Economic Growth v/s distribution

In the USA (a presidential election year), there is a considerable debate on how much emphasis government policy should assign to economic growth (properly interpreted to encompass all externalities and market failures) and how much to income and welfare distribution. The argument in the US revolves around economic efficiency, individual freedom and fairness.

Let us deal first with economic efficiency. Conservatives tell us that an increase in income tax policy will discourage economic growth, even at current levels of taxation. A contrary view (http://economistsview.typepad.com/economistsview/2012/03) is that the “optimal” income tax rate in USA – before it would deter the wealthy from trying to earn more – is well above the present 36% level and is much closer to 50 to 60%. One can at least say that the effect of a higher marginal tax is small to insignificant.

On the question of individual freedom, there is no doubt that many Republicans, which are now condemning gay marriage, abortion, access to contraception etc., are effectively attacking individual freedom. As Reich says, “a society where one set of religious views is imposed on a large number of citizens who disagree with them is not a democracy. It’s a theocracy”. See http://economistsview.typepad.com/economistsview/2012/03/the-difference-between-private-and-public-morality.html I am sure that most libertarians would agree with this view. As to the impact of smaller government on freedom, this depends on one one’s perspective on fairness.

One’s notion of what is fair is a subjective issue. The average income of the vast majority of Americans is today slightly below the average back in 1966, whereas the top 1 percent share of real income growth has been strongly increasing over this whole period. The gains of the super-rich have made the US one of the most inequitable in the developed world..

Personally, I do not accept the view that distribution effects do not matter. The US has a long way to go to ensure that it has an adequate safety net to provide enough income mobility (at least relative to Scandinavia and Australia). More importantly (and less subjectively), the enormous rise in relative income of the super-rich has occurred in a period of rapid productivity growth – with all of the productivity growth going to the super-rich! It is hard to accept that there is any semblance of “fairness” in the US system.

Can something be done in the USA to shift power to the working class? Reich says: Congress has lost interest; Unions have no voice; most of the press are controlled by vested interests which seek to retain the present distribution of political power; and the working class have neither the time nor access to wealth nor the sense of unity it needs to demand change. In some cases the Republicans are trying, with its deficit reduction policy, to make distribution worse.

This is one good reason why Governments need to balance fairness against alleged economic efficiency effects. What do you think?

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54 Responses to Economic Growth v/s distribution

  1. wilful says:

    What do you think?

    I think that this debate has been done to death a thousand times and nothing new can or will be learned here. But even the most hardened warriors from the Right in Australia agree that the US does not have the balance right and the US is too inequitable (despite then inconsistently advocating for more of the same medicine for Australia).

  2. Paul Frijters says:

    Peter,

    I think the countervailing force that would be needed to reduce inequality in America is if this is seen to hurt its relative standing in the world, i.e. that societies with more equal distributions of income overtake the US in terms of average wealth and military potential. Only then do I think the vested interests can be overturned with an appeal to benefits to the nation.

    One of the most interesting aspects of the current reality is that the US, despite all its problems and inequities, is not on any visible declining trajectory at all. There are countries that are close to its wealth per capita, but they are small and few. The more equal models of the Northern European and collectivist Asian societies are less wealthy per capita and less dynamic (with the exception of Norway and Australia, but oil and minerals is the reason there).

    Hence, somewhat surprisingly, it is as yet not clear that it ‘costs’ the Americans anything to have such an unequal distribution, such poor education for its majority, such a violent and and ill-informed view of the world, etc. It is humming along just fine and can still count on a large brain gain from immigrants from all over the world. The really talented seem to make their way up even if they start poor, the education for a small elite is great and that seems to be enough, the pantomime political scene keeps the worst excesses in check. It has often been argued that the US is `underneath’ suffering from major problems that will soon bring it to its knees, but so far that has proven to be untrue and even the current 5-year outlook is relatively rosy for the US.

  3. Dan says:

    Hi,

    I agree with wilful that

    Paul, wealth per capita expressed as a mean is a pretty limited – indeed, misleading – measure of growth (let alone the good society – Qatar anyone?), but you know that, so I’m not sure why you’re proposing it as a metric for success.

  4. Dan says:

    Oops, didn’t finish first bit:

    I agree with wilful that this will probably rehash the same old ground.

