Friday, March 12, 2010

The Greed Question

I find it highly curious that capitalists, free-market advocates, conservatives, and libertarians are accused of being greedy, selfish people.

The aforementioned groups, all of which I generally consider myself a member, don't expect to keep all of their income, as most of us agree that we need a basic level of government, and that requires some small, small level of taxation. We do, however, want to live in a society where we keep most of what we earn - by working every day, many people at jobs they don't even like - and thereby have enough income to pursue our dreams and be charitable to those causes/organizations that are near and dear to our hearts.

Now, on the other side of the coin we have the more "progressive" worldview and philosophy advocating the ideology that some people make too much money and therefore it is the right of other people to take some of the former's income. Oh I know, it is all done for compassionate reasons. I understand that many people think this way because of a deep-seated desire to help people.

But let us look more closely at the implications of these ideologies and see if we can determine which one is truly the more greedy, envy-based of the two.

The first philosophy posits that if a person earns his or her income, he or she should get to keep the vast majority of it. Simple.

The second philosophy posits that if a person does not earn his or her income, then he or she is entitled to take a portion of another person's income.

Somehow I find the idea of coveting another person's income and goods to the point of forcibly redistributing his or her wealth to be egregiously the more greedy and selfish position to take. Desiring another person's property is envy, and going out of your way to take it from them is greedy and selfish. Many would call this stealing. Desiring to keep the property for which you have worked, for years and years in some instances, and possibly after substantial personal risk, is not born of envy or greed. Rather, it is your basic, fundamental, human right.

The greed question can be summarized as follows:

Who is the more greedy, the person who wants a free ride, or the person who wants to pay his or her own way?


  1. I'm sorry, but please don't pretend to be respectful of other people's views if you're going to say things like "progressives think some people make too much money and therefore other people have the right to take it." You're clearly not without intelligence; just reach a little bit. Even if you come to a different conclusion than I did, I'm sure you can express progressivism in less hyperbolic terms.

    Firstly, progressive taxation. This is the idea that people with higher income pay a higher percentage of their income in taxes. This has long been the bedrock of our country's tax system works. It helps maintain a stable middle class, which is essential in a democracy like ours (or constitutional republic if you will). Well, actually our middle class is dying out and wealth is increasingly concentrated in the hands of oligarchs, which probably means that our taxation wasn't progressive enough.

    Of course, you'll counter this argument by saying that if the wealthy are getting wealthier, it's because they've earned it, right? Perhaps, but perhaps not. Wealth creation is done through labor (you know, actually making stuff), but it's also done through investment capital. Investors provide capital to companies so they can start up, and then they own a piece of that company, forever generating wealth through no labor of their own. Is that earning their wealth? Yes and no (but more no than yes). They're not really doing anything, but they did give the company the money it needed to be built in the first place. Consider though that capital gains taxes for investment are some of the lowest tax brackets in the US (just 15%). Warren Buffet is the classic example: a multi-billionaire, he pays a smaller tax rate than his secretary (who makes 85K). Suddenly, the argument about who "earns" what seems murkier.

    The system works best when there's a balance struck between the wealthy and middle classes (i.e. workers and owners). How is a society where the wealthier earn bigger and bigger shares of the pie simply by virtue of being born into the upper classes at all fair? And please check statistics on it before you tell me there's much upward economic mobility in our society...

    In short, fairness is a vastly complex subject. Don't, for the sake of political expediency, dumb it down this far. Pretending it's cut and dried is a disservice to everyone.

    As to social programs, it's really in everyone's benefit to have them. Yes it sometimes means that money is directed toward the lower classes from the upper, but it's worth it to avoid mass bankruptcy, mass starvation, and class warfare. Those who deride the "death panels" they envision in the healthcare reform bill should be sickened by the horrors that would happen to seniors without medicare and social security.

    By the way, even with social programs that redistribute wealth, the wealthy are still kicking the s#%t out of the lower and middle classes. They really don't need you to defend them (the middle and lower classes though, could always use another champion).

    "Who is more greedy, the person who wants a free ride, or the person who wants to pay his or her own way?"

