Thursday, October 13, 2011

Meritocracy and Economics: Herman Cain on Why You're Not Rich

"Don't blame Wall Street, don't blame the big banks, if you don't have a job and you're not rich, blame yourself!" Cain said. "It is not a person's fault because they succeeded, it is a person's fault if they failed. And so this is why I don't understand these demonstrations and what is it that they're looking for."


One of the main things that, for me, made me doubt and abandon the conservative politics of my high school days, was the fact this just didn't seem true. There were too many luck factors out there to believe that economic advantage is the product of personal merit. I heard about a study that showed that, in today's America, the biggest determinant of your economic success is how wealthy your parents were. 



Part of what may be at the bottom of some of this is the Reagan idea that when the government is helpful to disadvantaged persons, it undermines human self-reliance and creates "welfare queens."   I think conservatives have the idea that markets are meritocratic, that they distribute in accordance with what people deserve, or at least approximately. Therefore, when the government acts to help people lower down the economic totem pole at the expense of the people higher up, the government takes money from people who deserve it and give it to people who don't deserve it.  

Is there something more plausible than this for conservatives to say?

32 comments:

Heuristics said...

I would have thought the biggest determinant would be if the person made any effort to succeed. If they don't make any effort at all then the outcome would be guaranteed.

Mike Darus said...

Victor:
There is nothing more plausible for conservatives to say because they firmly believe it is true.

The problem is that liberals believe completely in inherited wealth and luck. This is also not true.

What do you do when both idealogies are wrong?

Crude said...

I'll say here exactly what I said with the Warren post.

There's an element of truth in what Cain is saying, but you have to dig down so deep to get to it, and it's probably not even something what Cain himself realizes. (And to the first yokel who makes a biblical Cain joke in this thread, I tell you this: Too easy, we all thought of it already.)

The fact that Cain defends bank bailouts poisons his statement from the get go. If he applied it to the banks as well as everyone else, he'd be in a stronger position. And the core truth that a man must rely first and foremost on himself for success does remain.

Crude said...

For the record, Victor.

I know you call yourself and even think of yourself as liberal, to my knowledge. But I appreciate how calmly you approach these questions. It's extremely refreshing.

As for your actual question: I don't think it's true that conservatives have the idea that markets are meritocratic. Maybe that, for moral, idealistic, and efficiency reasons, there's a certain balance of government involvement and free market that should be struck, and it happens to be one with less government involvement than there is.

Likewise, I think many would question whether what's going on is 'the government acting to help people lower down on the economic totem pole'. That's a nice way of putting it. An antagonistic way is "buying votes" and otherwise. And I think some important questions are, "Who are these people, what do they need, why do they need it, what's the best way to get them it, what limits are there, what should we expect of them?"

In fact, I'd say that's one problem in these discussions. Where it gets cast as, 'There are poor people. We want to help them. Why don't you want us to help poor people?' It's just not that simple.

Matt DeStefano said...

I'm curious as to how Cain and others who believe in this type of ideology react when they see unemployed Americans who have applied to dozens and dozens of jobs. Would they really stand there and tell those individuals that it is their fault they aren't employed?

Crude said...

Would they really stand there and tell those individuals that it is their fault they aren't employed?

It really depends. Are they only applying to certain jobs and avoiding others? Are certain jobs beneath them?

Also, are they english majors?

I know some people who are out of work. Hell, I'm self-employed and not exactly wealthy. Absolutely some people do get screwed, or legitimately fall on hard times.

That said, I again say that Cain's statement is pretty out there. Gist, etc, etc, as before.

Anonymous said...

"The problem is that liberals believe completely in inherited wealth and luck. This is also not true."

I wonder if there's an ideology that explains why people like to represent conservatives and liberals as stick figures driven by an ideology? Is this the ideology of the mushy middle? I am (in most contexts) a liberal and I completely reject the idea that it's just a matter of inheritance and luck. What drives me towards the liberal view is (partially) the thought that effort and virtue will reward only a small fraction of those who make it and have it. As a result, many undeserving suffer from easily remedied hardships. That's why I rather like there to be a social safety net. Also, there's the Lockean thought that the world was given to us in common and there's an imperative to leave as much and as good for others until you can't, at which point you have to strive for arrangements that benefit those that didn't get to take what was rightly theirs to begin with. The imperative to give the next generation an equal opportunity to succeed if they make an effort is one that should (used to a few decades ago) appeal to conservatives. Because I believe it is an imperative, I'm very much in favor of some forms of regressive taxation and distribution.

