[net.politics] Libertarianism & Luck

orb@whuxl.UUCP (SEVENER) (01/15/85)

> 
> >At any rate, it is evident why Nozick is concerned to demonstrate that
> >market outcomes are just:  Nozick's minimal state is not allowed to
> >"correct" market outcomes by redistribution of wealth, even though, as Hayek
> >admits, market outcomes depend to a great extent on luck.  We thus see, not
> >for the last time, how the defense of the minimal state is linked to the
> >defense of capitalism.  
> 
> Ok, I have no problem with that statement. So what? Life is a bitch, and then
> you die -- and that's the good news. You aren't going to eliminate luck in
> peoples lives by any statist approach, the luck will just be who controls the
> state, and who dies under it.
> 
> Brad Miller
> -- 
> ...[rochester, cbrma, rlgvax, ritcv]!ccice5!ccice2!bwm

Is it really true that we can't reduce the role of luck in people's lives?
Then what is the whole point of buying insurance?  Obviously it is possible
to balance out the risks over a larger group of people and therefore
reduce the role of luck.   What may be random "luck" for the individual
may still be predictable using probability and the law of large numbers.
Why should a few people gain all the benefits of the economic system
and many other people sustain the losses?  Is there really anything wrong
with balancing out such benefits and losses to a certain extent?
Of course the major element of luck in any individuals whole life is
who she or he happens to be born to.  Why should those born rich be
able to go through their whole lives without working at all, while others
struggle just to make ends meet? This is fair? This is justice?
         
   tim sevener    whuxl!orb

fagin@ucbvax.ARPA (Barry Sten Fagin) (01/18/85)

Who said what:
   >> > Tim Sevener
   >>   Brad Miller
   >    Tim's reply to Brad
	My reply to Tim

>> >At any rate, it is evident why Nozick is concerned to demonstrate that
>> >market outcomes are just:  Nozick's minimal state is not allowed to
>> >"correct" market outcomes by redistribution of wealth, even though, as Hayek
>> >admits, market outcomes depend to a great extent on luck.  We thus see, not
>> >for the last time, how the defense of the minimal state is linked to the
>> >defense of capitalism.  
>> 
>> Ok, I have no problem with that statement. So what? Life is a bitch, and then
>> you die -- and that's the good news. You aren't going to eliminate luck in
>> peoples lives by any statist approach, the luck will just be who controls the
>> state, and who dies under it.
>> 
>> Brad Miller
>> -- 
>
>Is it really true that we can't reduce the role of luck in people's lives?
>Then what is the whole point of buying insurance?  Obviously it is possible
>to balance out the risks over a larger group of people and therefore
>reduce the role of luck.   

Of course!  In fact, insurance companies would play a major role in
a libertarian society.  Individuals can and do purchase insurance
against the trials and tribulations of an uncertain world, and do so
freely in the context of a market economy.  This is an argument against
government intervention, not for it.


>Why should a few people gain all the benefits of the economic system
>and many other people sustain the losses?  

Space forbids me to do more than simply comment that there is no "system"
that creates and distributes wealth.  In fact, PEOPLE create and
distribute wealth, so the benefits and losses about which Tim
speaks are the benefits and losses of particular persons.

>Is there really anything wrong
>with balancing out such benefits and losses to a certain extent?

Depends on how you do it, of course.  You would use coercive means,
no doubt, which human beings have natural rights against.  As I'm
sure you can guess, any voluntary means you choose will have my 
blessing .

>Of course the major element of luck in any individuals whole life is
>who she or he happens to be born to.  

Quite true.  Should children born into wealth should be forced to
change places with those in poorer families? Or do they have certain
natural rights that render them immune against such claims?

>Why should those born rich be able to go through their whole lives 
>without working at all (...)

