J.K. Rowling is the former welfare mother who wrote the Harry Potter books. She’s worth an estimated $1 billion. That makes her one of the richest self-made women in the world.
I don’t know what her U.S. income is, but I’m sure she is in the top 1 percent. Make that the top 1/10th of 1 percent.
So why should you care? If you’re not a fan, there is no reason why you should. Harry Potter books and Harry Potter movies certainly are not making you any worse off. If you are a fan, you have lots of reasons to care. Rowling has undoubtedly made your life richer. Every time you plunk down the cash needed to buy one more book or see one more movie, you are getting something that is probably much more valuable than what you paid for it. At least I rarely hear anyone complain. The way J.K. Rowling got really, really rich is by making millions of ordinary folks really, really entertained.
Most people get this. One person who doesn’t is Paul Krugman, editorial writer for The New York Times. We are experiencing an "extreme concentration of income," he writes, and this is "incompatible with real democracy." It’s "oligarchy, American style," he complains.
Did you know that every time you buy a ticket to see a Harry Potter movie you are contributing to extreme inequality of wealth? Did you know that you are undermining the foundations of our democracy? Did you know you are helping one more billionaire to get more than her fair share of our national income?
Ah, but wait. Before you succumb to mind numbing guilt and sink into fits depression, there is a cheerier side to all this. Back before Krugman was churning out folklore designed to make left wing lunacy look respectable, he actually wrote about real economics — which is why he won a Nobel Prize. Let’s tackle the real economics first. Then I’ll return to the folklore.
For more than 100 years there has been a fairly well established economic theory about personal incomes. In fact it’s so well established that it isn’t even controversial. In a market economy, people tend to get the value of what they produce, at the margin.