Why I Read Bryan Caplan
I know I often disagree with him. But then there’s stuff like this:
“What’s stopping Warren Buffett from paying more taxes?” is a red herring. The fundamental question is: “Why is government’s share of the voluntary donations market so damn small?” All genuinely charitable donations suffer from the Prisoners’ Dilemma… That’s probably a big part of the reason why charity is only a few percent of GDP. But none of this explains why out of the more $300 billion that Americans give to charity, the American government garners about $3 million. Despite widespread nationalist and statist sentiments, Uncle Sam’s share of the charity market is microscopic – less than .001%. How very odd.
Suppose you start a new charity to provide free haircuts for hippies. You only manage to raise the money to pay for three haircuts a year. The Prisoners’ Dilemma might explain why people aren’t more generous with their money in general. But the Prisoners’ Dilemma doesn’t explain why the other charities raise so much more money than yours. If you ask “Why don’t people give more money to my charity?,” the best answer is that people hold your charity in low esteem. Similarly, if total donations to the U.S. government add up to a few million dollars a year, the best explanation is that people see lots of better ways to spend not just their dollars, but their charitable dollars.
I do wonder, though: Could the U.S. government attract a lot more donations with better marketing? What if the President spent less time raising money for his campaign and more time raising money for the Treasury? What if Congress publicly acknowledge the ten biggest donors in an annual ceremony? I can easily believe that donations to the U.S. government would rise a hundred-fold. But even then, Uncle Sam’s share of national charity would be a mere .1%.
It is exceedingly odd that Americans profess to love their country so much, yet volunteer so little money to their government.
One issue, and perhaps this is what Caplan was getting at, is how effective donating to the “U.S. government charity” would be. If it’s a donation to help the US pay back its debt, for example, it seems there’s little uncertainty (for me, at least) that the US would use the money in that way. Add to that the fact that “money is fungible, etc.”Report
Add to that the fact that money is fungible, and you destroy any good the earmark might do.
Which on the margin makes the nondonating taxpayer look a little bit wiser.Report
Not that this would count as a donation to charity if I participated, but I never check the box on my tax form that would apply $3 of my tax (without increasing my overall tax payment) to the presidential federal campaign funding. It’s not so much because I disagree with the idea in principle–I don’t know if I agree or disagree with it–it’s just…..I don’t know.Report
I don’t check it either. That money goes to the major parties, and I see no reason to reward either of them.Report
It’s also less than clear to me that all donations to charity suffer from a prisoner’s dilemma. All sufficiently small donations do this, perhaps — but then, charities are free to refuse if I send them a check for a penny.
If the government doesn’t face this problem — as Arnold Kling suggested — then it becomes more likely that people under-donate (or over-praise).Report
To me it’s less than less than clear. In fact, it’s absurd. For this to be true donations would have to have comparatively little effect unless many people donated. But there are plenty of cases where one donation can have a big impact. This was also mentioned in the comments to Caplan’s post. Caplan does not show his assertion.Report
One might still claim that with the government running large programs in many areas, even programs that would suffer from the prisoner’s dilemma if run by individuals, it still makes sense to donate a marginal dollar. This is what Kling says, and is the exact opposite of what Caplan says: we admit that charities often do not suffer from the prisoner’s dilemma and then reason that government operations don’t either at the margin.
Kling’s argument, though, assumes that you are using the tax increase for existing programs. If the tax increase is applied to a new and PD-suffering program then there is clearly a solid case for Buffett-like demands.
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A few issues:
1.) Lack of clarity on fund disbursement: If I donate to Haircuts for Hippies, I know my money is going to pay for actual haircuts for actual hippies or costs associated with running the charity. If I donate to the government, my money could go to welfare or food stamps or the military or Medicare or Medicaid or…
2.) Efficiency: Many (all?) charities make available information about how much of every dollar donated goes to the actual cause. How would the government fare on this measure?
3.) Branding: As you discuss, marketing matters. I don’t know anyone that sees paying more taxes as “charity”.
How to solve it? If people had an option to direct any funds above and beyond their tax bill, you might see it. I might throw $100 if I know all or most of that money will end up in the pockets of young kids buying lunch.Report
Well, people donate to the United Way without always knowing where their money is going, right?
But in general, any such governmental approach would do best if people could donate specifically to programs they supported and if all the funds were publicly accounted for so you could know how much is for overhead, etc. There are already private watchdog organizations that do that, so it wouldn’t be much of a stretch. We’d just have to get the agencies accustomed to the fact that the polis really does get to know what they’re doing. (I’m assuming CIA, NIA, and such would not be included in this program.)
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Yes, but even united way has a much more specific mission than the us govt. I may not know exactly where my donation goes, but it is being used for some sort of charity project rather than a new bomber or justifying a tax cut for mitt romney. This argument just doesn’t fly.Report
There are charity projects and then there are charity projects. My United Way contribution could go to support my children’s YMCA swim team, or it could go to assist Boy Scouts in their effort to discriminate against gays or to promote the killing of unborn citizens.
That is, if I was foolish enough not to designate the purpose of my donation. So that’s why I emphasized that charitable contributions to government should be donations to specific programs, not just to “the” government as a whole. If even donating to United Way as a whole is too broad, then donating to the American Government as a whole is unconscionably broad.Report
James,
See my comments below on Pragmatarianism blog. I would add that another key to charitable donations is in signaling and peer pressure.
A successful donation to government program would allow people to display their contributions. For example, a state could experiment with issuing license plates that are color coded based upon contributions.
If you pay the base tax rate you get a blue license plate. If you contribute between 5 and 10 percent above base rate, you get a silver plate. 10 to 20 gets a gold plate and so on. Note that the contributions could include only government directed donations, or government and other approved charities.
The point is that a dude pretending to be a good progressive and driving a new Lexus with a blue license plate would have some explaining to do.
As a libertarian I am not much of a fan of violent coercion. I believe peer pressure is great though, and should be used much more.Report
Speaking as a progressive, I think people should pay their tax levels according to the law and if we have a lack of tax revenues, it’s a collective action problem, not a problem of a lack of charity.Report
“people donate to the United Way without always knowing where their money is going, right?”
Right, but lots more people don’t donate to the United Way for exactly that reason. So I’m not sure what you think you’re proving there.Report
That not knowing where their money is going is not a problem unique to government, nor does it lack an already proven solution.Report
…but, as I pointed out, people’s chosen solution is don’t donate to that charity.
“Here is a non-government actor doing the same supposedly-bad thing as the government” is not an argument that what the government’s doing is actually okay!Report
Only some people’s solution, Duck. And the solution chosen by many others is to donate their money with a directive to where it shall be directed–a scheme UW presumably created to encourage more donations.
“Here is a non-government actor doing the same supposedly-bad thing as the government” is not an argument that what the government’s doing is actually okay!
I never said it was. Please don’t be a dick just for the sake of being a dick.Report
I see the problem. I’m responding to the part of the post I actually quoted, and you’re acting like I’m responding instead to the rest of the post that I didn’t quote.Report
So…basically, if we give the government more money to use at Congress’s discretion, it can’t be trusted to spend it as wisely as the private sector would. That’s the whole point.Report
One obvious issue: Haircuts for Hippies, and the Red Cross for that matter, don’t already require that I pay them money or suffer legal consequences (including fines or imprisonment). I suspect if they did, fewer people would donate to them.Report
Yeah. Fish Haircuts for Hippies and the Red Cross, those bastards.Report
Fish Haircuts for Hippies
I’m not sure what that would look like, but apparently it’d be an improvement?Report
Like this:
How many people know the address of the Office of Public Debt?
Most charities advertise… (though the ones I donate to do not spend my money to do it).Report
Whose money do they spend?Report
the work they do is advertising enough.Report
I’ve been donating to the government for about 20 years now.
Every year, I’ll add in another $12 or $7 or so to my taxes.
Really, the reason is so, if I ever get audited, I can go back further and claim overpayment.
I donate to the CYA fund.Report
The reason the government fails as a charity is … the government isn’t a charity. It doesn’t have a charity’s focused goals, it doesn’t do a charity’s advertising. It just isn’t a charity. But talking about it that way does keep us focused on Buffett’s supposed hypocrisy, so well done.Report
Thank you. Government is also not a household or a business.Report
And therefore, government has nothing to learn from charities, households or businesses. It is sui generis and the only standard by which it can be judged is its own.Report
I say that government can be treated as a charity because it:
1. Accepts private donations.
2. Does things for the public good.
There are lots of charities that don’t have focused goals; there are lots of charities that don’t advertise much. Those things aren’t essentials for charitable work.
Come to think of it, Bank of America advertises a lot and clearly has focused goals. Is Bank of America a charity?
You’ve come up with an entirely ad hoc and obviously unworkable definition. So well done, yourself!Report
some charities are even private corporations…Report
No, as I’m sure you’re aware, the two characteristics I listed were not intended to be a complete definition of the term charity; they are an incomplete list of characteristics that distinguish a charity’s ability to attract voluntary donations from that of the government. But I’m sure your mistake was made in good faith.
All charities have goals more focused than those of the government, and all charities place far more emphasis on advertising than the government does on its voluntary public debt reduction program. And yes, advertising in some form to attract attention, and focus sufficient to gain and hold the interest of donors, are indeed essential for charities. No, they are not essential “for charitable work,” but the discussion concerns charitable organizations, not charitable work.
On the other hand, your list of characteristics, which you do assert is a complete definition of a charity, is clearly wrong since it excludes almost no one.Report
No, as I’m sure you’re aware, the two characteristics I listed were not intended to be a complete definition of the term charity; they are an incomplete list of characteristics that distinguish a charity’s ability to attract voluntary donations from that of the government. But I’m sure your mistake was made in good faith.
I am aware that these two characteristics were not intended to be a complete definition. The problem is that they have nothing to do with being a charity. They aren’t a part of the definition at all. In any sense.
Suppose I said, “To be a charity, you have to help injured puppies.”
Now, it’s true that some charities help injured puppies. But some charities help homeless war vets and don’t bother with puppies. Some help women with breast cancer; again, no help for the puppies. Some help alcoholics — and not even any puppies at all. Et cetera.
Helping injured puppies is neither a necessary nor a sufficient part of being a charity. Helping puppies is an accidental aspect of charity, and as such it has nothing to do with determining whether that thing really is a charity.
The same is true of “having focused goals” and “advertising.”
But I’m sure you made your error in good faith and will be happy to retract it.
Now, as to my list. I find that it excludes for-profit corporations, families, and individuals. It includes nearly everything for which donations are tax-deductible, including churches, universities, nonprofit arts organizations, research grant outfits, and the like. That it just happens to include government is part of the point of the definition: It’s easy to construct a definition that isn’t obviously unreasonable, that excludes the obvious non-charities, that includes the obvious charities, and that places government with the charities. I find that pretty remarkable.
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Your definition fails to exclude me, and I’m not a charity.
As I stated and defended in my second paragraph, which you clearly did not read, the two characteristics I cited are indeed essential for charitable organizations.Report
As I said to Jesse, if you really are doing so much charitable work, then set yourself up as a nonprofit. If you’re not, then don’t go around saying that you are just for purposes of debate.
Your second paragraph, which I did read, was so silly as not to require a response. Are all charities more focused than the government? So what? “Focus” isn’t the definition of a charity. It has nothing to do with charity. If it did, Bank of America would be a charity, what with its laser-like focus on making money.
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Your definition of charitable organization was, in full:
1. Accepts private donations.
2. Does things for the public good.
I stand ready to accept donations any time someone wants to provide them. The work I do is socially useful, so can be said to be “for the public good.” I have met both requirements of your definition; therefore I am, by your definition, a charity. However, I am not in fact a charity. Therefore your definition is wrong. Are you capable of grasping logic?
Also, are you capable of consistency? I listed two qualities that distinguish charities from the government in their ability to attract donations: focus and advertising. First, you wrongly characterized these as an attempted definition of a charity:
You’ve come up with an entirely ad hoc and obviously unworkable definition.
When I corrected this falsehood, you claimed not to have done so:
I am aware that these two characteristics were not intended to be a complete definition.
Now you’ve pivoted right back to claiming they are a definition:
“Focus” isn’t the definition of a charity.
It is clear you are incapable of critical thinking, but let me just repeat: focus and advertising do not constitute a definition of a charitable organization, so finding an organization that has focus and does advertising but isn’t a charity doesn’t work as a gotcha.Report
I stand ready to accept donations any time someone wants to provide them. The work I do is socially useful, so can be said to be “for the public good.”
The work you do is (presumably) at a for-profit corporation, and you wouldn’t be doing it without a salary attached. If your work is at a nonprofit, then yes, you’re (an agent of) a charity, but that’s not remotely an interesting point.
I listed two qualities that distinguish charities from the government in their ability to attract donations: focus and advertising.
Are you ready to say that United Way isn’t a charity? They’re pretty unfocused.
If you’re never going to exclude anything — except the government — based on these two entirely irrelevant criteria, then why not just say “most charities don’t issue currency”? It would be equally ad hoc. Just like helping hurt puppies.Report
Why yes, the fact that I’m not an agent of a charity is indeed not an interesting point. Why did you make it?
Yes, the United Way is indeed “pretty unfocused”. Very good. But they are more focused than the government. And the degree of focus is important to their success in raising money. Similarly, they advertise and otherwise promote their activities in order to attract donations. The government does not, or does so in some insignificant minimal way. These two differences go a long way toward explaining why the United Way is successful at raising voluntary donations and the government is not.
Now, it’s true that other organizations advertise and have focus. It’s also true that many such organizations are not charities. That’s OK, because we’re not trying to define the word charity in terms of those characteristics. We’re only making the point that charities advertise more than the government and have greater focus than the government.
Now please, come back and tell me that I’m not a charity and that BoA is not a charity.Report
Why yes, the fact that I’m not an agent of a charity is indeed not an interesting point. Why did you make it?
You misread. I was claiming that your claim of “I’m a charity” would be uninteresting, if it turned out that you actually worked for a charity.
Yes, the United Way is indeed “pretty unfocused”. Very good. But they are more focused than the government.
I disagree. The United Way seems to me considerably less focused. But even if I were wrong, let’s suppose that United Way continued to lose focus, until they became as unfocused as the government. What would you do? Revoke their status as a charity? Or would you change your mind about the government?
You appear committed to one or the other, which I think is silly.
Nor have we even touched the subject of advertising. In my neighborhood, there’s a small nonprofit Radio and TV museum. Let’s consider them, shall we?
They don’t operate for profit. They don’t advertise very much — certainly orders of magnitude less than the U.S. government. Are they not a charity? Because they don’t advertise? I think that’s nonsense.
Finally, I claimed that you’re not a charity because the work you do is for salary, not for free. You may occasionally behave in a charitable manner, but to the extent that you do, you very definitely are allowed to file for nonprofit status. If you feel this strongly about it, you could probably have made a better case — and in fewer words — simply by filling out the paperwork. If not, then I’m not interested in hearing your claim. It’s merely for show, as you demonstrate through your actions.Report
let’s suppose that United Way continued to lose focus, until they became as unfocused as the government. What would you do? Revoke their status as a charity?
If the United Way became less focused, and in fact became less focused than the government, they would still be a charity. How do I know this? Because — for what, the fourth time? — focus does not define a charity. You can be unfocused and still be a charity. Try to understand this. My point is that you won’t be a successful charity. You will be an unsuccessful charity. But still a charity.
