Milton Friedman on Wealth Redistribution

by Don Boudreaux on November 24, 2011

in Economics, Inequality, Video

I lament, along with Mark Perry, that Milton Friedman is no longer in this world to address today’s OWSers.  (Note that in the first video Friedman hints at the argument made recently by Steve Landsburg.  See also here.)

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{ 119 comments }

Greg Webb, librarian clowns, et al November 24, 2011 at 10:38 am

A 100% inheritance tax would cause people to give away most of their property during their lifetime. That shouldn’t cause too much grief if Friedman is correct that people often value their family more than themselves. Offhand, I can see two considerations/problems here. A gift tax would kick in instead of the inheritance tax, and people may die unexpectedly before they could give their stuff away.

Friedman seems to think a society would cease to function if such a policy were enacted, and I’m not sure why. Anyway, not many would favor a 100% inheritance tax. Why should the government take it all away? Under what theory of social justice?

Steve C. November 24, 2011 at 12:05 pm

The same theory of social justice that led to the imposition of the inheritance tax in the first place.

Greg Webb, librarian clowns, et al November 24, 2011 at 12:09 pm

Which is what? Do you know the history of the inheritance tax and its impact?

SmoledMan November 24, 2011 at 12:27 pm

Why shouldn’t every generation be forced to make their own fortune? That is what makes America different. Why should someone by dint of lucky birth get $5 million for doing nothing?

Ubiquitous November 24, 2011 at 1:52 pm

Why should someone by dint of lucky birth get $5 million for doing nothing?

At least be consistent:

Why should someone by dint of lucky birth get to be smarter than others? He didn’t work for it.

Why should someone by dint of lucky birth get to be more talented than others? He didn’t work for it.

Why should someone by dint of lucky birth get to be better looking than other? He didn’t work for it.

How about this, instead:

There’s an old saying — something that also makes America different: “From shirtsleeves to shirtsleeves in three generations.” To wit: Grandpa works hard and earns a fortune; his grandchildren are soft, lazy, and unambitious, and proceed either to squander the fortune or dissipate it because of costs in administering the family estate.

Profligate squandering or gradual dissipation: either way, grandpa’s original wealth will inexorably flow away from his family toward someone else who makes better use of it.

Greg Webb, librarian clowns, et al November 24, 2011 at 2:21 pm

If someone inherits money or property it can be taxed. If someone inherits a singing voice and makes money singing their income can be taxed. Inheriting a physical trait or intelligence isn’t really taxable now is it? I find the analogy faulty. Perhaps the dual use of the word “inherit” is confusing you .

Chris George November 24, 2011 at 7:09 pm

Never read Harrison Bergeron have you?

LowcountryJoe November 24, 2011 at 10:31 pm

Because inheriting desired physical traits or intelligence can never be used to enhance one’s income-earning potential like it did in the example where someone inherited an enjoyable singing voice, right?

Ubiquitous November 24, 2011 at 10:57 pm

The word “inherit” means exactly the same in both cases. That money can be taxed but intelligence cannot (at least at present), in no way means that the word “inherit” has a dual use. Your semantics is as weak as your economics. There is no semantic linkage between the idea of “inherit” and the idea of “that which can be taxed.”

Inheriting a physical trait or intelligence isn’t really taxable now is it?

Sure it is, at least indirectly. For example — to list just one policy that could very well be implemented right now — you could redistribute “A’s” or “100′s” earned by the brighter, more intelligent students on their grades, to the less bright and less intelligent students, in order to make everyone in the class equal in their GPAs. That’s a redistribution of the results, or effects, of intelligence; and — I guarantee this — if implemented at an early enough age in school, and with consistency, the brighter, more intelligent students will of their own accord begin to perform just like their mediocre peers. I assume that’s the result you want. As for making the more mediocre students more intelligent, that can be very easily accomplished — and today IS being accomplished — by lowering standards for specific groups.

It’s all doable.

A more direct method of taxing intelligence might be accomplished by following the example of Huxley in “Brave New World”: by injecting a poison such as alcohol into the fetuses conceived by highly intelligent parents, you can retard their development and intellectual ability. Huxley used alcohol in his novel, but today, with modern biochemistry and genetics, I’m sure you and other bio-egalitarians could invent far more sophisticated and subtler ways to do the same thing. Again, IF such technology were to exist, I assume you would, in principle, approve of such use.

Frankly, your position is sick. You’re saying that you would accept the analogy — and, therefore, presumably, the policy of human-ability-redistribution — IF the technology existed. You reject the analogy only because at present we cannot equalize people’s talents and intelligence in a direct manner. If we could, however, I take it you’d approve.

As I said, your position is a sick one.

That’s why I long ago came to the conclusion that the main problem with the left is not intellectual, but, rather, moral and psychological.

g-dub November 25, 2011 at 12:22 pm

u> That’s why I long ago came to the conclusion that the main problem with the left is not intellectual, but, rather, moral and psychological.

How is inability to think through rudimentary chains of reasoning not an intellectual problem?

I attribute to them the entire holy trinity of close-mindedness: dumb, immoral, and psycho nut jobs.

SmoledMan November 27, 2011 at 11:31 am

I’m perfectly ok with inequality of intelligence. Let that smart person make their own fortune. What I’m not ok with is someone inheriting $5 million just because of dint of birth.

Josh S November 24, 2011 at 10:07 pm

Why not have a 100% gift tax? Why should someone by dint of having a generous boyfriend receive a lovely diamond necklace for Christmas? Why should someone by dint of having wealthy parents receive an Xbox for his birthday? Why should someone by dint of having an indulging grandma receive $500 for spending money in college?

It’s not fair, I tell you, not fair at all.

LowcountryJoe November 24, 2011 at 10:35 pm

But I kind of like by dints, by God. I like the fact that an elected politician who gets a simply majority of the vote, by dint, gets to be the gift-giver with OPM. [/sarc]

vikingvista November 26, 2011 at 4:59 am

Why shouldn’t every generation be allowed to live in peace, free from those who would violently strip them of their peacefully acquired belongings?

Since somebody gets the wealth, perhaps you can explain why your choice is more deserving than the choice of the property owner.

brotio November 24, 2011 at 3:37 pm

One positive from a 100% inheritance tax would be that so many Regressive second, and third-generation trust fund babies wouldn’t be able to spend their lives in politics.

No Senator Kennedys. No Senator Rockefellers. It would almost be worth it.

Doc Merlin November 25, 2011 at 5:45 am

Yes they would. Their fathers create a charity in their name and make them paid employees of it. They then can spend this money on charity they want to do, and spend the salary on their own personal consumption. Mostly however it functions as a trust fund.

Its roughly what warren buffet did for his kids to avoid the billions in inheritance tax he would otherwise have to pay.

brotio November 25, 2011 at 6:57 pm

I know.

But can’t one dream of a world with no Senator Kennedys, or no Senator Rockefellers?

Martin Brock November 24, 2011 at 4:02 pm

“Tax” suggests state revenue, so I rather favor title expiration. At the death of a title holder, the title goes on the auction block, but no central authority receives the monetary revenue. The money is removed from circulation.

Under what theory of social justice does a state threaten to harm people crossing lines without its consent? Title to property is a useful construct, enabling capital markets to organize productive means, but what the state giveth, the state may taketh away.

If you want hereditary title in perpetuity, you’ll need the cooperation of armed men willing to defend the claims of your heirs as well as your own. Don’t expect the cooperation of armed men with other ideas, and don’t bore me with the ridiculous pretense that your heir’s claim has anything to do with my liberty.

Property is a means to libertarian ends, but no forcible imposition, including forcible propriety, is liberty the classically liberal formulation. If it is, then “life, liberty and property” is redundant.

In The Road to Serfdom, Hayek distinguishes hereditary title from other property rights, and while he defends it, he finds it less in the classically liberal tradition than other rights of propriety.

