Thursday, June 27, 2013

I get what you get in ten years, in two days



"I get what you get in ten years, in two days."
- Chris Brown, "Look at Me Now"


Plenty of folks have turned out to attack Greg Mankiw's essay, "Defending the One Percent". Most of them have focused on Mankiw's numbers and factual assertions. I thought I'd take a different approach, because at its core, Mankiw's differences with the bulk of the economics world are more about values than facts.

The usual economist case for income redistribution is based on utilitarianism; the idea is that $1000 matters more to a poor person than to a rich person. Mankiw wants to ditch this idea in favor of a value system based on "just deserts":
An alternative to the social insurance view of the income distribution is what, in Mankiw (2010), I called a “just deserts” perspective. According to this view, people should receive compensation congruent with their contributions. If the economy were described by a classical competitive equilibrium without any externalities or public goods, then every individual would earn the value of his or her own marginal product, and there would be no need for government to  alter the resulting income distribution.
Here is that 2010 Mankiw essay, which is very similar to the recent one.

Now, value systems are subjective; what the government should or shouldn't do is a matter of opinion. But I think it's worthwhile to think through the implications of Mankiw's "just deserts" value system.

To do this, let's do a thought experiment, and compare two imaginary people - just for fun, let's make them two American white males in their mid-40s. The first let's call Brad CEO. He's the CEO of a big company and makes $30 million a year, which is just a tad less than the CEO of Phillip Morris made in 2012. The second let's call Mike Clerk, who works at Wal-Mart, earning the average Wal-Mart wage of $12.40 an hour, or a bit over $25,000 a year. Mike is hardly unusual, income-wise; in fact, somewhere between 20% and 25% of American households make less than Mike. Furthermore let's assume that taxes are zero; this is a world where everyone gets his "just deserts" (Note that because of elasticity, this means that Brad CEO actually takes home more than the CEO of Phillip Morris would take home in the absence of taxes; so perhaps Brad is more accurately compared to the CEO of Abercrombie & Fitch).

In 10 years, Mike gets $250,000. That is about what Brad gets in three days (not two; sorry, Chris Brown).

Now let's imagine that Mike wants to buy something big - say, a new Honda Civic (disclosure: I drive a Honda Civic). That costs about $18,000. So Mike has to save up to afford it (sure, he can just finance it, but then he has to make payments, which amounts to much the same thing). How long does it take him to save up $18,000? Let's suppose that Mike is an extraordinarily thrifty man (following the advice of blogger Noah Smith), and lives well under his means - eating cheap fast food or low-quality grocery store food without much meat content, living in a small studio apartment, biking to Wal-Mart each morning, etc. By these heroic efforts, he manages to put aside 25% of his income - over eight times the average household savings rate in America today - just to buy that Honda. (Assume the risk-free rate of return is around zero, as in America today).

It takes Mike about 5,800 hours of work to afford the Honda Civic. That is about three years of full-time work.

So Mike works and works and works, for three years. Stocking the stockroom. Punching the cash register. Dealing with angry customers. Putting boxes up on shelves. Hour after hour. Day after day. Biking home to eat his low-quality vegetarian meals in his tiny studio apartment. At the end of those three years, Mike's hands are a little more wrinkled, his hair a little grayer, his back a little stiffer. Those three years represent about 4% of Mike's entire lifetime. But he finally does it. Three years after he decided he wanted one, there it is, in his parking lot: a beautiful brand-new Honda Civic.



Now let's go over and look at Brad. Suppose Brad randomly sees Mike's new Civic in a parking lot and decides that he wants the same car. Like Mike, he decides to set aside 25% of his income to buy it. At this rate, assuming a 40-hour workweek and 50 weeks of work per year, Brad will have to work a little less than 5 hours. That's slightly more than half of one working day. Go to a couple meetings, send some emails, and the Civic is his.

Now suppose Mike goes to Greg Mankiw and asks: "Dr. Mankiw, why is it right and just that it took me 4% of my entire lifespan to buy this car, with all my heroic efforts and harsh self-denial, when it took that Brad CEO guy less than a day? I put in every bit as much effort as he does, day after day. Why does he deserve to get things with so much less effort than I put in?"

Dr. Mankiw responds:
I am more persuaded by the thesis advanced by Claudia Goldin and Lawrence Katz (2008) in their book The Race between Education and Technology. Goldin and Katz argue that skillbiased technological change continually increases the demand for skilled labor. By itself, this force tends to increase the earnings gap between skilled and unskilled workers, thereby increasing inequality...The story of rising inequality, therefore, is not primarily about politics and rent-seeking but rather about supply and demand... 
If Goldin and Katz are right that the broad changes in inequality have driven by the interaction between technology and education...then it would seem an unlikely coincidence that the parallel changes at the top have been driven by something entirely different. Rather, it seems that changes in technology have allowed a small number of highly educated and exceptionally talented individuals to command superstar incomes in ways that were not possible a generation ago.
"OK," Mike says. "But why, then, is Brad CEO so much more productive than I am? Where does his $30 million productivity come from?"

Dr. Mankiw responds:
[T]he intergenerational transmission of income has many causes beyond unequal opportunity. In particular, parents and children share genes, a fact that would lead to intergenerational persistence in income even in a world of equal opportunities. IQ, for example, has been widely studied, and it has a large degree of heritability. Smart parents are more likely to have smart children, and their greater intelligence will be reflected, on average, in higher incomes. Of course, IQ is only one dimension of talent, but it is easy to believe that other dimensions, such as self-control, ability to focus, and interpersonal skills, have a degree of genetic heritability as well.
"So let me get this straight," Mike says. "Brad deserves to be so much richer than me because of ability he was born with? People who are lucky enough to be born with high skills deserve to be able to get a Civic in half a day, while people who were born with fewer skills deserve to have to slave away for years if they want a Civic?"

Anyway, Dr. Mankiw's answer is not forthcoming, and Mike cannot leave a comment on Mankiw's blog, due to the no-comments policy. So our story continues.

Mike falls off of a ladder one day (he's in his late 40s by now, and less coordinated than he used to be). He's able to work, but only with greatly increased pain. In the old days, before Mankiw's "just deserts" theory gained widespread acceptance, Mike would have been able to collect Social Security disability; now, however, the government tells him that he does not deserve disability payments - they constitute an unfair transfer of income from the productive to the unproductive - and so he must continue to work. Additionally, Mike cannot go to physical therapy because he cannot afford health insurance, and Medicaid was canceled because Medicaid payments do not constitute the "just deserts" of the unproductive.

So Mike continues working for a short time, until his company is forced to downsize by changes in the global economy. Wal-Mart closes Mike's store and lays him off. In the old system he would collect unemployment insurance payments, but now the government tells him that unemployment payments are not his "just deserts".

Anyway, this tale is getting a bit maudlin, so I will abandon it in the middle; if you want stories about poor people that actually have endings, go read Charles Dickens. But hopefully by now I've made my point. It's easy to say that people deserve to get whatever they can manage to get in a "free" market. But when you start to actually think about the consequences of such a system, you realize that it probably doesn't fit very closely with most people's concept of the term "just deserts".

Like I said, moral values are just statements of opinion, and Greg Mankiw is certainly entitled to his own. But I somehow doubt that his opinion of "just deserts" will be able to win over a majority of Americans, even among the intellectual classes.

198 comments:

  1. Funny-- a few months back, I compared Tucker Carlson's worldview to that expressed by Sir Mix-a-Lot in "I Checks My Bank". Strange how often that kind of thing overlaps.

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  2. Sometimes I wonder what Keynesians must think reading my blog, when they think my economics is awful and my value system is hideous, but I'm occasionally funny. You have answered this question for me, Noah.

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  3. Anonymous6:16 PM

    Your arguments is about pure resentment forget empirical or a logic thing like income inequality vs consumption inequality.

    An example is look the country in sudamerica with more inequality (Gini Coefficient): Chile vs the country with less inequality in: Venezuela if you travel for those countries you can see that the quality of life of the poor in Chile is much better than the poor in Venezuela i dare you to travel or ask someone that has travel to those countries that tell you the difference in the consumption of the poor in Chile with consumption of the poor in Venezuela where everything is subsidize.

    I agree 100% with Mankiw.

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    1. Anonymous6:30 PM

      Check your facts : Colombia is the country with more inequality in SA. Besides, this a weird continent to test your theory. If you look to a more traditional continent i.e Europe, you'll see the most unequal are always the worst performers. The economic evidence for this is widely accepted; research, not just read stuff to confirm your prejudices.

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    2. Anonymous6:38 PM

      You wrong the more unequal country is Chile: http://www.oecd.org/els/soc/OECD2013-Inequality-and-Poverty-8p.pdf

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    3. Anonymous6:41 PM

      When I said "you wrong" above is in response to the first reply that have this comment not the autor of the comment, I agree with him.

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    4. That report only has OECD Countries (unless i missed something)

      Here is a list of county by GINI
      http://www.indexmundi.com/facts/indicators/SI.POV.GINI/rankings

      For South America it looks like Boliva, Columbia, Brazil, and Paraguay are all ranked higher but I am unsure if this list is before or after taxes/transfers.

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    5. Anonymous7:41 PM

      The report only has OECD countries. Colombia has a higher GINI than Chile for sure. And its Colombia, not Columbia... Just saying...

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    6. There is more then one way to make an economy more equal; the top 3 most equal countries (norway, denmark and sweden) are also some of the richest per capita. I live in Chile, and I can assure you there are some insanely poor people here, and there doesn't have to be. Venezuela's problem is that it is a kleptocracy, and has been since before Chavez.

      Don't know why I'm still typing, your argument is so terrible you must be a troll.

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    7. Anonymous9:18 PM

      INEQUALITY TEAM: Singapore, Hong Kong, Australia VS Venezuela, Cuba, Ethiopía.

      This is the most stupid debate ever.

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    8. Chile GINI>Singapore GINI; Singapore GDP>Chile GDP.

      Troll so hard...

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    9. Anonymous10:15 PM

      I'm from Finland, I have no idea what the word "troll" means on internet.

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    10. Anonymous10:30 PM

      Hunter what's your point? What i'm saying is that Singapore, Hong Kong, Australia are the most unequal countries and Venezuela, Cuba, Ethiopía are the less unequal according to the GINI COEFFICIENT this is not about the size of GDP this is about inequality can you please just focus on the point? or that make me a troll?

      I'm against bad inequality like Ukraine has, that's why i'm more focused on consumption inequality than income.

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    11. I'm from Finland, I have no idea what the word "troll" means on internet.

      Finnish trolls are the most skilled and subtle of all trolls...

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    12. OP said that redistributing wealth has been bad for Venezuela. My argument is that redistributing wealth obviously can be done without making the entire country poor. Just because some countries are poor and equal (by the way you missed the best example: Afghanistan!) doesn't mean that redistributing (some) wealth will make a country poor.

      As to what a troll is I will leave you with this quote from my brother:
      "A well crafted question doesn't generate half the response of a poorly crafted statement. Thus is the essence of trolling."

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    13. Maybe there is a problem with the GINI coefficient?

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    14. Anonymous11:22 AM

      Different opinions discussed with respect = Trolling.

      I'm in favor of some sort of redistribution like a catastrophic insurance the voucher system, equity investment arrangement for students to pay college in that system the government would provide a student with financial assistance to pay for college, and in return, the student would agree to pay a percentage of his income back to the government each year upon finishing school regardless of the amount of money initially provided to him by the government.

      But I also want to replace the income tax with a progressive consumption tax (first proposed by Milton Friedman) and a cut spending dramatically.

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    15. This comment has been removed by the author.

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    16. My comment above was removed because the blogging software put it in the wrong place.

      Here is what was supposed to go in this slot...

      Ultimately it is not just about GINI absolute levels, but relative levels. A GINI of 0 is just as bad as a GINI of 1 (assuming the limits were possible). It is also good to look at GINI direction. US, for example, had a fairly equal society half a century ago and grew a lot. Then the GINI rose and growth cut by at least a third even with the moderation we had at times. Similarly, you can look at South Korea's growth rate on google finance and at the "What the heck happenned here???" point further research will tell you that that was when the unequal is good crowd came into power.

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  4. Anonymous6:20 PM

    noah smith is on his "cool J"

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  5. Awesome post!

    I just commented at Chait's blog:

    If people really understood the implications of economic libertarianism, especially the long run ones, almost everyone would flee in terror, so libertarians have no choice but to massively lie and mislead if they want to get support for libertarian policy. So that's what you constantly see from libertarian writers educated in economics well enough to really understand the implications. They have no choice but to lie and mislead their asses off.

