“Social Justice” and “Income Distribution”

by Don Boudreaux on September 1, 2009

in Complexity & Emergence, Inequality

Benn Steil’s and Manuel Hinds’s Money, Markets & Sovereignty is among the most impressive books that I’ve read in a long time.  I quoted from it in an earlier post, and I’m sure that I’ll do so in several other posts — including this one:

Most wealth is created de novo in the process of applying ingenuity to comparatively worthless commodities, and the benefits flowing from consumers to providers in a free society bear no relation to any distributive or merit-based calculus.  There can exist no principles of just conduct – which necessarily imply free choice – that would produce a pattern of wealth distribution which could also be called just.  It is logically impossible to have a game in which both the actions of the players and the final score can be subject to rules of fairness.  If it is unfair for one team to outscore another by more than a certain margin, the behavior of the players will have to be directed by the umpires.  But if the players are to be free to act within rules of fair play, the outcome logically cannot be said to be unfair.  Likewise, if citizens following all the rules of just conduct become wealthy, there is no basis on which to condemn the resulting distribution of wealth as “unjust.”  If no one actually commits an injustice, then no moral principle can reconcile justice to individuals with social justice after the fact.  Only in centrally directed social systems, such as the military, can social justice even make sense, as there are no rules of just conduct in settings where individuals are instructed what to do.

(From p. 53 of Steil and Hinds; original emphasis.)

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{ 98 comments }

Greg Ransom September 1, 2009 at 8:14 pm

This sounds a lot like the work of Hayek .. and Kirzner. I can’t recommend more highly Kirzner’s _Discovery, Competition, and Distributive Justice_.

Anonymous September 1, 2009 at 8:39 pm

But socialists like Muirhound think the economy is a zero-sum closed box. He can’t conceive of the idea that wealth is created without taking something unjustly from someone.

Anonymous September 1, 2009 at 10:44 pm

And you can’t conceive of the idea that wealth has little to do with value and productivity.

Anonymous September 1, 2009 at 10:58 pm

I know I can’t.

Anonymous September 1, 2009 at 11:03 pm

Ah why bother with the man-child.

Anonymous September 1, 2009 at 11:49 pm

I guess I’m fascinated by his uniqueness. It isn’t exactly idiocy or ignorance. I’m pretty sure he’s not being facetious. Insanity might work, but people say he’s a functional physician. Something is broken in him, but I can’t quite put my finger on it. That is, even if he agreed with us, he’d be just as odd.

Anonymous September 2, 2009 at 6:08 am

How about a wealthy bank robber or A US Senators salary and benefits? Ken Lay of Enron?

Anonymous September 2, 2009 at 3:06 pm

All that a thief possesses is the result of productivity. Just not the thief’s productivity.

If you’d been reading Cafe Hayek, you’d know that some transactions create wealth (voluntary transactions), and some destroy wealth (burglaries, taxes). You are mistaking us for Keynesians who think that all transactions, because they increase GDP, create wealth.

Anonymous September 1, 2009 at 11:02 pm

Because Bill Gates didn’t create a company in 1975 that ends up employing 100,000 people now. Nah, I wouldn’t call that creating value and productivity at all!

Anonymous September 1, 2009 at 11:37 pm

Sure he created value but if he had funneled several billion back into wages or new projects or into thea govenment health plan he would have created even more value. Him packing away 40 billion in itself didn’t create value.

Justin P September 2, 2009 at 12:43 am

Completely subjective, value is inherently subjective and therefore meaningless.

Have you ever stopped to think that maybe Bill Gates give his money freely to charities that he places a higher value on than you would?

http://www.gatesfoundation.org/Pages/home.aspx

Bill Gates has given more to the community and more to charity than you ever will, so maybe you should thank him instead of trying to steal his money.

Matt September 2, 2009 at 2:32 am

He doesn’t pack it away. Unless he is stashing a few billion dollars under his bed, or unless he keeps it all in his checking account, his money is being used. Even if it’s in a savings account earning 1.2 percent it is being used. Whoever stores his “cash” is using it to secure investments in other companies and projects. If he keeps it in Microsoft, then Microsoft can use the capital to invest in new projects that will be so helpful to mankind that people will actually choose to buy it.

If it makes you sleep better at night, just pretend that Bill Gate’s money is being used to invest in a software project that wil help hospitals cut 30% of their and save thousands of lives every year. It shouldn’t be that hard to imagine because it might actually be happening.

Anonymous September 3, 2009 at 2:42 am

au contraire. him getting to collect taht 40 billion dollars was the engine that caused him to continue producing anything at all, and those 100,000 employees should thank him for being so focused on making money that he kept putting energy into growing an institution that is now able to pay them a living wage.

Anonymous September 1, 2009 at 11:39 pm

Sure he created value. But him acking away 40 billion doesn’t necassarily create value. Better for that money to be re-invested into some thing we all need like more research dollars or education grants ect…

pauliv September 1, 2009 at 11:54 pm

I have to believe you are kidding. Please be kidding. You cannot believe that individual liberty, efficiency, or just plain old justice (all of which have value, I would argue) could possibly be served by Gates being forced to give his money to “something we all need.” If he chose to do so, fine. Otherwise, what you suggest is blatantly tyrannical and is only funny if you are kidding.

