They have worked recently to implement a self-hosted tax submission system and given their rate of return while there may be some mismanagement it is one of the most provably efficient organizations in the government netting 415$ for every dollar of funding in 2024.
Isn’t that a completely bizarre metric though in this instance??! It is specifically the revenue generating arm of the government. If it wasn’t running at a “surplus” that would be very concerning indeed.
I did no verification on whether that metric is correct or not, but I would suspect the metric would be only measuring the amount of revenue the IRS "generated" from doing manual work like audits. The regular, I owe 1,000 in taxes, and I paid 1,000 in taxes. Wouldn't be considered +1,000 in that case, it would be excluded from the metric altogether. Only the additional "findings" from audits would be counted.
No the point is that if the IRS was at maximum efficiency, more funding wouldn't increase revenues because tax law is tax law: you can't market it or expand the customer base.
But if every new dollar currently produces much more then a dollar in returns, it means it's underfunded because taxes that should be collected, that by legal analysis would be planned for in budgeting, aren't.
And that matters for a great many things, but one reason is that if you pay taxes and want a tax cut then one reason you're not getting it is because actual revenues are lower then they should be due to uncollected taxes.
I'm not saying we shouldn't have an IRS, and I think IRS agents are probably one of the best ROI gov't employees possible, but 8,500 IT engineers and managers (who I have heard literally didn't even know how to code) makes no sense at all
Defunding the IRS is nothing but an effort to reduce tax enforcement. People that have relatively straightforward finances can be trivially audited in a formulaic way with data that's on hand - a lack of human auditing resources tends to benefit those with more complex finances which also tend to be the people with a lot of money who can afford to lobby for less enforcement funding.
Also for reference, in 2024 the IRS had a rate of return of 415:1, they'll obviously target the lowest hanging fruit first but for every dollar of funding received they collected 415 dollars of tax revenue that would have been missed. This is an obscenely efficient organization.
Implied in your statement - it benefits those who can create more complex financial situations. Often the complexity of the situation is largely synthetic.
I agree that the complex financials are generally intentionally created for sheltering and that complexity is only possible because of our overly complex tax code which has been made significantly more complex by tax preparer lobbyists from Intuit and others.
That “415:1” is misleading and manipulative. The target rate of recovery is ~10:1, which is roughly what the IRS actually achieves.
Audits are not an infinite money glitch. I used to work for a Federal audit agency that also recovered ~10:1. The reason we target 10:1 recovery on audits is because the return on funding additional audits beyond that falls off very sharply. Furthermore, more aggressive auditing greatly increases compliance costs which ultimately come back as costs to the Federal government, so the net recovered revenue is even less than the headline figure.
Audit recoveries tend to be about sloppy compliance, not people trying to cheat the system. People with more complex taxes are more likely to screw up the exponentially more complex compliance aspects. Auditors are mostly fighting entropy.
I'll admit - the 415:1 was pulled from an article detailing information from 2024 but the main point isn't the actual value but the fact that it's more than 1:1. When the IRS receives more funding the US government gets more money than what it is budgeting - this doesn't scale to infinity, at some point you'll have nearly complete auditing capture and more budget will just be burning money but we're no where near that point.
Putting money into the IRS is basically a free money printer for the US government and it's only deep corruption that keeps it so poorly funded.
There are substantial indirect costs not accounted for in that ratio. Anywhere close to 1:1 is a large net loss to the government. Your mental model of the cost effectiveness of audits completely ignores large second-order effects.
The Federal government has a century of empirical data on this. They set their targets accordingly, which as a heuristic is roughly optimal at around 10:1. This may not be intuitive to you. It wasn’t to me either until I worked at a Federal audit agency. Most of it actually makes sense once you understand the bigger picture.
Second order effects is where the real damage is done.
That extra tax specialist could have been an additional production line worker, which would have created volume, which would have lowered prices, which would have made inputs for other goods cheaper, etc.
It is really wild when you think at a macro level, how much value is destroyed, all due to indirect costs which are extremely difficult to estimate.
Is that 415:1 the rate of return of an audit, or the expense:revenue ratio of the IRS as a whole? I remember hearing some time ago that the expense ratio was 11% for the IRS? But 415:1 is way way less than 11%.
