The “Sharing Economy” Is the Problem

Re:The “Sharing Economy” Is the Problem by dragonwriter on Tuesday July 07, 2015 @01:48AM (#9843818)

> And so if I consume immediately, I get $80 worth of consumption for every $100 I earn, whereas if I invest I consume only $77.2 of consumption for every $100 I earn. That's the core of Sumner's argument.

With the numbers you gave, the first number was correct ($80 of consumption on $100 in pre-tax labor income), but with investment the actual number is $88.75 on $110 of pre-tax labor and capital income, or $80.68 per $100 of income.

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Re:The “Sharing Economy” Is the Problem by grinnbearit on Tuesday July 07, 2015 @03:22AM (#9844039)

No, yummyfajitas' numbers are right, given a 25% tax rate on capital gains and a 2.8% discount rate

consuming immediately gives you 80% of income

assuming you invested all of it, 80$ and made back 10$ which was then taxed at 25%, you're left with 87.5$ out of 110$ in total income.

consuming after a year gives you 87.5/110 = 79.5% of income, 1 year in the future. After discounting at 2.8%, you're left with only 77.38% of income.

In that case, you'd rather splurge than invest.

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Re:The “Sharing Economy” Is the Problem by yummyfajitas on Tuesday July 07, 2015 @07:25AM (#9844736)

The NPV of $88.75 in future consumption is $77.2 (assuming the investment achieved average returns, which the average investment will).

Comparing dollar values of money in the future to dollar values of money in the present is simply incorrect.

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