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Claims that intelligent left-wing bloggers couldn't possibly agree with
We don't take steps to redress inequalities of looks, friends, or sex life. We don't grab a kidney from you to save someone's life, even though that health difference was unfair brute luck. Redistribution of wealth has some role in maintaining a stable democracy and preventing starvation. But the power of wealth redistribution to produce net value is quite limited. The power of wealth creation to produce net value is extraordinary. Most of America's poor are already among the best-off of all humans in world history. We should be putting our resources, including our advocacy and our intellectual resources, into wealth creation as much as we can.
That's me, quoting me; I pulled the material from the inner guts of Typepad software.
Posted by Tyler Cowen on June 21, 2007 at 07:05 AM in Philosophy | Permalink
Comments
Agreed! And the question now is -- how best to create wealth? And I suspect you believe it is something like sticking to, or amplifying the kind of property relations/ordering of economic sphere we have now. But here's the problem with that -- today, we utilize a tiny percentage of the human race's mind power for wealth. Most people have unthinking jobs. And I don't think that will change if we stick we the way things are. It seems like next quantum leap in the capacity to produce would be be created by a change in the ordering of the economic sphere that would free the bulk of humanity from the unneeded pursuit of survival -- a guaranteed basic income, a citizen's grant...Then we can talk about wealth creation!
Posted by: Prom.Theus at Jun 21, 2007 7:49:03 AM
Let's see....
"Most of America's libertarians are already among the best-off in after tax income of all humans in world history. We should be putting our resources, including our advocacy and our intellectual resources, into wealth creation as much as we can."
Posted by: Robb Lutton at Jun 21, 2007 7:50:26 AM
I may not be intelligent, but I am a left-wing blogger on occasion. And you are right I can't agree with these claims.
Even intelligent right-wing bloggers seem to believe in some strange two-phase world. Phase one is wealth creation, and takes place in the market: the wealth I end up with is apparently "my" wealth, created by me out of whole cloth from my own efforts. Phase two is wealth redistribution, and is carried out by government ("we") to reallocate that wealth generated in phase one.
This world, in which the state is the weapon of the envious poor, is not the one I see. Sure, the state may be the only mechanism the poor have to pursue self-protection, but it's not "ours": Robin Hood is the folk hero of wealth redistribution, and he was as non-state an actor as they come.
One other gripe: "The power of wealth creation to produce net value is extraordinary" is a tautology. Wealth creation is a social act, not an individual one. Societies create wealth, people don't.
That's a bit confused I'm sure, but it's the best I can do while eating breakfast.
Posted by: tom s. at Jun 21, 2007 8:04:44 AM
Societies create wealth, people don't.
Really? If you were on a desert island by yourself, you wouldn't build yourself shelter? Wouldn't grow crops? Wouldn't make fishing nets? Wouldn't improve these over time?
If you were doing these things, then even without society, your net worth would be increasing.
Posted by: Jody at Jun 21, 2007 8:19:42 AM
my idea is that wealth redistribution is not good (generally speaking).
but it is good to give everybody the same chances, expecially looking to the stuff that does not depend on merit and/or responsability.
let us say: basic education (and, why not, university education) and health care should be equalized for parity of chances and not for wealth redistribution (may be there is a way to equalize without growing a leviathan state or build up monstruous public structures like in Europe)
retiring system, instead, is based heavily on merit and responsability of the individual and should not be managed by public or state systems (except emergency and so on...).
so, even if I am not an intelligent left-wing blogger, I can agree with your statement.
but I am not sure that in US there is parity of opportunity for everybody.
neither in Europe, of course.
Posted by: Kerub at Jun 21, 2007 8:20:20 AM
"But the power of wealth redistribution to produce net value is quite limited."
http://select.nytimes.com/2007/06/19/opinion/19herbert.html?n=Top%2fOpinion%2fEditorials%20and%20Op%2dEd%2fOp%2dEd%2fColumnists%2fBob%20Herbert
Just to be clear, do you think providing health care to nine million american children is of limited value (especially considering the life-long health conditions and concomitant costs that would be avoided)? Or do you agree that the health care of nine million american children is of significant value, but instead have a more complex, economic argument about how putting money elsewhere would create even MORE value?
When you get away from the academic Rawlsian types and talk to real left-wingers in society I think you'll see that they are not very concerned with equality in the abstract and much more concerned with preventing a poor child from developing life-long diabetes and the resulting suffering and other costs.
Posted by: npopp at Jun 21, 2007 8:33:05 AM
"Really? If you were on a desert island by yourself, you wouldn't build yourself shelter? Wouldn't grow crops? Wouldn't make fishing nets? Wouldn't improve these over time?
If you were doing these things, then even without society, your net worth would be increasing."
Of course you would, but these things will only take you so far. The vast amount of "wealth creation" has been realized post agricultural societies. This was the basic starting point of the "growth revolution" in economics; why did incomes and wealth suddenly being to rise at unprecedented levels when they basically remained flat for thousands of years?
There is a limit to your wealth creation on this deserted island. It is not until you start populating the island, extracting raw materials, trading with neighboring islands, and getting the positive feedback from knowledge creation and technological advance that you will see a significant increase in your "wealth". I think that is the point the poster to which you posed the question was making.
Posted by: Matt at Jun 21, 2007 8:33:49 AM
But the power of wealth redistribution to produce net value is quite limited.
What does "value" mean in this sentence?
Posted by: alkali at Jun 21, 2007 8:34:04 AM
I am a moderate non-blogger (lapsed blogger, comment creature), but as it happens I was re-reading this, this morning:
Only 10 percent of big ocean fish remain
I understand that with "left-wing" and "wealth" discussions you are focusing in on particular policy contests ... but, to me the fishes thing is the best answer to "we should be putting our resources [...] into wealth creation"
The left-right contest is played with competing concepts of wealth. Certainly dollar-wealth isn't going to help us buy sushi when the fish are gone.
Posted by: odograph at Jun 21, 2007 8:45:52 AM
Shorter: wealth, like happiness, is too often redefined to win arguments.
Posted by: odograph at Jun 21, 2007 8:49:33 AM
It would seem to me that the common ground for 'wealth creation' and 'inequality reduction' lies in human capital and infrastructure - both demand increased investment. Better educated and healthier poor population would improve both. The question becomes how do you further these ends, but deviating answers don't necessarily reflect the right/left split on wealth creation/inequality, but rather the ability of the market/government to act effectively toward these goals.
I agree that the poor are doing great in absolute terms, but they are unappreciated assets, many with artificially low value due to neglect. Bottom line, a lot of people who could power wealth creation are falling into the cracks at the margins. Both morally and economically, it makes sense to sift through all of our human assets to locate drivers of wealth creation.
Posted by: Christopher at Jun 21, 2007 9:00:13 AM
odograph,
There is no shortage of cows. I wonder why.
Tom and Jody,
It's arbitrary and semantic to argue whether societies or individuals create wealth. Obviously individuals can create wealth on their own but benefit from network externalities in wealth creation of being involved in a large orderly society. I doubt anybody would disagree with that claim.
Posted by: josh at Jun 21, 2007 9:12:56 AM
"Robin Hood is the folk hero of wealth redistribution . . ."
Robin Hood was not redistributing wealth; he was returning wealth that had been stolen through unjust, oppressive taxes.
Posted by: Ragnar Danneskjold at Jun 21, 2007 9:18:12 AM
I like the Robin Hood analogy. He stole from the government and gave people their taxes back. Just like the Sheriff, the government has lots of land it keeps us from hunting on, extracting resources from (including at sea), and to top it off takes a huge sum of money in taxes, approaching 40%. It is a vast empire of wealth destruction.
Posted by: 8 at Jun 21, 2007 9:20:15 AM
I think the above is generally true but... It is completely wrong. The reason being is I think that the utility provided to an individual by a marginal unit of wealth decreases at a different rate than you assume. And of that utility a significant portion comes from a feeling of status that is confered by having "more" than others. So for the rich each additional unity of wealth provides relatively little utility and much of that utility comes from feeling successful/ having more relative to others, so that portion would not actually be dimminished by the government leveling taxes symetrically against the rich.
The same amount of wealth could be used by the less the well off to purchase things that offer comparitively great gains to utility. Like nutirtious meals, superior child care, hell even air conditioning and nintendo wii's.
Now of course redistributing does create disincentives to work which is inefficient, and many people do resent surrendering their autonomy over how their money is used, so there are some big down sides. Still, the fact that money is much better at buying happiness when you don't have much of it and bad at buying happiness when you have a lot of it makes it difficult for me to come down strongly against significant levels of flat out wealth distribution.
Posted by: Michael Foody at Jun 21, 2007 9:20:26 AM
Actually I think Mr. Hood stole quite a lot from the church. If my memory is right, he wasn't particularly discerning where the money came from.
"Steal from the rich, give to the poor, Dennis More, Dennis More."
