James Scott Some years ago I had a debate on anarchy with James Scott; Robert Ellickson was moderator cum participant. A recording is available online. I had read two of Scott's books. One, The Art of Not Being Governed, is about the existence of extensive stateless areas in South-east Asia over a very long period of time. From the standpoint of the adjacent states the stateless areas, typically hills, mountains, and swamps, are populated by "our ancestors," people who have not yet developed far enough to create or join states. By Scott's account, on the other hand, much of the population of the stateless areas is descended from people who were once in states, much of the population of the states from people who were once stateless. The pattern as he sees it was a long term equilibrium based on the difficulty of maintaining a state when population densities are low and transport and communication slow. When a state is doing well it pulls in people, whether voluntary immigrants or the captives of slave raids, from the adjacent stateless areas. When the state is doing badly, the flow of people goes in the other direction, fleeing taxes, conscription, and other benefits of being ruled.
The first of Scott's books that I read was The Art of Not Being Governed.
What struck me about it was that when I considered his model---people who don't want to be under the authority of a central government, who live in rough terrain where government forces can't easily go, and whose authorities are not political rulers but religious prophets---it seemed to me to be an equally good description of parts of the United States, particularly the Appalachian and Ozark regions. I don't think that Scott has ever suggested that the "hillbilly" archetype in American culture is an image of the stateless life, but a lot of its features could be fitted into his description.
For that matter, pre-monarchic Israel might be another example, though it's harder to be sure how people actually lived then; we have only one set of records, written by partisans of a different side, and some archaeological evidence that is hard to reconcile with those records.
Coming from a hillbilly culture that was not in the Ozarks or Appalachians, but definitely descended from Western Virginian culture, I can attest to the difficulty even today of the ineffectiveness of a central authority to impose its will in some cases, if not all.
I go back to visit relatives periodically, and it's still interesting to see the methods by which they evade certain parts of the governing force.
The marginal utility of a dollar can (and I think does) also drop faster than the logarithm. From what I can see, the real problem with progressive taxation is that the utility function differs between people and isn’t really knowable. The basic logic is fine if we can make assumptions about the utility function. Which we can but I don’t trust anyone, let alone a politician, to do that. (I anyway favor a land tax.)
BTW I initially had difficulty understanding your point so I used ChatGPT to summarize then I reread it. Also your footnote was helpful.
The utilitarian argument for progressive taxation based on declining marginal utility of income assumes that different people have the same utility function for income, that income differences are due to differing opportunities to acquire income.
Suppose you reverse the assumptions, assume that everyone has the same opportunities to earn and different incomes are due to differences in the utility function for income. The conclusion reverses — higher income people people have a higher marginal utility for income.
Neither assumption is correct. How nearly correct you think either is will determine whether you accept the argument.
I think that once you accept utilitarian arguments as valid you've already abandoned libertarianism. The basis of utilitarianism is that it's legitimate to make one person worse off, in order to make another person a lot better off or a lot of people a little better off (or any other combination that's similar according to a utilitarian calculus). And that opens the door to initiation of force. The foundation of libertarianism is a nonsacrificial ethic: One that says you don't get to make people worse off for other people's benefit (whether material or subjective, as when a blasphemer is silenced or kill by those their statements offend). That gives a basis for noninitiation of force. With utilitarianism, it's a case of "We've already found out what you are; now we're haggling over the price."
The underlying metaphysics of utilitarianism is the idea of conflicts of interest. The nonsacrificial ethic reflect the belief that, as Ayn Rand put it, "there are no conflicts of interest among rational men," which grows out of Bastiat's theory of economic harmonies. And that theory may be unintuitive, but it is so only in the same way that free market economics generally is unintuitive, or that (for a great many people) libertarianism itself is unintuitive.
1. One can define libertarianism either by assumptions or by conclusions. If you define it by assumptions, then someone who does not believe that initiation of force is always wrong is not a libertarian, hence in particular a utilitarian is not a libertarian. If you define it by conclusions, then a utilitarian who concludes that a rule of non-initiation of force results in higher utility is a libertarian.
I have problems with both approaches. An absolute non-initiation of force rule leads to conclusions that I don't accept and that I don't think most libertarians would accept, for reasons I have discussed in the past. Utilitarianism also leads to conclusions I don't accept. But I think both work as elements of my moral system. The fact that an action would violate rights is an argument against it, but not necessarily a decisive argument. The fact that an action would increase total utility is an argument for it, but not necessarily a decisive argument.