Captured revenue : cost to capture (could be an audit, billing for interest/fees due, etc. lots of avenues to capture revenue that is being missed).
The problem is these metrics aren't really scalable productivity metrics. If you doubled cost, it might go to 100:1, if you tripled cost, it might go to 0.5:1
Each dollar generally gets more expensive to capture.
A key point is that there are large indirect costs that scale up rapidly that are not accounted for in these direct costs. These costs show up on the balance sheet somewhere else in the government, which makes the ROI for the auditors look much better than it actually is.
This is well-understood by the Federal government. When they set their targets they fully account for the growth of indirect costs created by the audit activity that don’t show up in the ratio.
Good point, and kind of interesting in that as we keep cutting funding to the IRS, this ratio will probably get wider (which looks good, but is actually bad for what it implies).
> Get rid of sales tax, property tax, exemptions, IRAs, 401ks, short capital gains, long capital gains, medicare, state, all of that bullcrap. Annualized, non-annualized, credits for having an EV on the 4th day of the second Tuesday while being a fisherman, married and single filing differences, end all of that.
I agree with your overall point of simplifying taxes by merging more things into income tax, but some of the taxes you mentioned are levied by local governments to fund themselves. The United States has a federal system; it would be a much bigger change to centralize all of the funding.
Well, local governments (cities and towns) also have expenses -- police, fire departments, trash collection, water and sewage, roads, public works. Schools are partially funded locally. That has to be paid for.
It's theoretically possible for a local government to levy an income tax, but a lot would need to change -- much more than just changing tax rates. Employers and banks report income to the federal government (and states, I suppose, but I live and work in Texas so I don't know much about that). They would have to report that information to towns and cities too. There's also the problem of granularity -- how does an employer or bank know where someone actually lives? If you have a P.O. box in a town, do you have to pay taxes in that town? If you work in a different municipality (not uncommon!), do you have to pay taxes there too? If you have a home in one town, work in another, but spend most of your free time hanging out in a third, are you completely off the hook for supporting the third town?
You could have the federal government collect all the money and then allocate it to state and local governments, but that's a massive change in how American society works, and I'm not sure it's any less complex in the end. Some of the complexity in the tax code (e.g. different levels of capital gains tax) is a policy choice, but some of it reflects the complexity of the real world.
I tend to agree with this. The logic should be the same with different rate tables for each taxing body. What I don't want though is the Fed govt being the collector and distributor of all the funds. They already weld too much power with their various funding influences for transportation, healthcare, etc. The states and local govts shouldn't need to pander so heavily to the federal govt for funds.
It seems efficient and simple that way. But you don't want federal politics playing that much of a part of your local life. And you don't want your local politicians to have to pander to the federal levels just to get what they need or what is theirs. I think this would result in disaster as the federal politicians are too out of touch with local needs.
If we had a single formula for taxes, then each taxing body could have their own rate table to apply to it, but still collect it directly - then I think that would be a better approach.
For simplicity sake, take income tax at flat rates. Federal may be 20%, your state might be 10%, city might be 5%. Maybe my state rate is only 5% and you might want to move here, but nationally we all pay the Federal 20% rate.
By definition, a federal system does prevent a single point of collection and distribution. If states could not or did not collect taxes on their own authority, it would not be a federal system. States would just be adjuncts of a national government.
Which misses the point. If the point is to reduce the number of taxes, having the federal government collect 10 different types of taxes instead of state governments collecting 7 types of taxes won't change all the different taxes we have.
There is no singular place we can change how many different taxes you pay. There's... thousands? Tens of thousands? Once you factor in city, county, state, federal, special districts, etc.
Taxes aren't just there to provide an income stream to the government. It's also a mechanism to guide behavior via incentives (or punishment). Right or wrong there we're providing an incentive to hold assets longer, or use less fuel or buy from domestic producers etc.
I wholly support drastically simplifying the tax code - I disagree with the extent to which you'd simplify it since there is a very good reason to have property taxes and some of the sin taxes have notable social benefits. Additionally, using tax rebates as an incentive to install home solar is an excellent initiative for the environment. Our tax code should be pretty simple - it shouldn't be a single line (or even multiple graduated lines).
Until we simplify the tax code, though, can we properly fund the IRS to actually audit it? I think my thing (funding the IRS) is a lot easier to do quickly than your thing (completely rewriting how the government garners revenue) and I don't want perfection to be the enemy of the good.