Justin P September 2, 2009 at 12:45 am

Oh look….he does give to education.
http://www.gatesfoundation.org/topics/Pages/scholarships.aspx

Oh look….he does give money for research.
http://www.gatesfoundation.org/grantseeker/Pages/overview.aspx

You need to think before you type sometimes….

louh September 2, 2009 at 2:39 am

Better for who? If what we need is so obvious why do we need Bill Gate’s savings, where are the entrepreneurs, angels, venture capitalists etc?

Anonymous September 2, 2009 at 3:18 am

Let me repeat muirduck. Bill Gates does not have $40 billion stuffed under his mattress. Do you understand that yet?

MWG September 1, 2009 at 11:11 pm

I propose a committee headed by a new czar that will determine the value each citizen has created. Those who have accumulated a greater proportion of wealth to that of their productivity will have it confiscated by the federal government who will use it to invest in our new green economy…

Justin P September 2, 2009 at 12:45 am

Didn’t they do that in Soviet Russia? Something about a Gosplan or something…sorry but I’m the product of public education so anything outside liberal propaganda is outside my realm.

Anonymous September 2, 2009 at 2:56 am

God, you’re stupid, muirduck.

Wealth would not be wealth if there were no value or productivity as its foundation.

Only a socialist can believe that a fairy magic wand can be waved and wealth produced…….but that is what all thieves come to believe. Wave the wand (gun) and people give up their wealth.

Anonymous September 2, 2009 at 5:20 am

I think, And you can’t conceive of the idea that wealth has little to do with value and productivity qualifies for the List of Muirpidities.

It’s also been awhile since a complete list was posted (my list is missing some entries).

Justin P September 2, 2009 at 12:29 am

That sounds very Keynesian….hey wait a minute…oh no I think I’m putting two and two together…quick someone get the thought police!!!

Anonymous September 2, 2009 at 2:11 am

Don,

Please trust me on this. Do not use the military as an example for this:

Only in centrally directed social systems, such as the military, can social justice even make sense, as there are no rules of just conduct in settings where individuals are instructed what to do.

Social justice and the military way are so widely separated as to be totally alien to each other. LOL, I am sorry man, but the military structure is something you’d have to experience for yourself to understand why I reject your suppostion.

In the military, individual action is reserved for those rare instances where one is totally cut-off from superior command. Individual action in normal circumstances carries with it grave danger and retribution.

There is no social justice in the military, there is structure. Where one is on the structure framework determines justice, if any.

Cheers September 2, 2009 at 2:48 am

I think your last two points is his point vid,

Decisions on individual action in the military are subject entirely to the consequences they have on the whole, and the success of the mission, with no consideration for individual consequences or liberties.

ie: you leave post, modify a mission, go awol, disobey orders, negligent discharge, etc and the court martial is decided based on rules that are based on the potential impact to the unit, corps, army, etc as opposed to the impact on you as a person.

Cheers

TeeJaw September 1, 2009 at 9:09 pm

I have this book and have started reading it. It is very well done and a pleasure to read. So far, I like the way the authors explain natural law as law that is discovered by right reason and based upon long established customs and practices of the people as opposed to law that is created by legislators and reflects the will of the rulers instead of the emergent spontaneous social order. In the latter the law follows life, and the opposite is true under the former.

There used to be a method of establishing speed limits that was based upon sound engineering principles but has now given way to pure politics. The old way was called the “85th percentile” rule. It was discovered through observation that about 85% of the traffic would be going at about the same speed and that the other 15 percent were the only ones who were “speeding.” The speed of the 85 percent would become the legal limit and only the 15 percent were subject to speeding citations. Now, for political reasons and revenue raising, speed limits are set by just the opposite percentages. The will of the bureaucrats has trumped the spontaneous order of the people.

Anonymous September 1, 2009 at 10:01 pm

Likewise, if citizens following all the rules of just conduct become wealthy, there is no basis on which to condemn the resulting distribution of wealth as “unjust.”

Tautological truisms are true.Clearly, if the rules of just conduct have titles to property expiring upon the death of the property holder, then to be distributed by a market financed by creditors, there is no basis for condemning the resulting distribution of wealth as “unjust”.If the rules of just conduct permit any man to challenge another man’s title by hand to hand combat, as happens continually in the state of nature, there is no basis for condemning the resulting distribution of wealth as “unjust”.

Anonymous September 1, 2009 at 10:27 pm

“But if the players are to be free to act within rules of fair play, the outcome logically cannot be said to be unfair. ”

How about if at the beginning of the game before anyone is committed we agree that large concentrations wealth and inherted wealth are not good for the system as a whole.

So why not all agree, at the beginning, making a rule that if any of us gets fabulously successful we will give most a large portion of that wealth back to the system?
The rules are the same for all of us, the system would likely promote greater efficiency as the ability to move up the economic ladder would be greater thus incentivising more to try harder.

If it could be shown that massive concerntrations of wealth and power and inherited wealth improved the overall condition of society then who could argue against them. The evidence is not supporting of this claim. Likewise such accumulations in no way increase the liberty of the wealthy or the rest of society. They mearly allow more likelyhood of accumuated power and abuse.

No one has ever given me a good reason why some one needs a billion dollars. I suspect Gates and Jobs would have produced the same value regarless of weather they recieved 1 billion or 40.

The only people who believe it are the Burkeians who basically believe the wealthy elite are some how far suprior and should indeed have the accumulated power regardless of weather it came form something truly procductive or not or even if it was simply inherited.

