Where the Rawlsian Rubber meets the Randian Road.

by Daniel on March 3, 2009

I know, readers, sometimes it seems that we at CT are determined to continue discussing Rawls vs Cohen on the requirements of justice until our last reader has been driven into screaming insanity, but have faith – this is empirically relevant stuff.

I have a friend who is planning to not work overtime this year to stay well below the dangerous benchmark that is 250k. His point was that he might as well take some time off and enjoy and relax rather than work and give every dollar above 250 away. I don’t blame his reasoning and the loss is, he spends his money

Obviously the first reaction to this is what a great country America is, where someone can earn a quarter of a million dollars without understanding the concept of a marginal tax rate. The second is “gosh, what an unpleasant fellow, surely a decent theory of justice would condemn this behaviour”. But hold fast! Not necessarily – while perhaps empirically unlikely, it is in principle possible that someone might have a utility function over work and leisure which had a pinch point at exactly the same point as the tax system, and so he might be responding sensibly to the incentive structure. On this case, there’s surely a genuine difference between what Rawls would say[1] (that our mystery John Galt was entitled to respond to the incentives created by an ideal set of institutions), and what Cohen would say (that egalitarianism demanded that he continue to put the hours in and shoulder the burden of the financial crisis).

On the other hand, this person raises a rather more dicey ethical problem:

I told my wife that we may need to be prepared to move to another country – one with a strong American community, of course – because of the excessive tax and regulatory burden placed on businesses w/in the Continental U.S. What is happening in California will soon be extrapolated to the the other states. When the usurpers are at last exposed for who they truly are and when we can return to common sense, we’ll depose them and take back what is rightfully ours — a culture of civility based on Natural Law/Judeo-Christian ethics, and the rule-of-law Republic that the Founders envisioned.

Surely we can all agree that we wouldn’t want “politically-motivated spite” to be the sort of thing that the institutions of an ideal society accomodated? Or would we? There’s presumably no way in which people like this can be prevented from emigrating – it might not even be undesirable – but you can see the source of Cohen’s intuition that it’s not exactly just.

On the other hand, there are easy cases:

We also have “gone Galt”. Hubby decided to retire and start Medicare instead of our original plan of waiting two years.

Discuss away, but preferably only if you have read the book [2].

[1]This is an alternate-Earth Rawls who also believed that the current US tax code was the ideal set of institutions agreed in an ideal contracting situation. Give me a break here will you.

[2] By “the book” I of course mean Atlas Shrugged.



nolo 03.03.09 at 5:05 pm

I have read the book. Clearly, the couple that has “gone Galt” has not.


John Emerson 03.03.09 at 5:15 pm

These people are insane. I’ve kept my income below $250,000 all my life, without thereby becoming a Randian. Tell them that they’re falling into the Sandwichman’s fiendish trap.

They seem to believe that working hard is altruistic and for others, and that they can hurt others by hanging out and chilling. Wow.


David in NY 03.03.09 at 5:25 pm

Never read it.

OTOH, that list of comments is really stunning. All the verisimilitude of the letters in “Penthouse Forum.” See http://www.theonion.com/content/node/29699 .


Henry 03.03.09 at 5:25 pm

I understand that “Dr. Helen” was at C-PAC, putting forward a strong case for ‘going Galt’ on a farm till the nasty Democrats go away. Wasn’t clear whether the world would be denied the intellectual fruits of the Instapundit as part of a package deal or not.


David in NY 03.03.09 at 5:29 pm

On the third hand, wasn’t Joe Wurzelbacher’s(sp?) entrance on the national stage his concern that he might make $250,000, a concern that turned out to be wildly implausible?


John Emerson 03.03.09 at 5:32 pm

I was really terrified by the thought that Tennessee might have one less law professor and one less forensic psychologist (= “expert witness”.) The people of Tennessee has already suffered so much, what with their poverty, stupidity, and meanness, and now this.


Dave Maier 03.03.09 at 5:52 pm

When the usurpers are at last exposed for who they truly are

Why do I think this means “when Barry Soetoro’s alleged Hawaii birth certificate is finally revealed to be a fraud”?


marcel 03.03.09 at 6:22 pm

Something about this title, containing both ‘rubber’ and ‘randy/’randian’ brings to mind some very peculiar images and raises some, um, interesting questions. I’d prefer not to read any comments on what this says about the particular mind. Questions include:

What is a Rawlsian Rubber? One size fits all?

Is the Randian Road the one that the Beatles referred to on The White Album?

Why does the Rawlsian Rubber meet the Randian Road, and is that painful or pleasurable?


MH 03.03.09 at 6:26 pm

Only if I went “Galt” would I have time to read Atlas Shrugged.


Russell Arben Fox 03.03.09 at 7:18 pm

I’ve kept my income below $250,000 all my life, without thereby becoming a Randian.

John, you never fail me. This had me laughing so hard I nearly fell out of my chair.


chrismealy 03.03.09 at 7:23 pm

Strike another blow against Ricardian equivalence. Those people should have “gone Galt” when Bush ran up the debt.


Bruce Baugh 03.03.09 at 7:49 pm

If I had a lot more time and energy I’d go poke someone with a stick about the sense in which it is “going Galt” to draw on Medicare. But life is short and I’d get a better return on investment for trying to bite my toenails the way I sometimes bite my fingernails.


Rich B. 03.03.09 at 9:49 pm

Doesn’t the new plan cause individuals with incomes over $250K to lose some tax deductions for things like charitable contributions? If that is the case, an individual making $249K could end up paying lower taxes than one making $251K, outside of the marginal tax-rate issue.


Brock 03.03.09 at 9:56 pm

Please don’t blame the state of Tennessee in its entirety, Emerson. It’s just the UT system that deserves to be castigated.


Slocum 03.03.09 at 11:12 pm

Obviously a lot of this is pretty silly, and I don’t think these people are going to sell everything and emigrate any more than lefties upset about Bush in 2004 followed through with threats to pick up and leave.

