patrick.net

They have their own “burn rate” for their inheritence, which is very very fast.

I like the term "half life" better in this case. :)

@SFWoman,

I have added your terms to the Housing Bubble Glossary. Your cultural distinctiveness has been added to our own. Resistance is futile. :-)

DinOR,

I don't dismiss regional differences at all. In fact, folks like you and I are in a unique position to really appreciate those differences. The main thing that irks me is that the definition of "wealth" in the part of the Midwest I'm talking about is based upon the continuation of government subsidization for stuff like farms and health-care. Yet, it's these same people who happily decry the foul of welfare mothers, big city entitlements, and taxes. Who do they think is paying for their farms which are often 250% leveraged with gov't backed subsidized loans and habitually unprofitability? The land itself isn't even valuable in many areas, having lost versus inflation over the past 25 years.

I'm not sure what seperates them from the favorite hated "French Provincial Farmers" besides a lot more churches.

Who do they think is paying for their farms which are often 250% leveraged with gov’t backed subsidized loans and habitually unprofitability?

The aggie business may be strategically important though.

Also, the government will just inflate away to pay for all the entitement programs for the people. So it’s a moot point. Inflation = taxes on people with lots of money.

No, this just shows that future inflation will be mild.

I’m poor, but I’d like to leave the best to my kids. It’s their choice to piss it away.

The best you can give your kids is a good education. Challenge them to surpass you.

If we have anything left we will probably want donate it to good causes, like social or scientific research.

. What the hell are they going to do with it that is any better than my drug addeled child? Build bridges in Alaska? Fight wars in Iraq?

I have to agree, somewhat.

Lower tax is good, but if we have to make a choice, I think we should tax the dead man to death before we tax the living daylight of of the living man.

What the consumer pays in subsidies is made up in the form of affordable food.

Very true.

If it gets bad enough that we have to use corn and soybeans for our plastics and fuel, any ag land is going to be used for people food and for mules, horses, and oxen etc.

I doubt biomass can come close to satisfying our needs. The most promising source is still nuclear.

So, are buyers really leaving the market, or have lending standards improved? Have prices gotten so high that even the most creative loan product won’t finance the greater fool, or have the fools wised up?

I think all are happening. They are actually all interconnected.

I’m poor, but I’d like to leave the best to my kids. It’s their choice to piss it away. I’m loathe to give it to government. What the hell are they going to do with it that is any better than my drug addeled child? Build bridges in Alaska? Fight wars in Iraq?

Fewlesh,

like I said, I'm not against people leaving their kids a reasonable inheritance. This does not mean people like you. I just don't see the benefit to society in allowing billionaires to bequeath their whole fortunes in perpetuity.

How is perpetuating a permanent landed aristocracy good for American society? How does this promote the values of "by your own bootstraps" individualism, self-reliance and class mobility? I go into debt and sacrifice for an education, then work my ass off for XXX years to achieve a modest lifestyle. Meanwhile, Thurston Howell, IV inherits his billions and lives off the interest, while amusing himself by screwing supermodels and doing drugs. Wow, some great "incentive" system we have for rewarding hard work here!

Now, I think you do have a point in handing it all over to Uncle Sam is not the best idea. Perhaps we could give people a choice: whatever's left over after the "reasonable' inheritance allowance (if anything) can be donated to charities of the deceased's choosing. Otherwise, it's fair game for the IRS.

The intereresting thing about the concept of using soybeans for plastics resin is that it has been around a long time. Henry Ford Sr. was friends with George washington Carver and Thomas Edison and had the concept of altenative, renewable resources as fuel in 1914, and even produced a number of engines that would run on the stuff. Project Piquet is simply addressing the problems that Henry Ford saw coming almost 100 years ago.

On the subject of death taxes and "pulling yourself up by the bootstraps", I'd like to point out that to have each generation fight their way forward is very inefficient. The only benefit is "it builds character".

In schools, topics that would once be cutting edge are now routinely learned. Calculus, once limited to those like Leibniz and Newton, has slowly migrated down to the highschool level. Imagine if each student had to devise their own calculus on the theory that what Leibniz spent so many years on should not just be handed to them.

Now, wealth is obviously somewhat different from education, and "it builds character" is actually a pretty strong argument. But, I'd like to make sure that once beyond said character building, my children would be able to pursue their own dreams without having to waste 90% of their lives just to get to a level where that's possible.

(Perhaps a death tax exemption for trusts that meet certain payout requirements, i.e. tuition, market rate living expenses, other approved "dreams" would accomplish this.)

Cheese, ground beef. Maybe we should change our priorities and subsidize fresh fruit and veggies.

And foie gras too!

On the subject of death taxes and “pulling yourself up by the bootstraps”, I’d like to point out that to have each generation fight their way forward is very inefficient. The only benefit is “it builds character”.

I do not agree completely. Education is more than schools. Rich parents can teach their kids life and business, which is extremely valuable information. Also, they can provide them with opportunities and startup capital.

I believe foie gras farmers are subsized in France.

