Bryan Caplan at EconLog has written a post that covers some ground I’ve covered in class (the original idea in my classes goes back to a student I had at the University of Alabama in Summer 1990).
But … I didn’t write it up, and I wish I had.
In short, if we morally pillory the rich, that lack of respect will make the investments required to get rich more undesirable, reducing the ranks of the potentially rich, and likely further increasing the per capita well-being of those that persevere in getting rich.
That’s right: not liking the rich will make inequality worse.
It gets worse: the people who are likely to persevere are those that are more thick-skinned and insensitive to the cares of others.
In sum, I think this is the income inequality version of the “acting white” problem that some smart minority students face.
Economically, I think this is a form of contrapositive Peltzman Effect. That’s usually thought of as the perverse outcome where making something desirable easier frees up extra resources and/or willingness to engage in something undesirable. It’s contrapositive is then that if we tie up resources and/or willingness to engage in something undesirable (i.e., getting rich) we’re going to make something (presumably) desirable (i.e., a more equal distribution of income) harder to achieve.
I actually think we’ve seen this in North American hockey. Two generations ago, most of the team was enforcers: the number of graceful Yvan Cournoyer’s was pretty small. But, hockey as a sport reduced the romance of enforcement to the individual player, and now it is concentrated in a handful of brutes whose pay easily outstrips their limited potential to actually promote scoring opportunities.
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