Economics, recent

What If Ayn Rand Was Right About Entrepreneurs and Inequality?

Few public figures have managed to consistently attract both sheer adoration and abject disgust quite like Russian-American author Ayn Rand. Fewer still have created an intellectual legacy with as much endurance as her radically individualistic philosophy of Objectivism.

Atlas Shrugged remains a cherished favorite of venture capitalists and libertarian-leaning politicians all over the planet, with a notable stronghold in Washington D.C., perhaps even within the Oval Office itself. Rand’s literary influence is often derided as a mere reflection of the tractability and moral certitude afforded by her novels, her economic principles disregarded as patently ridiculous. Galt’s Gulch has attracted so much scorn as to become something of a joke, a way to easily scoff at the naive utopianism of laissez-faire capitalism. Rand and her largely philosophical economic views have been consigned to history as an interesting relic of sorts—a compelling, well-articulated fantasy that has no basis in reality. How then should we interpret new research from the Nation Bureau of Economic Research (NBER) that suggests her controversial description of the income inequality dynamic might have been mostly true?

Dan Riffle (self-styled “policy guy” for Democratic congressional wunderkind Alexandria Ocasio-Cortez) currently has the interesting Twitter display name of “Every Billionaire Is A Policy Failure.” The phrase is both pithy and prophetic, at least to the extent that it reveals quite a bit about the political direction that seems most attractive to the more radical elements of the Democratic party. This nascent redistributive agenda is not particularly surprising—decades of real wage stagnation has co-occurred alongside trends indicative of wealth concentration and rising inequality, factors that painfully and repeatedly highlight the enormous and extremely variable proliferation and influence of wealth in American society.

Farhad Manjoo, writing in The New York Times, was recently granted a front page spread to opine on the merits of abolishing billionaires.

Prevailing political wisdom seems to indicate that this unpleasant issue of wealth inequality is inherent to every capitalist economy, more so given rapid technological progress and the automation of manual work. The question that politicians are increasingly compelled to answer is—what should be done? Assuming that extreme wealth and inequality is the result of grift and luck leads to dramatically different policy than accepting that extreme wealth itself might be reliably correlated with net-positive economic outcomes.

Any attempt to drastically alter the distribution of wealth in an economy necessarily starts with the premise that the current distribution is fundamentally unjust, or at the very least socially undesirable. French economist Thomas Piketty summarized the problem neatly in his hugely influential book Capital in the Twenty-First Century—when returns to capital exceed the rate of economic growth (formalised as r>g – as has largely been the case in America) inequality will worsen as capital income accumulates and concentrates amongst a shrinking cohort of inordinately fortunate capitalists. Thinkers of a Pikettian bent are primarily opposed to such a dynamic because it is suggested to be inherently unstable, rendering society increasingly prone to civil and political turmoil.

In contrast, Manjoo, Ocasio-Cortez (and a large number of potential Democratic presidential nominees) oppose wealth inequality mostly on moral grounds, as positive proof that wealthy individuals enact mass exploitation and economic misery thanks to a complex system of oligarchy and nebulous political influence. Simply put, the core of wealth inequality is commonly purported to be the returns that accrue to beneficiaries of unfair legislation or those who simply enjoy the ownership of capital without undertaking any kind of productive economic activity. This is also a view supported in principle by Piketty and largely the Democratic party as a whole—a view that is now almost entirely accepted as economic fact. Indeed, it seems fair to say that the Democratic party has something of a friendly relationship with Piketty—he’s previously participated in an interview with Elizabeth Warren, expressed his admiration for the politics of Bernie Sanders and earned a nod from Hillary Clinton herself. His name appears to hold considerable weight amongst the Democratic establishment.

Alarmingly, recent research on the matter raises the prospect that Piketty may be almost entirely wrong, in that income inequality is primarily driven by labor income that is realized as profit by owner-managers of mid-market firms. This is a mechanism consistent with Rand’s basic premise—that extreme incomes are predominantly earned as a function of the exceptional abilities and efforts of skilled entrepreneurs, not by a class of passive capital owners. Piketty does recognize that entrepreneurs may generate extreme incomes via their own efforts, however he also warns that such entrepreneurs tend to accumulate the capital that precedes the creation of a rentier class and entrenched wealth inequality. The NBER view suggests this warning may be unnecessary, as the primary source of income inequality is demonstrably earned business income—income ultimately attributable to the labour efforts of skilled owner-managers that does not remain tied to any particular stock of capital nor persist through multiple generations.

Furthermore, Piketty’s famous inequality, r>g, may yet prove to be less important in itself given the recent strong performance of the U.S. economy. While the NBER data suggests that Piketty’s view of wealth generation and accumulation may be somewhat misspecified, persistent economic growth may yet prove to render his conclusions impotent on their own terms—his central thesis recognizes that income inequality is suppressed during periods of high economic growth. Given the recent performance of the U.S. economy, Piketty may yet live to regret or even update one of his own conclusions—this being that there is no reason to believe that the long run economic growth rate can exceed 1 to 1.5 percent annually. The Trump administration has so far succeeded in overseeing a period of economic expansion that Piketty himself would admit is highly unusual and inimical to rising inequality even in the absence of any specific policy.\

In any case, the assumption that extreme variance in income or wealth is largely due to market or regulatory failure renders highly progressive income tax regimes or statutory wealth taxes tremendously popular amongst both Democrats and Republicans. Ocasio-Cortez is promising an aggressive top marginal tax rate of 70 percent (for those lucky enough to earn over ten million annually) while Elizabeth Warren is exploring a wealth tax of 2 percent. Despite their political appeal there is no particular reason to expect that these taxes would alleviate inequality in America—firstly, because high earners (especially those deriving income from capital) don’t pay tax in the same way as wage earners do, and secondly because such taxes often fail to deliver the desired outcome in practice. The French socialist president Francois Hollande was famously forced to abandon his 75 percent income tax in 2015—despite the tax enjoying the overwhelming popular support of French voters, as it raised very little revenue.

Indeed, this may not be surprising—the average voter is, by definition, not extremely wealthy, and the rich can often use their considerable resources to avoid tax or move somewhere with a more amicable tax regime. Rand extensively argued that progressive taxation and all other forms of redistribution were ultimately harmful, and that a healthy, thriving economy will necessarily involve a class of hyper-rich capitalists. However, any evidence for the empirical plausibility of Rand’s work carries the politically toxic connotations of being pro-greed, pro-inequality and anti-worker.

In essence, the current political debate on the issue of inequality is an attempt to provide an answer to a normative moral question—one that rests upon the assumption that no-one truly deserves to be a billionaire, or earn an income that exceeds some arbitrarily high threshold. The danger in this thinking lies precisely in what is assumed, and the consequences of enacting policy based on potentially false assumptions. While it may be true that the mere existence of billionaires and extreme wealth disparity is a reliable source of some social discontent, it must be first examined whether addressing this discontent (as part of a legislative agenda) will ultimately prove worse than allowing the discontent to remain while enjoying the diffuse economic benefits that are often associated with extreme individual wealth in the first instance. The NBER research overwhelmingly suggests that not only do high-income individuals work to accrue their wealth, their businesses suffer and often close after they cease to be involved in management. This is entirely antithetical to the growing popular consensus that inequality is tightly correlated with exploitation and systemic inequity.

Wherever this debate may lead, the name Ayn Rand is likely to remain highly unsavoury in political circles. Paul Ryan famously retracted comments he’d made about enjoying Atlas Shrugged, such was the negative reaction he received when it was rumored he asked all his staffers to read it. However, on the specific topic of wealth generation and income inequality her work must not be overlooked—as much as it might be painful for some to admit, on what may prove to be the most politically charged issue of the 2020 election, she might have had a point all along.

 

Cameron Hendy is a political commentator living in Melbourne, Australia. 

Feature photo by catwalker / Shutterstock.

256 Comments

  1. Sean Leith says

    Since when inequality is an issue to the society? The only argument against inequality would be: that would cause some people unhappy. They are unhappy doesn’t mean they should be. Everyone is playing in the same field, with equal rules, understand those rules, some people get rich faster than the other. But everyone get richer by play the same rule.

    The leftists are happy that everyone makes $1 a day, while angry making $10 day while Bill Gates makes $1000 a day.

    • Nakatomi Plaza says

      Wow, you are a child. You really think the rules are the same for everybody? You are completely, totally unequipped to have an adult conversation about this issue. And a quick internet search confirms that Bill Gates makes something like ten million dollars a day. Yea, every goddam day, but he’s worth every penny, right?

      • E. Olson says

        NP – If it makes you feel any better, the Gates foundation disperses $14 million per day to various charities and good causes. Of course he and his wife get to decide which charities and good causes get his money, so I guess we can still hate the bastard for giving away his fortune instead of paying more taxes and letting government bureaucrats decide how to spend his money.

        • Sneed Urn says

          EO to NP You know that is not really the point. Gate’s philanthropy is laudable. Political rule by the financial elite is not.

      • Ryan says

        Bill Gates is probably overpaid, but limiting his ability to earn money, isn’t going to make poor people richer. In fact it might make them poorer because he gives most of his money to charity. It is also important to understand, most of Gates’ wealth is not liquid. It is in Microsoft stock etc. and exists only on paper.

        I would be more upset if he consumed more 10 million a day. I don’t think that’s possible though.

        • Lynne says

          Ryan: the whole world can never get richer. It will never ever ever ever happen. The whole world will never be smart or savvy or lucky. Inequality will always exist. The worst inequality, however, is the kind the government dispurses

        • Ryan says “Bill Gates is probably overpaid”–by whom? Bill Gates got his money because people wanted to invest in Microsoft stock. They raised the value of his shares. So who is any outsider to say, “Investors are overpaying for Microsoft”?

          Under capitalism, no one has any money other than what he was given either in trade or as a gift. So the complaints “He has too much” reduce to “People should have been allowed to buy so much from him (or gift him with so much).

      • peanut gallery says

        NP, I think it’s childish to assume you have the power to determine everyone’s worth. What’s yours? Your neighbor? Maybe he is worth 10 million. Maybe not. What’s the metric to determine this? It’s just emotional rhetoric. Now I actually think that maybe it IS needed to reduce the power and influence of the rich and powerful to create more stable society. I also don’t presume to know the worth of every CEO.

      • Francesca Serrecchia says

        Yes. Of course he is worth every penny. He made Microsoft! I wish I could ask if you were joking but I know enough to know you’re likely serious.

      • Carl says

        Bill Gates is one of the greatest benefactors of humanity – ever. His charitable endeavors are just frosting on the cake. The vast wealth he created has accrued to millions of individuals in the form of good jobs at Microsoft and the even more millions in the industry and small businesses that sprang up as a result. Then there are the plumbers, mechanics, salesman, etc. who themselves have prospered while providing goods and services to this flourishing offshoot cohort.

        Do you understand the metaphor “eating your seed corn” – that’s what confiscating or capping the wealth of individuals like Gates would be like.

      • As a matter of fact he is. Compared to what he has contributed to the prosperity and increased productivity of others, his ten million a day is a pittance.

      • Phil Major says

        “Bill Gates makes something like ten million dollars a day. Yea, every goddam day, but he’s worth every penny, right?”

        Worth? Worth what to whom? What does worth have to do with anything?

        The question should be, does he earn his wealth in a just manner? if yes, and it seems clear that he does, then it doesn’t matter how much he earns or how much he stacks up. It’s his.. and his having a whole bunch of money is for him to worry about, not the commentariat that despises wealthy people for having stacked up serious cash.

      • Sam Mazzuchelli says

        While Bill Gates is, like you, a left wing puke, he is more so a technical and entrepreneurial genius. His inventions and corporation changed the world for the better and continue to do so. Check the stock price.

      • Steven Farrall says

        That doesn’t pass the ‘so what?’ test. If Gates serves millions of customers well he deserves his profits. However, if he is enjoying that income as ‘rent’ or he has been aided by special privilidges then it is wrong. Most wealth inequality days lies at the feet of government policy failure over areas including tax and subsidy policy, bad money – i.e. unwarranted credit expansion and mis-priced money, and favouritiem to landowners. These are postive failures of government note, not negative failures. Most positive government interventions fail.

      • Nockian says

        Clearly he is because people freely vote with their wallets-setting aside any cronyism since MS were forced by the Government to appoint lobbyists.

        The rules are not the same for everybody as long as Government is the involved in the productive economy, but when Gates began his business he wasn’t assisted by the state. Indeed IBM were top dog until MS began cutting the cost of small consumer computing -the value to all of us of this innovation is incalculable.

      • Scoop says

        Why call someone a child rather than pointing him to what you believe to be the best article demonstrating that the rules are not the same for everyone?

        Personal attacks don’t win converts. They make people angry.

      • Defenstrator says

        I think it is you who are unequipped for adult conversation. Your consistent name calling and inability to examine things in a neutral rather than self righteous fashion speak to an immaturity that makes actually intellectual conversation beyond you.

      • Peter LePort says

        Yes, he is worth every penny of it. See “Capitalism: The Unknown Ideal” by Ayn Rand.

      • Earl Goudie says

        Look at what Mr. Gates produced; Microsoft, you’re damned right he’s worth every penny!!

      • ccscientist says

        How exactly did Bill Gates “steal” his $? He produced products that people wanted at low prices. Where is the theft?
        The unfairness does come in when people use political connections to harm competitors or to get contracts, but that is called corruption. It should be rooted out.

    • Stephen Grossman says

      The only argument against inequality would be: that would cause some people unhappy. They are unhappy doesn’t mean they should be.

      Their unhappiness is their problem, not a problem of other people.

    • J. P. Miller says

      Growing up my family was very poor at a level that church groups left groceries at our door. I never remember either of my parents ever disparaging the rich. By high school my father was working two jobs. They taught us the values of work, saving and honesty. We were instilled with a confidence that we could do and accomplish anything we set out to do given those virtues and the freedoms we enjoyed in the United States. By high school 3 of my siblings and I all had jobs. Three of us ended up in satisfying professional careers and one a tradesman/entrepreneur. My father lived comfortably until his passing. All of us children would be classified by most as rich in our retirement.
      There are those who have much more than I do. I praise people like Bill Gates who made the lives of billions of people better and more productive. I praise people like James Hardin who entertains me and a million Rockets fans with his skills. I praise people like Elon Musk who sets the sights of human imagination on the stars.
      There are also those who have much less than I do. I praise them as well. My father who demonstrated those values and raised such a fine family. The Vietnamese immigrant who worked diligently sewing for my wife’s business. Also poor she earned money so her children could go to college. The man who cleaned the restrooms at work always had a smile and cheerful greeting as I did for him. My neighbor’s hired hand works 6 days a week to feed his family and offers to do odd jobs for me on Sunday.
      The only people who earn my ire are those who claim that each of these people should be equal and that our system is evil for allowing them to be unequal and by golly if they aren’t equal they will use the force of government to make them equal. That is an utterly ridiculous goal on its surface.
      Not one of those people wants to be the other or do what the other does. Not one of them expects or even remotely thinks they deserve what the other has. Every one of them when they wanted something more, set out to get something more, not wealth that someone else already had but physical skills, fame, an easily used operating system, space flight, a happy life, college for their kids or a satisfying career.
      Each of the people in my examples have made the lives of people around them richer but not for that purpose. They did it for their own purposes, to make their own lives richer. They achieved it too. To hell with equality!
      Ayn Rand observed what I am describing here and called it the American sense of life.
      She taught me first that living my life that way was moral, contrary to those who claim we need the government to enforce equality. Then she taught me tools to make my life happier and more productive. Her richest legacy is that if we wish to live our lives we must create our own wealth to the greatest extent we are capable.

    • david of Kirkland says

      Social stability is a goal of good governance. Revolutions arise when inequality is associated with unfairness. You can assert your claim, but it won’t feel good if the uber-rich heads land in a basket.
      Sadly, tax rules that favor the rich help them over regular earned income, and that disparity is what corrupts politicians, sustains political parties (factions voting rather representatives we elect).
      And it seems that rich corporations buying and merging can surely be anti-trust.
      Google is a search engine. Fine, be the best one you can be. But once it entered the phone business, it perhaps should be another company. Once it entered document creation, another business. Once it entered social media, another business. Once it entered selling ads, another business. Once it entered automobiles, another business. And on and on and on….
      Free markets are best when there’s choice and competition. Big conglomerates are likely the opposite, and are nearly always necessary for individuals to amass huge wealth compared to leaders of a single industry.
      We saw this Microsoft, which started off with an OS, then added documents and spreadsheets, then spread into ever more software, databases, accounting, web server/browsing, and now offers cloud computing. By putting caps, we’re more likely to have lots of competitors in those spaces rather than allowing the king of one industry gobble up all the competition or price them away as loss leaders.

  2. johno says

    If the left would bother to study history, they would learn how well their ideas work.

    AOC’s ‘new green deal’, if you read the unedited version, is just a rehash of the Communist Manifesto… and history tells you what an economic failure that was. Let’s not even get into the millions murdered by Stalin and Mao, or the general misery that pervades the pure communist nations. Or the ecological disasters that befell the large communist nations.

    Nor is their view of billionaires as exploiting the masses rooted in anything but imagination. The tech billionaires didn’t exploit people, they became wealthy by making a lot of people’s lives better. They have also opened up opportunities for the ‘little people’. I am working on a tech idea that wouldn’t be possible, were it not for cloud technology and mobile technology. If you understand tech, you also understand what a great equalizer those two inventions are.

    Wait, isn’t that what the left claims it wants to do? And their vision of how to enact that is to run off the very people who are doing just that? One begins to wonder if the left resents tech billionaires, because they aren’t one.

    Even if we look back to what might be termed exploitation of workers by today’s standards, the Industrial Revolution, we also find that the population of the UK skyrocketed during that period. Why? Because people had jobs, and had food. In more feudal times, there just wasn’t a lot of food to go around, so the birth rate was low, and infant mortality was high. Viewed from the perspective of results, the Industrial Revolution made a lot of people’s lives better. Not by today’s standards, but when lack of a job meant starvation, it provided jobs… lots of them.

    Driving off tech billionaires won’t ‘blunt tech driven inequality’, it will simply result in the tech relocating to a more accommodating nation, taking their inventions and their tax payments with them. And those on the left will have… nothing.

    Brilliant, just brilliant.

    And please… don’t tell them to ‘learn to code’. The last thing we need in the tech industry are people who react on emotion, and can’t get their facts right.

    • Morgan says

      Sure, they make people’s lives better by being good managers, mostly. Or by getting lucky and smart and catching a trend. They deserve something, certainly. But they don’t deserve billions of dollars. They don’t deserve who knows how many mansions when so many people in our country are homeless. And they certainly don’t deserve the political power their money affords them simply because they’re good managers.

