Theory of Value

[prosperity]

This actually deals with, I think, more than one branch of philosophy...but I believe it has significant moral implications. Has anyone else seen an argument against individualism that goes like this:

http://www.zmag.org/znet/viewArticle/19865

I've seen variants of it, but this article actually tries to assert that knowledge is owned, and that the living owe the dead for it - in some sort of literal sense.

[Jake_Ellison]

Knowledge and information are two separate things. While information can exist in one of Einstein's books, knowledge of that information requires study, and can only exist inside a living human's mind (consciousness). That study has to be done by a living person, and that person deserves the fruits of his new found knowledge.

As far as the information in Einstein's books, that information was made public by Einstein, so it is publicly available. Anyone can learn it, transform it into knowledge, and then use that knowledge, which is theirs and theirs alone (it is inside their mind!!!)

On the other hand if someone prefers to keep and sell the information he produces, that information belongs to him and his descendants, to profit from. However, once sold to someone, the knowledge that book/CD/etc. produces belongs to the person who bought the information and turned it into knowledge.

[edit]

Let me just give a quick example. I am right now frantically studying, reading a website which is open to the public, and which is about the wonderful world of functional programming. Again, all the information in front of my eyes is available to the two nitwits who wrote that article. They could right now go to the website, learn it and get a programming job, thus collecting their fair share of the public "knowledge" available to them and everyone.

Oh, but they don't do that. They have a better idea: let this stupid mark Jake learn it, create a pretty program, and then we'll say he used our "knowledge" to create it, so it's ours. And all this without any of this (God Damn, impossible to understand piece of crap) "knowledge" having come anywhere near inconveniencing their stress-free afternoon, spent in the park, looking at the pretty girls.

Edited December 15, 2008 by Jake_Ellison

[~Sophia~]

From that article:

In the decades after the Second World War, productivity and wages rose together, almost on a one-to-one basis. Beginning in the 1980s, productivity and wages began to diverge, a divergence that sharpened to record levels under George W. Bush. Since 2000, productivity has increased about 20 percent, but the median hourly wage went up only 3 percent.

Is it reasonable to file this as ignorance (rather than dishonesty) since it is coming from a Professor of Political Economy? Hmm.....

Although the observed rate of increase in earnings is tied to the rate of increase in labor productivity over the very long run, in shorter periods the two rates may differ if there is a significant increase or decrease in the supply of labor.

It is believed by most economists today that the slow down in real wage growth (the rate of growth in excess of the rate of inflation) in the 1980s and 1990s occurred because of the increase in labor supply that came with the influx of baby boomers.

In the 1950s and 1960s, when the economy was growing rapidly and labor was relatively in short supply, real wages rose quickly, and at a rate higher than the rate of increase of output per worker. In the 1970s and 1980s, however, when the baby boom generation began to enter the labor market, labor supply increased significantly. Some predict that the fact that the baby boom is now working its way through the system implies, therefore, that the rate of growth of real wages will increase significantly in the next two decades.

Edited December 15, 2008 by ~Sophia~

[John McVey]

I've seen variants of it, but this article actually tries to assert that knowledge is owned, and that the living owe the dead for it - in some sort of literal sense.

Not so much that the living owe the dead, but that some of the living owe the rest of the living because the former are better able to make use of the knowledge left to us by our forebears and the latter aren't. The reference to the legacy of the dead is a cover for that, to declare certain high incomes as 'unearned,' and thus use it as a blunt instrument to be used against the living who might object to being made to cough up. The whole thing is just another variant (as you say) of using the bogus theory of social-production as rationalisation for pandering to envy.

If you doubt Sophia's call on these guys' moral characters, check out this. They've even got a naked reference to how the highly productive love their work so much that they'd still produce even after being shackled!

JL: Do people in fact work harder when they know they'll get to keep more of what they earn? Don't higher taxes at some point reduce effort?

GA: Perhaps "at some point." But there's little evidence that it works this way at the top, which is the target of our argument. As I suggested earlier on the issue of incentives, very, very large fortunes simply aren't needed to generate productive contributions. If Bill Gates was told by the government in 1980 that he'd only end up with $25 billion in his bank account when his company peaked (instead of the $50-something billion he actually held), do you think he would have stopped trying to build Microsoft? What if the limit was only $1 billion, or a generous executive salary? Even then he would have continued, no doubt. Clearly, there is a huge gap between what the richest earn and what it takes to "incentivize" their contributions. These economic "rents," as they're technically termed, are pervasive in our economy, especially at the top.

There's worse following that.

You're right that it is about the theory of value and morality. The purpose of this trash is to use a crap value theory to disarm people who lack the proper moral knowledge required to defend themselves. There's nothing new here, at least as far as I can be bothered to pick through in detail. Maybe others could find stuff, but I don't feel like slumming it to see.

JJM

[Tenure]

Could you link to a good value theory or some such? I come across this argument from time to time, that there's some acceptable cut-off point at which you can diminish output without harming input (tax without reducing production), whether it be just taxing riches to 'distribute the wealth', or taxing carbon footprints to 'clean up the mess'. I can kind of intuitively figure out why it's wrong, but I've never been able to fully formulate an argument beyond, "Utilitarianism doesn't trump the moral right to your production".

[gags]

I come across this argument from time to time, that there's some acceptable cut-off point at which you can diminish output without harming input (tax without reducing production), whether it be just taxing riches to 'distribute the wealth', or taxing carbon footprints to 'clean up the mess'. I can kind of intuitively figure out why it's wrong, but I've never been able to fully formulate an argument beyond, "Utilitarianism doesn't trump the moral right to your production".

