Friday, September 27, 2013

Redistribution to the wealthy

Paul Krugman is a Nobel winning economist who has staked out the liberal neo-classical position over the past few years.  He writes a  blog in the New York Times which is must reading for economists, macro-policy makers, and politicians.  In the past week, he has been writing about the views of the very wealthy and how they feel persecuted by public opinion.

In part he says:

This is important. Sometimes the wealthy talk as if they were characters in “Atlas Shrugged,” demanding nothing more from society than that the moochers leave them alone. But these men were speaking for, not against, redistribution — redistribution from the 99 percent to people like them. This isn’t libertarianism; it’s a demand for special treatment. It’s not Ayn Rand; it’s ancien régime.
Sometimes, in fact, members of the 0.01 percent are explicit about their sense of entitlement. It was kind of refreshing, in a way, when Charles Munger, the billionaire vice chairman of Berkshire Hathaway, declared that we should “thank God” for the bailout of Wall Street, but that ordinary Americans in financial distress should just “suck it in and cope.” Incidentally, in another interview — conducted at his seaside villa in Dubrovnik, Croatia — Mr. Benmosche declared that the retirement age should go up to 70 or even 80.  The thing is, by and large, the wealthy have gotten their wish. Wall Street was bailed out, while workers and homeowners weren’t. Our so-called recovery has done nothing much for ordinary workers, but incomes at the top have soared, with almost all the gains from 2009 to 2012 going to the top 1 percent, and almost a third going to the top 0.01 percent — that is, people with incomes over $10 million.So why the anger? Why the whining? And bear in mind that claims that the wealthy are being persecuted aren’t just coming from a few loudmouths.  (see here for complete blog entry)

So, do you idolize the very wealthy?  Do they deserve their wealth because they are special people?  Or are they lucky people in the Rawlsian sense?

6 comments:

  1. This is a tough one. Do we as a nation idolize the wealthy? In a way, yes. Part of the "American Dream" is that we can ALL be that wealthy one day, and so we respect the people that already are. Whether they're a celebrity or business mogul, we believe that could be us one day. Whether or not that view is valid is a different question... and one that I'm certainly not qualified to answer. I like to believe in the ideal, but as we know, the playing field certainly isn't level - and I'm not entirely sure how, or if, we can or should do anything about it.

    As far as to if they deserve their wealth we need to come up with a viable definition that we can all agree on for "deserve." If by deserve we mean worked hard and achieved it, we'll get a much different result than if we regard inheriting money as deserving. Paris Hilton wouldn't deserve her wealth by our first definition, but most certainly would by the second. Of course, whether or not she "deserves" the money brings into question whether or not she should get to keep it. We talk about "taxing the rich," quite often as the top 1% of earners continue to make more, but when we begin talking about if they "deserve" their money everything gets muddier. For example, if Warren Buffet doesn't "deserve" his $50B net worth, who does?

    ReplyDelete
  2. I agree this is a tough one! Most economics profs teach about the goodness of capitalism but what are we to make of it when we keep seeing that it doesn't not consider everyone. The guy talking in the article doesn't make us feel any sympathetic on the rich. Talking about who deserves what won't get us anywhere. It is times like these we get to appreciate government's efforts to redistribute income.

    ReplyDelete
  3. subconsciously, majority of the people in U.S. idolize the wealthy. they serve as inspiration and role model. i think in part the rich do deserve the wealth they are generating. at the same time, though, for social disparities to lessen and poverty to alleviate it is important to redistribute wealth that remains concentrated in the same 1%.

    ReplyDelete
  4. I agree with the comments saying that the wealthy are idolized in the fact that we want to achieve the same goals and live the same lifestyle they do. But besides that there is not reason to "idolize." If anything I would be jealous of someone that is rich since they have wealth and riches that I don't. And this can be frustrating because while some people work for their fortunes, others have it handed to them and I believe that is the problem with the wealthy. To many people children seem to be "daddy's little boy" that will take over the company or the fortune and they are not actually the right person for the job.

    ReplyDelete
  5. It's nuts that in a democracy the 99.9% have to fear the 0.1%. Only the corruption of our politics by the money of the wealthy can make that happen. Unfortunately, this is happening universally.

    ReplyDelete
  6. Originally, I was for bank bailouts, because obviously they support our economic system. It was only after I realized that the crooked bankers that collapsed our system continue to manipulate our economy, lie and steal from their customers while the CEOs picked up fat bonuses for accepting tax dollars from the very people that they screwed, that I took another look at the issue.

    ReplyDelete