The Politics of Envy

This is to the NYT from the economist Greg Mankiw, who authors the standard Macroeconomics textbook used in colleges. He now chairs the President's Council of Economic Advisors. He's smarter than you and me - fait attention.

To the Editor:

Your chart about the percentage of income earned by the top 0.1 percent of taxpayers was fascinating, but "Richest Are Leaving Even the Rich Far Behind" failed to draw the obvious conclusions from it.

The data show that the rich take a rising share of income when the economy is booming, such as during the 1920's and 1990's. Their share declines when the economy hits hard times, such as during the Great Depression and the most recent recession.

The rich took their smallest slice of the economic pie during the 1970's - a period when productivity growth was low and unemployment and inflation were rising.

Here's the lesson: If policy makers' primary goal is to reduce income inequality, they should put the economy through the wringer. But if they want economic prosperity for all, they should avoid focusing on the politics of envy.

N. Gregory Mankiw