X-Spam-Status: No, score=-2.6 required=5.0 tests=BAYES_00 autolearn=unavailable version=3.2.2 Sender: -2.6 (spamval) -- NONE Return-Path: Received: from newman.eecs.umich.edu (newman.eecs.umich.edu [141.213.4.11]) by boston.eecs.umich.edu (8.12.10/8.13.0) with ESMTP id l7VIOSux016808 (version=TLSv1/SSLv3 cipher=DHE-RSA-AES256-SHA bits=256 verify=FAIL) for ; Fri, 31 Aug 2007 14:24:28 -0400 Received: from workinggirl.mr.itd.umich.edu (mx.umich.edu [141.211.176.132]) by newman.eecs.umich.edu (8.14.1/8.14.1) with ESMTP id l7VINoD8019593 for ; Fri, 31 Aug 2007 14:23:58 -0400 Received: FROM newman.eecs.umich.edu (newman.eecs.umich.edu [141.213.4.11]) BY workinggirl.mr.itd.umich.edu ID 46D85CB2.B8CD7.7360 ; 31 Aug 2007 14:23:46 -0400 Received: from boston.eecs.umich.edu (boston.eecs.umich.edu [141.213.4.61]) by newman.eecs.umich.edu (8.14.1/8.14.1) with ESMTP id l7VINHVV019496 (version=TLSv1/SSLv3 cipher=DHE-RSA-AES256-SHA bits=256 verify=FAIL); Fri, 31 Aug 2007 14:23:17 -0400 Received: from boston.eecs.umich.edu (localhost.eecs.umich.edu [127.0.0.1]) by boston.eecs.umich.edu (8.12.10/8.13.0) with ESMTP id l7VINbux016789 (version=TLSv1/SSLv3 cipher=DHE-RSA-AES256-SHA bits=256 verify=NO); Fri, 31 Aug 2007 14:23:37 -0400 Received: from localhost (dreeves Æ localhost) by boston.eecs.umich.edu (8.12.10/8.12.9/Submit) with ESMTP id l7VINbQU016786; Fri, 31 Aug 2007 14:23:37 -0400 X-Authentication-Warning: boston.eecs.umich.edu: dreeves owned process doing -bs X-X-Sender: dreeves Æ boston.eecs.umich.edu In-Reply-To: Message-ID: References: <4CE28F9E-2B6E-4834-B3FA-1C3FBF2E7341 Æ umich.edu> <02548635-1F0E-4244-847D-8FA54DACAD4B Æ umich.edu> <1acf35a70708221835o75734aa2waa72f00b69632a18 Æ mail.gmail.com>

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MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII; format=flowed X-Spam-Checker-Version: SpamAssassin 3.2.2 (2007-07-23) on newman.eecs.umich.edu X-Virus-Scanned: ClamAV version 0.91.2, clamav-milter version 0.91.2 on newman.eecs.umich.edu X-Virus-Scanned: ClamAV version 0.91.2, clamav-milter version 0.91.2 on newman.eecs.umich.edu X-Virus-Status: Clean Date: Fri, 31 Aug 2007 14:23:36 -0400 (EDT) To: Dave Morris cc: improvetheworld Æ umich.edu, Steven Reeves , reeves-hayos Æ umich.edu, reeves-kalkman Æ umich.edu From: Daniel Reeves Subject: Re: mind the gap Remaining answers: > 1. Regulations on stock trading should factor in the decreased happiness > of the screwed-over ERIM employees. We may be at a stale mate on this. I feel that the ERIM employees, by voting with their feet, can better protect themselves, and with fewer bad side-effects, than the government can. By the way, I feel that there should be no legal recognition of the concept of a corporation. A corporation should be nothing but a (contractual) agreement among the people who comprise it. Kevin and Vishal and Matt and Franz and I are arguing pro-capitalism but I wonder if the differences between our position and that of rabid anti-capitalists is as severe as it seems. We identify some of the same problems. We just disagree about whether the solution is to get closer to or further from pure capitalism. > 5. There is such a thing as bad profit when one party doesn't realize the > bad consequences of the deal they're making. There's also such a thing as bad regulation when the government mistakenly thinks it knows better than you what deals are in your interest. Maybe we just have different intuition about the right trade-offs here. I'd go almost so far as to say that even if we identify a case where regulation helps, let's not suggest it to the government. It will only encourage them. I'm back to the war on drugs analogy. Let's focus on direct harm. (And again, swindling I consider direct harm.) > 4. Capitalism does not respect basic human rights. Right, that's what laws are for. I'm not an anarchist. *** Capitalism is not an engineered system. Forcibly redistributing the wealth that people create is an engineered system. Capitalism is the rejection of such systems. *** But you don't have to be a purist about it. I'm just saying that that's the world-improving direction from the status quo. Anyone not clear on the Daddy Model of Wealth, I pasted below that section from Mind the Gap: (http://www.paulgraham.com/gap.html) Also, thanks to everyone who has told me off-list that they're following this debate with interest (or in a couple cases half-hearted interest!). Danny Excerpt from Mind the Gap: When I was five I thought electricity was created by electric sockets. I didn't realize there were power plants out there generating it. Likewise, it doesn't occur to most kids that wealth is something that has to be generated. It seems to be something that flows from parents. Because of the circumstances in which they encounter it, children tend to misunderstand wealth. They confuse it with money. They think that there is a fixed amount of it. And they think of it as something that's distributed by authorities (and so should be distributed equally), rather than something that has to be created (and might be created unequally). In fact, wealth is not money. Money is just a convenient way of trading one form of wealth for another. Wealth is the underlying stuffthe goods and services we buy. When you travel to a rich or poor country, you don't have to look at people's bank accounts to tell which kind you're in. You can see wealthin buildings and streets, in the clothes and the health of the people. Where does wealth come from? People make it. This was easier to grasp when most people lived on farms, and made many of the things they wanted with their own hands. Then you could see in the house, the herds, and the granary the wealth that each family created. It was obvious then too