For once Sam Harris takes a break from focusing laser like on the sins of others that he can't control (Islamic terrorism) and considers problems that he can control. Here he is on inequality in the United States.
This will have to tide Darf and HP over temporarily. A sick family and crazy work schedule has me unable to dive back in to our never ending debate thread. But I'll be back.
110 comments:
Take your time brother. I have a newborn and 2 year old to attend to. Life is busy busy busy.
Few thoughts on the post:
First, Harris writes, "It is worth noting, however, that throughout the 1950's--a decade for which American conservatives pretend to feel a harrowing sense of nostalgia--the marginal tax rate for the wealthy was over 90 percent. In fact, prior to the 1980's it never dipped below 70 percent."
But what he forgets to mention is the GINORMOUS tax deductions that were available before Reagan's tax reforms (ie the 1950's). So while on record the tax rate was higher, few if any actually paid it, after deductions.
For example, Wiki writes:
The Tax Reform Act of 1986 was designed to be tax revenue neutral, because individual taxes were decreased while corporate taxes were increased. As of 2011, the Tax Reform Act of 1986 was the most recent major simplification of the tax code, drastically reducing the number of deductions and the number of tax brackets.
To make his point, what Harris has to look at then is not tax rates but effective tax rates. And on that, you don't see a big change at all.
Harris also writes, In the meantime, the average net worth of the richest 1 percent of Americans has doubled (to $18.5 million), while that of the poorest 40 percent has fallen by 63 percent (to $2,200).
How much do you want to bet that healthcare costs and other fringe benefits have not been included? Again, when included, the vast difference almost entirely disappears. Imagine that: the whole income inequality debate could really be a problem - not of the American economy as a whole - but simply of our rising healthcare costs.
Harris also writes, Thirty years ago, top U.S. executives made about 50 times the salary of their average employees. In 2007, the average worker would have had to toil for 1,100 years to earn what his CEO brought home between Christmas in Aspen and Christmas on St. Barthes.
But what he forgets to mention is that CEO's today have a far larger responsibility. They have to navigate the global economy (in a much more globalized world) and preside over a generally more dynamic economy.
Then there is the implicit assumption, still unproven, that if only the government taxed the rich more, the homeless rate, or the quality of our bridges and roads, would somehow improve. But the government is already taking in record revenue, and these things have not gotten better. What makes him think they suddenly will? Maybe they will be just used to start more wars abroad, for example?
In fact, on the area he spends the most time (education), it has been precisely the loosening grip of government (through vouchers and charter schools) that has shown the most promise. More tax dollars being spent on public education has been the problem, not the solution.
With that said, I am perfectly on board with his solution, namely: ...I am no more eager than anyone else is to fill the pork barrels of corrupt politicians. However, if Gates and Buffett created a mechanism that bypassed the current dysfunction of government, earmarking the money for unambiguously worthy projects, I suspect that there are millions of people like myself who would not hesitate to invest in the future of America.
But his solutions lack imagination. For example, his solution on education ("make college free for anyone who can't afford it.") is something that is already done. Hasn't he heard of pell grants? In addition, even this can be seen as a boom to the rich (its a subsidy to an institution that has been only getting more expensive with time).
Or take his clean energy solution. He writes, Much of the money we spend on oil is used to export the lunatic ideology of conservative Islam--building mosques and madrassas by the tens of thousands, recruiting jihadists, and funding terrorist atrocities. We should have devoted ourselves to a clean-energy Manhattan Project thirty years ago. Success on this front would still yield enormous wealth in this country, while simultaneously bankrupting the Middle Eastern states that only pretend to be our allies. Our failure to rise to this challenge already counts as one of the greatest instances of masochistic stupidity in human history. Why prolong it?
But it's more complicated than this (oh the irony here - who is really the "stupid" one?). After all, oil is sold on the world market, so if you don't sell it in one place (say the USA), you sell it in another, maybe at a lower price (I know this economics stuff is complicated for lefties, but it's their duty to know this before they pontificate, IMHO). But if you believe that we are towards the final stages of oil production, then mostly what you do by reducing oil consumption in the USA is subsidize use by China and India - which, as subsidy economics tell us, will simply ramp up their oil production. In the end, "building mosques and madrassas by the tens of thousands, recruiting jihadists, and funding terrorist atrocities" will likely remain unchanged. All the extra money we spent reducing carbon emission will not have reduced carbon emissions or global warming, it would have just made it cheaper for China and India to increase more of theirs. How is that a good return on your investment?
Here is my view on income inequality and what to do about it: first, I don't oppose all tax increases. In fact, I am neutral on effective tax rates below 33%. Countries that are more corrupt (some countries in Africa, for example), I will likely support lower tax rates - because the added tax revenue is likely to go to corrupt government officials. Countries that are less corrupt (like the USA and Germany, for example), I would tend to support a higher tax rate. But my absolute limit is 33%. Like unions who refuse to let workers work more than 8 hours a day (33% of 24 hour days) on moral grounds, I think it is immoral for the government to take more than 33% of someones earnings.
Lastly, the best form of empowerment for anybody, regardless of social status, is a job. No charity, no hand out, and certainly no government program, has ever been able to give someone that self worth that a job is able to. It's the age old adage: "teach a man to fish, and you feed him for a lifetime". So even though the rich may spend their money wastefully, it still creates more jobs than any government program will ever do (manufacturers of yachts, for example, tend to be middle class and in need of jobs too). This is also why I tend to be against the minimum wage and several other government programs.
HP -
"Here is my view on income inequality and what to do about it:"
You forgot to say what you would do about it. Or maybe by saying nothing, it was a metaphor that you would not do anything?
"So even though the rich may spend their money wastefully, it still creates more jobs than any government program will ever do (manufacturers of yachts, for example, tend to be middle class and in need of jobs too). This is also why I tend to be against the minimum wage and several other government programs."
Your argument is a straw-man argument. I'll leave open the possibility that I am being pedantic but the issue is not as you describe.
Is anyone arguing that it is not more efficient for the rich to spend the money vs. the gov't. The same can also be true of the not-rich.
Your ideal government I suspect would cost less than mine. Anyway given that the government needs money to operate what is the most effective way of collecting the necessary money?
Curiosity question -
Say the government was exactly as you would wish it to be. But say that its expenditures exceeded its receipts. How would you remedy this?
Say the government was exactly as you would wish it to be. But say that its expenditures exceeded its receipts. How would you remedy this?
Great question. Here is how I would approach it.
First, my "ideal" form of government is a government that only serves its fundamental purpose: rule of law, foreign defense, property rights, settle legal disputes, and roads and infrastructure.
With that said, I strongly doubt that after taxing the rich and everybody else as high as 33%, we will not be able to pay for such fundamental necessities. Since we tax close to that now and were paying for all that plus Medicare, Medicaid, and social security...by far the most expensive elements of the deficit.
But lets assume we couldn't. Say we lived in a third world country where it was difficult to get enough revenue to do so. Then I would push for more consumption type taxes. To pay for public roads, for example, I'd push for more toll roads. To get more police services, I'd look to something like this. In other words, I'd move more towards a pay-for-use type fee. In the end, I might even support an across the board consumption tax.
Curious question for you: What is your moral limit on how much the government should tax its citizens? And what is your moral limit on what the government should provide for its citizenry?
I think the major difference between you and me HP is that I focus on results. You say you want government to serve certain fundamental functions. You want it to do certain things. That's not the way I look it. What I want is a gov't that produces certain outcomes. Namely I want a good society. I want child suffering to be minimized. I don't want to see a lot of starvation. That sort of thing.
If that meant there was no government at all that would be fine with me. It's not about having a government that produces roads and infrastructure. It's about producing a certain outcome.
What if tax rates at 65% meant that all income groups experienced improvements in their standard of living? Is 33% some magic number that we must strive for because it's our goal?
My problem with the governmenta we have today is that it is organized such that only top income groups experienced substantial improvements in their standard of living and the remainder experience less from a relative perspective. I think it could be organized such that all income groups experienced improvements in their standard of living. If all income groups experienced year over year 5% improvement in their standard of living but that meant that I had tax the top rate at 75% that would be great. The rich are taxed at a higher rate, but their lives are getting better. But not only their lives. Also the lives of the rest.
Don't confuse means and ends. 65% or 33%. It's not that either of these are magic numbers. It's that we should strive to create a good society.
There is another fundamental difference between you and me Jon, and I would argue that it's also a fundamental difference between liberals and conservatives more generally, namely: Conservatives speak about results in the real world, liberals focus on "utopias".
Given the constraints of reality, I would argue that my model approaches your goals more closely. Given some utopia that nobody has yet seen or experienced, you disagree.
But we live in the real world...and you cant just "think" of a "good society", you have to show one that works better than another, and learn lessons from there.
No more utopia's Jon, you are an atheist now. Heaven on earth is nonexistent.
What a strange response. I'm asking you to focus on results rather than means. You pretend I'm the one not looking to results.
Minimizing suffering and striving to see the gains enjoyed by all, not just the rich is Utopian? Really?
You always say "I would argue" when what you really do is you assert. You just asserted that what you would suggest would be best. 33% is a really important top marginal rate. Why's that? Are you just "thinking" of what you think would make for a good society or can you somehow show that this figure is ideal?
Remember, I haven't proposed a top marginal rate. I'm responding to your proposal. I'm not saying I think 33% is a bad number. I would accept that # if the outcome justified it. But you asked Paul to come up with some moral limit for a top marginal rate. You seem to emphasize the rate rather than the results. The moral limit is the limit that produces the good results, whatever that happens to be. If it was zero then my moral limit is zero.
Just for reference, I happened to notice a blog that was talking about the top marginal rate that maximizes economic growth. I haven't read the entirety of it, so I'm not advocating it, but perhaps you would find it interesting. It's Part 1, a bar chart, Part 2, and Part 3 so far. His conclusion is 65%. So again, I want to emphasize that it's not about picking a certain value and saying that anything greater is "immoral." It's about testing different rates and deciding which results in preferred outcomes.
HP -
You asked -
"Curious question for you: What is your moral limit on how much the government should tax its citizens? And what is your moral limit on what the government should provide for its citizenry?"
I do at times speak in moral terms. I typically do so as short hand - to not get bogged down on minutia. But I often reject the concept as meaningless. I am a hybrid of a moral sujectivist and a desire utilitarian (desirist?). Not sure if you are familiar with this or not. So on one sense (the subjectivist) "morally" I have no limit. On the other (the desirist) if increasing the tax rate to some X amount help to fulfill more desires then that could be the more "moral" thing to to.
As an approximation to my views - I tend to agree with what Jon said in his response - outcomes vs fundamental functions. I do think there is overlap between these two.
Do you really believe this?
"Conservatives speak about results in the real world, liberals focus on "utopias"."
From reading you and Darf it seems to me that it is you two who focus on utopia :-)
But morals have to play a part. Let's say we take your view to its extreme example, you want " a good society....child suffering to be minimized....don't want to see a lot of starvation."
Let's say tomorrow then, the government came to your house with guns, seized 90% of your goods and property, and gave it away to the very poor in Africa. Would you be for such gross injustices? They certainly would reduce child suffering and starvation. So why not?
My point is that while child suffering and starvation is bad, and a goal worth reducing, there is only so much of a moral claim that it has on the earnings of others. I might be moved to give a homeless guy some money, but he doesnt have the moral right to demand money from me. I would argue that the rich have a moral obligation of no more than 33% of their income. The less rich less of a percentage of their income, and so on.
Regarding 65% as the top marginal tax rate, again, you fall for the liberal propaganda. I read blogs all the time, especially economic blogs, so I know the leanings of particular blogs. So of course I immediately recognized your source, Angry Bear, as a liberal blog. That's fine, you say, look at the data. Well when I do that (unlike you, I still continue on to read those I disagree with), I noticed striking omissions: first, they only count top marginal tax rates, ignoring all other tax rates and deductions and other factors that were HUGE before the Reagan tax cuts.
(Let me give you a piece of advice Jon: when you read marginal tax rate comparisons of the 20th century without taking into account the large disconnect of significant reduction in deductions pre 1980's, be VERY VERY suspect. Also, while your at it, when you read income inequality comparisons without factoring in rising healthcare costs and other fringe benefits, be VERY VERY suspect. At that moment, be as critical with the source as you would be if it were from a rightwing warmonger. ;-) )
Second, it overly emphasizes the abnormality that was the post WWII era. This is a common theme among liberals: they argue that the post WWII era had both high marginal tax rates and high economic growth - so why not do high marginal tax rates now? Well the problem with that argument is a) the huge deductions that made the high marginal tax rates deceptive (effective tax rates were lower) and b) the rest of the world was following Chomsky economics - ie going leftist. So the United States, being the relatively more capitalist country, benefited from an abnormal influx of talented people and corporations. So its not apples to apples (not to mention many of the racist policies that are likely never to return...and should not return, that artificially raised economic growth during that time).
For the record, I don't really care what the marginal tax rate is either. If the marginal tax rate is 65% or even 100%, I am fine with that. All I care about here is the effective marginal tax rate - that can't, IMHO, go above 33%.
Regarding utopias: you keep speaking of this more egalitarian world that makes everybody better off...but you fail to point to any policy solutions that actually achieve that or example of a country that you actually agree with.In fact, I would argue that you can't. History has shown that it's no coincidence that the least egalitarian societies are also the best for the poor. The poor of the world themselves know this, see here, and it seems to be the general pattern going forward.
"The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery." -- Winston Churchill
Paul,
Read my last paragraph to Jon.
I think you were mainly responding to Jon but I will address a couple of things.
"But morals have to play a part."
Where do you get your morals? This is an honest question. I mentioned already that for me this term as used in every day language is somewhat meaningless.
You keep referring to effective marginal rate of 33%. Which, perhaps jokingly, you mentioned you derived from unions only allowing union workers to work 8 hours days. This is a non-sequitur but also completely arbitrary. If that is your limit - fine but to claim it is one founded on some moral principle seems tenuous to me. On an unrelated note - it is kind of ironic that most of the people I know who are in a union view themselves as conservative.
"Let's say we take your view to its extreme example, you want " a good society....child suffering to be minimized....don't want to see a lot of starvation."
Let's say tomorrow then, the government came to your house with guns, seized 90% of your goods and property, and gave it away to the very poor in Africa. Would you be for such gross injustices? They certainly would reduce child suffering and starvation. So why not?"
I get the point but a child in Africa is not part of "our" society. And to the larger point of incentive; which I think belies your analogy, we don't disagree per se. We probably disagree on the threshold where the disincentive becomes something actually counter productive (I hope I am clear).