2. You are not distinguishing between act utilitarianism and rule utilitarianism. A rule utilitarian might conclude that libertarian rules maximize utility. In particular he might conclude that although the direct effect of a progressive tax is an increase in utility it has indirect effects that decrease utility by more. He might even conclude that having a government with the power to tax decreases utility hence be an anarchist.
I don't have a full response to this comment, but to paraphrase an epigram I am sure you are familiar with: If rule utilitarianism leads to the same conclusions as a nonsacrificial ethic, then it is superfluous; if it leads to different conclusions, then it is harmful.
Well, let me say that I thinj that utilitarianism is wrong, for several reasons:
1. The idea of a utility function is not an accurate model of how human beings function. There is not a precomputed utility score for every option a human being might choose. We have the ability to choose between two options, but it's not always easy and may be agonizingly difficult; and such situations are the heart of much literature, from Sophocles to Tolkien. I think this is most easily accounted for by supposing that the human brain uses different internal "markets" for choices in different domains, but doesn't habitually trade off between the different domains and doesn't have a pre-existing standard for doing so.
2. Even if there were an internal utility function for a given human being, there is no analog of the zeroth law of thermodynamics for different human beings; we cannot say that person A's utility for X is the same as person B's utility, or is different from it. There is simply no measuring device that can assess this. All of economics works off of "A values X more than Y, and B values Y more than X"—but that still works even if B is a utility monster who cares more intensely about their least preference than A cares about their greatest preference.
3. The basic point of denying point 2 is the wish to say that X has greater utility for B than for A, and therefore we should take X away from A and give it to B; and that is a sacrificial ethic and an authoritarian one. It would be surprising if it were shown that the results of applying this sort of calculus consistently led to a preference for a nonsacrificial ethic, as there are a vast number of other conclusions that might be reached. But if it did, a simple statement of the nonsacrificial principle would give us a constraint that made many questions simpler. And if we set that principle aside, it comes down to "We've settled what you are; now we're haggling over the price."
4. Metaphysically, "utility" is an English equivalent of the ancient Greek concept of "ataraxia" put forth by Epicurus: pleasure as the relief of felt unease or displeasure. But the concept of pleasure is fundamentally that of a passive state that we are made to feel by an external force or agency. And living organisms are fundamentally not passive but active; much of what we do, from physical exertion to dialectic to artistic creation, seeks not to experience pleasure or avoid discomfort but to find the right sort of action.
I think that 3 is the essential point for social ethics, but I think for all of these reasons utilitarianism is a nonstarter as an ethical theory.
High marginal tax rates are an instrument of government corruption. High marginal rates greatly increase the returns on doing favors for public officials who, absolutely _not_ quid pro quo, arrange for tax credits and deductions.
>Part of what I found interesting about that exchange was that it shows that Scott, despite what is obviously his very high intelligence, doesn’t, perhaps can’t, think in mathematics
It also seems like Scott Alexander is just biased to defend the status quo. After all, his own line of reasoning justifying redistribution on the basis of decreasing marginal utility of money would imply that all or nearly all of tax revenues should be distributed to the poorest people in the world, almost none of whom live in Western countries. In reality, almost none of it is. But I don't see Scott raising this objection, although the issue isn't mathematical.
Instead, he defends the status quo which involves taxation and redistribution, but hardly any of that redistribution directed to the global poor.
That's very interesting that a flat tax is equal burden only with falling marginal utility of money. It makes sense once you think about it.
I'm skeptical that the original purpose of welfare "proved unachievable" in any meaningful way, other than that the things the government tried didn't fix poverty. It seems very clear that the usual structure of government welfare has always been detrimental for pretty obvious economic reasons. Welfare cliffs and restrictions on use of money that necessarily make that money less valuable than it otherwise would be. A negative income tax (or somewhat equivalently, UBI) seems most likely to actually reduce poverty.
' From the end of WWII to the beginning of the War on Poverty, the poverty rate, definition held constant, fell sharply. Since the War on Poverty got fully funded and operating, the poverty rate, definition held constant, has been roughly fixed, going up and down with general economic conditions. That suggests that the expansion of the welfare state had the opposite of its intended purpose. It was supposed to get people out of poverty, to make them self-sustaining. It actually made poverty a little less unpleasant and so somewhat reduced the pressure to struggle out of it. As Murray describes in Losing Ground, the original purpose proved unachievable, so was abandoned.'
