On Rich, Poor, and What Trends Mean

Boy, it sure looks like all your statistics are really doing a lot of good.

But just wait till Admiral Dewey gets back from Manila Bay with his.

That'll settle everything.

First I wouldn't agree entirely with your premise - that those on "the political left" think the economy has been bad the last thirty years. I think they would say that some things have been bad - many measures suggest that inequality has increased (although there are caveats to those findings), and long term unemployment has steadily increased. But we have obviously become wealthier and trade is freer. It's a mixed bag.

But even if you accept your caricature of what the left thinks about how the economy has done, you still have an odd understanding of "what the left wants". For someone that wants to slash government and regulation, you see "what the left wants" as "more regulation, intervention, and government". But the point is, the left wants CERTAIN intervention and regulation. You see intervention as undifferentiated because to you it's all bad. But just because that's how you see it doesn't mean that the left thinks intervention is all good. I come from a centrist Democrat, Clintonesque sort of background that respects a lot of what men like Reagan did and stood for but still think there is a role for a smart, active government. I don't just celebrate any intervention. I appreciate the New Deal historically as a rough, first draft attempt at a Keynesian approach to policy, but I don't worship the ground FDR walks on. Same with the Great Society. I celebrate the fact that we killed welfare as we knew it. It was well intentioned but ill conceived. I'm sure I'm on the "political left" compared to most people here, but your caricature of someone who just thinks "government intervention does work" is a complete mischaracterization. I don't like undifferentiated government intervention at all. I'd prefer not to have government intervention - and where I do support it my position isn't "any intervention is a good intervention".

I think they would say that some things have been bad - many measures suggest that inequality has increased (although there are caveats to those findings)

Ahh....the perfect example of a Danny comment. On some threads he proclaims that inequality is a positive and here, where it's convenient to his argument, he lists it as a bad thing.

I will conveniently pretend, for the purposes of my rule, that methinks1776 is not the same as methinks, and then ask methinks1776 why the fact that there can be good inequality (ie - inequality arising as a market signal) negates the possibility of bad inequality. And further - why we can't recognize that "good inequality" both serves an important economic function AND may have negative social consequences.

It seems to me that it's perfectly reasonable to talk about a phenomenon like inequality without committing to the idea that it's all good or all bad. If I ever gave the impression that I thought inequality was all good, or even that a reasonable level of inequality is always enjoyable, then I apologize for giving that impression.

I think this is one of those teachable moments Obama was waxing on about.

I will conveniently pretend, for the purposes of my rule, that methinks1776 is not the same as methinks,

"I'll pretend you're not the same person"? This is the best you can do? This is exactly the stomping on your loudly declared principles whenever it is convenient for you to do so that makes you look like a schmuck.

NEVER EVER sell your option cheaply. Why sell your option to respond at some time of your choosing by publicly proclaiming that you shall never respond EVER again? What did you gain? All you needed to do was stop responding. The effect is the same and you maintain the option of responding without showing yourself to be the undisciplined little hyporcrite that you are. Optionality is wonderful. Tossing it away for a cheap emotional thrill is childish. There's your teachable moment, my boy.

why the fact that there can be good inequality (ie - inequality arising as a market signal) negates the possibility of bad inequality.

It doesn't. To oversimplify for the sake of time and space, "Good" inequality stems from people making choices. "Bad" inequality results from an impendiment to choice. In the United States, the greatest inequality of income exists between people who take great risks by becoming entreprenuers and those who don't (that is, the top of the fifth quintile tends to contain a disproportionate amount of entrepreneurs). That's a good thing. The inequality in the Soviet Union was much greater than in the United States. That inequality resulted from a small ruling class stealing everything for itself and being in a position to do so. At the same time, people did not posses the freedom to choose for themselves. That's bad inequality and that inequality resulted from endless government involvment.

Let's not pretend that the left is suddenly NOT against inequality of outcomes rather than inequality of opportunity. By insisting on more government control, the left is arguing EXACTLY for inequality of opportunity. More government involvment means government bureaucrats decide who succeeds and who fails. You are attempting to assign to the left a benevolent position they do not actually hold.

As for concocted negative social consequences - well, those are just so conveniently broad and subjective, aren't they? I mean, washining machines you can measure, but social consequences? The question of social consequences is irrelevant as anything but fodder for dinner conversation amongst psuedo-intellectuals.

How can social consequences be negative if inequality arises from choices people make for themselves? On the other hand, forced equality produces endless social consequences. There is nothing more negative than the class warfare the left has been stoking for decades. There is nothing more negative and demoralizing than the theft the left has committed in the name of some amorphous social justice. There is no social consequence worse than creating a system where government decides who gets what because rent seeking is the only way to survive in such a system. The only way to get ahead is to have the right connections, not to work hard and to invest.

Fretting over this contrived "Social consequences" as a pretext for government control of outcomes is the only thing worth recognizing about "social consequences".

It seems to me that it's perfectly reasonable to talk about a phenomenon like inequality without committing to the idea that it's all good or all bad.

Of course it is. Only leftist would-be central planners and economists give two figs about inequality in a free country. Everyone else is just busy running their lives. Economists care for academic reasons and leftist because they're always looking for a way to rob people of their liberty.

I'm not surprised that you find inequality so troublesome. I never believed you when you said you were all for it.

"By insisting on more government control, the left is arguing EXACTLY for inequality of opportunity. More government involvment means government bureaucrats decide who succeeds and who fails."

The left (at least I am) is arguing for good/ fair rules that create equality of oppurtuniy not equal outcomes. There should in my opinion e a diversity of income distribution but at some point it's not proper or healthy. Indeed I can't deny that , like Adam Smith and Thomas Paine, the nature of competitive markets will require some asymmetric input from those of good fortune in the form of a progressive tax or its equivalent. But this will in no way hinder entrepreneurs or markets.

