The Flip-Side of Noble Lie-Side Economics?

You’re living in a dream world (or you have tenure) if you really believe merit doesn’t matter.

The fact that George W Bush is not a failed used car salesman invalidates this. As does the aftermath (or lack thereof) of the whole financial crisis thing.

So a schoolteacher, coal-miner, convenience store clerk, etc. is BY DEFINITION lazy, incompetent, free-riding or stupid. Otherwise they would have been rewarded for their merit with a higher-paying job. Nice how the theory covers all cases.

Would Secular Calvinism be a good name for it?

It’s not a theory; Brooks doesn’t believe it. He merely wants you to believe it.

You can’t go wrong, when a pundit says “Americans” or “the American People”, by replacing it with “me and my buddies”.

A person who does NO work, and invests their inherited wealth in a series of dangerous and destructive financial instruments will pay only 17%.

If he invests his inherited wealth in a series of dangerous and destructive financial instruments, he’ll probably lose all of his wealth, and there won’t be any taxes to speak of.

It’s basically a word salad. Either he invests intelligent and pays taxes on his gains, or he invests unintelligently and loses his money.

lol, not David Brooks? lol. any excuse or perversion of words and mindset will suffice in the great theft perpetrated upon the American public.
Steal all the money and make the poor pay. Trickle up economics. where all the wealth sucks upward, no taxes on the Elites so they will create jobs in 3rd world countries, paying stockholders greater dividends while robbing the American poor.

A reverse Robin Hood. asking a robber why he sole the bank, gets the reply, “that’s where the money is.” The Rich have bought Congress, the Media and have con artists telling poor Americans it only fair you pay more taxes than the Rich.

it’s their country after all. They OWN it, now. Bought and paid for, lock, stock and barrel.

If he invests his inherited wealth in a series of dangerous and destructive financial instruments, he’ll probably lose all of his wealth, and there won’t be any taxes to speak of.

And even if he does, his family and friends will almost inevitably see him all right.

It’s incredibly rare for a wealthy person to become poor.

And even if he does, his family and friends will almost inevitably see him all right.

It’s incredibly rare for a wealthy person to become poor.

Quite so. I don’t have a firm position, really, on the taxation matter, but it’s not the same everywhere. In America higher taxes on the rich are probably unavoidable (I can’t see convincing arguments against it), in France the wealth tax is amusingly quixotic, Germany I don’t understand any of it at all. America, by the way, has much more leverage to tax its rich than other Anglophone countries, as lots of its rich are people whose success was “only in America,” or people are fundamentally attached to living in America.

I think the U.K. and Canada are probably the only two G8 countries who actually would find raising taxes on the rich inadvisable policy for practical reasons. Canada, for the reason that it doesn’t really need the revenue and supererogatory taxes are silly; the U.K. for the reason that it’s hard to raise taxes without bugging the Russian and Arab expatriates whose habitation in England is *free money*.

I’d be the first to admit that wealth and earnings have just about very little to do with individual striving and hard work. I don’t quite know the full moral implications, but presumably they are damaging to my political beliefs. A poor guy selling coffee in Omaha is not going to make as much as some guy selling yuppie coffee in Santa Monica, no matter how much harder he works. And of course, selling normal coffee and selling yuppie coffee don’t really involve differences in merit. When people complain about the cult of Macs, what they don’t understand is that it’s essentially Rotarianism for the upper-middle class: the people who design Apple products have that background aesthetic, the people who design the $60 iPhones cases (check out Grove Made) have that aesthetic, the people who design iPod appendages also have that sensibility; your money is going toward others from your own milieu. After all, designing Apple accessories might be what your daughter or nephew will be doing. A non-negligible portion of Apple’s overcharging goes toward good pay for artsy upper-middle class folks; it’s Rotarian-style mutual bill-padding.

P.S.: anyone have any data on German expatriation in London? I’m trying to do a bit of a side research proj. on how individual Continentals respond to economic incentives of the English-speaking-world finance industry.

“A person who works 50 hours a week, 52 weeks a year will end up paying at least 25% in income taxes. A person who does NO work, and invests their inherited wealth in a series of dangerous and destructive financial instruments will pay only 17%. ”

Well, OK, an average (rather than marginal) tax rate of 25%. You’ve got to be a pretty high earner to pay that in income taxes actually.

“For example, say, you’re single and have taxable income of $185,000 in 2011. And let’s say your gross income was $210,000. Well, your income up to $8,500 is taxed at 10%. From $8,501 to $34,500 is taxed at 15%. From $34,501 up to $83,600, it’s taxed at 25%. From $83,601 to $174,450, the rate is 28%. And you’ll pay 33% on the remaining $10,600. (The top rate, 35%, kicks in at $379,150 for singles.) In this case, your average tax rate (the proportion of gross income you’ll pay in taxes) is about 22%.”

http://www.smartmoney.com/personal-finance/taxes/whats-your-average-tax-rate-9548/

Agreed, that’s only federal income taxes, but there’s plenty of places with no state income taxes (and plenty of places where the state taxes capital gains and investment incomes).

From Emmanuel Saez (http://elsa.berkeley.edu/~saez/saez-UStopincomes-2006prel.pdf) we can see that that $210,000 gross income would put one firmly in the top 5% of *household* incomes, let alone individual incomes.

So your contention becomes that at an average 25% income tax rate, taxes on incomes are too high? Thus that income taxes upon the top 5% should fall?

@rules, ‘industrious’ is the pain that buys you the moral right to be better than others. As far as I can tell it’s not even a trick or so to dupe the naive. Lots of people really believe that they deserve their better outcome because of their hard work, and quite often they did indeed work hard.

Honesty sometimes served the same role of painful virtue that makes you deserving, but it has become less convincing, if it ever waw convincing. After all, the ranks of the sepf-made rich really are filled with hsrd workers, but not obviously with very honest people.

To believe that hard work pays you only have to ignore the hard workers who are not rich, andc who you never meet away. To believe that honesty pays you have to ignore the dishonest rich folks you do know.

This:

… imagine two secretaries with the same job but one earning considerably more. … for this example to translate into a fair economic system, both secretaries must have the opportunity to develop their skills. It’s not fair at all if the less-effective secretary couldn’t go to school and doesn’t know how to read …

together with this:

When politicians argue that, for the sake of fairness, we must raise taxes on the entrepreneurial class … they are unwittingly undermining the possibility of achieving the opportunity society they regret not having … if we want to approach [this] ideal, we must define fairness as meritocracy, embrace a system that rewards merit, and work tirelessly for true equal opportunity. The system that makes this possible, of course, is free enterprise. When I work harder or longer hours in the free-enterprise system, I am generally paid more than if I work less in the same job. Investments in my education translate into market rewards.

adds up to something very odd looking, if not incoherent. Where will those ‘investments’ come from? I can only read “work tirelessly for true equal opportunity” as a call for our social arrangements to be made perfectly endowment insensitive. Say you accept on that basis that there should be taxation: your attention will then turn to efforts to make taxes fair. Yes, some ambitions will be blunted through taxation. Whose ambitions? Ambitions to what? Is Brooks arguing that higher taxes for the rich alone would be unfair, compared with current arrangements? Or does he think it can all be done with loans, or something?

I have a bit of trouble keeping the lies straight. So, if I’ve got this, the “noble lie” is that success is due to merit. That would make the assertion that “Success is never due to merit, so we’re justified in progressively taxing it’s results away.” the “ignoble” lie?

You’re living in a dream world if you think that Mr Mistoffelees can’t influence the horse races. Everyone can think of times when they won big because he was purring loudly when they placed the bet. We can also come up with cases when we lost because we ignored his warning miaows.

Myles 04.25.11 at 4:04 am

” If he invests his inherited wealth in a series of dangerous and destructive financial instruments, he’ll probably lose all of his wealth, and there won’t be any taxes to speak of.”

