Does the Wealth Gap Matter?
I used to think it didn’t. I used to ask: So long as the poorest members of society aren’t in desperate straits, what does it matter if there are people at the top whose driveways are paved with gold? Is the “wealth gap crisis” really reflective of anything more than class envy?
I guess you could say that I’ve evolved on this point. I have come to believe that wealth gaps do matter, and that ours probably is sub-optimally large. Further, I think Republicans need to be concerned about this, because our sizable wealth gap is undermining the Republican Party’s efforts to connect with the American public. Particularly if (as seems likely) a large wealth gap is going to be a long-standing feature of American life, we need to think through the social implications.
Let me start by clarifying an important point. It is neither unjust nor unhealthy for a society to have a wealth gap, and even for that gap to be fairly significant. This is a natural function of the freedoms (both economic and otherwise) that conservatives hold dear. To a great extent, disparities in wealth are actually necessary to drive productivity. Wealth can be a reward for hard work, prudent management, beneficial risk-taking and other good things. Of course, no reasonable person believes that wealth consistently follows virtue. Sometimes wealth disparities simply reflect different priorities, as when an intelligent person chooses to write poetry or translate ancient Sumerian texts instead of making millions on Wall Street. But we should also acknowledge that luck is a big factor in worldly success, and that negative traits (unscrupulousness, neglect or avoidance of personal responsibilities) sometimes pay off too. There is no rule, written or otherwise, that the market must reward the worthy.
These reflections lead me to the following conclusion: some level of wealth redistribution probably is consistent with justice, but it’s imprudent to have too much. I don’t really believe that anyone is, per se, entitled to be a multi-millionaire, but I do believe that, all things considered, it’s in society’s best interests that there should be some. I don’t hate rich people, and I believe that there are a great many who have earned their fortunes honestly, through activity that is beneficial to society as a whole. It’s fair to expect them to give something back, since nobody gets fabulously rich without a good measure of fortune and a lot of support from less-well-compensated auxiliaries. But we shouldn’t treat the wealthy like blood-sucking pariahs, because as a group they do an awful lot for society, even before they get around to filing their taxes.
Here’s the problem. Over the past few decades America has had some nice periods of economic growth. To some extent everyone benefits from these, as in the '90s when employment was sky-high. Overwhelmingly, though, the greatest beneficiaries have been the rich. The economic changes of the '80s and '90s left the wealthiest 5% (and especially the wealthiest 1%) of Americans dramatically richer than they were before, while the middle class didn’t move all that much. The benefits they did get (such as cheap computers and smart phones) were largely balanced by some ugly negatives (such as lower job security and higher medical and education costs). The good life got much better, but the okay life was still just okay, and in many ways it was quite a bit less secure than it previously had been.
The reasons for all this are complicated, and I’m not an expert on the subject, but I think one factor is that major companies (thanks to technology) can often operate with a much smaller staff than what they would have needed in 1965. A person with necessary, specialized skills can sometimes be extremely valuable to a company, but solid, loyal, average-intelligence workers are less needed than formerly. Thus, economic growth doesn’t necessarily translate into more jobs or higher wages for the middle class. And everyone knows, of course, that blue collar factory jobs have largely been outsourced at this point. Even if we could turn the economy around, it’s no sure thing that this would lead to more or better jobs for middle-class or blue-collar workers. Since today’s working adults have lived through one or two economic booms already, it’s no surprise that the middle class implicitly assumes that a plan to “heal the economy” is mainly intended to benefit the rich. Isn’t that mainly what has happened in previous periods of economic growth?
This brings me back to wealth gaps and why we should care about them. In order to sell any kind of political message, you need to make your voting population feel that they are participants in a larger effort to build a certain kind of society. I think conservatives have, to a large extent, failed to do this. It isn’t just a result of the media’s relentless efforts to portray us as sexist, racist, anti-science homophobes. It’s also because American society is genuinely fragmented, with a small portion of us doing extremely well while the rest of society continues to struggle. The Republican message really hasn’t addressed that fact, and it leaves many middle-class Americans feeling that Republican politicians are just talking to somebody else when they promise jobs and growth and other such goodies. And it surely isn't lost on them that the rich frequently manage to use their resources to cement a privileged place in society for their children as well as themselves.
