Capitalism: Awesome or Deplorable? (2 Viewers)

[Bottomfeeder Sports]

No, doesn’t imply that at all. Was speaking to balance. Don’t believe we have, or likely ever will, achieved it.  We are simultaneously over regulated and under regulated depending on the business subset. 

I was too slow

 

[dkp993]

I was too slow

Great minds and the like....

 

[timschochet]

Capitalism is awesome. 

I could offer economic and philosophic and political arguments to prove my point but I won’t because I have a better argument: my entire adult life I have been involved in retail leasing and sales. Countless times I have witnessed folks with little to their name scrimp and save in order to start up a family business: donut shops, restaurants, nail salons, etc. They work their asses off 7 days a week, night and day, to provide food for their children and a home. Then to pay for college so that their kids can be better off than they were. If they do well, perhaps they can open up a second location or a third, and be prosperous. 

Call me naive but this is the American dream and despite certain imperfections which I am always eager to fix (and which I suppose makes me a moderate Democrat), I believe in it. I’ve seen it work well  far too many times not to believe in it. And I simply don’t trust socialism or other economic systems to produce the same result. 

 

[Terminalxylem]

Materially, we compare ourselves to those above us. Morally, we compare ourselves to those below us.

This is an interesting observation, but it doesn’t need to be this way: if you consciously flip the script (appreciate what you have, model those who behave righteously), you’ll likely end up a much better person.

 

[FairWarning]

Capitalism is awesome. 

I could offer economic and philosophic and political arguments to prove my point but I won’t because I have a better argument: my entire adult life I have been involved in retail leasing and sales. Countless times I have witnessed folks with little to their name scrimp and save in order to start up a family business: donut shops, restaurants, nail salons, etc. They work their asses off 7 days a week, night and day, to provide food for their children and a home. Then to pay for college so that their kids can be better off than they were. If they do well, perhaps they can open up a second location or a third, and be prosperous. 

Call me naive but this is the American dream and despite certain imperfections which I am always eager to fix (and which I suppose makes me a moderate Democrat), I believe in it. I’ve seen it work well  far too many times not to believe in it. And I simply don’t trust socialism or other economic systems to produce the same result. 

The American Dream right here.  

 

[The Commish]

Capitalism is awesome. 

I could offer economic and philosophic and political arguments to prove my point but I won’t because I have a better argument: my entire adult life I have been involved in retail leasing and sales. Countless times I have witnessed folks with little to their name scrimp and save in order to start up a family business: donut shops, restaurants, nail salons, etc. They work their asses off 7 days a week, night and day, to provide food for their children and a home. Then to pay for college so that their kids can be better off than they were. If they do well, perhaps they can open up a second location or a third, and be prosperous. 

Call me naive but this is the American dream and despite certain imperfections which I am always eager to fix (and which I suppose makes me a moderate Democrat), I believe in it. I’ve seen it work well  far too many times not to believe in it. And I simply don’t trust socialism or other economic systems to produce the same result. 

And this likely doesn't happen, or at the least is very less likely to happen, if capitalism is left to its own devices and runs unchecked.

 

[whoknew]

Capitalism is awesome. 

I could offer economic and philosophic and political arguments to prove my point but I won’t because I have a better argument: my entire adult life I have been involved in retail leasing and sales. Countless times I have witnessed folks with little to their name scrimp and save in order to start up a family business: donut shops, restaurants, nail salons, etc. They work their asses off 7 days a week, night and day, to provide food for their children and a home. Then to pay for college so that their kids can be better off than they were. If they do well, perhaps they can open up a second location or a third, and be prosperous. 

Call me naive but this is the American dream and despite certain imperfections which I am always eager to fix (and which I suppose makes me a moderate Democrat), I believe in it. I’ve seen it work well  far too many times not to believe in it. And I simply don’t trust socialism or other economic systems to produce the same result. 

That's an argument FOR capitalism?

 

[timschochet]

And this likely doesn't happen, or at the least is very less likely to happen, if capitalism is left to its own devices and runs unchecked.

I agree. Which again is why I’m a Democrat. I believe in the New Deal and the Great Society and some tinkering around the edges to help the needy and those who have been punished by racism and unfortunate circumstances or through no fault of their own. And when crises like recessions and natural calamities and pandemics come around, the government has a major role to play.

But I don’t want to do away with the system. 

 

[timschochet]

That's an argument FOR capitalism?

Yes. Why not? 

 

[whoknew]

Yes. Why not? 

Because maybe the goal in life should be to NOT work very hard, 7 days per week.

 

[IvanKaramazov]

Guys, if you're going to parachute into the thread and talk about the dangers of "unchecked" capitalism, you should really say what parts of capitalism you think need checking and what sort of checks you're talking about.  Are you talking about a social safety net?  New or higher taxes?  More aggressive antitrust enforcement?  More government regulation of industry?  Less regulatory capture by industry?  Or what?  

Some of the things that I just rattled off would be good IMO -- a new carbon tax, for example.  Some of them are probably bad on net, like antitrust enforcement.  Some of them are mutually exclusive, like more regulation and less regulatory capture.  And some don't have anything to do with capitalism per se, like social welfare programs.  That's why it's good to be explicit.      

Edit: For example, @timschochet just mentioned countercyclical fiscal policy as an important check on capitalism.  In my own mind, that item probably wouldn't have cracked my top twenty guesses on what people mean by "checked" vs. "unchecked" capitalism, so I'm glad he said what he meant instead of leaving it to the imagination.

 

[timschochet]

Because maybe the goal in life should be to NOT work very hard, 7 days per week.

It isn’t, not in itself. But they work that hard to achieve other goals: put their kids through college so their kids have a better life, or become prosperous themselves so that they don’t have to work that hard in the future. Or both. Working hard is a means to an end in order to achieve a future prosperity, either for this generation or the next. I don’t see anything wrong with that, and I don’t know a better system. Do you? 

 

[whoknew]

It isn’t, not in itself. But they work that hard to achieve other goals: put their kids through college so their kids have a better life, or become prosperous themselves so that they don’t have to work that hard in the future. Or both. Working hard is a means to an end in order to achieve a future prosperity, either for this generation or the next. I don’t see anything wrong with that, and I don’t know a better system. Do you? 

I don't believe I'm qualified to determine if a system is better or not. I just don't know enough about the other systems. I also don't even know how we define better.

But, for example, a system where college is free would mean that the parents would not have to work so hard to pay for college. Is that better? That's a loaded question with a lot of variables. 

