The Richest

by Dave Schuler on March 31, 2014

James Joyner riffs off of a post by Derek Thompson at The Atlantic:

If the most extreme manifestation of inequality is this variable, it’s not obvious why we need to eliminate it. If we had a top 0.001 percent that was essentially an aristocracy, it would certainly be a problem. But if it’s fluid, with most people and families falling out of the class and being replaced by others, it’s not obviously problematic, so long as it’s truly earned. I don’t begrudge Bill Gates his billions; Paris Hilton, on the other hand, is a different story.

See especially the graph of the change in the concentration of wealth reproduced from the original post.

I see the problem slightly differently as I explained in the comment I left on that post:

I think it depends entirely on what you consider normal or desireable. When I was in college, the top 1% wealthiest accounted for about 25% of the wealth. Now they account for about 50%.

The second question, neither answered nor even asked, is whether policies have been jiggered to account for the change. I think they have. I think that only some of the .01% have been able to create their enormous wealth with any skill other than the ability to manipulate and exploit the system.

The policies in question cover a broad range: trade, immigration, economic, labor, financial, intellectual property, the list is practically endless. Walmart wasn’t just created with retail acumen. it depends on trade and zoning policies, just to name two.

The most recent example of what I’m talking about occurred during the financial crisis. We didn’t have to save the bankers along with the banks but we did. That’s ” this group, comprised mostly of bankers and CEOs”. Those aren’t the Michael Jordans. They’re the beneficiaries of government policy.

The political responses to that have been essentially two. Some have maintained that since the top .01% are so skilled and hardworking and are responsible for creating lots of jobs they’re entitled to retain their wealth. Others have argued that the richest should be taxed and the proceeds given to the next wealthiest 1%-.99%. They don’t articulate it that way but that’s the net effect of their argument.

My own view is different. I think we need to change the policies that are responsible for the concentration of wealth.

{ 6 comments… read them below or add one }

... March 31, 2014 at 4:07 pm

I don’t begrudge Bill Gates his billions; Paris Hilton, on the other hand, is a different story.

Funny, because (a) Paris Hilton isn’t worth as much as most people assume (and I doubt she’s worth as much as is reported), (b) has earned a surprising amount of money on her own, (c) hasn’t been accused (as far as I know) of any predatory business practices or anti-trust violations, etc.

... March 31, 2014 at 4:09 pm

I think that only some of the .01% have been able to create their enormous wealth with any skill other than the ability to manipulate and exploit the system.

What, you don’t think the creation of junk bonds and corporate raiding counts? Next you will be saying the inestimable value-add of high frequency trading is some sort of zero-sum game to extract wealth from the suckers. Sacrilege!

steve March 31, 2014 at 4:38 pm

I wonder if it is too late. The ultra wealthy control much of the media and the political parties. It took the Great Depression to shake things up n the past. The better safety nets we now have, plus the stimulus kept things from becoming as bad this time. Plus, the wealthy have all of their think tanks promoting the ideas that would keep us from addressing this issue. The unemployed are just lazy. We have makers and takers. Etc.

Steve

Dave Schuler March 31, 2014 at 5:15 pm

Next you will be saying the inestimable value-add of high frequency trading is some sort of zero-sum game to extract wealth from the suckers.

I used to debate this regularly with Steve Verdon. I think there should be some kind of a transaction tax on trades, maybe so much per dollar of value per trade. There’s a name for that sort of tax. Tobin tax, maybe?

... March 31, 2014 at 7:29 pm

Steve, things started changing before the Great Depression. That simply accelerated the process. The Red Scare of the teens had an impact, too. And their had been a progressive movement that reached a peak round about then as well.

The rich had to have been shaken not just by the Bolshevik Revolution and the collapse of the Hohenzollern and Habsburg empires, but also by how dicey things got in London and especially Paris at the end of the Great War.

Andy April 1, 2014 at 12:37 am

“I wonder if it is too late. The ultra wealthy control much of the media and the political parties. ”

That’s often asserted, an assumption that apparently needs little evidence. While the rich obviously have disproportionate influence, I’m skeptical that it is as decisive as many claim. I think the bigger problem is apathy.

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