Timothy Noah

What's So Bad About Inequality?

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Andrew Kohut and James Q. Wilson both published op-ed pieces this past weekend that said everybody should just calm down about this income-inequality business.

Kohut's essay, which appeared in the New York Times, is titled, provocatively, "Don't Mind The Gap." But since most of the piece merely questions whether the public is any more exercised about income inequality than it has been in the past, a better title would be "Doesn't Mind The Gap." The public's relative lack of concern about the income gap would not of itself constitute evidence that we shouldn't mind it (though I can see why a professional pollster might be susceptible to thinking so). But in any case, Kohut's case that the public doesn't mind the gap strikes me as pretty weak.

Kohut starts right off by conceding that a recent report by Rich Morin at Pew, where Kohut also works, found a striking 19 percent increase between 2009 and 2011 in the percentage of respondents who said there were "strong" or "very strong" conflicts between rich and poor. I'd have thought that rise (from 44 percent to 66 percent) would mean that public interest in income inequality was on an upswing. But Kohut says it doesn't, because polls have always shown, and continue to show, that people deem income inequality "an acceptable part of our economic system." Fifty-four percent said so to Gallup last month, up from 45 percent in 1998.

So, okay, people don't want to overthrow the government and turn the United States into a socialist republic. Me neither! Meanwhile, 61 percent say the economic system favors the wealthy unfairly. Kohut concedes that that is important, but he insists that it doesn't reflect the public's attitude toward inequality so much as its attitude toward fairness, a distinction without much practical difference. Kohut goes on to say that a majority of the public thinks that rich people don't pay their fair share in taxes and that the power and influence of banks represent a threat to the country. But whatever you do, don't call that an inequality issue!

So ... we raise taxes on the rich and we re-regulate the banks, right? Not so fast, Kohut says. "What the public wants is not a war on the rich but more policies that promote opportunity." Who said anything about a war on the rich? As President Obama never tires of saying, we just want them to pay their fair share.  Similarly, the desire to limit the power and influence of banks doesn't spring from any destructive impulse. It springs from a responsible impulse not to let banks continue the dangerous boom-bust cycle of the past three decades, wherein reckless investments yield high profits in good times and government bailouts in bad times. We've been through that with the S&L crisis of the 1980s and the subprime crisis of the aughts, and every time it happens the prospect of any future crisis becomes more terrifying because each crisis results in greater bank consolidation and therefore more dire potential consequences should the few remaining banks go bust. As for promoting opportunity, well, certainly, lets do that too. It's a worthwhile goal. But it isn't one that conflicts with addressing income inequality.

Kohut's basic problem is that the phrase "income inequality" makes him squeamish. Wilson's problem ("Angry About Inequality? Don't Blame The Rich") is that he thinks the inequality trend of the past 30 years has something to do with poverty. Actually, it doesn't. The income disparity between the poor and the middle class hasn't changed much since 1979. It was lousy to be poor then and it's lousy to be poor now, but it isn't appreciably more lousy. (There's some evidence that may have changed after the 2008 crash, which hit the poor very hard, but the long-term trend hasn't been notable.) When people talk about income inequality what they're actually talking about is the growing disparity in incomes between the middle class and the affluent, and between the affluent and the super-rich. Wilson entirely sidesteps these issues.

Wilson suggests that only economically reckless countries like Greece have seen income inequality fall in recent years. That's utter hooey. France enjoyed healthy economic growth between 1985 and 2005 while managing at the same time to reduce income inequality. And, as I've written elsewhere (forgive me for repeating myself): "Greece as of 2008 had more income inequality [measured by the Gini coefficient, which is also what Wilson uses] than Germany, economic powerhouse of the European Union. Indeed, the countries now at risk of default (Greece, Italy, Spain, Portugal) are, if anything, notable for their abnormally high Gini-measured levels of income inequality (Ireland is an exception). And seriously pinko (yet economically healthy) Sweden has a level of income inequality well below all these countries."

Wilson then goes on to say that "the case for progressive tax rates is far from settled." I lost interest in what he had to say after that. At the Washington Monthly, where I worked many years ago, we called this a "get up and get a beer line." That is, it's the kind of sentence that so thoroughly interrupts the reader's train of thought with a provocative, extraneous, and never elaborated-on new thought that the reader pauses, thinks, "Hey, that's interesting," puts the magazine down lost in thought, gets up and gets a beer, and never finishes the article.

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