      • Ryan says

        I agree with you, although, since the richest 3 men in America supported the losing side of the last presidential election, I would suggest we ask ourselves how much power they have.

        The problem is, caping their income, won’t reduce homelessness. What is the point of hurting billionaire’s if it doesn’t help others, and in fact may hurt the poor.

        Also, people who have multiple houses, don’t often have multiple mansions, and if so, it is an investment property. Investing in properties is good, because it increases the number of available houses.

        • Stephen Grossman says

          What is the point of hurting billionaire’s if it doesn’t help others, and in fact may hurt the poor.

          For nihilists, destruction is an end in itself, not a means to an end. Morality is a guide to life, not the sacrifice of life.

          • Douglas B says

            Stephen G., I agree with you because I know what context you’re coming from. However, the average reader does not. Your statements would be more intelligible and convincing if you argued with facts prior to broad abstractions.

        • johno says

          History becomes relevant again: During the late 1800’s, over 1/4 of the nation’s wealth was owned by four men: Carnegie, Vanderbilt, Morgan, and Rockefeller… the .0001%.

          While that did result in monopoly abuse, the electorate responded, and we moved forward. If that couldn’t do the nation in, neither could the current situation.

      • The Ulcer says

        “But they don’t deserve billions of dollars.”

        That is a problematic statement. If we create a system in which policy directives are aimed at what people deserve, it certainly won’t end with income. Who decides what someone deserves? Slippery slope.

        • Sam Mazzuchelli says

          The Red Chinese do. What did I read recently, 17.5 million air flight ticket transactions were blocked due to insufficient “social credit”. Wait until the Dims get their mitts on that concept. Venezuela here we come.

        • Scoop says

          You have to have a system that, in some way, sets rules to encourage behavior that society wants more of and discourage behavior that society wants less of. We don’t want people to amass wealth through robbery, so we put robbers in jail and return their plunder to their victims. We do want people to amass wealth by doing things that make us all better off, however, because it gives people an incentive to do more of those things.

          But when you’re making the rules for the system, you really have to think of what activities you want to encourage, what you want to discourage and make sure your rules effectively enforce those preferences. A lot of resentment at the very wealthy these days, IMHO, stems from the fact that many of them seemed to have amassed their money from activities that have either done nothing to benefit society at large or hurt it.

          In that way, societies are always forced to decide who “deserves,” great wealth, although “deserves” is a childish way to put it. It’s more that societies are always forced to try to maximize general welfare by deciding which activities can generate great wealth.

      • Craig Willms says

        @Morgan

        I don’t pretend to know the answers to the homeless problem, but who are you to determine what anyone ‘deserves’. Almost everyone of these billionaires created something of extreme value and employed thousands directly and millions indirectly. Even their mansions had to be built and furnished (and maintained) thereby providing even more jobs for average people and probably reducing potential homelessness. Most of these guys are not scrooge sitting on piles of money – the $$ gets put back to work.

        Stripping billionaires of their wealth in civilized modern nations is not going to solve inequality problems.

        Stopping cronyism and corruption (in government and otherwise) would go a lot father. But this gets even less lip service than all this anti-billionaire talk.

        • Scoop says

          The answer to the homeless problem is to institutionalize people who cannot take care of themselves, not as some sort of punishment, but as a protection of last resort. A halfway house that let people do as they liked during the day before returning at night would probably be fine for most, but people with major mental illness need residential care unless/until their problems can be reliably managed. It is no more kind to let them be totally free than it would be to let a nine year old be totally free.

        • Stephen Grossman says

          I don’t pretend to know the answers to the homeless problem

          Abolish Progressive education and its anti-cognitive methods. Even classical education is vastly superior.

      • Doug F says

        Who are you to decide what they deserve? The free-market at least has a set of objective rules for making the choice.

        • David of Kirkland says

          @Doug F – Well, government gets to decide. There is no free market without government (what currency would be used? what contracts would exist? what protections from fraud would exist?) oversight.
          Antitrust is a real issue, and letting the rich use their power to take over additional industries isn’t good for competition or the concept of free markets.

      • Stephen Grossman says

        But they don’t deserve billions of dollars.

        If morality is symbolized by a man tortured on a cross, youre right. But if morality is symbolized by Michelangelo’s statue of a rational, self-confident, self-respecting David, youre wrong.

      • johno says

        What is your yardstick for what someone ‘deserves’? They are already shouldering a huge tax burden as it is.

        The practical reality is: if you move to take most of the wealth that these people have created, and in most cases they created it, not inherited it, they will just move to another country, and take their tax payments with them.

        And you’ll end up with nothing.

      • ccscientist says

        These rich people provide most of the jobs in the country. You are free to create as many jobs and take a lower salary if that pleases you. Why do you care how much Warren Buffet makes? How does that harm you? Oh, I know, poor people still exist. Someone once said: the poor will always be with us. Is it better to help the poor by throwing money at them or by giving them a job?

      • Uhtred69 says

        Morgan someone that can run a Starbuck’s outlet effectively and profitably is a ‘good manager’. A CEO running a company is a completely different animal. They are, as a rule, high achieving, insanely driven individuals. Try and follow one around for a month and see if you can handle the mere hours alone, (hint: the Starbuck’s Manager gets to go home at the end of the day).

        They don’t typically earn billions but there are exceptions. What they make is what they can negotiate in the marketplace. If you disagree become a shareholder, organize a block of shareholders and fire the CEO, (and team), of a particular target company rehiring your version of the appropriate compensation package. If it works, (and I’m with you on this one), then you will change not just that comp’ package, but that will also trickle into the rest of the sector.

    • Ray Andrews says

      @johno

      If anyone suggests some adjustment to the tax code or to some other policy that might just possibly help the 99%, out come the dire warnings of Mao and Stalin. What’s that whimsical ‘law’ that says that in any emotional discussion Hitler will be invoked sooner or latter? We have the parallel ‘law’ that that should a ‘socialist’ suggest the tax on caviar be raised by 1%, that we are one step from the Great Leap Forward and the Cultural Revolution and the Gulag. Please folks.

      • Phil Major says

        When those at the top already pay most of the income taxes collected, what would the justification be for taxing them further?

        That is, since taxes are levied to offset costs, one’s tax bill ought to approximate their costs. Nobody has a problem paying a little more, but those who pay orders of magnitude more than they cost the government are already unjustly taxed.

        To pile on further is to simply add to the injustice.

      • I find that to be an exaggeration. And a willfull ignorance of the progressive tax code. Certainly in Canada the bottom 20% income earners receive a tax credit for some income and more in benefits for all the rest. The top 10% in contrast pay a massively disproportionate share. So when I see people talk about the importance of income redistribution I generally assume they have no idea what they are talking about. Because if they did they would know we already have it.

      • johno says

        I like that ‘some adjustment’, nice and vague.

        What the left is proposing isn’t ‘some adjustment’, it’s a major adjustment that will drive off the creative minds that are creating tech wealth in the US, instead of somewhere else.

  3. P. Visser says

    Interesting study and clear article. However, the core of Rand’s thinking on economic inequality was not that it happens to be practical, or just that it is caused by differences in individual (economic) productivity. Her essential point on this topic was that it is moral for the individual to strive for his values, and that he himself should be the benefactor of his actions. (This should be done rationally, which she considered to exclude things like stealing, looting, mooching, lying, fraud, etc.) Whatever economic inequality happens to result from different individuals doing ‘their thing’, voluntarily, is therefore morally right, and redistribution is therefore wrong.

    This moral philosophy of rational egoism is what causes the most hate against her, not that she celebrated productive persons, or said that free markets work, though those are related: the moral ís the practical, as she would say.

    Nice that the Intellectual Dark Web is paying attention to Ayn Rand, who I consider an important proto-member!

    • Serenity says

      P. Visser,

      Moral philosophy of rational egoism has its limits. As far as market concerned morality varies from one society to another and evolves with time.

      Thirty years ago, in UK entrepreneurs could earn much more engaging in anticompetitive behaviour like abuse of dominance, restrictive practices, etc. That was perfectly legal and therefore moral. Hundred of years ago entrepreneurs could paid their employees significantly smaller proportion of profits because that was generally accepted practices.

      Why would you pay your cleaner more than £8 per hour when there are illegal immigrants who would work for less?

      Market needs regulation to stop rational egoism from abusing market power.

        • Ray Andrews says

          @E. Olson

          That we are cancerous with hypocrites (we are) is not an argument that regulation is not needed. What is needed is some understanding that vigorous oversight of government is always required. We have in parliamentary systems the government and the official opposition and we know why that’s necessary. But the bureaucracy just ‘sits there’. We need an equivalent of the official opposition but for bureaucracy — the official anti-bureaucracy. It’s a new idea, we have no such thing, but we need it.

          • E. Olson says

            Ray – the bureaucracy used to be run on a patronage basis, where the party winning the presidency could stock the agencies with his own people and cast out the opposition people. A supporter of James Garfield didn’t get the job he was expecting and shot the president, who later died from infection from the surgeon sticking his dirty finger in the wound to find the bullet. In response, civil service reforms were put into place to professionalize the bureaucracy and take the “politics” out of it by making it virtually impossible to fire federal workers once they were qualified and hired for the job.

            Congress has gradually delegated actual law interpretation and enforcement to these bureaucracies over time, and new agencies have been regularly added, which means most “government” is actually done by unelected “professionals” who can’t be fired, and who get status and power by increasing their budgets, staff, and legislative oversight. Guess who tends to be attracted to secure jobs, larger government, and more power? If you guessed big government Leftists you would be correct. Thus any initiative to cut budgets, deregulate, or close obsolete agencies and programs is fought with great resistance, which means Republicans can rarely get their initiatives obeyed and enforced, and even Democrats can struggle if their initiatives require efforts not in keeping with the desired work habits of the unfireable bureaucracy. On the other hand, a Leftist bureaucracy with complete job security means that Republican’s can never get tough on crooked Democrats such as Hillary Clinton, Lois Lerner (IRS scandal), Maxine Waters, or Andrew McCabe, but Democrats get eager bureaucratic cooperation to go after their political enemies (see the totally fake Russia investigation as the latest example).

            So how would a “anti-bureaucracy” work? Why wouldn’t it also turn into a bloated, non-responsive, Leftist cancer on limited and efficient government?

          • Ray Andrews says

            @E. Olson

            Thanks, that was a nice summary of the situation. Entirely correct in my view.

            “So how would a “anti-bureaucracy” work? Why wouldn’t it also turn into a bloated, non-responsive, Leftist cancer on limited and efficient government?”

            That’s the big question. Where I start tho is just by facing the problem squarely. We KNOW that governments get corrupt so we institute official oppositions who’s job is too ‘prosecute’ the government constantly and thus at least give us a prayer of holding corruption at bey. But we do not yet take similar measures against bureaucracy and I’d say we should. We need to KNOW — institutionally and formally — that all bureaucracies bloat given the chance.

            Yeah, the anti-bureaucrat bureaucracy is itself a bureaucracy, but then again opposition politicians are themselves politicians, but we do get some value from having an opposition. You guys have your GAO, who I understand have bureaucrats pissing themselves in fear should the former be standing at the door. We have the Auditor General, who likewise can dig up any corruption. Our Sheila Fraser brought down a government. So, why not have a similar mechanism, not for outright corruption, but for mere, bloat and waste and delay and unaccountability and … so on? History shows us that efficient bureaucracy is possible. We are wrong to say that nothing can be done. Heck how about we try? The Deep State is untouchable. Let’s touch it with malice aforethought.

            Basically I don’t know what the answers might be, but I do know that we haven’t even tackled the problem in a systematic way. We whine about the weather but we don’t do anything about it. We are shocked and appalled by bloat but what mechanisms are in place to tackle it? None, really. Let’s make fighting bureaucracy part of our daily hygiene.

            Mind, bureaucrats should be very well paid and very well treated, but if you work for the government, only the highest standards will be acceptable. And you will sign letters: ‘Your humble servant’. (Can you imagine ?)

          • Saw file says

            @ Ray dolphin
            An effective proper counter to entrenched government bureaucracy is something I have pondered for a few decades now.
            The 4th estate used to be marginal counter to the worst most blatant/obvious excesses. Current investigative journalism has generally become generally politically/ideological, in it’s bent.
            The only viable solution that I see for a legitimate watchdog of bureaucracy is the ‘retired’ citizenry. Most especially the retired bureaucrats.
            They know the’system’ and due to locked in pensions they are somewhat untouchable.

        • Serenity says

          Sorry, E. Olson, I should’ve made myself clear.

          What I meant was regulation of western markets by, for example, UK Competition Law or US Antitrust Law. Competition watchdogs implement antitrust enforcement against cartels, prevent building of monopolies by controlling mergers and acquisitions. If it is not possible to avoid a monopoly, the company’s market power is regulated, for example, by capping prices.

          Ray Andrews, I agree with you in principle, but I would not call entrepreneurial spirit ‘greed’ or even ‘rational egoism’ because of negative connotations.

          For most of us, getting out of our comfort zone to take risks and start our own business, would be too stressful to even think about. It is our good fortune that some of us actually do it and create jobs for the rest of us as a result.

          The entrepreneurial spirit is a powerful drive behind the market economy.
          Of course, the growth of our enterprises should be limited, and the market should be regulated to maintain a balance: to allow for other stakeholders’ interests, to keep wages fairly high, to support the market’s diversity and competition, to avoid or restrain monopoly and to stop abuse of dominance. However, the only alternative to the market economy is a soviet type of suffocating bureaucracy.

          • E. Olson says

            Serenity – no need to apologize – I enjoy some spirited debate even if it might be based on mistaken interpretation. I agree that anti-trust is a very important government function, that has been taken too lightly at least in the US.

          • Ray Andrews says

            @Saw file

            “The only viable solution that I see for a legitimate watchdog of bureaucracy is the ‘retired’ citizenry. Most especially the retired bureaucrats.”

            That is one hell of a good idea. Juries of retired citizens partially consisting of, and always able to consult with retired bureaucrats themselves.

          • Stephen Grossman says

            the growth of our enterprises should be limited

            Should it be limited to the ambition of a Bill Gates or a heroin addict living in a cardboard box on a sidewalk?

      • Doug F says

        I would agree that markets need regulations – to ensure that criminal activities do not occur, to ensure that we account for actions they take that impact others (e.g. sending their sludge into rivers), etc. We do not need and should not want regulations aimed at ensuring some people should not be allowed to earn more than some arbitrary number.

        Also, show me where giving people money for nothing has done anything positive for the long-term income equity of a system? In most cases it seems to create a growing class of people demanding money for nothing – an unsustainable model.

      • ccscientist says

        “Market needs regulation to stop rational egoism from abusing market power.” This idea of market power is called monopsony–it is the claim that a business can exploit workers because the workers have no choice. But look around. People quit their jobs all the time. There are oil field jobs open right now in Texas, if you want one. Where is the monopsony power? Likewise, the claim that a business exploits customers. I may think you are an idiot to line up all night for the latest movie or Apple product, but there is no way the company made you do that.

    • Ray Andrews says

      @P. Visser

      Except that Rand and people who think like her tend to suppose that these titans create their wealth on a sort of economic blank slate which is manifestly false. Society creates and maintains the playing field on which they score. People like myself would that that, therefore, the billionaires should be required to pay for the upkeep of the playing field that has served them so well. Even, perhaps paying the grounds keepers. Is it just a coincidence that the societies that produce the most billionaires are the Western mixed economies? Yes, those societies in which we take care to feed the goose that lays golden eggs? Contrast Guatemala where wealth concentration is even worse than America but where, surprisingly, few billionaires are created.

      Perhaps the truer just-so story about economics is that the best policy is ‘Trickle UP Economics’ — citizens wealthy enough to buy your new i-pad, with enough leisure time to spend on facebook, who are well fed enough not to feel the need to burn down you mansion, who have been more or less educated at public expense (sufficient to be useful workers to you), who feel some sort of investment in the same system that has made you rich (because they, too, feel some benefit) … maybe that’s how it really works? Perhaps Greed Is Good, but one can have too much of a good thing?

      • E. Olson says

        Ray – Billionaires from the business world (as opposed to socialist dictator world) get such large sums mainly on the basis of heavy sales volume (or projected sales volume) that makes their stock ownership so valuable. When markets are local (as they have been historically), an entrepreneur’s sales volume is limited by the size of the local town or county or small country (e.g. Guatemala), so getting rich in such places may require some ruthless greed (and bribes to get government protection/cooperation). On the other hand, it doesn’t really require much greed to become a billionaire when markets become national or global, because it becomes relatively easy to rack up big sales. To become a billionaire in the US means generating an after tax profit of $3 per US citizen, or if we limit ourselves to the 2 billion people globally with a Western middle-class income or higher, our billionaire only needs to have an after tax profit of 50 cents per person. That doesn’t seem so difficult when you are selling air (Google) or $5 cups of coffee (Starbucks), but you still need an idea and execution that will provide something that people will voluntarily give you their money for.

        In the modern economy nothing is stopping you or me or anyone else from having that billionaire idea except our own cognitive limitations and risk adverseness, as venture capital and professional help is easier than ever to get for those with a great idea (and even many with bad ideas). On the other hand, who is the truly the greedy party when governments decide to use their legal authority to take large amounts of wealth from the “greedy rich” who have created wealth for themselves and their shareholders (which include pension funds, and endowment funds), and jobs for thousands more by profitably serving customers, and give it instead to voters (and illegals) without good ideas, but who want “free stuff”? I don’t think very many rich people are adverse to paying taxes for the infrastructure and basic government services that have helped them generate their wealth (but are also available to everyone else), and many are very generous in giving to charity, but a large and permanent welfare state is much more problematic and prone to corruption and destruction.

        • Ray Andrews says

          @E. Olson

          “having that billionaire idea except our own cognitive limitations and risk adverseness”

          Or working three jobs to pay the rent and not having the money for a computer with which to pursue an idea. I basically don’t disagree tho. I really have no problem with billionaires. A prosperous society should produce many.

          “a large and permanent welfare state is much more problematic and prone to corruption and destruction”

          True. It needs oversight by a dour Scotsman. But knowing you will never go hungry is a liberation in my view that could reap dividends in all sorts of ways. BTW when I was young and creative I came up with two ideas that I thought were very good (one could change the world), but I was working at the time, and had little time or spare funds to pursue them. I suspect that kind of thing happens all the time.

      • Joe Ligotti says

        Funny how the so-called playing field created by ‘society’ (whoever the hell that is) was the same as it was for everyone on the planet when Gates and Jobs started – yet these were the men whose actual achievements put it all together to create the incomparable value of Microsoft and Apple.

