Is &quot;compound empowerment&quot; a valid argument for progressive taxation?

Sorry, I missed this comment earlier.

Migeru: Does talking about "dynasties" as opposed to "aristocracy" help?

Haven't talked about dynasties because they can so easily point to the Kennedys and Clintons. Though this may be proving the point, in their mind, the existence of "liberal dynasties" is probably evidence of the inherent hypocrisy of liberalism.

Migeru: You need to spend energy on shifting the frame, or at least undermining the frame with appeal to other parts of their value system (if that is possible).

You said it. Shifting the frame is too ambitious (at least for me), so one must undermine it, or rather, gently dismantle it.

I do believe that we share the same values, but we simply put more and less emphasis on different ones. Also, we have different assumptions about reality.

So, for example, the assumption that anyone -- if they try and work hard and persistently enough -- ~~can~~ will succeed. Or that what success we achieve is mainly through one's own efforts and minimally through supporting circumstances.

If a "fiscal conservative" can be made to reconsider those two points, perhaps there would be more chance of persuading them of the validity of both the compound empowerment argument and the vertical equity argument for progressive taxation.

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Tue Jun 24th, 2008 at 03:55:55 AM EST
[ Parent ]

Re: "aristocracy" (4.00 / 2)

I do believe that we share the same values, but we simply put more and less emphasis on different ones. Also, we have different assumptions about reality.

Since the origin of this diary is a text by Lakoff, you should probably read Moral Politics to understand that no, you don't share the same values and yes, you have different assumptions about reality.

And remember this by kcurie: EUROPE.IS.SO.DOOMED. Narrative Edition

In other words, only when a statement or discourse is in direct contradiction with itself and immediate reality can we reach the guys at the other side of our enlightenment narrative/mythology. But we have to reach them, otherwise, they will forget.

You need to undermine their frame by pointing out how their narrative is self-contradictory and then be ready to push your narrative as a way to resolve the contradiction.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue Jun 24th, 2008 at 05:26:55 AM EST
[ Parent ]

Re: "aristocracy" (none / 0)

Migeru: You need to undermine their frame by pointing out how their narrative is self-contradictory and then be ready to push your narrative as a way to resolve the contradiction.

Have you ever tried this? Has it ever succeeded? (I am not asking skeptically, but simply to find out.)

Unfortunately, I may not have a proper narrative that I can offer to resolve those contradictions. (Maybe I have one implicitly, but it is not articulated well enough to push on someone else.)

I'll see if I can find a summary of Moral Politics to get Lakoff's main points. I still think my friends and I share the same values, but simply weight them differently. But I am curious as to how Lakoff argues otherwise.

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Tue Jun 24th, 2008 at 05:47:14 AM EST
[ Parent ]

Have you ever tried this? Has it ever succeeded? (I am not asking skeptically, but simply to find out.)

It's like debating Creationists... You might get better advice from JakeS or DoDo...

Jokes aside, I'm not saying it's easy to do but since these are your friends you actually have a body of previous conversations to have an idea of how you could try to argue to them that they contradict themselves.

You might find that when faced with a contradiction between the profit motive and their values they bite the bullet and drop their values.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue Jun 24th, 2008 at 05:51:05 AM EST
[ Parent ]

It's like debating Creationists... You might get better advice from JakeS or DoDo...

The easiest way to deal with people like that is if you can find a factually wrong statement that is sufficiently vital to their argument that they cannot simply abandon it. Then you nail them to the wall with it and you don't let go until they squirm.

Otherwise, you need to know thine enemy and know thyself.

Creationists and Freepers have about 20 different argument templates (so maybe 30 put together, because there is some overlap). In my experience you need to know them so well that you can immediately dissect any argument you encounter and discover the template, then employ the standard counter-template.

The primary difficulty is that when two completely different narratives clash, the background knowledge that is assumed to be self-evident is in fact disputed, and you have to argue against three or four times as many arguments at any one time as you would have if you were debating with someone who substantially shares your narrative but disagrees with you on a detail here and there.

To take a simple example, the creationist might say "Archaeopteryx is a hoax." You should read this as "[There are no transitional fossils; therefore claimed transitional fossils are hoaxes. For example,] Archeropteryx is a hoax. [Since there are no transitional fossils, Evolution has to be false. Q.e.d.]"

The standard counter is "There are mountains of transitional fossils. For example, the evolution of the modern horse is charted completely from where it branched off from its last common ancestor with humans. Even if Archeropteryx were a hoax, it wouldn't change the fact that transitional fossils are abundant and completely consistent with evolutionary theory."

