Thursday, January 25, 2007

Bruce Bartlett and Tyler Cowen on Inequality

Economist's View


If my real income does not fall, how am I hurt when Bill Gates makes another billion dollars? After all, the economic pie is not fixed. What he gets doesn’t come at my expense, so why should I or anyone else care? ...

  • I have always thought about the subject in this way. I do not think that the rich making more money is contributing the poverty of others.

     - post by tbentson



If it were costless to play Robin Hood and take from the rich and give to the poor, it would be hard to oppose. But there are costs. We really don’t want the Gateses of the world sitting around clipping coupons. We want them out there thinking of new products and businesses to make themselves richer, because in the process they will improve the quality and lower the prices of goods and services we use, employ workers ..., and so on.

  • I belive that there is a great cost to overtaxing the rich. The rich business owners such as Bill Gates greatly stimulate our economy. Every dollar that Bill Gates makes represents one dolllar that a consumer spent on a Microsoft product. That means that every person in the supply chain between Microsoft and the consumer made a profit. There are countless amounts of people that are employes by large corporations. If the rich were excessively taxed they may be forced to downsize their operations. Every copy of Microsoft Windows that is sold employes many people. There are programmers that develop the product, assembly line workers that create and package the procuct, and drivers that ship the product. Retailers of their product also depend on Microsoft for a portion of their income. Taxing the rich will not close the wealth gap in this country. It will lower the wealth of the rich and in turn lower the amount of wealth that they provide to their workers. Everybody will be less wealthy.

     - post by tbentson



Furthermore, more-educated groups show greater income inequality than less-educated groups. Uneducated people are more likely to be clustered in a tight range of relatively low incomes. But the educated will include a greater range of highly motivated breadwinners and relaxed bohemians, and a greater range of winning and losing investors. A result is a greater variety of incomes. Since the United States is growing older and also more educated, income inequality will naturally rise.

  • This is a reasonable explanation for income inequality. The rich are not the ones to blame for this gap. They are simply people who made better decisions somewhere in their lives. I believe that some of their wealth is also due to luck.

     - post by tbentson


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