# Profits are a tax on labor **URL:** \ **Category:** Great Debates\ **Created:** [July 12, 2013, 3:07am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283 "2013-07-12T03:07:25Z")\ **Posts on this page:** 20\ **Page:** 15
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 25, 2013, 10:02pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/281 "2013-07-25T22:02:33Z")
And when the owners of robots can make more robots with little to no help from human labour? [http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/?\_r=0](http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/?_r=0) > [@](#): > > > [@](#): > > > > As more robots are built, largely by other robots, “assembly can be done here as well as anywhere else,” said Rob Enderle, an analyst based in San Jose, Calif., who has been following the computer electronics industry for a quarter-century. “That will replace most of the workers, though you will need a few people to manage the robots.” > > Robots mean that labor costs don’t matter much, so you might as well locate in advanced countries with large markets and good infrastructure (which may soon not include us, but that’s another issue). On the other hand, it’s not good news for workers! > > This is an old concern in economics; it’s “capital-biased technological change”, which tends to shift the distribution of income away from workers to the owners of capital. > […] > I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn’t seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism — which shouldn’t be a reason to ignore facts, but too often is. And it has really uncomfortable implications. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [July 25, 2013, 10:08pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/282 "2013-07-25T22:08:32Z")
> [@SlackerInc](#): > > And when the owners of robots can make more robots with little to no help from human labour? > > [Rise of the Robots - The New York Times](http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/?_r=0) Then we kick back and live post-scarcity lives on our government stipend, and only do labor that we find personally fulfilling. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [July 26, 2013, 12:36am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/283 "2013-07-26T00:36:50Z")
> [@bldysabba](#): > > I’ll need to see a cite to believe that. If we compare Federal Funds (fairly close to the shortest term T-bills) with the inflation rate (monthly, percentage change over a year), we can get an idea of the post hoc real rate of return. [Here it is.](http://research.stlouisfed.org/fredgraph.png?g=kUA) Normally the rate of return is higher than the inflation rate for a positive real return. Not always, but in the past it was the normal state of things. I didn’t remember this, had to look it up. The figures would be a bit different if we used expected real returns, but before TIPS there wasn’t really any direct market guide to expected inflation. The negative real return we can see in the 70s was a post hoc negative return, but I would guess the expected real return had been positive at least at the beginning of that window before markets wised up that inflation would be consistently higher than previous eras. The current era is fairly unusual. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 26, 2013, 2:17am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/284 "2013-07-26T02:17:42Z")
> [@Human\_Action](#): > > Then we kick back and live post-scarcity lives on our government stipend, and only do labor that we find personally fulfilling. That would be my hope; but there are a lot of more dystopian ways it could go down, as we discussed [here](http://boards.straightdope.com/sdmb/showthread.php?t=637834). Think about the current composition of the U.S. House; if that doesn’t change drastically, there’s no way they’d go for such a plan. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [July 26, 2013, 2:32am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/285 "2013-07-26T02:32:07Z")
> [@BlinkingDuck](#): > > This is why there needs to be a social safety net. > > If I can’t find work than I should be able to farm land for food. If all that land is owned then I am not allowed to do this so society owes me a safety net. Otherwise, I should be able to move onto land and farm. HAAAAA!!! HA HA HA HA HA!!! Let me get this straight: You want a social safety net where the welfare recipients have to _work_ to get food? That would _never_ function. The reason many people are on welfare is precisely because they have no desire to work. ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [July 26, 2013, 3:20am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/286 "2013-07-26T03:20:01Z")
Many? Perhaps. But most people on welfare are either unable to work, or are looking for work. It is only a myth that a large proportion of welfare recipients are unwilling to work. However, the plan of moving welfare recipients to self-sustenance farm labor is unworkable for other reasons, the primary one being there simply aren’t that many farm jobs. Even an able-bodied person can’t make his way around the country splitting rails and milking cows. The economy (and farm technology) have gotten beyond that stage. The safety net today is in the form of food stamps, not a vegetable garden. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 26, 2013, 3:48am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/287 "2013-07-26T03:48:56Z")
