F*#K MINIMUM WAGE

I'm gonna end this discussion for good. Income Inequality, if too high, is a problem. Then how do you solve it?

*You have two choices - A and B. Let's compare A and B.

Choice A has been tried by many many countries for decades. Yet none of these countries have ever solved the income inequality issue and many suffer from relatively low purchasing power when compared to the actual GDP. Income equality is actually pretty bad and Big Businesses control everything including politics.

Choice B has been tried by a couple of countries and has been in place for decades. These countries have the highest income equality and their people are the happiest in the world. Small business communities thrive and their purchasing power is well above their real GDPs.

Can you guess what choices A and B are?

Here's the answer. A = Minimum Wage & B = Direct Redistribution of Income through universal basic services or negative income tax.

Seriously, Left's favorite Nordics don't have a minimum wage. They have a direct redistribution of income scheme through universal basic services and what is essentially a negative income tax for low productivity jobs. Sweden, Denmark, Iceland, and Norway all don't have a minimum wage.

Add Free-market heaven Singapore to the mix and these 5 countries have one of the lowest income inequality in the developed world with very high purchasing powers. 

Do you know what these 5 countries have in common?

1) No minimum wage

2) Some sort of Negative Income Tax / UBI Schemes.

3) Mostly free markets

4) Low Corporate tax rates

So say NO TO MINIMUM WAGE and SAY YES TO NEGATIVE INCOME TAX/UBI/UNIVERSAL BASIC SERVICES IN EDUCATION & HEALTHCARE

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (101)

  • Intern in RE - Comm
Mar 2, 2021 - 10:09pm

"They have a direct redistribution of income scheme through universal basic services"

So you're proposing the US of A become commie hell hole like North Korea. Um... no thanks.

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
Most Helpful
Mar 2, 2021 - 10:49pm

Let's look at the immigration policies and demographics of those nations you mention...

"Work ethic, work ethic" - Vince Vaughn

  • 12
  • 1
Mar 2, 2021 - 11:01pm

Let's look at the education policies of those countries I mentioned.

Oh wait they're actually pretty good so their people don't have to take up low wage jobs and focus on high productivity high income jobs. All the low income jobs and low productivity jobs go to immigrants from Phillipine in Singapore.

If you want to move to Nordic, no one's stopping you except the language barrier and the weather.

Gasp.

Unlike most people I don't confuse correlation with causation. 

Mar 3, 2021 - 4:52pm

Singapore is really easy to move to. Not sure about the others mentioned but I almost moved there until I visited and realized the humidity is not something I could ever live with. Food was awesome, taxes are great, etc...

Mar 2, 2021 - 11:04pm

famejranc

there would be slaves if there was no minimum wage

Are there slaves in Nordics? Not a lot I bet except some weird voluntary sex slave shit going on.

Are there slaves in the US? You bet ya.

Negative Income Tax > Minimum wage.

You're literally getting paid the same amount of money either way. Except with minimum wage, you cap employment rate.

Negative income tax ornsome other direct redistribution of income scheme  is like CBD without any significant long term damages and Minimum wage is OxyContin and might destroy your life.

Mar 3, 2021 - 6:59am

Milton Friedchickenman

famejranc

there would be slaves if there was no minimum wage

Are there slaves in Nordics? Not a lot I bet except some weird voluntary sex slave shit going on.

Are there slaves in the US? You bet ya.

Negative Income Tax > Minimum wage.

You're literally getting paid the same amount of money either way. Except with minimum wage, you cap employment rate.

Negative income tax ornsome other direct redistribution of income scheme  is like CBD without any significant long term damages and Minimum wage is OxyContin and might destroy your life.

The Nordic countries have very protective labor laws (which are non existent in the US), and they have a very big social safety net. 

Mar 3, 2021 - 2:50am

famejranc

there would be slaves if there was no minimum wage

There are slaves now dipshit it's called the penal system. Literal legal enslavement of people who are convicted by the justice system. And a counter to your idiotic statement, please tell us more about all the slavery that's rampant in *adjusts glasses* Sweden, Denmark, Iceland, Norway, and Switzerland. Aren't those the countries you lefties tend to point to as doing it right? Then let's get rid of the minimum wage all together shall we?

Array

  • 1
Mar 3, 2021 - 4:51am

Aren't those also the countries you always dismiss as being too different from the US for it to be a fair and legitimate comparison? What makes them good comparables now? I'm by no means a leftist on economic policy, just trying to understand who is more hypocritical.

Switzerland just voted to introduce minimum wage, btw. Does not negate it's non existence until now, for sure, but it is an interesting data point.

Mar 3, 2021 - 2:08am

agree. the problem is that people who want UBI/negative income tax/universal school&healthcare, want this in addition to high minimum wage. and they want it from additional taxes, instead of reshuffling already huge government budget that gets wasted on bombing kids arounds the world and bailing out corporations.

Mar 3, 2021 - 2:43pm

Kevin25

agree. the problem is that people who want UBI/negative income tax/universal school&healthcare, want this in addition to high minimum wage. and they want it from additional taxes, instead of reshuffling already huge government budget that gets wasted on bombing kids arounds the world and bailing out corporations.

Exactly. There should be 2 choices in social safety nets -1 ) basic income or 2) welfare state through basic services in Healthcare and social security and what not (either way, some part of the money should be reserved for education whether it's through public school systems or school choice).

Basic income is much easier to implement and less prone to failure IMO.

But fuck military Keynesianism and Crony Capitalism.

