September 12, 2006
From the desk of Jane Galt:A little pressed for time today . . . I'm off to Armonk in a minute, and probably won't be back until late tonight.
So, a little meditation on blog partisanship.
Recently, I seem to have inadvertently become The Economics-Blogger-In-Charge-of-Liberal-Baiting. This was not intentional, or even desired.
I designed the thought experiment about throwing acid in Cindy Crawford's face not because I was trying to get those in favour of redistribution to admit that they also want to disfigure supermodels. Rather, having spent more than a little time thinking about the supply of fairness in the universe, and our possible duty to increase it, I found that thought experiment genuinely useful in clarifying my views--not about redistribution, per se, but about a subset of redistribution which aims to increase the supply of fairness by punishing success (or, as many of my interlocutors seem to believe, luck.) Ultimately, I concluded that the existance of a status hierarchy is not a good reason for that kind of redistribution, precisely because I concluded that I wasn't actually interested in the same sort of redistribution when it involved assets other than wealth . . . even though those assets are, unlike wealth, 100% distributed by luck.
The reason I think that this is interesting is that humans often convince themselves that they are reasoning by logic from first principles, when in fact they are being guided by intuitions hammered into our brains by several million years of evolution. That doesn't mean that those intuitions are wrong, or inappropriate--as I wrote about abortion, people are being guided more by fuzzy emotional logic than the principles they think they're basing their positions on, and that's okay. But we need to recognize it.
People who say that they are being guided by the latest research on status hierarchies in judging redistributional programmes, in my opinion, are much more likely being guided by a lot of evolutionary and cultural baggage about wealth. We are evolutionarily designed to simultaneously desire status, and despise it in others; we are programmed to live in very small family groups where redistribution is both expected, and possible; and our amygdalas have a hard time grasping the idea that a big chief could earn his wealth, rather than stealing it from the group.
So I wasn't picking on Brad, or redistributionists; rather, I was trying to illuminate what I thought was an interesting question what are we really thinking. Not a question, it turns out, that anyone else is much interested in. But I still am.
Posted by Jane Galt at September 12, 2006 9:31 AM | TrackBack | Technorati inbound links"); ?>Jane,
Honestly, we get it. The thing is, the folks who attack you on the details, the ones who choose to assign the worst possible motivation, they get it too. That's why they attack.
I spend time on a few left blogs too. I know that I will never get the last word, and I expect to be insulted regularly. But sometimes I get the feeling that I've gotten through, and that makes it all worthwhile. I suspect that you have gotten through.
Posted by: Randy on September 12, 2006 10:11 AMTo pile on with Randy - most people - be they blog commentators or guys in hardware stores are heavily biased towards "assuming the worst" out of someone they disagree with. I see the most innocuous posts on both sides of the fence hailed as examples of extreme dementia of "the X side of the political spectrum."
If someone "on your side" forgets the exact lyrics of the star spangled banner - it's no big deal, they were probably just tired and the "other guys" are "wankers" for making a big deal out of it. If someone "on the other side" forgets them - it's evident that they are stupid and venal, as is everyone on "that side."
It's actually more than a little depressing.
But not as depressing as the people who probably know that the comment was innocuous, but decide to attack it anyways, since it will play well with their base. Got to have an enemy to ridicule, lest the natives start scrutinizing your actions.
Posted by: jb on September 12, 2006 10:24 AMI think you are making a very important point: that society focuses on the one thing that can be redistributed--wealth--ignoring other forms of endowment that cannot be redistributed--like beauty. The primal motivation is "fairness". I think you are correct in identifying the irrational urge that can motivate some redistributional arguments.
Posted by: Piso Mojado on September 12, 2006 10:40 AMI think the issue is not that people don't understand, or even agree, with the underlying assumption, but that they disagree with the conclusion on other grounds. In that situation, they will play the double-standard: generalizing from specifics fallacy, worst case scenario, etc. as a way of analysis, when they wouldn't accept a disagreement with themselves on the same ground. I wouldn't worry about them. At this stage of their lives, conversion is unlikely anyway.
Posted by: nrc on September 12, 2006 10:42 AMAll very interesting, but why are so many economists maquerading as free-market boucaneers seeking tenured faculty positions at publicly funded universities?
LOL.
Posted by: Don McArthur on September 12, 2006 11:03 AMWhatever else he may be, Brad DeLong is a smart guy -- of course he understood your argument about Cindy Crawford. He chose to mischaracterize and dismiss it for rhetorical advantage. And he took this approach for reasons of his percpetion of your and his relative status -- if Greg Mankiw or Tyler Cowen had written the same thing that you did, DeLong surely would have rebutted it fairly and respectfully. It's interesting that DeLong proffesses to be worried about status but, at the same time, he wields it so readily and unthinkingly.
With respect to non-monetary forms of status/spite/envy, etc, there are forms that are arguably both more powerful than money and easier to remediate than either money or beauty. One of those is the powerful, lifelong status differential that result from competitive university admissions. People are nuts about university rankings and about admission to elite universities, and many subsequently derive lifelong feelings of superiority from the exclusivity of their alma mater. Within the public realm, at least, this could be fixed straightaway by switching from a competitive to a lottery-based admissions system.
So, anyway, by all means, don't give up thinking about non-monetary forms of status inequality.
But a lot of wealth IS distributed by luck. E.g. it's largely luck that put me in a position to buy a house in London when they were still affordable. Somebody today in the same relative income position is pretty much unable to do that now. 20 years ago in London, productivity and intelligence were not the measures that got you into The City, but connections and the 'right' education were (yes, signalling etc.).
Of course we can all, to an extent, engineer our own success, but who can honestly say that they haven't benefited from the capricious hand of fate (given some natural talent)?
Posted by: spinynorm on September 12, 2006 11:44 AMFrom Jane: "we are programmed to live in very small family groups where redistribution is both expected, and possible"
Ah, the source of egalitarianism! A very interesting observation, and one I have not previously given much thought about.
Posted by: Yancey Ward on September 12, 2006 11:45 AMwe are programmed to live in very small family groups where redistribution is both expected, and possible
Moreover, in the evoluntionary setting there is little opportunity for the kind of return on savings, education, or talent for that matter that exist in the modern wolrd.
