Monday, February 29, 2016

Society’s ‘Lottery Winners’ and ‘Give Back’ vs. Win-Win

In May 2015, President Obama said this to a panel on poverty at Georgetown University:

The top 25 hedge fund managers made more than all of the kindergarten teachers in the country. So, when I say that, I’m not saying that because I dislike hedge fund managers, or I think they are evil, I’m saying that you’re paying a lower [tax] rate than a lot of folks who are making $300,000 a year. You pretty much have more than you’ll ever be able to use in your family will ever be able to use.

There’s a fairness issue involved here. And by the way, if we were able to close that loophole, I could now invest in early childhood education to make a difference. That’s where the rubber hits the road. That’s … where the question of compassion and ‘I’m my brother’s keeper’ comes into play. And if we can’t ask from society’s lottery winners to just make that modest investment, then really this conversation [on poverty] is for show.

Though Obama singled out hedge fund managers, his remark about “society’s lottery winners” clearly was meant to apply to successful achievers generally. It’s a logical followup to his “you didn’t build that” worldview.

In rebuttal, Forbes’s Rich Karlgaard has a nice column titled Society’s Lottery Winners. I recommend it, with one caveat. Early on, Karlgaard writes:

WORDS MATTER. Take the phrase “If we can’t ask from society’s winners to make [an] investment. … ” It’s a familiar plea from preachers and fundraisers, a particularly American approach. The U.S., happily, is a country that mints many winners who then traditionally give lots of money to charities, churches, schools and nonprofits.

Now change this plea by the addition of a single word: “If we can’t ask from society’s lottery winners to make [an] investment. …” Hmm–it has an altogether different ring to it, no? That one word, “lottery,” changes the entire meaning. A good-hearted plea to society’s successful to heed their better angels and give something back becomes, by inserting “lottery,” sarcastic and cutting.

I left these comments:

“A good-hearted plea to society’s successful to heed their better angels and give something back becomes, by inserting ‘lottery,’ sarcastic and cutting.”

But what does “give something back” imply? It implies that the successful got something they didn’t earn or deserve, and so have a duty to give it back.

But as Karlgaard makes plain throughout this article, successful people make their money by “meeting market needs”: i.e., by creating economic value in exchange for the money they receive from consumers who willingly buy that value. But the successful are not the only winners. Those who receive the values the successful create are also winners. I’m composing this comment on a Dell computer. Michael Dell wins, but so do I. It’s not just “win.” It’s win-win. Highly successful people, like anyone on any level who works for money, give value for value—except that the wealthy create a lot more value for a lot more people. Hence, their fortunes. I would argue that the economic value the successful give far exceeds their fortunes in most cases. How do the cumulative benefits enjoyed by Google’s millions of users and thousands of employees stack up against the monetary fortunes of [Larry] Page and [Sergey] Brin, however many $billions they may be worth? The relationship of society’s most successful achievers to society in general is not just win-win: It’s arguably win-WIN.

Political “entrepreneurs” who get rich by government favor rather than market trade aside, successful people have nothing to “give back,” because they already gave plenty in the process of becoming “society’s winners.” “Give something back” is a terrible way to counter Obama’s morally obscene derogation of success and achievement. The use of that phrase only validates Obama’s premise, because substituting “give back” for “lottery” merely says the same thing in a different way. The generosity of the wealthy is laudable, but not because they have anything to give back. The use of the term “give something back” in this article mars an otherwise powerful rebuttal to Obama.