  5. conrad says:

    “I think the countervailing force that would be needed to reduce inequality in America is if this is seen to hurt its relative standing in the world”

    I think the problem with this argument is that presumably inequality is only one factor in the data you will get from any likely comparison, and trying to establish causation with it must be rather difficult. This is especially so because its effects change things at different time-scales. For example, perhaps people try harder to do things that are economically productive when they are poor and know they might become rich, and so inequality might help you in the short term. Alternatively, it’s pretty clear that in the long term, inequality causes bad education outcomes, and this may you hurt (especially if this becomes endemic to particular groups). An even longer term effect at least in some rich countries is that people stop having kids and start saving all their money, since even the moderately well off worry about becoming the bottom of the distribution (this is especially true of some places in Asia).

    FWIW, and being fairly ignorant of economics, I think there’s a pretty broad range of inequality where it doesn’t make much difference, and so given that Australia sits in the midde of the low and high inequality band for rich countries, I’m not too worried. That being said, even with Australia’s level of inequality, you can see some bad outcomes, but these could potentially be addressed essentially ad-hoc (e.g., funding of poor schools better) rather than trying to change inequality via some sort of sledge-hammer type solution (e.g., massively changing the way we are taxed). Of course, people will then complain that the government needs to pick winners and that there are winners and losers from ad-hoc solutions, but I still think this is better than just sledge-hammer type solutions especially if the system doesn’t become too corrupt.

  6. Paul Frijters says:

    Dan,

    I see all this very much in terms of a Tiebout world were the smart and ambitious are capable of moving to those places in the world where life is good for them and the country they are in is successful in their eyes. On that metric, the US has not lost its allure at all. Indeed, higher inequality increases its allure to many of the world’s brightest and most ambitious because they will think they can be part of the 1% and the inequality comes with a celebration of success that is appealing to those who are successful. I hence see this in an almost purely equilibrium evolutionary sense: the costs of inequality in terms of higher crime, lower life expectancy, etc., will have to be severe enough to overcome the advantages to the mobile in the world.

    Average wealth is, I would say, the major input into military potential so don’t dismiss it just because of the usual arguments about what it doesn’t measure.

  7. conrad says:

    “Indeed, higher inequality increases its allure to many of the world’s brightest and most ambitious”

    I’m not sure it’s inequality that counts. I would think that the big factor for most people is that it is richer than their homeland and the US has a fairly good immigration system for allowing them to enter (say, unlike many places in Europe where only the first of these exists). The other reason for many science people at least is simply because their science system is bigger and better than most places and can hence also pay more and, perhaps more importantly, offer better and more diverse jobs. I would think that the fact that there are also lots of poor people wouldn’t make much difference for this type of immigrant (otherwise Chinese and Indians, who seem to account for almost half of most science labs I visit in the US, would stay in their own countries since inequality there is even greater). You might like to think of this reverse — Switzerland has high salaries in many professions also, but has a lower overall gini index than the US. I doubt too many people are not going to move to Switzerland if given the opportunity simply because there are not enough poor people to make them feel comparatively rich compared to the US.

  8. Fred Argy says:

    Paul, I’m not sure if you are implying that the ability of” smart and ambitious people” to move around is “advantageous to mobility” in USA. If you are, I think the evidence is clear. In USA, inter-generational economic mobility – which defines to what extent individuals can succeed by virtue of their own talents and motivation – lags far behind other developed countries. The USA is one of the world leaders in economic liberalisation and freer markets and this creates more room at the top – but US political ideology on redistribution, especially its inability to encourage education and health equality, has greatly hindered its mobility.

  9. Sam says:

    Conrad and Paul

    I think the inequality does count in attracting these people. They are attracted to a society where a select group of people with some attribute they also possess, whether that be due to talent, power or some combination of the two, does significantly better than average. They see the inequality as fair. For them vertical equity is about rewarding the talented/powerful.

    Sam

  10. Yobbo says:

    Still no explanation of why inequality is a problem in either post or comments, except the circle-jerking assumption that you all believe it to be true.

  11. conrad says:

    “They are attracted to a society where a select group of people with some attribute they also possess, whether that be due to talent, power or some combination of the two, does significantly better than average.”

    I still don’t see why this is particularly related to inequality. For example, the gini index differs between the US, Switzerland and Germany a lot. However, if you are, for example, a specialist doctor in any of those countries, you will earn a lot more than almost all other people (I’m not sure which country pays the most or the extent that the distribution at the real top end differs, but I assume all pay a lot at the top). This means that if you are a doctor migrating to one of these countries from some poor country, then unless you feel even better with yourself because you get step over many more homeless people in the US than you do in Switzerland or Germany, I don’t see what role inequality is playing.

