Will Wilkinson has an interesting new paper out that addresses the topic of economic inequality. Among his points are the following:
Money is merely a means to an end -- consumption. While the rich may spend more than the rest of us, it is not clear how much more they are really getting for the extra money with a leveling in quality appearing to take place. As Wilkinson argues:
Immigration increases inequality -- and that's good. When a destitute immigrant arrives in the U.S. the level of inequality in the country automatically increases. Within a relatively short amount of time, however, there is good reason to think that the individual will be better off (otherwise why would they have come?). Even if that person still makes less money than average in the U.S. and contributes to a rise inequality from a national perspective the individual has contributed to equality on a global scale. Strictly examining the impact from the vantage point of the U.S. is what Wilkinson refers to as "analytical nationalism."
Income inequality has not come at a perceptible detriment to democracy. There is a line of thinking that income inequality has caused our democratic ideals to give way to what some have termed a "plutocracy" -- the rule of a wealthy elite that sets the national agenda to their own benefit. In the face of such accusations, however, Wilkinson raises some rather practical objections: If this were true then how does one explain the political success of Barack Obama, the son of an immigrant father and public school teacher mother and the failure of Steve Forbes? How does one explain that a majority of those making over $200,000 voted for Obama in the last election despite his explicit promise to raise their taxes -- a significant shift from the 35 percent in this demographic that voted for the Democratic candidate in 2004?
Research has also shown that opinion leaders such as legal and political philosophers are overwhelmingly Democratic, and Democrats enjoy a sizable presence in the media. Paul Krugman, who is objectively in favor of redistributionist policies, is a member in good standing of the establishment, enjoying a high-profile position at arguably the country's leading newspaper and receiving a Nobel prize. The notion that the elites of this country are busily implementing a right-wing economic agenda in order to further the interests of the wealthy in this country is rather difficult to square with the evidence.
Update: Much more here.
Money is merely a means to an end -- consumption. While the rich may spend more than the rest of us, it is not clear how much more they are really getting for the extra money with a leveling in quality appearing to take place. As Wilkinson argues:
At the turn of the 20th century, only the mega-rich had refrigerators or cars. But refrigerators are now all but universal in the United States, even while refrigerator inequality continues to grow. The Sub-Zero PRO 48, which the manufacturer calls “a monument to food preservation,” costs about $11,000, compared with a paltry $350 for the IKEA Energisk B18 W. The lived difference, however, is rather smaller than that between having fresh meat and milk and having none. The IKEA model will keep your beer just as cold as the Sub-Zero model.Indeed, we have to think about the marginal benefit of money. Your first $25,000 of income are a lot more important than the last $25,000 if you make a million dollars per year. With the first $25,000 you can pretty much guarantee access to adequate housing, food and clothing while the last $25,000 is relatively trivial, perhaps allowing you to stay at a 5 star hotel during your week long vacation to Provence instead of a 4 star one.
Similarly, more than 70 percent of Americans under the official poverty line own at least one car. Despite a vast difference in price, the difference between driving a used Hyundai Elantra and a new Jaguar XJ is practically undetectable compared with the difference between motoring and hoofing it.
Immigration increases inequality -- and that's good. When a destitute immigrant arrives in the U.S. the level of inequality in the country automatically increases. Within a relatively short amount of time, however, there is good reason to think that the individual will be better off (otherwise why would they have come?). Even if that person still makes less money than average in the U.S. and contributes to a rise inequality from a national perspective the individual has contributed to equality on a global scale. Strictly examining the impact from the vantage point of the U.S. is what Wilkinson refers to as "analytical nationalism."
Income inequality has not come at a perceptible detriment to democracy. There is a line of thinking that income inequality has caused our democratic ideals to give way to what some have termed a "plutocracy" -- the rule of a wealthy elite that sets the national agenda to their own benefit. In the face of such accusations, however, Wilkinson raises some rather practical objections: If this were true then how does one explain the political success of Barack Obama, the son of an immigrant father and public school teacher mother and the failure of Steve Forbes? How does one explain that a majority of those making over $200,000 voted for Obama in the last election despite his explicit promise to raise their taxes -- a significant shift from the 35 percent in this demographic that voted for the Democratic candidate in 2004?
Research has also shown that opinion leaders such as legal and political philosophers are overwhelmingly Democratic, and Democrats enjoy a sizable presence in the media. Paul Krugman, who is objectively in favor of redistributionist policies, is a member in good standing of the establishment, enjoying a high-profile position at arguably the country's leading newspaper and receiving a Nobel prize. The notion that the elites of this country are busily implementing a right-wing economic agenda in order to further the interests of the wealthy in this country is rather difficult to square with the evidence.
Update: Much more here.
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