A Tax on Virtue

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An Embarrassment of Riches

The death tax is a tax on virtue.

Thursday, February 22, 2001 12:01 a.m. EST

Maybe you have to be a billionaire to appreciate the argument for keeping the estate tax.

A newspaper ad signed by Bill Gates Sr., George Soros, David Rockefeller and more than 200 other moneybags has just warned that repealing the estate tax "would have a devastating impact on public charities." We live in strange times indeed when the ethical case for keeping a tax rests upon a collection of fat cats talking about the things they will do to avoid paying it.

Of course, they don't really have an economic argument. Anyone who looks at the numbers knows that the death tax amounts to only about 1% of all federal revenues. But that figure doesn't begin to get at the actual and opportunity costs involved in collecting it. When the Joint Committee on Taxation looked into the issue two years back, it found these costs staggering: punishing savings, encouraging consumption and costing almost as much in compliance as it takes in.

What about the moral argument? Everyone knows about sin taxes--taxes on cigarettes, alcohol, etc. Well, a death tax is a tax on virtue. It's a tax on those who've worked hard, saved well and in most cases have already paid taxes on their wealth at least once and probably twice.

It is also responsible for a whole tax-avoidance industry, which takes in millions itself from the 200 well-heeled individuals in Sunday's ad. Put simply, if you really are rich enough you can have your cake and pass it along to your heirs too. But if you can't afford to pay the legions of estate lawyers, trust fund accountants and life insurance underwriters, your heirs will be forced to sell off what you've worked so hard to build up to pay off the IRS man waiting outside your funeral for his take.

So if the death tax really isn't all that significant for the government, why the opposition to getting rid of it? The answer is that the death tax was never about money. It is about envy and the corrosive philosophy it feeds. This is the philosophy Senator Tom Daschle invokes when he talks about Americans in terms of those whose tax cuts will let them buy a Lexus and those who supposedly will get no more than a muffler. The death tax is their favorite, the name of the game being to stoke the flames of resentment among the 98% of Americans who don't pay this tax against the 2% who do.

Their problem is that the public isn't buying. No matter how they are worded, polls show Americans instinctively understand there is something rotten about a government that would confiscate half of what you've worked hard to build up. This month a McLaughlin & Associates poll reported 88.5% of Americans saying the death tax is unfair, and nearly as many favoring its abolition. A Zogby/O'Leary report clocked in with 86% declaring the tax is unfair. A Portrait of America survey from last July even had 59% of Gore supporters wanting the tax killed. Given that the vast majority of Americans know that the death tax won't affect them personally, opposition to the tax is a pretty strong statement about ideas of fairness and morality.

Within the Bush Administration there are murmurs about giving up on abolishing the estate tax in the hopes of getting the President's other cuts through, and there have already been some defections in the GOP ranks. This would be a grave miscalculation. In his acceptance speech in Philadelphia in August, George W. Bush said that his own position was based on the "principle" that "every family, every farmer and small businessperson should be free to pass on their life's work to those they love." In the next breath Mr. Bush stated that "on principle" he also couldn't see why anyone "in America should have to pay more than a third of their income to the federal government."

These are good, sturdy principles for President Bush to stand on. In the election one of the defining differences between George Bush and Al Gore was that the former understood you don't make poor people better off by making rich people poorer. You help poor people by giving them a stake in the system that makes rich people wealthy. In the past only the wealthiest Americans have really been in a position to give their children and grandchildren advantages by transferring wealth. But a booming stock market and the growth of 401k plans means that American families of even modest incomes might leave a legacy for their children. Billionaires might not understand this, but ordinary Americans clearly do.

Within this context the death tax should be seen for what it really is: the flag of convenience for the Beltway's class warfare brigade. They know all too well that if they can't sell envy on an inheritance tax, they can't sell it at all. The real danger for the President is a halfway measure that would deprive him of victory and foster a reputation as a tinkerer rather than a reformer. "The only way to eliminate the unfairness of the death tax," says Rep. Jennifer Dunn, sponsor of last year's legislation, "is to end it once and for all."



