August 16, 2004

For What We Deserve...

Lindsay Beyerstein says smart things about what we "deserve":

Majikthise : Upsetting the desert cart: Various bloggers have explained our attitude towards desert in terms of its instrumental value. Brad DeLong sums up instrumentalism as follows:

We want a society in which those with natural abilities are provided with powerful incentives to use them productively. We want a society in which the successful cultivation of abilities is greatly rewarded. We want those capable of discipline and effort to receive as rewards the fruits of that discipline and effort. We want all these things because a society that provides people with a framework of such incentives is a richer, a happier, a more productive and prosperous society--a better society.

This is a fine argument for Rawls-allergic desert skeptics like DeLong and me. But Wilkinson's main target are Rawls sympathizers. Wilkinson claims to have found a conflict between common sense morality and Rawlsian theory. If so, this undercuts Rawls' claim to have codified common sense justice. Wilkinson argues that instrumentalism doesn't really explain our intuition that a hard worker deserves her reward, though it may explain our intuition that it would be expeditious to give it to her.

The instrumentalist position needs to be supplemented with a non-metaphysical theory of desert. It turns out that a contractual/procedural theory of desert explains our intuitions just as well. We don't have to argue desert in terms of free will and moral responsibility. Sometimes promises beget desert. Our society wisely promises people that they will be rewarded if they work hard and contribute a lot. So, justice demands that we make good on that promise by rewarding the high achievers. Instrumentalism explains why it is a good idea to make that promise.

Posted by DeLong at August 16, 2004 02:18 PM | TrackBack | | Other weblogs commenting on this post
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August 16, 2004

Income Gap Up Over Two Decades, Data Show
By ASSOCIATED PRESS

WASHINGTON - Over two decades, the income gap has steadily increased between the richest Americans, who own homes and stocks and got big tax breaks, and those at the middle and bottom of the pay scale, whose paychecks buy less.

The growing disparity is even more pronounced in this recovering economy. Wages are stagnant and the middle class is shouldering a larger tax burden. Prices for health care, housing, tuition, gas and food have soared.

The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the Census Bureau. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent.

Jobs and the economy top the list of voter concerns this election year. President Bush touts a strong economy that is growing, but polls find that Americans have doubts and think jobs are scarce. John Kerry is trusted more on the economy, with Democrats talking regularly of ``two Americas,'' divided between the rich and everyone else.

That argument has merit, some private economists say.

``For those working in the bottom half of the pay scale, they're under an enormous amount of pressure,'' said Mark Zandi, chief economist at Economy.com.

New government data also shows that President Bush's tax cuts have shifted the overall tax burden to the middle class from the wealthiest Americans.

Posted by: anne on August 16, 2004 02:27 PM

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When I read about "rewarding high acheivers" I feel some anxiety. Let us define "high achievers" and tehe rewards they get. In our society high acheivers are people who get lots of money through one means or another, and are rewarded for having lots of money. Is high achievement the acquisition of lots of money? Is the reward more money via tax breaks, special interest legislation etc?

Are high echievers people who constantly improve a product in tiny increments as the Japanese have done? And Detroit, of course? This method of course floods us with constantly updated but only marginally more useful products which then fill our increasingly huge storage lockers because the stuff is never really quite outdated.

Are high achievers only those who come up with a truly novel idea/product? There then would be very few high achievers because true novelty occurs only in spasmodic cycles. Are high achievers super salespeople who persuade us to buy yet more of the incrementally improved product?

In a consumeristic/materialistic society, some types of high achievers would be also highly destructive in the long run (consuming vast amounts of resources for production of "stuff").

To say that we need to seriously rethink our economy and the perverse incentives we have created may be trite, but intellectual games won't cut it. The hard work is trying to figure out where we really want to go, and how to get there. Increasingly, it looks like mindless consumption is what we want, and this is taking us to a vast world wide garbage dump. We can't really afford to pussyfoot around these issues, and yet "rationalism" constantly does.

Posted by: Carol on August 16, 2004 02:47 PM

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"Our society wisely promises people that they will be rewarded if they work hard and contribute a lot."

Like Britney Spears, I guess, who is worth about $100 million. Our society promises no such thing. The market largely determines the result which may or may not be a function of hard work. I know a lot of people who work exceedingly hard and whose contribution to a better society is arguably greater than Britney Spears. These people can barely make their ends meet.

