Social Justice or Something Else?

Here’s a quick test to help e.g. those who sympathise with the “we are the 99%” slogan to work out what personal motivation is behind their support of proposals for change in people’s relative incomes.

(Once you’ve read the short article) It’s worth observing that, after the button is pushed, if you have a relative measure of poverty (as we do here in the UK), measured poverty goes up.

A further observation: this test makes no claim that the hypothetical scenario is actually happening or will happen. Notice that there’s a genie involved.

14 thoughts on “Social Justice or Something Else?

  1. Doesn’t the quick test ignore the economics of everything costing at least 2x as much as before the button push?

  2. aki: like I said, genies are involved. It does say “real income”; and prices would not necessarily double – even if you say that everyone is being paid double (which the scenario does not say), then wages are not 100% of the price of everything.

  3. Well, for this test to teach the correct lesson, you can’t think too much about what the genie is doing at all, really. There must literally be no negative consequences immediately, or in any future. The universe freezes and magic makes all of the world richer while ignoring market forces, etc. Well, those who have nearly nothing will have… twice nearly nothing. Two cardboard boxes?

    I appreciate opportunities to examine my morals, but this shouldn’t be a litmus test for rightness. It simply assumes too much and leaves too much open. And while none of you have any reason to believe me, I know where my sympathies for part of the message of the 99%/Occupy Whatever come from.

    Maybe it should be worded more like “Push a button that gives the have-nots a reasonable standard of living and reasonable disposable income, in exchange for giving the haves 10, 100 or 1000x their prosperity.”

    Please correct me if I missed something..

  4. (ny reply is US-centric, as that is where I live and what I know; it might not apply elsewhere)

    Well, the analogy to what is really happening and what people are complaining about isn’t very good. People aren’t complaining that other people are rich, rather that they have undue influence on how the rules are made which amplifies the divide. People aren’t complaining that LeBron James gets paid handsomely for being a good basketball player, or that Bill Gates is worth billions. They are perceived as earning their money fairly.

    In light of that, if I pressed the button, that family making $12K/yr now makes $24K/year, which is tremendously helpful to them, but doesn’t change their political influence one iota. That broker who makes $2M/yr now makes $20M/yr; guess how much extra influence that buys?

    A few US presidential candidates are proposing that capital gains be taxed at 0%. The guy who spends 10 hours a day laying bricks, or tilling soil, or assembling cars would pay federal tax, while the speculator who performs a well timed trade would pay nothing. The fiction is that the current 15% tax rate on capital gains is so onerous that it is holding back those with deep pockets form investing in new ventures.

    In a typical year in the US, about 1/3 (and sometimes as much as 40%) of the total profit generated by all profitable companies is in the finance sector. While finance is an important service, I find it hard to believe that it is rewarded in proportion to its value. Back in the 1950s, that figure was more like 15%. It is often said that the “free” market is the most efficient mechanism for commerce. However, I have to wonder just how efficient it really is when 30-40% of all profit is drained by the financial plumbing; it seems awfully inefficient to me, to the benefit of the few.

    In the past 30 years, the GDP of the US has grown through increased productivity. The bottom 20% have seen their normalized income stay flat (and even drop at the lowest end). For the bottom 99%, the normalized income has gone up 50% in those 30 years; for the top 1%, it has gone up 275%. When people propose adjusting the tax rate to be more progressive, there is wild bleating about wealth redistribution, but the fact of the matter is redistribution is going on, and it is all in the direction of the most wealthy.

    I speak as someone not in the top 1% but in the top 10%. I don’t envy those with 10x the money I do, as I have enough money to do the things I care to do. However, I do want to live in a just society, and from a pragmatic point of view, I recognize that once a class of people see that the rules are habitually stacked against them, they have little reason to obey the rules, leading to a social breakdown. Everyone needs to have a vested interest in the system in order to maintain social order.

  5. > For the bottom 99%, the normalized income has gone up 50% in those 30 years;
    > for the top 1%, it has gone up 275%.

    The question is, is this a better or worse outcome than 0%/0%, or 20%/0%? I think that’s what the genie test is focused on.

    I think the question of whether the finance industry is unduly parasitic is only tangentially related. So is the question of how powerful people use their influence to increase their income gap. I’m sympathetic to the idea that we have big problems there. (Although I think the “Occupy” protests are at best a complete waste of time.)

  6. > The question is, is this a better or worse outcome than 0%/0%, or 20%/0%? I think
    > that’s what the genie test is focused on.

    Presumably Gerv’s assumption is that lots of people who think 20%/0% would have been a better outcome, and they’re either wrong or evil. I happen to agree.

  7. At first thought, the hypothesis is straight out of fairyland, isn’t it? You can’t make everyone richer all over the world, not in dollars, pounds, yens, euros or whatever currency units, but in actual standard of living, can you?