But I do think, maybe, you’re all missing a few things. I don’t believe these people misunderstand marginal rates and think that if they earn over $250K, then every dollar of their income will be taxed at the higher rates (or that every dollar over $250K is going to be confiscated — that was hyperbole in the quote above). What they do think is that if they earn less than $250K, then they too can be part of the virtuous, struggling middle class (who deserve tax cuts) rather than a part of the greedy, undeserving rich (who deserve to be soaked). The message they’re hearing now from Washington is roughly the opposite of Deng’s “To get rich is glorious”. They’ve been accustomed, as entrepreneurs, to being thought of as pillars of their communities and creators of jobs — rather than being despised as selfish bastards grabbing more than their share. If the reward is opprobrium rather than praise, then 60 hour weeks start to seem kind of stupid. As does taking a lot of risk to try to keep things going as they are. On the other hand, cutting back (or even only threatening to) feels like one of the only forms of resistance available at this point. And then there’s the zeitgeist — displays of wealth are out; cocooning and comfort food are in. In that kind of environment, why not trade some income for more free time and relaxation?

How much effect will this end up having? Some I think, but it’ll be hard to tease out of the general effects of economic decline. Galt or no Galt, the top 2% were going to be taking home a lot less to tax in any case (since so much of their income comes from capital gains, bonuses, and small business profits — all of which figure to be in pretty short supply for quite a while). I think Krugman’s right that there will be no possible way for Obama to pay for more than a fraction of his spending with tax increases on the wealthiest 2%.


David 03.04.09 at 1:08 am

Please tell me that everyone here who has read THE BOOK did so before they turned 20 and achieved the age of reason. Subtract points if you actually read the entire 80+ pages of JG’s rant. Trust me, if you read the first 5 or 6 and the last 2 or 3 you didn’t miss anything. On the other hand, I have occasionally, lo these many years, been tempted to reread The Fountainhead. If only for its wonderful take on what capable women really want.


anxiousmodernman 03.04.09 at 1:47 am


Justus 03.04.09 at 1:57 am

The US Government taxes based on citizenship, not residency, so moving abroad accomplishes nothing.

If you give up your US citizenship to avoid taxes there it is against federal law (passed in 1996) to ever set foot in the United States again.

9 million Americans live abroad but only about ~500 give up their citizenship in a given year.


Kenny Easwaran 03.04.09 at 2:03 am

If these people stop working as many hours, that seems to mean that there will be more work for other people to do, and therefore their companies will either hire more people, or lay off fewer. In any case, they’re helping the economy by decreasing the unemployment rate, rather than hurting the economy by spending less money. (The idea is that the work that needs to be done is more likely to trickle down than the money this person earns for overtime is. I don’t know if that’s actually true though.)


Righteous Bubba 03.04.09 at 3:31 am

If you give up your US citizenship

That can be difficult:

Those who imagine that exile will be easily won would do well to consider the travails of Kenneth Nichols O’Keefe. An ex-Marine who was discharged, according to his website, under “other than honorable conditions,” O’Keefe has tried officially to renounce his citizenship twice without success, first in Vancouver and then in the Netherlands. His initial bid was rejected after the State Department concluded that he would return to the United States—a credible inference, as O’Keefe in fact had returned immediately. After his second attempt, O’Keefe waited seven months with no response before he tried a more sensational approach. He went back to the consulate at The Hague, retrieved his passport, walked outside, and lit it on fire. Seventeen days later, he received a letter from the State Department informing him that he was still an American, because he had not obtained the right to reside elsewhere. He had succeeded only in breaking the law, since mutilating a passport is illegal. It says so right on the passport.


bad Jim 03.04.09 at 4:37 am

I just read the Wikipedia synopses of Atlas Shrugged and The Fountainhead and I have to wonder how a movie could have been made of the latter. An opera, sure; could it be worse than Lohengrin or Il Trovatore? but there must have been some changes made for the Gary Cooper version.

I’ve been told that there are wealthy people who insist that their money be invested so as to avoid paying a penny in income tax (everything in tax-free municipal bonds, perhaps). So, in addition to those who don’t understand the first thing about the tax system, there are also some with a pronounced aversion to sharing. Not everyone learns the same lessons in kindergarten.


Slocum 03.04.09 at 12:52 pm

Kenny Easwaran: If these people stop working as many hours, that seems to mean that there will be more work for other people to do…

Right — because every0ne knows there’s a fixed-sized ‘lump of work’ and so perhaps these people were not only taking more than their share of the fixed lump of national income but were achieving this result by selfishly grabbing an oversized share of the of the fixed amount of available work (and thereby depriving others of their fair shares of work). By that reasoning, if they cut back, it’ll be a win-win situation…


mpowell 03.04.09 at 1:16 pm

Slocum, you might have a point with regards to a certain set of small business owners, but if the culture of our country shifted to recognize that if you make a ton of money, you probably do it by screwing a bunch of people (here’s looking at your princes of Wall Street) I think the net effect on our economy and society would be quite salutary.

Also anybody crying about how they’re not valued by their community as much anymore because they’re being asked to do more to help out the society that has given them such tremendous opportunities is just as much an idiot as the person who thinks every dollar above 250K is going to be ‘confiscated’. The threshold is set at 250K, but this doesn’t start to look like much of a tax increase until you get much higher on the pay scale.


Slocum 03.04.09 at 2:38 pm

…if the culture of our country shifted to recognize that if you make a ton of money, you probably do it by screwing a bunch of people (here’s looking at your princes of Wall Street) I think the net effect on our economy and society would be quite salutary.

If, by ‘a ton of money’, you mean simply enough to be rich by Obama’s definition (e.g. > $250K/yr), then ‘princes of Wall Street’ account for a tiny fraction of these people. But thinking of ‘the rich’ as if they’re generally parasitic robber-barons does seem to be an experiment in cultural change that we’re getting ready to run.

