The politics of envy or something more worthy?

One of the most successful memes of the right in the last decade or so is that redistribution is the politics of envy. Of course politicians have to appeal to the emotions, and they have to appeal to all denominators including the lowest common ones. Well they don’t have to and there are limits, but if you’re in favour of progressive taxation it’s asking too much of a democratic politician to expect them not to point out to those at the bottom of the pile that those further up are doing better than them.

But it seems that so high minded am I that I never thought of this as the politics of envy. I thought of it as part of a long and distinguished sensibility of modern reform which, as it turns out is supported with remarkable uniformity by the great economists, from Smith through Mill, Marshall, Pigou and Keynes. That world is disdainful of the value of the “baubles” of power and wealth. Smith was particularly vigorous on the subject, indeed, making irrational hankering of the rich and powerful for baubles one of the major engines of the decentralisation of economic and political power in Europe.

But for all of them, the utility benefits of income encountered strongly diminishing returns once a degree of comfort had set in. As Marshall and Pigou were at pains to point out a dollar to a poor person meets more urgent needs than a dollar to a wealthy one, or to put it another way (which Marshall and Pigou did), other things being equal, dollars going to the poor are a more efficient use of dollars – in achieving the ultimate output (which got called ‘utility’) than dollars going to the wealthy.  (Oh, and of course they would have understood the point that other things are not equal, and that paying money to poor people can have incentive effects, so then one would pursue some joint optimisation problem of optimising utility subject to undesired incentive effects.)

This whole perspective was one that was shared by many reformers in my father’s generation. For me one of the touchstones of it in individual conduct is attitudes to classes on airlines. Why would you want to sit in business class?  Well the seats and food are nicer, but for three times the price of an economy fare? Are they that nicer? Further there’s something a tad awkward about lording it over others by sitting at the front of the plane. Some people who could clearly afford it don’t fancy it. The great billionaire philanthropist Chuck Feeney doesn’t like flying up the front of the plane as he travels the world giving his money away. That’s not like Cardinal Pell, the apostle of Christ for whom business class is not adequate. He travels first.

And in the 1980s and even the 90s I think there were a few politicians who travelled economy class. I think Peter Walsh was one of them. I wonder if any do today. How do the Greens travel?  Even by the time I got to the Productivity Commission – then the Industry Commission in 1993 – I’d say maybe 15 odd per cent of the staff entitled to travel business class travelled economy class. I doubt there’d be many there now, but I hope I’m wrong. I recall one Commission meeting where we were encouraged to travel business class.

In any event I came across this post on Alfred Marshall today and its quotes from Marshall reminded me of some of his own aspirations about wealth, and they’re worth sharing here:

The truth seems to be that as human nature is constituted, man rapidly degenerates unless he has some hard work to do, some difficulties to overcome; and that some strenuous exertion is necessary for physical and moral health. The fullness of life lies in the development and activity of as many and as high faculties as possible. There is intense pleasure in the ardent pursuit of any aim, whether it be success in business, the advancement of art and science, or the improvement of one’s fellow-beings. The highest constructive work of all kinds must often alternate between periods of over-strain and periods of lassitude and stagnation; but for ordinary people, for those who have no strong ambitions, whether of a lower or a higher kind, a moderate income earned by moderate and fairly steady work offers the best opportunity for the growth of those habits of body, mind, and spirit in which alone there is true happiness.

There is some misuse of wealth in all ranks of society. And though, speaking generally, we may say that every increase in the wealth of the working classes adds to the fullness and nobility of life, because it is used chiefly in the satisfaction of real wants; yet even among the artisans in England, and perhaps still more in new countries, there are signs of the growth of that unwholesome desire for wealth as a means of display which has been the chief bane of the well-to-do classes in every civilized country. Laws against luxury have been futile; but it would be a gain if the moral sentiment of the community could induce people to avoid all sorts of display of individual wealth. There are indeed true and worthy pleasures to be got from wisely ordered magnificence: but they are at their best when free from any taint of personal vanity on the one side and envy on the other; as they are when they center round public buildings, public parks, public collections of the fine arts, and public games and amusements. So long as wealth is applied to provide for every family the necessaries of life and culture, and an abundance of the higher forms of enjoyment for collective use, so long the pursuit of wealth is a noble aim; and the pleasures which it brings are likely to increase with the growth of those higher activities which it is used to promote.

When the necessaries of life are once provided, everyone should seek to increase the beauty of things in his possession rather than their number or their magnificence. An improvement in the artistic character of furniture and clothing trains the higher faculties of those who make them, and is a source of growing happiness to those who use them. But if instead of seeking for a higher standard of beauty, we spend our growing resources on increasing the complexity and intricacy of our domestic goods, we gain thereby no true benefit, no lasting happiness. The world would go much better if everyone would buy fewer and simpler things, and would take trouble in selecting them for their real beauty; being careful of course to get good value in return for his outlay, but preferring to buy a few things made well by highly paid labour rather than many made badly by low paid labour.

