Overcompensation

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I’ve seen this car four times in a little over a week, in four different locations. At first I thought, nahh, it couldn’t possibly be the same car. Maybe chrome wrap jobs are becoming a Thing and I’m seeing several different cars. But aughh, those rims!

In the process of minding my own business, I’ve acquired enough information to guess where the car’s owner works. It’s only a guess, because I can’t believe anyone would drive to work in this thing. I’ve seen where he does his banking. And I’m pretty sure I’ve seen where he lives. At this point it would be easy to plan a burglary (but I’m not going to do that!)

I live in a dense urban area; there are probably many cars that I pass just as regularly. They simply aren’t noticeable because they look like all the other cars. Driving a factory stock Prius in the Bay Area is the equivalent of browsing the web through Tor. If there are any arguments to be made for commuting in an ostentatious vehicle, I have yet to understand them.

The Laffer Curve Isn’t Completely Stupid

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I did my taxes today! Last year was one of those rare years where I had income, and I nearly forgot.

Americans don’t like to pay taxes. We’re unique in this regard. Swedes love paying taxes. Danes love to pay taxes. The Dutch love taxes. Even the French love taxes!

If government-controlled media outlets say so, then it must be true. But just to be sure, I consulted a Scandinavian friend.

    E: Why do Swedish people love taxes so much? Is it because your commitment to equality transcends the desire for money? Or do you just prefer to have the government do your thinking for you?

    Swede: What? Nobody likes to pay taxes anywhere. Sweden just does a good job of maximizing tax rates where it can.

Sweden has the highest income tax rate of all the OECD countries. Even if Swedish wage-earners don’t like it, what are they going to do? Flee to another country and claim refugee status? As evidenced by Sweden’s tax revenue, the citizens prefer to stay.

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Sales tax follows a similar strategy. The Nordic countries all have a 25% sales tax. High sales tax is rather regressive, but what are the residents going to do, take their business elsewhere? The government can tax as much as it wants as long as there’s no alternative to buying stuff.

Corporate taxes are a different story. It’s really easy to move a corporation to another country. Placing company headquarters in Liechtenstein is the European version of establishing a Delaware C-Corp.

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Money flows to where it’s treated best, so Sweden keeps its corporate tax rates relatively low. IKEA, icon of Swedish capitalism, is actually owned by a tax-exempt holding company based in the Netherlands. The holding company is then owned by a charitable foundation in Liechtenstein, dedicated to “innovation in the field of architectural and interior design” and controlled by the founder of IKEA.

IKEA’s tax-free accounting structure was set up in the 80s, when Sweden’s corporate tax rates were much higher. Today, the US has the highest corporate tax rate of any developed country, and maybe that has something to do with why Burger King moved its headquarters to Canada.

Warren Buffett likes to point out that he has a lower tax rate than his secretary. Of course he does! Buffett’s secretary is an American employee, and there’s not a whole lot she can do to change that fact. Buffett himself, on the other hand, is an untethered capitalist. If his capital-gains tax is too high, he’ll simply take his capital elsewhere: Just like how he invested $3 billion to take Burger King to Canada.

Warren Buffett Burger King

See Also:
1. E. Norrman. Tax Policy in Sweden. NBER, 1997.
2. Dutch masters of tax avoidance –the guardian
3. Wrappers come off Ikea structure –FT

How’s Venture Capital Doing?

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One chart, two different interpretations.

TechCrunch:
Apart from last year, National Venture Capital Association data shows that the $12.1 billion invested at the beginning of 2016 was the best start to a year since the dot-com boom in 2001.

Wall Street Journal:
Funding for U.S. startups fell 25% from the fourth quarter to $13.9 billion, the largest quarterly decline on record since the dot-com bust.

Both statements are technically correct, but imply opposite things. The story depends on what the readership wants to hear.

TechCrunch is a publication for tech workers in startup hubs. Keep things positive, the industry depends on a healthy supply of optimistic app developers. WSJ caters to rich people with self-managed investment portfolios. Play on their fears of impending market doom, scare tactics always get clicks.

It’s easy to be a journalist! Pick two data points, create a storyline, pad it with noncommittal quotes from vaguely credible sources, and wait for the Pulitzers to roll in.

When Facebook is the Internet

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Facebook is great at inflicting their service on captive audiences. Yesterday, I was super stoked that Lufthansa had free internet on my flight! Except it wasn’t free internet. It was free Facebook. Real internet cost 9 euro an hour.

It was like Internet.org, but for rich people. Internet.org is Facebook’s initiative to bring a limited version of the internet to developing countries, allowing locals access to a handpicked selection of websites, including (obviously) Facebook. The service was banned in India for violating the principles of net neutrality.

We take unrestricted internet for granted around here. The sum total of my knowledge comes from stuff I read on the Internet, and that’s true for most people I know. But what if the internet was limited to Facebook and its incredibly stupid list of What’s Trending?

During the flight, I created a proxy app to act as a window to the outside world. But the view isn’t the same when it’s lined with Mark Zuckerberg’s idea of what I should be looking at. And while I could have paid 9 euro for unrestricted access, this is the only view available to people in developing countries if they want any internet at all.