> [@Trinopus](#): > > Demonstrate to us you aren’t Pol Pot. Actually recommend a set of reforms that address the problems you (and only you) perceive. I’d: [ul] [li]Maintain interest rates at a permanently low level.[/li][li]Tax unearned income at the same level as earned income.[/li][li]Increase deficit spending, substantially and dramatically, whenever unemployment rose to an unacceptable level.[/li][li]Spend deficit money on big, expensive public infrastructure projects.[/li][li]Continue to monetize the debt, indefinitely.[/li][li]Make SS and Medicare taxes progressive.[/li][li]Increase the target rate for inflation substantially.[/li][/ul] ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 26, 2013, 4:09am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/288 "2013-07-26T04:09:55Z")
> [@Shodan](#): > > Does the guy who owns the hammer add any value? The carpenter cannot create any value without it. > > Regards, > Shodan Owning it doesn’t add any value. Permitting it to be used does. Its entire value goes away, eventually, unless the owner allows it to be used. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 26, 2013, 4:27am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/289 "2013-07-26T04:27:29Z")
> [@Damuri\_Ajashi](#): > > What does morality have to do with any of this. Equity, sure, but morality? Libertarian/conservatives have been successfully using moralistic language to push their own agenda for more than 30 years now. The problem with their approach is that they rely on a number of unexamined assumptions, which are in fact fundamentally wrong-head. For example: that _owning_ wealth is the same as _creating_ it. Or that having a large income is the same as being productive. > [@](#): > > I’m waiting for this day. If I have to hook myself up to a chair to provide energy to operate the robots then so be it. Well, there are folks who say that once they’ve finished building the robots, the workers will be redundant. Then what will they do? ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [July 26, 2013, 5:40am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/290 "2013-07-26T05:40:01Z")
> [@Human\_Action](#): > > So, does capital have value, yes or no? Sure it has value – to the people that made it. If you operate a printing press to make notes, or a forge and make coins, you’re adding value. Meanwhile the parasitic owner-class, like you and me, merely _own_ that value, and permit it to be exchanged. 😃 ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [July 26, 2013, 6:39am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/291 "2013-07-26T06:39:51Z")
> [@LinusK](#): > > [1]Maintain interest rates at a permanently low level. > [2]Tax unearned income at the same level as earned income. > [3]Increase deficit spending, substantially and dramatically, whenever unemployment rose to an unacceptable level. > [4]Spend deficit money on big, expensive public infrastructure projects. > [5]Continue to monetize the debt, indefinitely. > [6]Make SS and Medicare taxes progressive. > [7]Increase the target rate for inflation substantially. Thank you for this; it is substantial. I’ve taken the liberty of numbering the list. I think a slight majority of the participants of this thread would agree with numbers 3 and 4, and perhaps with 5 and 6. I think the Fed is already pushing number 7 about as far as they can. Same with number 1. Interest rates are already damn low, and we are inviting inflation. So, the only item on the list that is sufficiently controversial for me to argue against it is number two, which has been your bete noir from the first post. Should we tax capital gains at the same rate we tax income? If this were done today and in a sudden fashion, the stock market would crash, and both earned and unearned income would collapse. So, no, this would be a terrible idea. Some increase in the capital gains tax rate would suit me right down to a ‘T.’ So, yes, we should move gingerly in that direction. We should also increase income taxes on earned income in a progressive fashion, slowly rescinding the insane Bush tax cuts and, to a degree, the klutzy Reagan cuts. Moving to a Clinton-era tax rate would be very positive. ---
**Author:** ![QuickSilver](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quicksilver/32/7832_2.png) [@QuickSilver](https://boards.straightdope.com/u/QuickSilver)\ **Post date:** [July 26, 2013, 10:36am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/292 "2013-07-26T10:36:28Z")
> [@SlackerInc](#): > > What does “owns” mean? It has a legal definition, but I and other left wing oriented people do not see it as having some essential, metaphysical validity. This is particularly true of things people do not carry on them or at least store in their vehicles or (reasonably-sized) domiciles. As has been pointed out several times over, it doesn’t matter what you believe the meaning of “own” means. It matters only what the law and (overwhelmingly) society has defined “own” to mean, not to mention most english dictionaries. If you want to go around changing the meaning of words to suit your desired ends then you and your like minded friends are in for a long run of disappointing outcomes. And what, pray tell, is a: “(reasonably-sized) domicile”? ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [July 26, 2013, 11:59am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/293 "2013-07-26T11:59:00Z")
> [@QuickSilver](#): > > And what, pray tell, is a: “(reasonably-sized) domicile”? One which is no larger than **SlackerInc** ’s own domicile, I’d wager. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 26, 2013, 3:55pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/294 "2013-07-26T15:55:18Z")