        To the billions they made in voluntary trade with their customers, I would add the coin of my personal gratitude and admiration. When I look at the balance sheet – their money vs. the incredible values they have contributed to my life – I think I got the better end of the deal.

        • Ray Andrews says

          @Joe Ligotti

          You make my point for me. Yes, Gates and Jobs had enough personal wealth/security, enough free time, enough education and enough faith in the system to do what they did. A moderate amount of social spending is the very thing that gives ordinary people enough resources to pursue their dreams.

          But, if you are the sort of person who doesn’t know what society is, then my words are wasted on you.

          “To the billions they made in voluntary trade with their customers”

          During the darkest days of the Microsoft monopoly, trade with Bill was ‘voluntary’ in about the same way that trade with any monopoly is. Then I found Linux.

          • neoteny says

            Then I found Linux.

            I’ve got my 1st email address in 1989. It was a dial-up connection (2400 baud) to an ex-colleague of mine, who had a 386 on which he was running Xenix (a Unix adaptation) & on which he gave me a user account. Admittedly, the OS wasn’t free: but the 386 architecture, with its flat 4G address space made it possible to run a professional OS on it which was neither MS-DOS nor Windows 3.1 — in 1989. (Neither was my OS a Microsoft product: I had an Acorn Archimedes at that time — the 1st personal computer with an ARM CPU — running the Arthur OS.)

            But you’re right in the sense that for the average Jane, Linux was the first easily accessible alternative OS.

          • Stephen Grossman says

            ——During the darkest days of the Microsoft monopoly, trade with Bill was ‘voluntary’ in about the same way that trade with any monopoly is.

            You chose trade w/MS because it benefited you more living in a cave on raw bear meat. Nobody stuck a gun in your face.

          • ccscientist says

            Such an accidental monopoly can’t last and in the case of Microsoft it did not last. It is the competition of the market that makes sure it can’t last, not a benevolent socialist dictator.

        • TarsTarkas says

          Gates had a considerable amount of what is now pejoratively called ‘white privilege’ which is documented in Malcolm Gladwell’s book ‘Outliers’. On the other hand, he was able to use the access he had to the very limited computers and computer availability at the time to jump-start his future business activities. Lots of people growing up in his day had advantages equal to or far greater than his. He did something with it, which is more than can be said for most of the other ‘privileged’ of his era.

      • Stephen Grossman says

        billionaires should be required to pay for the upkeep of the playing field that has served them so well.

        Man is born free of man. Man is not a slave of man. Your hatred of the American Revolution is noted.

        • Sneed Urn says

          Man is born free of man? Really? It is an indefensible statement on a biological level and transparently observable practical level. Nothing can be more basic than biology. That kind of distorted and unthinking rhetoric and its absurd root “philosophy” really should be put to bed. Its tediously wrong.

          To be born and to survive man requires society. Man depends on man. It is not optional. You are not free of other men if you choose to live. No one is. Man’s only true “freedom” in the sense you propose is to choose to die. And to be clear, mutual dependence does not mean slavery, it means survival, and even prosperity.

  4. Tersitus says

    Someone please explain to me why Piketty would find “no reason to believe that the long run economic growth rate can exceed 1 to 1.5 percent annually.” It seems to me with a sizable pool of unused and underutilized labor, an active technological base in a culture of incentivized experimentation, ample capital, and a relaxed but attentive monitoring of an equally ample monetary base, the only thing in the way of steady economic percolation is a one-eyed ideologic blindness. Again, someone please school me in economics.

    • Ray Andrews says

      @Tersitus

      The economy, viewed as a black box, consumes raw materials and human energy and excretes garbage/pollution and human exhaustion. (Inside the box, we see that, before being excreted, the garbage/pollution exists as what we call ‘stuff’ for a brief time.) As raw materials deplete, as garbage starts to bury us, and as pollution starts to choke us, the machine must eventually stop.

      • Tersitus says

        Yep, RA, that’s pretty much how it looks to most of us. We could call it “the Ocasio-Cortez theory of capitalist production.”

        • Ray Andrews says

          @Tersitus

          Thing is tho that at one time stuff was the very measure of progress and even today, tho we have hugely too much stuff, we still do need some stuff. But the economy has become a self-perpetuating entity in its own right. It no longer serves us, we serve it, and it wants to grow infinitely and it does not care if it kills us in the process. It must eventually kill itself, too. So I say that it would be prudent to take the economy back. Try to get it serving real human needs again.

          • Stephanie says

            @Ray, must economic growth kill us? Given enough freedom to innovate, I don’t see why we wouldn’t find alternatives for our depleted resources. That may eventually include mining waste products. There’s a new technology I read about this week that captures CO2 into a form that can be burnt again. Current pollution concerns seem overstated and manageable with a growing economy. When a problem gets big enough, a market opens up for a solution.

          • Ray Andrews says

            @ Stephanie

            I don’t want to sound too gloomy. Up till now we have consumed more and more every year, perhaps that can stop. Smarter economies learn to produce more with less, but growth always seems to increase consumption faster than smartness can reduce it. Anyway, we need to keep getting smarter that’s for sure.

            ” that captures CO2 into a form that can be burnt again”

            That would violate the law of entropy.

      • You seem to be forgetting the valuable things that improve the standard of living that the box produces as well. There is a reason why people of middle class income live a life almost all the kings of history would envy.

        • Ray Andrews says

          @Defenstrator

          No, I don’t forget them. The stuff in the box is often very valuable, but it enters as raw materials and eventually it leaves as garbage and pollution. We all live in the box.

    • Sneed Urn says

      @ Tersitus Piketty was referring to the effect of what amounts to compound interest over long terms like 200 years or 500 years. For example, 1.5% growth over 200 years still ends up being a net 1,964% growth. 2.5% growth over 200 years nets 13,956% growth. It’s not indefinitely sustainable.

      He is not making that argument for shorter durations and exceptional circumstances.

  5. Marc Domash says

    The author states:

    This is a mechanism consistent with Rand’s basic premise—that extreme incomes are predominantly earned as a function of the exceptional abilities and efforts of skilled entrepreneurs, not by a class of passive capital owners.

    I looked in vain for any reference to the “Great Moderation” (the American period 1946-1970), when the disparities of income and wealth were much less (the top 1% owning 6% of the wealth to around 20% today) and economic growth averaged 3% or more. I guess abilities weren’t so exceptional then–after all, this rate of growth hasn’t been met since by the new “exceptionals[s]”.

    I haven’t looked recently but at one point in the last few years 4 of the top 10 wealthiest individuals in this country were scions of the Walton family. I guess the effort of the skilled involves picking your parents correctly. Even Andrew Carnegie thought there should be inheritance taxes. Taken to its logical conclusion, transfer of wealth across generalizations results in feudalism, not capitalism, which assumes that while talents may vary, a talented individual from a modest environment might actual exceed his or her station. American social mobility is the worse in the G7 (and maybe the G20).

    I think it wise to remember Warren Buffet’s comment that he had never seen a deal scuttled because of the tax consequences–if it made a profit it made a profit. The idea that Jobs, Bezos and the like will “go Gault” is ridiculous–the lust for empire-building is too great. If might be noted that Buffet acquired most of his fortune back when the top marginal rate was 70%.

    • Nakatomi Plaza says

      There is probably no single group of scumbags I detest more than libertarians and fans of Ayn Rand. Liars and hypocrites, every last one of them. They don’t think the rules apply to them, until they’re in trouble and yanking on those bootstraps only buries their heads deeper in their asses.

      When their bullshit gets them in trouble they can’t reach for those bail-outs and the social safety net fast enough.

      • dirk says

        The fans of Ayn Rand you can’t know, Nakatomi, but Ayn Rand herself certainly is a hypocrite, because she lived of some sort of pension or safety net handout in her later years. However, understandable it certainly is, why always live a pure and straight life until the end and in every aspect? Rousseau wrote an original work on pedagogy and education, but did not care much about his own children. Regrettable, but not more than a human weakness. Ayn Rand just worked out the principle of Adam Smith in his utter extremes, in a time that socialism, ideologically, seemed to be on the increase. So, logically that she was received as a last resort by some (ideologists and entrepreneurs alike) that saw their world crumbling.

        • Stephanie says

          Dirk, I believe Rand’s justification for collecting Social Security was that it was reclaiming income unfairly confiscated.

          • dirk says

            I just now read she also collected medicare payments, on the account of her husband. Yes, why shouldn’t you, if entitled?

      • Good thing we don’t crave your approval. And great job just…disparaging a group identity. That’s some fine intellectual work.

      • Blue Lobster says

        If libertarians and fans of Ayn Rand are the “scumbags” whom you most detest then I think it’s safe to say that for all your moralizing, the reliability of your moral compass must certainly be called into question. Fortunately, for you and all the rest of us, the real scumbags are by and large incarcerated or otherwise sequestered from the population at large whom they would gladly prey upon if given the chance. You may believe that Rand fans and libertarians are predatory, but that is simply because during your soft, Nerf-y life you have consistently been protected from true predators such that you are ill-equipped to recognize them. You live a life of safety, Nakatomi. Remember that because it may not always be so.

      • Kathy Hix says

        NP: I come here almost every day and read long, articulate, thought-provoking comments going back and forth on topics of varying depth and importance. I always learn something and am challenged to consider and reconsider my own biases and beliefs. And then I read yours . . . .

      • Doug F says

        It is this type of response that is ruining social discourse on important topics. Name calling and defining people (and despising people) based on group identities is not an argument or counter-point to anything.

    • Max says

      The recent college bribery scandal is a perfect example of the fallacy of the exceptional exceptionally wealthy. For all of “legacy” and donor priviliges, the ability to employ expensive tutors, admissions concultants, and acceptance letter writers, these untermensch still couldn’t couldn’t manage to score high enough to be granted acceptance.

      • E. Olson says

        Max – and all but one is a heavy Democrat donor – so not exactly a Libertarian crowd trying to cheat their kids into good schools.

        • Max says

          So the egregious offence is irrelevant so long as they of the party one affiliates with?

          • E. Olson says

            The irony is the Democrats are all for affirmative action and helping the underprivileged get into college, and against legacy admissions used by rich kids, but apparently when push comes to shove they don’t care whose spot they take when they cheat their way in for their own privileged (but not too bright) kids.

          • Max says

            @E. Olson

            They also oppose admissions testing on the grounds that it discriminatory, however it functioned in the fashion in which it was intended, meritocratically.

      • Jackson Howard says

        Look, if they are rich, they are better and deserving. So they deserve a spot in those college. Paying for it is just a legitimate way to avoid the unfair meritocratic entry system.

        Or do we have the poster child of Aristocratic incompetence facing a meritocratic door ?

        I wonder…

        Inequality is fine, so long as the benefits of growth are shared among all the strata in the society. But this is not what has been happening in the west since the 90’s and especially not since the 2008 bailouts.

        What we have is massaged inflation and GDP growth numbers painting a rosy picture of something much uglier. The bottom three quintiles have been losing ground while the top one (and the top 1% even more) have been reaping the benefits of the “free” money available (what else do you call 0% interest rate ?). We have a new gilded age where SJW/MAGA are just tools to keep the bottom strata busy with identity politics while the money flows upward.

        The inequalities in the US are back to the 1920’s levels, which is very dangerous IMO as far as stability is concerned.

        • Jim Gorman says

          Pray tell, what happened to the supposed 1% in the 20’s. Did they just stumble and hit their heads on the sidewalk from the 10th floor?

      • dirk says

        I wonder, Max, what has become of all those bribed-in kids. Has it ever been studied by sociologists? What I think, these non-valeurs will stay as such, non-valeurs, whatever their parents try or attempt. Though, I have a lot of sympathy for those parents with their millions. What else do with your money, is there any better use? Kids go first, only, it wouldn’t help them very much, I fear.

        • Max says

          It has. What the studies find is that regardless of performance in these colleges, the students these colleges find their way into lucrative, high-end occupations. These colleges are themselves a “who you know.”

          The amusing thing about this whole story is that the admissions testing that liberals/Democrats claim are discriminatory functioned in the fashion in which they were intended, meritocratically, and the admissions testing that conservatives/Republicans claim are based entirely upon meritocracy are circumvented by a myriad of privileges and grease. Both sides are wrong about the same policy.

    • Ray Andrews says

      @Marc Domash

      Very well said sir.

      “Even Andrew Carnegie thought there should be inheritance taxes.”

      I understand that Warren B. is leaving his heirs only moderately well off, not rich beyond the dreams of Croesus. It seems to be the case that it is proven that inheriting vast wealth is actually bad for you, thus wise parents do NOT bubble wrap their kids.

      “the lust for empire-building is too great”

      Indeed. Buffet himself views his chasing of wealth as a sort of game. The man is not a sybarite, he spends little, he just plays the game that he’s best at and then he plans to give it all away, as did Carnegie. Bill Gates was the same, he didn’t chase his next billion for the lust for money, but because it demonstrated his talent. You could tax the hell out of those guys and they’d still work just as hard.

    • Marc, 1946-70 were good years. There was very little immigration until the disastrous immigration act of 65. Bringing in 3rd worlders caused wages to go down. That would have an effect on the income gap.

      • Marc Domash says

        Immigration would tend to increase the rate of growth, as immigrants are typically workers. Competition for low-income jobs probably did cause some decrease in wages but many of these jobs are ones that Americans won’t do (farm worker in particular). But that decrease in wages for some would mean an increase in return to capital, which we have seen, but middle class workers (say auto assembly workers) have also seen wages go down as unions have been eviscerated. My point is that immigration should not be blamed for the decrease in the growth rate.

        • Lydiw says

          Myth. More on various forms of welfare than you might realize. especially when their children are diagnosed in public school is having a learning disorder which they all because they are so far behind. OTOH, It infuriates me that the public schools do not demand immunization proof! Do some homework on it. The center for immigration studies is a good place to start.

  6. Hmmm says

    These economic questions can be debated without using them to promote Ayn Rand and her sophomoric “philosophy.” Sheesh. C’mon Quillette, please don’t become a second-rate forum for Objectivism cultists.

    (Any non-initiates who find themselves intrigued by Rand after reading this piece would do well to read this contemporary review of Atlas Shrugged by Whitaker Chambers: https://web.archive.org/web/20110511214136/http://www.nationalreview.com/articles/222482/big-sister-watching-you/flashback.)

    • Heike says

      The reason that Ayn Rand is so hated is that there is a certain kind of person out there that is very high in trait openness. We might call these people “carebears”. Ayn Rand’s novels make a compelling case against altruism. These carebears are highly offended by this thought. Rand then backs up her arguments and does a great job in general making her case. The carebears, not having any rational rebuttal, become enraged. They say all sorts of things in order to get Rand’s “crimethink” out of their brains. Thus you’ll get book reviews that excoriate her writing, say the books are dull, too long, and a thousand other issues that are designed to get other people to decide not to read the book.

      One sees this carebear reaction to many other ideas in our society. It’s not that they’re bad people, they just have different personality traits from the rest of us. We need people high in openness to do certain things, such as care for the elderly in homes, create our art and staff our welfare state. It’s just that we should on no account allow them near economic policy beause they will wreck our society with a smile on their faces.

      “perhaps even within the Oval Office itself.”

      Doubtful. With all that’s said about Trump, why do people feel the need to lie? Trump was a pro-abortion Democrat for decades. He’s a centrist, not a hardcore libertarian. He’s pro-tariff, for Pete’s sake!

      • P. Visser says

        Funny to see quite a few of them carebears frequenting this website…

      • Max says

        The virtue of selfishness.

        And in the end, Rand ralied on the collective to carry her into her old age.

        • Douglas B says

          Ayn Rand left a large estate behind. This is inconsistent with the persistent notion that she “relied on the collective” (in the form of Social Security payments) to support her in old age.

          However, it is consistent with what (I think) she claimed: that she was coerced into paying into the Social Security Ponzi scheme (like all of us), so was justified in extracting what she could from it. I.e. She was acting on the principle of not giving moral sanction to injustice.

          Maybe someone can find the actual quote.

      • Serenity says

        Very good point, Heike.

        “Carebearing” is not a virtue on its own right.

        Excessive or misplaced altruism breeds selfishness in others, in the long run it leads to an inflated sense of entitlement and dependency.

        Plus, “carebearing” is often used as an excuse for pathological control and manipulation. For example, cult of personality represents a dictator as the carebear of the nation.

      • Lydia says

        “Ayn Rand’s novels make a compelling case against altruism. ”

        Bingo! It is referred to as selfishness. I abhor altruism because it’s always someone else (usually gov) compelling me on what to be altruistic about. That’s a Private matter between me and my God. Now half of our society operates like Neo Puritans on the matter of altruism.

    • Stephen Grossman says

      Chambers had only an emotional rejection of Rand, the same as you. As Rand said, there is no intellectual opposition to Objectivism.

  7. Max says

    For all the changes of the last fifty years, the conservative classics have held their place surprisingly well. Milton Friedman’s Capitalism and Freedom and Friedrich Hayek’s The Road to Serfdom are still featured on Breitbart’s online bookstore. Rush Limbaugh tells his listeners that “Milton Friedman should be the Bible for young people, or anybody, trying to understand capitalism and free markets.” Charlie Kirk, founder of Turning Point USA, celebrates Hayek and Friedman in his book, while Ben Shapiro holds up Friedman as a conservative icon in National Review.

    But what then are the liberty and freedom that conservatives celebrate? And does capitalism advance or restrain them?

    Freedom is regarded so highly because in a way it contains all the pleasures of life — it’s the ability to do what you want, within the limits of material conditions and a human lifespan. However you like to spend your time, whoever you love, whatever you like to work on or laugh at, all represent the tremendous value of social freedom.

    According to John Stuart Mill, the basic principle of freedom was that “the only purpose for which power can be rightly exercised over any member of a civilized community, against his will, is to prevent harm to others.” The philosopher Isaiah Berlin later described this idea as “negative freedom,” or freedom from coercion by others. Berlin also suggested a “positive freedom” — the freedom to do different things, rather than freedom from the choices of others. Instead of asking, “What power centers control me,” positive freedom asks, “What am I free to do with the world’s opportunities and resources?”

    The traditional philosophical view of capitalism is that while it does not provide a “positive freedom” to a fair share of the world’s production of goods, it provides a “negative freedom” from economic tyranny by leaving consumers and workers free to choose among different options. This is the view of Friedman and Hayek, and they insist it’s just the right kind of liberty. Many generations of capitalism’s defenders have agreed.

