Power Buys You Distance From The Crime

Link post

Introduction

Taxes are typ­i­cally meant to be pro­por­tional to money (or nega­tive ex­ter­nal­ities, but that’s not what I’m fo­cus­ing on). But one thing money buys you is flex­i­bil­ity, which can be used to avoid taxes. Be­cause of this, taxes aimed at the wealthy tend to end up hit­ting the well-off-or-rich-but-not-truly-wealthy harder, and tax cuts aimed at the poor end up helping the mid­dle class. Ex­am­ples (feel free to stop read­ing these when you get the idea, this is just the anal­ogy sec­tion of the es­say):

  • Com­puter pro­gram­mers typ­i­cally have the op­tion to work re­motely in a low-tax state; teach­ers need to be where the class­room is.

  • Es­tate taxes tend to hit fam­i­lies with sin­gle large as­sets (like a busi­ness) harder than those with di­verse in­vest­ments (who can sim­ply sell as­sets to pay for taxes), who are hit harder than those with enough wealth to cre­ate trust funds.

  • Ex­ec­u­tives can choose to re­ceive stock (which is taxed more fa­vor­ably) in­stead of cash to the ex­act per­centage they de­sire. Well paid em­ploy­ees are offered stock, but the amount will not be tai­lored to their needs. Lower level em­ploy­ees ei­ther are not offered this, or are not in a po­si­tion to take ad­van­tage of it.

  • The le­gal dis­tinc­tion be­tween a busi­ness (whose ex­penses are tax de­ductible) and a hobby (de­duc­tions not al­lowed) is based on whether the ac­tivity nets you in­come (there are com­pli­ca­tions and you can some­times prove a money loser is a busi­ness, but this is a good rule of thumb). Small busi­ness own­ers (e.g. lawyers) can fold their oc­ca­sion­ally-rev­enue-gen­er­at­ing hobby (e.g. pho­tog­ra­phy) into their real busi­ness, en­abling tax de­duc­tions for their hobby.

  • IRAs, 401ks, HSAs, and FSAs all lock your money up for a time or pur­pose, in ex­change for lower or de­layed taxes. You can only take ad­van­tage of them if you’re sure you won’t need the money for an­other pur­pose sooner.

  • More ex­am­ples here.

Note that most of these are perfectly le­gal and the rest are bor­der­line. But we’re still not get­ting the re­sult we want, of taxes be­ing pro­por­tional to in­come.

When we as­sess moral blame for a situ­a­tion, we typ­i­cally want it to be roughly in pro­por­tion to much power a per­son has to change said situ­a­tion. But just like money can be used to evade taxes, power can be used to avoid blame. This re­sults in a dis­torted blame-dis­tri­bu­tion ap­para­tus which as­signs the least blame to the per­son most able to change the situ­a­tion. Allow me a few ex­am­ples to demon­strate this.

Ex­am­ples 1 + 2: Cor­po­rate Malfeasance

Ama­zon.com pro­vides a valuable ser­vice by let­ting any idiot sell a book, with min­i­mal over­head. One of the costs of this com­plete lack of ver­ifi­ca­tion is that peo­ple will sell things that wouldn’t pass ver­ifi­ca­tion, such as coun­terfeits, at great cost to pub­lish­ers and au­thors. Ama­zon could never sell coun­terfeits di­rectly: they’re a large com­pany that’s easy to sue. But by set­ting them­selves up as a plat­form on which other peo­ple sell, they en­able them­selves to profit from coun­terfeits.

Or take slav­ery. No com­pany goes “I’m go­ing to go out and en­slave peo­ple to­day” (es­pe­cially not pub­li­cly), but not pay­ing peo­ple is some­times cheaper than pay­ing them, so fi­nan­cial pres­sure will push to­wards slav­ery. Public pres­sure pushes in the op­po­site di­rec­tion, so com­pa­nies try not to visi­bly use slave la­bor. But they can’t con­trol what their sub­con­trac­tors do, and es­pe­cially not what their sub­con­trac­tors’ sub­con­trac­tors’ sub­con­trac­tors do, and some­times this re­sults in work­ers be­ing un­paid and phys­i­cally blocked from leav­ing.

Who’s at fault for the sub­con­trac­tor(^3)’s slave la­bor? One ob­vi­ous an­swer is “the per­son lock­ing them in dur­ing the fire” or “the par­ent who gives their kid piece­work”, and cer­tainly it couldn’t hap­pen with­out them. But if we say “Nike’s lack of knowl­edge makes them not re­spon­si­ble”, we give them an in­cen­tive to sub­con­tract with­out ask­ing fol­low up ques­tions. The ex­ec­u­tive is prob­a­bly benefit­ing more from the sys­tem of slave la­bor than the fac­tory owner is from his lit­tle do­main, and has more power to change what is hap­pen­ing. If the small fac­tory owner pays fair wages, he gets out­com­peted by a fac­tory that does use slave la­bor. If the Nike CEO de­cides to in­source their man­u­fac­tur­ing to en­sure fair work­ing con­di­tions, some­thing ac­tu­ally changes.