The classically liberal formulation of property, from Locke forward, involves the propriety of a man’s governance of the fruits of his own labor and of certain natural resources that he molds by his labor. Locke never mentions hereditary title in the chapter “Of Property” in the Second Treatise. He instead discusses it in the chapter “Of Paternal Power”, and he states that a man traveling far from his father’s estate, away from the state enforcing his father’s title, surrenders his claim to the property.

For my part, I believe that a man properly has a right to a market exchange of the fruits of his labor for the fruits of another man’s labor, not an exchange of his labor for another man’s entitlement to consume divorced by forcible imposition from his own labors.

Josh S November 24, 2011 at 10:09 pm

So you believe a man has the right to obtain property, but lacks the right to give it to the person of his choosing.

Interesting.

Martin Brock November 25, 2011 at 8:33 am

If a man obtains property by threatening to harm other men, I think his right to the property differs very much from his right to property he obtains by producing it with his own labors. If you will distinguish one from the other, we can have a more fruitful conversation. If you simply conflate all forcible possession, we’ll never effectively communicate.

In reality, property is a grant of authority over specific resources, and personal productivity is only one of many rationales for these grants. I don’t believe that Barack Obama has a right to give the White House to anyone he chooses simply because he has once obtained the right to govern it for a limited time himself.

Rights to other houses may more or less like Obama’s right to the White House. When you’re ready to have a discussion not limited to sweeping generalities favoring the rights of established authorities, I’m also ready.

vikingvista November 26, 2011 at 5:22 am

Property may be granted by a state or otherwise stolen, but that doesn’t mean that is what propety is. Your whole misguided view of property is defense of statism.

There is nothing fundamentally important about the use of labor in acquiring property. Property can be peacefully acquired without it. Property does require force, unless you are one of those antilibertarian buffoons who conflates defensive and offensive force.

And please don’t “bore” me with cries of “Aristocracy!” Inheritance does not equal aristicracy. But a state powerful enough to ban inheritance, as you imagine, would almost certainly give rise to one.

Martin Brock November 26, 2011 at 9:41 am

My view of property is not misguided. It is realistic. When you call some property “stolen”, you are agreeing with me, not disagreeing; however, in more common parlance, “property” is “not stolen” by definition, so your usage is extremely unconventional and more apt to confuse than to communicate.

“Property” is a word. It describes all sorts of forcible possession and is not limited to the fruits of labor. This fact is precisely my point. Again, you agree with me rather than disagreeing.

In the tradition of Locke and other classical liberals, “property” does describe the fruits of labor and natural resources employed by an individual’s labor. If you doubt me, read “Of Property” in the Second Treatise of Civil Government. Ignoring the tradition doesn’t change it. In Locke’s formulation, hereditary title is “paternal power” rather than “property”.

A state powerful enough to enforce the claims of heirs to hereditary title always gives rise to aristocracy. Your imaginary hereditary titles without state enforcement are laughably ridiculous. Where in the state of nature does any creature inherit his father’s territory by writ of any title? No such natural order exists anywhere. Your fantasies are not persuasive.

Josh S November 26, 2011 at 4:16 pm

Yeah, we’re obviously not talking about inheriting property obtained by force using the power of government.

Private property is not the creation of the state.

Martin Brock November 26, 2011 at 10:03 pm

If you aren’t talking about anything called “property” in common parlance today, then make the distinction.

Josh S November 26, 2011 at 10:08 pm

You’re the one who said you want the state to seize property upon someone’s death, against the wishes of him to give it to someone else. This whole business about property obtained through taxation or whatever is a red herring–that’s not the issue, and you know it. The issue is whether a person had the right to decide to give his property to someone else upon his death, or not.

Martin Brock November 27, 2011 at 3:56 am

A state ceasing to enforce a property right ceases force. You want to pretend that the state’s enforcement of a particular claim is the absence of force, but the idea is nonsensical on its face.

I nowhere advocate any state simply giving anything to anyone. On the contrary, that’s what you advocate.

I rather advocate an auction where anyone may bid upon the state’s forcible exclusion of others from governance of particular resources upon the death of a title holder.

You advocate instead that the deceased title holder select a new claimant to the state’s forcible imposition without such a competition. You insist upon this gift of state power, not me.

In reality, property is obtained through taxation and otherwise, and property is held by force. Calling this fact a “red herring” is nonsense. Ignoring reality doesn’t change it. You might as well insist upon a monarchical head of state with hereditary title and call every opposition a “red herring”.

The issue is a title holder’s right to select the next governor of specific resources, governed with the force of the state, upon his death. Confusing this right with the propriety of individual liberty is not classically liberal. It is classically conservative and anti-liberal.

vikingvista November 28, 2011 at 12:15 am

““Property” is a word. It describes all sorts of forcible possession and is not limited to the fruits of labor. This fact is precisely my point. Again, you agree with me rather than disagreeing.”

I couldn’t possibly disagree with you more. Property need not be a forcible possession at all. Unless that is, you define “forcible” so broadly as to be meaningless. To you, I suppose, standing is an act of “force”, since to stand, one must resist the force of gravity. Your ideas would be comical if your savaging of the most fundamental of human liberties wasn’t so disgusting.

“In the tradition of Locke and other classical liberals, “property” does describe the fruits of labor and natural resources employed by an individual’s labor. If you doubt me, read “Of Property” in the Second Treatise of Civil Government. Ignoring the tradition doesn’t change it. In Locke’s formulation, hereditary title is “paternal power” rather than “property”.”

I’m familiar with it, and your interpretation is selective to the point of being wrong. Locke would not agree with your interpretation of him. He would not want to empower state to violently strip people of their property and auction it off. The only relevance of labor is the act of homesteading, which is the least common way of acquiring property.

“A state powerful enough to enforce the claims of heirs to hereditary title always gives rise to aristocracy. Your imaginary hereditary titles without state enforcement are laughably ridiculous.”

An utterly preposterous and clearly factually incorrect statement. It can only be true IF “aristocracy” is defined as “those who inherit”. And such a definition is contrary to how everyone but yourself uses the term.

“Where in the state of nature does any creature inherit his father’s territory by writ of any title?”

“Writ of any title”? You don’t have a brain, instead someone jammed a Black’s Law Dictionary between your ears. The law cannot be a foundation for any philosophy, but you sure do try, which is why you are so comical.

Where in the state of nature do parents give their offspring their property? The harder question is where in human nature has it not been commonplace? Where you have people, you have property. Where you have offspring, you have inheritance. States, with whatever statutory enforcements they provide, did not invent this, but like property itself, they merely respond to what already exists in human nature.

“No such natural order exists anywhere. Your fantasies are not persuasive.”

It exists everywhere. It is your problem if the most obvious of facts seem to be fantasies. You might want to have that looked into.

vikingvista November 26, 2011 at 5:09 am

A man properly has the right to be left alone, including to be left alone to peacefully grant his property as he sees fit. Your misinterpretation of Locke is no less odd than your claim to being a libertarian. It isn’t inherintance or property that requires a state, but instead your violent imposition of an auction of a man’s property against his will. Both this absurd idea, and your misguided notion of property, make you fundamentally a statist.

Martin Brock November 26, 2011 at 9:55 am

This idea is ridiculous. Your imaginary man doesn’t want to be left alone. He wants his governance of particular resources enforced. He wants to assign the right to govern particular resources to an heir and then to have his heir’s right to govern the resources enforced.

In the state of nature, a creature’s offspring ultimately dominate’s the creature’s territory only if the offspring’s own force permits. An estate auction only civilizes this natural order. A title holder’s child or other preferred heir may compete in the auction along with anyone else, and a child properly prepared to assume the title has many advantages when seeking credit to bid. A child not so properly prepared loses the contest and rightly so.