  • Prospect in PE - LBOs
Mar 3, 2021 - 7:58pm

Yeah, it's exacerbated by the fact that a lot of people just have the conception that wealth is just some black hole that people take out from, and that the rich are just taking more than their "fair share"

The wealth required to distribute a UBI needs to come from somewhere, and that's from taxing value-creating entities. A minimum wage just creates a deadweight loss on society where you artificially eliminate the potential for perfectly functional, solvent businesses from operating, reducing your overall wealth pool to draw from for your UBI/NIT.

Mar 9, 2021 - 3:46am

How dumb do you have to be to think that a minimum wage hurts the rich and benefits the poor, when in reality it will hurt a lot of poor people a lot, benefit some poor people, hurt some rich people and benefit some very rich people a lot.

Mar 3, 2021 - 3:01am

Pizz

Ur just mad that it's inevitable that the minimum wage will be $15 and poor people will benefit at the expense of the wealthy 

The fact that it can be laid out for you in clear English multiple times that this is precisely what is NOT happening and yet you still cling to this comically misplaced sense of righteousness in the name of who you perceive as downtrodden is frankly astounding. You're not hurting the ultra rich at all, you're hurting high earners but not "rich" people a bit, you're gutting what remains of the middle class, you're slightly helping the marginally less well off, and are severely hurting the poor with this type of policy. But whatever, I'm now comfortably at a place that will still be here 10+ years down the road when the problems these policies cause come to roost. And I'm a sucker for a good ol' fashion I told you so.

Array

Mar 3, 2021 - 6:25am

Pizz

Ur just mad that it's inevitable that the minimum wage will be $15 and poor people will benefit at the expense of the wealthy 

How smooth brained are you?

I've been arguing this whole DAMN TIME that minimum wage doesnt solve income inequality and actually poses a long term threat to the economy.

That's why I keep talking about negative income tax, which literally guarantees minimum level of income without the dangers of minimum wage. It's literal direct redistribution of income.

Mar 3, 2021 - 9:51am

Is there really no impact on broader wealth inequality as a result of Norway's decision to nationalize it's oil creating one of if not the largest sovereign wealth funds on the planet?

Their wealth doesn't seem to be merely from government policy decision albeit this may not be worth discussing given the impractical nature of replicating this in the US. This does make me question the point on "mostly free markets" being effective however. Their wealth seems to reflect the effectiveness of crown corporations in what was not at all a "free market" when Statoil was given the assets. Not to mention the taxes on oil production are what most Americans would call absurd and punitive. So I'm not really sure how you got to "mostly free markets" and low corporate taxes when these simply aren't true for Norway's largest wealth generator for the masses...

It's pretty easy to not have a minimum wage when the sovereign wealth fund has more than the average retirement age US 401k balance for each citizen at birth...

Mar 3, 2021 - 3:09pm

CanadianEnergyBanker

Is there really no impact on broader wealth inequality as a result of Norway's decision to nationalize it's oil creating one of if not the largest sovereign wealth funds on the planet?

It should be noted that I'm talking about income inequality not wealth inequality. Two different things. For instance Sweden has one of the highest income equality but lowest wealth equality.

Their wealth doesn't seem to be merely from government policy decision albeit this may not be worth discussing given the impractical nature of replicating this in the US. This does make me question the point on "mostly free markets" being effective however. Their wealth seems to reflect the effectiveness of crown corporations in what was not at all a "free market" when Statoil was given the assets. Not to mention the taxes on oil production are what most Americans would call absurd and punitive. So I'm not really sure how you got to "mostly free markets" and low corporate taxes when these simply aren't true for Norway's largest wealth generator for the masses...

It should be noted that Norway's dependcy on oil is exaggerated. Norwegian economy before oil was still very strong given their strong manufacturing base (at least they used to). Their GDP per capita was well above that of Denmark, UK, and Netherland in the 1960s in fact.

Another thing is Norway's economy except oil is very free. In fact the Nordic model is about having few highly regulated or even nationalized industries, implementing handful number of strong labor protections, but then having extremely free markets in the most up and coming industries.

Essentially you create massive growth in promising industries by letting them do whatever they want to do and you redistribute the results through high income tax. Hence the very low corporate tax but high income tax.

There's a reason why Nordic countries are one of the best countries for entrepreneurship. 

Mar 3, 2021 - 9:59am

Half this country screams SOCIALISM!!!1 anytime we discuss a marginal change in the income tax rates, and you think a negative income tax will fly?

you didn't make good choices; you had good choices

  • 1
Mar 3, 2021 - 1:44pm

Alt-Ctr-Left

Half this country screams SOCIALISM!!!1 anytime we discuss a marginal change in the income tax rates, and you think a negative income tax will fly?

Agree.  I might be in favor of a negative income tax but pursuing it makes no sense in the US.  Every right wing nut on this planet would screaming those liberals are trying to redistribute wealth.  There is a much better chance of raising the minimum wages across states.  Logically, it makes sense that workers should be paid a wage that he or she can live on.   Workers have very little power in the US, as unions have become less and less relevant.  Either you have a system with strong unions and no minimum wage or no unions and a higher minimum.   Weak unions and a lower minimum wage is the system we have now, which does not very well for people with less skill or knowledge.  The middle class has been on a downward spiral for decades.

http://www.series65examtutor.com
Mar 3, 2021 - 3:14pm

Alt-Ctr-Left

Half this country screams SOCIALISM!!!1 anytime we discuss a marginal change in the income tax rates, and you think a negative income tax will fly?

That's why I think the US is going downhill.

Stakeholders in the political system are bunch of bigots and idiots. 

At least Andrew Yang rebranded negative income tax as UBI and is actually gaining support from some blue collar Trump supporters. Who knows hownthe narrative might change. Heck Nixon tried to get negative income tax passed but got shot down. 

Tbh, fixing the education system should be a priority in the US but no one seems to talk about education.

