Who Cares Why?

Related to the inequality post below, one thing that bugs me about the way liberals often approach these issues is a tendency to get bogged down into picayune controversies about exactly why inequality has exploded. Was it the skill-biased technological change? Were CEOs underpaid in the past? Can we blame globalization? In truth, while these are all interesting questions, in terms of politics and policy they take a back seat to debates over remedies which often lack a tight relationship to the debates over causes.

Oftentimes, though, liberals act as if the thing that needs to be done is to prove somehow that inequality has exploded because people are in some sense "cheating" -- so you get these long stories about corporate governance and corrupt compensation committees, etc. The problem here, though, is that even if this is true, it could still also be true that the cure -- policy interventions into the operation of the market -- would be worse than the disease. And, conversely, if you could prove that the rise in inequality was all above board -- really was driven entirely by globalization and technological change -- nothing about that causal analysis would debunk the idea that we ought to make our tax system more progressive.

The relevant debate isn't about how we got here, it's about what would happen if we tried to change things. Some people, of course, think changing things would be immoral. Indeed, there are some people I know who adhere to the bizarre view that one source of injustice in the contemporary United States is that our richest citizens aren't rich enough. But beyond those people, you have a lot of people who take the view that raising taxes would have dire economic consequences, whereas lowering them would have large benefits. That's the only debate that really matters in this regard. If the costs to the non-rich of higher taxes on the rich would be small (as I believe), then higher taxes on the rich to provide more benefits to the non-rich makes sense irrespective of why inequality has grown so much whereas if the costs would be high then it doesn't make sense -- again, completely apart from the causal issue.

Comments

Surely a better understanding of the root causes informs what the best remedies would be.

Posted by noto | October 12, 2007 9:32 AM

The relevant debate isn't about how we got here, it's about what would happen if we tried to change things.

The two are related.

Posted by SomeCallMeTim | October 12, 2007 9:34 AM

The causal question would matter to the debate over remedies if you thought that the various rights we tend to think people have to keep the legitimate fruits of their labors are as important as equal distribution of resources. Then it makes a real difference whether the rich came by their riches by ethically exploiting facts about globalization and technology or by cronyism, corruption, etc. Most liberals don't share this view about the relative value of equality, but their opponents do, which might explain why they think it's important to show that the rich don't "really" have a right to their riches.

Posted by Geoff | October 12, 2007 9:37 AM

I do think you need to explain what your ideal end-state would be. If the goal is formulating policy, we ought to state the policy's desired effect:

Should everyone's net worth ideally be exactly the same? Or are we always going to have some quantum of inequality? If the latter, what amount of variation between rich and poor is acceptable?

Posted by southpaw | October 12, 2007 9:43 AM

The causes matter for political reasons. It is not easy to get a majority of Americans to support redistributive schemes if inequality does not arise from something that is actually wrong with the state of the world beyond the inequality itself. Americans just don't view inequality as bad in itself.

Posted by henry evans | October 12, 2007 9:56 AM

Surely inequality is a red herring.

If the non-rich were given a choice between (a) a society in which money were taken away from the rich with no benefit to anyone else, thus reducing inequality or (b) a society in which everyone was growing richer at differing rates, thus perhaps increasing inequality, surely they would choose (b).

The focus on equality for equality's sake is myopic and foolish.

Posted by Publius | October 12, 2007 9:59 AM

The problem, as I'm sure MY actually recognizes, is that support for the free market in the US is rooted to some extent in a metaphysics of value. People are educated to believe that "the price the market will bear" is the measure of a thing's intrinsic worth, and that any conscious attempts to regulate, subsidize, or tax are distortions of the "true" value. While such a deepseated metaphysics holds, progressive taxation and aid to those at the bottom of a very inequitable income distribution comes to seem like a violation of the property rights of those at the top of the scale. Liberals have to make some kind of argument to show people that there is no "true" value of people's labor, that everyone's earnings are shaped by the way the government sets the rules of the system, and that a democratic government has the right -- in fact, the duty -- to shape the rules of the system in a way that produces outcomes which comport with our basic feelings of fairness, and to ensure that as the economy grows, everyone benefits -- that it is fundamentally unjust for the bottom 20% of Americans to have the same median income now as they did 30 years ago. People need to be convinced that if the rules of the game produce that outcome, then the rules of the game need to be shifted. Because Americans these days start from the assumption that the rules of the game are Natural Law, and tampering with them violates economic holy writ.

