My take on Harry Binswanger’s interesting article in the Forbes

The Objectivist philosopher Dr. Harry Binswanger has written an interesting article in the Forbes. The following is what he yesterday noted at his Web site, HBL [^], from where I got to know about that article. BTW, he frequently updates the front page of HBL, and so, I am taking the liberty to quote his yesterday’s noting in its entirety:

“My new post is on the debt of gratitude the 99% owe the 1%. It contains a proposal, probably familiar to those here, that anyone who earns over a million dollars be exempted from all income tax.

It’s a big hit on Forbes. How big, you ask? Well it beat my previous record which was against gun control. That had an amazing 38,717 views, over a few weeks. The current article has had 88,000 views in one day. And it’s only going up from here.”

He then provided a link to the article, which is here [^].

Yesterday, I went through the article, and also quite a few comments. … Obviously, Dr. Binswanger should be happy about the interest the article has generated! As of writing of this post, the number of hits to this article had reached a mind boggling 164,409, and the number of comments, 585!

A notable feature here is not just the volume and the nature of the comments, but also Dr. Binswanger’s clean, direct, thorough, and gentlemanly responses to those comments. … I myself couldn’t have kept as much of patience replying back some of those nasty comments. (And you could tell that much about me, couldn’t you? (LOL!))…

The last time I commented on his Forbes column/blog [^] was in response to his article on immigration [^]. I dug it up today; it’s here [^]. …Wow! it’s seven months already! … Of course, I should have known—I have changed my stand since then; now, I am willing to  go for work anywhere, even to the USA!

Anyway, coming back to this week’s article of Dr. Binswanger’s, I thought it best not to comment on the Forbes blog, because I thought that the format of those immediate comments and re-comments, all done at the e-speed, wouldn’t be appropriate for what I had to say in response to that article…. What I have to say is something I wanted to do in a bit more relaxed mood, thinking aloud. My position is that I do not fully agree with Dr. Binswanger here. … So, before continuing to read any further, if you haven’t already done so, please go and completely read that article, and also at least the comments “called out” by the author, before continuing here.

I now presume that you have read the article and the prominent comments.

I will not bother noting down what all are the good or even great points in that article. With Dr. Binswanger, you always expect that. I will note only concerning my objection, the point where I disagree. But before that, a bit about the context.

For context, if you don’t know it, Dr. Binswanger’s obvious intent here is to counter a recent cultural idea that has gained a lot of traction among businessmen, both in the USA and in India. I don’t know who formulated this particular expression of it, but knowing that detail is not very important. What is important that many—far too many, in fact—prominent American businessmen and rich people have espoused it. Including not just Warren Buffett but also Bill Gates. (Some in SF Bay Area might want to reverse the order of noting down the two names here!) They, and others like them, have been canvassing for rich people to take a pledge to “give back” to the society.

The basic idea is ancient—it is as old as altruism is—but its specific formulation here is more in the Christian mould, and more couched for the American businessman. And, despite Ayn Rand Institute’s moral defence of the right of Microsoft not to be split in that DoJ case in the 1990s, Bill Gates, apparently, hasn’t learnt anything. On the contrary, he has been an enthusiastic front-runner in this recent “give back” drive.

Dr. Binswanger, for good reasons, would wish to counter this expression of altruism in the American culture today. Ayn Rand had a principled opposition to what she called the axis of mysticism, altruism and collectivism [^]. She instead upheld reason, rational egoism and individualism, in their respective places. (These are the main issues of contention respectively in epistemology, ethics, and politics.) Collectivism, she demonstrated, leads to statism and dictatorships, whereas individual rights lead to Capitalism. So, given this nutty but highly influential “give back” drive, and the fact that he is a pro-Capitalism philosopher, it was obvious that while writing for a business magazine, Dr. Binswanger would engage this battle against collectivism, at a level more basic to it: at the level of ethics, and on the issue of altruism vs. [rational] egoism.

His latest article is to be seen in this light. And, seen this way, if he were to be completely consistent in his position including also on the application side, I couldn’t possibly have had any issue with it.

However, I do have a problem—that way, a minor problem, but a problem, nevertheless—with this article. Dr. Binswanger here seems to have advocated a position that is, I think, perhaps a bit too narrow for an unqualified and immediate endorsement.

