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    The Grasshopper and the Ant, or the Beautiful and the Damned? Why We Have What We Have, and How Government Should Take What it Needs for Charity
    The Grasshopper and the Ant, or the Beautiful and the Damned? Why We Have What We Have, and How Government Should Take What it Needs for Charity
    The Grasshopper and the Ant, or the Beautiful and the Damned? Why We Have What We Have, and How Government Should Take What it Needs for Charity
    Ebook89 pages1 hour

    The Grasshopper and the Ant, or the Beautiful and the Damned? Why We Have What We Have, and How Government Should Take What it Needs for Charity

    By Daniel Badger

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    About this ebook

    This essay examines the roles of luck and hard work in determining lifetime earnings, and summarizes research showing that at least half of what we earn is explained by the "birth accidents" of gender, genes and parents. The implication for tax policy is that a sharply progressive income tax--a "Fortune Tax"--passes the tests for both fairness and efficiency. (18,000 words, 18 charts)

    LanguageEnglish
    PublisherDaniel Badger
    Release dateNov 17, 2012
    ISBN9781301271917
    The Grasshopper and the Ant, or the Beautiful and the Damned? Why We Have What We Have, and How Government Should Take What it Needs for Charity

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      Book preview

      The Grasshopper and the Ant, or the Beautiful and the Damned? Why We Have What We Have, and How Government Should Take What it Needs for Charity - Daniel Badger

      The Grasshopper and the Ant

      or

      the Beautiful and the Damned?

      Why We Have What We Have

      and

      How Government Should Take

      What It Needs for Charity

      Published by Daniel Badger, Jr. at Smashwords

      Copyright 2012 Daniel Badger, Jr

      CONTENTS

      Introduction

      Calendar Lottery

      Gender Lottery

      Genes Lottery

      Parents Lottery

      Education Lottery

      Job Lottery

      Why We Have What We Have

      How Government Should Take What it Needs for Charity

      The Great Chain of Earning

      Notes

      Data and Methodology

      Sources

      About the Author

      Introduction

      I work hard for what I have. I will share it with who I want to. Government cannot force me to be charitable. -- Glenn Beck: Seventh Principle to Live By

      I'd rather be lucky than good. -- Lefty Gomez

      Fortuna, noun, Latin: luck, fate, prosperity, possessions

      What do Ayn Rand, Rand Paul, Paul Ryan, Ron Paul and L. Ron Hubbard have in common? They believe that self-reliance and self-actualization--Glenn Beck's hard work-determine the path we travel in life. There is no place in their theology for, There but for the grace of God go I.

      I disagree. In my experience, self-reliance and hard work account for less than half of how well we do and what we have. The rest is accidental. So when I read Beck's Seventh Principle to Live By, my first thought was that his parents must have read him Aesop's Fable of the Grasshopper and the Ant once too often. My second thought was, Does this mean that if have what I have by accident, then government can force me to be charitable?

      I believe the answer is yes, and I believe this provides a strong argument for the fairness of sharply progressive income taxation. Since we don't deserve what we have by accident, what we have by accident is fair game for taxation to fund whatever safety net we decide we want. So our question is, how much of what we have comes our way by accident?

      Part One is a discussion of six lotteries, whose outcomes play an important role in determining our lifetime earnings. At the moment of conception, we draw tickets in four birth lotteries: calendar, gender, genes and parents. Later, we draw tickets in the education and job lotteries that screen, sort, and select us for whatever earnings path we follow to retirement.

      In discussing the lotteries, I make the weak claim that they matter a lot in explaining lifetime earnings. Most people intuitively accept that a lot does indeed depend on chance, so Part One shouldn't be particularly controversial. In Part Two, however (Why We Have What We Have), I make a stronger claim: the lotteries explain at least half of what we earn in our lifetimes, and half or less is explained by Beck's hard work.

      To prove this, I ask you to look at the numbers. In Why We Have What We Have, I do my best to present a readable summary of the findings of research on the question of how much of Americans' lifetime earnings can be explained or predicted (in the statistical sense) by the birth accidents. If I have correctly understood this literature, the answer is, at least half is explained by gender, genes and parents. More precisely, half or more of an individual's lifetime earnings, relative to the average American's lifetime earnings, is the result of drawing better or worse tickets than the average American in the gender, genes and parent lotteries.

      Why We Have What We Have is hard work. (Glenn Beck will be pleased with you if you get through it.) There is no rigorous way to discuss what explains lifetime earnings without a basic understanding of probability and statistics-the difference between a mean and a median, between variance and standard deviation, between correlation and R2, between a normal distribution and a log-normal one, and the meaning of coefficients in a multiple regression analysis. That's about it. You don't need to understand any of this to understand the conclusions of Why We Have What We Have, but you do if you want to understand how I reach these conclusions, as explained in Data and Methodology.

      The following graph summarizes the conclusions. Rich boys represents American men over age 25 whose parents' income was higher than the median (roughly 25% of the population). Poor girls represents American women whose parents' income was less than the median (another 25%). Everyone else is everyone else.

      tmp_db53699a7c71a945cda349967e9b09c6_aYgorR_html_m1c9e4070.png

      Statistically, a randomly selected poor girl has an 18% chance of earning above the population median during her lifetime. A randomly-selected rich boy has a 75% chance of earning above the median during his lifetime. A poor girl can do better than a rich boy if she fights hard enough, but only 8% of poor girls will succeed in earning more than the rich boy median.

      Some-especially if their name includes a Ron, a Rand or a Paul somewhere--will object that we are not statistics, that every individual is unique, and can achieve whatever he or she sets out to achieve by dint of hard work and self-reliance. To which I reply: yes and no. In our youth, and as individuals, we face possibilities. But over the course of our working lives, and as members of a population, we face probabilities. Every young person can and should try to beat these odds, and government should do whatever it can to change them. But

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