If you happen to know the details of the Archeropteryx case, you can also insist that it is not, in fact, a hoax (it isn't). But only do that if you are familiar with the case, because some claimed hoaxes are in fact hoaxes (e.g. the Piltdown man). They also know that nailing people to the wall on factual errors is a good tactic and they do exploit it.

As you see, the difficulty in addressing creationist arguments is partly in the fact that it takes 50-odd words to counter a four-word falsehood (or maybe 25 words for someone with a snazzier prose than mine, which is still a factor of six and the loose change).

And of course the usual creationist foot-soldier doesn't have a sufficiently solid grasp of the narrative he works within to be able to phrase the context of his argument as clearly as I have here, which adds another layer of difficulty, on top of this.

Finally, to some extent this approach is geared towards combating professional creationists - who must be assumed to know that what they spout is BS and be willing to Lie for Jesus (or be sufficiently delusional that you can't convince them with anything short of strong anti-psychotics). So the emphasis is more on convincing the onlookers that the professional creationist is full of crap than on convincing the creationist himself.

- Jake

Ceterum censeo Chicago esse delendam

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 26th, 2008 at 08:58:02 AM EST
[ Parent ]

Wikipedia: Moral Politics (book)

Moral Politics: How Liberals and Conservatives Think is a 1996 book by cognitive linguist George Lakoff. It argues that conservatives and liberals hold two different conceptual models of morality. Conservatives have a Strict Father morality in which people are made good through self-discipline and hard work. Liberals have a Nurturant Parent morality which sees people as something to be cared for and assisted.
(The first edition of the book was published with the subtitle What conservatives know that liberals don't.)

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue Jun 24th, 2008 at 05:52:14 AM EST
[ Parent ]

Re: "aristocracy" (none / 0)

Have you ever tried this? Has it ever succeeded?

I have and sometimes it does.

Around New Years Day 2008 we were at a party. Most of the attendees were 50+. One was a Marine combat veteran from the Vietnam War who has written an interesting self published memoir of his experiences before, during and after. He loves his guns, is an outspoken self professed Republican who found himself surrounded by a bunch of Democrats or worse. He enjoys being outrageous and often indulges indulges in hyperbole. He is in his early 60s and has a form of cancer that affects his spine. He is still physically active, but has had to give up riding his beloved motorcycles as his back won't take the pounding. Now he is reduced to driving his Corvette, carefully.

He relies primarily on the Veterans Administration for medical care. There is certainly a plausible link between his cancer and exposure to Agent Orange. I don't know if the VA has acknowledged his illness as being service related. With all of the strains on the VA from Iraq the VA has become like one of the country's worst HMOs. His alternatives at this point consist of paying out of his own pocket or waiting until he turns 65 and qualifies for Medicare.

We were discussing the medical insurance business in the USA. I said that I could see no excuse even for the existence of the private medical insurance industry. The whole industry was a pack of social parasites. They added greatly to the cost of delivery of medical services and decreased outcomes through rationing that was not justified on medical grounds. A government based single payer system would be the best and fairest system and would give us much more bang for our bucks.

Red meat for a Republican. He bit and started attacking "socialized medicine." He should be able to find and go to the best doctor he could find, etc. I agreed and asked him how he would pay for that in his situation. The best private insurance he had found and for which he might qualify was a low end HMO. I then asked him if he thought it was right that an HMO employee or the VA would make decisions on HIS medical care based on the impact on their bottom line, profit and bonuses rather than on his medical need. He had to say "NO." Amidst barely suppressed smirks around the room he said "That still doesn't mean I'm in favor of socialized medicine." The conversation shifted.

I may still be able to bring him around, at least on medical care. His identification with the Republican party is based not on material self interest but rather on the way in which their rhetoric empowers the bombastic and outrageous side of his persona. I understand. I told his girl friend, who could at times almost be seen to wince at his remarks, although she too voted Republican:

"John, (not his name), and I are a lot alike, except that we come from different political perspectives. At least when he is around I won't be the only or even, perhaps, the most outrageous guy in the room!" She gave me a wan smile. We have run into them again in social settings and for a while John and I will argue and talk past one another, but usually we find something on which to agree. That is always my goal.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Wed Jun 25th, 2008 at 02:38:33 PM EST
[ Parent ]

Migeru:

You need to undermine their frame by pointing out how their narrative is self-contradictory and then be ready to push your narrative as a way to resolve the contradiction.