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john r walker
11 years ago

Nicholas , have you recently flown economy class for 18 hours at a stretch?
I am a claustrophobic, there are limits to ‘closeness’, for me.

john r walker
11 years ago
Reply to  Nicholas Gruen

I am better at managing it these days …however claustrophobia, for me = panic attacks that are not much fun.

Patrick
Patrick
11 years ago

That reads a hell of a lot less profoundly to me than I’m sure it does to you. So yes to $500,000 Ferraris but no to six Holden Monaros? Yes to a $150,000 gorgeous diamond necklace but no to a variety of $30,000 watches?

Apart from a vague sense of a fetish for “craft” and a vivid dislike of conspicuous consumption, I struggle to get any sense of what he means or how one could act on it.

If nothing else, the excessive consumption of luxury carbuyers and F1 fans, and their insatiable desire for ever-fancier “gadgets”, has created enormous increases in “real wealth” for the consumers of drab ordinary wholly-robot-manufactured vehicles. It isn’t clear from the above where Alfred Marshall would sit on that.

Patrick
Patrick
11 years ago
Reply to  Nicholas Gruen

I certainly have no problem with public munificence.

Indeed I think personal modesty has much to commend it and I wish I had more of it. I’m afraid I find those comments very hard to read other than as you suggest, correctly, that I have.

There is another aspect of it, too. As you suggest I am not very comfortable with the particular idea of ‘taste’ which I think permeates the piece.

I think that your comments on fancy cars are very wrong, I would have thought that the craftmanship and their perceived beauty are perhaps the two main appeals of a fancy car! But that’s just an illustration of why I have a problem with his idea of taste.

More important is how that translates into choosing what should be admired. I think that in general the world is far better off when rich people buy flashy cars than when they buy art – perhaps if they were commissioning art the case would be different, but let’s stick to buying off the shelf. Their purchase of a car basically subsidises my next purchase of a car, what’s not to like? The rich man’s air travel of 1960 is my family reunions of 2010, just as is the rich man’s obscenely expensive business class of 1990 my economy class of 2010 (not exactly, yet, but in many ways, not least time and food, I’d rather economy now than business then).

You can probably see where I’m going. I think that the greedy pursuit of wealth, motivated to varying degrees by envy, has done more than most to create the age of comfort and opulence in which we now thrive. I might not personally aspire to conspicuous displays of wealth (not having any to conspicuously display I wouldn’t know) and my own personal views of taste are probably not so far removed from his, even if I would love a fancy car, in part for its craftmanship and beauty, at least as much as a Caravaggio (which I would quite like). I think that there is a more rotten core of ‘class’ reflexes in the way he has expressed his views which I associate with the misery and poverty of the pre-1900s world.

derrida derider
derrida derider
11 years ago

john r walker, that’s what “Premium Economy” class was invented for – the leg room without the obscenely overpiced status. Besides your point doesn’t explain the existence of Business Class on things like the Canberra-Sydney hop (20 mins in the air).

Nicholas, that’s a nice explanation of the optimal tax problem. And yes, I think people who talk about the “politics of envy” are trying to frame the issues away.

john r walker
11 years ago

dd
On some airlines ,for long hauls, you can get two biz tickets for the price of one biz ticket-I.e less than the price of two premium tickets.
As for Canberra to ‘x’, we used to have ‘frequent flyer’ access to the pre-flight Biz lounge (despite flying economy) – it was a lot more comfy and the coffee did not cost $5 for warm brown milk.

Paul Frijters
Paul Frijters
11 years ago

I am surprised you think of the politics of envy as something not worthwhile. The early economists you mention were acutely aware that both the penchant for ‘baubles’ amongst those already rich and the jealousy of the poor regarding the lives of the rich were both to a great degree fueled by a desire for status and the ‘envy’ that comes with the poor having to witness the status of the rich. I see nothing wrong with advocating redistribution because of envy and, to a certain extent, the success by ‘the right’ of using the label ‘envy’ to prop up the position of the rich merely uses the fact that we all tend to lie about our status-seeking tendencies. Its that self-deception that hampers us. The ‘right’ is using the fact that you cant have your cake and eat it which to me seems fair enough. One might not want to advocate envy as the smart way to live, but by the same token one then also shouldn’t tolerate people who flaunt their riches because it raises jealousies. Envy goes both ways: it is felt and it is actively generated for the same underlying reason!

john r walker
11 years ago
Reply to  Nicholas Gruen

nicholas

After the first QLD flood emergency people gave very generously , then the government put a levy on for flood relief. So when the next flood emergency happened there were much less in the way of voluntary donations.
The voluntary community group I belong to does a fair bit , quietly, and its operating costs are very small.
Free association solutions often work better ,than a ever more complex, hierarchical, bureaucracy.

john r walker
11 years ago
Reply to  john r walker

was not thinking of the sort of professional tax deductible philanthropy you have just accurately described… that is mostly just privatised government.