Also anybody crying about how they’re not valued by their community as much anymore because they’re being asked to do more to help out the society…

Eh, no — they’re not feeling undervalued because they’re being asked to do more. They’re feeling that way because of beliefs such as you’ve expressed — namely, that if you’ve become well off, ‘you probably did it by screwing a bunch of people’. From this perspective, then, these are not virtuous, productive people being asked to do more because they’re needed and because they’re strong enough to carry a greater load for a while, but rather these are guilty, greedy rich people being punished for sins of economic exploitation they’ve committed (even if — regrettably — such exploitation didn’t rise to the level of a criminal offenses).

…the society that has given them such tremendous opportunities

Subtext — their businesses are not things that they have created through years of hard work, risk-taking, worry, and persistence through lean times when they weren’t sure they were going to make it — no, their achievements were mostly attributable to opportunities given to them by society. Consequently they deserve little credit and have only weak claims on any profits. Can you see the incentive problem?


harry b 03.04.09 at 2:53 pm

There are numerous people who work hard, take risks, apply their skills to complex problems solving which is socially useful, and make a lot less than $250k. The difference between most of them and most of those who make more than $250k is luck. Those making over $250k a year who do not understand this are partly indulging in self-deceit and partly blinded by the prevailing ideology (to the extent that the latter is true they are not to blame for their false perception of course). Now, of course, some of those over $250k are there because they screwed people over, some because they just have the luck of having developed very rare skill sets that happen to be rewarded highly in our society, and others because they do something incredibly socially useful that (again they are lucky that) our society rewards highly.

None of these people have any complaint if we set tax rates higher on them. If we have reason to believe that enough of them go on “talent-strike” to make less advantaged people worse off then, sure, we shouldn’t raise the tax rates, but that’s because the less advantaged have a complaint, not because the over-$250k do. As for feeling sleighted because people say the kind of thing that mpowell does I have a lot of sympathy with those of them who have never grumbled about how their employees, or other people’s employees, are lazy or stupid and have never grumbled about other people needing hand-outs, or greedy unions, or…. This may be a substantial number of them, but, I’ll be perfectly honest, I have heard enough such complaints from well-paid people in casual conversation to suspect that significant numbers of the over-$250ks have no claim on my sympathy for their hurt feelings when they hear populist anti-rich rhetoric.


mpowell 03.04.09 at 3:04 pm

Slocum, your narrative pretty much requires the existence of a large class of people who, by working really hard, have built small businesses for themselves netting 250K+/year. If you believe that is really the best way to describe the bulk of people in that income group, then I could see how you would be really worried about discouraging additional work. I think that is really quite a stretch, though.

Additionally, the idea that we are punitively taxing the 250-500K group doesn’t really fly at all, does it? I am very much in favor of the idea that we need to eliminate the modern gospel of wealth that currently surrounds the wealthiest members of our society. It is a gospel that has people defending exhorbitant expenses on corporate jets for companies receiving government assistance on the basis that if those CEOs are paid that much, then their time is really worth it (but why were they actually paid that much to begin with?). I think we have a lot of pushback to do on this kind of thinking before we are in danger of erring on the other side of things. And that’s not really the message that allowing a 3% tax cut on the upper income bracket to expire is sending at all, anyhow. What it’s saying is that when we can no longer afford the luxury, the people who have clearly benefited the most greatly from membership in our society should also be the ones who are asked to contribute when that society is faltering.

If you are a dentist making 300K/year and you feel like a tax increase of 1500/year amounts to an indictment of your way of life, that’s just as stupid as describing the situation as confiscation.


David in NY 03.04.09 at 3:37 pm

Does any of those “going Galt” understand that that’s $250,000 in taxable income (not including capital gains)? Doesn’t seem so.


Bruce Baugh 03.04.09 at 4:40 pm

Whenever aid to the poor and needy is cut, we’re always told by some official voices about how the recipients didn’t really need that largesse and weren’t using it well. Well, the same is true of the top 5% and the top income tax bracket. We’ve seen that as a class, the very wealthiest simply can’t be trusted with that much discretionary income. When they’re taxed more heavily, they use the portion that’s theirs in relatively constructive ways, but when they’re given more, they blow it on complicated financial instruments until they end up making the whole economy collapse.

Nor are their moral crimes victimless ones. Their greed and negligence have led to jobs being taken away from others, including those who (all the official voices agree) ought to be working rather than on the dole. And since the offenders show no interest, as a group, in policing themselves or dealing with the consequences of their bad behavior, it’s as necessary for the state to step in and separate them from their instruments of vice as it is for the state to step in and separate children from undeserving poor parents engaged in substance abuse. In fact it is substance abuse, it’s just that here the substance is a financial instrument rather than crack or meth.

As a society, we cut off the benefits of poor people who blow their aid on addictive, harmful vices. I argue that it would be grossly insulting to hold the rich to any less standard – I think anyone arguing against holding the rich accountable as we do the poor is indulging in the fantastic, shameful belief that the rich are simply not capable of being as moral as the poor. I condemn that. I think that the principles many of the rich themselves endorse in dealing with poor people doing bad things should and can apply precisely as well to the rich.


Dan 03.04.09 at 6:04 pm

#25 – Appealing to luck as a justification for increasing the tax rates on the over $250k crowd simply doesn’t get you where you want to go. After all, the recipient of some of the extra tax revenue is just the beneficiary of luck too – it’s not like he is responsible for the fact that some rich person has had the luck of having developed a very rare skill set or does something that is (luckily) valued by society, is it? The distribution of wealth will still be saturated with luck either way.

It seems to me that you want to appeal to some sort of concealed premise that the baseline position is one of equal distributions, but note that this is not the same thing as merely trying to compensate for luck, and is far less compelling. (If reading Jerry Cohen has taught me one thing, it’s that focusing on assumptions of where the baseline should be can cause all sorts of mischief.)

