When taxes favor making money with money than labor why would anyone want to work?

Labor should be tax free or low and capital gain should be taxed high. Time is more valuable than money and taxes should reflect that.

> Time is more valuable than money

This is one of those "does not compute" statements that's sort of like dividing by zero. Money buys time, and time has value (https://www.investopedia.com/terms/t/timevalueofmoney.asp), which is measured in money.

It's why we try to incentivize long term investment, because without such an incentive, consumption now is better than consumption 5-10 years from now. We saw this happen before "long term" carve outs began proliferating in various states' tax codes.

> Money buys time, and time has value

Only when you look at it from the business owner perspective, who can simply buy more labor (time) to make more money.

For individuals, the only thing we have in this world is time, and it's finite. When it's all gone, it's all over for us. That means time is the most valuable thing possible to individuals.

If and when we choose we can sell some of that time for money. But money in not what we want, and it doesn't give us direct value. Time is what we all want, because sooner or later it runs out.

While it’s true that our time is finite, many people don’t have any clear idea how they want to spend their time. This is particularly true when retired. Often, people end up spending time playing games or surfing the Internet or whatever just because they don’t have any other plans.

So the value of time very much depends on your stage in life and your finances and your goals. Spending your time working or doing things yourself can be a good trade if you have the time and need the money.

Those things are perfectly legitimate usages of time. The whole point of time having value outside of money is that we should have to power to spend our time on things that don't produce money.

> For individuals, the only thing we have in this world is time, and it's finite. When it's all gone, it's all over for us. That means time is the most valuable thing possible to individuals.

But this is a difference in degree, not kind. When the average individual buys something online, some individuals may choose to pay a little more for expedited shipping. It's the same principle. More abstractly, if I were to pose an individual looking to purchase Nike shoes 2 options: $100 to get the shoes today, or $1 to get the same shoes a year from now, the majority of individuals would choose the former, rather than the latter. Again, that's because of the time-value of money.

Now, you're correct that not everybody has the means to be able to buy time like this, but one can't conclude from this reality that time is "more valuable than" money.

> Time is what we all want, because sooner or later it runs out.

Yes, this is correct, and it reinforces the argument that time and money are just two currencies that are interchangeable. Money is just a proxy for value, and time is undeniably valuable. Not everybody has enough money to buy 70+ years of "free time", which is why the median person typically trades labor instead of money for future "free time" (retirement). In most countries that offer social security, that's the underlying mechanism: convert mass labor into money (taxes/contribution) which can then be converted into long term investment (sovereign wealth funds, SS trust funds), which is then converted to equally distributed "future free time" for everyone involved.

Individuals can definitely buy time. Hire a house cleaning service, landscape company, grocery delivery service, nanny, etc. Those are all ways to buy time that frees up the individual to do other things.

Traditional thinking says if you earn more per hour than you're paying for stuff like that then it's a net win, but again that is a business idea (opportunity cost) and doesn't work for individuals. If it were true, everyone earning more than minimum wage should be paying someone to do every single thing in their entire life... but that doesn't work because you can't just earn more money when you're on salary, and you don't have infinite hours to work endlessly more.

This analysis totally ignores a whole bunch of factors, including that you can’t pay someone else minimum wage for a bunch of things, and that “hiring someone to do X” has a huge transaction cost associated with it. Not just the hiring part, but the coordination, etc.

The “can’t work more hours” piece actually works towards your argument for finite time: why would you want to spend any of your outside-of-salary time doing stuff you don’t want to do that could pay someone less to do?

Time is not fungible.

> Time is more valuable than money and taxes should reflect that.

I understand the sentiment, but it literally isnt true. If it were, then noone would accept a job since they'd rather have the time instead. At the very least, there is more nuance to be observed here.

> then no one would accept a job since they'd rather have the time instead

So, if we value air more than food, should we stop eating so we can breathe more?

You literally make this tradeoff each time you have a meal — what?

So we can breath enough? Hell yeah. I’d give up food to make sure I can breath.

Neither of those things have units on them, so that's obviously not the comparison they were trying to draw. The way I see the comment, labor is more valuable to society than putting up capital is, so the government should incentivize labor by raising the capital gains tax.