MWG September 1, 2009 at 10:43 pm

“No one has ever given me a good reason why some one needs a billion dollars. I suspect Gates and Jobs would have produced the same value regarless of weather they recieved 1 billion or 40.”

You idiot, you think Gates has $50 billion sitting in some checking account? His wealth is largely from the market value of the shares he owns in MSFT… you know? the company HE started. If you think the govt. has the right to confiscate portions of someone’s ownership in a company, I would suggest you take a look at how that has worked out for Venezuela…

Anonymous September 2, 2009 at 3:32 am

Another lesson in marginal value here, alluding to a different thread.

Anonymous September 1, 2009 at 11:02 pm

“So why not all agree, at the beginning, making a rule that if any of us gets fabulously successful we will give most a large portion of that wealth back to the system?”

What would you do, mein Fuhrer, with someone who does not agree?

kingstu September 1, 2009 at 11:15 pm

“How about if at the beginning of the game before anyone is committed we agree that large concentrations wealth and inherted wealth are not good for the system as a whole. ”

According to whom?

louh September 2, 2009 at 2:55 am

If we would agree that the game should be played until a person reaches a pre ordained number. As the person neared that number what would be his incentive to risk his present capital. The marginalized return would make it logically prohibitive to continue play. It would be a large disincentive. It would also be a logical assumption that those players with large pocket books may be more apt to venture into areas where the likely payoff would not coincide with the inherent risk. At some level these players are in the game just to play. They may go into areas where the monetary gain is far outweighed by the societal gain.

bb_gun September 2, 2009 at 4:12 am

muigeo,
you seem like an intelligent person. so before i respond to your broad question set, i will make a recommendation – spend less time frantically arguing in this forum and more time with an economics textbook.

1) Observation: “Sure he created value. But him packing away 40 billion doesn’t necassarily create value.”
Reply: In simplified terms, the marginal value to the consumer is their surplus, what they would have paid for the closest alternative less what they did pay. The fact bill amassed such enormous profits is a testament to the value he created for other people. Consumers invested in his product because it was expected to produce more wealth for them. Also, that 40 billion is not under his mattress. It is in bank accounts or invested in other business ventures. His 40 billion is hardly squandered, most of his money is being borrowed or being put to some other economically productive use.

2) Observation: ” [given assumption] why not all agree, at the beginning, making a rule that if any of us gets fabulously successful we will give most a large portion of that wealth back to the system? The rules are the same for all of us, the system would likely promote greater efficiency as the ability to move up the economic ladder would be greater thus incentivising more to try harder.”
Reply: Firstly, as we have already determined value is driven by what you offer other people (I wont charge you for that life lesson). Given that people have unequal skills, knowledge and insight (like gates) there will always be a disparity in material wellbeing no matter the material starting point or how frequently things are redistributed because some forms of human production will always be more valuable then other production. This story is consistent amongst social class because lazy rich kids who refuse to work hard, quickly evaporate their parents fortunes. Also, in your “From each according to his ability, to each according to his need” world, the dominant strategy is to claim that one needs everything.
Secondly, your cause-effect is straight up whack. I think you are asserting that if things are more equal, then people will become more competitive to break away from equality – ironically driven back to the point we started at before the redistribution – inequality. What purpose does this serve except to identify the crappiest of societies contributors? Equality does not drive prosperity because equality, in this case, is achieved through coercion. In actuality, when someone is providing a socially-valuable good/service and their reward is confiscated, they will find something else to do with their skills and time. Because it is assumed that they were doing the best they could given their circumstances, they are forced to downgrade their contribution.
3) “No one has ever given me a good reason why some one needs a billion dollars.”
Need is not an economic term and for that matter has little meaning in general. There is only a spectrum of want in relation to some objective. Need is a human marketing technique utilized by little children to convince their parents to purchase a toy after seeing it in a tv commercial.

Muirgo, your methodology is supportive of a central body that threatens its citizenry with incarceration if they do not financially feed its action (regardless of its consequence), fortifies their ability to drop bombs in foreign lands, and bolster their woeful spending campaigns that usurp our ability to design future technology and enjoy material comfort. It seems ironic that the ideologues that push for a social utopia are willing to kill, steal, and coerce their way to “happiness”. At least the ted kennedy parable has taught us one thing, the road to hell is paved with good intentions.

Anonymous September 2, 2009 at 7:24 am

… most of his money is being borrowed or being put to some other economically productive use.

Most of his money isn’t money. He governs assets with a monetary value, but the assets aren’t money. We say, “Gates has $40 billion,” but we mean that he holds assets with this monetary value.

Anonymous September 3, 2009 at 5:08 am

And marginal value at that. Just wait and see what happens to the value if he tries to rapidly liquidate it all.

bb_gun September 3, 2009 at 6:44 pm

except under extraordinary conditions, why would bill rapidly liquidate all of his assets? he made those investments because he expected their return was greater than the return from the underside of his mattress. opportunity is everywhere, so there must be a profitable marketplace somewhere. it is difficult to think of a reason for a complete retreat.

bb_gun September 3, 2009 at 6:33 pm

i generalized for effect, but your specificity is more informative. thank you. btw, your post below is extraordinarily eloquent.

Anonymous September 2, 2009 at 5:24 am

Good God, he’s on a roll. That whole post qualifies for the List.