    But any realistic review of the market economy reveals a different picture: capitalism limits both positive and negative freedom. It fosters a huge buildup of private power by concentrating individual wealth and entrenching corporate control over markets (along with mercilessly destroying environmental systems and thus the freedom of future generations). Capitalism not only fails to provide a “positive freedom” to a fair share of the economy — it fails to preserve “negative freedom” from the power plays of the 1 percent’s corporate property.

    When GM and Ford decided to desert cities like Detroit and Flint for poorer towns and countries, they denied their former workforce any positive freedom to enjoy the industry’s enormous revenues — revenues the workers themselves had created. When Martin Shkreli’s pharmaceutical company hiked the price of a life-saving patented drug from $13.50 to $750, effectively snatching it away from disease sufferers, it drove dependent users into poverty or bankruptcy — a frightening restriction of negative freedom. When Amazon held a sweepstakes to see which North American city would be blessed with its new headquarters, and mayors across the continent threw billions in tax concessions at the company’s feet, Amazon wielded enormous power over the destiny of millions of people — laying bare how capitalist investment decisions can dramatically limit human liberty.

    Capitalism’s defenders insist that, as Friedman and his wife Rose wrote in their book Free To Choose, “When you enter a store, no one forces you to buy. You are free to do so or go elsewhere. . . . You are free to choose.” They applied the same argument to workers: if you don’t like your job or career, find another one.

    But other figures have seen the market’s alleged negative freedom quite differently. Consider Frederick Douglass, the escaped slave and self-taught intellectual. He concluded:

    Experience demonstrates that there may be a slavery of wages only a little less galling and crushing in its effects than chattel slavery, and that this slavery of wages must go down with the other. . . . The man who has it in his power to say to a man, you must work the land for me for such wages as I choose to give, has a power of slavery over him as real, if not as complete, as he who compels toil under the lash. All that a man hath he will give for his life.

    Here Douglass was suggesting that markets allow the exercise of unaccountable power — the enemy of freedom. But how could a free person be “enslaved” to wages, with so many different options for purchasing goods and finding different careers?

    One answer, as critics of capitalism have pointed out for centuries, is that markets concentrate and often tend toward monopoly. From the well-known Gilded Age monopolies in oil and steel to the Silicon Valley tech giants of today, the dynamics of capitalism generate unbelievable concentrations of private power. And while antitrust law is intended to constrain such monopolies, as the eminent economist Alfred Chandler pointed out long ago, commenting on the 1890 Sherman Act, at best such statutes tend to “create oligopoly where monopoly existed and to prevent oligopoly from becoming monopoly.” Large agglomerations of unaccountable power — not the freedom-enhancing markets of Friedmanite fantasies — are the stuff of mature capitalism.

    Douglass’s larger point, however, was that market economies treat basic necessities as commodities to be bought and sold, including food and shelter. Capitalism compels people to find work in labor markets, on such terms as they can find and subject to the tyrannical rule of jumped-up capitalist bullies, from Rockefeller to Bezos.

    This is a radical infringement on positive and negative liberty. In order to get the rudiments of life, most people must submit to the utter dictatorship of the modern workplace — the day-to-day schedule changes, the dressings-down, the restrictions on freedom of speech. No wonder Douglass added: “As the laborer becomes more intelligent he will develop what capital he already possess — that is the power to organize and combine for its own protection.” Collective organization by workers — that bugaboo of capitalist partisans like Friedman — was the true guarantor of freedom.

    But wait — Friedman and company say they have a trump card: “Since the household always has the alternative of producing directly for itself,” Friedman wrote in Capitalism and Freedom, “it need not enter into any exchange unless it benefits from it.” The power of “exit” restricts the potentially coercive power of the labor market.

    Yet Friedman’s picture of the average family is so rosy it borders on the oblivious. What he refuses to recognize is that producing goods typically requires capital, the tools and equipment used to make products.

    And capital is enormously concentrated. Inequality scholar Thomas Piketty has found that the richest 10 percent of US households own 70 percent of total national wealth, and the top 1 percent alone owns 35 percent. Crucially, corporate stock, which represents ownership of the productive capital that’s required to make goods and thus enable people to “produce for themselves,” is just as concentrated, with the richest 5 percent of households holding 67 percent of US equities, according to the Economic Policy Institute.

    Somehow the Chicago School Nobelist fails to realize that the average individual — the individual around which his entire philosophy is allegedly based — is held hostage to the whims of those who own the productive economy, who can decide how wretched our work lives will be and which cities will get to have an economic future. From break times to ergonomics to maternity leave to acceptable workplace speech, the upper crust calls the shots and makes a mockery of “capitalist freedom.”

    Liberals, for their part, are often prepared to push for more “positive freedom” in the form of entitlements to health care, education, and a safe environment. But democratic control over investment and production would represent a far more promising model for liberty, since achieving worker control would replace capitalism’s profit motive with solidarity — the drive to support and collaborate with our fellow men and women.

    Doing so would end giant firms’ power to sweep the legs out from under a major city by relocating overseas, or to ruin their employees’ work lives by speeding up production or surveilling them. Decisions made by cooperatives of workers, elected and subject to recall by their colleagues, could be made in a matrix of social solidarity and thus significantly limit the power-mongering we’re used to from today’s corporate world.

    Rob Larson is professor of economics at Tacoma Community College.

    • Harland says

      Since when do Leftist academics give a crap about the American working class? This is arguing in bad faith. The jobs that went overseas went to desperately poor countries of brown people and helped them greatly. The out-of-work Americans are all a bunch of racist fascist scum, a basket of deplorables as the saying goes. Call me crazy but I simply do not believe any university professor who claims to be on the side of The Other.

    • Jason Brooks says

      “that the richest 10 percent of US households own 70 percent of total national wealth… the average individual — the individual around which his entire philosophy is allegedly based — is held hostage to the whims of those who own the productive economy”

      No, the average individual is held hostage by his preference for spending money over saving it. People who’ve saved for a rainy day can weather others’ economic whims.

      Note also that Piketty’s 10 percent/70 percent ratio is also largely the result of average individuals spending money instead of saving it. That ratio was smaller decades ago because the average American practiced frugality.

      • Max says

        @Jason Brooks

        Saving has nothing to do with it. It is well documented that wages have been stagnant for ages, real wages have declined, and the price of virtually everything has increased.

    • Doug F says

      Douglass was writing at a time when many companies used violence to stop labor from organizing and there were indeed certain areas where workers (especially in rural America) were captive – they had no other options. That is simply no longer true. And the more robust the economy overall the more choices labor has.

    • Stephen Grossman says

      —positive freedom asks, “What am I free to do with the world’s opportunities and resources?”

      With other people’s opportunities and resources. Thats the positive freedom of thieves and statiss.

    • Stephen Grossman says

      —->social solidarity

      Man is not a slave of man. Man is morally free of man.

    • Stephen Grossman says

      Larson is a professor of statism ,not the science of production for a market.

      Experience demonstrates that there may be a slavery of wages only a little less galling and crushing in its effects than chattel slavery

      I rest my case on Larson’s non-scientific poetry.

    • Sneed Urn says

      @Max Well done. Fundamentally, wealth Is power. It is a reality that seems not to be acknowledged or even understood. The power of wealth is what makes the notion of economic “freedom” so absurd and extreme wealth disparity so distorting even to the idea of a market economy. You don’t negotiate with your bank on what interest rate they’ll give you unless…you have the wealth to make that in their interest. IE more equivalent power. Oh! Oh! if you don’t, you can just show them by marching over to the next bank and having that one tell you what you are going to accept. Nicely done.

      Go through any number of scenarios of financial transactions and see who actually has the upper hand. It’s not going to be the lone poor guy. The only peaceful counter to the power of wealth is political power.

  8. ga gamba says

    Profit is not plunder. People who have become extraordinarily wealthy often provide a good or service many, many others want and that the cost of producing each additional unit to sell is negligible. They sell highly desired scalable goods and services. Further, their wealth isn’t income, most of it is tied to the value of the companies they founded. Not only are consumers saying with their purchases “I like this”, investors are saying “I’d like a piece of the action” as well.

    I’d even include certain criminals such as smugglers in this list, for example Joaquín “El Chapo” Guzmán, Pablo Escobar, and Al Capone. In response to government overreach, demand greatly exceeded supply. I don’t approve of murders and pay offs, but had the government legalised and regulated booze and drugs I reckon a lot of the murder and corruption wouldn’t have come to be. The gov’t would have earned tax revenue rather than spending it on war-on-drugs expenses.

    Now, there are some billionaires who have plundered. The list includes include Mobutu Sese Seko, Sani Abacha, Teodoro Obiang Nguema Mbasogo, Jean-Bedel Bokassa, Nicole Ceausescu, Ferdinand Marcos, and Hugo Chavez. Fidel Castro was $100 million short of a billion. Najib Razak only grabbed $600 million. There are many others whose graft only earned them tens of millions. Notice the commonality?

    “Every Billionaire Is A Policy Failure.”

    Which policy? Jeff Bezos got his start selling books. Why books and not shoes, chocolate, or auto parts?

    There are many reasons, and one of them is ‘bound printed matter’, which is what the US Postal Service (USPS) calls books, are shipped at discounted postal rates. The post office spends the same amount processing and transporting one kilogram of books and one kilogram of gold the same distance. The parcel carrier expends the same amount of labour carrying either, and doesn’t sell his/her labour at cheaper rates when carrying books and standard rates when carrying gold. Yet books are shipped cheaper.

    “It’s in the public interest!” Is it? Says who? Publishers, printers, authors, and their lobbyists.

    Bezos then moved to media, such a music CDs and software. Media mail also ships at a discount. The music industry, Silicon Valley, and Hollywood all lobbied for that. “Public interest!”

    Non profits are another beneficiary of discounted postal rates. For a 1oz letter it can be up to 30% cheaper than the rates paid by regular people.

    All of this is policy. Every other book seller paid (or the customer was charged) the same postal rates as Bezos. As far as I know, the USPS doesn’t have a unique Bezos rate reserved only for Jeff. That Bezos did it better than others is a policy failure?

    Perhaps the policy failure was stacking the deck in favour of certain groups, such as publishers and Hollywood studios to increase their revenues, and this aided the creation of the mass retailer we know as Amazon and its billionaire owner.

    For the first three months of 2018, the USPS reported a $1.3 billion loss, up from $562 million a year ago. Revenue grew by 1.4% while total expenses grew by 5.7%. For all of 2018 the loss was $3.9 billion. That was 12 straight years of financial losses – cumulatively it’s in the tens of billions. Regular addressed mail, i.e. the letters you, me, and businesses post, is down 35% over the past 10 years. USPS’s expenses haven’t decreased during the same time period. I’d wager they increased. I can’t even remember when I last posted a letter. It has to be years, perhaps more than a decade. My correspondence and payments are handled electronically.

    The most commonly received ‘addressed mail’, which isn’t general mail spammed to ‘resident’, is bills, and this continues to move to electronic billing and payments. (Mass volume spam is another discounted category of mail.) Most social letters we receive are greetings cards. In the UK, it was 13 social letters per person in 2013, down 28% from 7 years earlier. If that trend held true, I suppose we’re about 10 annually now. It’s likely the similar in the rest of the Anglophone world and probably beyond. The average person, one who isn’t running a home business, is probably spending no more than a few dollars per month on postage. Low postage rates benefit businesses, who lobby on behalf of fictional Aunt Edith and the birthday card she won’t be able to post because the stamp costing fifteen cents more is outrageous. Then the businesses lobby for discounts on already artificially low rates.

    Looking up USPS rates, I find the First Class Mail Letter (1 oz.) rate for postage purchased at the Post Office increased at the start of 2019 by five cents to $0.55 from $0.50. Each additional ounce for a First Class Mail letter will cost $0.15, a decrease from $0.21.

    That increase was much more than normal. The USPS had been restricted to increases based on inflation, but that measure is also stacked because of the gov’t policy to understate it.

    UPS, FedEx, and DHL all rack up profits. USPS mounts losses. National carriers such as Deutsche Post (which owns DHL), Japan Post, and UK Royal Mail have all been privatised and all are profitable.

    I actually feel a bit sad for the USPS. It doesn’t get financial support from the government, yet it has the government meddle in many ways its competitors don’t have to deal with. It’s the worst of both worlds. I reckon the government could unmeddle, but sensing the prevailing wind I forecast it will instead choose to use its skills to meddle further and apply more onerous regulation in the name of public interest to ever more businesses.

    • Max says

      Yet none of them would be what they are today if it weren’t for the hundreds or thousands of workers who wake up every morning and serve the product, stock the product, ship the product, transport the product, etc. If those people didn’t exist then all you have is an idea, an idea that becomes a one-man business at most.

      • E. Olson says

        Thanks Max – now I understand. So these greedy billionaires are getting rich by forcing those thousands of workers to stock and ship their product idea for free? Damn, I thought slavery was made illegal in 1865 – must be all those far-right neo-Nazis who dominate the academic history and political science departments that have covered up all this billionaire slavery for over 150 years. Its time to do what Lincoln and Grant failed to do – stop slavery so that everyone with an idea can start their own one-man business, which will happily prevent anyone from getting rich and exploitive.

        • Max says

          They are essential in the success of the business, plain and simple. The entire premise of the conservative/Republican fix-all, trickle-down, is that everyone involved in the success reaps the benefits. Businesses and corporations have become increasingly profitable yet that success has not found it’s way to those without with an acronym for a title.

          • Harland says

            “The entire premise of the conservative/Republican fix-all, trickle-down”

            Why is it that I am completely unconvinced as to the good faith of this argument? Leftists despise the American working class. They are The Other. They voted for Trump! They are white supremacists! And suddenly here is a leftist arguing on their behalf? I call shenanigans.

          • Max says

            @Harland

            You assume I make any of those arguments. The working class exists everywhere, rural and cosmopolitan. They undoubtedly voted for Hillary and Trump.

          • ga gamba says

            Businesses and corporations have become increasingly profitable yet that success has not found it’s way to those without with an acronym for a title.

            There are 28 million businesses in the US. Are they all increasingly profitable.? Of course not. Some wax whilst others wane due to a variety a reasons. Moreover, there are plenty of untitled workers who are compensated well. You assert much but substantiate little. All this data is available. For example, bricklayers in the US have a median wage of $24.35 per hour. A heavy / tractor-trailer truck driver is $19.16 per hour. A HVAC service technician’s hourly pay $20.59. If you yourself are looking for a good non-titled job, be a stevedore. You may use this site and others like it to learn what people earn.

            Those businesses are successful do pass that success on to the workers by remaining open for them to earn their wages/salaries and non-pay benefits. Some even pay end-of-year bonuses. In fact, even those that are failing are often legally obliged to pay their workers. It’s tricky to analyse the US because there are 52 jurisdictions, but some state laws penalise employers for failing to pay employees on time, and not paying employees makes an employer vulnerable to legal claims.

            You’ve also disregarded the existence of Employee-Stock Ownership Plan (ESOP) companies, which are entirely owned by the employees. Of course, as employee owners they face greater risks than regular old non-owner employees.

            Reading your claims and the lack of substance in your comments, I get the impression you’re a student who’s perhaps held some low-wage menial jobs. Those are starter jobs. It gets better as you acquire skills and bring more value to an employer.

            Now, if you’re not a student, I would encourage you to establish a business, run it according to your principles, and let us know how it goes in few years. Who knows? You just may have the answers that you may share with the rest of us.

          • Stephanie says

            Max, in addition to ga gamba’s excellent points, I’d like to specifically address your point about the value of workers.

            Yes, businesses tend to need people to do the grunt work. But if the work an employee is tasked with can be done just as well by someone off the street, what value has that individual actually added? Employees are compensated in proportion to the value they add to the company and the rarity of what they have to offer. Without assuming any risk, a wage for their labour is the appropriate compensation. A proportion of profits is only appropriate compensation when losses are shared as well.

            “Workers” as an abstract group are needed to run a business, but as individuals they are replaceable. As a person is first and foremost an individual, and cannot be married to a group identity that assimilates the thoughts, experiences and interests of everyone into a monolithic, homogeneous whole, they will always be treated as such. Unless humans turn into the Borg, we will be treated by society, including our employer, on the basis of our individual value.

          • Max says

            @Ga Gamba and Stephanie

            Those workers, individually, may contribute what appears to be negligible value, however the success lives and dies based upon their labour.

            The employee stock ownership angle is an entirely different issue to address. Most workers don’t receive such benefits.

            I’m actually not a student, I’ve graduated with my Master’s degree. I have had a plethora of occupations, from retail in grade school to moving furniture, building foundations to operating my own business. Like I said, when I ran my own business I was like the vast majority of small business owners, operating it solo. I also worked for my older sisters company, which employed workers and paid them better wages as the companies service increased in demand and became more profitable. I’ve seen small businesses that are shining examples of the best a company can be, I’ve experienced more and researched far more who are examples of the worst of human traits.

          • Lydia says

            Then why were so many Democrats in New York upset about Amazon not coming?

          • Kevin Herman says

            No one has ever espoused trickle down economics the way liberals explain it to be. Most people work for a small business by the way thats a 100% fact.

      • ga gamba says

        If the business lost money, would those workers have to return their wages? Of course not.

        Workers don’t take the financial risk. If you want a shot at the massive rewards… well, you have to accept the severe losses of money, time, effort, etc. that may come as well.

        You can see the survival rates by business sector. The future is not assured. It may not even be bright. Still, there are those who give it a crack. Thank goodness they do. They employ others who prefer not to take that risk.

        The entrepreneur pays all others (government, workers, suppliers, etc.) before s/he pays him/herself. The entrepreneur is paid last.

        • Max says

          Any rarely do these CEOs, they typically take risks with other peoples investments or the collectives wealth via banks.

          No, “entrepreneurs” of the wealth we’re referring to do NOT pay all other before themselves, that’s why they’re frequently found to be dodging taxes, paying poverty wages (which the public subsidizes), etc.

          And if the entrepreneur takes all of the risk, reaps all of the reward, then they certainly don’t need to rest of us to subsidize them in any way.

          • ga gamba says

            Any rarely do these CEOs, they typically take risks with other peoples investments or the collectives wealth via banks.

            Perhaps you’re conflating CEOs and entrepreneurs. Not all CEOs are those.

            Often the person founding a business, i.e. the entrepreneur, starts with his/her own capital and credit cards. Nearly six in 10 startup business owners use their personal savings for startup capital. The first outside investor is often a family member. Professional investors do not fund great ideas. Instead, they fund proven businesses – the idea has to be executed and show viability. This is typically sales, though eyeballs are important for web-based services. If you’re really wily, you’ve pre-sold some of your product to entice investor interest. Of course some investors will tolerate more risk for more reward. And investors typically get ownership and not interest payments, so they have more of a say. There are times having this input is important, such as when your investors are subject matter experts in the field.

