inequality

Martin Luther King Jr Day and Civil Rights: A (True?) Libertarian’s Lazy Perspective

Brandon Christensen Links, Politics , , , , , , , , , ,

History professor and fellow Notewriter Jonathan Bean has an op-ed out in the Daily Caller titled “Civil Rights Are Too Important To Be Left To Special-Interest Advocates.” From the opening paragraph:

“War is too important to be left to the generals,” the saying goes. Similarly, civil rights are too important to be left to professional advocates who champion only their own particular racial, ethnic, or religious causes. Unfortunately, in the “official” civil rights community of today a spirit of inclusiveness may be the exception, not the rule.

Read the rest.

Dr Bean’s post has reminded me of how to best tell the difference between a libertarian and a conservative (overseas readers: here is my reminder to you that, in US parlance, libertarian means liberal): libertarians have a deep, principled commitment to equality that is simply missing in conservative thought.

Libertarians will argue that all individuals are born equal, whereas conservatives will tell you individuals are not. Libertarian notions of equality are thus caught in the middle of two extremes: on the Right you have conservatives who believe that inequality equality is not possible on an individual, regional, national, or international scale and on the Left you have egalitarians who harbor all sorts of utopian pipedreams based on “equality.” These three paradigms are by no means obvious, and sometimes you have to think about the implications of a person’s argument.

The libertarian notion is utopian, as it has never been reached and probably never will be, but it is always within reach and is based upon civil and legal equality rather than some of the asinine notions of the Left. When I say “civil and legal equality” I mean that all human beings are deserving of the same fundamental individual rights. Conservatives don’t believe in this (think about their views on immigrants, for example, or ethnic/religious minorities).

So the libertarian, when faced with a hypothetical that looks at an immigrant who came to the US illegally, will say the immigrant is deserving of the same legal and civil rights as a native. A conservative will not. I know many self-described libertarians will give the second answer, and my response to them would be, “well, I guess you’re a conservative then, and not a libertarian.”

Ouch!

I understand that the complexities of politics in federal democracies make ideological arguments useless, so my only goal with this post is to help readers clarify their own political views. If you don’t support the civil and legal rights of illegal immigrants (for example), you are not a libertarian. I don’t mean to be in such a purge-y mood, but that’s a fairly basic tenet of the creed.

Also, Malcolm X did more for the civil rights of Americans than MLK did. The government chose MLK to represent the civil rights struggle, though, because he never toted a gun in public. Same thing happened in South Asia just before the UK left. Gandhi didn’t have nearly as much influence as the armed insurrections happening all over the subcontinent. Bring it!

Friends of Liberty and Friends of Montaigne II: Marie de Gournay (Expanding the Liberty Canon series)

Barry Stocker History, Liberty, Philosophy, Religion , , , , , , , , , ,

Marie Le Jars de Gournay (1565-1646) was a minor aristocrat from Sancerre in central France who became a leading scholar and writer of her time, and an important advocate of women’s liberty through her scholarly career against the dismissive attitude of powerful men of the time, and through her writing in favour of equality between men and women. She was a friend of Michel de Montaigne, one of the great historical advocates of liberty if in a rather enigmatic manner, and he even treated her as an adoptive daughter. After the death of Montaigne, she lived on the Montaigne estate as a guest of the family, while preparing the third edition of Montaigne’s Essays, a contribution to the history of thought and thinking about liberty in itself.

Gournay’s work in the transmission of Montaigne’s thought is though just one episode in a life of writing covering translations of the classics, literary compositions, and essays. Two essays in particular mark important moments in the case for liberty to apply equally between the two sexes: The Ladies’ Complaint and Equality of Men and Women. In these brief, but rich texts, Gournay argues that there can be no liberty, where goods are denied, so since women have been deprived of the goods of equal esteem, there is no liberty.

She points to the frequency and intensity of denial of equal esteem to women and contests it through the examples in which women have been esteemed, or we can see that women have performed great deeds on a level with great men. The argument is very much that of a Renaissance Humanist, that is someone educated in the languages, history, and literature of antiquity, as great expressions of human spirit and with the assumption that these are the greatest expressions of human spirit. Greatness of literary, intellectual, and statecraft in modern languages, modern thought, and modern states, is possible where  continuing from the classical tradition. Since the emphasis is on pagan classical antiquity, the Humanists to some degree placed humanity above Christian theological tradition, though some Christians were also Humanists and secular Humanist achievements to some degree interacted with scholarship of the Hebrew and Greek languages of the Bible, along with the Greek and Latin used by church thinkers.

Gourany’s concerns are largely secular but she does deal with the place of women in the Bible. For the Hebrew Bible (Old Testament) She points out that if the Queen of Sheba (often thought to refer to an ancient queen of Yemen, or possibly Sudan) visited King Solomon, because she knew of his great wisdom then she too must have had an interest in wisdom, and had some high level of scholarship, learning, and intellectual work herself.

