John Cochrane Denies Inequality and Reality

John CochraneIt seems that über-conservative economist-like substance John Cochrane gave a little speech at the Hoover Institution last Friday. He made the typical argument that inequality isn’t bad. And just like the good conservative that he is, he spent a fair amount of time arguing that the poor are poor because they are morally inferior. He didn’t put it that way, of course. He said, “A segment of America is stuck in widespread single motherhood, leading to terrible early-child experiences, awful education, substance abuse, and criminality…”

What’s interesting about this is that this is exactly what the aristocracy has always said about the poor. The fact is that they’ve pretty much always had causation backwards. Poverty creates all kinds of problems. It rarely works the other way around. Drug addiction is far more likely to be the result of living in poverty rather than the cause of it, although clearly there is a feedback loop. Cochrane wants to dismiss the plight of the poor by calling them unworthy, as if he were Yahweh, passing judgement on the people of Sodom. It doesn’t seem to ever occur to Cochrane that maybe he had an advantage in life; maybe he’s a professor at the University of Chicago because his father was.

Regardless, Michael Hiltzik does an excellent job of crushing Cochrane’s arguments. And I do mean arguments, because he isn’t really making a case. He’s just throwing everything out there. Everyone’s getting ahead, so inequality doesn’t matter! The poor in this country are doing better than the poor in the Central African Republic, so inequality doesn’t matter! African Americans are living longer, so inequality doesn’t matter! I highly recommend reading Hiltzik’s article, Watch a Conservative Economist Try to Wish Income Inequality Away.

I was most struck by one things that he mentioned early in the speech:

Suppose a sack of money blows in the room. Some of you get $100, some get $10. Are we collectively better off? If you think “inequality” [Note the scare quotes! -FM] is a problem, no. We should decline the gift. We should, in fact, take something from people who got nothing, to keep the lucky ones from their $100. This is a hard case to make.

Hiltzik dismisses this because he says that income inequality is not about how a windfall (Literally!) is divided. That’s true. But there is a more basic problem here. This is a false analogy. Over the last four decades, we have seen a wind blow through the economy. Some people have picked up a whole lot of money, most people have picked up nothing at all, and some people have seen the the money they had blown away. This is the same thing I discussed regarding Milton Friedman in, Rich Kid Guilt. In the documentary I was discussing, Friedman said that inequality didn’t matter because all people were getting richer. I wondered what Friedman would say if he were alive today to see that the rising tide is most definitely not lifting all boats.

At that time I had thought that he would use his remarkable mind to come up with excuses. And one does see this a lot with conservative economists, pouring over the numbers to show that, in fact, the middle class really has seen a tiny increase in incomes. The fact that it is open to debate shows just how rough that argument is. But there is no question since 2010, during which time the median income has decreased while the mean has increased: that means those at the top have seen their incomes go up, those in the middle and bottom have seen their incomes fall.

But John Cochrane doesn’t even make that argument. He just lies: everyone is better off! And note that he is one of the great conservative economic thinkers. And he’s totally immune to evidence. And he will never be embarrassed, because he tells the power elite what they want to hear. Of course, real economists just laugh at him. But that won’t stop him from helping to destroy our republic.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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