Left2Right

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Posted by: LPFabulous

This is good. I'm always amazed by the way you are capable of arguing for liberal principles in ways that make sense to conservatives. But that's because I'm still not sure whether your soul is a conservative Democrat or a liberal Republican.

Posted by: LPFabulous | Jan 26, 2005 5:53:13 PM

Posted by: tcobb

I really doubt that there are many people who would object to providing government aid to the destitute so as to prevent them from starving, freezing to death, or dying from some infectious disease. The devil, as always, is in the details. Just what level of "poverty" is sufficient to trigger the aid, and what obligations can or should be laid upon the recipients of such aid? And how should it be financed? These are the real questions over which the left and right disagree. The poor will always be with us, especially if we define them as those whose income falls within the bottom X percentage.

I think one of the big divides between the left and the right is that many on the left seem to view poverty in relative terms whereas the right tends to view it in purely objective terms, that being that if your basic biological needs for survival are being met then no, you are not entitled to a subsidy from the government.

Posted by: tcobb | Jan 26, 2005 6:58:56 PM

Posted by: Tommaso Sciortino

Oh come now, LPFabulous. This stuff is all in the dead center of mainstream Liberal thought, indeed, it motivates it. Sure, not every rank and file Democrat is an expert in this kind of political philsophy, but I'm sure the same thing is true of Republicans.

Posted by: Tommaso Sciortino | Jan 26, 2005 7:25:51 PM

Posted by: Paul Deignan

This line of argument begs the question of what the relationship should be between the governed and government in a democratic society by assuming that the legitimacy of taxation for social insurance is unique to authoritarian governments.

We might all agree that taxes are appropriate and necessary for the maintenance of a democratic society. This does not imply that the relationship envisioned here is justified. For example, the argument against natural law assumed a fatally flawed definition of possible natural law rationales. It is perfectly possible to justify social insurance on ideas rooted in natural law. The fact that the object of an individual's free will desire may be frustrated on occassion does not imply that this type of interaction is not a basis for the functioning of the wider society. The very fact that we seek a reasonable solution to egalitarian societal needs is a demonstration that "natural law" ideas are at play. Why would one want to discredit reason and free will?

So beware, the issue at hand here is not taxes, it is individual freedom and liberty.

Posted by: Paul Deignan | Jan 26, 2005 9:03:46 PM

Posted by: Rob Kar

Tommaso--What is distinctive--and, yes, distinctively amazing, in my view--about what Liz Anderson is doing is the following:

She seems to be developing a way of reorganizing and reframing the principle presuppositions of capitalist economies in ways that might (a) allow capitalist economies to better flourish without (b) pitting so-called 'leftist' egalitarian/fairness concerns against so-called 'right-wing' economic values. She is not--as far as I can tell--just drawing on an arcane body expertise in political philosophy to say things we all know, perhaps with added technical precision. Rather, she seems to be developing an important and unarticulated political possibility for us, one that may even be capable of garnering broad-based political support, healing a number of unfortunate political tensions in our culture, and helping our system to flourish in one fell swoop. If cashed out in the right way, the position might even attain a degree of stability and widespread moral support that our present system has not yet been able to attain.

The position is, I agree, rooted in a number of classic texts and thought. But--at least as far as I can tell--Anderson's particular combination and development of these ideas is both distinctive and exciting. (Here I am lumping this post in with her earlier ones.)

In any event, I genuinely look forward to seeing the next steps as this position develops!

Posted by: Rob Kar | Jan 26, 2005 9:13:44 PM

Posted by: tcobb

The very fact that we seek a reasonable solution to egalitarian societal needs is a demonstration that "natural law" ideas are at play.

I would submit to you that capitalism and egalitarianism don't mix. That is one of the fundamental problems that the left faces. Economies which are not based upon a capitalistic model have been shown to be disasters, and enforced egalitarianism (and there is no other kind) strangles the dynamics which makes capitalism work. Perhaps there is an undiscovered economic system that can rival the productivity of the capitalist model and somehow, at the same time, be consistent with egalitarian principles, but I won't be holding my breath waiting for it to arrive.

Posted by: tcobb | Jan 26, 2005 10:08:40 PM

Posted by: rtr

If “the claim "I deserve my pretax income" is not generally true”, it necessarily follows that “someone else deserves my pretax income” is also not generally true. Nonetheless, the quibbles with this post are at first glance seemingly minor in comparison to what I regarded as major flaws in the last post, probably because deserve has nothing to do with it. Something is one’s property or it is not. But, for one thing, income is in some way different than property generally. Old ladies living alone cannot be kicked out and have their paid for homes auctioned to pay property taxes when only income is being taxed. And lets not forget that capital gains taxes and taxes on interest are double taxation on income that was previously taxed. Taxation is out of control at all levels of government. It has been abused to the maximum it can be abused which is why there is no money in the social security trust fund (if tax rates were set at zero tomorrow all the money that was previously allegedly paid into the trust fund is negative), as taxes allegedly raised for the purpose of that program have been used to pay for other programs.

It’s good that the left recognizes that 90% income tax rates would destroy capitalism and make serfs of the citizens. Nobody is going to take them seriously unless they begin by stating that a 100% tax rate is theft, whether a democratic majority votes for it or a dictator declares it. Still, no explicit limits have been put on taxation, whether it is maintained as theft of not (which by definition it most certainly is unless as I pointed out in the last post one was to similarly maintain that forcing another to have sex against their will is not rape), and until there are inviolable in stone limits placed (which could in fact be zero), there is nothing preventing a majority from imposing 100% tax rates which is pure theft, plain and simple.

“Social insurance” may be a noble goal but unfortunately it is just as arbitrary a purpose as “cause we feel like it”. Not to mention it is not insurance either. It can’t be escaped that taxation is compelling involuntary action. As such, at a minimum it needs to be minimized and explicitly minimized or tyranny is inevitable. It’s obvious that the left believes 40% theft rates aren’t past the minimum. Universal health care could put them towards 50-60%, pretty much guaranteeing relative stagnation if not relative economic destruction (especially with fake monolpoly money fiat currencies). It grants similar justification for a “rich” minority to steal from a “poor” majority, by any forceful means whatsoever. “Liberal” leftists who now seek to co-opt the word “libertarian” to describe themselves are living in a socialist dream world if they think 100% tax rates wouldn’t be regarded as pure warfare which would lead to the destruction of society.

At present we are far beyond any reasonable minimum measures of taxation. Corruption and waste is rampant throughout. One only needs look at the 70% "administrative" cut of public school funds. Theft is theft and taxation only occurs with the use of violent force to collect. It criminalizes behavior which has caused no harm to society.

The left needs to take their heads out of the sand. The middle class is overtaxed. There is not enough money from taxing the rich nor is it just to treat them unequally under the law in order to bring about universal health care. The government’s accounting standards are massively fraudulent and attempting to hide potential forthcoming disaster brought about by exorbitant taxation.

The use of the word “MY” in the phrase “my pretax income” is a *lie* when stated by the left. If there is a possessive such as my, your’s, his, or hers, in front of something than it is by definition owned property by the referenced possessor. The left doesn’t have the guts, as it would be political suicide, to tell voters that their income is not their income but the “State’s” or someone else’s income. Taking it by any means against one’s will is irrefutably by definition theft. Of course, theft in every instance makes the thieves and the beneficiaries of thieves better off, or less poor, in the short term *at the expense* of those who have been robbed. It is in every instance not trade, whereby both parties to the exchange are by definition increasing their subjective wealth. As such calling it not theft or social insurance is a clear misrepresentation at best.