With regard to the New Testament, she comments on St Paul’s injunction in his Epistles that women be silent in church and not take the role of priest. Gournay argues that Paul was not writing out of contempt for women, but fear that men would be distracted and tempted by women speaking out in church serves whereto as part of the congregation or as priests. The limitation on the role of women is not therefore based on beliefs about the supposed inferiority of women, but control of male desire.

On the role of women in the Bible, Gournay argues that in general we should not argue that it supports an inferior role for women, given that God created both men and women in the beginning, and given that men are commanded to leave their parents in order to find a wife. The connection between man and woman, and the idea that a man’s life is completed by association with a woman, is the main message of Christian scripture for Gournay.

Looking at the more secular aspects of Greek and Roman antiquity, Gournay deals with philosophical and with historical concerns. On the philosophical side she notes the importance that Plato gives to the priestess Diotima (unknown outside Plato’s writings) in his dialogue The Symposium, which appears to recount conversations about love in a dinner and drinking party in Athens attended by some of the leading people of the time.

Plato shows Socrates presenting the views of Diotima as the correct ones on love, and Socrates, the teacher of Plato, always appears in Plato’s dialogues as a representative of truth. So Gournay points out, it must be conceded that Plato claims that his ideas, and those of Socrates, are in some degree dependent on the thought of women of their time. In that case, Aristotle made himself absurd when  he claimed that women were defective and inferior, since he was the student of Plato and therefore was in some way formed by ideas that Plato said came from Diotima.

Plato’s student Aristotle may have claimed women were inferior by nature to men, but Antisthenes, a follower of Socrates regarded women and men as equal in virtue. Gournay also refers to the tradition according to which Aspasia, female companion of the Athenian democratic leader Pericles (admired by Plato and Aristotle though they did not share his democratic principles) was a scholar and thinker of the time. There is a lack of contemporary sources confirming this view, but this applies to much about the antique world, so Gournay’s suggestions about Aspasia are just as strongly founded as many claims about antiquity, and the investigation of tradition is itself an important part of any kind of intellectual history.

Moving onto Roman historiography, Gournay points out the role take by women in the tribes of Germany and Gaul, according to Tacitus. Women serve as judges of dispute and as battlefield participants inciting male warriors to fight fiercely. So she can point to a revered classic source, which suggests that women had roles in ancient France and Germany denied to them in those countries in early modern times. In general, as she points out, the antiques often referred to a tribe of female warriors, known  as Amazons, which may have some historical origin in Scythian tribes from north of the Black Sea.

Gournay uses her formidable Humanist learning to demonstrate the ways in which equality between men and women had been recognised in the ancient past, on some occasions in some places at least. Showing that women have been recognised as equal to men in some contexts is evidence that the lower status of women in many societies is a result of socially embedded prejudices rather than any difference in abilities. As Gournay notes, rectifying denial of rights to women is part of the basis for real enduring liberty.

Karl Marx versus Thomas Piketty

Brandon Christensen Economics, History, Philosophy , , , , , ,

Both [Marx and Piketty] protest economic disparities, but move in opposite directions. Piketty advances into the domain of salaries, income and wealth; he wants to temper these extremes and give us—to alter the slogan of the ill-fated Prague Spring of 1968—capitalism with a human face. Marx advances into the domain of commodities, work, and alienation; he wants to undo these relations and give us a transformed society.

This is from UCLA historian Russell Jacoby in the New Republic. The rest of the article is not that great, to be honest (I’ll bet you ten bucks that Jacoby – whom I never took during my time in Westwood – is an old man; I can safely assume this because of the praise he lavishes upon Karl Marx at the expense of Piketty and other economists), but I thought this excerpt was a good opportunity to enhance my argument that Murray Rothbard was a great Cold War scholar and a terrible role model for the world we live in today.

Rothbard’s argument – exemplified by this excerpt that Adam provided in the ‘comments’ threads a while back – devastated the Marxist notions of the world held in the 1960s and 1970s, but Rothbard’s argument simply does not grapple with Piketty’s. It’s a whole new ball game, and one that newer scholars who have built upon Rothbard’s foundations are now grappling with. It does us no good to continue parroting a line of reasoning that has long since outlived its usefulness.

Piketty’s numbers on inequality don’t add up

Brandon Christensen Books, Current Events, History, Politics , , , , ,

The Financial Times, a center-Left British publication, has the story here.

Piketty, an economist at France’s most prestigious business school, recently wrote an almost 600-page treatise on the growth of economic inequality in the West. The book has earned him lots of fame and has been discussed ad nauseum for about a month now.

Here is what I have found most interesting up to this point on the debate about inequality: The factions and their strategies regarding data and how it is interpreted. I think Dr Delacroix’s approach to the way data is interpreted is best, namely that the study design itself should be analyzed first and foremost.

