Wednesday, August 14, 2019

Progressive {$everything}

This past Friday we drove from Lexington KY to Durham NC via the West Virginia Turnpike. What had been 3x$3 tolls was now 3x$4 tolls. This disappointed me, as tolls are a regressive tax - one that affects poor people much more than rich people. In the US, since 1913 the progressive income tax has been 1 of the only things countering the natural tendency of capitalism to produce runaway inequality.

A natural next step is a progressive wealth tax. aka capital or Piketty tax. That is why proposals like the Green New Deal include such a tax.

Further afield, I have recently been thinking about promoting (voluntary) progressive tipping. My wife & I got to visit France 6 years ago and both liked the "no tipping" of servers in France. Pay the people a living wage, what a concept!

Meanwhile, back in the United States of Capitalism, even though trickle-down economics is, per Krugman, a "zombie" economic theory - one that is known to be wrong, but that refuses to die - it still has influenced a lot of the US economic system for many decades. So I try to actually practice it via aggressive tipping: 100-33%, $5 minimum tip. All 3 of my daughters worked as servers (my son was a very good dishwasher), and for every 1 who over-tips, I guarantee there are 5 who under-tip.

A progressive tipping policy might look like:

  • if you're in the 0-50th %tile financially, you tip 15%;
  • 50-60, 20%
  • 60-70, 25%
  • 70-80, 30%
  • 80-90, 40%
  • 90-99, 50-100%
  • .01%'ers, 500%
  • .001%'ers, 1000%
I think this should be a no-brainer for the better-off. But, unless you are in the 0.001%, you probably don't think of yourself as "better-off". Maybe this would be another form of tumbrel insurance for rich folk besides UBI?

Note, someone told me that "tips" stands for "to insure proper service". Whatever. If service isn't great, I don't know what that server is having to deal with, so I support them regardless.
Then I got to thinking, tips are a "cost of goods" - a price. Why not have progressive pricing on everything, on a scale similar to the tipping? The rich are willing to pay big bucks for exclusive/rare/top-shelf products - how about they pay big bucks for everything, and subsidize purchases by the less well off?

Or, maybe even better and easier, expand the really inventive concept put forward by Karl Schroeder in "Stealing Worlds". There Schroeder posits that the emerging dominant cryptocurrency automatically distributes coins from wallets with too much to wallets with too little. This idea reflects one of my mantras: that money is software. How about a cryptocurrency that implements progressive pricing? A progressive cryptocurrency.

What is the range over which this adjustment should run? Why, the range that keeps the world in Kate Raworth's Doughnut, of course! I would guess that the upper limit on income/wealth would be greater than, say, the 9:1 ratio which limits the wages of executives based on the lowest paid workers' wages implemented by the Spanish Mondragon Coop. I suspect we can stay in the doughnut and still have filthy rich people - but maybe not the 182,000:1 wage ratio of Jeff Bezos to a $15/hour worker.

The concept, brought forth by Schroeder, is that, rather than trying to address inequality with band-aids after the fact, we should build more equality directly into the infrastructure. And while we're at it, this gives us a throttle which we can use to get us and keep us in the doughnut.

Hopefully food for thought. What else could you build into a cryptocurrency?

3 comments:

Chris Heinz said...

Here's an article by Harvard economist Kenneth Rogoff discussing a progessive consumption tax.

https://www.project-syndicate.org/commentary/benefits-of-progressive-income-tax-by-kenneth-rogoff-2019-09

Chris Heinz said...

On Twitter, the most excellent @liewbob Bob Weil suggests Progressive Fines. Oh hell yeah!

Unknown said...

Thanks Chris. Here's the post:
"If fines are meant to be a deterrent to breaking the law, shouldn't the amount fined go up, relative to wealth?"