Those who wish to pay higher amounts of taxes can do so without forcing others to similarly be subject to theft. They are free to voluntarily contribute their own property and income to the extent they wish. As they wish to impose their socialist “insurance” communes on society at large they are nothing but totalitarians who pay no heed to the violent lessons of the twentieth century and all of history. How much further can taxation go before society breaks down? There are no shortcuts to voluntary real insurance or voluntary real charity.

Posted by: rtr | Jan 26, 2005 10:53:27 PM

Posted by: John Turri

Elizabeth,

1. I have a minor question about this claim:

Claims of desert are essentially backward-looking. They aim to reward people for virtuous conduct that they undertook in the past.

I would have thought that at least some claims of desert are based solely on one's nature. For instance, you deserve to be treated respectfully simply in virtue of the fact that you are a person. This has nothing to do with past performance (virtuous though it may be!).

That said, this doesn't appear to affect the crucial claim that the market does not effectively track claims of moral desert. All it shows, I think, is that your characterization of moral desert isn't essential for your argument.

2. You concede that the claim "I deserve my income" would, if true, be "a powerful moral claim against taxation for redistributive purposes."

Suppose we grant your claim, which seems right to me, that the market does not effectively track moral desert. From that it does not follow that any given person does not actually deserve his or her income. In any given case, the person may have been awarded just what they deserve.

Aren't they just lucky to have gotten what they deserve? Yes. Yet they still deserve what they got, even if they were lucky to have gotten what they deserve.

Question: would it be unjust to tax such a person's income for redistributive purposes? It seems to me that you're committed to answering "yes." But perhaps I'm overlooking something.

Posted by: John Turri | Jan 27, 2005 12:33:57 AM

Posted by: Acton

Reading Ms. Anderson's post, I was finally rewarded in waiting for the Archimedian point. At the end of this post, she seemed to offer up her bedrock views on (1) where the burden of proof lies vis a vis justifying taxation, and (2) the proper social goals of the State. This is where I ran into problems.

As to the burden of proof, EA writes:

"And so far, no argument that people have a moral claim to their pretax incomes, sufficient to preclude taxing it for insurance purposes, has survived critical scrutiny. Certainly, "I deserve it" doesn't."

Since claims about "desert" of pretax income aren't helpful (one doesn't properly deserve or not deserve this income, the additional claim that there is an "urgent need" for social insurance against the vissitudes of capitalism means that the burden of proof regarding justifying taxation is on the taxed, rather than the State.

On the other hand, one can agree with the need for insurance against the volitility of capitalism on prudential grounds, and still argue that this need is irrelevant to the quetsion of justifying taxation. To connect the two, one needs another premise, which Ms. Anderson helpfully provides:

"My goal is not to ensure that people get what they morally deserve. It's to avoid gratuitous suffering, and to ensure that everyone has effective access, over their whole lifespan, to the means needed for a decent life."

I hope Ms. Anderson forgives me for this, (it ins't meant as an ad hominem) but in an otherwise careful and intersting post, these are weasel words. Not because the sentiment is flawed (who would disagree with avoiding *gratuitous* suffering?) but because it is the the least transparent part of her argument. Indeed, it is hard to interpret the above as anything other than a far-reaching and extravagant welfare right generated out of thin air. The most charitable interpretation I can generate is that Ms. Anderson is interested in the equal opportunity of all to participate in market exchanges as they may, in which case her point is a rhetorically fancy way of saying something uncontroversial for classical liberals such as myself.

On the other hand, if one follows the thread of Hayek's arguments regarding the informational funciton of capitalism, and adds in the prudential need for insurance against volatility, the result is optional private insurance. Optional, because the risk assessment and the lexical value of prudence depends on individual value assessments of risk, and local knowledge. Private, because the type of insurance and the risk assessment required for such insurance is local. Spontaneous cooperation (to diversify risk) is possible, permissible and perhaps advisable on prudential grounds, but it isn't clear that it is obligatory. And it is a thin reed to balance the burden of proof of taxation upon.

OTW, it is a *pleasure* to read a scholar who treats Hayek so respectfully, even to respectfully disagree. Thanks, EA!

Acton

Posted by: Acton | Jan 27, 2005 7:38:37 AM

Posted by: Paul Deignan

I would submit to you that capitalism and egalitarianism don't mix.

I disagree and I believe our history of capitalism here in this country bears me out. Pure capitalism requires regularization in order to maximize wealth. Wealth is created, ultimately, by people who must be motivate to work and innovate. It is human nature that need and the likelihood of satisfying that need drive productivity.

For instance, why should I invent and develop some new creation for market if there is no compensation to be had for the tedious work that is invariably necessary? Why should those that own vast wealth care that their projects stimulate others not related to create and compete? The optimal mixture of incentives is not concentrated in the few nor spread too thin. Pure capitalism leads to concentration, pure egalitarianism to lack of incentives and ultimately to depletion. Both are necessary for the optimal mix.

The problem with this post is not that social insurance is not desirable; it is that the method proposed of obtaining that insurance is to destroy the information-responsibility linkage between the individual and the insurer. This is counterproductive. The minimization of societal risk requires that the individual have a determinative role in the distribution and generation of the insurance fund. His stake in the economic game must be respected.

Posted by: Paul Deignan | Jan 27, 2005 8:18:28 AM

Posted by: oliver

Conservatives complain about the windfall (or incentiveless) aspect of tax-subsidized welfare distributions. How about instead of the windfalls, we tax the lucky and the unlucky alike according to a progressive scale that goes to negative tax rates at the unlucky end? The IRS takes nothing from the unlucky but gives them an "unluck" bonus calculated as a percentage of their earned income. So the IRS processes more or less the same kind and amount of paperwork as ever, but mails out bonuses instead of refunds and passes a comparable amount of revenue to the legislature except for the welfare component which the IRS will already have distributed. I'm assuming some progressive tax rate with a negative end could be concocted which still leaves an incentive to work. We don't want people to "opt" to work part time flipping burgers knowing they'll make as much after taxes as the full time meat packers.

Posted by: oliver | Jan 27, 2005 8:56:00 AM

Posted by: D.A. Ridgely

If no one has a per se entitlement to his accumulated wealth or current earnings, then it would appear to follow on the same grounds that no one else has such a claim on it, either. If no one else has such a claim, it would appear to follow that no collection of others (e.g., a democratic majority) would have such a claim. They can, of course, exercise power to take such wealth or earnings and they can rationalize their acts with utilitarian arguments, but in the sense of moral justification which utilitarian arguments necessarily fail, they have established no moral right to do so. If Ms Anderson wishes to make that argument, I agree.

Hayek (like Locke) aside, it is one thing to say that people do not absolutely deserve the rewards or risks they experience, quite another to say they do not in general deserve them at least as superior claims over others’ claims.

Markets are dynamic but not necessarily or even generally as “volatile” as that term connotes. Ms Anderson suggests by her choice of words that market prices are constantly rising and falling wildly. Not so. Some markets have high Betas, some are quite stable. Business cycles continue to exist, and there are irrational influences that temporarily affect both individual markets and the market in general. In fact, however, there is no reason to believe that the overall growth of wealth in market economies over time is itself accidental, and in that sense the market definitely does reward past good behavior in the form of prudent long-term investing (even, e.g., by prudently taking advantage of business cycles by dollar cost averaging, etc.).

Even accepting that “sheer dumb luck” is an inevitable factor in our lots in life, it remains probabilistically true that prudence and diligence, etc. do pay off for the vast majority of people the vast majority of the time. Even if such virtues are merely instrumental virtues and even if our contingent universe admits of no guarantees, it would be imprudent to reduce incentives promoting prudence and diligence or to increase incentives to those who may choose to accept the “effective access, over their whole lifespan, to the means needed for a decent life” without need of such instrumental virtues. (How many would-be philosophers might there be in a society that guaranteed a “decent life” to anyone who chose to forego a materially richer life for the life of the mind? How many of them would feel the need even to take their studies seriously or to be, even by the standards of the academy, “productive?” )

As others have already pointed out, “gratuitous suffering” is question begging. If we take Ms Anderson’s concerns about the magnitude to which “sheer dumb luck” determines our lot in life, what sort of suffering would not be gratuitous?

