The problem of Rawlsian transition

by Chris Bertram on August 7, 2012

(Since my attempt to make a point in a somewhat offhand and popularizing way seems to have been at the expense of clear communication, let me have another try, this time in a duller and more academic mode.)

Rawls has an idea of a feasible utopia, a well-ordered society, taking the form of a property-owning democracy,[1] in which distributive outcomes are programmed into the basic institutions via incentives attached to rules such that citizens, pursuing their own good within those rules, are led to bring about those outcomes. Importantly, those outcomes have the properties that they guarantee the worth of the basic liberties to citizens (material inequalities don’t undermine political equalities) and the difference principle is satisfied. This conception of what the just society would look like is important in responding to critics like Nozick, because, contra Nozick, the holdings that individuals have in the Rawlsian just society result from history: people are entitled to what they have because they have the rewards that have come from some action specified in advance by the rules (such as a net salary for doing a certain job or the winnings associated with a fair bet).[2] However the system as a whole is designed such that the invisible hand brings about just (or at least tolerably just) outcomes. A Rawlsian feasible utopia therefore satisfies someone like Hayek’s understanding of the rule of law: the government isn’t constantly intervening, trying to realize some antecedently decided-upon distributive pattern; rather the preferred distributive pattern emerges automatically from the normal operation of the system. Of course, this isn’t exactly laissez-faire: since the government does have the job of constantly adjusting the rules (such as, but perhaps not even mainly, tax rates) because left to itself entirely the system would drift away from its distributive “target” and the political equality of citizens would be undermined.

My intent in the foregoing paragraph is purely expository: it aims to be an uncontroversial (though necessarily incomplete) account of what Rawls believes about the functioning of the basic institutions of a just society. There are a number of things one could say about Rawls’s view here. In particular, I think that it is wildly overoptimistic about our ability to design incentive schemes with more-or-less predictable outcomes. Duncan J. Watts, in his recent Everything is Obvious , [3] is eloquent about the contrast between our confidence in our ability to design incentive schemes that will, say, raise the poor out of poverty, and our actual record when we’ve tried. To the extent to which our capacity to program such schemes is limited, I think that egalitarians will need to make more use than Rawls would have liked of ex post pattern-aiming administrative redistribution and that such ex post intervention will violate the norm of prospectivity that people like Hayek believe essential to the rule of law. If I’m right about that (and of course I might not be) then egalitarians face an uncomfortable choice between better conformity to their egalitarian goals and closer adherence to the norm of prospectivity. I favour more equality even at the expense of reduced certainty, others will disagree.

But there’s a further point, which we can call the problem of Rawlsian transition which, in my opinion, would exacerbate the tension, even in the event that we could solve the design problem for a feasible utopia. Rawlsians tend to see existing liberal democracies as legitimate but unjust. What I mean by this is that they think that those liberal democracies pass a threshold test of legitimacy such that claims and duties established under their basic institutions are valid. If I use the money I’ve earned through my work to buy a yacht, then I’m entitled to my yacht and it would be unjust for you to take it off me, even though the system under which I transacted falls a long way short of what justice requires. And just as it would be unjust for you to take my yacht, it would also be unjust of an incoming egalitarian liberal government to seize it, because I acted, in good faith, in conformity with the law, to get what I got. Now clearly, my holdings are not protected if they result from force or fraud on my part. But “force or fraud” here has a reasonably specific legal meaning. Tempting as it might be to claim that the 1 per cent (or the 1 per cent of the 1 per cent) acquired their holdings illegitimately, I take it that that’s false in the non-rhetorical sense: they enriched themselves according to the rules (notwithstanding that the rules were in part shaped by their lobbying). My worry now concerns the transition from the existing bad distribution to a Rawlsian feasible utopia: could it be achieved in an acceptable time (say a couple of decades at most) whilst relying exclusively (or with “notably rare exceptions”) on adjustments to the rules, incentives, etc that citizens face prospectively and the payoffs associated with them? Or would it be necessary (in violation of the norm of prospectivity) to take from some and give to others?

My worry about achieving the transition by redesigning the prospective rules has two components. First, a concern about whether, if everything went smoothly, such adjustments would shift the distribution of wealth and income sufficiently in a reasonably short time. And by “if everything went smoothly” I mean (a) we get the design component, that I expressed skepticism about above, right and (b) the 1 per cent only use their ingenuity and that of their lawyers and accountants to hold onto their wealth and eschew extra-legal action and political resistance. Second, a concern about political resistance by the 1 per cent: whether it would be possible to sustain such a transition over the time it would take, in the face of inevitable setbacks which the 1 per cent would exploit. The coming to power of an egalitarian liberal government, determined to effect radical changes in the basic institutions of society to the detriment of the 1 per cent would surely cause financial panic and economic dislocation. Such a government would then have to choose between abandoning its programme and carrying through quicker and more decisive measures to break the power of the 1 per cent, measures which would certainly violate the norm of prospectivity. [4]

My thoughts here include an assumption that some people will reject, so it is best to make it explicit. The assumption is that a Rawlsian just society would be very different from our existing liberal democracies in its pattern of wealth and income and indeed in other respects including the ownership and governance of firms. A species of “left” neoliberal, of which Matthew Yglesias can stand as a representative example, would surely disagree. Though they reject the existing wealth distribution as having become dysfunctionally extreme, they probably take the view that a “cleaned-up” version of the status quo, because of capitalism’s capacity for innovation and growth, would work to the greatest benefit of the least advantaged. To the extent that they are right and “feasible utopia” is closer at hand that I think it is, my concerns lose their force. Whether or not they are right about the facts, though, I take it they are wrong about Rawls, whose ideal of a property-owning democracy was more radical than mere welfare-state capitalism. [5]

fn1. On which, see (recommended!) Martin O’Neill and Thad Williamson eds, Property-Owning Democracy: Rawls and Beyond (Wiley-Blackwell, 2012)
fn2. The clearest Rawls text on this is probably, “The Basic Structure as Subject”. See also ch. 1 of Thomas Pogge, Realizing Rawls (Cornell, 1989).
fn3. Chapter 1 (in the Kindle edition, loc 361 et seq).
fn4. On these latter points see, for example, the reflections of Oskar Lange on the transition to socialism (a different transition, to be sure) in Lange & Taylor, On the Economic Theory of Socialism (McGraw-Hill, 1963) pp. 122-7.
fn5. Again, see O’Neill and Williamson.

{ 97 comments }

1

Ray 08.07.12 at 11:32 am

“But “force or fraud” here has a reasonably specific legal meaning. Tempting as it might be to claim that the 1 per cent (or the 1 per cent of the 1 per cent) acquired their holdings illegitimately, I take it that that’s false in the non-rhetorical sense: they enriched themselves according to the rules”

Well, that depends on how far back you want to look, doesn’t it? I’m sure it doesn’t take a lot of investigation to find a lot of property acquisition that was not down to free individuals making mutually advantageous contracts honoured by both sides. While Yglesias (for example) might say “oh no, we must limit ourselves to prospective changes in the law, otherwise Rawls will cry”, you’re saying “well naturally the current situation is terribly sad if you’re poor, but it would be unfair to blame the rich – it’s not like they’ve done anything wrong”

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Chris Bertram 08.07.12 at 12:05 pm

No, Ray, I’m not saying that as an “all things considered” statement, I’m saying that, _given that_ Rawlsians accept that existing liberal democracies pass a threshold test of legal legitimacy, there is limited scope _for them_ to make the “the rich stole their stuff” move.

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Ray 08.07.12 at 12:22 pm

Your phrasing suggests that you agree.

So is all of your post an argument that Rawlsians have terrible trouble explaining how we might ever get to a feasible utopia from here?

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aepxc 08.07.12 at 12:24 pm

It really seems to me that biology can help us out with the transition, if only we let it. Three observations:

1. Everyone dies.
2. It is difficult to argue how any individual can earn or deserve more than any other just by being born (indeed, this is the strongest part of the veil of ignorance – we all enter society at the same place).
3. Civilisation depends on leaving behind ever larger accumulated surpluses (of capital stock, of knowledge, etc.) for the following generations. It’s why we are not now born naked and ignorant on the savannah, and why both inequality and capabilities tend to soar when nomadic people settle down.

So, we start our lives owning nothing and having earnt nothing, but with a surplus, previously owned by people who have now died, that needs to be distributed. The question becomes how, to whom, and when to distribute that surplus. Traditional inheritance flies just as much in the face of egalitarianism as it does in the face of equality of opportunity and market-mediated transactions (there is no free competition).

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chris y 08.07.12 at 12:26 pm

Yes, this this the little discussed inverse of that overused quotation from Anatole France: “The majestic equality of the law which permits the poor as well as the rich to raise the prices of essential goods, to purchase educational advantages for their children and to evict tenants for late payment of rent.”

6

Mathew Yglesias 08.07.12 at 12:40 pm

As is often the case when my name comes up on Crooked Timber, I’m a bit confused as to why. It seems to me that Chris Bertram’s point is valid and applies equally well to robust welfare state capitalism as to property owning democracy.

Existing stockpiles of wealth have been accumulating under the understanding that the United States of America is not governed by the second principle of justice. What’s more, people have made a lot of decisions about their careers driven by the understanding that American society is not governed by the second principle of justice. A shift in policy—even if it’s exclusively forward-looking policy—that’s forceful enough to make a meaningful change in the distribution of income is necessarily going to have something of an ex post facto quality to it. “I worked long hours in a boring job climbing the corporate ladder for 25 years because CEOs can get stinking rich, and now you want to tell me inequalities need to be arranged for the maximum benefit of the worst off.”

To which I would say (as CB does) “so much the worse for the idea that changes all have to be prospective.” But I wouldn’t call myself a Rawlsian.