At all?  If their wealth is not managed productively, it will disappear.
So let's substitute "strenuously" for "at all".  Those born to wealth
are entitled to it iff their parents obtained it in a just manner.
Since it is entirely possible to accumulate vast amounts of wealth in 
a just manner (happens all the time), it is entirely possible
to be born to wealth in a just manner.

Suppose J. Paul Getty were to leave his son a billion dollars.  Doubtless
you would perceive this as an unfair and unjust distribution of wealth,
and would rectify it through coercive means.  But if JPG were to leave
a billion dollars to a struggling laborer, this would be OK?  
Does the justice of a distribution depend on the presence of
biological connections between the participants?  I think not.

> (...) while others struggle just to make ends meet? 

because to make sure that noone struggles to make ends meet would require
the coercion of those who disagree with you.  That's a cold, hard fact
about the social organization of free human beings.  Of course, there are
lots of other ways to better the lot of the starving, including charity
and working to make our society a more prosperous one.  Certainly the existence
of vast inequality can inspire one to more noble deeds than the
coercion of one's fellow citizens.

>This is fair? 
 
 No.

>This is justice?

Yes.

					Barry

(This is my first posting to the net; please excuse any mistakes)

-- 
Barry Fagin @ University of California, Berkeley

josh@topaz.ARPA (J Storrs Hall) (01/18/85)

>    tim sevener:
> Why should a few people gain all the benefits of the economic system
> and many other people sustain the losses?  Is there really anything wrong
> with balancing out such benefits and losses to a certain extent?
>          

If someone is lucky to be alive, are you justified in killing him?

--JoSH

nrh@inmet.UUCP (01/20/85)

>***** inmet:net.politics / whuxl!orb / 11:24 am  Jan 17, 1985
>> Ok, I have no problem with that statement. So what? Life is a bitch, and then
>> you die -- and that's the good news. You aren't going to eliminate luck in
>> peoples lives by any statist approach, the luck will just be who controls the
>> state, and who dies under it.
>
>Is it really true that we can't reduce the role of luck in people's lives?

An interesting question.  Naturally it has very little to do with the 
note you're responding to -- to reply AS IF the  person above had said
"You can't reduce the impact chance has on people's lives" is to 
misstate his position.

>Then what is the whole point of buying insurance?  Obviously it is possible
>to balance out the risks over a larger group of people and therefore
>reduce the role of luck.   

Indeed -- you'll notice a crucial difference between an insurance company
and a government here (although you're trying to use them for the same
purpose).  The insurance company must make sense.  It must answer
to stockholders.  It must make money without extracting by force it from
those who choose not to deal with it.  If it makes rules not consistent
with reality, it dies, and the people who chose to 
deal with it may suffer.  If a government does the same thing, it will
steal the resources it needs to support an impossible dream, and 
everybody within its reach will suffer.

>What may be random "luck" for the individual
>may still be predictable using probability and the law of large numbers.
>Why should a few people gain all the benefits of the economic system
>and many other people sustain the losses?  

A very hypothetical question.  I don't know of any economic system
where "a few people gain all the benefits of the economic system".
If you can find one (other than the trivial case of a society 
consisting of only a few people) I'm willing to examine the society.

I suspect you mean "why should a few people benefit vastly more than
others", and I suspect you know the answer to that question: it is that
in providing incentive to produce, our society allows choice to its
members as to how to use the rewards they get.  The impulse is strong to
look out for your children (and thus people inherit huge sums without
being productive themselves) and to look out for yourself (and thus
people assemble more wealth than they need).  In a society where no
person is forced (except by contractual terms) to deal with others, this
is not a problem (wealth tends to redistribute itself (take a look at
early America)).  In societies where wealth is controlled by means
unrelated to productivity or how much material good you do others,
wealth tends to be distributed according to whatever rationale dominates
the system.  The problem is that all such systems come to terms with the
common ideas of looking out for yourself and your children.  Under any
system, some people will be better adapted to the rules than others.
Making the rule be that the people must deal with each other on an equal
basis (rights-wise) and that they can only get wealth by giving value,
("trade") has the nice pair of properties that it promotes extreme
economic efficiency and doesn't require little nasties like government
restriction of emigration or immigration, forced slave labor, government
control of economic choices (including "which books shall be printed?")
and inquiry into private affairs.

