Out of Control Policy Blog

The Social Contract Does Not Grant the Collective Rights Over the Few

Paul Krugman must have been channeling some Sun Tzu with his Art of War inspired feign of innocence at the start of his column last week, claiming that the Presidentially popularized phrasing of the rich paying their "fair share" in society today—an idea that Mr. Krugman strongly advocates—is not class warfare. After the diplomatic argument that really, there is no war being fought by his side, he then proceed to engage in a full on mortar strike in the class war that is raging right now and that progressives have been waging for decades.

Specifically, Krugman argues: 

detailed estimates from the Congressional Budget Office — which only go up to 2005, but the basic picture surely hasn’t changed — show that between 1979 and 2005 the inflation-adjusted income of families in the middle of the income distribution rose 21 percent. That’s growth, but it’s slow, especially compared with the 100 percent rise in median income over a generation after World War II.

Meanwhile, over the same period, the income of the very rich, the top 100th of 1 percent of the income distribution, rose by 480 percent. No, that isn’t a misprint. In 2005 dollars, the average annual income of that group rose from $4.2 million to $24.3 million.

A simple question in response: So what? Is the growth of the middle class so slow that they are living in squalor or with poor living standards? Why should I care if the rich made such a dramatically higher amount of money than I do? It doesn’t take away from me, who is in the top 25 percent of income earners. There is not a fixed economic pie, it is constantly expending and we can all get a slice. My rich neighbor getting a bigger slice doesn’t impact the size or taste of my slice. 

Even worse though is the contention towards the end of Mr. Krugman’s column that betrays the real value position which separates progressives from libertarians:

Now, I know how the right will respond to these facts: with misleading statistics and dubious moral claims…

On the other side, we have the claim that the rich have the right to keep their money — which misses the point that all of us live in and benefit from being part of a larger society.

WHAT?!

Far be it for us to defend the rights of any and all taxpayers to keep what belongs to them. Property rights so often get in the way of a few elites trying to construct society in their own vision of it.

Backing down to earth, there is the fair point that in the midst of our national and global social contract we depend on each other for economic development. Few are the businessmen who manufacture everything necessary to run their companies. Everyone relies to some extent on others, as Leonard Read spelled out in his famous essay, "I, Pencil."

So the businessman is dependent on suppliers and innovators of other technology to help his profit. And he is dependent on consumers to buy his product. The consumer is dependent on the businessman to provide a product in demand. And the suppliers are dependent on the businessman to buy their equipment. This is all easily observed. 

What does not follow from this is the contention that, because a social contract binds all of this together, the collective have a claim on the resources of the wealthy few. By this logic, since we are all dependent on each other, why does the collective not have a claim on the resources of everyone else in society?  (If only such a system had a name.) Put another way, in Krugman’s social contract, how does one define the limits of the government’s claim on the resources of the wealthy to fund its activities?

See the whole Krugman column here.

Anthony Randazzo is Director of Economic Research


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