Regarding factions, remember when that graduate student from the heavily neo-Keynesian UMass-Amherst found discrepancies in the work of Kenneth Rogoff and Carmen Reinhart on austerity in the West? The Left attacked savagely. The Right came up with excuses that would have earned an ‘F’ on most undergraduate tests.

Now that the Left’s own preferred conclusions have been borne out by bad data, what do you think is going to happen? Who wants to bet that the roles of Left and Right will be reversed? When Rogoff’s and Reinhart’s mistakes went public, the graduate student was invited to speak on televised talk and radio shows around the world. His work was (justifiably) hailed in the national and international press, and also (much less justifiably) as an answer to the deplorable state of the discipline of economics. What do you think the odds will be that the researchers responsible for finding flaws in Piketty’s data will get the same reception?

My money is on the answer “not good.”

All of this discussion about austerity and inequality is great, of course. The fact that researchers are expanding their findings to include more than just the data within their own countries is perhaps the most satisfying development in regards to epistemological human progress. I will await further developments to lay down my own verdict on the matter of inequality in the West. With the mistake of Rogoff and Reinhart, I decided, after carefully reading the merits and weaknesses of both sides of the debate, that their mistake was small enough to overlook and that austerity generally leads to better economic outcomes in the near- and long-term and that public debt is a drag on economic growth.

Depending on how the Left responds to its critics, I will see if economic inequality is indeed growing in the West.

Open Access Gary Becker papers, and a couple of thoughtful links on him

Brandon Christensen Current Events, Economics , , , , , , , , , , , ,

Nobel Prize-winning economist Gary Becker died Saturday. For those of you who don’t know about his work, go here. For the rest of you, economist Tyler Cowen has compiled a great list of articles by Becker that you can read:

    1. “Irrational Behavior and Economic Theory.”  Can the theorems of economics survive the assumption of irrational behavior? (hint: yes)
    2. “Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology.”  The title says it all, from 1976.
    3. “A Note on Restaurant Pricing and Other Examples of Social Influence on Price.”  Why don’t successful restaurants just raise the prices for Saturday night seatings?
    4. “The Quantity and Quality of Life and the Evolution of World Inequality” (with Philipson and Soares).  The causes and importance of converging lifespans.
    5. “Competition and Democracy.“  From 1958, but most people still ignore this basic point about why government very often does not improve on market outcomes.
    6. “The Challenge of Immigration: A Radical Solution.”  Auction off the right to enter this country.

Cowen also linked to sociologist Kieran Healy’s fascinating take on Michel Foucault’s thoughts about Gary Becker’s work over at Crooked Timber (and here is a pdf of Becker on Foucault on Becker).

And economist Mario Rizzo shares some short thoughts about Becker’s work in relation to the Austrian School of Economics (Becker is associated with the Chicago School of Economics). Rizzo’s account of the early 1960s debate on rationality between Becker and Kirzner is worth a look.

Update: Here is Gary Becker’s 1992 Nobel Prize lecture (pdf)

Inequality: the Solutions

Jacques Delacroix Current Events, Politics , , , ,

There is going to be talk of inequality for three straight years. It’s the Obama administration’s strategy to help voters forget the horrors of the implementation of Obamacare. (It’s not optimistic about the rest of the plan either, it seems.) Of course, the word “inequality” resonates well with young people who have been impoverished by the administration’s bad policies since the current economic crisis (which it did inherit). When you can’t get a job, nearly everyone is better off than you are, and inequality is concrete.

Besides, you can always find inequality somewhere by cherry picking: Since 1990, the top ten per cent have increased their share from X to Z while the bottom 17% have seen their share decrease by W; since 2001, the top twenty percent have grown their share from M to P while the bottom 50%, blah, blah, blah. See what I mean? The only situation where you cannot find inequality is when everyone one, every person, every household has exactly the same as every other. This would be hard to achieve if you tried, because people would become unequal again at one end (on the one hand) before you had finished at the other end (on the other hand).

Yet, it turns out, it’s not difficult to do something concrete and decisive about inequality of income and/ or of wealth on an individual basis, through personal initiative. (Inequality of looks is a tougher proposition.). I advise how below.

First, if you are rich, you can easily dispose of your share of the social burden of economic equality. Just give away your money until you reach a median position or below. If you can’t help but earn more money, just keep giving it away. Problem solved.

Second, if you are poor, just decide to become Steve Jobs, or Bill Gates, both multi-billionaires who started from nothing. If that’s not your cup of tea, just become a millionaire athlete or actor. If that won’t work, and speaking of tea, start a Starbucks for teas. Hurry up, Starbucks itself is doing it right now. Don’t blame anyone: You had more than twenty years to take the initiative.

In general, the healthy poor in American have a lot of explaining to do. Go ahead, explain.

If you fear you don’t have the talent, or the education, or anything to help you qualify to do any of the above, here is a plan:

In every developed country including the US, there is a chronic shortage of plumbers, has been for at least forty years. One plumber I employed about ten years ago was grossing $60/hour. That was although his phobia prevented him for working in dark confined places. (Would I make this up?)