That's an excellent criticism of the parent and why we really do want a somewhat complex tax code even if it should be far simpler than what we have today.
We also want to balance regressive and progressive taxes, we do want to influence some behaviors through taxes that provide positive social outcomes - there are several really good complexities to have in our tax code. Just not as many as we do today.
Yeah so much of the complexity is around incentivizing or disincentivizing certain things; there's the mortgage interest exception because it's classified as a Good Thing (tm) to be encouraged/made easier and we have liqour/cigarette taxes because it's a Bad Thing we (societally) want less of.
So much of that complexity doesn't even really matter to most people anyways, there are a handful of credits most people may qualify for and then the standard deduction is more than something like 40% of people's itemized deductions. And those credits are usually one time events around particular events/purchases that are relatively well advertised. The most annoying one I've had is when the EV credit required me and my wife to file separately to qualify for.
It's so silly to think the entirety of the tax problem can be solved with one simple straight forward fix like the one proposed here. It's imo one of the peak examples of "broken tech brain" where people think the whole complexity of a situation can be solved with "one neat trick" kind of solutions. Far from exclusive to the tech world but I do see a lot of it from tech.
The very first things you list aren't related to the IRS at all. They're local and state taxes, and to get rid of those would require a radical rewriting of the Constitution itself. Not to mention it would destroy all fire department, county hospital, school, city park, state park, etc. funding.
Of course they're not, but this is how you smell someone that doesn't really want to enforce paying taxes, but just wants to evade them as much as possible.
I don't think that's fair. The US has so many administrative layers with taxing powers - federal, state, county, and municipal, and in many cases administrative bodies also charge massive filing fees, and courts charge large fees to finance themselves because they're consistently under-funded by legislatures.
So Americans get taxed a lot at many different levels of activity. The cognitive load of having so many different points of taxation is annoying and exhausting to a lot of people. It makes household budgeting a lot more work than it really needs to be.
But it is this way because of the Constitution
They maybe we should change that and have a simpler system with much less complexity. Dismissing people who object to the painful complexity of the US tax regime as 'evaders' is npt insightful or helpful.
> maybe we should change that and have a simpler system with much less complexity
Wholeheartedly agree, but I see the root cause of the issue being income tax itself. As soon as you tax income, you'll go down and endless rabbit hole of what's fair to tax, how much, what kind of income, investment income vs wage income, percentage vs flat rate, etc...
That gave us the mess we have.
I like the idea of consumption tax exclusively (would require an amendment). You're taxed on your purchases.
It's easy to drive behavior (more tax on some things... tax on cigarettes, yachts and private jets) and easy to make more fair (exclude grocery staples).
Consumption taxes are almost always regressive and improperly place the majority of the tax burden on the poor - they're good to have (especially the sin taxes and tax discounts on specific encouraged behaviors) but they should be coupled with taxes on wealth (aka property) and income. And these taxes should be somewhat complex - just not to the extent we have today.
This misses the point that tax exemptions are the way politicians campaign for voter blocks. Having different kinds of taxes makes it easier to target a voter blocks more precisely.
Why would you simplify the tax code if the whole point of the tax code is to create loopholes so you can pay way less taxes than the public would vote for?
The tax code exists for Welfare Queen Billionaires like Elon Musk.
Well see, you actually missed the catch that by eliminating everything except income tax people like Elon wouldn't have to pay any tax, it's even better for them. He's not getting a W-2, virtually all of his income is actually capital gains or similar.
Well it's a retort on the 2022 IRA bill, which increased the IRS budget by 80 billion over 10 years, and paved the way to hire 87,000 people. There has been a lot of hiring recently so it's hard to tell one thing from another but this isn't so much of mass layoff as an attempt at returning to normal.
The baseline was there was significant tax evasion by high net worth individuals. The staff up was to counter that, staffing down puts us back at reduced enforcement.
Someone has to pay to operate a nation state, you can’t borrow forever to fill the gap and there’s nothing left to cut. Roughly the bottom 60% of Americans do not make enough to have a federal income tax liability. So, we can kick the can on the top 40% paying until the bond vigilantes make the decision for the US.
If you recall these were not just accountants but agents who carry guns etc.
