Why Not Arbitrary Limits on Executive Pay?
Josh Marshall, in the course of making rather a different point, says:
As much as I think some exec paychecks are obscene and point to real imbalances in our economy, I’m really leery of limits on pay levels in private companies. To the extent that executives are paid too much, it seems like a broader issue of poor corporate governance, since shareholders shouldn’t be willing to pay executives obscenely more than they’re worth. But that’s sort of the point: shareholders, in practice, exert little real control over this sort of thing. (And I suspect, though I don’t know enough about this stuff to know, that that’s the case because in the post-1980 stock market, investors are much less concerned about the functioning of the companies — in a direct sense — than their ability to drive stock valuations.)
Some people, as I understand it, just don’t think inequality is a problem. But for the egalitarians among us, I’ve never really understood the view that obscene executive compensation is an issue that absolutely positively certainly must only be addressed through the indirect Rube Goldberg-esque method of changing corporate governance rules. What if we had a 95 percent marginal tax rate on income over $10 million? What dire consequences would flow from this? Perhaps a certain outflow of top-flight baseball talent to Japan. But I don’t see this leading to any kind of economic calamity. Producers of certain classes of supply-constrained luxury goods would lose out as their prices go down. But my strong suspicion is that at the end of the day most of the super-rich would ultimately find it a relief to get off the treadmill of status-competition and the not-quite-so-rich would be thrilled to see their betters cut down to size.
I’m prepared to be talked out of this view if Brad DeLong or someone can really lay it out for me, but I don’t see it for myself. If anything a de facto cap on compensation would probably make firms better-managed. The lack of ceiling on executive compensation creates bad incentives for firms to grow into unduly large conglomerates rather than be content to exist as highly profitable medium-sized enterprises, since bigger firms have higher-paid CEOs.
Meanwhile, check out Forbes’s list of the world’s most profitable firms. BP, a British oil company, is fifth on the list. And their CEO earns earns more than double what Christophe de Margerie takes in as CEO of Total, the French oil company that’s 6th on the list. At 8th on the list is Chevron, whose CEO earns more than either of those guys. The salaries are being determined by the nationality of the enterprise, not the success of the enterprise.
157 Responses to “Why Not Arbitrary Limits on Executive Pay?”
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March 27th, 2009 at 11:55 am
Linking this to the discussion about “going Galt.” It has been a long time since I read either Atlas Shrugged or the Fountainhead (jesus did I really read them both!?), but what strikes me is that Rand’s Nietzschean supermen are resented in the books for their achievements and creativity. What if we promise to respect CEOs creativity and Will and cap their pay, at, say, $10 million, as you suggest, would they go Galt then? If so, wasn’t it all about the money in any case and not being awesomely creative and having an awesome unbounded Will?
March 27th, 2009 at 11:58 am
I don’t think the pay of executives of non-financial companies contributes much to inequality. How much do these guys make, a few million a year? That’s really not that much – it’s comparable to what the best lawyers make, for instance, and I presume we’d rather allocate talent to managing companies than to litigation. Also, most executives wouldn’t be subject to the proposed tax, because most wouldn’t earn enough.
There’s also the issue that 95% is plausibly on the wrong side of the Laffer curve, so you’re giving up tax revenue in pursuit of equality. That might be justified, but you have not given a justification here.
March 27th, 2009 at 12:00 pm
If we don’t let the ruling class piss on us any more, how will the “wealth” trickle down to us?
Seriously, though, much better than trying to impose limits is simply to add additional higher-rate tax brackets for super-high incomes.
March 27th, 2009 at 12:02 pm
While I like the thought of soaking the rich as much as the next guy (unless that guy is a bonafide marxist), this is like arguing that the New England Patriots would be relieved if the playoffs just stopped after the second round, and that the Eagles would enjoy seeing no one win the Super Bowl.
March 27th, 2009 at 12:03 pm
I don’t think it’s Rube Goldbergesque to focus on corporate governance, because absurd salaries for top executives aren’t particularly the problem in and of themselves. The problem is that the owners of public corporations (i.e., the shareholders) basically have no control whatever over the operations of their businesses, and are at the mercy of hired guns. This is a result of the owners of companies viewing that ownership largely in terms of speculation in stock price values rather than getting a share in corporate profits.
Trying to reform this and make it so that the owners of corporations are actually in charge seems like a good policy overall.
Which isn’t to say I’d oppose huge marginal tax rates for very high incomes.
March 27th, 2009 at 12:06 pm
It is maybe perhaps worth pointing out that a cause of the present financial crisis was not high executive pay per se, but the practice of paying bonuses based on short-term performance—which led to disastrous consequences in the long term.
I think a case can be made for limiting such bonuses, but I don’t really see the point of placing arbitrary limits on executive compensation in general.
March 27th, 2009 at 12:07 pm
What dire consequences would flow from this?
It would be a disaster because Milton Friedman and shut up, is why!!
March 27th, 2009 at 12:13 pm
Is there an economic argument (instead of one based on the moral outrage of inequality) that an executive or anyone else shouldn’t make $50 million per year? I’m all for a progressive tax system, but tacking on a 95% tax on anyone making over $10 million seems like little more than spite.
March 27th, 2009 at 12:14 pm
As an employee, and not share holder, I would like to see top total compensation limited to a multiplier of bottom compensation. Say the top executive can not be paid more than 25 times what the line worker makes. There may be ways around it by using temporary services and contract employees, but it would encourage executives to get richer by making their employees highly paid.
March 27th, 2009 at 12:16 pm
I propose taxing all bonuses in the U.S. over $10,000 or so at 90%.
These executives use huge bonuses as regular pay largely because it is easier to hide from shareholders. If an executive is truly worth $10 million dollars, he should get a $10 million salary, and be able to defend it in front of shareholders. If they can do so, good for them.
March 27th, 2009 at 12:17 pm
Equality is a good thing. Liberty is also a good thing. So we should, everything else being equal, take the more liberty-consistent means to our egalitarian ends. Enacting a sane regulatory environment is, I submit, more liberty-consistent than confiscatory tax rates. Thus, insofar as it seems plausible that good regulation could have as much, or almost as much, of an impact on inequality as confiscatory tax rates, it seems plausible to think that we should pursue the regulatory route instead.
March 27th, 2009 at 12:17 pm
The picture makes the whole post.
March 27th, 2009 at 12:18 pm
личшие блоги рунета…
Josh Marshall, in the course of making rather a different point, says: As much as I think some exec paychecks are obscene and point to real[...]…
March 27th, 2009 at 12:23 pm
Agreeing with Captured Shadow here. Takes inflation into account, and who cares if there’s a ceteris parebus economic argument here? And that isn’t even touching the capital gains tax, which is what allows many of the super rich to get even richer.
March 27th, 2009 at 12:24 pm
I think putting an arbitrary cap on the salaries of executives/traders in the financial sector would be a very effective and simple means of limiting destructive risk-taking behavior and diverting talent back into productive sectors of the economy. It seems like we could eventually achieve that goal through other, more complex regulation, but a simple salary cap would do the trick much quicker and more transparently.
March 27th, 2009 at 12:25 pm
In Supercaptialism, Robert Reich argues that enormous CEO salaries are often the result of investor pressure to drive up stock prices.
When you consider a CEO’s salary as a measure of their management ability and/or long-term value to a company, their huge salary looks outrageous. When you realize that, on the day a new CEO is announced, a positive reaction on wall street is worth millions to investors, that same salary starts to make a lot more sense.
Like Matt, I believe CEO’s should take home much less money. As Reich points out, however, stock holders are in a terrible position to reign in CEO salary’s. When it comes time to negotiate a CEO’s pay, the last thing a group of influential stockholders wants to do is shoot themselves in the foot by limiting their ability to court the most promising individuals.
March 27th, 2009 at 12:26 pm
While we’re adjusting tax rates, can we raise the income tax on those with trust funds to 95% as well?
March 27th, 2009 at 12:29 pm
Can I add the addendum that all charitable donations from people making more than 10 Mil are 100% deductible. I like this idea because it still gives an incentive to work, but rather than taking home 2-5% of income you get to build something useful for the world in the form of an Opera, University or foundation.
March 27th, 2009 at 12:30 pm
stock holders are in a terrible position to reign in CEO salary’s.
Rein in, as in “restrain a horse by pulling on the reins.” I have sworn to make correcting this particular misuse my life’s mission.
March 27th, 2009 at 12:30 pm
If you lower it a bit, to 90%, you have the US during the 50’s and a good part of the 60’s:
http://www.truthandpolitics.org/top-rates.php
People look at a 90% top tax rate as if it’s a crazy, untested policy, with unimaginable consequences. But there is history about it, we should look and see what happened then.
March 27th, 2009 at 12:30 pm
Oh also, someone should really take a picture of their hugely overweight cat with a top hat and a monocle. If done well, it could easily become the internet fat cat pic of a generation
March 27th, 2009 at 12:32 pm
Tunch!
March 27th, 2009 at 12:34 pm
No, Jim, you don’t get it. It’s not spite, it’s egalitarianism. Totally different word!
Would it be a disaster? No, it probably would not spell the end of the United States in a single stroke. Neither would nationalizing, say, the shoe industry. But both would be steps toward inefficiency, and many experiments in government worldwide have taught us that enough steps of this kind ends in national failure.
Implement your rule and all of the top hedge fund managers retire tomorrow. Hedge funds do a lot to balance out various inefficiencies in our capital markets. When James Simons retires, fewer of those inefficiencies will be fixed. Again, not the end of the world, but definitely a step in the wrong direction. (I don’t have the patience to talk to anyone who believes that hedge funds specifically or the finance industry in general perform no socially valuable function, so please don’t bother.)
March 27th, 2009 at 12:38 pm
Tunch!
Which leads me to ask, El Cid (and I doubt I’m the first person to wonder this), how the hell do you find the time to write so much (well-written) commentary on so many different blogs? Are you really only one person? Do you have a day job?
March 27th, 2009 at 12:40 pm
(I don’t have the patience to talk to anyone who believes that hedge funds specifically or the finance industry in general perform no socially valuable function, so please don’t bother.)
Well, thanks anyway for the assertion. I’m sure your lordly manner wins all sorts of arguments.
March 27th, 2009 at 12:42 pm
“But my strong suspicion is that at the end of the day most of the super-rich would ultimately find it a relief to get off the treadmill of status-competition…”
That’s a dumb statement. I’m pretty sure most of the super-rich would gladly choose to remain super-rich and bear the incredibly tough burden of feeling lesser next to Bill Gates or whoever. The idea that they’d be relieved to be relieved of that burden of competition and pay millions to be rid of it is a stupid thing to think, much less say.
