Income Inequality Actually Sucks (25 Oct 2010)

Thanks to expiring airline miles, I am once again a subscriber of BusinessWeek, or rather, as it is known now, BloombergBusinessWeek. I like the new design, I like that it feels much more stuffed with content, Economist style, and I even don't mind the way they reprise the deckline at the end of stories as "the bottom line" for the morons in their audience who they assume can't be bothered to read what they've bothered to print. But I didn't at all care for this leader (to use the Economist terminology) about "the inequality delusion" by Drake Bennett, whose byline is ordinarily found on the Boston Globe Ideas page and not in the charnel house where right-wing ideology is made. Bennett is writing about recent polls that revealed that most Americans are fairly muddled about the full extent of income inequality in America, though the continue to espouse a desire for a more egalitarian society. Citing libertarian-leaning GMU economist Bryan Caplan, Bennett seems to suggest that Americans' ignorance about the growing levels of inequality is probably good, since they are likely to be too stupid to appreciate all the good things inequality does for society -- that is, motivate the genius class who might otherwise go Galt to build things to improve the lives of proles. That's not the kind of thing I want polluting my mailbox. If BusinessWeek was on Facebook and put that junk in a status update, I would de-friend it.

I was happy to see that Chris Lehmann was also irritated enough by the piece to write an intemperate take-down. He responds to this choice piece of anti-tax dogma from Bennett -- "Any attempt to reimpose that sort of tax rate today would lead to a flight of wealth and talent from the U.S. And with apologies to the social scientists, other ideas for dramatically reducing the income gap are in short supply" -- with some justifiably righteous indignation.

Hmm, where have we heard that “talent flight” mantra before? That’s right—from the defenders of the outlandish executive bonuses doled out under the misbegotten early days of the TARP bailouts. It would indeed be a shame to have to send the Fabrice Tourres of the world packing for greener pastures. And with apologies to Bloomberg savants, there are plenty of ideas for reducing our objectively perilous levels of wealth inequality, from single-payer health care to nationalized universities to unionized workplaces. Most industrialized western democracies have all these things, and as a result, the pain of massive economic contractions like the one we’ve been enduring is actually less lethal in exotic far-off lands like Canada and France.

Lehmann then explains how income inequality actually makes life worse for most people:

So there you have it: the great inequality debate waved away with the assurances of a sloganeering libertarian. So much for the abundant evidence that high levels of inequality help to precipitate, and certainly to prolong, depressions. So much as well for the striking range of positive social goods associated with more equal societies, from higher life expectancy to diminished crime rates to greater literacy rates and lower infant mortality.

Unequal societies are ones that have fragmented into separate classes who experience life from perspectives so different that they lose the ability to compromise with one another and perceive a common good. The logic of income inequality leads to the gated city and the ghetto.