Posted by brooksfoe | October 12, 2007 10:03 AM

I'm a historian, so I'm biased. But this seems crazy.

At the very least, the past gives us a sense of the effect of past policies. How can we gauge the impact of the Wagner Act or TANF or even tax progressivity on poverty without discussing the historical data?

Posted by AWC | October 12, 2007 10:08 AM

But beyond those people, you have a lot of people who take the view that raising taxes would have dire economic consequences, whereas lowering them would have large benefits.

What about the estate tax? To economists, that's the ideal tax because it's a tax on wealth and does not distort incentives (or distorts them far less than a tax on income does), and thus has little to no negative economic consequences. If there were really that many people worried only about the economic consequences of taxes, cutting the estate tax would not be such a popular plank in the Republican Party's platform. Estate tax cuts are popular because of the dominant ethic against redistribution of wealth that exist in this country.

Posted by Hat | October 12, 2007 10:16 AM

Brooksfoe, when you write....

"the bottom 20% of Americans to have the same median income now as they did 30 years ago."

Are you saying that the lowest quintile has not seen their median income change, or are your referring to median wages for workers as a whole? Either way, it should be noted that actual living standards for both median wage households and households in the lowest 20% have improved a great deal in the past 30 years, although it certainly has been more dramatic in the median wage households. The harm of great wealth and income disparity is certainly worth examining, but too often I've read people who advocate polices to reduce inequality assert or imply that actual living standards for the poor or median wage earners have stagnated over the past 30 to 40 years. That is simply a gross error, or an outright falsehood.

Posted by Will Allen | October 12, 2007 10:23 AM

Brooksfoe, your ignorance of economics and the way the world works is stunning. If there is any certain way to drive the country into ruin, it is the government readjusting the rules of the economy so that people are paid according to some idealized outcome.

Posted by Publius | October 12, 2007 10:28 AM

"Estate tax cuts are popular because of the dominant ethic against redistribution of wealth that exist in this country."

I don't buy it. The dominant ethic in this country is against redistribution of wealth from the deserving to the undeserving.

When welfare was viewed as assistance to the needy, it was popular. When it became viewed as a drain on hard-working people to reward "welfare queens," it became highly unpopular.

The estate tax was well accepted until the extremely wealthy engaged in a decade-long campaign to convince people that it was a "death tax" which fleeced dying farmers and small businessmen.

This is exactly why the nutbars launched a frontal assault on the family who gave the Democratic address on the S-CHIP program. Because most people support health care for poor kids. But few people want to pay for their own health insurance and then pay taxes to provide health insurance for people who can afford it, but don't feel like paying for it.

Posted by LaFollette Progressive | October 12, 2007 10:30 AM

And, conversely, if you could prove that the rise in inequality was all above board -- really was driven entirely by globalization and technological change -- nothing about that causal analysis would debunk the idea that we ought to make our tax system more progressive.

If I was after perfect equality, or I demanded a 'reduction' in inequality because inequality is just bad in and of itself and should be done away with, you would have a perfectly sensible argument.

If I don't neccessarily accept those two things as important goals, then inequality is a symptom of something else, like economic malfunction.

(Drastically increasing inequality in a time of flat wages, and an ostensibly 'good' economic enviroment, is certainly a red flag, whether that is due to 'globalization and technological change' or not. Particularly since 'globalization and technological change' in political discourse is functionally equiavalent to 'the fucking money fairies gave us bags and bags of moolah! Whoopie!'. On the other hand, it could partly or completely due to deregulation when deregulation amounts to 'a licence for rich guys to print more money'. More progressive taxation would not cure the latter bit either. Of course, if you are short of money to do things that need to be done, and that's due to less progressive taxation or just lower taxation, then you make that argument.)

If the costs to the non-rich of higher taxes on the rich would be small (as I believe), then higher taxes on the rich to provide more benefits to the non-rich makes sense irrespective of why inequality has grown so much whereas if the costs would be high then it doesn't make sense -- again, completely apart from the causal issue.

It doesn't make sense to raise taxes on the rich, since I don't know what the hell 'provide benefits to the non-rich' means. Subsidized vacations in Cancun? Four chickens in every pot (literally mandated by law)?

I know what you're after: if I want to do X, Y, and Z, I should tax the rich since they have more money and benefit from the way the current system is rigged.

But beyond those people, you have a lot of people who take the view that raising taxes would have dire economic consequences, whereas lowering them would have large benefits. That's the only debate that really matters in this regard.

