Category: Economics

When attacking DEI efforts, folks on the right usually make vague remarks about merit. While the right seems to have abandoned philosophy, let us imagine a good faith argument against DEI efforts based on an appeal to merit.

While the right is unclear what they mean by “merit”, the common usage is that a person receives something, such as a position, based on earning it through being worthy. For example, when people talk about meritocracy, they usually speak of people earning positions, jobs, scholarships or promotions based on their skills, abilities and effort. In contrast, receiving such things because of factors such as wealth, social class, or family connections would not be the result of merit. There are obvious philosophical questions about what factors should count as merit in terms of determining what people earn and what they merely receive. For example, a person who gets into college because of their academic ability might seem to have earned it by merit. But what if they have that ability because of the genetic lottery and years of expensive tutoring and schooling paid for by wealth inherited by their parents? They did not earn their genes, tutoring, and schooling and this would, it seems to diminish claims of merit. But let us return to constructing a merit argument against DEI efforts. I will then use that merit argument against inheritance.

To build a merit argument against DEI efforts, one must begin with the assumption that DEI is either not needed or unfair. For it not to be needed, it must be assumed that those who benefit from DEI do not face significant discrimination or unfair obstacles and have equal opportunity to succeed on their merits. For it to be unfair, it must be assumed that those who benefit from DEI gain an unfair, unmerited advantage over others.

While those who oppose DEI often seem to do so from racism, sexism and similar bigotry, one could take the view that women and minorities are just as capable as white men (and have equal opportunities) but that DEI efforts provide its beneficiaries unfair advantages over equally qualified white men. If it is also assumed that things such as jobs and scholarships should be earned by merit, then it would follow that DEI is bad. Obviously, I do not think that most folks on the right are advancing good faith arguments against DEI but let us take the merit argument seriously and hold them to their professed view that laws should be crafted to ensure that success is merit based and that unfair advantages are eliminated. This entails that the inheritance laws should be changed to eliminate the unfair, unearned advantages conferred by inherited wealth. If one is exceptionally devoted to merit, one could even push for laws aimed at creating equality of opportunity for everyone—but I will just focus on inheritance.

Inherited wealth, by definition, is unearned and thus anything it is used to acquire would be unmerited to the degree the wealth purchased it. Such wealth can confer significant advantages in terms of such things as influence, opportunities and resources. As a minor example, a family with sufficient inherited wealth can own property in the best school district, provide tutoring and other support for their children, enroll them in special programs and so on. If one is a stickler about merit, children obviously do not earn or merit such advantages even if their parents did not inherit their wealth and to the degree the children gain from them, they would not be earning whatever they receive from them. Ironically, the anti-DEI President Trump received millions from his father, and this provided him with a massive, unearned advantage over everyone who choose their parents less wisely. Family members can also inherit businesses and gain unearned ownership and positions in those businesses. And so on, for all that can be inherited and can yield unfair advantages. None of these are earned or merit based. So, those who reject DEI based on the merit argument must also oppose inheritance on the same basis. If laws should be passed to forbid DEI to ensure that success is based on merit, then laws should also be passed to eliminate or severely restrict inheritance to ensure that success is based on merit.

It might be objected that inherited wealth is not like DEI efforts, but the challenge is to show how they different in relevant ways. One could argue that there is an obvious difference: DEI is linked to such factors as gender, ethnicity and veteran status, whereas inheritance is usually just a matter of birth. But objections of this sort would be based on the idea that merit should apply to DEI factors but not otherwise, which would not be a merit-based argument. If merit is what matters and the law must ensure this, then merit is what matters and the law must ensure this.

While few, if any, on the right would accept the above reasoning and consistency arguments obviously have no effect on the right (or most people), we should always remember that their merit arguments against DEI are made in bad faith unless they also argue against inheritance. When they speak of merit, they should be asked about inheritance and other unfair advantages they favor.

After the financial class burned down the economy again, local governments once more faced a reduction in their revenues. As the economy recovered under a Democrat President, the Republicans held or gained power in many state governments, such as my own adopted state of Florida. With laudable consistency with their professed ideology, Republicans cut taxes for businesses, the well off and sometimes almost everyone. While the professed theory is cutting taxes increases revenue for state and local governments, shockingly enough the opposite happens: state and local governments run short of funds needed to meet the expenses of operating a civilization.

Being resourceful, local leaders then seek other revenue streams to pay the bills. While cities like Ferguson provided well-known examples of a common “solution”, many have embraced the idea of law-enforcement as revenue stream. While the general practice of getting revenue from law enforcement is nothing new, the extent to which some local governments rely on it shocking. How the system works is also often shocking as it can be a shakedown system one would expect to see in a corrupt country unfamiliar with the rule of law or the rights of citizens.

Since Ferguson, where Michael Brown was shot on August 9, 2014, has been the subject of extensive study, I will use the statistics from that town. Unfortunately, Ferguson does not appear to be unique or even unusual.

In 2013, Ferguson’s court dealt with 12,108 cases and 24,532 warrants. This works out to an average of 1.5 cases and 3 warrants per household in Ferguson. The fines and court fees that year totaled $2,635,400, making the municipal court the second largest revenue stream.

One concern that was addressed by the media was that the legal system disproportionally target blacks. In Ferguson, as in many places, most of the cases handled by the court are from traffic stops. Ferguson is 29% white, but whites make up only 12.7% of those stopped. When a person is stopped, a black citizen will be searched 12.1% of the time, while a white citizen will be searched 6.9% of the time. In terms of arrest, a black citizen was arrested 10.4% of the time and a white citizen was arrested 5.2% of the time.