-- Eve (eve_rebekah@yahoo.com), February 23, 2001

Answers

...editorial from Thursday's (2/22/01) Wall Street Journal.

-- Eve (eve_rebekah@yahoo.com), February 23, 2001.

I think the estate tax is a disgusting money grab and should be done away with yesterday.

That said, the title of this piece is a bit puzzling to me. A Tax on Virtue?

It's a tax on those who've worked hard, saved well and in most cases have already paid taxes on their wealth at least once and probably twice.

I note the author fails to point out that much wealth (my assumption) isn't made, but instead inherited. Passed down generation to generation. Whatever sweat equity there might have been was accumulated generations removed, except perhaps the search for shelter - tax shelter, that is.

Where's the virtue in a silver spoon passed along generation to generation? I've seen many situations - family businesses - where the owners sit on their asses collecting checks, sons inherit titles and serve mostly to toss pebbles into the wheels of the businesses (when not at the beach house or golf course), and unrelated employees bust ass to keep the families traveling and trading-in expensive cars for the latest models every year.

I see little virtue in this scenario, save providing for one's offspring.

I've known a large handful of trust fund babies, none of whom hold real jobs, all of whom live off the interest and will pass along the principle to their children. Good for them. But where's the virtue to which the author writes?

I'm not terribly happy with what I've written. Quite likely my vision is clouded by envy. Help me out here, please.

-- Rich (howe9@shentel.net), February 23, 2001.


Rich, the virtue is in working hard, being productive, saving and investing well, and attempting to make a better life for your loved ones and yourself.

There would be no virtue from the beneficiary's standpoint if he becomes a lazy playboy and wastes his inheritance. But if the deceased was as I've described above, his virtue is still unscathed.

I hope this helps.

-- Eve (eve_rebekah@yahoo.com), February 23, 2001.


Rich,

It the common Horatio Alger/Ayn Rand mistake of confusing wealth with virtue. Contrary to the capitalist/libertarian view, wealth is neither "good" nor proof of good. The collectivist/liberal view is equally wrong. Wealth is neither "evil" nor proof of evil.

The cogent argument against the inheritance tax is its inefficiency. As noted, it is possible to avoid the tax. All this requires is a retinue of attorneys and accountants. One can argue the inheritance tax is really a government jobs program for estate professionals.

If government is inclined to tax the transfer of wealth (gifts, estates, etc.), it should do so in an efficient, consistent manner. The tax should be low enough (and tight enough) to limit the incentive to cheat. Making the tax consistent eliminates the incentive to distribute wealth before (or after) death.

To include "virtue" or other moral issues in a discussion about taxation is inappropriate. A tax ought not distinguish between saints and sinners... it should simply raise revenue as efficiently as possible.

-- Jose Ortega y Gasset (j_ortega_y_gasset@hotmail.com), February 23, 2001.


Thanks, Eve.

I see. So the author speaks only of those who via hard work build wealth, are therefore virtuous by way of said hard work and financial success, & wish to pass it on when they die?

I don't buy the premise as a reason to do away with the tax. Nor do I agree accumulation of wealth through hard work is virtuous in and of itself. The process as to how one accumulates wealth would determine virtue. Hard work can be a positive attribute. Except when one works hard to the detriment of family, friends and employees in the pursuit of wealth. Seen it before.

One's conduct on the journey to - in this case wealth - defines virtue, IMO.

Slap me, smack me, beat me til I bleed. Yes? No? Maybe so?

-- Rich (howe9@shentel.net), February 23, 2001.



Jose,

I agree – wealth is neither good nor evil. Its accumulation can be, though. It’s good if it was done honestly and without harm to others. And it can confer many benefits – creation of jobs, production of other related products, raising the standard of living for many – especially for the individual’s own loved ones and himself. If this isn’t good, then what is it? And why?

