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Henderson on AOC and Allowing Billionaires

Summary:
In a recent interview, author Ta-Nehisi Coates asked newly elected Democratic Congresswoman Alexandria Ocasio-Cortez whether we “live in a moral world that allows for billionaires.” He clarified, “Is that a moral outcome, in and of itself?” Representative Ocasio-Cortez (henceforth AOC) answered that it is not moral and went on to say, “I do think a system that allows billionaires to exist when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health is wrong.” Her statement made it sound as if she thinks there’s a strong connection between the two. The uncharitable interpretation of her statement is that she thinks the people making billions are preventing poor people from getting good health care, as if

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In a recent interview, author Ta-Nehisi Coates asked newly elected Democratic Congresswoman Alexandria Ocasio-Cortez whether we “live in a moral world that allows for billionaires.” He clarified, “Is that a moral outcome, in and of itself?” Representative Ocasio-Cortez (henceforth AOC) answered that it is not moral and went on to say, “I do think a system that allows billionaires to exist when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health is wrong.”

Her statement made it sound as if she thinks there’s a strong connection between the two. The uncharitable interpretation of her statement is that she thinks the people making billions are preventing poor people from getting good health care, as if the rich people took it from the poor people. Although AOC didn’t make clear whether this is what she meant, she did say that she doesn’t believe that multi-billionaires Bill Gates and Warren Buffett are immoral. So the uncharitable interpretation is probably too extreme. The charitable interpretation is that failing to impose the high tax rates she would like on billionaires means there is less money for public health. But what if the connection between allowing billionaires to exist and making poor people better off is the opposite of what she contends? What if allowing people to keep a large percentage of what they earn is one of the factors that makes poor people better off? AOC doesn’t consider that possibility. But she should, because it’s true.

This is from my article published this morning on Hoover’s Defining Ideas, “AOC versus Adam Smith,” February 5, 2019.

I connect her statement with the Microsoft ad played during the Super Bowl and then write:

Microsoft put engineers to work on the adaptive controller in 2015 and introduced it in September 2018. Why? Was it just a public relations move rather than a business proposition to make money? Possibly. If so, notice that Microsoft had the wherewithal to do that. In that case, the same company that made billions for some of its executives also used some of its money for that cool technology. More likely, though, Microsoft saw a chance to make money. It’s possible that not only disabled people, but also others, will find the new technology attractive. So the incentive to make money led Microsoft to develop a cool technology that will probably help hundreds of thousands of people.

And my ending:

Ironically, therefore, the important question and the one Ta-Nehisi Coates should have asked AOC is not whether a moral world allows for billionaires. It is whether a moral world allows for politicians whose policies will not only reduce the number of billionaires, but also make poor people worse off.

David Henderson
David Henderson is a British economist. He was the Head of the Economics and Statistics Department at the OECD in 1984–1992. Before that he worked as an academic economist in Britain, first at Oxford (Fellow of Lincoln College) and later at University College London (Professor of Economics, 1975–1983); as a British civil servant (first as an Economic Advisor in HM Treasury, and later as Chief Economist in the Ministry of Aviation); and as a staff member of the World Bank (1969–1975). In 1985 he gave the BBC Reith Lectures, which were published in the book Innocence and Design: The Influence of Economic Ideas on Policy (Blackwell, 1986).

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