            The banks’ deposits are not the collective’s wealth. They are individuals’ and businesses’ deposits. Some money is held for the required capital adequacy ratio, so the bak doesn’t earn on that. Depositors’ insurance is to paid as well, this is a cost to bank, which means the depositors’ money is not at risk provided each dispositer’s account ownership category does not exceed a certain amount. Further, entrepreneurs don’t show up at the bank with the simple demand of “gimme money.” They have to have a well-crafted business plan that’s subject to scrutiny. New businesses are in fact the riskiest loans of any that a bank or lender might encounter – at least home loans are secured by the house and land and auto loans are secured by the vehicle’s residual value.

            if the entrepreneur takes all of the risk, reaps all of the reward, then they certainly don’t need to rest of us to subsidize them in any way.

            I actually agree with this. I oppose subsidies, set asides, legs up, preferences, capitulation to special pleadings, deck stacking, because they are all forced wealth redistribution up and down.

          • Max says

            @Ga Gamba

            Whether it’s family or collective funds from other businesses, it’s still a form of assistance from elsewhere.

            And yes, I was referring to CEOs and corporations, not an individual or half-dozen collective. I’ve owned a business, as has my older sister. My business was a one-man operation, my older sister’s business had employees that reaped the benefits of the increasingly profitable service. That sharing in success is why she never had turnover and her employees weren’t on public assistance.

          • ga gamba says

            @Max Those workers, individually, may contribute what appears to be negligible value, however the success lives and dies based upon their labour.

            Other than you, who asserts they contribute “what appears to be negligible value”?

            Businesses (that employ others) depend on the workers just as much as workers depend on their employers. It’s a relationship of interdependence. Workers would not collect their pay if not for their employer who provides facilities, tools, machines, resources, plans, etc. Without that they’d simply be a group of people standing together in an empty lot. Without workers, factories would be empty and machines idle – of course, if there there no workers, that investment to build and equip probably wouldn’t have been made.

            Workers of course may decide to acquire these means of production themselves, start their own businesses, and employ others as well. But the employer-employee relations is not a permanent one. Workers may chose to leave for greener pastures and employers may choose to let go workers for several reasons to include poor performance, negligence, and even economic downturn. That said, some workers are more valued than others. I reckon this may pain those who want everything to be equal, or who want to fabricate rules to present the illusion of this, yet talent and other attributes are not spread amongst all equally.

            And yes, I was referring to CEOs and corporations, not an individual or half-dozen collective.

            You do realise that this article is about entrepreneurs, right? I have no opposition to it digressing to include non entrepreneurial managers, the kind who follow after the entrepreneurial founders leave. But entrepreneurs are more than an individual or small collective. In fact, there is no size requirement to the definition of entrepreneur. Bill Gates is an entrepreneur. Satya Nadella isn’t. It’s my hope that you can be a bit more focussed in your assertions, even better if you can substantiate them, because I’ve a observed as trend where you assert things, I provide facts that counter these, and then you wiggle away to assert other things. It appears that you’re playing motte and bailey. Not particularly well, but playing it nonetheless.

          • Max says

            @Ga Gamba

            I was responding to someone else’s comment regarding and individual worker and the collective.

            The majority of business owners rely upon loans, of some sort, regardless of whether they get the ball rolling with their own funds. That means that there is a collective of others that have invested, in some way, to the business. This is before we even enter the realm of the folds in profit. And before you fall back on the regurgitated talking point of anyone starting their own business, no, everyone can not start and own their own business. The idea that everyone can be a business owner is as ridiculous as the idea that everyone will work if only there were a decent job available.

            I was utilizing the terms interchangeably, which isn’t particularly incorrect.

      • V 2.0 says

        True, but without Bezos they would not have these jobs. How many have the ability and appetite for risk to start their own business even on a much, much smaller scale than Amazon? What happens to Amazon if Bezos does not do his job well compared to the consequences of a less than great warehouse guy? Technicallly, Jeff Bezos should be paid the sum of all Amazon employee’s salaries in perpetuity.

        • Stephen Grossman says

          <without Bezos they would not have these jobs

          Bezos focused his mind onto reality, creating the idea of Amazon. Leftists pretend to respect ideas, but their ideas are mere floating abstractions ,eg, egalitarianism and altruism, not abstracted from reality.

    • Max says

      Castro is worth $900 milliomillion, lol. That figure is arrived at by claiming that whatever is property of the Cuban state is, in turn, Fidels. That’s like adding the value of federal parks, national monuments, etc. to Trump’s net worth.

      • Ken Smith says

        Trump isn’t a dictator. Now you’re just being silly

        • Max says

          “Dictator” or not, you can’t simply incorporate the value of public assets into the net worth of an individual.

  9. E. Olson says

    “Simply put, the core of wealth inequality is commonly purported to be the returns that accrue to beneficiaries of unfair legislation or those who simply enjoy the ownership of capital without undertaking any kind of productive economic activity. This is also a view supported in principle by Piketty and largely the Democratic party as a whole—a view that is now almost entirely accepted as economic fact.”

    Good article, and the quote above is exactly why Piketty and the Left are wrong about economics. Ownership of capital without undertaking economic activity is the equivalent of stuffing your mattress with money (or putting it in a bank account that earns .01% interest), which is an excellent way of losing actual and relative wealth because mattress money will not keep up with inflation, nor future estate taxes, nor the fortunes of others who invest in successful new technologies and businesses or even conservative broader equity and bond markets.

    “Every Billionaire is a policy failure” is certainly true in most cases, but not in the sense that AOC and Sanders suggest, as most Billionaires have been able to accumulate vast wealth due to lack of competition, and lack of competition is almost always the result of government policies that make it difficult and costly to start and grow a new business, or develop a new technology, or import products from abroad. Billionaires are also created by lax anti-trust, anti-collusion, and anti-corruption enforcement, as big Billionaires create small Billionaires by paying huge sums to buy new ventures that pose potential competitive threats to their profit streams, which are often approved by government agencies who are directly or indirectly influenced by bribes (aka campaign contributions and the promise of lucrative post-government employment). On the other hand, any Billionaire who gets his fortune from consistently out-working and out-smarting competitors to provide millions of customers with a product or service they eagerly exchange their money for has created real value that harms no one (and helps millions), and there is absolutely zero moral or ethical argument for coercive government policies that seek to confiscate this wealth. So if Democrats wish to fix the Billionaire policy failure they need to reduce the costs of doing business by lowering taxes and eliminating cost-ineffective regulations, and increase competition by focusing on reducing trade barriers (including getting trade partners to lower their barriers), and being very zealous about enforcing anti-trust, anti-collusion, and anti-corruption laws to prevent the concentration of market powers.

    Another very good point about this article that is not discussed enough is the futility of taxing the rich. “Fairness” NEVER works as a tax policy, because the rich always find a way of avoiding heavy taxation, whether it requires bribing legislators to create tax code loopholes, moving their business or themselves to lower tax domiciles, or simply avoiding potentially profitable (and job creating) economic activities that will net them very little return after taxes.

    • Ray Andrews says

      @E. Olson

      “there is absolutely zero moral or ethical argument for coercive government policies that seek to confiscate this wealth.”

      There certainly are arguments, even if you find them lacking. As I said above, the playing field itself needs maintenance. ‘Good’ capitalism is dynamic and renewing. Preventing the accumulation of really absurd levels of wealth in plutocratic familes (Walton) is bad for capitalism. In an analogous way, it is bad for deer to exterminate wolves. Wolves keep deer happy and healthy, counter intuitive as that might seem. The best thing for capitalists is to never let them get too fat or too lazy. Tax them. Recycle the money back into society at large, so that the next Bezos does not starve to death, but both eats and gets an education (for free!) and lives to develop the Next Big Thing. We agree that too much concentration of wealth is very dangerous to government, so don’t let it happen. Let’s keep our capitalists lean and mean and out of the pockets of politicians. I mean their cash out of the pockets of politicians, which puts the politicians in the pockets of their contributors.

      ” “Fairness” NEVER works as a tax policy, because the rich always find a way of avoiding heavy taxation”

      Which needs to be fixed. It is poor logic to say that because the rich cheat we should not try to stop them from cheating.

      • E. Olson says

        Ray – and what have the Walton heirs done with their inherited wealth that is bad? They continue to run Walmart stores that save the average US family something over $1,000 annually in lower food prices, and are the largest employer in the country. And if they were lazy, or not as bright as old Sam Walton, Walmart would collapse like Sears or K-Mart, and we would not be worried about the billionaire Waltons because they would not be billionaires anymore. Do you really think that if Uncle Sam had levied a 80 or 95% inheritance tax on the Sam Walton estate and forced the liquidation of Walmart to pay the tax bill, that the US would be better off? Do you really think Washington bureaucrats would use the Walmart fortune more effectively than the Walton heirs have used it?

        And frankly I just don’t get your exaggerated beliefs about some hypothetical starving Bezos who needs free college? We already have way too many people going to college, and poor people are on average the fattest in N. America. Confiscating wealth from productive people in order to provide others with “free” stuff will not create the next Amazon or Facebook or Apple or Tesla.

        • Ray Andrews says

          @E. Olson

          Moderation E. (what is you name anyway? you know mine, sheesh, I should know yours.) Perhaps a 70% inheritance tax over 1 billion. I suspect they don’t work very hard. I suspect they have managers to do it for them.

          ” some hypothetical starving Bezos who needs free college?”

          I don’t believe in free college, that’s a lousy idea (sorry Bernie). But hungry, exhausted people do not create businesses. But, give them a UBI, so they know that if they trip they will not starve, and who’s to say?

          “Confiscating wealth from productive people”

          I’d try to make every effort to avoid most of that. Sheesh, take Musk, I hardly think I’d tax him at all. Maybe a luxury tax on yachts, as we were discussing before, but on his capital? Nope. I don’t think capital is the issue. One taxes parasitic income. Rents perhaps. Dividends. Most money made on Wall St. which involves manipulation, not creation. I myself make a very sharp distinction between ‘real’ capitalism and moneyistm.

          • E. Olson says

            Ray – my friends call me E., and since I regularly get called unpleasant names on this site, I don’t wish to provide further identifying information that might be used to harass me at work or bother my family.

            As for you beliefs about the Waltons, the idle rich typically don’t stay rich very long, so I suspect the Waltons are very much personally involved in their business dealings. Rents and dividends are not parasitic income, they represent returns on investments that would otherwise not be made to the detriment of the economy and society, and as a retiree, you should be sensitive to the fact that many retirees rely heavily on dividends and rent to fund their “golden” years.

          • Ray Andrews says

            @E. Olson

            Ok, ‘E’ it is, but it had seemed slightly rude.

            “Rents and dividends are not parasitic income, they represent returns on investments”

            Sure, but I do think that ‘investment’ style income should be taxed higher than the more active and creative returns reaped by someone like Musk. Rents and such are returns based solely on the fact that one holds capital. The worst is Wall St. where it is, as Geko so famously said ‘a zero sum game’, that is, these people produce nothing at all (expect for economic instability and scams that end up hurting real people). To the extent that capital is really ‘active’ I’m all for it, to the extent that it is passive, it reminds me of the aristocracies of old sucking rent out of their surfs. To the extent that it is pure speculation or manipulation I’d lower the boom on them. Someone once worked out that the entire world could be run on the revenue produced by taxing all stock transactions at something like .5%. I’m a huge fan of what I call ‘real’ capitalism.

            “many retirees rely heavily on dividends and rent to fund their “golden” years”

            True, but I’m not considering my own personal interests here, I’m considering how the tax system might work better.

          • Stephen Grossman says

            Most money made on Wall St. which involves manipulation, not creation

            Investment is the most important industry, directing limited capital to the most productive uses. This is serious intellectual work but so abstract that many people cant link its ideas to the concrete increase in new and expanded business.

  10. Russ says

    What do you mean: “if”?

    If one believes Objectivism/Ayn Rand, one believes:

    There is an objective reality.
    People should be rational.
    People should be concerned with what is in their actual self-interest.
    People own their lives and property.
    People should be in control of and decide how their own lives and property are used.
    The initiation of violence against peaceful and innocent individuals is universally wrong.
    Only voluntary interactions among peaceful individuals are proper.
    Art should uplift rather than degrade the human spirit.

    If one rejects Objectivism/Ayn Rand, one believes:


    There is no “reality.” “Reality” is whatever one wants it to be. Saying one is “out of touch with reality” is a positive statement.
    People should be irrational/illogical.
    People should be concerned with whatever is destructive to their self-interest.
    No one owns his own life; all people are and should be slaves.
    No one has a right to own property; anyone for any reason can take whatever they want from someone.
    People should recognize that anyone other than themselves should be in control of and decide how their lives and property are used; anyone can, for any reason, take whatever they want from other people and dictate to them how they should live their lives.
    Initiating/using coercion and violence against innocent and peaceful others is the basis of all proper social interactions. Might makes right, determines what is right.
    Only involuntary actions are proper; forcing others to do or not do what they want is the essence of how people should be treated.
    Art should be degrading to the human spirit and treat people as worthless scum.

    There is no “third way,” no “middle ground” between freedom and slavery, between reason and irrationality, reality and unreality, property and theft, between self and non-self. Once the noose is around your neck, it doesn’t matter how long the rope is or how loosely held. You are no longer free.

    Individualism or collectivism: that is the fundamental choice: whether to live a truly human life of peaceful, voluntary social interactions that respects the moral autonomy of your neighbors…or one where you believe you have the “right” to treat others as “involuntary servants,” i.e., slaves, to fulfill your desires and decisions rather than their own; to be a bully, a thief, and a coward hiding behind the guns of the government to obtain what you want.

    You either believe in an objective reality or you don’t.
    You either believe in rationality or you don’t.
    You are either concerned with your rational self-interest or you aren’t.
    You either own your own property and your life or you don’t.
    You either accept the rights of others or you don’t.
    You either admire the best within humans or you don’t.

    You either believe in freedom or you don’t.

    Anyone who thinks in principles, in fundamentals, who understands how to apply these in the context of real life, knows this. Only evaders of the worst sort, of the basest superficiality, pretend that there can be any compromise between poison and life. They want to be viewed as decent people despite their abandonment of the essence of their humanity. They want to hide the destructive, ultimate consequences and implications of their beliefs and thus argue that it is wrong to be consistent, have integrity, or be fully rational, moral, and honest.

    They want to fool others into accepting the nonsensical notion that one can have his cake and eat it, too; that A is not A; that they can be both A and not-A; that the choice is not A or not-A but being and believing both at the same time.

    The real “false alternative” is offered by those who claim that people can simultaneously be moral and immoral, rational and irrational, free and a slave.

    That’s a sick “philosophy” that, in the end, offers only misery and death to those who foolishly embrace its savage and warped ideas.

    • Bartek D. says

      Well, of course not. There are dozens rational middle grounds for any of these. Take “rationality”. There is a well conceptualized idea of “bounded rationality”, there are useful notions of “self-deception” or “strategic irrationality” or “multiple-self”. There is evidence that some culturally developed practices good for individuals, in order to be effective, must be accepted “at face value” without rational deliberation et cetera, et cetera.

      The problem with objectivism is exactly the same as with communism: both doctrines are absolutely orthogonal to evolved human nature, physical and biological world. The “objective” and “absolute” receipts of Rand or Hoppe are coded rules for 8-bit computer games. Objectively (pun intended) perfect, but totally detached from reality.

      One could be a fierce defender of free market, capitalism and individual freedoms on the pragmatic grounds, without having anything to do with objectivism. This is, for example, the position of Hayek (who is, for that reason, hated by socialist and hardcore libertarians alike).

      • Russ says

        A “well-conceptualized idea” does not mean true. Ptolemy’s earth-centric vision of the solar system was well-thought out.

        “There is evidence” for X does not mean true. There was evidence for an earth-centered solar system; for phlogiston; for the efficacy of blood-letting; for a static geology; for religion; for Big Foot and flying saucers; etc. etc. etc.

        The problem with being open to anything is that one does not really know much of anything, especially how to deal with “grayness.” On a basic, existential, metaphysical level everything is “orthogonal”: X either exists or it does not.

        As for “grayness,” Rand covered that “objection” more than once. She — nor I — never disputed the fact that “gray” exists…but one can never actually understand “gray” unless one first understands the existence and nature of “black” and “white.” Sure, one can live on the surface of humanity and reality and think that “gray” is a primary color. But one would be wrong.

        And, sure, one can be “a fierce defender of free market, capitalism and individual freedoms on the pragmatic grounds, without having anything to do with objectivism.” But eventually one would encounter an objection that one could not properly answer, viz., the pathetic “objections” of Republicans to the “moral” objections offered by such “brilliant” thinkers as OAC and her ilk to capitalism and environmentalism. All they can come up with are “pragmatic” problems regarding cost and the like. They are unable to answer her “moral” complaints because they do not operate from a consistent, non-self-contradictory philosophy.

        Reality is not a smorgasbord: pick “A” from side 1 and “B” from side 2 and so on, and one will soon find oneself facing the unforgiving face of the three basic axioms of reality and logic.

        But, of course, I already covered that in my original post…

      • Stepheen Grossman says

        There is a well conceptualized idea of “bounded rationality”, there are useful notions of “self-deception” or “strategic irrationality” or “multiple-self”. There is evidence that some culturally developed practices good for individuals, in order to be effective, must be accepted “at face value” without rational deliberation et cetera, et cetera.

        Your face-value rationalization of evasion is noted. As you say, “without rational deliberation.” Reason is mind focused onto reality, not trapped within itself.

    • K. Dershem says

      @Russ, you’re presenting a false dichotomy, which is not surprising since that’s what Rand’s philosophy is based on. She contrasts rational self-interest and self-sacrificial altruism as if those two extremes are our only options. Obviously, humans are motivated by a complicated combination of self-interested and other-focused impulses, just as every modern economy is a mixture of free market and socialistic institutions. The only real question is what kind of balance we should strike between those ends of the continuum. Individuals who favor (for example) a single-payer health system do not want to abolish private property or live in North Korea; they believe (plausibly, in my view) that access to health care is a fundamental right which should not be left to the free market to deliver. Personally, I’m a pragmatist: I would support any system that provided quality health care to as many citizens as possible in a fair and efficient way. Various countries have achieved the goal of universal coverage with different combinations of socialized systems and regulated markets; I don’t think we should be ideologically committed in advance to any particular approach.

      Rand’s approach is simplistic to the extreme, which is perhaps understandable given her experience growing up in the disastrously collectivist Soviet Union. It’s more difficult to understand why anyone still takes her perspective seriously.

