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.
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:
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.
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.
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