Entitlements and expropriation

by John Quiggin on April 22, 2015

An interesting feature of politics in the US, Australia and probably elsewhere is the attack on “entitlements”, coming almost entirely from people who regard themselves as committed to defending property rights. The term refers to rights to receive payments such as Social Security that are entrenched in legislation and cannot be changed, at least without great difficulty.

As the term “entitlements” suggests, this legal security is precisely what distinguishes property rights from other kinds of claims on resources, such as those associated with the receipt of public or private charity, which may be granted or withheld at will.[^1] So, the objection to entitlements is that discretionary payments are being replaced by property rights.

What is going on here? Part of the story is that (as with Bismarck’s remark on sausages) those who approve of property rights mostly prefer to avert their eyes from the process by which they are created. Except when pressed, the operating assumption is that property rights arose from some sort of immaculate conception, as in the mythical story told by Locke.

But the real reason, today as with Locke, is that the attack on entitlements is precisely about expropriating some holders of rights (for example, beneficiaries of Social Security) for the benefit of others (for example, the corporate executives who fund organizations like Fix The Debt). The more property-like are the rights you want to expropriate, the harder the job becomes.

[^1]: Similarly the income derived from holding a job, which at least in the US, can be ended at the will of the employer.

{ 63 comments }

1

Paul 04.22.15 at 7:11 am

There’s an interesting jurisprudence in Australia around the applicability of the constitutional prohibition on uncompensated government takings to proprietary rights granted by the government.

The obvious rejoinder (obvious to me, but not, apparently to the High Court) that all property rights are ultimately granted by the government. Generally speaking the view has been that the law giveth and the law taketh away, unless the law gaveth sufficiently long ago.

2

Cassander 04.22.15 at 7:19 am

What attack is that, exactly? When Bush expanded Medicare and unrolled the ownership society? When Obama expanded food stamps, unemployment insurance, Medicare, and created the ACA? Is it a Ryan plan that explicitly does not change benefits for all current beneficiaries? Look, the left’s ability to spin their victories as defeats is impressive, but this is really reaching even by those lose standards.

3

Cassander 04.22.15 at 7:24 am

Loose standards, obviously. Damn auto correct.

4

Chris Bertram 04.22.15 at 7:34 am

Except when pressed, the operating assumption is that property rights arose from some sort of immaculate conception, as in the mythical story told by Locke.

I think that’s excessively rhetorical John. Perhaps a better way of putting it would be to say that some people think that underlying some legal claims to property are some moral entitlements that underpin those claims and which the law is bound to take account of. From the ancestral lands of peoples subject to colonization, to the artist who whittles an exquisite sculpture from a piece to driftwood, to the photographer whose picture is stolen by a large news corporation, there are lots of such moral claims out there. I bet you even recognize some of them as creating valid reasons. If you do, then the idea that property rights have an alternative “immaculate conception” in the fiat of states and legal systems, also looks problematic.

5

David Blake 04.22.15 at 8:48 am

Sometimes the conflict is very direct. In EU countries which have what is described as a debt problem the conflict is between bond holders and entitlement holders such as pensioners. The bond holders can go to court if they are not paid; the pensioners have no recourse to get satisfaction if their pensions are cut. Yet in any normal sense of the term they “bought” their pensions over the years with contributions.
This is why those seeking a more equitable situation should at least look at converting entitlements into property rights without bringing in all the outsiders who want to take profits out of the system.

6

John Quiggin 04.22.15 at 9:58 am

@Chris The point of the sentence you quote, and of the entire previous post is that, both theoretically and in historical reality, the legally enforceable property rights of today are built on the expropriation of the ancestral lands of people subject to colonisation. These are valid moral claims, but they are not claims “underlying some legal claims to property” except in tightly circumscribed cases like those of the Mabo case in Australia (where native title survived only if there had been no state action extinguishing it in the 200 years since European Settlement).

And the same point can be made in relation to other examples. The subject of a photo taken in public has moral rights about the way the photo is used, but there is typically no corresponding legal right or remedy. And the same for the photographer if she is an employee of the news corporation and the photo is deemed to be a work made for hire.

Even more important, and mentioned in this post, what about workers’ moral rights to their jobs, unrecognised in legal systems based on employment at will?

My point is that Locke and contemporary Lockeans are making claims for the primacy of a particular set of legal property rights, which are supposed to trump both the pre-existing rights of those they expropriated and the contemporary claims of the community as a whole to share in the income generated from land and capital. That’s a moral claim, but one that rests on a spurious legend of immaculate conception.

7

gianni 04.22.15 at 2:08 pm

Cassander-
Let us leave your selective reading of the empirics aside (ie you bring up Bush and the ‘Ownership Society’ but make no mention of his moves toward social security, despite it being a major plank of that program). Let us ignore, for the moment, your reliance on suggestion and rhetorical questions rather than positive contentions (the sure sign of a weak argument).