>Is there really anything wrong
>with balancing out such benefits and losses to a certain extent?

Let's not be too euphemistic here.  Whoever controls the "balancing"
apparatus will control the wealth of the society you propose.  
If you have any central control of this apparatus, you've created
a system wherein whoever can control the balancing will
look after himself and his children.  As David Friedman put it
(sorry, I'm quoting from memory here) "A society that depends
upon putting Saints in control is perilous -- there are not
enough Saints."

>Of course the major element of luck in any individuals whole life is
>who she or he happens to be born to.  Why should those born rich be
>able to go through their whole lives without working at all, while others
>struggle just to make ends meet? 

On the other hand, why shouldn't people who earn their wealth be able
to give it to whom they please?  And what could be more moral (as a
parent) than giving it to your children?  Part of the apparatus that
makes the poor in this country pretty well off compared to the poor
in other countries is that there are lots of opportunities.  Should
not the provider of opportunities be rewarded?  Should he not have
the right to do what he chooses with the reward (force and fraud aside)?

>This is fair? This is justice?

Prosecutor: "Members of the jury, is this the face of a fair society?"
Jury: "I thought we were supposed to judge the evidence, not the faces."
Yes, it is fair, and it is just, and it is even inspiring -- provided
you don't let the powerful concretize their position by giving
them political power.  The most often-used way of doing this is to
create some mechanism to regulate wealth, which in turn comes
under the control of the then-wealthy, which in turn is used to 
preserve the fortunes of the then-wealthy against the natural
economic forces that make preserving capital difficult for the
unproductive.

"Socialism" is one good example of this, particularly in the USSR.

orb@whuxl.UUCP (SEVENER) (01/22/85)

> > tim sevener (me)
> Barry Fagin @ University of California, Berkeley
> >Is it really true that we can't reduce the role of luck in people's lives?
> >Then what is the whole point of buying insurance?  Obviously it is possible
> >to balance out the risks over a larger group of people and therefore
> >reduce the role of luck.   
> 
> Of course!  In fact, insurance companies would play a major role in
> a libertarian society.  Individuals can and do purchase insurance
> against the trials and tribulations of an uncertain world, and do so
> freely in the context of a market economy.  This is an argument against
> government intervention, not for it.

GREAT! Then I presume those in Harlem will certainly buy insurance against
poverty! Or could it be possible that after 33% of the American people
were unemployed due to the workings of the wonderful "free enterprise system"
that they might decide that they should *ALL* shoulder the burden to
provide unemployment insurance, education, and other such collective
insurance against personal catastrophe?  Was there something wrong with
this national decision? I don't think so.
> 
> >Of course the major element of luck in any individuals whole life is
> >who she or he happens to be born to.  
> 
> Quite true.  Should children born into wealth should be forced to
> change places with those in poorer families? Or do they have certain
> natural rights that render them immune against such claims?
> 
> >Why should those born rich be able to go through their whole lives 
> >without working at all (...)
> 
> At all?  If their wealth is not managed productively, it will disappear.
 
So you take a million dollars out of your billion and pay your
accountants, lawyers and stockbrokers to see that the river of money
doesn't dry up.  If you own enough money then the law of compound interest
makes it very easy to keep such wealth without doing a thing.
> 
> Suppose J. Paul Getty were to leave his son a billion dollars.  Doubtless
> you would perceive this as an unfair and unjust distribution of wealth,
> and would rectify it through coercive means.  But if JPG were to leave
> a billion dollars to a struggling laborer, this would be OK?  
 
