Some years ago, I found myself sitting with three friends outside a bar near a mountain in Phoenix, Arizona. As we surveyed the foot traffic to the desert hills, we saw a surprising number of people with pit bulls. Perhaps motivated by the amount of beer consumed, one of my friends announced that he was going to purchase a pit bull. Another turned to him: “That’s terrible. Those dogs will kill you.” The third chimed in: “What? Those dogs just want to cuddle—they’re over-sized lap dogs.” Neither deterred him in his task, and he recently reported to me that both of our compatriots were wrong that day. Pit bulls are neither killers nor cuddlers.
Instead of denying that pay motivates people to earn their success—a concession that undermines the case for income redistribution—many advocates of redistribution deny that success is earned. If income is unearned, then we can redistribute it without slowing growth or reducing middle- and working-class incomes, even if incentives motivate effort, risk-taking, investment, and innovation. If pay is unearned, it’s fair to take it away.
Pay may be unearned for a variety of reasons. The price of talent—the wages of the successful—may rise for no other reason than talent is in short supply and cannot expand to meet the growing demand for it. In that case, a shortage merely redistributes pay from the rest of the economy to talent without talent doing anything more to earn its increased pay.