I like Pirsig's "Platypus" concept.

"Your view is that animals are classified as mammals and reptiles. Here is a platypus. Explain that?"

We have to confront them with narrative Platypi.

by ChrisCook (cojockathotmaildotcom) on Tue Jun 24th, 2008 at 06:32:52 AM EST
[ Parent ]

Here's a platypus.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue Jun 24th, 2008 at 06:55:17 AM EST
[ Parent ]

Re: "aristocracy" (4.00 / 2)

Marco, you seriously need to work on delegitimizing some of their pernicious assumptions. The class war is completely one sided, is being and always has been waged in the USA by the wealthy against the rest of society. The last time any serious social programs were passed was under LBJ. The last time any serious environmental regulation regime was put in place wad the EPA under Nixon. Since then it has all been backpedaling.

If you cannot get them to consider that and to try to refute that thesis in specific, then you are probably dealing with people whose modus operandi is to listen to Rush and BillO for talking points and then ignorantly spew them forth. The right wing has numerous "think-tanks" devoted to devising devious rhetoric. It is not a real discussion on the merits. It is you, unaided, on a stool, verses them with the Staples Arena sound system. You get drowned out. It isn't fair. Fair is what we have in the fall at the county seat, with the cows, the pigs, and the sheep.

Your best bet is to tell them that you won't waste time responding to Rush and BillO's talking points. Ask them to relate those talking points to events in their lives. How do the talking points do anything other than arouse emotional responses in a flock of manipulable arrested adolescents? They, and their families, if they have any, get fucked and they get the satisfaction of "at least not being a liberal." Just like so many of my Scots-Irish brethren for so long sacraficed the economic well being of their families for the consolation of "at least not being a nigger." The two consolations are of similar moral worth.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Mon Jun 23rd, 2008 at 10:07:02 PM EST
[ Parent ]

Assuming more informed and objectively better self-interest populace... We can, in principle, agree on any kind of distribution or non-distribution - even if it is too easy to take enforcement infrastructure (for the rules we agreed, or convinced each other) for granted. But what if I (and quite many other) are not interested in poker-lite distribution rules (even if I may have good chances to win)? What if don't feel that, in the world where status is everything is determined by money, money makers deserve all respect and benefits just because they concentrate on that money making?

Would it be moral for me to agree the money making class to gather more and more power and influence? Would it be immoral to make their occupation of capturing wealth and power more difficult? Would the majority be moral by knowingly allowing more suffering to itself? If (just suppose) a majority can agree that it is in their interests to control wealth and power balance by progressive taxation, would it be moral (or immoral) for them not to enforce that?

by das monde on Tue Jun 24th, 2008 at 11:45:17 AM EST
[ Parent ]

Re: Socratic Economics X: compound empowerment (4.00 / 2)

Showing only the income tax is a very deceptive way of presenting arguments about tax equality, IMHO. It is vital, of course, to your discussion, but properly can only be seen in the context of all income and all taxes. Were you to show, for the US at least, the portions of SSI, FICA, Medicare, sales estate and excise taxes paid by each group, a very different picture would emerge.

This is especially true when you consider the disproportionate influence exerted on the disposition of the revenues from the SSI, FICA, etc. by members of the top income bracket. Currently it is all effectively going to finance deficits, the largest portion of which were created in order to provide tax relief to that very top 1%.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Mon Jun 23rd, 2008 at 02:29:48 AM EST

Re: Socratic Economics X: compound empowerment (4.00 / 4)

ARGeezer:

Showing only the income tax is a very deceptive way of presenting arguments about tax equality,

Indeed, I think that the rich have successfully held the line for over 100 years against "progressive taxes" on wealth - rather than income.

Gates is a classic case of someone who has taken massive advantage of two untaxed privileges.

Firstly, the privilege of exclusive ownership of a "Commons" ie Knowledge.

IMHO those who are given such exclusive rights, through copyright and patents, should compensate those they exclude, through a tax or levy on the gross rental/use value.

Secondly, he has successfully been able to exclude from participation in his success his suppliers, staff (absent share options) and customers (who massively overpay due to his effective monopoly). I don't think he's needed to borrow much, if at all, so temporary financiers have not been excluded.

He has done this through the successful use of that toxic legal form - the Joint Stock Limited Liability "Corporation".