There is also something peculiar about saying that “the difference between most of them and most of those who make more than $250k is luck” (my italics). If I am entirely responsible for producing $10 000 worth of value and you are entirely responsible for producing $100 000 worth of value, are either ( both?) of us responsible for the difference, or is it a matter of luck? The fact that luck is not, on its face, a purely relational concept, yet you want to talk about relative distributions in terms of luck seems to give credence to the argument that you are smuggling in egalitarian undertones (because, of course, egalitarianism certainly is a relational concept) where there don’t need to be any.


Daniel 03.04.09 at 6:18 pm

They’re feeling that way because of beliefs such as you’ve expressed—namely, that if you’ve become well off, ‘you probably did it by screwing a bunch of people’

Speaking as someone who (depending on the exchange rate) has occasionally been in that earnings bracket, and who earns a living as an investment banker of a sort, you have no bloody idea how unappreciated I feel these days. I feel totally, totally unappreciated. However, the money itself is a consolation.

And, more than this, in a period when people are losing their jobs and homes, it’s pretty difficult to back up the waaaaaahmbulance for someone who, basically, is making two hundred and fifty thousand dollars.

The distribution of wealth will still be saturated with luck either way.

Yes, but in one case it will be more equal than the other, so the inequalities arising as a result of luck will be smaller.


Harry 03.04.09 at 6:32 pm

Dan — the “luck” claim does no work at all in justifying the change in the tax rate, obviously. I’m surprised you read what I said that way. What it does is play a role in a more complex argument robbing the rich of the right to complain about a change in the tax rate. There are numerous good reasons to change the tax rate in my opinion. If there were some genuine reason for thinking that the rich deserve their high incomes that would be a reason not to change the rates (a weak reason in my opinion, but a reason). There isn’t, and that’s what the invocation of luck is supposed to show. Now, you may not think that there is any, much, or enough luck, involved. Most people don’t; successful people, in particular, tend to think that their success is explained by hard work, talent, contribution, etc, and not, or hardly at all, by luck.


Slocum 03.04.09 at 6:36 pm

harry b: Now, of course, some of those over $250k are there because they screwed people over, some because they just have the luck of having developed very rare skill sets that happen to be rewarded highly in our society, and others because they do something incredibly socially useful that (again they are lucky that) our society rewards highly.

So there are at least three distinct levels of undeservedness then?

mpowell: Slocum, your narrative pretty much requires the existence of a large class of people who, by working really hard, have built small businesses for themselves netting 250K+/year.

Define ‘large class’ — obviously we’re talking about ~2% of the population, but of those, I suspect you’d be surprised to discover just how many fit that description:

Who is the prototypical American millionaire? What would he tell you about himself?

* About one in five of us is retired. About two-thirds of us who are working are self-employed. Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants.


This strikes me as a part of the economy that is all but invisible to academics.

If you are a dentist making 300K/year and you feel like a tax increase of 1500/year amounts to an indictment of your way of life, that’s just as stupid as describing the situation as confiscation.

Indeed. But many people are look at the avalanche of spending rather than the announced tax plans and reaching the same conclusion Paul Krugman has — namely, that there’s no conceivable way to pay for all this while limiting tax increases to the top 2%. It’s a pretty reasonable guess that increases are going to fall on more people than that. If I own dental practice, do I buy new equipment, bring on junior partners, open a satellite office? Or do I cut back to myself and a hygienist and play more golf? And it’s not just the money — it’s the zeitgeist. If business people start impressing each other with ‘conspicuous consumption’ of leisure and early retirement plans rather than plans to build and expand their businesses, that would be a significant change. And keep in mind that higher income people now work significantly longer hours than lower-income people. That wasn’t always the case (and may not be the case in the near future either).

Bruce Baugh: Well, the same is true of the top 5% and the top income tax bracket. We’ve seen that as a class, the very wealthiest simply can’t be trusted with that much discretionary income. When they’re taxed more heavily, they use the portion that’s theirs in relatively constructive ways, but when they’re given more, they blow it on complicated financial instruments until they end up making the whole economy collapse.

The top 5% encompasses about 15 million Americans. Just how many of those fifteen million do you think were involved in the ‘complicated financial instruments’ business? And by contrast, what fraction of those who were implicated in those disasters were bureaucrats working for government agencies who took their eyes off of the ball? How many were Washington insiders shuffling very profitably between government, the financial industry, and lobbying firms? How many were pension fund managers? Rather a lot, I’d say. In contrast, I believe I can say with confidence that exactly none of them were dentists or owners of pest control businesses.


Daniel 03.04.09 at 6:44 pm

Another bullet from Slocum’s link

Our household’s total annual realized (taxable) income is $131,000 (median, or 50th percentile), while our average income is $247,000

Admittedly this is ten years ago, but the median “millionaire” isn’t actually in the relevant tax bracket.


mpowell 03.04.09 at 8:36 pm

33: Yes, I was going to mention this. Wealth and income have a squirrely relationship. There are more people in the 150K-250K range then in the 250K+ range, and all those folks should be millionaires by the time they’re in their 50s. Of course mileage will vary, but the limitation is due to fiscal management, not income.

I don’t have a lot of information on the demographics of this class because it’s hard to know how much small business owners make. But most of the jobs I know of that will make that much are banking, law and medicine. And only of those 3 is consistently contributing something in my opinion.


doug 03.04.09 at 8:40 pm

I haven’t the energy to quip or discuss, but I do want to say that I love you all like you were my dear, fellow college insomniacs. Posts like this and the comment threads they produce keep me going on many an otherwise uninspiring day. Crookedtimber foreva.


Bruce Baugh 03.04.09 at 8:40 pm

The bottom 5% of the population is 15 million too, and has been hectored from time immemorial about its moral failings and how it can’t be trusted with things. And no chunk of that bottom 5% ever did anything like this amount of damage to the society around them. I have zero pity of any kind – this is nearly universally accepted operating procedure when it comes to groups some of whose members have messed up, and I don’t see any reason to exempt the rich just because you idolize them, Slocum.

