Michael C. Moynihan | July 14, 2009
A fascinating and typically clever new report from Cato scholar Will Wilkinson on income inequality argues (among other important, compelling points) that "intellectuals and policymakers...waste time and energy worrying that some people, who have had the opportunity to make the most of our institutions, have done too well" while ignoring larger, underlying social crises. From the summary:
Recent discussions of economic inequality, marked by a lack of clarity and care, have confused the public about the meaning and moral significance of rising income inequality. Income statistics paint a misleading picture of real standards of living and real economic inequality. Several strands of evidence about real standards of living suggest a very different picture of the trends in economic inequality. In any case, the dispersion of incomes at any given time has, at best, a tenuous connection to human welfare or social justice. The pattern of incomes is affected by both morally desirable and undesirable mechanisms. When injustice or wrongdoing increases income inequality, the problem is the original malign cause, not the resulting inequality. Many thinkers mistake national populations for "society" and thereby obscure the real story about the effects of trade and immigration on welfare, equality, and justice. There is little evidence that high levels of income inequality lead down a slippery slope to the destruction of democracy and rule by the rich. The unequal political voice of the poor can be addressed only through policies that actually work to fight poverty and improve education. Income inequality is a dangerous distraction from the real problems: poverty, lack of economic opportunity, and systemic injustice.
Print the PDF and read the whole thing.
And if you haven't read Wilkinson's splendid review of Richard H. Thaler and Cass R. Sunstein's book Nudge, which appeared in these very pages, print it out too.
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Envy is the bedrock of socialism. The politicians sell it, and
the proles buy it.
-jcr
Wilkinson aspires to be a "libertarian" central
planner.
Interesting assertion. Why do you say that?
I don't have the link handy, but I read a study that concluded
that well-to-do white liberals were the demographic most concerned
with income inequality.
Nothing like hauling around a load of needless guilt, is there?
"There is little evidence that high levels of income inequality
lead down a slippery slope to the destruction of democracy and rule
by the rich."
I'll try to read the whole thing soon to see whether he addresses
something akin to income inequality leading to the destruction of
democracy and rule by the *poor*.
Yeah, the rich would never use their money and influence to
manipulate government into protecting their interests and those of
their offspring.
Nope, all they desire is a perfectly just world and a level playing
field so everyone gets the same chance to succeed in life.
The desire to manipulate human emotion wreaks of the same hubris
that we can control the weather.
I would love to think that humanity would realize this in my
lifetime but it will eventually be my great, great grandchildren
who reap these rewards.
Yeah, the rich would never use their money and influence to
manipulate government into protecting their interests and those of
their offspring.
Rich people do that kind of thing all the time, that's why the
government shouldn't have the power to sell them those favors. Try
to keep up, will you?
-jcr
"I don't have the link handy, but I read a study that concluded
that well-to-do white liberals were the demographic most concerned
with income inequality."
Nothing like hauling around a load of needless guilt, is
there?"
I'm pretty young but I realize a lot of my accomplishments in life
were because I had parents who had the money and the drive to put
me through school at the best school districts and universities in
America. And I realize it wasn't fair that I got all these great
things, and someone else who went through some shitty urban school
didn't get the advantages I had.
It's not guilt, it's empathy. I would rather we had a world where
our kids all got off at the same footing, to create a better
meritocracy.
Sadly, we live in a system where some kids' schools are fucking
shit and other kids' schools, such as mine, do a pretty good
job.
Btw, that Cato dude ever hear of the French and Russian revolution?
When the proles get pissed heads start rolling.
Johnny john john,
I came from a solidly middle class environment with supportive
parents which helped me get in to UC Berkeley where I got my ass
kicked by many folks from economic classes far below me (mainly
Asian).
Hard work always prevails.
Income inequality is important because it usually tracks
political injustice and inequality. Societies that have large
income spreads (I think the kids call it the Gini coefficient) tend
to be places with poor records on liberty and human rights. When a
country claims to be free, but starts seeing greater income
spreads, it's usually a sign that freedom is eroding.
This isn't a hard and fast rule, of course, just a tendency. But
it's a strong enough tendency that it should give us pause.
