Wealth, taxes, ownership
There's been a lot of talk here about wealth issues -- who has earned what, who's work is most beneficial to society, if people really "earn" what they get, what should be taxed at what rate, etc.
I'd like to explore these things starting with a very basic question: "What does it mean to own something?"
It's fairly obvious that the notion of ownership is a social construct, although sometimes we speak about ownership as if it were some physical or mystical property of objects. There are many stories where, for example, a curse can befall someone who takes possession of a certain object, and that curse cannot be lifted until someone else willingly accepts the same object as their own. In such a story, a complex metaphysics is assumed to exist regarding how ownership is transferred, if stealing transfers ownership, if throwing something away without another person taking it clears away ownership, if dying renders the cursed object un-owned, etc.
Even when it comes to real-life situations, however, I believe that in many people's minds ownership unconsciously follows a kind of unexamined metaphysics of ownership much like what you'd construct to support the plot of a story about a cursed object. Think about the conviction, and even vehemence, that would typically be intoned when a person says something like "That's mine! You have no right to take it!" What is at the basis of the certainty with which we make such statements? What makes us so sure that ownership can be so clear and basic and rightful, even when most of us would end up stammering incoherently if asked to justify our assumptions about the nature of ownership?
Before going into what these assumptions might be, it should be mentioned, even if obvious, that the concept of ownership extends beyond physical objects, to abstractions like intellectual property, distribution rights, access to another person's time and labor, etc., with the ultimate abstraction being money itself. We usually don't talk about "owning" money, but rather having or possessing money, but still, it's fair to say that when we make a statement such as "That's my money!" we're talking about a kind of ownership, and certainly about an abstract power to obtain ownership of other things.
I'd propose that the most basic commonality among various peoples and cultures regarding the concept of ownership is the desire for mutual respect of ownership. Because I want to be able to call some things my own, and feel reasonably secure that others will respect my claims of ownership, I extend the same consideration to others. I won't trespass into your house if you don't trespass into mine. I won't take your mountain bike if you don't take my iPod.
Most of us also believe in respecting contractual exchanges, formal and informal, reached by clear mutual agreement. If I'm willing to pay $50 for a pair of sneakers, and you're willing to sell me a pair of sneakers for $50, we exchange money and sneakers and expect the rest of the world to recognize who rightfully owns what after that exchange -- I the sneakers, and you the $50 -- because we both were willing participants in the transaction.
Some commonality between people and cultures does break down a little bit, however, when we get into the details of trust and openness in such exchanges. If I use counterfeit money, is it your fault that you didn't check my money better? If the sneakers fall apart in two days, is that my fault for not thoroughly inspecting the goods before purchase? It's usually only people who think they'll end up on the winning side of such exchanges who support the cutthroat view that such exchanges are "fair". The rest of us, however, expect genuine money, checks that don't bounce, and quality merchandise as elements in socially-supported and recognized exchanges of ownership. We take "caveat emptor" as a warning, not a statement of principle.
What constitutes a valid exchange of money for labor -- exchanges that the great majority of people would recognize as fair -- is a place where I think it's a lot harder to find consensus. Suppose I accept a job that pays $20 per hour. As long as the work turns out to be what it was supposed to be, and as long as I don't hate the job so much that I keep coming back day after day for more, for some people that ends the discussion. It's a fair exchange because I've obviously decided that the exchange is fair by my own continued participation. Even if I quit that job, if somebody else is ready to fill my place for the same money, it must be a fair wage because the labor market as a whole is demonstrating its acceptance of that particular exchange of labor for money.
Let's go back to the example of buying sneakers for comparison. We expect valid money and quality merchandise in order to have a fair exchange. Hidden fraudulence and hidden defects are not considered acceptable. What then about the elements in an exchange of labor for money that are hidden from us? Do these enter into how fair we should consider the exchange?