But every baby born will have greater equality of oppurtunity and in genral better ualities of life if they just all agree at birth that down the road those who are the most successful will put in a little more to keep the system fair and effecient. And I talk to babies all the time... they agree.

"There is no social consequence worse than creating a system where government decides who gets what because rent seeking is the only way to survive in such a system. The only way to get ahead is to have the right connections, not to work hard and to invest."


Exactly! And my point is the rules can be tilted so cash flows to the top or to the bottom. I think the evidence clearly shows the latest boom in incomes for the extreme wealthy had more to do with them getting the rents they seeked and having the better connections compared to the average working person and little to do with truly adding productivity to the economy.

No one is stopping you from giving away all your money and possessions to charities that help the poor and the destitute. I give money to the poor. Why can't you?

Why must you rob me in order to feel good about yourself?


The left (at least I am) is arguing for good/ fair rules that create equality of oppurtuniy not equal outcomes.

That's a rather odd argument coming from you, considering that the last few posts of yours consistently harp on inequality of outcomes, and not of opportunity.

Either you're confused about "the left"'s position, or confused about your own position, or you're outright lying.

I'm glad that in your last paragraph, you finally came to the conclusion that the government is too big and must be shrunk. I always believed you would eventually turn around and join us.

No one is stopping you from giving away all your money and possessions to charities that help the poor and the destitute. I give money to the poor. Why can't you?

Why must you rob me in order to feel good about yourself?




Likewise no one is stopping you from using government sevices.... but almost every hour of everyday you will use some government provided service while you constantly bitch and whine about having to pay for them.

No one is robbing you DramaQueen... we all pay the same taxes based on income and I am paying more taxes then 95% of the population.

Although I try to minimize my use of government services, I do not have a choice in paying for them. If I send my kids to a private school, I not only would pay for the private school, but I would also pay for the public school, and a third time for the supply distortion.

If you allow me to avoid paying for a government service, I will happily select the private version instead. But that's not good enough for you. We all know that you will rob me anyway to pay for your ego trip.

How about this deal: I'll create my own bank, robertbank, where I give out low-interest loans to the poor. To fund my operations, I will send my goons to rob you. If I make money, I promise that I'll send over my goons less often (unless I decide to expand my operations, of course).

You'd be free to borrow as much as you want from my bank. Sounds perfectly fair to me. Surely you have no objections.

You, Methinks and I can even have a vote to decide on how much you'll pay. That way, you'll even get to democratically decide.

Re: "This is exactly the stomping on your loudly declared principles whenever it is convenient for you to do so that makes you look like a schmuck."

Principles? It was an easy rule of thumb that saved me a lot of grief. There wasn't anything principled or unprincipled about it. And I broke with it once to actually try to talk with you about inequality, but since this is how you start your post I'm not even going to bother reading the rest of it. There's no point and there's no benefit for me in it.

Next time you actually try to substantively engage me again perhaps I'll respond - not to break a foundational principle, but just to follow rules of thumb as long as they're useful. Until then, enjoy your sniping.

LOL!!

It has been patently obvious from the beginning that you are labouring under the delusion that we are all yearning for your pearls of wisdom.

I don't care what you have say about inequality. My response wasn't written for you.

Another Yabbut moment!

From now on, I will never again reply to Methinks, Vidyohs, etc. etc. - Yabbut Kuehn, several threads ago.

Yabbut, that's not like a principled stand, or something. I meant I'd never respond to their posts again, until I respond to their posts, again. You people just misunderstood what I said.

It's probably a good thing he didn't read all of Methinks' post.

What principles could possibly be at stake in that decision I made? It was a simple decision to keep me sane, and it's worked very well. The moment it looks like Methinks actually wants to talk about substantive and I give it another chance, it turns out Methinks doesn't want to talk about anything substantive at all. Oh well - I got burned. Should have stuck with the rule. Either way, there are no great principles at stake here. Once more - hyper-melo-drama over everything from the Cafe Hayek crowd.

What principles could possibly be at stake in that decision I made? - Yabbut Kuehn

Obviously, none. You're a "yabbut" kinda guy.

I know you must be flush with embarrassment that Methinks called you out after you petulantly claimed you weren't going to respond to her posts - and couldn't even make it stick for a week. But seriously, what did you expect would happen when you made such a big deal over your new pledge? It was just like when Yasafi announced he was leaving, and never coming back. Not one of us believed him, and as you can see, his principled stand is about as noteworthy as yours.

We should have started a pool on when you'd break your pledge, I'm sure most of us were gaming it, anyway.

... oh - and also extremely self-involved and personalized.

It stuck for several weeks. Wow - this was really important to you guys, wasn't it? I had no idea. I'm still a little fuzzy on what my lofty principles were. I was just trying to give myself a modicum of sanity, and so far it's done the trick. And I still plan on adhering to it unless there's good reason not to.

This is really interesting - your approach to my rule is just like your approach to policy: impractical, unpragmatic, and dogmatic.

Wow - this was really important to you guys.

Yabbut,

It wasn't important to me, but it was instructive.

It stuck for several weeks.

OK. Several weeks. Even Yasafi was able to stick to his pledge for a few months. But, to his credit, Yasafi is not a yabbut kind of guy.

Please! Do not lower yourself, your majesty. We wouldn't want you to soil yourself.

Of course you don't have any great principles at stake here. Your only principles are to teach everyone how great theft and envy are while obnoxiously trying to convince everyone that's not what you're doing. Socialists and fascists are by nature unprincipled - the ends justify the means.