I would gladly take a pay cut if my job let me work less time.

Come to Germany, where companies over a certain size (# of employees) literally cannot deny your request to work part-time: https://www.globaladvocaten.com/blog/labour-law-parttime-wor...

Be warned though, you won't make the same batshit insane US salary here.

Seconded. If I could keep my career security (I will still be employed here 10 years from now unless black swan) and healthcare (no spouse) while cutting pay and hours in half I would take it in a HEARTBEAT. No one is offering that.

This kind of flexibility is one of the advantages of consulting/freelancing. Obviously the career security aspect is different, but in a hot hiring market there isn't a shortage of opportunities. I know several people who, as they got to more senior levels, decided to work 50% of the time for roughly 60% of their previous salary.

But shouldn’t that be totally doable? What’s the argument against that by the employer? Because pay is also 50%

Many of the overhead costs scale as a function of headcount irrespective of how many hours each employee works. For example, let's say you work in a regulated industry where each employee needs to follow a certain training every year. Having twice as many employees each working 20 hrs will double the training costs. Management overhead will also go up since there will be more one-on-ones etc.

There are some issues that I think would make this difficult to do:

  - Two employees at 50% salary and time are not equivalent to a single employee at 100% of salary. They're strictly worse if always run in series, all else being equal. Alice starts project X on Monday and Tuesday, and hands it off to Bob on Wednesday because it's urgent. There's some inefficiency there. Good management could help avoid it, but would be hard-pressed to prevent it in all cases. At best, it's one more thing to worry about.

  - There are benefits outside of your salary that are more difficult to cut in half. Health plans, headcount taxes, etc.

That being said, there are some experiments being done (not at 50%): https://www.amazon.jobs/en/landing_pages/part-time-tech

Ok, I see. I guess if company feels that the talent is very valuable to them, it's possible to negotiate special terms like this, but I guess in general companies are not then interested in part-time roles yeah.

I'm actually planning to cut my time in half, but keep the same pay. My story was discussed here on HN yesterday/today: https://news.ycombinator.com/item?id=27133376

Long story short: As the startup I'm working at doesn't have enough money to raise my hourly price, I'm now proposing to cut my hours in half, but keep the pay. So I'm working half the time, but keep the pay. It's summer now, so I'm happy to spend more time with friends and family.

And while we're talking about working less, another thing that's interesting I think is "4-day work weeks". There are remote companies who work 32h per week. I even made a list of the ones I know, but I'm sure there are more: https://remotehunt.com/remote-companies-with-4-day-work-week...

Aside from fixed costs and aspects like coordination efficiency, companies have to raise pay more than linearly to get people into high hours jobs. Those disproportionate gains should be given back at cut hours, but too many employees would claim this is unfair.

I wrote about this a while back: https://www.growwiser.com/2011/11/27/less-work-for-less-pay-...

there are costs to employing someone that don't vary with number of hours worked.

The person you're responding to wants 100% of their current healthcare plan but only half the salary/expected hours, for example.

Maybe you can find one here: https://parttime.careers

People would take time over a job if Maslows hierachy of needs are taken care of by some grant like Universal Basic Income.

I would conjecture people don't always work for rational reasons -> Billionaires going to the office must piss off everyone like dude, you've won the game, go buy an island or something. So work is a useful habit. Useful in that it's a source of revenue for the government. Which is good and I agree with. But that makes unemployment a wholly irrational thing. Can our economic models even include unemployment as a variable? Surely government must hear those unemployment stats like a cat scratching a board.

Should people have to lie, cheat, beg so that they can become tax paying citizens?

This perspective is strongly endorsed by Pikkety's work, which shows that returns on capital outperform returns on labor. Further, there is a trend for higher levels of capital to not just produce proportionately higher returns, but also higher percentage returns. E.g. Harvard's endowment fund earns a higher percentage return than the smaller endowment funds of other universities. This disparity may be because higher amounts of capital allow owners to not only employ more skilled financial resources, but also to cherry-pick investments and negotiate superior returns to an extent that is not possible for owners with less capital. The disparity in returns on capital vs labor result in a concentration of capital in fewer hands (inequality) and this is linked to reduced overall productivity. Piketty proposes a tax on capital (not just on a capital gain, but on the balance) to reverse this. This is undermined by the fact that it is regarded as an impossibility (politically), kind of like proposing that we all just learn to levitate to do away with polluting aircraft.

