September 5, 2006
From the desk of Jane Galt:A representative sample of leftish comments on my envy post would go something like this:
"hahahahahahaha Jane Galt is a total retard! I don't even have to explain why she's such a retard, because obviously if she thinks that beauty is anything like wealth, she's a total [expletive deleted] retard! hahahahaha!!!""Wow. Jane Galt thinks that if I want to redistribute wealth, I also want to scar Cindy Crawford's face. No wonder libertarians are evil."
"Jane Galt is totally intellectually dishonest. She completely misrepresented Brad De Long's point in order to further her own selfish, horrible ends."
"Why can't we put libertarians in camps again?"
Let's see if we can't explain why these are not adequate, or even interesting, responses to what I wrote. Sadly, I'm willing to bet a fairly hefty sum of money that almost none of the lefty bloggers who linked to it originally will link to my attempts to rectify their misunderstanding. Because after all the point of blogging is not to have an interesting discussion; it is to make fun of people who don't agree with us, in the company of like-minded companions who will reinforce our conviction that other opinions are risible. But we'll know, won't we, dear reader. And the important thing, of course, is that we all agree . . .
Anyway, a lot of the defenses I saw of Brad DeLong could be paraphrased as "You misread Brad. Brad didn't say what you disagreed with; he was actually saying something incredibly stupid."
Here is roughly what I took Brad to be saying:
Human beings are primates. Primate tribes tend to be intensely driven by status competition. In America, a large component of that status competition centres around the accumulation of wealth, and the spending of that wealth in such ways as to demonstrate your riches (and taste) to other people. Because we are primates, that status seeking is, at least to some extent, a zero sum game; if we all had BMW's, they would cease to be a marker of status. Zero-sum games are ugly, not only from an economic perspective, but from a moral perspective; I can only enjoy higher status by making someone else worse off.Much of the utility that rich people derive from being much wealthier than everyone else comes from the fact that everyone else is not that wealthy. Therefore, their enjoyment of their increasing wealth comes, in some sense, at the expense of the poor, even if the poor are not materially worse off.
Now, there are actually a number of problems with this, which some other bloggers have raised:
1) Much status comparison is localised. Rich people don't compare themselves to the folks in the housing project ten miles away; they compare themselves to their neighbours. The poor, likewise. All the upper middle class people I know, including ones who make no money, like journalists and academics, believe that the working and middle classes secretly envy us our high social status. All I can say is, having recently spent several years at a working class job, if this is true, then the working classes must be extraordinarily good at keeping secrets.
2) Much status comparison derives from the fact of the income distribution, not its breadth. Movies about rich people in the 1950s, such as "A Place in the Sun", show a smaller material variance, but the social divide between haves and have-nots is if anything larger than it is now. In this sense, it doesn't matter if the richest man in America has $4 billion or $4 million; we envy him for being the richest man in America, not for having a 20,000 square foot Playstation-cum-mansion.
3) People delude themselves (or to put it more charitably, improve their net psychic wealth) by creating alternate status hierarchies they can dominate. I have the most famous female-run economics blog. In order to make myself happy, I have managed to convince myself that this matters.
Nonetheless, I accept that there is a broad dominance hierarchy in our society, and that wealthy and powerful people are on top of it. I believe that 99.99% of people in the world are happier when they are higher on this dominance hierarchy, and unhappier when they are lower. I think that there is a cluster of unlovely emotions surrounding status seeking, which we might call envy and gloating. These emotions are sufficiently complicated that they may shade into more terrible ones, if unchecked, as well as those we recognize as noble, like aspiration. Mr Delong argues in a follow-up post that the emotion enjoyed by the rich is spite, and that this justifies taxing the bejeesus out of them.
I beg to differ, both on the diagnosis and the cure. Most rich people don't spend enough time thinking about the poor to maintain spite's emotional intensity and strong other-focus. The people they want to spite are Ted in the New York office and Susan from Pilates. I have never met any affluent people over the age of 20 who deliberately flaunt their wealth to, or make fun of, the poor to their face; that creature exists only in the movies.
Given that Mr Delong is at the apex of a group I once described as "one of the most radically inegalitarian societies to be seen since Louis XVI fled Versailles", I am surprised at his readiness to attribute such dreadful motives to the rich. I've had a taste of both academia and investment banking. The dominance hierarchy of banking is so strong that if you could get the bankers out of their pinstripes for an hour, you could have filmed your average pitch meeting for the Discovery Channel. Yet when it comes to hyper-obsession with invisibly fine status distinctions, no banker could hold a candle to the average academic--or journalist, for that matter.
I am quite positive that Mr Delong's enjoyment of his prestigious professorship is substantially augmented by its position high in the academic firmament, twinkling light years above adjunct professors at Missoula Central Community College. Would he describe that emotion as spite for those less fortunate than himself? For after all, the existence of a pyramid for them to be at the top of is what makes him and his colleagues successful academics, rather than cranks with an odd hobby of publishing monographs almost no one reads. Should we punish them for their spiteful indulgence? Or should we recognize that it is normal, even laudable, to desire success?
It is not that I admire the rich for their gloating, or disdain the poor for their envy. I think that both are distasteful, in exactly the same degree, because they are both exactly the same emotion: the rich gloat, and the poor long to be entitled to gloat. The fundamental desire--to Lord it over others--is exactly the same; it is not edified merely because the possessor is unsuccessful at it, any more than the attempted murderer is on a higher spiritual plane than the fellow who actually managed to complete the act.
This is not an argument against redistribution per se, as some of my readers erroneously assumed. I think that there are good reasons to redistribute income (or in some cases, at least reasons that I would be prepared to debate): preventing hunger, cold, and premature death; maximising the opportunities that children have to lead a rich and satisfying life; giving a helping hand to those who have been brought low by fate, or even their own earlier bad decisions. I was not arguing that disfiguring Cindy Crawford was in any way equivalent to these; it is not.
Rather, my metaphor was aimed at a specific kind of redistribution: that which is less interested in making the poor better off, than in making the rich worse off, so that they don't make the rest of us look bad. Or as Brad Delong said:
Surely public policy should weigh the spite-generated utility the rich gain from their conspicuous consumption as worth less than nothing?
And in that case, the wealth hierarchy is precisely equivalent to the beauty hierarchy, morally speaking: it is a zero sum game in which a lucky few feel better only when the others feel worse. So to my mind, anything that applies to the enjoyment of wealth by the lucky few applies equally well to the enjoyment of endowments like beauty, athleticism, and intelligence. I am unable to construct a moral argument for cutting down the tall poppies of the income distribution that doesn't apply equally well to conspicuous flaunting of one's pulchritude, physical prowess, or brains. Possibly better, in fact, because beauty and athletic ability don't generate the kind of massive positive externalities that the pursuit of wealth does--even when that wealth is spent on private jets and other positional goods. And there are a lot more wealthy people who started out poor than there are beautiful forty year olds who were horrid-looking at eighteen.
Moreover, even if I wanted to cut down the tall poppies, given that we are and shall remain primates for the foreseeable future, before I start removing wealth from the status competition, I'd like to know what criteria will replace it. I mean, it would be nice if we all started competing on the basis of philanthropy, gourmet cooking, and poetic ability . . . but I think it's rather more likely that political power, physical strength, beauty and style, ancestry, exclusivity of social circles, and mastery of the really gratuitously nasty putdown will become more common metrics.
But that said, I don't want to cut 'em down. I think status seeking, for all that I engage in it, is a depressing game made worthy only because it occasionally has worthwhile side effects. I also think that evolution has made it unfortunately inescapable. If you want money to help the less fortunate lead fuller, richer lives, we can talk. But if you want me to help you shrink the income distribution merely because you have an aesthetic objection to Larry Ellison's harrier, I'm afraid we'll never see eye to eye.