I have zero respect for you and that's not the first time I've told you that.

Good points DK.

Libertarians want ALL policy to go away. As they can't specifically point to the benefit of doing so to me or the broader public the chances of our policy becoming fully libertarian are next to nil.

So we have to talk in terms of policy that can actually be effected. I think libertarians have a lot to contribute with regards to rational policy that looks at incentives and unintended consequences. But they seem to rather want to take the extreme case and suggest any policy is bad if it's not completely libertarian. As well as calling any policy pushers statist or communist. Which gets ridiculous because by their reckoning we live in a statism socialist economy but the poor are getting richer. There is some sort of logical disconnect where they can't even seem to stay on the same side of their own argument.

My main point is simply that relatively minor policy changes can make the system more equitable, more fair and even more efficient. Likewise minor policy changes can drastically benefit a small minority at the expense.... of the whole world ... I would argue. As bad as some liberal policies may have been none have come close to doing the amount of damage seen in the Great Depression or the current economic collapse.

Health care is a great example. There is little downside to improving our current system but the answer is not turn it completely over to the free market. There definantly are more market based approaches to what we are seeing offered but the Republican party in charge the last 30 years saw more benefit to keeping the current system unchanged.

"Libertarians want ALL policy to go away."

Patently false. Libertarians want policy that respects the real relationship between productivity, property rights and the general welfare, as described in basic economics and natural law.

"But they seem to rather want to take the extreme case and suggest any policy is bad if it's not completely libertarian."

Any policy is bad if it's written in denial of the above realities.

"by their reckoning we live in a statism socialist economy but the poor are getting richer."

Strawman. We recognize that the status quo is mix of free will and coercion. The point is that the supposed growing inequality used as justification for even more socialist policy is fabricated. Our principles hold that more libertarian policy will advance prosperity, and nothing to the contrary should be inferred -- as you are clearly doing here.

"There definantly are more market based approaches to what we are seeing offered but the Republican party in charge the last 30 years saw more benefit to keeping the current system unchanged."

1. The Republican party has not been "in charge the last 30 years."
2. During those periods where Republicans did hold clear majorities, we got very sound policies like HSAs, and sound proposals like tort reform which could not overcome moderate objections.
3. Not all Republicans are conservative/libertarian.
4. Some 85% of Americans have excellent comprehensive healthcare, and even now the remaining 15% have access to excellent emergent care. There is much downside to foolishly tinkering with it.

These are facts -- the way things really are. Have you ever stopped to realize how nonsensical and foolish your position is, being rooted in the denial of such realities?

"Libertarians want policy that respects the real relationship between productivity, property rights and the general welfare, as described in basic economics and natural law."

OK I basically agree.

Now look at this graph;

http://3.bp.blogspot.com/_n5ROGN0Id8Q/SwqTxQV5A...

Look at the blue line. Now tell me what the top 0.05% of income earners did between between 1975 and 2009 to make their value go from 5% of the income pie to nearly 15%.

Do you think the policy for that time frame fits with your above stated criteria.

Now look at this graph;

http://3.bp.blogspot.com/_n5ROGN0Id8Q/SwqTxQV5A...

Look at the blue line. Now tell me what the top 0.05% of income earners did between between 1975 and 2009 to make their value go from 5% of the income pie to nearly 15%.


I've been coming to the site for a few years now, never really read the comments, just started today and I've seen you post that graph a few times. I hope someone has informed you that w/ that graph you are assuming that the top half of one percent is a static class and the folly in that. As Thomas Sowell points out, sell a house in California and you're in the top 1% of income earners for that year. There's also been a lot of great work done, even from the IRS stats that you say are the source for that graph, on how a great many people move in and out of those income brackets every year.

"I hope someone has informed you that w/ that graph you are assuming that the top half of one percent is a static class and the folly in that."

That's an excellent point, Truck_Party. It's a point which has been made a number of times by commentors at Cafe Hayek. If you continue to read the comments at Cafe Hayek you should discover that many arguments such as yours are simply ignored by those who advocate wealth redistribution and government intervention. I sincerely hope you will have more success than we have had.

Thank you, I do plan on sticking around, but I don't have much optimism in any success of getting through to him. He seems committed to just following trends in different income brackets, not following people over time. All I could tell him is that there have been studies that follow people from the Treasury Dept. and IRS data that show what a transient economy we have.

From a recap of the Treasury study "Those who start at the bottom but hold full-time jobs nonetheless enjoyed steady income gains. The Treasury study found that those tax filers who were in the poorest income quintile in 1996 saw a near doubling of their incomes (90.5%) over the subsequent decade.Those in the highest quintile, on the other hand, saw only modest income gains (10%)."

Other studies that follow people over time report very similar findings.

Like I said, after reading more of his posts I don't hold much hope, in fact I'm laying 3-1 odds he posts the graph again if he responds to me. I did see in another posts' comment section Muirgeo said he wasn't for the equality of outcomes.. I'd also tell him it should be tough to say you're not for equality of outcomes when you spend all your time bitching about the inequality of outcomes.

This is the problem with these blog formats. As old post roll off the scroll good debate comes to an end.

Anyway if you do come back to read this I have 2 points.

One the studies I've seen have shown that mobility from one income decile to another is lowest in America.

Two, I don't care if the top 0.05% represented all new people ( it doesn't) why do they need 15% of all income as oppsoed to 5%. It still likely reprsents a massive mal-distribution of income in proportion to worth. Why do you assume the markets divies income up proprtionately?


Actually three points... you didn't answer the question of weather they produced comparable value for the income they took from the pie. My assessment is that much of that income is ultimatly going to come from peoples home equity, 401K's and tax payments.

