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Mind the Gap
October 11, 2007 4:51 AM   Subscribe

Mind the Gap: an essay by Paul Graham on wealth, riches, poverty, and why income inequality might not be so bad.
"When people care enough about something to do it well, those who do it best tend to be far better than everyone else. There's a huge gap between Leonardo and second-rate contemporaries like Borgognone. You see the same gap between Raymond Chandler and the average writer of detective novels. A top-ranked professional chess player could play ten thousand games against an ordinary club player without losing once.

Like chess or painting or writing novels, making money is a very specialized skill. But for some reason we treat this skill differently. No one complains when a few people surpass all the rest at playing chess or writing novels, but when a few people make more money than the rest, we get editorials saying this is wrong.

Why? The pattern of variation seems no different than for any other skill. What causes people to react so strongly when the skill is making money?

I think there are three reasons we treat making money as different: the misleading model of wealth we learn as children; the disreputable way in which, till recently, most fortunes were accumulated; and the worry that great variations in income are somehow bad for society. As far as I can tell, the first is mistaken, the second outdated, and the third empirically false. Could it be that, in a modern democracy, variation in income is actually a sign of health?
"
posted by hoverboards don't work on water (139 comments total) 18 users marked this as a favorite

 
It's because the rules of chess aren't rigged. Next!
posted by Abiezer at 5:11 AM on October 11, 2007 [13 favorites]


Rich guy says he deserves it; film at 11.
posted by grouse at 5:17 AM on October 11, 2007 [7 favorites]


the disreputable way in which, till recently, most fortunes were accumulated

Like that could ever happen in this day and age!

Honestly, you people are dinosaurs, and are headed the same way.
posted by Wolof at 5:24 AM on October 11, 2007


When it comes to writing essays instead of LISP code, Paul Graham is a dedicated proponent of worse is better.
posted by ftrain at 5:32 AM on October 11, 2007 [6 favorites]


So, how did late 18th century France compare to its contemporary England in terms of political stability?

The relationship between being good at something and being well compensated only exists in financial circles? Patronage is where it is at?

Does this guy really live in the 21st century?
posted by infowar at 5:37 AM on October 11, 2007


It's lamentable that people prefer reality TV and corndogs to Shakespeare and steamed vegetables, but unjust?

Unjust? heck no! Crank up the fryolator and grab the remote! We the People's got some shit to buy from some overpaid asswipe who thinks cultural blight is a perfectly great way to make a buck. Mmm mm good!
posted by kuujjuarapik at 5:39 AM on October 11, 2007


No one says feudalism didn't WORK as an economic system. It just lead to heartbreak and ruin for too many.

Democracy requires a different economic policy, one that fights tenaciously against feudalism, seeing as how that's what capitalism gravitates towards when you hoard wealth.

If a rich modern capitalist just looked up how feudal societies began, they'd see parallels to the way rich people want to keep getting richer. They'd find something wrong with wanting to do away with the estate tax.
posted by taumeson at 5:42 AM on October 11, 2007 [3 favorites]


One answer:

George W. Bush.

When my daddy's friends are good enough to give me millions of dollars in shares in a MLB franchise and then install me as president of the richest fucking country on earth, then we can talk about how income gaps are good for everyone.

and not before...
posted by geos at 5:42 AM on October 11, 2007


FUCK ALL YOU GUYS

I'M GONNA BUILD MY OWN CITY UNDERWATER

ONLY THE BEST AT MAKING MONEY WILL BE ALLOWED IN RAPTURE
posted by Greg Nog at 5:44 AM on October 11, 2007 [14 favorites]


This guy just wants us to accept base motives as best practice. If we let this country fall prey to what naturally arises from our unfettered behavior, we will become a nation obsessed with hoarding money and war.



Oh, wait.
posted by effwerd at 5:56 AM on October 11, 2007 [6 favorites]


Paul left out the most obvious answer: I'm an unrepentant commie.

If I ask someone what his job is, and he responds "writing detective novels" or "painting murals" or "writing software" or "fixing plumbing", at least his job is about something.

On the other hand, I want nothing to do with the guy who responds "my job is making money". What a selfish prick.
posted by jepler at 5:59 AM on October 11, 2007 [6 favorites]


Interesting take: "Instead of accumulating money slowly by being paid a regular wage for fifty years, I want to get it over with as soon as possible. So governments that forbid you to accumulate wealth are in effect decreeing that you work slowly. They're willing to let you earn $3 million over fifty years, but they're not willing to let you work so hard that you can do it in two. They are like the corporate boss that you can't go to and say, I want to work ten times as hard, so please pay me ten times a much. Except this is not a boss you can escape by starting your own company."
Good post, hoverboards don't work on water. Some of these essays are quite old. I wonder why it took so long for them to become available on-line
posted by tellurian at 6:01 AM on October 11, 2007


Income inequalities are bad for society not because they make people sad or jealous, but because they lead to social instability. The two historically reliable methods of transferring wealth from rich to poor are progressive taxes and violence. I prefer the former. If there is a high concentration of people with nothing to hope for and nothing to lose, you get the latter.
posted by bluejayk at 6:02 AM on October 11, 2007 [9 favorites]


That article was accurately priced by the free market.
posted by srboisvert at 6:03 AM on October 11, 2007 [18 favorites]


"Instead of accumulating money slowly by being paid a regular wage for fifty years, I want to get it over with as soon as possible. So governments that forbid you to accumulate wealth are in effect decreeing that you work slowly. They're willing to let you earn $3 million over fifty years, but they're not willing to let you work so hard that you can do it in two. They are like the corporate boss that you can't go to and say, I want to work ten times as hard, so please pay me ten times a much. Except this is not a boss you can escape by starting your own company."

Of course, the fact that the only way you can quickly make that kind of money, short of engaging in a limited number of productive enterprises like invention, is by taking it from the pockets and mouths and homes of those doing actual productive work has nothing to do with it at all.
posted by Pope Guilty at 6:05 AM on October 11, 2007 [6 favorites]


of engaging in a limited number of productive enterprises like invention

Paul Graham only knows about the world of dot-com venture capital. All your old-school Das Kapital discussions are meaningless to him. If you're not getting rich by inventing stuff then you don't exist in his world.

There are none so blind, etc, etc.
posted by GuyZero at 6:17 AM on October 11, 2007 [1 favorite]


I tend to agree with the overall point PG is making that income disparity is a sign of healthy, specialised economies. However, it is also a sign of corrupt, inefficient economies. How to distinguish between the two?

I note he takes as examples of modern wealth generation the Apple guys, ignoring the Microsoft guys, the Enron guys etc. Selective sampling at its worst.

And bluejayk made a really good point: Income disparity causes social friction that can be remedied only by wealth redistribution, either through violence or progressive taxation. Philanthropy is good but its motivated by individual agendas and generosity. A social consensus on how to increase overall productivity (e.g. by providing services such as health care and education) means government taxation.

Also PG conveniently forgets the problem of inherited wealth. Sure, granddady Hilton was one productive s.o.b. but how would that justify Paris?
posted by monkeyx-uk at 6:18 AM on October 11, 2007 [2 favorites]


I've seen some of his essays on economics and social policy, and when it come to those things, this guy is just a stone-cold moron. Here is a rather odious essay where he equates blue-color workers with computers and says they deserve low wages, and that higher wages in the middle of the century were an 'anomaly' caused by expansion. Now that we've worked out the kinks of this industrial thing, it's time to start putting the squeeze on the lower middle and lower classes so that the rich can make more profits! His argument is that servers and computers got cheap, so therefore workers are just the same way!

And here is yet another article arguing for increased income inequality, because it would lead to more startups! And we all know, the sole measure of economic health, the only reasonable goal for the economy is to create more startups!

(Actually, Universal Healthcare would be a huge help in creating more startups, because people could go on their own without worrying about how to pay for health care)
posted by delmoi at 6:21 AM on October 11, 2007 [3 favorites]


Hmm, and here is an argument about philosophy being pointless, or poorly done, or something. It's kind of hard to follow. But he says he feels like he learned a lot in Calculus, but not Philosophy 101. Well who does he think came up with Calculus?

This guy is such a shallow thinker.
posted by delmoi at 6:30 AM on October 11, 2007 [5 favorites]


Actually, if we set up an economy in which the people whose actions actually generate large amounts of wealth were rewarded more than the rest, miners and factory workers would be pulling down impressive seven figure salaries. When Wal-Mart posts its earnings for the quarter, where does that money come from? Essentially, two sources: The raw materials used to make all that crap they sell and the workers who turn the former into the latter. So, if you're looking for the people who are good at making money, there they are.
posted by Clay201 at 6:36 AM on October 11, 2007 [3 favorites]


Let the engineer make that $400K salary and let the CEO have his $4 million compensation package. Where I have a problem is once you start going into magnitudes beyond $10 million or $100 million. No one should have that kind of personal wealth. That should either be taxed or spent out on products or services to keep it moving, and there should be perks for using it to invest in businesses outside the family. Yeah, it will probaby go to cronies, but at least it spreads the wealth and they'll have to hire people and buy things.
posted by rolypolyman at 6:37 AM on October 11, 2007 [1 favorite]


Well, Danny, the world needs ditch diggers, too.
posted by digiFramph at 6:39 AM on October 11, 2007 [2 favorites]


work ten times as hard? nobody can do that. does this guy have no clue how hard people work?
posted by sineater at 6:41 AM on October 11, 2007 [3 favorites]


Of course, the fact that the only way you can quickly make that kind of money, short of engaging in a limited number of productive enterprises like invention, is by taking it from the pockets and mouths and homes of those doing actual productive work has nothing to do with it at all.
So, what if you 'engage in a limited number of productive enterprises like invention' and also want to make money by working more? Should you be restricted from doing so?
posted by tellurian at 6:44 AM on October 11, 2007


The problem isn't income inequity per se, but the fact that at the bottom end of the scale we have people working, sometimes two jobs, who still can't afford a decent place to live, food, and other basic necessities. And I'll argue that the bottom of the scale is so low because the folks at the very top have too much.

If income inequity meant that everyone had a decent life, and Bill Gates gets more toys, then yeah, you could reasonably argue that income inequity isn't a problem. But that isn't what it means.

Hell, in the modern US even moderately well off folks can't even afford health care. This is indicative of a broken economy.