Perhaps California should do the same too. :-P

Scott,

Is grid lock in BA better than in the "Buroughs?" I've worked at IB's and the abuse of "employment at will" is taken to extremes. I'm not saying it doesn't happen in Silicon Valley, just not on a daily basis. You did the right thing.

Imagine if each student had to devise their own calculus on the theory that what Leibniz spent so many years on should not just be handed to them.

@Requiem,

I'm not sure I understand your analogy here. How is discouraging a permanent wealth aristocracy equivalent to withholding education? I'm not suggesting everyone should revert to a state of nature and re-invent the wheel here. Just that a tiny minority should not enjoy a free ride in life purely by virtue of the "birth lottery".

All I'm suggesting is levelling the playing field a little for each generation by preventing (some of) the permanent generational transfer of vast wealth. Of course, children of the super-wealthy would still enjoy huge advantages that other children would not have: first-rate private education, top medical care, having a network of powerful/influential friends through their parents' connections, etc, etc... Hardly an "unfair" scenario.

(Perhaps a death tax exemption for trusts that meet certain payout requirements, i.e. tuition, market rate living expenses, other approved “dreams” would accomplish this.)

This is pretty much what I suggested. Exempt inheritance up to a certain level, to allow for college tuition and some reasonable amount of post-graduate start-up costs (transportation, housing, etc.).

I had the most delicious seared foie gras at Silks in one of the hotels (maybe Mandarin Oriental?) downtown.

Yes, Silks is in Mandarin Oriental.

On the other hand, I had not-so-great foie gras at the Ritz Carlton, which is weird because the rest of the meal was excellent.

I did research in London and we had a group called (no joke) the Militant Vegetarians who were always trying to bomb our lab

Yes, when we were at Davis, the monkey lab has tight security too.

My moto is: I will eat a vegetarian before I will become one.

So.. is all that extra money being spent on Ag useless? Absolutly not.

The problem is the ag industry is bimodal. Large factory/corporate farm operations are the most productive and efficient in the world. Small family farms (the "cultural farms") are just the opposite; barely more productive than some 2nd world operations. The free market has been fixing this on its own as family farms are sold off and some are recyled into more organized, scaled operations. But *this* is not what the midwesterns mean when they say protecting farmland. In fact, they actively fight against organized farming operations by passing local laws and lobbying their state gov't trying to establish barriers to efficient farming.

Agriculture as a national strategic resource? Sure. But just not most of the family operations. (In fact, nearly all of the family output is low-grade feed grain and is largely exported with the help of US subsidies to 3rd world livestock operations and the like.)

And now some comments from that Commie-pinko uber-Liberal, himself, Alan Greenspan:

The income gap between the rich and the rest of the US population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself.

The result of this, said Greenspan, is that the US now has a significant divergence in the fortunes of different groups in its labor market. "As I've often said, this is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing," Greenspan told the congressional hearing.

http://www.csmonitor.com/2005/0614/p01s03-usec.html

SFwoman,
I can speak from personal experience at least for myself that not all government money doesn't go towards large evil corporate farmers. My Uncle is a 3rd gen Dairy farmer. His farm was his father's, and before that, his father's father. They are a small operation with perhaps 150-200 cows and roughly 800 acres, which in farm terms is small. He grows all of his own feed, uses cow manure to fertilize, just like his dad and also uses a combination of low impact farming techniqes and technologically advanced processes such as ear tags that help his cows be up to date on their health. He doesn't do this because he wants to be environmentally concious or try to make a statement. He does it because it preserves his land and saves money. Does he get special treatment from the goverment for using these techniques? no. Does he get less of his share because he is a small operation? No. Neither do any of the 10 or so dairies in located around him.
Farming is prohibitivly expensive. A New John Deere Quad wheeler is over 100k. A combine- 200k. Add feed, computer equipment, drugs for the livestock,and so on and so on, and if it were not for government subsidies, Farmers wouldn't be able to survive if there was even the slightest downturn. The cost of farming has simply gone through the roof. That said, my uncle has almost always been self-sufficient.But He would have a hard time getting started now if he had to. I would be willing to almost bet that large farms are actually more self sufficient. In the case of organic farming, there are also large scale operations all over the country that use organic farming techniques, so these too should be lumped into the same equation as the large farms.
Just remember that those subsidies keep affordable food on our tables. it is also not the farmers direct responsibility for the severe obesity in our country. You can thank all those large producers such as Kraft, Nabisco, and the countless fast food chains. But in the end, who's eating the stuff in the first place? The farmer, fast food joint, and food engineers aren't making them do it. If this is supposed to be an argument for promoting health, then I'd rather see MORE money being pumped into education so that special classes, such as healthy eating and health in general can be shown to students. Trust me. My wife worked in the CA school system for 3 years. it is absolutly appalling that the RICHEST state in the union has some of the POOREST schools in the nation. That's another subject though...

Small family farms (the “cultural farms”) are just the opposite; barely more productive than some 2nd world operations.

Many Kobe Beef farms in Japan are very small though. If we let the big farms take over we may lose tenderness in the meat. :(

Just to clarify, my position on "death tax" has nothing to do with the wealth gap nor social justice. To me, it is all about incentivizing production.

