CiF mentality

Matthew Sinclair and the Devil's Kitchen want to set up another CiFWatch blog. They're stronger men than I, because my usual reaction to CiF is just despair.
Take this from Khaled Diab.

Together, the world's 946 billionaires are worth a staggering $3.5 trillion - which sits between the annual GDP of Japan and Germany.

This confuses income with wealth. A more relevant - and just as staggering - benchmark is that it's around two-fifths of the UK's housing stock (pdf).

One reason why this kind of gap appears is that while most of us depend on our labour to earn our daily bread, the superrich have the magnifying effects of capital - and other people - bolstering their fortunes.

This is just crass. Most of the super-rich he mentions - J.K. Rowling, Oprah, David Beckham - owe their fortune to superstar economics, a field Mr Diab seems ignorant of.

There is a strong case to be made for the introduction of a cap on earning, or a "maximum wage". This would complement the minimum wage to ensure a fairer distribution of wealth in society...Some will immediately raise objections and say that markets should not be meddled with or else we risk stifling creativity and growth. But what this neoliberal capitalist dogma overlooks is that markets always have been and always will be controlled.

I've just the four objections here.
1. The presumption that "fairness" consists only in the pattern of wealth. But what matters is the origin of inequalities. Some wealth - that arising from theft (such as that of Russian oligarchs), exploitation, rent-seeking or (I'd add) inheritance is more unjust than Oprah Winfrey's fortune.
2. The smearing of one's opponents as having "dogma."
3. The failure to even address the problem of incentives. It might be that winner-take-all markets are a cheap way of incentivizing people. How many people work in TV, writing, or software programming for low wages in the hope of becoming the next Oprah, J.K. Rowling or Bill Gates? I dunno. And nor does Mr Diab.
4. The failure to see that the fact that "markets have always been controlled" might be correlated with the fact that mankind has almost always been poor.
What grieves me most here, though, are not the flaws in this particular piece. They're not important enough to merit attention.
Instead, the piece reveals a mindset to which the chuntering class - especially but not exclusively Groan-readers - is prone. It's the presumption that society is not be be studied carefully, but is merely the object onto which we should impose our own ill-thought-out ideas. 

Comments

[dearieme]

Well said. A suitable epithet for that diatribe is "stupid", but it's nice to see you analyse four ways in which it is stupid. Presumably the author of it is envious and resentful. I've never understood the point of being resentful that you can't bend it like Beckham. I've got a fifth objection: giving any state the power to do what Mr Diab recommends is a route to tyranny.

[Ken Houghton]

Depends whether Roberto Carlos is even more highly compensated, no?
(See http://www.beautifulhorizons.net/weblog/2007/03/bend_it_like_be.html)

Chris, are you suggesting that Superstar Economics is just another way to exploit the rest of us, from stars to spear-carriers?

[Dipper]

I think for folks on the left the reaction to the existence of wealthy individuals is difficult.

Too often attempts to reduce the gap seem to be attempts to make it impossible for people to cross the poor/rich divide, hence entrenching inherited wealth.

The wealth being generated today is of a scale that has effectively destroyed the staus of inherited wealth, as very few British people can inherit the kind of money needed to compete with Private Equity or Hedge Fund multi-millionaires. Surely this has to be a good thing?

so unusally I find myself agreeing with dearieme.

[jameshigham]

Have to go along with this, despite the wonky last paragraph.

[James Hamilton]

"the presumption that society is not be be studied carefully, but is merely the object onto which we should impose our own ill-thought-out ideas." Sadly, this is also a beautiful phrase with which to sum up a large proportion of contemporary psychological and even psychiatric study, from Layard on up.

[Surreptitious Evil]

But he also confuses "wage" with "total annual earnings". Many of the very rich are not there because of any form of wage but because of asset appreciation, non-pay income (JK Rowling's share of the cover price, sports-people's sponsorship & endorsement income etc, etc.)

I do appreciate the horror at enormous wages (therefore not risk or success linked) paid to certain people - but then I don't like soap operas either - that is not a valid reason to legislate agin them.

I suppose Bill G pays himself a reasonable amount (and I really can't be bothered to do the research to check) but his real wealth is in the value of his Microsoft shares. Is Diab really suggesting that, come 4 Apr every year, every asset I, you and everybody else owns is valued, the increase over the previous year summed and anything over some arbitrary value confiscated? If he is, he is a statist fool, if not, he is simply a mendacious idiot who can't be bothered seeing past the attention-grabbing headline of his (presumably drunken or otherwise drugged) idea.

S-E

[Surreptitious Evil]

But he also confuses "wage" with "total annual earnings". Many of the very rich are not there because of any form of wage but because of asset appreciation, non-pay income (JK Rowling's share of the cover price, sports-people's sponsorship & endorsement income etc, etc.)

I do appreciate the horror at enormous wages (therefore not risk or success linked) paid to certain people - but then I don't like soap operas either - that is not a valid reason to legislate agin them.

I suppose Bill G pays himself a reasonable amount (and I really can't be bothered to do the research to check) but his real wealth is in the value of his Microsoft shares. Is Diab really suggesting that, come 4 Apr every year, every asset I, you and everybody else owns is valued, the increase over the previous year summed and anything over some arbitrary value confiscated? If he is, he is a statist fool, if not, he is simply a mendacious idiot who can't be bothered seeing past the attention-grabbing headline of his (presumably drunken or otherwise drugged) idea.

S-E

[Kevin Carson]

Re #4, I'm reminded of similar arguments that anarchism has never existed, a totally free market has never existed, etc. My standard response: perhaps that has something to do with the fact that we've never had a society that wasn't based on class exploitation.

The first states arose when the peasantry produced a sufficient surplus that kings and priests could milk them like cattle. Since then, state has intervened in the market on behalf of whatever privileged class has controlled the state.

[ths]

Let's follow this argument through. So most income inequality is due to the super-rich's income from capital, now lets imagine we implement his idea of a maximium wage in a problem free way. Haven't we just increased the returns to capital by lowering wage costs?

[Matt Munro]

"the presumption that society is not be be studied carefully, but is merely the object onto which we should impose our own ill-thought-out ideas." Sadly, this is also a beautiful phrase with which to sum up a large proportion of contemporary psychological and even psychiatric study, from Layard on up."

Psychology is (or should be) the scientific study of the individual psyche, not a deconstruction of "society". Agree that under the influence of the liberals, feminists and marxist who infest academia it is becoming dogmatically anti-scientific and increasingly resembles sociology.

[Meh]

You mean like the projection of managerialism or hierarchies onto every potential analysis of society?