7

Vicki Nash 08.07.12 at 12:55 pm

Great post Chris. So I’ve often wondered about this question of whether it is possible to get to a Rawlsian well-ordered society ‘from here’, but have never understood how the necessary ‘bootstrapping’ could occur. Yes it’s plausible that we could re-design the basic structure of society such that the resultant institutions deliver a distribution meeting the criteria of the two Principles, but if accomplished over a short time-span (such as the couple of decades that you suggest) this would necessarily not match the deepest intuitions about justice held by many (not just the 1%), if only because as Rawls himself acknowledges ” …the institutional form of society affects its members and determines in large part the kind of persons they want to be as well as the kind of persons they are” (Political Liberalism p. 269) . So which needs to come first – changes to the basic structure or moral reasonableness?

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Jay 08.07.12 at 12:59 pm

The big question, for me, is whether the Rawlsian system has some incentive or mechanism to keep the temporarily powerful from tearing down the redistributive elements of the system and perpetuating their advantages. Over time, that seems to be what happens to “just” systems in the real world.

9

Patrick S. O'Donnell 08.07.12 at 1:05 pm

Chris,

I think this captures much of Amartya Sen’s critique of Rawls’s “transcendental institutionalism.” Sen speaks of Rawls as being within a (niti) tradition of “arrangement-focused” contractarian thinking (the usual suspects) in contrast to what he terms a tradition of “realization-focused” comparisons (e.g., Smith, Condorcet, Wollstonecraft, Bentham, Marx, J.S. Mill), the former’s ex ante approach focused on designing and implementing “just institutions,” while the latter’s ex post (nyaya) orientation intent on comparative assessments of “just societies,” much in the manner of social choice theory. (Sen also highlights the different ‘informational’ foci of the respective approaches.) Thus Sen’s preferred approach “would tend to ground the assessment of combinations of social institutions and public behaviour patterns on the social consequences and realizations they yield….” The social realization approach would appear to give a greater role to, or at least has more confidence in, politics, at least insofar as that involves ongoing reliance on the rational basis of social judgments and public decisions, or accords a prominent role to practical reasoning in public fora, whatever our prior faith in or commitment to the putatively just institutions set up by the original “framers.” Nothing is sacred, in other words, even if we see these institutions as presumptively fair, for they remain liable to publicly reasoned re-examination (presumptions are rebuttable after all). Reasoned scrutiny, on this account, is not the sole prerogative or privilege of the original framers or designers that a would-be democratic society must pay debilitating deference to with regard to the pursuit of justice. I might add, somewhat ironically I suppose given Sen’s dislike of G.A. Cohen’s transcendental utopian conception of justice (my description, which makes it Platonic in inspiration), is that Sen’s approach permits ongoing respect of our intuitions of (perfect) justice insofar as we can always assess the degree to which our realizations fall short of the perfect “Form,” so to speak, there’s always room for a critique of sorts that precludes any kind of complacency with regard to our achievements.

10

otto 08.07.12 at 1:12 pm

I also find it odd the ways that Yglesias – or an ‘Yglesias ideal type’ – is sometimes referenced in CT posts.

Re. this sentence: “A species of “left” neoliberal, of which Matthew Yglesias can stand as a representative example, would surely disagree. Though they reject the existing wealth distribution as having become dysfunctionally extreme …”

It might be better to either stick with “A “left” neoliberal”, and only refer to Yglesias himself if you can actually reference some of his writing.

If you want to talk about “a species of blogger whose spelling is humorously erratic, of which Matthew Yglesias is a representative example”, then of course no problem.

11

SamChevre 08.07.12 at 1:29 pm

It seems to me to be helpful to look at a different question.

Lets’ say there’s a town, with several churches and several place a church could be built, and no synagogue. There are four scenarios:

1) There could be a law saying “no synagogues may be built in this town.” That would be unjust (in any liberal understanding of justice), but in accordance with the rule of law and with both the principle of prospective rules and the principle of non-arbitrary rules.

2) After Ben makes known that he’s planning to buy a parcel of land to build a synagogue, a law is passed saying “no synagogues may be built in this town.” That is unjust (as above), and violates the principle of non-arbitrariness, but is still in accordance with the rule of law and the principle of prospective rules.

3) After Ben buys a parcel of land to build a synagogue, a law is passed saying “no synagogues may be built in this town.” That is unjust (as above), and violates the principle of non-arbitrariness and the principle of prospective rules, but is still in accordance with the rule of law. (I’m not certain, but I think it is.)

4) The town has a law saying “any new religious building must do a one-month traffic study and get a permit, and anyone can request that the traffic study be re-done and it will need to be re-done before a permit will be granted.” Ten years later, Ben is still doing traffic studies. The law fits the the principle of non-arbitrariness and the principle of prospective rules, but as applied it violates rule of law.

It seems that income/wealth distribution is similar. There are goals that aren’t permissible, and there are means that aren’t permissible even if the goals are. But assuming that the goal of wealth redistribution is permissible (stipulated if we’re discussing Rawls), then it needs to meet the principles of non-arbitrariness (so it forbids “no catching up with the Rockefellers” rules) and the principle of prospectivity (it applies to income or spending in the future).

I do not see why an all-sources income tax (so inheritances and gifts would be taxed like any other income) would in any way violate either of these principles, and it seems that such a tax could achieve any desired level of redistribution in one generation.

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Chris Bertram 08.07.12 at 1:41 pm

Matthew Yglesias (and otto) the reference wasn’t supposed to be insulting or anything. Here’s a post in which you outline a “left” neoliberal position

http://thinkprogress.org/yglesias/2011/01/17/199655/pas-dennemi-a-gauche/?mobile=nc

Whilst not denying that the achievement of your objectives also faces obstacles both in terms of implementation and overcoming political opposition, it seems closer to the status quo than a Rawlsian POD would be. So I don’t think the characterization of you as a representative of a particular bit of ideological space, situated between the existing and Rawls’s ideal is unfair or misleading.

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Collateral Damage 08.07.12 at 1:48 pm

Isn-t the basic problem this (mistaken) early-18th-century assumption that a society is an agglomeration of citizens who can be held to have made some kind of mythical Hobbesian or Rousseauesque contract with each other?

Since societies plainly aren-t like this, the Rawls model has a deeper problem than just describing some possibly pathway from one unsustainable state of affairs to another unsustainable state of affairs. Societies are assembled out of clans with strong obligations and loyalties to their own kin, their ancestors, and their future offspring, all stronger than or at least as strong as their obligations and loyalties to the larger political unit they find themselves within. This is why the whole concept of a society as a set of individuals is unfortunately wrong. Like other liberal theories from that century, the Rawlsian veil of ignorance is just another hopeless attempt to rescue the American/French 18th-century liberal consensus from its core weaknesses.

14

Ray 08.07.12 at 1:53 pm

[OK Ray. I'm zapping you, _pour encourager les autres_. The OP was focused on a specific issue, it wasn't an invitation to post generalised expressions of your feelings about Rawls or Yglesias. Stick on topic people. CB]

15

Charlie W 08.07.12 at 1:57 pm

Nice post. I comment cautiously … However, I wonder – as before – if something isn’t being given away in the suggestion that it is politically feasible to maintain a settlement in which the ‘norm of prospectivity’ is always fully respected. Even it it were feasible, I am sceptical that a politically dominant advantaged group would in practice maintain such a settlement, even though they may claim that this is what they are doing. I suspect that we hear much more from certain groups on this issue (i.e. the wealthy) than from others, and with selective emphasis; i.e. the ability of employers to count on being able to respond quickly to market conditions is ‘more important’ than the ability of employees to count on long term utilisation of acquired skills.

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Phil 08.07.12 at 2:01 pm

Coming at it from the other – utopian – horizon, the seemingly limited extent of Rawls’s projection has always puzzled me. While we’re all behind our hypothetical veil of ignorance, why would we start by thinking “private property, check; wage labour, check; government, check…”? I personally think communism would be a remarkably good way to arrange human affairs, could we but get there from here – why would hypothetical-me behind the V. of I. think any differently?

(Or do I need to read the book? If so it’ll have to wait, I’m afraid.)

17

Katherine 08.07.12 at 2:09 pm

it would also be unjust of an incoming egalitarian liberal government to seize it, because I acted, in good faith, in conformity with the law, to get what I got.

Depends on what is meant by “seize” a bit doesn’t it? Would that include “democratically elected government has policy of nationalisation (with or without redistribution of the proceeds) with reasonable compensation”? Or just grabbing assets and giving them to others?

And it also depends what is meant by someone having “acted”. Your example was someone having worked, earned money, bought yacht. But does “acted” include “inherited”, or even “invested, sat back, collected”?

I’m not trying to be fractious. These are questions I’m asking myself. But I’d like to know what others think too.

18

Pat 08.07.12 at 2:19 pm

Apparently I need to back and re-do some reading, for every time I read Bertram’s account of what Rawls would say about something, I keep thinking, “no, that’s Nozick.”

But somehow I don’t think Rawls would really have a problem with the introduction of, say, a property tax. (Well, not as a political philosopher. Property taxes are rather suboptimal revenue policies.) And if that’s true—notwithstanding all the people who accumulated the property in part out of the understandable expectation that said property would not be taxed—then the norm of prospectivity isn’t actually violated by every policy that serves the Robin Hood function.

And if that’s true, then I really don’t have to go back and reread Rawls, so I’m desperately hoping I’ve gotten this right.

19

temp 08.07.12 at 2:20 pm

I’m somewhat confused as to the context of this post. How much interpretation do you need to find a “norm of prospectivity” in Rawls? Would he really object to taking from some and giving to others in order to obtain his utopia? Who are you trying to convince here?

I’ve never seen anyone on the left argue against taking from the rich on the basis of a “norm of prospectivity.” Even if you are interpreting Rawls himself correctly, the only other Rawlsians you cite (e.g. Thad Williamson) agree with you on the necessity of wealth transfer. Can you point to any living leftists who have a principled objection to ex-post wealth transfer?

