> Why aren’t we building Elon Musk’s “alien dreadnoughts” — giant, gleaming, state of the art factories producing every conceivable kind of product, at the highest possible quality and lowest possible cost — all throughout our country?
Because we have few of the industrial titans which are required to spearhead that and round up (or possess) the necessary capital. This sort of outcome does not magically self-assemble, it starts with one person that takes action. You actually need hyper competent, hard charging, ambitious, skilled people of all sorts to go after the extreme challenges represented by such a huge re-industrialization. These people and their talents no longer exist in such high numbers among the population as they did prior to the gutting of the US industrial age. They are now rare and the capital that desires to fund them is equally rare.
If you want to produce them, you need to completely alter the incentive structures we arrange our economy around.
We should have 0% corporate tax rates for all domestic manufacturing concerns, to get started. Tax individual income at a higher rate.
Implement a robust system of income tax credits and abandon the minimum wage as it exists today. This is not my idea of course, Warren Buffett is probably its loudest supporter and he is absolutely right. Set the income tax credit system such that it guarantees a higher minimum wage of at least $12. By removing the strict front-facing minimum wage we have today (which blocks labor from the market), all businesses would immediately aggressively seek to hire anyone and everyone they can get their hands on. The workers would be guaranteed a minimum wage by the redistribution income tax credit system and there would be no labor-value blocker (aka the minimum wage) keeping businesses from hiring people.
If a state has a $12 minimum wage, and your labor is only worth $9, you're screwed. This solves that.
It's about absorbing max lower skill labor (where the unemployment problems tend to be over time) into the workforce. You make labor artificially cheaper, while simultaneously paying that labor a fair wage: we subsidize the outcome we want. They produce, they earn a good wage, they build savings and can start to become asset owners. They also start learning new skills (and later might start production of their own based on the accumulating of experience at making goods; an important catalyst in re-industrialization). The combination would unleash epic common-goods manufacturing output the likes of which the US hasn't seen in half a century.
It would make it economical to manufacture low-margin, lower value goods in the US again. It becomes a de facto subsidization for employment and manufacturing.
This would instantly change the US economy for the better.
How would that minimum wage replacement work? Wouldn't every minimum wage employer just switch to paying $1/hr or whatever, and let this system pay the rest? That would mean such companies couldn't give their workers a $1/hr raise without paying $12/hr more. I seem to be missing something.
That would be true for the absolute lowest value labor. Only about 1% of the labor force earned the minimum wage in 2019. Maybe that would increase to 3-5% under this scenario, with higher real wage compensation covering more people.
The competition for labor - which exists at all times in some form - will continue to force businesses beyond the floor of the income tax credit line for the extreme majority of labor. A person that now earns the minimum $12/hr via the tax credit system, a business can offer them $12 + their own $3 cost ($15/hr total to the employee), and steal them away for relatively inexpensively versus the old minimum wage costs. The business might have been paying a $10/hr min wage in their state previously, for example; so paying $3/hr for that labor is still a net savings. You could gradually eliminate the tax credit as you step up the income scale (maybe every combined dollar above $12/hr the person earns, one dollar in the credit vanishes; so someone earning $20/hr total, that employee loses $8/hr of the credit, so $16/hr of that has to come from the business; or half that rate of vanishing; you get the general idea). It's entirely plausibly this would massively boost income levels for the bottom half of workers, as businesses would offer over the $12/hr line to lure the best lower skill workers (it would still be net cheaper to the business than the old system, which is why they'd do it). It would also make a lot of small businesses solidly profitable and encourage higher rates of business formation again (most mom & pop businesses operate at very thin margins; would have to implement some new fraud checking and minimum revenue requirements perhaps; have to avoid various fraudulent employment schemes). Also, the credit should apply to lower income waiters also, they can keep tips on top of that (if they yield enough combined income, it would be taxed; a person earning the minimum $12/hr pays zero income taxes, over that we'd have to decide where income taxes begin and how they climb).
We would continue to tax normal corporate income outside of manufacturing (and we could begin by just experimenting by dropping manufacturing taxation to half the normal rate, test the outcomes it generates). The increased personal income taxation pays for the new redistribution model. We would want to reform our personal income tax system further to optimize, maximize it (including treating all income equally for tax purposes).
