Trying desperately to defend the 1 percent

Posted: 17 June 2013 in Uncategorized
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I’ve often said that the Occupy Wall Street movement’s greatest contribution, to date, has been to focus on the opposition between the 1 percent and everyone else.

And, to judge from Greg Mankiw’s latest, the OWS argument continues to have considerable bite. That’s because Mankiw, in an attempt to defend the 1 percent, throws everything against the wall in the hope that at least something will stick.

What does Mankiw come up with? Here’s some of what he tries: assertions without any empirical confirmation (“high earners have made significant economic contributions”), personal anecdotes (“I was raised in a middle-class family; neither of my parents were college graduates. My own children are being raised by parents with both more money and more education. Yet I do not see my children as having significantly better opportunities than I had at their age.”), one empirical study (about the high pay to CEOs in closely-held firms, a result that can be explained in a diametrically opposed manner), the supposedly high percentage of income paid in federal taxes by the top 1 percent (as if 28.9 percent is really that large a number), and a long slew of possible explanations of income inequality other than class or power (including IQ, “self-control, ability to focus, and interpersonal skills,” and preferences for income over “personal and intellectual freedom”).

What a mess! But, of course, the underlying framework Mankiw presumes is the usual neoclassical story of productivity and “just deserts”—the idea that, in a competitive equilibrium (and assuming no externalities or public goods), everyone gets what they deserve.

But it’s precisely that neoclassical story that the OWS movement has successfully challenged. Hence Mankiw’s everything-but-the-kitchen-sink argument, which simply reveals mainstream economists’ desperate attempt to defend their own economic theory and, with that, the interests of the 1 percent.

  1. […] Greg Mankiw is being criticized for saying “I was raised in a middle-class family; neither of …” He is absolutely right, though. His children’s success or lack thereof in every area of life is in no way dependent on their parents’ money or education. It is dependent on how psychologically healthy their upbringing was. Please only argue about this with me if you’ve had an opportunity to observe the same number of children of very rich people as I have. […]

  2. […] other day, I argued Greg Mankiw’s defense of the top one percent was a real […]

  3. […] up was Mankiw, in an article I characterized last summer as throwing “everything against the wall in the hope that at least something will […]

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