The argument is which is the superior method for making the world better. On one side you have Krugman who believes you should tax the rich and let the government spend the wealth the rich accumulated to improve conditions for everyone.
On the other side you people who think that if you allow people to spend, save and invest their money as they choose, society will come out better in the end.
Side A likes to portray side B as selfish, greedy bastards and side B likes to portray side A as communists thieves. Really though, if you take the actual objectives of both sides I would argue they're generally noble.
There is still the matter of who is actually right. That is where the real argument is.
And I think you've seen some of this in statements from people like the lieutenant governor of South Carolina, when he said, "My grandmother was not a highly educated woman, but she told me as a small child to quit feeding stray animals. You know why? Because they breed. You’re facilitating the problem if you give an animal or a person ample food supply. They will reproduce, especially ones that don’t think too much further than that. And so what you’ve got to do is you’ve got to curtail that type of behavior. They don’t know any better."
Their belief isn't one that they can make the world a better place. But rather of actual superiority (hence they shouldn't be forced to give resources to inferior people). This I do think is a fundamental difference.
On one hand you have Keynesians who want to screw the rich out of envy and spite and have no concern for the poor, or even worse, actually want to oppress the poor to keep them as their constituents.
On the other hand, you have, like in your example, capitalists who think of the poor as an inferior species to be ignored, or worse, eliminated.
Neither side is immune.
I mean think about this. We're talking about an increase of 4% in the marginal tax rate for those making above $250k/year. A rational argument would be to look at the impact of where these tax dollars go versus what the wealthy might do with it. In itself this should be a very innocuous discussion. But look at what we have.
This is not about the best way to make the world a better place. But I do think it is more about "who _deserves_ to have resources".
Of course greed and self-interest is part of the motivation for making those arguments, but most free market economists and supporters truly believe that by allowing the rich to keep their wealth that all of society will benefit. Rich, poor, everyone.
You may disagree, lots of people do since at face value it is counter-intuitive, but my point is just that a lot, probably the majority of free market supporters, actually do have the benefit of all of society in mind. They'd say that the 4% increase in marginal tax rate would actually be detrimental to the poor. Again, you may have excellent arguments for why it is better for the government to take and spend that money, but they have logical counter-arguments.
In Reagan's era they would pitch trickle down as how everyone benefits from these tax cuts. The actual stated goal was to make life better for everyone, but starting from the top.
The current stated goal from the right is that the rich deserve the money, and the poor do NOT deserve. Not that the tax cuts will have some side benefit to the poor. Rather that we need to keep the money out of the hands of the poor. This is why the constantly use the code word "welfare" when talking to their base.
Again, there is a very rational argument to be had here. In fact, I think a rational argument would be a very boring one for most people in the US. But I think the reason that everyone is up in arms is not due to their passion for capitalism. But rather I think there's a fundamental belief that there are certain groups of people unworthy of _their_ money.
- Taking actions that result in rich people having more money is more likely to result in them saving or investing it, and not in them going out and spending it right now.
- Taking actions that result in someone who is just scraping by having more money is more likely to result in them spending that money right now.
If the goal is to get the economy moving again, I tend to think the latter solution is a better one in this instance.
Also, public works are a great thing to spend on - we're going to have to do it eventually, labor is really cheap right now, and it's better to fix before it breaks and more people die because of broken gas lines or collapsing bridges....
Ummmm. What do you think that saving and investing are?
Surely the rich guy isn't saving by stashing the money under his mattress, or he wouldn't have gotten rich in the first place.
Perhaps he's putting the money in the bank, in which case it's going to be used to underwrite someone's mortgage, or something like that.
Perhaps he's investing it in the stock market. But support of equities means that he's financing business, which is just another way of saying that he's helping to create jobs.
someone who is just scraping by having more money is more likely to result in them spending that money right now
Assuming that's true, what comes of it. I picture that person going out and buying a nice new HDTV from Sony, and much of that money going to Japan rather than sticking around in America.
Obviously I've picked my examples to tilt in one direction. But it ought to illustrate that what many people seem to believe is obvious common sense is far from that, and perhaps even, counter-intuitively, turns out the opposite.
After the IPO (and other secondary offerings), "the market" usually doesn't drive a corporation's funding. Companies can make some small out of money from releasing new stock, but not counting things like bond issuances (ie, borrowing from people or banks), they don't benefit from people playing the market.
That HDTV was probably built in China, not Japan. Even so, a lot of that money stays behind, in the distribution and retail channel. Someone's got to drive the trucks from the ports to the stores, for example.
Perhaps Krugman is simplifying for those of us who don't have degrees in economics, but he's suggested multiple times that rich people who "save" their money somehow take that capital out of circulation.
You were able to earn that money because:
1. You most likely live in a relatively free society most likely operating under the rule of law.
2. You were able to achieve what you did by "standing on the shoulders of giants".
3. You're most likely the recipient of an education provided by society that gave you the tools and opportunity to succeed.
Now, if society says that "Because we've helped you be so successful, it behooves you to contribute X percentage of your earnings back to society.", is that so wrong?
You have a moral responsibility to leave the world the same or better than you entered it. This concept seems to be lost in a sea of selfishness today...