Skill or dumb luck?
from Peter Radford
Be very wary of anyone who claims that their wealth is the result of great skill. Or even hard work. Luck had to play a part. Usually a very significant part. And dumb luck ought not be the basis upon which we build intelligent, caring, or stable societies.
Be wary, also, of arguments against popular policies that include references to envy or jealousy. Being opposed to plutocracy does not necessarily imply either. Those arguments are old and have been used to undermine the moral authority of populism since democracy first reared its ugly head and disrupted the ease with which our leaders could syphon off wealth for their own enjoyment.
The two go hand in hand.
Populists will be accused of devaluing hard work and skill, and of stirring up the evil sentiment of envy that is presumed to lie close to the surface in the squalid and uneducated minds of the masses. By being both an advocate of sloth and jealousy a populist is easily and summarily dismissed as being irrelevant to policy discussions and properly ignored by serious analysts everywhere,
Where being serious means combining allegiance to the economic status quo with a suitable level of puritanical moral self-abuse.
It used to be that arguments made by advocates of watertight property rights, freer markets, and reduced government intrusion into the workings of the economy were designed to offset the whimsy of autocratic monarchs. Nowadays they are used to fend off the redistributive urges of democrats everywhere. What was once radical and liberal, is now time honored and conservative.
This we cannot tax the fruits of capitalist effort too highly lest we undermine the, presumably, tender spirits of free enterprise. If we tax them too highly our wealth elite will shrivel into a mouse like fear driven and profit averse rabble. So much for the toughness they so flaunt as being one reason they succeed. So much for the profit motive.
Such taxation, they tell us, is a government inspired invasion of the freedom held sacrosanct by capitalists. Until, of course, its their turn to do the invading, but that’s in the spirit of innovation. It is creative destruction. Not at all like that crass jealousy inspired sinister destruction that the government undertakes.
Funny how these things work.
When the masses want something – like health insurance or retirement safety – it is an unearned entitlement paid for by an occlusion of freedom. When the rich want something – like health insurance or retirement safety – it is a property they can buy. It is an expression of freedom.
Anyway: here’s what I think. We ought to tax on the ratio of luck to skill involved in generating wealth and income. Those who had the good fortune to be born into wealthy families; the good luck to meet or be mentored by the ‘right’ person; those who went to the ‘right’ school and so on, ought to fork over a portion of their luck-derived gain. That will subsidize those who were less fortunate. The bit derived from hard work and skill they can keep.
The problem is that the bit derived from hard work and skill is always less they they think it is. It’s human nature to underestimate luck. Or to miscalculate good fortune. We humans like to think we control our fates a lot more than we actually do. Our lives are riddled through by chance. Our greatest skill is in how we deal with chance, not in how we created opportunity.
Put this all another way: if you believe, as you should, that uncertainty plays a very significant role in how the future unfolds as we navigate through our economic relationships, then you are endorsing the view that luck plays a role in how different people prosper. They cannot ascribe their asymmetrical wealth purely to greater insight, skill or hard work. A great portion came from dumb luck. Luck as embodied, for instance, in the old saying about being in the right place at the right time.
We all know this is true. We all know that hard work alone provides no assurance of success. Somewhere along the way you need skill. And a whole lot of luck. We applaud skill. We love merit, learning, innovation and all those wonderful attributes that help propel society forward. We really do.
Just don’t brag about being skillful when we all know you were lucky.
Now, lucky ducks, stop preaching all that other self-serving nonsense. You caught a break. Good for you. Now pay up.