Prudent people who can afford to do so already buy insurance sufficient to their believed needs. Insofar as they or the natural objects of their affection are also the beneficiaries of such insurance, they do not need the state to meet this need. This leaves those who cannot afford such insurance (especially including children) and those who can but choose not to do so. Since by her own argument none of us deserve the minimum decent life Ms Anderson would have us provide, it follows that at least the third category have no moral claim to be so provided and the only argument she can offer is that there would be enough such people living in sufficiently dire circumstances without any hope of a better future that they would threaten the entire society. If that is her position, she should say so cleanly.

Finally, I rather strongly suspect that Ms Anderson wants to wring a universal health care right out of all of this. If so, and even if her desire is to establish some mix of private and public care, how would she mitigate against the extent to which government intrusion in an otherwise private market would significantly skew prices as information?

Posted by: D.A. Ridgely | Jan 27, 2005 9:06:10 AM

Posted by: enzo rossi

In a hurry: EA's arguments hold if we maintain that the sort of desert in "I deserve my pre-tax income" is moral desert. But who said that? Couldn't it be the sort of desert involved in playing games? Specifically, the sort of games where luck plays a considerable role. That, after all, is what capitalism is. It's not a way of enforcing a moral code, but a system of rules (just like a game) designed to regulate the ways in which we become entitled to certain goods.

Posted by: enzo rossi | Jan 27, 2005 9:31:54 AM

Posted by: oliver

I think the riskiness of capitalism is underappreciated, because there are so many real rags-to-riches stories and because so many rich investors just get richer. But of course many people are just born rich, and then even the rich who become rich only on a string of investment bets have at least some form of insurance (e.g. a credit line) to help them borrow their way out of unlucky swings that would otherwise end their streak and lifestyle and socio-economic status. Even Nobel economist-advised hedge funds like LTCM and entire governments like Mexico's, despite all the talent they bring to bear, suffer bad luck and survive only through bail-out loans. I guess most of the evidence of the riskiness of capitalism gets displaced from everyday personal experience to rare and abstract headlines, and so we credit wealth too much to smarts and not enough to the combination of luck and social responsibility.

Posted by: oliver | Jan 27, 2005 10:51:30 AM

Posted by: baa

Perhaps some people who speak of natural property or of deserving their income mean to assert thoroughgoing philsophical views of right and desert. The majority, I suspect, simply express the common-sense view that a there should be a strong presumption in favor of rights to property acquired through consensual, market transactions. Don't we all believe this?

Someone else above has analogized external property to the body. If we explore this anlogy, we find that a conception of self-ownership as "natural" or as "deserved" doesn't rule out Government conscription in times of war. Yet, we often feel that the right a person has to their own body and time creates a substantial burden of proof. If the government (or anyone) wants to make demands on our body, the case must be compelling.

If we apply this kind of reasoning to property, we would replace the claim "I [morally] deserve my pre-tax income" (generally untrue), with "I have better claim to dispose of my pre-tax income than does someone else." Would we agree that the latter is generally true? If so, does it not have implications for taxation?

Posted by: baa | Jan 27, 2005 11:33:21 AM

Posted by: Martin James

I think Elizabeth Anderson's reasoning at heart always gets back to unspoken moral principles that she assumes are noncontroversial.

I am always amazed at the lack of respect for luck. If there one thing that people certainly deserve it is their luck. Is anyone unlucky at love that doesn't deserve it?

I have yet to see a winner of a raffle or prize or gamble that didn't feel as entitled to that money as money made with sweat. Usually they think they deserve it more. After all, anyone can make money through work, but it is a person's destiny to be lucky or unlucky.

More importantly, I think her assumptions about what I can only refer to as the "inevitableness" of a state overstate the contingency and maleablility of states.

States are a state of mind. They are a social fiction of habit and history. Anderson shifts back and forth between saying we should prefer states because they make us secure and wealthy and we must have certain types of states because they are moral.

I just wish she was more direct about where the morals come from.

Take the following case. Let's say that there are 90% of "A" people and 10% "B" people. One state that treats A and B equally has 2% real growth. A person comes along and shows that if we exile the B people we can earn 3% real growth.

I think there are people that think it is moral to exile the B people and people that think it is not and that there is no noncontroversial way to decide the matter.

Andersons' posts seem to get caught up in lots of detail that could best be summarized as "It is my opinion that a decent life for everyone would be a good thing" and left at that.

I think that all of our moral theories, liberal and conservative alike, are inadequate to the understanding of the role of violence in the world. As we can see in Iraq, the Balkans, Russia, China, Rwanda, California, etc. states are still made with iron and blood. And the primary actors in these struggles are frequently irrational by the lights of the other actors.

One can see this inadequacy most clearly by replacing every use of the word state in Ms. Anderson's posts with respectively "world-state" or "neighborhood". While society seems necessary, whether that society is a world-state or a neighborhood is problematic in the extreme.

How does one choose sides in a civil war?

Unless one puts this question at the top, understanding everything else about society is neither rational as theory nor explanatory of reality.

Our situation and our destiny is how to create a society or a social contract when we recognize that it is conflict and violence all the way down.

Posted by: Martin James | Jan 27, 2005 11:55:37 AM

Posted by: BC

You've still only gotten us to something like Milton Friedman libertarianism (w/ negative income tax), not to Rawlsian social democracy, which, I take it, is what the Left wants.

Posted by: BC | Jan 27, 2005 11:56:47 AM

Posted by: miab

rtr writes: "Something is one’s property or it is not. "

Pithy, but false.

Ownership interests consist of the proverbial "bundle of rights," and only rarely, if ever, does someone have every possible right in that bundle.

Some of these limitations on my ownership interests are consensually contractually created, such as a stockholder's agreement limiting my rights to sell or a mortgage putting oodles of limits on what I can do with my house.

But most of these limitations are not consensual contractual limitations--

Some are contracts of adhesion -- such as the prohibitions on copying and on charging people to view, that limit my property interest in the Disney videotape I "own".

Some reflect what we think is a pragmatic incentive structure to keep the economy moving, such as the "use it or lose it" risk of adverse possession that limits the "usage" part of my bundle of real estate property rights by excluding long term non-usage from the bundle, or the rule against absolute restraints on alienation of corporate stock, that excludes from that bundle part of my transfer rights -- namely, my right to issue/sell stock of my company subject to the specific conditions I want to put on it, or the expiration periods on intellectual property, that limit that bundle of property rights to a specific period of time.

Some are customary, such as my very temporary possessory interest in a parking spot on the street -- where I hold so few of the pieces of the bundle-of-rights that we don't usually think of this as ownership. The law would enforce that possessory interest if someone tried to tow my car out of the way so he could park there, but pretty much every other stick is absent from my bundle.

Some are part of the way our current laws reflect current moral views of what I "ought" to be allowed to do, such as limitations on my right to sell my body, or my right to use my land to grow pot.

Some, such as environmental limitations on my use of my land reflect the feeling (for some, drawn from the bible), that we are stewards of the land, and that the land is not transitory, while any given owner of it is, and that therefore it should not be permanently maimed.

Some, like tax liens on my house, or taxes withheld from my paycheck in order to pay for social welfare programs, reflect both a moral notion of taking a bit of the cruel edge off of pure capitalism, and a pragmatic notion that it minimizes the risk of an uprising of the peasants to overthrow the rich.

