Rawls on Inequality and Redistribution

Another great discussion at Crooked Timber growing out of a oversimplified but interesting essay by John Quiggin.

I'm only a fraction of the way through the over 400 comments and already some are great, such as #121 by Plume--high corporate and personal income tax rates help encourage re-investment.  The current neoliberal low taxes on such income results in disinvestment, speculation, and conspicuous gilded age real estate.  James Galbraith makes the same point in his essential book Predator State.

Another great comment by Plume is #112.  The first part is clear.

We did, however, have a long period of time when the top marginal rate was above 90%, and that worked just fine. In fact, when it was in place, America had its one and only middle class boom.

The second part is, I concede, a bit opaque, and way beyond normal discourse on these subjects, but seems to be a fusion of something nearly like MMT and communism.  I like it, but a lot of details are left out, such as how spending is done, if one person's spending is another person's income in a market system, how does it work in Plume's system, if all income comes from "public sector."

And Plume's #101 is great, The Sophist's #95 great and funny.

Much discussion about Pareto Optimality, including a thread that it does not exist.  I won't try to say it doesn't exist (as a formalism or algorithm) but it is horrible and should not be used in political economic theory.  Calling it "Optimality" makes it sound good, but what it really means, as Bruce Wilder suggests, is rich people saying to poor people "What's mine is mine and what is yours is negotiable."  I accept what Thornton Hall says in #86.

Peter K. nails it when he says in #78:

The economy was better regulated, taxed, managed in the 50s, 60s, 70s, until the neoliberal-Reagan revolution of the 1980s. There was more prosperity and rising incomes. There wasn’t a concentration of wealth in the hands of the regulators as public choice theory(sic) would have it. 

A later commenter quips that public choice theorists created the world they described when neoliberals following their advice made corporations their own regulators (and then the wealth concentrates in the regulators hands--the regulators who are the corporations themselves).

Quiggen makes a good point (I like it better than his OP) in #48 that in the absence of strong redistributional or predistributional support (such as legal support for labor unions) a dispersion in capital ownership is unsustainable.  The big will eat the small all over again, as Marx observed.  So the idea of a society of small capitalists is Chestertonian romanticism.  I think this exposes the weakness in many utopian reform ideas (though I still favor land reform and such--it's not enough).

There's a long running argument about Utility.  That it's a useful concept was demonstrated or assumed by the OP.  But some claim such a vague notion can't be subject to mathematics, etc.  That argument is poor I think, but a much better argument is that Utility might be a vector and not a scalar.  If it's a vector, utilities can't simply be added up as scalars as economists do, yet another slap at completely collapsed intellectual edifice of classical economics.  However I'd like to hear what the vector of Utility is like such that it cannot be collapsed in some way to a scalar.  Why not simply use the magnitude of the vector?  What aspect of vectorial Utility cannot be scalorized?

Many commentors make the point that Rawls wasn't concern with Utility at all, and so the OP thesis that Rawls would choose the top of the Laffer curve is laughable.  Quotes are given in which Rawls clearly says that fairness is more important than how much is produced.  I found this to be a great weakness of the OP.  I had sort of decided a few years back that I wasn't that interested in Rawls either (though I'm impressed if he values fairness above total production).  However I looked at this blog as a Party, an excuse for a lot of smart people to talk about things related to inequality, with most of the meat in the comments, and it doesn't disappoint.  The first few comments I've read by my favorite commenter at CT, Bruce Wilder, don't seem up to his usual length and profundity (though #12 is a gem, the crucial observation that income may come from either production or usury).  But Plume has really stepped up to the plate with many good comments.

The elephant in the room in all conversations about economics or the economy is sustainability.  We've largely built both without any serious regard for sustainability, and have well overshot the mark in terms of use, production, or destruction of many natural things.  ZM in post #24 is the first to address this, but he doesn't do very well on my re-reading (I was cheering too hard the first time).

The key point from this is that all the incentives given by capitalism from the beginning have been exactly the wrong ones.  By doing well, people are well along the way to destroying the planet.  That is what the marvelous incentives of the "market" have done.