There is, indeed, some portion of the electorate that is so mired in dependency that they probably can’t be won back through mere rhetoric. But I don’t believe that that group represents anything like 47% of the population. What we really have is a large segment of the population that needs to be persuaded that the Republicans can do something for them. That they don’t just care about business owners and entrepreneurs. That they understand how hard things have gotten for working-class families and young people who are up to their eyeballs in educational debt. That they have ideas for putting health care and educational expenses back within the budget of normal families.
I think the solution is really threefold. First, Republicans need to put forward some bold proposals for reforming inefficient industries that are over-regulated and over-supported by government. The medical and educational industries are the most obvious candidates. Second, the GOP needs to rebrand itself as the enemy of entrenched interest groups. I’m thinking about union bosses and overpaid academic administrators and corrupt crony capitalists. Help the middle class see that they’re paying through the nose to keep these people in their comfy niches. Why should they have to do that? Third, show that conservatives are willing to tax the rich to the extent that this actually helps improve society, and, more importantly, that we will support spending or tax breaks that actually help the middle class. I’m thinking about child tax credits, support for family-friendly public institutions like parks and rec centers, and giving a boost to affordable online education or credentialing services. Make the middle class believe that we really do want them to have opportunities, and that we care whether they and their families are living good lives. Make them feel that they are included in the society that we want to build.
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Comments:
Mar '12
Re: Does the Wealth Gap Matter?
Redistributive programs actually exacerbate the wealth gap. The ultrarich have many ways to avoid the effects of tax increases. That is why Buffet and Gates can advocate "taxing the rich". Any extra they pay will be a pittance to them.
It is the middle class which suffers most in redistributive schemes because; 1) that is where tax inceases generate the most revenue; and 2) they have few options for avoiding the increases.
If you want to eleminate the wealth gap, switch to a flat tax and cut transfer payments by 20%.
Jul '10
Re: Does the Wealth Gap Matter?
Sometimes, Rachel, I think you know the term conservative, but have no idea what it means.
"Wealth Gap" is the usual drivel that the Left drags out to create class envy. Yet here you propose that we continue just the same ideas "only a LITTLE less". ?Isn't that what the republican party has been doing for at least the last 30 years, perhaps longer.
History clearly shows that man's historical situation has been poverty. Indeed, extreme poverty. America has been the shining exclusion to that, going all the way back to the late 1600's and early 1700's. ?Why do you think that's true. (Hint: liberty). ?Did you realize that the standard of living in America in early 1700 was the highest in the world! None in Europe matched ours, and the rest of the world didn't even come close.
You cannot "improve" the lot of man by redistribution, by "sensitivity", by taxes, by whatever cockamamy proposal the left dreams up next. You can only do that with two things - liberty and faith. WITHOUT those two, you will have zip. THAT is the message that the republican party has not had.
Mar '11
Re: Does the Wealth Gap Matter?
Excellent post.
I agree with your assessment that technology has driven much of the income gap. Globalization has probably exacerbated the issue as well.
But whatever the causes, both sides (and especially Democrats) need to stop believing that income inequality is either a) a conspiracy of the rich to unproductively leech off everyone else, or b) a result of tax codes. As a first step, everyone needs to accept that some disparity in wealth will always exist - and is a positive feature of a free market - and that some natural market conditions will make that gap even larger.
In that regard, I also disagree with Schrödinger's Cat. A flat tax might shrink some of the wealth gap, but likely not enough to make the problem go away politically.
Edited on December 2, 2012 at 11:53pmDec '11
Re: Does the Wealth Gap Matter?
It’s also because American society is genuinely fragmented, with a small portion of us doing extremely well while the rest of society continues to struggle.
Americans are indeed fragmented because many socio/economic factions no longer share the values espoused by the infamous Protestant Work Ethic that clearly emphasizes the utter necessity of adapting to changing market conditions. Innovation, self-sacrifice, and the willingness to step outside one's comfort zone were qualities that made this country unique.
Apr '12
Re: Does the Wealth Gap Matter?
Well, Devereaux, I wasn't joking when I declared sometime back that I'm not a libertarian. But I did take pains to acknowledge that a wealth gap (and even a fairly sizable one) is neither unhealthy nor bad, and that the rich tend overall to be productive, honest citizens whom we should value. Nevertheless, I think we need to acknowledge that there is actually a good reason why Republicans are branded the party of the rich. It's because their recommended economic policies *do* very disproportionately help the rich. And in recent decades, they haven't helped the middle class or working class nearly so much.