At the beginning of this thread, there was a lot of talk about maximizing happiness. It seems to me that that should be the way to measure whether a system is "better" than another. MT argued that you need to do that on a long time scale - and it seems that you are arguing something similar. The problem I can see with that is it seems like we are always trying to maximize future happiness without paying attention to current happiness. 

I don't know - maybe I'm wrong. I am definitely pro-capitalism. I just want to keep open the option that maybe I'm wrong and have just been conditioned to think that because I grew up in the US. 

 

[The Commish]

I agree. Which again is why I’m a Democrat. I believe in the New Deal and the Great Society and some tinkering around the edges to help the needy and those who have been punished by racism and unfortunate circumstances or through no fault of their own. And when crises like recessions and natural calamities and pandemics come around, the government has a major role to play.

But I don’t want to do away with the system. 

Then I'd suggest your position is really "Capitalism with guardrails is really awesome!"  At that point, is it actually capitalism?  I'm kind of thinking no.

 

[fatguyinalittlecoat]

Capitalism is awesome. 

I could offer economic and philosophic and political arguments to prove my point but I won’t because I have a better argument: my entire adult life I have been involved in retail leasing and sales. Countless times I have witnessed folks with little to their name scrimp and save in order to start up a family business: donut shops, restaurants, nail salons, etc. They work their asses off 7 days a week, night and day, to provide food for their children and a home. Then to pay for college so that their kids can be better off than they were. If they do well, perhaps they can open up a second location or a third, and be prosperous. 

Call me naive but this is the American dream and despite certain imperfections which I am always eager to fix (and which I suppose makes me a moderate Democrat), I believe in it. I’ve seen it work well  far too many times not to believe in it. And I simply don’t trust socialism or other economic systems to produce the same result. 

Yeah, I'm going to agree with @whoknew that this is a pretty lousy defense of capitalism.  First of all, it's completely anecdotal and unrepresentative because your job only brings you in contact with certain types of people and not others, like say, the meat packing plant workers that were mentioned upthread.  And you aren't even seeing all the full consequences of the decisions your clients make.  Maybe this family that works night and day on their donut shop ends up putting some other donut shop out of business because it's in a slightly better location  Is that a positive?  Now the same number of people are earning income as before.  One family's "American Dream" has become another family's nightmare.

Or maybe the donut shop causes people to eat even more donuts, making every one of their customers slightly less healthy, thereby cumulatively diminishing the lives of many people in the community.  And it's not like wealthy people are the primary consumers of donuts.  In order for your client's family to succeed, it takes small amounts of money from lots of other lower-income people.  Yes, those transactions are voluntary, but it is far from clear that the consumer of the donuts is actually getting a good deal here, people are just addicted to sugar so they pick up a donut every morning on the way to work to provide some tiny sliver of happiness on their way to a job that sucks.  

Anyway, I really don't want to get bogged down in details about tim's donut shop story, it just seems very unconvincing to me as a serious pro-capitalism argument.  If we're talking about what is best for public policy, we need to focus on how the policies impact everyone, not just certain select people that might benefit at the expense of others. 

 

[timschochet]

Then I'd suggest your position is really "Capitalism with guardrails is really awesome!"  At that point, is it actually capitalism?  I'm kind of thinking no.

I’m kind of thinking yes. 

 

[fatguyinalittlecoat]

Why capitalism seems bad.

Some people think capitalism is bad because it results in economic inequality. I mostly think that criticism is misguided. (For one thing, poverty is a bigger problem than inequality per se, and capitalist countries generally have less poverty than non-capitalist countries. For another thing, it's poverty or inequality after taxation and redistribution that matter, and there's no contradiction between capitalism and ample redistribution.) But there's a sense in which this criticism can be valid if wealth results in political power (through lobbying, etc.), and political power results in the ability to veto redistributive programs. In that situation, capitalism can allow inequality to perpetuate itself.

Moreover, capitalism provides incentives for businesses to rig the political system to their advantage in other ways as well. The denial of climate science by a major political party in the United States, for example, is driven by an industry motivated by profit.

I want to go back to this point made by Maurile.  Of course I agree with the argument that it's problematic when economic power translates to political power.  But I think it's worth noting that economic inequality does not just allow rich people to buy more stuff, and it doesn't just allow them to influence the government.  It allows wealthy people to exert significant control over the lives of the rest of us, even outside the political system. 

Here's my favorite example that comes from the world of politics but isn't about government influence.  Last year Michael Bloomberg decided he wanted to run for President.  So he took a small fraction of his net worth and spent it to guarantee that every single American would be bombarded with ads with his name on them for months.  Every time we turned on the TV or computer or radio it was "BLOOMBERG BLOOMBERG BLOOMBERG."  When we were outside it was "BLOOMBERG" on the side of the bus or on highway billboards.  It was largely inescapable.  He personally annoyed and intruded on the lives of virtually every American just because he decided to run for President on a whim.  And to do that he made zero sacrifices.  Even after burning through all that money he has way more money than he will ever spend in his lifetime.  He could do the same thing every election cycle for the rest of his life and never run out of money.  And so could all the other zillionaires like him.  

Money is very closely related to power and control.  Even when it's not being used to influence the government. 

 

[IvanKaramazov]

Here's my favorite example that comes from the world of politics but isn't about government influence.  Last year Michael Bloomberg decided he wanted to run for President.  So he took a small fraction of his net worth and spent it to guarantee that every single American would be bombarded with ads with his name on them for months.  Every time we turned on the TV or computer or radio it was "BLOOMBERG BLOOMBERG BLOOMBERG."  When we were outside it was "BLOOMBERG" on the side of the bus or on highway billboards.  It was largely inescapable.  He personally annoyed and intruded on the lives of virtually every American just because he decided to run for President on a whim.  And to do that he made zero sacrifices.  Even after burning through all that money he has way more money than he will ever spend in his lifetime.  He could do the same thing every election cycle for the rest of his life and never run out of money.  And so could all the other zillionaires like him.  

Aside from annoying you, what did Bloomberg get out of this?  My understanding is that he basically just a bunch of money on fire with no actual results to show for it.  If you want to make an argument about rich people having a disproportionate ability to affect the world, this seems like a uniquely bad example.

 

[fatguyinalittlecoat]

Aside from annoying you, what did Bloomberg get out of this?  My understanding is that he basically just a bunch of money on fire with no actual results to show for it.  If you want to make an argument about rich people having a disproportionate ability to affect the world, this seems like a uniquely bad example.

Yeah?  You may very well be right, the Bloomberg thing really stood out to me, but maybe not to others.

