Meritocracy Tax System

Paul Krugman makes some interesting observations about Ben Bernake’s speech at the Baccalaureate* Ceremony at Princeton University June 2^nd, yesterday.

Here’s the part he quotes: We have been taught that meritocratic institutions and societies are fair. Putting aside the reality that no system, including our own, is really entirely meritocratic, meritocracies may be fairer and more efficient than some alternatives. But fair in an absolute sense? Think about it. A meritocracy is a system in which the people who are the luckiest in their health and genetic endowment; luckiest in terms of family support, encouragement, and, probably, income; luckiest in their educational and career opportunities; and luckiest in so many other ways difficult to enumerate–these are the folks who reap the largest rewards. The only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world, and to share their luck with others.

My estimation of Ben Bernake just went up, he called our economic system as we have seen it recently for what it is. And it explains why the rich get richer and the poor get poorer and the middle class struggles but in a way most do not consider.

The obvious implication of his comments is that our tax system needs to change from a meritocracy one to one that benefits all members of society including the unlucky ones.

Our representative here in Wisconsin, God bless his tiny little Ayn Rand mind, Paul Ryan, wants to lower the highest tax rate to 25%, or make the meritocracy system even worse. I have argued it should go back to what it was when Reagan took office and began this meritocracy crap.

Krugman argues based upon statistical studies of the EconomicPolicy Institute that the optimum top rate should be between 73% and 80%.  Don’t worry about the rich, their wealth grew when in was 90% under Eisenhower.

Some may label this radical, I think what we are currently doing is radical and harmful to the country.

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As a side note I am equally surprised that Princeton has a Baccalaureate Ceremony. These services, religious in nature as a rule, have gone by the way in most institutions and were generally conducted by clergy.