Did you miss the Great Financial Collapse? ‘Dangerous and destructive’ doesn’t necessarily mean to the investor; it could easily mean dangerous and destructive to others.

What is merit, anyway? A function of the talent one was arbitrarily born with and the amount of high quality effort other people have put into ensuring it gets developed? Funny to call that merit, surely.

No doubt that you set a sophist to catch a sophist, and this discussion is all quite in the best Socratic traditions, but we need to note that this entire fabric of sophistry and counter-sophistry completely misrepresents the rationale for progressive taxation.

Taxation isn’t a matter of rewards and punishments. It’s a matter of paying for the public obligations a govt takes on by collecting money from the members of society. The reasonable way to go about this is in the manner that least disturbs the ability of those individuals to go about their lives, at the very least to go about their lives in a way that leaves them capable fo contributing next year at tax time. We don’t tax the rich members of society at higher rates than the poor because we imagine that they are sinners in need of punishment. We tax the poor at lower rates because we don’t want the govt to take from them what they need to survive and thrive. We could tax people who earn $1,000,000 a year at 90%, and they and their families would do fine, would have food and shelter and clothing and health insurance, and even amusement, in abundance, and they would still be doing just as well next year and able to pay just as much in taxes. Take 90% from someone who earns $25,000, take almost any % from them, and you’re going to starve them. They won’t be able to pay taxes next year if they go quietly with this arrangement, because they will be dead of starvation or exposure, and there will be war if they don’t go quietly.

Why we routinely let the thugs frame taxation in Randian terms is beyond me. Just because one of these thugs is so incompetent that he exposes himself to a reductio even within his own frame, is no reason to accept that frame, even just for a bit of fun torturing the boob with his own devices.

“Taxation isn’t a matter of rewards and punishments. It’s a matter of paying for the public obligations a govt takes on by collecting money from the members of society. The reasonable way to go about this is in the manner that least disturbs the ability of those individuals to go about their lives, at the very least to go about their lives in a way that leaves them capable for contributing next year at tax time.”

Excluding the punishment aspect, you will find that it is the default position of the majority of Americans and both political parties. The catch being that most Americans view all the money, including the taxes, as their money. This creates a conflict where the political class in turn continues to offer more and more of the American taxpayers individual money for projects desired by the political class.

‘Meritocracy’ is one of many words which should be written with one less ‘c’ & one more ‘z’.

First, props to Myles for honesty: “I’d be the first to admit that wealth and earnings have just about very little to do with individual striving and hard work. I don’t quite know the full moral implications, but presumably they are damaging to my political beliefs.”

I’m sure that you’ve read Hayek, and I think he’s pretty interesting on this, actually. I think he called for a 100% percent inheritance tax, or something like that – either way, it was a measure associated with the far left. But he justified it by saying (correctly) that any outcome will be a distortion if you start out from different places. So he put it in terms of “market distortions” but flipped the “don’t tax me bro” argument on its head by saying “look, starting out with different amounts of wealth is basically akin the to a progressive income tax, which people on the right are supposed to dislike.”

Also, another fallacy that Brooks commits here is that he makes an appeal to “natural” circumstances, as if a do-nothing policy is somehow the same as one that mimics “nature”. What he fails to understand is that “not redistributing wealth and letting the market choose winners” IS STILL making an active choice. Policy makers are fully aware that life is not fair, and that our economic system is not absolutely, unarguably perfect and so is any mature human being. So if they choose to not mess with that system at all, it is in no way “natural” or “laissez faire” because they’re still consciously determining how our country will distribute wealth. This is an argument that, incidentally, a lot of Mises-types make (or should make) – that our current system, without redistribution, is still distorted, except it’s just in favor of the wealthy. We will never have a fully undistorted system, so there will never be a day where no redistribution is warranted, though hopefully the need for it will be smaller in the future.

Short dictateursanguinaire: harry b @ 27

Go not-blog about it at your own blog.

I wonder what Brooks’ reaction (and that of his allies at AEI) would be to what seems to me to be a perfectly logical suggestion based upon his claim to desire the maximization of reward for merit and hard work – leave income tax rates exactly where they are, and implement a 100% inheritance tax.

“I’m a highly successful, highly educated (relative to the rest of the country/world, though not the highest level [yet]) individual and I’ll be the first to admit that it was all luck. “

The primative “hard” determinist argument against the idea of merit or deserts. It may be luck that you’re a meritorious person rather than a slacker, but that doesn’t mean you *aren’t” a meritorious person. We ‘soft’ deteriminists understand that causation doesn’t preclude responsiblity, it’s essential for it.

***

I understand the ‘noble’ lie to be that all success is a result of merit. The ‘ignoble’ lie, then, would be to claim that no success is a result of merit. If you want to live without lies, you need to look at individual cases…

Americans aren’t opposed to redistribution of wealth. Indeed, most recent research has shown unusually high levels of support for redistribution, but a disconnect between those preferences and the behavior of elected officials.
(http://realignmentproject.wordpress.com/2011/04/07/hunting-the-elephant-in-the-room-inequality-part-i/)

Myles at 8 – and if he hires a monkey to throw darts at the financial pages, or otherwise just gets lucky? Isn’t this the big problem here when it comes to capital gains, that an enormous amount of what happens with investment is down to sheer blind luck?

Regarding “You’re living in a dream world (or you have tenure) if you really believe merit doesn’t matter”: sure merit matters, but so do a lot of different factors. The question is which is the most significant; the U.S happens to be a society where your parents’ background matters much more than it ought to – we weren’t always this way, but we have increasingly become this way. Case in point: in the U.S, at all quartiles of test scores, the children of the rich go to college at a higher rate than the children of the poor; so strong is the effect that the children of the rich who score in the 2nd quartile go to college more frequently than the children of the poor or children of the working class who score at the 4th quartile. (http://realignmentproject.wordpress.com/2009/07/23/the-balance-wheel-of-social-machinery-universal-public-higher-education/)

I basically agree with this post, but I did want to pick nits with at least this one comment:

What is merit, anyway? A function of the talent one was arbitrarily born with and the amount of high quality effort other people have put into ensuring it gets developed? Funny to call that merit, surely.

You have got to be kidding. If my parents push me to work harder at school, surely I can take at least some credit for rewriting essays while other kids are watching TV? I am pretty far to the left side of the American political spectrum (maybe as far left as the 99th or 100th US senator), but I have always found these insinuations in liberal political writing to be a little surprising since most accomplished professors have surely put quite a bit of time into their studies from a fairly young age themselves. This claim seems to me to go too far and at the same time, be unnecessary in order to substantially critique American society.

Taxation isn’t a matter of rewards and punishments.

Progressive income-taxation is the ideal method of taxation precisely because it punishes no one—in terms of lost purchasing power. Not the rich, not the poor, not the middle-class. The reason why this is true: in market economies, it is an absolute certainty that if an across-the-board tax hike is levied that preserves every household’s ‘ranking’ within the hierarchy of all disposable incomes, prices on all consumables would simply drop to levels that everyone could afford. The same quantities of goods/services would be produced/purchased, only at lower prices.

In all market economies, the scarcest goods & services are auctioned off to the highest bidders. Suppliers charge the highest prices that their markets will bear. Consumers who are willing and able to pay those prices get to be successful bidders. Those who cannot afford to pay a seller’s asking price will ‘submit their own bids’ only if the official selling price is lowered to a level that they can afford. In this kind of ‘auction’, the only bids that are offered are those that are certain to be accepted. Rich people are able to obtain the scarcest goods/services simply because they are able to outbid those who have less disposable income/wealth to bring to the auction.