Posted by: tom s. at Jun 21, 2007 9:29:18 AM
I felt a little bit bad about injecting fish into this, but I think Josh's sad comment tells me I was right to do so.
You know, as we close on 2008, the less intelligent right-wing blogs are going to commence the same dance about "environmental leftists." They well say, I'm sure that those "leftists" are out to stop our "wealth creation."
I can feel it in my conservative roots that wealth creation is good, but darn it, my wealth is _not_ in dollars alone, and the ocean is _not_ a freakin' feedlot.
Posted by: odograph at Jun 21, 2007 9:36:37 AM
As an aside, "idiocracy" was a cruel movie, but the image of a guy sitting in a trashed apartment, in front of a big screen TV, struck me as "Josh style" (right-wing blogger) success. If the TV's big enough, and the big gulps keep on coming ... then that "wealth creation" has worked, right?
Posted by: odograph at Jun 21, 2007 9:39:43 AM
If the TV's big enough, and the big gulps keep on coming ... then that "wealth creation" has worked, right?
What would you rather the guy on the couch do? Pick cotton all day in the hot sun?
Nobody has the authority to tell other individuals what to do with the leisure time that our unprecedented American wealth given us. (Oh, look at that guy just whacking at a small ball for hours--how pointless! Look at that girl playing the piano all afternoon--what a waste of time!)
Posted by: Ilsa Lund at Jun 21, 2007 10:06:54 AM
What would the effect of more government wealth distribution do to private wealth distribution (charities and such)? I recall reading somewhere that the US had a higher percentage of charitable contributions than other countries but have no reference for it and may have a faulty memory. Are there any studies on what could be crowding out of private charitable contributions? And would the government wealth redistriubtion program be any better than the current set of charitable organizations? More questions than comments ...
Although, after establishing a baseline standard of living (which may seem a bit extravagant to most people) I can see very wealthy people deriving a higher marginal utility from giving away an additional dollar (voluntarily, not through taxes - nobody wants to admit they "gave away" more money through taxes because then they look incompetent for not being able to hide the money better) than keeping it. Bill Gates to Warren Buffett - I gave away $X last year - what's that, you gave away $X-$1? Ha, ha Warren, looks like I need the money less than you. You must not be so rich. (Note: The above exchange is completely fictional and any resemblance to actual individuals is purely coincidental.) However, we do need a theoretical model of this behavior though so we know it could exist in equilibrium :) Anyone know if one exists?
Posted by: AZ at Jun 21, 2007 10:19:24 AM
Really? If you were on a desert island by yourself, you wouldn't build yourself shelter? Wouldn't grow crops? Wouldn't make fishing nets? Wouldn't improve these over time?
Really? How did you know how to do all these things? Did you educate yourself into this state in some unspoilt wilderness that was devoid of anyone and anything else?
Posted by: Chris Stiles at Jun 21, 2007 10:30:23 AM
Odograph,
The depletion of ocean fisheries (a very serious problem) has little to do with Mr. Cowen’s belief that the benefits of economic growth outweigh the benefits of wealth redistribution. It seems you incorrectly assume Mr. Cowen’s emphasis on growth somehow precludes him from supporting responsible action to protect fisheries (through tradable permits for example). I respectfully submit you are likely mistaken.
Posted by: Whit Stevens at Jun 21, 2007 10:46:04 AM
I felt a little bit bad about injecting fish into this, but I think Josh's sad comment tells me I was right to do so.
You know, as we close on 2008, the less intelligent right-wing blogs are going to commence the same dance about "environmental leftists." They well say, I'm sure that those "leftists" are out to stop our "wealth creation."
I can feel it in my conservative roots that wealth creation is good, but darn it, my wealth is _not_ in dollars alone, and the ocean is _not_ a freakin' feedlot.
odograph, you misunderstood Josh's point. Domesticated cows are not endangered because they are protected by private property rights; ocean fish are endangered because they are not.
And the proper regulatory regime for dealing with the latter market failure, while debatable, couldn't really be classified as "redistribution."
Posted by: Jim Copland at Jun 21, 2007 10:55:55 AM
I haven't seen any leftie yet try to explain why redistribution of (physical/monetary) wealth is justifiable
while redistribution of looks, charm, friends, or sex life, is not.
I'd appreciate it, cause that was kinda the point.
Posted by: Person at Jun 21, 2007 11:10:40 AM
There are an interesting span of comments there, but I am going go continue by comment-punditry by calling most of them "blithe dismissals."
People who respond with rote answers about property rights or fish farms don't know how well they've worked (not very well, really) in practice. They just saw a headline recently, that they can repeat, without reading past paragraph two.
I challenge you: have any of you taken action to protect those fishes, or to you just wave theoreticals in blog comments when the question comes up?
(FWIW, the best solution, in practice, is the ocean reserve, and I credit Mr. Bush for helping to create (so far) the biggest.)
Posted by: odograph at Jun 21, 2007 11:17:26 AM
Tidbit: I just read this morning that the Atlantic Cod are still in trouble, in part because the fishery has limits, currently three times as many Atlantic Cod are caught (as "by-catch") when fishing for other species.
By-catch, alone, is enough to sink the theoreticals.
Posted by: odograph at Jun 21, 2007 11:20:27 AM
(I usually let my typos go, but that one is confusing ... should be "in part because [while] the fishery has limits, currently three times as many")
Posted by: odograph at Jun 21, 2007 11:22:07 AM
Let me point out one issue that I am surprised nobody has jumped at yet.
Most of America's poor are already among the best-off of all humans in world history.
By what standards? And do you think the American poor would agree?
Posted by: Ben at Jun 21, 2007 11:24:12 AM
"Redistribution of wealth has some role in maintaining a stable democracy and preventing starvation."
Warrant?
In response to Tom S: Your Two Phase analysis ignores economic incentives. Why would an individual make an effort to create wealth in Phase I only to have that wealth stolen from him (by an individual or the government) in Phase II? By having a system of redistribution, individuals lose incentive to create wealth thereby decreasing opportunities for all individuals (especially poor ones) to engage in mutually beneficial exchanges in order to create more wealth.
The reason Robin Hood was popular is because he was stealing tax revenue and giving it back to the citizenry. It’s morally OK to steal money from a thief (in this case, the government) and return it to its rightful owners (in this case, the citizens).
Posted by: Paul R. Dorasil at Jun 21, 2007 11:31:23 AM
Where do you think the wealth comes from?
Posted by: Doggerted at Jun 21, 2007 11:41:51 AM
We still have to go back to the basic fact that since the government started significant redistribution of wealth or income after WW II real per capita income and per capita wealth creation has been significantly better then it was in the earlier era -- 1850-1950, for example. The raw data implies that in the US, the government redistribution of wealth has lead to much stronger wealth creation -- just the opposite of the premise Tyler's comments are based on. Moreover, even if you compare the 1950-1980 era to the 1980-2005 era when there was a sharp break in the direction of government redistribution you also get the same results with the growth rate of wealth or gdp creation slowing sharply after 1980s. The basic premise of this argument is that if the government redistributes wealth to improve the health and education of those far below normal it will lead to those at the bottom experiencing much stronger productivity growth and making the entire society much better off. Tyler, do you have any facts to disprove this thesis or support your theory that redistribution downward has harmed the US potential? What I see is a bunch of theories, but little data.
Posted by: spencer at Jun 21, 2007 11:57:45 AM
"We don't take steps to redress inequalities of looks, friends, or sex life."
The mind boggles at what these government programs would look like. Long waits in line for hanging out with your buddies? Fifteen minutes of paperwork taking the place of foreplay with your date?
I imagine redressing inequality of looks would end up something like that episode of the Twilight Zone where the woman wakes up from her plastic surgery with a gorgeous face, to the horror of the doctors, nurses, and passersby in the hallway. As the camera pans back their monstrous, freakish faces become visible.
Posted by: Thelonious_Nick at Jun 21, 2007 12:04:06 PM
Tyler,
I can't resist being bad, especially now that you are outing your inner
economist and likely to be about to become a millionaire (congrats).
So, if a left-wing blogger fails to disagree with your arguments, does this
mean that they are stupid or that your arguments are stupid?
Regarding redistributing charm, friends, sex life, and all that, well,
those things are just a whole lot harder to redistribute than is wealth
or income.
Posted by: Barkley Rosser at Jun 21, 2007 12:09:11 PM
Barkley_Rosser (wait -- isn't he the guy that who thinks Social Security isn't PAYGO?):
Those aren't all that difficult to redistribute. For example, take looks: compared to the welfare system,
it's quite inexpensive to give someone plastic surgery to enhance their looks. See: numerous makeover shows.
It's also inexpensive to give someone plastic surgery to make them uglier. (Though less professional research
has gone into this.) More importantly, it's cheap to tell who's *really* ugly and therefore deserving of
enhancement and vice versa :-P
I can do the rest, but you get the point.
Next objection?