At least, this should be how it's done in a low interest rate environment when investors are already desperate to invest in whatever they can get an above-inflation return on.

Replace "capital" with "investment"

Or imagine the extreme, where capital gains was taxed 100%. No one would invest, we would all be essentially hunter gatherers. There would be no capital appreciation allowed so you would not be able to invest in anything in hopes of making a profit.

Capital is how you build a better future

The problem is that there isn't enough investment despite the corporations having huge piles of cash. The billions in stock buy backs in the US are a testament to this. Your argument is valid in a world where savings are scarce but we have a global savings glut.

> The problem is that there isn't enough investment despite the corporations having huge piles of cash. The billions in stock buy backs in the US are a testament to this

Which is it? Are corporations sitting on huge piles of cash or are they using the cash for stock buy backs?

US has relatively low savings that has gone down from about 10% in the 70s to a low of ~3% in mid 2000s to ~7% today (ignoring 2020 which shot up savings to 30+%). Compare that to China which has much higher growth which regularly saves ~36%

https://tradingeconomics.com/united-states/personal-savings

https://tradingeconomics.com/china/personal-savings

"Or imagine the extreme, where capital gains was taxed 100%."

This will likely never happen unless we have a true existential/societal collapse so why entertain this thought?

Looking at extremes is a useful mechanism to understanding the underlying factors affecting something.

If you accept the fact that 100% capital gains tax would result in no investment and a 0% capital gains tax would mean a lot of investment, surely there is a link between cap gains and someone's willingness to investment. Especially considering that capital holders tend to be sophisticated and highly sensitive to incentives.

So increasing the capital gains tax would lead to less investment.

Capital gains tax is rarely if ever a major consideration in investment decisions. The vast majority of professional investors are interested in cash flows, not capital gains. It is just the speculators that live and die by capital gains, and they treat our markets like a casino. Disincentivizing their behavior would be a good thing.

This kind of thought exercise is frequently misleading, though, because it relies on the assumptions that (1) effects are essentially linear and (2) that if something is provably bad at the extreme, it's bad at virtually any amount. If someone makes $10M capital gains through investment and "only" gets to take home $9M because of the 10% tax rate, they've still made nine million dollars. As long as that's objectively a good rate of return, there's little to no disincentive. The effects of a 10% tax vs. a 100% tax are obviously not linear.

Funding doesn't work like that. It's not "we have to settle for 9% return instead of 10%". Everything is done at the margin.

So if someone prices out a project where they can expect 10% return but now you tell them they are only going to get 9%, then the risk may not be worth it.

You may not think like this, but I guarantee you the people in charge of allocating capital do think this way.

I agree that it is helpful but I also think it is more nuanced than that. What if there is a Goldilocks phenomenon? Someone with knowldege on the "life on Earth goldilocks with the Sun" could share their thoughts on such a comparison :)

I disagree, looking at the extremes is often used as a scare tactic against certain changes. We can also say that if we tax work 100% nobody would work.

The point of the OP was that work is generally more valuable to society than capital gains, but is taxed higher so there is a mismatch between the worth and how we tax it. Saying if we tax capital gains 100% nobody invests, does not add anything to the discussion as the same argument applies to work.

> The point of the OP was that work is generally more valuable to society than capital gains

Is it though? Capital build a better future. It's more forward thinking than just working.

For instance, I want my children to forgo working and build capital for their future by getting an education. The foregone income would pay back more in the long run.

I wouldn't consider an education to be capital. It produces no value without you doing work, whereas capital produces value through others' work.

All you're saying presupposes that "privatised capital" is the only possible way to organize an economy. In that sense it's justifying a system by arguing inside the system.

I'd still invest. Its not capital gains you'd be receiving, it'd be a higher salary

There's probably more governing cost to labour than to virtual jobs. In NZ builders pay more towards healthcare than coders do.

What taxes favor day trading commodities over labor?