If rich people were required by some Leftist political party to start paying taxes at steeply progressive rates, none of the yachts or Rembrandts or beach front property would disappear. They would all still be sold to the highest bidders, which means that the wealthy would still have all the disposable income they need to purchase the scarcest goods/services/experiences available in the marketplace. If a supplier of luxuries sets her prices too high, she won’t be able to sell all of her product. She would be forced by the marketplace to lower her prices to a level that ‘dollar-poor’ [‘pound/euro-poor’] rich people would find affordable.

It is a mystery to me why most ‘anti-Republican/anti-Conservative’ economists are oblivious to the way Conservative/Republican arguments re: tax policy are fundamentally flawed by the fallacy of composition. When all taxpayers within a particular stratum of income earners are required to experience the same decline in their incomes, then none of them ends up experiencing any loss of purchasing power. Why is that so difficult to understand?

If they did understand how the fallacy of composition applies to tax policy, we wouldn’t be having the same discussions about ‘fairness’, would we? Is it fair to tax the wealthy in a way that doesn’t deprive them of any* of their purchasing power? The answer couldn’t be more obvious.

[*Required: marginal rates, on gross incomes, no exemptions, allowances, deductions of any kind. Yes, some billionaires would lose some of their purchasing power relative to the rest of the world’s billionaires, but is that a concern that any of us should take seriously?]

#46: Tax rates are set by national governments, whereas competition for status goods is global. This makes a difference, no? Our rich people demand the wherewithall to outbid not each other, but the Ukrainian oligarchs.

Charlie, 48:
Tax rates are set by national governments, whereas competition for status goods is global. This makes a difference, no? Our rich people demand the wherewithall to outbid not each other, but the Ukrainian oligarchs.

It makes a difference, as I acknowledged, but not much of a difference. In a very large economy, like that in the United States, the difference is quite small. Still, measures could be taken to protect the purchasing power of America’s uber-rich citizens [relative to the world’s uber-rich), by imposing a stiff tax on foreign purchases of domestically-produced luxuries, of which there are many.

In “their own neighborhoods” (nations), America’s Uber-Wealthy would enjoy undiminished status. If they feel some embarrassment in front their international friends, what concern is that of ours?

Of course, the best solution to such a ‘problem’ is to not only embrace steeply-progressive income taxation here in America, but to also promote its acceptance around the world. The more countries countries throughout the world that embrace a certain ‘standard’ configuration of progressive tax rates, the less it would/could matter to rich people around the world.

All it takes is one, large, wise country to champion the cause, and then suddenly, people all over the world will see improvements in infrastructure, standards of living, and work opportunities.

Some of Brooks’s examples are strange. For example, the one about the secretaries brought up @ 20: Brooks doesn’t talk about the fact that pretty secretaries make more than plain secretaries (though he mentions it elsewhere–though, on the other hand, in fact, accomplished middle-aged and older secretaries are often paid quite well even when their looks are sadly past their best, and in fact are not actually discarded due to their failure to meet a certain standard of femininity or “heterosexuality”). He talks about the fact that better educated secretaries make more than less well educated secretaries (as a matter of, I have known secretaries who could not spell, but not secretaries who could not read). Then he talks about the fact that secretaries who had the opportunity to go to school earn more than secretaries who did not have the same opportunities, which is what is strange. Because on the one hand, while many plain women may wish they were beautiful, it seems doubtful that all high-school educated women wish they were Ivy graduates, so they would hardly feel that was unfair, and probably wouldn’t change if they had the chance. And on the other hand, there are no liberal, feminist or governmental, institutions–none–going around saying that, in fact, it would be much more fair to pay the less-educated women more, while not at all suggesting that they go back to school. Yet Brooks seems to be deriving some rhetorical “oomph” from the expectation that “liberals think women who can’t read should be favored as secretaries over women who can.”

Salient, 49:

That’s only true relative to one another, which isn’t what counts. They experience a loss of purchasing power as a class, relative to other classes.

Actually not true at all. That would only happen if a lower-class stratum (pre-tax) ended up with more disposable income after-tax than some higher class. The use of marginal tax rates makes such an outcome impossible.

Yes, the wealthy would have fewer dollars/pounds/euros, but those smaller quantities of dollars/pounds/euros would still buy them everything that their larger disposable incomes would have purchased, if the tax had not been imposed at all.

How can you assert that purchasing power would be lost if the wealthy are still able to purchase everything that they would/could have purchased before, only at lower prices? You may not realize it, but when you use the term ‘purchasing power’ in your argument, you are assuming that prices will not change along with changing incomes at the upper-end.

It would simply reverse the pure price-inflation that occurred within the upper-class after the Republicans in America slashed the income tax rates of the wealthy. They all obtained more dollar ‘wealth’, but they didn’t see any increase in the purchasing power of their incomes because all rich people got the same increases in disposable income. They simply bid up the price of every sort of scarce good/service/experience/financial asset. None of the wealthy became better off in real terms.

Kroeger@53:

Okay, I’m just going to respond to this argument directly after cross-posting. Do you really think that the only thing the rich spend money on are positional goods? This is crazy. They don’t spend all their money on real estate in Manhattan and Malibu. There are also: yachts, trips to golf resorts, ski chalets, private jets, lake homes in Montana, vacation homes in South America and many more. These are all goods the quantity and consumption of which are determined in large part by the distribution of incomes.

“The primative “hard” determinist argument against the idea of merit or deserts. It may be luck that you’re a meritorious person rather than a slacker, but that doesn’t mean you *aren’t” a meritorious person. We ‘soft’ deteriminists understand that causation doesn’t preclude responsiblity, it’s essential for it.”

Yo, it’s bad enough to misspell words when attacking someone’s argument, but messing up “primitive” is about as bad/ironic as it gets. And, I didn’t make any specific policy choices. I don’t believe in total equality. My point is, we should keep determinism in mind when we’re talking redistribution. Yes, society would probably not work as well if we did not at all reward merit. There is a middle ground between that and holding the logically inconsistent metaphysical viewpoint that free will can exist (without it being some form of tautology or self-contradiction) and thus redistribution is wrong on principle. I’m with you on the middle ground. But I think that redistribution as a principle of fairness follows from that middle ground. It’s pretty much the difference principle – some merit-rewarding is good for everyone but total meritocracy from unequal starting points could result in widespread suffering.

Kroeger @ 58:

Okay, why don’t you give us an example of the kind of good you’re talking about because I think you’re mistaken. Obviously real estate is a positional good, but what kind of luxury good are you thinking of that has the properties you are claiming?

“Even if you aren’t willing to give me credit for my work ethic, perhaps because that was also circumstantial, I still sacrificed time that I would have otherwise preferred spending doing something else.”

Just to pick nits, I agree with what I take to be your viewpoint, mpowell. But if we go by that metric, doesn’t everyone who develops any skill sacrifice some time? And anyways, determining value from “time sacrificed/pain induced by laboring” sounds an awful lot like LTV. Even under that schema, that would mean rewarding certain professions with much more than they currently earn, i.e. it would still not justify the current economic order. But I think that’s what you’re saying, isn’t it?

How can you assert that purchasing power would be lost if the wealthy are still able to purchase everything that they would/could have purchased before, only at lower prices?

They would not be able to purchase as many people as they used to. If income is distributed more equally, the cost to indenture someone rises, because there are fewer people on the bottom rungs who are desperate enough to accept a life of harsh servitude. The price of a person goes up. The price of labor goes up. (If you prefer, fill in gardener or housekeeper or pilot or butler or chef or whatever for ‘person’ but this same point applies to labor more generally, at least to a first approximation.)

What separates the wealthy from all other consumers of non-positional goods is that they possess the money wealth they need to outbid poorer folks for the positional goods they desire.

No. What separates the wealthy from all other consumers is their ability to indenture and exploit other people, specifically, those people who are desperate to get by and maybe acquire some modicum of goods for themselves. A significant portion of the general population has to struggle to acquire the non-positional goods they need to survive, much less flourish, and many of them only succeed inconsistently. The more desperate such folks are, the easier it is for the upper class to exert control over them, by controlling the means through which they receive their essential non-positional goods. When they’re under your control, you can get them to do things for you, and those things make your life nicer.