If someone had much more than everyone else it was probably through rent seeking or out right stealing. Thus, upon seeing someone with much more than everyone else we are tempting to conclude, rent seeking or stealing.
Beauty, brains, etc do not envoke the same evolutionary reaction because it is much harder to steal those or gain them from rent seeking.
Though you may note that women who seek to increase their attractiveness to men through unconventional means are likewise the target of negative reactions. Likely drawn from the evolutionary past when such women were defecting and breaking the female cartel on sex.
Posted by: Karl Smith on September 12, 2006 11:58 AMWhat you keep refusing to get is that most people (even including many libertarians) acknowledge that wealth accumulation is partially the result of having benefitted from living in a stable society ruled by law. Beauty isn't. The analogy falls apart right there, as long as we're talking about estate-tax like "redistribution".
Posted by: Evil Liberal on September 12, 2006 12:01 PMEvil Liberal:
A stable society ruled by law tends not to have lots of war, famine, and plague that tend to diminish beauty, nor does it allow bride-stealing, stonings, and honor killings that discourage beauty accumulation.
Posted by: AT on September 12, 2006 12:19 PMEvil Liberal,
Re; "...wealth accumulation is partially the result of having benefitted from living in a stable society ruled by law."
That is absolutely true. So why on earth would we want to replace the laws that resulted in the stability and wealth (i.e., property rights) with something as intangible as "equality" which has no proven social value whatsoever?
Posted by: Randy on September 12, 2006 12:20 PMEvil Liberal
The arguement is not against redistribution. Its against redistribution on the grounds that having rich people make poor people feel bad.
There are certainly other arguements in favor of redistribution.
Posted by: Karl Smith on September 12, 2006 12:48 PMKarl,
If by "make poor people feel bad" you include the more logical endpoint of "undermines the confidence of the governed in the institutions of law", then I'd argue that redistribution is very very very valid. It certainly has happened in many countries where redistribution is a practical (even if not legal) absence, but there's a chicken-and-egg problem there too.
Randy,
We already had estate taxes. The Republicans, supported whole-heartedly by every self-identified libertarian I've seen, are trying to get rid of them.
Posted by: Evil Liberal on September 12, 2006 1:16 PMEvil Liberal,
I don't like the estate tax either. It isn't fair because its only applied to the most wealthy. On the other hand, if we apply the concept that inheritance should be taxed at say 10% to everyone, then I could live with it.
Posted by: Randy on September 12, 2006 2:06 PMRandy,
On "fairness" grounds, it's obvious that the billionaire benefitted more (by orders of magnitude, not linearly) from the rule of law than did the tenthousandaire. If you don't agree with this, there's really no point even discussing it.
Posted by: Evil Liberal on September 12, 2006 2:26 PMMany of the rich did not earn their money or even get lucky, but got their money taking advantage of loopholes in the system. One that bugs me is the practice of selling credit unions and mutual banks to the public in what is known as a stock conversion. The ceo, officers, and directors make tons of money while the customers, lose their ownership rights. Two Dallas credit unions made news doing this last year when the NCUA tried to block the conversion.
Posted by: joan on September 12, 2006 2:38 PMEvil Liberal,
It's not at all obvious that the wealthy benefited more from the rule of law than did the less wealthy. Years ago, while still in school, I compared two hypothetical couples. Both couples earned the same amount from their jobs and received the same raises. The difference was in their spending habits. One couple was a net saver the other were spendthrifts. At age 65, both couples were killed in an accident on the way to their class reunion. Which couple had the higher standard of living? The spendthrifts. Which couple's kids received government aide to attend college? The spendthrifts. Which couple, had they lived, would have needed to rely more heavily on the government for retirement security? The spendthrifts. Which couple paid the most in taxes (excluding sales taxes)? The savers. Which couple had secured their own retirement security? The savers. Which couple was able to provide for their own children's education? The savers. Which, at death, had the higher net-worth (and was subject to estate taxes)? The savers.
Now then, tell me, which of these two couples benefited the most from the rule of law? The savers had a greater wealth. By your definition that means they benefited the most. I have a different view. It's the spendthrifts who spent most on their personal consumption, so didn't they benefit the most and give back to society the least?
On "fairness" grounds, it's obvious that the billionaire benefitted more (by orders of magnitude, not linearly) from the rule of law than did the tenthousandaire.
If you don't agree with this, you may have a better grasp of factor productivity than Evil Liberal does.
Posted by: Paul Zrimsek on September 12, 2006 2:55 PMJane Galt, first, as I said in comments to an earlier post, throwing acid in Cindy Crawford's face is an emotive image and not conducive to rational discussion. If you really want to avoid partisanship you would be wise to avoid such images.
Second, by using the word "redistribution" you are loading the dice. Society as a whole produces wealth and society as a whole decides how that wealth is to be distributed to the citizens. Rather than dictate every last detail of who gets what (which is inefficient and impractical) society has established market based mechanisms and rules to allocate wealth. These rules include taxes. The distribution society has collectively decided on is the aftertax distribution. Changing the rules will change the distribution but there is no redistribution, the final distribution is for society to decide.
The situation for beauty is different. Society can not choose to allocate less beauty to A and more beauty to B but society can choose to allocate less wealth to A and more wealth to B. So this is a poor analogy.
Society can choose to destroy beauty (your acid example) but this makes no more sense then destroying wealth by say burning the houses of the rich (which liberals are not recommending).
Posted by: James B. Shearer on September 12, 2006 2:56 PMDavid,
That type of Randian objectivist fable really isn't helpful. At all.
But if it helps, consider the plight of a frugal saver in a country in South America experiencing runaway inflation because the population has no faith in the rule of law and has therefore voted in crook after crook after crook who promised to redistribute but somehow never got around to it.
It's Not Coincidence that the "grasshoppers" do best in countries with strong rule of law and what self-avowed libertarians view as overly onerous regulatory burdens.
Posted by: Evil Liberal on September 12, 2006 3:10 PMEvil Liberal,
Re; "...it's obvious that the billionaire benefitted more... from the rule of law than did the tenthousandaire."
Well, I don't think its obvious. Of course, it depends on how highly we value human life. Certainly the billionaire gained more in dollars, but then, without the wealth made possible by the application of the law to property rights, the tenthousandaire and those below would very likely be dead - or maybe just living very short lives in desperate poverty.
