inequality

On July 15th Larry Summers published an insipid editorial in the Huffington Post entitled "inequality of opportunity a more important focus than inequality of income."   He begins his piece by saying, "there is no question that income is distributed substantially more unequally than it was a generation ago - with those at the very top gaining share as even the upper middle class loses ground in relative terms. Those with less skill, especially men who in an earlier era would have worked with their hands, are losing ground, not just in relative but in absolute terms."  Since there is no question, I won't dwell on it, but I call his piece "insipid" mostly because, of all people, Larry Summers, an ex-Harvard president, should know that this same inequality of income has a profound effect on inequality of opportunity.  By most measures, America is becoming stratified within social classes, and there is less movement between those classes than our faith in a meritocratic "land of opportunity" might suggest.  With a few merit scholar exceptions, of course, the children of the wealthy go to Harvard for a rich educational experience, while the children of the poor go to the local community college and work while they do so.  I do believe it is important to address inequality of opportunity, particularly for our rising generations, but how can one focus on inequality of opportunity without first focusing on inequality of income, insofar as income is the principle means of capturing that opportunity and making it one's own?  http://www.huffingtonpost.com/2012/07/16/larry-summers-inequality-of-opportunity_n_1675564.html    


There are any number of questions that face us as a nation, but I do believe the increasing stratification of America into classes is having, and will continue to have a profound effect on the American character as the differences between what we want to believe of ourselves gets more and more out of sync with the realities of the world we inhabit.  On the one side of the political debate, as Dr. Summers would have it, "Progressives argue that widening inequality jeopardizes the legitimacy of our political and economic system. They contend that at a time when the market is generating more inequality, we should not be shifting tax burdens from those with the highest incomes to the middle class, as has taken place over the last dozen years."  On the other side, "conservatives argue that in a world where everything is increasingly mobile, high tax rates run more risk of driving businesses and jobs overseas than they once did. They point out the central role of entrepreneurship in advancing economic growth and note that since most new ventures fail, the returns of success have to be very large if entrepreneurship is going to flourish." 


Mr. Summers sees this as an impossible divide, and perhaps it is, and I don't think many would argue that the divide is part and parcel of the political reality we now inhabit.  The divide, of course, goes much deeper than simply tax policy, a fault line that runs back to the origins of our constitutional republic.  It concerns the legitimacy of federal taxes at all, which in turn raises questions about the legitimacy of a federal government at all.  You find an earlier editorialist, Hamilton, arguing, with more than a hint of exasperation, "what is a power, but the ability or faculty of doing a thing?  What is the ability to do a thing, but the power of employing the means necessary to its execution?  What is a legislative power, but a power of making laws?  What are the means to execute a legislative power but laws?  What is the power of laying and collecting taxes, but a legislative power, or a power of making laws, to lay and collect taxes?  What are the proper means of executing such a power, but necessary and proper laws?"  


The question, of course, is this:  "what is necessary and what is proper?"  A good deal of Hamilton's argument throughout what has come to be known as the Federalist Papers focused on the need for a tax-supported federal government to provide for the common defense, and there are few conservatives (or progressives for that matter) who would argue against the necessity for a strong (or at least a strong enough) military presence.  Beyond that, determining just what a necessary, much less a proper government service becomes a bit dicier.  I would recast Dr. Summers' divide between progressives and conservatives along a different fault line.  On the one side, that is, progressives argue that we have a collective responsibility for certain things like education, health care, and the basic needs of food and shelter, particularly for the infirm, the elderly and the young.  There is no question that all have been commodified, and there are invidious comparisons to be made between, say, the education one receives in the public schools and certain private schools -- between, say, the health care one receives at a public clinic and certain private hospitals.  If one can afford the best, if one has the necessary means, one can get the best.  On the other side, at the extreme end of the spectrum, the conservative would argue that we have no (or very little) collective responsibility, only an individual responsibility.  If to the extent that something can be commodified, it should be commodified, and government should butt out of the picture.  Those who desire an education, health care, and the basic needs of food and shelter should find the individual means to procure them.


In fairness, this is what I call a spectrum issue.  There is an extreme progressive view, where all things are considered a collective responsibility, but one rarely hears extremist argument at the far end of the progressive spectrum.  The argument among progressives is the diminished one that some things like education et cetera are a collective responsibility and it is fitting and proper to collect taxes to insure that those things are adequately provided for all.  One is, however, hearing extreme arguments on the conservative side, and hearing them within what might pass for the mainstream, the notion that one should starve the government, particularly the federal government, until one can drown it in a bathtub.  


When Summers writes, "unfortunately, the points on both sides of the argument have considerable force" is perhaps true when we are close to the center of the spectrum, but the points on both sides grow more and more absurd, and his argument becomes even more disappointing, more a shoulder shrug than of resignation as we move to the extremes. "The reality," he tells us, "is that inequality is likely to remain high and rising even in the face of all that can responsibly be done to increase tax burdens on those with high income and redistribute the proceeds."  If the best argument one can muster for a progressive tax policy, in both senses of the word progressive, is to play Robin Hood, to take from the rich and "redistribute the proceeds," then we may as well concede the debate, in part because such a simplistic view of "redistributive justice" violates individual autonomy while evading the crucial question of just what is necessary and proper as a collective responsibility.  The fundamental issue is not the redistribution of income from the rich to the poor, but whether it is a collective responsibility to insure that all Americans have access to education, health care, or the basic needs of food and shelter. 