"I might be moved to give a homeless guy some money, but he doesnt have the moral right to demand money from me."
Another straw-man argument to me. I don't no anyone who claims he has a *moral right* to demand money from you. What we do have is a democratic(ish) society that desires some things and not others. And if a decmocratic society (as a whole) desires to increase taxation (or whatever) to provide basic shelter for this person then it has done the moral thing (keep in mind I am a hybrid desirist). You are free to fight to oppose this as I am free to fight for it.
On a side note - I clicked on the link you provided earlier (The Economics of Fire Protection). I don't know exactly what you are advocating for as the piece itself, as I read it anyway, ends with an open question. One of there not being an obvious libertarian solution.
I did like this part thought
"Now, a fire breaks out at a home where the owner is not a member of either fire protection service. The owner offers to pay to have the fire put out. Do the two companies compete the price down to $10,000?"
Uh-huh. In the meantime while the owner barters with the two companies, the house has already burned down, the person caught inside has died and the house next door has now also caught. Oh and by the way that other house happens to use the fire dept the first homeowner did not choose. Hyperbole - with tongue in cheek.
Let's say tomorrow then, the government came to your house with guns, seized 90% of your goods and property, and gave it away to the very poor in Africa. Would you be for such gross injustices? They certainly would reduce child suffering and starvation. So why not?
Actually I know a guy with a family of 4 that makes really good money, but lives in a tiny apartment and sends the rest to these extremely poor people in Pakistan. Maybe I should do that. And maybe I don't because I'm too selfish. But stepping outside of my world, if I were like an alien that had the power to do whatever I wanted, I would probably look at the US and say, yeah, lots of their wealth is basically stolen from other states at the point of a gun. Not that each individual is directly responsible. I mean, my neighbor, with his pool in the back yard and multiple brand new cars, doesn't even know that much of his present prosperity is derived from foreign oppression. So if I'm that alien I probably would do some redistribution like that.
If that powerful alien came down and said that I must give away my wealth, but everyone else has to as well, I would not complain. I would say that yeah, we should not set up borders and say that everyone else is screwed. We should have an attitude that says we are all in this together. Frankly I would think such an action would be extremely beneficial. We really are. Today a tiny opulent minority controls the destiny of the whole world, and they may run us off a cliff in their search for short term profits. An attitude that recognizes we are all in this together may be the only thing that can save us.
But even this is not what I've been suggesting here. I'm saying that yeah, we should take more from the wealthy now. This hurts them short term, but long term they benefit. Long term all income groups experience a better life. Sure, today we could kick all the kids out of school and put them to work in factories. That would help the company stock presently. It's a cost adder to educate people. But long term, having invested in those children, those educated people will generate the ideas that will grow our economy and benefit everyone.
So sad that you grossly miss the point regarding Angry Bear. I know they are liberal as well, so there's no reason to pat yourself on the back for recognizing this. My point is you need to argue for a marginal rate based on some criteria and data. You just pull 33% out of a hat. At angry bear they set up conditions for which they define success and they test the different rates to achieve that. They may be totally wrong. Here you are arguing against their conclusion. That misses the point totally. I don't need to even read their posts to recognize this point, which is why I told you I'm not subscribing to their claim. I'm saying that claims about what you regard as the perfect rate need to be justified, not asserted.
Some points can be made without reading every link you provide. The fact that I didn't read one link you provided months ago of the dozens of links you offer doesn't change that.
I don't know why you say I don't offer solutions for creating a better society. You advocate no more than 33% effective top marginal tax rate. My point is that there is an optimal rate that will produce a better society and I don't know what it is, but we should try and decide what it should be based upon some criteria and test data, not simply pull it out of a hat. I think you are saying that you are offering real solutions and I'm not in that at least you have suggested a rate. But when you suggest a rate with no supporting evidence you might as well have not said anything. If I simply assert that 90% is the best does this mean I'm offering a real solution now? I don't think so. I think I need to show why 90% is ideal before my suggestion qualifies as a real solution. In the same way what you have offered is not a real solution.
I havent forgotten about you two, just got some unexpected family visitors yesterday and are occupying my time for the next couple days.
Ill hopefully respond this weekend.
Paul,
Where do you get your morals?
Its a fundamental instinct, I guess. Something on the same level as 'do no harm'. But if that doesn't convince you, how about something like this?
But even on utilitarian grounds, one could make a related argument: property rights have shown to be fundamental to prosperity around the world, and keeping the fruits of your labor seems to be part of property rights.
Lastly, I see property rights and fruits of ones labor as fundamental rights, similar to say free speech and religious freedom. So I dont buy the democratic argument. At some point, it's morally wrong.
You write, I get the point but a child in Africa is not part of "our" society. To which, I respond: so what? How is society relevant to "starvation" and "hunger"?
Jon,
But why wait? Why do something communally that could be done as an individual level just as well?
Btw, with this whole "our wealth at the expense of others" viewpoint, how do you explain the fact that the rest of the world is getting richer as well? In fact, global inequality has been shrinking dramatically, just as United States inequality has been increasing. How to explain that within your paradigm? I am genuinely curious.
Wait, so you're saying I should give more to the poor? Does that seem somehow wrong to you?
Just got paid last Friday. My monthly insurance premiums jumped a bit. 55% to be exact. That's a measure of inequality that EPI figures don't even account for.
Can't respond in detail to the rest, since I'm off on a short weekend trip. I will say though that I saw the Oliver Stone documentary called "South of the Border." He interviews Chavez and other leftist South American leaders. They're doing interesting things. Paying off IMF loans for instance. The failed coup attempt of Chavez from 2002 seems to have emboldened others. They are taking matters into their own hands. They are resisted by the media in their own countries, which are owned by wealthy plutocrats who advocate on behalf of American backed presidential candidates, some of whom barely speak Spanish. They are resisting, and accomplishing important things. There is progress in the world. Some places have grass roots/unionist type movements.
Such as Germany. Worthwhile article below.
http://www.alternet.org/story/147859/
This is how Wiki describes the Venezuela economy:
A recent International Monetary Fund (IMF) study qualified as "delayed and weak" the economic recovery of Venezuela in comparison with other countries of the region that had emerged from the world economic crisis "comparatively well" and were now recovering to a "strong rhythm". It forecast regional growth of an average of 4.0 percent this year and in 2011, while Venezuela´s economy will shrink by 2.6% in 2010.
This is also the general standard view of economists over all. But of course, you watched a movie, oh and the IMF is a bunch of corporate bought off economists anyway, and surely, so is American academia, so what do they know. It's Jon and his accountable-to-no-one movie producer that we should follow.
My prediction: with time, as Venezuela starts to show more and more the effects of the failed economic policies, Jon, Chomsky, and other "admirers" will claim that they never really supported Venezuela or Chavez anyway.
Its a fundamental instinct, I guess. Something on the same level as 'do no harm'.
Seems to me you are a moral subjectivist - what is instinctual to you may not be so to me.
But even on utilitarian grounds, one could make a related argument: property rights have shown to be fundamental to prosperity around the world, and keeping the fruits of your labor seems to be part of property rights.
With much of what you are saying I don't disagree with with one possible huge exception. The concept of rights. Absent a society or civilization that is willing to define what a right is, it has no meaning. I don't mean to get bogged down on minutia but absent some governing force (for lack of better word) you have no rights. Might makes right in such case. But that aside - I agree that "property rights" is effective in producing desired results.
Lastly, I see property rights and fruits of ones labor as fundamental rights, similar to say free speech and religious freedom. So I dont buy the democratic argument. At some point, it's morally wrong.
See my previous comments. These rights you describe as fundamental to me are special type of privilege. Not sure why you don't buy the democratic argument. I believe it is our constitutional democracy that helps guarantee them. Keeping in mind the constitution can be amended. It is highly improbably but it is possible these cherished rights could go away. Prohibition is an example of this.
You write, I get the point but a child in Africa is not part of "our" society. To which, I respond: so what? How is society relevant to "starvation" and "hunger"?
Point taken but your question was
"Let's say tomorrow then, the government came to your house with guns, seized 90% of your goods and property, and gave it away to the very poor in Africa. "
I just don't see why the US government would do so. And if it did it would be because we voted into office (collectively) the people responsible for it.
What happened to my response???
I lost one too
When you say "I'm genuinely curious" I'm assuming you genuinely are interested in my opinion even if it isn't as if I've written some sort of research paper. It's just my general sense, uninformed as I would be the first to admit it is. Kind of a "What do you think" type question. My answer is that I don't think there is nothing good in the world, and I would look to South America as perhaps a model for improvement. I haven't looked closely, but my sense is they can teach us a lot.
I have a documentary and you have a Wikipedia summary. So we're both pretty limited.
On the other hand we're talking about inequality, not GDP. These are very different things. Chavez does deal with capital flight. You offer to share the wealth with the population as opposed to handing it over to investors and yeah, they try to punish you with capital flight, and that hurts. He also has to deal with an extremely hostile media owned by the former plutocratic leaders. It's not going to be easy.
Are you suggesting that Chomsky has supported certain economic policies and switched when it was shown that they were a failure? What do you have in mind?
Not like America, which is all about free markets and non government intervention. For others that is, not for themselves. And especially not for large and powerful corporations. Like Boeing. Saudi Arabia is happy to buy Boeing jets. Provided his private jet is outfitted like Air Force One. Our government obliges. Free markets and tough love for them. Massive state intervention for us.
http://www.nytimes.com/2011/01/03/business/03wikileaks-boeing.html?_r=1&pagewanted=2
Regarding economic opportunity and morality, I think Krugman's point here seems very sensible. What do you think?
Jon -
Does blogger have an auto-spam filter? The post I alluded to as missing is now available (thank you). If there is a spam filter of some kind, are there keywords or anything that in the future I should watch out for?
Thanks,
I have a documentary and you have a Wikipedia summary. So we're both pretty limited.
You have a documentary that can be directed by anyone. For example, I could do a movie tomorrow showing the wonderfulness of Stalin. It could be completely historically inaccurate - and there is nobody to stop me. No accountability. Nothing. Just my own imagination.
Contrast that to Wiki. If I make an erroneous charge, it gets immediately changed. If we go back and forth trying to change it, its flagged as bias.
The two couldn't be more different.
On the other hand we're talking about inequality, not GDP.
Right, and GDP/capita is the most universally accepted measure of poverty and wealth. Income inequality is not even related to poverty (in fact, I would say it might be inverse related - the greater the income inequality, the less the poverty).
So again, yes we are talking about two different things. I am talking about actual poverty. You are talking about your hate for the rich.
Sure, Wiki articles are critiqued. That's a good thing and I think Wikipedia is a great resource. Can't movies be critiqued? Can't people talk about misleading things that Michael Moore does? I think they can. I think they do. So you have to look into things. Regardless we both have pretty limited information. I'm fine with that. Just expressing my general sense of things. I assumed that was what you were asking me for.
Why is the world getting richer, you ask? That's expected on your model and on mine. I expect slave societies to get richer, as they did in the 18th century. Not surprising. Not relevant either.
Paul, I am not sure why the spam filter grabbed your post. It seems that recently blogger is acting strangely. I guess offering a lot of hyperlinks does sometimes cause problems, but I see you don't have any of that. Maybe there's a temporary glitch going on. Hopefully blogger will fix this shortly.
Why is the world getting richer, you ask? That's expected on your model and on mine. I expect slave societies to get richer, as they did in the 18th century. Not surprising. Not relevant either.
It's not just that the world is getting richer, it's that world inequality is reducing. How do you explain that?
Quick recap here:
HP-How is it that worldwide inequality is reducing?
Jon-South America may hold some answers.
HP-But GDP is down in Venezuela.
Jon-GDP relates to wealth, not inequality.
HP-GDP/capita is the standard measurement of wealth.
Jon-Fine, you want to talk about wealth instead, wealth increased in slave societies. So what?
HP-But how is it that worldwide inequality is reducing?
I guess I'd suggest that South America may explain some of this. If your response is that GDP is down in Venezuela I'd suggest you look above for my response.
Actually, if you look at the data, Venezuela is making the region poorer (GDP down) so it would make world inequality increase, not decrease.
So again - how do you explain the reduction in world inequality?
Dropping GDP means dropping inequality? How so?
Actually, if you look at the data, Venezuela is making the region poorer (GDP down) so it would make world inequality increase, not decrease.
That does not, necessarily, follow. It is conceivable that if GDP is down that the poorer have gotten less poor and the rich have gotten less rich - by an amount more than the poor have gotten less poor. This would be less inequality.
I have no idea if this is the case. as I know next to nothing about Venezuela. Also Brazil is a bordering country and it has been doing well as of late. So the comment about making the region poorer needs further explanation, no? Maybe you meant region -> country (?)
World Inequality is a measure of the difference between the worlds richest and the worlds poorest. How do you measure wealth and poverty? It is primarily done by GDP/capita. Higher GDP/capita = higher wealth. Lower GDP/capita = lower wealth, poor.
Paul,
It is not country inequality that we are discussing here, but WORLD inequality. Granted, it could still be possible, but were talking giant reductions in world inequality...far more than most of these Latin American countries probably have in total inequality.
Btw, inequality itself is the least useful measure of poverty and economic progress. For example, if Bill Gates moved from the United States to, say, Cuba, their inequality would rise noticeably but nobody would say they are poorer because of it.
In fact, the opposite tends to be true - the higher the inequality, the more desirable is the area for the worlds poor.
I thought we were talking about the gap between the world's richest people and the world's poorest people. Not the world's richest countries and the world's poorest countries. You're talking about the latter and I'm talking about the former.
The latter is probably a lot of regression towards the mean. After WWII the US had half the world's wealth and 6% of the world's population. Comparing countries you'd expect to rest to start to gain.
The question is though, are those gains being funneled mostly to rich people or poor people. I thought you were saying that poor people were benefiting as well elsewhere in the world, unlike the United States. Venezuela could explain that, even if their GDP was dropping. Within Venezuela they may becoming more egalitarian. The rich could lose a lot and the poor could lose a little and inequality is reducing. A dropping GDP wouldn't tell us if that was true or not.
India as a whole may be growing faster than us. But within India, are the gains being enjoyed by the wealthy alone? I understand the growth in the # of billionaires can't keep pace with the growth in the # of suicides amongst farmers. India grows, but the wealthy are making a killing while the poor are getting destroyed. That's still a problem in my book. By your measures, HP, it would seem you would call it success.
It does compare countries as opposed to people. But the two measures are so close that they move in tandum. In the same countries where GDP is growing, so is life expectancy. Nutrition. Healthcare. Leisure. etc.