In any case, the two reasons that I really like the Bloomberg example are because: 1) unlike a lot of the ways that the wealthy exercise control over our lives, this one was very in-your-face and pretty clearly undesirable for most people; and 2) Bloomberg is so wealthy he was able to do it without anyone else's money and without making any financial sacrifice for himself (other than on paper).   I find in very offputting that a single individual can overwhelm an entire nation with that crap for months, not because people have decided he's newsworthy or because he's an elected official, but simply because he is sitting on a giant pile of money.   

Whether or not you think Bloomberg got anything from it, to me it is just an example of a "shock and awe" sort of move that highlights to me how much attention $5 billion can buy.  It makes Maurile's "you have two apples he has three apples" hypo just seem like a joke.  My problem with wealth inequality isn't that some people can buy more stuff than other people.  Money changes everything.  If you don't think "BLOOMBERG BLOOMBERG BLOOMBERG" is scary enough, use your imagination to think of a message that Bloomberg could have drilled into all our brains that you do think would be harmful.  

Or, if you're still not convinced by Bloomberg, I'll go with Jeffrey Epstein.  Maybe that's a better example.

 

[FairWarning]

Because maybe the goal in life should be to NOT work very hard, 7 days per week.

That is what it takes to own something for many. Perhaps they should work for The Man instead?

 

[Maurile Tremblay]

Last year Michael Bloomberg decided he wanted to run for President.  So he took a small fraction of his net worth and spent it to guarantee that every single American would be bombarded with ads with his name on them for months.  Every time we turned on the TV or computer or radio it was "BLOOMBERG BLOOMBERG BLOOMBERG."  When we were outside it was "BLOOMBERG" on the side of the bus or on highway billboards.  It was largely inescapable.

This is an example of why an income tax is better than a wealth tax. Spending $100 million on political advertisements reduced Bloomberg's wealth by $100 million while reducing his income by $0. Political advertisements are effectively a deductible expense with respect to a wealth tax, but not an income tax.

 

[Maurile Tremblay]

I think what I described is a natural consequence of capitalism so I’d be interested in what your solution would be if starting from scratch.

Figuring out how to decrease rich people's political influence in general is difficult if we want to preserve freedom of speech.

But on the narrower issue of protecting a certain level of redistribution from being assailed by rich people, that seems a lot easier. Make it a constitutional requirement that a basic income guarantee (or possibly a means-tested version of it) have a floor of N% of the previous year's GDP (or some other measure that can't be easily gamed). Make it payable only to natural-born citizens, but make it impossible to reduce or eliminate without a full-on constitutional amendment. Children are included -- payable either to their parents or into a trust they can access upon adulthood, or a combination of those things.

 

[Bottomfeeder Sports]

Some of them are mutually exclusive, like more regulation and less regulatory capture.

is "mutually exclusive" meaning that any regulation necessarily ends up ultimately favoring the interest of  those being regulated rather than the public?  Am I putting "words into your mouth" reading this in this manner?   If I am not misreading you -

Is this an absolute?  Or just that you find cases to the contrary so exceptional that they just prove the rule?   

And is "burdensome regulations" merely that the regulations are a burden to the public and new players in a market, but not so much for entrenched players?

I think that I would argue that all too often in practice that these things are true, but I don't think that I am ready to accept that things needs to be this way.  Or that often burdensome regulation that really benefits those being regulated (especially when they can't admit it) is likely in also the interest of the public.   But I get also that patronage appointments to sit at or near the top of our regulatory bureaucracy are seldom filled with anyone other than industry insiders.   

 

[Maurile Tremblay]

I've heard some people say that every billionaire is a policy failure.

I think that's wrong.

Consider Elon Musk. I believe I heard this story regarding Tesla, but it's probably even more true of SpaceX.

Musk put $100 million of his own money into Tesla. He estimated that there was a 90% chance that he'd lose the entire investment. The business was kind of a long shot, pretty likely to fail and end up being liquidated in bankruptcy. But the remaining 10% chance made the investment worthwhile on the whole.

If you don't give Musk the possibility of making at least $1 billion in the 10% of cases where the company succeeds, though, there's no way for the investment to have a positive expectation. We have no Tesla. We have no SpaceX. That would be a terrible shame.

 

[Dinsy Ejotuz]

Figuring out how to decrease rich people's political influence in general is difficult if we want to preserve freedom of speech.

But on the narrower issue of protecting a certain level of redistribution from being assailed by rich people, that seems a lot easier. Make it a constitutional requirement that a basic income guarantee (or possibly a means-tested version of it) have a floor of N% of the previous year's GDP (or some other measure that can't be easily gamed). Make it payable only to natural-born citizens, but make it impossible to reduce or eliminate without a full-on constitutional amendment. Children are included -- payable either to their parents or into a trust they can access upon adulthood, or a combination of those things.

Hey @Maurile Tremblay, I saw Robert Schiller talk on this exact thing once upon a time.  Where benefits would rise and fall indexed to inequality, as implemented at an earlier point in time.

I think I probably saw in 2009 or 2010, but he was still pitching the idea as late as 2014.  As inequality rises, so would taxes/redistribution.  But when it fell, taxes would fall with it.  Obviously not easy to implement.

His idea was to integrate inequality indexing with inflation indexing: Instead of just linking tax brackets to inflation as measured by the Consumer Price Index, as we have done for years, he proposed that the adjustments also take account of rising inequality, if it occurred. He proposed a system to offset the loss in tax revenue that inflation indexing would produce, in a way that would get us closer to a target distribution of after-tax income; if inequality worsened, higher tax brackets would bear a bit more of the burden, and people at the bottom would bear less.

 

[IvanKaramazov]

I've heard some people say that every billionaire is a policy failure.

I think that's wrong.

Consider Elon Musk. I believe I heard this story regarding Tesla, but it's probably even more true of SpaceX.

Musk put $100 million of his own money into Tesla. He estimated that there was a 90% chance that he'd lose the entire investment. The business was kind of a long shot, pretty likely to fail and end up being liquidated in bankruptcy. But the remaining 10% chance made the investment worthwhile on the whole.

If you don't give Musk the possibility of making at least $1 billion in the 10% of cases where the company succeeds, though, there's no way for the investment to have a positive expectation. We have no Tesla. We have no SpaceX. That would be a terrible shame.