Raising taxes on rich people would have dire economic consequences; rich people would have a lot less money. This wouldn't have an impact on the economy at all, really, if the money was directed sensibly.

Indeed, there are some people I know who adhere to the bizarre view that one source of injustice in the contemporary United States is that our richest citizens aren't rich enough.

Megan McArdle?

Anyways, if you let the argument go philosophical, you will always lose the debate you're trying to have. I don't have any reason to go after the rich just because they're rich. (And in fact, as far as I can tell, most people who want to go after the rich regardless of where the money goes, what to do it for other reasons than that the person has a lot of money. E.g. rich people are evil, eat day laborers for breakfast and so on.) They aren't bothering me... or rather they have the power to alter the system in their favor so they do alter the system in bad ways, which does bother me, but the money is the means, not the problem.

max
['I'm not an ideologically committed socialist, after all.']

Posted by max | October 12, 2007 10:31 AM

I concur with those who think that understanding the roots of the situation is important. If you think, as I do, that the decline in power of labor unions has contributed substantially to income inequality (on both ends, a lessened ability to insist that the bottom end gets more and that the top end is not compensated at levels unrelated to their actual productivity), then it gives you a clue about the remedy.

Posted by David in NY | October 12, 2007 10:31 AM

Americans start from the assumption that the rules of the game are Natural Law because they are. The basic laws of economics -- supply and demand, paying people what the market will bear -- are indeed natural law. You play around with those laws are your peril.

Posted by john | October 12, 2007 10:33 AM

If the costs to the non-rich of higher taxes on the rich would be small (as I believe)...

Really, you believe them to be small? If we're talking net costs, I think you ought to be saying that you believe them to be non-existent (at least the vast majority of the non-rich).

Let's suppose, for instance, that, because of modestly higher taxes -- much/or mostly falling on the wealthy -- US GDP growth over the next 30 years averages 2.83% instead of 2.98%. It's certainly true that the population as a whole -- rich and poor alike -- will bear some of the costs of this lower growth. But I'd posit that for most people, there won't be a net cost to pay. Because the benefits they'll get (peace of mind, improved health, sounder pensions, a cleaner environment, better schools, better public transportation, less crime, etc.) will outweigh, even in concrete financial terms, the costs they'll have to pay.

Posted by Jasper | October 12, 2007 10:42 AM

david, what is that remedy? Strengthen unions? with any luck, they'll be able to recreate the performance of the US auto industry on the rest of the economy.

I'm also curious how the hedge fund manager took money away from the union worker.

Posted by Qwerty | October 12, 2007 10:44 AM

I don't buy it. The dominant ethic in this country is against redistribution of wealth from the deserving to the undeserving.

I think we both agree that, at least politically, the reasons for inequality are incredibly important. Conservatives have managed to create the image of the "welfare mom" (a stereotype of an undeserving beneficiary) while at the same time making the "hard-working farmer" the image of the deserving person whose estate the government taxes. Liberals, similarly, make children and blue collar workers their deserving beneficiaries and "overpaid CEOs" their undeserving rich people. To connect this with the post, even if you did somehow win the economic cost argument, you'd still have this ethical fight on your hands. You might as well fight this ethical battle now.

Posted by Hat | October 12, 2007 10:47 AM

david, what is that remedy? Strengthen unions? with any luck, they'll be able to recreate the performance of the US auto industry on the rest of the economy.

Unions are market actors. You can take away the right of collective bargaining if you want, but as numerous other commentors have pointed out, you monkey with the laws of the free market at your peril.

Posted by Steve | October 12, 2007 10:50 AM

Look, even if you don't think that it really matters in terms of tax policy whether or not the causes of the rapid increase in inequality are rooted in cheating or fraud on the part of CEOs and the like, don't you think that maybe widespread cheating and fraud might be matters of independent concern, which might be something people want to talk about, and prevent on its own terms independently of inequality?

Seeing a mafioso boss who makes his money from extortion walk around wearing flashy clothes and jewelry may not really be a better argument for sumptuary laws than seeing an honest businessman doing the same thing, and sumptuary laws are a silly idea regardless, yet surely it's still a matter of grave concern if we have a mafioso boss who's extorting a lot of money out of people, right?

Posted by Julian Elson | October 12, 2007 10:51 AM

Hat- "...even if you did somehow win the economic cost argument, you'd still have this ethical fight on your hands. You might as well fight this ethical battle now."

