There are billions of computers, but only a few computers can run very large local LLMs.
So instead, imagine billions of laptops (or phones) available in store that have local LLMs installed which allows you to have intelligence-like chatbot features available with the equivalent performance of Claude Opus 4.5 or GPT-5 if not better and they are far smaller.
Thank you for telling us that efficient + performant multi-modal local AI models is the endgame; a bonus if they are smaller to fit in phones.
Landlords provide a useful service for anyone who doesn't want to live in a house for a long time. There are pros and cons to renting vs buying. If you are against landlords you are also against anyone who buying a house is a bad decision.
Vacant property investment exists, but it is a small factor in all markets.
The easiest surefire way to lift the bottom of the economy right now is to go on a mass home building spree.
If people had their rents cut in half, it would solve most other money problems they complain about (shy of those who will just inflate their lives into being money constrained again).
Of course this will come mostly at the expense of regular middle-class homeowners, who will see the enormous paper gains of their properties in the last 5-10 years be decimated. Red or Blue, I don't care who, hates losing money and will emphatically vote against this happening.
You are missing the bigger problem, healthcare spending. We as a society now spend more on that than our housing, and the gulf between the two widens every year.
We should do what you say, but we should also focus on pumping out more doctors, etc.
Have you looked around? We actually have plenty of "housing", however most do not meet the qualities/criteria that make them desirable enough to be "homes".
Lower density, family and pet friendly. You know, the kinds of places that landlords live in. Not the places they are trying to force on others as "inevitable".
> regular middle-class homeowners, who will see the enormous paper gains of their properties
As one of those homeowners, I keep hoping that housing values go down because I'm taxed on the value of my home every year, and that tax burden is crushing me. My property taxes are 2% of the (appraised) value of my house. The fact that its worth twice what I paid for it is meaningless to me when the tax bill comes - I can't really sell it and cash out the 'investment' because I need somewhere to live.
No. Mass building (while not touching inequality) will NOT solve the issue.
It’s easy to see why: there already IS enough housing around for everybody. If there wasn’t, you would see a massive amount of homeless people. And even in the US where that might be the case - the amount of empty real estate is larger than the amount of homeless people. You could easily house them if you wanted. It’s a question of distribution.
The other reason to see why this doesn’t work is: there is no country that managed to do it. Miraculously, the housing crisis has hit all (western) countries on the planet. All of them try to build their way out of it, no one succeeds. Why?
If you just mass build, the new units will be bought immediately by the rich, and the working people will have no housing still.
Productivity will go up, competition will go up, profits will go down, unemployment will go up, wages will go down, a crisis will occur, consolidations and monopolies will emerge, hyper inequality will then break a system incapable of compromise. But sure, there will be a lot of washing machines.
Money is just a proxy for value add. When automation replaces the labor, the only remaining value add may be withholding violence. I hope we don't get there
> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
This is a weird one. I don't think the problem with rich people is that they consume luxury goods. That's actually a good thing overall. Let them have their megayachts, megacars, golden toilets, etc. Someone has to build those.
I think the problem is when they use their unlimited funds to purchase stuff they shouldn't own. Newspapers, TV stations, social media, etc. That kind of power, often flaunted openly (see the bezos scandal when they literally wrote something along the lines of "if you screw with us we have wapo at our disposal") is not something that should be in the hands of one person. Or a family. That's way way way more dangerous to society than them snorting caviar off of models' bodies, or eat gold leaf you won't believe they're not burgers with truffles on top.
That isn’t what he is saying. He is saying that tax reform needs to be progressive, meaning it hits rich people more, and it hits them when they spend not when they earn.
A progressive tax will tax them more when they buy luxury items and thus make them buy fewer luxury items.
Bingo. The guy has a lot of things right, but I was floored when I read "progressive consumption tax" coming from an otherwise well written essay. Consumption taxes are regressive, and no amount of progressive lip stick will make them redistribute sufficiently to achieve the effect he wants.
I would say that any tax reform that fails to reduce asset concentration will completely fail to reduce economic inequality. Let Bezos have his newspaper, if that's all he owns. Let him game the system to evade income tax. Fine. The problem is when a very small group of people own all the newspapers plus their original business empires plus their privately owned social media companies, plus their funded PACs, their psyops, etc.