The usual reply to such disparities is to claim that blacks commit more crimes than whites. If it were true that black Americans were being arrested in proportion to the rate at which they were committing crimes, then this would be (on the face of it) fair. However, this is not the case. Even though blacks were more likely to be searched than whites, police discovered contraband only 21.7% of the time. Whites who were searched were found with contraband 34.0% of the time. Also, 93% of those arrested in Ferguson were black. While not logically impossible, it would be odd that 93% of the crime in the city was committed by black citizens.

Naturally, these numbers can be talked around or explained away. It could be argued that blacks are not being targeted as a specific source of revenue, and the arrest rates are proportional and just. This still leaves the matter of how the legal system operates in terms of being focused on revenue.

Laying aside race, Ferguson stands out as an example of how law enforcement can turn into a collection system. One key component is, of course, having costly fines. For example, Ferguson had a $531 fine for high grass and weeds, $792 for Failure to Obey, $527 for Failure to Comply, $427 for a Peace Disturbance violation, and so on.

If a person can pay, then the person is not arrested. But, if a person cannot afford the fine, then an arrest warrant is issued, and this is the second part of the system. The city issued 32,975 arrest warrants for minor offenses in 2013 and the city had a population of 21,000 people at that time.

After a person is arrested, they face even more fees, such as court fees and these can quickly pile up. For example, a person might get a $150 parking ticket they cannot pay. They are then arrested and subject to more fees and more charges. This initial ticket might grow to a debt of almost$1,000 to the city. Given that the people who tend to be targeted are poor, it is likely they will not be able to pay for the initial ticket. They will then be arrested, which could cost them their job, thus making them unable to pay their court fees. This could easily spiral into a court-inflicted cycle of poverty and debt. This, obviously enough, is not what the legal system is supposed to do. Unless, of course, it is.

From a moral standpoint, one problem with using law enforcement as a revenue stream is the damage it does to the citizens who cannot afford the fines and fees. As noted in the example above, a person’s life could be ruined by a single parking ticket. The point of law enforcement in a just society is to protect the citizens from harm, not inflict ruin.

A second moral concern is that this system seems to be racketeering. It makes a threat of arrest and court fees, and then offers “protection” from that threat in return for a fee. That is, citizens are threatened so they will buy their way out of greater harm. This is hardly justice. If it was practiced by anyone other than the government (or a corporation), it would be criminal racketeering and a protection scheme.

A third moral concern is exploiting the citizens by force and threat of force damages the fundamental relation between the citizen and the democratic state. In feudal states and in the domains of warlords, one expects the thugs of the warlords to shake down the peasants. However, that sort of thing is contrary to the nature of a democratic state. As happened during the revolts against feudalism and warlords, people will sometimes revolt against such oppression, and this is to be expected. Robin Hood is, after all, the hero and the Sheriff of Nottingham is the villain. But some folks in law enforcement take Darth Vader to be the hero, so…

This is not to say that there should never be fines, penalties and punishments. However, they should be proportional to the offenses, they should be fairly applied, and should be aimed at protecting the citizens, not filling the coffers of the kingdom. As a final point, we should not be cutting the taxes of the rich and shift costs to the poor. That is unjust and will result in dire social consequences. But the obvious problem is that these systems are working as intended.

A Philosopher’s Blog 2025 brings together a year of sharp, accessible, and often provocative reflections on the moral, political, cultural, and technological challenges of contemporary life. Written by philosopher Michael LaBossiere, these essays move fluidly from the ethics of AI to the culture wars, from conspiracy theories to Dungeons & Dragons, from public policy to personal agency — always with clarity, humor, and a commitment to critical thinking.

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  • Politics, power, and public life — including voting rights, inequality, propaganda, and the shifting landscape of American democracy
  • Ethics in everyday life — guns, healthcare, charity, masculinity, inheritance, and the moral puzzles hidden in ordinary choices
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  • Philosophy in unexpected places — video games, D&D, superheroes, time travel, and the metaphysics of fictional worlds

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This collection is for readers who want more than hot takes — who want to understand how arguments work, why beliefs matter, and how to think more clearly in a world that rewards confusion.

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A look back at the American economy shows a “pastscape” of exploded economic bubbles. These include the housing bubble and the technological .com bubble. We are probably blowing up a new bubble.

In “The End of Economic Growth?” Oxford’s Carl Frey discusses the new digital economy and presents the value of select digital companies relative to the number of people they employ. One example is Twitch, which streams videos of people playing games (and people commenting on people playing games). Twitch was purchased by Amazon for $970 million. Twitch had 170 employees. Facebook bought WhatsApp for $19 billion. WhatsApp employed 55 people at the time of this acquisition. In an interesting contrast, IBM employed 431,212 people in 2013.

While it is tempting to explain the impressive value to employee ratio in terms of grotesque over-valuation, there are other factors involved. One, as Frey notes, is that digital businesses often require relatively little capital. WhatsApp started out with $250,000 and this was actually rather high for an app as the average cost to develop one was $6,453 at the time. As such, a relatively small investment can create a huge return.

Another factor is an old one, namely the efficiency of technology in replacing human labor. The development of the plow reduced the number of people required to grow food, the development of the tractor reduced it even more, and the refinement of mechanized farming has enabled an even more dramatic reduction in labor. While it is true that people must do work to create digital companies (writing the code, for example), much of the “labor” is automated and done by computers rather than people. AI companies also hold forth the promise of eliminating even more human labor, although one should consider the potential risk of letting AI do critical work.

