If anyone noticed my absence for the past week, I took a break in an undisclosed (but warm) location. And, if I don’t run into you before Sunday, Happy Mother’s Day.
Haven’t had time to start anything ambitious, but I’ll just pass along Paul Krugman’s column of today, in which he discusses the 25 highest paid hedge-fund manager of last year, who earned a combined total of $21 billion, or, as Krugman notes, more than twice as much as the combined income of all the kindergarten teachers in America.
Highlighting the fortunes of these billionaires isn’t — as righty critics like to assume — about class envy, Krugman argues. In fact, it’s about looking square in the face of the myth that righty critics prefer, “that the big rewards in modern America go to innovators and entrepreneurs, people who build businesses” that create jobs and upward mobility for the common people. These almost-a-billion-a-year guys (and yes, he notes, they’re all guys) aren’t big employers nor even big investors — these are the guys that manage the investments for the already-rich families so that the total wealth of the society can continue to be concentrated among the already wealthy, the hedge-fund managers themselves and their wealthy clients.
Krugman doesn’t mention this today, but I will. The United States has long since stopped being a leader among the nations of the world in socioeconomic mobility — that is, the likelihood that a young American of modest means will make it into affluence through hard work, initiative, entrepreneurship, all that stuff. We are turning more and more into a society in which the best way to end up rich is to be born that way.
“But why does all of this matter?” Krugman asks himself; and answers: “Basically, it’s about taxes.”
America has a long tradition of imposing high taxes on big incomes and large fortunes, designed to limit the concentration of economic power as well as raising revenue. These days, however, suggestions that we revive that tradition face angry claims that taxing the rich is destructive and immoral — destructive because it discourages job creators from doing their thing, immoral because people have a right to keep what they earn.
But such claims rest crucially on myths about who the rich really are and how they make their money. Next time you hear someone declaiming about how cruel it is to persecute the rich, think about the hedge fund guys, and ask yourself if it would really be a terrible thing if they paid more in taxes.
Have a good weekend.