    End Quote

    Of course there's the brutality of extreme libertarianism, preferring monumental suffering and loss rather than give up even one micron of economic freedom for even one person. But I also refer to the massive economic loss over the long run. The more advanced an economy gets, the more important and productive zero marginal cost idea goods get, and goods that cannot practically be patented and sold and distributed for profit at reasonable transactions costs. Here the pure free market gets massively inefficient. With libertarianism we'd have vastly less basic scientific and medical research, and scientific discovery would be kept secret and massively underutilized rather than posted on the internet to be used by all the worlds' scientists and engineers 24/7/365 easily.

    As a result, if you compare two independent societies starting at the same point, one which went with extreme libertarianism and the other a mixed economy with 10% of GDP spent on public basic scientific and medical research (vastly more than now in America), and substantial spending on public infrastructure and education, the second society would be ridiculously more wealthy and scientifically and medically advanced 100 years later (and would have higher total utility in the short run too; amongst other things keep in mind positional externalities). It would be a joke to compare them. The loss over the long run from extreme libertarianism is just incredible. I had a brief post related to this:

    http://richardhserlin.blogspot.com/2010/01/if-our-health-care-system-really-is.html

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    1. +1.

      The entire story of human life is an attempt to move away from the law of the jungle. Libertarians should remember that 'piracy is capitalism as God intended it'.

      Of course, they then claim that regal duties and property rights are still to be defended in their libertarian utopia.

      My question is why. If a rich guy can use my economic poverty/lack of capital to coerce me into a subsistence job, what can I not use my muscles/my gun to coerce him?

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    2. Yes - see various posts on crooked timber pointing out that propertarianism is basically a variation on feudalism.

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    3. Or just read this paper:

      http://www.google.com/url?q=http%3A%2F%2Fsites.sas.upenn.edu%2Fsfreeman%2Ffiles%2Filliberal_libertarians_ppa_2001.pdf&sa=D&sntz=1&usg=AFQjCNG517uG8eOWORQS0URG_Ydn3aWWCw

      Not a system actually friendly to freedom.

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    4. https://fbcdn-sphotos-e-a.akamaihd.net/hphotos-ak-prn1/p480x480/45857_471705436212636_922494736_n.jpg

      Patents filed per capita were higher in a year that the pinkerton militia had more guns than the U.S. military than they are today.

      When all national infrastructure, from transit to electricity was built and operated for a profit.

      Yes, it was completely terrible to be poor at that time. One in every eleven steelworkers would die on the job within a given year. Tenement houses sprung up without windows, insulation, or ventilation, packed so tight that the population density of manhattan was nearly double what it is today.

      But innovation would have continued. Research was funded in 1895 privately, it could be today. Same with infrastructure.

      Should we go back?
      It would mean more economic growth. The terrible conditions inspired union membership that made the middle class in the U.S. a reality. It's really difficult to tell what might have conspired without the Roosevelts' presidencies, but it wouldn't be "law of the jungle". It would probably be very similar to modern day singapore (a country with higher median wages than the U.S. and no minimum wage law).

      Just my two cents.

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    5. 'Oh yeah? Name one of these "moral facts"...'

      Not to threaten visiting lecturers with pokers?

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    6. ... Wow, so if I preview a reply, change my mind about publishing it, then try to reply in a different thread, the commenting system remembers the position of my previous abortive reply? Awesome.

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  6. Anonymous6:44 PM

    "Anyway, Dr. Mankiw's answer is not forthcoming, and Mike cannot leave a comment on Mankiw's blog, due to the no-comments policy. So our story continues."

    I laughed out loud in the office, thank you for this. I think Mankiw is often (unconciously) deceptive mixing normative economic statements with positive economic statements. Besides at the end of the day it isn't that tranfers are moral, its which transfers. And the cool thing is we as a country get to decide that.


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  7. Anonymous6:45 PM

    [Feel free to delete after correcting]

    In 10 years, Mike get $250,000 --> gets

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    1. Anonymous6:53 PM

      And also, its "Just Deserts", with one "s". Yeah I know, looks bad, but that's the correct spelling.

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    2. Anonymous6:57 PM

      Oh, I see you got it, sorry about that! Great post BTW!

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    3. Thanks, folk(s)! :-)

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    4. Anonymous1:36 AM

      i'm confused. what does "just deserts" mean? is that a misspelling in the original essay or is mankiw talking about "only arid places" as opposed to "just desserts" meaning "rightful reward"?

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    5. Some get to pig out on pie for dinner, other have to eat their spinach.

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    6. "Just desserts" is not "rightful reward". "Just desserts" would mean "No dinner or appetizer, please". Just deserts (one s) means "rightful reward", in that it's what justice implies you deserve. (Deserts being an archaic construction of deserve.)

      http://en.wiktionary.org/wiki/just_deserts

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    7. Anonymous10:19 AM

      Here, a desert is just something that's deserved. Nothing to do with dry places or puddings.

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    8. Anonymous8:35 PM

      thanks. wow. learned something new. cool. but the pronunciation is "desserts"?

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  8. Anonymous7:01 PM

    I actually don't disagree, but just to play devil's advocate -- what about the argument that people like Brad the CEO make possible the jobs of Mike the Wal-Mart employee? Perhaps the skills and ingenuity of the Brads of the world create businesses like Wal-Mart that employ Mike when Mike would otherwise not have a job. The "job creator" hypothesis, if you will, is then how Brad is productive, contributes to society, and earns his just desserts. What is your response to that?

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    1. Anonymous7:19 PM

      Wouldn't then the question be what level of income is essential to give Brad the incentive to apply his native genius to create jobs for the Mikes of the world, and once that reaches a level of diminishing return it becomes more just to transfer that income to the Mikes?

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    2. Yeah, obviously there is an equality/efficiency tradeoff. My point was just that people don't think of "justice" in quite the way Mankiw does.

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    3. I think Mr. Anonymous, that probably we are closer to that equilibrium than you might expect. Everyone realizes that the diminishing marginal returns of income mean that we should redistribute, but the flip side of diminishing marginal returns is that in order to encourage people to work the non-stop 80 hour+ work weeks required of the CEO's of Wal-Mart, you need to increase their salary by a lot. Assuming I will have the same job for the rest of my life and I made 20$ an hour and worked 40 hrs. a week, to get me to work another 10 hours a week you would need to double my salary. Another 10 and you would need to double it again. Another 5? Triple it this time. ANOTHER 5? yeah I better be making $500 an hour if you want me to work 70 hours a week. And if you ask me to work 80 HOURS A WEEK UNTIL I AM TOO OLD TO DO ANY OF THE THINGS THAT ARE WORTH DOING IN LIFE I swear to god no amount of money will be able to convince me not to kick your ass let alone convince me to actually do it. This is why we pay CEO's the money that we do; you would have to be insane to want to live that life, even with that kind of money. It amazes me that anyone smart enough to be the CEO of a fortune 500 would actually want to.

      All of this isn't to say we shouldn't redistribute wealth, but rather that doing so may lead to less hours worked by CEOs and therefore less competitive companies. I'm personally okay with that.

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    4. Anonymous9:30 PM

      There would be, similarly, a diminishing marginal (new jobs created) return to Brad's labor. Does he really create as many new jobs with hours 41-80 that he does with 1-40? We need to balance all of these forces against each other. Fortunately, empirical evidence (e.g., the 90's & 00's) suggests that it is possible to have substantial job growth with higher top marginal tax rates.

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    5. Anonymous9:54 PM

      Ms. Anonymous from the above comment again - thanks for all your thoughts!

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    7. I don't understand the necessity for CEO's to work long hours. I think that just has to do with shoring up positions in a hierarchy. Lets assume there is some limit on a CEOs capacity to read and understand reams of information. And there is a limit to the number of hours anyone can work before their capability diminished. And there is a limit to how much more information improves rather than diminishes the quality of decisions under uncertainty. The way we cope with producing more in the past is always through organisational and technical fixes, not through working ever harder.

      And this job creator fairy tale is absolute crap (sorry)! The job is (rightly) as much about destroying jobs (particularly those in competing firms) as it is about creating jobs. The level of jobs in the economy is governed by macro forces. Not the quality of CEOs. The only difference the quality of CEOs could make is in total productivity and therefore productive capacity.

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    8. I remember reading somewhere, long ago, that 40 hours per week was about the maximum length of weekly labor for efficient results, at least for manual labor. (Construction?) As I recall, when they increased the work week to 48 hours, for a while they got more done, but then it settled back so they were getting just 40 hours worth of work out of a 48 hour work week. I really doubt it should be any different for the more cerebral efforts of a CEO. Thinking is hard work, as evidenced by the fact that few people actually do much of it. Could just be an inability, or unwillingness to delegate authority.

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    9. "what about the argument that people like Brad the CEO make possible the jobs of Mike the Wal-Mart employee?"

      For most CEOs, it's absurd. Unless you're talking about founding entrepreneur, someone will have the job of CEO, so there is no logical way in which the person currently holding that job can claim to "make possible" his underling's job.

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    10. "This is why we pay CEO's the money that we do; you would have to be insane to want to live that life, even with that kind of money. It amazes me that anyone smart enough to be the CEO of a fortune 500 would actually want to."

      Did you try your math? Because it doesn't do nearly the job you think it does.

      Let's observe the world of big law firms (because it's a world I know). $160,000 a year plus a potential bonus of $20-40K is enough to make a 25 year old recent law grad work 80 hours a week (or more). The typical one will do it for 2-3 year as long as he gets 10-20% raises a year.

      After 8-10 years, he will be willing to continue to do it for a couple million a year.

      So, what explains the difference between a law firm partner's $2-5 million and a CEO's $30 million? It's certainly not hours worked.

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    12. Besides which, I think the very high pay will not necessarily increase total work input. At least some of these high flyers, will retire early.

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    13. Can I just register my absolute joy that there remain people in the world as blissfully ignorant as Hunter Pritchett. His world must be rainbows and ponies all day.

      Do you think poor people don't work 80 hour weeks? The difference between a poor person's 80 hour week and a rich person's is that the poor person's will be made up of three 25 hour jobs and a backbreaking public transport commute between them.

      The utterly insane notion that the only thing stopping someone on $12 an hour from moving to $1200 an hour is the number of hours they work doesn't even make sense mathematically or economically. It's a fiction invented specifically to perpetuate the myth of fairness. CEOs aren't extracting rent, they're just working harder. So you work harder and one day all this will be yours, as long as you shut up.

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    14. "Yeah, obviously there is an equality/efficiency tradeoff. My point was just that people don't think of "justice" in quite the way Mankiw does."

      No, that's not obvious. The equality/efficiency tradeoff is another of Mankiw's deceptions, at least in right-wing economies. There is a large *inequality*/efficiency tradeoff. We tolerate some loss of efficiency in the name of property rights. The idea that you can have massive production improvements without equal and opposite consumption improvements to match is just one big case of "not thinking it through" (TM)

      And actually if you look carefully, you will notice that Walmart actually destroyed a lot more jobs than it created. The job destruction was on the whole a good thing, probably, but the job destruction with a large amount of wealth redistribution would be an even better thing. That was probably confusing, so let me re-phrase. There were physical efficiency improvements made by Walmart and those helped society, but here was also a lot of downward pressure in inflation-adjusted wages and that was the bad thing. One problem with "economists" like Mankiw is they are under the crazy opinion that you can somehow pay people half as much to spend the same amount of time doing the same amount of work and somehow you magically have a twice as productive society when you add it all up.

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  9. What struck me as interesting about Mankiw's essay is that he basically starts with Nozick's Wilt Chamberlain example (without saying as much). Nozick's argument was basically: if we start out with a fair distribution, then have a series of voluntary, welfare-improving transactions, whatever distribution we end up with is fair too.

    But the starting point is not fair - not so many voluntary welfare-improving transactions between the European settlers Native Americans. (Or take any one of dozens of other non-voluntary transactions). Which seems to me to create severe problems for any Nozickian type argument.

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    1. Nozick's Wilt Chamberlain example is bogus, because half the world and all of those working in sales are paid on commission, e.g. out of the price of the sales just like Wilt's 25 cents.

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    2. The logic is not watertight either, because of unrepresented affected parties and unforseen consequences.

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  10. Anonymous7:14 PM

    I think you have accurately traced the implications of Mankiw's moral framework up until you consider Mike's disabling injury. But I think Mankiw would insist that he has an "out" as regards Mike's disabling injury.

    I imagine that Mankiw would argue that his perfectly competitive benchmark includes complete insurance markets. Correspondingly, the "just deserts" allocation assumes that Mike is insuring his fall off the ladder. To the extent that, as an empirical matter, the DI market fails, Mankiw could then support transfers made by a public DI system.

