On May 20, British economist Anthony Atkinson and Paul Krugman had a long discussion about inequality and income tax rates. Atkinson thought the top income tax rate should be 60% and Krugman thought it should be 73%. Apparently, the City University of New York wanted a wide range of views.
Here are some highlights I found interesting:
23:02: Krugman says the Koch brothers are evil. In an 86-minute discussion, guess how much evidence he presents for that claim.
24:14: The moderator, Chrystia Freeland, asks a good question, first of Tony Atkinson and then of Paul Krugman: Do the wealthy deserve their wealth. What's interesting is how uncomfortable Atkinson (notice his literal hand-wringing) was with that question and that he didn't give a direct "No." Krugman also talked around the question: he did it, admittedly, in a nuanced way, but it was striking that he was not willing to say "no" either.
26:30: Krugman says name me a financial innovation that has been unambiguously beneficial, and you're not allowed to count the ATM.
DRH (me): I've got one. The court decision in the 1970s that effectively wiped out usury laws on credit cards. From then on, a bank based in a state with no usury laws or very high usury ceilings could issue a credit card to someone in a state with very low usury ceilings, e.g., Arkansas. At the time, that liberated young people like me who had been unable to get a credit card, even with a credit limit of $250, before then. Of course, you might argue that the gain was not unambiguous because a lot of people had trouble controlling their debt. But a similar charge could be leveled against ATMs.
27:30: Krugman says the top marginal tax rate on income should be 73% because we shouldn't care about the well-being of high-income people, whom, as he virtually always does, Krugman mislabels as "the wealthy." I found his callousness towards high-income people breathtaking, even for him.
32:20: Krugman advocates an international tax cartel (of course, he doesn't use that term) of governments to coordinate their attempts to raise marginal tax rates so that high-income people have few ways out. I wrote about that in 2009 here.
34:18: Atkinson says that the top tax rate should be 60%.
35:20: Krugman jokes that we could get Congress to go along with higher tax rates if we got the Cincinnati office of the IRS involved. Interestingly, when he gets little audience reaction, he says, "Sorry. That's a little bit too topical." My guess is that the audience felt uncomfortable admitting what the IRS did. This is actually one of the few things about Krugman that I like: he will sometimes "go off the reservation" and admit certain things that "his side" doesn't like to admit. Of course, in this case--and here's what I don't like--Krugman seemed to approve of what the IRS did.