Anonymous September 2, 2009 at 5:29 am

Good God, he’s on a roll. That whole post qualifies for the List.

Anonymous September 2, 2009 at 10:04 pm

The rules are the same for all of us, the system would likely promote greater efficiency as the ability to move up the economic ladder would be greater

By what mechanism does stealing the wealth of people who “have too much” increase the ability of those who don’t to “move up”?

Anonymous September 3, 2009 at 3:05 am

who inherits wealth is not a concern for us based on who receives it. the matter of concern is what the person who created it wishes to do with it. if I wish to give my son my money, (which I won’t be doing,) then since it is mine to dispose of, you have no right to go to him and say that it isn’t ‘fair’ that he received it. it doesn’t concern you, it concerns me and how I dispose of my own assets. me. not you. not society. especially not the government. Also, it’s interesting that I’ve already been taxed in making the money, it will again be taxed in just giving it away. some racket they have there. a person gaining inherited wealth is not taking it away from anyone else. they aren’t stealing bread from the mouths of the poor by not pouring out their guilt in gilts. In fact, hopefully, they don’t even apologize for being wealthy. What business is it of anyone’s how much money a person has?

Anonymous September 1, 2009 at 10:43 pm

If you are a supporter of unlimited wealth why not be a supporter of unlimited power. Those who accumulate power because they are bigger and more heavily armed must have done so because they are superior to the minority of us weaklings. Why deprive them of their liberty by insisting that power be equally shared.

I see no difference between my above absurd argument and the one for unlimited accumulations of wealth. Capitalism doen’t need massive accumulations of individual wealth to work. If anything the past 30 years have shown how disastreous such accumulations can be.

The Fortune 400 I believe earned some $1.4 trillion dollars in 2007. If you honestly believe that was more positive for you and the average citizen then it was negative I think you really need to rethink your position.

MWG September 1, 2009 at 10:51 pm

Money does not equal power no matter how much you want to believe it does. If it did, Mitt Romney would be president, and Bill Gates wouldn’t give a damn about what the EU thinks.

Anonymous September 1, 2009 at 11:03 pm

And the Government spends $5 trillion a year, far more then the Fortune 400 income. So who is more powerful?

pauliv September 1, 2009 at 11:58 pm

I can support unlimited wealth, justly earned, precisely because I do not support unlimited gov’t power. Only someone who fancied his government to have unlimited power would argue as you do. I think the average citizen is better off free, with his fortunes to be determined by his own skill, will and breaks, than to have a gov’t with unlimited power trying to prevent the best, brightest or luckiest from accumulating unlimited wealth. We can’t all be rich, but we can all be free.

Anonymous September 2, 2009 at 2:50 am

Thank you my pet minature Chihuahua, for the addition to “Stupidity of the Duck” series. #38

OR #38

muirgeo 3 hours ago
”The Fortune 400 I believe earned some $1.4 trillion dollars in 2007. If you honestly believe that was more positive for you and the average citizen then it was negative I think you really need to rethink your position.”

In your fevered stupidity I know that you think that all the profits of every single company, listed in the fortune 400, goes to one single individual and not to a multitude of stockholders.

Yes, you idiot, the more wealthy those companies become, the more wealthy I become. Only the Village Idiot can not understand that.

Anonymous September 2, 2009 at 5:29 am

I was speaking of the Forbes 400 erroneously calling it the Fortune 400. The Forbes 400 IS based on personal income. You likewise were too confused to realize its the Fortune 500 and the Forbes 400.

Anonymous September 2, 2009 at 2:26 pm

From the recesses of the little Chihuahua skull, the pet thinks the name was the point.

Anonymous September 2, 2009 at 7:11 pm

The Forbes 400 list is about net wealth, not income. That makes your point even more specious.

louh September 2, 2009 at 3:00 am

Why not accept the fact that by natural selection one organism may grow larger, faster, and live longer than any other. Should we kill that organism, should be try to contain it’s growth. Or should we take a step back and try to figure out the benefits to the group of having such an organism.

Anonymous September 2, 2009 at 3:36 am

How about consider the possibility that whatever you and others agree to do to it today, others may agree to do to you tomorrow.

louh September 2, 2009 at 12:16 pm

I hear that.

Anonymous September 2, 2009 at 6:38 am

The Forbes 400 didn’t earn $1.4 trillion dollars in 2007, because most of this income was “unearned” as a matter of law. These people governed resources to this extent in 2007, but the 400 people you seem to prefer, in the Congress, governed far more, without accountably organizing resources to produce goods more valuable than the goods they consume. Our majoritarian Lords are now far more parasitic as a matter of fact.Do I want the Lords entitled to build castles for their exclusive use? No. I don’t want this entitlement any more than Adam Smith did. We could discuss how this authority might be limited, as Smith did, but you don’t discuss it. You only discuss ever greater entitlement for the other 400. I just don’t get it. That’s exactly what the Lords want you to do.

If you honestly believe that these two parties are adversaries, with one championing your interests against the other, you’re out of touch with reality. Any adversity between them is a show. You’re only cheering the bread at their circus, without realizing that the circus is a joint venture.