You must understand that one can still be under attack even whilst one is successfully parrying the blows, and that the complaint ‘Please stop attacking me!’ still holds force, even for one adept at ‘floating like a butterfly…(etc).’ You must understand that words like ‘victory’ and ‘defeat’ refer to the outcome of a particular struggle, speaking to the allocation of spoils to each side; whereas the term ‘attack’ and the accompanying notion of ‘defense’ refer to the relation of one’s position to the status quo boundaries and demarcations. These notions are distinct: attackers can both win and lose the fights that they pick.

I say you must understand these things because it seems that you are unclear about these basic concepts, and it can be quite challenging to have a productive discussion with someone when they define commonplace terms in such an idiosyncratic manner.

The implication of your statement – that one cannot complain of an attack until they have been sorely beaten – is absurd, and totally effaces the part of the political struggle which determines the outcomes of these contests: the rallying of supporters in response to an existing political attack.

But then, you know all this and are just being a crank. (Again).

8

gianni 04.22.15 at 2:42 pm

J Quiggin –

Part of the story, at least in the US, lies in the different meanings evoked by the notion of ‘property’, depending on your audience. So when someone of a libertarian stripe says to JQ: ‘we must defend our personal property against the depredations of social security by privatizing it’, you can immediately recognize the conceptual confusion there for what it is.

But take that idea of ‘property’ out of the academy and away from the political philosophers and their ilk. Out there, the property is very often invoked against state power, as a distinct moral claim that is on equal footing to those of the state. The individual/collective distinction looms large in this conception of property, which is naturally interpreted as ‘personal property’ and understood not in the top-down manner of the political philosopher, but instead bottom-up from the immediacy of one’s experience of receiving a paycheck and/or owning a plot of land.

I struggle to find a better way to describe it, but we see time and again (at least in popular US politics) that the more ‘common sense’ or ‘immediate’ the specific type of property is, the greater its moral force in the popular mind. There is a sense in which all these complex legal protections actually diminish, rather than ground, claims to property.

It is a conception of property that begins with the frontiersman stepping out into the Frontier, laying down his stakes and shouting ‘this here is mine!’. No one wants to talk about the state violence required to open that frontier in the first place – least of all our frontiersman, who in recognizing this state violence would also be recognizing their newly planted wheat and potatoes have been watered with blood.

9

Chris Bertram 04.22.15 at 2:42 pm

@John, thanks. Maybe the points I made are just orthogonal to your concerns here then. Will think on it.

10

cassander 04.22.15 at 2:53 pm

>but make no mention of his moves toward social security, despite it being a major plank of that program

I made no mention of it because it failed, quite miserably. But now that you mention it, I think it is worth discussing. Bush never released many specifics, but IIRC the broad strokes of his plan were to allow people who wanted to invest part of their SS taxes into personal funds that they owned, but which were managed by the government. That is to say, he wanted to change an entitlement that people did not have property rights over into one where people could choose to have those rights if they wanted. And in libertarian circles, this is one of the more common arguments one finds for defined contribution over defined benefit plans of any variety. So this is an example of conservatives trying to expand the sphere of full on, 5th amendment property rights and property owning, not trying to restrict them. And it was killed by opposition from a left that wanted to preserve the current, more nebulous set of rights for everyone. So the opposite of John’s original thesis.

>but make no mention of his moves toward social security, despite it being a major plank of that program

Then I will be as clear as I can be. Entitlement programs are not “under attack” in any meaningful sense of the word. There are no thrusts to parry. Republicans will occasionally make noise about them, but when push comes to shove, they leave them alone or expand them. And frankly, you I suspect you know this to be the case. Do you think that if the republicans sweep both houses and the presidency, the ACA will be repealed? Because I very much doubt it, and suspect you do too. Those on the right who seriously believe in cutting them are roughly as influential as those on the left pushing for single payer. They can get their team to mouth the proper pieties when prodded, but not to actually implement them.

>But then, you know all this and are just being a crank. (Again).

If pointing out that fundamental assumptions on which the discussion is premised are completely divorced from reality makes me a crank, then I’m a crank. You’re welcome for the service.

11

TM 04.22.15 at 2:56 pm

“the attack on entitlements is precisely about expropriating some holders of rights (for example, beneficiaries of Social Security) for the benefit of others”

Similarly, states and cities are systematically reneging on pension obligations toward retired former employees, obligations that were contractually agreed on and for which the pensioners paid in advance by providing their labor. And amazingly (or not), we don’t hear a word from libertarian contractualists about the inviolability of contract rights. It goes without saying that when AIG executives are promised bonuses, different standards apply.

12

TM 04.22.15 at 3:04 pm

CB: “some people think that underlying some legal claims to property are some moral entitlements that underpin those claims”

Some people think that, true. But it’s a far cry from “some people” and “some moral entitlements” to our actually existing, legally enshrined, extensive system or property rights. I think JQ is talking about those who defend the actual system, not some hypothetical ideal.

13

TM 04.22.15 at 3:05 pm

of property rights.

14

Brett 04.22.15 at 3:06 pm

@John Quiggin

Even more important, and mentioned in this post, what about workers’ moral rights to their jobs, unrecognised in legal systems based on employment at will?