Now if the top 5% want to admit that they can’t actually bear anything like the scrutiny or criticism they’ve dished out for the last thirty years, then we could see about starting their instruction in self-control, moral competence, and the like. I’ve been proceeding on the basis that there isn’t actually anything morally incapacitating about great wealth, but if they and their defenders want to say there is, I’m willing to see what might help just as I would with any other mental disability or incapacitation.


Perezoso 03.04.09 at 8:51 pm

the authentic Rawlsian does not screen, moderate, delete, or troll rate comments . J-Edgar Rawlsians do


Harry 03.04.09 at 8:57 pm

Bruce Baugh — well, I’m with Jesus on this one. If you think there’s nothing morally incapacitating about great wealth you a) have a strange reading of the empirical world or b) a deeply unchristian reading of moral requirement. Great poverty, by the way, is the also morally debilitating, not that there aren’t exceptions in both cases, and these two fact combine to make a case for a much more equal distribution of income and wealth, a case that is, in my opinion, overdetermined.

That said, no-one is making the case for a substantially more equal distribution of income and wealth, and absent substantially egalitarian reforms I am entirely open (empirically) to the idea that the least advantaged might benefit from extra increments of inequality (which is what slocum is, I think, most concerned about, and rightly so) and that on those grounds, but only those, various things the administration is doing might possibly be problematic. But the (putative) behaviour of the (putative) John Galts is not made morally innocent by that fact. (Of course, if Ann Coulter shut her gob everyone would be immediately better off, because her personal mission is to poison public discourse, something she excels at — her particular highly-paid talent is immensely socially destructive).


Dan 03.04.09 at 10:10 pm

Bruce Baugh,

I think you’d find it a bit odd and perhaps even a bit offensive if I said that we should have zero pity of any kind for Jews or blacks, being, as they are, groups some of whose members have messed up. Yet somehow when talking about the rich, the vulgar collectivist in you thinks that it’s OK to extrapolate blame-worthiness to the whole group. Unless you have any independent reason for thinking that all rich people contributed to the current crisis (which I’d love to see), the fallacy is exactly the same in either case.


I’m sceptical that luck is what’s really at stake here. I say this because you happily discuss the immorality of “the (putative) behaviour of the (putative) John Galts” which is, namely, withdrawing their labour in the face of increased adverse incentives to work. Now, it seems to me that it’s certainly very odd, if not downright inconsistent depending on how we analyse certain of the concepts involved, to hold both that it is a matter of luck that the rich earn what they do, and yet that it is not a matter of luck (indeed, is a matter of choice that they are morally responsible for) that they fail to continue working under a higher tax rate. You want (and maybe rightly so) to condemn them for threatening to stop working as hard, but the fact that they can plausibly make that threat suggests that it is not really a matter solely of luck that they earn what they do.


Perezoso 03.04.09 at 10:13 pm

In theory the Difference principle is thoroughly egalitarian, even socialistic, and those who pair up Rawls with the likes of Divine Ayn have done him wrong (peruse a few objectivist-like sites [if you can stomach it] and one notes Rawls ranked among the “collectivists”). Rawls, however, did acknowledge historical and political conditions (and injust distribution), which prevent the original position and difference principle from being consistently applied; given existing conditions, the DiffPrin. can be applied via maximin: any proposed political or economic policy should benefit the least off as well as it does the wealthy , unless some inequalities could benefit all (say in terms of division of labor—-that’s what troubles the apparatchiks, I believe) .

TOJ is a massive and somewhat bureaucratic system, perhaps slightly utopian, but attacking it as insufficiently egalitarian seems a rather odd tactic . Rawls’ critics ( ie. Baron Von Nozick) usually attacked it as overly egalitarian. A more effective critique of TOJ, or Cohen might proceed along somewhat Malthusian lines: Rawlsville will not likely hold together during unstable or extreme conditions, whether famine, drought, war, riots, or if petroleum reserves or H20 were to dry up. (The marxistas have other objections: “Rawls, petit-booj-wah liberal jackal” variety.)


Harry 03.04.09 at 10:27 pm

You can rightly be held responsible for your choices when they harm others under certain conditions. It can still be entirely a matter of luck that you enjoy the advantages that enable you to harm others.


sg 03.04.09 at 10:43 pm

Just as well all those people earning 250k plus didn’t benefit from being born wealthy, while all those people in the bottom income bracket didn’t suffer from being born poor. Or this tax might seem like just a way of distributing bad luck.

But as slocum can tell us, everyone in that 250k bracket worked to get there, while everyone in that bottom bracket was rich until they just stopped working and taking risks (which, you know, haven’t had any bad effect on the economy recently, those risk thingamies).

Why, if you were to go and talk to anyone in a council house in England living on the dole, you’d find an ex-250k-a-year banker, whose work ethic slipped (watch out Daniel!). They don’t deserve redistribution, kids. And rich people never ever ever get rich by paying those bottom-income sludge-dwellers tax-free below-living-wage salaries under the table. Or selling them 125% mortgages and taking their bonus and running before the fallout wipes out a real economy which employs people.

No sirree. Just listen to slocum, that’s the recipe for a really just society.


Martin Bento 03.04.09 at 11:57 pm

Dan wrote:

“It seems to me that you want to appeal to some sort of concealed premise that the baseline position is one of equal distributions,”

Don’t know about Harry, but I will state this as an unconcealed premise: equality is the baseline because given a certain quantity of wealth, equal distribution maximizes total utility. That is, wealth runs down the diminishing marginal utility curve like anything else, so the more of it you have, the less utility you get from each additional unit. Hand that unit to someone with less, and the total utility between the two of you is increased. $20 feeds a starving person or lights the cigarette of a rich one. Now, by distorting incentives, redistribution can degrade the total wealth, so there are countervailing factors. This is not an argument for complete equality. But it is one for equality as the baseline , divergencies from which must be affirmatively justified.


