More about Merit Goods

Posted on December 9, 2011 by Loquitur Veritatem

This is a follow-up to “Merit Goods, Positive Rights, and Cosmic Justice.” That post was inspired by a post at Austin Frakt’s blog, The Incidental Economist, about which John Goodman had this to say:

Austin, on first reading, I thought you were saying that I (as a taxpayer) should help pay for your daughter’s asthma medication — even though you agree that you can afford to pay for it yourself. Disbelief overcame me, so I read your post a second time. Then I read it a third. Each time, the message was as incomprehensible as on the previous reading.

Is there a persuasive reason why I owe the Frakt household something? If so, it’s not in this post.

Frakt’s response to Goodman:

You owe me nothing. Follow the link to value-based insurance design or find the V-BID center at U Mich. I think you’re looking for trouble where none should exist.

Well, I followed the link, and came away unconvinced that Frakt wants nothing from Goodman or anyone else. Accordingly, I posted this comment (paragraph breaks and emphasis added):

Your post about value-based insurance — to which you refer John Goodman — suggests that by reducing the co-pay on asthma drugs, trips to the ER would be averted, thus reducing the insurance company’s total costs and (possibly) the premiums it must charge its policy holders. If I have that right, it explains your reply to Goodman that “You owe me nothing.” I suspect that what he reacted to — and I would have reacted to similarly — is your assertion that “breathing [is] a merit good, something we all have a right to enjoy.” That assertion is unnecessary to the discussion of value-based insurance. And your use of the term “merit good” strongly suggests that your statement “Asthma medication is exactly the type of health product that should be free, or nearly so, especially for low-income families” is not just a statement about the presumed efficacy of value-based insurance, but advocacy for income redistribution.

In that case, a modified version of Goodman’s reaction is entirely in order, and I subscribe to it: “Is there a persuasive reason why I owe other households something, and what qualifies you (or anyone else) to make that judgment?” The excuse that I might otherwise end up paying for ER services through my taxes or insurance premiums relies on the assumption that ER services are a merit good that ought to be covered by tax subsidies and/or mandated insurance coverage. There is no end to the number of things that can be called merit goods, but calling them merit goods does not disguise the fact that doing so is an excuse for imposing one person’s or group’s preferences and burdens on others.

Those impositions have led to the present state of affairs, in which myriad interest groups pick each others’ pockets — and the pockets of the unfortunate who are not well-represented by an interest group. One truly unfortunate result of that state of affairs — aside from the gross diminution of liberty — is the diversion of resources from uses that would foster greater economic growth and alleviate much of the poverty that provides an excuse, in the first place, for special pleading about merit goods.

Merit Goods, Positive Rights, and Cosmic Justice

Posted on December 7, 2011 by Loquitur Veritatem

A merit good is said to be something that

an individual or society should have on the basis of some concept of need, rather than ability and willingness to pay…. [T]he concept … lies behind many economic actions by governments…. Examples include the provision of food stamps to support nutrition, the delivery of health services to improve quality of life and reduce morbidity, subsidized housing and arguably education….

Sometimes, merit … goods are simply seen as an extension of the idea of externalities. A merit good may be described as a good that has positive externalities associated with it. Thus, an inoculation against a contagious disease may be seen as a merit good. This is because others who may not now catch the disease from the inoculated person also benefit.

[M]erit … goods can be defined in a different way…. The essence of merit … goods is [has] do with … information failure…. This arises because consumer[s] do not perceive quite how good or bad the good is for them: either they do not have the right information or lack relevant information…. [A]merit good is [a] good that is better for a person than the person … realizes.

Other possible rationales for treating some commodities as merit … goods include public-goods aspects of a commodity…

A merit good, in short, is something that someone believes that the state should cause to be given to certain individuals, as a “positive right,” for various reasons: perceived need, externalities, and market failure among them.