In March Hit and Run was blasting Sy Hersh about the CIA, just thought does that article still stand in the light of the news of the past week?
Josh,
Income inequality is an issue when qualified people are denied
opportunity based on their economic class. I don't see that as an
issue in this country.
We have so many outreach programs, scholarships, etc.. in lower
income and minority communities that demonstrate this is not the
fact.
The fact is that there are cultural issues with many people in this
country who do not grasp the notion of hard work and sacrifice
which keeps them from advancing.
I'm pretty young but I realize a lot of my accomplishments
in life were because I had parents who had the money and the drive
to put me through school at the best school districts and
universities in America. And I realize it wasn't fair that I got
all these great things, and someone else who went through some
shitty urban school didn't get the advantages I had.
That whooshing sound you just heard was johnny john john's hair
being parted.
The unequal political voice of the poor can be addressed only
through policies that actually work to fight poverty and
improve education. Income inequality is a dangerous
distraction from the real problems: poverty, lack of economic
opportunity, and systemic injustice.
Yes. Income disparity IS an existential threat to our democracy. But the tipping point is farther off than many activists will have us believe. In order to fix income disparity, we need to eliminate the mechanism by which money is siphoned from everybody and doled out to the politically connected and the banks - namely, printing money, and inflating. A return to a sound money system would create a truly level playing field for everyone to exercise the fruits of their individual excellence.
Income inequality without opportunity is why the French,
Russian, American and other revolutions took place.
Today, inequality and barriers to opportunity are directed squarly
at at the productive class.
In California I've watched hard working Asians start from
nothing and succeed, going from being low earners to inclusion
among the top earners in a generation (or less). My wife and I,
although white, both did the same, and we know many others with
similar backgrounds and stories. Having advantages helps if you
also have abilities and use them, but having abilities and using
them still will overcome disadvantages in America.
http://strongasanoxandnearlyassmart.blogspot.com/2006/11/asian-and-black-racial-disparity-in.html
Sadly, we live in a system where some kids' schools are
fucking shit and other kids' schools, such as mine, do a pretty
good job.
The public school system was deliberately set up to keep kids from
shitty neighborhoods with shitty schools out of the nice
neighborhoods with nice schools.
In California I've watched hard working Asians start from
nothing and succeed, going from being low earners to inclusion
among the top earners in a generation (or less).
That's a pattern that waves of immigrants before them followed. Not
many of the Jews, Irish, Italians, Poles, or Germans who came to
the USA in the 1800s were rich when they got here.
-jcr
I will also say, thank goodness for first-generation immigrants,
wherever they're coming from. They work hard enough to make up for
a lot of lazy natural-born US citizens.
-jcr
Much has been said in this thread about the folly of using inequality as a proxy metric for "justice," so I'll address the latter itself. From the quoted bit of the article:
Many thinkers mistake national populations for "society" and thereby obscure the real story about the effects of trade and immigration on welfare, equality, and justice.
Which is to say that it's none of their business. The only
conceivable purpose a measure of difference in income and standard
of living serve, at least when mentioned together, is to construct
a fascist concept of "justice" which hinges on government being an
instrument of collective action, rather than a defense
against such violence.
The tingly, coppery taste of mercantilism I get in my mouth when I
hear these things reminds me that even proponents of "social
justice" know what purpose income inequality serves. The useful
idiots aren't confused about that; they're simply confused about
the role of society in the life of the individual. Beyond complete
withdrawal (e.g., gulching as escape or as a beacon on the hill) I
have no simple solution for that.
"[You] came from a solidly middle class environment with
supportive parents which helped me get in to UC Berkeley where
[you] got [your] ass kicked by many folks from economic classes far
below me (mainly Asian)."
Schempf: I am asian. I did great in school, where I saw a lot of my
friends drop out because of the pressure. A lot of kids just
weren't used to the workload. I was. And the only reason I did so
well was because I was trained to study, by my parents and by my
excellent schools.
I'm not particularly smarter than anyone else, but my parents gave
me tremendous resources and advantages, because they had the money.
When your parents don't have money, it makes it all the more
difficult to get a good education despite your natural
talents.
