Earlier, I posted an entry discussing some issues with the topic of
wealth inequality. I mentioned that there was
an article written by David Brooks that I wanted to analyse, but I didn't have room. So let's tackle that article
now.Suddenly the whole world is talking about income inequality. But, as this debate goes on, it is beginning to look as though the thing is being misconceived. The income inequality debate is confusing matters more than clarifying them, and it is leading us off in unhelpful directions.
Ok, so far, I'm in complete agreement with him. Nothing is ever really as simple as it first appears, so let's take a look at the issue and see where it takes us.In the first place, to frame the issue as income inequality is to lump together different issues that are not especially related. What we call “inequality” is caused by two different constellations of problems.
Again, I'm with him so far. I'm not sure I'd boil it down to two issues; there are a lot more factors at play here than just two. But I'll agree that it's not a single problem. So, with that in mind, let's see what else he has to say.At the top end, there is the growing wealth of the top 5 percent of workers. This is linked to things like perverse compensation schemes on Wall Street, assortative mating (highly educated people are more likely to marry each other and pass down their advantages to their children) and the superstar effect (in an Internet economy, a few superstars in each industry can reap global gains while the average performers cannot).
Ok, although he has some valid points here, I want to make sure that we understand something very clearly. First, notice that he references the 'top 5 percent of workers.' This is using misleading terminology. The 'top 5 percent of earners' might be a better way to refer to these people, although I don't fully agree with that term either.
Once upon a time, I asked my father to explain how capitalism seemed to violate the rule of conservation of mass. Although I know that economics and physics are two completely different creatures, I didn't understand how selling something would cause more money to appear. The way it seemed to work to me was that if Susie had five dollars and Adam had a hamburger, then Susie could buy that hamburger from Adam for 5 dollars. Then Susie eats the hamburger, and now Adam has five dollars, but nobody has a hamburger any more. Where does this extra money come from?
My father explained that the analogy was flawed, because Adam wasn't just selling a hamburger; he was selling the products of his work. Specifically, he had spent time and energy raising cattle to provide the meat, and growing wheat and vegetables to produce the bun and the various condiments. Thus, the five dollars wasn't just money for a hamburger; it allowed him to continue raising more cattle and growing more crops, which in turn allowed him to make and sell more hamburgers. Thus, his income continues to increase, allowing him to employ people (such as Susie), which enables them to buy the hamburgers they need to survive, and creating a growing pool of economic resources.
So, my understanding of economics duly remedied, I came to understand money as a representation of work, rather than as a representation of material resources. As my father described it, a dollar is, in a sense, a contract: 'I will give you this as a promise that I will perform a certain amount of work to improve the society in which I live, and in return, you will give me a hamburger so that I can do that work without being hungry.'
Which is where we run into problems: What about those people who aren't actually working? I'm referring to people who have enough invested that they can live off the interest without having jobs. They are not doing any work. They're not improving society. They're making a living off the work of other people.
What about those people who earn millions of dollars annually? Can we really say that a CEO, a professional athlete, a rock star, or an actor in Hollywood really does 242 times as much work as the general manager at Taco Bell? (these figures are based on a quick Google search for the
average CEO salary, which gave me a figure of $9.7 million, and the
average fast food manager salary, which gave me a high-end figure of $40,000)
To be fair, the law of supply and demand does apply here. There's a higher demand in this country for rock stars than there is for, say, teachers. Because, as we all know, teachers are worthless, and so are not appreciated by American citizenry. But heaven help us if we don't get to listen to Miley Cyrus! Likewise, there's a higher supply of unskilled labourers available to work in retail positions than there are people capable of serving as CEOs of major corporations.
But this now goes back to my rant about the evils of culture: we grow up in a culture that values fame, money, and power, and disenfranchises those who chose a different path for themselves. Thus, we spend ridiculous amounts of money on vain and shallow pursuits: pointless decorations for our homes, cars, bodies, etc; needlessly bigger houses and vehicles; entertainment and hobbies; etc. Yet we're unwilling to spend very much on the things that really matter: scientific research to alleviate real problems such as climate change or disease; education to improve the living standards of our citizenry; humanitarian efforts to relieve suffering abroad; etc.
And this is a topic upon which Brooks touches, very briefly, when he mentions 'the superstar effect (in an Internet economy, a few superstars in each industry can reap global gains while the average performers cannot).' It has become easier than ever for a small handful of individuals to become superstars whilst the rest flounder in obscurity. We, as a society and as individuals, have a limited amount of time, energy, interest, and attention. We tend to spend those things on those we deem worthwhile, but as flawed and irrational beings, we tend to base our estimation of a person on how popular they already are. In other words, we can only have one Allie Brosh, one Lindsey Stirling, one Freddy Wong... it's amazingly difficult to garner any attention for yourself when these people have already become incredibly popular. And since all of these people have become famous from social contact (one person shares a video or essay, that gets shared by others in turn, and soon everyone knows who these people are, even if they don't realise they know who they are), it really is, to a great extent, an issue of luck. Who will happen to catch the attention of the cultural zeitgeist? It's not that others don't work very hard; they just aren't fortunate enough to be noticed.
