the insidious logic of income inequality

 
jouett
 
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jouett
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12 November 2018 06:30
 

As usual the podcast discussion was very interesting, but I wanted to write to mention an interesting juxtaposition of positions that I encountered.

Discussion of Will MacAskill and Ben Todd’s 80,000 hours during the Q&A portion of Waking Up #138 at 1:37:10 yielded a surprising discussion of non-profit salaries. Rather than, as has since been done in #140, decrying the disparity in wealth (which is reflected in executive salary multiples of average employee salaries), Sam takes the position that non-profits should consider engaging in the same kind of egregious salary differentiation for which the private sector is famous (or perhaps more correctly, infamous). This position seems to derive from a particularly insidious line of rhetoric that argues that the super wealthy somehow deserve their extreme wealth because they are just that much better than we hoi polloi. It also assumes that non-profits would benefit from having the same short-sighted, self-serving leadership that many public companies have.

It might be more productive to ask instead why executives have been so successful at coopting the putative oversight of boards that they are able to arrogate to themselves such a huge proportion of the benefits. Or, as Sam and Matt pointed out in #140, these executive all too often abscond with bonuses for destroying the wealth of others.
I am extremely skeptical of the “great man” theory of progress in any domain, and I would point out that Apple may have made outrageous money producing “must have” products and services, but the fundamental capabilities that drive the underlying technologies that are the backbone of those products and services (microprocessors, the internet and networking in general, global positioning systems, lithium batteries, LCDs, cellular networks, etc.) were developed by myriad people at multiple institutions and generally at great public expense. Although there are certainly substantial differences in capabilities across people and there is likely some true need to distinguish between the value of such capabilities in labor markets of all kinds, it is at the very least a mixed message to decry income inequality in one breath while arguing for greater pay for “elite” talent at non-profits.

 
EN
 
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EN
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12 November 2018 08:03
 

The economic system is biased in favor of the super wealthy, to the point that the wealthiest have gained almost all the benefit of our economic growth over the past 20 years.  They may be smart and hard-working, but they are not that much smarter and harder working that others.  They benefit from being in the USA and from the tax laws and other aspects of our system. Most of their wealth comes from the good fortune of being in the right place at the right time.  So how do we reset the system to allow others to gain the benefits of our growth, while still allowing the wealthy to get the benefit of their own personal industry and risk-taking?  Initial proposals are 1) increase personal income tax to Eisenhower administration levels; 2) extend FICA and Medicaid taxes to the entire personal income instead of cutting it off at about $127,000; and 3) a possible one-time tax based on net worth to level the playing field.  The last proposal would be difficult, as net worth is measured in many different forms, not usually liquid assets.  But something needs to be done to open the benefits of our system to all, not just the top 1%.

 
jouett
 
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jouett
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12 November 2018 09:10
 

Good points EN, and Sam Harris has focused some attention on the issue in the podcast. Alas, all of those proposed solutions (and pretty much any others that may pop up) face extraordinary obstacles - power (and wealth) begets wealth (and power). Even UBI, a seemingly simple solution that the podcast points out was almost implemented under Nixon, has little hope of passing in our current political landscape. Unfortunately, the “logic” of that system pervades discussions even by those who think diligently about those problems. I tend to hew in the direction of Dewey’s assessment of the corporatized nature of modern society (although he comes from more of a psychological than an economic perspective). Some have diagnosed the fundamental problem that Dewey identified, but it seems to make little difference in our broader efforts in organizing ourselves. It is terribly difficult to produce egalitarian change in a system that extols the virtues of rugged individualism, and when the talking points of the anti-egalitarian side of the argument begin to infiltrate the speech and thinking of those who have recognized the fundamental problem it seems a Sisyphean task.

 
Brick Bungalow
 
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Brick Bungalow
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12 November 2018 09:26
 

Some tangents.

I’ve long suspected that there are root causes transcendent of any artificial system. Some systems are better than others of course and we should endeavor to create the most just society possible but I don’t think the problem gets eliminated simply by reorganization and redistribution. I think we need a culture that values justice and equality first. Any structure of mere reward and punishment will easily be gamed by the unscrupulous as we’ve seen in nations that have tried to reinvent their whole economy for similar reasons. Not ‘great’ men. Just men who could anticipate and provoke.

I recall the kinds of arguments put forth by people who vote for so-called fiscal conservatives when they themselves have no capital or real estate or any kind of wealth that would benefit personally from these policies. I think its the same mentality that demanded a king. Sometimes it’s even self aware of this fact as in the case of conservative evangelicals. There is no wish for economic justice. Many of us look at Trump with his fetish for gold plating and see only an absurd fraud. I think the garishness of his conspicuous wealth probably hits some very deep triggers with certain people. They may want to be rich but what they REALLY want is to be a litter bearer. They want a tangible object of worship. No re write of the tax code is going to fix that.

 
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16 November 2018 02:44
 
Brick Bungalow - 12 November 2018 09:26 AM

They may want to be rich but what they REALLY want is to be a litter bearer. They want a tangible object of worship. No re write of the tax code is going to fix that.

That is an interesting way of putting it.  I’ll need to stew on it.