Matt Yglesias made a keen observation about the State of the Union address, Sorry, Equal Opportunity Isn’t Good Enough. It’s about how both Obama and Cathy McMorris Rodgers (in her “response” to him) focused on “equality of opportunity.” It’s true: people just love the idea of opportunity. It’s like motherhood: no one is against it. And as such, it is meaningless to talk about.
Yglesias focuses on the general idea that just because someone is born slow and stupid doesn’t mean they should be relegated to a short and painful life. There is something fundamentally wrong with that idea. Just the same, you don’t want to give everyone the same amount or a random amount of wealth. This would suck the vitality out of the society. Incentives really do matter.
The randomly distributed wealth example is a good one. I think it is more or less the system we now have. I know that conservatives want to think that money stays in certain families because of great genes. But that isn’t my experience. I find that people’s abilities are mostly due to their environments. Look at Bush the Younger. There is no doubt that born to poor or middle class parents, he would not be rich. Yglesias discusses the random distribution case and notes that it would provide bad incentives for people. That’s true. And I think we are seeing much the same thing in our economy. People don’t generally think, “I’m going to work hard at this entry level job because I want to be Bill Gates!” They think that the entry level job may lead to a reasonable life. But that expectation is looking more and more like wishing to become Bill Gates.
It does seem to me that Yglesias poses the question right. There are two things that we are trying to maximize: fairness and incentives. An economy where everyone gets the same would not provide anything in incentives. An economy that allowed a small group to get the vast majority of wealth would not provide fairness. We should look for something in the middle that provides both fairness and incentives. I don’t have the ultimate solution as to what that might be. I’m not even sure there is a single system. But one thing is certain: our society is tilted entirely toward the incentives.
What’s especially bad is that if Bill Gates were worth only $30 billion instead of $60 billion, I don’t see that he or anyone else would feel more incentivized to work. There is a point of inequality past which we don’t get any extra incentives. And we are well past that point in the United States and in the world. So our society could provide a whole lot more fairness without losing any incentives for the young up-and-comers. Truly, I think a 99% tax on wealth above a billion dollars would have no negative effects on the society. But clearly, less extreme measures wouldn’t.
I like Yglesias’ framing of the issue. But there is a deeper issue: there cannot be anything close to equality of opportunity when absolute equality is so far out of whack. This sets up a situation where the children of the rich get every conceivable advantage, even apart for actual cash payments. This is not a meritocracy. This is, as I’ve discussed before, inviting the poor in to play your Monopoly game after all the properties have been purchased. I wish we could cut the crap, but that seems unlikely. Conservatives argue about these issues the same way they argue about global warming. First they argue that there is no inequality problem. Then they argue that there is inequality, but the real issue is mobility and that is fine. Then they argue that equality just means laws that specifically stop people from doing something. Then they argue that mobility doesn’t matter. If they were honest, they would just admit that they like the way things are and they have no reason.
The bottom line to all of this is that talk of opportunity is a distraction. We all believe in it. Hooray! We don’t ever have to talk about it again. But if we really care about it—if we want to provide it to everyone—we need to do something about inequality. This isn’t class warfare. In fact, it is just the opposite. It is an effort to lessen class distinctions. Regardless, discussing opportunity without income and wealth inequality is just lip service. It means nothing.