All assets must be taxed directly to such an extent that concentrated assets are redistributed naturally through market forces. Tax wealth, not work.
A post about mis-generalization seems to make a huge mis-generalization, seemingly from a lack of diversity.
The author recognizes that laundromats exist, but doesn't believe that washing machines are a luxury good (his yacht example of 60% owned by the top 1% likely applies somewhere around 60% to the top 30%). This indicates the author generalizes that high density living with shared appliances don't exist or apply to a large part of the population (that density doesn't shift statistics).
A few thoughts, instead of taking 340m people, you need to account for 2% homelessness, another 8% as housing insecure, 30%+ as high density possibly sharing at the apartment/condo building or laundromat level. A small upper 1% that outsource to services.
The infamous Mitt Romney, 47% of Americans don't pay income tax quote can be really shocking when you start thinking about the average American, and the wages that they earn compared to a higher income segment you might be in.
Per a quick search, that's 0.2%, not 2%. Not sure about what "housing insecure" means, so that's harder to check. Also, that is just a one-night snapshot, and many of those won't be homeless if you check back later.
The high level question of wealth concentration from new technology is an interesting question (and probably could have been just 3 sentences, since it is unanswered).
The rest of the article has some easy to read anecdotes, but it's hard to know if they are at relevant/accurate. E.g. common mistake (arguably) that I see a lot:
> In 1990, America enacted a tax on luxury consumption of goods such as expensive cars, yachts, furs and jewelry. A few years later, the tax was repealed by a coalition that included Democratic politicians worried about job loss in the yacht building industry. It’s hard to think of a more perfect example of muddled thinking about distribution. Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
Mega-yachts are money pits. A rich person purchasing a mega-yacht is probably the fastest way to redistribute a monetary supply. Taxing it has some benefit, but reduces the incentive to buy mega-yacht... Now, monetary supply and productivity/wealth are not exactly the same thing, but this seems like a basic error.
Most Americans have space to hang clothes. They don't use it, but the space exist. Sometimes it is illegal to use that space to hang clothes, but they wouldn't even if the laws changed.
So, this whole analysis strikes me as the worst of "economic thought?" The first bit of failure here is "equating well-offness to output," e.g. something that can be measured by GDP.
Then it misses the other big deal, which is the utter weirdness caused by extreme on-paper wealth inequality, where the e.g. Elon Musk numbers reach levels of literal absurdity.
Money, in a sense, doesn't matter. It's "goods and services." The big question should be, does the way we do "money" effectively help everyone trade goods and services in a reasonable way. That's the only real path to "happiness."
>>recall that central LA currently lacks the large stock of high-rise apartments that you see in cities like New York and Chicago.
The author entirely overlooks that NYC and Chicago are not in earthquake-prone areas and LA is right next to a major geologic fault system. Yes, skyscrapers can be safely built to withstand earthquakes, but it tends to be at least expensive, which is counter to solving affordability issues.
>>I favor a steeply progressive consumption tax.
This is generally pointing in the right direction, but a progressive transaction tax on every transaction, including finance and investments would be far better. Easier to track, harder to evade, far less intrusive into peoples' lives required by income tax. and the rate and difference between rates would be so low that structuring deals to 'optimize' taxation brackets would be pointless.
Just the volume of Equities + TRACE fixed income/structured + munis + real estate is over $200Trillion. A mere 3% tax on those would put the $6T US budget in large surplus. Add $1.7 Quadrillion of ovrerall payments and a 0.3% tax on transactions (yes, $3 per $1000) would also put the US budget in surplus. Make it progressive by setting tax rate tables based on transaction size, e.g., transaction <$10=0.01, <$100=0.1%, <$10k=0.2%, <$100k=0.3%, <$1MM=0.4%, =>$1MM=0.5% (plus big penalties for 'structuring' transactions to lower brackets).
Sky scrappers are expensive. A single story building is the cheapest thing you can build anywhere - only when land is expensive is it worth going up instead of out. There is value in density so we build skyscrapers anyway, but for nobody is it the most economical way to get square feet.
If we put a $10k tax on beards, that's $600 billion right there!