But the “right” to something that is not earned or freely given is not a right, as the term is properly understood. It is an extortion by force or the threat of force, either directly (as in the case of outright theft) or though the coercive power of the state. Only a fool or a dishonest person can say that something obtained through extortion is obtained by right, unless that person believes that the victims of extortion are less deserving — less human — than the intended beneficiaries of extortion.

If a right is anything, it is something that all members of a polity can enjoy equally. If some members of a polity are placed above others through force or the threat of force, then the polity has no system of rights; it has a system of arbitrary privileges, dispensed by the state according to the whims of the faction then in power.

Given that a right must be something that all can enjoy equally, a right can only be negative:

the right not to have one’s life taken if one is peaceful toward others

the right not to be deprived of liberty if one is peaceful toward others

the right to the peaceful enjoyment and use of one’s property in the pursuit of one’s life and livelihood.

These negative rights come down to this: the right to be left alone as one leaves others alone.

If “obligations” accompany the right to be left alone, they do so only in the context of voluntary social (and economic) relationships, wherein acts of kindness and charity flow readily among persons who trust and care for each other and do so, in good part, because they observe the right of others to be left alone. These “obligations” are incurred and honored voluntarily, not because a person or group invested with the power of the state decrees them.

Merit goods (“positive rights”), by contrast, are the products of presumption — judgments about who is “needy” and “deserving” — and they are bestowed on some by coercing others. These coercions extend not only to the seizure of income and wealth but also to denials of employment (e.g., affirmative action), free speech (e.g., campaign-finance “reform”), freedom of contract (e.g., mandatory recognition of unions), freedom of association (e.g., forced admission of certain groups to private organizations), freedom of conscience (e.g., forced participation in abortions), and on and on.

The list of “merit goods” that forms the basis for the many and various forms of state-sponsored coercion may not be infinite, but it is exceedingly long. And its length is limited only by the perverse ingenuity of the seekers of “cosmic justice.” What is cosmic justice? I like this example from Thomas Sowell’s speech, “The Quest for Cosmic Justice“:

A fight in which both boxers observe the Marquis of Queensberry rules would be a fair fight, according to traditional standards of fairness, irrespective of whether the contestants were of equal skill, strength, experience or other factors likely to affect the outcome– and irrespective of whether that outcome was a hard-fought draw or a completely one-sided beating.

This would not, however, be a fair fight within the framework of those seeking “social justice,” if the competing fighters came into the ring with very different prospects of success — especially if these differences were due to factors beyond their control….

In a sense, proponents of “social justice” are unduly modest. What they are seeking to correct are not merely the deficiencies of society, but of the cosmos. What they call social justice encompasses far more than any given society is causally responsible for. Crusaders for social justice seek to correct not merely the sins of man but the oversights of God or the accidents of history. What they are really seeking is a universe tailor-made to their vision of equality. They are seeking cosmic justice.

To be a practitioner of cosmic justice, a person must set himself up as a judge of the merit of other persons, without really possessing more than superficial information about those other persons (e.g., that they are “rich” or “poor” by some standard). As I once said of two founders of modern “liberalism,” T.H. Green and L.T. Hobhouse, they are

accountants of the soul….

…(presumably) intelligent persons who believe that their intelligence enables them to peer into the souls of others, and to raise them up [or put them down] through the blunt instrument that is the state.

This is done on in the service of concepts that do not bear close examination, such as externalities, public goods, market failure, and social justice, social welfare, and positive rights. I will not repeat my asseessments of those concepts, but refer you to some of them instead:

Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
A Short Course in Economics
Social Justice
The Meaning of Liberty
Positive Liberty vs. Liberty
More Social Justice
On Self-Ownership and Desert
Luck-Egalitarianism and Moral Luck
Externalities and Statism

The Case of the Purblind Economist

Posted on August 31, 2010 by Loquitur Veritatem

Purblind: lacking in insight or understanding; obtuse

Steven Landsburg just doesn’t get it. Uwe Reinhardt lectures him about the folly of “efficiency” (or “social welfare”), and Landsburg continues to act as if there were such a thing:

Suppose you live next door to Bill Gates. Bill likes to play loud music at night. You’re a light sleeper. Should he be forced to turn down the volume?