MWG September 2, 2009 at 6:45 am

“Do I want the Lords entitled to build castles for their exclusive use? No. I don’t want this entitlement any more than Adam Smith did. We could discuss how this authority might be limited, but you don’t discuss it. You only discuss ever greater entitlement for the other 400. I just don’t get that.”

martin, your shortest posts tend to be you best as is illustrated with this gem.

mesaeconoguy September 5, 2009 at 8:03 am

Because they’re not the same thing, fool.

The difference is choice. That’s what you’re supposedly for, right?

Then how come you’re the biggest obstacle to it? And who the hell are you to decide? You have a well established record of mental incompetence and general ignorance, so you’re obviously not the right guy.

If you honestly believe what you spew on this blog and had any integrity whatsoever, you would immediately relinquish everything you have ever gained via your misidentified “talent” (you’re a living counterexample for signaling theory, more later), and you would apologize to everyone here for your ignorance.

You need to rethink your entire wasted life, sniveling jackass.

D G Lesvic September 2, 2009 at 12:11 am

Need I point out, for the umpteenth time, that you are all missing the point, that taking from the rich to give to the poor does not reduce but increases inequality, and is therefore unjust by the redistributionist’s own standards.

Anonymous September 2, 2009 at 12:29 am

You are right about the effects of redistribution, but you are wrong that that is the reason people like me oppose it.

Justin P September 2, 2009 at 12:52 am

Thomas Sowell said it best here. http://www.realclearpolitics.com/articles/2009/07/16/a_personal_inequity_97440.html

“The problem with trying to equalize is that you can usually only equalize downward. If the government were to spend some of its stimulus money trying to raise my basketball ability level to that of Michael Jordan, it would be an even bigger waste of money than most of the other things that Washington does
So the only way to try to equalize that has any chance at all would be to try to bring Michael Jordan down to my level, whether by drastic rule changes or by making him play with one hand tied behind his back, or whatever.

The problem with this approach, as with many other attempts at equalization, is that it undermines the very activity involved. Basketball would be a much less interesting game if it was played under rules designed to produce equality of outcomes.”

Anonymous September 2, 2009 at 6:22 am

“Equalizing” Sowell and Jordan, in the sense that Sowell discusses here, has nothing to do with Sowell’s skill at basketball or with Jordan’s. The economic forces channeling far greater values toward Jordan’s bottom line involve taxpayer financed municipal stadiums, copyrights, broadcast spectrum monopolies and countless other forcible proprieties.Top athletes didn’t suddenly start drawing crowds in the twentieth century, but they did become far wealthier. Babe Ruth was a wealthy man but not nearly as wealthy as Jordan. I can’t name a similar, nineteenth century athlete at all, but I can name nineteenth century statesmen and industrialists. There’s a reason for that, and it’s not because people loved their statesmen and their bosses so much more in the nineteenth century.Without countless forcible proprieties, Jordan might still be a far better basketball player and more beloved by more fans than Sowell, without being more entitled to build a castle. Classical liberalism is and always was primarily about forcible inequality, not forcible equality. Sowell’s point here is not a liberal point at all. It’s a diversion from the point.

Gil September 2, 2009 at 1:36 am

Blah, blah, blah!

Justin P September 2, 2009 at 12:28 am

Damn you, now I’m going to have to buy the book.

D G Lesvic September 2, 2009 at 2:03 am

limitedvista,

I can understand how I drive my wife nuts, but what is this power I have over Kelly, Grove, and yourself, the smartest people here, nay, in the world, to get them to say the dumbest things.

You wrote,

“You are right about the effects of redistribution, but you are wrong that that is the reason people like me oppose it.”

I have made no assumption about your reason for opposing R, and could well understand that you might oppose it, as I would, for other reasons.

But what is wrong with addressing what may well be other people’s reasons for supporting it?

Are we limited to but one argument against R? If we’re permitted more than one, what would be wrong with including mine along with any others? Why, if, as you say, you agree with it, would you keep it a secret?

Whose side are you on?

Anonymous September 2, 2009 at 2:15 am

“you are all missing the point”

Your words DG. I’m cannot be missing a point that isn’t mine.

Matt September 2, 2009 at 2:35 am

I can just imagine the Patriots last year claiming that every game they played in was a tie because it’s not fair that they lost their starting QB.

This passage is elogent

Anonymous September 2, 2009 at 6:51 am

I’m pretty sure muirbot only is talking about the truly downtrodden, not spoiled wealthy millionaire athletes.

Andrew_M_Garland September 2, 2009 at 3:17 am

The Political DictionaryLiberal Economics: Money falls from heaven for everyone to use. But, the immoral and sneaky rich gather more than their share. The government should then step in and redistribute the money the way God intended. Sorry, I mean the way Gaia, or the Tooth Fairy, or whoever intended.The leftist criticism for everything is that someone is making a profit. From a government perspective, where most profits are handed out to co-conspirators, I understand how one could see profits as excessive handouts to disagreeable people.But, it is laughable to think that government administrators are motivated exclusively by altruism. They don’t consider their wages, expense accounts, vacation pay, per diem overages, medical care, and pension as their personal profit. No, that is an honest salary for hard work in a mind-numbing environment.Most people regard profits as somehow unnecessary and “extra”. Without profit, things would be so much cheaper. Or, maybe not.They Are Profiting From My NeedsI once met a person who blamed the bakery for selling her a cake. You see, thay made a profit off of her need for a cake.

Anonymous September 2, 2009 at 4:18 am

Like lowiqers who accuse physicians of profiting off of sickness–as though physicians made them sick, or people choose to purchase physician services for the purpose of getting sick.