BTW lower income asians are just as fucked as other lower income
groups. The reason why asians do so well in USA is because many
came from educated & rich families to begin with. My family was
highly educated in China and ran away from the commies to make the
big bucks in the USA.
My family was highly educated in China and ran away from the
commies to make the big bucks in the USA.
The disconnect is fucking amazing.
What disconnect are you talking about?
http://en.wikipedia.org/wiki/Cultural_Revolution
Whats so bad about a progressive tax system anyways? The rich
can afford to pay a greater percentage of their wealth to the gov't
anyways, the poor can't.
Conversely, as always, rich dudes usually have more say in gov't
anyways so it should balance out.
Maybe the gov't should just give all the rich people a sticker for
paying more taxes, to make them happy.
I wonder, does a progressive tax make rich ppl get into politics
more, to make sure they get their money's worth from their
taxes?
johnny 2Xjohn,
I imagine the majority of libertarians who have a problem with the
income tax have a problem with income tax on general principle and
any complaints about progressive taxation are secondary.
Of course, I could be wrong.
On the one hand it seems pretty plain to me that there must be
some income inequality. Not everyone wants to work as hard or as
smart as others, and we need inequality as incentives to make our
economy stronger overall.
On the other hand I see what the fuss is about, all you have to do
is accept the relatively uncontroversial axiom that money=power to
see that income inequality is in tension with democracy and equal
opportunity.
Here's a little thought experiment I like to do:
How many people on this thread really think there is anything other
than the barest chance that your kids will have as many life
opportunities, throughout their life (cradle to grave), as Michael
Moore's kids? How many people really think your kids will die with
as much wealth as Michael Moore's kids?
And I can say that without, of course, knowing a single thing about
your (potential probably) kids and his kids. I can say that just
knowing about money, what it can get you and how it can perpetuate
itself.
And some people think that's messed up in society that values
"equal opportunity."
BTW-that would apply to my kids and potential kids too, not trying to be superior here
as Michael Moore's kids?
My (hypothetical) kids would have the advantage of not having an
idiot for a father. Fix that w/ a govt program.
What about, say, MC Hammer's kids? Would that be when he had the
millions, or after he went bankrupt and wound up on reality TV? You
_do_ realize financial position isn't permanent, don't you?
What disconnect are you talking about?
The disconnect between your parents fleeing communism and then
raising a kid who embraces it. I really just feel bad for them.
MNG, do your kids have the same opportunities as Chelsea Clinton or the Obama kids, or is inequality based on political pull better than based on dirty lucre?
MNG,
I can say with little doubt that any potential kids that I have
will almost assuredly have a better quality of life than Paris
Hilton has had.
Libertarianism ends the money=power problem by refusing to allow
power to be sold.
Also, there are plenty of politicians who arent very wealthy, but
they have power. At the best, you can say they manipulate money to
get power. They dont actually need the middle man.
will they have as many opportunities, influence, or
money?
Opportunities - yes.
Influence - I hope not. :)
Money - That is up to them. While neither came from a poor
background, Both Gates and Buffett started life with WAY less money
than Hilton.
Quality of life is more important than influence or money.
What is the gini coefficient for Happiness?
MNG,
Also, as my kids are still "potential" I have at least 18 years and
9 months to make sure they are billionaire heirs as adults. :)
A couple of points on johnny john john's statements:
1.) Quote 1:
I'm pretty young but I realize a lot of my accomplishments in life
were because I had parents who had the money and the drive to put
me through school at the best school districts and universities in
America. And I realize it wasn't fair that I got all these great
things, and someone else who went through some shitty urban school
didn't get the advantages I had.
-It is by no means clear parental wealth is meaningfully correlated
to child school performance, and when the genetics of the parents
are factored out (twin studies) this is especially a very flaky
relationship.
-You are discounting the possible influence of your genes. In
multiple studies, Asians, especially Asian Americans, repeatedly
score far above the mean in IQ tests. Your success to date has
perhaps more to do with your genes than your environment. Now of
course, their is no saying to what extent each had a role, but the
"all environment" assumption is not valid.