And all of this is based on the unproven/unprovable notion that this “treadmill” even exists, much less that it’s oppressive to rich people.
It’s comments like this that make right-wingers label liberals as communists; and I can’t blame them for it. Thanks.
March 27th, 2009 at 12:45 pm
Good, because I’ve long since surrendered. It’s not nearly as common as “free rein” becoming “free reign”, though (and at least that makes some sort of sense). Or is that part of your mission?
March 27th, 2009 at 12:50 pm
Implement your rule and all of the top hedge fund managers retire tomorrow.
And management of hedge funds is a skill set that no one will ever bother to acquire unless they are assured of an eight-to-nine-figure compensation package, especially in a world where all the other eight-to-nine-figure compensation packages have disappeared.
WRT the idea of limiting CEO’s to a multiple of their organization’s lowest-paid workers, I used to like this idea until I realized it’d just result in outsourcing all the lesser-paid jobs to pseudo-independent contractors. And if you tried to stamp that out there’d be other gambits. Really, just keep it simple and tax the hell out of eight-to-nine marginal income; nobody produces nine figures worth of value per year anyway.
March 27th, 2009 at 12:56 pm
Captured Shadow, excellent idea! Which goes well with increasing the size of unions to make this possible, and then, perhaps, reworking the way corporations are taxed to discourage profit taking by the top execs. Their excessive pay often leads to shenanigans – for instance, proposals to sell companies to entitites which happened to be owned by the CEO. Who has enough money to set up such entities, and enough power to force sales, and often enough power to degrade the value of the company he is ceo-ing in order to make it a bargain for his own greed. Al Dunlop is a good example of this kind of exec. Bad for business, good for himself. A villain.
March 27th, 2009 at 12:58 pm
James Gary is right. The problem is not the dollar amount but what the dollar amount was based on. If those bonuses were accrued using practices that were at best dishonest and at worst criminally fraudulent, that compensation was not earned. Thank God, Cuomo is all over these guys. Why is he the only one digging to find out what fraud took place?
As for executive pay caps, I am generally against them. If I quit my good paying, low stress, 9-5 job to toil away for years on a startup with the hope of a big payout someday, I do not think it is in the country’s interest to dissuade me with a punitive tax system. If you think that is an unrealistic scenario, you haven’t spent much time in Silicon Valley. As it is, start up founders get hit with taxes on stocks they have received but are locked out of selling and a myriad of other complicated tax issues around spurts of high income in between years of little or no income. Most of the people I know who have actually cashed out and made tidy sums from their start ups do not live in a manner that they rest of the country would consider rich.
Which brings me to another important point: the definition of wealth and poverty are local and it is absurd to define it nationally. $700,000 buys you a small one bedroom condo in San Francisco or a 3500 square foot house in Austin or practically a mansion in Atlanta. A family can get by pretty well with $70k/year in many part of the country, but that is the poverty mark for some of our cities. Before Congress gets all excited about hunting down the top income brackets, they need to make sure the definitions they use are indexed.
One last thought: while it is tempting to tax the hell out of the super rich, the IRS needs to do some analysis. A friend who used to work there told me once that when the highest tax brackets were taxed more, those folks got very good at hiding their money and the IRS actually collected less.
March 27th, 2009 at 12:58 pm
Why is it just the baseball stars who would go to Japan?
I hate it when progressives’ love for labour distorts what labour really is, an input.
Now you can argue the US labour market for executives is inelastic in the short run so the incidence of the tax falls on the executives, but what about in the long run.
Won’t the US talent move offshore, provide the same output, and pay less tax? Not to mention the effect this will have on foreign talent.
Perhaps “going Galt” really just means leaving or never coming to America because you can do better in the UK, Hong Kong or nearly everywhere else.
March 27th, 2009 at 1:04 pm
Pretend you are Bill Gates circa 1982, and Matthew’s proposed cap is in place. How hard do you work to make Microsoft into Microsoft?
Very hard, son, considering I’m planning on taking all my compensation in stock options, not salary.
Also, I’m a hyper-competitive computer genius with a chip on my shoulder because I got kicked out of Harvard. I could just stay at home and live with my wealthy parents, but I’m not interested in doing that. Really, the salary cap would make zero difference to me.
P.S. Stock is a far superior way to reward talent than slush money guarantees. http://delong.typepad.com/sdj/2009/03/needed-for-aig-and-the-tarp-silicon-valley-compensation-schemes.html
March 27th, 2009 at 1:06 pm
How hard do you work to make Microsoft into Microsoft? Not very, no?
I’ll give that rhetorical question a real answer, Al, when you supply a quantitative measurement of “hard work” and an explanation of what it possibly has to do with the present discussion.
If you’re contending that Bill Gates wouldn’t have founded Microsoft if he’d known he’d only be worth $3B instead of $30B after thirty years, I will respond that since there’s no possible way of actually knowing, it’s a pretty stupid line of argument.
March 27th, 2009 at 1:06 pm
Oh, really? Bill Gates never made more than about $1 million a year in salary at Microsoft. 99.9% of his wealth came from the increasing the value of the company in which he owned a substantial stake.
The problem is indeed high salaries and bonuses, which incentivize dangerous short term risk taking. If compensation were dependent upon long term success, we wouldn’t see nearly as much risky behavior from CEOs.
Furthermore, I suspect BillG was going to work hard no matter what he was getting paid, because that’s what geeks tend to do when presented with interesting problems.
March 27th, 2009 at 1:07 pm
The philosophical issue here is whether we as a society and polity have the right to do something that might produce a diffuse societal gain, but which requires getting into the business of legally sovereign people acting consensually among themselves. Corporations have a governance structure, and if that governance produces decisions like “let’s pay our CEO $50 million for nothing in particular” it’s hard to see how that is more readily susecptible to legislative control than outsized salaries for musicians or football players: now as it happens, football is governed by a salary cap, but they worked it out among themselves.
I completely agree with Matthew that the alleged negative consequences of curtailing CEO pay are nonsense and wouldn’t happen, but I would still submit that CEO pay is none of our business as long as companies aren’t on the dole.
March 27th, 2009 at 1:09 pm
Gates made his money as a stockholder. I’m sure he was paid a lot too, but not billions. Other Microsoft execs made money by being paid in stock options, but Gates had the stock to begin with.
March 27th, 2009 at 1:10 pm
Don’t worry Matt, I’m sure the court astrologers will be here to tell you that it will lead to utter meltdown using language you or they don’t understand and models that have never been borne out by the real world. And you’ll believe them, because the only thing they teach in the ivy league are how to put class interests ahead of everything else that Economists are the only experts that matter even though they are catastrophically wrong about everything.
March 27th, 2009 at 1:15 pm
It was compounded in the financial industries where the boards were dominated by senior executives of the companies that employed them. Unlike the case of Gates, they frequently sat on the board despite not actually owning much of the company stock. Stockholders were shut out, and unresponsive boards largely set their own pay for their alternate role as executive.
March 27th, 2009 at 1:16 pm
Let them have their compensation but tax most of it back. They need the outsized pay packages to be able to keep up with the neighbors in Greenwich or some other expensive neighborhood. It is a way of scoring for them. So let them have it but institute a 49% millionaire’s tax and tax their dividends at the ordinary income rate, and crack down on tax shelters and offshore accounts.
And while I’m at it, I’d also vastly reduce the payroll tax to, say, 1.5% each for employee and employer, but extend it to wages and salaries up to $500,000. And have a carbon tax.
March 27th, 2009 at 1:20 pm
The average professional baseball salary in Japan is approximately 35 million yen, or roughly $360,000. Moreover, simply playing in Japan won’t prevent the players’ salaries from being subject to U.S. income tax. Finally, even if they were all somehow allowed to become Japanese citizens, the top marginal rate in Japan is 50%.
March 27th, 2009 at 1:23 pm
well let’s throw them a bone, even, and say we’ll have an 85% tax on everything over 100. this would drag in a ton of revenue, whittle our count of billionaires down by a bit, and would set a good precedent (so that eventually, we can take one of those zeroes off & eventually find a way to seize all of their $$!)
March 27th, 2009 at 1:36 pm
Well, the top tax rate in 1982 was 50%. And Microsoft was funded in 1975, when the top tax rate was 70%. That did not make anyone stop working hard.
So the question is really one of ‘where do you put the line’. Maybe 90% is very high, but it is not unprecedented. And a top rate of 50% would be a great improvement.
March 27th, 2009 at 1:37 pm
You’d have people that make more than $10 million and the businesses they own leave and go to London, etc.
This is stupid, Matt. Someone else making a load of money doesn’t adversely impact your life. We have things like a minimum wage for good reason, but a cap makes no sense. The only cap on pay should be what an employer is willing to give someone.
March 27th, 2009 at 1:39 pm
Man, some people here sound reasonable and others sound like they missed the October Revolution. I’m all for a more Progressive income tax structure (ex. top rate 50% for over $1 million inflation adjusted), but I am absolutely against legal pay caps, etc in the name of “fairness”. These things do have unintended consequences, even if Matt chooses not to think about them.
All this populist rage is surely moving us along the path to being another banana republic.
March 27th, 2009 at 1:42 pm
I have no problem with salary caps, but I think there are some other considerations.
I admit to being very thoroughly not an expert, but it looks to me like a whole lot of this is tied up in capital gains taxation. Reducing the capital gains rate so much provided huge incentives to bring in money that could be classed as capital gains. If there weren’t that immensely lopsided treatment, there never would have been so much reason to build up the FIRE sector in the first place.
March 27th, 2009 at 1:44 pm
You’d have people that make more than $10 million and the businesses they own leave and go to London, etc.
They’d leave and go to London, but their businesses would be left behind. Otherwise, Liechtenstein and Luxembourg would be the industrial heartland of Europe, and most of what we buy over here would be stamped ‘Made in the Cayman Islands’, instead of ‘Made in China’.
March 27th, 2009 at 1:44 pm
I propose that we simultaneously declare political pundits to have no inherent value, and charge them $100 per post/article as a way of compensating the nation for their blather. I can’t see any downside; many pundits will flee to Europe, but I can imagine that many will be relieved that they will need to find productive work.
You first, Matt.
March 27th, 2009 at 1:45 pm
Inequality is a problem. Instead of closing the gap by applying pressure to the top, why not bring the bottom of the curve up? You do that by empowering labor. Not just in the form of Unions but in other, more creative ways. For one, salaried employees should have a representative on the board of directors at the large public companies. Salaried employees should have incentive compensation tied to CEO pay. We use complex models to arrive the stupid comp levels many CEO’s enjoy. The problem is this, those comp levels are sacred contracts when the comp is going up but they get quietly rewritten or altered if top management doesn’t hit their targets. There is no downside, only upside. Change the rules. Make the labor representative on the board in charge of the executive compensation committee.
