This long attack on the unfairness of progressive taxation from the Hoover Institution by Kip Hagopian usefully embodies a lot of right-wing delusions about income inequality. It argues that a person's income is determined by three things:
This is obviously written to minimize the role of luck. It acknowledges that Bill Gates made more money by choosing to become a software mogul than by choosing t be a high school math teacher. But, of course, Gates (as he has acknowledged) benefited enormously not just from his family situation but from the timing of his birth, which put him in the work force at a moment when computing technology was set to explode. If he had been born a decade or two earlier, he probably would have been an anonymous lab geek if he had followed his mathematical inclinations, or perhaps the owner of a successful grocery store chain if he had pursued his entrepreneurial instincts.
What's more, it is demonstrably not the case that income levels simply reflect aptitude and effort. Now, obviously being from a richer family affords all sorts of advantages, including physical, emotional, and cultural development. But factor all that out of the equation and assume that it's just fair for all those things to translate into higher academic performance and higher earnings.
Even assuming that, there are massive advantages inherent simply in being born rich (and disadvantages in being poor.) My favorite example, simply because it's so dramatic, is that a child born into the lowest-earning quintile who manages to attain a college degree is less likely to be in the highest-earning quintile than a child born into the top quintile who does not attain a college degree. This is all the more remarkable when you consider that making it to, and through, college is far harder for poor kids than rich kids even at a given level of aptitude. (Two thirds of the kids with average math scores and low-income parents do not attend college, while almost two-thirds of high-income kids with average math scores do.)
How would Hagopian explain this? The lower-income kids managed to beat the odds by graduating from college, yet they make less money than the rich kids who beat the odds in the other direction by not going to college. By any measure, the former group has more aptitude and greater work ethic. Now, clearly right-wingers in general, and wealthy right-wingers in particular, like to think aptitude and effort and choices determine how much money you make. (Hagopian is the co-founder of a venture capital and private equity firm.) You see this from Greg Mankiw, Arthur Brooks, and on and on. The right-wing worldview is based on a moral premise about the relationship between merit and wealth that is demonstrably false.
Self-justifying dreamworld indeed; it's high time we discussed class in America.
Of course we aren't supposed to have a class structure in America. We are all supposed to have Opportunity and by dint of virtue and hard work we can all get rich.
That's demonstrably false.
Self-justifying dreamworld indeed; it's high time we discussed class in America.
Of course we aren't supposed to have a class structure in America. We are all supposed to have Opportunity and by dint of virtue and hard work we can all get rich.
That's demonstrably false.
"The right-wing worldview is based on a moral premise about the relationship between merit and wealth that is demonstrably false."
True. Now, the more times you point this out, in more different ways, the more the REST of us may realize how the right-wing is screwing the public. As you point out, the right-wing is living in a self-justifying dreamworld, they are not going to change. So it's up to the rest of us not to buy in to this convenient, but false, characterization of America.
"The right-wing worldview is based on a moral premise about the relationship between merit and wealth that is demonstrably false."
True. Now, the more times you point this out, in more different ways, the more the REST of us may realize how the right-wing is screwing the public. As you point out, the right-wing is living in a self-justifying dreamworld, they are not going to change. So it's up to the rest of us not to buy in to this convenient, but false, characterization of America.
I always laugh when the use the example of a professional athlete. Yes, Jerry Rice is one of the greatest football players ever. Yes, Jerry Rice had considerable physical talents. Yes, Jerry Rice had an unbelievable workout regimen that honed those talents.
BUT, Jerry Rice got to play with two Hall of Fame quarterbacks (in an offense designed to Rice's strengths) and he only missed considerable playing time (all but one game) in one of his twenty seasons due to injury. On another team (maybe the Detroit Lions) or more injury prone, would he have had the same results.
This is not to denigrate Rice, who certainly had a legendary work ethic, but to point out that the real world is littered wi ... view full comment
I always laugh when the use the example of a professional athlete. Yes, Jerry Rice is one of the greatest football players ever. Yes, Jerry Rice had considerable physical talents. Yes, Jerry Rice had an unbelievable workout regimen that honed those talents.
BUT, Jerry Rice got to play with two Hall of Fame quarterbacks (in an offense designed to Rice's strengths) and he only missed considerable playing time (all but one game) in one of his twenty seasons due to injury. On another team (maybe the Detroit Lions) or more injury prone, would he have had the same results.
This is not to denigrate Rice, who certainly had a legendary work ethic, but to point out that the real world is littered with cases of people who had talent, work ethic, and opportunity, but had the misfortune of something bad happening to them. In other words, bad luck.
Dude makes it sound like earned income is deterministic, like there's this formula that could predict it perfectly if you could adequately measure all the variables. That's just bizarre. I've never read or heard of a single structural analysis of income determination that doesn't allow for various types of idiosyncratic shocks. It's not just that "parent's socioeconomic status" is a variable that has independent effects and should be considered apart from "aptitude"; it's that people get hit with bad news, bad luck, that has no relationship to any of their characteristics or background. Almost certainly there are thousands of people out there with Bill Gatesian levels of talent that aren't b ... view full comment
Dude makes it sound like earned income is deterministic, like there's this formula that could predict it perfectly if you could adequately measure all the variables. That's just bizarre. I've never read or heard of a single structural analysis of income determination that doesn't allow for various types of idiosyncratic shocks. It's not just that "parent's socioeconomic status" is a variable that has independent effects and should be considered apart from "aptitude"; it's that people get hit with bad news, bad luck, that has no relationship to any of their characteristics or background. Almost certainly there are thousands of people out there with Bill Gatesian levels of talent that aren't billionnaires or even managing successful grocery store chains, but are dirt poor. It seems to me a humane and efficient social policy (a) gets as many of them as possible earning and producing to their potential (cutting down the effects pure, random idiosyncratic bad luck, in whatever form it takes) and (b) protects the rest of them from grinding poverty and misery.