Perhaps the society should guarantee certain outcomes, but if it insists on relying on the whims of the market, the society is simply rolling the dice.

And while we're at it, maybe we should ensure we don't reward the low achievers, like George W. Bush.

Take TV. Currently, we are rewarding mediocrity more than ever. Perhaps it has always been much of a wasteland, but not completely. The market has ensured that TV is now largely a cesspool of extreme moral degradation, as evidenced by the endless plethora of so called reality shows.

Posted by: tstreet on August 16, 2004 02:58 PM

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Maybe I'm just nit-picking, but why the hell does anybody want a "desert"? Sand tends to collect in inconvenient places.

I'm more fond of DESSERT, which I'm supposing you uber-geeks are discussing.

Posted by: Ras_Nesta on August 16, 2004 03:25 PM

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Ahem.

From Webster's Revised Unabridged Dictionary (1913):

Desert \De*sert"\, n. [OF. deserte, desserte, merit, recompense,
fr. deservir, desservir, to merit. See Deserve.]
That which is deserved; the reward or the punishment justly
due; claim to recompense, usually in a good sense; right to
reward; merit.

According to their deserts will I judge them. --Ezek.
vii. 27.

Andronicus, surnamed Pius For many good and great
deserts to Rome. --Shak.

His reputation falls far below his desert. --A.
Hamilton.

Syn: Merit; worth; excellence; due.

Posted by: Thad on August 16, 2004 03:48 PM

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A desert is a metaphorical dessert.

Posted by: ogmb on August 16, 2004 03:56 PM

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I'm not sure what "explain" means in "instrumentalism doesn't really explain our intuition that a hard worker deserves her reward", but if it means "explain where the intuition comes from", then I think it is as easily explained as maternal love and various other instrumentally valuable instincts: it is a mental phenomen which is valuable to the organism's genes and/or memes (via the mechanism that Brad has been describing), and therefore is reinforced by genetic and/or memetic selection.

I'm always a little wary of philosophy which tries to explain a phenomenon without starting out by saying what caused/causes it -- which remarkably often turns out to be a simple case of natural selection....

Posted by: Jonamike on August 16, 2004 03:57 PM

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Just deserts ain't apple pie, my Dear.

Posted by: anne on August 16, 2004 04:20 PM

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This post sounded like gibberish to me. The poor do most of the real work. Why don't they have most of the real money?

Posted by: Dave of Maryland on August 16, 2004 04:43 PM

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Rewarded with what?

Posted by: Bean on August 16, 2004 04:45 PM

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Bayerstein offers a good point.

But she makes a logical leap when she moves from "hard work" to "high achievement," which aren't the same thing. They simply tend to look the same.

She fails to offer any explanation for why the _market_ should decide who the high achievers are, as opposed to the state or some mixture thereof.

And finally, the question of proportion remains crucial. Just as we should question the notions of absolute intellectual property implicit in infinite copyright protections, we might imagine that the rewards "high achievers" receive under welfare capitalism are sufficiently just.

Posted by: AWC on August 16, 2004 04:50 PM

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"High achievers" seize what they want. They are not "rewarded", there is no "market", they are, so far as I can tell, self-driven to do what they do. How much & how fast they seize depends on innate ability, which is usually the result of many complex, personal factors. We should admit such people exist (as they clearly do) and insist they work for the public good. Failing that, they should be appropriately taxed.

It might help to make an analogy. Money is only one of many things that can be seized. Imagine there was a butterfly collector who was so good at collecting (eg, seizing) butterflies that butterflies were in danger of disappearing from the earth. Was nature merely "rewarding" him? Of course not. Our collector's actions were independent of need, and so, consequently, independent of "reward". Faced with such a situation, it would be in society's interest to monitor or regulate, or (in the case of money) profit from (eg, tax) his activities. As societies have always done.

On the other hand, it could be Brad's original post was about wage & salary earners. But such people rarely make (or loose) real money. The big stuff is a different game.

Posted by: Dave of Maryland on August 16, 2004 05:23 PM

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Dear Dave,

Please explain this further:

"On the other hand, it could be Brad's original post was about wage & salary earners. But such people rarely make (or loose) real money. The big stuff is a different game."

