22
Nov
11

More linky, less thinky: Special edition on income inequality

We begin with a post by Jason Kuznicki, reacting to a poll in which 73% of respondents believe that there are not too few rich people:

His argument, in a nutshell:

As far as I am concerned, 73% of the country appears to have lost its mind. I’d like everyone to be rich, which means, obviously, that we have too few rich people.

Failing that, I’d like to select some random non-rich person, and, without changing anyone else’s wealth, make him or her rich. And I’d repeat that operation as many times as I was allowed to. Wouldn’t you?

Somewhat surprisingly — only because of the venue — the comments section is a free-for-all of raw, naked, emotional partisanship.  (They’ve got a Marxist!  A real, honest-to-balls, true-believer Marxist!  Labour theory of value and everything!)  I’ve never skimmed through a comment section at the League — at least, not since I started dropping in occasionally — and been filled with such an atavistic sense of dread at the idea of becoming enmeshed in it.

But that’s not to say it wasn’t instructive.  Briefly, we learn that Jason and the freed-markets commentariat use wealth as a proxy for quality of life, while the left-progressive commentariat uses wealth as a proxy for power.  No wonder they’re talking past each other!  (We also learn that, no matter how often he repeats himself, Jason will never be able to persuade his interlocutors that when he writes “real wealth” he actually means “real wealth” and not “nominal wealth” or “unicorn giggles”.  As I mentioned: raw, naked, emotional partisanship.  The folks arguing against Jason aren’t actually arguing against him — they’re arguing against some sort of plutocratic straw-man and his Republican-voting shills.)

Well, I’m one of those “rising tide lifts all ships” proponents, so let me throw in my two cents (real, not nominal).  Jason’s simple moral argument — wealth as a proxy for quality of life — is perfectly fine in isolation.  But it also, quite by accident, addresses the left-progressive shibboleth of wealth inequality (see what I did there?) as a source of power mismatch.  Jason notes, quite rightly, that if you argue in positional terms — “the 99% vs. the 1%”, for example — you’ll never get rid of inequality unless you can somehow get rid of fractions.  But the power differential problem isn’t so much a matter of pure percentiles as it is, crudely, a matter of relative differences between those percentiles.  If the median one-percenter has, I dunno, a hundred times as much wealth as the median individual — and we make the crucial assumption that wealth is linearly proportional to power — then teh ebil 1% is a hundred times more powerful per capita than the median.  Now we apply Jason’s simple procedure of making enough non-rich people rich to bring median wealth up by a factor of ten.  Oh look: the power differential has gone down by a factor of ten!  That’s a good thing, right?

Fucking fractions; how do they work?

——

Next, Arnold Kling points us to a pithy sentence from Larry Summers:

A general posture for government of standing up for capitalism rather than particular well-connected capitalists would also serve to mitigate inequality.

Quite.  The wealth-as-power-differential story depends critically upon rent-seeking and regulatory capture.  I want less of both.

——

Of course, every time the income-inequality question comes up there’s always debate over whether those grasping plutocrats/noble wealth-creators actually deserve their megabucks, for example as a just reward for meaningfully contributing to society.  I think it’s pretty fuckin’ clear that not all of them do, and Alex Tabarrok provides us with an example:

Behold the wonders of the corporate income tax!  That out-group punishment mechanism instrument of social justice is so effective, that General Electric spent an untold amount of money and man-hours creating a tax return fifty-seven thousand fucking pages long earlier this year, in order to claim a tax credit of $3,200,000,000 on about $14,000,000,000 in profits.  You will find me difficult to persuade that any of the lucre and effort spent on that massive act of bureaucratic Onanism made a meaningful contribution to society.  It’s all entropy.

——

Finally, Megan McArdle trolls the internet:

Oh, sure, she starts off with a cogent point about the manifestations of one-percenter wealth now as opposed to in the ’80s (fewer corporate perks, more stock options), but then she writes this comment on credentialism:

It suddenly occurred to me that [credentials-based homogeneity] is a standard feature of the work lives of blue state elites:  almost all of their contact is with people just like them.  Same education, usually the same few states of origin, and a pretty uniformly shared set of values about what work is for and how it should be done.

