THE PLANK OCTOBER 5, 2009
The usually interesting Ross Douthat has an unusually terrible column today about the Democrats and income inequality. Douthat is one of the few conservatives who has ever acknowledged the empirical reality of growing inequality and treated it as a serious issue. His latest effort is a discouraging sign of where right-leaning thought on this topic stands.
Douthat’s thesis is, “In the short run, Barack Obama could preside over an America that’s more economically stagnant and more stratified.”
Where’s the evidence? Douthat begins by noting:
There’s only so much that politicians can do about broad socioeconomic trends of a more unequal America is a vexingly complicated issue, whose roots may wind too deep for public policy to reach.
Liberals, though, have spent decades telling a more simplistic story, in which conservatives bear all the blame for stagnating middle-class wages and skyrocketing upper-class wealth.
This is a strange statement.
In fact, liberals have spent decades engaged in a lengthy – some would say tiresome – multisided debate over the causes of rising income inequality. I have read innumerable papers and articles blaming technological change, education, weakening labor power, international trade, changing corporate norms, among other factors. Most analyses pin the blame on multiple factors.
Douthat continues with his explanation as to why Obama will fail:
For one thing, the lazy liberal’s cure for income inequality — soaking the wealthy with higher tax rates and cutting taxes for everybody else — simply isn’t going to happen.
It isn’t? It already has! President Obama has extended the portion of the Bush tax cuts that benefit the working- and middle-class, and is letting the portion that only benefit households making more than a quarter million dollars a year expire. Nobody has called making the tax code more progressive a “cure” for income inequality. But it does help ameliorate the symptoms.
But it’s also because soaking the rich only makes a difference on the margins. The federal income tax is already quite progressive, and our corporate tax rate is one of the highest in the West.
Focusing on a couple progressive elements of the tax code ignores the fact that the American tax code overall is just slightly progressive.
To really create a more egalitarian America, we have to address trends that run deeper than the tax code. But many of these are issues that the Democrats are either unwilling or ill equipped to tackle.
For instance, inequality is driven in part by low-skilled immigration: it nudges wages downward for native workers, and the immigrants themselves are taking longer to achieve upward mobility than earlier generations did.
But today’s Democrats, bent on consolidating the Hispanic vote, aren’t likely to seek a lower immigration rate, or a better-educated pool of immigrants. The kind of “comprehensive” immigration reform that liberals support would probably increase low-skilled migration to the United States.
Research is in fact divided on the impact of immigration upon income inequality. At most it accounts for a small portion. Democrats don't "have to" address this one particular element of income inequality in order to make the situation better any more than I have to eat less peanut butter in order to lose weight.
Inequality is also driven by the collapse of the two-parent household, which disproportionately affects the poor and working class, depriving them of the social capital they need to rise.
But today’s Democratic Party increasingly represents “unmarried America” — the single, the childless, the divorced. This makes it an unlikely vehicle for policies that discriminate, whether through tax code or the welfare state, in favor of the traditional nuclear family.
Wait. Douthat is correct that two-parent families do better than single-parent families, and that this contributes to income inequality. So why, then, would it help to “discriminate” in favor of the category that’s doing well and against the category that’s falling behind? That would make inequality worse. Now, maybe Douthat has some explanation as to why his policy of discrimination would encourage more marriage and intact families. But he doesn’t or even hint explain how or whether such a policy would compensate for the windfall gains to the married and the windfall costs upon the unmarried.
Douthat turns to education:
Inequality is perpetuated by our failing education system — and especially by the bloated cartel responsible for educating the nation’s poorest children. (If you want to understand inequality in America, start with last spring’s Los Angeles Times series on what it takes to fire a lousy teacher in the Angeleno school system.)
But today’s Democrats, the heroic efforts of some liberals notwithstanding, remain the party of the education bureaucracy, resistant to all but the most incremental efforts to bring choice and competition to our public schools.
What? Obama is pushing an aggressive program of educational reform that goes further than any previous president in the direction of accountability that is absolutely not the preferred position of the education bureacracy. If Douthat means to include President Obama in his caveat about "some liberals," well, that's pretty strange in a column purporting to describe Obama.
Douthat concludes on this odd note:
There is, however, one way that a Democrat majority can plausibly bring down inequality: Just let government keep growing.
This is the lesson of Western Europe, where the public sector is larger and the income distribution much more egalitarian. The European experience suggests that specific policy interventions — the shape of the tax code, the design of the education system — may matter less in the long run than the sheer size of the state. If you funnel enough of a nation’s gross domestic product through a bureaucracy, the gap between the upper class and everybody else usually compresses.
But economic growth often compresses along with it. This is already the logic of our current fiscal trajectory: ever-larger government, and ever-slower growth.
That combination could eventually create the more egalitarian America that Democrats have long promised to deliver. The question is whether Americans will thank them for it.
So now Obama will succeed in reducing inequality? Does Douthat even remember that he began his column by predicting the opposite?
Also, note that Douthat has ignored many of the factors that liberal analysts believe have contributed to inequality. Weakening leverage for labor? Well, the Democrats are trying to push legislation to ease organizing. Changing norms of corporate behavior? They plan to make executive behavior more transparent and accountable. And of course health care reform would reduce an important source of working- and middle-class economic anxiety. That’s on top of the aforementioned educational reform and progressive nudging of the tax code. I’d call that a reasonably robust program to take on rising inequality. To what degree it will work remains to be seen. But it’s highly bizarre for Douthat to write an entire column about the Democrats’ anti-inequality agenda without mentioning a single item in it.
A lot of these failures, to be sure, result from the space limits of the op-ed format. But still, my goodness…