Wealth Distribution, Part II

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Paul Solmon’s excellent PBS News Hour series on the economy continued this week, featuring – in a remarkable display of intellectual fairness – Robert Lerman’s objection to Solmon’s previous report on the increasingly huge inequality of wealth distribution in the United States (which I blogged on here). Solmon had originally described the situation using the statistics represented in this chart-

Lerman objects that when social security and medicare are included in the comparison, the inequality is not quite so disturbing-

Several commenters at the News Hour site point out that medicare and social security are not really the equivalent of other sorts of wealth in that they are not fungible, nor are they anything but financial burdens prior to one’s reaching retirement age. But putting those qualms aside, it’s worth pointing out that if entitlements really do have the effect of mitigating an otherwise (presumably) unfair wealth distribution, that’s all the more reason to save the programs from Republican attempts at dismantlement. In principle, I’m not against allowing individuals to “opt in” to riskier private retirement accounts, which might help to equalize wealth (and wealth-fungibility prior to retirement, if the law allows), as long as the “public option” could be retained in its current form for those who want it. But simple math suggests that with fewer people paying into the public option, the difference would have to be made up somehow… and what better way to make up the difference than by lifting the cap on the amount of income subject to payroll taxes, as well as by taxing super-wealth at higher rates,thereby further mitigating the wealth gap?

Lerman argues that at some point extreme wealth does not make a significant difference to quality of life. The capacity for pleasure is, after all, finite. Yes, the super-rich can drive a Ferrari while the rest of us drive Toyotas, but a car is basically a car, a palatial house is ultimately just a house (and, even if you own several, you can’t live in more than one at a time). I think that this might well be true, and that focusing on it may help to mitigate the resentment so many people are feeling these days. But, by the same token, doesn’t it help to bolster the argument that raising someone’s standard of living to a merely decent level by taxing someone else’s super-wealth at a slightly higher rate is morally defensible – maybe even morally required?

Here’s the entire thought-provoking segment-

Watch the full episode. See more PBS NewsHour.