A Very Long and Tedious Piece

I often go round and round with Dave Budge, but never really confront the issues he raises in a systematic fashion. Usually, I characterize his arguments, and he claims I have mis-characterized, restates, and then again. We recently had a rather long drawn out debate, and he took time at his blog to put up a thoughtful analysis of what he thinks I believe. This is my response.

CAUTION!!! This is not for everyone, but I do invite others to tear it apart. Italics are Dave’s words.

I have asked, repeatedly in fact, that those who believe in various forms of collectivism – from weak to strong – provide me the moral rationale for forcefully taking property from one person and giving it to another. Very rarely have I gotten a sophisticated answer.

The rationale for “forcefully taking property from one person and giving it to another” is in the constitution – we seek to “establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.” Article 8, Section 1: To lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.” The constitution was amended in the early 20th century to allow for an income tax.

Income taxation fits the bill – it is forcible confiscation of wealth. Others propose alternatives – national sales taxes and the like – still others propose scaling back government services to the point where taxation to the extent that it exists now would not be necessary. But for so long as we demand the level of service we do – primarily our massive military complex and large social programs, we need to tax incomes.

Dave is a libertarian and conservative, and doesn’t believe in the level of government we have now – in fact, believes that it is a slippery slope that leads to totalitarianism, though that never seems to materialize. It’s an aged argument – that we invite ourselves into bondage by doing good things for ourselves. I look around and see signs of totalitarianism, but not in social programs, but rather from a right wing that is using fear to get us to give up our most basic freedoms. Another day.

In many respects it constitutes the rule of law that we need to provide for an orderly society. In matters of encroachments of personal rights perpetrated by individuals it’s necessarily the fabric of the “social contract.” But at some point the majority will sanction actions by the, removed and third party, government that entirely violate the rights of the minority. With majority support those actions are understood as morally absolute. Then society holds government as religion with a blind acquiescence to colloquial dogma. And we do it with feel good language like “the greater good” – whatever that means.

I challenged Mark Tokarski to use as a criterion to justify various social programs:

… explain to me whether the outcomes of those programs have been:

A) Moral
B) Effective
C) Efficient

On morality he answered:

Morality is a human construct, not given us from without. It is how we decide (what) is good for us, what is not. Some say it’s evolutionary – maybe so. But the greater good is the whole point of moral systems. So some things seem right to individuals – to accumulate without purpose, to refuse to take care of the commons, to refuse to pay a share over for the common welfare. For the greater good we say these people are selfish and short-sighted, and we set our rules in spite of them. (Yes, I’m talking about you.)

This “definition” of morality may have some merit but it cannot be taken as a moral absolute and avoids any discussion of context or moral realism. For example, this was the argument that Truman made in using atomic weapons on Japan. That implies that actions are moral based on a preconceived projection of net positive outcomes. It’s classically embedded in Hume’s “is/ought” problem. An action is considered as “is” good rather than “ought” to be good and consequences are avoided. The problem is that the antecedent supposition is often wrong and it’s arrogant to assume otherwise.

Additionally, Mark’s proposition that accumulation of wealth comes without purpose. But the accumulation of wealth has a great purpose in providing capital which is employed in all economic activity. Even socialism recognizes this but asserts that such accumulation is best held by an egalitarian state. He also makes a bad assumption that those who accumulate wealth “refuse” to pay for the common welfare. This is prattle. Capitalists understand that ensuring some baseline of, as Mill would say, social happiness serves rational self interest. But the economics of doing so not only suffer from diminishing returns but, at some point, turn negative on society as a whole. Additionally, stating that capitalist “refuse” to pay for the common good is an outright canard. The only people that usually take this position are anarcho-capitalists and, as far as I can tell, none of them are captains of industry.

(I mentioned at some point that slavery is “efficient” – lost in the shuffle.)

I leave the morality argument to others. I’m caught up in the idea of greater good. It serves our neighbors well if we don’t raise hogs on our property. Their institution of zoning ordinances restricts my freedom, but the end result is a moral good. Assertion of collective will over individual preferences is at the heart of an orderly society. And as with everything, we don’t debate the fact, but the degree to which we implement the fact.