An example of this would be Komen, which widened its focus from breast cancer to right-wing politics. This failed. They are still a charity. Just a less successful one. Get it?
The government, which is involved in an enormous variety of endeavors, has zero chance of attracting significant volunteer donations because every potential donor finds something or other it does to be objectionable. Potential donors don’t want to contribute to something to which they object, even if that activity forms only a small part of the total of the charity’s activities. This is why focus is important for a charity. It doesn’t define the charity. It determines whether the charity is successful. Do you understand the distinction?
Advertising, or perhaps more broadly promotion, is a critical function of the small charity you cited. This is independent of the amount of money they spend on that function. And again, even if they did not place emphasis on that function they would still be a charity. Just not a successful one. Are you getting this yet?
I claimed that you’re not a charity because …
I did not claim to be a charity. I very clearly stated I am not a charity. You really cannot follow a simple discussion, can you?Report
I claimed that you’re not a charity because …
I did not claim to be a charity. I very clearly stated I am not a charity. You really cannot follow a simple discussion, can you?
We’re done. The above represents blatantly dishonest selective quotation. The reason I’ve been insisting on “you’re not a charity” is to differentiate your reasons for claiming it, from my reasons for claiming it.
I can follow a discussion. Can you be honest about it?
I’m glad at least that we made some progress in abandoning the preposterous definition of a charity that you announced in your initial post, viz:
The reason the government fails as a charity is … the government isn’t a charity. It doesn’t have a charity’s focused goals, it doesn’t do a charity’s advertising. It just isn’t a charity.
So I’ll take it that I did make some progress with you.Report
Heh. Clearly you’ve just been playing me, because I know you can’t be this stupid. I admit you had me going until now.
Well done. And I mean it sincerely this time.Report
So you’re saying this isn’t an obviously preposterous definition?
The reason the government fails as a charity is … the government isn’t a charity. It doesn’t have a charity’s focused goals, it doesn’t do a charity’s advertising. It just isn’t a charity.
We can go another round if you like, but let’s set up a standalone thread if you do.Report
Wow.
The bit you quoted was not a definition.
No need for further discussion.Report
If the middle bits weren’t a definition, then what purpose did they serve?
If they served no purpose at all, then you might have done better to link a Bach violin sonata.
It would support your assertions equally well, no?Report
I accept private donations and help people all the time. Am I a charity? Cool, tax exemption for me!Report
You think you’re joking, but you’re not.
In reality, it’s fairly easily done. People set up nonprofit businesses on that model all the time. I know quite a few of them, given my line of work.Report
I believe that’s what a ‘foundation’ is, more or less.Report
“What’s stopping Warren Buffett from paying more taxes?” is a red herring.
The argument that I find more interesting is “why does Berkshire Hathaway still owe billions in taxes that it agrees that it owes?”Report
Because the fines are less than the projected time-value of the money it’s not paying?
Seriously, do recall that your 401k is a piggy bank. Breaking into it is actively discouraged, but not curtailed.Report
I kind of see the question posed, “Why is government’s share of the voluntary donations market so damn small?”, as a kind of category error. The government constitutes charities – it can define the field of charities, what counts as a charitable organization and how charities must behave. As Chris touches upon, the suite of powers/duties is so different, an individual’s relationship to government vs. an individual’s relationship to a charitable organization is so different (what charity is a percentage of the US economy or employs a percentage of the US workforce?).
And some of the fundraising tools charities use would become perverse were the government to use them – special privileges for donors, a network of cooperating institutions that give donors status… when applied by the government I see, at minimum, lots of equal protection violations. If not simply reducing the dignity of state: early ticketing at trials, move over Washington and Lincoln, we’re putting donors’ faces on the currency, or, no more “White House” or “US Capitol” but “Wal-Mart White House” and “United Airlines US Capitol”.Report
It’s also pretty obvious women hate Nordstroms. I mean, I never see anyone voluntarily paying more than the list price for a dress there. Or refuse to take the sale price.Report
When you say it like, I start to feel bad because I think I might have hated my kids. I mean, I paid for all their necessities and gave them some spending money, but I didn’t give more than that. Why didn’t I give them more than that?Report
Wait, you have kids whom you gave spending money to and you’re talking about doing so in the past tense… I thought you were my age (mid to late twenties)Report
Ahhh no, my good man. I’m old. 48! I just often act like an immature young person on the internet.Report
48 is not, by the way old.Report
In fact, it’s the most sexy age for a man to be.Report
Until next year.Report
(And just to pre-emptively dissipate any potential confusion, that was a dig on me, Murali.)Report
Shouldn’t we instead make sure that all children should have some spending money? How many dollars could have been provided (yes, even to “your” children) if instead of frittering your money away by giving it to “your” kids, what if you had used that money to lobby your congressman and/or senators?Report
Now I’m thinking about Fraud and Abuse. Perhaps we could make sure that kids have refillable cards with credits and these credits can be traded for things on a list of approved entertainments. Educational movies, healthy snacks, maybe books that have been approved by the local parental/teacher organizations.Report
If that were the case, then I wouldn’t be going thru this difficult emotional time right now, that’s for sure. And that alone might make your idea a good one.Report
I don’t have any kids, myself. Cats, mostly.
I just look at how people with kids raise their children and think “I should have the government tell them to do stuff the way that I assume that I would, if I had kids”.Report
I don’t have any kids, myself. Cats, mostly.
Have you done enough for them?!? Like you and kids, I don’t have any cats, but have plenty of thoughts about what they need.
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I cut off their nuts and notched their ears! What more do you want from me?Report
Coming up next, why the fact that we don’t tip government bureaucrats or soldiers means that we don’t really appreciate their services.Report
A wonderful example, though you didn’t intend it that way.
If someone advocated tipping bureaucrats — but never did so himself — would it be unreasonable to ask why not?
Nope. It would be the most reasonable thing in the world. Same thing here.
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No, it’d be like takign a guy who said “Teachers should be paid more” and asking him why he didn’t tip his daughter’s teacher.
The simple fact that it wouldn’t increase her pay a bit, nor would it help any OTHER teacher, would be sort of on point.Report
Or ya’ know, we could raise their pay via a collective action. Like we lived in a society that worked together or something weird and collectivist like that.Report
Yes, its very weird and collectivist.Report
We give to the USO. Does that count?Report
You’re missing the point entirely. If someone routinely gave large sums of money to other for-profit businesses for no reason, but only a penny to Nordstrom’s every now and then, and said that we should all be forced to pay more money to Nordstrom’s, it would be entirely appropriate to ask, “Hey, what the hell?”
Let’s not extend this analogy any further. For the sake of the kittens.Report
No, I think I got the point. Someone looked at an apple and noted how much unlike an orange it was. I did the same.
Just because people don’t pay more than they are made to pay does not mean they do not value something. If we made paying for the armed services “optional” by individual the vast majority of people that believe the armed services are necessary would choose to pocket that money and let others pay. Same with water that comes to my house, or the clothes that I buy to work in.
You (and Jason, and Bryan) are confusing “I don’t want to pay more than I already do for something” with “people must really dislike X if they don’t pay extra for X voluntarily.” But that’s a fallacy, and faulty thinking. People may not chose to donate their money voluntarily to food banks, but that doesn’t mean that they don’t value having a mandatory safety net.
If people did not want to pay taxes for the services the government gives, they could get rid of any and all of them in an election cycle.
Don’t get me wrong. This is not me arguing for any and all government services; this is me saying it’s ridiculous to look at the things people vote to keep year after year after year after year and say, “People must really not want those things” because you’ve found a clever semantic argument.Report
Tod, I think the fundamental assumption here is that our behaviour qua consumer is more telling (of our actual preferences and beliefs) than our behaviour qua voter. Our voting behaviour has more to do with expressing values and signalling affiliation than any honest assesment about the efficacy of policies. So even if we vote for something, it reflects less of what we actually believed and more of what we think we believe or wish we believed.
Also, the point is that we are already willing to spend a certain amount of money on others. ie. tragedy of commons types of situations would not apply.
That said, the fact that taxation does tend (to a certain extent) to substitute voluntary spending means that people who voluntarily contribute to the government are actually willing contribbuting not just the extra bit, but would presumably have donated the same amount even in the absence of coercion. We cannot really judge what fraction of the money people set aside for altruistic purposes that they would give to the government when most of said money is coercively extracted.Report
I hardly know where to start. Well, any edition of Journal of Philanthropy might be a good start.
Want to run a philanthropy? Want to encourage donations to your cause? You need to demonstrate three virtues:
Solving a genuine problem: Haircuts for Hippies won’t get donations because even in Augusta WI, a town of 1510 souls, so reads the sign at the edge of town, we have three barbershops. Now if someone were to say, run an charity called First Impressions, whose aim would be making unemployed people presentable for interviews, different story: A stockpile of professional suits, dresses, shoes, resume preparation, and yes, hair styling, interview coaching, I bet I could run such a charity and get people and corporations to donate.
The government is solving problems. Building an attack submarine isn’t a cause most people will feel charitable enough to support. Back in WW2, children used to raise money for fractional war bonds. Times were different but it was a matter of perception. Then, our country needed us. Our government engages in propaganda, some of it quite good, just not on us.
Demonstration of Thrift: Thrift is not parsimonious. Thrift is efficiency. The government doesn’t demonstrate much of that. Nuff said.
Effective Outreach: I alluded to this with the propaganda business above. Between Congress and the Executive, the country’s power brokers are beyond shameless in their excesses, lavishing every sort of perq on themselves. Effective outreach combines the message of thrift with that of need to demonstrate “we’re the organization best capable of intervening in this problem. We understand it and we’ll help you understand it. We change lives for the better, for pennies a life.”
See, this is why we don’t have national health care, and for good reason. This is why we say “The” Government and not “Our” government.Report
The government is solving problems. Building an attack submarine isn’t a cause most people will feel charitable enough to support.
And yet national defense is one of the clearest examples anywhere of a public good. I can’t really credit this as a reason.
Demonstration of Thrift: Thrift is not parsimonious. Thrift is efficiency. The government doesn’t demonstrate much of that. Nuff said.
But this, on the other hand — I do believe we agree on it.
Effective Outreach: I alluded to this with the propaganda business above. Between Congress and the Executive, the country’s power brokers are beyond shameless in their excesses, lavishing every sort of perq on themselves. Effective outreach combines the message of thrift with that of need to demonstrate “we’re the organization best capable of intervening in this problem. We understand it and we’ll help you understand it. We change lives for the better, for pennies a life.”
I’d give you half a point here, if I may. How do we square this with all the proud displays of nationalism we still find everywhere in our country?Report
How do we square this with all the proud displays of nationalism we still find everywhere in our country?
Heh. It’s become a religion.Report
“And yet national defense is one of the clearest examples anywhere of a public good.”
And if we could donate money specifically to national defense then you’d be on to something.Report
You can! We haven’t raised any taxes for the War on Terror. Many veterans are underserved. There are tons of veterans charities.Report
They don’t “outreach” because they don’t care. What we complain about with them under the assumption they are bugs in the system are actually intentional features.Report
Who is this mysterious They? The government? When it comes to Bugs and Features, there are far too many insects crawling around Washington DC these days. They’re called Lobbyists. They’re doing Outreach, appealing to the charitable instincts of our politicians. There’s a certain amount of mutual pity-partying going on, for those politicians are also aggressive mendicants, appealing for donations to their campaign committees.
But when it comes to Return On Investment, there’s no better investment than a political donation. I find this all a bit contemptible, I’m sure you do, too.Report
People are under the impression that the gov’t wastes an enormous amount of money — that’s why a lot of conservatives get away with claiming they’ll shrink revenue but leave Medicare and Social Security untouched: “You just gotta reduce waste and fraud.” With that in mind, it makes sense that many Americans imagine they might as well burn their cash rather than donate it. And in any event, relatively few are in any position to give away money; and those who are, by and large, don’t think they use government services much anywho.Report
Because he fights the conventional wisdom that Americans love and trust government and like paying taxes?Report
Basically this compares an entire sector (government) that happens to be unified in terms of finance and spending decision-making to discreet entities with separate finances and deciion-making in a different sector (NGOs) – aggregated. The government performs a lot of functions distributed among distinguishable sub-entities. But from the perspective of the books (the ones that people concerned with the effects of the government spending beyond its revenues have to be concerned with in any case), functionally, the government is a unified entity within which, as Jason notes, money is fungible, and whose spending decisions are made by a single entity. A marginal dollar that a person would like to direct toward a particular government function or action – even including general deficit reduction – is highly likely to be more effectively put to the end of lobbying the centralized legislature to spend a further taxpayer dollar on the particular function. So that money goes into lobbying.
With private charity, for the most part, organizations are specialized to a particular function. So a person desiring to further a particular charitable enterprise has only to give to an organization performing that function to be reasonably assured that the dollar will go to efforts at least ostensibly related to performing the function. So dollars end up going directly to the organizations, because they perform the double duty of both furthering the enterprise and being votes for the particular enterprise in the invisible Congress of charity.
This is clearly inefficient to some degree (arguably massively?). But I’m not sure what the alternative is. A centralized national legislature with taxing and spending power is fundamental to our chartered system. There is going to be a lobbying edifice that builds up around that over time. And I am skeptical, though not entirely dismissive, of arguments that any functions I’d want performed beyond a basic core that clearly will not arise privately due collective action problems (like defense and justice) that the government currently performs, I could expect private charity to grow to provide as reliably and comprehensively a government does. It’s not clear to me that a larger cadre of professional lobbyists than there otherwise would be (as opposed to a there being a large one rather than none at all) represents a large enough inefficiency for me to wish we did not have things like Social Security, Medicare, federal aid to K-12 education & student higher ed. loans, etc. I suppose I’m persuadable on the point, though.
The main point is that the comparison is not really a valid one, because the structures, purposes, and relationships to other organizations and to people of the organizations being compared (private charities to the federal government) really aren’t similar enough for us to have expectations that people would behave similarly where each is concerned.Report
Also, the government doesn’t name buildings after you.
Should you wish to contribute to the general goal of Science and Technology, you’re better off donating to a college, even if they get most of their dollars from the gov’tReport
I also agree with Chris’ observation that, because government is inherently coercive, and because it ties its existence to a claim of necessity, and because it requires people to pay an amount it informs them of, that people are going to assume that if they’ve paid that amount, then they’ve done what is necessary to maintain government functionality at the level at which it currently operates. If a person wishes it did less, certainly she won’t be offering voluntary contributions. If she wishes it did more, it is likely more rational to expend her contribution on sending the message to her representative what the additional things she’d like done is. If she’s satisfied with the things the government does but is concerned about deficits. then, again, even if she has a great al of surplus wealth to apply to the problem, in reality she won’t be able to dent a deficit of any size worth having that level of concern over, so her rational move will again be to spend the money trying to convince the government that whatever she wants the approach to balancing the budget to be, hers is the right and just (or otherwise desirable) way to go about it. Otherwise, she’ll have contributed her money to deficit reduction in a way that likely made a negligible impact on the deficit on its own, and she’ll have done little to shape the way the government chooses to actually go about using its power to coordinate action so as to avoid collective action issues to reduce the deficit, which it still must do eventually, as the vast majority of the same deficit will remain even after her donation.Report
+1 to both your comments here. Said it better than I could.Report
There’s a saying that most of the waste goes to prevent fraud and abuse. From where I sit I see that *a lot.* It seems part and parcel to the desperate fear that someone, somewhere, is getting over. Very closely related is the rise of credentialism and zero-tolerance policies/laws: people abuse discretion (conversely they also quite robustly abuse the lack of discretion).Report
I’d actually be quite happy with line item taxation that allowed me to identify where my taxes went. If I could determine that 95% went to schools and libraries and 0% went to drug enforcement or the police, I’d be more than willing to pay higher taxes.Report
There is a blog called pragmatarianism that explores what it would be like if taxpayers could direct substantial portions of their taxes. I think it is a great concept. I would love to see various programs compete for tax dollars. Conservatives could fund their massive defense budgets, and progressives could aim their tax dollars at paying for others’ health care.