You say that I misinterpret Locke without any reference to Locke, presumably because you’ve never read Locke.

You call me a “statist” while simply ignoring the statutory force that your own assertions of propriety imply. I call myself a minarchist rather than an anarchist, precisely because I defend particular property rights. You rather deceive yourself and then deceive others by pretending that you advocate no state.

Josh S November 26, 2011 at 4:17 pm

Being left alone included being left alone by thieves and squatters.

Martin Brock November 26, 2011 at 10:06 pm

You squat on a parcel of land and threaten to harm others squatting likewise, and you’re shocked, shocked to find others threatening you similarly.

Josh S November 26, 2011 at 10:16 pm

I guess you must think it a naked act of aggression to threaten people with harm who would try to use your body sexually without your permission. After all, in the state of nature, you can only repel the sexual dominance of others over your body if your own force permit. State auctioning of sexual privilege to your body only civilizes this natural order.

Martin Brock November 27, 2011 at 4:05 am

Your comparison of a parcel of land to my body is incredible nonsense.

You draw a line somewhere and convince some armed men to title it “your property”. Thereafter, your statesmen lock anyone contesting your governance of the parcel in a cage or even kill him, but you don’t call this forcible imposition a violation of his body.

Instead, you pretend that your violation of his body defends against his violation of yours, when in fact the issue is your governance of a parcel of land and has nothing to do with your body. Then you trot out “red herring” like you have a clue what the words mean.

Your sophistry is Orwellian. It was Orwellian when the classical liberals debated it, and it’s still Orwellian today.

vikingvista November 27, 2011 at 11:57 pm

Your property is the material world under your volitional control. Whether we are talking about the dirt under your feet, the rock in your hand, the shirt on your back, the hair shed from your head, the hair still on your head, your legs, or your liver is irrelevant. And the fact that it is irrelevant has been demonstrated throughout history, whether it be slavery or some other form of ownership of another person.

The foundation of a consistent notion of property rights IS the body you naturally control, when free from the interference of others. Extension of property to also include other parts of the world is trivial. It precedes any notion of society or state. The latter only take interest in that which already exists.

The comparison of a parcel of land to your body is exactly relevant, and shatters your whole unfounded, wholly stipulated, and legalistic view of what property is.

Martin Brock November 28, 2011 at 10:37 am

Your property is the material world under your volitional control.

The material world under my volitional control can also be under your volitional control. My property, in common parlance, involves more than my volitional control. It involves my right forcibly to exclude your volitional control.

Whether we are talking about the dirt under your feet, the rock in your hand, the shirt on your back, the hair shed from your head, the hair still on your head, your legs, or your liver is irrelevant.

Nonsense. Confusing my liver with the land beneath me, even a parcel of land far from me that I claim only by writ of some title registered at a court house, is incredible. My liver is me. A parcel of land is not me. This distinction ought be clear enough for any six year old.

And the fact that it is irrelevant has been demonstrated throughout history, whether it be slavery or some other form of ownership of another person.

We aren’t discussing one man’s ownership of another. We’re discussing one man’s ownership of a parcel of land. Please don’t conflate the most obviously different things to score rhetorical points.

The foundation of a consistent notion of property rights IS the body you naturally control, …

Of course. My body is naturally my own, and your body is naturally yours. Neither my body nor yours is a parcel of land.

when free from the interference of others. Extension of property to also include other parts of the world is trivial.

No. It isn’t trival. Locke for example never suggests that the extension is trivial. On the contrary, when summarizing “Property”, he writes, “And thus, I think, it is very easy to conceive, without any difficulty, how labour could at first begin a title of property in the common things of nature, and how the spending it upon our uses bounded it. So that there could then be no reason of quarrelling about title, nor any doubt about the largeness of possession it gave. Right and conveniency went together; for as a man had a right to all he could employ his labour upon, so he had no temptation to labour for more than he could make use of. This left no room for controversy about the title, nor for encroachment on the right of others; what portion a man carved to himself, was easily seen; and it was useless, as well as dishonest, to carve himself too much, or take more than he needed.”

In the Lockean conception of natural propriety, a resource is yours to govern because you personally labor upon it, where land is so plentiful that your claim need not exclude others seeking to labor similarly, and to claim more than you personally employ by your own labor is “dishonest”.

The vast majority of “property” in my experience does not fit this description, so while the idea is interesting theoretically and historically, it has little bearing on the practicalities of “property” as I use the word in my daily life.

It precedes any notion of society or state. The latter only take interest in that which already exists.

Lockean propriety, described above, arguably precedes the state, but we aren’t discussing Lockean propriety here. I don’t live on a frontier with land so abundant that I may claim all the land that I can fruitfully exploit by my own labor without excluding you from pursuing a similar objective on the same land.

On the contrary, in my neck of the woods, my nearest neighbor is literally a few feet from my homestead. Without exclusive rights by registered titles enforced by an authority respected by both me and my neighbor, my neighbor might routinely encroach upon my personal space, and I could hardly prevent it.

The comparison of a parcel of land to your body is exactly relevant, and shatters your whole unfounded, wholly stipulated, and legalistic view of what property is.

Incredible. Your blurring of distinctions is the legalistic fiction. Only an ideological zealot clinging to a legalistic category confusing the two can fail to grasp the import of a distinction between his own body and a parcel of land.

Martin Brock November 28, 2011 at 10:59 am

And if you want to understand the Lockean conception of hereditary title, you may not read his discussion “Of Property”, because hereditary title does not appear there. You must move on to the next chapter in the Second Treatise, titled “Of Paternal Power”. There, you may read,

“But if they will enjoy the inheritance of their ancestors, they must take it on the same terms their ancestors had it, and submit to all the conditions annexed to such a possession. By this power indeed fathers oblige their children to obedience to themselves, even when they are past minority, and most commonly too subject them to this or that political power: but neither of these by any peculiar right of fatherhood, but by the reward they have in their hands to inforce and recompence such a compliance; and is no more power than what a French man has over an English man, who by the hopes of an estate he will leave him, will certainly have a strong tie on his obedience: and if, when it is left him, he will enjoy it, he must certainly take it upon the conditions annexed to the possession of land in that country where it lies, whether it be France or England.”

So the classically liberal tradition recognizes hereditary title as an instrument of political power from the very outset.

vikingvista November 29, 2011 at 8:10 am

DU: “The material world under my volitional control can also be under your volitional control.”

Possible, but unlikely in the same time and place, and totally irrelevent anyway.

DU: “My property, in common parlance, involves more than my volitional control. It involves my right forcibly to exclude your volitional control.”

My property “in common parlance” isn’t something that some ancient legalistic idiot pulled out of his ass. It is derived from a more fundamental notion of property, derived from observations of humans interacting with each other and with the world around them.

And if property is by right yours, then it is someone ELSE’S force that you suffer or resist to maintain it. Resisting someone’s force against YOUR property, whether it be your land or your body, is not what libertarians refer to as “force”. Do you deliberately conflate the meaning of “force” in the libertarian context with initiated force, or are you merely confused on the matter?

DU: “Confusing my liver with the land beneath me”

Confusion is your metaphysics, not mine. Your liver and your land are different, but both are your property.

DU: “even a parcel of land far from me that I claim only by writ of some title registered at a court house, is incredible.”

What is incredible is your insistence that property is only a “writ of some title registered at a court house”. Law may be *your* god, but it may shatter your universe to know that lawmakers require quite a different god–one that you don’t seem to have ever even imagined.

DU: “My liver is me. A parcel of land is not me. This distinction ought be clear enough for any six year old.”

