Justice and Income Inequality

This article makes the case that addressing income inequality is the (perhaps not so) hidden heart of President Obama’s agenda. What it doesn’t explain is what his arguments for greater equality in our income distribution are.

In the history of political philosophy, there are at least these three reasons for questioning inequality.

First, there’s the claim that inequality harms the poorest, who lack the bare necessities required for human flourishing. This is not so much an argument against inequality in itself as it is an argument for establishing a floor beneath which no one should be permitted to fall.

Second, there’s the claim that a wildly unequal distribution of income does not appropriately recognize and reward the varying talents and efforts that people display. Some get too much and others too little for their work. A just distribution of income would probably still be unequal, but it would likely be less so and certainly look different from the one “randomly” produced by the marketplace.

Third, there’s the claim that inequality produces political instability, that those at the bottom resent those at the top. In this instance, the “pragmatic” argument for greater equality is that it will take some of the venom out of political life, that it will diminish the likelihood of destructive class conflict, and that it will promote a healthy community. This argument might have some force even if those at the bottom already possess the minimum requisites of human flourishing and are being rewarded more or less as they deserve for their abilities and effort. Envy and resentment—what Tocqueville called “the debased taste for equality”— pose a political problem even if they’re not justified.

The only clue the article gives to the president’s reasoning is a reference to his 2011 speech in Osawatomie, Kansas . This speech, which attracted a lot of attention at the time, is worth revisiting today.  In various ways, he invokes all three of the lines of argument I’ve sketched above. Consider, for example, this passage:

It was here, in America, that the most productive workers and innovative companies turned out the best products on Earth, and every American shared in that pride and success — from those in executive suites to middle management to those on the factory floor. If you gave it your all, you’d take enough home to raise your family, send your kids to school, have your health care covered, and put a little away for retirement.

Today, we are still home to the world’s most productive workers and innovative companies. But for most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefitted from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren’t and too many families found themselves racking up more and more debt just to keep up.

Here we have a vision of human flourishing, expressed (not altogether adequately, in my view) in terms of fulfilled parental responsibility and economic security. And we have a claim that the contemporary economy has all too frequently severed the nexus between effort and reward that is necessary for justice. Finally, there’s an implicit claim that the violation of the old understanding is a legitimate ground for political complaint.

Later in the speech, he explicitly articulates a version of the political argument, insisting that the perceived close connection between wealth and political power delegitimizes our government in the eyes of most of its citizens.

The president explains attributes these problems, above all, to two sources. First, there’s technology and the globalization it enables.

Over the last few decades, huge advances in technology have allowed businesses to do more with less, and made it easier for them to set up shop and hire workers anywhere in the world. And many of you know firsthand the painful disruptions this has caused for a lot of Americans.

Factories where people thought they would retire suddenly picked up and went overseas, where the workers were cheaper. Steel mills that needed 1,000 employees are now able to do the same work with 100, so that layoffs were too often permanent, not just a temporary part of the business cycle. These changes didn’t just affect blue-collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs or the internet. Today, even higher-skilled jobs like accountants and middle management can be outsourced to countries like China and India. And if you’re someone whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages and benefits—especially since fewer Americans today are part of a union.

And then there’s old-fashioned greed:

Remember that in those years, thanks to some of the same folks who are running Congress now, we had weak regulation and little oversight, and what did that get us? Insurance companies that jacked up people’s premiums with impunity, and denied care to the patients who were sick. Mortgage lenders that tricked families into buying homes they couldn’t afford. A financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.

His solutions are both familiar and underwhelming. For the second problem, there’s regulation, but how a presumptively illegitimate government can rein in the interests that have allegedly captured it is a question the president doesn’t address. The more government regulates, the more there is to be gained by being at the table when the regulations are written. And in a complicated economy, with extensive regulation, most of the rule-making is going to be done under the proverbial radar. Republicans and Democrats may have different sets of wealthy cronies, but it’s hard to see how anything the president has proposed overcomes the problem of crony capitalism.

For the first problem, there’s “investment” in both education and infrastructure.

The world is shifting to an innovation economy. And no one does innovation better than America. No one has better colleges and universities. No one has a greater diversity of talent and ingenuity. No one’s workers or entrepreneurs are more driven or daring. The things that have always been our strengths match up perfectly with the demands of this moment.

But we need to meet the moment. We need to up our game. And we need to remember that we can only do that together.

It starts by making education a national mission— government and businesses; parents and citizens. In this economy, a higher education is the surest route to the middle class. The unemployment rate for Americans with a college degree or more is about half the national average. Their income is twice as high as those who don’t have a high school diploma. We shouldn’t be laying off good teachers right now—we should be hiring them. We shouldn’t be expecting less of our schools— we should be demanding more. We shouldn’t be making it harder to afford college—we should be a country where everyone has the chance to go.

In today’s innovation economy, we also need a world-class commitment to science, research, and the next generation of high-tech manufacturing. Our factories and their workers shouldn’t be idle. We should be giving people the chance to get new skills and training at community colleges, so they can learn to make wind turbines and semiconductors and high-powered batteries . . . .

Today, manufacturers and other companies are setting up shop in places with the best infrastructure to ship their products, move their workers, and communicate with the rest of the world. That’s why the over one million construction workers who lost their jobs when the housing market collapsed shouldn’t be sitting at home with nothing to do. They should be rebuilding our roads and bridges; laying down faster railroads and broadband; modernizing our schools—all the things other countries are already doing to attract good jobs and businesses to their shores.

I’m agnostic about infrastructure investment. I’ve certainly heard the argument that we have many roads and bridges that need work and see plenty of evidence that governments at all levels are attending to at least some of these needs. There’s surely more to be done, but given our current levels of public debt, I don’t easily see where the additional money is going to come from. I’m much less impressed by the argument for high-speed intercity rail and public transit (at least so-called heavy rail).

I could say a lot about investment in education, but will restrict myself to this.First, over the past fifty years or so, we’ve spent a lot on education with not much to show for it. Perhaps we haven’t spent as wisely as we should. Until we can figure that out, I’m not sure that we should willy-nilly spend more. Second, much of what the president celebrates about American higher education is the product of a relatively free marketplace, though one in which the heavy hand of government is becoming more and more manifest. Left to their own devices, colleges, universities, and technical schools will find all sorts of interesting ways to satisfy the demands of the educational marketplace. Government regulations tends to discourage this innovation and government money tends to raise prices. I take it that no one wants less innovation and higher cost.

What I found most promising about the president’s speech is also what dismays me the most about his analysis. He framed the question in terms of the expectations people have for their families, the hope that they can live up to their responsibilities as parents. I strongly suspect that where families are intact, with two parents contributing to the welfare of the household (through some combination of work, “household management,” and attending to the education of the children), the inequality in the distribution of income that most troubles him is diminished . So why not talk about marriage, the culture and community that support it, and the character it begets? Would not reversing the decline of marriage and family formation ultimately do a great deal more to promote the human flourishing that sits at the heart of the president’s and our concerns?

I am persuaded that economics has a lot to do with family formation , but am also confident that talk about economics and about the distribution of income is no substitute for a proverbial focus on the family.

There’s an important conversation to be had here, but the point of departure has to be “the good life,” understood in traditional terms, not merely in terms of how much money we have or don’t have.