Will Progressives Ever Think About How We Structure Markets, Instead of Accepting them as Given?17th November 2018
(I originally posted this piece on my Patreon page.)
The right would like us to believe that the inequality we see in the United States, and increasingly in other countries, is a natural outcome of market processes. Unfortunately, many on the left seem to largely share this view, with the proviso that they would like the government to alter market outcomes, either with tax and transfer policy, or with interventions like a higher minimum wage.
While redistributive tax and transfer policies are desirable, as is a decent minimum wage, it is an incredible mistake to not recognize that the upward redistribution of the last four decades was brought about by conscious policy, not any sort of natural process of globalization and technology. Not recognizing this fact is an enormous mistake from both the standpoint of policy and politics.
From the policy standpoint, we give up a huge amount by not examining the policies that have caused before-tax income to be redistributed upward. As a practical matter, it is much easier to prevent all the money from going to the top in the first place than trying to tax it back after the fact.
On the political side, we should never have our argument be that somehow the big problem is that the Bill Gates of the world were too successful. The big problem is that we have badly structured the rules of the market so that we gave Bill Gates too much money. With different rules, he would not be one of the world’s richest people even if he had worked just as hard.
Since we’re on the topic of Bill Gates, patent and copyright rules are a good place to start. For some reason, it is difficult to get people to accept an obvious truth: there is a huge amount of money at stake with these rules. By my calculations, patent and copyright monopolies could well direct more than $1 trillion a year, a sum that is more than 60 percent of after-tax corporate profits.
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