Ben Shoemate's Notebook

(Photo by Francisco Diez)

Do you have too many readers of your books and articles? Want to reduce traffic on your blog? It turns out, there is a foolproof way to alienate many of your fans, quickly and at almost no cost.

It took me years to discover this publishing secret, but I’ll pass it along to you for free:

Simply write an article suggesting that taxes should be raised on billionaires.

Really, it’s that simple!

You can declare the world’s religions to be cesspools of confusion and bigotry, you can argue that all drugs should be made legal and that free will is an illusion. You can even write in defense of torture. But I assure you that nothing will rile and winnow your audience like the suggestion that billionaires should contribute more of their wealth to the good of society.

This is not to say that everyone hated my last article (“How Rich is Too Rich?”), but the backlash has been ferocious. For candor and concision this was hard to beat:

You are scum sam. unsubscribed.

Unlike many of the emails I received, this one made me laugh out loud—for rarely does one see the pendulum of human affection swing so freely. Note that this response came, not from a mere visitor to my blog, but from someone who had once admired me enough to subscribe to my email newsletter. All it took was a single article about the problem of wealth inequality to provoke, not just criticism, but loathing.

The following should indicate the general gloom that has crept over my inbox:

I will not waste my time addressing your nonsense point-by-point, but I certainly could and I think in a more informed way than many economists—whose credentials you seem to think are necessary for your consideration of a response. Do you see what an elitist ass that makes you seem? I think you should stick to themes you know something about such as how unreasonable religion is. I am sure I am not the only one whose respect you lose with your economic ideology.

Nothing illustrates why people should not leave their comfort zones than this egregiously silly piece….You make such good points about the importance of skeptical inquiry and about how difficult it is to truly know something that your soak the rich comments are, as a good man once said, not even wrong. Take care.

Sorry Sam. I used to praise and promote your works. You’ve lost me. Your promotion of theft by initiating force on others is unforgivable. You’re just a thug now, attempting cheap personal gratification by broadcasting signals which cost you nothing, just like Warren Buffett.

Many readers were enraged that I could support taxation in any form. It was as if I had proposed this mad scheme of confiscation for the first time in history. Several cited my framing of the question—“how much wealth can one person be allowed to keep?”—as especially sinister, as though I had asked, “how many of his internal organs can one person be allowed to keep?”

For what it’s worth—and it won’t be worth much to many of you—I understand the ethical and economic concerns about taxation. I agree that everyone should be entitled to the fruits of his or her labors and that taxation, in the State of Nature, is a form of theft. But it appears to be a form of theft that we require, given how selfish and shortsighted most of us are.

Many of my critics imagine that they have no stake in the well-being of others. How could they possibly benefit from other people getting first-rate educations? How could they be harmed if the next generation is hurled into poverty and despair? Why should anyone care about other people’s children? It amazes me that such questions require answers.

Would Steve Ballmer, CEO of Microsoft, rather have $10 billion in a country where the maximum number of people are prepared to do creative work? Or would he rather have $20 billion in a country with the wealth inequality of an African dictatorship and commensurate levels of crime?^[1] I’d wager he would pick door number #1. But if he wouldn’t, I maintain that it is only rational and decent for Uncle Sam to pick it for him.

However, many readers view this appeal to State power as a sacrilege. It is difficult to know what to make of this. Either they yearn for reasons to retreat within walled compounds wreathed in razor wire, or they have no awareness of the societal conditions that could warrant such fear and isolation. And they consider any effort the State could take to prevent the most extreme juxtaposition of wealth and poverty to be indistinguishable from Socialism.

It is difficult to ignore the responsibility that Ayn Rand bears for all of this. I often get emails from people who insist that Rand was a genius—and one who has been unfairly neglected by writers like myself. I also get emails from people who have been “washed in the blood of the Lamb,” or otherwise saved by the “living Christ,” who have decided to pray for my soul. It is hard for me to say which of these sentiments I find less compelling.

As someone who has written and spoken at length about how we might develop a truly “objective” morality, I am often told by followers of Rand that their beloved guru accomplished this task long ago. The result was Objectivism—a view that makes a religious fetish of selfishness and disposes of altruism and compassion as character flaws. If nothing else, this approach to ethics was a triumph of marketing, as Objectivism is basically autism rebranded. And Rand’s attempt to make literature out of this awful philosophy produced some commensurately terrible writing. Even in high school, I found that my copies of The Fountainhead and Atlas Shrugged simply would not open.