Wealth isn’t about positional goods. It’s about power. Power over other people. And the whole point of progressive taxation is to redistribute that power more fairly.

dictateursanguinaire @ 63:
Yeah, the US is pretty far from being a meritocracy as it is, much less any kind of luck egalitarian utopia. As for my ideal economic order, I’m not 100% sure what it would be. I’m not entirely comfortable with LTV. I think that if you reward people for just putting in effort you will get a lot of effort in unhelpful areas. I’ve never really settled in my mind whether paying people by partially market driven rates is fundamentally fair or just necessary to achieve a reasonable level of society wide productivity. Obviously this debate gets awfully involved pretty quickly, I was just objecting to the suggestion that investment in worthwhile skills doesn’t lead to merit. I think if we ever achieved a society where 99%+ of people were not born in unfortunate circumstances it would be interesting to see how people felt about this debate. But unfortunately I doubt we’ll ever get there.

The arguement “they earned it” implies that all the costs that should have been recognized were. It is not the nature of social costs of business activity for those cost to be collected at the point of sales. Tobaco companies earn lots of unrecognized social costs miscatagorized as profits. The tax system is where we make up for our inability to correctly attribute social costs to the actual transactions. Do you know the social costs of Tarborro? I don’t use it, you don’t use it, but we pay for it.

Denying the very concept of merit as a matter of principle is in my view not only unconvincing but also politically counterproductive. What progressives need to hammer home any time this debate comes up is the fact that there is practically no recognizable relationship between the merit and income in the top and bottom slices of the income distribution. The 3 to 5 orders of magnitude difference in income between a CEO and the person who cleans his/her office has nothing whatsoever to do with any non-arbitrary definition of merit. Chances are that the if the former is incompetent while the latter is doing a great job, this fact will have no bearing whatsoever on the income gradient. And that this constellation is not unusual at all is widely known. The mystery is why progressives don’t mention it more often.

Mpowell, you are asking for more money now to make up for the fact that you stayed in and did your homework when other kids were outside playing football when you were 12? And how much more than them do you think you are owed, because of this?

mpowell@47
I find it equally bizarre that someone would not recognize the extent that that hard work was brought about by other people’s efforts. My parents did invest in me, a fair bit. They provided space, and structured my life around school. No TV during homework. Talking about complex matters in front of me all the time, expecting em to engage, and to have informed opinions, asking “why do you think that?” when my logic failed me. Radio 4 on all the time. Quiet questions, not pushy, about whether homework was done. Never did any of it for me. Highly dedicated and encouraging teachers, esp at 9, 12, and in high school. I passed Ad Math at 15 because after a disastrous first exam I spent an evening with a family friend who prepped me for the second (a prof of aeronautical engineering at imperial college, lived a couple of blocks away). Disbelieved the diagnosis that I was educationally subnormal (ESN) when I was 5, and carried on as if I was normal, because they weren’t deferential to the system. Peers who were smarter and less hard working than me, but provided competition.

Without all that would I have worked hard? I doubt it. Perhaps though. But its not something I am willing to call merit, to say so just seems bizarre. Kindness to a student in desperate need, helping that student to overcome, or at least manage, serious problems in life, that might be merit (though it’s a pleasure) but the reward for that is in heaven, as it should be.

mpowell, 51:

Okay, why don’t you give us an example of the kind of good you’re talking about because I think you’re mistaken. Obviously real estate is a positional good, but what kind of luxury good are you thinking of that has the properties you are claiming?

I think the division of goods into the categories of positional vs. nonpositional is one that may cause unnecessary confusion. I prefer the more basic division of goods into the categories of plentiful vs. scarce [relative to demand]. It closely parallels the categories of nonpositional vs. positional.

Across virtually all categories of goods, there are varying grades of quality. One can generally expect to pay more for the highest quality offerings because (1) the wealthy want to possess them, and (2) they can afford to outbid those who have less disposable money wealth available.

With few exceptions, I consider the highest quality goods = least plentiful goods (relative to demand) = positional goods. If for any reason the highest quality good in some category also happened to be the most plentiful of such goods (even more plentiful than inferior goods), then the good would have to be considered non-positional.

Wouldn’t you agree?

The wealthy are a machine for saving. Saving lets compound interest work its magic. The wealthy work magic.

That’s better. That’s more convincing, and it’s actually closer to the truth.

@71.

Sure. I just like pointing out that while everyone’s poster girl for that sort of inheritance, Paris herself, will inherit, she’s not done so yet.

Harry @ 77. Another similar point. The Danish national income tax rate is 3.76%. The top Danish national income tax rate (there are only two) is 15%.

Where the real income taxes come in is at the commune level, which can (and often is) be a unit as small as 10,000 people. 25-30% at that level.

We might call it the “Where does Mads drink” effect. (Mads being, I’ve just found out, one of the top Danish first names at least among penpals which is the first google result for Danish first names). I’m reasonably convinced that people will happily (perhaps “more happily”) stump up a higher portion of their income to be spent on social or public services if they know where the bloke who spends it has a beer on a Friday night. In a unit or community of 10,000 it’s not all that difficult to find out where Mads does go for his before the weekend relaxer. And both the ability to beard him in his den, and the risk of being so bearded, are likely to make the money better spent and thus more cheerfully given.

At the other end of the scale, compare the US and the EU. It’s not just UKIP extremists like myself who spit in rage at relatively trivial sums (1%, 2% of GDP) being sent off to Brussels to be spent a thousand miles away from where the tax is raised. Look at the German reactions to Greek bailouts. National taxation, hugely greater sums, produces much less of a fuss.

I get the impression (it’s years since I lived there) that the more local the taxation in the US the less outrage it engenders. We can see the schools that property taxes build while who knows what happens with what gets sent to DC?

Which brings me to something that’s always rather confused me about the left liberal position in the US. It generally assumes that more should be done at the federal level rather than State or County. It also generally assumes that something more like the Nordic way, higher taxation, more government provision of things, is similarly the way to go.

Yet one of the ways which the Nordics manage this higher amount of government is precisely by making it all more local, in direct contradiction to the putting more stuff at the Federal US level. I’m convinced that a great deal less federal government and a great deal more localism would in fact allow tax collected (well, possibly at least) to rise to the sort of levels that would provide the public services some desire: but that the insistence on doing these things at the Federal level is one of the things which prevents such.

I read Brooks’s second argument like this:

There are two concepts of fairness: meritocratic and redistributive. Redistributive fairness applies to distributions of unearned goods – such goods should be split so that each person derives equal benefit from his allotment. Meritocratic fairness applies to distributions of earned goods – such goods should be distributed in accordance with how they were earned.

Although the US is imperfectly meritocratic, many goods are in fact earned. Therefore it would be inappropriate to apply redistributive fairness towards them, or to apply redistributive fairness as a blanket principle. By doing so, in fact, we are reducing the degree to which merit is rewarded, for the sake of distributing that portion of goods which are unearned.

Moreover, by adopting redistributive fairness as a blanket principle, and eroding the belief that anything is really earned, we degrade the sense of control people have over their own lives. This diminishes motivation to work hard for success; it crushes entrepreneurial spirit. We move ourselves even further away from a meritocratic society with such an adoption.

Brooks’s real problem is with what he perceives to be the underlying assumption of Obama’s rhetoric: that the earnings of higher-earners are, in fact, not earned, and subject to redistributive fairness (in Brooks’s terminology). And, in fact, I think many higher-earners hear Obama’s rhetoric the same way – and are understandably irked by it.

I don’t read Obama’s rhetoric that way, but if one did, the thrust of Brooks’s second argument becomes a little more understandable.

