himself, and ends up making 400k a year. He get's taxed at a 35% tax rate.

Mr Rich does nothing all year but party, relax on the beach, and snort blow. He makes 3.5 million dollars due to his fat stack of cash. He gets taxed at a 15% tax rate.

This seems completely backwards. Shouldn't Mr Rich get taxed at a %50 tax rate?

If Mr. Rich doesn't work....why would he pay income taxes???? Is this how we should treat our retirees?

Should money be able to earn itself?

Didn't think anyone would be able to answer that....

[BigBallinStalin]

John Below #1 works a normal 40 hours a week job, earns 50k a year. He get's taxed at a 25% tax rate.

Jane Blows #2 works a long 50 hours a week job, earning 150k a year. She get's taxed at a 28% tax rate.

Joe Blow #3 works his ass off, 60 hours a week, does damn good for himself, and ends up making 400k a year. He get's taxed at a 35% tax rate.

Mr Rich does nothing all year but party, relax on the beach, and snort blow. He makes 3.5 million dollars due to his fat stack of cash. He gets taxed at a 15% tax rate.

This seems completely backwards. Shouldn't Mr Rich get taxed at a %50 tax rate?

If Mr. Rich doesn't work....why would he pay income taxes???? Is this how we should treat our retirees?

Should money be able to earn itself?

Money itself doesn't act. Humans do.

[PLAYER57832]

No because it's misleading to state that Mr. Rich "does nothing but party." His saving and consumption decisions affect others.

Consumption
Mr Rich adds to the economy of producers and consumers of that beach. His parties also contribute, as does his spending on cocaine. Taxing him takes money from the producers of alcohol, parties, tourist attractions, the transportation of these related goods (and the tourists), airlines, cars, the cocaine producers and distributors, etc. etc. etc.

You miss all the transactions which he creates within many markets.

Wrong. He creates nothing. You're committing the (very common) error of ignoring Say's Law.

Production equals consumption -- that is not negotiable. Since there are no practical limits to consumption, but there are practical limits to production, the latter is the only defining variable.

Inherited wealth is mortmain. It really makes no difference if Mr. Rich spends the money on caviar and cocaine himself, or if the governement taxes it all away, distributes it to welfare mothers in the Bronx, and they spend it all on caviar and cocaine. Economically there's no difference between parasites who inherited their unearned wealth and parasites who get it in the form of a monthly cheque.

You miss a couple of facts. The wealthy actually don't spend proportional amounts of their income. They tend to invest and save more than those with lesser incomes. They might spend more in absolute terms, but not proportionally. Giving $50,000 to 100 people in wages will spur the economy FAR more than giving 5,000,000 to one person.

So investments and savings (in a bank or other entity) don't lead to economic growth?

Not anywhere near as much as purchases, no. That's pretty basic economics.

However, the real issue is outside both of those. Right now, the debate is not really between the "have's and the "have nots", though it plays out as if it were. The real debate is about sustainability and value for all versus value for just a few at the top.

When "efficiency" and "cost-cutting" mean its perfectly OK to take $5k from a secretary who makes $30K, because you can easily hire a temp for $20K ... and this is done across the board, so that the boards can crow about their dividend payouts or investments overseas or such and when the CEO gets a bonus for such policies, then its bad for all of us.

When drilling companies are allowed to go in an infuse chemicals into a small town water system (Brockway PA to be specific.. but a large part of PA and Ohio are all facing this now) and just declare that the chemicals are safe and its just too onerous to expect these companies to test or even identify these chemicals before putting them into rock layers that are just a short bredth from our municipal water systems.. when the town is not even allowed to KNOW what is happening, is being turned down in court..This is about real people having to either give up their houses, jobs, families and entire way of life or simply trust that the company won't lie. (except, it already has.. many times).

This type of thing only happens when the target is just profit and only at the top, not sustainable jobs, not overall good. Overall good looks at the fact that Western Virginia was a wonderful place with a lot of resources... but now is depressed and rife with pollution. Overall good looks at the fact that the west was covered with timber just 50 years ago, but now many timber based towns have folded because the companies cut quickly and then moved on, (and killing a huge set of fisheries besides). Etc, etc.

