I mean, ultimately, this is going to require some degree of de-financialization and de-commercializing housing. I've expounded on this before, but adding in the insurance makes sense as well....
I mean, ultimately, this is going to require some degree of de-financialization and de-commercializing housing. I've expounded on this before, but adding in the insurance makes sense as well.
There's no reasonable way to add up the math to be able to rebuild expensive houses and all the expensive things in the houses....especially since much new housing isn't made to be bare-bones basic, it's being built as luxurious as possible to be able to extract max value out of it.
I think switching to a land-based building-type model with fixed costs and payouts will do better. You pay X per sq ft of building, Y per 1/4 acre, plus a small penalty for each 10k paid out. Payout = buildingTypeRate+Y*landRiskModifier. The dude with a 10BR, 5BA mansion on the waterfront pays higher rates, but gets paid out the same (call it $500k) as the 4BR, 2BA colonial in rural PA because they're both single-family detached homes. Have different building type modifiers to account for how apartment buildings are more expensive to rebuild but can house more people than a single-family. Having the payout be fixed means families won't necessarily be able to replace everything they own at equivalent quality, but they will be able to build something large enough for their family to still live in comfort.
Ultimately, the function of insuring and payouts will need to be nationalized. The Fed, rather than injecting cash into the economy via banks, will primarily inject cash via insurance payouts and possibly something like a UBI.
Raising minimum wage substantially, to the order of $50/hr, while capping income via high taxation somewhere on the order of $400/hr (for high risk dangerous jobs), will help normalize cost-of-living everywhere. Ban using housing as an asset, by not being able to use it (or the insurance payout) as collateral for a loan.
I'm sorry, what the heck would the point of raising it that high be? Why would you ever consider raising minimum wage to the equivalent of the current 81st percentile of wages? That sounds to me...
Raising minimum wage substantially, to the order of $50/hr
I'm sorry, what the heck would the point of raising it that high be? Why would you ever consider raising minimum wage to the equivalent of the current 81st percentile of wages? That sounds to me like rampant inflation with no upside.
First, because it's a somewhat arbitrary pick. Switch it to $10/hr min and $80/hr max and the math still holds. Maximum=8x the minimum. But heavily inflating rather than deflating will be much...
First, because it's a somewhat arbitrary pick. Switch it to $10/hr min and $80/hr max and the math still holds. Maximum=8x the minimum. But heavily inflating rather than deflating will be much less painful to people that are currently in debt. More people would probably balk at the min salary being $20k and the max salary being capped at $160k. Opposed to $104k to $832k. Maybe split the difference and say $30/hr to $240/hr. Either way, the main point of insuring the differences between the bottom 20% and top 20% are much lower thresholds.
Second:
Because it doesn't matter if you're flipping burgers or programming computers, if you're spending 40 hours a week doing it, you deserve a living wage. In many parts of the country, a household will be struggling on less than $100k... and many households currently just do that by having 2 earners.
Because we need to properly value household labor, so only 1 member of a household needs to work a wage job in order to provide for a family. Something like a UBI helps, such that even people whom are not currently working are getting paid still get enough to survive.
Because of that, and other ideas I've discussed, taxes on the whole will be much higher. While the minimum wage might now be $100k, that minimum wage will also need to pay taxes. Odds are there will be many more minium wage jobs than there are currently. And that's not a bad thing. Your wage will reflect more the danger and neccessity of your job, and how well you do it...rather than you just getting paid more as a programmer than an electrician just because you went to school longer.
Because there will now be a wage cap, even if there is an initial period of inflation, the impact of perpetual inflation over time will be lessened.
Third, because getting to that max salary would be quite difficult. I'm envisioning income tax brackets something like this (using my 50/hr minimum):
Up to 200k: 10%
Up to 300k: 20%
Up to 400k: 50%
Up to 500k: 80%
Up to 600k: 90%
Up to 800k: 99.9%
Over 800k: 100%
Doing it this way give a good bit of headroom for quality workers, but limits the impact of people whom got lucky and created multi-billion-dollar corporations.
Not to mention the higher ups in these companies make exponentially more money than the workers. There is no reason they need that much money they can easily spare more pay for workers without...
Not to mention the higher ups in these companies make exponentially more money than the workers. There is no reason they need that much money they can easily spare more pay for workers without taking a dent to their financial situation.
I am so on board with this, so I'm not having a "gotcha" moment, but how would you deal with employers paying out their employees (or more likely their C-Suite) in equity or profit sharing to get...
I am so on board with this, so I'm not having a "gotcha" moment, but how would you deal with employers paying out their employees (or more likely their C-Suite) in equity or profit sharing to get around salary caps?
That’s one of my concerns with this; most of the ultra-high net work individuals generate wealth/income through stock ownership and non-wage compensation, along with collateralized loans against...
That’s one of my concerns with this; most of the ultra-high net work individuals generate wealth/income through stock ownership and non-wage compensation, along with collateralized loans against their wealth. They can be paid the $50 an hour while receiving their previous salary through other means.
I’d also be concerned about uncontrolled inflation, but I think @skybrian and @stu2b50 can speak to that better.
Ideally this would be paired with some sort of wealth/asset tax as well, to sidestep non-wage compensation. If it can be valued, it can be taxed. And maybe, just maybe, we shouldn't let people...
Ideally this would be paired with some sort of wealth/asset tax as well, to sidestep non-wage compensation.
If it can be valued, it can be taxed.
