greed for hippies

From Julian Sanchez, who has been kind of a featured guest-star here this past week: a look at the moral confusion that erupts when people who voluntarily earn less than they could demand higher taxes from those who are maximizing their earning potential.

Political ideology aside, I’m as likely as the next guy to feel distaste for the high earner who fails to give more than a pittance to charity and carps at higher taxes: It seems obvious someone that well off should be doing more to help the needy. But what about the journalist and the academic and the non-profit staffer who could be high(er) earners but prefer their compensation in the non-taxable form of leisure and job satisfaction? I don’t think I’d much like being a consultant or practicing corporate law, but I like to imagine that I could probably do one or the other competently, have a hell of a lot more income to transfer to the needy, and still keep a comparable or higher material standard of living. I don’t look as greedy as the guy who fails to share the wealth, because I’m deriving my utility from a less readily quantifiable and transferable source. But if that’s partly a matter of choice (it’s hard to say, since for all I know I’d actually be awful at better-paying professions) is there all that much moral difference between us?

Fascinating. There is something to this. People who could be earning more, but who choose to stay in creative or intellectual professions or work low-stress jobs in order to have free time to work on their avocations, are in essence deriving a kind of untaxable benefit from their choices. Yet they (we) are comfortable higher taxation of those who choose to maximize their cash earning potential instead.

On the other hand, Sanchez compares the effect of higher taxation on people in different income brackets and different levels of earning maximization, and he says that in the professional middle class, it becomes “clear that what you’re taking from people [if you raise their taxes] is time — time away from the people and projects they love.” I.e., if you raise taxes on a wealthy industrialist, maybe he has to work a little harder to make the same amount of money, but because he’s so wealthy you haven’t really put much of a dent in his ability to enjoy life. But if you raise taxes on a guy who works as an office drone in order to fund his weird folk-art sculpting, and he has to work more hours now to keep himself afloat, that’s fewer hours to make his giant steel panda bears, which are all that make his life bearable.

To me this sounds like a good argument for progressive taxation. But that’s because I’m the kind of guy who would like to make giant steel panda bears. The wealthy industrialist may find this unconvincing, since he has to carry the tax load for me while I’m declining to maximize my earnings in order to follow my bliss.

Interesting.

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4 Responses to greed for hippies

  1. John says:

    But who qualifies as someone who isn’t maximizing their earning potential? An artist who went to Yale? If you’re a billionaire who didn’t graduate high school, does that mean you’re earning beyond your potential? Unless we’re talking about someone who has a job that pays by the hour and chooses to work 20 hours instead of 40, the phrase “maximizing your earning potential” is gibberish. Where you are in your work and in your life is the result of hundreds of discrete choices over tens of years as well as thousands of variables you have no control over. Distilling it down to ‘earning potential’ as if it’s just opportunity cost is a pointless exercise.

    I know he qualifies himself (“it’s hard to say, since for all I know I’d actually be awful at better-paying professions”), but I still say it’s the kind of pop economics game that has no meaning.

    • thehandsomecamel says:

      Well, speaking only for myself, I can say that there have been numerous times when I’ve chosen not to pursue a higher-paying job because I wanted to be FREE!!! to practice my ART!!!

      Specifically:

      – When I was living in Atlanta, I worked in commercial photo studios for years as an assistant to support my film habit but never took the next steps to becoming a photographer.
      – In ’08, I quit the Army to go be a writer and a beach bum in Venice.
      -Last year, I essentially declined a high-paying contracting gig in order to give Elana a chance to keep pursuing screenwriting. (Granted, that one may turn out to have been a smart financial choice in the long run.)

      So I get what he’s saying. Ultimately, of course, it’s probably not a line of thought that produces anything quantifiable, especially because many people do end up making quite a lot of money, almost accidentally, by pursuing their bliss. Mark Zuckerberg has some confounding variables, if you will. So I’m not sure we can tax people for being artsy hippies, or anything.