Fourth, I think it's no coincidence that extreme concerntrations of income occur concurrent with economic crashes. That extra trillion dollars going to oof shore accounts for the wealthyis far less prooductive then if it went to the masses in the middle class who would spend it all.

And again they seem to be more policy directed then productiivty directed.

I think your's is the position that says lets run the markets like casinos while mine is the one that says lets reward true productivity.

Then I'm guessing your studies are wrong, and possibly authored by John Edwards or Mike Huckabee.

On points 2 & 3, why do you assume you know people's 'worth' and what incomes they should make? I have no idea if they've provided comparable value, and neither do you. I do know that the people w/ actual skin in the game think they have or they will, and they're in a much better position to judge their worth than two spectators from the sidelines.

The 4th point gets more silly. For starters, those who receive those large incomes pay something like 40% of all income taxes. At which point is enough for you? Second, the "give the middle class the income b/c they'll actually spend" is a fallacy refuted so many other times that I don't want to waste the keystrokes, just google it.

Also, you've greatly misstated our positions. My ideal system is one which insures freedom from coercion and property rights. Your system is one in which you get to play king and decide who's really productive and gets to decide other peoples' worth despite having no skin in the game.

That chart's been debunked before. Too many other things changed in 35 years to make that chart a useful indicator of anything.

Furthermore, the "pie" is not made of income; it's made of wealth, and they are not the same thing. High incomes for some people do not translate to greater poverty for others without accounting for what everyone spends their income on. And I'm pretty sure the uppermost percentiles have assumed responsibility for most of America's savings.

OK well never mind then cause you're just making crap up as you go along. The chart is from a libertarian website, its from IRS data and it IS made up from income.

For a minute there I thought you were some one who actually was interested in serious dialog. My bad!

"OK well never mind then cause you're just making crap up as you go along."

1. Return to top of page.
2. Note the appearance of the phrase, "'consumption' inequality.'
3. Income does not equal consumption.
4. It doesn't matter what website you get income data from; it's inherently flawed as an input from which to draw conclusions about consumption.
5. To draw conclusions about consumption equality from income figures, as you are doing, is the definition of "making crap up."

Whois,

In Yasafi's world, the Congress is irrelevant and presidents are Kings.

Do you expect integrity from ideologues?

Merg asked,

"Where is your logic?"

That's what I'd like to know, too.

I can tell you this. Merge knows where mine is, for it's shut him up every time.

Your statistics never will.

Love him or hate him, Merg is revealing the inadequacy of statistical analysis and the need, ultimately, for theory. And all of the statistics here at the expense of theory is showing what's wrong witha "loosely defined economics." Under a Gresham's Law, the loosely defined will drive out the strictly defined, and there won't even be a place in its own home for real economics.

Just remember that data without theory is a meaningless jumble, that there is economics without the jumble, but not without the theory, and without the data altogether, but not without the logic.

While I don't think statistics should be entirely dispensed with, I tend to agree with you, DG; it is a point Mises himself emphasized. The problem is that--sigh--Muirgeo does kind of raise a valid point, which is to say, that none of this proves anything. Each side can claim credit for the economic situation of the preceding decades if beneficial, cast blame if harmful. And there is nothing perfectly unambiguous about the picture painted by these statistics. As Nietzsche said, "there are no facts, only interpretations," which basically leads to your point about the importance of theory. By the way, DG, while on another blog I came across your "book" (I guess), and while I read only a small part, I quite liked what I read. I plan eventually on reading it in its entirety, once I have secured myself full-time employment. (Sounds paradoxical, I know, but I spend more time fretting about being unemployed and searching for jobs and drinking myself into a stupor as a coping mechanism to have much leisure reading time.)

Barbarian,

I am deeply saddened to hear of your personal problems and hope things will get better for you soon, and pray you stop trying to drink them away. If nothing else, alcohol shrinks the brain. Anyways, you're a helluva good man, so don't let your situation get you down. I have a son, too, who has finally gotten a job after about a year or so unemployed. It is so brutally unfair. Keep your spirits up. And don't drink! Not even water!

Back to Merge. Quite a long time ago, maybe a year and a half, he agreed to the most fundamental principle of our side. I hate the word libertarian and prefer Utilitarian Voluntarist. Ayways he agreed to the most essential principle of libertarianism or Utilitarian Voluntarism, to live and let live. He was what you might have called an anarcho-libertarian. So what happened? Too many people here took the pressure off him. It was pure reason that brought him to our side, and the emphasis again on statistics that let him slip away.

We ought to forget about them altogether and get back to the basics of Austrian economics, strictly defined, pure reason.

Ludwig von Mises: "No one shall be idle if I have to work; no one shall be rich if I am poor. Thus we see, again and again, that resentment lies behind all socialist ideas." - Socialism

Mises is like the last of God's prophets. Yeah, I was too lazy to apply for this great grant-writing job that I know I was a shoe-in for (or is it shoo-in? Maybe I wasn't so qualified, lol). Anyway, I'm trying not to be attached to any job that I might find, because I really, really want to work for the Peter Schiff campaign in Connecticut next year, and I will do just about anything to realize my passion.

Barb,

Sounds like you're plagued by self-doubt. Shouldn't be. The sky's the limit for you. You have greatness in you. In long life I've learned that greatness may come out in big things or little things. Doesn't matter. My father was a GREAT man, in little things, by the world's standards, but none bigger, by mine. Go for that writing job. Don't be afraid to fail. Go for that political campaign. Your successes or failures don't define you. Just the fact that you're here shows how special you are. And we can all see what a clear thinker and superb writer you are. As far as we're concerned, you're as good as anybody. We love you and are pulling for you. So stop wallowing in self doubt and destruction, and put your extraordinary God given talens to use. Right now, you sonofabitch.

