What To Do About The Long-Term Implications of Automation

no the tariffs and a huge wall creates high wages, and people choose to work.

forcing work is like rape, since it removes the safety of welfare. (consent). capitalism can be either good, or bad.

 

I would rather have the back and forth tussle ongoing between the capitalists and the social democracies than any kind of dictatorship by either side.

Yes, the pendulum will swing back and forth but as long as it is limited and no egregious excesses occur on either side the system will survive because it NEEDS to be flexible enough to adapt to changes in society such as the upcoming wave of automation.

The government of OF the People and FOR the People must be able to REGULATE capitalism whenever and wherever it harms We the People. Beyond that capitalism should be allowed to make whatever profits are possible in a well regulated economy.

 

Dictatorship and democracy are opposites. You cannot have one with the other being the rule. Karl Marx said “Democracy is the road to socialism” because democracy is government of the people, by the people, for the people. I think you may be thinking of the phrase "dictatorship of the proletariat". By definition and intention, that would also be the enforcement ("dictatorship") of democracy.... -government of, by, and for the people. So if we are going to be opposed to democracy because it would have to be enforced and opposing forces held at bay and therefore call it a "dictatorship", we have lost already.

In reference to economic changes, like automation, under our capitalist system such changes have always been implemented for the benefit of capitalists and their private profit and usually to the detriment of workers. There is no doubt that automation will be handled any differently and no pendulum will be involved.

Why? Why should we protect individual "rights" to make enormous profits beyond all others? What you are proposing is that "we" somehow avoid the power and influence of wealth over government (Europe is losing that battle right now) and create a huge bureaucracy to create, manage, and enforce laws and regulations and oversight to maintain constraint when all we need is to ban private profit.

 

OK. Let's say that we don't want people to make enormous profits. What form of government are you advocating and which countries are using it? I can't think of any countries I would want to live in except democracies, tell me a few good ones using your system.

 

Democracies? What country has democracy? There are none.

No need to change our form of government. Just tax enormous profits and incomes until they are no longer attractive, and incentivize the formation of WSDEs (Workers' Self-Directed Enterprises). They are the very definition of "democracy", so you'll love them.

 

Many times, things that look like they ought to work, don't because of unintended consequences. It would be easier to get more people behind an idea, like taxing very high profits, if they saw some country who was doing that successfully. Which countries are doing what you suggest, and how are they doing?

 

Remember the US from about 1945 to 1970?

Tax rates today are at historic lows. And it seems to be causing trouble.

 

Boy, for such a short reply, your post sure generated a lot of research time for me! It was enlightening, though. Here's what I learned.
I knew that the highest brackets for income taxes were much higher in the past. I did not know that they were higher at almost all income levels, as you said. Here is the site for this info. https://www.scribd.com/doc/19050096...te-Adjusted-for-Inflation#download&from_embed

One of the things that I found very interesting is that the amount of taxes as a % of GNP has not risen much. Here is the site for this info. https://fivethirtyeight.com/features/u-s-tax-rates-the-big-picture/ The graph goes back to 1965 NS up to 2012. By about 1968 personal taxes as a % of GNP was 9%. It had its ups and downs with a high of 12% in 2000. In 2012 it was back to 9%.

It seems like if the tax rates were higher, which they were, then the % of taxes to GNP would be higher. This I don't get. Maybe you have some insight.

If you think that increasing income disparity is part of the general dissatisfaction in the US, as I do, I noted something interesting. The top tax bracket changed from 70% to 50% in 1982 In 2012 dollars the top rate went from 70% on $544,000 to 50% on $200,000. The chart below and some very interesting analysis comes from this site.
https://taxfoundation.org/short-history-government-taxing-and-spending-united-states/

FIGURE 1

Income disparity begins again (it was this high in the 20's and 30's) in about 1979. The lows for income disparity were in the 50's & 60's. I think this increasing disparity could well be related to the drastic reduction in tax rates for the wealthy. It would also enable them to have an ever increasing proportion of wealth.

So Kode, what are your thoughts? Or anyone else who wants to chime in.

 

Yes, they were. And yet the right today obeys their irrational marching orders in complaining about "high taxes". They aren't.

And yet tax revenue has risen but with the drop in tax revenue as a percentage of GDP since 2000, the change in total tax revenue has not changes as fast as it did at other times. And look at the change in the GDP!!

http://www.multpl.com/us-gdp-inflation-adjusted/

We have greatly increasing GDP and a declining tax revenue as a percentage of GDP since 2000, which produces a reduction in the RATE of change of tax revenue.

Well, in the mid to late 60s, we had a drop in the tax rates with an increase in GDP, and your "fivethiryeight" graph shows a sharp increase in individual tax revenue as a % of GDP with a corresponding fall in corporate revenue without the sharp rise. So combining them flattens the change in overall revenue as a % of GDP ("RAPGDP"?) it would seem. Then in the 80s there was another cut in tax rates while GDP kept climbing, but individuals' RAPGDP trended upward a bit while corporate RAPGDP trended downward a bit, cancelling each other out. Hmmmm. I'm not sure how to answer your question. Probably the flattening of middle class real income gains shown in your graph below also has a role from about 1974.

Regarding this last concern, remember that the late 70s was when women "went back to work" and this increase in the labor pool was addressed by business by reducing raises and letting pay fall behind inflation, plus paying the female portion of the workers a lower pay than the rest. Business took advantage of lower taxes on high incomes to give bigger salaries to the corporate elite. When taxes were high, the incentive to take high salaries was dampened and the money was plowed back into business. But when taxes fell below 70% in 1982 it became more attractive to take bigger incomes, and this increased disparity.