    As always, I think this is a vast over-simplification aimed to prove your own view as being right. I think the real answer is that the greediest people are the ones who want to earn money without doing work, even to the point where the ones who do the work have to accept less. The ones at the bottom can't pay their own way, but mostly, they do want to (as this would mean they'd no longer be poor). They just can't get a job anymore since the financial industry f#$ked up the economy...

  2. This is a well presented statement of the libertarian position. I hope that my statement of why I don't agree with it will be as clear. Here goes:

    First of all, the government can't do anything, anything at all, without redistributing income. Some people will always profit more from a tax on this to raise money for spending on that. So an argument against redistributing income is an argument for no government at all, which I think stopped being a serious choice for us on the day when our forebears tasted that apple.

    Second, given that some government is necessary, how are we to pay for it? There are two ways: taxing everyone at the same rate, or applying a graduated tax. It has been recognized since antiquity that a flat tax simply doesn't work -- it would tax the poorer part of the population into desperation, even if the government proposed to do no more than the absolute minimum that a state must do to remain in existence and defend itself. Gibbon makes this point in his reflection on the tax policies of the Emperor Constantine.

    Third, if taking away part of people's hard earned money is something that the government should do only when absolutely necessary, isn't this an argument against a flat tax -- which inevitably shifts the burden of taxation away from unearned income (investment income) and on to earned income (salaries or hourly wages)?

    Fourth, the agricultural argument (forgive me -- I'm from central Ohio). Money is like manure: you spread it around and it makes things grow, but if you pile it up all in one place, all it does is stink. The economy had a healthy growth rate during the 60s, when the upper marginal tax rates were, by today's standards, positively Scandinavian. Everyone benefitted from that.

    Fifth, shouldn't a determination to resist making involuntary contributions to the government be accompanied by a willingness to forgo benefits received from the government? And supposed that among those benefits are the jobs that we have (made possible by a government-sustained system of highways, etc.), the public schools that we have attended, and so on? If we are fighting for independence from the government, should we abstain from receiving as well as from giving?

    I guess I could summarize by saying that the life is a lot more complicated, and a lot less loginal, than the principles of the libertarian/Tea Party movement; which is why the latter does not seem fitted to the former.

  3. Sing it sister! That which is illegal for the citizenry but legal for the government is naught but tyranny! Taxation beyond that which is used for the purposes granted to government by the Constitution is not only thievery, but is itself the mechanics of tyranny! Keep on keepin on!

  4. You have pinned the matter to the mat.

    Greed must be understood rationally, as a specific form of envy: the desire for something that one has in no way earned. If that understanding does not prevail, we get a state of affairs in which anyone who desires only what he has earned can be deemed "greedy" along with the foulest highwayman. mugger...or "progressive."

    But then, our leftists have always excelled at redefining terms in such a manner as to advance their own agenda -- an agenda which, if assessed rationally, would get them deemed greedier than any armed robber who's ever lived.

  5. "The system works best when there's a balance struck between the wealthy and middle classes (i.e. workers and owners). How is a society where the wealthier earn bigger and bigger shares of the pie simply by virtue of being born into the upper classes at all fair?"


    Anyway, back to the come the really rich lefty icons like the Kennedys, the Rockefellers, and the Pelosis can keep their wealth, demand more and more from the regular American taxpayer, and Compassionate Progressives are silent about them? That is such a hypocritical stance.

    Also, why is it that you Compassionate Progressives think the pie stays the same size? Competitive Capitalism in this country has proved that, when free markets are operational, the pie grows bigger and bigger so that new people get a slice. Those classified as poor in America look wealthy to the poor people in countries with economies controlled either by a central government or by an area tyrant, as in so many African countries. Why is it that rivers of public and private aid pumped into these kinds of countries, over many years, never causes all the "boats" to float to a higher level?

  6. No, I'm sorry Anonymous #1. I've been called greedy for years and years, and so I decided to investigate the philosophical question of who is actually greedier. Come now, reach with me.

    I think it's quite obvious that those who covet that which they have not earned are greedier than those desiring to keep that which they have earned. It is actually very simple though you may want to muck it up as best you can, because we're speaking in philosphical terms here. Funny, my fiance predicted that the opposing responses would not approach the philosophical arguments but rather the supposed practical arguments. And I say supposed because I don't think your solutions are very practical.

