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.
I’d say the easiest thing (in terms of not disrupting the economy, not in political terms, heavens no) would be to raise the floor. Make the absolute worst situation one could have in America be perfectly adequate. Eliminate the stupid tax credits for having children. Simply provide decent places to live, enough to eat, health care, clothing, the basics.
But-but-but . . . won’t everyone just be lazy and not work? Some would. Very damaged people (and we have a lot of those.) But in order to have amenities, they’d have to get jobs. And most people want a few amenities.
It would be hugely useful to eliminate, once and for all, the notion we have today, where people without kids are left to basically starve, and people with kids get a modicum of public assistance (ranging from barely-enough to nowhere-near-enough, depending on the state you live in.) I can’t express strongly enough how many people I’ve run into (especially when doing taxes for H&R Block) who see parenthood as the only option to avoid being put out on the street.
The earned income tax credit, a favorite of conservatives, is a joke. A stone joke. It’s only worth anything if you make slave wages, and it’s worth more the more kids you have (or claim on your return.) Many poor people fight like bandits over who claims the kids, steal social security numbers, it’s a mess. All the earned income tax credit does is subsidize slave wage-paying companies (which is why conservatives love it.)
Our "culture of poverty" (a favorite conservative phrase meaning, in code, "why America isn’t racist and Black people just suck") is entirely created by our system that subsidizes slave-labor-wage companies, provides almost no safety net to childless adults, and gives adults claiming kids a little financial boost when they file their taxes at robbery agencies like H&R Block.
Yes, people will always screw, and have kids by accident. But making their lives miserable (the Clinton plan) will not stop unplanned pregnancies. It hasn’t and won’t. Currently, people who don’t especially want to raise kids often have them just for the meager once-a-year tax benefits. A decent life guaranteed for everyone would change this pattern. Not eliminate bad/overstressed parents, but reduce how many people deliberately have kids in order to survive.
Beyond this, raising the floor would raise wages. Automatically. Companies that pay nothing would have to pay more to entice people to work for amenities. And amenities, as opposed to rent, stimulate economic growth. This is so basic no Chicago-school economist can grasp it.
Of course, as you mention, we need tax rates on high earners to go way up, back to where they once were. Socially and culturally, however, I suspect we have such vast inequality because our floor is so low. In a society where nobody suffers, a degree of ambition is regarded as something bright, energetic people do, and looked up to. Pure greed is regarded as ridiculous. Look at American movies/TV/novels from the New Deal up until the 80’s. The rich jackass was a figure of pure mockery, a shallow and disturbed individual.
In a society where people struggle to achieve the basics (and most can lose their access to the basics at almost any time), the super-rich are winners, smart enough to have made it. This not only distorts how a functioning economy should work, it makes the notion of community — even friendship — borderline impossible. When we are told, incessantly, that the difference between security and terror of failure depends on our positive attitude and smarts and rewards from an anthropomorphic deity that rewards right thinking, we don’t look at other people as people; flawed, good, kind, unpleasant, etc. We constantly judge ourselves by how we compare to others. I’ve seen so many friendships ruined by this. (I’ve had a few ruined myself, but don’t consider those having been worth maintaining, frankly.)
All this gets back, I guess, to how deeply we continue to fight the Civil War and pay the price for slavery. At least indentured servitude, as unfair and cruel as it could be, admitted that those without power could be just as worthy as those with, if they paid their difficult dues. Slavery introduced us to the succulent notion of intrinsic human inferiors (since you have to make others subhuman to treat them that horribly.) And so, today, we can’t have a decent health care system, we can’t have a floor that improves all of our living conditions, we can’t have anything. Because those lazy good-for-nothing Black folk will suck us dry if we do.
Ugh.
@JMF – At this point, I wouldn’t mess with the EITC, but you are right. Roughly half of the money we give out results in lower wages. I wrote about this before, and I’d look it up, but I’m on the road.
One thing I find interesting is that the same people who complain about teenage pregnancy and welfare mothers are the people who want to make birth control hard to get. I’m convinced now that the social conservatives really do think women should just be barefoot, pregnant, and in the kitchen. It’s disgraceful that we treat them as though they were protectors of the family. They are anything but.
I think that the philosophy bread by our supposed meritocracy is just as rigid as the philosophical basis of slavery. It doesn’t really matter that one was based on skin color and the other a particular combination of genes and environment. The Perkinses of the world believe they are better than the rest and demand to be treated as such.
I discussed the issue of friendship and class last week when I wrote about [i]The King’s Speech[/i]. There is really no difference between the thinking of King George VI and our masters of the universe.
Otherwise, I completely agree with your argument for a minimum income. It’s taken me a long time to get there, but I now see it as necessary. There is no other way forward that I can see.
I quite enjoyed that "King’s Speech" essay. I don’t respond to much on the Interwebs these days, but I do quietly read you writers that count. Geoffrey Rush is so brilliant in that movie; without him, it would have no point.
One of my very favorite movies, to risk being poked at by the blogmaester, is "A Passage To India." Same themes of friendship and power.
It’s funny — those of us who want America to be moderately tweaked in order to preserve it much as what we’re accustomed to are called "liberals." Those who want it utterly bent out of shape into a new pattern call themselves "conservatives." Strange/weird.
@JMF – I’m glad to hear it! As I recall, [i]A Passage to India[/i] is a great movie–and novel! But I haven’t seen the movie since I was a kid.
That’s exactly it. Conservatism in modern America is a radical philosophy. There is nothing conservative about it. The Democratic Party is the conservative party. They are the ones who are trying to keep things as they are. The Republicans are working on a revolution. That’s one of the reasons I call them proto-fascist.