Very nice post. If it had been posted as a comment on DeLong's blog, he surely would have deleted it and banned you for life.
Posted by: Jack on September 5, 2006 6:53 PMJust wanted to be the first to agree :-)
Well said.
Posted by: Tim Lundeen on September 5, 2006 7:14 PMYou too, Jack? I actually get a kick out of spending the afternoon at DeLong's blog engaged in a rousing discussion, getting all kinds of responses, knowing everything I say will be deleted by 5pm, and letting my opponents references speak for me. Its kind of a status thing - I win :)
Posted by: Randy on September 5, 2006 7:21 PMLarry Ellison has a Harrier?
Seriously, this:
"It is not that I admire the rich for their gloating, or disdain the poor for their envy. I think that both are distasteful, in exactly the same degree, because they are both exactly the same emotion: the rich gloat, and the poor long to be entitled to gloat. The fundamental desire--to Lord it over others--is exactly the same; it is not edified merely because the possessor is unsuccessful at it, any more than the attempted murderer is on a higher spiritual plane than the fellow who actually managed to complete the act"
was a truly splendid piece of writing. A religious leader who shall here go unnamed said something similar -- that envy and pride are two aspects of the sin of "covetousness."
Posted by: TheProudDuck on September 5, 2006 7:33 PM> Much of the utility that rich people derive from being much wealthier than everyone else comes from the fact that everyone else is not that wealthy.
Great post -- the above-quoted drivel is one of the biggest piles of crap I have ever seen on a blog. It's such a caricatured Cruella DeVille view of the rich that it could only have come from a far-lefty. Do they really think rich people sustain themselves ("much" of the utility) by thinking that they're richer than other people? Retarded.
Posted by: brett on September 5, 2006 8:02 PMOn a related note, in the event that the previous discussion of whether diminishing economic inequality even if it involves only diminishing the wealth of the rich would be a good thing, I think a better argument than DeLong's "spite" argument lies not in the (conspicuous) consumption patterns of the wealthy, but their investment patterns. I submit that concentration of wealth in the hands of a few people whose every conceivable want is already satisfied, increases the risk of asset bubbles, with the potential to disrupt the economy systemically.
Inflation has been defined as too much money chasing too few goods. When the excess money is evenly distributed throughout the economy, the result is that consumer prices rise (because a good chunk of the average person's income is expended on consumption). The metrics used to measure inflation are based largely on consumer prices, so if monetary policy is too loose, it shows up quickly, and if central bankers act rationally, they restrain the growth of money supply and thus restrain inflation.
With truly wealthy people (as opposed to the debt-laden status-seekers infesting Newport Beach, making life miserable for us normal people who just grew up hereabouts), there's only so much one can consume. Gatsby's shirt closet notwithstanding, the marginal utility of even really nice stuff diminishes at some point; there comes a point when an additional Aston-Martin doesn't make you any happier. (I think I'd be happy with three or at most. And as long as I'm dreaming, I'd like a pony.)
What happens to the rest of rich people's money? They generally don't stuff it in mattresses. They invest it. Ordinarily, that's even better than when money is used for consumption (either by the rich or by others), because it can be used to increase capital and thus productivity, "making the pie higher" for everyone. But when money is too loose, the oceans of liquidity in the pockets of the rich go sloshing around the financial world in search of yield. Just as too much money chasing too few consumer goods leads to consumer-price inflation, so does too much money chasing too few good investment opportunities lead to asset-price inflation -- in other words, to speculative bubbles, where asset prices cease to be justified by their discounted future yields, and appreciate based solely on a temporarily self-fulfilling expectation of future appreciation.
That's all well and good, when the wealthy content themselves with selling each other stocks, bonds, and Picassos. But this time out, they've turned to an asset which is also an essential consumer good: housing. This involves not just the proverbial "flipping," most of which is undertaken by economically illiterate realtors or other amateurs who mistake the effects of an unprecedented boom market for the results of their presumed personal genius, but also hedge funds pouring trillions into purchasing mortgage-backed securities and derivatives whose risks would, in other times, have had prudent investors running shrieking for the doors.
The result is a gross disconnect between housing prices and incomes. To afford a $750,000 house, one traditionally needed about $135,000 in income, assuming a 6% interest rate. In Orange County, California (heart and facilitator of the housing bubble), $750K buys you a tumbledown three-bedroom rancher in a so-so area. The number of houses for sale for $750,000 and above vastly exceeds the number of potential buyers with six-figure incomes.
The market will eventually adjust, with much weeping and wailing and gnashing of teeth by ordinary people who, afraid of being "priced out forever" (and may every realtor who ever uttered that phrase be drawn and quartered) saddled themselves with mind-boggling amounts of debt that they will not possibly be able to service when their loans' low introductory rates re-set to fully amortize the principal. (Until then, there is plenty of annoyed muttering and gnashing of teeth from those of us who have the choice between dealing with the inconvenience of renting a family house, and buying a home at the height of a massively overinflated market.)
So there's the one conceivable justification I can think of for reducing the wealth of the wealthy as an end unto itself. Of course, it would be a horribly imprecise response to a problem that could probably be dealth with more effectively by central-bank policy, more responsible lending standards, and tax penalties for outright speculation.
Posted by: TheProudDuck on September 5, 2006 8:04 PMClayton Cramer addressed this issue today in the context of income mobility here then asked this question:
Let's do a thought experiment. If tomorrow, we could wave a magic wand, and every poor person in America had health insurance, medical care, a nice middle class home, a new car, and a full refrigerator, would that be a good thing? I think it would be wonderful. But to hear the income inequality whiners talk, if the top 10% of American families also became billionaires at the same time, this would be a bad thing.
I don't think you can blame bubbles on the rich. It is when the masses pile in that the bubbles occur. The rich are usually cashed out before the pop.
Posted by: Will C. on September 5, 2006 8:21 PMI'm not at all convinced that the current bubbles are the result of "too many rich people". First of all, I seem to recall some guy getting a Nobel Prize for proving that inflation is always and everywhere a monetary phenomenon, caused by too much liquidity creation. Given the tidal wave of liquidity unleashed upon the world by the Federal Reserve Bank since 1987, and similar issuance by the Bank of Japan all through the 1990's & continuing to this day, it seems unreasonable to fret about a few billionaires here and there, when central bankers routinely dump multiple billions of dollars monthly into the economy via certain major banks ... and those banks, via the miracle of fractional-reserve banking, then proceed to multiply that liquidity by some stunning number, loaning it out to anyone capable of fogging a mirror.
Thus it ain't the rich that have created stock market bubble(s), followed by the current housing bubble (now in progress of popping), to be followed by something else. No, it is the central bankers in general, and Alan Greenspan in particular, who have created the current unstable situation.
Sometimes I find myself wondering if Greenspan, former alcolyte of Ayn Rand, didn't set out years ago to bring fiat currency into disrepute for the next two centuries or so...and as Fed chair, took the actions to guarantee said result...
Posted by: ellipsis on September 5, 2006 8:30 PMTo those living in the SoCal area:
So whaddya do? Do you ride it out in apartments until the bubble pops or do you decide to buy as small as a house as possible? I'm not being facetious, as moving to the SoCal area is not outside the realm of possibility.
Posted by: Klug on September 5, 2006 8:32 PMThe upshot is, we all know that regardless of what DeLong actually says about the rich in order to stir up controversey, he would never seriously pursue any of it. To do so would injure a large number of the politicians most likely to implement his desired forms of public policy.