Not sure what moral right that is, and what it implies (if having a job is a moral right, then is the government obligated to provide jobs to any who want one if they can’t find a private employer to offer them one?).

15

bob mcmanus 04.22.15 at 3:18 pm

14: Yes. Beveridge? FDR’s “Second Bill of Rights.” Employer of Last Resort (Job Guarantee), favorite social program of Post Keynesians. Search Wray or Tcherneva.

16

TM 04.22.15 at 3:30 pm

Cassander: The retirement age is going up pretty much everywhere. That is a de facto benefit reduction, and as Krugman points out, the life expectancy of low income retirees is not increasing at the same rate.

DB 5: The idea that Social Security would be better protected if it were transformed into an individual property (i. e. retirement account) probably doesn’t work. There is just no way to guarantee any kind of market return on capital, as SS actually does. The Swiss retirement system is an interesting case study. Its first column is just like SS. Its second column is a mandatory pension account which is tightly regulated (but privately administered – you say you would like to get rid of outsiders taking profits out but I don’t see how that could work). It used to have a legally required minimum annual return of 4%. During the boom of the late 90s, when capital returns were much higher, the legal rate was not raised in order – so the justification went – to have a cushion for lean years. When the crash came, of course, the legal return rate was lowered because suddenly it turned out there was no cushion. The casino just doesn’t work that way. The current minimum return I believe is 1.5%.

Germany also now has a mixed system which seems to be a flop (but I don’t know much about it). To my knowledge, nobody so far has come up with a system that consistently and verifiably improves on Bismarck.

17

TM 04.22.15 at 3:31 pm

Oops, moderation. Could it be the word Bismarck?

18

Bloix 04.22.15 at 3:54 pm

“The term refers to rights to receive payments such as Social Security that are entrenched in legislation and cannot be changed, at least without great difficulty.”

Actually, the distinguishing feature of an entitlement is that the government will provide a benefit to any person who meets a pre-established set of conditions. Once the conditions are met, the person is “entitled” (or “has a right”) to the benefit. This means that the amount of money to be spent in providing the benefit is not set by the usual legislative appropriations process, but by demographic factors.

Some people have argued that the statutory right to receive a payment upon satisfaction of the conditions is a property right. But in the US that position has been considered and rejected. A statutory right is not a property right, and it does not receive remotely the same level of constitutional protection that a property right receives.

And a right to payment does not look like a property right. I cannot think of a right to a payment that in law is a property right, whether as between private parties or between individuals and the government.

JQ is imputing hypocrisy to people who profess allegiance to the principle of property rights but who deny that persons who receive entitlement payments have a property right to those payments. I don’t see it.

It is true that in the US, where questions of rights are forced onto the Procrustean bed that is the Constitution, the Supreme Court held, in the wonderfully named case of Goldberg v. Kelly (1970), that administrative agencies cannot terminate entitlement payments without providing an administrative hearing. In doing so, it found that the due process clauses of the Fifth and Fourteenth Amendments, which guarantee that the government shall not deprive a person of “life, liberty or property without due process of law,” required such a hearing.

But the Supreme Court in that and other cases treats the phrase “life, liberty or property” as a collective umbrella of interests vis-à-vis the government. It has never held that the interest in welfare payments is literally a property right, and the process that is “due” for termination of welfare benefits is far less that the process that would be due, for example, for taking your house.

So, although JQ thinks that it is obvious that the right to receive Social Security payments is a property right, he doesn’t have the law on his side.

To the contrary — in 1960, the Supreme Court held in Flemming v. Nestor that although there was a due process right to be free from arbitrary governmental action,” there was no “accrued property right” to Social Security payments. Thus it has been settled law for more than half a century that there is no property right to Social Security payments and that Congress can abolish or alter the statutory rights it has created by the simple passage of legislation.

Regardless of what “moral rights” may exist, the statutory rights to government entitlement payments are not property rights. At least not in the US. There’s been a lot written on this, and it would be worth looking at the literature.

19

Tim Worstall 04.22.15 at 3:55 pm

Interestingly, given JQ’s example of SS as a property right, American law is crystal clear on this point.

Such payments (or benefits, whatever we call them) are simply not a property right.

http://en.wikipedia.org/wiki/Flemming_v._Nestor

Thus whatever people are doing to them cannot be said to be messing with property rights.

Maybe it shouldn’t be this way, of course, but that is the way that it is.

20

gianni 04.22.15 at 3:59 pm

cassander, you might want to take up the issue of pensions mentioned by TM above before dismissing this as a non-issue.

21

cassander 04.22.15 at 5:07 pm

@TM

>Similarly, states and cities are systematically reneging on pension obligations toward retired former employees, obligations that were contractually agreed on and for which the pensioners paid in advance by providing their labor.

What exactly do you think libertarians should be saying here? The cities and states in question don’t have enough money to pay their obligations, so they are entering bankruptcy, a legal procedure I have never heard any libertarian speak against in principle, and only occasionally in detail. Would you prefer debtors prison for the population of Detroit?

