The rich are getting so rich, they’re “super-rich” and tax hikes are just the kryptonite government needs to bring them down to Earth. At least that’s the viewpoint of two liberal policy advocates [1]The Washington Post’s Frank Ahrens highlighted in a September 22 story on the Forbes 400.
“For the first time, all 400 Gotbucks on the Forbes tally are billionaires, from Gates (worth $53 billion) down to the bottom, Los Angeles semiconductor magnate Sehat Sutardja ($1 billion),” Ahrens observed, later calling them “eye-popping numbers that show the speed with which wealth is gained.”
Such “eye-popping” wealth is a good thing, a Forbes magazine editor told Ahrens, because it indicates economic growth and progress. But that’s not what Ahrens was driving at with his story “The Super-Rich Get Richer: Forbes 400 Are all Billionaires.”
No, Ahrens found the increase – from 13 billionaires among the nation’s 400 richest Americans to all 400 in only 24 years’ time – to be cause for concern.
“The enormous sums spur the natural question,” he insisted, though not explaining why one should naturally be concerned with wealthy people becoming wealthier. “Is it good, bad or neither that wealth is accumulating so fast that numbers begin to lose their meaning?” he pondered.
For answers, he turned to, among others, “Dean Baker, a macroeconomist at the Center for Economic and Policy Research in Washington” and former Clinton administration economist Lawrence Katz.
Ahrens left out CEPR’s liberal leanings, including its support of a “windfall profit” tax on oil as well as Katz’s ties to the liberal administration.
“I think it’s very bad,” Baker insisted. “If these people pull away so much wealth,” he asserted, “that means everyone else has less.” Of course, plenty of economists could have told Ahrens that his zero-sum logic is faulty. Just because one person gains doesn’t mean another somewhere loses.
By “everyone,” Baker could mean the federal government, Ahrens suggested, arguing that the Forbes 400 benefit from tax cuts at the expense of the government. “Today’s marginal tax rate for the richest Americans is 35 percent, down from more than 60 percent 25 years ago,” the Post reporter noted.
“We could do a lot more with the tax system,” Harvard economist and former Clinton Labor Department official Katz told Ahrens, “to help out those who are less fortunate.”
While Ahrens did add that Katz “is of mixed mind” about growing wealth, pointing to “the possibility of great philanthropy,” the Post reporter left out any rebuttal from economists who would vehemently disagree with Baker and Katz, such as [2]Russell Roberts, an economist at George Mason University.
In a [3]September 22 blog posting at cafehayek.com, Roberts lambasted Baker for “an impressive cheap trick” of “ignoring the role of inflation in artificially creating billionaires.” What’s more, Roberts added, the co-founders of Google, both of whom are in the Forbes 400, “created wealth, they didn’t take it from others” by “creating something new that people valued.”
“We pay nothing directly for Google and we Google users are better off along with [Google founders] Brin and Page,” Roberts argued, adding that a mere 10 years ago, before the phenomenal success of their startup company, “Brin and Page weren’t in the top 1%” of income earners.