Here’s a fundamental flaw: Dave confuses the “accumulation of wealth” with creation of wealth, and seems to be saying that accumulation equals creation. It would naturally follow that we can’t have large enterprises without wealth accumulators, ergo we need wealthy people to have an industrial society. That is essentially the Randian premise – I think if you follow it further down the line it will get into the idea of the excellent few making live bearable for the mass of us – Dave calls them “captains of industry”.

I’ve often wondered about this – why we bow to people like John D Rockefeller – he was a wealth accumulator, a man who harvested the bounty from the labor and creativity of others, a man who forcibly drove others out of the marketplace. No hero of mine. Imagine, for a second, a man who has accumulated $1 million. He banks that money, and the bank lends it out to others who invest in new enterprises. Now imagine 1,000 ordinary Joe’s, each of whom have saved $1,000 and have put the money in the bank. Same result. From Rand we get a slavish worship of wealth accumulators and a disdain for ordinary people that is at the heart of Dave’s philosophy. The greatest freedom, the only freedom we have that seems worth fighting for is the right to accumulate. This is where we differ.

Wealth accumulation is, in and of itself, no great accomplishment. Great fortunes like John D’s did a lot of good when he gave it away – the University of Chicago is an outstanding legacy – but while concentrated in one family, created an aristocracy. I don’t value aristocrats. I don’t see any value in passing fortunes from one generation to the next, as without fail there is regression towards the mean. George W. Bush is a prime example, but not the only one. In the end, we are governed by a class of wealthy who have laid claim to the finest educational and cultural upbringing, but who are at their core mediocre. And mediocre leaders fail to inspire and commit huge blunders. Ergo …

Ayn Rand mistook collective genius – the drawing upon each other that provides the synergism that drives human creativity – and laid it all at the feet of a few men. This is, in my view, her greatest mistake – to presume a trickle-down world rather than one in which intelligence and wealth creation are a community product. And it is the investment in community, versus individual estates, that separates those of us on the left from our compatriots on the right. It’s not a few good men, it’s a society.

Accumulation of wealth does indeed happen without purpose, and needs to be routinely undone. There are among us geniuses whose creativity has spawned economic activity and fostered wealth creation, and these geniuses have (and should have) collected great fortunes. But there comes a point … along with the income tax came the idea of progressivity and the estate tax, and the premises of these taxes was based on the concept that Dave disputes, greater good. People saw something happening during the Gilded Age – something that happens naturally in all societies. Huge amounts of wealth were concentrating in a few places. The people who accumulated this wealth were taking control of government in addition to monopolizing free market enterprises. It was decided that huge concentrations of wealth were an anathema to democratic societies.

We don’t want kings and pawns – we wanted an equitable distribution of wealth. We feared aristocracy, and all that it entails, including perpetuation of mediocrity that usually follows great fortunes after the creative genius has passed. For all of these reasons, we decided to tax income, to do so progressively; to tax estates, to do so progressively. Greater good.

You can have extremes of wealth and poverty, or democracy, but not both. Some Supreme Court justice said that.

He (Mark) says:

I leave it to you to explain to me how private greed is really a moral good. I leave it to you to explain to me how personal freedom, in a society where we each depend on the labor of others to survive, can exist without limits.

I think I’ve addressed the issue of why private accumulation of capital is a social moral good. I will not, however, associate greed with capitalism. Lots of people are greedy. Down and out drug addicts are greedy. People who game the entitlement system are greedy. Anyone can suffer from greed. Greed is one of the Seven Sins and I don’t assume it’s a moral good. At the same time I don’t know where anyone has proposed that personal freedom doesn’t have limits. I’d like to know who has said that other than Mark and those who misunderstand tenets of classical liberalism. We’re not free to steal, murder, break contracts, interfere with other’s property, etc.

This is a misunderstanding based on misuse of the word “greed”. It’s something we all share. A better term is “self-interest”. Substitute it in Dave’s paragraph above, and it loses some of its preachiness. Self interest is a natural and wholesome thing, and no one disputes that it is vital and necessary to our existence. And indeed we need to accumulate. But then we go to extremes, and we have John D again, and because we have a necessary and wholesome attribute of human existence working well on a small scale, we say that it must be a good thing on a gigantic scale too. Ergo, John D’s vast accumulation of wealth was a good thing, and breaking up that fortune bad.

It’s the essential difference. There comes a point where wealth accumulation no longer serves the greater good, and we place limits on it. We fear rule by wealth as much as the chaos of no rulers at all.