The real truth is that we have lost the chance to truly be competetive, not because of the many environmental regulations, but because we keep waiting until damage is already done to impose regulations. We don't take a proactive, preventative stance and so research is directed at the "use and abuse", not the sustain and keep modes of production. It was not always that way. This whole "new" hype of biofuels, for example. Even though a lot of it is hype and distorted, there is real and beneficial technology there... technology that was being researched 70 years ago, 30 years ago. It was buried. It was buried because a few people with power wanted to make money from oil, not pass money onto thousands of farmers raising hemp or other, more sustainable crops (note I did not say "corn").

[PLAYER57832]

John Below #1 works a normal 40 hours a week job, earns 50k a year. He get's taxed at a 25% tax rate.

Jane Blows #2 works a long 50 hours a week job, earning 150k a year. She get's taxed at a 28% tax rate.

Joe Blow #3 works his ass off, 60 hours a week, does damn good for himself, and ends up making 400k a year. He get's taxed at a 35% tax rate.

Mr Rich does nothing all year but party, relax on the beach, and snort blow. He makes 3.5 million dollars due to his fat stack of cash. He gets taxed at a 15% tax rate.

This seems completely backwards. Shouldn't Mr Rich get taxed at a %50 tax rate?

If Mr. Rich doesn't work....why would he pay income taxes???? Is this how we should treat our retirees?

Should money be able to earn itself?

There is a reason usary was considered a high sin for many many years.

[Dukasaur]

No because it's misleading to state that Mr. Rich "does nothing but party." His saving and consumption decisions affect others.

Consumption
Mr Rich adds to the economy of producers and consumers of that beach. His parties also contribute, as does his spending on cocaine. Taxing him takes money from the producers of alcohol, parties, tourist attractions, the transportation of these related goods (and the tourists), airlines, cars, the cocaine producers and distributors, etc. etc. etc.

You miss all the transactions which he creates within many markets.

Wrong. He creates nothing. You're committing the (very common) error of ignoring Say's Law.

Production equals consumption -- that is not negotiable. Since there are no practical limits to consumption, but there are practical limits to production, the latter is the only defining variable.

How can he create nothing if his money was exchanged for bonds, stocks, or investments in capital and equipment?

One of the key lessons that teachers of investment fundamentals struggle to teach is that "the stock doesn't care who owns it."

If Mr. Rich owns 100 shares of Microsoft and decides to give them to you, is there any net gain or loss for Microsoft? Absolutely none. It's a common saying that the stock market is an essential venue for companies to raise investment financing, but while being true that saying is somewhat misleading. The only thing that provides investment capital to the businesses is the Initial sale of the stock. Once the stock has left that stage and entered the churning maelstrom of the stock market, there is no further gain to the company.

Now, remember, one of the initial parameters laid out in the OP is that Mr. Rich does not work. He is a pampered layabout who inherited his wealth. If he was a venture capitalist, doing research on products and ideas and funneling his money into various ventures then yes, he would be providing further gains to the economy. But that would be changing the parameters of this thread. The dissolute nature of Mr. Rich is one of our bounding parameters. Mr. Rich Sr., the grandfather worked his ass off, made a pile of money, and put it into stocks which Mr. Rich III eventually inherited. He lays on the beach while investment advisors churn his account, moving it from one stock to another.

You might even argue that the doing the churning are creating value, although that is highly debatable in itself.

How can he create nothing if his money is exchanged for an airline ticket to the beach?

The pilot creates wealth by flying the plane, the mechanic creates wealth by fixing it, the ticket agent creates wealth by efficiently distributing tickets, but the ticket holders themselves are consuming wealth. And, like the stock, the ticket doesn't care who owns it. If Mr. Rich goes on the plane, or if I steal his ticket and go on the plane, or if I donate it to the Church and the Pope goes on the plane, the results are identical.

Let's use your logic: if you see a voluntary exchange, you'll say, "nothing was created! and never mind the mutual gain!," i.e. the additional capture of value from the exchange ex-ante. You're not making any sense. Clearly, value was created for both parties of the voluntary exchange ex-ante; otherwise, why would they trade if they didn't expect to gain additional value?