I believe, in short, that Summers', not unlike many others, miss the point entirely.  Having said that, I don't want to evade his point.  He writes that "perhaps the focus of debate and policy needs to shift from a focus on inequality in outcomes, where attitudes divide sharply and there are limits to what can be done, to a focus on inequalities in opportunity. It is hard to see who could disagree with the aspiration to equalize opportunity or fail to recognize the manifest inequalities in opportunity today."  At first blush, this shift from "equalizing one's present circumstances" to "equalizing one's opportunities" would seem to be the middle ground between collective and individual responsibility, and of course he is correct in suggesting that few would disagree in principle with "equal opportunities."  We have, in other words, a collective responsibility to "create opportunity" and the individual responsibility to capitalize on those opportunities through diligence and hard work.  We are, after all, the "land of opportunity," and the myths surrounding those who have "made it big" -- the Carnegies and Rockefellers of a previous era -- the Gates and Jobs of our era -- have served to trap any number of discussions in a circle.  


Summers recognizes that "a serious program to promote equal opportunity must both seek to enhance opportunity for those not in wealthy families and to address some of the advantages currently enjoyed by the children of the fortunate."   Summers has a point, if an enhanced opportunity would mean upward income mobility, and there is plenty of evidence that upward income mobility is not what it once was.  We can all think of an exception to the rule, but the exceptions are exceptions because the rule has some force.  I am suggesting that, for too many Americans, their present circumstances determine their opportunities, particularly for those at the bottom of the economic heap.  While studies of income mobility are tricky to interpret and the import of the statistical data sometimes unclear, Scott Winship of the Brookings Institute draws the following conclusion: "What is clear is that in at least one regard American mobility is exceptional: not in terms of downward mobility from the middle or from the top, and not in terms of upward mobility from the middle — rather, where we stand out is in our limited upward mobility from the bottom. And in particular, it’s American men who fare worse than their counterparts in other countries. One study compared the United States with Denmark, Norway, Sweden, Finland, and the United Kingdom.   It found that in each country, whether looking at sons or at daughters, 23 to 30 percent of children whose fathers were in the bottom fifth of earnings remained in the bottom fifth themselves as adults — except in the United States, where 42 percent of sons remained there."  One could cite other studies, but the Brookings Institute, and the National Review can hardly be accused of left leaning sentiments, and while they would resist gloomy interpretations, if Indiana’s governor, Mitch Daniels, is correct, if  “upward mobility from the bottom is the crux of the American promise,” then we are not doing exceptionally well at creating opportunity.  http://www.brookings.edu/research/articles/2011/11/09-economic-mobility-winship   


The difficulty arises when we ask, "what exactly creates opportunity?" Or as important, when we ask "what exactly forecloses opportunity?"  We already know the answer to those questions.  Things like education, health care, basic needs tend to create opportunity, while the lack (or discernible disparities in the quality) of the same tend to foreclose opportunity.  Summers tells us, for example, that "by far the most important step that can be taken to enhance opportunity is to strengthen public education," but I am pessimistic that this most important step will be taken, either at the primary, secondary, or post-secondary levels.  Indeed, for those who have drifted further and further to the right of the political spectrum, where individual responsibility has become in essence every man for himself, the way to "strengthen public education" is to remove the collective responsibility of "public" from the equation, and to the absolute extent possible, commodify education and release it within "the survival of the fittest" ecology of the free market.   The liberal impulse to let parents choose is fine, of course, but parental choice will be driven by their available means to choose, their income.  A commodified education is unlikely to equalize the quality of education for all, but rather distribute students between a Walmart education and a Nieman-Marcus education.  If education and opportunity are as intimately linked as Summers and others believe, that distribution will foreclose opportunity and reinforce inter-generational class structures, particularly for those at the bottom who, in a commodified world of every parent for themselves, will be unable to afford even the modest Walmart education.


In the end, I do believe that Summers is correct at least in his sentiment, that we should focus on creating opportunity, but the suggestion that this may be a way out of the current political impasse is, well, insipid.  One cannot discuss the creation of opportunity without discussing the growing disparity of income distribution, and even more pointedly the growing despair of those at the bottom of the income distribution.   In the end, I also believe that Scott Winship is correct at least in sentiment, that "in a narrow sense, the sputtering economy and ballooning deficits are likely to dominate the 2012 election season. But while every election has its own particular concerns, fundamentally it is to the American Dream that our politicians must tend — that libertarian and egalitarian bundle of values and hopes that transcend our partisan, economic, and social divisions."  In the end, however, I am less than hopeful that we can, short of a full blown crises, transcend our divisions.