Mar 3, 2021 - 3:37pm

KClubs

The "Nordics" have workers unions. They typically negotiate and structure rough wage ranges for certain job types. 

Also, as CanadianEnergyBanker said, it's easy to have tons of social programs, aid, and education when your country has one of the biggest SWFs.

Negotiations per company is much preferable because each company will have different minimum ranges agreed upon by both parties. Economically, this "minimum" wage discretely agreed upon by labor unions and individual companies is going to reflect real productivity per capita specific to that company. And changes in the wage will reflect productivity growth of that particular company.

Miles different from a government mandated price floor in the labor market, which by the way is not very susceptible to market failure so any floor or ceilings will create giant distortions.

More issues arise because productivity per capita is different by company and any nationally mandated minimum wage completely ignores this discrepancy. This is why national or state level minimum wage is generally devastating for small businesses: SMBs tend to have much lower productivity per capita and limited productivity growth.

Centrally mandated minimum wage in effect is an unfair system that favors high productivity industries and companies (whose sizes are often big). 

Mar 3, 2021 - 9:29pm

GuyFromTheCity

i think we should allocate more resources toward educational opportunities and special extra learning opportunities for those with high test scores or otherwise demonstrated potential. 

I agree that we should absolutely do education better. 1 major reason that the 5 countries I mentioned works is because of their strong education system.

In the US the education system sucks unless you're smart. 

Mar 3, 2021 - 12:19pm

I don't think you're showing the full picture. 

1. There is no minimum wage, per law. However, the unions are powerful in all these countries, and in practice, they set a floor to the salary levels of mostly low-income jobs. Many low-income jobs are also outsourced to workers from poorer EU countries which come during different seasons in order to make a buck and then leave, so the wage gap between EU countries pay a big role. 

2. Besides an experiment in one Finnish city, I've not heard about UBI for any of the countries you mention, certainly not for Norway and Sweden. It's also the first time I hear about negative income tax, but I guess it's partially correct if you count grants and social security benefits for low-income families who can't pay for themselves. However, it's misleading to call it a negative tax because it's not a cash outlay, and most public services have low excess amounts initially. Ie. I spent a night in the hospital after breaking a foot and it cost me around 40-50 USD, which someone from a low-income household would get refunded. 

I don't know... Yeah. Almost definitely yes.

  • 1
Mar 3, 2021 - 3:52pm

QuiltEmerson

I don't think you're showing the full picture. 

1. There is no minimum wage, per law. However, the unions are powerful in all these countries, and in practice, they set a floor to the salary levels of mostly low-income jobs.

Unions negotiating wages with individual companies is a much much preferable way and I don't have a problem because that way there is no distortions in the economy. When these decisions are made in more localized settings (per company) they will reflect productivity per capita within that company or even departments. Rates of change in the wages will then actually reflect the productivity growth.

When these "minimum wage" decisions are made centrally through a government and the same number is mandated for all companies regardless of size and industry, huge distortions are created.

Market determines wages through some factor of productivity per capita and changes in wages reflect productivity growth. Whenever you ignore the discrepancy of productivity across different companies, across company sizes, and across industries some companies will be hurt more than others. This is quite unfair and creates giant distortions in the economy thay will eventually bite back.

Many low-income jobs are also outsourced to workers from poorer EU countries which come during different seasons in order to make a buck and then leave, so the wage gap between EU countries pay a big role. 

Again this is preferable isn't it? The US has illegal immigrants as well to perform low-income jobs.

Issue is that the US's education policies are so terrible that many Americans can't even think about picking up higher value jobs for some reason.

Personally I think the US should fix its education system into one that allows easy transitions into higher-productivity jobs for most Americans.

All 5 countries I mentioned have some version of this so their population can easily adjust and divert their skill sets fast if needed.

2. Besides an experiment in one Finnish city, I've not heard about UBI for any of the countries you mention, certainly not for Norway and Sweden.

Basically welfare state = Universal Basic Services which is just giving people services instead of income. When you calculate your TC, you add your benefits too don't you?

It's also the first time I hear about negative income tax, but I guess it's partially correct if you count grants and social security benefits for low-income families who can't pay for themselves. However, it's misleading to call it a negative tax because it's not a cash outlay, and most public services have low excess amounts initially. Ie. I spent a night in the hospital after breaking a foot and it cost me around 40-50 USD, which someone from a low-income household would get refunded. 

I'm not understanding what point you're making with this. Care to elaborate?

Mar 3, 2021 - 12:59pm

You're not wrong but the gigantic drunk person that is the US government would never follow something that has worked in other places. Democrat or Republican, they just don't do it.

Dayman?
Mar 3, 2021 - 3:56pm

Nightman Cometh

You're not wrong but the gigantic drunk person that is the US government would never follow something that has worked in other places. Democrat or Republican, they just don't do it.

Honestly that's why I think we need a complete overhaul of the legislative branch. By design, the US legislative branch is set up in a way that does not incentivize legislators to look out for what's best for the country and engage in real problem solving. Instead the incentive structure is set up for them to look out for what's best for themselves and their party.

Mar 7, 2021 - 9:11am

That's actually not correct. After the Cannon Revolt of 1910, the importance of party loyalty actually gave way to the importance of "the candidate" as an individual. And the enactment of direct primary laws between 1890-1920 only further deteriorated party loyalty in the Congress.