IMHO those who have the protection of Limitation of Liability should again compensate the rest of Society, and at least part of Microsoft's GROSS revenues should have been the subject of a "Limited Liability Levy".

Such taxes on privilege - and in particular the "Single Tax" on land rental values (ie the privilege of "ownership" of the Commons of land) advocated by Henry George - would be extremely progressive.

Such taxes on privilege are inherently easier to collect and harder to avoid, and would allow Income taxes (the ones Helmsley famously said are for ""little people") to be massively reduced, as they should be.

by ChrisCook (cojockathotmaildotcom) on Mon Jun 23rd, 2008 at 05:40:31 AM EST
[ Parent ]

Knowledge "commons" (4.00 / 2)

ChrisCook: Firstly, the privilege of exclusive ownership of a "Commons" ie Knowledge.

Do you mean you consider software code to be a form of "knowledge commons"? I agree, it would be great if every software developer and development company opted to make their products free, but that is not something that should be imposed on them. In this respect, I think software code is more like art, and the creator reserves right to use and distribute: these products should not automatically fall into some commons as soon as they are completed.

ChrisCook: Secondly, he has successfully been able to exclude from participation in his success his suppliers, staff (absent share options) and customers (who massively overpay due to his effective monopoly). ...

He has done this through the successful use of that toxic legal form - the Joint Stock Limited Liability "Corporation".

Hmmm. I agree with you that a more open and cooperative model of business organization should be available and legally supported by the state. However, I am not sure if Gates and other corporations should automatically be blamed -- and penalized through progressive taxes -- simply because they became economically successful through free and voluntary business activities supported by the conventional corporate structure.

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Mon Jun 23rd, 2008 at 06:20:57 AM EST
[ Parent ]

Re: Knowledge "commons" (4.00 / 4)

Do you mean you consider software code to be a form of "knowledge commons"? I agree, it would be great if every software developer and development company opted to make their products free, but that is not something that should be imposed on them

I'm not advocating that products should be "free": merely that if software writers do charge for use, then part of the gross revenue should be collected for the benefit of the Society which gave them the privilege of exclusivity and the licence to charge.

I advocate ownership "in common" by a Custodian (nothing new there, virtually the entire stock market is technically owned by Custodians), within a revenue sharing framework agreement.

ie x% of revenues goes to Society, and (100-x)% goes to the software producer and any partners he may have. If he doesn't charge, then Society gets (100-x)% of nothing.

However, I am not sure if Gates and other corporations should automatically be blamed -- and penalized through progressive taxes -- simply because they became economically successful through free and voluntary business activities supported by the conventional corporate structure.

Gates was used as an example in the Diary, so it's not me picking on him! IMHO he's no better or worse - just more successful - than anyone else who uses a "Corporation" as an enterprise model.

As a policy, I think a "Limited Liability Levy" on gross revenues - collected at the clearing level - would be preferable to the Corporation Taxes levied on easily and infinitely manipulable and transferrable net profits.

So I'm not advocating a Limited Liability Levy as additional to Corporation Tax, but as possibly a simpler and fairer alternative.

It could not be "passed on" to customers over and above existing prices in that Corporations already maximise the prices they charge.

Investors would therefore have to share the gross income of the Corporation with Society in return for the privilege of Limitation of Liability they receive.

by ChrisCook (cojockathotmaildotcom) on Mon Jun 23rd, 2008 at 08:05:59 AM EST
[ Parent ]

The basis for the grant of a ... (none / 1)

... government-created monopoly is that it serves a greater public good by encouraging creation of more work.

After all, what is different about copyright as opposed to normal property rights (usas, abuses, usafructus) is that it does not reduce the direct benefit I obtain from the use of an original if someone else makes use of a copy ... it only affects market rents obtainable due to artificially created scarcity value.

That is, in any event, the Constitutional basis for the grant of copyright in the United States.

Bill Gates is a more fascinating topic for conversation because the question of the public benefit from the copyrights held by Microsoft can be argued both ways.

A less fascinating a topic for conversation is Disney's push to maintain copyright in peretuity over the creation of Disney and those who worked for him between the World Wars ... because it is obvious that permitting copyright for that long after the death of the original author provide no material incentive to the creation of new works at all ... it only interferes with the creation of new works by preventing that work from entering the Public Domain.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Tue Jun 24th, 2008 at 12:58:14 PM EST
[ Parent ]

Re: Socratic Economics X: compound empowerment (4.00 / 2)

Interestingly, Bill Gates Sr. and Warren Buffet are two very public advocates of greater taxation of their own tax bracket, on grounds of both practicality and principle.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Mon Jun 23rd, 2008 at 05:37:03 PM EST
[ Parent ]

Re: Socratic Economics X: compound empowerment (none / 0)

Taxes and regulations based on the state granting the status of a "fictitious legal entity" to corporations seems hard to argue against. Corporate charters create immortal entities that have limited liability. If objectors don't like the taxes or the regulations, just do business under their own name and try to live forever.