  12. conrad says:

    “Still no explanation of why inequality is a problem in either post or comments”

    There was linked literature in some posts some time ago Yobbo (and some really good discussion also).

    I can only vouch for the education stuff — in general, inequality produces bad outcomes in education. People with a poor education then tend to breed more and their children also don’t tend to get a good education. They then have a higher chance of becoming a social nuisance, live off government welfare etc. . I think all of that is pretty well established, even if people don’t like to say so. If it wasn’t case, people like you wouldn’t need to argue about how the education system should be fixed by deregulating it so children could move schools, wave their vouchers around etc. .

  13. Dan says:

    That was a good thread, I even recall a mind changing (albeit in the opposite direction from my own views, but nevertheless).

  14. Yobbo says:

    I can only vouch for the education stuff — in general, inequality produces bad outcomes in education.

    Surely a poor education is the result of a poor education system? As far as I can tell, education (high school at least) is free in most countries so there is a lot more at play than just the income of parents.

  15. conrad says:

    “Surely a poor education is the result of a poor education system?”

    It’s the result of multiple things. You can look at extreme cases if you want (e.g., kids that can’t afford books etc.), but even in not such extreme cases inequality is a problem.

    “so there is a lot more at play than just the income of parents.”

    I’m not disputing that, but it doesn’t mean that inequality and things associated with it are not an important factor.

  16. Yobbo says:

    It doesn’t mean that they are, either.

  17. conrad says:

    Yobbo, even the Finns think subsidizing education is worthwhile, and they are not exactly high on inequality already (see here: http://www.oecd.org/dataoecd/41/25/37404508.pdf)

  18. Pedro says:

    I think when people argue about inequality neither side is really fretting about the relatively small amounts spent on education. That argument tends to be more about systems. I’m not sure there is a very robust correlation between money spent on education across a system and outcomes.

  19. Paul Frijters says:

    Fred,

    I was talking about mobility between nations, not mobility from the bottom to the top within a society, where the available evidence indeed suggests the US does rather poorly.

    Conrad,
    the Swiss would get a lot more immigrants if they let them stay, but they too get a brain gain from offering high wages to the talented for a while. They almost run a guest worker system for talented people.
    The main thing I would say otherwise is not just that the top 1% in the US not only will earn more after taxes than the top 1% in Germany or almost anywhere else, but the culture of looking up to that 1% is far stronger in the US. So indirectly, yes, inequality in the US comes with a culture that is appealing to the talented.

  20. Mel says:

    Fred:

    “Can something be done in the USA to shift power to the working class?”

    No. The US is far too big and its working class too diverse and aimless to ever organise as a class for itself. The good news for social democrats in Oz is that the US gives us the best approximation of what a “libertarian society in reality” looks like and thus offers a strong antidote to the propaganda generated by our local far-right think tanks and media.

  21. Tel says:

    On the question of individual freedom, there is no doubt that many Republicans, which are now condemning gay marriage, abortion, access to contraception etc., are effectively attacking individual freedom.

    Agreed… and it’s been that way for at least all of the Bush years.

    What’s an honest Libertarian supposed to do about it? I mean, why did Obama attack Catholics over birth control? It’s a piddling sum of money and a really big deal for the religious minded; like seeing five cents on the street and feeling too proud to bend down and pick it up, so you drop a brick on your toe as a cover story.

    Why are the “progressives” who have traditionally been supporters of free speech, suddenly out there promoting censorship?

    I’m looking hard to see a corner where freedom is not under attack, and nothing looks good.

    I can only vouch for the education stuff — in general, inequality produces bad outcomes in education.

    I’m very much in favour of selective schools, because the fact is that if you put one really bright kid in a class with 19 dingbats, you get a result of 20 dingbats and a completely wasted kid. I’m not sure if that counts as equality, depends on your point of view since it’s an ill-defined term.

  22. Yobbo says:

    No. The US is far too big and its working class too diverse and aimless to ever organise as a class for itself. The good news for social democrats in Oz is that the US gives us the best approximation of what a “libertarian society in reality” looks like and thus offers a strong antidote to the propaganda generated by our local far-right think tanks and media.