Posted by: anony-mouse on September 5, 2006 8:43 PManony-mouse wrote:
The upshot is, we all know that regardless of what DeLong actually says about the rich in order to stir up controversey, he would never seriously pursue any of it. To do so would injure a large number of the politicians most likely to implement his desired forms of public policy.
Oh, I dunno about that. Some of DeLong's rantings, along with the nutroots in general, are beginning to remind me of some of the philosophes circa 17-seventy-something. All that talk was fun and games, until someone took it seriously...and sure, nobody in the modern world is really interested in turning things upside down enough to kill the rich, but if (when?) we fall into a really deep economic trough, who knows just how stupid people can get?
I think it was Charles Mackay, author of "Extraordinary Popular Delusions and the Madness of Crowds", who observed that men lose their sanity in masses, and come to their senses one by one...
Posted by: ellipsis on September 5, 2006 8:51 PMJane Galt said:
It is not that I admire the rich for their gloating, or disdain the poor for their envy. I think that both are distasteful, in exactly the same degree, because they are both exactly the same emotion: the rich gloat, and the poor long to be entitled to gloat. The fundamental desire--to Lord it over others--is exactly the same; it is not edified merely because the possessor is unsuccessful at it, any more than the attempted murderer is on a higher spiritual plane than the fellow who actually managed to complete the act.
I don't agree that the desire to lord it over others and the desire not to have others lord it over you are exactly the same. Similarly I don't think a desire to be treated fairly is the same as a desire to treat others unfairly. Does Jane Galt really wish to equate the master and the slave in this way?
I think this post completely misses an important point (for which I take no credit, see knzn) about two different ways of talking about spite and envy. First, there is an emotion you feel towards other people. Specific rich people may try to spite other people of their acquaintance; specific poor people may envy other people of their acquaintance. In this sense, it is correct that the downtrodden don't envy Bill Gates, because they don't *know* Bill Gates. He's just not very salient. This is also the sense in which it makes sense to say that envy and spite are distasteful emotions.
But the sense which is relevant for egalitarian social policy is not this emotional sense. For policy purposes, "envy" is just an easy way to denote the relation between inequality and subjective welfare judgments. Envy is an apropriate term for this relation because people are fairly cognizant of it. But in this sense it is *not* a distasteful emotion that involves resenting or wishing to harm other people -- it is just how people's minds work.
It gets messier than this when we examine the cause of the correlation between one's distance from social benchmarks of well-being, but I think it is fair to say that the emotion (which can be used as a verb) and the feature of welfare curves (which is more of a metaphor) should not be confused.
Posted by: anon on September 5, 2006 9:02 PMWill and ellipsis:
You're right that the rich don't "cause" bubbles; central banks do, with too-loose monetary policy. But since monetary policy is adjusted using metrics that chiefly measure consumer-price inflation, as opposed to asset-price inflation, I wonder whether the kind of inflation you get when wealth is concentrated among people whose investment-to-consumption ratio is high, has the result that true inflationary conditions -- the presence of excess money in an economy -- gets undermeasured. The solution, of course, is not to reduce the number of rich people (wouldn't mind whacking a few lyin' cheatin' realtors/mortgage brokers, though), but rather to adjust the inflation-measuring criteria so as to account for how the increasingly dominant wealthy use their money.
Alan Greenspan expressly stated he wasn't concerned about asset prices, and that the Fed wasn't equipped to do much about them. I differ, and I think it's irresponsible to exclude asset prices from the Fed's calculations, especially with respect to a "dual-use" asset like housing that is both an asset and an essential consumption item.
Posted by: TheProudDuck on September 5, 2006 9:12 PMKlug:
The SoCal resident who didn't get onboard the housing train at the commencement of the 20%+ annual appreciations has the unappetizing options of:
(1) renting a house, then having the landlord move in, forcing one to explain to one's 2-year-old why he can't play in his favorite tree anymore ;
(2) renting an apartment, which has the advantage of saving money, but is often low on the comfort/prestige meter;
(3) going for broke with a death-or-glory option ARM mortgage on a house you can't really afford unless you get a 100% raise in the next couple of years or unless it really is "different this time" and trees will grow to the sky, with double-digit appreciation continuing forever in spite of every lesson of economic history; or
(4) doing an exhaustive research to find the handful of houses whose value is merely obscenely out of line with fundamentals, rather than ludicrously so, stretching to buy, and then planning to sit tight for the next decade or so and hope that the irrationality will have worked its way out of the system by then, allowing you to weather the downturn and pick up the next rising market.
Those options mostly suck. I've chosen option (2), having just had option (1) prove unpleasant. I'm hoping we avoid a Japan-style slow fade, and instead get a relatively rapid return to normalcy (i.e. in the 18-month range). $2 trillion in option ARMs adjusting to radically higher payments in the next two years ought to speed things along, I would think. The prospect of being foreclosed upon tends to concentrate the mind wonderfully.
Posted by: TheProudDuck on September 5, 2006 9:24 PM"I have the most famous female-run economics blog. In order to make myself happy, I have managed to convince myself that this matters."
I was amused by your self-observation. I like your blog regardless of your gender or degree of fame: I hope that bumps you up another rung on the status ladder.
I never understood the "keeping up with the Joneses" mentality. I can understand dominance-seeking behavior, and I can understand doing things to fit into a group, but I am baffled by comparative status-seeking behaviors. What are the advantages of buying a Mercedes I don't need just because my neighbor bought a BMW? If I already have a job, wife, kids, etc., what will be the negative consequences of ignoring my neighbors' status symbols?
Posted by: Dr. T on September 5, 2006 9:31 PMIf you don't want others to lord their wealth over you--as opposed to actual power--then you can prevent it by not caring whether they have more stuff than you do. Wanting them to stop having the stuff is envy, not freedom.
Posted by: Jane Galt on September 5, 2006 9:35 PMTheProudDuck -
There's another option for coping with inflated housing prices that many Southern California residents seem to be taking: moving to Utah, Nevada, Idaho etc.
Anyone care to come up with some sort of relationship between "probability of writing an obnoxiously provocative posting on a weblog" and "probability of deleting opinions that differ"? DeLong is merely one of a set of individuals that seem prone to do this...a large set...
If you're implying that I've deleted comments because I disagreed with them, that's bullshit. I have missed stuff that fell into our spam filter--anything with more than two links is likely to fall prey--but any comment I've deleted (and there haven't been many) that wasn't obviously spam has had a note left in its place to explain why I deleted it. If you fall into our spam filter, as a number of my left wing readers will attest, if you let me know I'll fish you out with no additions or subtractions.
Posted by: Jane Galt on September 5, 2006 9:57 PMJane Galt wrote:
If you're implying that I've deleted comments because I disagreed with them, that's bullshit.
I don't recall referring to this weblog at all, unless you are really DeLong under a really, really, really deep cover. Sorry that I touched a nerve, but frankly as I wrote my previous posting I was thinking of the DU, HuffPo and a number of others, where it's standard procedure to post something along the lines of "Republicans eat their young", followed by deletion of postings contesting that. There are, I'm sure, some non-Left/liberal weblogs that do the same thing, although I cannot think of any right now.
Obviously if I was referring to this weblog, I'd be expecting my posting to be deleted; the self-cancelling posting, as Herb Caen would have called it...
Posted by: ellipsis on September 5, 2006 10:21 PMSometimes I have a tin ear, so I have to ask: was the start of this post a joke?
Does Jane believe that the comments she indented were a "representative sample"?