I prefer Jeff Bezos for this argument.  He has no idea who I am or that I even exist, but Amazon represents a significant improvement in my quality of life relative to a world where Amazon doesn't exist.  And obviously it's not just me -- the fact that so many people are willing to shell out for Prime just for the privilege of having their Amazon shipping sped up a bit tells you how much consumer surplus this enterprise generates.  No objections at all on my end to a guy getting rich for this kind of improvement in living standards.

(I also like his newspaper, but there are lots of other good papers to read if the Post disappeared tomorrow.  There's no good replacement for Amazon.)

 

[fatguyinalittlecoat]

Holy crap I am so triggered by those posts by Maurile and IvanK but I’m also tired and high so I gotta come back to this tomorrow.  
 

ETA: Crap I couldn’t resist (see below).

 

[fatguyinalittlecoat]

I've heard some people say that every billionaire is a policy failure.

I don’t know who those people are but they seem pretty smart.

Musk put $100 million of his own money into Tesla. He estimated that there was a 90% chance that he'd lose the entire investment. The business was kind of a long shot, pretty likely to fail and end up being liquidated in bankruptcy. But the remaining 10% chance made the investment worthwhile on the whole.

If you don't give Musk the possibility of making at least $1 billion in the 10% of cases where the company succeeds, though, there's no way for the investment to have a positive expectation. We have no Tesla. We have no SpaceX. That would be a terrible shame.

The idea that Elon Musk’s motivation in creating Tesla or SpaceX was to achieve a specific rate of return on his investment seems a bit off to me.  He’s not some banker just investing in the companies, he’s the founder and designer and CEO.  He wants to build cool stuff.  That’s his motivation.  He’s a weird dude with a rock star girlfriend half his age and a kid with a funny name and some good ideas.  Maybe he also wants to be famous.  I don’t think a wealth tax is gonna make him just give up the cars and the rockets to start taking bong hits on the couch and playing video games all day.

 

[fatguyinalittlecoat]

I prefer Jeff Bezos for this argument.  He has no idea who I am or that I even exist, but Amazon represents a significant improvement in my quality of life relative to a world where Amazon doesn't exist.  And obviously it's not just me -- the fact that so many people are willing to shell out for Prime just for the privilege of having their Amazon shipping sped up a bit tells you how much consumer surplus this enterprise generates.  No objections at all on my end to a guy getting rich for this kind of improvement in living standards.

(I also like his newspaper, but there are lots of other good papers to read if the Post disappeared tomorrow.  There's no good replacement for Amazon.)

I guess I have a few points here:

1) While consumers have undoubtedly received benefits from Amazon, the company has been a disaster for a lot of people that sell things, threatening the livelihoods of millions of people that have seen their incomes decrease or businesses fail due to competition from Amazon or because Amazon's huge market share forces them to sell their wares on Amazon for a much smaller profit.  I think Amazon is also bad for the environment.  I think there are some other more controversial negative impacts I could attribute to Amazon, but the details don't matter.  In calculating how much Amazon has benefited the country, it is important to also account for the people's lives that have been diminished by Amazon.  

2) The two possibilities aren't "Amazon" or "nothing like Amazon ever exists in the world."  The overwhelming likelihood is that if Bezos didn't build Amazon when he did, some other company or companies would have filled that space.  It's not like online shopping was some wild impossible idea that only Bezos could come up with.  Yes, they built a good company that emerged as the leading online seller.  They have been able to leverage that position as the most popular online seller to buy up and crush competition that might interfere with their dominance in the market, gobbling up more and more of the retail market.  But none of this was inevitable, and none of it is unique to Bezos or Amazon.  If Amazon didn't exist, I strongly suspect you would still be able to buy stuff online and get it delivered quickly today.  It would just be from some other company.  So in calculating how much Amazon has benefited the country, the benefit really is only the difference between Amazon's quality and the quality of whatever other company or companies would be out there if Amazon wasn't crowding out so much competition.  Obviously that involves a lot of speculation and we could have different guesses about what that counterfactual world looks like, but I feel like you're giving WAY too much credit to Amazon if you assume that the only difference between a world with Amazon and without would be the non-existence of Amazon.

3) Even with the most burdensome possible taxes proposed by Bernie Sanders/Elizabeth Warren/AOC, Jeff Bezos would still be one of the richest people in the world.  He would have enough money to purchase any consumer goods he wanted for the rest of his life without ever running out of money.  When you say you don't have any objections to him getting rich, that kinda understates the scope of what's happening here.  His net worth is about 4 MILLION times the size of the median American family's net worth.  I don't have an objection to him being rich, he can buy whatever he wants.  But the massive wealth disparity between Bezos and most people gives him an insane amount of power over the rest of us that I think is problematic.  

 

[djmich]

would like to jump in when have more time.  fatguy, do you have a model country that has embodies your ideal form of government?

 

[timschochet]

3) Even with the most burdensome possible taxes proposed by Bernie Sanders/Elizabeth Warren/AOC, Jeff Bezos would still be one of the richest people in the world.  He would have enough money to purchase any consumer goods he wanted for the rest of his life without ever running out of money.  When you say you don't have any objections to him getting rich, that kinda understates the scope of what's happening here.  His net worth is about 4 MILLION times the size of the median American family's net worth.  I don't have an objection to him being rich, he can buy whatever he wants.  But the massive wealth disparity between Bezos and most people gives him an insane amount of power over the rest of us that I think is problematic.  

I agree with this. But I’d like to point out that you’re not doing away with capitalism here, you’re simply tinkering with it to make it better, more equitable. And I agree with that approach. But it also disproves the notion that capitalism is bad. If it was a bad system, then no amount of tinkering (taxation) would fix it. 

 

[fatguyinalittlecoat]

would like to jump in when have more time.  fatguy, do you have a model country that has embodies your ideal form of government?

I don't know that I'm knowledgeable enough in the details of any country's economic systems to characterize anything as ideal.  But from what I know, places like Denmark and Finland seem to be pretty good at providing a strong social safety net while also redistributing wealth so nobody gets too rich.  It looks like the wealthiest guy in Finland has like $4 billion.  

 

[IvanKaramazov]

I guess I have a few points here:

1) While consumers have undoubtedly received benefits from Amazon, the company has been a disaster for a lot of people that sell things, threatening the livelihoods of millions of people that have seen their incomes decrease or businesses fail due to competition from Amazon or because Amazon's huge market share forces them to sell their wares on Amazon for a much smaller profit.  I think Amazon is also bad for the environment.  I think there are some other more controversial negative impacts I could attribute to Amazon, but the details don't matter.  In calculating how much Amazon has benefited the country, it is important to also account for the people's lives that have been diminished by Amazon.  