    What a load of rubbish. The US is not a libertarian society and hasn’t been for a hundred years. There are many countries more libertarian than the US, but since they don’t have the problems with gang violence and the war on drugs that the US does, and get along fairly well, left wingers tend to pretend they don’t exist.

  23. Dan says:

    Yobbo is (gasp!) right – the US is what happens when religious fundamentalism meets crony capitalism. The mythology of the place is that it’s free, but in reality it’s pretty much entrenched power – with the lack of opportunity for out-groups that entails – all the way. (I can’t help but rather like the place, albeit.)

  24. Dan says:

    Though if Yobbo could name some libertarian countries, I’d be much obliged.

  25. Yobbo says:

    Liechtenstein, Hong Kong and Switzerland are the 3 most obvious examples, but many other OECD countries rank higher on the economic freedom indices than the United States. (The US comes in at #10 according to the economic freedom index).

    The US probably comes in at #1 for freedom of speech and gun rights, but in every other measure it’s not particularly libertarian at all.

  26. conrad says:

    Yobbo, are you talking about the Hong Kong with free public housing (40% of the population live in it, or whatever the number is now), a similar education system to here (at all levels), a similar health system to here (i.e., public hospitals etc.), no free-hold land (only 100 year leases), no democracy, far tigher drug restrictions, etc. . ? I think the main difference is direct welfare (of which there is a very limited amount), which doesn’t make it libertarian, especially if culturally you are essentially obliged to pay for your relatives if they are unemployed, quite unlike here.

  27. Yobbo says:

    Conrad, I’m not saying that Hong Kong is a libertarian Utopia, because obviously it isn’t for the reasons you have pointed out. But no country on Earth is. And yes, Australia is also rated as more free than the US in most indices.

  28. Dan says:

    Hmm. Essentially the Swiss model is to put a whole lot of essentially public expenditure through the private sector – and I’m talking about health insurance here – but still have it government-mandated to the extent that it may as well be a government program. It looks libertarian until you finish the sentence.

    Liechtenstein you can probably have, along with all 35,000 Liechtenstanis, although given that they granted women the right to vote in 1984(!) – and the referendum only just passed – you wonder how excited about liberty the people who live there are.

    Hong Kong: no. Apart from the points Conrad raised, something that people from o/s don’t realise is just how culturally in-the-know you have to be to get much done there. That’s an ‘externality’ as go those freedom-of-doing-business indices, as far as I’m aware.

  29. Yobbo says:

    something that people from o/s don’t realise is just how culturally in-the-know you have to be to get much done there. That’s an ‘externality’ as go those freedom-of-doing-business indices, as far as I’m aware.

    That might be true but it has nothing to do with whether or not the country is libertarian.

  30. Dan says:

    I actually think it does, otherwise ‘freedom’ is just the punchline to a bad joke. But Conrad was on the money anyway.

  31. Pedro says:

    So Dan, if you buy some health insurance that’s essentially public expenditure anyway? Okey dokey. And a culture in which business success is often based on networks of personal relationships is somehow unfree? I guess black is white if you really want it to be. But I’m sure you’re correct that the type of freedom not mandated by govt is really just a bad joke.

  32. Dan says:

    You’ve misunderstood my comments, perhaps deliberately.

    Do you actually know how Switzerland’s health system is organised?

    And as for your second question, that’s an interesting question but it’s certainly not the crux of what I was saying. Culture does not equal networks of personal relationships, though I’m sure they typically help.

  33. Pedro says:

    I’m not the mendacious type Dan. You said that Swiss health insurance is essentially public spending, I guess that leap is because it is compulsory. By the same token my bike helment was government spending, along with what it costs me to get the kids vaccinated. Ironically, the extra we pay to to the State primary school is not government spending because it is optional.

    “something that people from o/s don’t realise is just how culturally in-the-know you have to be to get much done there. That’s an ‘externality’ as go those freedom-of-doing-business indices, as far as I’m aware”

    “I actually think it does, otherwise ‘freedom’ is just the punchline to a bad joke.”

    I’m not sure what I didn’t understand about those statements.

  34. Dan says:

    Re: Switzerland – it’s compulsory, and the companies are legally bound to provide insurance at a price that the policyholder can afford. You could say that the companies take the shape of utilities, just about.