Posted by: Randy on September 12, 2006 3:22 PMJames,
Re; "Society as a whole produces wealth and society as a whole decides how that wealth is to be distributed to the citizens."
True, but society as a whole has already decided to distribute the most to those who contribute the most. That is the effect of our choice to utilize private property rights and free markets. Society has also decided to do a minimal level of income redistribution to meet people's basic needs regardless of their contribution. But what society has not decided is that everyone should get an equal share regardless of contribution. Those who do want this have got a lot of convincing to do.
Posted by: Randy on September 12, 2006 3:32 PMJames
Your comment that Jane has loaded the dice by using the term redistribution is itself unfair.
When DeLong says in the original blog entry that sparked this debate that "A reality-based government would react to growing pretax inequality by taxing the rich more, and subsidizing the poor more", what on earth can he be talking about other than redistribution. As a glance at almost any quality dictionary will tell you, it is a fairly commonly used piece of terminology.
While I think Jane's analogy is far from perfect, I agree with one of her main conclusions - DeLong in his post appears to want to reward envy and to punish success because of status pollution.
As Jane pointed out in a later post, there are plenty of good reasons for supporting less inequality but I consider DeLong’s alleged externality arising from envying the rich is not one of them.
Posted by: stephen c on September 12, 2006 4:13 PMEL
It isn't obvious at all that a billionaire has benefitted "more" from the rule of law. I suppose it depends on how he got his money and what you mean by benefit. Consider: the billionaire can afford to hire private thugs to protect his property and person. His business and good graces matter to banks and other corporations regardless of whether or not the FDIC or courts are involved. If he lived in a corrupt country, he could easily bribe anyone he wished. And if some corrupt bank or government official cheats him, he can hire an assasin.
The tenthousandaire can't afford security guards or bribes; he benefits from the rule of law by being able to keep his money at all. In effect, he convinces others, through taxes, to pay for his security thugs and bribers.
I'd rather be rich than poor, but the difference between rule of law and corruption is much more pronounced if you're poor.
Posted by: Rob Lyman on September 12, 2006 4:17 PM"...it's obvious that the billionaire benefitted more... from the rule of law than did the tenthousandaire."
In a society without the rule of law, the billionaire would be surrounded by hired thugs - and would most likely use them, not only to protect his own property, but also to steal from the tenthousandaires and to enslave the poor. The middle classes and even the lower classes benefit much more from the rule of law than the high and mighty, who are better protected in any case.
Posted by: markm on September 12, 2006 4:20 PMSecond, by using the word "redistribution" you are loading the dice. Society as a whole produces wealth and society as a whole decides how that wealth is to be distributed to the citizens.
Now who is loading the dice? Certainly not Jane Galt. YOU just loaded them by saying "Society as a whole produces wealth."
No, it most certainly doesn't.
Individuals in a Free Market society take the steps at producing wealth. It is "Society" that takes the wealth from these individuals. If you can't get that, then there is no point reading anything else.
Rather than dictate every last detail of who gets what (which is inefficient and impractical) society has established market based mechanisms and rules to allocate wealth. These rules include taxes.
Taxes are merely the price paid by individuals who choose to freely live in a civilized society. It is the individual that determines how much wealth he or she wishes to accumulate.
As an individual, I worked 3 jobs. I didn't have to work 3 jobs. I did it because I liked to accumulate (and save) wealth for my future and the future of my family. In order for me to work these jobs, I had to pay some taxes to make sure that I was living in a society that had the infrastructure to promote these jobs. (You don't see too many venture capitalists setting up shop, leasing offices, and hiring Mexicans in Cancun to write Microsoft .NET applications now do you?) That is because the capitalist doesn't even know if he or she is going to have an office in Cancun that isn't ransacked from one day to the next. Typically you don't have to worry about that in a civilized society.
The distribution society has collectively decided on is the aftertax distribution. Changing the rules will change the distribution but there is no redistribution, the final distribution is for society to decide.
Again, this is on the false premise that it is "society" that creates wealth. You are mistaken. "Society" does not make me richer (and create wealth) by paying off the debt on my home mortgage. I do as an individual by choosing to put my hard earned dollars into my house and not my own belly at the local bar.
We make choices in life. Many of these choices are how much free time we are willing to sacrifice from our very short lives in order to gain a little bit of wealth for the future. From the moment we are born, we only get (on average) 34,000 days and then we are dead. Every one of those days you (as an individual) choose (of your own free will) to work hard and make money, is a tiny fraction of your life you spent creating wealth in a civilized society. There must be some reward for this sacrifice, or no one would do it. Typically, that reward is money that you get to keep.
Posted by: Paul on September 12, 2006 4:45 PMWhere's Blissex? He usually shows up by now with long, jesuitical, and barely coherent posts that are brimming with indignation and fury over some alleged misinterpretation that's too subtle for anyone else to notice.
Posted by: Anono on September 12, 2006 4:46 PMIt's Not Coincidence that the "grasshoppers" do best in countries with strong rule of law and what self-avowed libertarians view as overly onerous regulatory burdens.I think you meant to write “ants” instead of “grasshoppers” because this sentence in its current form, while true, helps your opponents’ argument more than your own.
"Society as a whole produces wealth and society as a whole decides how that wealth is to be distributed to the citizens."
If you really believe this, you have no place arguing about economics.
Posted by: Anthony on September 12, 2006 5:16 PMOn "fairness" grounds, it's obvious that the billionaire benefitted more (by orders of magnitude, not linearly) from the rule of law than did the tenthousandaire.
The billionaire doesn't benefit more from the rule of law, he makes better use of it. There's a critical difference. "Benefit" suggests a giving of something unearned, a bestowing of something. But the rich man's wealth was earned, not given to him (leaving aside the case of inheritance). Both the billionaire and the poor man have the same liberty, the same rule of law. The billionaire simply used his liberty to create vast wealth while the poor man chose to spend his time doing other things.
The techniques for creating wealth are out there for anyone to practice. They are well-known, written about widely, and there are plenty of people with wealth to use as models for success. No one has more hours in their day than anyone else, and no one in this country has more liberty than anyone else. You don't need to be born rich to become rich, either. All that matters is learning and applying the tried-and-true rules for building wealth, and those are available to be read in any public library for free. But some people choose to focus on learning and applying the techniques for building wealth, and others choose to spend their time doing other things - like complaining that the rich person "benefits more" from the rule of law and should thus have a bunch of his wealth confiscated and given to the complainer or his designatees.