What's that, people might change their behaviour in response to it, in possibly unintended and negative ways? Nah we can just hand wave that away, who needs liquidity or investment.
A "high-rise" is anything over 6 stories; they aren't skyscrapers. The argument generally is for upzoning, not for setting height records, and that argument isn't impacted by seismology.
> The whole point of being rich is to get away from every single human being that doesn’t have to be nice to you.
This is false. Most rich people don't want to get away from every single human. (if they did they can find plenty of places to backpack). They want to get away from a few crazy people who stalk them.
>P.S. Can you even imagine 130 million washing machines?
>...more than three times around the Earth on the equator...
Nah, that's the wrong way to go about it. The total length of your blood vessels would also circle the earth twice, but I'm sure you'd prefer them to stay safely inside your body.
If each washer is 3 feet on a side, that's 6 square feet. You could easily stack them 4 high with an ordinary forklift. So that's around 7 square miles, or just 7 sections of a standard 36 section survey township. Where I live, there's enough farmland to fit all of them within a 2 mile radius, without disrupting much (well, unless you're a farmer). You'd nearly be able to fit all the dryers too.
> The key to higher living standards for average people is to produce lots more output, which requires more automation.
Building and deploying that automation requires capital. As a result, it's largely the people who control that capital who benefit from it, not the individual workers whose productivity is increased by it.
There were people who added value to a manufacturing process by being highly skilled welders (earning $30/hr) who can push MIG wire at 30 inches per minute. On a good day, they actually average 20 inches per minute OEE because they also need to load and unload the fixture, take lunch breaks, and so on. Those welders become (or are replaced by) weld-jig-operators, who can load a buffer of incoming parts, unload a buffer of completed parts, and replace emptied spools of wire, clean up the work area, and so on, while the $400k weld cell with a trio of ArcMate robots pushes 80 inches of wire per minute.
Yes, that's a 4x productivity gain, but does the welder now earn $120 hour? No, the new operator now gets a pay cut back to $20/hr because you can train a replacement in a week (unlike a welder, who needs years of practice to manipulate a torch that skillfully). Meanwhile, the owner of the company profits at ~$100/hr, recoups their big capital investment after a year, and rakes in the profits after that to buy another yacht, or maybe a newspaper.
> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
While this is essentially tautological, I'm not sure you can practically tax the majority of luxury consumption. Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager)[1]. All of those differences are luxuries, and many of them are informal and thus hard to tax. If we were to successfully tax all the formal luxuries (which in and of itself becomes legislative whack-a-mole), the wealthy will have a strong incentive to shift much of their luxury consumption to informal luxuries.
Plus, I find all of the focusing on "wealth tax" and "luxury tax" and such rather mystifying when we have an extremely regressive income tax in the US. The low tax rate for long-term unearned income in the US, combined with the fact that borrowing against assets does not realize any of the gains, makes effective tax rates for the 99.9 percentile much lower than the 90th percentile.
It is possible to eliminate dynastic wealth just by ensuring the losses due to inflation and taxes exceeds investment returns at the top tax bracket.
1: Or the difference in your kid applying to a college with your name on one of the buildings versus someone else's kid applying to that school
39 comments
[ 3.4 ms ] story [ 65.7 ms ] threadSo instead, imagine billions of laptops (or phones) available in store that have local LLMs installed which allows you to have intelligence-like chatbot features available with the equivalent performance of Claude Opus 4.5 or GPT-5 if not better and they are far smaller.
Thank you for telling us that efficient + performant multi-modal local AI models is the endgame; a bonus if they are smaller to fit in phones.
Sumner is somehow unfamiliar with the concept of a landlord or vacant property investment.
> progressive consumption taxes
When someone proposes one, let me know.
Vacant property investment exists, but it is a small factor in all markets.
Which could still land you squarely on the economic right.
If people had their rents cut in half, it would solve most other money problems they complain about (shy of those who will just inflate their lives into being money constrained again).
Of course this will come mostly at the expense of regular middle-class homeowners, who will see the enormous paper gains of their properties in the last 5-10 years be decimated. Red or Blue, I don't care who, hates losing money and will emphatically vote against this happening.
We should do what you say, but we should also focus on pumping out more doctors, etc.