Tom
Posted by: Tom G. on September 5, 2006 10:31 PMEllipsis:
Of course the Republicans eat their young! I read it in the NY Times so it must be true.
Posted by: Hackelhead on September 5, 2006 10:32 PMThis is sick, it is none of your business how the rich spend their money unless it is My business how you spend your money. I'm cutting back on the Ho-Ho's and junk food, no cable and Internet, lots more books. Donations to the church of my choice. Forget the car, your kids get private school.
Why do we pass around these little papers (money)? because it is a way of exchanging our wants for efforts of others - the day money does not forfil our wants is the day of destruction of money.
Posted by: Doug_S on September 5, 2006 10:34 PMDoug_S declared:
I'm cutting back on the Ho-Ho's and junk food...
That ties in with the longevity thread, since cutting back on the junk food increases insulin sensitivity...
Posted by: ellipsis on September 5, 2006 10:40 PMHackelhead proclaimed:
Of course the Republicans eat their young! I read it in the NY Times so it must be true.
Exactly so, any paper that celebrates the work of Walter Duranty must be trusted without exception, failure to do so is clearly thoughtcrime...
Posted by: ellipsis on September 5, 2006 10:43 PManon (9:02) comments:
I think this post completely misses an important point (for which I take no credit, see knzn)……and you can read the rest in his/her original comment, but since I’m now here to blow my own horn, here’s the link.
Posted by: knzn on September 5, 2006 10:48 PM
"That ties in with the longevity thread, since cutting back on the junk food increases insulin sensitivity..."
Yeah, but the ho ho's and junkkfood I am cutting back on are YOUR HO-Ho's and JUNK FOOD.
Posted by: Doug_S on September 5, 2006 11:00 PMThere are a lot of us out there for whom the perfect theme song was recorded a few years back by The Pirates Of The Mississippi - Let's Let The Joneses Win. This works especially well in my neck of the woods right now, where the standard form of conspicuous consumption is putting 24" rims on an otherwise ordinary car.
I'm completely mystified by the notion that I am somehow made worse off because the rich are getting richer faster than I am. That gap doesn't directly change my situation at all. I'm actually made better off by the existence of concentrated wealth, because the work I do is part of a capital expenditure rather than an operating expense.
Posted by: triticale on September 5, 2006 11:03 PMI wrote:
"That ties in with the longevity thread, since cutting back on the junk food increases insulin sensitivity..."
Doug_S tried to scare me with:
Yeah, but the ho ho's and junkkfood I am cutting back on are YOUR HO-Ho's and JUNK FOOD.
Cut back all you wish. As the old song says, "Nothin' from nothin' leaves nothin'..."
Posted by: ellipsis on September 5, 2006 11:45 PMJane, I looked in the comments to your envy post and was unable to find any of the quotes you provided as a representative sampling of "leftish" comments. Could you please give examples of the arguments your opponents actually used and attempt to refute those instead of just making stuff up?
Posted by: purple on September 6, 2006 1:44 AMYou'll know that you've died and gone to heaven when you live in a country where the economists are reduced to debating the utility, taxation, and/or subsidy of greed, envy, and spite. When you get there you will note with amazement that the denizens of this heaven insist on referring to "the rich" exclusively in the third person. Whew!
Ken
Posted by: Kenneth A. Regas on September 6, 2006 2:03 AMI am baffled by comparative status-seeking behaviors. What are the advantages of buying a Mercedes I don't need just because my neighbor bought a BMW? If I already have a job, wife, kids, etc., what will be the negative consequences of ignoring my neighbors' status symbols?
Easy -- what's "wrong" with it is, it proves that the success of status-seeking behavior depends upon the attitudes of both parties involved and not just the one with more money. This immediately shuts down about 9/10s of that particular debate, and into the coffin with it falls yet another sound-bite justification for grabbing someone else's wealth with state mandate.
I posted a question very similar to yours in the other thread, and mostly got dead air. Apparently, taking responsibility for one's own reactions is no more popular than the actions version of the same.
Posted by: anony-mouse on September 6, 2006 2:48 AM«Here is roughly what I took Brad to be saying: [ ... ] Much of the utility that rich people derive from being much wealthier than everyone else comes from the fact that everyone else is not that wealthy. Therefore, their enjoyment of their increasing wealth comes, in some sense, at the expense of the poor, even if the poor are not materially worse off.»
Very astute! Very clever! I note that you now say «I took Brad to be saying», but the problem is that even if you «took» it to be so, you wrote something completely different, that Brad's position was that punishing the rich would raise the happiness of the poor, just as torturing the beautiful would raise the happiness of the plain as these representative quotes (my underlining added) should remind you:
http://WWW.JaneGalt.net/archives/009434.html
[Mankiw] "[ ... ] Brad suggests, people derive utility from comparisons with others. In this case, making the rich poorer raises others' welfare, even if their material standard of living is unchanged. In Brad's world, a rich person conveys a type of negative externality, like pollution."»
«So we know that this would bring happiness to far more Americans than it would distress. We dont have to turn them into quasimodo--just make them no more good looking than I am. Just think how happy America could be made if Cindy Crawford had saddlebags and a squint.»
«Of course, to judge from our mass-market journalism, Americans actively enjoy watching young, pretty people suffer. [ ... ] So perhaps we should let them suffer--in fact, we should probably film it, so that Americans could download every tear, moan, and horrified scream at their new appearance.
The nice thing about the last strategy is that it doesn't require government intervention--free lance beauty socialists could give the rest of America a big boost in net happiness with every jar of acid they toss.»
«No, I think the reason that we recoil is that it is repulsive to make people suffer just because others enjoy it. And it is horrifying to give free reign to our worst impulses through the power of the state.»
Not only that, while Greg Mankiw astutely protected his misrepresentation with «suggests» (he knows weasel-speak better than you do) you did not.
Now what is the connection between «Americans actively enjoy watching young, pretty people suffer» (what you wrote) and the completely different understanding you took of DeLong's point and kept to ourself until now: «Much of the utility that rich people derive from being much wealthier than everyone else comes from the fact that everyone else is not that wealthy.», which I think is a reasonable paraphrase (except for missing the «conspicuous consumption» qualifier) of DeLong's «a good chunk of the utility the rich derive from their conspicuous consumption is transferred to them from the poor.»?
None, unless your argument was based on Greg Mankiw's foul «Brad suggests, people derive utility from comparisons with others. In this case, making the rich poorer raises others' welfare,» as to what DeLong wrote, without any «suggests» escape clause.
Pretty slimy overall.
Disclaimer: as to DeLong's musings about conspicuous consumption helping the rich enjoy making the poor feel worse about being losers, I think it is neither that important, nor that universally valid, even if there are quite a few signs that it does happen.
The bigger issue is that ''somehow'' in the past 10-15 years inequality has increased sharply from the fairly stable norm in the 1940-1990 period, principally by the capture by the top 1% of households of most of everybody's productivity gains. This has not just made the poorer 99% feel more like losers (compensated by increasing real estate rices for homeowners), but has materially harmed their interests (and never mind the actual decline in real incomes of the poorest 20%).
How fortunate I and my sisters must be that no one told my parents that Republicans eat their young. ;-)
Posted by: markm on September 6, 2006 7:58 AMI am quite positive that Mr Delong's enjoyment of his prestigious professorship is substantially augmented by its position high in the academic firmament, twinkling light years above adjunct professors at Missoula Central Community College. Would he describe that emotion as spite for those less fortunate than himself? For after all, the existence of a pyramid for them to be at the top of is what makes him and his colleagues successful academics, rather than cranks with an odd hobby of publishing monographs almost no one reads.