Life is not fair, and we should not attempt to make it more fair. We should make it more optimal.

@Scott,

Ha, ha, you read my mind! I posted that Greenspan "commie' remark before I had read yours.

Well, I agree with you that it’s impossible to control for ALL variables to give everyone a perfectly equal shot/level playing field. No, life ain't fair. However, that being said, tax/inheritance laws are HUMAN creations that we can control. They're not determined by genetics. We will never create any system that's perfectly "fair" because life itself isn't fair, but we can at least try to aim for more "fairness" in those things we can influence.

We will never create any system that’s perfectly “fair” because life itself isn’t fair, but we can at least try to aim for more “fairness” in those things we can influence.

I think we should just aim to create a better society (maximize utility). Whether the eventual system is fair or not should not be important.

@Peter P,

One way of looking at the concept of "fairness" is to define it as "incentivizing production."

"Social justice", however you want to define it, could itself be an outcome of policies that encourage/optimize production.

One way of looking at the concept of “fairness” is to define it as “incentivizing production.”

“Social justice”, however you want to define it, could itself be an outcome of policies that encourage/optimize production.

I agree. Very true. Many people think that fairness means "everyone should be treated equally in everything" though.

Just to play theoretical devil's advocate on the inheritance tax issue:

The argument is that all inherited wealth is either preserved or consumed. Consumed wealth solves itself, because it is recyled into the economy (I'm not making a trickle-down argument nor a social justice statement, just a theoretical truism).

Preserved wealth must be invested in places that produce returns equal to or greater than inflation. This provides necessary capital to the system which allows for productive industry to operate.

Enter taxation. Taxation has varying, often not easily controlled, disproportionate effects. Where taxes are redistributed, the gov't takes on the role of social justice arbitrator. Where taxes are reinvested, the gov't takes on the role of "picking winners". Where taxes are specifically reinvested in "strategic" concerns, the gov't is executing it's responsibility as society's guardian.

Democratic governments engage in all three types of activities. This is where the practical political argument begins.

Assumedly, without any taxation of estates, all wealth would go directly into either consumption or market-arbitrated investment.

(taking off my market fundamentalist hat for the day now)

(taking off my market fundamentalist hat for the day now)

Does the hat have the IMF logo on it?

Does the hat have the IMF logo on it?

It sure doesn't have a Stiglitz logo on it :)

You are not a duck or goose that will have a pipe shoved down its throat and be force fed to fill its gullet for human tastes

Yum. I really feel like a foie gras feast now. I definitely prefer goose. Why do they use duck for foie gras here anyway?

We cannot let those ducks/geese die in vain. We must eat them and enjoy them!

It should cost more to get a Big Mac and Supersized Fries and Coke than to have a bowl of rice and beans and a salad or veg plus a glass of milk, but it doesn’t.

SFWoman, I really want to agree with you, but I would still rather have the free market decide.

New thread: The Libertarianism-Morality Conundrum

HARM,

I think I agree with you on the need for a levelling of the playing field. What I was thinking with my analogy is that a wealth aristocracy means that at least some people are able to do what they want in life. (OK, so that doesn't sound all that good.) I should say, I don't really care if they exist; I care more about the opportunities for everyone else. If most people could afford the lifestyle enjoyed by, say, an average doctor or lawyer, I doubt there would be too much complaints about the hyper-rich.

Like world hunger, I don't think of poverty as a resource problem; more of a political problem. A larger death tax will help solve it about as much as having our farmers grow huge food surpluses. (Which, IIRC, they already do.)

Like world hunger, I don’t think of poverty as a resource problem; more of a political problem.

Exactly. I may be flamed for saying this but I think foreign aids to hungry nations serve no purpose whatsoever. We better just stop wasting money now. They do not need food. They need education. Giving them food will only prolong their hunger.

I don’t really care if they exist; I care more about the opportunities for everyone else. If most people could afford the lifestyle enjoyed by, say, an average doctor or lawyer, I doubt there would be too much complaints about the hyper-rich.

We are in agreement here. The only problem is, in order for the hyper-rich to exist (very high resource individuals), you pretty much have to have large numbers of hyper-poor (very low resource individuals).

Like world hunger, I don’t think of poverty as a resource problem; more of a political problem.

Exactly. I may be flamed for saying this but I think foreign aids to hungry nations serve no purpose whatsoever. We better just stop wasting money now. They do not need food. They need education. Giving them food will only prolong their hunger.

I agree when it comes to sending habitual aid to countries run by corrupt bureaucracies or dictatorships. The aid always gets diverted away from its intended target anyway. More aid just prolongs the existence of these rotten governments and the misery of the people.

Truely, we are all very well off, not hungry (yes, major political/theft/distribution problem with world hunger), have no neighbors chasing us with machetes for being in the wrong ethnic group, etc.

We are indeed very lucky. If we were born in Somalia, we would not be able to get anything no matter what we do.

It irkes the heck out of me that a fruit salad at McDonald’s cost’s damn near $5, but I can get a double cheeseburger for $1.

McDonald needs to protect its brand, selling too much fruit salad may distract it from the core business.

I love vegetables. But I like them cooked in meat or fish broth.