J. Baughman 03.04.09 at 11:59 pm


Actually, I find it odd and even a bit offensive that you would equate the rich, a group who, by their disproportionate control of the wealth of this country, have a correspondingly disproportionate amount of power in society and government, with Jews or blacks, both of whom are socially and culturally disadvantaged, usually by those same rich.

The condition of wealth is not equivalent to the condition of race, which is inborn. A Jew can’t become more Jewish by exploiting the labor of the poor. A black can’t become more black by convincing the government to bail out an entire malfunctioning industry. The rich can, and do.

Furthermore, being extremely black or extremely Jewish is considered a negative in modern society. These are conditions that generally go along with a lack of agency. You cannot say that about being extremely wealthy. Being rich is considered a good thing!

The reason that Bruce can–and that we as a nation should–hold the rich to a higher standard is because the rich, by gathering into themselves both money and power, have claimed the higher standard for themselves.

They have the power, they can damn well be saddled with the responsibility. If they don’t want the one, they can give up the other.


Perezoso 03.05.09 at 12:06 am

start with Rawls’ Original Position itself, chosen (supposedly freely) under the Veil of Ignorance: hardly necessary, any more than Perp X striking a deal with Prosecutor Y to save (or not save) his crony Perp Z is necessary. The difference principle only follows from whatever sim-city rational humans (assuming they exist) would choose (assuming it would be binding, somehow). TOJ’s a pleasant if longwinded rhapsody, and not the worst philosophaster’s hustle, but not that much of an upgrade on Hobbes (and Hobbes knew not the Utopian Rag)


Righteous Bubba 03.05.09 at 12:15 am

threatening to stop working as hard

Who is threatening this?


Bruce Baugh 03.05.09 at 12:29 am

Thus we find that it was not morning in America, back what seems so long ago, but only a crepuscular flaring of unexpected light in the yawning abyss that was 20th century taxation. In that first illumination, many of us went mad as we saw for the first time the true form of our relief, a thing not wholly Laffer Curve, nor Georgist, nor Burkean, but something I must not and will not recall. Even now I tempted by this spectral visage upon which is impressed the threshold of forty percent (rounded up), but Ia! Ia! The Fed With A Thousand Directors! No! I will not be consumed, but will consume! This wealth is mine, to be hoarded against the day when at last the masses accept their proper position, and we hear no more of 40% or of closed deductions, and the horror that was distributed gains will be no more.


Dan 03.05.09 at 12:41 am

Martin Bento,

There are a few possible responses to make here; Firstly, I’d probably be inclined to say that utilitarianism is actually meaningless, because there is no such thing as ‘utility’ that can be compared between people. It’s not just that determining the various levels of utility of different people causes epistemic difficulty, it’s that there is no underlying phenomenon there to be measured in the first place; Secondly, I might agree for the sake of argument that utilitarianism is in fact a meaningful doctrine, but a false one.

But most convincingly (because non-question beggingly) I might concede that utilitarianism is meaningful, and true, and that wealth really does have a DMU, and that everyone’s utility function is pretty similar, and that redistribution is costless, and that there are no incentive problems with redistribution whatsoever. The problem then is that it still doesn’t follow from utilitarianism that an equal distribution is justified. Basically, that reasoning just isn’t valid in a dynamic world with production as well as consumption. For the argument in full I’d recommend David Schmidtz’s excellent paper “Diminishing Marginal Utility and Egalitarian Redistribution” (Journal of Value Inquiry, volume 34 I think).

Righteous Bubba,

Forgive me, but I’ve never actually read a book by Rand in my life. Isn’t threatening to withhold their labour what (putative) John Galts do?


Righteous Bubba 03.05.09 at 4:18 am

Forgive me, but I’ve never actually read a book by Rand in my life.

Someone gave me Atlas Shrugged once and I never made it through. I have this idea that I read the Ayn Rand Lexicon because it was bite-sized chunks but all I can remember is something from the A section so I think my memory is flattering me. Or not.

Isn’t threatening to withhold their labour what (putative) John Galts do?

Sure, but I was remembering that the post linked to above reveals a bunch of stupid blowhards who seem remarkably unlikely to do anything about anything, and the later comments seem to dryly go along with the idea that there might be such people. There have been some news items here and there about people who misunderstand marginal tax rates but I don’t yet see the Grim and Serious Rich Person Packing Up.

I could be misreading in any case.


Dr Zen 03.05.09 at 6:53 am

Where is this fantasy land they’re all moving to anyway?


Martin James 03.05.09 at 7:34 am

I read this board because its so fascinating to find people that experience life so profoundly different than I do. I mean am I the only person on this board that picked his career, employer, work hours, and job location to maximize his after-tax compensation? I mean, what surgeon couldn’t have also been a pediatrician or public health worker? What big city lawyer couldn’t have also been a small town public defender? What dentist couldn’t have been a ninth grade health teacher ( OK, I admit, quite a few.)

Now some apparently think that the price incentives are wrong. That these highly paid careers have no value. But if that’s the case why not selectively tax or ban the offending careers to fix the incentives. Tax accountants for Exxon could have a 100% excise tax. Can it really be the case that all of these highly paid jobs are not worth the pay?

Others believe that reducing the number of work hours of the highly paid would give more people the opportunity to do these jobs. The problem with that is that human capital in the form of training is almost entirely a fixed cost. Once the doc is trained, productivity is maximized by working them as many hours as possible without degradation of their performance. Increasing marginal tax rates hardly seems to encourage the most efficient use of human capital.

I don’t think that the largest impact will be people working less, I think it will be people avoiding taxes more. Remember the barter exchanges that people created the last time tax rates were high to keep things off the books?

People forget that class war is a two-sided war. If your side loses the government you talk the battle extra-governmental. Obama got off the first shots with his collective FU to the rich by basically saying we’re going to give healthcare to the unemployed and the poor from your taxes. The rich aren’t rich because of luck they are rich because they are aggressive, scheming, patient hard-working SOB’s who love money. Taking it from them won’t be easy.


