I very much enjoyed yesterday’s story of Bill O’Reilly threatening to stop working if his taxes went up, which I first saw in a fun item from Kevin Drum.
Perhaps it’s just the almost-pennant-race season talking, but my immediate thoughts when I hear this kind of stuff isn’t so much Ayn Rand as it is the somewhat related (but I’ll try, I promise) predictions that free agency in baseball would lead to lots of rich ballplayers retiring early. Those predictions were common throughout the late 1970s and all through the 1980s, and I still see them every once in a while, despite 35 years of evidence to the contrary. Here’s the thing: if there’s one thing that a few centuries of capitalism has taught us, it’s that most of us rally, really, really like money, and despite its probably diminishing marginal returns in how much enjoyment we get out of our lives, very few of us behave as if it has diminishing marginal returns. That is, millionaires keep working. Some of them even work really hard (hard enough to convince themselves that those who aren’t rich must be lazy, although granted many wealthy people don’t have to actually work all that hard to convince themselves of that).
At any rate, after 35 years, I can only remember a handful of baseball players who retired voluntarily when they still could have collected a paycheck that would have constituted a non-trivial addition to their net worth: Will Clark, Mike Mussina, Andy Pettitte…I’m sure there are others. But not very many. Certainly, no one has retired in midcareer because he had enough money now.
Returning to O’Reilly, what I’d guess is that lot of well-off people feel exactly how he (claims) to: that it wouldn’t be worth it to continue working if their tax rates approach 50% (and never mind that in reality no one is talking about effective overall tax rates that high). But you know what? No matter how sincerely they think that’s the case, they are probably wrong. In the event, quite a lot of them would actually react be working more, since that would be the only way to make back the money they would be losing to taxes; others would just plug on, because they had set up their lives to “need” that continued income…or just because, when it comes down to it, they prefer more money to less, and continuing to work would still be the only way to accomplish that goal.
Hmmm…this is a fluff lightweight item that’s already way too long, isn’t it? Sorry. The main points, just to get out of here, are (1) people like money, and (2) people are really bad at making predictions about themselves, even when they’re sincere about it.
[Cross-posted at A plain blog about politics]