This line of argument raises the empirical question of how large the benefit of government infrastructure is. The average value is surely very high, as lawless anarchy would leave the rich (as well as most everyone else) much worse off. But like other inputs into the production process, government infrastructure should be valued at the margin, where the valuation harder to discern. As I pointed out earlier, the average person in the top 1 percent pays more than a quarter of income in federal taxes, and about a third if state and local taxes are included. Why isn’t that enough to compensate for the value of government infrastructure?Then he goes further, by noting that government has been engaged in less and less infrastructure provision, and more and more redistribution of income, anyway. So, if that infrastructure is so important, why are the incomes of the 1% increasing as fewer government resources are directed at assisting them?
He also attacks the 'Rawlsian' argument that government redistribution can be thought as a kind of insurance that everyone should be happy to pay for, to avoid being one of the poor;
Yet take this logic a bit further. In this original position, people would be concerned about more than being born rich and poor. They would also be concerned about health outcomes.
Consider kidneys, for example. Most people walk around with two healthy kidneys, one of which they do not need. A few people get kidney disease that leaves them without a functioning kidney, a condition that often cuts life short. A person in the original position would surely sign an insurance contract that guarantees him at least one working kidney. That is, he would be willing to risk being a kidney donor if he is lucky, in exchange for the assurance of being a transplant recipient if he is unlucky. Thus, the same logic of social insurance that justifies income redistribution similarly justifies government-mandated kidney donation.
No doubt, if such a policy were ever seriously considered, most people would oppose it.No doubt indeed.
The Occupy Wall Streeters aren't going to be very happy to read his conclusion that those of the 1% who earned their way there by being CEOs of large firms (even financial firms), probably did so because they provided good value for their services.
We eagerly await Paul Krugman's fit of apoplexy.