To highlight how it could work, there could be a base level of taxes, a fungible level where taxpayers could direct their funds, and an optional level where people could direct additional funds above the minimum.
Once we set the system up it could evolve so that some agencies competed within a given space. For example, there could be three or four agencies that competed for tax dollars in the space of welfare. We could choose to send our money to the more efficient one, or the one with the best track record of lifting people out of the cycle of dependency.
Obviously not every service should be funded voluntarily, nor should every one have competing agencies or programs. A lot of them should though.
http://pragmatarianism.blogspot.com/Report
Roger,
In grad school I was once talking to a couple of undergrads in my class, and the topic somehow got onto student government, of which they were part, and they asked me how I would revamp it if I could. I responded that I would still charge the same student fees, but instead of letting the student government divvy it up between the different student organizations I would let each student direct their own fees as they saw fit.
I’d never actually seen a person blanch, prior to that, but their faces literally turned white. “But what would we do”? they asked.Report
I can see where people might decide that trying, each April, to sort through the 3000 or so federal agencies to determine where they want their tax dollars to go would be a real pain in the neck.
Perhaps a modification to this idea would be that every 2 years we elect people to represent our interests, who then would spend their full time sorting through the agencies and determine the funding priorities.Report
Perhaps a modification to this idea would be that every 2 years we elect people to represent our interests, who then would spend their full time sorting through the agencies and determine the funding priorities.
Cause we’ve all seen how well that worked.Report
Only led to the richest, most powerful nation in the history of the Earth.Report
With a terrible wealth disparity and a penchant for shedding oceans of blood in weaker countries….
Oh, wait, are liberals not concerned about those things anymore?Report
Of course, but the fact things aren’t perfect doesn’t mean our democratic form of government hasn’t done too horrible when it comes to budgeting priorities. People like Social Security, Medicare, and unfortunately, the Pentagon. So, that’s what we spend taxes on.Report
Sure, you can delegate power to a 3rd party on the assumption they’ll pursue your interests — then watch in horror as they generally pursue their own and screw yours instead.
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Rufus-
But what if the vast majority of other people went the other way, giving 95% of their funds to drug enforcement and police and 0% to schools?
This is one of those ideas that seems all fine and dandy until you realize OTHER people are also going to be given the same power. Tyranny of the majority and all that jazz…Report
Yeah. Sorry, I know this might upset some libertarians here, but the average citizen doesn’t actually know what we need to fund and how much to fund it. Now, some things I may like be massively overfunded (education/children’s health care), but other things will be severely underfunded more than they already area.
Crowdsourcing is fine for point ‘n’ click adventure games. Not so much for countries of 300 million people.Report
I know this might upset some libertarians here, but the average citizen doesn’t actually know what we need to fund and how much to fund it.
You think libertarians believe the average citizen does have that kind of knowledge?
You’ve missed one of the basic rules of libertarianism–none of us can really know what someone else really wants and needs, and to say we do is patronizing. That’s one of the major reasons we tend to be distrustful of public policies in general–who’s making the policies has some importance, to be sure, but there is no set of people that have the privileged knowledge to really know what others need.
I don’t think you’re going to offend too many libertarians with that claim.Report
We have crowdsourcing of policy decisions. It’s called democracy. Your people hate us because we criticize it.Report
Jesse,
I think my comments would put this fear at risk. Start small and experiment. Let the system build and learn over time. It would empower you and lead to a more informed people. The uninformed would continue to go into the general fund.
Also note my above suggestion on color coded license plates to recognize contribution levels for those going above base levels of taxes.Report
Nah, I’ll stick with the system where we democratically choose representatives to determine the best public policy for the nation, state, or local legislature.
People will never be informed as they need to be about political budgeting, because they have jobs, children, and a life. On the other hand, even though I may hate their decisions, representatives have whole staffs to determine the best plan.
Yeah, it’s “tyranny”, but so is society in general. But, if you want to start small, I think you should start with you. I assume you put up to a vote where the profits of your business go every quarter, right?Report
I know this might upset some libertarians here, but the average citizen doesn’t actually know what we need to fund and how much to fund it.
This is probably true, but doesn’t it amount to saying that most people haven’t gained the information needed to make the decisions that they’ve never been in any position to make, and therefore we shouldn’t put them in any position to make those decisions?Report
Perhaps if they understood the consequences of their not-knowing, this might motivate them a bit. Our budgeting process is insane. I should write up something in the way of a parser and troll through thomas. Wild consternation would ensue if folks knew what was in the actual legislation.Report
Kazzy,
Your concept of a bug is my definition of a feature.
The whole point of it is that it allows people of different values to cooperate together with less tyranny. Instead of forcing the crowd to use the will of the majority or of their representative to lead in one direction, they can pursue multiple directions.
The benefits of decentralized experimentation are that it embraces multiple values and that it doesn’t put all the eggs in one basket.Report
“what if the vast majority of other people went the other way, giving 95% of their funds to drug enforcement and police and 0% to schools?”
Same thing that happens when a majority of people vote against gay marriage. Someone convinces a judge to declare that it’s un-Constitutional and therefore not permitted.Report
Well, there are a lot of funds taken out of any given paycheck that are already earmarked for certain destinations.
Social Security, unemployment insurance, and whatnot. I’m sure we all know the drill. The problem that I see is that if the 53% number touted by “the 53%” is correct, then… how to put this… there will be over-representation of particular government philosophy when it comes to who gets what and under-representation of other views.
There will be a lot of people who support libraries under this scheme.
There won’t be quite as much support for the Grain Inspection, Packers, and Stockyards Administration.
Now, as a Libertarian, I don’t know exactly how essential I find the Grain Inspection, Packers, and Stockyards Administration (shouldn’t the market take care of that?) but I suspect that there are a non-zero number of Administrations that do provide essential services that not 3 out of 100 people could name (let alone remember to earmark).Report
yeah, if you like ratshit in your peanut butter cups….
(oh, wait, are we supposed to be talkinga bout problems that gov’t is actually solving…???)Report
Actually, the government merely makes sure that there is an acceptable level of ratshit.Report
not really. there are nearly constant recalls from that factory… (and those are only the epidemics they CATCH, and assign properly).Report
[Citation needed.]Report
Jaybird,
A couple of things.
First in a complex system it is important that we have not a single change, but the other institutional changes that go with it. If people began to steer their contributions, the system would probably need to start small and evolve over time. Certainly we wouldn’t start with essential services that people are unaware of.
Over time, those services that were competing for directed funds would naturally begin to advertise their benefits and superiorities. They would try to do more with money than those competing with them. The media and other organizations could publicize costs and benefits and rank and benchmark. Over time, the people could be more informed than they are now. Tax time could include transparent, third party certified publication of costs and benefits.
Second, the choices don’t have to be between national defense and child welfare. Consider instead that if we had a set amount going to welfare, that we could direct our money to one of five competing welfare agencies. If no decision is made, it goes to all five equally. Now we have competition for quality and efficiency.
The point I am making is that this would evolve into a different system than we have now, but the evolution would involve extensive institutional changes that could grow over time.Report
yes. including giant gobs of money spent on advertising. This is part of the reason we have so much medical waste right now.Report
This one is easy to solve, but I will ask you to try to think your way through it.
Kimmi, if I asked you to solve the problem you just posed by typing as many solutions as you could think of in five minutes, how many answers could you come up with?Report
Nah, I’d rather not have poor people have to figure out between 25 different choices just to get food stamps. Or be it like 1885, with seven different fire trucks showing up to one fire. Competition isn’t always fantastic.Report
Jesse,
Again, this would be real easy to solve if we think about it. Wouldn’t it?Report
I agree, it is easy to solve. One provider for those things we determine through democratic elections to be part of the common good.Report
Well that wasn’t the answer I was hoping for with my smart Alec question. Touché.Report
Grain Inspection, Packers, and Stockyards Administration like the FDA and multitudinous (and usually overlapping) other branches of gov’t doesn’t actually inspect anything, instead they write voluminous pages of regulations and require the industries to inspect themselves. Every now and then, for the cameras they’ll get off their lazy duffs and go out and do a pop audit, usually around election time (sweeps). Regulators don’t regulate either, they follow the exact same formula.Report
Uh, no. Never seen a meat inspector at work, I gather.Report
Come on, as we all know, Government Regulator’s are history’s third greatest monsters, right after IRS Agents and welfare recipients.Report
Yeah. Makin’ folks obey the laws. Monstrous, monstrous, yes indeedy. If these folks who loudly proclaim the government should restrain itself to matters of Force ‘n Fraud understood the first fucking thing about what happened in meat packing plants before the Pure Food and Drug Act was passed, they would shut their ignorant pie holes.Report
Actually I have seen a “meat inspector”. He came into the facility, went into the office and reviewed the paperwork provided by the company, exactly as I said. No cameras were rolling, so no getting down and dirty. So you’re saying the industry doesn’t self inspect? Put another way, what percentage do you believe of the food industry actually gets inspected by ANY level of the gov’t? Also, we import tremendous levels of food (and increasing). What percentage of THAT do you believe gets inspected?Report
Sure, self-regulation is a necessary part of the process. Notice, however, the paperwork was actually there for the inspector to look at. Now if the sausages produced by that meat processing plant led to people getting sick and dying, they’d have lot numbers to send out for recalls. There would be petri dishes in the cooler to examine.
See, this is where the Libertarians just don’t fucking get it. Sure, from my perspective, we need market regulation, both internal and external. Can’t do without either, though. When a politician wants to repeal a law, the first thing he does is cut funding to the regulatory body which enforces that law.Report
Here’s the deal Blaise. The gov’t bureaucrats exist to enhance their wages. The average cost per FTE in the FDA food inspection division is $163K per year. The people doing the ACTUAL work, in those thousands of feedlots and meatpacking plants across the nation? The low $30’s.
This is why I don’t ever buy the liberal’s arguments about “regulation”. The word gets thrown around like some kind of magic wand that automagically solves any and all problems. The reality is far different. We had the financial crisis of 2008 when Sarbanes Oxley was fully in force. In fact, certain provisions of SO exacerbated the problem (specifically the mark-to-market rules). Once the active market for certain options contracts became illiquid, the “assets” on banks evaporated instantly. This belongs in a separate OP, but the fact that “regulations” were in place had absolutely NOTHING to do with the depth or severity of the crisis, and the 100,000 pages of regulations in Dodd-Frank are likewise going to do NOTHING to ameliorate the next crisis, which should occur within the next 5 years or so (depending on the outcome of this election).Report
Now, now. You said inspectors aren’t inspecting. Let’s not play little games with what constitutes regulation, SOX has nothing to do with this issue. If anything, SOX has kept things on the up-and-up, Lots more companies being taken to the woodshed and emerging with truthful statements of earnings. I find this a salubrious and refreshing change from the usual crapola trying to read through some of those old 10-K and 10-Q reports of yore.
Anyone who’s against SOX should take a refresher course on Cost Accounting, with an emphasis on Forensics. The very idea, that some assholes yearn for a return to the decades when VCs and CEOs routinely defrauded the investing public. Taliban.Report
This is kind of tangential to the issue, but relating to SOX.
One of the big changes was section 802, codified as section 1519 of title 18. This section asserts the federal character of non-pending investigations, known as the ‘deputizing effect.’
Basically, an internal company investigation can later be a federal investigation. Misleading statements to company counsel then becomes essentially the same as submitting false documents to a court.
As of March 2011, there had never been a successful defense of 1519. There finally was one, in US v. Stevens, with good faith reliance on counsel as an affirmative defense.Report
*jawdrop*
… you’re seriously against mark-to-market? HOW fucked up do you think our market should get when everyone can wave their ass at you and fart out what something is worth, without any reason for believing that other than “I get paid more for saying it’s bigger”???
I mean, seriously, this is freshmen economics.
Can I suggest you go read Calculated Risk, or something else populated by real risk assessment folks?Report
as a Libertarian, I don’t know exactly how essential I find the Grain Inspection, Packers, and Stockyards Administration (shouldn’t the market take care of that?) but I suspect that there are a non-zero number of Administrations that do provide essential services that not 3 out of 100 people could name (let alone remember to earmark).
That gets into mere pragmatic problems of just how we offer the alternatives to people. First, we should ask people to remember, but give them a list to jog their memory. Second, while we should compartmentalize, so that social welfare contributions don’t go to military weaponry, etc., we shouldn’t compartmentalize too much. E.g., we don’t need to ask people whether they prefer their military funding to go to drones, armor plating for humvees, etc. So a general category of “Food Inspection” would probably suffice.Report
“So a general category of “Food Inspection” would probably suffice.”
But even so, I’m pretty sure that lots of people will say that they’ve never heard of anyone they know dying from it, and that it still happens even though we’ve got all this supposed security, and that’s why we don’t need the DHS–er, I mean, the FDA.Report
Oh, no, some people won’t choose the “right” way.
And that argument leads us to support what approach to collective decision-making?
Oh, yeah, none of them.
Report
I’m loving the way this thread has leftists spouting libertarian talking points. A pity they don’t understand that the very same arguments apply to raising taxes.Report
I’ve been chuckling for the same reason.Report
I don’t see the libertarian talking points. I think people should pay their taxes according to the law. If the law is changed, say to higher taxes, they should follow that law as well. I don’t think I’ve ever heard anybody in any thread here call for Cuba-style confiscation of wealth outside of the law.Report
The Libertarians are complete naifs when it comes to taxation, mostly because their ideas about markets are so simplistic.Report
Pot…. Meet kettle.Report
Oh can it, Roger. The Libertarians understand nothing of Fraud or they’d be for market regulations. Since they aren’t, they’ve already demonstrated the depth of their ignorance. When it comes to taxation, the Libertarians daily demonstrate their idiocy, insisting we can always get by on less, especially less regulation. Which leads us back to the Libertarian failure to understand the nature of Fraud and the need for regulation.Report
I’ve had this discussion with you at least twice. I support, no demand!, good regulation to make markets work. Rules and institutional devices protecting against fraud are absolutely paramount.
Is it ok with you that from now on, when you repeat the above accusations over and over again, that instead of James or me answering we just link you back to this comment?Report
As I am not really a Liberal, I strongly believe you’re not the standard-issue Libertarian. You’re the one indulging in the tu-quoque of Pot and Kettle. The fact is, Libertarians looking at market forces are like pigs looking at bicycles. If they gave a damn about Fraud, they’d understand the need for regulation and they’d quit making stupid noises about Meat Inspectors and suchlike, parading the thousands of pages of regulations around as if they were crosses being borne to Golgotha. The Libertarian doctrines on market forces are so much Flat Earthery. They’re even wronger than the Marxists. Every time I bring up this fact, oh, they’re all for necessary regulations, just not someone from the outside doing it, claiming those regulators might be coopted. It’s complete hysterical bullshit and I’d advise the Libertarians to take the training wheels off their little economic models and ride around in China for a while, where they put melamine in the milk because regulations aren’t enforced.