Anonymous September 2, 2009 at 2:22 pm

I once listened to a woman in New York city, who ran a non-profit private academy for little kiddies, and she was complaining bitterly that no one wanted to invest in her non-profit.

Her words.

DG Lesvic September 2, 2009 at 5:43 am

Vike,

You said you couldn’t miss a point that wasn’t yours.

But you have already said that it was.

And, in any case, you could and have missed it.

Anonymous September 2, 2009 at 5:53 am

I think you must be very very tired, DG.

Anonymous September 2, 2009 at 6:20 am

Pretty good post. I just found your site and wanted to say that I have really enjoyed browsing your Nike Dunk High posts. In any case I’ll be subscribing to your blog and I hope you post again soon!

Current September 2, 2009 at 9:13 am

This point was made by Hayek in “Law, Liberty and Legislation” vol.2.

Cribbing Hayek from an Amazon review… Hayek: “[I]n…a system in which each is allowed to use his knowledge for his own purposes the concept of `social justice’ is necessarily empty and meaningless, because in it nobody’s will can determine the relative incomes of the different people, or prevent that they be partly dependent on accident. `Social justice’ can be given a meaning only in a directed or `command’ economy (such as an army) in which the individuals are ordered what to do; and any particular conception of `social justice’ could be realized only in such a centrally directed system. It presupposes that people are guided by specific directions and not by rules of just individual conduct. Indeed, no system of rules of just individual conduct, and therefore no free action of the individuals, could produce results satisfying any principle of distributive justice…In a free society in which the position of the different individuals and groups is not the result of anybody’s design–or could, within such a society, be altered in accordance with a generally applicable principle–the differences in reward simply cannot meaningfully be described as just or unjust.”

Anonymous September 2, 2009 at 2:16 pm

I read this passage over and over. I think I get his point but I’m still not sure. However, I believe what he is saying is you can’t set up markets fairly and have just outcomes. I believe it is indeed a brilliant truism.

The fault of it is that YOU can set up fair rules and have MORE just outcomes. The false premise is that the outcomes must be equal or equally just.

James K Galbraith in his book, The Predator State resolves the issue. “The setting of wages and the control of the distribution of pay and incomes is a social and not a market decision.”

Brilliant!!!

mesaeconoguy September 5, 2009 at 8:11 am

I read this passage over and over. I think I get his point

No, you don’t.

Allow me to clarify: James Galbraith is a moron, like you.

Markets don’t care, idiot. That’s the point. You’re not that important. Get over it.

Life isn’t ”fair.” This isn’t equal outcome, amateur economist Galbraiths (both of them).

TeeJaw September 2, 2009 at 2:57 pm

Wouldn’t it be nice if everyone were rich? Alas, that is not likely. But if the free market is allowed to work almost everyone, a large majority at least, will likely be richer tomorrow than they are today. On the other hand, if Muirgeo’s rules were in effect, it is a lead pipe cinch that almost everyone will be poorer tomorrow than they are today.

Which do you prefer, Muirgeo? Some rich, some poor, most in between? Or all equally poor? Well, not all. Not the the criminal gang ruling the country and enforcing the system you advocate. As in Cuba and Venezuela and most of the Arab Middle East, they will be rich, they will have guns, but you won’t have any guns or money or lawyers and you will be at their mercy. That is, if they have any mercy, which they won’t.

Anonymous September 2, 2009 at 3:31 pm

“Wouldn’t it be nice if everyone were rich? Alas, that is not likely.”If by “rich”, you refer to some percentile of income or wealth in this country, then by definition, everyone cannot be rich. If by “rich”, you refer to consumption as a percentile of everyone in the world, then you’d be hard pressed to find anyone in the country, even people living on the streets, who aren’t rich. If by “rich”, you refer to the opportunities available for individuals to exploit their own abilities and direct their own lives, then nowhere on earth or in history have so many people been so rich as in the US today.

Anonymous September 2, 2009 at 5:30 pm

I think the post is based upon a false premise.

I would agree with it one hundred percent if it advocated 100% estate taxes and gift taxes, required attendance by all children at uniform schools, etc. Then you would have perfectly “fair” teams and everyone could compete and nobody could impugn the resulting score, however lopsided it might be. That is probably the strongest and most logical caveat that would allow for compeling libertarian thought: “let’s create a very equal playing field, and then it is up to everyone to do what he or she wants and nobody has to feel bad about it or anything.”

As it is now, many libertarians seem to favor their current situation, derived after centuries of governmnet intervention, plunder, systematic laws excluding women, poor people, immigrants, etc. for the longest time, and the argument seems to be, “Ok, no matter what the rules were and what happened in the first half of the game, everything is relatively fair right now, at least as far as I am concerned, so lets keep playing, just no changing the rules starting now, and oh yeah, no government at all except for people with guns to enforce my property rights!”

Why not admit that far more reasonable approach is to admit you are an independent, a socially liberal republican, or a fiscally conservative democrat, acknowledge government must play some role in creating institutions that allow for a market place to even exist, and realize that liberty, human nature, and human decency requires some amount of government action, if only to promote and maintain such a human-invented concept at “property rights” and to prevent anarchy and mob-rule, and then devote oneself to serious policy arguments over the appropriate level of government involvement?