  • Intern in Research - Other
Mar 3, 2021 - 4:16pm

Dude I think you are forgetting something pretty key and someone kind of alluded to it with the immigrants comment. You generally don't have a high functioning welfare state unless you have a homogeneous society. Plenty of work has been done researching this phenomena and it was a topic of interest when I studied global macroeconomics. It's really fucked up to think about but as long as the impression at least that the welfare is going to people of other races (tribes) then welfare is an "unfair system that hurts me and makes people lazy". Republicans had a ridiculously difficult time scalping welfare until they could paint the welfare recipient as a black lady from the inner city as opposed to an old white woman in Georgia. It's the same reason stimulus bills were easier to pass and why Trump supporters like it. The perceived benefit also goes to white people as opposed to primarily minorities and immigrants as is the impression when it comes to other forms of government aid. Look up Front Nationale and Marine Le Pen in France (FN) regarding social security equivalents and lowering the retirement age. Basically the idea is that they believe they can have a welfare state so long as it is "pure blooded" white French people as the recipient, and even though it is pretty obvious that some of France's problems lie with the low retirement age and strong unions they support it. Just to give an idea they have a more albeit still not nordic levels of racial and religious homogenity and honestly a terrific education system relative to ours when it comes to educating middle and lower class kids so I'm not sure education fixes the problem. Even if we wanted to go down that route we would still face the issue of getting people to be okay with having a slug of their taxes going to educate black kids in another state as opposed to right now where the impression is "at least I know my kids and my neighbors (most likely people of the same race) are the only beneficiaries of my taxes". It just seems like you are discounting racial issues when it comes to dealing with this.

Mar 3, 2021 - 5:59pm

Dude I think you are forgetting something pretty key and someone kind of alluded to it with the immigrants comment. You generally don't have a high functioning welfare state unless you have a homogeneous society. Plenty of work has been done researching this phenomena and it was a topic of interest when I studied global macroeconomics. It's really fucked up to think about but as long as the impression at least that the welfare is going to people of other races (tribes) then welfare is an "unfair system that hurts me and makes people lazy". Republicans had a ridiculously difficult time scalping welfare until they could paint the welfare recipient as a black lady from the inner city as opposed to an old white woman in Georgia. It's the same reason stimulus bills were easier to pass and why Trump supporters like it. The perceived benefit also goes to white people as opposed to primarily minorities and immigrants as is the impression when it comes to other forms of government aid. Look up Front Nationale and Marine Le Pen in France (FN) regarding social security equivalents and lowering the retirement age. Basically the idea is that they believe they can have a welfare state so long as it is "pure blooded" white French people as the recipient, and even though it is pretty obvious that some of France's problems lie with the low retirement age and strong unions they support it. Just to give an idea they have a more albeit still not nordic levels of racial and religious homogenity and honestly a terrific education system relative to ours when it comes to educating middle and lower class kids so I'm not sure education fixes the problem. Even if we wanted to go down that route we would still face the issue of getting people to be okay with having a slug of their taxes going to educate black kids in another state as opposed to right now where the impression is "at least I know my kids and my neighbors (most likely people of the same race) are the only beneficiaries of my taxes". It just seems like you are discounting racial issues when it comes to dealing with this.

I get what you're saying. But it just sounds like a matter of political cost it takes to implement a certain policy, which has absolutely nothing to do with the soundness of the policy.

This is an age old problem. It's easy to find an optimal policy. It's difficult to convince enough people to adopt that policy.

World is fucked up in that way and it'll never change unfortunately.

Mar 4, 2021 - 3:42pm

Milton Friedchickenman

I get what you're saying. But it just sounds like a matter of political cost it takes to implement a certain policy, which has absolutely nothing to do with the soundness of the policy.

This is an age old problem. It's easy to find an optimal policy. It's difficult to convince enough people to adopt that policy.

It's difficult to convince people to adopt a policy when the political system means that anyone succeeding passing meaningful policy will "win" at the expense of others.  By all estimates the Affordable Care Act should have reduced national spending on healthcare by meaningful degrees, but allowing it to stand would have given Democrats a "win" and thus the GOP spent eight years doing all they could to tear it down.  And while in that instance there is a clear villain, I don't fully exempt liberals from this either.  How do we expect to have any kind of reform or meaningful policy debate when the mere act of succeeding is anathema to half of the political establishment, regardless of outcome?

Mar 3, 2021 - 4:59pm

I might go to hell for saying this but honestly: fuck em. Milton, as much as I love you: I totally disagree with your plan to have a negative income tax. If the government is handing out money to people on the left-hand side of the scale, that means that by definition they have to increase taxes on people on the right-hand side of the scale. Now I don't know about you but I hate being taxed. As it is I have trouble stomaching the fact that so much of my taxes go towards things that I derive 0 benefit from. Now to tell me that I have to pay even MORE taxes for poor people is even more unpalatable. So what do I do? I say fuck em. It's criminal that I have to pay more in taxes to support other people.

If your job doesn't pay you enough to live on- then frankly that's your fault. The market sets the prices of labor. If your labor isn't enough to support you, then who's fault is that? Not mine. It's not my fault that the value a McDonald's cashier provides is not enough to support him/her. I didn't force the McDonald's cashier to be a McDonald's cashier. Everybody is paid at their replacement cost. An IB analyst is paid so much because there is a limited number of people who can do the job. When almost 100% of the population has the necessary skill to be a McDonald's cashier then it's no fucking surprise that wages are so low. I can be a McDonald's cashier tomorrow, but the cashier can't be an IB analyst. 

Now the next point: why the fuck would I want to be in a country with little wealth inequality? By putting a floor on people's lifestyles, you also put a ceiling. There's a reason why the US has more millionaires and billionaires than all the other countries in the world combined. The US is ranked #9 in the world for most wealth inequality. It's a feature, not a bug. 

The minimum wage shouldn't be raised. And we DEFINITELY shouldn't implement any sort of negative income tax. End rant. 