We could entirely exclude high wage employees from the income tax credit system, so those employees are not subsidized in this (if your engineers are making $125,000 they don't need the $12/hr income tax credit underneath them).
We simultaneously could alter some welfare benefit programs that are no longer as necessary as a larger share of the population is working and earning higher wages (you rebalance the system in other words).
We should instead move the tax burden to land, since holding land is completely unproductive, and as opposed to working for an income, which is productive.
Holding land isn't unproductive. Existing is a pre-requisite to working for an income. Having shelter is a pre-requisite to existing. Shelter is extremely productive in fact and is necessary. That's like pretending that the factory roof isn't productive because all it does is provide shelter from the elements, so it's unnecessary. It can make a lot of sense to be a land owner, which is why people seek it out so strongly. Being able to say: this is mine, this is not yours, this is not the tribe's land, this is where I shall raise my family for the next 20 years, this is my private space to do as I please; that's extremely enticing (for most non-robots).
Eating food at home is productive. Raising children under a safe roof is productive. Learning in the comfort of your home is productive. Resting is productive. A good night's sleep is productive. And so on.
Further, factories exist on directly productive land. It often makes sense to own that land for all sorts of good reasons.
There's a fair argument for land tax adjustments, however it should go with increased income taxes on the top 1/3 regardless. Although it has to be very technical. Taxing people that own $10m houses in SF at the same elevated rate as a homeowner in a poor rural region would be economic assassination.
Of course this all needs to go hand-in-hand with demolishing our healthcare system and remaking it into a system with per capita costs 50% lower than they are today (which gets us close to the rest of the developed world). Doing that is how we finally get universal coverage, until then all properly universal systems will remain blindingly expensive. The economic benefit to the new system having a lower cost, universal healthcare system would be very far reaching.
That's why I said land instead of property. Land can't be created or destroyed, so there's no need to provide incentives for it, or worry about disincentivizing it.
> Taxing people that own $10m houses in SF at the same elevated rate as a homeowner in a poor rural region would be economic assassination.
I'm not sure this would be a problem. Increasing the land tax brings down the property value, since the value reflects some multiple of the rents you can extract from it, and so the tax would naturally be corrected. Of course, all this depends on having a good system to assess land.
I'm in agreement about healthcare; too much time is spent on discussing single payer vs private etc., and not enough on bringing down the costs, that would be there regardless of the system we use.
Because we have few of the industrial titans which are required to spearhead that and round up (or possess) the necessary capital. This sort of outcome does not magically self-assemble, it starts with one person that takes action. You actually need hyper competent, hard charging, ambitious, skilled people of all sorts to go after the extreme challenges represented by such a huge re-industrialization. These people and their talents no longer exist in such high numbers among the population as they did prior to the gutting of the US industrial age. They are now rare and the capital that desires to fund them is equally rare.
If you want to produce them, you need to completely alter the incentive structures we arrange our economy around.
We should have 0% corporate tax rates for all domestic manufacturing concerns, to get started. Tax individual income at a higher rate.
Implement a robust system of income tax credits and abandon the minimum wage as it exists today. This is not my idea of course, Warren Buffett is probably its loudest supporter and he is absolutely right. Set the income tax credit system such that it guarantees a higher minimum wage of at least $12. By removing the strict front-facing minimum wage we have today (which blocks labor from the market), all businesses would immediately aggressively seek to hire anyone and everyone they can get their hands on. The workers would be guaranteed a minimum wage by the redistribution income tax credit system and there would be no labor-value blocker (aka the minimum wage) keeping businesses from hiring people.
If a state has a $12 minimum wage, and your labor is only worth $9, you're screwed. This solves that.
It's about absorbing max lower skill labor (where the unemployment problems tend to be over time) into the workforce. You make labor artificially cheaper, while simultaneously paying that labor a fair wage: we subsidize the outcome we want. They produce, they earn a good wage, they build savings and can start to become asset owners. They also start learning new skills (and later might start production of their own based on the accumulating of experience at making goods; an important catalyst in re-industrialization). The combination would unleash epic common-goods manufacturing output the likes of which the US hasn't seen in half a century.
It would make it economical to manufacture low-margin, lower value goods in the US again. It becomes a de facto subsidization for employment and manufacturing.
This would instantly change the US economy for the better.