I absolutely would not say such a thing. I thought you knew me better than that. But gaining money is not a value, it is a token for an expected future value. If I mow your lawn and get $20, the value of $20 is not inherent in the paper note that you gave me. The value resides in the pizza that I'm expecting to buy with it later tonight.

Say's Law
To simply sum it up it's "supply creates its own demand," but this isn't all of it.

An individual can either consume or save. There's a balance between the two. Curtailing present consumption leads to an increase in savings. This signals to producers to restrict their current production and prepare for an increase in future production. In this sense, "production equals consumption," but this is over time. It isn't instantaneous, and that's what you missed.

Production doesn't equal consumption.

Over the long term, yes it does. Sure, there is Galbraith's alleged "refutation" of Say's Law, but all Galbraith really proved is that consumption can be deferred, and to some degree production can be deferred, too. But in the end the books will balance.

Otherwise, people would never make mistakes. Resources would be allocated with 100% efficiency. Producers would dedicate resources to their most highly valued uses, thus earning maximum profit in any endeavor. Drop the equilibrium thinking; it's causing you confusion.

And I don't see how this refutes what I'm saying. Say's Law can be used to describe how Mr. Rich contributes to the economy.

Inherited wealth is mortmain. It really makes no difference if Mr. Rich spends the money on caviar and cocaine himself, or if the governement taxes it all away, distributes it to welfare mothers in the Bronx, and they spend it all on caviar and cocaine. Economically there's no difference between parasites who inherited their unearned wealth and parasites who get it in the form of a monthly cheque.

Yes, there's a difference between public spenders and private spenders. There's totally different incentives at play! By saying they're the same, you're arguing that political and bureaucratic incentives are the exact same as profit and loss incentives. But they aren't, and I hope you can see that.

I said nothing of the kind.

How can you say that their wealth is unearned? It was a voluntary, legal transfer of ownership rights. If that's unearned, then any gift you received is unearned. There's a difference between receiving property voluntarily from someone who dies and receiving property that was coerced from others through taxation.

Voluntary vs. involuntary and earned vs. unearned are not exactly identical dichotomies. And of course I agree with you that there's a moral difference between voluntary and involuntary exchanges.

Think about it. Economically, yes, there's a huge difference. :/

once you start introducing normative ideas like that, then every discussion spins out of control and becomes a debate about life, the universe, and everything. Next thing you know, it's goodbye, and thanks for all the fish. I was trying to stick to a strictly descriptive discussion, without getting into the normative aspects of it.

[Lootifer]

This thread is awful.

[BigBallinStalin]

I said nothing of the kind.

http://www.conquerclub.com/forum/viewtopic.php?f=8&t=169246#p3696882

"Wrong. He creates nothing."

"Production equals consumption -- that is not negotiable. "

"It really makes no difference if Mr. Rich spends the money on caviar and cocaine himself, or if the governement taxes it all away, distributes it to welfare mothers in the Bronx, and they spend it all on caviar and cocaine."

1) He does create something.

2) No, that's wrong.

3) Yes, there is a difference.
(for reasons already explained which I won't repeat.)


And, where's the normative?

[BigBallinStalin]

No because it's misleading to state that Mr. Rich "does nothing but party." His saving and consumption decisions affect others.

Consumption
Mr Rich adds to the economy of producers and consumers of that beach. His parties also contribute, as does his spending on cocaine. Taxing him takes money from the producers of alcohol, parties, tourist attractions, the transportation of these related goods (and the tourists), airlines, cars, the cocaine producers and distributors, etc. etc. etc.

You miss all the transactions which he creates within many markets.

Wrong. He creates nothing. You're committing the (very common) error of ignoring Say's Law.

Production equals consumption -- that is not negotiable. Since there are no practical limits to consumption, but there are practical limits to production, the latter is the only defining variable.

How can he create nothing if his money was exchanged for bonds, stocks, or investments in capital and equipment?

One of the key lessons that teachers of investment fundamentals struggle to teach is that "the stock doesn't care who owns it."

If Mr. Rich owns 100 shares of Microsoft and decides to give them to you, is there any net gain or loss for Microsoft? Absolutely none. It's a common saying that the stock market is an essential venue for companies to raise investment financing, but while being true that saying is somewhat misleading. The only thing that provides investment capital to the businesses is the Initial sale of the stock. Once the stock has left that stage and entered the churning maelstrom of the stock market, there is no further gain to the company.