    Now, I think his taking of this "out" causes him other problems. In particular, if "just deserts" can be defined with respect to post-birth complete markets, it's not obvious why we wouldn't prefer to define them with respect to pre-birth complete markets. But the out does exist.








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    1. Mike does have health insurance, and gets the best treatment that modern medical science has to offer.

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    2. Noah: "But I somehow doubt that his opinion of "just deserts" will be able to win over a majority of Americans, even among the intellectual classes."

      Which is why economic liberalism is incompatible with true democracy and some "imperfection" must be introduced into the political process for economic liberalism to prevail in a true democracy. Recognizing this, the US founding fathers, other than Tom Paine, argued for representative "democracy," that is, a republic rather than a true democracy.

      Subsequently, when the institutions of government were being developed, the argument was between Hamilton and Jefferson over the degree of centralization and the role of private wealth in govt finance, with Hamilton winning the argument that the nascent republic must model its finance on the successful European powers, especially Britain. So the check on government would be the wealthy financiers, think Robert Morris, who financed it and would insist on discipline, against the rabble would otherwise have raided the treasury given the opportunity.

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    3. Anonymous8:02 PM

      To Noah @ 7:24PM: Mike may have health insurance, but I'm arguing that in a complete markets world, he also has private disability insurance. In a real world without a functioning private disability insurance market, therefore, Mankiw could in principle support a program like SSDI.

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    4. In a real world without a functioning private disability insurance market, therefore, Mankiw could in principle support a program like SSDI.

      Only if it wasn't redistributive on net, though.

      Really, what's underlying the example is that Brad is (presumably) born with an endowment of skills that allows him to do non-dangerous jobs in which an injury will not be debilitating. Mike is not. So it's more of a way of illustrating differences in endowments, than a "gotcha" of incomplete markets.

      But yeah, I did think of this. Also, unemployment insurance is a similar case.

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    5. Hahahaha once you apply the "in a real world without" XYZ clause to Mankiw's claim the whole paper burns apart. Meritocracies are shitty but aristocracies are worse!

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    6. This is silly, the amount of insurance that can be afforded is also a function of income. It makes no important difference.

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  11. And Richard Nixon said famously to the world, "we are all Rawlsians now".

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  12. Anonymous9:03 PM

    Why is the guy stuck at Walmart making $25k a year? Before you can talk about what is "fair", you need to answer that question. Many on the Left would have us believe that the guy is working as hard as he can, had bad luck in life, not his fault, yaddayaddayadda. But what if the guy is stuck at Walmart because he dozed off in school? Was he more likely to sit around smoking joints than studying? Get in trouble with the law? Why should we feel sorry for slackers?

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    1. If you're correct than that would mean over a quarter of the population are slackers, so the term kind of loses its sting as an insult.

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    2. He's not a slacker, he' borderline mentally retarded, and has worked his ass off to get where he is. Of course both my example and your example exist in the real world. Today we are using my example.

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    3. Anthony, is it best to compare Mike Clerk to the population as a whole, or to other guys in their mid-40s? Are 25% of guys in that age group only making $25K/year?

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    4. According to Greg Mankiw, it's probably because he was just born dumb...

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    5. Probably not worth responding to an anon-troll, but I always encourage people with this attitude to solve for the general equilibrium. Let's say a) "intelligence" had anything to do with why people work at WalMart and b) everyone who was in the bottom half of the IQ distribution suddenly gained 15 IQ points. So...does WalMart go out of business because everyone is too smart to work at WalMart? Who are the janitors? Who cleans septic tanks? Who restocks aisle 5? Until automation is such that certain low-skill and deeply unpleasant jobs don't exist, they'll have to be done by someone, no matter what the level or distribution of natural endowment is.

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    6. What if Brad CEO is there because he's really Brad CEO, Jr. and dad left him the company? What if he's able to run a business because his mom put him through the best schools, paid tutors, sent him to camp?

      Yes, SOME people are poor because they deserve it. And SOME people are rich because they work harder and smarter than everyone else. But contrawise, SOME people are rich because they are the grandsons of robber barons and pirates, and SOME people are poor because a hurricane wiped out their home town or because they're the grandsons of people abducted by other people's grandfathers.

      Mankiw's argument (that everyone gets what they deserve) is exactly what you expect from someone whose dice rolls came up solid.

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    7. Nathanael10:56 PM

      In reality, he's working at Walmart because he started with nothing and so he can't get ahead. Brad CEO is the son of Brad Senior, CEO and US Senator. And is an idiot to boot, but got bailed out repeatedly by his dad.

      Mankiw's basically just a evil man. We knew it, but this essay he comes out and proves it, by adopting the "I'm rich because I deserve it and I know I deserve it because I'm rich" philosophy, a philosophy very similar to that of Louis XIV.

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    8. Do you donate nearly all of your excess income to charities that help "down on their luck" people today? Or is the amount you're taxed conveniently close to "just right", and you still go to the movies, buy smartphones, while real people have MUCH WORSE sob stories than Mike? Kind of weird how OK you are with the status quo in that regard, while toddlers starve and twitch with preventable diseases, no? You call others evil, but live a hypocritical live that is no less evil. You seem like the CEO of A&F to much of the world's population. That you continue to live this way means you ARE Greg Mankiw, you just like to complain about the richer folks.

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  13. Isn't abandoning utilitarianism a fortiori abandoning marginalism?

    To use the example on wikipedia, diamonds are more valuable than and equal mass of water because their marginal utility is greater. Mankiw seems to be saying that diamonds are more valuable than water because they are "genetically" better.

    I think the only way Mankiw could save throwing out the economic baby with the bath water is by making the claim that while marginal utility exists (so rich people do decide to stop working an extra hour and consume leisure or sleep) there is no imperative to maximize total utility. One consequence of this is that if this genetic elite destroys the earth and total utility slowly vanishes, Mankiw says there is really nothing you should do about it.

    Relevant: Delong wrote something awhile ago about the social welfare function of the market ... whereby you save utilitarianism by simply weighting Bill Gates's desires by a factor of a million or so:
    http://delong.typepad.com/sdj/2009/04/hoisted-from-the-archives-a-non-socratic-dialogue-on-social-welfare-functions.html

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  14. The first sentence of Mankiw's paper is "Imagine a society with perfect economic equality." My response to this statement is: "No."

    I stopped reading paper after that. I've got better things to do, and there are far better authors of fantasy fiction.

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  15. I'd like to know more about this example. What choices has Mike Clerk made in life so that, by the time he was in his mid-40s, he was only making $12.40/hour? Isn't that relevant in assessing what someone deserves?

    I made $8.40/hour working a freaking manual labor summer job while in college in 1997, which adjusted for inflation is about $12/hour. Even when I was in high school working fast food I made over $7/hour adjusted for inflation. How is it that Mike, with decades more work experience than me at the time, can only pull a bit over $12?

    Also, why is Mike buying a new car? Isn't that rather financially illiterate? I've owned two cars in my life: a Ford Festiva and a Toyota Tercel. Both bought used for around $2K (I have been car free for 9 years now and have walked to work 90% of the time). If Mike bought a $9K car, instead of an $18K one, he might have money for the physical therapy. An extra $9K will pay for 90 PT sessions at $100/hour.

    Lastly, if taxes are zilch, and Mike is pretty thrifty, shouldn't he have some money saved by his mid-40s that could pay for PT? If we assume that Mike started working at 18, averages $16,000/year until age 45, and saves 20% of it, that's about $90,000 ($3,300 times 27). If he averages $20,000/year and saves 25%, that's $135,000, and doesn't include any compounding interest or other form of ROI.

    Lastly, in a world with zero taxation, and thus no payroll taxes that serve as a disincentive to hiring, it stands to reason that Mike would have an easier time finding a job to replace the one he was laid off from and thus UE insurance wouldn't be as big a consideration.

    The only useful part of this story I see is the bit about health care. It should absolutely be a priority of public policy to ensure that people have access to affordable health care, which also shouldn't be linked to employment (but traditionally has been thanks to absurd tax policy). But this has nothing to do with inequality -- this should be a goal even if incomes were perfectly equal.

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    1. Colin, I hate to break it to you, but...I made Mike up. He's not a real guy. So any answers to these questions will also just be made up by me. ;-)

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    2. But I guess my vision of Mike was very loosely inspired by this:
      http://m.dailykos.com/story/2013/06/02/1212957/-Being-poor-in-America?detail=hide

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    3. The point of the $18K car is that it is luxurious. The whole question is why Brad CEO 'deserves' easy access to this luxury, while Mike Clerk doesn't.

      Perhaps he would have some money saved up, but that's only a given if this accident is the first bad thing that has happened to Mike in his life. He never bought a home at the wrong time, never paid for a wedding, never had kids... the list goes on. Even with health insurance, deductibles add up especially on a low-quality diet. To quote George Bailey, "Do you know how long it takes a working man to save $5,000?"


      "What choices has Mike Clerk made in life so that, by the time he was in his mid-40s, he was only making $12.40/hour?"

      All it takes is getting laid off by a dying company for someone with a promising management career to end up driving a cab; once your resume says 'cab driver' your odds of getting back on the management track are remarkably slim.

      We live in a world filled with uncertainty. Assuming that low wages *must* be the result of poor choices requires that you not known many people. And in order for Mankiw's version of justice to square with most everyone else's, you *must* make that assumption.

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    4. Noah,

      I am of course aware that Mike Clerk is a product of your imagination. My point was simply that there are many questions that we should probably have answers to before assessing what Mr. Clerk deserves.

      As for the DailyKos entry, I have to say I didn't find it very illuminating. A guy basically just says that he is a math whiz, is good with technology and has people skills but is stuck making $18K/year in take home pay in middle age. He talks about going from being affluent to poor, with nothing said about how that happened, and then he blames it all on the super wealthy.

      In any case, if your point with this post is that there are people out there who are not getting what they deserve in life, or that some do better than others through something other than hard work, you are no doubt correct. That said, as a general rule, I do find in life that people tend to get what they deserve, and that those who work hard, play by the rules and make good decisions do well for themselves while those who make poor decisions and put forth little effor don't do as well. If this wasn't true, no one would bother working hard, as life outcomes would just be a big crap shoot unrelated to effort.

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    5. I do find in life that people tend to get what they deserve

      "Deserve" in your own opinion, you mean.

      I myself don't have much of any notion of what people "deserve". But I'm not usual.

      those who work hard, play by the rules and make good decisions do well for themselves

      Well, you know, I made up the example of Mike Clerk in order to get close to the Chris Brown lyric of "I get what you get in ten years, in two days". Because it was cute. But someone who works hard and plays by the rules, but is born with low ability, might reasonably make, say, $60k a year (which is well above the median household income!). In that case, it takes Brad CEO about six days to earn what that guy earns in 10 years.

      So you see, the American rich are so rich that the ratios are huge even when the other person makes well above the median.

      The purpose of this thought experiment was not to show what a piteous life Mike Clerk leads - his deprivation was due to his extreme thrift, and even so he's much much better off than the average Bangladeshi or the average American of 1920.

      The point was to illustrate that the disparities in purchasing power between the super-rich and others, when presented starkly and converted to time unites, is unlikely to strike most Americans as "just". And I contend that that point is true independently of the truth of your claims about "working hard and playing by the rules".

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    6. Noah,

      Thanks for your response. If your point is simply to demonstrate the vast purchasing power of the super-rich vs. average or below average Joes, well OK. I'm guessing, however, that most people with basic math skills have already grasped this -- the quip about Bill Gates losing money if he stoops to pick up a $100 bill which illustrates a similar point has been around for a while.

      As for whether the outcome is just, you may well be correct that most Americans would see it as unjust, but again I would need more information. If Brad CEO was the child of poor immigrants, worked his way up the ladder and runs a company which -- at least partially due to Brad's superb organizational and leadership skills -- regularly turns out pharmaceuticals which save or help millions of lives while Mike Clerk was an alcoholic who spent time in and out of jail and/or blew the family inheritance before trying to turn things around in his mid-40s, that may change people's notions of what is "just" in your scenario. (To be sure, these are extreme examples, and I am in no way trying to suggest that most CEOs are heros or Walmart workers alcoholic losers)

      Basically, I would need to assess both Brad and Mike's overall contributions to society and lifetime efforts before assessing whether the outcome is just. Simply being presented with a bunch of numbers without an overall picture doesn't tell me a great deal. But then, perhaps like you, I'm not usual.

