Caleb James DeLisle on Nostr: He also briefly touches on the fact that Denmark (with its high minimum wage) takes ...

He also briefly touches on the fact that Denmark (with its high minimum wage) takes value away from companies that would otherwise spend that value doing things to improve themselves - as companies do in the US. And if companies are able to take their value and use it to improve themselves, we should expect better capital allocation because all of these companies are in competition to do the best job of capital allocation. That is to say, it should make everyone better off.

Then he points out that while this IS the theory, the results do not bear it out. US companies dump their excess capital into speculative thingamajigs like AI which not only don't make everyone better off, but which are actually showing all the signs of a bubble that will not even make the companies investing it it better off.

This reveals a very important point: Every tax has a negative impact on the activity that you are taxing. So if you want to raise money for the state without doing harm, you can tax sin (cigarettes, alcohol, drugs, junk food, prostitution), OR, you can tax Conspicuous Consumption (Rolex, Rolls Royce, Private Jets, houses in wealthy neighborhoods), OR, you can tax speculative bubbles.

Taxation of speculative bubbles is a very interesting angle because - like sin tax - it discourages something that is actually bad, so the tax would be a net benefit even if you were to burn the money in a dumpster. However, distinguishing between speculative bubbles and The Future is an incredibly difficult task because every speculative bubble is predicated on a belief that said bubble is actually The Future - and taxing the wrong "bubble" will lead to a catastrophic intervention and a loss of national competitiveness.

Furthermore, taxing speculation may well be impossible as capital will simply flee to another country which has no such policies and engage in such speculation there. But it is at least worth recognizing that in as far as Denmark's high minimum wage may be considered a tax on corporate speculation, it does seem to work.