Rich,

I see the accumulation of wealth as potentially a virtue, to the extent you value your life and the lives of your loved ones, and it goes to their benefit. I see a “virtue” as a lifeling course of action (e.g, honesty, productivity, courage, benevolence, justice, integrity, etc.) -- of pursuing your values -- to make happier the persons you value most, including yourself, or to gain and/or keep the things you value most - - WITHOUT intentionally hurting anyone in the process. But your post reads as if you can sense this.

I have lots more to say here, but I have to do it in spurts, as I'm trying to catch up with work 'n' stuff.

-- Eve (eve_rebekah@yahoo.com), February 23, 2001.


My comments were triggered by the author's failure to define the virtuous nature of the accumulation of wealth. What jumped off the page was that the position was taken - The death tax is a tax on virtue - and then poorly defined and supported.

Attributes such as you listed, Eve, were what I was looking for from the writer. The author had to be vague, I believe, for to define the virtue of wealth would be to whittle down the list of those who achieve wealth through virtuous means. Doing so would narrow the number of affected taxpayers far too significantly to serve his larger purpose - garner support to repeal the tax. A broad brush cover far more canvass than a finely detailed one. And to moralize too deeply would be to, in this case, lose the support of the readers.

-- Rich (howe9@shentel.net), February 23, 2001.


I prefer to discuss capitalism outside of a moral context. The market for child pornography functions much like the market for religious texts. It is simply the interaction of supply and demand. The concern of economics is not the moral nature of markets, taxation or wealth accumulation... it is efficiency.

It is silly, and misleading, to discuss the inheritance tax as a matter of taxing "virtue." This invites one to consider the nature of how a specific "fortune" was created. Would you have government tax the "good" person differently than the "bad." Do you trust government to make this distinction?

On a related note, there are legitimate economic grounds for charging specific taxes on tobacco, alcohol and other items. The use of tobacco and alcohol create external costs. For example, a drunk driver may kill other persons in an accident. A life long smoker may require extensive medical treatment while lacking the financial means. Society pays these external costs one way or another. It is more efficient to have the users of these goods pay the true costs. This is why many economists support the notion of allowing companies to bid for and buy the right to "pollute."

-- Jose Ortega y Gasset (j_ortega_y_gasset@hotmail.com), February 23, 2001.


eve, I know you are not the type who would shrink from confronting opinions or facts that challenge your intellectual framework. I suggest that you read History of the Great American Fortunes by Gustavus Myers. There you will read about many of the highly pragmatic, yet less than moral or virtuous, acts performed in the pursuit and defense of their fortunes, by such leading capitalists of the 19th century as Astor, Gould, Mellon, Carnegie, and Rockefeller.

While their crimes may never rank with Ted Bundy, I think you will find your belief in their "virtue" may be adjusted when you are confronted with a fuller set of facts.

-- Little Nipper (canis@minor.net), February 23, 2001.


Of course Nipper is correct. The surest path to riches isn't by building a better moustrap, but by preventing any competitors from building any at all. That way, you can cut curners, manufacture crap, overcharge for it, and tell your customers to take it or leave it. This is wonderful work if you can get it. Your profit margins will ooze virtue from every pore!

Capitalists get rich through honest competition only under duress.

-- Flint (flintc@mindspring.com), February 23, 2001.



Rich, yes -- good points.

Jose, I wouldn’t classify a criminal and immoral activity such as child pornography as capitalism. On your next point, I’d have the government tax neither the good nor the evil person or company. But I also wouldn’t remove the tax system before a long range, across-the- board reduction in government (say, to ten percent of its budget of today) had been accomplished. Your third paragraph has some good points. The final point on rights to pollute is interesting, and one that I’d love to discuss at length, but I think it would take us too far afield from the topic.