An efficiency analysis would begin, in principle (though it might not be so easy in practice) by asking how much Bill’s music is worth to him (let’s say we somehow know that the answer is $10,000) and how much your sleep is worth to you (let’s say $25). It is important to realize from the outset that no economist thinks those numbers in any way measure Bill’s subjective enjoyment of his music or your subjective annoyance. Only a crazy person would think such a thing, and I’ve never met anybody who’s that crazy in that particular way. Instead, these numbers primarily reflect the fact that Bill is a whole lot richer than you are. Nevertheless, the economist will surely declare it inefficient to take $10,000 worth of enjoyment from Bill in order to give you $25 worth of sleep. We call that a $9,975 deadweight loss.

The problem with this kind of thinking should be obvious to anyone with the sense God gave a goose. The value of Bill’s enjoyment of loud music and the value of “your” enjoyment of sleep, whatever they may be, are irrelevant because they are incommensurate. They are separate, variably subjective entities. Bill’s enjoyment (at a moment in time) is Bill’s enjoyment. “Your” enjoyment (at a moment in time) is your enjoyment. There is no way to add, subtract, divide, or multiply the value of those two separate, variably subjective things. Therefore, there is no such thing (in this context) as a deadweight loss because there is no such thing as “social welfare” — a summation of the state of individuals’ enjoyment (or utility, as some would have it).

Landsburg persists:

Take a more realistic example: Should we spend, say, a billion dollars a year to subsidize end-of-life health care for poor people? It would be, I think, a terrible mistake to settle this question without at least asking whether the recipients might prefer that we spend our billion dollars some other way — say by subsidizing their groceries or just giving them cash. If so, the difference in value between what they’re getting and what they could be getting (as measured by the recipients) is a deadweight loss. The bigger that deadweight loss, the more we should reconsider our spending priorities.

Who is “we,” Prof. Landsburg? Do you presume to speak for me, one of the taxpayers who would share in the cost of subsidizing end-of-life health care for poor people? The “recipients” have no right to prefer anything. It is my money you’re talking about, not some pot of “social welfare” that sits in the sky, waiting to be distributed by omniscient economists like you. The deadweight loss, as far as I’m concerned, is whatever you take from me to “give” to others, in your omniscience. I have better things to do with my money, thank you, and whether or not they’re “charitable” (they are, in part), is no business of yours. Who made you the accountant of my soul?

How to Combat Beauty-ism

Posted on June 12, 2010 by Loquitur Veritatem

Now that the seekers of cosmic justice have taken care of health inequalities by ensuring that everyone enjoys equally poor health under Obamcare, they are turning their attention to inequalities in beauty. Here’s the lowdown:

In her provocative new book, The Beauty Bias: The Injustice of Appearance in Law and Life, Stanford law professor Deborah Rhode argues that workers deserve legal protection against appearance-based discrimination unless their looks are directly relevant to their job performance….

Rhode convingingly [sic] argues that beauty bias in the workplace is a widespread problem with serious consequences. Between 12 and 14 percent of workers say they’ve suffered some kind of appearance-based discrimination on the job.

It should go without saying that discrimination on the basis of appearance is unjust, especially when it comes to features individuals have little or no control over. Rhode does a good job of spelling out why such bias is offensive to human dignity and equal opportunity.

If discrimination on the basis of appearance is unjust, then discrimination on the basis of intelligence and ability must also be unjust. A very high percentage of workers have been discriminated against on the basis if their lack of intelligence, and yet individuals have little or no control over their level of intelligence. Nor do they have much control of their ability to do things that require intelligence or other genetically determined traits (e.g., exceptional eyesight, exceptional height, perfect pitch).

Therefore, following Deborah Rhode’s logic, public and private institutions should not be able to discriminate on the basis of intelligence or ability (where it is genetically dependent). Professors, most athletes, most musicians, brain surgeons, and others whose occupations demand high intelligence and/or unusual physical abilities should be chosen by lottery. Think of Debora Rhode as you go under the knife.

