Gintis vs. Redistribution
By Arnold Kling
if the wealth were redistributed to the middle class, the US investment rate would fall, since the rich save their money and it is translated into investment, whereas the middle classes would spend their gains on consumption, thus driving out investment. A “soak the rich” policy simply cannot work to the advantage of the middle classes.
My reading of this is that Gintis is an apostate in the liberal church. He is saying that he would rather leave the rich alone to save than take their money and give it to the middle class, who would consume.
I think that the class-based theory of saving, which goes back to Marx, does not hold up in the data–at least not perfectly. My understanding is that there are savers and spenders spread all over the income distribution.
But I agree with the larger point that the case for taking from the rich to give to the middle class ought to be stronger than just “the top 1 percent get X percent of income, and that’s a lot.”
Gintis’ comment appears in the context of a negative review of Paul Krugman’s book. Perhaps it is a sign that the Bush fatigue that is emerging on the right has a mirror-image Krugman fatigue on the left.