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Blaise,
As James’ post yesterday clarified, there are different breeds of pigs.
When the pink pigs say something, it is bad form to argue against what a pink pig says by saying “all pigs believe this” when you know it is only the spotted pigs that actually believe it. You are trying to dismiss pink pig arguments by making arguments that apply only to spotted pigs.
Those spotted pigs make me nervous too.Report
A libertarian is okay with regulation as long as it’s applied immediately, neutrally, and comprehensively. Gravity is an example of a regulation that a libertarian finds acceptable.
“But there’s no way to regulate a financial market to the same extent as gravity!” Welp. Here we are, then.Report
Libertarians Like Fire Escapes?
someone doesn’t like the ADA…Report
I’m loving the way this thread has leftists spouting libertarian talking points. A pity they don’t understand that the very same arguments apply to raising taxes.
That would be who? What comments, what talking points?Report
It is exceedingly odd that Americans profess to love their country so much, yet volunteer so little money to their government.
There’s another process in place for charitable donations to the government; it’s called voting to increase ones taxes and people do it all the time. Why are we judging love of government based on participation in a process it doesn’t pursue (donations) rather than the one it is created to pursue (taxation)? In fact, it seems like charities are the ones learning from government and not vice-versa, with organizations like Kickstarter succeeding greatly with all-or-nothing donation schemes.Report
Trizzlor,
Considering that half of America pays no income taxes, your system easily degrades into voting for others to pay taxes for you. All this envy against the wealthy is a case in point. I find it amazing that someone could argue that someone else should pay more taxes. That they would refer to this as charity is laughable.Report
Sure, lots of people vote for someone else to pay more taxes, but lots of people vote for themselves to pay more taxes as well. If our end goal is to measure how much money people volunteer to their country then it’s disingenuous to gloss over the latter.Report
No. The part they VOLUNTEER is the part that applies to themselves. You can’t volunteer someone else’s contribution. This is what behavioral economists refer to as complete and utter bullshit (sorry to go all technical)
Someone is being disingenuous here all right.Report
It’s a good thing income taxes are only 1/3 of what the government takes in as far as revenue and most American’s don’t pay other taxes that pay for things like Social Security and Medicare.Report
Jesse,
The point is that those not paying income taxes vote higher income txes on others. Those not paying social security and Medicare any more vote for higher benefits for themselves paid by someone else. Same can be applied to corporate taxes, inheritance taxes, etc.
Some people believe that when you can vote for benefits for yourself and pass the costs to someone else that you have created a recipe for disaster. I’d love to hear the counter argument, assuming there is one.Report
Well, I’m not going to convince you, but I am happy that a libertarian has admitted the real problem with this country is that those damn poor people are paying too little in taxes.Report
Is that really what you read? Even when you try real hard? Come, on, I dare you to actually consider the point…..Report
So, do you think it’s a good or bad thing 47% of people don’t pay income tax?Report
Oops, hit replay too soon. Meant to say, “do you think it’s a good or bad thing 47% of the population pays no income tax assuming the same spending levels that we currently have?”Report
Good question.
I think 47 percent not paying income taxes is fine. My concern is when those that don’t pay get to demand that others pay more. This is a recipe for disaster. The Great Karnak would probably predict it will lead to budget deficits, debt problems and worse.
I am not demanding higher taxes or less inclusive democracy. I am suggesting that we solve the issue of personalized benefits and socialized costs.Report
We don’t have a massive budget deficit due to poor people voting themselves free stuff. We have a budget deficit because of a massive bloat in the defense budget, unneeded tax cuts, the worst recession in seventy years, and the rising cost of health care.
Report
Jesse,
How much of that would you say is a consequence of personalize benefits and socialized costs?Report
Not that much, at least when it comes to the average American. The average person didn’t get much benefit out of the defense budget, didn’t get much benefit out of the tax cuts, have only had to pay higher premiums in health care over the past thirty years, and likely got hurt by the recession.
On the other hand, the powerful all have been helped out by the above and as a result, we should limit their power via laws and regulation.Report
Not that much, at least when it comes to the average American
The question wasn’t about average Americans. It was about whether the policies privatized benefits for someone and socialized costs on everyone else.
Did they?Report
To some extent, but that happens all the time with any group of people larger than about three. That’s how society has worked for around 5,000 years. Grog killed three wooly mammoths and shared the meat with the rest of the tribe.
Yes, there are free loaders in the system. That’s part of the cost of a society that works pretty well, all things considered.
Report
And because it’s a necessary cost, are you saying you’re not concerned about the size of the cost, or the necessity of it in particular areas, or who’s doing the benefiting? (All of those may be inaccurate reads; I do not mean them as claims, but questions.)
To make myself clear, the things you are complaining about are in large part caused by privatization of benefits and socialization of costs. And to some extent done so by the people you blame–the 1%.
I think it’s important to come to grips with the concept and what it means in practice, and how we can best mitigate it. I think not only libertarians, but liberals would actually find it an exercise that supports their position (not all liberal policy positions, but more than I suspect you realize off the cuff).Report
Most deep problems are pernicious like this. Society progresses to the extent that we can find partial solutions to these deep problems. To say it has always been a problem implies that there is nothing we can do about it. I’d like to think political progress is possible, and I am pretty sure if we want a better world we need to experiment with better institutions.Report
“The average person didn’t get much benefit out of the defense budget,”
As invariably happens, this is the part where I point to flight, spaceflight, semiconductors, microprocessors, and TCP/IP. None of these were bankrolled by the civilian market. (And those are just the top-end categories. I can certainly drill down if you want specific examples.)Report
I think there are ways to eliminate the free loaders in the system that can afford to put it into the system. Regulations, law, and such, mainly focusing on campaign finance, lobbying, and the way we elect politicians. Of course, that’s different than what you believe, but I do understand there is some issues.
On the other hand, the truth is, the parts of the government that are under a lot of scrutiny don’t have a lot of waste. Yeah, the Pentagon wastes a lot of money because the DOD is sacroscant. The MMS can be a freaking Spring Break party because nobody knows it exist. On the other hand, Social Security, unemployment, and food stamps doesn’t really have that big of a fraud problem, despite protestations by the right to the contrary.
Now I admit however, I don’t really give a damn that in the long run, a lady who worked 40 years as a janitor is going to get more in SS benefits than she put in.Report
Density: I was more focused on the big jump up since 9/11. I’ve always said I’ll happily double the R&D budget of the military in exchange for cutting the size of the military forces in half.Report
Well, I’m not going to convince you, but I am happy that a libertarian has admitted…
Come on, Jesse, that’s not his point at all, and to purposely distort it like that is cheap partisan rhetoric. It’s below the desired quality level of this blog and it’s below your own dignity. Address his point or quit arguing.Report
The point is that those not paying income taxes vote higher income txes on others.
Wait, where is this happening?
If the theory goes that poor people can vote themselves lavish benefits at the expense of the rich, why hasn’t that actually happened?
Is it possible that there is some counteracting force to prevent this?
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Liberty,
The reason they can’t get lavish benefits is that there are not enough rich to go around. If there was I am sure you would try to exploit them even more. How can you ask where this is happening when you are a fan for higher taxes on the wealthy?
This type of progressive mentality is inherently parasitic.Report
Because the story of taxation in recent decades is the brutal exploitation of the wealthy?
Also, were I to level the “parasitic” charge, it would be at the intergenerational inequities perpetrated by the recent levels of low taxation lessening the burden on the well-to-do, over all the US has been coasting on the investments of the past and not contributing an appropriate share to the required investments for the future.Report
No, only poor people and rich people who got rich off being good at sports or entertaining people can be parasites. The rest of the one percent is filled with job creators, who deserve even lower tax rates!Report
The sarcasm is so out of control lately, it accidentally starts making double-whammy sense.Report
Creon,
You know this is the rate before exemptions. The point is that the rich pay more of a share of income taxes in the US now than they did in the past, and they pay more of a share of income taxes than they do in most countries. Figures available upon request.
But before you guys jump on this, this is not my point. I actually believe the wealthy should pay more. I repeat, those that make more should pay more. Furthermore, those that make little should pay little or nothing at all. I actually agree! If you read carefully above, I actually started with a way of addressing this problem.
I also agree with the inter generational parasitism comment that Creon makes.
The issue that we are discussing is the inherent danger when we create systems with privatized gains and socialized costs. These naturally devolve into parasitic systems. The elderly are doing it to the young. Taxpayers today are doing it to taxpayers tomorrow. Progressives are doing it to the wealthy. Let me define the benefits and tell you how much you need to pay for them. WTF?Report
The point is that the rich pay more of a share of income taxes in the US now than they did in the past…
I believe it, because the rich are so wealthy in the US, and they command such a huge share of the wealth compared to America’s peers that it stands to reason that they’d pay a large share of the tax, and that share would be more than most countries. The US is so unequal that it yields these results. These facts don’t inform the question as to how much more the wealthy could/should pay .
The issue that we are discussing is the inherent danger when we create systems with privatized gains and socialized costs…. Progressives are doing it to the wealthy.
Maybe I’m not fully understanding what you mean by privatized gains and socialized costs here, do you have examples in mind? I don’t understand how progressive taxation fits this bill.Report
Creon,
Yes the wealthy make more. Wealth in free markets is basically positive sum. Jobs and Walton made a fortune for themselves by making hundreds of millions of lives better. I wish they made even more by making our lives even better. Consider their wealth as our collective thank you letters.
My point is that there is something foul about demanding someone else to pay for your ideals. When people that do not make over 250 grand say they want people who do make over this amount to pay more there is potential for abuse. A majority can abuse a minority. I do believe taxes should be graduated. I would do so by a system that has a flat rate and an exemption. One rate, one exemption, applies fairly to all.. Furthermore, I believe the flat rate should be set firmly. The details would lead us off optic.
Rules should be fair and set firmly and not reset each year to try to jockey for position and take from one another.
Heck, does any of this even make sense to the non libertarians, or are we just blabbering?Report
Roger, would a negative income tax fit into your preferred tax system?Report
Creon,
My first response was no. Then erased it and I rewrote it as yes. Now I am just not sure.
Let me ask for a skip on this question, and instead say that I think the poor should have firm safety nets that help and encourage them to quickly get out of the net. I would like more of our taxes to go to the poor and for these dollars to help them improve. I don’t see negative income tax as the best way to do this, but I really could be wrong.Report
I love this notion that government is “coercive” and forces us to pay taxes. Why, it is a form of theft! Taking my money, right outta my wallet!
How come no one thinks of government as selling services- that we each consume those services, and pay taxes for them.Report
Because when they do a crappy job at something you can’t demand your money back.Report
Liberty,
Actually I just made an argument above that it should be viewed exactly as you suggest. To do so, we should make some services and programs compete for our taxes.Report
Nah, I see enough ads. I don’t need ads for the FDA and IRS as well.Report
So you would rather see ads for laundry detergent and Viagra than find out where your tax dollars go?
This discussionis surreal. Ok, I admit it may not work to have taxpayer direction to part of our tax dollars. Truth is most new ideas, statistically, don’t work. What I don’t get is why – if we assume it could work — that progressives would be against it. After all, it would increase the favor ability of taxes.Report
I know where my tax dollars go. But, I agree. I think the government should pay the nominal expense to send a report every year to every family that gives a topline view of the budget, with some fancy charts and graphs. Even a few commercials. On the other hand, we don’t 21 different agencies competing with the best food stamp plan.
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I know where my tax dollars go.
No, you don’t. You know where tax dollars in general go, but you have no idea how much you pay for any particular thing, and there are many things we are funding that you don’t know about.
That’s not a knock on your intelligence–it’s just that it’s true for all of us.Report
I think 21 is excessive as well.. Three or four would be healthy though.Report
And one was fine for my family when I was a kid. I never heard anybody complaining that they didn’t get a good deal on food stamps. Not everything needs to be a market.Report
You never heard of anyone that got food stamps for free saying they didn’t get a good deal?
Don’t you think we should ask those that paid for them?Report
Nah, I think it’d be much for those on food stamps to be required to write a letter of thanks to the 47%, thanking them for their taxes and promising that they will pull themselves by their bootstraps.Report
I think a thank you letter is a great start. And the promise to become responsible would be appreciated as well. Furthermore, if they want to continue to get my money, they better back up the promise with some action.
So, are we all in agreement?
Those adults getting non insurance based government assistance (this excludes medicare, SS and unemployment) will write an annual thank you letter, and submit a plan on how they will take charge of the situation to the best of their ability. Hell, if you did this I would increase my contribution level to these programs. I love helping people who appreciate it and want to try to help themselves.
Does everyone following this thread agree? Sound off….Report
Well, the students at my college who get a named scholarship have to write a letter of thanks to the person/family funding it.Report
Why should beneficiaries of SS, unemployment, and Medicare be exempt, especially if they take out more than they’ve put in. After all, the government already knows how much you’ve paid in Medicare/UI/FICA taxes. It’d be fairly easy to set up a system to remind the 74-year-old grandmother with diabetes or the single mother to send her yearly thank-you letter to her betters once they get past the point where they’re taking money from other people.Report
A scholarship is a gift. Everybody has the same right to food stamps or other government services, as long as they’re ready to be poor as hell. An inverse of the ole, “both the poor and rich have the right to live on the streets” line.Report
Jesse.
I was just figuring that insurance systems are based upon risk mitigation, not generosity from another. The guy that gets his car fixed doesn’t owe a thank you card to the other premium payers. To the extent these programs are sham insurance I might agree. Indeed, if we designed a thank you letter system, it may lead to changing food stamp more toward an insurance like mechanism. You are right, any of us could need it some day.
Suggestions on thank you for student loans and agricultural subsidies might be a good idea too. I would love to see the agribusinesses send an annual thank you note from the CEO for all the money they extracted from us.Report
By that measure, all government services are insurance programs. We pay taxes and when we’re unable, we take out services whether it’s food stamps, housing assistance, or the EITC.
Welfare is welfare. The fact that we pay a special tax for Medicare and Social Security is pointless when there’s no real connection between those taxes we pay and the payments we get out of it.
If single mothers on food stamps have to write a letter, so should “responsible” old people the moment their cancer costs more than their Medicare taxes they’ve put in.Report
Those adults getting non insurance based government assistance (this excludes medicare, SS and unemployment) will write an annual thank you letter, and submit a plan on how they will take charge of the situation to the best of their ability.
You first, pal.
Again- you owe your success and current wealth and social position to government programs; you personally have benefitted from decades of government investment and programs which you can’t possibly begin to pay back. On any given day of the week you are a taker as much as a maker. The wealthier you are, the more property you own and the more employees you employ, the more you have benefitted.
On behalf of the American taxpayers, you are welcome.Report
Jesse,
You are actually making my original point. I want to give to programs that help the poor that meet certain conditions, and you want to give to programs that meet different conditions. In an either or world one of us wins and th other loses, or we compromise and both get sub optimal results.
My solution, a set of institutions competing for our taxes, would allow you to give to your and me to mine. I get it that this is repulsive to you.Report
Hi Liberty,
You are confusing your types of exchange.