Many people are making tons of money in crypto but even more are losing out. But people only post online when they are winning. It's the same as Instagram - everyone seems to have incredibly interesting lives but really most of us work 9-5 and spend most of our free time watching Netflix or performing mundane tasks. Social media focuses and amplifies the good parts of other people's lives.

There's a whole "loss prn" subset on wsb and some crypto subreddits where people proudly show their losses, the bigger the better.

And lots of suicidal kind of messages when the whole market crashes. So I'd say losses are as vocal as wins depending on which forums you go to.

Loss porn gets boring after a while and it's more of a subculture than mainstream. It's more interesting to report on a janitor who became a billionaire trading Dogecoin on their daily commute than reporting on the same person blowing their meagre salary buying derivatives, which they didn't understand, on a sketchy exchange.

Those are not the same people.

You need a decent amount of capital to pull off the trading and renting. Unemployment isn't pocket change to those people, but it is not a lot.

Similarly, in my professional life I'm seeing more people working on silly apps that run a filter over a selfie than people working on e.g. medical image processing or you know, stuff that is actually useful. I see businesses who write a CRUD website/app to connect contractors (read: employers) to businesses. And they are hugely successful.

I don't know but something seems wrong in the way work is incentivized. Is the market broken?

I’m often thinking about the same thing, but not only in tech.

Like why this photo filter app boy/girl is super rich + has a lot of free time, and my friend nurse has very little money and works all the time?

Because being a nurse doesn’t scale. It’s better to provide a small amount of value to 100 million people than immense value to 10 people.

It's kind of subjective to say this is better. If 100 million people had a bunch of cool image filter apps on their phone but no access to medical care the outcome is pretty clearly not better.

Perhaps it's more reasonable to say that providing a small amount of value to a larger amount of people is more profitable.

Luckily this isn’t a binary choice, the more profitable cool image filter app takes nothing away from healthcare.

The world is full of people who simply aren’t capable of providing “value” at scale. Odds are that society gets better outcomes when the few who can do so pursue things like silly image filter apps (and sometimes actually useful things too) over nursing careers.

This may be true today, but it is a lot easier to build a silly image filter app now than it was 10 years ago. If the incentives remain skewed in favor of "highly distributed but small value" contributions to society while the difficulty of making such contributions also decreases we may, in fact, see a shortage of nurses.

Yeah. And I'm also thinking about the value you give to the world, you know. Like these photo filter apps. How do they improve our life here on Earth.

They rather have negative effects I would say: like a bad impact on teenager's self esteem or something like that.

But yeah, it's our society and it's values :)

That filter app probably makes people laugh or at least smile, that’s value right there.

The question is: should everybody pursue work that is of low value and scales well? Because that is what seems to be more and more the case.

In a way, scaling/globalism seems to be working against us.

For a variety of reasons most people can’t. Those who can probably should.

Let’s also not forget the possibility of highly valuable and highly scalable pursuits.

There are still two problems here:

1. People with the talent to make high-value/low-scale products (e.g. medical imaging) are working on low-value/high-scale products (silly apps). This is similar to how our brightest minds are making people click ads.

2. Apple and the HN reality distortion field make everybody (even those without the skills) believe they can become rich by creating low-value/high-scale apps.

Making a silly app that runs a filter over a selfie is a short easy project for a medium experience dev. Making medical image processing requires way more skills and knowledge of various topics.

It has nothing to do with the market and everything to do with ease of creation.

If you can connect workers to employers in ways that wouldn't have been connected otherwise, you improve the conditions for the worker and the employer.

Don't underestimate the value and utility of CRUD apps.

Society has been like this for a long time.

Automation and economies of scale has made it much more efficient to produce necessities. Yet society has failed to convert that into allowing the low classes to have more free time. Everyone needs to do some useless job to survive even if there is nothing that needs to be done.

This also impacts the climate and has to be solved.

This is the result of decades of policy favoring capital over labor. Tax rates on capital gains are lower than taxes on income earned through labor. The Supreme Court tells us that corporations are people too. Congress passes tax reform with permanent tax cuts for corporations but individual tax cuts that expire. Corporations run multi million dollar ad campaigns lauding “essential workers” as “heroes” yet they continue to pay a minimum wage that verges on poverty wages. Capital owners multiply their wealth every time a disaster hits while labor is still reeling from the last one.