Of course that would require that the majority of citizens stop acting like a bunch of timid children who are afraid they will annoy the adults. That is the real challenge.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Tue Jun 24th, 2008 at 04:20:27 PM EST
[ Parent ]

All things being equal (none / 0)

There are also other messy issues to consider, such as wealthier people having access to lawyers and financial advisers to help them avoid paying taxes through fancy loophole acrobatics.

However, I guess I am trying to go for a hypothetical, highly simplified situation in which the wealthy do not have disproportionate influence on the disposition of tax revenues, where there is only one kind of tax, say income tax (which applies to all forms of income, including capital gains), and everyone pays it honestly (i.e. no tricky loopholes, offshore tax havens, etc.)

I realize that this is a hopelessly idealized scenario. But since I am debating this with fairly staunch fiscal conservatives, raising those other points is just going to introduce more points of contention. What I would like to isolate "the more you make, the more you benefit from public services & infrastructure, and therefore the more taxes you should pay even above a flat percentage of your income" principle, and explore if that on its own is a strong enough argument in favor of progressive taxation.

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Mon Jun 23rd, 2008 at 06:04:17 AM EST
[ Parent ]

Here's a 'flat tax' for you to consider: (4.00 / 3)

Wealth tax. Chris mentions it in the thread above. Hey - we all pay 1.5% per year on our assets. That's a flat tax, correct?

My son is the Assessor in our county, and, theoretically, he can already assess every asset that an individual or company owns for purposes of taxation. Of course, in the U.S. we have - by common practice - limited this to 'real' property (meaning land and buildings). But there's a 'flat tax' rate just waiting to be implemented.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Mon Jun 23rd, 2008 at 10:13:19 AM EST
[ Parent ]

Re: Here's a 'flat tax' for you to consider: (4.00 / 2)

Add to that the ability to pay in "equity shares" and the argument that people will lose their homes goes away.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Mon Jun 23rd, 2008 at 10:18:17 AM EST
[ Parent ]

Re: Here's a 'flat tax' for you to consider: (none / 0)

So what does it mean if an entity owns a share of your equity? Surely a portion of income and of the proceeds if you sell. Anything above that? Do you have to generate an income?

The plural of anecdote is bullshit.

by generic on Tue Jun 24th, 2008 at 11:48:23 AM EST
[ Parent ]

Re: Here's a 'flat tax' for you to consider: (none / 0)

In Arkansas we also pay property taxes on vehicles registered to operate on public roads. The rate is the same as for real property, although the assessment is often a fraction of the real worth, and drops to nothing for vehicles worth less than $2000.00. That at least adds a degree of progressiveness.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Tue Jun 24th, 2008 at 04:25:45 PM EST
[ Parent ]

Re: All things being equal (none / 1)

While it would not advance your goal of a single tax, I have seen cogent arguments for a sales tax on professional services. This would fall disproportionately on those in higher income brackets who avail themselves of lawyers, accountants, architects, engineers such as myself, etc. This would counterbalance the sales tax on goods that disproportionately impact those in the lower brackets. As the Democrats love to do in the USA, the tax could exempt medical services below a certain level, public construction projects, etc.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Mon Jun 23rd, 2008 at 05:44:10 PM EST
[ Parent ]

Sales tax on professional services (none / 1)

In fact, a sales tax is the obsession of one of my friends. I will put to him the notion that the sales tax should apply to professional services as well as to goods. I am very curious as to what he will say.

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Mon Jun 23rd, 2008 at 07:38:58 PM EST
[ Parent ]

Re: Sales tax on professional services (none / 0)

In Europe there's no sales tax, there is Value Added Tax which is added both to sales and to professional services.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue Jun 24th, 2008 at 05:32:56 AM EST
[ Parent ]

Exactly. (4.00 / 3)

USians pay around 40 - 50% of their income in total taxes, except that the very rich are actually on the low side of the scale; because their SSI contribution is capped at a relatively low income; sales taxes apply to a small portion of their purchases; their income is derived from capital gains (15% tax rate currently); and they have all kinds of investment 'incentives' that allow them to shield income from taxes.