There's not much, if anything, that you do actually own 100% of the rights to. Any one of these limitations might be right or wrong, a good idea or a bad idea. But why is society's judgment, acting through the state, that taxation for social welfare is a pragmatically and morally sound reason to put a limitation on our bundle of property rights, *categorically* different from the various pragmatic and moral justifications for other exclusions from that bundle?

Posted by: miab | Jan 27, 2005 12:00:13 PM

Posted by: oliver

Huh. Thanks BC for Friedman's name and key words "negative income tax." Apparantly the Johnson administration seriously considered it. Here's a link
http://www.econlib.org/library/Enc/NegativeIncomeTax.html

Posted by: oliver | Jan 27, 2005 12:05:35 PM

Posted by: Achillea

I'm assuming some progressive tax rate with a negative end could be concocted which still leaves an incentive to work.

This strikes me as a rather large assumption. Please correct me if I'm wrong, but I translate 'progressive tax rate with a negative end' to mean 'the more money you earn, the higher the percentage of it taken in taxes ... but the government will pay you to earn very little.'

Posted by: Achillea | Jan 27, 2005 12:37:30 PM

Posted by: John Turri

D.A. Ridgely,

there is no reason to believe that the overall growth of wealth in market economies over time is itself accidental, and in that sense the market definitely does reward past good behavior in the form of prudent long-term investing.

The overall growth of wealth in market economies over time might not be accidental, but how does that relate to whether individuals deserve their income? The "overall" perspective might be in terms of decades or even centuries, with lots of unpredictable cycles in between. So it's unclear, to me at least, whether such "overall predictability" implies anything at all when it comes to an individual's long-term planning.

e.g., by prudently taking advantage of business cycles by dollar cost averaging, etc.

What?

it remains probabilistically true that prudence and diligence, etc. do pay off for the vast majority of people the vast majority of the time.

Could you please reveal your evidence for this rather striking claim?

Posted by: John Turri | Jan 27, 2005 12:50:22 PM

Posted by: oliver

"it remains probabilistically true that prudence and diligence, etc. do pay off for the vast majority of people the vast majority of the time"

until the market crashes and most people suffer terribly. What frequency of sacrificial generations are we willing to accept in return for the prosperity of generations in between? Catastrophes happen, and thus was invented insurance, which paved the road for capitalism.

Posted by: oliver | Jan 27, 2005 1:01:21 PM

Posted by: Nick

Dollar Cost Averaging - DCA

The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares when prices are high.

Investopedia Says: Eventually the average cost per share of the security will become smaller and smaller. Dollar cost averaging lessens the risk of investing a large amount in a single investment at the wrong time.

Posted by: Nick | Jan 27, 2005 1:10:41 PM

Posted by: John T

EA seems addicted to straw men arguments. In arguing against natural rights theory she ignores the fact that the Framers also ignored it,note I say the framers and not the men,some of whom were also Framers who wrote and fought for independence. She uses Locke as a battering ram,albeit a well edited battering ram,but then says she disagees with him. I am doing this from memory as I don't wish to wade thru the Serbonian bog of her arguments a second time. What she does to Locke she also does,in my readings,to Hayek. By the way EA thanks for linking us to Amazon,do you work on commision? In quickly reviewing some of the same complaints crop up. It is generally granted that soe sort of social insurance should be provided,leaving aside moral considerations for a moment,if only to keep the peace and as Bennett Cerf is reputed to have said to prevent the needy from killing us. The question is,and wearily remains so,how much. There is much to dispute in EA's long winded saga[is it over,if not put me out of my misery], a couple of examples to follow,but remember the Serbonian bog. Somewhere in one of her epic postings she mentions bankruptcy courts and implies or states that this is in fact a surrender or loss of rights. If I may pull together my shatterd mind for a moment just the opposite is true. Although it was great fun on the part of the lender/seller to have a debtor flung into a feces filled and rat infested hole and watch him slowly rot it occured to someone that it was better to salvage a portion due him. Which goal the debtor could not assist him in if he was squatting somewhere covered in shit. Hence the genesis of bankruptcy courts,which by the way also protects the debtor,aka the sacred little guy. As to Hayek,suffice to say that EA scants his position on progessive taxation which must have or should have a bearing on her argument. Perhaps she would care to elaborate on that. It's reassuring of EA to throw capitalism a bone,unfortunately it's a bone with a string on it. Let the strong continue,let the weak drop out. Today I'm weak.

Posted by: John T | Jan 27, 2005 1:11:50 PM

Posted by: oliver

If national and/or global market collapse weren't a real and persistent threat, the United States wouldn't spend so much as it has bailing out the creditors of (other) debtor nations like South Korea, and wouldn't care nearly so much about who controls oil in the Middle East.

Posted by: oliver | Jan 27, 2005 1:12:40 PM

Posted by: oliver

The whole world would care a lot less about terrorism too, if the markets weren't houses of cards.

Posted by: oliver | Jan 27, 2005 1:14:36 PM

Posted by: Nick

This has a good example with numbers of DCA.

http://news.morningstar.com/news/MS/Investing101/DollarCostAveraging/dollarcostaveraging.html

Posted by: Nick | Jan 27, 2005 1:14:39 PM

Posted by: CW

"...the only argument she can offer is that there would be enough such people living in sufficiently dire circumstances without any hope of a better future that they would threaten the entire society. If that is her position, she should say so cleanly."

whether or not MS. Anderson will say it "cleanly", being a "liberal" not enamored of moralistic arguments for social welfarism, I will - with two additions. first, it appears arguable that extremes at both ends threaten society - I see evidence that beyond a certain level (not all that high), too much wealth can be as corrosive as too little, altho obviously in different ways. second, from a purely selfish perspective, other people's undeserved deprivation just isn't pleasant to behold - or more accurately in my case, to hear/read/see reported.

based on other comments, I know Mr. Ridgely and others are bothered to some extent by this unpleasantness - I don't know about the issue of wealth extremes as a threat to society. but in any case, suppose one does find other's extreme deprivation unpleasant, may have concerns about threats from below, but holds the libertarian view (my understanding) of "it's not government's business" (or, stated more consistently with the current topic, "it's not justification for a tax-funded collective response"). then what actions by whom does one propose to mitigate present and future sources of the unpleasantness and possible threats to society? private charities? corporations motivated by self-interest to promote a healthier consumer society? (both subject to free rider concerns, no?) other? or is one simply to carry on stoically?

BTW, this isn't a challenge - it's a real question. given the consistent libertarian theme of "keep government out of it" across the multiple issues raised on this blog, I'm trying to understand what alternative approaches are envisioned by those who do admit that market solutions don't always work. while realists have to admit that many government solutions have backfired, for critics to simply point that out gloatingly doesn't really contribute to addressing the concerns.

OT aside - and yes, all the evidence suggests Alger Hiss was guilty, a conclusion that was relatively clear to an objective observer even in the '60s. but so what?

Posted by: CW | Jan 27, 2005 1:22:59 PM

Posted by: S. Weasel

BTW, this isn't a challenge - it's a real question. given the consistent libertarian theme of "keep government out of it" across the multiple issues raised on this blog, I'm trying to understand what alternative approaches are envisioned by those who do admit that market solutions don't always work.

Private charity. Whittle down the legions who benefit from government largesse to those genuinely incapable of fending for themselves, and the number should be manageable. At least, that's the usual libertarian take on it.

Posted by: S. Weasel | Jan 27, 2005 1:46:43 PM

Posted by: Matt

Sometimes I wonder how the left2right people find the motivation to try and communicate with the right who want to listen w/o really listening, so that they can say they have and convince themselves that their ideas are really superior. Obviously, this doesn't apply to all of the commentators here, but it certainly does apply to some of them.

