The Left on Just Deserts

I just got an email from the left-leaning Economic Policy Institute regarding their work on inequality.  I was struck by this passage:

Since the 1970s, the United States has become increasingly unequal in terms of income, wages, wealth and opportunity. Today, 1 percent of Americans are taking home nearly 20 percent of the country's total income and own nearly 35 percent of the country's wealth. This means that you (yes, you!) are probably making less money than you deserve to.*

Notice the emphasis on what "you deserve."  They aren't following the logic of the conventional Mirrlees model: they aren't saying we should redistribute more because the marginal utility of the rich is so much less than the marginal utility of the poor and middle class.  Rather, they are talking about what people deserve.

If economists want their models to connect with the political debate, they have to spend less time emphasizing diminishing marginal utility and more time thinking about just deserts.

That does not mean the EPI's conclusion is correct.  But I think they are right about the framing of the issue.
_____

*By the way, this was a mass email, not to me personally.  I don't think EPI really thinks I am making less money than I deserve to.

In Defense of Me

My new paper on the One Percent has generated a fair amount of Internet commentary.  I won't respond to the critics. Time is scarce, and I am busy with other projects. For better or worse, I will leave the paper to speak for itself. (I should note that my paper is part of a forthcoming JEP symposium. I have not seen all the other papers, but from what I have seen, the symposium should offer a good, balanced group of perspectives.)

Regarding all that Internet commentary, I did enjoy this defense from Matt Nolan.  Nolan was apparently a reader of my favorite textbook early in his life.  His defense of me begins as follows:

When it comes to looking at policy, I started life fairly heavily left wing. When I started university at the age of 18, my first textbook was by Greg Mankiw. He was a Republican, while most of my economics reading at the time had been Marxist or a frustrated attempt at reading the General Theory by Keynes. I was immediately certain that I would hate the textbook, and that it had no value – at that point I was even more immature than I am now   

I was utterly and totally wrong – a situation I have become accustomed to. Mankiw’s first year textbook is clear, to the point, and is honest about what the economic method is and what it achieves. He “wears his assumptions on his sleeve” which I have learnt is the distinction of the best type of economist. His textbook, and his papers on macroeconomics and tax, have been insightful for me as a way of not just understanding economic ideas, but of understanding the economic method.

Thanks, Matt!

Defending the One Percent

Click here to read my new essay "Defending the One Percent," which is forthcoming in the Journal of Economic Perspectives.

An All-Harvard CEA

With the news that Betsey Stevenson is joining the CEA, the three-member board will now have two Harvard PhDs and a Harvard professor. Just saying....

Update: A friend points out, "Actually, we have had an all-Harvard CEA for some time since Betsey is replacing Katharine Abraham (a Harvard Ph.D.) and Jason is replacing Alan Krueger (a Harvard Ph.D.)."

The Jason Furman Fan Club

AEI Chapter.

Update: Here the President's announcement of Jason's appointment.

Landsburg versus Krugman

1. Paul Krugman says a Heritage Foundation economist is dishonest.
2. Steven Landsburg says, not so fast.

A Commencement Address

This morning I gave the commencement address at the Chapel Hill-Chauncy Hall School, from which my older son just graduated.  You can read the speech here.

Update: A video is posted here.