Ilíon said...

And yet, I was born into poverty that most Americans cannot fathom. And my father was born into even worse poverty, and Southern rural poverty, at that ... yet, his grandfather was among the few in the South wealthy enough to have slaves to do his work for him.

In America, the greatest factor in "achieving success in life" is just showing up to do the work.

Ilíon said...

Crude: "There's an element of truth in what Cain is saying, but you have to dig down so deep to get to it, and it's probably not even something what Cain himself realizes."

Yet, concidering that Cain got where he is today *expressly* because he does believe exactly what he said -- and then consistently acted upon that belief -- one can surely understand why he says what he says ...

Crude: "The fact that Cain defends bank bailouts poisons his statement from the get go. If he applied it to the banks as well as everyone else, he'd be in a stronger position."

... except for that part; it's a mystery to me why any truly conservative person would support corporate bailouts.

Ilíon said...

Crude: "... In fact, I'd say that's one problem in these discussions. Where it gets cast as, 'There are poor people. We want to help them. Why don't you want us to help poor people?' It's just not that simple."

This typical "liberal" response is especially dishonest because *no one* is standing in their way of "helping" "the poor". What we object to is the anti-Consitutional looting of the public fisc -- and the concomitant expropriation by violence-unto-death of the fruits of everyone else's labor -- to do their "good deeds".

Ilíon said...

Matt DeStefano: "Would they really stand there and tell those individuals that it is their fault they aren't employed?"

Crude: "Would they really stand there and tell those individuals that it is their fault they aren't employed?"

I have a long-time (former) co-worker who, like me, is a computer programmer, and who has been unemployed for at least the past year and a half. And, the reason he's still unemployed is that he's not actively seeking employment. And the reason for that is:
1) he's burned out, because he used to for years at a time work 3000-3500+ hours per year;
2) he's collecting "unemployment compensation", and thus has little present motivation to actively seek employment;
3) the jobs he's seeing are offering less than he's used to making, and so he's not ready to consider them.

Damien S said...

Even if a substantial amount of luck plays a part in some getting super rich that does not invalidate the free market.

Who would deny, for example, that someone who has gotten super rich, like a Steve Jobs or a J. K. Rowling, has not done so with the result that we are all much better off then if they had not created the wealth and ingenuity they created.

Crude said...

Ilion,

3) the jobs he's seeing are offering less than he's used to making, and so he's not ready to consider them.

Funny you should mention that. I have a friend, a great friend, a friend who wants to work. But, there's one problem. He's on unemployment, and not only does he not want to consider those jobs offering less than he used to make, but he knows that if he accepts them and gets let off again that his unemployment will be affected. So, better to wait rather than work.

Which I don't think is a foolish way to think. He's running the numbers as they are, and coming to a reasonable conclusion. Maybe he wouldn't be able to pay his bills with lesser pay either.

But that needs to be considered. Is it "there are no jobs for me?" - and sometimes that's flat out true - or is it "there are no jobs that I want"? That's one reason I brought up the english major. I've seen some protestors complaining that they have a 4 year degree, not always in the most useful field, and how now they're working at such and such job for low pay and they're crushed under college loan debt.

Shouldn't we ask the question, "Are you at all culpable, even in part, for your situation?" And again, sometimes a person isn't culpable. Sometimes they're culpable, but on the whole they aren't. And sometimes they are.

Mike Darus said...

Ilion said, "This typical "liberal" response is especially dishonest because *no one* is standing in their way of "helping" "the poor". What we object to is the anti-Consitutional looting of the public fisc -- and the concomitant expropriation by violence-unto-death of the fruits of everyone else's labor -- to do their "good deeds"."

I think I agree with what you are saying but the way you are saying it is over the top. It comes across as crass instead of the wisdom it could be. It invites fact checking like, "is there a death penalty for tax evasion?"

Reducing tax loop holes for corporations and the wealthy is not "expropriation"; it merely rolls back the rules toward fairness. Some tax breaks were created for good reason - to encourage captial investment, etc., but they are ineffective.