Different tack - if you made a graph of utility-derived vs. taxes paid, you would get an inverse bell. The utterly poor and the super-rich get more value from government than the vast majority of us tax-payers. We get highways and some 'public protection' services. The super-rich get free money from the Fed, cost-plus contracts, payments-in-lieu-of-growing-crops, etc.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Mon Jun 23rd, 2008 at 10:01:54 AM EST
[ Parent ]

fair income ? (4.00 / 4)

I think the argument should be turned on its head. Which should incomes and wealth derived by the capitalist economy be considered morally fair ?

I don't think I ever understood that one. Don't forget that the economical arguments in favour of a "free market" have always been about efficiency, not fairness.

Auferre, trucidare, rapere, falsis nominibus imperium; atque, ubi solitudinem faciunt, pacem appellant.

by linca (antonin POINT lucas AROBASE gmail.com) on Mon Jun 23rd, 2008 at 03:25:30 AM EST

linca: Which should incomes and wealth derived by the capitalist economy be considered morally fair ?

Suppose I apply for a job that pays 300,000 euros per year. I get rejected in favor of another applicant because they are deemed more qualified than I am.

So I apply for another job whose requirements are much easier for me to satisfy because they involve competencies that are far more common (and which I happen to have to a sufficient degree). This job pays 30,000 euros per year, and I get it.

Where, in this scenario, is the unfairness? And who precisely should be blamed for being unfair?

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Mon Jun 23rd, 2008 at 06:35:13 AM EST
[ Parent ]

Re: fair income ? (4.00 / 7)

First thing to note is the obvious, that the top 1% incomes typically do not come from wages.

Secondly and crucially, what created this qualification divergence in the first place ? Was he more lucky in getting previous jobs that were more formative ? or did he have family relationships that got him those jobs ?

Did he get in a better university because he worked harder in high school ? Or did he grow up in the proper neighborhood with access to the better schools, because his parents had enough wealth to buy the proper house ; did they know more about the school system ? Did they give him early access to cognitively and culturally better education ?

The liberal "equal starting line" is a myth. Our societies are highly hierarchically differentiated, and starting higher on the ladder gives one, indeed, an unfair advantage - unless you consider random chance to be fair. And calling it random chance is being nice ; very often the parts of society higher up the ladder consciously lessen the chances of those starting from lower ends.

Then there is the unfairness inherent in the random aspects of markets moving around ; depending upon entering the job market when it is on the upside or the downside, two equally qualified people will get very different - and lasting - opportunities and wages.

Another example being the merits of two candidates to, say, medical studies - one who is the last accepted in medical school, the next one the best candidate rejected. The discontinuity in prospective wages in very large - yet the difference in merit will be very, very small, maybe a bad choice of salutation formulae in the candidacy letter. Is that fair ?

As for who to blame for the unfairness, quite often no one - except the way our civilisation is set up with strong hierarchies. However regularly, the discriminations that create inequalities have perpetrators ; see racism, sexism...

Auferre, trucidare, rapere, falsis nominibus imperium; atque, ubi solitudinem faciunt, pacem appellant.

by linca (antonin POINT lucas AROBASE gmail.com) on Mon Jun 23rd, 2008 at 06:52:04 AM EST
[ Parent ]

John Stuart Mill : Of the Stationary State (1848)

The guy who got the job was a black man (actually, his mother was white, but white people see him as black) whose father abandoned his family when he was seven. His mother supported them working as a postal employee. They lived in a small working-class town in Ohio. Through very, very hard work he was accepted into a top tier university. Don't know what his grades were like in high school, but it is conceivable that the university's affirmative action program helped him get there. Don't know what his university grades were, but he worked like the devil there, too -- although he clearly was not the academic type, he worked overtime to make up for what he could not get on a raw intellectual aptitude.

In the end, he was picked up by a premiere investment bank. Now he's probably a millionaire.

What had going for him: a super mother, some of the best street smarts I've ever seen, great looks, and excellent health.

True story. And a fair outcome.

Maybe this sort of case is the minority, but they exist, and there are plenty of them.

In any case, how do you propose wages should be set, if not by the market mechanisms of job supply and demand?