Posted by: Person at Jun 21, 2007 12:15:06 PM
Paul Dorasil - I was trying to say that this "two-phase" picture, which is implicit in Tyler's quote, does not correspond to the real world. Personally I don't think there is such a phase 1 or phase 2, so I simply don't agree with the "wealth-production/wealth-redistribution" dichotomy that is the premise of our host's argument.
By the same logic, I can't take up Person's argument because I don't accept the premise that the redistribution of looks is analogous to the "re" distribution of wealth, or that (also implicit in many comments here) all wealth accumulation in the private sphere is "creation".
Posted by: tom s. at Jun 21, 2007 12:19:55 PM
tom_s: What exactly are you denying with regard to phase 1/2? Are you saying there's no difference between wealth production and redistribution? That buying an apple is the same as giving money for no apple?
By the same logic, I can't take up Person's argument because I don't accept the premise that the redistribution of looks is analogous to the "re" distribution of wealth,
Oh, we know you don't accept that premise, but to have an actual relevant contribution you have to be able to show what the relevant difference is.
or that (also implicit in many comments here) all wealth accumulation in the private sphere is "creation".
No one has claimed that. They claim that certain behaviors that constitute the free market, are wealth creation. Obviously, people can make money today through destructive acts (e.g. hired hits).
Posted by: Person at Jun 21, 2007 12:33:22 PM
Unfortunately, this conversation has equated the left with egalitarianism. However much respect I have for the position, there is much more to the left, and a lot more that is relevant for this topic. Here's one. A very traditional, close-to-vulgar Marxist perspective. It goes like this: capitalist property relations have allowed, as the right wing acknowledges, enormous gains in the material well-being of humans. Separating direct producers from the means of subsistence and placing the control of those means under the competitive logic of capital has allowed for a second revolution in the technological capacity of humanity, equal or greater to the neolithic revolution. Marx was a great, even the greatest? admirer of capitalism. However, the specific property arrangment of capitalism (specifically, the private ownership of Capital) now fetter the production of wealth. Instead developing the technological capacities of man, huge amount of resources are used to maintain the current property regime (advertising, workfloor security, police forces, war --etc) If we put the means of production under democratic control (but what is this! right!) then we can make the third leap!
Posted by: maybemarx at Jun 21, 2007 12:41:36 PM
Let me try another angle on the redistribution question.
Here's a practical problem: If the gulf between rich and poor becomes too big, or is perceived to be too big, resentment increases, and opportunities for demogoguery increase too. Resentment+demogoguery equals taking the whole wealth-creating structure down. As we know, a lot of people would rather kill the goose that lays the golden egg rather than see a neighbor make off with most of the eggs.
So that's a practical problem. The poor may be well-off in historical terms, but 1) they don't know that, and 2)given human nature they probably don't care. They want goodies, and they're pissed off by the rich, especially the flagrantly greedy.
How to manage things in such a way that the wealth-creation process goes on, relatively unhindered, without creating the kinds of social antagonisms that can bring it down?
I'll submit that a certain amount of redistribution of wealth is socially necessary in a practical sense. The poor need to feel that they're being looked after a bit, and they need to feel that the rich are pitching in to the general well-being of the society. And I think this kind of redistribution is socially necessary whether or not it's particularly effective in a strictly economic sense -- it's symbolically important. And symbols count.
My own preferred way of contending would be to impose some kind of tax surcharge on the very, very wealthy -- an extra 10% on everything above a certain point, maybe. It wouldn't hurt the ultrarich too bad, it'd please the poor, and it'd be good symbolism. I'd also encourage the rich to monitor their public behavior better than they do. The occasional show of gratitude to the system we're all pitching into, etc. Encouraging charity bigtime would be great too.
Elementary psychology: If you say to a group of people who feel they have it hard, "too bad, tough it out" *too* many times, they're likely to turn on you, and on the entire system.
Posted by: Michael Blowhard at Jun 21, 2007 12:42:21 PM
I'd be all for the redistribution of looks, except that happily, you don't need to take someone's beauty away to give it to someone else. (Plastic surgery don't need much in the realm of spare parts. Yes, I think it would be both just and wise to sponsor plastic surgery for people who really have problems in that departement, for instance with birth defects.)
Sex life & friends? Actually, I think we have pretty equal opportunities there already, and when we haven't it's usually down to economic inequality, which as you know is already a target. Again, people with social phobias or other problems they can't help could perhaps get sponsored classes to deal with them or something - if that was truly the best way of helping them in the pursuit of happiness...
Posted by: Harald Korneliussen at Jun 21, 2007 12:45:57 PM
" Here's a practical problem: If the gulf between rich and poor becomes too big, or is perceived to be too big, resentment increases, and opportunities for demogoguery increase too. Resentment+demogoguery equals taking the whole wealth-creating structure down. As we know, a lot of people would rather kill the goose that lays the golden egg rather than see a neighbor make off with most of the eggs."
Cowen agrees to redistribution in to this extent as long as the goose isn't killed i.e. stability is maintained, but not more than that. I think his point is valid.
Posted by: Jack Sparrow at Jun 21, 2007 12:47:42 PM
"We don't take steps to redress inequalities of looks, friends, or sex life."
Wasn't there a funny bit in "Eat the Rich" where O'Rourke talks to a Swedish minister of Happiness or some such?
Posted by: odograph at Jun 21, 2007 1:18:44 PM
TC works from less than adequate measurement tools - I predict the next 20-25 years will produce better econometric tools, which will require him to rethink his approach. Extreme wealth (Gates and Buffet, for example) is inefficient - they need to give it away. (That's why we have all not chosen to become billionaires - right?) They will not live forever, and cannot use it, so they need to give it away. There is waste in creating extreme wealth. At a point, wealth inequality is a negative externality. It wastes resources. Why put up with Gates copying his program billions of times (calling it wealth creation - a legal construct - based on IP rights)? To encourage innovation. That works to a point, but only to a point, then it becomes a negative externality. TC is not enough of an econometrician (yet) to be able to graph out when wealth inequality becomes a negative externality.
Assume the earth gets to colonize earth 2 - there is a need to allow income inequality to give incentives to reasonably develop the new planet. But that incentive must not be so great as to produce waste.
Just because economists cannot yet discern how to produce the goods from Microsoft without excess wealth creation (that Gates now needs to get rid of) does not mean the US economic system is now optimized with respect to inequality issues.
Posted by: cfw at Jun 21, 2007 1:23:46 PM
Odograph,
"As an aside, "idiocracy" was a cruel movie, but the image of a guy sitting in a trashed apartment, in front of a big screen TV, struck me as "Josh style" (right-wing blogger) success. If the TV's big enough, and the big gulps keep on coming ... then that "wealth creation" has worked, right?"
EVERYONE was a freeloader on the system, more or less. I thought of it as the "wealth redistribution" had worked. One of your ideological colleagues had already previously referenced buying poor people wii's with welfare checks...
And Spencer,
"the government redistribution of wealth has lead to much stronger wealth creation"
Can you prove ANY causation there? Or are you just assuming that because they both happened that one caused the other?
Posted by: Jake at Jun 21, 2007 1:41:35 PM
What an odd assertion, the more I make the less I share because it is mine. It is as irrational as any I have heard, and yet claims to be rational. Does this come under a previous posts idea of "pathology" of the wealthy?
Posted by: Dan at Jun 21, 2007 2:12:51 PM
Person,
I only specifically mentioned charm, friends, and sex life. While plastic surgery, or whatever,
may not be all that expensive, seriously redistributing charm, friends, or sex life are nearly
impossible, except maybe in some fantasy universe or state-run prostitution scheme or whatever
(and that only gets sex life; sending people to government-run charm schools is not likely to work).
And to Tyler, I suppose another answer for the "left-wing blogger" who does not disagree, besides
that they are either stupid or the argument is stupid, would be that they are not really left-wing.
Posted by: Barkley Rosser at Jun 21, 2007 2:13:41 PM
Person,
Please use economic terms when describing hired hits. It is called asset stripping, and has played a role in wealth creation. This is an economics blog, ok?
Posted by: Dan at Jun 21, 2007 2:25:22 PM
"We don't take steps to redress inequalities of looks, friends, or sex life."
This reminded me of a funny story from my old university in Canada, Queen's University. I never met the girl, but I was told she had severely disproportioned breasts. It was so bad that the health care system agreed to pay for a single implant to get her to a more proportioned look. She opted to get both upgraded, ultimately paying for just one implant.
Posted by: Richard at Jun 21, 2007 2:26:21 PM
I'm a conservative by nature Jake, and only a moderate by cognition. My gut will go with the market, and I only overrule that when the market proves destructive.
The difference I have with my unreformed brethren is that I face hard realities, and don't simply (and repeatedly) insist that any bad news must be false, or that theoretical worlds are as valid as this one.
(in Idiocracy, the guy with the big screen and big gulp was a lawyer, not on the dole)
Posted by: odograph at Jun 21, 2007 2:29:11 PM
If a stable democracy is a function of redistributing wealth, then we are in big trouble; in fact, we already are.