...Un­less con­sumers switch to a cheaper, slav­ery-driven shoe brand.

Which is ac­tu­ally re­ally hard to not do. You could choose more ex­pen­sive shoes, but the profit mar­gin is still big­ger if you shrink ex­penses, so that doesn’t help (which is why Fair­trade was a failure from the work­ers’ per­spec­tive). You can’t in­ves­ti­gate the man­u­fac­tur­ing con­di­tions of ev­ery­thing you buy—it’s just too time con­sum­ing. But if you pun­ish ob­vi­ous en­slave­ment and con­duct no fol­low up stud­ies, what you get is ob­scured en­slave­ment, not de­cent work­ing con­di­tions.

Mo­ral Mazes de­scribes the gen­eral phe­nomenon on page 21:

More­over, push­ing down de­tails re­lieves su­pe­ri­ors of the bur­den of too much knowl­edge, par­tic­u­larly guilty knowl­edge. A su­pe­rior will say to a sub­or­di­nate, for in­stance: “Give me your best think­ing on the prob­lem with [X].” When the sub­or­di­nate makes his re­port, he is of­ten told: “I think you can do bet­ter than that,” un­til the sub­or­di­nate has worked out all the de­tails of the boss’s pre­de­ter­mined solu­tion, with­out the boss be­ing speci­fi­cally aware of “all the eggs that have to be bro­ken.” It is also not at all un­com­mon for very bald and ex­tremely gen­eral edicts to emerge from on high. For ex­am­ple, “Sell the plant in [St. Louis]; let me know when you’ve struck a deal,” or “We need to get higher prices for [fabric X]; see what you can work out,” or “Tom, I want you to go down there and meet with those guys and make a deal and I don’t want you to come back un­til you’ve got one.” This push­ing down of de­tails has im­por­tant con­se­quences.
First, be­cause they are un­fa­mil­iar with—in­deed de­liber­ately dis­tance them­selves from—en­tan­gling de­tails, cor­po­rate higher ech­e­lons tend to ex­pect suc­cess­ful re­sults with­out messy com­pli­ca­tions. This is cen­tral to top ex­ec­u­tives’ well-known aver­sion to bad news and to the re­sult­ing ten­dency to kill the mes­sen­ger who bears the news.
Se­cond, the push­ing down of de­tails cre­ates great pres­sure on mid­dle man­agers not only to trans­mit good news but, pre­cisely be­cause they know the de­tails, to act to pro­tect their cor­po­ra­tions, their bosses, and them­selves in the pro­cess. They be­come the “point men” of a given strat­egy and the po­ten­tial “fall guys” when things go wrong. From an or­ga­ni­za­tional stand­point, overly con­scien­tious man­agers are par­tic­u­larly use­ful at the mid­dle lev­els of the struc­ture. Up­wardly mo­bile men and women, es­pe­cially those from work­ing-class ori­gins who find them­selves in higher sta­tus mi­lieux, seem to have the req­ui­site level of anx­iety, and per­haps tightly con­trol­led anger and hos­tility, that fuels an ob­ses­sion with de­tail. Of course, such con­scien­tious­ness is not nec­es­sar­ily, and is cer­tainly not sys­tem­at­i­cally, re­warded; the real or­ga­ni­za­tional pre­miums are placed on other, more flex­ible, be­hav­ior.

Th­ese ex­am­ples differ in an im­por­tant way from tax struc­tur­ing: struc­tur­ing re­quires seek­ing out ad­vice and act­ing on it to achieve the goal. It’s highly agen­tic. The Wells Fargo and ap­parel-out­sourc­ing cases re­quired no such agency on the part of ex­ec­u­tives. They vaguely wished for some­thing (more rev­enue, fewer ex­penses), and some­how it hap­pened. An em­ployee who tried to di­rect the ex­ec­u­tives’ at­ten­tion to the fact that they were in­di­rectly em­ploy­ing slaves would prob­a­bly be fired be­fore they ever reached the ex­ec­u­tives. Ex­ec­u­tives are not only out­sourc­ing their dirty work, they’re out­sourc­ing knowl­edge of their dirty work.

[De­tails of per­sonal anec­dotes changed both in­ten­tion­ally and by the va­garies of hu­man mem­ory]

Ex­am­ple/​Ex­cep­tion 2.5: Cor­po­rate Malfea­sance Gone Wrong

The Wells Fargo ac­count fraud scan­dal: in or­der to meet quo­tas, en­try level Wells Fargo em­ploy­ees cre­ated mil­lions of unau­tho­rized ac­counts (typ­i­cally ex­tra ser­vices for ex­ist­ing cus­tomers). I origi­nally in­cluded this as an ex­am­ple of “ex­ec­u­tives in­cen­tiviz­ing en­try level em­ploy­ees to com­mit fraud on their be­half”, but it turns out Wells Fargo made al­most no money off the fraud- $2m over five years, which hardly seems worth the em­ploy­ees’ time, much less the $185m fine. I’ve left this in as an ex­am­ple of how the in­cen­tives-not-or­ders sys­tem doesn’t always work in pow­er­ful peo­ple’s fa­vor.

