Time for another walkout on Mankiw

4 Jan, 2015 at 22:21 | Posted in Economics | 2 Comments

With this model as background, let’s move to the big question: Why should we be concerned about inequality in wealth? Why should anyone care if some families have accumulated capital and enjoy the life of the rentier? Piketty writes about such inequality as if we all innately share his personal distaste for it. But before we embark on policies aimed at reducing wealth inequality, such as a global tax on capital, it would be useful to explore why this inequality matters.

mankiwOne place to look for answers is Occupy Wall Street, the protest movement that drew
attention to growing inequality. This movement was motivated, I believe, by the sense that the
affluence of the financial sector was a threat to other people’s living standards. In the aftermath
of a financial crisis followed by a deep recession, this sentiment was understandable. Yet the
protesters seemed not to object to affluence itself … From this perspective, the rentier lifestyle of capitalists should not be a concern. As we have seen, in a standard neoclassical growth model, the owners of capital earn the value of their marginal contribution to the production process, and their accumulation of capital enhances the productivity and incomes of workers.

Greg Mankiw

In deed — and nothing could more forcefully show what total horseshit marginal productivity theory is.

To think that the exploding income and wealth inequality that we see around us today can be explained by marginal productivity theory is — to put it gently — an obvious sign of someone having bad luck when trying to think.

Three years ago, a walkout was staged by students in the introductory economics class Ec10 at Harvard, taught by Greg Mankiw. Maybe it’s time for another one …

2 Comments

  1. And this is the normative hypocrisy Harvard perpetuates since it is a prime beneficiary of the first order from the maldistribution of wealth. Mankiw, being cynically subversive, eschews any correlation between massive wealth and wealth holder success in the distortion of tax laws designed to manage income distribution.

    Yes, not only a walkout but a petition to replace him with a professor who actually understands the self imposed, destructive behavior of capitalism.

  2. You know, at least he is not confused as many neoclassicals that suggest that their model does not say that remuneration is tied to marginal productivity.


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