COMMENTS ON CHAPTER SIX (REDISTRIBUTION)
[ABSTRACT of this chapter: It is commonly alleged by theorists that there is a deep conflict between the ideals of LIBERTY and EQUALITY, because only by coercive taxes can the rich be brought to subsidize the poor. The heretical claim is made here that adding redistributive taxes to an already-extant tax-base does not increase coercion at all! Then the further claim is made that using redistributive taxes to fund a social floor could truly increase the liberties of the poor (by minimizing economic coercion) without threatening the liberties of the rich. (And of course rational redistribution presumably increases the important opportunities of the poor, sacrificing only trivial opportunities for the rich.) Therefore these two great ideals, properly construed, are mutually reinforcing, not conflicting.]
GOVERNMENTS COOPERATING TO CONTROL CORPORATIONS?
We mustn't place much hope in such a reform: the natural reluctance of 'sovereign' governments to restrict their policies by international agreements is strongly bolstered by the judicious lobbying done within each government by the rich corporations. (Americans who aren't much bothered when 'American' corporations buy influence with Congress & the White House are suddenly shocked to discover that foreign governments and corporations are also buying influence in this free market. Money talks, in every language--money has no nationality.)
NEED FOR ACADEMIC TENURE: Profs who 'back up' incompetent colleagues are contributing to the risk of having tenure abolished altogether.
We need to invent workable procedures for weeding out obviously bad performers
while still protecting faculty dissidents.
TREND TOWARD NON-TENURED UNIVERSITY TEACHERS: At U of Cal, Berkeley, graduate teaching assistants went on strike. 75% of all class-sections had to be cancelled! Most students there are taught by teachers with no academic freedom.
"TRADING YOUR BIRTHRIGHT FOR A MESS OF POTTAGE":
Readers of the Bible will recognize this reference to the story of how
Jacob 'bought' Esau's inheritance by offering the hungry slob a bowl of porridge
for it. /However, if Esau were really starving at the time (temporarily), this might
be a rational choice for him.
The issue may not be between liberty and COMFORT, but between liberty for
the rich and SURVIVAL for the poor. At this point, right-wing thinkers commonly
shout "Give me liberty or give me Death!" (But how much liberty does one have in
the grave?) That slogan says that death may be preferable to complete slavery. But
even the hottest libertarian would not prefer death for himself to the modest
restriction on his 'liberty' from,say, a five-per-cent redistributive tax! In any
case, I show in the text in Chapter Six that initiating such a tax does not affect the
liberty of the rich at all!
REDISTRIBUTIVE TAXES: Tax credits(not just deductions) should be
allowed for contributing to worthy causes (approved by most citizens). Then
I will be able, to some degree, to pick which worthy cause I prefer
my money to go to.
WELFARE ABUSES:Even non-libertarians may feel indignant at ABUSES of the
welfare system, just as many non-pacifists feel indignant at the--far greater, indeed
breath-taking--frauds and boondoggles involved in 'defense' spending. Almost any
government program will warrant some chagrin at the way it misuses the taxes it
raises. Still, most Americans don't propose to dismantle the Pentagon just to stop
the boondoggles; and the abuses of the welfare system don't justify dismantling
the 'social safety net' altogether. The welfare system is 'just overall', in that its
necessity warrants its continuance, even with inevitable abuses.
COERCION AS TEMPTATION:
Some defenders of slavery said that anyone who IS a slave DESERVES to be one--by rejecting suicide, the slave shows that he basely ranks mere survival ahead of
his integrity, his human dignity.
ECONOMIC PLIGHT OF ORDINARY AMERICANS:
--Robert Reich, the Secretary of Labor, says that our Middle Class is now divided into the 'Winners', the 'Losers', and those in between who feel 'Threatened'. This 'threatened' class could soon be the majority.
--Thousands of people now on welfare are being forced onto the job market. They will then be competing with the working poor (30% of workers); there aren't enough low-skill jobs for all the low-skill people.(In 1997, there were between 33 and 222 less-skilled workers for every entry-level, LIVABLE job in Illinois. If we don't care about 'livable' jobs, there were 4-6 workers in search of every entry-level job in Illinois.) Local governments especially will want to replace present workers with ex-welfare people. /In the recent 'full-employment' boom, one temp agency said, "Without the welfare-people, we'd have had to raise entry-level wages by 5%." (..illustrating Marx's claim that the 'reserve army of the unemployed' are valued by bosses as a way to restrain the demands of the workers.)
--Since 1980, the tax-burden has shifted markedly from taxes on the rich
to taxes on the ordinary man (e.g., from progressive income taxes to regressive
sales taxes and social-security taxes). The media screams about the burden of
income-tax, but the family of four earning the median income of $35,000 paid
$5300 to social security tax and only $2700 to income tax. (People dream that
they're paying social security into a 'fund' for when they retire; but the Supreme
Court has held all along that there is no right to a social security return;
the 'fund' is largely fictional; it's just another tax.)
