
Gordon Tullock on avoiding difficult decisions about saving lives – updated
24 Jan 2015 Leave a comment
in constitutional political economy, economics of bureaucracy, economics of regulation, Gordon Tullock, health and safety, health economics, income redistribution, James Buchanan, labour economics, Rawls and Nozick Tags: expressive voting, health and safety, James Buchanan, rational ignorance, rational irrationality, statistical life, veil of ignorance, veil of insignificance, veil of uncertainty

Gordon Tullock wrote a 1979 New York Law Review book about avoiding difficult choices. His review was of a book by Guido Calabresi and Philip Bobbitt called Tragic Choices which was about the rationing: the allocation of kidney dialysis machines (a “good”), military service in wartime (a “bad”), and entitlements to have children (a mixed blessing).
Tullock argued that we make a decision about how to allocate resources, how to distribute the resources, and then how to think about the previous two choices. People do not want to face up to the fact resources are scarce and they face limits on their powers.
To reduce the personal distress of making these tragic choices, Tullock observed that people often allocate and distribute resources in a different way so as to better conceal from themselves the unhappy choices they had to make even if this means the recipients of these choices are worse off and more lives are lost than if more open and honest choices were made up about there only being so much that can be done.
The Left over Left and union movement spends a lot of time pontificating about how we must not let economics influence health and safety policy rather than help frame public policy guidance on what must be done because scarcity of resources requires the valuation of life in everything from health, safety, and environmental regulations to road building. health budgeting is full of tragic choices about how much is spend to save so lives and where and for how long.
The Left over Left and the union movement deceive themselves and others into make futile gestures to make themselves feel good. These dilettantes cannot assume that they are safely behind a veil of insignificance. They have real influence on how public policy on health and safety are made.
A major driver of the opposition among the Left over Left and the union movement to the use of cost-benefit analysis and the valuation of statistical lives is its adoption makes people confront the tragic consequence of any of the choices available to them.
By saying how dare you value a statistical life does not change the fact that choices made without this knowledge will still have tragic consequences, and more lives may be lost because people want to conceal from themselves the difficult choices that they are making about others as voters and as policy-makers.
One of the purposes of John Rawls’ veil of ignorance and Buchanan and Tullock’s veil of uncertainty is that the basic social institutions be designed and agreed when we have abstracted from the grubby particulars of our own self-interest. Buchanan and Tullock explain the thought experiment this way
Agreement seems more likely on general rules for collective choice than on the later choices to be made within the confines of certain agreed-upon rules. …
Essential to the analysis is the presumption that the individual is uncertain as to what his own precise role will be in any one of the whole chain of later collective choices that will actually have to be made.
For this reason he is considered not to have a particular and distinguishable interest separate and apart from his fellows.
This is not to suggest that he will act contrary to own interest; but the individual will not find it advantageous to vote for rules that may promote sectional, class, or group interests because, by supposition, he is unable to predict the role that he will be playing in the actual collective decision-making process at any particular time in the future.
He cannot predict with any degree of certainty whether he is more likely to be in a winning or a losing coalition on any specific issue. Therefore, he will assume that occasionally he will be in one group and occasionally in the other.
His own self-interest will lead him to choose rules that will maximize the utility of an individual in a series of collective decisions with his own preferences on the separate issues being more or less randomly distributed.
Behind the veil of ignorance and the veil of uncertainty, we would all agree that resources are limited, including in the health sector and some drugs can’t be funded – choices must be made.
Once we go in front of the veil of ignorance and find out that we are the one missing out on that drug, naturally, our views will change. We agreed to these rules as fair for the distribution of basic social resources when, as John Rawls put it:
…no one knows his place in society, his class position or social status; nor does he know his fortune in the distribution of natural assets and abilities, his intelligence and strength, and the like.
Is always the case that someone just falls on the other side of any line in the sand. If you move that line, there is always another set of people who are just on the other side.

