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I find the liberal argument about tax cuts for the "rich" a little bit founded too. It's patently unfair that we have differing tax rates for capital gains and income, especially since the rich have much more of their disposal income in capital than wages, which they use to great extent in the form of stock options and bizarre partnerships that structure their incomes in such a manner.
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Do you find any tax structure that isn't effectively flat "patently unfair"? How about the
growing income gap?
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Pragmatically, I support progressive taxation - I guess that's what it takes to keep the plebes satisfied. I don't see any real moral reason that income inequality is necessarily bad, though I can imagine some societal reasons why "we" might want to discourage it, because the already endowed rich actually push for the most destructive policies that the poorest think they benefit from. Also, I'm not sure how I feel about the subsidization of education and research (pvn, if ideas aren't scarce, why shouldn't we subsidize the tools that produce those ideas?)
To liberal minded thinkers - is it so implausible that the richest members of society are far more productive than ordinary people? There may be compelling arguments for income redistribution if the rich are somehow appropriating their income unfairly - but is that guaranteed? If we could prove that our economic system was mostly
pareto efficient, would that change your views on redistribution? Even if the market was free that doesn't necessarily mean you support its allocation of resources, of course. I personally think the richest members of society are definitely the most "productive", and it's reflected in all sorts of ways by our tastes. I looked at my Last.fm playlist recently, and it follows a nice little
Long Tail distribution - I consume the work of my favorite artists much more than even middling ones. People enjoy Michael Jordan clips far more than the hundreds of talented NBA players (think how much skill the league just requires)! Oprah's phenomenal income reflects how much pleasure she provides to millions of soccer moms everywhere - their incomes are a reflection of tournament tastes. With tools like the Internet and better distribution networks the tale of the super-stars is only going to continue.
Moreover, the richest don't really do nefarious things with their money, now often just giving lots of it away. Most can barely spend it, or work so hard their money is mainly a status comparison rather than any morally dubious "conspicuous consumption". I also think our idea of who exactly the rich are is rapidly changing. 'round here in Durham there are an awful lot of well-off people who sold stakes in promising acquired startups, people walking around with realized equity wealth from very innovative companies. These aren't even suited, cigar-smoking TV capitalists, but people in blue jeans who mainly think they are ordinary, and that's become more so all the time (think Larry and Serge from Google). Even if the advantage they have in buying the newest, most life-changing goods isn't as great as we think. Some rich person will undoubtedly try the newest gene therapies first, ahead of some of us perhaps deserving hoi polloi, but the same capital from which so much of their wealth derives is rapidly innovating to bring us those goods cheaply. Seriously, anyone who thinks the poor are worse off than years ago should just ponder the deflationary effects of rapidly improving computer technology and ordinary utilities (which existing wealth made possible), like the following fact:
"In 1970, according to the American Housing Survey (from HUD and the Department of Commerce ,then called the Annual Housing Survey, Table A-1, p. 32), 36% of the 67 million households in America had air conditioning, 11% had central air. This is the earliest data available from this survey.
In 2005, the most recent data from the same survey, (Table 2-4, p. 66) 82% of the 15 million households with income below the poverty line had air conditioning, 52% had central air."
The
consumer surplus that I garner from things like my iPod and Macbook more than compensates me for any shortfall in my real earning growth, especially since I think the rich deserve their incomes more and more. I think the world would much better off in realizing how satisfying we have it and how better it will get than assuaging our short-term envy.