This weekend, conservative economist Greg Mankiw wrote that the expiration of the Bush tax cuts will inspire him to work less -- Mankiw's going Galt! Ryan Avent has synthesized critiques of Mankiw's piece, as well as added his own analysis, to conclude that "in a piece laying out the maths behind his choice to write an additional piece on economics Mr Mankiw demonstrates how incomplete the picture painted by economists frequently is."
One economic assumption of Mankiw's that deserves further questioning is the idea behind the column: That his sole motivation to work is leaving his children money thirty years from now. I don't know how old Mankiw's children are, but for the sake of argument let's say they'll be at least thirty. Should people be working simply to leave their adult children as large a sum of money as possible? Probably not, especially bearing in mind that Mankiw expects to pay the inheritance tax, so he's already planning on leaving behind at least $1 million tax-free.
The American ideal of hard work leading to material success is an important one, but we don't often spend enough time talking about it generationally, since policy-making depends on whether we think labor is important for its own sake -- the Protestant ethic, if you will -- or just important for the sake of getting paid and making sure the next generation can work less. Conservatives and other free-market fundamentalists often subscribe to the latter interpretation, but that doesn't begin to capture the human reality of why we work.
The policy-making model that Mankiw favors -- the lowest possible barriers to leaving wealth for your children after death -- is a recipe for aristocracy and indolence; hence the fact that many of the public-spirited wealthy, from Andrew Carnegie to Bill Gates, have concluded that huge fortunes should only be in private hands temporarily. To go further, we would continue to create incentives for investment in the next generation -- through education, start-up loans, etc. -- while decreasing incentives to leave behind large accumulations of capital. Our tax system already reflects that: Parents can save for their children's education tax-free (and their own retirements), but there are barrriers -- low ones, frankly -- to simply leaving behind a vast fortune. That doesn't mean that people shouldn't be able to leave their estates to their children, but we need to stop pretending that their isn't a public interest in how that happens.
In fact, that progressives generally support policies that value work over money while conservatives oppose them highlights an interesting contrast in the two worldviews: Conservatives laud responsibility and work ethic, their policies aren't designed to preserve it; progressive are tagged as anti-work because of their support for a social safety net, yet the left supports policies that come with an expectation of employment. That's just looking at the incentives.
We're not even getting into the more abstract progressive association with ideas about the dignity of labor that comes through long connection to the union movement, or pragmatic policies like the Family Medical Leave Act, which is designed to maximize people's contributions to their home lives and the economy. Maybe it's time for a return to first principles when we discuss ideology and the economy.
-- Tim Fernholz
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