Fifty days before the 2012 presidential election, Mitt Romney’s "47 percent" comment about Americans who pay no income tax rocked the presidential race and arguably sank his candidacy. Both before and after Election Day, Romney struggled to explain the comment, emphasizing that he could have stated his proposals more eloquently but never really shaking his out-of-touch, rich-guy image.
Now, one of Romney’s top economic aides is arguing in favor of a different percentage of the American people -- the 1 percent. In an essay titled “Defending the 1%,” former Romney economist Greg Mankiw imagines an economically egalitarian society and then explains how difficult it would be to maintain.
Economic inequality, Mankiw argues, is the expected result of a society that prioritizes skill-biased technological change.
“…When the pace of education advance slows down, as it did in the 1970s, the increasing demand for skilled labor will naturally cause inequality to rise," he writes in the Journal of Economic Perspectives. "Income inequality is not about politics and rent seeking but about supply and demand."
Even before the "47 percent" video went public, President Obama frequently argued that the top 1 or 2 percent of the wealthiest Americans could afford to pay more in taxes. Polling at the time showed that was a very popular position.
After the election, the Bush tax cuts for those making more than $400,000 were allowed to expire as part of the "fiscal cliff" deal.
Mankiw acknowledges in his paper that, while the greed does exist in areas like the financial sector, income inequality does not constitute a problem as much as inefficiency or unequal opportunities in society. He argues that the latter two things should be the focus, to the extent that they exist, rather than income inequality.
"If the growing incomes of the rich are to be a focus of public policy, it must be because income inequality is a problem in and of itself," he writes.
Mankiw goes on to list popular arguments from the left, but ultimately says that the government’s irresponsible spending make it difficult to justify raising taxes on the rich.
Ultimately, he concludes “my disagreements with the left lies not in the nature of their arguments, but rather in the factual basis of their conclusions.”