Jane Galt has been tracking developments in the "Soaking The Spiteful Rich" discussion sparked by this post by Brad DeLong, with follow-ups here and here. Brad DeLong's position is that the rich engage in conspicuous consumption partly in order to spite the poor; consequently we should have a more progressive income tax to prevent this. I am not kidding:
I wrote that one reason that America's rich today live the expensive and ostentatious lifestyles they do (rather than spending much more money on charity, or philanthropy) is that it is a way of making other people feel small and unhappy...
And the policy prescription:
The easiest and most important thing the government can do to neutralize the adverse consequences of rising inequality is to make the tax system more progressive, not less. A reality-based government would react to growing pretax inequality by taxing the rich more, and subsidizing the poor more (through policies like the EITC) as well.
I wrote that one reason that America's rich today live the expensive and ostentatious lifestyles they do (rather than spending much more money on charity, or philanthropy) is that it is a way of making other people feel small and unhappy....
Brad seems to see the rich as especially mean and spiteful. I see them as some combination of more talented, hard-working, and lucky than average but otherwise like everyone else. (Or maybe Brad views everyone as mean and spiteful and the rich as having more opportunities to exercise these vile attributes.) I wonder if our varying perspectives on human nature can partly explain our different positions on public policy.
Eventually Brad DeLong offered a third post billed as a defense of his view:
Ori Heffetz's work has some empirical implications for the spite-vs-envy question...
Uh huh. Based on the long summary provided, the "empirical implication" is that the rich engage in proportionately more conspicuous consumption than the rest of us, and who can doubt it? But does this paper offer any support for the '"spite" theory of motivation? No... so I suppose I can argue that this paper has some empirical implications for the theory that the rich engage in conspicuous consumption to uplift and inspire the poor, and help the poor feel better about the prospects for their children and grandchildren - call it the "Someday this may all be yours" theory.
Of course, it also has empirical implications for the theory that the rich engage in proportionately more conspicuous consumption in order to ward off alien abduction. Wow, that was a powerful study!
Well. Lizardbreath at Unfogged cleverly shifts the topic in a post titled "Jane Galt Seems Displeased With Advocates Of Redistribution" - briefly, since it is beyond dispute that income redistribution is a good thing, folks who object to DeLong's specific argument are just being cranky.
I would have said Jane G. is displeased with silly arguments, but she says so herself in a follow-up. And the second comment at Unfogged is on target:
The discussion of why inequality is bad seems to have gone off the rails in the exchanges that I've been reading. The libertarians were saying egalitarianism was motivated by envy, and then DeLong defended himself by saying that he was motivated by a hatred of spite, which hardly seems like a firm ground for a tax code.
I have not seen any table-pounding defense of the specific spite-motivated progressive tax code advocated by DeLong (as opposed, for example, to consumption and excise taxes on spite-capable goods). If such defenders are out there, feel free to enlighten the rest of us. Thanks.
As to my own Official Editorial Position - don't rush me. My previous thoughts were here, and my quick reaction is this: I suspect that income inequality is being used as a proxy for other things, such as class and income mobility. My strong hunch is that if class and income mobility were high, folks would not be too worried about income inequality; conversely, if income inequality were low but our class and income structure was rigid (working class kids don't go to college and end up in working class jobs; neighborhoods are segreagated by class and income) I think people would agree we had a problem despite equal incomes.
My thought - drop the "income inequality" proxy and establish metrics for the variables that represent the "real" problem. Treating the cause rather than the "income inequality" symptom is more likely to lead to a long term solution, or ta least, a sensible discussion about what it is we are trying to achieve.
SINCE IT MAY NOT BE OBVIOUS: It may not be obvious, but I happen to think that Brad DeLong is a smart, honest liberal (and we all know the standard position on two out of three). Just for example. he wrote a fascinating career-killer on the potential problems with a Hillary Administration a while back; on another topic he blew a whistle on his own team in response to my near-endless heckling about a particular point about GDP growth versus corporate profitability.
And look, not every one of his blog posts represent the first draft of a paper intended for publication, especially when that post goes up just before Labor Day weekend. He floated an idea, people had fun whacking it, that's life.
My secret hope is that he will be goaded into coming back to the question of income inequality. I am reasonably convinced there is some sort of a problem and it would be interesting to see an analytical framework to think about it. That said, spite-based economics probably is not it.