And maybe, just maybe, we shouldn't let people whom are subject to wealth taxes take out loans? If they are short on money they can sell assets.
Edit: also ping @rosco since you originally asked.
Agreed. These types of views are wacky. Many industries, such as grocery stores, have pretty slim margins. Their profits are "high" due to volume. What do people think will happen when their...
Agreed. These types of views are wacky. Many industries, such as grocery stores, have pretty slim margins. Their profits are "high" due to volume. What do people think will happen when their biggest expense, employee wages, goes up by 3-5x? Yep, prices will follow. It's simple math.
I'm sure glad that I don't live in this guy's (or gal's) dream world.
I get your frustration, but you're also essentially ending any chance at a constructive conversation with the wacky dream world language. You're kind of inviting a fight. I do agree, though, that...
I get your frustration, but you're also essentially ending any chance at a constructive conversation with the wacky dream world language. You're kind of inviting a fight.
I do agree, though, that there's no point in talking about potential solutions that have no hope whatsoever of happening in the near or medium term.
Before we could even start considering anything that progressive in the US we'd have to decouple capital and government to a degree that hasn't been seen in generations. Which I wholeheartedly think we should try to do.
I mean...I am kind of describing an end state. Even small steps in the direction of this end state would see positive benefits and would likely see a snowball effect. Increase top bracket tax rate...
I mean...I am kind of describing an end state. Even small steps in the direction of this end state would see positive benefits and would likely see a snowball effect.
Increase top bracket tax rate to 80%. Increase minimum wage to $20/hr ($15/hr was more accurate circa 2016) for everyone, eliminating all those weird exemptions for tipped workers.
Start building on the federal insurance programs that exist....and adjust their payouts so that building overly-extravagantly for the risk profile of the area bears heavy risk to the owner, and not society as a whole.
Big yes to bringing back higher top tax brackets! It just makes sense, sadly conservatives have done a good job of muddying the conversation so that many people don't understand how it really...
Big yes to bringing back higher top tax brackets! It just makes sense, sadly conservatives have done a good job of muddying the conversation so that many people don't understand how it really works. Ditto for minimum wage.
Not the OP, but that's half the point, I think. I'm not in favor of this proposal, but as a thought experiment: With increased cost of labor and a capped possible income, prices would rise to...
Not the OP, but that's half the point, I think. I'm not in favor of this proposal, but as a thought experiment:
With increased cost of labor and a capped possible income, prices would rise to address the difference in costs, while the people who made lower than $50/hr would have their incomes raised to match it while the very wealthy would have their revenues capped.
At that point, you'd have higher prices, but a narrower band of possible incomes, all of which would be able to afford them. Combined with the limits on using housing as a financial asset, you'd have much much lower financial and housing inequality, while ensuring that the poorest are better situated to afford life in our modern world.
Or that's the theory anyway. There's plenty of holes to pick at, but that prices would follow the minimum wage up isn't one of them. That would be expected, and is already baked in.
But doesn't that just mean we're undervaluing our food system? Why is a license for Adobe photoshop $30 a month while an apple is 50 cents? It's all arbitrary anyway.
But doesn't that just mean we're undervaluing our food system? Why is a license for Adobe photoshop $30 a month while an apple is 50 cents? It's all arbitrary anyway.
It's not really arbitrary, though. It's how we (society) value a piece of fruit that we use to sustain ourselves, which is common and easy to produce, distribute, and store compared to a software...
It's not really arbitrary, though. It's how we (society) value a piece of fruit that we use to sustain ourselves, which is common and easy to produce, distribute, and store compared to a software subscription, which is considered the best in the industry (at least according to most people), and is used by professionals to make money. For whatever reason, people are willing to pay $30/month for Photoshop. If an apple costed $30, nobody would buy it. So the price goes down until there is a balance between the supply of apples and their demand.
I'd say it has to do more with aggressive business practices and a monopoly on the content editing space. If a change in policy made the cost of producing/selling apples ~$30, along with increased...
For whatever reason, people are willing to pay $30/month for Photoshop
I'd say it has to do more with aggressive business practices and a monopoly on the content editing space.
If an apple costed $30, nobody would buy it.
If a change in policy made the cost of producing/selling apples ~$30, along with increased prices in other fruit, I'd wager folks would buy it.
and is used by professionals to make money
You could say the same about pastry chefs, cider makers, or carnival concession vendors. An apple pie might be a little underwhelming without the namesake addition. Doctors may welcome the change though ;)
Unless it's a policy they need to meet (like they currently do with minimum wage) and then it will be calculated in to the cost of the good. We already live in a world dictated by minimum wage...
they're selling a commodity that is priced efficiently (plenty of competitors) at a slim margin over the cost from the supplier, which logically means it's not possible for payroll to be the largest expense.
Unless it's a policy they need to meet (like they currently do with minimum wage) and then it will be calculated in to the cost of the good. We already live in a world dictated by minimum wage regulations, be it a somewhat cruel one for those having to labor under those salary expectations.
I think the unsaid part of this discussion is that the cost of goods will rise with the increase in labor costs, but that's only a bad thing for folks who already make well above minimum wage. We're all getting our food budgets subsidized by poor worker conditions.
Why exactly can't the guy with the 10br waterfront mansion simply pay a premium high enough to rebuild a 10br waterfront mansion? Of course it makes sense to offer a reduced premium in exchange...