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Mon Jun 23rd, 2008 at 10:30:36 AM EST
[ Parent ]

Re: fair income ? (4.00 / 4)

Firstly, why is that fair ? Does his effort "deserve" 10x compensation, that in the end will represent 100x wealth ? For example, does his wage represent actual contribution to social welfare, rather than being in a position to skim off the productivity of others ? Read the Anglo Diseases diaries about how investment banks are destroying the world's industrial infrastructure...

Secondly, for one guy like this there are ten guys like Bush, or Gates (whose family was wealthy to begin with), and these stories, as heart warming as they can be, serve the useful role in the American psyche of hiding the realities of a class based society where social mobility is going down fastly - and was never that high to begin with. A CEO wage is fair because you, yes, you, could get it if you work hard enough ! That's the fairness of a lottery system eventually, because you will find people who worked as hard as him who didn't get into the right school.

The mechanism I propose to socially set incomes - not wages - is to reinforce the one that is already in use, albeit weakened : lessen the inequalities of market based incomes with progressive - and possibly confiscatory for the high end - taxation. Income tax is not only, not even mostly, about paying to the State the utility you get from its services ; it is also about what we socially define as fair incomes, because the market is unfair.

Auferre, trucidare, rapere, falsis nominibus imperium; atque, ubi solitudinem faciunt, pacem appellant.

by linca (antonin POINT lucas AROBASE gmail.com) on Mon Jun 23rd, 2008 at 10:51:45 AM EST
[ Parent ]

Re: fair income ? (none / 1)

linca: Firstly, why is that fair ? Does his effort "deserve" 10x compensation, that in the end will represent 100x wealth ? For example, does his wage represent actual contribution to social welfare, rather than being in a position to skim off the productivity of others ? Read the Anglo Diseases diaries about how investment banks are destroying the world's industrial infrastructure...

I should preface by saying that when I chose the original 300K example, I was pulling that out of the air and was not thinking of this person. I thought of him after reading your first comment as an example of someone who despite fairly tough odds, did manage to obtain a relatively high compensation for a job that he really deserved. He did not make 300K right out of school, but he did still make significantly more than most college graduates, and once embarked on that career path, his income grew apace.

Having said that, it is unfortunate that he happens to be an investment banker, as they are our textbook example of the predatory profession. It would have been less complicating (for my point) if he were a doctor or designer or something.

However, I do recall reading what you (I think) wrote once before making a similar point about the injustice of superstar athletes making so much money, way more than the average player (this weekend I learned a friend of a friend plays for the Los Angeles football team Galaxy; while he makes about $40K, his teammate and colleague David Beckham makes $5.5 million [before counting commercial endorsements that could make the total up to $250 million over five years] -- I refused to believe it).

I also find such extreme differences in income somehow disgusting and perverted, even scary. As I guess you would say, does Beckham really contribute 5.5 million/40 thousand = 137 times (not to mention 1370 times) more to Galaxy's performance than his unknown teammate?

Still, I would feel uncomfortable legislating caps or salary brackets based on professional categories. But that is not what you would propose, if I read you correctly; you would adjust incomes to "fairer" levels by reducing overly high incomes, which basically amounts to progressive taxation. And your last sentence make it clear that you think vertical equity is more important than "compound empowerment" to justify it.

linca: ... you will find people who worked as hard as him who didn't get into the right school.

That is most likely true. Is there a way to quantify this, or at least find some measurable, if only circumstantial, evidence of this?

... all progress depends on the unreasonable mensch.
(apologies to G.B. Shaw)

by marco (cowannar at gmail punkt com) on Mon Jun 23rd, 2008 at 11:42:15 AM EST
[ Parent ]

Re: fair income ? (4.00 / 6)

It's very hard to quantify failure. But we do, in fact, mass produce failure. Many talented people fall through the cracks, especially because efficiency is defined as profit and not as social returns in the form of improved quality of life for the majority.

Besides that - income levels are talismanic, not rationally calculated. In a culture that rewards narcissism, narcissistic income levels need no other justification. Someone has to have them, and since it's narcissism and not talent that's being rewarded, the reward is based on notions of the inherent specialness of celebrities and CEOs, and not on anything more substantial.

You won't get support for progressive taxation until this narcissistic mythology is replaced by a mythology of cooperation, empathy and social awareness - which sounds unlikely now, but is a possible outcome if the current system implodes in a memorably horrible way.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jun 24th, 2008 at 05:17:07 AM EST
[ Parent ]

Re: fair income ? (none / 1)

slightly OT, morale della favola, seems like we should be prioritising the teaching of good parenting as much as number-juggling and consumer-milking...sorry, business school...

