Posts Tagged ‘ redistribution ’

Dissonance: Fun for Everyone

I suppose I’ve been beating up on the political left a bit lately, but I want to take this chance to remind my readers that I’m an equal opportunity hater. This won’t be a make-up post simply shaming the right for something, but it will begin a long regress toward my libertarian mean. Republicans and Democrats often find some neat rhetorical symmetries in their constant battle to differentiate themselves whilst remaining indistinguishable from a policy point of view and some of these symmetries often reveal glaring inconsistencies in their underlying ideologies. A pair that I’ve recently hit upon both revolve around the already ridiculous issue of immigration.

A common retort offered by conservatives against those criticizing their position on wealth redistribution is that marginal investment spending is more socially beneficial than marginal consumption spending, populist translation: we’re taxing “job creators.” The assertion is often coupled with a diatribe about how “it’s not a fixed pie,” i.e. investment can grow the economy and subsequently raise living standards across the board or allow for more beneficial redistribution at some later date. “A rising tide lifts all boats,” “the wealth will trickle down,” etc.

When it comes to immigration, however, the pie gets very fixed, very quickly. While economic theory and all the empirical evidence from the last 40 years has shown immigrants to add to the division of labor and indeed “grow the pie,” they only come to “steal” jobs from Americans by “accepting freely offered employment from American businesses.”

On the other side you have Democrats, the steadfast defenders of laborers everywhere and the unions that bring them dignity. What people tend to miss is that unions, while often increasing compensation for their own members, do so at the expense of scabs and aspiring professionals everywhere. There are many people willing to accept unions jobs for lower pay, and I think it’s fair to say that this willingness is indicative of their being in greater “need.” They are denied jobs because the labor market is either too selective or restricted in quantity, both on account of higher union compensation. Then there are people who see union compensation as an entry signal, grad students being a perfect example. They pour resources into getting credentials in hopes of getting the return of a comfortable and protected position, but often find themselves in debt and out of luck, or in the very unenviable position of adjuncts.

The dissonance? Those on the left tend to be more sympathetic to the plight of immigrants, whose situation is almost perfectly comparable to those of scabs and aspiring professionals. The American Union insists on keeping out wage and job competition, so would be immigrants are forced to live in squalor to protect the well-being of people no more deserving than they are.

All in all, the left have a better excuse in that it’s much more likely they are just ignorant of the disemployment and rent-seeking effects of unions. But of course, ignorance of the law is mitigating at best, not a full-fledged excuse. Happily, I think this leaves this post’s conservative bashing credentials slightly stronger on balance…

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Completing the Redistributionist Trilogy

There is a third popular argument for redistribution that falls somewhere in between the argument from justice and the pragmatic argument. Fittingly, it’s a hybrid of the two. Despite constant attempt to re-brand it, it is the argument from reparations.

Any one who has come across them understands that arguments from reparations are riddled with potential pitfalls ranging from problems with predicting alternate realities, to measuring effects, to estimating the decay of effects over time, to it being unclear whether wealth today was actually derived from crimes passed, or whether there are undesirable social consequences for groups paying or receiving reparations etc. etc. etc. My concern may actually lend some precision to a reparationist case, but cost it considerably in terms of scale. Those who can reasonably be held accountable for crimes whose effects span generations are few in number and small in wealth compared to the demands of those who feel they are its victims.

Basically, any individualist account of slavery or similar atrocities can hold accountable only those people who directly devised or carried out criminal orders. That means the small group of powerful men who devised slave expeditions and those who came to own slaves as well as those who were directly involved in the handling of slaves in between. If it sounds like a substantial part of the population from whom white Americans, consider that this excludes everyone involved in building the ships, guns, nets, clothes, and food for the slave expeditions themselves and everyone involved with every other industry in the western world who wasn’t a slave owner, wrangler, or conspirator.

I suggest that, while many of these other people profited from the slave-trade and other atrocities through exchange with those responsible, burdening them responsibility for any wrong-doing in the entire structure of production leading back to them would be supererogatory and, as a consequence, wildly inefficient (i.e. causing people to surrender huge amounts of utility to transactions costs).

So, even if we can clean up everything else about reparationist arguments, the money just isn’t there, unless you want to convict the blameless for not plunging us into a dark age by tracing every possible moral consequence of their micro-decisions.

Admirable Leftists Are Teachers

In my last post, I criticized the argument for redistribution as justice; People below a certain standard of living have claims on the property of others by virtue of their existence alone. I find this line morally repugnant in the same way I imagine its proponents see vast inequities in wealth as morally repugnant. It’s truly an impasse of sentiments for which I can hardly imagine an agreeable form of adjudication.