Well put. I agree.

Posted by LaFollette Progressive | October 12, 2007 10:59 AM

Every ten years or so, the United States needs to pick up some small crappy little rich guy and throw him against the wall, just to show the world we mean business.

Posted by FS | October 12, 2007 11:09 AM

boy, this post is like the pure distilled essence of Yglesias

Posted by DG | October 12, 2007 11:16 AM

I understand the argument that how people got rich matters ethically even if it doesn't from the point of view of utilitarian optimal policy. I think it's overblown though--even if the rich are getting rich entirely through honest means, they are still richer than they otherwise would be because the rest of society exists.

Bob the Angry Flower made this point really well. Capitalism tends to reward the hyper-skilled with their marginal benefit to society. But in doing so, it fails to reward the unskilled for their collective benefit to society. For all the money we take from the rich, they're still doing better than they would in the absence of human society. (And if the rich feel differently they're free to move to other countries.)

Posted by Consumatopia | October 12, 2007 11:30 AM

"Americans start from the assumption that the rules of the game are Natural Law because they are. The basic laws of economics -- supply and demand, paying people what the market will bear -- are indeed natural law. You play around with those laws are your peril."

Where to start with such silliness as this?!? I think this is case in point for not ignoring what history tells us.

Posted by Ricky | October 12, 2007 12:33 PM

Publius, you give us a treasure trove of mindless comments.

"If the non-rich were given a choice between (a) a society in which money were taken away from the rich with no benefit to anyone else, thus reducing inequality or (b) a society in which everyone was growing richer at differing rates, thus perhaps increasing inequality, surely they would choose (b)."

No, they wouldn't. You are wrong, as are all radical economists. You ignore the fundamental incompatibility between pure competition and relative deprivation; even if all boats are (sort of) rising, if we are a competitive environment, I am hindered by greater rising of my competitor's boat. But, I understand that economists are myopic, and fail to see that.

http://ucsdnews.ucsd.edu/newsrel/soc/04-07Equality.asp

Economics is not science, and its theories are not "laws;" it is the analysis of a logic system whose fundamental premises are demonstrably false.

Posted by Michigander | October 12, 2007 1:15 PM

Oh, Publius, I beg to differ! Your ignorance of economics and of the way the world works is stunning! Touche!

Do you actually have anything to say, or do you just get off on spouting this kind of juvenilia? And the Roman moniker makes you sound oh so buff.

Posted by brooksfoe | October 12, 2007 1:19 PM

Publius said:

If there is any certain way to drive the country into ruin, it is the government readjusting the rules of the economy so that people are paid according to some idealized outcome.

I really do like this idea that it is somehow dangerous for public policy decisions to be driven by desired outcomes. Tell us, please, Publius, if we should not base public policy decisions on the outcomes we desire, what should we base these decisions on? Ideological prejudices?

I think much of this discussion misses the point. Talk about rich guys cheating and getting "too rich" is not necessarily intended to be a logical means of argumentation. This is politics, after all, and there is much to be said for changing people's perceptions.

What some on the left are trying to do, I think, is get people to start to think of the rich as mean and selfish so that policies that cut against the rich will be more popular. The right has been using this trick for years, arguing that the rich got that way from hard work and patriotism and other fine qualities.

Posted by Rob Mac | October 12, 2007 1:24 PM

Notice how Publius describes the economy:

"If there is any certain way to drive the country into ruin, it is the government readjusting the rules of the economy so that people are paid according to some idealized outcome"

This is typical of economists; instead of treating the economy as a system of production, distribution, and consumption that is created for the benefit of humanity, Publius treats the economy as a game, with independant origins. That's complete nonesense; the economy is a man- made creation, and the entire purpose of it is to generate normatively desirable outcomes.

Posted by Michigander | October 12, 2007 1:31 PM

my: "The relevant debate isn't about how we got here, it's about what would happen if we tried to change things."

How we got here is by making choices, and if we choose to change things, we will get somewhere else, but, maybe, not exactly, where we expect or hope to get to.

The recognition that politics is about how to "institute" change, by creating and shaping institutions, which, in turn, create and shape economic, political and social outcomes, was the foundation of 17th century Whiggism, the great-grandfather of liberalism. Liberalism and its political precursors, in both advocating progressive reform and opposing tendencies toward authoritarian tyranny, has always been centrally about trying to figure out changes in the institutional rules of the game affect outcomes in the long-run -- it is the core enterprise of liberal politics. That sometimes paranoid obsession with where small reforms will lead, or how small changes in the past led to undesirable outcomes in the present, is the key, enduring characteristic of the ideology that produced the American Revolution.

