The Dish

Yglesias makes it:

Very high taxation of labor income would mean fewer huge compensation packages, not more revenue. Precisely as Laffer pointed out decades ago, imposing a 90 percent tax rate on something is not really a way to tax it at all — it’s a way to make sure it doesn’t happen. If you believe systematically lower CEO compensation packages would mean a mass withdrawal of talent from the business world and a collapse of American industry, then those smaller pay packages could be an economic disaster. But the more plausible theory is that systematically lower CEO compensation packages would mean systematically higher compensation spending elsewhere in the corporate structure. Either more frontline workers or better-paid ones. The new tax code would redistribute value inside the corporate structure without anyone actually paying the new sky-high taxes.

But Zachary Karabell doubts that taxing the bejesus out of CEOs will solve our problems:

The top 100 CEOs in the [NYT’s] survey took home a total of $1.5 billion. That’s rather nice for them, but redistributing, say, $1 billion of that would do almost nothing to help the 100 million people at the bottom of the economic pyramid in the U.S.

Even if you included upper management and got to, let’s say, $100 billion, the extra income distributed across American society would barely improve living standards. Boards could mandate that, say, Larry Ellison of Oracle should be less wealthy so that Oracle employees could be more wealthy, but Oracle employees are already on the winning side of the global economic equation. They are not the ones who need help. …

No matter what redistributive measures we took, we’d still be faced with an economic system in dramatic flux based on the erosion of traditional wage industries in the developed world over the past decades. It is not inequality that has caused the middle class to lag and suffer. Inequality rather is a symptom of a system that reached the limit of what it could provide wage earners performing jobs tied to 20th-century manufacturing.

Danny Vinik counters Karabell:

[I]f he thinks $100 billion in additional redistribution “would barely improve living standards,” he does not understand the federal budget. President Obama’s plan to expand the Earned Income Tax Credit (EITC) would cost $60 billion over 10 years and lift half a million people out of poverty while helping another 10.1 million Americans in deep poverty. You could fund that and still have $940 billion to spend on antipoverty programs over the next decade. The federal government spent $61 billion in total on the EITC last year. On the Child Tax Credit, it was $57 billion. In January, Republicans and Democrats bitterly fought over food stamp cuts that ended up totaling $9 billion over a decade. An additional $100 billion in annual federal spending would have an immense effect on the living standards of low-income Americans.

In another post, Yglesias flags a study suggesting that higher taxes on the rich could boost the economy by redirecting talent out of the financial sector:

The career choices talented people make matter not just for themselves, but for the rest of society. Jobs differ in the extent to which success helps others. Major scientific breakthroughs help a scientist advance her career but are also broadly beneficial to society. A great teacher may impact a smaller circle of people, but is still helping many people beside herself.

By contrast, lawyers and traders seem to largely compete with each other in zero-sum games. If high taxes push talented people into careers where their work helps others that could raise the growth rate and increase human welfare completely apart from revenues. The authors show that under a variety of plausible assumptions the socially optimal top marginal income tax rate is very high — in the 70 to 90 percent range — largely because high tax rates would deter talent entry into finance and encourage talent entry into research/academia and teaching.

Ryan Jacobs flags a study that suggests people grow closer to God amidst relationship troubles:

In a new study published in Social Psychological and Personality Science, researchers recently tested how threats to romantic relationships affected people’s intimacy with God. The results suggest that the divine can act as a sort of rebound during moments of romantic desperation or trouble. The researchers exposed mostly religious subjects to psychological exercises that “threatened their romantic relationship” and then asked them about their connection to God. A control group just answered the God questions. Across three experiments, those in the experimental group reported stronger connections or a greater interest in God. The experiments also showed that those under the threatened relationship condition were “more willing to accommodate God’s transgression,” like not answering prayers. The researchers write that the results indicate that there is “considerable overlap between people’s divine and interpersonal relationships.”

But the study indicates a flip side:

[Researcher Kristin] Laurin’s team found that participants sought to enhance their relationship with God when under threat of romantic rejection – but only if they had high self-esteem. This fits with past work showing that people high in self-esteem seek social connection when their relationships are threatened. It’s a sobering finding, Laurin says: “We find that high self-esteem people, who already are the ones who take constructive steps to repair their relationships when they are under threat, have yet another resource they can turn to: their relationship with God,” she explains. “Low self-esteem people, who are the ones who retreat and protect themselves at the expense of the relationship when the relationship is under threat, don’t seem to be able to use this new resource either.”