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    7. If your point is simply to demonstrate the vast purchasing power of the super-rich vs. average or below average Joes, well OK. I'm guessing, however, that most people with basic math skills have already grasped this

      Yes, but I wanted to do it in a way that made it more powerful and real for the average reader, by converting purchasing power into "time required for a specific purchase". Most people think of great riches in terms of all the things you could buy - yachts, mansions, etc. They rarely think of it in terms of how quickly a rich person can buy something. I wanted to illustrate that.

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    8. Nathanael11:00 PM

      Colin -- if we want to make it realistic, Brad is Charles Koch, who inherited a giant company from his dad and didn't do a god-damn thing to improve it. And has been actively working to increase pollution, nationally and internationally. *And* has been doing his damndest to make sure that guys like Mike can't get ahead -- by cheating them. Read "Nickel and Dimed" by Barbara Ehrenreich for some of the typical ways that works.

      Anyone who actually pays attention knows that the majority of billionaire CEOs are fraudsters and got where they are by a combination of inheritance and fraud. There are a few exceptions -- most of whom just got lucky.

      But maybe most of the readers here don't pick stocks for a living, and so haven't studied CEO behavior and history as carefully as I have. I've found that in general most people don't pay attention to anything.

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  16. Anonymous9:36 PM

    "The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

    John Kenneth Galbraith

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    1. Nathanael11:00 PM

      JKB for the win. :-)

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  17. You don't chose what, when, where, how, why or to whom you're born. And those all unarguably have a large effect on the outcome of your life. This makes "just desserts" theory at best only a partial description of the world. Of course there needs to be some incentive to effort; but can't it just be getting rich instead of ultra-mega-stinking-filthy rich?

    This really ties in with two conservative ideas. One is that everybody is basically just waiting around to get a free ride. If you give people half a chance they'll just sit there and do nothing and collect a check. Now it's true of a minority of people but those are people you should pity. They've got problems. The vast majority of us have dreams of doing something worthwhile and leaving something behind before it's over. If nothing else leaving some happy and healthy kids behind.

    The other idea is the primacy of the individual because genetics or the will of God or whatever. This is nonsense. We live in an interdependent world. Imagine a disgruntled construction worker sees Mankiw's paper and storms into Harvard and throws him down a flight of stairs severely crippling him. Then his wife leaves him and takes half the money. Then medical bills eat up the rest. And then we're supposed to say "Oh that Greg Mankiw, he just got what he deserved"?

    WTF?

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  18. Anonymous10:15 PM

    What's most interesting about the response to Mankiw's paper is the emotion it's brought out in those that don't agree. Take this post for example: it's like a work emails we've all written that we stow away in the draft folder, only to delete later when we cool down and realize its content is ridiculous.

    Except Noah posted it.

    Noah's last paragraph is spot on, though I think our agreement or disagreement with Mankiw's view is highly dependent on the state of the economy. Maybe in 5 years a majority will agree with him.

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    1. Anonymous2:06 AM

      did you read the post, Greg?

      no, in five years, regardless of economic conditions, the majority will not agree you.

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    2. Nathanael11:02 PM

      Anyone who agrees with Mankiw on this matter is actually evil.

      Anti-social behavior involving intellectual deception for the purposes of selfishness -- Mankiw's so-called "view" barely qualifies as an opinion, and is basically a catalog of psychological defects which are generally injurious to society, and therefore evil by most ethical codes.

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    3. I agree with the responses here.

      Another thing to consider is that Americans have been lied to about more with respect to the Iraq war than just WMD existence. The truth that you will never see in the networks is the interim government was a follower of the principles Mankiw is espousing here. In the first year, Post Saddam, L. Paul Bremer's economic policies in a country already in a depression would have made Herbert Hoover look like a solid progressive. And then we cancelled the elections because the candidates we liked only got 14% of the vote. Most of the people who ended up fighting us were peaceful protesters in the early days. Rather than raising up their arms to fire they were raising their human arms and shouting in peaceful protests of hundreds of thousands of people that our network news stations conveniently forgot to cover.

      Conservative economists as a group are indirectly responsible for the deaths of hundreds of thousands if not millions of people.

      We should be getting emotional.

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  19. The best part is that he basically just hand-waves at the idea that rent-seekers may claim a share of social output above-and-beyond their productivity even though IT'S EVERWHERE.

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  20. Anonymous11:04 PM

    I was expecting something a little more complex, but I suppose the simplicity of this post is good, too. Although, it's wonder to me that there are people who don't really understand the moral implication of this libertarian economic view. If I may simplify an already simple story:

    "People should only make money--that is, they should be able to live--so long as they produce things that can be sold in a market of private goods. And what people get paid should depend on what the market decides your product is worth."

    Or, more bluntly:
    "Produce sellable shit or die."

    That is the world Mankiw would like us to live in.

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    1. That's nice. I like to live in my own fairytale utopia as well.

      He seems like to understand that the real world is also one where it caould be "seek rent/monopoly power/connections/political power or die".

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  21. You say we live in an interdependent world, and I would agree. But who says that it is a legitimate function of government to make life "fair?" Determining what is fair is no less subjective than value systems.
    Except when legislators attempt to decide what is fair, they are taking the marginal product of some to give to others. How is this fair?
    And why is the federal government the only source of relief if our poor worker finds himself out of a job?

    You write "Of course there needs to be some incentive to effort; but can't it just be getting rich instead of ultra-mega-stinking-filthy rich?"

    You are free to do whatever you wish, but you are not free to decide what someone else's value system should be.

    I also think that economists have gone off the deep end regarding their own utility. What economists think, whether the bulk of them or the minority (nice attempt at marginalizing those with whom you disagree), is of little use or consequence to the average man.

    Life is not fair. Politicians and economists are incapable of making it otherwise and should stop trying.

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    1. Mobs of sans culottes tend to make life interesting at times, which is a strong reason for governments to make life a bit fairer.

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    2. "Life is not fair. Politicians and economists are incapable of making it otherwise and should stop trying."

      Extreme black and white thinking illustrated in one short sentence. Let's use a slightly different example. Disease happens regardless. Doctors and nurses should stop trying to fight it.

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    3. "Extreme black and white thinking illustrated in one short sentence."

      I have let to find a libertarian who understands that the real world with real people is shades of gray (who would wreak havoc in their idealized fairytale land).

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    4. Anonymous12:08 PM

      A social system that was mostly fair (like the U.S.) and becomes unfair will lose legitimacy. When it does, revolts and revolutions occur - the mobs dumping tea in the harbor or pushing tumbrils to the guillotine. Justice and fairness matter a lot for social peace, which ensures the long-term survival of a governmental system.

      The American economic system is rapidly losing legitimacy. Like democracy, it's a bad system -- except for all the others. People who ignore the unjust parts of the our system undermine it as surely as those who openly call for destroying it. The champions of injustice, like Mankiw, are worse.

      Fairness and justice contribute a lot to the long-term stability and survival of institutions. We need to fix ours, as Theodore Roosevelt, FDR, and LBJ did, before the problems lead to revolution.

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    5. Nathanael11:04 PM

      Thanks, anonymous -- I'm usually the one saying what you said. People are beginning to understand this.

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    6. Nathanael, I wouldn't take too much pride in that fact in that it is nonsense. There can be no perfectly equitable society, and I'm not certain anyone would prefer to live in one if the possibility existed. Where is the injustice that Mankiw champions? Some people have talents, skills, ideas, what-have-you that command higher wages. Albert Pujols making $30 million dollars does not take one cent out of my pocket or yours.
      The argument that government must make life "more fair" otherwise there will be blood is offensive and anyone making it should be ashamed of themselves. TR, FDR & LBJ did far more harm to the economy and our social institutions than can ever be quantified.
      My experience has been that Libertarians are the few that understand reality far more clearly than ideologues. Because of the almost infinite shades of gray and the fact that the economy is made up of millions of people making hundreds of decisions daily, it is the height of hubris to pretend to know how to guide the economy or to pretend that politicians are not just as human and self-interested as those evil bastards that actually go out and earn a living.
      Our government is chartered to, among other things, promote the general welfare, not provide specific welfare. As smart as we all are today, it might do us well to consider that there is wisdom to be found throughout history. Many of the schemes devised in order to make life fair have been tried time and again throughout history and have ultimately found to be lacking. That is why our country was founded on the principle that the function of government is to protect and preserve life, liberty and property, not to decide who gets what.

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    7. "Albert Pujols making $30 million dollars does not take one cent out of my pocket or yours."

      Oh yes it does.

      Where do you think that income comes from - the air? And if we tax it and give ordinary people better services, isn't that a cents in their pocket effectively?

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    8. Nathanael2:55 AM

      Blah blah blah. Stop talking bullshit, Sean. The fact is that this society is deliberately crushing the poor and middle class.

      I wouldn't care about the lucky people with $100 billion dollars, if the rest of us had $50K a year each.

      *But we don't*, and *worse*, the people with $100 billion dollars are mostly trying to take away the things that the 99% *do* have*. Too much money means too much POWER, and it is dangerous to allow a few rich thieves to have that much power.

      And good riddance to people like you. Real libertarians (who are socialists) are great people -- fake libertarians like you are trouble.

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  22. Jason B.11:24 PM

    "Now, value systems are subjective; what the government should or shouldn't do is a matter of opinion."

    Noah, this is a bold claim that you haven't justified at all. You know how irritating it is when you hear folks not versed in econonomics pontificating about your area of expertise?

    There's a whole area of philosophy with a lot of really smart people trying to figure out the nature of moral statements and what we can know about them: metaethics. The majority position among trained philosophers is moral realism, the claim that there are objective moral facts (http://philpapers.org/surveys/results.pl, 56.4% accept or lean towards moral realism)

    I'm not going to make an argument from authority here, because there is so much disagreement in philosophy and progress is seriously slow and difficult (and consensus rare). But the fact that over half of the people who spent a lot of time thinking about these issues disagree with what you state does I hope give you pause.

    I hope you'll do a post justifying your claim! Or at least acknowledge it's pretty hasty of you to state it without backing.

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    1. that there are objective moral facts

      Oh yeah? Name one of these "moral facts"...

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    2. Jason B.1:27 AM

      Torturing an innocent person for sadistic pleasure is a bad thing.

      Or take any other statement that all decent normative theories would agree is moral or immoral (the issue of utilitarianism vs Kantian deontology vs contract theory a la Rawls is separate from the analysis or morality itself. But there are plenty of uncontroversial things all normative theories agree about)

      I don't expect to win you over with a few paragraphs, but I just hope you're now aware that a lot of intelligent people do take moral realism seriously.

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    3. Torturing an innocent person for sadistic pleasure is a bad thing.

      Well I certainly agree with that, though I'm not sure what "innocent" means. Nazis probably thought their victims weren't "innocent", and Christians believe the people God condemns to Hell aren't "innocent"...

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    4. Jason B.2:20 AM

      I said innocent to rule out the possible (and doubtful) justifications of torture in ticking time-bomb situations.

      There's no doubt you're right that bad people will justify their beliefs to themselves. But that doesn't change the way things are. Victims of genocide are clearly innocent. The fact that the Nazis likely believed the Jews were deserving of their fate doesn't change the facts any more than their twisted views of race change the basic facts of human biology.

      I'm glad you agree with my claimed fact. But there's a real concern if it's just in a "That's just, like, my opinion man" manner. Because if you're at the point of not thinking there are any moral facts, can you take things like the holocaust seriously? What can you say to a bigot? You have to think there's no moral progress to be made, and no one's opinion is objectively any better than anyone else's on these issues. But I think there are things that you (and I, and most people) believe that show we have more moral knowledge than the racist, the sadist, and the bigot.

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    5. Victims of genocide are clearly innocent.

      Clear to you and me, but not to many many humans throughout history. How can we prove ourselves correct, and them incorrect?

      But there's a real concern if it's just in a "That's just, like, my opinion man" manner.

      That is exactly what it is. It's just, like, my opinion man.

      Because if you're at the point of not thinking there are any moral facts

      ...and I am...

      can you take things like the holocaust seriously?

      Yes, of course I can.

      You have to think there's no moral progress to be made, and no one's opinion is objectively any better than anyone else's on these issues.

      Objectively, no. Subjectively, in the opinion of Noah Smith, yes. You may wish for there to be moral facts, but wishing does not make it so...

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    6. Wobbly5:30 AM

      Noah Smith wrote: "Oh yeah? Name one of these "moral facts"..."

      If you think that all sentences that purport to make claims about moral facts are really just opinions (and are either false or neither true nor false), I don't see how this approach (i.e. going through a list of such sentences) can possibly resolve the issue. It makes about as much sense as trying to demonstrate that there really is such a thing as mathematical truth simply by going through a list of purported mathematical truths!

