Is All Economic Growth Created Equal?

Oren CassThe Bulwark January 21, 2019

The 20 percent button: a thought experiment.

Imagine a button that would instantly double the productivity of the labor market’s most productive quintile, but also cause the least productive quintile to drop out of the labor force. Would you push the button?

The top quintile is more productive to begin with, so the gain from doubling its productivity exceeds the loss at the bottom—the tradeoff leaves our economy more productive and output higher. If you want, for purposes of the hypothetical, you can stipulate that pushing the button also implements whatever policy of redistribution you might prefer, taxing away some share of the top’s gains and transferring it to those no longer working. In consumption terms, everyone can be a “winner.”

This “20 Percent Button” offers a useful heuristic for the fissures emerging within our traditional political coalitions. I posed the question recently to a group of business school students who thought they shared a political outlook. Simultaneously, some said “yes, of course” while others said “of course not.” And then they gasped audibly, amazed that people with whom they were accustomed to agreeing could see such an easy and obvious matter so differently.

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