One of the things I'm seeing a lot here is a criticism of Anderson for failing to make a moral case for wellfare. The problem here is that Anderson undoubtedly appreciates the complexity of the entire argument about justice and realizes that would be attempting to much for this post. Right now, she is simply rebutting the argument that individual's have a right to their pre-tax incomes that precludes most forms of taxation.

D.A. Ridgely obseves that if nobody has a per se entitlement on his accumulated wealth, then it would appear to follow that nobody else does either. Now, D.A., in all of your posts you appear pretty respectful and reasonably thoughtful, but this just seems like intentional ignorance. Anderson makes the argument that the whims of the free market do not provide anybody w/ an entitlement to their accumulated wealth, but this hardly prevents other moral concerns from dictating who, in fact, does have an entitlement to some share of societies wealth. Anderson has not made much of an argument in that direction, but she hasn't really tried to. That doesn't mean those arguments don't exist, and perhaps we will be getting to them later.

I happen to have rather conservative economic policy positions, but my political philosophy lines up w/ Anderson quite a bit. I believe in a Rawlsian view of justice where liberty comes first. Rawls then makes what I believe is too strong of a claim for helping the least advantaged in our society, but I still agree that justice demands that we attempt to insure minimum standards for the poor.

Arguments that people have intrinsic rights to their wealth always strike me as a little absurd. When you recognize that the society you live in (and the government that allows it to exist) are responsible for your ability to accumulate 99.9% of the wealth that you possess, it just seems silly to make the argument that you have the only right to that wealth. Nozick's claim that taxation is the same as forced labor intrinsically relies on the assumption that taxation is, in fact, equivalent to forced labor. Brilliant. If you have a right to the fruits of your labor maybe the society you live in has a right to the fruits of their labor, which is the creation of a society where capitalism allows people to accumulate vastly more capital than they would have otherwise. A full explanation of my argument is too long for a comment, but what I want to emphasize is that this is what Anderson is making a case for. And that is a separate issue than deciding what justice demands we do w/ the wealth that the government taxes.

Where I split w/ a lot of liberals is on Hayekian views about markets. I believe in regulated, but free, markets and I also recognize that high tax rates don't work. Anderson's agreement w/ Hayek does not appear to be mere lip service, which is mildly surprising. My conservative policy positions come from the fact that when I look at government spending, most of it appears to be wasted. So while I agree that the government has the right to tax me, I hardly agree that the money should be wasted. Thus on economic policy I tend to fall into the conservative camp. But on philosophy I tend to fall in the liberal camp. These are two separate issues. When posters here worry about what the minimum standard of living for the poor ought to be, they are conflating these two issues. Undoubtedly, Anderson would make claims along these lines that we might disagree w/, but they are not involved in this issue.

Posted by: Matt | Jan 27, 2005 2:46:22 PM

Posted by: Rob Kar

Matt -- I agree with your basic response to D.A. Ridgley.

The point EA is making is a narrow one, which aims to debunk one specific, though seemingly pervasive, assumption made in many of the public debates. This is the assumption that the mere fact that one has *earned* an income necessarily entails that that income is *deserved.*

It's hard to see how EA could be wrong about this given the economic facts. And, indeed, the rise of modern bankruptcy law is premised in significant ways on the flip side of this same kind of argument. There was a time when we used to throw all debtors who could not repay their debts in debtors' prisons, because we assumed that failure to be able to repay necessarily entailed that the relevant debtors deserved punishment. But we now know that the economic facts are much more complex than that in capitalist societies where markets are being used to provide information on supply and demand. In these circumstances, the riches that markets provide us with also have a cost. In particular, we are all at some risk of bankruptcies caused by the very market forces that contribute to our social welfare. Modern bankruptcy law thus distinguishes between the 'good faith' debtor and those who are just unwilling to make good on their promises or are just trying to game the system. And the good faith debtor who has come into misfortune through no fault of his or her own is no longer thought to 'deserve' such punishment. Instead, we allow such debtors to dissolve, reorganize, etc., and these laws are to everyone's benefit in a capitalist economy. Businesses are emphatically *not* against this form of social insurance/social welfare.

To say that not everyone who finds themselves in bankruptcy proceedings *necessarily* deserves their misfortune is not--contrary to what D.A. Ridgley tries to infer from EA's related position--to say that none do. It's still possible--indeed, likely, that sometimes people deserve their income, or at least some of it, and sometimes they deserve their losses (with the same caveat). But what EA's argument points out, rightly, is such desert does not *necessarily* follow from facts about earning (or, by extension, failing to earn) in a capitalist economy.

Posted by: Rob Kar | Jan 27, 2005 3:32:29 PM

Posted by: frankly0

I'm kind of baffled by the line of argument in this post.

I guess I don't see why the real issue here is whether one "morally deserves" one's pretax income.

Look, if I win the lottery, I don't think that anyone will argue that I more "deserve" to win than all the losers do; indeed, in some important sense, I "deserve" hardly any of my winnings, especially if I invested little time or money to get it. But are those winnings, nonetheless, rightfully mine? It's a rare person who would dispute that they are.

But if my pretax income is rightfully mine, however little I "deserve" it, isn't that already problem enough for the notion that the government has a right to some of my income?

I think that the government's right to take my income has to based on other grounds, e.g., the need to pay for the societal overhead that is inherent in virtually any transaction in a capitalist economy (we don't perform our transactions on a desert island with people raised by wolves). It may be that the fairest way for the government to base its taxes has to do, at least in part, with how much I have done to "deserve" my money (an estate tax being an example of one that might try to take into account moral deserts) but that is a different matter.

Posted by: frankly0 | Jan 27, 2005 3:35:45 PM

Posted by: Rob Kar

Frankly0--I agree with most of what you've just said, but I don't agree that you're 'baffled' by the line of argument in EA's post. In fact, you seem to understand the basic gist of it quite well: it is an argument about the scope of desert, and your comments about the lottery suggest that you agree with EA.

What I think is troubling you is that lack of *desert* does not necessarily mean that you don't have a *property right* in something, and you think that there is a possible, separate, property (and not desert) based ground for concern with taxation. You are right, but EA handles property based concerns and their bearing on the issue in an earlier post.

So I think it's important to recognize that this post has a narrow focus.

Posted by: Rob Kar | Jan 27, 2005 3:46:44 PM

Posted by: oliver

My general position is that this blog suffers from a shortage of sufficiently harsh treatment for D.A. Ridgely, and while I think the climate of this blog is only improved by whacking him for the irrelevant and all too familiar two cents he's tossed at great length this time, as someone who throws his own two cents around a lot I feel obliged to defend DAR against Matt's seeming lumping of Ridgely's post here into a trend of deaf reactionary conservative responses. Arguably, this blog is a free speech zone, and not only did Ridgely make a civil segue to his irrelevant point, by the principle of equal time for opposing views, a reasonable (albeit misguided) person would say Ridgely had every right to balance Prof. Anderson's 15 or so implicitly pro-tax paragraphs with an anti-tax voice, especially if he reasonably perceived that no one was going to manage a response to the point Prof. A chose to argue explicitly, and especially if he reasonably perceived that the deaf reactionaries would be more likely to wade in if he didn't, to the further embarrassment of his cause. So, please, let's show the man a little more tolerance.

Posted by: oliver | Jan 27, 2005 4:16:26 PM

Posted by: frankly0

Rob Kar,

Well, I guess what baffles me is the notion that anyone would truly believe in any case that one's income enjoys a precise, direct relationship to what one "deserves" -- the lottery example is one obvious counterexample, but, as another, who truly thinks that a guy who lucked out in the dot com era by selling all his tulips before they crashed "deserved" his hundreds of millions of dollars?