No, it certainly would not be OK.  If JPG distributed his billion dollars
to 100 million laborers or those who actually do the work that sustains
the billion dollars then this would seem more fair than perpetuating
and even increasing an unequal distribution of wealth. Giving the one billion
dollars to somebody other than his son does not resolve the fundamental
problem--perpetuation of an unequal distribution of wealth and passing
on such wealth without any effort on the inheritors part, other than
crawling out of the womb.
 
I am not prescribing any specific action to solve this problem.
But I think that the inequitable distribution of wealth IS a problem
which Libertarians seem totally unwilling to address.
 
In the real world as opposed to the mythical "Libertaria" 33% of the
country was unemployed during the Great Depression. To solve this problem
people supported their government in providing assistance to these
people, who were unemployed through absolutely no fault of their own,
but simply due to the workings of the economic system.  I think that
this was (and still is) a reasonable thing to do.
  
In the real world as opposed to the mythical "Libertaria" there are
people who inherit a fortune and do nothing whatsoever to contribute
to other's welfare other than to contribute to the welfare of lawyers,
accountants and others who insure that the money keeps rolling in.
This is not to say that most of the wealthy are lazy: actually many
are very hard-working.  But it points up the injustice of a system which
allows some people to make money off of other people's labor:
how to deal with such injustice is a very complicated problem.
But it IS an injustice and it IS a problem.  Libertarians seem unwilling
to admit this.

How would Libertarians deal with the Great Depression? Pretend it didn't
exist? 
Ah, yes, that's the answer, of course it didn't exist because such
economic downturns just cannot happen in Libertaria! We have defined them
out of existence, ipso facto, TAA DAA! they no lonher exists!
Amazing what a consistent philosophy does for you!
Why, if you believe that, I'll tell you about a REAL existing society
which has no classes, no crime, indeed no social problems of any kind.
Just ask the leaders of the USSR about how their consistent system has
solved all social problems and ills......
 
where is the connection with reality????
tim sevener   whuxl!orb

orb@whuxl.UUCP (SEVENER) (01/23/85)

> >    tim sevener:
> > Why should a few people gain all the benefits of the economic system
> > and many other people sustain the losses?  Is there really anything wrong
> > with balancing out such benefits and losses to a certain extent?
> >          
> 
> If someone is lucky to be alive, are you justified in killing him?
> 
> --JoSH

Who is suggesting killing anybody? On the other hand there IS a valid
ethical concern here: the average lifespan for the affluent is much
greater than that for the poor and people in the Third World.
Right now, as we know thousands are starving in Ethiopia.  But this was
merely the event the media has temporarily decided to focus on.  In fact
many people are starving all over the world, and have been for some time.
The solutions to this problem are not necessarily just to send massive
amounts of food. The long-term solution involves promotion of a more
efficient agricultural system in these countries through land reform,
government price supports, provision of extension services to provide
technical aid to peasants who often use inefficient methods.
Will it kill the affluent to provide some money to assist in helping
their fellow humans in the rest of the world?  
Of course, Libertarians will now suggest that it is just a question of
getting people to *voluntarily* contribute to help the starving in the
rest of the world.  I would agree this would be better than promoting
such efforts through taxation.  But this is largely the system
we have right now.  The government is not stopping anybody from
contributing to relief organizations or very good organizations like
Oxfam America (which funnels its aid to help *production* and not
just the provision of food itself). Is this working?
What Libertarians are mounting a campaign to contribute to those starving
in the rest of the world?
If the advocates of totally voluntary action are unwilling to volunteer
their own time, money and energy to help the starving, then who is?
 
      tim  sevener     whuxl!orb

orb@whuxl.UUCP (SEVENER) (01/24/85)

>from nrh: 
> I suspect you mean "why should a few people benefit vastly more than
> others", and I suspect you know the answer to that question: it is that
> in providing incentive to produce, our society allows choice to its
> members as to how to use the rewards they get.  The impulse is strong to
> look out for your children (and thus people inherit huge sums without
> being productive themselves) and to look out for yourself (and thus
> people assemble more wealth than they need).
 