You keep using poverty measures ("poor are getting destroyed") and inequality interchangeably, when the two are far from it. For example, the United States is the country with the largest inequality - but its also the top choice to live of poor people around the world. Why do you think that is? This is not an anomaly either - as a rough rule of thumb, the more income inequality a country has, the better off are the poor.
In other words, poverty should be looked at by itself, not in relation to inequality. They really are not related (and if they are, its an inverse relationship).
To repeat a question I asked you before,
Regarding zero sum, it still implies that. Remember, I made the Google example above. I could have also made the J.K. Rowlings example. Or the Bill Gates example. Or Alex Rodriguez example. Or Johnny Depp example. Their gains are also our gains. Of course they get more, but they actually did the inventing. In other words, their gains do not subtract from our gains - in fact, they also make our lives better. Do you atleast agree to that?
I really want an answer to this question. It will help clarify alot.
I do agree that Sergey Brin has made our lives better, but while this can be true in his individual case it's not true in the case of other individuals. So for instance the founder of Blackwater has not made my life better despite the fact that he's struck it rich. Hedge fund managers that made huge bucks putting the whole financial system at risk and then forcing state bail outs have struck it rich at the expense of the population, like Eric Prince from Blackwater. Mining companies and fossil fuel companies rape the environment, and insofar as they can get away with it and avoid penalties this helps their major stockholders, the bulk of whom are among the super rich. Does this help me? I don't think so. So the individual case does not prove the rule.
What is the basis for your claim that the poor would rather come here than go anywhere else? Did you read the altnet article I provided? He makes the point that for the bottom 2/3 of Americans would enjoy better quality of life in various parts of Europe.
Check this out. Cuba getting more high speed internet thanks to Venezuela. Chavez helping the poor despite US opposition.
Also, what do you think of Krugman's thoughts?
We could go on and on about particular instances of the rich making us better or not - but is it safe to say then, that only some rich people harm the poor, in other words, income inequality does not necessarily mean harm to the poor?
I want to narrow down the disagreement. Do you atleast agree with that? In other words, lets just focus on people in the technology sector, movie stars, sports players (some would argue, the bulk of income inequality), book writers, and even some people in finance - can you agree that they also make our life better in the process of getting rich?
Do we agree there?
Now, onto your questions, What is the basis for your claim that the poor would rather come here than go anywhere else?
It's to show a general pattern, namely: the preferred destination of those who live in very poor countries (often egalitarian), is the United States and places like it. All of which, happen to be vastly unequal. The general point is that while you claim income inequality harms the poor, the poor seem to have a very different perception (doesn't their vote atleast count for something?). And its not just the poor overseas, its the immigrant poor in the United States as well. Immigration as a whole, tends to be from generally egalitarian societies to vastly unequal societies.
Regarding Europe being a better place to live...before I answer, I am curious Jon, what do you think I will answer? What do you think is the "standard" conservative answer to such a question? I ask this because the Europe vs the United States argument is very common in liberal vs conservative debates, and I want to use it as a proxy to see how much of the debate you have been familiar with (my hunch is very little).
So pray tell, what do you think I will respond?
I think you have the cart before the horse. It is not that inequality is harmful. It's that the US is institutionally structured to produce greater inequality and I think an alternative institutional structure would produce better outcomes.
In a totally free market society where private property rights is the over arching principle (and I know this is not something you advocate) what happens is those with resources naturally use those resources to press their advantage. That's a natural tendency. Some societies attempt to mitigate that some (like Chavez is trying to do) and some societies allow it more. The oligarchs in Venezuela don't like Chavez, but the mass of poor people do.
Bill Gates moving to Colombia isn't a problem. Coke subsidiaries killing union organizers in Colombia is a problem. Both do exacerbate inequality, but I don't object to the former. I don't object to all actions that increase inequality, as I've already stated.
The reason I ask for the basis of your claim regarding the poor preferring the US is that I'm not familiar with the evidence for that claim. So yeah, the fact that I'm asking what the basis for the claim is may be a clue that I'm unfamiliar with the basis of the claim. You have a "hunch" that I don't know. That "hunch" is informed by the fact that I asked you.
It's as if I ask you where the store is and you reply "I have a hunch you're ignorant and don't know where the store is." Yeah, that's why I asked.
Of course I'm familiar with general criticisms of Europe over the US, including high tax rates, sometimes high unemployment (though perhaps not as bad as us right now), slower economic growth rates. But those would not be a response to my question. The poor could prefer Europe because of that social safety net that is funded by high tax rates.
Okay, were making progress. Income inequality itself is not harmful. Great!
I'm curious Jon, you state:I think an alternative institutional structure would produce better outcomes.
What is that "alternative institutional structure"??? Give me some actual policy preferences.
Regarding poor people, you misunderstood me. I was asking for what you think the other side would respond regarding your alternet article link - not poor people preferring the United States. The alternet article is about Europe being a better place to live for 2/3 of Americans. That's why the paragraph where I asked you for what you think I would respond is preceded by "Regarding Europe being a better place to live". Sorry I wasn't clearer before.
The reason I am asking for what you think I would respond is that you mentioned the article twice. The first time you referred to it as a "Worthwhile article". That gives me the impression that you read it, weighed the counter argument, and still found the article persuasive. So I want to get a feel for just how much you know about the counterargument (again, my hunch is not alot).
So please, what would say a Milton Friedman respond to such an argument?
Regarding the poor preferring the United States, the proof is in the link I provided when I made the claim originally (yet another example of you not reading other peoples links). But here it is again, so you dont have to scroll up.
Comment keeps getting spam filtered. Please approve.
You and Darf continue to ask for suggestions and I continue to repeat them, but I'll do it again.
1-The Bretton Woods financial framework imposed limitations on things like day trading. I'm not exactly sure what the specifics were. It may have been a small fee to make an exchange. The purpose of this is to discourage immediate punishment that can come with policies instituted in a democratic way that serve the public interest. For instance suppose a state increases penalties for environmental destruction. Immediate capital flight punishes that state. Capital flees to where environmental protections are more lax. So corporations will play one state off of another, driving away environmental protections to improve profits. Basically it undermines democracy. You end up with what some economists call a "virtual Senate" of investors and lenders that have a moment by moment referendum on government policy. A trade tax effectively puts a little sand in that mechanism, slowing it, but not eliminating it. An investor now has an incentive to think more long term rather than short term, and democracy can function.
2-I would reverse the rulings that call corporations persons. Corporate personhood allows governmental policy to be driven entirely by these entities which have a profit motive only, not humanity. The CEO of Shell Oil might be a good guy, but he has an institutional requirement to maximize profits. That may mean killing Nigerians. As an individual he may not prefer that policy, but if he doesn't pursue it he'll be replaced and his replacement will if that action maximizes profits. To pursue that he must lobby our government. If corporations were real persons we'd consider them psychopaths. Why put so much power to control public policy in their hands? This action would basically be a large move towards democracy and away from oligarchy. With democracy of course we'd see a lot of specific policy changes, like single payer care, assistance to the poor, etc.
3-I would spend public monies on high tech industry, but not necessarily gearing that towards war. So I wouldn't fire all Boeing employees. I would simply say that instead of developing bombs they can have an opportunity to develop other things that serve the public interest, as opposed to things that harm the public interest, like their wars. There are many good things that could be accomplished instead. And public funding is key to the success of some things, like computers and the internet.
4-I would make our tax system more aggressive instead of regressive. Again, this would probably follow immediately from the change in lobbying and consequent increase in democracy.
Here's something I'd change that I haven't mentioned before.
5-Our public school system has been ruined by business, which seeks to create obedient robots good at taking orders and bad at independent thought. That may sound conspiratorial, but this is the stated objective of many that were involved in the imposition of compulsory education. All the money in the world won't change the institutional structure which is designed to make people stupid. And it works as we can see. We're getting more and more stupid every year. I'll have more to say about this in an independent post, but for now I'll say that I'd make changes which would reduce the costs, and probably provide secondary education for free.
So there's a few specific changes I'd start with.
With regards to Europe, yes you are right that polls show foreigners do say they would prefer to move to the US. The US is glamorous. Hollywood and all that. Great PR which sells it. I can grant that people would indicate they would like to move there above other places.
What I'd like to know is if you disagree with the altnet article that says in fact poorer people will have a better quality of life in Europe. How would a right winger like yourself react? I suppose with statement like what I made last time. Their economic growth has been slow at times, their unemployment rates have been high (not as high as ours today probably), taxes are high, etc.
The Europe vs USA discussion could really blow up this comments section. I am going to try really hard to give you what I think are the main points, but really, it deserves a separate post. Even many separate posts. It's alot more entailed than the income inequality debate (which, as you can see, is already pretty entailed as it is).
So here goes the VERY short version: basically, there are two views, two paradigms, two "visions" of an economy. The first, is generally considered left: an economy with a large safety net, strong unions, and generally high taxes. The second, and my preferred, is considered right: an economy with a large percentage of immigration, weak unions, weak safety net, and generally low taxes. The leftist economy tends to grow slowly. The rightwing economy tends to grow in a boom and bust way, with higher average growth than the leftist economy.
The Europe vs USA discussion could really blow up this comments section. I am going to try really hard to give you what I think are the main points, but really, it deserves a separate post. Even many separate posts. It's alot more entailed than the income inequality debate (which, as you can see, is already pretty entailed as it is).
So here goes the VERY short version: basically, there are two views, two paradigms, two "visions" of an economy. The first, is generally considered left: an economy with a large safety net, strong unions, and generally high taxes. The second, and my preferred, is considered right: an economy with a large percentage of immigration, weak unions, weak safety net, and generally low taxes. The leftist economy tends to grow slowly. The rightwing economy tends to grow in a boom and bust way, with higher average growth than the leftist economy.
So which one is better? Well that depends on personal preferences. The answer will be different for each person, depending on their personality. It would be like asking someone if they should join a union. If you are ambitious, entrepreneurish, and generally a high achiever, you would prefer the "rightwing economy", where it's easier to strike it rich (and, similarly, you would tend to oppose union membership). If you are someone who, for example, prefers small gains over large risks, and doesn't have any large ambitions to be CEO one day, you just want a steady growing pay - then the leftist economy is better for you (and, similarly, you would probably tend to favor union membership).
It's kinda like asking someone should you invest their money in stocks or bonds? There is no right answer...it depends on the personality. Stocks give you better long term gains, but they are alot riskier. Bonds are safer, but you sacrifice long term growth. It depends on the person (and age group - which is why the young tend to prefer the USA, while the older Canada in my link above).
And here is the important thing you have to notice about these two economies: they are mutually exclusive (please, click on the link and read the blog- atleast this one time...its very pertinent to this discussion ). You can't have a large safety net, for example, and a large immigration class. And you don't need high taxes if you don't have a large safety net. And you dont get low growth with low taxes. etc. It's all a domino.
And you see this in Europe. Germany, for example, is not very friendly to the immigrant Turks (only recently, beginning to change, see here). And Germany, like the Scandinavian countries, are extremely homogeneous (White). Much of the "problems" of the United States are really just problems of immigration - education, crime, poverty and to some degree, inequality. If you compare "White of German descent" in the United States, with "German" in Germany, oftentimes, you get similar results (for a recent example, see this).
So going back to your original question: I agree with the alternet article, in the sense that, the author probably is better off in Germany. I would say the same about the average White union member as well. But the question is: does this apply to everyone? And on that I would say no. In addition to the exceptions mentioned above, if you are a minority, the unemployment rate is significantly higher in Europe than it is in the United States. And strong welfare nets notwithstanding, having a job means alot (Highly recommended article here). It's a source of self respect, pride and happiness.
And don't say that 'a couple percentage points of unemployment is worth it', since even a couple points of unemployment could have a drastic affect. An economist explains: 'Think about how hard it was to find a job back in January 2009 when our unemployment rate was 7.2%. The plight of the job-seeker wasn't 30% worse than it was in May, 2008, when the unemployment rate was 5.5%. It was probably more like two or three times worse. Now imagine turning 7.2% unemployment into a way of life. It's pretty awful to imagine, isn't it? Well, you don't just have to imagine it, because in France and Germany, 7.2% is normal. The horror!"
Liberals often speak as if everyone was a white union member (take the minimum wage debate, for example), but immigrants and minorities count as well. In fact, from a purely humanitarian ground, I would say the rightwing model of taking in more immigrants and treating them better is the more humane one.
So to summarize: the leftist model is better for low ambition middle class citizens. It's worse for immigrants and minorities of all stripes, and the bottom and top of the economic ladder.
HP -
If you don't mind I'd like to go back to a claim you made earlier on
But what he forgets to mention is the GINORMOUS tax deductions that were available before Reagan's tax reforms (ie the 1950's). So while on record the tax rate was higher, few if any actually paid it, after deductions.
I am focusing on the GINORMOUS claim. I agree there were deductions that one could take back then that one is no longer able to but I am skeptical about the GINORMOUS claim. Can you enumerate some of these deductions?
Moving back to income inequality:
I'm curious Jon: what do you consider a better society, the roughly egalitarian Cuba, or the vastly unequal United States? Why?
Also, there is a point you have made repeatedly that I've been wanting to challenge, you write, Why is the world getting richer, you ask? That's expected on your model and on mine. I expect slave societies to get richer, as they did in the 18th century. Not surprising. Not relevant either.
But this is NOT expected. In fact, if you look at history for hundreds of years before the 18th century (specifically the industrial revolution) all societies, including those of slaves, were stagnant. So why the change post 18th century?
I know the answer I would give...but I want to know how you see it.
The claim that Americans oppose a welfare state basically because of racism is not clear, because it seems the American people in fact support more welfare state/New Deal measures. It's true that in fact we have a limited welfare state, but this is over the objections of Americans generally. See Chapter 1, footnote 7 of Chomsky's Understanding Power. Also the link within that footnote.
Your argument amounts to a lot of basic disagreements between left and right. You say a less socially democratic society produces greater economic growth. So risk takers prefer the US to Europe. But following the imposition of New Deal measures and Great Society measures was the golden age of American economic growth. The period from just after WWII to the mid-70's was the gang busters economy. It's with the imposition of right wing economic policies since that time and the dismantling of the welfare state that we've slowed radically.
Again, what we have here is a case where the theory sounds plausible, but the cold hard facts undermine the theory.
Which is a better society, Cuba or the US? That's too complicated a question to answer. In what sense? Where would I rather live? The US. Cuba has been subjected to years of strangulation by the world's most powerful military and economy. Cuba has been subjected to more terrorism than any other state in the modern era. Other states can only engage in commerce with them if they are willing to be subjected to economic penalties imposed by the world's most powerful economy, so yeah, things are tough there. They also have very limited freedoms. That's not surprising. When a state is attacked the government often curtails the people's freedoms. With the relatively minimal attack the US was subjected to we've lost all kinds of freedoms. It would be much worse here if we were subjected to the kinds of things tiny Cuba has been subjected to.