Array

  • 1
  • 1
Mar 3, 2021 - 6:03pm

LuciferMorningstar

I might go to hell for saying this but honestly: fuck em. Milton, as much as I love you: I totally disagree with your plan to have a negative income tax. If the government is handing out money to people on the left-hand side of the scale, that means that by definition they have to increase taxes on people on the right-hand side of the scale. Now I don't know about you but I hate being taxed. As it is I have trouble stomaching the fact that so much of my taxes go towards things that I derive 0 benefit from. Now to tell me that I have to pay even MORE taxes for poor people is even more unpalatable. So what do I do? I say fuck em. It's criminal that I have to pay more in taxes to support other people.

If your job doesn't pay you enough to live on- then frankly that's your fault. The market sets the prices of labor. If your labor isn't enough to support you, then who's fault is that? Not mine. It's not my fault that the value a McDonald's cashier provides is not enough to support him/her. I didn't force the McDonald's cashier to be a McDonald's cashier. Everybody is paid at their replacement cost. An IB analyst is paid so much because there is a limited number of people who can do the job. When almost 100% of the population has the necessary skill to be a McDonald's cashier then it's no fucking surprise that wages are so low. I can be a McDonald's cashier tomorrow, but the cashier can't be an IB analyst. 

Now the next point: why the fuck would I want to be in a country with little wealth inequality? By putting a floor on people's lifestyles, you also put a ceiling. There's a reason why the US has more millionaires and billionaires than all the other countries in the world combined. The US is ranked #9 in the world for most wealth inequality. It's a feature, not a bug. 

The minimum wage shouldn't be raised. And we DEFINITELY shouldn't implement any sort of negative income tax. End rant. 

You don't have to raise tax to have negative income tax. Friedman actually did some empirical research on this and he found out that all you need to donis change the tax code to having having a flat tax capped around 22% for people making above the minimum income threshold.

This likely hasn't changed much since then. The US government spends less portion of the GDP than they did in Friedman's time.

Another thing to note is that most of our tax dollars are wasted on unnecessary government functions anyways. Cut all that and you might even be able to lower taxes rates below 20% while having negative income tax.

Mar 3, 2021 - 6:04pm

Also don't confuse income inequality with wealth inequality. Two totally different things.

3rd point. Income equality doesn't mean everyone gets paid the same. It means you get paid what your valued for.

If your value is $500k then you get $500k. Of your value is $50k then you get paid 50K. That's Income Equality. 

  • Intern in Research - Other
Mar 3, 2021 - 6:20pm

You won't go to hell but the more you hold the line on not willing to take on any tax increase whatsoever or minimum wage boost or welfare increase then you boost the risk of full on violence. The more unequal a society is the more violence there is. You don't pay a tax since you don't want to help a poor person, you run the risk of them extracting even more from you with violence. You get non-zero benefits, it is called not having a high risk of getting attacked for your wealth and as of the moment we don't have full on socialism as a popular view point but the less willing you are to reform then the more people there will be who think the only path of any change is full wealth and income redistribution as opposed to a 5 point boost on taxes. I would also caution you on the belief that the reason you are doing well and the reason they are poor is due to their own fault. You likely got into a great university because you lived in a zipcode with good public schools (or you went private) and only had to focus on school. I got a brief taste of a shitty school system and honestly I am so glad most of my years were in a good district. Some of my friends still in the area simply couldn't break out and even though they are trying to make a go of it, there's very few paths to success let alone a stable middle class life and you know what I probably would not be where I am without the leg up of not having to worry about little shit and not having to work through school. Likewise I know plenty of people from good families who had decent grades because they basically cheated their way through high school then college and are lazy pieces of you know what. They are doing just fine with reasonably good jobs. To be clear plenty of people are poor because they are simply not willing to work hard but don't attribute your success to being harder working than the guy who's poor so much as just recognize a lot of people work hard including yourself and sometimes luck is the only differentiating factor. Every wealthy person who didn't inherit it worked hard but not every poor person is lazy. Also very pragmatically in a world where we have been cutting tax rates for decades and boosting military spending which are almost inherently unproductive dollars, I think we could absolutely increase welfare without raising your taxes and instead could finance it by cutting some military spending by not going into Iraq and other foreign misadventures.

Mar 4, 2021 - 1:14am

If there is one thing I noticed is that there has been a rise in SJW Woke Beta Soyboy Vegan Crossfit Liberals working in Finance. Just see this forum for example because there are heaps of beta males here who clearly never worked hard to get into finance due to their unlimited network.

The days of the Alpha Bros - Jordan Belfort, Gordon Gekko and John Lefevre are gone.

Most people in finance are weak and emotional now. Their understanding economics is based entirely on emotion rather than logic.

No wonder Wall Street will need a another bailout soon.

Mar 6, 2021 - 3:25pm

WorldsGr8estKid

Just see this forum for example because there are heaps of beta males here who clearly never worked hard to get into finance due to their unlimited network.

Agree.  Also, hate that some of these elite privilege kids look at their own life and then assume every other white person on the planet grew up just like them. Hence, they must support the most left-wing policies possible to make this right while not giving up their own positions.

Sorry that you feel bad about how you got your position through connections and a silver spoon from birth.  Different story for the rest of us. Learn to deal with your self guilt instead of lashing out at others.

  • Analyst 1 in IB - Ind
Mar 4, 2021 - 4:35am

It seems to me that your argument is based around the idea that a flat minimum wage is an ineffective means of closing the income gap, and that providing more support for those with "low-productivity jobs" limits the income gap to a higher degree. I'd agree, but is that really what you want? The outcome of such a proposal does lead to a reduction in income inequality, but it also leads to a reduction in average production i.e. value added to the economy per worker (side-effect of subsidizing low-productivity). If there is less wealth being created, within a country, per-person, then how can you argue that this doesn't lead to a drop in average income when compared to an equivalent economy without a negative income tax?

