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Date: Sat, 8 Sep 2007 05:01:52 -0400 (EDT)
To: improvetheworld &AElig umich.edu
From: Daniel Reeves <dreeves &AElig umich.edu>
Subject: Re: mind the gap

The straw poll so far has me and 4 others anti Daddy Model.  James (I 
presume it was him) is the only pro ("not entirely broken").  Everyone 
else said "other".  (Trixie must not have voted!)

It's not too late:  http://dreeves.wufoo.com/forms/mind-the-gap/

My claim is that James and Trixie are dead wrong -- the Daddy Model is 
totally broken.

Coconut world is maybe too simple.  We'd want to agree that we're not 
going to let people who can't climb trees [1] starve.  Purely voluntary 
charity might be the ideal if some people climb trees for fun and are 
really quite happy to throw down extra coconuts.  But I could also support 
something like:
   Everyone put X% of the coconuts they harvest in a big pot.  Make X big 
enough that when we divide up the pot equally among everyone (regardless 
of what you put in) the poorest people don't go hungry [2].
   Communism sets X at 100% (contribute what you can, split the spoils 
equally).  As Franz suggests, this ensures the least number of coconuts 
will be harvested.  As James and Dave have suggested, setting X=0 may 
maximize the total harvest, but not total happiness, unless voluntary 
charity would suffice [3].

So I think we've achieved consensus for simple coconut world.  What about 
when some resources are limited?  Say Ingrid is building cars out of 
coconuts but she can only build them so fast.  James claims that when a 
rich person gets a car that that's directly hurting some poor person who 
didn't. That's wrong, and the reason is prices.  The price of Ingrid's 
cars go up until supply meets demand.  What's so exquisitely just about 
that?  It means that the people who get the cars are coughing up so many 
coconuts that the people who don't get cars actually *prefer* to not have 
them -- they'd rather keep the coconuts [4].

So in fact all these things (cars, experts' time, real estate) that seem 
constrained are not.  Supply meets demand.  The distribution of these 
things is unequal because people have different amounts of coconuts, which 
are unlimited [4].  The more you're willing to harvest, the more you have. 
And the case of ingenious Ingrid is no different -- instead of harvesting 
them directly she's making a free exchange with the people who are happy 
to harvest coconuts for her in exchange for her cars.

It's unsettling to see Ingrid's vast piles of coconuts but after all, 
coconuts are unlimited so she hasn't hurt anyone.  And who are we hurting 
when we try to tamper with the free exchanges going on here?

To repeat Graham's original point, Ingrid's coconut piles don't represent 
an unfair distribution of coconuts (thinking so is the Daddy Model), they 
represent her much more effective way of *creating* wealth.

I know there are major caveats in the real world (historical inequalities, 
disparate opportunities, and entrenched/pervasive injustice) but have I at 
least convinced folks of the brokenness of the Daddy Model?

Danny

[1] The analogue is "people who have nothing to contribute that others 
value".

[2] The analogue is "can afford food, housing, health insurance, and 
education".

[3] I feel this should be estimable by extrapolating charitable giving 
trends to the case of increased income (paying fewer taxes) and increased 
need (fewer social programs).  It may be hard to find good analysis of 
this question that isn't disguised political propaganda.
   I find it annoying when both libertarians and socialists treat things 
like this as something to be reasoned about from the first principles of 
their pet ideologies.  I came dangerously close to that myself in a recent 
post.  Don't let me get away with that!

[4] The analogue to the coconuts is all things of value that anyone 
creates, from your raw labor, to your expertise, to things you build. 
Raw natural resources count too but that's a small fraction of all wealth. 
And ideally natural resources start out as public goods so that we all 
share that wealth. (That's the case for the electromagnetic spectrum -- I 
don't know much about other natural resources, but again this is not 
central to our debate.)


--- \/   FROM Franz Marschall AT 07.09.06 15:26 (Today)   \/ ---

>
> Hi Danny and James,
>
>
>
> Let's think about this analogy:
>
> A group of people live on an island with plenty of food and many coconut 
> trees. Climbing up a tree and picking a coco nut doesn't take away 
> anything from the others. Those who are fit enough to climb a tree 
> gracefully give away 20% to 25 % of the nuts they harvest to the 
> spectators who were watching them. Imagine following rule would be 
> enforced:
>
> Anybody who picks coco nuts has to give away 1/3rd to 1/2 to those who 
> appear to have no coco nut.
>
> Does anybody from this mailing list belief that overall supply of 
> harvested coco nuts will increase? Or, that those who didn't get enough 
> coco nuts under the old habit would now get more?
>
> Or does anybody think, that a skilled climber would train himself to 
> pick more nuts in less time?
>
> The same applies to $, Pounds, Euros etc.
>
>
>
> Franz
>
>
>
>  ----- Original Message -----
>  From: James W Mickens
>  To: Daniel Reeves
>  Cc: Kevin Lochner ; Dave Morris ; improvetheworld &AElig umich.edu ; reeves-hayos &AElig umich.edu ; reeves-kalkman &AElig umich.edu
>  Sent: Tuesday, September 04, 2007 10:51 PM
>  Subject: Re: mind the gap
>
>
>  > And I don't think you clarified what James is saying.  He said that more
>  > real wealth to billionaires does directly hurt poor people.  I'd like to
>  > hear the chain of causality he has in mind.
>
>  According to Graham, "wealth is not money. Money is just a convenient way
>  of trading one form of wealth for another. Wealth is the underlying
>  stuff---the goods and services we buy." The underlying stuff, the goods
>  and services, are constrained resources. For example, using a wealth
>  resource in one way often prevents its use in a different way; real estate
>  that is used to build a library can't be used to build a sports stadium.
>  Wealth is also constrained by the rate at which it can be produced. There
>  are a finite number of automobiles that can be produced per month. There
>  are a finite number of hours that doctors can spend treating patients.
>  These figures may improve over time, but they will still be finite. This
>  means that many types of wealth are scarce. Ergo, distribution matters. In
>  particular, skewed wealth distributions directly hurt poor people because
>  there is a finite amount of wealth for everyone to share, and giving a
>  unit of wealth to one person is equivalent to taking it away from someone
>  else. Thus, the Daddy Model of Wealth is not totally broken. Wealth is not
>  money, but many types of wealth *are* constrained by natural limits.
>
>  A society's wealth can grow over time, but it will never be infinite.
>  Thus, there will never be enough wealth to maximize everyone's utility.
>  But given diminishing utility returns on wealth accumulation, sound public
>  policy should ensure that wealth imbalances do not grow too large.
>
>  ~j
>

-- 
http://ai.eecs.umich.edu/people/dreeves  - -  search://"Daniel Reeves"

"Theoretically, there is no difference between theory and practice;
In practice, there is."