Little Nipper, to the extent these folks obtained their riches through fraud, theft, other criminal activity or government redistribution/handouts, they’re not being virtuous or good. Otherwise -- well, give me a specific example of an action other than those that you're concerned about. In any case, check out J.J. Hill and the Great Northern Railroad. As I recall, I think you’d find him to be virtuous in his business dealings and accumulation of wealth.

Flint, the principal “preventing” of competition we need to be concerned about (aside from criminal activity, fraud, etc.) are the ones that tend to result in real, permanent monopolies, such as the post office, public schools and heavily regulated industries, such as utilities. The other, “clean” potentially temporary monopolies (the “better widget” ones) deserve to be so.

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


eve:

Only in a world of pure hypothetical theory can you build a widget so good and so cheap that *nobody* can find a way to make it a little better or a little cheaper. And do so quickly. Your "deserved monopoly" situation won't last a quarter at the very longest. And by this definition, everyone who comes out with any competitive product of any kind has a "monopoly" on that product for a short time. We even grant patents an a (mostly futile) effort to protect new products from being copied immediately.

So go back and read what I wrote again. The capitalist wants to PREVENT competition. He wants to make sure, by force if necessary, that nobody else enters his market. He wants government to do this on his behalf if at all possible. THAT is the path to real money.

And Jose is entirely correct about child pornography. It is a generic product with a cost of production and a cost of sales, which can be sold at a profit because the demand is sufficient. Just like widgets. A good capitalist will invest in a murder-for-hire group if it's justified by their bottom line. Goods is goods, you know? If it makes money, that is virtue to the capitalist, and nothing else matters. If it makes money by satisfying people, fine. If it makes money by causing suffering, fine. If it makes money by preventing competition, fine. It *does not matter* how it makes money.

-- Flint (flintc@mindspring.com), February 24, 2001.


One more thing. I fail to see any difference between selling pollution licences, or levying fines against offenders. To the polluter, this is simply a cost of doing business. He balances the cost of the fine/licence against the cost of reducing the pollution, does a bit of calculus, and determines the pollution level that minimizes his costs. If this calculation requires that dollar values be assigned to jail time, then they get values assigned. If legal costs are incurred, these are added in as well. So are lobbying costs, necessary bribes, etc.

But the goal is *always* to maximize profit. The law is simply a cost factor that's part of the equation. Morality need not apply.

-- Flint (flintc@mindspring.com), February 24, 2001.


Flint,

Your comments are in brackets.

[Your "deserved monopoly" situation won't last a quarter at the very longest.]

With all due respect, this is empty rhetoric. Some capital- intensive industries require much longer, due to the tougher natural barriers to entry.

[The capitalist wants to PREVENT competition.]

I agree. Of course they’d love lower competition. That’s one reason they work so hard to be the best – to make the best product for the money, and improving our standard of living, to boot. So this desire – to prevent competition without stepping on others’ rights – is natural, healthy and normal – moral, too.

[He wants to make sure, by force if necessary, that nobody else enters his market. He wants government to do this on his behalf if at all possible.]

This, however, would be immoral. Possibly criminal, too – depending on what you mean by “force.” So, again, we seem to agree here. Cool!

Your next paragraph makes clear that you define capitalism to include criminal activity. I don’t. My definition of capitalism implies adherence to the individual rights to life, liberty and property as found in our Constitution. Government’s function is to preserve and protect our individual rights. Thus, the rational kind of capitalism – the kind that I aspire to – implies a certain kind of politics and government beneath it. This would be the precise antithesis to “capitalism” as you define it.

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


Eve, since you admit that wealth and fortune may as easily be obtained by fraud, deciet and other immoral practises, this rather invalidates your contention that a tax on wealth is equivalent to a tax on virtue. If wealth and virtue are commensurable, then you can't equate them.

"In any case, check out J.J. Hill and the Great Northern Railroad. As I recall, I think you’d find him to be virtuous in his business dealings and accumulation of wealth."

