Category: Economics

While the American right favors tax cuts, the left sometimes proposes tax increases. One argument advanced by the right against increasing taxes is the demotivation argument. The gist of the argument is that if their taxes are increased, the rich will become demotivated and this will have negative consequences. Since these negative consequences should be avoided, the conclusion is that taxes should not be increased.

In assessing this reasoning, there are two major points of concern. One is whether a tax increase would destroy the motivation of the upper class. The other deals with the negative consequences, their nature, their likelihood of occurring and the extent and scope of the harm. I will begin with the alleged consequences.

The alleged consequences are many and varied. One is based on the claim that the top economic class includes the top innovators of society and if they are demotivated, then there will be less innovation. This could range from there being no new social media platforms to there being no new pharmaceuticals. While this is a point of concern, this assumes that innovation arrives primarily out of the top economic class—which can be tested. While some top earners are innovators, innovation also come from the lower economic classes—such the people doing research and engineering. The idea that the rich are the innovators does match the fiction of Ayn Rand but seems to miss the way research and development usually occurs.

Another alleged consequence rests on the claim that the upper class serves as the investors who provide the capital that enables the economy to function. Since they control the capital, this is a reasonable concern. If Americans with the most money decided to reduce or stop investing, then the investment economy would need to rely on foreign capital or what could be provided by the lower classes. Since the lower classes have far less money (by definition), they would not be able to provide the funds. There are, of course, foreign investors who would happily take the place of the wealthy Americans, so the investment economy would probably still roll along. Especially since American investors might find the idea of losing out to foreign investors sufficient motivation to overcome the demotivation of a tax increase.

There is also the claim that the upper class contains the people who do the important things, like brain surgery and creating the new bubble that will be the destroy the world economy next time around. While this has some appeal, much of the important stuff is done by people who are not in the upper class. Again, the idea that the economic elite are doing all the really important stuff while the rest of  us are takers rather than makers is yet another Randian fantasy.

Fairness does, however, require that these concerns be properly investigated. If it can be shown that the upper class is as critical as its defenders claim, then my assertions can be refuted. Of course, it worth considering that much of the alleged importance of the upper class arises from the fact that it has a disproportionate share of the wealth and that it would be far less important if the distribution were not so grotesquely imbalanced. As such, a tax increase could decrease the importance of the economic elites. I will now turn to the matter of whether a tax increase would demotivate the rich.

An easy and obvious response to the claim that a relatively small tax increase would demotivate the rich is that the rest of us work jobs, innovate, invest and do important things for vastly less money than those at the top. Even if the rich paid slightly more taxes, their incomes would still vastly exceed ours. And if we can find the motivation to keep going despite our low incomes, then the rich can also do so. When I worked at a minimum wage job, I was motivated to go to work. When I was an adjunct making $16,000 a year, I was still motivated to go to work. Now that I am a professor, I am still motivated to go to work.

It could be replied that those of us in the lower classes are motivated because we need the income to survive. We need to work to buy food, medicine, shelter and so on. Those who are so well off that they do not need to work to survive, it could be claimed, also have the luxury of being demotivated by an increase in their taxes. Whereas someone who must earn her daily bread at a crushing minimum wage (or less) job must get up and go to work, the elite can allow themselves to be broken by a slight tax increase and decide to stop investing, stop innovating, and stop doing important stuff.

One reply is that it seems unlikely that the rich would be broken by a tax increase. Naturally, a crushing increase would be a different story—but the American left does not seriously suggest imposing truly crushing tax burdens on the rich. After all, crushing burdens are for the poor. Another reply is that if the current rich become demotivated and give up, there are many who would be happy to take their place—even if it means paying slightly higher taxes on a vastly increased income. So, we would just get some new rich folks to replace the demotivated slackers. The invisible hand of the market to the rescue again.

 

The avoidance argument against increasing taxes on the rich is that doing so is pointless because they will find ways to nullify the increase. They might use established methods or develop new ones, but (the argument goes) they will manage to avoid paying more taxes. Therefore, there is no point in wasting time trying to make them pay more.

This argument has a certain appeal in that there is little sense doing ineffectual things. As such, it would seem reasonable to leave things as they are, since this change would do just that—only at the cost of enacting ineffective legislation.

Despite this appeal, there are two factual issues that need to be addressed. The first is the issue of whether the rich would try to avoid a tax increase. Some of the wealthy have at least claimed to favor higher tax rates, so they might accept the increase. However, most people (be they rich or not) generally prefer not to pay more taxes. There is also the fact that many of the rich already do all they can to minimize their tax burden. There is no reason to think that a tax increase would change this behavior. As such, it is reasonable to infer that most of the rich would try to minimize the impact of any tax increase.

