If “inequality is increasing”, it can mean a couple of things:
- The poor are getting poorer
- The rich are getting richer, or
- Some combination of the two
I care about poor people. I am agreeable to political measures to help them. If poverty is increasing, I see that as a dire crisis requiring action.
But, by and large, we have not been seeing great increases in poverty. We have been seeing the richest people getting richer, and the rest of the population has not been keeping up with them.
In 2006, I read the book “The Conscience of a Liberal” by the Nobel-winning economist Paul Krugman. I did it to expose myself to a contrast to my own conservative views about economics. I was expecting him to go on and on about “poverty”. But he didn’t. I’m not sure the word “poverty” even occurs in the whole book. But he went on and on and on about “inequality”. It became pretty clear that Krugman lies awake at night, dreading the possibility that anyone else out there might have it better than he does.
It gets worse — he describes the Great Depression as the “Great Compression” because inequality was greatly reduced by FDR massively confiscating the property of rich people with ridiculous, extornionate tax rates over 90%. There were far fewer rich people at the end of the Great Depression, and Krugman thinks that was just dandy, he waxes nostalgic over this era. Most of the labor-saving devices we use to do housework hadn’t been invented yet, so women had to stay at home — being a “housewife” was a busy full-time job. In 1947, the median family’s income was 44% of what it is now, but the important thing is that there were far fewer of those oh-so-nasty rich people around so the likes of Paul Krugman could sleep soundly.
There are a number of problematic trends that are worth talking about:
- the plight of the poor
- median wage stagnation (in real terms — median wages have been keeping up with inflation as defined by CPI, but not increasing any faster than that)
- medical inflation far outstripping CPI
- many jobs that were previously done just fine by high school graduates now require a college degree (why?) and inflation of college tuition and the price of textbooks has far outstripped even medical inflation
All of those problems are worth talking about. And if you discuss any of them under their own specific name, I have no problem with you. But talking about “inequality” is intellectual sleight of hand, a way of pretending to be motivated by compassion while really being motivated by envy. Talking about “growing inequality” makes it sound to the uninformed like someone is getting worse off, which is baloney — in our times “growing inequality” does not reflect a trend of people getting worse off, it reflects the rich getting richer, and if you can’t live with that, I suggest you seek counseling.
And if people want to be especially misleading, they start giving figures on “wealth inequality” rather than “income inequality”. The thing is, culturally, most Americans don’t save squat. Only a few are too poor to save anything, there are many Americans whose income, in real terms, is stratospheric compared to many people in the third world who are getting by just fine. But they lack the maturity to save anything. American culture is about “keeping up with the Joneses” so you buy a house you can barely afford, same for your car, and tons of other useless crap, and the whole time it’s the height of bad manners for anyone to ask “Is it paid for?”. The financial sector has been doing such a great job of making credit available to such a large share of the population that people don’t see any need to save up a “rainy day fund”. If hard times hit, they’ll just go into credit card debt.
Sometimes you get figures like “the 8 richest people in the world have more wealth than the bottom 50% of the world’s population”. I’ve got news for you, the net wealth of “the bottom 50% of the world’s population” is very probably negative. You have more change in your pockets than “the wealth of the bottom 50% of the world’s population”.
In the US, except for really, exceptionally poor people, a failure to accumulate wealth reflects an inability, or at least an unwillness, to delay gratification. And there’s a lot of that going around.