Now, remember, one of the initial parameters laid out in the OP is that Mr. Rich does not work. He is a pampered layabout who inherited his wealth. If he was a venture capitalist, doing research on products and ideas and funneling his money into various ventures then yes, he would be providing further gains to the economy. But that would be changing the parameters of this thread. The dissolute nature of Mr. Rich is one of our bounding parameters. Mr. Rich Sr., the grandfather worked his ass off, made a pile of money, and put it into stocks which Mr. Rich III eventually inherited. He lays on the beach while investment advisors churn his account, moving it from one stock to another.

So, by do nothing, you mean "he did something by hiring people to manage his money"?

This is ridiculous.

[BigBallinStalin]

I understand you're quite educated when it comes to economics, BBS, so please, be gentle with me. :S

My thought at the moment is this...
There are many broken aspects of our current system, but one part that I feel should be completely eliminated is:
Borrowing and loaning.

It is a falsehood to say that loaning creates money. It does not. It merely reallocates a medium to another person with the assumption that it will be paid back in full, with interest. This method claims to say that the person that had initially saved the money still has claim to what they had put away despite it technically being gone. It's completely illegitimate. I'm honestly dumbfounded as to why we still have this. I understand that some people may need services or products that they may not be able to pay for currently and it may or may not be their fault for their predicament, but in the end it only benefits the people in need and the people making these illegitimate deals. It might be a bit much (okay, I'll give in and say it IS too much) to say that people should just be given what they need if they absolutely must have it, but debts should not be incurred. (I think to myself briefly about how it seems every single nation is in some kind of debt... which does not seem possible-shouldn't there be a balance for all the negative? Where is it, assuming it does exist?)

I don't understand the underlined... here's an example of borrowing and lending:

Mary wants to borrow $1,000. Bob lends Mary $1,000 for one year with an interest of 10% compounded annually. So, after one year, Mary must pay Bob $1,100. Mary then pays the amount owed. What's illegitimate with this?

Anyway, I think based on my unprofessional, uneducated opinion, that all wealth derives directly from resources and the physical manifestation of ideas, or products.
I think that all people of a land should have some claim to resources, being a part of the nation, so that they may make a profit with it. The claims should be split equally amongst the entire population. There should also be no inheritance.

/incoherentrant

Well yeah, I think that's all I can muster for now. Fire away, BBS! ;P

I buy gardening equipment, and for $30 I'll mow Maugena's lawn. We agree to this, and I perform the service. Maguena's satisfied, I'm satisfied. I go home, I have my $30, and I subtract my expenses for mowing that lawn: -$5. I earned $25 profit. Why must some portion of my profit be taken from me and distributed among others?

The equipment is mine. I bought it. I sought out customers, and engaged in voluntary exchanges with them. This is all performed by me. Then Maguena expects my services to be worth the $30; therefore, he gives me $30, and he's satisfied after the work is done. Why do other people have a claim to my profits? Who has a claim to my lawnmower? Who has a claim to my own efforts?

[nietzsche]

This thread is awful.

I hope you are kidding. Very good points made.

The whole thing is rotten from the start. Watch Money Masters.
http://www.imdb.com/title/tt1954955/

If we really want to fix this we should start right there.

[BigBallinStalin]

Starring Rick James, bitch!

[PLAYER57832]

I understand you're quite educated when it comes to economics, BBS, so please, be gentle with me. :S

My thought at the moment is this...
There are many broken aspects of our current system, but one part that I feel should be completely eliminated is:
Borrowing and loaning.

It is a falsehood to say that loaning creates money. It does not. It merely reallocates a medium to another person with the assumption that it will be paid back in full, with interest. This method claims to say that the person that had initially saved the money still has claim to what they had put away despite it technically being gone. It's completely illegitimate. I'm honestly dumbfounded as to why we still have this. I understand that some people may need services or products that they may not be able to pay for currently and it may or may not be their fault for their predicament, but in the end it only benefits the people in need and the people making these illegitimate deals. It might be a bit much (okay, I'll give in and say it IS too much) to say that people should just be given what they need if they absolutely must have it, but debts should not be incurred. (I think to myself briefly about how it seems every single nation is in some kind of debt... which does not seem possible-shouldn't there be a balance for all the negative? Where is it, assuming it does exist?)

