April 23, 2007 2:40PM # If Inequality Is Okay, Let’s Redistribute Anyway By [Will Wilkinson](https://www.cato.org/people/will-wilkinson) --- SHARE In an [outstanding post](http://www.marginalrevolution.com/marginalrevolution/2007/04/harry_potter_an.html), Alex Tabarrok explains how the changing economic and technological conditions that helped Harry Potter creator J.K. Rowling become a billionaire lead to inequality without apparent injustice. [Matthew Yglesias’s reply](http://www.matthewyglesias.com/archives/2007/04/superstars/) puzzled me: > Insofar as this is a large part of the inequality story, it does tend to undercut highly moralized objections to the right \[to be\] so darn rich. Rowling isn’t *doing anything wrong* to get so rich. But on the other hand, insofar as this story is right, it also seems to me that the primary pragmatic worries one might have about pro-equality measures likewise tend to melt away. If the very best in a range of fields are just bound to reap enormous windfall earnings under current technological conditions then it seems unlikely that tax measures aimed at limiting the size of those windfalls would significantly deter anyone from doing their work. One doubts Rowling set about down this path because she thought it stood any reasonable chance of making her a billionaire. I am confused. If Alex’s account “tends to undercut” the moralized objection to wealth inequality generated by superstar effects, then it also tends to undercut a large part of the motivation for wealth-equalizing confiscation and redistribution, namely, so-called “distributive justice.” Despite his misguided insistence in referring to a sum created by millions of voluntary acts of exchange as a “windfall,” Matt has, it seems, conceded that Rowling’s riches have been justly earned–that the process by which all this money got “distributed” to her is fair. So there is no question of exploitation, injustice, cause for redress, etc. Nevertheless, Matt would like us to know that should political elites decide to confiscate a good portion of Rowling’s fortune *anyway*, despite the fact that she owns it justly, this policy may not actually be self-undermining in the long run. But then, what *is* the point of this kind of “pro-equality” redistribution once it is agreed that there was no moral objection to the prior distribution? I’m sure Matt has something in mind, and I hope he’ll share it. In any case, regarding the “pragmatic” case for taxing superstars, in *The Winner Takes-All Society*, Robert Frank and Philip Cook [argue](http://www.prospect.org/print/V5/17/frank-r.html) that huge payouts for superstars induce inefficient *overinvestment* in their fields*.* The *point* of taxing superstars, on this account, is precisely to limit entry into superstar fields and to channel human capital investment that will otherwise be wasted in the largely futile attempt to become NBA players or Hollywood screen legends into more socially productive uses. Frank and Cook acknowledge that this may result in a reduced supply of excellence in certain fields, but argue that this loss is more than offset by more mundane economic gains from increased efficiency in the allocation of skills to people. Even if we don’t get the *best* rock stars, we’ll still have *good* rock stars, and we’ll have fewer people wasting productive years trying to be rock stars. And lower levels of inequality! Now, I don’t know about Rowling’s motivations in particular, but Frank and Cook’s argument — the most sophisticated case I’m aware of for raising taxing on superstars — seems to me to undercut Matt’s *general* point. If Matt would like to change his argument to “Sure, by sticking it to big-money authors we might not have gotten Harry Potter, but we would have gotten offsetting returns from increased output among schoolteachers and lawyers, *and* a decrease in inequality,” then I’ll be happy to argue against that instead. As it stands, his current argument seems wrong both as a matter of morality and a matter of pragmatism. ##### Related Tags [General](https://www.cato.org/general), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).