http://www.capitalismv3.com/index.php/glossary/#schumpeterian%20intellectualsECONOMISTS AS THE ACOLYTES OF TOTALITARIANISM
“Once people decided that they wanted to make a living from giving economic advice, they needed customers. The government was the obvious target. The new class of professional economists said that politicians could spend the taxpayer’s money willy-nilly, even on total waste. And, that all their remaining economic problems could be solved, without cost or effort, by monetary manipulation, in time for the next election. This proved to be a big seller, and it remains so today.” (- Courtesy of Forbes)
See: Schumpeterian Intellectuals in my Glossary of Political Economy
What is rich? Is ‘Rich’ something we can define or calculate? And how much can we tax them?
It is certainly possible to calculate who is ‘rich’. The goal of every individual is to exit the market. Whether that individual studies hard to get a good (protected) job in big company, or works for the government which by definition is extra-market (and protected), or seeks a (protected) union job, or whether that person does none of that rent-seeking, and instead, exits the market through saving or investment.
“Rich” means ‘exiting the market’. To exit the market one needs roughly on hundred times the median income, or about 4.5-5M today. It used to be that a million dollars meant something meaningful, but it doesn’t. You can easily burn through it if you’re the kind of person that can make it in the first place.
Rich is a balance sheet calculation, not an income calculation. If a person’s balance sheet exceeds about one hundred times the median income (which is by definition, the 1%) then realistically, it doesn’t matter how much of their income you tax.
I suspect that the various means of calculating maximum utility taxation is closer to 60 or 65% based upon what I can find.
But if you tax the income of a small business person who is trying to exit the market, then we certainly have the right to wipe out social security, wipe out pension programs, fire federal workers and wipe out their savings. Because unless those assets are counted, the definition of ‘rich’ is asymmetrically used to punish people who participate in the market.
http://www.realclearpolitics.com/video/2011/12/12/reid_millionaire_job_creators_are_like_unicorns_because_they_dont_exist.html#.TuakAVgFvgw.facebookI’ve created more jobs than Reid ever has. And probably paid more taxes.
Greg Mankiw makes a case for graduate school education:
Apart from their bank accounts, Gallup finds education to be the greatest difference between the wealthiest 1% of Americans and everyone else. The Gallup analysis reveals that 72% of the wealthiest Americans have a college degree, compared with 31% of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16% of all others.
But it’s not education that gets people into the 1%.
It’s IQ and hard work.
Education produces little more than signaling.
Greg Mankiw makes a case for graduate school education:
Apart from their bank accounts, Gallup finds education to be the greatest difference between the wealthiest 1% of Americans and everyone else. The Gallup analysis reveals that 72% of the wealthiest Americans have a college degree, compared with 31% of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16% of all others.
But it’s not education that gets people into the 1%.
It’s IQ and hard work.
Education produces little more than signaling.
Over on Stumbling And Mumbling, Chris Dillow writes about inequality, and refers to OECD Gini-charts on inequality and trust, in an effort to suggest it’s ‘how we believe’ one thing or another that determines redistributive policy. As if conservatives simply need to ‘feel differently’ in order to desire a more egalitarian society.
I try to show him that a tolerance for redistribution is a function of cultural homogeneity, and a lack of threats to the status economy.
Here is most of Chris’ article:
My chart shows that the correlation between big government and equality is weak. Yes, countries with big government spending tend to be more equal, but there’s a lot of variation around this. For example, France and Norway have similar levels of equality, but France spends 13 percentage points more of GDP. And the UK has the same inequality as Australia or Japan, but spends 10 percentage points more of GDP.
In fact, it could be that the positive correlation between equality and public spending doesn’t reflect causality from the latter to the former at all, but rather an omitted variable. Countries that combine big government and equality tend to be high trust societies. It could be, then, that the same high trust that makes people supportive of redistribution – because they believe “welfare scroungers” aren’t ripping them off – also makes them support big government as they trust politicians not to waste money.
This possibility hints at another – that perhaps it’s possible to combine small government and equality if the right cultural or institutional factors are in place. I mean, for example:
– Strong trades unions. These not only raise the pay of the worst off, but also help restrain top pay.
– A collectivist culture. A society that believes that corporate performance depends upon the abilities of all its employees will be more egalitarian than one which believes that organizations can be transformed by star managers.
– Education. A highly educated workforce might be more equal, if only because it creates more competition for top jobs. There is a correlation between education levels (pdf) and equality – the egalitarian Nordics do better than the inegalitarian US and latin Americans. And the causality mightn’t be entirely from inequality to poor education. However, high educational standards are achieved not by increased spending, but by a culture which values schooling – and the UK lacks this.
Herein, I fear, lies the big challenge for the Left. Although it is technically possible to reconcile small government or fiscal conservatism with greater equality, the UK lacks the cultural underpinnings which would permit this happy combination.