20

Clay Shirky 08.07.12 at 2:25 pm

“To the extent to which our capacity to program such schemes is limited then I think that egalitarians will need to make more use that Rawls would have liked of ex post pattern-aiming administrative redistribution than Rawls would have liked…”

should probably be

To the extent to which our capacity to program such schemes is limited, I think egalitarians will need to make more use than Rawls would have liked of ex post pattern-aiming administrative redistribution…

21

Chris Bertram 08.07.12 at 2:35 pm

Thanks Clay. Poor proofreading. I’ve corrected that.

22

Watson Ladd 08.07.12 at 2:58 pm

Rawls explicitly mentions that the right to own productive assets isn’t necessarily included in his conception of property owning democracy. So expropriation of capital seems to be within the the limits of the procedural bounds. Sadly my copy of ToJ is in a basement in Chicago, so I’ve got no means to find the exact page.

There is a deeper question: historically much of the divide between Social Democrats and Marxists was over the necessity of proletarian politics to change the relations of labor. By limiting the question to distribution you seem to be missing out on the workplace as a social institution and a place for potential politics.

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Chris Bertram 08.07.12 at 3:03 pm

A couple of things to add. When I wrote the post, I hadn’t read Thad Williamson’s ch. 11 of the O’Neill and Williamson volume. That chapter “Realizing Property-Owning Democracy: A 20-Year Strategy to Create and Egalitarian Distribution of Assets in the United States” doesn’t quite do what it promises (in that in the strategy it outlines it leaves very significant asset inequalities in place after 20 years, and wouldn’t satisfy the difference principle). But it does suggest that considerable progress could be made toward the goal of making sure that each household had access to a stock of wealth.

Katherine: to answer just one of your questions, I think a heavy estate tax is entirely legitimate in Rawlsian terms and would be one important source of funds for redistribution.

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Chris Bertram 08.07.12 at 3:07 pm

Watson: _Rawls explicitly mentions that the right to own productive assets isn’t necessarily included in his conception of property owning democracy_

No, what he actually says is that the right to own the means of production isn’t included among the basic liberties covered by the first principle of justice. It doesn’t follow from that that it wouldn’t be unjust for the government to seize your farm without compensation Watson. (That’s your comment quota for today)

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piglet 08.07.12 at 3:20 pm

Yglesias 6 is correct. When we say that laws shouldn’t in general be made retrospecitvely (especially penal laws), that doesn’t exclude that purely prospective legal changes can mess up people’s lives quite radically. No legal regime can guarantee that the assumptions underlying the career choices you made when you were 20 will remain valid throughout your life (or even for a year or two), and it would be absurd to expect otherwise.

As a realistic example, a student may enroll in University and find that next year, tuition fees will rise threefold or that the grants she relied on will be cut. Now some – namely, the students affected – will complain that this is a violation of ROL. But really, this situation is not a legal issue but a political issue. Democratic governments within a legalistic, gradualistic framework have the power to enact quite radical reforms, for the better or for the worse. At issue is rarely the fine points of legal interpretation. At issue is whether they can find the political legitimacy for those reforms.

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Sam Alexander 08.07.12 at 3:21 pm

I’m confused as to why anyone would call themselves a Rawlsian if it means that one must accept the legitimacy of existing liberal democracies .

Why not accept the legitimacy of certain functions of liberal democracies, namely the democratic ones, and not others? If it is acknowledged that the system functions in such a way as to maximize the power of a certain class of society who can then engage the system in order to benefit themselves, why should we accept that conformity to those laws crafted by a few to benefit a few should entitle one to make claims to anything gained from adherence to unjust laws?

I realize that the Rawlsian makes a distinction between a just society and legitimate governance, but then again, why would one call oneself a Rawlsian if this distinction prevents one from using that same legitimate governance to create a more just society?

Must Rawlsian’s ignore the inherent injustices of our society? Under this logic couldn’t the abolition of slavery in the South through legal means be viewed as an ex post taking of property acquired under adherence to the law of a legitimate liberal democracy?

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mpowell 08.07.12 at 3:28 pm

I have to agree with temp here. I’m not going to claim to be a greater expert on Rawls than CB, but this sure isn’t the impression I received when I studied the subject. This is the kind of interpretation you expect from a conservative, trying to demonstrate that Rawls’ account of justice does not defend the aggressive redistributive policies favored by the left (in a hypothetical world where that was actually on the table). Rawls didn’t cover all the possible cases you might want, but he was pretty clear on at least one thing: his first two principles. And it seems like this argument/interpretation really rests on elevating some duty of the state not really contained in these two principles above the difference principle.

I know that a variety of people on the left have decided that Rawls’ theory of justice was too accomodating of human nature or something, but you can make this argument well enough on it’s own without having to push Rawls’ actual position further right. It seems to me that there are left-of-center philosophers out there and left-of-center political actors (and we sometimes call the latter neo liberals). But these are two very different kinds of people. I don’t think it’s fair or appropriate to mix the two.

28

Antti Nannimus 08.07.12 at 3:37 pm

Hi,

In a rigged system, bought and paid for in secrecy behind closed doors, how can anyone argue that the gains acquired under such a system are, or have ever been, legitimate? You can argue that no such rigged system exists because it has not been proven in court, I suppose. However that argument simply ignores the awful success of that fixed system. We’ve seen enough of the tip of the iceberg to know there is a mass of corruption that is real and immense.

Have a nice day,
Antti

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Chris Bertram 08.07.12 at 3:39 pm

mpowell: I think the problem is that many students over the years have been taught, or have taken away from their teaching, an interpretation of Rawls according to which he’s aiming directly at an end-state distributive pattern. On that interpretation, Rawls is vulnerable to something like Nozick’s Wilt Chamberlain argument. But actually, his view is quite different and very procedural/historical, only the procedures in question aren’t given by natural rights (as they are for Nozick) but are chosen/devised in virtue their contribution to a set of such procedures such that that set realizes the principles of justice (including the DP). As I wrote above, Pogge is very good on this in ch. 1 of Realizing Rawls.

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Bruce Wilder 08.07.12 at 3:42 pm

The problem with Rawls is that his ideal rule-making isn’t so much ex ante as a priori, and the practical problems of adjustment of the rules in light of experience is given short shrift.

Given that acknowledgement, it is not clear to me that the following can be fairly derived from a Rawlsian vision of a feasible liberal utopia:

the government isn’t constantly intervening, trying to realize some antecedently decided-upon distributive pattern; rather the preferred distributive pattern emerges automatically from the normal operation of the system.

How do you know that the government isn’t constantly intervening in the feasible utopia? Just because I have chosen my destination and mapped my route before starting out doesn’t mean that I don’t have to steer my car the whole long way.

I would agree that a Friedman or a Hayek might imagine a self-regulating market as the engine of utopia, but is that really Rawls’ vision as well? Does he imagine the political economy must be designed as a well-wound watch, simply because he imagines ideal rules as made a priori behind a veil of ignorance?

31

Chris Bertram 08.07.12 at 3:51 pm

Well Bruce, you might have gone on to read the immediately following sentence:

bq. Of course, this isn’t exactly laissez-faire: since the government does have the job of constantly adjusting the rules (such as, but perhaps not even mainly, tax rates) because left to itself entirely the system would drift away from its distributive “target” and the political equality of citizens would be undermined.

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Chris Bertram 08.07.12 at 4:25 pm

Professor DeLong has decided to that this is an opportunity to pursue his vendetta. You can read his post here:

http://delong.typepad.com/sdj/2012/08/department-of-huh-chris-bertram-confuses-me-what-is-the-rule-of-law-edition.html

I have submitted a comment:

bq. Brad: I accept that the first post was not as clear as I would have liked it to be. You are an intelligent guy, however, so I think you’re entirely capable of understanding the second one, which you link to. If you’d read it carefully (actually even if you’d read the first one carefully!) your would have understood that the Rawlsian view I’m discussing is NOT opposed to progressive redistribution via the tax system (especially via taxes on income or consumption). The claim is rather about whether redistribution that complies with the rule of law norm of prospectivity (i.e. not including direct transfers of assets previously justly acquired) could accomplish enough redistribution over an acceptably short period. That’s an empirical question, of course, and one to which I might hope you’d contribute an answer.

bq. What’s the betting that you either don’t publish this comment, or deface it with your own interpolations (as is your usual practice)?

It might seem mean to point out Brad’s own contribution to Rawls scholarship, but I’ll let him speak in his own words:

http://www.j-bradford-delong.net/movable_type/2004_archives/001093.html

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Collateral Damage 08.07.12 at 4:33 pm

Sorry if perhaps I went off topic….? Was this partly to me?

– [.... The OP was focused on a specific issue, it wasn’t an invitation to post generalised expressions of your feelings about Rawls or Yglesias. Stick on topic people. CB] –

Of course, when I wrote ’possibly pathway’ I meant to write ’possible pathway’.

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Chris Bertram 08.07.12 at 4:46 pm

And now DeLong apparently thinks that I’m advocating shooting kulaks or something:

http://delong.typepad.com/sdj/2012/08/delong-smackdown-watch-mandos-on-chris-bertram-confuses-me-what-is-the-rule-of-law-edition.html

(For DeLong’s own commitment to democracy and human rights, see his praise for Jeanne Kirkpatrick

http://delong.typepad.com/sdj/2006/12/rip_jeane_j_kir.html

)

35

Dan 08.07.12 at 4:49 pm

But actually, his view is quite different and very procedural/historical, only the procedures in question aren’t given by natural rights (as they are for Nozick) but are chosen/devised in virtue their contribution to a set of such procedures such that that set realizes the principles of justice (including the DP).

