Envy and the paranoia of income equality - economic impact is startling

 

 

Psychologists dichotomize envy into two types.

Benign envy is kindly, where the individual is inspired by another’s personal success, and is eager to duplicate it.

Malicious envy is when you strive to harm or damage the successful person in some way to make you look better. This definition is based on a relationship to a given person, and not to a defined group. But when extended to a group of people, malicious envy produces startling economic implications.

Let us examine why.

 

ECONOMISTS VIEW A modest degree of envy as harmless and beneficial, too. To the extent that it serves to motivate a person to excel, it is useful, or benign. But economists extend the concept to embrace groups or classes of people, i.e., to be resentful of a group. In this case, the individual may strive to improve his image not only relative to a specified individual, but to a group.

But here the resentful individual may want to harm members of a group or a class – in which case it becomes malicious envy. Thus, there exist two analytical concepts of malicious envy: the psychological approach, which is based on a one-to-one relationship; and the economist’s, which is connected to a one-to-many relationship. (For elaboration of the economist’s approach, see the essay “Income redistribution can have depressing effect on all income” in my self-published 2013 book Common Sense Economics.) In fact, an example of malicious envy is afforded by a noted politician’s view of the top 1 percent of income recipients – a group he loves to hate, and who seemingly can never be taxed enough.

In an article in The Personality and Social Psychology Bulletin, investigators studied 200 college students and found that when they stimulated feelings of benign envy, it triggered students to want to work harder on tests measuring intelligence and creativity. And in another study published in the same journal, researchers found that modest envy can motivate us to seek higher aims – loftier objectives for self-improvement in a competitive environment.

This difference in approach between psychologists and economists is more apparent than real. At the benign level, the economist’s definition doesn’t differ from the psychological concept. However, with the psychologist’s malicious-envy concept we encounter differences since it doesn’t apply to groups.

 

MALICIOUS ENVY IS another story. Not only is it harmful on a personal level, but when extended to groups of people it can converge to venomous hatred, aided especially by the cloak of anonymity. To economists, the malicious invidious person can damage groups of people.

For example, a member of the lower 99 percent of income receivers might invidiously vote to boost taxes on successful individuals. In accordance with any standard dictionary definition, this act can be deemed malicious.

In this way, the psychological definition of malicious envy may be tweaked to extend to groups or classes. If so, the economist’s concept of excessive envy is implied, and the psychologist concept of malicious envy may be applied to the economist’s excess envy groups. Thus, there exists a surprisingly close relationship between these two concepts. The psychological approach reinforces the conclusion of some economists: Excessive envy can be malicious.

In other words, by expanding the personal relationship to groups, two independent intellectual processes can arrive at the same conclusion: Under the mantra of the incomprehensible abstractions of equity, justice and fairness, redistributive tax and regulatory policies are easily justified, and enacted because of malicious envy. And because of the incomprehensibility of these abstractions, we can never know at what point redistribution will ever be optimal, or when enough is enough. That is the tragedy of this approach.

Most economists have long agreed that a progressive income tax is inefficient; yields gross distortions in the allocation of society’s resources by flashing wrong signals for the flow of resources; and weakens incentives, especially for those who bear risks. Yet many economists justify it on grounds of the impossible-to-grasp concept of fairness. That this murky, slippery concept – the meaning of which lies beyond the talents of our most skillful philologists – can play such an important obfuscating role in our political process has to be one of the leading tragedies to befall Western civilizations.

 

FINALLY, PEOPLE ARE different. They have unequal talents and skills. In combination with the powerful influence of incentives and a free, competitive market to contract, one consequence of different talents is unequal income and wealth. There is nothing mysterious, illicit, conspiratorial, malicious nor exploitative in the core of this simple process. Yet many of our ablest citizens cannot understand it.

 

(The writer is a professor emeritus of financial economics at the University of Georgia. He lives in Aiken, S.C.)

 

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