I don’t mean to be a whiner but check this out from Scott Sumner’s recent EconLog post:
Unlike many on the left, I don’t envy the rich. I’m really happy that Larry [Ellison] is really happy. If Larry was even a bit happier, and if that boosted total global happiness, that would be fine with me. But I can’t get away from the implication of (what I perceive as) diminishing marginal utility. Some redistribution is justified.
Larry Ellison is extremely lucky to live in a universe where:
1. Government is very inefficient.
2. Incentives have a surprisingly strong effect on behavior.
If not for those practical limitations to redistribution, it would be hard to argue against people who favor taking away almost all of Ellison’s wealth, and reducing his consumption levels back to roughly average. But that’s not the world we live in; Larry’s very lucky that incentives do matter a lot and that governments are very inefficient. Even Sweden tolerates multi-billionaires for pragmatic reasons. Thus even a pure utilitarian like me favors MTRs on top consumption peaking at perhaps 80%, not 99.999%.
I plead innocent to both charges. I’m a pragmatic libertarian who just happens to think that global happiness would be maximized by small government, free market economic systems, with a few interventions to deal with externalities like pollution, and also to redistribute consumption.
It just so happens that most of my policy recommendations help the super rich (but not redistribution). But it also just so happens that all of my policy recommendations help the poor. There may be some potential policies out there that boost Larry Ellison’s happiness by more than it hurts the happiness of the poor, and where a true libertarian like me would have to favor the rich over the poor.
I don’t think it is useful for Scott to refer to himself as a “true libertarian” after admitting that Larry Ellison is lucky that there are some practical roadblocks such that Scott only wants to tax 80% of his consumption rather than 99.999%. Doesn’t mean I’m right or that Scott is wrong, it just means that it’s pointless to use words if they can be used in such ways.