I have read a biography of Hill by Stewart Holbrook. He was better than most railroad barons in that the foundation of his success was based on the ability to reduce the gradients of his road, thereby reducing costs. However, he hired fairly unscrupulous companies to lure Scandinavians into emigrating to the Dakotas and eastern Montana, by spreading fraudulent and misleading pamphlets throughout Scandinavia. The purpose was to provide a farming population, who would settle in areas served by Hill lines and ship on them. This fraud was a key part of his strategy and a prime source of his wealth.

-- Little Nipper (canis@minor.net), February 24, 2001.



"If wealth and virtue are commensurable, then you can't equate them."

Oops! I meant "not commensurable".

-- Little Nipper (canis@minor.net), February 24, 2001.


Little Nipper,

The "tax on virtue" here assumes the wealth was created by the taxpayer and was obtained without resorting to force or fraud, or in a criminal manner, inherited, or through government largess. I don't think I ever said or implied that a tax on wealth was necessarily a tax on virtue. If I did, I would retract it.

To the extent J.J. Hill obtained his wealth through fraudulent means, I stand corrected with respect to my assessment of him. Keep in mind, though, that your list doesn't negate the principles involved.

Flint,

To elaborate...

A businessman who obtains his wealth through criminal activity or fraud has violated the Constitutional rights of his victim. Since I view a true capitalist as one who obtains his wealth without violation of another's rights (or government largess or inheritance), the businessman in my example is not a true capitalist.

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


eve:

You say my observation is "empty rhetoric" because you believe that in theory there can be exceptions? You need to do better than that. Yes, Iridium put up lots of satellites and nobody else followed suit. If their product had been successful, they may have been able to have abnormally high profit margins for a year or two. But in the first place, that sort of thing is very much the exception, and in the second place you don't amass fortunes in a year or two, there is this physical plant (those satellites) to pay off with your income. Meanwhile, you have blazed a trail others can follow faster and cheaper.

In any case, your definition of a virtuous capitalist is tightly circular. You define anyone who makes money using techniques you don't like as not being virtuous, so they aren't capitalists. This leaves only those who did it in your approved way (if there are any, which is doubtful). But hey, I can define an elephant as everything that isn't anything else, and then I can say an elephant is dainty. And if you point out that elephants aren't dainty, then I can say those aren't elephants, because they fail to fit my definition!

So your definition of capitalism requires that someone get rich behaving exactly as you specify. That's very convenient -- except that most if not all of those subject to the estate tax did NOT behave that way! Indeed, a good chunk of our law is devoted to regulating or prohibiting the methods those very people developed and used.

Now you seem to be backpedaling, and saying these people "would have" been virtuous, if only they hadn't broken the law or done things now illegal. Eve, I submit that such people do not exist and never have. They made a virtue of money, and achieved it by any means necessary -- often with government's assistance and blessing.

I repeat, capitalists make money through honest competition only under duress. Government provides that duress, by passing all these laws that *force* competition, and make antisocial practices illegal, and generally reduce profits and increase costs. Capitalists *hate* things that reduce profits and increase costs, Ayn Rand notwithstanding. Regulation is a necessity.

-- Flint (flintc@mindspring.com), February 24, 2001.


"The "tax on virtue" here assumes the wealth was created by the taxpayer and was obtained without resorting to force or fraud, or in a criminal manner, inherited, or through government largess."

And that assumption is the weakest part of your argument.

However, I will state that the estate tax has suffered from the same "bracket creep" that affected the income tax before it was indexed to inflation. When the threshold for estates was set at the current level (isn't it $600,000?) the value of an estate that size was far greater than it is now.

Taxing this level of estate is contrary to the original intent and purpose of the law and the threshold should be raised back to one that is in better alignment to the original. But that is not what the Republicans are proposing. They are proposing elimination of the tax altogether, based in part on the "tax on virtue" types of argument you are using here.