Despite the fact that for many of us equality of outcome is not a goal, but freedom, the difference between egalitarian and non egalitarian states is, driven by factors in addition to those you mention:
Education
Status Signals
Access to power, Resistance to Changes In power:
[callout]…small homogenous Protestant countries with high median IQ’s are more distributive than factional, non-protestant countries with lower median IQ’s.[/callout]
d) Size: it is easier for a small homogenous culture to create an environment that tolerates redistribution. This is the reason for the egalitarianism of the nordic countries. They’re small and homogenous and there are few if any external pressures from ‘unlike’ groups with different cultural and therefore status signals and different “property definitions.”
e) Composition: IQ distribution matters. This difference affects the USA, and dramatically effects South America. South america is also highly tribal – as are Brits. The USA is a domestic empire over a set of different cultures consisting of different economic, religious, racial and cultural interests in various compositions, each with different IQ distributions, and this in turn correlates pretty consistently with performance of the groups, which in turn creates competition for status signals, and a desire for access to power in order to expand them, and a counter-desire for people who which to resist that expansion.
A number of these factors run counter to the progressive fantasy about the nature of mankind, and individual behavior in society. And failing to include them in your list, is simply a prescription for failing to accomplish your desired state of ‘equality’, by denying the factors that dramatically affect political preferences in redistribution.
The lesson to take away from any analysis of the tolerance for redistribution of one’s productive gains (‘equality’), is that **Human beings seek status as much or more than money, and that those who have money will redistribute it to the less advantaged if they perceive that they are not undermining their status as individuals, their status as a cultural class, or their status as a system of cultural manners, ethics and morals.**
In other words, if the proletariat has to behave and conform, (which it does in france and doesn’t’ in england or the USA) then people will tolerate redistribution. If the proletariat doesn’t have to behave or conform, then they will resist it.
That’s the difference between seeing people as disadvantaged and lazy and incompetent or threatening and destabilizing.
*Adherence to norms determines the tolerance for egalitarian sentiments. And cultural diversity reduces tolerance for egalitarian sentiments.*
Economists look only at the monetary economy. But the monetary economy is a Maslowian pyramid that exists first to support basic needs, second to provide individuals with the needs for reproduction, and third to provide the needs for status signals – which in turn provides access to mates, and ease of nesting/reproduction. As the economy improves, and the upper classes expand, the status signal economy dominates the monetary economy – ie: the society becomes politicized. The only solution is cultural homogeneity.
In other words, there are opposing curves that describe cultural homogeneity and the tolerance for monetary redistribution, which in effect describes the status signal economy.
THE DECEPTION CREATED BY THE OECD CHARTS
Here are the charts the you’re referring to.
And from these charts, we are expected to deduce that ‘high trust societies’ are the most redistributive.
However, what these charts actually show, is that small homogenous Protestant countries with high median IQ’s are more redistributive than factional, non-protestant countries with lower median IQ’s.
All this means is that PEOPLE ARE MORE REDISTRIBUTIVE WHEN THERE ARE FEWER THREATS TO THEIR WAY OF LIFE.
And Charles’ argument is just another example, of why any economic argument that mentions the nordics is be definition, false.
Curt
“I actually think this issue brings up extremely deep philosophical questions that virtually no one I can find wants to engage in.”
What are you talking about?
No one wants to engage in those conversations? You haven’t posted an issue yet that hasn’t been addressed in the past century pretty thoroughly. Or at least, you should engage a few libertarian intellectuals.
I think you mean, that it is impossible to affect the political dialog by framing policy questions by other than political means. There is only ONE political spectrum (progressive to conservative) but there are TWO political AXIS (incorrectly stated by Nolan) consisting of Individual Property Rights (Economic Freedom per Nolan), and Pseudo-Shareholder Appropriation Of Returns (Personal Freedom per Nolan).
***And so you yourself are framing the question falsely.***
Which is why you can’t get serious traction with your arguments (despite being the best blogger on center-progressive political economy).
Now, you’d have to answer your own question here: why is it that a) people don’t frame it the way you prefer, and b) why is it that you frame it the way that you do?
It’s the progressive vision versus the conservative vision. ie: you see the world as a run-rate system that has it’s own momentum that is unstoppable and the fruits of which can be siphoned and shared without consequence. Conservatives view the world as a struggle to concentrate capital resting on a fragile edifice that has been constructed by irrational but successful means, and which can be disassembled and lost without constant vigilance.
Counter-intuitive results are produced on both sides of the aisle. For example, online pornography drastically reduces sex crimes – it seems obvious now, but it didn’t then. Cheap fattening food, cheap music, cheap movies and cheap video games, and easy access to pot give the unwashed proletariat something better to do than alcohol, hard drugs, violence, crime, rebellion and hanging on street corners like they did until fifteen years ago. Increasing incarceration and increasing punishment (especially three strikes) works to reduce crime. Eliminating the permanent welfare dependency decreased dependency. The inter-temporal redistribution system (social security) created a dependency bubble.
The purpose of politics is to win control of the bloody hand of government so that your alliance of minorities can seek rents on the other alliance of minorities instead of working in the market for mutual gain — like we libertarians of the classical liberal bent recommend, by treating society as a portfolio of human capital that must be constantly improved for the benefit of all.
All of us want the benefits of the market without the risks of participating in it. People seek to game the market through political rent seeking, through saving enough to live off their savings and investments, to under-consuming so that they have more leisure time. The market is hard.
It’s pretty obvious: because it would undermine their entire philosophy.
And no, there is no debate among researchers over the genetic, race and class composition of IQ.
That debate is only conducted among the political class.
Conservatives observe natural laws. Not ideology but natural law.
Hierarchy is just letting the best people have the freedom to produce excellences for the rest of us.
