John Mace's (and others') opinion about societal fairness, 99%, etc

Great Debates
1

So over in this thread there’s yet another discussion of OWS, the 99%, etc., going on. And at least one thread of the conversation is one that I find very interesting, and I will summarize parts of it like this (making up the numbers, as that’s not the point).

Liberals: Things are unfair/unbalanced right now, in favor of the rich
John Mace: What do you mean? What’s your evidence for that?
Liberals: well, in the 1960s CEOs made an average of 80x the hourly wage of their lowest paid employees, now they make 800x
John Mace: So? Capitalism determines what salaries people get paid. And the market has determined that modern CEOs are worth that much money. “Fair” and “balanced” have nothing to do with it.

(I hope I’m summarizing Joh Mace’s position accurately… if not, if you’re reading this, please correct me.)
So, my question for John Mace (and others who share his opinion) is this: Do you even accept the hypothetical possibility of a situation in which a basically capitalistic society has its rules set up in a fashion that you would agree were unfair and unbalanced? That is, even if we exclude prima facie discriminatory things like poll taxes and genetic-qualifications-necessary-to-be-in-congress, can you imagine a set of rules and laws and regulations, and the society that they created, which you would look at and say “wow, something is clearly wrong, the richest people in that society have way too much money, power and influence, and the poorest people are hugely screwed”. For instance, take the current US, cut top tax rates even more, get rid of public student loans so that it makes it much harder for poor kids to go to college, get rid of any federal agency that helps poor and middle class people find housing, change campaign finance and lobbying laws to increase the power of money in elections, get rid of the estate tax entirely, make it much harder to vote in a way that hits poor and working people especially hard, etc.

What I’m trying to get at here is… do you look at the situation in the US right now and say “well, things have changed in the past 30 years, but the situation is still healthy, even though I accept the possibility that it could at some point be unhealthy”, or do you say “what are these concepts of health/fairness/balance you keep talking about? As long as poor people aren’t being literally forbidden from voting, then the system is still a democracy, and whatever happens, I’m happy”. Because it seems like you’re saying the second… you’re just rejecting all talk of fairness and balance out of hand, with “hey-it’s-just-capitalism” being your fallback defense.
And, as a followup, if you accept the hypothetical possibility of an unfair capitalist society, then how is that hypothetical world different from what we have now? Do you believe that we are closer to it now than we were in, say, the 1960s?

2

Plus, if there’s no such thing as an unfair society, surely a very high marginal tax rate would also not be unfair. Remember, no whining about it, it’s society that decided that!

3

This is an excellent, well thought out post, and you are pretty much dead on as far as I am concerned.

The people you are describing have already defined capitalism and “the free market” as perfect and infallible. Whatever capitalism produces is good. If that means CEOs that make 30000x their lowest paid workers, or even their average worker pays, then that’s what the market called for.

On an individual basis, they may have some altering opinions. Some agree that false advertisement should not be allowed, or dishonesty in general. Some agree that there should be some limits on minimum wage and child labor.

But besides these bare minimums as you have pointed out (like being able to vote, not being killed etc), you’ve got it spot on. Whatever “the market” decides DEFINES what is fair. If that means CEOs make 10 dollars an hour, then that’s what’s fair. If that means they make 10 dollars per second, then that’s what’s fair too.

That’s how I see it anyway.

4

And in these capitalist societies should the uber-rich be able to have a disproportionate amount of control on the government?

5

I guess one way of answering your questions is to say this.

It does not matter if the top 1% is making 100 times more than me, or a thousand, or a million. The simple fact of disparity does not demonstrate injustice.

The fact that you have more than me does not prove that you are doing me wrong.

The other misconception is that the government does a better job of mediating supply and demand than the market. By and large, it doesn’t. The famous adage is “Capitalism is the worst system of economics, except for all the others”.

It is possible to make a case for raising taxes, in order to fund the necessary functions of government. Reducing income disparity is not a necessary function of government.