#86: Moreover, by adopting redistributive fairness as a blanket universal principle, and eroding qualifying the belief that anything is really earned the material gain of an individual is down to the unaided effort of an individual, we degrade give perspective to the sense of control people have over their own lives.

I think there’s really not much going on with Brook’s piece other than rhetoric in support of the notion that we should nurture an ‘entrepreneurial class’ with winner-take-all tax policies. He can’t quite come out and say that there should be such a class, so it has to be gestured at.

Brett
Aha. Got it. The ordinary use of “merit” contains the idea that there is something good or deserving about the person who has it. But since we don’t deserve things we have no responsibility for, merit as you’re using it can’t have much to do with the ordinary use of merit. So, merit in this context just means “does things that get rewarded in the market” or something like that. Then, sure, people with merit get rewarded by the market. I agree, if that’s how we define merit. It just has nothing to do with how they ought to be rewarded. Anyway, thanks for clearing up that confusion.

Tim, thanks, useful as ever. There’s a historical story about how the left became oriented to the Federal level — a combination of the fact of the civil war, the use of state troopers etc against labour in the 50 years around the turn of the 20th century, the New Deal (though, as my friends like to point out, many new deal programs were invented in the states, mostly in mine), and then Brown and the civil rights act. This is just a causal story, not a justification!

Tim – I’m sorry, but both contemporary and historical evidence points the other direction on national v. local taxation and provision. Historically, as Harry pointed out, federalism has resulted in drastic divergences – Robin Einhorn will tell you that this has to do fundamentally with slavery and the way that planters dominated government and successfully avoided taxing their slave property versus the New England town hall as a source of legitimization of taxation. And everything that followed.

However, the same thing is true today. On the taxation side, the South overwhelmingly relies on regressive sales taxes (http://www.amazon.com/gp/product/B004NBZGIS/ref=pd_lpo_k2_dp_sr_1?pf_rd_p=486539851&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=0520269675&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=0APME5X76JQXDCXJNSTM), maintains a low tax, low wage economic strategy, and under-invests in core areas of state provision. Look at where opposition to expanding UI eligibility or Medicaid eligibility has centered in the last three years – the South.

The Danish strategy doesn’t work when you have really big differences between sub-units, and when the political elites of particular sub-units pursue exaggerating those differences as a core economic strategy. As I’ve said before (http://realignmentproject.wordpress.com/2009/08/02/union-and-liberty-why-progressives-should-resist-secession/), the gains that the Vermonts realize are more than outweighed by the damage done to the poor of the Alabamas.

Brett Bellmore –

A key point here about progressive taxation, is that by decoupling benefits of spending from paying for that spending, it makes politically viable even expenditures which are a net loss to society. It makes viable spending that people would not support if they had to pay for it themselves.

The same logic applies to public goods and positive externalities as well. Without progressive taxation, you don’t get spending that’s a net gain to society above and beyond the gain to the individual, and you don’t get spending that people under-invest in when they have to pay for it themselves, if they can pay for it themselves.

Yet one of the ways which the Nordics manage this higher amount of government is precisely by making it all more local, in direct contradiction to the putting more stuff at the Federal US level.

I find this hard to believe. How would they avoid the creation of ghettoes where adequate social services can’t be provided because the ghetto lacks the tax base to pay for them? (Clearly they *do* avoid that, at least mostly, as their outcome statistics prove.) Regional redistribution is the major point of the liberal tendency toward federalization. Poor neighborhoods in Georgia should get some New York or California tax dollars because it will take too long, with too much human misery, for them to develop bootstraps capable of pulling themselves up.

Maybe you mean to say that in the Nordic states, the funding is federal, but the control is local? If so, I’m impressed by their ability to trust the voters of poor localities with funds without strings attached.

A key point here about progressive taxation, is that by decoupling benefits of spending from paying for that spending, it makes politically viable even expenditures which are a net loss to society. It makes viable spending that people would not support if they had to pay for it themselves.

This is even a large part of the point of it, IMO.

I agree — providing income security and subsidized medical care to 75-year-olds *is* a net loss to society. A rational society would put them on ice floes, or make Soylent Green. Similar remarks apply to some coma patients, some mentally handicapped people, and other reliably unproductive members of society.

But most human societies seem to believe that that sort of rationality isn’t the proper end goal of a society, except for societies so close to extinction that they have no other choice.

…Of course, this is the uncommon case; far more commonly taxation is used in cases where the net benefit to society is clear, but the people most in position to benefit from the investment don’t have the resources ex ante to make the investment, and nobody else has sufficient self-interest in doing so unilaterally. Politics and taxes allow members of society to agree to spend some of everyone’s resources with the shares of payment being determined by the political process rather than by individual degrees of generosity or stinginess — a clear step forward in fairness, even if political outcomes are not absolutely ideal.

Henri – short answer, Madison was right. Central control pushes all the political elites into one big pot where none of them can dominate, so they have to form national majority coalitions to get things done instead of relying on a unifying special interest of just that local elite.

After both studying history and working in local politics, I’m convinced that the conventional wisdom that local government is more democratic/accountable is completely wrong. And it’s not just about the South – look at the Dorr Rebellion in Rhode Island.

Fair enough Tim. So let me state the more narrowly defined case: when you have really big differences between sub-units, when the political elites of particular sub-units pursue exaggerating those differences as a core economic strategy, and/or when sub-units are under the control of a single powerful interest, then federalism doesn’t work.

I think that encapsulates both the Nordic and Dixie cases.

I think the division of goods into the categories of positional vs. nonpositional is one that may cause unnecessary confusion. I prefer the more basic division of goods into the categories of plentiful vs. scarce [relative to demand]. It closely parallels the categories of nonpositional vs. positional.

See, this division seems fundamentally misguided to me. There are resources that are scarce, but not positional. Personal jet planes, for example, are a huge luxury. If you make 500K/year, you might fly first class. If you make 2M/year, you might rent out time on a jet. If you have > 200M in personal wealth, you might own your own jet. There are items which will always be extremely expensive, but are only limited in quantity by the availability of wealth committed to purchasing them. Equalize incomes and the only private jets you’d see would be corporate ones (maybe). But as you push more and more income to the top, you see more jets. I’d agree that exclusive wines are a positional good much like real estate, but these seem more like an exception than the rule to me. I would wager that many of the scarce goods that the wealthy consume are limited in quantity by demand not by supply. The supply curve for private jets is flat, for example, and, in my opinion, one of the most valuable privileges of being rich. And you could build more luxurious golf or ski resorts if there was money to be made in doing so, so even those would not qualify in my opinion. We could have a discussion about the distribution of consumption by the wealthy but that would require actual evidence. In my view it is 100% wrong to equate scarce goods with positional goods. There is plenty of overlap, but they are fundamentally different concepts. So you can’t assert without lots more evidence that the consequences to the wealthy of progressive taxation would be minor.

Henri @ 88: No, of course I am not in this group. There are engineers who are, but usually their wealth comes from start ups or something similar. I am not defending Brooks arguments in defense of this group, just responding to the claim that merit doesn’t exist at all.

Harry @ 78: I guess we just have a different perspective. But my view is that hard work is not just something you happened to luck into. It’s a choice to sacrifice leisure time to improve productivity later. It’s a difficult decision and it seems to requires a lower time preference than many people demonstrate. Some people probably value the development of their mind for it’s own sake. I suspect these people may be more likely to enter academics. I do as well, but it would not have been sufficient motivation on its own. For me the decision to pursue my studies was frequently at a direct cost in activities I would have enjoyed more like playing sports, socializing with friends or similar. And if there were not monetary rewards for my improved skill set I would definitely regard passing on those opportunities as a mistake.