I don't understand the underlined... here's an example of borrowing and lending:

Mary wants to borrow $1,000. Bob lends Mary $1,000 for one year with an interest of 10% compounded annually. So, after one year, Mary must pay Bob $1,100. Mary then pays the amount owed. What's illegitimate with this?

If you are asking about the Middle Ages and later Christian view, there would be 2 problems.

The first is that there was a distinction made between money earned through work, through personal effort and other types of money. Work created the "right" to money. Simply loaning it did not.

The second problem is that money creates power. If those who have money, alone are allowed to dictate the value, then everything else loses value. We saw this in this century with the old style company stores. The owner would hire people, not pay them, but allow them credit in the company store at very high interest rates. Sometimes they were even told they HAD to buy things from that store. By the time the paycheck came around, they often did not make enough to even pay off the bill... no matter how frugal they were. (not to mention those that managed to somehow pay their bills often found their employment terminated quickly).

[PLAYER57832]

I understand you're quite educated when it comes to economics, BBS, so please, be gentle with me. :S

My thought at the moment is this...
There are many broken aspects of our current system, but one part that I feel should be completely eliminated is:
Borrowing and loaning.

It is a falsehood to say that loaning creates money. It does not. It merely reallocates a medium to another person with the assumption that it will be paid back in full, with interest. This method claims to say that the person that had initially saved the money still has claim to what they had put away despite it technically being gone. It's completely illegitimate. I'm honestly dumbfounded as to why we still have this. I understand that some people may need services or products that they may not be able to pay for currently and it may or may not be their fault for their predicament, but in the end it only benefits the people in need and the people making these illegitimate deals. It might be a bit much (okay, I'll give in and say it IS too much) to say that people should just be given what they need if they absolutely must have it, but debts should not be incurred. (I think to myself briefly about how it seems every single nation is in some kind of debt... which does not seem possible-shouldn't there be a balance for all the negative? Where is it, assuming it does exist?)

I don't understand the underlined... here's an example of borrowing and lending:

Mary wants to borrow $1,000. Bob lends Mary $1,000 for one year with an interest of 10% compounded annually. So, after one year, Mary must pay Bob $1,100. Mary then pays the amount owed. What's illegitimate with this?

If you are asking about the Middle Ages and later Christian view, there would be 2 problems.

The first is that there was a distinction made between money earned through work, through personal effort and other types of money. Work created the "right" to money. Simply loaning it did not.

The second problem is that money creates power. If those who have money, alone are allowed to dictate the value, then everything else loses value. We saw this in this century with the old style company stores. The owner would hire people, not pay them, but allow them credit in the company store at very high interest rates. Sometimes they were even told they HAD to buy things from that store. By the time the paycheck came around, they often did not make enough to even pay off the bill... no matter how frugal they were. (not to mention those that managed to somehow pay their bills often found their employment terminated quickly).

[PLAYER57832]

I buy gardening equipment, and for $30 I'll mow Maugena's lawn. We agree to this, and I perform the service. Maguena's satisfied, I'm satisfied. I go home, I have my $30, and I subtract my expenses for mowing that lawn: -$5. I earned $25 profit. Why must some portion of my profit be taken from me and distributed among others?

The equipment is mine. I bought it. I sought out customers, and engaged in voluntary exchanges with them. This is all performed by me. Then Maguena expects my services to be worth the $30; therefore, he gives me $30, and he's satisfied after the work is done. Why do other people have a claim to my profits? Who has a claim to my lawnmower? Who has a claim to my own efforts?

How is it that you were able to do all this? Begin with education, continue with a communication and transport system that are well maintained? In an illusionary world, those things happen due to free enterprise. In reality, they happen due to free enterprise among areas that are already wealthy or rather, that will benefit the wealthy... a person might well be happy to have his workers have to drive rutted roads, so long as he gets to drive on smooth ones and the delivery trucks get to drive to the dock or rail station or next town without much hassle. Other areas need government assistance or intervention.