What's more, it is wrong to suggest that liberty and the rule of law is some kind of benefit that government gives to people. We all have those things naturally as a birthright. They can only be taken away, not bestowed on us. It's like breathing air - we all have a natural right to do it. I suppose someone could say "the rich benefit more from breathing air than the poor, and thus owe a bunch of money to the poor", but that would be nonsense, wouldn't it. Same thing with saying that some people benefit more from liberty.
Posted by: Mark on September 12, 2006 5:23 PM"No one has more hours in their day than anyone else, and no one in this country has more liberty than anyone else."
Come on. To take everyone's favorite example, Paris Hilton has nothing but free time, while most Americans are required to spend 8 hours a day at their workplaces. Paris has more time and more liberty than almost anyone. Why? Because she was lucky enough to be born rich.
Posted by: purple on September 12, 2006 5:47 PMParis Hilton is hardly the average rich person. I've read that the average millionaire works 80 hours a week. Too much work for my taste :-P.
Posted by: anonymous on September 12, 2006 5:52 PMParis has more time and more liberty than almost anyone. Why? Because she was lucky enough to be born rich.
Don't forget beautiful. She was born rich and beautiful. She can have any man she wants.
She also must put up with Paparazzi camping out at her house and following her from place to place. She does not have a moment of peace and quiet in her life. If she so much as gets a hangnail, the whole world has the "liberty" to read about it in the Enquirer.
The rich and beautiful have problems just like the rest of us.
Posted by: Paul on September 12, 2006 6:02 PMKurt Vonnegut's "Harrison Bergeron" pretty much sewed up the "punish people for success" meme.
You can read it here:
http://instruct.westvalley.edu/lafave/hb.html
I'm currently reading a book on the characteristics of wealthy people (as distinguished from high-income people). Intelligence isn't as important, it seems, as the right attitude. Hmm, no real opportunity for redistribution, there. People worth a million or more dollars tend to be inquisitive, and likely to spot opportunities that others do not see. Hmm, nothing there that is redistributable.
However, it seems that the vast, vast majority of wealthy people are married, happily, for many years. Divorce is very rare, and that tends to keep wealth in the family by itself. Furthermore, there is a short list of qualities that their spouses (usually wives) tend to have: cheerfulness, dependability, fidelity and so forth. Ah-HAH! Now we have something that we can work with, eh?
I leave the implementation details of "redistribution of reliable spouses" to the liberals...
Paging Evil Liberal! Paging Blissex! Paging James B. Shearer! Here's your chance to Make A Difference...
Posted by: ellipsis on September 12, 2006 6:55 PMThe billionaire may have benefitted more from the "protect people's property" function of the rule of law, but both have benefitted equally from the "protect people's life" and "protect people's liberty" functions, both of which have values so many orders of magnitude higher than mere money that the relatively tiny contribution of the cash utterly disappears when you make the total value gained comparison.
Posted by: Jeff R. on September 12, 2006 7:15 PMRandy said:
True, but society as a whole has already decided to distribute the most to those who contribute the most. That is the effect of our choice to utilize private property rights and free markets. Society has also decided to do a minimal level of income redistribution to meet people's basic needs regardless of their contribution. But what society has not decided is that everyone should get an equal share regardless of contribution. Those who do want this have got a lot of convincing to do.
Who thinks everyone should get an equal share? Certainly not me. I just don't think society is bound to accept without change the distribution produced by the market under some arbitrary set of rules.
Anthony said:
"Society as a whole produces wealth and society as a whole decides how that wealth is to be distributed to the citizens."
If you really believe this, you have no place arguing about economics.
Some societies (like Singapore) are better at producing wealth than other societies (like Cuba). I think it is reasonable to ask why. What would you call the discussion of which ways of organizing society are best for producing wealth if not economics?
James,
Re; "I just don't think society is bound to accept without change the distribution produced by the market under some arbitrary set of rules."
My point is that what you call the "arbitrary set of rules" are in fact society's rules. Free markets and property rights don't exist in nature, we invented them, and we choose to apply them. Why? Because they have proven to be a highly efficient method for allocating available resources to their most productive uses. Now, having established the rules, does society have a right to modify them? Certainly. The question is, is the value added by the modification greater than the cost?
Posted by: Randy on September 12, 2006 9:26 PMRandy, sure the market rules are society's rules but so are the tax rules. You are giving the pretax distribution a privileged position it is not entitled to. Particularly since you believe taxes are not really borne by the nominal payers.
As for arbitrary, I mean there are many reasonable alternative sets of rules for a market economy. Different sets of rules would produce different income distributions. So there is no justification for considering the current market outcome to be "the" market outcome instead of "a" market outcome, just one of many possible outcomes which could be produced by a market economy.
As for changing the rules, one can certainly ask whether Bush's changes were worthwhile. It appears to me that government economic policy under Clinton was more sensible.
Posted by: James B. Shearer on September 12, 2006 10:04 PMI think we're getting stuck in a circle here.
We can probably all agree that a market-based society builds is best at building wealth not only for the successful, but also for the unsuccessful (perhaps to different degrees).
We can probably all agree that some redistribution of earnings is a good thing, since the poorest and unluckiest among us could use some help. Also, we can afford it.
We can probably also all agree that some redistribution buys social peace. Eventually, those guards can't prevent the poor from eventually rising up.
The question is how much redistribution is enough? There's a delicate balance. On the one hand we want to maximise productivity, and encourage the kind of good individual productivity from which we all benefit. On the other hand, we want to help the very poorest without destroying their incentive for good behavior.
England offers some clues. They went too far in the seventies under the old Labour party and drove away the most productive and killed initiative from those that remained. So I think I can say that marginal tax rates of 97% are excessive.
I would argue that, although the balance in the US may not yet be perfect, we're closer to it than many other countries. I recall reading somewhere recently that the poorest quintile in the US is better off than the corresponding demographics in many more "enlightened" countries such as Sweden. So we're stumbling towards the right answer.
In the meantime, statements such as "the rich benefit the most" seems to me an attempt to avoid thinking about this balance and to reduce it to simple moralising.