To summarize: Haves and have nots are bad for a society, if our society was composed of haves and have mores it wouldn't necessarily be a bad thing.
posted by sotonohito at 6:47 AM on October 11, 2007 [5 favorites]


Also PG conveniently forgets the problem of inherited wealth. Sure, granddady Hilton was one productive s.o.b. but how would that justify Paris?
An unfortunate but necessary side effect of allowing people to keep the wealth that they generate. If you were to prevent it, by, say a 95% tax on inheritances worth over $1 million dollars, I think that you'd make people think twice about generating wealth. Making money is hard; what's the point if it all gets taken away from your family when you die?
Actually, if we set up an economy in which the people whose actions actually generate large amounts of wealth were rewarded more than the rest, miners and factory workers would be pulling down impressive seven figure salaries.
The problem is that the skills required to manufacture goods or mine raw materials are not scarce. It's the law of supply and demand: It's harder to find someone who can run a company well than it is to find someone who can swing a pickax or turn a screwdriver.
posted by JDHarper at 6:47 AM on October 11, 2007


Hell, in the modern US even moderately well off folks can't even afford health care. This is indicative of a broken economy.
Yes, but I'm not sure that this is a problem with income inequality per se. It seems like there's a huge demand for medical care, and that demand is bound to increase as baby boomers get older. That demand has driven up the price of health care; there are only so many hospital beds.

But here's what's broken: People should be seeing that, and building more hospitals. People should see opportunity for high wages in the medical field, and training as doctors and nurses. The increased competition among suppliers of health care would drive down the cost of health care.

But instead we have a nursing shortage, and the population of doctors (if I'm not mistaken) is on the decline. Why?
posted by JDHarper at 6:53 AM on October 11, 2007


So, what if you 'engage in a limited number of productive enterprises like invention' and also want to make money by working more? Should you be restricted from doing so?

No, but you should pay a higher marginal tax rate. No one is 'restricting' anyone here. If you work produces 10 times as much value, you make 8 times as much money. If you can't deal with that, probably your work doesn't have too much value in the first place, and if you don't like it you can try leaving society and seeing how much money you make then.
posted by delmoi at 6:57 AM on October 11, 2007 [3 favorites]


Man I can't stand Paul Graham. All his essays are the same. They appeal to the Reddit crowd who think they are the next bill gates, and any other libertarian schmuck who thinks they are so awesome because they were born into the a world where they won't die of malaria.

At least he's not as straight up crazy as what-his-face with all the guns. Eric S. Raymond. Yeah.

What is it about dudes with computers?
posted by chunking express at 7:02 AM on October 11, 2007 [6 favorites]


If I ask someone what his job is, and he responds "writing detective novels" or "painting murals" or "writing software" or "fixing plumbing", at least his job is about something.

On the other hand, I want nothing to do with the guy who responds "my job is making money". What a selfish prick.


Me and my pals over here in the Department of Currency Design and Research at the Bureau of Engraving and Printing would like to give a collective "screw you" to this statement.

Not really an employee of Engraving and Printing.
posted by Pollomacho at 7:03 AM on October 11, 2007 [9 favorites]


JDHarper Would reducing the incentive to produce *money* be a bad thing? Money isn't wealth, its a symbol of wealth. Some people are good at manipulating that symbol, but really is it a skill that a society needs?

I'm not saying they should be forbidden from doing that if its their bag, I'm just saying that even if we accept, for the sake of argument [1], that a huge tax on inheritance over a certain amount would reduce the number of people who manipulate stock markets, etc, to get large quantities of money, why would that necessarily be bad?

Further, re: skills and scarcity, while you are correct in the main, it is easier to mine than it is to run a mining company, I think that its not nearly as hard as is often made out, nor that the necessary skills are so scarce that we have to pay them over 400 times what the actual productive people make.

I notice that for all the outsourcing mania no one seems to want to outsource executive jobs. Surely India has a large number of MBA's and whatnot who are fully capable of running large companies for a fraction of what US executives charge, yet somehow no one seems to be tapping that.

"But instead we have a nursing shortage, and the population of doctors (if I'm not mistaken) is on the decline. Why?"

Speaking as someone with a mother-in-law and sister-in-law in the nursing profession I have a possible answer. Its anecdotal, of course.

Due to the push for hospitals to make ever more profit for those oh so rare and highly paid executives doctors and nurses are often worked to exhaustion. Officially they put in 12 hour shifts, which has been scientifically shown to reduce efficiency and increase malpractice, but the "official" shift is often quite a bit shorter than the real shift. The pay is not especially high, even for doctors but more so for nursing staff, and they work you to death. Is it a surprise that people aren't choosing that career path?

Oh, and mostly the work sucks ass because people *aren't* building additional hospitals and other medical facilities, that costs money and therefore cuts profits. Instead they try to cram more and more patients into existing facilities, which allows them to avoid hiring as many new doctors, nurses, etc by simply piling more work onto their already overworked and fatigue addled staff.

Then they blame the problem on the malpractice suits which inevitably result from having doctors and nurses running at a constant fatigue state.

chunking express The computer field tends to attract bright, quirky, creative, people and many people of that type tend to hold extreme or oddball ideas in all areas of life, not merely computers or politics. At the other end of the scale from PG you get Richard Stallman, who has political views of the same magnitude as PG but in the opposite direction.

Generally hacker types tend to be pro-freedom, but will often differ significantly on what "freedom" means. I'd argue that I'm pro-freedom, but I think that PG and his economic plans are massively FUBARed and the product of insufficient consideration of history and consequences. Freedom != anarchy. A free market is a good thing, an anarchistic market isn't.

[1] Which, BTW, I don't.
posted by sotonohito at 7:08 AM on October 11, 2007 [4 favorites]


So, what if you 'engage in a limited number of productive enterprises like invention' and also want to make money by working more? Should you be restricted from doing so?

I'm kind of implying that the notion that hard work makes the worker money. Large amounts of cash don't come from working and having the majority of the wealth you produce stolen from you. Large amounts of cash come from being the guy who owns the business and therefore having the "right" to steal the majority of the wealth generated by your workers.
posted by Pope Guilty at 7:09 AM on October 11, 2007


Also I keep seeing "PG" in this thread and getting briefly confused.
posted by Pope Guilty at 7:10 AM on October 11, 2007


Pope Guilty I've always found the imaginary dialog here on the subject of work and ownership to be both amusing and instructive.

I don't agree with everything it says, or implies, but its observation as to the absurdity of how little the actual productive members of society are paid for their efforts rings true.
posted by sotonohito at 7:18 AM on October 11, 2007 [2 favorites]


It's harder to find someone who can run a company well than it is to find someone who can swing a pickax or turn a screwdriver.

I don't think this is true. There's a Hyundai plant about twenty miles from where I'm sitting. If we turned it over to the employees to own and run, would they fuck it all up? There might be a learning curve, but odds are they could do it. If it turned out they needed to know some things you can only learn in an Ivy League MBA program (though personally I doubt any such thing exists), they could always hire a consultant.

Now, of course, Hyundai wouldn't like this turn of events because those workers might put their own needs ahead of Hyundai's desire to make a profit. So in that sense, yeah, you're right: you do have to be very careful when choosing a manager. You might fuck up and get someone who isn't obedient to the stockholders. But that's not a fuction of skill or intelligence; that's an issue of morality.

At the very least, we have to concede that we don't really know who can and can't do this job until there's a level, purely merit-based playing field on which everyone can compete. This goes way, way beyond merely providing a decent education to everyone. There are all kinds of social prejudices and preconcieved notions that go into choosing CEOs. The people responsible for these decisions generally choose people who talk and act like they do, who have the same kinds of experiences, who see things the same way. In this respect, it's not that different from the way the military chooses officers. The new generation always closely resembles the old.

Suppose you put an adamant, blue-collar Union supporter in charge of GM? And suppose that during his tenure, his continued employment and pay rate were determined by a vote of union memebers? I'll bet our ideas about "who can run a company" would change pretty rapidly.
posted by Clay201 at 7:26 AM on October 11, 2007 [3 favorites]


This is a question which people are often seduced into oversimplifying.

Concentrated wealth can be a problem. There's no doubt about it. But what happens when the very rich set up foundations and nonprofits and build museums and help sick people and protect natural resources?

Then these rich are clearly spending their money better than the majority of people, who want to consume and waste. Let's be honest, fast food and People magazine don't exist because of the rich.
posted by ewkpates at 7:27 AM on October 11, 2007 [1 favorite]


The problem is that the skills required to manufacture goods or mine raw materials are not scarce. It's the law of supply and demand: It's harder to find someone who can run a company well than it is to find someone who can swing a pickax or turn a screwdriver.

This may or may not be true - I don't know of empirical studies that demonstrate that company-running skills are actually scarcer than manufacturing skills. But, at least in the contemporary U.S., a lot of people are being paid a lot of money for running companies extremely poorly. The miner or manual laborer who doesn't perform well gets fired and may have trouble finding another job; the CEO whose company fails by every available metric gets a fat golden parachute and immediately gets hired by his friends on the board at another company. These days, a great deal of wealth accumulation is the result of access to the social networks of the wealthy and powerful (cf: GWB), and has little to do with intrinsic skill.
posted by googly at 7:31 AM on October 11, 2007 [5 favorites]


"In the real world, you can't keep living off your parents. . . . In the real world, wealth is (except for a few specialists like thieves and speculators) something you have to create, not something that's distributed by Daddy."

Apparently this man has never heard of Paris Hilton and her coterie.
posted by oddman at 7:34 AM on October 11, 2007


To expand on what googly is saying...

We have to remember that these companies are controlled by a pretty small group of people. It stands to reason they're going to guard them jealously. If you owned a large chunk of General Motors, would you allow it to be run by someone whose loyalty you questioned? Certainly not if you had ten full blooded boot-lickers eager to take the job.
posted by Clay201 at 7:35 AM on October 11, 2007


I was going to establish a museum just the other day. Then I saw a bag of Doritos and bought that instead.
posted by effwerd at 7:36 AM on October 11, 2007 [1 favorite]


Stimulating article. Lots to think about. Thanks.

Unfortunately, am in the dark about how economics works, except on the simplest of levels. Would love a beginner's/kids guide book or, better, site. Any suggestions?

Current international account balances. I'm perplexed by how the supposedly wealthiest country, USA, is in fact in the greatest debt. Wouldn't that make it the poorest-richest? Or are we the wealthiest with no money?
posted by nickyskye at 7:37 AM on October 11, 2007


But what happens when the very rich set up foundations and nonprofits and build museums and help sick people and protect natural resources?

