Murphy & Nagel's foolish fiscal psilosophy

Some 15 years ago  Alex Gosseries wrote a review of Murphy & Nagel's 'the myth of ownership'.

 How can philosophical theories of justice possibly translate into fully-fledged fiscal proposals?

They can't. Fiscal policy is about elasticities of supply and demand. Philosophy can say shit about that. This does not mean that one can't use philosophy to justify a shite fiscal policy. But anti-semitism works better. All dem Richie Richs are secretly Jewish or else are Freemasons or...did I mention Jews? well obviously I mean really Jewy secret Jews like the Pope and the Chinese and Saudis and so on. 

Reading Liam Murphy and Thomas Nagel’s Myth of Ownership will definitely be of great use to political philos-phers interested in answering this key question. The book is organized around two central (sets of) claims that repeatedly resurface across the chapters. The first idea consists in a rejection of myopia, i.e. of the view consisting in analyzing the fairness of a given level and distribution of the tax burden  without looking at the distribution of tax benefits.

This extremely stupid. The fact is, the Revelation principle says there is always a mechanism such that a member of a group receiving a benefit can pay her share. But, no mechanism in the world can prevent people quitting such a group medium to long term or else subverting the thing completely. 

Of course, one could simply mug and kidnap people and shoot guys who try to run away. But then killing the gangsters is what politics is about. Philosophy has no purchase.

Regret minimizing, because of Knightian Uncertainty, means there will be some altruistic transfers and a 'safety net'. But that is the fat which gets cut back on when hard times hit. Philosophy can be kept around as a cheap way of fooling people they have reliable entitlements. Then just when they are all relaxed and cozy you haircut the fuck out of their savings like they are Greek pensioners. 

For instance, the authors rightly stress the fact that ‘a tax burden that is matched by an equivalent transfer is not in the relevant sense, a burden at all’ (p. 14).

So, it has an 'incentive compatible' mechanism. Philosophers can still fuck it up but  once they have been chased away the thing can be made to work properly once again.

Murphy & Nagel with the characteristic cretinism of their profession concentrate on the justification for the one type of tax which can't exist save in pathological form over the medium to long term. 

Instead of fiscal policy, if these two cretins were writing about oncology they would say 'We must encourage cancerous cells to metastasize. The Doctors are barking up the wrong tree. Thankfully, us philosophers have come to the rescue.' 

The second key claim is that it is meaningless to examine separately the legitimacy of the tax system and the system of property and pre-tax income.

This is true enough but only because all examinations of legitimacy are meaningless shite unless we are discussing my own claim to be the Grand Duke of Ruritania. 

This second claim is actually twofold. One idea is that in the absence of a state there would be no market and no system of property to pre-tax income.

Nonsense! Property owners would band together to hire professional killers. True, one or two may be rich, or crazy, enough to make do with his own bunch of bandits. But then he'd be robbing his neighbors till either he becomes the 'stationary bandit' or else succumbs to a coalition of poorer men. 

Markets existed before there were Judges. Judges existed before there were Kings. Kings existed before there were States. 

On the other hand, we know that if a State exists there may be no markets and no taxes. You do what you are told or you get your head kicked in.  

Since there is no state without taxation,

Nonsense! The State can own everything and compel corvee labor. There may be tax without monetization but there has to be a class of accountant/scribes. Monetization means, eventually, you have Governments reliable enough to provide Consols- i.e. riskless assets. That's when you can kick fiscal policy up a notch. The first 'transfer' that has to be budgeted for is the rentier. Then there is a 'widows and orphans argument' for activist monetary policy to avoid a liquidity trap and only subsequently do voters acquiesce in transfers to actual widows and orphans and so forth. But these transfers tend to be 'horizontal'- i.e. within an income group- and are tolerated for prudential reasons. But those who rely on safety nets tend to be the first to go to the wall when there is a fiscal crunch. 

such market and property could not conceivably exist without taxation.

Very true! In prison, the thing to do is to go up to the big guy with gang tats and steal his pudding. I say this as a karate yellow belt who once tried to steal candy from a baby. Baby kicked my ass.  

