Showcase Panel I: Redistribution of Wealth
Thursday, Nov. 12
9:45 a.m. – 11:30 a.m.
Grand Ballroom

– Prof. Richard A. Epstein, James Parker Hall Distinguished Service Professor of Law and Visiting Professor of Law, New York University Law School
– Mr. Steve Forbes, Chairman and CEO, Forbes Inc. and Editor, Forbes Magazine
– Prof. Jed Rubenfeld, Robert R. Slaughter Professor of Law, Yale Law School
– Mr. Andrew L. Stern, President, Service Employees International Union
– Moderator: Hon. J. Harvie Wilkinson III, U.S. Court of Appeals, Fourth Circuit

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(introduction by Judge Wilkinson)

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(Discussion of Professor Richard Epstein)

Leonard Leo welcomes all of the guests, and delegates from the French Federalist Society (couldn’t quite get the French spelling).

Richard Epstein sitting on the right side of the Dais, and Andy Stern sitting on the left side. Yep, that’s about right.

JHW: Moderator, Thanks everyone for assembling such a great convention. Panelists will have to start by defining redistribution of wealth.  And this panel will have perfect harmony [Laughter]. Professors should go first, because when Andy and Steve get in, all nuance will be lost.

Jed Rubeneld:

I am the token liberal in the entire room, I am against redistribution, but I don’t think it exists. “No doubt, wherever the right of private property exists, there must and will be inequalities of fortune. [Since] it is self-evident that […] some persons must have more property than others, it is […] impossible to uphold freedom of contract and the right of private property without at the same time recognizing as legitimate those inequalities of fortune that are the necessary result of the exercise of those rights.” Coppage v. Kapage. Lochner era court discredited

Anti-redistributionism means restoration of Lochner era. Comitted conservatives should be against activism and Lochner jurisprudence. Just because Lochner court said something does not mean it is wrong. “As a liberal, the Constitution can mean anything I want it to mean. I’m just kidding by that.”

Progressive taxation do not take Property from A and give to B.

Where are Natural Law rights to enforce natural rights? Only real courts enforce positive law.

JHW: Panelists become pugilists. LOL.

Epstein has taught Civil Pro, Contracts, Criminal Law, Legal History, Labor Law, Real Estate, Finance, Jurisprudence, Land Use Planning, Patents, Taxing, Roman Law, Workers Compensation.

Richard Epstein

Antitrust, environmetnal law, administrative law and af ew others

I am grateful I am not a member of YLS faculty. Coppage v. Kansas that collective bargains was unconstitutional taking of property. Old court thought that distribution should take place through tax system and not alteration of contract and Tort. Problem is difficult becuase people don’t believe that. We are all Lockeans. We acquire through first possession. Don’t need to do anything to acquire right to use own labor. Why is redistribution hard topic? We don’t know what the term means. We know the moral case why there is a case for redistribution.

Moral case- People acquire property through occupation and labor. Is there a way we can make social improvement?

I have never seen anyone make idea of redistribution of wealth should be banned.

At height of Laissez Faire, heigh of voluntary transactions of transfer of wealth. Regarded as moral obligation enforced by social sanctions, and supported by conscience.

If people accept redistribution voluntarily, next question, can we take a moral intuition, and transfer it into a set of legal obligations? This is where the problem begins. These are problems not knock-out blows.

Epstein proposes “Redistribution Last.” First task to create social order is to handle poverty through production of wealth. There will still be laggards but by increasing size of the pie voluntary transactions will improve the issue.

What is the optimal level of redistribution? What is method to solve it? Lacunae in progressive tax? Epstein is a defender of flat tax, but I won’t defend it here. Steve Forbes Chuckles.

$250,000 doesn’t get you very far in NYC. Wealth a bad measure of what one has. Many young doctors who earn $250K and have lots of debts because they deferred income earlier on and will pay back with future earnings.

How do you know you will only do redistribution that makes sense, so that transfers from haves to have nots. Public choice difficulties where redistribution goes in wrong direction for wrong reasons.

Monopoly industry, huge transfer of wealth from consumers to producers, and creation of debt weight loses. Economics 101.