The true question is not how to use the rewards people get, it is
how they get such rewards in the first place?  Is it fair for the
onwer of a factory to get money for nothing more than owning the factory?
What good would the factory be if there were nobody to work in it?
(note: this is about to become a moot question when factories become
so automated nobody *will* have to work in them.  How people will
then have money to buy the factories production is a problem we
are about to confront......)
>  In a society where no
> person is forced (except by contractual terms) to deal with others, this
> is not a problem (wealth tends to redistribute itself (take a look at
> early America)).  In societies where wealth is controlled by means
> unrelated to productivity or how much material good you do others,
> wealth tends to be distributed according to whatever rationale dominates
> the system.
 
"wealth tended to redistribute itself in early America": this is an
interesting proposition, however a study I have read on this subject
showed that the concentration of wealth tended to increase in several
cities (Boston, Philadelphia) according to the evidence examined.
It is true that America did present a path to property unavailable
in Europe: namely, homesteading the frontier, an option provided largely
due to the foresight of Thomas Jefferson.  One should also note that
this brilliant founding father (so often cited by Conservatives!)also
supported and campaigned for the provision that every parcel of land
homesteaded would have some land set aside for public education.
Public education: arrghhh! Such a ghastly sore in the free enterprise system!

more comments on this article to come......
 tim sevener   whuxl!orb
 "loving every minute of it!!"

eder@ssc-vax.UUCP (Dani Eder) (01/25/85)

> No, it certainly would not be OK.  If JPG distributed his billion dollars
> to 100 million laborers or those who actually do the work that sustains
> the billion dollars then this would seem more fair than perpetuating
> and even increasing an unequal distribution of wealth. Giving the one billion
> dollars to somebody other than his son does not resolve the fundamental
> problem--perpetuation of an unequal distribution of wealth and passing
> on such wealth without any effort on the inheritors part, other than
> crawling out of the womb.
>  
     Let's see just how unfair the current system is.  I'll use the
Boeing Company for 1983 as my example, because I have our annual
report handy.  Total income was $11.308 billion. 98.4% of this was
due to sales, the other 1.6% was mostly interest on time deposits
and the like.  Most of this, $8.128 billion, goes to expenses:
buying raw materials and parts from subcontractors, utility bills,
purchase of machine tools, local and federal taxes, debt service, etc.

     The remaining $3.18 billion is available to pay employees
salaries and profits to the shareholders.  The employees received
$2.825 billion, or 88.8% of this.  The shareholders received
$136 million, or 4.3%.  The balance was reinvested in the company,
to provide future growth.  Even assuming all the retained
earnings eventually go to the shareholders, they receive only
12.2%, or $355 million.

     Why should the owners receive anything?  Well, they own
a bunch of buildings, tools, and land, worth $3.048 billion,
with which you can build useful products, like commercial
airplanes.  Why should the workers receive anything?  They
have specialized skills and experience that can produce those
products.  It takes a cooperative effort of those who have
the hardware and those who know how to use it to build the
products.  Why is it reasonable for the shareholders to
get 12.2% of the 'profits'?  It is they who take the risk of
losses.  The employees are guaranteed a known wage.  It is
true that employees may be laid off, but so long as they
work they will get a definite amount for their time.  On the
other hand, the shareholders have no guarantee of profits.
It is possible for them to lose their entire investment.
They could also make lots of money.  It is for the risk taking
that they are worthy of their gains.

     Now, a regulated monopoly, like public utilities in most
states, has no risk.  The state typically sets a guaranteed
rate of return, typically fairly high.  This, to me, is wrong.
If there is no risk, the rate of return should be very low,
maybe 3%.  Otherwise the shareholders in the monopoly ARE getting
a free ride of the type several USENET readers complain about.
So, the libertarian answer is to de-regulate the monopolies,
and allow competition and the market to operate.

Dani Eder / Boeing / ssc-vax!eder