The extremity of naivete required to believe that the lottery win and the dotcom luckout were "deserved" suggests the argument's something of a strawman. I think that most everybody understands that if we generally have a right to our pretax income, it's not because we always "deserve" it.

The point is, the only real argument here for taxation must go up against the notion that we have a right to all of our pretax income, and that is a far harder argument to make, because we very much believe we often have a right to income that we certainly understand we don't morally deserve.

Posted by: frankly0 | Jan 27, 2005 4:24:35 PM

Posted by: Glen Raphael

One of Ms. Anderson's unstated assumptions is that "society" and "government" are essentially the same thing, so my debt to the former can be discharged by giving money to the latter. I have strong contrary intuitions.

Consider this: today I didn't get mugged or robbed. EA thinks I should credit government for providing a background level of "law and order", and that the government therefore has an implied claim of unspecified size to my property. However, I'm more inclined to credit my neighbors as individuals for choosing not to mug or rob me.

Suppose I passed 50 people today on my way to work. Each of those 50 people /could/ have chosen that moment to beat me to death with a baseball bat, yet didn't. In allowing me to live, each of those people is individually responsible for 100% of my current level of wealth, health, and happiness. Does that mean that each of those people individually /deserves/ 100% of my wealth? Perhaps 100% is too large. Let's say 40%.

If the fact that I couldn't possess >90% of my current wealth without the help and cooperation of some other specific person or entity means that that person or entity is entitled to 40% of my wealth, then all 50 people I passed today are individually entitled to 40% of my wealth. I wasn't a math major, but I'm pretty sure the numbers don't add up.

So here's another way to look at it: just as those 50 people could have attacked me and didn't, I could have attacked them and didn't. So they owe me a debt of similar magnitude to that which I owe them. Thus, it all evens out: By committing to live and let live, by not stealing from others or hurting them, I enable those around me to live in harmony and abundance, discharging my debt to those who do the same to me. What I owe - all I owe - is to treat others with the same respect and kindness that they treat me.

And that's /it/. I don't owe 40% of my wealth to any particular organization or person in exchange for my good fortune. Because if I owed it to any one such entity, I'd owe it to all of them, and my pockets aren't large enough to discharge a >2000% debt.

Posted by: Glen Raphael | Jan 27, 2005 4:30:44 PM

Posted by: Terrier

Glen Raphael, with so many beneficent people walking the streets why would you not want to donate all of your money? And considering that the FBI did not detain you today for questioning and the ATF failed to knock in your door why not spread some of your largess around the governmental coffers?

The fact that we live in a society where people do not (for the most part) randomly murder their fellow citizens must have something to do with the fact that our system of government allows citizen participation. Likewise, it would be hard to argue that you could transport the Constitution to Mesopotamia 5000 years ago and institute a stable government with it. You don't have to be a citizen. I'm sure there are places remaining on the planet where passing 50 people to get to work without being killed is still a great relief and I would bet that governments in those places have much more difficulty taxing citizens.

Posted by: Terrier | Jan 27, 2005 5:05:16 PM

Posted by: Kian Wilcox

"Arguments that people have intrinsic rights to their wealth always strike me as a little absurd. When you recognize that the society you live in (and the government that allows it to exist) are responsible for your ability to accumulate 99.9% of the wealth that you possess, it just seems silly to make the argument that you have the only right to that wealth."

While it might be true that without government and society it would be impossible to accumulate 99.9% of the wealth that one has earned, it is almost certainly true that without food it would be impossible to accumulate any wealth at all. Likewise with emergency medical care. Just because a person couldn't have earned it without someone providing the service of food doesn't suggest to me that the farmer has some large claim on my wealth, and that he are justified in using force to coerce that claim from me. Rather, a variety of food producers compete with each other for customers, and that interplay of supply and demand reduces that claim to a relatively small voluntary exchange that betters us both. In the case of government and security, transportation infrastructure, etc., there is little freedom in supply competition, reducing the incentive for productivity increase, and worse, there is very little threat of withdrawal of payment because of high barriers to exit on government services (i.e., jail time for withholding taxes, the expense, both monetary and emotional, of moving out of country, etc.). What is the fundamental difference between the services that government provides (whether or not one wants them) and those services that farmers and doctors provide? All of them seem to be necessary (if not sufficient) conditions for prosperity. Why is it not alright for a group of farmers to storm the cities with shotguns demanding their 'rightful' share of my wealth?

-Kian

Posted by: Kian Wilcox | Jan 27, 2005 5:06:45 PM

Posted by: rtr

miab asks a great question: “But why is society's judgment, acting through the state, that taxation for social welfare is a pragmatically and morally sound reason to put a limitation on our bundle of property rights, *categorically* different from the various pragmatic and moral justifications for other exclusions from that bundle?”

First of all, only individuals judge, have the capacity to judge. This may be important, especially if the skeptics and their immoral Kantian anthropomorphist contemporaries really cannot be totally refuted. So all we might only have is the various pragmatic and moral justifications of individuals.

Nonetheless, there does indeed exist a *categorical* difference between taxation and the other alleged limitations: that categorical difference is voluntary and involuntary. That categorical difference is the reason for the existence of the words and actions of rape, theft, and murder.

Secondly, the “proverbial bundle of rights” has nothing to do with absolute existence or non-existence of property. Indeed, you are correct that there are many instances where total ownership of property *by particular individuals* is not the case. Certainly, regulated gated communities or condominium associations fall under that notion. What moral right or justification does a condo association have to assess fees according to the income means of its members if it is not contractually stipulated by *every* member? To unequally tax its members? To tax them at a flat income rate? They have no such right or justification so why should the association calling itself the “State” have that right?

Adhesion is voluntary agreement, any falsely claimed legal conceptions aside (and I mean by this controversial things such as copyright may be found in the future to be inherently wrong in the same way that slavery was found to be wrong). And at any rate the prohibitions against copying and charging people to view is similarly violent theft of the use of your property. Property, properly defined, is limited to the circumscribable material spatial domain (which is why of course fiat digital numbers can be manipulated so, and it necessary to compel acceptance). Ideas can never be owned to the exclusion of others by anyone. Thus, ideas, formulas, patents, and copyrights, are not property, and not ownable by anyone. Only the videotape or other material objects which have ideas imprinted upon them can be owned. It is only by custom and the threat of violence that one cannot use one’s own material property in any non-harmful to others manner, such as copying it or charging others to view it. The left should readily embrace this, but alas they too have sold out to corporate interests. This will cause the democrats to lose their young constituency the way vouchers will cause them to lose their black constituency, but that’s beside the point of this thread.

You do not own your parking spot on the street but you do own your vehicle. I do like the analogy though. There are restrictions on parking in front of a fire hydrant or in a snow zone. Does that enable moral justification for towing cars that are painted black on the fact of them being painted black? Towing care that are above or below a certain market value? Should welfare recipients get the Denver Boot after collecting a certain number of welfare handout tickets? Can or should they be towed outside the borders at some point?

“Some are part of the way our current laws reflect current moral views of what I "ought" to be allowed to do, such as limitations on my right to sell my body, or my right to use my land to grow pot.”

So are you saying then that you have no problem with laws that compel the “ought” of the use of your body? We could I suppose re-institute laws of compulsory prostitution for some crimes, or even just as religious or cultural punishments. Would you have a problem with this? Why? On what categorically compelling grounds? If you can rightfully be prohibited from growing pot you can be rightfully compelled to grow cocaine.

“Some, such as environmental limitations on my use of my land reflect the feeling (for some, drawn from the bible), that we are stewards of the land, and that the land is not transitory, while any given owner of it is, and that therefore it should not be permanently maimed.”