The person who says it cannot be done should not interrupt the person doing it. Chinese Proverb.

by melo (melometa4(at)gmail.com) on Tue Jun 24th, 2008 at 11:17:44 AM EST
[ Parent ]

Typically, what is fair or unfair ... (4.00 / 2)

... in that $300,000 job is the size of the salary increment. That $300,000 job, as a salaried job, is most normally senior management. Senior management wage inflation in the US at least is in excess of any CPI inflation or non-managerial wage inflation, because they have far more direct personal contact with the system of deciding their wage ... and the CEO-wage inflation has been extraordinary, because they help pick the members of the Board of Directors that in turn decide on executive salaries.

And it is probably the case that the senior management has skills (in addition to connections from going to the right schools) that exceeds the skill of the fork lift operator on the floor of one of the third party logistics warehouses where the firm's logistics have been outsourced ... but to be fair, its not just "more" valuable that has to be justified, but twenty times as valuable ... and then that the skills of the CEO are twenty times as valuable as the skills of the Senior Vice Presidents.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Mon Jun 23rd, 2008 at 10:22:39 AM EST
[ Parent ]

Besides - what is the easiest and most (4.00 / 3)

gratifying job in the company (unless you're the wine taster at Chateau Lafitte)? It's the CEO job. There is no risk nowadays. You make a good decision, you get a bonus and someone else gets laid off; you make a bad decision, you get your retirement bonus early. CEOs should pay the company instead.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Mon Jun 23rd, 2008 at 03:41:19 PM EST
[ Parent ]

Like someone wrote about ... (none / 0)

... the early Naughties in the English Premier League ... "Ah, yes, they'll be looking back to coaching in this period as the feet-up league. If you have a top side, play a 4-4-2. If you are fighting to avoid relegation, play a 3-6-1. Have the trainers work the lads til their fit, and have the marketers tell you which lads to give a couple of games more than their form deserves. Sooner or later you will get the sack, but it'll come as quick whether you work hard at your job or not, and you'll get a juicy payout besides."

A paraphrase, mind, not a quote, since I read it some five years back.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Mon Jun 23rd, 2008 at 07:47:16 PM EST
[ Parent ]

Re: fair income ? (none / 1)

That would depend on the basis on which they were deemed more qualified. What if the person given the job in a non-family owned company has no more qualification, or even less qualification than you, but is related to the person doing the hiring, went to the same school as the person doing the hiring, is a co-religionist, etc.? Especially if those factors are not generally known.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Mon Jun 23rd, 2008 at 05:56:30 PM EST
[ Parent ]

Re: fair income ? (4.00 / 2)

Let them be paid whatever, but tax away the top.

As linca said, the goal should be a balanced distribution of income, whether from wages or other sources. Excess income should be taxed progressively, insufficient income supplemented (there's no reason why relative poverty needs to exist).

And tax assets at a flat rate, allowing payment in "equity shares" on those assets if income from them is not sufficient to pay the tax.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue Jun 24th, 2008 at 05:31:54 AM EST
[ Parent ]

Re: fair income ? (4.00 / 2)

I recall that John Stuart Mill himself noted that while the capitalist system had been shown to be the most efficient means of generating wealth, it did not follow that it was the best or most efficient means of distributing wealth. I have looked for this quote in his work but been unable to find it.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Mon Jun 23rd, 2008 at 05:47:28 PM EST
[ Parent ]

Re: fair income ? (4.00 / 2)

was it this quote you were looking for?

It is only in the backward countries of the world that increased production is still an important object: in those most advanced, what is economically needed is a better distribution, of which one indispensable means is a stricter restraint on population. Levelling institutions, either of a just or of an unjust kind, cannot alone accomplish it; they may lower the heights of society, but they cannot, of themselves, permanently raise the depths.

Life should consist in at least fifty percent pure waste of time, and the rest doing what you please.

by ceebs (bunchofwankers (at) gmail (dot) com) on Mon Jun 23rd, 2008 at 06:22:38 PM EST
[ Parent ]

A good quote, but not the one for which I have lost the reference. I skimmed his Political Economy and the addition thereto entitled On Socialism. What I am looking for is almost exactly what I quoted. I am not clear on how he ended the statement. Thanks.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

by ARGeezer (argeezer a in a circle yahoo dot com) on Mon Jun 23rd, 2008 at 10:16:39 PM EST
[ Parent ]