These people tend to vote Democratic.  Small-business owners, who work in much more diverse environments, tend to vote Republican.  I’m not going to speculate on why this might be so–but I suspect that it matters.

Fortunately, I had the good sense to stay out of that comment section.


4 Responses to “More linky, less thinky: Special edition on income inequality”


  1. November 23, 2011 at 01:28

    I’m not certain “less thinky” is an accurate title, this certainly made me think. I think Jason misses a fundamental truth; “That which is earned is valued.” This supposition is supported by the supprising number of Lottery winners who declare bankruptcy. Just giving stuff to people is no guarantee of success.

    I also think that too many people have bought into the “equality” chestnut. Not equality in the sense of the 13th-15th ammendment, but in the “anyone can become president” sort of way. Not everyone gets to be an astronaut.

    On the subject of GE and the Epic Tax Return of Doom, I can only quote Robert Goodloe Harper “Millions for defense but not one penny for tribute.” If one assumes (correctly) that the IRS, and by extention the government as a whole, is the enemy, it makes a lot of sense.

    • November 23, 2011 at 12:44

      Thanks for dropping by!

      I think Jason misses a fundamental truth; “That which is earned is valued.”

      I don’t think Jason’s missing that point so much as ignoring it to avoid complicating his thought experiment. His magic make-people-rich button could just as easily be giving people marketable skills and formidable work ethics as writing them cheques — and since he posits that he’s talking about real rather than nominal wealth, the former’s more likely.

      I also think that too many people have bought into the “equality” chestnut.

      Take that one step further: People buy into the “equality” chestnut when it refers to ways in which they’re not special. If I’m an #Occupy protester, I’m probably not rich, so I want incomes to be equal so that I’m not competing with the guy who can afford $300 jeans and the week’s latest fashions at the local meat market. But I probably don’t want skill at folk guitar to be equal, because if everyone could play folk guitar I wouldn’t be special and I’d never get laid.

      Or on the flip side, if I’m GE, I want everyone to be subject to the same Byzantine corporate tax code, because I can afford to pay a legion of accountants and lawyers to file a 57-kilopage tax return and the scrappy semiconductor startup that’s trying to compete with me can’t. Not to mention the fact that I spent a lot of good money lobbying for $3,200,000,000 worth of loopholes in that tax code.

      If one assumes (correctly) that the IRS, and by extention the government as a whole, is the enemy

      I don’t buy that assumption, at least not completely. Certainly there’s a thundering herd of government regulations that make life difficult for GE… but they make life even more difficult for GE’s smaller competitors. GE, meanwhile, has enough clout to shape those regulations to their advantage (or at least to minimize their disadvantage).

  2. November 23, 2011 at 13:10

    I think you may be right about the OWS desire to completely level the playing field. After all, if everyone sucks, no one can say you failed.

    True, money isn’t real wealth, it’s just a placeholder for the work you’ve already done. But even then, if everyone has the same skill set, then you’ve leveled the playing field again, and you can chalk your failure up to random chance. Sounds like fear to me.

    The government of always the enemy of enterprise. And just because government is adversarial to GE doesn’t mean it’s not also adversarial to all other businesses as well. Sort of a Lernaean Hydra of Suck and Fail with a political mandate.

  3. 4 perlhaqr
    November 23, 2011 at 20:06

    Briefly, we learn that Jason and the freed-markets commentariat use wealth as a proxy for quality of life, while the left-progressive commentariat uses wealth as a proxy for power.

    And how is that power expressed most often? By using the money to buy laws. Do. They. Yet. See. My. Point. About. Reducing. GOVERNMENT?

    No, I didn’t think so. Money is like the fuel in an internal combustion engine of government. Take away the spark, and the power goes away too.


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