Last week, Pew released a study measuring American attitudes toward future technologies. While the majority of respondents expressed significant reservations about most of the tech, Emily Badger is glad that the driverless car was among the most accepted:

Transportation geeks generally love the idea of autonomous cars because they’ll make ownership unnecessary. When cars no longer need people to drive them, they can drive around all day, transporting one passenger after another after another — in a network that might look a lot like personalized public transit. The resulting transportation system would be tremendously efficient. Cars wouldn’t spend the vast majority of their lives parked. We wouldn’t need to devote so much of our land to parking spots. We could get rid of the urban congestion that’s caused purely by people driving around looking for parking. …

Maybe you own a car because you need it, for mobility. But you own that car because you want it for some more intangible reason. In the future, however, the arrival of mass-market autonomous cars will force us to confront the difference between these two ideas. When you no longer need to own a car for mobility, will you still want one anyway for the love of cars, or for what they say about you, or for some other deeply personal reason?

Elsewhere in the study, 65% of respondents felt “it would be a change for the worse if lifelike robots become the primary caregivers for the elderly and people in poor health.” Waldman, on the other hand, welcomes the age of the robo-sponge-bathing:

Part of the reluctance people have may come from the associations we have with the word “robot,” and not just that they might rise up and exterminate us. When you hear the word, what do you think of? Something made of metal and plastic, probably. Not something with gentle hands that could, say, turn you over carefully and apply a soothing salve to your bedsores. But when they actually start designing caregiving robots, you can bet they’ll make sure to make them soft.

That industrial design will be one important part of gaining acceptance for helper robots. But more important will be the fact the need is so great, and they’ll be really, really handy. We already have a glaring need for caregivers for the sick and elderly, and as the Baby Boomers age, it will only increase. There are never going to be enough people to meet the need, unless half the American population is made up of nurses, orderlies, and home health aides taking care of the other half. And that of course would be prohibitively expensive. Robots will be pricey at first, but the price will drop over time, and Medicare will gladly pay a few grand for a bot that can do work that would end up costing tens of thousands of dollars a month if it were done by humans.

Adi Robertson parses more of the study:

Despite our categorical optimism about “technology,” it turns out that we’re sometimes more conservative about things that are actually on the horizon. 63 percent of Americans, for example, think that it would be a change for the worse if US airspace was opened to “personal and commercial drones.” 22 percent thought it would be a change for the better. … 66 percent think that it would be a bad thing if parents could alter a child’s DNA “to produce smarter, healthier, or more athletic offspring,” compared to 26 percent in support.

The most popular advance was a world where “most people wear implants or other devices that constantly show them information about the world around them,” which 53 percent thought would be a change for the worse and 37 percent thought would be an improvement.

Jason Koebler asked bioethicist Jonathan Moreno to explain all the anti-tech anxiety:

“I’m not impressed that this tells us very much how people will respond in a real case,” Moreno said. “If you go back and look at historical change, people were terrified of horse and carriages, they were shocked you could go 10 miles per hour on a train. But then, once you get them on it, we got very comfortable going from 10-40 miles an hour.” The point, Moreno said, is that people adjust to new tech very quickly. …

It’s not hard to think of more recent examples. At first, people were horrified that someone could reach them at any time on a cell phone—now, we can’t live without them. By generally trusting that “technology” as a whole is a force that’ll make people’s lives easier, the public doesn’t have to pick and choose which ones to throw their proverbial support behind. And, maybe it doesn’t even matter what people want—innovation is going to happen regardless.

Noting the widespread use of mobile payments in Africa, Bright Continent author Dayo Olopade thinks through whether similar efforts could succeed in the US. She sees need for the technology because “the poorest 30 percent of Americans were, to use an industry term, underbanked—unable to access credit and financial services within their means”:

Exporting mobile money to the United States, however, entails a slew of challenges that its creators did not face in Africa.

Need drove the invention of M-Pesa and its counterparts, but regulatory ambiguity ensured it could scale. Even today, mobile-banking laws in Africa are evolving slower than the technology itself. One hazard, regulators believe, is that mobile payments can be used for money laundering. While much of this risk is diffused by ID cards, PINs, and caps on transfers, it was not until 2011 that Kenya legislated capital requirements for mobile banking, and only in 2013 did the government begin to tax mobile transfers. Other countries in Africa have been stricter about which entities can serve as mobile financial institutions, but since telecoms are not traditional banks, they fall into a regulatory gray area.

In the United States, however, banking laws are much less malleable, and any activity that smells like banking is subject to a significant burden of compliance with post-crash policies designed to protect consumers. Allowing telecoms or tech companies to act like banks may involve new legislation. Given this headache, mobile money in the U.S. might end up looking different than it does in Africa, perhaps involving partnerships among wireless carriers, hardware companies, and banks. But the bar has been set, and the West now finds itself in the unfamiliar position of looking to Africa for technological inspiration.

Dayo’s “Ask Anything” series is here.