The Flip-Side of Noble Lie-Side Economics?

by John Holbo on April 25, 2011

Matthew Yglesias points to this Arthur Brooks piece, “Obama says it’s only ‘fair’ to raise taxes on the rich. He’s wrong.” Brooks says he’s shifting from the usual perverse consequences argument – if we tax the rich it will actually cost more money – to a fairness argument. But really it’s just a twistier iteration of the perverse consequences argument.

Basically the first part of the argument goes like this.

1) Americans think it’s fair to reward merit and hard work.
2) Americans think merit and hard work are in fact rewarded in America.
C1) Americans think it’s unfair to redistribute income. (from 1 & 2)

3) Obama’s proposal would change the way income is distributed (i.e. would be redistributive).
C2) Americans don’t agree that Obama’s proposal is fair (from C1).

This part of the argument is boringly bad. 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. Be that as it may, the argument now gets interestingly bad, as Brooks tries quietly to patch the logical badness of this first bit. The above argument is absurdly all-or-nothing. There is, after all, no contradiction – not even a tension – in believing 1, 2 and the denial of C1. All you have to believe is that reward for merit is imperfect, as things stand, and that changes to the existing rules would make the system a bit less imperfect. Brooks avoids considering this obvious possibility, proceeding to a sort of noble lie argument that addresses it indirectly.

Since equality of opportunity is not universal, doesn’t this invalidate — or at least weaken — the romantic notion of meritocratic fairness? Of course not. You’re living in a dream world (or you have tenure) if you really believe merit doesn’t matter. Everyone can think of times when things went well as a direct result of hard work. We can also come up with cases in which we were punished at work or in life for laziness, incompetence, free-riding or stupidity.

And even if only a portion of the outcomes in life were due to merit, we should still gear our system to the part that is under our control. Otherwise, we have no incentive to be industrious, honest, innovative and optimistic — and there’s no reason to teach these values to our kids, either.

Most important, if we reject the ideals of opportunity and meritocratic fairness, we will end up with a system where outcomes are simply based on luck or political power — it would become a self-fulfilling prophecy. In a 2005 study published in the American Economic Review, economists at Harvard University and the Massachusetts Institute of Technology studied 29 countries and showed that a belief in luck over merit was strongly linked to the level of taxation and spending on social programs. Furthermore, they showed that the more citizens believed in a merit-based system, the more their public policies produced such a system.

In contrast, when populations believed that outcomes are a product of luck, birth, connections, or corruption, the people demanded more distortions to the free-enterprise system and ended up with a system that only affirmed their anxieties.

This is a variant on the old ‘some see the glass as half-empty, some see it as half-full’ adage. Some people see the half-full glass as completely full. And: we should be those people. If there is any element of meritocracy in the system, the system ought to be regarded, simply, as a meritocracy. It’s important that people think of America not as a half-functioning meritocracy but simply as a meritocracy. Otherwise (now finally we get to good old perverse consequences, for the first time without benefit of laffer curve) people will ask that the rules of the game be changed. And that’s a bad way to think. What we want is for people just to play the game as hard as they can.

Since this is an argument that belief that the system is perfect as it stands is a good belief for people to have, since it is regulatively healthful, whether it is true or not, one immediate and obvious consequence of Brooks’ argument is that one of the biggest threats to the health of the free-market system is … Arthur Brooks. If you keep telling people that Obama is a socialist, or is putting America on the road to European-style social democracy, you are attempting to convince them that Obama is introducing unfairness into the system. You are convincing Americans that the glass is only half-full, meritocracy-wise. But Brooks’ whole point is that people should not be encouraged to have that attitude.

So why not be truer to the flip-side terms of this noble lie-side economic argument? Why not tell people that Obama’s proposals to redistribute income will produce a perfect keyboard on which the invisible hand can play its tune? There is no perverse counter-efficiency problem (no Laffer curve here), and no psychological problem. If everyone believes Obama’s proposal is fair, no one will ‘go Galt’, out of a resentful belief that the system is unfair. (A pernicious tendency to ‘go Galt’, i.e. not work hard out of belief that meritocracy has been compromised, is what Brooks is warning against.) People will be heartened by the thought that the system is fair, will work hard.

We’ll all get richer! (At least, that’s the theory.)

{ 176 comments }

1

David 04.25.11 at 2:07 am

And the keyboard will be wireless, too.

2

bay of arizona 04.25.11 at 2:19 am

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.

3

Bobcat 04.25.11 at 2:31 am

Plus, there’s the whole Bartels/Hacker+Pierson “We’re already redistributing wealth…up” through current policy argument, which suggests that a return to higher marginal tax rates on the wealthy might actually produce more fairness.

4

maidhc 04.25.11 at 2:38 am

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?

5

imajoebob 04.25.11 at 2:39 am

The real perversity is in the statement, “the more citizens believed in a merit-based system, the more their public policies produced such a system.” The rich and powerful have twisted the logic so severely that many, if not most Americans actually believe Argument 2 is true.

Far too few people recognize that the American system of taxes, government, and even “meritocracy” is so skewed in favor of the wealthy – especially the indolent wealthy, that most people have little opportunity for significant success. Rising to the top of the socioeconomic pile is as much a factor of luck as it is effort and talent. Doubly perverse, those that are able to “move up the ladder” are more often rewarded for cunning and guile than talent and potential.

The simplest example (other than Michelle Bachman) is capital gains taxes. 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%. Hard work is actually subject to punitive taxation, while the idle are rewarded for doing nothing.

For more than 30 years American government has been changing into a blunt instrument for protecting the privileged few at the expense of the working class, and worst of all, where luck – from the lottery to the unexpected retirement of an incumbent politician – is the best chance most people have for extraordinary success.

6

mcd 04.25.11 at 3:54 am

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”.

7

The Tragically Flip 04.25.11 at 3:54 am

It is perverse that if you assume a meritocracy is at work, then you can defend an actual aristocracy as merited. If we’re going to have feudalism, I think I would prefer “divine right of Kings” as the moral underpinning to “we must have earned it because we have it so we must deserve it…”

8

Myles 04.25.11 at 4:04 am

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.

9

mclaren 04.25.11 at 4:29 am

That fact that this fool can make an argument based on meritocracy in an era where billionaire bankers get 7-figure bonuses after crashing the world economy is hallucinogenically, mind-crushingly, bone-flatteningly stupid.

And thus, the mere fact that a New York Times columnist gets a 6-figure annual income for making arguments this halfwitted serves as a definitive refutation of his entire thesis of meritocracy. The existence of David Brooks as a New York Times columnist contradicts the entire thesis put forth in this op-ed by David Brooks the New York Times columnist.

If Brooks were bright enough to recognize this exquisite antinomy, he might at least be amused.

10

Beleck 04.25.11 at 5:04 am

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.

11

shale 04.25.11 at 5:38 am

It must be difficult being David Brooks. What with living in a probabilistic universe, but not believing in probabilities. Luck, in a colloquial sense, is just another word for chance, risk or probability. Most layman recognize that success involves some combination of hard work and luck. Redistributive policies are justified on the grounds that society runs better when the unlucky hard-worker is cycled back through the system—as opposed to dying in the gutter—and the most lucky outlier is not permitted to rule the world.

At least all those healthy educated happy socialists who can look forward to their children having a brighter future than even their already bright future in Europe recognize this.

12

ejh 04.25.11 at 6:39 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.

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.

13

garymar 04.25.11 at 6:41 am

Arthur Brooks, Arthur Brooks.

14

Myles 04.25.11 at 7:44 am

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.

15

The Creator 04.25.11 at 7:45 am

Arthur Brooks, Arthur Brooks, riding through the autocracy,
Arthur Brooks, Arthur Brooks, on his hobby-horse “Meritocracy”,
He steals from the dupes,
He gives to the crooks,
Arthur Brooks,
Arthur Brooks,
Arthur Brooks!

(Sorry, couldn’t resist it)

16

Tim Worstall 04.25.11 at 7:59 am

“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?

17

JulesLt 04.25.11 at 8:17 am

Absolute genius – any outcome other than the free-enterprise system is a ‘distortion’.

And I love, love, love this :
“In contrast, when populations believed that outcomes are a product of luck, birth, connections, or corruption, the people demanded more distortions to the free-enterprise system and ended up with a system that only affirmed their anxieties.”

