Which of these is not like the other?
Here I am in the LA Times on inequality alongside Peter Singer (Princeton philosopher) and Sam Webb (head of the Communist Party). My take is different from their’s.
The company I keep
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I got a kick out of Sam Webb's post. First for this clip; "While billionaires and multimillionaires have become almost as common as "Law & Order" reruns…". Yes, and what does that tell us? And second for his assumption that when the Democrats take over that something will be done about the problem of inequality. What he will find, of course, is that when something is done, things are going to get worse, not better. Oh well, those who cannot learn from history…
I wonder how much of this spectre we see from income inequality is because we never actually see or interact with any actual rich people?
Face it, billionaires just plain don't go down to Burger King for a Whopper. They hire some poor schmuck to hit the drive-thru and bring them one.
That may be, but millionaires go to Burger King all the time. The problem is, we can't identify them by their fangs or horns.
The view that the economy is a zero-sum game is the critical flaw in both Singer and Webb's arguments. In their gloomy worlds, every billionaire takes billions out of the economy at the expense of everyone else. This wealth is never created fairly by individuals, it is always greedily taken and represents ill-gotten gains.
Needless to say, I do not believe that conclusion. People create wealth at the net benefit to society. Wealth is a signal that you're doing something right, you're allocating resources efficiently, you're providing goods and services that society values and therefore you're a good (and really the only) judge of how to spend or invest your wealth.
I'd end it there, but someone will probably bring up Enron. We don't revoke civil liberties because there are criminal. Likewise, we shouldn't revoke economic liberties (the ability to become wealthy) because there are criminals.
Russell, I can't beleive that anyone could not be totally convinced by your argument on this.
Why is a Communist and a Bioethist given newsspace about such an issue? Do they ask economists about the engineering behind the latest bridge?
I also think it is telling that the communist was happy to have the dems back in power. As a free market thinker, that tells me who to vote against.
Did anyone else notice the irony in a communist talking about peace? Has any system ever delivered more violence?
I've probably posted this here before, but since Singer came up again, it's worth another pasting.
http://www.reason.com/news/show/27886.html
Professor Roberts:
You write, "[w]hat most of us really care about isn't inequality but opportunity." I agree with you that inequality is not inherently bad (and provides the necessary incentives to work hard), but do we have equality of opportunity? All other things equal, will someone born into a low income family be just as likely as someone born into a high income family to earn a high income later in life?
It has been my experience that many of the same people who promote equality of opportunity are not willing to take the necessary measures (e.g., subsidizing education, increasing the estate tax) that would ensure a world where those with the most merit are the most likely to succeed.
Umm, how does the estate tax "promote equality of opportunity?" Or to put it another way, how does stealing money from one person and putting it into a huge bureaucracy promote equality of opportunity?
Isaac
Suppose we were all infected with the 'Singer Meme' and no longer consumed anything so luxurious as bottled water (when clean tap water was available). Just how long does Singer think such a society of hair-shirt-wearers would be wealthy enough to help others (never mind itself)?
The very wealth that Singer thinks we all should give away arises from economic activity involving 'luxury' goods and services that Singer thinks we should all do without.
In his comments about Warren Buffet he shows a faint glimmer of understanding this, but only a glimmer.
I believe this is on topic. A BBC view of forces influencing the American economics & the history of “How to control and influence the masses.”
Subject: Propaganda, history, from the BBC
http://video.google.com/videoplay?docid=-2637635365191428174&q=documentary+-rose+duration%3Along
Interesting doc, supposedly the "best ever". 58:16 running time. The person that posted the video thinks it shows the American Identity.
Back in the good old days, I remember my parents forgoing a trip because "our car wouldn't make it". For the record, I would take my eight year old Nissan across the country tomorrow if I had to. Those same parents switched from veal to chicken cutlets for cost reasons.
Do you think the socialists would like it if all the billionaires of the world converted all of their wealth into paper money, piled it in one place and set it on fire, thus destroying their wealth? Somehow I doubt it.
