I have long argued against the idea that we must pay successful people excessive amounts of money because they would otherwise just sit on their duffs and produce nothing. There are many things wrong with this way of thinking. The main thing is that the argument can only be made by non-creative people. When Steve Jobs started Apple, he didn’t do it to great rich. He may have had dreams of being rich, but I’m sure at the time he would have been more than happy with a successful small company. That is the dream of every creative person: to do what you love and make a living at it.
But my main argument has always been that there are a whole lot more creative people than is generally understood. For every J. K. Rowling, there are literally thousands of others with comparable abilities. I’m sure that Rowling would admit that herself. She combined talent with the most limited resource there is: luck. And the same thing goes for Steven Spielberg.
I’ve mentioned these three creative people, because these are the three that Gregory Mankiw highlights to justify inequality in his paper, Defending the 1 Percent. According to him, if we didn’t have ridiculous levels of inequality, we wouldn’t have smartphones, fantasy books, and blockbuster movies. As I’ve argued for a very long time, Einstein’s contributions to our knowledge of the universe are arguably the greatest ever. Yet it is madness to think that if Einstein hadn’t ever been born that we would still be scratching our heads about the photoelectric effect.
Earlier this month, Matt Steinglass of The Economist took Mankiw to task for this very reason. He wrote:
Everyone knows the adage, “Build a better mousetrap, and the world will beat a path to your door.” But it isn’t true. People have invented literally thousands of better mousetraps and no one cared. The standard mousetrap is good enough for the job. So we can’t even say that without Steve Jobs we wouldn’t have better MP3 players; without J. K. Rowling we wouldn’t have better fantasy books; without Steven Spielberg we wouldn’t have better summer blockbusters.
The take home of all this is not that we shouldn’t incentivize creative success. It is just that there are limits to it. Steven Spielberg is worth about $3 billion. Does anyone really think that he would be less creative if he only had $1 billion? What’s more, I think that he would have worked harder his whole career if he had had just $3 million. But that’s a discussion for another time.