Actions such as these do not - and were never intended to - change the status quo. Plus, it's kind of a slap in the face to take money from the workers and then say "Hey, if you're really desperate and can act really grateful, we'll give you back some of the wealth we stole in the form of meals on wheels and shitty health clinics." (Which is not to say I'd turn down the meal or the health care if I were in that position.)
posted by Clay201 at 7:39 AM on October 11, 2007 [3 favorites]


sotonohito, that's a splendid laying-out of the socialist view of capitalism!
posted by Pope Guilty at 7:40 AM on October 11, 2007


I guess I should have used more precise language
posted by jepler at 7:42 AM on October 11, 2007


Man, this guy is so goddamn cute, I want to take him home and punch him. Footnote #3:

According to a study by the Corporate Library, the median total compensation, including salary, bonus, stock grants, and the exercise of stock options, of S&P 500 CEOs in 2002 was $3.65 million… According to the Bureau of Labor Statistics, the mean annual wage in the US in 2002 was $35,560.

Good old median vs. mean, favorite tool of liers-with-statistics everywhere.

In 2006, the average CEO of a Standard & Poor's 500 company received $14.78 million in total compensation, according to a preliminary analysis by The Corporate Library.
posted by ormondsacker at 7:45 AM on October 11, 2007 [3 favorites]


how hard would i have to work at mcdonald's to earn a million dollars in one year?

also: Let's be honest, fast food and People magazine don't exist because of the rich.

all this tells me is that you don't know any rich people.
posted by klanawa at 7:51 AM on October 11, 2007


An unfortunate but necessary side effect of allowing people to keep the wealth that they generate. If you were to prevent it, by, say a 95% tax on inheritances worth over $1 million dollars, I think that you'd make people think twice about generating wealth. Making money is hard; what's the point if it all gets taken away from your family when you die?

I think you'll find that almost everyone in the world is a selfish bastard. In fact, by definition, anyone who hoards vast amounts of wealth must be selfish, at least during their lifetime. If they were so generous, why wouldn't they give it away during their life?

Inheritance should be tax free up to about as much money as it takes to start most businesses (so some small number of millions) and then taxed 100% beyond that. Perhaps counter-intuitively, the government would collect nothing because (in their wills) wealthy people would give it all away by charitable donation, setting up trusts, etc.

The government actually gets very little by way of the inheritance tax. The entire purpose is to encourage charitable giving, not to generate revenue.

The issue here is not one of punishing those who become wealthy. The issue is preventing dynastic wealth from causing our democratic society to slouch towards feudalism.
posted by jedicus at 7:55 AM on October 11, 2007 [1 favorite]


Suppose you put an adamant, blue-collar Union supporter in charge of GM? And suppose that during his tenure, his continued employment and pay rate were determined by a vote of union memebers? I'll bet our ideas about "who can run a company" would change pretty rapidly.

And then he'll hire the blue-collar factory guy that knows accounting, and the other factory guy that has a law degree to be general counsel, and, oh yeah, the factory guy that knows how to implement large IT systems. And when those guys retire, the Union supporter/CEO will just hire people who are experts in these various specialty areas but who are Union-supporters by blood, or something. But all these bluish-white-collar guys will never use their positions to shift the balance of power in their favor. Never.
posted by mullacc at 8:10 AM on October 11, 2007


It's harder to find someone who can run a company well than it is to find someone who can swing a pickax or turn a screwdriver.

The implication is that running a company well is what results in huge compensation for the CEO. Recent history argues that it's something else.


It seems like there's a huge demand for medical care, and that demand is bound to increase as baby boomers get older. That demand has driven up the price of health care; there are only so many hospital beds.

It isn't demand that's driven up the cost of health care in the U.S.; it's the monster toad that is the insurance industry, sitting between the doctor and his patient and gobbling up most of the money that should go from the latter to the former.
posted by Kirth Gerson at 8:13 AM on October 11, 2007 [1 favorite]


The problem is that the skills required to manufacture goods or mine raw materials are not scarce. It's the law of supply and demand: It's harder to find someone who can run a company well than it is to find someone who can swing a pickax or turn a screwdriver.

I want to second this and similar comments:

This may or may not be true - I don't know of empirical studies that demonstrate that company-running skills are actually scarcer than manufacturing skills. But, at least in the contemporary U.S., a lot of people are being paid a lot of money for running companies extremely poorly. The miner or manual laborer who doesn't perform well gets fired and may have trouble finding another job; the CEO whose company fails by every available metric gets a fat golden parachute and immediately gets hired by his friends on the board at another company.

And add one more observation of my own. Supply and demand is more complex than the first commenter acknowledges. Even accepting these premises: "the skills required to manufacture goods or mine raw materials are not scarce" and "it's harder to find someone who can run a company well," the supply and demand argument for inflated executive wages fails to account for the fact that while executive skills may be in relatively shorter supply, the real demand (meaning, in terms of raw numbers) for such skills is dramatically lower. A company of hundreds of thousands of employees may need only one CEO and a relatively small number of upper-level managers. The demand in real terms in the workforce is not for executives, because only 1 out of every few thousand positions is an executive-level position. So the simple fact is, no matter how rare management skills may be, you don't need nearly as many managers in the workforce, so the workforce supply and demand argument, while superficially persuasive, is most likely a post-hoc rationalization that doesn't square with the facts.

In real-terms, a productive workforce requires far more workers than bosses, a fact which should create a countervailing demand for workers that's more than sufficient to off-set any perceived scarcity in the supply of management candidates. But the financial decision makers within an enterprise are managers themselves, and so naturally they have a conflicting personal stake in how their own skills are valued.
posted by saulgoodman at 8:16 AM on October 11, 2007 [4 favorites]


Now, of course, Hyundai wouldn't like this turn of events because those workers might put their own needs ahead of Hyundai's desire to make a profit. So in that sense, yeah, you're right: you do have to be very careful when choosing a manager. You might fuck up and get someone who isn't obedient to the stockholders. But that's not a fuction of skill or intelligence; that's an issue of morality.

If you mean the workers running the plant have a moral obligation to make a profit for the company, should they run the plant, I'm not entirely sure there is any such moral imperative except if it was established as a matter of trust (and then keeping your word could be said to be a moral good).

However, the function of business is profit. Whether that profit is distributed in a cooperative, reinvested by the business or given back to stockholders (who can do perhaps spend it more wisely than the business could), the primary function of business is to generate a profit. It may even be the sole function (although German-style capitalism would disagree).

Now, I'm all for questioning income disparity based on economic and social merits but non-profitable business leads to corruption or destruction. Either way when any organisational unit (be it an office, factory, company, nation or international body) doesn't generate wealth by itself, it cannibilizes some other organisational unit that does or it dies.

And cannibalistic organisations (I'm looking at governments, all those charities and NGOs) are IMO part of the problem. They're good at siphoning income and exploiting emotions but fairly inefficient at solving problems in the long-term.

Far too many people associate profit with greed when its really about efficiency. Being so good at something that you generate value.
posted by monkeyx-uk at 8:18 AM on October 11, 2007 [2 favorites]


There are very few people who make significant amounts of money who don't enter into this bubble of economic retardation.

Your understanding of economics will invariably be distorted to the point at which the amount of money you make feels like an expression of god's will. God in this cause could be the internet bubble, the invisible hand, etc. We are designed to self-justify. The alternative explanations make us feel bad so we steer clear of them.

You may refer to this in the future as Crane's law of economic self-justification.

And I expect royalties. No, I *deserve* them.
posted by mecran01 at 8:21 AM on October 11, 2007 [2 favorites]


In 1995 Graham and Robert Morris founded Viaweb, the first application service provider. Viaweb's software (written largely in Common Lisp) let users make their own Internet stores. In the summer of 1998 Viaweb was sold to Yahoo! for 455,000 shares of Yahoo! stock, valued at $49.6 million.

By his logic, he worked 326 times harder than a programmer making $50k/year during that three year bubble.
posted by mecran01 at 8:23 AM on October 11, 2007 [2 favorites]


There have been two provocative statements in this thread, to whit: taking it from the pockets and mouths and homes of those doing actual productive work has nothing to do with it at all.
and
if you don't like it you can try leaving society and seeing how much money you make then.
I believe that both of these comments are examples of straw man.
posted by tellurian at 8:28 AM on October 11, 2007


By his logic, he worked 326 times harder than a programmer making $50k/year during that three year bubble.

OK, I disagree with much he has to say but he does clearly state there is no correlation between effort and reward in the real world.

From the OA:

It will seem to someone still implicitly operating on the Daddy Model that it is unfair when someone works hard and doesn't get paid much. To help clarify the matter, get rid of everyone else and put our worker on a desert island, hunting and gathering fruit. If he's bad at it he'll work very hard and not end up with much food. Is this unfair? Who is being unfair to him?

I do agree with your other point about hindsight-justification of what in a lot of cases is dumb luck and circumstance :)
posted by monkeyx-uk at 8:29 AM on October 11, 2007


We are designed to self-justify.

This is so very true, but there is more to it than that. The political super-structure of most western democratic countries is designed to reinforce and perpetuate the wealth of the capitalists. The laws we have, the life-lessons we teach our children, everything is there to perpetuate the economic model people with money have decided is so awesome.
posted by chunking express at 8:30 AM on October 11, 2007


The demand in real terms in the workforce is not for executives, because only 1 out of every few thousand positions is an executive-level position.
True enough. My point in my original comment was less about management skills in particular and more about skilled labor generally. The average factory worker doesn't need much in the way of skills: s/he needs only the ability to read and the physical wherewithal to operate a machine. Since the vast majority of Americans fit that description, the wages are going to be low. Factory workers can be (shouldn't be, but can be) treated as replaceable parts.

On the other hand, skilled laborers, like executives, accountants, IT workers, lawyers, architects, designers, and so on are much harder to replace. There are far fewer qualified lawyers than there are literate, able-bodied people.

And even leaving aside the scarcity of those particular skills, there are more costs involved in replacing one CEO with another, or one designer with another. It might take a factory worker a week to learn the basics of his position on the assembly line, but installing a new CEO takes a bit longer.
posted by JDHarper at 8:37 AM on October 11, 2007


Gah! Why can't we edit comments again? I left out the last paragraph:

Since it's so much harder to replace a CEO or any other skilled laborer than it is to replace a line worker, the skilled laborers have a better bargaining position. It's costs less in the short term to give the CEO a bigger salary than it is to replace him with a cheaper one, or even a better one.
posted by JDHarper at 8:39 AM on October 11, 2007


This may or may not be true - I don't know of empirical studies that demonstrate that company-running skills are actually scarcer than manufacturing skills.