This also sounds like an argument against euthanasia, organ donation, and against many types of medical surgery, such as amputation. And that in a nutshell is why taxation is morally dangerous. The justifications for taxation are the same *categorical* justifications for forced euthanasia. Do you have a problem with eradicating the sick, the weak, and the poor by the method of extermination? Why?

Posted by: rtr | Jan 27, 2005 5:27:54 PM

Posted by: miab

rtr writes: "“Some are part of the way our current laws reflect current moral views of what I "ought" to be allowed to do, such as limitations on my right to sell my body, or my right to use my land to grow pot.”

So are you saying then that you have no problem with laws that compel the “ought” of the use of your body?"

No. Actually I am not a big fan of either of the laws I cited. I was citing them as another example of the fact that it is completely unremarkable that I don't own 100% of the rights regarding "my" property. That empirical observation doesn't mean I'm advocating each of these as a matter of policy. Some of these exclusions from ownership rights are sensible, some are not. But the mere statement that property is "mine" doesn't say much about which of those rights I actually have.

You (rtr), in particular, may not be vulnerable to accusations of *logical* inconsistency on this point, because of your remarkable willingness to go as far as you do in calling less-than-total rights over property to be illegitimate. If you truly believe that environmental limitations on land use are in the same category as forced euthanasia, then (1) wow!, and (2) I can't claim that you're being inconsistent.

*However* this also also means that your conception of what ownership rights *should* go along with owning property is one that is not, and has never been, the list of ownership rights that *does* go along with owning property.

Maybe at that magical moment when our ancestors first formed the social contract that created "property", they included a clause that said "Provided, however, that the words "my" "mine" "property" and "ownership" shall in no case be understood to mean total dominion over every aspect of the thing owned, but rather shall always be understood to be in part subject to some limitations and some competing claims, including claims of the state (should one ever come into existence from this state of nature), and claims of the earth against excessive environmental harm."

So if you never really owned 100% of the rights to something, the part being taken might not have been "yours" in the first place.

Maybe bad policy, but not theft.

Posted by: miab | Jan 27, 2005 6:31:55 PM

Posted by: neal

Arguing in the abstract, let's take the major social programs funded by the US government, mediCaid, Welfare, and even social security. Have these programs pushed forward human knowledge? I maintain, that by and large the answer is no. These are programs that improve the welfare of those living today.

Say instead this money were left in the private sector. There is a strong motivation in the private sector to be more efficient. The more efficient, the better able the company is to compete and grow. That means better productivity, and that means better lifestyles and opportunity for the next generation, at least on average.

So, you can say things like "Gee, market forces don't redistribute rewards based on what's morally correct," but that's not what you want them to do. Redistributing rewards based on morality can shortchange the next generation, and that's not fair.

Posted by: neal | Jan 27, 2005 6:33:31 PM

Posted by: rtr

miab: “It is completely unremarkable that I don't own 100% of the rights regarding "my" property.”

I’ll answer this while also answering what it is that the libertarian “right” offers in opposition to the leftist “wrong”.

Whenever or wherever you do not own 100% of the rights regarding “your” property then it is not “your” property. Ideas can belong to everyone. What more than this do socialists or leftists need? Not only is this realm inhabitable by all but it is *equally* inhabitable by all. Everyone has 0% ownership rights in this realm. This is by far the most valuable part of existence in that it efficiently creates more from less, is the purest part of the engine of wealth production. Try and put that in perspective and think what it realistically implies. It means *all* those afflicted with AIDS can be treated for relative pocket change. It’s well within the means of a relative few to do it -- chump change. It means much better computer operating systems cost the effort of some mouse clicks for the majority. It means genetically engineered bountiful food crops can eradicate world hunger, again for relative pocket change. It’s the biggest concession (actually it’s rightfully not a concession but an actuality only prevented by the use of violence, the same violence that is taxation) the left ever got or ever will get. Have you even looked at it? It is much more than everything you need to bring about a more just more egalitarian society -- without violence. Try and imagine the wealth “transfer” that implies from the corporate world and the holders of patents and copyrights to everyone else.

You always and everywhere own 100% of the rights regarding your body, which is your property. No contract can ever eradicate that. Marriage cannot prevent divorce or coerce rape. It works the same way for bankruptcy. The most any creditor can demand back is the original property or market value of it. If the original property or market value of it is gone, that was the risk the creditor took upon lending to the debtor. The creditor and debtor can voluntarily agree to work it out or the relationship is over to the extent of due process.

What is all that can be owned? Land and objects. The division of the ownership of land is now spread among billions and not among a relative few tyrants (only for the most part because of the blindness of socialists and leftists who are stuck in the mindset of conquering tyrants). It is in everyone’s economic interest to trade with each other because trade by definition increases the material wealth of both parties to the transaction. Thus, it is in the interest of all those to increase the wealth of all others by trading with them. Thus, it is in the interest to form “commons” such as roads and public merchant squares to facilitate trade. Why should we pay taxes to build roads when the Walmarts of the world are willing to do it, FOR FREE? They want to trade with you, just like you want to trade with them, and everyone else. All this competition for trade constantly brings about better bargains for the poorest least able with no necessary work on their own part.

Home building companies want to sell land and develop subdivisions and houses, offices, apartment complexes, and mega malls. Competition among builders, owners and renters, brings about better deals for all if it is allowed to happen, if violent force is kept at bay (and taxation is violent theft). That is all that is necessary to multiply by 10 the living standards of 99% of the poorest. Only the spite that the wealth of the richest might be multiplied 1,000 fold keeps the living standards of the poor lower than they otherwise would be. The jealousy of the left causes the misery of the poor as much as the corporate usurpation of the right, if not more so. Is the left blind that it was private property and contractual free trade that has raised the living standards an incredibly-told-fold in a mere few centuries?

Ideas and thus education are now cheaply available everywhere on the internet. Why pay millions of percent more for public education and the 70% administrative skim for public education?

What else do the poor need? They can have free education, almost free food, almost free medical drugs. Millions can take medical courses on-line and constantly improve the quality and lower the cost of providing medical care. Are programmers too stupid to program machine to perform surgeries? I think not. Millions of people are competing to offer the best deal on shelter. Wake up already! It is the violence of taxation, the violence of theft of property, and the violence of preventing the use of property that is holding not just the poor, but everybody down.

Just in case anyone is idiotic enough to retort what incentive would there be for anyone to invest in technology ask yourself why would anyone post to this blog if they weren’t being paid to do so. Collaboration is necessarily inherent in trade. Go google for some self help groups on the web, whether psychological or medical, and take note of the pure incentive of trading knowledge that dwarfs the pure profit motive. And the pure profit motive is still in full force as well, as those selling objects with the latest best knowledge imprintations at cheaper cost will drive those selling older knowledge imprintations at higher cost out of business. Not to mention those attempting to invent in relative secrecy for limited time monopolies will be at a huge disadvantage to the collaboration of millions.

Posted by: rtr | Jan 27, 2005 7:52:49 PM

Posted by: Adam

A number of people seem to be making the following sort of objection in the comments here:
"Prof. A suggests that you don't deserve get more than everyone else just because you are luckier than them. But there are situations where you do deserve to get more than everyone else just because you have been luckier than them - e.g. if you win the lottery." One might think that the situation with respect to earnings under capitalism is rather different than the lottery situation.
Suppose that there are 5 us each with 5 bucks. 2 of us decide to spend all our money on coke and enjoy ourselves whilst the three others, fully aware of all the risks involved, buy lottery tickets. If one of those three wins the lottery, it looks like he deserves to have more than the rest - everybody knew what the risks were, they all had a choice to opt in or opt out.
But capitalism doesn't look like that to me. Suppose that 5 of us are on an island and in order to survive we all have to work for its ruler. Despite the fact that we all work equally hard, at the end of the year he decides arbitrarily to give 1 of us more that the others. That guy is just lucky. The rest of us would reasonably complain - "he didn't deserve that!"
I suggest - the luck one is subjected to under capitalism resembles the island more than the lottery case - nobody has the option of entering or not some big capitalism lottery they details of which they know. People just have to work to survive and how well they fare does not (for the reasons given in the post) track how hard they have worked or any other criterion of desert.