A third factor is the digital aspect. Companies like Facebook, Twitch and WhatsApp do not make objects that need to be manufactured, shipped and sold. As such, they do not (directly) create jobs in these areas. These companies do make use of existing infrastructure: Facebook does need companies like Comcast to provide internet connection and companies like Apple to make the devices. But, rather importantly, they do not employ the people who work for Comcast and Apple (and even these companies employ relatively few people).

One of the most important components of the digital aspect is the multiplier effect. To illustrate this, consider two imaginary businesses in the health field. One is a walk-in clinic which I will call Nurse Tent. The other is a health app called RoboNurse. If a patient goes to Nurse Tent, the nurse can only tend to one patient at a time, and they can only work so many hours per day. As such, Nurse Tent will need to employ multiple nurses (as well as the support staff). In contrast, the RoboNurse app can be sold to billions of people and does not require the sort of infrastructure required by Nurse Tent. If RoboNurse takes off as a hot app, the developer could sell it for millions or even billions.

Nurse Tent could, of course, become a franchise (the McDonald’s of medicine). But being labor intensive and requiring considerable material outlay, it will not be able to have the value to employee ratio of a digital company like WhatsApp or Facebook. It would, however, employ more people. However, the odds are that most of the employees will not be well paid. While the digital economy is producing millionaires and billionaires, wages for labor are low. This helps to explain why the overall economy is doing great, while most workers are worse off than before the last bubble.

It might be wondered why this matters. There are, of course, the usual concerns about the terrible inequality of the economy. However, there is also the concern that a new bubble is being inflated, a bubble filled with digits. There are some good reasons to be concerned.

First, as noted above, digital companies seem grotesquely overvalued. While the situation is not exactly like the housing bubble, overvaluation should be a matter of concern. After all, if the value of these companies is effectively just “hot digits” inflating a thin skin, then a bubble burst seems likely. This can be countered by arguing that the valuation is accurate or even that all valuation is essentially a matter of belief and if we believe, all will be fine. Until, of course, it is no longer fine. The economy, like religion, is faith based.

Second, the current digital economy increases the income inequality mentioned above, widening the gap between the rich and the poor. Laying aside the fact that such a gap historically leads to social unrest and revolution, there is the more immediate concern that the gap will cause the bubble to burst. The economy cannot, one might assume, endure without a solid middle and base to help sustain the top of the pyramid.

This can be countered by arguing that the new digital economy will eventually spread the wealth. Anyone can make an app, anyone can create a startup, and anyone can be a millionaire. While this does have some appeal, there is the fact that while it is true that (almost) anyone can do these things, it is also true that most people will fail. One just needs to consider all the failed startups and the millions of apps that are not successful.

There is also the obvious fact that civilization requires more than WhatsApp, Twitch and Facebook and people need to work outside of the digital economy (which lives atop the non-digital economy). Perhaps this can be handled by an underclass of people beneath the digital (and financial) elite, who toil away at low wages to buy smartphones so they can update their status on Facebook and watch people play games via Twitch. This is, of course, just a standard sci-fi dystopia.

Over the years I have criticized for-profit schools. As I have emphasized before, I have nothing against the idea of a for-profit school. As such, my criticisms have not been that such schools make money. After all, I buy the food I need to survive with the money I make from being a professor. Rather, my criticisms have focused on the performance of these schools as schools, with their often-predatory practices, and the fact that they rely so heavily on federal funding for their profits. This article is, shockingly enough, also critical of these schools.

Assessment in and of higher education is standard practice now. Some assessment standards are set by the federal government, some by states and others by schools. At the federal level, one standard is in the Higher Education Act and states that career education programs “must prepare students for gainful employment in a recognized occupation.” If a school fails to meet this standard, it can lose out on federal funds such as Pell Grants and federal loans. Since schools are fond of federal dollars, they endeavor to meet this standard.

One way to qualify is to ensure students are suitably prepared. Another approach, one taken primarily by the for-profit schools (which rely heavily on federal money for their profits) has been to lobby to get the standard set to their liking.  As it now stands, schools are ranked in three categories: passing, probationary, and failing. A passing program is such that its graduates’ annual loan payments are below 8% of their total earnings or below 20% of their discretionary incomes. A program is put on probation when the loan payments are in the 8-12% range of their total earnings or 20-30% of discretionary incomes. A program is failing when the loan payments are more than 12% of their total income or over 30% of their discretionary incomes. Students who do not graduate, which happens more often at for-profit schools than at private and public schools, are not counted in this calculation.

 A program is disqualified from receiving federal funds if it fails two out of any three consecutive years or gets a ranking less than passing for four years in a row. This went into effect back in the 2015-2016 academic year.

As a matter of ideology and not fact, it is often claimed that the for-profit, private sector is inherently superior to the public sector. As with many ideologies, this does not match reality. Public higher education, which is under constant attack from the right, has been amazingly successful: 99.72% of the programs were rated as passing, 0.18% were rated as being on probation and 0.09% were ranked as failing. Private nonprofit schools also performed admirably with 95.65% of their programs passing, 3.16% being ranked as being on probation and 1.19% rated as failing. So, “A” level work for these schools. In stark contrast, for-profit schools had 65.87% of their programs ranked as passing, 21.89 ranked as being on probation and 12.23% evaluated as failing. So, these schools would have a grade of “D” if they were students. It is certainly worth keeping in mind that the standards used are the ones that the private, for-profit schools pushed for and it seems likely they would do even worse if the more comprehensive standards favored by the AFT were used.

