The Angry Rich

http://www.nytimes.com/2010/09/20/opinion/20krugman.html?src=me&ref=general

by terra_t • 16 years ago

61 77 16 years ago

The Economist (a magazine that is very pro-business) had an interesting article recently about social psychology experiments that showed that the rich are less able to enjoy the day to day pleasures of life. And this effect also happens among people temporarily made relatively rich (say given $100) or even just shown pictures of money.

The need of our economic system to keep people consuming creates advertising indoctrination that pulls our attention away from what really satisfies: Day to day relationships with other people and the details of our life. Excess wealth is more a matter of aggressively possessing things that other people don't have than enjoying those things for themselves. It leads to an empty narcissism that leaves the rich unsatisfied and without empathy for the victims of their greed. And frustrated and angry and in search of scapegoats.

viggity2• 16 years ago

Oh, so it is ok to take away what someone else's earnings because you know better than they do?

niels_olson• 16 years ago

In a complex society with specialized occupations like "entrepreneur", "economist" and "congress-critter"? Yes. BTW, how's DARPAnet working for you these days?

CapitalistCartr2• 16 years ago

I've known several dozen wealthy people and none of them are like that. Not one. All of them were older, and paid little attention to the 'consumer culture' that advertising promotes. Most of that advertising was through channels that target the young (under 45) crowd because they are the ones best influenced by it.

bediger• 16 years ago

For a while last year, and into this year, the Denver Post newspaper would put a little side-bar by Krugman columns, advising people that the "Cafe Hayek" web site could provide an anti-dote to Krugman's editorial.

They did this for no other editorials. After reading this column, I finally understand why.

pmb2• 16 years ago

And yet, I am confused. I read lots of right-wing op-eds and left-wing op-eds. Why would this particular more-left-than-right op-ed deserve to be treated differently?

bradleyland• 16 years ago

Krugman makes me so angry, not as someone who is rich, but as someone who understands the difference between earned and entitled:

"... consisting of people who feel that things to which they are entitled are being taken away."

If I am rich in America, chances are that either I, or my family before me, earned the money in the most effective free market known. I'm not saying it's perfect, but it's the best we've got. The assertion that I should be able to keep what I have earned is not entitlement. Entitlement is the assertion that I have a right to something, without regard for effort or trade.

I am entitled to keep what I have earned. Taking my earnings is a moral wrong. There is no two ways about it. It is no more right to take a dollar from a man who has a hundred of them than it is to take a dollar from a man who has one.

lutorm3• 16 years ago

I am entitled to keep what I have earned. Taking my earnings is a moral wrong. There is no two ways about it. It is no more right to take a dollar from a man who has a hundred of them than it is to take a dollar from a man who has one.

Just to be clear, you are stating your moral opinion. There is nothing inherent about these opinions. Just like my opinion that if you are rich you have likely benefited disproportionately from and made use of the structures of society that made it possible for you to get rich, and as such it's perfectly reasonable to ask you to contribute from your wealth to the upkeep of society is also just an opinion.

And speaking of moral wrongs, what about the moral obligation to help people those who are less fortunate?

il5• 16 years ago

I just want to point out that most of the taxes you pay in the US do not go to the upkeep of society you may benefit from (which we can define as schools, police, education, etc).

Most of your tax money either goes to propping up a bloated military-industrial complex, maintaining bases overseas, counterterrorism ops, foreign aid to oppressive regimes, etc etc.

If you're a pro-tax liberal you're probably against high defense spending, but you're perfectly happy to keep funding it with your tax dollars.

Just food for thought.

EDIT: If you want to quibble, the majority of discretionary spending is military(not counting Social Security/Medicare). Since that's where your income tax dollars go, it's a reasonable argument to make.

tomhoward• 16 years ago

To suggest that taxation equals help for those less fortunate and is therefore a moral obligation is a non-sequitur, particularly in this age of bailouts of banks and car companies.

Even if it wasn't, no moral obligation is being satisfied when such "help" is forcibly extracted.

Further, it can be convincingly argued that such forcible extraction and wasteful reallocation of wealth reduces many people's capacity and willingness to voluntarily help those less fortunate.

