Monday, December 19, 2016

Redistributing Wealth from the Bottom Up

251 days until the first class.


Okay. Calm down. Everything will be fine. Deep breath.

I have two three-day weekends coming up and a five-day weekend in the middle of January. It’s a good time to get things done – with much of my work going into, “A Template for Revolution”. This document is actually turning into a list of things that I would recommend as a part of a society’s morality insofar as, to the degree to which they are adopted, to that degree society will be much improved.

The first part of the document has stressed promoting an interest in non-violence, opposition to bigotry, rules governing the criticism of an idea, and moral aversions to lying and intellectual recklessness. This is not meant to be an exhaustive list of all that morality requires. It is, however, a list of things that society can improve upon and, to the degree that it does so, society generally will be much improved.

The second part has so far focused on the accumulation of wealth by a few families into “corporate feudal estates.” In it, I have presented arguments against the libertarian principles that seem to justify the concentration of wealth into the hands of a few corporate-feudal families, with the rest of us substantially serving as “serfs” on corporate-feudal estates that are owned and operated by corporate-feudal nobility. I have completed a section arguing against the natural moral law defense of these principles, and a section that responds to the utilitarian defense of these principles.

Against the former, I have argued that an intrinsic moral value does not exist – that what we have is a set of principles that people generally have reasons to promote (or not) insofar as the result serves their interests. Against the latter, I have argued against the idea that a free market assigns goods and services to those who value them most. (This is true only in a society where wealth is substantially equal; otherwise, those with more money have the capacity to bid goods and services away from those who value them more but who have less money.) I have also argued against the idea that if we allow any wealth transfer that we will slide down a slippery slope to the point where we have no wealth production and people only seek to obtain wealth by taking it (using the government to transfer it) from one person to another.

However, the utilitarian libertarians are not entirely wrong. If a policy takes a small amount of wealth out of the pockets of a large number of people, and deposits it into the bank accounts of a few people, this generates unequal incentives when it comes to getting that policy adopted. It is known in some circles as a “law of concentrated benefits and diffused costs”.

Consider, for example, a policy that takes an average of $1.00 out of the pocket of each American and puts it into a corporate bank account. For example, the government puts a tariff on imports that drives up the price of the commodity being protected to the point that Americans end up spending $1.00 per month more (on average) for this good. This wealth goes into the pockets of the companies that are in the protected industry. In other words, each American loses $1.00 out of their bank account, and a set of companies pocket an extra $300 million per month.

If you are on the side that has a potential to make $300 million per month for the indefinite future, you have reason to invest a great deal of money into getting that law passed. However, the 300 million people who will lose $1.00 per month has almost no reason to get involved.

The companies that stand to make $300 million per month in added income can start to work on getting their policy passed by hiring public relations firms to come up with a campaign that will help get the law passed. The public relations firm can begin by brainstorming on arguments that have a chance of influencing decision makers (or the public), then testing their ideas with a series of focus groups and surveys. The idea is to come up with a set of claims (measuring only their effectiveness – the degree to which they are true or false being important only insofar as they influence effectiveness. As the Donald Trump campaign has made abundantly clear in the past two years, even the most blatant lies and misinformation can be extremely effective.

Once these professional deceivers figure out which stories will work (which is quite different from figuring out which stories are true), they go to work getting the stories to the public. Any firm worth its salt can quickly come up with a list of bloggers, reporters, commentators, and other opinion leaders, and begin to match the opinion leader to the story. They write the press releases, make the phone calls, prepare the white papers, arrange the conferences, and make the invitations to lunch that will start to get the information – the narrative – that they want the public to have to the public, feeding the information more or less precisely to those most likely to swallow it. These days, it also includes the manufacture in internet memes and twitter slogans – the type that will shared and retweeted – that generate just the attitude the professional deceivers want people to have.

It would be a mistake to think that this only happens on the right side of the political spectrum. The professional deceivers know what liberals are likely to believe and share and will get the information out to them that will have the desired effect as well. One example we can draw on the liberal side of the equation is the idea that classroom size matters when it comes to the quality of education. A child gains more by having a quality teach than from a smaller classroom. Terminating “the worst 10%” of all teachers and putting the students in larger classes taught by better teachers would produce a benefit. However, teachers’ unions who want more teachers – and, thus, more members – have reason to promote a fiction that class size matters among liberals who are disposed to want to believe such claims.

The example above of the meme that distorts wage rates is another example. The claim in the meme is not false. However, it has been engineered and presented with an intention to create a false belief – an attitude that does not follow from the available evidence but which serves the political interests of those who shared the meme.