Is he really saying that corruption is a legitimate part of the free enterprise system?? I suppose that arguably, it’s just a successful sales technique, and that only successful firms can afford it.

Ditto that blithe dismissal of the impact of birth and connections on outcome.

“Otherwise, we have no incentive to be industrious, honest, innovative and optimistic”.

And again, working back from his chain of argument, these virtues can only exist in the presence of a true free market. Which would be news to centuries of amateur sportsmen, scientists, academics, gardeners, writers, musicians or anyone else who wakes up and does something out of personal interest, perhaps even at some financial sacrifice.

And why is industrious on the list? I’ve never understood the idea that hard work, in itself, is useful – it is a means to an end. More importantly, the avoidance of hard work is a major driver of innovation.

18

zamfir 04.25.11 at 8:48 am

@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.

19

Henri Vieuxtemps 04.25.11 at 9:18 am

@ zamfir: but the concepts of ‘honesty’ is also a subject to interpretation within the framework of the dominant ideology.

For example, Bernie Madoff is dishonest, for victimizing hard-working rich people; OTOH those who recently lost their houses have nobody to blame but themselves; they are guilty of being irresponsible borrowers, of being, in fact, dishonest.

20

Charlie 04.25.11 at 9:50 am

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?

21

Hidari 04.25.11 at 9:57 am

‘You’re living in a dream world (or you have tenure) if you really believe merit doesn’t matter. Everyone can think of times when things went well as a direct result of hard work. We can also come up with cases in which we were punished at work or in life for laziness, incompetence, free-riding or stupidity.’

I’ve been living in that dream world all my life. As for people being ‘punished’ for laziness or stupidity, well, someone should read more Dilbert (though not, apparently, Scott Adams).

It does indicate, however, as I’ve pointed out on this blog before, the persistence of the Just World Phenomenon, which is, as has been pointed out, a fundamental illusion.

22

Brett Bellmore 04.25.11 at 11:09 am

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?

23

William Burns 04.25.11 at 11:17 am

If there’s one class of academics who unquestionably believe they have got to where they are through merit, it’s the tenured.

24

engels 04.25.11 at 11:26 am

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.

25

Salient 04.25.11 at 11:42 am

I have a bit of trouble keeping the lies straight… the “ignoble” lie?

The above argument is absurdly all-or-nothing. There is, after all, no contradiction – not even a tension – in believing 1, 2 and the denial of C1. All you have to believe is that reward for merit is imperfect, as things stand, and that changes to the existing rules would make the system a bit less imperfect.

…That response sounds awfully familiar, doesn’t it? I wonder where you might have seen it before.

Would Secular Calvinism be a good name for it?

The phrase you might be looking for is Secular Calvinball

26

Barry 04.25.11 at 12:20 pm

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.

27

harry b 04.25.11 at 12:26 pm

Tim — there are plenty of States with no income tax. But I’ve only been able to think of a couple where one would actually want to live… (one of those Northwestern states, I think, maybe one more… ok, I’m a committed midwesterner, so maybe my opinion is worthless). Real estate taxes are not income taxes, but add them in, for many states, and somebody in the top 5% but not the top 0.5% probably pays a similar marginal tax rate to that in several northern european countries (though the marginal rate kicks in at a much higher income, because of the rate structure/deductions, etc). Plus add health insurance as if it were a tax.

28

harry b 04.25.11 at 12:28 pm

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.

29

gatherdust 04.25.11 at 1:19 pm

Who was it who said that we should stop calling the poor, well, poor and think of them as the pre-rich instead? David Brooks? No, not Foster Brooks. Hmmm…

30

Glen Tomkins 04.25.11 at 1:20 pm

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.

31

chris 04.25.11 at 1:58 pm

Taxation isn’t a matter of rewards and punishments.

I suspect that this sentence is incomprehensible to an economic Calvinist.

32

james 04.25.11 at 2:02 pm

“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.

33

Gene O'Grady 04.25.11 at 2:14 pm

I’ve actually been a secretary (responding to the passage quoted in #20), and an awful lot of other things, plus working in HR and budgeting where I knew who made what. There is no job on this planet, probably including inheriting money, where skill and hard work are less connected to how much you make.

No, this doesn’t say bad things about secretaries, or women in the work place; it does say bad things about most bosses and most HR departments, which basically don’t even try to evaluate secretarial positions lest they step on toes.

34

Guido Nius 04.25.11 at 2:33 pm

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

35

Dave 04.25.11 at 2:57 pm

Since this is an argument that belief that the system is perfect as it stands is a good belief for people to have, since it is regulatively healthful, whether it is true or not, one immediate and obvious consequence of Brooks’ argument is that one of the biggest threats to the health of the free-market system is … Arthur Brooks. If you keep telling people that Obama is a socialist, or is putting America on the road to European-style social democracy, you are attempting to convince them that Obama is introducing unfairness into the system. You

Try: This argument has it that people must believe, for the health of the system, that the status quo is perfect. However, it is immediately obvious from Brooks’ argument that one of the biggest threats to the health of the free-market system is Arthur Brooks himself. When he is not trying to persuade people that the free-market status quo is perfect, you see, he argues that Obama is introducing unfairness into the system.

36

dictateursanguinaire 04.25.11 at 3:19 pm

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.

37

dictateursanguinaire 04.25.11 at 3:34 pm

Also, this is just sheer pandering to egos:

“You’re living in a dream world (or you have tenure) if you really believe merit doesn’t matter. Everyone can think of times when things went well as a direct result of hard work. We can also come up with cases in which we were punished at work or in life for laziness, incompetence, free-riding or stupidity”

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. Not only was I born with financial advantages, I was born to parents who instilled the hard-work value in me. Brooks, and all these other people who believe in a ludicrous version of the free-will argument, never explain how someone born to lazy, indolent parents is supposed to develop hard-work habits. Every time that that DOES happen, I guarantee it is because they were lucky enough to have some other individual – a teacher, aunt/uncle, priest, whatever – step in and play the nurturing role.

Look, people have done experiments on this. If you put monkeys or cats in deprivation chambers or give them to “bad parents” or otherwise do things that obviously limit their development, guess what? It limits their development. People accept this, but then turn around and say that because of “free will”, humans aren’t limited in this way. We can just “choose” to pull ourselves up the bootstraps. Bull. Show me. Prove, by empiricism or logic, how the notion of free will is anything but a tautology. And if someone CAN succeed even in shitty circumstances, isn’t it because they were born with an incredible will? Should we deprive people of basic necessities for being born with average skills to below-average parents?

38

dictateursanguinaire 04.25.11 at 3:41 pm

Short dictateursanguinaire: harry b @ 27

39

piglet 04.25.11 at 4:03 pm

Why does this nonsense deserve a blog post, and such a long one? Didn’t Yglesias already say what needed to be said?

40

Substance McGravitas 04.25.11 at 4:07 pm

Go not-blog about it at your own blog.

41

Lee A. Arnold 04.25.11 at 4:10 pm

“Going Galt” always sounds to me like they are threatening to not wear any underwear. I don’t know why it is, but I always have that image when I hear the phrase. I am sorry, I sure wish I didn’t. But it always comes across as, “Dagnabbit, if you’re not going to admit that running an upscale resort is more meritocratic for selling beers to beachbums than running a cheesy little bodega, well then, I’m going to walk around in a kilt, commando-style! Take THAT! They’ve been running over here to pay 77 cents more a bottle!” (It’s not because they are hoping to see more babes in bikinis.) Of course, I know Galt is a character in a book I never read, so maybe there is some stirring dialogue about the “virtues” of egotism that is supposed to come to mind, as the callow and unholy substitute for a spiritual conversation. Brooks’ screed suggests it too: from a spiritually twisted premise, thence to a logically twisted conclusion. It has the stink of an ill-targeted yet overused mantra. Omm, omm, omm, I am going to wake up soon! “Going Galt” sounds like you promise to rub yourself raw by wearing a iron chastity belt. While you are running a resort hotel. Selling beers. It is just so pathetically stupid. If this is the current battle cry of the Washington establishment, does it mean they are also losing the support of the godawful TeaParty, too? Maybe the class war is just about over? Nahhhh…

42

TheSophist 04.25.11 at 4:32 pm

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.