Gormo3• 16 years ago

What are these structures of society that make it possible for people to succeed?

Society isn't some uniform, monolithic thing that exists in own right, that we either choose to participate in or not. Society is the product of actual relationships among real people. They don't depend upon external institutions as a precondition of cooperating toward mutual benefit, but establish those institutions as a consequence of doing so.

Everything we call 'society' is the result of people making the choice to interact with each other. From there, communities arise, customs emerge, and economies develop. But every tax, regulation, divisive political program, and every faction seeking to impose its narrow agenda on everyone at once just have the effect of raising the stakes of participating in society. They give people more to lose and more to fear in openly relating to others; people become less likely to form stable networks of trust and more likely to become isolated, disconnected, and paranoid.

When we so stridently pursue policies intended to 'upkeep' an abstract, taken-for-granted concept of society, we risk undermining the basis on which real, actual societies function.

zdw2• 16 years ago

I call BS on this.

You were able to earn that money because:

1. You most likely live in a relatively free society most likely operating under the rule of law.

2. You were able to achieve what you did by "standing on the shoulders of giants".

3. You're most likely the recipient of an education provided by society that gave you the tools and opportunity to succeed.

Now, if society says that "Because we've helped you be so successful, it behooves you to contribute X percentage of your earnings back to society.", is that so wrong?

You have a moral responsibility to leave the world the same or better than you entered it. This concept seems to be lost in a sea of selfishness today...

zzzmarcus5• 16 years ago

The disagreement isn't about leaving the world the same or better, almost everyone wants that.

The argument is which is the superior method for making the world better. On one side you have Krugman who believes you should tax the rich and let the government spend the wealth the rich accumulated to improve conditions for everyone.

On the other side you people who think that if you allow people to spend, save and invest their money as they choose, society will come out better in the end.

Side A likes to portray side B as selfish, greedy bastards and side B likes to portray side A as communists thieves. Really though, if you take the actual objectives of both sides I would argue they're generally noble.

There is still the matter of who is actually right. That is where the real argument is.

okaramian2• 16 years ago

Our economy is an ecosystem. I'm a software developer because there is a demand for it, and the only reason this demand exists is because people are educated enough to use my product.

How do you determine the line between what one has earned vs. what one may have been granted via a series of societal issues?

amh• 16 years ago

Don't these societal conditions apply to "good" and "bad" software developers alike? All other things being equal, if you're successful and somebody else fails (selling to the same market), then the most obvious explanation is that you met the needs of your customers better and somehow improved their lives. This is signaled by a monetary reward greater than the guy who failed, and proportional to the value you added.

The general prosperity of society is built up by an uncountable number of these successes and rewards. Hand-wringing about whether your own contribution would be possible absent all the prior contributions is putting the cart before the horse. You aren't illicitly skimming profits from society, you're making valuable contributions in your own right.

ryanricard• 16 years ago

I dislike this framing of taxation in absolute terms. Yes, the government "takes" a portion of your earnings, but in doing so it provides a number of services, some of which were prerequisites to those earnings in the first place (paving the road that brought customers to your storefront).

Sure, we can argue about particulars of how the government chooses to allocate those "takings." I wish my government would spend less on its military, for instance. Other people might wish it to spend less on social welfare programs. But neither of us can honestly use absolute language like "Taking my earnings is a moral wrong. There is no two ways about it." Arguing that states cannot tax is arguing that states cannot exist.

My apologies if you are an honest defendant of some form of anarchism, but I feel like using such absolutist language to discuss a proposed three percent increase in the top marginal tax rate seems incongruous. It feels like you have the intent of inspiring knee-jerk emotions instead of rational discourse. It's fishy.

dbfclark• 16 years ago

If your argument shows that all taxation is immoral and not to be borne, doesn't it prove rather too much?

exit2• 16 years ago

"earned" is a more complicated concept than you make it out to be.

did you "earn" the particular set of aptitudes and interests that made you a "high earner" at this juncture in history? i'm pretty sure you were just lucky in that respect.

you mention "or my family before me" - it takes quite a particular set of beliefs to say that you are entitled to what your ancestors earned.

what if you inherit tremendous wealth from ancestors who "earned" it through tremendous injustice (slavery, exploiting addiction, etc.)? even if you go on to leverage that wealth legitimately, how do you compare your earnings against those of someone who started out differently.