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    7. Jason B.5:32 AM

      "Clear to you and me, but not to many many humans throughout history. How can we prove ourselves correct, and them incorrect?"

      By engaging in moral reasoning and making it clear that if we take seriously the moral equality of all individuals, we should not be committing genocide.

      "You may wish for there to be moral facts, but wishing does not make it so..."

      True, and neither of us has actually explicitly defended their position one way or another (just saying "there are no moral facts" needs examining just as closely, I'm sure you'll agree) So let me try - though to get a much better defense, just have a look through some of the links I posted.

      When we engage in conversation, the way we're using words tends to assume there are facts/truths about the world that we're grasping for. If I disagree with my friend about what time we organized to meet, there's a fact our conversation/debate revolves around - when we in fact organized to meet. If I argue with someone about climate change, there are facts made true by certain features of the world that we disagree about.

      If mathematicians disagree about a conjecture, there is a fact of the matter as to whether it's true or not. What's interesting here is the truth-maker: whether a mathematical claim is true or not does not depend on the state of the world (as math is clearly an a priori discipline), but rather whether the conjecture logically and mathematically follows from the axioms mathematicians assume.

      Similarly with moral disagreement, the way we talk and debate and discuss makes it clear to me that the default position is moral realism: the onus is on the anti-realist to give arguments why there are no moral facts. And this has been done. Mackie's argument from queerness is probably the best: he says that if there were moral truths they would be very strange indeed, unlike any other kind of facts. And the mental faculties we would need to learn of these facts would be unlike any other we possess. It's clear how to learn scientific facts: look at the world. What do we do in ethics?

      But I think the best response is compare morality with maths. The truth-maker of mathematical facts is nothing in the world. Similarly with ethics. The way mathematical facts can be known is by explicitly stating some axioms/assumptions, and working rigorously from there. Well, it's the same in ethics: start with a quite obvious axiom (the moral equality of all individuals) and from this use normative theories in a rigorous and reasoned manner to derive some moral facts. The big question is which moral theory does this best: does utilitarianism accurately uphold the moral equality of all? Better than libertarianism? Than Rawls' theory of justice as fairness?

      I get the idea that there's just something "weird" about moral facts. But I'd like to see someone defend why they accept that there are mathematical truths, but not moral ones.

      Also, I'd question whether subjectivism is really the best position for the anti-realist. Do you really want to claim that some moral claims are true, but only true for one person/culture/society etc.? Wouldn't it make more sense to follow Mackie and say there are no moral truths at all, and that all moral talk is bogus? Because this is different from sujectivism. In the jargon, it's called error theory.





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    8. >> By engaging in moral reasoning and making it clear that if we take seriously the moral equality of all individuals, we should not be committing genocide.

      Why should we take seriously the moral equality of all individuals? (And for the record, I do.) It seems you are reduced at some point to axioms -- "self-evident truths", to be more poetic -- but what do you do with someone who disagrees with them? And before you haul out maths as your exemplar, remember that the "obvious" postulates of geometry were accepted as "self evident facts" for millenia... and then Gauss showed that the fifth postulate is not logically necessary -- and THEN Einstein, et al, showed that the actual Universe we inhabit obeys the geometry that violates the "self-evident" facts. So until you can explain away hyperbolic geometries, I think you're standing on sand.

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    9. If you want to prove moral statements with math, it's not too hard. Let's work through a quick proof:

      Axiom: You shouldn't kill people.

      Q.E.D.

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    10. All theorems are tautologies.

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    11. Anonymous12:27 PM

      I see, Noah, your opinion is expressivist in the way of Ayer? Objections to this view are set out here -- http://en.wikipedia.org/wiki/Expressivism#Objections_to_expressivism

      Laurence

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    12. Seems like more of an error theorist than an expressivist to me.

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    13. Jason B.7:29 PM

      "Axiom: You shouldn't kill people.

      Q.E.D."

      Mathematical analogy:
      Axiom: For a right-angled triangle, a^2 + b^2 = h^2
      Q.E.D

      It's quite clear your axiom is not a good one. There are plenty of imaginable situations where we should kill someone (in self-defence, the person is Hitler, etc.)

      You need to actually start of with an assumption that is self-evident (like the moral equality of all individuals) and then do the hard work of normative ethics to get some results. Just as you need to start with the self-evident propositions in maths, and do mathematical work to derive theorems. And not assume the result in the first place.

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    14. Jason B.7:41 PM

      gilroy0: " It seems you are reduced at some point to axioms -- "self-evident truths", to be more poetic -- but what do you do with someone who disagrees with them? And before you haul out maths as your exemplar, remember that the "obvious" postulates of geometry were accepted as "self evident facts" for millenia..."

      My knowledge of maths isn't really adequate here, but doesn't the failure of the parallel postulate just show that not all axioms are equal? That some assumptions are better than others? And why don't your concerns about axioms in metaethics transfer to doubts about maths on the whole?

      The fact that Euclid was wrong in his assumptions doesn't mean the whole of maths is standing on sand. Why would it do that for other subjects that rely on some self-evident truths? They just have to, in fact, be self-evident.

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    15. Jason B: "Torturing an innocent person for sadistic pleasure is a bad thing"

      So I have it that Mayor Bloomberg's decision to limit supply of painkillers in NY hospital is a fact-based and proven act of malice? Sure I do not know if Mr Bloomberg is excited when hi imagines those thousands of people now screaming in pain due to his decision, but it is as close as it gets.

      I also have it that anybody who opposes euthanasia on religious grounds also has to be immoral sadist. It is safe to assume that such person prefers pleasure from thinking about oneself as just an moral - at the cost of the unbelievable pain that the terminally ill patients have to endure.

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    16. Jason B: But I think the best response is compare morality with maths. The truth-maker of mathematical facts is nothing in the world.

      I agree with you that morality and math/logic have the same substance. But I think you misunderstood math. Mathematics is "never" about seeking truth on a deeper level. The whole mathematical apparatus is to *preserve* truth value, not to discern it.

      It works like this:

      1. Assume that X is true
      2. Apply "logical" transformations that we know preserve truth value that transform X to Y
      3. Now we know that Y is true

      But the only way to find out if X is true or False is to measure it, to look into reality. What happens if in reality we find out that Y is not true? So we either made some math errors in step 2 or we made wrong assumptions. (PS: notice that I am also applying logic to this very argument, this is how it goes with these things)

      But there is no moral representation of morality in reality. Morality is a virtual thing - same as logic, it exists only in our brains. Reality and true "facts" have one crucial property - reality is what remains there if nobody believes it. But how can you find out if some moral assumption is True? Only by asking people how they feel about it. If they believe that something is moral they will tel you. If they do not believe that something is moral they will not tell you. There is no objective "morality detector" that you can apply.

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    17. Jason B.9:16 AM

      JV: I know little of American politics or Bloomberg's decisions. A quick google search told me the situation may be a little more complicated than you've implied: the stated purpose of the changes is to limit substance abuse. That's clearly not a case of someone sadistically enjoying the pain of others, and I'm not sure how you could have ever mistaken it for that. But perhaps the policy is still wrong, I don't know enough. It is surely contingent on the extent to which there are substance abuse problems, and what other solutions there are...

      I certainly don't think those opposing euthanasia are sadists. Some think suicide is always and everywhere immoral because of their religious beliefs (which is clearly nothing to do with taking joy in others' suffering). Others may be concerned about slippery slopes towards things like legalized suicide for anyone who's feeling down. Presumably they're concerned about the well-being of people. And not just wishing pain on others.

      It's curious how you've taken a really clear statement by me, and claimed it applies to things that it very obviously doesn't...

      I think most mathematicians would disagree with your characterization of their field. If it were just about preserving the truth, then how could progress be made?

      You're getting a bit too wrapped up in weird metaphysics in your last paragraph. If you say that reality is what's left when no one's around, and use this to argue against moral duties and realities, then you'd have to say the same thing about prudential reasoning in general: if I have a desire to become a better tennis player, I have reason to practice tennis. This is an obvious truth. And its truth isn't affected by the fact that when humans die out, there's no "reason" floating out there, or no reason "in" our brains.

      " But how can you find out if some moral assumption is True? Only by asking people how they feel about it."

      I talked about this above to someone else: the whole field of normative ethics is dedicated to figuring out what is right and what is wrong. If you're skeptical of their methods or claims, then that's fine and everyone's open to hearing criticism. But if you believe the only open strategy people have been using to get moral knowledge is to ask people how they feel about it, then you have a lot of reading and learning to do. Normative ethics is more than 2000 years old, although there's no time like the present to learn about it.






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    18. "It's curious how you've taken a really clear statement by me, and claimed it applies to things that it very obviously doesn't..."

      Both of my examples show that some people knowingly condemn thousands of other people to suffer pain sometime equal to the worst torture you can imagine - and yet you can "easily" find out some other "moral reasons" why this torture may be "good". It seems that their pain is just too small a price compared to other moral issues like drug abuse or increased suicidal rate.

      So where are your "facts" that torture is universally bad thing? How come that torture is bad and immoral in one context and acceptable or possibly even moral choice in another context?

      " If it were just about preserving the truth, then how could progress be made?"

      The whole point of my post was that mathematics is in itself a field that studies how various objects are related. It generates "knowledge" that may be applicable to a real world, but it cannot generate meaning.

      For instance you can have some definition of some word, for instance "beautiful". You can define that something is beautiful if it is symmetric. And then you can use mathematics to find that some objects are beautiful because they contain some unexpected symmetries.

      But there is no mathematics or logic that can set the meaning of the word "beautiful". Beauty is virtual concept, it does not have some solid representation in reality akin to "atom of hydrogen".

      PS: This is important - I do not dispute that "beauty" does not exist. I think that after careful study I could came up with pretty exhausting definition of something called "JV's definition of beauty". For instance that if an object is shown to me and makes some specific pattern of neural response in my brain than we say that the object is beautiful.

      But what if there is some object that creates similar response with somebody else but not me? What if the response depends on my mood, or my understanding of the object? In the end you will find out this line of thinking as a very frustrating one.

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    19. Jason B.4:29 AM

      "So where are your "facts" that torture is universally bad thing? How come that torture is bad and immoral in one context and acceptable or possibly even moral choice in another context? "

      Sure, we need a robust framework for thinking about these issues. So I begin with the self-evident assumption of the moral equality of all individuals. From there, we have to choose the right normative/poltical theory, as I'm convinced by Kymlicka that they're all striving to apply this assumption of moral equality to everyday matters. I don't think libertarianism does it well. And I love Rawls' veil of ignorance thought experiment, where we get rid of all factors that can bias us in respecting others, but I believe his veil is too thick (see Hare for elaboration). I think from the original position (properly set up) we would get a utilitarian society, where we try to make people as well off as possible.

      So when could something like torture be acceptable? Well, certainly not for gratuitous pleasure. That's why I stated it as my moral fact. There's no way it could maximize well-being. Ticking time-bomb situations are a possible reason, but in practice I think they will rarely occur, we can't know when it is such a situation, and we cannot have provisions in the law for this. So I think torture should always be illegal.

      Something like banning euthanasia is not the same as torture. Torture is an active, deliberate process. I don't see what is gained by ignoring the active/passive distinctinon, because we find active wrong-doings much more blameworthy than passive wrong-doings (though I doubt there's a difference in the actual rightness of the action just becasue of passivity.

      I personally think banning euthanasia is wrong, because terminally ill people should not have to suffer needlessly and there is little reason for such a ban. Having said that, I don't support fully-legalized suicide for anyone, because I think that could have bad effects on those looking for a quick way out, or those who aren't thinking rationally.

      So something can be wrong in one case and acceptable in another (though I object to your use of the word 'torture' as explained above) because any decent moral theory is going to be situational. It's going to depend on the context. Otherwise we'll get this terrible sort of 'absolutism' that some doctrines/religions hold.

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    20. "So I begin with the self-evident assumption of the moral equality of all individuals."

      Not so quick. First, if morality was fact based you would not have to start with self-evident assumptions. But I don't even have to go into this layer. I can start with another question like - what is an "individual"? Must it be human? Can any animal be considered an individual? What about children or mentally ill people - are they individuals if they are not fully capable of certain type of reasoning? What about embryo in various stages of pregnancy? What about humans that were genetically modified so they cannot be technically considered homo sapiens sapiens anymore?

      And I do not want your opinions on some hints of answers of any of these questions. If morality is fact based, if it is independent of subjective view then there has to be some place where I can find irrefutable answer.

