Re: Income distribution [and growth]

["John O'Donnell" <jackodonnell@xxxxxxx>]

Bruce McFarling wrote:

> On Tue, 03 Sep 2002 16:25:00 -0700,
> John O'Donnell <jackodonnell@xxxxxxx> wrote:
>
> >John, you must have a very peculiar notion of "feedback." Feedback has
> nothing
> >whatever to do with concentration of wealth. It has solely to do with
> obtaining
> >the information needed to determine the next control action to take,
> either by
> >automatic response like control of room temperature by a thermostat or
> manually
> >like your control of your car's speed in response to the indication of
> speed on
> >the speedometer.
>
> John2, this is talking about mechanical systems under
> external control.

No, it is talking about the process of feedback. Look at the original
message from John1 and you may grasp the reason for the explanation.

>  Self-regulating systems have internal
> feedbacks. As per your description, whether the feedback is
> internal or external, it involves information generated by a
> process that serves to modify the regulation of that process.
>
> Control of self-regulating systems, especially complex
> self-regulating systems, is a harder thing than control
> of mechanical systems that are entirely under external
> control.  Since the economy is the former, and what
> you are describing is the latter, I take it that your
> response to having a hard problem is to pretend that it
> is easy and proceed from there?

Control of complex systems is complex, whether they are mechanical or
otherwise. "The economy" is complex and hardly an appropriate candidate for
a singular control but many processes within an economy do present
opportunities to use a rational approach to control, such as a feedback
signal to determine the direction and magnitude of the next change to be
made in a control variable.

> Fine as far as it goes, but as long as you are pretending
> that the problem is easier than it is, why not go whole
> hog and pretend the problem away?

Sounds like a good choice as long as you're going to ASSUME irrational
behavior why not impute a ridiculous extension of your assumption?

>  Just assumed that it
> is a self-regulating system, and that whatever level that
> it happens to end up with under the current institutional
> framework is somehow the "right" outcome?  Then you don't
> have to do anything at all.

Now your presenting the typical methodology of economists. Can you identify
any proposals by economists that are anything but belief that a choice is
good therefore any failure to attain any particular end is just the result
of extraneous forces that caused the failure of the believed choice?

> And, yes, financial wealth is an internal positive feedback
> ... it is information generated as a result of a process
> that serves to modify the operation of the process.  At a
> certain level of wealth holdings, the holder can live on
> the returns and continue to accumulate, which is how an
> aristocracy of wealth continues to emerge.

You really do live in a world all to yourself. What action is taken in
response to what feedback signal are you attempting to describe here?

Yes, given enough wealth and the present state of societal organization
[i.e. -- All rents created by society given without obligation to first
come first served "owners."] a holder of wealth can live on the returns and
continue to increase the wealth without any significant management or even
oversight of the particular wealth allocation. But that is independent from
any control changes implemented in response to a feedback signal.

> The only clear way to break down the development of an
> aristocracy of wealth is to switch death duties from
> the estate to the recipient.

This may be the "ONLY" method observed by your blind eyes but the fact is
that there are a substantial number of alternatives including the "Monopoly
Tax" and "Citizen's Dividend" I have presented in _Three Steps to Economic
Freedom_.


>  Syd Carroll has proposed:
>
> (1) $1m gifts received tax free
> (2) 2nd $1m taxed at a 25% gift rate
> (3) 3rd $1m taxed at a 50% gift rate
> (4) 4th $1m taxed at a 75% gift rate
> (5) All additional taxed at a 100% gift rate
>
> That would eliminate the level of wealth holdings that
> are self-perpetuating over multiple generations.  And,
> after all, it is a voluntary death duty, since as long
> as the will of the deceased hands out the funds in $1m
> blocks, it would be gift tax free, unless of course
> some of the beneficiaries had already received sizable
> bequests.

There is also the establishment of trusts that live forever and just change
beneficial owners. But, of course, such work arounds to a scheme that
attempts to fix a symptom rather than a cause are trivial to people living
in academia where practical reality is irrelevant.

--
   -- jbod

  Tax Privilege, Not People
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