Yes, management salaries are almost certainly a case of market failure. Labor is such an inflexible, illiquid and opaque market that it's very damn questionable if anything but the most abstract macroeconomic forces are applicable.

Ironically, PG is on to something when he insists that people who work really hard ought to be compensated more. This is basic common sense and nobody would argue with it. And it does, to an extent, justify the massive risk/reward structure behind startups. But anybody with half a brain would then ask if the same logic is applicable to traditional companies. Are firms actually paying their employees a fair market price? At this point anybody with half a brain would start laughing. Pointedly, it's among the skilled "knowledge work" of the middle classes that employee salaries are massively devalued. There are huge barriers for these persons to move between jobs and so firms habitually exploit this and underpay knowledge workers a great deal.

However, the function of business is profit.

This is a non-point that can be used to justify about anything up to and including stealing babies. Businesses do not exist in a vacuum and they are not monolithic entities. They are complex systems that exist within larger ever more complex systems. Unless you're a truly morally bankrupt individuals you would recognize that there are limits and protocols that good businesses must respect in their pursuit of profit. The question is just where these limits are. And if you ever do take a serious, objective look at the data it's becomes very, very clear corporate upper management and especially CEOs are massively overvalued. But due to structural deficiencies, mainly lack of transparency and very deep economic boom, these individuals have been able to give themselves ever larger paychecks but avoid shareholder and worker aggression who, contrary to popular belief, do have very legitimate claim to profits. This situation is slowly righting itself in the form of increased entrepreneurial activity (and again, this is where startups come in) -- a lot of individuals are starting to realize slaving away for somebody else's third home isn't the best way to spend one's days but this solution isn't really viable for everybody.
posted by nixerman at 8:43 AM on October 11, 2007 [3 favorites]


The problem is really that being rich, or say "having a talent for making money," gives you access to essentially every social good; health, love, happiness, a yacht with some hawt bitches etc. Whereas, being a superb school teacher or social worker gets you about $40,000 a year in a city, and health insurance. And if making money is a skill or talent, it is a talent that contributes very little. I second delmoi -- this guy is a puddle.
posted by Raoul de Noget at 8:45 AM on October 11, 2007


The average factory worker doesn't need much in the way of skills: s/he needs only the ability to read and the physical wherewithal to operate a machine. Since the vast majority of Americans fit that description, the wages are going to be low.

That makes sense if you divide the entire workforce into factory workers and executives. The vast majority of the American workforce falls somewhere in-between those categories, and the point still holds.

Highly-skilled and technical laborers still earn significantly less than even the most unsuccessful and unskilled executives. You know what category earns even more? Those living off of capital earnings and investments from legacy wealth, and those top-earners increasingly don't have to be productive members of the workforce at all.
posted by saulgoodman at 8:46 AM on October 11, 2007


Oh my God, is this really Metafilter? Where are all the people who always show up and go on about how the poor deserve to be poor because they didn't work hard enough to put themselves through college?
posted by Jess the Mess at 8:49 AM on October 11, 2007


I believe that both of these comments are examples of straw man.

Then point out how. You can't just go "ha-ha, straw man!" and think that you've contributed something.
posted by Pope Guilty at 8:50 AM on October 11, 2007


Oh my God, is this really Metafilter? Where are all the people who always show up and go on about how the poor deserve to be poor because they didn't work hard enough to put themselves through college?

Sleeping it off.
posted by Pope Guilty at 8:53 AM on October 11, 2007


Another problem with taxing the rich a lot is that, well, they're rich - and thus have the resources to move themselves and their personal wealth to a country with lower marginal tax rates. Same goes for businesses, which over the long term can and do migrate toward locations with more favorable tax and labor situations. Taxes are useful things but trying to apply them on a moral basis of "no one should be that rich" can backfire.
posted by Mr Bunnsy at 8:53 AM on October 11, 2007


We are designed to self-justify.

We have evolved to self-justify.
posted by grouse at 8:57 AM on October 11, 2007 [6 favorites]


But here's what's broken: People should be seeing that, and building more hospitals. People should see opportunity for high wages in the medical field, and training as doctors and nurses. The increased competition among suppliers of health care would drive down the cost of health care.

But instead we have a nursing shortage, and the population of doctors (if I'm not mistaken) is on the decline. Why?


Because obtaining a medical education is beyond the financial ability of a rapidly increasing number of people. Because being a doctor increasingly is about kissing the asses of insurance companies and not about tending to the patients? Because hospital corporations have discovered it's more profitable to push nurses to do more of the doctor's duties and work longer shifts with fewer available nurses?

Healthcare costs are rarely based on anything so outmoded as traditional supply/demand rules, unless you focus on artificially restricting supply. It's almost entirely about increasing profit margins and pleasing the big investors first.
posted by Thorzdad at 9:05 AM on October 11, 2007 [2 favorites]


Having a talent for increasing capital rather than consuming it should get you more of whatever you want, because in a society where value is determined by demand, the ability to increase capital rather than consume it is incredibly valuable.

Teaching isn't valuable in this society. Hello? Hello? Just because some of us think it should be doesn't mean that all of us are willing to pay more for teachers. Value is DEMAND based. If you want economic goods, then you probably shouldn't become a teacher.

Raoul is the "poster poster" for those who fail to understand economics. The value to society is set by the market, not by what is important to anyone in particular.

If you can stay rich and don't lose your wealth, then you have demonstrated the ability to preserve and protect capital. This is a very big deal. This is more important to economies than even the very finest teaching or social working. Do grasp this.

If you are a socialist and or don't like the free market, then you are free to disagree with all of this. I, and I'm guessing the others amongst us who are good at creating and maintaining capital, would gladly have a country/economy without you. No socialists required.
posted by ewkpates at 9:09 AM on October 11, 2007


Further, re: skills and scarcity, while you are correct in the main, it is easier to mine than it is to run a mining company, I think that its not nearly as hard as is often made out, nor that the necessary skills are so scarce that we have to pay them over 400 times what the actual productive people make.

You know absolutely nothing about running a mining company.
posted by Kwantsar at 9:10 AM on October 11, 2007


Because obtaining a medical education is beyond the financial ability of a rapidly increasing number of people. Because being a doctor increasingly is about kissing the asses of insurance companies and not about tending to the patients? Because hospital corporations have discovered it's more profitable to push nurses to do more of the doctor's duties and work longer shifts with fewer available nurses?

Or the supply of doctors is artificially restricted. Which is the most parsimonious answer. And it's true on its face. Good God. Everyone has biases, lots of them are showing in this thread, and people are writing some really senseless things.
posted by Kwantsar at 9:17 AM on October 11, 2007 [1 favorite]


Nickyskye:
I'm also in the dark about economics, so I've been reading Basic Economics and listening to Timothy Taylor's economics Great Course on tape. Both of these seem to be aimed at absolute beginner.
Unfortunately, I don't know enough to judge whether these are any good. I have heard Sowell is very conservative and so I'm keeping that in mind while reading. Taylor seems a little looser. They both seem to think that Economics is amoral (as opposed to immoral) and doesn't concern itself with how-things-should-be but how-things-are and why.

I just got to the part in Taylor's tapes about Current Account Balance and he seems to think this is not necessarily bad because it means that lot of investment capital is coming into the country. (Our dollars go to other countries to pay for what we buy. These dollars flow back into the US as investment because they do no good just sitting in Japan or wherever). I have to say this sounds suspicious to me, but what do I know.
posted by MtDewd at 9:18 AM on October 11, 2007


You know absolutely nothing about running a mining company.
Tower Colliery
posted by Abiezer at 9:22 AM on October 11, 2007


Sure, everyone has their biases, including the essayist. His argument is essentially the old Calvanist viewpoint that if God loved you, you'd have money. His God is, of course, the mythical free market.

In reality, the upper-executive class as it exists in the UK and US and increasingly in Europe, appears to be operating as a kind of oligarchy. As Kirth Gerson's link further up the thread points out, these guys all serve as non-execs on each other's boards, effectively determining their own salaries independently of shareholder value. Of course they then justify these salaries by pointing to each other and saying 'He gets even more' and the spiral continues.

Meanwhile, the pay and, perhaps more importantly, the benefits, of the typical worker are being eroded. This is effectively a transfer of wealth from bottom to top, governed not by free market dynamics, but by the interests of the executive oligarchy. Predictably, the result is that the rich get richer, the poor get poorer, and social mobility reduces, indicating that the kind of meritocracy that PG eulogizes does not really exist.
posted by Jakey at 9:47 AM on October 11, 2007 [3 favorites]


The other thing he's not mentioning in all this "they work harder and are better so they deserve more" rhetoric is how, exactly, the CEOs of today are so much better than the CEOs of the 1960s and 70s. Are the workers today that much worse and the CEOs that much better? The income disparity between worker and executive - the gap - is what's rising, not necessarily the profits. Some quotes from that (admittedly a bit dated; it's from 1999) link: The pay gap between CEOs and workers is five times wider than it was at the start of the decade, and ten times wider than it was two decades ago.

CEO compensation skyrocketed by 443 percent between 1990 and 1998, while average worker pay increased 28 percent, a little ahead of inflation. A worker who earned $25,000 in 1994 would earn $138,350 today if their pay had grown as fast as the average CEO, according to the AFL-CIO.

So tell me, were the 1998 CEOs 443% better than the 1990 CEOs? And are the 2007 CEOs 443% better than the 1998 ones?
posted by mygothlaundry at 9:47 AM on October 11, 2007 [1 favorite]


Tower Colliery

"The rising amount of imported coal, coupled with global price increases and demand makes formerly uneconomic sites commercial again."

You know nothing about running a mine either, I'd suppose.

To what degree the government ought to tax the wealth of the high earner is an open debate, and that's fine. But if a mining company is worth $5.5B under control of party A, and $6B under control of party B, party B is economically worth half a billion dollars. Even though by the simplest yardstick party B is less than ten percent better than the alternative.To those with even a rudimentary understanding of asset pricing, it is obvious that the half a billion of value created can stem from little more than a few relatively minor decisions. (Operating) leverage at work.
posted by Kwantsar at 9:47 AM on October 11, 2007


Meh. How come the conversation is always about inequality of outcome and rarely about inequality of opportunity. The latter seems to me to be a more fundamental problem, a greater injustice, and morally a more clear-cut issue. Because equality of opportunity doesn't exist in this country, of course the outcomes are going to be unequal. All of these editorials about how the rich deserve their money work on this demonstrably false premise. Seems like a smokescreen to me.
posted by SBMike at 9:49 AM on October 11, 2007


So tell me, were the 1998 CEOs 443% better than the 1990 CEOs? And are the 2007 CEOs 443% better than the 1998 ones?

