Kathleen
Vanity Fair, to which I begrudgingly subscribe (anything that keeps Hitchens on a payroll can’t be that bad, right?), brought my blood to a boil this morning when I read their latest article on ‘inequality.’
Here’s the gist:
“Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income – an inequality even the wealthy will come to regret.”
Hmmm. Okay Mr. Stiglitz, let’s think about this one:
- Even if the top one percent made/earned (“take”? take from who, exactly?) 25% of the nation’s “income,” in 2008 the top 1 percent of tax returns paid 38.0 percent of all federal individual income taxes.
- Since when has economics been a zero sum game?
- Stiglitz makes a thinly-veiled comparison between the wealthiest Americans to oligarchs in Russia. I would compare the US government to a dilapidated playground that puts it in their favor, but I see no reason to condemn people playing by the faulty institutions that have been developed. Corporatism, rent-seeking, and other elements pervert the income of the top, but it is also hard to say if people in the bottom 1% deserve so much wealth when everyone earns it in a context of a far from perfect free market.
- Lowering tax rates on capital gains promotes investment. When people know they will yield more from an investment, they will be inclined to make more.
- Wait, I think someone covered this already…
Clearly there is much more to say. Everyone is welcome to contribute their observations…
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Comments
I'm a very mild-mannered guy. But if they raise the rates on capital gains and/or dividends, I'll be out protesting in the streets in my Legal Insurrection t-shirt (which I need to buy).
I'll be ready for 'em. They'll never take me alive.
Vanity Fair is kept alive by advertisers of luxury goods so I find it amusing that they keep being willing to support writers who want to destroy the ability of their customers to continue purchasing these goods. (Ditto Vogue, Bazaar, etc.) Only in America!!!!
The paragraph you quote prompts these reflections:
1) The concept of "the nation's income" is an abstraction. The nation has no income. Individuals have income. In a free-market society, individuals have income that is commensurate with the capital, labor, ingenuity, artistry, showmanship, and risk that they invest, multiplied (or divided) by factors beyond their immediate control. In a state-run economy, individuals have income that is commensurate with their utility to the state or their domination or subversion of the state.
2) In our once-a-free-market economy, most of the income that accrues to the top 1% is income that they have earned by one of the methods mentioned in (1) above. In the main, they are not taking it from anybody else, much less "the nation."
3) If "the nation" is taken as more or less synonymous with the national government, as most statist leftists do, then it is "the nation" that takes from the producers, and lives off the surplus that the producers are willing to do without.
4) Inequality of results is a necessary component of a free market — actually of any economy. If different amounts of capital or labor did not lead to different results, nobody would be motivated to do anything at all.
5) Inequality of results is also what makes "the nation" possible. It is the productive few who always contribute the most to any collective endeavor. Norman Vincent Peale used to point out, if I am not mistaken, that examining the books of any charitable enterprise would almost invariably show that 5% of the donors contributed 50% of the total. Something on that order is true for the economy of a whole.
6) Thus is you emulate Lenin's elimination of the kulaks by punishing the top 1% or top 5% of producers, you don't just starve the top 1% or top 5% of the economy, you cripple the economy by destroying 50% or more of its productive power. This happens every time.
7) Robert Heinlein's famous quote comes to mind: ' Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as "bad luck. '
8) This comment is already too wordy, but I want to emphasize Heinlein's statement that poverty is the natural condition of man. Poverty is the natural condition of all of the natural world. All of the animals, and mankind in the natural state, are naked, homeless, and spend all of their time looking for something to eat. It is not necessary to ask why some people are poor. That's the natural state of things. The important question to answer is why some societies are not poor.
9) The wealth that has been created by the modern free-market industrial economy has enabled more people to enjoy a satisfying standard of living than there were living on the earth 500 years ago, 90% of whom were living in abject poverty — and there are many more people in the world today.
10) Equality of condition and inequality of results are the "magic" ingredients that allowed such a state of affairs to happen.
Oh Lord.
And these people are democrats?!?
I cannot even begin to understand the circus that is their minds.
I was a JFK democrat, a Reagan Democrat, this is now the democrat party (I would call it "democratic" except they stole votes on May 31th 2008 from one candidate to give to another of their chosen candidates)
I say again, who are these loonies? I'm guessing they hide behind the conservative/centerist/moderates dems, but as they have now completely taken over the "democratic" party, there is no place for sane centerist democrats anymore. And oh yes, independents like me are aware of the games the lame media will play to convince me that tea party are the "extreme" ones, but as a former democrat myself, I can say at this point, its the democrats who are extreme.