This data indicates the for-profit schools are not as good a choice for students and for federal funding as the public and non-profit private schools. After all, using the pragmatic measure of student income relative to debt incurred for education, the public and private non-profits are the clear winners. One easy and obvious explanation for this is, of course, that the for-profit schools make a profit. As such, they typically charge much more than comparable public and non-profit private schools. Another explanation is that for-profit schools generally do a worse job preparing students for careers and with placing students in jobs. So, a higher cost combined with inferior ability to get students into jobs translates into that “D” grade. So much for the alleged inherent superiority of the for-profit private sector.

It might be objected that there are other factors that explain the poor performance of the for-profit schools that make them look better. For example, perhaps students who enroll in them differ significantly from students in public and non-profit private schools and this helps explain the difference in a way that partially absolves them. As another example, perhaps the for-profit schools just suffered from ongoing bad luck in terms of the programs they offered. Maybe salaries were unusually bad in these jobs or hiring was very weak. These and other factors are worth considering. After all, failing to consider alternative explanations would be poor reasoning indeed. I am, after all, a philosopher and not a politician or pundit. If the for-profits can explain away their poor performance in legitimate ways, then perhaps the standards would need to be adjusted to take into account these factors.

It is also worth considering that schools, public and private, do not have control over the economy. Given that short-term (1-4 year) vagaries of the market could result in programs falling into probation or failure by these standards when such programs are “good” in the longer term, it would seem that some additional considerations should be brought into play. Naturally, it can be countered that 3-4 years of probation or failure would not really be short term (especially for folks who think in terms of immediate profit) and that such programs would fully merit their rating.

That said, the last economic meltdown was somewhat long term and the next one (our bubble based economy makes it almost inevitable) could be even worse. As such, it would seem sensible to consider the broader economy when holding programs accountable. After all, even a great program cannot make companies hire nor compel them to pay better wages.

While people who voted once again for Donald Trump gave various reasons for their choice, some say they chose him because he is a businessman, and they see government as a business. While some might be tempted to dismiss this as mere parroting of political rhetoric, the question of whether the state is a business is worth considering.

The state (that is, the people who occupy various roles) does engage in some business like behavior. For example, the state engages in contracts for products and services. As another example, the state does charge for some goods and services. As a third example, the state does engage in economic deals with other states. As such, it is indisputable that the state does business. However, this is distinct from being a business. To use an analogy, most of us routinely engage in business like behavior, yet this does not make us businesses. So, for the state to be a business, there must be something more to it than merely engaging in some business-like behavior.

One approach is the legal one. Businesses tend to be defined by the relevant laws, especially corporations. As it now stands, the United States government is not legally defined as a business. This could, of course, be changed by law. But such a legal status would not, by itself, be terribly interesting philosophically. After all, the question is not “is there a law that says the state is a business?” but “is the state a business?”

To take the usual Socratic approach, the proper starting point is working out a useful definition of business. Since this is a short essay, the definition also needs to be succinct. The easy and obvious way to define a business in capitalism is as an entity that provides goods or services (which can be abstract) in return for economic compensation with the goal of making a profit.

While there are government owned corporations that operate as businesses, the government itself does not seem to fit this definition. One reason is that while the state does provide goods and services, many are provided without explicit economic compensation. Some also receive goods and services without providing any compensation to the state. For example, some corporations can exploit tax laws so they can avoid paying any taxes even while receiving government subsidies and contracts.

While this seems to indicate that the state is not a business (or is perhaps a badly run business), there is also the question of whether the state should operate this way. In his essay on civil disobedience, Henry David Thoreau suggested that people should have an essentially transactional relationship with the state. That is, they should pay for the goods and services they use, as they would do with any business. For example, a person who used the state roads would pay for this use via the highway tax. This approach does have some appeal.

One part of the appeal is ethical. Thoreau’s motivation was not to be a cheapskate, but to avoid contributing to government activities he saw as morally wrong. Two evils he wished to avoid funding were the Mexican-American war and slavery. Since the state routinely engages in activities some citizens find morally problematic (such as subsidizing corporations), this would allow people to act in accord with their values and influence the state directly by “voting” with their dollars. The idea is that just as a conventional business will give the customers what they are willing to pay for, the state as business would do the same thing.

Another part of the appeal is economic as people would only pay for what they use and many probably believe that this approach would cost them less than paying taxes. For example, a person who has no kids in the public schools would not pay for the schools, thus saving them money. There are, of course, some practical concerns that would need to be worked out here. For example, should people be allowed to provide their own police services and thus avoid paying for these services? As another example, there is the challenge of working out how the billing would be calculated and implemented. Fortunately, this is a technical challenge that existing business have already addressed, albeit on a much smaller scale. However, this is not just a matter of technical challenges.

An obvious problem is that there are people and organizations who cannot afford to pay for the services they need (or want) from the state. For example, people who receive food stamps or unemployment benefits obviously cannot pay the value for these goods. If they had the money to pay for them, they would not need them. As another example, companies that benefit from United States military interventions and foreign policy would be hard pressed to pay the full cost of these operations. As a third example, it would be absurd for companies that receive subsidies to pay for these subsidies. If they did, they would not be subsidies. The company would just give the state money to hand back to it, which would just be a waste of time. The same would apply to student financial aid and similar individual subsidies.