It is legitmate to structure taxation so it avoids taxing the very poor, limits taxation of those with medium income, and fully taxing the wealthy. It makes sense. Sales tax has at least the last two categories automatically.

Helping the poor is a good thing. It is not a bad thing for those who believe this to encourage government to do it. It is better to try and get some of it wrong than not to try at all.

Crude said...

I think I agree with what you are saying but the way you are saying it is over the top.

Ilion? Over the top? Never! ;)

Matt said...

What drives me towards the liberal view is (partially) the thought that effort and virtue will reward only a small fraction of those who make it and have it.

This kind of thing boggles my mind when people say it. Living the virtuous life ALWAYS rewards the person who does it. Saving your money is ALWAYS better than wasting it. Not smoking, gambling, or having affairs is ALWAYS better than doing those things. The complaint really seems to be that the rewards aren't big enough or that they differ from person to person.

If you really want to help the poor, look to the government. Mass immigration and free trade agreements are the number one and two things that make it hard for unskilled people to earn a living. Anyone who doesn't target those two things isn't serious.

Ilíon said...

Mike Darus:I think I agree with what you are saying but the way you are saying it is over the top. It comes across as crass instead of the wisdom it could be.

Crude:Ilion? Over the top? Never! ;)

Perhaps one of you gentlemen can explain to me why I should give a damn about such an accusation? Perhaps one of you can explain to me how this accusation is any more meaningful than One Brow bitching that I am “arrogant”?

Did what I said become untrue because I didn’t phrase it so as to tickle the ears and stroke the egos of persons who *will not* understand the truth of what I said, no matter how tenderly and solicitously it is phrased?


Mike Darus:… It comes across as crass instead of the wisdom it could be. It invites fact checking like, "is there a death penalty for tax evasion?"

Explain to me, please, why I should give a damn about the antics of those who *will not* understand the truth?

Mike Darus:… It invites fact checking like, "is there a death penalty for tax evasion?"

I’ve explained this at least once here on VR’s blog -- *all* normative law is at least implicitly backed up by the threat of violence and death. If you were not paying attention to what I’ve said, what is your excuse for not observing what happens “in real life”? Hell, this implicit threat of violent death doesn’t even have to involve enforcement of any specific law, but only the impatience, of the persons who order the guns, to achieve a result they desire when they desire it … as witness Ruby Ridge, and Waco, and Miami.

Ilíon said...

Matt:If you really want to help the poor, look to the government. Mass immigration and free trade agreements are the number one and two things that make it hard for unskilled people to earn a living. Anyone who doesn't target those two things isn't serious.

I’m convinced! We should erect trade barriers between the States of the Union, and, when we really come into our stride, between the towns and cities of each State. Then, we can all be equally rich just by sitting around and not working.

Of course, there won’t be any jobs to work at even if we did want to work; but at least we’ll all be equally rich. Well, some of us, the people who control government’s guns, will be a bit more equal that the rest of us, but that’s only to be expected.

The truth is, the expansion and consolidation of open markets – free trade, for sort – is the *cause* of the general, and continuously increasing, prosperity we have enjoyed for the past two to three centuries.

So, yeah, let’s slaughter the goose that lays the golden eggs! Then we can all be fat and happy.

The truth is, protectionism always harms the many, who are diffuse and unorganized, so as to benefit by subsidy the few, who are concentrated and organized. Moreover, the sum total of the harm done the many greatly exceeds the subsidy given the few. Protectionism, like all forms of government subsidy, destroys wealth, even as it confiscates it from some to bestow it upon others.

Crude said...

Perhaps one of you gentlemen can explain to me why I should give a damn about such an accusation?

Who said you should? You communicate in a certain way, very forceful, very aggressive. I doubt you'll deny that much - it makes for some humor here and there.

You know I won't use your tone as a criticism proxy if your arguments are what I question. But I think we'd largely be in agreement on this topic, particulars aside. We even agree with the problem Cain has given the bank bailout position.

BTW, you quoted someone else and attributed it to me earlier. Just making sure you're aware.

Ilíon said...

Damien S:Even if a substantial amount of luck plays a part in some getting super rich that does not invalidate the free market.

Moreover, that some get “super rich”, while other do not, does no harm at all to those who do not. And, as you further point out, they actively benefit all of us by working to get “super rich”.

Crude said...