The poor, and the not-so-poor, demand more and more - and get more - with each passing election. Whether it's the Republicans or Democrats, the party in power must redistribute wealth or appear to do the same in order to maintain power. One must only look to the problem of illegal aliens who generally are led to believe that they are owed some type of compensation for their personal predicaments. I believe that redistributing wealth without responsibility for one's life's decisions will only lead to more demands by other illegals and poor U.S. citizens who think they are owed some type of compensation for their predicaments. Opportunities abound in this country - the bootstrap type and the ubiquitous federal/state jobs program type.
Unfortunately, some middle class Americans - like the poor - do not want to make the hard choices that creating wealth or protecting wealth demands. In other words: cell phones vs. health care, big screen televisions vs. acquiring more education, 3200 sq. feet homes vs. 2000 sq. feet homes. Most Americans have difficulty determining what is a need vs. a want. Like illegal aliens, the aforementioned Americans have become accustomed to believing that they deserve some type of redistributed wealth for their personal predicaments.
The elementary school in which I teach, provides free everything for students who receive free or reduced lunches - field trips, school t-shirts, free books from the book fair, free pizza @ P.T.A. meetings (under the guise of a winning ticket from a random drawing). In fact, I have students who will ask for their five dollars back when they learn it should have been a freebie or ask why they haven't received a free book from the book fair - without embarrassment . Yet, all the while, no one works in the home, never has and never will - or the family has a plethora of cell phones, a recently purchased SUV, or snappy clothes from stores in which I don't shop, because I've determined that the costs out-weigh the benefits.
No worries, though...life is too short to be angry over such ominous trends that are part of every American town and city. When most Americans start believing that their lots in life are not rooted in others' wealth, redistribution will cease to be seen as a right.
Posted by: Mike at Jun 21, 2007 2:35:39 PM
Spencer,
Correlation does not equal causation. And, in any case, I would like to see support for the assertion that GDP actually grew faster since 1950 than it did in the period of 1850-1929, for example.
Posted by: Yancey Ward at Jun 21, 2007 2:39:10 PM
There is a deep question of identity underpinning the widely accepted notion of relative initial fortune. In discussions such as these that consider initial welfare or inherited endowments participants never think twice about what is implied in comparing the prince qua prince to the pauper qua pauper. Everyone seems to just accept that there is an essence in each individual that is the core of his identity and that at that level there is no privilege; all are alike. Else how does a claim of initial inequality have any meaning? It depends for its meaning on an inherent equality that is prior to the superficial inequality. Not a moral equality. Not of worth. Though perhaps that too. But a state of equal well-being that existed first and established the ought. In this way, we are stuck bickering among ourselves and with Nona and Decuma about the fairness of what simply is. I am born into my situation; I am not born in the abstract and afterward assigned to my situation. (Or am I? Can someone see what came before? …comes before? …is prior? Have you peered outside the cave fellow fool?)
Posted by: Matthew Petersen at Jun 21, 2007 2:51:08 PM
In response to the contention that "Most of America's poor are already among the best-off of all humans in world history" Ben wrote "By what standards? And do you think the American poor would agree?"
The reason no one has jumped on this is because it is completely obvious. For 99.8% of humans throughout history their existence to getting enough to eat, clothing and shelter. The food was probably disgusting, the clothes were rags and you lived in a hovel. I believe that Steve Landsberg in his book More Sex is Safer Sex says until about the time of the Industrial Revolution that your average Joe lived on $400-600 per year in current dollars.
Now your average poor American has a television, microwave, a car and is probably wrestling with obesity. So yes, there is no doubt that they are better off than the vast majority of other humans throughout history. Keep in mind that poor is a relative measurement, which is why the poor will always be with us.
Do I think the poor would agree with that they are among the best off in human history? No, but that's more due to their probable lack of historic perspective and ignorance than anything else.
Posted by: Colin at Jun 21, 2007 2:54:43 PM
re yancey: quick scan at bea shows ~2.6% annual gdp growth since 1950, whereas gallman, wright, others would probably present ~3.5% in agreement for the earlier period.
Posted by: tp at Jun 21, 2007 3:03:11 PM
I think the right answer it to glean some bits from Colin about the wealth we have, and some bits from Mike about they way we spend that wealth. It is a life on the Hedonic Treadmill for many. Or as I rudely put it, bigger screens, more big-gulps.
Posted by: odograph at Jun 21, 2007 3:05:03 PM
Odograph,
I am not opposed to redistribution and am certainly not opposed to doing something about the depletion of the oceans (whether that involves creating reserves or creating an "ocean market").
But be careful to only chastize conservatives about "facing harsh realities". While many conservatives are prone to ignoring information which does not mesh with their ideology, liberal/socialist types are also prone to filtering information. For that matter, no matter how high and mighty you and I think we are in our information gathering/thought processes, we have biases as well.
As far as Idiocracy goes, I have one politically incorrect, hypothetical question: Would the average IQ in the movie have dropped so much w/o the redistributive welfare state? It seems like certain people were allowed to procreate at will, relatively consequence-free by Something. It certainly wasn't because they were forced to better themselves. They were very obviously getting something for nothing (even the "lawyer").
Posted by: Jake at Jun 21, 2007 3:15:32 PM
Ah Jake, you reply with utmost reason. There is no Righteous Indignation I can work up in reply to that!
As far as the question goes, I'll answer it at an angle: I hope "intelligence" is an emergent property, and not the outcome of a gene or two.
Posted by: odograph at Jun 21, 2007 4:07:21 PM
Wow, people sure will read a lot into a two sentence response on an internet message board. The point I was trying to make, mr. odograph, is that the endangeredness of fish is not the inevitable result of wealth creation per se, but rather, as other people have pointed out, porblems establishing property rights on fish or oceans. I am not sure why you attacked me personally; that was really pretty rude.
Posted by: josh at Jun 21, 2007 4:49:39 PM
"Most of America's poor are already among the best-off of all humans in world history" Ben wrote "By what standards? And do you think the American poor would agree?"
I think this mismatch is the crucial thing about wealth and inequality.
Why are the poor of Paris's suburbs so unhappy that they riot, when they heating and food and electricity? But there are no mass riots in all the African cities that lack all of these? [I wanted to say Algerian but I actually know nothing about the place.]
The answer has to be that something like social position or dignity matters a great deal to people, often more than material wealth. If it is simply position on the social ladder then we're screwed, as by definition some people are going to be at the bottom.
But I think there's hope that it's something more like dignity, which conceivably everyone could have.My reason for this hope is that some countries have worse problems with this than others, so it's not universal. But possibly this is because if you're at the bottom of a rich country you can still look down on all those in poor ones.
Posted by: Michael Abbott at Jun 21, 2007 4:51:38 PM
It never understood why libertatians and other conservatives are obsessed with wealth redustribution. Yes, redistribution is inefficicient. However, it is far less inefficient then many other governement programs. Why don't we get rid of or minimize the war on drugs first? Or cut military spending? And for those of you who think that if the US had fewer B6 bombers and hydrogen bombs, we'd be promtly taken over by terrorists, the funny thing is, that the larger a country's military, the more reason it has to use it. After all, how much anti-canadian sentiment is there in the world? Anti-swiss?
Posted by: Linda at Jun 21, 2007 5:05:19 PM
Those Canadian m*therf*ckers.
Posted by: anne murray at Jun 21, 2007 5:12:10 PM
I apologize, Tom. I misunderstood you. A two phase world is not necessary for a lack of property rights to discourage wealth creation. If I know that 60% of my income will be stolen upon earning it, I will have less incentive to work than if I know that only 10% of my income will be stolen upon earning it. Why? Because 40% of my income is less than 90% of my income, and I'm more willing to work harder if I have a greater expected return.
Alternatively, if you pay me more to work less, I will be more likely to work less.
Therefore, if you tax a certain group of people for working and pay another group of people to work less (i.e. welfare state), you will discourage both groups from working (which is a voluntary and mutually beneficial exchange) and therefore decrease wealth creation.
The net result is that both groups are worse off. The rich are worse off because they are taxed more heavily. The poor are worse off because they have fewer employment opportunities, and thus have fewer opportunities to become wealthy. Nobody ever got promoted to a position of “Senior Welfare Recipient.” There is no Vice President of the “Receiving Transfer Payments Department.” A welfare state injures social mobility, and therefore hurts the poor.
Posted by: Paul R. Dorasil at Jun 21, 2007 5:15:29 PM
Sorry Josh, I was having fun being a lowly comment-pundit (a lower rank in the internet constellation that right-or-left-bloggers).
But, I really do think that the whole "use property rights" think is a little blithe. Most fisheries are in decline. This includes fisheries under management. This includes fisheries with property rights established.
And remember, economists, Hotelling, & etc. tell us that if an "owner" can make more money by catching all the fish, and investing the loot elsewhere, that is the most economically productive path.
