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Nozick's Wilt Chamberlain example
Let's say a bunch of poor kids all pay to see Wilt Chamberlain play basketball. Wilt gets the money, the kids get to see the game. At the end of the day Wilt is richer and the kids are poorer. Since we wouldn't object to any one of these transactions, why should we object to the resulting pattern? Robert Nozick went further and argued that any "pattern-based" notion of justice would require continual and unjustified interference in personal liberties. That was one of the most famous claims in his Anarchy, State, and Utopia; here is another summary of the argument.
I'm all for the NBA but I've never been overwhelmed by this approach. I agree that there is "nothing unjust" about the Chamberlain outcome but still perhaps we can do better in consequentialist terms. Nozick's argument defeats egalitarian leveling but does it really refute, say, mildly progressive taxation? What if we could tax Wilt a bit and make life much better for the kids? Without invoking public choice skepticism about government (which indeed is important), what's so bad about that? Is it morally wrong? Wilt is still quite free and we get some social good in return.
I'm usually skeptical of moral arguments that don't confront the question of "at what margin" straight up. I will, however, buy this (abbreviated) argument:
1. A doctor is not required to devote his entire life, or even a part of it, to helping poor kids in Africa, even if he could create greater good by doing so. Personal autonomy matters.
2. The right to keep the product of your labor -- money! -- is a big part of autonomy, even though it is not always recognized as such.
3. Barring end-of-the-civilized-world exigencies, no one should be forced to part with more than a certain percentage of his or her income, even when valuable public goods are at stake. There is, after all, no end to good ideas for redistribution, not the least of which is the helicopter drop to Malawi. We all draw the line somewhere, so it's not enough to cite benevolence to defeat the claims of property rights and the demand for low taxes.
4. Adhering to such a percentage rule will have desirable consequentialist properties, given the public choice problems with government behavior. Thus a kind of consilience supports this moral view.
That all said, I do not believe we have a very clear or very scientific answer as to what the right percentage is. Furthermore "the proper percentage" is likely contingent upon historical circumstances. I take that as representing a partial -- but only partial -- endorsement of Nozick's Wilt Chamberlain argument and of course I reject the deontological ("just don't!") nature of Nozick's approach altogether.
Warning to extreme libertarians: Don't even try to argue that zero is the maximum permissible rate of taxation. Would you abolish all taxation today, immediately, if it meant a rapid collapse into social chaos?
Warning to social democrats: You are used to citing beneficience arguments to argue for raising taxes. But you reject beneficence arguments yourself, when you refuse to step into the shoes of Peter Singer and call for even more redistribution. I want to make you feel guilty about this tension. What you'd like to do is dismiss Singer with a separate argument and then turn your fire to the anti-tax types and feel that beneficence is always on your side. It isn't.
Here is my earlier post on Nozick's experience machine. Here is Will Wilkinson with more on Rawls. Going back to our earlier discussion, Ross Douthat has provided an excellent discussion of notable conservative books. I am a big fan of Nozick's book although a) I don't consider it "conservative," and b) I like the obscure sections best, such as the discussion of anarchy and government in the first part.
Posted by Tyler Cowen on March 6, 2008 at 07:08 AM in Philosophy | Permalink
Comments
Thank you for this interesting post.
To me, the confusion about Wilt arises from the attempt to model everything in terms of money.
Money is a relatively convenient metric for modeling behavior, but it clearly lacks the bandwidth to
capture society in all its hoary glory.
Oversimplification buys as much as obfuscation.
Cheers,
Chris
Posted by: C Smith at Mar 6, 2008 7:53:07 AM
I am not an opponent of taxation, but I worry (even panic) when I see how taxes map to expenditures. A friend once told me that he was happy to pay taxes "because I support national parks." When I pointed out to him that parks expenditures were probably way under 1% of the budget, he (a PhD economist), said, "oh well, I'm getting my money's worth."
For me the biggest problem is not tax and spend within this country that reduces social chaos (and augments other chaos, e.g., DEA) or even spending on international programs (Peace Corps being one of very few good ones), but tax and spend to attack other countries or subsidize certain groups.
It is the mechanism, once implemented, that can wreak havoc. Consider an alternative mechanism: Tax lotteries. Each department of government (DoD, DoI, DoJ, and others Dos) runs a lottery. People are required to buy as many tickets as their taxes, but they get to choose where the $$ goes. They may "win" a refund, but the average taxpayer still pays. Who would give to the DoD? Of those who gave, how much would they give? 60% of their total? Probably not. [This discussion would probably move to the next stage, politicians reorganizing departments to combine good/bad programs, e.g., Department of Killing Foreigners and Feeding Our Children, but I'll stop there.]