Exactly so. DeLong claims to believe that it doesn't really matter if the poor and middle classes in the U.S. are, on the whole, becoming better off over the years in material things because increasing inequality means they're losing ground in the 'status wars' and status matters much more than material well-being.
But if status matters much more than material well-being then why worry about money when there are so many other forms of status inequality that contribute to unhappiness? As you suggest, from DeLong's perspective it must be that the gross status inequality in the academic world causes much unhappiness among the obscure turtles at the bottom of the pile, and DeLong can't argue that it doesn't matter because faculty at Northeast State U also have well-paid tenured jobs with summers off and nice benefit packages. Because according to DeLong what matters for well-being is status and those folks are big-time losers in the status competition -- a competition in which DeLong sits atop the pyramid. Is DeLong in favor of redressing this pernicious form of inequality? If not, why not?
Posted by: Slocum on September 6, 2006 8:15 AM«I'm lost in the discussion...»
There are several cascading ones. Pithy summary, and take it as not the ultimate truth, even if the quotes provided are actual verbatim quotes (my emphasis added though), and most of them are of the ''what did he/she say/mean?'' sort, which is always hard to pin down:
* What did DeLong mean? As quoted by Greg Mankiw, he wrote: «a good chunk of the utility the rich derive from their conspicuous consumption is transferred to them from the poor.».
* What did Mankiw «suggests» it means? «making the rich poorer raises others' welfare».
* What did ''Jane Galt'' comment as to Delong's position? «beauty socialists could give the rest of America a big boost in net happiness with every jar of acid they toss» «it is repulsive to make people suffer just because others enjoy it. And it is horrifying to give free reign to our worst impulses through the power of the state.»
* What does ''Jane Galt'' now claim that she «took» to be DeLong's argument? «Much of the utility that rich people derive from being much wealthier than everyone else comes from the fact that everyone else is not that wealthy.»
* How valid or interesting is DeLong's contention (as I understand it) that those who flaunt their wealth make themselves feel happier and those poorer feel more miserable?
* How does DeLong's contention (as I understand it) about «utility» relate to recent large changes in the pre-tax income distribution?
* Should it be public policy to discourage the rich from transfering utility from those poorer via conspicuous consumption?
It seems to me that the latter three points have not been discussed much, in part because Greg Mankiw and ''Jane Galt'' seem to me to have been discussing something that DeLong did not say.
First, excuse my English, I’m European (German).
To identify envy you first have to get your morals straight. And that’s not easy.
Think of a Ancient Greek vs. a Libertarian:
G: This slave is envious of my freedom.
L: No, he resents you, cause no man should be a slave.
G: Why? We fought and I won. Now he is my slave.
L: Yeah, but you attacked him
G: So what?
L: Never heard of the Non-Agression-Axiom, Self-Ownership… You have no right to attack people.
G: Who says that?
L: God.
G: Which one?
The same problem emerges between a libertarian and an equalitarian.
E: A higher income based on nature or nurture is unfair. Your IQ is not the outcome of hard work, only luck. We have to redistribute.
L: You are legitimizing envy.
E: No, I resent unjust conditions.
L: Who’s justice?
E: Rawls.
L: F**k Rawls.
I don’t know how to distinguish objectively between envy and resentment, cause I don’t know how to choose objectively between a variety of different moral standards. But I really don’t see why a libertarian is in any better position than an egalitarian.
If the problem is conspicuous consumption (or the envy/spite motivating such consumption), isn't the most efficient solution to tax consumption instead of income?
Posted by: Independent George on September 6, 2006 9:03 AM«[ ... dialogues ... ] I don’t know how to distinguish objectively between envy and resentment, cause I don’t know how to choose objectively between a variety of different moral standards.»
Nice dialogues BTW. And the question is not objectivity: as you note there is no math of morals:
* Conspicuous/invidious consumption can cause not so much envy (''make them worse off without us being better off''), or resentment (''you are rich because I am poor'') but spite often results in misery and humiliation (we are such losers), especially in a country where being poor is considered ''guilty''.
* If you look at the consequences and their distribution, the libertarian position has rather worse impact on more people than the progressive one, if only because the millionth dollar of income is usually not quite as indispensable as the ten thousandth. The libertarian retort to this seems to me to be usually ''tough''.
«But if status matters much more than material well-being then why worry about money when there are so many other forms of status inequality that contribute to unhappiness?»
Well, it used to be that a poorer aristocrat could humiliate a richer commoner because of their different legal statuses and informal prestige.
But that is largely (we hope) in the past. The argument about status inequality is that it adds to the significant issue of income inequality, not that it is bigger.
«If the problem is conspicuous consumption (or the envy/spite motivating such consumption), isn't the most efficient solution to tax consumption instead of income?»
But the enabler of conspicuous consumption is income... And the bigger problem is not that the poor feel humiliated, but that this can happen because they are poor.
However many countries tax luxury goods at rather higher rates than ordinary goods. But in the USA sales taxes are flat, which makes their regressiveness worse, and conservatives somehow usually forget to advocate lower sales taxes, which hit the poor much more than the rich, or at least lower sales taxes on the sort of stuff that the poor consume and higher ones on the sort of stuff that the rich consume... Curious indeed :-).
Blissex - The point I'm making is that income is a rather inefficient manner of taxing consumption. Suppose two people earn $150k per year. One person maxes out his 401(k), fills his kids' college funds, yada yada. The second buys a new Humvee with gold rims. The saver pays the same income tax, even though he's not engaging in the conspicuous consumption the spender is. This is a pretty common phenomenon, too - in my job, I often see people with similar incomes engage in wildly different spending habits.
I admit that I'm not quite convinced that a pure consumption tax is the best solution, but insofar as we're discussing conspicuous consumption and envy, I see a lot of merit to it. Most of the consumption tax plans I've read use a monthly tax credit to everyone - usually in the $300-$500 range - to maintain progressivity, and a consumption tax is not mutually exlcusive with the better redistributive policies out there like the EITC or Section 8 vouchers.
Again, I'm not (yet) an advocate of pure consumption taxes, but does seem possible to maintain progressivity with it. But if we're discussing tax progressivity as it relates to conspicuous consuption, the most efficient solution does seem to be consumption taxes coupled with generous low-income tax credits, as opposed to simply high marginal rates on a sharply progressive income tax.
Posted by: Independent George on September 6, 2006 10:31 AMThe argument about status inequality is that it adds to the significant issue of income inequality, not that it is bigger.
Nope. DeLong's argument is that even if the material well-being of middle and lower income Americans is improving (and he concedes that he believes it is), income inequality matters precisely because of its pernicious status effects. Which is to say, DeLong thinks that status trumps material improvments.
Put it another way -- for the sake of argument, suppose it is true that a vibrant open economy is wealthier, grows faster, but produces more inequality. Is that preferred over a poorer, slower growing, but more equal economy? I would say definitely yes -- that the overall improvment in living standards is much more important than any status effects of inequality -- especially because many of the important status differentials aren't directly related to income (e.g. DeLong's place at Berkeley, atop the academic pyramid -- Berkeley doesn't pay him that much more than an economist at a 2nd or 3rd tier state U but the status differential is vast).
But it seems that DeLong (and many on the left) would say that the poorer, slower growing, more equal economy is actually preferable -- even though material standards are lower for everyone. Why? Because (they believe) status is more important to well-being.
But if, in their view, status is so important and money less so, then why do they focus exclusively on redressing financial forms of inequality rather than other forms?
