Originally titled “The Spreading of Economic Fallacy” in American Thinker, April 15, 2011
By Chuck Rogér
The world of academia provides a comfy home to progressives. And when one of the critters writes in Vanity Fair magazine, gems of “thought” tend to emerge. In a new Vanity Fair article, “Of the 1%, by the 1%, for the 1%,” Columbia University economist Joseph Stiglitz writes:
It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably.
Left-liberal economists gravitate to silly beliefs. In the arena of silliness, Stiglitz does not disappoint. The economist pushes three fallacies in only four sentences.
In the first fallacy, Stiglitz foists up the concept of “the nation’s income.” The contention ignores reality. A “nation” has zero income. Likewise, a nation’s government has no income. All income is traceable to individuals, just as all spending is traceable to individuals. When people earn more, they spend or invest the increases in ways that inject more money into the economies of nations, continents, and the planet. Many other people earn and spend more as a result.
The second and third of Stiglitz’s fallacies reveal more of the silly progressive narrative. Individuals do not “control” the percentages that their earnings represent in the income of all people as a group. People certainly have some control over their individual earning power, but can do little to stop other determined people from reaping the rewards that come with hard work. And finally, the contention that the top 1 percent of earners has “considerably” improved their “lot in life” is laughable.
Once a gazillionaire owns two yachts, four homes, and ten cars, regularly eats $25,000-a-kilo Almas caviar, enjoys unlimited top-notch medical care, and travels around the world all year long, does gathering a-hundred gazillion dollars more to support ten yachts, a palace or two, a container ship full of Rolls-Royces, and every-Friday-night dinners at Central Park West’s Jean-Georges Restaurant put yet a bigger smile on the gazillionaire’s face or render said gazillionaire immune to death?
Really, Professor Stiglitz, can’t your immense, hay-wired, progressive brain do better?
(HT: Café Hayek’s Russ Roberts)