Those who want to take $1.00 out of each person’s pocket and put it in their own also have an incentive to get legislation passed that will have this effect. This is very easy to do. Most people – you and I included – have no idea what happens with all of the small amendments that get attached to each bill that goes through the legislature. The business leader wanting to divert money into his bank account has reason to hire the attorneys to do the research and actually write the law as they want the law to read. They hand it to the legislator as a completed package ready to submit. For you, the reader, I would like to ask you how many of these amendments you think you – or anybody you know – has ever heard of. The legislator is hardly going to get any bed press or lose a vote for accepting this bill – but will certainly draw the attention of the business owner and his friends for refusing to submit it.

Many government regulations do not come into existence as laws. Instead, regulatory agencies are empowered to create new legislation or to employ some measure of discretion in interpreting and applying the rules that they are responsible for. This provides the business with another way to route a dollar or two out of each person’s pocket into their bank account – by bringing about a favorable interpretation of the rules. This means hiring experts in the regulatory system that governs their company. However, it also helps to hire some of the employees – particularly the senior level employees – of that agency. Those employees can provide the company with insight as to how things get done and the personal attitudes and ideas of those who will be making some of the decisions. The people they hire – being friends with those who still work for the agency – can exercise some measure of influence over those decisions. Here, as is the case above, neither you nor anybody you know will ever actually be aware of these events to protest them. The people – seeking to make their lives easier – have good reason to ignore those who are ignoring them and for giving those with the money and the power what they ask for.

The company seeking to direct a few dollars from each person into their accounts also have the means and the motive to challenge the regulations themselves. They can file lawsuits, attend hearings, and create white papers all with the intent of persuading whoever hears a dispute to make a decision favorable to the company. At the same time, there is nobody at these hearings or raising a voice in these disputes representing the people who will lose a dollar or two out of their pockets each month. This is because it remains the case that it is not worth the time and effort for those who lose a dollar or two to even become aware of this dispute and how much it will impact them.

When we repeat this process over any number of companies – each taking a nickel, a dime, or a dollar or two out of the pockets of several people and putting it in their own, the costs to the average citizen adds up significantly. However, it is never the case that it is worthwhile to challenge any one amendment, regulation, or interpretation. Each of a thousand bureaucratic decisions that funnel money out of their accounts into the pockets of a business only represents a small fraction of what each customer is losing. No individual amendment, regulation, or interpretation can be profitably challenged. Yet, the result of a thousand of these little economic nicks and cuts is to leave each customer – and the poorer and middle class customers more than any others – worse off than they would have otherwise been.

Furthermore, it is the purpose of these amendments, regulations, and interpretations to concentrate wealth – to take a little bit of money out of each of our pockets and to put it in the pockets of somebody who is making millions of dollars. We each lose $1.00, and the millionaire gains $300 million. We each lose $1000 in a thousand amendments, regulations, and interpretations like those described above, and a few hundred millionaires split $300 billion in additional profits.

For those who claim to be capitalists, none of this is consistent with capitalism. There is no rule in capitalism that justifies wealthy people using the government to manipulate the market in such a way as to channel hundreds of billions of dollars from the pockets of the poor and middle class who cannot afford to lobby the government and put it into the pockets of a very wealthy few who have the means and the motive to do so. The people who support these maneuvers do not support the free market. If they claim to support the free market – this is simply another part of the deception and manipulation they are engaged in to channel money from your bank account into the bank accounts of millionaires.

Any time anybody tries to establish a complex set of regulations – whether for prescription drugs or energy production or employee safety or any of a thousand other potential reasons for government regulation – they set up the mechanisms through which a company can take a nickel, a dime, or a dollar or two out of each person’s pocket and put it in their own accounts.

It is na├»ve, at best, to think that a government regulatory agency that you or I never heard of, that has the capacity to make our lives a little more expensive and funnel that money into the accounts of some corporation, has not been twisted and distorted to do exactly that. The harms that are done to people in this way are among the things that the utilitarian libertarians are right about. These are, at the same time, among the costs and harms that progressives tend to ignore – that, in some cases, the professional deceivers manipulate them into ignoring – because it helps to protect the power of the companies to make the poor and middle class poorer and the extremely wealthy wealthier.

This is not to say that all regulations are bad because, if we were to understand regulations properly, we would see even such things as the prohibition on vandalism, theft, assault, and murder are “regulations” in a sense. In fact, even though regulations that fit the descriptions mentioned above are the bad regulations that should be removed, calls for a reduction in government regulation seldom if ever target those that profit companies at the expense of the middle class and poor. The regulations that the corporations want removed are those that prevent them from poisoning or otherwise harming people when it is profitable for them to do so. I will have more to say on that matter in a future post.

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