I seriously doubt any six year old would confuse you with your liver. With your arse maybe. And plenty of people historically didn’t give a damn what you call “you”, but all would probably laugh at the idea of you identifying yourself with your liver. Objectively, and in practice, matter is matter. It is under someone’s control or it isn’t. I can take your liver, I can take your kidney, I can take your hair, or I can take your land. I can take anything in the world I can get a hold of. It really doesn’t matter if you gathered it, shed it, shat it, or grew it off the side your neck. It is all property. The question is only one of legitimate ownership.

DU: “We aren’t discussing one man’s ownership of another. We’re discussing one man’s ownership of a parcel of land. Please don’t conflate the most obviously different things to score rhetorical points.”

We are discussing *property*. Clearly you need to exclude any kind of property that doesn’t fit into your absurd “court house” defined philosophy. But since your entire understanding of the universe is nothing but one legislator’s or another’s stipulation, I suppose an arbitrary stipulation about what to call property is a kind of consistency.

DU: “My body is naturally my own, and your body is naturally yours.”

There is nothing, without context, unnatural about someone gutting you and taking your kidney. The only context by which your body is naturally your own, is under the condition of noninterference by others. But that is true with all other kinds of property as well. If nobody interferes, then whatever you take control of in the world, is yours. But of course, it is precisely interference that you desire to impose on people in the form of forced auctioning of their properties.

DU: “Neither my body nor yours is a parcel of land.”

And a parcel of land is not a car. Yes, there are many different kinds of property. So what?

ME: when free from the interference of others. Extension of property to also include other parts of the world is trivial.
DU: No. It isn’t trival. Locke for example never suggests that the extension is trivial. On the contrary, when summarizing “Property”, he writes, [2nd Treatise Ch 5 section 51]”

Of course it is trivial. A person owns his body (his property) and merely removes something from the “commons” to join it with his property, and it too becomes his property. Your specific quote, which is merely a summary of the now familiar notion of homesteading (the topic of the chapter, and thus the numerous references to “the beginning”) oddly doesn’t even address this question. Since you apparently have no idea what Locke said about the extension of self ownership to the rest of the world, here are some relevant quotes, from the same chapter:

“every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his”

and

“man, by being master of himself, and proprietor of his own person, and the actions or labour of it, had still in himself the great foundation of property; and that, which made up the great part of what he applied to the support or comfort of his being, when invention and arts had improved the conveniencies of life, was perfectly his own, and did not belong in common to others.”

and

“when did they begin to be his? …and it is plain, if the first gathering made them not his, nothing else could. That labour put a distinction between them and common”

and

“Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.”

DU: “In the Lockean conception of natural propriety, a resource is yours to govern because you personally labor upon it”

False. What a sophomoric misreading of Locke. First of all, Locke is referring to “the beginning”–homesteading–the origins of property, *not* how most property comes into possession today or in his day. He is explicit about that. Second, this personal “labor” you speak of is MERELY the “removing” of resources from the commons. Third, Locke didn’t care how much land one person owned, merely that resources were not being wasted. Almost the entire chapter is dedicated to origins, but he does speak of how money (or any imperishables) “may be hoarded up without injury to anyone”, and allows one person to rightfully own far more resources than he could personally use, because money and commerce prevents it from being wasted.

Read the entire chapter 5. It is not at all what you think it is.

DU: “where land is so plentiful that your claim need not exclude others seeking to labor similarly, and to claim more than you personally employ by your own labor is “dishonest”.”

It was “dishonest”, because it spoiled a portion of the commons, thereby “robbing” others who might have used it, in “the beginning” before there was money which enabled proper ownership of larger quantities of resources (without despoiling).

But what is *really* dishonest is your misrepresentation of Locke.

DU: “The vast majority of “property” in my experience does not fit this description, so while the idea is interesting theoretically and historically, it has little bearing on the practicalities of “property” as I use the word in my daily life.

Right–the vast majority of property today is not homesteaded, as it presumably was in the beginning, as Locke described in chapter 5. But it is relevant in establishing a rightful chain of ownership. And when that chain is lost, and rightful claim cannot be established, it once again becomes relevant. Locke’s use of “labour” (a removal of resources from the commons) is a description of the natural limitations in nonmonied primitive societies, and ABSOLUTELY NOT, as you claim, an argument against merely handing off property to another person. Here’s another quote you missed from that chapter:

“If he gave away a part to any body else, so that it perished not uselesly in his possession, these he also made use of.”

ME: It precedes any notion of society or state. The latter only take interest in that which already exists.
DU: Lockean propriety, described above, arguably precedes the state, but we aren’t discussing Lockean propriety here. I don’t live on a frontier with land so abundant that I may claim all the land that I can fruitfully exploit by my own labor without excluding you from pursuing a similar objective on the same land.

That is a ridiculous misreading of Locke. Perhaps not a misreading, since one must wonder if you ever read him at all.

DU: On the contrary, in my neck of the woods, my nearest neighbor is literally a few feet from my homestead. Without exclusive rights by registered titles enforced by an authority respected by both me and my neighbor, my neighbor might routinely encroach upon my personal space, and I could hardly prevent it.

This is hardly on the contrary to Locke. Nor does your use of “exclusive rights by registered titles enforced by an authority” to secure those rights mean that is the only way they can be secured. Nor does it mean they are being improperly secured in a Lockean or any other sense. The fact that some authority is securing property does not mean it is legitimate for an authority to do what it wants with property. Rational principles of property ownership may or may not be followed by an authority. The authority does NOT, as you claim, define them. An authority following rational principles is not the same as an authority following irrational and offensive principles such as your confiscate-and-auction scheme.

ME: The comparison of a parcel of land to your body is exactly relevant, and shatters your whole unfounded, wholly stipulated, and legalistic view of what property is.
DU: Incredible. Your blurring of distinctions is the legalistic fiction. Only an ideological zealot clinging to a legalistic category confusing the two can fail to grasp the import of a distinction between his own body and a parcel of land.

You realize, don’t you, that “ideological zealot clinging to a legalistic category” perfectly describes you for as long as I’ve read your postings. You are the one who takes law as a philosophical primary–not me, not judges, not lawmakers, and not thankfully most of humanity.

And I am perfectly capable of distinguishing between all kinds of property. Are you capable of arguing, as opposed to merely asserting, that your body is *not* property, in opposition to Locke who said that it was?

vikingvista November 29, 2011 at 9:38 am

JL via DU: “But if they will enjoy the inheritance of their ancestors, they must take it on the same terms their ancestors had it, and submit to all the conditions annexed to such a possession. By this power indeed fathers oblige their children to obedience to themselves, even when they are past minority, and most commonly too subject them to this or that political power: but neither of these by any peculiar right of fatherhood, but by the reward they have in their hands to inforce and recompence such a compliance; and is no more power than what a French man has over an English man, who by the hopes of an estate he will leave him, will certainly have a strong tie on his obedience: and if, when it is left him, he will enjoy it, he must certainly take it upon the conditions annexed to the possession of land in that country where it lies, whether it be France or England.”

DU: So the classically liberal tradition recognizes hereditary title as an instrument of political power from the very outset.

Locke recognizes that it is the father’s choice to bestow an inheritance or not, and his child’s right to accept or not. He explicitly says this is a free choice for both parities, and “is no more power than what a French man has over an English man.”

Subjecting an offspring to “political power” here merely means that whatever obligations are attached to the estate, go with the inheritance (should the father and heir both agree to the inheritence). This is true of any system of voluntary agreements.

The most that can be said to support your position, is that Locke recognized as legitimate some conditions by the state upon accepted grants of property. It does not mean Locke thought any state actions or conditions were legitimate (he did not). It does not mean that the father or heir necessarily had ANY political power whatsover. It does not mean that anyone at all was coerced in any way. And it certainly does not mean that Locke opposed, as you do, inheritance. As an advocate for liberty and a (mostly) rational theory of legitimate property rights, he certainly would be appalled at your vicious proposal to confiscate-and-auction.

You are inserting context for your own purposes, doing Locke a grave injustice.