Two major questions come up in my mind:
a. Is the utility transfer from poor Alice to rich Bob based on the size of their income difference, or the size of the gap in their positions in the wealth distribution? If seeing Bob driving a Lexus makes Alice feel ten times worse than seeing him driving a Toyota, then there's some argument for taxing luxuries or trying to decrease the inequality of spending. (But note that the real difference in quality between a Lexus and a Toyota is probably pretty small.) If it just sucks to be at the bottom, and so Alice is going to be about as unhappy to be passed (in her '91 Civic) by Bob in his '02 Camry as by Carol in her '06 H3, then there's not so much argument in this direction. I think Brad DeLong's comments assumed that the difference in spending had a big impact on the utility transfer, though I could be missing something.
b. Is the transfer really a zero-sum sort of thing? If Bob gets a small boost from driving a Lexus, and Alice gets a huge sting from seeing him pass her in her old Civic, then again, we may have an argument (at least on paper) for restricting the inequality. If Bob gets a huge boost from driving a Lexus, and Alice barely notices it (at least it's not a Hummer, which blocks her view when it passes her), then the inequality of spending is actually a *good* thing in utility terms.
Posted by: albatross on September 6, 2006 11:38 AMBlissex is back! With more barely-decipherable posts that are highly indignant over some supposed misinterpretation or another.
Posted by: Anono on September 6, 2006 11:47 AM"I don’t know how to distinguish objectively between envy and resentment, cause I don’t know how to choose objectively between a variety of different moral standards."
On part of this is easy. If you'd just as soon make the rich poorer as make yourself richer, that's envy, plain and simple. If you just want to make yourself richer, that's ambition.
Resentment isn't opposed to envy. It can often accompany it (perhaps always, when the envy is unhealthy). OTOH, you have every right to resent someone who has stolen something from you, whether or not you envy them. A slave justifiably resents his master, whether or not he envies also. I would justifiably resent someone who stole my $25,000 new car and sold it to a chop shop for $1,000, but I'm unlikely to envy the miserable SOB because he probably isn't even making a living...
Posted by: markm on September 6, 2006 11:55 AMWhat I gather from reading all this criticism is that the people who want to lord it over others have all managed to become rich, and therefore in a position to do so; while the rest of us have no desire to lord it over others and so at least do not mind the lack of opportunity. Is this not a wonderful result? I detect the hand of Providence in it.
Posted by: Paul Zrimsek on September 6, 2006 12:25 PMJane says:
I think it's rather more likely that political power, physical strength, beauty and style, ancestry, exclusivity of social circles, and mastery of the really gratuitously nasty putdown will become more common metrics.
What do you mean "will become"?
Slocum notices that DeLong, et al, believe that status is more important than income, and yet place their efforts into reducing income inequality rather than status inequality, and naively asks why. The answer is obvious: status is related to both economic status and "political" status - "political" status meaning status gained by the means Jane mentioned as future sources of status. People who have lots of money have status which may exceed DeLong's, but if we "cut down the tall poppies", DeLong and other leftist academics will end up at the top of the status heap.
Until they notice that their less-educated political masters have more status than they do.
Posted by: Anthony on September 6, 2006 1:39 PMOne thing gets missed in all this is the issue of consent. Redistribution for redistribution's sake -- that is, taxation placed on the rich for the specific purpose making them less rich, with the revenue for public expenses a secondary consideration -- cannot possibly be considered an exercise in consensual government.
While a person might reasonably consent to be taxed at a higher rate in order to provide for the common expenses of maintaining his society, no person would reasonably consent to a measure expressly designed with no other purpose than to make him less well off -- to screw him, putting it plainly. No screwage with or without representation.
The heart of democracy is consensual government -- but consent can be an elusive thing, as statesmen going back to Cromwell have recognized. Decisions are rarely made unanimously, so "consent" has to be located in various proxies, such as majority votes and the deliberations of representatives. The heart of the constitutional-republican variety of democracy lies in the recognition that it's no more just for 51% of the public to take the other 49%'s lunch, than for a single autocrat to do so.
There are some things to which no reasonable person could ever be said to consent to. The State should not take sides. Basing a punitive, redistributive tax on either envy or resentment sounds pretty close to the "animus" that the Supreme Court used to strike down a gay-rights restriction measure in Colorado a few years back in Romer v. Evans (1996) 517 U.S. 620 ("The concept of equal justice under law requires the State to govern impartially").
Now, I'm speaking as a person who, having grown up on the wrong side of the Eucalyptus Curtain from Newport Beach, is plenty familiar with the "proud man's contumely" often displayed by the rich. And I've been known to suggest ghastly medieval tortures for certain species of realtors and mortgage brokers. But if you think rich kids are obnoxious, try dealing with a self-righteous politician. A government powerful enough to do away with the obnoxiousness of wealth would inevitably create a horde of even more obnoxious commisars.
No screwage with or without representation. I think that ought to be a Constitutional amendment or something.
Posted by: TheProudDuck on September 6, 2006 1:49 PMBlissex is back! With more barely-decipherable posts that are highly indignant over some supposed misinterpretation or another.
Interesting. That's a little harsher than I would have phrased it, but it really does capture the spirit.
Posted by: anony-mouse on September 6, 2006 3:33 PM“…you have every right to resent someone who has stolen something from you, whether or not you envy them…”
My point is this: Imagine an amoralist, who believes in the law of the jungle. He could say: “You have no rights! If you are so dumb to let somebody steal your car, that’s your own fault. Your resentment is just envy. You want to have the car back, because you think, it’s “your” car. Shut your eyes! What do you see? That’s yours!”
Envy is longing for something somebody else has - without having a right to it.
If you have a right to it, it’s not envy but justified resentment.
By changing your moral standards envy can be transformed in resentment or vice versa. Think of slave who is envious of his master. Imagine that he is deeply ashamed of his envy. Then a revolutionary comes along and convinces the slave that what he is feeling is not envy but resentment, a justified longing for freedom. There is no reason for him for thinking he has to be a slave just because he is a prisoner of war or black or non-muslim or a woman…
On the other hand, there can be the case of mistaken resentment. You think you have right to long for the property of somebody else, but you are wrong. In this case what you feel is resentment, because you feel justified. But as soon as you realize your error, you have to stop your emotions. If you continue, it’s no longer resentment but envy.
“I would justifiably resent someone who stole my $25,000 new car and sold it to a chop shop for $1,000, but I'm unlikely to envy the miserable SOB because he probably isn't even making a living...”
You can resent him (if you think you are justified) or envy him (if you think you are not justified) for stealing your car without having to be envious of his whole life.
Posted by: cartman on September 6, 2006 3:39 PMProudDuck has it entirely right. Until the Walton family starts hiring private armies, akin to what some industrialists did with Pinkertons in decades past, I'm entirely more concerned about the thuggish potential of a run of the mill politician elected by the AARP set.
Posted by: Will Allen on September 6, 2006 4:21 PMpurple: "Jane, I looked in the comments to your envy post and was unable to find any of the quotes you provided as a representative sampling of "leftish" comments. Could you please give examples of the arguments your opponents actually used and attempt to refute those instead of just making stuff up?"
"Jane Galt thinks that if I want to redistribute wealth, I also want to scar Cindy Crawford's face" is not a mischaracterization of the Lizardbreath post and comments.
"Jane Galt ... completely misrepresented Brad De Long's point in order to further her own selfish, horrible ends" is not a mischaracterization of Blissex's comments.
Posted by: Joe Mealyus on September 6, 2006 5:25 PMI see more willingness among the rich than among the academic to hold in esteem the possessions, material or intellectual respectively, of those less sucessful. Academic life seems to be a more zero sum game. Thus I view DeLong's argument to be more likely based on projection than fact. Perhaps it is unkind to think it, but I also view his statements as an attempted status encroachment on those in another hierarchy, the wealthy.