One more point needs to be addressed regarding two above comments; one by Obama, and one by Karlgaard. Obama said:

There’s a fairness issue involved here. And by the way, if we were able to close that loophole, I could now invest in early childhood education to make a difference. That’s where the rubber hits the road. That’s … where the question of compassion and ‘I’m my brother’s keeper’ comes into play. [emphasis added]

Obama is clearly playing the altruism card. How does Karlgaard respond? Less Obama’s “lottery” insertion, Karlgaard concedes that such calls amount to “A good-hearted plea to society’s successful to heed their better angels and give something back . . .” [emphasis added]

This concession to altruism by Karlgaard amounts to, “‘Giving back’—giving away your earnings to those who didn’t earn it—is morally superior to creating wealth,” if creating wealth is given any moral credit at all. By conceding Obama’s altruist premises, Karlgaard concedes the moral high ground to Obama. Once Karlgaard concedes the moral high ground, quibbling over Obama’s “lottery” terminology is inconsequential by comparison.

This is another example of why defending free market capitalism requires challenging altruism. Capitalism, with its emphasis on individual rights to life, property, and the pursuit of personal happiness, doesn’t jive with “I’m my brother’s keeper.”

Related Reading:

How You Build That


Anonymous said...

I think it's important to attack the philosophical issues here, such as "giving back," altruism, and the like.

But there is another way to approach this. According to Obama, we need to spend more money on teachers, teacher salaries, and inner city schools.

What reason is there to believe that any of this will improve education? We've been trying this since the Great Society and it's been a failure. This is why I think The Bell Curve is the most important book in my lifetime. Thanks to it (and all sorts of research since then) we know that an individual's intelligence and to some extent his success are largely determined by genes (maybe as much as 80%). As Charles Murray said recently, once you have "merely OK" schools and parents, you are pretty much up against a genetic wall.

The black IQ is 85. Even if that's not genetic (and the genes for intelligence will be found in a few years) we don't know how to increase IQ.


Michael A. LaFerrara said...

SJ, don’t you think the government’s coercive dominance of education is a bigger barrier to good schools than any supposed “genetic wall?”

Genetics, like when and where you are born, is only an unchosen starting point. What the individual makes of his genetic inheritance is what matters when it comes to his economic achievement. Genetics don’t determine success. Genetics won’t give you better ideas, the right values, the best choices, or get you up off the couch and out to work. Genetics won’t give you as a parent the freedom to choose your child’s school or you as an educator the freedom to choose a new educational method, philosophy, or curriculum when a government throws a tax supported, compulsory education establishment in your way.

madmax said...


Genetics places parameters around a person's life outcomes. There are of course some atypical people that succeed despite low IQ but generally IQ is enormously predictive at the population level (is more random at the individual level). Blacks and other equatorial people (ie Muslims) have very low IQs which means they have very low processing capacity (think of IQ as CPU power). This means that freedom, economic achievement and aesthetic / artistic beauty need a genetic infrastructure as well as the right ideas. Objectivism ignores one of those to its (and societies) detriment.

Rand's blank slate view of human nature will not hold. You should get used to that idea.

madmax said...

Here's another reason why you need biology to explain the differences in economic outcomes. Look at what this leftist group has to say:

“how do we explain persistent disparities among groups, and disproportionate levels of poverty, incarceration, unemployment, etc. in communities of color. We can’t. Not without a structural racism analysis" (Grassroots Policy Project)

Their egalitarian assumptions are based on a view of human nature that starts from neurological uniformity of all races and ethnicities of humanity. That is wrong. There is a significant degree of genetic variation. With racial hereditarianism we can show that differences in outcome are due to differences in biology. Thus leftism can be discredited empirically in addition to moral / philosophically.

Think of it this way. Who were at the top of Rand's "Pyramid of Ability"? That's right, the top of Rand's pyramid would be the high IQ contingent of any society. IQ does not make you rational but it is a really good place to start. Necessary but not sufficient to use Aristotle's language. Also Google up "smart IQ fraction" to see good arguments that a society needs a significant portion of its population to be above 106 IQ for it to have any realistic chance of economic advancement.

I know you are going to come back with philosophy and ideas and freedom and reason and Rand and .... But the point I am making is that you need more than good software (which is all that Objectivism stresses). You need good hardware too. Without powerful enough hardware you can not install the liberty software. It won't take, as depressing as that is.

Michael A. LaFerrara said...


“Objectivism ignores one of those . . .”