43

Greg B 04.25.11 at 4:42 pm

Variant on harry b @ 27:
What is ‘hard work’, anyway? Just a circular definition of ‘things I did which resulted in material gain’? Funny to call that hard work, surely.

This labour theory of value – that working sweatier and longer hours is what gets the bux – is so obviously erroneous that it’s used to discredit Marx (even when it isn’t Marx’s labour theory of value at all) and it’s the one used to defend the current economic status quo? It’s economic zombies all right.

44

Brett Bellmore 04.25.11 at 4:58 pm

“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…

45

Nate Stout 04.25.11 at 4:59 pm

Here’s an analogy:

Imagine that there are four people on a lifeboat. All are survivors of a shipwreck that occurred several miles from the nearest coastline, and all are uninjured. On the boat are a middle-aged man, a 12 year old child, an 80 year old woman, and a 28 year old professional athlete. The four passengers have but one oar and must split up the rowing duties in order to bring the boat safely ashore. The child is of average size and strength for a child of his age, but the elderly woman is in very poor health and can contribute very little to the efforts. The middle-aged man is in decent health but is not in peak physical condition. He has lived a sedentary lifestyle and is overweight and out of shape. The athlete, however, is in ideal physical condition. He has worked his entire adult life to cultivate an ideal combination of strength, endurance, and health even forgoing certain pleasures and enjoyments in his endeavor.

As the passengers are dividing up rowing responsibilities, the elderly woman suggests that those with the greatest physical capabilities ought to bear the brunt of the responsibility in getting them all safely ashore. However, the athlete objects to this idea. He claims that he shouldn’t be required to do the majority of the work simply because he is the most physically gifted. After all, he’s worked hard to make himself this way, so why should he be punished for being successful? Maybe if those other passengers had put in the work that he had, they wouldn’t need to rely on him to save them. What’s more, he doesn’t really need the lifeboat. Though it would be an extreme burden on him, he could likely swim to shore. The only reason he’s staying on the lifeboat is because it offers safer passage to shore without the risks that come along with swimming, but he doesn’t see why he should have to pay a higher price for those benefits given that the others are receiving them as well.

What is your impression of the athlete in this example? Is it immoral to require him to bear the brunt of the load? Would it be immoral not to ask this of him? It seems to me that whatever intuitions we have about this hypothetical scenario ought to be the same as those we have regarding tax distribution. It also seems clear to me that the moral thing for the athlete to do is to row the boat to shore, and I fail to see any credible justification to the contrary.

46

StevenAttewell 04.25.11 at 5:00 pm

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/)

47

joel hanes 04.25.11 at 5:03 pm

[ kicks Paris Hilton ]

Thus I refute it.

48

mpowell 04.25.11 at 5:22 pm

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.

49

SeaDrive 04.25.11 at 5:59 pm

1) Americans think it’s fair to reward merit and hard work.
2) Americans think merit and hard work are in fact rewarded in America.

If you are disinclined to do actual field research, take the easy way out and watch a few episodes of “Undercover Boss” or “Dirty Jobs.” The new generation of robber barons is running away with far too much of the money made by the efforts of ordinary employees. Let them pay the taxes.

50

James Kroeger 04.25.11 at 5:59 pm

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?]

51

Henri Vieuxtemps 04.25.11 at 6:17 pm

…surely I can take at least some credit for rewriting essays while other kids are watching TV?

So, how rich are you now?

52

Charlie 04.25.11 at 6:36 pm

#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.

53

Salient 04.25.11 at 6:52 pm

JamesWhen 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.

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. The aim of antiprogressive tax policy is (roughly speaking) to preserve the distance between the top-earning class’s purchase power and other class’s purchase powers. In particular, with a more equitable distribution of wealth, it’s more difficult to hire servants and workers under exploitative conditions, which is one of the most ‘fun’ things one gets to do with one’s inordinate wealth (find me a billionaire who hasn’t hired a staff of personal servants, and I’ll show you someone who has collected a lot of Monopoly money). So ok, maybe over a reasonable time-horizon they still get to own roughly the same quantity/quality of luxury goods, but the number of people can they indenture decreases starkly.

mpowellIf 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?

…well, you can feel proud of what you did and ‘take credit’ in terms of pride and self-esteem, but do you feel you ought to be paid more now, for your work as an adult, because of that childhood dedication? Surely you have mixed feelings about that.

Brett (again?!)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…

Nah, you don’t need to “look at individual cases” to determine appropriate tax policy even if there is some nontrivial meritocratic component of most people’s income. That’s silly. For one thing, it wouldn’t be feasible to write a personalized tax code, and for another, you’d still need some kind of principle which allowed you to determine appropriate tax for each individual.

In fact, the above argument is absurdly all-or-nothing. There is, after all, no contradiction – not even a tension – in believing 1, 2 and the denial of C1. All you have to believe is that reward for merit is imperfect, as things stand, and that changes to the existing rules would make the system a bit less imperfect.

…Quite a bit of that response sounds awfully familiar, doesn’t it, Brett? Still tilting at straw windmills?

54

James Kroeger 04.25.11 at 6:57 pm

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.

55

Myles 04.25.11 at 7:03 pm

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?

I think in the grander moral scheme it’s probably down heavily to luck, but on a more granular level it isn’t as much. I think Warren Buffet is a tedious tool who wasn’t actually investing (he managed most of his companies), but I nonetheless don’t think financial returns are wholly random.

The problem is that if you genuinely believe that it’s all about luck, your investment returns will reflect that belief. You will start investing on (in most cases, scurrilous) insider or professional “tips”, opportunistically by trying to outsmart the market, and so on, none of which are viable long-term strategies. (Repeat to yourself, ad infinitum: you will not outsmart the market.) If you want to turn investing into a casino, it will be a casino.

If you don’t try to outsmart the market, however, and invest without reference to the casino aspect, it’s entirely possible that you might have just selected appropriate securities on solid research and analysis of the broader, more structural economic factors. (Most amateur analyses refer heavily to the company itself rather than the broader structural factors, which do influence market prices.) For example, I think structurally speaking, the “yuppie” end of the economy is doing well, so I would follow companies like Whole Foods or Williams-Sonoma closely (disclaimer: THIS IS NOT FINANCIAL ADVICE). It also seems that retail banking is doing badly, so I would look more closely at non-retail banks like Goldman Sachs. So on.

56

bianca steele 04.25.11 at 7:14 pm

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.”

57

Omega Centauri 04.25.11 at 7:21 pm

James@46, Thats simply nuts!
Only if we had a fixed supply of goods, and we all could make only a single bid/purchase, “I’m at percentile 92.23% and the ordering of bidable lifestyles can be ordered in a manner everyone agrees with, then I would bid/purchase the 99.23% lifestyle. But in the real world, there is a huge difference whether the wealth ratio of 99.9% versus 1% is 1.01 or 1000. In the former case, the business case for building yachts is nonexistent (you’d lose your shirt selling them at a huge loss), whereas in the latter case there would be a profitable market for superyachts.

Preservation of the economic ordering is only one parameter in the model.

58

James Kroeger 04.25.11 at 7:28 pm

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.

59

mpowell 04.25.11 at 7:41 pm

Henri @ 47, Salient @ 49:

Well, I am an engineer and since I have a very useful skill set and am very good at what I do, I am paid quite well compared to the median earner. I can see how one could argue that to the degree my skill set is due to genetics (just born smart) or my parents providing better schooling that I don’t deserve the extra income associated with my increased productivity. But I don’t really understand the argument that I wouldn’t deserve the income due to time I put in as a child, as a student or as a worker to improve my productivity today. 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.

I want to add that I still support progressive taxation. It’s just that everyone agreeing that Brooks is full of it is not as interesting of a discussion to me.

Omega @52: I also want to mention that I agree with your point. The argument that the only thing that matters is ordering is uninformed nonsense. There is some sense in which it is true for perhaps some goods, but there are wide range of goods for which it is so obviously false I don’t understand why anyone would think otherwise. Anyways, this argument for progressive taxation is self-defeating. If all that matters is the ordering, progressive taxation is hardly necessary then, right?

60

mpowell 04.25.11 at 7:50 pm

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.

