I am posting this now largely because it is the right place to get in discussion of unrealized capital gains taxes and other campaign proposals, but also there is always plenty of other stuff going on.
Thanks for the section on unrealized capital gains being unreasonable. I was rather perturbed that Matt Yglesias recently came out in favour of such chicanery*, also citing that same pretty-bad Dylan Matthews article as convincing him on the merits. The pushback from the commentariat was...disappointing. One expects a neoliberal, market-friendly, economically literate blog and its readers to see the myriad ways this proposed tiger goes tiger. The context of Matt's post was that restructuring tax incidence while keeping overall rates the same can generate various free lunches (unobjectionable!), which is even weirder if the actual proposals are to increase the headline capital gains rate too. Andrew Gelman's amnesia strikes again, disappointingly.
I think roon's secondary point that current distortions towards rewarding extended holding is Sometimes Good, Acktually is also underappreciated. It was sort of a shock to change my irl milieu from mostly-middle-class-and-up to mostly-working-class-and-down, and see basic investment literacy evaporate. Increasing diversification is good...but not if it results in a lot more Robinhood-style day trading and market timing hail-marys, which is a depressingly common sentiment. Dumb money crowding out smart money and all that, limited deferment of gratification. (My employer pulls an accounting shenanigan where employees are allowed to rob Peter to pay Paul once a year, by exchanging part of their company match retirement contribution for cash upfront...taxed at an onerously higher rate, since it's a "bonus", so you keep like half of it all told. The popularity of this swindle is left as an exercise for the reader.) True, the absolute amount of capital at stake in this percentile is not huge...but one wants them to become wealthier, and discouraging mismanagement helps with that. I'd accept punishing capital gains taxes if it meant an equivalent reduction in, say, income or payroll tax, but that doesn't seem to be what the potential money is earmarked for either.
> New York City’s biggest taxi insurer, insuring 60% of taxis including rideshare vehicles, is insolvent, risking a crisis. Other than ‘liabilities exceeding premiums’ the article doesn’t explain how this happened?
> As usual, a lot of responses are not aware that home ownership rates are essentially unchanged, both overall and by generation by age, versus older statistics, and despite less children the new homes are bigger.
An important caveat is that people are less able to live where they would like to (and where they would be most economically productive) these days due to NIMBYism and lack of development. I don't have data for this, but it seems like today people can afford houses in places like Texas, but not in California, and in the past this was not the case - i.e. prices everywhere were closer to the cost of construction (perhaps I'm completely wrong on this)? Many people would probably happily trade large houses in Texas for smaller ones in CA, but those houses don't exist, so CA is crazy expensive, and people move to Texas.
With tips...I know the apocryphal etymology is false (no, it's not an acronym for To Insure Prompt Service, though that was a good book otherwise), but the intended function does seem to function anyway? My family instilled a strong tipping culture, and for whatever reason it seems to get me reliably good service in affected transactions. Maybe it's actually some complicated correlate like "predisposed to treat service workers nicely" or whatever rather than the actual money, but results are results. I wonder how this would change with tax exemption: generous tipping would become less useful as a price-discrimination signal marking Keep This One Happy. It was interesting seeing this play out during covid, when the vibes among Polite Company strongly encouraged everyone to tip more and oftener. Hard to measure how much it actually affected services rendered, though, due to all the exigent circumstances of the time, but these days...(it'll get really weird with the increasing variety of not-traditional-services trying to incept tipping as a norm too)
One thing I appreciated Consumer Reports trying to teach the masses was that It's Okay To Throw It Out And Upgrade. In fact, as that thread breaks down, it'll often end up being cheaper in many ways, or even net savings over time - for many values of it. Likewise, it was honestly depressing to learn how grim the actuarial predictions for repairs and warranties were...what a racket. All of that green eyeshading still has a hard time arguing against the intuitive distaste for Marie Kondoing, sadly. I think that's a lot of why people complain about Don't Make Em Like They Used To - it's very memorable when your fridge craps out and you gotta toss out a bunch of rotten food, not so much when a workhorse appliance continues to function unremarkably for years. My father's house does have one of those 30-year fridges which is still puttering along the same as when I was a kid; we're pretty fond of it, no matter how inefficient it is. (It'd be interesting to link this to personality traits; my family has unfortunate strains of hoarding and anthropomorphizing objects. Does this lead to higher aversion to replacing stuff/more trauma from stuff breaking?)
