Arthur Brooks explains it all

Arthur Brooks, whom I teased in another context a couple of posts ago, straightens us out about fairness and taxes in that cave of wonders, the Washington Post opinion section: more taxes (than whatever number you have in mind, I guess) on people who have a lot of money are unfair.

He sounds his horn to alert us that “rewards are fair when they are proportional to merit”.  This prescription has troubled philosophers for centuries, because they have rather  stupidly failed to see how easy merit is to discern.  Cutting bravely through this fog, Arthur shows (and is sure we see) that merit is measured by income and wealth, with only the most occasional and unimportant errors.  (Well, shows is maybe a little strong; it’s sort of an “as any fool can plainly see; I can see!” argument.)  Indeed, by halfway through his piece, all the victims of these looming unfair tax increases are entrepreneurs, not a Paris Hilton among them; and conversely, there’s no merit at all for poets, artists, firefighters, doctors undermining the American way by practicing in clinics for the poor instead of LA plastic surgery suites, teachers….

Perhaps it’s meritorious to choose wealthy parents, or get yourself born into a two-parent family that makes you do your homework, and can afford to live where the schools work. There’s certainly no question in Brooks’ mind that all of the amazing increase in American productivity of the last couple of decades is due entirely to the brilliance of the financial sector, and the chief executives of the companies whose paper it plays with. It can’t have anything to do with workers, because they haven’t kept any of the wealth it created, QED! The captains of industry who trashed their companies and walked away fixed for life under golden parachutes, too: nothing but merit there.

Indeed, the logic has the beautiful seamlessness of, um, a circle, completed by

And even if only a portion of the outcomes in life were due to merit, we should still gear our system to the part that is under our control. Otherwise, we have no incentive to be industrious, honest, innovative and optimistic — and there’s no reason to teach these values to our kids, either.

The only incentive for merit is to make money, the only evidence of merit that matters is having made a lot, and it’s both fair and efficient that the people who should pay taxes are the people who haven’t. Dang.

Toward the end, he commits some serious ideological errors for which his colleagues and funders will rap his knuckles cruelly, admitting that

There is certainly a role for government in this system. Private markets can fail due to monopolies (which eliminate competition), externalities (such as pollution), the need for public goods (such as education, which is indispensable in an opportunity society), corruption and crime. Furthermore, most economists agree that some social safety net is appropriate in a civilized society. When the government focuses on these things, it assists the free-enterprise system.

His technical chops are a little rusty; education is great, and it may be a market failure, but it’s certainly not a public good. Still, the nose of the camel is in the tent.

The problem this piece presents to readers, however, is assuredly the fault of careless work at the WaPo, where a harried editor apparently removed the paragraph in which  Brooks wraps up his argument.  It must read something like this:  That government role consumes resources, even after our ruthless extirpation of waste, fraud and abuse, so someone has to be taxed.  Now that we know that the rich are meritorious and the poor (except for the odd unfortunate who fell in the safety net) merely lazy or feckless, we can see the logic of taxing the poor until the laudable (and unique) incentive really bites and they stop doing it, and the radiant fairness of allowing them as has to keep it all.  A graduated income tax is not the problem; the problem is that the one we have is graduated the wrong way!

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

53 thoughts on “Arthur Brooks explains it all”

  1. • The top 1% of personal income earners ($380,000 or more) earned 20% of the total personal income and pay 38% of the total income taxes.

    • The top 5% of personal income earners earn 35% of the total personal income and pay 60% of the total income taxes.

    • Of the top 400 earners each year over a 15 year period, only 27% have appeared more than once.

    • Of the top 10% of earners, only 2% earned a million dollars or more.

    • Standard of living cost varies greatly depending on location. It can cost more than two and two-thirds as much to live in Manhattan than in Wichita, KS.

    • 45% of the people filing tax returns for 2010 will pay no income tax. Of course everybody pays other taxes, both explicit and hidden.

    • Historically, high or low marginal income tax rates has had little impact on federal tax revenues.

  2. Producers vs. Parasites. Well, I am reminded of Balzac’s truth, “Behind every great fortune lies a great crime,” and the incontrovertible fact that there can be no accumulation of vast private wealth without explicit government assistance.

  3. There can be no accumulation of vast private wealth without toilets, either, but that doesn’t make plumbers the source of all wealth. Frequently that assistance is nothing more than the impartial enforcement of generally applicable laws against theft, fraud, and assault, which benefit everyone, though most don’t take huge advantage of them.

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