You say all societies had stagnant economies prior to the Industrial Revolution. That's just false. Despite growth this doesn't mean there weren't better alternatives. Slavery isn't justified by the fact that economic growth occurred and slaves were better off in later years than in earlier years.
What do you think of the Krugman link I provided?
Posted on behalf of HP Part 1
I am not arguing that on paper people don't support a welfare system, I am arguing that the welfare system and immigration (or a diverse economy in general) have an inverse relationship. The more you get of one, the less you get of the other.
My proof of that is threefold: The first, is the book by Political Science professor at UCLA Martin Gilens' Why Americans Hate Welfare. The second is the large amount of people that agree with me, people like Paul Krugman, Matthew Yglesias on the left (there are many others, I just took two prominent examples), and Jeffrey Miron, David Friedman (son of Milton Friedman) and here, and even Milton Friedman himself, on the right.
Third, and the strongest argument, is the countries themselves. If you look at a world map, you will notice that the more pro-immigrant the country, the less the welfare and safety nets. The more welfare and safety nets, the less the immigration. And don't point to the United States as an outlier, the Scandinavian countries - Sweden, Norway and Denmark - are model examples of welfare and social safety net countries in liberal circles, and they also happen to be the most racially homogeneous.
Jon makes a common argument when he writes, "But following the imposition of New Deal measures and Great Society measures was the golden age of American economic growth. The period from just after WWII to the mid-70's was the gang busters economy."
Posted on behalf of HP Part 2
I have answered this same question atleast twice (see here and here) to only be ignored by Jon. Maybe this time he will actually respond to my rebuttal? So here goes:
Does anybody even remotely familiar with history notice something unique about those dates? Those dates were the heart of the cold war, up to the final years of the spread of communism. Think about how this is relevant: while the rest of the world was headed towards Chomsky economics, the USA - though certainly far from pure capitalist ideals - was becoming the de facto capitalist country of the world. So what would you expect? Companies came to the United States in droves - they had little other options. The United States was the best place, for example, to open up manufacturing plants that require a large amount of upfront costs and are risky to open up in countries where the government could decide tomorrow to cease control. These corporations naturally looked for a country that had strong property rights, the rule of law, and atleast rudimentary market policies. No other country fit the bill more than the United States during this time. The United States then become the bedrock of technology, education, and progress.
So it makes sense that everybody in the United States, especially those at the bottom, would benefit. But then what changed around the 1980's? Jon points to income inequality resulting from lower taxes and the destruction of safety nets. But what also happened, and I would argue is more important, is the beginning of the fall of communism, culminating in the eventual fall of the USSR in 1989. As communism started to break down, poor countries than started opening up there borders to free trade. You started to have the East Asian tigers prosper in the 1970’s and into the 80’s. Then you had the rise of China and to a lesser extent India. So the United States was no longer the preferred option. You had many other countries to compete with now, so our artificial edge began to disappear.
Posted on behalf of HP Part 3
Lastly, I would say that a good chunk of our growth from post WWII to 1980 was based on racist policies and other policies that we don’t want to repeat again (which, btw, further confirms my argument: you could only have strong unions during a time of low immigration - read the link for more). I know Jon doesn’t like reading from sources who don’t agree with him, but I challenge him to read this post (click here) and see if it doesn't challenge the presuppositions he holds so dearly.
Now, back to income inequality, Jon writes: Which is a better society, Cuba or the US? That's too complicated a question to answer. In what sense? Where would I rather live? The US.
Can you be more specific? Why do you prefer to live in the United States if the United States has vastly more income inequality than Cuba? What is it about Cuba's economy that makes you prefer the United States even with our vastly unequal wage growth?
You write, You say all societies had stagnant economies prior to the Industrial Revolution. That's just false. Okay fine. Let me ask the question a different way (My point is generally correct, I just needed to go back a little further and quantified it a bit, see here). What would you prefer, living "as a slave" in the United States with its vast income inequality, or say, living in Mexico, with lower income inequality? Why?
You ask about the Krugman article, and on that there is more room for agreement. Personally, I don't have a strong opinion on basic safety nets, one way or the other. Except to say that they should be extremely progressive. We shouldn't be paying for the healthcare costs of Warren Buffet, simply because he qualifies for Medicare for example*. But whether we should have medicaid, or social security, for those at the bottom, I am much more open to. I haven't quit decided which way to go on that. I'm persuaded by arguments like this**, but at the same time don't know if we would have, or even should have, the political will to just do nothing. It's still an open question for me.
Posted on behalf of HP Part 4
*Some of my friends claim that the difference between conservatives and liberals is in the question of "whether we should provide government services for the poor", my response is always to point out that the better question that splits the ideologies is "whether we should provide government services for the rich.
** One of the strongest arguments against social safety nets is this: "Every time the government takes some of the trouble out of performing the functions of family, community, vocation, and faith, it also strips those institutions of some of their vitality—it drains some of the life from them. It’s inevitable. Families are not vital because the day-to-day tasks of raising children and being a good spouse are so much fun, but because the family has responsibility for doing important things that won’t get done unless the family does them. Communities are not vital because it’s so much fun to respond to our neighbors’ needs, but because the community has the responsibility for doing important things that won’t get done unless the community does them. Once that imperative has been met—family and community really do have the action—then an elaborate web of social norms, expectations, rewards, and punishments evolves over time that supports families and communities in performing their functions. When the government says it will take some of the trouble out of doing the things that families and communities evolved to do, it inevitably takes some of the action away from families and communities, and the web frays, and eventually disintegrates." Read the full article for more.
Your links basically argue that the reason the US has less welfare programs is because the US is less homogeneous and welfare programs aren't preferred in non-homogeneous societies. But my point is this assumes that the policies reflect the desires of the population. In fact they don't. So it's not that we lack welfare because people are racists. We lack welfare because policy doesn't reflect public sentiment.
You're right that my recent comment did ignore one of your 10 page replies from long ago in which you argue that the cause of the economic downturn in the US is the collapse of the Soviet Union which would occur 10 or 15 years into the future. I continue to assert that the post WWII era up until the mid 70's was the golden age because I find your appeal to the 15 years into the future cause to be wildly implausible.
Your second link in which you claim to have replied to this point in fact does not reply to the point. You say that the top marginal rates from the 40's to the 80's are misleading because of the many deductions available. That doesn't change what I said. The welfare state and regulations have been dismantled starting in the mid 70's and moving outward. That has coincided with our economic downturn. I didn't claim that top marginal rates changed.
Though you should quantify the effect. Deductions may have been available, but what was the net effect on the tax rate of the wealthy vs the tax burden of the poor. I'd be curious to know.
I know if I only read 10 of the links you provide, as opposed to all 15, I'll be criticized for not being willing to look at the opposite side of the coin. Though I may find after reading it, as I did with the link above which you claim replies to my argument about prosperity from the 40's to the mid 70's, that the link had nothing to do with the issue and I've wasted my time. Tough to win in this environment.
But I took your challenge and read your 3 page Reason link. A lot of it rehashed prior arguments we've had. Immigration is the issue. Marriage preferences. He says that unions can't complain because their have been no changes to major labor law. The Wagner Act hasn't been repealed. There's no policy explanation. The difference is Reagan announced that he simply would not enforce the Wagner Act. There may not have been a policy change, but there was an enforcement change, and that's all the change that is required.
Check out for instance this reference to a Business Week article which frankly talks about "illegal firings." That is, firings of union organizers that are illegal under the Wagner Act. They aren't even hiding the fact that they are simply breaking the law. That's how you undermine union work even if you don't have a policy change.
Why prefer the more unequal US to the more equal Cuba? Because being bombed sucks. They may have good products that under normal conditions they'd be allowed to trade. Sugar. Cigars. Under normal conditions they could sell a lot of sugar and buy a car with the proceeds. But the US blocks other nations from trading. So Cuba has lots of cigars and few new cars. It's pretty obvious why those conditions make for a less pleasant society and why I'd rather live here.
Of course I'm a professional and fortunate. If I were a 9/11 first responder suffering health problems and lacking medical coverage I'd probably get in that both with Michael Moore and go get medical treatment from Cuba, which is quite outstanding when you consider how much the US blocks their ability to get medical supplies. They treated the 9/11 first resonders for free whereas back in the US, the richest country in the world, those people were left out in the cold.
I don't know why you are saying your point was generally true with regards to the improvement that sometimes occurred in slave societies. The reality is my general point is true. You must at least agree that in SOME slave societies life got better for slaves. This is not an argument for slavery. Right? So it doesn't matter if everyone's economic situation is improving. That doesn't mean that there isn't a better alternative system.
Meant to say "get in that BOAT with Michael Moore."
As to whether I'd rather be a slave in the US or free in Mexico you would have to give me additional details. Do you mean today or back when slavery was legal? If back when slavery was legal, what year? Where in Mexico do I live? There are a lot of details that would affect my answer. Not sure I see the point of the question though.
HP Response 1
We can leave the immigration vs welfare/social safety net discussion alone for now. I don't want this to blow up. Suffice it to say that I am making more than a mere "people won't want it" argument - I am making an argument that its plain incompatible, even if people wanted it. The two can't coexist in any meaningful sense...I've even provided links from economists on both sides explaining that very thing and shown that in fact, that is the reality of the situation thus far. Make with it as you wish.
You write, ...in which you argue that the cause of the economic downturn in the US is the collapse of the Soviet Union which would occur 10 or 15 years into the future.
I know you disagree with my argument. I disagree with yours. The question isn't whether you agree or disagree, the question is why you disagree. To be honest, I find much of what you write 'wildly implausible' as well. But I don't just state that and move on. I make an argument. So please, make an argument. Do you deny that the United States, during the period after WWII and up until roughly the rise of the Asian tigers, enjoyed a unique place in the world? Being, as I argue, 'the de facto capitalist country of the world'. Do you deny that this would artificially raise our productivity vs others? In other words, this proves the rightwing economic policy: the country that followed more closely Milton Friedman economics (and shunned more so the collectivist, Chomsky economics), of the time also enjoyed the largest growth. What part of this do you disagree with?
Second, do you deny that competition (ie other countries, especially the Asian tigers and later China and India), reduces the profits of a de facto monopoly? Do you deny that these countries emerged during the late 1970's and early 1980's? Do you deny that they would present serious competition to the United States? I mean, make an argument here. Don't just assert. Nothing I am arguing is controversial, historically. It's all basic stuff. So I want to know what part you disagree with.
Third, it's also false to claim that I have some type of 15 year time lag. The historical alignment is nearly one-to-one. During a time when the rest of the world was going communist or atleast leftist (post WWII to say 1980's) the US enjoyed growth. During a time when countries were abandoning communism (late 1970's and into the 1980's), the US started to lose that artificial growth. It aligns perfectly. Where is the lag?
Regarding the article I provided (btw, I read every article you link to, you dont even have to prod - I like reading those I disagree with), you wrote, A lot of it rehashed prior arguments we've had. Immigration is the issue. Marriage preferences. He says that unions can't complain because their have been no changes to major labor law.
HP Response 2
Here are the main takeaway points from the article I asked you to read: the era was plagued with "highly restrictive immigration policies" that allowed unions to boom (surprise, surprise! - unions prosper only in a low immigration environment - who would have guessed???), limited competition, and resulted in lower inequality. This "ancient form of group identity" permeated all aspects of life, not just racism but sexism as well, and the culture that it created - of limiting immigration, women participation in the labor force, among others - was the underpinning of this grand utopia that leftists yearn for. That has gone and will never return (hopefully!), therefore neither will the utopia.
Regarding union law "enforcement change", you claim that modern day examples of "illegal firings"proves it, but it does nothing of the sort. Or do you deny that there were "illegal firings" as well during the WWII to the 1980's? "illegal firings" have been part of life ever since unions existence - as long as unions cost companies money, there has always been an incentive to eliminate their power, and "illegal firings" has always been one of the options. You have yet to show proof that its more so today than yesterday.
Secondly, even if it is more today, that fits with the main theme of the article - namely, that competition has gone up since the 1980's and above (immigration, women in workforce, etc) and that has put pressure on companies to limit union power even more. In other words, "illegal firings" maybe be an affect of more competition, not necessarily of a change in enforcement.
You write, Why prefer the more unequal US to the more equal Cuba? Because being bombed sucks.
Forget the reasons why Cuba is poor - assume its a different country even, if that makes it easier. Just keep their a) poverty constant and b) equality constant. Assuming those two remain the same - where would you rather live? And why?
You write, If I were a 9/11 first responder suffering health problems and lacking medical coverage I'd probably get in that boat with Michael Moore and go get medical treatment from Cuba, which is quite outstanding when you consider how much the US blocks their ability to get medical supplies.
I'm not sure, and I wanna be sure, but do you believe that their quality healthcare is comparable to ours? If you believe this, I want you to say it. Do you? I'm not talking here about access to healthcare - but the actual quality healthcare, is it comparable?
Regarding slave societies - I basically believe that slave societies and non-slave societies alike, generally showed a very low growth rate for most of history up until about 150 years ago (give or take a 100 years, depending on the country). I linked to proof of that in my response (see again here). And yes, I agree that slavery is wrong, regardless of the growth. I just think it absurd to equate free citizens under a system of inequality with any form of slavery. The two are so distinct that it boggles the mind how they can even be analogized.
Regarding Mexico, I mean today.
HP -
source - http://www.indiana.edu/~econdept/workshops/Fall_2007_Papers/Crafts_ncgrowth.pdf
There is a table at the end of this link - disclaimer I did not read the doc and I don't know if it is reliable (I am assuming it is). Anyhow this table says that GDP growth in Western Europe from 1950-1973 was (if I read it right) 4.06% per year vs the US's 2.45. From 1973 to 2005 it was 1.86% to 1.91%
I'll admit to confusion on my part in that it at times feels you are making an implied claim that Jon is a full blown socialist. Maybe that is besides the point. So let try to clarify some things for me -
when you say "he country that followed more closely Milton Friedman economics (and shunned more so the collectivist, Chomsky economics), of the time also enjoyed the largest growth. What part of this do you disagree with?"
Where does Western Europe lie in your scale. Where do you think Jon lies?
And to Jon, where would you say you lie?
This "ancient form of group identity" permeated all aspects of life, not just racism but sexism as well, and the culture that it created - of limiting immigration, women participation in the labor force, among others - was the underpinning of this grand utopia that leftists yearn for.