There's no reasonable way to add up the math to be able to rebuild expensive houses and all the expensive things in the houses....especially since much new housing isn't made to be bare-bones basic, it's being built as luxurious as possible to be able to extract max value out of it.
I think switching to a land-based building-type model with fixed costs and payouts will do better. You pay X per sq ft of building, Y per 1/4 acre, plus a small penalty for each 10k paid out. Payout = buildingTypeRate+Y*landRiskModifier. The dude with a 10BR, 5BA mansion on the waterfront pays higher rates, but gets paid out the same (call it $500k) as the 4BR, 2BA colonial in rural PA because they're both single-family detached homes. Have different building type modifiers to account for how apartment buildings are more expensive to rebuild but can house more people than a single-family.
Why exactly can't the guy with the 10br waterfront mansion simply pay a premium high enough to rebuild a 10br waterfront mansion? Of course it makes sense to offer a reduced premium in exchange for a payout capped at $500k, but there's no reason why someone shouldn't be free to insure the house they bought if they so choose.
And why do we need building type modifiers? The fact that different buildings have different rebuild costs is a solved problem.
Because of the insurability problem being discussed in the article. Dude with giant house in high-risk area gets to pay very high rates, gets low payout. It's essentially another form of tax: You...
Because of the insurability problem being discussed in the article. Dude with giant house in high-risk area gets to pay very high rates, gets low payout. It's essentially another form of tax: You can choose to build something fancy and large in a high-risk area...but you'll be paying high rates and bearing most of that risk yourself compared to people in lower-risk areas. But your (mandatory) insurance insures that despite that risk...you won't get nothing.
At least, that was the rough theory. I can't say that I sat down for weeks to formulate a detailed proposal....merely an idea intended to spark discussion, which, for better or worse, it did.
People freak out when they see high minimum wages, as though their wage would be impacted by that. The target is the top richest people and corporations in the nation, those who aren’t earning...
People freak out when they see high minimum wages, as though their wage would be impacted by that. The target is the top richest people and corporations in the nation, those who aren’t earning their wealth from hourly or salary positions. The idea is to close the wealth gap because as you get into the millions and billions, the disparity gets exponentially ridiculous.
And how do you redistribute that pie down without it affecting the middle class? Unless you're also redistributing enough to the middle class to (1) cover the cost increases I face as a result of...
And how do you redistribute that pie down without it affecting the middle class?
Unless you're also redistributing enough to the middle class to (1) cover the cost increases I face as a result of the minimum wage increase and (2) ensure my standard of living isn't harmed by a sudden injection of demand into middle class products like Choice striploins then conversations about dramatic minimum wage increases are absolutely a middle class issue.
The middle class suffered the most from the past few years of inflation. Wages at the very top and very bottom increased significantly. Wages in the middle only increased moderately, and decreased...
The middle class suffered the most from the past few years of inflation. Wages at the very top and very bottom increased significantly. Wages in the middle only increased moderately, and decreased relative to inflation.
For low earners, minimum wage effectively doubled. It's rare to see jobs for less than $15/hour. For high earners who receive mich of their income from corporate bonuses and equity, they had a nice payday as well.
Don't get me wrong, I'm glad that the market minimum wage went up. That's a great thing. But the middle class was disproportionately harmed by inflation.
It's also kind of evidence that middle-wages don't automatically jump up by the same amount as the minimum wage. In a way, the middle class suffering during an inflation crisis makes sense. They...
It's also kind of evidence that middle-wages don't automatically jump up by the same amount as the minimum wage.
In a way, the middle class suffering during an inflation crisis makes sense. They suffered losses...but by and large the bottom being brought up kept them from being destitute while the middle mostly needed to tighten belts and cut down on luxury spending...despite suffering they were still better off than the bottom was before the crisis. It's really weird to me how people go "how dare you make me experience what it's like to be more like > 50% of the population."
The top wouldn't have suffered during an inflation crisis anyway...and kinda shows just how fucked up that the whole situation is.
I think you’ve answered that question. You’re getting grifted today, so yes, you would get more of that pie. Something important to me is a focus on quality of life. I can make more money, sure,...
I think you’ve answered that question. You’re getting grifted today, so yes, you would get more of that pie.
Something important to me is a focus on quality of life. I can make more money, sure, but I need some damn vacation and time for myself. I had some travel plans this year that got nuked when I got COVID. Any PTO I banked was used on dealing with that ridiculous recovery. If I get sick like that again I’ll have to go unpaid. So now I’m burned out from overworking myself with at least another six months before I can save up enough to take an entire week, god forbid.
I’m not even sure “middle-class” is a thing anymore. I used to say the definition of middle-class was being able to grab whatever you want from the grocery store without thinking about it, but I’m finding more and more I’m having to make deliberate choices about what I add to my cart.
How do I end up with more pie? I agree that quality of life is extremely important. But unless a significant minimum wage bump comes with a significant middle class wage bump I'm paying more for...
How do I end up with more pie?
I agree that quality of life is extremely important. But unless a significant minimum wage bump comes with a significant middle class wage bump I'm paying more for goods and services while also having to compete with new purchasers of middle class goods. My quality of life would go down.
Here's the thing, minimum wage increases take time to genuinely impact inflation. Look at the employee costs of a large retailer like Target (you can dig through their annual reports), whom starts...