My suggestion is that you should apprentice yourself to a plumber for a year or so. After that span of time – which you might finance through a loan, don’t be shy, go right ahead – go into business for yourself. Plan for thirty hours a week of actual work because you need time to relax and a little time to get organized and to do the billing. Take a French-style one month vacation each year. Charge as much as I was willing to pay the phobic ten years ago, $60/hr.

You should gross about $85,000 a year. Count $15,000 for taxes and other deductions if you insist on keeping books. You are left with $70,000 to spend. According to the Census bureau, the gross household US median income was under $52,000 in 2011. It’s probably not much higher now. Since we are comparing net to gross, these elementary calculations put you actually well ahead of the average. And, remember, we are comparing your projected income to the median household income. So, under my plan, your spouse need not be gainfully employed.

With this kind of income, if you are that kind of person, you should be able to salt away in savings $5,000 each year. Placing the savings at a safe 3%, you re likely to be able to give your children something like $140,000 after only twenty years. Nice down payment on a house in California, nice house in Arkansas, even with inflation. Yet, more choice!

If you end up finding your superior plumber’s income distasteful because it violates your belief in equality, see above. Or you might just decide to work less each week or to take longer vacations.

On inequality, see also: “Equality and Fairness“.

Any questions?

Equality and Fairness

Jacques Delacroix Current Events, Philosophy, Politics , , ,

Yesterday, President Obama gave a stirring speech on income inequality and he declared war on it. The President is a rich man who was abandoned by his drunken immigrant father. He was brought up by his hippie mother. She had a doctorate. It took her twenty years to earn it. (I don’t mean to say that she was idle during most or any of these twenty years.)

I am an immigrant myself. I came to this country with no money (that’s NO money), no degree, no skill, nothing. (I was white, it’s true, still am.)

(By the way, about half the people with African blood in the US have zero American slave ancestry. Yes, like the president. They are descendants of immigrants like me, people who volunteered to come to this allegedly racist country.)

I have an American doctorate too. It did not take me twenty years.

Fifty years after reaching this country , I live modestly but with no serious wants. And I live in a very desirable place, even by world standards.

I bet you filled in the blank: “Poor guy, poor immigrant worked hard all his life, blah, blah…”

But I didn’t. Nearly every time I found myself at a crossroad, I chose the other path; I selected psychic income over money income; I wanted more free time rather than a bigger car, or a bigger house. Now, does President Obama mean that I should feel bitter toward the other guy in initially similar circumstances who chose the income, who put in fifty hours weeks, and who is now worth several times what I am worth?

Does the President mean that I should be bitter because so many men my age are richer than I am ? Men who live in Cleveland and such?

Does President Obama really mean that I should enlist the services of government to take that other old guy’s money by force to give it to me? And next, will they take from me, equally by force, my golden memories of the three months I spend spear-fishing on the Caribbean coast of Mexico?

That would be fair, or would it?

And do we prefer to live in a society that gives even a poor immigrant the kind of choices I had or in a society where nearly everyone gets about the same regardless of personal preferences?

Inequality

Jacques Delacroix Current Events, Politics , , ,

President Obama’s signature achievement is in shambles. He believe himself that it cannot be saved. He is going for left-radical broke. Today he denounced “inequality.”

I am not sure younger people have the sophistication to realize that there are thousands of ways to measure inequality and that, therefore, you can always find one that serves your political purpose.

I don’t know how many could tell me what’s wrong with inequality.

By the way, I am far from rich myself, although I have worked all my life, not very hard, it’s true. (Did you notice how I often give you the answers to the questions I raise?)

Unequal Poverty: Tricks (Part Two of two)

Jacques Delacroix Comments, Current Events, Economics , , , , , , , , , , , , , ,

In the previous installment:

I explained how the general standard of living in America, denoted by real income, grew a great deal between 1975 and a recent date, specifically, 2007. This, in spite of a widespread rumor to the contrary. The first installment touched only a little on the following problem: It’s possible for overall growth to be accompanied by some immobility and even by some regress. Here is a made-up example:

Between the first and the second semester, grades in my class have, on the average, moved up from C to B. Yet, little Mary Steady’s grade did not change at all. It remained stuck at C. And Johnny Bad’s grade slipped from C to D.

Flummoxed by the sturdiness, the blinding obviousness of the evidence regarding general progress in the standard of living, liberal advocates like to take refuge in more or less mysterious statements about how general progress does not cover everybody. Or not everybody equally, which is a completely different statement. They are right either way and it’s trivial that they are right. Let’s look at this issue of unequally distributed economic progress in a skeptical but fair manner.

It’s awfully hard to prevent the poor, women and minorities from benefiting

I begin by repeating myself. As I noted in Part One, it’s too easy to take the issue of distribution of income growth too seriously. Some forms of improvements in living standard simply cannot practically be withheld from a any subgroup, couldn’t be if you tried. Here is another example: Since 1950, mortality from myocardial infarctus fell from 30-40% to 5-8%. (from a book review by A. Verghese in Wall Street Journal 10/26 and 10/27 2013). When you begin looking at these sort of things, unexpected facts immediately jump at you.