COMPETITION FROM IMMIGRANT WORKERS: "Americans without high-school diplomas have seen wages fall slightly because of new immigrants," said
a Rand Corp. economist; "but the vast majority of Americans are [better off]
because of lower prices from immigrant workers." Are lower prices for junk
an adequate trade-off for humiliating unemployment or wages one can't raise a
family on?
COMPETITION FROM WORKERS OVERSEAS: A top German economist
pointed out that worriers about inflation from wage-raises forget that when
a labor market in one country 'gets tight', a company can look abroad. The global
services labor pool is just an E-mail message away. Accordingly, credit card
providers, insurance firms, phone companies and technology service concers are
placing crucial functions all over the world..Even software design is being moved
offshore. U.S. corporations know that many overseas workers know English.
RICH/POOR GAP : 358 billionaires throughout the world together control assets greater than the combined annual incomes of 45% of the world's population (about 2.5 billion people)./ But 89 countries are worse off than a decade ago.
19 countries are worse off than they were in 1960. (And this was before the 1998 depression in Asia.) The U.S is grouped with Brazil, England and Guatamala as having the national percapita income figure out as 4 or 5 times higher than the average income of the poor.
U.S. families earning more than $100,000 per year went from one in a thousand in 1953 to 1 in 25 in 1988. The male college grad made 60% more in 1988 than a high-school grad. The income of the latter group went down 22% in 15 years./Average real wages in 1997 were $1.20 lower than in 1973. The median family income ($37 thousand) has stagnated since 1973. Even the wages of 2-worker couples with college educations have stagnated. Hourly wages for most couples fell from 1979 to 1994. (Workers with 'some college' worked 17% more hours, bu earned only 4% more wages.) Only the top third of workers (those with 4-year degrees) got more-per-hour than before in '97. Hourly wages for non-supervisory employees have sunk by 13% since 1973.
This has happened in no other industrialized country.
ABOLISHING ESTATE TAXES? Defenders of this proposal say they're trying to
protect 'family farms and businesses'. But these constitute only 7% of estates.
Most estate money is in bonds, stocks, cash, real estate (other than personal
home), insurance,etc.
THE RICH ARE BEYOND THE CONTROL OF GOVERNMENT: 'THE
SOVEREIGN INDIVIDUAL' (by J.D. Davidson and W.Rees-Mogg) points out
that computer-revolution makes savvy rich people independent of any
governments; they can bargain for tax and regulatory relief by threatening to move
assets instantly across borders.
Urgency of POVERTY problems:
In one poor,black Chicago community, local businesses sank from 800 to 100. In
many inner-city ghettos, MOST adults are not working. (They don't show up in
unemployment statistics, which record only those looking for jobs.)
The number of children in poverty with working parents rose 65% in 20 years. Half of these children have two parents at home, with the father working.
--It's commonly said that Capitalism does more good by creating wealth than does charity by merely distributing it.
But imagine an island (A) where there is already a great surplus of potatoes, so they are burning their surplus to take off a slight morning chill. Meanwhile, people on another island (B) is going hungry from lacking potatotes.
Now imagine Mr. Producer, on island A, who devises a new way of doubling potato production--result: they have more to burn. Mr. Trader, on the other hand, devises a way to build a great ship that can haul some of the surplus potatoes to island (B) for sale there. An impartial observer would say that Mr.Trader has benefitted 'everyone' (on both islands) far more than Mr. Producer.
Now imagine a country where the very rich spend money on absurd luxuries (e.g., the Wall Street trader described as parking his half-million dollar-Ferrari in a garage alongside his $120,000 Porsche and his $17,000 Ducati motorcycle-- "I didn't have any toys as a kid", the man explains). If the government took money from him efficiently and gave it to educate poor people, or provide basic food, housing and health care for them, then the government would be moving this resource, money, to people who can put it to a better use than the rich man can--assuming the government did not interfere excessively with needed investment. So a redistributing government could be adding far more value to a society as a whole than does a corporation that produces more luxuries during a glut.
Consequential arguments vs. Redistribution: One of the most impressive such arguments (from THE LAW, by Frederick Bastiat) may be summarize thusly:
"It sounds great to have the government not only take care of roads, national defence, etc.--expenditures that help ALL the citizens, but also to subsidize individual citizens who need help. The problem is that, in such a society, practically everyone thinks they need help from the government. (The average citizen's attitude is 'Tax him, subsidize me!') The government ends up, not taxing the rich to help the poor, but taxing the powerless (usually the lower middle-classes) to subsidize the powerful (as in 'corporate welfare')."
However: we are now , willy-nilly, in a society where the government is expected to help specific individuals. If we cancelled all subsidies to the poor (as we have recently cut them severely) the rich and powerful would go right on demanding, and getting, subsidies.