I see this as very similar to the ICE situation. Biden has loyalty and power in IRS and so gave it money to help him police. As the government gets more corrupted I think we’ll find more agencies weaponized like this.
Can you provide proof of this “loyalty and power” at the IRS to Biden mentioned? Because without proof, it sounds like a “deep state” conspiracy theory without evidence.
Actually no. Did you notice I’m criticizing both administrations?
The similarity to ICE funding is about the misuse of agencies as places to stock resources for your party.
> You’re shifting the discussion to organizations being political
The article suggests that a bunch of IRS people got cut. The missing context is the bunch that got added at the end of the Biden administration. Without considering the 2022 bill, we can’t tell the delta.
Are you suggesting either decision is not political?
It isn't, no one is buying code on it's own - but it's a component of the product. I dislike the phrasing above since it assumes the two are distinct things.
AI also led me to experiment a bit more. In my case it helped remove the barrier to getting that initial bare-bones skeleton of code in a new environment by helping setting up libraries and a compile chain I was unfamiliar with and then giving me a baseline to build off of. Did you find that AI helped you evenly all the way through the experience or was it more helpful earlier or later on?
It was probably most helpful early on when there was lots of code to write and stuff to configure. Context is an issue as time passes. But it's still quite helpful for tweaking things/adding features later on, as long as I provide it with the necessary context/point it to the right files to read.
It has always been my opinion (and born out by our statistics internally, when counting self-review in the form of manual testing and automated test writing) that reviewing code (to the level of catching defects) often takes more time than actually building the solution. So I have a pretty big concern that the majority of AI code generation ends up adding time to tasks than it saves because it's optimizing the cheap tasks at the expense of the costly tasks.
It also screws up code smells, disguising what used to be a "this looks weird, better investigate more in-depth" structure into something easily overlooked. So you have to be on guard all the time instead of being able to rely on your experience to know what parts to spend the extra effort on.
Absolutely! When you review code you need to understand the problem space, the thought process that created the code and the concrete implementation. The second step has always been hard and AI makes it a magnitude harder IMO. Writing code was never the hard part.
as much as you or i may be against it, inevitably AI coding will move away from human review and toward more automated means measuring program correctness
this was already happening even before AI - human review is limited, linting is limited, type checking is limited, automated testing is limited
if all of these things were perfect at catching errors then we would not need tracing and observability of production systems - but they are imperfect and you need that entire spectrum of things from testing to observability to really maintain a system
so if you said - hey I'm going to remove this biased, error prone, imperfect quality control step and just replace it with better monitoring... not that unreasonable!
I'm actually all for automated measures of program correctness and I think that manual testing is the last resort of tight budgets outside of highly complex integration issues. Adding more automated test cases that are built in to the CI pipline from the unit level to the highest levels (as long as they're not useless fluff) usually ensures a much lower level of defects. AI can help with that process, but only if we're diligent in checking that it isn't just building pages and pages of fluff ineffective tests - so we still end up needing to check the code and the tests that AI has written and I am still concerned that that ends up being more expensive in the long run.
I gain comprehension through the authoring process. I've always been weaker on the side of reviewing and only really gained an understanding of new tooling added by coworkers when I get to dig in and try to use it. This is absolutely a learning style thing and I have ADHD and have known since high-school that I am more engaged in the practical and have trouble with dry lecture style teaching - I have even excelled in pretty abstract and theoretical fields but it takes trying to work through problem solving, even if those problems are abstract and hard to mechanically represent.
So I am in the same boat, AI can write some good skeleton code for different purposes so I can get running faster but with anything complex and established it serves very little benefit. I'll end up spending more time trying to understand why and how it is doing something then I'd spend just doing it myself. When AI is a magical fix button that's awesome, but even in those circumstances I'm just buying LLM-debt - if I never need to touch that code again it's fine, but if I need to revise the code then I'll need to invest more time into understanding it and cleaning it up then I initially saved.
I'm not certain how much other folks are feeling this or if it's just me and the way my brain works, but I struggle to see the great savings outside of dead simple tasks.
It would be pleasant to know a bit more about the whole of what was reported. If this system reported 24 potential vulnerabilities of which thirteen were legitimate that's pretty excellent, if it only reported these twelve then that's astounding - but we don't know how many false reports were filtered through either by the OpenSSL team or by the folks running this agent and the primary issue.