Posted by: michael on September 6, 2006 6:09 PM"Because after all the point of blogging is not to have an interesting discussion; it is to make fun of people who don't agree with us, in the company of like-minded companions who will reinforce our conviction that other opinions are risible."
Have my babies Jane Galt!
On second thought, have lots of babies. The world will be better off.
Posted by: TooTimidToSay on September 6, 2006 8:27 PMNice post. I find that most redistributionist schemes amount to nothing more than the lazy persons "egalitarianism". Lacking the will or ideas to bring the bottom up. They instead attempt to bring the top down in order to make the bottom feel better.
Posted by: Mike on September 6, 2006 11:57 PM«"Jane Galt ... completely misrepresented Brad De Long's point in order to further her own selfish, horrible ends" is not a mischaracterization of Blissex's comments.»
First of all ''Jane Galt'' has described her paraphrases as «A representative sample of leftish comments on my envy post would go something like this» and then used quotation marks. She has tried to weasel a bit by saying «something like» to indicate it is an approximate sample, but the proviso is as to the sample, not as to the quotes. She did not write ''sample of my own characterizations of leftish comments''.
Apparently she is a journalist for a famous periodical and she should know that there is a large difference between a set of caricatures and paraphrases and a sample of actual comments. I personally think that it is dishonest, and especially so for a journalist, to pass off one's own words as an approximate sample of other people's comments. Even if her characterizations of those comments were fair.
As to «not a mischaracterization», try to find some actual quote from «Blissex's comments» to the effect that ''Jane Galt''s motives were to «further her own selfish, horrible ends».
I do reckon that the (clumsy) twisting of DeLong's words was horrible as such, but only she knows whether her ends were selfish and horrible or noble and altruistic, like trying to warn about and prevent the creation of squads of acid throwing beauty socialists inspired by professors from Berkeley :-).
«I'm lost in the discussion...»
There are several cascading ones, that's why it is complicated. Pithy summary of the main subdiscussions, and take it as not the ultimate truth, even if the quotes provided are actual verbatim quotes (my emphasis added though), and most of them are of the ''what did he/she say/mean?'' sort, which is always hard to pin down:
* What did DeLong say? As quoted by Greg Mankiw, he wrote: «a good chunk of the utility the rich derive from their conspicuous consumption is transferred to them from the poor.».
* What did Mankiw «suggests» it means? «making the rich poorer raises others' welfare».
* What did ''Jane Galt'' comment as to Delong's position? «beauty socialists could give the rest of America a big boost in net happiness with every jar of acid they toss» «it is repulsive to make people suffer just because others enjoy it. And it is horrifying to give free reign to our worst impulses through the power of the state.»
* What does ''Jane Galt'' now claims that she «took» to be DeLong's argument? «Much of the utility that rich people derive from being much wealthier than everyone else comes from the fact that everyone else is not that wealthy.»
* How valid or interesting is DeLong's contention (as I understand it) that those who flaunt their wealth make themselves feel happier and those poorer feel more miserable?
* How does DeLong's contention (as I understand it) about «utility» relates to recent large changes in the pre-tax income distribution?
* Should it be public policy to discourage the rich from transfering utility from those poorer than them with conspicuous consumption?
It seems to me that the latter three points have not been discussed much, in part because Greg Mankiw and ''Jane Galt'' seem to me to have been discussing something that DeLong did not say.
As to my previous thought:
«a reasonable paraphrase (except for missing the «conspicuous consumption» qualifier)»
I wrote «reasonable» instead of ''correct'' because it is not correct, but can be optimistically considered a reasonable misunderstanding (at least compared to her previous arguments). Compare ''Jane Galt''s misunderstanding with DeLong's similar but far from equivalent words:
«from being much wealthier»
«from their conspicuous consumption»
Not all those that are «much wealthier» engage in significant amounts of «conspicuous consumption». DeLong's quoted comment is not about wealth, it is about conspicuous consumption enabled by wealth (and I guess in particular invidious consumption).
"...like trying to warn about and prevent the creation of squads of acid throwing beauty socialists inspired by professors from Berkeley :-)."
BTW there is a crazy spanish movie about that: "Acción mutante". Hollywood should do a remake!
http://us.imdb.com/title/tt0106215/
Posted by: cartman on September 7, 2006 7:03 AM«One thing gets missed in all this is the issue of consent.»
But this seems to me to be quite a blatantly incorrect fantasy: in the real world, there is a free market in taxation.
If people believe that taxation in the USA is a bad deal for them, they can renounce their USA citizenship and its benefits and choose any other citizenship (and many do: Bermuda, Bahrain, Saudi Arabia, ...) they find that offers them a better deal.
The libertarian argument goes that USA citizenship is a free transaction between each citizen and the state, and any freely entered transaction benefits both parties.
There is no Berlin wall around the USA, no exit visas either. The USA is a free capitalist society, and if you don't like it, leave it. If you stay it is only because you have chosen freely to agree to its rules, taxation included.
«There are some things to which no reasonable person could ever be said to consent to. The State should not take sides.»
Well, the USA constitution says that the State takes the side of the majority of voters, within limits (that the current majority is well prepared to ignore in the illusion of ''better safe than sorry''). And again the USA constitution is not something that everybody is forced to respect: only USA citizens (and residents) freely choose, by maintaining their citizenship (or residence), to be bound by it (except of course for the President, whose oath of office frees him from any need to be bound by the Constition :->).
Blissex, you are factually incorrect--in the real world, if Congress decides you're renouncing your citizenship for tax reasons, they'll confiscate a large portion of your assets. And American citizens, unlike citizens of any other developed nation, pay American taxes no matter where they live or earn the money.
As for the random accusations against my paraphrasing skills . . . I don't even know what to say. If the suggestion that we put Libertarians in camps did not tip you off to the fact that I was using hyperbole in the service of humorous effect . . . well, I'm afraid I don't know how to make that sort of thing any more clear. The substance of the paraphrase was correct: most of my interlocutors basically said either that they wanted to redistribute for other reasosn, which wasn't relevent, or that I had misunderstood Mr Delong, which I hadn't. Or that I was such a retard that they didnt even need to explain why I was wrong.
Posted by: Jane Galt on September 7, 2006 9:26 AMA charming explanation does not a bad analogy fix.
Posted by: perianwyr on September 7, 2006 11:55 AMApparently she is a journalist for a famous periodical and she should know that there is a large difference between a set of caricatures and paraphrases and a sample of actual comments.
I'll bet she also knows how to discern the correct tone and timbre of a piece of writing by investigating the use of creative literary structures, instead of assuming that everything is exact-word literal until proven otherwise in a court of law, too.
Posted by: anony-mouse on September 7, 2006 12:11 PMJane, such a light of rationality. You are part of the reason why I have continued my subscription for so many years, and why it doesn't trouble me to be banned off delongs increasingly sycophantic site. Kick anne over there for an obvious fault and brad defends her with the delete key.
I don't understand Brad's tendency to uncork his inner Veblen as referred to above, without Brad managing to show understanding for how far above the rest he has been. Jane has my utter agreement with both his position and myopic bent about how where he sits colors his perspective. I too might be a bit of a redistributionist if I were tenured in Berkieland waiting for the next D administration to begin social welfare experimentation on an economy that has just experienced a hard landing.
Given the opportunity, we could once again see the failure of capitalism placed onto the back of the current winners through redistributionist policies. The bad parts of the New Deal took a long time to reverse. Now the bad parts of unreasoning republican push the laffer curve down below the sweet spot for the highest tax revenues and spend like a petty South American dictator are going to dominate the next few decades. Brad may well be one of the architects of the new new deal.