We should expect that an employer (at least in the private sector) intends to make a profit from our labor. Why bother to hire us if it's a break-even or losing proposition? But how much profit is "fair" if the extra profit isn't passed on to the employee? 50%? Double? Triple? Am I being ripped off if my employer makes ten times as much money from my labor than what he is paying me? Am I being ripped off if the books show that my employer only shows a 10% profit from my labor, but part of what is being counted as an "expense" against my labor is a large transfer of the value of my labor into huge salaries and lavish perks for top executives?
For the laissez-faire capitalist, there is no unfair level of profit from my labor. If I personally don't know how to greatly multiply the value of my labor, then those who do know how have "earned" the right to make whatever they can make from using my labor. The money others can make from my labor is a "fair" reward for them taking risks, networking, making shrewd business decisions, etc. From the "winners" perspective, it's all just a game -- and the rest of us shouldn't whine if we don't play the game well enough to win like they do.
The other extreme is the communist* motto "From each according to his ability, to each according to his need". I find it incredibly puzzling that the Christian Right in America is so in bed with laissez-faire capitalism, because the communist view sounds much more Christ-like to me: Do what you can to help others, be satisfied by having your needs met by what others do for you.
I have lots more to say, and lots to tie together in what I've already said, but this is getting to be an awfully long post, so I'll just toss what I've written so far out to the wolves, and pick up on it later.
[*Edit: fixed this to say communist rather than socialist.]
I'd like to explore these things starting with a very basic question: "What does it mean to own something?"
It's fairly obvious that the notion of ownership is a social construct, although sometimes we speak about ownership as if it were some physical or mystical property of objects. There are many stories where, for example, a curse can befall someone who takes possession of a certain object, and that curse cannot be lifted until someone else willingly accepts the same object as their own. In such a story, a complex metaphysics is assumed to exist regarding how ownership is transferred, if stealing transfers ownership, if throwing something away without another person taking it clears away ownership, if dying renders the cursed object un-owned, etc.
Even when it comes to real-life situations, however, I believe that in many people's minds ownership unconsciously follows a kind of unexamined metaphysics of ownership much like what you'd construct to support the plot of a story about a cursed object. Think about the conviction, and even vehemence, that would typically be intoned when a person says something like "That's mine! You have no right to take it!" What is at the basis of the certainty with which we make such statements? What makes us so sure that ownership can be so clear and basic and rightful, even when most of us would end up stammering incoherently if asked to justify our assumptions about the nature of ownership?
Before going into what these assumptions might be, it should be mentioned, even if obvious, that the concept of ownership extends beyond physical objects, to abstractions like intellectual property, distribution rights, access to another person's time and labor, etc., with the ultimate abstraction being money itself. We usually don't talk about "owning" money, but rather having or possessing money, but still, it's fair to say that when we make a statement such as "That's my money!" we're talking about a kind of ownership, and certainly about an abstract power to obtain ownership of other things.
I'd propose that the most basic commonality among various peoples and cultures regarding the concept of ownership is the desire for mutual respect of ownership. Because I want to be able to call some things my own, and feel reasonably secure that others will respect my claims of ownership, I extend the same consideration to others. I won't trespass into your house if you don't trespass into mine. I won't take your mountain bike if you don't take my iPod.
Most of us also believe in respecting contractual exchanges, formal and informal, reached by clear mutual agreement. If I'm willing to pay $50 for a pair of sneakers, and you're willing to sell me a pair of sneakers for $50, we exchange money and sneakers and expect the rest of the world to recognize who rightfully owns what after that exchange -- I the sneakers, and you the $50 -- because we both were willing participants in the transaction.
Some commonality between people and cultures does break down a little bit, however, when we get into the details of trust and openness in such exchanges. If I use counterfeit money, is it your fault that you didn't check my money better? If the sneakers fall apart in two days, is that my fault for not thoroughly inspecting the goods before purchase? It's usually only people who think they'll end up on the winning side of such exchanges who support the cutthroat view that such exchanges are "fair". The rest of us, however, expect genuine money, checks that don't bounce, and quality merchandise as elements in socially-supported and recognized exchanges of ownership. We take "caveat emptor" as a warning, not a statement of principle.