. . .
I'm not sure I agree that the purpose of the expansion of the welfare state was to get people out of poverty, make them self-sustaining. Salesman's puffery.
D-LBJ said he'd got the 'n-' vote for the Democratic party for generations. This was in the D party interest, and if that was his plan, it succeeded. 90% plus vote for the Democrats, POC and single white women.
Moynihan said the purpose of Affirmative Action was to create a black middle class by providing middle class jobs for Blacks. This also succeeded. Instead of a 'Talented Tenth', as we had through the 1950's, we have a black middle class. (Getting this from Andrew Hacker's book on income distribution in the early 1990's- median income for blacks and whites was in the 40k range for both. Casual reading, no guarantees.)
'Destroying poverty' good was, I think, salesman's puffery for expanding D patronage, which succeeded. At the price of stopping US economic growth by 1970, but the D party got a tighter lock on America. Creating a black middle class also succeeded.
> 50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.
It was quite ironic to see your failure to understand the simple mathematics Scott presented lead you to the following conclusion.
> Part of what I found interesting about that exchange was that it shows that Scott, despite what is obviously his very high intelligence, doesn’t, perhaps can’t, think in mathematics. It is something I had once observed of another highly intelligent person, a past colleague. The next exchange is further evidence.
David clearly understood the mathematics Scott was presenting. That's how he was able to claim that that mathematics was flawed - a claim which you yourself appear not to understand.
Do you see what's wrong with it? If you don't, reread David's explanation. To summarize, it's based on an assumption that isn't always true.
>50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.
To which David responded with paragraphs of misunderstanding of the mathematics of what Scott claimed, while coming out feeling smugly superior in the end.
> If you work through the mathematics of the declining marginal utility argument for progressive taxation you will discover that it is only an argument against lump sum taxation.
What? Scott didn't make a "declining marginal utility" argument, he pointed out the obvious common sense that "50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.".
> It is easy enough to write a utility function with declining marginal utility for which the utility of the second half of an income of $100,000 is greater than the utility of the second half of an income of $50,000;
Yes, except such a utility function function does not correspond to reality, because again, "50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.".
> For any structure of taxes more progressive than a lump sum tax, including a flat tax, there is some utility function consistent with declining marginal utility for which that structure imposes a larger utility cost on higher income taxpayers.
Yes, except such a utility function is not consistent with reality.
> Declining marginal utility can support a utilitarian argument for progressive taxation but an equal burden argument requires a stronger assumption, how strong depending on how steeply graduated the taxation is.
Yes, an argument for progressive taxation would require an assumption like "50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire."
> You get equal burden from a flat tax, each taxpayer paying the same fraction of his income, if utility equals the logarithm of income, making marginal utility inverse to income.
Yes indeed, you would need sub-logarithmic utility for progressive taxation. Another way to phrase "Sub-logarithmic utility" would be..."50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire."
And of course, the punch line:
> Part of what I found interesting about that exchange was that it shows that Scott, despite what is obviously his very high intelligence, doesn’t, perhaps can’t, think in mathematics. It is something I had once observed of another highly intelligent person, a past colleague
You just claimed David spent several paragraphs of misunderstanding Scott's claim, and responded with several paragraphs based on the same premise David pointed out was incorrect.
A) The premise is correct (ask anyone outside your bubble).
B) David did not point out it was incorrect, as he provided no evidence it was incorrect.
C) David spent several paragraphs solely arguing against a straw man that diminishing marginal utility *necessarily* implies sub-logarithmic utility. This is not what Scott claimed.
"He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it."
150 years later, Adam Smith's words still ring true. However, to be fair to chess(players) I will say that to be good at chess means always having many different plans. It is one of the most common errors in chess to devise a plan at t1 and then not notice that the conditions for its application are not valid perhaps already with the following move of the opponent (at t2)--but sticking to the plan nevertheless. Since your plans affect your opponent, your opponent will always work to eliminate the conditions for the plan's feasibility. In the same way, since policies and regulations affect people whose behavior they aim to regulate, people will modify their behavior in ways that will eliminate (some of) the intended effects of the regulation. Hence, the error of Smith's "man of system" consists not in acting as a chess player but in acting as if he has no "opponent" capable of reacting. Having an opponent who is capable of reacting to your plans (and equally: assuming that your opponent is capable of reacting) is essential for the game of chess.