Anonymous September 3, 2009 at 5:51 am

“many libertarians seem to favor their current situation, derived after centuries of governmnet intervention, plunder, systematic laws excluding women, poor people, immigrants”

And your argument is that some people are probably currently benefiting in some intangible way off of the crimes of others in the past, so let’s just indiscriminately punish everyone for it now. Apparently the obvious tangible injustices that you must commit in the process do not bother you.

It is called collective justice. Collective justice is, as a matter of fact, not justice at all. It is one of humanities greatest evils. And you, like those in the past who have also advocated for it, really use it simply as a convenient justification for the evil they wish to do to others. In your case, I suspect you wish to persuade your government to confiscate others’ property, and feed your values with the loot–or simply force them to live in some manner consistent with your values.

How about a test of your sincerity. Would you allow someone who starts out with zero net assets–or puts up some amount of wealth that you deem his ill-gotten gains–to choose to be free from all of your coercive schemes? Would you allow that person to pursue a libertarian life–to live by the “rules” of liberty?

Anonymous September 3, 2009 at 5:20 am

The game example is an excellent way of explaining fairness. In baseball there is a cadre of non-players called umpires, who, with no interest in the outcome, act as arbiters for the actions of players. In the rest of life, there is a cadre of non-humans called government employees, who, with no interest in the outcome, act as arbiters for the actions of humans.

This, of course, is nonsensical on so many levels. I have encountered government employees that should consider the term “non-human” an upgrade. But even the best are incapable of stepping outside of humanity and performing a role in the same manner that we can stipulate into existence in sports.

Even with our stipulations, umpires and referees can cheat to achieve some real-life benefits. While there probably is broad agreement over most of what constitutes “unfairness”, what’s left over is hardly insignificant. And there is more than just the question of just conduct – what about unjust conditions?

The reality is this: even in sports they institute leveling strategies like granting poor performers better drafting positions; separating schools into classifications and revenue sharing.

Anonymous September 3, 2009 at 6:03 am

“even in sports they institute leveling strategies like granting poor performers better drafting positions; separating schools into classifications and revenue sharing”

Participation in sports is voluntary. Care to make participation in government voluntary?

Anonymous September 3, 2009 at 5:21 am

The game example is an excellent way of explaining fairness. In baseball there is a cadre of non-players called umpires, who, with no interest in the outcome, act as arbiters for the actions of players. In the rest of life, there is a cadre of non-humans called government employees, who, with no interest in the outcome, act as arbiters for the actions of humans.

This, of course, is nonsensical on so many levels. I have encountered government employees that should consider the term “non-human” an upgrade. But even the best are incapable of stepping outside of humanity and performing a role in the same manner that we can stipulate into existence in sports.

Even with our stipulations, umpires and referees can cheat to achieve some real-life benefits. While there probably is broad agreement over most of what constitutes “unfairness”, what’s left over is hardly insignificant. And there is more than just the question of just conduct – what about unjust conditions?

The reality is this: even in sports they institute leveling strategies like granting poor performers better drafting positions; separating schools into classifications and revenue sharing.

sandre September 2, 2009 at 12:12 am

He is not kidding he is a fool

Justin P September 2, 2009 at 12:38 am

A physician? My god man!!!

I agree with you, I’m pretty sure he is sincere. I wouldn’t say that anything is broken though. I hate it when liberal call libertarians, “Mentally Challenged.”

I think it’s just safe to say that he has a different outlook on life and has a different value set than most of the commentators and posters here. It’s very healthy in a society as large as ours. That being said, I vehemently disagree with most of what Muirgeo has to say, but at least he keeps us from being complacent. As capitalists we should all know that complacency leads to Epic Fail.

Anonymous September 2, 2009 at 12:43 am

“different value set”

Yeah. He doesn’t value basic logic.

Anonymous September 2, 2009 at 3:29 am

Now you see what I mean? Care to rephrase your prior defense of him?

sandre September 2, 2009 at 3:58 am

I admit that there are people who are born with physical and mental infirmities, and there are those who meet with tragedies in their life for no fault of their own. Charitable giving sure help some of those and I’m all for it.

But gates giving his wealth ( capital, not income ) doesn’t come without a cost. It is the old saying about -teaching a man to fish versus giving him one. Let me explain – over the years Bill Gates has managed to accumulate a lot of capital. The 40 billion is mostly his share in Microsoft’s market capitalization. It is not something he has piled under his mattress from his income stream or not even deposited in a checking/savings/CD.

He can use that capital to reinvest in things that he knows best and he does best – which is making software, or he can choose to do a large number of other things including what the Gates foundation does. Reinvesting has a high likelyhood creating jobs, opportunities, wealth, for a lot of others and also has immense potential ( as he has shown from his track record ) to increase his own wealth much further. By giving money away through Gates charities, he might teach a few to fish, but he is also likely to waste a lot of that capital on just feeding some people fish. It sure will come with opportunity costs of technology/software that could have been and will not.

Anonymous September 3, 2009 at 2:51 am

this is bill gates, the loser, the quitter, the social defaulter. he has given in to this imaginary sense that somehow it is only good for a man to benefit others, but bad to benefit himself. If it’s only good to benefit others, who are the beneficiaries to collect such benefits? Moral invalids? A man can only live inside one brain. He can only sustain that which he knows to be good, and he can only know things to be good in relation to his perception of them.

