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April 5, 2006 -- Governments often get their wealth-destroying, morally depraved ideas from our often misnamed institutes of "higher learning." The latest that's popping up in bulletins, newsletters, and probably soon in legislation is from a 2005 study on "The Economics of Workaholism," co-authored by Joel Slemrod of the University of Michigan and Daniel Hammermesh of the University of Texas in Austin.  

The study starts by stating that "Economists have recently re-considered whether a range of individual behaviors are self-destructive, and possibly addictive, and have proposed that it may be Pareto-superior to tax them in order to induce people to abandon or cut back on them."
"Pareto superior" is an economic term that refers to some alternative distribution of wealth or resources that makes some individuals better off and no one else worse off. In this context the term means that would-be philosopher-kings pretend to know what's good for us and what is not and are probably poised to grab our freedom or our wallets and have their way with us.
Sure enough the authors go on to say, "The focus of this 'new paternalism,' associated with the burgeoning field of behavioral economics, has been on a set of activities (smoking, drinking, overeating, and gambling, in particular) … and on public policy responses in the form of 'sin taxes' that are highly regressive." The authors go on to state, "Here we begin to explore the economic implications of a self-destructive behavior that is likely to be more prevalent among affluent people -- workaholism."
How utterly brazen they are about their immoral intent! They admit that they're paternalists, that is, they treat their fellow citizens like children who need the care of, well, economists like themselves and they will manipulate tax policy to run others' lives.
The authors look at individuals who delay retirement and make the awesome discovery that "individuals with more education are less likely to follow through with their expressed plans for retirement. Similarly, those with higher personal incomes" tend to delay as well.
Hmmm, so the smartest, most prosperous people work more than others and this is bad why?
The study goes on with page after page of pseudo-science and psychologizing about the utility functions of individuals who just don't know what's good for them and about how they create negative externalities -- read: harm -- to their families, friends and others.
Where to start dissecting this stunning arrogance?
The authors summarize: "For some people, current work increases the desire for future work (known as 'reinforcement')" -- just like taking certain drugs today will increase your desire to take them tomorrow. Further, current work "lowers the utility from a given amount of working ('tolerance')" -- just like getting less of a jolt from certain drugs over time, meaning you need larger doses in the future. The authors conclude that "If workaholics either do not recognize these effects, or do recognize them but have … imperfect self-control, then government intervention arguable can increase their utility as measured consistently," that is, make them better off. And, of course, workaholism "is likely to be highest among highly compensated, highly educated individuals, so that the appropriate corrective tax scheme will be highly progressive."
Atlas isn't shrugging. He's being forced into early retirement.
With dark humor the authors give their study -- a manifestation of all that's wrong with academia -- the subtitle, "We Should Not Have Worked on This Paper." Damned right you shouldn't have!
Pause and catch your breath. Where to start dissecting this stunning arrogance? To begin with, if the government forced the most productive individuals into early retirement, there would be less wealth in the society and we'd all be poorer. Even if one accepts the authors' presumption that those individuals would be better off in a retirement home than in the office of an enterprise, how is that "Pareto superior?"
The authors could argue that individuals who work too much create extra costs, for health care, for example, because of high blood pressure, stress and the like. But this is a "social" problem only if governments, that is, taxpayers foot the bill. If individuals pay there own way, there is no Pareto balancing act to worry about. Asking in this context whether a certain situation is Pareto superior proceeds from a collectivist premise and conceit.
Here Austrian School economists like Ludwig von Mises have it right when they observe the methodological futility and foolishness of pretending to be able to look into the soul of others, discover what their scales of values are, judge what preferences would be better for them and try to engineer a society to change the preferences and values of millions of individuals. That's what socialism and the welfare state attempt to do and the debris of those attempts litter our country and our world.
Slemrod’s and Hammermesh's rot is simply a new way of packaging the so-called “progressive” income tax system which, in fact, punishes productivity and wealth creation. An oft-stated excuse for such a redistribution scheme is that it is good for society as a whole. Poorer people will be better off and prosperous people have enough anyway and won't be hurt too much if their mansion-and-Mercedes money is trimmed back a bit. The deeper motive behind the punitive tax is often envy of the prosperous. But the reason that individuals become rich is because they make others prosperous by making more stuff. Bill Gates is a billionaire because he created billions of dollars of products that we were willing to purchase.
The authors of this study take a different tack. Instead of arguing that such a tax is for the good of society or the poor, they call the most productive individuals “workaholics” and say the higher tax rate is for the good of these wretched job addicts. Thus the authors aren't seen to act as hate-driven wrecking balls; they're simply kind altruists providing a labor policy version of AA.
Of course, their tool – higher tax rates on the most prosperous -- is the same old political blunt instrument used for a century to punish productivity per se. Are they suggesting that the vast majority of prosperous and productive people suffer from their made-up disease? What about people who are wealthy but who don’t overwork, retiring early as nannies Slemrod and Hammermesh would have them, or who inherent wealth or who win a lottery?
The reality is that many of these so-called “workaholics” love what they do. They love the challenge of building and running an enterprise; the challenge of developing in their minds a plan and translating it into concrete reality; the challenge of realizing the best within them --their intelligence, honesty, integrity and fortitude.
If Slemrod and Hammermesh want to do something to help these producers, they can remind them that they should reflect on their own virtues, which allow them to be productive, and take the deepest pride in their achievements. And they certainly can refrain from suggesting that they be punished for those virtues, which is not only economically stupid but immoral.
It’s those producers who create the wealth that, in the form of voluntary contributions or, sadly, mandatory taxes, fund pretentious elites like Slemrod and Hammermesh who seek to cripple and destroy those producers. The producers pay for their own executioners.
It’s rare to find an idea so consistently wrong and on so many levels -- epistemological, ethical and political. And it's stunning to find the paternalist arrogance so openly and unapologetically displayed.
So many assaults on liberty begin with evil ideas from a few morally confused or corrupt professors that pass unchallenged into professional literature, conferences, classrooms and elite culture. By the time politicians are spreading such viruses it's too late to stop their spread. It is thus crucial that we expose nonsense like the "workaholism" study to the radiation treatment of our analysis, scorn and derision before it metastasizes.


Edward Hudgins

About The Author:

Edward Hudgins, formerly director of regulatory studies for the Cato Institute and editor of Regulation magazine, is an expert on the regulation of space and transportation, pharmaceuticals, and labor.
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