And I say this as someone who considers himself, in large part, a “libertarian”—and who has, therefore, embraced more or less everything that was serviceable in Rand’s politics. The problem with pure libertarianism, however, has long been obvious: We are not ready for it. Judging from my recent correspondence, I feel this more strongly than ever. There is simply no question that an obsession with limited government produces impressive failures of wisdom and compassion in otherwise intelligent people.

Why do we have laws in the first place? To prevent adults from behaving like dangerous children. All laws are coercive and take the following form: do this, and don’t do that, or else. Or else what? Or else men with guns will arrive at your door and take you away to prison. Yes, it would be wonderful if we did not need to be corralled and threatened in this way. And many uses of State power are both silly and harmful (the “war on drugs” being, perhaps, the ultimate instance). But the moment certain strictures are relaxed, people reliably go berserk. And we seem unable to motivate ourselves to make the kinds of investments we should make to create a future worth living in. Even the best of us tend to ignore some of the more obvious threats to our long term security.

For instance, Graham Alison, author of Nuclear Terrorism, thinks there is a greater than 50 percent chance that a nuclear bomb will go off in an American city sometime in the next ten years. (A poll of national security experts commissioned by Senator Richard Lugar in 2005 put the risk at 29 percent.) The amount of money required to secure the stockpiles of weapons and nuclear materials in the former Soviet Union is a pittance compared to the private holdings of the richest Americans. And should even a single incident of nuclear terrorism occur, the rich would likely lose more money in the resulting economic collapse than would have been required to secure the offending materials in the first place.

If private citizens cannot be motivated to allocate the necessary funds to mitigate such problems—as it seems we cannot—the State must do it. The State, however, is broke.

And lurking at the bottom of this morass one finds flagrantly irrational ideas about the human condition. Many of my critics pretend that they have been entirely self-made. They seem to feel responsible for their intellectual gifts, for their freedom from injury and disease, and for the fact that they were born at a specific moment in history. Many appear to have absolutely no awareness of how lucky one must be to succeed at anything in life, no matter how hard one works. One must be lucky to be able to work. One must be lucky to be intelligent, to not have cerebral palsy, or to not have been bankrupted in middle age by the mortal illness of a spouse.

Many of us have been extraordinarily lucky—and we did not earn it. Many good people have been extraordinarily unlucky—and they did not deserve it. And yet I get the distinct sense that if I asked some of my readers why they weren’t born with club feet, or orphaned before the age of five, they would not hesitate to take credit for these accomplishments. There is a stunning lack of insight into the unfolding of human events that passes for moral and economic wisdom in some circles. And it is pernicious. Followers of Rand, in particular, believe that only a blind reliance on market forces and the narrowest conception of self interest can steer us collectively toward the best civilization possible and that any attempt to impose wisdom or compassion from the top—no matter who is at the top and no matter what the need—is necessarily corrupting of the whole enterprise. This conviction is, at the very least, unproven. And there are many reasons to believe that it is dangerously wrong.

Given the current condition of the human mind, we seem to need a State to set and enforce certain priorities. I share everyone’s concern that our political process is broken, that it can select for precisely the sorts of people one wouldn’t want in charge, and that fantastic sums of money get squandered. But no one has profited more from our current system, with all its flaws, than the ultra rich. They should be the last to take their money off the table. And they should be the first to realize when more resources are necessary to secure the common good.

In reply to my question about future breakthroughs in technology (e.g. robotics, nanotech) eliminating millions of jobs very quickly, and creating a serious problem of unemployment, the most common response I got from economists was some version of the following:

1. There ***IS*** a fundamental principle of economics that rules out a serious long-term problem of unemployment:

The first principle of economics is that we live in a world of scarcity, and the second principle of economics is that we have unlimited wants and desires.

Therefore, the second principle of economics: unlimited wants and desires, rules out long-term problem of unemployment.

2. What if we were having this discussion in the 1800s, when it was largely an agricultural-based economy, and you were suggesting that “future breakthroughs in farm technology (e.g. tractors, electricity, combines, cotton gin, automatic milking machinery, computers, GPS, hybrid seeds, irrigation systems, herbicides, pesticides, etc.) could eliminate millions of jobs, creating a serious problem of unemployment.”