For me this paragraph is a fallacy of equivocation. But as to not get bogged down on trivialities let me cede for sake of discussion much of the above with one exception. I don't know who these leftists you keep referring to are.
My hunch is that the desire for a stronger labor movement is to counteract what is (currently) an incredibly strong corporatist movement. Do you disagree that corporations have a lot of power (more so than organized labor)?
is there any irony in that (generally speaking) it seems it is conservatives that actually yearn for those times - though I'll grant you not the labor unions.
It is also ironic because by your own words you want to use animosity (bad choice of words?) towards others (immigrants) as a means to eradicate a safety net. That to me you is a problem. (wrongly) Don't help educate those who wrongly feel this way, use them as a means to an end.
As an FYI - on labor movement I am currently in the neutral to slightly pro camp. I am trying to keep on open mind on this. No claim as to how successful I am at keeping my mind open :-)
Sorry about the spam thing Paul. Not sure what's going on.
And the thread is not dead to me. I just got busy, but I'm jumping back in here.
As far as where I lie on the scale of full blown socialism, I'm not even sure myself. I like a lot of leftist economic thinking, but this is not to say I like all kinds of regulations and beuracracy. I think the central tenet of socialism may in fact be really smart (worker control of industry as opposed to capitalist control). The central point though is that I think concentrated wealth tends to use their power to extend their wealth at the expense of the public, and I think that needs to be resisted. Right now the government is the only way to do it.
HP, you seem to think that if I ever let a discussion end without getting the last word that this is some sort of character defect on my part. I disagree. You know I don't agree with the claim that the cause of our economic downturn is the collapse of the Soviet Union or the fact that we were MORE like Milton Friedman would suggest from 1945 to 1975. You act like because I failed to deny that argument in one thread, I'm obligated to concede your point forever more even though I've strongly disagreed in other threads. That makes no sense.
Do I deny that we were the 'de facto" capitalist country in the world? Absolutely, if by capitalist you mean free market/Milton Friedman-esque. Extremely progressive taxes. Huge publicly subsidized high tech industry. The Great Society. Highly regulated financial markets. Import restrictions.
What did in fact get a heavy dose of Milton Friedman would be Russian after 1989. Not going so great. These days sex slavery is a way of life for huge numbers. The UN Development Program estimates tens of millions of excess male deaths during the 1990s, on the order of Stalin's purges. This is the world of forced free markets, much like the rest of the third world.
So you've pointed to various causes for the increase in inequality. The fall of the Soviet Union (as if all the prosperity fled to them. They are a train wreck. And it's too late.). You point to marriage preference, divorce, single parenthood, immigration. It's just kind of all over the map. None of these things correlating real well in my opinion. Now it's this very vague reference to east Asian tigers emerging in the late 70's and early 80's. You've got to get a little more detailed here and explain what you are talking about. The Japanese, with their enormous state sector and import restrictions? S Korea with it's death penalty for capital flight? You're telling me to make an argument and you're throwing out very vague general statements disconnected with any linear logical sequence or argument. I have no clue what you mean.
You say as the rest of the world has moved away from Communism this is the cause of our woes. South America has been moving left steadily for years. Take a look at Norway. Massive social state. Very progressive tax structure. Huge growth. Startups love it.
To me the US has been overthrowing leftist governments for years steadily since WWII. I can't point to 1975 as some sort of pivotal year away from leftism. Chile was 1973 but they've since had massive state intervention in the economy. 1989 is the only conceivable turning point. And as I said it's not like the Soviet states have had some sort of influx of prosperity as they've embraced Milton Friedman. In fact it's more like they've been through a war.
Regarding union law enforcement you say I must show that it's different now than it was yesterday. That's exactly what the link I provided showed. Take a look again, but read it all. Maybe you only looked at the first sentence because that's what I referred you to.
Union firings and illegal activities did in fact continue not because profit margins were slim. They continued while profits were enormous. And that's to be expected. Our system results in margins that are never enough. If you made 20% but could have made 25% then of course that's disappointment. I'm going to hold off on sources for this because it's late, but I can get them.
Cuba's poverty is a function of the warfare perpetuated against them. So yeah, I'd rather live here than in poor yet more equal Cuba. But if you took away the warfare perpetuated against them they are a totally different country. Even you would have to admit that. How successful they would have been we can't really know.
Some people were better off getting care in Cuba than the US. For instance some 9/11 first responders had conditions that weren't suited for the emergency room, where they can get free care by law. They got better care in Cuba than they were able to get here. That's just their individual case. That's my point. It very much depends on how much money you have and what your ailment is. If you make $30K and you have chronic, but treatable pain then you're probably going to get better care in Cuba. If you are a professional with full medical coverage, as I am, then you're better off here. What we pay though is outrageous. According to the World Health Organization's rankings, which I've linked to many times and am too lazy to find right now, the US was ranked something like 37 out of the 100 or so countries ranked. Cuba was 39. I think the embargo has taken it's toll though over the last decade so they've probably dropped since then. Still, pretty good when you consider the economic stranglehold they are subjected to.
What are you talking about with "equating" slaves and free people? Nobody did that. Nobody said they are the same. I'm saying that just because growth ocurred in slave societies, which it did, this doesn't justify slavery. Growth occurs in our society. This doesn't mean we couldn't improve on the system.
Posted on behalf of HP 1
Paul,
I only have a minute...but let me reply anyway.
Anyhow this table says that GDP growth in Western Europe from 1950-1973 was (if I read it right) 4.06% per year vs the US's 2.45. From 1973 to 2005 it was 1.86% to 1.91%
This is indeed contrary to what I had believed. I haven't opened the link, but this deserves further inquiry. If true (which, frankly, I doubt), it poses a problem for my argument and Jon's.
Where does Western Europe lie in your scale. Where do you think Jon lies?
I would consider Western Europe overall capitalist as well. It's just of a more watered down version. Kinda like Democrats are to Republicans - both capitalist, but Democrats are more watered down.
When I say "the collectivist, Chomsky economics" I mean basically communist - USSR, China, North Korea, etc. While others didn't complete go all the way, they teetered on the edge - and that certainly had an impact on their economy (just as, for example, Chavez is having on Venezuela's long term growth).
And regarding Jon, I believe he is in fact a full blown socialist, he just hasn't followed his logic completely through yet. I don't think he knows enough basic economics to stop him from going too far into socialism.
Eventually (or maybe already so) he will just coach it in much more acceptable terms ("USSR wasn't really communist", "I want a Democratic socialism, not a dictator one", "real socialism is control by the workers, historic communism - except for very small pockets here and there - never really tried that" etc, you get the idea).
Do you disagree that corporations have a lot of power (more so than organized labor)?
True - but corporations have a check, competition. What is the check on unions? Also, corporations, at their best, actually produce value, a good, something. What do unions produce? Whatever they garner for their members, they take from other, less paid workers.
I am reminded of a famous Milton Friedman quote on unions:
“If unions raise wage rates in a particular occupation or industry, they necessarily make the amount of employment available in that occupation or industry less than it otherwise would be — just as any higher price cuts down the amount purchased. The effect is an increased number of persons seeking other jobs, which forces down wages in other occupations. Since unions have generally been strongest among groups that would have been high-paid anyway, their effect has been to make high-paid workers higher paid at the expense of lower-paid workers. Unions have therefore not only harmed the public at large and workers as a whole by distorting the use of labor; they have also made the incomes of the working class more unequal by reducing the opportunities available to the most disadvantaged workers”.
Posted on behalf of HP 2
But don't get the false impression from this that I think corporations are saints, I don't. In fact, I agree with Milton Friedman who said that the greatest threat to capitalism were corporations. But it's precisely because of my fear of corporations that I have the opposite political views that Jon does - because corporations have so much power, you want to reduce the power of government.
Will Wilkinson explains:
They also keep banging straight into the problem that if government is empowered to heavily affect people’s fortunes, then people with the biggest fortunes will have the most at stake when it comes to influencing government. The idea that the government should do much much less is completely unacceptable, so they are left chasing their tail — trying to get money out of politics without simply increasing the incentive for money to get into politics — with mounting indignation.
Leftists want government to come in and save the little guy - but instead of doing that, government is constantly captured by the rich. Jon knows this. He deep down hates this. But what is his solution? Give the government more power. When it continues to fail to meet his ideals, he responds by wanting to give government even more power. It's a belief that basically has no ability to be proven false - a blind faith in the government, religious in nature.
What has history shown? That more government is the solution? On the contrary, more government has always been the problem. It has always been captured by special interests. Even when Democrats controlled the presidency, and both houses of congress, it was still captured by business (do me a favor and read this post).
When Venezuela goes off the deep end, Jon is going to argue that they abandoned their ideals, that only if Chavez had more heart, more compassion, more strength, and I am going to respond the way history has to past socialist proponents:
Posted on behalf of HP 3
"Since the collapse of the Soviet empire, many defenders of socialism have argued that dictators, including Mao, Stalin, and Pol Pot, were aberrations; they took Marx’s ideas in the wrong direction. They claim that nationalization of the means of production (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 50 years later, Hayek’s argument holds. Every socialist regime tends toward authoritarianism of some sort.
Chavez reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the Left who supported him. Unfortunately, what the proponents of socialism again and again fail to realize is that it is the message, not the messenger, that is embarrassing."
This is precisely the utopianism I was referring to above. Jon hopes the world to be a certain way, but it isn't. Instead of dealing with the world the way it is, he pushes on to the way he wants it to be - only to be dealt setback after setback, by mans nature.
You write, It is also ironic because by your own words you want to use animosity (bad choice of words?) towards others (immigrants) as a means to eradicate a safety net. That to me you is a problem. (wrongly) Don't help educate those who wrongly feel this way, use them as a means to an end.
I don't know if you can tell by name but I am in fact a child of illegal immigrants. I love immigrants. It would be my wish that the world would embrace immigration. But it's an ingrained human trait to oppose those different than us. It's an evolutionary survival technique probably as deep as child rearing itself. I am not arguing the way the world should be, I am arguing the way it is. When you factor in a zero sum fixed pie ingredient (government, welfare, social programs, etc), you can't help but get backlash. It's the way it is. And if you think talking people out of it is going to work, you need to head to Arizona and get a dose of reality.
HP -
For someone who only had a minute to response that was quite a response :-)
I'll begin by referring to something at the very end of your respone -
"And if you think talking people out of it is going to work, you need to head to Arizona and get a dose of reality."
This brought a smile to my face because I do live in Arizona.
I did not know you were the son of illegal immigrants. I am interested in your history.
According to your Blogger profile you are an engineer. It seems you are a success story. I am interested in learning (if you are willing to share) about how and the means by which you achieved the things you have.
Let me preface the rest by saying that I think much of our disagreement boils down to one of our respective level of fundamentalism. Dare I say you seem
much close to a fundamentalist capitalist whereas I am (or consider myself to be) a practical capitalist. I am a capitalist (with caveats) because I think
that is the system that works best towards desired goals. I suppose this is also true of you but I do get the sense that even if this were not true you would still favor capitalism. That is my impression anyway. Maybe I am wrong. Also that is not to say that given external realities you don't adjust
accordingly.
If I am off base here I'd like to know.
Moving on -
As to the link I provided before - the table I refer to is comparing growth rate of GDP/person. Which if taken into account that population growth rates in Europe has generally been less than the US might explain things for you.
Here is the link again - in a tiny URL form. For some reason the previous one got chopped.
http://tinyurl.com/4m73qku
I have a question to both you and Jon - truth is I know very little about Chomsky. So when you say "the collectivist, Chomsky economics" - now given what I just said - my limited knowledge of him is that he favors a left-libertarianish form of government. A gov't with a strong (?) safety net but in most other respects possibly quite limited.
This is very roughly where "overall" I think of myself to be. Though I consider myself a liberal not a libertarian.
Back to Chomsky - I think he speaks out about his perceived injustices and/or double standard of the Amererican Gov't (and by proxy its people). I don't see his arguments as collectivistic per se. Am I way off base here?
To my question about corporate power you responded to me by saying - "True - but corporations have a check, competition. What is the check on unions?"
I think I know what you mean by check but I think it possible I am interpreting it wrong. At any rate - are there not competing unions?
"Also, corporations, at their best, actually produce value, a good, something. What do unions produce? Whatever they garner for their members, they take from other, less paid workers."
I don't know if that is anything more than tautological but I agree with you that corporations actually produce value. As to what unions produce - I don't have an answer but a guess. Perhaps (possibly) the mere threat of a union can have the desired effects of increasing pay. For example: amazon has various distrobutions centers here in AZ. A friend of mine, who works there, and I meet frequently for lunch. On several occasions we've discussed Unions. He is
against them and I, as already stated, am neutral to slighly pro. Anyway in our discussions - and I will caution that I might have misinterpreted him, amazon
skews their pay (slightly) higher than they otherwise might. Presumable to help stave of their associates from unionizing. Is that a good?
On the Milton Friedman quote -
"Since unions have generally been strongest among groups that would have been high-paid anyway, their effect has been to make high-paid workers higher paid
at the expense of lower-paid workers. Unions have therefore not only harmed the public at large and workers as a whole by distorting the use of labor; they have also made the incomes of the working class more unequal by reducing the opportunities available to the most disadvantaged workers”.
This intuitive makes a lot of sense - but intuition is not a meaningful gage of the truth. Is it not possible that in some scenarios that the effect may actually be positive. Say for example: that due to increased pay of union membership that those union members are now able to buy goods that otherwise they would not have been abl to - say a boat, or a car, or a new computer... whatever. They have now increased demand in another sector. Could that not increase demand for labor in those other industries? This is a simplified scenario and there is a balance to be played but I think it possible.
Do you know of any empirical data that shows one way or the other? I'd be interested.
"But it's precisely because of my fear of corporations that I have the opposite political views that Jon does - because corporations have so much power, you
want to reduce the power of government."
Umm, ok. Reduce power to prevent corporations from doing whatever they want? Taken this with some brief statements you've made (and I paraphrase) that you
prefer that our highways be (presumably) privately owned and paid for via tolls; for a hybrid-privatizated (from the link you provided) of fire and police services. (hyperbole alert) If you follow that logic you are going to ultimately end up with a corporatist fascist state.
Beyond that I am having some difficulties dealing with what seems to me duplicitious. You are fighting for this ideal, dare I call it utopia, of small
government. Fine. It is unrealistic as a sole objective but yet you argue/talk for it. Yet when it comes to other matters you state
"This is precisely the utopianism I was referring to above. Jon hopes the world to be a certain way, but it isn't. Instead of dealing with the world the way it is, he pushes on to the way he wants it to be - only to be dealt setback after setback, by mans nature."
