Squeezing the rich is good: even when it raises no money

Bravo! Plus I am not at all sure that the tax would not raise more revenue.

Right on.

Adam Smith is right that the US combines a relatively progressive tax system with high level of post-tax income inequality. Not sure what this proves. The US also combines the worlds best universities with a not so great system of K-12 education. I don’t imagine adam.smith (or anyone else) would take this as an argument against higher ed.

That said, I did write a little opinion piece a few years ago, making the case against tax fairness on somewhat similar grounds.

MPA – Kenworthy has more links here: http://lanekenworthy.net/2012/02/16/is-the-u-s-tax-system-more-progressive-than-those-of-most-other-rich-countries/ take a look at the Barnes and the Whiteford posts in particular. Note that all of these people (with the possible exception of Whiteford) are ideologically to the left of Drum and DeLong.

@JW Mason – given your opinion piece I’m not sure we disagree much here. At least I agree with your 2003 version ;).

Re: Soaking the Rich “placing me”: http://krugman.blogs.nytimes.com/2012/04/03/the-simple-analytics-of-soaking-the-rich-wonkish/?_php=true&_type=blogs&_r=0

adam@8
Adam you didn’t say the US had one of the most progressive tax systems, you said it had the MOST progressive.

MPA – did you follow the links as I suggested? Barnes has the US as most progressive. Whiteford has the US as first or second depending on measurement.

On the other hand, raising no money is a highly unlikely property of a tax rise. So if some specific tax change genuinely would raise no money, something is fishy. Most likely the person or organisation saying it would be revenue-neutral is lying, for the usual reasons.

If not, then there very likely is some other change which will also have equal or greater good side-effects, but also raise money. Which seems not only more useful, but also a politically easier sell.

oh god no, I hadn’t notice that. Please write ten more posts explaining irony to me!!!

Adam.smith,

Then why did you bring it up?

In The Sky, I think MPA meant “highly regressive,” not relatively unprogressive. He could have omitted the “highly,” but here’s evidence of ” just plain regressive” state and local taxation from folks who apparently don’t think regressive taxes are such a bad thing:
http://taxfoundation.org/article/comments-who-pays-distributional-analysis-tax-systems-all-50-states

So, even in rebutting ITEP, regressive taxation is conceded at the state and local level.

Consumatopia ,

I think the EITC is necessary right now, but it’s a bad idea overall. It makes it easier for wealthy corporations and business owners to keep their wages low, knowing the public kicks in the difference. It would be much better, IMO, to do at least these two things:

1. Raise the minimum wage to $15 an hour, and hook it to inflation.
2. Set a maximum ratio of ownership (or executive) pay to rank and file of 10 to 1.

It would be far better, as long as we’re stuck with capitalism, to make sure capitalists pay workers fair wages, than to externalize their costs onto the public at large. We shouldn’t have to subsidize their greed.

@Consumatopia – good points. In an ideal world having both VAT and strongly progressive income tax would be the best outcome. What I was trying to say is that given the empirics we have, I’d spend more energy on the former than the latter, at least if the principle goal is fighting inequality as Chris’s post suggests. I’m still open to the possibility that “class warfare” in tax policy is good politics.

As for how to categorize the EITC—that comes down to whether looking at tax progressivity without transfers makes any sense at all. Arguably it doesn’t. Once you count the EITC out, you also have to count all the stuff that Suzanne Mettler categorizes as the “submerged welfare state” out. Which goes back to the point I think JW Mason’s piece makes nicely. We should focus less on the the details of taxation and more on having a robust state apparatus and public sector.

adam.smith,

But if we talk about hidden “welfare,” then we have to talk about the not so hidden trillions spent on wealthcare. We fight most of our wars to protect and defend markets and private property for the wealthy, and to force new markets open for our capitalists. We spend fortunes protecting private property for the rich domestically. We spend fortunes protecting their so-called rights in courts. We externalize their costs for them when it comes to pollution and waste — and rotten wages and benefits. We taxpayers spend roughly 7 billion a year to subsidize fast food corporations, for example.

And we lead the world in that waste and pollution. We actually throw away roughly half of our food, for instance.

Whenever the conversation turns to “transfers” it inevitably leaves out the rich. But they, in fact, receive the greatest amount. And it’s not close.

We should focus less on the the details of taxation and more on having a robust state apparatus and public sector.

But the rich are opposed to that, too, and for much the same reasons.

[power is a positional good, and a more-powerful more-effective state diminishes the power of the privately wealthy.]

Plume@24: The public is not a disjoint category from corporations. EITC is funded by taxes (and deficit spending), and corporations and rich people do pay a decent chunk of that, although not as much as one might like. The EITC is an alternative way to get money from corporations to workers. Some of that tax burden gets paid by the rest of us, but some of the cost of the minimum wage is going to get shifted onto prices too.

More generally, a minimum wage is mathematically equivalent to a tax of $X for each man-hour a company employs which is then funded towards a $X/hr wage subsidy, with the difference that the company pays its workers directly instead of going through the government. By having an explicit wage subsidy like the EITC, you have more flexibility to play around with things: have rich companies pay more into the system, have the benefit not be based on a strictly per-hourly basis, and so on. Moving from EITC as it is to EITC as it might be, moving from funding it out of the general budget to funding it from a payroll tax of some kind could help further push the burden onto corporations without just having a minimum wage.

Focusing on wages (especially when you make clear you aren’t particularly fond of the wage system) just seems too narrow minded. The working poor need money, and the rich have plenty to take. How we get the money from point A to point B is a technical issue that shouldn’t be obscured by whether the transaction goes through the government.

I think in the USA the discussion gets derailed because of the distortion caused by S-corps. These are small generally family owned businesses, and profits are taxed as if they are individual income, even though in many cases they are reinvested in the corp. So in the US at least there is at least a little bit of truth to the complaints about the taxing the job-creators. I don’t know if the UK has similar issues, -or if small privately held corps can play by the same tax rules as the boys.

I wouldn’t say that it is impossible for a tax increase to decrease revenues. In the case of a tax like the one discussed here, at least some of the wealthy targets will move overseas, and thus this tax-minimizing behavior will cut into revenue. It becomes a matter of does the government lose more due to this effect, than it raises from those who stay.

Companies don’t leave because of taxation in America. We’re among the least taxed people in the developed world. Effectively. After deductions, etc. etc.

They leave to take advantage of even cheaper labor and even more laxness in regulations. It’s not about taxes. But they claim it is. And that’s just pure BS and propaganda, designed to maximize their profits even more.

Why all the vitriol against adam.smith? It seems fair to say that tax progressivity doesn’t explain the differences between the US and Sweden. And really, raising rates without cutting down on loopholes seems like an ineffective strategy for reducing income inequality.

The larger point is that maybe the way to reduce inequality is to increase spending on redistribution (welfare, public schools, etc) or public goods (parks, arts, etc) rather that taxing the rich. Maybe the inequality in the US today is more about the decline of unions and social equality than lower tax rates. I think this is why folks to the left of Delong/Krugman criticize their obsession with tax rates.

MPAVictoria – Delong’s method is problematic. According to his graph/logic, a country where the top 10% have 26% of the income and pay 26% of the taxes is as progressive as a country (the US) where the top 10% have 34% of the wealth and pay 45% of the taxes. While some of Delong’s stuff is excellent, this one does not pass the eye test.

Eric,

Yes, we need more public spending for the poor and the working class. But if you don’t tax the rich more, where do you get the money? Does it make sense to tax the non-rich more in order to help the non-rich? Seems like a bit of a wash. Not fully, of course. But you’re at least reducing the impact of greater spending and potential reductions in inequality.

The richest 400 Americans hold as much wealth as the bottom 60%. Just 400. And one family, the Waltons, heirs to the Walmart fortune, hold more than the bottom 40% combined. You’re not going to help inequality levels by a little bit more social spending, especially while taxing the people you’re trying to help.

The gap is so grotesque, so unconscionable, we’re long past dabbling with the margins. We need much stronger medicine. I think the only solution is to dump our system altogether, as it’s just economic apartheid writ large. But short of that, we’re going to need to radically increase taxes on the rich, and make it illegal to continue to underpay workers to the degree now in effect, at least (since roughly 1973).

There was a section on the 31st January episode of Tim Harford’s radio 4 series More or Less on how much the 50% band actually raised. The programme is available permanently as a podcast on the radio 4 website at http://www.bbc.co.uk/podcasts/series/moreorless

Eric,

It’s not an either/or thing. Both/and.

I think capital gains should be included in one’s personal income total. No difference. We shouldn’t tax labor more than investment. All monies made, just total ’em up and tax them together. The more you make, the higher the percentage. As mentioned, we really need those higher tax brackets, too.

As a society, we have a vested interest in discouraging personal accumulation of great wealth. It’s bad for society. Very, very bad for society. If we stick with capitalism, taxation is one method of evening the playing field and discouraging said hoarding.

And we need to make it the law to pay a living wage, at least.

One thing that may be working behind the tax-free gated security fences, where the refusal to share has become a moral philosophy, is the idea that one surefire way to reduce income inequality is to reduce the actual numbers of the inequal – not by economic adjustment, but by actual elimination.
The poor are no longer complaining, because the poor are no longer with us.
That this has a parallel in the inaudible response of some wealth-hoarders to climate change – that the reduction of carbon footprint is easiestly done by reducing the size of the foot itself.
It’s right out of fuedalism’s playbook.
Get em all hooped up and ready to kill, and then sic em on each other.
Or maybe some kinda manageable plague?
Only right now that’s not available, or timing or something. And communication’s so pervasive and instant that you got to watch what you say, even at closed-door dinners for the mega-rich.
So there’s a quietus.
But that neo-Darwinian hope is still there.
Why should we share our hard-won wealth with people who shouldn’t even be here in the first place?

I’m well aware of all the arguments about the impossibility and irrelevance of classical antiquity as a model for the modern world – but as an inspiration, if nothing else, Athenian democracy has a lot going for it: that’s democracy in its literal sense as the power of the ordinary people – the poor, as Aristotle expressly notes – to defend themselves against the rich and keep them in line. Yes, it was only for citizens, and that excluded women, and some of them had slaves, but the basic idea that communal wealth should be used to support everyone, and that the rich needed to be soaked regularly for the collective good – and the success of a system that got the rich informing and bringing court cases against one another for failing to be suitably generous benefactors to the community – is worth keeping in mind.

Bruce,

This stuff gets you a little worked up. Don’t get hung up on Larry Summers.

Krugman & Stiglitz balance it right out.

mattski @ 50

Stiglitz, maybe. Krugman is a case of “with friends like this . . . ” much of the time. Krugman labels himself a liberal, but he’s a very conservative fellow in certain ways, and particularly in the economic doctrines he adheres to.

@ 52

You’re giving me a sad. I take it you don’t read his stuff on a regular basis?

@52 and 55 – yes I have. Really, don’t embarrass yourselves. He is both liberal, wants much stronger redistribution and cares to change structural inequality. You really are off base.

DN

Hmm. Ok, let’s call this what it is: an argument for tax rates on the rich that are on the “wrong side” of the Laffer curve.

And let’s get the preliminary caveats out of the way: currently existing tax rates on the rich are probably not anywhere near the “wrong side” of the Laffer curve. So basically this is a theoretical exercise. There’s still a lot of room to argue for higher tax rates on the rich, even if one thinks this whole argument is bunk. In other words, just because I disagree does not mean I don’t think we shouldn’t increase the tax rate on the rich.

Ok, now the argument itself.

The first part, ” First, in a complex society…” just says that some part of an individual’s income/wealth is a result of the existing social infrastructure which makes it possible to earn it, rather than due to an individual’s own “effort”. And that means that all individuals in society should be expected to contribute their “fair” share to maintaining that social infrastructure. Sure, of course. But that’s an argument for positive – and progressive – tax rates, not necessarily on tax rates on the rich “on the wrong side of the Laffer curve”. In other words at best it’s a necessary not a sufficient condition for the conclusion drawn.

Second premise: “The second consideration is that inequality… This is basically a rent seeking argument (it’s only sort of about inequality). Folks who already have lots of wealth/income have the ability to use that wealth/income to transfer further wealth/income from others to themselves. By taxing the people who due to their high income/wealth are most likely to engage in rent seeking, we limit their power to engage in such behavior. Even if such taxes raise no revenue (or even less revenue) there might be a pure efficiency advantage to such a policy (less rent seeking). To some extent I buy this. But it’s still cost/benefit kind of thing and it’s not clear that you really want to go that far (thinking about it quickly, putting these kinds of rent-seeking considerations into it shifts the Laffer curve right, allowing for a higher efficient tax rate, but it doesn’t completely eliminate it)

The third premise income inequality makes life worse for the rest of us in real terms… is … pretty weird. It’s essentially an argument that envy and jealousy should be rewarded. So my rich, born with a silver spoon in his mouth, never had to worry about a thing, neighbor gets struck by lightning. I feel better now. Should social policy really reflect those kinds of preferences? You take that argument seriously, you’re gonna end up going some dark paths.

So go with #2 but flesh it out.

notsneaky @ 58 is doing a pretty good job of getting down to it.

3.) income inequality makes life worse for the rest of us in real terms… I don’t see why this statement points to “envy and jealousy” as opposed to, say, status-seeking conspicuous consumption, which is socially wasteful, or injurious social or political domination, which leaves “losers” sick and depressed.

2.) a rent seeking argument Why not start from an argument from incidence and economic rents? It seems to me that a realistic model of income distribution would identify economic rents as an important “unearned” component of income, particularly the incomes of rentiers and the politically powerful (C-suite executives).

By having a relatively low marginal rate of income tax on business corporations in possession of significant sources of economic rent and their controlling top executives, we are incentivizing (I hate that word) the ruthless exploitation of political and market power. Laffer might be right: lower marginal rates get more effort, but it’s effort focused on predation and looting.

1.) As a policy aimed at backing away from an emergent neo-feudalism of globalized rentiers, the “wrong side” of the Laffer Curve might actually be the right side.

income inequality makes life worse for the rest of us in real terms… is … pretty weird. It’s essentially an argument that envy and jealousy should be rewarded.

I think only an economist could think this way. “Envy and jealousy” includes concern with almost everything that makes for a decent existence — a sense of personal agency and of personal significance, having authority in some domain, being free from arbitrary authority of others, a secure place in one’s community, a degree of status and respect, an opportunity to participate in collective decision making. All of which depends on one’s relative position.

And even if you don’t buy that, even if you still want to call it “envy and jealousy,” who are you to tell people that that part of their subjective wellbeing doesn’t count?

All of which depends on one’s relative position.

Capitalism is a system that runs on relative position. Are you relatively more credible as a job candidate? You’re hired. People don’t get feel like losers because they’re mentally weak, but because inequality has real material knock-on effects.