By the way, appreciate your interest. If you don't feel like wading through the whole ugly mess now, you might still want to focus on the most important part, The Forbidden Theory of Redistribution. Here is direct link to it. And if it doesn't work, just click on my name below, scroll down to Contents, and down to that title, the only one in color, and click on it.

Here is the direct link. Hope it works.

http:/www.econotrashtalk.org/ForbiddenTheory.htm

By the way, my e mail showed an entry by John Dewey that I don't see here. He asked why we bother with Merg. Has he ever responded to logic? As I just said before, yes, he has. The problem was that most of us here slipped away from logic into statistics, and he slipped with us.
If we get back to logic, we can pull him back to it too. But we have to get back to it first.

New rule.

No more goddammed statistics.

Statistics are the opiate of the incompetent, and an admission that you don't have logic.

Show Merg the logic, and he'll come aboard. He did before, and he'll do it again. The fault is not with him. It is with the numbers crunchers.

The numbers are not economics. They're history. The numerologists are not economicsts, they're historians. That's fine. We need historians, too, but not posing as economists, and crowding economists out of their own field. Statistics are for history, and logic for economics. Keep them separate and serve each other. Mix them all up, and both will suffer.

DG Lesvic: "New rule.

No more goddammed statistics."

As far as I know, you are not the owner of this blog, DG Lesvic. Russ and Don have used statistics in support of arguments they have made. That tells me that there is no rule against using statistics in the comments for this blog.

If the owners of this blog permit you to do so, you are certainly free to call me incompetent because I use statistics in support of my arguments. But that will not for a second stop me from using them. You may quote Mises or anyone else till you are blue in the face, but I will still use statistics in support of my arguments.

If you own a blog, and you request that I not include statistics in my comments on the blog which you own, I will honor that request.

I'll be looking forward to your statistics.

DG,

I appreciate your sympathy, but the situation really is not so bleak. I have savings to fall back on, and I expect not to be unemployed for very much longer; my only regret is that I deplete the nation's capital stock as we speak as I dip into savings. And well, frankly, I would probably be drinking a lot anyway, so your admonitions, while admirable, are probably futile :-). I certainly blame no one but myself (I have not searched as hard as I could have) and the government for my current, temporary situation; I don't blame "the rich" or the "capitalists" or whoever, because I know the only reason millions are without jobs is because of government monetary, fiscal, and regulatory policy--because of government force. The rich have become rich through their own ingenuity and effort and almost universally by satisfying the needs and wants of the common man. They should be lauded for their achievements! Our modern world would not be possible without capitalists, entrepreneurs, scientist-inventors, and the consumers to guide their path. Does this mean that the rich should have a class mentality, with arrogance and scorn of the less fortunate? No, of course not (nor should the poor have a class mentality or a sense of entitlement). Does this mean that the rich shouldn't help the poor? No, of course not, but these are moral and ethical considerations BEYOND the scope of law and of state force. Compulsory charity is not charity; it is, in a word, THEFT. Yet charity does exist, and no one should be exempt from being duty-bound toward charity, whether rich, middle-class, or poor, but it should be voluntary, and I would argue that charity would be MUCH higher absent government redistribution, not to mention monetary policy. When a thing like charity is forced, it eventually perverts everyone, almsman and almsgiver, by embittering and reducing the inner moral drive of the latter and by spoiling the former. Our culture has become completely warped.

"The rich have become rich through their own ingenuity and effort and almost universally by satisfying the needs and wants of the common man. "


While I'm concerned for your issues with alcohol I am more concerned with the Stocckholm Syndrome from which you suffer.

They so satisfied my need for CDO's ... for that I am thankful.

Right you are, Barbarossa.

Since I'm the managing partner of my firm, my taxes are not withheld. I have to sign the check and I'm painfully aware of every penny that is confiscated by the government. I have said it before on this blog - when I write a check to the government, it turns my stomach. When I write a check in the same amount to charity (whether I help someone out privately or through a charitable organization), I have completely the opposite feeling. If government taxed me less, my charitable contributions would be even higher. Unfortunately, the reduction in itemized deductions for higher earners means that as income grows, the deductability of charitable contributions declines with incomes, absurdly punishing those who earn more for giving.

If you can write that well, maybe you'd better keep drinking.

While I don't think statistics should be entirely dispensed with, I tend to agree with you, DG; it is a point Mises himself emphasized. The problem is that--sigh--Muirgeo does kind of raise a valid point, which is to say, that none of this proves anything. Each side can claim credit for the economic situation of the preceding decades if beneficial, cast blame if harmful. And there is nothing perfectly unambiguous about the picture painted by these statistics. As Nietzsche said, "there are no facts, only interpretations," which basically leads to your point about the importance of theory. By the way, DG, while on another blog I came across your "book" (I guess), and while I read only a small part, I quite liked what I read. I plan eventually on reading it in its entirety, once I have secured myself full-time employment. (Sounds paradoxical, I know, but I spend more time fretting about being unemployed and searching for jobs and drinking myself into a stupor as a coping mechanism to have much leisure reading time.)

(Sounds paradoxical, I know, but I spend more time fretting about being unemployed and searching for jobs and drinking myself into a stupor as a coping mechanism to have much leisure reading time.)

So much of that going on these days. I have a few friends in that position and it hurts me to think about it. Good luck to you.

