The super-rich aren’t super-smart says Ezra Klein. While it might be comforting to believe that that income differences represent differences in knowledge and skill, it’s just not true:
The massive gains in wealth in this country are apportioning to a small slice of rich people at the very top of the income distribution, not the broad mass of skilled, college-educated workers who hoped they were buying into the economic ruling class but, in fact, are just the new middle. We’ve built an economy where the riches go not to those with the most knowledge, but the most money.
Matt Yglesias isn’t convinced. He points to a 2007 report by Jared Bernstein and Larry Mishel which shows that college graduates still earn significantly more than those with only high school. There "was a huge run-up in the wage premium in the 1980s" writes Yglesias, and "that hasn’t declined at all." So in other words, differences in human capital still explain a great deal of the inequality in incomes.
Of course Yglesias admits that "it’s a mistake to monomaniacally focus on educational attainment as the only factor driving inequality" and the Bernstein and Mishel paper he links to makes that point clear. But he insists that the college wage premium endures partly because of "inadequate preparation for students from disadvantaged backgrounds and screwy priorities on the part of institutions of higher education".
In a follow up post Klein points out that income inequality kept increasing even when growth in the college wage premium stalled:
If inequality is a simple function of educational attainment, then the economy remains a relative meritocracy, and reversing the trend is a simple matter of sending more people to school (though, as Matt does point out, that’s easier said than done). If not, then it’s a function of any number of forces, ranging from globalization to tax rates to corporate culture, that speak to deeper inequities in our economy, and might require more direct government intervention.
Klein and Yglesias are largely arguing past each other. Klein focuses on spectacular increases in income at the very top of the distribution while Yglesias pays more attention to differences nearer the bottom. Klein doesn’t explain how reining in incomes at the top would help those with incomes at the bottom, and Yglesias doesn’t claim that the rich could become super-rich if only they got a better education (for an amusing take on the plight of the merely rich, watch this video).
What’s really going on here?
Klein’s interest in the causes of inequality waxes and wanes. What he’s really interested in is getting the government to do something about it. Last year he wrote:
Whether inequality is a result of skills-biased technological change or low marginal tax rates or Wall Street or the inequality gnomes is really neither here nor there.
So why is he arguing with Yglesias about the causes of inequality? The reason is that Klein is trying to sell redistributive policies to readers who believe their country ought to be a meritocracy. A large proportion of Americans (particularly white educated Americans) believe that differences in income are fair if they are the result of talent and effort. And rather than argue with his readers about values, Klein sets out to convince them that increases in inequality are not the result of differences in ‘merit‘.
In an earlier post Yglesias writes that "Oftentimes … liberals act as if the thing that needs to be done is to prove somehow that inequality has exploded because people are in some sense ‘cheating’". And that’s exactly how Klein is acting in this latest exchange with Yglesias.
Klein gets drawn into this debate because his conservative opponents are constantly cooking up enormous stews of data in an effort to convince readers that the free market rewards the talented and virtuous. Some of these arguments are so outrageous that it’s difficult to resist arguing back. Even free market champions like Friedrich Hayek acknowledged that these claims don’t hold water (the ‘Ecclesiastes effect‘ remains strong).
Klein has now become so anxious to discourage the idea that differences in income have anything to do with differences in merit that he’ll attack anyone who suggests that there is a correlation between investments in human capital and market income. To do so is — in Klein’s mind — the same thing as conceding that income inequality is morally justified.
No philosophy please, we’re Liberals
Klein’s thinking starts and ends with policy. Being a Liberal means building coalitions, winning power and getting down to work on a long to-do list — taxing the rich, supporting Medicare, defending Social Security and so on. It’s projects first and principles second — or better still, projects full-stop. There’s just no room for abstract philosophising. (Watch this video to see how frustrated that makes Cato’s Will Wilkinson.)
Ironically, Klein’s no-philosophy strategy is similar to philosopher Richard Rorty’s. In an article for the Nation Rorty argued against appealing to principles:
Plausible principles are usually too uncontroversial to help one decide which projects to support. I suspect that anybody who thinks of him or herself as leftist would be happy with the most famous principle put forward by a political philosopher in recent decades, John Rawls’s Difference Principle: "Social and economic inequalities are to be arranged so that they are both (a) reasonably expected to be to everyone’s advantage, and (b) attached to positions and offices open to all." The trouble is that most people on the right are happy with it too.
You do not encounter many Republicans who tell you that we shall always have the poor with us, that deep inequalities are necessary for the successful functioning of the economy. Rather, Republicans argue (and most of them actually believe) that since the best poverty program is a thriving economy, and since such an economy requires that people who have money send it to their stockbrokers rather than to the government, redistributionist measures will not be to the advantage of the least advantaged. Such measures, they say, even though adopted with the best of intentions, turn out to violate Rawls’s principle.
When we on the left argue with Republicans who take this line, it is not about principles. Rather, we insist that a thriving economy can afford redistributionist measures, and that a rising tide will raise all boats only if the government constantly interferes to make sure it does. All the fruitful arguments are about facts and figures, about the concrete consequences of the passage of specific pieces of legislation.
Politically this can be useful position to take. Klein seems to regard political philosophy as a game for losers — people like libertarians:
Libertarians, who’re something of an ideological movement without much hope for political power, tend to spend a lot of time puzzling through the theory and philosophy of their ideas. Liberals, who’re something of a political movement without much hope for ideological purity, tend to think through policies and outcomes.
This is another way of saying that Liberals generally agree about the policies they support but disagree about why. This is why talking about policy unites the movement, while talking about principles fragments it. Naturally everyone has their own moral principles, but playing the game means keeping them to yourself. Only the most vacuous and general statements of principle are safe to say out loud.
The constraints of practical politics mean that Klein will never explain why he thinks that inequality is a bad thing. As a result, his arguments about solving the inequality problem will always end up looking like half the premises are missing.
Klein will happily say that rising income inequality is a bad thing. He’ll argue about how to measure it, and — when he’s in the mood — argue about what’s causing it. But what he won’t do is say why anyone ought to care if inequality rises or why government ought to be responsible for fixing the problem. If you were to ask whether inequality would necessarily be such a bad thing if the same things that drove up inequality also made the poor better off, Klein would probably dispute the idea that rising inequality really was likely to make the poor better off.
But maybe Klein is right. In the real world, political battles aren’t won by those with the best analysis and the most complete arguments. Just as high incomes go to those with the most money, the ability to shape policy goes to those with the most power … or something like that.