I’ve never paid much attention to Sam Harris before, beyond knowing that he’s identified as a “new atheist,” and he’s developed some kind of argument for a science of morality that doesn’t exactly seem to be winning over lots of philosophers. But let’s stipulate that Sam Harris is smarter than me. That is, I’m willing to assume that his Ph.D. in neuroscience from UCLA required more intelligence than did my Ph.D. in Political Science from Oregon. And yet, there’s this funny little thing called “studying” that he seems not to grasp. He appears to be one of those people who, knowing how intelligent he is, assumes that the thoughts he thinks must, ipso facto, also be intelligent. And thus he trods out into a discipline about which he knows not even the first principles, is rebuked for his lack of knowledge, and then challenges those who have made it their life study.
His post post criticizing income disparities was the subject of some criticism, and he added the following addendum.
If you are an economist and believe that you have detected any erroneous assumptions above, please write to me here. If your comments are significant, I will be happy to publish our exchange on this website.
Isn’t that delicious. “If you experts “believe” I’ve made an error, point it out to me; If I consider it to be significant, I’ll publish it.” It never seems to enter his head that the experts might not simply “believe,” but actually know when he’s made an error, or that he might not be qualified to recognize a significant error in a field he’s never studied. Educated people aren’t supposed to forget the value of actual study and research, but all too often they do.
Well, I’m not technically an economist, but I have put quite a bit of time into studying the subject, so I’ll take a whack at his assumptions. (And for another perspective, see Sandefur’s commentary.)
Happily, not all billionaires are content to hoard their money in silence.
Conservatives also believe that people become rich by creating value for others. Once rich, they cannot help but create more value by investing their wealth and spawning new jobs in the process. We should not punish our best and brightest for their success, and stealing their money is a form of punishment.
Of course, this is just an economic cartoon. We don’t have perfectly efficient markets, and many wealthy people don’t create much in the way of value for others. In fact, as our recent financial crisis has shown, it is possible for a few people to become extraordinarily rich by wrecking the global economy.
Amazing, Harris has discovered a new principle unknown by economists…markets aren’t perfectly efficient. I can’t help but imagine he had a certain feeling of smugness as he demonstrated his keen insight into the economic world. Of course this assumption is right, but also of course the efficiency of markets have precious little to do with whether people become rich by creating value for others. In fact it’s the inefficiencies in markets that create opportunities to get wealthy by creating value for others through improving the efficiency of a market. And just how does he imagine wealthy people avoid creating value for other people, unless really does believe they are following the Scrooge McDuck approach? Wealthy people pretty much have just two options of what to do with their money: invest it or spend it. If they invest it, someone else is willing to pay to borrow it; which means it creates value (if borrowing wasn’t of greater value than not borrowing, the borrower wouldn’t borrow). If they spend it, someone trades merchandise or services for it, which creates value (they value the money more than the merchandise or service). In fact it’s pretty damned hard, I think, for a wealthy person to not create value for others with their wealth. Really, this stuff isn’t that hard–anyone who can get a Ph.D. in neuroscience could pick up basic economics pretty easily, I would think.
But even in the ideal case, where obvious value has been created, how much wealth can one person be allowed to keep? A trillion dollars? Ten trillion?
I have to interrupt his thought here to ask, does he really mean to use the word “can,” instead of “should”? Obviously they can be allowed to keep all their wealth. Not that I would necessarily vote for that in a referendum.
Granted, there will be some limit to how fully wealth can concentrate in any society, for the richest possible person must still spend money on something, thereby spreading wealth to others. But there is nothing to prevent the ultra rich from cooking all their meals at home, using vegetables grown in their own gardens, and investing the majority of their assets in China.
And…so? Does Harris really imagine that if Bill Gates took to spending his time gardening and cooking that there’d be any noticeable economic harm? Sure some waiters might have fewer tips, but if that’s what Bill Gates preferred to do, his utility would increase’ he’d be better off. Oh, and his billions would still keep revolving through the economy via whatever investments he’s made. (Has Harris ever though about his own retirement account?) And so what if Gates invests it all in China? (Does Harris’s science of morality have a formula for how much each Chinese person counts compared to each American?) Harris seems to assume a fixed economic pie, so that investment elsewhere impoverishes America. Has he ever thought about how much a richer China could buy from the U.S.?