March 27th, 2009 at 1:47 pm
Unless they renounce their citizenship, they’re still liable for US income taxes.
If someone is making a ton of money by growing a profitable company, then I don’t see a problem. Again, the problem is anything that allows for short term profit maximization that is risky and imperils the company over the long term.
So, yeah, high income taxes on salaries and low capital gains rates on mature, say 5 year, returns, would be fine.
Of course, it doesn’t need to be 90-95%, but something over 50% certainly sounds reasonable.
March 27th, 2009 at 1:48 pm
“the not-quite-so-rich would be thrilled to see their betters cut down to size.”
Why? I don’t get this. If you don’t count other people’s money, their wealth won’t bother you in the slightest. My rich uncle on Park Avenue drinks instant coffee (no kidding), diet Coke, and Budweiser like anybody else. He’s been wearing the same $20 plastic digital watch for the last five years. I don’t really see what his wealth does for him except vacations in Gstaad, and he can’t even ski. His wealth is all in the stock market and the bank, in other words, it’s working for other people, as it should.
March 27th, 2009 at 1:54 pm
Some people, as I understand it, just don’t think inequality is a problem…$10 million? What dire consequences would flow from this? Perhaps a certain outflow of top-flight baseball talent to Japan…But my strong suspicion is that at the end of the day most of the super-rich would ultimately find it a relief to get off the treadmill of status-competition and the not-quite-so-rich would be thrilled to see their betters cut down to size.
a) I do think inequality is a problem. A huge one, actually.
b) I think higher taxes on the rich and a much more robust safety net are the the way to go.
c) I think “higher” taxes need not mean 95%. Just sounds to high to me. I don’t think it would only be baseball stars leaving the country (or spending lots of time and effort at trying to find overseas tax shelters; one of the problems with sky-high marginal rates is that that nth extra dollar of tax revenue becomes awfully expensive to collect). I think it would also mean venture capitalists, entertainment figures, high tech executives, and, yes, captain of high finance. And sky high marginal rates would do nothing for the “keeping up with the Howells” problem Matt cites, because gross paychecks would still be a means of keeping track.
d) I think we’d be more justified in ultra-high rates like the ones Matt suggests if we were to implement a progressive consumption tax (an idea favored by Warren Buffet, as it happens).
e) So, at the end of the day I do think government must play a much more vigorous role in promoting equality; I just don’t see any reason to think it knows better than the owners of a firm what said firm’s employees should be paid, even when there’s lots of evidence that the firm’s owners aren’t very good at optimizing compensation plans, either (this problem must be addressed by reforming corporate governance).
f) So sign me up for higher marginal rates (perhaps topping out at around 50%-60%) or a progressive consumption tax combined with tax code simplification/base broadening (I mean, does anybody really think a tax code with 95% marginal rates won’t be riddled by loop holes?), and with much higher social safety net spending thrown in the mix.
March 27th, 2009 at 1:58 pm
Posts like this make me wonder if Matt is just not very bright. His cushy upbringing and the fact that he never worked a real job is addling his brain. I mean, we know he doesn’t care very much for liberty, but a salary cap for the entire United States? Why?
March 27th, 2009 at 2:13 pm
No doubt about it, there has been stupid money in the market. But that has more to do with micro economics than the need for salary caps. The fact is that oil companies are not paying the real cost of their product (the cost of pollution clean up) so the price of gas to the consumer does not include that cost. The supply and demand curve would be dramatically different if those costs were actually assessed and paid. The same is true for the finance industry. These salaries and bonuses were based on incomplete or intentially inaccurate information. But these are problems with lack of oversight. With so much money hanging in the balance, it is beyond naive to think these guys can regulate themselves. At least when they were LLCs they had to answer to their partners, but the stock market is a nameless, faceless force that can bring riches if seduced properly. Lack of oversight changed the game from a business transaction to a seduction.
As for what motivates geeks, if you are not one, if you have never worked for a start up or if you have never started one, you cannot rightly judge what motivates them. To imply that technologists are like savants that sit in a corner solving unsolvable problems because ‘that’s the way their brains work,’ is beyond uninformed.
March 27th, 2009 at 2:27 pm
This is stupid, Matt. Someone else making a load of money doesn’t adversely impact your life.
But it makes him feel bad. You know, I sort of feel sorry for people who have this burning desire to “see their betters cut down to size.” It must be exhausting to worry all the time about the people who make more money than you.
March 27th, 2009 at 2:31 pm
I get it!!
It’s a fat cat!
Fat cat in photo, fat cats on Wall Street!
March 27th, 2009 at 2:32 pm
Yeah, I have a job, but most of the time I work out of the office so I have this stuff open in the background and glance at it when the real work glazes my eyes over. Sometimes I’m out of the office a lot. Sometimes I do better doing two things at once (avoiding the dreaded multi- etc word).
March 27th, 2009 at 2:33 pm
James Gary: glad you find the comments interesting, though. Thanks. Mostly I’m just either venting, engaging in brute silliness, or fixated on why some view isn’t being included in relevant public debates. Or all 3 simultaneously.
March 27th, 2009 at 2:35 pm
set it up like the NBA – you can pay your CEOs and other top management however much you want but at some level the company has to pay a luxury tax
March 27th, 2009 at 2:43 pm
Major league sports are monopolies.
March 27th, 2009 at 2:48 pm
And while I’m at it, I’d also vastly reduce the payroll tax to, say, 1.5% each for employee and employer, but extend it to wages and salaries up to $500,000.
Bad idea. Social Security is THE vital bedrock of the US safety net. As such its political popularity is a key strength. Transforming the program into a more explicitly welfare-style system by making it vastly more progressive would undermine that political strength. If payroll taxes are so bad, we ought to just get rid of them altogether and move to a notional funding mechanism for Social Security which keeps in place the current formula (but which derives its cash from general revenue).
March 27th, 2009 at 3:01 pm
Posts like this make me wonder if Matt is just not very bright. His cushy upbringing and the fact that he never worked a real job is addling his brain. I mean, we know he doesn’t care very much for liberty, but a salary cap for the entire United States?
I don’t know that this is what Matt is saying. I also don’t know anything about Matt’s upbringing, other than that he comes from a family of writers. If his background was cushy, then it’s all the more to his credit that he wants to see more egalitarian fiscal and economic policy in this country.
What I do know is that there is no liberty in being homeless or impoverished while other, more fortunate, people can choose whether to spend their money on cheap wristwatches, or skiing vacations in Gstaad, or both.
On the surface, it may be true that “someone else making a load of money” does not adversely impact Matt’s life (or more to the point, my life — Matt makes a great income as an employed journalist, and I’m unemployed and threatened with eviction).
But if your analysis is just a bit less shallow and superficial, you can see that someone getting $30 million…. as a bonus! on top of a base salary much higher than that, actually IS causing me harm. Because such a person almost certainly opposes the Employee Free Choice Act, because such a person opposes unions in general, because a unionized workplace means higher wages and better benefits and stronger job protections for employees — and those increased labor costs cut into Mr. Zillionaire’s bottom line. HIS personal wealth is directly threatened by measures and policies that serve the economic interests of less financially advantaged people. HIS personal wealth is directly threatened by moves toward more economic equality — not so much because he does not want someone else to make more money as because the policies that have to be put into place to help that worker make more money are going to interfere with the fiscal and economic and labor policies that enable him to have a financial profile with no income limits.
March 27th, 2009 at 3:14 pm
I completely agree with Matthew that the alleged negative consequences of curtailing CEO pay are nonsense and wouldn’t happen, but I would still submit that CEO pay is none of our business as long as companies aren’t on the dole.
It is our business if the resulting incentives lead to behavior that runs the whole system off a cliff. “Private” decisions have public consequences, and when they’re serious enough, “none of our business” doesn’t cut it.
March 27th, 2009 at 3:45 pm
Kathy K.
You make some very strong point about how Mr Zillionaire’s compensation brings him power and a voice over the rank and file,but you don’t have to be a Zillionaire to be leery of unions. It is hard to find an current US industry where unions worked. When you look at the auto industry, the US was once the leaders of the world. While its pathetic and wasteful executives may fly around casually in private jets, the unions have just recently cut their linesmens salaries to around $110K a year in a town where you can buy a decent place for $65K. How can the American auto industry survive like this when everyone agrees American cars are at the bottom of quality and value? Because a sense of nationalism compels people to still buy American. That is not a sustainable model if we believe in capitalism.
I would love to believe in unions since they tackled some great things such as child labor and the 40 hour work week. But unions become their own part of the problem when they become institutions. They need to earn their dues. They need to continue to expand enrollment. They become businesses with their own business model problems that may run counter to what a community needs. How many more people would have jobs in Detroit if US cars were the best quality, best engineered, most popular cars and linesmen made $75k/year?
March 27th, 2009 at 3:59 pm
Exactly Kathy K. For many rich folks it seems apprehending massive amounts of wealth is just the start of something beautiful, apprehending ever more massive amounts of wealth.
March 27th, 2009 at 4:03 pm
I believe the stock gains were from exercising stock options which were given as part of his compensation. That’s how he earned $29 million of his pay in 2007. I haven’t seen anything about his 2008 pay.
While it probably isn’t the case with O’Reilly at Chevron, manipulation of stock price to make a killing in options is what most of the complaints about executive pay are about.
March 27th, 2009 at 4:15 pm
We badly need a far more progresive tax system – with far higher taxes for the very rich and far higher inheritance taxes.
The harm is obvious and direct. At present you have strong incentives to funnel the resources from companies into the hands of a few folks – so you do. If the tax rates are high (as they were from the 1940s through the 1970s) – you have no incentive to give yourself an extra 100 million, and that cash goes to your shareholders or your workers. Furthermore – it becomes possible to distort the system if individuals amass hundreds of millions of dollars.
We did the experiment, it failed, and we need to change back to the system which actually worked. Note that the USA had plenty of innovation and good living standards with those o-so-scary tax rates. It is the rich and their bootlickers who have the record of empirical failure to explain away, not those who advocate progressive taxation.
March 27th, 2009 at 4:42 pm
I guess it’s nice to know that progressives can make poorly thought out arguments based on rage just as well as conservatives.
How about this: a good chunk of the world lives on less than $1 per day, so I propose a 95% tax on every household that makes more than $80,000 per year, as those people are fabulously wealthy by world standards.
I really don’t get what capping people’s salaries really gets anyone, and where is all the outrage over how much money Oprah or Eli Manning makes? Or is it only big bad corporate people that we are are supposed to be mad at?
March 27th, 2009 at 4:48 pm
dean baker points out that corporate status is not required but a privelege that the US government grants. As such, the government is entitled to make what ever rules necessary to protect the stockholders (and in fact does).
