Ever noticed how you don’t hear much about economic inequality? Sure, you’ll hear about poverty and how to employ more people. But when it comes to structural inequality, forget about it. And the reason is that it is the rich who determine what is discussed in the public square and they do not like to talk about inequality. Poverty? Jobs? These are issues that the rich can feel good about. A rich man can feel all noble and shit by ponying up a bit of cash for a homeless shelter. A rich woman can feel kindhearted about writing a check for a job training center. But inequality?! That implies maybe that their riches are not legitimate.
I would go father. I would say that the allure of libertarianism and Ayn Rand is that they provide the rich with armor against what they know deep down is true: they’re lucky. And just so you understand, I mean completely lucky. But just so you don’t think I’m just a bitter old man, let me explain how lucky I am. I was born smart. I was born in America. I was born to parents who were often in the middle class. Of course, I was born with other things that were not so helpful in making it in modern America: humility, introspection, and a sense of fair play. For me as with everyone, my experience in life is entirely dependent upon who I was born and where I was born. Everyone does what comes naturally, and no one should get a gold star for being particularly good at what they are particularly good at.
Given that I see the world this way, it is not surprising that I think that economic inequality is a very big deal. What’s more, Timothy Noah’s new book The Great Divergence is important reading. The book is data heavy. Noah spends a chapter each on various reasons why we have such an unequal economy. In the end, there are two main issues. The first is that the tax system rewards wealth—the more you make, the less you pay. In the meat of the book, he tends to downplay this issue, because he notes that even before we look at taxes, income inequality has risen sharply over the last 30 years. It is only in the final chapter that he admits that it is a big deal—especially the Social Security deduction cap at $106,800.
The primary cause of the rise of inequality in the United States, according to Noah is the demise of private sector unions. This comes as no shock. In my own experience, those who are unionized take it for granted and don’t fight to defend it. Those who are not unionized resent those in unions, even as they wish that they too were in a union. This goes back to something I read in The New Jim Crow, that slavery became racialized in the United States to keep poor whites and blacks from forming alliances. Thus, poor whites could feel good that at least they weren’t black (and therefore slaves). We see the same thing today over unions. The rich manage to get non-union poor to vote against unions to bring down the middle class union members. It doesn’t help the poor, it hurts the middle class, and it rewards the rich.
The best chapter in the book is the second to the last: “Why It Matters.” Here, Noah goes through all the arguments than conservatives make for why inequality doesn’t matter. The thing that has most amazed me over the past few years is the rise of this argument that inequality is good. Noah destroys this idea, writing:
[S]ome degree of income inequality is necessary to reward effort and skill. Capitalism depends on it. But something close to the dystopia they envision where effort and skill don’t matter already exists for those toiling in the economy’s lower tiers. They should have a chat with their office receptionist.
It is only jerks who have no experience with the working lives of real people who can propose such rubbish as serious scholarship. People who have spent their whole lives toiling in the upper-middle class have no idea. Regardless of how capable and conscientious one is at a minimum wage job, he will always be treated as suspect—as someone who must be watched lest he steal or shirk. The fact that college professors are more likely to be lazy than any worker at Walmart hardly matters.
Did I mentioned that a son’s income is more correlated to his father’s than a son’s height is correlated with his father’s? That’s right: we’ve created a society where wealth is more heritable than biological attributes.
In the final chapter of The Great Divergence, Noah presents some policy recommendations. Unfortunately, even before presenting them he admits that they are not very likely to gain any traction anytime soon. In fact, he notes that in 2009-2010, with a Democratic congress and presidency, unions could not get the small change of card check to the Taft-Hartley law.
The Great Divergence is a really good, even important, book. It explains a lot about the world we now live in. It is also really depressing.