Income Inequality; Taking Ideas Seriously

A very quick thought: America is very peculiar in that we have very high income inequality, and yet we do not have overwhelming political pressure for greater income redistribution. Indeed, even as economic inequality has exploded over the past thirty/forty years, the American electorate has arguably become more conservative/libertarian on economic policy issues, such that higher taxes on the top 1% is not a clear winner as a policy. During the Republican primary debates, the candidates described Democrats’ efforts to let the Bush tax cuts expire as “class warfare,” and middle-class voters cheered. This poses a puzzle, and naturally invites the question of why.

And Republicans and Democrats, liberals and conservatives, very often converge upon the same descriptive answer to that question/explanation of the phenomenon. Both say something like this: “In America, ordinary middle class people believe that they could become rich in the future.”

Where they differ, of course, is in their normative attitudes toward this descriptive claim. Republicans think this is great, an exhibition of American optimism and ambition, a proof that the American dream is still alive. Democrats think it’s sad that they believe this, because it’s just statistically untrue that many ordinary, middle class people will join “the 1%”–and the more old-school Leftists might even throw around the term “false consciousness.”

Let’s leave aside the normative debate for a bit. I have a question: Why have we accepted this descriptive explanation? It strikes me as incredibly stupid and condescending. Let’s take an accountant named Brian as our archetype of the middle-class man. According to a Google search, $60,000 a year is a good salary for an accountant. Question: What ordinary accountant believes he can become rich in the future? Doesn’t he associate with other accountants, hang out with them, maybe even read accountant message boards?  Mustn’t he, then, know, much better than the conservative pundits who celebrate him and the liberal pundits who decry his false consciousness, that he is not going to get rich as an accountant? Aren’t, then, the statements “Brian stayed in his accounting job and had no intention of leaving” and “Brian believes that he will get rich in the future” mutually contradictory? In fact, wasn’t applying for any accounting position other than a partner-track job at the most elite New York financial accounting firm basically a commitment to not becoming rich in the future?

“Okay,” you object, “but what about another archetype of the middle-class woman, Charlize the small-business owner? She’ll probably have an average income for life, but if her business catches on, she might make it big in 15 years!” Okay, sure. Even so, does it really resonate with you that she opposes higher taxes on the rich simply because she is overestimating the probability that she will become rich, and hopes to save herself $2,000 on her 2027 tax return? Is this how people whom you know and talk with think? Do you know people who think this way? I definitely don’t.

So what can explain Americans’ failure to get enthused about more redistribution?

I have a radical idea: Let’s take people at their word! Maybe the reason Charlize and Brian are unenthused by the idea of higher taxes on the wealthy and more redistribution is the reason that they say their reason is, that they think such a redistribution would be unjust, and maybe the wealthy even deserve their wealth. Maybe intellectuals, who spend their lives debating abstract ideas, should take seriously the idea that ordinary people, too, are persuaded and motivated by abstract ideas.

***

For the record, despite my sarcastic tone, I’m not actually endorsing Charlize’s and Brian’s idea that higher taxes on the wealthy are unjust. Philosophically, I’m really skeptical of all claims about “moral desert,” especially as they relate to economic issues and income distribution. Take Debbie as our archetypal “1-percenter.” Suppose we even accept the (incomplete at best, and radically wrong at worst) argument that Debbie owes her relative wealth to her good  character — hard work, delayed gratification, determination and bravery, etc. Well, doesn’t she “owe” that good character to her parents, the public institutions that educated her, etc.? If not and she’s totally self-made, then does she “owe” her character to her genes? Where do we assign human moral agency, and hence, moral desert? To borrow from the vernacular, where does the buck stop? Since it’s impossible to clearly divide individuals’ moral agency, I think it’s impossible to assign people moral desert for their outcomes in life, and, so, I think debates about economic policy must take place on more broadly consequentialist grounds. (This is also, for those who are curious, why I am now so much more keen on social science, as opposed to the humanities, as my preferred way of thinking about the world.) This is not about taking sides — there are consequentialist argument in favor of higher taxes on the wealthy, and consequentialist arguments against — just about defining the terms for a reasonable debate.

More practically, our technological future is actually going to upend actually everything about our world in very unpredictable ways. It’s plausible that this technological future could make our economy even more tournament-like, in ways that could make economic inequality radically, radically radical. If that happens — if we end up with a world where cheap robots can do 99% of the world’s jobs, while the 1% accrue enormous rents on the patents they hold on these robots’ algorithms — then we’re unquestionably going to need some way to do a lot of redistribution through the tax system. In this world, claims that people’s income levels are a reflection of their moral desert will look plainly ridiculous.

So to clarify once more, the point of this post is not, “Charlize and Brian are terrific political philosophers,” or even, “I, for one, welcome our new robot overlords.” It’s that we need to take the influence of ideas seriously, and stop giving condescending, materialistic explanations of what voters say about their own beliefs. There are some such explanations that seem really implausible — this one being an outstanding example.

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4 thoughts on “Income Inequality; Taking Ideas Seriously

  1. Pingback: The Sophist, Economist, and Calculator’s Guide to Political Philosophy « squelchtoad

  2. Consider the premise that monetary wealth equates to happiness. Frankly, it’s bizzare. America is a country that has achieved a great many things, of which we can surely debate the value ascribed to each… but surely we can agree that on the whole, the typical American in poverty is head and shoulders better off than the average third world denizen.
    So where then does the happiness quotient kick in? Are only American’s worth of joy?
    Do the poor in Ethiopia not laugh? Do they not dance and celebrate the wedding of a daughter or the birth of a son? Would their joy be greater with a little more coin in their pocket? Does the Alabama trailer-park checker at the Bi-Lo not enjoy the heck out of a pack of Kools and a six pack while watching the Crimson Tide roll on a flat screen telly?
    I propose that envy isn’t a particularly noble trait and a significant number of the great unwashed frankly got over it long ago. So what if there is a 1% out there. We sing, we dance and we live a life of love… and we are happy.

  3. Consider the premise that monetary wealth equates to happiness. Frankly, it’s bizzare. America is a country that has achieved a great many things, of which we can surely debate the value ascribed to each… but surely we can agree that on the whole, the typical American in poverty is head and shoulders better off than the average third world denizen.
    So where then does the happiness quotient kick in? Are only American’s worth of joy?
    Do the poor in Ethiopia not laugh? Do they not dance and celebrate the wedding of a daughter or the birth of a son? Would their joy be greater with a little more coin in their pocket? Does the Alabama trailer-park checker at the Bi-Lo not enjoy the heck out of a pack of Kools and a six pack while watching the Crimson Tide roll on a flat screen telly?
    I propose that envy isn’t a particularly noble trait and a significant number of the great unwashed frankly got over it long ago. So what if there is a 1% out there? We sing, we dance and we live a life of love… and we are happy. Generally.

  4. For many, political views are a way of expressing themselves… “I am ‘such and such’ kind of person.”

    Maybe the common man cares about abstract ideas, but I am not even sure intellectuals I know do… often, people use abstract ideas to rationalize a pre-existing sentiment.

    – a cynic.

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