A chess player has one opponent. Smith is imaging a chess set where each piece is an opponent, at least to the extent of having, and acting on, different objectives than the planner.
Sure, but it's easy to walk away from Smith's analogy thinking that the error of the "man of system" consists in acting as a chess player. It may not be immediately obvious to everyone that for Smith's purposes, it doesn't matter whether the "man of the system" is rearranging chess pieces on a chess-board, books on a bookshelf or fridge magnets on a fridge.
“… libertarianism, in its earlier and somewhat more moderate incarnation as classical liberalism, ….”
Classical liberalism is not inherently “more moderate” than libertarianism. Some classical liberals advocated real anarchy (most notably, perhaps, Gustave de Molinari) or a minimal state. They, at least, seem to have been libertarians avant la lettre. So it is probably more accurate to say that libertarianism has long been a more extreme subset of classical liberalism.
“Mike starts his discussion by criticizing libertarians for being utopians; he is now criticizing libertarians for not being utopians.”
I agree that libertarianism can be viewed as a subset of classical liberalism but it wasn't the subset that is entitled to credit for the accomplishments of classical liberalism since those were accomplished by governments with more power than modern libertarians, in the sense being discussed, approve of.
Governments are likely to be better (i.e., less bad) the more centrally classical liberal that they are. But governments can be considered collectively as being the cause of most of the evils inflicted on people. So if a few of them eventually turned to combatting some of the more egregious evils, I do not give them too much credit. Those governments had “crowded out” societies that are libertarian anarchies—with their superior wealth, power, and morality—that would probably have done a better job, more efficiently, and sooner.
Good debates. I think the position where anarchic libertarianism might lose very badly is against moderate libertarianism or "classical liberal" libertarianism. David mentions here that classical liberalism has probably the best track records as far as human right and wealth gains. The anarchic societies often cited have very weak gains in either direction (wealth or rights). It would seem minor compromises in theoretical negative rights might contribute to the highest welfare for everyone on net rather than theoretically full negative rights. I see some of the successful private cities like Prospera as essentially still compromises (still under some sort of government, but far less of it).
In grad school, one Leftist prof continually "explained" to me that I was a believer in the public choice opinion group. He couldn't even conceive of anyone who being at the very least philosophically in the anarchist libertarian camp. Another prof (philosophy) tried to tell the first prof that it would help if he thought of me as a highly armed, incredibly dangerous Amishman. I like that description.
> I don't know if it is right but it makes more causal sense than "the rich got lots richer, the poor got only a little richer, and that must be because the rich were hogging all the money that otherwise would have gone to the poor," which does not have any obvious causal structure at all
The only cause needed is for the return on capital to be greater than the increase in wages in the case where we are comparing unearned to earned income.
I don't think most high income is due to non-human capital, am not even sure it is due to human capital as opposed to differing abilities and behavior. What fraction of all income do you think is dividends and other returns on capital?
Further, your argument assumes that capitalists invest all of their income, consume none of it.
I think another elephant in the room is that as wealth differences rise, leverage over the poor increases, leaving them less capable of bargaining for higher wages. And part of the reason for this in turn is that the poor largely exist as a fungible class of labor rather than as individuals who can make a fine grained case for their value to an employer.
It's interesting to me that libertarians complain about lack of "math" but entirely ignore large categories of formalism such as game theory, network theory. This is similar to the reduction of Marx to just the LTV which is then easily trounced, and seems like either an artifact of perverse incentives in academia or explicit bad faith.
I don't understand your "complain about lack of "math"" point. What is the libertarian complaint? And why do you think libertarians ignore game theory? I have a chapter on it in my _Price Theory_.
In particular they think whether or not an economy or an arrangement is positive sum or not is trivial, and thus that deviation from treatment of apparent free trade as positive sum is itself trivially irrational. In actuality there are enormous incentives to disguise coercive or fraudulent games as free trade games, and thus the rational approach to basically any real life game is going to deviate, sometimes very sharply, from the toy case.
Bargaining is part of the process by which equilibrium prices are approximated, just as random molecular motion is part of the process by which thermodynamic systems come to thermal equilibrium.
Maybe people who bargain are in higher demand than people who don't. I'm sure there's some way to avoid that nit being picked. It's not really interesting to me either way. I'm happy to concede that your reasoning doesn't allow for what I'm describing.
The first of Scott's books that I read was The Art of Not Being Governed.
