![]() ![]() First, there’s ample evidence that these disparities are not increasing the way Krugman implies. This is neither here nor there with respect to Krugman’s larger argument that we are heading toward “government of the rich.” And contrary to what he thinks, these examples do not refute the idea that riches generally are a reward for achievement.Įven if it’s true that America isn’t heading toward plutocracy, some might argue, should we not be concerned about the erosion of democratic sentiment that wealth inequality engenders? No, for two reasons. But the appeal is largely rhetorical, operating in defiance of economic logic. These examples make people more acutely aware of income disparities because they seem to be examples of someone making lots of money for doing nothing. Another example might be a professional athlete who signs a multimillion-dollar contract and then has a terrible year, or a big-budget action picture that flops. One suspects that Krugman has invoked the overpaid but inefficient CEO as a rhetorical device to foment indignation about income disparities. ![]() And the company suffers when they do.īut excessive salaries for ineffective CEOs aren’t directly charged to my account (unlike, say, tax increases). ![]() Do some corporate boards pay their CEOs too much? Sure. The free market respects people’s freedom to make decisions, but it doesn’t guarantee that all decisions are wise. It may be true that some CEOs are overpaid. Part of Krugman’s complaint is that the pay for top CEOs has skyrocketed (4,300 percent!) even in cases where one has had a disastrous tenure at the company. So to lament inequality without taking into consideration real gains by all is morally obtuse at best. If one approach to political economy makes both Smith and Jones richer, but to different degrees, that is preferable to one in which both are equally impoverished. The latter is psychologically, as well as socially, destructive. It’s more a matter of attitude whether I am filled with joy at the increase in my wealth or resentful that the historians have even more. ![]() If all the historians start driving Jaguars, I have still doubled my income. There’s a deeper point about income inequality, which can be summarized as “so what?” Since when is disparity between incomes the only gauge of how good a state of affairs is? If all philosophy professors could double their incomes, but only as part of some scheme whereby history professors would triple theirs, is it not in my interest to agree to this? There’s a sense in which this may be “unfair,” but preferring the status quo is clearly detrimental, to me as well as to everyone else. But there’s scant evidence that any politicians consistently work toward that end. What is in everyone’s real interests, of course, is to have the maximal amount of liberty that is consistent with everyone else having equal liberty. But it is not, since it is predominantly the working class that will bear the burden of paying the higher prices for those goods. For example, it might seem to be “catering to the interests of the working class” to enact import quotas on foreign goods, because they protect the jobs of those who produce the corresponding domestic goods. Other times it means catering to what they see as the interests of the poor.īut politicians are notorious for attaining results contrary to their stated goals. Sometimes that means catering to what they see as the interests of the rich. Even if we wanted to reduce the citizenry to convenient, polarized categories like “rich” and “poor,” the politicians would be a distinct third class. More to the point, politicians are still democratically elected, and fears about campaign finance notwithstanding, it remains the case that a rich person has as many votes as a poor person. For one thing, many of our richest citizens are left-leaning. Rockefeller’s day, there is simply no evidence that we are governed by a cabal of the wealthiest few. Even if it were true that income inequalities are more pronounced now than in John D. If it wasn’t a plutocracy during the hated (by Progressives) Gilded Age, it isn’t now. Even if we grant the assumption that income inequalities are increasing, that wouldn’t make our society a plutocracy. Plutocracy means government by the wealthy. The very title of his column, “Plutocracy and Politics,” is misleading. He needn’t worry himself (more important, he needn’t worry his readers), since his argument depends on misleading arguments about wealth disparities and philosophical confusion about American democracy. In a New York Times op-ed (June 14, 2002), columnist Paul Krugman lamented the increasing inequality between rich and poor, and expressed concern that this will lead to an erosion of democracy. ![]()
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