Fishing expeditions

The US population of 260 millions to over 300 million during the period of interest 1975-2007 can be divided in an infinity of segment, like this: Mr 1 plus Mr 2; Mr 2 plus Mrs 3; Mr 2 and Mrs 3 plus Mr 332; Mr 226 plus Mrs 1,000,0001; and so forth.

Similarly, the period of interest 1975 to 2007 can be divided in an infinity of subperiods, like this: Year 1 plus year 2; year 1 plus year 3; years 1, 2, 3 plus year 27; and so forth. You get the idea.

So, to the question: Is there a subset of the US population which did not share in the general progress in the American standard of living during some subperiod between 1975 and 2007?

The prudent response is “No.” It’s even difficult to imagine a version of reality where you would be right to affirm:

“There is no subset of the US population that was left behind by general economic progress at any time during the period 1975- 2007.”

Let me say the same thing in a different way: Given time and good access to info, what’s the chance that I will not find some Americans whose lot failed to improve during the period 1975 to 2007? The answer is zero or close to it.

This is one fishing expedition you can join and never come back empty-handed, if you have a little time.

Thus, liberal dyspeptics, people who hate improvement, are always on solid ground when they affirm, “Yes, but some people are not better off than they were in 1975 (or in _____ -Fill in the blank.)” The possibilities for cherry-picking are endless (literally).

Everyone therefore has to decide for himself what exception to the general fact of improvement is meaningful, which trivial. This simple task is made more difficult by the liberals’ tendency to play games with numbers and sometimes even to confuse themselves in this matter. I will develop both issues below.

To illustrate the idea that you have to decide for yourself, here is a fictitious but realistic example of a category of Americans who were absolutely poorer in 2007 that they were in 1975. You have to decide whether this is something worth worrying about. You might wonder why liberals never, but never lament my subjects’ fate.

Consider any number of stock exchange crises since 1975. There were people who, that year, possessed inherited wealth of $200 million each, generating a modest income of $600,000 annually. Among those people there were a number of stubborn, risk-seeking and plain bad investors who lost half of their wealth during the period of observation. By 2007, they were only receiving an annual income of $300,000. (Forget the fact that this income was in inflation shrunk dollars.) Any way you look at it, this is a category of the population that became poorer in spite of the general (average) rise in in American incomes. Right?

Or, I could refer to the thousands of women who were making a living in 1975 by typing. (My doctoral dissertation was handwritten, believe it or not. Finding money to pay to get it typed was the hardest part of the whole doctoral project.) One of the many improvements brought about by computers is that they induced ordinary people to learn to do their own typing. Nevertheless, there was one older lady who insisted all along on making her living typing and she even brought her daughter into the trade. Both ladies starved to death in 2005. OK, I made them up and no one starved to death but you get my point: The imaginary typists fell behind, did not share in the general (average) improvement and their story is trivial.

So, I repeat, given some time resources, I could always come up with a category of the US population whose economic progress was below average. I could even find some segment of the population that is poorer, in an absolute sense, than it was at the beginning of the period of observation. Note that those are two different finds. Within both categories, I could even locate segments that would make the liberal heart twitch. It would be a little tougher to find people who both were poorer than before the period observation and that would be deserving of liberal sympathy. It would be a little tough but I am confident it could be done.

So, the implication here is that when it comes to the unequal distribution or real economic growth you have to do two things:

A You have to slow down and make sure you understand what’s being said; it’s not always easy. Examples below.

B You have to decide whether the inequality being described is a moral problem for you or, otherwise a political issue. (I, for one, would not lose sleep over the increased poverty of the stock exchange players in my fictitious example above. As for the lady typists, I am sorry but I can’t be held responsible for people who live under a rock on purpose.)

Naively blatant misrepresentations

A hostile liberal commenter on this blog once said the following:

“Extreme poverty in the United States, meaning households living on less than $2 per day before government benefits, doubled from 1996 to 1.5 million households in 2011, including 2.8 million children.”

That was a rebuttal of my assertion that there had been general (average) income growth.

Two problems: first, I doubt there are any American “households” of more than one person that lives on less than $2 /day. If there were then, they must all be dead now, from starvation. I think someone stretched the truth a little by choosing a misleading word. Of maybe here is an explanation. The commenter’s alleged fact will provide it, I hope.

Second, and more importantly, as far as real income is concerned, government benefits (“welfare”) matter a great deal. Including food stamps, they can easily triple the pitiful amount of $2 a day mentioned. That would mean that a person (not a multiple person- household ) would live on $1080 a month. I doubt free medical care, available through Medicaid, is included in the $2/day. I wonder what else is included in “government benefits.”