The discussion of inequality has nothing to do with jealousy or envy. Suggesting that is just a lame attempt to silence that discussion, or at least deflect attention from the wealthy. No one with any intelligence falls for that nonsense.

Inequality is created by taking something from others so you have more than they do. Wealth is finite. Time is finite. Labor is finite. Resources are finite. If one person has more of something, others have less. That’s just math and physics.

Conservatives, however, have this odd belief that money can be multiplied, alchemically, magically, so that everyone wins and no one loses anything. Unless, of course, they have to pay taxes. That someone can magically make billions without screwing over, exploiting and otherwise shitting on a huge number of people. Sorry, but that’s impossible. Anyone who has managed to hoard millions of dollars via business has done so through screwing over his or her workforce, plus consumers, plus the earth.

Inequality is not only unjust, it’s indefensible. Mathematically, socially, environmentally and economically. The latter, primarily because people who concentrate large amounts of money actually take that money OUT of the economy, and the capitalist system needs money to flow through it, not kept out. The concentration of money in a few hands reduces economic activity, demand, growth. And in the capitalist system, that hurts all of us.

No one with any intelligence falls for that nonsense.

If only that were true…

From what I know S-Corporations profits are income. Owners are able to use the company account to pay all sorts of basically personal expenses. Their should be a cap on the amount of money that can be earned as an S-Corporation or a tax somehow related to it’s spending.

The latter, primarily because people who concentrate large amounts of money actually take that money OUT of the economy

How do you take money out of the economy, exactly?

In the sky,

I responded. It’s in moderation. Probably cuz I posted a video, too. Nick Hanauer’s, from his TED talk.

Bruce, really quickly,

3) I can elaborate later on but I think my statement is pretty obvious. Consider an alternative situation. Once a year we round up all the rich people who have incomes above X$ per year. And then, as part of an exercise in social catharisis we go around and kick each one of them in the nuts (they’re all male, of course). However, we do let each of them opt out of getting kicked in the nuts by paying Y$. The only argument for this kind of policy is that it makes the rest of feel good to kick some rich SOBs in the nuts. Maybe. Probably. But… what kind of theory of morals are you relying upon here? One which says this is a universal good, not just “feels good” for the us, who do the kicking.

2) Sure, that’s more or less part of what I said. But that’s still just an argument for progressive taxation, not “kick’em in the nuts” taxation. (To the extent there might be some wiggle room, like I said, this is the part which can actually works logically, but it needs to be made more precise)

3) Assumes it’s conclusion. It is good if we do X. Suppose we do X. It is good. The actual question is “do we want to back away from an emergent neo-feudalism of globalized rentiers” AT A COST TO OURSELVES (or simply to spite some others). Because that’s what Chris is arguing for. It’s not just an argument that it would be good to “back away from an emergent neo-feudalism of globalized rentiers” but that it’s even good to do so just out of spite and envy.

Look, if you wanna go around kicking rich guys in the nuts because it makes you (and the non-rich guys) feel better, I sympathize with the intent. But I’ve got enough self-awareness to realize that it’s essentially a shitty, petty, instinct. Like I said, I can’t think of a theory of morals which would say, hey, that’s hunky dory, indulge. So I’m not gonna pretend that it’s a policy that is recommended for society as whole. It’s like a fantasy that’s better off never put into practice.

What notsneaky said.

And do not forget that the filthy rich are a very tiny minority, especially outside the US. It’s a mathematical fact that if you want to raise a shitload of money to spend on the poor you have to heavily tax those in the middle, not just the top. The truly rich class has money but no people, the truly poor class has people but no money (d’uh). Only the middle class has money and people.

What I’m saying is that people here who want a big welfare state, more public goods, etc should be first and foremost arguing for more taxes on themselves – nice solidly paid academics in the top quartile but not the top percentile – not some tiny distant class of strangers they have never met and are never likely to become. Because it never ceases to amaze me how dead keen most people are on more taxes or less welfare or both for people who are not them.

I think only an economist could think this way.

I don’t think so, most economists I know recognize that getting satisfaction out of another person’s misfortune is not a pretty thought. And if you’re right, then that just means the economist has it right.

“Envy and jealousy” includes concern with almost everything that makes for a decent existence

Really? I guess for some people it’s true. The people who… get eaten up with envy and jealousy when others are better off than them. But are those the “representative agents” we want to base public policy on? For most people a “decent existence” means being able to satisfy their basic needs, a certain level of security and comfort, and some amount of hedonistic indulgence. None of these things necessarily depend on others experiencing less happiness and being made worse off.

— a sense of personal agency and of personal significance, having authority in some domain, being free from arbitrary authority of others, a secure place in one’s community, a degree of status and respect, an opportunity to participate in collective decision making. All of which depends on one’s relative position.

They may depend on one’s relative position, or they may not. If I can experience a sense of personal agency and of personal significance, with authority in some domain, and free from arbitrary authority of others (that one is the separate rent seeking argument sneaking in there), a secure place in my community and a degree of status of respect (perhaps I don’t even care about that) and an opportunity to participate in collective decision making (again, rent seeking argument, not this argument) WITHOUT regard to how others folks are doing then, no, it doesn’t depend on my relative position. If it does, then yeah, it’s a form of envy and jealousy. And again, we’re not talking about what exactly it is that makes people happy – as that can lead down some dark paths – but whether or not considerations of envy and jealously are something to account for in how structure public policy.

And even if you don’t buy that, even if you still want to call it “envy and jealousy,” who are you to tell people that that part of their subjective wellbeing doesn’t count

The same person who thinks it’s ok for me to tell others that it’s pretty shitty to experience happiness at others expense. You don’t like that person? Well, who are you to tell me……..

(Krugman’s) current edition of International Economics (published 2012) states repeatedly and unequivocally that “An increase in the money supply must eventually cause all prices to rise in proportion.”

He does need to add “outside of a liquidity trap” in there, but otherwise it’s fine. Drop him a note next time he brings it up.

Well done, Prof. Bertram! Best post I’ve seen on CT for quite a while. I haven’t got time to comment now, but we need to have a fuller explicit understanding of what ‘equality’ means in the areas of economic activity and the application of ethical principles. Imbalances of economic outcome such as we are seeing these days lead to asymmetries in the application of ethical principles in so many other areas of social policy where the interests of the wealthy are opposed to the welfare of everybody else, meaning benefit for the .1 percent and harm for everyone else, for no justifiable reason. Along similar lines, there was an interesting interview with Angus Deaton on the LSE British Politics and Policy blog (“Five minutes with Angus Deaton”). This problem, of the ability of the wealthy to override ethical principles in policy making, concerns the whole world; all political systems seem to tend toward plutocracy. And there needs to be a definite effort to respond to corporate media hacks when they parrot their specious conventional nostrums.

Also, thumbs up to Bruce Wilder, esp. @61.

Conservatives often say there is not enough money amongst the rich to tax. Taxing it won’t put a dent in the deficit.

Well, let’s see. The 1% brings in roughly 20% of all income, though I’ve seen estimates as high as 25%. Income for Americans was roughly 8 trillion last year, though I’ve seen estimates as high as 11 trillion. That means the 1% made at least 2 trillion that we know about.

If they paid as much as they did from the 1930s thru the early 60s, effectively (55%), that would put revenues at roughly 1.1 trillion. Again, that’s just for the top 1%. Given the fact that they pay significantly less that that, effectively — well under half that rate — at worst, we’re doubling revenues just from that 1%. And, if we add new tax brackets for the super-rich, that revenue total would go higher.

In short, a tax increase on the wealthy would garner many hundreds of billions in new revenue a year. At least. That’s not bean bag.

There is nothing “for the hell of it” involved. Nothing. Taxing the rich more is far better for the economy, for social cohesion, for the health and longevity of the rest of the population, for democracy and as an incentive to reinvest in production, rather than speculation. It would lower deficits and eventually debt, and allow greater social spending. It’s all positive — even, ironically, for the wealthy themselves. It redirects their personal greed and selfishness into more productive venues that would redound to them a thousand times over. It would increase demand for their own products. It would, in short, be great karma for them.

There is no downside.

“Me too. But there’s a difference in what we feel is fine for us personally, and skipping along to the conclusion that it’s a good idea to base social policy on such sentiments. Like I said, you take that seriously, and you wind up in some dark places.”

Yes truly the real danger that exists right now is that society might pick on the rich. We are lucky to have you among us as a prophet of some dark, terrible future.

JW Mason,

About those collective decisions, versus decisions made for us by a tiny fraction of the population, the financial elite:

Really good article on Salon today. A shocker that it’s published in a mainstream outlet. A very pleasant shocker, as I agree with pretty much everything the author says:

http://www.salon.com/2014/02/02/why_youre_wrong_about_communism_7_huge_misconceptions_about_it_and_capitalism/

MPAV,

I’m in my 50s, and I can’t remember a time when the filthy rich whined and moaned so much about their supposed persecution. It’s unprecedented in my lifetime.

In the past, they at least had the decency to hide such feelings, if they had them. And for most of my youth, CEOs didn’t even appear publicly. This seemed to change with Lee Iacocca of Chrysler. It’s been all downhill since. The billionaire as deluded Rock Star and Martyr all in one.

Bruce Wilder,

Thanks. You explained it much better than I did. My response post is still hung up in Moderation. Probably because I added a video by Nick Hanaeur (TED talk) about how one billionaire won’t buy as much in this economy as a thousand working class folks, etc.

Our economy is consumer-driven (70%). It doesn’t do well if people sit on their money. That’s taking it out of the economy in effect, even as it’s being “invested.”

Bruce @51 – I didn’t read further downthread, so might not answer all of your points, but I don’t know why you think I’d disagree with any of what you write. Nowhere do I suggest that pre-tax income inequality is a given. I don’t even mention pre-tax inequality. I think 90/50 inequality can be reduced through straightforward means like stronger unions and collective bargaining. 99/50 inequality requires more directly political change, but like Hacker/Pierson I don’t think it’s a coincidence that 99/50 rations are much higher in places where unions are weak.
But Chris’s post is about taxation, so I wrote about taxation.

I don’t think her writing them required her to deprive others of much of anything.

Her writing the books didn’t deprive anyone of anything. Her *getting an income* from the books certainly did. Specifically, it deprived people of the right to freely copy and distribute and make use of the stories in their own way. Her property is not in the books. It is in the legal right to exclude others from using the books in a certain way.

(Similarly, whatever she has spent her income on is the right to exclude people from certain goods. To own a house simply means to have the legal right to deprive others of the use of it.)

Now, you might think that, on balance, this is a good trade for society. I think all of us agree, for example, that it is a good thing that you have the right to deprive others of the use of your personal residence. But that doesn’t change the reality that that is what it is.

We can debate whether the current right-to-exclude Rowling has with respect to her books is the right one. Certainly we want some provision to be made for people who spend their time writing. Are copyrights better than fellowships, stipends, etc.? Maybe so, maybe not. Perhaps we think the chance of getting rich encourages people to write better books. On the other hand, some people who might have enjoyed the books, didn’t get to read them. Some people who might have sold their own books based on hers, didn’t get to make an income from that. Some plays or alternative movies based on the books didn’t get made. And so on.

We can decide whether we think, on balance, a stronger right-to-exclude would lead to better outcomes, or a weaker one, or just the one we’ve got, or none at all. But we cannot say that Rowlings *property rights over her books* (as opposed to the writing of them itself) does not deprive anyone of anything. By definition, it does. That’s what a property right is.

“we should increase taxes on the rich in order to distribute decision making power more equally” is not the same as the statement “we should increase taxes on the rich, even if it raises less revenue, because it will make some people feel better”

I think they are the same — except the last clause should read, “because it will make people better off.”

taxing the rich and flushing it down the toilet in the hope that that will somehow make the poor feel better.

What’s the referent of “it” here? Money claims are not the same as real goods and services. Suppose Bill Gates’ bank balance today is $90 billion, tomorrow we make it $90,000. In what way have we as a society become poorer?

“Her writing the books didn’t deprive anyone of anything. Her *getting an income* from the books certainly did. Specifically, it deprived people of the right to freely copy and distribute and make use of the stories in their own way. Her property is not in the books. It is in the legal right to exclude others from using the books in a certain way”

I can get a free copy of HP right now. And there’s troves of fan fic floating around. For the most part her income comes from a large number of people not minding tossing Rowling 10 dollars for a book. And the mere possibility of amassing billions by millions of people not minding tossing you a few dollars, or an hour or two of labor, or whatever, for creating something they like doesn’t go away by working up the usual talk about the right to exclude, which is really tangential to the main point.

Plume says any fortune requires shitting on people. But all it takes to get a fortune is a huge audience with the willingness and the ability to toss you a few bucks for what you do. This is true whether they do it in a ‘pay what you wish’ world or a regime of enforceable intellectual property rights.

@Plume

A business owner derives their compensation by taking the revenues generated by their workforce, by the sweat and blood of others, keeping most of that for themselves, and then redistributing back some of it to that workforce.

This isn’t pre-modern agriculture. The business owners make an offer to people to do stuff for him or her for an agreed-upon amount, they do stuff, they get paid when the owner’s not being a shitheel. What the owner chooses to pay themselves is the amount they’ve decided they need to be paid for the whole venture to be worthwhile, as opposed to going off and doing something else. And without the owner, there is no compensation for anyone, no “revenues generated by the workforce”, no business.

Also, that part about the agreed upon pay? Nonsense. Workers take what they can get, and they have no say in what they get. They aren’t in the driver’s seat. Especially with high unemployment. Capital is in the driver’s seat.

It’s a right-libertarian myth to claim workers accept crappy wages “voluntarily” so it must all be legitimate and beyond questioning.

No one’s buying that garbage.

Truth be told I don’t care if some people are making billions – I only care if the rest of society is growing as well

When it isn’t you can point to a billionaire and rightly say their money is misallocated.

By assertion? At least conceptually they’re obviously different. And if someone is made “better off” (i.e. they feel better) if someone else is made poorer (all else constant and all that) then that surely is just envy and spite.

As a card-carrying economist (your PhD is from Northwestern, iirc), you are obliged by the laws of the guild to judge well being only in terms of people’s preferences as expressed in their behavior. If people are willing to incur a cost to burn witches on the village green, then witch-burning is an economic good. You might not go in for it yourself, but if the goal is just to organize society in the way that best fits your personal view of what’s best, no reason to bother with markets and prices and such.

Irrelevant side issue. Obviously we’re using dollar income or wealth as a stand in for real resources

No, it is relevant. But I thank you — seriously! — for writing this. Those of us on the Post Keynesian side get into the habit of saying “capitalist economies are based on money contracts not barter” so much that it becomes a kind of catechism. We forget what it means and why it matters. This exchange is reminding me why it does.

