Upvoted for the topic, but I think this is a little to credulous in the abstractions chosen (“labor” and “capital” as well-defined categories with uniform composition). There’s a whole lot of capital and labor that are deeply entangled in how valuable they are, and a lot of both capital and human improvements that don’t categorize this neatly. In fact, the details overwhelm the abstraction when you look closely at specific examples. This is very tied to the the false idea that “capital” is passive, and no human decisions (action) is involved in the income/rent that it generates.
IMO, a better framing is “incumbents” vs “upwardly mobile”. In the modern (last 120 or 50 years, depending on one’s race, gender, and social standing) world of fractional ownership and financial intermediation, labor would be capable of using part of it’s wages (which is not insignificant for many industries) to start to accumulate capital, and over the course of a few decades have a lovely mix of the two in nice synergistic utopian harmony.
The major hurdles here are societal, legal, and “natural” economic constraints that keep most people from really participating in the capital part of things. Many things have breakpoints in the cost/return curve—building another factory won’t be profitable if the existing factory (which you didn’t build because someone else got there first) is sufficient for the market. In highly productive regions, the best real estate is already owned by someone.
Also, a whole lot of the “labor class” doesn’t have the education, expectation, or family/social support to devote significant energy into learning about and growing capital, so there’s no way to really get started.
I guess that all comes under the heading of “capital accumulates, labor doesn’t”, but the details and mechanisms are important in understanding why “tax capital” is probably not going to help. Taxing inheritance (IMO including height and IQ, in addition to financially-measurable rights) would go a lot further, and it’s worth examining why some kinds of inequality-at-birth are OK and some kinds aren’t.
Upvoted for the topic, but I think this is a little to credulous in the abstractions chosen (“labor” and “capital” as well-defined categories with uniform composition). There’s a whole lot of capital and labor that are deeply entangled in how valuable they are, and a lot of both capital and human improvements that don’t categorize this neatly. In fact, the details overwhelm the abstraction when you look closely at specific examples. This is very tied to the the false idea that “capital” is passive, and no human decisions (action) is involved in the income/rent that it generates.
IMO, a better framing is “incumbents” vs “upwardly mobile”. In the modern (last 120 or 50 years, depending on one’s race, gender, and social standing) world of fractional ownership and financial intermediation, labor would be capable of using part of it’s wages (which is not insignificant for many industries) to start to accumulate capital, and over the course of a few decades have a lovely mix of the two in nice synergistic utopian harmony.
The major hurdles here are societal, legal, and “natural” economic constraints that keep most people from really participating in the capital part of things. Many things have breakpoints in the cost/return curve—building another factory won’t be profitable if the existing factory (which you didn’t build because someone else got there first) is sufficient for the market. In highly productive regions, the best real estate is already owned by someone.
Also, a whole lot of the “labor class” doesn’t have the education, expectation, or family/social support to devote significant energy into learning about and growing capital, so there’s no way to really get started.
I guess that all comes under the heading of “capital accumulates, labor doesn’t”, but the details and mechanisms are important in understanding why “tax capital” is probably not going to help. Taxing inheritance (IMO including height and IQ, in addition to financially-measurable rights) would go a lot further, and it’s worth examining why some kinds of inequality-at-birth are OK and some kinds aren’t.