When you have this sort of environment, how can anyone claim that the top 5% have 'earned' their place as the wealthiest amongst us?At the bottom end, there is a growing class of people stuck on the margins, generation after generation. This is caused by high dropout rates, the disappearance of low-skill jobs, breakdown in family structures and so on.
This is mostly true; if you can't get through school, how can you expect to ever have a decent-paying job? But I want to point out that 'the breakdown of the family structure' is not really an issue. It's a cultural concern. We grow up in a society that expects a man to marry a woman, impregnate her, and one or both parents work to earn money to feed, clothe, raise, house, and school their child(ren) whilst remaining married and sexually faithful to each other. When a family doesn't follow this script, members of that family are shunned, or pitied, or otherwise treated as defective. Children who grow up in such a 'broken' family learn to be ashamed of it and, by extension, themselves. Then we dismiss these same people as 'lazy,' 'unmotivated,' or 'entitled' for the problems that we created within them in the first place.
But families don't actually work this way, inherently speaking. Other cultures have different family structures (such as many middle-eastern families, which practise polygyny with little to no paternal involvement in child-rearing, or so-called 'primitive' tribes that have no family in the sense that first-world people think of it because everyone in the tribe sleeps with everyone else, and therefore nobody knows who the father is, so the entire tribe raises all children communally). None of these other cultures look at the lack of two-parent families as a deficit. So that can't be the problem with ours, outside of how we're taught to feel shame when our family doesn't fit the norm.
Apart from that, yes, Brooks is right in that we have a large portion of the population unable to break themselves out of the cycle of poverty.If you have a primitive zero-sum mentality then you assume growing affluence for the rich must somehow be causing the immobility of the poor, but, in reality, the two sets of problems are different, and it does no good to lump them together and call them “inequality.”
Except that it totally is the same problem. The growing affluence of the rich is based on taking as much as possible, and giving back as little as you can get away with. There are some people (and some institutions) that realise that wealth is not necessarily a worthwhile goal, and are more willing to treat their employees equitably. But then you have people like Rupert Murdoch, who have billions of dollars in income already, and still desire more, therefore taking steps to insure that as much money as possible is channeled away from their employees into their own coffers. You have companies like Wal-Mart, who treat their employees very poorly despite their staggering levels of income.
Contrast this with companies like Publix, which pays their employees decent wages, offers them worthwhile benefits, and is still managing to be very financially successful. They are enabling their employees to live in decent living standards by accepting that being a millionaire is just as comfortable as being a billionaire. If all companies operated this way, I wouldn't be nearly so upset about the issue of wealth inequality.
Yes, the economy is not a fixed amount. As my father said when discussing the topic, 'the pie gets bigger.' But that doesn't change the fact that the vast majority of the nation's wealth sits firmly in the control of 1% of its population, and despite what David Brooks wants you to think, these people do have control over whether the remaining 99% have a decent standard of living, or even an opportunity to attempt to attain one.Second, it leads to ineffective policy responses. If you think the problem is “income inequality,” then the natural response is to increase incomes at the bottom, by raising the minimum wage.
But raising the minimum wage may not be an effective way to help those least well-off. Joseph J. Sabia of San Diego State University and Richard V. Burkhauser of Cornell
looked at the effects of increases in the minimum wage between 2003 and 2007. Consistent with some other studies, they find no evidence that such raises had any effect on the poverty rates.
That’s because raises in the minimum wage are not targeted at the right people. Only 11 percent of the workers affected by such an increase come from poor households. Nearly two-thirds of such workers are the second or third earners living in households at twice the poverty line or above.
The primary problem for the poor is not that they are getting paid too little for the hours they work. It is that they are not working full time or at all. Raising the minimum wage is popular politics; it is not effective policy.
I'll admit that the policy responses we're seeing are perhaps not as effective as we'd like. But I think the problem is that the policy responses don't go far enough. It's not enough simply to increase minimum wages; we also need to put a cap on the possible earnings at the top. When Rupert Murdoch has a net worth of over $13 billion, which is more money than anyone can reasonably spend in a lifetime, why would it be unfair to take two or three billion dollars and distribute it amongst his employees who can't afford to send their children to university without putting themselves in serious debt?
