\n\n“I realize that the case of pure socialism is something of a straw man. In the next part of this series I\u2019ll look at the case for simply more redistribution than we have now. But a look at pure socialism on both practical and what I would call spiritual grounds is still illuminating.”
…
“GDP in the US is currently about $21 trillion. There are about 250 million Americans over the age of 18. So that\u2019s about $84,000 per adult. How about a system that gives $84,000 to every adult over the age of 18? Earn above $84,000 and you pay a tax of 100%. Earn less than $84,000 and you get a check to make up the difference. Bianca and I would be on the same footing. Bianca currently makes something on the order of $30\u201340,000. Pure socialism would roughly double her standard of living.”
…
“Full equality simply wouldn\u2019t work very well. If you earn $80,000 you\u2019d get a check for $4,000. If you earn $14,000 (roughly the Federal minimum wage for full-time work) you\u2019d get a check for $70,000. And if you don\u2019t work at all, you\u2019d get a check for $84,000. Some people love what they do or feel some kind of calling to their work and those people might keep doing what they\u2019re doing. But some people will stop working and enjoy the same consumption as someone working two or three jobs to make $50,000.<\/p>\n\n\n\n
A policy that equalizes income at $84,000 isn\u2019t a safety net. It\u2019s a safety hammock. Some people would choose to relax in it.”<\/p>\n\n\n\n
…<\/p>\n\n\n\n
“GDP isn\u2019t going to stay at $21 trillion. Even if everyone currently earning less than $84,000 stopped working entirely, GDP wouldn\u2019t fall by half because the top half of the income distribution produces more than half of the output. But GDP would almost certainly fall.”<\/p>\n\n\n\n
…<\/p>\n\n\n\n
“people currently earning more than $84,000 would work a lot less as well, knowing that any income over $84,000 would go to someone else. So the standard of living wouldn\u2019t be sustainable at $84,000. It would be something less and whatever that lower number is, it probably wouldn\u2019t grow much over time \u2014 the incentive to invest and innovate would be smaller. Not a zero rate of growth \u2014 as before, money isn\u2019t the only motivator. A lot of people would still try to create new things. But presumably the growth rate would fall fairly dramatically.”
…
“If everyone earns the same amount after tax, you don\u2019t care what your market wage is. So wages won\u2019t motivate you to do something unpleasant or something that takes skills that can only be acquired over a long period of time. Why would anyone want to wash dishes or cut lawns on hot days or work at a garbage dump? Or do anything that is dangerous? Better to stay home and collect your check”
…
“The fact that basketball actually pays more than ballet is not irrelevant. The dramatically higher salary of an NBA star relative to ballet is telling Lebron that he is much more valuable as a basketball player than a ballet dancer. That dramatically higher salary is telling Lebron that a lot more people are willing to pay a lot more money to see him dance with a basketball than to dance with a ballerina.<\/p>\n\n\n\n
The money is telling him something. It\u2019s not telling him he has to be a basketball player. But it tells him something about what it costs him to be a ballet dancer. It\u2019s pushing him toward basketball.
<\/p>\n\n\n\n
That\u2019s what salaries do in a market economy. They send us signals. The signals are sometimes distorted \u2014 they can ignore costs and push us to do something tawdry but financially pleasant. They can understate what the full impact of something is. Hard as it is to believe, many people are able to enjoy Lebron James without buying tickets to Lakers games or buying his jersey or watching him on television. You can actually make the case he\u2019s underpaid. But ignore that. The point is that salaries and prices more generally are imperfect. But they\u2019re not irrelevant.<\/p>\n\n\n\n
When you go to a world of complete equality, salaries play no role in assigning people to tasks. That task has to be performed by some other mechanism, usually the State, which means that a bunch of people with little or no skin in the game have the job of figuring out who should do what. That isn\u2019t going to turn out very well. It certainly didn\u2019t work well in the Soviet Union where the workers in the workers\u2019 paradise had an informal motto: we pretend to work and they pretend to pay us.<\/p>\n\n\n\n
So pure socialism doesn\u2019t work very well in the sense that I don\u2019t think Bianca would be better off in that world in the sense of material well-being. This is essentially Rawls\u2019s criterion for redistribution \u2014 we should maximize the well-being of the poorest member of society. Bianca\u2019s not the poorest but the point is similar. I think Bianca would have a lower standard of living and her children would have less of a chance to flourish \u2014 the world would be a more static place. And by a lower standard of living, I don\u2019t mean just a little lower. Without incentives and the informational content of wages, we couldn\u2019t achieve anything like a modern standard of living for 330 million people. We\u2019d be much much poorer in material ways with consequences for non-material aspects of our life like health.” “I realize that the case of pure socialism is something of a straw man. In the next part of this series I\u2019ll look at the case for simply more redistribution than we have now. But a look at pure socialism on both practical and what I would call spiritual grounds is still illuminating.”