The danger of high compensation is that corporations are being used as vehicles to strip assets and give them to individuals, instead of to pepetuate business goals for long term benefit to society. If ther earre not long term beneftis to society , there is no reason for our government to offer such a benefit as corporate status, let them become private partnerships and deal with the world without corporate protections. Short term outlooks have destroyed the benefits to society fo corporate status, and the government, in order to protect the citizens and stockholders, must do what it can to protect our long term interests.
March 27th, 2009 at 4:56 pm
One thing worth pointing out is that any attempt to limit total compensation will result in enormous competition to find ways around the system. Increasing executives’ ability to incur “business expenses” seems like an obvious way of increasing de facto compensation—expect more company cars (a Rolls, complete with driver), more and fancier corporate jets, more skyboxes, more tolerance for nepotistic hiring, bigger offices and bigger budgets to decorate them, fancier food at meetings, venues for conferences and corporate “retreats” moved to five-star hotels in Paris, and so forth. Probably still better than the current system though.
Personally I still like the idea of capping financial compensation at n times the compensation of the lowest-paid worker at the company. One side effect though would be that companies would start trying to rearrange their corporate structures so as to make their lowest-paid workers the nominal employees of a different company. I can see, e.g., Time Warner setting up a separate “staffing company” that rents out low-wage employees to other companies for a flat fee and just so happens to be headed by a former Time Warner middle manager and just so happens to have one major client that provides 95% of its business.
Another trick would be to redesignate the low-wage workers as “contractors,” possibly by rewriting their job descriptions.
March 27th, 2009 at 5:23 pm
I find this rather befuddling. I can see why progressives, which I’m not, care a great deal about making poorer people richer, but I can’t at all understand why Matt values equality in the abstract, such that he sees a need to make richer people poorer. So long, I should think, as there’s a sufficient safety net for everyone, a progressive shouldn’t care if an executive makes a million or a hundred million. Now, if you actually needed such drastically confiscatory tax rates in order to provide said safety net, then maybe there’s an instrumental interest in confiscatory tax rates, but Matt seems to think that social levelling is a good in and of itself.
March 27th, 2009 at 5:31 pm
I would love to believe in unions since they tackled some great things such as child labor and the 40 hour work week.
Which were just as passionately opposed by management back then as issues such as wages and benefits, pension plans, safety regulations, and job security are now. Now, in our present day, child labor and compulsory 60-hour work weeks look like a bad idea, but back then, people with the same views on unions as you have were condemning such improvements as “bad for business.”
The fact is, the gains made as a result of unions were hard-won, and can easily be lost. There is a reason why Wal-Mart gets away with paying its sales associates such low wages, why it gets away with forcing employees to work off the clock and why it refuses to pay overtime, why it gets away with offering such shoddy benefits, why it gets away with employing illegal aliens, why it’s constantly being sued for discrimination against women and other vulnerable groups. There is a reason why Wal-Mart spends so much money and time on union-busting activities. Because it couldn’t do these things if employees were allowed to unionize.
Of course, unions are as vulnerable to any other societal institution to corruption and dilution of message, but that doesn’t mean we should throw them out. Remember, the pilot who successfully landed that plane in the Hudson River got his contingency flying skills from his union. I’m sure we’re all grateful that he belongs to a union.
March 27th, 2009 at 5:39 pm
It wouldn’t work because why don’t you bastards stop trying to run every goddamn thing under the sun
March 27th, 2009 at 5:44 pm
Asher, there are two answers to your question: 1) in order to make poor people richer, there must be some mechanism by which to do so. The obvious place to look is at those who are highly compensated. No one is going to the poor-house by being limited to a mere $10M/yr (an hourly rate of $5000/hr). 2) As others have already pointed out, having people that grossly overcompensated provides distorting effects on the capitalist system. It encourages behaviors that are counterproductive and, as we saw with Enron/AIG and others, often hugely damaging to the system.
March 27th, 2009 at 6:04 pm
Why set the maximum wage at $10 million? Why not $100k instead? After all, why should a Harvard law grad make seven figures as a partner in a fancy law firm, while a Fordham grad makes $70k in the DA’s office? $100k is enough for the Harvard grad. Think of how much happier we’ll all be, without having the stress of trying to make more money.
March 27th, 2009 at 6:23 pm
“What if we had a 95 percent marginal tax rate on income over $10 million?”
You call yourself an egalitarian? If you were truly an egalitarian you would suggest that we should put a 100 percent marginal tax rate on all income.
March 27th, 2009 at 6:29 pm
Kathy Kattenburg,
You may find this recent post about Wal-Mart by Dr. Mark Perry to be of interest:
March 27th, 2009 at 7:42 pm
I know a couple of people who have taken college level introductory economics courses who can answer these questions for you. But your best bet is to enroll yourself in a local community college, get decent grades, and then apply to a local state university.
March 27th, 2009 at 7:46 pm
This is utterly insane. Once the cost of paying taxes exceeds the cost of evading them people will find ways to avoid paying. It’s not that expensive to hire good accountants to hide away your money.
March 27th, 2009 at 7:56 pm
You may find this recent post about Wal-Mart by Dr. Mark Perry to be of interest.
Dear Dave in Hackensack:
I followed the links in that recent post back to the original Bloomberg news article about the employee bonuses and found the following sentence, which came after the paragraphs quoted by Dr. Mark Perry but were, oddly enough, left out of Perry’s quote and your reference to it.
This is how capitalism still works: Companies reward their employees when they finally get sued after years of abusive labor practices, in the desperate hope that (a) they will not get hit with legal sanctions and (b) they can somehow persuade (bribe?) employees into not joining unions.
Have a good day.
March 27th, 2009 at 8:14 pm
Nothing hates success more than failure….
March 27th, 2009 at 8:18 pm
Let see, if we had made this rule 25 years ago the personal computer you are reading this on wouldn’t exist.
Why? because there would have been no desire to spread such a great invention to the world. Why do all that hard work creating and distributing a product that provides billions of dollars worth of value to the world just for $10 mil a year. It wouldn’t have happened.
By the way, that Bill Gates Foundation that gives hundreds of millions of dollars to needy people all across the globe. That wouldn’t exist either.
Same goes for cable television, cellular phones, medicines, …
March 27th, 2009 at 8:20 pm
Why would a drug company spend hundreds of millions on research and development to invent drugs that save and extend millions of people’s lives just to make $10 mil a year?
March 27th, 2009 at 8:42 pm
Kathy, Walmart is a good example. I am not antilabor, simply anti union. Walmart employees were able to achieve those gains without unionization. In fact most of the problems you listed with Walmart are policies that Walmart uses that are against current law. You don’t need to start a union, demand 100% participation and garnish employees wages for union dues to achieve those things. Ideally, in stead of unions, there should be a legal organization similar to the ACLU that can work on a case by case basis. That way labor could have legal representation without wasting the resources demanded by unions.
March 27th, 2009 at 10:05 pm
> Let see, if we had made this rule 25 years ago the
> personal computer you are reading this on wouldn’t exist.
>
> Why? because there would have been no desire to
> spread such a great invention to the world.
First of all, we are talking about salaries here not ownership, stock, or even stock options. I deeply dislike the software and culture that Bill Gates created but I don’t begrudge him his fortune because he made it through ownership of a company he created. Through most of Microsoft’s value-creating period Gates’ salary was no more than $200,000/year.
Salaries are paid to fiduciary managers and employees, not owners.
But equally important is this: I worked for an industrial design/manufacturing entity that generated huge amounts of innovation from 1880-1980 whilst paying its researchers/engineers ~80,000 in today’s dollars and its President a **salary** in the range of 5:1 to 10:1 the average researcher – say $560,000/year on today’s dollars. During the 1980-1990 the industry and the entity were massively “restructured” in the name of “competitiveness”. Today the “CEO” (used to get by with just a President) is pad a salary (there’s that word again) of $8 million/year, the union has been broken, the researchers haven’t gotten a decent raise in 5 years – and the entity hasn’t produced a useful innovation since 1995.
So tell me: how did they manage to create so much from 1880-1980, and not so much today, even though the CEO has 15 times the “incentive” he had for the first 100 years?
Cranky
The lack of a preview function on Yglesias’ blog must be destroyed!
March 27th, 2009 at 10:13 pm
I hold a modest number of shares of Apple computer, and our CEO took the company from the brink of bankruptcy to a $95 billion market cap. If we paid him 45 billion dollars, we shareholders are still WAY ahead. Personally, I invested a couple of grand, and my AAPL shares today are worth six figures, even after the drop from the peak last year.
I couldn’t care less if those clowns who are living on bailout money get sent to the poorhouse, but if you try to interfere in the compensation of the people who created the bulk of my net worth, I’d fight you tooth and nail, you self-righteous jackass. We gave Steve Jobs an airplane, and a bunch of you idiots bitched about it. Hell, I want to see what happens if we give him TEN airplanes.
March 27th, 2009 at 10:35 pm
Matt is right that nationality determines the inequality of salaries–or more accurately, language and culture: Anglo-Saxon cultures have more inequality. This was demonstrated conclusively (all the charts and statistics you could want) by the late progressive economist David Gordon, in his last great book, Fat and Mean, which showed that stockholders in Anglo-Saxon cultures were happy to pay a large, unproductive class of middle managers whose main function was to oppress the workers and keep their wages low; they added nothing to innovation or productivity, they just made the owner class a bit richer. The book ought to be required reading in this crisis.
The other book people ought to read before they pop off about paying more to our so-called geniuses at the top is Ronald Dworkin’s Sovereign Virtue, about balancing the usually divergent claims of personal liberty and social equality.
It can be done, people: one of the first steps involves disentangling the portion of your gains that comes from luck from the portion that comes from merit, including unusual talent. Being human, we assume that all our achievements come from our great merits–how wrong we are!
The Greeks knew this–as Themistocles said to the man from Thrace who accused him of only being famous because he was from Athens, “There is something in what you say….if I was from Thrace, and you were from Athens, no one would have heard of either of us!”
Dworkin, an actual genius, offers abundant solutions for disentangling the puzzle of how luck and merit, social contributions and individuality, combine to form our personal and collective fortunes–armed with that knowledge, we could actually design fair systems of taxation and insurance that would conduce to a genuinely productive and humane society.
We won’t though–we’re too selfish and too stupid to listen to a genius who tells us that the image in the mirror isn’t quite perfect, even if that awareness could lead directly to our salvation. The self is a dead end, folks–you’ll find out soon enough, just after it’s too late to do anything about it.
March 27th, 2009 at 10:38 pm
Cranky Observer,
CEOs switched to high salaries because getting paid in stocks and stock options became to cumbersome and difficult after people like Yglesias made it so.
