My particular political statement here: the government is uniquely efficient (potentially) at redistributing income.
Well, that depends on what you mean by “efficient”, if you only care about how much gets distributed and not to from whom or to whom then it is certainly most efficient. If on the other hand you think of redistributing income as a sub-goal of increasing everyone’s living standards, say, then this statement is highly dubious.
If on the other hand you think of redistributing income as a sub-goal of increasing everyone’s living standards, say, then this statement is highly dubious.
It is well established that the marginal utility of a dollar is higher for poor people than for rich people, so in the short-term, net utility is trivially increased by redistribution even though not everyone’s utility is increased. Tossing out all net improvement because some people lose a small amount to support large gains elsewhere seems like poor policy to me.
But I am interested in the longer term, not the shorter term. In the long term, arguing against redistribution is the concern that productive people will be disincentivized to use their talents as much if they can’t accumulate more compared to a non-redistributionist scenario. Arguing for redistribution is a concern that the more unequal a society, the less basic cohesion there is with multiple bad long term results: 1) the more force (police, eavesdropping, limitations on political expression) must be used, 2) reduced input into the education of the poorer classes, resulting in less talent developed at higher expense within the society as a whole.
The 2nd point is a little subtle. People tend to sort themselves into what they are good at. If all N people in my society have access to education, I’ll have a reasonably close to optimum self-sorting of people into jobs that they are talented at. If instead my society has stratified, and only 10% of families have the resources to educate their children to be doctors, lawyers, and indian chiefs, and the rest wander the streets selling chewing gum to passing tourists and mowing lawns, then I the most productive cadre of my society will be reduced in efficiency since it is drawing its talent from only one-tenth the human resources it would have drawn from in a more equal society.
So my reason for supporting redistribution is to keep the talent pool large so we don’t pay an excess in training costs for a more mediocre top layer in our society.
In the long term, arguing against redistribution is the concern that productive people will be disincentivized to use their talents as much if they can’t accumulate more compared to a non-redistributionist scenario.
Another argument is that in capitalist societies, someone who made a lot of money probably made it by making products people want, thus increasing general utility. This suggests that he is particularly good at figuring out how to spend money to increase utility, likely better at it then both the redistributers and whoever they’re redistributing the money to.
I’m not sure if this is the best place in this thread to say this, but here goes:
In several of the calculations throughout this thread you seem to be assuming that the redistributers themselves are completely efficient and incorruptible.
Well, that depends on what you mean by “increasing everyone’s living standards.” If you mean “people have square-root-shaped utility of money, so moving money from rich people to poor people increases total utility,” then all that really matters is the redistribution. If you mean “by increasing economic activity, since poor people have lower rates of saving, thus creating more wealth,” then… no, wait, the redistribution is still pretty much what matters.
Ah! If you mean “giving poor people more opportunities, thus leading to better use of human capital, increasing everyone’s living standards,” then you want to give the most help to the poor people who are going to take new opportunities based on more wealth. The question is then, do you have anything in mind when you refer to things that are better than, say, a public education system at providing poor people new opportunities?
Ah! If you mean “giving poor people more opportunities, thus leading to better use of human capital, increasing everyone’s living standards,”
Thank you for figuring out what I was thinking! One of my many problems in any discussion is I can’t figure out which things I need to state because there are other interpretations and which things I can leave unstated because everyone will quickly read it the same way.
This is the one I mean. I am fascinated by the progress human kind has made so far. I am interested in bringing that to new levels, and one way to do that is to use the pool of human resources we have ever more efficiently. Getting rid of arbitrary limits on what women or black people were allowed to do has been a great help in that goal. Avoiding a debilitating stratification may also be important.
do you have anything in mind when you refer to things that are better than, say, a public education system at providing poor people new opportunities?