Note that the wikipedia page on Hotelling's rule uses the words "while emptying the stock resource."
A system with purely property rights, and an emphasis on "wealth creation" will lead to that sort of thing.
Posted by: odograph at Jun 21, 2007 5:21:57 PM
linda- i'd be willing to bet that the vast majority of 'libertarians' and 'conservatives' out there would be hugely in favor of eliminating the war on drugs, legalizing, and implementing some sort of tax to keep consumption at or below its current level. see various prominent economists (becker, e.g.). but we are, unfortunately, rationally inattentive, and the vast majority of us out there don't realize that we could achieve the results we get right now at far lower cost to society (and in fact, might reap rewards). as for military spending, the correlation you draw is fine, but forget about military size for a second and recognize that we are also the richest country in the world, and that when human dignity (perhaps more crassly, jealousy) comes into play in a world of inequality as so many recognize (from all points on the spectrum), threats are credible. do we need a gigantic military as the richest country in the world? no. is it okay that as the richest country in the world we deem necessary some institution to secure our property, whether it be in the form of a global governing body that can credibly protect property rights, or signals to reduce social distances (a la akerlof, leeson, etc), or any other alternative? i think so. and right now, i'm not entirely convinced that the alternatives are better (read: more efficient). i suppose a guy like dani rodrik might be convinced, but at the expense of the whole concept of the nation-state. which, it seems to me, has at least some value for most americans (although not for me). so what do you do?
Posted by: neil at Jun 21, 2007 5:39:23 PM
No hard feelings, but just to be clear, I didn't say "use property rights" but rather that overfishing is a problem stemming from lack of property rights. I don't mean to imply that I know a good wasy to create oceanic property rights or that it is even possible. The point remains, though, however blithe, there is no necessary relationship in most cases between resource depletion and wealth creation. I also don't see how Idiocracy depicts a world more wealthy than our own.
Posted by: josh at Jun 21, 2007 5:54:33 PM
Wrong. Redistributing consumption is exactly the correct remedy for most forms of inequality. For example, because of discrimination, short people earn less money, so do racial minorities, etc. Good old fashioned redistribution addresses that with a minimum of distortions.
Cowen is also kidding himself about how people are motivated. Relative position is more important than absolute position. Entrepreneurs aren't that sensitive to tax rates.
Check out Frank's "Choosing the Right Pond" for a good non-ideological challenge on these issues.
Posted by: Chris M. at Jun 21, 2007 6:01:53 PM
From 1850 to 1950 real per capita gdp growth in the US was 1.5%. since 1950 it has been 2.2%. So since 1950 real per capita gdp growth has been 50% stronger then in the era of small government.I did not say real gdp -- I said living standards. From 1950 to 1980 it averaged 2.2% -- since 1950 the average was 2.0%(and that is rounded up). So the supply side revolution that shifted after tax income strongly in favor of the wealthy -- income redistribution upward--has been associated with a significant slowing of growth in per capita real gdp or standards of living.
No I can not prove that there is a causal relationship between big government and better economic performance -- correlation does not necessarily imply causation. But you can not prove the other opposite case either. But the basic premise of Tyler's comments assumes that big government reduces growth or wealth creation. It is an assumption that you can not demonstrate, and I have a wealth of data that supports my case.
What data do you have to demonstrate that I am wrong?
Posted by: spencer at Jun 21, 2007 6:07:31 PM
Canada doesn't need a military, because, well...we have one; ditto for the Swiss...NATO, anybody?
Just get a job and stop worrying about your neighbor's iPod.
Posted by: Mike at Jun 21, 2007 6:22:05 PM
Linda-- on a per capita basis the Swiss have one of the largest military establishments in the world.
Posted by: spencer at Jun 21, 2007 6:44:30 PM
"Canada doesn't need a military, because, well...we have one."
Actually, we do have one. And two of our boys were killed in Afghanistan yesterday, bringing the total to 60 Canadian soldiers killed there there in active duty (and recall we are less than 1/10 the size of the US). You remember Afghanistan? Where Bin Whatshisname was?
Posted by: vimy at Jun 21, 2007 6:46:32 PM
"I also don't see how Idiocracy depicts a world more wealthy than our own."
It's a dumb movie, but I think Idiocracy's citizens tried to create more and more banal wealth, until that's all they had.
;-), I understand conservatives cringe at the words "smart growth" these days, I wonder what kinds of growth that leaves them. And I wonder if there might be a "smart wealth" analog.
Posted by: odograph at Jun 21, 2007 7:03:44 PM
Vimy,
What does any of that have to with the fact that Canada relies on our military - approx. 50,000 soldiers is hardly a military.
America prevents a lot of the world's dictators and thugs from taking over the likes of Canada - great beer though...
Posted by: Mike at Jun 21, 2007 7:08:56 PM
Sweeden is #18 in per capita military spending.
Unfortunately, wars are not fought on a per capita basis. If it were, Luxembourg would one of the larger "military establishments in the world".
In total military spending, Sweeden is 24th.
In terms of what percentage of GDP goes to the military, Sweeden is 85th.
http://www.nationmaster.com/graph/mil_exp_dol_fig_percap-expenditures-dollar-figure-per-capita
http://www.globalissues.org/Geopolitics/ArmsTrade/Spending.asp#InContextUSMilitarySpendingVersusRestoftheWorld
http://www.nationmaster.com/graph/mil_exp_dol_fig_pergdp-expenditures-dollar-figure-per-gdp
Posted by: gary at Jun 21, 2007 7:23:12 PM
"America prevents a lot of the world's dictators and thugs from taking over the likes of Canada -"
Yes, thanks for saving us from all those dictators that were on the cusp of invasion. Like...ahm...wait, I'll think of one...
Actually, the only invader of our home and native land I can think of is the US, and that was some time ago.
Anyway, this is horribly off topic from the original post.
I think the original posts highlights the central failing of economists, which is idealizing economic systems, initiatives or policies that work well in theory, provided the economy doesn't actually involve people behaving the way people actually behave. Also, it presumes that the goal of societies should be that of economists, which is a bit blinkered. Wealth is a means to an end, no? Not an end to itself? And what is the end? A livable, sustainable civilization? Something like that? If that means some inefficiencies and compromises, well, is that the end of the world?
Yes, welfare doesn't create incentives. However, most of us don't end up there for any number of reasons. No economy is going to generate full employment or true equality of opportunity, and there will always be people who are not capable, or willing, to find productive occupations. Yet, there must be some means for providing for them. Otherwise, they starve, or turn to crime. I'd much rather pay taxes to pay for welfare than hire a personal security guard to shield me from the underclass who live in shanty towns around my gated community. I'm not sure letterbombing pamphlets that inform the underclass that they should be happy they have more than the average middle ages peasant is going to be a rousing success.
Posted by: vimy at Jun 21, 2007 8:07:56 PM
"We don't take steps to redress inequalities of looks, friends, or sex life. We don't grab a kidney from you to save someone's life, even though that health difference was unfair brute luck. Redistribution of wealth has some role in maintaining a stable democracy and preventing starvation."
Actually, now I think I've gotten a plausible way to look at the problem. (maybe someone at the top might have commented on it but I haven't read them all.) A "intelligent" (whatever that is) left-winger will say,
Inequality of looks, friends and sex life can be reduced via the the reduction of inequality of wealth. Money indirectly helps in addressing all these issues, which will be too complicated to be addressed on their own. It is not just elimination of starvation the people are after, because thats not too expensive to achive.
Rioters aren't necessarily starved people, they want "psychological" satisfaction too, which is helped by the relative increase in their status to other people. Thats why the quote makes sense,
"capitalism is the unequal sharing of happiness and communism is equal sharing of misery." (maybe it was said the other way round, by Churchill.)
Posted by: Jack Sparrow at Jun 21, 2007 8:17:50 PM
Vimy,
It was joke...lighten up and volunteer in a soup kitchen.
Posted by: m at Jun 21, 2007 8:53:35 PM
The first sentence of the comment compares inequalities in "looks, friends, or sex life" with inequalities in distribution in wealth. You might notice that each of these categories is extremely personal. How our economy functions and distributes wealth is extremely not personal: do you know who made any of the possessions in your room? Even if you're crafty, you got the materials from somewhere. The "market" is an amazing wealth creating tool. Well-functioning markets are created by governments and civil society: the individuals who create and obey the laws of property, contract, and tort. Tiny amounts of wealth creation can be attributed to individual efforts, while cooperative civil society makes a modern industrial society possible. Most of the massive income some individuals earn can be attributed to a well-functioning civil society or the accrued technological knowledge of generations bygone. Bill Gates's nerd-power would not get him much on a desert island. (Perhaps he has realized this and started to share his wealth.) Accordingly, it is appropriate to distribute some of the gains to everyone in the society who had created them. Even the poor.