What constitutes a valid exchange of money for labor -- exchanges that the great majority of people would recognize as fair -- is a place where I think it's a lot harder to find consensus. Suppose I accept a job that pays $20 per hour. As long as the work turns out to be what it was supposed to be, and as long as I don't hate the job so much that I keep coming back day after day for more, for some people that ends the discussion. It's a fair exchange because I've obviously decided that the exchange is fair by my own continued participation. Even if I quit that job, if somebody else is ready to fill my place for the same money, it must be a fair wage because the labor market as a whole is demonstrating its acceptance of that particular exchange of labor for money.
Let's go back to the example of buying sneakers for comparison. We expect valid money and quality merchandise in order to have a fair exchange. Hidden fraudulence and hidden defects are not considered acceptable. What then about the elements in an exchange of labor for money that are hidden from us? Do these enter into how fair we should consider the exchange?
We should expect that an employer (at least in the private sector) intends to make a profit from our labor. Why bother to hire us if it's a break-even or losing proposition? But how much profit is "fair" if the extra profit isn't passed on to the employee? 50%? Double? Triple? Am I being ripped off if my employer makes ten times as much money from my labor than what he is paying me? Am I being ripped off if the books show that my employer only shows a 10% profit from my labor, but part of what is being counted as an "expense" against my labor is a large transfer of the value of my labor into huge salaries and lavish perks for top executives?
For the laissez-faire capitalist, there is no unfair level of profit from my labor. If I personally don't know how to greatly multiply the value of my labor, then those who do know how have "earned" the right to make whatever they can make from using my labor. The money others can make from my labor is a "fair" reward for them taking risks, networking, making shrewd business decisions, etc. From the "winners" perspective, it's all just a game -- and the rest of us shouldn't whine if we don't play the game well enough to win like they do.
The other extreme is the communist* motto "From each according to his ability, to each according to his need". I find it incredibly puzzling that the Christian Right in America is so in bed with laissez-faire capitalism, because the communist view sounds much more Christ-like to me: Do what you can to help others, be satisfied by having your needs met by what others do for you.
I have lots more to say, and lots to tie together in what I've already said, but this is getting to be an awfully long post, so I'll just toss what I've written so far out to the wolves, and pick up on it later.
[*Edit: fixed this to say communist rather than socialist.]
Comments
Nick
like the Masai, and at various points, some melanesian tribes.
Chief Seattle's famous 1854 speech (surrounded in some controversy)
"How can you buy or sell the sky, the warmth of the land? The idea is strange to us.
If we do not own the freshness of the air and the sparkle of the water, how can you buy them?
... continues
not to go off topic if you weren't finished with the primary line of argument, shetline
I'll save my other tangents for now
Now I guess they should have banned me rather than just shut off posting priviledges, because kickaha and Amorph definitely aren't going to like being called to task when they thought they had it all ignored *cough* *cough* I mean under control. Just a couple o' tools.
Don't worry, as soon as my work resetting my posts is done I'll disappear forever.
Originally posted by trumptman
You've just discovered that money doesn't exist. Congratulations.
I wouldn't say that. Money may be an abstraction of other abstractions, like value and labor and ownership, but that doesn't make it any less real.
I think most of us would prefer something in between the extremes of robber-baron social Darwinism and an imposed socialist egalitarianism. Of all of the economic systems tried so far, capitalism has been the most successful and productive. The incentive of profits and the ability to dream big dreams of success are certainly big motivating factors. I think most people enjoy the idea that it's possible to become very, very wealthy in this world, especially those who hope to get there some day themselves, but even many of those who know that they'll probably never be rich, yet who nevertheless still enjoy the dream.