>The retirement age is going up pretty much everywhere. That is a de facto benefit reduction, and as Krugman points out, the life expectancy of low income retirees is not increasing at the same rate.

Again, discussion is not action, at least in the US. And frankly, one can debate whether or not increasing the age is a benefit reduction. If the average lifespan of people on SS increases, they get more years of benefits, which can reasonably be called a benefit increase, and increasing the age in tandem with those increases is merely keeping the benefit flat, much like a COLA theoretically keeps the benefit flat in the face of inflation.

>There is just no way to guarantee any kind of market return on capital,

Except, you know, for the fact that the S&P has never had a 15 year period where the return didn’t average at least 5% per annum, and the usual figure is more like 10%.

And you completely leave out the property right side of the angle, that what a DC type system does best is protect against benefit cuts, something everyone in this thread seems to think is imminent. If you truly think the republicans are just days away from cracking open the piggy bank, then you should absolutely want the largest private accounts possible today, because once given, they can’t be taken away.

>as SS actually does.

Well one, SS doesn’t guarantee a return, just payments, and the return it does provide has been steadily declining despite lengthening lives because the dependency ratio keeps shrinking. And if the economy ever did get screwed up enough that there was an extended period with no market growth, then we’d almost certainly be at a zombie apocalypse level of screw up, and SS wouldn’t be coming either.

22

TM 04.22.15 at 5:37 pm

cassander, the retirement age IS going up. It’s not discussion.

“The cities and states in question don’t have enough money to pay their obligations, so they are entering bankruptcy”

Well no state so far and very few cities have entered bankruptcy. And what does it mean, they “don’t have enough money to pay their obligations” – I don’t hear New Jersey refusing to pay any other state obligations. It’s the pensions that are regarded as optional by the looters in office. E.g. http://www.politico.com/story/2015/02/judge-overturns-nj-gov-christie-pension-cut-115435.html.

23

F 04.22.15 at 6:50 pm

Except, you know, for the fact that the S&P has never had a 15 year period where the return didn’t average at least 5% per annum, and the usual figure is more like 10%.

This may be technically true, but once one adjusts for inflation it’s a different story. The S&P total return has had at least two 15 year periods of 0% real returns: 1929-1945 and 1966-1983. Also 1901-1921 and 2000-2013, though the latter was not 15 years. The long term average is 6% real returns.

24

Bloix 04.22.15 at 7:06 pm

TM – why are you bothering? And for what it’s worth, states can’t declare bankruptcy.

25

jake the antisoshul soshulist 04.22.15 at 7:23 pm

Property was stolen from the commons fair and square. Entitlements, however, are stolen from the one who stole from the commons. :=}

26

LWA 04.22.15 at 7:26 pm

This post gets at what bothers me about the idea that “protecting rights” is a goal of the state, as opposed to “justice” or some other moral framework, and especially asserting that rights pre-exist the state.

Identifying rights, their boundaries, how they are applied and when and to whom is a profoundly political act based on moral intuition and revelation. They can’t have any meaningful protection without the group consensus to enforce them.

27

cassander 04.22.15 at 7:39 pm

@TM

> It’s the pensions that are regarded as optional by the looters in office.

I fail to see your point here. Politicians kicking the can down the road rather than solving problems and trying to make others pay for the gifts they hand out is just standard operating procedure. All I see is yet another argument against collective retirement schemes and in favor of individual. When the bills for SS and Medicare start to press, politicians will play exactly the same games.

@F

>This may be technically true, but once one adjusts for inflation it’s a different story.

It’s still the same story, the standard returns for SS are not quoted in inflation adjusted terms. if you take the returns just a year in either direction of the ones you mention, things look immensely better. people having to wait an extra year before retiring twice a century is not a high price to pay for making everyone much better off.

28

TM 04.22.15 at 7:55 pm

If SS were mediated by the stock market instead of the federal government, then baby boomers would have to be selling their papers en masse right now, putting downward pressure on stock prices. Also, read the fine print: past performance is no guarantee for future performance. Both SS and the stock market are fueled by economic growth. If growth stagnates in the long term, every investment vehicle is affected.

Empirically, there is no question that SS or similar retirement systems have worked for workers and individual private investment has not generally worked for them. See my Swiss example above. It’s not that the Swiss are totally inept at handling money, still the private pension system hasn’t worked nearly as well as it hypothetically ideally might have worked, and there are plenty of worse examples from other countries with privatized pension systems.

29

mdc 04.22.15 at 8:35 pm

The rhetoric of the attack is that “entitlements” sounds derogatory to people who are used to hearing “entitled” as meaning “illegitimate (and usually invidious) claim of respect, status, or goods.” As in: “I can’t stand him: he always acts so entitled!” I bet if you asked people, many wouldn’t be able to identify social security as an entitlement program.