What struck me about it was that when I considered his model---people who don't want to be under the authority of a central government, who live in rough terrain where government forces can't easily go, and whose authorities are not political rulers but religious prophets---it seemed to me to be an equally good description of parts of the United States, particularly the Appalachian and Ozark regions. I don't think that Scott has ever suggested that the "hillbilly" archetype in American culture is an image of the stateless life, but a lot of its features could be fitted into his description.
For that matter, pre-monarchic Israel might be another example, though it's harder to be sure how people actually lived then; we have only one set of records, written by partisans of a different side, and some archaeological evidence that is hard to reconcile with those records.
Coming from a hillbilly culture that was not in the Ozarks or Appalachians, but definitely descended from Western Virginian culture, I can attest to the difficulty even today of the ineffectiveness of a central authority to impose its will in some cases, if not all.
I go back to visit relatives periodically, and it's still interesting to see the methods by which they evade certain parts of the governing force.
Re Scott Alexander section:
The marginal utility of a dollar can (and I think does) also drop faster than the logarithm. From what I can see, the real problem with progressive taxation is that the utility function differs between people and isn’t really knowable. The basic logic is fine if we can make assumptions about the utility function. Which we can but I don’t trust anyone, let alone a politician, to do that. (I anyway favor a land tax.)
BTW I initially had difficulty understanding your point so I used ChatGPT to summarize then I reread it. Also your footnote was helpful.
The utilitarian argument for progressive taxation based on declining marginal utility of income assumes that different people have the same utility function for income, that income differences are due to differing opportunities to acquire income.
Suppose you reverse the assumptions, assume that everyone has the same opportunities to earn and different incomes are due to differences in the utility function for income. The conclusion reverses — higher income people people have a higher marginal utility for income.
Neither assumption is correct. How nearly correct you think either is will determine whether you accept the argument.
I think that once you accept utilitarian arguments as valid you've already abandoned libertarianism. The basis of utilitarianism is that it's legitimate to make one person worse off, in order to make another person a lot better off or a lot of people a little better off (or any other combination that's similar according to a utilitarian calculus). And that opens the door to initiation of force. The foundation of libertarianism is a nonsacrificial ethic: One that says you don't get to make people worse off for other people's benefit (whether material or subjective, as when a blasphemer is silenced or kill by those their statements offend). That gives a basis for noninitiation of force. With utilitarianism, it's a case of "We've already found out what you are; now we're haggling over the price."
The underlying metaphysics of utilitarianism is the idea of conflicts of interest. The nonsacrificial ethic reflect the belief that, as Ayn Rand put it, "there are no conflicts of interest among rational men," which grows out of Bastiat's theory of economic harmonies. And that theory may be unintuitive, but it is so only in the same way that free market economics generally is unintuitive, or that (for a great many people) libertarianism itself is unintuitive.
Two points:
1. One can define libertarianism either by assumptions or by conclusions. If you define it by assumptions, then someone who does not believe that initiation of force is always wrong is not a libertarian, hence in particular a utilitarian is not a libertarian. If you define it by conclusions, then a utilitarian who concludes that a rule of non-initiation of force results in higher utility is a libertarian.
I have problems with both approaches. An absolute non-initiation of force rule leads to conclusions that I don't accept and that I don't think most libertarians would accept, for reasons I have discussed in the past. Utilitarianism also leads to conclusions I don't accept. But I think both work as elements of my moral system. The fact that an action would violate rights is an argument against it, but not necessarily a decisive argument. The fact that an action would increase total utility is an argument for it, but not necessarily a decisive argument.
2. You are not distinguishing between act utilitarianism and rule utilitarianism. A rule utilitarian might conclude that libertarian rules maximize utility. In particular he might conclude that although the direct effect of a progressive tax is an increase in utility it has indirect effects that decrease utility by more. He might even conclude that having a government with the power to tax decreases utility hence be an anarchist.
I don't have a full response to this comment, but to paraphrase an epigram I am sure you are familiar with: If rule utilitarianism leads to the same conclusions as a nonsacrificial ethic, then it is superfluous; if it leads to different conclusions, then it is harmful.
That assumes that all that matters is the conclusion, not how good the argument is that gets to it.
Further, the argument is symmetrical — you could as well have concluded that your ethic is superfluous.