Tim @ 84: What you are talking about may apply in some societies, but I’m not sure it would work in all of them. If you take the simple example of school districts in the United States, the wealthy consistently succeed at setting up political boundaries such that their tax dollars primarily benefit their peers. The consequences are generally pretty inegalitarian, in fact they are one of the biggest problems related to educating poorer kids in many states. Sometimes they even manage to be parasitical- living near a large city, for example, to take advantage of it’s benefits, but avoiding the tax burden v(ia jurisdiction manipulation) required to maintain the bulk of the infrastructure they utilize. I don’t think the liberal left in the United States is really amiss for preferring federal level taxation given the political and social community they are operating within. It is certainly far from obvious as to how to proceed from where we are currently at to progressive solutions implemented at the local level.

Steven, suppose you have a country with the industrial region, high tech, modern infrastructure, high population density, educated, progressive population – and the sparsely populated agrarian region, with religious, patriarchal, conservative population.

So, your hypotheses are that:
1 – federalism will not work well in this country, and
2 – strong central control is beneficial for both regions.

I have a problem with both propositions. I believe that
1 – federalism could work well, most of the time, and
2 – if/when federalism does not work, each region would be better off if they split and went their own merry ways, instead of endlessly agonizing in pursuit of that elusive compromise.

And may I also suggest that perhaps your preference for central control is based on the assumption that the industrial/progressive half prevails (most of the time), which is far from obvious.

this is the sort of accusation which really needs to be justified on a case by case basis, rather than leveled against everybody who’s “rich”.

Why, not necessarily. If we postulate that the highest possible meritorious contribution of the most talented, most hard-working individual (him/her being, after all, a mere mortal) can’t be higher than, say, 5 (or 10, or whatever, you pick the number) times the average contribution, then, at a certain level, increments of one’s income automatically become undeserved.

I am not defending Brooks arguments in defense of this group, just responding to the claim that merit doesn’t exist at all.

Well, that’s what’s so infuriating about Brooks claim: it can’t really be verified or disproved because he can’t be pinned down on what “merit” is or how to measure it. All that happens in situations like these is a lot of back-and-forth about who is demonstrating “merit” and who isn’t – and usually the “who” is an unquantified group at that. And at the end, people like Brooks will believe that certain elites have “merit” despite all evidence to the contrary; they’ll simply gush a bit about “intangibles”, the sort of expertise that just can’t be quantified, but which is nevertheless vital to the success of the modern high-powered firm and without which it will go under.

I’ll point out yet again why burden of proof standards are formulated the way they are: does anyone really believe Brooks’ mind is open to any sort of evidence? Going with the idea that you get to state a position and then others have to prove you wrong – and to your satisfaction at that – is a mug’s game. But that’s all these types have left.

Which is why they don’t tend to do so well in academia. And why, ironically, academia often seems far more egalitarian than the business sectors.

this is the sort of accusation which really needs to be justified on a case by case basis, rather than leveled against everybody who’s “rich”.

Why, not necessarily. If we postulate that the highest possible meritorious contribution of the most talented, most hard-working individual (him/her being, after all, a mere mortal) can’t be higher than, say, 5 (or 10, or whatever, you pick the number) times the average contribution, then, at a certain level, increments of one’s income automatically become undeserved.

Well, I don’t know about your specific figure for the upper bound. I’d place it much higher myself. But that gets to the nub of the matter right there – how do you measure these contributions independently of income? The Defenders of the Faith will maintain that these elite types are being munificently rewarded because of their superior quality and contributions. How can you know these elites are superior to the rest of us? Because by they have been shown so by virtue of the compensation they’ve been awarded. It’s a closed and very self-referential loop.

Incidentally, using specific examples won’t help your case with these people. Point out that someone like Mozilo was very well compensated indeed even though the value he added to the product his organization sold was, um, negative and they’ll dismiss this with a wave of their hand saying that this is mere anecdotal data.

“For example, in the United States you can legally bribe politicians. That influences the efficacy of other kinds of policies.”

To quote Myles- High level officials in the United States never take bribes.

lack the resources to bring their own development up to par with rich regions (Germany, Scandinavia), and the latter decline to make the transfer payments

What resources do they lack?
How do ‘transfer payments’ help development? I suspect in a capitalist system transfer payments can only hurt development. No one transferred any payments to China, all it took was a lot cheap labor, undervalued currency, and political stability.

“I’m no expert on Cohen, but you didn’t mention incomes. I have the impression that he had objections to unequal incomes based on standards that a garden variety liberal would probably find unobjectionable. Various forms of merit, for example, as some of the other threads in this post have been talking about.”

Hmm. I was implying sorta that incomes would be according to market forces. I’m okay with that given some substantial restrictions. I think in a sense, it amounts to democracy. But as Hillel Steiner points out, while this is a good schema, it’s distorted when people come to the market from vastly different places.

Were it totally undistorted (ie equal opportunity), and provided that the state resolved to fix market failure/run natural monopolies, break up private ones and give help with basic services, I’m not sure that there would be a fairer way to divvy up income. I mean, if some person were compensated in a vastly unjust way in that schema, and obviously so, wouldn’t people just change their consumption patterns to reflect this opinion? If we all decide that some non-essential good is not worth as much as we’re paying, it seems that the price will then usually equalize to reflect that. Or if that some service is more important, won’t we compensate them more?

I still have some questions about this, though. There are a number of low-skill jobs that are empirically essential to society (how about janitorial duties?) which don’t garner much income because technically anyone could do it, but only the destitute do it because it sucks. Basic food service, mail carrying, mining etc. I think UBI is a solution to this. If no one had to rely on such a job for income, market rates would have to go up to entice people to work them. Or full employment. Although as Kalecki observed, capitalism may not end up being compatible with full employment.

To quote Myles- High level officials in the United States never take bribes.

Passive-aggressive personality much?

“If we postulate that the highest possible meritorious contribution of the most talented, most hard-working individual (him/her being, after all, a mere mortal) can’t be higher than, say, 5 (or 10, or whatever, you pick the number) times the average contribution, then, at a certain level, increments of one’s income automatically become undeserved.”

Why, yes. It’s really quite remarkable the propositions you can prove, if you’re permitted to posit your conclusions.

I’m intrigued by TW’s claims about Denmark. Are you saying that most public spending is done by small communities they way they choose, and that they even get to set the tax levels? Could you provide references and more details, because the way you put it seems to violate the laws of physics. Even under Scandinavian levels of egalitarianism, there is enough variation in the ability to tax at the scale you are talking about that such a system must create massive inequality and tear society apart.

Regarding the US, USA Today published a very instructive list of federal transfers (http://www.usatoday.com/news/nation/2011-04-26-new-york-government-aid.htm#table). Especially the poorer Southern states get a large junk of per capita income from federal transfers (the percentage isn’t given but you are looking at about $8,000 out of 30,000 in MS, AR, AL, LA). These are the states that send “small government” Republicans to Washington to dismantle their life lines.

John Holbo said:

If you want to know whether Americans think it would be unfair to raise taxes on the wealthy, you can ask them, rather than trying to get your answer in this round-about deductive fashion. My distinct impression is that ‘tax the rich’ polls pretty well.

Your distinct impression is right. Obama is on the money with his call for tax hikes on the rich. A recent poll finds more than half the country’s potential voters want the government to make the income tax more progressive:

ABC/Washington Post survey [conducted April 14-17 2011] finds 54% of country strongly supports hike on those earning more than 250K,

Induction always cuts to the conclusive chase faster than deduction.

The AEI should stick to calling for regime change in the Middle East. Uhhmm, on second thoughts…

@117, Brett Bellmore: I don’t posit my conclusion, I posit my intuition, my judgment.

If someone told you that their meritorious contribution is a 100, 1000, a million times higher that of the average person, wouldn’t your intuition say at some point: ‘sorry, too much, this is absurd’? Tell me.

Ah, more up to date tax rates:

http://www.taxrates.cc/html/denmark-tax-rates.html

Two ntaional rates now, the middle one having been abolished.