30

TM 04.22.15 at 9:03 pm

A bit more on public employee pensions. The argument is that these pensions were contractually promised and also in many states guaranteed by state law (the Detroit and Stockton bankruptcy judges simply declared these state laws irrelevant), and they are not in most cases particularly generous. Yet many states and cities look for ways to renege on these obligations with the help of right wing propaganda, often it has to be said with the support of libertarians. It is true that many pension systems are underfunded but why? Well because they were underfunded. Pension systems were in effect used as a credit card (http://www.newrepublic.com/article/120630/stockton-detroit-bankruptcies-gut-budgets-and-imperil-pensions), often to pay for tax cuts benefiting the rich. That doesn’t mean the workers aren’t entitled to their pensions. There is no logical or moral reason why worker’s hard-earned and contractually and legally guaranteed pensions should be any less protected from expropriation than their homes.

http://www.progressive.org/news/2013/07/183102/rightwing-attack-public-employee-pensions
http://robertreich.org/post/2615647030

31

mrearl 04.22.15 at 9:06 pm

“And a right to payment does not look like a property right. I cannot think of a right to a payment that in law is a property right, whether as between private parties or between individuals and the government.”

A debt is a right in the holder to a payment according to the terms thereof. It is property subject to attachment or garnishment. Intangible, but property. So the quoted statement may be too broad as between private parties.

32

MPAVictoria 04.22.15 at 9:13 pm

” There is no logical or moral reason why worker’s hard-earned and contractually and legally guaranteed pensions should be any less protected from expropriation than their homes.”

Also worth pointing out that in many cases workers took these pensions instead of contributing to Social Security. So if the pensions vanish they are literally left with nothing. Many people don’t realize this.

33

Ogden Wernstrom 04.22.15 at 9:38 pm

…not a high price to pay for making everyone much better off.

Now we find an assertion posing as an assumption, right there at the end of @27 (cassander 04.22.15 at 7:39 pm). I’m not sold on the assertion that everyone would be much better off, since those who will not receive their contractual payments are prima facie worse off (if you are using “everyone” as “each individual”), and those who took that money receive a lower marginal utility (if you are using “everyone” to refer to a single collective value of, um, offness).

But, once we have given in to the notion that contracts made between persons and governments will be ignored as a practical matter (ibid), can’t we all look forward to the day when corporations gain full personhood, and screwing them over will be acceptable to right-wing reactionaries?

34

cassander 04.22.15 at 10:02 pm

>But, once we have given in to the notion that contracts made between persons and governments will be ignored as a practical matter (ibid), can’t we all look forward to the day when corporations gain full personhood, and screwing them over will be acceptable to right-wing reactionaries?

talk about a divergence! Where on earth did I imply we should assume government contracts don’t count? Of course they do, which is why any change should be phased in gradually and generally not affect current beneficiaries whenever possible. Of course, the easiest way to do that is to make changes today, but, of course, anyone who suggests that is invariably accused of “attacking” entitlements.

35

cassander 04.22.15 at 10:04 pm

@TM

> often to pay for tax cuts benefiting the rich.

wow. talk about chuzpah. sure, the detroit pensions, and many others, were criminally mismanged but the real culprit is tax cuts for the rich in a country where the tax code has been growing more progressive for decades!

36

TM 04.22.15 at 10:35 pm

I realize it’s a hopeless but for the record, yes there is a direct connection between Christie’s tax cuts and his multiple attempts to rob pensioners of billions of dollars. You stated: “Politicians kicking the can down the road rather than solving problems and trying to make others pay for the gifts they hand out is just standard operating procedure” but apparently you didn’t mean this to apply to give-aways in the form of tax cuts.

37

cassander 04.22.15 at 10:49 pm

@TM

>I realize it’s a hopeless but for the record, yes there is a direct connection between Christie’s tax cuts and his multiple attempts to rob pensioners of billions of dollars.

actually, the record states that NJ was pulling in 24 billion a year when Christie came into office. It is pulling in almost 29 billion this year” So no, there isn’t a revenue problem, revenues are up considerably in excess of inflation. Feel free to apologize whenever.

38

Ogden Wernstrom 04.22.15 at 10:53 pm

Where on earth did I imply we should assume government contracts don’t count?

04.22.15 at 7:39 pm (@26) , in your second sentence.

Let’s see, TM@11, “…states and cities are systematically reneging on pension obligations toward retired former employees, obligations that were contractually agreed on…” led to cassander@21, “The cities and states in question don’t have enough money to pay their obligations, so they are entering bankruptcy”, led to TM@22, “It’s the pensions that are regarded as optional by the looters in office”, which led to this:

Politicians kicking the can down the road rather than solving problems and trying to make others pay for the gifts they hand out is just standard operating procedure.

Did that sentence not refer to the practice of reneging on contractual obligations? Were you part of that conversation?

…any change should be phased in gradually and generally not affect current beneficiaries whenever possible…

…makes me think that you changed the subject – probably to one where your argument is not so weak. Is that the “divergence” to which you refer?