61

James Kroeger 04.25.11 at 7:54 pm

Omega Centauri, 52:

Only if we had a fixed supply of goods…

You are forgetting that, when discussing the purchases of the very wealthy, we are talking about goods/services that are, by and large, permanently scarce . Long-run supply curves are nearly vertical. The wealthy seek them because they are comparatively rare, difficult to obtain/bring to market. Yes, it is possible to identify a few exceptions, but they are rare. If some ‘thing’ that was once a luxury suddenly become mass-producible, the wealthy would no longer be interested, and would drop out of that market.

For many of the goods/services consumed by the lower classes, higher money-incomes could stimulate a reallocation of resources that results in larger quantities of output (especially when human resources are under-allocated). But the output consumed by the wealthy is a special case, because there is never a time when suppliers of luxuries are not doing everything in their power to bring more scarce luxury experiences to market.

62

dictateursanguinaire 04.25.11 at 8:14 pm

“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.

63

James Kroeger 04.25.11 at 8:14 pm

mpowell, 55:

Do you really think that the only thing the rich spend money on are positional goods?

Of course not; but they are always going to be able to afford the non-positional goods they desire, so it is really pointless to bring them into the discussion. 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.

When/if their disposable incomes are reduced by steeper tax rates, their non-positional good purchases will remain unchanged. It is the positional goods they buy that absorb all the extra disposable income they earn/steal. Those goods will not disappear and yes, the markets will clear.

64

mpowell 04.25.11 at 8:15 pm

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?

65

mpowell 04.25.11 at 8:24 pm

dictateursanguinaire @ 59:

This debate on deservingness would be more important if people started talking more about Jerry Cohen and less about Rawls. Rawls’ difference principle kind of papers over the problem because if you don’t pretty substantially reward people for merit, it’s unlikely you’re going to get much production out of them. But Cohen has a more utopian approach and whether you agree with him or not, if you are talking about distribution in a Cohen-preferred framework, you have to talk about whether it is morally acceptable for higher productivity workers to hold out for higher pay, essentially.

66

dictateursanguinaire 04.25.11 at 8:44 pm

“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?

67

Tim Worstall 04.25.11 at 8:48 pm

@ harry b @26. Yes, well, there’s plenty of places where we can have marginal income taxes over 25%, similarly, the average tax rate over 25% comes in at a much lower level of income when we add real estate, sales taxes etc. But I was referring specifically to the average, income, tax rate as put forward in the earlier comment.

“and somebody in the top 5% but not the top 0.5% probably pays a similar marginal tax rate to that in several northern european countries”

Sure, no doubt about it at all. I once did the numbers and someone living in NYC, what with city, state and federal taxes, has a marginal tax rate right up there with the Swedish. Although they face a higher, in NYC, inheritance tax rate, corporate income tax rate and, I think I’m right in saying, capital gains tax rate. And the sales tax rate isn’t all that different either.

Which led me to the conclusion that if you had the American (or NYC) method of delivering services then at Swedish tax rates what you get is the Bronx. Mebbe Brooklyn. Which isn’t exactly that great social democratic nirvana that’s going to persuade the rest of America to go for it really.

BTW, I’ve no real problem with those Swedish tax rates. But it does need to be allied with the Swedish method of delivering the services those tax rates pay for. Not the NYC method of doing so.

68

Salient 04.25.11 at 8:52 pm

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.

69

Tim Worstall 04.25.11 at 8:53 pm

” [ kicks Paris Hilton ]

Thus I refute it.”

Well, yeees, although as far as I know she hasn’t inherited yet. She’s made her own money off the fact that she will inherit.

70

mpowell 04.25.11 at 9:00 pm

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.

71

joel hanes 04.25.11 at 9:17 pm

[ Paris Hilton ] … hasn’t inherited yet. She’s made her own money off the fact that she will inherit.

The question is not whether she’s made her own money — the question is if she’s made her own money by dint of merit.

But look at the Forbes 400, if you like. The Mars heirs. The Walton heirs. The Kohler heirs. The Bass heirs. The Lauder heirs. The Ziff heirs. The Koch heirs. The Johnson and Johnson heiress. The Hearst heirs. The Wrigley and Getty heirs. The SC Johnson heirs. The Cargill heirs. The Carlson heirs. The Pritzker heirs. The Stryker heirs.

notice a pattern ?

72

Frank in midtown 04.25.11 at 9:42 pm

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.

73

Myles 04.25.11 at 9:46 pm

BTW, I’ve no real problem with those Swedish tax rates. But it does need to be allied with the Swedish method of delivering the services those tax rates pay for. Not the NYC method of doing so.

I think you have mistaken feature for bug. The fact that New York government exists as an inefficient patronage machine is a feature, not a bug.

If you can’t take it, move to Connecticut, which is about the only place in the Tri-Cities region free of this kind of politics at either the state or local level.

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piglet 04.25.11 at 10:26 pm

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.

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Ervin Szalai 04.25.11 at 11:07 pm

I think there is a fairness argument against progressive tax or any other form of “taxing the rich”. Your country and the republic as a form of government is built on the principle that the individual must be protected from the oppression of any majority – unless the individual commits a crime or aggressive act against other individuals. If you are not protecting those who gain more money – it really doesn’t matter how legal way they achieving it, by merit or simply just luck – and you’re letting the majority of the less talented/less lucky/less hard working to take away from them by legislative force, you just as easily should support any bloodthirsty mob, because the arguments would have been just as vaguely justified.

I’m from Hungary, Europe and I really admire the framework of your country. Maybe You should be too.

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engels 04.25.11 at 11:17 pm

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?

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Harry 04.25.11 at 11:52 pm

Tim

that’s a great calculation, and a depressing but not unconvincing conclusion. Thank goodness we are scandinavians in Wisconsin… But there isn’t much chance of redesigning the federal system in a Swedish way, even if we could get Swedish style civil servants to deliver.

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Harry 04.26.11 at 12:08 am

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.

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ScentOfViolets 04.26.11 at 1:16 am

It seems like the whole point of nonsense like this is to get people get caught up in what are essentially unfalsifiable opinions. And people like Brooks get to be infuriatingly obtuse by not really getting down to tacks on concepts that have been put into such hard service they have eroded down to slogans and buzzwords.

What does Brooks mean – precisely – when he uses words like “merit” and “egalitarian”? I don’t know, and in all probability, neither does he. But I imagine he’ll argue to the death over what those words mean when you use them. That’s the point – to carry on endlessly in a way that ensure nothing is ever definitively pinned down, proven, or decided.

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James Kroeger 04.26.11 at 1:52 am

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?

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Tony Lynch 04.26.11 at 2:30 am

There is a further problem with the Brooks &c. line. Moralistic defenses of anything economic as “just”, “good”, “right”, &c. in the framework of a fundamental endorsement of the legitimacy of market egoism live on borrowed time, for such accounts are self-destroying. See:

http://www.springerlink.com/content/qt807327t655j60u/

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bjk 04.26.11 at 3:28 am

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.

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maidhc 04.26.11 at 7:56 am

mpowell:

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?

How about wine? In the 1980s a top-end bottle of wine went for maybe $500. A price that might be affordable a few times in a lifetime for a moderately successful person such as a wine critic. Nowadays it would be up into 5 figures. It’s a problem for someone who is a serious wine critic—how can you write about wine when you’ve never been able to taste the best?

But if you’re pulling in a few hundred mill, dropping $15000 on a bottle of Red Ned is chump change.

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Tim Worstall 04.26.11 at 10:32 am

@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.

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Brett Bellmore 04.26.11 at 10:45 am

“If you are not protecting those who gain more money – it really doesn’t matter how legal way they achieving it, by merit or simply just luck – and you’re letting the majority of the less talented/less lucky/less hard working to take away from them by legislative force, you just as easily should support any bloodthirsty mob, because the arguments would have been just as vaguely justified.”

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 find it equally bizarre that someone would not recognize the extent that that hard work was brought about by other people’s efforts. “

Nothing good about this batch of steel. Sure, the properties are ok, but they’re due to the alloy the metallurgist mixed up, cold working in the rolling mill, and the subsequent heat treat, all of which the steel had nothing to do with.

Who cares HOW you got to be meritorious? The important thing is that you are, or aren’t.

