22
Sep
2016
Krugman Wants to Take $$ From Rich People, Just So They Won’t Have It
It’s not a regrettable necessity to take rich people’s money in order to help poor people. Nope, Krugman wants it to be a legitimate part of political discourse to take away their fortunes because we don’t want there to be such rich people.
I think its clear Krugman fears the economic, political and social power that comes with the rich having such great fortunes. In addition to redistribution, this is why he wants to tax them. To reduce their power over others. He fears the power of the rich the way you fear the power of the state.
Get rid of the state, and the rich will only have power over their own resources.
It’s not “power over others” merely because you can engage in many more voluntary transactions than the poor.
Businesses actually like it when rich people buy their stuff.
Besides, ALL government decisions logically must be based on cronyism because one or more groups of people are not getting what they voted for – the losing groups paid taxes and got nothing in return, effectively subsidizing the winners.
I’m not sure I’d so confidently dismiss the power of the rich with or without a state. Without the state, the rich would effectively be the state, because they would soon control everything, or at least that seems to be what happens generally in places where the state is very weak. I just think if history teaches anything, it’s that the rich tend to a acrue power. I’m not sure you will so easily defeat that tendency, even in the ideal stateless world.
“Without the state, the rich would effectively be the state, because they would soon control everything …”
Voluntary trade is not control, and no one is entitled to other people’s property.
The rich have purchasing power – that’s it. And if businesses would rather cater to the rich than the poor, that’s their prerogative.
Besides, when rich people spend money, they make less-rich people richer. AND they’re willing to throw away stuff that you could probably exchange yard work or errands for.
Poverty is not the result of other people having more of what you wish you had.
The concept that rich = control is just envy.
Ok, let’s assume we still have a state, one that defends private property. How would the rich “soon control everything”? Let’s say a rich guy buys 1,000 small businesses up. He’s got to *pay* for those small businesses! It’s an exchange, not merely a one-sided transfer. If a small business owner finds the offer to be worth more to him than the continued operation of the business, should he not be able to make that decision?
Many seem to have this idea that the economy is a fixed pie. If the rich get richer, they must be doing so off of the backs of the low and middle class. The reality is that the rich can only get richer – in a free society with private property backed by government force – if they continually produce value for others in that free society.
But if Obama does that, then how does Krugman’s favorite candidate get Her ad money?
Politics of envy rises its ugly head once again.
I’d be delighted to take Krugman’s fortune off his hands, then. Lead by example, man!
That’s just blatant socialism, in case anyone missed it. It should be pointed out to people, and nullified by the individual.
And no it wasn’t always acceptible, as Krugman says: America was founded on private property rights and skepticism about government motives.
Let’s apply the same concept to government…once it gets too large, it has to cut back it’s marginal receipts by 70%. Krugman does not specify what too much is but Piketty clearly was targeting many more than the very wealthy. There is the problem that Krugman is talking about income tax while Piketty’s wants a wealth tax but we can worry about it later. (Pelosi: pass this so that you can find out what’s in it.)
I don’t know if that’s a fair characterization of Krugman’s argument, Dr. Murphy. Krugman is just arguing that concentration of wealth in the hands of the few is not desirable.
Now, there are some problems with his argument.
1. “Great fortunes” also mean “great potential for investment”. If you don’t tax people’s income or investments, then they’re going to want to spend it or save it. Savings result in capital formation, which allow for future production. Either way, the rich
2. Krugman’s argument seems to rest on a mental model of the “wealth” in an economy functioning as a fixed pie. If the rich get richer, they must be doing so at the expense of the poor. Of course, this doesn’t make sense. Assuming they aren’t stealing, the rich can only get richer if they produce goods and services of value which other people in society buy. If other people in society are buying goods and services of value, then they are, by definition, increasing their own subjective well-being.
3. However, the Left seems to have a rather bizarre world-view regarding wealth. On one hand, they argue that wealth is derived from savings. Somebody can only hold an asset if he hasn’t spent it on a consumer good, and since the value of one’s assets is what determines valuation, someone’s “wealth” is how much they’ve *not* consumed.
Of course, this is the central distinction between “wealth” and “income”. However, if the Left wants to reduce wealth disparities, then doesn’t it make sense to actually not tax income and not keep interest rates so low? That way, those in the lower and middle classes can save and *grow* their wealth, rather than depending on government programs?
Hi Bob,
Growing inequalities in the distribution of income and wealth can lead to increasing inequalites in the distribution of economic and political power. The rich have the ability to influence governments through financing political patries that will act in their interest and in financing lobby groups that seek to act to influence governments.
Monopoly power in markets can lead to incomes above Marshallian “normal profit” unless markets are contestable. Super-normal profits are probably unjust gains due to the existence of ” market power’. It is not only political power that we should be wary of, but also economic power.
This is not to deny the benefits of poperly functioning markets in efficient resource allocation, which I think Krugman supports.
John Arthur
Hi Bob,
What effects does progressive income tax have on work effort when we consider both the substitution and income effects? Do the substitution effects outweigh the income effects or is it the other way around? What does the empirical evidence support?
John Arthur