Have you ever noticed that people who worry about inequality seem to be focused only on certain kinds of inequality? When they obsess about the income and wealth of the top 1%, they seem to be bothered by only some of those at the top, and not others.
For example, have you ever seen Robert Reich or Paul Krugman or any like-minded complainer bemoan the huge salaries of professional athletes? What about the stratospheric incomes of rock stars? Or movie idols? Or super models?
Even more puzzling, when is the last time you saw any of them assailing worthless heirs? I would guess that a large share of mega gifts to Barack Obama's presidential campaign came from "trust fund babies." These are people who are living (and living well) off the assets created by some deceased capitalist. All too many of the heirs spend a good part of their lives giving personal and foundation money to…well…to promote socialism.
Shouldn't there be a Hall of Shame (and maybe an annual award for the most shameless) to draw attention to the activities of those who use the fruits of capitalism to try to destroy it?
Something else is odd about the sociology of the anti-inequality crowd. They seem to be unfazed by inequality created by government.
Take the recent Powerball outcome. At $588 million, it was the largest lottery prize in history ? to be shared by two ticketholders. In essence, hundreds of millions of dollars are being transferred from mostly low-income families in order to create a few super rich individuals. As I wrote previously:
I can't think of any single act of government that creates more inequality than the lottery — at least per dollar raised and spent. Think about it. Thousands of (mostly below-average income) people buy tickets and, after the drawing, one of them becomes immensely wealthy…
I can't think of anything in the private sector that even begins to compare to this reverse Robin Hood redistribution from the poor to the rich and the nouveau riche. And remember, in order to pull it off, government first has to establish a monopoly, keeping private competitors (who would at least raise the poor bettor's expected return) out of the market.
Then there is the entire structure of elderly entitlements. They mainly take from people who have less and give to people who have more. Social Security, for example, is funded by a regressive tax on wages and is distributed to the population group that has the lowest poverty rate of all. It's not just Warren Buffett who is on the receiving end. In general, the greater your lifetime income, the larger your monthly benefit. Medicare is also funded by a regressive tax on wages. Although the benefits are supposed to be uniform, in reality the zip codes where the largest Social Security checks are cashed are the places that spend the most on health care for the elderly.
Think about that last finding for a moment. Throughout the country, families who are struggling to get by and who cannot afford to buy their own health insurance are paying 15% of their income to fund hip and knee replacements for our true leisure class, so they can get back out on the golf course.
I suspect you could put a 50% tax on all the professional athlete income above $1 million and it wouldn't change the outcome of a single football game. Similarly, I think you could really sock it to Hollywood and even the idle rich without too much economic harm.
But when Paul Krugman writes about the top 1%, this is not who he has in mind. He is complaining about the incomes of people who run large companies. He wants their tax rate to be 91%!
I think Ayn Rand may have been right. The left is populated by people who are not especially bothered by those who become wealthy by virtue of birth or luck or good fortune. They do not even seem to be bothered by the winner-take-all feature of professional sports that confers millions of dollars on some athletes while those who were almost as good languish in near poverty. No, who they obsess about are the creators, the builders, the entrepreneurs.
They don't hate the wealthy who don't deserve their wealth. They hate the wealthy who do deserve it.
Postscript: an exception to what I have just written is Joe Nocera, an economics writer for The New York Times. Last Saturday, he wrote:
[L]otteries may well be the single most insidious way that state governments raise money. Many of the people who buy lottery tickets are poor; lotteries are essentially a form of regressive taxation. The odds against winning a big jackpot are astronomical — far worse than the odds at an Atlantic City slot machine. The get-rich-quick marketing — by government, let's not forget — is offensive.
Nocera writes about
[A] recent e-book written by Don McNay entitled, "Life Lessons From the Lottery." McNay is a financial adviser and newspaper columnist, based in Kentucky, whom I've gotten to know over the years. He specializes in helping people who have come into sudden money. He is convinced that the vast majority of people who win big-money lotteries, like the recent Powerball prize, wind up broke within five years. "The money just overwhelms them," he told me the other day. "It just causes them to lose their sense of values."
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