Well, that at least makes Amazon a good example to discuss, because this is definitely a case of capitalism working as intended -- a more efficient firm is driving less efficient firms from the market, to the benefit of consumers but obviously to the detriment of the less efficient firms who are losing out.  I see this dynamic as hugely part of the "pro-capitalism" side of the ledger.

 

[The Commish]

I agree with this. But I’d like to point out that you’re not doing away with capitalism here, you’re simply tinkering with it to make it better, more equitable. And I agree with that approach. But it also disproves the notion that capitalism is bad. If it was a bad system, then no amount of tinkering (taxation) would fix it. 

This is an odd definition of "bad" Tim.....

 

[fatguyinalittlecoat]

I agree with this. But I’d like to point out that you’re not doing away with capitalism here, you’re simply tinkering with it to make it better, more equitable. And I agree with that approach. But it also disproves the notion that capitalism is bad. If it was a bad system, then no amount of tinkering (taxation) would fix it. 

Yeah, I think you guys are trying to have it both ways by insisting that lots of redistribution is perfectly compatible with what we normally consider to be capitalism.  If capitalism is about private ownership, at some point there's a definitional problem if the government is seizing lots of your private property in the form of taxes every year.  And if one of the compelling reasons in favor of capitalism is that it motivates people to work harder, at some level of redistribution that argument no longer holds water.  

I think it makes more sense to think of a continuum with "pure capitalism" on one end and "pure socialism" on the other end.  We're somewhere in the middle, but in my judgment we're way too far on the "pure capitalism" side.  The more redistribution we do, the further we move along the continuum in the direction of socialism, which is what I've been advocating for.  It doesn't seem fair for you guys to take everything but the purest form of socialism and designate it as "capitalism" just because there is some level of private ownership.

 

[fatguyinalittlecoat]

Well, that at least makes Amazon a good example to discuss, because this is definitely a case of capitalism working as intended -- a more efficient firm is driving less efficient firms from the market, to the benefit of consumers but obviously to the detriment of the less efficient firms who are losing out.  I see this dynamic as hugely part of the "pro-capitalism" side of the ledger.

I agree that Amazon is a good example to discuss. 

To the extent your argument is "capitalism is the best system at making the pie bigger," I think I agree with you.  I just think making the pie bigger often isn't the most important goal.  

 

[The Commish]

Yeah, I think you guys are trying to have it both ways by insisting that lots of redistribution is perfectly compatible with what we normally consider to be capitalism.  If capitalism is about private ownership, at some point there's a definitional problem if the government is seizing lots of your private property in the form of taxes every year.  And if one of the compelling reasons in favor of capitalism is that it motivates people to work harder, at some level of redistribution that argument no longer holds water.  

I think it makes more sense to think of a continuum with "pure capitalism" on one end and "pure socialism" on the other end.  We're somewhere in the middle, but in my judgment we're way too far on the "pure capitalism" side.  The more redistribution we do, the further we move along the continuum in the direction of socialism, which is what I've been advocating for.  It doesn't seem fair for you guys to take everything but the purest form of socialism and designate it as "capitalism" just because there is some level of private ownership.

Last thing we need is "capitalism" in the same vane as "but socialism!!!!!!'" that is so rampant around here.  Being honest, I'm probably at the 55/45 split on the capitalism/socialism continuum.  Maybe 60/40

 

[Maurile Tremblay]

If capitalism is about private ownership, at some point there's a definitional problem if the government is seizing lots of your private property in the form of taxes every year. 

I don't think seizing cash is much of an issue with respect to whether a system is capitalist or socialist. It's seizing the means of production that matters. Regulation seems more significant than taxes on that score.

To be sure, there's such a thing as seizing so much of the profit that the line between private and public ownership is blurred. If you seize all rents from my investment property, in what sense do I really own it? (I guess I can still choose what color to paint it, but what's the point?) I think tax rates have to get really extreme, however, before that becomes salient.

 

[Maurile Tremblay]

To the extent your argument is "capitalism is the best system at making the pie bigger," I think I agree with you.  I just think making the pie bigger often isn't the most important goal.  

I might be jumping too far ahead in the discussion, but...

I'm totally open to the idea that people in Finland might be happier than people in Sweden right now, in part because Finland has fewer billionaires per capita. (Using Sweden to represent lots of growth without suppressing billionaires, and Finland to represent the other side of that trade-off.)

But I don't see how Finland is supposed to convince nearby powers to reduce the size of their own pies, or, failing that, to convince them not to invade, from now until the end of time.

 

[Maurile Tremblay]

By the way, Matt Yglesias had a substack article a day or two ago about the wealth tax that raised a lot of issues relevant to this thread. Unless someone beats me to it, I'll paste it here later when I'm on my desktop.

 

[Maurile Tremblay]

Regulation seems more significant than taxes on that score.

Although it seems to me that most good regulations can be framed as protecting (and better defining) property rights rather than infringing then.

A factory owner doesn't have the right to pollute indiscriminately -- not because he doesn't own the factory, but because he doesn't own the air.

 

[fatguyinalittlecoat]

If capitalism is about private ownership, at some point there's a definitional problem if the government is seizing lots of your private property in the form of taxes every year. 

I don't think seizing cash is much of an issue with respect to whether a system is capitalist or socialist. It's seizing the means of production that matters. Regulation seems more significant than taxes on that score.

To be sure, there's such a thing as seizing so much of the profit that the line between private and public ownership is blurred. If you seize all rents from my investment property, in what sense do I really own it? (I guess I can still choose what color to paint it, but what's the point?) I think tax rates have to get really extreme, however, before that becomes salient.

It seems likely that Jeff Bezos would have to sell some of his shares of Amazon to pay wealth taxes if they ever became law.  Or his heirs would need to sell shares to pay estate taxes.  I don't think there's such a clear line between seizing cash and seizing the means of production.  You can buy a factory with cash and you can sell a factory to receive cash.

 

[Maurile Tremblay]

It seems likely that Jeff Bezos would have to sell some of his shares of Amazon to pay wealth taxes if they ever became law.  Or his heirs would need to sell shares to pay estate taxes.  I don't think there's such a clear line between seizing cash and seizing the means of production.  You can buy a factory with cash and you can sell a factory to receive cash.

I am willing to concede that wealth taxes are bad.

Forcing Bezos to sell some of his shares, though, is different-in-kind from seizing (and keeping) some of his shares. In the former case, Amazon remains wholly privately owned. That's not really socialism, IMO.