Now, I'll be the first to admit that another part of the problem is our culture. We have been conditioned to think that smartphones are mandatory, that you have to have the latest electronics such as big screen plasma TVs and the latest edition of the big video game consoles, the biggest cars and houses, and the best body that money can buy. The lower classes tend to spend far more money on unnecessary trifles and leave insufficient funds for the things that really matter, like education and health care. But until we get this culture issue sorted out, is it too much to ask that they have a decent standard of living? When a man dies because he can't afford to buy both antibiotics and painkillers, so has to choose between them, and ends up dying of a toothache, there is a serious problem.
Besides, most of the conservatives still place a lot of stock in the idea of 'trickle-down economics;' the idea that if you give more money to the wealthy, it will work its way through the economy to make the lower classes more prosperous. Don't these people realise that the rich don't spend money the same way that the poor do? It gets invested, or spent on high-dollar items that come from companies that don't employ lower-class citizens. When the poor people have more money, they spend it on Xboxes and iPhones, and that money ends up in the hands of the wealthy anyway!Third, the income inequality frame contributes to our tendency to simplify complex cultural, social, behavioral and economic problems into strictly economic problems.
Yes, but that doesn't mean it's not an issue. Again, I point out Rupert Murdoch, worth $13 billion dollars, and compare him to George and Sally Smith, who both work minimum wage jobs because they can't get anything better, and are earning $30,000 total between them. Just because they didn't inherit a megacorporation from their parents, does that mean they are really 866 times less valuable, as human beings, as Murdoch?There is a very strong correlation between single motherhood and low social mobility. There is a very strong correlation between high school dropout rates and low mobility. There is a strong correlation between the fraying of social fabric and low economic mobility. There is a strong correlation between de-industrialization and low social mobility. It is also true that many men, especially young men, are engaging in behaviors that damage their long-term earning prospects; much more than comparable women.
He even uses the word 'correlation!' Yet it never occurs to him to think about the old adage, 'correlation is not causation.' How does he know that high school dropout rates are caused by poverty, rather than the other way around? How does he know that single motherhood isn't caused by poverty, instead of caused by it as he insinuates? And he mentions 'the fraying of social fabric' again, suggesting that the society that he thinks is normal is the only one in which humans can live. Just because society is changing, and you personally think that change is a bad thing, doesn't mean that poor people should be further disenfranchised.
And then he talks about young men damaging their long-term earning prospects. What does that have to do with anything? I'd almost suggest that he thinks women can't be expected to be the primary breadwinners. Which shows how misogynistic he really is. Maybe that's not the case at all. Maybe it's just a correlation, and not causation.
I sure hope so.Low income is the outcome of these interrelated problems, but it is not the problem. To say it is the problem is to confuse cause and effect. To say it is the problem is to give yourself a pass from exploring the complex and morally fraught social and cultural roots of the problem. It is to give yourself permission to ignore the parts that are uncomfortable to talk about but that are really the inescapable core of the thing.
Yes, it is a complicated issue. But he's doing the same thing he decries from others by suggesting that poor people make themselves poor.Fourth, the income inequality frame needlessly polarizes the debate. There is a growing consensus that government should be doing more to help increase social mobility for the less affluent. Even conservative Republicans are signing on to this. The income inequality language introduces a class conflict element to this discussion.
I have bad news for you, Mr Brooks. The issue is already polarised. And it's not just a result of those calling for an end to wealth inequality; the wealthy are just as bad about demonising the poor. Listen to any conservative news show, and you'll hear the lower classes dismissed as lazy, entitled mooches. If we can't get these people to realise the reality of the situation, then all your calling for the left to stop polarising the debate will come to naught.Democrats often see low wages as both a human capital problem and a problem caused by unequal economic power. Republicans are more likely to see them just as a human capital problem. If we’re going to pass bipartisan legislation, we’re going to have to start with the human capital piece, where there is some agreement, not the class conflict piece, where there is none.
Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness.
Except that it's not just liberals that don't focus on opportunity and mobility. The upper classes are just as likely to display classist attitudes as the lower classes. Yet I don't hear you calling for the wealthy to recognise the validity of the lower-class concerns. This is what we call 'hypocrisy.'If we're going to mobilize a policy revolution, we should focus on the real concrete issues: bad schools, no jobs for young men, broken families, neighborhoods without mediating institutions. We should not be focusing on a secondary issue and a statistical byproduct.
And this final paragraph displays a final and stunning lack of awareness of the plight of the lower classes. Bad schools? Broken families? These aren't the issues you think them to be. And what's worst of all of this is that these problems could be solved, the schools fixed and the families empowered, the job opportunities for young men (and women, not that Brooks thinks women should be given equality to men), the social resources for poverty-stricken areas, if the issue of wealth inequality were remedied, so that the poor people have the money they need to improve their schools, cease the conflicts that tear the families apart, allow better job opportunities to return to their beleaguered neighbourhoods, and instate the social resources.