Sunday, 13 November 2016

Off With Their Heads!

The left's relationship with the alleged Inequality Disaster is strange to be sure. Whatever happened - inequality caused it: financial crises, stagnant economies, Trump's rise to power, rain in Glasgow or my dirty clothes. All inequality's fault. Nevermind that there's a million ways measurements can go wrong, and don't forget to faithfully chant Oxfam's mindless wealth inequality figures. The solution? Confiscatory taxes, Piketty-style, and if it doesn't work shout 'OFF WITH THEIR HEADS' and start preventing people from getting rich in the first place.

My reaction to these lunatics is as ambiguous as it gets; riddicule and insult their naive mindless heads – or actually engage with their childishly weak arguments. Being left these days somehow equals hating inequality and blaming everything on it. This is the kind of rant and wake-up call they all need: 

Ok, let's be serious for a moment. I shouldn't blame ignorant lefties for believing things like "The Rich are Getting Richer and the Poor and getting Poorer"; after all, despite easier access to more information than any generation before them, they stubbornly refuse to engage with that information (see 'Cult') or find out why not everyone agrees with them. Allow me to be slightly more sophisticated and actually discuss some inequality claims seriously. 

From the Spirit Level to the girl at Fresher's Fair, the argument is that inequality makes entire societies worse off. High-inequality countries do worse in life expectancy, teen pregnancy, social mobility, drug abuse, mental health and down the line of ills. For all that's wrong with this research, let's pretend it's true. Along comes Piketty, finally getting some attention to his and his collegues' research that all kinds of inequality are up-up-up over the last decades, and that's a major problem. Of course we are doing very badly by certain social indicators; inequality is a disease, and it makes us sick! The mechanism here is explained to be some version of envy. Hedonic treatmills; keeping up with the Joneses. 

However, it turns out most people are unaware of it. Here is Krugman in his, by now, infamous post 'Our Invisible Rich', where he's sure he brings a killer blow to people like me:
So Americans have no idea how much the Masters of the Universe are paid, a finding very much in line with evidence that Americans vastly underestimate the concentration of wealth at the top.
So how can people be unaware of this development, or at least unaware of its scale? The main answer, I’d suggest, is that the truly rich are so removed from ordinary people’s lives that we never see what they have. We may notice, and feel aggrieved about, college kids driving luxury cars; but we don’t see private equity managers commuting by helicopter to their immense mansions in the Hamptons. The commanding heights of our economy are invisible because they’re lost in the clouds.
If most of the harm of inequality, Pickett-Wilkinson style, is transmitted through a social envy process, where my poor health outcomes are blamed on the fortunes of the Bill Gates and Warren Buffets of the world (or even my property-managing next-door neighbour), it is crucial that I see them. If, as Krugman's article points to, most people are so greatly unaware of the extent to which incomes are unequally distributed, they cannot be affected by them in that way; if the rich are so removed from my ordinary life, Dr. Krugman, then the envy-keep-up-with-the-Joneses process that increases my stress and worsen my mental health cannot occur. If I suffer from seeing wealthy people, but I hardly ever see wealthy people, then conclusively, I do not suffer very much.

Cochrane makes the same point in a blog post I referred to the other week:
But this seems to play exactly to my point. If most Americans have no idea how the superwealthy live, or how many superwealthy there are, just how can their existence influence the behavior of people who don't know they are even there?
Next: even the slow post-GFC growth is blamed on inequality. Of course. How? The rich aren't consuming as much as the poor – in econ-lingo their 'marginal propensity to consume' is lower  so after decades of inequality rising, and a financial crisis that disproportionately hurt the poor, the economy now has insufficient demand: Underconsumptionists are alive and well! 

But hang on, in the first problem the rich are consuming too much, their extravagant living, luxury cars and helicopter commutes are a case in point. For the underconsumptionists they are consuming too little! Come on, guys – make up your minds, already!

At the end of the day, there's nothing left but laughter and riddicule. In the avalanche of confusion which is discussions over inequality, the left's absurd contradictions turn comical. They can never consistently justify the redistributions, other than by levy Piketty-style taxes on minimum-wage earners to pay the global poor; every imaginable social ill is caused by inequality, even if nobody is aware of it; the rich consume too much and too little at the same time, and the only solution is large confiscatory taxes. Not to raise revenue, but simply to limit income. Off with their heads!

Off with their heads, and pretend that solution has no backlash.
Off with their heads, and pretend the argument is valid in the first place.
Off with their heads, keep calm and blame the rich. Please reconsider, children. Please reconsider. 

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