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orthonormal comments on A potentially great improvement to minimum wage laws to handle both economic efficiency as well as poverty concerns - Less Wrong
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Comments (74)
Don't talk about politics on lesswrong ever. This is just painful.
That's a bit harsh. I think the problem is just that Vijay hadn't heard of Friedman's negative income tax proposal, and is reinventing the wheel. Also, it's not polished enough for the Main section.
Thanks, orthonormal! Yes I had not heard of it and the idea seems very similar.
And politics is a mind killer.
And OP seems to have little idea about economics.
And more specifically this is 50% marginal tax rate and great incentive for illegal employment.
The original formulation of "Politics is the mind killer", intuitively seems not as good as yours here. It seems that there are probably other mind-killers.
Can we think of specific one's that aren't well described as "politics" and have a mind-killing effect of a commensurate order of magnitude?
Is "mind-killing" somehow a better description of what politics does than, say, beginning deliberation by writing one's bottom line first?
Anything that people incorporate as part of their identity tends to generate the cluster of biases that we collectively label "mind-killer". Many of these (body image; musical taste; Kirk or Picard) aren't political issues in the mainstream, but almost all of them become political issues among interested parties; in fact, I'd say that a colloquial sense of "politics" is defined partly in terms of which issues invoke that sort of identification.
That seems right.
I spent a bit of time looking at the details of Negative income tax. It is possible that I am not understanding the subtleties of Negative income tax but it appears that what I proposed is different and better than Negative Income tax. The reason for this is the following. In my scheme if a person is making wage y which is less than some threshold wage x, the state pays him (y-x)/2 which satisfied two objectives (1) People who are poorer get more state aid (2) People are still incentivized to work harder and make more money since their total payout (wages + government aid) is an increasing function of their wage. Let's take a negative tax rate of say -100%. Here a person making $1/hour gets another $1 from the government and a person making $4 per hour gets another $4 per hour from the government. This satisfies objective (2) above but not objective (1). Of course, one would argue that there would be tax slabs and consequently even different negative tax rates at different levels, but this problem exists within each tax slab. One could make each tax slab infinitesimally small and achieve the same effect as my proposal but that would be much like saying a function is linear, when it is really exponential and you are approximating it piecewise linear with really small pieces.
My bad. Friedman's NIT implementation seems to be the exact same thing I wrote. NIT seems like a really lousy name for it though, given that it naturally lends itself to the interpretation in my previous comment ; as a fixed percentage bonus added to your salary by the government within some wage band.