Another one bites the dust

Oh dear. Have to take a pop at another often worthwhile blog, Chris Dillow's Stumbling and Mumbling.

He argues that inequality is increasing because of a "winner takes all superstar effects." This, he contends:

increases the force of Rawls’ [here] claim that the distribution of talents is “arbitrary from a moral perspective” because “no-one deserves his place in the distribution of native endowments.” The essence of winner-take-all economics is that small differences in skills can mean large differences in returns. Even if you think Rawls was wrong on this, and that there is a moral element in the distribution of skills - say, insofar as these arise from differences in effort - one must, surely, be inclined to think that small differences in skill are largely arbitary.

Whose moral perspective? What has "deserving" got to do with it? There is no moral basis for taking from one person to give to another. It can only be done by coercion, which by definition favours the strong over the weak. Therefore any attempt to redistribute the rewards of arbitrarily distributed talents (Dillow appears to be unaware that Rawls considers application - that is, hard work - is also an unfairly distributed attribute) constitutes an exercise of the even more arbitrary principle that might is right.

It reduces the relevance of the self-ownership thesis. Even if we concede the Nozickian [here] point, that people own their own talents, this does not suffice to justify leaving superstar salaries untaxed, because such salaries are a joint product. They arise from an interplay of talent (or luck) with socio-technical forces: globalization; a negligible marginal cost of production; copyright laws; and so on. No superstar can claim a right to these factors, which are an accident of history. And insofar as these are social factors, it might be reasonable for the incomes arising therefrom to be socialized.

Untaxed? Anyway, the point is not whether or not superstars should pay super tax, but whether they can be forced to do so, given that they can choose where they live and can employ armies of lawyers and accountants to minimize their tax exposure.

Sportspeople are rather more tied to a particular geographic area than artists or businesspeople, but they have to invest tens of thousands of hours of practice even to aspire to stardom, and most of those who attain it have relatively brief careers that can be cut short at any time by injury. What is "fair" about supertaxing their brief period of exceptional earnings, when after it is past most of them earn little from their skill? 

Plus - who does the "socializing"? Some austere Platonic elite that will perform the wonder of moral redistribution without any of it sticking to their fingers? Yeah, right. Lastly, the most significant "social factor" is that large numbers of people are willing to pay to enjoy the talents of these superstars, without coercion, as an exercise of free will.

Because only a tiny minority become superstars - and they do so at least in part through luck - hardly anyone with rational expectations would anticipate becoming a superstar. Superstar salaries, then, are not needed to induce people to become writers, musicians or sportsmen. Instead, they consist very heavily of rents. And rent is a reasonable subject for tax. 

Which then accrues to the state, whose officers reward themselves handsomely and in addition award contracts to rent-seeking private corporations in return for bribes, and spend some more of it on portions of the electorate selected according to the arbitrary criterion of whether their votes can swing a future election.