Creating more value in an economy would do more than wealth redistribution to combat the harmful effects of inequality.
– Tyler Cowen, in a review about a much-discussed book by Tom Piketty on the subject of inequality. Piketty favours a lot of heavy state activity to control and reduce said inequality. Now, it is easy to just default to the standard libertarian line and say that fretting about such inequalities is just an excuse for a statist power grab. The fact is that the sheer gap in wealth we can see today is a reason why, however mistakenly, idealistic, smart people are fearful of, and hostile towards, laissez-faire capitalism. So it is worthwhile to keep making the economic, philosophic, and political case for why coercive measures to reduce inequality is bad and dangerous.
I could not resist adding in this paragraph from Cowen:
The simple fact is that large wealth taxes do not mesh well with the norms and practices required by a successful and prosperous capitalist democracy. It is hard to find well-functioning societies based on anything other than strong legal, political, and institutional respect and support for their most successful citizens. Therein lies the most fundamental problem with Piketty’s policy proposals: the best parts of his book argue that, left unchecked, capital and capitalists inevitably accrue too much power — and yet Piketty seems to believe that governments and politicians are somehow exempt from the same dynamic.
In today’s society the less affluent can afford cars, have electricity and indoor plumbing in their homes, access to world class hospitals, only available to the very wealthy 100 years ago.
The sorts of people who are offended by market economies must somehow believe markets can be eliminated but the truth is more insidious. Such an abrogation of property rights could, I suppose, be achieved given the requisite levels of ruthlessness, but killing the market for highly paid, skilled achievers will merely create a larger market — this one for political influence. Those too stupid to understand that, and how dangerous it is, will always be with us I am afraid.
Inequality is a key moral issue of the left and they have a purpose in their campaign.
Imagine we’ve turned the clocks back a few decades, and John D Rockefeller is walking around as the symbol of wealth. He was in fact wealthier than bill gates and Steve Jobs combined. Should we have shared his wealth, so that we could all be as rich as Rockefeller? Well, we didn’t do that, and today we are all much richer than him. We have better diets, better medicine, better communications, better cars, better everything.
The question is, could we have made this progress with high taxes? I doubt it.
the best parts of his book argue that, left unchecked, capital and capitalists inevitably accrue too much power — and yet Piketty seems to believe that governments and politicians are somehow exempt from the same dynamic.
Only more so. People will not stop competing for power and prestige just because doing so using markets is forbidden. But the power to be competed for will be much bigger, because there’s all that extra state coercion to gain control of.
Pikety, moreover, is offended not merely by the pluto-capitalists, he’s offended by the petit “rentiers” – ie anyone who saves. Since ordinary middle class savers don’t, by saving, acquire any power over anyone’s life but their own, it’s fairly obvious that what really offends him about capitalism’s implications for the distribution of power in society is that privately owned capital in big packets or small, dilutes the power of the state. He’s just another in the long line of megalomaniacs who loathe the idea of limited government.
The “libertarian” left were out in force in their natural home (Putin’s “Russia Today”) on Tuesday.
The mistake is often made that the “libertarian” left only object to rich people under present Big Government conditions (Corporate Welfare) – not to rich people in general.
In reality they (the LLs) oppose rich people in general.
Britain before 1914?
A place of fairly low taxes, not much of a Bank of England credit bubble, no real restrictions on imports (i.e. Corporate Welfare to “protect” the domestic owners of manufacturers) and so on…
Do the L.L.s think that Britain before 1914 was basically a good place?
Of course they do NOT.
They oppose it with every ounce of their being – as could be seen on the “Keiser Report” (or any other Russia Today show).
Britain was an evil “Plutocracy” dominated by the “rentier class” (Marxist language there – going back to the fallacies of David Ricardo long ago refuted by Frank Fetter) and their “land monopoly”.
“40% of people in London lived in shared accommodation – because there were “no controls on landlords” and on and on……
And then came on some LL who had made a film “The Four Horsemen” to “educate” people about finance and the world.
And who does the “educating” in this LL film?
Noam Chomsky (the Pol Pot supporter – see “The Anti Chomsky Reader”), George Stiglitz (the print and spend “Nobel” economist), Max Keiser and so on….
And people wonder why I hate the LLs.
It is simply not true that they (the LLs) only oppose inequality caused by Big Government (such as Central Bank credit bubbles) they hate large scale private property in the means of production, distribution and exchange on PRINCIPLE.
Their attitude to Britain before 1914 (and desperate efforts to justify themselves – even claiming that the Norman Conquest of 1066 or Henry VIII selling off of monastic land in the 1500s justify their position) show this clearly.
Like Regional, I usually argue that inequality is less now than ever: a rich man might have a collection of Ferraris and Bentleys, but for all practical purposes a Ford Focus is equivalent.
However, the actual argument is, “capital and capitalists inevitably accrue too much power”. It’s not just having stuff, it’s the ability to direct capital and affect politics. But the directing capital is not very scary on its own, and and the power capitalists have to affect politics derives entirely from the ability of a well funded politician to accrue power.
This makes me think the main problem is that there are too many rich lefties.
Yes, income inequality might have increased but utility inequality has decreased dramatically.
When my still living father was at school, it was unremarkable for a class to lose a child to a fatal disease, be it mumps, measles, TB or some other disease, in any particular year. Child mortality was declining but the fortuitous discovery of antibiotics and their industrial scale development in the 1940s has transformed life (and its duration) along with many other advances to such an extent that to bleat about inequality strikes me as, at most, an indulgence.
We should attack those who complain about inequality as the Communist scum that they are, people are no more equal than they are uniform. Let us mock them as attacking diversity.