-In your explanation of your success, you include mainly external
social variables. It may be revealing to look at internal cultural
variables, such as the persistence to hard work that almost all
northern asians share, regardless of wealth. These internal
cultural variables are important, becasue they are not so easily
altered by top-down intervention, espeacially when they happen to
be absent in some underperforming social groups.
- You say that it wasn't "fair" that YOU got all of these things
and someone else didn't. I would like to see the opinion of your
parents on this. Parents that, more than likely, saw their hands
bleed and their minds go numb from the amount of work they had to
put in to send you to college and live in the best school
districts. And they did this while other people's parent squandered
their money and time on current satisfaction of their desires.
Looked at this way, is it really more "FAIR" to take from your
parents what they sacrificed for, and give to the children of
parents who were much less forward-thinking?
2.) Quote 2:
Schempf: I am asian. I did great in school, where I saw a lot of my
friends drop out because of the pressure. A lot of kids just
weren't used to the workload. I was. And the only reason I did so
well was because I was trained to study, by my parents and by my
excellent schools.
-Again, you are assuming 100% environmental influence. In the
observation of the multiple twin adoptions studies that have been
conducted both in the U.S. and abroad, Asians are more easily
taught to do calm but boring work than most other ethnic groups.
And of course your culture (that of your parents) helped, but there
are multiple influences here.
3.) Quote 3:
I'm not particularly smarter than anyone else, but my parents gave
me tremendous resources and advantages, because they had the
money.
-How do we know you are not particularily smarter than anyone else?
If you got into as good of a school as you say, I guarantee you
test at the top 75% of all people your age on any of the
standerdized intelligence tests (WISC, RAVEN's, WAIS...)
4.) Quote 4:
Whats so bad about a progressive tax system anyways? The rich can
afford to pay a greater percentage of their wealth to the gov't
anyways, the poor can't.
-This is the kind of argument for progressive taxation that tells
me you have not educated yourself in basic economics. And that's
ok, but I would highly recommend you do so.
Societies that have large income spreads (I think the kids
call it the Gini coefficient) tend to be places with poor records
on liberty and human rights. When a country claims to be free, but
starts seeing greater income spreads, it's usually a sign that
freedom is eroding.
Correlation is not causation. Wealth/income gaps in those countries
are just as likely to be a result of injustice and oppressive
policies as they are the underlying cause.
Conversely, as always, rich dudes usually have more say in
gov't anyways so it should balance out.
Take power away from the government, and that influence won't be
worth buying. Problem solved.
MNG--life isn't fair, its something that you and your kind need
to learn to deal with and accept. All you can ask is that everybody
be given the opportunity to live their life as they see fit and to
be able to work as hard as they want to get ahead. Obviously for
someone with millionaire parents the opportunities will come
easier. But that doesn't mean that people from worse off
backgrounds can't better their situations and live better lives
than their parents did. I just met a CEO of a company who came to
America from Cuba when he was 5 without his family, didn't speak
any English and now, 45 years later, made 12 million dollars last
year. That's the beauty of America. We can all better our station
in life if we work at it. That's going to mean different things for
different people, but once again, that's just how life works. The
dream is there for anyone to take.
And at the end of the day, the government that you profess to love
so much is one of the largest perpetuaters of inequality throughout
society.
Converse to that, there are plenty of people who grew up wealthy or middle class in nice neighborhoods with good schools who end up being totally worthless. The correlation between the wealth of the parents and the success of the children is far from clear.
Life should be fair for the lazy and the productive alike. Stealing from the rich isn't stealing because they can afford it. Like how it's OK to mug a guy with an iPhone, but not somebody with a Cricket tracphone.
The correlation between wealth at age 30 and wealth at age 60 is
anything but clear.
See pro athletes and doctors for examples of movement in both
directions (Doctors often having negative wealth at age 30 due to
ginormous student loans).
"Opportunities - yes.
Influence - I hope not. :)
Money - That is up to them."
Opportunities-laughable, no way. You don't think money can buy
trips, tutoring, tuition, housing, automobiles, etc., or do you
argue these things don't relate to opportunities? C'mon robc,
you're smarter than this.
Money-it's possible, but would you like to bet on it?
"MNG--life isn't fair, its something that you and your kind need to
learn to deal with and accept."