I have never said that government is a force for ill. What I’ve said is that government is a vehicle for ill. And I can use Mark’s own complaints in showing how society is worse off from government intervention. Let’s just take the tax code for starters.

Why is it fair, assuming codified unfairness is immoral, that the tax code arbitrarily rewards people who work for employers who subsidize health insurance? Why is it fair that homeowners get to write off their mortgage interest while renters don’t. Why is fair that wealthy people can get tax credits for locking up land for their personal use with conservation easements? Why is it fair that parents of young children get a refundable tax credit (which can be used to offset payroll taxes) when others don’t. Why is fair that the central bank can manipulate interest rates on the backs retirees who use CDs for income? And I’m sure if I think about it for a while I can come up with a few hundred more example.

Here we are dissembling into the odd features of the tax code. It’s a mishmash, I’ll grant you, but there is in every feature mentioned above that one thing that Dave even disputes exists: greater good. We want to encourage home ownership – it’s a great way for ordinary Joe’s to save. We want to preserve undeveloped land, so we encourage farmers and ranchers to forego subdividing. We want to help out low income parents by foregoing the payroll tax on their low income stream, and we do so by means of the child care credit (the refundable one is relatively unused – it’s the non-refundable child credit that is most widely used. The non-refundable child tax credit does not offset payroll taxes). Private central banks I don’t know for –

There is much unfairness in the tax code – mostly it is a reflection of who has power, who doesn’t. There is within it right now a hangover from the days when ordinary Joe’s were more influential. But that is on the wane – the tax code has lately been rewritten to favor certain types of income while punishing others, and it reflects the power of wealth accumulators. Capital gains and dividends are especially favored, while secondary favor is bestowed on interest, rents and royalties. Most disfavored are wages and self-employed earnings.

But the heart of the matter is an income tax – Dave doesn’t want it. We disagree.

And if one, such as Mark, asserts that greed is a motivating force then he has to look no further than government’s role in enabling the rent seeking of, say, big energy, big pharma, military suppliers and all that is lobbied for interests he contends are motivated by greed. Why is it that there is a 50 cent import duty on ethanol when we desire to separate our dependence on middle-east oil? The government’s largess is the biggest playground for mischief in the economy and it boggles the mind one who complains about the malfeasance of business doesn’t acknowledge that it’s government that’s the real complicit enabler.

As I said before, the tax code is a reflection of who has power, who doesn’t. We on the left have long recognized that wealthy self-interested people have managed to translate their own self-interest into the public, or greater, good. They can do this because they have undue influence over politicians, and they have undue influence because of the way we structure our campaigns to allow private wealth to supply the money that candidates need to buy media time to diddle people with advertising propaganda. That’s a basic change that we on the left advocate – public financing of political campaigns, that would alleviate many of the ills that Dave describes above. Just one – ethanol – can be laid a the feet of private concerns like Archer Daniels Midlands. Take away their sway over Midwest politicians, and ethanol evaporates.

Quoting me, Dave goes on:

I define a system that seeks equitable distribution of necessary resources for all – necessary resources. I don’t care about TV’s and Twinkies – only health care, education, transportation, basic foodstuffs and utilities. I seek to use government to manage these necessities and see that all have access. A system that only rewards private greed usually leads to a few select getting to best and the majority being ill served. This yields societies as we see in Latin America with enormous poverty and opulent wealth, side by side, no middle.

First, I’m not sure about his definitions of either “equitable” or “necessary.” In the roughly 14% of the population that lives in the lower class most have 2 TV’s, 2 cars, a VCR and Twinkies are eligible foods stuff that can purchased with food stamps. And the irony can hardly go unnoticed that it’s the poor who suffer the most from obesity and disease from poor nutrition (not too little but the wrong type of food) who are the primary beneficiaries of the attempt at an equitable distribution of resources. Government schools are failing the poor and the semi-socialized medical system most harms the less educated working poor with price controls that shift the burden of payment to another cohort. Yet, he uses as an example of capitalism creating economic oligarchy counties where government corruption protects the upper class while he avoids the fact that huge middle classes are being born from places with significant economic freedoms like Taiwan and Singapore. He makes the assumption that it’s capitalism that causes the disparity in wealth while completely avoiding the issue of corruption.

(By the way, an aside, Taiwan gave up private health care and went to a national system, much like Canada and France’s. It’s wildly popular and successful.)