Eric Mack has a nice reconstruction of Nozick’s “liberty upsets patterns” argument in “Self-ownership, marxism and egalitarianism”, directed against the Rawlsian response that it’s the basic structure that matters (not the end-state or some other pattern). From memory: the key here is that even though the basic structure is the locus of justice, the evaluation of whether a basic structure is just or not depends on the distributive outcomes it engenders (putting aside satisfaction of the first principle and focusing only on the difference principle). Suppose it is conceded that it is very hard to predict the distributive outcomes of a particular income regime (deriving from a particular implementation of the basic structure), and that people will likely act in accordance with the rules in unpredictable ways that will result in the favoured pattern not being realized. Then it seems that there’s a dilemma for the Rawlsian: is such an income regime just or not? If yes, then it seems impossible to explain why the resulting distribution is unjust, given that it arises from a just income regime, and impossible to explain why the regime must be modified. If no, because the resulting distribution is unjust, then prospectivity is utterly violated because no-one will ever be in a position to know that the current income regime is just until after the fact, when the resultant distribution is observed.

Again that was from memory, but I recommend checking out the article — it sounds like you might very well agree with the dilemma (if not Mack’s preferred resolution).

36

Nathan 08.07.12 at 4:55 pm

I wonder if the transision may be accomplished most effectively (and least destructively), by setting a rational limit on the accumulation of wealth. That is, once an individual, or corporation, has accumulated a specific high level of nominal wealth, they are prevented from the accumulation of more.

For example, once an individual has acculmulated 1000x the median wealth, in nominal terms, any marginal income will be taxed at 100%. Of course this could create a negative incentive for persons above that threshold to continue to ‘work’, but at the same time it would encourage those individuals to begin to consume or endow their excess wealth, so as to decrease marginal income.

This would be a set and predictable rule, and those at the threshold would understand that the only way to increase their wealth would be to increase the median. It also exerts the somewhat rational arguement that anyone accumulating wealth above a certain threshold must be breaking the rules somehow.

37

L2P 08.07.12 at 5:00 pm

I’m having trouble getting from this:

“Rawls has an idea of a feasible utopia, a well-ordered society, taking the form of a property-owning democracy,[1] in which distributive outcomes are programmed into the basic institutions via incentives attached to rules such that citizens, pursuing their own good within those rules, are led to bring about those outcomes. This conception of what the just society would look like is important in responding to critics like Nozick, because, contra Nozick, the holdings that individuals have in the Rawlsian just society result from history: people are entitled to what they have because they have the rewards that have come from some action specified in advance by the rules (such as a net salary for doing a certain job or the winnings associated with a fair bet).[2] However the system as a whole is designed such that the invisible hand brings about just (or at least tolerably just) outcomes. A Rawlsian feasible utopia therefore satisfies someone like Hayek’s understanding of the rule of law: the government isn’t constantly intervening, trying to realize some antecedently decided-upon distributive pattern; rather the preferred distributive pattern emerges automatically from the normal operation of the system.”

To this:

“Tempting as it might be to claim that the 1 per cent (or the 1 per cent of the 1 per cent) acquired their holdings illegitimately, I take it that that’s false in the non-rhetorical sense: they enriched themselves according to the rules (notwithstanding that the rules were in part shaped by their lobbying).”

I would think that, yes, if we currently had a society where the government did not constantly interfere with incentives, perhaps we would find it troubling to suddenly change those incentives and take somebody’s current riches. I’m not that troubled, but I can see it.

But that’s not us. Our governments constantly change the rules. 60 years ago Disney would long ago have lost it’s rights to it’s IP; it lobbied and got extensive new economic benefits. 40 years ago the ability of finance to manipulate the economy was much less. And so on. And so on. We drastically raised taxes in the 10′s and 20′s (before which they, well, didn’t exist) and drastically lowered them in the 80′s and 2000′s. We’ve regulated and deregulated.

Given that, where’s the problem in telling some CEO at Epic Financial Co., “Hey, we’re regulating finance so that your rate of return is going to be something like 0%-5% depending on how great you are. Bummer.” Why can’t we say, “Yah. McYachty? Your schooner now has a 3000% excise tax. Per year. Happy sailing!” Those are just a continuation of the past, constantly changing, regulation and tax policies.

38

Chris Bertram 08.07.12 at 5:00 pm

Thanks Dan. Yes, I agree that Mack has his finger on a real problem there, though I can’t see that it’s “impossible to explain why the regime must be modified.” If the existing procedures fail to realise the distribution they’re aimed at (so to speak) then holdings acquired under them are nevertheless just; but that doesn’t mean that you can’t mess with the basic structure so as better to hit your distributive aim in the next iteration. (Assuming that you can design the institutions well enough at all, obviously.)

39

Jeff R. 08.07.12 at 5:17 pm

The norm of prospectivity is at least as much a practical constraint as a moral one, isn’t it? I mean, the real big problem with arranging a debt Jubilee is that if the grand panjandrum of liberal philosopher-kings organizing society have the power and authority to declare a debt Jubilee then afterwards nobody is ever going to lend anyone anything again, which is almost certainly a bad thing for collective well-being that far outweighs the justice gained by the original policy.

(The original, old-school version might have been workable had it persisted; if you’ve got a long-standing tradition of erasing debt every century or some multiple thereof there’s enough prospectivity that a new system, with time-to-next-jubilee discounts baked in, can arise. But you can’t get there from here, again: any hypothetical world or national body with sufficient power to establish a century-period Jubilee can’t help but also have the power to say ‘oops, we need one more’ five years later.)

40

mpowell 08.07.12 at 5:19 pm

CB @29: I’m familiar with Rawls’ idea that his ideal society should be enacted through a set of rules instead of instructing outcomes, but I still don’t agree with your conclusions. You seem to be bundling Rawls’ vision of an end state with prescriptions for current policy, based on the claim that under Rawls’ view modern liberal institutions have a minimum level of legitimacy of a sort.

John Holbo had a post a while ago talking about the various level of ideality that policy and philosophical arguments can occur at and he proposed, I think, that we should acknowledge what we are talking about more specifically. After ToJ Rawls spent some time trying to deal with less ideal theory that would be more applicable to the contemporary political situation. And I think you might be taking ideas that he advanced when considering less ideal political situations and applying them to ideal theory type considerations and creating confusion.

I just have a hard time buying what you’re selling here. I’m not sure Rawls or any people who like his theory are likely to accept that they have to give up anything important to them in the theory to justify substantial changes to the tax codes in the here and now. Given that, the burden is really on you to demonstrate that Rawls’ theory of justice really does depend on tying the state’s hands in this way for it’s claim to being what justice requires, not just to show that well, you could interpret Rawls as saying that. Maybe your argument would be something along the lines of: coming up with a priori rules that insure a fair distribution is inherently impossible. But the problems you originally identified sounded more political than practical, so I don’t think I’d agree.

41

Kindred Winecoff 08.07.12 at 5:26 pm

“The coming to power of an egalitarian liberal government, determined to effect radical changes in the basic institutions of society to the detriment of the 1 per cent would surely cause financial panic and economic dislocation. Such a government would then have to choose between abandoning its programme and carrying through quicker and more decisive measures to break the power of the 1 per cent, measures which would certainly violate the norm of prospectivity. “

Empirically I’m not quite sure that’s true, depending on what you mean by “effect radical changes in the basic institutions of society”. Perhaps you could be more clear about what sort of changes you have in mind, but the election of left parties does not seem to have an effect on, e.g., sovereign borrowing costs. Neither does social spending per se. Layna Mosley has done a lot of work on this — both qualitative and quantitative — and her results are pretty persuasive. At least in advanced economies, the main thing that investors care about are inflation, some semblance of fiscal rectitude, and the balance of payments (which is really another way of saying “some semblance of fiscal rectitude”). In other words, the things that directly impact the likelihood that investors will be paid back in full. Investors don’t seem to care much about top marginal tax rates or the size of the welfare state.

Her book: http://www.amazon.com/Global-Capital-National-Governments-Mosley/dp/0521521629

Article version: http://www.unc.edu/~lmosley/mosleyIO2000.pdf

Perhaps you meant some other kind of financial/economic disruption (or some other kind of radical changes above and beyond an expansion of the welfare state by means of redistributive taxation), but the comparative history of welfare states suggests that this is not a foregone conclusion.

42

Chris Bertram 08.07.12 at 5:29 pm

mpowell: Rawls-according-to-me is perfectly cool with substantial changes to the tax code: high rates of income tax, taxes on luxury consumption, even a 100 per cent estate tax (maybe unwise but not unjust). He’s a little more worried about seizures of the accumulated assets of living persons.

43

bianca steele 08.07.12 at 5:32 pm

How much of the confusion comes from the difference between A Theory of Justice and Political Liberalism, and whether the latter book represents an elaboration of ideas that are equally found in the first one, or whether it represents backtracking to what is politically feasible, given society as it is and the fact that some kinds of agreement among people is not to be had?

From Charles Larmore, “Political Liberalism”:

To many, this disclaimer of truth has seemed a surrender of Rawls’s earlier claim (in A Theory of Justice) that his theory of justice as fairness (the liberty and difference principles, etc.) is the correct theory of justice. It has seemed a retreat to the also inadequate and even false view that his theory is simply one on which people in modern Western societies will agree.” (citing William Galston, John Gray, and Joseph Raz)

The Penguin anthology I was assigned selections from Nozick and Rawls in very clearly labels Rawls as someone interested in outcomes and not at all in desert, but it was published in 1979 and the essay by Rawls that Larmore is discussing was published in 1985.

44

bianca steele 08.07.12 at 5:34 pm

me: someone interested in outcomes and not at all in desert

No, that’s not right, sorry, but it does focus entirely on something quite different from anything that seems very easily compatible with what CB outlines here.

45

The Raven 08.07.12 at 5:38 pm

“Tempting as it might be to claim that the 1 per cent (or the 1 per cent of the 1 per cent) acquired their holdings illegitimately, I take it that that’s false in the non-rhetorical sense: they enriched themselves according to the rules [...]“

In the current situation, that is not true at all. Numerous laws have been broken in the creation of the banking disaster. Even in history it often is not true. “We stole it, fair and square,” is the usual rule.

46

JW Mason 08.07.12 at 5:59 pm

I’m having the same reaction as L2P @37.