In voluntary exchange, I get to choose my services and payout. In free market interactions, thank you is a mere pleasantry. The reciprocity is implicit in the exchange among rational adults.
If government services were set up this way, I would similarly exchange taxes for services. Public goods could be handled the same way via moving the choice up to the level of joining the society vs viable competing alternatives. Reciprocity again rules.
What you want is a system where I am forced to pay for everyone else’s ideals and privatized gains whether I want to or not (absent leaving country of birth). This is not something I will thank anyone for. Don’t force me to do something and ask me for a thank you. Yes I gained from government. I am sure I could have gained more in a more voluntary system.Report
By the way, Jesse and Liberty,
I am pretty sure that if taxpayer directed funds to competing agencies led to more government services, that were run more efficiently, that benefited the poor more, and led to more long term equality and prosperity, you two would still oppose it.
Libertarians assume that when we lay out an argument that will enhance general welfare that progressives will agree to it. After extensive time Listening to progressives, I am convinced that rationality does not matter as much as purity to the sacred values of community and equality of outcome inherent in the heart of true progressives.Report
Roger, if you want to make the argument that you would be better off had the decades or centuries of government investment and benefits had not been given to your family, well go right ahead.
Right now, your statement sounds like the guy in the Medicare hoverround saying he wishes government would get off his back.Report
Liberty,
You sound like the slaver reassuring himself that his slaves would not be able to care for themselves without the helpful bite of his lash.
I can value government and suggest ways to make it more valuable. Do you notice the distinction?Report
Don’t we have 50 or so? the hoops are different per state…Report
Kimmi,
Federalism is a fine start…..Report
Heh. It is true many new ideas don’t work. But when the statistics point to the old ideas not working, especially ones where the market abjectly fails to solve a particular problem, lo here come the idiot Libertarians to make excuses for the market. I’m telling y’all, more and more the Libertarians remind me of the old-line Marxists, constantly making excuses for failure.Report
ones where the market abjectly fails to solve a particular problem,
Betcha can’t name 5 that can stand up to scrutiny.Report
What is this, Groundhog Day or something? I’ll bet I’ve pounded in a quarter million words into this website over time and none of it seems to have left a dent.
1. Health Insurance: single payer would give us real numbers and meaningful statistics.
2. OTC derivatives: dark markets obscure systemic risk. The sleep of reason breeds monsters.
3. Right to Work laws haven’t produced meaningful gains in any market sector. Union busting is all we got out of that. The factories I moved from Japan to Georgia are all gone now.
4. Failure to enforce monopoly laws has led to a paucity of competitive options. Our cell phone and Internet infrastructure sucks. Other countries make this stuff work by enforcing standards. We can’t.
5. Bank failures, see 4 and 2.
Now you’ve got your five, not that you’ll admit them. You’re just an aggravation. I wish you put more effort into thinking.Report
Ah, shit, I’ve got a forum to participate in tonight, or I’d go to town here. But real quickly,
1. You’re assuming we have a free market in health care, and making your comparison to that. Invalid comparison.
2. Yes, to some extent. Not to the extent you think. (If the problem is the darkness of the market, as I think it is, then light is the only regulation that’s needed.)
3. Actually, a student of mine did a nice senior research project showing that in cost-of-living adjusted terms, folks in right to work states are slightly better off than those in close-shop states.
4. You don’t know jack shit about markets and monopolies. You whine about the cell phone market and can’t even be bothered to remember when we actually did have a monopoly in phone services–when it was regulated, before we opened up the market. If you think markets lead to monopolies, you’ve demonstrated that your economics knowledge is the equivalent of asking an astrologer about astrophysics.
5. Bank failure. And you still refuse to accept that our regulatory structure actually played a role in that by creating moral hazards.
I’ll bet I’ve pounded in a quarter million words into this website over time and none of it seems to have left a dent.
You’ve pounded a quarter million words of pure bullshit, that’s why. Remember this, Blaise, just because you’re an arrogant dick doesn’t mean you’re always right. Together the two of us are proof of that, because we can’t both be right. But spare me your assumptions that just because you repeat what I can see as patent nonsense over and over that I ought to suddenly accept it as wisdom.Report
Creative has burned more companies than anybody. Do you have any idea how much work has wound up burned to ashes because it could outcompete creative?Report
Heh. Call anyone an arrogant dick online and you might as well have said “You win”
Yes, I am an arrogant dick and I make no apologies for that fact. Single Payer isn’t anything more or less than a check-clearing mechanism for health care payments. It’s not an impediment to any sort of market forces, it makes sure bills get paid on time. Gives everyone the information needed in the process.
Forcing OTC derivatives into regulated exchanges is the only thing I’ve ever asked.
As for right to work states, sure, they’re cheaper. That’s because they’re failing. During the Depression, he who had some money could live very high on the hog, too. That’s a non-starter. Banana Republicanism at its most obvious.
As for monopolies, I was part and parcel of the deregulation of AT&T back in the day, so I do have some insight into how this process works. If my part was very small, it was from a remarkable viewpoint, the change management system for every telephone switch emerging from Bell Labs. I have migrated to Linux and bring my clients along, knowing how Microsoft’s monopoly has warped the market in software. Therefore, I will assert some knowledge, considerably more than Jack Shit, on the nature of monopolies.
Markets do lead to monopolies, precisely according to the laws governing the formation of stars and planets. That you would invoke astronomy in this case only amuses me. Gravity is a powerful force and Mr. Gauss told us just how it all comes about.
I’m sure all this is patent nonsense to you, James. Pigs, bicycles…..Report
“I have migrated to Linux [because of] Microsoft’s monopoly…”
LOL. It takes a special kind of arrogance to directly refute oneself within the same sentence and pretend to be offering some special kind of wisdom.
“Markets…lead to monopolies…according to the laws governing the stars and planets…”
Gravity’s got nothing to do with it. Pull your head out of your ass and say something that’s empirical instead of grandiose poetry. If you can’t understand how market competition breaks down a monopoly you know nothing about markets despite all your pretensions.
Re: right to work states are “failing.” He says with no evidence, as though I somehow might take his word for it. I can’t cut and paste right now (due to some bad buttons on my computer and forgetting to grab my mouse and not being sophisticated enough to figure out how else to do it), but google politifact unemployment right to work states. It sucks bad to read that Bill O’Reilly said something right, but it turns out he did.
And don’t give me some amorphous unprovable definition of failing. Give me facts with citations or admit that you’re the League’s greatest bullshit artist.Report
Um, James, I’m not going to but my head on the whole right-to-work thing, but pointing to a single moment where right-to-work states might have slightly lower unemployment as proof that RTW states are better is weaksauce.
For instance, what’s better. A state with 8% unemployment, but an average median income of $40,000 or a state with 6% unemployment, but an average median income of $30,000?Report
James, do you think “monopoly” means
1. M is the only possible supplier for X, or
2. M has constructed barriers to entry which affect the other suppliers
Unless it’s 1, there’s no contradiction between “M is a monopoly” and “I’m ornery enough to pay the price for not using M’.Report
California and New York are better than Alabama and New Mexico?
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Mike,
Every company hopes to build barriers to entry. The question is whether they can do so successfully enough to deny consumers a readily available alternative. Microsoft couldn’t keep folks from offering a competing OS for absolutely fishing free (dollarwise, it did require a bit of knowledge, or a friend with some). That’s a pretty darn low barrier.
And let’s not forget a little company called Apple. Was there ever any barrier to buying a Mac instead of a PC?
Someday I’ll write a post specifically about this issue, but the reality is that there were always alternatives to MS. That’s not to say that MS is a noble company and that it never played dirty; it’s just to note that consumers always had ready access to an alternative. As long as that’s the case, there’s no monopoly.
If you read the ruling in the Microsoft case, you can see the judge’s sleight of hand where he goes from talking about Apple as a competitor to suddenly excluding Apple from the relevant market when he declares MS to be a monopoly. It was a nice trick; not exactly honest (or not necessarily dishonest; perhaps just dumb), but effective at getting to a popular outcome.
I’ll also note that Bill Gates never gave any money to politics, while his competitors did regularly, particularly to a certain senator from Utah who used his judiciary committee position to launch an investigation–only a little bit of rent-seeking there. And the result of all that was that Gates and Microsoft now donate to politics; a negative equilibrium outcome if there ever was one.Report
I get a bit of a giggle about when people talk about cell phone monopolies. We don’t have a monopoly or – at present – a duopoly. We have four major carriers plus a number of regional ones. I live in a sparsely populated western place, and I had my choice between three carriers (two national, one local).
Back before the great consolidation, we had tons and tons of companies. Things were not better then. The national networks have provided national coverage and I now get very frustrated when I enter a dark zone that used to be quite common*. I was about to admit that it’s more expensive than it used to be, but that’s only true because of our expectations. If we want the sort of no-roaming, no-data, per-text fees that used to have, we can get them for prices that are competitive with yesteryear.
That’s not to say that we wouldn’t have been better constructing an actual national, government-run network. I think the argument that we should have gone the route that Europe did is actually quite strong. But monopolies are not the problem, as far as I’m concerned.
* – My first cell phone had coverage at neither the university I attended nor my parents’ house. My current phone has coverage during over 75% of the rural-road drive between here and any larger city I want to get to.Report
Microsoft couldn’t keep folks from offering a competing OS for absolutely fishing free (dollarwise, it did require a bit of knowledge, or a friend with some).
They did, for an astonishing amount of time, prevent PC manufacturers from pre-installing Linux, meaning the time investment to get it up and running rendered it anything but free. (That’s time you could otherwise have spent using the computer, sleeping, earning money, drinking, chasing women, watching TV, etc. Remember when you accused me of not understanding opportunity costs? 🙂 )Report
And, of course, Linux is an OS for CS students, hobbyists and (some) professionals. (Now that Macs are effectively Unix workstations, they’re much more popular than Linux among the software engineers I know. ) The same barrier to entry (not being able to sell a competing OS pre-installed on the most popular hardware platform) applied to commercial competitors, which is one big reason there weren’t any.Report
@Will: So, did the market solve the problem? All these competing standards have crippled the USA. As we march headlong into the bright glittering Murkan future ( where Japan and Korea and Europe were in the 1990s with telco standards ), we still lack Internet service in some surprisingly obvious places.
But then, that’s just the way we do things here. Still running around on inches and feet and ells and roods and acres and quarts and gallons. It’s ridiculous.Report
Oh, good grief. The same day I actually come to the defense of the cell phone quadropoly, Verizon goes and reminds me of exactly why I hate cell phone companies. They’re going to charge me to upgrade phones? Ridiculous. If you’re charging me $30 to save $200, you’re really just saving me $170. Be up front about it. If it wasn’t cutting off my nose to spite my face, I’d just go back to going contractless and buying my own dang phones.
@Blaise, I was merely addressing the monopoly argument. We’re better served with four national companies than we were back when it was a bunch of small ones. I actually said in the comment that having a mandated standard as with Europe might have been a better route to go. Given the givens, though, it’s actually pretty impressive to me that we have the four networks that we do. What the government didn’t do, consolidation patchworked together into something workable, if not ideal.Report
@Mike Schilling
{Hanley} Microsoft couldn’t keep folks from offering a competing OS for absolutely fishing free (dollarwise, it did require a bit of knowledge, or a friend with some).
{Schilling} They did, for an astonishing amount of time, prevent PC manufacturers from pre-installing Linux, meaning the time investment to get it up and running rendered it anything but free.
There are two problems in your argument. First, while I agree Linux was not free, because there were some time/knowledge costs for installment (which, in fact, I did note above), the issue is not whether an alternative is free but whether it is readily available at a realistic price. And alternatives were readily available, not only Linux but Macs.
Second, you’ve mentioned before that you think MS not allowing their licensees to pre-install competing operating systems indicates a monopoly, but in fact it’s just a contractual arrangement. You want to be a licensee for our operating system? OK, but you must use ours and ours only. If you want to use someone else’s, go strike a deal with them.
I find it astonishing that MS gets so much criticism for that, when it actually did license its OS, whereas Apple doesn’t get nearly the same kind of shit when they refuse to license their OS to other companies at all. MS made lots of other companies lots of money; Apple, not nearly so much.
Here’s the problem with monopolies. By not being subject to competition they can increase prices and skimp on innovation, and since they’re the whole of the industry, or at least very nearly so, the whole industry is characterized by increasing prices and little innovation. Does that characterize the personal computer industry over the course of of the last 30 years? My wife just ordered a 32 gig IPad for $600 bucks, whereas my first PC, a 50 meg, cost $1500 in 1992, which is equal to around $2300 today. For roughly 1/4 the price my wife is getting 655 times the computing power; that means roughly a 2600 fold increase in computing power per dollar spent. Plus the IPad has all kinds of bells and whistles my first PC didn’t have, like the ability to take really high quality pictures and shoot video.
That’s the real test of whether there’s a monopoly–price and innovation–because ultimately the value of a market is that it forces suppliers to give customers ever more for ever less. Few industries in the past several decades have done that as well as the computer market.
Now one caveat here is that I could (perhaps fairly) be accused of having slid from talking just about OSes to the tech industry as a whole. So let me just close by pointing out that MS has had to improve its OS over the years. I remember once upon a time when freezes and crashes were infuriatingly common with Windows. But I have not had one, not even one, in years now. Does Apple still have a better OS? I’d have to defer to people more technically savvy than me, but that’s not really the issue when determining whether there’s competition. All that really matters to determine that is to look at whether MS was able to avoid improving its OS or whether it had to work on improving it.
None of that’s to say anybody must or ought to like MS. That’s not to say it never engaged in any business practices that are open to legitimate critique. It’s just to say that the term monopoly is not at all legitimate, unless we ignore the technical meaning of the term and try to change its meaning as a matter of convenience.
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Agreed that Apple deserves far more criticism than it gets. The notion that they’re white hats to MS’s black hat was always silly, and is increasingly more so all the time.
I remember once upon a time when freezes and crashes were infuriatingly common with Windows. But I have not had one, not even one, in years now.
I’m guessing you either stayed with XP or skipped directly to Windows 7.
And, of course, once upon a time viruses were infuriatingly common with Windows, resulting in lost time, money, and data, while nowawdays …
Never mind.Report
Pangloss Hanley’s at it again. Let’s stipulate to Microsoft not being a monopoly for the moment, simply because there’s no reasoning with you about the form and substance of monopoly. My point still stands: Microsoft did warp the marketplace for software.
Let’s consider what happened once Linux and BSD coalesced: Apple forked BSD because the security, memory management and file systems were better. IBM went for Linux and Java in a big way: helped them sell mainframes.
What might have happened if Microsoft had not gained such a large market share from its per-processor license?
The “computer” as we understand it today would be a variety of appliances. You wouldn’t give those appliances much thought, any more than you give the microkernel code in your car’s computers much thought. Smart phones would have arrived a decade earlier. Games boxes would be several generations ahead of where they are now.
The Internet would look very different. Microsoft’s misbehaving browsers and brain-dead security model wouldn’t be driving people like me ( and a million website designers ) crazy, trying to implement working security models.
Remember, folks, the phrase Hi-Tech just means this shit don’t work reliably all the time. Once it does become reliable, you stop thinking about it and it becomes a part of your life like the keys in your pocket.
Bill Gates stood at the nexus of control between the hardware and software communities. Sometimes he did good things, sometimes he didn’t. We have that little cretin Nathan Myhrvold to thank for Windows, surely the worst possible approach the world could have ever taken to graphical interfaces at the time. Of course MSFT improved their software: there was nowhere to go but up.
