Thanks for sharing... I'm now ruminating on the contrast between "natural scarcity" and "social choices". Even in the example of the corner store as "natural scarcity", there is a temporal aspect to it. Once the corner store is built and owned, future generations, in a sense, "lose" an option to capture "natural scarcity".
So, is it really "natural"? Or, is it just another arbitrary construct (property rights that transfer to heirs)? Might it be more "natural" to zero generational transfer, to "reset the chessboard" for each generation?
The water in which we swim... So many arbitrary constructs that we can hardly recognize them as arbitrary.
Apr 26, 2023·edited Apr 26, 2023Liked by Kris Abdelmessih
Very good post, thanks! But taking issue here on one aspect:
>1031 exchanges is that they encourage growth because they keep people spending money on new property developments instead of cashing out and enjoying their gains. Which embeds two assumptions:
>• It’s generally better to tax consumption than investment, and
>• Real estate investment is a particularly worthy kind of investment to avoid taxing.
There's an even bigger (standard-issue monetarist) assumption lurking behind this: That when you cash out a portfolio asset — swap it for M2, "cash" assets — you face this decision:
"Should I take a fancy vacation, or rebalance my portfolio (cause I'm overweight M2)?"
Assuming a ~large portfolio, plenty of assets to spend out of, it seems that portfolio rebalancing is just...what happens. Well-off people spend more cause they have lots of assets, not because they have lots of M2 assets in their portfolio.
But which asset(s) should you swap your cash assets for? 1031 encourages property (re)development assets. But whatever, that's completely separate and removed from any choices to spend ("consume") more.
Despite perpetually increasing productivity, we have stagnant real wage growth (demonized as wage inflation.) Has real wage growth become impossible for working class under our current system? I appreciate you engaging with this idea in a nuanced way. :)
I just shared some posts that seemed interesting on these topic. The topics themselves are way out of my depth and anything I said about them would be no more than vibes (not that this is bad...vibes lead to good questions)
Don’t stop writing. Thank you. The infinite game.
Thanks for sharing... I'm now ruminating on the contrast between "natural scarcity" and "social choices". Even in the example of the corner store as "natural scarcity", there is a temporal aspect to it. Once the corner store is built and owned, future generations, in a sense, "lose" an option to capture "natural scarcity".
So, is it really "natural"? Or, is it just another arbitrary construct (property rights that transfer to heirs)? Might it be more "natural" to zero generational transfer, to "reset the chessboard" for each generation?
The water in which we swim... So many arbitrary constructs that we can hardly recognize them as arbitrary.
Bingo. "The rules are made by humans" is conveniently ignored at worst and it's a fact that's naively ignored if we use a charitable framing
Very good post, thanks! But taking issue here on one aspect:
>1031 exchanges is that they encourage growth because they keep people spending money on new property developments instead of cashing out and enjoying their gains. Which embeds two assumptions:
>• It’s generally better to tax consumption than investment, and
>• Real estate investment is a particularly worthy kind of investment to avoid taxing.
There's an even bigger (standard-issue monetarist) assumption lurking behind this: That when you cash out a portfolio asset — swap it for M2, "cash" assets — you face this decision:
"Should I take a fancy vacation, or rebalance my portfolio (cause I'm overweight M2)?"
Assuming a ~large portfolio, plenty of assets to spend out of, it seems that portfolio rebalancing is just...what happens. Well-off people spend more cause they have lots of assets, not because they have lots of M2 assets in their portfolio.
But which asset(s) should you swap your cash assets for? 1031 encourages property (re)development assets. But whatever, that's completely separate and removed from any choices to spend ("consume") more.
Focusing on assumption 1, maybe it's just the general distributional effect of taxing capital less than consumption?
Despite perpetually increasing productivity, we have stagnant real wage growth (demonized as wage inflation.) Has real wage growth become impossible for working class under our current system? I appreciate you engaging with this idea in a nuanced way. :)
I just shared some posts that seemed interesting on these topic. The topics themselves are way out of my depth and anything I said about them would be no more than vibes (not that this is bad...vibes lead to good questions)
It was a rhetorical question ;p great post