Yea, it's fricken cold. Vermont internal combustion buses were extremely unreliable already and would struggle in the extremely hilly environment as soon as there was ice. Even Williston is too much for buses to be a reliable year round transit option.
That said, relying on a technology with a temperature requirement anywhere north of -10c was a foolhardy decision.
> That said, relying on a technology with a temperature requirement anywhere north of -10c was a foolhardy decision.
There was no temperature requirement when they were purchased. Now it seems likely that New Flyer will be sued.
From the article:
Clark also explained that the five electric buses were “operating well” until November 2025 when the batteries “were recalled for fire hazard.”
The recall prompted a software update from New Flyer to “decrease the likelihood for fire” that “included only allowing the bus to charge to 75% and to not allow charging when the battery is below 41 degrees,” Clark explained.
“Previously we could charge in any temperature to 100%,” Clark said.
You're splitting hairs between a turd and a polished turd here.
Throw air actuated chains on like every snowy municipality already does for their fire trucks and school busses and call it good. This solution is one every regional transit authority that deals in snow is already aware of and familiar with and it doesn't matter what your source of motive power is.
I looked up the specific bus in this article and we don't need to have an argument about this because the New Flyer buses involved don't have torque vectoring and have 1 central motor.
The drive is nearly identical to a regular diesel bus with an open differential, except it doesn't work in the winter.
The problem is that we'd all blocklist advertisers and then they'd all cry. It's like how most mobile distros don't allow you to control relative app volume - if it might hurt ad bucks it can't be allowed.
The ad industry underwrites the consumer tech market. That's why you can buy a SmartTV for like 100 bucks (or whatever, I haven't bought a tv in like 10 years knock-on-wood).
My plan to buy a TV is to get one that can be kept offline, or one that can be made able to stay offline through flashing or dismantling into its very core elements.
Dismantling it would probably ensure it's ugly af, but maybe if you try to go for one of those TV-in-a-frame things it might not look hideous.
Not sure how common it is now, but based on repair manuals my TV's wifi is provided by a standard m.2 wifi module and can be trivially removed. That wouldn't stop them from changing the TV's OS to nag or otherwise disable itself afterwards but the hardware change is about as trivial as it could be.
Now why the disable wifi option isn't available on the TV when it appears in the user manual is another matter...
Or you can either do what I do and buy an old TV. I have a nearly 20 year old plasma that looks great and isn't gonna listen in on me. If you absolutely need a higher resolution than 1080p or need an OLED display, you can buy them as "digital signage" (though, usually with a pretty high markup)
All the people with money would lobby against content categories because then large mixed category sites like Reddit or Twitter would have to either separate their app, or have the ability to send additional content headers based on content tags per piece of content.
Legally, since pornography still doesn't have a true definition in the US, someone would have to define the categories as well, and then the hundred million free speech fights would begin.
Your vision is the correct one, in my opinion, "adult content" headers would be an easy lift for web technology. But the ad agencies and information agencies (often the same) are spending all of the money to make sure nothing like that happens.
I've seen numerous apps that do already provide content categories without separating apps. NSFW/SFW is the most common, but I've also seen ones that allow you to opt-out of gambling or alcohol ads.
Heck no - I own a Samsung purely to continue to have access to Sound Assistant (to enable individual app volume control without rooting my device).
I just want everyone to be clear on why it isn't happening.
This is also the same reason why early versions of Android had incredibly fine-grained permission controls that was stripped out... can't have users blocking inter-app marketing key coordination after all.
They’ve proven themselves to be bad actors with no moral compass. No different than street drug dealers, casinos, traffickers, or any other predatory industry. They should’ve regulated as such.
I don’t have any problem with old-timey “Dishsoap Brand Dishsoap sponsored this content. They want you to know that a dish isn’t clean unless it’s Dishsoap clean!” Type ads. Much beyond that should no longer be tolerated.
> I don’t have any problem with old-timey “Dishsoap Brand Dishsoap sponsored this content. They want you to know that a dish isn’t clean unless it’s Dishsoap clean!” Type ads. Much beyond that should no longer be tolerated.
I think the only advertising I've knowingly listened to was a Privacy.com sponsorship on The Modern Rogue. Now been a paying customer for years and they have been mostly great. I think that sponsorship was back in, like, 2015 or 2016. Oh how times have changed.