Here's the thing, minimum wage increases take time to genuinely impact inflation. Look at the employee costs of a large retailer like Target (you can dig through their annual reports), whom starts all employees at $15/hr. Based on their costs and number of employees....roughly speaking for every $1/hr increase to wages, they would need to increase their prices by about 0.1% So if they increase wages by $10/hr for every employee (and not every employee needs this), a $10 item now costs $11$10.01 (Edit: I can math). But said employees can now afford to buy $1600/month more stuff. Of course, this will cause ripples through the economy, but it takes years for this to happen. Last time I checked, my employer doesn't automatically give me month-adjusted inflation raises.
I was describing an end state, of course it would be prudent to do the minimum wage increases over the course of a few years...say by like $3 a year for a decade. While doing the high-bracket tax increases quickly, over the span of 5 years or less.
Right, but we're still talking about the middle class (1) paying more in order to (2) create more competition for middle class goods. The middle class does not come out ahead.
Right, but we're still talking about the middle class (1) paying more in order to (2) create more competition for middle class goods. The middle class does not come out ahead.
I mean....yea....kinda the point. The middle class is already in the middle. They basically get to stay where they are, and in exchange, everyone else (both above and below) gets to be a bit more...
I mean....yea....kinda the point. The middle class is already in the middle. They basically get to stay where they are, and in exchange, everyone else (both above and below) gets to be a bit more like them.
That's not neutral to me though, which isn't something the left is upfront about when they're pushing for a minimum wage. Framing it as "it's about taking a slice of pie from the wealthy and...
That's not neutral to me though, which isn't something the left is upfront about when they're pushing for a minimum wage. Framing it as "it's about taking a slice of pie from the wealthy and giving it to the worst off" implies that it's neutral for the middle class.
The problem is that "the middle class" has always been this weirdly defined nebulous political group that way more people think they're a part of than actually are. Like.... I guess the question...
The problem is that "the middle class" has always been this weirdly defined nebulous political group that way more people think they're a part of than actually are. Like.... I guess the question at this point is... how do you define "middle class"? What are the thresholds for assets, income, and luxury spending that you see as the bottom-tier of middle class?
I think @rosco mentioned at one point in the thread: Part of the problem is that the middle-class lifestyle is being subsidized by goods and services being provided cheaper than they should be on the backs of people being paid too little money.
The search for an egalitarian and just society is going to require taking from those with too much pie and giving to those with none. Maybe that's too much empathy to ask....and that's why people start into those "eat the rich" discussions. Because when the top says "Why should I sacrifice my quality of life for you increasing yours," it's no less out of touch or callous. Because you're complaining about having to pay more for most-expensive meat while everyone else is salivating to have anything better than factory chicken.
You’re a couple orders of magnitude off on one of these. Maybe you mean 10% instead of 0.1%?
Based on their costs and number of employees....roughly speaking for every $1/hr increase to wages, they would need to increase their prices by about 0.1% So if they increase wages by $10/hr for every employee (and not every employee needs this), a $10 item now costs $11.
You’re a couple orders of magnitude off on one of these. Maybe you mean 10% instead of 0.1%?
You are correct, that I did the $10/11 thing wrong. I'm still reasonably certain the amount is only between 0.1 -> 1% increased revenues needed, nowhere near 10%. So yes, that $10 good would only...
You are correct, that I did the $10/11 thing wrong. I'm still reasonably certain the amount is only between 0.1 -> 1% increased revenues needed, nowhere near 10%.
So yes, that $10 good would only need to be $10.10 with the new, higher, 1%.
Your entire comment is a nice thought experiment (and unfortunately, will probably stay at that stage for a very long time) that I tend to agree with, and I have a question to the quoted part...
Ban using housing as an asset, by not being able to use it (or the insurance payout) as collateral for a loan.
Your entire comment is a nice thought experiment (and unfortunately, will probably stay at that stage for a very long time) that I tend to agree with, and I have a question to the quoted part specifically: Do you think banning real estate as loan collateral will really prevent asset use? Or did you implicitly mean to include renting business in that ban?
I was referring to asset in the sense that so much of average Americans' wealth (and debt) is tied up in it. To sever the line between "essential good for survival" and "my entire net worth". IMO...
I was referring to asset in the sense that so much of average Americans' wealth (and debt) is tied up in it.
To sever the line between "essential good for survival" and "my entire net worth".
IMO a system that does that well will severely hamper the ability for anything but short-term rentals like hotels to be financially viable. Because housing will become more affordable as we've reduced the ability for people to chase the "perpetually increase value of home" dragon.
It seems to me that, at least in the long term, this is a good thing. In the immediate term, you've got 2/3 of the country underinsured on homeowners insurance, which is definitely a bad thing,...
It seems to me that, at least in the long term, this is a good thing.
In the immediate term, you've got 2/3 of the country underinsured on homeowners insurance, which is definitely a bad thing, but I took away a couple of key points:
The global reinsurance market is pricing in climate issues and rates are rising as a result
Reducing insurability is a key tool in reducing greenhouse emissions; when insurance companies stopped insuring coal plants, new coal plant creation plummeted
I've thought for years that the day we make fixing the climate profitable is the day we save the world. Properly pricing in the cost of climate change is a key step in doing that and it sounds like insurance companies are on the front lines figuring out what the proper cost actually is.
When people can't get insurance and their land values plummet, that's the type of squeeze that spurs a proper government response -- hopefully it's not just price fixing (which would double down on shortages) and actually results in some meaningful conversations about curbing emissions.