Having raised kids, it seems unlikely to me that institutionalized public education for a nominal 6 hours a day (two hours work in 6 hours?) is all that need be done. Meanwhile, we observe that the more money a family has, the more they spend on advantages for their children. So while inexpensive or free public education is one good approach, another is just making poor families relatively richer generally. Which is most efficient? That is a discussion I think we should have, and i don’t think the answer is trivial, or that there is even necessarily only one “correct” answer. But the ideal that “we should all get to keep all the money we make, and spend it only on our children if we want” is a point I disagree with, and what I wanted to argue against in my OP. The captains of industry are generally from families that have given their children EVERY advantage. Of course it may be far from optimum to try to get to equality of
So yes, education is a great component of the kind of redistribution that I want. I suspect a more intact family doing more “enriching” activities together, not living in relative squalor, being able to teach “healthy choices” because price is not the only consideration when acquiring food, these may make generally redistributive policies efficient. Add to that our clear knowledge that marginal utility of dollars declines as you get more dollars, and we have a straightforward reason to choose progressive taxation to fund these things. (Note progressive income tax is not the only way to tax progressively, and income tax would not be my first choice of taxing, but that is another discussion).
With respect to education, in this essay about inequality (seriously read that whole thing) Paul Graham makes the point that improving access to education doesn’t actually decrease inequality since while to makes the poor richer, it also makes the rich richer.
There is of course a way to make the poor richer without simply shifting money from the rich. You could help the poor become more productive—for example, by improving access to education. Instead of taking money from engineers and giving it to checkout clerks, you could enable people who would have become checkout clerks to become engineers.
This is an excellent strategy for making the poor richer. But the evidence of the last 200 years shows that it doesn’t reduce economic inequality, because it makes the rich richer too. If there are more engineers, then there are more opportunities to hire them and to sell them things. Henry Ford couldn’t have made a fortune building cars in a society in which most people were still subsistence farmers; he would have had neither workers nor customers.
If you want to reduce economic inequality instead of just improving the overall standard of living, it’s not enough just to raise up the poor. What if one of your newly minted engineers gets ambitious and goes on to become another Bill Gates? Economic inequality will be as bad as ever.
responds to a statistical generalization with 2 famous examples
I agree that this is wrong.
Scumbag Eugine Nier
Even though this is obviously a joke, with an over the top reference to popular memes, it still seems counterproductive for building a strong community.
That captains of industry are from wealthy families? It’s certainly consistent with everything I’ve read about the heritability of wealth and it’s easy enough to supply other famous examples (eg. Bill Gates III).
Well, there’s also the people you take money away from to consider. For instance, we could pick a really rich person and take away all their money and distribute it to a hundred poor people. This might suck for the rich person, but the poor people would all be really happy about it.
But this is a lot like the doctor who kills a healthy person off the street to donate their organs to his patients, and I thought we all agreed not to do that.
We could try to convince the rich person to give away a lot of their money.
For instance, one of GiveWell’s standout organizations is GiveDirectly which simply transfers money from donors to poor recipients in the developing world (specifically, Kenya). “The recipient uses the transfer to pursue their own goals.”
But this is a lot like the doctor who kills a healthy person off the street to donate their organs to his patients
Sort of! But argument by analogy is just not very good when the thing itself is plenty comprehensible to all involved. It can neglect the subtleties of both the situation and our desires, and also people are bad at keeping hypotheticals and reality separate on the intuition level.
All I’m saying is that we can’t say “just look at how much money is being distributed”. Obviously the situation I suggest is very different from one in which two rich people lose half their money.
If you mean “by increasing economic activity, since poor people have lower rates of saving, thus creating more wealth,” then… no, wait, the redistribution is still pretty much what matters.
This appears to be a complete non sequitur. But, yes I do mean “increase the amount of wealth being produced”. Which as mwengler points out people have less motivation to create wealth if its going to be redistributed away.
The question is then, do you have anything in mind when you refer to things that are better than, say, a public education system at providing poor people new opportunities?
Well, here in the US the public education system pretty much sucks.