I simply don’t see where this comes from:

just as it would be unjust for you to take my yacht, it would also be unjust of an incoming egalitarian liberal government to seize it, because I acted, in good faith, in conformity with the law, to get what I got.

The anti-Bertram liberals in this debate seem to be pretty consistently taking the position that “rule of law” does not include any particular right to property, and that a legitimate government can in fact seize the yacht, on whatever terms it likes, without in any way violating the rule of law. (That is, obviously, as long as the yacht-seizing measure was passed by a duly seated legislative majority and so on.) Hayek might have thought otherwise, but if so he doesn’t seem representative of the genus of liberal believers in the rule of law.

There’s still the practical-political problem of the transition. That’s important! But that argument doesn’t gain anything from claiming a fundamental contradiction between egalitarianism and the rule of law on the basis of a definition of the latter that nobody actually uses.

47

JW Mason 08.07.12 at 6:01 pm

Again, the distinction you make (@42) between high income taxes and seizing accumulated assets just seems artificial and unreal. There is no such distinction in reality, since the value of an asset is just the income (monetary and otherwise) that you get from it; and nobody seems to be trying to make one.

48

Dan 08.07.12 at 6:16 pm

If the existing procedures fail to realise the distribution they’re aimed at (so to speak) then holdings acquired under them are nevertheless just; but that doesn’t mean that you can’t mess with the basic structure so as better to hit your distributive aim in the next iteration. (Assuming that you can design the institutions well enough at all, obviously.)

Right: I think there’s another dilemma here. “the next iteration” of the income regime either does or does not retroactively affect holdings that have accrued under the previous regime. If it does, then you have to explain why (what you have just described as) just holdings generated under a just income regime can be permissibly confiscated or redistributed (or whatever) in the name of justice, which looks very hard. But if it doesn’t, then the next iteration will very likely be unable to realize the favoured pattern, because the regime only has prospective force — the previous holdings are untouchable by it. (Not sure if this line of thought is in the article, but it’s how I’d be inclined to respond).

49

actio 08.07.12 at 6:22 pm

Dan: “Suppose it is conceded that it is very hard to predict the distributive outcomes of a particular income regime (deriving from a particular implementation of the basic structure), and that people will likely act in accordance with the rules in unpredictable ways that will result in the favoured pattern not being realized. Then it seems that there’s a dilemma for the Rawlsian: is such an income regime just or not? If yes, then it seems impossible to explain why the resulting distribution is unjust, given that it arises from a just income regime, and impossible to explain why the regime must be modified. If no, because the resulting distribution is unjust, then prospectivity is utterly violated because no-one will ever be in a position to know that the current income regime is just until after the fact, when the resultant distribution is observed.”

Adding time can help with that challenge.

Policy makers are at t1 justified in implementing the particular income regime X1 in virtue of it being expectedly best at realizing justice at t1. At t2, when X1 permitted behaviour unexpectedly generate justice suboptimal outcomes, the policy makers are justified to transition to any available modified particular income regime X2 that is justice expectedly best at t2. Some desired level of prospectivity can be added through retention rules for the series of particular regime implementations. The rules could be called 10 year plans solely in order to anger libertarians.

50

Chris Bertram 08.07.12 at 6:33 pm

_The anti-Bertram liberals in this debate seem to be pretty consistently taking the position that “rule of law” does not include any particular right to property, and that a legitimate government can in fact seize the yacht, on whatever terms it likes, without in any way violating the rule of law._

That’s a very strong claim, are you sure you want to be committed to it (including the “on whatever terms it likes”).? There’s more than one issue here: (a) what’s right and wrong, all things considered and (b) assuming Rawlsians accept the norm of prospectivity as a component of the rule of law, can they accept such uncompensated seizure. (I take it that compensated seizures, as in compulsory purchase or US “eminent domain are ok.).

(Bertram (as opposed to Bertram’s Rawls) does not accept under (a) a purely positivist account of property rights, but that’s a story for another day.)

51

Chris Bertram 08.07.12 at 6:41 pm

Again, the distinction you make (@42) between high income taxes and seizing accumulated assets just seems artificial and unreal. There is no such distinction in reality, since the value of an asset is just the income (monetary and otherwise) that you get from it; and nobody seems to be trying to make one.

Well the first thing I’d want to notice is that my house (for example) and the value of my house are two separate things. I don’t find the (moral) distinction between seizing my house and taxing me on income derived from renting my house out to be “artificial and unreal”, to the contrary, it seems to me that conflating the two is an artifact of a particular was of looking at the worlds rather than a feature of “reality”. Maybe one should tell a different story about fungible assets, and I shall certainly think on that.

52

Bruce Wilder 08.07.12 at 6:46 pm

CB: “you might have gone on to read the immediately following sentence”

I really wasn’t asking you to grade my reading comprehension skills; condescension isn’t clarification. It is hard not to feel provoked, but I will take it that my previous comment did not clearly express the nature of my puzzlement, and try again.

Your core argument seems to me to reduce to one familiar to economists: that is, the principle of Pareto optimality. Policy changes, which result in a Pareto improvement, are “objectively” desirable across a broad spectrum of interests and viewpoints, and can be endorsed as the conclusions of a positive economics. A Pareto improvement is one which makes some better off, without making anyone worse off. It is a fundamentally conservative principle, which leaves everyone in possession of past gains, and, essentially, rules evaluation of those past gains out of bounds for positive economics.

Pareto optimality is woven into the methodology of economics, and is one of the foundations for the right-wing orthodoxy, which dominates mainstream economics. In the abstract, it sounds good, but in operation it tends to translate into a rich man saying to a poor man, “what’s mine is mine, and what’s yours is negotiable”. Lots of centrist and left-leaning economists castrate themselves by accepting it, and related methodological propositions. (I thought piglet, in the earlier thread, was objecting to this kind of uncritical rhetorical pre-emptive surrender to the frameworks proposed by the Right, implied by attributing to Rawlsian liberals acceptance of a kind of Pareto optimality criterion, under the guise of some prospectivity business.)

If a Rawlsian path to feasible utopia was indeed constrained by a principle analogous or similar to Pareto optimality, I think I would agree that we should expect utopia to be a long time coming.

I’m just not sure that the Rawlsian idea of “fair” or just market exchange, and how it is to be achieved, necessarily conforms with the Hayekian or Friedmanite idea, well enough to justify modeling Rawls as embracing the notion of a state practicing laissez-faire, or even laissez-faire modulated by tax-and-transfer, ex post redistribution. The abstract model of an efficient economy, pre-tax, moderated in the direction of justice by progressive taxation and social insurance transfer schemes was popular for a long time with economists of a neoliberal bent, like Brad DeLong, and I think they thought it was both approximately realistic as a description of actual 1st world mixed economies and vaguely Rawlsian.

It seems to me that Rawls’ idea of “fair” or just market exchange is a good deal stronger than Pareto would allow, in that it requires that each exchange be a mutually beneficial, positive-sum transaction, by a standard of unconstrained, a priori consent, and that political institutions governing such exchange, should constrain the players’ behavior to make it so. Private players, strategically pursuing their private interests are not assumed to “naturally” arrive at anything like that result; they arrive at it, only because their self-interested play is sufficiently constrained by a visible hand of public rules, albeit rules they themselves would recognize as fair and just, if only they could forget for a moment their particular and vested interests.

It seems to me that a typical social-democrat-cum-American-liberal envisions an active regulatory state. An Elizabeth Warren would want a Consumer Financial Protection Bureau, for example, or, a New Dealer would want an FDIC and an SEC. I think the activist regulatory state is Rawlsian, the implications for income and wealth distribution are potentially profound, and of fairly immediate effect, without involving explicit “expropriation” of a kind likely to be distastefully arbitrary, however much hedge fund managers might cry over a lost ability to defraud, or pharmaceutical companies mourn the loss of the ability to extort or addict, or coal companies complain of the cost leaving mountains and watersheds intact and unpoisoned, etc.

So, I’m left wondering why this seemingly tendentitious insistence on a Rawlsian laissez-faire, albeit one with a modified limited hangout? Money-in-politics considertions aside, a Rawlsian state would not need to worry too much about whether a 1% gets 25% income distribution needed to be “corrected” by redistributive expropriation; 1% cannot possibly get 25% in a “fair” economy, of positive-sum exchange.

Now, if your point is that a political economy, where 1% take 25%, and many exchanges are negative sum by a Rawlsian standard, cannot get to “fair” without violence, well that might make some sense to me, as a theory of politics. It still wouldn’t establish the sort of correspondence with Hayek you need to imagine that a Rawlsian liberal would feel constrained by historical precedent to be, in practice, a fatally compromised corrupt centrist neoliberal Obama fan.

53

Chris Bertram 08.07.12 at 6:50 pm

Bruce: our puzzlement is mutual. We are clearly not good interlocutors for one another. My post had nothing to do with Pareto optimality afaics. Let’s leave it at that.

54

JW Mason 08.07.12 at 7:15 pm

the first thing I’d want to notice is that my house (for example) and the value of my house are two separate things. I don’t find the (moral) distinction between seizing my house and taxing me on income derived from renting my house out to be “artificial and unreal”, to the contrary, it seems to me that conflating the two is an artifact of a particular was of looking at the worlds rather than a feature of “reality”. Maybe one should tell a different story about fungible assets, and I shall certainly think on that.

Indeed. But also the rights and interest you have in your house, and your ownership of your house, are also two separate things.

Insofar as you are renting the house purely for income, it is a fungible asset, not different from a purely financial claim. Insofar as as you have interests in the house other than the income you derive from it, a liberal position that recognizes them is just as likely to end up giving less weight to property rights, as more. Your moral right not be evicted from your longtime residence doesn’t go away just because you happen to rent that residence. And laws that uphold that right are going to diminish the property claim of your landlord.