We can probably all agree that some redistribution of earnings is a good thing
Count me as one of those who vehemently disagrees. If I earn money by trading value to someone else in a mutually voluntary transaction, it is no one else's business to "redistribute" it. Can we use a more accurate and less Clinton-like term than "redistribute"? Perhaps "steal", or "confiscate"?
It just boggles my mind when people sit around talking about "redistributing" wealth as though it was something that just wasn't quite distributed correctly the first time. IT WAS NOT DISTRIBUTED, IT WAS CREATED OUT OF THIN AIR THROUGH EFFORT. It did not exist before someone created it. So where do you get off sitting back in your easy chair and decreeing that it should be "redistributed"? Wealth belongs to the person who created it, period.
And I'll be damned if I'll acquiesce to "redistribution" to buy social harmony. That's what police are for. If we stopped teaching people that they were somehow entitled to freebies off the magic money tree, "redistributed" from other peoples' pockets, there wouldn't need to be any social unrest.
Take Hong Kong. I am no expert on it, but my understanding is that it's basically a rock with few natural resources. No redistribution to speak of, either. Just a relatively free market, relatively unencumbered by government meddling. Result? Bustling economy providing many jobs, resulting in much contentment and productivity. Yes, and some incredibly wealthy people. But the poor needn't resent that because they can start businesses and build their way up too. The hope is there for everyone.
All over the world, countries keep rediscovering that the solution to poverty is not "redistribution" (stealing) but getting government out of the way. Ireland for example. And now recently Estonia is being noticed for how fast its economy is growing since a Milton Friedman-like fellow took control and got some good free market stuff going.
Quit trying to fine-tune your socialism. The answer is in getting the government out of people's pockets, strictly enforcing property laws, and leaving human ingenuity to work its miracles. All you do when you try to meddle is drive productivity into the black market, encourage corruption, stifle ambition, and teach people that they're entitled to the fruit of others' labor.
Posted by: Mark on September 13, 2006 12:32 AM"Paris Hilton is hardly the average rich person."
The person I was responding to claimed that we all have the same amount of time at our disposal and the same freedom of action. I gave Paris Hilton as an example of someone who has much more time available than nearly anyone else and virtually no constraints on her behavior.
"I've read that the average millionaire works 80 hours a week. Too much work for my taste :-P."
Cite? Link?
Posted by: purple on September 13, 2006 1:51 AMThe person I was responding to claimed that we all have the same amount of time at our disposal and the same freedom of action. I gave Paris Hilton as an example of someone who has much more time available than nearly anyone else and virtually no constraints on her behavior.
And it's still wrong as expressed. Her day remains 24 hours in length, and barring calamity, she will have her three-score years and ten plus or minus a few.
If you meant to say that the possession of extreme wealth allows her to allocate those 24 hours differently than other people, then sure -- but I fail to see how that's helpful. Wealth has always enabled people to allocate more time to the pursuit of non-survival activities, if they so desire. Most of us save 25+ minutes of manual labor each day by using an automatic dishwasher, for example.
Posted by: anony-mouse on September 13, 2006 3:26 AMAnony-mouse,
Exactly. A primary benefit of trade is that a new form of wealth is created - free time. And free time can be reinvested.
While Paris Hilton may seem to be investing her free time rather frivolously, just think of all the people who have jobs involved in supporting her frivolity.
Posted by: Randy on September 13, 2006 7:54 AM1) James, I agree with:
"The situation for beauty is different. Society can not choose to allocate less beauty to A and more beauty to B but society can choose to allocate less wealth to A and more wealth to B. So this is a poor analogy."
But the reason why beauty can't be redistributed and money can is because money is fungible and beauty isn't. Not because "[s]ociety as a whole produces wealth", which wouldn't be a logical explanation even if it were true.
2) The funny thing about the universal use of Paris Hilton to embody the idle rich (beyond the fact that there aren't exactly thousands of Paris Hiltons running around) is that she's an enormously succesful, hard-working producer of wealth herself. In fact, she's pretty much invented an entirely new career track, and the more people buy into the notion of her as a lazy airhead, the more of a genius she's been at marketing her persona.
Posted by: JSinger on September 13, 2006 9:50 AMJames,
Re; "You are giving the pretax distribution a privileged position it is not entitled to."
I don't really think so. What I'm doing is giving neither the distributionists nor the anti-distributionists a privileged position. Recognizing that free markets and private property ARE social institutions refutes the argument that social institutions have some sort of automatic rights to the fruits of free markets and private property. The issue is one of cost/benefit analysis - not rights.
Posted by: Randy on September 13, 2006 9:58 AMGazzer,
In the meantime, statements such as "the rich benefit the most" seems to me an attempt to avoid thinking about this balance and to reduce it to simple moralising.
I agree, however that is mainly a response to those who dont believe that any redistribution can be justified, as if free market economy rules were somehow woven into the moral fabric of the universe. See the reply just beneath yours. I agree with John Shear's statement: "I just don't think society is bound to accept without change the distribution produced by the market under some arbitrary set of rules"
Posted by: MS on September 13, 2006 10:33 AMThe rich and beautiful have problems just like the rest of us.
Thank you for your insightful comment. I am so relieved to know that the rich have problems just like the rest of us. In fact, I was just thinking about this the other day. For example last month I was trying to plan a vacation, and I havta tell you, it is such a hassle! Making sure the flights connect, making hotel reservations, deciding where we are going to go first, second, last etc, making sure we all get to see what we want and so on. I could go crazy! Now see, people in prison dont really have that problem. They have it so easy. Every day is the same for them. Of course, they may have some adventures in the shower, I heard. But the important thing is, everyone has 24 hours in a day. I am very comforted by that. You could be blind, paralized, whatever, but the rich will still have problems like running away from the paparazzis, and you still have 24 hours in a day. The universe looks out for everyone!
Posted by: MS on September 13, 2006 11:23 AM"The funny thing about the universal use of Paris Hilton to embody the idle rich (beyond the fact that there aren't exactly thousands of Paris Hiltons running around) is that she's an enormously succesful, hard-working producer of wealth herself. In fact, she's pretty much invented an entirely new career track, and the more people buy into the notion of her as a lazy airhead, the more of a genius she's been at marketing her persona."
She was able to do this because she was born rich.
Posted by: purple on September 13, 2006 11:43 AM"Take Hong Kong. I am no expert on it, but my understanding is that it's basically a rock with few natural resources. No redistribution to speak of, either."