      PS: In truth all you count as self-evident is stemming from Humean view. People have morality because they are biologicaly wired to percieve it. We know that inflicting pain to other people is evil because we can use empathy and feel what they feel. We can carry this insights of empathy even to other species, if an animal cries in pain we are capable to weep for it because we can relate.

      But we do not know for instance if plants feel pain or how they express it. We cannot use our experience for this and so we are indifferent to it in the same way mantis is indifferent to pain it inflicts to its pray as it is eaten alive.

      If the whole human population would be composed of sociopaths and sadist incapable of empathy our morality would be very different. Because morality is not "fact" based but it is a virtual concept.

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    21. Jason B.6:48 PM

      "Not so quick. First, if morality was fact based you would not have to start with self-evident assumptions"

      So you're back to saying that any subject that relies on axioms cannot be fact based. This includes math (extensively), physics, economics - consider Samuelson's axioms of revealed preference for consumer theory, or the four axioms of the expected utility theorem. Are von Neumann and Morgernstern living in fairy-land because they assume some reasonable things about preference relations over lotteries? Not much left to say when you write things like this. The question is the reasonableness of these axioms, not the fact that we have them in the first place.

      "I can start with another question like - what is an "individual"? Must it be human? Can any animal be considered an individual? What about children or mentally ill people - are they individuals if they are not fully capable of certain type of reasoning?"

      Certainly. But the differences in capabilities create differences in our moral obliations and how we should treat others. When a human painlessly dies, she is deprived of fulfilling her life goals, and because this person had the capacity of self-reflection and growth, this is an actively bad thing. If an animal which cannot ponder its existence (with perhaps the exception of the smartest chimps, not sure what the science says here) painlessly dies there is no such loss. Though suffering in the moment for beings with no self-reflection/little reasoning capacity is definitely bad. Current practices of factory farming are hugely immoral. So taking the interests of all beings into account includes taking note of their capacities, and what this means for what's required for a flourishing life.

      "And I do not want your opinions on some hints of answers of any of these questions."


      I'm giving you reasoned arguments. That's the method of philosophy. I don't see a way to get around it either. Because there's no way to critique the methodology of philosophy without engaging in reasoned arguments. To dismiss the practice of giving arguments in support of positions, you'd probably have to claim they're poor ways at getting to the truth. But then you're engaging in epistemology, and the philosophical method. You can't escape it, because philosophy is the field that analyzes from the highest level.

      "If morality is fact based, if it is independent of subjective view then there has to be some place where I can find irrefutable answer. "

      No. Absolutely not. I'm not sure why so many people get trapped up on this. Compare: if physics is fact based, if it is independent of subjective view then there has to be some place where I can find irrefutable answers. That's just patently false. We currently don't know the nature of dark energy. It's possible we're not smart enough to ever learn the truth. That in no way, shape of form means there isn't a fact of the matter about what's causing the accelerating expansion of the universe. You're arguing that if we cannot find the answers to some issue, there are no answers. Look or think about another field for just a second, and it's clear how unjustified a position this is.







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    22. Jason B.6:49 PM

      (Had to split up my post because of length!)

      "But we do not know for instance if plants feel pain or how they express it. We cannot use our experience for this and so we are indifferent to it..."

      Well if you think certainy is a requirement for having knowledge, then we cannot know that any other thing (human, animal, or plant) feels pain at all. People could be philosophical zombies - beings who show all the outward signs of having experiences/qualia, but for whom there's no consciousness on the inside at all. (Interestingly, the concept of p-zombies is to argue against physicalism/naturalism. Plenty of online resources if you're interested) It's just show. But I don't think any modern philosophers consider certainty a requirement for knowledge. It's too strict and we would not know any empirical facts at all(because we could be fooled by a Cartesian demon). Basic biological facts tell us plants don't have the capacity to feel pain.

      "If the whole human population would be composed of sociopaths and sadist incapable of empathy our morality would be very different. Because morality is not "fact" based but it is a virtual concept."

      People's moral codes would be different. But that's not what we've been meaning when discussing morality. We're talking about the normative concept of 'oughtness', and not the beliefs that people happen to hold. So you've just restated the argument from disagreement, which isn't much of an argument at all.

      Compare: if all humans were irrational beings they would be incapable of engaging in prudential reasoning. Hence, it is not true if I want to get better at tennis, I should practice.

      This is clearly a bad argument, right? But it has the same structure as yours.

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    23. "So you're back to saying that any subject that relies on axioms cannot be fact based"

      No, I say that they cannot be fact based if the validity of axioms is under question. Facts cannot be validated by them being "reasonable" or that majority of philosophs/physicists think that they are valid.

      I will go back to what I originally said, only slightly changed

      1. Assume that X is true

      2. Apply "logical" transformations that we know preserve truth value that transform X to Y

      3. Now we know that Y is true

      We know that Y is true only if we know that X is true. X can be either assumed, or it can be validated by measurement/observation of reality. We generally say that Y is "fact based" only validity stems from observations of reality, for instance that X is based on measurement.

      You can also say that the sentence "If X is true then Y is true" is a fact. But that is where I say that this is stretching the meaning of the word fact. Technically it OK to say so, but one has to be vary of not to misinterpret it by saying that "Y is true is a fact".

      Again I will show you another example. I think that you know this thing:

      1. Our understanding of God is a being than which no greater can be conceived.

      2. The idea of God exists in the mind.

      3. A being which exists both in the mind and in reality is greater than a being that exists only in the mind.

      4. If God only exists in the mind, then we can conceive of a greater being—that which exists in reality.

      5. We cannot be imagining something that is greater than God.

      6. Therefore, God exists.

      If majority of philosophers - even some of the brightest minds - at some time agree with hidden assumptions behind some logical "proof" like the one above, it does not make existence of god a "fact".

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    24. 'Oh yeah? Name one of these "moral facts"...'

      Not to threaten visiting lecturers with pokers?

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  23. Jason B.11:29 PM

    For anyone who read my last comment and is interested in metaethics, here are a few resources to get you going:

    https://www.youtube.com/watch?v=Rm2wShHJ2iA - a great debate with the very sharp Shelly Kagan

    http://www.iep.utm.edu/moralrea/ Reader-friendly introduction

    http://plato.stanford.edu/entries/moral-realism/ - a little more advanced

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    1. Anonymous5:41 PM

      This is just so sad. You (and so many others) so desperately wish that there were some sort of objective morality. Sorry, Charlie, but it is just so utterly unlikely. You're nothing but an overeducated theist, consumed with faith.

      There is no evidence that there is a universal morality.

      There is no evidence that, even if there were a universal morality, humans could discover it.

      There is no evidence that, even if there were a universal morality and humans could discover it, humans would agree on it.

      So (1) it doesn't exist, (2) even if it did, we probably couldn't even tell, and (3) even if we could tell, there'd still be a lot of dissenting opinions, which would render the whole thing worthless.

      And just to prove a point, this is what I believe: Murder is not immoral, though I have no misgivings about the state having the power to punish those who engage in it.

      Do I violate universal morality because I believe this? And why? And how did I become so misguided/immoral?

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    2. Jason B.6:49 PM

      " You're nothing but an overeducated theist, consumed with faith."

      Except I'm an atheist. As is Shelley Kagan, who I linked to, who argues persuasively that morality does not depend on the existence of a god. As are the majority of philosophers. (Look up the philpapers survey). I'm not consumed with anything.

      "There is no evidence that there is a universal morality."

      Stating things without argument isn't exactly convincing. This is exactly the problem I have with Noah. It's fine if you disagree with the arguments for moral realism, but at least engage with them (follow the links, and read my posts above)

      "There is no evidence that, even if there were a universal morality, humans could discover it."

      It should be clear that this has absolutely no bearing on the objectivity of moral statements. The way things are is a separate issue from whether we can come to know them. E.g. the fact that we can't currently know certain things about the universe millions of light years away doesn't in any way affect the facts of what's going on. And anyway, I doubt the claim that there's no way of knowing about whether actions are right or wrong. See: the whole field of normative ethics

      "There is no evidence that, even if there were a universal morality and humans could discover it, humans would agree on it."

      Again, disagreement is irrelevant. Does disagreement in science mean there are no facts about the way the world is?

      "And just to prove a point, this is what I believe: Murder is not immoral, though I have no misgivings about the state having the power to punish those who engage in it.

      Do I violate universal morality because I believe this? And why? And how did I become so misguided/immoral?"

      You haven't proved anything. You're just restating in different words your previous claim, without argument or backing, there there are no moral facts (I assume this is why you think murder is not immoral)I don't know why you believe what you do. People who haven't studied philosophy tend to engage in it(because you can't avoid it, see Mankiw and Noah) but engage in it poorly. I don't know why creationists don't believe evolution is the process of our origin.

      So to sum up, in your post you:
      1) Stated without argument that you disagree with me.
      2) Brought up a completely irrelevant point about epistemology
      3) Brought up a completely irrelevant point about disagreement

      This is why I wish every kid would have to take some philosophy classes in high school. We could avoid this sort of zero-content discussion. Are you by chance a new athiest?

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    3. o.nate5:44 PM

      Anonymous writes:
      And just to prove a point, this is what I believe: Murder is not immoral, though I have no misgivings about the state having the power to punish those who engage in it.

      To me, this proves a point, but perhaps not the one you were hoping to prove. I think that people get very worked up arguing one side or the other about moral realism, but in the end, it seems to have very little effect on what one believes about how one "should" act. Perhaps it really doesn't matter very much whether moral truths are "objective" or not. People will still go on trying to do and encouraging others to do what they believe is right.

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  24. Anonymous12:15 AM

    What do we know about these two examples BEFORE this story picks up? Is it possible Brad went to college, did internships, spent his Friday nights reading The WSJ and The Economist while Mike didn't? If that IS possible, are you implying Brad only did that because he had good genes?

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    1. Well, Mankiw was the one who said genetics was key...

      And who knows, maybe genes were the reason Brad went to college, did internships, etc...

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    2. But why did he go to college, do internships, and keep up to speed with economics news? Because of some prior cause.

      And what about high school? Prior cause.

      If you keep asking, you'll always push up against genetics and environment. Which is a classic ethical argument that people don't deserve rewards and punishment.

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    3. "Well, Mankiw was the one who said genetics was key..."

      Nope! Last time I checked, 56% was a majority, and unless my comprehension of english has detiorated, Mankiw says that 56% of economic outcomes is related to enviromental condtions unrelated to family.

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    4. Mike's dad left when he was five. When he was sixteen his mom caught cancer, making him, as the eldest boy in a traditional working class family, the one with responsibilities. He went and worked in the local lumber yard for ten years, which paid reasonably if not amazingly, although most of his spare money went on caring for his mother (a debt which he is still paying off despite her death four years ago - Mike, of course, is pleased she lasted so long, but three all-clear/remission cycles meant a lot of out of pocket) . When the owner of the lumber yard retired he left it to his son, who ran it down for two years then sold out to a bigger concern. The new owners cut staff, including Mike. Mike didn't want to be on unemployment insurance - as a good protestant republican he believed you should get back to work rather than sitting around complaining. Like all good citizens, he took the first job he found, even though it paid less than he had been getting.

      Amazingly, in all that time, he never found the opportunity or inclination to read the WSJ and dream of becoming a stockbroker, the lazy fucker. I guess he should have worked harder.

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  25. "If the economy were described by a classical competitive equilibrium without any externalities or public goods...."

    If magical unicorns could fly me to the moon....

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  26. Extreme inequality is generated by "winner take all" effects. The larger the social group, the greater the benefit of being on top. So unless human civilization goes into decline, inequality at the extremes will continue to increase.

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    1. There are resets, they are generally called revolutions. Sensible people are willing to take a pay cut to avoid them.

      Delete
    2. Was human civilization declining in the US post-WWII before the oil shocks?

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    3. Max, Do you intend to argue that if we raised taxes on the wealthiest to 90%, as they were post WWII, this would not affect inequality? If that is your point, then there would seem to be no downside to doing so. If that's not your point, then what's your point?

      You're engaging in what I call "root cause fallacy," where you identify X as the root cause of Y, then jump from there to the claim that only a reversal of X would lead to a reversal of Y, which does not logically follow.

      On a side note, your proposed root cause (which I do think is part of the story) has interesting implications for "just desserts". What winner-take-all implies is that, if you went back in time and somehow prevented the births of our current crop of winners, others would have stepped up and won, providing the same value. The Economist laid out this argument in more detail.

      Any sort of structural cause to the distribution of wealth undermines the "just desserts" argument as it implies that fundamental features of the economy are deciding the ratio between the income of the .1% and the meadian earner, and that this ratio has nothing to do with the ratio between how hard they each worked to get to their position.