CapitalistCartr2• 16 years ago

I didn't inherit any money. As for my aptitudes and interests, they didn't make me a 'high earner'; they didn't make me a dime. My work to apply them did.

I see a lot of that attitude, that because I was born smart is why I have the job I do now. I wasn't born smart. That information didn't start out in my brain. I spent a lot of Saturdays as a kid at the library, reading non-fiction. I spend a lot of time now, reading non-fiction. In other words, I study.

I have a career coach, that helps me make plans to accomplish my goals. A lot of work went into this 'born success'. I think it's only perceived that way because others don't want to see that they can do it, too.

CWuestefeld4• 16 years ago

It seems to me like those who are voting this comment down are doing so not because the viewpoint it provides is wasting our time, or poorly expressed, or anything like that.

This looks to me like nothing but shouting him down because you disagree with what he's got to say. In a case like this, I think you ought to win the battle through superior logic and rhetoric, not just by voting him down so nobody sees his thoughts.

kenjackson7• 16 years ago

You really think this is not a waste of time to read? "It is no more right to take a dollar from a man who has a hundred of them than it is to take a dollar from a man who has one."

And given how extraordinary the claim is, there's not a single argument to support it. It seems like the definition of trolling. A well-reasoned argument for why we should either have no taxes or an extremely regressive tax system would be welcome, but I see nothing of the sort in that post.

olegk2• 16 years ago

Nobody is being taxed on the cash one has in his bank account. You're taxed on the income your cash generates.

So cut the crap.

zoomzoom• 16 years ago

The problem is that the distinction between "earned" money and "handout" money is not so clear. If you "earn" your money by servicing porky government contracts, is this something that you have done entirely on your own? Are you entitled to keep your profits if you pull them out of the ponzi scheme before it collapses?

Alot of the wealth in the top 1% of Americans these days was earned by people who in one way or another got rich by timing their entry and exit from the scam properly. An honest assessment of wealth creation since 1980 could come to no other conclusion. The scam was so big that they might not be morally accountable in a personal sense for doing wrong. But do these people deserve to keep their earnings, even as the extent of the scam becomes clear to the rest of us?

The reality is that money is not earned in a vacuum. We all depend on others to make our living somehow, even self-employed solo founders. If society cannot bear to give so much to the wealthiest 1 in 1000 any longer, do they have a right to collapse the whole economy in defense of their profits?

jacoblyles4• 16 years ago

Krugman is such a hack. He never acknowledges the good arguments of the other side. Always makes it seem like the other side is full of drooling selfish evil idiots. Can't stand reading the man's columns.

olegk2• 16 years ago

So you think it's great that rich get taxed at 15% and the poor/middle class at roughly 30-40%?

I'm pretty sure among you and Krugman, you're a hack.

sokoloff• 16 years ago

A significant portion of the poor are taxed well below 15% on a average basis, with a non-trivial fraction below 0%.

I'd be hard-pressed (as would you) to concoct a "poor" person's tax return with an average rate of roughly 30-40%.

hristov• 16 years ago

Then you should perhaps point out the good arguments of the other side.

jacoblyles4• 16 years ago

While this is a general problem with Krugman, and not a problem specific to this column, people who disagree with higher rates of taxes on the rich would do so for the following reasons:

1) Efficiency concerns: decentralized allocation of capital versus political allocation of capital

2) Business cycle concerns: raising taxes in a recession was one of the things done during the Great Depression, and there's a reason it lasted 12 years.

3) Fairness concerns: The rich already give about half their income to government (depending on the state and the method by which they earn their income). How much is too much?

4) Revenue concerns: the income of the rich is highly volatile, and so is the revenue of a country that depends on heavily progressive taxation.

5) Long term economic growth concerns: Capital is more mobile than ever, and people will prefer to invest in countries with lower taxes, ceteris paribus.

6) The Laffer Curve: it has an inflection point.