The author of the statement above is trying to mislead us in a crude way. I would be eager to discuss the drawbacks of income received as benefits in- instead of income earned. As a conservative, I also prefer the second to the first. Yet, income is income whatever its source, including government benefits.

The $2/day mention is intended for our guts, not for our brains. Again, this is crude deception.

Pay attention to what the other guy asserts sincerely about economic growth.

Often, it implies pretty much the reverse of what he intends. In an October 2013 discussion on this blog about alleged increasing poverty in the US, I asked the following rhetorical question:

“Or have Americans’ standard of living only improved as the gap [between other countries and the US] closed?“

I meant to smite the other guy because the American standard of living has only increased, in general, as we have seen (in Part One of this essay posted). A habitual liberal commenter on my blog had flung this in my face:

“….Since 1975, practically all the gains in household income have gone to the top 20% of households…” (posted 10/23/13)

(He means in the US. And that’s from a source I am not sure the commenter identified but I believe it exists.)

Now, suppose the statement is totally true. (It’s not; it ignores several things described in Part One.) The statement says that something like roughly 60 million Americans are richer than they, or their high income equivalents were in 1975. It also says that other households may have had almost stationary incomes (“practically”). The statement does not say in any way that anyone has a lower income in 1975. At best, the statement taken literally, should cause me to restate my position as follows:

“American standards of living have remained stationary or they have improved….”

You may not like the description of income gains in my translation of the liberal real statement above. It’s your choice. But the statement fails to invalidate my overall assertion: Americans’ standard of living improved between 1975 and 2007.

What the liberal commenter did is typical. Liberals always do it. They change the subject from economic improvement to something else they don’t name. I, for one, think they should be outed and forced to speak clearly about what they want to talk about.

Big fallacies in plain sight

Pay attention to seemingly straightforward, common liberal, statist assertions. They often conceal big fallacies, sometimes several fallacies at once.

Here is such an assertion that is double-wrong.

“In the past fifteen years the 20% of the population who receive the lowest income have seen their share of national income decrease by ten percentage points.” (Posted as a comment on my blog on 10/21/13)

Again, two – not merely one – strongly misleading things about this assertion. (The liberal commenter who sent it will assure us that he had no intention to mislead; that it’s the readers’ fault because, if…. Freaking reader!)

A The lowest 20% of the population of today are not the same as those of fifteen years ago, nor should you assume that they are their children. They may be but there is a great deal of vertical mobility in this country, up and down. (Just look at me!) The statement does not logically imply that any single, one recognizable group of social category became poorer in the interval. The statement in no way says that there are people in America who are poor and that those same people became poorer either relatively or in an absolute sense. Here is a example to think about: The month that I was finishing my doctoral program, I was easily among the 20% poorest in America. Hell, I probably qualified for the 5% poorest! Two months later, I had decisively left both groups behind; I probably immediately qualified for the top half of income earners. Yet, my progress would not have falsified the above statement. It’s misleading if you don’t think about it slowly, the way I just did.

I once tried to make the left-liberal vice-president of a Jesuit university understand this simple logical matter and I failed. He had a doctorate from a good university in other than theology. Bad mental habits are sticky.

B Percentages are routinely abused

There is yet another mislead in the single sentence above. Bear with me and ignore the first fallacy described above. The statement is intended to imply that the poorer became poorer. In reality, it implies nothing of the sort. Suppose that there are only two people: JD and my neighbor. I earn $40, neighbor earns $60. In total, we earn $100. Thus my share of our joint income is 40%, neighbor’s is 60%. Then neighbor goes into business for himself and his income shoots up to $140. Meanwhile, I get a raise and my income is now $60.

In the new situation, my share of our joint income has gone down to 30% (60/60+140), from 40%. (Is this correct? Yes, or No; decide now.) Yet, I have enjoyed a fifty percent raise in income. That’s a raise most unions would kill for. I am not poorer, I am much richer than I was before. Yet the statement we started with stands; it’s true. And it’s misleading unless you pay attention to percentages. Many people don’t. I think that perhaps few people do.

My liberal critic was perhaps under the impression that his statement could convince readers that some Americans had become poorer in spite of a general (average rise) in real American income. I just showed you that his statement logically implies no such thing at all. If he want to demonstrate that Americans, some Americans, have become poorer, he has to try something else. The question unavoidably arises: Why didn’t he do it?

Was he using his inadequate statement to change the subject without letting you know? If you find yourself fixating on the fact that my neighbor has become even richer than I did because he more than doubled his income, the critic succeeded in changing the subject. It means you are not concerned with income growth anymore but with something else, a separate issue. That other issue is income distribution. Keep in mind when you think of this new issue that, in my illustration of percentages above, I did become considerably richer.

Liberals love the topic of unequal progress for the following reason:

They fail to show that, contrary to their best wish, Americans have become poorer. They fail almost completely to show that some people have become absolutely poorer. They are left with their last-best. It’s not very risky because, as I have already stated, it’s almost always true: Some people have become not as richer as some other people who became richer!

