Krugman’s blog, 12/28/16

There was one post yesterday, “Greed Springs Eternal:”

Jonathan Chait catches Larry Kudlow praising the Orange One for choosing a cabinet of billionaires, because rich men are incorruptible — after all, they don’t need even more money. As Chait says, this is ludicrous on its face; consider, for example, Russia’s oligarchs.

What Chait doesn’t note is the special irony of seeing this argument from Kudlow, or indeed any right-wing advocate of supply-side economics. Remember, their whole worldview is based around the claim that cutting taxes on rich people will work economic miracles, because of incentives: let a plutocrat keep more of an extra dollar in income, and he’ll innovate, create jobs, lead us to an earthly paradise in order to get that extra income.

To belabor what should be obvious: either the wealthy care about having more money or they don’t. If lower marginal tax rates are an incentive to produce more, the prospect of personal gain is an incentive to engage in corrupt practices. You can’t go all Ayn Rand/Gordon Gekko on the importance of greed as a motivator while claiming that wealth insulates a man from temptation.

Now, for what it’s worth, the reality is clearly that even the insanely wealthy generally want more. You can ask why they want it; the hedonistic pleasures of luxury must surely top out at a tiny fraction of what the average Trump nominee is worth. Gold-plated toilets don’t flush any better than the usual kind. But for such people, money is about ego, power, winning the game. Greed has no limit.

But what’s more interesting and revealing, I think, is the way people like Kudlow for whom incentives are supposedly all suddenly say something completely different when it comes to conflicts of interest.

And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. It was never about the incentives; it was just another excuse to make the rich richer.

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