Sam Grove November 24, 2011 at 7:47 pm

Ever heard of the legal instrument known as a trust?

john thurow November 25, 2011 at 1:35 am

The way I understand why inheritance taxes don’t work is this: you have two landholders, farmers, one rich the other middle class. The rich farmer has more land then the middle class farmer. Both, however, derive their wealth from their land which is not easily transferred to cash which inheritance taxes require. Now, the rich farmer knows this so he takes out a insurance contract which will cover the cost of the inheritance tax upon his death, thus he is able to preserve his farm for his posterity. On the other hand, the middle class farmer can’t afford said insurance and thus on his death his estate has to be sold to pay for said tax (most likely it is sold to the rich farmer). Thus a law with the intent of stopping aristocracy actually promotes it.

Doc Merlin November 25, 2011 at 5:54 am

BINGO!

Darren November 25, 2011 at 3:40 pm

BINGO!

I believe this falls under “unintended consequences”, as so many government policies seem to lead to.

Martin Brock November 25, 2011 at 8:39 am

The premium on an insurance contract covering the cost of inheritance taxes necessarily transfers some of the value of the land to the insurance provider, so it differs little from pre-paying the inheritance tax.

Every attempt to stop aristocracy does not actually promote it, but apologists for aristocracy have countless rationalizations for this axiomatic assumption.

Darren November 25, 2011 at 3:43 pm

it differs little from pre-paying the inheritance tax.

The money goes to the insurance provider rather than the government. Since insurance agencies are owned by “the rich”, it just goes from one rich person to another.

Martin Brock November 25, 2011 at 7:50 pm

Taxes generally go to the rich.

Martin Brock November 27, 2011 at 8:40 am

And I’m the one trying to break this transfer of rights to statutory coercion among the rich, not you. I advocate title expiration, not taxation. A transfer of rights to forcible imposition is precisely what you advocate instead.

Martin Brock November 25, 2011 at 8:41 am

Yes. Trusts can be very useful instruments.

Don November 25, 2011 at 3:39 pm

And what of the guy who has a heart attack in his 50′s? He dies, his house, money, company, and other assets are confiscated (for taxes). Where is his family then?

The average lifespan is 78.1 years, which means that HALF of all people die younger than that. To assume that we are on some program which ends on a set date (like the expiration of a jug of milk) is asinine and foolish, and you post is an solid example of such simplistic and sloppy reasoning.

Martin Brock November 26, 2011 at 10:11 am

Life insurance and trusts can be very useful instruments. Supporting the dependents of a deceased proprietor is an admirable use, and I defend it. This standard of propriety does not excuse entitling an able bodied man to the fruits of another man’s labor without a market exchange of labors by writ of forcible propriety. Pretending to defend the former while defending the latter is the sophistry of a political parasite.

steve November 24, 2011 at 10:50 am

:-) Ahh, the good old days when the wealthy invested in factories instead of innovative financial products. I too wish that Friedman were still alive. I would love to hear his response on the behaviors of our current wealthy individuals. What is the proper response when the job creators stop creating jobs? What happens when capital is concentrated into the hands of very few people? What happens on the supply side when all of those decisions are made by fewer and fewer people? If you talk with the VC guys, it is pretty clear that small businesses typically start with funds from family and friends. They come in at the next step to make these start ups grow. How do you get more of that first step if the non-wealthy do not have the capital?

Steve

EG November 24, 2011 at 11:32 am

“What is the proper response when the job creators stop creating jobs? What happens when capital is concentrated into the hands of very few people? What happens on the supply side when all of those decisions are made by fewer and fewer people?”

I’m going to make a wild guess here and say that you have probably had ever heard of Milton Friedman before, and never read anything by him.

Krishnan November 24, 2011 at 11:59 am

Re: EG – the ignorance shows as you guess. Note he does not mention what Friedman has said so often – about himself working hard and also about immigrants (as Surfisto also notes).

The idea that in the US, in a free market system, almost anyone without anything except hard work, some luck (yes) and access to the system – CAN become better off – and yes rich is impossible for some to accept – so they do not. To them, ANYONE who is wealthy HAS DONE SOMETHING WRONG. They will not accept ANY data, any argument. So, it is useless to try and tell them anything else.

Yes, there are always thieves and charlatans – but exceptions do not make the rule. The number of times Friedman says “by and large” – should make it clear to anyone that Friedman never argues that our system is perfect – but the best that ever was and ever will be

steve November 24, 2011 at 3:29 pm

I will confess that the only book of his I ever read was his Monetary History since I have long been interested in the Great Depression, but I have read a lot of his articles and heard him speak twice. My general sense, could be wrong, was that he was not as rigid in his thinking as a lot of economists. I think that our world has changed sufficiently from when he did his work, that he might offer different ideas now.

Steve

EG November 24, 2011 at 5:19 pm

The premises you bring up are false. But, given that he was around writing and giving speeches into the 2000s, I’d say things have changed very little since then.

But, again, the premises you bring up are false. When job creators stop creating jobs? Well, given that job creators respond to incentives to create jobs…that’s where you’ll find your answer.

When capital is concentrated in the hands of a few people? There is nothing that concentrates capital in the hands of a few like political power. There is nothing which counteracts this best then competition for capital.

What happens when the decisions are made by fewer and fewer people? There is nothing that concentrates decision making like political power. There is nothing which decentralizes decision making, like the market.

steve November 24, 2011 at 8:16 pm

If you dont want to answer the question, dont.

“When job creators stop creating jobs? Well, given that job creators respond to incentives to create jobs…that’s where you’ll find your answer.”

Since incentives matter, those with capital have incentives to maximize their returns, not create jobs.

Steve

EG November 24, 2011 at 10:13 pm

“If you dont want to answer the question, dont.”

I thought I answered the question.

“Since incentives matter, those with capital have incentives to maximize their returns, not create jobs.”

Of course. Jobs are easy to create. Give everyone a spoon, and have them dig a ditch. There. You’ve got jobs. Of course everyone’s incentive is to maximize their profit. The person who wants a job wants to maximize their profit. When that person meets me, and he can help me maximize my profit, then he in return gets to maximize his.

I don’t know how Milton Friedman of all people, or even a freshmen econ undergrad, would have trouble answering that question.

Jon Murphy November 24, 2011 at 10:57 pm

You are correct that everyone wants to maximize their profits, but remember what profits are:

Profit is Total Benefits minus Total Cost.
You maximize your profit by operating at the point where the marginal benefits equal marginal costs.

So, suppose this example: Assume we have a man who is unemployed. In order for him to live (eat, pay rent, entertainment, etc), it costs him $20,000/yr. The ditch digging company offers him a job paying $30,000/yr. However, the cost of going to this job will add an additional 25,000/yr.

So, first situation (unemployed): TB: $0, TC: $20,000. Net Profit: -$10,000.

Second situation (employed): TB: $30,000, TC: $45,000. Net Profit: -$15,000

In which situation is the man better off? Of course, one could argue in both cases, the man is screwed.

Also remember that jobs are a means, not an end in and of themselves. We could create jobs by putting everyone to digging ditches. We’d have full employment, and nothing to eat. We want jobs that create goods and services people demand. Otherwise, we are just wasting time, money, and resources.

Surfisto November 24, 2011 at 11:33 am

Ask any immigrants who come here with nothing that same question. They may start mowing lawns and build this out to a successful landscaping business. I would actually like to see information or panel data on immigrants in general, who come with nothing and where they are over time. If you want more of the first step, work hard. The “American Dream” in my eyes is still there for anyone willing to work hard and not ask or expect handouts.

Krishnan November 24, 2011 at 12:00 pm

Surfisto – there are those that will refuse to understand what you mean. It just is. To some, anyone who makes it in the US is a thief, charlatan – no matter what, no matter how dirt poor they were and how hard they worked.

