The Defining Question of Our Time

In anticipation of the State of the Union address is which it is believed that the topic of income inequality will be front and center, Mark Schmitt, writing at New Republic, suggests reframing the debate. I completely agree with and endorse the conclusion of his piece:

Inequality was constructed by the rules of the system and we can remake those rules.

and I agree that income inequality is important for reasons he mentions:

As Princeton economist Angus Deaton put it in the conclusion of his recent book, The Great Escape, “The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy.”

I’m skeptical that we will accomplish greater income equality by subsidizing insurance companies, physicians, bankers, and political operatives. That has, however, been the policy of the last several years.

I think that the most significant single thing that could be done to promote greater income equality is more jobs. That isn’t an idea that seems to gain any traction.

I’ll throw some questions on the floor. Is income inequality a problem? If so, what should be done about it?

For those of you who on seeing the title of this post thought it was going to be taking a side on Katniss Everdeen vs. Harry Potter, I’m sorry to disappoint you.

12 comments… add one

  • TastyBits

    I think that the problem is more wealth inequality. Specifically, unequal wealth creation opportunities, and unequal wealth retention opportunities.

    Interestingly, most of the people concerned about income inequality are benefiting from this specific wealth inequality. It is almost as if they were trying to divert attention from the substantial wealth they have recently gained.

    Solution: wealth tax. Everybody except for the racists will get behind an amendment to make it possible.

    How about it rich liberals? Let’s stick it to these rich racist Republicans. We can show them. Let them go live with the darkies they hate.

    I am going to hold my breath waiting for you all to join me. Ya right.

  • jan

    I think that the most significant single thing that could be done to promote greater income equality is more jobs.

    Both parties parrot that phrase, giving lip service to the real concerns of the people. However, the real policies pursued, once a politician wins, relates to the ideology peculating in their political agenda, not to the people’s needs and wants. HC is a perfect example of the prioritization exercised by the current POTUS, while job creation was parked on a side street.

  • I think that the problem is more wealth inequality.

    Don’t tell anybody but there’s a bipartisan consensus against taxing wealth. Why do you think Ted Kennedy was in the Senate all those years? The family knew that as long as he was there it would be darned hard to impose a wealth tax.

    BTW, there’s an interesting post here on the election of 1912 and how the strategies held out in that election for coping with wealth inequality failed.

  • Modulo Myself

    Inequality is part of the system. I would suggest that the gap between rich and poor has become so prominent now because all other fictions in the system have died and wealth, which is just an electronic number, is all ‘we’ have to left to measure things with. The list of those who had power in the 40s and 50s, I believe, were more powerful than the current list of clone billionaires, but they had other ways to accrue power than in endless piles of electronic money.

  • PD Shaw

    This is easy. I am an income inequality skeptic, in that I don’t think income inequality is a problem, or at least its little different from over a generation ago. I think healthcare costs have swallowed much of the compensation gains for the middle class, so they feel poorer.

    I agree w/ TastyBits that wealth inequality is an issue, but wealth is difficult to tax. Major property items like real estate and vehicles are the usual proxy. (I’ll have to check out the Zenpundit post)

  • TastyBits

    I am not for taxing wealth, but I am fed up with the faux concern about income equality, poor people, etc. @Dave Schuler identified the reason for income inequality – jobs. With no job, you have no income, and your income is only equal to other unemployed people.

    The system has always been rigged, and folks at the bottom know it. Whatever. If you rich liberals really want to help people, stop trying to help people. Go to another yoga class, make another rug, drink another latte.

    Oh yeah, stop pretending like you care. It is really insulting.

  • ...

    According to CNN, the defining question of our time is, “Do you have Bieber on your Celebrity Death Watch?”

    (My answer is, “Yes I do, for a few months now.”)

  • ...

    But I think the DQOOT will be, in retrospect, “Why did Tenielle leave the Captain?”

  • Andy

    “For those of you who on seeing the title of this post thought it was going to be taking a side on Katniss Everdeen vs. Harry Potter, I’m sorry to disappoint you.”

    That would be Epic (with a capital E) and could make Marvel vs. DC look like a JV match.

  • steve

    Dave- You again go after the kind of inequality that has fewer consequences for our economy. People making $250k a year are not setting policy and buying politicians. While we should correct and eliminate the subsidization, you are not going to reduce it below the multiples of median income seen around the world for most of those professions.

    However, you are much closer when you touch upon wealth inequality. Since a lot of that wealth comes from income at some point, income still matters. It is a difficult problem since the people with the wealth control the media and our politics. Wish there was a good answer.

    Steve

  • TastyBits

    @Dave Schuler

    I meant to comment on your link earlier.

    It has been quite a while, but if I remember correctly the TR from 1900 was vastly different than the TR from 1912. I think he had been co-opted sometime after 1904, but I could be getting this wrong.

    From memory, he was not selected for VP because he was qualified, he was selected because everybody agreed that they did not want him. Nobody ever thought he would be president. If they did, they would have selected the NY dog catcher instead, and therefore, he had no political baggage when McKinley died.

    The year following the link (1913) is also instrumental to wealth inequality.

  • Red Barchetta

    I wasn’t going to comment because of the generally poor quality of the comments. Just let me give you two factoids that you should chew on.

    1. From 1980 to 2005 median income increased across all major demos – white males, non-white males, white women and non-white women. In fact, it increased 31% in the aggregate, and that’s without accounting for benefits, which grew faster than wages.

    However, the weighted demographic mix changed to lower productivity demos, fewer white males and significantly more non-white males and non-white females, yielding an apparent 3% increase.

    Source: US Census Bureau

    2. In a study by David Weil (“Economic Growth, 1st Edition 2005)
    a cross country, cross time, cross growth rates and income levels concluded “we are unable to uncover any…evidence that pro-poor policies systemically raise the share of income of the poorest……..”
    To the contrary, the graph they produced is striking. Y axis is avg income per capita for bottom quintile; x axis is average income per capita. Significantly upward slope; The correlation was .88

    In other words, growth and productivity (equals jobs) is good for the poor. And that comes from investment and innovation. Siphoning off capital from “rich” investors to make handouts for the poor may be good in the very short run, but it also makes the poor serfs. In the long run its growth, growth and growth.

    Where do you think Obama will come out on this? I think we all know.

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