Posted by: anne on August 16, 2004 05:27 PM

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I suspect Dave means that the real big winners are those who own a lot, rather than those who work a lot.

Of course, as several commenters have already pointed out, "those who contribute a lot" are generally defined by "those who own a pulpit from which to preach and be heard" which in turn. Not surprisingly, the high contributors turn out to be the same as those who define them. It is rather like the Bertrand Russell comment on evolution --- something like "life has advanced from the amoeba to the philosopher. Unfortunately, it is the philosopher who tells us this is an advance".

Posted by: Tom Slee on August 16, 2004 05:38 PM

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I'm not sure Beyerstein's response re: contract solves the problem. For Beyerstein, the notion of desert is something we get *out* of the social contract, it isn't something we carry into it. However, as I understand Rawls, we carry our common sense morality into the original position (that heuristic device for focusing our intuitions) in determining the contract into which we will enter. However, desert seems to be front-loaded into our intuitions of justice. For example, our intuitions are that the farmer in the state of nature is more deserving of the corn he sows and harvests than the slothful neighbor who does nothing, but comes to carry it away.

(At the same time, I'm more sympathetic to Rawls. I don't think he is committed to what Wilkinson contends, but I've yet to puzzle out why.)

Posted by: Robert Tennyson on August 16, 2004 05:43 PM

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Well, one thing is for sure. People collecting Ricardian rents on land sure don't deserve them.

Posted by: liberal on August 16, 2004 05:50 PM

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When considering just deserts, it is useful to distinguish between earned and unearned income, the latter being (in large measure) the return to capital, which is itself best viewed as the accumulated crime and sacrifice of centuries, plus interest. This is particularly pertinent in the present historical moment, when trade with low-wage Giga-states like China and India is depressing wages here at home ("factor price equalization") even as it boosts the return to capital.

Posted by: Luke Lea on August 16, 2004 05:59 PM

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But... don't all those units of hard-working capital also deserve their desert? C'mon have a little bit more empathy for them! What's it called? Capitalophilia? :-]

Posted by: Jean-Philippe Stijns on August 16, 2004 07:16 PM

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Brad said: "We want a society in which those with natural abilities are provided with powerful incentives to use them productively. We want a society in which the successful cultivation of abilities is greatly rewarded."

Does this apply to wage/salary earners, or those who work independently? In my experience - which is only my experience - wage/salary compensation is based as much on politics as any other factor.

No, Tom, it's not about property. Property is something that can be acquired, if it's desireable to do so. But it's hardly the crux of the matter. Be bold, Goethe said, Boldness has its own rewards. The really big winners, in every field, and without exception, are those who are bold.

Posted by: Dave of Maryland on August 16, 2004 07:30 PM

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There is, of course, some overlap between the deserving and the rewarded, even if the correlation is weak. We see the rewarded deserving and are reassured. There are however many deserving who aren't rewarded, but "Die in Dunkeln, sieht Mann nicht."

Posted by: jam on August 16, 2004 08:12 PM

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Social contractarians have to work pretty hard at this, I note. Lemme see if I get this:

Society wisely deems that people shall be rewarded for behavior X. This societal decree is identical to desert. Desert does not have a metaphysical component. If behavior Y becomes more fashionable, then we shall alter our definition of desert with a wave of our societal wand. Please note that in a democracy, I can only deserve something as long as 51% of people agree with me that such is the case. We will employ this conceit to justify any social policy we want and still act as though desert is a meaningful justification for our policy. We will need a Department of Desert to ensure that Desert is properly defined so we get re-elected next year, of course.

I think you would be much better arguing strict utility and dropping the whole desert angle. Desert is an subjective expression of values. It may be a powerful personal motivator, but it makes for crappy justification of policy unless we can all agree on a metaphysical system, which is apparently not the case.

Did someone up there seriously ask why the government shouldn't just hand out rewards as it sees fit? For chrissakes, I thought you guys were liberals. Do you want to kiss their ring when they deem you worthy of bread this evening?

Posted by: Jason Ligon on August 16, 2004 09:03 PM

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Er, Dave?

Seeing as how this is an econ blog and all, I just wanted to check on something. You know that wealth is non zero sum, that value is created in an economy, right? Collecting all the butterflies in the world so that the poor have none? Come on.

