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.

Are you ready for some more outrageous Wall Street banking behavior? You may have heard last week that JPMorgan Chase CEO Jamie Dimon got a 74% raise. This is after the London Whale trade lost the company $6 billion in 2012. Then, last year, the company was fined $20 billion for financial misbehavior—also known as fraud or “stuff that would get regular people thrown in jail.” But Dimon got a huge raise. Hooray for capitalism!

Matt Taibbi wrote a great article yesterday, Jamie Dimon’s Raise Proves US Regulatory Strategy is a Joke. He noted that the “record” fine against the company didn’t make its board and top management repentant, but it did cause them to layoff 7,500 non-CEO class of line employees. And they froze the pay of the people who remained.

Taibbi goes into some depth about the problem. If we didn’t already know before, we should have known after the 2008 financial crisis: the CEO class does not run its companies in the long-term interests of those companies. Instead, they run them in the short-term interests of themselves. All the top people who caused the 2008 crisis went away with tens of millions of dollars. What does it matter to them what ruin they leave in their wake?

It would be one thing if these people were socially ostracized. That might make them less inclined toward their dirty dealings. But all of them do it. What’s more, no level of fine is ever going to make Jamie Dimon unwelcome on CNBC. These people are our royalty, so anything they do is acceptable, with a minor exception for a Bernard Madoff sort of scam. (Although even there, I think if Madoff had controlled the kind of money that JPMorgan Chase does, it might have been different.)

But I’m focused on that 74% raise. In my work life, I’ve had employers who were hugely impressed with my work. I’ve been given ostentation raises. But I’ve never gotten any raise even close to 74%. I’ve talked to people, and no one I know has ever gotten a raise like that. Supposedly, raises are given to stop an employee from leaving. But that clearly isn’t the case with Dimon. He certainly wasn’t going anywhere. It is just that people in our society assume that the rich are better and thus deserving of ridiculous compensation packages. And this is with Dimon already making gobs of money.

Of course, as Taibbi notes, JPMorgan Chase was “sending a message” to the justice department. Not only are they not cowed, but they are also willing to inflict a bunch of harm on innocent employees if the government messes with them. After six years of watching the bankers flip off the rest of society, it isn’t surprising. But it seems that the Obama administration is determined to be naive in these matters. A proper government would have thrown people in jail. Or at least tried!

The last five years have told the people of the United States everything they need to know about justice in America. If you reveal our torture program to the press, you must go to jail. But if you rip off people for billions of dollars, cause a financial crisis, and generally screw up the economy for a decade or more, you’re in the clear. In fact, you are probably rich and well respected!

American justice in action!

And the la-hand of the Freeeeee!
And the hoooome, of thhhhhe, braaaave!

Last night on The Daily Show, Samantha Bee did a segment on the minimum wage. In it, she talked to investment banker Peter Schiff. He perfectly captures the essence of the patient aristocrat explaining the way the world works to the silly commoner. You could almost hear him sigh as he laid out the conservative narrative against the minimum wage, “There’s a law in economics—supply and demand—that’s something that you learn in Econ 101. If you increase the price of something you decrease the demand. And wages, that’s the price of labor. The higher you make the minimum wage, the more jobs are going to be destroyed.” You see, it’s a law! Except, it isn’t. Our economy is far more complex than that. The actual data indicate that it would at most cause minor job losses and at best create jobs.

Schiff goes on to imply that if you doubled the minimum wage, it would double the price of a hamburger. In the past, I would just pass off what he says to his keen desire to believe the fairy tales that support his ideology. But more and more I think the real problem is that rich people just aren’t that smart. Or maybe it is more accurate to say that they don’t think deeply about these issues. They grab onto a very simplistic narrative that happens to tell them that they deserve their $70 million net worth, and that is the end of their thinking.

Matt Yglesias wrote a great article following on the stupid Tom Perkins letter to The Wall Street Journal, Stop Listening to Rich People. He says:

The deference is the killer. There’s an interesting contrast. Hollywood stars also have opinions on policy. And they get a certain level of attention paid to them. But Obama never meets with them to discuss policy. And the funny thing is that since actors know that they are not experts, they are more likely to know what they’re talking about than are business people. Otherwise, there is no more reason to think a businessman would have insights into policy than an actor or, for that matter, grocery clerk.

I’m not saying that successful business people are stupid. But in my experience, they are rarely brilliant. In business, I think an over-abundance of brains can be a distinct liability. It makes a person less decisive and more easily bored. But let’s face it: economics isn’t that hard. It is not beyond any of these people to understand that the labor market is a monopsony and so simple ideas about supply and demand just aren’t valid.

But if I were drowning in cash, I might not care either. I might just latch onto any convenient theory that said that I was great because I was rich and the poor sucked. All of that is to say that I might have a much worse understanding of the macroeconomy than I do now. But if I were rich, people would listen to me and think I made sense, even though my ideas would be worse. We really are a culture in crisis and Peter Schiff (Who is pushing gold!) is a symptom.

I watched the State of the Union address last night. It was typical of such speeches: a hodgepodge of policies that sound more like a pep rally than a policy speech. And given the political realities, how could it be anything else? We don’t have a parliamentary system were the party in control can actually get stuff done. So what we get is a lot of pretending. It may well be why in America we don’t do things so much as we appear to do things.

A big part of this is the political rhetoric we use. Especially on the right, it is perpetually vague. My favorite example of this last night was when the president said, “But the budget compromise should leave us freer to focus on creating new jobs, not creating new crises.” I know what he means. When liberals talk about creating jobs, they mean infrastructure spending, job training, tax incentives for businesses to hire. There are all kinds of things, but they mostly cost money. When conservatives talk about creating jobs, they mean cutting taxes on the rich and regulations on business.

Of course, what the conservatives want has nothing to do with creating jobs. Tax cuts for the rich have very little effect on the economy and if they are matched by cuts to other programs, they actually have a negative impact. Cutting regulation in a depressed economy is just a way to make businesses more profitable—it doesn’t do anything to encourage hiring. A depressed economy is the perfect time to force businesses to clean up their factories and plants because it will create jobs. Cutting taxes on the rich and regulations on businesses are things conservatives always want to do because they consider them ends in themselves.

The point is that politicians of any political flavor can go around and talk about creating jobs without any sense of cognitive dissonance. Most ordinary people don’t think of tax cuts for the wealthy as a jobs program, but this is a matter of faith on the right. That’s why I think liberals are ill advised to talk in vague terms. It’s similar to the healthcare debate, where every couple of months some conservative wonk will say, “The Republicans do too have healthcare reform ideas!” And they list them and then it is clear that Republicans have no healthcare reform ideas.

None of this is to say that Obama’s speech was bad. He did mention a number of specific things that I quite liked: research funding, patent reform, the ridiculousness of $4 billion in subsidies to the oil companies each year. And it compared well to Cathy McMorris Rodgers’ speech. She said that of course the Republicans have plans to address income inequality, “Republicans have plans to close the gap—plans that focus on jobs first without more spending, government bailouts, and red tape.” So they have unstated plans that don’t cost any money and won’t require anything of the private sector. What could this be? Oh, that’s right: cutting taxes on the rich and regulations on business. You know, “Job creation!”