39

TM 04.23.15 at 3:14 am

Christie Pushes Ahead With Business-Tax Cuts, Racking Up $600M in Lost Revenue
Next year’s budget calls for $660M more in business-tax breaks, despite depleted transportation fund and court-ordered pension payments

http://www.njspotlight.com/stories/15/03/03/christie-pushes-ahead-with-business-tax-cuts-racking-up-660m-in-lost-revenue/

I don’t know about your 24 and 29 billion figure. The state budget is almost 34 billion.

http://www.njspotlight.com/stories/15/03/26/administration-drags-feet-on-delivering-data-needed-to-assess-christie-budget-plan/
“Last year, after state Department of Treasury officials learned of a roughly $1 billion revenue gap late in the fiscal year, Christie trimmed the planned contribution into the public-employee pension system. Now, public-workers unions are contesting in court a similar reduction for the current fiscal year.”

40

adam.smith 04.23.15 at 5:07 am

(Just as a side note and because we’re talking Bismarckian welfare systems: Bismarck never said that thing about sausages&laws: http://quoteinvestigator.com/2010/07/08/laws-sausages/)

41

John Quiggin 04.23.15 at 7:53 am

jake @25 wins the thread

42

que_es 04.23.15 at 1:37 pm

Jake is correct of course. And that’s why Bloix’s points about the law in 18, while they may be technically accurate, are beside the point.

Provoking the masses into attacking “entitlements” distracts them from attacking mass accumulations of “property rights” by the few who have them.

43

Bloix 04.23.15 at 8:37 pm

#42 – I had thought that JQ was making a legal argument. He explicitly referred to the “legal security” provided by entitlements and the “right to receive such payments.”

I don’t disagree with the motivating force behind the post. I have argued, with friends and acquaintances and in many, many blog comments, that efforts to “reform” Social Security are in truth attempts by the very wealthy to steal the money in the Social Security Trust Fund that accumulated there from the payroll taxes of millions of working people who trusted that the 1983 reforms were for their benefit. George Bush had a scheme to do this, but he failed. But the grifters who want to steal this money will never give up. For them, any pot of money set aside for ordinary people is an invitation to plunder.

But I am aware that the word “steal” in this context is metaphorical. If the machinations of the Washington Post, the Pete Peterson Foundation, the advocates for chained CPI and raised retirement ages and cuts in benefits and the liars who say “Social Security is bankrupt!” succeed, they will have broken no law.

JQ appeared to think differently, and so I pointed out that if he does he’s not correct. It’s important, I think, to be clear when we are being literal and when we are being metaphorical.

But Jake@25, I think, is not being metaphorical. He appears to be a follower of P.-J. Proudhon. Although his view has an honorable pedigree, it hasn’t worked out where it’s been tried and people who have lived under systems based on it seem to be, for the most part, supporters of the concept of property rights.

44

John Quiggin 04.23.15 at 9:53 pm

To clarify (though I think it was clear in the OP), I don’t claim that US Social Security is a property right in the sense of US law. My point was that, as the term “entitlements” implies, it has many of the characteristics of a property right, most obviously that it is hard to take away. It is this fact which its enemies, like Cassander, bemoan when they use property-derived terms like “entitlement”.

45

cassander 04.24.15 at 4:43 am

@John

> It is this fact which its enemies, like Cassander, bemoan when they use property-derived terms like “entitlement”.

First, you used the term. Second, the term is used by government accountants, hardly the enemies of social security. Third, and this is most important, of the two of us, only one of us is proposing a system to give people full property rights to their retirement savings, and it’s not you.

46

John Quiggin 04.24.15 at 5:25 am

Google “Paul Ryan” + entitlements.

47

ZM 04.24.15 at 6:09 am

Paul @ 1

“There’s an interesting jurisprudence in Australia …
The obvious rejoinder (obvious to me, but not, apparently to the High Court) that all property rights are ultimately granted by the government. Generally speaking the view has been that the law giveth and the law taketh away, unless the law gaveth sufficiently long ago.”

There are two problems here.

1 is definitional – what is “the government”? In previous discussions some have argued Indigenous Australians had a government, but I think governance fits better as academic discourse on governance includes individual citizens and companies etc – all stakeholders. In our Westminster system we inherit from England the government is the majority formed in the Lower House of Parliament , with the minority being the loyal opposition.

2 is that since we get laws from England – english laws date back to before the institution of the parliament at Westminster . Laws before around about then are called laws from time immemorial and the cannot necessarily be altered at the government’s will, like the right to ramble.

I found this looking into laws because I think the government causing climate change is unconstitutional. I found an American book that says this breaching is due to Roman public trust law applicable in America. I found an Englush paper that says this is due to public trust law in English common law and in the Magna Carta – which would be applicable in Australia.

So the government has to not break some ancientlaws and entitlements – like the entitlement to a proper nice climate for the heirs of our commonwealth.

Except some group would have to establish standing in the supreme and high courts, this has been difficult for the American group, , I asked Environmental Justice Victoria if they would be interested and they said maybe they will look into it.

48

ZM 04.24.15 at 6:12 am

Re-reading your comment I guess “unless the law gaveth sufficiently long ago” might mean laws from time immemorial?

49

cassander 04.24.15 at 3:34 pm

@john

>Google “Paul Ryan” + entitlements.

what magnificent obtuseness. I wasn’t aware that I was personally responsible for the actions of all republican politicians. But fine, if that’s the case, you should google Bush + social security reform, then read about his proposals to extend property rights to people vis a vis personal accounts. I assume you were in favor of that plan?

