Archive | December, 2011

Progressive Taxation Increases Incentives to Work for the Vast Majority of People

7 Dec


Unbelievable, the amount of shit this guy is talking. For all the fucking idiots who are so convinced that raising taxes reduces any incentive for people to work and innovate, think about this.


The wealthiest 1% earn at least $800,000. The median salary is around $30,000. That means that an individual chosen at random has a 1% chance of becoming really wealthy and living a very comfortable life.


What kind of incentive is that? No matter how hard you work, how smart you are, how cleverly you play the markets, statistically speaking only 1 in 100 of you are going to translate that hard work and talent into vast wealth. Are we really suggesting that only 1 in 100 people work hard enough to ‘deserve’ the mega salaries of the 1%?


The price of failure to break into a the upper echelons? A salary somewhere around the median – either a little above or below $30,000.


For me, that seems like a really fucking BAD system of incentives. The pie doesn’t increase proportionately to the total ‘volume’ of hard work people are putting in to making themselves well off. No, instead, the vast majority of people work their asses off and DON’T MAKE IT into the elite, and end up sitting on a $30,000 salary for the rest of their lives.


Wouldn’t it be more of an incentive for wealth to be spread more evenly? What if the richest 30% were earning an average of $300,000 and the median salary was $80,000? Doesn’t that say to the average person – there is a MUCH BIGGER CHANCE that if I work hard I WILL BE COMPENSATED for my hard work!


Yes, it’s entirely possible that a more progressive taxation system will reduce total growth, and lead to a pie which grows at a slower pace, or even shrinks for a period. But it’s also OBVIOUS that in this scenario it’s very possible that a vast majority of poorer people stand to gain – and that this number is vastly larger than the number of rich people who will inevitably stand to lose.


Given the assumptions of economic theory about self interest, why wouldn’t this in fact be desirable? Given that everyone is rationally self-interested, why is it that 99% of the population chooses to ignore the possibility of increasing their own share of the pie through progressive taxation?


Don’t listen to the dogma about loss of incentives through progressive taxation. Think about it properly.

Some notes on ‘The Idea of Justice’

1 Dec

Doing some reading of Sen’s ‘The Idea of Justice’, and thought I’d take some notes for later perusal:

Sen is talking about Rawls’s original position:

– no knowledge of personal identity, attributes or endowments.

– representatives choose, under these conditions, the rules for the fair running of society.

He doesn’t go into details, but from what I can remember two fundamental rules emerge:

1. Liberty and freedom of opportunity is given a huge priority. 

2. The institutions of society must be structured so that those worst off in society are as well off as they could be, out of all possible alternative setup of institutions. 

Nice quote from Rawls: ‘…I want to say that one conception of justice is more reasonable than another, or justifiable with respect to it, if rational persons in the initial situation would choose those principles over those of the other for the role of justice. Conceptions of justice are to be ranked by their acceptability to persons so circumstanced’. (Page 55, in Sen).

Sen’s overview of his critique of Rawls’s two principles that emerge from the OP:

– ‘I have to express considerable scepticism about Rawls’s highly specific claim about the unique choice, in the original position, of one particular set of principles for just institutions, needed for a fully just society. There are genuinely plural, and sometimes conflicting, general concerns that bear on our understanding of justice…Many of them share features of being unbiased and dispassionate, and represent maxims that their proponents can ‘will to be a universal law’. Indeed, plurality of unbiased principles can, I would argue, reflect the fact that impartiality can take many different forms and have quite distinct manifestations. For example, in the illustration with the competing claims of three children over a flute, considered in the Introduction, underlying each child’s claim there is a general theory of how to treat people in an unbiased and impartial way, focusing, respectively, on effective use and utility, economic equity and distributional fairness, and the entitlement to the fruits of one’s unaided efforts’. (This is all from Sen, 56-7).

An immediate objection springs to mind: how can we say that the general theory of ‘entitlement to the fruits of one’s unaided efforts’ is an unbiased and impartial theory? Seems obvious that this is exactly the kind of theory that Rawls’s original position shows IS in fact biased, in that we don’t have full control over the productiveness of our labour efforts!