January 26, 2005
Elizabeth Anderson on Hayek & the claim "I deserve my pretax income".
Philosopher Elizabeth Anderson -- How Not to Complain About Taxes (III): "I deserve my pretax income". Quotable:
Today's post is a tribute to F. A. Hayek. I was going to commend Hayek earlier, for nailing the economic case against comprehensive planning, but fellow-blogger Don Herzog beat me to it ..
The claim "I deserve my income," as applied to an individual's pretax income in free market economies, has considerable intuitive force. If true, it suggests a powerful moral claim against taxation for redistributive purposes, on the intuitively plausible supposition that a just economic order ought to ensure that people get what they morally deserve.
But, however intuitive these claims may be, they are unjustified. In two of his important works of political economy, The Constitution of Liberty (see esp. ch. 6), and Law, Legislation, and Liberty (vol. 2), Hayek explained why free market prices cannot, and should not, track claims of individual moral desert ..
Hayek was right. It might sound like a compelling idea, to make sure that people receive the income they morally deserve. But orienting the economy around this goal, assuming it is achievable at all (and there are principled doubts about that), would doom us to poverty and serfdom. It would abolish capitalism, along with its chief virtues. It isn't worth the draconian costs.
3. Several implications follow from Hayek's insights into the nature of capitalism.
(a) The claim "I deserve my pretax income" is not generally true. Nor should the basic organization of property rules be based on considerations of moral desert. Hence, claims about desert have no standing in deciding whether taxation for the purpose of funding social insurance is just.
(b) The claim that people rocked by the viccisitudes of the market, or poor people generally, are getting what they deserve is also not generally true. To moralize people's misfortunes in this way is both ignorant and mean. Capitalism continuously and randomly pulls the rug out from under even the most prudent and diligent people. It is in principle impossible for even the most prudent to forsee all the market turns that could undo them. (If it were possible, then efficient socialist planning would be possible, too. But it isn't.)
(c) Capitalist markets are highly dynamic and volatile. This means that at any one time, lots of people are going under. Often, the consequences of this would be catastrophic, absent concerted intervention to avert the outcomes generated by markets. For example, the economist Amartya Sen has documented that sudden shifts in people's incomes (which are often due to market volatility), and not absolute food shortages, are a principal cause of famine.
(d) The volatility of capitalist markets creates a profound and urgent need for insurance, over and above the insurance needs people would have under more stable (but stagnant) economic systems. This need is increased also by the fact that capitalism inspires a love of personal independence, and hence brings about the smaller ("nuclear") family forms that alone are compatible with it. We no longer belong to vast tribes and clans. This sharply reduces the ability of individuals under capitalism to pool risks within families, and limits the claims they can effectively make on nonhousehold (extended) family members for assistance. To avoid or at least ameliorate disaster and disruption, people need to pool the risks of capitalism.
UPDATE: Reactions to Anderson:
The keen-witted Elizabeth Anderson drops the Hayek Bomb on those who believe that they "deserve" their income.
Misunderestimating Don't-Call-Him-Fritz -- Hayek that is. Not surprisingly we have a mis-use of knowledge in liberal economist bloggerdom:
"The claim "I deserve my income," as applied to an individual's pretax income in free market economies, has considerable intuitive force.... But... Hayek explained why free market prices cannot, and should not, track claims of individual moral desert...."
Those who actually know their Hayek see through this sophistry immediately, and ask: "Deserve my income, compared to whom?". And to that, Hayek answers; we can't possibly come up with an answer that undermines the claim of the individual to his own income. Because, as humans, we must be ignorant of the myriad details that went into the earning of that income ..
Left2Right's Elizabeth Anderson writes so thoughtfully that even the conservative replies to her ideas make sense. Hey, I'm always relieved when cons who aren't out of control Confederate States of America types make points that I can consider but disagree with .. I'm no economist, but it's just plain to me that unfettered capitalism can destroy human dignity and decency ..
Elizabeth Anderson and other commentators misunderstand Hayek and in the process they fail to understand the sense in which market outcomes may be said to be just. Hayek argued that the concept of social or distributive justice was "empty and meaningless." Anderson tries to use this argument, which she explains well, to suggest that any idea of libertarian or free market justice must also be empty and meaningless. Hayek, however, did not argue against rules of just conduct, "those end-independent rules which serve the formation of a spontaneous order." Among such rules may be Nozickian or Lockean rules of voluntary exchange.
It's quite possible, for example, to be a good Hayekian and also to say that I deserve my income because it was acquired by just conduct, e.g. by production and trade. True, it is an accidental fact that I live in a time and place where my skills are highly prized. In this sense, I do not deserve my income (i.e. my income is in part a function of things beyond my control). But I do deserve my income in the sense that it was acquired justly and to take justly acquired earnings may be an injustice.
I don't think arguments about people deserving things need to be taken very seriously. It's hard to make out what the concept is supposed to mean in this context. People deserve things relative to a system of social arrangements. If you promise to give me something, then I deserve to get that thing when you promised to give it to me. But abstracted away from any real practices, desert doesn't mean anything. But insofar as you feel like you need an argument about this, I think the argument from luck does about all the work you need.
The step that no one has managed to make is the one between arguing that people don't "deserve" their incomes/assets/property and establishing that someone else does deserve to dispossess them of same .. And why stop with incomes or property?
Since the publication of Robert Nozick�s Anarchy, State, and Utopia, if not earlier, libertarians have argued that taxation is morally problematic not because people deserve their income, but rather because they are entitled to it. One�s overall moral character is irrelevant to whether one ought to be able to keep the fruits of one�s labor, on this view; what matters is whether one got what one has fair and square, in accordance with the rules concerning the acquisition and transfer of property. Scrooge is entitled to his money even if he doesn�t deserve a nickel of it.
See also Jason Soon and Tyler Cowen.
Technorati is tracking the conversation in the blogosphere here.
Posted by Greg Ransom at January 26, 2005 11:55 PM