Lower density, family and pet friendly. You know, the kinds of places that landlords live in. Not the places they are trying to force on others as "inevitable".
As one of those homeowners, I keep hoping that housing values go down because I'm taxed on the value of my home every year, and that tax burden is crushing me. My property taxes are 2% of the (appraised) value of my house. The fact that its worth twice what I paid for it is meaningless to me when the tax bill comes - I can't really sell it and cash out the 'investment' because I need somewhere to live.
It’s easy to see why: there already IS enough housing around for everybody. If there wasn’t, you would see a massive amount of homeless people. And even in the US where that might be the case - the amount of empty real estate is larger than the amount of homeless people. You could easily house them if you wanted. It’s a question of distribution.
The other reason to see why this doesn’t work is: there is no country that managed to do it. Miraculously, the housing crisis has hit all (western) countries on the planet. All of them try to build their way out of it, no one succeeds. Why?
If you just mass build, the new units will be bought immediately by the rich, and the working people will have no housing still.
This is a weird one. I don't think the problem with rich people is that they consume luxury goods. That's actually a good thing overall. Let them have their megayachts, megacars, golden toilets, etc. Someone has to build those.
I think the problem is when they use their unlimited funds to purchase stuff they shouldn't own. Newspapers, TV stations, social media, etc. That kind of power, often flaunted openly (see the bezos scandal when they literally wrote something along the lines of "if you screw with us we have wapo at our disposal") is not something that should be in the hands of one person. Or a family. That's way way way more dangerous to society than them snorting caviar off of models' bodies, or eat gold leaf you won't believe they're not burgers with truffles on top.
A progressive tax will tax them more when they buy luxury items and thus make them buy fewer luxury items.
The money taken from 1000 or 2000 rich people may be used for the rest of the 130000 ones
I would say that any tax reform that fails to reduce asset concentration will completely fail to reduce economic inequality. Let Bezos have his newspaper, if that's all he owns. Let him game the system to evade income tax. Fine. The problem is when a very small group of people own all the newspapers plus their original business empires plus their privately owned social media companies, plus their funded PACs, their psyops, etc.
All assets must be taxed directly to such an extent that concentrated assets are redistributed naturally through market forces. Tax wealth, not work.
Well, yes? That means those "someones" are not building something else instead.
The author recognizes that laundromats exist, but doesn't believe that washing machines are a luxury good (his yacht example of 60% owned by the top 1% likely applies somewhere around 60% to the top 30%). This indicates the author generalizes that high density living with shared appliances don't exist or apply to a large part of the population (that density doesn't shift statistics).
A few thoughts, instead of taking 340m people, you need to account for 2% homelessness, another 8% as housing insecure, 30%+ as high density possibly sharing at the apartment/condo building or laundromat level. A small upper 1% that outsource to services.
The infamous Mitt Romney, 47% of Americans don't pay income tax quote can be really shocking when you start thinking about the average American, and the wages that they earn compared to a higher income segment you might be in.
Per a quick search, that's 0.2%, not 2%. Not sure about what "housing insecure" means, so that's harder to check. Also, that is just a one-night snapshot, and many of those won't be homeless if you check back later.
The rest of the article has some easy to read anecdotes, but it's hard to know if they are at relevant/accurate. E.g. common mistake (arguably) that I see a lot:
> In 1990, America enacted a tax on luxury consumption of goods such as expensive cars, yachts, furs and jewelry. A few years later, the tax was repealed by a coalition that included Democratic politicians worried about job loss in the yacht building industry. It’s hard to think of a more perfect example of muddled thinking about distribution. Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality.
Mega-yachts are money pits. A rich person purchasing a mega-yacht is probably the fastest way to redistribute a monetary supply. Taxing it has some benefit, but reduces the incentive to buy mega-yacht... Now, monetary supply and productivity/wealth are not exactly the same thing, but this seems like a basic error.
Or perhaps America is poorer because they lack an outside space to hang clothes?
Then it misses the other big deal, which is the utter weirdness caused by extreme on-paper wealth inequality, where the e.g. Elon Musk numbers reach levels of literal absurdity.
Money, in a sense, doesn't matter. It's "goods and services." The big question should be, does the way we do "money" effectively help everyone trade goods and services in a reasonable way. That's the only real path to "happiness."