If you mean “by increasing economic activity, since poor people have lower rates of saving, thus creating more wealth,”
This appears to be a complete non sequitur.
What I mean is the typical capitalist statement “voluntary transactions create wealth.” Since both sides are happier than they were (well, most of the time, this is reality after all), they’ve both gained wealth. This gets called “creating” wealth, even though that’s a bit silly :) So if you want to make people happier, one way is to look for high-gain voluntary transactions, and make them happen more often. Thus my claim that increasing economic activity will (ceteris paribus) create wealth.
This obviously isn’t always applicable—sometimes investing the money (what would otherwise happen) is just fine, wealth-creation-wise. But if poor people, and the economies that poor people are part of, have high-gain voluntary transactions available to them that they aren’t using yet because of lack of money in the system, there’s opportunity.
Well, that depends on what you mean by “efficient”, if you only care about how much gets distributed and not to from whom or to whom then it is certainly most efficient. If on the other hand you think of redistributing income as a sub-goal of increasing everyone’s living standards, say, then this statement is highly dubious.
It is well established that the marginal utility of a dollar is higher for poor people than for rich people, so in the short-term, net utility is trivially increased by redistribution even though not everyone’s utility is increased. Tossing out all net improvement because some people lose a small amount to support large gains elsewhere seems like poor policy to me.
But I am interested in the longer term, not the shorter term. In the long term, arguing against redistribution is the concern that productive people will be disincentivized to use their talents as much if they can’t accumulate more compared to a non-redistributionist scenario. Arguing for redistribution is a concern that the more unequal a society, the less basic cohesion there is with multiple bad long term results: 1) the more force (police, eavesdropping, limitations on political expression) must be used, 2) reduced input into the education of the poorer classes, resulting in less talent developed at higher expense within the society as a whole.
The 2nd point is a little subtle. People tend to sort themselves into what they are good at. If all N people in my society have access to education, I’ll have a reasonably close to optimum self-sorting of people into jobs that they are talented at. If instead my society has stratified, and only 10% of families have the resources to educate their children to be doctors, lawyers, and indian chiefs, and the rest wander the streets selling chewing gum to passing tourists and mowing lawns, then I the most productive cadre of my society will be reduced in efficiency since it is drawing its talent from only one-tenth the human resources it would have drawn from in a more equal society.
So my reason for supporting redistribution is to keep the talent pool large so we don’t pay an excess in training costs for a more mediocre top layer in our society.
Another argument is that in capitalist societies, someone who made a lot of money probably made it by making products people want, thus increasing general utility. This suggests that he is particularly good at figuring out how to spend money to increase utility, likely better at it then both the redistributers and whoever they’re redistributing the money to.
I’m not sure if this is the best place in this thread to say this, but here goes:
In several of the calculations throughout this thread you seem to be assuming that the redistributers themselves are completely efficient and incorruptible.
Well, that depends on what you mean by “increasing everyone’s living standards.” If you mean “people have square-root-shaped utility of money, so moving money from rich people to poor people increases total utility,” then all that really matters is the redistribution. If you mean “by increasing economic activity, since poor people have lower rates of saving, thus creating more wealth,” then… no, wait, the redistribution is still pretty much what matters.
Ah! If you mean “giving poor people more opportunities, thus leading to better use of human capital, increasing everyone’s living standards,” then you want to give the most help to the poor people who are going to take new opportunities based on more wealth. The question is then, do you have anything in mind when you refer to things that are better than, say, a public education system at providing poor people new opportunities?
Thank you for figuring out what I was thinking! One of my many problems in any discussion is I can’t figure out which things I need to state because there are other interpretations and which things I can leave unstated because everyone will quickly read it the same way.
This is the one I mean. I am fascinated by the progress human kind has made so far. I am interested in bringing that to new levels, and one way to do that is to use the pool of human resources we have ever more efficiently. Getting rid of arbitrary limits on what women or black people were allowed to do has been a great help in that goal. Avoiding a debilitating stratification may also be important.