Facebook wants to become a primary news destination, the homepage of the internet. But curated news media isn’t information; corporations have to avoid offending advertisers and shareholders. The only free press is the collective internet, and that’s exactly what Facebook’s Internet.org is not.

Facebook, you’ve known me since 2004. Why are you so terrible at showing me relevant content?
Facebook, you’ve known me since 2004. Why are you so terrible at showing me relevant content?

See Also:
Facebook’s Free Basics is Not The Internet

Let the Robots Dig Coal Mines

Bad robot! That's what you get for taking our jobs!
Bad robot! That’s what you get for taking our jobs!

Another week, another proclamation that the robots will take our jobs. Why is future-President Trump denouncing overseas outsourcing? Trump should be railing against robots.

John Maynard Keynes predicted an impending mass unemployment 85 years ago. And before Keynes, technological unemployment was similarly forewarned by prescient thinkers like Karl Marx, Paul Krugman, and Mao Zedong. Even in 4th century BC, Aristotle wrote about the end of human labor due to the invention of watermills and levers and vending machines.

None of those predictions came to pass, but this time is different. This time, we have ROBOTS.

Previously, Keynes proposed a solution to mass unemployment in his General Theory [1]:

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is.

Actually Keynes went on to suggest that houses and roads and pyramids might be a better use of human labor, but infrastructure development is politically fraught. And we have robots for that stuff.

So let the hyperproductive robots bury banknotes in coalmines, and have the unemployed masses dig them out.

The nation has no shortage of abandoned coalmines now that the largest coal companies have all filed for bankruptcy. The robots didn’t take the coalminers’ jobs, but they can certainly appropriate the coalmines!

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As government agents, the robots will need to undergo certification and background checks. Robots will need occupational licenses, work permits, microchips, and NTSB-approved safety wire. We’ll also need robot compliance officers, certified robot mechanics, and people to certify the certified mechanics. We can use bureaucrat-robots to supervise some of the worker-robots, but it can’t just be robots all the way up, because Quis custodiet ipsos custodes and such.

There will inevitably come a day when a robot malfunctions. A minor software glitch or a malicious hack, and maybe a robot causes some damage. Robots will thereafter need to be insured, they’ll need routine audits and health & safety examinations to check for viruses. We’ll see a proliferation of attorneys specializing in robot litigation. Maybe they’ll demand rights for their clients.

And lest you think I’m being ridiculous, just refer to the sequence of events that transformed general aviation in the past century. What began as a hobby for self-taught mechanics is now an industry where you to have your anus digitally inspected by an FAA-authorized medical examiner before you can legally pilot a Cessna 152 (FAR Part § 61.23).

There’s gonna be a lot of work to do, is the point I’m trying to make.

But we’re not asking for banknotes in coalmines, and we don’t actually want to do work. We really just want free money. That is, a Universal Basic Income.

ubi

I get the impression that the loudest advocates of UBI are also the people least likely to have their jobs displaced by automata. How come I don’t hear manual laborers calling for Basic Income? Probably because I don’t follow any on Twitter, but still.

The technologically-elite don’t really believe that robots will destroy all the jobs. They just want to seem like they’re not only looking out for themselves for once.

But this is Silicon Valley, and that’s never the case. Silicon Valley progressives want a social safety net so that they can explore world-changing ideas without incurring any real risk. They want the grown-up world to be more like college.

Great, I would love to get paid for not working. Unfortunately, the ruling class knows better than to let large numbers of smart and educated people have too much free time on their hands. That’s exactly how we end up with anti-establishment movements like the Beat Generation and 60s Counterculture and Occupy Wall Street. Do you think Satoshi Nakamoto* could have created Bitcoin while chained to a desk job?

Academia used to be the most effective way to keep a lot of smart, ambitious narcissists from doing any real harm. But the government no longer provides sufficient funds to keep these people institutionalized. The academic world has become a bureaucratic politicized mess, and there is no place left in society for those who want a life of intellectual freedom.

So what do you do when you have the soul of Socrates and the Lyceum of America’s underfunded academic institutions?

You say some stuff about robots taking our jobs and make the case for Basic Income. Maybe with enough social security, Silicon Valley can become a safe-haven for aspiring tech leaders to pursue challenging projects without worrying about an immediate return. UBI won’t be cheap, but if we eliminate all existing welfare programs, we can redistribute funds from the needy to the lazy [2].

If we’re honest about what we want, we can see that there are other ways to get there. The domain of solutions to Robots are taking our jobs is different from the domain of solutions to Smart people want a safe space in which to be academic.

Do we want a return to the Golden Age of Athens? Ancient Greece didn’t achieve economic and cultural growth by instituting UBI, they did it by funding public works programs. There are other possible solutions. More funding for research and the arts. Government think tanks. Intellectual safe spaces. Whatever. But to blame the robots for automating our jobs away is disingenuous and grossly misinforms the entire conversation.

*But what if Satoshi was a bot?

See Also:
1. John Maynard Keynes. The General Theory of Employment, Interest and Money, 1936.
2. Charles Murray. In Our Hands: A Plan To Replace The Welfare State. AEI Press, 2006.