That's not quite true - more than half the population pay zero income tax and a huge proportion live in government-subsidized housing (a 500 square foot flat in a towering concrete block, but it's better than nothing). In other words, the benefits exceed the contribution, even though there's no safety net to pay for food. They were forced to provide some sort of housing - the population of HK literally doubled in just two or three years in the 1960s, when Mao allowed large numbers to escape the Cultural Revolution (unlike the Great Leap, when he made them all stay and starve together), so the British government began a massive building program that effectively subsidizes the poor and some of the middle class.
But Hong Kong is a good example because the government doesn't do a lot of meddling, and offers good incentives. Also, there's suprisingly little envy of wealth there - rich businessmen (especially Li Kai-shing) are treated like rock stars or top athletes, and everyone hopes that they too will be wealthy some day. Maybe the solution for DeLong's problem is simply to teach our poor people to be more like the Hong Kong Chinese - change the culture of the poor, and the problem is solved!
"Some societies (like Singapore) are better at producing wealth than other societies (like Cuba). I think it is reasonable to ask why."
The answer isn't complicated. Singapore does far less redistribution, giving people an incentive to create wealth. Cuba aims for greater 'equality', with the natural result that they all end up poor together.
Posted by: Ann on September 13, 2006 11:46 AM"Her day remains 24 hours in length, and barring calamity, she will have her three-score years and ten plus or minus a few."
More of those 24 hours are hers to use as she sees fit. Her lifespan will be prolonged by health care the average person does not have access to.
Posted by: purple on September 13, 2006 11:51 AMpurple,
I don't have the cite, but I distinctly recall reading in the Wall Street Journal in the late 80's that the average millionaire worked 14 hours a day for at least 6 days.
I did that for a while, when I was much younger, and it gets old fast. Up at 6 am, at work by 7 am, leave work at 9 pm, do whatever for a little while, then to bed and the cycle starts anew the next day.
I'm not that driven to create wealth. But the people I've met who are really rich are not driven to create wealth, but rather simply to work, and they happen to be in an area of endeavor that makes them wealthy.
Posted by: Rex on September 13, 2006 12:28 PMOf course there is a very good argument to made against massive redistributionist policies – have the net effect of destroying massive amounts of wealth. Their proponents always seem to tacitly accept the odd notion that redistributing wealth will not significantly change behavior, but we know that this is not true. The relatively poor who receive the benefits of the redistribution will work less hard because they don’t have to produce wealth to enjoy its benefits, and the relatively wealthy will work less hard because they benefit less on the margin from their efforts. Voila’, less wealth to go around. No news here.
What is more interesting to me is the assumption that seems to often be accepted on both sides of this argument – the assumption that property rights are nothing more than the instrumentalities of societal wealth creation. The implication is that, if “society” decides that property rights no longer lay on the path to some goal or other, “society” should have no compunction about employing the state’s monopoly on organized violence to take property from one group of people and give it to another. What other rights, I wonder, are nothing more than utilitarian tools which, having been “created” by society, can be legitimately revoked by society? Life? Liberty? Beauty? Is nothing sacred?
We are evolutionarily designed to simultaneously desire status, and despise it in others; we are programmed to live in very small family groups where redistribution is both expected, and possible; and our amygdalas have a hard time grasping the idea that a big chief could earn his wealth, rather than stealing it from the group.
I think you should stick to economics and leave the evolutionary psychology to the experts. Where have they concluded that "our amygdalas have a hard time grasping the idea that a big chief could earn his wealth, rather than stealing it from the group?" Given the prevalence of social hierarchies and inequalities in our evolutionary history, we may have been "programmed" by evolution to believe just as strongly, or more strongly, that the just and proper social order is one of hierarchy and inequality as that it is one of egalitarianism and equality.
And about Cindy Crawford.....if and when it becomes possible for people to safely and inexpensively engineer physical beauty into their children through genetic engineering or some other means, I have little doubt that large numbers of people would do so, or at least would want to do so. This would in effect be the "redistribution" of assets otherwise distributed by luck, and in that sense be the quivalent of throwing acid in Cindy Crawford's face, to use your inflammatory example.
Posted by: Major on September 13, 2006 2:22 PMWhat other rights, I wonder, are nothing more than utilitarian tools which, having been “created” by society, can be legitimately revoked by society? Life? Liberty? Beauty? Is nothing sacred?
Pretty much. What else do you call our men and women in uniform who are getting killed other than "utilitarian tools" to make society better off? If life was truly sacred, government should have no right putting people in harm's way (let alone drop bombs on them, assuming life is sacred everywhere, regardless of nationality). But we do put people in harms way, execute crminials, search people and their belongings before they get on airplanes, forbid yelling "Fire!" in a crowded theater and so on. No right is limitless, and unilitarianism is a significant part of our decision making process.
Posted by: MS on September 13, 2006 3:11 PMShe was able to do this because she was born rich.
True, but completely irrelevant to my point. (In general, no one is disputing that being rich has certain advantages to being poor, so it's not necessary to keep posting one one-liner after another arguing otherwise.)
Posted by: JSinger on September 13, 2006 3:27 PMRex: "But the people I've met who are really rich are not driven to create wealth, but rather simply to work, and they happen to be in an area of endeavor that makes them wealthy."
I've met a couple who were driven to build their companies. Fred Smith, Fedex founder, always seemed consumed to me. Spending a 18 hour day on his business was what he wanted to do. (However, he did regularly attend his ten-year-old's soccer games.)
Posted by: JohnDewey on September 13, 2006 3:54 PMMajor: "if and when it becomes possible for people to safely and inexpensively engineer physical beauty into their children through genetic engineering or some other means, I have little doubt that large numbers of people would do so"
Eighteen year old girls are asking for breast implants as a high school graduation gifts. From what I've read, thousands of moms are writing the checks.
Posted by: JohnDewey on September 13, 2006 4:04 PMMore of those 24 hours are hers to use as she sees fit. Her lifespan will be prolonged by health care the average person does not have access to.
As you now restate, wealth has perks in terms of how one may allocate their time (and what kind of conveniences may be accessed). I still fail to see how this helps the discussion.