That's a claim that can't be thrown around without doing a lot more unpacking. Are wealthy property owners not already highly taxed? There's definitely a great deal to be concerned about with...
Right now, the insurance market is unintentionally protecting wealthy property owners while socializing their risk through highly subsidized premiums. The US government holds liability for the majority of flood insurance, for example, managed by the Federal Emergency Management Agency. Repeatedly flooded properties make up just one percent of the program’s policies but account for more than 30 percent of the claims. “When the government’s the backup insurer, the taxpayers have to support that,” Hill says.
That's a claim that can't be thrown around without doing a lot more unpacking. Are wealthy property owners not already highly taxed? There's definitely a great deal to be concerned about with public liability for things like flooding, but you still need to show your work before claiming that wealthy property owners are out benefiting their contributions.
Two out of every three American homes are now underinsured, meaning owners may face major financial losses if they were to endure a disaster. The effects won’t be felt equally. There can be an inherent tension between climate-related financial risks and anti-redlining efforts: people of color who have long suffered discrimination are now disproportionately living in areas in greater danger of disaster. That makes it difficult to both price climate risks and not divest from underserved communities.
Wouldn't we expect people of fewer means to be living in areas of higher risk? Property values there would be falling as risks and the costs to insure against them rise.
Not necessarily. I have a home, which is valued at roughly $400,000 (incidentally one of the worst in town). Annual property tax is about $12,000, or about 3%. A mansion on the waterfront about a...
Are wealthy property owners not already highly taxed?
Not necessarily. I have a home, which is valued at roughly $400,000 (incidentally one of the worst in town). Annual property tax is about $12,000, or about 3%. A mansion on the waterfront about a mile and a half from me is valued at about $2,000,000. It pays roughly $30,000 in property taxes, or about 1.5%.
But to speak to insurance premiums... Sure, they almost certainly pay a higher insurance premium than I do. But do you know the flood and storm damage risk of my property? Almost 0. The flood risk of theirs? 100%
Based on the current (and projected) flood and storm risk for that mansion, the insurance company would need to be collecting a premium on the order of 500,000/year in order for people like me to not be subsidizing the rebuild cost of that mansion. In part because rebuild cost generally costs 20-30% more than the value of the home. My rebuild cost is estimated to be roughly 600,000. The mansion's rebuild cost is likely more on the order of $3 million.
Is that mansion in the same tax district? And the $2m valuation is its assessed value? If so then yes, that's absolutely inequitable. How on earth does that fly with your electorate?...
Not necessarily. I have a home, which is valued at roughly $400,000 (incidentally one of the worst in town). Annual property tax is about $12,000, or about 3%. A mansion on the waterfront about a mile and a half from me is valued at about $2,000,000. It pays roughly $30,000 in property taxes, or about 1.5%.
Is that mansion in the same tax district? And the $2m valuation is its assessed value? If so then yes, that's absolutely inequitable. How on earth does that fly with your electorate?
But to speak to insurance premiums... Sure, they almost certainly pay a higher insurance premium than I do. But do you know the flood and storm damage risk of my property? Almost 0. The flood risk of theirs? 100%
Insufficiently penalizing high risk homes with commensurate premiums is definitely a huge issue. People who live in less prone locations certainly should not be doing that, it's grossly inefficient.
Based on the current (and projected) flood and storm risk for that mansion, the insurance company would need to be collecting a premium on the order of 500,000/year in order for people like me to not be subsidizing the rebuild cost of that mansion. In part because rebuild cost generally costs 20-30% more than the value of the home. My rebuild cost is estimated to be roughly 600,000. The mansion's rebuild cost is likely more on the order of $3 million.
The mansion needs to be rebuilt every ~6 years?
Here's an article about how the government-sponsored flood insurance in question disproportionately favors the wealthy. They didn't dive into it as much with this article in part because it's been covered many times before.
There's no doubt that wealthy people like waterfront.
But the original article here also highlights that racialized communities are increasingly likely to live in these disaster prone areas. And most importantly, showing that the wealthy significantly benefit from government flood insurance doesn't inherently prove anything. One would have to demonstrate that the wealthy aren't simply funding their own insurance program.
But yes, federal programs to subsidize risky, expensive places to live is ridiculous.
Yes, same tax district. Thank tax increase cap calculations that pretty much only benefit multi-million dollar homes. It's pretty simple to sell to brainwashed people: You wouldn't want the...
Yes, same tax district. Thank tax increase cap calculations that pretty much only benefit multi-million dollar homes. It's pretty simple to sell to brainwashed people: You wouldn't want the government to increase your taxes by 30% would you? Vote NO on <repeal tax-hike cap referendum>.
I was probably being a bit hyperbolic wrt that insurance rate. That said, at current sea level rise it's gonna be underwater inside of 20 years so that should probably be an instant no--insure anyway.
I mean, ultimately, this is going to require some degree of de-financialization and de-commercializing housing. I've expounded on this before, but adding in the insurance makes sense as well.
There's no reasonable way to add up the math to be able to rebuild expensive houses and all the expensive things in the houses....especially since much new housing isn't made to be bare-bones basic, it's being built as luxurious as possible to be able to extract max value out of it.
I think switching to a land-based building-type model with fixed costs and payouts will do better. You pay X per sq ft of building, Y per 1/4 acre, plus a small penalty for each 10k paid out.