For me the goal ought not be in growing or reducing (it could go either way) government. It ought to be about trying to make government better; more
effective. Perhaps there is an invalid assumption there that we can agree on what is better or more effetive. You possibly will argue it is also an ideal but I think it is one with a higher chance and makes the most sense. I think that if government was more effective government that possibly a smaller (ish) government would follow. But for this to happen you have to essentially toss out almost the entirety of the Republican party and some in the Democratic
party. We'll make a deal - you help toss out the GOP and I will help you in your battle against unions.
You stated
"Even when Democrats controlled the presidency, and both houses of congress, it was still captured by business (do me a favor and read this post)."
true enough - but it is difficult to accomplish things for the little guy (assuming that is goal, which I think it is not) when you have the whole of GOP establishment actively working counter to this.
Sorry for the multiple posts. My original response was too long and I had to break things down.
OK, I just relaxed some comment moderation settings. We'll see if this helps. I used to have trouble with spam so I enabled it, but the spam seems to have stopped. Porn with Chinese symbols, for whatever reason. In fact I have a Chinese friend and I asked him to read for me what it was that was appearing on my blog. He nearly choked when he saw it, so I guess it was bad.
A quick one.
http://www.chomsky.info/articles/1986----.htm
Paul,
It's a long story! Here is the short version: My parents and most of my family are from Guerrero, Mexico and came in their early 20's as illegals, mostly in the 70's. They were all granted citizenship because of Reagan's immigration reform in the 80's. Though they have been in the United States for a while now, they speak only broken English. They can understand what they need to get by, but they all speak it with heavy accents, and prefer to live in primarily Spanish speaking circles. My parents divorced when I was 5 yrs old and I grew up primarily with my mother in Compton, Ca. After a rough patch living with her, at the age of 15, I moved around a bit. First with my dad for a little less than a year, then as a carnie with my brother, then with my uncle in Phoenix, Arizona then eventually in the Rio Grande of Texas, with my grandparents then friends. By the time I was 16 and a half though, I was already back with my mother in Compton, Ca. finishing my time there.
As far as education goes, I am sort of the failure turned success story. I dropped out of High School in the 10th grade, got my GED, and pretty much partied the rest of my teen years away. But then, at the age of 18, broken hearted, I decided to pick up the phone and call a for-profit trade school and see what they can do for me. Being on commission, they brainwashed me into thinking I was a mathematical genius and decided for me, that engineering should be the career I should pursue (it was the most difficult major and probably had the highest commission). SO I did it (I was naive). After having to take some remedial math classes to catch up, as luck would have it, it turned out that I was actually pretty good at engineering. I graduated top of my class and was lucky enough to get a job at a fortune 500 company - months before even graduating. I moved out of Compton, my mom did the same shortly after, and now I am the "golden child" of the family. Aunts and uncles who would previously advise their kids to stay away from me, now give me preferred treatment. Anything I advise is treated as gold. Later, I took some graduate classes at UCSD and was about half way through a masters program in electrical engineering when a girl I was dating (who lived in Vegas!) got pregnant. She moved in. We got married. And now, two years later, we have another addition to our family, a newborn, just a month old yesterday. This is what I look like in person, with my oldest boy (second is a girl).
If you want to know more, I have a secret blog where I divulge more info, but you'd have to email me for that. :-)
I have more to say on the rest of the post, but I will post that tomorrow. When I have more time to organize my thoughts.
HP - thanks for sharing a bit of your history.
I sent Jon my response earlier today, he should be posting it soon. But in the meantime, I thought some of you still interested inequality might find the Economist magazines online forum on the subject interesting.
See here and here. Towards the bottom of the post, you will see other contributors.
Posted on behalf of HP 1
Jon,
You write, HP, you seem to think that if I ever let a discussion end without getting the last word that this is some sort of character defect on my part. I disagree.
I don't expect you to reply, we all have other priorities that need attending to as well, but I don't expect you to keep making the same argument without first addressing what I said initially to it. How is a conversation supposed to move forward if you just ignore what one responds and keep making the same argument?
You write, Do I deny that we were the 'de facto" capitalist country in the world? Absolutely, if by capitalist you mean free market/Milton Friedman-esque. Extremely progressive taxes. Huge publicly subsidized high tech industry. The Great Society. Highly regulated financial markets. Import restrictions.
Okay, maybe I am explaining this badly. Let me try again: I am NOT arguing that we were textbook capitalist, or Friedman-esque, or any such nonsense. What I am arguing is a relative matter: we were more so than others. Say you had a capitalism grade from 0 to 100, with 100 being perfect capitalism. Say the United States scored an 80 (or a 50, or a 40, or even a 30), if the rest of the countries scored lower on that scale, then that would still make the United States the 'de facto capitalist country'. That is what I am arguing. At the time, the United States was more capitalist then the rest. Granted, the USA wasn't textbook capitalism, but relatively speaking, the United States had more capitalism then the rest.
Also, to be clear, I am specifically asking about the era you keep pointing out: after WWII up until the 1970's. Not after (for a more nuanced view of Russian growth, see here).
Do you agree with that? Lets stop here and get at least understanding on this, then we could move on.
Regarding inequality, let me say it again: inequality does not come with a simple explanation. It deals with large dynamic economies across the world. So it would make sense that the causes are all over the map. It's not going to be one single explanation. I've argued before that most of it is due to a) the rising cost of healthcare (btw, ObamaCare requiring employers to cover more healthcare costs, is going to reduce even further wage growth - and shift it to healthcare coverage), b) the return to education, c) technology, d) immigration, and e) globalization. Oh and btw, this is exactly what economists have been saying all along, see here.
Posted on behalf of HP 2
You can go with Chomsky and some movies you've watched, but I'll go with what the economists say. :-)
You write, Take a look at Norway. Massive social state. Very progressive tax structure. Huge growth. Startups love it.
But what you forget to mention is that Norway, like all of Scandinavia, is very homogeneous - in other words, it fits perfectly into the model I mentioned earlier.
But ignore that for the moment, and let's look at other factors. We could start with natural resources - Norway is the fifth largest oil exporter and third largest gas exporter in the world. Might that have something to do with their ability to pay for the large welfare state and succeed anyway (you gotta love the way Jon would jump on this distinction if it was Chile, but when its a country he prefers - natural resources advantages get ignored)?
And even with all of this going for them, they still lag the United States in important factors, like median income in PPP adjusted dollars (see here - I thought wage growth was important Jon?) and citizens revealed preferences, see here.
Regarding inequality in general, we are finally getting somewhere when Jon says: So yeah, I'd rather live here than in poor yet more equal Cuba.
Then is it safe to say that what is important, indeed, what should be important, is not inequality but actual standard of living? In other words, lets pick two scenarios: country a doubles their income inequality but also raises their standard of living by say 50%, country b reduces their income inequality by 50% but lowers their standard of living by 25%. What scenario do you prefer?
Or to put it another way, can you think of a scenario where income inequality matters more than standard of living?
Regarding Cuban healthcare, I am glad you can admit that at least our high end quality healthcare is better. That is really the trade-off in this whole healthcare economics debate (as it is with everything - economic growth vs equality): do you sacrifice the top end quality healthcare for more coverage (equality). Atleast having you acknowledge the trade-off is a big step.
And don't put too much emphasis on the WHO ranking, its politically charged. It puts a heavy weight on universal coverage and so therefore begs the question: it argues that because our healthcare system does not have universal coverage it should have universal coverage. Hardly an objective metric.
Posted on behalf of HP 3
Btw, did you see what WikiLeaks uncovered regarding Cuban healthcare? Scary stuff. Looks like even egalitarian Cuba understands the value of the free market in healthcare.
Paul,
I dug deeper, even sent an email to an economist currently getting his phd about it. This is what he wrote:
This is a invalid comparison, since Europe between 1950 and 1970 was recovering from World War 2. Economic production was way below normal levels, because the continent had recently been occupied or bombed into destruction.
Generally it is not considered correct by economists to compare the growth rate of countries that start from different levels. The reason is that macroeconomists have established an empirical rule, called "conditional convergence", which means that if you have reasonable economic policy, poorer regions will grow faster than richer regions, as they pick low hanging fruit or adapt already available technology.
One example is that poor American states grow faster than rich American states, but no one claims Alabama is economically superior to Connecticut. Currently Africa is growing faster than both Europe and America.
Basically, the gist of his argument is that growth during that period is misleading because of the different starting points. After providing me GDP/capita from the 1940's to 2008 (which, btw, shows the United States always ahead of Europe) writes: "As you will see, Europe during the years after world war 2 just went back to the same ratio (about 30% below the U.S) as it had before the war."
Actual GDP/capita though might be a better indicator, and the United States has always been ahead. See the data for 1950 here, and 1973 here, for example. Also, current growth rates show the United States ahead, which is a far better indicator, given our relatively closer starting positions (see here). See here and here for more on this.
But let's get back to the general point: namely, that high taxes and/or safety nets, generally lead to slower growth. On this there should be no disagreement. While its not perfect, the relationship is highly correlated. Take Sweden, for example, often on the top of liberals list of economies to model. The relationship is strong if you look at growth vs the welfare state, see here.
Regarding Chomsky, like most extreme lefties, he is an anarchist. This is convenient for him because it allows him to be the ever present mud thrower, without having to stand on firm ground. If you criticize the economies of Scandinavia heavily, he can always respond that his preferences lie elsewhere. And since anarchy is non-existent, there is nothing to throw mud at him for.
Posted on behalf of HP 4
With that said, he still shows preferences. He argues for classical communism ("workers own the means of production"), and no matter how many times that has been tried and failed, he continues to make excuses (well, they didn't really try it). If Chomsky had his way, he would probably support some type of Democratic socialist experiment, where workers were given ownership of the factory - the fact that Hayek proved many years ago that all such experiments are doomed to the same totalitarianism escapes Chomsky.
Regarding unions, don't get me wrong, unions do have <em>some</em> value. But it's far more limited than the untrained eye can see. If you have time, I highly recommend this article on unions and chapter 19 of this book. They are both short enough to be read during a lunch break, but can explain this much better than my ESL writing skills would be able to do. In fact, if you truly have the interest in at least understanding the rights qualms with everything from unions to the minimum wage, I'd highly recommend reading that book in full (can be downloaded for free here). That book, Economics In One Lesson, by Henry Hazlitt is a classic and is credited with being the first and one of the most influential books to many on the right (right along side of Milton Friedman and Ayn Rand), myself included (though I have not read anything Ayn Rand).
You write, Say for example: that due to increased pay of union membership that those union members are now able to buy goods that otherwise they would not have been abl to - say a boat, or a car, or a new computer... whatever. They have now increased demand in another sector.
This example reminds me of the "broken Window fallacy". Have you heard of it? It's from Bastiat, another highly recommended author. See his explanation here. Anyway, he writes that people have the tendency to only see what is "seen" and not take into account what is "unseen" (many say its this distinction that separates a novice from an economist). Take the breaking of a window. Some might argue that that is a good thing, economically, as it causes the store owner to go and purchase another window thereby spurring economic activity, both in wages and jobs, in the window making business. Surely a good thing, right? Then surely breaking store owners windows is a good thing, economically speaking, no? Well, it would be if you took only the seen. But what about the unseen? Well that money used for fixing the window could have been used for something else, equally productive and economically enhancing. Or it could have been saved and borrowed by someone else, also producing something equally productive and economic enhancing. In fact, that broken window reduces the availability of goods and services produced, as now resources have to go to repairing something that was already there and away from "making more of".
I would say the same fallacy applies to the union example above. By artificially (this caveat is important, for without it, the rest doesn't necessarily follow) raising labor costs you create unemployment and oftentimes make goods more expensive. Both things that reduce the economies ability to "make more of" goods and services. And ultimately, that is what decides standard of livings - the amount of goods produced. The amount of lemonade you can get from an X number of lemons.
And who are those people who would be mostly negatively affected? The non-union members. Often poorer than union members.
Posted on behalf of HP 5
Regarding my view of government, let me be clear. I am not an anarchist. I believe the government does have viable functions. Such as enforcing the rule of law. Maintaining property rights. Deciding and maintaining contracts. Even providing roads and basic means of transportation. And of supporting education and to some degree basic necessities like healthcare.
Given that form of government, you are likely to have a more dynamic corporate structure with companies rising and falling decade after decade, and no one corporation dominating the political scene.
Regarding my fundamentalism, I think we started off with a misunderstanding. I only believe in the property rights of wages because I have seen from my experience that property rights are essential to a well functioning economy. If tomorrow you were able to show that say, a communist society, on a grand scale, provided a higher standard of living, mobility, and freedom to make your own personal decisions - I would abandon my views and switch.
My view is more practical - I could point to history or to modern day economies, and show that property rights, small government, and a general capitalist disposition results in a higher standard of living (maybe not higher equality, but certainly standard of living). I could argue that the United States has historically followed this pattern more closely (relatively speaking!!!!), and has therefore prospered. In Latin America, I could point to Chile, Latin America's most conservative economy, and also Latin America's most prosperous. In Asia, I could point to Hong Kongs transformation in the 70's, probably the closest to textbook capitalism, and show that the country experienced the greatest alleviation of poverty in the history of man. I could look in the other direction. I could see that countries that do the opposite, say North Korea, China before the neoliberal reforms, and India before the neoliberal reforms, were some of the poorest countries in the world. It seems to be a general pattern, see here.
So it's on this basis that I make conclusions. I don't just grab them out of thin air. Jon, on the other hand, yearns for an economy that gives you both a high standard of living and equality. We haven't seen such a country. We haven't seen a pattern of such a country work. In fact, all the countries that follow Jons recommendations (higher taxes, higher safety net etc) also have a lower standard of living, higher unemployment, and less growth.
But Jon doesn't care. In his mind, this world is possible. This utopianism must be pursued, damned be the actual results. It's the communism debate all over again. You can point to communist failures over and over again, but Jon won't care - he will always find some flaw in their implementation and assure us that if only implemented differently, the next one is sure to be better, is sure to reveal that utopianism that he so yearns for. All the while innocent people suffer.
That is the utopianism vs reality contrast I was arguing against. My arguments have some basis in reality. In actual implemented policy. Jon's dont.
Posted on behalf of HP 6
Regarding politics and government, you write, ...it is difficult to accomplish things for the little guy (assuming that is goal, which I think it is not) when you have the whole of GOP establishment actively working counter to this.
Right - but Republicans were just doing what they needed to do to maintain and enlarge power. This is what politicians do. To assume otherwise is wishful thinking. It would be like criticizing babies for not speaking clearly. It's the rules of the game that have to change - not the players. The players wont.
