If you hiked taxes at the top end and increased welfare spending it would have a net expansionary effect. Everyone knows this. So let's stop with this whole "billionaires create jobs" bullshit.
Even from the standpoint of innovation or productive investment, by far the most important determinant of investment is the state of aggregate demand, which redistributive policies would improve.
Not to mention the fact that genuine, world changing innovation most often comes from public sector projects and funds.
Then there's the conventional, but fallacious, wisdom that a person's income is reflective of their contribution. But really, no one has an individual contribution to collective output that can be isolated. We're inseparable part of larger processes.
This is even more so for billionaires, who provide nothing tangible to production. They contribute financial capital, which mainstream economics treats as equivalent to real capital (buildings, machinery etc). But the Cambridge Capital Controversies showed that to be incoherent
But even without getting into technical issues of how to determine the distribution of income, a glance at history shows it has nothing to do with contribution or income, and everything to do with institutions and who those institutions give power to.
Was the distribution of income in feudal Europe between serfs and barons based on relative contributions? Was the distribution of income in the United States between slaves and slave owners based on the differences in their productivity? It would be offensive to suggest so.
It's obviously based on the institutional set up of the time and who these institutions give power to. The institutional setup of today gives full rights and privileges to financial capital while disciplining workers and states. That explains the distribution of income.
So income is not a function of how much you contribute to society, it's a function of how much you are allowed to take.
To pre-empt a common criticism of this line of argument, it should be made clear that I'm essentially objecting to the neoclassical theory of marginal productivity.
But many economists would object to my argument by saying that marginal productivity isn't meant to explain real world income distribution, it models how income would be distributed in a perfectly competitive market economy. I object to this on 2 grounds: usefulness & validity
I would question (to put it politely) the usefulness of a theory that doesn't intend to explain phenomena observed in the real world. It's as simple as that.
But even accepting that, marginal productivity theory is not valid. For one, the perfectly competitive market is a barren model of real world markets. It's devoid of law, society, institutions and even human agency.
Real world markets depend on laws, rights and institutions to enforce them. They depend on societal norms & as a result on politics. It's impossible to separate the functions of markets from these forces, and as a result it's impossible to explain income distribution without them
My more fundamental objection however is that marginal productivity doesn't exist. There is no way to measure an individual contribution because production, services, any way that people earn income are irreducible to their individual parts.
Capital can't work without labour and (arguably) labour can't work without capital. Labour can probably not work without depending on other labour either. So it's impossible to separate each contribution.