About statistics and theory.....yes, both sides can claim the statistics. But, let's compare the statistics of a social democracy and the statistics of our quasi-capitalist country. Let's compare the same statistics before the Soviet bloc fell apart. During his visit to the United States, Khrushchev could not believe the appliances that were taken for granted in American middle class homes. Only the top layer of the nomenklatura could dream of having the lowest quality appliances and only city dwellers expected running water (most of the time).

In the social democracies of Europe, only the very wealthy have houses the size of the average American home and a dishwasher and air conditioning are quite the luxury.

Can we claim that more government involvement improved the lot of the poor in the United States? Only if we ignore the statics in Europe where there is more government involvement.

Finally, an anecdote: When my family left the Soviet Union in the mid-70's, we first lived in Europe. In the Soviet Union, my family was considered wealthy and well connected - which still meant that our standard of living was well below the standard of living of the average American blue collar worker at the time. While we lived in Europe our standard of living wasn't much different - although our access to basic goods was slightly improved and we no longer had to go through the tedious process of procurement in the black market. When we arrived in the United States, our standard of living dramatically improved even though were at the the very bottom of the bottom 20% of earners for years after immigration.

Agreed, which I took to be the underlying lesson in Don's post.

Muirgeo is an ideologist, and like all ideologists he sees a large proportion of human interaction as exploitation. In economic data there will always be some group doing 'better' than another, and if you start with a belief in exploitation as the foundation of modern social organization, this is all the evidence you need.

The problem is that this exploitation is axiomatic for the ideologist and the argument is always circular - there are differences in material condition because of exploitation, which is proven by the differences in material condition. There is no practical epistemology about this - no falsifiable hypotheses, no logical constructs on observation. It is always a matter of simply "seeing" what is in front of you. The radical feminist doesn't offer a testable hypothesis that leads to a conclusion that society is a patriarchy organized to benefit men through the exploitation of women. You either have a raised consciousness or you don't.

So why argue?

Exploitation is a natural human behavior. Exploitation of human beings is a subset of that behavior. The problem for Muirgeo is that he sees exploitation where it does not exist (e.g., wealth from production) and refuses to see it where it obviously does exist (the political system). This is, I believe, a rationalization. Muirgeo is a supporter of the political class, so he is unable to accept that the system of the political class is inherently exploitative. But because he is part of an exploitation system he sees exploitation in others - much the way that a dishonest person always suspects that those around him are lying.

The defining characteristic of ideology is that it sees exploitation in 'voluntary' transactions. To the 'unenlightened' observer, for example, marriage is a voluntary transaction. To the radical feminist, however, it is an institutional manifestation of exploitation of women by men. It cannot be truly voluntary (for the woman, at least) because the bride labors under 'false consciousness'. The evidence for this is that she has agreed to marriage - no further proof is necessary because the dark reality is available to the perception, without the application of logic (itself a manifestation of the oppressive patriarchy), to those whose perception has not been distorted.

To the ideologist forceable intervention by the government into the ostensibly free interactions of individuals is not perforce a good or a bad thing, because those interactions are not really free at all. They constitute exploitation of one form or another, and the test of whether government interference is moral or immoral lies entirely in the enlightened judgement of whether the interference is on behalf of the exploited or the exploiter. The only moral imperative is for liberation.

This way of looking at civilization is a habit of mind which has given rise to every totalitarian movement. Hence it is the philosophical underpinning for the greatest atrocities of the 20th century, which is to say, in the history of mankind.

Man, awesome points raised today. You're exactly right, tx. How can you ever be wrong if you assume what you're trying to prove? the modus operandi of the socialist. Is tx for "Texas"?

Yup. Born in Fort Worth and living in Houston.

Tex,

Why argue, you ask.

Because I love my children and grandchildren.

You said at the outset that you agreed with me, and with what you took to be Don's point. I didn't get from my reading of Don that he agreed with me at all. I have been arguing all along that taking from the rich to give to the poor could not reduce but only increase inequality. A few people here have agreed with that, but not Don so far as I recall. And a few more, though not agreeing with it, have at least shown some interest in it, but, again, not Don, so far as I could recall. How about you? Interested?

DG,

I may have been wrong about Don's point. When I read it that was the lesson I took away, but I have been mistaken before.

The very same reason I care about our external liabilities as a nation. Well, I have no children (and thus no grandchildren), but I do have friends and family, and I do have my own mouth to feed, so I sure as hell give a damn about the future. I'm no accountant or economist, but I know of several--most of the Austrian persuasion--who are very concerned with our mounting trade/budget/current-account deficits and the related external debt levels that have arisen as a result. I'm not so sure I trust the interpretation of domestic manufacturing statistics, either. I'm not trying to raise an issue that I debated on a previous post, and I'm not trying to make you ally your interests with mine, simply because of our commonality in being skeptical of naked statistics; but I am saying that I agree with your position, and if we are going to invoke statistics of this kind, we need to develop a thorough analysis and broad context with which to interpret them.

Well that question goes both ways Don. If your claims are (A) government intervention is bad for the economy, (B) Libertarian economies are better, (C) the current economy is "not even close" to libertarian and (D) the economy is getting better where is your logic? At best you may wish to claim you do not have a libertarian economy available to prove your point... which in itself begs the question.

So what can we do except look at degrees of government intervention. It's clear that deregulatory policies favor accumulation of wealth at the top as well as boom and bust economic cycles of greater instability and less efficiency.

"So why do so many persons on the political left see in the economic data of the past three decades a compelling case for even greater government control over our lives and pocketbooks? " Don B

Don, you wrote that in April of 2009... the answer is NOW is why. Our predictions have come true. The economy is trashed for a long time to come and it's the accumulative effects of "liberalizing" policy over the last 3 decades. It is certainly not the result of progressive policies.