Maybe it is true that if communism only had a benevolent ruler, one that actually cared about the people, that most of the problems of communism would disappear. Maybe that is true. I honestly don't know. But at any point, it's irrelevant if the political incentives are such that only the cruelest and most power-hungry get to the top. That is the argument Hayek makes against communism, and any attempt to establish a communism.
Conservatives and libertarians make a similar argument, namely, that the United States political process self selects for the most power hungry and political ambitious. There is simply too much power congregated in Washington for this to be otherwise.
You can't just give these hypothetical's and assume the world could operate that way. You have to first prove it's possible on a large scale. My argument is that "effective government" on a large scale, with as much money is at stake as is in the United States economy, is an impossibility. Jon can point you to several examples of our government falling short of its ideals. Of politicians falling prey to lobbyists for their own personal gain. Each of these will merely confirm my belief. But instead of that questioning Jon's view of the government - it only makes him have more faith in government. It reminds me of the Christian who has experienced something awful in his life like the death of a child, only to turn around and have it strengthen his view in God, instead of weaken it.
Jon has a faith in government that cannot be disproven. It's absolute. Blind. Utopian.
This is a invalid comparison, since Europe between 1950 and 1970 was recovering from World War 2. Economic production was way below normal levels, because the continent had recently been occupied or bombed into destruction....
Fair enough.
Using one of the links you provided the most recent (not sure it actually is but should suffice)
link
It shows the US as #8. I am glad to toss out 1, 2, 3, and 5 for reasons you describe in your one of responses (due to natural resources, etc). That leaves Ireland, Switzerland and Denmark ahead of the US (I don't think these countries have vast natural resources but I conced that I don't actually know). I am a bit surprise to see Germany as far down the list as it is. I don't know where I am going with this. As I've said before we are roughly in the same place. Though I am willing (open) to sacrifice (relatively speaking) a lower GDP for other priorities.
I do find curious you provided the following link
link
It says "It’s enough to make you wonder what the answer for long-term growth is. Tax cuts don’t seem to be: growth in this country was faster than in Europe after the Clinton tax increase and after the Bush tax cut (and, of course, the American economy grew faster after the tax increase than it did after the tax cut).
Or does the entire difference stem from the fact that Europeans work less (as the end of this Jonathan Chait post discusses) — and essentially are choosing quality of life over growth?"
I didn't click on the various other links that this pages refers. But it doesn't seem to argue your case. Maybe that was not your intent.
In simplistic terms - do I do you an insjustice by saying that you choose growth over quality life? Whereas, I am willing to decrease growth (not sure by how much honestly) for an increased quality of life? Here I am talking philosophically. It is undeniable that there is a relationship between the two.
On the various link you provided from the Super-Econmy blog - I didn't read all of them word for word but what I read was awful.
For example:
"According to the latest figures, there were 36.000 Americans in the five Nordic countries. According to the 2000 census, there are 140.000 people born in the five Nordic countries that have migrated to America.
So almost 4 times as many people have moved from the welfare state to capitalism than from capitalism to the welfare state. Voting with their feet, people choice America over the Nordic welfare states. " he then has a graph and concludes as follows
"ow would the left respond to this fact? I guess they could say something along the line that the American system is worse for the low-skilled, and the Nordic system worse for the high-skilled. Low-skilled Americans are however less likely to be entrepreneurial enough to move to another country to improve their lives, whereas high skilled Scandinavians seek out better opportunity in America."
The whole thing is atrocious. I am certain you see this. And I didn't think the other links from this site were much better.
You wrote - "where workers were given ownership of the factory - the fact that Hayek proved many years ago that all such experiments are doomed to the same totalitarianism escapes Chomsky."
When you say Hayek proved this, what do you mean exactly? Is his proof a mathematical one or a philosophical one (or combination thereof)? I haven't read his book.
I won't belabor the union issue to much. I will acknowledge that the trend is against them - in the private sector. And whether I want it or not I don't see that trend changing anytime soon.
I appreciate the broken-window fallacy link you provided. Thus far I've only read the actual broken window section. Here are some things that come to mind that I hope will be clarified as I read further. The first is somewhat insignificant but the example is staw-manish. Let me be clear - I am not an economist and I hope I haven't come across as pretending to be one. But I think most who actually think of these things do take into account - on some level - that to repair the window *possibly* means that some other good will not be purchased. Or that the money may otherwise have been used for for lending, whatever. But there does seem to be an implicit assumption towards this being a fact; rather than possible or probable.
For me section 1.21 was an example in sophistry. "It is he who makes us understand how absurd it is to see a profit in destruction."
Let me try some right back (this is a bit tongue in cheek).
Isn't it true that if one has to buy new shoes because the old ones have worn out, then it is the hat maker who suffers for surely had James not had to buy a new pair of shoes (because his old one wore out) he otherwise would have bought hat. Let us both encourage shoe maker(s) to make everlasting shoes.
I would say the same fallacy applies to the union example above. By artificially (this caveat is important, for without it, the rest doesn't necessarily follow) raising labor costs you create unemployment and oftentimes make goods more expensive. Both things that reduce the economies ability to "make more of" goods and services. And ultimately, that is what decides standard of livings - the amount of goods produced. The amount of lemonade you can get from an X number of lemons.
I know I said I wouldn't belabor the union point but let me create a scenario. Say a company has budgeted $D dollars for hire employees. Now say the the amount of goods demanded by the marked indicated that the company needed to hire X employees. Say union work cost U and non-union work cost N. But that for both cases U*X < D and N*X < D. I realize I have skewed the scenario but Which is better overall for the economy - to hire union member or non-union. Note I am not claiming to know the answer - and I recognize there are externalities.
And of supporting education and to some degree basic necessities like healthcare.
Would you elaborate what you mean by some degree basic necessities like healthcare? I am curious about this.
Right - but Republicans were just doing what they needed to do to maintain and enlarge power. This is what politicians do. To assume otherwise is wishful thinking. It would be like criticizing babies for not speaking clearly. It's the rules of the game that have to change - not the players. The players wont.
Fair enough - but to change the rules you have to toss out the players that are not willing to change the rules. So does this mean in the next election you will not vote GOP then? :o)
One last thing (for now) -
Say you have two nearly identical worlds (modally speaking). These worlds are identical w/ the exception that one has an income tax and the other does not.
Now say that in one world (this one) - you make a gross salary of $G. Your effective tax rate is 30%. For a net of 0.70 * G.
Now in the other world - there is no difference between net and gross (no income tax). So my question is how much (approximately) would you make in this other world?
Posted on behalf of HP 1
I agree with you - Denmark is a curious case. Certainly an outlier. Here are interesting facts about Denmark that help explain some of their success:
With its economy open to global trade and investment, Denmark is among the world leaders in business freedom, investment freedom, financial freedom, property rights, and freedom from corruption. The overall regulatory and legal environment, transparent and efficient, encourages entrepreneurial activity.
Wiki writes:
According to World Bank Group, Denmark has the most flexible labour market in Europe; the policy is called flexicurity. It is easy to hire, fire and find a job. Denmark has a labour force of about 2.9 million. Denmark has the fourth highest ratio of tertiary degree holders in the world.[70] GDP per hour worked was the 13th highest in 2009.
But it has a high minimum wage and low inequality. So it's a mix of a lot of good with some bad. With that said, here is my take on Denmark: first, and most importantly, it fits with the economic model I discussed above - a high safety net with an overall homogeneous population. In fact, there is good reason to believe that if we adopted the Denmark model, it would also come at the expense of immigration (see here and here). Second, and strongly related to the first point, is the Scandinavian countries are really just different culturally than the United States. Denmark, for example, always has higher scores than the United States on cooperativeness, trustworthiness, civic-mindedness and work ethic, which is related to my third point, which is that their workforce is simply more productive than the United States workforce.
Also, there are still benefits that the United States has over Denmark, such as a higher median income, see here.
With that said, I do think Denmark is an interesting country and should be looked at further.
Regarding the link showing economic growth, you write, But it doesn't seem to argue your case. Maybe that was not your intent.
In discussions with others, one of my preferred methods of making my case is to use those that agree politically with "the other side" to argue my point. If I showed you a wild rightwinger, arguing that the United States has higher economic growth than Europe, you might be suspicious - after all, they agree with me politically, so they might be fudging the numbers. SO what I try to do is find those that disagree with me politically, those that find my point politically inconvenient, to concede the point. It shows more honesty on my part (a completely different philosophy than Jon - he just tends to quote from those who agree with him politically, often strongly partisan sources).
Posted on behalf of HP 2
So that is what I did. David Leonhardt is a liberal. He prefers the big safety net model, and as a consequence, has to prefer higher taxes. So he can't bring himself to admit that lower taxes result in higher economic growth. But look at the graph more closely. The United States and Britain, are the two most "capitalist", and they are the two with the highest growth. This is no coincidence. The trend is pretty strong, see here. This is why David Leonhardt is left scratching his head - absent that, there really is no other explanation.
You ask about a "quality of life" vs "growth" trade-off, but really, that's misleading, as growth itself drastically increases quality of life. See this by Tyler Cowen, professor of economics at George Mason University who writes:
The importance of the growth rate increases, the further into the future we look. If a country grows at two percent, as opposed to growing at one percent, the difference in welfare in a single year is relatively small. But over time the difference becomes very large. For instance, had America grown one percentage point less per year, between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990.
I would say that our "quality of life" is markedly better than that of Mexico, wouldn't you?
You ask, When you say Hayek proved this, what do you mean exactly? Is his proof a mathematical one or a philosophical one (or combination thereof)? I haven't read his book.
Mainly philosophical...but with time empirical - after all, we have yet to see a country refute his main thesis.
Regarding unions, you ask, Which is better overall for the economy - to hire union member or non-union.
Posted on behalf of HP 3
From an economic perspective, union member vs non-union member really doesn't matter. It's artificially raising wages that matters. By "artificially", I mean raising wages above ones productivity level. So for example, lets say that union member charged U per hour but gave U of value in productivity. And non-union member charged N, but gave N of value in productivity. Even assuming U > N in wages and productivity, it's a wash. There should be no preferences.
With that said, I'd like to insert some minority bias here. From a humanitarian perspective, I would still prefer the N method above. Why? Because non-union members (when comparing the same industry) tend to be poorer and more minority. They tend to have lower productivity and are more in need of that entry level job to help them move up the economic ladder. Therefore jobs concentrated on them tend to fill a void more in need of filling.
This is the example I made in discussing the same thing with Jon here (I highly recommend the full exchange, if you have the time).
Regarding healthcare, there are basically two forms of healthcare I would support (and by extension, I would say also most economic conservatives/libertarians): the first version is the standard libertarian solution to healthcare. Namely, have most healthcare costs be out of pocket (eliminate employer subsidized healthcare) up to a point, say $50k and below (with a sliding scale the less income you make), and have private insurances provide catastrophic insurance above that point. I would support the United States government subsidizing some of that cost for those with low income. For a more detailed explanation, see 1 - 3 here. For a much more detailed version, go here.
The second form is a barebones healthcare. Libertarian Brink Lindsey summarized it best when he said,
There are two health policies that liberals and libertarians would both prefer to the status quo. The first is a free market plus redistribution for the poor. The second is bare bones, high-deductible national health care, with a free market for all add-ons.
Posted on behalf of HP 4
The reason neither are likely to happen is mistrust. Liberals think that if they sign on for the free market plus redistribution, the redistribution won't actually happen. Libertarians think that if they sign on for bare bones national health care, the cost will quickly increase.
How would this "barebones healthcare" actually be implemented? Something like this would garner my support (btw, the author of the plan is Brad DeLong, professor of economics at UC Berkeley, so I'd think the illustration to be somewhat realistic economically).
You ask, So does this mean in the next election you will not vote GOP then? :o)
This is actually a good question. While I am Republican, and generally vote Republican, I do not want an all Republican government. In fact, I agree with Milton Friedman who said the best form of government is a Republican congress and a Democrat as president. When Republicans control the purse (congress) and Democrats control the sword (foreign policy), incentives align such that you get less wasteful spending and less wasteful wars (this is why the reverse isn't necessary good - Democrats controlling congress and Republicans control the presidency). This is what we had under Clinton, and contrary to popular belief, I think it was that unique division of government that gave us the prosperity, not Clinton. SO if it looks like Republicans will take the senate as well, I just may - and I do mean may - vote Democrat for President. Although, my strong dislike of Democrats might just lead me to vote 3rd party (as I did in 2008).
Regarding your income question, I don't think I understand. Truly assuming "nearly identical worlds" I would say G. I feel like this is a trick question and I am missing something?
Truly assuming "nearly identical worlds" I would say G. I feel like this is a trick question and I am missing something?
It was not my intent for this to be a trick question. A read a while back that economic theory suggests that the salary/pay person in the "other" world would be much closer to this world's N. The theory goes - extremely brief and I hope that I word it well enough - that although your gross in this world is G your net pay is N (.7G). The market knows that in "effect" you are willing to work for $N. So in the world w/o taxes - why would they pay you the G instead of (something closer to) N.
Now - I thik that if in this world we slowly eliminated taxes that changes things a bit. Particularly for people already in the workforce. However, I (currently) believe there would be a gradual migration towards salaries being adjusted towards the non-tax world.
That description was a bit trite I am sure but I hope it is adequate enough.
Thoughts?
btw - and just curious - why is Jon posting in your behalf. Are you having issues publishing your own comments?
Good point. That may very well be true. I know that for example prices are only affected by supply and demand...not, say a tax. They adjust to their equilibrium regardless of tax.
But to be honest, I haven't completely wrapped my head around that. It's an area that frankly I still need to learn more about.
Jon posts for me on big posts - with alot of links. They almost always get spammed and some post and some dont. Then when Jon approves them, their order gets all messed up. Makes for complicated reading. I've just found it easier to make Jon do all the work. Hahaha. :-)
One of the points I have been trying to make repeatedly, is that income inequality doesn't matter per se, it's poverty that matters.
To put that point in perspective, digest this quote:
<em>The typical person in the top 5 percent of the Indian population, for example, makes the same as or less than the typical person in the bottom 5 percent of the American population. That’s right: America’s poorest are, on average, richer than India’s richest — extravagant Mumbai mansions notwithstanding. </em>
Now digest this graph. Amazing, isn't it? And what does Jon have to say about that? He responds: the rich are getting more!!!
To which I respond, why care?
He responds: the rich are getting more!!!
To which I respond, why care?
You would care if they are getting rich at your expense, would you not?
