David Henderson, Idiot

David Henderson tells us:

"Then, in my late teens, I started to learn economics. I started to understand that the vast majority of income in a relatively free society is earned. It's true that a small number of wealthy people did get their money by fraud or dishonesty. More common, especially in societies with lots of government controls, were people who got wealthy by using political pull. But I started to see that the typical high-income person in a relatively free society gets his or her income the old-fashioned way--by earning it." -- David Henderson

I suppose it is good that some economists are willing to expose themselves, or their teachers, as incompetent. Economists refusing to teach theories that collapsed half a century ago, except as history, would be better. Even if markets were perfectly competitive, marginal productivity would not be a theory of income distribution. In neoclassical economics, properly understood, no sense can be attached to the claim that the rich earn their income. But, of course, markets are not perfectly competitive in the United States. The ever increasing income and wealth being seized by the top quintile, or 10%, or 1%, or 0.1%, etc. is the result of the exercise of political power.



Noah Smith, who probably thinks of himself as a liberal opposing "libertarians" (that is, propertarians), is not much better. In his discussion, he fails to mention any empirical facts about the increasing and astonishing unequal distribution of income in the United States. He fails to discuss whether or not gross inequalities in the distribution of income and wealth is consistent with the smooth expanded reproduction of a capitalist economy. And he fails to discuss whether having an income distribution in the United States that has not been matched since the 1920s might have something to do with current recessionary conditions. Instead, he writes about feelings. As far as feelings go, the vast majority of Americans should be angrier. "Let fury have the hour, anger can be power/D'you know that you can use it?"