Inequality

Many people on the left side of the political spectrum believe that the key problem now is economic inequality, and that the solution must start by redistributing some of the wealth of the rich to the rest of the population. This is, for instance, the point of the “Occupy” movement’s criticism of the “1%”.

There’s much truth in this view. It’s now indisputable that the level of inequality has increased dramatically in recent decades, reaching levels last seen before the Great Depression (the one in the 1930s). It seems largely indisputable as well that the wealthy are more separated from the rest of society than in the past – living in gated communities, getting increasing access to services designed especially for them – and that the influence of money on the political process has grown. All of this is troubling. But the liberal diagnosis and prescription does not follow.

The first difficulty is that most of the country does not agree with this diagnosis -- so you can't get them to take the prescription. It is true that most citizens, perhaps 2/3, agree that the rich are not paying their fair share of taxes and exert too much influence; but if you dig a little deeper into the polls, you find that it is a weakly-held belief, low priority, and has actually declined in the last decade. That is why the Occupy movement has never gained significant traction beyond the core liberal community. Instead, much of the country believes, with great passion, that the most important problems are moral – a breakdown in responsibility, community, and value integrity. This leads not to demands for redistribution of wealth, but to various conservative and fundamentalist movements focused on religion and traditional values or local control.

These movements are not driven by the wealthy, though they have formed an uncomfortable alliance. The Tea Party and its ilk are neither very favorable nor very critical towards wealth as such; and their core issues are ones which are not of concern to the wealthy and are indeed often problematic for business leaders. Wealth in itself creates no reasons for caring about homosexuality or abortion or gun ownership; while business leaders disagree with the Tea Party on diversity and object to restrictions on immigration.

Any historical survey will make clear that inequality has produced morally conservative movements at least as often as liberal-redistributive ones. Sometimes the two strands have combined in unfortunate ways: millenarian movements since the middle ages have often combined extreme ethical-religious purism with total communism of property. More generally, the point is that that protest movements have rarely followed the simple logic of economic interests.

The second problem is with the liberals' prescription – their view of how to correct the injustices. Their answer is generally through a combination of tax policy and social-welfare redistribution. This answer does not take into account the really deep, wide, and long-lasting loss of faith in the effectiveness of government – going back at least forty years, and extending through the entire advanced industrial world. Even those who agree that inequality has grown too large generally recoil at the thought that government power should be increased to deal with it. About 2/3 of the population has a negative view of the federal government, believes it has too much power, and sees it as the primary danger for the future; less than 20% view it favorably, and less than 10% believe it should have more power.

So the liberal policy justification comes down to saying: “We know better.” There has always been something bothersome to me about the famous phrase, “It’s the economy, stupid!”: it seems disrespectful and demeaning, implying that many things that people care about very deeply are not important. And it doesn’t actually work: liberals have struggled to explain why so much of the electorate continues to vote against their economic self-interest, at least as the experts see it. Robert Frank, trying to figure out "What's The Matter With Kansas?", lamented that conservatives have “won the heart of America” even though – in his view – rational minds should tend to liberalism. A rather vicious circle of mutual misunderstanding has been established, and many in the broad middle of the country (geographically and politically) feel their concerns are being treated with disrespect. That sparks anger, and anger drives the tremendous energy of the Tea Party and other groups on the Right.

Anyone who cares about community needs to be concerned about the corrosive effects of rising inequality. But we need to spend more time understanding before prescribing.