What do these moral elite who demand that folks like gates give away fortunes to prove their virtue have to say in defense of the fact that they treat their own families better than they do the family down the street? How about how they put food on their own table before the neighbors? Why do they insist upon mowing their own lawns before they’ve first mowed those of the entire block? What a bunch of self centered people in a self centered world!

If one is truly concerned with their own best interest, that means they will look out for the things that they value, personally. Their own happiness, that of their family, the company of those they love, and they do not take a single thing from anyone else, if they know what is good for them. How many business do you know that think “I’ve got this great business model! I’ll make a crappy product, sell it for a high price, and I’ll be rich!” None. If they do that, they won’t make it for very long. Some try this model, and fail. Some temporarily undercut, but that is rare. The truth is, someone who is truly and rationally self interested will not want to damage his own reputation by doing ill to others. Goodwill is more valuable than a few quick kill scams of thefts. returning customers buy more, and tell others to buy more. Those who have been cheated simply call the cops or lawyers. No rational, self-interested individual loving his own happiness would ever seek to bring upon himself the wrath of those he has wronged, nor the torment of public crucifixion that would surely follow.

YES, there are bad businessmen, but they are not RATIONALLY self interested. They are worshipers of their own whims. Rational men do what is best for them, which is very hard to do sometimes.

Justin P September 2, 2009 at 3:42 am

Ha ha. no, not yet anyway.

Anonymous September 2, 2009 at 5:08 am

You will. I was in your shoes once.

Justin P September 2, 2009 at 5:15 am

One thing is for sure, I don’t want him as my doctor.

I understand what your saying, I was previously posting a lot on a predominantly lib/progressive but anti-obama/pro-HRC blog, but left once they started talking about how Obama can’t be a Dem because he was backing of the public option. You know basically because they don’t like him and they think he will hurt the party, now is the time to eject him and start the revisionism.

Justin P September 2, 2009 at 5:28 am

I agree with the teaching a man to fish theme, but the point I was making was that the government doesn’t need to confiscate Gates’ wealth in the name of “Better for that money to be re-invested into some thing we all need like more research dollars or education grants ect…”

Gate’s is already voluntarily doing that and better than would have been the typical Government/Croney system of grant giving we have now.
They key being voluntary giving, not confiscation, which is what Muir is an advocate of.

I agree with you though, that most of that money will be wasted, but the same is true in any venture capital operation as well.

Anonymous September 2, 2009 at 3:15 pm

I don’t like anything DK writes on this forum either, but I don’t think he’s nuts. With muir, there is something beyond ideology. Maybe a kind of cultish programming. Maybe the reason he spends so much time here is like a cry for help–”Someone save me! Please pull my mind from this small blinded crypt that MoveOn.org has chained me to!”

Anyway, I sure don’t want to hurt his livelihood. If he’s providing a useful service for someone, I can separate that from the weirdness of his Cafe postings.

Anonymous September 2, 2009 at 7:13 pm

I hope you’re being facetious about that last Keynesian remark… otherwise it’s no wonder any discussion of Keynesianism with you seems pointless.

Anonymous September 2, 2009 at 10:05 pm

Sure we can have a pointed discussion about Keynesianism. Let’s start here: Tell me one idea that distinguishes Keynesianism that isn’t nonsense.

Anonymous September 3, 2009 at 2:40 am

for one, printing money is wealth redistribution. It is certainly not a creation of any kind of value. You may think that’s a nice n sympathetic thing to do, but it’s exactly the equivalent of a REGRESSIVE tax. People’s savings are made to be less valuable as more money is ‘deficit spent.’ Those with less money to begin with are devalued the most, percentage-wise. Why is it not considered wealth creation when stock holders are diluted to hell when the government buys a gigantic stake in the company via a new issue? Oh, right, but it’s different with M1 and M2. Keyenes said so. We oughtta build pyramids, or dig big holes, bury dollars in treasure chests and tell men to dig them up!

You can talk all you want about how the money will be destroyed at some point, but if it really were a zero sum game, there would be no ‘stimulus effect’ to speak of.

It’s very much like saying Check Kiting works to grow the economy, as long as nobody cashes any of the checks. (For example, I recall someone citing that the monetization of the GSE debt by the Fed, bought on the open market from other financial institutions is really not affecting anything economically because its proceeds are still sitting in bank reserves and not getting out into the economy via lending. ie, nobody’s caching the check.)

Anonymous September 3, 2009 at 6:51 pm

He wouldn’t. The point was regarding marginal value. You can say he has $40 billion in assets, but that does not mean he can cash out and buy $40 billion in some other assets. There is another restriction to that value label–to get that value assumes he would sell only small portions over a long period of time. A realistic valuation would have to depreciate for that.

Anonymous September 3, 2009 at 9:23 pm

Not the underside of his mattress. He made those investments because he expected their return was greater than the return from his next best option. The difference is significant, because it leads to market efficiency.If two assets with comparable risk have different expected yields over some period, then we must expect investors requiring a yield over this period to sell the asset with the lower yield and buy the asset with the higher yield, thus driving the price of the former down and the price of the latter up, until the difference in expected yield no longer exists.Rational expectations depend upon information, and information need not be widely known, but if you only have widely known information, you can’t rationally expect one asset to yield more than another with comparable risk, because this difference between two assets is unstable. An efficient capital market bids it away.

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