(I'm sure there are thousands of subconscious influences that I have no idea about, though. Maybe a few radio ads put a brand in my mind for something so I didn't search for alternatives. I don't listen to broadcast radio anymore though.)
Job sector growth (after revisions down) has been almost entirely within the healthcare industry which is quite unsustainable. We can't all get rich being a middle man between the doctor and our neighbors. Outside of that sector we're seeing economy-wide shrinkage and stagnant wage growth with a decrease in real wages relative to inflation.
This is a recession - it will be a full-on depression if we get a doveish Fed chair... it might be one anyways, we'll need extremely adroit action to recover into a healthy economic state.
But hey, DOW go up and that's all we care about, right?
> We can't all get rich being a middle man between the doctor and our neighbors
I'm not familiar with the healthcare sector. Is this where the job growth is?
The country is getting older and I expect there would be a lot of demand for non-AI-replaceable nurses and elder care. Many of those workers have also been deported or scared out of the country.
> I'm not familiar with the healthcare sector. Is this where the job growth is?
Real world, less so; HN-focused areas, absolutely. Nearly every mediocre, tech-focused healthcare start up is just a money siphon, no matter how many times their founders talk about “disruption”.
In actual healthcare, there are massive nursing shortages, and lots of need for people doing actual, hard, brick-and-mortar work.
Healthcare job increases should not be unexpected as the country ages, deaths outnumber births in 21 states (as of this comment), the demand for care will only grow over time.
> As of 2024, 18% (61.2 million) of Americans are 65 or older, according to Census Bureau data. The national population over the age of 65 has more than doubled since 1980, with three-quarters of that growth occurring in the 21st century. The 65 and older group grew by more than 26.2 million people, a 74.6% increase, during that time.
> The number of Americans ages 65 and older is projected to increase from 58 million in 2022 to 82 million by 2050 (a 42% increase), and the 65-and-older age group’s share of the total population is projected to rise from 17% to 23%. The U.S population is older today than it has ever been. Between 1980 and 2022, the median age of the population increased from 30.0 to 38.9, but one-third (17) of states in the country had a median age above 40 in 2022, with Maine (44.8) and New Hampshire (43.3) at the top of the list.
It is very unlikely the work done by CNAs, RNs, physical therapists, and others providing this population care can or will be automated.
That top graph has been shared a lot but its a somewhat disingenuous display of data. It's true that lots of growth has been healthcare in the last 2 years, but that doesn't mean zero growth elsewhere, you can see eg construction growth on the chart, which is reflected in the fact that construction is seeing all-time-high employment right now:
And if you look at something that's "flat" like transportation, its still essentially at all time highs right now, its just now declining slightly, but its on the heels of major growth: https://fred.stlouisfed.org/series/CES4300000001
Now if you look at one that's negative on the graph, like retail trade, and zoom out:
Serious contractions in these things would be much more worrisome, but this data is basically fine. Some losses may just be temporal corrections from all time highs, like what happened to software jobs at the end of ZIRP (though Software now has separate problems to solve wrt job market).
To be fair, the healthcare employment flows are small (1.6M) compared to the total employment stock (160M+ people). And you would expect the healthcare labor supply to increase to match the bulge created by the baby boom. I don't think this means we will all be a healthcare middle man though; it assumes this large flow is permanent, and overstates the fraction of the labor stock.
The Trump clan literally does not care. The most pressing issues are to further legalize crypto so that the whales (including Trump's World Liberty Fund) have an exit. So there is a family/industry crypto conference at Mar a Lago while the economy is crashing:
Because it's a funny money financialization bubble that seeks to perpetuate irrational exuberance as long as possible without regards to fundamentals or externalities.
I mean, even ignoring the recent GenAI narrative, vast portions of the economy have already been significantly automated for decades.
Additive Manufacturing, industrial robotics, the Internet, and the proliferation of computers had already made large portions of manufacturing and low skill white collar jobs redundant by the mid-2010s.
Furthermore, the brutal reality is most businesses can generate revenue growth just by concentrating on the 90th percentile and above of households [0], (edit: or at best the 70th percentile of households of income [1]).
