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A thought experiment:
imagine a bunch of clones, with the same mental talents and skills. They all start with equal amounts of money. For some reason, they all play poker with each other. What happens? Their skills are the same, so their stakes will fluctuate randomly with the luck of the deal. If stakes could range across the integers, each would stay at an average value of what they started with.

But without debt, anyone who gets a bad run and runs out of money is out of the game. And given enough time, someone *will* run out of money. One fewer player, with their money distributed among the others. The process will repeat, and the end point is a single person with all the money. Not because of desert, but because of random walks and the elimination of the zero point.

But that's an artificial example (why don't they stop playing poker?); is there something more realistic? Take the same clones, and same equal division of money, as well as equal division (as best can be arranged) of physical resources. They'll farm, craft, and trade. Equal abilities and equal starting points, they should stay equal, right? -- No. Random fluctuations strike again: weather and pests hurting or help crops, weather delaying or sinking trade, diseases or cancers striking at people's health, even for clones. So wealth will fluctuate -- and then stuff happens even before the bankruptcy effect. "It takes money to make money", "the rich get richer" -- those with more money can afford economies of scale[1], or take more risks (an economy of scale of risk and investment, really) and pull further ahead, not because of talent but simply because they have more wealth.

And that's the ethical effect. Less ethically, there's extorting an unfair share of the surplus value of trade[2] from the desperate, bribing government to favor one's own enterprises[3], and using hired gangs or superior weaponry to outright steal more.

Am I saying the rich never earn their wealth through superior merits[4]? No. But given that even a completely egalitarian initial condition can lead to concentration of wealth just from random walks and economies of scale, let alone less ethical uses of superior wealth, I think this constitutes a robust null hypothesis against claims of total desert. Not that we want to enforce egalitarianism regardless of effort -- that's been tried and failed -- but it doesn't leave much sympathy for outrage at the existence of any income or wealth tax whatsoever.

[1] Buy more contiguous land, get more use out of a tractor. Pay more up front for something better made, spend less on maintenance. If it takes the same effort to manage $100 as $1000, the $1000 gets better returns. Etc.

[2] A and B can cooperate with equal effort to make a dollar. They should split it fairly, right? But say A had $10, B has $0.10, and it takes $0.10 a week to live. A can say "take ten cents or I won't work with you",, having a 100 weeks to try to find another partner, while B only has a week to find a fairer deal or die.

[3] C works 2000 hours a year and earns $100,000. D has a bunch of rental wealth, and makes $100,000 for no effort. C pays more in taxes. Is that fair?

[4] Of course, merits such as intelligence, attractiveness (is that fair?) or work ethic are themselves results of genetic and childhood lotteries, so the question of whether one entirely deserves the benefits of one's randomly allocated merits is an interesting question of its own.

Edit: Milton Friedman and Bill Bennett on the wages of luck, the justice of amelioration (education and guaranteed minimum income) and the non-existence of free will.


( 2 comments — Leave a comment )
Aug. 2nd, 2008 04:29 am (UTC)
In real life, with non-clones possessed of different genetic and memetic heritages, the effect of random chance -- while present -- is hardly overpowering. And whether or not a given person "deserves" his wealth, an entity which has the power to take one man's wealth has the power to take another man's wealth too -- and there is no guarantee that this entity will preferentially take the wealth of the less deserving.
Aug. 2nd, 2008 04:50 am (UTC)
the effect of random chance -- while present -- is hardly overpowering.

That's debateable. Or subject to empirical study rather than hot air debate. And as my added article has Friedman and Bennett noting, genetic and memetic (not to mention financial) heritage is itself random chance.

no guarantee that this entity will preferentially take the wealth of the less deserving.

No, but that's what democracy is for.
( 2 comments — Leave a comment )


Damien Sullivan

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