So given how bad this will ultimately be, exact equality of circumstance would have provided better ultimate outcomes than capitalist profit and inequality.

So when "solutions" call for more "growth" or suggest that more "growth" is a good thing, that's exactly wrong.

We must have less material consumption total per capita, but far more equally distributed, so there is prosperity for all.  That fundamentally means less money and power for those on the top.  We can't get to a desirable world otherwise.  Pareto Optimal outcomes are the least desirable ones.

Along with that, a large voluptuary reduction in child birthing would help make the sustainability crunch less painful.  Funny there's almost never any discussion of that anywhere.  It's a difficult thing to intellectualize let alone realize, so we ought to be talking about that a lot more.

How the University of Illinois caters to the wealthy

Here's a key post (though now nearly a couple weeks old) on how rich donors called the shots regarding Steven Salaita's dehiring prior to the vote by the Board of Trustees (who are themselves just another bunch of rich people and rich appeasers).

Here we have one little example both of the power of the rich (of course, we live in a Plutocracy) and the costs associated with having people who are rich, along with the systems of law and property which enable people to get rich (which supposedly make us all better off by providing the right incentives--which is nonsense).  Those people will then destroy everything worthwhile in society (democracy, human rights, art, science) in order to maintain power for themselves.

The benefit to society for having a capitalist class are not as great as the losses.  The best example is Global Heating.  The rich are always ready to sink the entire ship so long as they will continue to be on top.

Krugman on Syll on Keynes

Very interesting.

Actually, if not an actual prophet, Keynes was at least the smartest economist ever, whose ideas have stood a long test of time (while competitors only crumble, even the great edifice of Smith, Ricardo, and Walras lays in ruins).

Some of his ideas were influential in economics, and therefore it is interesting to understand in particular the General Theory, the most influential part of his contribution to economics.  I would go beyond saying has the best economic ideas and theories--he has about the only good fundamental ones, and the only good way to start.

It is wrong to start with Adam Smith's rational baker.  Fundamentally wrong (and so, in a peculiar way which casts a good light on the misanthropes).  It tells you little about how the overall economy operates.

But since Keynes was such a smart man, it might be a good idea also to look at all the rest of the things he said about economics, and everything else.  Not only was he a smart man, but he put his intelligence to the benefit of his society, as much as his influence lasted and lasts.  So he was a good man, and a smart man, and therefore be of great benefit to know what he said publicly about most things.

As much so as doing, what I do far more often, as reading Krugman's take on things.  Another good and smart man, maybe not Keynes, but still worth reading.

College for All

I would like to see free college for all in the USA.  Free college in all public universities, including the best.  Free college along with the expectation that most will go to college, much as we have that expectation for High School today.

College should not be understood as job training, but as general education, "liberal arts" education to help train people to think and become self-educating, to become familiar with the arts and sciences of their civilization as they actually are, and not filtered through a private slant.  The word is complicated enough that schooling should continue to the 16th grade because people need that much education and they need to reach that age before education stops.  And industry is productive enough that we can get by without people in that age range having to work.  Having them not work also helps maintain good wages for labor.  There should not be workers for every possible job, but only enough workers to do what most needs to be done, and needs doing enough to command a high wage without question (even though there is never any guarantee that any wages will ever come close to the social value of work, and they especially don't for lower paying work, because wages are not set by a mythical free market but by conservative traditions).

But as long as college is not free, there should be no expectation that everyone should attend college, AND there should be no stigma or loss of the possibility of having a good career without attending college.  And no family should be so poor that kids or young adults of college age are unable to attend college because income is needed from the young adults to sustain the family.

Thus I would sort of agree with the kinds of things that Robert Reich says here, in the world as it exists today.  I remember Hedrick Smith making these arguments in the 1980's.

But we should remember that the better solution would be to have free college for all and a far more equal society.

Keynes: Love, Beauty, and Knowledge

Beautiful review of Skidelsky's biography of Keynes by Brad DeLong ten years ago.

A dynamic model of the economy

A Norwegian has developed a dynamic block diagram analysis of the macroeconomy which looks quite good, it demonstrates elementary Keynesian concepts like the multiplier, and also shows the inconsistency in IS-LM wrt money stocks.