Posted by Bruce Wilder | October 12, 2007 1:55 PM

I agree, in theory, with the protesters here that we should be examining the source of the increase in inequality. But they're missing the point. The problem with the public debate on this issue is that the conservatives always use issues like that to distract us from the real issues. They'll argue that the source of inequality is something else, or that we were just measuring inequality differently back then, or they'll do something completely ridiculous like start claiming that the poor have been getting better also. Sometimes you have to just break away from these traps.

The point is that inequality in America is really bad right now. And despite some people's understanding, great enough inequality can be bad enough to cancel the benefits of greater average wealth. Furthermore, there is no reason to believe that the poor would not be better off with a system that produced less inequality. We know that education outcomes are heavily dependent on class. We know that in an increasingly global economy education is the only hope many Americans have of avoiding competing with immigrants for service sector jobs. We need to do something about inequality.

Posted by mpowell | October 12, 2007 2:22 PM

The best way to decrease inequality is to have a prolonged recession. There was less inequality during the malaise of the Carter years than the dot-com boom of the later Clinton years.

Posted by Juan | October 12, 2007 2:23 PM

Another way to decrease inequality, of course, is to stop importing poor people with little human capital. How much of the growth in poverty has come from importing poor people from Mexico?

Posted by Juan | October 12, 2007 2:25 PM

A nuclear war would be the best way to reduce inequality.

Posted by Marcus | October 12, 2007 2:27 PM

brooksfoe,

it is fundamentally unjust for the bottom 20% of Americans to have the same median income now as they did 30 years ago.

The bottom 20% do not have the same median income now as they did 30 years ago. They have a much higher income. Since inequality has increased, their share of total income has declined somewhat, from about 4.2% to about 3.4% using the Census Bureau's official money income measure, and from about 5.5% to about 4.7% using the Census Bureau's "disposable income" measure, which takes into account the effects of taxes, transfers, and non-cash income. But total income itself has increased so dramatically over the past 30 years that even though their share is smaller, their income is much higher. And income data alone is not an accurate indicator of economic status or standard of living, anyway. As others have pointed out, consumption-based measures provide a much better picture of people's true standard of living than income data.

Posted by Mixner | October 12, 2007 2:32 PM

mpowell,

... something completely ridiculous like start claiming that the poor have been getting better also.

It's your claim that's ridiculous. The evidence that the standard of living of "the poor" has been getting better is overwhelming.

The point is that inequality in America is really bad right now. And despite some people's understanding, great enough inequality can be bad enough to cancel the benefits of greater average wealth.

Yes, too much inequality is bad. So is too little. So how much inequality is the right amount? How do you decide? What makes you think inequality now is too high rather than too low, or just right?

Posted by Mixner | October 12, 2007 2:40 PM

Publius wrote:
"Brooksfoe, your ignorance of economics and the way the world works is stunning. If there is any certain way to drive the country into ruin, it is the government readjusting the rules of the economy so that people are paid according to some idealized outcome."

To me, that perfectly describes the way our economic policy actually functions. Or do our politicians not continually point to the stock market or GDP or other indicators of overall national welfare when arguing for their specific economic policies, e.g. tax cuts, federal reserve boards, etc.? The government changes the rules of the economy all the time in pursuit of society-wide policy goals, even when it is just a court making some minor modification to contract law, or Congress passing Sarbanes-Oxley or altering provisions of the tax code. Surely we have idealized goals we hope to serve with our economic policies, maximizing overall welfare being the foremost.

Then we've got this gem:
Surely inequality is a red herring.

If the non-rich were given a choice between (a) a society in which money were taken away from the rich with no benefit to anyone else, thus reducing inequality or (b) a society in which everyone was growing richer at differing rates, thus perhaps increasing inequality, surely they would choose (b).

The focus on equality for equality's sake is myopic and foolish.

Please point me to any serious proposal by anyone concerned with equality that involves simply making the rich poorer for the sake of inequality. Nobody but a philosopher would advocate for something like that.