    So you don't think that people taking the risk by investing capital deserve a return on their investment? That's the whole point of investment. A person takes a calculated risk hoping that it will return more than was invested. In your world people would invest and then get nothing back, or at best, a meager return. In your world, most people wouldn't bother investing, and that would be a world with very few jobs.

    I'm sorry you were offended by my "hyperbolic" speech, but the same could be said for your own "hyperbole." As someone who will probably always remain in the middle class (because of my chosen career), I will never be ashamed of defending a person's right to keep his or her own earnings and property. Why? Because I don't believe in class warfare, and it is your own progressive ideologies that actually promote and stoke the fires of brazen class warfare.

    As Abraham Lincoln once said,"Let not him who is houseless pull down the house of another, but let him work diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."

    Au revoir PG!

  7. To Anonymous #2 and your reasonable response:

    You say - "First of all, the government can't do anything, anything at all, without redistributing income. Some people will always profit more from a tax on this to raise money for spending on that. So an argument against redistributing income is an argument for no government at all, which I think stopped being a serious choice for us on the day when our forebears tasted that apple."

    I believe you and I have a fundamental difference in our view of government. When you say, "First of all, the government can't do anything, anything at all, without redistributing income," I must argue that there is a gigantic difference between many of the things that government "does" and many of the entitlement programs that are only redistributive in nature.

    One example: paying the salaries of Representatives, Senators, and the President. When we pay their salaries, we are not taking from some citizens in order to give free gifts to other citizens. When we pay the members of the military, we are not taking from some citizens in order to give free gifts to other citizens. In these instances, we are paying for the government, we are not redistributing wealth.

    However, Medicare, Medicaid, TANF, WIC, GAU, SSI, Food Stamps, etc. are programs that take from some people to give free things to other people. Do you see the difference? There a few, enumerated powers and responsibilities of the federal government, and paying for those redistributes nothing. It is the difference between general welfare and specific welfare, the former being the desirable form of "welfare," and the latter being antithetical to individual freedom and liberty.

    As for the practical nature of entitlement/redistributive programs, they always, always begin with strict elgibility guidelines, serving only the most vulnerable and needy. However, they always, always loosen those standards and elgebility requirements to add more and more people to the rolls because it is just too tempting for politicians to dole out other people's money in return for votes.

    "If you rob Peter to pay Paul, you can always count on Paul's vote." This may be a cute little phrase, but it holds a lot of truth.


  8. Continued...

    Lastly, you mention how great the sixties were econimically, but you fail to mention that JFK propsed large tax cuts in the 1962, which were eventually signed into law in 1964 by LBJ, after Kennedy's assasination. The legislation was called "The Kennedy Tax Cuts" to honor the man who had proposed it. So those good times were most likely a result of the new economic activity spurred on by the tax cuts. Were the resulting tax rates still too high? Yes, but it gives us a good example of revenue increasing when taxes are decreased. (Why? Less taxes means more jobs and more jobs means more revenue. Higher taxes means less jobs and less revenue.)

    "President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).

    According to President John F. Kennedy:

    'Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits… In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.'"

    (I normally don't have time to respond to comments, but this was a rare opportunity that I embraced.)

  9. **Oops - misspelled "economically" in my haste - please forgive me.**

  10. Liberty Belle,

    First, as one who has written "teh" for "the" 10,000 times in his life, I propose that we overlook each other's typos.

    Next, I agree that there is a difference between paying the salaries of soldiers and spending money on entitlement programs. Still, both require redistribution of wealth. I just wanted to lay to rest "redistribution", per se, as an objection to government action. Our disagreement is not whether redistribution is right or wrong, but about which forms of redistribution are justified, and which are not.

    Which takes us to our fundamental disagreement about the purpose of government. The libertarian view is that it should be restricted to national defense, police action, and a few other activities that provide a secure framework within which we can enjoy "life, liberty, and the pursuit of happiness." I think that those are among the primary tasks of government, but I think that other tasks are legitimate as well.