The most popular alternative argument for progressive wealth redistribution is a pragmatic one. This argument is far more noble in my view for more than just its susceptibility to empirical and theoretical testing. The view simply states that a more even distribution of wealth allows for larger swathes of the population to have the time and resources to grow both in number and human capital leading to a bigger pie for all. The argument is more pro-human, pro-progress and anti-the political vitriol of the “soak the rich because they’re rich” entitlement argument.

Proponents of this latter view are environmentalists, not the kind that like trees, but the kind who think your low productivity is a consequence of your father hitting you rather than your having the genes of a father who would hit his own child. If our experiences, exposure and guidance were right and well focused enough, any one could be nearly as productive as anyone else. The reason the low-productivity workers live relatively worse and have children who follow in their footsteps can be put up to a lack of resources which is very difficult to overcome. Obviously, people have broken the cycle in the past and some do today, but the theory is that only a little cushion between each pay check and the hours of work that go into them would give the poor time to develop human capital and be more productive, have better pay, and a greater bounty from which to consume.

So, if you believe this and find yourself a young person in in the 60+ percentile of a developed nation, you become a teacher. The young poor have the time and resources (public education) to improve their human capital and build a better life for themselves and their children if only they’re properly motivated and directed in that time. Thinking as you do, who better to give them that motivation and direction?

As admirable as both the form of the argument and the follow-through of its adherents are, another merit of the argument, its falsifiability, lets it down, if only somewhat. The social science research comes down markedly in favor of genetic explanation for variance in income and intelligence. For income, genetic effects account for about 50% of income variation among men in Finland, a much less genetically diverse country than the United States. IQ studies trend toward 75% heritability. This means that environment can still account for up to half of income variation, but much of this can be put up to extremities much greater than the quality of individual educators.

This is, of course, one of the most contentious debates in academia and all I wanted to say is that there is a more admirable argument for redistribution than the one from justice and it happens to explain why teachers are so much more likely to be democrats without relying on the shoddy self-interested voter hypothesis.

The Best Time to Alienate Readers is Before I Have Any

This. So. Much. This.

Is what a demonstrably intelligent, college educated acquaintance of mine had to say about what was actually just this.

There’s so much I can say, but long windedness on my part doesn’t even do me any good, let alone you. I’ll elaborate two points: first, this is a prime example of populist irrationality. By populist irrationality, I simply mean that, given the underlying values, the proposed solution does more harm than good. Second, the irony of those values which claim to abhor selfishness, but are themselves motivated only by the sense that some owe others merely for existing and irrespective of what they have to offer in return.

First:

Let’s assume we have some minimal standard of human dignity that it is our sworn duty to uphold for all people at any cost. According to the article, this entails independent living space with climate control, an automobile, access to Western medical care, cable internet and telephone service with ~$25 a day left over for food and miscellany in addition to at least 120/168 hours of sleep/leisure per week. Assuming no effect on the prices of these goods, no transactions costs, no misallocations of capital, and no negative production change as a result of fewer hours worked, all we would need to do is double world GDP and distribute accordingly.* While all of those assumptions are far off the mark, simply redistributing income after production is a much sounder strategy to uphold a given standard of living than what the populist view suggests: raising the minimum wage.

Unfortunately, as is often the case, the emotionally satisfying response is the one that holds sway in the market for intellectual garbage. If people were genuinely interested in rectifying what they see as an inequity, they would understand and admit to disemployment effects and misallocations (high skill workers taking low skill jobs that pay like high skill jobs). Beyond that, they’d advocate that workers be paid what the market will bear in the interest of allocating to maximize gains from trade and leave no resources idle so that a redistribution after the fact could be maximally effective in improving the lives of the least well off. The appeal of the minimum wage vis a vis this suggestion is that it pays workers for their toil, which advocates interpret as desert, forgetting that low skilled workers are providing very little value to the society that is supposed to satisfy their compensatory expectations. 

Second:

“Human beings are worth more than that. Anyone who works 40 hours a week (nevermind 74 hours) ought be able to take care of all the basic necessities in life.”

By virtue of birth, humans are entitled to take more from the people who were here before are willing to give them for whatever it is they do. Those people never had any say in whether or not you were born, but now that you’re here, they owe you what you think is fair and anything less is criminal. In all sincerity, I’d like someone to explain to me why they’re the selfish ones.

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*Assuming an adult population of 5.5 billion at $24,000 annual income (a bit less than the article suggested) the total comes to ~132 trillion 2012 WGP was ~71 trillion.