Thanks to Larks for point­ing this out.

Ex­am­ple 3: For­eign Med­i­cal Care

My cousin An­gela broke her leg while trav­el­ing in Thailand, and was delighted by the level of care she re­ceived at the Thai hos­pi­tal—not just med­i­cally, but so­cially. Nurses brought her flow­ers and were just gen­er­ally nicer than their Amer­i­can coun­ter­parts. Her in­ter­pre­ta­tion was that Thailand was a place mo­ti­vated by love and kind­ness, not money, and Amer­i­cans should as­pire to this level of re­gard for their fel­low hu­man be­ing. My in­ter­pre­ta­tion was that she had enough money to buy the good­will of ev­ery­one in the room with­out notic­ing, so what she should have learned is that be­ing rich is awe­some, and that be­ing an Amer­i­can who trav­els in­ter­na­tion­ally is enough to qual­ify you as rich.

This is mostly a suc­cess story for the free mar­ket: An­gela got good med­i­cal care and the nurses got money (I’m as­sum­ing). Any crime in this story were com­mit­ted off-screen. But An­gela was cer­tainly benefit­ing from the nurses’ re­strained choices in life. And had she had ac­tual power to af­fect health­care in US, try­ing to fix it based on what she learned in Thailand would have done a lot of dam­age.

Ex­am­ple 4: My Dat­ing an Artist Experience

My starv­ing-artist ex-boyfriend, Con­nor, stayed with me for two months af­ter a lit­tle bad luck and a lot of bad de­ci­sions cost him his job and then apart­ment (this was back when I had a two bed­room apart­ment to my­self—I miss Seat­tle). Dur­ing this time we had one big fight. My view on the fight now is that I was lo­cally in the right but globally the dis­agree­ment was in­dica­tive of ir­rec­on­cilable differ­ences that should have led us to break up. That was de­layed by months when he ca­pitu­lated.

One pos­si­bil­ity is that he gen­uinely thought he could change and that I was worth the at­tempt. Another is that he saw the in­com­pat­i­bil­ity, or knew things that should have led him to see it, but lied or blocked out the knowl­edge so that he could keep liv­ing with me. This would be a shitty, ma­nipu­la­tive thing for him to do. On the other hand, what did I ex­pect? If the pun­ish­ment for break­ing up with me was, best case sce­nario, mov­ing into a home­less shelter, of course he felt pres­sure to ap­pease me.

It wasn’t my fault he felt that pres­sure, any more than it was An­gela’s fault her nurses were born with fewer op­tions than her. Time in my spare bed­room was a gift to him I had no obli­ga­tion to keep giv­ing. But if I’d re­ally val­ued a co­er­cion free de­ci­sion, I would have com­mit­ted to hous­ing him in­de­pen­dent of our re­la­tion­ship. Although if that be­comes com­mon knowl­edge, it just means peo­ple can’t make an un­co­erced de­ci­sion to date me at all. And if helping Con­nor at all meant a com­mit­ment to do so for­ever, he would get a lot less help.

This case is more like the Wells Fargo case than Ama­zon or Nike. I was get­ting only the ap­pear­ance of what I wanted (a gen­uine re­la­tion­ship with a com­pat­i­ble per­son), not the real thing. Nonethe­less, the uni­verse was con­tort­ing it­self to give me the ap­pear­ance of what I wanted.

Summary

What all of these sto­ries have in com­mon is that (rel­a­tively) pow­er­ful peo­ple’s de­sires were met by peo­ple less pow­er­ful than them, with­out them hav­ing to take re­spon­si­bil­ity for the ac­tion or some­times even the de­sire. So­ciety con­spired to give them what they wanted (or in the case of Con­nor and Wells Fargo, a fac­simile of what they wanted) with­out them hav­ing to ar­tic­u­late the want, even to them­selves. That’s what power means: abil­ity to make the game come out like you want. Disem­pow­ered peo­ple are forced to con­sciously no­tice things (e.g., this bud­get is un­reach­able) and make plans (e.g., slav­ery) where a pow­er­ful per­son wouldn’t. And it’s un­fair to judge them for do­ing so while ig­nor­ing the moral­ity of the pow­er­ful who never con­sider the sys­tem that brings them such nice things.

Take home mes­sage:

  1. The most agen­tic per­son in a situ­a­tion is not nec­es­sar­ily most morally cul­pable. One of the things power buys you is dis­tance from the crime.

  2. Power ob­scures in­for­ma­tion flow. If you are not proac­tively look­ing to see how your wants and needs are be­ing met, you are prob­a­bly benefit­ing from some­thing im­moral or be­ing tricked.

This piece was in­spired by a con­ver­sa­tion with and benefited from com­ments by Ben Hoff­man. I’d also like to thank sev­eral com­menters on Face­book for com­ments on an ear­lier draft and Justis Mills for copy­edit­ing.