Posted on 10/04/2014 4:11:42 AM PDT by Kaslin
Why does the left care about income inequality? University of Chicago economist, John Cochrane asked that question the other day and could only settle on one answer: they like big government.
But first things first. What do you think would be more helpful to people at the bottom of the income ladder: redistribution of income from the rich or getting a good education and acquiring the habits of self-discipline and self-control?
To help you think through that question, consider this. Over the past 35 year the income earned by the top 1 percent has grown from 10 to 20 percent of household income. If we taxed away all of that increase and divided it up among all the other families it would amount to only $7,105 per household each year. However, the average wage gap between a family of two college graduates and a family of two high school graduates grew to $30,000 over the same period of time.
In other words, not going to college appears to be four times more important than anything that could be gained by taxing the rich for people in the lower half of the income distribution.
I learned these facts from Harvard economist Lawrence Katz, by way of Eduardo Porter, writing in The New York Times. Porter assumes causality is involved. He complains that
…the United States trails nearly all other industrialized nations when it comes to educational equality.
Barely 30 percent of American adults have achieved a higher level of education than their parents did. Only Austria, Germany and the Czech Republic do worse. In Finland more than 50 percent of adults are more educated than their parents.
And he goes on to consider all the things we might do to encourage more people to go to college.
But I think this is mistaken. A college education doesn’t cause people to be successful. Rather, the self-discipline and the tenacity required to set goals and achieve them leads young people to get degrees and to be successful.
Just think of how many billionaires don’t have a college degree. There is Bill Gates, Michael Dell, Ted Turner and Mark Zuckerberg – just to name a few. Personal characteristics not sheepskins, produce success in life.
As I have written before, although the left seems obsessed by the existence of inequality, the most interesting analyses of the phenomenon are on the right. For the most part, all the left does is deplore. By contrast, both Charles Murray and Tyler Cowen argue that problematic change is occurring: the middle is disappearing and people are gravitating into the upper and lower strata of society. For Murray the reason is behavioral. For Cowen, it is aggravated by technological change.
Murray says we are experiencing an ever widening cultural divide. As summarized in a previous post:
Upper-middle class professional types … get married and stay married. They work hard and work long hours.
… for the blue collar, never-got-beyond-high-school class, however … [a] shocking number aren't even working at all. Many are not getting married in the first place. Of those that get married, the divorce and separation rates are soaring.
What about happiness and well-being? About 65% of the upper middle class professional types say they are in happy marriages. That number has been dropping steadily for the past 40 years for the working class types; and today it stands at 25%!
And Murray's study leaves out blacks, Hispanics and other minorities — just so you don't think the fundamental problem is racial or ethnic. His study focuses only on the white community.
Tyler Cowen has a completely different approach. Are your skills a complement to the computer or a substitute for it? If the former, he predicts that life for you is likely to be cheery. If the latter, life is likely to be dreary. "This is the wave that will lift you or that will dump you," he says.
As I wrote in a forthcoming review of Average is Over:
Cowen finds examples everywhere of intelligent machines substituting for human labor. Robot arms are doing the work of doctors in the operating room. Computers spend more time flying our planes than the pilots do. Smart software is being used to spot phony reviews on the Internet, to detect liars at online dating sites and to profile passengers in airports. Computers are creating music, playing chess and drawing pictures of human faces.
So what can be done about any of this? Virtually no one has a compelling solution. And there may be no solution. Back to John Cochrane:
Why is there a big political debate just now? Why is the Administration and its allies in the punditry, such as Paul Krugman and Joe Stiglitz, all a-twitter about “inequality?” Why are otherwise generally sensible institutions like the IMF, the S&P, and even the IPCC jumping on the “inequality” bandwagon?
That answer seems pretty clear. Because they don’t want to talk about Obamacare, Dodd-Frank, bailouts, debt, the stimulus, the rotten cronyism of energy policy, denial of education to poor and minorities, the abject failure of their policies to help poor and middle class people, and especially sclerotic growth.
Exactly - those who want to succeed and who have a well-defined goal will take the right courses and take the time to learn beyond what is in the classroom. Others consider college to be party time and get useless degrees in the arts, etc., and expect some liberal college to hire/tenure/enrichen them because they're lazy libs.
Sounds like the old Unabomber had a point.
No more factory jobs,better get a 100,000 dollar debt going to college,become a raving leftist on the way,and you can become an expert on any number of subjects,spew your bilge on 24/7 cable channels hosted by greased up freaks,pretty boys,lesbians,racists,and blowhards telling you the same recycled crap about the plethora of government programs that have spent trillions and borrowed trillions more to SOLVE all of the nations ills,poverty being the main culprit,How pray tell has that worked out?