Jews are active citizens

Regulars of my discussion group didn't at all agree with the idea the Israel promoted the Muslim Brotherhood, in order to keep it's neighboring states weak.  Weak is one thing, they already were weak, collapsing chaos is another, and that's not what a settler colonial states need.

I didn't find that argument very believable either, and, btw, I employ the least amount of self censorship here, in order to cover the deepest depths, though sometimes off target, and I apologize for some clearly anti-semitic concepts in earlier posts.  As a clarification, I believe it would be impossible for any religious group to create a settler state as zionists did and then have it become peaceful and democratic. It's a miracle Jews have done as well as they have in Israel.  As I claim below, Jews are good at making civilization.  However the concept, plan, and timing, and location were fundamentally flawed, and for that reason Israel cannot succeed.  It turns out also that the best nation is the one not tied to the baggage of state, etc.

One idea approaching anti-semitism, is a sort of superiority concept.  Jews culturally teach their children to be active citizens, resisting oppression (and the deepest judiasm also calls on Jews to fight the oppression of others…the basic deep rule of Judiasm is to do more for others than self…but I digress), and so on.  That makes them more politically effective than their numbers would suggest.  In the US they are 2% of the population, but most people believe they collectively have much more influence than that.  Maybe more like 10%.  And that's enough to have great impact on a centrist majoritarian government such as the USA.  And of course the military giveaways to Israel are really giveaways to US military equipment makers anyway, so Israel becomes to the US Congress an excuse for another exchange of gifts and bribes, an automatic 100% vote is assured.

Is it anti-semitic to say that Jews are excellent citizens?  The above argument doesn't relate to shadowy underground mafias and the like…just the ordinary rules of democratic political participation, which, sadly, many minorities and the poor generally don't take advantage of--though I am not saying that all the problems of the poor can be laid on their own doorstep for this or any other reason…but active political participation and better organization could help them.

Now, to be clear, there are also very effective lobbying/bribing organizations such as AIPAC, rich bribers, and so on, maybe even mafias as there are for other nations, and I don't approve of those things, though they are also a given in US politics, and Jews will have more impact than Palestinians due to lobbying clout rather than justice or public opinion.

Jews are smart (it isn't antisemitic to say that is it?) so AIPAC is an unusually effective organization.  The problem is not with AIPAC and it's Jews (well, necessarily) but rather that lobbying like that should be illegal, elections should be publically funded, anything else should be considered bribery.

Anyway, back to the argument that Jews are active citizens...

This also means that a fair settlement of the future of Palestine--including full right of return for all Palestinian refugees--wouldn't necessarily make IP (Israel/Palestine) unlivable for the Jews.  I think much Israeli/Jewish fear about this is unwarranted…I believe the Jews would ensure at minimum an IP state fair to them but probably even more profitable than the current one…as has happened in South Africa…though one does imagine in the wake of a Fair Settlement (which itself can be hardly imagined) many Jews would choose to leave IP, not necessarily allowing this fair multicultural state to be tested.  But in fact Jews, Muslims, and Christians lived in peace together under Muslim rule in Palestine for most of more than a millennium, notably the Ottoman empire.  So in fact the belief that this is impossible, that Arabs can't run a reasonable multicultural state is itself antisemitism toward arabs.

My discussion friends don't believe the full Chomsky argument, that Israel is mainly a US project, and it's incredible history of support in the USA stems from its importance to US military planners, and he discounts the usual conspiracy arguments and "unbelievable" effectiveness of Zionist lobbying on that.

My retired military friend didn't agree with that at all.  He said the US State Department has long been hostile to Israel, as have probably a majority of the US military establishment.  US Military do not see Israel as a dependable ally or client.  Previous Israeli actions, such as attacking a US ship, have reinforced that feeling.  He felt that Israel's success in maintaining US support had to come entirely from Zionist success in politics, as well as military industrial self-interest.

I think there may be more going on in the military than my friend concedes, but largely it is Zionist effectiveness in politics which has led to their success, as he says.  And it is not antisemitic to say that Jews are active citizens, as more others should be.  Nor that AIPAC is an effective briber, and there shouldn't be such things.