Let me get this straight, this thread is about libertarians
bitching about the tax system and programs in place to battle
inequality, bitching that they are not fair, and your retort is
that "my kind" needs to learn that "life ain't fair?" OK!
"The correlation between wealth at age 30 and wealth at age 60
is anything but clear."
Again, laughable. By "clear" you meant to say "not 1.000". Because
it's pretty clear, and you know it.
"Life should be fair for the lazy and the productive
alike."
Let me get this straight: you and your kids will end up poorer than
Moore and his kids because you and your kids are lazier and he and
his kids are more productive.
I'll take your word on that...
MNG,
It goes both ways. My kids may get the opportunity to work a lame
ass job to make the money to buy a crappy car.
That opportunity is probably worth more than being given a luxury
car on your 16th birthday.
Opportunities balance out at worst.
As far as I know, Paris Hilton never had the chance to work in the
family business as a teen. I dont think she worked the check-in
counter at a hotel.
If Im doing what I think I will be doing at that point in time, my
hypothetical kids will get to work in the family business. They
will get to learn the day-to-day stuff of running a business from a
young age and, if they so desire, the chance to take it over at
some point in time.
Again, laughable. By "clear" you meant to say "not 1.000".
Because it's pretty clear, and you know it.
Actually, no it isnt.
The 50s are the prime earning period for most people.
At age 30, most millionaires arent.
You don't think money can buy trips, tutoring, tuition,
housing, automobiles, etc., or do you argue these things don't
relate to opportunities? C'mon robc, you're smarter than
this.
Money cannot buy drive, ambition and discipline. Virtues like these
make the most of even marginal opportunities, whereas the lack of
them make even the best opportunities worthless.
Yeah, but see, Paris has the opportunity to work a crappy job too (she had a whole show about it). Your kids won't have the opportunity to fly to Paris for lunch, and many other things.
You're reading the correlation in question wrongly:
What's the correlation between people that have lots of wealth and
their kids being wealthy?
While it is a decade+ out of date now, MNG, you
really need to read The Millionaire Next Door.
Dont worry, it isnt at all libertarian, you wont be corrupted.
:)
Are you going to tell me its not stronger than the correlation
between people who do not have lots of wealth and their kids being
wealthy?
Because I have to laugh in your face there in all due respect
robc.
You're reading the correlation in question
wrongly:
No, you are. I stated it clearly:
he correlation between wealth at age 30 and wealth at age
60
I didnt bring up kids at all in that post.
Are you going to tell me its not stronger than the correlation
between people who do not have lots of wealth and their kids being
wealthy?
Because I have to laugh in your face there in all due respect
robc.
That is because you, once again, are having reading problems.
I said the correlation between wealth at 30 and 60 isnt clear. No
comparisons.
However, I will say this - lets take two groups, both of which are
millionaires at age 30. Group A earned it during their 20s. Group B
inherited it in their 20s.
I bet Group A will be richer at age 60.
MNG-
Although robc has me filtered out, let me say that his
recommendation regarding The Millionaire Next Door is a good
one.
MNG-
BTW, the book is not some kind of liberatrian tome. It is a very
practical, hands-on chronicle of how people handle money and how
some very ordinary folks, over time, accumulate wealth.
(checks Amazon)
Ah... so that's why so many rich people don't tip for shit.
Damn, I really wanted to see johnny john john come back and
address SugarFree's "disconnect" answer.
JJJ pretty much got owned.
Maybe he thought the equating of "progressive taxation" with "Communism" was lame and went somewhere else.
On the other hand I see what the fuss is about, all you have
to do is accept the relatively uncontroversial axiom that
money=power to see that income inequality is in tension with
democracy and equal opportunity.
Money does not equal power. Money equals wealth, which may or may
not be used to coerce other people. If money equalled power, then
Warren Buffet and Bill Gates would have spent the last twenty years
contending for control of the United States, which they have
not.
The truism (Iron Law Number 6) is:
6. Money and power will always find each
other.
A big pile of power will, indeed, be influenced by a big pile of
money. The way to break this cycle is to reduce the size of the big
pile of power.
Today, inequality and barriers to opportunity are directed squarly at at the productive class.