Payout = buildingTypeRate+Y*landRiskModifier. The dude with a 10BR, 5BA mansion on the waterfront pays higher rates, but gets paid out the same (call it $500k) as the 4BR, 2BA colonial in rural PA because they're both single-family detached homes. Have different building type modifiers to account for how apartment buildings are more expensive to rebuild but can house more people than a single-family. Having the payout be fixed means families won't necessarily be able to replace everything they own at equivalent quality, but they will be able to build something large enough for their family to still live in comfort.Ultimately, the function of insuring and payouts will need to be nationalized. The Fed, rather than injecting cash into the economy via banks, will primarily inject cash via insurance payouts and possibly something like a UBI.
Raising minimum wage substantially, to the order of $50/hr, while capping income via high taxation somewhere on the order of $400/hr (for high risk dangerous jobs), will help normalize cost-of-living everywhere. Ban using housing as an asset, by not being able to use it (or the insurance payout) as collateral for a loan.
I'm sorry, what the heck would the point of raising it that high be? Why would you ever consider raising minimum wage to the equivalent of the current 81st percentile of wages? That sounds to me like rampant inflation with no upside.
First, because it's a somewhat arbitrary pick. Switch it to $10/hr min and $80/hr max and the math still holds. Maximum=8x the minimum. But heavily inflating rather than deflating will be much less painful to people that are currently in debt. More people would probably balk at the min salary being $20k and the max salary being capped at $160k. Opposed to $104k to $832k. Maybe split the difference and say $30/hr to $240/hr. Either way, the main point of insuring the differences between the bottom 20% and top 20% are much lower thresholds.
Second:
Third, because getting to that max salary would be quite difficult. I'm envisioning income tax brackets something like this (using my 50/hr minimum):
Up to 200k: 10%
Up to 300k: 20%
Up to 400k: 50%
Up to 500k: 80%
Up to 600k: 90%
Up to 800k: 99.9%
Over 800k: 100%
Doing it this way give a good bit of headroom for quality workers, but limits the impact of people whom got lucky and created multi-billion-dollar corporations.
Not to mention the higher ups in these companies make exponentially more money than the workers. There is no reason they need that much money they can easily spare more pay for workers without taking a dent to their financial situation.
I am so on board with this, so I'm not having a "gotcha" moment, but how would you deal with employers paying out their employees (or more likely their C-Suite) in equity or profit sharing to get around salary caps?
That’s one of my concerns with this; most of the ultra-high net work individuals generate wealth/income through stock ownership and non-wage compensation, along with collateralized loans against their wealth. They can be paid the $50 an hour while receiving their previous salary through other means.
I’d also be concerned about uncontrolled inflation, but I think @skybrian and @stu2b50 can speak to that better.
Ideally this would be paired with some sort of wealth/asset tax as well, to sidestep non-wage compensation.
If it can be valued, it can be taxed.
And maybe, just maybe, we shouldn't let people whom are subject to wealth taxes take out loans? If they are short on money they can sell assets.
Edit: also ping @rosco since you originally asked.
Agreed. These types of views are wacky. Many industries, such as grocery stores, have pretty slim margins. Their profits are "high" due to volume. What do people think will happen when their biggest expense, employee wages, goes up by 3-5x? Yep, prices will follow. It's simple math.
I'm sure glad that I don't live in this guy's (or gal's) dream world.
I get your frustration, but you're also essentially ending any chance at a constructive conversation with the wacky dream world language. You're kind of inviting a fight.
I do agree, though, that there's no point in talking about potential solutions that have no hope whatsoever of happening in the near or medium term.
Before we could even start considering anything that progressive in the US we'd have to decouple capital and government to a degree that hasn't been seen in generations. Which I wholeheartedly think we should try to do.
But until that happens, the rest is impossible.
I mean...I am kind of describing an end state. Even small steps in the direction of this end state would see positive benefits and would likely see a snowball effect.
Increase top bracket tax rate to 80%. Increase minimum wage to $20/hr ($15/hr was more accurate circa 2016) for everyone, eliminating all those weird exemptions for tipped workers.
Start building on the federal insurance programs that exist....and adjust their payouts so that building overly-extravagantly for the risk profile of the area bears heavy risk to the owner, and not society as a whole.
Big yes to bringing back higher top tax brackets! It just makes sense, sadly conservatives have done a good job of muddying the conversation so that many people don't understand how it really works. Ditto for minimum wage.
Not the OP, but that's half the point, I think. I'm not in favor of this proposal, but as a thought experiment:
With increased cost of labor and a capped possible income, prices would rise to address the difference in costs, while the people who made lower than $50/hr would have their incomes raised to match it while the very wealthy would have their revenues capped.
At that point, you'd have higher prices, but a narrower band of possible incomes, all of which would be able to afford them. Combined with the limits on using housing as a financial asset, you'd have much much lower financial and housing inequality, while ensuring that the poorest are better situated to afford life in our modern world.
Or that's the theory anyway. There's plenty of holes to pick at, but that prices would follow the minimum wage up isn't one of them. That would be expected, and is already baked in.
But doesn't that just mean we're undervaluing our food system? Why is a license for Adobe photoshop $30 a month while an apple is 50 cents? It's all arbitrary anyway.
It's not really arbitrary, though. It's how we (society) value a piece of fruit that we use to sustain ourselves, which is common and easy to produce, distribute, and store compared to a software subscription, which is considered the best in the industry (at least according to most people), and is used by professionals to make money. For whatever reason, people are willing to pay $30/month for Photoshop. If an apple costed $30, nobody would buy it. So the price goes down until there is a balance between the supply of apples and their demand.
