This is a tale about how a man who was asked to give a speech at the Rock and Roll Hall of Fame in Ohio ended up whining about the perils of wealth inequality.
“The music industry is a microcosm of what is happening in the U.S. economy at large,” Alan Krueger, one of President Obama’s top economic advisers, said yesterday. “We are increasingly becoming a ‘winner-take-all economy’…”
Why? Top earners, or “superstars,” are getting a larger share of total ticket revenue, and according to Krueger, they don’t deserve it. He never mentioned any of these superstars by name, but I imagine they are rock and roll bands like the Red Hot Chili Peppers, Muse, and popular artists like Justin Bieber, Beyoncé, and Taylor Swift.
Krueger juxtaposes a graph of rising ticket revenue among the top 1 percent of artists in the music industry with a graph of rising income of the top one percent of Americans. But declaring that because these two graphs look alike means the situations are directly comparable is a non sequitur of the most obtuse variety:
“Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up.”
Krueger laments the Internet, that nexus of globalization and technology, for allowing some artists to increase their economies of scale such that they have gone global.
He also says that what we call the “best artists” are actually the “luckiest” artists, blaming a herd mentality among fans for driving fame. But any way you look at it, consumer demand for a product or experience is the only “fair” metric. The alternative is some Federal Musical Department deciding which artists should be subsidized and which should be taxed in order to create an even playing field.
And the undertone of the speech is that Mr. Krueger knows better than Americans about which artists are deserving of a larger following and which people are deserving of a larger income—in the same way that the government has decided that it knows better about which health care options we should have.
Yet Krueger’s solution of government-enforced fairness would remove the incentive to make a viral video, a well-loved product, offer a better health care plan, or to aim to “make it big” in the music industry.
Imagine any material trend—Ugg boots, Crocs, North Face jackets. What Mr. Krueger is suggesting is limiting the success of these items because it is unfair that they have in effect “gone viral.”
If people believe outcomes are a product of chance, nepotism, or corruption, they will advocate for forced wealth redistribution. This necessitates the government choosing winners and losers, which introduces a system of political power-mongering as artists expend energy to lobby for favors.
Luck is not chance. Luck is capitalizing on an opportunity that has presented itself by chance; in this way, luck is tied to merit.
Not every enterprise or band is successful enough to achieve economies of scale worthy of international fame. The best thing government can do is to ensure a stable economy and get out of an aspiring artist’s way in terms of minimizing regulations on small businesses and Internet activity.
Krueger uses the end of his speech as a plug for Obama’s desired economic policies—a higher minimum wage, universal pre-school, universal health care, and what Kruger describes as a social contract that upholds “fairness.”
But history shows us that using government force to ensure that prosperity is broadly shared is the fast track to fascism. The real focus should be on getting our fiscal ducks in a row, not on bemoaning inequality.