In recent times the only way to make real money in this country was
to engage in esoteric money-moving schemes on Wall Street. Tell me,
what exactly did any of those people produce?
You cannot talk about the distribution of wealth without applying a
moral standard. If you believe that people are entitled to all of
their wealth no matter how they came about it, fine, but admit that
you feel that the best society is one in which darwinian
competition (which is inherently unfair) is paramount. You can't
then claim that redistribution schemes are "unfair" or "theft,"
since fairness doesn't enter the equation.
In recent times the only way to make real money in this country was to engage in esoteric money-moving schemes on Wall Street. Tell me, what exactly did any of those people produce?
If you're only talking about people who used accounting tricks and
fraud to make money, like Bernie Madoff, then most of those people
are either broke or in jail.
If you're referring to traders and investors, like Warren Buffet,
then they contributed by helping capital flow to the most
productive parts of the economy. By selling a bad company and
investing in a good one, they promote the growth of productive uses
of capital, while punishing inefficient uses of capital. That's a
pretty important service.
Duh. That's what the Handicapper General is for.
Nah. I think we need a czar for that.
The Czarwin.
Income inequality is important because it usually tracks political injustice and inequality. Societies that have large income spreads (I think the kids call it the Gini coefficient) tend to be places with poor records on liberty and human rights. When a country claims to be free, but starts seeing greater income spreads, it's usually a sign that freedom is eroding.
What evidence exists that income inequality in America is the
result of political inequality?
What evidence exists that income inequality in America is
the result of political inequality?
My taxes are going up to bail out prodigal rich assholes who make
more money in one day than I made all last year. And I know that,
at least in my state, if you get a job doing X for the government
you will make at LEAST 50 percent more than your counterparts in
the private sector, and have better benefits and a guaranteed
pension besides.
I have no problem with people who get rich in private business, but
people who get rich off tax money piss me off more and more each
week.
Maybe the gov't should just give all the rich people a
sticker for paying more taxes, to make them happy.
Jesus Christ! Do you realize that rich people pay less in taxes on
a percentage basis? They have accountants, lawyers, and lobbyists
so they don't have to pay much in taxes. Those 3 groups are the
biggest opponents of a flat tax.
A flat tax means rich people paying more in taxes. Maybe you should
go back to your 'good schools' and get a refund if you don't
understand something that basic.
Let me get this straight, this thread is about libertarians
bitching about the tax system and programs in place to battle
inequality, bitching that they are not fair, and your retort is
that "my kind" needs to learn that "life ain't fair?"
OK!
Wow you are fucking dense! You do realize that libertarians (and
other non-retards) tend to see a bit of difference between fairness
when force and the point of a gun are used rather than circumstance
of birth, parents, etc., right?
If you are actually claiming that "tough, government exists, get
over it, life isn't fair", then I hope someone says something
similar to your corpse after they cave your head in. "Tough, life
isn't fair, you just got your head smashed in."
Why do libertarians not entertain the notion that governments (and therefore their tax policies) can be legitimate?
I always prescribe to the belief that there is no perfect gov't
system, that a greater variety of gov'ts is always better in the
long run.
It is disturbing that the fed keeps grabbing more power because of
"emergency situations".
I think (without good evidence) our fed system is just way too old
and klunky for a modern country, and I jealously eye those European
nations with "proportional representation" . Think of the
possibilities when Americans can actually elect both actual
libertarians, single-issue parties, actual liberals, etc to
Congress... Proportional rep. may even destroy some incentive for
state pork spending.
When was the last time your Congressmen represented your
views??
Duh. That's what the Handicapper General is for.
By the way, 2081 is supposed to be out on DVD in October
or something. It's supposed to follow the original more closely
than 1995's feature, but you can never tell.
JJJ,
Our current bastardized version of federalism is surely clunky but
if we were to go back its simple and elegant concepts we would be
in very good shape
Schempf:
Simplicity is not always better. Complexity is not always better
either. But the best gov't is something in between. I think pure
libertarianism's way too simple for it to work effectively.
I want to see the results of Obama's policy. I'm not going to
reserve much judgment against Obama until he's sufficiently fucked
me in the ass. Maybe he'll actually help the country out.
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