Posted by: Jason Ligon on August 16, 2004 09:07 PM

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Rawls and Beyerstein were obviously not the "A" students working for a "C" boss. Those of us who are know just how bitter and hollow the dessert cart we were promised in high school can become.

The richest most rewarded among us, here in America at least, are not the "high achievers and natural abilities" we might see in a John Glenn or Willem DeKoonig, but instead, those whose sole and exclusive focus is on Mammon ... how to get money, how to keep it, how to make others bring cash to you, throw it at you, how to ease the burden of it off them and into your bank account, even have them thank you for that!

That's American instrumentalism. Beating the suckers like a drum. The house always wins, and you don't need a PhD from Berkeley to get that.

Posted by: Tante Aime on August 16, 2004 10:35 PM

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Gracious, I'll be days digging myself out of the deserts and instrumentalism, the echievers and the contractual/procedural theories. I thought I'd heard the worst of political gobbledegook from my feminist friends of the 70's. Can anyone offer a lucid translation of this entry?

Posted by: Wayne on August 17, 2004 03:22 AM

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A desert really is a deserted area. It is NOT a synonym for "dessert" - unless you happen to be using the US dialect of English, which is prone to dropping double consonants that are there for a reason (e.g., in this case, distinguishing the pronunciation).

Posted by: P.M.Lawrence on August 17, 2004 04:08 AM

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How about if one's natural abilities consist of ably (and, possibly, legally) taking what others produce ? A skilled warrior or a witch doctor in an agricultural tribe, say. Would we want to give this person his abilities' worth ? Even as an instrument promises of just desert are vacuous. The ring nice in our ears, just like the Victorian "Honesty is the best policy" sounded great at Victorian ears. Giving to one one's desert is as empty a statement as statements come.

Posted by: George J. Georganas on August 17, 2004 05:02 AM

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Technical question:

Is this meant to be a quote from someone? What I am seeing is plain text, with no link or attribution. Since the first sentence is, "This is a fine argument for Rawls-allergic desert skeptics like DeLong and me.", and the entry says "Posted by DeLong"... I get the feeling I'm missing something. Like who's talking here.

Posted by: tatere on August 17, 2004 07:46 AM

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Luke Lea: Good & crisp characterization of capital formation. It would probably have taken me two paragraphs to make the same point.

Posted by: cm on August 17, 2004 07:58 AM

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Hello Jason,
I'm not an economist but I am aware it's not a zero sum game. But neither is money infinitely elastic.

Hello Wayne,
After further thought, I've concluded this post was a private matter between DeLong, Rawlins, Wilkinson & some others. Brad sometimes posts things just so he can keep track of them. Nothing wrong with that.

Posted by: Dave of Maryland on August 17, 2004 08:33 AM

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But cm and Luke? Surely all that unearned income that is nothing more than accumulated global misery should be spread evenly with our Chinese and Indian brothers. I mean, nobody earned it. Right?

Posted by: Jason Ligon on August 17, 2004 08:40 AM

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When did we make a promise to people that hard work would be rewarded? I'd say that's more of a myth than a promise, a myth propounded to perpetuate the even more toxic myth that one's success in life (or lack thereof) is entirely the result of one's own efforts. And it is certainly true that for some people, this is the case. But how realistic is it? How hard did George W. Bush work? Admittedly his is an extreme case, but I think it's also true that for enormous stretches of human history and for the overwhelmingly vast majority of humans throughout history, success and failure, as we construe those concepts, scarcely existed. For "desert" to have any meaning, in my mind, there needs to be at least some rough semblance of equality of opportunity along with at least some rough semblance of a level playing field. I don't think anyone can seriously argue that either of those things pertains, even in the USA. Hard work is a good thing, and those who work hard SHOULD prosper; I'm just not sure that enough of them DO prosper to claim that the promise of desert and the instrumental benefit of keeping that promise bear much relationship to the world we actually live in.

Posted by: Tom Beck on August 17, 2004 08:47 AM

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Jason Ligon: "... in a democracy, I can only deserve something as long as 51% of people agree with me ..."

Two points I would like to make:

(1) Representative democracy does not work in as a simplistic way as you imply. Even if assuming 100% voter participation, majority choice is not the same as majority rule. Just as examples, you can only elect people that actually become (or are made) candidates, and legislators can only pass laws/ordinances that are proposed.