Policy implications of mis-direction about income growth

The topic matter because, in the hands of modern liberals any level of income inequality can be used to call for government interventions in the economy that decrease individual liberty.

Here are a very few practical, policy consequences:

A Income re-distribution nearly always involves government action that is, force. (That’s what government does: It forces one to do what one wouldn’t do out of own inclination.) That’s true for democratic constitutional governments as well as it is for pure tyrannies. In most countries, to enact a program to distribute the fruits of economic growth more equally it to organize intimidation and, in the end, violence against a part of the population. (For a few exceptions, see my old but still current journal article: “The Distributive State in the World System.“ Google it.) This is a mild description pertaining to a world familiar to Americans. In the 1920s, in Russia, many people (“kulaks”) were murdered because they had two cows instead of one.

Conservatives tend to take seriously even moderate-seeming violations of individual liberty, including slow-moving ones.

B Conservatives generally believe that redistribution of income undermines future economic growth. With this belief, you have to decide between more equality or more income for all, or nearly all (see above) tomorrow?

It’s possible to favor one thing at the cost of bearing the travails the other brings. It’s possible to favor the first over the second. This choice is actually at the heart of the liberal/conservative split. It deserves to be discussed in its own right; “Do your prefer more prosperity or more equality?” The topic should not be swept under the rug or be made to masquerade as something else.

If you are going to die for a hill, make sure it’s the right hill.

PS: There is no “income gap.”

Update; a Woman

Jacques Delacroix Current Events , , ,

I am mostly absent from this blog because I am fine-tuning the manuscript, “I Used to Be French: an Immature Autobiography.”

It’s very time consuming. It’s like when my mother would inspect the boys room on Thursday AM (no school day) around 11:30:

A small grain of dust would jump into her eyes  and have disproportionate consequences on your subsequent happiness.

Speaking of the women we love, my wife said two memorable things before ten this morning:

“I don’t care about the truth.”

” I wish Somerset Maugham were alive so I could marry him instead of you.” (She is a woman of culture. I am flattered to be cuckolded in her mind by a great writer. It’s better  than some Harlequin bodice-bursting novel author.)

I am also working on a part two to my essay on poverty (“Growing Poverty…“).  It will deal with the favorite liberal myths of inequality.

Inequality Unexplained

Fred Foldvary Economics, Liberty , , , , , ,

There is a new economics documentary film that stars Robert Reich, former Secretary of Labor under President Clinton and now a professor at the Goldman School of Public Policy at the University of California at Berkeley. The film, Inequality for All,  directed by Jacob Kornbluth, won a U.S. Documentary Special Jury Award and has been shown nation-wide.

Unfortunately, Robert Reich has not explained why the US has had an increasing inequality of income. Neither in the film nor in his writings and interviews does he examine the cause. Without the elimination of the cause, there can be no remedy. As usual in documentaries of social problems, most of the film just describes and tells stories about the inequality.

Inequality for All is typical of welfare-state presentations in jumping to governmental responses that only treat the symptoms and effects. Reich advocates a higher minimum wage without any analysis what determines wages in a market economy.

Most basically, in a free market, ordinary workers are paid what economists call the “marginal product,” or what an extra worker contributes to output. If a worker adds $10 each hour to total output, then that is what he is paid, and that is what he is worth to the company. If the company pays him any less, say $8, that provides an opportunity for a similar company to offer $9 and get the $10 worth of output, so competition will drive the wage up to the worker’s contribution, his marginal product.

A minimum wage forces the firm to pay more than the worker’s marginal product. The firm will not hire a worker who costs more than he is worth. The reason that workers are not all dismissed is the law of diminishing returns. In a farm or factory, if there are only a few workers, each worker’s marginal product is high, because there is a lot of land and machines, and few workers. As workers are added, each extra worker contributes less extra output. Workers are hired up to the quantity for which the wage equals the marginal product.

The minimum wage acts like a tax on labor that forces the firm to reduce the number of workers employed to that level where the higher marginal product equals the required wage. In some cases, the firm will also respond by reducing benefits such as medical insurance such as by hiring part-time instead of full-time labor.

Many firms in competitive industries respond to the higher minimum wage as they would to a higher tax. They pass on some of the costs to the customers. The higher price reduces sales, production, employment, and income.

The minimum wage is lethal to the economy as it acts as an extra tax on employment on top of payroll taxes, unemployment taxes, workers insurance taxes, and the income tax on the profits of the firm. All these taxes reduce employment and reduce the take-home pay of the worker.

Henry George stated in his 1883 book Social Problems that “There is in nature no reason for poverty.” Poverty is caused not by any lack of natural resources but by human institutions that deprive workers of the ability to buy what they produce. The institution with the power to impose this intervention is government. The totality of restrictions, mandates, taxes, and subsidies reduces enterprise and takes away much of the product of labor. Then impoverished workers need the welfare state to provide the necessities of life.

