By Dan Weil
The top 1 percent of Americans in terms of income generally deserve the money they make, says Harvard economist Greg Mankiw.
Part of the problem is that the public doesn't understand how the money is made, he writes in The New York Times. People generally don't object to the huge salaries of entertainers and athletes, because people understand what these stars do to earn the money, Mankiw explains.
But, most top earners make their fortunes in less visible ways, he notes. Many of the 1 percent are CEOs.
"A typical chief executive is overseeing billions of dollars of shareholder wealth as well as thousands of employees. The value of making the right decisions is tremendous."
Many of the 1 percent are in finance, which is very important work, Mankiw argues. "Those who work in banking, venture capital and other financial firms are in charge of allocating the economy’s investment resources," he writes.
"They decide, in a decentralized and competitive way, which companies and industries will shrink and which will grow. It makes sense that a nation would allocate many of its most talented and thus highly compensated individuals to the task."
Meanwhile, in a recent survey of the top 1 percent conducted by American Express Publishing and Harrison Group, only one-third say they "like it when others recognize me as wealthy," CNBC reports. That's down from 40 percent a year earlier and from 53 percent in 2010.
Perhaps being viewed as wealthy now feels like a stigma.