(2) Norms of ethic and social value (and specifically those outside the criminal prosecution domain) are not typically codified in laws and voted on, but are defined & enforced largely by complex patterns of social interactions, and are driven by "macro-social" trends, like changes in how the economy works. For example, before let's say the 60's/70's, women were supposed to be housewives, or at best work part-time or in low-level supporting jobs, and those pursuing a profession were viewed as neglecting their determination. Today, women are expected to participate in the workforce, and housewives are to an extent viewed as above a job, backwardly, or underachieving. That's what I mean by "driven by macro-social trends".

However, those three areas -- ethics & values, lawas, and macro-social trends -- are strongly interrelated and coupled by feedback loops. Furthermore there is not one uniform ethic & value system in the society, but there are several and perhaps many "subcultures" in this regard.

How does this relate to the subject matter we are trying to discuss here -- there is not one uniform value system that defines "achievement", and what is a just "reward", but different people have different views on this (and their views are usually colored by their own position in society and in the value-creation process).

Also don't underestimate the impact of an increasingly homogenized mass media apparatus on formation of opinions. Those who sit at the "source" (of the opinion manufacturing) have a large say in at least influencing the concepts in which people think. When for decades "clever" advantage-taking is hailed as "entrepreneurship" and "achievement" (or else clients may place their ads elsewhere), and gradual & sustainable operation branded as "underperformance", it is little surprising that the reward & incentive structures follow suit.

Posted by: cm on August 17, 2004 08:53 AM

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Jason Ligon: "Surely all that unearned income that is nothing more than accumulated global misery should be spread evenly with our Chinese and Indian brothers. I mean, nobody earned it. Right?"

I'm not sure what point you are trying to make here. That one cannot assume a critical position towards robber barons and current offshoring trends at the same time?

Posted by: cm on August 17, 2004 08:57 AM

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The hard work angle is a holdover from the labor theory of value.

If I work hard counting grains of sand on the beach, I don't think society as agreed to reward me. What society has done more explicitly is allow me to have ownership of goods produced through my own labor or acquired through voluntary exchange. Through exchange, I have to provide something that someone else wants, and that is what society rewards. Until they decide that someone else is more worthy, that is.

Posted by: Jason Ligon on August 17, 2004 08:57 AM

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cm:

Regarding your two points. I agree. My criticism was directed at the notion that we can societally define desert on the one hand, then use it as justification for social policy on the other. To be a meaningful argument in favor of some certain social policy, desert must have a metaphysical component that is not part of the social contract. Either there is a metaphysical concept of desert as Rawls claimed, in which case it is subject to Wilkinson's criticism, or there isn't, and we shouldn't be using it in policy discussions at all.

"I'm not sure what point you are trying to make here. That one cannot assume a critical position towards robber barons and current offshoring trends at the same time?"

More precisely, that the criticism of unearned income not rightfully belonging to whoever holds it now would also apply to whoever winds up with it after an act of redistribution. They didn't earn it either. Desert again fails us. If making the world a better place is a justification for redistributing, then I would think that people who are really struggling, like peasants in China, would be prime candidates for your largesse.

As an aside: Egad this place is Marxian. I've never seen so many people swindled when they buy toothpaste at the grocery. The wealthy do nothing but steal from you? Nevermind, I can somehow see where this will wind up ...


Posted by: Jason Ligon on August 17, 2004 10:24 AM

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So, justice demands that we make good on that promise by rewarding the high achievers.

I'm not saying this is wrong, but there's a much more pragmatic reason for making good on the promise. If we didn't, people would figure it out pretty fast, in the aggregate. We play this game many times, not just once.

I also think that absolute rewards are less important in shaping behavior than the frequency and first-order derivative of rewards.

From a strict behavioral point of view, this is far better at convincing people that hard work is going to make their life better. This used to be axiomatic to the American system, but it's currently a dubious proposition, and that's a BIG problem.

Posted by: Jay on August 17, 2004 02:58 PM

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The premise that "just deserts" is necessarily a feature of common-sense morality needs to be reexamined. My common sense says, "From each according to their abilities, to each according to their needs."