It could be replied that this is acceptable, those who cannot pay for the goods and services will be forced to work harder to be able to pay for what they need. Just as a person who wants to have a car must work to earn it, a person who wants to have police or fire protection must also work to earn it. If they cannot do so, then it will become a self-correcting problem as they die in fires or are killed by criminals. Naturally, the state could engage in some limited charity, much like businesses sometimes do. The state could also extend credit to citizens who are down on their luck or even conscript them so they can work off their debts to the state.

The counter to this is to argue that the state should not operate like a business because it has obligations that go beyond those imposed by payments for goods or services. The challenge is, of course, to argue for the basis of this obligation.

A second reason the state is not a business is that it is not supposed to operate to make a profit . This is not merely because the United States government spends more than it brings in, but because it does not even aim at making a profit. This is not to say that profits are not made by individuals, just that the state as a whole does not run on this model. This is presumably fortunate for the state, few other entities could operate at a deficit for so long without ceasing to be.

There is, of course, the question of whether the state should aim to operate at a profit. This, it must be noted, is distinct from the state operating with a balanced budget or even having a surplus of money. In the case of balancing the budget, the goal is to ensure that all expenditure is covered by the income of the state. While aiming at a surplus might seem to be the same as aiming for a profit, the difference lies in the intent. The usual goal of achieving a budget surplus is analogous to the goal of an individual trying to save money for future expenses.

In the case of profit, the goal would be for the state to make money beyond what is needed for current and future expenses. As with all profit making, this would require creating that profit gap between the cost of the good or service and what the customer pays for it. This could be done by underpaying those providing the goods and services or overcharging those receiving them, both of which might seem morally problematic for a government.

Profit, by its nature, must go to someone. For example, the owner of a small business gets the profits. As another example, the shareholders in a corporation get some of the profits. In the case of the government, there is the question of who should get the profit. One possibility is that all the citizens get a share of the profits, although this would just be re-paying citizens what they were either overcharged or underpaid. An alternative is to allow people to buy additional shares in the federal government, thus running it like a publicly traded corporation. China and Russia would presumably want to buy some of these stocks in the United States.

One argument for the profit approach is that it motivates people; so perhaps some of the profits of the state could go to government officials. The rather obvious concern here is that this would be a great motivator for corruption and abuse. For example, imagine if all courts aimed to operate at a profit for the judges and prosecutors. It could be contended that the market will work it out, just like it does in the private sector. The easy and obvious counter to this is that the private sector is well known for its corruption.

A second argument for the profit option is that it leads to greater efficiency. After all, every reduction in the cost of providing goods and services means more profits. While greater efficiency is desirable, there is the concern that costs would be reduced in harmful ways. For example, government employees might be underpaid. As another example, corners might be cut on quality and safety. The operation of for-profit prisons and universities provide tow cautionary tales about how a for-profit government would be bad for those outside the ruling class.  It can be countered that the current system is also problematic since there is no financial incentive to be efficient. An easy reply to this is that there are other incentives to be efficient. One of these is limited resources, people must be efficient to get their jobs done using what they have been provided with. Another is professionalism.

In light of the above discussion, while the state should aim at being efficient, it should not be a business.

The American anarchist Henry David Thoreau presented what has become a popular conservative view of the effect of government on business: “Yet this government never of itself furthered any enterprise, but by the alacrity with which it got out of its way…Trade and commerce, if they were not made of India-rubber, would never manage to bounce over obstacles which legislators are continually putting in their way…” While this view of the role of the state in business is often taken as gospel by conservatives, there is the question of whether Thoreau is right. While I find his anarchism appealing, there are some problems with his view.

Thoreau is right that the government can be employed to thwart and impede enterprises. To illustrate, this can be done by granting special advantages and subsidies to certain companies or industries, thus impeding their competitors. However, he is mistaken in his claim that the government has never “furthered any enterprise.” I will begin with an easy and obvious reply to this claim.

Modern business could not exist without the physical and social infrastructure provided by the state. In terms of the physical infrastructure, businesses need the transportation infrastructure provided by the taxpayers. The most obvious aspect of this infrastructure is the system of roads that is paid for by the citizens and maintained by the government (citizens acting collectively). Without roads, most businesses could not operate as products could not be moved effectively, and customers would be hard pressed to reach the businesses.

Perhaps even more critical than the physical infrastructure is the social infrastructure created by the people acting collectively and through officials. The social infrastructure includes the legal system, laws, police services, military services, diplomatic services and so on for the structures that compose the governmental aspects of society.

For example, companies in the intellectual property business (which ranges from those dealing in the arts to pharmaceutical companies) require the legal system and law enforcement. For example, if the state did not enforce drug patents, the business model of the major pharmaceutical companies would be destroyed. As another example, if the state did not protect Disney’s intellectual property, their profits would suffer.

As a further illustration, companies that do business internationally require the government’s military and diplomatic services to enable their business activities. In some cases, this involves the use of the military to serve the interest of business. In other cases, it is the less bloody hand of diplomacy that advances American business around the world.

All businesses rely on the currency system made possible by the state and they are all protected by the police. While there are non-state currencies (such as bitcoin) and companies can hire mercenaries, these options are not viable for most businesses.  All of this shows the state plays a critical role in allowing business to even exist. This can, however, be countered.