At some point you own a thing. You have the right to use, alienation, transfer and all the rest. Law imposes limits on all those rights, either for public purposes or in recognition of conflicting private rights. (You “own” the music and e-books you’ve downloaded but your right to transfer them to a third party is severely limited, so do you really?) As the restrictions on what you can do with your property get tighter, at some point you’ve ceased to own it, but I don’t think there’s any liberal consensus on where that line is, or that it’s impermissible to cross it. The liberal position — which I don’t share, incidentally; I’m on your side in the larger debate here — isn’t that there is any right to property as such, but that any collective action changing the rights of property, just like any other collective action binding on individuals, can only be taken by duly constituted state authorities acting in the manner prescribed by law.

I just don’t think anyone makes the distinction you’re claiming. People who *do* think uncompensated seizure of property is illegitimate even if legally authorized, *also* always AFAICT think that sufficiently high taxes and tight regulation on the use of private property, are also illegitimate confiscation.

The real debate is the practical one. Can actually existing liberal political institutions of regulate the economy in a way that will produce minimally just outcomes, or are existing concentrations of wealth and power too great for constitutional politics to be enough?

55

Brad DeLong 08.07.12 at 7:35 pm

Matt–

But we could decide going forward starting today that we will rewrite our laws to conform to Rawls’s Second Principle, and it would not be a violation of the rule of law for us to decide to do so. It is not unjust for congress to tax incomes from whatever source derived, to regulate the value of money, or indeed to regulate commerce among the several states. Since wealth holders are on notice that congress has these powers and may decide to use them to implement Rawls’s Second Principle, there’s no ex post facto taking here to worry about.

You could call yourself a Rawlsian without getting into trouble here…

56

Chris Bertram 08.07.12 at 7:50 pm

_Since wealth holders are on notice that congress has these powers and may decide to use them to implement Rawls’s Second Principle, there’s no ex post facto taking here to worry about._

Well that’s an interesting point of view. The UK Parliament is unconstrained by a written constitution. One could say, therefore, that wealth holders are on notice that it has the power to confiscate their assets overnight by passing legislation to that effect. I suspect the position that such confiscation would not constitute an ex post facto taking, on grounds that the wealth holders were aware of the power would not be widely held, to say the least.

57

JW Mason 08.07.12 at 8:12 pm

I suspect the position that such confiscation would not constitute an ex post facto taking, on grounds that the wealth holders were aware of the power would not be widely held, to say the least.

Well, DeLong just showed up to say he holds it. And isn’t he kind of who you’re arguing with?

Of course you are right that if Parliament passed a 10% wealth levy tomorrow (something Keynes supported, incidentally; wasn’t he a liberal?), many people would object that it was confiscation, violation of the rule of law, etc. The thing is, I’m pretty those same people would also object, with the same kind of language, if it were a top marginal tax rate of 95%, or a compensated nationalization of the banks, or lots of other things your hypothetical Rawlsian should be fine with.

58

Chris Bertram 08.07.12 at 8:26 pm

JWM, it is a logical consequence of what DeLong’s said that even a 100% confiscation by the UK Parliament would not constitute an _ex post facto_ taking. I think that constitutes a reductio. ROL is a substantive ideal, and you can’t claim to have met it just by giving your measures legal form.

59

Chris Bertram 08.07.12 at 8:27 pm

Incidentally JWM, interesting points in your previous comment, and I’m thinking about them rather than ignoring them.

60

Bruce Wilder 08.07.12 at 8:31 pm

Just as a general proposition, I don’t think mainstream liberal advocate of democracy-with-property would disavow even explicitly ex post judgments of equity regarding the outcome of private exchanges of property rights. What’s bankruptcy law, other than an institutionalization of a process for such judgments? It’s not a general jubilee, but it does constitute state intervention, ex post. Wasn’t bankruptcy, and the abolition of debtor prisons and the like, a signature liberal project? Does Rawls reject bankruptcy?

61

L2P 08.07.12 at 8:50 pm

“JWM, it is a logical consequence of what DeLong’s said that even a 100% confiscation by the UK Parliament would not constitute an ex post facto taking.”

That’s not possible in the US. In the US no property can be taken without just compensation. Taxation at a rate that would be considered confiscatory is a violation of the 5th amendment. What a “confiscatory” rate might be is a little unclear, but it’s well below 100% (I don’t think any effective income tax rate has exceeded 50%). As the constitution can only be amended after a lengthy process that would give any stakeholder ample time to adjust their actions and expectations.

62

Anderson 08.07.12 at 9:47 pm

Taxation at a rate that would be considered confiscatory is a violation of the 5th amendment.

I’ve never looked at the issue, but an argument surely could be made that the 16th Amendment, coming later than the 5th, modifies the former in some respect.

63

JW Mason 08.07.12 at 9:49 pm

Taxation at a rate that would be considered confiscatory is a violation of the 5th amendment. What a “confiscatory” rate might be is a little unclear, but it’s well below 100% (I don’t think any effective income tax rate has exceeded 50%).

Come now. No one — in the history of the US? in the history of liberal societies anywhere — ahs ever paid an effective tax rate over 50%? This is obviously not true.

I’d also like to see an example of a U.S. court setting a ceiling on constitutionally permissible tax rates. Frankly, I doubt one exists.

64

js. 08.07.12 at 9:55 pm

Just want to say: this thread has been very helpful. And JW Mason–your contributions have been super helpful. Thanks.

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NickS 08.07.12 at 10:47 pm

“JWM, it is a logical consequence of what DeLong’s said that even a 100% confiscation by the UK Parliament would not constitute an ex post facto taking.”

I think this is where it matters whether we’re having a practical debate or a philosophical debate. In theory a democratically elected government has the power to do any number of things which would be a terrible idea from a philosophical, moral, and practical POV. In practice, however, democratic governments seem far more inclined towards inaction than overly drastic interventions and tend to only legislate major changes in cases where they are overwhelming popular.

I’m not sure that it’s an incoherent position for somebody to claim that they believe, in theory, that the government has the power to seize property, any and all property, while still remaining confident that they will never do that [note: I'm not claiming Brad DeLong holds this position].

If you believe that than the question becomes, “on what basis would we think it’s a bad idea for the government to go a massive spree of nationalizing assets?” Your post presumes that one reason, and possibly the most important reason, is that it would be a betrayal of an implicit social contract — that the people who currently hold those assets had good reason to believe that they wouldn’t be nationalized. But you could pick many other reasons to object.. On practical grounds one could say that it would just be too difficult, too disruptive, or create too much possibility for corruption and patronage.

I’m still thinking this through myself, but I’m reminded of this comment on Democracy by David Runciman:

If elections are not the answer, then what explains the ability of the world’s leading democracies to survive crises, something which has been demonstrated time and again over the last century? My best guess is that their crucial advantage lies in being more politically flexible than the alternatives. That is, in a crisis democracies can experiment with autocracy but autocracies can’t experiment with democracy, not even in small doses. They daren’t, for fear of losing control. This is the real problem for the Chinese system. At some point, perhaps at some point quite soon, China’s leaders will face a critical situation in which they would be better off if they could find an outlet for popular dissatisfaction with the regime. But they will be extremely nervous of opening that door for fear of what lies behind it. So they will be stuck. Democracies can put democracy on hold and get away with it; if autocrats suspend their autocratic powers, they tend not to get them back.

He argues that an important strength of Democracies is their ability to behave in very undemocratic ways in certain situations. That’s not an unambiguously good thing, for many many reasons, but it’s an interesting argument and suggests a wider range of possibilities than DeLongs, “But you may be right: the underlying point may be that we neo-Rawlsians cannot win by the ballot, and so we must use the bullet instead.”

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L2P 08.07.12 at 10:51 pm

“I’ve never looked at the issue, but an argument surely could be made that the 16th Amendment, coming later than the 5th, modifies the former in some respect.”

Well, yes. The argument can be made, has been made, and has been disposed of back in the 1920s. The result of that argument was that income taxes are NOT a taking without compensation, but that an income tax that is so high as to be confiscatory would be. Now only tax protestors raise that argument.

As for effective income tax rates, no one I’m aware of has ever found an effective income tax rate over 50%. Because of deductions, expenses, and exclusions from taxable income either the amount of taxable income or the average rate applied is less than 50%. But maybe something’s out there I’m not aware of.

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Bruce Wilder 08.07.12 at 11:20 pm

Nominal income tax rates have topped 90% in the U.S. at times. Just because people adjust their incomes to avoid paying that sort of rate, on average, doesn’t really prove anything in the way of legal or moral principle.

We express fear of arbitrary takings, but there are always circumstances looming on the horizon in which taking would seem completely justified to many, because certain forms were observed, certain ritual words spoken. I’ve mentioned bankruptcy, as one, where a catch-all authority resides to resolve broken private contracts. We’ve just been through a great financial crisis, where the government had the option of dispossessing various parties. You can say, ah, these were special circumstances, the realization of anticipated contingencies, but that’s just belaboring the point that satisfying certain formalities is sufficient to provide a context in which we are just fine with the government making an ex post judgment, and, in some cases, taking everything.

This association of formal, procedural context and substantive meaning is really all our politics has to sustain the notion of a shared interest in a general, public good. We should be very, very careful about signing up for whatever idiot premise a Hayek or Friedman or Nozick offers us, about the rule of law, or free markets, or pretty much anything. As John C. Calhoun once demonstrated, one man’s security for minority rights is another man’s slavery.

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Phil 08.07.12 at 11:24 pm

Well, from 1974 to 1979 the top rate of income tax in the UK was 83%, payable on all income over £20,000 p.a; through the 1960s and 1970s there was also a system of surcharges on higher earnings, which effectively raised the top rate to 95% or more. Thatcher’s government cut higher rates of tax (including the 83% rate) in 1979, but the top rate was 60% until as late as 1988. Few people paying a 60% top rate would actually pay as much as 50% on their total income, but when the top rate was in the 80s or 90s it would be another matter.