I'd say it has to do more with aggressive business practices and a monopoly on the content editing space.
If a change in policy made the cost of producing/selling apples ~$30, along with increased prices in other fruit, I'd wager folks would buy it.
You could say the same about pastry chefs, cider makers, or carnival concession vendors. An apple pie might be a little underwhelming without the namesake addition. Doctors may welcome the change though ;)
Unless it's a policy they need to meet (like they currently do with minimum wage) and then it will be calculated in to the cost of the good. We already live in a world dictated by minimum wage regulations, be it a somewhat cruel one for those having to labor under those salary expectations.
I think the unsaid part of this discussion is that the cost of goods will rise with the increase in labor costs, but that's only a bad thing for folks who already make well above minimum wage. We're all getting our food budgets subsidized by poor worker conditions.
Why exactly can't the guy with the 10br waterfront mansion simply pay a premium high enough to rebuild a 10br waterfront mansion? Of course it makes sense to offer a reduced premium in exchange for a payout capped at $500k, but there's no reason why someone shouldn't be free to insure the house they bought if they so choose.
And why do we need building type modifiers? The fact that different buildings have different rebuild costs is a solved problem.
Because of the insurability problem being discussed in the article. Dude with giant house in high-risk area gets to pay very high rates, gets low payout. It's essentially another form of tax: You can choose to build something fancy and large in a high-risk area...but you'll be paying high rates and bearing most of that risk yourself compared to people in lower-risk areas. But your (mandatory) insurance insures that despite that risk...you won't get nothing.
At least, that was the rough theory. I can't say that I sat down for weeks to formulate a detailed proposal....merely an idea intended to spark discussion, which, for better or worse, it did.
People freak out when they see high minimum wages, as though their wage would be impacted by that. The target is the top richest people and corporations in the nation, those who aren’t earning their wealth from hourly or salary positions. The idea is to close the wealth gap because as you get into the millions and billions, the disparity gets exponentially ridiculous.
This video helps visualize that gap with slices of pie: https://youtu.be/DANUXO-GQwU?si=GVFpbPPcb2csO0L1
Not trying to take half a slice of pie from the upper middle class. The idea is to take a few slices from that upper class.
And how do you redistribute that pie down without it affecting the middle class?
Unless you're also redistributing enough to the middle class to (1) cover the cost increases I face as a result of the minimum wage increase and (2) ensure my standard of living isn't harmed by a sudden injection of demand into middle class products like Choice striploins then conversations about dramatic minimum wage increases are absolutely a middle class issue.
The middle class suffered the most from the past few years of inflation. Wages at the very top and very bottom increased significantly. Wages in the middle only increased moderately, and decreased relative to inflation.
For low earners, minimum wage effectively doubled. It's rare to see jobs for less than $15/hour. For high earners who receive mich of their income from corporate bonuses and equity, they had a nice payday as well.
Don't get me wrong, I'm glad that the market minimum wage went up. That's a great thing. But the middle class was disproportionately harmed by inflation.
It's also kind of evidence that middle-wages don't automatically jump up by the same amount as the minimum wage.
In a way, the middle class suffering during an inflation crisis makes sense. They suffered losses...but by and large the bottom being brought up kept them from being destitute while the middle mostly needed to tighten belts and cut down on luxury spending...despite suffering they were still better off than the bottom was before the crisis. It's really weird to me how people go "how dare you make me experience what it's like to be more like > 50% of the population."
The top wouldn't have suffered during an inflation crisis anyway...and kinda shows just how fucked up that the whole situation is.
I think you’ve answered that question. You’re getting grifted today, so yes, you would get more of that pie.
Something important to me is a focus on quality of life. I can make more money, sure, but I need some damn vacation and time for myself. I had some travel plans this year that got nuked when I got COVID. Any PTO I banked was used on dealing with that ridiculous recovery. If I get sick like that again I’ll have to go unpaid. So now I’m burned out from overworking myself with at least another six months before I can save up enough to take an entire week, god forbid.
I’m not even sure “middle-class” is a thing anymore. I used to say the definition of middle-class was being able to grab whatever you want from the grocery store without thinking about it, but I’m finding more and more I’m having to make deliberate choices about what I add to my cart.
How do I end up with more pie?
I agree that quality of life is extremely important. But unless a significant minimum wage bump comes with a significant middle class wage bump I'm paying more for goods and services while also having to compete with new purchasers of middle class goods. My quality of life would go down.
Here's the thing, minimum wage increases take time to genuinely impact inflation. Look at the employee costs of a large retailer like Target (you can dig through their annual reports), whom starts all employees at $15/hr. Based on their costs and number of employees....roughly speaking for every $1/hr increase to wages, they would need to increase their prices by about 0.1% So if they increase wages by $10/hr for every employee (and not every employee needs this), a $10 item now costs
$11$10.01 (Edit: I can math). But said employees can now afford to buy $1600/month more stuff. Of course, this will cause ripples through the economy, but it takes years for this to happen. Last time I checked, my employer doesn't automatically give me month-adjusted inflation raises.I was describing an end state, of course it would be prudent to do the minimum wage increases over the course of a few years...say by like $3 a year for a decade. While doing the high-bracket tax increases quickly, over the span of 5 years or less.