Then, with incomes lagging behind, credit cards were promoted as a way to maintain standards of living. And consumer debt increased and increased.

Despite what the right says, capitalism requires continuing increases in markets, sales, profits, and production was the main way of achieving all that. But capitalist economics faced increasingly severe crises since about mid 70s too. And in good times the working class was able to recover mostly from the previous crisis, enabling them to withstand the next crash. But since the 2008 crash the middle class has not recovered. And now we are facing the prospect of another and a worse crash but without being prepared.

So the income disparity chart shows the worsening of the capitalist crisis as they face greater and greater difficulty with achieving increasing markets, sales, and profits, and how they have hammered the middle class to keep themselves gaining. But at some point it has to end, and the coming crash may be the time.

Just my thoughts. I hope you're not sorry you asked.

 

I've been AWOL from PF for a while, but here are some more thoughts. First, Kode, you sure had a lot more words this time.
Anyway, it looks like we agree on higher taxes for the wealthy as a cure (or a least an aid) to solving income inequality. From what I read, there is a limit to how much you can tax people without them either reducing the amount they work or moving out of the country. I think the corporate rate would be more likely to cause people/companies to move out of a country. I don't see enough individuals moving because of tax rates to be even noticed. What do you think?

But just to see what other OECD countries highest tax rates are, I looked up a few relevant ones.
Great Britain 45%
France 45%
Germany 47.5%
Italy 48.8%
Switzerland 40%
USA 37%
Japan 56%

Nordic countries much higher.

So it looks like we could move up to 45% to 50% without having to worry much about people moving. Thoughts?

Since in the States we can hardly pass any tax increase, that would be a big hill to climb. How do you think we could eventually get there? Here, a lot of people I talk to don't want to tax the rich more, even though they are not rich. I guess they think they will be some day.

 

The USA could increase the top tax rate to 60% and no one would "move" because it would make no difference even if they did move. American citizens are required to file US tax returns irrespective as to where they actually reside. The ONLY way to AVOID filing US tax returns would be for them to RENOUNCE their US citizenship. That is not going to happen IMO.

 

So, any thoughts on how we can get the ball moving some to increase tax rates for individuals?

Do you agree that if we increase taxes too much on corporations that some of them might move? Seems like if we stay about like the other OECD ON corporate rates that we would be ok.

 

Easiest and simplest solution to increasing taxes is just to remove the Social Security income cap. That takes care of SS funding through 2090 and it increases government funding which will bring down the deficit.

Next we need a National Debt Surtax to be paid on all income in excess of $500,000 pa. This NDS will ONLY apply while the debt is greater than zero. If there is no National Debt the Surtax does not apply to any income above that limit.

The issue of corporate taxes is a red herring IMO. Instead let's use TAX INCENTIVES to reduce their tax rates. In other words for every person employed for a full year at a wage that is at least 3 times the poverty rate with benefits the corporation can reduce it's own tax rate by 0.001%. So for every 1000 people gainfully employed that would be a reduction in the tax rate of 1%. This becomes an incentive for corporations to employ people at incomes that enable them to be consumers who don't need government welfare benefits.

 

I like the first two a lot. The first one should be a pretty easy sell as a way to put soc sec on sound footing. Has this been proposed in Congress? If so, the fat cats sure must have some pull there because it sure makes sense.

The NDS looks really good, too. With a threshhold of $500,000 there wouldn't be a very big percentage affected but a sizable amount of money raised! I doubt if anything like this has been proposed.

So how could this be enacted? It seems to me that there are two ways to get enough attention to the public to get big things done. Social media is one. But first it seems you would want to test the water with a poll or something to make sure that a big %age of people really like it. Or somehow get to one of the wealthy big names that are in favor of better government, like Mark Cuban, Bill Gates, Warren Buffett, etc. Then they connect with their each other and get enough money to get some publicity. Probably still go back to social media. If you can get lots of people thinking this would be good for the country, we might have something.

What do you think?

This thread certainly isn't getting much attention any more. I think there have been three of us to post to this since Jan. Maybe we need to start a new thread with this focus.

 

And if the laws were changed to provide a good national healthcare system, it would be a disincentive to part-time jobs and it would allow for shifting the corporate burden from the cost of benefits to federal taxes. IOW reduce the cost of benefits by moving the burden to the government, and increase corporate taxes by the same amount or a bit less. Win-win as I see it.

 

Yup. That's why I keep telling the righties that our tax burden is at historic lows. So we don't need more cuts.

Nope. I've pondered it and I come up empty-handed.

One of the beneficial effects of high tax rates on huge incomes was that those tax rates motivated the recipients to take less income from their businesses and plow the extra back into the business for a tax write-off. This kept the disparity in check. But now with top tax rates being so very low, those same people see no reason to avoid taxes on income so they're taking it as income, and creating huge disparity.

Capitalism has been in increasing trouble since the 1970s but has come up with various tricks to keep the game going. Not so any more. They are running out of tricks and so are now basically pillaging America for all they can get while they can and to hell with the people and to hell with boosting production, especially since they can't sell all they can produce as it is.

 

The problem with removing the S.S. income cap is that there are those people at the high end who say there's a cap in S.S. benefits so a corresponding cap on income makes sense, but if you remove the income cap and don't remove the benefits cap, it isn't fair.

I say fine, end FICA altogether and increase income taxes and don't break it down for people to see how much of their income went for this or that. But I' sure that would create some problems with persistence and avoidance of threats to kill S.S. altogether.

 

The problem is that it is not in "our" hands. "We-the-people" have no real say in the use nor the impacts of this or most anything. It's in the hands of the government which has been bought and paid for by Big Business. So it will serve them and not us since our needs are diametrically opposite theirs.