Bottom Line: I am more worried about spending than taxing.
Posted by: David Zetland at Mar 6, 2008 7:58:36 AM
Interesting discussion. Living in a Nordic social democracy myself, Norway, I pay taxes that I guess would seem outrageous for most Americans. Since I favor the view of the welfare state as an efficient and non-bureaucratic insurance policy, I more than happily pay my taxes. I still get to keep more than half of my income, and don't have to shell out for health insurance, private retirement plans or saving for my children's education. I get sick? Public health, no questions asked. Temporarily unemployed? The State is my insurance. Education for my children? Excellent public schools.
Of course, some of this can be exploited, but I find universalism to be preferable to the enormous bureaucracy that follows private insurance. I don't mind paying for some freeriders. Most people enjoy working more than sitting around waiting for the next welfare check, and that's what keeps the system more than floating. The perfect percentage for me? No idea, but probably higher than most here.
Posted by: karl strom at Mar 6, 2008 7:59:12 AM
I've always been more concerned with Progressive tax structures. As long as my tax percentage stays low (or zero) then why should I have any qualms about increasing the tax rate for Wilt or the doctor. As long as we all pay the same or close to the same rate, democratic institutions should be fairly good at determining that maximum rate.
Posted by: Rich at Mar 6, 2008 8:05:07 AM
Underlying all this is the curious matter of the remarkable materialism of the left, a matter noted in Bertrand de Jouvenal's odd book "The Ethics of Redistribution." Jouvenal says a lot of things that seem wrong to me, but he got this one right. People who are poor tend to have a lot of problems, but many of these are not much caused by poverty, yet the leftist response to just about anything is "let's take money away from those rich people and ...."
A bit of evidence (this is me, not Jouvenal): Why is it that religious belief should correlate as much as it does with sympathy for free markets, flat taxes, etc? My guess is that religious people, on the whole, are less materialistic than others and so don't get quite so exercised about differences in wealth.
Posted by: Alan Gunn at Mar 6, 2008 8:16:50 AM
why not just put a price ceiling on what Wilt charges instead of taxing him...?
Posted by: Charlie at Mar 6, 2008 8:17:56 AM
I think that all but the most extreme libertarians would agree that a progressive tax is acceptable. Even the flat tax proposals which get brought up from time to time incorporate a progressive schema: They typically -skip- the lowest earners.
Which means that what Tyler is really asking is, "Where do we draw the line?" It's a difficult question. I imagine most readers at MR will prefer the line to be a bit lower, most readers at the NYT may prefer the line higher. How do even go about framing a discussion of where the high water mark of taxation should be?
As with David Zetland, I tend to be concerned with the spending side of things: Much government spending may attempt to help Wilts' customers, but how does it accomplish this? As always, the devil is in the details, and we have existing government programs for drugs prohibition, substance abuse in general, medical problems, employment problems... sheesh the list goes on and I could be typing them up for pages.
I think that Milton Friedman nailed it in his support of the negative income tax. You hand every American a check for $X and get rid of many of the social aid programs. Much less bureaucracy, much more effective distribution, and most importantly the most respect for human autonomy. So I say draw the line at or near where it is now, max it out around 30% or so, and incorporate a negative income tax to both keep things very progressive and to respect human autonomy.
Posted by: Mercutio at Mar 6, 2008 8:26:32 AM
The idea that we can extrapolate principles of justice from the revealed intuitions of odd hypothetical examples, has plagued philosophy. Clearly we all have intuitions about fairness and justice in certain situations but they pretty much never make some neat framework and it would be odd if they did. Our intuitions have evolved to deal with specific and not abstract situations.
With regards taxation, the only credible arguments for and against are instrumental rather than justice based. People want to live a certain life and if they see that being possible within a certain system they are happy with it. People who want to be rich are not happy with the Nordic welfare state because it's harder to get rich there. People who want a safety net, like Karl, and who don't mind not being so well-off in material terms, are happy there.
People in the US, it seems to me, are less happy with taxation because there is a meme that it is theft. Moreso, however, it is because they don't trust the government to spend the money wisely and they often think that even if the government were wise, it wouldn't allocate the resources as efficiently as private individuals. Americans, more than Europeans, also think that people are morally responsible for their problems. These are all empirical issues that can be answered with research. There's no reason to be ideological about it. I'm somewhat happy paying taxes in Finland (I'm less sanguine about freeloaders than Karl). I'd be far less so about paying tax in the US.