“I’m talking about making a fortune from business, via a workforce”

And a business includes the gains in wealth from the mechanisms mentiond Those mechanisms for value creation don’t disappear. The exploitation of surplus value remains the exploitation of *surplus* value. Value in excess of the value of the raw inputs – at base, value in excess of the cost of the reproduction of the worker.

” You respond with hypothetical single human actors who make innovations, or artists, or someone outside the business world.”

I’m not sure why you think exchange, allocation, direction, invention, design, the application of technique, &etc only occur outside the business world.

“And even then, you speak of added value via labor, but it’s labor in capitalism that receives so little compensation for what it does, while capital takes the lion’s share.”

Some labor is highly compensated, most isn’t. And I’m not sure what your “but” is there for. Yes, labor adds value (specifically: socially necessary labor. “Work” alone, in the physics sense is ambivalent). That’s all it takes for us not to be talking about zero sum. It remains the case that we’re talking about a positive sum game. A positive sum game can also be a win/lose rather than a win-more/win-less game, but that’s a separate question.

“The workforce is being screwed over relative to the amount taken from them for the value they’ve produced, the hours they work, etc.”

Being screwed relative to what it was possible for you to have gained is not the same as being worse off than you were ex ante. But even then, as before, being worse off than you were ex ante doesn’t imply that you’re in a world with less wealth and value than before.

” It is impossible for an owner to both pay a fair salary and make a fortune. It’s mathematically impossible, as mentioned.”

You don’t demonstrate “mathematical impossibility” by mentioning things. The impossibility of the proposition has everything to do with your stipulated conceptual definitions and very little to do with math. If you define “owner” to mean someone who doesn’t do anything but take from employees, then naturally it will follow that their receipt of *any* compensation is unfair: you’ve baked it in, you’ve already defined ownership as unfair. This isn’t mathematical proof, it’s tautology.

“Who is rewarded and for how much is arbitrary in our society.”

Not really. It follows perfectly non-arbitrary patterns having to do with wealth, social capital, social networks, skill, institutional structure, features of particular industries, &etc. ‘Wrong’ and ‘unjust’ is not the same as ‘arbitrary.’ Who is rewarded and for how much is reasonably predictable in our society.

“And we haven’t even started to talk about the part played by…”

Which is good, because I’m perfectly aware of these things. As well as the Marx 101 ‘bosses are exploiting the workers’ stuff. I’d really rather keep things focused on the claims that economic activity is all zero sum and that the finitude of time/resources/labor/etc implies that such activity is zero sum, because those sorts of claims ought to be discarded and replaced with a more robust conception of the sources of value.

@113: you’d be interested in australia’s “dividend imputation” system, which collects some significant corporate taxes and then [effectively] rebates them in their entirety to the company owners recipients in the form of refundable tax credits [attached to dividends paid].

Which is pretty similar to how VAT-type sales taxes work, really [call it a value-removed tax!]. Do the plutocrats like it? No, not so much.

This Jan 2013 column from Krugman, responding to Stiglitz, is a fairly good illustration of Krugman the conservative economist, while this Dec 2013 column, responding to Ezra Klein, among others is a contrasting illustration of Krugman the liberal political analyst. Both columns are about income inequality and their relation to the Great Recession. Now there’s a year between them, so maybe there’s some evolution going on, but I think a close reading leaves the conservative economist’s major commitments intact. Speaking for myself, I cheer the Dec 2013 column, but I roll my eyes at the Jan 2013 column.

My point is that Krugman’s politics, which are more legible to the vast majority of his readers than his economics, do not always line up neatly with his economics. This isn’t just Krugman; I think it is a general problem in the econoblogs — we tend to identify folks like Brad DeLong and Mark Thoma and Noah Smith, who line up with Krugman, as liberals, because they appear relatively liberal, politically. Their establishment, mainstream economics, though, can be quite conservative, and much harder for many readers to “read”, and this will show up, indirectly, and in sometimes disappointing or frustrating ways.

The economic conservatism, one could say, is as much or more a conservatism of method and a conservatism of socialization, than a conservatism of desiderata. Krugman in Jan 2013 is not saying he wants an extreme income distribution — a political statement. Only that as a matter of textbook economics, he doesn’t see a logically necessary constraint on the content of a technocratic macro policy aimed at full-employment. That’s implicitly a declaration in favor of a certain analytic method, and also certain conventions of the mainstream profession associated with that analytic method. By not seeing a constraint, he legitimates a dialectic with still more conservative economists, who do desire an extreme income distribution (think Mankiw or Feldstein), and, effectively, rejects a dialectic with more left economists, who do see a constraint, or, say, criticize what they regard as an observed instance of policy forming a Marxist Reserve Army of the Unemployed. (A probably horrible example I know, but it is hard to think of an example that doesn’t need a lengthy explanation to be plausible.)

Krugman relies on analytic models almost exclusively, to bolster his intuition. It is a very common style in economics. Keynes was, similarly, an intuitionist. It’s a style, which is quite similar to the Chicago-style of working out the particulars of a deductive system, which was mastered by Samuelson; that similarity of style accounts, I think, for the aforementioned dialectic — the New Keynesians and the New Classicals in macro, for example, find each other’s work legible, even if they persist in talking past each other on every issue of substantial conflict.

The conservatism of his economics makes Krugman, imho, a poor critic of the very conservative, even reactionary Bernanke, just to point to an example of how this matters. He has a hard time seeing daylight between himself and Bernanke, and he’s so busy declaring the triumph of kludgy old IS/LM analysis in explaining the course of the Great Recession, that he seems scarcely aware of the pernicious effects of Bernanke’s policy choices.

He’s a bit too prone to accept certain shibboleths of the profession — he’ll go rather uncritically with a story of exchange rates balancing international trade, and talk of the on-going Euro crisis in those terms. He’s never been particularly good on institutional policy issues, such as how to regulate the financial sector — his method just doesn’t prepare his mind to think effectively about how to constrain strategic competition, or even why it’s important to the performance of the economy overall. He’s hardly alone in this — the macroeconomists, generally, are one big fail on banking and financial regulation.

“the idea that people have full liberal property rights in their pre-tax income is unwarranted.”

And my teeth? Do my teeth belong to the collective?

In all complex societies those charged with managing the society as a whole have an uneasy relationship with the upper levels of the elites (those with a disproportionate command of the forms of power that society rests on). So classical Greek tyrants and citizen bodies worried about the rich, kings worry about the high aristocracy, the pope keeps a stern eye on cardinals and so on. Where the elite capture the central institutions of the polity life never goes well for those lower down. Very often, it does not go so well for the polity itself. This is not economics, it is basic sociology and an obvious lesson of history (sorry Plume – it’s one Marx got wrong).

Lining up the super-wealthy and mulcting them of a humungous amount to avoid being kicked in the balls would actually be quite humane by comparison with many of the methods historically employed. The point of the exercise is to keep in front of the rich that their wealth and status are not theirs by right, but are an outcome of the joint endeavours of the society of which they are a part. The rich, of course, wish to deny this. If you let them do so, they will escape control.

Neville Morley mentioned classical Athens. They forced the rich to spend a significant fraction of their wealth on public goods (festivals, triremes). That has much to recommend it, for the point is not to find some optimal level of taxation but to continually reduce the wealth otherwise piled up in private hands while continually reminding those hands of their dependence on others.

And my teeth? Do my teeth belong to the collective?

You know that thing about teeth and money being interchangeable is just a story parents tell, right?

“Adam you didn’t say the US had one of the most progressive tax systems, you said it had the MOST progressive.”

Sadly all answers are correct here. It depends upon what the definitions are. The US Federal income tax system is one of the most progressive income tax systems in the world. The Federal tax system as a whole is also one of the most progressive.

The State and local tax systems are pretty regressive, including as they do sales taxes.

It’s the absence of a VAT of Federal sales tax that makes the Federal system so progressive in comparison to other tax systems.

This is pretty much Lane Kenworthy’s point. He goes on to point out that if you want to raise enough money to run something like a European welfare state then income tax just isn’t going to manage it. You need to have something like a VAT to be able to collect enough of GDP to pay for it all.

Re the Diamond and Saez rate of 73% as the peak of the Laffer Curve. That does come with some caveats. That’s if there are no allowances in the system. And it’s also specific to the US tax system, based as it is upon possession of a passport, not residency. There’s an implication in their paper that a residency based system (like has to be true in the EU, given the free movement of labour) has a lower peak, 54% from memory.

And the UK already has a top rate at about that: there’s no limit on employers’ NI and yes, that 13% or so has an incidence upon the employees’ wages, not the employers’ profits. Add that to the current 45p rate and we’re around that peak already.

“Third, income inequality makes life worse for the rest of us in real terms. Economists are supposed to believe that utility (whatever that is) matters intrinsically and money only matters instrumentally. But right-wing economists often seem to forget this as soon as they are asked to comment on tax policy and inequality, arguing as if their theorems apply to cash and not to utility.”

I’m not an economist and I’m certainly right wing by the standards around here. But that is moving over from income inequality to consumption inequality. And it is that second which is, to my mind, the important thing that should be considered. That utility: what can people actually consume rather than what’s their gross income?

And the TUC ran some interesting numbers a couple of years back about the top 10% and the bottom 10% in the UK. Income inequality, pre tax and pre benefits, was around 30:1. Consumption inequality (including free at the point of use NHS and education etc), after taxes and benefits and government spending etc was more like 6:1.

Obviously one can argue that more should be done or less: but it is true that a lot is already being done.

JWM & notsneaky: I think you’re arguing over a misread of Chris’s OP (the ‘envy and jealousy’ part). Here’s Chris’s point 3:

if those on high incomes have too much, they can outbid the rest of us for goods that are intrinsically in limited supply or where supply can’t be quickly increased. If I’m further away from being able to buy a house near to where I work, because house prices are raised in an auction I can’t compete in, then I’m worse off even if my income stays flat. Reducing the purchasing power of the wealthy is therefore good for me (unless I got hold of a house early and can earn windfall gains from the auction).

Seems pretty material to me. Chris goes on to say (under the same point) that

Unrestrained income for the wealthy also means that they can commit more of their resources to ensuring that their offspring make it to the top in the next generation, thereby harming the opportunities for the rest of society.

which you could (and I think notsneaky did) absorb into point 2, ‘rent seeking’. But the rest seems like a separate point.

“Ronaldo and Bale” oh snap! Good point about the normative decision as well – it seems to me that the proper focus would be put back on rejecting the preference and trying to find other ways of achieving good ends without any support for the position (normative or otherwise).

Back to the very original topic – I am sure this has been mentioned somewhere or other, but if the taxes (or transfers, in that case) bring no additional revenue, then where does the supposed pain inflicted on the wealthy come from? If this is just an attempt to divert the source of popular retaliation against the wealthy (which is going to remain until the inequality situation improves substantially, or at least until people feel again that we live in something like a meritocracy), it is clearly a useless one.

Yep, there’s a clear tension between holding the position that tax increases are futile and also holding the position that they will destroy the economy.

I would have thought the obvious counter would be “Okay, we’ll take the rate back down to 40%, but we’ll close all the loopholes as fast as we can.” Articles etc. I’ve seen make it clear that the rich, i.e. in the 40% tax band, are all too frequently paying much less than 40%, say 32% or less, so you could raise a few billion more by actually getting them to cough up.
Same of course goes for the corporation tax.

Incidentally, there’s a passage in Peter Hall’s diaries where he explicitly factors in higher-rate taxation (which was considerably higher at the time) and treats it as an incentive to earn more money – as in, another hundred K might sound good, but if you think you’ll have to subtract 60% instead of 40% you realise you’ll actually need another 150 at the very least. Admittedly he was talking about the money he was going to demand from patrons of his services rather than the profits he was hoping to realise, but I can’t see why entrepreneurs wouldn’t be similarly motivated. A higher tax band is only a disincentive when you’re coming up to it, surely.

JW Mason,

I am curious how you think Krugman would respond if you asked him in a coffee shop about the apparent discrepancy between his columns/blog posts and his textbook vis-a-vis the money supply.

You sound convinced that his answer wouldn’t satisfy you. ?

“There’s no tension. If you tax doctors more, and they respond by working less, you have hurt the economy (less medical services) but not raised any tax revenue. ”

I have always doubted this. People like money. They will keeping working to make more money even if the tax rate goes up a couple of percentage points. In fact they might even work harder to keep the amount they bring home the same.

Katherine 02.03.14 at 11:24 am @ 131:
‘… Redistribution would be less necessary if the distribution was bit fairer in the first damn place.’

But what is fair? Even casual observation of sites of social production will reveal that the actual, real contribution of the participants and immediate bystanders are inextricably mixed and the judgement thereof subject to point of view, opinion, and prejudice. Feudalism solved this problem through traditionally assigned roles and rights which were the result of old contests of power; liberalism-capitalism solves it by continuous negotiation, which are mostly characterized by the exertion of present power. In other words, fairness isn’t on the liberal table because it can’t be computed and the ruling and dominant classes don’t want it anyway (otherwise they could not rule and dominate). The only truly fair distribution is a communist distribution, and you will not get that from capitalism however reformed.

In other words, fairness isn’t on the liberal table because it can’t be computed and the ruling and dominant classes don’t want it anyway (otherwise they could not rule and dominate). The only truly fair distribution is a communist distribution, and you will not get that from capitalism however reformed.

I have no particular argument with this. I am not a capitalist and not a liberal (in the sense that I am further left).

Taxing people more, leading to them working less . . . .

That’s just Randian fiction. To put it generously.

Most people don’t have the luxury to go Galt. And most rich people show how much they love money by the mere attainment of their riches. They typically don’t quit even once they have a ton. They typically keep going for more and more and more. And a host of studies show how much the rich are invested in being richer than other rich people. How much that drives them. There is actually more “envy and jealousy” at the top than between the bottom and top.

And if someone can make, say, a million a year, and take home 850K of that, and tax rates suddenly increase so that he or she takes home “just” 700K of it, that’s still 700K. They’re not going to give that up, because 700K a year is a hell of a lot better than zero, and they have expenses! It becomes even more of a moot point once you’re making tens of millions or billions. No one’s going to miss the difference between 80% of a billion and 50% of a billion (effectively).

Or, if they work less because they’re taxed more and suddenly take home less, they take home less, thus increasing the problem that supposedly led them to working less in the first place. “I’ll show them!!!” It’s bogus. Not to mention, the vast majority of people also don’t get to cut hours and still satisfy customers, clients, patients, etc. etc. Eventually, a doctor (or lawyer, or money manager) will alienate enough patients with his or her golfing, they won’t have any left.