If Microsoft was not a monopoly, it behaved like one. We have MSFT to thank for the lack of progress in the natural progress of “computers” into appliances.Report
Mike,
I’m both technologically unsavvy and a lucky recipient of an employer provided laptop, so I can’t really say what operating system I have. All I know is that it’s Microsoft, that I had Microsoft before, and had Microsoft before that, and it’s improved. As a consumer, that’s all that actually matters. As a matter of asking whether they have a monopoly that’s allowed them to avoid innovating, that’s still all that actually matters.
As for viruses, I think you know the real answer. It’s not that viruses can’t be written for Macs, but that the types of shits who write viruses are most often going to write them for the type of machine where they can spread the most, and that’s a function of two related things; absolute numbers of that type of OS and the level of technological savvy of the users.
And there’s no doubt MS works to respond to viruses, which it wouldn’t necessarily need to do so vigorously if it actually had a monopoly. In fact a few years ago I read an article that said MS actually responded much faster to new viruses than Apple–they had to precisely because they were a more frequent target. I have no idea if that’s still true, but the point remains.
As to criticism of Apple, I think the only thing they can fairly be criticized for is bad business decisions. I didn’t actually intend to suggest I thought they should be criticized, just that criticizing MS for monopolistic behavior and not Apple was hypocritical. But I don’t any of Apple’s decisions can be criticized with any meaning except on the grounds of whether they were properly profit-maximizing.Report
It was such a sad day when Microsoft finally fixed the “buffer overrun” on pictures bug…
that was a bug that they’d had for years and years. Known issue, great way to run code on someone else’s machine.
If someone actually thinks Microsoft is responsive, well, let me lay that one at your feet.
Anyone remember Lotusnotes?Report
What might have happened if Microsoft had not gained such a large market share from its per-processor license?
How did Microsoft gain such a large market share? It’s per-processor license is not a sufficient explanation. Lots of companies could have created an OS and insisted on a per-processor license but not have succeeded at all. Others could have created an OS and licensed it and successfully competed with MS, but chose not to. (IBM, for example, clearly had the intellectual capital to create a distinct OS.) And then there’s Apple, which famously chose not to license, and in consequence never caught up with MS in terms of units sold. The story isn’t just about MS and its per-processor licenses.
What might have happened if Microsoft had not gained such a large market share from its per-processor license? The “computer” as we understand it today would be a variety of appliances. … Games boxes would be several generations ahead of where they are now. … We have MSFT to thank for the lack of progress in the natural progress of “computers” into appliances.
Eh, the things that are happening might have happened faster in an alternative universe. Maybe. But even if so, you’re still wanting to blame it all on MS instead of blaming it on the tech companies that didn’t compete successfully, the ones that made worse business decisions than MS. Why was Bill Gates at the nexus between software and hardware? Because the other companies didn’t make as good of business decisions.
there’s no reasoning with you about the form and substance of monopoly.
That’s because I’m using the standard professionally accepted technical definition. If you want to use a non-standard, technically inaccurate definition, that’s your right. But I can’t understand why you’d ask me to go along with it.Report
Two strikes against you coming into this debate: the first, I was around for the initial IBM PC and wrote code for it. Two, I remember how Microsoft screwed around with the software market, with Bill Gates’ famous letter to Byte Magazine, saying developers ought to sell their software not just give it away, calling us thieves and parasites. Fuck Bill Gates. He ruined the market for software for well over a decade.
The IBM PC caught on because its brand name had enough credibility in the business world to justify putting them on work desks. IBM had not intended the PC for the business market: it was in competition with Atari and Commodore and Apple for the home computer market, where the need for connectivity could be solved with RS-232 modem connections. Notice it didn’t have a network card aboard.
And there was a Killer App, Lotus 1-2-3, a useful enough tool for solving for matrix solutions, a rewrite of VisiCalc. Lotus wrote it all in assembly language, completely bypassing the operating system, writing directly to the screen. Both IBM and Microsoft were mere bystanders as this curious little machine began to crunch data using Intel’s instruction set. Along came dBase and the stage was set for a complete paradigm shift in how businesses could handle their own data.
Though it hadn’t actually written the operating system, Microsoft crushed each such application as it appeared, rewiring its OS plumbing to keep others out of their market space.
I lived through all this. That’s what happened in this universe. This wasn’t a matter of better or worse decision making on anyone else’s part. IBM inadvertently created this little monster and Bill Gates became a nasty rent-seeking little troll under the bridge. He’s taking his billions and doing other things with them, wonderful things like curing malaria and bilharzia and other such worthy projects. But let’s not kid ourselves about what Microsoft did or the corporations it murdered or the millions of unproductive hours spent resolving application errors to gross incompetence and outright malfeasance on Microsoft’s part.
As far as a monopoly goes, I’ve studied this problem as long as it’s been a problem. Here’s the sovereign principle of monopoly law: monopolies are what monopolies do. Microsoft obviously acted in restraint of trade. What you understand about this business is less than nil. If ever there was a bit of mansplaining, it’s this silliness about Standard Professionally Accepted Technical Definitions.Report
Though it hadn’t actually written the operating system, Microsoft crushed each such application as it appeared, rewiring its OS plumbing to keep others out of their market space.
Heh, heh. So MS had to keep innovating? Because of competition? I’m pretty sure that’s exactly what I said. If there’s real competition that forces a company to keep improving its product, it’s a heck of a stretch to say they have a monopoly. MS kept improving its product and its prices went down. That’s not what happens with monopolies.
Or as economist Don Boudreaux writes,
“…Do real prices in markets in which the firm offers products fall? Does output in these markets expand? Are innovations in the market regular? If so, the firm is not likely a monopolist…
If Microsoft’s large market share is rooted in an unfair or inefficient monopoly advantage, or if this large market share itself is a source of monpoly power, the Microsoft would behave like a monopolist. It would restrict output and raise prices…
Liebowitz and Margolis find…that, from the late 1980s through the mid-1990s, ‘in the five software categories where Microsoft did not have a product, prices fell by an average of about 15%. But in the 10 categories where Microsoft does compete, either with a separate product or a component of the operating system, prices fell by approximately 65%'”
Here’s the sovereign principle of monopoly law: monopolies are what monopolies do.
Monopoly law was written by non-economists. U.S. anti-trust law is a pseudo-economics from top to bottom. Indeed, “monopolies are what monopolies do,” but economists have a better grasp on what it is monopolies actually do.Report
James,
Oh, good! Then you’ll agree that Creative is a fucking monopoly because their market share is well over 90% of the market, and because they’re still charging fifty times the rate that their competition was charging… FIVE YEARS AGO, when they bought their competition.
Price goes up, Price Held Up? Monopoly!
Whee, I win.
[“Way to go, Mr Microphone…
show us all what you don’t know…”]Report
Kimmi,
I’m willing to be persuaded. Can you provide evidence?Report
James,
Microsoft got the market presence it did based in good part on being in the right place at the right time. Then, using its existing leverage to prevent anything else from seriously coming up against it. Apple still exists, in large part, because Microsoft bailed them out for fear of anti-trust litigation. It was helpful to have that limping, frail competitor still around (Apple wasn’t then what it is now – though what it is now isn’t enough to constitute a threat). You’re right that they don’t constitute a monopoly, as other options do exist, but it’s not hard to imagine that more and better opportunities might exist if not for Microsoft’s anti-competitive practices.
I think that Microsoft’s reputation for software gets something of a bad rap. I’ve found Windows to be preferable to the alternatives that some people tout as superior. It’s true that one of the large reasons for the security holes is that they have such a big target on their back, for instance. They take on a tough job, certainly in comparison to Apple, by not having mandated software (and thank goodness they don’t!).
However… that’s only a part of the story. Microsoft’s security has always been lax even apart from being the juicier target. Linux has long provided much better and wider internal hardware support than Microsoft. Microsoft went over five years in between XP and Vista and Vista was a dud*. Internet Explorer was a complete and utter mess and wasn’t made decent until 2006**.
The IE example itself is interesting because you can sort of see how they respond when there is an actual threat compared to when there isn’t. They let IE wither because they thought they were invulnerable and only ramped it up when it became apparent that people were not willing to put up with it any more and various cadres of volunteers were putting together an infinitely better product.
Of course, we can look at this and say “The market fixed it all eventually: Windows 7 is pretty good, IE is putting out a decent product or has been displaced, and so on.” There is some truth to this. Microsoft’s market power is not remotely as troubling to me as it used to be. But there’s still a good argument to be made that we lost a lot in the meantime. Industry opportunity costs, as it were.
It’s actually kind of ironic that the biggest thing I can actually say in defense of Microsoft’s influence on the industry is that the market-dominance was a good thing in the overall. When I was a kid, everything was PC vs Mac and you had to worry a lot of about compatibility. It would have been worse of OS/2 hadn’t been killed in its cradle. The standardization proved to be a net benefit, I think. However, Microsoft’s use of the catbird seat did become abuse. And the smartphone industry is actually making me rethink the beauty of standardization.***
* – Ironically, that people simply refused to adopt it is an indicator that Microsoft was not, as of 2006, as all-powerful as its critics claimed it was.
** – I put this post-script because it’s not central, but it’s kind of funny how Bill Gates was against free software until he needed free software to defeat Netscape.
*** – Due in part to the fact that the Deathstar in the smartphone biz is Apple, and I am far more uncomfortable with Apple hegemony than either Microsoft or Google hegemony.Report
5 years ago, I bought a Gigabyte (later nicknamed gigaboom, for its tendency to have explody capacitors) motherboard with onboard sound — the sound chip cost somewhere in the ballpark of $1.00. Creative is currently selling “low-end” sound cards for $50.00.
My soundsystem was easily the equal of Creative’s best… but don’t take MY word for it. A friend of mine who has perfect auditory memory (*ducks Chris*) will vouch for it (he can’t read music — but he can sing anything from memory, and knows if someone muffs even one note in a song he’s already heard.)
I can provide other examples of Creative’s skullduggery, they’re ample.Report
@Will,
using its existing leverage to prevent anything else from seriously coming up against it.
Will, I can’t find the reference right off the bat, but my favorite line in the ruling against Microsoft ran something like, “It was not inevitable that Microsoft would always respond to every innovation that threatened its market share.” Which can only logically be read as, “behaving competitively is monopolistic behavior.”
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Kimmi,
I’m not sure why you believe that Creative has some sort of monopoly? There’s VIA, C-Media, and ASUS. I believe all of which (I am relatively certain about VIA, pretty sure on C-Media, and I think ASUS as well) design their own chipsets.
Also, there are a lot of pretty solid sub-$50 sound cards out there. Few bear the Creative name, but they’re out there.Report
James, there’s competing in the sense of creating a better or cheaper product, which we should applaud, and there’s better in the sense of preventing other people’s product from working right or trying to block access to other people’s product. Microsoft stands accused of the latter. I’m not sure why the latter should be considered okay, since one of the main benefits of the market is supposed to be that competition makes products better, cheaper, or both.
(As for the anti-trust lawsuit, I’m not sure. At the time, I thought the case was stronger than it appears to have been in retrospect. Microsoft’s power and leverage were indeed mitigated with time.)Report
and there’s better in the sense of preventing other people’s product from working right or trying to block access to other people’s product. Microsoft stands accused of the latter. I’m not sure why the latter should be considered okay,
1. The latter should not be considered OK (but if we’re talking about “making others products not work right on our OS when they compete with our products, I’m not certain that’s not-OK, although I’m open to argument, not having thought it all the way through).
2. I’d be hesitant to claim MS never did anything not-OK. They’re a corporation, after all, and it’s not corporations I admire, but the ability of the market to discipline them.
3. But I hear vague statements that MS did such things, and few specific claims, and in general the specific claims I’ve heard have come from anti-MS fanatics who can’t distinguish between hard-nosed business practices and actual anti-competitive behaviors. I’m all for evaluating specific claims, and (given point 2), I expect that there are some accurate ones. Just not as many that stand up to scrutiny as most people believe.Report
James,
I think the “not work right on our platform” loses a lot of resonance when it comes to platforms that dominate the market. I don’t know what the threshold is (Somewhere north of 50%, probably somewhere north of 75%) and that provides too much leeway to use your market leverage to prevent competition with other products and deserves scrutiny.
One of the issues here is that there is a tremendous gray area. “Did the latest patch prevent opposing software from working as a biproduct of a loftier goal, or were you just trying to prevent the opposing software from working?*” is a hard question to answer because it’s rarely going to be only the second.
I would probably break it down to three questions:
#1. If you did not have market-dominance, would you be doing this anyway?
#2. If you did not have a competing product, would you be doing this anyway?
#3. Is what you’re doing hindering innovation from third parties?
I would submit that for Microsoft, the answers to some questions are No, No, and Yes. To pick another example, Apple right now (a company for which I have a real disdain for), I’d argue that the answers are Yes (they don’t have market-dominance on the iPhone), Yes, and No (because there are other similarly viable platforms where the innovations can occur).
These are still, however, tough questions to answer. And I think where the disconnect often occurs is that Apple is given (and in the eyes of many, has earned) a benefit of the doubt that Microsoft is not. When Apple says “Doing this makes for a better product, which is why we do it” they are more likely to believed.
Should this be the determining factor in a court of law? No. But it’s certainly fair game in public opinion. And when the answers are No, No, and Yes, I believe that represents a real problem. Not always a legally actionable one, but a market problem.
* – It’s actually my belief that Gates believed that preventing opposing software was itself a lofty goal. For reasons not all that dissimilar from Jobs v2.0. Gates had a particular vision and wanted to be in control of the trajectory of the industry because he believed he could do a better job setting the sails than anyone else. Ditto Jobs. The former is reviled and the latter celebrated because Jobs’s vision (in the eyes of most) actually worked better.Report
Will, that’s a compelling start, and I absolutely respect the effort to lay out a clear framework. I’m not sure off the top of my head how to respond to #1 and #3. They may be good approaches. But I do have a real problem with #2, because what you’re asking is, “are you doing something different in a competitive market than you would if you actually were a monopolist?” And we want companies to behave like competitive firms. The problem with monopolies is that they allow companies to not act like they’re in competition. So I really think that one just can’t work–it creates a black mark for even the most virtuous actions of a firm, like providing good customer service.Report
Right to work states are thriving and recover faster after economic downturns.
All the US gains in employment in manufacturing since 1977 have been in the non union segment (up 6%). The union segment has declined by 75%, driving the net loss of manufacturing jobs. In construction, all the net growth in jobs since 77 has come in the non union sector.
Unionization leads to 10% lower stockholder returns, 10-15% lower profit, 6 to 13% lower capital investment and 15 to 20% less R&D. In other words, it starves itself out of existence over time. It dwindles away and dies.
In general job growth is 3 to 4 percentage points lower in unionized businesses.
Unions are the perfect example of selling poison to the masses and calling it medicine. If you force someone to pay you twenty percent over the market rate, you better not complain when your job and company are no longer around after a few decades. It is simple economics.Report
I think you’re painting with too broad a brush there.
I’ve worked on union jobs for Bechtel, ConocoPhillips, and Hitachi, all of which are doing quite well.
There are different types of unions, and to lump them all together gives rise to unfounded conclusions.Report
Will,
Point taken. I love the idea of voluntary worker organizations non coercively representing worker interests. My concern with unions is only around the association between them and coercion.
