Subscribe"When people care enough about something to do it well, those who do it best tend to be far better than everyone else. There's a huge gap between Leonardo and second-rate contemporaries like Borgognone. You see the same gap between Raymond Chandler and the average writer of detective novels. A top-ranked professional chess player could play ten thousand games against an ordinary club player without losing once.
Like chess or painting or writing novels, making money is a very specialized skill. But for some reason we treat this skill differently. No one complains when a few people surpass all the rest at playing chess or writing novels, but when a few people make more money than the rest, we get editorials saying this is wrong.
Why? The pattern of variation seems no different than for any other skill. What causes people to react so strongly when the skill is making money?
I think there are three reasons we treat making money as different: the misleading model of wealth we learn as children; the disreputable way in which, till recently, most fortunes were accumulated; and the worry that great variations in income are somehow bad for society. As far as I can tell, the first is mistaken, the second outdated, and the third empirically false. Could it be that, in a modern democracy, variation in income is actually a sign of health?"
Also PG conveniently forgets the problem of inherited wealth. Sure, granddady Hilton was one productive s.o.b. but how would that justify Paris?An unfortunate but necessary side effect of allowing people to keep the wealth that they generate. If you were to prevent it, by, say a 95% tax on inheritances worth over $1 million dollars, I think that you'd make people think twice about generating wealth. Making money is hard; what's the point if it all gets taken away from your family when you die?
Actually, if we set up an economy in which the people whose actions actually generate large amounts of wealth were rewarded more than the rest, miners and factory workers would be pulling down impressive seven figure salaries.The problem is that the skills required to manufacture goods or mine raw materials are not scarce. It's the law of supply and demand: It's harder to find someone who can run a company well than it is to find someone who can swing a pickax or turn a screwdriver.
Hell, in the modern US even moderately well off folks can't even afford health care. This is indicative of a broken economy.Yes, but I'm not sure that this is a problem with income inequality per se. It seems like there's a huge demand for medical care, and that demand is bound to increase as baby boomers get older. That demand has driven up the price of health care; there are only so many hospital beds.
The demand in real terms in the workforce is not for executives, because only 1 out of every few thousand positions is an executive-level position.True enough. My point in my original comment was less about management skills in particular and more about skilled labor generally. The average factory worker doesn't need much in the way of skills: s/he needs only the ability to read and the physical wherewithal to operate a machine. Since the vast majority of Americans fit that description, the wages are going to be low. Factory workers can be (shouldn't be, but can be) treated as replaceable parts.
Consider asking the average computer programmer to tell you about himself. "I'm a great lover, a great driver, and a great software engineer," is a likely response. What about the fact that his girlfriend left him, he got into an accident on the way into work today, and you showed him how to rewrite his data model with one third as many tables? He will have excuses at the ready: "The girlfriend was having issues with her family; the breakup had nothing to do with me. It was the other car's fault. My design was cleaner, squeezing all of that stuff into fewer tables is a kludge." A computer programmer can be ridiculously overconfident and will never confront incontrovertible evidence of his shortcomings.
Pilots, on the other hand, are constantly forced to confront their limitations. Every time the instructor has to help them, they realize that they would have been in trouble if doing the maneuver by themselves. Every time a non-professional pilot puts on a hood and does a simulated instrument approach, he or she is usually making small mistakes and generally not being mentally as far ahead of the airplane as desired. Every time a pilot works toward new rating, there is the reminder that achieving the standards of the FAA checkride is uncertain and will require a lot more practice. You're unlikely to spend much time with pilots who are truly overconfident because, unfortunately, most of them are dead.
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
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The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.
-Adam Smith, The Wealth of Nations
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posted by Abiezer at 5:11 AM on October 11, 2007 [13 favorites]