Comment by RickHull | Hacker News Reader

Comment by RickHull | Hacker News Reader

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Furthermore, most of Krugman's argument seems to be an appeal to envy. Without envy, what reason should anyone have to begrudge Steve Jobs or Bill Gates their enormous financial success. Wealth is not a zero sum game, and these men have contributed untold amounts of wealth to society, in several important forms:

* Iphones in the hands of welfare moms

* Lavish consumption habits which distribute cash throughout the goods and services economy

* Massive amounts of investment yielding better technology and higher productivity and efficiency

* Charitable giving and other altruistic endeavors

It is not at all obvious, even if 90% would vote to do so, that taking resources from those who have earned them and putting them under government control and distribution would put them to better use. Leaving aside the moral concerns of taking justly acquired property from individuals, and the undermining of private property as an institution, there is great reason to believe that government distribution puts resources to lower use rather than higher. Positive sum games are always to be preferred over zero or negative sum games.

Your argument is predicated on the assumption that the rich use their wealth only for the "important forms" you mention. What you don't mention is how they are able to influence the political arena with their wealth. The influence of politics by a few is a very natural consequence of massive inequality, and is a zero-sum game. More political influence of the wealthy means less political influence of the poor.

You cannot divorce the economy from politics.

I don't disagree with your analysis, but this is not relevant to Krugman's argument nor my objections to it.

>there is great reason to believe that government distribution puts resources to lower use rather than higher.

Not exactly true.

https://en.wikipedia.org/wiki/Fiscal_multiplier#United_State...

The last paragraph of that section strongly implies that the US fiscal multiplier is zero. Keep in mind that the multiplier needs to be greater than one for a positive effect.

> More recently three economists with the NBER and IMF have published a working paper examining economic features that impact fiscal multipliers. They found that the output effect of an increase in government consumption is larger in industrial than in developing countries, the fiscal multiplier is relatively large in economies operating under predetermined exchange rate but zero in economies operating under flexible exchange rates; fiscal multipliers in open economies are lower than in closed economies and fiscal multipliers in high-debt countries are also zero.

US has an open economy, high debt, and flexible exchange rate.

It really depends on when the money is spent and what the money is spent on.

>They start by looking at multipliers for government consumption... In developed countries, they find that the long-run multiplier is 0.66.

but then

>However, government investment—things like infrastructure building—results in higher multipliers. Here, the long-run multiplier was 1.5 for developed countries

So that shows that the "what" matters. Here's the "when":

>They examined several European countries and showed that fiscal multipliers are substantially higher than previously assumed. Previous IMF studies had assumed multipliers of roughly 0.5. In other words, a €1 injection of government money into the economy would only have a net benefit of 50 centimes. By contrast, Messrs Blanchard and Leigh found that the actual multipliers in the early years of the crisis were “substantially above 1”.

That being based on a 2013 study by the IMF, later than the 2011 study quoted on Wikipedia.

http://www.economist.com/blogs/freeexchange/2013/08/fiscal-p...

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