 

[fatguyinalittlecoat]

I might be jumping too far ahead in the discussion, but...

I'm totally open to the idea that people in Finland might be happier than people in Sweden right now, in part because Finland has fewer billionaires per capita. (Using Sweden to represent lots of growth without suppressing billionaires, and Finland to represent the other side of that trade-off.)

But I don't see how Finland is supposed to convince nearby powers to reduce the size of their own pies, or, failing that, to convince them not to invade, from now until the end of time.

The United States has the biggest pie of anyone.  We've used that giant pie to make a lot of giant guns.  But I'm not convinced that makes us the least likely country to suffer from foreign attacks.  If anything, I think the size of our pie and the size of our guns encourages foreign hostility rather than discourages it.  In my opinion the best way to discourage foreign attacks is through diplomacy and working with multi-nation institutions like the UN and NATO, rather than by scaring everyone with big pies and big guns.

 

[fatguyinalittlecoat]

I am willing to concede that wealth taxes are bad.

Forcing Bezos to sell some of his shares, though, is different-in-kind from seizing (and keeping) some of his shares. In the former case, Amazon remains wholly privately owned. That's not really socialism, IMO.

This tangent took us to a weird place I'm not sure exactly what we're disagreeing about now.  I agree that imposing wealth taxes does not make the country socialist.  I just think it pushes us in that direction on the continuum.  There are a million different ways to design an economic system that lie somewhere between what I would describe as "pure capitalism" and "pure socialism."

ETA:  Are you saying wealth taxes are bad because they might make a person sell assets or because of the reasons you stated earlier about big-spending rich people paying less than rich people with less conspicuous consumption?

 

[Maurile Tremblay]

Consider the wealth tax
It's back — and it's still not clear why
Matthew Yglesias
Mar 10, 2021

I’m not really sure why, but Elizabeth Warren rebooted the wealth tax debate at the beginning of the month with Bernie Sanders and others cosponsoring.

During the course of the 2020 primary campaign, she embraced two different versions of wealth tax proposals, and Sanders campaigned on a third, different proposal. The fact that the wealth tax keeps bouncing around with different numbers attached is a bit odd. So is the fact that what it’s financing is always changing. For Warren, it was originally the workhorse of her campaign plans for expanded child care and other things. But then when she felt pressure to develop a Medicare for All financing plan, a bigger wealth tax became part of that. Sanders’ wealth tax seemed designed to be higher than Warren’s just so he could be the true left candidate.

Now, the latest wealth tax iteration is vaguer in its purpose.

Warren, in the roll-out release, says “this is money that should be invested in child care and early education, K-12, infrastructure, all of which are priorities of President Biden and Democrats in Congress.”

But Biden ran his own primary campaign and had ample opportunity to go in this direction if he wanted to. So at times, the wealth tax seems like an answer in search of a question. The idea is to demonstrate that there’s a high-polling, politically popular way to finance a Nordic-scale welfare state without a Nordic-style tax system that would ask more of middle-class Americans. I think that’s probably not true. But even if it is, it’s weird — the wealth tax is somehow simultaneously a pragmatic political gambit, and also something that has no politically plausible path to being enacted.

What made Warren’s campaign so fun to cover, though, was that her famous “plans” did a great job of raising the big, conceptual issues with the American economy. So I do think it’s worth going over the wealth tax, its origin, and its rationale.

The alchemy of wealth

In the national accounts, all of your money is either saved or consumed.

Consumption is like when you buy lunch and then you literally consume the lunch. But buying underwear is also consumption. So is taking a flight on a plane or filling up your car with gas.

Saving could mean that money goes into your savings account. But if you take some money and invest it in the stock market, that is also saving. Indeed, in this sphere of economics, savings and investments are equal by definition, which is not how normal people use those words.

What makes this a little fuzzy is that some forms of consumption are neither as ephemeral as lunch nor as impossible to re-sell as underwear. These are your “durable goods,” like furniture and appliances, that last for years. From a household balance sheet standpoint, the difference is that even a really nice, solid table is going to sell for less than you paid for it if you try to unload it after three years of use. By contrast, a share of stock in a company that manufacturers tables could go either up or down. The table depreciates. The table company stock is an investment. That said, the share of stock represents a claim on the assets of the table manufacturing company. Those assets include a bunch of machinery that is table-like — long-lasting but depreciating, and probably hard to resell.

Where this gets really imponderable is that if you buy a computer, that’s household. But if your employer buys you a computer, that’s a business investment. And, weirdly, if I buy myself a computer, that’s also a business investment — because I own a business where I employ myself to type on a computer.

In other words, these are not — to an extent — metaphysical or economic distinctions. They are distinctions of tax law. Households pay taxes on their income, but then can often get tax breaks for saving that income in a 401(k) or 529 or HSA or IRA. Businesses pay taxes on their profits, but they can deduct their investments. Broadly speaking, this is all because we think investment is good and a prosperous society should have a big stockpile of stored-up investments. But of course you’re not going to invest for no reason — your investments will generate income. But in order to encourage investment, we tax that income (capital gains and interest) at preferential rates compared to labor income.

And all this accumulated, income-generating investment is wealth.

How we tax wealth

There is no “wealth tax” in the United States. But if you imagine two co-workers who do the same job and live in the same town and get paid the same salary, but one is Wealthy and the other is Not Wealthy, there are a variety of ways that the Wealthy one will end up paying higher taxes.

The most salient one is that most Americans — and especially most affluent Americans — own a home, and rich people sometimes own two or even three homes. These homes are subject to property taxes. Property taxes are not “wealth taxes,” because a person who owns a $340,000 home outright is a lot wealthier than a person with a $340,000 home and $270,000 in mortgage debt.

Still, residential real estate is a major form of wealth in the United States — for middle-class people, it’s generally their main form of wealth.

Then there are bonds, stock, and other financial instruments. Most Americans own at least a little of this stuff, but the ratio of financial instruments to real estate goes up the richer you get. There’s a school of thought which says there should be no taxation on the income that these kinds of investments earn. Then there’s a rival school of thought which says income is income, and it should all be taxed the same. The United States kind of splits the baby here — capital gains and dividend income is taxed, but it’s taxed at a lower rate than labor income. And the moderately wealthy also have a lot of ability to shelter their investment income from taxation through various kinds of special accounts — though the truly rich are way too rich for this to work.