Well, let me say that I thinj that utilitarianism is wrong, for several reasons:
1. The idea of a utility function is not an accurate model of how human beings function. There is not a precomputed utility score for every option a human being might choose. We have the ability to choose between two options, but it's not always easy and may be agonizingly difficult; and such situations are the heart of much literature, from Sophocles to Tolkien. I think this is most easily accounted for by supposing that the human brain uses different internal "markets" for choices in different domains, but doesn't habitually trade off between the different domains and doesn't have a pre-existing standard for doing so.
2. Even if there were an internal utility function for a given human being, there is no analog of the zeroth law of thermodynamics for different human beings; we cannot say that person A's utility for X is the same as person B's utility, or is different from it. There is simply no measuring device that can assess this. All of economics works off of "A values X more than Y, and B values Y more than X"—but that still works even if B is a utility monster who cares more intensely about their least preference than A cares about their greatest preference.
3. The basic point of denying point 2 is the wish to say that X has greater utility for B than for A, and therefore we should take X away from A and give it to B; and that is a sacrificial ethic and an authoritarian one. It would be surprising if it were shown that the results of applying this sort of calculus consistently led to a preference for a nonsacrificial ethic, as there are a vast number of other conclusions that might be reached. But if it did, a simple statement of the nonsacrificial principle would give us a constraint that made many questions simpler. And if we set that principle aside, it comes down to "We've settled what you are; now we're haggling over the price."
4. Metaphysically, "utility" is an English equivalent of the ancient Greek concept of "ataraxia" put forth by Epicurus: pleasure as the relief of felt unease or displeasure. But the concept of pleasure is fundamentally that of a passive state that we are made to feel by an external force or agency. And living organisms are fundamentally not passive but active; much of what we do, from physical exertion to dialectic to artistic creation, seeks not to experience pleasure or avoid discomfort but to find the right sort of action.
I think that 3 is the essential point for social ethics, but I think for all of these reasons utilitarianism is a nonstarter as an ethical theory.
High marginal tax rates are an instrument of government corruption. High marginal rates greatly increase the returns on doing favors for public officials who, absolutely _not_ quid pro quo, arrange for tax credits and deductions.
>Part of what I found interesting about that exchange was that it shows that Scott, despite what is obviously his very high intelligence, doesn’t, perhaps can’t, think in mathematics
It also seems like Scott Alexander is just biased to defend the status quo. After all, his own line of reasoning justifying redistribution on the basis of decreasing marginal utility of money would imply that all or nearly all of tax revenues should be distributed to the poorest people in the world, almost none of whom live in Western countries. In reality, almost none of it is. But I don't see Scott raising this objection, although the issue isn't mathematical.
Instead, he defends the status quo which involves taxation and redistribution, but hardly any of that redistribution directed to the global poor.
That's very interesting that a flat tax is equal burden only with falling marginal utility of money. It makes sense once you think about it.
I'm skeptical that the original purpose of welfare "proved unachievable" in any meaningful way, other than that the things the government tried didn't fix poverty. It seems very clear that the usual structure of government welfare has always been detrimental for pretty obvious economic reasons. Welfare cliffs and restrictions on use of money that necessarily make that money less valuable than it otherwise would be. A negative income tax (or somewhat equivalently, UBI) seems most likely to actually reduce poverty.
' From the end of WWII to the beginning of the War on Poverty, the poverty rate, definition held constant, fell sharply. Since the War on Poverty got fully funded and operating, the poverty rate, definition held constant, has been roughly fixed, going up and down with general economic conditions. That suggests that the expansion of the welfare state had the opposite of its intended purpose. It was supposed to get people out of poverty, to make them self-sustaining. It actually made poverty a little less unpleasant and so somewhat reduced the pressure to struggle out of it. As Murray describes in Losing Ground, the original purpose proved unachievable, so was abandoned.'
. . .
I'm not sure I agree that the purpose of the expansion of the welfare state was to get people out of poverty, make them self-sustaining. Salesman's puffery.
D-LBJ said he'd got the 'n-' vote for the Democratic party for generations. This was in the D party interest, and if that was his plan, it succeeded. 90% plus vote for the Democrats, POC and single white women.
Moynihan said the purpose of Affirmative Action was to create a black middle class by providing middle class jobs for Blacks. This also succeeded. Instead of a 'Talented Tenth', as we had through the 1950's, we have a black middle class. (Getting this from Andrew Hacker's book on income distribution in the early 1990's- median income for blacks and whites was in the 40k range for both. Casual reading, no guarantees.)