And note that at this point nobody is talking about radically equalization of incomes. We're pointing to an alarming phenomenon and observing it in our streets and saying we need to do something to reverse it. The proposals are modest: progressive tax policy, social safety nets, access to education, access to credit. Your argument is the true red herring. All it takes is a visit to the wretched parts of any American city for you to begin to realize what is truly at stake, and here's a hint, it's not the age-old theoretical debate between anarcho-capitalism and absolute equality of outcomes.

And to think you criticized Brooksfoe for being ignorant of the way the world works.

Posted by StJoe | October 12, 2007 3:33 PM

And note that at this point nobody is talking about radically equalization of incomes.

Really? Someone in another thread just proposed limiting incomes to $250,000 a year. Sounds pretty radical to me.

We're pointing to an alarming phenomenon and observing it in our streets and saying we need to do something to reverse it.

What alarming phenomenon is that, exactly? All I see from your side are endless variations of "There's too much inequality!" "The rich are getting too much!" and so on. No serious argument is made to support these assertions. No standard or principle is offered by which to justify the claim that the current level of inequality is too high, or to describe what the "proper" level of inequality would be. It's just vacuous handwaving.

I think most Americans know that this "the middle class is stagnating" trope is a ridiculous lie. Anyone who's been around for 20 or 30 years, who is remotely familiar with the material circumstances of ordinary Americans' lives, knows that people have a lot more stuff and a lot better stuff now than they did a generation ago. That's one reason why your efforts to incite support for policies of mass redistribution of wealth have been such a spectacular failure. Sure, you might get the next administration, if it's a Democratic one, to do some fiddling. You might get a partial rollback of the Bush tax cuts. But that's probably about it.

Posted by Mixner | October 12, 2007 3:48 PM

"boy, this post is like the pure distilled essence of Yglesias"

How true... His conviction that you should never honestly describe the views of people who disagree with you is always on display to some extent, but it really stands out with this post.

Why are the wealthy getting wealthier relative to everybody else? Because the wealthy rely on capital, the less wealthy rely on labor. And as technology advances, the percentage of production due to capital rather than labor also advances. Eventually, when factory automation reaches it's ultimate manifestation in the form of completely automated factories, (It's not as far away as you might think.) the share of production due to labor will drop to essentially zero, and the economic situation of people who's only skill is to act as verbally programmable industrial robots will become dire indeed. People who rely on intellectual skills instead will manage to retain at least some leverage vs capital until we have good human equivalent AIs. Then we're in the same boat.

Ultimately, the only answer is that we must ALL become capitalists.

Posted by Brett Bellmore | October 12, 2007 6:21 PM

The American myth of the self-made man is very annoying. E.g., put Bill Gates or Steve Jobs in the India of the 1970s and they'd probably end up as nothings.

"Oh, that's because they wouldn't have had economic freedom".

Exactly. Economic freedom doesn't come for free. While it does mean that government doesn't pick economic losers or winners but the market does, the ability for a society to make the market able to operate requires significant investments in public goods.

Just think of the institutions that have to be built to have effective patent and copyright protection; for such protection to even be a public policy priority, how many other problems have to have been reduced to negligible.

India today - booming economy, blah, blah, blah. For anyone who knows the reality, India's growth is hampered by a lack of investment in public goods, of the kind the US has in plenty, but the US is neglecting to invest in.

An inegalitarian society is a hindrance and not a help to the next round of innovators and entrepreneurs. [The margin is too small for the argument.]

The opposition to a reasonable tax policy in the US is crippling the goose that laid golden eggs.

Posted by Arun | October 12, 2007 7:35 PM

Arun,

What about someone like Lakshmi Mittal? He's revered as hero in ass-backward places like Kazakhstan where he's taken idle steel factories and made them prosper, and their communities along with them. He didn't wait until Kazakhstan or Mexico or wherever established U.S.-levels of capitalist infrastructure; instead he worked within an imperfect world as all entrepreneurs do, and created value and increased prosperity for himself along with hundreds of thousands of employees and investors.

Does he make a lot more than the average steel worker? Of course, but do you think the Kazakh workers care? They love him, because after decades of an impoverishing experiment in enforced equality that left them broke and starving, they are making money working for him.

It wouldn't hurt for American lefties to learn from history for once. A lot of the left's ideas have been tried elsewhere and you can see what the results have been.

Posted by Fred | October 12, 2007 7:57 PM

Matt: "Related to the inequality post below, one thing that bugs me about the way liberals often approach these issues is a tendency to get bogged down into picayune controversies about exactly why inequality has exploded. . . .