It could be argued that while the state is necessary for business (after all, there is little business in the state of nature), it does nothing beyond that and should just get out of the way to avoid impeding business. To use an analogy, someone must build the stadium for the football game, but they need to get out of the way when it is time for the players to take the field. The obvious reply is to show how the state has played a very positive role in the development of business.

The United States has made a practice of subsidizing and supporting what the ruling class sees as key businesses. In the 1800s, the railroads were developed with the assistance of the state. The development of the oil industry depended on the state, as did the development of modern agriculture. It could, of course, be objected that this subsidizing and support are bad things. But they are certainly not bad for the businesses that benefit. Elon Musk, for example, profits greatly from taxpayer money. Presumably he was so focused on cutting support for others so even more of this public money could end up in his accounts.

Another area where the state has helped advance business is in funding and engaging in research. This is often research that would be too expensive for private industry and research that requires a long time to yield benefits. One example of this is the development of space technology that made satellites possible. Another example is the development of the internet, which is the nervous system of the modern economy. The BBC’s “50 Things that Made the Modern Economy” does an excellent analysis of the role of governments in developing the technology that made the iPhone possible (and all smart phones).  Unfortunately for business, the Trump administration is (from malice or ignorance) cutting support for research.

One reason the United States has been so successful in the modern economy has been the past commitment of public money to basic research. While not all research leads to successful commercial applications (such as computers), the ability of the collective (us acting as the state) to support long term and expensive research has been critical to the advancement of technology and civilization.

This is not to take away from private sector research, but much of it is built upon public sector foundations. As is expected, private sector research now tends to focus on short-term profits rather than long term research. Unfortunately, this view has infected the public sector as well. As public money for research is reduced, public institutions seek private money, and this money often comes with strings and the risk of corruption. For example, “research” might be funded to “prove” that a product is safe or effective. While this does yield short-term gains, it will lead to a long-term disaster.

The state also helps further enterprise through laws regulating business. While this might seem like a paradox, it is easily shown by using an analogy to the role of the state in regulating the behavior of citizens.

Allowing businesses to operate with no regulation is like allowing anyone to operate without regulations. While the idea of an unregulated life might seem appealing, individuals need protection from others who might threaten their life, liberty and property. To this end, laws are created and enforced to protect people. The same applies to protecting businesses from other businesses (and businesses from people and people from businesses). This is, of course, the stock argument for having government rather than the unregulated state of nature. As Hobbes noted, a lack of government can become a war of all against all and this ends badly for everyone. The freer the market gets, the closer it gets to this state of nature  and this is well worth remembering. The ruling class controlling business does want the citizens to be in the state of nature relative to them but they want to be protected from each other and the citizens by the coercive power of the state.

It might be assumed that I foolishly think that all government involvement in business is good and that all regulations are desirable. This is not the case. Governments can wreck their own economies through corruption, bad regulations and other failures. This has happened in the past and is probably happening now.

Regulations are like any law as they can be good or bad, depending on what they achieve. Some regulations, such as those that encourage fair competition in business, are good. Others, such as those that grant certain companies unfair legal and financial advantages (such as Monsanto here), are not.

While rhetorical bumper stickers about government, business and regulation are appealing in a simplistic way, the reality of the situation requires more thought and due consideration of the positive role the state can play, with due vigilance against the harms that it can do.

 

The venerable Wells Fargo bank made the news in 2016 for financial misdeeds on a massive scale. Employees of the company, to meet the quotas set by management, created accounts without the permission of the clients. In response over 5,300 lower level employees were fired. Initially, CEO John Stumpf and former head of retail banking Carrie Tolstedt were to keep their rather sizable compensation for leading the company to a great financial “success” based on this fraud. However, the backlash from the public and the shareholders resulted in Stumpf and Carrie losing some of their financial compensation.

As would be expected, there were no plans for criminal charges of the sort that could result in jail time. This is consistent with how most financial misdeeds by the ruling elites are handled: some fines and, at worst, some forfeiture of ill-gotten gains. While I do not generally agree with Trump, he was not wrong when he pointed out that the system is rigged in favor of the elites and against the common people. The fact that Trump is one of the elites and has used the system does not prove him wrong (that would be fallacious reasoning); rather he also serves as more evidence for the rigging. Those who loath wealthy Democrats can also include them.

It is instructive to compare the punishment for other misdeeds to those imposed on Wells Fargo. Shoplifting is usually seen as a minor crime,  but a person who shoplifts property with a combined value of less than $300 can pay a fine up to $1000 or be sentenced to up to a year in jail. Shoplifting property with a combined value over $300 is a felony and can result in a sentence between one and ten years in jail. Wells Fargo robbed people through the use of fees and other charges that arose from the creation of unauthorized accounts.

While there are differences between the direct theft of shoplifting and the indirect robbery of imposing charges on unauthorized accounts, there is little moral distinction: after all, both are means of robbing someone of their rightful property.  Because of this, there would appear to be a need to revise the penalties so that they are properly proportional.

One option is to bring the punishment for major financial misdeeds in line with the punishment for shoplifting. This would involve changing the fine for financial misdeeds from being a fraction of the profits (or damages) of the misdeeds to a multiple of the profits (perhaps three or more times greater). It could be argued that such a harsh penalty could financially ruin an elite who lacked adequate assets to pay for their misdeed; however, the exact same argument can be advanced for poor shoplifters.