Seriously (not), here is how the government should deal with the problem of beauty-ism:

1. Establish national standards of beauty. This should be done by an independent commission of experts appointed by the president, subject to confirmation by the ugliest members of the Senate.

2. Assign every person over the age of 16 a beauty rating, on a scale of 1 to 8 (“10” is such a cliché). This can be done at the time of the decennial census. It would require the abolition of the mail-in form in favor of visits to every dwelling place in America by teams of beauty judges who are trained and certified by the beauty commission. Refusal to be judged would be a felony, punishable by compulsory viewing of American Idol or similar fare, as determined by the beauty commission.

3. Determine the national distribution of beauty ratings. If the ratings are normally distributed, for example, they would occur with the following frequency per 1,000 persons: 1 = 1; 2 = 21; 3 = 136; 4 = 341; 5 = 341; 6 = 136; 7 = 21; 8 = 1 (distribution does not add to 1,000 because of rounding).

4. Require every employer (private and government) to maintain a workforce with a distribution of beauty ratings that matches the national distribution. Heads of private and government organizations (e.g., CEOs, the president, the speaker of the House) would be counted for purposes of determining compliance with the national average.

5. Give employers an opportunity to comply with the national distribution. In an arrangement similar to cap-and-trade for carbon emissions, employers could trade overly beautiful employees for underly beautiful ones. In a token bow to liberty, the terms of trade would be negotiated by the trading parties.

6. Punish employers who fail to bring their workforces into compliance with the national distribution by a date certain. Punishments would vary according to the degree of noncompliance. At a minimum, offenders would be forced to watch Dancing with the Stars. As for the most serious offenders, their personal beauty ratings would be lowered to 1, thus insulting 999 out of every 1,000 offenders and making it almost impossible for them to work anywhere. No exceptions would be made for high-ranking officials. (Note to Barack Obama, Harry Reid, and Nancy Pelosi: That means you.*)

Thus endeth today’s journey into the never-land of cosmic justice.

__________
* On the evidence of these portraits and photos of the presidents of the U.S., I conclude that average beauty rating for a president in the post-hirsute era (Wilson through Obama) is a below-average 4.4.

Accountants of the Soul

Posted on May 18, 2010 by Loquitur Veritatem

In a post about two of the founders of modern “liberalism,” T.H. Green, and L.T. Hobhouse, I say

Green and Hobhouse . . . were accountants of the soul. Green’s apparent delicacy in warning of too much intervention [by the state] is overcome, in the end, by his recognition of the British state (embodied in Parliament) as the proper arbiter of human conduct. Hobhouse, more boldly, presumed that he and others of his ilk (but not those who disagree with him) could determine how much of one’s property arose from “social organisation,” how much of one’s property was “held for power,” and how to expand liberty by adopting different forms of coercion than those imposed by social norms.

Once again, we are met with (presumably) intelligent persons who believe that their intelligence enables them to peer into the souls of others, and to raise them up through the blunt instrument that is the state.

It is hard to distinguish the mindset of the “liberal” from that of the “libertarian” paternalist, who does not cavil at the prospect of using the power of the state to “nudge” lesser mortals toward “choices” that he deems in their best interest. “Liberals” and “libertarian” paternalists are alike in their abstract love of mankind and particular disdain for individuals.

Utilitarianism, “Liberalism,” and Omniscience

Posted on June 8, 2009 by Loquitur Veritatem

Utilitarianism is sort of under debate in the blogosphere (see here). But all the hifalutin’ philosophising misses the main point about utilitarianism: Those who practice it are arrogant pretenders to omniscience.

The appeal of utilitarianism rests on two mistaken beliefs:

There is such a thing as social welfare.

Transferring income and wealth from the richer to the poorer enhances social welfare because redistribution helps the poorer more than it hurts the richer.

Having disposed elsewhere of the second belief, I here address the first one.