I heartily agree with the billionares like Soros who signed the petition. Money accumulated across generations places power in the hands of those who never demonstrated any merit connected to that accumulation of power. And the chances are almost 100% that such power would be used to perpetuate itself, rather than for meritorious puposes.

I do see that, if I believed as you do, I would think as you do. But you have failed to demonstrate a factual basis for your position, only a philosophical basis.

-- Little Nipper (canis@minor.net), February 24, 2001.


Flint,

Your post carries with it lots of subsidiary issues. I don’t have a lot of time right now, so I’d like to respond to what I feel are the most important, and if you think I skipped over something you feel is important, just reassert it and I’ll be happy to respond. The only problem is that after tonight, I’ll be offline for about a week; I’ll try to answer any open posts after that.

Again, your comments are in brackets.

[You define anyone who makes money using techniques you don't like as not being virtuous, so they aren't capitalists.]

Nope. I gave REASONS and SUPPORT for my position. Please re-read my posts, where I tie capitalism to rights and the role of government. And indirectly, it’s a derivative of other areas in philosophy. You see, It’s all a SYSTEM to me, whereas you’re looking at capitalism in a vacuum. Tying all that together is complicated, though, and in my brief posts I know I couldn’t really have done it justice, so I can empathize with any confusion on your part. I was just hoping to get you to see my perspective in at least a generalized way. Just ask, though, and I’ll be glad to elaborate.

[…(ironically) most if not all of those subject to the estate tax did NOT behave that (i.e., in a virtuous) way!]

Where do you get this “most” from, Flint? I’m sorry, but I don’t buy that for a minute. In any case, why should we punish the good with the bad?

Little Nipper,

Your comments are in brackets…

[I heartily agree with the billionares like Soros who signed the petition. Money accumulated across generations places power in the hands of those who never demonstrated any merit connected to that accumulation of power. And the chances are almost 100% that such power would be used to perpetuate itself, rather than for meritorious puposes.]

So you’d take the money from the ones who created it honestly and through hard work and redistribute it. That’s a socialist position, right? Well, I guess we’re not too far from opposite ends of the spectrum on this one. Don’t forget that those billionaires’ heirs will be set for life practically no matter what’s done with the estate tax. So, in substance, they have nothing to lose. The ones who are not socialists are most likely doing this to lobby for the charitable interests they’re tied to.

Further, your “100%” begs explanation, and your “meritorious” term needs definition. What do you see as “meritorious”?

[you have failed to demonstrate a factual basis for your position, only a philosophical basis.]

The philosophical basis is crucial, because it gives you principles -- general guides -- to deal with very complex sets of facts; otherwise at times you'd just be swimming -- not really knowing if you're right or wrong. Thus, the principles and the facts work together. I can elaborate on this, too; just let me know.

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


Little Nipper,

To add something...

My philosophical basis (which is my bedrock set of principles and axioms) helped me to see through this set of facts and made it easier for me to determine the merits of the issue. If you think I don't have all the facts (or misinterpreted something), that's ok -- just give me the ones you think I need and I'll add them to the mix.

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


eve:

Come on now. The "vacuum" in which I'm examining capitalism usually goes by the name "the real world". I understand the philosophy you're peddling, but I think you need to recognize where it falls short, for whatever reasons. I've tried to show you that, left to nothing but market forces, capitalists will find ways to maximize profit. ONE component of that effort is to produce good products at reasonable prices. But you keep insisting that that's the ONLY arrow in the capitalist's quiver. It ain't. In fact, it's one of the most difficult to use, and used as a last resort only when all the others become too expensive for one reason or another (like regulation).

Let's try a real world example. Cell phone service in the US is abominable. Calls don't get through, they get cut off, the signal to noise ratio is so bad you can't understand the person on the other end, and these problems happen VERY commonly.

