Libertarian law professor Richard Epstein was on the PBS NewsHour last night for a segment titled "Does U.S. Economic Inequality Have a Good Side?" Highlights:
You can tell the difference between a liberal and conservative by the following test. A liberal believes that changes in taxes have very little effect on production, but huge effects favorable on distribution.
Folks like myself believe it's exactly the opposite. Very high tax rates or even small changes in taxes have very adverse effects on production, and they do very little to produce redistribution, because the money gets dissipated and taken away through the political process in the ways that even the most ardent supporters of redistribution will not like.
PAUL SOLMAN: Aren't many of the top 1 percent or 0.1 percent in this country rich because they're in finance?
RICHARD EPSTEIN: Yes. Many of the very richest people in the United States are rich because they are in finance.
And one of the things you have to ask is, why is anyone prepared to pay them huge sums of money if in fact they perform nothing of social value? And the answer is that when you try to knock out the financiers, what you do is you destroy the liquidity of capital markets. And when you destroy the liquidity of those markets, you make it impossible for businesses to invest, you make it impossible for people to buy home mortgages and so forth, and all sorts of other breakdowns.
So they should be rich. It doesn't bother me.
PAUL SOLMAN: Are you worried that a small number of people controlling a disproportionate share of the wealth can control a democratic system?
RICHARD EPSTEIN: Oh, my God no.
If you think the rich are controlling the situation, why is it that anything more than $1 million on a home mortgage turns out to be non-deductible, while the amounts that are below that are left? If one thinks that the rich dominate the particular system, why is it Obama is targeting for political advantage people with incomes over $250,000, rather than those who are under that particular figure?
You're talking about 1 percent of the people, and they're going to win an electoral battle against the multitudes? Forget it. It's just not going to happen.
It's worth clicking through to see or read the whole thing.