Looks? Society as a whole does not help create good looks. Friends and a sex life are not something that can be redistributed. Even with these seemingly insurmountable barriers, "we" still try to help. Our government gives everyone an education, giving them tools to overcome deficits in looks and social connections. Institutions often judge people by tests without viewing an individual, avoiding the influence of social networks and smooth skin. Non-corrupt government bureaucracy itself is a large normalizing force.
The second sentence notes we do not take kidneys involuntarily. Again, society/government does not create kidneys.
One of the most important values Americans hold is equality of opportunity. The quote suggests that in the absence of redistribution, a meritocracy would exist. This assumes an equality of opportunity that does not exist. Children need well-off educated parents in order to perform to their potential.
Perhaps Tyler accepts a system that does not provide for equality of opportunity or provide wealth equal to contribution. All that is important is future aggregate wealth. Or, in other words, "We all had a shot at the wealth lottery. It just so happened that my family and I won. If you lost, too bad. And please stop trying to take money from me."
Posted by: c&d at Jun 21, 2007 10:44:52 PM
If socialists such as the ones showing their ugly mugs in this thread had ruled mankind throughot history we would still be living in caves.
Posted by: Erik at Jun 22, 2007 5:29:24 AM
So to summarize Tyler, we don't agree with your unstated assumption (that there is any conflict between the two goals) and we do not understand your terms (basically why should the poor value increased wealth for the rich - possibly at the expense of the natural environmental heritage of everybody). So where do we go from here?
And as for the various property rights fundamentals who pop up every now and then, sorry but you are off topic.
Posted by: reason at Jun 22, 2007 6:55:32 AM
Sorry that should read .... property right fundamentalists....
Posted by: reason at Jun 22, 2007 6:57:49 AM
"Most of America's poor are already among the best-off of all humans in world history."
I hope you don't use this straw man anymore. Yes, a cave man would be happy with a deerskin and living to the high age of 30, but he has no reason to expect more. If he lived right next to a country club for the wealthy of today, he might think "Why don't those people share some of their wealth with me? I could derive get vastly more happiness from even the tiniest bit of their luxury, than they can from it all. OK, so as a cave man I may not be very useful to them, but we're of the same species, right? Shouldn't they have some empathy with me? You'd think they'd get some happiness from seeing my children play rather than starve!". Then a guy comes out of the country club and says "No, I'm sorry, we can't take your incentives away! That would just make you worse off."
Somehow, I think it's understandable that the cave man now is angrier than before.
Posted by: Harald Korneliussen at Jun 22, 2007 7:35:32 AM
Spencer,
What part of "support for the assertion" did you not understand? Restating the assertion is not support for the originally stated assertion. In other words, a link to your source is what I am asking for, or, at the very least a reference.
Posted by: Yancey Ward at Jun 22, 2007 10:02:50 AM
And, note that a later reader provided a reference that contradicts your assertion.
Posted by: Yancey Ward at Jun 22, 2007 10:11:15 AM
Some cavemen are doing better than others.
Posted by: fustercluck at Jun 22, 2007 10:23:35 AM
PERSPECTIVES ON JUSTICE:
Laissez faire: Material equality is an ideal which those with means should strive toward. Only they can legitimately confer the benefits of their wealth. They do so through both exchange and giving.
Unprincipled moralist: Material equality is an ideal which the mob, under whatever auspices, should establish by force.
Specious statist: Coercive means of establishing equality are necessary to empower individuals of moderate and greater wealth to most efficiently confer the benefits of their wealth on others. Indeed the state is simply the mechanism they employ for achieving their legitimate individual objectives.
Posted by: Matthew Petersen at Jun 22, 2007 10:57:24 AM
C&D said, "Institutions often judge people by tests without viewing an individual, avoiding the influence of social networks and smooth skin. Non-corrupt government bureaucracy itself is a large normalizing force."
This reasoning is faulty since IQ is associated with looks. Maybe not causally, but it can be legitimately argued that people with better looks have better IQ's because they have friends and a well rounded life. So they do better on tests and there is evidence to support that, for example, tall people are more likely become CEO's than short people.
"The second sentence notes we do not take kidneys involuntarily. Again, society/government does not create kidneys."
This is also wrong since the government doesn't really create anything looks, social circle, or sex life, but people who somehow attain it (naturally via inheritance or through luck via the market) are more likely to succeed. Similarly, some are endowed with better kidneys than others!
"One of the most important values Americans hold is equality of opportunity. The quote suggests that in the absence of redistribution, a meritocracy would exist."
Equality of opportunity is held in principle by Americans, but I don't think that it necessarily exists in reality. The question is that does redistribution really make a society more meritocratic? And Cowen's answer seems an emphatic NO.
I think Cowen has hit the nail pretty hard on this one. So far I am unable to see a really robust critique.
Posted by: Jack Sparrow at Jun 22, 2007 12:17:54 PM
here's what i don't get -- obviously if you redistribute all wealth, there's little incentive for people to generate something beyond the bare necessity. so do the redistributionists in the comments grant that you have to leave something for the efforts of whoever's wealth is being redistributed? if so, how much? why doesn't it make more sense to assume that letting people keep and spend whatever wealth they acquire/generate ensures the most amount of goods to ultimately be redistributed via spending, some taxes, etc. if people aren't permitted to acquire/retain enough cash to create demand for certain things, those things obviously never get created, whether it's widescreen TVs, pharma drugs, educations, etc. or are the redistributionists saying that, given where we are now, redistribution makes sense even if it doesn't initially? do the redistributionists ignore that, by comparison to 500 years from now, all but billions of today may look as deprived as hunter gatherers do to us? that is, do we care about whether redistribution potentially puts the brakes on development that may lead to wonderous places?
Posted by: dj superflat at Jun 22, 2007 1:39:20 PM
Blah blah blah!
In the Soviet Union, we were all told that "society created wealth". Individuals we were just cogs in the the wheels of "society". So, the individual was sacrificed to the "greater good" of "society". In other words, this bullshit has been tried before.
WOW! Did that ever work out well for us! Look at all the innovation that came out of Russia. What? You don't think gulags, starvation, widespread poverty and living in constant fear are innovations? And talk about income inequality - the income inequality in Soviet Russia would make even a Republican blush!
I love the Marxian theme here of step 1.) use captialism to create wealth and step 2.) use socialism to redistribute it so that all outcomes are equal. But we don't value everything equally, do we? It's the theory of all behaviours are equal. There's no right and wrong and there's no such thing as behaviours that lead to success and behaviours that lead to failure. We have to treat both sets of behaviours equally by taking from the successful and giving to the unsuccessful so that they're material outcome is equal. So, why bother going to the trouble of engaging in behaviours that lead to success - or wealth creation? Well, none. So, nobody engaged in productive activity. Unless, rent-seeking is suddenly considered "productive activity".
I love the idiotic caveman example. How many people do you have starving in the United States? Last I checked, our problem was that we were too fat. Also, the guy coming out of the section 8 housing two blocks away was munching on a burger and listening to his ipod while he was getting into his Toyota. Back in socialist Russia, there was no food on the shelves of the grocery stores for ANYBODY to eat. In socialist France, 14,000 died during a heatwave. How many poor people die in heatwaves in the United States? In socialist France, the average person doesn't have as many material comforts as the majority of the poor do in the United States. Although, they do get free aspirin and anti-depressants (the consumption of which is higher in France than in any other country).
This whole Marxist leftist bullshit agenda is for people who are too stupid to learn from history or think beyond stage one. Be honest, Tyler, tell them what happened when Lenin implemented the highly egalitarian Marxist communism in Russia (if you know yourself). The lack of price signals so disorganized labour that the entire economy collapsed within weeks and Lenin conscripted factory workers and farmers. That's right - forced labour. I mean, you have to work for your lunch and all but these people worked and weren't even given lunch!
Bottom line is this: if you feel that the poor are so destitute, then give them your income. Unfortunately, studies show that you dictatorial Marxists love to reach into other people's pockets but never your own. Liberals give significantly less to charity then conservatives do - even though liberals have higher average incomes. Hypocrites.
Posted by: Methinks at Jun 22, 2007 5:22:16 PM
re: yancey, spencer
as far as i can tell, spencer's data appear to be flat-out wrong, even considering the not-so-subtle date transformation he makes. note that yancey inquired about 1850-1929 (specifically excluding the depression, and would have made the point even more definitively if he had asked about say 1850-1914), not 1850-1950, which obviously gives a far different result (although still not quite as weak as spencer claims). regardless, i believe gallman demonstrates ~3.9% for the period in question, while gavin wright, bob fogel, and others might revise that figure to more like 3.4-3.6%. in any event, as all of those guys will agree, as will most sane economists of today, that period of sustained growth was far more impressive than any other period in any other place on the planet at any time in human history. it was obscene. argentina, japan, others have achieved that kind of growth briefly, but never for such a sustained duration, and while china continues to impress, it'd require another 70 years of its performance today to match the u.s. back then. no rational forecaster of today thinks that'll happen. no rational forecaster of today thinks that CAN happen. the 'long 19th century' was obscene. food for thought.
