Harvard economist, occasional Republican economic adviser, and avid social Darwinist Greg Mankiw has produced the latest in his series of passionate defenses of the financial prerogatives of the ultrarich. In his most recent New York Times column, Mankiw begins with the relatively sympathetic case of gazillionaire actor Robert Downey Jr. Nobody is upset that Downey earned $50 million to appear in The Avengers, he posits. Therefore, Mankiw proceeds to argue, nobody should be upset with the incomes of other extremely rich people.
One sleight of hand in Mankiw’s column (as Paul Krugman points out) is his easy leap from the relatively unobjectionable way Downey earns his fortune to the way other executives — especially those in finance, who represent an enormous chunk of the very rich — earn theirs. If you don’t like Downey’s movies, you can choose not to attend them. If you don’t like the financial industry siphoning off your 401(k) or plunging the world economy into a massive crisis destroying trillions of dollars and ruining the lives of millions of people forever, you don’t have as much recourse.
Mankiw wants us to ignore the serious moral problems embedded in the rentier class – such as the Wall Street titans joking in secret gatherings about their reliance on bailouts – and think of the one percent as Iron Men, to whom we owe admiration and gratitude. But even if we consider Mankiw’s chosen example on its own terms, the Iron Man problem does not take us where Mankiw wants to go.
Mankiw presents Downey’s income as the perfect synecdoche for the debate over inequality:
“Does his compensation strike you as a great injustice? Does it make you want to take to the streets in protest? These questions go to the heart of the debate over economic inequality, to which President Obama has recently been drawing attention.”
Actually, these questions are peripheral to the debate over income inequality. Obama is not proposing any laws that would prevent Downey from earning $50 million to appear in a comic-book movie.
But there is somebody who considers Downey’s income a great injustice: Greg Mankiw. As Mankiw has insisted time and time again, Obama’s tax policies unfairly seize too great a share of Downey’s income and spend it on people less deserving than Downey. Indeed, Mankiw’s work suggests he believes society’s cruel exploitation of Downey and his economic peers is the single most compelling social wrong in the world today.
Have Obama’s confiscatory tax policies discouraged Downey from sharing his talents with the world? Apparently not — he is already filming another Avengers sequel. If we followed Mankiw’s urgings and reduced Downey’s tax rates, would he give us even more films? That seems hard to believe. Does Downey himself even begrudge his current tax burden? I don’t know the answer, but the fact that he donated to Obama’s reelection, the failure of which would have spared him from his current onerous rate, suggests he probably does not.
So what does Downey tell us about the inequality debate? Is the conclusion, as Mankiw implies, that because millions of people flock to his performances, that he should have more money?
The richest one percent, Mankiw informs those New York Times readers he considers too dense to grasp this fact, “contribute many millions in federal taxes, and other millions in state taxes. And those millions help fund schools, police departments and national defense for the rest of us.”
That’s nice. But the issue is that Mankiw thinks they’re contributing too much to fund schools, police, and national defense. The relevance of Robert Downey Jr. to the inequality debate is as follows: Mankiw and the party he works for propose that Downey (or his heirs) should enjoy finer luxuries than he currently does – a few more classic cars, perhaps another vacation home – and that the rest of us should either pay more to the government or get less from it.