Warbo 03.05.09 at 11:34 am

“The rich aren’t rich because of luck…”

Are people not allowed to inherit anything in the US?


Phil 03.05.09 at 12:17 pm

Warbo – that’s my favourite heffalump-trap for Libertarians. “So, are you in favour of a 100% inheritance tax?” (Generally they aren’t; sometimes they’re outraged at the very suggestion.)

I’m puzzled by Dan’s charge of smuggling in egalitarian undertones … where there don’t need to be any. It seems to me that something like Rawls’s ‘original position’ is an absolutely necessary reference-point if we’re going to think at all coherently about distributive justice. Coming at it from the other end, if you think of justifiability in the context of Habermas’s ever-expanding circles of dialogue, any distribution that starts unequal is going to be awfully hard to justify once your dialogue expands beyond a certain point. In other words, philosophically speaking equality is the baseline. (As it has been for some time. Even Hobbes started with equality.)


freepatriot 03.05.09 at 3:22 pm

arethese people serious ???

anybody who truely believes in “going galt” is operating with half a brain. and these idiot who think they’re “going galt” without any real understanding of the concept are even less intelligent

by all means, please deprive us of the labor of the LEAST INTELLIGENT part of the population

given the performance of Wall Street in the past 10 years, hopefully some highly paid corporate executive are in the batch of morons who are ready to deprive us of the benifits of their incompetence


Dan 03.05.09 at 4:41 pm


The egalitarian undertones are smuggled in when you guys start talking about the fact that the rich have their wealth (partly?) as a matter of luck, as though that justifies redistribution. You actually have no problem with people having stuff as a matter of luck; indeed, the poor people who will be the recipients of the proposed transfer payments or added spending or whatever will benefit as a matter of luck too, because, after all, they are no more responsible for generating the wealth than are, well, the rich people who generated it.

So my point is really that the whole tactic of justifying redistribution because the rich are lucky to have what they do is a bit of a disingenuous one – it’s not that the rich are lucky that justifies the redistribution, it’s that they’re rich that does all the work. Which, I suppose, if you’re an egalitarian, is fine and natural. But those of us who aren’t, I think it’s worth pointing out that emphasising the role of luck does not necessarily or particularly lead to egalitarian conclusions at all – unless, of course, you start off with an explicitly egalitarian baseline.


DR 03.05.09 at 4:53 pm

Martin James,
One thing you seem to be forgetting is the free market. If a profession is in high demand, and because taxes are raised, they cut back their hours because it isn’t worth it, the market will respond by raising their wages.


Martin James 03.05.09 at 5:30 pm


Yes, people do inherit money but people are also allowed to cut disobedient children out of their will and give it all to sexy young blonds.

Sounds like a fair fight to me!


harry b 03.05.09 at 5:37 pm

I think you are being obtuse, Dan, either deliberately, or ignorantly, its hard to tell. I have been pretty clear about the role that the invocation of luck played in my argument, which is to block the kind of “I deserve it because I’ve worked hard” complaint which slocum was implying on behalf of the up-against-the-wall rich. I have heard this complaint in social situations many times from people who are in the richest 0.5% of humanity and it is simply silly. There’s no smuggling in of equality here. In fact, and again I was very explicit about this, if its really true that the putative lower efforts of the rich in response to very small changes in marginal tax rates we are talking about will harm the disadvantaged then they, the disadvantaged (but not the rich) have grounds for complaint. In the end, I think some version of the difference principle is right, and has priority both over equality and over equality of opportunity. But, and this is Cohen’s point, it is not the case that there is nothing wrong from the point of view of justice when people who could work harder to benefit the least advantaged refuse to.
Finally, in the context of a discussion of Cohen’s critique of Rawls, which is how daniel frames this, there is nothing intellectually about assuming a baseline of equality, since that is something both of them agree about.


Martin James 03.05.09 at 5:38 pm


That’s true assuming that the demand for their services is fairly inelastic. So, under this logic, the tax increase ultimately falls on those with the least elastic demand for the services of the highly compensated.

Since taxes have generally been falling over the same period that compensation differentials have been going up, it makes one wonder how much higher the differential will go with a tax increase on the highly compensated.


Perezoso 03.05.09 at 5:48 pm

Maybe pitch your Rawlsian dreams to the Black Caucus, or perhaps governments of Saudi Arabia, or Sudan, or your local mosque for that matter. I suspect there’s some apparatchik behind most academic Rawls discussion: TOJ sort of the intellectual equivalent of surrendering ( even marxistas and nietzscheans might agree to that).


harry b 03.05.09 at 5:53 pm

Ok, after everything I’ve said, this may sound ridiculous, but I do have some sympathy with the ‘work more hours only if highly compensated’ attitude. Like slocum, I understand if people think “well, I’m pretty well paid, and I’ve got a family, and if I can get much more money for them its worth neglecting them, but if I can only get a bit more it isn’t — I and they would be better off if we spent more time together”. And, because America has so little safety net, and because the disadvantaged are socially excluded and despised, it takes a lot of money really to secure your kids against quite bad outcomes. And, I suspect (because I hear it from people) that rich Americans genuinely believe that being middle class (eg being a teacher) is a much worse life than it actually is. What makes the Galtishness offensive is that they are not privately making trade-offs in the circumstances they face (like the rest of us do) but display a sense of entitlement to circumstances that are even more favourable to them than those they face, and threaten to hold the rest of us to ransom. I carry around this nice quote from Kenneth Griffin from a Times story a couple of years ago, to remind me that to be humble about whatever success I enjoy, and to remind me why I support higher tax rates for people like him, and even for people like me (I’m not in the relevant bracket, but like slocum I think the threshold will come down eventually):

“In the current world there will be people who will move from one tax area to another. I am proud to be an American. But if tax became too high, as a matter of principle I would not be working this hard”


Phil 03.05.09 at 6:21 pm

You actually have no problem with people having stuff as a matter of luck

I’ve no idea what you’re talking about. Certainly I’ve got a problem with some people having stuff and others not as a result of luck. I can also tell the difference between “individual beneficiary of luck” and “individual beneficiary of collective policy”.