The other side of the second claim — the baseline claim — is that justice ‘is not a matter of applying some equitable-seeming function to a morally arbitrary initial distribution of welfare’ (p. 30).

Justice is a service industry. You pay for what you get one way or another. There may be some 'free riding' 

Hence, the very existence of property to pre-tax income depends on the existence of taxation.

If you have money, you can protect your property or, at least, the guy who stole it from you, or the guy who stole it from him, can protect it.  

And the fairness of a given level and pattern of taxation cannot be assessed independently of an assessment of the legitimacy of the pre-tax property and income.

Fairness can't be assessed. Unfairness can be reported. This is why we don't want a 'General Eyre' looking into how everybody got what they have and then changing things around in the name of fairness. We just want Justice to be a demand driven service industry- unless our complexion is such that the police keep shooting us in which case we may want to defund that shite. 

In a nutshell, the twofold nature of this second claim is clear: ‘the pre-tax distribution of welfare is both entirely imaginary and morally irrelevant’.

Pre-tax distribution of welfare is related to real world metrics though the underlying Social configuration space may be very complex indeed. It isn't imaginary for fiscal policy. It is real insofar as it relates to factor income. If you get the pre-tax distribution wrong your budget will have a big hole in it. That is morally relevant. It is wrong to fuck up your country. Stop being such an evil cunt. Go find a cancer patient and explain to his family that you have a swell plan to kill him quicker. They will show their gratitude by kicking your head in. 

Morality or 'fairness' or 'Justice' or 'Value' or 'Beauty' of 'Goodness' or 'Gobsititude' are either 'buck stopped'- i.e. someone has an immunity from providing a justification for their determination- or they face a halting problem or else are multidimensional and feature McKelvey chaos. No matter how you model it there will always be a concurrency problem. 

Econ & Math were both aware of all these problems since the Seventies. But the philosophers, it seems, chose to remain ignorant. 

Moreover, a proper assessment of the pretax distribution is only possible

it is not possible. That's what the maths says.  

if we get rid of our natural inclination to constantly slide from legal rights on our pre-tax income to moral rights (e.g. p. 34).

Even if we chop our heads off and shove them up our arses the problem would remain. 

For pre-tax income and property should not be seen as what people are morally entitled to since this can only be defined after a fair tax system has imposed its burden.

This objection is easily disposed of. Economists make a distinction between factor income and individual income. So do we all. Why? We won't remain a factor of production through our whole life cycle. We save when we are working and dissave when old or enfeebled. Individual income is 'smoothed' factor income. Since individuals differ as individuals than as factors of production, the former have lower elasticity than the latter. Redistribution catches those already committed or who have 'stranded assets'. But, at the margin, factor elasticity is increasing as entry and exit change. 

In short, there are two key (sets of) claims, about the non-separability of burdens and benefits on the one hand, and the property and the tax system on the other.    The authors’ two claims call for a broad-minded approach to issues of taxation of justice. This is a point that is actually relevant to most issues of distributive justice. For example, when it comes to employment policy, e.g. whether seniority rules in cases of layoffs are fair, should be assessed not merely in a good-specific manner, i.e. by looking at the rule’s impact in terms of distribution of access to employment among those who are currently working, but also in an all-things-considered manner, i.e. taking into account the rule’s impact in terms of productivity and, as a result, on all members of society, through tax and transfers. In a way, this amounts to stressing the limits of ‘local justice’ approaches ‘à la Elster’ (J. Elster, Local Justice: How Institutions Allocate Scarce Goods and Necessary Burdens, Cambridge: Cambridge University Press, 1992). Yet, this does not rule out the efforts of explicitly second-order theories of justice analyzing the fairness of tax burden whenever changes in the distribution of tax benefits are politi-cally out of reach. It only entails that, even when we propose fiscal reforms focusing on the burden side only, we should take into account the distribution of tax benefits as it exists. 

The problem is obvious. We don't have the information and can't aggregate it even if, by some magic, it was given to us. All we can do is permit rent-seeking under cover of some stupid pi-jaw. But then you have more and more people doing pi-jaw, not first order good. The thing collapses.