As I argued with Mark in February, I am convinced that long term unions can only maintain above market rate wages via threat of force. They can accomplish other things absent threats and force.Report
Roger,
Union has value (to America) if it raises aggregate wages for entire industry? Yes/no?Report
Kimmi,
If it raised average wages non coercively via such things as better training programs or better incentives that lead to more productivity then YES. That is the point though, the way to increase wages in a non exploitive way is through higher productivity.Report
Union has value (to America) if it raises aggregate wages for entire industry? Yes/no?
Kimmi, Roger is right; only if it raised productivity, thereby increasing aggregate wealth in America. Otherwise the aggregate wage increase in the industry is merely a shift of wealth, either from the owners/investors if it comes from reduced profit, or from consumers if it comes from increased prices. In that case it has no net value to America, no more than me giving you a dollar changes your and my aggregate wealth.Report
James,
All due respect, but a dollar in a working man’s pocket goes to the next person really quickly. A dollar in a rich man’s pocket is most likely to just spend a good deal of time sitting there, doing jack-all (or used in China).
Haven’t quantified it, but there’s certainly an argument that “a spent dollar” is a lot better than a “saved dollar…”Report
Haven’t quantified it, but there’s certainly an argument that “a spent dollar” is a lot better than a “saved dollar…”
Kimmi, that’s just the very old “paradox of thrift.” It’s not a very strong theory.Report
James,
yeah, rather irritated right now that you blew me off. upon further consideration, figure it’s probably my fault for not knowing the right terminology. still irritated though.Report
James, I may not have been clear on what I meant by #2. The problem is not vertical integration, nor the expansion into more competitive areas, but rather using your market position in Competition A to sabotage the opposition in Competition B.
This hypothetical would be an extreme example: let’s say that a company named Arctel had the dominant position on smartphones. They have an appstore which is the only place you can get apps to install on their phones, and the appstore has various options for music subscription services. Then Arctel decides to get into the music subscription service business, and suddenly all of the other music subscription apps are banned from their appstore. That would be an example of what I am talking about.
On the Netscape front, a lot of people believe that Microsoft did something like this. Once they started pushing IE, Windows suddenly stopped getting along so well with Netscape. I don’t care that Microsoft started offering IE, nor do I care that they included it for free. I do care, however, if they started sabotaging Netscape (to be fair: alleged, but the intent was never proved).
I would probably go a step further and say that preventing computer manufacturers from including alternatives as part of the installation would be, if not sabotaging, still problematic. It’s using your market position over here (your ability to dictate to computer companies what can and cannot be installed) to unduly influence the competition over there. That’s not competing by offering more value or a better option, but by hindering other options. Not always wrong, but in conjunction with #1 and/or #3, problematic.
(As an aside, this is the first time I’ve outlined a list. It’s subject to change as I am still thinking it through. But this conversation has forced me to start thinking it through rather than relying on a problematic “I know it when I see it,” which is a good thing.)Report
Will,
Thanks for the clarification. I’m not ready to agree, but I do hear what you’re saying.Report
Just because I feel a little argumentative. (What’s the bet for? Shall we say a meal if you’re ever in Austin?)
1. Utility companies. Specifically water and electricity, both of which are natural monopoly sectors and when originally constituted had some massive inefficiencies due to the fact that they were private. (Thinking more on the british example here and in the developing world)
2. Migratory fish stocks. Markets have failed spectacularly to curb overfishing. I’ll include whaling in this sector. Generally we’ll go with common pool resources and the tragedy of the commons. There are examples of institutional arrangements that can fix this without being government, but in industrialized economies this has been a substantial problem when governments don’t intervene.
3. Child labor and sweatshop practices. It takes a certain degree of government intervention to make this unprofitable. Although consumer awareness is a good tool in addition to government power.
4. Might fall under 3, but markets didn’t (and haven’t) solve the problem of chattel slavery or human trafficking for that matter.
5. Externalities related to addictive, inelastic goods. Say tobacco. Smoking eradication only really became an issue after governments started putting warning labels, restricting marketing materials and the like, plus putting increasingly prohibitive restrictions on what could be sold as a tobacco product.Report
“Markets have failed spectacularly to curb overfishing.”
Well, the market solution to the suggested problem of overfishing is to eat a different kind of fish. “But that’s not a solution!” Yeah it is. It’s just not the one you wanted. Nobody ever said that the market would always give you the solution that you considered optimal.Report
Eating different kinds of fish haven’t actually helped bluefin tuna stocks recover.Report
You’re presuming that preserving the bluefin tuna is something that the market cares about.
What if the market just wants to eat fish and doesn’t care what kind?Report
I’m not sure what you mean by “the market” in this case, but from a consumer perspective the type of fish available for purchase is a big deal and depletion of fish stocks so that fewer and fewer choices are available is to me, not an ideal outcome.
The overfishing of atlantic cod or turbot or dover soles have made them increasingly rare and clearly market forces weren’t “fixing” the overexploitation of resources that weren’t sustainable.Report
It’s more an issue of the type of fishing than fishing for any one thing in particular.
The tuna get caught in nets, and especially when the nets are being lifted.Report
@Nob,
That’s the safest bet ever, for both of us. 😉 But here’s my responses.
1. Utility companies.
Yep, natural monopolies are an exception to the rule. There’s generally a true barrier to entry in that case. Competitive markets can be created in them, and in fact several countries (US included) have been doing so, but it does require a central manager of the grid. That central manager doesn’t necessarily have to be a governmental agency, but that grid manager is in a monopolistic position even if there are multiple power firms wanting to sell and customers wanting to have choice, so some regulation is almost certainly necessary in that case.
2. Migratory fish stocks.
Lack of property rights, plain and simple. You won’t find any–or at least not many–free marketers arguing that markets work well without clearly defined property rights. In places where there are de facto well-defined property rights (socially recognized and enforce, not always official legal property rights), overfishing is far less of a problem. But I recognize you focused on migratory stocks, and, yes, they’re the hardest to effectively enforce property rights on. But if we could, there’s no reason to expect the market would fail.
3. Child labor and sweatshop practices.
Eh, I won’t agree. Technically those aren’t market failures. That’s not to say we have to like or allow them–efficiency is a value, and there are competing values that we sometimes favor over efficiency–but it’s not a market failure.
4. chattel slavery or human trafficking
Come on, nobody ever claimed that markets solve all imaginable social problems. You’re talking about things that explicitly violate market norms, that violate the fundamental principles of markets. This is really no different than blaming markets for not ending theft, murder, and rape.
5. Externalities related to addictive, inelastic goods. Say tobacco.
Maybe. I’d have to ponder that one longer before I made an intelligent substantive response.
But I’ll say this. You provided a much more serious and meaningful challenge, well worth buying you a meal, in Austin or elsewhere. But then I’m not surprised, since I know you’ve thought about these things a lot more carefully than our friend upthread. What you’ve largely done is delineate some of the limits on markets, and no sensible person would deny that there are some. Markets don’t create paradise, they just bring us closer to it than non-market systems do.Report
I was about to reply to the utility issue, but you beat me to it.
In Lubbock, there are two power companies. There are some areas of town where this is only one service area, but in most places you can choose either LP&L or Xcel.
In Illinois, you buy your power from a provider, and the carrier sends you the bill. There are an awful lot of providers available.Report
My brother, who lives in Nevada, keeps trying to sell me, who lives in Michigan, natural gas.
I don’t really understand how it works. The beauty of the market is that I don’t need to.Report
“That’s not to say we have to like or allow them–efficiency is a value, and there are competing values that we sometimes favor over efficiency–but it’s not a market failure.”
Which is the point I’ve brought up elsewhere in this discussion. “I don’t like it!” is not a market failure.Report
Fine. Carry Trade.
Tulips.
How many bubbles do we need to list before we’re willing to talk about the failure of the market to correctly value concrete items?
The Market is a Game — the game of the “Greater Fool”
Anyone who believes otherwise Will. Get. Burned.Report
@Jesse,
For instance, what’s better. A state with 8% unemployment, but an average median income of $40,000 or a state with 6% unemployment, but an average median income of $30,000?
You’re missing a key variable–what’s the cost of living? $30,000 in Indiana goes a hell of a lot farther than $40,000 in California. And that’s the key issue, along with unemployment. If the unemployment rate in state X tends to be lower (not just a moment in time) and the cost-of-living adjust income (not just nominal dollar income) tends to be higher than in state Y, there’s reason to say state X is doing better.
Of course there are reasons to choose state Y–culture, connections, type of job you can have, weather, whatever else you value. I’m just talking about on pure narrow economic grounds, RTW empirically ain’t so bad as you might think.Report
Jesse and Kimmi,
Adding on to the argument,
To the extent that union coercion distorts wages from the market rate, resources that could be used more efficiently are prevented from doing so. The market or economy becomes less efficient.
Using coercion to distort markets exports poverty to others. It is a zero sum activity that tends to make the world a bit worse.
I am one hundred percent a fan of higher wages. The positive sum path is via higher productivity. And I always look for the positive sum path.Report
Roger,
higher productivity correlates with lower wages (at least over the course of the ongoing Long Recession — plz, powers that be, don’t call it a depression.)Report
higher productivity correlates with lower wages (at least over the course of the ongoing Long Recession
Not over the long term of human history, which, if you know anything about data, is a better set.Report
If we assume (really, real world stuff), that the union is not coercing the companies, then a “higher than otherwise” rate that the non-union shops have to compete with… is that then distorting the market rate?Report
James,
Is the 1980’s to now a Brave New World?
It’s fine to say that productivity increases wages — maybe it’s even true. But we’ve got a two century long energy bubble, and a forty year productivity bubble (that isn’t paired with wage increases on parity).
You explain it.Report
Kimmi,
I don’t think so. If unions were more productive than non unions, then it would attract employees, capital and production toward this more efficient solution set. Consumers would gain, union employees and investors would gain, society would gain. Non union investors and employee would see lower returns and wages.Report
Roger,
so santas don’t get paid more than elves? and don’t attract capital??
I think, as usual, you’re ignoring the effects of advertising — and the pocketlining of people who can, after all, just “move on.” The idea o the factory still being there in half a lifetime doesn’t exist anymore — and that was part of what made unions a good deal for the company.Report
I love this notion that government is “coercive”…How come no one thinks of government as selling services–
I don’t really get to determine how much of the service I want to consume, and I can’t make a decision not to buy a set amount at a set price. If I choose not to buy a 20 pound box of potato chips for $30, PriceMart doesn’t punish me in any way. In fact they never force you to buy any product you don’t want.
Seriously, now, if I couldn’t say no to buying Wal Mart underwear, even though I hated the price, quantity, and style, without WalMart punishing me in some way, would you seriously not talk about how they were coercing me?
Dude, you can make an argument for why government coercion is legitimate, but you can’t make a serious argument that it’s not coercion, and that’s really like going to the store. Because what the government does is so different than what a store does that you’d pitch an absolute shit fit if a store did it.
Now, on the local level, we do have the Tiebout Model (named after Charles Tiebout), where local communities in a large metropolitan district are assumed to set taxation and service levels so as to compete with each other in enticing residents. In that sense you can talk about government selling services. But even in that model the barriers to exit from the government you’ve contracted with can be very difficult (e.g., selling your home and moving); not impossibly difficult, but difficult on a scale you’d complain madly about if your cell phone company tried it.
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So negotiating with a city is totally different than a Walmart greeter negotiating with her employer. Completely different. Got it.
Actually, I think trying to model the government as a charity or business are both foolish wankery.
Government exists precisely to take care of things that voluntary donations and market forces can’t do very well.
The key word here is ” very well.”
If either of those things were capable of taking care of things like roads and armies “very well” they might exist as working models.
Its not like they haven’t been tried; both private armies and private roads have been tried, with varying degrees of success throughout history.
But it has been found- by nearly every modern successful nation- that public taxation and government organization work pretty well at these sorts of things.
The “let everyone go their own way” model being floated is pernicious and to be blunt, rather adolescent. It seems grounded in a resistance to ever having to do something objectionable, crying “coercion” at having to cooperate with others. While of course, enjoying the fruits of cooperation.Report
So negotiating with a city is totally different than a Walmart greeter negotiating with her employer. Completely different. Got it.
Wow. Could you have possibly misinterpreted me any more badly? Hell, I wasn’t even talking about employment, because you didn’t fucking bring it up in the first place! So don’t go moving the goddam goalposts. You said government was “selling services.” That’s not employment, that’s sale.
I answered your question, and then you went off on irrelevant tangents.Report
Naw, I was referencing earlier arguments where peple like me (well, actually, me) complain about overpowerful corporations and the libertarians who talk about “voluntary contracts”. As in, employees should be “free” to “negotiate” their wages.
I reference this because the relative power positions of Walmart and greeter are about the same as between a city and a citizen taxpayer; neither one can possibly be described as any sort of “contract” and for 99% of us, neither one can realistically be negotiated.
Which leads to the second half of my comment; democracy depends on cooperation and compromise, not atomized individuals. The only way individuals have power is by joining together with others which is why I so strenuously resist the “do your own thing” stuff.
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democracy depends on cooperation and compromise, not atomized individuals. The only way individuals have power is by joining together with others which is why I so strenuously resist the “do your own thing” stuff.
Of course democracy depends on cooperation and compromise. The atomized individual claim is a pejorative term applied first to social contract theory (it had a technical meaning there that made sense), but more recently to any theories about individualism. But aside from a handful of misanthropes, you won’t find any supporters of individual who are opposed to cooperation and compromise. That’s a red herring; a bad misunderstanding. The absence of cooperation and compromise backed by the threat of government force is not no cooperation and compromise; it’s purely voluntary cooperation and compromise.
And you did move the goalposts, or at least shift the terms of the debate when I rebutted you. Either way, it’s not really kosher.Report
James-
You complain that you don’t get to pick your own level of government services; Roger wants a world in which he only pays for things he likes to support.
You both actually do get to pick these things, currently. However you can only do it in the aggregate, as part of a voting majority. You both clearly understand this, but still complain that it is coercive, so I assume you want it to be purely individual- where your decision of what to support is not overruled by the will of the majority like it is now.
Again- in your own words- you want voluntary cooperation and compromise, but without the backing of coercion, so you never are forced to do something you don’t like to do.
Am I getting that right, or misquoting you?Report
Roger,
Sort of. I’d just emphasize that it’s not individualistic in the sense that we want to refuse to ever go along with something we don’t like. We just don’t want to be forced to when it goes beyond our willingness to voluntarily submit.
There have to be limits to what we can force people to do. The best limit is the individual’s own conscience.
As to “I” choose as “part of a voting majority,” that’s actually a really problematic claim. The literature on the difficulties of transforming individual preferences into group preferences is pretty big, and it’s mostly pretty dismal. There’s a lot more than I can go into at the moment, although someday I hope to write some more here at the League on public choice theory, but I hope for the moment you’ll just tentatively (no more) accept my word that saying someone chose X because they were in the majority is a claim fraught with such numerous pitfalls that it just can’t be assumed to be true in any particular case.Report
Well ok, now we are making progress.
I look forward to such a post.Report
Just to clarify,
I want to explore moving toward a world where more people have more say in where their taxes go, and in how much they pay. I want the world to be less coercive. It isn’t about me. Indeed I wouldn’t even coerce anyone to go along with my idea. If I couldn’t convince them to, I would respect their wishes.