Whatever works.
Posted by: Finnsense at Mar 6, 2008 8:35:26 AM
The way I see it, the public good created from the tax must outweigh the deadweight loss of the tax. Remember, taxing Wilt is the same as taxing the poor kids. Either way, Wilt won't play as much...
Posted by: Nate at Mar 6, 2008 8:40:12 AM
The problem with a "mildly progressive taxation" is the slippery slope. Any institution which is not libertarian in principle will start slipping down that slope, as the US Government did when it started taxing incomes in the beginning of the twentieth-century and a few years later what was just "mild" became an extortion (I think it went up from 10% to a 95% max, on certain kinds of "extreme" incomes).
Posted by: Fabio Franco at Mar 6, 2008 8:40:26 AM
"Any institution which is not libertarian in principle will start slipping down that slope"
Why? If the institution is aware that making taxes more progressive will cause harm, why would it do it? Finland is heavily socially democratic but it has made taxation less progressive over the last decade.
Posted by: Finnsense at Mar 6, 2008 8:46:05 AM
I'm unclear about the structure of your "argument", Prof. Cowen. Is (3) supposed to follow from (1) and (2)? If so, where does (4) come from? It seems like an independent assertion, tacked on to the argument at the end.
Posted by: Brock at Mar 6, 2008 8:47:40 AM
One problem here is that the Chamberlain example loads the dice by assuming that all inequality is the result of benign voluntary transactions, like the sale of tickets. (Though the argument would be slightly stronger if Wilt's fans were adults.)
That's true in some cases. If lots of people are willing to pay to see an athlete or entertainer, for example, then the analogy holds. But to assume that this is the general case is pretty naive.
So while I agree that,
"The right to keep the product of your labor -- money! -- is a big part of autonomy," I don't agree that all personal wealth is a product of one's own labor.
Posted by: Bernard Yomtov at Mar 6, 2008 8:58:06 AM
As the first proposer of Anarchy, State and Utopia in the conservative booklocker in the previous post, I feel I ought to respond to at least the Wilt Chamberlain point. (As to whether or not it's conservative, Tyler and I can simply disagree on terminology.) I don't see the Wilt Chamberlain example as upsetting, say, the case for progressive taxation. What it upsets is the notion of any particular notion of an ideal pattern of social structure. If your notion of progressive taxation fixes the marginal rates with respect to income at some set of levels, it presumably does so for some reason. Whatever that reason is (and the desired equality of income distribution is only one -- funding of public goods is another) subsequent voluntary exchange can mess it up badly. Thus, you had some conception of how equal you wanted the income distribution to be and voluntary exchange messed it up. It's not just the autonomy of Wilt to keep the fruits of his labor -- it's the autonomy of his customers to make him richer than you want him to be.
Posted by: jfalk at Mar 6, 2008 9:09:01 AM
I don't even buy the first part of your argument... Why are the poor kids any poorer? Assuming they are rational actors in an efficient market: They paid to see Wilt because they were getting more value than the cost of the ticket. They are actually richer after they see Wilt play.
The argument for taxing Will is really that the market is not efficient enough to accurately price-in and collect fees for all the things we "should" be paying for. (Assuming we have a collective responsibility for helping our fellow humans and for paying the externality costs of our actions)
Posted by: Mark Denovich at Mar 6, 2008 9:10:47 AM
Am I the only one who saw "Wilt Chamberlain" in the headline and eagerly anticipated a "more sex is safer sex" post? Now I'm sipping my morning coffee resigned to another day that won't quite live up to expectation.
Philly Fan
Posted by: SIxer Guy at Mar 6, 2008 9:30:39 AM
I think all these discussions ignore the really difficult issue: Who gets to be part of the polity or nation? Much of this is tied to the problem of aggregating different preferences both for taxation and spending and its unintended consequences. You can't get away from tribal problems.
Norwegians would be less happy to pay for the welfare state if Norway were 65% Muslims who believed in expanding sharia and spending to keep public facilities single sex, restraining out-marriage, and teaching Koranic law.
Also, large federal organizations have to deal with warfare, espionage, and terrorism. A world in which Russia turned expansionist and the US isolationist would rapidly upend the European social compact. Here too you need to postulate necessary public goods in a world of imperfect and muddling authorities. You can't magically say, No military for Vietnam or Iraq, but we'll be there if it's WWII!
And where there ethnic factions with different goals things really get problematic. Cf. urban USA or Quebec.
