I’ve had the fortune of doing a lot of reading lately (mainly in the bathtub). As such, there’s been a swirl of ideas and arguments floating about in my head, looking for the best way to be expressed. I’ve considered breaking up this post in two, but for now I think I’ll keep it together and perhaps save some of my other thoughts for another day, another post.
What, you may ask, have I been thinking about? Inequality. Yes, it’s admittedly not a very conservative issue. Ask most libertarians or conservatives about wealth and income inequality, and they’ll either deny it exists (incomes may be different, but consumption levels are quite homogenized and equal) or explain the issue away by arguing that it really doesn’t matter. Income, and more generally wealth, inequality has always been a weakness of right-wing political thought, particularly in Europe. Why is it, some will ask, that my neighbor has and owns more than me? Is he not a man like myself, the person will further ask, and possessing the same needs and wants? Why then should he have more? These questions are further compounded when you have, as Europe did, a nobility that had great scores of wealth through little effort of their own. Marx went even further in his assault on inequality. Money, he argued, could not only allow one to purchase goods and things, but also time. Money liberates a person, allowing them to satiate their base needs and focus on activities and efforts that are not necessary but essential to the soul of a man. If you have enough money, for example, you don’t have to worry about working all day for food and shelter, but can spend your time traveling, learning, or doing a host of other activities with your free time. Right wingers didn’t go far enough, according to Marx. Yes, it is well and good to talk about political liberty in the sense of rights and freedoms, but you (the right wing) are missing the point entirely. If you don’t equalize wealth, you will never equalize liberty. The poor man will always be a slave, not of chains but of physical necessity. To have a politically free society, argues Marx, you need a materially equal society.
In the American context, cries against inequality have been relatively limited. America naturally lacked the idle, contempt worthy landed nobility of Europe. Instead, our wealthy mainly, but not always acquired their wealth through sheer effort, cunning, and aggression. The wealthy in our mind are not aristocrats but plutocrats; Gould, J.P. Morgan, Gates, Ford, etc. Combine this mindset with an economy that, until now, was generally growing for all income groups, and the pressure of the wealth gap is relieved. One may not care much for his neighbor’s disproportionate wealth if he or she is moving up the social and wealth ladder. Combine further these observations with the fact that, except in the 1920s and post 1980s, income and wage inequality was quite small in the US. The CEO or manager earned more, but not disproportionately more. Inequality, and the according class consciousness and warfare that results from it, have thus never been major American issues.
This is starting to change. The stagnation in incomes for the lower and middle income brackets in the US, coupled with the soaring pre-tax incomes of those in the top percent, has set the stage for a revival in American class consciousness and class warfare rhetoric. Witness the rise (and subsequent fall) of the Occupy movement or Obama’s recent charge against business owners that they “didn’t build that.” Even more worrying than the rising level of income inequality is the declining levels of social mobility in the US. See the hyperlinked New York Times article for more info. Income inequality by itself is a worrying issue, but added with the fact that not only do we have a burgeoning wealth gap in the US, but we also have less chance for those at the bottom to move up, and you have a worrying, and potentially volatile, situation. Returning to the neighbor example, it is bad enough if my neighbor has several Mercedes while I only have a Chevy, but it is even worse if I am trapped in a dead end job with no hope of ever obtaining those Mercedes through hard work and thrift. The partisan politics of the issue aside, an engaged and thoughtful observer should ask three questions when looking the issue of rising income inequality in the US.
1. What the hell is going on?
2. Can we do anything to fix it?
3. Does it matter?
To answer the last question first, yes, income inequality does matter. Regardless of the causes of inequality, it is not stable for a democratic republic such as ours to have a vast chasm between the rich and the poor. This leads to resentment and institutional disengagement on behalf of the poor and elitism and contempt on behalf of the rich. Further, income inequality may lead to a worsening of the unquantifiable but ever so necessary societal threads that are necessary for democracy and capitalism to work. Trust, a sense of community, cohesion, and other such social elements are what I have in mind. Finally, capitalism seems to work best when it has a wide and deep middle class, with the productivity and consumer needs available to sustain both the supply and demand sides of the economy. These arguments do not necessarily imply that government should take an active hand in managing the wealth levels, as the left would argue, but rather that government should be concerned and ever vigilant against societal trends that would undermine its existence.
Having established that inequality is a matter of concern, let’s look at what’s causing it before we launch into noble but misguided solutions. As to be expected, there is a whole host of competing explanations for what’s going on. For the purposes of simplicity and clarification, let’s categorize them into two camps, a conservative and liberal one. I should stress here that conservatives and liberals do not fall neatly into either camp. I’m making a simplification here that unfairly ignores a lot of nuances of either side’s arguments, but damnit it’s my rarely updated and often neglected blog, so I’ll do as I please.