Wrong. The point is not that natural endowments—which nobody has any control over— don’t matter, but that people should be judged according to what they make of their natural endowments, which they do have control over. This is not ignoring the hardware for the software. It is putting each in its proper place. As far as justice—that is, what people deserve—goes, “the hardware” is irrelevant. I spent 46 years in the construction trades (actually, 2 trades), mostly as employee but also as self-employed. I think I did pretty well for myself. Obviously, I couldn’t have exceeded my natural limits. But did I even reach them? Maybe, if I put my mind to it, I could have invented some new kind of plumbing tool, and made a fortune. Who knows? Who cares? Statistical group correlations between biology and economic outcome are irrelevant. The reality is, I as an individual made of my potentialities what I made of them, by my own choices—and by grace of the people who valued my services and paid me accordingly. And so did the guy at the top of the pyramid. We’re both entitled to our economic rewards, however unequal—and for whatever unequal reasons—those rewards.

Modern egalitarians ignore free will and individual character and assume all outcomes are the result of natural endowments (as well as other factors beyond the individual’s control). Since they see differing natural endowments as inherently unfair, as if nature could be unfair, it follows for them that differences in economic outcomes are all a matter of luck, like playing the lottery—and thus unfair and in need of corrective action through coercive government intervention. This view fits their statist politics just fine. But my view is that aggressive government coercion, not human diversity, is what’s unfair.

(And by the way, the pyramid of ability does not necessarily correlate to economic rewards. People of lesser ability but brimming with entrepreneurial energy often make fortunes by turning the knowledge discovered at the top into mass-market products.)

Anonymous said...

"don’t you think the government’s coercive dominance of education is a bigger barrier to good schools than any supposed 'genetic wall?'

No. I don't agree with the government monopoly on schools. I think schools are leftist in such areas as history, social science, etc. That being said if you are born smart you'll do well in those areas that are (for the most part) non-ideological such as math and physics.

As The Bell Curve showed, there is a correlation between IQ and other traits. Low IQ people tend to commit more crime, have more family problems, use drugs, etc.

Of course you can be smart and be evil and not smart and moral, but these traits cluster together.

So when you are designing an immigration policy for example, it is perfectly reasonable to exclude most Muslims because you know with complete certainty that they are more prone to crime, etc. Even if Muslims were to convert to, say, Quakerism, they would still have all sorts of problems. (I'm talking about Muslims born in the East where they average IQs of 85.)

-Steve Jackson

Anonymous said...


The IQ of whites is 100. The IQ of African-Americans (who average 20 percent European genes) is 85. That means that the average white person is smarter than 83 percent of blacks. (Sub saharan Africans are even lower.)

Think about what the means in terms of a society that permits large scale non-white immigration.


Mike Kevitt said...

Mr. La Ferrara seems to have lost patience and has decided not to respond anymore. Not sure I blame him. But, lemme try this:

Even if you're a semi-retard with some physical inabilities, you can still function productively within your field of awareness and physical abilities. And such people usually want to. Nothing saying they'll choose crime or terrorism. 'Software' determines that. Totalitarian statism leaves then NO room to function. Under statism they'll die by age 30 or sooner unless the state feeds them so they can live longer as basket cases. But individual rights and laissez-faire capitalism leaves the whole field of human action (minus initiatory physical force) wide open for the most unable to do what they can. They'll usually do what they can. The market will buy it. Due to the productivity of those who produce the most(countless times more than they would or ever could consume)the productivity of the semi-retards just might be enough to earn them a reliable income above and beyond their subsistence needs. If not always, how about charity in a laissez-faire system to fill the shortage? Laissez-faire enables the 'least' among us to live comfortably, respectably and happily for a full natural lifespan rather than die young and miserable.

Michael A. LaFerrara said...

Well put, Mike. In reality, we are individuals, not collective averages. I didn't respond to Steve's last 2 comments because I would have been repeating myself, so I gave him the last word. Thanks.