Further, what if he were to have gotten hurt? Would he pay, would you, would society? Most likely society would wind up paying. Therefore by hiring him, you have placed a potential greater burden on society, a risk that society must bear.

Also, even when free enterprise can do the above, they are necessarily less efficient at it. What makes a communication system and transport system work the best is its uniformity. However, markets want to target only the "biggest bang" areas. By putting it into a large, unified governmental program we wind up with a universal system that works better for all, including particularly commerce. At least until a bunch of individuals start putting their hands in to make their personal incomes a bit nicer.


BUT, once those things are done, then sure.. the free market should decide.

[BigBallinStalin]

Yeah, I'm just gonna stick with Maugena on this one.

[Phatscotty]

If you do not earn an income, you should not have to pay and income tax (nor is it even possible).

[Maugena]

I understand you're quite educated when it comes to economics, BBS, so please, be gentle with me. :S

My thought at the moment is this...
There are many broken aspects of our current system, but one part that I feel should be completely eliminated is:
Borrowing and loaning.

It is a falsehood to say that loaning creates money. It does not. It merely reallocates a medium to another person with the assumption that it will be paid back in full, with interest. This method claims to say that the person that had initially saved the money still has claim to what they had put away despite it technically being gone. It's completely illegitimate. I'm honestly dumbfounded as to why we still have this. I understand that some people may need services or products that they may not be able to pay for currently and it may or may not be their fault for their predicament, but in the end it only benefits the people in need and the people making these illegitimate deals. It might be a bit much (okay, I'll give in and say it IS too much) to say that people should just be given what they need if they absolutely must have it, but debts should not be incurred. (I think to myself briefly about how it seems every single nation is in some kind of debt... which does not seem possible-shouldn't there be a balance for all the negative? Where is it, assuming it does exist?)

I don't understand the underlined... here's an example of borrowing and lending:

Mary wants to borrow $1,000. Bob lends Mary $1,000 for one year with an interest of 10% compounded annually. So, after one year, Mary must pay Bob $1,100. Mary then pays the amount owed. What's illegitimate with this?

Anyway, I think based on my unprofessional, uneducated opinion, that all wealth derives directly from resources and the physical manifestation of ideas, or products.
I think that all people of a land should have some claim to resources, being a part of the nation, so that they may make a profit with it. The claims should be split equally amongst the entire population. There should also be no inheritance.

/incoherentrant

Well yeah, I think that's all I can muster for now. Fire away, BBS! ;P

I buy gardening equipment, and for $30 I'll mow Maugena's lawn. We agree to this, and I perform the service. Maguena's satisfied, I'm satisfied. I go home, I have my $30, and I subtract my expenses for mowing that lawn: -$5. I earned $25 profit. Why must some portion of my profit be taken from me and distributed among others?

The equipment is mine. I bought it. I sought out customers, and engaged in voluntary exchanges with them. This is all performed by me. Then Maguena expects my services to be worth the $30; therefore, he gives me $30, and he's satisfied after the work is done. Why do other people have a claim to my profits? Who has a claim to my lawnmower? Who has a claim to my own efforts?

The loaning tangent I was on was intended to be about the evils of banks, but I felt as though loaning in particular was to blame, but I suppose I'm wrong.

The second part isn't about a form of social security, I think all citizens should be entitled to a portion of the nation's resources as a birth right so they can take it and make a living eventually. (Directly from the land.)

[BigBallinStalin]

I think all citizens should be entitled to a portion of the nation's resources as a birth right so they can take it and make a living eventually. (Directly from the land.)

How would that work? As in, explain, or give an example please.

[Dukasaur]

No because it's misleading to state that Mr. Rich "does nothing but party." His saving and consumption decisions affect others.

Consumption
Mr Rich adds to the economy of producers and consumers of that beach. His parties also contribute, as does his spending on cocaine. Taxing him takes money from the producers of alcohol, parties, tourist attractions, the transportation of these related goods (and the tourists), airlines, cars, the cocaine producers and distributors, etc. etc. etc.

You miss all the transactions which he creates within many markets.

Wrong. He creates nothing. You're committing the (very common) error of ignoring Say's Law.