Surfisto November 24, 2011 at 12:50 pm

Sadly I agree. A main point I have not heard from this or OWS or most other arguments, is people are just jealous. Yes, they make big bonuses, but because they work hard and have earned it. Stop being jealous.

Krishnan November 24, 2011 at 12:54 pm

Re: Surfisto – and of course, someone will say “What about X? – He did not do anything to earn those millions” – and sure, there are always X’s (and some Y’s) who are thieves and charlatans. What Friedman reminds us so effectively that such X’s and Y’s EXIST PRECISELY because of Governmental Intervention (“in large part” as he will add). The existence of exceptions does not negate the rule that, by an large, the free market system has been BEST in allowing ANYONE to get better because they could.

vikingvista November 26, 2011 at 5:58 am

Yes. And the immigrant can groom his child in his own values and to carry on his traditions and perhaps even his business. Unless some crackpot statist forces him to auction it all away. You know, to stop him from being part of an aristocracy.

Martin Brock November 28, 2011 at 12:36 pm

If the immigrant grooms his child in his own values and to carry on his traditions and to operate a business effectively, the market can reward his efforts by awarding his child the title. That’s what an “auction” is all about. A qualified proprietor seeks credit in a credit market and bids.

An auction is an instrument of market organization. Hereditary title is not an instrument of market organization. I’m the one advocating market organization here. You are not.

Furthermore, if the immigrant’s child works in the business himself before the immigrant’s death, he may have claims to the business independent of the immigrant’s claims, requiring no hereditary title. Any employee of a business may earn entitlement to govern a business by his merits, and a proprietor’s child is no exception.

vikingvista November 29, 2011 at 10:00 am

DU: “If the immigrant grooms his child in his own values and to carry on his traditions and to operate a business effectively, the market can reward his efforts by awarding his child the title.”

That’s what the market does when it leaves the father alone to grant his property to his son.

DU: “That’s what an “auction” is all about.”

Ahh, you are skipping a little part about confiscation of the property to force it into auction. Confiscation of property, and stripping a legitimate owner of the rights to his property is as anti-market as anything can get.

DU: “An auction is an instrument of market organization.”

Wholesale violation of property rights is not. Unless, that is, your idea is to peacefully pursuade people to voluntarily will their property to auction. If that is the case, then I have no problem with it. It also will never happen. Nor should it happen.

DU: “Hereditary title isnot an instrument of market organization.”

ANY voluntary transfer of property is an instrument of market organization.
ANY involuntary transfer (like your proposal) is not.

DU: “I’m the one advocating market organization here.”

Utterly laughable, and completely false in any sense of the words. You are advocating an assault on freedom in a statist tradition approximated only by the totalitarian communist states of the 20th century. It is truly disgusting to anyone who values individual liberty. It is also counterproductive to your stated goals, and a misidentification of what you consider to be the problem. It shows a complete lack of understanding for why voluntary inheritance occurs. It is truly a crackpot idea if ever there was one.

“Furthermore, if the immigrant’s child works in the business himself before the immigrant’s death, he may have claims to the business independent of the immigrant’s claims, requiring no hereditary title.”

Sure, if the immigrant granted them.

“Any employee of a business may earn entitlement to govern a business by his merits, and a proprietor’s child is no exception.”

Only if granted by the owner (or stolen from him).

Josh S November 24, 2011 at 10:13 pm

Actually, he did have answers for all of those:

When job creators stop creating jobs, the government needs to repeal the regulations that make job creation so unattractive, and cut the taxes that make it so prohibitive.

When capital is concentrated in the hands of a few, the political class needs to stop pouring money into the coffers of those few, and the central bank needs to abandon its policy of guaranteeing continued, ever-increasing riches to those few.

Of course, those solutions are lacking in opportunities for graft, which is why few politicians ever support them.

Aussie November 25, 2011 at 2:15 am

This response is pretty close to my own thoughts on the subject.

Now I got my degree in the 1970s ans was fed on Keynes :) but that does not mean that I agree with Keynesian propositions!!

What I see most is that government over-regulation as well as government borrowing etc. has an impact upon what is available for investment purposes. This I believe is key to the jobs issue.

The money available for investment is a part of the a finite pie. If government is taking more than 50% then there is less available for the private sector. Government regulations also have an impact upon whether or not entrepreneurs are willing to invest at a given time.

Keep in mind that I graduated at a time when stagflation first hit the world wide economy. Graduate jobs were indeed quite scarce at the time. The big accounting firms and big business in general were not hiring graduates at the time. This is similar to a situation that has developed during this time.

The solutions are those that were applied by the Reagan Administration, and in my country by the Fraser Government. They were harsh solutions but they were necessary.

Taxes such as we have now work as a disincentive to employ more people. This is especially true with regard to the application of payroll taxes.

This is the starting point to finding the solutions.

p.s. I am not impressed by the large bonuses received by some executives. I certainly think that there is some justification for believing that some do in fact enrich themselves at the expense of others.

ralph November 25, 2011 at 7:51 am

When you see how carelessly the the recipient of those taxes, you become inclined to keep as much away from them as possible. the recipients of wealth do better on average with their money and if they provided income for the sellers of expensive cars, I think that the car seller could do good things with that money.
We should remember that the power to tax is the power to destroy.

Nikolai Luzhin, Eastern Promises November 27, 2011 at 5:35 am

I would love to hear his response on the behaviors of our current wealthy individuals

Like Hayek, Don, et al, his nose would be brown

Krishnan November 24, 2011 at 10:54 am

I have never heard anyone make a point as effectively as Milton Friedman.

What is depressing however is that no matter what, NO MATTER WHAT, there will be a segment of the population that craves for the forcible taking and distribution of wealth EVEN IF they can implicitly understand that it will not work.

muirgeo November 24, 2011 at 12:05 pm

It HAS been working. It is the ONLY thing that works. NO successful society exist with out taxes. NO MATTER WHAT you will ignore that fact presuming you know of a better way when ZERO evidence exist to support your faith based belief.

Steve_0 November 24, 2011 at 1:15 pm

My students, having just collected the data and charted economic freedom of all countries versus quality of life factors, would disagree with you.

muirgeo November 24, 2011 at 1:56 pm

And the higher the taxes, the more successful the society. I offer you current-day Greece as evidence.

HaywoodU November 24, 2011 at 3:09 pm

Ha! Whoever you are, I am gobbling this ‘bit’ up! Don’t stop the funny.

muirgeo November 24, 2011 at 4:23 pm

Muirgeo imposter claims,

” And the higher the taxes, the more successful the society. I offer you current-day Greece as evidence.”

No a big problem for Greece was the lack of collecting taxes by the right of center politicians in charge the last decade.

Ubiquitous November 24, 2011 at 11:08 pm

No a big problem for Greece was the lack of collecting taxes by the right of center politicians in charge the last decade.

No, the big problem for Greece is that government made promises it had no way of keeping except to tax everything in sight including piss.To say that taxes aren’t high enough in Greece is an insult to the intelligence of the Greek people who will no doubt suffer an Argentina-style fate for the next 10 years.

If it really is true that you’re the authentic muirgeo (and I have no proof of that except your say-so, and why should I believe you?), then I prefer the impostor: he’s a riot and you’re just plain dumb.

brotio November 25, 2011 at 12:05 am

No a big problem for Greece was the lack of collecting taxes by the right of center politicians in charge the last decade.

To the right of whom? Uncle Joe Stalin? They’re certainly no farther right than your Savior, Barack Hussein Obama.

muirgeo November 25, 2011 at 1:22 am

Greece would have been fine were it not for it’s swing right and deciding to collect less in taxes. Also the global Wall Street melt down and the use of financial derivatives from Wall Street bankers sunk their economy. It had NOTHING to do with their spending same as here. It’s just mush they keep feeding you at Fox and it’s all lies.

http://en.wikipedia.org/wiki/File:Greece_EU_average_revenues_1999-2010.png

Now if their tax collections were going up you might have a point but again reality is and the facts are on my sidle leaving you no honest options…since you can not be honest on such things… and so you will deny the facts even when they are put right in front of your faces.