Ilion,

The truth is, protectionism always harms the many, who are diffuse and unorganized, so as to benefit by subsidy the few, who are concentrated and organized.

What if the many that protectionism harms are all citizens of China, and the people who benefit are all US citizens? Permissible then?

Forget for a moment that in no protectionist case will this be true - there will always be someone in the US who will be harmed, and someone in China who will benefit. But if that weren't the case, I'd like to know your view.

Ilíon said...

Corporations don't pay taxes. Only actually existing persons -- you and I -- pay taxes.

Ilíon said...

"Permissible then?"

It's not a matter of 'permissible' ... it's a matter of stupidity on the order of cutting off your nose to spite you face.

Ilíon said...

"You communicate in a certain way, very forceful, very aggressive. I doubt you'll deny that much ..."

I adamantly deny ever being aggressive. I assertively assert truth, and generally in blunt terms. And, I refuse to pander to those who cannot abide blunt truth … to put it another way, I refuse to submit to passive aggression.

Ilíon said...

China is one huge slave-labor camp -- by definition, it cannot be a free market. By the very nature of the beast, it is not the case that individuals in America are freely exchanging the fruit of their labor with individuals in China -- that mutual freedom and individuality is the essence of free/open markets.

Crude said...

It's not a matter of 'permissible' ... it's a matter of stupidity on the order of cutting off your nose to spite you face.

Right, but in this case - whose nose and whose face?

It's a straightforward question. Here's another way to put it: If protectionism would harm only non-Americans and benefit only Americans, should America have protectionist policies in your view? And whatever way you answer - why?

Ilíon said...

CrudeIt's a straightforward question. Here's another way to put it: If protectionism would harm only non-Americans and benefit only Americans, should America have protectionist policies in your view?

Really? A straightforward question?

Here’s another way to put it –

If circles could be made square, should the government of the US restrict the legitimate marketplace choices of all Americans so as to economically compel them to buy the products or services offered by a small sub-set of Americans, which products or services they had already decided they’d rather not buy at the price on offer when offered in an open/free market, and for a higher price then when originally offered in the open/free market.

Perhaps you’re not properly understanding what protectionism is. Protectionism is not simply keeping the products of another (or all other) countries out of one’s nation. Rather, protectionism is the attempt to compel a nation’s citizens to buy the higher-priced goods or services of domestic producers in places of the lower-priced foreign goods and services they’d already made clear they’d prefer to buy -- either by artificially raising the domestic prices of less expensive foreign versions or by restricting the importation of those foreign products. And, it generally has the effect of further raising the prices of the already over-priced domestic goods; for, with competition pressure relieved by force of law, the domestic producers have little to no incentive to hold down the prices they are demanding.

=========
It’s one thing to cut off trade with China because China is a huge slave-labor camp, and we shouldn’t be giving financial support the Chinese State, which is our sworn enemy. It’s quite another thing to restrict trade with South Korea (or France) because citizens of that country are offering the citizens of our country quality goods for a lesser price than domestic producers of comparable goods are prepared to accept.

Ilíon said...

Getting back to the *title* of the OP -- "Meritocracy and Economics: Herman Cain on Why You're Not Rich" and the Cain quote: "Don't blame Wall Street, don't blame the big banks, if you don't have a job and you're not rich, blame yourself! …"
--
The title is talking about *one* thing – “why you’re not rich” – and the quote is talking about both that and “why you don’t have a job” … in the context of “protests” about their joblessness by people who don’t want to earn their own livings by honest labor in the first place.

What Cain said in not false, on either point, neither when applied to the context about which he said it nor when applied to the wider context to which everyone wishes to apply it.

I am not rich because:
1) I don’t wish to put in the work required to become rich;
2) I’ve made some unwise economic decisions – decisions which I know when I made them were economically unwise.

You are not rich for similar reasons, especially number 1).

From the time I was about 11, way back in the dark ages of the early 1970s, until early 2000, I had never been unemployed. Of course, until I was 16, I just did odd jobs for individuals, and I didn’t work during all semesters/quarters while in college. However, since 2000, I have been unemployed twice, and for a total of nearly five years. And the reason my unemployment went on so long wasn’t *just* that most potential employers are stupid (which is incredibly true), but also that I wasn’t seriously looking for a job.

