Home > Economics, Philosophy > Do I deserve my salary? (and how to read my blog)

Do I deserve my salary? (and how to read my blog)

January 21, 2012 Leave a comment Go to comments

Given the balance of the things I write about, I get the feeling that people probably think I’m pretty conservative. I write quite a lot about taxation, the inability of the government to ‘stimulate’ the economy through spending and the fact that states are by nature coercive. And while I have become more conservative in the last 2-3 years, it is at the margin. Now, it just so happens that this is also the stuff that I find really interesting and I just feel like I have more things to say about it. It’s also the case that the standard of argument around these topics is extremely high in the blogs I read, and it’s more fun to get involved in that rather than amateur political philosophy (and Matt Yglesias has pretty much has that angle covered, with appropriate snarkiness).

But I have a whole set of prior beliefs than I haven’t written about nearly as much, but that massively inform my political thinking. For example, I think there are incredibly compelling arguments to the effect that I owe the relative level of my income to factors way beyond my control. Imagine tomorrow everyone woke up and loads more people were good at consulting and not many people at all were good at flipping burgers. Prediction: my salary goes way down, fast food worker’s salaries go way up. My salary is a function of the supply of people offering my skillset, and the demand by other people for those skills. And whatever you think about free will etc., I certainly don’t control other people’s desires or skillsets. I’m but a tiny cog in a massive machine called ‘the labour market’.

That kind of thinking makes me pretty egalitarian. And if total redistribution of income was totally costless, I’d be pretty inclined towards it. But it very much isn’t costless, and I think it would have appalling practical consequences. If human beings were perfectly charitable and unselfish, then it would be fine. But we aren’t. We value ourselves over others. We get greedy when we get power, and massive income redistribution through the government creates a massive concentration of power. We always, always need to be thinking about what will in fact happen if we try and change something.

And this is why I write about the things I do. Because I think people don’t really understand the consequences of policy – and even if they happen to be right, they are almost certainly way too sure about it. The fact that we probably understate the effective tax rate as a percentage of their income for people with savings* doesn’t remotely mean (if correct) that the capital gains tax rate should be zero, or even less than it is now. But it probably does mean that you should have a weaker preference for the tax at the margin. I want you to update your beliefs to reflect new information. Where you end up at depends on where you started (FWIW, I started out thinking they should be taxed the same. I now think it is appropriate that cap gains rates should be lower than income tax rates).

One of the best books I’ve read in the last year is Selfish Reasons to Have More Kids by Bryan Caplan. Whilst the book as a whole is fantastic, it’s the structure of Bryan’s argument that is so wonderful. Bryan presents tons of evidence from twin adoption studies to suggest that genetics has a much larger role to play in the kind of person you turn out to be in the long run than the environment you grew up in**. If true, this means that raising kids need be nowhere near as stressful as most people make it to be. Suppose Bryan is right. If Bryan is right, and your beliefs on the subject of the effect of parenting on children has changed, you should have more kids than you were planning to before hand. Why? Because the cost of having them has fallen (individual parenting decisions aren’t as big a deal as you thought, so you can stop stressing about it). General rule: if the cost of something falls, or the benefits of something increase – you should want more of that thing. This is still consistent with wanting none of that thing, if the costs still outweigh the benefits. But it’s a great example of updating our beliefs to reflect new information (and I highly recommend the book).

I can’t present you with a complete and coherent position on anything. There’s just too many things to know, too many factors to consider and I’m not clever enough. Don’t get too hung up trying to figure out what I think. I’m not too sure myself, a lot of the time! Think at the margin, for yourself. Is this right, is this wrong, how does it affect what I already believe, should I be so sure. It’s not the natural way to think, but it’s the smart way.


* note: that statement depends on the fact that savings were at one point earned, which is obviously not true in the case of inheritance or expropriation

**provided the environment is such that adoption would be legally approved

Categories: Economics, Philosophy
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