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Andrew 04.26.11 at 10:47 am

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.

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derek 04.26.11 at 11:34 am

all of which the steel had nothing to do with.

Which is why I make a point of never letting steel keep a penny of the money it earned by its properties.

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Charlie 04.26.11 at 11:41 am

#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.

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Henri Vieuxtemps 04.26.11 at 12:41 pm

mpowell: Well, I am an engineer and since I have a very useful skill set and am very good at what I do, I am paid quite well compared to the median earner.

Brooks’ piece is quoting Obama defining ‘the rich’ as the top 1%. By income, I imagine. To be a member of this group you need to be paid at least $500K/year. If it was measured by wealth, you’d need a net worth of (I’m guessing) about $7-8 million. Are you a part of the group Brooks is concerned about?

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Harry 04.26.11 at 12:45 pm

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!

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liberal 04.26.11 at 1:06 pm

Yawn. This entire debate is ill-informed.

The key point is economic rent. If someone is meritorious, and earns a high income because he in fact is contributing to useful production, whether because he is a brilliant innovator or because he puts capital to good use in a competitive market, then fine, tax him at the same rate as anyone else.

The problem is that most of today’s rich got that way through parasitic rent collection. They make no useful contribution to production and earn their riches through legalized theft. And what makes the debate sickening is that the parasitic got that way because of state-granted privileges, first and foremost in the form of land ownership in the absence of onerous land taxes, but also government-granted monopoly rights.

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StevenAttewell 04.26.11 at 1:39 pm

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.

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dictateursanguinaire 04.26.11 at 1:45 pm

“But Cohen has a more utopian approach and whether you agree with him or not, if you are talking about distribution in a Cohen-preferred framework, you have to talk about whether it is morally acceptable for higher productivity workers to hold out for higher pay, essentially.”

Essentially, yes. Even in a utopia, I still believe in the market system with three (large) qualifications. One, in this highly productive society, all people have a basic unconditional right to certain things: enough food/water to survive, some form of housing, some form of basic medical care. Two, everyone has a roughly equal start in life: no parents can give excess advantage (what constitutes excess would be hard to say.) Three, nearly-perfect competition exists for most goods; every market functions more or less like eBay. For any good that’s not universally valuable/a human right, I think the price system is good because it allows for expression of value and information. I think “liberal” above me pretty much has it right. If Cohen or anyone else disagrees, I would legitimately be really interested to hear why. But I’m not sure who would – after all, even Marx’s big complaint about capitalism was artificial suffering. I think (from what I remember) that he was fine with free exchange provided that basic needs were met for alll. It seems to me that too much socialist thought afterwards took elimination of capitalism as the end, not the means to a better world, and thus blinded itself. Capitalism needs some serious tinkering, but in the end, it IS tinkering and not revolution, methinks.

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chris 04.26.11 at 1:54 pm

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.

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Henri Vieuxtemps 04.26.11 at 2:01 pm

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.

What makes you think that a central control strategy would work better under these circumstances? It sounds really counterintuitive. It seems that more diversity requires more autonomy, not more central control.

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StevenAttewell 04.26.11 at 2:30 pm

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.

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Tim Worstall 04.26.11 at 2:58 pm

“Tim – I’m sorry, but both contemporary and historical evidence points the other direction on national v. local taxation and provision.”

Referring to Harry’s point to me, I’m entirely happy to accept that that’s the US experience. It’s just that it’s not the Nordic one. Which is rather what I was highlighting.

“Maybe you mean to say that in the Nordic states, the funding is federal, but the control is local?”

No, it’s the other way around. Taxes are raised locally and spent locally. For example, (to varying degrees to be sure) the Danish and Swedish health care systems are run at commune/county level. But of course there are specialties, rarities, where it would be near insane to try and have treatments for in units of some tens of thousands, even hundreds of thousands of people. Money moves up from these base units to pay for regional, possibly national, facilities that contain these exotica.

As to the “Where does Mads drink” effect, perhaps this is simply me projecting my own personal foibles onto others. For I certainly would be happy to pay higher taxes if I could go around and shout at the person spending it if I thought they were going off the rails. But then as @95 points out, there are plenty of counter exmples. Bell California anyone?

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StevenAttewell 04.26.11 at 3:13 pm

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.

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chris 04.26.11 at 4:00 pm

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.

Absolutely — how many people can even name their alderman, let alone how he/she voted on issues that affect that citizen? Local government affects people, but it does so in obscurity. Not secrecy, exactly, but it just isn’t salient enough for most people to bother paying attention to. (On the other hand, the few people who have a direct personal interest in the decisions, like real estate developers, pay a *lot* of attention. The combination of intense pressure by a few and lack of scrutiny by the many is highly conducive to corruption.) The sheer scale of the federal government makes it seem more important, and therefore, more scrutinized.

There’s also an economy of scale in reporting. It wouldn’t make sense to have a staff of investigative reporters constantly prying into the operations of the local government of a medium-sized town, but it’s taken for granted that almost everything the federal government does will be in the media spotlight because the potential audience is so much bigger.

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mpowell 04.26.11 at 4:07 pm


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.

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mpowell 04.26.11 at 4:13 pm

dictateursanguinaire @ 92: 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.

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Henri Vieuxtemps 04.26.11 at 4:18 pm

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.

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Brett Bellmore 04.26.11 at 4:46 pm

“The problem is that most of today’s rich got that way through parasitic rent collection. “

Liberal, 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”.

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Henri Vieuxtemps 04.26.11 at 5:08 pm

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.

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Tim Worstall 04.26.11 at 5:19 pm

“Absolutely—how many people can even name their alderman, let alone how he/she voted on issues that affect that citizen?”

Well, in systems where there really is local power (say, a French c0mmune) then everyone does know the name of the Mayor of that commune. One reason for very low turnout in UK local elections might be that as there isn’t much power there there’s not much interest.

Chicken and eggs priority argument I know….

mpowell:

“What you are talking about may apply in some societies, but I’m not sure it would work in all of them.”

Well, possibly, but then that opens up a whole can of worms. Perhaps a high (er) tax high (er) government supplied services model just won’t work in the US given that some things apply in some societies and not others? Perhaps the more dirigiste methods of France just won’t work in the UK ditto? Perhaps government pocking winners, economic planning, works in Korea (South) while it won’t work as a development model in Ghana?

We can also run it the other way: perhaps a freeish market with some mixed economy elements is just fine for the UK but will produce oligarchic disaster in Russia?

If we’re going to say that courses of action are dependent upon societal differences then we’ve got something of a problem in looking at any one society and then trying to add what we think are the successful components of that to any other.

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ScentOfViolets 04.26.11 at 5:27 pm

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.

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Myles 04.26.11 at 5:38 pm

Well, in systems where there really is local power (say, a French c0mmune)

What does a French commune do that an Anglo-American city council doesn’t?

Perhaps a high (er) tax high (er) government supplied services model just won’t work in the US given that some things apply in some societies and not others?

I’d modify that a bit. If you think the US as a whole not as the equivalent of an individual Euro country, but rather of the whole EU, you can see why a high-tax high-services model might not work at the federal level.

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ScentOfViolets 04.26.11 at 5:40 pm

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.

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mpowell 04.26.11 at 5:55 pm


If we’re going to say that courses of action are dependent upon societal differences then we’ve got something of a problem in looking at any one society and then trying to add what we think are the successful components of that to any other.

I’d say this is definitely something of a problem. At the very least, the entire legal/political system plays a role in determining the marginal impact of a given policy. You don’t even have to go all the way to talking about culture. For example, in the United States you can legally bribe politicians. That influences the efficacy of other kinds of policies. It certainly makes comparative analysis difficult, though I would still say it’s very useful.

110

MPAVictoria 04.26.11 at 6:13 pm

“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.

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chris 04.26.11 at 6:42 pm

If you think the US as a whole not as the equivalent of an individual Euro country, but rather of the whole EU, you can see why a high-tax high-services model might not work at the federal level.

ISTM that we are instead seeing why it doesn’t work at the non-federal level — poor regions (the PIIGS, the former Warsaw Pact states) 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 that would be required to do so without strong central authority. The result is divergence, resentment, one-size-fits-nobody policies from what central authority there is, and possibly eventually political instability and even breakup.