Yglesias is against anyone getting more than $10 million in compensation for what they produce. It doesn’t matter if that money is via cash salaries, stock, real estate…
My point is that anyone who looks at this halfway objectively would see how much damage this would cause and how absolutely ridiculous it would.
I haven’t even begun to point at that every company would no longer be headquartered in U.S. and corporate tax revenue would become essentially nil.
The government has done a very good job of figuring out just how much they can extort from the rich before they get up and leave. Yglesias hasn’t figured that out.
March 27th, 2009 at 10:48 pm
Some Guy,
you need to give that money from AAPL stock back. You didn’t “earn it”.
People who buy stock for the sole reason you want the price to go up don’t actually produce anything and are as evil as the middle managers in companies who keep the oppressed, oppressed.
March 27th, 2009 at 10:58 pm
Oh, if only the universe would live long enough for me to provide some counterpoint to all of the posts here (particularly the original blog post).
Let’s start by saying people who support taxing the “super rich” (AKA, the “I-wish-I-was-smart-enough-to-make-that-much-money rich”), are simply envious, lazy, ignorants. What you’re trying to put forth, yet won’t accept for yourself, is that the desire to make money is evil. But I’m fairly certain that everyone here has a job, where they make money. And they try to do good at their job, so they can keep making money and hopefully make more money. The desire and inherent psychological foundations are the same, regardless of how many zeros come on the end of your paycheck. I bust my ass and work long hours to make good money, and the corporate lawyers down the street do the same, they just get paid a crap ton more than I do. There is simply NO way of saying $X is good while $X+1 is bad. The only thing we can judge here is the motivation and character of the “super rich”, and I challenge that they aren’t any different than us. Go to Starbucks and you’ll see what I mean. People who look like you, act like you, and even buy the same coffee as you, are there at starbucks working on their cell/laptop in their free time to make more money, just like I do on occasion, what does the pay rate matter? Don’t demonize people who are more successful and prosperous than you, it makes you look like an moronic pathetic fool drowning in your own hypocrisy.
Secondly, I find your “outrage” of the executive pay, bonuses, etc, extremely simple minded and childish. It’s an “outrage” when the executives of some of the world’s LARGEST companies, get a bonus, but okay when we piss billions away into companies that made terrible choices? As I’m sure none of you know the details, the financing choices AIG made were idiotic and unrealistic, they deserve to reform or go under.
I fail to see the logic in taxing the “super rich” while bailing out the “super rich” companies.
Keep in mind, the most dramatic increase in CEO pay in large companies, was caused by the US government trying to “regulate”. After Enron, the government passed legislation stating that CEO’s were PERSONALLY (not corporately) liable for the financial statements they sign off on every year, even though it is not the CEO’s job to double check the statements. Due to the higher risk of CEO positions, the pay rate flew through the roof. Who wants to risk losing your house, car, and savings because of an accounting error?
Yglesias….you want to know the outcome of this legislation you arrogantly propose? Google would stop operating two weeks into the year when the’ve already made more money than they know what to do with, the sporting industry would collapse, Bill Gates and (formerly) Steve Jobs would not release new hardware/software for decades at a time, and Warren Buffet and Bill Gates wouldn’t set up charities where they funnel BILLIONS through to worthwhile causes, that reach many more people than your insignificant blog.
I’ll leave you with the words of Qui Gon Jin, “The ability to speak does not make one inteligent”. Keep that in mind next time you open your mouth or use your keyboard to post this brain vomit that’s unworthy of the recognition bestowed on a pile of crap.
March 27th, 2009 at 11:28 pm
Ignorant Real Estate Developer,
I’m going to assume that you’re playing the devil’s advocate. However, for the people who are as pig-ignorant as Yglesias apparently is, I will point out that the purpose of a stock market is to make capital available for productive uses.
The money I invested in AAPL was money I got from people who parted with it willingly (in other words, I’m not a government employee), and if and when I sell those shares, I won’t be putting a gun to anyone’s head to make them buy at a price of my choosing.
When I risk my OWN money and win, the winnings are mine. If I risk it and lose, I don’t go bitching to Uncle Sugar to cover my losses.
March 27th, 2009 at 11:41 pm
Kevin Egan,
Even if all wealth were the result of winning at roulette, what are the chances of anyone playing the game if they know that they won’t get to keep their winnings?
I don’t give a rat’s ass whether you or Yglesias believe I deserve what I earn from wages, what I make in returns on investments, or even what I might win at poker. Any money I get from people who give it to me willingly is mine, not yours, not the government’s.
Want “equality”? Try Cuba, you pig-ignorant pinko rat bastards. You’ll be trying to swim to Miami for a latte after a week.
March 27th, 2009 at 11:55 pm
iglesias, you truly are a dumb ass.
March 28th, 2009 at 12:04 am
Why Not Arbitrary Limits on Executive Pay?
Same reason we let gays have gay sex. ’cause we’re a free country. And if people want to have gay sex, or earn a 10,000,001st dollar, they have a right to.
March 28th, 2009 at 12:05 am
“By the way, that Bill Gates Foundation that gives hundreds of millions of dollars to needy people all across the globe. That wouldn’t exist either.”
Yes, let’s all praise the fact that survival of millions depends on the whims of a few obscenely rich individuals.
And the discussion about how good Wal-Mart is to its employees is a rich one, too. You people are so brainwashed it’d be hilarious if it wasn’t destroying the working and middle classes in this country.
The people defending these ridiculous salaries are morally at the level of five-year-olds children (”It’s mine, mine mine!”)
And if they think the CEOs are the ones actually doing the work that create value in a company, they’ve never worked a fucking day in their lives.
March 28th, 2009 at 12:06 am
Some Guy,
I was being sarcastic. You have done as much for the country buy buying AAPL stock as the guy who trades time for money 50 weeks a year and EVERY PENNY you earn should be yours.
Yglesias and the like can’t get past this time for money mentality that makes $10mil a year seem outrageous. But I will save my breath on that one.
I’d rather point out to everyone.
INEQUALITY IS GOOD!! (and I am not being sarcastic.)
The ability to see what is possible at both ends of the spectrum motivates us all via desire and fear.
The only time inequality is bad is when there is regulation that inhibits the movement of people from one financial level to another. Of course, Yglesias is all for more regulation, so it makes sense that he considers inequality bad.
March 28th, 2009 at 12:09 am
brewmn,
I think it is Yglesias who is shouting “It’s mine, mine mine!”
March 28th, 2009 at 12:11 am
Asher, there are two answers to your question: 1) in order to make poor people richer, there must be some mechanism by which to do so. The obvious place to look is at those who are highly compensated.
Surely we don’t need a de facto salary cap to make the poor richer. European countries seem to do pretty well at making the poor richer without outright caps or 95% tax brackets.
March 28th, 2009 at 12:13 am
“I think it is Yglesias who is shouting “It’s mine, mine mine!””
That’s because you’re stupid.
March 28th, 2009 at 12:29 am
So educate me brewmn,
explain how taking money from Bill Gates makes the people living in real poverty around the world better off.
explain to me how inequality is the problem and not the fact that they live in countries that have no economic infrastructure that rewards people for their efforts and allows them to easily change their financial level.
I want to know because I have worked in the poorest parts of Africa and I have watched the black market economies that thrive despite the government oppression. Inequality still exists between the poorest of the poor – its all relative.
March 28th, 2009 at 12:42 am
the top 50% of all earners pay 95% of all taxes. Boosting the tax rates for the richest among us will raise revenue rather quickly for a short period of time and then collapse. To make up for the drop in revenues, the tax rates for those not so rich will have to go up.
confiscatory taxes do promote equality by making us all poor.
March 28th, 2009 at 12:52 am
“explain how taking money from Bill Gates makes the people living in real poverty around the world better off.”
Well, I reject your notion that even high rates of taxation is “taking money from” someone like Gates. We as a society have created and now protect and enforce the property rights that have given rise to his wealth, and taking a substantial slice of that wealth away in order to further other social objective (such as, at a minimum, providing decent food, housing healthcare and education to the poorest amongst us) is well within our political prerogatives.
Since you’ve disingenuously decided to try to transform a question of whether higher tax rates should be implemented on US wage earners in order to further societal goals into the philosophical one of whether inequality can completely be eradicated from the globe, I’ll assume that you have no intention of debating the question posed in Matt’s post honestly.
I’ll also have to assume that if you can’t see there’s a difference between arguing that the worst effects of inequality can be ameliorated nationally through our goverment’s policy, and arguing that absolute global equality should be imposed, then you can’t really be educated on this topic.
March 28th, 2009 at 12:53 am
explain to me how inequality is the problem and not the fact that they live in countries that have no economic infrastructure that rewards people for their efforts and allows them to easily change their financial level.
I’d love to live in a country like that (not the one with no economic infrastructure — the one that rewards people for their efforts and allows them to easily change their financial level).
Do you have a particular country in mind, or is this just a Big Vision goal?
March 28th, 2009 at 2:43 am
Can we stop talking about Matt’s stupid idea like it has something to do with “higher taxes”? 95% isn’t tax policy, it’s a salary cap. If Matthew had the courage of his commie convictions he’d just come out and say 100%.
What do you think would happen to that money anyway? Do you think any company is going to bother paying someone more than the cap, just so the government can take 95% of it? That money is going to go under the table or into non-cash compensation, and the IRS won’t see a dime.
There’s something a little odd about people who are arguing for massive wealth confiscation saying we’re the ones who are all about ” mine, mine, mine.”
March 28th, 2009 at 7:30 am
http://www.valueinvesting.de/en/inflation-equity-investor-by-warren-buffett.htm
“Employee compensation already totals twenty-eight times the amount paid out in dividends, and a lot of those dividends now go to pension funds, nonprofit institutions such as universities, and individual stockholders who are not affluent. Under these circumstances, if we now shifted all dividends of wealthy stockholders into wages – something we could do only once, like killing a cow (or, if you prefer, a pig) – we would increase real wages by less than we used to obtain from one year’s growth of the economy.”
March 28th, 2009 at 7:36 am
Brewmn,
just because I don’t agree with you doesn’t make me uneducated on the topic.
I believe that “we” didn’t give Bill Gates his property rights and we didn’t give him the right to keep as much of what has earned so far.
Those are inalienable rights just like Freedom of Speech and Religion. Every person on earth is born with those rights and it is only a question of whether they live in a place that protects those rights or not.
The government doesn’t grant inalienable rights. And no matter how much you rationalize taking those rights away you are still taking someone’s inalienable rights away – which is wrong.
March 28th, 2009 at 11:13 am
Why not just a 95% tax on all income over $40,000? I mean, that’s above the subsistence level, and any more income than that is just greeedy!