Right, but we're still talking about the middle class (1) paying more in order to (2) create more competition for middle class goods. The middle class does not come out ahead.
I mean....yea....kinda the point. The middle class is already in the middle. They basically get to stay where they are, and in exchange, everyone else (both above and below) gets to be a bit more like them.
That's not neutral to me though, which isn't something the left is upfront about when they're pushing for a minimum wage. Framing it as "it's about taking a slice of pie from the wealthy and giving it to the worst off" implies that it's neutral for the middle class.
The problem is that "the middle class" has always been this weirdly defined nebulous political group that way more people think they're a part of than actually are. Like.... I guess the question at this point is... how do you define "middle class"? What are the thresholds for assets, income, and luxury spending that you see as the bottom-tier of middle class?
I think @rosco mentioned at one point in the thread: Part of the problem is that the middle-class lifestyle is being subsidized by goods and services being provided cheaper than they should be on the backs of people being paid too little money.
The search for an egalitarian and just society is going to require taking from those with too much pie and giving to those with none. Maybe that's too much empathy to ask....and that's why people start into those "eat the rich" discussions. Because when the top says "Why should I sacrifice my quality of life for you increasing yours," it's no less out of touch or callous. Because you're complaining about having to pay more for most-expensive meat while everyone else is salivating to have anything better than factory chicken.
You’re a couple orders of magnitude off on one of these. Maybe you mean 10% instead of 0.1%?
You are correct, that I did the $10/11 thing wrong. I'm still reasonably certain the amount is only between 0.1 -> 1% increased revenues needed, nowhere near 10%.
So yes, that $10 good would only need to be $10.10 with the new, higher, 1%.
Your entire comment is a nice thought experiment (and unfortunately, will probably stay at that stage for a very long time) that I tend to agree with, and I have a question to the quoted part specifically: Do you think banning real estate as loan collateral will really prevent asset use? Or did you implicitly mean to include renting business in that ban?
I was referring to asset in the sense that so much of average Americans' wealth (and debt) is tied up in it.
To sever the line between "essential good for survival" and "my entire net worth".
IMO a system that does that well will severely hamper the ability for anything but short-term rentals like hotels to be financially viable. Because housing will become more affordable as we've reduced the ability for people to chase the "perpetually increase value of home" dragon.
It seems to me that, at least in the long term, this is a good thing.
In the immediate term, you've got 2/3 of the country underinsured on homeowners insurance, which is definitely a bad thing, but I took away a couple of key points:
I've thought for years that the day we make fixing the climate profitable is the day we save the world. Properly pricing in the cost of climate change is a key step in doing that and it sounds like insurance companies are on the front lines figuring out what the proper cost actually is.
When people can't get insurance and their land values plummet, that's the type of squeeze that spurs a proper government response -- hopefully it's not just price fixing (which would double down on shortages) and actually results in some meaningful conversations about curbing emissions.
That's a claim that can't be thrown around without doing a lot more unpacking. Are wealthy property owners not already highly taxed? There's definitely a great deal to be concerned about with public liability for things like flooding, but you still need to show your work before claiming that wealthy property owners are out benefiting their contributions.
Wouldn't we expect people of fewer means to be living in areas of higher risk? Property values there would be falling as risks and the costs to insure against them rise.
Not necessarily. I have a home, which is valued at roughly $400,000 (incidentally one of the worst in town). Annual property tax is about $12,000, or about 3%. A mansion on the waterfront about a mile and a half from me is valued at about $2,000,000. It pays roughly $30,000 in property taxes, or about 1.5%.
But to speak to insurance premiums... Sure, they almost certainly pay a higher insurance premium than I do. But do you know the flood and storm damage risk of my property? Almost 0. The flood risk of theirs? 100%
Based on the current (and projected) flood and storm risk for that mansion, the insurance company would need to be collecting a premium on the order of 500,000/year in order for people like me to not be subsidizing the rebuild cost of that mansion. In part because rebuild cost generally costs 20-30% more than the value of the home. My rebuild cost is estimated to be roughly 600,000. The mansion's rebuild cost is likely more on the order of $3 million.
Here's an article about how the government-sponsored flood insurance in question disproportionately favors the wealthy. They didn't dive into it as much with this article in part because it's been covered many times before.
Is that mansion in the same tax district? And the $2m valuation is its assessed value? If so then yes, that's absolutely inequitable. How on earth does that fly with your electorate?
Insufficiently penalizing high risk homes with commensurate premiums is definitely a huge issue. People who live in less prone locations certainly should not be doing that, it's grossly inefficient.
The mansion needs to be rebuilt every ~6 years?
There's no doubt that wealthy people like waterfront.
But the original article here also highlights that racialized communities are increasingly likely to live in these disaster prone areas. And most importantly, showing that the wealthy significantly benefit from government flood insurance doesn't inherently prove anything. One would have to demonstrate that the wealthy aren't simply funding their own insurance program.
But yes, federal programs to subsidize risky, expensive places to live is ridiculous.
Yes, same tax district. Thank tax increase cap calculations that pretty much only benefit multi-million dollar homes. It's pretty simple to sell to brainwashed people: You wouldn't want the government to increase your taxes by 30% would you? Vote NO on <repeal tax-hike cap referendum>.
I was probably being a bit hyperbolic wrt that insurance rate. That said, at current sea level rise it's gonna be underwater inside of 20 years so that should probably be an instant no--insure anyway.
Here is a complementary article, with graphs.
The Doom Loop