Monday, July 11, 2011

The Tale of the Slave(s)

Alex Tabarrok has seemingly stirred up a hornets' nest over at Marginal Revolution by leveling a blow at bloggers on the left for their use of the following data which seem to indicate that people who consume tax credit/sheltering don't believe they're the beneficiaries of government subsidies:

Alex's contention? Well, they aren't subsidies.

It's an interesting question that highlights some of the opposing biases between the left and the right, generally speaking. I have many sympathies that fall in line with those of Alex it would seem. If we start from the general proposition that taxes represent previously owned wealth, at least nominally, I think it's a hard conclusion to escape. If someone walks up to you and your friends in the middle of the street and demands your wallets, but tells you (and just you) to keep $20 of what's in your wallet, does that $20 represent a subsidy?

My inclination is to say, "No, of course not." After all, if you had $100 in your wallet then you've net -$80 from the "transaction." The net beneficiary of interaction at the individual level is the thief. On the other hand, and more broadly speaking, if we use subsidy to loosely describe comparative advantage, well now we have something for the left to rally around. So, much to our shared chagrin I'm sure, we're back to a perspective of inequity on an individual basis vs. inequity more relatively speaking. In a sense, maybe both sides are right to the extent that they use their own definitions for "subsidy."

Ironically, it's debates like this that have mellowed me a bit while still holding fairly radical political conclusions. To figure out if someone is a beneficiary of government "subsidy", in any form, I think it depends on a number of factors. We have to look at all the direct cuts and subsidies against all the direct forms of taxation. Then we need to weigh that against any indirect subsidies or protections an individual might receive and also any indirect taxation they might be shouldering. Once we've gotten to that point, we'd have to figure out how many tax dollars, through public programs and services, they actually consume. Then, and only then, could you safely declare that the next/last X dollars credited to that individual would qualify as a subsidy - on net. I think that basic test would apply to all individuals, rich or poor, regardless of the subsidy in question. Seeing as how difficult in practice it might be to even determine if any individual is a tax-feeder or tax-eater, you can imagine my lack of enthusiasm for even attempting to make the same assessment regarding entire groups or classes of people. I don't think the analysis is quite as useful as the proponents on all sides think it is.

Nevertheless, I found something quite disturbing about a good deal of the comments following the post in question. Almost all of the objections had a tinge of one or both of the following assessments:

1. Taxation is not slavery - someone has to pay for the programs.
2. If we have to pay, then withholding your pay is stealing from others.

The first objection, I believe, is probably the most blatant (and common) form of cognitive dissonance I see in the political realm. To call it a non sequitur would be a bit of an understatement. Whether something be necessary or not has little to do with if it is, in fact, slavery. If you believe the expropriation of labor or its product is needed, then that only grants you that slavery is needed, not that it isn't slavery.

The first objection also keenly reminded me of Nozick's Tale of the Slave - which continues to throw a lot of progressives into a tizzy. Nozick's classic setup is a better refutation of the first objection than my own, but it doesn't really handle the second objection directly. However, it made me wonder, in that framework, if we had postulated at any step that the slave-owner should let a slave work an hour less, would those on the left call that refunded labor/time a subsidy to that slave? Would they collectively decry the slave as a net beneficiary of the slave-master? Would we think him silly to not consider his singular hour a freedom a subsidy? If you you would, then you don't understand Alex's point.

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