I'm not saying the anti-taxers are right, but any honest commentator should acknowledge that some arguments exist on the other side. But in Krugman's world, people only disagree with him because of personality flaws (angry, selfish, myopic, stupid, etc.). I can't stand the man's smug self-righteousness which he keeps regardless of how mainstream or controversial his opinion on the topic at hand. The man sold his soul to democratic socialism a long time ago to the point he pretends that no other valid worldview exists.

I can't think of a single economics columnist who is more partisan or who treats his opponents with less regard.

In particular, this article scans like a college newspaper op-ed. It is a simple Rah Rah piece for his side. It could have been written by a campus Marxist group. "Look at the poor rich folks, struggling to pay for their private schools and limosines". Gosh Mr. Krugman, with such incisive commentary I can see why you got that Nobel.

And of course he forgets to mention that most rich people vote Democrat, so his entire argument that the rich are "angry" is questionable to start with.

zzzmarcus5• 16 years ago

I don't think it's any mystery why the rich are angry. Whether it's right or wrong, they see it this way:

"I've spent my entire life working to build wealth. I've sacrificed and it's paid off. Now I'd like to use my wealth in the way I see fit. Whether that's spending it, saving it, investing it or giving it away, it should be my decision, not a government planner's decision."

Again, right or wrong, that is how the rich view the situation when they are facing increased taxes and dilution of their wealth through inflation. Whether you agree with it or not, it's not hard to understand.

Krugman believes that the government can, and will, spend money in a way that benefits society as a whole more than the people who earned it would if they were allowed to keep it. The rich disagree.

binspace• 16 years ago

> Krugman believes that the government can, and will, spend money in a way that benefits society as a whole more than the people who earned it would if they were allowed to keep it. The rich disagree.

Except the government tends to heavily subsidize the rich. I'd be happy to get rid of taxes, earmarks, bailouts, pork, etc. I don't expect that to happen without the aid of a collapse, though.

vtnext• 16 years ago

Another trigger for the uproar these days is the fear that Krugman and his ilk are allowed to conduct grand social experiments with the economy. Many see huge economics experiments like the Great Moderation as the cause of our ills, and expect the worst from risky proposals from economists and politicians.

9oliYQjP• 16 years ago

Most of the rich people I have met who are "self-made" don't actually feel that angry. It's the rich people that were born into wealth who are pissed off.

Take Ben Stein for instance. The guy is pissed off. And yet, he was born to a presidential advisor and had quite the head start in life. He'll never see it that way mind you. But I'm pretty sure his own father would disagree with his latest rants. Don't take my word for it, read this:

http://www.progressive-economics.ca/2006/06/09/adam-smith-di...

[T]he people who wear the Adam Smith tie are not doing so to honorliterary genius. They are doing so to make a statement of their devotion to the idea of free markets and limited government. What stands out in WofN, however, is that their patron saint was not pure or doctrinaireabout this idea. He viewed government intervention in the market with great skepticism. He regarded his exposition of the virtues of the free market as his main contribution to policy, and the purpose for which his economic analysis was developed.

Yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system. He did not wear the Adam Smith necktie.

These cases were numerous, and some of them are surprising. I give here a list, certainly incomplete, largely derived from Viner’s article on Smith written for the sesquicentennial of the WofN. (The parentheses are mine.)

The government could legitimately do the following:

– Protect the merchant marine and give bounties to defense-related manufacturing industries.

– Impose tariffs on imports in order to bargain for reduction of tariffs by other countries.

– Punish, and take steps to prevent, dishonesty, violence and fraud. (Does this include the SEC, and would prevention of violence justify measures to assist ghetto youth?)

– Establish indicators of quality of goods, such as the sterling mark for silver. (Does this justify the Food and Drug Administration, the Federal Trade Commission and the Consumer Product Safety Commission?)

– Require employers to pay wages in cash rather than in kind. (Could the government conversely require employers to pay part of wages in the form of health benefits?)

– Regulate banking.

– Provide public goods, such as highways, harbors, bridges and canals. (What about railways, airlines?)

– Run the post office. (Also telephone, the information highway?)

– Grant patents and copyrights.

– Give a temporary monopoly to a trading company developing commerce in new and risky regions. (Is this industrial policy, managed trade?)