Regards,
Shodan

6

Let me address your paraphrasing first.

As a general rule, I like to challenge assumptions. There is this meme out there that the CEO/worker pay ratio of 40 years ago or so is somehow correct and the ratio today is not. At a fundamental level, regardless of any ideology, I would question why we should assume that.

Secondly, I don’t necessarily see that if CEOs made less, workers would make more. And that’s the real problem-- that workers think they should be making more. Let’s say we capped CEO pay at $2M/year. How would that make your average worker’s pay go up?

Thirdly, there is the issue of fairness and capitalism. I think we can all agree that capitalism is not an ethical or moral system, and ideas of fairness are simply not relevant. It’s certainly relevant in the realm of public policy, but not in capitalism.

So, yeah, I can think of all kinds of situations where a capitalistic system could result in unfairness. That’s easy-- just look at crony capitalism in place like Russia. The real question, of course, is if our public policy in the US results in unfair outcomes in our capitalistic system. I can think of one area right off the bat, and that’s the loophole that allows hedge fund managers to treat what is essentially salary income as if it were capital gains. Still, that would just make these guys super rich instead of super-duper rich, and I don’t know that it would put one penny in the pocket of your typical middle class working stiff. We’d have more money for social programs to help the poor, but that wouldn’t affect the CEO wealth gap that seem so to be such a hot button.

As a libertarian-leaning guy, my gut reaction to claims of our democracy being undermined by rich people and corporations is that it’s a natural result of giving so much power to the government in the first place. We should have simple tax codes that aren’t subject to thousands of loopholes that rich people can lobby for and use. We should use our tax code for one and one purpose only-- raise the money necessary to run the government. Treat all income the same, and let the market determine the best way to allocate resources. Don’t encourage home ownership over rentals-- let people decide, depending on market conditions, what makes most sense for them. And don’t set up a situation where we rush to bail out huge banks and corporations when they teeter on the edge of failure. If that means re-instituting something like Glass-Steagal simply because we know we can’t do that, then so be it. As much as I don’t like government meddling in business, I absolutely detest the government picking winners and losers whether that is preferential tax breaks or deciding which industries get Uncle Sam to come to the rescue when they fuck up.

That’s my first take on a response to the OP. Hope that was helpful.

7

if it’s just a question of time frames, there is greater recognition of rights now that in the 60s, IMHO.

for your fundamental question on fairness in a capitalist society, you have to set up an “ideal construct.” let’s call this a “free market” instead of your “capitalist society.” in a free market, competition is nearly perfect, with little or no interference from the government. with perfect competition, it’s hard to have monopolies and oligarchies, and cartels. the only question there remains is how much governance this kind of society needs. for those who feel there should be some government, it is not correct to say the government maintains “fairness” and equality. it is there to protect individuals’ rights. this is perfectly logical for the reasons you mentioned. some are richer than others, some are smarter, some are more influential. so we prevent the strong from abusing the weak. we do not want to weaken the strong.

8

I don’t really get why the market’s “natural” functions are supposed to be so sancrosact. There are tons of systems we meddle with because we feel the natural outcome to be unacceptable. Why is economics supposed to be such a uniquely “hands off” area?

9

Fairness will never be a part of human society because you can’t have a society that is entirely equal; social stratification is required for any sort of organization.

HOWEVER

Deciding who is higher up on the social ladder is something we should worry about. Part of this is deciding how people should be rewarded. Right now, rewards are in many cases being dispensed in a manner that is not proportional to the amount of “work” an individual accomplishes (here defining work to be a measure of achievement in terms of progress and/or benefit to society). I think this is the problem - CEOs, for example, who themselves give very little are taking a lot, while others who deserve larger rewards are being ignored.

Society should not function as a game, and whoever cheats better gets more cash. This is how the world is being played right now, and people are beginning to realize that. It’ll take a lot more than a few protests to change that, though.