Posted by: anony-mouse on September 13, 2006 4:17 PManony-mouse wrote:
As you now restate, wealth has perks in terms of how one may allocate their time (and what kind of conveniences may be accessed). I still fail to see how this helps the discussion.
What's all this breezy talk about time allocation and convenience accessibility? The point is the lack of equality of opportunity. A confluence of inherited status, wealth, and a small talent for showmanship made it possible for Paris Hilton--and only Paris Hilton--to vault to the height of cultural superstardom by making a tape of herself juggling cock. That is a singularly unique opportunity which could not be availed by any commentator on this thread no matter how hard they tried, I'll wager.
Equality of opportunity is a fiction. Having the good luck of being born into wealth usually exempts one from the hardships of having to work hard and pay for a decent education and repay the interest on those student loans. Paris Hilton could spend her hours starting multi-million dollar entrepreneurial ventures into the oil business and still have enough left over to buy that $500,000 diamond necklace, if she liked. What did she do to earn that privilege? She was born--and nothing else.
Posted by: Immoralist on September 13, 2006 5:35 PMEquality of opportunity is a fiction. Having the good luck of being born into wealth usually exempts one from the hardships of having to work hard and pay for a decent education and repay the interest on those student loans.
Daniel K. Ludwig dropped out of school in 9th grade, borrowed $50 from his dad, and started rebuilding junk boats. Over time he parlayed this into a fleet of oil tankers. At one time he was the richest man in the United States, before he blew half a billion on an ill-considered real estate speculation. Along the way he suffered a permanent back injury while working on board one of the boats he and his employees were rebuilding.
Dave Thomas dropped out of school in 9th grade and started working behind the counter at a restaurant. He had the luck to be in the right place at the right time, saw an opportunity, and rode Colonel Sanders coat tails until he reached the point he could launch the Wendy's chain and create some real wealth.
On the other hand, grandchildren of wealth creators quite often have no concept of wealth creation and simply p!ss the money away, as Paris Hilton would be doing if she were just a little less clever and fascinating.
Posted by: triticale on September 13, 2006 8:50 PMjl asks:
What is more interesting to me is the assumption that seems to often be accepted on both sides of this argument – the assumption that property rights are nothing more than the instrumentalities of societal wealth creation. The implication is that, if “society” decides that property rights no longer lay on the path to some goal or other, “society” should have no compunction about employing the state’s monopoly on organized violence to take property from one group of people and give it to another. What other rights, I wonder, are nothing more than utilitarian tools which, having been “created” by society, can be legitimately revoked by society? Life? Liberty? Beauty? Is nothing sacred?
Sacred rights can be expensive. How far behind other societies are you willing to fall by sticking to your principles? Fidel Castro is willing for Cuba to fall very far behind indeed lest Cuba be tainted with any hint of capitalism. Deng (it doesn't matter if a cat is black or white as long as it catches mice) Xiaoping was not willing to see China similarly held back. I expect history will treat him more kindly than Castro.
Mark,
Sorry I'm about 24 hours late with my reply, but I hadn't expected to work someone up into such a fury.
All I said was that we could all support SOME redistribution. I should have said "all reasonable people".
Here are some examples of what I meant:
Money to support orphans and children born to parents in prison or devastated by drugs; money to cover a basic education for all (we know that not all parents would spring for this, given half the chance); assistance for disabled people and for military wounded (including help finding jobs). I would probably include help to elderly people stricken by dementia. I could go on and on.
Yes, we can all disagree about how far to go. However, if you can't even go this far, then try to remember that, even though you created your earnings, you are still the product of a SOCIETY; as such, you've enjoyed the benefits of what all those people before you put into it - those who died fighting tyranny, those who built the constitution, those who built the economy before you and developed the free market and industrial society that you were fortunate enough to be born into.
Grow up.
And by the way, I'd rather you address my points rather than throw socialist epithets around. The fact that I'm am far from being a socialist is perhaps an indication of just how far off the deep end you have jumped.
Posted by: gazzer on September 13, 2006 10:17 PMOn the other hand, grandchildren of wealth creators quite often have no concept of wealth creation and simply p!ss the money away, as Paris Hilton would be doing if she were just a little less clever and fascinating.
No arguments there, certainly. But she remains in a relatively small minority of persons and even then her wealth has no real bearing on the rest of us, or the merit of redistributionist arguments. Okay, so she can allocate her hours differently than I. Or, more importantly, than most of us, the same ones who will really end up bearing the weight of any meaningful redistribution program.
And by way of "meaningful", I note that if the woman vaporized tomorrow morning, leaving behind only a will that specified all her assets should be divided evenly among the sum inhabitants of the U.S....everyone could buy, what, a couple of postage stamps?
Posted by: anony-mouse on September 14, 2006 12:15 AMMore of those 24 hours are hers to use as she sees fit.
That's an outrage. Clearly she (and all other wealthy folks) should be put to death at an early age. It's only fair. Why should they get to enjoy more free time than us hard working folk?
Posted by: SG on September 14, 2006 3:07 AMWhat I learned from these comments;
Two reasons to favour forcible (re) distribution
i) to help the less fortunate (orphans for example)who would not otherwise be helped by altruism of even a rich society.
ii)because it is not "fair" that some people are richer or have more resources than others.
Two reasons to oppose forcible (re) distribution
i) Because it results in a poorer society overall, which means on average everyone has less (so less altruism)
ii)Because private property and freedom are sacred.
Now it seems to me that both i)s are somewhat complementary - you can have a debate or design experiments to see which is the better because they both have broadly the same objective (making people better). Hong Kong and Soviet Russia are two such experiements.
Both ii)s are non-complementary moral positions, a matter of taste if you like. I am not sure myself whether moral decisions are subject to rational decision analysis although Jane's acid test was a good attempt, and you might sacrifice your position on 1 to achieve 2.
Perhaps some of the heat could be taken out of the discussion by people specifying whether they are arguing on the moral or the practical side.
Posted by: ChrisA on September 14, 2006 9:08 AMChris,
Except that an argument from a moral perspective which leads to an impractical conclusion is inherently immoral. Pragmatism rules.
Posted by: Randy on September 14, 2006 10:35 AMChrisA
Good post! You have made, in my view, a solid effort at breaking the argument down into its constituent pieces. I particularly appreciate your having focused the discussion on forced redistribution as opposed to, for example, voluntary charity (Is there any other kind?). I do wonder if we might need a special category to handle public goods, the which have some natural redistributional characteristics which are not, however, the motivation for their funding.
