« The Futility of Base-Broadening to Pay for Massive Tax Rate Cuts | Main | Links for 10-14-2012 »

Saturday, October 13, 2012

That Blurry Line Between Makers and Takers

Flight layover blogging -- this is from Tyler Cowen:

That Blurry Line Between Makers and Takers, by Tyler Cowen, Commentary, NY Times: Mitt Romney has apologized for his depiction of 47 percent of America as wealth takers rather than wealth makers. But his blunder touched inadvertently on some discomforting truths about the importance of politics in income distribution in the United States.
If Mr. Romney’s points were to be reformulated in a more defensible direction, the outline might look something like this...

Waiting for you to go read Tyler's column so my comments will make sense (hopefully, anyway). . . . Where Tyler and I differ most is not in the diagnosis of the problem. We both think, for example, that moneyed interests have captured far too much of Washington. Where we differ is the solution. His libertarian leanings lead him to propose getting government out of the way. If government is not involved, then moneyed interests can't screw things up. I have some sympathy for that point of view. But I suspect (strongly) I also have more faith than he does in government's ability to do good. Yes, we need to do our best to stop money from capturing politicians, something that increasing inequality makes worse. But we also need government to stand up for the typical household who does not have the power that comes with wealth. If government simply steps out of the way, stops regulating, etc., then the power that comes with wealth will exploit the powerless (think of things like workplace safety) and they will be even worse off than they are now -- I have no doubt about that. There are some areas where less government is the solution, but in many cases the answer is a government that represents all of our interests, not just those who can provide campaign cash in great volumes. Getting there is a problem -- how do you get a captured government to uncapture itself? -- but even with all its imperfections I just don't believe that no government at all will result in a better outcome for the vast majority of Americans. (A good analogy is monopoly power. I think the government should do more to reduce monopoly power, but it doesn't due to the influence of the wealthy and powerful who own these companies. But getting rid of anti-trust law altogether, i.e. getting government out of the way completely,  won't improve the outcome -- monopoly problems would simply get worse). I want to improve government, not kill it.

    Posted by on Saturday, October 13, 2012 at 03:30 PM in Economics, Market Failure | Permalink  Comments (67)


    Feed You can follow this conversation by subscribing to the comment feed for this post.