American legislators don't understand cause and effect, and underestimate the resourcefulness of the private sector. Corporations, wanting to comply with the law, decide to pay people in share equity. Interest rates and risk premia go down, and ex post no one should be even remotely surprised by the intensification of the pay gap.

All heat and no light from this discussion. Disappointing.
posted by Kwantsar at 9:59 AM on October 11, 2007


There's running it, and there's the larger economic environment. Your claim was they lacked the skills.
posted by Abiezer at 10:03 AM on October 11, 2007


"All heat and no light from this discussion. Disappointing."

I totally agree. But it's okay Kwantsar. You'll think of something enlightening to say eventually.

In the meantime, why not just grouse about the shortcomings of other people's remarks? You like doing that too, right?

/just flinging poo for fun here; no offense intended; no need to visit metatalk
posted by saulgoodman at 10:16 AM on October 11, 2007


There's running it, and there's the larger economic environment. Your claim was they lacked the skills.

No, my claim was that Pope Guilty knows nothing about running a mining company. My unstated claim was that running a mining company is very, very difficult. A corollary of this claim is that running a mine just a little bit better than the next guy is worth a lot of money.

I can drive a car quite capably on a road or a race track, but I don't look at Jeff Gordon and say "it's not that hard."

All your link said was that some workers bought a mothballed mine and kept it running.
posted by Kwantsar at 10:18 AM on October 11, 2007


No, my claim was that Pope Guilty knows nothing about running a mining company.

No, and that's why/because I'm not in mining. I'm also not the one who posted the Tower Colliery link, but god forbid the great and mighty snarkmaster Kwantsar fact-check.

My unstated claim was that running a mining company is very, very difficult.

So difficult, in fact, that we let people whose only qualification is having money do it.
posted by Pope Guilty at 10:23 AM on October 11, 2007


The more I read about matters of economics, the greater becomes my suspicion that it is the most cunning of tricks played on humanity since religion, a perfect storm of incomplete knowledge, untestable assumptions, pervasive influence, personal politics and rationalization.
posted by MetaMonkey at 10:23 AM on October 11, 2007 [12 favorites]


Well that's the rub to me Kwantsar. We seem to agree that it's difficult to do (you're right, I know fuck all about it), the Tower Colliery workers can do it and so can your theoretical entrepreneur.
I would say that bit about doing it slightly better than the next guy is only worth a lot more money if you rig the rules of the game so that is the case. In my balance of public goods, I like the model where we get coal and lots of people keep their jobs so long as they're sustainable. The model it appears you advocate is that most of the rewards go to a few for a small incremental difference, and the plug will be pulled when they're no longer satisfied with their take. For a long time in the UK, coal mines were indeed nationalised. They worked quite well. They were privatised duuring the Thatcher administration, and of course you can pick an economist who suits your ideology to say whether or not that was necessary.
posted by Abiezer at 10:33 AM on October 11, 2007


skilled laborers, like executives, accountants, IT workers, lawyers, architects, designers, and so on

As a skilled technical worker more often than not surrounded by incompetents who have made their way into executive positions, I take umbrage with their inclusion in a list of "skilled" laborers.
posted by JaredSeth at 10:37 AM on October 11, 2007 [2 favorites]


Arse - Thatcher was gone by the time they sold it off in 1994 it seems. It was the rump of her government under Major. She was just the one who gutted it before hand.
posted by Abiezer at 10:39 AM on October 11, 2007


I would say that bit about doing it slightly better than the next guy is only worth a lot more money if you rig the rules of the game so that is the case.

No, no, no. The game may be "rigged" in that the guy who does it slightly better doesn't "deserve" as much compensation as he gets. The game may be "rigged" in that the best man for the job isn't in fact in the role. But under no circumstance is the fact that doing something a little bit better can create large changes in value the mark of a "rigged" system. Rather, it's an immutable law of microeconomics.

And you may not like it, but Western oil companies, for example, are a hell of a lot better at getting a resource out of the ground than state-owned companies. Whether they should be pulling it out is a different question entirely.

And, Pope Guilty, do you see the word "either" in my comment to Abiezer?
posted by Kwantsar at 11:00 AM on October 11, 2007


MetaMonkey, you are a slave to the greatest of the many enslavers of humanity of which economics is not one: poor critical thinking.

Who gets to set the price? This is the core of the question. If it's the guy with guns, then you've got a dictator. If it's the guy who produced the good or service, then you have a free market.

When socialists set the price, this is dictatorship by the masses, who are, as we all know, the greatest threat to liberty.

Another important question, but only once we've accepted the importance (and non-tricky legitimacy) of economics, is why do economic systems fail?
posted by ewkpates at 11:12 AM on October 11, 2007


Kwantsar,

American legislators don't understand cause and effect, and underestimate the resourcefulness of the private sector. Corporations, wanting to comply with the law, decide to pay people in share equity. Interest rates and risk premia go down, and ex post no one should be even remotely surprised by the intensification of the pay gap.

That's some quality light right there. I'd honestly appreciate an explanation because it sounds smart.

The main thing I got out of the abstract was that in a "perfect world" boards would pay CEOs & it they would use their capitalist brains to figure out the appropriate pay scale. Congress in it's infinite wisdom felt that CEOs were being paid for something other than performance (silver hair? height? oh yeah cronyism I guess) and that pay needed to be explicitly performance-based. Whereupon converting performance to a formula mean that CEOs could game the system and I guess stop paying so many dividends since they weren't being evaluated on that. I have no idea why anyone cares about dividends.

In any event what connection do you draw between the article you linked and the discussion here?
posted by Wood at 11:17 AM on October 11, 2007


I don't disagree that there's a value in that incremental difference. It's the nature of exactly how you calculate that value. Of course "rigged" is a loaded word, but my point is that different models really do affect the weight assigned to the various factors in the economic activity, because it's a human endeavour and not a blind force of nature. That last is the problem I have with much of the worst free-market boosterism - at its crudest it often denies any political and historical context at all.
To go out on a limd in another area I know bugger all about, even with your example of the Western oil companies - one of the factors that added impetus to an increase in the efficiency of their operations was I believe their response to political pressure from environmental lobby groups. The balance sheets for squeezing the last drop out of some of the North Sea fields would have looked different without it. And didn't StatOil play a big part in turning Norway from a bit of a backwater into one of the wealthiest societies in the world? Not that I haven't heard a few comical stories about them from a geologist brother.
posted by Abiezer at 11:23 AM on October 11, 2007


Who gets to set the price? This is the core of the question. If it's the guy with guns, then you've got a dictator. If it's the guy who produced the good or service, then you have a free market.

so what have you got if you've got the fed setting interest rates which ultimately affect the price the guy who produces goods or services can charge for them? (oh yeah, and don't forget the fed has the guns on its side, in a pinch.)

When socialists set the price, this is dictatorship by the masses, who are, as we all know, the greatest threat to liberty.

really? we all know that? huh. i guess it probably says in the constitution somewhere that the "unwashed masses" are a much greater threat to liberty than some tyrannical elite (like, I dunno, a monarchy or oligarchy, say?) could ever be. missed that part, i guess.

so modern capitalism, given the importance of the role the fed plays in setting interest rates, is kind of like socialism, except that its regulations don't benefit the masses (cause if they did, that would be a threat to the "liberty" of the elite who do benefit). i see.

who's liberty are we protecting here anyway, if not those of "the masses"?
posted by saulgoodman at 11:28 AM on October 11, 2007


ewkpates, I'm not sure what your arguement is or how it is relevant to my comment (must be that pesky critical thinking ;). Could you spell it out for me?
posted by MetaMonkey at 11:32 AM on October 11, 2007


This guy is arguing that Paris Hilton "deserves" her position as gadfly jet-setting fasionista-moron and calculating media super slut?

Okay. I agree.

I would love to buy into this premises.

Especially since I seem to be the luckiest asshole on the planet. I make a good living with out having to dig ditches. I have a beautiful wife. I vacation in exotic places. I live well. I go to all the cool parties. Dang.

It must becuase I am a special snow flake.

I'm sure it has nothing to do with the hundreds of thousands of labor hours my ancestors put into building assets and exploiting resources.

Nah.
posted by tkchrist at 11:37 AM on October 11, 2007


And, Pope Guilty, do you see the word "either" in my comment to Abiezer?

No, my claim was that Pope Guilty knows nothing about running a mining company.
posted by Pope Guilty at 11:49 AM on October 11, 2007


1. Economics is not a trick or a lie or a tool to oppress the masses.
2. Minorities suffer because of majorities. It isn't one guy with a gun who decides things, but a bunch, a mass if you will, of guys with guns who decide to follow one guy, usually no gun, in the oppression of a minority.
3. Once we accept that the producer sets the price, now we turn to the question of how economic systems fail. They fail because complete freedom to enter into any contract creates the opportunity for a crisis when too many people sign too many bad contracts.

This crappiness of the majority, if you will, can collapse an economic system. Our solution to this is to regulate the system by means of interest rates. This certainly effects businesses largely based on the size of the business. If your business is small enough not to need credit, then you don't have to worry about interest rate regulation.

Think of the fed as a majority that defends us, more often then not, against an even greater and uglier majority - ourselves.
posted by ewkpates at 11:54 AM on October 11, 2007


ewkpates, you sound like a member in the free-market cult. If you step back and look at how most counties with a free-market economy are set up, it is pretty clear who the government is protecting, and it isn't joe-schmoe working at the car factory or a walmart.

A few hundred years back, the way the people in power kept their wealth and power was to say it was decreed to them by God almighty. Nowadays these people keep their power and wealth by teaching people that they are rich because they worked hard, while the person at the factory is poor because he doesn't work hard enough. God has been replaced by the invisible hand of the free market.
posted by chunking express at 12:16 PM on October 11, 2007


The second reason we tend to find great disparities of wealth alarming is that for most of human history the usual way to accumulate a fortune was to steal it: in pastoral societies by cattle raiding; in agricultural societies by appropriating others' estates in times of war, and taxing them in times of peace.