Also: great comment Lundell.
Also: great comment Lundell.
If eternity is an issue, then it's not luck at all, since it's harder for a rich man to enter Heaven than it is for a camel to go through the eye of a needle. For those not familiar with Hagopian, he wrote the essay The Inequity of the Progresive Income Tax. Right. I don't think we will be seeing Hagopian in Heaven. On the other hand, I don't believe they have venture capital funds in Heaven. I could be mistaken. About VC funds in Heaven, not whether we will be seeing him there.
If eternity is an issue, then it's not luck at all, since it's harder for a rich man to enter Heaven than it is for a camel to go through the eye of a needle. For those not familiar with Hagopian, he wrote the essay The Inequity of the Progresive Income Tax. Right. I don't think we will be seeing Hagopian in Heaven. On the other hand, I don't believe they have venture capital funds in Heaven. I could be mistaken. About VC funds in Heaven, not whether we will be seeing him there.
In addition to luck there are also market forces, which are frequently driven by decisions made by large corporations (for example financial firms). The "rough" carpenter who spent nights and weekends developing the skills necessary to qualify as a more highly valued "finish" carpenter may very well be in an unemployment line due to the mortgage crisis. Government also plays an active role. If he is employed, he'll certainly be making less in a "right to work " state.
I'm not even going to get into the Conservative tendency to choose examples where people train themselves vs. the majority of well paying jobs that require a degree or some formal training.
In addition to luck there are also market forces, which are frequently driven by decisions made by large corporations (for example financial firms). The "rough" carpenter who spent nights and weekends developing the skills necessary to qualify as a more highly valued "finish" carpenter may very well be in an unemployment line due to the mortgage crisis. Government also plays an active role. If he is employed, he'll certainly be making less in a "right to work " state.
I'm not even going to get into the Conservative tendency to choose examples where people train themselves vs. the majority of well paying jobs that require a degree or some formal training.
Agree with JC and the posters, but isn't the more correct response that this type of argument itself is a non sequitor? The claim that the rich are rich because of all their hard work and effort AND THEREFORE should not be subject to a progressive tax is the seed from which grows the dippy conclusion that progressive taxes punish the efforts of the country's brightest most tenacious... worse, it encourages sloth.
Why even respond in kind by pointing out the true (but less important) "luck" factor(s), when the more correct answer is that progressive taxes are not in any way something of a punitive measure, either against someone who was lucky enough to be born to wealth and certainly not agai ... view full comment
Agree with JC and the posters, but isn't the more correct response that this type of argument itself is a non sequitor? The claim that the rich are rich because of all their hard work and effort AND THEREFORE should not be subject to a progressive tax is the seed from which grows the dippy conclusion that progressive taxes punish the efforts of the country's brightest most tenacious... worse, it encourages sloth.
Why even respond in kind by pointing out the true (but less important) "luck" factor(s), when the more correct answer is that progressive taxes are not in any way something of a punitive measure, either against someone who was lucky enough to be born to wealth and certainly not against someone brilliant and hard working enough to make their own fortune. No, rather the progressive code exists to acknowledge that the rich derive more - MUCH more - share of the public good than the middle class and poor, and the uber-wealthy exponentially more so.
Why does the argument always seem to shift away from this basic fact and towards the back-and-forth of the specious (the rich are deserving and the poor are unworthy, saith the gop) vs the true-but-irrelevent (a lot of the rich were born that way, and the poor are hardworking but needy, we respond)... ?
The wealthy should pay proportionally higher taxes because they are beneficiaries of the largess provided by tax revenues in greater proportion - not simply greater amounts - than less wealthy citizens. Full stop.
Rayward, thoughtful and amusing as always my friend
Rayward, thoughtful and amusing as always my friend
It's also worth noting the extensive and well respected LSE study that charts social mobility.
The results are conclusive: Countries with high tax rates have higher social mobility.
http://www2.lse.ac.uk/newsAndMedia/news/archives/2005/LSE_SuttonTrust_re...
Interestingly, Britain and the US have the lowest social mobility, which of course means, any child born in the US that has a high work rate, and natural skill for their chosen profitable profession has less chance to move up in economic class than the equi ... view full comment
It's also worth noting the extensive and well respected LSE study that charts social mobility.
The results are conclusive: Countries with high tax rates have higher social mobility.
http://www2.lse.ac.uk/newsAndMedia/news/archives/2005/LSE_SuttonTrust_re...
Interestingly, Britain and the US have the lowest social mobility, which of course means, any child born in the US that has a high work rate, and natural skill for their chosen profitable profession has less chance to move up in economic class than the equivalent child in a high tax, "socialist", European country like say Denmark, for example.
If the Right seriously believed in this aptitude/hard work and profession model of social mobility, they would significantly increase taxes on the rich to fund free third level education for all.
One could write a college thesis on what's wrong with this social theory, but I guess you could boil it down to luck if you use the term broadly enough.
One could write a college thesis on what's wrong with this social theory, but I guess you could boil it down to luck if you use the term broadly enough.
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