With hindsight, we know that didn’t happen, and all of the American workers who would have been working on farms without those technological, labor-saving inventions found employment in different or new sectors of the economy like manufacturing, health care, education, business, retail, transportation, etc.

For example, 90% of Americans in 1790 were working in agriculture, and now that percentage is down to about 2%, even though we have greater employment overall now than in 1790. The technological breakthroughs reduced the share of workers in farming, but certainly didn’t create long-term problems of unemployment. Thanks to “unlimited wants and desires,” Americans found gainful employment in industries besides farming.

Mark J. Perry
Professor of Economics, University of Michigan, Flint campus and
Visiting Scholar at The American Enterprise Institute and
Carpe Diem Blog

 

As I wrote to several of these correspondents, I worry that the adjective “long-term” waves the magician’s scarf a bit, concealing some very unpleasant possibilities. Are they so unpleasant that any rational billionaire who loves this country (and his grandchildren) would want to avoid them at significant cost in the near term? I suspect the answer could be “yes.”

Also, it seemed to me that many readers aren’t envisioning just how novel future technological developments might be. The analogy to agriculture doesn’t strike me as very helpful. The moment we have truly intelligent machines, the pace of innovation could be extraordinarily steep, and the end of drudgery could come quickly. In a world without work everyone would be free—but, in our current system, some would be free to starve.

However, at least one reader suggested that the effect of truly game-changing nanotechnology or AI could not concentrate wealth, because its spread would be uncontainable, making it impossible to enforce intellectual property laws. The resultant increases in wealth would be free for the taking. This is an interesting point. I’m not sure it blocks every pathway to pathological concentrations of wealth—but it offers a ray of hope I hadn’t seen before. It is interesting to note, however, what a strange hope it is: The technological singularity that will redeem human history is, essentially, Napster.

Fewer people wanted to tackle the issue of an infrastructure bank. Almost everyone who commented on this idea supported it, but many thought either (1) that it need not be funded now (i.e. We should take on more debt to pay for it) or (2) that if funded, it must be done voluntarily.

It was disconcerting how many people felt the need to lecture me about the failure of Socialism. To worry about the current level of wealth inequality is not to endorse Socialism, or to claim that the equal distribution of goods should be an economic goal. I think a certain level of wealth inequality is probably a very good thing—being both reflective and encouraging of differences between people that should be recognized and rewarded. There are people who can be motivated to work 100 hours a week by the prospect of getting rich, and they often accomplish goals that are very beneficial. And there are people who are simply incapable of making similar contributions to society. But do you really think that Steve Jobs would have retired earlier if he knew that all the wealth he acquired beyond $5 billion would be taxed at 90 percent? Many of people apparently do. However, I think they are being far too cynical about the motivations of smart, creative people.

Finally, many readers said something like the following:

If you or Warren Buffett want to pay more in taxes, go ahead. You are perfectly free to write the Treasury a check. And if you haven’t done this, you’re just a hypocrite.

Few people are eager to make large, solitary, and ineffectual sacrifices. And I was not arguing that the best use of Buffett’s wealth would be for him to simply send it to the Treasury so that the government could use it however it wanted. I believe the important question is, how can we get everyone with significant resources to put their shoulders to the wheel at the same moment so that large goals get accomplished?

Imagine opening the newspaper tomorrow and discovering that Buffett had convened a meeting of the entire Forbes 400 list, and everyone had agreed to put 50 percent of his or her wealth toward crucial infrastructure improvements and the development of renewable energy technologies. I would like to believe that we live in a world where such things could happen—because, increasingly, it seems that we live in a world where such things must happen.

What can be done to bridge this gap?

 

1. The Gini coefficient is a measure of wealth inequality in a society. It is also one of the best predictors of its homicide rate—better than GDP, unemployment levels, energy consumption per capita, or any other measure of average wealth. This suggests that it is relative rather than absolute scarcity that motivates violent competition between people (see, for instance, Daly, Wilson, & Vasdev, “Income inequality and homicide rates in Canada and the United States.” Canadian Journal of Criminology, April 2001: 219-236). ↩