So, this is based on a discussion I had online today, but I figured it would make a good blog post to go into a lot of other stuff I'm talking about. The original discussion was about the recent spats between Bernie Sanders and Howard Schultz, and how one "earns" a billion dollars. This was my response, and I figured it deserves some consideration here too:
Yeah, Im going to be honest, all social mechanisms for distributing wealth are subjective, and die hard ideological laissez faire capitalists have this tautological idea that whatever happens according to laissez faire mechanisms is "legitimate". If the workers earn pennies on the dollar while the owners of the companies make billions, that's what they're worth, because the market is always right.
Now, I'm going to throw some shade at leftists too here. A lot of them have this labor theory of value where its like what workers produce is what they're entitled to, and they deserve the full value of their labor. But....who decides who gets what? If a chair sells for $50 who gets what? The cashier? The carpenter? The truck driver who drove it to the store? The person who cut the tree down? Etc. Capitalism has answers, they all pay each other along the supply chain via market standards. And while markets are imperfect, I do believe they can be manipulated to ensure human ends.
Property is a social convention. Division of labor is a social convention. Every society needs some sort of way to distribute labor, and the rewards from that labor. There is no one inherently correct way to do this. It's what we collectively choose as a society.
Markets are functional for the most part, BUT laissez faire markets have really messed up incentives. When you have a few people at the top own everything, and the rest of people be workers who are essentially coerced to work by the threat of wage slavery, then you shouldnt be surprised when that owner class takes most of the wealth for themselves and pays workers the minimum they can get away with. That's what the end result of capitalism is, without any protections.
But say, we do any combination of the following:
1) Give workers ownership of the means of production so that they have a role in decision making about worker compenation
2) Give workers the freedom as power to say no, through a basic income, to refuse employer demands when they go against their interest
3) Give workers the ability to unionize and strike, forcing employers' hands to give better compensation to workers
4) Have the government directly regulate things like minimum wage, ensuring a minimum standard of treatment and compensation for workers is reached
5) Have the workers tax the owners of companies at crazy oppressive rates like 90%, forcing owners to forgo compensation and instead invest their money back into their companies in the form of higher wages and the like
Then suddenly, it becomes much harder for owners to "earn" a billion dollars.
If we had say, market socialism, workers would be able to collectively decide who gets paid what.
If we had a UBI, not only would owners be taxed more and wealth redistributed via the UBI itself, but it would give workers a leg to stand on where they could refuse employer demands much more easily, as they'd no longer be de facto wage slaves.
If we had unions, workers would collectively bargain, causing more wealth to trickle down that way.
And again, minimum wages increasing worker compensation, and taxing the rich directly can all impact how the pie is shared directly.
There are ways to resolve these issues within market systems. Markets are good, markets are efficient, But they are not all knowing and their natural outcome is not always what's best for society according to ALL of its members.
Honestly, the only justifiable reason to have inequality in the first place is work incentive. If everyone made the same amount of money regardless of effort, then there would be no point in working. So we do want some level of inequality to ensure that differences in effort and skill are rewarded. BUT....honestly, we could have a lot more equal standards and STILL have a reasonable amount of income inequality. Even with UBI, which would redistribute say, 20% of all income equally, there would still be plenty of incentives to work and earn more money. And honestly, its probably better for most members of society that income and wealth are relatively evenly distributed. Laissez faire capitalism only benefits those at the top. To make "capitalism" or "markets" appeal to the masses, you need some combination of the above ideas.
To add onto this, to point to the above examples I used for solutions, you can probably see a wide variety of schools of thought as to how to solve the problem.
1) is basically market socialism
2) is my UBI/indepentarian philosophy
3-5) are the policies FDR implemented during his new deal
All of these work in various ways. Someone with more socialist leanings is going to prefer solution 1, although I find socialism overrated. My preferred solution is #2 but I do think others in conjunction with 2 should be considered. 3-5 are all decent solutions but often times they're inelegant and piecemeal. Together they all provided the general basis for shared prosperity in the new deal era, but they all never directly took on the paradigm of work itself.
I say we should take on work itself. Many people don't like to hear that because, once again, they think workers "earn" their money and are entitled for it, but as I said, all of these discussions of who gets what are subjective, and the idea that a worker is entitled to money has some validity, but it's overstated. The first knee jerk reaction when one questions this assumption is basically "well if we didnt reward people for work, no one would work." And to that, I agree. But...that does not preclude an ABSOLUTE right to that income. As we know from UBI studies, and has been largely corroborated by my research into the laffer curve, we can probably tax people at a marginal tax rate of up to 70% without greatly decreasing productivity. Beyond that, it's possible revenues would decline. But under that? Yeah, people would largely work. Honestly, I dont think your typical person should be taxed at 70%, but the rich? Absolutely. If markets determine they're worth billions, I see nothing wrong with taking 70% of that away and redistributing it. Still keeps enough rewards to keep them working, but while alleviating the core issue with capitalism.Generally speaking, my proposals would make the effective marginal tax rate range from around 30% at the bottom (7.65% FICA, 20% UBI tax, maybe a 4% medicare for all tax, standard deduction on income tax) to 70% at the top (37% income tax, 10% local taxes, 20% UBI tax, 4% medicare for all tax), with most paying 45-60% or so (7.65% FICA, 10-24% income tax, 20% UBI tax, 4% M4A tax, maybe some local tax). That's around where the most tax happy social democracies are, although on the flip side, my own tax regime wouldn't have a VAT, so it's still less aggressive than most european countries would be in net.
All in all, I honestly don't think my ideas are that bad in context. After all, the functional purpose of letting people keep the money they earned from work is...to incentivize work. We should recognize why that system is as it is without thinking there's some inherent morality that comes from work. I feel like that's where the disconnect in modern society is. People think too hard about the inherent morality that is associated with tying income to work without thinking about the actual functional reason for it. And that's actually one of the reasons why our societies are so work happy. Between the right thinking what the market decides is perfectly just and moral, and the left thinking that the labor theory of value is the right way to go, people just lose the functional roots underlying the whole system.
Keep in mind, a huge assumption of mine, in all matters of law and morality, is that there is little to no objective morality. What is moral is mostly a matter of what enhances human well being to me. I like good things and I dislike bad things, no matter how tautological as that sounds. After all, that's how a humanist should look at the economy. And applying humanist principles to it to get a "human centered" result, perhaps some level of tying income to work incentives is a good idea, but also, reducing the existing work incentives and moving toward redistribution is also a good idea.
Again, something to think about.
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