When it comes to the effects of taxation on production, it's important to recognize that these are decisions being made on the margins. For example, if an investor has a project that he anticipates will provide him with a 15% annual return and his required rate of return is 12%, then he will invest his money and move forward with the project. However, if taxes are such that they reduce the anticipated return to 10%, then the project will not be pursued. If taxes are such that they reduce the return to 13%, the project is still likely to get funded however there is less margin for error and more risk. Taxation kills projects (and the jobs and income associated with those projects) that are on the margins.

[SD26]

Could you link to a good value theory or some such? I come across this argument from time to time, that there's some acceptable cut-off point at which you can diminish output without harming input (tax without reducing production), whether it be just taxing riches to 'distribute the wealth', or taxing carbon footprints to 'clean up the mess'. I can kind of intuitively figure out why it's wrong, but I've never been able to fully formulate an argument beyond, "Utilitarianism doesn't trump the moral right to your production".

Well, when does tax money actually give it's money back plus interest to those who produced the taxable incomes in the first place?

It's a burden, period.

If I choose to give to a program for the development of a workers skills or research or to teachers for my kids...I am choosing that based on my recognition of value. That's different than a tax.

How much effort should I produce currently to generate more taxing opportunities for "those that know better"?

[Maarten]

Another issue is that the so-called unnecessary pay the rich people get that doesn't serve as an incentive, still gets put back into the economy in the form of investments. When you tax it and give it to others, that generally turns the money into direct consumption. That's why it IS harmful, even if the person in question may not work any less hard. He WILL invest less, and that is where the real danger comes in; they're leaching away investment funds and turning it into "food", so to speak, that serves much less economic value.

[SD26]

Another issue is that the so-called unnecessary pay the rich people get that doesn't serve as an incentive, still gets put back into the economy in the form of investments.

And into things. If everyone had one kind of car, there would be nothing extra or more to get. Those with more cash can look to get a steak, a bigger car, a pool, and so on. Those all lead to jobs, more development, more investment, and so on.

Those that have the means will look for the newest cool thing, if they so desire. LCD TV's, BlueRay, etc. None of that stuff will be cheap initially.

As people make more money, they need people to do other things as their individual value of time increases. If your time is worth $100 an hour, mowing the lawn is not in your interest. If you make $10 a hour, hey, mow the lawn to save money.

[John McVey]

Could you link to a good value theory or some such?

There's the foundations in VoS (particularly the first chapter, The Objectivist Ethics), added to by OPAR, and then there's what I have written. That doesn't deal specifically with the bogus theory of social production, though. Getting to that from the theory of value takes reasoning and work from a pile of observations. I don't know of anyone who has dealt with that, though I know the answer in general and will write it down in detail at some point.

I come across this argument from time to time, that there's some acceptable cut-off point at which you can diminish output without harming input (tax without reducing production), whether it be just taxing riches to 'distribute the wealth', or taxing carbon footprints to 'clean up the mess'.

That sounds like the Laffer Curve, or at least an inspiration for it. There's a point of taxation at which the government's take is maximised, where having a higher tax rate still leads to less tax revenue.

There is also the theory of economic rents on investment returns as described by Frank Knight (in The Ethics of Competition, IIRC), who said there's an amount of return that 'serves no social purpose' and which society is justified in taking or otherwise curtailing. That lead to the marginal social benefit vs marginal social cost theory, used particularly in Antitrust cases where higher rates of profit than the bare minimum that prevents people from throwing in the towel are prima facie evidence of "restraint of trade" of some kind.

I can kind of intuitively figure out why it's wrong, but I've never been able to fully formulate an argument beyond, "Utilitarianism doesn't trump the moral right to your production".

That's all there is to it. It's wrong because it is theft, plain and simple. Any theory that tries to say there's a point at which it is the most beneficial for society is nothing more than an attempt at specification and quantification of what thieving people are able to get away with for a given state of culture that is yet to be accepting of rational selfishness as a matter of principle. "I earned it, it's MINE, dammit!" is all the justification you need.

JJM

[Steve D'Ippolito]

That sounds like the Laffer Curve, or at least an inspiration for it. There's a point of taxation at which the government's take is maximised, where having a higher tax rate still leads to less tax revenue.

Not really, because this argument is about the total size of the economy, not the government's take. The Laffer curve is a valid argument (but of course presupposes the government has the right to take), this other one claims that some really low level of taxation will not hurt the economy at all--ludicrous. The Laffer curve also has a very different shape, it peaks out somewhere between 20 and 50%, this one's peak is a flat line between 0% and some small percentage, before taxation starts hurting the economy, then decreases fromt here.

Absurd, as I said. Even that leftist guy who was hare was willing to admit it would hurt the economy; he just thought it was a price we ought to be willing to pay.

Of course even if it were true that some minimal rate of taxation would not hurt the economy, there is the moral argument against taxation to counter it with.

[John McVey]

Could you link to a good value theory or some such?

I also forgot Miss Rand's "An untitled letter". Specifically it deals with John Rawls' Theory of Justice and related newspaper articles, but in doing so it touches on a lot of the crap used in the ZNet article. You'll find it in PWNI, or the original three parts in issues 9-11 in volume 2 (1972-3) of The Ayn Rand Letter.

JJM