– Require children to have a certain level of education.

– Provide protection against communicable diseases.

– Require the streets to be kept clean. (Environmentalism?)

– Set a ceiling on interest rates.

– Impose discriminatory taxation to deter improper or luxurious behavior.

knowtheory• 16 years ago

I think you're mostly right but not quite all the way there.

These people are basically being told that they've hit their limit. Society has hit it's limit. They have been reaching for the American dream, and by everyone else's standards they've achieved it. But they think, as society's golden children, that they shouldn't have to make any sacrifices on their journey (while asking everyone else to sacrifice to bail them out).

That's really what it is. They're being told they can't have everything, and they are apoplectic about it, and are taking it out on the bearer of that message. It's kind of a sad temper tantrum. Unfortunately it may drag America back into the mire from which Culture Warriors like Sarah Palin and Bill O'Reilly plan their verbal asymmetric warfare.

The really galling part about all of this nonsense (at least when it comes to bankers) is the notion that they weren't complicit in creating the situation that we're in, that requires everyone to cut back. This isn't something that's being done to them. This is a direct result of the consequences that our society chose to do, two wars, massive tax cuts to the wealthy, all deficit spending. This has a good explanation: http://delong.typepad.com/sdj/2010/09/in-which-mr-deling-res...

jacoblyles4• 16 years ago

You are aware that the main audiences for Palin and O'Reilly aren't exactly ivy league silver spooners, right? And that their audiences in general opposed the bailouts? You are lumping together everyone that doesn't agree with you and attributing to them positions that they do not hold.

Gormo3• 16 years ago

What does it mean to say "society has hit its limit"?

mcantelon• 16 years ago

>Again, right or wrong, that is how the rich view the situation when they are facing increased taxes and dilution of their wealth through inflation. Whether you agree with it or not, it's not hard to understand.

Statistically, the rich are getting richer. The middle class are the ones who should be angry as they are the demographic who have suffered the most economically in recent decades.

This political cartoon nicely counters the rich's complaints about tax burden:

http://i.imgur.com/zehGy.jpg

I would attribute the recent anger of the rich, and their tea party proxies, more to greed than rational self-interest. I see the present greed as irrational because it creates the potential of political blowback that will likely imperil the greedy in the long term.

george_george• 16 years ago

The rich are getting richer and the poor are getting poorer... but only in relative terms. In absolute terms, we're all getting richer.

It's pretty hard to argue that the lower classes are getting poorer when you compare what we had 50 or 100 years ago with what we have now: our houses are bigger, they have plumbing and electricity, they're filled with God knows how many gadgets and appliances, cars outnumber people, sugary and fatty foods that used to be considered luxuries are eaten in excess even in (or especially in) the lower classes.

We're definitely better off. If the middle classes are suffering it's because their own prosperity meant they never learnt to live within their means.

spot• 16 years ago

I don't see many people claiming that keeping taxes low on the rich benefits society. That fig leaf wore thin a long time ago. This is heartless greed. It's especially immoral given how the rich have benefited from the state.

maigret2• 16 years ago

"dilution of their wealth through inflation"? Many statistics recently shown the riches have apparently never been that rich before: http://www.guardian.co.uk/business/2010/apr/25/rich-list-wea...

zzzmarcus5• 16 years ago

Sure, even though the rich have more dollars (or whatever currency) than ever, they are still affected by inflation.

Inflation means that can buy less with each dollar they have.

When the government adds to the currency without adding any actual value, usually by printing money, they're "inflating" the amount of currency available and actually making every existing dollar/pound worth less. It affects everyone, rich or poor.

It's a way of taxing without actually increasing taxes, and to my original point, rich people don't like it.

nadadenada• 16 years ago

Here in Spain rich people are not angry, the gov don't want to increase taxes because rich people will fly away, so they are who pay less, why should they be angry?

Pensioners should be the angry people, they will see their pension be lower each year (and nowadays it is extremely difficult to pay for food with an average pension) just to help government to reduce its deficit. They don't have lobbies and this year is not time for election so put more weight on the back of poor old people this is just the face of justice.

The Angry Rich

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