In his big picture article, The Inequality That Matters, Professor and blogger Tyler Cowen explains why we can’t do anything about the periodic financial crashes that wreck the lives of millions. The issue of The American Interest in which this article appears is named Are Plutocrats Drowning Our Republic? It certainly is timely, with wealth inequality at an all-time high. In the foreword, the editor of the of the magazine, Adam Garfinkle, describes one of the problems:
Four means of translating money into political (and subsequent economic) benefit seem to exhaust the logical possibilities: persuading Congress and reg-writing bureaucrats to pass on the transactional costs of corporate functioning to the public, as when taxpayers bear the cost of industry regulation instead of the industries being regulated; lobbying to shape tax laws and accounting rules so that their accumulated wealth is maintained and protected, most often at others’ expense; lobbying to ensure maximum leverage in the financing of political campaigns; and, the master stroke, lobbying to ensure maximum feasible freedom to lobby.
This is a nice statement of the problem, and coupled with the view of the editor that many, if not most, Americans are too busy, either with work or their obsession with “vacuous celebrity” to care, suggests that the plutocrats are going to win easily.
Professor Cowen is in the so-what camp. He begins by showing that the inequality in personal well-being is sharply down over the last 100 years, and perhaps in the last 20 years. This is true enough, at least for people with decent jobs. People generally feel satisfied with their lives and enjoy the sense that they earned it. In that setting, they don’t see massive wealth and income inequality as big problems. As Cowen puts it, the anger is directed not at the wealthy in general, but towards “undeservedly rich people.”
Second, he says that envy is usually local, directed against people we actually know, family and friends who seem to be doing a little better than we are. It isn’t easy to get worked up over the wealth of Arthur J. Pergamen, a hedge fund manager. Most people have no idea of how people like him display their wealth to each other, the peacock walks they do, the ways they establish their social rank, so it is hard to feel one way or the other about them. Click this link for a hint.
Third, he wonders if there are real gaps in inequality of stuff below the richest people. After all, he says, prices are down at Wal-Mart. True, most of us can have a decent TV and other material stuff, but the real advantages of money isn’t the ability to buy stuff. What matters is that upper middle class people are able to raise their children to succeed, with better socialization and better education.
Finally, he talks about “threshold earners” a group which “… seeks to earn a certain amount of money and no more.” He thinks this group is growing, filled with graduate students trying to make only enough money to support their educations and older singles. This is good, he says, because these people have chosen to maximize the pleasures of the ‘non-commercial sphere of life”. He acknowledges that there are people who want to work but can’t find anything, but doesn’t offer any ideas to help them.
Thinking about my friends and acquaintances, all of this seems accurate. They generally are satisfied with their lives and their prospects for the future. They don’t pay attention to political issues or big picture issues on a regular basis. Things that drive me crazy about politics barely register with them, as Jon Walker wrote recently.
I wonder if Cowen read his editor’s introduction. If he had, he would have found an answer to the question of why upper middle class intellectuals are so hostile towards the hyper-rich.
Ample data testify to the fact that the professional classes, often enough those with liberal arts educations and liberal views, are far quicker to take umbrage at inequality, and to see the machinations of aristocracy in those of a higher station, precisely because they connect it not to differences in “talent and virtue” but rather to corruption born of structural distortion. This has a lot to do with acquired habits of mind. Whereas the less formally educated hear abstractions but see actual people and behaviors, the more formally educated hear actual people and behaviors but see abstractions. That is largely why advanced levels of education track with the impulse toward meliorism, and why those with graduate degrees or higher tend to vote overwhelmingly Democratic.
As long as discontent resides only in the educated class, the “impulse towards meliorism” will be the only countervailing pressure against the usurpation of existing institutions that control the worst depredations of the rich. Cowen says we can’t protect ourselves from economic wrecks. If meliorism as manifested by the current administration continues to dominate the range of political discussion, I agree.