And can a CEO keep his or her job by cutting back on work? Uh, no.

Again, it’s Randian garbage.

How many copies did Rowlins latest book sell again before it was known she is the author? Ah right 1500 copies. Even now, she doesnt sel anywhere near as many as with Potter. Potters sucess relies on Potters sucess. People enjoy Potter so much more than other similar quality books because so many others enjoy Potter too, with whom they can talk about Potter, or watch a big budget movie, or visit a big budget theme park attraction. The best does not win in popular cultur. Randomness, marketing budgets and path dependency dominate.

Gates and Zuckerberg are such ovious cases of dumb luck, upper class relations and ruthlesness in winner takes it all markets thats its not even worth bothering to elaborate. The same is true for less obvious business cases. For example, discount stores too are natural monopolies. Sam Walton admits as much for Wal-Mart in his Autobiography – that if things had gone slightly different, some other now bankrupt discount chain could have been the big winner.

Zuckerberg and Gates would be nothing without the public sector inventions of the computer, the Internet, GPS and now, touch screen technology. All of this romanticism about the lone wolf entrepreneur is total crap. They ride to their billions on the shoulders of millions of others, and generations (of not centuries) of innovations that preceded them. And most of the innovation happened in the public sector, by public sector workers, funded by the public, which they then used for their own personal profit. And they use public infrastructure to move their products, and their workers went to public schools, etc. etc. etc.

Yes, it matters that some people make billions. Again, that means their workers can’t, because the revenues generated by that workforce, from which the Zuckerberg’s steal their outrageous portion (and fortune), are finite. Those revenues are finite. So if the top dog takes billions, that’s money that is no longer available at all to the people who actually generated the revenues.

Math. It’s just math. Well, morality as well.

Bruce Wilder 115,

Isn’t another reason for a much higher corporate rate, in effective terms, the greater incentive to put money back into production?

Corporate taxes are on profits, not sales. Profits are what you have left over after overhead is covered. Overhead includes labor. If we taxed corporations at 90%, say, and made it stick, they would have to put money back into the business to avoid that taxation. Ownership would likely say, “Well, I’d rather spend it on our business than hand it over to the government.”

The taxes could be set up to encourage actual hiring of new employees, purchasing of manufactured goods, and better rank and file wages. Not just the empty talk about domestic versus overseas hiring from our pols. But something with real teeth. A tax strong enough to shift idle money away from speculation and into production instead.

And by encourage, I don’t mean “tax credits.” I mean punitive taxes to be avoided through new hires and more investment in concrete goods. Do the right thing, and you avoid the hammer. Not, do the right thing in a thousand different instances, and we give you a cookie for each of those instances.

JWM

But really, I don’t know the answer to your question. Maybe I’ll get a chance to ask him someday…

:^)

I do hope so. I wish I could be a fly on the wall on that occasion.

Anarcissie,

True. And part of that fault goes back to that belief, that romanticism about the lone innovator, the great pioneer who does all the work him or herself, with no help from anyone, past or present. Sol they “deserve” the massive rewards. That’s part of the Great American Myth, and I don’t think it’s reproduced all that much in other countries — except via our exportation of said myth.

This myth seems to have afflicted many liberals and progressives, too, who keep saying they don’t have a problem with a winner-take-all system, where one person can make billions, despite complete dependence upon millions of others and the public sector.

It’s actually quite incredible that this has been basically taken for granted as the norm.

Katherine @ 131: Redistribution would be less necessary if the distribution was bit fairer in the first damn place.

Indeed, but, to repeat the point I made @ 51 about the inevitable reflexivity of any policy, and reinforcing the point UnlearningEcon and others have made upthread, setting an effective dampener on the ability of people to realize very high incomes may be a necessary part of a strategy of creating a society where redistribution is less necessary.

When Bertram argues that raising substantial revenue from the proposed tax rate is not necessary, I think he’s opening the door to these kinds of arguments: that maybe squeezing the rich, cuts off some of the more pernicious dynamics that lead to extreme inequality and its social costs.

“Try and engage, hmmm?”

Well that was needlessly condescending. Still it is always best to know what kind of person you are talking to, so thank you for that I guess.

It’s basically:

“If you don’t give me what I want, I’m just going to hold my breath until I go blue in the face!!”

“Uh, well. Suit yourself.”

Anarcissie-
I’m more elaborating what I think you’re saying than arguing with it.

…people volunteered to give them money and repute…

You wear them high heel shoes and that skin-tight dress honey what do you expect?
–
a fault in culture that’s hard to pin but more and more seems to have come about through the same blame the victim/customer pseudo-morality, where you buy it it’s on you.
You initiate the transaction, the merchant just patiently awaits your patronage.
You dress like that it’s on you.
You don’t have to work here you know, you wanted a job with us.
A place in our congregation, a house in our village etc etc.
It wasn’t “culture” at first, it was a thing like Windows or Fbook. Voluntary participation. Come in from the remnants of the wild, enjoy the fruits of the wheel®.
Or like buying blackmarket drugs. Your choice. You become addicted, still your choice.
Nobody decided to adopt petro-chemical energies. They just happened. We chose that path however blindly, just like people chose Windows and Fbook.
Capitalism relies on the Judeo-Christian morality of personal responsibility to evade the moral implications of locking up access to essential things then bottlenecking openings to that access, then blaming the customers for the direction of civilization when that artificial restriction impedes the show.
TV industry spokesapologists were great at that back in the day.
At the same time they were educating whole entire generations about the world and culture and morality and civilization, they were whining about only giving the public what it was asking for, when accused of dumbing-down the people’s heads.
So don’t blame us for where it all went.
We were just responding to a perceived market need.
You were the ones giving us all that money.

Not that this will be new to many here, but… Dickens, 160 years ago:

The wonder was, it was there at all. It had been ruined so often, that it was amazing how it had borne so many shocks. Surely there never was such fragile china-ware as that of which the millers of Coketown were made. Handle them never so lightly, and they fell to pieces with such ease that you might suspect them of having been flawed before. They were ruined, when they were required to send labouring children to school; they were ruined when inspectors were appointed to look into their works; they were ruined, when such inspectors considered it doubtful whether they were quite justified in chopping people up with their machinery; they were utterly undone, when it was hinted that perhaps they need not always make quite so much smoke. Besides Mr. Bounderby’s gold spoon which was generally received in Coketown, another prevalent fiction was very popular there. It took the form of a threat. Whenever a Coketowner felt he was ill-used – that is to say, whenever he was not left entirely alone, and it was proposed to hold him accountable for the consequences of any of his acts – he was sure to come out with the awful menace, that he would ‘sooner pitch his property into the Atlantic.’ This had terrified the Home Secretary within an inch of his life, on several occasions.

However, the Coketowners were so patriotic after all, that they never had pitched their property into the Atlantic yet, but, on the contrary, had been kind enough to take mighty good care of it. So there it was, in the haze yonder; and it increased and multiplied.

So yes, to hell with this idea that if you raise taxes on ultra rich people they’ll go Galt and then YOU’LL BE SORRY, MOM!

Bullshit. Always has been.

(notsneaky, i.e. me)
“You can study how preference for racism affects outcomes without personally condoning these very preferences.”

(Unlearningecon)
This itself is a normative decision. I’m not saying anyone is definitely claiming otherwise, but I think it needs to be said.

Of course it is! We’re having a normative discussion – what kind of Social Welfare Function should society have? I say, choose one without envy, even if the people in the society experience envy, and of course choose one which does not …. “enable” or “acquiesce” “condone” (I need a better word here) racism, even if some people in society are racist. I’m sure Chris and JW Mason would agree with the latter, but they’re – apparently, some effort is being made to avoid the essence of it – disagreeing with the former.

Phil @135

Yeah people have estimated Laffer curves in the past. Even if tax revenue doesn’t go to zero with a 100% tax rate, that doesn’t matter for the argument (it’s usually presented that way for heuristic purposes but it’s not necessary). The point is that the curve flips its slope at some level.

MPA @140

That’s already build into the Laffer curve. It’s why it flips its slope, the different strength of the income and substitution effects.

To add, and reply to JW Mason’s earlier comment – about slashing Bill Gates’ bank account and does that make society worse off . If you raise the tax rate and tax revenue falls or doesn’t increase, then pretty much by definition that means the tax base has shrunk. And tax base going shrinking, almost by definition, means society is poorer. And that’s the scenario that is being assumed. So you can’t side step the issue by pretending that we have a non-revenue increasing tax-increase, but the society isn’t poorer (in material terms) than before. Those are the assumptions Chris makes.

“To add, and reply to JW Mason’s earlier comment – about slashing Bill Gates’ bank account and does that make society worse off . If you raise the tax rate and tax revenue falls or doesn’t increase, then pretty much by definition that means the tax base has shrunk. And tax base going shrinking, almost by definition, means society is poorer. And that’s the scenario that is being assumed. So you can’t side step the issue by pretending that we have a non-revenue increasing tax-increase, but the society isn’t poorer (in material terms) than before. Those are the assumptions Chris makes.”

What if you don’t think that material well being is all that matters? Tell me how much is equality and social cohesion worth?

@173

You know there are times when posting here just makes me feel stupid in comparison.

“That’s fine. You can increase equality with regular ol’ progressive taxes, no need to implement destructive taxes. It’s only once you get past a concern over equality and into pure envy (“I want you to have less, even if I have no more, or even if I have less too”) that destructive taxes come into play.

And you’d have to be a bit more specific about what you mean by “social cohesion” and why it’s a good (not denying it is) but it seems to me that going around kicking people in the nuts to make others feel better isn’t really going to make society more cohesive. I’m pretty sure a history book may provide some examples.”

You know what? Ignore me and respond to Bruce. His comment has much more able phrasing than mine.

Bruce,

Maybe. In a second best world (which is of course where we live). I’m thinking in those cases there’s gonna be a different set of tax rates which achieve the same goal but without destroying anyone’s income more than it needs to be. It’s the difference between *relative tax rates* (how much you tax activity A relative to activity B) vs. the level of the tax rates. I’m not sure though and you may very well be right. Let me think about that a little.

(also, taking the number of psychopaths in society as given, if you decrease their number in finance, you got to increase their number somewhere else so it becomes a problem of the “optimal allocation of psychopaths” (did I mention I was an economist?). A better argument someone might make is that certain market structures and industry cultures produce psychopathic behavior in otherwise non-psychopathic people. Then I think your conclusion goes through easily)

Well except for the fact that rich people are the ones who actually own the corporations. Of course I would just be fine with taxing all capital gains and dividends as regular income.

Continue to the next bit about consumers having to pay higher prices, and workers ending up earning lower wages, and then re-read the bit about having little reason to think that this tax somehow magically targets the rich and powerful share holders.

Tax increases don’t necessarily increase prices. If businesses can’t sell their product with higher prices, they won’t raise those prices. And given that the rank and file is tapped out, they won’t be able to sell at higher prices.

It is also not likely that a business which receives an increase in taxes will cut wages. We know that tax cuts don’t lead to higher wages for workers, or more workers. Why should we expect wage cuts and job losses, necessarily, if taxes go up?

Basically, the logical extension of that argument is to zero out all taxes on business. Because it’s just passed along to consumers and hurt employees, supposedly. But then, businesses would be the free riders they complain so much about. The 47% that never pays any taxes. Blah blah blah.

Got a deal for ya: If I had the power, I’d happily get rid of all of your business taxes, in exchange for the following:

1. You can no longer claim personhood.
2. You can no longer donate, as a corporation, to any political cause or person
3. Personal income tax now is based upon all monies made, from all sources, without exceptions.
4. Top rate goes to 95%. Top bracket goes to 1 billion, with additional brackets of 1 mil; 10 mil; 50 mil; and 100 mil.
5. You receive zero in government subsidies from now on.

Yes Gorgonzola, and that’s why the Social Welfare Function shouldn’t reflect solely your preferences (why is it skin off your back if someone else wastes their labor and resources? Not your, theirs). Someone else can make the same arguments for organic broccoli and justify a super high tax on, hell, let’s make it all organic food

Thanks for the response, Salem. It was an obvious enough response and clearly I’ve been away from economics too long. It was an honest question and you have an honest answer. I don’t think Plume starts his comment off on the right foot talking about John Galt and going right for the strawman, either.

That being said I think that Plume’s response is not entirely incorrect. While it’s clear to people who work or have been around people who work that workers actually do keep in mind their final income – similar, if not identical considerations are seen when people working on the clock are told to be careful about overtime, and in people planning retirements at the end of a high-income period as the base for a pension, rather than retiring at the end of a period after a pay cut.

So long as you have stepped tax rates (or its equivalent in a progressive or regressive tax function), people are going to try to balance their work against their income. Surely the poorer side of this spectrum of decisions is uncontroversial – the adjunct professor or the high school graduate working multiple jobs because the pay is lousy, while their spouse works multiple jobs as well. It would be nice if there was a clear definition between “ducking out of work to avoid taxes” and “declining to take on more work because of time and personal health preferences.”

A random thought which is probably neither here nor there – when you have a tax system with increased rates in steps, it clearly could distort peoples’ views of their actual preferences for work tolerance versus pay, because even the appearance of discontinuous jumps makes it appear their ratio of work to pay decreases, and probably this is true even if it doesn’t. Of course, even if you can make that simple calculation, there are lots of other issues which militate against working longer.

@ Gorgonzola Petrovna: That is exactly true. In fact it’s well documented that luxury businesses are also disproportionately harmful, since the people who work for them (middle-class or poor people) are entirely at the mercy of the buyers, and if the economy turns down you have a lot of infrastructure and human capital sitting around being unused. But still there are some troublesome human factors that make this less than straightforward, like pride: If a person or a family just gets by with its own luxury marque (or just a service that caters more to the wealthy, like freelance builders), and we say that’s “not social necessary,” what then of their skill set and their own capital? We are unfortunately too late in the game to say “you should have chosen a different job,” or at least that’s the case when politicians begrudge job training programs. I am also skeptical of the idea that we could kill off industries as useless without putting historic (or even current) skills in danger.

Investing/saving today is consumption tomorrow.

A guy named Maynard wrote a whole book explaining why that isn’t true. Funny story.

We also can think of a any number of scenarios that disprove the second fork of 2. easily: Putting it under the mattress and forgetting about it, burying your silver in a Viking hoard, D.B. Cooper’s lost ransom money.

Even if we try to redefine what “saving” means, there’s still the time preference issue. A simple economic example: Let’s say that there is a small town with just one bakery. If the owner decides to “save” all his income indefinitely, even against the needs of the bakery and the other people in the area, it won’t be good.

Even more simply, there are two different ideas naturally expressed by the phrases “consumption tomorrow” (how many tomorrows from now? How many lost opportunities in the meantime?) versus “permanently taking resources out of the economy” (which is just a silly statement, since entropy is taking resources out of the economy all the time).

