Defending the One Percent

GREGORY MANKIW
JOURNAL OF ECONOMIC PERSPECTIVES 27.3 (2013): 21-34

Mankiw argues that a even a world of perfect income inequality is subject to “entrepreneurial disturbances” which naturally result in increases in inequality. How should the entrepreneurial disturbance in this formerly egalitarian outcome alter public policy? This thought experiment is Mankiw’s view of the U.S. economy, particularly since the 1970s. While he argues it is difficult to square the rhetoric of the Left with the economist’s framework; their standard arguments for redistribution are “valid in principle but dubious in practice.” That is, their claims about the causes of income inequality are false. He concludes that from a Rawlsian original position, even the Left would choose the sort of “just desserts” system he advocates.