Having raised kids, it seems unlikely to me that institutionalized public education for a nominal 6 hours a day (two hours work in 6 hours?) is all that need be done. Meanwhile, we observe that the more money a family has, the more they spend on advantages for their children. So while inexpensive or free public education is one good approach, another is just making poor families relatively richer generally. Which is most efficient? That is a discussion I think we should have, and i don’t think the answer is trivial, or that there is even necessarily only one “correct” answer. But the ideal that “we should all get to keep all the money we make, and spend it only on our children if we want” is a point I disagree with, and what I wanted to argue against in my OP.
The captains of industry are generally from families that have given their children EVERY advantage. Of course it may be far from optimum to try to get to equality of
So yes, education is a great component of the kind of redistribution that I want. I suspect a more intact family doing more “enriching” activities together, not living in relative squalor, being able to teach “healthy choices” because price is not the only consideration when acquiring food, these may make generally redistributive policies efficient. Add to that our clear knowledge that marginal utility of dollars declines as you get more dollars, and we have a straightforward reason to choose progressive taxation to fund these things. (Note progressive income tax is not the only way to tax progressively, and income tax would not be my first choice of taxing, but that is another discussion).
With respect to education, in this essay about inequality (seriously read that whole thing) Paul Graham makes the point that improving access to education doesn’t actually decrease inequality since while to makes the poor richer, it also makes the rich richer.
Um, Steve Jobs, Andrew Carnegie.
“Scumbag Eugine Nier—responds to a statistical generalization with 2 famous examples.”
I agree that this is wrong.
Even though this is obviously a joke, with an over the top reference to popular memes, it still seems counterproductive for building a strong community.
Turned out true though.
What statistics? All I see is an assertion.
That captains of industry are from wealthy families? It’s certainly consistent with everything I’ve read about the heritability of wealth and it’s easy enough to supply other famous examples (eg. Bill Gates III).
Well, that’s more evidence than mwengler provided.
Well, there’s also the people you take money away from to consider. For instance, we could pick a really rich person and take away all their money and distribute it to a hundred poor people. This might suck for the rich person, but the poor people would all be really happy about it.
But this is a lot like the doctor who kills a healthy person off the street to donate their organs to his patients, and I thought we all agreed not to do that.
We could try to convince the rich person to give away a lot of their money.
For instance, one of GiveWell’s standout organizations is GiveDirectly which simply transfers money from donors to poor recipients in the developing world (specifically, Kenya). “The recipient uses the transfer to pursue their own goals.”
Sort of! But argument by analogy is just not very good when the thing itself is plenty comprehensible to all involved. It can neglect the subtleties of both the situation and our desires, and also people are bad at keeping hypotheticals and reality separate on the intuition level.
All I’m saying is that we can’t say “just look at how much money is being distributed”. Obviously the situation I suggest is very different from one in which two rich people lose half their money.
Way to set up a straw man and then steal his kidneys!
If a general argument is made, then it can be refuted by any specific counter-example.
This appears to be a complete non sequitur. But, yes I do mean “increase the amount of wealth being produced”. Which as mwengler points out people have less motivation to create wealth if its going to be redistributed away.
Well, here in the US the public education system pretty much sucks.
What I mean is the typical capitalist statement “voluntary transactions create wealth.” Since both sides are happier than they were (well, most of the time, this is reality after all), they’ve both gained wealth. This gets called “creating” wealth, even though that’s a bit silly :) So if you want to make people happier, one way is to look for high-gain voluntary transactions, and make them happen more often. Thus my claim that increasing economic activity will (ceteris paribus) create wealth.
This obviously isn’t always applicable—sometimes investing the money (what would otherwise happen) is just fine, wealth-creation-wise. But if poor people, and the economies that poor people are part of, have high-gain voluntary transactions available to them that they aren’t using yet because of lack of money in the system, there’s opportunity.