<\/p>\n …<\/p>\n “GDP in the US is currently about $21 trillion. There are about 250 million Americans over the age of 18. So that\u2019s about $84,000 per adult. How about a system that gives $84,000 to every adult over the age of 18? Earn above $84,000 and you pay a tax of 100%. Earn less than $84,000 and you get a check to make up the difference. Bianca and I would be on the same footing. Bianca currently makes something on the order of $30\u201340,000. Pure socialism would roughly double her standard of living.”<\/p>\n …<\/p>\n “Full equality simply wouldn\u2019t work very well. If you earn $80,000 you\u2019d get a check for $4,000. If you earn $14,000 (roughly the Federal minimum wage for full-time work) you\u2019d get a check for $70,000. And if you don\u2019t work at all, you\u2019d get a check for $84,000. Some people love what they do or feel some kind of calling to their work and those people might keep doing what they\u2019re doing. But some people will stop working and enjoy the same consumption as someone working two or three jobs to make $50,000. …<\/p>\n “GDP isn\u2019t going to stay at $21 trillion. Even if everyone currently earning less than $84,000 stopped working entirely, GDP wouldn\u2019t fall by half because the top half of the income distribution produces more than half of the output. But GDP would almost certainly fall.”<\/p>\n …<\/p>\n “people currently earning more than $84,000 would work a lot less as well, knowing that any income over $84,000 would go to someone else. So the standard of living wouldn\u2019t be sustainable at $84,000. It would be something less and whatever that lower number is, it probably wouldn\u2019t grow much over time \u2014 the incentive to invest and innovate would be smaller. Not a zero rate of growth \u2014 as before, money isn\u2019t the only motivator. A lot of people would still try to create new things. But presumably the growth rate would fall fairly dramatically.”<\/p>\n …<\/p>\n “If everyone earns the same amount after tax, you don\u2019t care what your market wage is. So wages won\u2019t motivate you to do something unpleasant or something that takes skills that can only be acquired over a long period of time. Why would anyone want to wash dishes or cut lawns on hot days or work at a garbage dump? Or do anything that is dangerous? Better to stay home and collect your check”<\/p>\n …<\/p>\n “The fact that basketball actually pays more than ballet is not irrelevant. The dramatically higher salary of an NBA star relative to ballet is telling Lebron that he is much more valuable as a basketball player than a ballet dancer. That dramatically higher salary is telling Lebron that a lot more people are willing to pay a lot more money to see him dance with a basketball than to dance with a ballerina. That\u2019s what salaries do in a market economy. They send us signals. The signals are sometimes distorted \u2014 they can ignore costs and push us to do something tawdry but financially pleasant. They can understate what the full impact of something is. Hard as it is to believe, many people are able to enjoy Lebron James without buying tickets to Lakers games or buying his jersey or watching him on television. You can actually make the case he\u2019s underpaid. But ignore that. The point is that salaries and prices more generally are imperfect. But they\u2019re not irrelevant.<\/p>\n When you go to a world of complete equality, salaries play no role in assigning people to tasks. That task has to be performed by some other mechanism, usually the State, which means that a bunch of people with little or no skin in the game have the job of figuring out who should do what. That isn\u2019t going to turn out very well. It certainly didn\u2019t work well in the Soviet Union where the workers in the workers\u2019 paradise had an informal motto: we pretend to work and they pretend to pay us.<\/p>\n So pure socialism doesn\u2019t work very well in the sense that I don\u2019t think Bianca would be better off in that world in the sense of material well-being. This is essentially Rawls\u2019s criterion for redistribution \u2014 we should maximize the well-being of the poorest member of society. Bianca\u2019s not the poorest but the point is similar. I think Bianca would have a lower standard of living and her children would have less of a chance to flourish \u2014 the world would be a more static place. And by a lower standard of living, I don\u2019t mean just a little lower. Without incentives and the informational content of wages, we couldn\u2019t achieve anything like a modern standard of living for 330 million people. We\u2019d be much much poorer in material ways with consequences for non-material aspects of our life like health.”<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[217,607,560],"class_list":["post-3628","post","type-post","status-publish","format-standard","hentry","category-article-share","tag-economics","tag-ethics","tag-socialism"],"_links":{"self":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/3628","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3628"}],"version-history":[{"count":1,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/3628\/revisions"}],"predecessor-version":[{"id":3629,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/3628\/revisions\/3629"}],"wp:attachment":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
https:\/\/medium.com\/@russroberts\/do-i-deserve-what-i-have-part-ii-9ee3ce75b46e<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"
\nA policy that equalizes income at $84,000 isn\u2019t a safety net. It\u2019s a safety hammock. Some people would choose to relax in it.”<\/p>\n
\n The money is telling him something. It\u2019s not telling him he has to be a basketball player. But it tells him something about what it costs him to be a ballet dancer. It\u2019s pushing him toward basketball.<\/p>\n