Europe had a natural experiment along these lines: across much of eastern Europe (Hungary, Poland, the Baltic) the upper levels of the elites captured the state in the C16 and C17. Enabled by foreign alliances and the rents from export trades in resources (grain and timber in the north, cattle in Hungary). Serfdom was reimposed, the rights of the lower and middle classes curtailed, urban life stifled, taxes on the upper classes pretty much abolished and so on. Class warfare in the form of peasant uprisings and savage repression were endemic.

This is going off topic, but the last sentence isn’t entirely correct. Cossacks aside (and that was later), what’s peculiar about that time period, at least in Poland and Baltics, is the (relative) LACK of rebellions by peasants and class warfare as this process took place. Hungary did have a rebellion or two, but considering all of Europe, less than average. You’re thinking of the Holy Roman Empire, Bohemia and the German Peasants’ War, but that’s different.

I don’t consume yachts either. Nor does anyone I know. Nor do I appreciate the idea of a personal yacht, or a mega-mansion. Thus, building a yacht is not, from my prospective, a socially necessary activity; it’s a waste of labor and resources. And thus it definitely is skin off my back.

Ah, but I do consume yachts. So I can tell you some of the interesting economics: there’s some non-obvious stuff here.

Boats are actually cheap. Fibreglass box, some metal bits, maybe a small engine. Sails can be pretty pricy ’cause there’s some fancy chemistry involved, but there’s really not an awful lot of resource consumption involved in boatbuilding. And fibreglass lasts a pretty long time, so there’s a lot of good second-hand deals out there.

http://www.internationalonedesign.org/boats-get-one/shaw-pricing
http://www.sharpies.com.au/Boats4sale.html

… mind, these are both pretty cheap classes. Anyway. Boats are cheap. The cost is storage: boats range between “size of a large sofa” and “size of a medium-sized house”, and they — well, the larger ones — have to be stored on or near the water, and “on or near the water” is a high-demand resource. Boat storage is a positional good: levelling out the income distribution will cause pretty significant falls in the cost of boat ownership

[as the people at the top cease being able to afford their seven favourite expensive hobbies and have to cut back to three, people in the middle get access to their second-favourite expensive hobby and some of the people in the bottom get access to their favourite, leading to a significant improvement in net social utility.]

notsneaky – in terms of major rebellions (the sort that get time in history books), yes. My feel is that in terms of lower-level unrest, with occasional major outbreaks, no. The big ones were like Pugachev, Rakoczi or Gyorgy Dosza. One historian characterised Tsarist Russia as a state at war with its population – a constant background hum of threat, with attacks on gentry houses very common. Ireland had the same pattern – rick-burnings, local assaults on bailiffs and so on, punctuated by major rebellions every generation or so.

roy belmont 02.03.14 at 9:01 pm @ 164:
‘… We were just responding to a perceived market need.
You were the ones giving us all that money. …’

If people don’t even have the potential of intelligence, agency, and autonomy, then even capitalism is too free for them. They need to go back to feudalism or fascism. But if they do have the potential, then something is missing because, for the most part, they don’t exercise them. Hence we get repulsive, destructive characters like Gates and Zuckerberg given enormous powers, wealth, and repute. I figure it’s either culture or genes. If it’s genes, the situation is hopeless; so I’m looking for my keys under the streetlight.

Steve Keen, my impression is he’s a bit of a loon.

Keen’s a gadfly. Ed Prescott is a loon. To know your players, you need a program.

A job in The City *and* a Union Jack face tattoo ? Some people have all the luck (shouldnt it be ‘a very English’ bloke/lad/mate/chap rather than dude ? )

194 “why is it skin off your back if someone else wastes their labor and resources? Not your, theirs”

Because we operate in the same economy. If this economy dictates that a number of workers must dig and fill holes all days, then it’s a bad economic system. Inefficient. All other things equal, these workers could take over a part of the socially necessary work that others do, and, for example, reduce everyone’s work-week to 4 days.

roy belmont 02.04.14 at 6:49 am @ 201 — The invention of slavery and the state.

Btw, while tax reform is most needed, it’s really small ball in the scheme of things. We now know that just 85 people hold as much wealth as the bottom 3.5 billion. In America, the richest 400 hold as much as the bottom 60%.

Worldwide, the richest 20% consume 85% of our resources. Which obviously tells us capitalism has been an abysmal failure of epic proportions, especially when it comes to the allocation of resources — which it was supposed to be so “efficient” at.

Think about it. Basically, we have 85% of our production geared for 20% of the population, leaving 15% of that production geared for 80% of the population.

This is obscene. It would likely make even the 18th century denizens of Versailles blush. Why do so few in 2014 seem to even bat an eye at this?

@notsneaky et al.
I’m surprised nobody here as even mentioned Robert Frank’s extensive work on positional goods. His book (it’s pretty much always the same one published under various revisions and titles) goes into a lot of detail in showing how inequality eats away at overall welfare quite aside from any subjective sense of “envy and jealousy”. Distribution of private goods matters, the nature of public goods and the distribution of power matters. Full rational actors, free of envy, are in many cases constrained to participate in negative-sum arms races for positional goods. Damping down those arms race by taking goods away at the top is a positive-sum move. And, BTW, distasteful as “envy and jealousy” might be, it’s not a good idea to ignore them if one wants an economic discussion of human beings, as opposed to some hypothetical other species.

Plume @209

Your newsletter, subscribe etc.

Bruce Wilder, Plume, JWM, et al: Thnx, guys, you won.

[Pie] In the sky: you lose.

MPA Victoria @174: yeah, me too.

Bruce Wilder @171: I am not, myself, all that far from the moderate center in my politics.

Surprised to hear this, Bruce, and I suspect at least some others here are too. Would you mind describing your politics, however succinctly?

The peculiarity I was referring to is that there was surprisingly little resistance to the establishment to serfdom. There was more resistance to its existence, a few centuries later.

What’s surprising about that? At the time serfdom came into being, we can presume that it offered a reasonable deal for both sides under the circumstances then present. Which presumably wasn’t the case later, or the people who wanted to stop being serfs wouldn’t have wanted to stop being serfs.

@220:

The cossacks IFAIK were basically runaway peasants or serfs. They went south to the steppe country, where they met up with the Tatar “hordes”. So they formed their own groups, since nomadic horsemen ruled the roost in that region over any settled agrarian mode. The “hosts” and the “hordes” were basically the same thing, except for skin color, language and religion. What made the cossacks difficult to deal with is that they were autonomously self-governing and rather anarchic, so eventually, they “had” to be brought into line or else liquidated.

“At the time serfdom came into being, we can presume that it offered a reasonable deal for both sides under the circumstances then present.”

Really? Wouldn’t it be more likely that the serfs choose the “deal” as an alternative to a violent death.

Bruce @ 215

Bernanke the Reactionary

Bernanke was a critical player in making that choice, a choice to make the rich richer at the expense of the working and middle classes. He did it, I think it is clear to those paying attention, out of personal, political conviction.

I don’t think this is right at all. I think Bernanke felt his first duty was to stabilize the economy, whereas perhaps you felt his first duty was to promote a fairer distribution of wealth.

I fully agree that on balance the response to the financial crisis only exacerbated inequality. I fully agree that political power in the US today is disastrously misappropriated. I do not agree that the ‘Left’ is in possession of some special wisdom as to what should be done about this beyond the very humble first steps of, a) increasing taxes on the upper end of the spectrum, b) improving regulation of the financial sector, c) increasing transparency on the flow of political money and d) [my pet favorite] increasing funding for public media.

And I don’t think you succeeded above in making a persuasive case re Bernanke. You rather punted on my request for evidence…

Oh, Anarcissie, that’s such a CT question!

mattski @ 226

I agree that the ‘Left’, as you put it, is not in possession of any special wisdom about what should be done about inequality. It needs to get some. It needs to open its eyes. Bernanke should not be getting a pass, because Krugman, who should know better but doesn’t, said Bernanke was an okay guy, fully paid up member of the guild, etc. You can’t win a class war, if the only classes hiring armed and fighting professionals are the mega-rich and the corporate executive class.

My position is not, as you claim, that I think Bernanke had a duty “to promote a fairer distribution of wealth.” I think he had a duty to do as he did, because that’s what the people who hired him, wanted him to do. I think those of us, who aren’t rich and powerful, who form the 99%, ought to recognize that Bernanke doesn’t work for us, isn’t working for us. (Ditto for Tim Geithner and Larry Summers and, yes, Barack Obama.)

What’s pernicious here is the illusion that Bernanke was acting in a broad public interest, guided solely by technocratic considerations, putting partisan and ideological considerations aside. That’s a view, I think, which has been legitimated by nominal spokespersons of the ‘Left’ (or centre-left, anyway) on economic policy, like Krugman. It’s b.s. And, it disables and dis-empowers the 99%, when they cannot see an alternative, whether it’s an alternative from the socialist Left or the populist Left or the liberal Left, or even a centre-right, which isn’t owned and operated as a wholly-owned subsidiary of the 1/1oth of 1%.

You previously have made the point that the ‘Left’ can be out of touch with the reality of the political attitudes of those cousins from Oklahoma — people I would characterize as having authoritarian political attitudes, the traditional targets for populist political appeals. Those people were instinctively opposed to the Wall Street Bailout, and I think their instincts were pretty good in some respects. When the ‘Left’ aren’t clear about the distributional issues, and, instead lecture the rubes on the virtues of elite technocratic competence, that’s when the ‘Left’ loses touch with reality.

In an earlier comment I wrote that the core of a financial crisis is a lot of bad debt, and governance requires a revision of values and equity claims, with, inevitably, some division among creditors*, debtors*, the state and wastage. The argument for intervention by central power and assumption of some equity claims or debt by the state is that it is possible to reduce wastage; that’s the argument for technical expertise and technocratic governance. The rest, though, is a continuum of choice: there’s no technical, a priori reason to favor creditors over debtors; the economy isn’t more “stable” because creditors have all their rights vindicated and debtors are thoroughly screwed. And, being a continuum of choice, it is as much a legitimate arena of political contest as the progressivity of the income tax.

I don’t think an objective observer, looking back at 2007-8 and since, could confirm Bernanke in good technocratic stewardship for the broad public, even if we could, counterfactually imagine him as a “public” servant. There was a lot of wastage — reduction in labor force participation, reductions in home ownership, falling wages, a lot of housing stock unnecessarily neglected or damaged, increases in parasitic debt, regularizing predatory banking practice, etc. The recovery has been the weakest in post-WWII history.

*I’m using the simple language of creditors and debtors, because it is convenient to my theme of political choice about who gets what, but I’m conscious that the problems of finance are problems of mediating institutions, which are both creditors and debtors and, frequently, neither. In the actual financial crisis of 2007-8, derivatives figured prominently and among the most egregious of the failures of governance involved derivatives. Bernanke’s role in seeing that AIG’s derivatives books was paid out in full is highly questionable, for example, on both distributional and technocratic grounds.

It’s the dry rot and mold infecting the unreformed mediating institutions of finance, following the flood of liquidity and Quantitative Easing and prolonged low policy rates, which should worry everyone, but especially the ‘Left’.

Bruce Wilder :

“Those people were instinctively opposed to the Wall Street Bailout, and I think their instincts were pretty good in some respects. ”

Really? Opposed to bailing out everybody else, and willing to lie about – well, everything.
But what has the Tea Party wave done to deal with Wall St?

The tea party never cared about the bailouts for Wall Street. They arose in opposition to even the hint that Obama might help underwater homeowners. That sparked the “populist” cough couch rebellion by Santelli on CNBC, which was so obviously stage-managed, followed by the bizarre outburst against the ACA, which was a very conservative program, straight out of the Heritage Foundation. The tea party eventually had to put up token resistance to the Wall Street bailouts, to avoid complete mockery for their shilling. They now talk of “crony capitalism” when that’s just redundant.

Bruce strikes me as correct when he talks about Bernanke doing as he’s told to do by his employers, the billionaire class. Which is all the more reason why we need to tear down and reopen the Fed under new management. Us. We the people.

No more quasi-private/public nonsense.

Personally, I am not interested in a fairer distribution of wealth. What I’m after is an extension of the social spaces in which wealth doesn’t matter. With the eventual goal (far in the distance, clearly visible though we ourselves are unlikely to reach it) a world where wealth doesn’t exist.

236: Communisation. see Endnotes at 219 if you have lost faith in social democracy or violent revolution and prefer to avoid waiting for the apocalypse. Or keep your own faith.

Although I prefer “accumulation” to “wealth” because it works as a more general metaphor and is not so much the morality tale.

@236:

Wealth is a stock; income is a flow. I think you might mean to say: a generalized condition in which income doesn’t depend on the ownership of wealth and in which wealth is a common pool resource. But then, under such a putative condition, all our definitions would change, eh?

Bruce @ 230

We agree on quite a bit. But as far as the Left,

[needing] to get some [wisdom]. It needs to open its eyes

Is that really the pressing issue? What could the Left do if it indeed had the right insights? Would love to hear you on this.

It seems to me that as long as Red-state America is going to send right-wing loons to Congress there isn’t a whole hell of a lot ANYONE can do to make positive change. Well, what can we do about this? The best answer I can come up with is to engage in dialogue with heartland conservatives. My secret ambition [don’t mock me please!] is to organize discussion groups that do just that, and create media out of it. There are few more effective techniques than genuine respectful dialogue.

My feeling about Bernanke is that he absolutely believes he acted in the public interest. Similar to my feeling about Obama. He finds himself ‘at the controls’ only in the most nominal of senses. The inertia/momentum of our plutocratic state is too much for a divided government to deal with. Maybe if Democrats controlled the legislative, the executive AND the judiciary we would be seeing some better developments. But, long term, the pressure has to come from below. I think you might agree.

Star Trek Capitalism: Taking the same ax you brought to the wilderness of the New World to the wilderness of stars.

geo @ 218 asked about my politics, and, I guess, why I would characterize my self as near the center in politics. I would say, if I appear to be leaning pretty far left, it is because, though I choose to stand near center ground, I lean against the prevailing wind, and right now, those winds are blowing at hurricane force. I have to lean pretty far left, just to stand my ground.

I don’t regard Ben Bernanke as evil. I think the point of view and interests he represents are legitimate. john c. halasz @ 235 did a brilliant job of summing up the case for Ben Bernanke acting in the public interest as Ben Bernanke sincerely conceived it. Contra MPAVictoria @ 233, my cynicism is not letting Bernanke “off the hook”; I’m not cynical. The problem as I see it, is that Ben Bernanke and the neoliberal politics and economics he represents are not opposed adequately. Bush appointed him; Obama re-appointed him; Krugman and other economists endorsed him in non-partisan, non-ideological terms. No one put Bernanke on the hook. And, he has had a major role, major discretion in determining the distribution of wealth and income — nothing could be more political, more deserving of political contest.