I'm sorry, but as soon as someone calls taxes theft, unless I have respect for their anarchist cred, I have no interest in anything they have to say about politics. I also note he never once addresses anything about actually existing human suffering in the lower classes, but rather just seems to make the similtaneous claims that 1) we are living in the best of possibly economies, or near enough, and 2) that it's their own fault they're poor anyway. This is self-congratulatory and utterly useless.

But what do I know? I'm a student (on parent's money), currently planning to become a professor (who "live within socialist eddies of the economy"), and a socialist to boot, so I'm apparently "the greatest threat to liberty".

Maybe if I lived in this "real world" I keep hearing about, I'd stop caring about people too.
posted by Arturus at 12:32 PM on October 11, 2007


ewkpates, I think you mistook my point - I was not arguing for or against any particular economic theory or ideology, but about the unknowability of economics itself. Game theory can only take you so far, the rest is politics and rhetoric.
posted by MetaMonkey at 12:35 PM on October 11, 2007


Hard work doesn't have a value. This misconception continues to frustrate people who think that hard work should be the basis of an economy.

What does have a value in a free market? The ability to create and protect capital, aka value. Does this take hard work? Sometimes yes, sometimes no.

Workers, ordinary guys who put in their 9 to 5, aren't blessed or particularly valuable by themselves. They don't have a right to comfort and luxury in any way. They are essentially using the good idea that someone else had. Without that factory or that walmart, would they be able to create value for the economy? Chances are no, because if they could then they would.

Digging ditches is hard work. Some ditches are dug and these ditches provide no value to the economy. Some ditches are dug and provide waste disposal, aqueducts, and fortifications. Knowing where, when, and why to dig a ditch has value to an economy. Digging it, well, those guys are a dime a dozen. If you got a dozen, then unionize ditch diggers and then come talk to me.

I'm not a member of any cult. I just think that people who have a near religious devotion to "the value of hard work" or "an honest day's work" are basically, sorry, dishonest. They want it to be easier to live in social contract than it is to live in the wild, hunting and gathering everything you need to survive.

It isn't easier to live within a social contract. It's less violent. You still have to figure out how to survive just the same.
posted by ewkpates at 12:37 PM on October 11, 2007 [5 favorites]


Arturus, he does talk about the difference between "absolute" and "relative" poverty. We should try to work on absolute poverty, but shouldn't worry about relative poverty.

I think that the free marketeers have a point about these issues: every year it seems that the national definition (if there could be one) about what constitutes "poverty" moves ever upward. In one of the articles I recently read about the current foreclosure crisis, one mother in Nevada was quoted as saying (from memory here), "the bank can't take my home! I deserved this home, I worked for it for years and moved out of an apartment! The government should come in to protect my home!" Nevermind the fact that she makes $38,000 per year and owns a $400,000 home, apparently basic math has no bearing on this matter.

In this case, she could get housing - a rental unit, most likely, but it isn't her *right* to own a home. A dream, perhaps. A desire, sure. But never a *right*. Same goes for healthcare, education and the like: these things should not be rights and should not constitute levels of poverty.

I also feel the need to reiterate that the majority of ones' 'wealth creation' is due to the effort they put in and to an extent, a certain amount of luck. On the aggregate, I'd say we're doing pretty damned well in contrast to 50 years ago, but we have to be careful about what we consider to be "doing well". Fifty years ago that meant some kind of roof over our heads, today it seems to mean a guarantee of a job, healthcare, education and housing.
posted by tgrundke at 12:44 PM on October 11, 2007


ewkpates - I have to adjust my comment based on your excellent one above about digging ditches. You are absolutely correct: digging ditches (hard work) is based upon the value creation of the one who thought of what kind of ditch, where to dig it and how to dig it. Good point.
posted by tgrundke at 12:48 PM on October 11, 2007


Workers, ordinary guys who put in their 9 to 5, aren't blessed or particularly valuable by themselves.

What are you going on about. Paris Hilton, George Bush, etc are blessed with what exactly that they deserve the wealth and power they have. What exactly are they blessed with that they deserve the life they lead, and not the life lead by someone living in abject poverty in the middle of rural India? Being spat out of some womans vagina in America versus the Congo doesn't make you a better person, it just makes you a luckier person.

What does have a value in a free market? The ability to create and protect capital, aka value.

So maybe we value the wrong things? When human beings are considered subhuman because they can't produce capital you have fucked up broken system.
posted by chunking express at 12:53 PM on October 11, 2007 [3 favorites]


Same goes for healthcare, education and the like: these things should not be rights and should not constitute levels of poverty.

Healthcare isn't a basic right? Education? The hyper-individualism you see in the US is scary.
posted by chunking express at 12:56 PM on October 11, 2007


You're really going to have to explain this to me, Pope Guilty. That is, what I neglected to "fact check." And spell it out for me, please.

Wood, my point is pretty simple. When Congress decided that public company CEOs were "overpaid", and it tried to fix that problem, companies started to pay executives in shares and derivatives. At almost that exact time, the US had a sustained, secular downturn in interest rates and risk premia-- two things that drive the value of equities straight up. I do not believe that this idea is controversial, but it never makes it into the reports about income inequality. Further, changes in risk premia and interest rates have virtually noting to do with the creation of economic value. The comment is relevant because it answers, in part, the question posed by mygothlaundry. As far as the rest, I can't tell whether you are being sarcastic, and fighting a multifront war here while I should be working is bad.

And Abiezer, I can't speak to the particulars of Statoil. But the value of that incremental difference is usually calculated through a discounted cash flow mechanism. What I'm not understanding is whether your argument centers around economic efficiency, or morality. If it's the first, we can play ping-pong all day. I can tell you about all the mines and fields I have visited, and you can tell me whatever it is you're going to tell me. If it's the second, well, that's a different ballgame altogether. I suppose my point is that laissez-faire is pretty good at economic efficiency. If you want to use a social justice ruler, you'll be best off by crafting a royalty scheme whereby the state can collect the Ricardian rents associated with its natural resources, and employing progressive taxation if you think rich people are getting too rich. The second-order problems you get with other approaches are pretty significant. You want people to have coal, and jobs. The free market is good at the first, but it generally likes to replace people with machines. If this rubs you wrong, you should be ready to explain why you want people working in coal mines.
posted by Kwantsar at 1:08 PM on October 11, 2007


The economy, the State, and the social contract aren't the same as your mom and dad, chunking. While your family may want to take care of you, the economy, the State, and the social contract do not.

Since there isn't a right to Health care and Education in the social contract (the Constitution), I don't know why you expect them. Where did you get the idea that these were rights?

WE DON'T VALUE THE WRONG THINGS. U R CRAZY. In economics, value is based on supply and demand. It is the result of our shopping habits. Religions are the source of the abstract "values" you are looking for. Economies are not.

Perhaps you would enjoy a religious State, where economic value is set by some ideology rather than consumer demand and production supply. Enjoy. It may sound wacky, but I prefer hyper-individualism. I call it "Liberty". It's wild.
posted by ewkpates at 1:23 PM on October 11, 2007


WE DON'T VALUE THE WRONG THINGS. U R CRAZY. In economics, value is based on supply and demand.

you do realize the particular definition of value you're employing here begs the question, don't you?
posted by saulgoodman at 1:31 PM on October 11, 2007


Okay, basic miscommunication here: education and health care are not rights because they are written into the social contract we are under. They are rights because the idea of a 'right' is a flexible piece of terminology, and because in our modern society, these things have fallen under basic requirements for existence.

When people talk of rights to food or clean water, basic human rights like that, do you raise the same objection because they're not written into the constitution?

disclaimer: I am a utilitarian, and consider, like Bentham, natural rights to be nonsense on stilts, but some things are basic enough that the language is justified.
posted by Arturus at 1:34 PM on October 11, 2007


Demanding that others feed you is ridiculous.

Clean water isn't a right, it's an environmental resource. Read the Kwantsar's comment about crafting royalty schemes. I think that private sector business should have to pay to use common natural resources such as air, water, and anything in a natural park if they diminish these resources as a part of production.

Saul, my friend, it doesn't beg the question. We are talking about value in a free market. Then, somebody says, hey, like love is a value, and like education and like friendship and stuff. I say no, not in a free market. You don't assign value in a free market, you calculate it.

Maybe this all boils down to "Value Wars". Is value what people decide they'll pay, or is value what God says it is?
posted by ewkpates at 1:44 PM on October 11, 2007


Right or not, if you deny education to a large portion of the population, you're going to have a mess on your hands. Ditto health care. Those ignorant or sick people aren't going to evaporate; they are going to cost society a huge amount of capital and energy.
posted by Kirth Gerson at 1:45 PM on October 11, 2007


No one is denying anyone anything. If schools don't offer to sell educations, then someone else will if the demand is high enough. See? Supply, demand. Stop using the language of "right" and "deny". Start using the language of supply and demand. If enough demand for cheap education exists, trust me, I'll step up. Class sizes in the low 100's. Qualifications in the low qualifications.

While I would never use a public library myself, I understand that such things exist. I encourage those who cannot afford educations to start there.

"With the money I have I buy books. With what is left, I buy food." -Mr. Erasmus
posted by ewkpates at 1:53 PM on October 11, 2007


Yes, it is a morality thing, Kwantsar. The idea the there was a moral aspect to economic activity was a given in Europe and China, as far I have read about two histories I'm somewhat familiar with, until proponents of the new efficiencies set out to break it down - with a variety of motives according to their lights.
We now live in the world that is a consequence of that change in paradigm, but it can change again. Various movements have intervened down the years in attempts to do just that.
Of course, I don't want people to work down coals mines if it isn't necessary. I want the typical lefty stuff like a society that maximises the opportunity to live a life of material well-being and decent livelihood for the largest possible number of people. As has probably become obvious, I'm no economist, but I'm fairly certain that we are in a reasonable position to move closer to that, particularly in the industrial West. Hence the arguments in European social democracies, and hence the various mixed models you see there that attempt just that.
posted by Abiezer at 1:54 PM on October 11, 2007


So maybe we value the wrong things? When human beings are considered subhuman because they can't produce capital you have fucked up broken system.

I'm not sure who you are applying it to but almost everybody produces some capital its just that the physical effort put in doesn't necessarily equal the capital produced.

In a market economy we DO distinguish between doctors and ditch diggers. And we are all the better for it. Thats backed up by enough evidence that I don't even feel the need to cite an example.

Thats not to say there are not people who are, bluntly put, a burden on society. Either through will, neglect or circumstance and thats where why all societies (USA included) have some social safety net. And we are all the better for that too.


