The Inequality Obsession

imagesContinuing my discussion of George Kennan’s book (see previous post), he also addressed inequality.  So have I (here, here, and here; maybe thus my own obsession). And we recently viewed ex-Labor Secretary Robert Reich’s film, Inequality For All. See how open-minded I am? It’s actually a good film and I’m in sympathy with much of it. I’ll discuss it in a separate post.

George Kennan said nothing has been more “totally disproved by actual experience than the assumption that if a few people could be prevented from living well everyone would live better.” This derived from his observing (as a diplomat) communist countries, where eliminating the rich was accompanied by impoverishing the rest. Yet that poverty was, for most people, made endurable by its being widely shared. And, after communism’s collapse, anyone’s effort to better their situation through enterprise was widely resented and opposed, as illegitimate.

UnknownI was reminded of the old Russian tale of the peasant granted one wish – with the proviso that whatever he got, his neighbor would get double. After long thought, the peasant says: “Take out one eye!” That psychology is relevant to the inequality obsession.

Is it unjust for one person to have more than another? Some seem to think so, or at least talk that way. But if the concept of justice means anything, it means outcomes earned and deserved, rather than meted out arbitrarily – and pure egalitarianism would entail the latter rather than the former. I recognize that there’s inevitably some element of luck in outcomes; but egalitarian obsessives seem unwilling to recognize an element of deservingness; that a person who works harder and/or smarter and lives more prudently should be richer.

images-1In fact, there’s a widespread idea (here’s an example) that wealth and deservingness are inversely correlated – that not only don’t the rich deserve what they have, it’s actually the fruit of evil. All the more reason to see redistribution as social justice.

However, while of course a few people are thieves, most rich folks get their money through making a societal contribution of one sort or another. Unknown-1When you buy a yogurt at the grocery, you’re not ripped off; you’re getting something worth more to you than the price paid (or else you wouldn’t buy it). The grocer, and the yogurt maker (and everyone else involved, e.g., in transporting it), who give you this boon, profit justly. That’s the reality of most economic transactions and relations.

images-3We recently saw a TV documentary showing all that goes into manufacturing a certain monster truck. So many people working with such skill and attention to detail, to make sure that truck will do its job safely and well. It was really impressive. If they earn good pay, and their company earns good profits, they deserve it. This is the true face of business. It’s why all the rantings about the “evils of capitalism,” and the idea that wealth is obtained at the expense of the poor or society, miss the mark. The businesses you get yogurt from don’t profit at your expense, but by satisfying your needs and wants. Same for the truck manufacturer.

Inequality is rising not because more people are becoming poor, but because more are becoming rich; in particular, more very rich. That’s not a problem as long as everyone has a decent living standard. This we can achieve without exterminating great wealth. Indeed, the wealthy pay a disproportionate share of taxes that fund the social safety net.

Yet the obsession over inequality is not mainly a concern for the welfare of the poor. It is instead all about the rich. Lefties cannot stand it that they, with all their social consciousness and moral virtue, have less wealth, and consequently less power and influence, than benighted toads who (they think) are ethically inferior and get rich through grubby commerce. images-4To quote Kennan: “one cannot evade the occasional suspicion that it is not such much sympathy for the underdog that inspires much of this critical enthusiasm as a desire to tear down those who preempt the pinnacles of status to which they themselves aspire.”

(To be continued)

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7 Responses to “The Inequality Obsession”

  1. Gregg Millett Says:

    We’ve had the aristocratic cultures; the master/slave cultures/ the patron/mozo cultures (which I lived within during the Nicaraguan Revolution); the male dominated cultures and the Capitalist owners/workers cultures and also simply the diverse, and often antagonistic, cultures of our present world. I’m with you Frank, the economic entrepreneurs are an asset, as are the science guys, the musicians, the artists, the philosophers, but I’m not with you in seeing them in the glowing light that you seem to shine on them. Humanity has made tremendous strides toward equality and opportunity — worldwide, probably the most in just our lifetimes. But the rich need to be reigned in in creative ways to make sure they are adding to opportunity and toward equality. For the top 1% to now have 20% of the pie in the U.S — that’s a little scary — are we moving to the time of the “Robber Barrons?”

  2. rationaloptimist Says:

    Barons maybe (there are always barons in any type of complex society), but robbers mostly not. Wealthy people get there by earning it, not robbing it. Mostly.

  3. Karl Miller Says:

    Well, I’m a Leftie and here’s what I can’t stand. I’ve never liked the language of “the 99% versus the 1%.” I think it’s creepy and lynch-y and, unsurprisingly, fails to inspire anyone politically. Moreover, I think widening economic inequality is not a problem unto itself but rather a symptom of a much bigger problem: the lack of class mobility. So, there again, the language, the discourse on the left is troubling, even if the phenomenon is alarming, real, and in need of remedy. Why do I still identify as a Leftie even if Leftie discourse is so mangled? Well, because Leftie policies are still the right ones for this moment, sorry. The American Right has an even worse discourse right now and the heartbreaking thing is that all its best policies are suborned to one over-arching political objective: make life hell until 2016. Yeah. I can’t stand that.

    Our problem today is not that the rich are restrained too much. Nor that they have not been sufficiently praised. Our problem is we have an investment economy almost completely detached from the production economy — but not so detached that it cannot cause widespread misery a la 2008. The only substantial class distinction is this: you can earn money by working, like most of us, or you can earn money by having it already and gathering interest and dividends. Which is more virtuous? Which do we really admire more? Which should be encouraged and prioritized in our tax and regulation code? The worker, of course.

    Making smart investments on accumulated capital is all fantastic and congrats to anyone who’s made their fortune just by pushing paper and gambling shrewdly – I mean that: congrats. But to accumulate that much free capital in the first place, someone has to either 1) work or 2) inherit it. That more and more are inheriting it instead of earning it through “productive achievement” (i.e. labor) is the reason you see so much resentment from the Left.

    Now, none of this holds on a long enough time-line or for every juncture of economic policy choice, of course. Reagan’s policies were helpful in the early 1980s because they arrested inflation and gave the tax code a much-needed house-cleaning. But they also began the era of big deficits and the great divergence between America’s investor class and its working class.

    Frankly, I couldn’t care less about who’s being more rude to whom or more resentful – the war of odious attitudes is better fought on cable news. My question is: how does any of what you’re talking about connect with actual policy choices before us? Because you keep rounding back to these axiomatic chants about “earning” and character judgments about “some people.” But without anything specific to debate, it all sounds like fantasy sandbox melodrama to me.

  4. rationaloptimist Says:

    Karl, I sincerely thank you for a serious and thoughtful comment. A few points:
    It was not under Reagan, but Bush II that deficits began exploding (as a Republican I thought the Prescription drug thing was completely fiscally insane).
    I agree that it’s not that “the rich are restrained too much.” I’d even agree that there are too many tax loopholes, and in general they (we!) should be taxed more, and especially, receive less welfare (Soc. Sec & Med)! But what IS “being restrained too much” is SMALL and new businesses, which is where all our net job growth occurs.
    I also agree with you that social mobility is the problem, not the existence of rich people. Too many on the left seem to believe it’s the latter, which is just factually wrong.
    As to policy, there are three crucial things: education, education, and education.
    My next blog post (tomorrow?) will continue on this subject, relevant to some of what’s in your comment.

  5. Karl Miller Says:

    Cool, man. Education is a huge subject. Patent reform would have a huge effect on small business creation right now; I’d love to know more about the rest.

  6. rationaloptimist Says:

    You might look at this previous post about education, as relevant to inequality:

  7. housewivesquest Says:

    There is enough for the needy but not the greedy

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