Posted by: tp at Jun 22, 2007 5:36:22 PM
Amen, Methinks.
Posted by: Mike at Jun 22, 2007 6:18:39 PM
I guess one could counter with colonial Britain.
But was there anything about access to an entire continent of as-yet untapped resources that would have anything to do with that?
Posted by: tag at Jun 22, 2007 7:38:49 PM
colonial britain didnt even come close. achieved brief spurts of 3.0-3.2, ran at about 2.2 sustained.
as for the 'resources' hypothesis- i think the consensus these days is that that's pretty much bunk. a labor force that grew even faster than a population that was exploding, a capital stock that increased about 400-fold, and productivity growth that probably rivals what we see today did far more to contribute to the overall growth. did land have ties to these other factors that is probably understated? you bet. was it 'resources' that dominated other factors to explain the absurdity of the u.s. in 19th century? not a chance. look around you today- how often do 'resources' explain the better part of growth differentials worldwide?
Posted by: tp at Jun 22, 2007 10:19:16 PM
That post doesn't really make sense. It's relatively easy to take some money from one group of people and give it to another. How in the heck would you propose to
1) measure someone's looks or sexual prowess and
2) give one man's looks or lovers to another.
Furthermore, while the right to not be hungry and have decent health care are rights that a lot of people in the world can get behind, the right to having lots of sex partners or being really hot don't have nearly as much support. I suppose if nothing else, it's because the world sees these things more as luxuries than as needs. Few lefties believe the poor deserve big screen TVs or a brand new Mercedes.
Posted by: Andy at Jun 23, 2007 11:16:43 AM
Mike,
Cherry picking the data you are. Between 1870 and 1970, a longer period, the
growth rate in the US was 1.8% but was 2.4% in both Japan and Sweden. Cool it.
Posted by: Barkley Rosser at Jun 23, 2007 1:24:50 PM
"In the Soviet Union, we were all told that "society created wealth". Individuals we were just cogs in the the wheels of "society". So, the individual was sacrificed to the "greater good" of "society". In other words, this bullshit has been tried before."
This is more of an emotional argument than a logical one. No "credible" left-wingers really favors a socialistic state today. But there is evidence of correlation between instability and high-inequality like that of in Chile, Argentina India (if you have searched properly, Indian society has been very unstable since the past one fifty years). So it is in the self-interest of the rich to give some to the poor to at the very least keep them quite. Read Daron Acemoglu's book Origins of Dictatorship and Democracy.
Posted by: aristotle at Jun 23, 2007 11:22:29 PM
"This is more of an emotional argument than a logical one."
That wasn't an argument - emotional or otherwise. That's a historical fact. I was witness to it. They taught these very words to us the moment our feet crossed the threshold of our first school on the first day. If you think this constitutes an emotional argument then you are just showing your ignorance of basic historical fact.
"So it is in the self-interest of the rich to give some to the poor to at the very least keep them quite."
I agree with this statement. But what you socialists don't get is that there's a difference between giving of your own free will and government using its coercive power to reach into your pocket (via taxes) under threat of jail. If you use the neigbourhood effect argument, you may justify some redistribution by government to the destitute. The problem is that you Marxists constantly redifine "poverty" - note the relative poverty argument of the caveman poster and others.
I may have no trouble parting with my money to provide for the permanently disabled. And I may be delighted that government actually takes over the act of taking care of them with my money. I may feel bothered by people who can neither clothe nor feed themselves and I may be happy to give them enough money to eat and dress, so that they may be able to get a job and a skill so they can be self-reliant. But am I morally obligated to provide them with a lifestyle closer to my own, which I have actually worked for? Are they entitled to compel me to provide them with a lifestyle of their choosing? For a socialists who don't believe in a "socialistic" state, their arguments sure smack of "from each according to his ability, to each according to his need."
Related stuff to consider:
The elites in Soviet Russia lived about the same material lifestyle as the "working class" in America at the same time in history. The middle class in Europe lives a lifestyle that's slightly materially worse than the "working class" in America right now. Why do you suppose that is?
Inequality of outcomes is a result of inequality of risk, work and some luck. Do you suppose that a person who takes the enormous risk of starting a business deserves the same outcome as someone who does the bare minimum to get by? Do you still think that person would start the business if he had no upside? If you do, then you don't understand incentives.
If outcomes are dependent on work and risk taking, then more people will take the risks necessary to create wealth. If the government uses its coercive power to increase the risk/reward ratio by decreasing the expected reward, then fewer risks will be taken, less leisure time will be given up in the effort to innovate and less wealth will be created to redistribute. So, sure, there will be less income inequality (in theory - in Russia, the income inequality was worse) but everyone will just be poorer. How is this outcome better?
I love it when people blame income inequality for instability - as if that's the only factor in an economy. "There is evidence of a correlation" is not the same as "cause". People who don't understand that have never taken a statiistics class. It's just the rallying cry for Marxist simpletons. Since the collosal failure of socialism, they've stopped yammering about egalitarianism and started justifying socialism by claiming that vast entitlemen programs are necessary to maintain "stability" and "freedom". So, they've used an old tactic of hijacking the language of Liberty and freedom and rendering it meaningless. (incidentally, I love how you use the income inequalities of socialist India as evidence of instability caused by capitalism).
Most of these pontificating socialists have never been poor. If you would ever bother descending off your high horses and actually talk to those of us who have spent most of our lives in poverty, you would know that we're not looking for a paternalistic government to coddle us. The poor don't want the indignation of losing their freedom to the coddling of self-serving liberals. What they want is choice in education so that they can get the hell out of the ghetto. they want to take pride in a job well done, the ability to better their lives under their own steam and to be treated like humans, not pet projects. Oh, they also resent being categorized and labeled by condescending liberals who have never wanted for anything themselves. That's how most of the poor who became rich did it - government programs can't make you productive.
So, you can couch your bullshit anyway you want, it's still bullshit.
Posted by: Methinks at Jun 24, 2007 1:56:30 PM
First, I am neither a socialist, marxist, paternalist, egalitarian etc etc, whatever you are presupposing that my beliefs are. And your facts are manipulated to form a emotional argument. Hypothetically speaking a true Marxist economy will look nothing like the Soviet Union (now please don't jump and start accusing me of advocating such an economy.)
"Inequality of outcomes is a result of inequality of risk, work and some luck."
This is true. Vaguely speaking if there are more "lucky" people in a society than "unlucky" ones its fine and there is no need to redistribute. But if it is the other way round (like in Chile, Argentina, India and SOVIET UNION etc etc) there will be instability problems. This is very well documented by facts. In Soviet Union all the assets were controlled by the few politicians who can be said to be the LUCKY ones. Redistribution is necessary not just in the sense of goods, but also in the sense of an availability of opportunity to take risks. A country like Singapore, which is like a dictatorship can remain stable as long as the inequality remains above a decent cutoff level.
If you are trying to argue that there is no link between inequality and instability, you are fighting a losing war because it is a well documented and established fact that there is such a link and the Soviet crisis was partly because of that. It collapsed because there weren't enough opportunities for most people and so inequality was disgustingly high between the few rich (state) and the masses.
So its not really a bullshit argument that I made and maybe you should learn to argue with your head not your ass.
Posted by: aristotle at Jun 24, 2007 3:44:47 PM
Methinks,
Is it really true that you are "poor"? Is this perhaps because you are a student?
Or do you actually live in a ghetto?
Posted by: Barkley Rosser at Jun 24, 2007 6:03:56 PM
No, barkley, I haven't been a student for decades. I haven't been poor for about that long. Yeah, I used to actually live in a ghetto long before I was a student. A real life South Bronx ghetto! My guess is most of you have never even driven past one.
Incidentally, most students are supported by their parents and are not "poor". I had no financial support from anyone while I was a student, thus, I was "poor" because my earnings fell somewhere in the bottom of lowest quintile. Unless you're willing to redefine "poor" for the sake of convenience once again.
Posted by: Methinks at Jun 25, 2007 10:25:01 AM
"First, I am neither a socialist, marxist, paternalist, egalitarian etc etc"
I don't give a crap if you call yourself a Sputnikest or an elephant. No matter how you relable and repackage totalitarian socialist drivel, it's still drivel. If you're too ingorant of history and don't know that you're repackaging old, discredited ideas which have been the source of human suffering throughout the 20th century, that's your problem to fix.
"..there will be instability problems"
I can fix your instability problem right now. If you're looking for stability, I can impose a totalitarian police state right now. Poof - instability gone! What you and your ilk call "instability" others call "liberty". I'll decide who gets what - for the "greater good", of course. I'll decide just exactly how much income everyone can have. Differences of opinion and differences in lifestyle will inevitably lead to disagreements which cause "instability" but if you don't have the ability to voice your opinions or enough economic control over your life to change your own economic circumstances, then you don't have Liberty. But you get plenty "stability".