Agricultural subsidies “profound and horrible mistake” to protect farmers against world’s price markets. Remain in business too long, become politically entrenched, raise prices to cause inconvenience.

Minimum wage causes massive unemployment, people knocked out of jobs. Recent raises in minimum wages, net effect is high increase of teenage unemployment among member of minority groups.

Don’t ask how to dole out things? Ask how government got the things to dole out?

What state can do is vastly different.

“Redistribution last is the way to organize the social order.”

More after the jump.

Andy Stern

I love this Country. What my grandparents dreamed about is that their grandchildren would lead a better life than they would.

Basic point: Our Country is leading to most profound and significant economic transformation in the history of the world. Three revolutions- Agricultural, Industrial, and this 3rd economic revolution from national to international economy, from manufacturing to service/knowledge/green revolution, will only take 30 years.

Glen Beck is wrong. I’m a Capitalist not a Socialist or a Communist or whatever else he has called me. LOL

Fatal Flaw with market economy- It has not worked, it did not work. America is in peril. [Epstein nodding his head]

We are in longest period of economic stagnation in history of our country. He does not support redistribution of wealth upwards.

Showing graphs about income gains at different quintiles of society, compares modern inequality, decoupled productivity and wages- productivity doubled but wages didn’t. America was a much more equal place, we all shared wealth. We have all grown apart. Knocks Reagan. [Rising tide only raises luxury liners.]

“Americans agree that economic opportunity should be widely equal.” Equality they somehow be linked to hard work. We should not let those boats sink in richest country on earth- healthcare, retirement, minimum wage, adjustment for relocation of job to China, “we can do better for America and we need to right now.”

For those of you who care more about this country than a particular company, join me, to make this a place where dreams of our children and our grandchildren can come true.

Steve Forbes:

Moral basis of capitalism is to provide services. Adam Smith said if you want dinner, you pay the baker. Entrepeneurial capitalism works with proer rules of the road

Great depression caused by the Smoot Hawtley Tariff, mistakes by federal reserve, massive tax increases. Disasters have origin in monetary policy. Economics is about turning today’s scarcity’s into tomorrow’s abundance.

-Can have a magnificent vehicle, but depends on good fuel

-Can have a great brain, but without a good heart, fails

Wouldn’t have a housing bubble without too much cash added the market.

Free markets get the rap for the government’s mistakes.

Fluctuation is normal in a market society. In ten-year period many people moved from lower to higher quintiles.

Immigrants come here for the opportunity to move up.

Today’s pessimism is nothing new. We’ve had times where morale dipped and then bounced back. Ie. Reagan’s 1980s.

Economics is about turning today’s scarcities into tomorrow’s abundances.

Can be done in health care, too.

Need to remove barriers to entrepreneurship.

Allow personal accounts for Social Security so that future generations can avoid the failure of current generation.

People intuitively understand that when people have needs, we need to help them. But there’s just as much to be said for people to work to better their lives when they’re motivated by the desire to improve their lives and their children’s and grandchildren’s lives.

We can overcome malaise and show what free and spirited people can do.

Discussion

Forbes: We can surprise the world with our innovation, but we will end up like Western Europe where innovation goes elsewhere. We need to promote school choice and eliminate barriers to grow rather than to redistribute.

Rubenfeld: Reasons to be against progressive redistribution. You can believe it does not help its intended beneficiaries, creates entrenched class of people who do not have right incentives.  Great depression results from Laissez Faire. [Epstein slapping his forehead.] You should not begin with a premise that concludes conclusion.

Epstein: “Those who do not understand the past are condemned to repeat it.”

I was having debate with Sunstein, Obama was most retrograde intellectual to ever run for office

Obama policies: Tariff barriers, high tax policies, strengthen level of union monopoloy (Chard Check). Epstein plugs his book, and offers Andy Stern a copy. Reading my book will be on of the most productive things you’ve done in years. Epstein FTW!

In post-war era, no major New Deal reforms.

21st century is a validation of wisdom of Adam Smith.

If you want to create jobs, shut down every act, repeal NLRA!  [HUGE APPLAUSE]