Looking back at the country I grew up in, I do sometimes wonder where all the money’s gone that now has to be replaced through advertising and sponsorship and public-private partnerships. Perhaps that’s the answer. Pace Laffer, any government cutting the top rate of income tax from 83% to 60% is surely going to be forfeiting a lot of income – and even more when they cut it again, from 60% to 40%.

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Kris 08.07.12 at 11:25 pm

Great post Chris.

I’m not sure how your position can be maintained though. I’m simplifying here a bit (apologies), but you seem to hold the following beliefs:

1. Large scale redistribution of lawfully aquired capital is required to create a just society. (All here seem to agree, rightly.)
2. There is a law that says that sort of redistribution is theft. (Delong disagrees)
3. This law cannot be changed by legislatures post facto. (Legal positivists disagree)

You seem to think that all three claims are true and that this shows there are certain laws regarding property ownership that should be broken. I’m not sure that this is right. I think these 3 claims are logically inconsistent (if we accept some fairly obvious definitional truths about justice and laws) or something near logically inconsistent.

Here’s what I mean. If there are objective laws or facts about laws out there (in some sense) in the world, they have to have some sort of normative force. In simpler terms, following the law should always be just. Thus, if there is some real, objective law that -if we obey it- prevents a just society, why should we obey that law? That law can’t have any normative force, because -pretty much by definition- we always ought to do that which is just. And as such, it becomes hard to say how there could be such a law. One or the other has to go: Rawls’s account of justice or the claim that there is a law with normative force that stands in the way of acheiving justice.

I think what you’ve really discovered here is the seeds of an argument against certain intuitions we have about legal realism.

On the other hand, I think you are quite right in your debate with Delong (who I like reading, too). To say that Congress can up and pass a tax that would take away, say, all capital and give it to the state and have the Supreme Court allow that seems like a bridge to far for the state’s taxation power’s. But if you are a positivist, you can change the law, no problem.

I’d accept the positivist’s way out of this. But liberals should understand that is what they’re doing, too. (My guess is that Delong sort of accepts this positivist solution, too. He thinks The power of Congress to tax is very flexible and allows massive redistribution to become lawful if people agree that it is lawful, which realists will reject.)

I would also point out, in you defense, that a lot of people thought that the government couldn’t take away the bonuses of the bailed out too big to fail banks, because to do so would be an illegal violation of their contracts. “Contracts are sacred!” I can’t imagine large-scale redistribution would be considered more legal than that, for example.

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djw 08.07.12 at 11:42 pm

Happy to see a volume on property owning democracy, which is perhaps the only major rawlsian concept I find underexplored in the secondary literature; thanks for the tip!

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SamChevre 08.08.12 at 12:43 am

I’m not sure that it’s an incoherent position for somebody to claim that they believe, in theory, that the government has the power to seize property, any and all property, while still remaining confident that they will never do that.

It’s a philosophically incoherent, but historically common and actual position, to hold that the government has the power to seize property, any and all property, while still remaining confident that they will never do that to me or people like me–only to Indians/blacks/slumlords…

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Marcus Morgan 08.08.12 at 12:59 am

I would probably say Utopia arises when the social contract we all make when given a chance to vote (or compulsorily at all 3 levels of government in Australia) is realized in a ‘common wealth’. I guess that is a traditional view and saying, as the point of a collective is to further a collective. The individual always remains free within the constraints of the collective, but a collective is by definition concerned with common wealth when regulating the individual. So, what should we vote upon? That’s an individual question when assessing their own existence (and potential) against the prescriptions for a collective presented as policy.

As for Rawls, I’m a lawyer and not an academic, but the distinction might be between liberty and equality. There may be a tension between them, in freedom to control property as if in a jungle, and equality as a basis for individuals to agree to delimit their freedom to be in a jungle. We do that by the social contract (a Constitution & then laws) and then, consistently with the social contract, by agreements to progress in society by clever bargains and accumulation of property. However, agreements are closely regulated to be as fair as possible to the parties, as equality does not amount to friendship between them.

So, we also regulate the property accumulated by use of flexible agreements within the fixed term of the current social contract. Flexible agreements are regulated by Society on principle of social justice, for example, and fit within a complex framework of laws regulating title to property, and redistributing it under tax laws. Although there is currently no simple ‘principle’ underlying equality to property ownership as there is in our individual status to make agreements (the rationales of Marxism are far from simple), that ‘principle’ underlying agreement is as much a fiction requiring the reality of close definition and regulation as property ownership.

Political parties suggest redistributions of property in their proposed social contract, and we vote. I tend to think of the contract as a means, and the property as an end, and that ideas about equality are tied into both. Retrospective laws should be avoided, but the social contract is flexible enough to, and ought to, restribute property fairly. Utopia might be the middle path of reasonable sharing of increasingly scarce property, and reasonable freedom to agree to progress as an individual, so that bickering might cease and reasonable progressive debate and planning can happen.

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JW Mason 08.08.12 at 1:25 am

As for effective income tax rates, no one I’m aware of has ever found an effective income tax rate over 50%.

What do you mean by this? Do you mean that no person in the United States has ever paid more than 50 percent of their income in federal income taxes? Or that no person in the United States has ever paid more than 50 percent of their income in all taxes together? Or that no one in any liberal democracy has? Or do you mean that effective tax rates have never exceeded 50 percent of income for any substantial income fractile or other demographic?

Anyway, here’s an analysis of individual income tax returns by the Tax Policy Center that finds thousands of households paying effective federal income tax rates over 50 percent in 2008. (Not surprisingly, these are mostly low and moderate income households.) And that’s not even counting state and local taxes.

The tax code is complex, and effective rates can vary from marginal rates in either direction for all kinds of reasons. The idea that an otherwise legitimate tax code would be illegitimate (or found unconstitutional in the US) if it resulted in some people facing very high rates is just silly. And of course we already know that very high statutory rates are fine — as Phil notes above, they were the norm until quite recently. The 300% yacht tax, if it were adopted in the usual way, would be perfectly compatible with the rule of law in both its general and US-specific versions.

Sorry for sidetracking the discussion with this, but I think the idea that there is a clear line between expropriation and regulation is not sustainable.

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Tony Lynch 08.08.12 at 2:14 am

All very interesting – but for me there is one problem. The Difference Principle is effectively empty, except as a legitimating figleaf. If I (who may one of the worst off around here) think that the inequalities around me are unfair, I have to show that there is an alternative set of arrangements – somehow available as a real option from here – under which the worst off would be better off.

OK.

How do I do this counterfactual reasoning, and how do I persuade those presently doing quite well thank you? (After all, it is always easy to make the case that TINA, or that any alternative will in fact be worse. And those doing well will be far better placed with their pet economists and philosophers to make a “plausible” case to this end.)

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LFC 08.08.12 at 3:27 am

TLynch@74
No. Other way round. The better off have to show that existing inequalities work to the benefit of the worst off and thus satisfy the DP. Not even their pet economists can do that with a straight face.

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LFC 08.08.12 at 3:32 am

In 4th paragraph of the OP, “a concern about political resistance to the 1 per cent” should read, I think, “a concern about political resistance by (or on the part of) the 1 per cent”.

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Chris Bertram 08.08.12 at 5:49 am

LFC, thanks for noticing that, fixed.

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Watson Ladd 08.08.12 at 1:43 pm

Chris, I think I didn’t do a very good job of making my point.

Rawls doesn’t discuss the problem of transition much in ToJ, and I’ve forgotten what he did say about it. But he does devote quite a bit of time to discussing what rights are protected. In particular, he doesn’t feel that RoL protects property in capital. Your argument seems to be, and correct me if I’m wrong, that the preexisting property in capital, since it is given by an unjust but legitimate system, must be respected, and that this necessity prevents effective redistribution of wealth.

I think both halves of this argument are wrong. Many laws and judicial actions extinguish legitimate claims, be it transitioning to Torrens title, AEDPA, tightening standing requirements, etc. Torrens title in particular may expropriate people who have claims they can no longer pursue because the deeds are no longer valid. Yet there doesn’t seem to be a rule of law issue with any of these, or at least not despite much litigation over it.

The US Constitution (amendments are part of it!) protects property separately from due process. Both are frequently litigated together, but they are conceptually different. Now, there could easily be takings that violate the rule of law, but takings are not taxes: they are the seizure of specific property. The Netherlands has a wealth levy and rule of law.

As for redistribution a tax on investment income sufficiently high to force sales to the state would seem to do the trick if you wanted to redistribute capital, and with that the gains associated with capital. If you wanted to redistribute unproductive assets the impact on income inequality would by definition be nil, and in fact many of the assets whose redistribution is being urged would lose value with more equal incomes. When no one can afford to maintain a mansion, the value of mansions decreases. Redistributing capital would have a bigger effect, as would strengthening the bargaining power of the working class.

Lastly, if you have a system of ex post redistribution operating continuously it becomes ex ante. This may be a problem for Rawls depending on how you read him. But he doesn’t have a problem with income tax, and adjusting the income tax to reduce post-tax inequality seems well within the bounds he puts forward.

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JW Mason 08.08.12 at 2:32 pm

js. @64 – Thanks!

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L2P 08.08.12 at 4:08 pm

“Anyway, here’s an analysis of individual income tax returns by the Tax Policy Center that finds thousands of households paying effective federal income tax rates over 50 percent in 2008.”

You’re link doesn’t work. Still, it’s hard to get an effective combined rate over 50% when the top marginal combined federal tax load hovers around 50%. My guess would be that study includes taxpayers who didn’t file, and so includes taxpayers that have IRS-prepared returns without any deductions, and interest and penalties included (those are technically taxes). Otherwise I’m not sure how the math works.

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JW Mason 08.08.12 at 4:28 pm

The link is http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=366. For some reason, CT won’t accept links that end with numbers.

Obviously, people facing an effective tax rate over 50% are going to have some exceptional circumstances.