Actually, I would consider something up to around twice its size, housing the same size family, to be reasonable. And of course that does not mean that something 201% of its size is wildly egregious–like many things, it is a continuum with much grey area and “I know it when I see it”. BTW, despite my Marxian ideals, I am a pragmatist and would gladly settle for the centre-left programme advocated upthread by **Triinopus**. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [July 26, 2013, 4:12pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/295 "2013-07-26T16:12:45Z")
> [@SlackerInc](#): > > That would be my hope; but there are a lot of more dystopian ways it could go down, as we discussed [here](http://boards.straightdope.com/sdmb/showthread.php?t=637834). Think about the current composition of the U.S. House; if that doesn’t change drastically, there’s no way they’d go for such a plan. So if everything changed, but everything else stayed the same, we’d have a heck of a pickle. Well, yeah. The reason we don’t have the US House embracing a post-scarcity guaranteed income system is that we don’t live in a post-scarcity economy. If in the future a majority of people are unemployable because they don’t have any skills that anyone wishes to purchase, including subsistence farming and living chess sets, the cost of production will have dropped so low that welfare for everyone (at a 2013 middle class living standard) will cost a tiny fraction of the national/world product. If the Bill Gates of the future world of the future are so rich, some of them might just decide to buy everyone in America a house because he’s tired of looking down at them camping on the streets as he flies from his megamansion to his private Disneyland. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 26, 2013, 4:25pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/296 "2013-07-26T16:25:59Z")
> [@LinusK](#): > > Owning it doesn’t add any value. Permitting it to be used does. IOW the guy owning the hammer is adding value by permitting it to be used. So the owner does add value, by permitting use, and therefore is owned something. It is no different in principle from owing and permitting the use of capital. Since the owner of capital is permitting others to use his capital, he is entitled to a return on his investment. QED. Regards, Shodan ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 26, 2013, 4:30pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/297 "2013-07-26T16:30:05Z")
[QUOTE=SlackerInc] What does “owns” mean? It has a legal definition… [/quote] The legal definition is adequate for our discussion. > [@](#): > > I and other left wing oriented people do not see it as having some essential, metaphysical validity. I’m guessing you do when you are talking about your stuff. Otherwise you folks wouldn’t be blathering so much about somebody else making money off your labor. Regards, Shodan ---
**Author:** ![Cheshire\_Human](https://avatars.discourse-cdn.com/v4/letter/c/5f8ce5/32.png) [@Cheshire\_Human](https://boards.straightdope.com/u/Cheshire_Human)\ **Post date:** [July 26, 2013, 7:19pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/298 "2013-07-26T19:19:36Z")
> [@Shodan](#): > > IOW the guy owning the hammer is adding value by permitting it to be used. > > So the owner does add value, by permitting use, and therefore is owned something. It is no different in principle from owing and permitting the use of capital. Since the owner of capital is permitting others to use his capital, he is entitled to a return on his investment. QED. > > Regards, > Shodan I would have put it differently. The owner adds value by _deciding_ what the best use is, and contributing it to that use. How does he decide? The best use is the use which makes him the best return on his investment. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [July 26, 2013, 7:23pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/299 "2013-07-26T19:23:27Z")
> [@Cheshire\_Human](#): > > I would have put it differently. The owner adds value by _deciding_ what the best use is, and contributing it to that use. How does he decide? The best use is the use which makes him the best return on his investment. And if no return is possible…why did he go to expense of acquiring, and face the risk of owning, the hammer? Without profit, there’s no private capital, and without private capital, you get the Soviet economy. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 26, 2013, 10:38pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/300 "2013-07-26T22:38:58Z")
> [@Lemur866](#): > > If the Bill Gates of the future world of the future are so rich, some of them might just decide to buy everyone in America a house because he’s tired of looking down at them camping on the streets as he flies from his megamansion to his private Disneyland. Perhaps it could go down that way. But if the Keynesians are right, it might go down more in a way that doesn’t allow the owners of capital in the future to make profits very easily, because too great a number of people are unemployed and cannot provide consumer demand. It could take a revolution or at least an FDR type figure to step in and change direction. [Previous page](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283.md?page=14) [Next page](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283.md?page=16)