'Destroying poverty' good was, I think, salesman's puffery for expanding D patronage, which succeeded. At the price of stopping US economic growth by 1970, but the D party got a tighter lock on America. Creating a black middle class also succeeded.
> 50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.
It was quite ironic to see your failure to understand the simple mathematics Scott presented lead you to the following conclusion.
> Part of what I found interesting about that exchange was that it shows that Scott, despite what is obviously his very high intelligence, doesn’t, perhaps can’t, think in mathematics. It is something I had once observed of another highly intelligent person, a past colleague. The next exchange is further evidence.
You couldn't make it up.
David clearly understood the mathematics Scott was presenting. That's how he was able to claim that that mathematics was flawed - a claim which you yourself appear not to understand.
Do you see what's wrong with it? If you don't, reread David's explanation. To summarize, it's based on an assumption that isn't always true.
Scott clearly said
>50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.
To which David responded with paragraphs of misunderstanding of the mathematics of what Scott claimed, while coming out feeling smugly superior in the end.
> If you work through the mathematics of the declining marginal utility argument for progressive taxation you will discover that it is only an argument against lump sum taxation.
What? Scott didn't make a "declining marginal utility" argument, he pointed out the obvious common sense that "50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.".
> It is easy enough to write a utility function with declining marginal utility for which the utility of the second half of an income of $100,000 is greater than the utility of the second half of an income of $50,000;
Yes, except such a utility function function does not correspond to reality, because again, "50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire.".
> For any structure of taxes more progressive than a lump sum tax, including a flat tax, there is some utility function consistent with declining marginal utility for which that structure imposes a larger utility cost on higher income taxpayers.
Yes, except such a utility function is not consistent with reality.
> Declining marginal utility can support a utilitarian argument for progressive taxation but an equal burden argument requires a stronger assumption, how strong depending on how steeply graduated the taxation is.
Yes, an argument for progressive taxation would require an assumption like "50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire."
> You get equal burden from a flat tax, each taxpayer paying the same fraction of his income, if utility equals the logarithm of income, making marginal utility inverse to income.
Yes indeed, you would need sub-logarithmic utility for progressive taxation. Another way to phrase "Sub-logarithmic utility" would be..."50% of what a person with $10,000 makes is more valuable to her than 50% of what a billionaire makes is to the billionaire."
And of course, the punch line:
> Part of what I found interesting about that exchange was that it shows that Scott, despite what is obviously his very high intelligence, doesn’t, perhaps can’t, think in mathematics. It is something I had once observed of another highly intelligent person, a past colleague
You just claimed David spent several paragraphs of misunderstanding Scott's claim, and responded with several paragraphs based on the same premise David pointed out was incorrect.
Except:
A) The premise is correct (ask anyone outside your bubble).
B) David did not point out it was incorrect, as he provided no evidence it was incorrect.
C) David spent several paragraphs solely arguing against a straw man that diminishing marginal utility *necessarily* implies sub-logarithmic utility. This is not what Scott claimed.
"He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it."
150 years later, Adam Smith's words still ring true. However, to be fair to chess(players) I will say that to be good at chess means always having many different plans. It is one of the most common errors in chess to devise a plan at t1 and then not notice that the conditions for its application are not valid perhaps already with the following move of the opponent (at t2)--but sticking to the plan nevertheless. Since your plans affect your opponent, your opponent will always work to eliminate the conditions for the plan's feasibility. In the same way, since policies and regulations affect people whose behavior they aim to regulate, people will modify their behavior in ways that will eliminate (some of) the intended effects of the regulation. Hence, the error of Smith's "man of system" consists not in acting as a chess player but in acting as if he has no "opponent" capable of reacting. Having an opponent who is capable of reacting to your plans (and equally: assuming that your opponent is capable of reacting) is essential for the game of chess.
A chess player has one opponent. Smith is imaging a chess set where each piece is an opponent, at least to the extent of having, and acting on, different objectives than the planner.
Sure, but it's easy to walk away from Smith's analogy thinking that the error of the "man of system" consists in acting as a chess player. It may not be immediately obvious to everyone that for Smith's purposes, it doesn't matter whether the "man of the system" is rearranging chess pieces on a chess-board, books on a bookshelf or fridge magnets on a fridge.
In the spirit of Christmas, we must forgive Adam Smith for not having the foresight to use the more apt analogy of a Sim City player. 🎄
I couldn't follow this at all, and I usually can at least somewhat follow your posts.