      • Jim Gorman says

        Your argument is incomplete. You mentioned single payer health system. Do you also believe that the government should extract money from everyone to cover all health care? How about cosmetic surgeries that make one “feel” better by helping one’s ego which then allows them succeed to a greater extent? How about the person who needs a liver transplant but the government has run out of money due to too many “cosmetic” surgeries? How about end of life decisions based upon cost? Should government be involved in any of these decisions? Are you willing to let government bureaucrats decide who gets what? Are you going to penalize the rich when they pay for their own health care that isn’t available to everyone?

        Just where do you think unintended consequences come from when government tries to run complicated systems through legislation and bureaucratic rules?

        You can argue about grey areas but in the end there are only two choices. Capitalism/free markets or communism. Any grey areas will necessarily disappear because they can not be sustained!

        • Ray Andrews says

          @Jim Gorman

          Baloney. A survey will reveal many variations of the theme of social medicine that work very much better than the American system. France, Switzerland and Japan come to mind. It is simple dogma to say that these countries do not do what they clearly do.

          • Jim Gorman says

            RA – I notice you didn’t mention Canada, Great Britain, Cuba, etc. Nor did you mention what the bottom 50% of income must pay in income taxes. Do you truly believe the countries you listed have no, and I mean none, limits on what they cover? Or, long waiting times that might prove fatal?

            Government run, single payer health systems all have problems, the least of which is what everyone must pay – no free passes for the working poor. If you want to make people believe you, these problems should be brought out. Not ignored like they have no problems.

          • Ray Andrews says

            @Jim Gorman

            I am Canadian so I know our system fairly well. It’s far from the best, but if you ask Canadians whether they’d prefer the American system the answer is something like 98% ‘no’. Of course there are issues but one of them is not being left to die when your insurance runs out. The plain fact is that your system is the worst on the planet of any developed nation. Everyone know it. Forget the ideology just look at the return on money invested. BTW as to wait times, what our rich do is just jet down to Mexico or India or even the US for treatment, so that at least works for them.

            A poor friend of mine just had cancer surgery. They may have saved her. She had no where near the money to pay for it, but she didn’t have to. If I pay taxes for that, I’m very happy to.

      • Ray Andrews says

        @K. Dershem

        “Various countries have achieved the goal of universal coverage with different combinations of socialized systems and regulated markets”

        Exactly. I would not look at the American system and evaluate its ideological purity, I would look at it and note that it produces the worst return on investment of any system in the civilized world. I would search for the system that produces the best return on investment and implement that system irrespective of ideological concerns. Yes?

      • Stephen Grossman says

        I’m a pragmatist

        Both Pragmatists and prostitutes compromise their knowledge of reality with evasion.

    • Brad Gillespie says

      There is an objective reality.
      People should be rational.
      People should be concerned with what is in their actual self-interest.
      People own their lives and property.
      People should be in control of and decide how their own lives and property are used.
      The initiation of violence against peaceful and innocent individuals is universally wrong.
      Only voluntary interactions among peaceful individuals are proper.
      Art should uplift rather than degrade the human spirit.

      Seriously, why should any of these absurd expectations be observed? Being so anti-rand only shows how irrational your argument is. Maybe soften it up a bit, by actually embracing objective reality, and conceding that people should own their own lives? Yes, savage and warped — an opinion that shows how utterly irrational you are.

  11. Bartek D. says

    First, the whole reasoning was in fact outlined in Peter Thiel’s “Zero to One”, so noting really new. This is very interesting book, by the way. Thiel, for example, argues that competition is bad and monopolies are good. He argues that calling company a “mafia” is an actual compliment. A really good read.

    Second, there is no necessary incoherence between the views Piketty and Rand (and NBER paper). Piketty deals mostly with history, Rand with visions. There is indeed something strange going in the global economy (not only USA) since about 2000, in terms of rising inequalities and lagging wages and it is probably caused be digitization. Thus, the Piketty’s approach might have been perfectly correct up to 2000, and Thiel’s vision, and – accidentally – Rand’s might be valid starting at about 2000. Economic laws are not physical laws, they do morph and are subject to double hermeneutic.

    Third, when dealing with billionaires and inequality, one should keep in mind that many of them are actually willing to distribute their fortunes for charitable causes. Google for “The Giving Pledge”. Additionally, while we frequently hear about the “power” associated with great wealth and its threat to democracy, one should remember that this association is now very weak compared to the past. Millionaires’ ability to bribe universities to accept their children is truly pathetic compared to the ancient times, when extremely rich people afforded and utilized private armies and so on.

    • Stephen Grossman says

      Rickety has no theory to explain his statistical chaos. He evades govt control of finance. Quantifying Marx is quantifying scientific failure. He evades 200 or so years of capitalist progress, progress that is currently increasing. He merely rationalizes the evasion of mans’ need to make independent judgments.

  12. Maya says

    If that’s the case, abolish inheritance.

    If Ayn Rand was right and the world is divided into producers (who will give value no matter what the odds) and consumers (who will drain value no matter what the odds) then there is no true reason why an unproven, untested, possible consumer should have the ability to inherit the wealth, status, and power of a producer simply because they were birthed by one.

    It’s quite possible that as a side effect of this, billionaires will disappear by default, since nobody would keep more wealth than they could spend in a lifetime knowing that it’s all gone when they die.

    • Harland says

      This would dispossess our new hereditary aristocracy in Washington DC and as such is a non-starter.

      A lot of people disliked Hillary Clinton because she was a criminal and a warmonger, but not me. I disliked her for the simple reason that she was named Clinton. Bush, Clinton, Bush, Obama, Clinton had an awful ring to it. One is reminded of the corrupt governments of the Old South where corrupt officials had their wives step in for them. I.E. “Pa” and “Ma” Ferguson of Texas and many others.

    • Ayn Rand is frequently misrepresented and here is no exception. She did not divide society into producers, who create value, and consumers who drain value. Consumers do not drain value. Consumers ARE producers. Production and consumption are two sides of the same coin. If you produce wheat in the field and I buy it with the furniture I produce then I am trading my production for your production. Everyone who who leads an honest life is both producer and consumer. They are the same thing seen from different perspectives.

      Ayn Rand divided society into the producers and the looters, not the producers and consumers.

  13. JimBob5 says

    Under socialism we’ll still have lots of billionaires or their equivalents in terms of access to the best and the most of what life has to offer, but they’ll gain their wealth through political acumen and ruthlessness, not by building a successful giant enterprise or by directing capital to its most useful ends.

    • E. Olson says

      JimBob – what you say would only be true if you assume that socialism relies on corrupt, biased, and power hungry political leaders with imperfect knowledge about human nature, technology, and economics, who use their absolute power to siphon off resources for personal gain to achieve billionaire status.

      True socialism, however, will always rely on leaders who are uncorrupted by absolute state power, have perfect knowledge about all topics to most efficiently and fairly allocate resources, and are driven by visions of social justice rather than power and status, and thus set a good example by living an austere lifestyle, and are perfectly willing to peacefully step-aside once the state and power hierarchies are no longer necessary for a perfectly functioning society. So obviously there will never be any billionaires under true socialism.

      • Stephen Grossman says

        True socialism, however, will always rely on leaders who are uncorrupted by absolute state power, have perfect knowledge about all topics to most efficiently and fairly allocate resources

        Note the implicit appeal to God. This is willful stupidity of a high order. Maybe its subtle sarcasm.

  14. dirk says

    Indidividual inequality is one thing, but what about the ineqality of BNP in nations? Qatar, Saudi Arabia, Venezuela (until shortly, compared to neigbour Latin nations). Brunei? What have these nations created or managed to be so rich, and so influential on the world scene (in a rather negative way)?

    • ccscientist says

      Some of the inequality between nations is due to geography, some to luck, much due to culture and politics (remember, Venezuelans voted Chavez into power). The far left wants to claim that all rich western countries stole all their wealth from their colonies–but the US doesn’t fit, nor does the huge leap in China the past 40 yrs. Some good analyses have shown that whatever the stolen value the Europeans got was less than what they spent in military might to steal it. Nevertheless, they will claim this as fact.

  15. Simon Johnson says

    It’s quite extraordinary how many quillette readers still trot out the false dichotomy of attacking socialism when confronted with any criticism of neo-liberalism.

    • Heike says

      Both philosophies rely on crushing the American working class (aka racist deplorable white supremacists). When you’re sporting four foot-long gashes in your chest, readers can perhaps be forgiven for not realizing they came from a brown bear instead of a black bear.

  16. Alan Gore says

    Most resentment of the rich stems from the plebeian belief that the economy is a zero sum game, that every dollar the rich have has to be gouged from the poor. This was true in ancient and medieval times. We know this because in those days all societies could use gold as currency. Because the supply of gold grows only very slowly year after year, the fixed supply of gold matched the relatively fixed supply of wealth in every economy.

    The Industrial Revolution and technology changed all that. Discovering new technologies makes the whole pie larger. We had to make the transition from gold to managed fiat currencies precisely because economic wealth began growing at a rate faster than the supply of gold.

    • Farris says

      Imagine life without billionaires. Liberals believe the wealth earned by billionaires would be redistributed for everyone else’s benefit. However the truth is without billionaires the wealth would never be created.
      Billionaire life styles employ many people: companies with employees, accountants and money managers, lawyers and countless service industry personnel. The money billionaires earned is often redistributed back into the economy, that’s how billionaires have all the luxuries they possess. Filtering redistribution through government is often inefficient and wasteful. Furthermore billionaires contribute the most revenue to the government in the form of income, property, sales and capital gains taxes. “In 2016, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid roughly $538 billion, or 37.3 percent of all income taxes, while the bottom 90 percent paid about $440 billion, or 30.5 percent of all income taxes.”
      Leftist would kill and eat the geese laying the golden eggs.

      • Craig Willms says

        @Farris

        Well said.
        You’d think it would be common sense, but people are so jealous. I guess it’s part of being human to envy, then potentially hate someone who has more than you. You’d think these billionaires just stumbled into piles of money by chance, undeserving…

      • Ray Andrews says

        @Farris

        “Furthermore billionaires contribute the most revenue to the government”

        But really all wealth comes from the workers who produce it. If parasites are taxed heavily is is only to recapture some of what they took from workers in the first place. The upper classes can honestly claim to do some work themselves in terms of organization and allotment of capital and so on, but they are consuming several times more than they did in the 60’s and I don’t think they are working any harder. Meanwhile the lowest half of the population are working harder, but making less money. I don’t think it’s fair.

        • Farris says

          @Ray

          “If parasites are taxed heavily is is only to recapture some of what they took from workers in the first place.”

          Parasites is an odd term for persons who put capital at risks to provide jobs that puts food in the mouths of families. If there is no job there is no labor. No one holds a gun to anyone’s head to work at these companies. Without billionaires there would be no jobs.
          If you don’t think it fair you are free to start a competing company and pay higher wages. Perhaps you will attract the best talent and become wildly successful or perhaps you will go broke and watch your well compensated employees move on.

          • Farris says

            @Ray

            When President Trump cut corporate tax rates, it was employees who saw a benefit in bonuses. Of course one could take the Pelosi approach and refer to this additional compensation as crumbs.

          • Ray Andrews says

            @Farris

            “Parasites is an odd term for persons who put capital at risks to provide jobs”

            I know. As I go on to say, the wealth holding class does some work. But they also tend to want to eat more than they deserve. They always seem to want more. How much more do they need? They say they need much, much more. Is there a point at which the economy should be rebalanced with the workers in mind? Or must all increases in wealth go to the 1%?

            “No one holds a gun to anyone’s head to work at these companies.”

            Sure, we are free to starve. The individual worker can take on the corporation, fair and square. The global elites are keen to flood formerly prosperous societies with endless people from the 3d world too.

            “Without billionaires there would be no jobs.”

            I disagree. The largest sector of the economy is still small business. I like small business, we do real work for real people. We rarely hide our profits offshore.

        • Craig Willms says

          @Ray

          You are probably correct, however the government, after collecting the taxes, is not “returning” it to the workers in question, Instead they retire at 55 after having been educated for free by the tax payer and after several mental health sabbaticals to go along with their fine healthcare and retirement packages.

          So you see the dilemma?

          • Lydia says

            Craig, bingo! Government bureaucrats are the biggest parasites in our country.

        • Lydia says

          But the workers are unionized. Even government bureaucrats are unionized.

        • ccscientist says

          Ray: a couple of fallacies here: first, the lowest half of the population is NOT making less than in the 60s–real wages in terms of purchasing power have been rising. Many things like AC, iphones, cars, TVs that were rare in the 60s are now ubiquitous. The middle class is shrinking by becoming wealthier. Were you around in the 60s? I was.
          Second, you seem to believe workers are trapped at a given job. Do you really believe all businesses get together in secret and set wages? That is overtly illegal. Business hire good workers away from each other at a higher wage all the time.
          When someone founds a business and it ends up making life better for people and they employ 10,000 employees, I find it offensive to call them parasites.

  17. Ted Talks says

    I can think of no other author who is subject to more unearned vitriol that Ayn Rand. Its quite comical.

    You got lefty folks like some of the comments above “blerggahh, I hate Objectivists. Ayn Rand’s philosophy is stupid!!!11!1!”

    Hating Objectivists is like hating tress in the desert. The way people lash out at her you would think several dictators adopted her philosophy and starved millions of people.

    • Farris says

      @Ray

      “But they also tend to want to eat more than they deserve. “

      And who decides who deserves what? You? How about people deserve what they earn or is that unfair in your world?

      Most billion dollar companies started as small business. Do you think Ford, GE, IBM, Microsoft, Apple, ect…just sprang up over night. Thinking you know what others deserve or have is dictatorial. Congrats on your small business but I wondering do you exceed to every demand of every one of your employees who believes he should be earning more? Furthermore I would be willing to bet the largest expense of your small business is payroll.

      • Ray Andrews says

        @Farris

        “And who decides who deserves what? You? How about people deserve what they earn or is that unfair in your world?”

        One view of economics is that there is no such thing as justice, and that everyone takes as much as they can get. Except that the people who hold that view make an exception for working people who’s greed, should they form unions, is excoriated. Thus E believes that people like me should not have our ‘gold plated pensions’. Our greed is not good. It is not fair.

        So, maybe there is such a thing as justice, since most people appeal it at some time or other. The government decides on tax policy. From about the end of the War to Thatcher/Reagan all parties seemed to have some idea that the government’s policies would be designed around the wellbeing of ordinary people. It’s not that there were no rich people, indeed, rich people had never been so numerous. But they didn’t own almost everything like they did in the age of the Robber Barons, and going back to the age of the aristocracy when serfs were exactly slaves.

        Then it was decided that that brief time of general prosperity should end — the rich should once again own almost everything. And government policy once again implemented that goal. (It wasn’t quite that simple of course. The previous paradigm had run into some real trouble and reform really was needed for everyone’s sake. I’d have voted for Reagan myself.)

        So, to answer your question, the government decides. In the days of aristocracy, the guy with the sword decided. From the industrial revolution thru the 20’s the guy who owned the factory decided. Big guys believe that whatever they take in a fair fight is justly theirs, no? We observe that capital can always keep workers at starvation wages if the law does not intervene. Folks like yourself will say that because capital can do that, it is just that they do it. Marx said that that would never change without revolution.

        But wait! Something went terribly wrong — democracy. People decided that they could design a state to serve their own needs and that thus capital would be regulated. This started happening around the turn of the century. The Robber Barons were shocked and appalled. Government started ‘interfering’ everywhere. Safety standards in mines! The miners had freely entered into contracts to work in deathtrap mines for a couple of decades, where, if they weren’t killed outright, they could look forward to dying of black-lung by the time they were 45 or 50. But the miners freely decided that that was better than starving to death outright! Who had the right to interfere?

        Well, taking the Robber Barron’s ideas to their logical conclusions, there is no such thing as justice, and therefore there is nothing intrinsically just about The Free Market either. It’s just one of several economic models. There is no platform on which people like yourself can appeal to your economic views as being the proper ones. Who says what is proper? If there is only greed and self-interest, then the working people, by taxing the rich, are merely being greedy and self-interested, which Ayn Rand should heartily applaud. So the people demanded safety standards in mines. And unions were made legal.

        But if there is such a thing as justice and fairness, and if we have a democracy, then the voters have decided that justice and fairness will be what they say it is. And they say that elephants dancing with mice is not fair, especially since it’s the mice who do the work of feeding the elephant. The elephant is bigger, but the mice are more numerous and they’ve decided (sometimes) who controls the tune. But the capitalists can always move to Guatemala if they want, no one has confiscated their passports. If you don’t like our democracy, then move.

        “Most billion dollar companies started as small business. Do you think Ford, GE, IBM, Microsoft, Apple, ect…just sprang up over night.”

        But notice that these companies all started during the era when the common good was the paradigm. Henry Ford famously said that his workers should have enough money to buy one of his cars. In my view, an economy that has concern for the common good is also an economy that will produce the most billionaires. I like billionaires. But I think they should reinvest in the countries that made their wealth possible. That’s call taxes.

        • Farris says

          @Ray

          “It is not fair.”

          No offense, I actually enjoy the back and forth. However you have used the above statement now twice. Don’t you find that statement a bit immature and naive? It is akin to saying there should be no winners or everyone should get a trophy. You make your points well but the above statement detracts from from the rest of your post.

          Your analysis of the robber barons is a bit flawed. Many robber barons supported increased regulation as a way of preventing upstart competition. If robber barons could increase entry costs, it would solidify their hold on the market. Regulations that benefited the workers and consumers also benefited the established companies.

          Finally saying that government should decide who should earn what is a call for a dictatorship, where the government dictates all. That is infinitely more dangerous than any large corporation which would be lucky to have a dominant life of over fifty years.

          “…in the long run of the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of government; and certainly the harm is likely to be counteracted faster.”
          John Cowperthwaite Financial Secretary Hong Kong 1961-1971.

          • Ray Andrews says

            @Farris

            “No offense, I actually enjoy the back and forth.”

            Me too, I find you honest and that’s all I ask.

            “Don’t you find that statement a bit immature and naive? It is akin to saying there should be no winners or everyone should get a trophy.”

            But everyone appeals to fairness at some point. We do have that built in sense that something is unfair, do we not? I agree that the idea is fraught. What is fair is very debatable. And no, I do not believe everyone should get the trophy. That would not really be fair at all. The ‘everyone wins’ trope is one of the stupidest ‘feel good’ nostrums that was ever invented. It is not just stupid, it is positively corrosive.

            “If robber barons could increase entry costs, it would solidify their hold on the market.”

            Sure. It belies the trope that only leftists like big government.

            “Regulations that benefited the workers and consumers also benefited the established companies.”

            That’s how it should be. In my view the dog eat dog economy in the long run isn’t even good for dogs. Even the NY Mafia came up with The Commission because they realized that even among themselves they needed law and order.

