One of the most harmful pieces of residual baggage left over from the Cold War is that policymakers are still loathe to talk about inequality. After all, boiled down idiotic simplicity, capitalism is all about growth and socialism is all about equality. But now the Cold War is over, and it’s time for economists and policymakers to once recognize inequality for the social ill that it is. Communism failed; it’s time for market economics to take a swing at this problem. (Fortunately, this is already happening, at least to some degree.)
This post over at Econlog got me thinking:
Fifty years ago, a college-educated male was much more likely to meet and to marry a female with average or below-average cognitive ability than is the case today. Stratified marriages will produce stratified children. As cognitive skills become increasingly important determinants of wealth, we may see a reduction in intergenerational mobility across income classes.
I had never really considered social inequality as a biological challenge, only as a economic one. But according to the research cited above, not only is wealth stratified, but the inherent biological ability to succeed (intelligence, dexterity, charisma, etc.) may be increasingly segmented as well. Now there’s a touchy issue to approach.
On the other hand, the notion that suddenly this trend is happening in America over the past 50 years surprises me and seems a bit odd. In theory, throughout history wouldn’t people of greater ability have risen to the top, and then sought out mates of similar quality? But were that the case, we would expect biological disparity to be much greater than it actually is, and we wouldn’t expect to see genetic diseases riddling noble lineages. (Though we might chalk the latter up to inbreeding – choosing mates similar to yourself backfiring; it seems nature has a solution to everything.)
And so it remains a riddle for the time being…
July 11, 2007 at 12:13 am
Interesting topic, Capy. As always, the issue of economic inequality begs the question of why we should care. This question seems especially important when considering the CGD mission statement that you hyperlinked. CGD describes the ideal world economy as a zero-sum game, such that it is not acceptable to have everyone grow richer proportionally. Rather, CGD wants the poor to catch up with the rich. This strikes me as odd, because it seems that CGD would prefer wealthy nations becoming poorer to poor nations becoming wealthier. At best, it would seem CGD wants wealthy nations to stop growing and wait for the poor. Why should we want that??
July 11, 2007 at 2:38 am
SM,
Inequality is one of those issues where I really think over-intellectualizing has had a decidedly negative impact on the discourse. I am quite familiar with the reasoning about why inequality shouldn’t concern us; it goes something like this:
Income / wealth / wellbeing is not a zero-sum game. Therefore, the rich can get richer, and even if the poor do not gain anything but remain just as poor, we still have a Pareto improvement and the world is a better place. So we shouldn’t concern ourselves with relative wealth, but rather absolute wealth. Right?
Wrong. That sort of rhetoric is 100% academic because people do care about equality. It may not be a zero-sum game in fact, but it is in practice, because people do envy what others have. Therefore, policymakers should absolutely be very concerned with inequality as an issue, because it is associated with happiness, stability, and increasingly, the legitimacy of capitalism.
I don’t see that written anywhere on their site, and I would be surprised if that was what they had in mind. I feel fairly confident in saying that they are more trying to help the poor catch up, rather than hold the rich back.
What to do about inequality is a much trickier issue (which is why I found the biological question interesting), but recognizing it as a legitimate goal is the first step, and one that has for the most part still not been taken.
So in short, we should care because other people care. We should care because, for example, in Latin America, inequality has created social fissures that allow thugs like Chavez to credibly question capitalism itself. And I doubt the broader populace will take “stop coveting thy rich-ass neighbor” as a viable substitute to actual inequality reduction (and why should they?).
July 11, 2007 at 11:26 pm
I don’t deny that people do care about inequality, so I readily accept this point. I don’t think my argument was the same as the one you attacked, though. My concern is why should the wealthy care about economic inequality, which you also addressed to some extent. However, your argument mostly seems to boil down to the threat that poor nations could pose to rich nations out of jealously or anger over exploitation. These are valid concerns, but I’m not sure that they overcome the economic costs of attempting to remedy the problem. After all, no matter how much economic assistance we give to poor countries, they will still be poorer than the U.S. I’m not sure that they would think any better of us, either! Why not just focus our efforts over levelling the playing field in this country, where we can count on people appreciating the assistance?
July 12, 2007 at 1:05 am
I think I might be with Skepty on this one. While I do strongly believe in fully funded service programs in which Americans can contribute to the economic well-being of other countries via direct action; levelling the playing field internationally would be difficult.
In order to have the ability to do so, America would have to remain supreme over the rest of the world; in effect, play god.
If we focused on leveling the playing field inside America, especially for immigrants, than people could come from all over the world gain status in the US and contribute back to their own country.
July 12, 2007 at 4:06 am
@Skepty
Well, I agree that America should strive to eliminate inequality in its own society, so I guess we don’t disagree so much at this point. Whether or not we should strive to do so in other countries we disagree on, but I think we’ve had the foreign aid debate before. Nevertheless, couple points.
It’s not just the fear that the poor will rise up. There are plenty of more subtle disharmonies in societies that are exacerbated in tandem with increasing inequality to make greater equality a worthy goal.
Also, there are indeed “economic costs of attempting to remedy the problem” as you say, and some may not be worth the cost. In those cases, I wouldn’t argue for them. Here I am arguing that inequality should be a legitimate goal on the agenda, and not much more.
@Wander
Unconsciously or consciously, you seem to have joined the remittance school of development thought. I support those strategies, but would suggest that there is more we can do, which is likely where we disagree.
We don’t have to completely level the field; greater equality does not mean absolute equality, but rather a better balance than currently exists.
I want to consider for a moment that you might be wrong
Actually, I agree, which is why in my next post I will explain how inventing invincible battle droids could substitute for godlike power, and will advocate increased funding for R&D in robotic warfare so that we can have a perfect society.
July 12, 2007 at 5:52 am
I guess I have unconsciously joined the remittance school of development thought. I don’t know that I have joined it exclusively, in general, I think innovation along all schools of thought are good; there is definitely more we can do.
In fact, if a development program were to work with a population recieving remittances, it might be able to do something really amazing. It seems that one of the development fields problems is that it, by its nature is always, on ground that is falling from under it. You invest in one thing then the unstable social situation changes the playing field and makes what was a good development investment a bad one. Add in a little bit of stability coming in from remittances and maybe the playing field won’t change quite so often.
As for your reference to posting next about invincible battle droids, I hope that those droids aren’t connected in any way to Micheal Moore. What’s more, I hope Micheal Moore isn’t an invincible battle droid in hiding under a layer of stealth blubber.
July 12, 2007 at 11:44 pm
Sorry if we’ve already hashed this out Capy, since I don’t remember, but I think the philosophical investigation of this topic has a lot to offer. If I may take the lead with a question of my own, I’m wondering how the development community generally justifies the use of American tax dollars for development work overseas. To my mind, this is very controversial, especially when we agree that much development work could be done in our own country with the same money. Redistribution of wealth is always suspect as far as I’m concerned, but it’s even more suspect when it’s distributed to people who aren’t even part of the system!
July 13, 2007 at 4:25 am
I agree; that would be a worthwhile topic for a separate post. Have at it, and I will respond.
April 24, 2009 at 11:27 am
This topic is quite hot on the Internet at the moment. What do you pay attention to when choosing what to write about?