You could argue that, well, they would if only we embraced a more principled conservatism. Maybe so. But whatever agenda we pitch, I think we need to acknowledge that ordinary Americans have fairly strong reasons to be skeptical. If we can't find better ways of bringing the benefits home to the ordinary middle-class worker, we won't get the opportunity to make any reforms, either moderate or sweeping, to the disastrous Democratic agenda.
Mar '11
Re: Does the Wealth Gap Matter?
EThompson:
Americans are indeed fragmented because many socio/economic factions no longer share the values espoused by the infamous Protestant Work Ethic that clearly emphasizes the utter necessity of adapting to changing market conditions. Innovation, self-sacrifice, and the willingness to step outside one's comfort zone werequalities that made this country unique.
Agree. I think this is another example of how too many people take post-WWII America as a model which should be extended to perpetuity, instead of the big outlier in US history.
Social conservatives think we should magically harken back to the social structures and mores of the 1950s. Liberals think we should still be the industrial powerhouse, with well-paying, middle-skilled jobs aplenty.
Society seems to have lapsed into a state of laziness whereby if you show a minimal modicum of desire to work, a middle-class job should be waiting for you. How quickly we forget that this country was built by people constantly redefining themselves, not 40-year job security.
Apr '12
Re: Does the Wealth Gap Matter?
It's a multi-faceted problem, indeed. To a large extent we killed that kind of ethic in the over-regulated, over-structured post-WWII society, and it's hard now to bring it back. But at the end of the day, I think the reforms I want to see would simultaneously help to make the market more genuinely fluid (which it still really isn't, despite some private-sector movement in that direction), while also giving the middle class some temporary props to help them make the transition.
Apr '12
Re: Does the Wealth Gap Matter?
Mendel
Social conservatives think we should magically harken back to the social structures and mores of the 1950s. Liberals think we should still be the industrial powerhouse, with well-paying, middle-skilled jobs aplenty.
Ha! We do agree on many things, Mendel. This is why I, despite being extremely socially conservative in some respects, perpetually argue that we need to loosen and potentially redraw some of our conservative ideas about family structures and gender roles. They're more tied to an obsolete economic model than we sometimes realize or want to admit.
Dec '11
Re: Does the Wealth Gap Matter?
Mendel
EThompson:
Americans are indeed fragmented because many socio/economic factions no longer share the values espoused by the infamous Protestant Work Ethic that clearly emphasizes the utter necessity of adapting to changing market conditions. Innovation, self-sacrifice, and the willingness to step outside one's comfort zone werequalities that made this country unique.
Society seems to have lapsed into a state of laziness whereby if you show a minimal modicum of desire to work, a middle-class job should be waiting for you.
Bingo. As my father incessantly preached to his children, there is no such thing as fair.
Sep '10
Re: Does the Wealth Gap Matter?
The idea that the wealth gap makes the poor poorer is just not true. Quite the opposite. There is no foreseeable limit to how big the economic pie can get. The political flap over the wealth gap comes from those economically challenged folks who believe the economy is a fixed size and if one person earns more money another person must necessarily have less. This is a fallacy that we need to confront. One of our big failures in the last 4 years is to concede that capitalism is part of the problem. It is the solution, creeping socialism is the problem. It has shown itself to make everyone poorer all the places it has been tried and yet in our hubris we believe we can adopt socialism piecemeal and it will somehow work. 2 cheers for the wealth gap. It is the sign of a healthy opportunity society.
Feb '12
Re: Does the Wealth Gap Matter?
While all that you put forth may be true. A bigger problem with being right is being able to sell that you are right. It is too easy to characterize wealth inequality as "unjust" at its face. It is easier for a mob to internalize that "they the rich" are the root of my unhappiness than for the same to think that "more liberty" is the cure. Especially when the solutions are for the "rich to give" verses "we to earn".
Apr '12
Re: Does the Wealth Gap Matter?
Ross, you're right that the poor don't get poorer just because the rich get richer. I for one always understood that; it's why I used to think that "wealth gaps" don't matter. But here's what I came to understand. People don't just care about how much they have in absolute material terms. They care about social access, and it's reasonable for them to care about that; it's not just a question of class envy. If you have a class of very rich people who largely control the society, and who give their kids all kinds of advantages to help them take over those same roles, and who are basically out of touch with how the rest of America thinks and lives, that creates an unhappy situation for the people at the bottom even if they do have insulated houses and personal computers.
