Saturday, October 24, 2009

Lord Brian Griffiths of Fforestfach (and Goldman Sachs) says his paychecks make you rich.

He lies in his decaying, ennobled Thatcherite teeth, of course. Justin Fox, at Times "Curious Capitalist" blog reports:
I get the feeling that Brian Griffiths' words at a panel discussion in London Tuesday might go down in history as some kind of let-them-eat-cakish landmark. Said the economist, a former Margaret Thatcher adviser who was raised to the peerage in 1991 and has been helping make ends meet since then by toiling away as a vice chairman (read: guy who participates in panel discussions and stuff) of Goldman Sachs International:
We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all
Griffiths is of course right that at some level there is a tradeoff between inequality and prosperity. The prospect of making more money than others gives us incentives to work harder, to take more risks, to be more inventive—all of which makes the economy grow much faster than it would if we were all perfectly equal, financially speaking. And the presence of large pools of money in private hands enables valuable investment and philanthropy.
But the argument that ever-growing inequality will make us ever more prosperous really doesn't hold up. Neither does the more specific argument—to take Griffiths' statement in context—that gigantic paychecks at Goldman Sachs and other Wall Street and City firms are good for the rest of us. I don't know that there's any incontrovertible proof that they're bad for the rest of us, either, but the standard Wall Street credo that its people get paid so much because the work they do is of such great value to society doesn't seem so convincing these days.
A commentor on the site puts Justin to "rights":
Among the thriving, prosperous countries of the world, more-equal countries grow faster:

Ditto for countries with more-progressive taxation:

And those countries provide more opportunity for talented people to climb the ladder and make everyone more prosperous.
Also worthy of note: Nations whose women experience the greatest freedoms--reproductive, political, economic, etc.--also thrive better than those in which women are kept as chattel.

Funny thing...

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