50

Sancho 04.24.15 at 10:11 pm

I’m still trying to get over the claim that the U.S. tax code has been growing steadily more progressive. Is this one of those things where anything less than total capitulation to the rich is considered communism?

51

Ogden Wernstrom 04.24.15 at 11:36 pm

My @38 took more effort than I have time for at the moment, but it worked for about 30 hours. It’s someone else’s turn.

52

cassander 04.25.15 at 1:23 am

@snacho

>I’m still trying to get over the claim that the U.S. tax code has been growing steadily more progressive.

No, it’s basic math. in 1979, the richest 20% had 45% of the income and paid 55% of taxes. today, they have 50% of income and pay 70% of taxes. And that is all federal taxes, not just income taxes, the top 20% pay 92% of income taxes, compared to 65% back when the top rate was 70%. I’m sorry that reality does not conform to your ideological predispositions.

53

Ogden Wernstrom 04.25.15 at 3:03 am

No, it’s basic math. in 1979, the richest 20% had 45% of the income and paid 55% of taxes. today, they have 50% of income and pay 70% of taxes.

“Richest” is a loose interpretation of highest-tax-reportable-income. For another thing, 2011’s figures are the most-recent for income, 2010 for taxes, and I am suffering a hallucination that makes me think today is a day in 2015. For the purposes of entertaining my hallucination and the arsebadgertarian, we can pretend that 2010/2011 is today.

I do see, however, that the top quintile earners’ share of after-tax income went from 42% in 1979 to 48% in 2011. I don’t even have to do maths, because those entries are in the last table on that income page. The other 4 quintiles all decreased their share of total after-tax income between 1979 and today 2011.

Wow. How stratospheric have those top incomes become, since the top 1% have gone from 7.4% to 13% share of all income in that time period? (And have roughly doubled their share of income tax liabilities.) They appear to have taken all of the income from the quintiles that lost ground, plus the lower half of their own quintile.

And that is all federal taxes, not just income taxes, the top 20% pay 92% of income taxes, compared to 65% back when the top rate was 70%. I’m sorry that reality does not conform to your ideological predispositions.

It really appears to show how anti-progressive all the US Federal taxes other than income taxes have become over the years, doesn’t it?

It is not all federal taxes. However, it does make a good attempt. It adds 75% of corporate business taxes to the taxes paid by individuals, based on an estimate of which quintiles own how much. Too bad it does not add corporate income to any of the incomes shown.

For the recent years’ figures for the lowest quintile, about 24% of the income shown is the estimated value of health insurance, not cash income.

Plus, the child-related tax credits get computed as a negative income tax rate. I imagine that Obamacare subsidy will further skew the tax calculations for this table. The taxpolicycenter.org picks and presents info that best supports its anti-tax-on-the-rich agenda.

54

cassander 04.25.15 at 3:23 am

@ogden

>“Richest” is a loose interpretation of highest-tax-reportable-income.

only if by loose, you mean the standard definition.

>I do see, however, that the top quintile earners’ share of after-tax income went from 42% in 1979 to 48% in 2011. I don’t even have to do maths, because those entries are in the last table on that income page. The other 4 quintiles all decreased their share of total after-tax income between 1979 and today 2011.

and? I told you that. In fact, I even rounded up!

>How stratospheric have those top incomes become, since the top 1% have gone from 7.4% to 13% share of all income in that time period? (And have roughly doubled their share of income tax liabilities.)

and this is relevent to tax progressivity how?

>They appear to have taken all of the income from the quintiles that lost ground, plus the lower half of their own quintile.

again, and? these are shares of income. the they always add up to 100. incomes in the bottom quintile were up 50%, the top up 100%. that does not imply that the rich took from the poor, merely that they got richer faster.

>It really appears to show how anti-progressive all the US Federal taxes other than income taxes have become over the years, doesn’t it?

since I don’t get to pay taxes besides income taxes, this is rather irrelevent. expecially becasue except for excise taxes, the share of tax paid by the rich in all categories is up.

>taxpolicycenter.org picks and presents info that best supports its anti-tax-on-the-rich agenda.

except this data comes from the CBO, not the tax policy center. are they part of the vast right wing conspiracy as well?

In conclusion, that was a very roundabout way to admit that the data proves me right.

55

Peter T 04.25.15 at 4:23 am

In light of this, I find JQ’s enthusiasm for income redistribution as a answer to inequality puzzling. Tax schedules can be changed at the stoke of a pen, income hidden or shifted and so on. But property is much harder to take away (not impossible, but much harder). So why not advocate for confiscation and redistribution of property, or an extension of property rights to forms of income?

56

Val 04.25.15 at 6:42 am

Cassander @ 52

I suggest the figures you’re quoting can just as easily mean the opposite of what you think they mean. Where income inequality increases in such a way that a small proportion of the population at the top of the income distribution is earning a large and increasing proportion of income, and an large and increasing proportion at the bottom is earning a small proportion (‘hollowing out’, which has happened particularly in the USA), you will inevitably get the top section paying a larger share of income tax.