For example, despite all the love Costco gets on HN - the reality is it only targets customers within the top 50% of households by income [2]. You may delude yourself into thinking that you are a thrifty underdog when you shop at Costco, but the reality is most Americans cannot and will never be able to afford Costco, and Costco doesn't want or need their business.
A K-Shape Economy is actually the historical norm.
This is my suspicion. I imagine, if you don't care about the majority of the population, you might as well reduce the economy to circular transactions between corporations and between 1%ers and the businesses catering to them.
Circular Transactions mean something else and are orthogonal to this conversation.
That said, the reality is that the 70th percentile of household income nationally is a little over $130K [0] and the US is a country with a population of around 341 Million people.
Therefore, you can have a self-sustaining consumer market with around 100 Million Americans who are members of households earning above $130k a year - you would end up with a significantly larger TAM than targeting the bottom 70%.
Most skilled (SWE, Accounting, Law), semi-skilled (Automation Engineer, Mechanic), civil service (Police, Teachers, Local government employees, Military), and union employees all marry people within this strata and remain in that strata.
Doesn't this mean you get siloed economies? That is, the people below the 70th percentile have their own (maybe multiple) ecosystems? Quite similar to india1,india2 and india3 in the late 2010s. This should bring about income mobility right?
Exactly! And yes - you are seeing the developing of a concept similar to India or China 1/2/3 in Western markets now.
The reality is, America1 or France1 has tastes and sensibilities closer to India1 or China1 instead of America3. As such, there's no point targeting America3 or France3, because it doesn't dramatically grow your TAM the same way India1 or China1 could.
This is why Walmart and Amazon began pivoting heavily into the India and China consumer market in the mid-2010s.
The India 1/2/3 concept that Blume Ventures came up with is a modified version of a similar mental model we used to analyze China back in the 2000s and 2010s which itself is was forked from the principle of market segmentation.
I guess, the idea is that you cannot target both America1 and America3 with the same product. Take into account that America3 doesn't have a lot of disposable income in the first place, and going after a similar target audience in another country becomes a much more sensible choice than trying to expand into a different audience in your own.
> What's a reason that wouldn't also apply to india2,3?
If I understand correctly, it would also apply to India2-3, that's why nobody's proposing that.
It's the same principle why India1 doesn't target India2 or India3 - it negatively impacts brand positioning for marginal gain.
That's why you find different companies targeting different subsegments of a market globally.
Additionally, we do live in a globalized world, so a brand that is at the lower rung in one market may try to upscale their value by targeting the upper portion of another market. You see this with Walmart which targets America2 but uses a different strategy to target China1 (Sam's Club China) and India1 (Best Price, Flipkart).
Conversely, a China1 or India1 brand can also try and successfully build market share in America2 and America3 in a manner that an America1 brand wouldn't want to do due to brand prestige implications. This is why you see SHEIN and Temu's popularity amongst America2 and America3 or Wellspun becoming the primary supplier for textile goods for Walmart and TJX.
Everyone loves to talk about neuromancer but missed when gibson went on to write a half dozen even more prescient books about exactly this process and its eventual consequences.
I personally am thankful to Gibson, and some other cyberpunk authors, for the ample warning they gave; many things ended up prescient. (Not that I heeded that warning enough, alas.)
> Additive Manufacturing, industrial robotics, the Internet, and the proliferation of computers had already made large portions of manufacturing and low skill white collar jobs redundant by the mid-2010s.
I think a much more realistic explanation than robotics and 3d printing is the outsourcing of the social and environmental costs of industrialization to countries willing to bear it, like China, Vietnam and Mexico.
Containerized shipping, email, and computerized logistics have made globalization efficient, and therefore inevitable.
Low skilled manufacturing had already left the US by the early 1990s with stragglers leaving by the early 2000s.
Heck, I used to live in LA as a kid at that time in the 90s and 2000s and the sweatshops (yes we had sweatshops) sewing clothes for Gap were staffed by undocumented Mexican, Korean, Thai, Chinese, and Vietnamese migrants in the Fashion District.
On the other hand, even highly paid manufacturing segments like automotive had already normalized industrial robotics by the early 2000s [0].
Basically, income mobility was already dead by the 1990s [1]. The difference is most Boomer HNers were insulated by that because it is clear almost everyone on HN who grew up during that era grew up in a 50th percentile and above household back then and wasn't the head of a household in the 1980-2005 period.
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