Martin Bento 03.05.09 at 6:29 pm

Dan wrote:

“Firstly, I’d probably be inclined to say that utilitarianism is actually meaningless, because there is no such thing as ‘utility’ that can be compared between people. It’s not just that determining the various levels of utility of different people causes epistemic difficulty, it’s that there is no underlying phenomenon there to be measured in the first place”

The underlying phenomenon is that people want things (“things” in the broad sense including lifestyles, abstract liberties, etc.). “Utility” is just a label for the subjective satisfaction that comes from getting what you want. That utility assignments for a given person are sortable (i.e., there’s a DMU) is an implication of the fact that people make choices. Choices are not always easy or consistent, so the sortability is not necessarily perfect, but if you toss this out, you pretty much toss out all of economics, including the bits that are just common sense and that we see operating all the time. As for comparing utility functions of different people, you can’t get normative results without normative premises, and I am assuming political equality as a value. Under political equality, everyone’s subjective concerns – their utility function – as a whole should be equal as a people concern. So each utility function generally descends and each sums to one. There is some variation in slope possible, but public policy will always require some approximations. Certainly, assuming some variation is slope for particular people over others, e.g., such that their strong desires get more but their weak desires less favor, would require some additional work to establish, i.e., it cannot be baseline.

As for your second paragraph, if you have an argument to make, make it. Anybody can point to the library, but unless you’re going to pay me, you don’t get to assign me work. Although I didn’t say an equal distribution was justified, I said it was baseline, i.e., that one would have to justify deviations from it.


Martin Bento 03.05.09 at 6:36 pm

“people concern” > I meant to say “public concern”, though perhaps I should have said “political concern”


Martin Bento 03.05.09 at 7:43 pm

Rereading my comment, I realize the tone I took with Dan sounds more hostile than I intended. Dan, if you want to point me to something available on the web, I might look at it, though you should at least provide a summary of the argument. If everyone here is going to argue by pointer, there will be all footnotes and no discussion, besides which we are all busy people.


MH 03.05.09 at 7:53 pm

The going Galt meme is overblown, but higher taxes do matter even for people without the resources stop working. I realize that not everybody can shift their income/hours worked easily, but it does matter for some. There are only so many hours in the day and pretty much every extra hour I’m at work means something else that has to be paid for (since I’m not willing to cut down sleep or leisure or family time anymore). If I do overtime, I won’t have the time to clean the gutters myself or we’ll eat more expensive prepared food because there is no time to cook. And, when making those calculations, the marginal tax rate is what matters.


harry b 03.05.09 at 8:02 pm

MH — yes, I think that’s right. Daniel has restricted this discussion to the real world, though, and I really wonder what proportion of the $250ks are really in your boat (as it were). I also wonder how carefully people calculate (I long ago decided that a couple of articles for the TES, or reviewing 3 books for presses, would pay for someone else to do my taxes: a couple of articles for the TES takes me about half the time that doing my taxes does, and I enjoy it; reviewing books takes longer, but I also enjoy it, and feel some obligation is fulfilled. Talking of which I should get on and review one right now).


MH 03.05.09 at 8:18 pm

Harry, I’m not in that boat as far as income goes. My point was that people who pay much lower rates of taxes still make those types of calculations.


harry b 03.05.09 at 8:37 pm

Oh, I wasn’t accusing you of being in that income bracket :). I agree that people in lower tax brackets make these kinds of calculations (I suspect from your description that you and I are rather similar in that regard). What I’m wondering is how many people in higher tax brackets do (as opposed to how many say they do). People work long hours for all kinds of reasons, and while well-balanced integrated people like you and me have a high preference for leisure/time with family/etc, my anecdotal observations of people with very high incomes is that some of them aren’t like us…. (there, that’s inviting you to feel as smug as I sound, but you know what I mean…)


Perezoso 03.05.09 at 8:52 pm

Maybe a Rawlsian approach to organized crime, or Rawlsian Nevada brothels……….All the girls got a raht to a john now…… We’re gonna divide ’em up fair n square…. fuggetabout it


MQ 03.05.09 at 9:30 pm

God, Slocum and his fellow travelers are petulant, whiny hysterics. According to Deloitte, the full impact of Obama’s tax plans would be to increase the tax bill for a family making $500,000 by ten percent, or a bit over $10,000. They’ll still be some of the lowest taxed rich people in any major industrialized country. I can understand someone not wanting to pay any more in taxes, but if this change makes you have a hissy fit about how “undervalued” you are then you’re a spoiled little brat.

Does any of those “going Galt” understand that that’s $250,000 in taxable income (not including capital gains)? Doesn’t seem so.

actually, it’s $250,000 AGI in the discussion, not taxable income. This does include all cap gains except those from sale of a primary residence.


geo 03.06.09 at 6:09 am

As MQ points out, the tax increase we’re talking about just isn’t that substantial: 35% to 39.5% on income over $250K. This is tiny compared with the payroll tax increases for the non-rich that the first round (Reagan’s) of tax cuts for the rich resulted in.

No doubt it’s reasonable at least to ask whether even this small tax increase would make entrepreneurs less productive. But doesn’t this question obscure the fact that, by an overwhelming margin, the wealth and income we should be targeting originates in the non-productive — ie, the financial — sector? The financial sector’s share of both profits and total output soared in the last few decades, without creating anything like corresponding social wealth. Perhaps the fairest and most efficient tax policy would be to leave all non-financial workers and entrepreneurs alone and instead confiscate all income (including capital gains) over $250,000/yr. earned in the financial sector over the last twenty years.

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