Intellectual Property Law

Joe the Economist (Greg Mankiw)

By wu

Economist Greg Mankiw has a post that fascinates me.  As a professor who makes over $250,000 a year, he notices that under Obama’s tax plan he may make less money, and pass on less to his children.  Since he’s pretty happy with the amount of money he has, as he should be, he says he has very little reason to do any more work.

Here’s what fascinates me about his post:

1.  It assumes that his only incentive to do any work outside of his regular teaching and research is to make money.  This seems so counter to what the idea of academia is for, and is passed over so easily.

Tenured academics like Greg M. have an incredible luxury: the time, freedom to work on what he wants, and a guaranteed paycheck (in his case, a large one).  To say in that position you’ll only do “more work” if paid seems an offense to the idea of academia itself.   Academics aren’t supposed to be on sale or work only on commission.

Greg M. himself is disproof of his own ideas.  He spends alot of time blogging, and writing advice for junior professors and so on, all for free.  If Obama wins, it looks like he’ll be doing more of that in the future.  The irony is that that result might be better for society than him doing a bunch of consulting or paid-speaking.

2.  The implication, taken by other writers like “Beldar” though not by Greg himself, is that Greg working less is proof that Obama’s tax cut will hurt the country.  But hold on - Greg represents 5% of the country.  The rest — the 95% percent who get a tax cut, will presumably have reasons to want to work harder, because their taxes are going down.

It’s a simple calculation.  The tradeoff is economists and others who make more than $250,000 doing less, versus 95% percent of the population who have reasons to do more.

Its at least ambiguous.  And since the money is worth more, on the margin, to people who make less than $250,000, they have more reason to want to work for it.  $1000 means more to someone who makes $60,000 than to Greg M.

The upshot:  Obama’s tax plan will encourage a rich man like Greg M. to devote more time to the public and his children instead of paid speaking gigs, and makes a lot of other people incentives to earn more money.  Sounds pretty good to me.

Full post as published by What’s New With Wu on October 27, 2008 (boomark / email).