That’s quite a mouthful – I’ll try to break it down. If you travel to Nicaragua, you’ll find that most people there own two or more TV’s. As a measure of wealth, the TV is rather useless. I doubt the prevalence of multiple automobile ownership among the working poor that he cites. American diets are awful, centered as they are around processed foods and burger and pizza factories. Fat and high fructose corn syrup are cheap to produce and affordable to low income people, who aren’t well-versed in diet and exercise. Some government schools are failing their students, mostly in inner cities, and the answer the right wants to promote there – to create a new income stream for private corporations, is fraught with problems of its own.

But notice how this is the only solution he proffers – privatize. Despite the widespread success of well-funded public schools in place like my home town, when schools fail he automatically attacks their funding source. A little creativity in finding solutions to the problems of inner city schools, which translates into problems with blacks integrating into our culture, would be nice.

Mark has a fatal flaw in understanding. I have never, not once in my life, advocated that we don’t have government. But he’s right, as I’ve outlined above, that too much government is exactly the source of a great deal of inequity. As for owing a debt, I can’t speak for who owes whom for what but it is in our best interest to be compassionate and charitable. Mark, like so many on the left, assume that the only fair arbiter of charity is the government. How foolish. Organizations like the Salvation Army and the Red Cross distribute goods and services for about 5% of total resources where the government is significantly less efficient. The centralized decision making in the distribution of scares resources has never in the history of man shown to be either more “fair” or more efficient that million of consumers making choices to which business quickly adapts.

This is a false dichotomy – to presume that I advocate only government as the arbiter of charity. Private charity is healthy and an important part of our society. But it’s not enough. That’s all. If we are left to private charity to take care of our underclasses, we are in the world that Dickens described. Do we really want to go there?

So I will concede, in a limited way that, it is a moral choice to seek an outcome where society strives to provided the greatest good. He makes no coherent argument that the government is the best at doing so and builds a straw man who acts only motivated by greed. And still, he doesn’t make the moral argument for forcibly taking money from one person and giving it to another. But if he’s really interested in it it there are places from which he might start (with whom I have multiple disagreements) – as opposed to his genuinely good heart.

I was instantly drawn to the paragraph that started out “So I will concede”. (His link leads to John Rawls, by the way.) The “straw man” of people motivated by greed merely refers to self-interest and the invisible hand as the greatest arbiter of wealth in societies. The word “greed” is pejorative and should be excised. Self-interest is a nice substitute, but I cannot fathom a society where individual short-term good is the best planning tool for our long term health.

I mentioned at one point (and he disputed) that every government program we have today, for all their inefficiency and ineffectiveness, was put in place to remedy a greater inefficiency that existed in the private sector. Our solutions are imperfect and we could work on remedying that problem were it not for the Ayn Rand problem – the people on the other side of this debate are so extreme that they want to take us back to a time when there was no government help for the poor, when everything was done through the private sector, and government’s only role, to quote Tommy Thompson, was to “protect our shores, deliver our mail, and stay the hell out of our lives.” I’m sure that government mail delivery would go too.

And for the record, I’m not a heartless bastard who doesn’t think we should help the needy. I just question the fairness, efficiency, effectiveness, and wisdom of it being done so by a government that has such a poor history of doing so. No one has ever said that free-markets are fair. What we have said is they are more fair than anything else that has been tried. But Mark seems to think that a few smart people in government can do the job better than a million people working for their own rational self-interest. That’s elitism and arrogance. The striking thing is that the paradigm he proposes has been tried over and over again with such spotty results. One would hope that such “progressives” would look outside of the conventional wisdom for solutions. Unfortunately they don’t.

I mentioned to Dave that his arguments contained false dichotomies, and this paragraph is loaded. Either or. Government fails. Tried and failed. There are plenty of examples where our formulas have succeeded, and places where people share a higher tax burden in exchange for a more comfortable, less extreme society. America is a very uptight place. Western Europe has found a better solution to our frenzied existence, and studies show that people there are happier than us even though they don’t have the extremes of wealth so prevalent here.

But I don’t look to government to solve all problems – just mediate a few of the more persistent ones where the private sector has, throughout recorded history, shown such spotty results. Social Security works. National health care works. Public education works. Private entitlement payments to working age individuals doesn’t work so well and engenders new problems. I don’t have all the answers. Not by a long shot.