It's interesting that in certain narrow domains, we *have* allowed people to consume substandard-for-today goods without that much of a fuss. The whole fast-fashion fad, way over on the cheap vs. durability side of the Pareto frontier? That was totally a thing! Funny to see it go full-circle, with The Youths these days happy to do a lot of unpaid labour "thrifting" through the masses of surplus clothing. It always amuses me when someone condescends at the absurdity of people who still clip 50 cent off coupons for groceries, then spends hours on Facebook Marketplace or Depop trying to score a deal on some cut-rate castoffs. All of which would be much less possible without the embarrassment of riches that came about from The Fast And The Fashionable. Back In My Day(tm) we had to trek through the snow uphill both ways to the outlet stores...
One observation about car (collision) insurance in particular is that you typically must buy it to finance a vehicle. This naturally leads to many people purchasing the product who do not understand it or have any interest in how it works.
cheaper fridges will be replaced more often, but fridges that aren't built to last are cheaper. I think Vance is correct re: durability, but consumers are correct to value price over durability. Fridges were overbuilt.
counterpoint: dishwashers are definitely worse now, and i don't see any reason to have to put my wifi password into my dryer.
Throughout when you say Harbinger tax dym harberger tax: https://en.wikipedia.org/wiki/Harberger_Tax
Damn it, you're technically correct but I want to manifest this one because my version is obviously much better.
stolen valor from Professor Harberger!
Nominative Determinism is more powerful than valor.
Thanks for the section on unrealized capital gains being unreasonable. I was rather perturbed that Matt Yglesias recently came out in favour of such chicanery*, also citing that same pretty-bad Dylan Matthews article as convincing him on the merits. The pushback from the commentariat was...disappointing. One expects a neoliberal, market-friendly, economically literate blog and its readers to see the myriad ways this proposed tiger goes tiger. The context of Matt's post was that restructuring tax incidence while keeping overall rates the same can generate various free lunches (unobjectionable!), which is even weirder if the actual proposals are to increase the headline capital gains rate too. Andrew Gelman's amnesia strikes again, disappointingly.
I think roon's secondary point that current distortions towards rewarding extended holding is Sometimes Good, Acktually is also underappreciated. It was sort of a shock to change my irl milieu from mostly-middle-class-and-up to mostly-working-class-and-down, and see basic investment literacy evaporate. Increasing diversification is good...but not if it results in a lot more Robinhood-style day trading and market timing hail-marys, which is a depressingly common sentiment. Dumb money crowding out smart money and all that, limited deferment of gratification. (My employer pulls an accounting shenanigan where employees are allowed to rob Peter to pay Paul once a year, by exchanging part of their company match retirement contribution for cash upfront...taxed at an onerously higher rate, since it's a "bonus", so you keep like half of it all told. The popularity of this swindle is left as an exercise for the reader.) True, the absolute amount of capital at stake in this percentile is not huge...but one wants them to become wealthier, and discouraging mismanagement helps with that. I'd accept punishing capital gains taxes if it meant an equivalent reduction in, say, income or payroll tax, but that doesn't seem to be what the potential money is earmarked for either.
*https://www.slowboring.com/i/148318117/unrealized-gains-should-probably-be-taxed
The link for "Dylan Matthews gives a steelman defense" is broken, I think deleted. Was the tweet just a link to this Vox article? https://www.vox.com/future-perfect/362399/billionaire-minimum-tax-andreessen-biden
> New York City’s biggest taxi insurer, insuring 60% of taxis including rideshare vehicles, is insolvent, risking a crisis. Other than ‘liabilities exceeding premiums’ the article doesn’t explain how this happened?