But here’s the thing: Before, you argued that top statutory marginal rates well above 50 percent are not confiscatory because in practice pays that much. (You’ve provided no evidence whatsoever to support the claim that no one has ever paid a tax rate over 50 percent, and you are certainly wrong about it. Nor have you provided any cite to a court decision saying such a rate would be unconstitutional.) Now you turn around and say that when people *do* pay rates above 50 percent, that doesn’t count either, since the usual marginal rate is lower than that. So, which is it that you are talking about, effective rates or marginal rates?

You claimed that tax rates (statutory or effective) above 50 percent have never existed, and that if they did they would be unconstitutional takings. That’s just not true.

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mpowell 08.08.12 at 6:39 pm

Well, we can have a long debate over what constitutes a tax rate, or wealth tax, that would be considered a violation of the strong RoL that CB is talking about. But from my view, none of that is really necessary. I don’t think the claim that the wealth of the 1% must be taken immediately in order to break their political power is valid. In the United States, political consensus that wealth should not lead to outsized political power that was strong enough to actually make the necessary changes would be sufficient. You need a majority durable enough to appoint favorable supreme court justices or possibly large enough to pass a constitutional amendment, but you establish that the right to speech does not mean spending money to influence the political process. And then you create a public funding agency for state and national campaigns. Then you pass a very high estate tax, increase the tax on investment returns and instruct your monetary authority to target 4%, which combined with an investment income tax is an effective tax on retained wealth. In my opinion, this and additional financial and labor market reforms would get the job done. The problem is not the need to violate the RoL, the problem is in getting the necessary people voted into office. This problem is almost impossible to overcome, but it exists either way.

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Robert Dudek 08.08.12 at 8:48 pm

“That is, in a crisis democracies can experiment with autocracy but autocracies can’t experient with democracy, not even in small doses. They daren’t, for fear of losing control. “

Doesn’t this fly in the face of facts? Authoritarian governments have, many times, experimented with “democratic”/”liberalizing changes designed to weaken central control, such as Cuba’s current reforms for the self-employed, the Prague Spring, and glastnost, to name only those that immediately come to mind.

Sometimes these changes do undermine authoritarianism; sometimes they are reversed.

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JW Mason 08.08.12 at 9:07 pm

I don’t think the claim that the wealth of the 1% must be taken immediately in order to break their political power is valid.

Here’s the real issue. Can we regard political institutions as exogenous with respect to the distribution of wealth? Can a society persistently have an arbitrarily large divergence between the distribution of wealth and the distribution of political power? And if not, which tends to adjust to the other?

I agree with Chris Bertram that it’s probably more realistic to regard distribution as exogenous and political institutions as adjusting. Note also that changing the distribution of wealth does not have to mean redistributing wealth, in the sense of taking property claims away from some people and transferring them to others. it can also mean reducing the value of property claims across the board, for instance through an increase in the wage share. I think this kind of redistribution at the point of production has been more important historically than explicit redistributive policies.

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Tony Lynch 08.09.12 at 7:01 am

Re LFC #75.

Is there a real difference here? I mean the well-off will be satisfied all too easily, and certainly they won’t try real hard to see things from the end of those ignorant nail ladies.

And even if they did, there is a problem with the badly off – the Critical Theory Problem: after all, these people live in a world pretty much powered by the better off, and that leaves its cognitive marks.

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UserGoogol 08.09.12 at 8:35 am

JW Mason: Well, it’s not wealth that matters, it’s using wealth. And for financial assets, using wealth means being able to use it to buy things. Without that, money is just useless paper. And if you tax the hell out of income and/or consumption, using that sort of wealth becomes difficult, making the wealth just useless paper. Same thing with the more tangible sort of capital, since typically the goal is to make money, rather than to just lead industry for one’s own amusement. And on the other side, just having a lot of luxuries doesn’t give you much of any power if you can’t liquidate that somehow. Having a really nice yacht is fun, but it doesn’t get you much more than that.

It requires a very specific set of assets to be able to influence politics, (to the extent that people can shape politics at all and it’s not just impersonal historical forces) and those assets are things rich people typically expect to be able to buy as they go, not something they have waiting in reserve.

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UserGoogol 08.09.12 at 8:49 am

Because I can’t edit posts, here’s one last sentence to satisfy my sense of pedantry:

Therefore, if you tax the hell out of the income and expenditures of rich people, you’ll be able to take quite a bit of their disproportionate political power away even if they continue to sit on large sums of wealth officially.

Also, I shouldn’t have said “useless paper” twice. That’s an annoyingly stupid looking editing mistake.

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Tim Wilkinson 08.09.12 at 1:21 pm

changing the distribution of wealth does not have to mean redistributing wealth, in the sense of taking property claims away from some people and transferring them to others. it can also mean reducing the value of property claims across the board

This.

In the alternative universe in which there is a rule-of-law or retroactivity problem, (presumably based on some pre-existing claim to having chains of property-ownership honoured in perpetuity – and the shifting incidents of ownership being ossified – or whatever the obscure basis of the Hayekian objection is, exactly) buying up shares and compulsory purchase of private firms would be a way of redistributing physical capital, while printing money and giving it to the poor would be a way of redistributing relative income The latter especially would be appropriate since the 1% are so fond of pretending that increases in their monetary wealth don’t affect the situation of others (‘politics of envy’). So adding a load more nominal wealth to the system is surely Pareto-improving, too, and complaints would have to be motivated by the politics of spite or jealousy or something?

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Tim Wilkinson 08.09.12 at 1:25 pm

relative income -> relative wealth

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matt 08.09.12 at 8:25 pm

Does Rawls object to retrospective takings because they violate a formal requirement of legal fairness (a ‘rule-of-law’ objection from the right, as it were), or because they can’t be relied on to adequately provide for the autonomous flourishing of the citizenry? I thought this latter idea (from the left, as it were) was Rawls’ critique of the welfare state.

And I think the transition problem you point out is real, but what’s the upshot? I don’t think *any* transition path looks very likely to succeed, including (even especially) ones that would involve unjust means. I guess this implies either that POD is a practically impossible phantom of the brain, or that human history is an abortive failure.

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chrismealy 08.09.12 at 8:30 pm

I don’t think the claim that the wealth of the 1% must be taken immediately in order to break their political power is valid.

Maybe not, but it’s the best place to start.

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Charles Peterson 08.09.12 at 11:10 pm

If differential wealth-power exists, it’s impossible to keep it from influencing politics perpetually toward it’s own advantage to the degree that Rawlsian utopia is neither attainable, achievable, or sustainable. If you can’t contribute to politicians, you can groom them, run your own independent ads, or buy all the media. If you can’t do that, you can create independent PR organizations, think tanks, even private schools and accredited universities. Even hiring managers to run businesses is going to have a powerful political effect. Suppose you made it so that all corporations were publicly managed (an idea I like), then shareholders could move their funds to other companies, or abroad, or start private firms. If productive assets could not be owned, you sponsor lots of parties, hoodlums, lousy writers, or nerds to become technocrats. The Rawlsian utopia with any kind of property can’t be transitioned to or exist for longer than a few decades. We tend only to get brief glimpses of what such things might be like only sometimes after great dislocation (with a few exceptions perhaps, I don’t know enough about Denmark to know how close it is).

I could be wrong, and in that case I take a few steps back and agree with Chris that welfare state capitalism (plus regulation, etc, per Y and D) is insufficient. It is highly unstable at best, continually subject to being undermined, and has an inherent tendency to allow the most rapacious feel entitled to enslaving everyone else, whether they followed all the rules or not, how fair the rules were, or how much luck was involved. Even if you have a society of well meaning wealthy (my thanks go to Ellen B. Scripps and many others) they are subject to being outmoded, outpaced by the greedier, luckier, or later. Something much more radical and thorough than welfare statism (plus regulation) is required, starting along the lines Chris suggests.

The insufficiency of welfare state capitalism was argued in similar terms to my first paragraph by Albert Einstein in the first issue of Monthly Review in 1949.

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Andrew Cady 08.11.12 at 4:16 am

So what’s the conclusion? Alimony for the rich? Or just lop off their heads?

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eddie 08.11.12 at 6:06 am

Still some people going on about ‘lawfully acquired’ wealth when it’s recognised that laws were made for the benefits of the slavers. Slavery was always wrong. The fact that it was lawful at the time is another crime that those who profited from it, their heirs and successors, need to make reparations for.

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js. 08.11.12 at 6:43 am

almost certainly no one in the US govt charged w policy—leaves India-Pakistan relations out of the equation.

I’ll grant you that people talk about it. I don’t think it changes the fact that US policy re Pakistan is essentially predicated on studiously trying to ignore the problem and on throwing money at bombs and the military instead (US and Pakistani military both of course).

Also, I’m not sure how much we disagree really. I agree that Indo-Pak relations are remarkably intractable, and I don’t see any easy way out. But at least to me, it seems obvious that if you were actually trying to solve the problem of fundamentalist Muslim militancy in Pakistan, you’d pursue radically different policies. (“You” here is the US govt., give or take.)

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js. 08.11.12 at 6:45 am

Oops! Last comment should not be on this thread. Sorry!

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Tim Wilkinson 08.11.12 at 8:23 am

I wonder if other kinds of reliance on the assumption that things won’t change (in certain ways) are also regarded as violations of the Rule of Law? One who has ‘lawfully acquired’ a stable addiction, for example, only to find that the legislature suddenly foists on them a choice between criminality or cold turkey. Or who has planned their retirement on the basis of a state pension scheme only to find that it has been run down. Or who has relied on the NHS only to find, after developing a medical condition, that only a substandard service is available on the NHS and the government says they should have taken out private medical insurance (before developing the condition, of course). Or whose carefully planned work and home life involves commuting by train at BR fare levels, only to find the rail service flogged off to private companies, and rail fares rendered unaffordable.

I expect there are better examples, but in any case all of these are examples of ‘legitimate expectations’ being frustrated by changes in the law, most of which I disapprove of strongly and consider shameful betrayals; but I’d not describe them as derogations of the rule of law.

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