    I believe, for example, that it is legitimate for government to undertake beneficial or necessary tasks that private enterprise cannot do as well as the people can collectively, or that private enterprise cannot do at all. For example: early in the nineteenth century, as our rapidly growing and industrializing economy required better roads and highways, the old system of private toll-roads was soon found to be inadequate. We developed a system of public highways to replace the toll roads, and these have been vastly beneficial to the nation as a whole. In doing this, the government assumed a role that went beyond that of providing physical security; it assumed an active role in developing the economic life of our country.

    Few people even among the Tea Party would advocate a return to private toll roads. "Socialized" infrastructure achieved a worthy goal that could not be achieved in any other way. The program of building public roads is justifiable in nearly everyone's mind by having met two tests: it performs a useful, even necessary task, and it performs this task better than private concerns could.

    President Obama's proposal to provide health insurance to the millions of Americans who cannot get it otherwise meets both of these tests, in my opinion. The goal is worthy; researchers at Harvard Medical School estimate that 45,000 Americans die every year for lack of medical coverage. And the goal cannot be met any other way. These Americans are without coverage precisely because, for one reason or another, private insurers won't give them coverage.

    But, should some people be made to pay for benefits that others will enjoy? I would say that in a society and economy as complex as ours has grown to be, many individual measures are required that some pay for and others benefit from. The question to ask is not whether individual government programs make us winners or losers, but whether, in the aggregate, we are benefitting as much as we are contributing.

    I feel that I am benefitting as much as I am contributing. It's a rough calculation, of course, but I still am able (in spite of living in the People's Republic of Massachusetts) to live in my own home, buy more books that I can read, eat too much, and go on vacations when I would have been happier staying at home.

    And I'm willing to pay a little provide health insurance to the millions of Americans who can't get it from private insurers. They are, after all, my fellow Americans.

    BTW: I am impressed by the civil tone of the back and forth on this site. It's been a pleasure.

    PS: Liberty Belle -- if you read Anna Karenina, get the translation by Volokhonsky and Pevear. They are the best!

    Yours, Anonymous #2

  11. Liberty Belle --- about taxes: By your own admission, then, a robust economy is compatible with a top marginal tax rate of 70 percent, which is dizzyingly high compared with what we have today. This, among other things, suggests to me that the relationship between economic performance and the tax rates and changes in fiscal policy is far more complicated than the Laffer-Curve formulation: low taxes --> economic expansion --> increased revenues. In my 60 years on this Earth, I have found that generally, one does not get to eat one's cake and have it too. (Alas!)

    The effect of changes in fiscal policy seem to depend on circumstance.

    Raising taxes can have different effects. In his second term FDR (as you point out) became concerned about the federal deficit and raised taxes, thereby nipping in the bud a promising recovery. In his first term, Clinton cut spending and raised taxes to bring down the federal deficit; this resulted in lower long term interest rates and prolonged economic expansion.

    Lowering taxes can have different effects, too. JFK, you say, stimulated the economy by lowering taxes, and the 60s were in fact prosperous. But George W. Bush's repeated tax cuts resulted in ho-hum economic performance followed by a bust (roughly, the tax cuts and a capital glut blew speculative bubbles, and lack of effective regulation of the financial markets allowed the bubbles to grow and grow and grow ....)

    All of this suggests to me that the simple formulation that taxes are always bad (at least for the economy) leaves some important factors out of the picture. Circumstance is king, and a very tricky king at well.

  12. ...continued from above...

    This, of course, is the fallacy of the Abraham Lincoln quote. What happens when the person can't build their own house? I think the answer is that society should give him tools and lumber because they are cheaper in the aggregate than having the man tear down the other man's house (and I surely agree with you that this isn't a good response from someone who has no hosue... but it is the usual response, and perhaps not entirely unmotivated if we understand his frustration and impotency in the situation). Let's have entitlements, but calibrate them so that society in total loses the least and we maximize the total economic pie.