It isn't the wealth they hate, its the fact that somebody else has it.
Caliban asked, "I wonder how much of this spectre we see from income inequality is because we never actually see or interact with any actual rich people?"
Caliban, you probably interact with rich people all the time without knowing it. For example, thanks to good fortune and hard work, my household income is now in the 98th percentile. If things continue as they've been going, my wife and I will be millionaires within a few years. And yet one of us stops at Taco Bell at least once a week; my wife shops at Wal-Mart; we live in an unremarkable ranch house; we drive mid-market Toyotas; and so on. I don't think we own anything that someone with a $50,000 salary couldn't afford. In fact, I suspect that a lot of lower-middle-class people own a lot more modern gadgets than we do. If you saw us, you'd never guess that we're "rich."
Keith wrote:
“…billionaires of the world converted all of their wealth into paper money, piled it in one place and set it on fire, thus destroying their wealth?”
Actually paper money, bank statements, etc… are a symbols – representation of wealth.
As an analogy, a Menu in a restaurant is a representation of food. One would not think of eating a menu.
Just as the Menu represents Food, Money represents Wealth.
Money is a great way to exchange wealth, but the value of money is the goods and services it represents.
link to: Propaganda, history, from the BBC
http://video.google.com/videoplay?docid=-
2637635365191428174&q=documentary+-
rose+duration%3Along
Eric — "Actually paper money, bank statements, etc… are a symbols – representation of wealth."
So the next time I lose some paper money, I can go to the bank, tell them I lost $50, and they'll give me $50 more?
Closing the Wealth Gap, by P.J. O'Rourke
Arguably the best piece ever written on the unequal distribution of wealth.
slocum's point is the real one, and i'm not sure why it wasn't made more clear in your piece. the billionaires and others with wealth drive the economy, permit diversification, etc., that spreads the wealth around. that is, they buy boats, go on trips, hire nannies and gardeners, etc. if you stop that, we're all back to limited goods and services — some sort of necessity criterion — which means limited jobs, limited opportunites, etc.
didn't we learn anything from the soviet union, communist china, etc.? just plain silly. (oh, and you all know far more seriously rich people than you think, sit next to them in movies, eat next to them at restaurants, etc.; the stunning thing about the US is how much everyone lives the same compared to just about any other country.)
The Equalizers
Everyone wants to be a hero to someone.
The Equalizers champion the "unrich".
Jp – “So the next time I lose some paper money, I can go to the bank, tell them I lost $50, and they'll give me $50 more?
”
LOL – bank? No wrong organization. For the $50 you need to fill out the proper paper work to get on the government Dole.
BTW, I understand that when filling out the paper work don’t write “lost $50”. Say “I need $50” you’ll have a better chance of getting it. heeeeee…
The LA Times picked Sam Webb for the piece. Why not a member of the American Nazi Party? They also have a thing or two to say about inequality.
Those other two are very scary characters indeed!
I think the debate can be boiled down to how different people relate to other people's wealth. How do you react when you see a person in a very nice sports car? Do you think "That sure would be nice." or "I wonder what he does." or do you say "That lucky S.O.B."
To me, Class Warfare is the fuel to the leftist fire. If you get upset that others have money, you will probably believe that current "Wealth Inequality" is too big. This is obvious. What is less obvious is that that is a huge number of people who believe that the rich got rich because of luck, inheritance, theft, or any number of "unfair" ways. These people are ripe for the leftist way of thinking.
The Lefties gain strength every time they can convince someone that they are on the losing side of wealth distribution. And the arguments are becoming more sophisticated: gas guzzling cars, McMansions, etc. Simply color the wealthy not only as unjustifiably wealthy, but also as wasters of resources (the rich are stealing your drinking water, driving up your gas prices, and polluting your air), and as unsympathetic Scrooges who won't give to charities.
Can you be too rich?
Can you be too healthy? too good-looking? too intelligent? too tall? too well-fed?
Inequality is a fact of life, as to assets, opportunities, and outcomes. Ray G's question "Do we have equality of opportunity?" is misplaced. We have no "right" to equality of opportunity, so arguing how it could ever be achieved is ridiculous.