The notion of a social welfare function arises from John Stuart Mill’s utilitarianism, which is best captured in the phrase “the greatest good for the greatest number” or, more precisely “the greatest amount of happiness altogether.” From this facile philosophy grew the patently ludicrous idea that it might be possible to quantify each person’s happiness, sum those values, and arrive at an aggregate measure of total happiness for everyone.

Utilitarianism, as a philosophy, has gone the way of Communism: It is discredited, but many people still cling to it under other names — “social welfare” and “social justice” being perennial favorites among the “liberal” intelligentsia.

How can supposedly rational “liberals” imagine that the benefits accruing to some persons (unionized employees of GM and Chrysler, urban developers, etc.) cancel the losses of other persons (taxpayers, property owners, etc.)? There is no realistic worldview in which A’s greater happiness cancels B’s greater unhappiness; never the twain shall meet. The only way to “know” that A’s happiness cancels B’s unhappiness is to put oneself in the place of an omniscient deity — to become, in other words, an accountant of the soul.

It seems to me that “liberals” (most of them, anyway) reject God because to acknowledge Him would be to admit their own puniness and venality.

Inventing “Liberalism”

Posted on May 11, 2009 by Loquitur Veritatem

Modern “liberalism” is statism — left-statism, in particular. According to Mike Rappaport of The Right Coast,

[Although] John Stuart Mill was one of the thinkers who moved liberalism toward its modern meaning, it was in the works of Hobhouse and T.H. Green that the change was most affected.

As for Mill (1806-1873), here are some excerpts of my analysis of his influential On Liberty:

… Mill’s prescription for the realization for liberty … is his “harm principle” beloved of both libertarians and modern liberals. It is as if Mill began with the harm principle in mind, then concocted a description of liberty to justify it. The “devil,” in this case, lies not in the details but in the harm principle:

That principle is, that the sole end for which mankind are warranted, individually or collectively in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.[2]

Given the individualistic thrust of this passage and the surrounding text, the only plausible interpretation of the harm principle is as follows: An individual may do as he pleases, as long as he does not believe that he is causing harm to others.[3] That is Mill’s prescription for liberty. It is, in fact, an invitation to license and anarchy….

The main appeal of On Liberty to libertarians and modern liberals is Mill’s defense of conduct that (in his view) only offends social norms:

Society can and does execute its own mandates: and if it issues wrong mandates instead of right, or any mandates at all in things with which it ought not to meddle, it practises a social tyranny more formidable than many kinds of political oppression, since, though not usually upheld by such extreme penalties, it leaves fewer means of escape, penetrating much more deeply into the details of life, and enslaving the soul itself. Protection, therefore, against the tyranny of the magistrate is not enough: there needs protection also against the tyranny of the prevailing opinion and feeling; against the tendency of society to impose, by other means than civil penalties, its own ideas and practices as rules of conduct on those who dissent from them; to fetter the development, and, if possible, prevent the formation, of any individuality not in harmony with its ways, and compel all characters to fashion themselves upon the model of its own. There is a limit to the legitimate interference of collective opinion with individual independence: and to find that limit, and maintain it against encroachment, is as indispensable to a good condition of human affairs, as protection against political despotism.[5]

Thus Mill rejects the enforcement of social norms, “except [in] a few of the most obvious cases,”[6] by either the state or “society.”…

Mill’s bias against the enforcement of social norms, in all but a few “obvious cases” (murder? theft? rape?), ignores the civilizing influence of those norms. That influence is of no account to Mill, as [Theodore] Dalrymple explains:

For Mill, custom is an evil that is the principle obstruction to progress and moral improvement, and its group on society is so strong that originality, unconventionality, and rebellion against it are goods in themselves, irrespective of their actual content. The man who flouts a convention ipso facto raises society from its torpor and lets everyone know that there are different, and better, ways of doing things. The more such people there are, the greater the likelihood of progress….