On the other hand, not all extremes of wealth are widely appreciated, especially when the low end of the economic ladder can be so low, even for some people who work very hard, and when the rewards at the high end often seem so horribly exaggerated, if not completely unfair -- huge bonuses for CEOs even when profits are down, golden parachutes for executives who've made terrible business decisions, small bands of lawyers collecting 30, 40, or 50% of settlements where the remainder is being divided among hundreds or even thousands or tens of thousands of actual plaintiffs who are the real injured parties deserving compensation.
Consider that in the US 5% of the population owns 50% of the wealth, as much wealth as the other 95%. Is a mere 1-out-20 level of talent or effort (or whatever else lands you in that category) so truly deserving that it should be rewarded with the same amount of wealth that the rest of the people, on average, have to divide 19 ways among themselves?
To paraphrase Churchill's famous remark about democracy, capitalism is the worst kind of economy, except when compared to all the other types of economies we have tried.
Capitalism is good at providing people with incentives to work hard, to innovate, and to provide quality goods and services. Capitalism is also good at comparatively efficient allocation of labor and other resources, mainly because the automatic feedback of supply and demand works so much better than any externally imposed regime.
But capitalism has its downsides. Capitalism often favors growing accumulations of wealth in the hands of fewer and fewer people -- wealth becomes power and power is used to change the rules of the game so wealth and power can be maintained. The feedback mechanisms of market forces, while useful, are far from perfect and can lead to gross distortions of the values of goods and labor and intellectual property. There are powerful incentives not just to do good things like work hard and provide good products, but also to cheat the system if possible -- polluting if you can get away with it, busting up unions if you can get away with it, bribing authorities for favorable consideration wherever possible. etc.
One way to address the above problems is regulation. We don't want to over-regulate to the point that incentive is stifled, but most of us do want to see at least the most obvious abuses curtailed, and we don't want to be forced to suffer indirect costs like pollution simply so others can make more money by not including the true costs of production in their prices.
Hmmmm. After midnight. I suppose I'll get to finance and taxation tomorrow... and hopefully get some more comments going so I don't feel too much like I'm just pontificating on a soapbox here.
Originally posted by shetline
The other extreme is the socialist motto "From each according to his ability, to each according to his need". I find it incredibly puzzling that the Christian Right in America is so in bed with laissez-faire capitalism, because the socialist view sounds much more Christ-like to me: Do what you can to help others, be satisfied by having your needs met by what others do for you.
Not to be nit-picky, but you seem to be confusing socialism with communism. The motto above is the motto of communism, while socialists would say, "From each according to ability, to each according to contribution."
True socialism believes that "he who does not work does not eat."
Originally posted by progmac
Not to be nit-picky, but you seem to be confusing socialism with communism. The motto above is the motto of communism, while socialists would say, "From each according to ability, to each according to contribution."
True socialism believes that "he who does not work does not eat."
Feh! All of those long-haired pinko hippy freaks are the same!
But, yes, you're right. There's a formulation of the saying that's only two letters different in the socialist version: "From each according to his ability, to each according to his deeds."
Banking and financial services seem to me to be one of the biggest sources of distortion of market outcomes in our capitalist system. Bankers, stock brokers, and the like do perform socially useful functions by helping us store, accumulate, distribute, and invest capital. If money is the life blood of a capitalist system, financial services are like the circulatory system, keeping the money flowing and helping to direct it where it's needed. But how valuable are these financial services, and how much of the money that's being circulated should be consumed merely by the process of circulation?
In your body, you wouldn't want your circulatory system to use up too much of the oxygen and nutrients in your blood, before delivering these necessities to other parts of your body. The circulatory system should be very efficient, dipping into the flow as little as possible.
When it comes to the circulatory system for our economy, however, that system seems to think it's an end unto itself. We make financial superstars out of the people whose job it is to move capital around, and let them skim quite a bit of the money flowing through the system for themselves. We honor and praise people who often serve no socially useful purpose whatsoever, who use cleverness and connections to play the system only for their own gain, holding these people up as admirable models of hard work and success.