The Soviet bureaucracy couldn't even divide bread equally. How could a U.S. bureaucracy divide opportunity equally? Even parents have a hard time equalizing opportunity within their own families.
Note to thinker1776:
Can one be too "greedy" or "oppressive"?
Inequality may be a fact of life, but that doesn't mean we have to encourage it or let it get out of hand.
"Inequality may be a fact of life, but that doesn't mean we have to encourage it or let it get out of hand."
You're right! Really slow, lazy, irresponsible people encourage inequality everyday.
To fix that, David P. Graf & friends should donate 15% of their pay to help those that are suffering from such inequality.
You know, funds given freely is charity, and that's the spirit that you're trying to evoke.
Ray G:
Have you ever done something that has caused a negative externality, like drive a car?
If you have, I do not see why you should keep all of the money that you "earned." You have caused involuntary harm to me.
As a corollary, I am willing to bet that you have also benefited from positive externalities, like an educated workforce. You should pay your share for the amount that you have benefited.
These are not "funds given freely." Your refusal to pay is analogous to theft.
golddog,
How much money should Ray G pay for all of his negative externalities? What about the amount he should pay for other people's positive externalities? Doesn't Ray have his own positive externalities that should balance out what he receives from others?
Ray G already pays for driving his car. Remember the gas tax? It's not Ray's fault if the government takes Gas tax money and gives it to farm subsidies or something that doesn't address the negative externalities of driving.
Are are you suggesting that the gas tax is not high enough?
And everyone in society benefits from an educated workforce, should Ray G pay more than others if he knows how to use the workforce expertise more to his advantage than I do.
It's interesting that this educated workforce did not become educated to benefit Ray but they do benefit him, and you think he is expected to pay some sort of cost. To whom should he pay? The group that educates people? He already does through property tax and other forms of taxation. Are those taxes not enough? How would you know how high the taxes should be to ensure an educated workforce?
Trees give oxygen that benefits me, but I'm sure they are not doing it for me. Should I pay them a tribute? Should I give them extra water as a thank you? I benefit from my forefathers good work in setting up a solid political system. How can I pay them?
If you are suggesting that these externalities somehow relate to income equality, I'd like to see your reasoning. Perhaps within a society there is some connection, but the article's antagonists are bringing in "1 billion people" around the world who make $1 a day. Is Ray G. affecting them to the point that he should contribute to their well-being?
Python:
Your point that externalities are difficult to quantify is correct.
I was not making an economic argument about the extent of taxation, but rather a philosophical argument on the justification for taxation. Ray G. was implying that all taxes go to income redistribution. I was pointing out that taxation also pays to compensate for externalities. When governments are correcting for externalities, I do not think the “taxation is theft” argument is valid.
Since Ray G. benefited from the positive externalities of an educated labor force, he or she should pay for those benefits. To not do so, would be akin to stealing. One of the concomitant effects of subsidizing education is that it moves the state of society closer to one that has equality of opportunity.
I have no problem with absolute inequality; it is a necessary condition to provide incentives for the proper functioning of markets. It is a possibility that extreme levels of inequality may produce social unrest, which is a negative externality. If one accepts this, then it is appropriate for the government to tax to correct for extreme levels of inequality.
I don't defend the two other authors of the article. It is unfortunate that a center left economist was not chosen instead. It gives a distorted view of the left as dominated by “socialists,” “communists,” and “extreme leftists.” In reality, many of the people on the left would like to compensate for market failures.
May I also suggest that your view of “class warfare” is not accurate. Many of those on the left are in higher income brackets (e.g., George Soros, Bill Gates, Al Gore, etc.). The divide between left and right may be less along income lines and more along lines of people who recognize market failures and ignore them versus those who recognize market failures and would like to attempt to correct them.
golddog,
I don't think you characterized my comment on class warfare accurately. I am not saying that the wealthy are on the "right" and the rest are on the "left". I am saying that those who tend to use class warfare as a way of bringing about social change tend to be on the "left"; and those that don't are on the "right".
