Posted on | January 3, 2014 | 88 Comments
Slate.com has become a journalistic ghetto, an “Amateur Online Webzine Specializing in Hit-Trolling and Outrage-Fishing,” as Ace calls it, and their “business and economics correspondent” (?) Matt Yglesias gets in the spirit with a 415-word item under this headline:
Yglesias quotes one sentence from a New York Times article:
Matt Hlavin, an entrepreneur in Cleveland who owns seven businesses, mostly in manufacturing, bought three Mercedes last year: a $237,000 SLS AMG and a $165,000 S63 AMG for himself, and a $97,000 GL550 sport utility vehicle for his wife.
Yglesias then proceeds to argue — I’m sure you’re surprised — that it is a bad thing for Matt Hlavin to have three Mercedes.
That’s it. That’s all he’s got.
And when I say that Yglesias “argues” that it’s a bad thing for Hlavin to have three Mercedes, of course, I mean Yglesias just assumes this, and also assumes Slate.com’s readers share his contempt for Hlavin’s wealth and thus are eager to applaud Yglesias’s plan to expropriate and re-distribute Hlavin’s wealth:
[I]f you managed to give it to the truly needy in the United States, you’d create a huge surge in well-being. And of course if you were able to use it to reduce severe third-world poverty, the gains would be incredible. . . .
The kind of conspicuous consumption that drives people to buy a $165,000 S63 AMG is basically zero sum, whereas the kind of consumption that a family in the bottom half of the income distribution would finance with more money is not.
The assumptions embedded in Yglesias’s “argument” (which is not actually an argument at all) are enormous. He assumes, for example, that Hlavin and other wealthy people are fixed targets, whose economic behavior will not be modified by higher taxes. They’re supposed to keep earning at the same rate, no matter how steeply you increase the progressive taxes on their income. And, at a second degree of causation, Yglesias evidently never considers whether changes in the economic activity of the “rich” (however you define this) produced by higher taxation might also result in greater hardship for the poor.
The best anti-poverty program in the world is a job, after all, and if higher taxation of the rich results in less capital investment in business, there will be fewer jobs created. You can’t make capitalism work without capital, and Yglesias’s judgment that someone with three Mercedes has too much capital — too much wealth –requires a belief that excess wealth is an economic problem.
Why? Yglesias never adequately explains this. He simply assumes that Hlavin’s wealth is a problem and then proceeds to “solve” it, without any real consideration of obstacles to implementing his redistributionist policy, or the potential harms of such a policy:
I’d say the taxation should focus on Hlavin’s consumption spending more than his income per se, and should be designed to especially hit activities with substantial environmental impacts. But the point is that taking the money Matt Hlavin is spending at the Mercedes dealership and giving it to other people is a huge winner.
Alternative proposal: If there were a tax on bullshit, Matt Yglesias could pay off the national debt by the end of the year.