Last but by no means least, if you are very rich, then the value of your estate will be taxed before you can pass it on to your heirs. This is paired with an obscure tax loophole called “stepped-up basis.” When you sell a share of stock, you pay tax on the profits — the difference between the purchase price and sale price. But if you inherit stock, you get to use the share value at the time of inheritance rather than the original purchase price. This is a big deal. And since the estate tax only starts to kick in at $11 million, it’s really not a trivial thing. If you inherit $10 million in stock from your dad, you’re not going to make any Forbes lists, but you’re still way richer than the typical American. And your dad won’t have paid taxes on his stock gains because he never sold, and then the estate is too small to be taxed, and if you sell the stock right away then the stepped-up basis means you don’t pay tax either.

Proposals to tax wealth

The first time I heard a proposal for a wealth tax came when I interviewed the famous French economist Thomas Piketty on the book tour for the English translation of “Capital in the 21st Century.”

His idea was that instead of relying on property taxes, which he characterized as basically a regressive and arbitrary form of wealth tax, we should have a modest progressive tax on net wealth.

I thought at the time (and continue to think) that this was an intriguing suggestion if you abstract away from all the many institutional and legal issues. The big problem is that at least in the United States, property tax is the workhorse of local governments, and only the federal government could feasibly collect a wealth tax. There’s also a lingering question as to whether wealth taxes are even constitutional at all. But the key thing about the Piketty Tax Reform is that I can tell you exactly what the point is, which is namely to make it easier than it currently is for the majority of people to build personal wealth. In that sense, it fits very nicely with certain Jeffersonian themes in American political history.

It’s also a plausible answer to the question “Why don’t you just act like the Nordics?” because the goal is to create something different than the Nordic outcome (whether or not that’s a good goal is another question).

But what we’ve been talking about more recently is different:

• Warren, January 2019: 2% tax on household net worth between $50 million and $1 billion, and 3% on household net worth above $1 billion.
  
• Sanders, September 2019: 1% marginal rate on household net worth between $32 million to $50 million, with an escalating series of brackets that ultimately ends at an 8% tax on net worth above $10 billion.
  
• Warren, November 2019: Raises the rate on net worth over $1 billion to 6%.
  
• Sanders and Warren, March 2020: Back to the original Warren proposal, but this time with Sanders as a cosponsor.
  

In all four versions, the idea is, broadly speaking, to finance government spending on various normal progressive things. But they are also all paired with Piketty-style arguments that we should care a lot about wealth inequality.

Should we care a lot about wealth inequality?

Warren’s work on this was done in collaboration with Gabriel Zucman and Emmanuel Saez, two French economists who’ve also worked with Piketty. The three of them, it seems to me, have two big points about the hyper-wealthy and why they are bad.

One of them, which I found very plausible a decade ago and much less so today, is that the super-rich can use their wealth to effectively control the political system and further entrench their wealth.

Now there’s clearly something to this. Michael Bloomberg and I are both secular Jewish liberals who have broadly similar center-left political ideas and a lot of interest in American politics. But while I have a somewhat influential blog and Twitter feed, he has a whole media empire and a vast fortune. Consequently, he is more politically influential than I am. And you can see the evidenced consequences of this on topics like gun control, where he and I have different ideas. Probably the single biggest lever through which I could get my way into this subject would be to personally persuade Michael Bloomberg and create a situation where a Democrat is more likely rather than less likely to get Bloomberg Bucks if he tacks to the center on guns.

That said, I think the specific concern about political domination by a billionaire oligarchy is now in rough shape.

• Donald Trump was a mostly-fake populist, but at the same time he was clearly not the preferred choice of the GOP donor class, who could neither stop him nor make him go away.
  
• Joe Biden eventually became the choice of “the Democratic establishment,” but his primary fundraising was terrible. The mainstream donors wanted Buttigieg or Harris or Beto, and both Sanders and Warren raised more money than those three anyway.
  
• Billionaires are clearly not the reason that it is politically challenging to impose a carbon tax, create a path to citizenship for the undocumented, or hold police officers accountable for misconduct, just to name a few issues that have inspired a lot of recent passion.
  
• A lot of the political influence of rich businessmen comes from the fact that they control important businesses — even if you cut Mark Zuckerberg’s wealth by 90%, as long as he controls Facebook and Facebook is a major source of information, he’s still very influential. By the same token, Rupert Murdoch is a much more politically significant figure than the much-richer Elon Musk.
  
• Small donors keep becoming more and more important in politics, so while Bloomberg-style influence clearly matters, its impact seems to be getting weaker rather than stronger.
  

The other concern is a worry that the world will become dominated by dynastic wealth as it was in pre-World War I Europe.

I don’t think this is a crazy thing to worry about, and I do think that boosters of American entrepreneurialism should be a little more cognizant of the fact that if Sam Walton had one heir rather than four, that person would be the richest person in America. That said, in the actually existing United States of America, nine out of the top 10 richest people are founders/entrepreneurs rather than heirs. Number 10 is Charles Koch, which I think is a somewhat ambigious case. Then you have Julia Koch, three Waltons, and MacKenzie Scott, so you start getting into dynastic territory.

I think a lot of folks in Silicon Valley are too complacent about this. We’re closer to dynastic wealth being a huge issue than they sometimes want to admit. But I would not say that this is a first-order problem right now in the year 2021. Many top billionaires, thankfully, have taken The Giving Pledge, and the rest should be encouraged to do so. More quietly, we should encourage the mega-rich to follow the examples set by Elon Musk and Jeff Bezos to have large numbers of children and/or divorces. The extent to which the top ranks of wealth are dominated by heirs vs. founders is heavily influenced by how many kids the richest people have, and I think Piketty’s analysis sort of discounted that.

So in terms of “we need a wealth tax to fight dynastic wealth,” I would kind of put a pin in it and see where we are in 20 to 30 years. The real issue that Warren and Sanders are putting on the table is tax revenue.

The $3 trillion question

Saez and Zucman estimate that the Ultra-Millionaire Tax would raise about $3 trillion over a 10-year window.

Critically, it also polls well. And this seems like basically the best argument to me — if you faced an urgent need to raise $3 trillion in a way that polls well, then Warren and Sanders have come up with one.

That said, the constitutional issue here worries me a lot. Warren has put out two letters (here and here) from constitutional law experts arguing that there’s no problem with a wealth tax. Unfortunately, none of those experts is Leonard Leo or a former John Roberts clerk. Warren has convinced me that if I were on the Supreme Court, I would rule that the wealth tax is fine. But it seems to me that the legal merits of this issue have very little practical importance. It’s clear that conservative jurists are somewhat reluctant to back-track on well-established legal precedents. But tossing out a totally novel legal theory is cruising for a bruising.