Another option is to bring the punishments for shoplifting in line with those for the financial elites. This would change the fine for shoplifting from likely being more than the value of what was stolen to a fraction of what was stolen (if that). For example, if someone stole a $1,000 video card, then their punishment might be paying a $100 fine. The obvious objection to this proposal is that if shoplifters knew that their punishment would be a fraction of the value they had stolen, then this punishment would have no deterrent value. Shoplifting would be, in effect, shopping at a discount. It is thus hardly shocking that the financial elite are not deterred by the present system of punishment since they profit greatly if they do not get caught and do very well even if they are caught and “punished.”

It could be objected that the financial elite would be deterred on the grounds that they would still be better off using legal means to profit. That way they would keep 100% of their gain rather than a fraction. The easy and obvious reply is that this deterrent value is contingent on the elite believing that the legal approach would be more profitable than the illegal approach (with due consideration to the chance of getting caught and fined). Since punishment is often a fraction of the gain and the potential gain from misdeeds can be huge, this approach to punishment has far less deterrent value than a punishment in which the punished comes out at a loss rather than a gain. If a corporation could, for example, make 200% more by doing illegal things and they risk only losing a fraction of that gain, then doing illegal things is a smart move.

It is also interesting to compare the punishment for identity theft and fraud with the punishment of Wells Fargo. Conviction of identity theft can result in a sentence of one to seven years. Fraud charges also have sentences that range from one to ten years and beyond. While some do emphasize that Wells Fargo was not engaged in traditional identity theft, what they did was morally similar. As an example of traditional identity theft, a thief steals a person’s identity and gets a credit card under that name to use for their own gain. What Wells Fargo did was open accounts in people’s names without their permission so that the company could profit from this misuse of their identity. As such, the company was stealing from these people and doing the same sorts of harm inflicted by identity theft.

From a moral standpoint, those involved in these actions should face the same criminal charges and potential punishments that individuals acting on their own would face. This is morally required for consistency. Obviously enough, the laws are not consistent. We all know that the misdeeds of the elite and corporations are usually punished lightly or not at all. Nothing new, as the history of law is also the history of its unfair application. The injustice of justice, one might say.  However, this approach is problematic.

Seem from a certain moral perspective, the degree to which I am obligated to accept punishment for my misdeeds is proportional to the consistency and fairness of the system of justice. If others can walk away from the consequences of their misdeeds or enjoy light punishments for misdeeds that would result in harsh penalties for me, then I have little moral reason to willingly accept any punishments that might be inflicted on me. Naturally, the state has the power to inflict its punishments whether I accept them or not, but it seems important to a system of justice that the citizens accept the moral legitimacy of the punishment.

To use an analogy, imagine a professor who ran their class like the justice system is running. If an elite student cheated and got an initial grade of 100, they might be punished by having the grade docked to an 80 if caught. In contrast, the commoner students would fail and be sent before the academic misconduct board for such a misdeed. The commoner students who cheated would be right to rebel against this system and refuse to accept such punishments, though they did wrong, justice without consistency is but a mockery of real justice.

In light of this discussion, Wells Fargo was yet another example of the inherent injustice and inequality in the legal system. If we wish to have a just system of justice, these disparities must be addressed. These disparities also warrant moral disobedience in the face of punishment. Why should a shoplifter accept a fine that vastly exceeds what they steal when a financial elite can pay but a fraction of their theft and profit well from their misdeeds? They should not.

The student loan crisis occasionally gets attention in the media, but the coverage is often quick and shallow. Back in 2016 James B. Steele and Lance Williams of Reveal from the The Center for Investigative Reporting presented a more in-depth examination of the student loan industry. As a former student and current professor, I am concerned about student loans.

The original intention of student loans, broadly construed, was to provide lower income students with an affordable means of paying for college. Like most students, I had to take out loans to pay for school. This was back in the 1980s, when college costs were more reasonable and just as student loans were being transformed into a massive for-profit industry. As such, my loans were modest (about $8,000) and I was able to pay them off even on the pitiful salary I was earning as an adjunct professor. Times have, however, changed for the worse. And it just keeps getting worse under Republican rule for the rich, by the rich and against the poor.

Making a long story short, the federal government enabled banks and private equity companies to monetize the federal student loan program, allowing them to profit from the loans and fees. Because many state governments embraced an ideology of selfishness and opposition to the public good, they significantly cut their support for state colleges and universities, thus increasing the cost of tuition. At the same time, university administrations were growing both in terms of number of administrators and the size of salaries, thus increasing costs as well. There was also an increase in infrastructure costs due to new technology as well as a desire to market campuses as having amenities such as rock-climbing gyms. The result was $1.3 trillion in debt for 42 million Americans and this just keeps increasing. On the “positive” side, the government makes about 20% on its 2013 loans and the industry was humming along at $140 billion a year.

While the government held about 93% of the total debt, the debt collection was contracted to private companies and these were scooped up by the likes of JPMorgan Chase and Citigroup. As expected, these contractors make large profits (about $2 billion per year back in 2016). The collection process is often very aggressive, and the industry has used its control over congress to ensure favorable laws. For example, student loan debt is one of the very few debts that are not discharged by bankruptcy.

While student loans were originally intended to benefit students, they now benefit the government and the private contractors to the detriment of students. As such, there is a moral concern here in addition to the practical concerns about loans.

If the primary purpose of student loans is to address economic inequality by assisting lower income students attend college, then its current state goes against this purpose. This is because the system is creates massive debt for students while creating massive profits for the state and private contractors. That is, students are being exploited by both the state and the private sector. The collusion of the state makes seeking redress rather difficult. After all, the people need to turn to the state for redress, yet the state is an interested party and under the influence of industry. This problem is, of course, not unique to student loans and it is one more example of how privatization is great for the private sector rich but often awful for citizens.

