Wednesday, October 9, 2019

Stiglitz on Economic Rent

A basic principle of economics holds that it is highly efficient to tax rents because such taxes don’t cause any distortions. A tax on land rents doesn’t make the land go away. Indeed, the great nineteenth-century progressive Henry George argued that government should rely solely on such a tax. Today, of course, we realize that rents can take many forms – they can be collected not just on land, but on the value of natural resources like oil, gas, minerals, and coal. There are other sources of rents, such as those derived from the exercise of monopoly power. A stiff tax on all such rents would not only reduce inequality but also reduce incentives to engage in the kind of rent-seeking activities that distort our economy and our democracy. 
– Joseph E. Stiglitz The Price of Inequality

[M]inor tweaks in the economic system are not going to solve the problem… The underlying problem is the whole structure of our economy, which has been oriented more at increasing rents than increasing productivity and real economic growth that would be widely shared in our society … one has always to think about issues of shifting so that, for instance, just a tax on capital might be shifted, and a lot of the models have shown this would happen, but a tax on land, rents, would actually address some of the underlying problems. This is the idea that Henry George had more than a hundred years ago, but this analysis that I have done ... goes one step beyond Henry George. Henry George argued that a land tax was nondistortionary, but this analysis says that a land tax actually improves the productivity of the economy because you encourage people to invest in productive capital rather than into rent generating. Well, the result of the shift in the composition of the savings towards more productive investment leads to a more productive economy and in the end leads to a more equal society.
– Joseph E. Stiglitz [Speech in Paris–April 8th, 2015]

Monday, September 16, 2019

The Physical Economy Of Goods & Services

"No financial sleight-of-hand can transfer goods and services from the future to the present. And no debt that we might pile up for the future can reduce the sacrifices of goods and services we must make today."

– Hans Morgenthau in 1942 regarding war "debt"

Sunday, August 18, 2019

Fallor Ergo Sum

What difference, if you are mistaken? For if I am mistaken, I am. For he who is not, assuredly cannot be mistaken; and therefore I am, if I am mistaken. Therefore because I am if I am mistaken, how am I mistaken that I am, when it is sure that I am, if I am mistaken.'

– Augustine

Wednesday, July 3, 2019

Fallacy of Insignificance

 Reminder to be awesome at what you do:

Some time in 1959, I received a letter from an American professor of psychology, Abraham H. Maslow, enclosing some of his papers. He said he had read my book The Stature of Man, and liked my idea that much of the gloom and defeat of 20th century literature is due to what I called ‘the fallacy of insignificance’. Maslow said this resembled an idea of his own, which he called ‘the Jonah complex’.

One day, he had asked his students:

‘Which of you expects to achieve greatness in your chosen field?’

The class looked at him blankly. After a long silence, Maslow said:

‘If not you—who then?’

And they began to see his point. This is the fallacy of insignificance, the certainty that you are unlucky and unimportant, the Jonah complex.

– Colin Wilson "New Pathways in Psychology"

Wednesday, April 17, 2019

Hedging Your Bets

Karl Marx’s private confession to Frederick Engels after writing a newspaper article on the likely outcome of the Indian mutiny in the 1850s:

‘It is possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way.’

Monday, April 15, 2019

The Superficial Philanthropy of The Common Leftist

"To have a liking for the corporeal man with hide and hair – why, that would no longer be a “spiritual” warmheartedness, it would be treason against “pure” warmheartedness, the “theoretical regard.”

For pure warmheartedness is by no means to be conceived as like that kindliness that gives everybody a friendly hand-shake; on the contrary, pure warmheartedness is warm-hearted toward nobody, it is only a theoretical interest, concern for man as man, not as a person.

The person is repulsive to it because of being “egoistic,” because of not being that abstraction: Man. But it is only for the abstraction that one can have a theoretical regard. To pure warmheartedness or pure theory men exist only to be criticized, scoffed at, and thoroughly despised; to it, no less than to the fanatical parson, they are only “filth” and other such nice things."

– Max Stirner

Friday, April 12, 2019

Labor Is Not A Commodity: It's A Common-Pool Resource

The everyday experience of working people, economic policies of governments, bargaining priorities of trade unions and theoretical models of economists refute the idealistic maxim that labor is not a commodity. An early rationale for the proposition was given in 1834 by William Longson of Stockport in his evidence to the House of Commons Select Committee on Hand-Loom Weavers:
…every other commodity when brought to market, if you cannot get the price intended, it may be taken out of the market, and taken home, and brought and sold another day; but if a day's labour is offered on any day, and is not sold on that day, that day's labour is lost to the labourer and to the whole community…
Longson concluded from these observations of labor's peculiarities that, "I can only say I should be as ready to call a verb a substantive as any longer to call labour a commodity."

Karl Marx was emphatic about the peculiar historical nature of labor – or, more precisely, labor-power – as a commodity. Rather than reject the label outright, though, he chose to examine it more closely. Marx observed that for labor-power to appear on the market as a commodity, the sellers must first be free to dispose of it (but only for a definite period) and also must be obliged to offer labor-power for sale because they are not in a position to sell commodities in which their labor is embodied.

Connecting Longson's observation to Marx's, it would seem as though, aside from moral strictures, one of the qualities that most distinguishes labor-power from other commodities – its absolute and immediate perishability – is what compels its seller to submit unconditionally to the vagaries of demand. To paraphrase Joan Robinson, the misery of being regarded as a commodity is nothing compared to the misery of not being regarded at all.

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