The United States of America is the BEST at everything!
Unfortunately that includes the art of propaganda and brainwashing
There are the lower income folks, for whom railing about inequality is a simple appeal to envy and a rationalization of their own incapacities in the market. This accounts for a large number of people, but they are followers, not leaders. They don't set the agenda. More important are the activist and leadership elements of the left, for whom inequality serves other objectives.
For the activists, inequality is not so much about low incomes or material deprivation as it is about status resentment. In my admittedly limited personal experience, the really hard core left-liberal activist is working and makes a decent enough income, but is absolutely furious that too many other people in other walks of life (especially business and the professions) are making significantly more money. There is a no longer surprising irony in the consistency with which people who insist that they are not materialistic, and indeed claim to be anti-materialistic, are explosively angry that the market values building a successful small business more highly than community organizing. These people are driven primarily by resentment. They hate the success of others, and their agenda is primarily to destroy.
The leadership elites on the left, by contrast, are themselves very well to do. They focus on inequality as a way to legitimize the regulatory state, of which they see themselves as the natural managers. For them, it is primarily about power. They are also not really concerned about "inequality" per se, as they pay themselves very, very well. They are happy to suppress the incomes and prospects of the business and professional classes, as this reduces political competition and economic competition for positional goods, but they will see no inconsistency in moving seamlessly from their vacations on Cape Cod and Chelsea Clinton style wedding to rabble rousing speeches against inequality. This, of course, ranks with sexual hypocrisy as the oldest scam in the book, and the left has almost never been self-critical in this area.
Not being a member of either major party, this article reinforces the fallacy of the partisan political writer, that his side is purely good and the other side is purely bad.
I immediately found myself asking and answering the companion question in my own mind, "Why does the Right care about income equality?". That answer has nothing to do with laziness, insufficient education, or racial bean-counting:
Forty years or more of big business and government selling American jobs to the highest bidder ten thousand a time via the H1-B visa scam, burdensome laws and regulations, Obamacare, distortive (?) taxation schemes at every level of government, and Statist (Federal Reserve) control in monetary policy and its chummy relationship with all the TBTF banks come to mind immediately.
At least as importantly, those who don’t get a chance to go to college, but have the traits and character that would have allowed them to succeed there if given the chance, will succeed anyway.
bump
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The formula for ending inequality and all the class warfare BS is ridiculously simple...
A flat tax with only one deduction, namely all income below the poverty level. Today that is about $12,000 per year for a single person.
Married, single, rich, poor, 6 kids or none at all, everyone can deduct the same amount, and everyone pays the same percentage rate on everything over that.
All income treated the same, and all taxed at the same rate. Hourly wages, capital gains, interest and dividends, all taxed at the same rate.
Now the professionally grieved could whine about those better off, but all they could do is push for a higher rate on everyone. That isn’t likely to gain many followers.
It would also lower state and local taxes, and control inflation.
Cities and states would have a harder time raising taxes if none of it was deductible on their federal return.
If there were few high tax states and cities there would be less wage creep to cover the high COL. That holds down inflation.
Just think how much productivity would go up if everyone had the same incentive to get ahead, and any benefit to living in poverty was gone?
They really don’t mean ‘equality.’ Equality means the same. Are they saying they want everyone to receive the same amount of money? So the janitor at McDonalds would get the same pay as a brain surgeon? If they don’t mean that, they should stop saying ‘equality’.
I’ll take that further and say that underachievers are encouraged because the government will help them survive.
The simple truth is that there's a huge gap between what people want to get paid for the work they do, and what they're willing to pay others for their work. This is behind almost every business transaction in an economy like ours.
Here’s a fable from Russia:
Two farmers lived side by side.
One was always up before dawn to water the cows and put them out
to graze. He spent the morning sharpening his plow, feeding the
horse, repairing the barn and in the afternoon tending the fields
and bringing in the cows to milk. Over the years his herd increased
and he was able to buy a few nice thing for his family and build
on to his house.
Next door the neighbor slept late and started off the day with
vodka. His cows were neglected and died off. His field lay fallow,
overgrown with weeds and his house fell into disrepair.
The district commissar came through and seeing how poor the second
farmer was doing, stopped to ask what he could do to help.
Quickly the farmer pointed to his neighbor’s place and said
“kill off most of his cows”.
Why does the left care about income inequality?
Easy they need every tool for socialism and that’s the first step to communism.
Control is there only answer.
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