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Thursday, July 31, 2014

NY Times: Is It Time to Stop Obsessing About Income Inequality?

New York Times:  Income Inequality and the Ills Behind It, by Eduardo Porter:

Is it time to stop obsessing about inequality?

Perhaps it was President Obama’s speech last December, calling the nation’s vast income gap “the defining challenge of our time.” The American publication of the French economist Thomas Piketty’s blockbuster Capital in the Twenty-First Century must have helped.

Whatever the reason, suddenly inequality seems to be not only at the top of the liberal agenda, but in the thoughts of concerned American voters.

Yet amid the denunciations of inequity as the major evil of our era, persistent voices — mostly but not exclusively from the political right — have been nibbling away at the concern over distribution that is taking over the zeitgeist. ... [T]he critique does add up to a coherent argument: The income gap cleaving society between the rich and the rest may, in fact, be a red herring.

CowenIt is not only that the accumulation of income at the apex of the pyramid of success is not the nation’s main problem. There is little we can do to redress it anyway. “The returns to growth are going to people in other countries, most notably China, and generally to people with high I.Q., no matter where they live,” said Tyler Cowen, a professor of economics at George Mason University and a contributor to the Economic View column in The New York Times. “I don’t really know how you could undermine this dynamic, short of wrecking the world. Trying to deny that logic is going to fail or worse, backfire.”

Mr. Cowen, who describes himself as a libertarian with a lowercase “l,” is the author of Average Is Over: Powering America Beyond the Age of the Great Stagnation (Dutton, 2013), which posits that technology and globalization have essentially split the labor market in two: high and low earners. Far fewer stable jobs are left over in the middle to support what through much of the 20th century we called the middle class.

In his view, the defining challenge of our era is that workers in the bottom half of the distribution can no longer trust that their living standard will double every generation. “The right moral question is ‘are poor people rising to a higher standard of living?’ Inequality itself is the wrong thing to look at,” he told me. The real problem is slow growth.

(Hat Tip: Mike Talbert.)

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Comments

Did new focus group data just come in showing that this issue does not win votes for Democrats? If so, Americans may realize that the Fed's cheap money policy is history's largest transfer of wealth from the middle class to the ultra-rich. Democrats have embraced this policy. They own it even more than Republicans.

Posted by: AMT buff | Jul 31, 2014 7:22:54 AM

But people who don't care about inequality don't care about poor people either.

Posted by: mike livingston | Aug 1, 2014 4:07:11 AM

AMT, that is probably correct, but voters will not figure that out. It is too arcane, and the MSM (aside from FOX which preaches only to the converted) have neither the aptitude nor the appetite to deliver that message.

Posted by: Mike Petrik | Aug 1, 2014 8:06:38 AM

I had to check to make sure that it is August 1st, not April 1st. But, I still don't believe it. Rational thinking in the NYT? Who would have ever thought it possible?

Posted by: Dale Spradling | Aug 1, 2014 8:19:21 AM