Notice that I said "equivalent" in my last sentence. I'm not comparing the US to Sweden, because our economies have totally different structures and histories. There was no historic flight of manufacturing in Sweden, at least in the same scale as the US, because these manufacturing facilities didn't exist. Sweden has massive energy reserves that shatter our per-capita output, yet no dying coal industry to shrug off. However, Americans move from low-income professions to higher-income professions all the time. There is no single country with more income mobility than the United States, despite Sweden having a more educated populace. Instead of catering to people with "low-production" jobs, why don't we cater to aggregate production instead and stop stifling the success of entrepreneurs in some grandiose display of socioeconomic virtue-signaling?  

Mar 4, 2021 - 7:37am

It seems to me that your argument is based around the idea that a flat minimum wage is an ineffective means of closing the income gap,

+ it creates giant distortions in the labor market that impacts the entire economy that will eventually bite back. Something you don't get from NIT and minimum wage agreed upon by labor unions and respective companies. (Since those two methods are directly linked to productivity growth )

and that providing more support for those with "low-productivity jobs" limits the income gap to a higher degree. I'd agree, but is that really what you want? The outcome of such a proposal does lead to a reduction in income inequality, but it also leads to a reduction in average production i.e. value added to the economy per worker (side-effect of subsidizing low-productivity). If there is less wealth being created, within a country, per-person, then how can you argue that this doesn't lead to a drop in average income when compared to an equivalent economy without a negative income tax?

It's a matter of finding the Pareto efficient frontier. You have a trade off btw maximizing equality while minimizing productivity reduction. There is no solution that solves both. Classic economics right?

Essentially what you'd have to do is to calculate the minimum income threshold that negligibly impacts the productivity while still giving low-productivity people employment opportunities and a chance to live well enough.

Another thing to note is that this trade-off btw income equality and productivity is only a short-term phenomena.

Coupled with good education system and inxentice structures for individuals to increase their own productivity, it'd be a net increase in productivity in the long term.

Notice that I said "equivalent" in my last sentence. I'm not comparing the US to Sweden, because our economies have totally different structures and histories. There was no historic flight of manufacturing in Sweden, at least in the same scale as the US, because these manufacturing facilities didn't exist.

Tbh, this is where the system fucked up in the US. Outsourcing manufacturing wasn't bad per say. But the issue was that it wasn't coupled my massive investment in education that would have allowed the population to acquire new skills and choose different career paths quickly.

Sweden has massive energy reserves that shatter our per-capita output, yet no dying coal industry to shrug off. However, Americans move from low-income professions to higher-income professions all the time. There is no single country with more income mobility than the United States, despite Sweden having a more educated populace.

It's ironic because in the US there's high mobility to people who can get a job and keep it. Yet there are millions of people who don't even look for jobs and live on welfare. These people aren't even included in employment related figures. 

There's a very easy solution to this issue though. Have tiered NIT. If you don't have a job, your total income should be much less than people with low-income jobs. For ie. If you don't have a job, the government pays you $10/hrs. If you have a job that pays say $7.5/hr. The government pays you $7.5 /hrs so you end up making $15/hrs. Essentially you get 2 minimum income thresholds. 

Instead of catering to people with "low-production" jobs, why don't we cater to aggregate production instead and stop stifling the success of entrepreneurs in some grandiose display of socioeconomic virtue-signaling?  

Why would NIT scheme stifle success of entrepreneurs? No one is going out there taxing more wealth or income.

NIT could easily be imemented with a flat tax of 22% or so according to Friedman's research. It won't impact most people's income because productivity of individual companies won't be stifled at this income tax rate. In fact, with 22% across productivity would probably increase given how tax rates are in the US.

Corporate tax should be kept low of course.

Another thing is if we do away with many unnecessary government functions that no one benefits from (unnecessary wars, unnecessary foreign aids, and trillions of dollars spent on "war on drugs") then it'd be possible to have income tax below 20% and still have NIT. 

Mar 4, 2021 - 10:47am

Milton Friedchickenman

I'm gonna end this discussion for good. Income Inequality, if too high, is a problem. Then how do you solve it?

You have two choices - A and B. Let's compare A and B.

Choice A has been tried by many many countries for decades. Yet none of these countries have ever solved income inequality issue and many suffer from relatively low purchasing power when compared to the actual GDP. Income equality is actually pretty bad and Big Businesses control everything including politics.

Choice B has been tried by couple countries and has been in place for decades. These countries have the highest income equality and their people are the happiest in the world. Small business communities thrive and their purchasing power is well above their real GDPs.

Can you guess what choices A and B are?

Here's the answer. A = Minimum Wage & B = Direct Redistribution of Income through universal basic services or negative income tax.

Seriously, Left's favorite Nordics don't have a minimum wage. They have a direct redistribution of income scheme through universal basic services and what is essentially a negative income tax for low productivity jobs. Sweden, Denmark, Iceland, and Norway all don't have minimum wage.

Add Free-market heaven Singapore to the mix and these 5 countries have one of the lowest income inequality in the developed world with very high purchasing powers. 

You know what these 5 countries have in common?

1) No minimum wage

2) Some sort of Negative Income Tax / UBI Schemes.

3) Mostly free markets

4) Low Corporate tax rates

So say NO TO MINIMUM WAGE and SAY YES TO NEGATIVE INCOME TAX/UBI/UNIVERSAL BASIC SERVICES IN EDUCATION & HEALTHCARE

I mean, these are good points, except for the fact that UBI or any kind of redistributive taxation scheme is even less politically feasible than a minimum wage.