    Re: Hong Kong – what’s the issue here? If you or I can’t meaningfully do business there, it’s hardly an anarcho-capitalist paradise, more like the crony capitalism that libertarians make a point of deploring. If you’re appealing to some lofty philosophical notion of freedom, then that’s fine – and it also happens to be the punchline I was referring to.

  35. Pedro says:

    Dan, I guess we’re talking past each other, but an anarcho-capitalist (is there any other type of anarchist?) paradise wouldn’t be telling people how to do business and if it really is an anarchy then those personal relations would be a big part of building the trust required to do business. There’s a difference between business friendly and freedom friendly.

    And with switzerland, so price controls and mandate purchases is the same as government spending. You might be trying a bit hard to prove yobbo wrong.

  36. Dan says:

    There’s a difference between business friendly and freedom friendly.

    Yes! That’s what us emancipation-minded lefties have been trying to tell you the whole time – that free markets do not equal free people. I’m glad that you’ve come around.

    The rest of your post is blather, I’m afraid:

    a) Of course there are other types of anarchism. Ask Noam Chomsky what he thinks of Murray Rothbard.
    b) Re: Switzerland, my thrust is that such an arrangement wasn’t libertarian. And it’s not. A health care provider in a libertarian country could surely refuse to take on a customer, if for instance that customer was going to cost them. I think you’re trying too hard to prove me wrong.

  37. Pedro says:

    I was only saying that swiss health insurance is not government spending. Sure free markets do not mean a free people, but unfree markets means unfree people. I think the problem with the lefty idea of freedom is that it is something that governments provide by constraining some for the benefit of others.

    You can ask me what I think of murray rothbard, his ideas are pretty stupid. I was only implying, as an aside, that concepts like, say anarcho-syndicalism, are a bit light on the anarchy and heavy on the central control. All of the anarchic societies I can think of seem to display the key hallmarks of capitalism.

  38. desipis says:

    Pedro,

    Sure free markets do not mean a free people, but unfree markets means unfree people.

    That’s not necessarily true. If one party acts in a way that constrains the freedom of other parties, regulation is put in place that stops (or minimises) such acts, and the loss of freedom from the regulation is less than the loss of freedom caused by the acts, then a more regulated (or ‘unfree’) market can result in a more free people.

    I think the problem with the lefty idea of freedom is that it is something that governments provide by constraining some for the benefit of others.

    Part of the problem with having such a broad definition of ‘lefty ideas’ of freedom is that your definition essentially includes all notions of both criminal law and enforcement of contracts. Looking at the philosophy supporting the ideas of property and freedom that underpin libertarianism you find arguments about freedom being about governments constraining some for the benefit of others (or for the public good), yet limited to a seemingly arbitrary scope.

    The problem I have with libertarianism is its based on the desires for freedom of wealthy property owners from the Enlightenment era (freedom from interference from Lords/Kings), rather than the desires for freedom of the majority of people in contemporary society (freedom from interference from a much wider range of people, influences and things). There’s seemingly an assumption that property rights are more natural or important that other rights (human rights, community rights, etc). I’m yet to see a persuasive argument for why the libertarian definition of freedom is the best one, or the one that ought to be politically pursued to the exclusion of other definitions. It’s similar to the issue of defining fairness covered in the OP.

  39. Pedro says:

    desi, I meant broadly unfree, with substantial restrictions on the ability to trade, like in socialism. Though I think you need to be careful with the idea that my acts might constrain your freedom. It’s obviously a wrong if I kidnap you. But your freedom is not affected if I refuse to deal with you, nor if I try and hoard resources I gain legitimately.

    As for my “lefty ideas of freedom”, it seems for many on the left the natural imbalances of talent, effort and luck are freedom constraints to be corrected by the government. You can’t be free until given enough taxpayer charity to provide some dignity or a leg-up in the world. I think 3 of FDR’s 4 are natural freedoms and the other one is a free and not a freedom. If I pay out my mortgage I might be free of debt, and thus enjoying freedom from debt, but my lack of debt is not an obligation imposed on others, where as my freedom to say this on the blog is a freedom that creates positive obligations on others to not interfere with me doing so.

    I imagine that most libertarians would put human rights above property rights, but then you and the average libertarian might have a different list of human rights. Obviously human rights do not exist beyond the point they are recognised by everyone else and therefore are pretty fungible. Even the right to life includes, for most people, a large “but”. It seems to me that one key attribute of a right is that it is accepted as inherent. Property rights, being generally accepted, are recognisable as a human right, which is not to say that all aspects of our property law are the codification of a human right.