I don’t have any problem with the basic idea behind his suggestion: that if at all giving back should be the issue, then it’s the 99% that should give back to the 1%. The only issue I have are with the details.

The first detail: Is it really only the 1%? Or should it rather be something like, say, 2%? 5%? … I don’t know, but I am just wondering… It’s a very minor, quantitative detail, but still, that 1% figure seems to me, off-hand, too small—even elitist.

And, I have another, relatively much more important, issue here—call it a problem if you wish: Just how do you decide who constitutes the top x%?

Here, Dr. Binswanger follows the historically valid criterion: the income. Historically, it seems, the income would have made for a valid criterion in the USA: the government interference was almost nothing as compared to today, and so, “income” would have been the same as “the money made in the [mostly] free market,” which would have been the same as “the earned money,” which, in turn, would have been in direct proportion to “productive achievement.” So, it would have been valid to say that if you made a million, you are an honourable man because you are so productive. Productivity (including creativity, etc.) is a virtue.

The trouble is that today’s system is not capitalistic at all. Not even in the USA. Even though Americans habitually forget this simple fact.

Today, the income no longer is tied with the productive achievement of a man or how  worthy his output actually is (and can be). In fact, the whole issue comes up precisely because the government exercises such a great deal of coercive control in the economy (and with government, all controls are always coercive; there is no such a thing as a non-coercive government control—it’s a contradiction in terms).

Here, realize that the one element of Dr. Binswanger’s suggestion, namely that Congressional Honors (and only that—honor) may be bestowed on productive individuals is not in itself bad. We live in such bad times that it “instinctively” seems to us that selection procedures followed even if “only” for honors would always be fully problematic, even if it were to be a completely free, Capitalistic society. (And, so, we tend to overemphasize the idea that in a free society, there would be no government honors.) However, historically, in the USA, that never was the case. American presidents were known to boast of the wealth they personally made, and simultaneously, also used to be eager to bestow social honors on the other, wealthy, individuals, all in a manner so innocent as to seem to belong to a realm of fairy tales, today. And, people would by and large have no problem with who was thus honored and who was not. The goodwill among people was so great and so authentic. So, in that sense, honors, even Congressional Honors, by themselves, would be fine by me.

The trouble is, when the government is so big as to create as much of a mess as the one in which we currently live, the very idea that some government- or politicians-bestowed honors should go, without qualification, to all the millionaires seems preposterous not just out of envy/jealousy, but also because far too many of us have (or at least I have) the sense that far too many of them simply made a killing precisely exploiting government-enforced restrictions or controls of the economy—or at least influenced government in some way to derive benefits (“grabbing,” really speaking).

From what I gather by regularly reading HBL site, Steve Jobs is Dr. Binswanger’s favorite example of a great money-maker—and Jobs indeed was one, in very many important ways.

But Jobs himself was found at least actively supporting if not outright canvassing for the DoJ to “break the back of Microsoft” just a decade ago—the times incidentally coinciding with quite some part of the wealth he made. And, the quoted words are his own; he said that in a fairly serious even if somewhat passionate settings—or at least the local Palo Alto and San Jose newspapers had carried such news items back then. Now, suppose you supply some great (objectively valid) contextual material to show how Jobs was simply tired of, say, Microsoft‘s abuse of the government power, by some background deals they struck with the government and all, and so, to save his business, with no better alternatives left (despite ARI’s presence right in his home state), he had to begin, say, “encouraging” the DoJ only as a counter-measure, and therefore, he really would deserve honors despite all those utterances. Suppose you say that, in Jobs’ defence. It still leaves open the issue of whether you then want the honors also to go to both Bill Gates and Scott McNealy, together with Jobs. And, also to that guy who founded some company called WebVan or so. People would want to buy vegetables online, he thought. People would not want to leave their armchair and go to market, have a direct look at vegetables like spinach and ochra, they would not want to touch and press a couple of apples or grapefruit from all sides, before coming to the conclusion that that material was good enough to take to their kitchens, he thought. Give people some good stock photographs of fresh vegetables on the Internet, and some great discount deals, and the convenience of delivery to their door-step after just a mouse-click, and they will happily buy even perishable food items like vegetables online, he thought. And bet his company on this idea. The company went bust, of course, but he made millions via what is known as the “exit parachute.”