Now, here we ought to have a golden opportunity for your virtuous capitalist, right? He will actually invest in the equipment where the others skimped, right? He will advertise the superiority of his service, right? Well, uh, no, it's not happening. Why not? Because quality problems are treated by all competitors as a trade secret. Your virtuous captalist can't get the information necessary to support his claim, and meanwhile he is charging more for what appears to be the same service. So he goes broke. This is *really happening*, eve. For the same reason, there is no incentive to improve service among existing providers. When the information is not there for the public to pick the better product at the better price, there is no incentive to *reduce* margins by improving the product.

This is a tiny example, but I'm trying to show you that we really do need regulations to force capitalists to be virtuous. And your philosophy MUST take situations like this into account to be of any use. Philosophies that *assume away* real-world inconveniences are the real vacuum. You must address how economic actors *really act*, not how you propose that they OUGHT to act in order to accommodate your philosophy.

-- Flint (flintc@mindspring.com), February 24, 2001.


Flint,

Just what I feel is the crux of the matter for now...

You said that I insist the virtuous capitalist is the only real capitalist and you imply that's wrong.

Well, from my perspective it's right, because I include recognition of individual rights to life, liberty and property as an integral part of the necessary context of true capitalism.

When you leave this element out, of course the door is left open to include crooks of every kind who have no respect for someone ele's right to property, their right to life, etc. So, given that you've left rights out of the capitalist equation, all bets are off and every freak in the world who does a transaction is magically transformed into a "capitalist." Follow me so far?

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


eve:

Let me repeat. You must address how economic actors *really act*, not how you propose that they OUGHT to act in order to accommodate your philosophy. This means, I'm NOT interested in how characters behave in novels where human nature has been ignored so that the characters can be steered to behave as your philosophy dictates.

Look, I can make up mythologies too. I can propose economic and administrative theories based on how I wish people would act. In my imaginary world, they would all be enlightened, fully informed, brilliantly intelligent, altruistic as all hell, interested in the long term, and so respectful of one another they could just SHIT. OK?

But any real-world structure that *depends* on people behaving like that will fail, OK? FAIL! If you read any political history, every political theory ever seriously presented starts off by saying "Because human nature is like *this*..." And this is necessary, because a philosophy requiring people to act in unnatural ways cannot work.

Your capitalist, as you define him, properly belongs in the category of alien anthropology. A fascinating subject, no question. But you must recognize that it's not applicable to this discussion.

-- Flint (flintc@mindspring.com), February 24, 2001.


Flint,

I need more information before I can comment on your cell phone scenario, for example:

Was our entrepreneur aware of these types of risks before he went into the business? Should he have been? Should his legal counsel have been aware? Did the competitors commit fraud? Breach of contract of any sort? Did they force the entrepreneur to do anything or refrain from doing anything by blackmail? How long do you think this these "trade secrets" can be kept, given that so many seem to know about it? How is it that so many aspects of these products DO improve? What did we have in the way of cell phone technology and availability twenty years ago? Almost zip? Nada? Hmmm...and what do we have now?

By the way, I'm not for zero regulation -- it's just that for me the argument for a regulation would most likely have to show that there's a specific health threat (e.g., pollution, product and worker safety).

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


Flint,

The last paragraph in my last post speaks of regulations other than those laws and/or regs that would cover criminal acts, fraud, miscellaneous torts, contract and patent issues, etc. etc.

Also, we cross-posted and I haven't yet read your latest post.

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


Flint,

I just read your latest post. All the folks you're talking about, other than the virtuous capitalists, DO have to be dealt with.

It's just that for the most part they already ARE. By the criminal laws, the civil tort, contract and patent laws, libel and blackmail laws, etc. etc.

What I would add to this are pollution, product and worker safety regulations and little else, although you might be able to convince me to add a thing or two to the list.

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


eve, as Flint is trying to tell you (albeit with a lot of sarcasm), you appear to be letting your philosophy color your interpretation of the facts to such a degree that you are no longer interpreting facts impartially, but selectively.