He was not adequately opposed intellectually, and consequently, couldn’t be adequately opposed in the execution of power. As john c. halasz so eloquently put it: “the arsonists were put in charge of fighting the fire, precisely because [the monetarist economics that Bernanke helped to fashion] was the only operative structure in place or practically conceivable to most.“. [emphasis added]

mattski: Is that really the pressing issue?

I kind of think it is. I think we need some kind of mass politics to represent a mass interest, but I don’t think it will get organized solely or primarily by spontaneous uprising from below. It’s been retarded by the low ebb of social affiliation generally, and I don’t know the causes of that social atomization, and it has also been inhibited by what Chris Hedges identified as the death of the liberal class, the passing away of institutions, which nurtured thinkers and leaders, who could press the case for change and for paying attention to the broad, general interest.

If the discontents of the local notables class, represented by the Tea Party and Ted Cruz or Rand Paul, seem to spring from an untutored id, it is because there’s no front lobe of liberal ideology to shape and filter those impulses. Instead, there’s the networks of Dick Armey and the Koch Bros. It’s not that long ago that Bob Dole would have been one of their representatives — his id wasn’t pretty, either, but his table manners were better. In the Great Depression era, Carter Glass, a Senator from the Harry Byrd organization, came out of that class, and wrote radical banking reforms into law. That they’ve been co-opted by the plutocracy is obedience to some natural law of politics. They are not the natural allies of the working man, but they aren’t the natural allies of the plutocrats, either.

And, the discontents of much of the middle and working classes are scarcely represented at all. I think a lot of ordinary people are deeply disturbed by economic and political trends, without understanding much in abstract policy terms, without being able to find trustworthy and authoritative voices to listen to or follow. I think mattski is right about there needing to be a lot of low-level social organization and discussion — not indoctrination, but people learning and developing informed points of view — before masses of people are likely to demonstrate much good taste or commitment. Move On! hasn’t cut it, and Elizabeth Warren is lonely.

The Right organizes Fox News to fight the increasingly imaginary “liberal media” and the Left organizes Media Matters for America to fight the right-wing media. What kind of ratings or audience share does Media Matters get? It’s absurdly lop-sided.

Barry @ 232: There are always going to be a lot of people, who don’t pay a lot of attention to politics, and don’t understand much on those rare occasions when they do pay attention. Their participation in politics, even whether they participate in democracy, depends on organization and leadership. If the Left is not going to contest organization and leadership of large swathes of the population, because . . . racist cooties, or god and guns, or just anger and resentment, then, yeah, the Right-wing sociopathic demagogues, who do get busy are going to lie and cheat and channel resentments into craziness or worse.

Plume @ 234 — The activist Left really should try to take over some of the regional Federal Reserve banks. The governance structure is open to popular takeover — a legacy of the populists. If the economics department at the University of Minnesota can take over a Federal Reserve bank, surely a political organization with a broader constituency could, as well. Even if the lefties were not wholly successful, they’d surely get some resources as a consolation prize.

Just a counterfactual footnote.

I don’t think the case of Krugman et alia v. Bernanke was all that heavy a lift in 2008/9. They could have opposed him on partisan grounds, and should have. A simple argument could be made that Bernanke had exercised extraordinary power in the crisis, which might have been appropriate, but it would be dangerous in a democracy to confirm anyone in the exercise of such authority. Rotation in office would ease exposure of those decisions to necessary scrutiny, . . . blah, blah, blah. They could be high-minded and technocratic, and still help ease him out, in other words.

And, I think, even within the admittedly narrow bounds of mainstream economics, it wouldn’t be that hard to identify Bernanke with conservative politics, and demand someone with a bit more sympathy for the wage-earning classes and less for the banksters.

Personally, I am not interested in a fairer distribution of wealth. What I’m after is an extension of the social spaces in which wealth doesn’t matter. With the eventual goal (far in the distance, clearly visible though we ourselves are unlikely to reach it) a world where wealth doesn’t exist.

The only social space where “wealth doesn’t matter” is where a bunch of nudists eke out a short, brutish life living on raw fish, shell fish, snails, lizards and wild berries and edible roots.

The issue with modern wealth is not wealth, but the fact that some accumulate astronomical mountains of wealth by expropriating the wealth produced by others.

That is all.

Printing or otherwise generating money will not cause inflation where it does not flow, for example under present circumstances the working class and the poor are not getting more money than usual — in fact, their world may be somewhat deflationary. Consequently the price of labor and the goods produced by labor does not inflate. As the money is created, it is made available to the rich and goes into the things the rich concern themselves with — real estate, equities, collectibles, precious metals, flacks, lawyers, and politicians.

The place where wealth doesn’t matter. Yes. That is the dream. Most don’t even stop to think about it, because we live in this capitalist soup, but there once was a time when people could go through most of their lives without any interaction with markets beyond their own community. Economic matters didn’t follow them 24/7. Other life-spheres dominated — spiritual, familial, artistic, sports, what have you. Today, nothing escapes the domination and dominion of capital, economics, markets. It has an obscenely disproportionate impact on our society, which is why we can no longer simply accept that people who choose a life in business should be able to call the shots and do as they please.

Once, long ago, we could be cavalier about that. It really didn’t matter if Joe or Jane wanted to make their own products and sell them locally. It was no skin off our teeth. We grew our own food, made our own clothes, built our own homes, and Joe and Jane just added to the mix. We even bought things from them from time to time. But today? After more than two centuries of primitive accumulation and the division of labor, we no longer provide for ourselves, and everything is a commodity and everything is a transaction and capitalism follows us everywhere.

Some of us see this as madness. Others see it as nothing more than “Nature.” And for those who see it as nature, they don’t see it as a problem that only a tiny fraction of the population even wants to own a business, hire workers, control the markets, set prices, set wages and determine our destinies for all intents and purposes. They don’t see it as a problem that this tiny fraction has such a disproportionate impact on all our lives . . . . when centuries ago they didn’t.

So, aside from the need for redistribution — which is totally necessary and totally just, given the imbalance the above creates — we do need to return to a time when the economy was not the be all and end all of existence. We need to return to a time and place where we have the freedom and liberty to escape from all of that. The right-libertarian idea of freedom and liberty seems to be, instead, to end even the tiny portion of life not already subject to capital, to economics, to commodification. They want wall to wall business.

I want as little of it as is humanly possible.

That dream died when someone went and invented penicillin and home electronics. Then suddenly industrial wealth meant an alleviation of real human suffering and tedium.

Bruce @ 246

My takeaway from what you wrote is you’re not really sure what the Left should be doing. (Well, who is?!)

I have a gut feeling that we are mostly perplexed by the same thing: how did America go from the successes of the New Deal, the widespread prosperity of the 50’s & 60’s, to the economic sclerosis that characterizes the Reagan and post-Reagan eras. It is certainly a vexing question.

I think my answer is, for the most part, an alarming percentage of wealthy people are also dangerously neurotic and the correlation is not accidental. AND, the combination of great wealth with unusually fearful, jealous dispositions is not good. So, (painting in broad strokes here) long term strategy for dealing with this state of affairs is not to fight fire with fire but rather to “demilitarize.” And that is done by talking patiently and respectfully with people who find themselves persuaded by conservative ideology. (I do have a conservative cousin in Oklahoma, and I need to do a better job of engaging with him!)

My takeaway from what you wrote is you’re not really sure what the Left should be doing. (Well, who is?!)

Well, liberal reformers gonna reform. Warren’s “Postal Bank” although 100 years old, is a decent idea.

Spontaneity, Mediation, Rupture …Endnotes #3

Revolution is not a plan.

(1) The unfolding crises of capitalism cause proletarian struggles both to proliferate and to transform in character. (2) These struggles tend to generalise across society, without it becoming possible to unify concurrent struggles under a single banner. (3) In order for fundamentally fragmented struggles to pass over into a revolution, communising measures will have to be taken*, as the only possible way of carrying those struggles forward. (4) It will thus become necessary to abolish class divisions — as well as the state, distinctions of gender and race, etc.— in the very process of revolution (and as the revolution). Finally, (5) a revolution will therefore establish, not a transitional economy or state, but rather, a world of individuals, defined in their singularity, who relate to one another in a multitude of ways. This last point will hold true, even if those individuals inherit a brutal world, ravaged by war and climate catastrophe — and not a paradise of automated factories and easy living.

*Yes, at a certain point this will become logistics. But right now, it can also mean looking for struggles as they erupt (Thailand, Turkey, abortion in Texas, grass in Alaska) and trying to relate and empathize.

Perhaps in 2008 Bernake saw his primary role, as a result of having studied the Great Depression, being to stabilise the global economy ? Which the Fed did do, afaik ?
IANEA so what are people saying his options were domestically that could have lessened inequality, undermined the plutocracy etc ? Is this the difference between a fiscal or monetary stimulus ? Or are we saying let the banks take bigger loses ? Is this within his remit ? Apologees for the ignorance ..

Re “progressive” tax system: This part of the debate seems to have faded out but I’d like to add something here. Here’s an article on the Arkansas state income tax (http://www.arktimes.com/ArkansasBlog/archives/2014/02/05/mike-ross-rolls-out-income-tax-plan-phased-in-cut-to-overcome-43-years-of-inflation). Here the top bracket starts at $34,000 a year. 60% of tax-payers are in the top two brackets (you have to scroll down a bit to get to the tables). This is fairly typical for US states. Any numbers about US tax structure that only include the federal level are going to be grossly misleading.

Mother Jones had an article (http://www.motherjones.com/kevin-drum/2012/02/soaking-poor-state-state) directly comparing taxes paid as percent of income by the poorest 20% versus the 1%. The poor pay twice the tax rate than the rich.

I think Hazel Henderson once wrote that Marx didn’t understand money.

It is tough with our debasement of academic standards and the bastardization of “think tanks” into lobbyists. I was surprised by a couple of the states’ rankings on the table, so i tried to look up the underlying data. The complete report is here:
http://www.itep.org/pdf/whopaysreport.pdf

But I can’t make heads or tails of it. Homeownership rates for households making less than $21,000 a year in California is very low. I don’t believe I can get to a 4% real estate tax rate on the bottom quintile. Or that the poorest quintile pay TWICE the absolute (and 5x the rate) as the top 5% do in business excise taxes.

‘Any numbers about US tax structure that only include the federal level are going to be grossly misleading. ‘

I disagree – even accepting their data at face value, California is still a fairly flat/progressive state. Looking at the overall country, it won’t change the averages by more than a percent or two…

One of the main problems with trusting economists to handle any of this is that they have jobs. Generally, fairly nice jobs. Sometimes even cushy. As do most nice, well-meaning liberals and progressives from the middle class. So, they naturally believe it’s quite the sensible thing to do to “go slow,” be “pragmatic” and “practical” because they have theirs. They’re pretty set. Not as set as the 1%, obviously. But they’re pretty set. So they don’t want to rock the boat, fearing it will capsize and knock them out, so they won’t have their nice house with its 3.5 baths, 2.5 fireplaces, its sun room and brand new kitchen with all the latest stainless steel gear.

Go slow. Be practical. Be pragmatic.

Meanwhile, millions of human beings actually starve to death. Three billion humans live on less than $2.50 a day. You can afford to buy your Ipads because most of the people who make them work for 70 cents an hour in conditions that lead many to suicide. And what was the response to those suicides? Not to pay more or make conditions better, but to actually put nets around the warehouses.

So, you sit there in your comfy chairs and you play with numbers and you make fun of people who talk of better ways to live and organize societies.

Of course, some of us share fault there. Some of us don’t talk about our own sense of needed gradualism, once we’ve made the leap into true socialism. The gradualism involved with making the next leap after that into a kind of state without a state, which we know would take generations. It would take generations to internalize the changes, to make them routine, to make it so there wouldn’t be a big fuss over every microbial decision, that it would all function as a day to day routine, as we do now, because humans adapt like that. They get used to change and internalize it over time. It becomes the norm. The past then seems to be alien.

So, some of us who talk about end goals are at fault for not making that more clear. But bashing that far off horizon is still a copout. It’s still just a way to avoid the idea of change altogether. Because when one can say that a very distant goal, that may or may not ever be reached, seems crazy, they can just say, “Let’s just forget about the whole thing.” Even the long, “progressive” journey toward that very distant horizon. “Let’s just stay where we are instead. It’s much safer and warmer here.” It makes it worse if they think someone is promoting an immediate leap into that distant horizon, when they aren’t.

In short, we need visionary leaders, not bean counters in their comfy chairs. We need visionaries who seek to include everyone, not just the lucky 1% and their functionaries right down into the middle class.

Special for Bruce.

From today’s On Point, from NPR.

“You can afford to buy your Ipads because most of the people who make them work for 70 cents an hour in conditions that lead many to suicide. And what was the response to those suicides?”

Do you know what life was like in rural china before the industrialization boom? It wasn’t good.

Crickets Chirpping,

That’s the capitalist myth. That life was so much worse before people were kicked off their lands and their means for self-provision were destroyed. It’s just a reflex today. The first thing that pops into the mind of capitalist cheerleaders.

In reality, they were better off in the country, until the economy left them stranded there, moved to the cities, crushed local and community economies. It was better.

And pretty soon, they’ll be just like us, unable to turn back, incapable of doing without umpteen other humans making stuff they once made themselves, in their own homes, or never knew they “needed,” because they didn’t.

That’s the trap which primitive accumulation and the endless of division of labor produced and produces, and so-called “communist” nations — which were never communist — fell into.

mainland China hit the Malthusian cap a long time ago, even despite the population loss to regular wars. for most of the past two thousand years, its population levels have only been sustained through aristocratic bureaucracies carefully maintaining a capital stock (the great irrigation and canal projects)

How do you square:

“be just like us, unable to turn back, incapable of doing without umpteen other humans making stuff they once made themselves, in their own homes, or never knew they “needed,” because they didn’t. ”

with complaining about $0.70 an hour being too little? So do you want them to be richer, or poorer (in financial terms). Are suicide rates higher or lower in China today? All in mortality rates are vastly lower than 50 let alone 100 years ago. But with the comments about Pol Pot, I’m afraid where this conversation will go …

I am regrettably unable to see into future decades, although I will point out that the only societies with a proven track record of sub-replacement fertility are the heavily industrialized ones. Worse yet, effective contraception is the exclusive output of chemical industries.

But all that isn’t really the relevant point. I would willingly gamble on starving in 2030 if it means not starving today.