All in all, for this and many other reasons, I think one has to really question what one means when one says that a person has "earned" what he or she has acquired, and with how much conviction one can truly speak in absolutes about the ownership of anyone's wealth.
This is where I wish to bring in the issue of taxes.
I constantly hear tax-cut loving conservatives talk about how the government is taking their money, as if taxation weren't an issue of a social obligation, but a form of outright government-sponsored thievery.
If one takes this kind of terminology about taxes literally, the only fair tax is no tax at all -- any tax is a form of theft. Why bother to argue about what level or degree of theft is acceptable?
If one is going to be practical about this, however, and accept the fact that even a very stripped down, minimalist government will need some money in order to function, you then have to accept that some level of taxation is required -- a necessary evil, perhaps, but hardly theft. More of an obligation imposed by the social contract.
If you accept that taxation is inevitable, and that some level of taxation is fair, then it's clear that there are a few things that aren't automatically clear: What exactly should be taxed? What's the right level of taxation? What should government be spending this money?
The tax-cut crowd loves to say things like "Those Democrats are out to take YOUR money." Well, unless the Republicans are running on a 0% tax platform, they're out to take MY money too. But they don't say "Vote for Joe for Congress! He'll steal less of your money!" in their campaign ads, do they?
The whole "it's YOUR money" thing is just rhetorical nonsense, meant to elicit an unreasoning emotional response. The real debate has to be about finding the right level of taxation, and there's obviously no magic number which represents an exact dividing line between fair taxation and theft.
Since ownership is a social construct, and since capitalism is a good but imperfect system, I see no problem with society as a whole deciding that the ownership of some of the wealth of society is public, not private. For example, many of the inputs into our economy -- mining and timber resources, oil deposits, water, sunshine, air, radio spectrum bandwidth -- can very arguably be considered societal contributions to the economy, with there being no compelling reason to consider all the various arrangements that we make for private access to these resources as total give-aways. Society as a whole contributes, society as a whole expects a return.
Knowledge and information which are in the public domain, and publically financed education, are also societal inputs into economic productivity from which it's perfectly fair for society to expect a return.
Viewed this way, taxation isn't a matter of someone taking YOUR money. Taxation is simply society collecting society's rightful share of the public wealth which just happens to have ended up in your hands. And while absolute fairness is both impossible to define precisely or to achieve, I think a progressive tax system that taxes the wealthy at higher rates certainly moves closer towards a reasonable notion of fairness that does enshrining the wild excesses and quirky distortions of free markets and financial institutions as the ultimate arbiters of fairness.
Taxation should, of course, show some level of restraint. We don't want to strangle the economy and crush initiative. Honoring the value of incentive and our own personal dreams of wealth, we don't want to use taxation as a heavy, blunt instrument of enforced financial egalitarianism. I think, however, that society as a whole can safely claim enough of the wealth at large as public wealth so that it can serve many needs, certainly more than a harshly conservative or libertarian view of government would support.
How much taxation is enough? Let the voters decide, using the law to help enforce some fiscal discipline and realism that the collective mind of the voters might not automatically produce (voters can't get $100 of services for $10 in taxes, even if the collective un-wisdom of voting sometimes produces such irrational and contradictory results). Certain aspects of wealth should be safe from majoritarian forces -- it's close to universal to want to feel secure in our possessions, to feel that we are safe from unreasonable search or seizure. In deference to the social construct aspect of ownership, however, I think it's fair to allow democratic rule to hold sway over decisions about how much wealth should be considered public wealth, and how that public wealth should be spent.
Originally posted by shetline
"From each according to his ability, to each according to his deeds/contributions."
That doesn't sounds Socialist at all. In fact, it sounds perfectly laissez-faire capitalist: you get whatever you can afford to pay for.