From the viewpoint of Sweden, Sweden is quite successful, but from the viewpoint of Europe, Sweden’s success isn’t so impressive; it’s just one of the wealthier neighborhoods of a continent that still contains quite a lot of poverty. Europe is a curate’s egg nearly as much as the US is and you have to zoom in on the right part to make it look good.

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Henri Vieuxtemps 04.26.11 at 7:06 pm

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.

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StevenAttewell 04.26.11 at 7:37 pm

Henri –
My “preference for central control” in that situation is actually based on the belief that strong central government is better for the majority of the population of both regions – and the belief that the industrial/progressive half will prevail as long as the majority of the population exercise their right to vote.

I think where you and I disagree is over the question of “population” vs. “policy regime.” From an admittedly American perspective, I’d point out that there’s a lot of folks in supposedly-monolithic conservative areas who vote for and desperately need progressive policies (look at the map of the U.S electorate by income bracket, for example – http://realignmentproject.wordpress.com/2009/08/02/union-and-liberty-why-progressives-should-resist-secession/ – the poor South is solidly Democratic).

Without a national government, the needs of this population go completely unmet, even if they plus voters in the progressive areas make up a majority of the nation.

Tim at 104 – “Well, in systems where there really is local power (say, a French c0mmune) then everyone does know the name of the Mayor of that commune. ” I disagree. There’s enormous amounts of power at the state level in the U.S, but levels of awareness and information about state legislators, state departments, etc. are really low. Salience is a huge problem.

Henri at 111 – “I suspect in a capitalist system transfer payments can only hurt development.” What? Ummm…the Marshall Plan? EU transfers, especially in infrastructure, have been instrumental in the development of many European countries – Spain and highways being only the most obvious example.

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dictateursanguinaire 04.26.11 at 8:10 pm

“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.

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Tim Worstall 04.26.11 at 8:14 pm

“I’d modify that a bit. If you think the US as a whole not as the equivalent of an individual Euro country, but rather of the whole EU, you can see why a high-tax high-services model might not work at the federal level.”

Yes, I think that’s rather a point I make further up the thread.

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Myles 04.26.11 at 9:43 pm

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

Passive-aggressive personality much?

117

ovaut 04.26.11 at 10:13 pm

Conservatives believe in the natural justice of the prevailing order, and in the virtue of the transiently strong, as items of ideology. Conservatives, as an item of ideology, believe too in the profit motive as the best and soundest engine of human effort. But there need be no explanation for this grander than that they are bad people. They become pernicious when, acting as though it were true because they depend on its so being and need that, they inflict their ideology on a world whose calm intractability confounds it.

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Brett Bellmore 04.26.11 at 10:23 pm

“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.

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ScentOfViolets 04.26.11 at 11:04 pm

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.

Careful there; in some cases it is only because there is government intervention that the market rates are so low. And where you get employers moaning about needing illegal immigrants because “Americans just won’t do that kind of work.” Well, no they won’t. Not at the wages you’re paying, bud.

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piglet 04.26.11 at 11:52 pm

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.

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Jon H 04.27.11 at 5:25 am

Myles wrote: “I think in the grander moral scheme it’s probably down heavily to luck, but on a more granular level it isn’t as much. I think Warren Buffet is a tedious tool who wasn’t actually investing (he managed most of his companies), but I nonetheless don’t think financial returns are wholly random.”

That doesn’t necessarily mean they’re due to skill or acumen. For a lot of high-net-worth individuals, I suspect their returns are due to connections. It’s easier to make a killing in Google-type IPOs or private equity if you get invited to invest in those IPOs and private equity funds.

After all, that’s probably how the portfolios of Congress manage to beat the markets. Not business acumen, connections.

Hell, even considering celebrities and pro athletes, it seems like the only people who get into money problems are those who either 1) hired a crooked accountant or were robbed by their parents, or 2) did profoundly stupid things with their money. And by profoundly stupid I don’t mean “invested in a sub-par mutual fund”, I mean “Decided to buy McLaren F1s in every color of the rainbow”, “Invested in my buddy’s new recording studio”, “Developed a heavy meth habit”, etc.

It seems like celebs really need to work *hard* at losing their money; would do quite well with just index funds; and would do fantastically if they have connections that can get them into angel investor funds, private equity, hedge funds, etc, and just put 20% of their money in there.

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Jack Strocchi 04.27.11 at 5:29 am

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…

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Jon H 04.27.11 at 5:36 am

Tim Worstall wrote: “Well, yeees, although as far as I know she hasn’t inherited yet. She’s made her own money off the fact that she will inherit.”

She’s probably got a massive trust fund, though. Perhaps she earned it through her hard work, running around without knickers and letting paparazzi take pictures of her crotch.

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Henri Vieuxtemps 04.27.11 at 5:57 am

@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.

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Tim Worstall 04.27.11 at 10:35 am

Piglet @119.

http://www.skm.dk/foreign/english/taxindenmark2008/section2howisincometaxed/

The Danish tax system explained. I’m slightly wrong in that in that chart it looks like there are three, not two national income tax rates.

The numbers there are averages across the country, so not showing variations between communes. But yes, the commune/local (plus church) tax is vastly higher than the national tax. Averaging 25% rather than the 5 or 6 % of the first two national tax rates.

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Tim Worstall 04.27.11 at 10:36 am

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.

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Brett Bellmore 04.27.11 at 10:44 am

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. No matter how convenient you may find it to simply posit the outcome of such an examination, instead of actually carrying it out.

We have a term for judging people without looking at the individual details. It’s “prejudice”. We have a term for people who engage in this. It’s “bigots”. Looking at the individual details is, unavoidably, inextricably, part of rendering an decision that’s actually defensible.

And that’s so whether or not your ‘moral intuitions’, AKA prejudices, tell you that you don’t need to know anything about somebody to render judgment in their case.

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Salient 04.27.11 at 11:23 am

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.

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Salient 04.27.11 at 11:30 am

And needless to say, in this context to “render judgment” is to assess things like appropriate tax liability, not to assess guilt or worthiness or morality.

The question before us here is not, “does this person deserve this much?” — it’s “given the limited resources available to all of us, should we allow a small handful of people to pool [x]% of those resources?”

130

Brett Bellmore 04.27.11 at 11:45 am

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.

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MPAVictoria 04.27.11 at 12:18 pm

“Passive-aggressive personality much?”

Come on Myles. It was meant in good humor and to be fair you did say something to that effect in an earlier thread. If you have changed your mind on the issue than I cheerfully retract my comment.

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Henri Vieuxtemps 04.27.11 at 12:19 pm

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?

133

chris 04.27.11 at 1:07 pm

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.

Do I also have to examine their individual circumstances to determine whether or not they can outrun Ferraris or fly by flapping their arms?

Some people can run faster than other people, but no people can run 100x faster than the average person (which would be over 500 mph). There are limits to human variation.

Fraud and lotteries aside, primarily the wealthy receive their wealth by siphoning off a percentage of the work product of everyone below them on the org chart. Whether or not this is “earned” is a matter of definition, in a sense, but it’s certainly possible to believe that it is not. Management in some sense is necessary to collaborative enterprise, but there’s definitely an argument for the view that management that decides that management should be paid first and best is a form of corruption, placing the manager’s self-interest ahead of the goal of the company/organization.

If you want to dispute that head on, go ahead, but clearly several people on this thread hold the view that managers deciding to pay themselves a lot are in breach of their fiduciary duties as managers and, as such, not earning the lots of money they choose to pay themselves.

And from that perspective, I don’t have to examine how many iPads Steve Jobs has personally built to be pretty damn confident that it is not enough to account for his personal income.

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John Holbo 04.27.11 at 1:33 pm

Brett: “We have a term for judging people without looking at the individual details. It’s “prejudice”. We have a term for people who engage in this. It’s “bigots”.”

I suppose the only safe thing to do then, to avoid prejudice and bigotry, is to enforce perfect after-tax income equality. Because it’s not as though we are going to examine all the individual details of every single tax payer’s life. So the only way to avoid the bigotry of assuming that some people are more deserving than others, without checking, is to assume that no one is more deserving than anyone else. Fair enough? You’ll sign on? (You wouldn’t want to be a bigot, after all?)