PS I also believe that A.G. took the Randian position of intending to destroy the currency through gradually showing the untenable aspects of the system. CF his rather frank admissions about his preference for a gold standard in his testimony to congress. He knew the social security reform would be flawed without investing the surplus into foreign investments in growing countries, but still championed it anyway, full well expecting that the "lockbox" "trustfund" or whatever euphimism you chose would be spent. It has been spent, and within five years the chickens will all begin coming home to roost.
Posted by: allenm on September 7, 2006 4:35 PM«using hyperbole in the service of humorous effect . . . well, I'm afraid I don't know how to make that sort of thing any more clear.»
You state now your paraphrases were an hyperbolic caricature, not a «representative sample», which is the words you actually used to introduce them. Perhaps you should not have used those words. Sloppy :-).
Because attributing, even humorously, to others absurd notions that they have not expressed seems a bit too common in this blog. Either by dropping provisos on special-case or inconclusive papers, or by twisting people's opinions to an unfair and ridiculous extreme.
«The substance of the paraphrase was correct:»
As to that I am not so sure. Well, most caricatures, even those introduced with «representative sample», are based on some degree of verisimilitude. But my impression is that your paraphrases were not quite correct, to say the least. Perhaps you should not trust your paraphrasing skills that much.
In this very post you paraphrased DeLong's «a good chunk of the utility the rich derive from their conspicuous consumption is transferred to them from the poor» as ««Much of the utility that rich people derive from being much wealthier than everyone else comes from the fact that everyone else is not that wealthy» which is longer and yet contains at least two major (and some minor) ''mistakes'', one of which I have already pointed out.
My own preference is for literal (and perhaps overabundant) quotes, and to clearly mark paraphrases as such. Just in case. And when the effect sought is humorous I usually remember to add a smilie. Just in case.
Admittedly sometimes I get carried away and I talk loose, but your arguments have seemed to me to be based on loose talk.
«or that I had misunderstood Mr Delong, which I hadn't.»
Whether you had «misunderstood» is something that is hard to determine because it is private to your mind; but what you wrote is plain, and I saw several comments (myself included) about misrepresenting (a rather different concept from ''misunderstanding'') DeLong's arguments in «Should we cut down the tall poppies». Such misrepresentation (if any) by Mankiw and you might have been the fruit of a honest mistake, but both of you are very educated professional wordsmiths, and even while blogging it is hard to imagine such sloppiness is accidental.
Perhaps in the «Should we cut down the tall poppies» post you managed to misrepresent your own (mis)understanding (out of habit? :->), because what you wrote in it seems to me to have a rather different meaning from what follows «Here is roughly what I took Brad to be saying» (as I have argued in a previous comment).
A bit more care (as to dropping provisos, quoting, paraphrases, ''suggestions'', extrapolations, ...) from you (and Mankiw) would be welcome.
«if Congress decides you're renouncing your citizenship for tax reasons, they'll confiscate a large portion of your assets.»
And even if true, how does that make keeping or renouncing USA citizenship less of a free choice? You are objecting here to the terms of the bargain, not showing that it involves any compulsion.
The libertarian perspective on this should be that one should have renounced USA citizenship before accumulating those assets. If they did not, suffer the consequences.
Every day a USA citizen can ask herself: should I stay a citizen and then enjoy USA welfare if I become poor but pay higher taxes or a large exit fee if I become rich, or quit now and then be out of luck if I become poor but pay less taxes if I become rich? It is a free choice. A freely entered bargain.
And quite a few rich USA citizens choose to take it or leave it, balancing benefits and cost.
Nobody is forced to remain USA citizens before (or after) acquiring their assets. What matters to a libertarian is the freedom of the choice, not the price paid for it. If the choice is free one cannot complain about the price. Freedom is about being able to choose a bargain, there is no guarantee that any one bargain is sweet.
Example: a latino immigrates to the USA penniless, gets USA citizenship to enjoy the advantages thereof including welfare when thing get tough, but eventually makes a few millions and wants to renounce USA citizenship and move to Bahrain with all those millions intact, because USA citizenship is good when it rains, but bad when it shines. But he freely entered into a well published bargain when he chose to become a USA citizen, and he knew or should have known the consequences. Entirely the same for a native citizen, who as a rule has the option to renounce USA citizenship at any time before acquiring assets.
«And American citizens, unlike citizens of any other developed nation, pay American taxes no matter where they live or earn the money.»
And that is part of the free bargain USA citizens are offered.
Taxes for USA citizens are entirely the result of a voluntary transaction among free people who are not in any way forced to become or remain citizens. It is not like George III sending the redcoats to grab money from his subjects.
I think that there are good reasons to redistribute income (or in some cases, at least reasons that I would be prepared to debate): preventing hunger, cold, and premature death; maximising the opportunities that children have to lead a rich and satisfying life; giving a helping hand to those who have been brought low by fate, or even their own earlier bad decisions.
But whose hand are you entitled to give? Mine?
Posted by: John T. Kennedy on September 7, 2006 8:12 PM"But I really don’t see why a libertarian is in any better position than an egalitarian."
Okay, who let Thrasymachus in here?
Posted by: Knemon on September 7, 2006 9:25 PMI asked this over at DeLong's, on what is probably by now a very dead thread, so I'll ask it again:
Wouldn't a special tax on luxury goods put them even further out of the reach of all but the richest, thereby making them an even more noxious flaunting-tool?
Posted by: Knemon on September 7, 2006 9:31 PMOne point in this discussion everybody gets wrong is the reason why rich people don’t gloat in front of poor people. Everybody seems to think they don’t do it because they are nice, descent people and that Delong has a too bleak view of his fellow man. I think they don’t gloat out of the same reason a grown-up doesn’t fight a child to show off his physical strength. The child isn’t even in his reference group. But this is worse than beating the child. A nouveau rich who gloats in front of poor people treats them nevertheless as worthy of being envious of him which is a lot more egalitarian than thinking that the poor don’t count at all. The nouveau rich is still able to imagine that he could be one of them, that’s why he is called “nouveau”. The poor are still his reference group. Real aristocracy starts when being poor gets unthinkable. Vice versa, real “slavery” starts when you think that being rich is not for people like you.
The more people gloat and are envious the more egalitarian a society is. Cause everybody is in the same reference group. If you are an egalitarian, two cheers for gloating!
BTW an easy way to stop conspicuous consumption would be to give out foolproof status-badges. There could be a colour-code, one colour representing wealth, another your income or your academic grade. The more intense the colour, the better you are doing. By this you can show off without spending money for useless stuff. It is essential that the badge is foolproof, but I think production cost would be small. With digital coding, there are a hundred ways to do this and we all could save a lot of money.
And if you are invited to a nice party and you don’t wear your badge, we all know why :-)
Knemon:
Wouldn't a special tax on luxury goods put them even further out of the reach of all but the richest, thereby making them an even more noxious flaunting-tool?
Yes, and this is a good thing. It means that less resources are wasted in order to mark the same level of wealth. Quoting John Stuart Mill:
"When a thing is bought not for its use but for its costliness, cheapness is no recommendation. As Sismondi remarks, the consequence of cheapening articles of vanity, is not that less is expended on such things, but that the buyers substitute for the cheapened article some other which is more costly, or a more elaborate quality of the same thing; and as the inferior quality answered the purpose of vanity equally well when it was equally expensive, a tax on the article is really paid by nobody: it is a creation of public revenue by which nobody loses."
Posted by: guest on September 8, 2006 6:19 PM