Maybe that's because I'm a crazy pinko. then again, if you get down to cases, I think you'd find most people would agree on a long list of goods that should be allocated based on need, or simply membership in society, rather than merit however defined. Healthcare, the protection of the law, food, shelter, etc. (up to some level), as well as such intangible necessities as respect and compassion. And on the flip side, anyone who genuinely cares about their work acts primarily out of a disinterested desire to do it well, not the hope for reward -- what Marc Bloch called "the professional conscience."

Rewards and penalties may have the practical benefits Brad describes, but I don't think they need have any moral claim.

Posted by: jw mason on August 17, 2004 03:27 PM

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cm is right to note that representative democracy is not the same as plebiscitary democracy. In particualr, provided that the units of representation have some reasonable corresponsdnece with the real cleavages in society, the process of forming a parliamentary majority will act as a weighting system that will protect the interests of minorities. On an issue that is of great importance to a minority but lesser importance to the rest of society, tehre will be strong incentives to form coalitions that protect the interests of the minority. This is a big reason why nightmare scenarios like Jason Ligon's don't unfold in real democracies, even ones without formal constitutional protections for minorities.

Posted by: jw mason on August 17, 2004 03:36 PM

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jason Ligon: Nobody has made the case that "the wealthy do nothing but steal from you". What Luke Lea and myself were referring to is what Marx called the "initial accumulation of capital".

I suppose you are not going to dispute that, to name just one well-documented example, the emergence of the US-American economy was in significant part based on land-grabs and forceful expropriation & deportation of the natives to make natural resources available for extraction, and the exploitation of the population and imported slaves.

In Europe and I suppose elsewhere it was similar, only that there land & resource ownership dates back to feudalist times and earlier.

Posted by: cm on August 17, 2004 04:58 PM

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jw mason:

You have much faith, sir. A very great number of people would prefer to do nothing economically productive, whole heartedly as they might throw themselves into fantasy football or other persuits. "From each according to his ability, to each according to his need" creates great value in demonstrating need and avoiding the demonstration of capability at all costs.

I use the 51% argument as an illustration that will fit in one sentence, and I am aware that it does not precisely describe our current system. However, I think you underestimate the savvy and effectiveness of a motivated unchecked majority. The concern is not when they are intersted and the minority isn't, it is when they seek directly to gain at the minority's expense. Coalitions are fine, but when one coalition forms around the premise that we all get free goodies so long as we persecute only a minority through the legislative process, an enduring coalition of looters absolutely can form. The majority simply pays people to remain in their coalition. "The third way" is nothing more than this process in action. It is checked in most countries not by constitutional protections or because those looted from have any real political clout, but because the majority realizes that you can kill the goose that lays your freebies at a certain point. The system is also supported by a humongous economic engine in the US that plays by much more classically liberal rules. Companies can afford to pay the amounts asked of them because they can sell in a much less regulated market to make up the difference.

Posted by: Jason Ligon on August 17, 2004 05:09 PM

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I think all the rhetoric about economic injustice in some of the comments is off-point. The fact that our political and economic structure seeks by design to reward personal industry is not well countered by the fact that it also rewards other, arguably less virtuous characteristics by chance (or even by necessity).

Posted by: Strange Doctrines on August 17, 2004 05:16 PM

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The free marketers also make the assumption that those who have attained wealth (whether by due diligence or by chance) will themselves not use to THEIR benefit the very political system that the "less successful" want to use to redistribute the wealth.

In all of history, the powerful have sucked at the government teats to provide them one advantage or another over their lesser foes. The ideal of the free market cannot exist as long as those with the dough can obtain superior access to the political system than those without. Thus, for practical purposes alone, the "lesser" must be able to intervene on their own behalf.

Posted by: Jacques on August 17, 2004 08:19 PM

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cm:

If that is what you were referring to, I don't dispute it at all. I do note, however, that while land seizure was the basis of every nation and tribe in the history of man up to a certain point in history, there are several thousand steps between the taking of undeveloped land and modern uses of that land. It is, therefore, a mischaracterization to claim that capital is best viewed as the the accumulation of crime and sacrifice. A whole lot of other stuff was going on in the way of creating value, volutary exchange, and innovation.