    And yet… think of the industrial revolution of the 19th century… of the agricultural revolution of the Neolithic… didn’t they do just that (give everyone a better standard of living I mean, I’m not talking about the spread)?

  8. Robert said, “I think the question of whether the finance industry is unduly parasitic is only tangentially related.”

    No, it is directly related because Gerv posed it in that context. The original question didn’t tie the two issues together.

    I’m sure you bible scholars will tell me which chapter and verse this is, but one of the few parables that really stuck with me from my years of going to church was the one where the vineyard owner hires men to bring in the crops; they work for a week or two, but the vineyard owner realizes the weather will turn before the job is done, so he hires a second crew. Thankfully, the harvest comes in, and the thankful owner pays the first crew the agreed upon sum, but in the generosity of the moment decides to pay the second crew the same amount as the first crew, despite their not having worked as much.

    Wilson’s question directly relates to that story, and it is a fine parable. Gerv casting the occupy wallstreet complaints as being in the same category is what I’m disagreeing with. The others who have replied have said, well, of course hit the button if both are simply rewarded without any other complicating factors. But occupy wallstreet is in the real world, and such a decision to increase the wealth of the top 1% 10-fold would have significant consequences.

  9. People aren’t complaining that LeBron James gets paid handsomely for being a good basketball player, or that Bill Gates is worth billions. They are perceived as earning their money fairly.

    I think people are complaining about this, in that they say “rich people” should pay more taxes – which effectively means “they should have less money for themselves, and more money should be redistributed to others”.

    When people propose adjusting the tax rate to be more progressive, there is wild bleating about wealth redistribution, but the fact of the matter is redistribution is going on, and it is all in the direction of the most wealthy.

    Doesn’t that obscure an important difference between the two types of “redistribution” you mention? The redistribution “in the direction of the most wealthy” is (assuming no criminal behaviour) due to free people making uncoerced exchanges which make both sides better off (business). The redistribution “the other way” would be due to people having money taken off them by threat of force or imprisonment (which is what taxation is) and given to others. The two are not equivalent.

    (ObDisclaimer: the above description of taxes does _not_ mean I disagree with the entire idea of taxes, or paying them. Romans 13.)

    Jim: The parable you refer to is known as the Parable of the Workers in the Vineyard, and can be found in Matthew chapter 20.

    I specifically didn’t mention the Occupy movement, only the 99% slogan, because it seems that this particular strand of what’s going on is most at risk from being motivated by envy for the rich rather than a desire to see the betterment of the poor.

  10. Gerv, I don’t know what it is like the UK, but it seems like even poor Americans think they are one lottery ticket (away from being rich and don’t want to see a

    • sorry — accidentally somehow sent this just as I started composing my response. see below for the final form.

  11. Gerv, I don’t know what it is like the UK, but it seems like even poor Americans think they are one lottery ticket (or worse, one appearance in a reality TV show) away from being rich and thus don’t have a problem with other people being rich. I can only reiterate my opinion that the nub of the complaint isn’t wealth, it is that the game rigged.

    To make an analogy, if I played tennis with someone and they beat me because they were better, it wouldn’t rankle me. But if they won because they cheated, or because the judge showed overt bias (say the judge was friends with the other player, or they went to the same school) then I’d be incensed. There is the perception that the 1% have gamed the system.

    When discussing whether rich people should pay more taxes, it is very important to define how you are measuring “more.” More in absolute dollars, more in their marginal rate, more in the effective tax rate, more in federal taxes vs total taxes … When the richest 0.1% have a substantially lower effective tax rate than the next 30% of the population (which they do in the US), it is hard to argue that the “solution” is to cut the capital gains rate to 0% (which is where that 0.1% make most of their money).

    “The redistribution ‘in the direction of the most wealthy’ is (assuming no criminal behaviour) due to free people making uncoerced exchanges which make both sides better off (business).”

    That is a wildly naive view of what really happens. You might as well argue that people working in menial jobs are at not disadvantage because they are free to lobby congress and get laws passed in their favor in exactly in the same way that corporations do. Those waiters could broadcast their own TV news channels to get their point of view heard, just like Rupert Murdoch does. See? It is completely fair.

    The people on the top rung have influence and access to define what is allowed, and to some degree, what gets prosecuted when the rules are broken. They get to determine what shows up on the news shows, to hide important stories and distract people with manufactured distractions.

    Nobody thinks that changing the tax codes will fix everything, or will eliminate all or even most disparity, but it is a start to making the system more fair. Nobody thinks that it is only a matter of taxes — it is a systematic corruption of the ideal of our representative form of government, and OWS is giving notice that people won’t stand to be taken for granted much longer.