The second factual issue is whether the rich would be able to nullify a tax increase and to what degree. One approach is to consider that if the rich are concerned about a tax increase, then this indicates that it would affect them. After all, people generally do not worry about things they believe will not affect them.

A reasonable counter is that while the rich will be affected by the tax increase, their concern is not that they will be paying more taxes, but that avoiding the increase will come with a cost. For example, they might have to pay lawyers or accountants more to enable them to neutralize the increase.  Or they might need to lobby or “donate” to politicians. It makes sense that the rich would be willing to expend resources to mitigate any tax increase. As if the expenditure would be lower than what paying the increase would cost them, then this approach could be rational. It could even be claimed that some might be willing to pay more to avoid the taxes than the taxes would cost them, perhaps as a matter of principle. While this sounds odd, it is not inconceivable.

Another approach is to consider how effectively the rich avoid existing taxes. Even if they are somewhat effective at doing so, the increase could still impact them and thus generate more tax revenue (which is the point of a tax increase). As such, an increase could be effective in regard to the stated goal of increasing revenue.

In addition to the factual issues, there is also the issue of whether the principle that underlies this argument is a good principle. The principle is that if people will be able to avoid a law (or policy), then the law should not be passed.

This principle does have a pragmatic appeal: it seems irrational to waste time and resources creating laws  that will simply be avoided. This sort of avoidance argument is also used against proposed bills aimed at gun control. Interestingly, most who use the avoidance argument against gun control do not accept this same argument about abortion laws or drug laws. This is as should be expected: people tend to operate based on preferences rather than on consistent application of principles.

One possible response is that if a law is worth having, then steps should be taken to ensure that people cannot just avoid it. If some people can get away with murder, then the morally right reaction would not be to give up on the law. The correct reaction would be to ensure that they could not get away with murder. Naturally, it can be argued that the tax increase would not be a law worth having—but that is a different argument from the avoidance argument.

A second possible response is to reject the consequentialist approach and argue that the fact that people will be able to avoid a law is not as important as the issue of whether the law is right. Some people take this approach to drug laws: they accept that the laws are ineffective, but contend that since drug use is immoral, it should remain illegal. As always, consistency is important in these matters: if the principle that moral concerns trump the pragmatic concerns is embraced, then that principle needs to be applied consistently in all relevantly similar cases. If the principle that the pragmatic should trump the moral is accepted, then that needs to be applied consistently as well. While the issue of whether such a tax increase is morally right or not is important, my concern here is with the avoidance argument. But, if the tax increase is not the right thing to do and the rich would just avoid it, then imposing it would be both wrong and a poor  pragmatic choice.

One way to argue against increasing taxes (or having any taxes at all) is to contend that to increase the taxes of the wealthy against their wishes would be coercion. There are more hyperbolic ways to make this sort of argument, such as asserting that taxes are robbery by the state. However, I will use a more neutral definition of “coercion.” While “coercion” has a negative connotation, those of “theft” and “robbery” are even more negative.

If coercion is always morally wrong, then coercing the wealthy into paying more taxes would be wrong. As such, a key issue is whether coercion is always wrong. On the face of it, the morality of an act of coercion would depend on many factors, such as the goal and nature of the coercive act and the parties involved. An important factor is whether the coerced consented to the system of coercion. For example, it can be argued that criminals consented to the use of coercive force against them by being citizens of the state and so they (in general) cannot claim they are being wronged when they are arrested and punished for crimes they committed.

It could be claimed that by remaining citizens of the United States and participating in a democratic political system, the rich consent to the decisions made by the legitimate authorities of the state. So, in the unlikely event that Congress increases the taxes of the rich, then the rich are obligated to go along. They might not like the decision, but that is how a democratic system (supposedly) works. The state is supposed to use its coercive power to ensure that the laws are followed—be they laws against murder, laws against infringing the patents of pharmaceutical companies or laws increasing the tax rate.

A reasonable response to this is that although the citizens of the state have agreed to be subject to the coercive power of the state, there are moral limits on the power. Returning to the example of the police, there are moral limits on what sort of coercion they should use—even when the law and common practice might allow them to exceed them. Returning to the matter of laws, there are clearly unjust laws. As such, agreeing to be part of a coercive system does not entail that all the coercive actions of that system or its laws are morally acceptable. Given this, it could be claimed that the state coercing the rich into paying more taxes might be wrong.