What message is labor supposed to take from all of this? We are not valued at all, so why even bother? If society is set up to be a system where we all just trade paper and bits back and forth, then why do any productive work at all if you’re going to end up getting shit on?

Imagine filing a tax report where all your housing, food, car and clothing expenses are listed as operating expenses and are thus not taxed. In addition to that, most of your income went to an Irish subsidiary and your total taxable income this year is $150, taxes at 20% because "I identify as a C-corp".

I'm literally in the process of registering an LLC for myself to do consulting work, because our laws have been set up in such a way that it's more beneficial to treat myself as a corporation rather than a human being.

Almost all wage earning activities have had downward wage pressure on real wages for the last 5 decades. The only exception to this sees to be highly defensible businesses/monopolies and the talent pool these businesses draw from.

I wouldn't be surprised for more daytraders to emerge playing games like GME/TSLA/BTC. With infinite printed money there never needs to be a greater fool. Shorts who go bust get bailed out, banks who bet long can pump the stock on near negative interest, Individuals can drive momentum to the point that other players leverage the money spigot.

After all as long as the money doesn't get withdrawn it doesn't impact the real economy right?

A fundamental difference between trading and working for pay is that you're not risking your principal when you take a job.

No, you are instead explicitly forfeiting substantial portions of the only life you’re ever going to get.

Is watching coinbase 24/7 more fun?

Trading is also a job you have to put effort in and one that does not appeal to me at all. I'd rather be programming.

Absolutely not in any single way is it more fun. I miss programming, I miss team members, I miss gut-wrenching production issue debugging.

Sometimes the stress and anxiety of crypto is physically debilitating.

But you're wrong that it's something you have to put effort into. The absolute BEST decisions i've made in crypto were inaction. The biggest regrets I have were all caving to anxiety.

That's when you pay someone to watch Coinbase 24/7. It will show the same to everyone, so there's no need for everyone to keep watch.

It doesn't have to be this way! You're on HN, a lot of us are actually doing what we enjoy, or at least are pursuing that goal.

I recognize that's the result of a whole heap of privilege, but I don't have to work and still do because it fulfills my desire to build things and... well honestly, make money.

The vast majority of investors acquire their investment capital by the same mechanism.

You’re not risking your principal but you can be risking your life. Who ever died trading on the market? My wife had a friend who died last year from COVID at 33. His last tweet was about how his dick manager at T-Mobile was forcing them to come into work despite the global pandemic. A life wasted in the name of selling cellphone plans. T-Mobile stock hit an all time high today tho.

I would hazard a guess that the downvotes are because if your going to include second order effect deaths like that then a lot of people have no doubt died from trading stocks as well. There was an article here on HN recently about one such tragedy. Some kid killed himself because he thought he owed a bunch of money from trading options or something (I think it was Robinhoods UI but don’t quote me on that) when I’m fact he didn’t owe the money.

It is insane to compare a single self-inflicted death based upon misunderstanding to hundreds of thousands of deaths resulting from the corporate norms.

I think suicide is a mental health issue more than an occupational hazard. Re: the downvotes, they’ve been going up and down. +2 to -2 to +2 to -1 again. I just said something people have feelings about, that’s all.

> I think suicide is a mental health issue more than an occupational hazard.

The two are orthogonal rather than opposed categories.

This is your bubble. Only a fraction of a percent of the population are able to do any of those things.

To make more money from investing than working you need a whole lot of savings. If by some miracle you can make 10% a year long term (and you haven't been poached by a hedge fund yet), and you need 100 k to live, that means you need to have more than a million in the bank ("more", because you want to compensate for inflation as well).

It is hard to run a society off of derivatives, fiat money, and bitcoin production instead of steel and lumber production.

Lack of labor should accelerate automation.

Central banks printed billions to "save" the stockmarket. Leading to gigantic hidden inflation.

Poor are poor. Middle class are screwed (money on bank account basically has negative interest due to inflation). So you can be a pseudo rich by just holding stock/bitcoin/peoperty - since they increase in value purely due to money print.

If you are a middle class person the central bank basically screws you to save the stock market.