    The world is messy and to make it work reasonably well requires a pragmatic approach to the recognition of rights, but I think you build on the best foundations by starting with the narrow ideas of rights and then add on the practical bits. I think this is the sensible libertarian approach recommended by people like Friedman and Hayek, who were not against the state or the welfare state.

  40. Dan says:

    Talent and effort I have no issue with. Luck, on the other hand, I certainly think the government should address to a significant extent – putting me in the same loopy-left orbit as, say, Michelle Bachmann (at least if she means what she says about thinking equality of opportunity is a desirable thing).

    To be clear: not massively interested in equality of outcomes, and I really don’t think that’s uncharacteristic of the mainstream left in capitalist countries. I think Pedro is arguing with a Leninist made largely of straw.

  41. Pedro says:

    Well Dan, good to know your not that much of a redistributionist after all. But I don’t think I’m arguing with a straw lenin, only people who want substantial interference economic activity and increased taxes on the rich.

  42. Dan says:

    I’m a redistributionist to the extent that equality of opportunity is attained. And we’re nowhere near.

  43. desipis says:

    But your freedom is not affected if I refuse to deal with you, nor if I try and hoard resources I gain legitimately.

    I disagree that acts can be so easily classified as not affecting freedom. I think we need to be careful to consider the circumstances in which your actions occur.

    If you’re talking about a deal between two individuals of roughly equivalent position and ability, where the denied party has other practical ways of achieving a similar deal, then the impact on freedom of one refusing to deal with the other could be said to be minimal. For example, consider two individuals negotiating the second hand sale of a common item. Comparing the loss of freedom from being denied the deal to the loss of freedom that would occur were the government (or other third party) to force the sale to go through could lead to the conclusion that the impact is negligible.

    If however we consider a different scenario where there’s a disparity between the power and needs of the parties then the freedom equation might change. Imagine if the only supermarket in a small town suddenly decided to stop dealing with a resident. In a practical sense, that resident would no longer have the freedom to live in that town because they would not have an accessible supply of food. If the government were to intervene, the loss of freedom (to deal with one of hundreds of customers) of the supermarket could easily be argued to be much less than the loss of freedom of the resident.

    Thus, we need to look at the practical circumstance, and not some abstract right, in order to determine the optimal outcome in terms of freedom.

    I also think it’s telling you label things as ‘obviously wrong’ or ‘legitimate’ in an attempt to explain why they should be considered as infringing on others freedom. I think it would be better to reverse that around and consider the practical impact on freedom of the act, and use that practical impact to determine the legitimacy or wrongness of the act.

    …you build on the best foundations by starting with the narrow ideas of rights and then add on the practical bits

    I tend to agree with your general approach. However, the main problem I have with it is that libertarians typically see the initial narrow set of rights as set in stone and paramount. I would see them as malleable and subordinate to practical issues.

    As for my “lefty ideas of freedom”, it seems for many on the left the natural imbalances of talent, effort and luck are freedom constraints to be corrected by the government.

    In terms of luck, I agree with Dan and don’t have a problem with that ‘lefty’ view, as long as the means the government chooses don’t cause a greater constraint on freedom than they manage to remove. I also tend to think that outcomes are to a much greater extent determined by luck, than by talent or effort, and so don’t see a prima facie problem with tackling inequality in outcomes.

  44. Yobbo says:

    Imagine if the only supermarket in a small town suddenly decided to stop dealing with a resident. In a practical sense, that resident would no longer have the freedom to live in that town because they would not have an accessible supply of food.

    They could grow their own food, get it freighted in themselves, or get a friend to do their shopping for them.

    I grew up in a town that doesn’t even have a supermarket, the nearest is a 60km drive away. The locals deal with that by doing their shopping less frequently and storing more food.

    So your analogy is bullshit, basically.

  45. Pedro says:

    I’m with yobbo, the micro-management of relationships by government is not the path to freedom, and exactly that micro-management is a reason for the amazing growth in the volume of legislation.

    “I also think it’s telling you label things as ‘obviously wrong’ or ‘legitimate’ in an attempt to explain why they should be considered as infringing on others freedom. I think it would be better to reverse that around and consider the practical impact on freedom of the act, and use that practical impact to determine the legitimacy or wrongness of the act.”