Of radical evil, in which the [twentieth] century was to abound, [Mill] has nothing to say, and therefore he had no idea that a mania for progress could result in its very antithesis, or that some defense against such radical evil, of which the commission was no possible without the co-operation and participation of many men, was necessary. The abandonment of customary restraint and inverted moral prejudice was not necessarily followed by improvement.[9]

There is a high price to be paid for the blind rejection of long-standing social norms, whether by individuals, organized groups, legislatures, or courts wishing to “do their own thing,” exact “social justice,” make life “fair,” or just “shake things up” for the sake of doing so. The price is liberty.

If Mill was in the van of modern liberalism, Thomas Hill Green (1836-1882) and Leonard Trelawney Hobhouse (1864-1929) were leaders of its intellectual tank corps.

An article about Green at The Stanford Encyclopedia of History includes this (under “The Principles of State Action”):

Green holds that the state should foster and protect the social, political and economic environments in which individuals will have the best chance of acting according to their consciences. Notice that in principle Green is not concerned to allow all actions, no matter what their origin…. Yet, the state must be careful when deciding which liberties to curtail and in which ways to curtail them. Over-enthusiastic or clumsy state intervention could easily close down opportunities for conscientious action thereby stifling the moral development of the individual. The state should intervene only where there was a clear, proven and strong tendency of a liberty to enslave the individual. Even when such a hazard had been identified, Green tended to favour action by the affected community itself rather than national state action itself — local councils and municipal authorities tended to produce measures that were more imaginative and better suited to the daily reality of a social problem. Hence he favoured the ‘local option’ where local people decided on the issuing of liquor licences in their area, through their town councils….

Green held that the ultimate power to decide on the allocation of such tasks should rest with the national state (in Britain, embodied in Parliament). The national state itself is legitimate for Green to the extent that it upholds a system of rights and obligations that is most likely to foster individual self-realisation. Yet, the most appropriate structure of this system is determined neither by purely political calculation nor by philosophical speculation. As we shall see, it is more accurate to say that it arose from the underlying conceptual and normative structure of one’s particular society.

Here are some key passages from a biography of Hobhouse on the site of the UK’s Liberal Democrat History Group:

… Hobhouse’s mature political and economic thought [culminated] in his extraordinary little book Liberalism (1911). He sought to explain the social programme and taxation policies of the Liberal government as an extension, not a reversal, of the economic principles of earlier Liberals such as Mill. His underlying theory, difficult to apply in practice but clear enough in theory, was that wealth was created by a combination of individual effort and social organisation, and that the state was entitled to redistribute for the common good that part which arose from social organisation. He also distinguished between property held for use and property held for power, recognising the need for the former but not the latter to be protected by a system of rights. Out of the combination of these ideas, Hobhouse developed Liberal justifications for a guaranteed minimum income funded by income tax.

Hobhouse also developed a distinctive view of liberty and the proper purposes of state power. He maintained, against what we now call libertarianism, that liberty depended on restraint – that every liberty depends on a corresponding act of control. He followed Mill in pointing out the many forms of coercion in social life, including features of existing social and economic conditions. His conclusion was that the proper role of the state was to maximise the availability of liberty by reorganising the existing constraints. But Hobhouse differed from Mill in explaining why paternalism should be opposed. Whereas Mill starts with the harm principle, that no-one should be coerced except to prevent harm to others, Hobhouse says that we should refrain from coercing people for their own good not because [their] good is indifferent to us but because it cannot be furthered by coercion. He believed that the value of liberty lies precisely in its role in human self-development.

Green and Hobhouse, in other words, were accountants of the soul. Green’s apparent delicacy in warning of too much intervention is overcome, in the end, by his recognition of the British state (embodied in Parliament) as the proper arbiter of human conduct. Hobhouse, more boldly, presumed that he and others of his ilk (but not those who disagree with him) could determine how much of one’s property arose from “social organisation,” how much of one’s property was “held for power,” and how to expand liberty by adopting different forms of coercion than those imposed by social norms.

