Tyler Cowen on inequality, redistribution, and wealth creation:
We don't take steps to redress inequalities of looks, friends, or sex life. We don't grab a kidney from you to save someone's life, even though that health difference was unfair brute luck. Redistribution of wealth has some role in maintaining a stable democracy and preventing starvation. But the power of wealth redistribution to produce net value is quite limited. The power of wealth creation to produce net value is extraordinary. Most of America's poor are already among the best-off of all humans in world history. We should be putting our resources, including our advocacy and our intellectual resources, into wealth creation as much as we can.
1 comment:
Wrong. Redistributing consumption is exactly the correct remedy for most forms of inequality. For example, because of discrimination, short people earn less money, so do racial minorities, etc. Good old fashioned redistribution addresses that with a minimum of distortions.
Cowen is also kidding himself about how people are motivated. Relative position is more important than absolute position. Entrepreneurs aren't that sensitive to tax rates.
Check out Frank's "Choosing the Right Pond" for a good non-ideological challenge on these issues.
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