The liberal narrative goes like this. Once upon a time, greedy capitalists took advantage of their workers, endlessly squeezing every last waking hour out of them to make a profit. This lead to increased wealth for the rich, but an ever growing and disposed under class. The efforts of FDR and the erection of a bipartisan welfare state changed all of this. In the post war years, income inequality fell thanks to a swath of regulations made by the federal government. As a bonus, the economy boomed thanks to a large, confident, and growing middle class. However, things took a turn for the worse. That wild cowboy actor Ronald ‘raygun’ Reagan launched a twenty year crusade against the middle class. The rollback of regulations and the embrace of a free trade mindset led to falling wages for middle class workers, deindustrialization, and hollowing out of the middle class. Bush Jr. continued and expanded these policies, and we are now in a recession because of the death of the middle class. Inequality then results from a less active government that enables capitalists to go hog wild and run their BMWs and SUVs over the backs of the American middle class.
The conservative narrative is different. It argues that there is widening income inequality in lots of countries, not just the US. The stagnation in middle class wages is not a uniquely American phenomenon, but appearing in most developed nations. Canada, with its more protective regulations concerning worker’s rights, has seen the same phenomenon. If regulations were the issue, they argue, then why is income inequality rising in areas with more strident regulation than the US? Furthermore, while free trade has its downsides and the issue is far from clear, the US engaged in free trade before without the corresponding stagnation in incomes. Under the Kennedy administration, for example, there was a huge round of global tariff lowering yet wages for middle class workers continued to rise. The answer to the cause of inequality can be found in three reasons. First, technology has replaced the need for lots of unskilled labor and placed a higher premium on skilled, knowledgeable workers. Second, the industrialization of the third world, with China being the main country, has led to an increased amount in the quantity of unskilled labor, driving down wages. Finally, and most controversial, the social mores of the working class have changed.
Let’s look into this last claim a little more. In his latest book entitled Coming Apart, controversial AEI scholar Charles Murray argues that the social values and behaviors that enable the middle class to survive are starting to significantly fray. Inequality is not just the fault of capitalists, but also partly the fault of the workers themselves. It’s not hard to see why this point is controversial.
His arguments are born out of statistics. We know, from studies, that children born with a male and female parent have higher rates of success. We can quantify this success using such metrics as high school graduation rates, likelihood of teen pregnancy, college degree attainment, criminal convictions, and so on. Children born to a one parent household all have statistically lower levels of success in these metrics. That is not to say that there are not exceptions to this, but rather that it is observable as a general trend. Since many, if not all, of these metrics are highly correlated with financial success, it could be possible that the skyrocketing out of wedlock birth rates are harming the working and middle class’s chances for self-advancement. Indeed, there are studies that show that individuals who get married and have children within the bonds of marriage have a very high statistical chance of moving up the social ladder into the next income bracket.
You may have seen this article from New York Times reporter Jason DeParle. In it, he makes the argument that Americans are increasingly separated by the institution of marriage on a class basis. This is, to put it mildly, extremely worrying. If marriage and these other middle class behaviors are starting to disintegrate, we will have a less mobile and more unequal society, with all of the social ills that brings about.
Let us then ask what Lenin asked; what is to be done? To this question come the default answers, nothing or redistribute income. I’m not satisfied with either answer. Redistributing income is not only morally wrong, but also pragmatically ineffective as a policy. It may ameliorate the pains of the poor, but it does nothing to address the causes of this inequality. Further, it does nothing to address the related issue of social mobility.
If the conservative argument about inequality is correct, there may be nothing we can do on a political level. I am skeptical of efforts by governments of imposing morality. They are never effective and tend to backfire. What if this is a problem we cannot address through government action? Improving education may work, or it may not. Education says nothing and teaches little about internalized values and behaviors formed while young.
We could act to encourage and subsidize marriage even more than we do now, though this raises a dilemma for liberals. Do we act to reduce the causes of inequality even if it costs us the hard fought victories of feminism? I don’t know how that question will be answered.
Thus we are left with a problem that defies any quick or obvious remedy. The only way this issue can effectively be dealt with is if we take action on a cultural level, an action that does not look like it’s going to happen any time soon. There is an essential conservative truth hidden within the matter. Governments are constrained by the society in which they operate. They can nudge and change society, but they cannot undo or stop large social changes. If one wants to win the battle of ideas one has to first win the battle of culture.