Once again, we are met with (presumably) intelligent persons who believe that their intelligence enables them to peer into the souls of others, and to raise them up through the blunt instrument that is the state.

And that is precisely the mistake that lies at heart of what we now call “liberalism” or “progressivism.” It is the three-fold habit of setting oneself up as an omniscient arbiter of economic and social outcomes, then castigating the motives and accomplishments of the financially successful and socially “well placed,” and finally penalizing financial and social success through taxation and other regulatory mechanisms (e.g., affirmative action, admission quotas, speech codes, “hate crime” legislation”). It is a habit that has harmed the intended beneficiaries of government intervention, not just economically but in other ways, as well:

Americans have learned dependence, instead of self-reliance.

Civil society has all but vanished, and with it our ability to solve problems and resolve conflicts cooperatively. Instead, we are forced by government to accept one-size-fits-all solutions.

Not to mention that our liberty — true liberty, not Mill’s hypothetical kind — has all but vanished.

Thus are the wages of “liberalism.”

Greed, Cosmic Justice, and Social Welfare

Posted on March 1, 2009 by Loquitur Veritatem

GREED

We have heard much about “greed” in connection with the current financial crisis and recession. It seems that “greedy” lenders and financial intermediaries granted sub-prime mortgages to persons of low credit-worthiness and then infected the financial system by securitizing those risky mortgages and peddling them around to investors.

Why don’t we hear about the “greed” of the borrowers who entered into those sub-prime mortgages, and who enjoyed (and still enjoy, in most cases) better housing than they would otherwise have occupied. Why don’t we hear about the “greed” of the politicians who (seeking to curry favor and votes from certain groups) pressured Fannie Mae and Freddie Mac (and through them, mortgage lenders) to make mortgages more readily available to low-income borrowers (i.e., to make riskier loans)?

When does the desire to have more (e.g., a bigger house, a higher income) stop being the “American Dream” and become “greed”? Why is it good for a low-income person to inhabit a house that he can’t really afford but bad for a high-income person to inhabit a house that he can afford, and whose investments and entrepreneurship have helped the low-income person strive toward the “American Dream”?

The answer, of course, is that “greed” is whatever a politician, pundit, or other purveyor of economic envy says it is. “Greed” is invoked not to explain financial success but to denigrate those who have attained it (only to lose it, in some cases), as if they had attained it at the expense of those who have failed to attain it (thus far, at least). Except in the (relatively rare) cases of outright theft and fraud, financial success is not attained at anyone else’s expense; economics is not a zero-sum game.

COSMIC JUSTICE

The habit of castigating the motives of the financially successful and then penalizing their success by taxing them disproportionately appeals not only to envy and economic ignorance but also to what Thomas Sowell calls cosmic justice. The seekers of cosmic justice are not content to allow individuals to accomplish what they can, given their genes, their acquired traits, their parents’ wealth (or lack of it), where they were born, when they live, and so on. Rather, those who seek cosmic justice cling to the Rawlsian notion that no one “deserves” better “luck” than anyone else. But “deserves” and “luck” (like “greed”) are emotive, value-laden terms. Those terms suggest (as they are meant to) that there is some kind of great lottery in the sky, in which each of us participates, and that some of us hold winning tickets — which equally “deserving” others might just have well held, were it not for “luck.”

This is not what happens, of course. Humankind simply is varied in its genetic composition, personality traits, accumulated wealth, geographic distribution, etc. Consider a person who is born in the United States of brilliant, wealthy parents — and who inherits their brilliance, cultivates his inheritance (genetic and financial), and goes on to live a life of accomplishment and wealth, while doing no harm and great good to others. Such a person is neither “lucky” nor less “deserving” than anyone else. He merely is who he is, and he does what he does. There is no question of desert or luck.