Unpopular opinion but the central banks are the main source of inflation.

Now the economy is completely unglued from any fundamentals.

> Unpopular opinion but the central banks are the main source of inflation.

I mean, that seems obvious, there can't really be inflation if the money supply doesn't increase, can there?

If the money supply stays fixed, then some people will save/hoard money. Some people will also be more able than others to acquiring money (possibly because they already owned assets/rental property), maybe they were born rich. The amount of money that is circulating will automatically decrease. That tends to produce deflation.

The problem is that if you have deflation in your economy, it also increases the incentive for people to save/hoard money even more. Why would you spend your money today when it will be worth more later? You have a feedback loop where the amount of money circulating just keeps decreasing, and so prices automatically have to go down.

> I mean, that seems obvious, there can't really be inflation if the money supply doesn't increase, can there?

Depending on your definition, sure there can be. Private lending is the primary driver of inflation. Most wealth is on paper anyway, so long as people don't try to get actual cash, then an economy can experience significant inflation with a fixed supply of money.

You don't even need lending to drive inflation without a money supply increase. There are lots of bitcoin millionaires out there who can't actually liquidate their holdings for cash, but could, in theory, actually buy other physical goods with it at roughly face value.

Central banks don't have a monopoly on inflation, despite everyone's apparent belief that they do. They are a major influencer, yes, but at USD-scale, they don't have all that much control. You can see this in how the Fed almost always misses their inflation targets.

The Fed's primary concern with interest rates is the US Government going, essentially, bankrupt. The stock market is much further down the list.

4% * $50 trillion = $2 trillion in just interest per year. The US Government will be at roughly that debt level perhaps within a mere 12 years at this point (assuming one normal recession in that time).

So as you can see, the US Government can afford no meaningful climb in the average interest rate it's paying on its swelling debt. Normally as a massive borrower gets more shaky in its finances, the rate it would expect to pay would climb at an accelerating pace with its fiscal implosion. To avoid that fate, the Fed has to step in and become the primary buyer of the garbage US Government debt (which will be endlessly recycled as they will never pay any of it down now). The financing problem with the US Government is so enormous at this point that there are no other nations or private pools of capital large enough to keep up with it on a consistent annual basis, currency debasement - eating the value of anything held in dollars, including most US assets - is all that is left to fully fund the government (and the entitlement costs will only keep spiraling higher this decade and next).

The stock market is a laughably trivial concern next to that problem. Which is also why one of Biden's immediate priorities is raising taxes (if they don't, the Democrats know it'll put the welfare state & entitlement programs they've put so much effort into building over many decades into jeopardy sooner (collapsing demographics may take care of that regardless)).

Raising taxes to pay for a bankrupt government just seems like such a backwards way of doing things.

>Central banks printed billions to "save" the stockmarket.

I agree with most points but that wasn't the main motivation. It was to keep the economy going in terms of people spending money when much real production was stopped due to covid. Now covid is mostly over, at least in the west, and spending is rising leading to inflation, bank printing will probably stop and the stockmarket fall. Which is not necessarily a bad thing.

Endless money printing distorts value in weird ways in my opinion.

But I think what you're seeing is lots of fomo and people who had savings because they were forced to save (couldn't spend it), they should be back to their jobs when the market inevitably crashes.

Would be nice to have enough money to invest enough to make a nice living wage off of the market right now. Most people don't have that $$. Early adopters are WAY ahead of everyone else in this regard. Luckily I got in early.

We seem near the top of an epic bull run. I'm not sure the ability for everyone to get rich by trading virtual things between each other will continue indefinitely.

Current monetary policy is the equivalent of unemployment payments for the wealthy. It distorts markets and discourages productive investment.

you're talking about the same groups of people.

the people that say shit like "unemployment payments encourage laziness" are talking about poor people, minorities and people of color.

The people you're referring to doing crypto trading are typically affluent already, or people in social structures and communities where they have places and people to fall back on.

Now imagine the whole country gets UBI. I don’t see how it can ever work out with this tiny example we’re seeing.

> sitting back and watching Coinbase 24/7 is objectively more profitable

Is it? I find that highly improbable.

That can't continue forever though.

True, crypto is the new UBI