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Solow versus Mankiw on the 1%ers

Bob Solow comments on Greg Mankiw’s defence of the “1%” ers and Mankiw replies.  I think Solow wins the day – most of the big fortunes these days stem from the finance sector and from trading.  It is not from super-marketing, deal-making types like Steve Jobs (Mankiw’s hero) although even there are spivy oh so American traits.  But my real gripe with Mankiw is covered in the first few lines of Solow’s letter.  Why does Mankiw feel the need to come to the defence of this highly privileged lot?  His blog does this sort of thing all the time.   Why not defend the interests, at least occasionally, of the worst-off?  My own view is that Greg Mankiw is a highly skilled technician and expositor of American-stylle modern economics.  He sees this as economics.  I tend to think of the Mankiw view as  more of a selfish American aberration that gets the logic mostly right but the ethical priors mostly wrong.

 

 

 

7 comments to Solow versus Mankiw on the 1%ers

  • Jim Rose

    Did not saez show that the modern rich are working rich, not rentiers.

  • rog

    Saez says that the primary driver of wealth for the top 1% is the stock market.

  • Jim Rose

    Rog, in striking it rich, Saez says
    ‘over the century. The share of wage and salary income has increased sharply from the 1920s to the present, and especially since the 1970s. Therefore, a significant fraction of the surge in top incomes since 1970 is due to an explosion of top wages and salaries.’

  • rog

    Quote: Text of “Striking it Richer” updated with 2012 estimates

    http://elsa.berkeley.edu/~saez/saez-UStopincomes-2012.pdf

    During both recessions, the top 1 percent incomes fell sharply, by 30.8% from 2000 to 2002, and by 36.3% from 2007 to 2009. The primary driver of the fall in top incomes during those recessions is the stock market crash which reduces dramatically realized capital gains, and, especially in the 2000-2002 period, the value of executive stock-options.

  • Jim Rose

    that rog, for admitting your error. as you say, stock options are part of a salary package of executives.

    The evidence suggests that top incomes earners today are not “rentiers” deriving their incomes from past wealth but rather are “working rich,” highly paid employees or new entrepreneurs… (p. 5)

  • rog

    Saez also points out that top earners capture a large fraction of productivity gains increasing inequality.

    As Harry says (as does Saez) the wealth captured by the top few is from share trading and other “investments”.

  • Jim Rose

    capture: “captured, capturing, captures
    1. To take captive, as by force or craft; seize.
    2. To gain possession or control of, as in a game or contest: capture the queen in chess; captured the liberal vote.
    n.
    1. The act of catching, taking, or winning, as by force or skill.
    2. One that has been seized, caught, or won; a catch or prize.”

    Let’s rename Nozick’s Wilt Chamberlain parable the J.R. Rowling parable.

    A Scottish welfare mum decides to cheer her-self up and write a book, going to local cafés to do so to escape from her unheated flat. The initial print run was 1000 books, five hundred of which were distributed to libraries. Today, such copies are valued between £16,000 and £25,000.

    Rowling is the first to become a billionaire by writing books

    G.A. Cohen twisted and turned to argue that the fruits of Rowling’s mind, in effect, belong to us all?

    How many Harry Potter books would have been written if Cohen is right and his ideas applied?

    Are you willing to risk explaining your answer and how it would be part of a better world for them to the young and not so young fans of Rowling’s books?

    Instead of just buying her book, we must put up with constant interference with people’s liberties to prevent injustices from Rowling’s royalties getting too high.

    Why does rage against the top 1% never mention celebrities, athletics and entertainers? They earn much more than the top CEOs! Is it because such honesty requires too close an encounter with the real drivers of superstar incomes?

    p.s. I have never read any of the harry potter books nor seen any of the films.