Such reasoning does not dissuade those who seek cosmic justice. Many of the seekers are found among the “80 percent,” and it is their chosen lot to envy the other “20 percent,” that is, those persons whose brains, talent, money, and/or drive yield them a disproportionate — but not undeserved — degree of fortune, fame, and power. The influential seekers of cosmic justice are to be found among the “20 percent.” It is they who use their wealth, fame, and position to enforce cosmic justice in the service (variously) of misplaced guilt, economic ignorance, and power-lust. (Altruism — another emotive, value-laden term — does not come into play, for reasons discussed here and here.)

Some combination of misplaced guilt, economic ignorance, and power-lust motivates our law-makers. (Their self-proclaimed “compassion” is bought on the cheap, with taxpayers’ money.) They accrue power by pandering to their fellow seekers of cosmic justice. Thus they have saddled us with progressive taxation, affirmative action, and a plethora of other disincentivizing, relationship-shattering, market-distorting policies. It is supremely ironic that those policies have made all of us (except perhaps politicians, bureaucrats, and thieves) far worse off than we would be if government were to get out of the cosmic-justice business. (See this, for example.)

SOCIAL WELFARE

Some proponents of cosmic justice appeal to the notion of social welfare (even some economists, who should know better) . Their appeal rests on two mistaken beliefs:

There is such a thing as social welfare.

Transferring income and wealth from the richer to the poorer enhances social welfare because redistribution helps the poorer more than it hurts the richer.

Having disposed elsewhere of the second belief, I now address the first one. I begin with a question posed by Arnold Kling:

Does the usefulness of the concept of a social welfare function stand or fall on its mathematical properties?

My answer: One can write equations until kingdom come, but no equation can make one person’s happiness cancel another person’s unhappiness.

The notion of a social welfare function arises from John Stuart Mill’s utilitarianism, which is best captured in the phrase “the greatest good for the greatest number” or, more precisely “the greatest amount of happiness altogether.” (See “Adler on Mill’s Utilitarianism” at the Adler Archive of The Radical Academy.)

From this facile philosophy (not Mill’s only one) grew the ludicrous idea that it might be possible to quantify each person’s happiness and, then, to arrive at an aggregate measure of total happiness for everyone (or at least everyone in England). Utilitarianism, as a philosophy, has gone the way of Communism: It is discredited but many people still cling to it, under other names.

Today’s usual name for utilitarianism is cost-benefit analysis. Governments often subject proposed projects and regulations (e.g., new highway construction, automobile safety requirements) to cost-benefit analysis. The theory of cost-benefit analysis is simple: If the expected benefits from a government project or regulation are greater than its expected costs, the project or regulation is economically justified.

Here is the problem with cost-benefit analysis — which is the problem with utilitarianism: One person’s benefit cannot be compared with another person’s cost. Suppose, for example, the City of Los Angeles were to conduct a cost-benefit analysis that “proved” the wisdom of constructing yet another freeway through the city in order to reduce the commuting time of workers who drive into the city from the suburbs. In order to construct the freeway, the city must exercise its power of eminent domain and take residential and commercial property, paying “just compensation,” of course. But “just compensation” for a forced taking cannot be “just” — not when property is being wrenched from often-unwilling “sellers” at prices they would not accept voluntarily. Not when those “sellers” (or their lessees) must face the additional financial and psychic costs of relocating their homes and businesses, of losing (in some cases) decades-old connections with friends, neighbors, customers, and suppliers.

How can a supposedly rational economist, politician, pundit, or “liberal” imagine that the benefits accruing to some persons (commuters, welfare recipients, etc.) somehow cancel the losses of other persons (taxpayers, property owners, etc.)? There is no valid mathematics in which A’s greater happiness cancels B’s greater unhappiness.

Yet, that is how cost-benefit analysis (utilitarianism) works, if not explcitly then implicitly. It is the spirit of utilitarianism (not to mention power-lust, arrogance, and ignorance) which enables Barack Obama and his ilk throughout the land to impose their will upon us — to our lasting detriment.

Politics and Prosperity

“Government is a disease masquerading as its own cure.”

Tag Archives: cosmic justice

How to Combat Beauty-ism

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this:

Share this:

Like this: