Tuesday, March 04, 2008


The United States is a country where individualism has always had great merit. American fortunes and lives have been made based on the idea of individual liberty. But while this concept is more than valuable, it has also led to the belief among some that it is they who have entirely made themselves. This way of thinking leads to some other conclusions which are misguided in my opinion. For example, people who strongly stress individualism can slide towards egotism. At the very least, they believe that there should be a "to each his own" culture in which every person looks out for himself or herself (They also point me to the struggle for survival in nature, which is as far-fetched a comparison as one can imagine)

I have had this argument with people I know who oppose tax hikes and argue that they are not responsible for the rest of society. In my opinion, what they don't understand is that every man, no matter how talented he may be, is inevitably shaped by society. In fact talent itself is defined by the times in which one lives. A hundred years ago, the kinds of talents that have propelled billionaires to the top of the social ladder right now may have been meaningless. Individual talents without a doubt are responsible for success, but any person who thinks that it was he and he alone who made his success possible clearly is having a fit of fantasy. This does not mean that he is obliged to help others (in case libertarians take umbrage) but it also does not mean that he is independent of the system and therefore inherently not obliged to help others. The point is, individuals grow along with society, and it is not possible for long if at all to keep individual success divorced from social prosperity. I wish all those who oppose higher taxes almost as a gut reaction understand this. Adam Smith had said this. Even Bill Gates said it, that the bedrock of progress is individual success combined with that of society, which comes about by those who are privileged reaching out to those who are not in creative ways.

But it is easy for people like me to say this, and probably more difficult to demonstrate it. I am happy when I see examples of people from whom such quotes may superficially sound surprising. That's why I was quite pleased when I saw a quote from another exemplary person who without a doubt is an immensely talented individual, and who should know the role of individualism better than most others. Yet he says
"Many people have this idea that it's "their money' and they deserve to keep every penny of it. What they don't factor in is all the public investment that lets us live the way we do. Take me as an example. I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society in which I was born into. If I'd been born into a tribe of hunters, this talent of mine would be pretty worthless. I can't run very fast. I'm not particularly strong. I'd probably end up some wild animal's dinner.

"'But I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the finanical system to let me do what I love doing-and make a lot of money doing it. The least I can do is help pay for all that."
Point to note in my opinion.


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Blogger Freelance Procrastinator said...

.. with people I know who oppose tax cuts ..

I assume you mean tax hikes here. I think that the primary opposition is to limit the size of government, which is seen as wasteful and inefficient. It has been seen that the free market or private enterprise, more often than not, does a better job of providing for the needs of people than a centralized body (Gates and Buffet are themselves cases in point w.r.t charity).

There is a case to be made for govt. spending in several instances (basic research, say) but it should be limited and opposing tax hikes are one way to do that. Buffet himself says how he pays less (percentage) tax than his secretary because he knows how to manipulate the tax system and he rightly gives his savings from taxes to (non-government) charities who do a better job of dispensing aid than a central body would do. Its not just how much money one gets but also how efficiently one uses it and Govts have a notoriously bad record of doing the latter.

1:03 PM  
Blogger Ashutosh said...

Sorry, I did mean tax hikes. I agree that govt. is usually wasteful, but my main complaint is about people who oppose universal healthcare or anything similar to it. The thing is, in many cases where large-scale nationwide action is needed, sometimes govt. has to step in for a quick fix, even if not the most efficient.
As you say, basic research is largely always going to be done with public funds. Also, if people are always going to be opposed to govt. intervention in some policy, I think then that they also should not expect the fruits of that policy. But here you don't find too many enthusiasts...!

1:10 PM  
Blogger tejas said...

As usual, well articulated post! I would also add the obvious analogy to the similar condition that arises in the realm of scientific knowledge, when some dude said something about standing on the shoulders of giants.

What is fair taxation? How much do we credit someone appropriately? (in terms of money, fame, whatever).

This takes us into questions which taxation academics (what are they called?), economists and computer scientists grapple with all the time: what is a "fair" taxation policy? is it "stable"? how do we put a number on "social welfare"? so on, and so forth.

2:55 PM  
Blogger Parag Waknis said...

I think the eternal pair, death and taxes, has more than just inevitability in common. In spite of knowing fully that we can’t avoid either of them, we do try our best to resist them both!
Anyways, I think it will still take some more effort and time to make an individual see the social costs and benefits of his or her actions. Meanwhile, people like me are bit happy as we thrive on such inadequacies of the human psyche! We design policies (and get paid for it) which force individuals to internalize the externalities created by their actions.
What's more interesting, however, is the implication of your argument for issues like intellectual property rights and their optimality. Applying your argument to scientific progress would imply limited or no patents. Is that right or am I reading too much of it?

2:56 PM  
Blogger Ashutosh said...

tejas: your point about about how to decide what's "fair" taxation is entirely valid. while the answer is indeed complicated, there always should be reasonable debate among people, instead of sticking to some extreme side.

parag: good quip about death and taxes, you raise an interesting point about patents, and the answr again is complicated. patents are necessary to recover the cost of drug research. but in some cases, i think there is a good case that their duration should be reduced (eg. 20 year exclusivity)

1:13 PM  

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