    I’m not sure I understand what you’re getting at. Kidnapping is obviously wrong because of what it does to your freedom. Earning and saving money by legitimate means surely cannot be recast as a wrong because you have some notions about how it affects the freedom of others. I think that’s the fundamental divide between our ideas. If you define wrongs by outcomes instead of just acts then you have an approach at grave risk of seriously constraining freedom. The ultimate left outcome is the from each and to each mantra, and nobody has gotten anywhere near that in a serious way without massively constraining freedom.

    “I also tend to think that outcomes are to a much greater extent determined by luck, than by talent or effort, and so don’t see a prima facie problem with tackling inequality in outcomes.”

    Really? Is that because the starting point for talent and effort is the luck of your parents?

  46. Dan says:

    See I’m not – and I don’t think Desipis is – talking about ‘micromanagement’.

    Here’s a sweeping reform for you that’d hit the Luck factor: crank up the estate tax. The specifics can be discussed, but crank it up to a point where it’s a serious revenue stream. Spend the revenue on whatever you like: providing better services for remote Indigenous Australia (there’s no doubt in my mind that this represents a market failure as well as a failure of morality), or infrastructure to make it easier to do business (that is, earn, not inherit wealth), or education to improve Australia’s future productivity, or heck, income tax cuts. Whatever floats your boat.

    I also think it would have the happy corollary of a more sensible real estate market, because it would hit the ‘landed gentry’ but not so much the battlers.

  47. Paul Bamford says:

    Imagine if the only supermarket in a small town suddenly decided to stop dealing with a resident. In a practical sense, that resident would no longer have the freedom to live in that town because they would not have an accessible supply of food.

    [Desipis @43]

    They could grow their own food, get it freighted in themselves, or get a friend to do their shopping for them.

    [Yobbo @44]

    How about we imagine instead the situation of a woman living in a small town whose only pharmacist refuses to sell or dispense any contraceptive products whether they be prescription or over the counter. I suppose that she could always, by Yobbo’s logic, plant a rubber tree and start a small business producing hand-crafted condoms.

  48. Pedro says:

    Dan, you don’t think setting rules about whether a trader can ban someone from their premises in desi’s parable is not micro-management? There is now an awful lot of micro-management of legal relationships and transactions and even of the neighbourhood.

    And me being old and rich (in my dreams) through hard work and thrift is not luck, but if I die the state should take the lions share to equalise the luck of my descendents and the children of the not so thrifty. Can’t see any fairness based counter arguments there?

    BTW, having spent a chunk of my career with retirement village clients I’d say you’d be surprised at how many relative battlers want to leave something to their kids. Brown-tonguing the rich is not the reason death duties faded out in this country.

    Paul, what religious convictions do you think ought to be respected in a free country? Clearly in Bamfordania catholic chemists can’t can the condoms.

  49. Dan says:

    lolwut.

    Dan, you don’t think setting rules about whether a trader can ban someone from their premises in desi’s parable is not micro-management? There is now an awful lot of micro-management of legal relationships and transactions and even of the neighbourhood.

    Not particularly, but if you want you can have it.

    And me being old and rich (in my dreams) through hard work and thrift is not luck…

    Yes, that’s what I said…

    …but if I die the state should take the lions share to equalise the luck of my descendents and the children of the not so thrifty. Can’t see any fairness based counter arguments there?

    Since you’re not making proper sentences it’s hard for me to answer. I’ll try, though at the risk of labouring the point: I think it is fair in both principle and practice to redistribute wealth that is inherited, not earned.

    BTW, having spent a chunk of my career with retirement village clients I’d say you’d be surprised* at how many relative battlers want to leave something to their kids. Brown-tonguing the rich is not the reason death duties faded out in this country.

    So set the threshold for the tax $10,000 or $100,000 or $500,000 or make it steeply progressive. Ta-da! How easy’s that!?

    *As the recipient of such inheritances, allowing me to buy a place which I could not otherwise afford, I am not surprised. I am, however, grateful.

  50. Yobbo says:

    How about we imagine instead the situation of a woman living in a small town whose only pharmacist refuses to sell or dispense any contraceptive products whether they be prescription or over the counter. I suppose that she could always, by Yobbo’s logic, plant a rubber tree and start a small business producing hand-crafted condoms.

    Or, she could drive to the next town and buy them, or she could order them off the internet.

  51. Dan says:

    Ah, if only life were that easy for the people who most need it to be. You’re a romantic, Yobbo :)

  52. desipis says:

    [email protected]:

    I’m not so much thinking micromanagement by the government; more a shifting in private legal rights.

    I’m not sure I understand what you’re getting at.

    Perhaps I can highlight it with another hypothetical.

    Take Yobbo’s argument that, the resident has other options, therefore there is no wrong worthy of correction. What happens if we apply it to another example where someone has taken Yobbo’s car without permission. Yobbo has other options where he could walk, catch a bus or ride a bike, so there’s no wrong here. Except, I’m pretty sure Yobbo would make some reference to property rights as a justification for why the act of taking his car was wrong.

    What I’m trying to get at is arguments below this, and then examine these justifications to examine their limits. Why do we consider property rights important? What are the sociological or economic benefits from recognising property rights? What are the disadvantages? What are the moral or psychological reasons for why theft just feels wrong? What are the moral or psychological reasons for why not selling food to someone when you’re the only supplier feels wrong?

    Once we have answers to those questions, even though we each might consider different ones, we’re in a better position to answer my main questions: Should the notion of property rights (or whatever other “right”) that might be considered reasonable between individuals of roughly equal standing be applied in circumstances that involve a large disparity between the parties, such as a large corporation and a vulnerable individual? Are there limits to such notions in circumstances not contemplated by the original philosophies used to justify them?

    If you define wrongs by outcomes instead of just acts then you have an approach at grave risk of seriously constraining freedom.

    I’m not trying to define wrongs purely by outcomes, but rather to avoid defining them in absence of reasonable consideration for the outcomes. Also, by defining freedom as an explicit outcome then I can’t see how you could end up constraining it.

    Is that because the starting point for talent and effort is the luck of your parents?

    It’s more a case of the luck of which parents you get, although it’s also in a sense about compounding intergenerational luck. Thinking on it further I’d add a variable ‘circumstance’ to the list as well, as I think it plays an important role on who might have claim to the value of the output from the talent, effort & luck. A person born in a western industrialised country is likely to produce more output than the one born in an impoverished third world country. Isn’t it reasonable to say that the marginal difference (or at least a part thereof) from these circumstances should accrue to all those responsible for them? Of course the challenge is to dissect the output in such a way that the components from circumstance and luck can be accounted for without discouraging effort or the pursuit of talent.

  53. Pedro says:

    Dan, sorry to hear about your reading difficulties, but good for you on the unfair gains ;-). Do you have kids? If you do and you can’t understand why people might think an estate tax unfair then I’d be surprised. If we are here for anything it is to see our genes replicate successfully, what business is it of the State to change the odds for us?

    Desi, I don’t think its too hard to see the moral difference between refusing and taking. If your supermarket owner refuses to sell to a person is that equivalent to them coming back that night with a brick and helping themselves through the window?

    I think we have property rights now because our species has pretty much always recognised claims to property. I guess the big step was the evolution of property rights in land, that being the first significant instance of capital formation.

    “Isn’t it reasonable to say that the marginal difference (or at least a part thereof) from these circumstances should accrue to all those responsible for them?”

    We’re more productive than your average Gabonian because of our greater physical and human capital, so it is easy to think we are lucky to be here and not there. I don’t know about you, but I’m here because this is where my parents made me; and I’m pretty sure most of my recent ancestors were 19th century arrivals from the Brit Isles. When you think about it there is no luck involved, just chance. I could not have been any other person. There are no alternative possibilities of me existing. Any other combinations of DNA are different people.

    As for the claim that society is entitled to a tithe because of the lashings of capital making my middle class life possible, what of it? All that capital was formed through other people making money, so they’ve already got their chop.

  54. desipis says:

    Pedro, I’m not saying there isn’t a moral difference. I’m asking the questions of if and why that difference should rule absolutely over other moral issues. If we take the “because history” approach you take to justifying property rights, we’d still have slaves as part of the idea of property.

    I fail to see how making that (or any) distinction between luck and chance provides any (additional) moral justification for leaving things the way they happen fall.

    All that capital was formed through other people making money, so they’ve already got their chop.

    Obviously a view that depends on the absoluteness of property rights, however I see such an argument as weak given it’s complete disregard for externalities. You’re essentially saying there isn’t a moral issue by defining it out of existence.

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