In Dr. Binswanger’s scheme, he could have easily received the congressional honors for some 2–3 years in a row, before the company went bust, and also for a few years after that—due to the exit parachute, he would continue to make millions every year for some more years even in case the company went bust. Some money-making personality! Or, make it a plural, a sizeable one at that. Personalities!

Dr. Binswanger, it might seem, is naive.  Possible. More probable is this possibility that first he thought of this neat interest-generating idea, of turning the “giving back” idea on its head. This part is actually neat. But then, he probably simply got carried away a bit too far.

Though ideations in terms such as (economic) “class” and all that was so unlike Ayn Rand, she did once observe (though I can’t off-hand tell you where I read it) that the middle-class is the most productive among the three classes. The middle class, she had noted, is a product of Capitalism; it had never existed in any civilization and in any culture prior to the rise of capitalism.

I used to work in the SF Bay Area—arguably one of the most competitive places of work for software development—during the late nighties and early naughties. I have come across (though not necessarily personally) many, many examples of highly productive men—entrepreneurs and engineers, and even marketing people—making it big purely on their own hard work and merit. Some—in fact, many—might have become millionaires. (Microsoft, at that time, was minting a relatively very big number of new millionaires (was it 100?) per month.) And yet, I must note, per my actual, direct observations, the Venn overlap between the millionaires and the productive was only partial. There were enough on both sides of the “left-out” areas that one couldn’t possibly ignore them. Many good, productive people never made millions, though they did earn respectably well (in excess of $100 k/year).

My informal feel is that if you take the income distribution curve, the most productive would be in a band next to the top income earners. I mean to say, if you superimpose the distribution of the productivity of people (i.e. number of productive people at a given income level) on top of the income distribution curve, then, at least in today’s USA, the peak of the productivity curve would likely be on the higher income side, but not at the very topmost income levels. It would be somewhere next to it.

… Best surgeons—those who actually perform surgery as in contrast to those who don’t perform any surgery and only own or manage hospitals—would be found at, say, around the $500 k to $1 million levels. (Am I right?) Perhaps $5 million levels. But they won’t be found at the $50 million level. And, further, their density would be significantly high also in the $100 k to $250 k levels. Similarly, for lawyers and engineers. Greatest engineers are often “happy” working anywhere between, say, $70 k to $250 k. They typically miss the millionaire club. (And, I don’t buy the idea that Steve Jobs was great and his engineers relatively dumb, because it was only he who thought that so much slimming down of cell-phones was possible, or desirable. From what I know of the Bay Area engineers, that’s not possible, in fact. Engineers would be smart enough to think similarly too, though outwardly they would say: “it can’t be done.” The reason wouldn’t only be a relative incompetence, not in all cases anyway. A more likely reason would be simply that they were gunning for all those bonuses and stock options, which, BTW, wouldn’t come their way if they didn’t make it look difficult. And all of that money would still put them within only the $100 k to $500k bracket.)

I am not denying Jobs’ genius. I am pointing out another, orthogonal fact, viz., that if you take that distribution of # of productive people at a given income level, then some of the higher-level parts of this curve may go up and include some of the highest money-makers too. But its peak will not be at the highest income levels. If you want to approximate it via an all-or-nothing band (by cutting off at some low enough a level), then, the resulting band would certainly fall short of the topmost income levels.

Where does that, then, leave us? Fortunately for us, the number of the topmost earners would also be much much less than the number of productive but not-so-wealthy people. And, fortunately for us, I think, at least in the USA, the productive people’s band would lie right next to the topmost income peoples’ band. And, this make it easy to device a policy. We can afford to be generous, club the two together, and advocate for a top 2%, 3% or 5% or so. As an approximate band, they may be singled out for the remaining majority to be grateful towards them. I don’t care if you take it to the top 10% or even 15% levels. Just remember, as you widen the group, its inspiration-generation potential drops. And, that’s the last point I want to write about, today.