The left has been trying for a long time to increase the money spent on social services, increase taxes, etc... and has gotten hammered politically, because it sounds like they're taking something away from "hard working Americans" to give to shifty loafers (obviously, only people of color).  Why should they continue knocking on a door that has been proven time and again to be shut, instead of taking a new tack?

Mar 4, 2021 - 11:45am

Ozymandia

I mean, these are good points, except for the fact that UBI or any kind of redistributive taxation scheme is even less politically feasible than a minimum wage.

The left has been trying for a long time to increase the money spent on social services, increase taxes, etc... and has gotten hammered politically, because it sounds like they're taking something away from "hard working Americans" to give to shifty loafers (obviously, only people of color).  Why should they continue knocking on a door that has been proven time and again to be shut, instead of taking a new tack?

I thought I'd seen all the most idiotic takes on this subject between the two threads already but here you are, proving me wrong.

Array

  • 2
  • 3
Mar 4, 2021 - 3:38pm

PrivateTechquity 🚀GME🚀

Ozymandia

I mean, these are good points, except for the fact that UBI or any kind of redistributive taxation scheme is even less politically feasible than a minimum wage.

The left has been trying for a long time to increase the money spent on social services, increase taxes, etc... and has gotten hammered politically, because it sounds like they're taking something away from "hard working Americans" to give to shifty loafers (obviously, only people of color).  Why should they continue knocking on a door that has been proven time and again to be shut, instead of taking a new tack?

- expand -

I thought I'd seen all the most idiotic takes on this subject between the two threads already but here you are, proving me wrong.

Please explain why this is an idiotic take.  Which part of it rings untrue?  Just because you don't like it doesn't make it a valid point.  A lesson I've noted you've never seemed capable of grasping.

Mar 4, 2021 - 1:35pm

Ozymandia

Milton Friedchickenman

I'm gonna end this discussion for good. Income Inequality, if too high, is a problem. Then how do you solve it?

You have two choices - A and B. Let's compare A and B.

Choice A has been tried by many many countries for decades. Yet none of these countries have ever solved income inequality issue and many suffer from relatively low purchasing power when compared to the actual GDP. Income equality is actually pretty bad and Big Businesses control everything including politics.

Choice B has been tried by couple countries and has been in place for decades. These countries have the highest income equality and their people are the happiest in the world. Small business communities thrive and their purchasing power is well above their real GDPs.

Can you guess what choices A and B are?

Here's the answer. A = Minimum Wage & B = Direct Redistribution of Income through universal basic services or negative income tax.

Seriously, Left's favorite Nordics don't have a minimum wage. They have a direct redistribution of income scheme through universal basic services and what is essentially a negative income tax for low productivity jobs. Sweden, Denmark, Iceland, and Norway all don't have minimum wage.

Add Free-market heaven Singapore to the mix and these 5 countries have one of the lowest income inequality in the developed world with very high purchasing powers. 

You know what these 5 countries have in common?

1) No minimum wage

2) Some sort of Negative Income Tax / UBI Schemes.

3) Mostly free markets

4) Low Corporate tax rates

So say NO TO MINIMUM WAGE and SAY YES TO NEGATIVE INCOME TAX/UBI/UNIVERSAL BASIC SERVICES IN EDUCATION & HEALTHCARE

- expand -

I mean, these are good points, except for the fact that UBI or any kind of redistributive taxation scheme is even less politically feasible than a minimum wage.

The left has been trying for a long time to increase the money spent on social services, increase taxes, etc... and has gotten hammered politically, because it sounds like they're taking something away from "hard working Americans" to give to shifty loafers (obviously, only people of color).  Why should they continue knocking on a door that has been proven time and again to be shut, instead of taking a new tack?

Left's problem is that they want to increase spending without getting rid of unnecessary spending elsewhere. Their plan will get our tax rates to be 50+%. This is ridiculous. 

Also they're the same ones supporting ridiculous policies that kill education and increase income inequality. Politics is screwed 

Mar 4, 2021 - 1:58pm

Milton Friedchickenman

Left's problem is that they want to increase spending without getting rid of unnecessary spending elsewhere. Their plan will get our tax rates to be 50+%. This is ridiculous. 

Where do you want to cut spending?  Pretty much all discretionary spending goes to the military... which is a nonstarter in this country.  Social security and Medicare make up the vast majority of mandatory spending.  My point being, the American people have been pretty insistent that those three items remain intact (see the outrage over repealing the ACA), and that's ~80% of the federal budget less debt service.

If you can't cut those programs, the only alternative is to raise revenue to meet it.  If your argument is that the average American has grown accustomed to living large on someone else's dollar, then I agree wholeheartedly, but when you find me a politician willing to tell a hard truth to his or her constituent, I'll find you a talking pig.

Also they're the same ones supporting ridiculous policies that kill education and increase income inequality. Politics is screwed 

Well this is debatable.  As we've seen over the last four years, left leaning politics are fairly popular, especially compared with the non-existent policy positions coming from the right, so calling them "ridiculous" is a stretch.  As you allude to in your original post, we could do a lot to get rid of income inequality by raising the marginal tax rates... which you disagree with here.  A highly progressive tax regime is really the only way to fight income inequality, but no one seems to want that, so what else are you calling for?  Frankly, I'd be happy to see a 10% hike in my taxes, as long as I thought everyone else was shouldering some of the burden as well.  A gradated increase across the board.  I don't like feeling as though I am a piggybank to pay for whatever flavor of the month policy is in favor, but I also understand that if I'm more successful than most, it's because of the infrastructure and systems that allowed me to get there.  Having gotten more out of society, I have a responsibility and a duty to give back more as well so others might have the same opportunity.