The author entirely overlooks that NYC and Chicago are not in earthquake-prone areas and LA is right next to a major geologic fault system. Yes, skyscrapers can be safely built to withstand earthquakes, but it tends to be at least expensive, which is counter to solving affordability issues.
>>I favor a steeply progressive consumption tax.
This is generally pointing in the right direction, but a progressive transaction tax on every transaction, including finance and investments would be far better. Easier to track, harder to evade, far less intrusive into peoples' lives required by income tax. and the rate and difference between rates would be so low that structuring deals to 'optimize' taxation brackets would be pointless.
Just the volume of Equities + TRACE fixed income/structured + munis + real estate is over $200Trillion. A mere 3% tax on those would put the $6T US budget in large surplus. Add $1.7 Quadrillion of ovrerall payments and a 0.3% tax on transactions (yes, $3 per $1000) would also put the US budget in surplus. Make it progressive by setting tax rate tables based on transaction size, e.g., transaction <$10=0.01, <$100=0.1%, <$10k=0.2%, <$100k=0.3%, <$1MM=0.4%, =>$1MM=0.5% (plus big penalties for 'structuring' transactions to lower brackets).
Not impressed with the article
Maybe you should visit Japan sometime. Does downtown Tokyo look more like NYC/Chicago or LA?
Are those Tokyo skyscrapers mostly residential or office space? What is the relative cost of land (per unit area) in Tokyo vs LA?
What's that, people might change their behaviour in response to it, in possibly unintended and negative ways? Nah we can just hand wave that away, who needs liquidity or investment.
This is false. Most rich people don't want to get away from every single human. (if they did they can find plenty of places to backpack). They want to get away from a few crazy people who stalk them.
Nah, that's the wrong way to go about it. The total length of your blood vessels would also circle the earth twice, but I'm sure you'd prefer them to stay safely inside your body.
If each washer is 3 feet on a side, that's 6 square feet. You could easily stack them 4 high with an ordinary forklift. So that's around 7 square miles, or just 7 sections of a standard 36 section survey township. Where I live, there's enough farmland to fit all of them within a 2 mile radius, without disrupting much (well, unless you're a farmer). You'd nearly be able to fit all the dryers too.
Building and deploying that automation requires capital. As a result, it's largely the people who control that capital who benefit from it, not the individual workers whose productivity is increased by it.
There were people who added value to a manufacturing process by being highly skilled welders (earning $30/hr) who can push MIG wire at 30 inches per minute. On a good day, they actually average 20 inches per minute OEE because they also need to load and unload the fixture, take lunch breaks, and so on. Those welders become (or are replaced by) weld-jig-operators, who can load a buffer of incoming parts, unload a buffer of completed parts, and replace emptied spools of wire, clean up the work area, and so on, while the $400k weld cell with a trio of ArcMate robots pushes 80 inches of wire per minute.
Yes, that's a 4x productivity gain, but does the welder now earn $120 hour? No, the new operator now gets a pay cut back to $20/hr because you can train a replacement in a week (unlike a welder, who needs years of practice to manipulate a torch that skillfully). Meanwhile, the owner of the company profits at ~$100/hr, recoups their big capital investment after a year, and rakes in the profits after that to buy another yacht, or maybe a newspaper.
Now imagine the amount of paperclips AI could make.
While this is essentially tautological, I'm not sure you can practically tax the majority of luxury consumption. Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager)[1]. All of those differences are luxuries, and many of them are informal and thus hard to tax. If we were to successfully tax all the formal luxuries (which in and of itself becomes legislative whack-a-mole), the wealthy will have a strong incentive to shift much of their luxury consumption to informal luxuries.
Plus, I find all of the focusing on "wealth tax" and "luxury tax" and such rather mystifying when we have an extremely regressive income tax in the US. The low tax rate for long-term unearned income in the US, combined with the fact that borrowing against assets does not realize any of the gains, makes effective tax rates for the 99.9 percentile much lower than the 90th percentile.
It is possible to eliminate dynastic wealth just by ensuring the losses due to inflation and taxes exceeds investment returns at the top tax bracket.
1: Or the difference in your kid applying to a college with your name on one of the buildings versus someone else's kid applying to that school