The stuff I am talking about is quietly done.

john r walker
11 years ago

Nicholas
The quote has a whiff of a sort of ‘within-class’ signaling mechanism- along the lines of ‘ it is so crass the way the newly rich , flaunt their wealth’… its not how us real top class acts signal.

If they pay their taxes… if people really want to pay a stupid amount for absurdities like a Porsche 4WD, that is their problem, surely?

Michael
Michael
11 years ago
Reply to  john r walker

A Porsche 4WD would seem to create a lot more obvious problems than other status symbols such as expensive watches. The Porsche 4WD creates pollution, blocks visibility, presents a higher risk in cases of collisions and causes more wear to road surfaces. But I guess the basis of libertarian thinking is to focus only on yourself so it doesn’t surprise me that few owners would be aware of their impact on others.

john r walker
11 years ago
Reply to  Michael

Yes heavy vehicles do all of what you say, regardless of whether they cost 40 thou or 100 thou. Mind virtually all modern cars use a lot less fuel and are safer for all than cars of say 10 years ago regardless of size.

The Porsche Suv is not much diff to other cheaper Suvs …….buying a SUV simply because it has the same badge as a ‘2 seat’ type sports car, is absurd.

Ps I am no libertarian.

Patrick
Patrick
11 years ago
Reply to  john r walker

Wherein the politics of envy..!

What would you know and why would you care? I can assure you that the people buying outrageously expensive cars are the ones subsidising the development of your next car, which is already highly likely to have curtain airbags, park assist, semi-automatic freeway driving, highly sophisticated ABS braking, more exotic compounds helping you do things like stop faster and steer more reliably than you can shake a stick at, a gearbox that changes itself faster than Alan Moffat ever could, etc.

So when you next see passing an outrageously expensive car/SUV, you should perhaps say thank you.

john r walker
11 years ago
Reply to  john r walker

Patrick
We have 2 , 2nd hand poshish cars, They are both stylish , quick , handle very reliably , have all the extras and safety was an obsession for their maker. We are very happy to get luxury cast offs, for less than the price of a Barrina…. However I still reckon that Porsche’s SUV, is strictly for the worst sort of dentist.. :-)

Pedro
Pedro
11 years ago

I’d feel pretty confident that plenty of politicians have framed their claims to stir up feelings of envy and resentment. I think Swan has been trying that. Any reference to obscene wealth is a bit of a clue.

There is no question that you can maximize utility by redistributing from richer to poorer and that there is likely to be a sweet-zone of progressive taxation and redistribution in which maximum utility is achieved. Mind you, the state of maximum utility is going to be harder to find than the higgs bosun and so the most we can hope for is to get reasonably near and keep fudging around as circumstances dictate.

I can’t recall any politician framing their position as utility maximising in that sense. I suspect that a good many politicians don’t think of it like that. A quick look at the ALP, Lib and Greens websites doesn’t reveal any policy statements in those terms.

I don’t think there is any sense in which the rich are wrong, let alone wicked, for being rich or for arguing for a different policy on tax and redistribution. Nor do I care about conspicuous consumption, even though I’m happy to sit in economy and drive a ford hatchback. You can’t blame the peacock for his tail.

crocodile
crocodile
11 years ago

Politicians travelling economy. Yes I saw one. On a recent flight fro Sydney to Roma via Brisbane I sat right next to Barnaby Joyce. In economy class.

crocodile
crocodile
11 years ago

Sorry Nicholas, I didn’t look. Anyway, the flight from Brisbane to Roma has no business class but the Sydney leg certainly did. Several months later I spotted him on the same journey but on the way back. In economy but I wasn’t in the adjacent seat.

Funny thing is that I always thought he was a bit of a prick. Turned out he was quite nice fellow.

derrida derider
derrida derider
11 years ago
Reply to  crocodile

Successful pollies of whatever persuasion are usually personally nice people, crocodile. There is a strong selection effect in politics against people who are visibly pricks in face-to-face interactions (they don’t get preselected even), and only a tiny handful of psychopaths can hide prickness for years.

So pollies are almost always privately nice people forced by the incentives they face to behave like public pricks.

fxh
fxh
11 years ago

So pollies are almost always privately nice people forced by the incentives they face to behave like public pricks.

True- and then there’s Kevin Rudd

Tel
Tel
11 years ago

The truth seems to be that as human nature is constituted, man rapidly degenerates unless he has some hard work to do, some difficulties to overcome; and that some strenuous exertion is necessary for physical and moral health.