I’d say that, no matter whether it’s 1.1 times the average, or 1.1 billion times the average, there’s simply no getting away from looking at the individual details.

Brett, at some point you should probably explain how you would write an “actually defensible” tax code in this way. (Or how you would construct monetary and fiscal policy more generally.) I know it’s more fun to call us prejudiced bigots and ignoble liars, but it’s hopelessly incoherent to suggest that pretty much any feasible government policy is automatically bigoted, just because it doesn’t look at “individual details.” And if a given set of policies are not themselves bigoted, then generally speaking it’s not bigotry to advocate such policies. (There might exist occasional exceptions to that if-then, but this isn’t one of them.)

I’ll leave alone “prejudiced” because that word can have a very expansive meaning, and it would be tiring to argue about whether you specifically intended what you obviously implied.

When people are defending progressive taxation on the basis that the wealthy didn’t earn their wealth, (And there’s plenty of that going on in this thread.) it’s quite appropriate to point out that you don’t actually know that, unless you look at their individual circumstances.

You want do defend it on Dillinger’s reasoning, go ahead, and drop the nonsense about how it’s ok to tax the wealthy heavily because they’re all parasites anyway, or the government is responsible for all their wealth, or whatever the excuse of the day is. Because none of those excuses really make much sense, if you look too closely at them.

I’d say that, no matter whether it’s 1.1 times the average, or 1.1 billion times the average, there’s simply no getting away from looking at the individual details.

I did look at the individual details, and I found that each of the individuals is a mere mortal. Based on that uncontroversial fact, I conclude that there must be a limit to each one’s meritorious contribution, as compared to the average mortal. Yes, sometimes some of them do look like giants, but inevitably it turns out it’s only because they stand on the shoulders of others.

If the average dog can smell a strip of bacon from the maximum of 100 yards, can we say that the best freaking dog in the universe will not be able to smell it from a mile away?

it’s ok to tax the wealthy heavily because they’re all parasites anyway

It’s ok to tax the wealthy heavily because they have acquired a larger share of the world’s resources than is reasonable for us to allow any one person to possess. One needn’t be a parasite in order to be a glutton or a sinkhole. Some small amount of disproportionate gluttony is ignorable and probably inevitable, if and only if the human needs of every person in the society are adequately met. But [a] the human needs of folks in our society aren’t universally adequately met, and [b] I and others feel the discrepancy in resource possession is much larger than would be satisfactory or even tolerable, even if [a] was false. (On [b] we could have a reasonable debate over what the ‘satisfactory’ and ‘tolerable’ thresholds are, but we couldn’t dispute that those thresholds must exist.)

Roughly speaking, each society should get to decide how to apportion its portion of the world’s resources, generally by democratic procedure. The current wealth owners (and the current slave owners) should not get exclusive say on how to apportion resources just because the current system favors them.

@chris:
From the viewpoint of Sweden, Sweden is quite successful, but from the viewpoint of Europe, Sweden’s success isn’t so impressive;

Who, exactly, looks at things “from the viewpoint of Europe”? I mean seriously, most people don’t think in these terms, or indeed in any terms over which they have no control. And Europe-sized questions are exactly questions over which the average European simply has no control.

I’m generally in favour of localism, and this is as good a case as any: let the PIIGS be. If they can’t handle it, let them quit the single currency. The prospect of a massive fiscal transfers within the EU is just horrifying.

James: I’m an atheist who’s a firm believer in separation of church and state. Got any secular justifications for it?

“When people are defending progressive taxation on the basis that the wealthy didn’t earn their wealth, (And there’s plenty of that going on in this thread.) it’s quite appropriate to point out that you don’t actually know that, unless you look at their individual circumstances.”

Since I made a comment along these lines (74), let me point out, as many others have explained, that progressive taxation is easily justifiable without even getting into the debate about merit. Now we have the claim (by Brooks) that progressive taxation is immoral because the rich deserve their wealth, and the poor deserve their poverty (Brooks doesn’t make this explicit but it is implicit within his argument). Notice that the burden of proof is on Brooks to show that this is indeed true, at least in general, not on us to show that every individual rich person is a fraud. Brook has to show convincingly that the pay difference between the CEO and the cleaning person is due to merit. He has to explain why, in a supposedly meritocratic economy, even an unsuccessful or incompetent CEO or trader, even one who has made massive blunders, who maybe has destroyed his company or helped blow up the economy, is entitled to multiple times the income than the competent cleaning person doing an excellent job will ever make in his/her life.

Even if all CEOs were competent, progressive taxation wouldn’t be immoral. But the fact that they aren’t isn’t just a negligibility. The fact that we ha just witnessed our “meritocracy” in action equating to taxpayer funded million dollar bonuses to some of the most abysmally incompetent financial shenanigans ever let loose on the world is not just a marginal anecdote. It undermines the center of Brooks’, and your, political worldview.

Re Worstall. Denmark levies a municipal tax that is currently between 22 and 27%. What I couldn’t find any information on is how the tax rates are set, what municipal taxes are spent on, and whether there are equalization mechanisms. My guess is that the state mandates much of what municipalities have to provide to their citizens, and I bet there is some form of equalization. Switzerland has a similar system, where much of the tax burden is levied at the municipal level. Differences can be significant and the tax competition clearly clearly causes distortions (e. g. housing costs in low tax towns go through the roof, thus leading to economic cleansing). Germany does not allow varying income tax rates, but a set proportion (15%) of income taxes is reserved for municipalities (the rest is equally divided between states (which fund most of the schools) and the federal; municipalities also have other sources of tax revenue).

Yet one of the ways which the Nordics manage this higher amount of government is precisely by making it all more local, in direct contradiction to the putting more stuff at the Federal US level. I’m convinced that a great deal less federal government and a great deal more localism would in fact allow tax collected (well, possibly at least) to rise to the sort of levels that would provide the public services some desire: but that the insistence on doing these things at the Federal level is one of the things which prevents such.

This may be a false dichotomy. After all, in the US, the federal government would look much smaller if SS and Medicare weren’t inappropriately counted as part of it (and most of what remains is military spending, which unfortunately is exactly what Americans want). And if you want to know about the chances of raising local tax revenue, ask school districts how many of their requests are voted down. Wasn’t California’s prop 13, this iconic moment in the anti-tax movement, a rebellion against local taxes? Also, a lot of federal spending is distributed through local channels and part of Uncle Sam’s image problem is that most Americans don’t know what the government actually does for them. I agree nevertheless that the US could learn from countries such as Denmark. The key, I think, is to balance subsidiarity (localism) with solidarity (equalization). Denmark, Germany, Switzerland are somewhat different in how they try to make that balance. What strikes me as exceptional about the US is that there doesn’t even seem to be a debate about the need for that balance. Solidarity isn’t even part of the political vocabulary but neither is subsidiarity. I wonder whether Americans even understand what I’m talking about?

Piglet, I don’t think “solidarity” is a meaningful concept in this context. When the all-powerful guy in Washington takes money from a guy in Mass and sends it down to Alabama, I would be amazed if the guy in Mass interpreted it as a manifestation of solidarity. Especially considering that he knows that the guy in Alabama, who benefits from it, is working hard to ban abortions in Mass and, perhaps, is instrumental for starting far-away wars that he, perhaps, doesn’t approve of.

OTOH, the same guy in Mass might feel much better if the same money is spent fixing highways in Mass, or building a public park, or financing a public hospital in his town. Solidarity just may be one of those things that diminish proportionally to the cube of distance.

@144. Please note, I’m not trying to claim that I’ve discovered the ultimate solution. Only that I think there’s an interesting tension between how those (successful) high tax places seem to work, at least in part, and how those who would wish the US to be a successful high tax place phrase their arguments.