My frustration with class warrior comments arose out of the many others that have made more explicit comments about success means 'forcing people to throw money at you', and let us imagine that all precious butterflies in the world were captured by one evil man - with a twisty mustache, who likes to tie women to railroad tracks.

Posted by: Jason Ligon on August 17, 2004 09:00 PM

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jaques:

"The free marketers also make the assumption that those who have attained wealth (whether by due diligence or by chance) will themselves not use to THEIR benefit the very political system that the "less successful" want to use to redistribute the wealth."

Of course the wealthy will try and succeed to some degree at getting politicians to give them handouts! Ironically, a great many of the direct transfers of wealth from government to business is only possible in the US with popular support. Of course ADM wants agriculture subsidies. The question is, why does the government give it to them? Because ag subsidies are enormously popular in corn states. At the end of the day, if politicians didn't think they were buying large numbers of votes with subsidies, you wouldn't ever see them.

A government with large authority to determine winners and losers is therefore the worst possible solution. When you remove transactions from the market of voluntary exchange and place them under government direction, you aren't getting rid of market forces so much as you are changing the nature of the game. Instead of my having a product or service others demand being the engine of my wealth, I need political clout to get money. The market is now one of exchange between begging citizens and the government. If you vote for me, I'll give you X.

Posted by: Jason Ligon on August 17, 2004 09:15 PM

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jason,
I wonder if "voluntary exchange" is the right term for zero-sum games and many other appropriative activities that we observe in all societies. Lawyers in tort cases come to mind. Surely jury awards can hardly be called voluntary exchange by either the ones paying them or receiving them and neither can lawyers' fees. If only the functioning of an economy could be separated from its governance !

Posted by: George J. Georganas on August 18, 2004 05:36 AM

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George:

"If only the functioning of an economy could be separated from its governance !"

It would be nice, wouldn't it? This line of reasoning takes guys like Chomsky on one side and David Friedman on the other into anarchist territory.

I'm not there, at least not yet. Institutions are initially based on some principle, but are later just habits. Our legislative system, with its emphasis on precedent, amplifies this effect. Right now, the precedent has been set that the government can trump the allocation of resources that results from market activity even when no legal wrong has been committed. We are now used to this idea. If the government can pay you because you ask them for money, they can also pay me if I ask for money. A minimal government position would be that the government can only reallocate when a legal wrong has occurred, as in the case of fraud or theft or (reasonable) liability for civil damages. The tax code we have doesn't help us at all on this front. It is designed for the government to financially reward certain behaviors. I prefer taxes on consumption or flat taxes above some minimum income level for this reason.

Yes, I acknowledge that property is in itself a government enforced monopoly of use. That doesn't mean that the government should be able to violate the principle of property at will, however. After all, we established the principle as a hedge against capricious government as much as one against looting neighbors.

Posted by: Jason Ligon on August 18, 2004 08:40 AM

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Jason Ligon wrote, "What society has done more explicitly is allow me to have ownership of goods produced through my own labor or acquired through voluntary exchange."

It also allows ownership of something no one produced: land. It furthermore allows the capturing of income (*rent*) from that land.

"Yes, I acknowledge that property is in itself a government enforced monopoly of use. That doesn't mean that the government should be able to violate the principle of property at will, however."

No; but it should at least ask the landlord to remit a payment equivalent to a substantial share of Ricardian rent.

"After all, we established the principle as a hedge against capricious government as much as one against looting neighbors."

Unfortunately, there's also another principle at work: to have access to land, the government allows a private party (aka the "landowner") to extort you. For this favor, the government expects very little in return.

Posted by: liberal on August 18, 2004 10:57 AM

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Jason
Most of the time habits come first and are written into laws later, if at all. The UK does fine without a written constitution. Setting mere principles against habits can be very unhealthy. The Soviet failure is a prominent illustration of my argument. The communist political philosophy assumed greed and indecency that no human beings ever possessed. Communism failed because it idolised greed even more that capitalism does ! Now, habits can evolve by natural selection. If we violate the property principle and this violation is of a size that enables it to pay for itself, fine. I doubt that it will, though. We have made a habit of enjoying the fruits of our labours (some of us of plainly illegal labours) and this is why mere laws, whether with 51% or higher approval, can hardly change us or our habits.

Posted by: George J. Georganas on August 19, 2004 07:25 AM

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