It could be argued that the proper function of the state is to serve the interest of the financial elites at the expense of the citizens. If so, then the student loan program should continue as it is; it is great for the state and the financial class while crushing citizens under mountains of debt. If, however, the state should serve the good of the citizens in general, then the status quo is a disaster. My view is, not surprisingly, that of John Locke: the state is to serve the good of the people. As such,  the student loan industry needs to be changed.

One change that would help is for states to return to supporting public higher education. While there are legitimate concerns about budgets, education is a great investment in both the private good of the students and the public good. After all, civilization needs educated people to function and people with college degrees end up with higher incomes and thus pay more taxes (paying back the investment many times over). While there are professed ideological reasons for opposing this, there are also financial motivations: dismantling public education would push more students into the awful for-profit schools that devour money and excrete un(der)employed people burdened by massive debt. While this is great for the owners of these schools, it is awful for the students and society.

Another change, which has been proposed by others, is to change or end the privatized aspects of the system. While there is the myth that the private sector is vastly superior to the inefficient and incompetent state, the fact is that the efficiency of the private sector seems to mostly lie in making a profit for itself rather than running the student loan system in accord with its intended purpose. This is not to say that the state must be great in what it does, just that cutting out the large profits of the collection agencies would reduce the burden on students. This is, of course, a moral question about whether it is right or not to profit on the backs of students.

There has also been talk about reducing the interest rates of student loans and even proposals for free college. I do favor lower interest rates; if the purpose of the loans is to assist students rather than make money, then lower interest rates would be the right thing to do. As far as free college goes, there is the obvious problem that “free” college must be paid for by someone and it is a matter of shifting the burden from students to someone else. The ethics of such a shift depends on who is picking up the tab.

As a closing point, there is also the matter of student responsibility. My loans went entirely to paying education expenses, which is one reason my debt was low even for the time. While many students do use loans wisely, my experiences as a student and a professor have shown that some students use loan money unwisely and put themselves into debt for things that have no connection to education. For example, faculty sometimes joke that while administrators drive the most expensive cars, students drive the second most expensive and most faculty drive the worst. Students that overburden themselves with loans they use irresponsibly have only themselves to blame. However, the fact that a few students do this does not invalidate the claim that much of the debt burden inflicted on students is unjust.  We should, as always, be wary of attempts to demonize people based on anecdotal evidence and straw person attacks.

 

One way to justify income inequality is the incentive argument. The gist is that income inequality is necessary as a motivating factor: if people could not get rich, then they would not have the incentive to work hard, innovate, invent and so on. The argument requires the assumption that hard work, innovation, inventing and so on are good; an assumption that has some plausibility.

This argument does have considerable appeal. In terms of psychology, it is reasonable to make the descriptive claim that people are motivated by the possibility of gain. This view was held by Thomas Hobbes and others on the grounds that it matches the observed behavior of many (but not all) people. If this view is correct, then achieving the goods of hard work, innovation, invention and so on would require income inequality.

There is the counter that some are motivated by factors other than achieving inequality in financial gain. Some are motivated by altruism, by a desire to improve, by curiosity, by the love of invention, by the desire to create things of beauty, to solve problems and other motives that do not depend on income. These sorts of motivations do suggest that income inequality is not necessary as a motivating factor, at least for some people.

Since this is a matter of fact, it can (in theory) be settled by empirical research. It worth noting that even if income inequality is necessary as a motivating factor, there remain other concerns, such as the question of how much income inequality is necessary and how much is morally acceptable.

Interestingly, the incentive argument is a two-edged sword: while it can be used to justify income inequality, it can also be used to argue against the sort of economic inequality that exists in the United States many other countries. The argument is as follows.

While worker productivity has increased significantly in the United States income for workers has not matched this productivity. This is a change from the past, the income of workers generally went up more proportionally to the increase in productivity. This explains, in part, why CEO (and upper management in general) salaries have seen a significant increase relative to worker income: the increased productivity of the workers generates more income for the upper management than it does for the workers.

If it is assumed that gain is necessary for motivation and that inequality is justified by the results (working harder, innovating, producing and so on), then the workers should receive a greater proportion of the returns on their productivity. After all, if high executive compensation is justified on the grounds of its motivational power, then the same principle would apply to workers. They, too, should receive compensation proportional to their productivity, innovation and so on. If they do not, then the incentive argument would entail that they would have no incentive to be as productive, etc.

It could be argued that top management earns its higher income by being responsible for the increase in worker productivity, that the increase in worker productivity is not because of the workers but because of leadership being motivated by the possibility of gain. If this is the case, then the disparity would be  justified by the incentive argument: the workers are more productive because the CEO is motivated to make them more productive so she can have an even greater income.

 However, if the increased productivity is due mainly to the workers, then this counters the incentive argument: if workers are more productive than before with less relative compensation, then there does not seem to be the alleged connection between incentive and productivity required by the incentive argument. If workers will increase productivity while receiving less compensation relative to their productivity, then the same should hold for the top executives. While there are other ways to warrant extreme income inequality, the incentive argument has a problem.

One possible response is to argue there are relevant differences between the executives and workers such that executives need the incentive provided by extreme inequality and workers are motivated sufficiently by other factors (like being able to buy food). It could also be contended that the workers are motivated by the extreme inequality as well, perhaps they would not be as productive if they did not have the (almost certainly false) belief that they will become rich.