Healthcare isn't a basic right? Education? The hyper-individualism you see in the US is scary.


Actually, everyone does have those rights as outlined in the Universal Declaration of Human Rights. The US (from a cursory glance and past visits) certainly provides those rights.

What the US doesn't necessarily do (and few countries achieve completely) is provide equality in the provision of healthcare or education.

I would think there are many arguments for such equality both economical and social. For example, better educated and healthier workers are more productive and equality in education stops aristocratisation of a society which can make it weaker in the long-term. However, there are convincing arguments that equality is inachievable and by striving for equality, we lower standards.
posted by monkeyx-uk at 1:56 PM on October 11, 2007


You don't assign value in a free market, you calculate it.

What is the calculation of value based on, if not some non-economic concept of value?

If schools don't offer to sell educations, then someone else will if the demand is high enough. See? Supply, demand.

Ha! Spoken like somebody who's never set foot in a history class.
posted by saulgoodman at 1:57 PM on October 11, 2007


Kirth, now you are getting somewhere. I agree with you on this and here's where I scratch my head at times: I don't think that healcare and education are a fundamental right, but I do recognize that if the system becomes far too skewed or too many people begin to feel disenfranchised, we're going to have some major upheaval.

The other issue is the numbers game: how many people truly are not properly educated or do not have healthcare? Hillary spouts off the 40 million number of uninsured. While this number in total may be true, I've been reading an increasing number of estimates that state that about 1/3 of those "uninsured" are people who choose not to have insurance (lots of 20-somethings, and yes, I recognize that there may be those who WANT healthcare but cannot AFFORD it) for legitimate reasons (young and healthy, self sufficient, part of medicaid/medicare), and another 1/3 or better may be comprised of illegal immigrants. Take that out and the number of uninsured Americans who cannot afford healthcare drops to 14 million or less.

Now, Kirth, I don't think that healthcare is being DENIED to anyone (explicitly). I also think that there's a good chance that a large percentage of those people without healthcare could afford to be covered if they cut back on other expenses and made different choices. Again, I have no doubt that there are many people who cannot afford healthcare at all, but I don't think that the numbers add up to some sort of social tipping point at the moment.

The US constitution provides for the protection of basic rights and the freedom to act without fear of unlawful reprisals or capriciousness. It does not promise you that you will lead a happy life, have a television, good education or even a paid doctor's visit. I don't think the desire to have such things is bad, but I never grew up thinking they were rights - my dad worked two jobs and my mother worked as well to help put us through school and pay for our healthcare. I don't expect the state to take care of my parents when they are old, either - that will be their responsibility to save, mine to assist, and failing that this is just how the chips will fall. I've accepted that and have no issue with it.
posted by tgrundke at 2:04 PM on October 11, 2007


Saul, my friend, it doesn't beg the question. We are talking about value in a free market. Then, somebody says, hey, like love is a value, and like education and like friendship and stuff.

No, it does beg the question. Value can't be defined as solely a product of the operation of the free market because the functioning of a free market presupposes value (no one would buy or sell anything if such transactions didn't deliver value to someone right? The real-world value of a good or service can't be determined solely in terms of its market value, because what determines that market value? The market? That's incredibly circular reasoning.
posted by saulgoodman at 2:26 PM on October 11, 2007 [2 favorites]


ewkpates I'm sorry to disagree with you, but I'm afraid that you are, in fact, in a cult. Its called the Cult of the Free Market.

The central tenant of this cult is that because the free market is, demonstrably, a useful and efficient way to deal with some things that it must therefore be applied to *ALL* things. You are claiming its a panacea, and it isn't.

The free market is simply a tool, it isn't sacred, and it isn't the answer to all problems. A hammer is great for driving nails, and crappy for applying paint. The free market is great for producing bananas, computers, and consumer goods. Its crappy for producing education or health care.

Recognizing that a tool has limits, and is not universally the right choice of tools, is not a disparagement of the tool, its just being sane.

The claim that education should be sold, rather than given as a right, is simply insane. An educated working class is essential for a functioning economy, corporations would wind up paying more for worker training if they got a bunch of ignorant types than they do in taxes to pay for public education. Same goes, in the long run, for health care.

Not to mention the fact that the inevitable rebellion and slaughter against the economic nobility you're proposing to create would put a pinch on production....

As for labor and money, I'll toss a simple one out: if an economy isn't paying a person who works full time, regardless of what they are employed to do, a living wage then the economy is fucked up. And "living wage" doesn't mean "can survive by living on the street and eating nothing but ramen".
posted by sotonohito at 2:36 PM on October 11, 2007 [7 favorites]


my dad worked two jobs and my mother worked as well to help put us through school and pay for our healthcare

The free-market sounds a lot like 18th century Calvinist doctrine for the modern man.

Also, if they didn't do these things and you caught the flu and died, that'd be cool because of what aspect of the free market?
posted by chunking express at 2:40 PM on October 11, 2007


sotonohito: Thank you for being so much more articulate than me. You rock.
posted by Arturus at 3:04 PM on October 11, 2007


No one is denying anyone anything.

If you're charging the parents of all children money for their basic education, then you are going to wind up denying that education to some of them, because the parents won't have the money or won't want to spend it. It may not be in the Constitution, but universal free education is part of the foundation of this country, and one of the things that made it the economic wonder it used to be. Claiming that supply and demand will provide the same, or better, benefits than government-provided education is a prescription for societal suicide. It won't, because it can't.
posted by Kirth Gerson at 3:29 PM on October 11, 2007


Call me crazy, I think the person working smarter should get paid more than the guy working harder. The amount of effort it takes you to get a job done is not an indicator of your effectiveness at that job.
posted by nomisxid at 4:03 PM on October 11, 2007


ewkpates, you're just coming off as a troll. The proponents of the mythical free market typically talk of meritocracy and equality of opportunity. In the US and Uk of today, the economic status of your parents is directly correlated with the educational and health outcomes of your life. Clearly this also determines to a great extent the economic outcome.

To try to maintain that this constitutes a free market meritocracy is clearly deluded.

Also, I would maintain that anyone that thinks that it's acceptable for the richest country in the history of the world to effectively ignore the poorest 5% of their population and claim this is for their own good is also deluded.

It is clear that in today's UK and US, the clincher is not working smarter, but starting richer.
posted by Jakey at 4:22 PM on October 11, 2007 [1 favorite]


"Instead of accumulating money slowly by being paid a regular wage for fifty years, I want to get it over with as soon as possible. So governments that forbid you to accumulate wealth are in effect decreeing that you work slowly. They're willing to let you earn $3 million over fifty years, but they're not willing to let you work so hard that you can do it in two. They are like the corporate boss that you can't go to and say, I want to work ten times as hard, so please pay me ten times a much. Except this is not a boss you can escape by starting your own company."

ok, so, if you make tons of money you don't have to pay taxes. then who covers the roads he'll drive on?
posted by andywolf at 4:23 PM on October 11, 2007


Anyone who believes in a free market should go to Ocean Hill in Brooklyn late at night. How many of the pro-free market people in this thread are white? Yes, it is a race thing.
posted by fuq at 4:57 PM on October 11, 2007


The thing the "free" market cultists are either too stupid to understand or wilfully choose to miss is the idea that wealth not only conveys power to act within the rules of economics, it conveys power to change the rules of economics, and make the market no longer free. Once someone (a cartel, generally) is winning the game, they can alter the rules to keep themselves winning more often, to make their win payoffs greater, to make the costs for other players greater, and so on. This is what has gone wrong with capitalism, especially in the USA. It's all that needs to go wrong.

"Hard work" is not a virtue, or inherently deserving of reward, or the purpose of humanity, or some kind of exercise in righteous self-abasement before the god Mammon; it's just a cost to the individual doing it. It may, or may not, produce a gain, and that gain will have very little to do with the "hardness" of the work involved, and much more to do with what it is exactly that you are doing. There isn't a CEO in the world who does 10,000 times "harder" work--or even twice as "hard" work--than a factory hand. They get paid more only because they get to set their own pay rates. There is no "free" in their market.
posted by aeschenkarnos at 6:41 PM on October 11, 2007 [2 favorites]


What is it about dudes with computers?

I think that another dude with a computer (who probably made about as much money as Paul Graham did in about the same time period for pretty much the same reason) might have discovered something when comparing programmers to pilots:
Consider asking the average computer programmer to tell you about himself. "I'm a great lover, a great driver, and a great software engineer," is a likely response. What about the fact that his girlfriend left him, he got into an accident on the way into work today, and you showed him how to rewrite his data model with one third as many tables? He will have excuses at the ready: "The girlfriend was having issues with her family; the breakup had nothing to do with me. It was the other car's fault. My design was cleaner, squeezing all of that stuff into fewer tables is a kludge." A computer programmer can be ridiculously overconfident and will never confront incontrovertible evidence of his shortcomings.

Pilots, on the other hand, are constantly forced to confront their limitations. Every time the instructor has to help them, they realize that they would have been in trouble if doing the maneuver by themselves. Every time a non-professional pilot puts on a hood and does a simulated instrument approach, he or she is usually making small mistakes and generally not being mentally as far ahead of the airplane as desired. Every time a pilot works toward new rating, there is the reminder that achieving the standards of the FAA checkride is uncertain and will require a lot more practice. You're unlikely to spend much time with pilots who are truly overconfident because, unfortunately, most of them are dead.

Regarding Graham himself, I really enjoy reading his essays, find them great food for though, but I tend to find he speaks with the lazy sloppiness smart successful people can often get away with, the one he worries over here.

I'm still interested in what Graham has to say -- the argument he makes in the essay is one worth examining, even if you reject the conclusion.

And of course I'm still interested in what he has to say about Lisp. But sometimes I'm not even sure about that. By the measure "by their fruits ye shall know them," I have some reason to distrust either Yahoo or Graham: my experiences working with Yahoo Stores have been so mediocre in comparison to several comparable e-commerce products (not written in LISP) that either Yahoo seriously tarnished what ViaWeb was after buying it, or they made a mistake in buying it in the first place.

I'm partially biased by having worked for a company that was competing with ViaWeb at the time (if I recall correctly, Yahoo looked at us too). But the product I worked on isn't the only one I think was superior.
posted by weston at 6:45 PM on October 11, 2007 [1 favorite]


I live in Australia.