Nobody is really (i.e. in actual fact) inspired by a top money-makers such as Bill Gates or a Steve Jobs. And the reason is not, as many Objectivists think, that the culture is that bad. The fact is, people are awed, even mystified, by the top money-makers, esp. the wealthiest ones in today’s mixed economy. But people do not want to emulate them. Not even the most ambitious but productive among the low-earners. And not even if all tax was to be exempted for top earners like Bill Gates or Warren Buffett. The reason is not a lack of ambition or moral strength or ability, and the reason is not “bad culture.” The reason is: because people are smart enough to realize, and correctly so, that these are the rather “freak” cases, speaking statistically. The amount of wealth they made came about via such a narrow and unique set of circumstances that it’s impossible for someone starting afresh to plan his career using as narrow and unique combination as that, and also not face in the process the risk, not just of possible failure, but also of too high expectations coming crashing too cruelly down. And therefore, the smartest and even the most productive among the topmost income earners (i.e. leaving aside all crooks and government’s bed-fellows aside) do not actually have a great inspiration potential.

Admiration potential? Yes. But potential for inspiration, in the sense Dr. Binswanger would desire? So as to effect the cultural change towards a better culture? LOL! Not really. People may talk in terms like “Bill Gates inspires me,” simply because they are just looking for some words to use, but in their mind doesn’t really seem to act that way—inspiration is not what their mind seems to derive.

There might be a few areas of exceptions here, of course. I am just continuing to think aloud. Top athletes (like Michael Jordan) may perhaps actually inspire the potential top athletes. But the phenomenon does not carry over more broadly into all fields of productive endeavour. And, for that matter, even among athletes, top money-makers don’t necessarily inspire the potentially best athletes, anyway. Think: who is not inspired by Sachin Tendulkar? And then, think: but who all athletes are inspired, in the real sense of the term, also by all those other millionaire cricketers? And then, also think: what makes people want to top, say, the carom tournaments or represent India in hockey team? Why does the great amount of money present in cricket still fails to inspire them to go to cricket? So, when it comes to inspiration, the top money-makers don’t inspire others, top performers do. … Indeed, it’s probably only in the finance and finance-dominated fields that top money-makers might also be the most inspiring people—I don’t know, but that could easily to be the case. In most other fields, the correlation simply does not hold good. Performance “out-inspires” money. And not because of any dichotomy the element of statism introduces, but simply as a fact of the human nature.

So, if the intent is reversing the bad cultural trends, Dr. Binswanger could have advocated honoring the most productive ones—and stopped there. But he went further, and made the issue conceptually narrower, by focusing on income as the criterion. And that’s where I disagree. Just the way he fights collectivism by taking the battle to a more fundamental level, that of ethics (altruism vs. egoism), similarly, he could have taken the suggestion to a bit more fundamental level, and advocated the most productive ones, instead of the richest ones. The former are the best candidates to appreciate the goal of bringing about a cultural change for the better, anyway—the latter may or may not be (and in today’s mixed economy, often are not).

People wouldn’t mind (or even care) if Warren Buffett and Steve Jobs get honored—or at least get all those tax exemptions, which too is what Dr. Binswanger suggests—so long as they could see that the actual productive geniuses also were getting honored, in fact a relatively greater number of them.

At a personal level, I don’t care if Mr. Forbes gets honored by the government or receives tax exemptions—so long as both Dr. Binswanger and I get 100% tax exemption on all our respective incomes, whatever these may be. That’s the bottom-line.

Otherwise, since the statists and collectivists aren’t going to reduce the government spending ahead of all that cultural change even if they accept Dr. Binswanger’s suggestion, what, effectively, he ends up doing is asking me to shell out even more income tax out of my income, in order to subsidize the top money-“makers” of today’s. And, why? Because they are productive geniuses, that’s why. Tough luck.

Now, that, really, is the bottom line.

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Update: I could locate Ayn Rand’s take on the middle class. She uses even stronger words—strong enough that no additional emphasis is necessary!:

“A nation’s productive—and moral, and intellectual—top is the middle class. It is a broad reservoir of energy, it is a country’s motor and lifeblood, which feeds the rest.”
–Ayn Rand

See the excerpts here [^].

 

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A Song I Like:

(Hindi) “kai din se mujhe, kabhi sapano mein..”
Singers: Hemlata and Shailendra Singh
Music: Ravindra Jain
Lyrics: Ravindra Jain

[May be I will come back and streamline this writing a bit.]

[E&OE]

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