25 July 2020


One of the primary problems with getting Congress to agree on further pandemic mitigation efforts — I hesitate to call it "relief" because that implies "we don't really have to do this, but we're magnanimously going to show our noblesse oblige for once" — has been a focus on free-market incentives as not just necessary, not just sufficient, but a moral obligation. Here's a taste:

“I’m not in favor of any premium extension for unemployment,” said Sen. David Perdue, R-Ga. “What I’d prefer is if you want to give a few bucks to people, put it in a direct payment. But right now, we have provided an incentive not to go back to work, which is what that’s been.”

Jennifer Shutt, Bridget Bowman, & Mary Ellen McIntire, Senate Republicans, White House near agreement on coronavirus relief package, Roll Call (22 Jul 2020, no corrections noted). So let's break this startling bullshit down, shall we?

If "incentives" are so important, we need to entirely discount military and other government service as appropriate in the modern economy. There is no financial incentive to take less money as a second lieutenant for the privilege of being shot at or losing a couple of legs. Nor, for that matter, is there any financial incentive for staying on as a four-star general whose pay is capped at $189,600 when many of them make far more than that after retirement sitting on corporate boards and such. (Not all of them, by any means.) Hell, that's just about what a top-10-law-school, top-half-of-the-class graduate could have expected to make right out of law school last year… without being shot at or blown up. <SARCASM> That obviously means that Sen Perdue et al. don't trust military officers because military officers aren't properly incentivized, but are instead something other than rational economic actors. </SARCASM> That also explains more about education and health policy — and the treatment of teachers and nurses — in this country over, say, the last century, than I want to contemplate. (Oh, wait, that might be "traditional female jobs"… which is right on point, because "rational" can't be gender-based.)

But there's something even more insidious lurking. Consider the way that — at least below the college level, and even for many colleges — instructors at religious schools are ordinarily paid less than the constantly-derided (unionized!) public school teachers. That must mean that religious-school education is inherently less worthwhile than public-school education, because only less-incentivized rational-actor instructors would deign to work for less. Similarly, every single lawyer who works for Legal Aid must be a lesser person — and lesser lawyer! — than those fresh-out-of-law-school kids pulling down $200k during their first years. So, for that matter, was Solicitor Gen. Don Varilli during his government service, which cut his pay by… ok, I don't know the percentage, but based on what I know of partner compensation at the firm he had been at, at least 70%.

Then let's consider the "rationality" of our top government officials, whose pay is also capped. Senator Perdue, to take one example, is getting paid a helluva lot less now as a United States Senator than he was at Reebok. So: What is his incentive? Is it rational? If it's not rational, that explains a lot about government dysfunction, because he's got a lot of company in the Senate who took "pay cuts" and therefore are not rational economic actors.

Which leads to my modest proposal: An 85% tax on inherited wealth (whether liquidated or otherwise) over an appropriate threshold of, say, $5 million. Because if there's one thing that we shouldn't be doing, it's incentivizing the sons and daughters of multimillionaires to idleness because they have no need to ever work for a living! (At a modest 3% after-tax return, that $5 million throws off $150k a year.)

I can hear the screams already.

But what this really points out is that the entire "incentives" argument is about incentivizing the right people. And those who are talking up incentives have a clear idea of who those right people are:

They look like the advocates-of-incentives do.

The right people are not those with learning disabilities (or immigrants!) who have topped out as janitors and retail workers and meat-processing-plant future-carpal-tunnel workers. Neither are they those who fail to emphasize "What's in it for me?" at every decision point. Nor are they career military, police, health-care, or education workers. Instead, the "right people" are those who don't actually need those "extra" incentives in order to put food on the table and a roof over the head.

Ain't post-Millsian capitalism grand? Or, closer to home — a couple hundred miles to the south — outright tribalism and backlash thereto. As epitomized by Sen Perdue's cousin being that Perdue, which sort of gets us back to "properly incentivizing" dead-end jobs so that the workers just accept their sorry lots in life and never complain.