Oftentimes, though, liberals act as if the thing that needs to be done is to prove somehow that inequality has exploded because people are in some sense "cheating" . . . . And, conversely, if you could prove that the rise in inequality was all above board -- really was driven entirely by globalization and technological change -- nothing about that causal analysis would debunk the idea that we ought to make our tax system more progressive."

Yes it would, if inequality does not justify expropriating wealth from those who fairly earned it. Evidently you disagree, which is fine, but I'm surprised you act like this viewpoint isn't common. It's my view, for one, and I consider myself a liberal.

Posted by Matt Tievsky | October 13, 2007 5:02 AM

Brooksfoe, your ignorance of economics and the way the world works is stunning. If there is any certain way to drive the country into ruin, it is the government readjusting the rules of the economy so that people are paid according to some idealized outcome.

Isn't this exactly the primary goal of the National Republican party? Its idealized outcome is concentration of wealth.

Posted by PK | October 13, 2007 1:40 PM

I'm always surprised at how much this issue, which I think is vitally important and hugely ignored, is misrepresented or misunderstood.

Here's my take in very plain language.

Economic inequity has grown in this country because we are losing the checks and balances of a competitive market, and have instead been convinced that we need a free market, where those with economic power can change the competitive rules as they please. Under these conditions, it becomes easier to fabricate wealth by bending the rules, buying congress, ignoring laws, exporting jobs, monopolizing markets, vertical integration, etc. We don't get the benefits that come out of innovation and competition, instead we have corporate power run amok.

This bill of goods has been sold as a sort of natural law, as evidenced by some of the comments on this thread. Is there a natural law right for corporations to be able to buy off the legislature and make the very rules designed to regulate them? No way. Yet many in this country believe that government should "get out of the way" of business so it can be more efficient. What a load of crap. It's only with a strong government with logical, targeted controls that we can have a system where competition and capital investment leads to benefits for a majority of the population. This whole idea that we need to weaken government is only another tactic by economic powers to further their advantage. And the whole problem is that they use that advantage to create wealth in contrived ways, like hedge funds, rather than employing capitol to create real wealth.

The reason why I think this issue is so important is that it encompasses the fundamental question of what role does governemnt play? The correct answer is that government is the people's power to offset unbridled financial power and contain it within a competitive system that will produce the most benefits for the whole society.

Please don't misunderstand this as socialism, I'm not arguing for taking wealth away from those who have earned it legitimately. Instead, I saying that we need to harness the power of competitive markets to create incentives and opportunities to invest capitol in business ventures that will efficiently generate and wealth for a larger number of people.

Posted by GreenVtster | October 13, 2007 3:01 PM

I'm fed up with the US government picking on China because of their
own financial woes: They went to war in Iraq, decided not only not to
hike taxes, but also cut them, but they want to have the cake and eat
it too. It's THEIR fault that there's a trade deficit, not ours. We
finance your war in Iraq by buying your (now worthless) falling dollar
(T-bond, Treasury bonds). And that's how you pay us back. Complaining
about our low Yuan; the trade deficit; and now you have the audacity,
the nerve and the gull to blame China for faulty products??? What
about the latest recall of 22,000 pound (10 metric ton) of US-grown
beef that was announced last week?? You made Japan hike their Yen and
as a result they went into a recession for 15 years, just because you
were so afraid they were buying out US companies.
And now, you bitch again - this time - about us restricting investment
in China in strategic industries by the Chinese government. So low!!!
Coming from a country that only recently announced measures to
restrict direct investment by "State-owned" (read: Chinese) companies
in US companies. You and your protectionist congress. Thank your good
luck, that most of the revenues created by your "multinational" (read:
US-based) companies, almost 60%, are created from abroad, including
China. And you want to restrict investments by China, Qatar, Russia
and others. What a yankee hypocrisy!!!

You know what? You've been enjoying our free lunch for way too long.
Unless you learn to shut up and be humble, and stop making China into
your own scape goat, let's see what's gonna happen if we dump all our
dollar reserves and invest in the Euro. I'm sure France and Germany
are much more receptive to Chinese investment, whine less about our
environmental record (as if you implemented Kyoto!!!). And we'll see
how you'll function after we get rid of our dollar T-bonds. And with
your already falling dollar, I'd rather buy Euros anyway.

http://www.abcnews.go.com/Business/wireStory?id=3721104

Posted by David Huang | October 15, 2007 8:19 AM