March 28th, 2009 at 12:34 pm
Evil Real Estate Developer,
That is an illogical construction re: property rights. Of course we have decided as a society that property rights are universal, but the work of enforcing those rights does in fact mean that we give those rights to Bill Gates. As Warren Buffett said once, he would hardly be where he is today if he were born in Bangladesh. A free and open society that protects property rights immeasurably benefits the wealthy, and they should be expected to repay that favor to society, not out of the kindness of their hearts but in taxes. To divorce the historical protection of what you call inalienable rights from the reality of situation is a cop out.
Ultimately, the reason for progressive taxation and the counter to all this talk of “mine all mine, i wouldn’t have done it if i knew you were going to take so much” is that society greatly contributed to your wealth. We as a country have done the great captains of industry, or even just the professional/managerial/executive class many favors that have greatly contributed to their ability to produce the wealth that they have. To act like Gates or Jobs or someone like this is an island to themself, and should be able to bask in their glory simply for having achieved wealth in a society set up to produce wealth for individuals, is delusional. Despite the slurs of the right wingers such as commie and pinko (slurs originating from a politician from a time where the marginal tax rate was 90%….should, but won’t, make you think), it is not communist to expect those who have benefited from society to repay the favor. Those who have taken great risk and come out on top should be rewarded, but many more take great risk and fail. We should be setting up a situation where as many people as possible are able to take risk, because the American Dream is fundamentally about taking that risk. As such, if we expect our citizenry to spend their lifetime taking risks in the great capitalist utopia, there should be an adequate safety net for all, and a fair system of social mobility that allows all to participate. Foundations and charity won’t achieve that, but instead will continue to concentrate power in the hands of the few.
March 28th, 2009 at 12:49 pm
“I believe that “we” didn’t give Bill Gates his property rights and we didn’t give him the right to keep as much of what has earned so far.”
Then who did?
And, if you grant one individual the right to acquire such a monopoly over resources, do you also deny others the right to take away those resources by any means necessary? And who decides whose rights prevail?
Because if you don’t, then you are giving one individual control over the very survival of millions. Your “philosophy” is anti-human, and no creature with a shred of moral decency would give it more than a moment’s consideration.
March 28th, 2009 at 12:53 pm
Oh my, it appears some one has never heard of the Tenth Commandment.
March 28th, 2009 at 1:11 pm
Fuck you and your stupid God, Darleen.
March 28th, 2009 at 1:50 pm
Bill Gates acquired his ‘monopoly on resources’ via millions of voluntary and mutually beneficial transactions. You and everyone else has the same access as he to our society’s infrastructure.
Bill Gates acquired his wealth peacefully and without violence. You would seek to redistribute it at gunpoint. Yours is the philosophy that is anti-human. It is furthermore incompatible with individual rights, democratic governance, and economic prosperity.
March 28th, 2009 at 2:00 pm
It is alarming that since the 1960’s American values of responsibility for self have not been maintained. Too many people believe that the success of person A is only at the expense of person B.
Even JFK did not believe that.
Most responsible adults teach their kids to respect the property of others, to examine their own wants to see if they are appropriate, to work hard for what they want and, most of all, teach them that coveting is wrong.
It appears that brewmn’s parents missed conveying several lessons.
March 28th, 2009 at 2:06 pm
“You and everyone else has the same access as he to our society’s infrastructure.”
Lie number one. Bill Gates is the son of the name partner in the largest law firm in Seattle. That’s as close to the epitome of the overclass as you can get.
“You would seek to redistribute it at gunpoint.”
Lie number two. Or did you forget that taxation at a rate higher than we currently have is what originally got the undies of all of you Galtian Supermen into knots?
Your argument rests on the assumption that the only path to “prosperity” is by allowing the wealthy (or “entrepeneurs, or whatever the fuck you want to call them) unlimited ability to acquire resources and to use them as they see fit, with no regard to the welfare of others. I reject that as the true anti-human philosophy.
And it’s funny how economic fascists like yourself are terrified of the violence of the mob, yet are totally complicit in the physical and economic violence inflicted on the poorest of your fellow citizens in your own name. See, e.g., incarceration rates, American.
March 28th, 2009 at 2:09 pm
“Too many people believe that the success of person A is only at the expense of person B.”
Straw man alert. Point to anything I’ve said that remotely supports this. And maybe you should spend a little time reading the New Testament. Your vengeful god schtick was rejected by your very own saviour.
March 28th, 2009 at 2:10 pm
“It appears that brewmn’s parents missed conveying several lessons.”
And leave my parents out of this, you stupid cunt.
March 28th, 2009 at 2:11 pm
epitome of the overclass
Two words: Oprah Winfrey
March 28th, 2009 at 2:14 pm
you stupid cunt.
Awwww, I rattled the poor, little, amoral thief’s rantings.
What are you, about 17 y/o?
March 28th, 2009 at 2:17 pm
Point to anything I’ve said that remotely supports this
Goodness, short term memory loss, too — since you wrote:
Your argument rests on the assumption that the only path to “prosperity” is by allowing the wealthy (or “entrepeneurs, or whatever the fuck you want to call them) unlimited ability to acquire resources and to use them as they see fit, with no regard to the welfare of others.
Who saltpetered your Wheaties this morning, brewmn, or are you always this angry at successful people?
March 28th, 2009 at 2:28 pm
Well, I might be only 17, but at least I can read.
“are you always this angry at successful people?”
You really are a one-note symphony here, aren’t you? I’m pretty sure I could buy and sell your moronic ass. I just happen not to have outsourced my compassion and conscience to Yahweh and the tender mercies of Bill Gates.
March 28th, 2009 at 2:34 pm
come on, brewmn, explain Oprah Winfrey’s success at the expense of others, how she was part of the “overclass” and monopolized “resources”.
Your continued potty-mouth tactics do not distract for your Jacobin commitment to slaughter those whose success you covet.
March 28th, 2009 at 2:36 pm
I see. So we should give the children of the rich to the poor, and the children of the poor to the rich. Would that satisfy your egalitarian yearnings? Would that reduce humanity to a stone age level of equality quickly enough for you, or should we just kill the children of the rich straight away?
How would your society create wealth? Who would design, engineer, market and sell goods and services? A majority vote in a collectivized factory? Or would we live in wood huts and kill deer?
Allowing individuals the freedom to produce and sell the product of their labors, and yes, get OBSCENELY RICH in the process, is the only thing that has ever improved the welfare of the masses. But because it does indeed mean that some will have more than others, it cannot be allowed to persist.
With regard to incarceration, I don’t know what the fuck you’re talking about. Legalize it and set them free.
March 28th, 2009 at 2:49 pm
Apparently my critics don’t understand the meaning of “unlimited,” and are unaware of the fact that wealthy interests having complete control of our politcal system is antithetical to representative democracy, not to mention human decency.
But keep arguing with the strawman you have constructed. It’s what rightwingers do best.
March 28th, 2009 at 2:52 pm
Re: brewmn @ #128
The projection is strong with that one.
A 5150 is in order.
March 28th, 2009 at 3:05 pm
Oh, I’m sorry. Am I supposed to give you credit for believing the state shouldn’t confiscate ALL of a person’s property, just some arbitrarily defined portion above some arbitrarily defined cap?
How generous of you.
March 28th, 2009 at 3:07 pm
what if someone shot you in the face for theft?
March 28th, 2009 at 4:45 pm
Essaywhuman,
first I don’t think I have called anyone a name in any of my comments.
Second, I am thankful to all the members of society who helped me to the level I am at today. I have either freely and voluntarily traded for their services or benefited from their conscious generosity. None of the benefit or payment was brought about through force on either side – as it should be.
I am thankful to live in the US where the government protects my rights. And I know that I can either pay taxes, go somewhere else, or have the government lock me up and take all I own.
But please remember, a government that protects property rights does it by protecting every single citizen’s property rights equally. We all benefit – not just the wealthy.
But you feel only the wealthy should have to pay for that benefit. Others get the benefit for free. And that is in direct conflict with the inalienable rights that each and every citizen is born with.
Finally, you make the leap from protecting our inalienable rights to protecting us from failure. THESE ARE NOT THE SAME.
I don’t think the founding father’s plan was to create a government that treats it citizens and companies like children – making sure they don’t suffer the consequences of their actions.
And I know it wasn’t their plan to create a government that treats banks and CEOs like children; protecting them from their actions, encouraging them take as much risk as possible because that is American, but letting them fail is not.
But that example doesn’t count. You were probably only talking about protecting the poor from consequences. You probably didn’t mean protecting all citizens from consequences.
March 28th, 2009 at 4:57 pm
> What if we had a 95 percent marginal tax rate on income
> over $10 million? What dire consequences would flow from
> this?
You could in the same way ask what “dire consequences” would flow if imprisioned everyone for traffic offences.
The issue here is that it is *unethical*. It is *theft*. If a voluntary and well-informed contract is agreed between Party A and Party B (in this case, such that Party B is paid 100 million a year), *THEN ABSOLUTELY NO ONE ELSE CAN HAVE ANY JUSTIFICATION WHATSOEVER FOR UNILATERALLY ABROGATING THAT CONTRACT*, which is what such a tax is properly tantamount to.
One does not discuss the nature and degree of consequence for an unethical act. It is wrong because it is wrong. It does not become more or less acceptable depending on our measuring of its consequence.
Furthemore, if we decide to place a 95% on the rich, why can’t we place confiscatory taxes on other groups, for other reasons? where does it stop, exactly, when we accept doing what is wrong because we consider the consequences acceptable? what when the consequences are acceptable to *us* but not to those bearing the consequences? this is socialism – I decide for you and take your money – and sooner or later, you will run out of other peoples money.
March 28th, 2009 at 5:25 pm
Bill Gates is the best example of why we shouldn’t tax the superrich at such insanely high rates. His current goal is to give away as much of his money as possible before he dies in the hopes of saving millions of lives by eradicating malaria. If he hadn’t made such insane profits over the past 20 years, would he be able to pump so much money into this endeavor? Obviously not.
March 28th, 2009 at 5:32 pm
“Bill Gates is the best example of why we shouldn’t tax the superrich at such insanely high rates.”
Wrong-O. Bill Gates is the exception that proves the rule.
March 28th, 2009 at 5:41 pm
Why would such measures be unnacceptable? Certainly for no reason justified by the field of economic’s. Arguments advanced on those grounds don’t even rise to the level of pseudoscience in terms of validity. The most that could be said against them are that they are cude, and possibily ineffective, means for dealing with the very real probem of inequity in this country; a problem that is destroying our culture and society.