At the moment I making no claim as to whether this is happening or not.
Definitely - if their wealth, reduces my wealth, I would care.
But the graph and quote shows otherwise.
HP, you have a lot of material directed at me in your earlier response to Paul above, so I'm going to address that, then address your more recent material.
You want to poo-poo the notion that the Soviet Union wasn't socialist. You want to pretend North Korea represents ideal conditions as far as Chomsky is concerned. He's been writing books for like 50 years. If this is the kind of thing he advocates then show that he advocated it in his writings.
Milton Friedman says that if unions raise wages they cut down on employment. Sounds good in theory. Is it true? Do the data support that conclusion? That's a much more important question in my view. Theory is one thing and reality is another. One might think in theory that increasing the minimum wage would reduce unemployment. But this 16 year study claims the reverse is true. You can disagree with it if you like, but the reality is things are complicated and I don't regard a question as settled because Milton Friedman says so.
You say because corporations have so much power we should reduce the power of government. OK. Then what is the check on that corporate power? What if we have corporate entities polluting like crazy because it increases profits and government power is non-existent. Who stops them? Let's suppose, in theory, corporations are assassinating people that attempt to unionize because that increases their profits. Who stops them? Let's suppose they are engaging in trade deals that are great for short term gain, but impose systemic risks that threaten an entire financial apparatus, which threatens everyone? Who stops them? I agree that government tends to get capture by private concentrations of power. But corporations are totalitarian institutions, right? I mean, it's not like they are democratic. The board decides questions based on profit maximization. They are responsive to major shareholders (basically the few owners) and they don't care what some janitor thinks. But their decisions effect all of us in many cases.
It's interesting that today liberterian means pure tyranny. All power in the hands of totalitarian institutions called corporations. No participation for the mass of population that holds insignificant amounts of stocks.
You say that ALL governments have been captured by concentrated wealth. I don't think that's true, but I don't pretend to know what has happened everywhere in every case. I think immediately of Vietnam. All of the south and all of the north supported the socially democratic government reflected by Ho Chi Minh. Concentrated power (the US) did try to destroy that democratic movement and impose on them an oligarchic style government, but that effort failed. Are they not still responsive to the public today? Maybe not. I don't know. I haven't studied it. Have you? In Venezuela they've tried to oust the democratically elected Chavez. A popular uprising re-installed him. He's still there, resisting the oligarchs. He has to fight the media, owned by the oligarchs. For now he's winning. He may not last. Nothing lasts forever. So what? You continue to strive for what is right. Power will try to take everything they can. They'll try to get control of government.
In 1820 you could have said that no society has ever ended slavery. Does this mean we shouldn't try? Feudalism looked like the only game in town. If people never tried to fix it because it had never been done successfully where would we be.
Question for you. If what I suggest always fails, can you point to government that in your opinion has worked and not failed? Because my understanding is corporate power does kind of like the kind of talk you offer. Reduce regulations on them. Give them a free reign. Cut their taxes. Make things easy for them.
But they don't really want small government either. Small government for everyone else, big government for us. They like bail outs. They like the nanny state. They like public subsidy of R&D. Welfare is bad for people. Welfare is good for corporations. So I don't see anybody following your suggestions. You back off the regulatory apparatus and government doesn't go away. Look at what years of electing the so called small government Republicans have gotten us. Bigger government than ever. That's what corporations want. Huge government that serves their interests, not the interest of people.
I read your link from the economist and yeah, I largely agree. It's not so much that I advocate bigger government. I advocate democratic government. I think that's the solution. Can we make government more democratic? It is more democratic in other parts of the world, like Bolivia and Venezuela. You have the wealthy class pushing hard for their preferred government but the population is able to resist. That's what we need.
Cato says Chavez is just about at dictator status. I don't accept that. He's won like 9 elections deemed fair by international institutions. Do watch that movie if you get a chance. Nothing mind blowing, but I think you'll see it's kind of informative.
I find this statement from you to be interesting:
This is precisely the utopianism I was referring to above. Jon hopes the world to be a certain way, but it isn't. Instead of dealing with the world the way it is, he pushes on to the way he wants it to be - only to be dealt setback after setback, by mans nature.
Is it wrong to strive to improve the world? So what if I push to improve the world. So what if I hope the world to be a certain way. I hope for peace and justice. What's wrong with that? And further, what's wrong with striving to attain it? If I got everything that I've here expressed I wanted, would I stop? Would I no longer look for injustices in the world? No. I'd seek the next injustice and I would resist it. That's what people who care about the world and care about others do.
OK, I'm now moving on to your next reply, which I posted in 6 parts. You ask if I agree that the US was MORE capitalistic than other alternatives. No, I don't agree. I would agree that Russia was more capitalistic after 1990 than before. I would agree that we are more capitalistic after 1980 than before. Which were the most free prior to 1980? I would probably look to the third world first. Places like the Philippines, Guatemala, Haiti, etc. Not that I've done the study. But I would encourage you to SHOW that the US is more free market rather than just spinning it out of your head because it seems plausible to you. I'm making no claim one way or the other, but I don't accept your claim because you haven't tried to demonstrate it.
Come on. Start ups love Norway because it's homogenous? The article talks about the causes. Take health care. In Norway you can hire the best man for the job. In the US you don't want to hire an old person. His health care costs are higher. So you don't necessarily get the most skilled person. Also health care, being so ridiculously expensive in the US, is a drain generally.
Does Norway have natural resources? Absolutely, and it's key to their prosperity. It's not owned by capitalists. It belongs to the Norwegian people and funds their treasury, just like in Chile where the major copper producer is state owned. That's the opposite of neo-liberalism man, and it's a boon for all, not just a tiny minority of stock holders.
The US has tons of resources as well. But it's owned by capitalists.
You say US income exceeds theirs. Maybe. But they have government provided services we don't have. Their GDP/capita is higher than ours.
You say standard of living is more important than inequality. But what I'm considering here is not which is the best country to live but which country is moving in the right direction. Like I've said before after WWII the US had half the world's wealth and 6% of the world's population. This is the best place to be of course. Even being poor here is a good situation. But the policies we have are making conditions worse than they need to be. That's something I'd like to see change, and it doesn't matter that we're bombing Cuba and otherwise strangling them.
It's as if you live with an alcoholic father that beats you routinely, but sometimes he goes next door and rapes the neighbors, maybe kills them. You say "Well, it's certainly better living here than next door." OK, but so what? Dad should stop beating us.
Do you believe that tens of millions of uninsured Americans who have no alternative but to go to the emergency room when it's too late to resolve a problem is a good thing? Can you at least acknowledge that one good thing you can say about France, despite what other objections you may have, is that everybody can get whatever treatment they need, from the bum on the street to the CEO. And you can take a break from your job if you so decide without fear of being unable to have medical coverage. Say you just want to take a year off. You can do that in France and go back to work without a lapse in coverage that could be catastrophic. That's a positive thing, right? It makes you free. WHO is right to give some weight to that factor, don't you think? Or do you look at the people who sew their own stitches, do their own dental work, and maybe go into bankruptcy and say "Boy, this is one feature I really like about care in the US."
What you describe from Wikileaks regarding Cuban care is not news to me. We block medical supplies from entering the country. So yeah, you have to bring your own things. This embargo is pure evil.
You say Chomsky is just a mud thrower, never pointing to anything positive. That's just pure ignorance. You don't read him enough to know, so you should just stop trying to describe his views. He's said many positive things about many different governments, including Vietnam, Venezuela, some of what occurs in China (while acknowledging it's a big country with many positive things and many negative things.) Of course there is much good to be said of foreign health care, like in Spain where what we pay here would cover 3 over there. And they live like 3 years longer than us. You talk too much about Chomsky given what little you know of him.
You say that I want high standards of living and equality and that's never been seen. Of course it has been seen as I showed in my first comment here.
I'm not actually interested in bigger government. Republicans historically grow government more than any other. They are more blatant in their devotion to corporate power. Corporations want huge government, but government that serves their interests, not people's interests. What I actually advocate is democracy. Government that reflects the will of the general public, not just power and wealth. That exists in places like Norway where the cost of hiring an employee and paying him $100K is much lower than in the states. I don't want big government, and if you talk about Chomsky you can be sure he doesn't want big government since he's an anarchist. What we recognize though is that with the present imbalances of power (with heavy concentrations of it in the hands of a few capitalists) government is the only plausible check on that power. I would want to see government grow in some areas and shrink in others to reflect public will. HP, I think you and I both would want to see a lot of reduction in government power. It's just that strategically I think what you offer has the opposite effect. Bush illustrates the result of your kind of thinking. Teeth in government removed in so far as government is a check on corporate power. This permits government to grow overall in service to that same corporate power. Big government serving corporate interests. Reduced government in areas where it serves the public interest. I'm ready to flip that structure.
For another gauge of what life would be like for you in Norway, check this out.
http://www.ifitweremyhome.com/compare/US/NO
Posed on behalf of HP1
Jon,
I missed you. :-) Allow me to respond.
Regarding Chomsky, I made very specific charges. I called him an anarchist. I argued that he has sympathies towards "classical communism", by which I defined as "workers own the means of production" ie "workers control the factories". I also argued that if Chomsky had his way he would probably support some type of Democratic socialist experiment, where workers were given ownership of the factory (I also argued that Chomsky would say USSR wasn't really communist). What part of this do you disagree with specifically? Where did I say otherwise?
Regarding the minimum wage, I encourage those more interested in the topic to see our exchange here. I leave it to the readers to decide who presents the most evidence based data.
Oh, one more point on the minimum wage: surveys of economists (see here) still show a majority support the view that increasing the minimum wage harms unemployment. Which is remarkable, considering that A) the minimum wage is at a historical low (even at this low level, more economists believe that it harms employment than do not - imagine if you raised it MORE) and B) most economists entered the field assuming the minimum wage does not harm employment (as is shown by polls of the average joe, where something like 90% believe that the minimum wage is good for labor).
So whose side do you think is more "evidence based"? But please, read the exchange.
You write, You say because corporations have so much power we should reduce the power of government. OK. Then what is the check on that corporate power?
Competition.
You ask, What if we have corporate entities polluting like crazy because it increases profits and government power is non-existent. Who stops them?
Good point. Actually, you bring up one of the rare cases where the government does serve a role in mitigating corporate power. This is because environmental impact is a negative externality, not part of the competitive exchange. Same with rule of law, enforcing contracts, and other basic functions of government. I am no anarchist Jon - I've already conceded the government has this role in market affairs. So in this case I would agree that Government has a role (as does other right wing economists, such as Milton Friedman, Thomas Sowell, etc).
Posted on behalf of HP2
Regarding government capture, sorry I should have been more clear. I don't mean all government has been captured - I mean all government that has large amounts of concentrated power and controls a large amount of people, has been captured. The more the concentrated power, the more incentive to capture. The more the people controlled by government, the easier it is to obscure things. So both are needed. I am sure there are some high school government bodies that are purely democratic. Probably some small city councils too. Maybe even some governments in small countries with relatively small economies. But as soon as you hit the big boys, the super powers certainly, capture becomes inevitable.
You ask, If what I suggest always fails, can you point to government that in your opinion has worked and not failed? Because my understanding is corporate power does kind of like the kind of talk you offer. Reduce regulations on them. Give them a free reign. Cut their taxes. Make things easy for them.
But that is my point: we want less government. Government itself is bad. Not being able to prove any government works is an argument for my position. With that said, I do agree that more "Democratic" (capital D) is better.
Now, back to the meat of it. You write, You ask if I agree that the US was MORE capitalistic than other alternatives. No, I don't agree....But I would encourage you to SHOW that the US is more free market rather than just spinning it out of your head because it seems plausible to you.
I'll look into that further (for a United States look, good place to look is here, for example Table 15.3 shows that government spending as a share of gdp was smaller in 1950-1970 than today). But maybe we don't need that. Let's go at this a different way. Would you atleast agree that the United States was seen as the counter model to the Soviet Unions model? In other words, during most of the cold war, do you agree that atleast rhetorically there were two models: the Soviet Union model and the United States model? And do you agree that the United States model, again, atleast rhetorically, encouraged property rights, a general privatization of industry and free trade relatively more than the USSR?
You write, Does Norway have natural resources? Absolutely, and it's key to their prosperity. It's not owned by capitalists. It belongs to the Norwegian people and funds their treasury, just like in Chile where the major copper producer is state owned. That's the opposite of neo-liberalism man, and it's a boon for all, not just a tiny minority of stock holders.
I think there are capitalist Requirements (capitalized R) and capitalist requirements (lower case r). And nationalizing natural resources is a lower case r. It's like state run water facilities or state run healthcare. Sure, some libertarians will argue that it violates capitalist principles, and it does, but it's not a core issue. Reasonable capitalist could disagree on that point. It's difficult to do that kind of stuff successfully nationalized or privatized (same with water facilities etc). So you kinda do whatever works.
Posted on behalf of HP3
Here are my main points regarding Norway:
1. Their natural resources puts them at a huge advantage to us. What a country can do with properly managed natural resources is miles ahead of what we can do without it. So it's not a proper comparison.
2. Their model cannot work here (ignoring, for the moment, their vast natural resource advantage) - atleast if you want to keep our generally diverse and open to immigration culture. Once you introduce large amounts of immigration, especially poor immigration, union power erodes, safety nets become more difficult to fund, support for them decreases and the whole thing unravels. Yet from a humanitarian standpoint, a more open immigration policy is the way to go.
3. Norway is very small (it has less than 5 million people - total). Smaller than most large United States cities. In other words, it falls right into my definition of workable Democracies. To go from that to something over 300 million is a LARGE step.
Regarding standard of living, here is the point: where is this model of what you want us to move towards? You use the drunken father analogy, but then I ask, where is the country that represents the stable family? In fact, the United States is the desired destination of the worlds young. The United States has the highest standard of living of probably the world - yet the United States has the highest income inequality (again, ignoring health care costs and all the caveats I made earlier). So again, if the United States is the drunk father, where is the model family???
But lets assume that I agreed with you that income inequality is a problem. Then why not support, say, education reform? There are good arguments to be made (see here), that it's our government monopolized education system that has been the primary cause of income inequality. Why not support reform efforts there? That is a solution that reduces income inequality without harming our standard of living.
Regarding healthcare, I've already stated elsewhere on this thread that the debate involves the trade-off between universal coverage (equality) and higher end quality healthcare (economic growth). I have also acknowledge that both are good ends (it's the same debate that permeates all political debates in the US: equality vs economic growth). It's juggling the two trade-offs that is important. Can you atleast concede that having the best higher end quality healthcare is a good thing as well, and it also saves lives?
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