The goal isn't to shrink the wealth gap as much as possible, but only to make everyone feel that they are contributing and valued members of society. Man does not live by bread alone.
Jul '11
Re: Does the Wealth Gap Matter?
EThompson
Mendel
EThompson:
Americans are indeed fragmented because many socio/economic factions no longer share the values espoused by the infamous Protestant Work Ethic that clearly emphasizes the utter necessity of adapting to changing market conditions. Innovation, self-sacrifice, and the willingness to step outside one's comfort zone werequalities that made this country unique.
Society seems to have lapsed into a state of laziness whereby if you show a minimal modicum of desire to work, a middle-class job should be waiting for you.
Bingo. As my father incessantly preached to his children, there is no such thing as fair. · 19 minutes ago
Good father!
Mar '12
Re: Does the Wealth Gap Matter?
Rachel L.:
Man does not live by bread alone. · 0 minutes ago
Nov '12
Re: Does the Wealth Gap Matter?
This post is based on the false notion that "the rich" from the past are the same individuals as "the rich" in the present and will remain the same in the future. You can't track groups of people and assume they remain static collections of the same people. Your entire extrapolation from this false premise is predictably nonsense.
The "gaps" between income levels are not a concern. What we should be concerned about is income mobility, the ability to move from one income level to another throughout the course of your life. This is becoming more and more of an issue within America because of our ever greater strides towards socialism and is a problem worth addressing; but your incorrect assumptions (based on faulty economic understanding based on Marxist lies) have led you to dangerously bad conclusions.
Edited on December 3, 2012 at 1:05amApr '12
Re: Does the Wealth Gap Matter?
The only thing needed to get my analysis off the ground, NoWayer, is for people to identify themselves with a socioeconomic class. Which they do. Actually, if Charles Murray is right, we really don't have that much upward mobility anymore, but the more important thing is that people know that there are rich people out there, and that they aren't them.
Nov '12
Re: Does the Wealth Gap Matter?
You're accepting a false premise. I understand that people's perception of themselves matter, but it's that perception that we need to change. Telling them they are, in fact, part of and stuck in an economic class will not help the situation.
We need to address the growing difficulty of income mobility by returning to freedom and liberty, not by increasing redistribution.
We need to show people the perceived wealth gap is a fallacy, because it is.
If you want proof, look up the wealth gap in other nations. You'll find that those with a small gap are societies with terrible economies and low class mobility. IE Mexico has a very small wealth gap. Nobody wants their economy. Bringing their socialism here, along with their narrow wealth gap, will only hurt more Americans.
Dec '11
Re: Does the Wealth Gap Matter?
No such thing as a zero-sum game!
Apr '12
Re: Does the Wealth Gap Matter?
The growth of the wealth gap certainly isn't a fallacy. It's a fact. We can argue about how we should feel about the wealth gap, and about the correct policy response to it, but whatever argument we make we should start by acknowledging what middle-class people already know: there's no guarantee that economic growth will help you personally, either by making you richer or by opening exciting new opportunities.
Some people (many, in fact) are de facto stuck in a particular socioeconomic rut. They lack the resources or the freedom (perhaps thanks to personal obligations) or the native talent to move up. Conservatives hate to admit this, but not everyone is in a position to become an entrepreneur or small business owner or what have you.
And anyway, I didn't say I favored more redistribution. Overall I think we need less, but it needs to be smarter, and targeted towards easing the burdens of the struggling-but-virtuous instead of incentivizing vice. This is not a choice of liberty vs socialism; we need to look past such hackneyed, oversimplified disjuncts.
Nov '12
Re: Does the Wealth Gap Matter?
No, the difficulty in upward mobility is the problem. People's perception that an income gap is a problem is also a problem in itself. Those are the issues we need to address.
Giving credence to false premises will exacerbate our real problems. We need to address the growing challenges facing people working to change their economic status. Increasingly redistributive economic policies will make economic mobility more difficult, not less, just as those efforts have hurt us over the last century.
This video directly addresses the misunderstandings you seem to be promoting. It should still be available to non-paying members for another week or so, if you don't have one you can create a free account. Please take a look and examine your premises, pay special attention to Yaron from ~4:15 - 5:00:
Income Inequality Insanity: The 99% are Growing and Consuming More Than Ever (http://www.pjtv.com/?cmd=mpg&mpid=113&load=7626)
Edited on December 3, 2012 at 2:16am