            “Finally saying that government should decide who should earn what is a call for a dictatorship,”

            Yes, but I do not advocate that. Rather, the government should very broadly steer the economy in a general direction. Tax policy should favor innovation not inherited wealth, real work not manipulation, wages over dividends. Again, this was achieved to everyone’s benefit in the 50’s – 70’s. Few of the billionaires (probably millionaires at the time) were really suffering and even an ordinary working guy could afford a house. It wasn’t so bad, was it?

            “in the long run of the aggregate of decisions of individual businessmen, exercising individual judgment”

            Standard Hayek. Sounds very nice. No doubt at least partially true. But not absolutely true as we see in Guatemala. Every western government intervenes in their economy to some level. Every civilized society has rules, taxes, controls. Exceptions? The question is, what rules are best, and for whom. A society can be over regulated, or under regulated. Balance is needed. Capitalism is powerful and useful, but it tends to concentrate everything in the hands of very few people. There is no reason why this should be the preferred outcome. People can and do choose other systems. IMHO balanced, mixed economies do best. You can vote for something else of course. Some vote for ‘socialism’ and that (taken too far) doesn’t work very well. I like lightly but carefully regulated capitalism with some sense of the public good and even with a safety net.

          • Farris says

            @Ray

            I wrote: ““No one holds a gun to anyone’s head to work at these companies.”
            And you replied
            “Sure, we are free to starve.”

            Wouldn’t preventing people from starving be laudable?

            Yes everyone appeals to fairness. That is the problem, the term is too vague. One man’s fairness is another’s travesty.

            “Rather, the government should very broadly steer the economy in a general direction. Tax policy should favor innovation not inherited wealth, real work not manipulation, wages over dividends.”

            Let’s talk about that! Government currently taxes individuals as desperate rates. This results in a lack of public unity and allows the government to divide and conquer. If all were taxed and the same rate it would be much easier to keep government in check. Taxing earnings discourages earnings, taxing spending encourages savings.

            It can be fun to imagine corporate billionaires rubbing their greedy little hands together conspiring to exploit the workers. But the truth is most billionaires own a controlling interest in publicly traded corporations. Therefore the billionaire’s fiduciary duty is to the stockholders. When Henry Ford wanted to give a benefit package to his workers far more generous than his competitors, the stockholders objected and for good reason. Mr. Ford was being generous with their money.

            Your rationale is often referred to as “zero sum thinking”. You believe that because some have more, others must have less. Such is not the case wealth is not only an indicator of prosperity but a facilitator of it. If you build your mansion next to my small house, my property value increases.

        • E. Olson says

          Ray – there has never been a time of the “common good”. There were big black markets during WWII when everyone was supposedly patriotic and working for the common good. Every Communist country has always been promoted as being for the “common good”, and yet the leadership always seems to end up with mansions, and billion dollar Swiss bank accounts. Lefties supposedly care about the “common man” and want higher taxes to pay for welfare, but are also most likely to cheat on their taxes, less likely to give to private charity, and cheat to get their dumb lazy kids into top universities. TV preachers tell us to live moral lives for the common good, but somehow end up living lavish lifestyles and have take a strong personal interest in hookers and young boys. In other words, we are all sinners and we are all selfish and greedy to varying degrees, and it has always been that way even as we try to moderate our worst instincts with religion and various forms of government/societal organization.

          Thus all those small companies that grew big were started when people were shits looking out for their own best interests, and they still somehow ended up succeeding. Henry Ford didn’t pay higher wages because he cared about the worker, he paid higher wages because turnover at his plants was so high it was costing him money, and he hoped higher wages would reduce it, but then spun the $5 day wage for PR purposes to make it look like be was a generous benefactor. In reality Henry was a bastard, who treated his son like shit, was a huge anti-Semite, and had zero engineering talent. He also failed in his first automotive venture, but didn’t give up and worked hard to fulfill his vision of making a good car for the mass market. Steve Jobs was also a asshole with a successful vision, Bill Gates seems to be a good guy, and Henry Leland who took over the first failed Ford car venture and turned it into Cadillac was also good guy. So successful leaders come in all stripes and flavors, but all have flaws.

          Which brings us to another issue. You seem to think that starting a business and turning it into a billion dollar venture is easy, and it is easy to see how you could see things that way since all we ever hear about in the media are the success stories. Most businesses and new products fail within 5 years, however, but we rarely hear about those. And all that wealth you seem to be envious of, is usually temporary as there is huge turnover among the Forbes richest people list, but again we tend to only hear about the ones that stay on top a long time who are the exceptions. People that risk their fortunes and reputation and strike it big should not be punished for being successful, and have their money taken and given to others who don’t take risks and don’t have ideas to make life better for all of us. Nobody deserves more that what their own effort earns them and what their own investments provide them, and most people will actually have a few years when they are towards the top of the income lists as they get a big bonus, sell their business, inherit some money, etc., but these good fortunes are not very rarely everyday/year events, and yet you think they should be heavily taxed because they have a good year.

          • Ray Andrews says

            @Farris

            “That is the problem, the term is too vague. One man’s fairness is another’s travesty.”

            I don’t say this is easy. But we have to figure something out that the bulk of the people will assent to, because we have a democracy (of sorts). But the notion of fairness remains fundamental to the way we tick. Even a mafiosi will chafe if something unfair happens to him. Billionaires will appeal to fairness. But I think we all have essentially the same basic notion.

            “currently taxes individuals as desperate rates”

            Pardon?

            “Taxing earnings discourages earnings, taxing spending encourages savings.”

            Yes. absolutely.

            ” Mr. Ford was being generous with their money.”

            Ok, but he also understood something that I agree with. Perhaps rather than making it a sort of personal demonstration (in violation of strict fiduciary as you say), this kind of thing should be managed by the government. No one wants to maintain the pitch, but everyone wants it in good shape for the next game. I believe in fairness to workers for the sake of fairness but I also think that everyone benefits in the long run from a decently organized society and that includes the rich. I have no problem with rich people.

            “You believe that because some have more, others must have less.”

            We have the sum of what the workers produce. They consume some of it, and they give the lion’s share to their masters. We have outright thieves, we have the aristocrats of old, who robbed you because God said they could, we have various combinations of real entrepreneurs, manipulators, scam artists, parasites, investors, rentiers etc. Some are outright thieves, most do ‘deserve’ a cut. But how much? Again, they will say that the economy should be designed to maximize their take. That’s the fair economy, the right economy, the natural economy. I disagree. We can design the economy any way we want, and no way is ‘natural’. I vote to design the economy for the general good. Like in the 50s.

            Captialism is the pooling of IOUs so as to concentrate labor in some ‘big’ venture. Good idea! But money does not create wealth, money concentrates wealth. Workers create wealth. Capital should ‘focus’ their labor where it can do the most good. But capital tends to concentrate wealth unduly. IMHO the government should constantly be stressing the old oligarchies and recycling their money back into society as a whole where it can stimulate new innovation. Like in the 60s. Leave the workers alone, let them spend their paycheques in the economy. Never fear, it will trickle up to the entrepreneurs and that’s fine.

          • Ray Andrews says

            @E. Olson

            “there has never been a time of the “common good”.

            Never perfect of course, but my parents told me that back in the day there was a sense of building a better tomorrow. Even the Victorians took huge pride in their public works. That’s why they were built so well. The Golden Gate Bridge — built to last forever, and a matter of national pride, and built for the common good. Yes, there are hypocrites of all kinds. We must never leave personal advancement by the sweat of our brows — or the coolness of our idea — out of the equation. Greed many not be quite so good, but it is very reliable, let’s use it. Christians almost invented charity but the bible says: “If a man does not want to work, neither let him eat.” We rightly reap what we have sewn.

            “but then spun the $5 day wage for PR purposes to make it look like be was a generous benefactor”

            I’m betting it was both. What he said about his workers being able to buy his cars, was true, and good things benefit everyone. I see little use in digging into the man’s soul. He sure became rotten to his workers latter on tho. But, all these guys, are real innovators. As I’ve said, I even respect Carnegie, warts and all. He made steel.

            You seem to think that starting a business and turning it into a billion dollar venture is “easy”

            Holy God no. I hate to think I’ve come across that way. Ford, Gates, Jobs … driven visionaries, yes sometimes assholes, but innovators. I might eventually tax away 10B out of a 40B fortune, but would that really impact them? But when they’re starting out of the gate, heck, I’d … well … the government makes mistakes subsidizing businesses too … but, nuts, I’d sure be tempted.

            And all that wealth you seem to be envious of

            Envy has nothing to do with this. Reinvesting in society is the issue. Not only is the infrastructure falling apart, but so are the less physical institutions that hold the whole thing together. If the whole thing collapses (lead by the universities), that will be bad news for billionaires too.

            “there is huge turnover among the Forbes richest people list”

            True enough. I’d keep them lean and mean with taxes so that they never get the chance to get fat and lazy. Maybe some wealth tax, tho I prefer luxury tax if possible.

            “punished for being successful”

            Taxes are not a punishment they are a return to society on the investment it made in creating an environment where you could succeed. Again, it is mixed economy western nations that produce the most billionaires, no? They should recycle some of their gains. Farmers invest in fertilizing their fields, no?

            “Nobody deserves more that what their own effort earns them and what their own investments provide them”

            As a fairness claim I understand, but in practice, I think of it as insurance. As you say, people cycle through various states of income. We’ll give you UBI when you need it, and we’ll tax you when you pull out. What’s wrong with that? You can believe in a society that always has your back. As I mentioned, hunter/gatherers always consider the kill to belong to the whole band.

            Oh and what about my niece Em? IQ 69. Starvation? Or just extreme poverty for her? Injured workers? The insane? Hitler thought that ‘useless eaters’ should be gassed. You? Not me. The wealthiest societies on earth can spare a few bucks for the unfortunate IMHO. But then again I’m a Christian so you can understand my softness.

            Then there’s the deep implications. UBI obviates the entire edifice of Victimhood — no point in whining, you get exactly what everyone else gets. Dry your tears.

            Crime:
            ‘Your honor my client grew up in the ghetto, he was discrim…’
            ‘Silence! We have no more use for that kind of talk. Was your client denied his UBI?’
            ‘Ummm, well no your hon…’
            ‘Good then that’s settled. 5 years hard labor. Dismissed … Oh, and boyah! Don’t let me see yo’ ass in my courtroom again, y’heah! You come see me when you get out, I’ve got a job for you. U tuff, U smart, we gonna make U strait, U heah boyah!’
            ‘Yes y’onnah, I believe ah do heah you’

        • Stephen Grossman says

          Man is alone in the privacy of his own mind. This frightens the anti-capitalists.

    • Craig Willms says

      @Ted

      You mean was done with Marx? (and they still love him). The world’s been F’d up for a while now. Black is white, up is down, freedom is slavery. killing killers is murder and killing babies is virtuous choice…

      God help us.

  18. asdf says

    Basic economics teaches that excess profits are economically impossible in a free market. Competition drives down excess profits. As such, billionaires should be seen as a failure.

    Usually when someone is a billionaire there is a government restriction on competition that allows the excess profits. Patents are a good example. Patent enforcement is a huge expense the government takes on. There are courts and regulators and policy, paid for by the government, that make your patent lawsuit a reality. People say “inventors only retain X% of the value of their invention”. What % could they retain without a patent? What kind of profits could one retain if they had to enforce their patents with their own private army?

    That doesn’t even get into people whose business receives various subsidies and advantages from governments.

    Every billionaire is a policy failure is a kind of acknowledgement that it’s impossible to earn those kind of profits in a world of free competition without government aid. Since it is sometimes impossible to eliminate the specific government aid that created those outsized profits, it can make sense to designate after the fact large fortunes as likely derived form such aid and tax them more heavily to recoup some of the aid back.

    • Ray Andrews says

      @asdf

      That’s why Standard Oil was not ‘regulated’ it was broken up. The best ‘regulation’ is competition, but as you say, business is subsidized and protected in all sorts of ways that are not obvious. ‘Free Enterprise’ looks like the booze business in Chicago during prohibition unless we have a state, law enforcement and regulations. The Free Enterprisers want exactly that amount of government that maximizes their profits — no more, no less.

      • Farris says

        @Ray
        “We can design the economy any way we want, and no way is ‘natural’. I vote to design the economy for the general good.

        Designed economies have a long inglorious history. The first thing the designers always eliminate is Freedom.

        • Ray Andrews says

          @Farris

          Every economy is designed. Some are designed badly. Often by over designing. People who are paid to regulate regulate and they keep regulating even when they are doing more harm than good. But the first thing the first headman in the first village did was impose some order on the marketplace. There had to be punishments for theft, there had to be weights and measures, there would eventually be currency supplied by the state, protections against selling rotten meat … culminating the the famous EU regulations governing the curvature of cucumbers. There is no magic place where good regulation stops and bad regulation begins. But every marketplace is regulated. BTW, I’m not a fan of command and control economies, but the ancient Egyptians made it work quite well.

          Yes Freedom. Messy isn’t it? Especially FOS, people will say nasty things and stupid things. The regulatory mindset finds it quite abhorrent.

        • Stephen Grossman says

          “General good” is scream of blood-drenched, religious hatred for individual good.

          • asdf says

            Singapore is designed for the general good. So is Denmark. Your economy will always be designed…either well or poorly. Good designers know not to over design.

  19. Caligula says

    The role of luck in amassing great fortunes should not be overlooked. Gates had relevant skills, and also a streak of ruthlessness, but he also found himself at just the right time and place.

    Yet to say it often takes luck to earn a great fortune does not diminish the social utility of not confiscating such fortunes. For if creating such fortunes does create value for many others, then if the reward requires not just talent and hard work but is also far from certain then the reward must be rich indeed before any will make the effort to (possibly) acquire it.

    Ultimately the “inequality” argument implies that I somehow become poorer if my neighbor builds a fancy house next to mine, or buys a better car than mine. Or perhaps I somehow become poorer even if this rich person is not even close to being my neighbor, as I am impoverished merely by knowing that someone, somewhere posesses this wealth and I do not.

    Thus, this new focus on inequality and not on absolute poverty seems inherently driven by envy. For why else would the focus be on differences of wealth instead of on ensuring that a modicum of material comfort can be obtained even by those with limited talents, so long as they’re willing to contribute a reasonable effort toward helping themselves before asking for help?

    And there’s also the danger of over-reach, for taxes on the rich rarely raise as much revenue as anticipated, and thus redristributive taxes inevitably expand to include the middle class. As H.L. Mencken wrote, “Every election is a sort of advance auction sale of stolen goods.” Do you really want democratic governance to degenerate into a mob eager to take from others for its own benefit?

    • Prometheus says

      “Do you really want democratic governance to degenerate into a mob eager to take from others for its own benefit?”

      Was that an intentional joke?

  20. Prometheus says

    Trust an Objectivist to completely misread a paper and claim it backs up their fantasy world. Did anyone bother to actually read the paper?

  21. Joe Cogan says

    “While it may be true that the mere existence of billionaires and extreme wealth disparity is a reliable source of some social discontent, it must be first examined whether addressing this discontent (as part of a legislative agenda) will ultimately prove worse than allowing the discontent to remain while enjoying the diffuse economic benefits that are often associated with extreme individual wealth in the first instance.”

    An examination that ought to take place sooner, rather than later. As French aristocrats discovered in 1789, declining to address such discontent may eventually lead to pitchforks, torches, and Madame La Guillotine.

    • ccscientist says

      Do you not see the difference between now and 1789 France? In France an actual monopoly of land existed with aristocrats owning almost all of it and serfs tied to the land. No worker in America is tied to his job and no monopolies exist. Most of the cries about monopoly are competitors trying to get government to wack their enemy. Even Facebook is losing customers who are not in fact tied to it. I don’t use it.

  22. I’ve believed and shared with friends my view ( for literally decades) that Nostradamus et al were mere pikers, that the real visionaries who’s prescience would truly and accurately endure, was Orwell and Rand…….and so it goes;)

    ( thats the limit of my prescience btw;))

  23. Chad Chen says

    What drives discontent is not inequality per se, but poverty and hardship in the bottom third of society, particularly àmong the working poor.

    In the United States, wage rates and employee benefits should be set so that full-time workers can afford to feed, clothe and house themselves, and pay for most medical services as well. The funneling of scarce resources to the top of the income distribution is preventing this.

    • E. Olson says

      Chad – so what kind of wage would you require to feed, clothe, house, and medicate full-time workers? Should the working poor be able to afford only Walmart sneakers or top-of-line Nike? What minimum standard of housing should they be able to afford: 500, 1,000, or 1,500 square foot homes and should we include a 1 or 2 car garage? Do we adjust wages for local cost of living – so minimum wage is $50 per hour in San Fran or NYC, and $25 in Omaha or Waco? What about those currently earning $40 per hour in NYC or $20 in Omaha – do they now get the new higher minimum wage or do we adjust them so they maintain a wage that is higher than minimum wage?

      Please tell us how this will work.

      • Chad Chen says

        It would work by expanding refundable tax credits. Benefits would be adjusted for cost of living differences. Stop being boorish.

        • E. Olson says

          Chad – my questions are not boorish, and your clarification did not address them. The EITC is probably one of the most effective redistribution programs there is, because it encourages people to work even if their skills are such that they are only able to get low wage work, but even the EITC requires decisions on just what level of living society wants to provide low income workers, and the quality of life the amount decided upon is highly dependent on the local cost of living.

          • E. Olson says

            Ray – EITC = earned income tax credit. For those below a certain income threshold, instead of paying taxes on their earned income (from work) they get money back from the government as sort of a wage supplement. Very similar to the negative income tax promoted by Friedman, although EITC does require the tax filer to have done paid work to get the benefit. An additional benefit is that it is pretty efficient to administer and hence requires little bureaucracy.

          • K. Dershem says

            The EITC is a successful program that enjoys bipartisan support, but it also enables employers to pay poverty wages. In effect, taxpayers subsidize companies that take a Wal-Mart approach to their workers (low wages, minimal benefits, high turnover) rather following the Costco model (higher wages, generous benefits, employer loyalty). I would be less conflicted in my support for the EITC if it were funded by a tax on companies that don’t offer a living wage. Of course, if labor unions hadn’t been devastated by decades of anti-union policies and propaganda, workers could negotiate on their own behalf and wouldn’t need government intervention. Another problem with the EITC: it works well for people who are able to find jobs in the formal economy, but individuals who can’t (for a variety of reasons) are often left in desperate poverty. They don’t starve, thanks for the availability of food stamps, but it’s very difficult to survive without access to cash. I’m currently reading a book called $2 a Day: Living on Almost Nothing in America, and it’s eye-opening.

            http://www.twodollarsaday.com/

          • Ray Andrews says

            @E. Olson
            @K. Dershem

            Thanks both. That’s an interesting policy. There’s potential there. I have a gut level dislike of minimum wage; it’s a blunt tool, but it is better than poverty. This EITC might be better. My favorite is still UBI, but that’s very negotiable. Or various workfare programs. Tho the righties poo-poo it, I thought that FDR’s sending the unemployed out to Arizona to build the Hoover Dam wasn’t such a bad idea. The Hoover Dam seems to have proven to be a good thing and there is the very minor point that thousands of men did not starve. Had the righties had their way, they would have starved, and we’d not have the Hoover Dam.