Dan J November 25, 2011 at 1:28 am

Everything to do with spending and lazy entitled people.

muirgeo November 25, 2011 at 1:51 pm

Greece would have been fine were it not for it’s swing right and deciding to collect less in taxes.

I’m sorry for posting such dumbshit statements. What I meant to say was this: Greece would have been fine were it not for its habitual positioning on the left and deciding to spend more. In other words: Spend LESS and the problem of collecting yet more taxes doesn’t arise. OK, now I get it. Spend LESS. Thanks, everyone at Cafe Hayek, for explaining it to me. I may be dumb — after all, I’m only an M.D. — but I’m not incapable of learning.*

(*I may resist and even reject learning new things, but I’m not incapable of doing so. I swear it.)

Don November 25, 2011 at 3:53 pm

muirgeo,

You’re posts are always entertaining! Nobody really needs to ridicule you because the reasoning of your posts is self-ridiculing.

You are either the dumbest person I’ve ever seen, or you are so witty that you are brilliant.

Being a glass-is-half-full kind of guy, I’ll hope for brilliant :^).

muirgeo November 25, 2011 at 9:11 pm

That post is not mine. Again some impostor feels the need to post as me. You can tell his post by the fact that the graviton is more blurred as he copied it and reproduced it into his own graviton. I guess that’s what libertarians are all about. Call you names and post as impostors because they aren’t capable of debating the facts.

muirgeo November 25, 2011 at 9:47 pm

the graviton is more blurred

In case you were wondering, a “graviton” is one of the two fundamental particles of the universe. The other is the “moron”, and as you can see from the blurred thinking in my posts, there are more of them than anything else.

Dan J November 25, 2011 at 10:03 pm

Muirgeo imposter is brighter than real muirgeo…..

Darren November 25, 2011 at 3:54 pm

NO successful society exist with out taxes.

You ignore the fact the NO successful society exists with excessive taxes.

Nikolai Luzhin, Eastern Promises November 27, 2011 at 5:37 am

no evidence exists that proves or even tends to prove this statement

muirgeo November 24, 2011 at 11:25 am

To address the OWS? What would he tell them? That financialization of our economy is a good thing? That the re-distribution of wealth upwards based on those with money having greater and greater access to policy makers is a good thing? That it’s a good thing that since he gave that talk finance now takes 40% of all corporate profits instead of 15%? Would he tell them that it’s a good thing that our largest banks just posted record profits while all the rest of the economy fails? Would he tell them that our debt driven economy that transfers wealth based on asset price inflation using debt leveraging and a shadow banking economy is a good thing?

I have a feeling Don he might just school YOU on the big picture anti-capitalism things that are going on to which you seem blinded to.

Randy November 24, 2011 at 11:54 am

Re; …the anti-capitalism things that are going on…

Interesting phrase, because I’m old enough to know that such “anti-capitalism things” have been going on for several decades now. I remember when the unions first starting going belly up back in the 70s for instance. I remember that they were making the same kinds of dumb demands that the OWS folks are making now. They were wrong then, they’ve been wrong ever since, and they are wrong now. Because a job is a cost, and they can demand until they are blue in the face, but they will never be able to demand a price for their labor that is higher than the market price – not for any great length of time anyway. They don’t call it the “Law” of supply and demand for nothing.

Aussie November 25, 2011 at 2:39 am

I agree with Randy. It has been going on from before I was born!!

SmoledMan November 24, 2011 at 12:28 pm

Hey muirbot – who are you to decide how much is too much profits?

muirgeo November 25, 2011 at 1:30 am

I’m not the one to decide. We should do so democratically. And indeed if the peoples desires were represented taxes on extreme wealth, on financial transactions, on inheritance, on unneeded subsidies act would be instituted because even well to do people like myself and those in the upper 1% of income agree. So it’s not me… its most of Americans. They mostly agree that if they do fabulously well they will help pave the way for others to do so because they understand that common sense tells us we do best when we don’t have extremes of income. I]There is no need for concentrated wealth. Most truly productive people don’t care about accumulating ridiculous amounts of wealth. Only those who are sociopathic and near insane think they need billions of dollars to pass on to their hoers. Only people who supper massive concentrations of wealth and power think we need to reward our top income earners with billions of dollars.

So yeah its not me it most people. Who are you to say we have to set up society by YOUR rules? You think YOU know better then the rest? If you do then go start your own damn country or stop whining and let democracy work.

Aussie November 25, 2011 at 2:48 am

Taxing the “top 1%” is mere tokenism. This is the case in any country.

The real issue here is that “the super rich” need to pay income taxes in the first place. Most of them use tax lawyers and tax havens and take advantage of living in other countries to avoid tax.

Reducing the taxes and then imposing a Consumption Tax is a far better alternative because it will actually increase the tax base.

Here in Australia we have the GST and it was controversial when it was introduced. There were trade-offs against some State taxes that were supposed to be dropped. This did not always happen as it was supposed to happen.

We pay 10% on goods and services but there are exemptions, especially with food.

What it means is that the top 1% cannot avoid paying this particular tax. If they buy a yacht then they pay GST, and the same for any other purchase of conspicuous consumption.

The GST is transparent and the system is a little bit complicated. It works quite well, but with our current government the gains have been wasted and instead of being in surplus we are in deficit.

So, rather than introducing yet more taxes it is far better to change the tax base and get the upper 1% such as the Zuckerbergs of this world to pay their share in the first place.

muirgeo November 25, 2011 at 10:38 am

No doubt there are better ways but in the short term they won’t happen so the most pragmatic thing is to close some loopholes and let the Bush tax cuts expire.

CalgaryGuy November 25, 2011 at 11:04 pm

I’m not the one to decide. We should do so democratically. And indeed if the peoples desires were represented taxes on extreme wealth, on financial transactions, on inheritance, on unneeded subsidies act would be instituted because even well to do people like myself and those in the upper 1% of income agree.

Wait, you’re telling me that if we had a vote whether or not to take someone’s wealth, lots of people would vote to do so and that would make it OK?

If the patrons of Cafe Hayek hold a vote and the majority decides that you shouldn’t be allowed to post anymore, would you be OK with that because the mob majority has spoken?

Ubiquitous November 26, 2011 at 1:42 am

Hey muirbot – who are you to decide how much is too much profits?

I’m not the one to decide. We should do so democratically.

We already do. That’s what the market IS — it’s a completely democratic way of deciding how much profit any person or firm should earn. The people vote with their dollars and those dollars flow to whomever the people vote for. What you really want, you closet tyrant, is to override the people’s economic vote with that of some political committee whose particular feelings about who is worthy of economic success and who is not are in agreement with yours.

You’re a closet tyrant and an uncloseted twit.

Nikolai Luzhin, Eastern Promises November 24, 2011 at 12:54 pm

Why, on a Thanksgiving day, are we touting the benefits of greed and selfishness, crony capitalism, etc.?

Steve_0 November 24, 2011 at 1:21 pm

Because we know about the true story of Thanksgiving, as written in William Bradford’s diary. The experiment of collective ownership left everyone on the brink of starvation. Only when property was made private, divided to individual families with the rights to enjoy the fruits of what they could produce, did production increase to adequately feed everyone.

Krishnan November 24, 2011 at 1:47 pm

The guy walks in. He says “Doctor, my head hurts” The physician asks a few questions and writes a prescription. The guy goes home, “fills” the prescription and the head ache goes away.

The prescription said simply “Stop beating your head against the wall”.