that the wealth of the world was not a fixed quantity that had to be shared out, like slices of a pie. If you wanted more wealth, you could make it. This is just as true today, though few of us create wealth directly for ourselves (except for a few vestigial domestic tasks). Mostly we create wealth for other people in exchange for money, which we then trade for the forms of wealth we want. [1] Because kids are unable to create wealth, whatever they have has to be given to them. And when wealth is something you're given, then of course it seems that it should be distributed equally. [2] As in most families it is. The kids see to that. "Unfair," they cry, when one sibling gets more than another. In the real world, you can't keep living off your parents. If you want something, you either have to make it, or do something of equivalent value for someone else, in order to get them to give you enough money to buy it. In the real world, wealth is (except for a few specialists like thieves and speculators) something you have to create, not something that's distributed by Daddy. And since the ability and desire to create it vary from person to person, it's not made equally. You get paid by doing or making something people want, and those who make more money are often simply better at doing what people want. Top actors make a lot more money than B-list actors. The B-list actors might be almost as charismatic, but when people go to the theater and look at the list of movies playing, they want that extra oomph that the big stars have. Doing what people want is not the only way to get money, of course. You could also rob banks, or solicit bribes, or establish a monopoly. Such tricks account for some variation in wealth, and indeed for some of the biggest individual fortunes, but they are not the root cause of variation in income. The root cause of variation in income, as Occam's Razor implies, is the same as the root cause of variation in every other human skill. In the United States, the CEO of a large public company makes about 100 times as much as the average person. [3] Basketball players make about 128 times as much, and baseball players 72 times as much. Editorials quote this kind of statistic with horror. But I have no trouble imagining that one person could be 100 times as productive as another. In ancient Rome the price of slaves varied by a factor of 50 depending on their skills. [4] And that's without considering motivation, or the extra leverage in productivity that you can get from modern technology. Editorials about athletes' or CEOs' salaries remind me of early Christian writers, arguing from first principles about whether the Earth was round, when they could just walk outside and check. [5] How much someone's work is worth is not a policy question. It's something the market already determines. "Are they really worth 100 of us?" editorialists ask. Depends on what you mean by worth. If you mean worth in the sense of what people will pay for their skills, the answer is yes, apparently. A few CEOs' incomes reflect some kind of wrongdoing. But are there not others whose incomes really do reflect the wealth they generate? Steve Jobs saved a company that was in a terminal decline. And not merely in the way a turnaround specialist does, by cutting costs; he had to decide what Apple's next products should be. Few others could have done it. And regardless of the case with CEOs, it's hard to see how anyone could argue that the salaries of professional basketball players don't reflect supply and demand. It may seem unlikely in principle that one individual could really generate so much more wealth than another. The key to this mystery is to revisit that question, are they really worth 100 of us? Would a basketball team trade one of their players for 100 random people? What would Apple's next product look like if you replaced Steve Jobs with a committee of 100 random people? [6] These things don't scale linearly. Perhaps the CEO or the professional athlete has only ten times (whatever that means) the skill and determination of an ordinary person. But it makes all the difference that it's concentrated in one individual. When we say that one kind of work is overpaid and another underpaid, what are we really saying? In a free market, prices are determined by what buyers want. People like baseball more than poetry, so baseball players make more than poets. To say that a certain kind of work is underpaid is thus identical with saying that people want the wrong things. Well, of course people want the wrong things. It seems odd to be surprised by that. And it seems even odder to say that it's unjust that certain kinds of work are underpaid. [7] Then you're saying that it's unjust that people want the wrong things. It's lamentable that people prefer reality TV and corndogs to Shakespeare and steamed vegetables, but unjust? That seems like saying that blue is heavy, or that up is circular. The appearance of the word "unjust" here is the unmistakable spectral signature of the Daddy Model. Why else would this idea occur in this odd context? Whereas if the speaker were still operating on the Daddy Model, and saw wealth as something that flowed from a common source and had to be shared out, rather than something generated by doing what other people wanted, this is exactly what you'd get on noticing that some people made much more than others. When we talk about "unequal distribution of income," we should also ask, where does that income come from? [8] Who made the wealth it represents? Because to the extent that income varies simply according to how much wealth people create, the distribution may be unequal, but it's hardly unjust. -- http://ai.eecs.umich.edu/people/dreeves - - search://"Daniel Reeves"