The ideology of welfare statists makes them only think of governmental aid and reject the idea that governmental intervention is the source of the problem. They sneer at “free market fundamentalism.” They don’t understand the fact that taxes on labor redistribute wealth from workers to landowners as government taxes wages to pay for public goods that generate higher rent and land value. They don’t understand that the worker-tenant pays twice for the public goods of government, once by having half his wage taxed away, and a second time in the higher housing rental he pays because greater governmental services increase locational rents.

The effective remedy for poverty is to remove all punitive taxes and land-value subsidies. We can remove subsidies to the landed interests by having them pay back the rent generated by useful public goods such as roads, schools, and security. Without taxes on labor and enterprise, the cost of labor is lower to employers, while the worker’s take-home pay is higher. The replacement of wage taxes with land value taxes would reduce economic inequality while also increasing the productivity of the economy.

Of course the elimination of poverty also has to include better education, and that can be accomplished with vouchers, payments not to schools but to parents. A voucher is a ticket that a parent could use to send his children to the best schools. It provides an incentive for educators to produce better schools. It is not a panacea, because the home and neighborhood environment are also important, but it would shift the incentives towards better schooling.

It is not only unfortunate but astonishing that a leading professor of public policy who cares about the poor would not make the prosperity tax shift, replacing wage taxes with land value taxes, the core of his policy proposal. I suspect his response would be that while this is a good idea, it is politically unfeasible, while raising the minimum wage has political support. But the reason it is politically unfeasible today is precisely that leading reformers such as Robert Reich refuse to bring the effective remedy to public attention in the ultimately futile effort to advocate policies with the least current political resistance.

Much of the gains from economic growth and welfare get captured by higher rent and land value. Raising the minimum wage is futile because if all workers get a substantially higher minimum wage, their landlords will be able to raise their housing rentals by the amount of their greater ability to pay, and the landed interests will end up with the gains. Why do you think that housing costs have been escalating while wages stagnate?

Equal Pay for Equal Work: The New/Old Trojan Horse; Unfairness

Jacques Delacroix Current Events, Law, Politics , , , , , ,

I am a sore loser. Thoughts of re-emigration dance around in my head. However, I am too old. And the very mechanism that I fear is trapping this whole society has entrapped me: I am dependent on Medicare which is not transportable. I am a ward of the federal government which took loads of my money for forty years and turned it against me, like a two-bit dope-dealer. Like other conservatives I know, I am tempted by the option of personal, psychological secession from the new Obama Peronista United States. But, finally, there is nothing to do right now but to continue to sound a voice of reason and of conscience in the hope that it will reach some of the inner children Pres. Obama has been singing to.

(Personally, I make it a practice to take my inner-child out every so often and to beat his ass.)

President Obama won re-election handily not by winning arguments but by side-stepping deftly vital issues of the solvency of this society, present and future, and of the role of government in restricting our freedoms. (There was also quite a bit of slime he threw at hapless Romney but that was secondary in his victory, I think.) After his inauguration speech I wonder if he is going to succeed in side-stepping central matters again by raising silly issues such as that of homosexual marriage. (I don’t use the word “gay” because it carries a political agenda. I am not against homosexuals, however. I don’t even think they have a greater chance of burning in Hell than I do, for example.) Continue reading →

One Sure Thing About Globalization – The American Motion Pictures Industry World Hegemony Part 2

Jacques Delacroix Economics , , , , ,

[Editor’s note: this lecture was delivered to the Leavey Institute of Santa Clara University in 2003. You can find it reproduced in whole here]

Poverty, some International Trends

Now, let’s look for objectionable new facts in the worldwide distribution of income. (It’s too difficult to get international data on wealth.) In the nineteen-fifties, the total of the national incomes of all other countries in the world barely equaled the national income of the US alone (Delacroix, 1974). Today, the US GNP constitutes less than one third of the sum of all countries’ GNPs (World Bank, 2002:4.2), although the US has experienced healthy economic growth since the fifties. It’s true that a number of countries are mired in deep poverty and that some are even regressing. (See below.) It seems to me those are all countries with exceptionally corrupt or tyrannical governments, such as Haiti on the one hand and North Korea, on the other, or stand-alone plutocratically-run former colonies such as the so-called “Democratic Republic of the Congo” (formerly Zaire), or Sierra Leone (where, incidentally, the bulk of the population was almost certainly better off under European colonialism), or that they have especially poor access to current information (because of high illiteracy and other reasons, including government censorship or even deeply entrenched cultural facts [4]), such as Afghanistan (but no hard data are available). By far the worst economic performers in the past ten years are the European countries that have been trying to recover from their cruel experiment in state socialism (“communism”), not the Third World countries.

In spite of loose talk of “globalization” somehow deepening the poverty of the Third World (5), the following countries experienced higher average Gross Domestic Product rates of annual growth than the US (and higher than any Western European country, except one; see below) between 1990 and 2000: Continue reading →