Posted by: Adam | Jan 27, 2005 11:27:26 PM

Posted by: frankly0

Here's a problem I see with Elizabeth Anderson's analysis.

To begin with, I'm not sure that there's anyone past adolescence who doesn't understand that income is, at least not infrequently, not fully deserved. There is the lottery win example, and the dotcom luckout example, which I mentioned above.

But here is how the question of "moral deserts" of income more typically goes. The idea is not that the market fixes on PRECISELY how much an individual deserves in all cases, but rather that it gets PRETTY CLOSE to what he deserves in most cases. Here the distinction between whether the market is looking forward or backward is mostly quite irrelevant, particularly in cases in which the incomes for a given kind of job are relatively stable over an extended period of time -- by far the most typical scenario.

Now I think that even in the case of such jobs, luck still plays a decided role -- who does not understand the merit of common complaints that Joe Blow is way overpaid? Yet there is certainly often the claim that the overall payrate for a given profession is fair and deserved because the market has stabilized over time at its current figure.

I haven't really worked out what this observation does to Anderson's argument, exactly. But if people believe that in many, maybe most cases, the vast majority of one's income is indeed "deserved" because the market has fixed on it, in virtue of a relatively stable payrate for one's profession, then it may present an ongoing problem for the view that the government has a right to tax one's income.

This would especially seem to be true if one typically "deserves", say, 90% of one's income, but the government chooses to tax at a rate of 45% of one's income overall.

Posted by: frankly0 | Jan 27, 2005 11:30:30 PM

Posted by: CDC

Money has three functions: It sends a signal to the market to produce a specific good. (I see that tomatoes went very quickly back to $1 from a high of $3) It - however imperfectly to the redistributionist mind - distributes goods and it provides an incentive to produce goods wanted by the market. Interference with any of the three functions also interferes with the other two. So, if - in his infinite wisdom - Senator B.G. Bro decides that X doesn't deserve y% of his income, the overall efficiency of the economy suffers. Sometimes the reduction in efficiency is worth it, and other times we get the Lawrence Welk museum.

Friedman 101.

Posted by: CDC | Jan 28, 2005 12:27:46 AM

Posted by: Paul Deignan

Think backwards in time and see if the principles that are being asserted remain true: 1000, 5000, 20,000, 50,000 years?

How did this society of ours develop? Out of a crackerjack box?

Remember ultimately, societies are a product of the individuals' will to act and interact. There is no ethereal and transcendent "Spirit of Government" that springs into existence no matter how many years in school it takes to understand arbitrage (no matter how complex the interaction -- I'm making a joke here).

Posted by: Paul Deignan | Jan 28, 2005 5:35:50 AM

Posted by: Paul Deignan

If no one has a per se entitlement to his accumulated wealth or current earnings, then it would appear to follow on the same grounds that no one else has such a claim on it, either. If no one else has such a claim, it would appear to follow that no collection of others (e.g., a democratic majority) would have such a claim. They can, of course, exercise power to take such wealth or earnings and they can rationalize their acts with utilitarian arguments, but in the sense of moral justification which utilitarian arguments necessarily fail, they have established no moral right to do so.

This is sound.

Posted by: Paul Deignan | Jan 28, 2005 5:53:51 AM

Posted by: Paul Deignan

Anderson makes the argument that the whims of the free market do not provide anybody w/ an entitlement to their accumulated wealth ..

This was in response. The error here is the understanding of the market. It is not an independent entity -- it is simply a group of people trading among themselves.

Posted by: Paul Deignan | Jan 28, 2005 6:03:43 AM

Posted by: Paul Deignan

So, the actual question is not whether the individual has a moral right to property, but over the limits of the domain of sovereignty of the individual as she interacts with her environment.

Property has no meaning without use, even if the use is purely intellectual (as in admiring art at the Met).

Posted by: Paul Deignan | Jan 28, 2005 6:26:28 AM

Posted by: abad man

EA States, “This isn't to say that virtue makes no difference to what returns one may expect for one's productive contributions. The exercise of prudence and foresight in laying out one's production and investment plans, and diligence in carrying them out, generally improves one's odds. But sheer dumb luck is also, ineradicably, a prominent factor determining free market returns. And nobody deserves what comes to them by sheer luck.”

This conclusion seems to make a pretty big logical jump. She states that virtuous behavior increases one’s odds for good returns. Then she seems to suggest good returns are the result of sheer luck. While luck may have something to do with a poor outcome, good returns usually require some amount of planning and effort. Otherwise what value is there to work? The fact that one’s efforts may not be compensated, or under compensated for, does not mean that another’s efforts have no value. Nor that the other person is not deserving of what they receive for their efforts. Doctors, Lawyers and Professors do not sit around for years playing dice trying to advance in their fields. If they did maybe your conclusion would have more validity, but in reality some sort of merit system is in play. Some amount of effort and work goes into success. Of course to concede that one can accept responsibility for success, one must also concede that one can be responsible for failure. Your argument attempts to reverse this and implies since no one is responsible for and deserves success, no one is responsible for failure either. In case you haven’t noticed everyday one encounters discourteous, unhelpful, and lazy people doing a damn poor job of whatever they are attempting to do. Luck has less to do with their lot in life than their attitude. I know this is not universally true, but neither is EA’s assumption that everyone is trying just as hard as they can.

Your argument is similar to the church’s when it wants one to tithe. The church will state everything comes from God. God has first right to the fruits of your labor because they come from no virtue of your own, but rather through God smiling down on you. Luck or God, the argument remains the same, what you do, and the choices you make have no inherent value and you have no claim to what you produce. Therefore, if you follow this line of reasoning to its conclusion, your life has no individual value. (Substitute life for pre-tax income in EA’s argument and you will see my point.)

I deserve what I earn and what I own. Bad luck may take it all away tomorrow. I might not deserve the bad luck, but that would not make my neighbors less deserving of what they own or earn because I had bad luck. I get up in the mornings and go to work for a fee agreed on by my employer and me. I produce or give something of value and I am compensated for it. What happens to others does nothing to alter the moral content of the exchange between my employer and me. Society does not produce goods, I produce goods and I do deserve what I get to produce them, value for value. This seems intuitively correct because it is correct. Certainly more correct than I do not deserve what I earn because what I earn comes from sheer luck.

I believe you are trying to construct a right of the state to tax me, out of a responsibility I have to the state to pay taxes. If the power of government is suppose to come from the people, my responsibility to pay taxes, as opposed to the right of the state to take taxes, does the best job of ceding the power to me. If I have no right to what I produce (earn) and own then no level of taxation by the state is unjust.

Fairness, Charity, and “Social Insurance”, (there is an euphemism if ever I herd one), have little to do with the issue of property and income. It may be good and right for society to be charitable, and provide a basic level of support for all of its members, but again I believe it is a big jump in logic to where this support is owed to all members of society. Here perhaps more than on the income side, should the concept of desert come into play. If someone behaves without virtue, and sheer good luck does not rescue them, do they deserve charity? Is it my or society’s responsibility to subsidize the poor choices of others? Personal responsibility, now there is an interesting topic for discussion and probably a major area of disagreement between the left and the right.

Posted by: abad man | Jan 28, 2005 7:48:16 AM

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