By Mickey Kaus
Sunday, January 26, 2014
The problem with the Democrats' new war on inequality
("the defining challenge of our time," says President Obama) is that
there are two kinds of growing inequality—and the Democrats are attacking the
wrong one.
When I started writing about income inequality in the
1980s, I expected to make a reassuring argument that incomes weren't growing
unequal. That article couldn't be written. An unceasing barrage of data
described an income scale that was pulling apart like taffy. The rich were
getting richer faster than anyone else. But even within skill levels or
professions—including journalism—the stars were making big money and everyone
else was stuck or in decline.
This pulling apart has continued for more than three
decades, through Republican and Democratic presidencies, including Mr. Obama's.
It seems to be driven largely by deep tectonic forces within the economy:
global trade, which has devalued the labor of unskilled Americans, and
technology, which has replaced labor with machines while empowering (and
rewarding) those with skills.
Harsh Truth No. 1: Democrats aren't proposing anything
that comes close to reversing this three-decade trend. They got nothin', as the
comedians say. Raising the minimum wage may be a good idea, but it affects a
sliver of the labor market. It's not going to stop the top 10% from taking home
50% of the nation's income, or 51%. The same goes for extending unemployment compensation.
Even the tax increases fought for by Mr. Obama are a blip. On paper they might
cut the incomes of the very richest Americans by 6%—until the rich find ways to
avoid them.
If Democrats are going to get voters to play along they
should maybe give them at least an idea of what they propose to do and how it
will achieve their goal—without toxic side effects. A better plan is to ask why
we care about economic inequality anyway. If the poor and middle class were
getting steadily richer, would it matter that the rich are getting richer much
faster?
There's some confusion among egalitarians on this score.
Many argue that inequality per se hampers growth, though the academic support
for this theory is soft. Others argue that it hampers mobility, though if
skills are now more important to getting ahead that in itself will hamper
mobility, whatever the level of inequality.
Harsh Truth No. 2: If it's not enough for everyone to
work hard—if you now have to be smart enough to learn—only some people will
make that jump.
When we think honestly about why we really hate growing
inequality, I suspect it won't boil down to economics but to sentiments. No, we
don't want to "punish success"—the typical Democratic disclaimer. But
we do want to make sure the rich don't start feeling they're better than the
rest of us—a peril dramatized, most recently, in the "Wolf of Wall
Street" and its seemingly endless scenes of humiliation and rank-pulling.
"Whether we come from poverty or wealth,"
President Reagan said, "we are all equal in the eyes of God. But as
Americans that is not enough. We must be equal in the eyes of each other."
Worry about this social equality lies at the root of our worry about economic
equality.
Social equality—"equality of respect," as
economist Noah Smith puts it—is harder to measure than money inequality. But
the good news is that if social equality is what we're after, there may be ways
to achieve it that don't involve a doomed crusade to reverse the tides of
purely economic inequality. As Reagan's quote suggests, achieving a rough
social equality in the midst of vivid economic contrast has been something
America's historically been good at, at least until recently.
We can, for example, honor the universal virtue of work
by making it the prerequisite for government benefits wherever possible.
There's a reason Social Security checks are respectable and politically
untouchable—unlike food stamps, they only go to Americans who've worked.
We can also pursue social equality directly, through
institutions that mix people from all income levels together, under conditions
of equal status—institutions like the draft, for example, or national service.
Do we remember the 1950s as a halcyon egalitarian era because the rich weren't
rich—or because rich and poor had served together in World War II?
The draft isn't coming back anytime soon. But the great
social egalitarian hope—mine, anyway—was that Mr. Obama's health plan might
perform a similar function, offering the poor and middle class the same care,
in the same hospitals, with the same doctors—and the same respect—that the
affluent get (much as Medicare already does).
The tragedy is that the Democrats readily abandoned this
goal. In order to save money and extend maximum coverage and subsidy to the
maximum number of the uninsured, Democrats signed off on a system in which
affluent Americans sign up for totally different medical networks than people
who have less to spend, while the poorest get shunted to Medicaid and the
richest bail completely into a private world of concierge medicine.
It's not easy to imagine a modern medical system that
would make Americans feel less like equals, even if they get subsidized. But it
is still more likely that ObamaCare can be changed so that the nation's
health-care system will reinforce social equality than that the
tax-and-transfer system will produce economic equality.
Social egalitarians always will be tempted or bullied to
abandon their real goal for a more concrete, economistic type of equality—the
green-eyeshade fairness of "tax progressivity," Gini coefficients and
income quintiles. Democrats have already sacrificed their biggest recent
legislative achievement—and best hope of preserving social equality—chasing
after the shallow democracy of what is, after all, only money. They shouldn't
make that their template for the future.
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