On the other hand, on reflection, perhaps it will emerge that there is a problem with your account of prejudice and bigotry.

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Salient 04.27.11 at 1:39 pm

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.

Bah, nobody’s disputing that the wealthy received their wealth because someone or someones directed it to them in some way. So sure, in a technical sense, a CEO “earns” the millions of dollars they get their buddies on the relevant committee to funnel their way at their company’s expense, if by “earn” you just mean “receive.”

But don’t be silly. You’re trolling, attempting to redirect conversation in unproductive directions by intentionally misreading and misstating others’ contributions to the thread. I’m just taking the time to call you out on it, because your comments here were more odious and insulting than usual. You know perfectly well that we’re disputing whether allowing the wealthy to keep and increase an arbitrarily large portion of the world’s resources is reasonable and just. If we allow “earn” to mean “receive only through a socially just process” then sure, you’re damn right inheritors didn’t “earn” their wealth, CEOs who drove their companies into the ground by leeching resources didn’t “earn” their wealth, and I do in fact believe that no matter how productive a person is, they are only entitled to a certain portion of the world’s resources — in particular, no member of the wealthy as a class is entitled to a share so large that it would impoverish the rest of the world if each wealthy person owned that share. A bit wordy, but basically, in a finite-resource world with billions of people, each person is morally entitled to a small portion of those resources, and morally obligated to not consume or possess so large a portion that they’re interfering with others’ rights to their share.

Telling me that it’s obvious people have “earned” their resources just because they have been given them in exchange for what they do, is obviously nonsense. Did slave owners “earn” the right to possess other people?

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Salient 04.27.11 at 1:47 pm

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.

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Substance McGravitas 04.27.11 at 1:48 pm

defending progressive taxation on the basis that the wealthy didn’t earn their wealth

How about the basis that it’s easier for the wealthy to find food and shelter and therefore surely find it easier to part with some cash?

138

Myles 04.27.11 at 1:58 pm

@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.

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james 04.27.11 at 4:05 pm

Progressive taxation is warranted because the wealthy are better able to handle it. It follows the very conservative principle of ‘..For unto whomsoever much is given, of him shall be much required…’ (Luke 12:48). This idea of justifying progressive taxes by defining away individual merit, individual property rights, and making the tax payer the indentured servant of the democratic state must be completely abandoned. I would rather have the rich pay nothing than head down the road being advocated.

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Brett Bellmore 04.27.11 at 4:35 pm

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

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dictateursanguinaire 04.27.11 at 4:58 pm

@james, we’re not talking about things from the point of politicians. i can personally not believe in a strong concept of merit, and let that be the justification for taxation- for my own conscious – and let the state have its own reason (e.g. you use our roads and we enforce your contracts, you need to at least pay that much). I agree that that reasoning would be bad for the state to have as its ideology. one can think that high redistribution of wealth is philosophically justified but think that the disincentive effects from over-taxation mean that we should only lightly redistribute. for my part, i strongly distrust the state and i wish it were not necessary. but “totalitarianism is bad” does not imply that “everyone who makes money made every cent based on their own merit alone and taxation is only justified because it is a necessity.”

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piglet 04.27.11 at 8:43 pm

“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.

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StevenAttewell 04.27.11 at 9:36 pm

Brett Bellmore at 140:

How are you on Adam Smith?

” The expense of defending the society, and that of supporting the dignity of the chief magistrate, are both laid out for the general benefit of the whole society. It is reasonable, therefore, that they should be defrayed by the general contribution of the whole society, all the different members contributing, as nearly as possible, in proportion to their respective abilities.
(Adam Smith, Wealth of Nations, Book 5, Chapter 1, Part 4)
(http://realignmentproject.wordpress.com/2009/07/12/in-proportion-to-their-respective-abilities-making-the-payroll-tax-progressive/)

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piglet 04.27.11 at 9:50 pm

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?

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James Kroeger 04.27.11 at 10:55 pm

Now we have the claim (by Brooks) that progressive taxation is immoral…

The argument that progressive taxation is immoral is ultimately based on the belief that rich people have a [moral] right that is violated when the state appropriates any portion of the money they’ve accumulated.

Moral rights are not ‘things’ that individuals/groups actually possess within themselves. They are moral obligations re: the behavior of ‘everyone else’, and so they are actually possessed only within the minds of ‘everyone else’ in the community.

In other words, you only have [moral] rights if everyone else in the community believes you are entitled to such a right. If the community does not believe that you deserve some imagined right, then it does not actually exist.

‘Everyone else’ is going to believe that individuals/groups deserve certain rights only if they believe that they would be better to grant such a right. This arises directly from the definition of the word moral: and act [or decision not to act] is moral if everyone would be better off if everyone behaved [or chose not to behave] in a particular way.

This is why the libertarian position is ultimately indefensible. Everyone would in fact be better off if those who would be harmed the least by a tax levy are required to pay the bills of the state. No person or group possesses a right to behave in ways that ignore the needs of the rest of the community.

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Henri Vieuxtemps 04.28.11 at 7:03 am

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.

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reason 04.28.11 at 7:16 am

147
James Kroeger @145 – very well put. But 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.

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Tim Worstall 04.28.11 at 10:14 am

@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.

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Tim Wilkinson 04.28.11 at 12:26 pm

The specialised kind of (institutional) desert known as ‘earning’ is a bit mysterious. How does it work?

Back when I had hopes of turning political philosophy to the service of counter-ideology, I started building a case that libertarian earning – given the existence of money at least – could never involve one’s moving to a (more than minimally) higher indifference curve; that it could not support any producer or consumer surplus; that it would extend only to the kind of minimal rewards that are modelled as occurring under perfect competition. This last formulation in particular provides a challenge to certain kinds of libertarian who stress the benefits of Invisible Hand, (locally) Pareto-optimal allocation under perfect competition.

There is, in any case, no reason to suppose that current distributional arrangements reflect earning in any pre-legal sense, nor that property rights must extend to all of the surplus that is generated by exchange (or more generally, re-allocation). Given that economic neoconservatives are so fond of going on about hard work, they do seem to owe an explanation of how people in (relatively) cushy, pampered, rewarding and high-status positions can possibly thereby have earned their enormous rewards.

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James Kroeger 04.28.11 at 2:44 pm

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.

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Brett Bellmore 04.28.11 at 4:53 pm

“Moral rights are not ‘things’ that individuals/groups actually possess within themselves. They are moral obligations re: the behavior of ‘everyone else’, and so they are actually possessed only within the minds of ‘everyone else’ in the community.”

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.

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piglet 04.28.11 at 5:59 pm

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.

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Henri Vieuxtemps 04.28.11 at 6:27 pm

I don’t know about Germany, but in Italy, for example, transfers from north to south are extremely unpopular (in the north, of course); Lega Nord is one of the most popular parties. And elsewhere they have problems with Catalonia, Quebec, etc. That’s nothing new, of course; 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.

Strong central control is useful for a nation with some sort of mission, of the imperial nature, usually. When it’s just a union for the benefit of the population, I believe almost everyone prefers federalism.

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piglet 04.28.11 at 8:11 pm

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?

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Henri Vieuxtemps 04.28.11 at 8:20 pm

I dunno, it’s just that I feel that solidarity is a voluntary concept, not something forced from the top down.

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piglet 04.28.11 at 8:50 pm

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.

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Tim Worstall 04.29.11 at 8:39 am

“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?”

Not as yet, no, so far I’ve only the observation, not a strong theory about why. Off the top of my head I might say that such local autonomy allows local choices: the Scands like a high tax large State world, the Swiss not so much.

But then that just ends up saying that the Scands and the Swiss are different, which isn’t really all that much of an advance in terms of political, economic or taxation theory.

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Henri Vieuxtemps 04.29.11 at 9:53 am

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?

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StevenAttewell 04.29.11 at 4:26 pm

Henri – take a look at the list of examples: Germany (where West to East transfers are a major political tension), Italy (North vs. South), Canada (Quebec), U.S (North v. South) vs. Scandinavia.

It seems to me that federalism only ever decreases tensions when the sections are relatively uniform – otherwise, you need a central government to create national identity that can bind the whole together.