Specifically, tax cuts for corporations and the wealthy, "free trade" agreements, lack of enforcement of anti-trust, union busting, minimum wage freeze, changes to CEO compensation, financial deregulation, immigration and many other policy changes over the last 30 years were in the direction of libertarian desires and NOT progressive policies.

This horrendous graph portrays 3 distinct results from 3 distinct trends in policy. The evidence is clear to me that tilting policy in the libertarian is inequitable, inefficient and has very little to do with promoting liberty.

All one has to do is read a little Henry George, Charles Dickens or Karl Marx to understand the life of the average worker back in the laissez faire days Hayek reminisced about. It wasn't pretty. So why do you think the average person would want to go back down that road?

muir,

Mmmmmwwwwwaahhhhhhhhhhh, you are incredible. You my hero. Yes, we have less regulations today than yesterday, you proved it with more than anecdotes, you provided data in terms of the net loss of regulations. :) On our way to first billion. Economy has been working only for the extremely rich like George Soros, Al Gore, Warren Buffet. Let's join the club. Senator Edwards charges only $55,000 for a speech on poverty - what a generous bleeding heart. Let's emulate these heros.

All one has to do is read a little Henry George, Charles Dickens or Karl Marx to understand the life of the average worker back in the laissez faire days Hayek reminisced about.

You are awesome. I'm waiting for your next post about why laissez faire never happened ever in history - i mean the one that Hayek REMINISCED about. YOu my hero.

This horrendous graph portrays 3 distinct results from 3 distinct trends in policy. The evidence is clear to me that tilting policy in the libertarian is inequitable, inefficient and has very little to do with promoting liberty.

This graph;

http://3.bp.blogspot.com/_n5ROGN0Id8Q/SwqTxQV5A...

Still creeping around the joint, and still ducking Robert_O's questions:

Why do you need the taxpayers to fund your credit operation? Why can't you create your own bank, muirbank, where you give out credit to poor people at low interest? Why must you rob me to feel good about yourself?

Quack... Quack... Quack...

Reducing taxes on corporations and the rich are not markers of "libertarian" policy.

Reducing taxes is irrelevant if government spending increases as all government spending must be paid for by those who labor to create value. Nor are "free trade" agreements a sign of libertarian sentiment. Libertarians propose no free trade "agreements" of any kind.

There have been changes in financial regulation, but there has been no deregulation of financial markets, to claim otherwise is deceptive. The regulatory budget increased greatly under GW Bush.

Why you pretend otherwise is obvious to we libertarians.

In point of fact, corporations do not pay taxes so much as they collect them.

Hey, Muirgeo, I'm currently basically unemployed. Could you get me a job at the Ministry of Truth? Please?

Life "wasn't pretty" in the halcyon "laissez faire days Hayek reminisced about" because, compared to us, people were a lot POORER back then. But compared to their predecessors, they were WAY better off. Man, if only we had instituted child-labor and minimum-wage laws 4000 years ago, Mankind would be, like, SO better off now. Ho please. Nevermind that child-labor laws harm children where their labor is needed for their and their family's very SURVIVAL and that such laws are superfluous in affluent countries where their labor isn't necessary. Unions are the reason we have child-labor laws anyway, not child advocates. And the laws are hypocritical anyway. If you work on your parents' farm or at their business, you can work from a pretty young age, so the laws are kind of pointless and self-defeating. And unions are stupid; without going into the details, let's just point at GM as an example, where the unions over decades depleted the company of its competitiveness. And minimum-wage laws increase unemployment among the poor, and they wouldn't even be "necessary" (not that I think they are) if it weren't for state monetary policy, which tends to erode the purchasing power of the poorest sooner and to a higher degree than those at the top (if not indeed indirectly transfer purchasing power from the former to the latter). (Isn't it lovely how the government creates a Catch-22 for the poor, whereby they are increasingly reliant on government handout because of government theft? Only the state.) Antitrust laws are stupid, too. The oft-cited example of Standard Oil is, ironically, the best case for laissez faire and against antitrust. At its peak, the company had 90% of the market (which means they still had competitors), and by the time the government got around to trust-busting them, their marketshare had dropped to like 65%, showing the beauty of the market and the nil need for antitrust. And it wasn't consumer advocates who lobbied Washington for antitrust, oh no; it was Standard Oil's COMPETITORS who whined like bitches because Standard OIL charged such LOW prices (read: great for the average Joe) that they had trouble staying in business! They were "too" efficient, apparently, whatever that means. But please, bring up Karl Marx, as if his theories haven't been thoroughly debunked. Muirgeo, I'm going to start addressing you as "O' Brien." Never mind the allusion; you wouldn't understand.

"At best you may wish to claim you do not have a libertarian economy available to prove your point... which in itself begs the question."

And here's the odd point to be made in this particular discussion: I would posit that government intervention does not result in a "bad" economy just as a perfectly government-free economy does not result in a "good" economy. Why do I say this?

"Good" and "bad" are entirely subjective terms that are, themselves, defined by reference to some absolute standard of perfect economic well-being. What is that standard and what does it look like?

No clue. It would, after all, be a utopia: "no place". Especially since it would vary depending on one's definition of "well being". Some define it as an equal distribution of goods, while others define it as an equal distribution of freedom. I fall into the latter camp.

So the statement really being made is not that a libertarian economy is the epitome of all that is good in the world, but merely that it is a better option than a government-controlled economy.

Which brings me to your second paragraph...

"So what can we do except look at degrees of government intervention."