Thomas Sowell Dismantles Egalitarianism
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in discrimination, gender, human capital, labour economics, occupational choice, Rawls and Nozick Tags: egalitarianism, Thomas Sowell
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in applied welfare economics, Marxist economics, politics - Australia, politics - New Zealand, politics - USA, Rawls and Nozick Tags: cowardice of intellectuals, Leftover Left, Thomas Sowell
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in F.A. Hayek, liberalism, Rawls and Nozick Tags: FA Hayek, John Rawls


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in economic history, Rawls and Nozick Tags: The Great Enrichment


via The magic and miracle of the marketplace: Christmas 1964 vs. 2014 – there’s no comparison » AEI.
How much do the top income earners actually earn in NZ?
16 Dec 2014 Leave a comment
in economic history, income redistribution, labour economics, politics - New Zealand, Rawls and Nozick Tags: top 1%

Source: topincomes-parisschoolofeconomics
Note: top income share data for adults for New Zealand adults go back only as far as 1953.
To begin with, a large number of people who see themselves as middle class will have to reclassify themselves in terms of class membership.
More importantly, they will have to pick up on their class consciousness because they are either in the top 10% as any successful professional is because the average income of the top 10% in New Zealand is $128,000. With a bit of luck, these members of the ruling class will be able to afford a house in Auckland without having to borrow from mum and dad.
Pretty much every successful professional is in the top 5% in New Zealand, with an average income of $170,000.
These rich have a lot of people look down upon and order about as junior or senior members of the ruling class, even if they did know they were a member of the ruling class until they looked at the diagram above. Welcome to the ruling class. Goodbye to the middle-class. Get over it.
As for the top 1% in New Zealand, they have an average income in 2011 of $336,000. Once again, successful professionals, successful entrepreneurs and what’s left of the rentier class will have to accept that supreme power as the ruling class of the capitalist system is open to just about anybody who does well at university and enters the professions. Are there no standards?
As for the top 0.5%, data on the top 0.1% stopped in 1989, they earned an average of $457,000 a year in 2011. That is starting to look like good money, though you do have to brush shoulders with celebrities, athletes and more than a few successful small entrepreneurs, but at least you are starting to earn a lot more than your average suburban doctor who is a member of the top 10%.
The ruling class is not what it used to be – the rentier class, old money. That the rich of today – the ruling class of the capitalist system – is open to many ordinary people who are new rich or just plain urban professionals, athletes, musicians and celebrities is a common finding all round the world. As Piketty and Saez explained for the USA:
This rise in top income shares is not due to the revival of top capital incomes, but rather to the very large increases in top wages (especially top executive compensation).
As a consequence, top executives (the “working rich”) have replaced top capital owners at the top of the income hierarchy over the course of the twentieth century.
Many of the rich both in New Zealand and overseas are working rich who made their money themselves and came from middle class or upper middle-class backgrounds.
Many of these rich are well educated smart people rather than the inheritors of wealth. The working rich and most of the rich of the 21st century must be well educated because so many of them are professionals in occupations where you must succeed at university to get in the ground floor, or they are athletes, musicians and other celebrities who must work their way up from the bottom.
A large number of New Zealanders who regarded themselves as middle class action are part of the rich – the top 10%, top 5% and banging on the doors of the top 1% or better – so they better start carrying themselves about with the airs and graces of the ruling class. Better practice by putting a plum in your mouth.
p.s. There was a big spike in top incomes in 1999. It seems like a lot of people in New Zealand brought forward income in 1998 and 1999 in anticipation of the election of a Labour Party government in the 1999 New Zealand general election, and an immediate increase in the top tax rate from 33% to 39% for incomes over $60,000.
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in economics of education, human capital, Milton Friedman, poverty and inequality, Rawls and Nozick Tags: Milton Friedman, School choice, vouchers
Intergenerational mobility in 1 chart
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in applied welfare economics, human capital, labour economics, occupational choice, politics - USA, Rawls and Nozick Tags: intergenerational mobility
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in liberalism, Rawls and Nozick Tags: Robert Nozick
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in politics - USA, public economics, Rawls and Nozick Tags: 47%, tax incidence, who pays taxes




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