Matt Levine explains it: https://newsletterhunt.com/emails/93502 (search for "too Uber to fail" in the page)
> As usual, a lot of responses are not aware that home ownership rates are essentially unchanged, both overall and by generation by age, versus older statistics, and despite less children the new homes are bigger.
An important caveat is that people are less able to live where they would like to (and where they would be most economically productive) these days due to NIMBYism and lack of development. I don't have data for this, but it seems like today people can afford houses in places like Texas, but not in California, and in the past this was not the case - i.e. prices everywhere were closer to the cost of construction (perhaps I'm completely wrong on this)? Many people would probably happily trade large houses in Texas for smaller ones in CA, but those houses don't exist, so CA is crazy expensive, and people move to Texas.
With tips...I know the apocryphal etymology is false (no, it's not an acronym for To Insure Prompt Service, though that was a good book otherwise), but the intended function does seem to function anyway? My family instilled a strong tipping culture, and for whatever reason it seems to get me reliably good service in affected transactions. Maybe it's actually some complicated correlate like "predisposed to treat service workers nicely" or whatever rather than the actual money, but results are results. I wonder how this would change with tax exemption: generous tipping would become less useful as a price-discrimination signal marking Keep This One Happy. It was interesting seeing this play out during covid, when the vibes among Polite Company strongly encouraged everyone to tip more and oftener. Hard to measure how much it actually affected services rendered, though, due to all the exigent circumstances of the time, but these days...(it'll get really weird with the increasing variety of not-traditional-services trying to incept tipping as a norm too)
One thing I appreciated Consumer Reports trying to teach the masses was that It's Okay To Throw It Out And Upgrade. In fact, as that thread breaks down, it'll often end up being cheaper in many ways, or even net savings over time - for many values of it. Likewise, it was honestly depressing to learn how grim the actuarial predictions for repairs and warranties were...what a racket. All of that green eyeshading still has a hard time arguing against the intuitive distaste for Marie Kondoing, sadly. I think that's a lot of why people complain about Don't Make Em Like They Used To - it's very memorable when your fridge craps out and you gotta toss out a bunch of rotten food, not so much when a workhorse appliance continues to function unremarkably for years. My father's house does have one of those 30-year fridges which is still puttering along the same as when I was a kid; we're pretty fond of it, no matter how inefficient it is. (It'd be interesting to link this to personality traits; my family has unfortunate strains of hoarding and anthropomorphizing objects. Does this lead to higher aversion to replacing stuff/more trauma from stuff breaking?)
It's interesting that in certain narrow domains, we *have* allowed people to consume substandard-for-today goods without that much of a fuss. The whole fast-fashion fad, way over on the cheap vs. durability side of the Pareto frontier? That was totally a thing! Funny to see it go full-circle, with The Youths these days happy to do a lot of unpaid labour "thrifting" through the masses of surplus clothing. It always amuses me when someone condescends at the absurdity of people who still clip 50 cent off coupons for groceries, then spends hours on Facebook Marketplace or Depop trying to score a deal on some cut-rate castoffs. All of which would be much less possible without the embarrassment of riches that came about from The Fast And The Fashionable. Back In My Day(tm) we had to trek through the snow uphill both ways to the outlet stores...
One observation about car (collision) insurance in particular is that you typically must buy it to finance a vehicle. This naturally leads to many people purchasing the product who do not understand it or have any interest in how it works.
cheaper fridges will be replaced more often, but fridges that aren't built to last are cheaper. I think Vance is correct re: durability, but consumers are correct to value price over durability. Fridges were overbuilt.
counterpoint: dishwashers are definitely worse now, and i don't see any reason to have to put my wifi password into my dryer.