First of all, I take issue with your use of the word "deregulation". Of course, by all rights, I should take as much issue with the arguments against "regulation". And I do. The reason is the vague meaning of the word "regulation". Let's call a spade a spade and re-label this "centralized control", because that's really what we are referring to here: channeling the bloodflow of economic productivity through government arteries so it can be policed by government authorities. Such control is not IN ITSELF wrong. What is wrong is the effect. And that is the issue I take with the second half of this second paragraph.

"It's clear that deregulatory policies favor accumulation of wealth at the top as well as boom and bust economic cycles of greater instability and less efficiency."

It would be difficult to establish your statement by facts within a single post, specifically your claim that a libertarian approach to the economy in fact causes the problems it claims are caused by government - booms and busts. So this is not the point I wish to argue. But booms and busts, I /would/ argue, are not /wrong/ in and of themselves. The economy recovers, jobs are reallocated as much as possible, and life moves on.

I will not even deny that ending redistributive policies may produce an /apparently/ larger disparity in income inequality. But this goes back to my point of fairness.

Do we consider a fair economy to be an equal distribution of goods or wealth, or an equal distribution of freedom?

If it is the latter, then government control of the economy necessarily results in a reduction of freedom and of the choices available to the individual. Thus, whether it results in greater income inequality or not, government control ends up being the poorer option!

"All one has to do is read a little Henry George, Charles Dickens or Karl Marx to understand the life of the average worker back in the laissez faire days Hayek reminisced about. It wasn't pretty. So why do you think the average person would want to go back down that road?"

To which I again raise this idea, not of good vs bad, but of better vs worse. Which is worse and which is better, to live in the countryside and slave in the fields for lower pay, or move to a city where you may work torturous hours in a factory at risk of life and limb but still earn a better living?

In other words, I doubt anyone would argue that the gritty, long hours and high risk work of the early industrial era is "good". But was it better than what was otherwise available?

Well, unless people were forced into those jobs at gunpoint, then yes. After all, they chose them. And if the alternative was starvation, the jobs presented were certainly better than that alternative!

""Good" and "bad" are entirely subjective terms that are, themselves, defined by reference to some absolute standard of perfect economic well-being."


No there not. There nothing subjective in the comparison of 12 hour worked days and 7 day work weeks for a starvation wage compared to the 40 hour work week with worker protections and benefits.

There is no freedom in a system controlled by men like Jay Gould who put down worker discontent by giving their striking workers a "rifle diet" while bragging they could "hire half the working class to shoot the other half."

Government of the people is the counter balance to the abuses of unregulated capitalism and as a side benefit it creates more freedom and greater economic efficiency.

Saying freedom comes first makes no sense if it results in starvation wages.


In our current era there is simply no reason the top 0.05% needs an additional $800 billion dollars of income. It has nothing to do with freedom and much to do with exploitation.

http://3.bp.blogspot.com/_n5ROGN0Id8Q/SwqTxQV5A...

That blue line in the graph is all policy driven and we did much better when it was at its lowest.

And NOTHING I am saying is promoting equal outcomes or frank socialism so leave those strawman as hay.

>>Government of the people is the counter balance to the abuses of unregulated capitalism and as a side benefit it creates more freedom and greater economic efficiency.<<

George, after all this time you still don't even know what capitalism is. Can you name any unregulated capitalism being practiced from the past or present? And if you can, let's stack them up and compare them to the abused of government -- even when that government is "by the people, for the people"

>>Saying freedom comes first makes no sense if it results in starvation wages...And NOTHING I am saying is promoting equal outcomes or frank socialism so leave those strawman as hay.<<

How does one go about reconciling these two thoughts in the same comment? If freedom does not come first, then what shall?

Freedom does not come first to Yasafi. He believes that only politicians and bureaucrats can determine how much liberty a man needs in order to be free.

As long as the yoke is comfortable, Yasafi is content to be an ox.

Subjectivity! Exactly! Muirgeo is invoking an "objective" standard, which in essence is his subjective standard that he has imposed on the rest of society, thus making it "objective." But it doesn't work that way. If, in the olden days, people migrated from the country, with lower pay and lower risk, to the city, with higher pay and higher (very specific) risk, then that was their personal, individual CHOICE. They PREFERRED that state of affairs. And even if the factory jobs were riskier, over time they would become less so, with improved technology and the employer's realization that safe workers were productive workers and that future employees would increasingly demand a reasonably safe work environment. Not to mention all the amenities of modern life that were more widespread and more accessible in the cities than in the country. It's all a bit relative, but it's all entirely subjective, and that's the point Muirgeo misses. In socialism, there is no room for subjectivity; subjective preferences are not allowed, or, at least, they are denied, mitigated, and disincentivized. We could go on forever proving the point, but an environment in which subjective preferences are allowed to flourish, THAT then becomes an objective good, if we consider everyone's personal, subjective satisfaction our aim. (As long as it is not at the expense of the property rights of others. If I become rich selling 99 cent cheeseburgers with which the poor can afford to feed themselves, do they then have the right to extract that wealth from me at gun point? NO. THAT's exploitation, that's extortion, that's theft, NOT selling something cheap and useful and becoming rich because a bunch of poor people willingly parted with their currency to obtain my product.)

Does the modicum of truth revealed in Muirgeo's post here eerily remind anyone of "Flowers for Algernon"? Muirgeo, is your name an acronym for mus Musculus something?

The statist need to fix everything, even that which is not really broken, is a fascinating bit of fundamentalism that does not get noticed by those who criticize "free-market fundamentalism" as though it were practiced by snake handlers but it is still a desire to prevent facts from getting in the way of beliefs.

Well said comment about socialist deification of Godvernment.

Congratulations for all the excellent economic history.

But it is still no substitute for economics.