Stone Glasgow November 24, 2011 at 6:02 pm

Spending does not equal destruction! Landsburg makes an obsurd argument. He implies that spending is similar to lighting wealth on fire. It isn’t even close; it is more like a fire sale on accumulated wealth, and ironically allows free men to choose how the wealth is distributed instead of allowing government to decide.

kyle8 November 24, 2011 at 6:58 pm

I am not opposed to a highly progressive inheritance tax on a strictly intellectual basis. This is because since we need some taxes, I find it better that you tax the dead rather than the living, and besides I see some societal interest in not producing a fossilized class of monied aristocrats.

The problem is that in the way it actually works is that it causes people to hide their estates in things like trust funds which means that otherwise dynamic capital may go to staid and low level investments.

There is also the danger that high inheritance taxes forces the break up of medium sized family businesses.

ChrisN November 24, 2011 at 8:20 pm

I am opposed on an intellectual basis. Perhaps if .gov could spend money on constitutionally mandated functions and not on making sure poor Granny down the street has a cell phone plan provided by the State, fat Timmy gets enough vegetables as school, get out of the health insurance business, banking business, auto manufacturing business, education, etc we wouldn’t even have to ponder a ‘highly progressive tax ‘ on otherwise private property.

Revenue isn’t the problem, spending is.

kyle8 November 24, 2011 at 9:05 pm

Oh I agree with all of that, but there would still be some need for some taxes.

Darren November 25, 2011 at 4:02 pm

How about an interitance tax equal to the age of the taxpayer when he dies (or based on age in some way)?

James Strong November 24, 2011 at 9:53 pm

Friedman is nothing shot of amazing. It’s not only about what he knows, but his delivery. Whenever I hear him speak he explains the concepts in a way that anyone can understand and with grace and elegance, which is why he is so effective at leaving anyone challenging him speechless.

Jon Murphy November 24, 2011 at 10:00 pm

I agree James. It’s too bad he’s since passed. May he rest in peace

Greg G November 25, 2011 at 8:02 am

Let’s not conclude the Friedman tributes without giving him credit for cementing the popularization of the idea that aggregate macroeconomic analysis works and that we don’t need to worry much about deficits if they result from tax cuts.

john thurow November 25, 2011 at 1:44 am

I think the OWS crowd et al should of been shown the movie “Babe”. I think it is a good analogy for life in that we are all pigs and unless we acquire some skill that is useful to the farmer, the farmer will not be in need of us and desire us for his feast. Babe on learning what was required went about to accomplish his salvation. We all need that moment when someone says “that will do”! But it won’t come unless we learn and acquire what is useful.

Vance Armor November 25, 2011 at 6:19 am

I think of Milton Friedman as an Economist of Empire, as a methodological Keynesian and a court jester for politicians he tried to sway, esp. President Wage and Price Controls — Richard Nixon. Milton Friedman, the developer of the withholding tax. Milton Friedman, the exponent of floating currencies — but only among the central banks — to give the dollar the pre-eminent position in the wake of the collapse of Bretton Woods upon the Nixon Shock of 1971 as the world’s reserve currency AND a pure fiat currency. Friedman appreciated spontaneous order and Hayek’s articulation of the use of knowledge in the market process, but Friedman, like Adam Smith, was more interested in the Wealth of Nations than the Wealth of People. He would have done better had he been a forceful critic of the very existence of the Fed, if he had jettisoned his positivism and pragmatism for a larger narrative, as did Hayek and the early Austrians. With Milton Friedman there is no critique of the economics of war and empire — only Cold War intrigue, over a million dead Vietnamese, and the desaparacedos of Chile and Argentina. He is to economics what Henry Kissinger was to statecraft — an apologist for the Pentagon, the defense contractors and the megabanks that thrive in an international system of central banks and fiat currencies.

Martin Brock November 25, 2011 at 9:20 am

Friedman opposed the invasion of Iraq and called it an act of aggression.

Josh S November 26, 2011 at 5:50 pm

Put down the Rothbard and read some honest history. Oh, and read Smith in his own words, because Rothbard’s portrayal of him is bullshit.

vance armor November 26, 2011 at 6:29 pm

Josh: Just call me de Niro — “You talking to me?” Your statement about Rothbard is not an argument but rather mere scatology.

Jon Murphy November 25, 2011 at 10:57 am

I have to admit, I love Steven Landsburg, and his column, linked in the post, to the WSJ is superb.

I would also encourage anyone who has not read his book “More Sex is Safer Sex” to check it out. Very good book.

vance armor November 26, 2011 at 6:32 pm

I think Rothbard was at his best as an intellectual historian, as a historian of economic thought, and as a political historian. As a political theorist and as an ethicist he was beyond quirky, perhaps so tendentious that he was indefensible at times. As an economist he really did not break much new ground — but America’s Great Depression is a true classic.

vance armor November 26, 2011 at 6:34 pm

Rothbard’s problem was that his economics had no underlying jurisprudence. He shares that problem with Milton Friedman. Neither Adam Smith nor Friedrich Hayek had that problem — they were masters of both economics and jurisprudence.

vance armor November 26, 2011 at 6:38 pm

What was Milton Friedman’s underlying epistemology? Logical positivism, which gave rise to his scientific positivism. Logical positivism was blown to pieces by Popper, perhaps Hayek’s best friend in the philosophical community.

SmoledMan November 27, 2011 at 11:32 am

Friedman was a hack like all conservative economists. Look what he did to Chile.

vance armor November 26, 2011 at 6:43 pm

Martin Brock comments that Friedman opposed the Iraq invasion. Interesting that Rose Friedman disagreed with him on this score. I think he struggled to jump ship from the Reaganites and Straussian warmongers of the Lyndon Baines Bush Administration, kind of like Bill Buckley also struggled to do so in his final years when he also opposed the Iraq War. It is a shame that National Review is today run by amateurs who are nothing more than GOP party hacks disguised as political opinion writers.

Martin Brock November 27, 2011 at 8:59 am

“Opposed the Iraq Wars” is a generous description of Buckley’s position. He never “opposed” the war in the sense of a Ron Paul. He only recognized the likely folly of it. He opposed a likely failure of imperial conquest. Paul rather opposes the imperial enterprise in principle, even imperialism in the name of “liberty”, recognizing that respect for liberty must emerge from the bottom up. An invading army cannot impose it simply by substituting one regime for another. Regime change is not liberation unless the governed themselves change the regime by withdrawing from it and from any other regime imposed by force.

Vance Armor November 27, 2011 at 2:37 pm

Spot on, Martin Brock. Yes, about Buckley, where you reinforced my point about his “struggle” to oppose the Iraq War.

Martin Brock November 27, 2011 at 1:41 pm

In the first video linked from Perry’s site, around 3:30, Friedman leaps to an incredibly ridiculous conclusion. He suggests that “the market system” somehow gives parents the incentive to invest in their children’s future success, even in “an irrational way”.

Of course, parents do invest in their children irrationally, i.e. they do not invest for a return proportional to (in a fixed ratio to) their investment. They rather invest in their children’s success regardless of any return. This parental impulse is obviously natural and has nothing to do with any system of forcible propriety or the market.

A billion years of evolution by natural selection (or the design of our Creator if you prefer) is responsible for this instinctive investment, not any statutory system. The laws governing this investment are written in DNA and flow through my veins, not through any title registry at any courthouse or through any exchange in a market.

Attributing this habit of parents to “capitalism” is simply another form of state worship, hardly different from atheistic state socialism. Friedman imagines my father as the “new capitalist man”, serving me only because wise philosophers like Friedman properly construct the rules of forcible propriety, and he imagines me serving my children similarly.

The idea is incredible nonsense, from a strictly scientific point of view, as well as a sacrilege. Market organization benefits immeasurably from parental instincts, but it hardly produces these instincts.

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