    I'm not entirely sure what is the key difference you identify between the practical and philosophical arguments here, but I'll just say that yes it is best to stand on your own two feet and live on what you earn. However, I must once again say that philosophical or not, this is still an oversimplification. There are people who cannot stand on their own two feet
    (whether they want to or not) and they are going to cost the rest money. The debate on entitlements (and healthcare, and all these economic issues) should be about how best to minimize these costs, not just hope they go away.

    Really, we're on the same page here. If we simply state "let's minimize the negative impact of those who diminish the total economic pie", then I think we can agree. But society should study the facts first. Progressives should be open to the idea that entitlements might be too high and it would be more effective to lower them. Conservatives should be open to the idea that entitlements do have a role to play in enlightened self-interest and wealth creation. We should let good economics determine where to set the bar, not ideologues.

    That's my point...

  13. Anonymous #1, here again. Saw the other comments and thought I'd address them. Oh, and I'm not PG, whoever that is.

    Firstly, I didn't call you greedy. It's perfectly natural to want to keep what money you can. Enlightened greed is fine with me.

    Okay, so first let me address midnightrider's comments.

    Firstly, I don't think the Pelosi's, Kennedy's, Rockefellers out there don't pay taxes. I think they play within the bounds of the same system everyone else does (Pelosi seems a particularly strange name to make it on this list, one way or the other). Taxes aren't paid into congressmen's bank accounts, so I don't really know what you're accusing them of here. Still, let me be the first progressive to say that if they're making money illegally, they shouldn't get to keep it.

    As to the argument about "why don't progressives realize the pie changes size?", well, I don't think we've forgotten that. In fact, this ties in nicely to the argument about greed that Liberty Belle put forward...

    **Oh, and Midnightrider, your argument that aid to the poor doesn't work because it hasn't worked in Africa is really one of the weakest arguments I've ever heard. To buy this argument I'd have to ignore the rampant corruption, disease, and many other problems that Africa has. Those are the root problems that afflict it, not too much foreign aid.**

    Yes, there are people out there whose economic activity increases the size of the "pie". Entrepreneurialism is a great thing, and I fully support it. However, there are also people out there who make money while simultaneously making the pie smaller for everyone else. Whether it's investment groups that buy up a previously-profitable company, tear it up, sell its constituent parts for profit and leave hundreds without jobs, or high frequency traders using computer algorithms to buy and sell stock by the nanosecond (extracting billions from the stock market without adding any value), or corrupt hedge funds that use short-selling to profit from a company's demise (and using public opinion to help ensure the company indeed fails). I'm not saying that all the entities listed above are crooked, just that many of them are, and often they are morally grey.

    This would be a good working definition of greediness: those who get short-term profit from destroying long-term total value. This is the kind of greed that we really need to address in this country. Government should be in the business of supporting practices that increase the size of the pie, as well as regulating practices that decrease the total size of the pie.

    As for entitlements Liberty Belle, I think they can work within a system of enlightened greed. Take medicaid, for example. Medical expenses tend to go up when ignored. A person who goes to the doctor with a cough gets billed $100. When that person can't pay the $100, they stay home, and the cough gets worse, eventually costing them $2000 for an emergency room visit for pneumonia (okay, this is totally made up and I have no idea if the costs are right, but the basic idea is there). Now, this person can't pay for treatment, and society is going to have to pay his bills one way or another. Even if we just let this person die, it's going to cost somebody SOME money (lost productivity, funeral costs, etc). Rather than pay the $2000, why don't we just agree to pay the $100 up front? Sure it would be better if the person could pay their own way, but there's a growing part of the population that simply can't. Society loses either way.

  14. Well said! It's refreshing to read such reasoned rationale. Now, let's hope that these concepts keep gaining traction in our culture, because the very progressive mentality you argue against is so very ingrained.

  15. A little off topic, but here goes: Lincoln quotations need to be verified, because he has had a lot of words put in his mouth over the years. The best way to verify Lincoln quotations is in Donald Fehrenbacher's "The Recollected Words of Abraham Lincoln". Fehrenbacher tracks down the sources for hundreds of "quotations" and then estimates the likelihood that Lincoln actually said them. The results are sometime startling: there is little reason to believe, for example, that Lincoln ever said "You can fool some of the people some of the time .... etc. etc."


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