Then, in his addendum, responding to his critics, he says;
Specifically, I would be interested to know if any economist has an economic argument against the following ideas:
Now, seriously, that’s like a creationist asking “I would be interested to know if any biologist has a scientific argument against the following ideas.” It’s the old, “I haven’t studied the topic, but I’m pretty sure I know more than the experts” approach. So let’s see if there are any economic arguments against the two ideas he presents.
Future breakthroughs in technology (e.g. robotics, nanotech) could eliminate millions of jobs very quickly, creating a serious problem of unemployment.
This idea is not stated clearly. Does Harris mean that we’d have a serious short-term unemployment problem if millions of jobs were eliminated “very quickly”? I don’t think any economist would argue that. But he doesn’t seem to be talking about that, because in a subsequent post, he says, “In a world without work everyone would be free—but, in our current system, some would be free to starve.”
No, and no. Let’s take the latter part first. Contra Harris, our current system, whatever its imperfections, actually manages to keep most jobless people from starving. So he’s just factually wrong there. He also assumes a wildly dramatic economic change will not be associated with any policy changes. I’d like to see some historical examples of that. But consider just how disconnected the idea is here. In a world without work he assumes that most people would not starve–but how would they be buying food, if they had no work and no income? Clearly, in this hypothetical world, the distribution of food is not based on ability to pay. So why would some starve? And how odd is it to worry about a world where we have all we want without having to work for it? I’m much more concerned about the opposite world, where we all have plenty of work but no goods and services to show for it. Harris is imagining a world where the central economic condition–scarcity–has been resolved, and he’s distressed?
Now to the first part, he assumes a jobless world, where all the work is done by machines. This is just a variant on the “lump of labor fallacy.” Essentially what Harris is talking about is increased productivity, but there are no historical examples of increasing productivity resulting in their being fewer jobs available. I hope I’m not going too far out on a limb when I suggest that if the very first idea you propose already has the name of “X fallacy,” you just might be in a position of not knowing your ass from your elbow. There’s much less reason to assume that massive technological advances will solve the problem of scarcity than that they’ll just further expand our wants. At least that’s been the path of economic history to date.
The federal government should levy a one-time wealth tax (perhaps 10 percent for estates above $10 million, rising to 50 percent for estates above $1 billion) and use these assets to fund an infrastructure bank. Contrary to many readers’ assumptions, I am not recommending that the federal government confiscate productive capital from the rich to subsidize the shiftlessness of people who do not want to work.
Interestingly, Harris seems to think people are only criticizing him because he wants to raise taxes on the wealthy. Not so; I’m in favor of returning tax rates to the level of the 1990s. That may not be as high as he would want, but that’s just quibbling about the stopping point when we both agree taxes should be raised. But I do think economists might be able to point out problems with this idea. First, he seems to suggest that he’s not talkinga about taking productive capital from the wealthy. It depends on the reading here–he could be admitting that it’s productive capital, but that he’s not suggesting using it to subsidize lazy people, or he could be claiming that the capital taken isn’t productive. The latter reading is more generous, but he did talk about billionaires hoarding their wealth, so he does seem to be making the basic error of claiming that up to 50% of some billionaires’ wealth is locked in non-productive capital.
But even with the more generous reading of his idea, he seems to be assuming no negative reaction from the billionaires. It’s almost as though he thinks incentives don’t matter. Perhaps he does, though, and that’s why he’s emphasizing that it’s only a “one-time” tax. But as any decent economist will tell you, governments have a devil of a time demonstrating credible commitment (watch through to the 4:15 mark, and you’ll understand the concept). The current Congress can cross it’s heart and hope to die, but they cannot bind the next Congress,* so why would any billionaire who’s just had 50% of his wealth taxed believe it will never happen again? And if we mistakenly encourage them to move all their wealth off-shore, we’ve just sacrificed the long-term for short-term gain.
Overall, not so good. If he gave those answers at the end of my political economy class he’d fail the final exam. Really his questions are not much better than a creationist asking, “But what about the second law of thermodynamics; have you ever thought about that? And what about the missing link?” They’re the questions of someone who’s lacking a grasp of the most basic concepts of the field he’s dabbling in. Whatever Sam Harris may be good at (and I’m not sure it’s philosophy, either), he really ought to stick to it.
* Interestingly, economists seem to be clearer on this than political scientists. Or that could be an artefact of the economists I read and the political scientists I talk to.