David,

You’re setting up a false choice, though. Further industrialization isn’t necessary to avoid starvation, now, today. Better land management is. Breaking up huge corporate farms, turning them over to smaller, much smaller producers, families, etc. would increase yield and efficiency. Taking profit out of the deal would allow more of the value to remain with the food and the service, rather than finding its way into the bank accounts of the Monsantos, etc. etc.

Make organic the rule, not the exception. Create free space in cities for common gardens and greenhouses. Push hard for self-provisioning at home to the degree possible. Offer courses for all, and make them mandatory in public schools, to teach everyone how to grow their own food. Instead of building another mall, build common gardens and greenhouses, along with teaching facilities. Instead of building another factory to make a green colored deodorant, instead of a white colored deodorant, build those organic produce facilities, again, with teaching tacked on.

This is not difficult. It’s common sense. It means that we stop coddling and pampering the financial elite, stop letting them run things, and take that into our own hands. It means sanity (for all) instead of unbridled profit-making machines that serve a tiny fraction of society.

David,

Thanks for reminding me of the other cost. Factory farms produce massive amounts of waste and pollution. See, for instance, this expose on Smithfield Farms. But, warning. Read it after you’ve already eaten.

No, they are not more efficient, by definition. They don’t work in a vacuum. You have to factor in what they do to the land, to animals, to the water system, with their massive amounts of anti-biotics, growth hormones, pesticides and the like. They make us sick, which adds to our health care costs and our lost productivity. They are not more efficient.

And we Americans throw away roughly half of our food. The lack of quality goods and their effects has to be a part of that dynamic.

Small family farms would, as you say, concentrate more on quality than quantity. People wouldn’t throw away so much, because it wouldn’t be junk, and the levels of pollution and despicable treatment of animals would radically fall.

Costs are an holistic affair, as is “efficiency.” Private, for-profit economies of scale also have the power to externalize far more of their costs onto the rest of us. That needs to be factored in.

mattski 02.06.14 at 7:17 pm
‘… I have to say I wasn’t impressed with some of Hazel Henderson’s remarks. For instance, “The main error is that money is equated with wealth.” If so, what is the negative consequence? …’

Well, for one thing, as money becomes more fictive and abstract, it becomes more unstable. Hence the financial events of 2005-2009, which many found deleterious, although in the end the rich were made whole and then some. In general, it is often thought that a lack of contact with reality is not a good thing.

As far as I am aware, industrial farming is more, not less, efficient at food production than family or small operations

In a competitive market, all production processes that are actually carried out are equally efficient, assuming all inputs and outputs are fully accounted for. So if, where you live, you can find for sale industrially farmed vegetables, large-scale organic vegetables, and local family-farm vegetables, then you know that all these techniques are equally efficient. (Needless to say, any intrinsic value that people place on organic or local produce is an output, just as much as a greater number of vegetables would be.)

Now, you may want to think of efficiency like an engineer, rather than economist — as the physical quantity of some output relative to the physical quantity of some input. The problem there is, which input? If we are engineers rather than economists, we don’t have the option of using prices to combine them; we have to pick one. And we are very likely to find that the production technique that maximizes output (in physical terms) per unit of land input is quite different from the technique that maximizes output per unit of labor input. So there’s no sense in which one technique is inherently “more efficient”: it all depends which input you want to economize.

Now in the case of agriculture, my understanding is that modern industrial farming as practiced in the US is strongly labor-saving. Most physical outputs are extremely high per hour of labor, compared with agriculture in other times and places. But if you measure output per acre instead, traditional agriculture does better. This makes sense since, compared with other times and places, wages are very high in the US. But in a setting where natural resource constraints bound more tightly, or agricultural labor was cheaper (which does not have to imply poverty; many people — like me! — enjoy farmwork and under the right institutional arrangements would be willing to do it cheaply), a shift back to traditional methods might be more efficient.

Again, that is in physical terms. In economic terms, if people prefer to buy cauliflower from small farms, that makes small farms more efficient producers of cauliflower, every bit as much as if they could produce more cauliflowers from the same inputs.

Andrew-

Those are indeed interesting: thanks. They illustrate my point well. What you see is — setting aside aggregation issues — agricultural output has increased by 250% over the past 70 years. This has been achieved with an approximately constant land input. Labor input, on the other hand, has fallen by 75%, while manufactures inputs have increased —
by 20-30% for durable equipment and buildings, and by much more for intermittent goods, up to 2,500% in the case of pesticides. So how much more efficient has agriculture become, if at all? It depends on the relative prices of different inputs. If labor is expensive, as it is in the US, then the increase in efficiency is very large. In a setting where land cost more, the gains would be smaller but still substantial. And in a setting where manufactured goods were very expensive, the technogical changes in US agriculture might appear as a very modest gain in efficiency or even as a regress.

Efficiency is simply not a property of a technique of production in itself. It’s possible that with a sufficient rise in the price of fossil fuels, more labor-intensive agricultural techniques that today are inefficient would become the more efficient ones.

JW Mason @ 290: “So if, where you live, you can find for sale industrially farmed vegetables, large-scale organic vegetables, and local family-farm vegetables, then you know that all these techniques are equally efficient. ”

Wouldn’t that only be the case if they all cost the same? In practice, local family-farm vegetables and organic vegetables tend to be more expensive than industrially farmed vegetables. The same is true of eggs and meat.

The real “efficiencies” and innovations regarding industrialized farming have occurred in the way corporation raise, manage and manipulate our expectations, not so much in the actual production of safe, healthy food that finds its way quickly to our dinner tables.

In reality, it’s marketing that has seen the greatest levels of “progress,” that and the incredible efforts taken to mask the process of production and storage. We still really can’t eat what we want, when we want to, even though we’re basically told we can. Take, for instance, orange juice:

Orange juice as a health drink

Key excerpts:

Alissa Hamilton points out in Squeezed: What You Don’t Know About Orange Juice, that with the rapid growth of convenience foods a larger question emerged around the very notion of what normal food was: processed or untouched? People ate one alongside the other without thinking too much about it. In the 1950’s, chemists developed more than 400 new additives to aid in processing and preserving food (taste was an afterthought, at best). Canned meals, powdered foods, frozen seasonal and exotic produce were now readily available year-round. Women’s magazines extolled these “new” foods and their miraculous time-saving attributes. But the idea that something processed could also be “fresh,” was provoking questions. By 1960 the FDA was becoming concerned with the misrepresentative “fresh” labeling of commercial orange juice. Not only was it far from fresh, but sugar
and water were being added. Federal standards and regulation ensued.

. . . .

But as Hamilton details in her book, there is practically nothing fresh or pure about it. Most commercial orange juice is so heavily processed that it would be undrinkable if not for the addition of something called flavor packs. This is the latest technological innovation in the industry’s perpetual quest to mimic the simplicity of fresh juice. Oils and essences are extracted from the oranges and then sold to a flavor manufacturer who concocts a carefully composed flavor pack customized to the company’s flavor specifications. The juice, which has been patiently sitting in storage sometimes for more than a year, is then pumped with these packs to restore its aroma and taste, which by this point have been thoroughly annihilated. You’re welcome.

mattski #289 — “No, not that. I just didn’t see her–in the instances I cited–making a coherent point. There were other remarks she made that seemed quite valid.

I am not sure that I understand you. Hazel Henderson is NOT — and I should make this clear — NOT proposing to print money. That is my idea in response to people who want pure socialism: advocate that, first. It would probably work, and it would get you closer to where you want to go.

Lee A. Arnold,

What is the difference between your idea of printing money for baseline healthcare and my suggestion of those electronic digits for hours worked? That pool of electronic digits, held by all. For all. For everyone.

As mentioned, money is just a representation of value, agreed upon within a closed system. Those electronic digits would be the same thing, within an alternative closed system. The key is agreement and acceptance.

Any system that has 1000 trillion in outstanding derivative trades is one that bases its system on fiction. That’s our current system. Why not make that available to 100% of the population, instead of the lucky few at the very, very top of the pyramid?

It sounds like you’re part of the way there with your printing idea.

It’s not the LTOV, strictly speaking. It’s simply the fairest way to assess value, account for exchanges, track them, and it removes the arbitrary from the process. There is no need to believe in or dismiss the LTOV to utilize it.

When you say “we must value different skills and different innovations,” who is that “we”? Certainly not the majority of humans, who have no say in the matter under our current system. And it’s certainly not valued according to any commonsensical, independent criteria. The winners of society set the rules and the value. We don’t.

There is no reason whatsoever, for instance, to value a Day Trader or a Hedge Fund manager above a teacher, a nurse, an EMT worker, etc. etc. That’s just completely arbitrary. The valuation is made by the people with the money and power to make that valuation, not by all of us, and certainly not be any useful criteria. In short, if you’re in the club, you make sure people in the club are “valued.”

And, to prove its arbitrary nature even more, this changes over time. Bankers, for instance, prior to financial deregulation, made far lower wages, as did most CEOs of major corporations. Doctors once made basic middle class wages not so long ago. And in our pioneering days, they made very little, often being supported by an entire town, with their home and food provided (temporarily) by the community in the form of a trade, with a small stipend to boot.

Your description implies a kind of longterm, established, independent metric for value which simply has never existed. It shifts across time and place. Athletes, musicians, actors, entertainers, have all seen dramatic changes in their compensation over time, as another example.

As for your “knowledge problem.” Given the recurrence of one crisis after the next in capitalism; given the need for endless bailouts by the public; given the fact that 85% of production is geared toward 20% of the population, leaving just 15% for 80% of the people . . . it’s obvious that the “knowledge problem” has not been solved. Add to that the incredible waste and pollution the system generates. Again, as mentioned above, we throw away half our food.

The system I propose couldn’t possibly be worse and would have to be better, as it’s based on the local, the community, local and community needs, to order, as opposed to centralized corporations producing products for future sales, based upon wishes and prayers. Unsold and returned merchandise is a massive problem in the capitalist system. It wouldn’t be in a produce-to-order system.

Plume #302: “It’s simply the fairest way to assess value, account for exchanges, track them, and it removes the arbitrary from the process.”

I don’t see how any of that is true.

No. My vision is of a distant future. Not something we leap into from where we are today. It’s for a time long after the change to real socialism, when we’ve put enough distance between ourselves and the madness and injustice of our current system. When we’ve internalized the realization that we finally hold an equal share of power, each to each. I hope for a day when this becomes second nature, routine, everyday to us, and we can shed most aspects of a “state.” Before that time, we’ll need one, but it must be engaged in a program of redistribution and social justice to reverse the ravages of capitalism.

So it’s a process. Steps. A horizon. Not one quick leap.

I’m just disagreeing with your rather generous description of our current system, and your dismissal of alternatives. Seriously, “the knowledge problem” is not something that will be an issue in the system I propose, but it is a problem now. With capitalism.

In short, it’s called economic apartheid.

#307. Meant, CEOs and owners make up a tiny minority.

It’s late. Editing skills failing . . . fast. Must. Go. To. Sleep.

SoU #309: I suppose it depends on your definition of “socialism”, and it also depends on whether you considered Lehman to comprise the entire financial sector.

I meant, ‘@312’.

The Labor Theory of Value proposes that the exchange value of a commodity will be determined by its labor ‘content’. That does not necessarily involve currency at all. The currencies in which exchange values were (sometimes) measured could be based on anything the traders agreed on, including labor. One could still pay a huge sum, in labor-based money, for something that required no labor whatever. Remember, like the lady said, ‘Money is not wealth.’

Basing money on labor, or land, or gold, or anything else, can be a conscious decision, not something that just happens to happen.

By ‘capitalism’ I mean the private ownership and control of the means of production by an elite who exploit the labor of a working class and other resources. Credit unions and other cooperatives are private, but they are not supposed to involve the exploitation of a working class by an owning and managing elite. In much of this discussion, ‘capitalism’ assumes the capitalist state as well as the existence of capitalists and capitalist enterprises, a capitalist state being one in which capitalists not only exist but form the ruling class. Bernanke’s doings seem to me to be in complete conformity with the capitalist state and the interests of its ruling class, although I suppose some libertarian types would characterize central-government intervention in the economy as fascism. It certainly doesn’t look like socialism to me.

Anarcissie #316: “By ‘capitalism’ I mean the private ownership and control of the means of production by an elite who exploit the labor of a working class and other resources.”

And popular political discourse in the U.S. uses “socialism” to mean any government involvement in, or bailout of, any economic activity whatsoever. Not only from the right: Occupy Wall Street, for example, frequently called the Fed bail-outs, “socialism for the rich”.

So: Two pop definitions, both of them unfaithful to the originals.

My point in #299 was that the debate has lacked the obvious moral quid pro quo. If the government can print money to fund Wall Street’s bad gambles, it can surely get involved in healthcare.

Plume @317 — Okay, so forget all the visions of leaps. What is your next step?

To get people to open up their minds to the possibility of alternatives. Extending the realm of the possible is the main reason for offering future visions, visions of the future. Moving the Overton Window. Expanding the realm of the national conversation. To end the idea that we are stuck forever with what we have, or stuck just working on the margins, for “reforms” that always get rolled back anyway, even if they are passed — which is becoming all too rare these days.

IOW, those reforms, under present circumstances, are just about as unlikely as my future vision. But those ad hoc reforms give no one any lasting hope of actual, positive change, or anything to really become excited about for the future (especially young people), as a vision. Unless you’re a technocrat and just love nickel and dime-ing things to death.

The powerful vision of hope first. Then the steps. The acceptance that we’re not stuck forever with what we have first. Then the steps. The end of the brainwashing that tells us of the endless wonders of capitalism first. Then the steps. All of those, of course, being “steps” themselves.

They are steps, IOW.

Beyond that, organizing truly leftist groups from the ground up. A shift from running only national candidates, to running local and state first. Doing whatever we can to get on all ballots, into all debates, starting with the local. Take the message of alternatives to our system locally, state-wide and nationally, with an emphasis on the first.

IOW,

I think you confuse the existence of something with its legitimacy, or with it having a logical rationale behind it. If it exists, that must mean it’s the logical thing under our system.

No. All too many things are forced in this system, and would fail any independent test of logic from outside this system. Unfortunately, there is no outside at present.

Anarcissie #325,

Again, we agree. The American right has successfully distorted the meaning of socialism to basically signal totalitarian control by government. In reality, socialist theory prevents that control. It must be fully democratic, including the economy, and offers no chance for dictators. The people, not political parties or dictators, own the means of production. And most socialist theories depend on local, community control, and are quite antagonistic toward centralized power. Actually, toward any concentration of power at all.

The whole point of “social good” must necessarily move completely away from that kind of concentration.

And then Marx adds that this should lead to a future world of real communism, which is basically the internalization of socialist ideals to the point where a state structure is no longer needed. We take care of that on our own, as a natural, everyday routine. It’s just a part of our day to day, and we have tons of free time to pursue our own bliss, as Joseph Campbell might term it.