  24. TheSnark says

    In “Atlas Shrugged” the economy was run by a coterie of entrenched managers, protected by government regulations and bureaucracies, delivering increasingly inferior goods to a captive population. Rand’s heroes were the men and women who were trying to break that stranglehold and open up the markets. They were not just fighting the government, but also the businesses that were living off the government’s largess and protection.

    Today in the US we have many businesses like that, with entrenched managers delivering poor goods/services at excessive prices to captive markets. Think of your ISPs, cell phones companies, internet services (maybe free, but then you are not the Facebook’s customer, your data is their raw material), pharmaceutical companies, large banks, etc.

    The progressive’s answer is more regulation, which, after a burst of idealism, will just lead to more regulatory capture. The Republican answer is less regulation, but the real effect is to get rid of the regulations that enable competition to the entrenched incumbents. I suspect John Galt would be appalled by both of them.

  25. Risible Malarkey says

    What If Wilhelm Riech Was Right About Orgone Energy?
    What if L. Ron Hubbard Was Right About Xenu?
    What if…

  26. I tried to read Atlas Shrugged once. It wasn’t the ideas that turned me off so much as the prose. It was such bad writing that I’m permanently skeptical of the judgement of all Randians about everything.

  27. Andrew Elsey says

    Let’s just state the facts: equal success among entrepreneurs does not equate to equal talent, anymore than being a noble meant you were actually superior several hundred years ago. Above average nerd Sergei Brin got carried to billions on Larry Page’s sideshow freak back. Lord Zuck Zuck is certainly no Bill Gates; Marky mark was in the right place at the right time meeting the right people with the right mentors. So I only half believe in the mythical Atlas Shrugged billionaire, because all of the Walton royal family would be shoveling crap in a manure pit if their father wasn’t a machine. You just can’t ignore that when you apply Randian Over-man theory or you’re an idiot.

    Also, the Galt analogy is completely backwards in modernity. Nowadays you can basically count on your invention or company to be stolen or ran into the ground by Facebook or Google.

    There are thousands of equally brilliant, hard working entrepreneurs just waiting to fill the void if the government breaks a few companies up and ships off a few billionaires into the mountain to build their own society (we’ll keep the ones that are actually exceptional).

  28. Zion O’Toole says

    It’s funny how countless extremely successfully people say they were inspired by Rand’s “sophomoric” philosophy.

    Rand, like most other great philosophers, gave us a lot of brilliant insights and a few head-scratching clunkers.

    • K. Dershem says

      Vanishingly few professional philosophers regard Rand as “great” — literary critics don’t think very highly of her novels, either. Expert consensus isn’t always correct, but it seems telling that only Objectivist true believers can perceive her “genius.”

    • Plenty of “extremely successful people” also regard Dale Carnegie and Tony Robins as “great philosophers”. Just because someone who is “extremely successful” at selling widgets thinks it doesn’t make it so.

      Hell, millions of “extremely successful people” are also inspired by Coldplay.

  29. DBruce says

    You can only understand inequality from a Georgist perspective. Inequality deriving from capital and labour is meritocratic but inequality deriving from land monopoly is not. Most of the inequality that we talk about derives from land monopoly.

  30. markbul says

    Very few people solve the most difficult math problems. Very few people create huge hit songs. Very few people can diagnose the most obscure diseases. And very few people can make huge amounts of money. We should EXPECT that very few people will make far more money than the rest. Because very few are talented at the highest levels. While many are socially and economically useless. I don’t see where fairness is an issue here. It is fair that those who produce wealth should benefit from that production.

    • Chad Chen says

      The relationship between making money and “talent” is weak. Among IT experts, Bill Gates and Jeff Bezos invented nothing and are very far down the list of original thinkers. Among investors, Warren Buffet is something of a plodding blockhead. Steve Wozniak was much brighter than anyone else at Apple, and head and shoulders above the salesman/designer everyone talks about.

      When will people learn that most financislly successful people and other “leaders” are either plain lucky, or they are merely sociopaths who out-maneuvered or exploited other people.

  31. Omar Hegazy #YANGGANG says

    I’m sorry, but this article is uninformed.

    First of all, I don’t care about whatever singular study that has not been replicated you throw in my face (seriously – not even a meta-analysis?) to disprove Piketty. Profits through rent-seeking behavior as opposed to real labor is an actual problem. We already know objectively about how the growth of wealth among the richest is vastly outpacing the mediocre growth in GDP, about how labor productivity is vastly outpacing the stagnancy in the median income, and, as I’ll talk more about later, about how our rapid growth in wealth is dismally correlated with an equally rapid drop in labor participation. If you didn’t know about these things, look them up – they will be summarized much more effectively than I can here.
    So let’s not talk about that. Let me instead share a few anecdotes about rentier behavior that I know of :

    I live in New York City, where millions of homeless drunkenly wander the streets while random Hong Kong billionaries buy up multi-million dollar Upper East Side penthouses and leave them completely empty. Those billionaires stand to make millions doing absolutely nothing but reselling those penthouses later, probably to more billionaires content to believe that it is never a bad time to invest in New York, and who will leave these extremely valuable HOMES just as a barren asset to expand their wealth.
    Want another one? Many Wall Street firms here are spending hundreds of millions of dollars trying to figure out how to quickly buy a commodity at one exchange and immediately sell the same exact commodity at a different exchange where it’s more expensive. It’s important to abuse this arbitrary cross-exchange variance in price QUICKLY : buying at the less expensive exchange raises the price there, and selling at the more expensive one lowers it there, so the first firm that can buy-and-sell in bulk will even out the prices quickly and win it all. These firms stand to make BILLIONS here by doing nothing other than being the quickest to abuse arbitrage. They’ve already figured out how to communicate between New York to London and back in MILLISECONDS, and now they want more, which means hitting the limits of the speed of light itself. So some of these firms have even hired renowned physicists to do work in general relativity trying to find the most optimal places on the planet’s surface to communicate with global exchanges (i.e.; where on the planet you should be to get the quickest readings from Shanghai, London, NYC, etc.). Some of these optimal midpoints are in the middle of the Atlantic. These banks are now looking at potentially spending multiple millions of dollars building floating platforms for servers in the middle of the Atlantic Ocean literally just to make money from …. being the quickest boys to buy a stock somewhere, and sell it somewhere else.

    This has nothing to do with enterpreneurship, or genuine investment in our market, producing or helping to produce anything for American people.

    So how could you say these people are doing honest-to-God good “””work””” for our country? How could you argue that that money could not better used in the hands of the American people?

    Second of all, let’s assume that, fine, most people aren’t getting rich like this, and actually the GDP is fine, and I cherry picked bad examples, and inequality just means that the richest are working harder than ever to bring us great products.

    So let’s talk about automation. Its rapid rise has already led to the destruction of our manufacturing industry, its now slowly killing our retail industry, and it has trained its murderous lust on the massive transportation industry in the coming decade. These technological developments have upended our understanding of capitalism : it is now entirely possible to be a successful “entrepreneur” and build a thriving business without hiring that many people at all. The robots are doing all the work.

    This thesis is reflected in our abysmal labor participation rate. Firstly, let me just dispel with the trite, meaningless meme of our “historically low unemployment rate”. The unemployment merely just measures the proportion of people actively seeking a job that cannot find it. It’s not useless, but it doesn’t paint the full picture. If you take a look at the labor participation rates of this country, which measures the proportion of those in their `prime working years’ (typically 18 to 64 or 25 to 64) that are in or seeking employment, you get a completely different picture. Our labor participation rate has seen sharp drop offs over the last 15 years, especially after the recession in 2007 (according to the BLS, it grew from 58% in 1948 to 67% in 2000, but dropped back down to 1978 levels of 62% in 2018, effectively undoing 4 decades of growth in the labor market over the course of 18 years). While we do have more of the rich entrepreneurs in tech and finance so glowingly regarded in this article, there is an even larger proportion of our American people that have nothing to do or look forward to other than shoot up heroin and watch television.

    And who could blame them?

    First the machines came for the thriving post-war manufacturing industry. Then, Amazon went after the retail sector, and robocalls made customer service irrelevant, undoing the farcical meme of America as a `service economy’. Now taxi drivers and truckers at at risk of losing their jobs at well. It’s safe to say that anyone could be next. So what more is there to do?

    It’s not that these people are failing to satisfy the lolbertarian demands of working as hard as the entrepeneurs or (ugh) “just lift urself up by your bootstraps bro 4Head”. It’s that, when so much of the work can just be done more cheaply and safely and efficiently by bots, the market just DOESN’T NEED THEM, no matter how hard they work. These people have been born into a world where their Boomer parents are telling them this Reaganite garbage of ‘pull yourself up by your bootstraps’ and the actual market is telling them ‘Dude, unless you know anything about private equity or C++, I don’t care how hard you work. Your ceiling is the local manager at GameStop’.

    Silicon Valley venture capitalist and founder of Netscape Marc Andreessen once wrote an influential article in tech circles called “Software is Eating the World”, about the ever growing role of software engineering in our economy. This is false. Software is not eating the world. It is devouring it wholesale and sucking the bone marrow out of its labor industries.
    When Instagram was sold to Facebook for $1 billion, it had 30 million users and thirteen employees. This particular example is indicative of a fundamental modern refutation of the traditional capitalist notion that deregulation is good because when we leave our rich to do as they please, the investments will benefit us all in the form of good jobs that will spur market activity.

    But this Reaganite nonsense doesn’t make any sense any more. You can now build a product valued at a billion dollars with 30 millions consumers and only create TWELVE jobs in the process. Trickle, trickle.

    There’s a reason that Ayn Rand is looked at with such mocking contempt in many circles and why most of us grow out of our laissez-faire anarcho-capitalist phase in the 10th grade. It’s because, in our modern world, this unrealistic “no gods, no masters” utopia does not pan out at all for anyone except the top 1%. Every time people talk about how taxes are inherently evil and the rich are doing good akshually, these shadow-y executives in tall glass buildings in the financial district look down and start CRYING laughing as they see these reductive lumpenproles carrying a copy of `The Fountainhead’, talking about “muh GDP muh productivity” in order to defend no one but THEIR interests.

    • Robert Melater says

      Thank you for this. Well said.

      Further – my personal point of view = deal with some other economic pieces first. The issues of regulating billionaires, yes or no, becomes a moot point after the gamed economy gets tilted back towards level*
      1. Pay working people more (and the move towards a $15 min wage = just about 1/2 of what it should be to live in the US above the subsistence level)
      2. Be aware of the fairly close to slave labor being used throughout the US agricultural system; the cheap food of the US is built upon the backs and hands of both legal and illegal workers who are paid $2 – $5 per hour
      3. Subsidies to agribusiness, oil, pharmaceuticals, military equipment, both hidden and direct – end them, or have accurate accounting.
      4. Capture downstream environmental cost, eg what are the real actual costs to worldwide consumerism, in using China as if it were the New Jersey of 1910, a factory wasteland whose environmental outcome doesn’t matter. It’s headed towards the large superfund site ever
      5. “Fix” the gaming of financial markets (you called out the high speed trading piece so well). High speed trading, pitching education loans without bankruptcy relief, bundling loans into tranches and packaging as CDOs, all that, are the same things: when the house deals all the cards, and knows what you hold – only the house wins.

      Set some things straight, and then it don’t matter who is a billionaire and who is not.

      *[knowing that it will always be tilted in ways we don’t see until it’s been going on way too long; the amorality of currency capital – well it’s amoral – we need to tilt towards human capital whose morality is different]

      • Stephen Grossman says

        gamed economy gets tilted back towards level

        Sleaze Dictionary
        level: communist equality. See: mass murder

    • ccscientist says

      I hesitate to wade in but your Wall Street example is called arbitrage and is what makes markets fluid. Someone buys corn now to sell later at a profit. Without them the farmer cannot sell all his corn at harvest because all the other farmers are trying to sell at the same time. Simple example.

      The claim that workers are being eaten by bots and AI is why in 1830 people threw wooden shoes into the machinery…but somehow it never happened.

      As to the low labor participation rate, might it not be that some people decide they have enough money and decide not to work? This particularly affects married women who are more likely to stay home if the husband has a good job.

  32. Robin says

    An interesting article.
    Ayn Rand’s literary skills were not great (apart from – maybe – We the Living, the first novel written in English based on a first-hand experience of the Revolution, the reality of which flew in the face of its acclamation by useful idiots in the West ), however she was a force for freedom of the individual and was – still is – a voice for those who feel voiceless and powerless against the mealy-mouthed hypocrisy of the socialists cloaked in their ‘we know what’s best for everyone’ collectivism. Her heroic vision of humanity – focusing on strength rather than weakness – particularly appeals to young people and her core ideas have an enduring influence on many young fans throughout their lives even as they acknowledge her literary weaknesses and – yes – the irony that her last days were funded by the taxpayer.

    • dirk says

      A voice for those who feel voiceless, well said Robin, that’s what I also think it was all about. And that’s also why she sold so good.

  33. fzz says

    Think Mafia. As in Mafia runs gov’t regulatory agencies. See latest hit job by FDA on Vit. C Iv’s.

    Did Rand write about this? Did she foresee this? Did you?

  34. Stephen Grossman says

    Rand’s literary skills were not great

    Your faith is strong. And conventional authorities agree w/you. Dont bother with evidence. It would only stir up troublemakers. You may now go back to sleep.

  35. Robert Franklin says

    “Any attempt to drastically alter the distribution of wealth in an economy necessarily starts with the premise that the current distribution is fundamentally unjust, or at the very least socially undesirable.” This of course is utterly untrue. Read Keynes. The original purpose of redistribution of wealth was/is to counteract industrial capitalism’s problem of overproduction. It’s all about helping capitalism survive and thrive. And of course redistribution itself isn’t a choice, it’s the inevitable result of income taxation and spending. Please, think a little bit.

  36. Rick Martinez says

    Why do people mess with and even hate the successful, the motivated, and the wealthy? My good old, tough Mexican fruit tree farmer dad used to tell me that if I wanted to be rich–go hang around with the rich and find out how they did it, learn their secret. After all, they are examples of what is humanly possible: If they did it, every other human can do it too…if “rich” is what I want. For myself, I see entrepreneurs as dreamers–who make their vision become reality by hard work. They are not driven by greed or the profit motive, but by their dreams and visions becoming reality. Doctors, for example. Medicine is not a business, and physicians are not sales people. Medicine can never be sold, it can only “practiced” and delivered–and often pro bono. Yet, when they envision their new office, it’s a dream become reality. And so it is with entrepreneurs, business-people, visionaries, innovators, risk-takers–the architects of growth. They don’t prove what’s impossible, rather affirm what’s probable. We shouldn’t begrudge them. They make things happen for lots of people.

    • dirk says

      My dad about this, where I told him about a superrich villager in Peru having a monopoly of certain forest produce exported to Europe: yes, so it goes sometimes, he is having on a good meadow (and this was old farmer’s experience I think, from a time that you either were farming on some good rich soils, either had the bad luck of poor soils near your farm). The moral: there were no bad feelings then, or ideas that richness should have been divided better among the community. So, nothing really different as of now.

  37. Bart Poladsky says

    Wake up people.

    Ayn Rand has it right.

    Is this not obvious? Is the earned fortunes of the justly rich not a testament to their ability and execution? Should they not be an inspiration to you? Are they not an inspiration to some? The ones that try- and do not necessarily succeed? Are they not the heros? And if in fact you choose not to take the chance, a chance you are free to take (at least for now and to the degree that you are still free) So what? That is not a reason to punish success. Success that you do benefit from, have benefited from and will continue to benefit from; in the form of affordable: cell phones, way affordable food choices at the grocery store, cars and planes and tv’s and the internet and amazon and on and on. A comfortable , climate controlled place to live with running hot and cold fresh drinkable water for next to nothing, and the plumbing and sewer systems to deliver it and dispose of your SH-T.

    Wake up, and GROW up people!

  38. ccscientist says

    Almost the entire suite of new jobs in this country result from new businesses started by entrepreneurs, many of whom started with nothing. They do not have to start big successful businesses. If you take away their incentives, they will not do so.
    The other side of this is that many small successful businesses were started in the same way as the big ones, they just were not as successful. The dream is to be a success. Do not take that dream away.
    Piketty is delusional that there is a group of idle rich collecting “rents”. Almost all current rich are running some sort of business. He lives in the 18th Century France with all his talk about “rents”.

  39. ccscientist says

    Any system made up of humans will have corruption, crazy people, mean people, and attempts to exploit. However, a free enterprise system tends to mitigate this. A business run by an exploitive or crazy owner will tend to lose their best employees (because they have marketable skills), thereby becoming less competitive and going away. A business that tries to deceive customers will develop a bad reputation and go down. The only way to create a monopoly is with government help, which of course we should resist.
    BUT when the businesses are all owned by the socialist government, who will challenge the corrupt corporation and put it out of business? No one can, that is the danger.

    I saw considerable disdain above for Wall Street. I have retirement savings. I want to loan that money to businesses that will grow it as much as possible. Anyone on this blog will also want to do this. How do I find the place to invest my money? Not the bank at .01%. It is the stock market and Wall Street is what keeps the market running. Of course the bankers are greedy and evil but they keep my money growing, so I forgive them.

    • E. Olson says

      CCS – I have enjoyed reading your my thoughtful comments throughout here, I only wish you had become involved in the discussion earlier when it was more active.

  40. Mark30339 says

    Man plans the demise of Pareto, and God laughs.

  41. Brad Gillespie says

    Of course to those who hate freedom and individual rights, the ideas of Ayn Rand are poison. The platitudes from the left are indefensible, and rely on..well, platitudes and attitudes, but very little reason. There’s a mush area in the world of leftism, that intrudes on the rights of individuals as it construes this fuzzy overlord thing, that dispenses equality to all, and restrains those who earn too much money. It’s socially just to restrain too much wealth or accomplishment. Of course, restraining free people with government force is fine, as long as it fits into whatever popular socially just theory is floating around at the moment.

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