Here, you can get a good education through the teritary level for free, or at least for free-right-now. Of course, you do have to pay back the gov'mint for the teritary education; but that's an extra tax percentage, scaled to your income, until you pay it off. For someone my age, I had a huge debt (for reasons various), and I should have it paid off in the next couple of years, by the time I'm 30. Honestly, I don't know if the approach here scales; but for the size of the domain, it seems a reasonable way to manage a basic education for the populace.

Healthcare is an interesting one. I've got a bunch of medical issues (teeth, eyes, injuries, rsi, random stuff), so I pay for private health insurance. That covers the major stuff. For the minor stuff ("I have a cold", "I want a vaccine"), and emergencies (eg, car accidents), medicare subsidizes most of it, and the rest is not a huge some of money, especially if you're on a low income (student, pensioner, etc). Pharmaceuticals are also heavily subsized by the government. High income earners pay an extra 1% tax to help fund this, and if you're over 30 without private healthcare for hospital visits, you get another extra surcharge, again applied as a tax. It's widely recognised that we have some problems in this area as well, and they're probably going to be addressed in the upcoming election.

From the point of view of growing up with the above - everything I've heard about the US system horrifies me. You have to go into ginormous debt to a private agency to get a decent tertiary education; a medical emergency can likewise land you in serious debt; your health insurance is tied to your employer, instead of being affordable to you as a citizen, and consistent (at your discretion) no matter what your employment happens to be doing.

If that's what a truely free market looks like, you can keep it and welcome to it. I'll take my nanny-state and high taxes, thanks.
posted by ysabet at 6:48 PM on October 11, 2007 [1 favorite]


The proponents of the mythical free market typically talk of meritocracy and equality of opportunity. In the US and Uk of today, the economic status of your parents is directly correlated with the educational and health outcomes of your life. Clearly this also determines to a great extent the economic outcome.

To try to maintain that this constitutes a free market meritocracy is clearly deluded.


It also makes me wonder how many free market cultists have actually worked on Wall Street. I took a five year detour from social work to be a trader. I met as many straight up thugs and hustlers on Wall Street as I have in North Philly. Don't dress this shit up too much, man, making money ain't fucking writing great novels. If given the opportunity, and certainly out of necessity, a real money maker will step on your fucking neck in a way that requires no skill or ability other than possessing a cold heart.

I'm sure the author considers that a "strong will." Whatever gets you to bed at night, man.

And any attempt to equate the pursuit of money with what Chandler did when he sat down at the typewriter is a bad fucking joke, period.
posted by The Straightener at 6:48 PM on October 11, 2007 [1 favorite]


Some people here have an excellent grasp of economics. Most of the commenters of the pro-market bent do. Paul Graham too.

In one sense, they are right to say that there is no economic problem when Mr "Extra 10%" takes the CEO's office and pulls in half a billion dollars, and simultaneously some naive ditch digger, uneducated, no grasp of the economy, works his heart out for forty years, contracts pneumonia, and dies because he can't afford health care.

The efforts of both were priced accurately by the market according to how much wealth they created, and they were rewarded accordingly.

In the same vein, a physicist might correctly say that there is no problem when a boy takes a gun to school and shoots a few dozen classmates with it. The force acting on the bullet from the exploding gunpowder propels it with enough velocity to puncture the victim's skull and come out the other side -- you can cry all you want, but it's simple physics. A biologist or doctor might then come along to explain how they die -- the correct outcome for someone whose brain has been pulped by a bullet.

Of course, Values and Rights and Fairness are nonsense terms within economic models -- or physical, or medical ones. Economics is a science*, not a system of values. You need to put economics out of your head when considering what's Good, rather than applying that label to whatever that science predicts.

* insert disclaimer
posted by magic curl at 7:48 PM on October 11, 2007 [3 favorites]


(Personal confession: I have a dream of an all-powerful, theoretical free market being unleashed on this goddamn country to teach those no-hopers with their fast food and people magazines what they're really worth. Unfortunately, they don't seem to respond by politely starving to death exiting the labour market like I got taught in undergrad.)
posted by magic curl at 7:59 PM on October 11, 2007


Economics is a science

The fuck it is. No scientist can be thoroughly, consistently wrong and still be considered a scientist. No scientific discipline can be so nearly completely incapable of making predictions as economics and still be considered a science. And most damning of all, science is not normative, and economics, deny it to their dying breaths though the economists and professors may, is normative to the core.

Economics, as it is taught in schools and practiced for corporations and the government, is not a "science". It is a religion.
posted by Pope Guilty at 9:14 PM on October 11, 2007 [1 favorite]


so i'm guessing ewkpates started out begging on the streets for food. life never lent you any advantages that came with birth did it? any success must of been purely due to hyper individualism and absolutely no one helped, ever.

from your comments of thinly veiled disgust for everyone "below" you, those sad library goers and such, make you as poor in life as someone sleeping in a doorway.
posted by andywolf at 9:19 PM on October 11, 2007


The fuck it is.

I had a disclaimer, you know.

It's a soft science. A social science. It may not be rigorous and reliably predictive -- almost nothing involving human behaviour is. But that was irrelevant to my point.

posted by magic curl at 9:46 PM on October 11, 2007


from your comments of thinly veiled disgust for everyone "below" you, those sad library goers and such, make you as poor in life as someone sleeping in a doorway.

In fairness to ewkpates, I don't see his thinly veiled disgust being directed at library goers, but at people who think library goers should be paid as well as investment bankers with no time to read books.
posted by magic curl at 9:55 PM on October 11, 2007


It isn't easier to live within a social contract. It's less violent. You still have to figure out how to survive just the same.

Ewkpates, If the social contract doesn't make our lives easier, how can it make our lives less violent? Furthermore, why is a social contract desirable at all if it doesn't make our lives easier?

Maybe this all boils down to "Value Wars". Is value what people decide they'll pay, or is value what God says it is?

Perhaps you are overlooking another type of value system. If you are unfamiliar with secular ethics, I would suggest starting with Adam Smith's The Theory of Moral Sentiments. By no means stop there. Read Hume, Kant, Mill and Rawls. That's the bare minimum to even scratch the surface. Value systems decoupled from money and God are out there.

For the sake of clarity, I'm going to suggest some other values that don't issue from the font of the market. I'm sure we both value liberty, for instance: freedom of conscience and belief, freedom of speech, habeas corpus, etc. These things all must have value, or they wouldn't be worth defending. Sometimes, values are determined by a democratic process. To reject this is to reject the entire premise of democracy. Your reductionist view of value seems to imply that the value of individuals should be a function of their wealth, or ability to create or acquire it. After all, it's the market or God, right?

Also, you seem to have stated that even a wealthy nation like the US has no obligation whatsoever to prevent its citizens from starving, or dying for want of clean water. I can't think of a word for that but abominable.

While I would never use a public library myself, I understand that such things exist. I encourage those who cannot afford educations to start there.

I began writing this under the assumption that your comments have been made in good faith, but I'm having my doubts upon reading this. You sound like Marie Antoinette.

To once again get back to Adam Smith, even he felt that progressive taxation and public education were acceptable infringments upon the free market.
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

---

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.

-Adam Smith, The Wealth of Nations
posted by [expletive deleted] at 2:17 AM on October 12, 2007 [3 favorites]


1. The library comment was needlessly inflammatory/distracting. I think people should buy books, I think communal ownership of books is ethically wrong. Some woman who just won some big prize for writing at age 88 was self taught. Books. She used books.

2. Ethically, morally, or tyrannically setting value in the market is all the same. People MUST be free to buy and sell at whatever price they negotiate amongst themselves.

Everybody likes to think they know what is best for everyone else. Everybody likes to think they know best how to save people from the hardships of life.

The problem is that everybody just ends up a tyrant, forcing people to their way of believing by "saving them".

3. The social contract allows us to live together without beating each other and taking each other's stuff through force. That's it. That's the whole deal. Liberty is not a value, it is a natural state that we do not sacrifice when we agree to live together nonviolently.
posted by ewkpates at 5:17 AM on October 12, 2007


The social contract allows us to live together without beating each other

but from the way you're saying things ought to be, this only applies to those that have the good fortune of being born in an economically advantageous situation. not to mention the good fortune of being born without any disabilities. cause without any form of societal assistance for people born with major physical and developmental disabilities you might as well put them in a bag and toss them into the river. at least that would be humane, since from your perspective they don't earn so they're waste. you can try to pretty it up, but that's what you're saying.
posted by andywolf at 5:46 AM on October 12, 2007


ewkpates wrote "I think communal ownership of books is ethically wrong."

You've managed to jump, somehow, from "a free market economy is quite efficient" and "it only makes sense that the person who produced X sets its price" to bizarre statements about libraries being evil, or ethically wrong, or however you choose to phrase it.

Can I repeat my comment about you being in a cult?

Adam Smith must be spinning at a couple megahertz after seeing what people like you and Rynd have done to his work...

Seriously, and with no snark at all, how can you fail to see that the policies you propose will do nothing but give rise to a new aristocracy? If one, by luck of birth, isn't born into a family wealthy enough to buy health care, education, etc, your proposals will doom them to a life of miserable poverty and drudgery. The fact that a few, highly exceptional, individuals may (in the early days anyway, before the class boundaries are inevitably codified into law) be able to, by dint of nearly superhuman effort, escape the trap of being born into a poor family does not make your idealized society anything resembling a meritocracy.
posted by sotonohito at 8:54 AM on October 12, 2007 [2 favorites]


Forgot to add: your "success story" of a completely unnamed and unidentified, and I strongly suspect completely made up, old woman who became a successful writer by studying in libraries is a very good argument *AGAINST* your values.

After all, in your perfect world not only would libraries not exist, but all right thinking people would revile the very concept as being ethically wrong. So the old woman you so conveniently invented [1], would be completely unable to succeed without the libraries you want to see torn down.

[1] And who, if she does have real existence, I'd wager learned how to read in a tax funded school. You can't walk into a library as an illiterate and magically start reading books.
posted by sotonohito at 9:07 AM on October 12, 2007 [3 favorites]


I think people should buy books, I think communal ownership of books is ethically wrong

Well who cares what you think? The thoughts of Randian are hardly worth effort to listen to them, I mean, I don't care what creationists think about biology. I'm constantly amazed by people who don't think anyone else matters yet think other people give a damn what they think about things.
posted by delmoi at 1:16 PM on October 14, 2007 [3 favorites]


I just realized a more precise way to say what I just said: "I'm amazed by Randians who don't think others matter, yet that those selfsame thoughts matter to selfsame others" It collapses nicely the sets of people involved.
posted by delmoi at 10:14 AM on October 19, 2007


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