Posted by: jj at Mar 6, 2008 9:33:03 AM
I'm not following you. "1. A doctor is not required to devote his entire life, or even a part of it, to helping poor kids in Africa"; but "no one should be forced to part with more than a certain percentage of his or her income". If the doctor is being taxed, isn't he having to devote part of his life--that part spent earning the money to pay the taxes--to helping poor kids (or more likely corrupt officials)? Granted he's not having to actually go to Africa, which may make the taxes more attractive, but that's still time which he could be spending birdwatching.
You could make an argument that the State is justified in forcing me to pay 0% of my income, or 100%, but I'd have a hard time swallowing that, say, 20% is justified but 20.01% is not. And if we accept 20.01% today, next year it'll be 23%, and up from there.
Ideally, the State ought to provide services which I willingly buy, no coercion needed.
Posted by: cdeboe at Mar 6, 2008 9:49:32 AM
Very interesting post. It's sort of funny that you should be discussing this at the same time that Brad DeLong is arguing for an end to the "Age of Friedman".
It seems to me that your logic is correct. There is no absolute prohibition on progressive taxation. The question is what is the approximately correct solution. Lots of room for argument there.
Thanks for laying out the issues so cogently.
Posted by: Scot at Mar 6, 2008 9:49:32 AM
If libertarianism is principally concerned with individual liberty, than consistently applying its principles to dismiss theft of all forms seems like a rather benign conclusion (no matter how old the practice in question). That hardly seems like an extreme position at all.
“Barring end-of-the-civilized-world exigencies, no one should be forced to part with more than a certain percentage of his or her income, even when valuable public goods are at stake. “
Arguing that you should rightfully keep all of that which belongs to you is sensible – not extreme. Suggesting however that your neighbor or fellow citizens are entitled to take some arbitrary percentage of your property by force however is quite strange.
“Would you abolish all taxation today, immediately, if it meant a rapid collapse into social chaos?”
Ending confiscatory taxation in no way guarantees a shift into a Mad Max Universe – neither can the continuation of any particular tax regime guarantee tranquility.
Posted by: extreme libertarian at Mar 6, 2008 9:53:32 AM
Nothing especially wrong with what you're saying, jj. That's why taxes are a question of what's practical, not a question over ideology. But be careful playing the tribal card. The experience from Norway, with our very few Muslim immigrants (even fewer in Finland), is that they quickly adapt to our social democrat mentality and are happy to pay taxes to support our secular, gay-friendly, pro-choice, affirmative action government. In fact, a large majority of Asian and African immigrants vote for left-of-(Norwegian)-center parties. Of course, these parties are also pro-immigration...
Posted by: karl strom at Mar 6, 2008 9:54:44 AM
RE: "the proper percentage" is likely contingent upon historical circumstances
Major exigencies and true public goods offer the strongest justifications for taxation and government spending. So the "proper percentage" would be higher (in relative terms) in states where people are poorer. (Although it should be lower in absolute terms than is seen in practice, across the spectrum of wealth.)
In the real world of course, the percentage of GDP controlled by government always grows once wealth has been achieved - and this growth in government control has nothing to do with exigencies or true public goods.
Posted by: Paris at Mar 6, 2008 9:56:35 AM
Nice post. I agree that consequentialism (with a rough metric of additive utility) should determine the optimal tax rate, just as consequentialism should be the basis of all public policy, and indeed all action.
Posted by: mk at Mar 6, 2008 10:00:35 AM
"Norwegians would be less happy to pay for the welfare state if Norway were 65% Muslims who believed in expanding sharia and spending to keep public facilities single sex, restraining out-marriage, and teaching Koranic law."
This is true but I'm not sure how it applies to any developed country. The US does not have a "small" state because people have different values. It has it for a variety of reasons. Canada is every bit as multicultural as the US yet they have a decent safety net. Sweden also has a very large refugee population which doesn't dent their welfare state - even though refugees are far harder to assimilate than immigrants.
Posted by: Finnsense at Mar 6, 2008 10:00:53 AM
Nozick's line of thought is conservative in so far as market-economics comes out of conservative thought and not vice-versa. Adam Smith and Edmund Burke were intellectual conservatives -- not libertarians. Before them, the late scholastics who had an even earlier understanding of free markets such as Juan de Mariana, Luis Saravia de la Calle were also "conservative." The enlightenment period is largely influenced by the "conservative" political and economic theorists of the medieval period.
Posted by: jip at Mar 6, 2008 10:02:44 AM