When you think about it, it’s actually especially perverse to kick a question about oligarchical control directly over to the branch of government most insulated from public opinion.

What’s more, while this particular form of taxing the rich is definitely popular, it’s not obvious that it has big advantages over other forms of taxing the rich. There’s weirdly little polling of Joe Biden’s actual tax proposal, but the most recent thing I found showed that about two-thirds of the public supported higher income taxes on those earning over $400,000 a year.

I also have some serious doubts about the wealth taxers’ framing concepts. Frank Newport of Gallup did a great piece in 2019 on “Americans’ Longstanding Interest in Taxing the Rich,” where he notes that even though higher taxes on the rich is popular, there is very little popular animosity toward rich people, and reducing inequality is ranked by the public as a very low priority. Those aren’t exactly reasons not to do a wealth tax. But they are reasons to ask again, why exactly we are doing this? The wealth tax is popular, but so is Democrats’ normal “tax the rich” proposal — and that proposal raises fewer constitutional issues. The fact that the politician most identified with the wealth tax is extremely unpopular — in 2018 she underperformed Bob Menendez, who was in the middle of a corruption scandal — is further reason for pause.

The very best reason I have ever heard for doing a wealth tax is that the one-shot nature of the estate tax makes it too easy to avoid — you only need to dodge it once — while the steady drip, drip, drip of the wealth tax gives the IRS more bites at the apple. That’s fair enough, I suppose, but you still achieve a very similar effect by ending the stepped-up basis loophole and (if you want to) raising capital gains and dividend tax rates.

Upward toward social democracy

I’m not “against” the wealth tax per se, and if someone running for office thinks it’s politically compelling then go for it, I suppose.

But in terms of the slow boring of hard boards, I don’t love it.

• If you’re writing a reconciliation bill that needs tax increases to offset new spending, then it’s going to be harder to get 50 Democratic senators for a wealth tax than for a more banal tax hike.
  
• If you’re trying to do a bipartisan deal with Republicans, then God help you if you’re trying to sell them on the wealth tax.
  
• If you’re sincerely worried about the revenue situation, then introducing a tax that the Supreme Court might toss out seems ill-advised.
  

And if you’re actually not worried about revenue, then a tax seems like a bad answer.

Concentrated economic power needs to be fought with antitrust remedies and probably a new body of communications law to deal with the tech giants.

Codetermination — another Warren idea that she wound up talking about less — is a proven means of directly empowering workers vis-a-vis employers that I think has some unique advantages, and is also something we have actual experience with in Germany. Even more broadly, it’s common in Europe to have what’s known as “sectoral bargaining,” where there is a pattern union agreement across an entire industry. That’s another powerful egalitarian tool that has stood the test of time.

Last but by no means least, we really do know how expansive welfare states work. They offer universal benefits that are financed by moderately progressive tax systems. If you look at Denmark or Sweden, they tax the rich more than we do. And they tax the middle class more, too. It’s just overall higher taxes, and in exchange, you get more stuff. It is a more egalitarian distribution of resources, but it doesn’t stop successful Swedish corporate founders from becoming billionaires. What’s more, if you are making the case for a more expansive welfare state, I think you actually want to reassure people that America will continue to be the home to successful startups. And successful startups, by their nature, generate large amounts of unrealized capital gains.

The big issue is that you need to actually persuade people that they want less private consumption and more public consumption. Higher taxes, but a stronger guarantee of free healthcare, cheap child care, and cheap higher education.

It’s not wrong to say that the rich need to pay their fair share or that we could use some redistribution. But even a “regressive” tax like a VAT, congestion pricing, or a carbon tax is highly redistributive if it’s used to finance a universal program. Taxing the middle class is unpopular, fine, so prudent politicians shouldn’t lead with their chin. But there’s nothing wrong with normal approaches to taxing the rich, no particularly urgent need to offset anything with tax increases right now, and in the long run, no real path forward for progressive politics that doesn’t involve convincing people that they are going to get cost-effective public services. The wealth tax concept, to me, mostly seems like an effort to evade that conversation.

 

[Maurile Tremblay]

ETA:  Are you saying wealth taxes are bad because they might make a person sell assets or because of the reasons you stated earlier about big-spending rich people paying less than rich people with less conspicuous consumption?

To the extent that I was defending wealth taxes against some particular charge (such as that they lead us to socialism), I was just noting that my defense was limited. I'm okay with the idea that wealth taxes are bad in general, even if they're not bad in every possible way. (Mostly, I was intending that line to have some comedic value.)

 

[Maurile Tremblay]

The United States has the biggest pie of anyone.  We've used that giant pie to make a lot of giant guns.  But I'm not convinced that makes us the least likely country to suffer from foreign attacks.  If anything, I think the size of our pie and the size of our guns encourages foreign hostility rather than discourages it.

Hmm. I think this is a genuine disagreement between us. But it's something that seemed obvious enough to me that I've just sort of taken it for granted rather than putting a lot of effort into analyzing it.

 

[The Commish]

The United States has the biggest pie of anyone.  We've used that giant pie to make a lot of giant guns.  But I'm not convinced that makes us the least likely country to suffer from foreign attacks.  If anything, I think the size of our pie and the size of our guns encourages foreign hostility rather than discourages it.  In my opinion the best way to discourage foreign attacks is through diplomacy and working with multi-nation institutions like the UN and NATO, rather than by scaring everyone with big pies and big guns.

None of our formidable opponents are scared of our big guns.  They know everything's going cyber.  This should be obvious by now.  

 

[Dinsy Ejotuz]

Yeah, I think you guys are trying to have it both ways by insisting that lots of redistribution is perfectly compatible with what we normally consider to be capitalism.  If capitalism is about private ownership, at some point there's a definitional problem if the government is seizing lots of your private property in the form of taxes every year.  And if one of the compelling reasons in favor of capitalism is that it motivates people to work harder, at some level of redistribution that argument no longer holds water.  

I think it makes more sense to think of a continuum with "pure capitalism" on one end and "pure socialism" on the other end.  We're somewhere in the middle, but in my judgment we're way too far on the "pure capitalism" side.  The more redistribution we do, the further we move along the continuum in the direction of socialism, which is what I've been advocating for.  It doesn't seem fair for you guys to take everything but the purest form of socialism and designate it as "capitalism" just because there is some level of private ownership.

Isn't capitalism private ownership of the means of production?  I don't think anything in capitalism precludes a progressive tax policy.  But it's not something I've thought about or read about before, so maybe this is a known thing?