The real reason such measures are unacceptable is because our culture at a fundamental level is one that worships money. I don’t mean that in some crude grade school moralizing “money isn’t everything sense”, which implies I’m critizing the desire to maximize one’s compensation. Instead, what I am trying to convey is that money is the only shared cultural instrument by which we assign value and worth to things. As a result, monentary amounts are tied to social esteem, worthiness, and even our standards of truth.
The result, as you can see from the comments, is obvious. A country of religious moralizers that does not understand their religion. A country of legal experts that does not understand its laws. And finally, altough not reflected here, a country that once sent an astronaut to the moon that is rapidly falling behind the rest of the world in scientific and technical competance. The 90’s were an Indian summer in that area, I’m afraid, but even then we were simply building off of difficult, and expensive, technical and conceptual breathoughts made 40 and 50 years ealier, during a much different culture and time.
The relevance that all of this has to your questions is that it gives an answer that states, basically, that what Mr. DeLong or your, say does not matter. Even were he to support such a measure, it would be filed under politically impossible. Why? Because it would evoke many of the reactions you see in the comments. Claims of theft, threats of violence, slurs on the character of anyone who would dare to argue such a measure. A nation of heavily armed John Gaults, or Joe the Plummers, would rise, posting on comments on blogs from computers they may or may not own, living in houses whose mortages they never may be able to pay off, and finally driving (probably leased!), cars to the voting booths to vote whatever politician acted on that suggestion out of office. Or just shoot him outright. Such is the world we live in.
March 29th, 2009 at 4:26 am
And where do we stop? I’m sure that Mr. Yglesias makes substantially more money than is necessary to provide adequate shelter and sustenance for himself. Following his philosophy, I don’t care what he or his employer think he is worth for spewing this class-warfare socialist crap, or how much money he can make from other ventures, or the style of life that he would like to live, or the retirement that he would like to prepare for. Since this silly philosophy, has no rational limit, but is limited only by the arbitrary whims of the nitwits in Washington, I would say that if he makes more than $50,000.00 per year, then every additional cent of that should be confiscated and used for causes deemed worth by the government (which would usually mean repaying the people who paid to get them elected.) After all, so many other people “need” that money more than he does. If he doesn’t think that would be fair, then he should quit worrying about how much other people make and find something productive to do with his life. Most of the liberal “intellectuals” that I know, bemoaning the plight of the little guy while ensconced in their mansions and Mercedes, are anxious to give away everybody’s money but their own, which they jealously preserve by looking for every tax cheat and loophole that they can get away with.
By the way, aren’t the little newbie lefties entertaining with their ignorant, intolerant, foul-mouthed rantings. They certainly seem to come out of the gate with the sneering, cursing, and name calling, and apparently, they don’t even realize the hypocrisy of bashing the rich while bragging that they have enough to buy and sell people. For your consideration, I like the old example of “If you’re smart and work hard and make an A, and your classmate is less smart and doesn’t study and makes an F, isn’t it only fair to take enough points from you to give to him so you both have a C and pass? After all, he needs those points more than you do. After all, failure will hurt his self esteem, and isn’t it more important for both of you to pass than for you to get into a good college?” If your answer is “No”, then you need to take a long hard look at your overall philosophy.
March 29th, 2009 at 8:24 am
Speaking of the French Company Total.
11/03/2009 France slams ’scandalous’ Total job cuts
Despite posting the highest annual profit, the oil giant announces it will shed 550 jobs.
PARIS – France on Tuesday attacked the “scandalous” behaviour of its biggest company, oil giant Total, after it said it would slash jobs despite reaping the highest annual profit in French corporate history.
( I am sure some progressive nitwit will claim this article is bogus because of the date. Yes thats how they write March 11 in France 11-3)
“That a group like Total, which made billions in profits, isn’t able to set an example in terms of employment at a time like this sticks in my throat,” said Employment Minister Laurent Wauquiez.
March 29th, 2009 at 8:50 am
So begins the trek down the slippery slope. Let cap earnings, via a confiscatory tax rate, for people at $10 million. Who’ll complain expect a few rich guys. After a few years, the bar is moved to $5 million, still a huge sum, so only the rich take a hit. What happens when its $1 million, then $500,000? In a generation, the incentive forprogress will be eliminated from our society, and we will have won the race to the bottom. Every time socialism is tried, it fails.
March 29th, 2009 at 9:11 am
Some ideas just need to be tried. Let’s try this one with people who get paid for very little work. Actors.
March 29th, 2009 at 11:10 am
It has already been said above but; It sure as hell won’t stop at $10 mill, to believe in liberal/left self restraint, for that matter their day to day exclamations on policy, is riskier than a belief in the tooth fairy. Who I daresay is sometimes confused by the liberal/left with the federal government.
Said government having contributed mightily to our current hardship and having promised to extend our problems and travails well into a rather gray future, what else would you expect but a liberal wag calling for income management & controls. Deep, very deep !
March 29th, 2009 at 11:55 am
Does anyone else ever notice how much more boorish and rude the left’s activists are in blogosphere comments?
At first I thought it was just a feature of low-brow blogs like Kos or something.
You can usually count on them to be the first to use profanity and offer up ad-hominem in comments, perhaps with an obligatory reference to Hitler or the KKK. Moreover their comment sections tend be virtually fact-free with few statistics, and correspondingly more yelling and screaming. Maybe I’m pampered reading the evo-biology circuit, but you need a tough disposition to stomach the potty-mouthed filth you read here all the time against conservatives.
I suppose brewmn would be the first to thump his chest in his social group at how much he supports feminism, while calling women dreadful names when it suits him. And he’ll be first in line with his sob stories about most of the vicious criminals locked up in American jails, while calling educated and law-abiding commenters making their point of view “sick fucks”. But I suppose this sort of dissonance is required for liberal ideology, when it’s confronted with the repeated failures of their policies all over the globe, according to their newest fashions. You see, Chavez just isn’t implementing them the right way!
Many of those complaining also work in relatively socially-useless non-profit and civil service jobs. I just don’t understand why those who are jealous or covetous of the money others make don’t try to change professions in the private sector. Those well-off in demanding and stressful jobs aren’t to blame for your bad career decisions. No one you forced you to Save the Whales after graduating from your fancy college with 100K of debt.
And most of you definitely don’t work harder than most newly rich, either. Everyone knows that in America the poor have more leisure time than the upper class. I’m going to go out on a limb and say that most of the poor are less deserving of charity because they are idle. For most of human history it wasn’t this way. Thank God for America and it’s truly “progressive” capitalism that’s freed us from the shackles of egalitarian poverty liberals are all to eager to return us to.
March 29th, 2009 at 1:39 pm
Billy does a great job of boiling it all
down to the essential principles involved.
There is no such entity as “society” which can
create, protect, and decide. I disagree with 99.9%
of your vision of the world, so you have no cause
to invoke my name in your “we” statements. Which
makes all of those “society” and “we” statements
utter lies. You don’t have my authority to take
away any “fat cats’” money, so quit claiming you
do by using the royal “we” or presuming to know
what “society” wants. (That’s nearly as crazy as
claiming to know what god wants, as if a deity
capable of creating billions of galaxies needs to
whisper in some talking ape’s ear and keep it a
secret from the rest.)
Rights are inherent,
not created (otherwise, there would be no problem
with slavery and gas chambers if rulers and most
of the population thought it was OK). They derive
from our nature as rational beings, not from any
deity or
mobelection.You probably did very little in the way of creating
a civilization and culture which has an (albeit
whithering) respect for freedom and property rights.
I imagine the people who most deserve credit for
that would pitch you in the river for suggesting
theft in their name.
March 29th, 2009 at 2:42 pm
I think the more valid question is: why do liberals have a problem with freedom? Guess what? It’s not your money. It’s not the government’s money. We should put a cap on stupid blogs.
March 29th, 2009 at 4:50 pm
“Rights are inherent, not created (otherwise, there would be no problem with slavery and gas chambers if rulers and most
of the population thought it was OK).”
I suspect most people will instantly see this assertion as untrue, but nonetheless I will ask: if rights are inherent and not created, why do we see absolutely no hint of them in history until roughly 300 years ago? There was no problem with slavery as an institution until about then; it was accepted worldwide.
Rights were created. I grant you the right to property/freedom of speech/what have you because I want you to grant that right to me.
March 29th, 2009 at 7:09 pm
I suspect most people will instantly see this assertion as untrue, but nonetheless I will ask: if rights are inherent and not created, why do we see absolutely no hint of them in history until roughly 300 years ago? There was no problem with slavery as an institution until about then; it was accepted worldwide.
Really, untrue? You can’t be seriously grappling with that concept. There was no probelm with slavery as an institution until about 300 yrs ago and accepted world wide? You have got to be the biggest moron I’ve ever seen to comment on a thread.
If you don’t like or ascribe to the principles that this country was founded on fucking leave. One less asshole to have to listen to. Just don’t name me in *we* and other collective accertion.
March 29th, 2009 at 11:09 pm
Thanks to this blog and the comments around it, I’m beginning to understand the temperament of the people who voted for Obama and it is frightening.
Taking away the rights of others to own property or keep the fruits of their labors is something that used to be found only in most oppressive communist countries. It doesn’t matter if it is “only people making more than $10 million per year”, once it’s OK to take away someone’s property, it’s OK to take anyone’s property.
You do get what you sow. Our most productive and creative people will stop working and producing. The administration will use financial leverage (i.e. bailouts) to take over private businesses (i.e. banks, automotive, etc.) and control management. Everyone will be “more equal” because every one will have less. The only way to accomplish this utopia is through the use of force, financial or otherwise.
A friend who lived under Chinese communism was surprised how little difference there was between today’s capitalism in the West and the communism he thought he left behind in China. He told me “the only difference between socialism in the West and communism is violence”.
Welcome to the American Cultural Revolution.
March 30th, 2009 at 1:04 am
SCB, just because rights weren’t argued to be innate until a few hundred years ago doesn’t mean that they are not innate.
Much of our current concept of rights come from Locke who argued we have inalienable rights to life, liberty, and property. Inalienable meaning that they can’t be taken and an individual can’t surrender them. This idea is important and your concept of rights as being those which are granted by the state or society or that they are based on mutual benefit is hazardous. In the first case, it means that the state can revoke rights as it desires and there is no protection to the individual. In the second case, mutual benefit, this works poorly because if I am in the majority, I gain little or no benefit from you if I tolerate your rights and the idea will not hold.
It’s also important not to conflate innate or natural rights with legal rights.
March 30th, 2009 at 2:24 am
“What if we had a 95 percent marginal tax rate on income over $10 million?”
What a great idea. You make $10 million, and then make $1 more.