Mar 4, 2021 - 2:34pm

The underlying problem here isn't necessarily that inequality exists (which is not bad in and of itself) but rather that some people are literally unable to fulfill their basic needs on their current wages. The question is, do we force corporations to pay their workers enough to live or do we have the government step in and provide a bare minimum that would fulfill people's needs? 

I think I agree with you that policies like UBI is what we need, since minimum wage doesn't account for unemployed people. UBI also indirectly forces minimum wage to go up since corporations need to pay enough to entice people to actually work instead of relying on their UBI. 

But you have to think about which of these policies is actually more politically feasible (an unfortunate reality). Given that raising the minimum wage is more politically expedient than introducing a robust UBI/social service system in the US, it has more of an opportunity to improve people's lives quicker. That alone makes it a policy worth pursuing. It's also unclear to me why these are mutually exclusive policies - UBI might obviate the need for a minimum wage, but that doesn't mean they can't coexist. 

Mar 6, 2021 - 9:42am

Milton Friedman is the GOAT. Fully agree that Negative Income Tax is the way to go. In fact, I think it's ridiculous how this idea isn't mainstream yet. Why does the lowest tax rate have to be 0%? 

Furthermore, do away with all socialist policies such as free healthcare. Distribute the tax revenue to lower income people rather than into public services and allow people to choose how they spend their own money. 

Mar 6, 2021 - 1:40pm

Hndrxx

Furthermore, do away with all socialist policies such as free healthcare.

Healthcare is never free. Difference is whether you pay for it in taxes or not. 

Optimal systems around the world (Singapore, S. Korea, Japan, Nordics) choose single-payer or heavily regulated offerings for basic healthcare and allows lots of free market around supplemental care. The issue in the US unfortunately, isn't necessarily coverage. It's the restrictions put on supply through strict regulations that limit the number of doctors, number of hospitals, and amount of available drugs.

Healthcare works best when coverage is highly regulated but the supply is not. Unfortunately, the US has a complete opposite version of that.

Distribute the tax revenue to lower income people rather than into public services and allow people to choose how they spend their own money. 

Mostly agreed except education. There should be fixed amount that can only be spent on education. Choosing NOT TO GET EDUCATED is not an option nor should it ever be. People should choose where and how they get educated. Choosing not to get educated is an oxymoron TBH, since it really inhibits your freedom down the road (How can you choose freely if you don't even know what your choices are?).

Mar 6, 2021 - 6:00pm

Oh I know that healthcare is not free - it's just so often phrased that way that I accidentally say it myself. 

And yeah, I would also agree on the public education front. I think public and private should compete more fairly however, and that people should have the choice between which school they attend (which I believe is not the case in the US). I think Friedman nails it in his Capitalism and Freedom book - there are lot of positive neighbourhood effects to universal eduction, and it should really be mandatory up until people reach a certain age that they can decide for themselves on a rational viewpoint.

Mar 8, 2021 - 12:29pm

The American dichotomy of socialism vs free market capitalism as the only two alternatives is idiotic and funny to see as an outsider.

There are real economic arguments for a minimum wage, as outlined by the guy in OP's profile picture. Monopsony is a significant factor in US labor markets that drives wages artificially low below the efficient equilibrium level, and a minimum wage corrects for this. To acknowledge this is not equivalent to fetishizing Venezuela. You also mention the Nordics, which might not have a minimum wage, but instead have unbelievably powerful unions.

Mar 8, 2021 - 1:54pm

ElitistPopulist

The American dichotomy of socialism vs free market capitalism as the only two alternatives is idiotic and funny to see as an outsider.

Lol you clearly haven't read some of my other comments. It's not a point about free market capitalism vs socialism nonsense. 

It's a point on what policies actually help alleviate income inequality.

There are real economic arguments for a minimum wage, as outlined by the guy in OP's profile picture.

Point me to a source where Milton Friedman argues the virtues of minimum wage. I can point you sources where Friedman argues the negative externalities of minimum wage.

Monopsony is a significant factor in US labor markets that drives wages artificially low below the efficient equilibrium level, and a minimum wage corrects for this.

Minimum wage "tries" to correct it but my point again is that it has way too much negative externalities and eventually doesn't strike at the heart of the problem due to dangerous distortions it creates in the economy and artificially created level of inflation not supported by organic growth in money supply (which completely defeats the purpose of even raising the minimum wage. If you're making 50% more butbprixes also went up 50% so good luck)

To acknowledge this is not equivalent to fetishizing Venezuela.

No one's talking about Venezuela here except you.

You also mention the Nordics, which might not have a minimum wage, but instead have unbelievably powerful unions.

Like I've been saying for the 1000000th time. Unions negotiating wages levels with individual employers is much more preferable because it doesn't create distortions in the economy nor create artificial inflation like minimum wage does. 

Well negotiated wages btw unions and individual employers that reflect the actual productivity level of thay company. Which means that it doesn't put any industry or company sizes at a disadvantage. 

Overall, wage decisions are much better off made in localized settings because 1) wages would actually reflect productivity levels and growth, 2) There is no industry or company sizes that are given unfair advantages or disadvantages, 3) no danger of artificially raised prices without money supply growth to back it up.

Worried about making a living income? Literally redistribute income through UBI/NIT scheme. Any financial pressure on enterprises stunts productivity growth. While if you're a high income earners, your spending is capped so taxing that income wouldn't hurt total soending.

Start Discussion

Total Avg Compensation

April 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (187) $234
  • 2nd Year Analyst (106) $150
  • Intern/Summer Associate (96) $145
  • 3rd+ Year Analyst (26) $145
  • 1st Year Analyst (391) $132
  • Intern/Summer Analyst (319) $82