Thursday, January 5, 2017
David Glasner — Wherein Hayek Agrees with DeLong that Just Because You’re Rich, It Doesn’t Mean You Deserve to Be
Short version: It's the rent, stupid.
Most people feel (rightly) that there's something wrong with capitalism distribution that violates the principle of just deserts. It's unlikely that many understand the argument behind just deserts being the result of marginal productivity, but they get the gist of the explanation and find it fishy. But they can't really say why and how.
They need to be introduced to the concept of economic rent and rent extraction through asymmetrical power in the kind of political system that prevails in the liberal countries. It's not government of the people, by the people and for the people but rather government on the principle that those who own the country should govern the country, assuming trickle down.
In other words, its about the interaction of class, power, and wealth, giving rise to privilege; whereas just deserts depends on equal opportunity. The issue really boils down to the key social fundamentals of fairness and free riding that are found even in the insect world among ants and bees.
Wherein Hayek Agrees with DeLong that Just Because You’re Rich, It Doesn’t Mean You Deserve to Be
David Glasner | Economist at the Federal Trade Commission