      But Sanchez is mainly a philosopher, I think, and in that realm I think it’s worth thinking about. To some extent, taxing income does tax certain choices people make, in the sense that people who make it their life’s goal to make money (and are successful in that goal) are penalized more heavily than people who make it their life’s goal to work for a crummy non-profit (and are successful in that goal) or people whose goal is to make just enough money to support their model airplane hobby (and, again, are successful). Three people who start off with roughly the same socioeconomic advantages may end up making wildly different amounts of money, and, unavoidably, the banker takes more of a hit than the activist. There are good policy reasons to tax the wealthy anyway, of course — partly because there’s some social benefit to protecting a class of people who aren’t in it for the money, but mostly because people often don’t start out with the same advantages, and taxation is a partial bulwark against creeping aristocracy.

      Still, I can get pretty exercised about the stinkin’ rich, and it’s sometimes useful to me to remind myself of that West Wing episode where Sam says that we have to tax the rich, ’cause that’s the only way it’s gonna work, but maybe we shouldn’t insult them while we’re at it. People are just pursuing their own ends — as you say, hundreds of discrete choices — and there’s nothing particularly wrong with that.

  2. Eric says:

    Okay, sure, but why are we shifting the moral burden to the people who put intangibles like “time with family” and “the joy of giant steel panda bears” in the first place? It seems to me that it’s something of an arbitrary moral choice whether you choose “work harder to earn more” over “work hard enough to live well” or vice-versa… except that there’s a long and noble cultural tradition in, oh, sheesh, just about every pre-1980s-America culture that comes to mind of feeling disdain for those who live by the ethos that “greed is good.” I.e. for most of human experience people have been extolling the virtues of hard work in the context of making time to stop and smell the flowers, achieving Grace or Nirvana (or Whatever), learning wisdom, etc., not for the sake of having a little more money to give away (money being something that most cultures have insisted is the root of all evil, can’t buy love or happiness, ought to be given away in quantities between ten and a hundred percent, etc.).

    In other words, the usual bias in most places and times has been towards thinking the guy who likes making giant steel panda bears is onto something while there’s something actually wrong with the wealthy industrialist. Indeed, along those same lines we find that for much of the history of wealthy steel industrialists themselves, there have been subtle social pressures for them to vicariously be makers of giant steel pandas through endowments, grants, foundations, awards, trusts, and such and so on. Whatever the MacArthurs, Rockefellers, Carnegies and their ilk thought of bearing a bigger tax load for the benefit of panda casters and welders, they clearly thought well enough of panda makers and perhaps poorly enough about their own personal efforts towards inventing civilization that they went to quite a lot of trouble giving their money and names to museums, galleries, auditoriums, universities, prizes and so on.

    Also, I think there’s this hole in what Sanchez is saying: most of us panda people would be more than happy to make gazillions selling giant steel pandas if we could. At least some of us would be happy to take on a larger tax burden if we qualified for it (in fact, I was saying as much earlier this week). That is, if I were to be making Stephen King money as a writer, I’d expect to pay higher taxes–potentially much higher, actually, than people who are in Stephen King’s tax bracket are currently paying. Although my comments on this were triggered by George Harrison being a whiny and hypocritical little twit about this when he was in his twenties, I suspect I’m not alone in this, that a lot of artsy types would be happier carrying some larger tax burden (though perhaps not as high as 95%) if that were a signifier that they’d achieved some massive success in their artistic lives.

    My two cents, anyway. Thanks for the provocative piece.

    • thehandsomecamel says:

      Hey, Eric! Nice to hear from you, and I should have linked to your Beatles post, which is about much the same kind of thing.

      Anyway, I hear what you’re saying, and like you, I think there’s a public policy argument to be made for a modest subsidy of people who produce great things that they might not make a lot of money from. (And there’s a huge pubic policy argument to be made for supporting people’s choice to spend time with their families.) I’m not suggesting (and Sanchez is probably also not suggesting) that there should be a drastic change in tax policy to make sculptors and philosophers pay more. But it’s interesting to think about the way quantifiability influences the degree to which you get to keep, or must share, the fruits of your activities. You can be taxed on your income, because money is a quantifiable unit of exchange for time. You can’t be taxed on going to the park with your kid, even though that, too, was a reward you reaped from choices you made about how to spend your time. I don’t know that it changes anything. It’s just interesting.

      (Maybe this would be a good libertarian/hippy crossover mantra: “Being groovy — the ultimate tax haven!”)

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