Tuesday, June 24, 2014

Mankiw vs. Krugman on Inherited Wealth

Both Greg Mankiw and Paul Krugman have commentaries out at NYT on inherited wealth. Mankiw defends inherited wealth Krugman responds by arguing against it.

Mankiw wins the debate by far.

Mankiw is here: How Inherited Wealth Helps the Economy

Krugman is here: Sympathy for the Trustafarians

BTW, as I have pointed out before, John Maynard Keynes was in favor of inequality and large capital accumulations, which would put him in the Mankiw camp. See: What Would Keynes Say About Thomas Piketty?


  1. "Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one, would not bring back the dead virtue which was the fortune." - Francisco D'Anconia

    1. Rand had a big chunk of cray-cray in her head, but DAMN if that woman couldn't turn a phrase and be incisively insightful!

    2. change the monetary unit and we'll see who's wealthy.....

      Macroeconomist Gordon Long says, “We’re not really running a capitalist system. We are running a credit system. Instead of using savings, we are using credit. Credit, the way we are doing it now, is really a form of counterfeiting. If you look at the $72 trillion shadow banking system that we have operating right now, that is generating this credit . . . it collapsed in 2008 . . . and now it’s on a hairy edge. It’s not mortgages and housing this time. It’s student loans through Sallie Mae. These students don’t have any hope of paying this back. We are talking north of $1.1 to $1.2 trillion. It’s car loans this time because of subprime. That’s the way to look at car loans, they are sub-prime. . . . And you got these highly leveraged real estate investment trusts also operating through the shadow banking system. These problems are blatantly evident, and I don’t think the powers that be have any control over them.”
      On the next financial crisis, Mr. Long contends, “I think 2008 was an early warning signal of the magnitude of the problem. We didn’t fix it. We did extend and pretend. Dodd-Frank did not solve the underlying issues. The global swaps market went from $600 trillion to $700 trillion last year, alone.

  2. If inherited wealth is bad, Krugman should give me a large portion of his while he is still alive so his heirs don't get it. I'll even promise to spend it as fast as I can.