Production equals consumption -- that is not negotiable. Since there are no practical limits to consumption, but there are practical limits to production, the latter is the only defining variable.

How can he create nothing if his money was exchanged for bonds, stocks, or investments in capital and equipment?

One of the key lessons that teachers of investment fundamentals struggle to teach is that "the stock doesn't care who owns it."

If Mr. Rich owns 100 shares of Microsoft and decides to give them to you, is there any net gain or loss for Microsoft? Absolutely none. It's a common saying that the stock market is an essential venue for companies to raise investment financing, but while being true that saying is somewhat misleading. The only thing that provides investment capital to the businesses is the Initial sale of the stock. Once the stock has left that stage and entered the churning maelstrom of the stock market, there is no further gain to the company.

Now, remember, one of the initial parameters laid out in the OP is that Mr. Rich does not work. He is a pampered layabout who inherited his wealth. If he was a venture capitalist, doing research on products and ideas and funneling his money into various ventures then yes, he would be providing further gains to the economy. But that would be changing the parameters of this thread. The dissolute nature of Mr. Rich is one of our bounding parameters. Mr. Rich Sr., the grandfather worked his ass off, made a pile of money, and put it into stocks which Mr. Rich III eventually inherited. He lays on the beach while investment advisors churn his account, moving it from one stock to another.

So, by do nothing, you mean "he did something by hiring people to manage his money"?

This is ridiculous.

Did he?

Try this as a thought experiment:

Mr. Rich does not exist. His parents murdered him in infancy, and then covered up the crime by creating an entire fictitious life for him. There are receipts for the private school he did not attend, for the ski vacations in St. Moritz that he did not take, for the house in St. Lucia where he does not live, and so on.

Now the parents have died of natural causes, but Mr. Rich's non-life goes on. Automatic debits pay all the bills for the houses in which he continues to not live, while various property management services maintain them. Investment consultants continue to churn his account (but are careful not to churn it so aggressively as to raise his suspicions; little do they know that there isn't anybody watching) and pay his various taxes, a big impersonal law firm takes care of whatever the investment consultants can't, and the lawyers never question the eccentric recluse who doesn't answer their letters but pays them well through an automatic debit.

I think you can agree that a nonexistent person doesn't create anything of value. And yet, his non-life is indistinguishable from the life that we postulated for him earlier. If there is no quantifiable difference between the existing Mr. Rich and the non-existing Mr. Rich, then how can the existing one be described as productive?

Think about it; don't just give me a knee-jerk reaction.

Up above (It's too late at night for me to get into advanced cutting-and-pasting) you gave passing acknowledgement to Say's Law with a dismissive tone. I don't think you really accepted how important it is in this situation. Once the caviar is produced, it will be consumed. Whether it is eaten by the living Mr. Rich or whether it is eaten by a maid working for the non-living Mr. Rich (having cleaned his house for 30 years without ever seeing him, she's pretty confident that her theft will not be detected.) The limiting factor on the caviar sector is production, not consumption. Once a good is produced, it will be somehow consumed.

And, where's the normative?

You're a libertarian, and that's a good thing to be. Thirty years ago my thinking was pretty much where your thinking is now. In fact, almost precisely -- it was 29 years ago tomorrow that we held Canada's first Tax Day Protest, and 100 people under my direction marched down Yonge St. carrying signs saying "Taxation is Theft" and "Not a Penny For Parasites" and other such dainties. (And my personal favourite, which I wrote and people have been using on T-shirts and bumper stickers without attribution ever since -- "Pay Your Taxes -- Pigs Need to Eat Too!")

But my thinking has moved forward from that point, and yours will too one day. (It's not that I despise the government any less, but I've learned that the Non-Governmental Parasites (NGPs) are every bit as despicable, and dangerous.)

You make certain normative assumptions, that private wealth is always earned rather than stolen, that taxation is always bad, and so on. And normative assumptions always interfere with clarity of vision, whether they be good assumptions or bad. Anyway, I hope you try my thought experiment, and then tell me, is Mr. RIch mortmain, or not?

[Phatscotty]

Taxation as is now is horrible. Far too much waste. Just because taxes are necessary does not mean we should continue to pay them to an entity that is unable to properly manage our tax dollars.