Between state, Federal, local, etc. you now owe another $1.25 in taxes for making that $1. If you made a mistake and made too much you could lose money overall.
Lets punish success all we can. The greater the success, the greater the punishment.
I mean a total marginal rate well over 100% wouldn’t affect anything. Why not lower it though. Anyone making over $250,000 should pay in total 150% taxes. Then everyone would get off that work treadmill and find better things to do.
If you’re silly enough to work too hard (or win the lottery) you should suffer a loss for such anti-social behavior. If you make a million dollars you should pay (lets see, 250K at about 50%, plus 750K at 150%) somewhere around 1.25 million in taxes. That’ll give a disincentive to those hated rich people.
Sure we’ll be punishing success and encouraging failure; but if everyone can’t be equal, then by damned lets punish those who succeed until we make everyone equal failures.
What a great idea. Lets try to get this passed ASAP. As I’m a miserable failure who can’t do anything I’d approve of making the entire rest of the country miserable failures too.
March 30th, 2009 at 7:02 am
Just another idiot assuming a zero sum game….move along..nothing to see here.
March 30th, 2009 at 8:40 am
Every Man A King!
March 30th, 2009 at 10:59 am
Dear Dangerous Dan,
The “right” to own slaves (linked to a broader claim about equality) is a very good example of a right that has not always existed, but has been contested over time. Very few people today in the US would say that I have a right to own another person, but you do not have to go back in time very far to find Americans who claimed that very right. The Civil War was based largely upon this conception of rights, and if the Confederacy had prevailed, we might still have a country where the right to own individuals was considered to be “innate,” as part of the natural order.
Put another way, if the majority (or a sufficiently influential minority) recognizes a right, then it exists. This is true for legal rights, but also for natural rights – the latter is the basis for the former.
I recognize that this is dangerous. Lots of things are dangerous. The most popular alternative to this historicist view is to say that God gives rights, as many people do. But this is dangerous too, and based upon a conception of what people think God condones and wants. (For instance, Muslim countries are currently petitioning the UN to recognize a right to be free from critical religious comments. I am sure they feel this is what God wants.)
You can decide, as Locke did, that people have certain rights and always did, but if no one recognized Locke’s rights until year X, then what is to stop another person in year Y from discovering another right that had always been inherent?
In essence, when you say that your beliefs are correct, and that they always have been, and that they transcend history, even if most people in history would not have agreed or even understood — that is a reassuring notion, but ahistorical. It is more honest to say that rights are contested entities, and that people have to get down into the mess and argue for them, rather than say that they’ve been delivered to you from on high.
And Cindy – no need to be rude.
March 30th, 2009 at 12:04 pm
SCB,
This isn’t some arbitrary “discovery” of rights, based upon a happy accident that Locke picked some good ones–as if he could have arbitrarily picked others changed history. The three basic rights of life, liberty, and property are the logical consequence of our nature as rational beings.
Perhaps you might understand better if you realize that the word “rights” is used to denote many different concepts. The concept to which I refer (commonly described as “natural rights”) can be rephrased as follows: your right to liberty means that it is wrong for me to deny you that liberty, so long as you’re not hurting anyone else. Thus, if I were to say that I have a “right” to own you as a slave (obviously, without your consent, and not as a consequence of you doing something to harm others), that falls apart when you realize that it imposes an obligation on your part to give up your right to freedom for no logical reason, even though you have taken no action to warrant this. And, why wouldn’t you have the “right” to own me? It falls apart like a house of cards in a thunderstorm.
March 30th, 2009 at 12:48 pm
I’m not sure how someone can support increased tax rates on the rich with the egalitarian goal of increased economic parity but not be for a policy that would tax all Americans at 90% and send that money to 3rd-world countries. When you really get down to what would have to be done to give the poor of the world “decent” living standards, they shy away from the numbers with phrases “I’m only concerned with America.” Interesting that they like to keep their riches compared to the rest of the world, but not compared to the people providing them jobs, food, shelter, and every amenity in their lives. “Progressive” taxation is nothing more than a land grab by the middle and poor. It’s an envious loathing of those who have more than them that rapidly turns hypocritical when you point out that the poor of this country live in the top 10% of the world.
And what got us there? Certainly not obscene taxation on the wealthy.
March 30th, 2009 at 12:52 pm
Dear Elliot,
What you are doing here is absolutizing a historical outcome which you approve of. Locke’s writing came out of a specific historical and cultural context, and his concept of rights was accepted because it worked – more specifically, he articulated that idea because it had already begun working in inchoate and unarticulated form. Don’t forget that it was strongly disputed at the time.
Why do we see exceedingly few, if any, claims about natural rights for thousands of years of human history until the time of their emergence, and even then, only in a relatively small part of the globe? Is it because Western Europeans began to be rational beings at that time, and all other peoples were non-rational in some way? Or is it because there are many ways to structure a society, and the one based upon L,L&P is only one, one which fits well into a society moving towards capitalism as its fundamental institution, rather than, say, religion?
I don’t deny that advocates of natural rights *proclaim* these rights to be absolute. I am saying that the idea of natural rights has influence because people accept it, and as the case of slavery shows, fairly recently not all Americans have accepted it. Perhaps in 400 years, the heirs to our society will have another natural right about which we know nothing (or even reject), and proclaim that it follows from logic. Or perhaps they will find that one of them isn’t as logical as people used to think.
You might say that I am conflating natural rights, which is a philosophical concept that is true or false, with political rights, which are contested, but I would argue that the ideas are much more intertwined than you admit. You want to remove philosophy from the realm of politics, as mathematics are, but all human affairs, especially the concepts of right and wrong are political.
March 30th, 2009 at 12:58 pm
What is Lockes “property”?
Would Locke recognize ownership as applying to the abstract web of obligations we have now? I highly doubt it. Vast accumulation of wealth on the scale currently possible would have been entirely foreign to him.
What meaning does it have to say I “own” something that I have no connection with at all, other then a web of connections springing from a piece of paper, or an entry in a spreadsheet? Something I would never recognize as “mine” if shown on the street?
March 30th, 2009 at 1:35 pm
Will someone just let me know what nation in history has had the standard of living that Americans have had over the last 30 years that had over 50% tax rates? The real poverty rates (no home, no healthcare, no car, no electronics , no drug use) is relatively small percentage of the population. The larger share of the poor we point too have cable television (usually 2 or more), a computer, a cell phone, a gas guzzling SUV with really nice hydraulics, and free healthcare from the emergency room by leaving a false name and address. Don’t tell me this isn’t the real picture of the unwashed masses, I’ve watched family members game the system for decades and have decided not to associate with them due to the outrage that they sit at home while I’ve found myself working up to 3 jobs at a time to make ends meet. Now that my wife and I are at a point where we can both work a single job, own a house, and actually maybe take the family on a vacation I should give more? Not the American dream I was told about.
Many of the liberals here can send more money to the federal government if they wish too, I prefer private charities that ask for my money, not enforce the confiscation by the IRS.
And before many jump on the truly needy that can’t provide for themselves, this would be much easier if we helped only those deserving few through private charities where if they blow their money foolishly (like car warranties,business bailouts,etc.)
All the sectors of our economy that have extensive government intervention are the ones in trouble. There are more regulations on healthcare,education,housing,energy and finance than there are on all the other sectors of our economy. The above mentioned have only gone up in cost and lost value to taxpayers and consumers,as compared to electronics,household appliances, furniture,clothing,etc., which have only come down in price and gained quality.
March 30th, 2009 at 2:06 pm
A lot of talk for such a mind numbing, barkingly stupid idea.
March 30th, 2009 at 3:51 pm
“…and the not-quite-so-rich would be thrilled to see their betters cut down to size.”
This looks to me like the crux of the plan — envy and the pleasure in watching the rich get soaked. An appeal to our lowest instincts.
But this is not an economic plan, it’s a one-time confiscation, since the rich will not continue happily making $20 million/year just to watch the IRS take 95% of it. Cut them “down to size,” and then what? Wake up the morning after, feeling a twinge of guilt and sadness that it’s all over and can’t be done again?
If it’s a moral issue, I really would like to hear the case for income equality as a virtue.
March 30th, 2009 at 4:09 pm
If it’s a moral issue, I really would like to hear the case for income equality as a virtue.
Dave,
You won’t, because there isn’t one.
March 30th, 2009 at 6:46 pm
Joe F., interesting direction, but where are you going with it?
SCB, you’re looking at things from a relativist perspective, both culturally and temporally. That people contest what rights are rights is obvious, but true innate rights are such regardless of what people think. If people recognize a right exists, it may exist socially or legally, but that doesn’t make it a natural right. The problem with relativism is that it doesn’t actually make a truth claim; it makes a claim about what individuals or culture believe to be true, i.e. a belief claim. That people disagree about what the truth is doesn’t mean that truth doesn’t exist. For example, on a disagreement of whether God exists or not. He does or he doesn’t and so one proposition is true and the other false. Or two people, one of whom says the earth is flat and the other says the earth is spherical. That they disagree doesn’t mean neither is correct. Similarly, that what rights are natural rights or that they exist at all have been contested matters doesn’t mean truth the matters.
And natural rights may be the basis for some legal rights, but not necessarily.
What remains then is to analyze the arguments about the rights, which you seem to agree with.
I’m actually not troubled much by your historical interpretations, but they don’t override the philosophical considerations and arguments.
March 31st, 2009 at 9:50 am
Dear Dan,
Indeed, I am arguing from a relativist perspective. Given the natural rights emerged in a specific historical context, it is reasonable to see them as a cultural artifact, even if their proponents claim them to have always existed.
It seemed to me earlier that you were saying that John Locke or Western philosophy as a whole didn’t invent natural rights, but discovered something that had always been there, just as Galileo had found the moons of Jupiter, which had always been there whether the ancient Aztecs (for instance) knew about them or not.
But the moons of Jupiter and natural rights are quite different: the moons of Jupiter can be seen, and hypothetically, visited. There is no proof for natural rights, only compelling or less compelling arguments.
Anyway, I think we get each other’s drift, and thanks for being civil. In my view, societies can condone or condemn any activity they want, and, if they choose, justify that activity because it accords with the logic of natural rights, if they choose to deploy that language. (References to Western values as “logical” strike me as ethnocentric.) Such activities could include, to return to our original topic, confiscatory taxation, if there is widespread belief in a logical right to equality. (Many peasant societies redistribute property regularly and do so for a “logical” reason.)
In your view, natural rights are transcendent, immortal entities that exist whether we know about them or not, or base our society on them or not.
But given that Locke and Jefferson didn’t agree on what these rights were . . .
April 16th, 2009 at 10:13 pm
Badly need your help. If you don’t know where you are going, you will probably end up somewhere else.
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Thanks
. Chet.