Those on the "left" talk a lot about the differences between the "haves" and "have nots". But they rarely talk about the differences between the effort or abilities the 2 different groups used to get to where they are. From the "left's" point of view, it is a fatalistic difference that can only be "solved" through forced contributions from the wealthy. Those on the "right" however believe: a) people greatly impact their own destiny, and/or b) government involvement in the life's of individuals is a slippery slope that leads to lesser freedoms.
Furthermore, your wording regarding "market failures" is interesting. Do you have specific "market failures" in mind which those on the right ignored, but those on the left were able to find a good solution?
jp:
"
"So the next time I lose some paper money, I can go to the bank, tell them I lost $50, and they'll give me $50 more?
More so than with anything else of value, that is in fact correct.
Torch a stack of fifty dollar bills, and as long as the remaining ashes can solidly prove what happened to the original notes, the Treasury will replace them with new ones.
Don't try that with a Lexus.
"It is a possibility that extreme levels of inequality may produce social unrest, which is a negative externality. If one accepts this, then it is appropriate for the government to tax to correct for extreme levels of inequality."
The false premise here is that it is desirable for the government to correct the inequality. In fact, the government's job is to deal with the "social unrest," which by your own words is the actual negative externality.
Thus if it's possible to tax the rich at a lower rate while the government protects their property rights through added law enforcement, then this is arguably better than massive redistribution schemes that simply perpetuate the inequality by way of unintended consequences.
But you'll never hear a "center left economist" (a myth if there ever was one) admit it.
“Have you ever done something that has caused a negative externality, like drive a car?”
No. I’ve never driven a car in an instance of being a negative externality. If you think automobile usage in and of itself is an externality, you’re woefully ignorant of even the most basic economics. Really.
“If you have, I do not see why you should keep all of the money that you "earned." You have caused involuntary harm to me.”
I’ve caused you no harm. You’re hallucinating. And I’ve never worked for a union or the government (excepting the Marine Corps) and so I really have “earned” my money.
“As a corollary, I am willing to bet that you have also benefited from positive externalities, like an educated workforce. You should pay your share for the amount that you have benefited.”
I’ve paid my taxes already, and continue to do so yes, I am paying for the benefit of an educated workforce.
I’m guessing that you are not working, or have not worked long. Otherwise I wouldn’t have had to explain that.
“These are not "funds given freely." Your refusal to pay is analogous to theft.”
You are confusing paying taxes for public goods – in the instance of public schooling – with the idea that we should “level the playing field” with confiscatory taxes.
Such a leveling of a field is purely altruistic and has no real public good; or it’s at least in a separate category from that of public schools, roads, etc.
You were equally wrong to quote me as saying that "all taxes go to income redistribution."
That you got the gist of what I was saying, that it is wrong to tax someone simply to redistribute, but inserted something that I didn't come close to implying, much less saying, makes you a dishonest person at worst, at best perhaps a great exaggerator.
The perception that you are young and naive is only reinforced the more you post.
Addendum:
My last post was directed at golddog's gross misrepresentation of what I posted, and I meant to say that if he thought all automobile usage was a "negative" externality, then. . .
Actually, wouldn't burning billions of dollars(yen, yuan, euros whatever) of paper money cause deflation by taking all that currency out of circulation?
Though, at the same time, the liquidation of billions and billions of dollars in assets would cause all sorts of wackiness too.
Ray G
"No. I’ve never driven a car in an instance of being a negative externality. If you think automobile usage in and of itself is an externality, you’re woefully ignorant of even the most basic economics. Really."
Ray G, it appears you have no idea what an externality is if you think driving a car is externality-free. Suggest you learn some economics yourself.
i guess im lost on the whole subject. maybe on both sides of the fence. i have this political science class. he wants us to do a paper on the distribution of wealth. Never really thought about it until now. Pretty deep subject. So many thoughts and facts both. You all seem pretty up to date care to help me out?