This is regarding the New York Times article published on Feb 15th titled ‘Yes, the Wealthy Can Be Deserving’.
The author is a Harvard Economics professor so I am assuming he is hard-working and smart to have reached that position. Nonetheless, he rarely makes any argument from Economics to support his view.
Dr. Mankiw (the author) starts off talking about how Robert Downey Jr. made ‘only’ 3% of the revenue of his blockbuster movie ‘The Avengers’ meaning that for every $8 movie ticket purchased, Downey Jr. would make 25 cents and that the general public would be willing to pay him that much for his performance. This, the author argues is not perturbing to the general public. Well, he probably hasn’t heard everyone’s opinion on this, because I for one actually am perturbed that Downey Jr. makes that much. Not because I dislike Downey Jr., or even because I think he should not deserve 3% royalties from his movie. It is rather because his pay is representative of social priorities as a whole.
Consider how much money Americans spend on entertainment, alcohol and smoking products and compare that to how much Americans spend on, say, education and you will notice why I get grumpy when someone tells me a multi-millionaire actor deserves his paycheck. Priorities are wrong. In the period between 2000 and 2006 Americans managed to increase their annual spending on entertainment by 50%! 50 f—ing%! The next time somebody asks for lower taxes, maybe they should be asked how much money they are blowing away on getting drunk while watching Miley Cyrus twerking at a concert. It took a recession for Americans to wake up and cut back on Entertainment spending. Although I bet that number has gone up again now that we are recovering from the recession. At the same time, the US government budget for Education, Science research and welfare programs for the homeless have actually SHRUNK adjusted for inflation and remained flat otherwise over the last 5 years. This is despicable.
Coming back to the article, another tiff I had with the author is his constant defense of CEO salaries (even though the data says CEO salary is not linked to productivity or even integrity). I was particularly angered by this statement “Greater risk requires greater reward.”
Really Dr. Mankiw. Then why is it that police officers, fire fighters, combatants, miners and construction workers are given pitiable rewards considering that their jobs put them at the greatest risk of all – losing their life? To people like Dr. Mankiw, a billionaire wall street banker losing a few million is a big risk, but a police officer losing his life trying to protect people just like him doesn’t seem to be a big risk. That statement is an insult, not a good argument.
To end the article, the usual rhetoric of the tax dollars from the rich helping fund schools, the police blah blah is made (he did include military though, surprise surprise). But really – how much of the budget goes into this? How much money goes into education vs. waging wars? Public welfare vs. corporate tax breaks? Who is he kidding? The super-rich associate with politicians to get their way with the tax money that they (and all Americans) have put in. He forgot to mention that key point.
Most surprising is actually that NY Times let this guy write a piece for them. Didn’t realize NYT is leaning towards the right-wing ideology now.