And as I’ve already mentioned, I’m sure there’s an amount of projection of my own personality onto it as well. I would be willing to pay higher taxes if I could see, locally, who was spending it and how and beard them directly about how they are doing so. I wouldn’t if it all goes off to DC or Whitehall to be sliced and diced.

reason, 147:

…of course the problem is that your argument about morality would sail on by the (G)Libertarian, because it doesn’t gel with their platonist methodology. They want all their abstract ideas to be independent of people completely.

I am of the opinion that the Libertarian/Conservative-Republican/Ayn Randian perspective arises directly from a foundational assumption that [some] human beings are able, like Spock, to dispossess themselves of their fundamental human need for approval, the approval of other human beings. It would be nearly impossible for them to defend their POV if they could be persuaded to ‘confess’ that they really do have a profound need for the approval of other human beings.

My guess is that they would fight such a suggestion quite desperately, for they would instinctively realize that ’emotional honesty’ would be a tremendous threat to all of the bullshit ideas they embrace. The simple truth is that all human beings are born with a fundamental and intrinsic need for the approval of other human beings that cannot be made to go away through an act of will, or through enlightened ‘choice-making’.

Quite a subject to explore, if one has the time.

TW 148: I think this could be an interesting debate. I’m just throwing in some ideas. You might want to test your hypothesis about local taxation with more than one data point. Switzerland is a low-tax country with a strong preference for local autonomy that doesn’t seem to fit. Any ideas about that?

HV 146, are you sure the Mass guy who doesn’t want to share with poor Alabamans would be more inclined if the money goes to the homeless across town? Maybe he would but it would be nice if sweeping claims such as yours would be based on more than a gut feeling.

“I don’t think “solidarity” is a meaningful concept in this context.”

Why not? Because it’s America? Why do Germans or French (and probably Canadians) think that the concept is meaningful and Americans apparently don’t? Just because of the geographic distance? Doesn’t convince me but maybe you can elaborate.

my point is (or, at least, this is the impression I get) that more federalism, greater autonomy tend to calm things down, while attempts to increase central control aggravate it.

Maybe but that is not inconsistent with what I said: it depends on the right balance. As an aside, whether more autonomy really calmed things down, e.g. in Catalonia or Quebec, may be debatable. Sometimes more autonomy only leads to calls for even more autonomy. And finally, I still don’t see why you doubt solidarity is a “meaningful concept in this context”. It may not always be a popular concept but it would still be meaningful, non?

I see. Collective action is always forced down and only private charity is truly generous or caring. Solidarity, as understood outside the US, is actually a political concept and has little to do with individual charity. My point is precisely that the US is exceptional in that respect.

Collective action is always forced down and only private charity is truly generous or caring.

That’s not what I said, though. ‘Charity’ is a concept, ‘solidarity’ is another concept, and ‘collective action’ is also a concept, as well as things like ‘taxation’, ‘federalism’, etc.

You want to use the word ‘solidarity’ for a phenomenon that, IMO, does not fit the meaning of this world. Now, to describe centrally imposed/centrally controlled large-scale redistribution between regions you could use other words and phrases, like “good karma”, “brotherly love”, “humanism”, etc., but that wouldn’t impress me either. Does this make me a bad person?

Southern states are relying on sales taxes while cutting taxes for the rich and corporations – therefore Northern states should send them money? What kind of logic is this? Wouldn’t it make more sense to let Southern states hit the wall, collapse, and start evolving from there, rather than rewarding their bad behavior?

I guess my problem is with the proportions of this redistribution. It seems to me that the largest portion should be allocated to the local community (town), second largest portion to the county, then the state, then the nation, then globally. This is just common sense. In the US, the federal government gets pretty much everything, and then it gets re-distributed back to the states somehow. This causes problems. You don’t see a direct effect of your contributions. What’s worse, central government, flush with cash, becomes too powerful; what follows is all that lobbying, regulatory capture, imperial ambitions, and so on. Sure, occasionally something good comes out of it, but mostly by accident, it seems. They pass a civil rights bill, but then they go to a far-away place and burn people with napalm there for 10 years. People affected by the civil rights bill are better, but not that much better; people burnt by napalm are dead, their country is devastated. And so it goes.

Brett Bellmore, 151:

Cool. Then it’s perfectly fine for the Taliban to crush homosexuals under stone walls, given the societal context they find themselves in. While your reasoning makes a dandy excuse to reject minority moral positions as nonsensical when you’re a member of the majority, do you find it at all persuasive on issues where you find yourself in the minority? I suspect not.

‘Moral communities’ in the modern era have learned from history that there are times when the majority is not always wise in its response to certain categories of behavior (e.g., between consenting adults). Sometimes their shared perception of the situation is flawed; sometimes their perception of how to rationally respond to ‘bad’ behavior is flawed. That is why many of those modern communities that we think of as ‘moral’ have come to embrace the value of tolerance.

When an individual tolerates behavior that is perceived to be immoral (everyone would seem to be worse off if everyone were to behave in the same way), it is not necessary that the individual accept the behavior in question as ‘equally legitimate.’ But it is necessary that he forswear the use of punitive sanctions as an acceptable way to persuade ‘bad’ people to be good, and that he rely on logical argument and moral persuasion in any efforts that might be made to encourage the ‘sinful minority’ to be ‘good’ (to act habitually in ways that make everyone better off if everyone were to act the same, or at least to refrain from acting in ways that would make everyone worse off if everyone were to act in the same way).

Tolerant individuals are not required to embrace the notion of moral relativism, but only to reject certain methods of ‘persuasion.’ Moral absolutes actually do exist, that apply to everyone. It is absolutely true that moral behavior will always make everyone better off if everyone were to behave in the same way, but our understanding of precisely what kind of behavior will make everyone better off is not clear, and so we tolerate.

It is absolutely true that moral behavior will always make everyone better off if everyone were to behave in the same way

Only if you define “the same way” very carefully. Sexual orientation is a good example — not everyone is better off if everyone has sex with people of the opposite sex, but not everyone is better off if everyone has sex with people of the same sex, either.

…Actually, I’m not sure it works even after you correct for individual taste. Abolishing slavery is surely moral if anything is, but it doesn’t make *everyone* better off, specifically, the slaveholders. In general there are lots of forms of immoral behavior that make the perpetrators better off in some way.

Moral absolutes actually do exist, that apply to everyone.

Oh, is it time for another round of this? Please explain how to find a moral absolute, and what sort of evidence confirms that you have identified and formulated it correctly.

Individual Southerners don’t deserve to be abandoned to live (or die) in a collapsing state

Well, you are free to move there and help them, like civil rights activists did in the 60s. To change a community, you need to become a part of it. I don’t see any other way, any other acceptable way.

Social Security and Medicare are not what I’m talking about; these are entitlement programs, they have no regional component. But when the city of Boston needs to build some tunnels, the governor of the state has to lobby the federal government to finance the project. Does it make any sense?

“But when the city of Boston needs to build some tunnels, the governor of the state has to lobby the federal government to finance the project. Does it make any sense?”

Well transportation often concerns several regions or states. It does make sense to have some sort of national coordination. That is not to say that the particular US way of doing these projects is optimal. I’m sure it’s not because the result isn’t that great. Other countries have different systems that might be worth looking into. But the cure of deciding everything at the local level doesn’t appear optimal either to me. I doubt you could have a decent railway network without a strong component of national (ideally even international) planning.

More to the point, I don’t think transportation policy is an example of intentional redistribution between states so it doesn’t really support the argument you were making.

Oh, all right, so opinions differ. It happens, nothing’s wrong with that.

Why should we bother listening to Brook’s opinions on the matter when the richest (and therefore most meritorious) American Warren Buffett thinks we ought to raise taxes on the wealthy. After all if he’s too lazy and stupid to become a multibillionaire then he’s clearly too lazy and stupid to understand the tax system.