Saturday, July 21, 2012

You didn't build that. No, really.

Is the US a meritocracy? This chart, lifted from a fascinating OECD paper on social mobility, seems to suggest otherwise, because in a meritocracy your birthright should be less predictive of your destiny, and we're showing up behind such objects of libertarian scorn as France, Germany, Sweden and Canada (Canada!):
This is relevant to our current political debate because Romney is trying to make hay off of Obama's comments to this effect (the "you didn't build that" kerfuffle). As opposed to most of the campaign noise - I pity swing state tv watchers - this particular debate is actually important.

Romney argues for what amounts to economic elitism, where tax policy favors "job creators" (aka rich people). Obama argues for essentially a means-based taxation system. Both are predicated on the principle that our system should be funded by the people that benefit most from it; the difference is in who you perceive to be its primary beneficiaries. 

The argument I've made previously on this blog is that rich people benefit more from our government than poor people, and the logic is simple: if government isn't a key enabler of wealth creation, then relatively lawless places should be comparative hotbeds of innovation and "job creation". So, what do you imagine is the unemployment rate in, say, Somalia? 75%, according to this UN study. What?!? Where are my job creators at? It's an extreme example, but it helps make the point that the value you get from the enforcement of property rights, to name but one governmental function, is commensurate with the value of your property.

Republican orthodoxy counters that the more we make the rich pay in taxes, the less incentive we give people to strive to better their economic situation; that is, that the best way to promote a meritocracy is to increase the rewards of success. At this point we should refer back to the chart at the top of this post, which essentially suggests that rather than spend our resources encouraging people to want to improve their lot (never met someone that needed encouragement on this front, btw), we can best promote meritocratic principles by helping those who didn't win the birth lottery.

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