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  27. "Anyway, Dr. Mankiw's answer is not forthcoming, and Mike cannot leave a comment on Mankiw's blog, due to the no-comments policy. So our story continues."

    This was very funny, then I thought about it: it also says something about Dr. Mankiw.

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    Replies
    1. When you were a child there were always the sneaky little bastards who would throw a rock and then run away before you could catch them.

      Apparently some of those kids grow up to be Harvard economists.

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  28. this is a great post.

    did you read the interesting response to Mankiw from Chris Dillow at Stumbling and Mumbling about how ideas of justice are separable from ideas of merit?

    my version of the same argument, which like Mankiw starts with a thought experiment:

    Assume we live in a feudal society where few aristocrats extract a large surplus from the labour of many serfs, where the "productivity" of aristocrats is potentially large (the expected difference between outcomes in an estate run by a stupid and lazy baron versus a smart and conscientious baron is large) and that baronetcies are not hereditary but appointed by the crown for services rendered.

    In this case many of the same arguments put forward to defend inequality would go through. A serf could become a baron if by effort and ability they'd pleased the King, so you can say barons "deserve" their position. And so forth. But I think few would call such a situation fair, or castigate serfs for "resenting" the fact that they work hard all their lives to provide their Lord with a life of luxury.


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  29. bjdubbs6:27 AM

    what if the rich dude manages to consume the same amoutn as mr. walmart through his life? and lets assume that the savings of mr. 3days are invested in a big rig, mr. walmart gets a job driving a truck, and raises his wages by $10,000/year. is that situation not the same (plus the rig) as a reduction in the wage of mr. 3days and redistribution?

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  30. Anonymous9:09 AM

    OK, if we set aside Mankiw's problems with numbers and factual assertions and just focus on his values, then I have a question. Why do we care about his values? Couldn't I just as well ask my teenage daughters what they think about these matters? They have values. (When did we stop calling ethics "ethics" and call them "values"?) My daughters aren't experts in values, but neither is Mankiw. What it looks like he has done is to use his PhD and lofty academic perch help him create the impression that he is making points about economics - his area of expertise. What he is in fact doing is offering a non-expert opinion about ethics.

    OK, so his trick worked. He's had his "made ya look" moment. Now that Noah has pointed out that the economist has no clothes, shouldn't we laugh at him and shame him into putting his clothes back on?

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  31. Few comments:
    So Greg Mankiw, according to his own model - a quotidien concoction of economics, ethics, and thinly-veiled political opinion - is simply where he is due to his genes, high marginal product and the inexorable forces of technological progress.

    Its just jaw-dropping to see this sort of opinion in action. In fact he is likely a great deal slower than what he fancies his marginal product to have delivered to his life. In other words, he is collecting far more rent than he imagines. (His salary as it is related to the exorbitant fees at Harvard, etc, are due to a self-perpetuating grip on so many things, its hard to tabulate)

    Aside from all the weaknesses in his arguments, that Noah has pointed out, there are much bigger issues that have very little to do with charity (which is essentially what he equates a welfare society to) but much more central to understanding what makes us truly happy and wealthy: the well-being of all fellow creatures.

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  32. "Now, value systems are subjective; what the government should or shouldn't do is a matter of opinion."

    No, with great respect that is not entirely true. A nation which marginalizes and suppresses 47% of its population is not stable and should not be surprised by high levels of crime, low levels of effort, and political disengagement. These outcomes weaken the nation. A government which is concerned about the collective strength and resilience of the nation needs to worry a lot more about a few dozen Mike's than a single Brad: both because the Mikes outnumber the Brads and because when the chips are down it will be the the Mikes and their children who go and fight the nation's wars while Brad's children will pull strings, avoid the draft and serve in the Texas Air National Guard.

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  33. Whenever someone puts forward this type of theory, I always have to wonder, "have you met any CEOs?"

    Because if you have, or if you've met successful bankers or senior executives or whatever, it's pretty obvious that success is not entirely driven by talent or hard work.

    Of course, if you're willing to recognize the happenstance of birth as a valid determinant of just deserts, then I guess you're probably okay with CEOs that win the game of life out of nothing more than sheer luck.

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    1. There's more to it than luck (though that plays a big role) or even talent or hard work.

      Bloody-mindedness helps too. However, bloody-mindedness can be turned towards seeking rents and weakening the society & financial system (for individual gain) just as well as productive activities.

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    2. I'm not certain what bloody-mindedness means exactly, but it sure seems like it might include ambition and greed, which are certainly involved.

      Delete
  34. Anonymous1:32 PM

    Great post, Noah, I think you hit the nail on it's head. Particularly with the whole genetics thing, if Mankiw is really arguing that genes are such an important component of determining success at life, something I'd dispute based on my limited knowledge of the studies he cites, then we could easily present the argument that means we need to have more government intervention, not less, specially since the paper argues that it doesn't necessarily restrict to just intelligence or skill, but with people's choices ('they can't help it, it's in their genes!')!

    And that's profoundly disturbing, in so many ways.

    Also, I'd point out that in a very practical note, social mobility in the US is much, much less than in other similar nations (i.e., Britain and Canada, not to mention continental Europe!), which seems to show that there must be practical measures that could be taken in the US that would help with this (unless you believe that low social mobility is a good thing!) turning the US into a 'socialist hellhole'.

    Unless you could argue, straight-faced, that the UK and Canada are as such. In which case I'd just ignore you.

    ReplyDelete
  35. Just deserts for the bankers who received millions of dollars in bonuses by creating and selling garbage financial instruments (and destroyed the world economy as a result) would be to spend the rest of their lives locked in prison cells with 300 pound psychotics.

    ReplyDelete
  36. This blogpost is an unfair distortion of what Greg Mankiew actually wrote about the "Just Deserts" theory. In the reference to which Noah provided a link,

    http://scholar.harvard.edu/files/mankiw/files/spreading_the_wealth_around.pdf

    the section, "OPTIMAL TAXATION REVISITED" expresses his viewpoint:


    " Public goods and Pigovian subsidies lead naturally to a tax system in which higher income individuals pay more in taxes. Surely, those with higher income and greater property benefit more from a governmental system that protects property rights.

    Moreover, the monetary value attached to other public goods (such as parks and playgrounds) and to positive-externality activities (such as basic research) very likely rises with income as well. Indeed, if the income elasticity of demand for these services exceeds one, as is plausible, a progressive tax system is perfectly consistent
    with the Just Deserts Theory.

    What about transfer payments to the poor? These can be justified along similar lines. As long as people care about others to some degree, antipoverty programs are a type of public good. .."

    ReplyDelete
  37. If every low wage worker took Monday off the world would grind to a halt. If every 1%er took Monday off meetings would be rescheduled. So who's work is really more valuable?

    ReplyDelete
  38. It's worth mentioning that the CEO of Phillip Morris and others like him actually have negative deserts--they're glorified pushers with human misery and death written into their business models. What they deserve is a lifetime in prison. What they get is 30 million dollars a year. And many of the blue collar folks dying of cigarette-induced lung cancer sympathize with his plight and vote Republican.

    For the record, I'm not saying we should throw the CEO of Phillip Morris in prison, just that he deserves it--sometimes we shouldn't give people what they deserve for consequentialist reasons.

    ReplyDelete
  39. Nate O2:57 PM

    When rich people justify being rich, it reminds of how white people used to justify owning slaves and India. I don't think these are honest arguments, I think the upper class is stalling for time. The more time we spend bickering about inequality, the less time we have to revolt, a la 1789.

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  40. I think Mankiw's argument falls completely flat on its face because in marginal pricing regime the "Steve Jobs / Rowling / GonnaBeRichGuy" gets exactly the value of his marginal product, i.e. the added value to the society is an epsilon tending to 0.

    So the entire argument is easily rephrased as: should the product of one individual at least partly contribute to the well-being of the entire society or should everyone see for himself ? The answer is trivial.

    I suggest the following restating of Mankiw argument: suppose there's a perfect egalitarian society. One day aliens come on Earth and say "We will pick a random human each year and give him an enormous amount of [gold/dollars/fish]. We will also grant all other humans a negligible amount of [gold/dollars/fish]". We started from egalitarianism and this transaction makes everyone better off. Should the society rething redistribution ? The answer is "derp".

    ReplyDelete
  41. Anonymous3:51 PM

    pure. BRILLIANCE. love the analogy breaking down the EXACT PROBLEM. much appreciation.

    ReplyDelete
  42. Bill Ellis4:20 PM

    Thank you.

    ReplyDelete
  43. Anonymous4:40 PM

    I would have never though that a CEO capturing his compensation board and neutering his shareholders was "skillbiased technological change". I thought that was just "old school" politicking.

    ReplyDelete
  44. Bill Ellis4:44 PM

    Noah, Again, Great Post.
    And I just read the comments thread... wow. Some great stuff.

    ReplyDelete
  45. Noah,

    to use Greg's example, suppose Mike is dying from kidney failure and Brad has two healthy kidneys, of which he needs only one. So Mike asks Noah, why should Brad be lucky enough to live a long and healthy life with a spare kidney while I am left to die young? Out of curiocity, what would be Noah's answer? Should the government force Brad to donate his kidney to Mike?

    Finally, you greatly, and I hope not deliberately, misrepresent Greg's view. I have read enough of his writings, and I believe he makes the same point in the essay you linked, to know that he supports some redistribution. But he approaches the issue from a public good point of view. Most people would not want Mike to starve or forgo medical treatment because he cannot afford it, and would be willing to pay an amount if their contribution was enough to prevent that from happening. However, each individual contribution, at the margin, is not enough to deal with the Mikes of the world. Therefore, private charity would be underprovided, as is the case with parks or other public good subject to the free-rider problem. One does not need to subscribe to utilitarianism to advocate for mandatory redistribution. This, I believe, would be Greg's answer to your question.

    ReplyDelete
    Replies
    1. to use Greg's example, suppose Mike is dying from kidney failure and Brad has two healthy kidneys, of which he needs only one. So Mike asks Noah, why should Brad be lucky enough to live a long and healthy life with a spare kidney while I am left to die young? Out of curiocity, what would be Noah's answer? Should the government force Brad to donate his kidney to Mike?

      My own personal answer? Or what I think the answer of most Americans would be?

      Finally, you greatly, and I hope not deliberately, misrepresent Greg's view.

      nope

      Delete
    2. When he put his name to the Romney economic "White Paper" Mankiw surrendered for all time any claim to being given the benefit of the doubt.

      Delete
    3. Hmmm seems like a pretty extreme example, I'm fairly sure a society as advanced and democratic as ours could agree on a middle ground. The question is are we wealthy enough as a country to guarantee a basic standard of living and what should that standard of living be.
      I think we are technologically advanced enough to provide a much better living for relatively little cost than what many people in this country endure.

      As to your example be wary, Only the Sith deal in absolutes

      Delete
    4. "My own personal answer? Or what I think the answer of most Americans would be?"

      Both

      "nope"

      Yeap! For example, nowhere in Mankiw's writing will you find an attack on insurance, including dissability insurance. So I am not sure how following Mankiw's "just desserts" theory one is led to this conclusion, as in your example.

      Rpeers,

      the question is one of principle. Mankiw is not debating here so much the degree of redistribution, but rather what the basis for its justification should be. I think his criticism of utilitarianism is right on! But this does not mean that one can not make a case for redictribution by following a different path.

      Delete
    5. Yeap!

      Sorry, but "yeap" is not a word. I think the word you're looking for is "yep"...

      Delete
    6. also...

      nowhere in Mankiw's writing will you find an attack on insurance, including dissability insurance

      Pure insurance, no, but "insurance" that has a large component of redistribution? He'd be against the redistributive component because of "just desserts" theory, since it's no different than other redistribution.

      Delete
    7. Noah, thanks for the correction! I wish you had also taken some time to answer the kidney question.

      On topic, first, unless insurance premiums are perfectly correlated with the relevant individual characteristics, every insurance has an element of redistribution. For example, health insurance redistributes income from the healthy to those more likely to get sick. Second, I quote below what Mankiw writes in the essay that inspired your post about how the "just dessert" theory should be applied. Did you really miss all that? Come on now!

      "If the economy were described by a classical competitive equilibrium without any externalities or public goods, then every individual would earn the value of his or her own marginal product, and there would be no need for government to alter the resulting income distribution. The role of government arises as the economy departs from this classical benchmark. Pigovian taxes and subsidies are necessary to correct externalities, and progressive income taxes can be justified to finance public goods based on the benefits principle. Transfer payments to the poor have a role as well, because fighting poverty can be viewed as a public good (Thurow 1971)."

