By Kevin D. Williamson
Sunday, January 22, 2017
Nobody actually wants to have a nuanced discussion.
Everybody wants to have had a nuanced discussion, at the end of which they got
their way.
If you want to see this in action, talk to somebody about
incomes or wealth.
An economist who was doing research on income mobility a
few years back shared some interesting case studies. One of them was a fellow
who had a modest income for several years after college, a radical drop in
income for a couple of years, and then an enormous leap in income thereafter. “I
call that one ‘law school,’” he said. Other case studies showed a great deal of
variation: A man earning a healthy but not spectacular salary for 20 years had
a single year in which his income is a few million dollars — probably a
business owner selling his firm at retirement. Wealthy people often have years
where they have no taxable income to speak of, and a Washington University
study found that a remarkable number of Americans — one in five — will have an
income of $100,000 or more for at least one year of their lives. In his memoir,
Hillbilly Elegy, J. D. Vance reports
that his dysfunctional underclass family had periods of surprisingly high
income.
Reality is complicated.
The particulars of the issue are hotly contested, but I
do not think that there are very many analysts, left or right, who are happy
with the current state of income mobility in the United States. It is a very
large part of the political debate, though actual differences in public-policy
positions among mainstream U.S. politicians probably are not as important as
the broader world-development questions: The post-war era was an unusual time
for the United States that was never destined to last indefinitely, with the
rebuilt and modernized economies of Western Europe and East Asia cutting into
the commanding industrial position we enjoyed in the 1950s; Indians and Chinese
turn out to be pretty good at making things and providing services, and the
reforms in their political systems and economies, halting and partial though
they may be, revolutionized the world economy; the end of the Cold War cleared
the way for an expanded global trade regime, which developed more quickly than
many had expected as the Internet and other technological progress turbocharged
globalization. There’s much more, of course, but the short answer to the
implicit question behind so much of today’s economic-policy debate — “Why can’t
we have the growth, mobility, and broad consensus of the Eisenhower years?” —
is: This isn’t 1958.
Instead, we get: “Well, if we had those high 1950s
income-tax rates, we’d have that kind of economy again,” or “If we didn’t have
all these Mexicans and Chinese competing with us, we’d have that kind of
economy again.” There’s an equation with a billion variables, and everybody
just picks his favorite one and — “Eureka!” That’s politics.
Our politicians are not especially forward-looking, in
the main, and they are not especially imaginative. Washington occasionally has
a spasm about the parking of vast amounts of capital in overseas tax havens,
but it never occurs to anybody that one possible solution to that problem is to
be the tax haven — if your money could live in the world’s largest national
economy under the protection of one of the world’s most reliable legal and
political systems, why on Earth would you send it to live in Panama? Economists
as different as Paul Krugman and Milton Friedman have returned many times to
the basic truth that wages are historically correlated with productivity, and
that workers in more capital-intensive businesses tend to have higher wages.
Investors and workers may at some level compete for income, but their incomes
are also linked in complex and unpredictable ways. There are ways to encourage
and cultivate that beyond the usual Republican idea of cutting investment taxes
and the usual Democratic idea of using the state as an ersatz entrepreneur. But
you have to be open to genuinely new ideas, which means you have to be open to
learning and to honest discussion.
We aren’t. Mainly, what we get — because it is what we
demand — is a lot of half-literate moralizing. Case in point, Oxfam’s latest
headline-generating bit of nonsense, lamenting the fact that the eight
wealthiest men in the world have among them a net worth equal to that of the
poorer half of the human race. Shock and horror, etc., until you consider that
Oxfam’s global paupers include a great many — millions and millions — of rich
people and future rich people. They are rich people who do not have very high
net worths, which sounds strange only if you don’t spend very much time
thinking about the real world.
There are two things that Elizabeth Warren, Bernie
Sanders, and other scourges of the modern financial system always demand: less
debt and easier access to credit. (No, they do not quite seem to get how those
two things are related.) If you are a young professional with a $200,000 income
and a $400,000 mortgage on a $500,000 house, you may have a negative net worth,
but you aren’t doing too poorly in life. If you are with the firm of Nasty, Brutish,
and Short, your Harvard Law loans might outweigh your assets, but they won’t
forever. Easy access to credit — and it really never has been easier for people
in the developed world — means more debt. Some people use credit wisely, and
some do not. Here, too, there are opportunities for policy innovation, but many
of them would be unpopular, because they would do things like make it a great
deal more difficult for poor people to buy houses or for university
administrations to convert federally insured debt into generous private incomes
for otherwise marginally employable administrators and purported scholars of
increasingly exotic and specific avenues of social grievance.
But regardless of your policy preferences, the fact is
that the household finances of 25-year-old professionals in the United States
and Europe, or those of new homeowners and entrepreneurs in Korea and
Singapore, do not tell us much of anything at all about the state of the
world’s poor. As Chelsea
Follett puts it, Oxfam’s crude model means “a penniless, starving man in
rural Asia or Sub-Saharan Africa is far richer than an American university
graduate with student debt but a high-paying office job, a $2,000 laptop, and a
penchant for drinking $8 designer coffees.”
I do not want to be uncharitable to Oxfam, but the fact
is that these kinds of crude, clumsy, dishonest studies drive headlines, and
headlines drive donations. The feelings business is very profitable, and the
thinkings business is not.
We’ve just had a weekend of political rioting after
progressive-leaning and Democrat-affiliated celebrities and public figures
called for, among other things, a military coup d’état to overthrow the
democratically elected government of the United States and the imposition of
martial law. But after the hysteria dies down — and it will die down — we’ll
still be back where we were before: a prosperous, stable, healthy nation with
some very serious problems that need addressing, and that cannot be addressed
until we learn how to speak and think about them intelligently and until we —
we citizens — demand that our leaders do. And that means, among other things,
that we forgo rewarding political and media figures with money and power for
peddling lies and stupidity. A politician is like any other dumb animal: He’ll
do what gets him fed and avoid what gets him whipped. And lament “the system”
as much as you like, we citizens still control both the carrot and the stick.
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