Contrary to the idea of forced conformity, socialism and then communism, especially, would lead to everyone getting a chance to pursue his or her dreams — no longer enchained by capitalism or capitalists. No longer just a number, a piece of marketing data, a consumer, a commodity.

I posted it before, but this was a really good article about misconceptions regarding communism and capitalism in Salon.

#327,

Left anarchists, especially, objected on those grounds, which very few Americans seem to know. As did the Narodniks, whom Michael Perelman discusses in his The Invention of Capitalism.

Lenin seemed overly enthusiastic about the supposed wonders of capitalist industrialization, and he (ironically) implemented primitive accumulation in Russia, in order to speed that process through.

There are too many “ifs” to recount when it comes to Russia. But at least two key “ifs” stand our for me:

1. What if the world embraced the nascent revolution, instead of trying to crush it?
2. What if Lenin and those who followed him in leadership implemented true socialism, with a fully democratized economy, focused on local and community control and needs, never falling for any competition with the west?

I think the first “if” makes the second “if” possible. Pretty much every government with a sense of being under siege tends to curtail freedoms, not enhance them. We’ve seen that in every major war even among so-called liberal democracies.

Plume #322: “To get people to open up their minds to the possibility of alternatives… The powerful vision of hope first. Then the steps.”

Oh for God’s sake let’s come up with some concrete steps first, that’s the hard part. All of us can supply the powerful vision-of-hope thingy. We have it on tap. It is inchoate and nascent, it is already who we are. It is on tap like beer.

In the U.S., pushing Obamacare in the right direction over the long haul, is a possibly smart way to go. All of its flaws will be discussed, will be thumped, by the mainstream newsthumpers, and that is one of the routes to “public education” about “universal coverage”.

I have been derided around Crooked Timber for years now, because I maintain that the world will be almost entirely socialist in about 100 years. And that it might even happen in the U.S. first.

How and why? I think we just follow the psychology of what is happening now. It was described by Schumpeter (big warning to fearful labelers: he was a -gasp!- conservative!) in Capitalism, Socialism, and Democracy (1942), especially the part that conservatives never read properly: everybody is about to get very sick and tired of all this crap. All of it. Innovation becomes increasingly automated and corporatized, it leaves more and more people out of the big pie, the entrepreneurial mentality devolves into a tarnished, tawdry gibberish, and so the whole premise becomes ridiculous.

For me, the most interesting economist of the last century after Keynes, or third after Coase.

Where can that premise be made ridiculous at the present time? We need merely to continuously refute the Ailes-Rove-Koch-Fox-octopus. (Although that is to denigrate cephalopods, my apology. Let’s say, refute the “social cognitive bias” of “hard-money fear of public institutions”, perhaps. Institutions reduce transactions costs: this is the Coasian key to introducing “cooperation” back into economics, where it should properly contextualize, envelop, and overshadow “competition”.)

We need merely to continue constructing the society-wide conversation that the internet is already affording us. Look at what has already been happening: the plutocrats are already NOT coming up with any new ideas. They have begun to fall apart intellectually. The disintegration is faster than one might have suspected. It is pathetic, people!

Lee #330

Oh for God’s sake let’s come up with some concrete steps first, that’s the hard part. All of us can supply the powerful vision-of-hope thingy. We have it on tap. It is inchoate and nascent, it is already who we are. It is on tap like beer.

So, you trash and dismiss the idea of expanding the national conversation and the realm of the possible by including alternatives to capitalism . . . and you then call for “concrete steps.”

But your idea of “concrete steps” is:

We need merely to continuously refute the Ailes-Rove-Koch-Fox-octopus.

and, you pretty much claim victory:

We need merely to continue constructing the society-wide conversation that the internet is already affording us. Look at what has already been happening: the plutocrats are already NOT coming up with any new ideas. They have begun to fall apart intellectually. The disintegration is faster than one might have suspected. It is pathetic, people!

IOW, your “concrete steps” means having a conversation. But one within the narrow boundaries you think best. A conversation. Though you seem to believe that conversation (as you want it to be) already has the plutocracy on the run, whereas anyone paying attention sees that’s quite clearly not the case. All the evidence points to their even greater dominance, power, wealth and wealth concentration, etc..

But you really have made things much clearer. A conversation which includes alternatives to capitalism is a complete waste of time. But a conversation as suggested by Lee A. Arnold solves everything. It’s actually already solved our problems.

Plume @ 296:

The orange juice thing is interesting, but having not read the book, I’d like to ask if the sort of orange juice I drink, which says it is “not from concentrate” and lists exactly three ingredients: orange juice, tricalcium citrate, and vitamin D3, is different from the processed swill described in the book, or is it mislabeled? I’d assume if artificial flavors, or corn syrup, or whatever was added, it would have to be on the ingredients list.

DaveL #333,

Good questions.

I’m no expert on the subject, but if I understand the process correctly, those flavor packs are put in without labeling. They manage to bypass the ingredients issue somehow.

I’ve switched to buying fruit and eating that, instead of drinking juice. But even buying the whole fruits runs into a host of other problems with storage, waxes, dyes, gases, etc. etc. . . . . not to mention pesticides and hormones.

The further away we get from our food sources, the more likely it is that we’re eating very unhealthy things. And the further away businesses get from their customers, the easier it is for them not to care.

Plume #332: “But when you list your own idea of “concrete steps,” you, too, suggest a national conversation.”

I have three difficulties, one substantive, one rhetorical, one temporal.

Substantively, I do not think that capitalism is necessarily greedy or anti-ecological. But it needs to be tempered by a socializing institutionalism (for want of a better phrase).

Rhetorically, I don’t understand the absolute insistence that we agree to, or believe in, a certain set of ideas. I think the preprogramming, “Capitalism is evil,” is substantively wrong. But I also think that any ideological preprogramming is a rhetorical mistake. Of course much broader agreement is necessary, but I think that this new agreement is going to be an emergent property, and even the intellectual framework of it will be emergent, and larger and different than we expect. This is just the way ecology is.

Temporally, I think that things are changing faster than I would have imagined:

Plume writes (#332) that I “basically claim victory already…. suggests that your strategy is triumphant over the plutocracy as we speak. Given the actual facts on the ground, given the ever growing and more radical increase in inequalities of power, wealth and privilege, that’s a rather absurd deduction . . . not only as a causal inference but in the sense of who is really besting whom.”

It is not my strategy. Describe what is happening, shorn of any ideology: Since 30-40 years ago a new shift in incomes and wealth has continued to worsen and become a renewed major grievance, this time across nations. We are going right up against ecological limits that also may destroy us. What do we hear, from the Great and the Good? In the U.S., a billionaire momentarily set aside his mighty labors, in order to say what? Ans.: To liken increased taxes to Kristallnacht! Consider that statement: tin-eared immorality, Pecksniffian fatuity, and last but NOT least, lack of intellectual framework. (Schumpeter, on the inevitable loss of personal stature among this class is psychologically deep, fascinating and damning.) Why are we hearing this whining silly crap? Because the 100 years of directed, controlled conversation by one-way mainstream media are rapidly ending. They no longer control the public conversation. They cannot promulgate some turgid theoretical nonsense about how important they are. This is an informational shift of historic proportions. Looks to me like the plutocracy is mentally disintegrating, under extreme emotional duress. They are spending tons and tons and tons and tons of dough to swing the elections, and I imagine now they are really starting to worry about the votes. The game is on! and it is changing faster than I would have imagined.

I don’t hate anybody except dictators. All billionaires are not dictators. I don’t think about villainising billionaires as such. I think they are boring , most of them are pretty stupid, and some of them do bad things, yes. But I do not need a systems-theory villain.

Or, if there exists a systems-theory villain, it would have to include cognition problems, and so the villain is something like, “information-inundation, from growing ecological-limit complexities”.

And greed is a Biblical villain. Find out how many deaths per day are now caused by red-state refusal to take the ACA Medicaid expansion, and publicize this number, to vote-out Republican state legislators.

Another next-step idea.

What I don’t understand is, that after I write that we need socializing institutions in addition to capitalism, and perhaps we ought to print the money alongside the private financial system and just pay for all healthcare directly, you write — instead — that I “want to keep [the conversation] it in its nice, little narrow capitalism-only frame, one that suits the plutocrats just fine.”

And I don’t even insist on them, they are just ideas.

Because in order to “expand” the conversation to “include alternatives”, apparently I must agree to your insistence that capitalism is evil, and that nothing less than a root-and-branch extirpation will do the trick. I cannot question it, I must agree to it. Otherwise I am not allowing a “major expansion of the conversation”.

Again, even in addition to the substantive and theoretical concerns, I don’t think this will work as a rhetorical strategy for expansion.

#341: “I have never even remotely suggested that you need to agree with my critique of capitalism, or accept the solutions I propose.”

Let’s see, there is: “looking for any possible way to dismiss it or any other alternative” (#317). “so much of your thinking, is arbitrary” (319). “those ad hoc reforms give no one any lasting hope of actual, positive change” (322). “you confuse the existence of something with its legitimacy” (324). “dismissing and mocking the idea of expanding the national conversation by including alternatives to capitalism” (333). “want to keep it in its nice, little narrow capitalism-only frame, one that suits the plutocrats just fine” (339).

I’d say you sound very certain about these mischaracterizations.

And I think that is also, by the way, probably a very good rhetorical stance.

A better way to put this:

It’s bizarre that you would assert that my assertions are laden with expectation of your capitulation, while yours are somehow innocent of said goal.

Speaking for myself, your capitulation is not an interest of mine. Not in the slightest. I care about the larger chance at broadening the scope of dialogue. It’s irrelevant whether you, Mr. Lee A. Arnold, agree with me or not. I honestly couldn’t possibly care less.

It is my opinion that you want to keep the conversation in its nice, little narrow capitalism-only frame, one that suits the plutocrats just fine — because you dismiss and mock even the idea of alternatives. But more importantly, in this case, even the idea of discussing those alternatives.

It’s not about me or you, or your disagreement with me. Again, I couldn’t care less if you agree with me or not. It’s about expanding the conversation to include alternatives, and to seriously critique capitalism itself, without the chains of “it’s the only system possible” in place.

I’m interested in seeing a radical expansion of that conversation, one that includes some two centuries of dissent, unchained by restrictions capitalists love to impose, or love seeing others impose for them. I want an emancipatory conversation that ends the choke-hold of the status quo ante, one that blows up all establishment boundaries and replaces them with everything and anything.

Frankly, I’m bored to tears by the narrowness of current economic debates and the truly silly idea that all we need are tweaks here and there. Nero and his fiddle. But a conversation that allows everything and anything includes that still, by definition. So I’m not trying to silence the out-of-touch, day-late-and-dollar-short discussions. I just want the anti-capitalist position added to the mix. It is the anti-capitalist position that has been silenced for a long, long time and that needs to end.

Lee A. Arnold #349,

I think your question pretty much seals the deal. You’re just skimming what I write, at best.

No. I welcome your critique. Bring it on. But you haven’t critiqued what I’ve said. You’ve dismissed and mocked even the idea of an anti-capitalist position, and dismissed even the discussion of that idea.

The voting isn’t constant. As mentioned. Just as we have routines in our current system, they exist in a communal system. In a capitalist business, for example, guidelines are set, management is delegated and delegates, and workers, for the most part, self-manage. They don’t have to be told what to do every minute.

In the system I’m talking about, communities meet, hash out their itinerary for the week or month or quarter or year, etc. People vote on that. Then everyone goes about their business. There is no reason for endless voting after that. Micromanagement is unnecessary.

And, again, “the knowledge problem” is dealt with far better in a communal system, because it’s far closer to the people. No longer do we have some centralized, corporate power, dictating from thousands of miles away. No longer are we producing goods for potential future sales. We’re producing them to order, after establishing need and routine.

On psychology. I have thought of my system happening in several different ways. As an immediate change from the current system, on some island, with people who agree upfront to the basic tenets and actually want to live in that kind of society . . . . and as what would follow the shift to socialism in a relatively healthy capitalist society with surplus production. If it’s the former, people are already fine with the shift and there isn’t a “psychological” issue. If it’s the latter, there is a ton of time to make that shift, just as it took time to shift into a capitalist mindset.

Again, there was a major problem of “psychology” there, too. The masses opposed the new dispensation, vigorously, and fought against it for a long, long time. That’s why it took capitalism more than three centuries to finally dominate things. Well, that and its inherent contradictions and baked in oppression, which were never solved.

There will be no washing machines? Right now, there are lots and lots of labor-saving consumer durables which are manufactured at distant points, geographically VERY FAR from the locality of any communal system. There are washing machines, automobiles, computers, cell phones, plumbing pipes, electrical wiring and generators, medical devices, refrigerators, etc etc etc. There are hundreds or things.

And every day, thousands or millions of new decisions, total, are being made at the point of manufacturing of those items, and at points beyond those points, in regard to allocation, supply chains, energy improvements, introducing brand-new innovations into both the product lines and the manufacturing processes, etc.

So, are all the communes in a country going to vote on every little detail of what happens in distant places?

And the problem gets worse: suppose someone thinks up a new idea, let’s say an “anti-gravity generator”, but it would take a half-billion-dollar start-up. How does everybody else in all the communes evaluate the proposal, to give the person the money, the resources? What do you or I know about sub-atomic physics, or marine biology, or cardiac surgery?

And the problem gets even worse: What if there are a thousand new proposals for very new odd things, in very different fields, next month? Just in the next month? (That is probably a conservative estimate.) How does everybody else in all the communes evaluate all the proposals, to give the correct people the proper amount of money, the resources?

Your answer, reprinted above, was: “Doesn’t matter if someone invents something new…We don’t want to encourage endless invention… We will be extremely picky and only allow things that are necessary and for the common good… It’s got to be something really important, really necessary and really innovative — as decided by the populace… There won’t be that huge number of inventions on the docket, because we won’t need them and we won’t encourage them.”

Well, you have lost almost of your entire audience right there.

And theoretically, you are not solving the “knowledge problem”, you are avoiding it with restrictions and ignorance.

Hopefully the “fleshing-out” will be beyond the simple assertion that these are non-existent problems, because there will be a different set of rules and another form of logic, and will demonstrate instead, exactly HOW they are non-existent.

I’m mobile, so must be brief for now. But, just imagine the absolute absence of capitalist relationships, markets, infrastructure, and pretty much all of your objections disappear. Your objections require their existence in order to overwhelm the communal system. Again, they don’t exit.

Oh I keep forgetting it pops up. There is an ad on there, sorry.

Will take a close look at your video later. Skimmed the first part of it. It sounds good so far.