And as far as solidarity in the American context goes, in addition to the history of the U.S labor movement, I’d point to Social Security and Medicare as examples that the U.S population as a whole is solidaristic when they view themselves as part of the universe being protected.

Which kind of gets me to my point – you have to dis-aggregate regions to look at the people inside. Regional autonomy was awesome if you were a tidewater planter looking to keep a lid down on slaves and uppity poor whites, or if you were a mill or mine owner who wanted to shoot strikers or employ children, or if you were a Dixiecrat who wanted to keep black people and poor people from voting. But it wasn’t so great for the majority of people inside that state – still isn’t. Hence, the phenomenon of Southern states relying on sales taxes (including on groceries) while cutting taxes for the rich and corporations.
(http://realignmentproject.wordpress.com/2011/04/08/hunting-the-elephant-in-the-room-inequality-part-ii-taxes/)

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Henri Vieuxtemps 04.29.11 at 4:40 pm

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?

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piglet 04.29.11 at 6:23 pm

“centrally imposed/centrally controlled large-scale redistribution between regions”

This all depends a lot on how you frame the issue. “large-scale redistribution between regions” is never popular in the richer regions but when you ask people whether they think it’s fair that the quality of say education or health care should depend on geography, many will disagree and support equalization measures, and yes that is solidarity.

Let’s track back a bit. Worstall started talking about local autonomy citing Denmark as example and in response I invoked the need for both subsidiarity and solidarity. In the US context, where many affluent people live in economically segregated sub/exurban enclaves, my main concern is not so much discrepancies between states as within states and within regions.

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Henri Vieuxtemps 04.29.11 at 7:06 pm

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.

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chris 04.29.11 at 7:43 pm

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?

If only there weren’t people living there, maybe. Individual Southerners don’t deserve to be abandoned to live (or die) in a collapsing state even if a majority of their neighbors are self-satisfied self-righteous ignorant jerks, and this goes double for children (who, indeed, don’t deserve such a fate even if their *own parents* fit that description).

States don’t behave — didn’t we have a thread on this not long ago? (Although that was using the international meaning of “state” rather than the “administrative district of the US” meaning.) Therefore they can’t behave badly in such a way as to deserve anything.

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James Kroeger 04.29.11 at 7:43 pm

Brett Bellmore, 151:

“Moral rights are not ‘things’ that individuals/groups actually possess within themselves. They are moral obligations re: the behavior of ‘everyone else’, and so they are actually possessed only within the minds of ‘everyone else’ in the community.”

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.

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StevenAttewell 04.29.11 at 8:03 pm

Henri –
The nation as a whole should send money to poor people living in Southern states who are getting screwed over by their states – indeed, one very good thing about national taxation is that there’s a national majority in favor of progressive taxation, which counter-acts local regressiveness. Letting Southern states hit the wall only hurts Southern poor, not Southern political elites.

I disagree that it’s common sense that the local units should have the largest proportion of funds. Local units, as I have argued above, are prone to capture for local interests and elites, given the lack of competition (which isn’t the case at the national level).

State governments can be just as abusive as national governments. Take a look at Georgia’s role in pushing Indian removal, or the history of slave rebellion repressions in Virginia, South Carolina, etc., or the Southern states’ support for filibustering expeditions, or the history of the South 1877-1965.

James Kroeger – what about the counter-example: a minority that desires to repress the majority, and argues that its special privileges are moral rights?

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chris 04.29.11 at 8:04 pm

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.

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piglet 04.29.11 at 8:10 pm

In the US, the federal government gets pretty much everything, and then it gets re-distributed back to the states somehow.

Do you truly think that the federal government is a grand redistribution machine? This is not how it works. The main portions of “redistribution” by the US are SS/Medicare/unemployment, and those are mostly distributed to individuals, who each have paid FICA taxes at the same rates regardless of what state they reside in. It is true that on the level of each state, the aggregate amount say of SS benefits isn’t usually the same as the aggregate amount of SS taxes paid in that state. But that is incidental and not a purposeful scheme to redistribute between states (although the stabilization effect is welcome). SS is an insurance system in which all US residents participate under identical conditions. It is based on solidarity and reciprocity. It does not violate the subsidiarity principle because the federal level is appropriate for the purpose. Leaving Social Security to the state or county or neighborhood (or family clan) level would create massive distortions and simply be impractical.

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Henri Vieuxtemps 04.29.11 at 8:18 pm

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.

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piglet 04.29.11 at 8:23 pm

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.

US local governments have considerable authority to raise taxes. They do not in my view get enough allocations from the income tax collected at state and federal level (some cities have an income tax of their own but this automatically hurts their competitiveness). I oppose varying tax rates because of the distortions thereby created but I think cities should get a guaranteed share of income tax revenues so that they don’t have to rely as much on property and sales taxes.

An interesting side story is the fact that local property taxes can be deducted from the federal income tax. As a result, some very affluent communities tax themselves highly (the NYT recently reported on a community where $50,000 is the average tax rate, but without mentioning the deductibility issue). This allows them to maintain a high quality of schools and services for themselves while reducing federal tax revenue. This is not a good example of the virtue of local autonomy.

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Henri Vieuxtemps 04.29.11 at 8:27 pm

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?

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Henri Vieuxtemps 04.29.11 at 8:54 pm

some very affluent communities tax themselves highly

The rich in the US have too much money. They shouldn’t be able to make so much money, that’s the solution. Once they got the money, trying to take it from them is not a solution, it’s masturbation.

The fact that there are very rich communities and very poor communities is a huge problem, but I don’t believe your cure helps. Empirically, it doesn’t seem to be the case.

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piglet 04.30.11 at 1:01 am

“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.

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StevenAttewell 04.30.11 at 7:24 am

Just to second Piglet on the transportation issue:

The Big Dig, whatever you think about the political skullduggery involved, could not have been financed by the city of Boston – only a national government, what with the printing and central bank borrowing powers, could finance a project of that size.

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Henri Vieuxtemps 04.30.11 at 8:55 am

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

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James Kroeger 04.30.11 at 10:06 am

chris, 166:

Please explain how to find a moral absolute, and what sort of evidence confirms that you have identified and formulated it correctly.

I propound a moral theory that may very well be a synthesis of the relativist vs. absolutist positions. It is based on the fundamental assumption that all human beings are born with the same “needs”, that they all experience those needs with the same degree of sensitivity, and that there is nothing that any individual can do to ‘modify’ his needs. All appearances to the contrary are precisely that: appearances only.

Human needs = the foundation of human morality. Generally, the Good is associated with need-satisfaction [achieved morally] and the Bad is associated with ultimate need-deprivation.

Human beings are not born with an understanding of what their needs are. It’s something they’ve had to figure out. And so it is that different people have come up with different guesses about what it is precisely that they need, and re: how they might best go about obtaining need-satisfaction.

It is also assumed that human beings do not possess the power to create or annihilate needs. For example, a lot of people with try to tell you that they have no need for approval, but they are simply investing themselves in wishful thinking. Exactly how is it that one would go about annihilating one’s need for approval? Wish really, really hard that it would be so?

Counter to the wishful thinking of Ayn Rand’s apostles, individualism does not extend to the realm of need-creation/annihilation. There are no supermen. We are all equally vulnerable. Yes, different emotional histories (much emotional pain vs. much emotional pleasure) can lead to differing personalities.

If Human A enjoys a long period of attention and approval from most sources and Human B suffers from a long period of emotional-need deprivation, the two will exhibit different personalities/outlooks, but the two different outcomes are due to the same needs that each experiences equally.

So yes, my account is consequentialist, but those consequences are absolute determinants of whether or not a particular example of human behavior is right, wrong, or neither.

Killing a person who angers you is immoral because we would not all be better off if we were all to kill the people who anger us. Stealing is also immoral in most situations for the same reason. Lying is immoral in some circumstances because we would not all be better off if everyone also lied when facing the same circumstances. But lying would be moral in other circumstances because everyone would be better off if everyone were to lie for the same reasons.

Where are the moral absolutes? Well, with perfect knowledge of all relevant variables, it would be possible to determine the ‘right’ course of action in all imaginable situations, but in the absence of such knowledge, we must rely on our guesses. Judgments may be faulty, but the facts are what they are, whether they be known to us or not.

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Broggly 05.01.11 at 7:41 am

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.

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