Applying this approach to gazzer’s examples of redistributionist policies that all reasonable people would be compelled to support might look like this:
1. “Money to support orphans and children born to parents in prison or devastated by drugs.” First, these programs can be funded by forced redistribution or by voluntary charity. In other words, are these cases of people “who would not otherwise be helped by altruism of even a rich society”? Secondly, do the benefits (if any) of having government rather than charity provide these services outweigh the loss of rights inherent in the forcible confiscation of private property to fund them?
2. “Money to cover a basic education for all (we know that not all parents would spring for this, given half the chance).” Here we may have the “public goods” exclusion I mentioned. Public funding of education (as opposed to public PROVISION of education) is most often justified on a public good basis. Whether this is a reasonable justification is debatable.
3. “Assistance for disabled people.” See 1 above.
4. Assistance “for military wounded (including help finding jobs).” I see this as being a matter of contract. The government, as a matter of contract, provides assistance to disabled veterans who are providing a public good. This is no more redistributionist than paying them salaries.
5. “Help to elderly people stricken by dementia.” See 1 above.
Posted by: jl on September 14, 2006 10:52 AMjl,
If private charity could cover the needs we agree on, then I'm all for it.
However, I was just trying to list the most extreme cases for Mark's benefit. My personal viewpoint is that redistribution could be extended to cover other cases too.
For example, minimum wage folk are not in a position to pay their fair share for the kind of military that I like or for national parks or perhaps even for highways. So I personally don't mind paying a little more than my share.
Where I balance the scale probably differs from where others balance it. I think the judgement also must take account of our level of wealth.
gazzer
I believe that all three (although the third is a bit more of a stretch) of your new examples could be covered under the "public goods exclusion" I posited. In case you do not have an economics background, a public good is usually defined as a good that is nonexcludable and has non-rivalous consumption. National defense is a public good because I cannot exclude from its protection members of the public who do not pay for it and my enjoyment of national defense does not preclude my neighbor from enjoying it just as much. My view is that public goods, while they involve some elements of redistribution, are not "redistributionist" because redistribution is a side-effect rather than the objective. That is, the goal of national defense is not to make the rich poorer and/or the poor richer. It is to protect everyone.
Posted by: jl on September 14, 2006 2:11 PMRandy - I am afraid your logic escapes me. If I understand you, you are saying that moral positions have to lead to higher wealth. Not sure that is so (eg the anti stem-cell experiment movement). I think it was Milton Friedman who said he would prefer capitalism (because of the freedom element) even if it were less efficient than Communism.
JL-thanks for your comments. I suppose we could cover public goods under my first catagory - slightly expanding the scope of that catagory to "favour forced re-distribution to improve society".
Slightly OT, but it is interesting to me how often public goods come up to justify redistribution efforts rather than helping orphans. I am thinking of all the pork barrel politics.
Slightly more OT, why are the "fair society" advocates so down on Paris Hilton - has her partying harmed them in anyway? Are they poor because she took their money to become rich? I guess they didn't have to stay at her dad's hotels.
Posted by: ChrisA on September 14, 2006 2:55 PMChris,
Well, I was being a bit flippant, so this is going to be hard to support, but I'll give it a shot. I was actually thinking about instances in which actions taken in support of a supposedly moral premise lead to an even worse situation. For example, applying communism to large communities cannot be considered moral because in practice it results in atrocities. That which is moral must work.
But your question is, do moral positions have to lead to greater wealth?
Well we'd have to define wealth, but if we accept a rather broad definition, what moral premise could possibly lead to reduced wealth? For example, in charitable giving, the giver obtains the wealth of feeling good about themselves while losing a certain amount of material wealth, and the receiver obtains the material wealth and feels better about the giver - the material wealth is a wash but both people feel better. In mandatory redistribution, on the other hand, the material transfer is still a wash, but both people feel worse - the giver is resentful and the receiver feels like a thief. Its a net loss.
I'm thinking the answer to your question is yes. Your turn. Can you think of a moral standard which, when applied, would result in reduced wealth?
Posted by: Randy on September 14, 2006 5:15 PMRandy, it is easy to think of moral standards which when applied reduce wealth. For example many people (now and in the past) think usary is immoral. Strict rules against usary reduce wealth.
An example I gave before is Fidel Castro's moral belief that capitalism and markets are evil. His strict application of this standard has reduced the wealth of Cuba.
Posted by: James B. Shearer on September 14, 2006 5:48 PM
James,
This is getting tricky - but fun.
When I hear "usury", I think first of the term as it was used in the middle ages, when it basically just meant charging interest. Though part of a moral standard, it was counter productive. It made people poorer. It didn't work. So it was an immoral moral standard - that is, not really moral at all. Copy?
The modern definition of usury, on the other hand, is moral. Its purpose is to protect fools, and I can accept the fact that there are fools who need protecting. As such, it does protect (if not create) wealth by making fraud less likely. In the modern world, laws against usury do work.
Posted by: Randy on September 14, 2006 10:20 PMRandy, the fact that a moral standard makes people poorer does not prove the moral standard is actually immoral. There are other values besides wealth. For example even if it could be proved that banning slavery makes society poorer that would not mean it is immoral to ban slavery.
Castro presumedly believes capitalism is akin to slavery.
Posted by: James B. Shearer on September 15, 2006 1:27 AMRandy
I think what you have is a confusion between the ordinary meaning of moral and the philosophical meaning of moral. Ordinarily when people say something is moral they mean "good", therefore you can't have a "bad" moral, it's an oxymoron. However philosophically is is quite difficult to agree on basic morals or ethics, a moral is a first principle from where you start the argument. As an example sentence - I believe killing people is always wrong therefore we should lock up murders. The first part of the sentence is a moral position, the second the conclusion from the moral position. I can disagree with the moral position (just killings for instance) without invalidating that it is a moral position.
Maybe vanity on my part but is Jane developing my original post in her post on "Don't try so hard"?
Chris
Chris,
Agreed - and;
"Perhaps some of the heat could be taken out of the discussion by people specifying whether they are arguing on the moral or the practical side."
You're right here too. Though I happen to believe that the practical side is also the moral side.
Posted by: Randy on September 15, 2006 6:45 AM