It could be countered that if the taxes on the rich are increased, this would be after the state and the rich have negotiated the taxes. The rich have organizations, such as corporations, that enable them to present a unified front to the state. One might even say that these are unions of the wealthy. The rich can also pay lobbyists to negotiate with the people in the government and, of course, the rich also have the usual ability of any citizen to negotiate with the government.

If the rich fare poorly in their negotiations, perhaps because those making the decisions do not place enough value on what the rich have to offer, then the rich must accept this result until they have the chance to change the law. After all, that is how the free market of democratic politics is supposed to work. If the rich do not like the results, they should have brought more to the table or been better at negotiating. They can also find another country—and some do just that. Or create or take over their own state.

It could be objected that negotiations between the state and the rich will be unfair for the rich. While the rich can have great power, the state (probably still) has greater power. After all, the United States has trillions of dollars, police, and the military. This imbalance of power makes it impossible for the rich to fairly negotiate with the state—unless there are rules and regulations governing how the rich can be treated by the greater power of the state. There could be, for example, rules about how much the state should be able to tax the rich and these rules should be based on a rational analysis of the facts. This would allow a fair maximum tax to be set that would allow the rich to be treated justly.

The relation between a state intent on maximizing tax income and the rich can be seen as analogous to the relation between employees and businesses intent on maximizing profits. If it is acceptable for the wealthy to organize corporations to negotiate with the more powerful state, then it is also be acceptable for employees to organize unions to negotiate with the more powerful corporations. While the merits of individual corporations and unions can be debated endlessly, the basic principle of organizing to negotiate with others is essentially the same for both and if one is acceptable, so is the other.  Unions are the corporations of the poor and corporations are the unions of the rich.

Continuing the analogy, if it is accepted that the state’s freedom to impose taxes should be limited, then it would also be reasonable to think that there should be limits, regulations and restrictions on the economic freedom of employers in regards to how they treat employees. After all, employees are almost always in the weaker position and thus usually negotiate at a marked disadvantage. While workers, like the rich, could try to find another job, create their own business or go to another land, the options of most workers are far more limited.

To use a specific example, if it is morally right to set a rational limit to the maximum tax for the rich, it is also morally right to set a rational limit on the minimum wage that an employee can be paid. Naturally, there can be a wide range of complexities in regard to both the taxes and the wages, but the basic principle is the same in both cases: the more powerful should be limited in their economic impositions on the less powerful. There is also the shared principle of how much a person has a right to, be it the money they keep or the money they are paid for work.

Like any argument by analogy, this can be challenged by showing the relevant similarities between the analogues are outweighed by the relevant dissimilarities. There are various ways this could be done.

One obvious difference is that when the state imposes taxes on the rich, the state is using political coercion. In the case of the employer imposing on the employee, the coercion is economic (although some employers do have the ability to get the state to use its coercive powers in their favor). It could be argued that this difference is strong enough to break the analogy and show that although the state should be limited in its imposition on the rich, employers should have great freedom to employ their economic coercion against employees. The challenge is showing how political coercion is morally different from economic coercion in a way that breaks the analogy.

Another obvious difference is that the state is imposing taxes on the rich while the employer is not taxing their employees. The employer is setting their wages, benefits, vacation time, work conditions and so on.  So, while the state can reduce the money of the rich by taxing them, it could be argued that this is relevantly different from an employer reducing the money of employees by paying low wages. As such, it could be argued that this difference is sufficient to break the analogy.

As a final point, it could be argued that the rich differ from employees in ways that break the analogy. For example, it could be argued that since the rich are of a better economic class than employees, they are entitled to better treatment, even if they happen to be unable to negotiate for that better treatment. The challenge is, of course, to show that the rich being rich entitles them to a better class of treatment.

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.

Across hundreds of entries, LaBossiere examines the issues shaping our world:

  • AI, technology, and the future of humanity — from mind‑uploading to exoskeletons, deepfakes, and the fate of higher education
  • 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
  • Culture, identity, and conflict — racism, gender, religion, free speech, and the strange logic of modern outrage
  • Philosophy in unexpected places — video games, D&D, superheroes, time travel, and the metaphysics of fictional worlds

Whether he is dissecting the rhetoric of conspiracy theories, exploring the ethics of space mining, or reflecting on the death of a beloved dog, LaBossiere invites readers into a conversation that is rigorous without being rigid, principled without being preachy, and always grounded in the belief that philosophy is for everyone.

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.

Thoughtful, wide‑ranging, and often darkly funny, A Philosopher’s Blog 2025 is a companion for anyone trying to make sense of the twenty‑first century.

 

Available for $2.99 on Amazon

 

 

 

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.