My beef is not with rich people, I will never become a millionaire or a billionaire, what I don't like is bailing out failure, bailing out companies that have connections that small businesses do not have,and then those costs are spread over the taxpayers, I was absolutely against TARP.
Heck, I want lots and lots of people working hard, starting a company and becomning a millionaire, billonaire, I do not begrudge these people anything, and more power to them. As long as the system allows me the opportunity to do it as well, I am fine with it, I may fail or I may succeed, I just want that opportunity.
I do not these millionaire/billionare's wealth "spread around".
I support unions, but after seeing WI's temper tantrum, I have lost pretty much all respect for them, I read, actually read and not relid on the media's protrayal, legislation, and it was fair.
I want a social safety net, but one that is sustainable, Ryan's plan is a very good start and kudos to him for at least having the courage to confront those problems, all I hear from my former party is "Tea party wants to kill women, they want starve seniors"
Seriously??!?
All these elitists sit around gettig paid a big salary acting like they know better than regular working americans, who listens to their crap anymore?
Nations with 'equality' of income have no rich people to invest in growing businesses.
Instead of making everyone equally rich, having no inequality and thus no incentive to do better, makes everyone poor both in spirit and i wallet.
There has never been a nation with equality of income, nor will there ever be.
I am considered wealthy by most, and no doubt resented for it by many who are less wealthy. Most of them are strangers to me, I guess. I didn't see them nearby when I went to work full time at age 16. I guess they continued on in school. Nor did I see them around when I went on to work at least 55-60 hours per week for the next decade, building seed money for a planned business adventure. Perhaps they went home the instant they could. My resenters were likewise no where to be found once I began my business, probably because I found few willing to work 12 hour days, 7 days a week, for months on end. Could be I missed these folks because they were off on vacation while I went 10 years without a vacation, working, building, and growing my business. Well, now I'm 55 and retired, very comfortably, thank you, and I'm remaining still long enough to finally meet some of my detractors, those who fully believe the wealth I have came to me only at their expense, and that I ought to hand a chunk of it over as soon as possible. I struggle to understand this, and so far, not one lefty I've asked has been able to explain it either. This inability failed to impel them to drop the belief. Odd that.
I am amazed so many otherwise intelligent lefties do not have the barest grasp of the fact that wealth is created, not 'taken' from some finite community general fund. Their anger is prompted by the wrongheaded belief that one becomes wealthy only by stealing it from another. Surely the progressive leadership understands this, so it must be that this stupid idea is promoted as pure propaganda, a way to keep the less than affluent leftist based angry and ready for 'change', aka wealth redistribution. If one believes one is *owed* the money currently belonging to a hated Wealthy Person, it becomes very easy to justify just about any action employed to take it.
Everyone needs to remember that government, any government, is a net consumer of productivity…someone, somewhere has to produce something of value in order for the government to receive anything.
1. For about an hour, I've been walking around my house, doing routine tasks and trying to think of a coherent comment on Stiglitz's piece. It finally dawned on me that a coherent comment on something utterly incoherent is not possible.
2. Afaic America has developed serious systemic flaws in which counterproductive incentives play a major role. Beyond that, I haven't seen a convincing diagnosis let alone a plausible prescription.
I'd like to think I addressed Mr. Stiglitz in my whimsically titled "Schmuck With a Pen.
The unstated implication of the wealth disparity trope is that the rich spend all their money on booze and broads. The glitzy Hollywood liberals are the poster boys. I've been hearing the same theme for more than 60 years. You'd think that with all their intellectual firepower they could revise the 1932 playbook.
This year I received considerably more in a tax refund than I paid in taxes. Now I am a full time graduate student, and paid loads in maintenance to that ex-wife person. Once upon a time a person could say "Hey! I'm a tax payer!", but too many can not say that. I say adjust taxes so everybody pays some, and bring that expression back. In Wisconsin, because I paid rent for a heated apartment, once I entered my rent for the year into Turbo, my refund jumped magnificently. Obviously, those paying rent in a heated apartment are getting a big refund here. Why? I don't know. But I doubt I could claim my rent is helping cover the property tax. Too many people are not paying any taxes at all, and so they feel no need to restrain government spending. Isn't the socialist strategy to over load the system with takers?
@Punditarian: Very well said. Thanks.
Any rich folks out there who think they aren't paying enough taxes, should go to Pay.gov and make a donation.
"Taking" to describe the accumulation of wealth is what is wrong with the thinking (or lack) of progressives. Back in '51 when I entered the workforce at a mid west steel mill blacks and women were not usually hired as was true in much of our country. They were kept out of the workforce but could we have the productivity and wealth in this nation now if they were left out? Absolutely not! My view is that wealth is created by participation in WORK not taking. The more participation–the more wealth is created—NOT taken.