10

I don’t think it’s sacrosanct. It’s just that you have to be sure what you are doing doesn’t make things worse. One of the things we constantly hear, and this is from both the right and the left, is that we have to quit letting corporations outsource jobs and force them to manufacture in the US. I have yet to hear a way we can do that to any significant degree and not make things worse.

11

Not to mention that economics is hugely managed area by the Government so if they can manage one aspect of it (say providing TARP or oil company tax break or agricultural support) why not the other?

Anyone who ever went through basic economics or political economy classes should be able to connect any major economics activity to something that Government started or supported at one point or another.

12

True enough in and of itself. But if money is the reward for services provided to society, then we can come to a basis for who earns money by their work and who scams it by their negotiating ability. Observation indicates that a CEO is not providing 300x what his engineers are; and that a big business’s CEO is not adding that much more value than the CEO’s of the several small businesses his corporation bought out/outcompeted.

No, in fact the famous adage is as follows:

You dismiss “desirable” out of hand. Do you think that missions of government split cleanly into the necessary and the undesirable?

13

I think there is a difference between categories of moral theory.

Ethic from Authority is very popular, appears in many forms, and may be a variation on the following (not an exhaustive list):
ethic from consent
ethic from divine authority
ethic from tradition
ethic from positive law (legal positivism)

John Mace seems to follow in part a variation on this that could be called ethic from process. Follow the rules, work the system, and call the results good.

The problem is that these systems don’t give us a good way to use authority to change rules. It tells you to follow the law, it doesn’t tell you how to vote in the referendum.

So then we have Arguments from Consequence, including such ideas as the following:
hedonistic utility of various constructions
Rawlsian fairness
hardline preservationism of various kinds.

John Mace attempts an argument from consequence, but falls back on a small-c conservative, “let’s leave well enough alone.”

If he’s a consequentialist, it seems he fears changing the process more than suffering its side effects. If he’s working from a theory of authority, it seems to be an authority of process and tradition.

So maybe this kind of conservative “ethic from process” is neither fish nor flesh, neither from authority nor from consequence, but instead from caution and skepticism.

Maybe there are three kinds of basic theories. :wink:

14

IMHO, an agreement made between two consenting adults, neither of whom is under duress, is a fairly sacrosanct thing. Two people have expressed their will and have decided to do something that they are both happy with. A third person needs some mighty powerful justification to come in and fuck with that (e.g., that the first two people have decided to kill someone).

15

I agree, and this is where the occupy movement loses me. There seems to be a sense that every single rich person is a greedy son of a bitch who ruined the middle class. It is possible to be wealthy and still be a good, honest, hardworking person.

This is another strange comment that I hear a lot. I work my ass off as a mid-level manager, and I can’t imagine that running a company is easier than managing one department. When did it become such a meme that CEOs are giving very little? Certainly some work very hard, give generously to charity, and love their mamas just like the rest of us.

16

I can’t think of anything in that post about me that is correct.

17

Since when do we have capitalism in America?

18

I’m still really curious to know if a libertarian government would have campaign finance laws.

19

I suppose I am, broadly speaking, one of those asking about concepts of fairness and balance. For example, let’s use your example of in the 60s CEOS were paid 80x the lowest paid employees, but today their compensation is 800x of the lowest paid employees. How exactly do we determine this to be unfair, in either era? What reasoning, principle, or standard can be relied upon to show 80x is fair, or unfair, or 800x is fair or unfair?

I think fairness does play a role in a capitalist regime. People are entitled, actually they have a right not only in their labor but also in the fruits of their labor. A capitalist regime not adhering to this principle is unfair. Yet, in the U.S. we do have people being compensated for their labor. So, the present situation is not one in which people are not being compensated.

20

Are corporate executive salaries really subject to market forces?

As a hypothetical, maybe the situation is that corporate executive boards have created a closed system that isolates them from market forces and this is what’s causing the rise in salaries.