Like my friend who is sitting on his ass, part of my lack of motivation is that I was “burned-out” but constant dealing with the foolishness of other people. However, I have never in my life submitted a claim for “unemployment compensation” – I have never subsidized my sloth at *your* expense.

In similar wise, if *you* do not currently have a job, it is because *you* have not been willing to take a job. There are any number of reasons you are not willing to take a job … though, a great deal of them boil down to “that is beneath me”.

On that last, I call “bullshit” – look, I am more intelligent than most people in America, and I am capable of earning significantly more money than most other Americans, and if it is not “beneath me” to clean toilets, than it is not “beneath you” to take a job that pays 5% or 10% less than your last job.

Crude said...

Ilion,

And, it generally has the effect of further raising the prices of the already over-priced domestic goods; for, with competition pressure relieved by force of law, the domestic producers have little to no incentive to hold down the prices they are demanding.

I think it's very fair that you pointed out that protectionism will involve some harm to some people in the 'protected' country. I'll concede that immediately. Good point.

I don't think it's correct to say they have 'little to no incentive' to hold down the price. Protectionism does not remove competition entirely - there's still competition within the country. Nor does protectionism mean an utter embargo on imports - it can come in the form of taxes, ranging from slight to heavy.

Regarding Cain's comments, I agree that there is a core to his statement which is true and important - though still subject to the criticisms I mentioned, which you already noted.

Ilíon said...

Crude: "Nor does protectionism mean an utter embargo on imports - it can come in the form of taxes, ranging from slight to heavy."

But then, I never said that "protectionism mean[s] an utter embargo on imports"; and, in fact, I explicitly said that protectionism "can come in the form of taxes, ranging from slight to heavy".

Crude: "I don't think it's correct to say they have 'little to no incentive' to hold down the price. Protectionism does not remove competition entirely - there's still competition within the country."

But, it is correct -- when are you going to figure out that I am not in the habit of saying incorrect things?

Whether or not the domestic providers really are in competition one with the other, they are all under competitive pressure from the foreign manufacturer(s) -- that's why they sought protection; it is from competition is what they want to be protected. With the introduction of the protective measures, that foreign competitive pressure is lessened or removed ... therefore, "with competition pressure relieved by force of law, the domestic producers have little to no incentive to hold down the prices they are demanding"; for, among other things it was doing, the foreign competition was forcing them to hold down their prices.

rdubose said...

I really hate listening to arguments about wealth and wealthlessness, especially from people who seem to have it figured out or have never had a day without money in the bank. I would like to know if those who 'feel' some are not making an effort, why do they go to work?

Apparently you don't really know anyone on welfare. My personal example: Graduated from High School, first in my family to go to college. Graduated with a 3.4 gpa, came home and it took a year to find a job; that with the help of a friend. Went back to school to study in the area of my passion, the medical field. Graduated with honors, 'A' in my internships, could not get a job in my field. Why? Primarily the prejudices of the south had not completely lifted for my 1980s/1990s generation. Still waiting for the wealth 'trickle down' distribution to kick in.

adc said...

Luck or fate certainly does play a huge role in life.
The question then is - do you believe that force should be appropriated to correct "fate," or "luck?" Is that goal even achievable?

If someone is born at a disadvantage, why is that a justification to point a gun at someone else born with an advantage -> in the name of equality. This appears to be what people are demanding the government do to an arbitrary minority - to help the 'unlucky.'

We've arbitrarily decided what qualifies someone to be "wealthy," creating a minority group, then we are again arbitrarily deciding what amount of that minority group's property should be taken, or they are to be imprisoned. How is this considered human progress?

I don't see how the idea of taxing the wealthy at a disproportionate percentage from everyone else can be justified. Not to mention - it's asking the law - an instrument designed to prevent plunder - to turn on itself, and specifically plunder a certain targeted group, "for the common good."

The market system is not, and will never yield equality of results - because economies consist not of numbers and trends, but of unique people with differing values and wants. However - a capitalistic market is the only system which outlaws the use of Force in human interaction.

Every other system or attempt at a planned economy requires guns pointed at a minority - to enforce a few people's view of what is "fair." Government and Law is force. If you, Victor, are proposing or supporting a system designed to eliminate or reduce "luck," accept the fact that in the end you must point a gun at someone else to achieve this vision.

Personally, I view more freedom as Progress, more guns and force as a return to barbarism.