"..there will be instability problems. This is very well documented by facts."
Since they these "facts" are so well documented, I'm sure that you have a mass of links to vast numbers of research studies and imperical evidence of this cause and effect. I will check back on this thread for all of your links. I'm a bitch on wheels but if you can give me proof (understand that I will poke holes in everything you present) that redistribution beyond helping out the disabled and destitute creates more prosperity than the alternative economic systems available, I will absolutely concede. I'll be waiting.
"A country like Singapore, which is like a dictatorship can remain stable as long as the inequality remains above a decent cutoff level."
Quite a statement. Got anything to back that up?
"If you are trying to argue that there is no link between inequality and instability, you are fighting a losing war because it is a well documented and established fact that there is such a link and the Soviet crisis was partly because of that. It collapsed because there weren't enough opportunities for most people and so inequality was disgustingly high between the few rich (state) and the masses."
That is quite a demonstration of pontification on a subject from a point of the most massive ignorance I've ever seen. I'm going to have to use that one as an example elsehwere. Socialists are just too stupid to read. I don't even know if it's worth educating you! Oh crap...I'll try. Lenin implemented Marxian communism when the Bolsheviks took over. The economy collapsed. Kaput. It stopped functioning AT ALL. This is well docmumented in Lenin's OWN WRITINGS. Go get a copy of the collected works of V.I. Lenin and read for yourself. He had to bring back "commodity production". The reason such inequality in the Soviet Union existed is because socialism creates a zero-sum society. The people who are in charge of redistributing the resources - and EQUALIZINT THE INCOME - took the lion's share for themselves because they could. The country was not communist - it was socialist and it resembled, more than ever, a feudal society where 98% of the population were serfs. Except, they lived worse than they ever had in history. For starters, nobody systematically killed tens of thousands of serfs but the Soviet regime systematically killed tens of millions of people on purpose. The country created no wealth and WENT BANKRUPT! That's why it finally collapsed. You actually have to understand economics to get that but try anyway.
"Redistribution is necessary not just in the sense of goods, but also in the sense of an availability of opportunity to take risks."
If you learned that in an econ class, you need to demand your money back. If you leave people alone to make arrangements for themselves, they will distribute risk taking to their own liking. A central body does not need to exist to make risks available. They're available in nature. The only time everything gets screwed up is when a government tries to dictate to a group how much risk they can and can't take. What right does the government have to tell a private individual that he doesn't have the right to invest in a hedge fund if he doesn't meet certain wealth thresholds? What right does a government have to tell a poor person that he cannot take a mortgage? And if the government has that right, why not extend that right to who can shop in which store and who can live in what city? Try to wrap your mind around this nuance. And, seriously, get your money back
I notice you never stretched you "aristotle" mind to answer why you think the Russian elite's material lives were about equivalent to an American factory worker - even though they stole all the resources. Nor did you bother to think about why the average Frenchman's material well-being is about equivalent to the "poor" in America - even though wealth inequality is supposedly lower in France. Nor did you bother to stretch your mind to contemplate just exactly who decides how much redistribution is necessary and what gives the government the moral right to arbitrarily decide who gets what. Maybe we dumb Russians just screwed up socialism. But maybe you'll answer this question for me: if redistribution breeds so much stability, then why are there near constant riots in France? Why, according to Paris police, are 100 cars torched on an average Saturday night in the Paris region?
FORCED redistribution of wealth is simply "from each according to his ability to each according to his need" restated with an arbitrarily defined "need" and "ability". Hell, even Marx wasn't as totalitarian as that. If you don't get that, then unfortunately, my ass is a better thinker than your head.
Posted by: Methinks at Jun 25, 2007 11:14:50 AM
Why does redistribution of wealth stop at national borders? Surely there should be a lot more redistribution to the truly needy in the world - more accurately in the third world? Or does redistribution only sound good if you are the poorest in society (American poor) and sound a lot less attractive if you are actually quite wealthy (American poor being richer than most poor in the world)?
Posted by: PaulL at Jun 25, 2007 12:22:17 PM
Good point, Paul. Incidentally, the various "aid" programs we've been running for decades have poured how many trillions into Africa? I can't remember the exact enormous amount. How has that wealth transfer been working for them? Are they middle class yet?
Posted by: Methinks at Jun 25, 2007 4:32:44 PM
"I don't give a crap if you call yourself a Sputnikest or an elephant. No matter how you relable and repackage totalitarian socialist drivel, it's still drivel."
It reminds me of the saying, "talk sense to a fool and he will call you foolish."
"Since they these "facts" are so well documented, I'm sure that you have a mass of links to vast numbers of research studies and imperical evidence of this cause and effect. I will check back on this thread for all of your links."
"Quite a statement. Got anything to back that up?"
If you learnt to think before you blabber each time you would have noticed that I did post a author above. Anyhow, read Daron Acemoglu's - Economic Origins of Dictatorship and Democracy (joint with James A. Robinson). December 2005.
Even Cowen will agree he is the most credible economist on the topic. And if you haven't heard of him, he won the Clark Medal last year for research on the links between democracy and the principles behind a stable society. If you go to his website he has links to his papers also which are shorter. This is THE credible authority on this topic, so good luck poking holes!
".....(understand that I will poke holes in everything you present) that redistribution beyond helping out the disabled and destitute creates more prosperity than the alternative economic systems available, I will absolutely concede. I'll be waiting."
I don't mind holes being poked in my arguments, but I seriously doubt your ability to comprehend some arguments. You seem to have a severely myopic view of how an economy works.
".... answer why you think the Russian elite's material lives were about equivalent to an American factory worker - even though they stole all the resources."
The level of wealth that matters is relative to the people with whom you live with. True as you say that socialism creates a zero-sum game, but it doesn't matter to the state as long as it is getting most of the pie. Also capitalism doesn’t ensure a positive-sum game because you can reach equilibrium at a rather low level of output and unemployment. And material life is just one part of what the elites want, they also want POWER. And russian elite (check my definition or elites above) lived a very good life relative to other russians.
"But maybe you'll answer this question for me: if redistribution breeds so much stability, then why are there near constant riots in France? Why, according to Paris police, are 100 cars torched on an average Saturday night in the Paris region?"
Are you reading anything what I wrote above? I never argued for a mindless redistribution.
"..how much redistribution is necessary and what gives the government the moral right to arbitrarily decide who gets what."
How the heck does morality come into this argument? The government is a collection of people and they arbitrarily decide the level of redistribution according to their specific IDEOLOGIES because they have the power. Before you jump the gun again, think about how the heck does the market economy come into play?
Society is just a collection of human living together. And each is self-interested i.e. the catch word on how the people run are INCENTIVES ( I hope you agree with this much at least). If it leads us to the principle of COMPARATIVE ADVANTAGE, the economy will work fine and there will be both equilibrium and stability.
But comparative advantage doesn’t always work. If you know anything about human behavior or gametheory or evolution you will realize it. There are many situations where there are good incentives to CHEAT and many economists have shown that given the right incentives everyone is willing to cheat. This is just plain human nature. Remember so far we don’t have a government in place. What happens is that this is rather brutish society and to safeguard itself people will form groups to protect themselves and collectively form RULES to safeguard themselves. A government is just a collection of people who enforce these rules. But you see there is a conflict of interest between the people in the government and the masses. And they have to check each other. The agents running the government want more power so they need to be kept in check. So you can say that the government is a necessary evil.
Without any RULES, you will end up in a HOBBESIAN society where life is nasty, short, and brutish. Who decides what rules to enforce? That depends who has how the power is distributed in the society (and that can happen in a myraid of ways). In a legitimate democracy the people should have more power, in a dictatorship it’s the dictator. A truly free market economy cannot really exist without a government enforcing PROPERTY RIGHTS. A truly libertarian state cannot logically exist.
“FORCED redistribution of wealth is simply "from each according to his ability to each according to his need" restated with an arbitrarily defined "need" and "ability".” Uh no, forced redistribution means the government saying I’ve got more power, so its either my way or the high-way. Redistributive wealth doesn’t have to go and infact almost never goes to the person who supposedly “needs” it because that is subjective. A dictator can take all the wealth and use it on himself. That is also redistribution.
You seem to be living in the illusion of a severly distorted hayekian state. Try to think how does the equilibrium of a purely-competitive society make sense with evolution. Economists have difficulty to always reconcile the two. If you can demonstrate that they make sense together please enlighten me.
It seems that both your head and your ass have exchanged positions.
Posted by: aristotle at Jun 25, 2007 9:54:31 PM
Government is the most natural of organizations of human society. Since the very first collection of humans living together a government has existed. In early times, tribal leaders could be called the government. How was it decided who would be the leader. The most POWERFUL in the tribe was the leader. Now that we call ourselves more "civilized" we have progressed to form democracies instead of letting any random powerful agent/s to form a government.
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