This seems like the argument of a slave master (or any other elite ruler) justifying their position of giving other people work to do, because you know, it’s for their own good really. Imagine the decay if left to themselves!

It also makes a good justification for a status system, give that people tend to strive for status anyhow, might as well keep them occupied while they do it. For their own good of course. A status system provides incentive to strive but using envy as a motivational force (especially a political motivational force) offers the temptation of quick success — rather than work hard up the ranks, just rip down the people who seem to be ahead of you. For society as a whole, envy becomes self destructive (although it probably benefits some individuals) as the envious focus their energy on seeking ways to tear other people down, and those who have something to lose focus their energy on guarding, or hiding what they do have.

desipis
desipis
11 years ago
Reply to  Tel

This seems like the argument of a slave master (or any other elite ruler) justifying their position of giving other people work to do, because you know, it’s for their own good really.

That sounds like an argument against welfare.

For society as a whole, envy becomes self destructive (although it probably benefits some individuals) as the envious focus their energy on seeking ways to tear other people down

Envy sounds like a good way to describe the attitude of those against welfare.

Tel
Tel
11 years ago
Reply to  desipis

Can you provide a definition for “welfare” that fits your comment?

I am in no way opposed to my neighbours maximising their own welfare, however they see fit to do that. I am opposed to a central planning committee deciding that they know how I should live my life, because they claim to have my welfare at heart. I very much suspect that you have a different idea of what welfare is exactly, but I doubt you have thought about it in detail.

desipis
desipis
11 years ago

E.g. welfare:

At the start of 2013, the rules for single parent payments from the Federal Government changed. Now, when a single parent’s youngest child turns eight, they change to being paid Newstart Allowance.

[Senator McLucas] says understands that the change in payment means that some recipients receive less money on a weekly basis, but that the intent is a good one – to encourage people into employment when their youngest child turns eight.
“I think most of us know that the best thing we can do for people on low incomes is to get them into employment,” she says.

The policy of moving single parents onto newstart has been supported with both the “its good for them” argument and the “they don’t deserve financial security, gotta take it away” envy argument.

Rory Sutherland
Rory Sutherland
11 years ago

Surely the beauty of an airliner is that it redistributes wealth in a purely voluntary manner. Without the people paying handsomely to sit in splendour up in the front, many of the people in the back could not afford to travel at all.

However this beautifully symbiotic redistribution works in both directions. You *can* operate business-class only flights – and indeed, if you can fill them, these are highly profitable. Except there is one problem. Business travellers like to fly with airlines which offer frequent flights to the destination, giving them flexibility and saving needless hours spent away from home. Without economy class passengers you cannot operate sufficiently frequent flights. Hence most airliners are configured for mixed classes.

Price discrimination can often benefit everyone. In fact I can hardly think of an area where it works to the benefit of all more than in air-travel. Yield management pricing is another beautiful idea, where poorer people get to enjoy airliners and trains at low prices when the cash-rich and time-poor don’t need them.

Generally I am wary of academics disparaging material status-symbols. They do this because they have a status currency of their own (tenure, a parking space at the faculty, a Nobel prize) and so are naturally eager to devalue other people’s success markers. I think it was V Postrel who remarked that academics can rank their fellows in status more readily than a courtier at Versailles.

Rory Sutherland
Rory Sutherland
11 years ago
Reply to  Nicholas Gruen

Thank you so much for this reply. And accept my apologies – I never meant to imply you were guilty of this attempt to depreciate other peoples’ status symbols. I only meant to say that the most ardent attacks on consumerism usually come from those who are rich in other forms of status.

The really significant economic problem that arises from status seeking seems to me to be the residential property market – where competition for finite resources is entirely rivalrous, and where a huge amount of money comes to be spent in an activity which – unlike air travel – is economically unproductive and has no spill-over benefits for anyone else.

john r walker
11 years ago

Nicholas
Less Murray on the difference between – the luxury of Sprawl and – “idiot ostentation” .

Sprawl is the quality
of the man who cut down his Rolls-Royce
into a farm utility truck, and sprawl
is what the company lacked when it made repeated efforts
to buy the vehicle back and repair its image.

Sprawl is doing your farm work by aeroplane, roughly,
or driving a hitchhiker that extra hundred miles home.
It is the rococo of being your own still centre.
It is never lighting cigars with ten dollar notes:
that’s idiot ostentation and murder of starving people.
Nor can it be bought with the ash of million dollar deeds.

Sprawl lengthens the legs; it trains greyhounds on liver and beer.
Sprawl almost never says, Why not?, with palms comically raised
nor can it be dressed for, not even in running shoes worn
with mink and a nose ring. That is Society. That’s Style.
Sprawl is more like the thirteenth banana in a dozen
or anyway the fourteenth.