AMERICA - Economic Inequality, Part-6 (Inequality Not Bad?!)

"Does U.S. Economic Inequality Have a Good Side?" PBS Newshour 10/26/2011

(Series Part-1, Part-2, Part-3, Part-4, Part-5)

Excerpt

JEFFREY BROWN (Newshour): Now to our own continuing series on inequality.

A new analysis from the Congressional Budget Office supports the idea that income inequality has grown considerably over the past few decades. The report found that household income grew by 275 percent between 1979 and 2007 for the wealthiest 1 percent of the population. For the rest of the top fifth of the country, it grew by 65 percent. By contrast, the bottom fifth of the population saw its income grow by just 18 percent.

The NewsHour's economics correspondent, Paul Solman, has been exploring the consequences of those trends in previous stories he has done in his series. Tonight, he gets a contrarian view, suggesting inequality in a free market system may not be as bad as advertised.

It's part of his ongoing reporting on Making Sense of financial news.

PAUL SOLMAN: Richard Epstein, welcome.

RICHARD EPSTEIN, New York University School of Law: Thank you for having me.

PAUL SOLMAN: What's good about inequality?

RICHARD EPSTEIN: What's good about inequality is if, in fact, it turns out that inequality creates an incentive for people to produce and to create wealth, it's a wonderful force for innovation. So let's just go and take somebody like Bill Gates again or any entrepreneur.

Guy earns $50 billion, right? How much consumer welfare has he created by selling products? We can estimate the amount of gains to purchases, because everybody who buys one of his products or one of Steve Jobs' products, in effect, values it more than he receives.

The social gain from inequality to consumers of those goods probably dwarfs the entrepreneurial gain by a factor of 10-1 or 20-1.

COMMENTS: Can you believe this.... (wait, no, I'll be nice)

Let me start with his reference to Bill Gates and Steve Jobs. He is a law professor so he can be somewhat forgiving for NOT understanding the incentive (his pet word) for these people. They are techies, their incentive is just the ideas they came up with NOT making money. They did make money as a consequence of their ideas, which is not the same as being their incentive.

To put is in another way, they did not start with "I want to be rich, I need a way to do that." They started with "I can do that better," then worked at it.

Then there's...

PAUL SOLMAN: You mean to tell me that you don't think the top 1 percent of Americans don't have a disproportionate impact on the political process?

RICHARD EPSTEIN: No, of course they have a disproportionate impact, but that doesn't mean that they control it. They also ought to have it.

The last thing you would want to do in any kind of sensible society is to have a set of rules in which one man/one vote dictates over every issue.

Where did this "professor" get his education? Isn't "one man/one vote the core of a democratic society?

Then, looking at the numbers stated in the lead-in, a 4x and 15x income disparity is good? In a society that is supposed to be based on equal opportunity? With the income disparity we have today (and growing) the opportunities for the 99% of us are becoming less.

.....sorry, I'm tired of being nice about this guy. HE'S AN IDIOT!