Talents

For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath.
- The Gospel according to Matthew

r > g
-Thomas Piketty, Capital in the Twenty-First Century

From Jesus to Piketty, it is a commonplace that wealth is a positive feedback loop.

Under one model, differential ability to steward capital, plus compounding gains, implies that perfectly benevolent people with more money than most should keep it more often than a naive expected utility maximization would suggest. On the other hand, conquering empires also experience compounding gains; the ability to leverage force into more force implies that this is a harmful positive feedback loop. 

When seeking to do good, one should often attend to the specific details of the situation and take whichever action has the outcome they most prefer. But often there isn’t a very strong case for one particular action, and we’re left in need of a general heuristic for how to allocate our resources. Using explicit expected-value calculations in those circumstances will systematically underallocate resources to good uses that are less legible, and overallocate to things that illegibly cause harm. Accordingly, we need some baseline presumption for how to allocate one’s surplus between oneself, institutions one is participating in, and the rest of the world.

The deserving rich hypothesis

Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears not all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor–your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money.

-Ayn Rand, Atlas Shrugged

Suppose I am perfectly benevolent and value everyone’s well-being equally. I grow some wheat on otherwise unused land, harvest it, grind it, and bake it into a thing of value: bread. If other people are also hungry, I might share my bread. But even from the point of view of perfectly egalitarian benevolence, there should be a strong presumption that I ought to feed myself first. This is because my possession of the bread is evidence of my capacity to produce it; feeding me indirectly feeds others, because it enables me to produce more bread in the future. Feeding others who did not produce bread does not have that sort of flow-through effect.

Likewise, I may save some seed corn to reinvest by ploughing it back into my field, even if someone else is hungry. Even if I value others’ well-being equally to my own, I have demonstrated an ability to use grain to make more grain, which will feed people better in the long run.

This principle can be generalized. Suppose my village’s economy is complex enough to have a need for a currency to serve as an unit of account and store of value. If I sell my bread for money, then my possession of money serves as evidence that I have some sort of productive capacity. In a world where this is the main way one acquires money, there should be a similar generalized presumption that even a perfectly benevolent person should hold onto a disproportionate share of the money they earn.

The war profiteer hypothesis

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows
-Leonard Cohen

Suppose instead that my village does not possess the shieldmaking craft, and is being harassed by a gang of archers, who can make shields, albeit ones whose usefulness decays over time. These archers periodically rain arrows down on the village, at which point people without shields have a substantial chance of dying of arrow wounds. However, they make me an offer: if I make them some arrows for them, they will give me a shield in exchange.

In this situation, while it is understandable for me to earn some shields in order to protect myself, possession of shields is prima facie evidence of complicity in the violence being done to my village. Accumulating a surplus is particularly bad behavior. I would not want to generalize the heuristic that arrowmakers should get to keep their shields; that would mean more arrows, resulting in increased need for shields, in a harmful positive feedback loop. The presumption that one should keep a disproportionate share of the shields one has made no longer appears to hold.

A secondary consequence of this is that shields, which may have had no value in the village before, are now highly sought after. The archers might also exchange shields for bread, since the breadmaker has as much incentive as the arrowmaker to accept shields as payment. I, the arrowmaker, might trade one of my shields to the breadmaker for bread. If the arrowmakers make a special effort to attack people producing “counterfeit” shields, and people transacting in other currencies, then shields might quickly become a standard unit of account and store of value. Under those conditions, possession of a large stockpile of shields could be evidence of complicity in violence, but it is also evidence that someone has produced genuinely valuable goods and services that one might want to see more of.

Possessing shields could mean that you have made much bread. Or that you have made many arrows, with which those lacking shields will be harmed. Or, in many cases, some combination of the two. Production and violence are bound together into a single unit of account.

For now, the application to the present situation is left as an exercise for the reader.


Thanks to Jessica Taylor for the shields metaphor, and Wei Dai for asking the right questions to force me to clarify my thoughts on this.

Related: Matthew 25, Cash transfers are not necessarily wealth transfersWhy I am not a Quaker (even though it often seems as though I should be), The humility argument for honesty

7 thoughts on “Talents

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  3. J

    Is there a way to ask the same questions without "profiteer" and "deserving"? Similarly, "*good* uses that are less legible" can be changed to "illegible compounding gains".

    Why do you find this question useful? I don't see "do big institutions, rich people etc. create wealth more efficiently than others if you cause them to have extra wealth rather than causing others to" as a question with one answer (not saying you do). Where we actually differ may be that I believe the answers to specific cases of this question have different enough answers that answering the question in one case doesn't give you information about what the answer will be in another case.

    Like, maybe said answers will happen to be relevant in other cases of the question, i.e. what if it's true that feudalism *and* military dictatorships, poorly defined as those are in common language, are better at making wealth given more wealth than federations of cities (like CH) when, and only when they're at war enough. No idea, and not important to my point.

    I'd *find it pleasing* if "does wealth in the hands of the rich, empires etc. etc." had a general answer. The point of hypothesis testing is that you make your desired outcome the alternative hypothesis, and so it takes more work to come to believe it.

    To put it another way, imagine if the social sciences operated on a Bayesian framework.

    Reply
    1. Benquo Post author

      I didn't use "profiteer" or "deserving" in the body of the text, only in the section headings, where I tried to make it a bit more clear what I think the stakes are of what I'm discussing. So I thought I mostly did taboo those terms.

      I agree entirely that in practice, things are often mixed and one has to attend to the details of the situation to figure out the relevant moral and practical implications of wealth. I wrote this because it seems like people tend to unsee one or the other of the modes of wealth-acquisition I described. I hoped that describing both models clearly in the same post would help people avoid unseeing either one.

      Reply
      1. J

        > I wrote this because it seems like people tend to unsee one or the other of the modes of wealth-acquisition I described

        Is there a general mechanism behind why this happens, or no?

        Reply
        1. Benquo Post author

          Some people buy into the ideology of neoclassical economics, and assume that the price of a thing is a lower bound on its value. This ends up describing societies with an explosion of remunerative mercenary work as experiencing productivity growth. This may be motivated by a sort of Randian wishful thinking, assuming that production and trade are normal in business, and rent-extraction is abnormal. A lot of work has been put into giving these people a normative interpretive framework.

          Others focus on observed problems with our society's credit-allocation mechanisms - leftist radicals, most commonly - and take the problems (which are large enough that they might be most of the activity of the system by now) as the essential nature of the system.

          Reply
    2. Benquo Post author

      "Compounding gains" is ambiguous between leveraged aggressive war, and reinvesting your surplus into labor-saving or yield-increasing measures.

      Reply

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