The major selection appears to be in the matter of how much "virtue" is involved in amassing a great fortune. I am not talking about the owner of the appliance store who, if she sold her interest to an investor might be worth somewhere over $1 million but under $2 million. A modest fortune may be amassed quite easily without breaching virtue. It gets an awful lot harder to amass $1 billion without using means that do not conform to your theory of human nature.

Just to give an example from the list of people signing the petition: George Soros. He will be the first one to tell you that he took every advantage, not just of the sort of "rational market" mechanisms you beleive in, but also legal loopholes, market irrationality, investor ignorance, mob mentality, intimidation, bluff and any other factor he could exploit for his own purposes. Soros punished whole nations by devaluing their currency, deliberately pushed those devaluations past their rational limits and then profited by leveraging his own reputation for inafallibility to profit those who imitated him by bailing out first. He was one smart cat, but he does not credit his fortune to "virtue". Read his writings.

In science, facts trump theory. When theory is allowed to mask the facts or color them unduly, then one loses touch with reality. Be wary of this, eve.

As for my "socialism". I believe that when a democratic society grasps that following a particular policy will eventually destroy its democratic form of government, then it may act to preserve itself from destruction.

-- Little Nipper (canis@minor.net), February 24, 2001.


Little Nipper,

I would need much more information about Soros in order to ferret out which of his actions amounted to violations of persons' rights to life, liberty and/or property (from your list, some were relatively clear, some weren't) to give you my assessment of him.

Other than that, you have the last word....for now. :) Hopefully y'all can keep this thread going till I'm back; if not, I'll try to resurrect it. In any case, I commend you and Flint in your nice work here, and as more than worthy opponents in this little "dust-up."

Flint, if you're in the middle of writing something...I'll be back atcha next week. Hang in there -- ok?

So, I'll be offline for about a week, and I'm starting to feel very tired right about now. Oh yes...and I told my kids I'd see Gladiator with them in the living room tonight. Well, you can guess how long mom's gonna last (on the floor, propped up against the couch), before she's out like a light, head rolled back, one hand half-buried in the popcorn bowl...

Sweet dreams, y'all. (Yawwnnn)

-- Eve (eve_rebekah@yahoo.com), February 24, 2001.


Eve,

The word "capitalism" already has a commonly understood definition. If you insist on creating a new economic system, please use a new or different term.

What Flint and I are discussing is market capitalism-- an economic system based on the use of decentralized markets to allocate scarce resources, goods, and services. Capital is privately owned by individuals, and production and employment decisions are decentralized.

I am certain, given your copious reading in economics, that you have encountered numerous variations of this definition. The key elements are private ownership of capital and decentralized decision making through market mechanisms. Virtue and vice are matters for philosophers or theologians, not economists.

-- Jose Ortega y Gasset (j_ortega_y_gasset@hotmail.com), February 25, 2001.


Jose:

What's key here is that eve is working backwards from a *definition*, not forward from observation and logic toward a conclusion. A definition cannot be wrong, because it's right by definition.

The problem is, eve is disguising her definition as a theory based on evidence, to make it look as though it were derived to explain a body of observation. Where the disguise is threadbare, of course, lies in her inability to find real-world observations that properly fit the definition. So everything must remain theoretical. When we *insist* that the real world counts, she thanks us for our input, takes her definition (intact), and retires from the discussion.

Definitions are matters of faith. They cannot be modified and, most important, they cannot be disproved *even in principle*. Objectivism meets every requirement for religious dogma, which is rather sad. Market mechanisms are extremely useful within their very real limitations. Taking some cardboard caricature of those mechanisms, masking out all the limitations, and worshiping what's left blindly reminds me of the "Scientific People" in Bester's book The Stars My Destination. They chanted formulas by rote out of chemistry books in their rituals, as "scientific" as eve's dogma is "economic". Religion in all forms is the enemy of thought.

-- Flint (flintc@mindspring.com), February 25, 2001.


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