But that isn’t necessarily, as you suggest, because the system is becoming more progressive, nor because the rich are increasingly ‘paying more than their fair share’. It can just as easily be that there is an increasing proportion of households who simply don’t earn enough to pay much, or any, income tax.

If the figures you linked to had shown both ends of the income and tax distribution, then it could have been established whether that was happening. But they didn’t – I wonder why?

57

ZM 04.25.15 at 7:37 am

Peter T,

“In light of this, I find JQ’s enthusiasm for income redistribution as a answer to inequality puzzling.”

On John Quiggin’s blog he is running a recurring post on budgets and taxes.

My suggestion is we only allow a small amount of cash for church collections etc, then everyone has a card for purchases , and the card connects to a system with the figures of resource inputs into each purchase and adds them up. Then you put limits on how much resources any one person or any family are allowed to purchase on a variety of schedules eg. daily, every 5 years etc

You also have weighted taxes on items – low tax for beneficial items and high tax for detrimental items – so the government collects tax and improves society at the same time

This is much more sensible way of purchasing things as money values are arbitrary – measuring by resource inputs is much more objective and rational.

58

Ogden Wernstrom 04.25.15 at 1:53 pm

only if by loose, you mean the standard definition.

In which language?

and this is relevent to tax progressivity how?

You became the arbiter of comments when? If you are going to demand that responses contain no original, non-responsive content, please review your own practices.

since I don’t get to pay taxes besides income taxes, this is rather irrelevent. expecially becasue except for excise taxes, the share of tax paid by the rich in all categories is up.

You had already made it obvious that it’s all about you, but thank you for being so frank about that fact. Assuming that you are not breaking the law, you must be very poor – since you don’t pay excise taxes or the regressively-structured US payroll taxes.

except this data comes from the CBO, not the tax policy center. are they part of the vast right wing conspiracy as well?

Yes, these are selected portions of a CBO report. The CBO does as they are told by members of Congress – but CBO are very good about spelling out the assumptions and constraints that were handed down to them. If you look at Appendix A of the CBO’s report, you’ll find a section, “Methodology”. Pay attention to the footnotes and the referenced documents, which detail some of the ingredients which end up in this sausage-of-a-report.

In conclusion, that was a very roundabout way to admit that the data proves me right.

You are correctly quoting selected figures, which do not really prove the conclusion you have made – as Val already pointed out.

Thank you for not challenging my delusion about what year it is.

59

cassander 04.25.15 at 4:35 pm

@val

>It can just as easily be that there is an increasing proportion of households who simply don’t earn enough to pay much, or any, income tax. If the figures you linked to had shown both ends of the income and tax distribution, then it could have been established whether that was happening. But they didn’t – I wonder why?

First, the figures I linked DO show both ends, if you had bothered to look at them. And they are not income taxes, they are all federal taxes.

60

Ogden Wernstrom 04.26.15 at 1:55 pm

From my reading (in August of 2014) of the OMB sources, I found that not all US Federal taxes are included. Yet cassander keeps using the absolute, “all”.

Something else cassander appears not to be aware of – or doesn’t respond to, at least – is that 75% of corporate income taxes assessed are included in the tax-paid table, but zero corporate income is included in the income table. As cassander says, do the math[s].

I say that cassander “keeps using” the word “all”. The claim in cassander @52 is the same set of claims that cassander has posted previously. One significant difference is that he then offered the link to the original OMB report – which led me to find the information about the methods of creating that table.

Like a politician, cassander addresses the question that cassander wants to address, and ignores the remaining questions.

61

Val 04.26.15 at 9:25 pm

Cassander @ 59
The table you linked to shows all quintiles for income but only the top quintile for tax. I’d go further than OW @ 60 and say you are being dishonest. You can argue anything you want, but you should be honest.

I’m not familiar with your tax system, so I don’t know all about which taxes are state or federal. However the principle remains the same.

62

jpe 04.26.15 at 11:52 pm

We don’t have property rights in SS as a matter of law. So there’s that.

And amazingly (or not), we don’t hear a word from libertarian contractualists about the inviolability of contract rights. It goes without saying that when AIG executives are promised bonuses, different standards apply.

Depends on what pension rights we’re talking about. If they’re vested, then that’s one thing. If they’re wholly executory, on the other hand – ie, they’re future benefits that will be earned based on future performance – then there’s no property right to it.

W/ AIG, the performance had been completed. If the bonuses hadn’t been paid, the execs would’ve been entitled to treble damages under the relevant statute (ie, they get their bonus x 3)

63

jpe 04.26.15 at 11:55 pm

because I think the government causing climate change is unconstitutional. I found an American book that says this breaching is due to Roman public trust law applicable in America.

Asked and answered. Some NGO has been suing in various jurisdictions under this theory, and they’ve lost every time (including at the federal level). The defect in the theory isn’t so much standing as much as it is the political question doctrine which, in short, just means that if you want to change the law then you need to do so through the political process, not the courts.

Comments on this entry are closed.