The reason flowers are beautiful and full of nectar is that they need to convince bees to voluntarily come to them. Flowers compete for bees with other flowers. I would like government to be as beautiful as a flower, and am pretty sure that some day it will be.
The bees get honey and the flowers get to reproduce. Everyone gains.Report
What prevents you from collectively organizing like minded individuals from voluntarily showing solidarity to your favorite causes? Coercive solidarity isn’t my idea of solidarity. Are you worried if you had to sell your ideas that nobody would buy? If I was you I wouldn’t worry about that. My experience is that you have a lot of people that would join your team.Report
We are collectively organized. Into a nation.Report
We are collectively organized. Into a nation.
That begs more questions than it answers.
Q. Do you really think Roger or I or anyone else here would disagree with that as a statement of fact?
Q. Does it answer the question of what things should be done as a nation and what things should not?
Q. Does it mean that there are no other appropriate levels of organization, or that those other levels may have some competencies and legitimacies that the national level lacks?
Q. Does it mean there’s coerciveness to our solidarity at that level, or that if there is, we shouldn’t have any concerns about that?Report
A: Maybe not you or Roger, but there are people who believe the Constitution should be ratified once per generation or so.
A: No, but it does show that we are organized into a group that is deciding what we want to do as a group, through democratic elections.
A: Of course not, but there’s also legitimacy and competencies the federal government has that even the perfect private sector market, with no inefficiencies or bureaucratic boondoggles would have problems competing with.
A: Society is coercion, writ large. As I think I’ve said before, maybe it’s because I’m a statist who hates individuality, but I don’t get worked up over about 90% of the coercion that various libertarians on this site seem to lose nights of sleep over. Of course I’m coerced to pay taxes, go to school when I was a child, and pay into Social Security. It just doesn’t bother me.Report
Jesse,
I agree coercion is rampant. I believe progress involves making it less and less so, while making cooperation more and more do. To me society is cooperation.Report
Jesse,
there are people who believe the Constitution should be ratified once per generation or so.
?? Who? Honestly I’ve never run into such a person, and I’d be fascinated if you could point me toward someone who’s arguing that. For the record, I find that a nutty position.
there’s also legitimacy and competencies the federal government has that even the perfect private sector market, with no inefficiencies or bureaucratic boondoggles would have problems competing with.
But I’m not arguing against the federal government per se. You’re raising a point that I’m not sure anyone at this blog would dispute. There are, of course, people who would like to eliminate the federal government, but I don’t think you’re going to be debating any of them at the League.
Society is coercion, writ large.
Yes, but that doesn’t mean we can’t argue about the proper limits on that coercion. Parenting is coercion, too, but I suspect you have some fairly strong views about where parents cross the line.
I don’t get worked up over about 90% of the coercion that various libertarians on this site seem to lose nights of sleep over
But at the same time you get worked up over disparities in bargaining power between employer and employee, which is measurably less coercive than the state. That’s why I ultimately find your position difficult to understand. It seems internally contradictory to me.Report
Liberty,
You wrote: “…employees should be “free” to “negotiate” their wages. I reference this because the relative power positions of Walmart and greeter are about the same as between a city and a citizen taxpayer; neither one can possibly be described as any sort of “contract” and for 99% of us, neither one can realistically be negotiated.”
This is a fallacy. In reasonably large and open markets, the point where supply and demand meets is not distorted by relative power positions. I may not be saying this exactly right, but I can probably find references.
The point is that where there are reasonably large numbers of buyers and sellers (prospective employers and employees) the market rate is based upon supply and demand, not power. The point is that if another business could get an above market return from the Greeters labor, they are incentivized to offer at least one penny more. This keeps going on until nobody offers an additional penny. Supply meets demand, even with power imbalance.Report
Yup, there’s no massive distortion of power between the most powerful corporation on the planet and a single greeter.Report
Maybe that’s because the greeter actually isn’t that valuable, and his/her skills are easily replaced. But in a tight labor market, wages go up. Back in the ’90s, South Dakota was booming, and prospective businesses checking it out were told, “don’t expect to pay market wages; even the burger flippers at McDonalds are getting paid several dollars an hour more than that.”
So, did those burger flippers have any power vis a vis McDonalds?
Yuh know, Jesse, there’s an awful lot to be learned about markets by studying economics. Not to say sociological and philosophical approaches can’t teach us anything about them, but economics adds some worthwhile contributions of its own.Report
Of course, I could be anecdotal and say this greeter was making ten to twelve dollars an hour as a clerk at a small store in the same town twenty years ago, but Wal-Mart came in and destroyed the local economy. Surprisingly, you lose some leverage when there’s only one employer in town. But, anecdotal evidence is bad and of course, that hasn’t happened all over the country in the past twenty years or so.
Yes, you can always point to small areas or sectors where people are getting paid above market wages for a small period of time. But, we’ve seen thirty years of stagnant wages, slashed benefits, and rising coats for most of America while the top 1% had made out like bandits. All while in the thirty years previous, wage growth was basically the same across all five quintiles. give or take a few percentage points.
So yeah, I understand what happened. When you remove or change the rules of the game so that the wealthy and powerful benefit, they take advantage because that’s what corporations do. It’s in their charters.
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Jesse, do you actually know anyone who works at a small family owned business? Those employees are not making out that well for the most part. And Wal Mart has created more jobs in those towns than they’ve destroyed. I’ve no particular love for Wal Mart and don’t shop there when I can find what I want elsewhere (their customer service sucks, imo), but there’s comfortable ideological myths and then there’s facts.Report
Jesse,
Real hourly wages have almost doubled. Those families starting in the bottom quintiles have gained the most in subsequent years, and those starting in the top quintiles have actually gained the least.
You guys are screwing with statistics. Yes the quintiles changed exactly as you list, but people are not quintiles. Poor people gain more over time than rich people, they do so primarily by moving up into higher quintiles.Report
The point is that despite massive differences in power, supply and demand set wage rates, not power.Report
“If I choose not to buy a 20 pound box of potato chips for $30, PriceMart doesn’t punish me in any way. In fact they never force you to buy any product you don’t want.”
The liberal’s concept of market failure is when A: the choices he wants aren’t available and B: everyone else genuinely does want the ones that are.Report
Recently a tax attorney was arguing with Romney about the “If Buffet wanted to do something about the debt, he could just pay extra taxes himself instead of requiring everyone /else/ to” meme going around. The attorney claimed you can’t donate money to the gov’t, it just gets applied to future taxes owed. It took me about 30 seconds to find this. Unfortunately as the link proves, you can’t tell the gov’t how to spend the money you give them (kind of the whole point of this OP I believe).Report
I’ve been making this point myself for a while now. A related point, which I may or may not have made here specifically, is that very wealthy people—the ones Buffett is advocating taxing more heavily—have a fairly low marginal propensity to consume. When they get more money, they may spend a little bit of it on personal consumption, but they pretty much have all their material desires covered. When more money comes in, they’ll probably just throw it on the pile—which means it gets invested—or donate it to charity.
All of which is to say—you can’t really tax the extremely wealthy. You can make them cut checks to the government, but it will have very little impact on their personal consumption. Mostly it will just reduce the amount of money they invest or donate to charity. Now, Buffett in particular has pledged to donate virtually all of his money to charity. Mostly third-world charities. When he says “tax me more,” what this means in effect is that we should take money that would have gone to productive investments and/or poor people in the third world, and use it to subsidize middle-class Americans.Report
…what this means in effect is that we should take money that would have gone to productive investments and/or poor people in the third world, and use it to subsidize middle-class Americans.
I understand you’re putting this in stark terms to make a point, but an alternative view is that the government has a role in making productive investments. Yes, government can waste money on things both liberals and libertarians can agree upon as unproductive. But your comment pretty much allocates to the private sector all virtue and the public sector all vice.
Also this, “you can’t really tax the extremely wealthy”, doesn’t really make sense to me. Precisely what liberals want is a more progressive tax system wherein the wealthy are being made to cut larger checks to the government. The motivation isn’t taxation as a punishment, but a broadest shoulders bear the burden type of thinking, standard regressive vs. progressive taxation thinking. Not thinking motivated by animus towards the wealthy for being wealthy.Report
I truly think this is a roadblock for libertarians. I don’t care if somebody makes $40 million bucks selling fertilizer or building college dorms. I want them to pay the same effective taxation rate. Which ironically, makes me have a more equal view of rich people than most conservatives. 🙂Report
Government makes productive investments, but that’s a fairly small percentage of its budget, unless you count all military spending as productive investment, and even then more than half of governmnet spending goes to subsidize private consumption. And on the margin, the debate is around raising taxes on the rich to enable more spending on private consumption for the middle class, either through shoring up middle-class entitlements, adding new middle-class entitlements, or avoiding middle-class tax increases. Very little of any additional revenue the government gets will be productively invested.
At best, it’ll use extra money to pay down debt. Which means that money will be redirected from private investment to private investment. Harmless, but also useless.
Also this, “you can’t really tax the extremely wealthy”, doesn’t really make sense to me.
That is, short of the spiteful marginal tax rates of the 50s, there’s no tax policy that will redirect money from personal consumption of the extremely wealthy. Their personal consumption will remain roughly the same, and the extra tax revenues will come from money that would have gone to investment or charity. That’s bad tax policy. You want taxes to redirect money from personal consumption, not from investment and charity. It’s not about wanting to punish the rich—it’s about getting in the way of their doing good work.Report
Again with the all or nothing, either all military spending is productive or none of it is., isn’t this a false choice? Hasn’t DARPA yielded some useful results? Aren’t there spinoffs, spillover effects, and positive externalities involved in a number of things government pays for, including the military spending? And further including things you’ve classified as merely consumption – a healthy, educated populace is a prerequisite for the kind of high value-added niche the US hopes to compete in. We don’t provide non-discretionary spending for the benefit of the recipients – though I’d contend that’s good enough reason – such spending contributes to the well-being of the entire citizenry.
I’m not sure if we’re discussing taxation in the same terms. There are lots of goodies that I’d like to pay for, public broadcasting, national endowments for the arts and humanities, basic scientific research, a world class public university system… Changing the consumption patterns of the wealthy isn’t the object of these programs and associated taxation, nor is changing the consumption patterns of the wealthy the object of the redistributive end of my policy preferences. But I guess we’ll also disagree as to whether the government can build opportunity in sections of society that’re deprived via redistributive policies, and whether we can count that as a kind of investment.
As for your final point, getting in the way of the wealthy’s doing good work, I think you’re more sensitive to the consequences of a higher top tax rate than I am. I’d argue it is just a shift from being obscenely wealthy to slightly less obscenely wealthy. Few people here are talking about expropriation and seizing the commanding heights of the economy. I worked for the Labour party in the UK for a short spell and few people there speak in those terms (admittedly post-Blair, post-Clause IV Labour), and the run-of-the-mill US liberal position is well to the right of UK Labour positions generally speaking.Report
Sorry, there’s a “solely” missing from a sentence there “solely for the benefit of the recipients”Report
Again with the all or nothing, either all military spending is productive or none of it is., isn’t this a false choice?
Here’s what I said: “Government makes productive investments, but that’s a fairly small percentage of its budget, unless you count all military spending as productive investment.”
If we count all military spending as productive investment, then we can say that productive investment is a reasonably large chunk of government spending. If we count only a minority of military spending as productive investment, then I would say productive investment is a fairly small percentage of government spending. You need a big chunk of military spending to get from small to big.
And further including things you’ve classified as merely consumption – a healthy, educated populace is a prerequisite for the kind of high value-added niche the US hopes to compete in.
Well, that’s the ad copy, anyway. In reality, most government spending is on the retired, who by definition are pretty much done contributing to the economy, and on those who don’t have the cognitive ability needed to do high-value-added work.
But I guess we’ll also disagree as to whether the government can build opportunity in sections of society that’re deprived via redistributive policies, and whether we can count that as a kind of investment.
Is there any evidence that that’s actually working?
There are lots of goodies that I’d like to pay for, public broadcasting, national endowments for the arts and humanities, basic scientific research, a world class public university system
I don’t understand the obsession with having world-class public universities, when our private university system is arguably the best in the world, nor the allure of subsidizing the media consumption of the professional class. But I like research, too. You know what the actual priorities of our government are right now? What it will do if it gets more money? Shore up middle-class entitlements without raising middle-class taxes. So that middle-class people can consume more. That’s why we’d be diverting money away from private investment and charity.
As for your final point, getting in the way of the wealthy’s doing good work, I think you’re more sensitive to the consequences of a higher top tax rate than I am.
And you accuse me of all-or-nothing thinking. Look: It’s basic math. Let Y be pre-tax income, T be taxes paid, C be personal consumption, D be donations to charity, M be marginal propensity to consume, and I be investment:
I + D = Y – T – C
Now let’s increase taxes:
I’ + D’ = Y – T’ – (C – M(T’ – T))
When M is zero, this reduces to:
I’ + D’ = Y – T’ – C
Which means:
(I + D) – (I’ + D’) = T’ – T
In other words, raising taxes on someone whose marginal propensity to consume is zero will result in a reduction in his investment and charitable donations exactly equal to the amount by which his taxes were raised. If marginal propensity to consume is merely low rather than zero, then a small amount is redirected from consumption, but the lion’s share still comes from a reduction in investment and charitable donations.
It doesn’t matter that you’re not trying to punish him. It doesn’t matter that you’re not taking everything. Less pre-tax income means less money available for investment and charitable donations. Unless the government’s marginal expenditures—again, this means shoring up middle-class entitlements without middle-class tax hikes—are more important than that, this is bad policy.Report
Correction: Less after-tax income means less money available for investment and charitable donationsReport
re: Warren Buffet & his “rule”: the other day someone I follow on Twitter linked this. Explains a lot really.Report
Probably should’ve explained that at the link is a less mainstream interpretation of the wealth that Warren Buffet holds, in contrast to his “I earn it fair & square, and should be taxed more on it For The Common Good” crap. It’s not spam.
If the state, and the taxation to fund it, are permanent, then the least bad option IMO would be for funding to come from those who its existence primarily benefits, not based on income amount but on its source. A tax on financial transactions combined with a neo-Georgist land value tax would come close.Report
B-Psycho, I liked your link, but as you’ve no doubt noticed from previous posts here (if you’ve seen them) I’m not a huge fan of Buffet. His stance on taxes is 100% self-serving because of the businesses he owns, primarily his insurance entity. Higher taxes (and high inheritance taxes, which he’s also outspokenly in favor of) feed his main cash cow, Berkshire Hathaway.
The other and recent lie of his about his secretary paying more in taxes than he does is false on any number of fronts. This is as good an accounting treatment of it as any I’ve seen, although the Forbes piece was also interesting. The gap should come up further as Romney’s taxes get analyzed (and re-analyzed) in the press.Report
So basically higher taxes = increased demand for finding loopholes = more business for financial advisors = more money for Buffet since he owns firms that deal with that stuff, if I’m reading it right?
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Tie that together with the fact that Berkshire Hathaway owes a billion in taxes despite Buffet’s stated desire that he’d like to pay more in taxes, you’ve suddenly got explanations for Buffet’s statements that make as much or more sense as “Buffet is on our side.”Report
Positional goods seem to me to refute this kind of argument, whether the bad version by Caplan or the better versions by Kling, Cowen and others.Report
There is a more basic issue. The facts are wrong!Report