      Delete
    8. For example, health insurance redistributes income from the healthy to those more likely to get sick.

      I think this is an important point!

      Did you really miss all that?

      Of course I didn't miss that! Mankiw differentiates between redistribution and public goods, and admits that fighting poverty can be a public good. I agree with him on both counts. But does that really impinge upon the point I'm making in this post - that most people's intuitive notion of "just deserts" contains some element of redistribution? I think not.

      Delete
    9. This is a world with only four kidneys in it, I see. Unless Brad and Mike are related, they're only likely to have that kind of contact if they both end up paired in a kidney donor clearing swap.

      Delete
  46. My problem with the "just desserts" view is that what a theoretically ideal market promises is not this. I think most people understand just desserts to mean you get what you put in, but the reality is more like you get what the last guy like you to be hired puts in, which is necessarily less, and could be substantially less. Nothing in efficient markets theory says that businesses can't make boatloads off your labor without sharing much of it with you; it only says that businesses that can do so will hire enough so that hiring one more won't make them so much.

    The thing is I'm sure Mankiw understands this distinction just fine, but I think there is a tendency among economists to get too excited about the handful of things you can "prove" from a theoretical framework and attach more significance than they should. Under certain assumptions, markets will compensate everyone according to their marginal product. That means nothing interesting from the standpoint of any reasonable definition of justice. Deal with it.

    ReplyDelete
  47. Anonymous10:13 PM

    There are other issues besides just desserts. Certainly hard work and talent matter -- and they should, but cheap money works to create a 1%. Or at least moves it from a higher % toward 1. This is a systemic bias that is not accounted for.

    ReplyDelete
  48. Congratulations, Noah. Felix Salmon's Counterparties just designated your blog post as 'Takedown' of Mankiw's forthcoming JEP article.


    With such plaudits who needs to bother getting one's own research published to earn tenture!

    ReplyDelete
    Replies
    1. Is this your way of nagging me to stop blogging and go do some real work? ;-)

      Thanks, Mom...

      Delete
  49. Mankiw's paper is, I don't think I'm exaggerating, a Social-Darwinist's wet dream. A particularly bad string of arguments made by Mankiw are 1) that socio-economic differences are a product of merits, 2) that the observed difference in merits is a product of genes, and that 3) lack of socio-economic mobility are a byproduct of the heritability of IQ (nevermind that other advanced economies have greater inter-generational mobility). In total, it seems as though he is arguing that poor people are dumb, rich people are smart, and people in the middle are of average intelligence; moreover that the reason poor people have children that remain poor and the reason rich people have children that remain rich is strictly due to inherited genes. He then goes on to imply that the results are natural and that everyone, essentially, gets their "just deserts." He furthermore seems to assume that, even if it were natural, that it is fair or desirable and that society has no responsibility to correct for even the most distressing of consequences. The only thing he's missing, it would seem, is a call for forced sterilization of the poor.

    Would Mankiw really argue that George W. Bush would have become President whether or not he had not been born into the Bush family (if, say, he were adopted into a family of average means or had been swapped at birth)? Would he really argue that the reason that both he and his father were Presidents was because of genetically inherited traits? Is it more likely that he became President strictly because of who his father was and due to opportunities offered to him because of his family background? Would he, for instance, have gone to Yale and then Harvard if his father had been a plummer?

    Don't get me wrong, genes most assuredly have an effect on intelligence -- most especially there are genetic anomalies that can retard mental capacity -- this much is not in dispute. Genetics and resulting intelligence may indeed also play a role in a person's eventual salary (how much is debatable and probably isn't known with any degree of certainty). However, Mankiw, an economist, should stick to economics as genetics is obviously not his forte.

    Heritability of IQ is estimated to range anywhere from 0.4 to 0.7 -- meaning that a person's IQ is just under half to 3/4 attributed to their genes (not necessarily directly related to their parents intelligence), with the other 1/4 to half being the result of their environment. However, if one studies the effects of socio-economic background on IQ, we find that environmental effects increase the further down the socio-economic ladder we go and that genetics plays a larger role the further up the ladder we go ... meaning that even if a poor child has the capacity to be highly intelligent, their environment has a large negative impact on the outcome. Conversely, a child who is born to wealthy parents, even if they are only of slightly higher than average genetic capacity for intelligence, the outcome will not vary much due their environment.

    In previous studies on adopted children, for instance, the average intelligence of the children when first adopted, primarily due to their coming from abusive and neglected circumstances, was high 70s -- barely above the level acknowledged as retardation. Those who were adopted into farming homes improved to mid-80s while those who were adopted into middle-class homes improved to low-90s (approaching the mean).

    Additionally, a well-known genetic trait is "regression toward the mean" -- which results in two parents who are at either extreme (either extremely intelligent or extremely unintelligent) on average being more likely to have a child who is closer to the mean. Which brings me back to the Bush family ...

    ReplyDelete
  50. Ok Dr. Smith...how about comparing your Mike to a man tilling the fields in sub Saharan Africa. Mike is at least in air-conditioned Walmart...would you support a global income transfer then? if not why not?

    ReplyDelete
    Replies
    1. I think the question is not what I'd support, but what the American people would support.

      Personally? I do not support any direct income transfers to places with high fertility rates, for Malthusian reasons. Only places that are undergoing or have already undergone fertility transitions. However, I think Melinda Gates is doing great work in Africa on exactly this front. They need to bring their fertility rates down.

      Delete
    2. Nathanael2:59 AM

      Personally, I see two reasons for redistributionary policies:
      (1) To break the power of the 0.1% and prevent it from reappearing (in other words, to preserve democracy)
      (2) To raise the living standards of the 99%.

      In regards to #2, the best thing we can do is to give everyone free birth control, for Malthusian reasons, as Noah says. After that, clean water. And so on.

      But in regards to #1, there is no substitute for taking the wealth away from the people who have too damn much political power due to their wealth. It doesn't really matter what you do with the money once you take it away. You could burn it, though that would have a deflationary effect. You could hold big parties with it. The important part is breaking the political stranglehold held by a few extremely rich greedheads.

      Delete
  51. I'm not sure this has been addressed upthread (I'm still reading them, they're excellent!), but the perceptive Mr. Smith's post is a classic attack on Libertarianism that Libertarianism not only does not answer, but cannot by the basis of its own philosophy.

    Mankiw's argument is based on the procedural morality of 'just transactions, transacted justly'. Which is fine, as far as it goes.

    But it doesn't go very far because Nozickian 'justice as procedure' fails to address the two OTHER portions of human moral existence: Intentionalism - Virtue Ethics is the canonical example of intentionalism - and Consequentialism.

    Staggeringly, this is DELIBERATE on Nozick's part - he actively rejects at least Consequentialism in Anarchy, State and Utopia and ONLY accepts his procedural account of justice as valid, excluding intentionalism altogether. (it's been awhile since I've read AS&U, but that is as I recall)

    What the Libertarian answer here though, is to sneakily draw on intentionalism for the OTHER guy and deny him his 'just deserts' because of facts about his life that 'show' he never intended to amount to anything. This is the basis for most, if not all, arguments based on 'Personal Responsiblity'.

    So, their philosophy explicitly rejects anything as just that isn't procedurally so, but then uses the intent of the downtrodden to further bolster their position without acknowledging it, thus avoiding the sword cutting THEIR way by the counter claim that their intent is just and exactly that: to keep the downtrodden DOWN.

    The typical argument goes like this:

    Libertarian: Just transactions lead to just outcomes, no matter how they SEEM to be unjust.

    Liberal: But what about the CONSEQUENCES of these systems you purport are just? Isn't that unjust?

    Libertarian: No, because the downtrodden haven't been smart enough to ensure their continued safety in the face of almost certain starvation if they are unable to work, they don't deserve our help.

    See the bait and switch? The argument FOR is procedural and ONLY proceduralism is accepted as legitimate. The DEFENSE is intentional and since only arguments FOR are accepted on procedural grounds, they're 'safe' from the idea that their procedures harm people.

    ReplyDelete
  52. I think the case can be made much more concretely. Exxon's CEO, Lee Raymond, was paid “$686 million from 1993 to 2005." This comes to about $144,573 per day. Raymond was a man over the age of sixty. I figure he had to have about ten to twenty minutes of bathroom breaks during the working day. Now, at that rate, a full Raymond dump - during which he is productively thinking in that skilled way that benefits us all and helps world history along - is worth a couple of thousand dollars. His two days worth of bathroom breaks earn him more than the Walmart guy gets in a year.
    Mankiew is a stooge.

    ReplyDelete
    Replies
    1. Besides which as Exxon CEO, a significant amount of his time is spent working on how to corrupt various governments. Is that really socially productive?

      Delete
    2. Nathanael3:00 AM

      He also spends his time lobbying in order to increase pollution and increase carbon dioxide emissions and make global warming worse.

      Some people's lives are socially destructive. When those people are very very rich and therefore very powerful, *we have a problem*.

      Delete
  53. Isn't this all just about whether all deserts that come from things not under one's control or a result of effort are totally deserved and not to be trifled with by public policy or otherwise.

    Mankiw seems to accept that, but many would not, and they're not all socialists.

    ReplyDelete
  54. Anonymous11:05 PM

    You misrepresent Mankiw's just deserts theory because in his writings he makes room for provision of public goods, such as tools to alleviate poverty and if you read closely, he is logically coherent and consistent on that

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
    2. Noah already answered this point in the thread above. His main point is that the CONCEPT of "just deserts" that Mankiw uses does not correspond to most people's normative concept of "just". What Mankiw says elsewhere is irrelevant to this.

      Delete
  55. "Personally? I do not support any direct income transfers to places with high fertility rates, for Malthusian reasons. Only places that are undergoing or have already undergone fertility transitions. However, I think Melinda Gates is doing great work in Africa on exactly this front. They need to bring their fertility rates down."

    Do you not see it as possible, even likely, that transfers to high fertility rate areas (have never used that creepy term before) may actually assist in lowering fertility rates?

    You seem to be saying "I want those Africans to stop screwing and then I will help them!!"

    ReplyDelete
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  57. Anonymous3:01 AM

    A ideology driven post without enough attention paid to what the other side is trying to say. Many have pointed out and let me request you to read that Mankiw article again and if needed read his earlier Just Desert paper.

    1. Fundamentally Just Deserts is a tautology and cannot be challenged in any meaningful way. Only compared another tautology as being more or less effective. Mankiw says this is the fundamental way people look at their society. If things are perceived to be fair people are ok with A earning $30M and B earning $20K. If things are not perceived to be fair people want some distribution or some other kind of policy to change that. In what way do your examples challenge Mankiw? If B falls ill there is no way people think of it in Just Desert terms so that does not apply. Because their reaction would not change if A falls ill too. Someone who falls sick and needs medical help "did not deserve it" and hence needs society's help. That is the idea.

    So Broadly Mankiw's point is about how human beings want their society to be. A Just Deserts society which unites to help people in their bad times. In normal times everyone wants people to get only what they deserve.

    That this is not how society really functions then is why all kinds of policies of distribution etc can be justified which Mankiw himself agrees on. This is a better way to justify distribution than thinking that a $ is less worth to the rich than the poor. At least that should be the Economist's justification for distribution. Because in reality society is not fair to those who start off poor and with less educated parents. There is rent seeking and those close to power circles end up better off with the same ability.

    ReplyDelete
    Replies
    1. " This is a better way to justify distribution than thinking that a $ is less worth to the rich than the poor."

      Why exactly?

      You start off trying to make a positive case for Mankiw's argument then yourself introduce a normative argument. Rather destroys your credibility doesn't it?

      Delete
  58. As far as your comments about respect, I fully agree. There is a strong sense of hierarchy in Japan--so strong that it is embedded in the honorifics of the Japanese language--that I have sometimes found a bit disturbing. Nevertheless, there is also a strong tradition of common courtesy that it is truly remarkable and inspiring. This courtesy is closely tied to concepts of personal honor. There is noting disreputable about a menial task, but there is about not doing your best.

    I recall taking a long taxi ride in Tokyo. Traffic was difficult and the driver tried to take a route that he was unfamiliar with. He became lost, and the ride took longer than it should have. He was visibly upset and refused to take the full metered fare because, he explained, as a taxi driver that he was responsible for knowing the best routes from point to point and that he had failed in his responsibility.

    I finally got him to take the full fare. I said that I had willingly accepted the risks he had taken in trying an untested route. If he did not take the fare he was entitled to, then I would feel that I had cheated him by not accepting my responsibility. The dynamics of that interaction says a great deal about Japanese society.

    ReplyDelete