“… libertarianism, in its earlier and somewhat more moderate incarnation as classical liberalism, ….”
Classical liberalism is not inherently “more moderate” than libertarianism. Some classical liberals advocated real anarchy (most notably, perhaps, Gustave de Molinari) or a minimal state. They, at least, seem to have been libertarians avant la lettre. So it is probably more accurate to say that libertarianism has long been a more extreme subset of classical liberalism.
“Mike starts his discussion by criticizing libertarians for being utopians; he is now criticizing libertarians for not being utopians.”
We might call the two criticisms “naively optimistic utopianism” and “jadedly pessimistic anti-utopianism”. As the former is more usual, I deal very briefly with seven popular versions here: https://jclester.substack.com/p/utopianism-a-libertarian-viewpoint
I agree that libertarianism can be viewed as a subset of classical liberalism but it wasn't the subset that is entitled to credit for the accomplishments of classical liberalism since those were accomplished by governments with more power than modern libertarians, in the sense being discussed, approve of.
Governments are likely to be better (i.e., less bad) the more centrally classical liberal that they are. But governments can be considered collectively as being the cause of most of the evils inflicted on people. So if a few of them eventually turned to combatting some of the more egregious evils, I do not give them too much credit. Those governments had “crowded out” societies that are libertarian anarchies—with their superior wealth, power, and morality—that would probably have done a better job, more efficiently, and sooner.
Good debates. I think the position where anarchic libertarianism might lose very badly is against moderate libertarianism or "classical liberal" libertarianism. David mentions here that classical liberalism has probably the best track records as far as human right and wealth gains. The anarchic societies often cited have very weak gains in either direction (wealth or rights). It would seem minor compromises in theoretical negative rights might contribute to the highest welfare for everyone on net rather than theoretically full negative rights. I see some of the successful private cities like Prospera as essentially still compromises (still under some sort of government, but far less of it).
The argument against the classical liberal position is public choice theory, which suggests that it won't stay at a minimal government.
In grad school, one Leftist prof continually "explained" to me that I was a believer in the public choice opinion group. He couldn't even conceive of anyone who being at the very least philosophically in the anarchist libertarian camp. Another prof (philosophy) tried to tell the first prof that it would help if he thought of me as a highly armed, incredibly dangerous Amishman. I like that description.
I like to describe the Amish as anarchists — just very rule oriented anarchists.
> I don't know if it is right but it makes more causal sense than "the rich got lots richer, the poor got only a little richer, and that must be because the rich were hogging all the money that otherwise would have gone to the poor," which does not have any obvious causal structure at all
The only cause needed is for the return on capital to be greater than the increase in wages in the case where we are comparing unearned to earned income.
I don't think most high income is due to non-human capital, am not even sure it is due to human capital as opposed to differing abilities and behavior. What fraction of all income do you think is dividends and other returns on capital?
Further, your argument assumes that capitalists invest all of their income, consume none of it.
I think another elephant in the room is that as wealth differences rise, leverage over the poor increases, leaving them less capable of bargaining for higher wages. And part of the reason for this in turn is that the poor largely exist as a fungible class of labor rather than as individuals who can make a fine grained case for their value to an employer.
It's interesting to me that libertarians complain about lack of "math" but entirely ignore large categories of formalism such as game theory, network theory. This is similar to the reduction of Marx to just the LTV which is then easily trounced, and seems like either an artifact of perverse incentives in academia or explicit bad faith.
I don't understand your "complain about lack of "math"" point. What is the libertarian complaint? And why do you think libertarians ignore game theory? I have a chapter on it in my _Price Theory_.
In particular they think whether or not an economy or an arrangement is positive sum or not is trivial, and thus that deviation from treatment of apparent free trade as positive sum is itself trivially irrational. In actuality there are enormous incentives to disguise coercive or fraudulent games as free trade games, and thus the rational approach to basically any real life game is going to deviate, sometimes very sharply, from the toy case.
You are assuming that wages are determined by bargaining rather than by supply and demand.
Bargaining is part of the process by which equilibrium prices are approximated, just as random molecular motion is part of the process by which thermodynamic systems come to thermal equilibrium.
Maybe people who bargain are in higher demand than people who don't. I'm sure there's some way to avoid that nit being picked. It's not really interesting to me either way. I'm happy to concede that your reasoning doesn't allow for what I'm describing.