Thursday, December 16, 2010

More on Liberal Equality

I’ve complained from time to time on this blog (see e.g., here) that an obsession with the precipitous rise of relative income inequality is diverting liberals’ attention from what really matters, viz., the prospect of sustainably improving the well-being of people at or near the bottom of the socio-economic hierarchy in absolute terms. All other things being equal, the fact that people at the top are getting to be much better off than people at the top used to be, is a good thing.

A lot of liberals seem to have gotten in the habit of presuming that, morally speaking, other things are never equal because rich people being absolutely better off causes poorer people to be absolutely worse off.  But that presumption isn’t just unfounded, it’s empirically false.

Consider Lane Kenworthy’s findings in this connection (my emphasis):
“Income inequality has risen sharply in the United States and some other affluent countries since late 1970s, with much of the increase consisting of growing separation between the top 1% and the rest of the population. . . .

“Has this been bad for the incomes of the poor?

“In a relative sense, the answer is yes, at least in the United States. According to the best available U.S. data, from the Congressional Budget Office, the share of income going to households at the bottom has decreased.

“What about in an absolute sense? Would the incomes of low-end households have grown more rapidly in the absence of the top-heavy rise in inequality? If we look across the rich nations, it turns out that there is no relationship between changes in income inequality and changes in the absolute incomes of low-end households.”
That, Kenworthy hastens to add, isn’t an argument against redistributive social policy. On the contrary, if income is a reliable measure of well-being, increases in the absolute well-being of people on the lower rungs of the socio-economic ladder in western societies over the last thirty years has largely been a function of the effectiveness of redistributive social policy:
“[I]ncome growth for poor households [across developed societies] has come almost entirely via increases in net government transfers, and the degree to which governments have increased transfers seems to have been unaffected by changes in income inequality. . . .

“In some countries with little or no rise in income inequality, such as Sweden, government transfers increased and so did the incomes of poor households. In others, such as Germany, transfers and the incomes of low-end households did not increase.

“Among nations with sharp increases in top-heavy inequality, we observe a similar disjunction. Here the U.S. and the U.K. offer an especially revealing contrast. The top 1%’s income share soared in both countries, and through the mid-1990s poor households made little progress . . . But over the next decade low-end American households advanced only slightly, whereas their British counterparts experienced sizable gains. The New Labour governments under Tony Blair and Gordon Brown increased benefits and/or reduced taxes for low earners, single parents, and pensioners.”
So there is ample reason to conclude that, at least over the last thirty years, liberalism has measured up to its own moral standards.  The question is whether it’s fiscally sustainable in the longer term in anything resembling its current form.  No responsive answer, however, will have much to do with relative income inequality.

4 comments:

Osama Von McIntyre said...

I think we understand the "liberal argument" differently. As I understand it:

1. The market economy does not distribute rewards in proportion to merit, hard work, or fairness.

2. Broad disparities in income create broad disparities in individual power.

3. The powerful are able to use their power (be it financial or otherwise) to secure additional influence, power, legislative and legal advantage.

Therefore, it is contingent, from the liberal perspective, to ameliorate gross disparities in economic advantage, even in situations where the relatively poor are fat and have wide screen televisions.

Ron Replogle said...

OVM: I'm with you until you get to your conclusion. For the most part, Bill Gate's being rich doesn't make me poor, or substantially diminish my opportunities for leading a life according to my own values. Granted, disparaties of wealth can be converted into disparities of power in spheres of life where wealth shouldn't matter (like elections or judicial proceedings). But isn't the liberal solution to this kind of problem social regulation that blocks the pathways of conversion (think of campaign finance reform or rules of legal procedure)rather than making richer people worse off without making poorer people otherwise better off? From my days as an academic I remember that Mike Walzer wrote a terrific book about this in the 1980s entitled (if memory serves) Spheres of Justice.

Anonymous said...

Bill Gates being rich makes a lot of other people richer.

Arguments that liberals make about this subject just kill me. They all hate the rich but would really like to be one of them. Some of them even are rich, but I don't see them giving up their money to anything other than themselves and charities of their choosing.
Here's the solution: all the rich liberals ought to just send periodic checks to the US Treasury. Why wait for a law.

Ain't Ideology Fabulous? said...

l the rich liberals ought to just send periodic checks to the US Treasury. Why wait for a law.

That's the tiredest conservative canard out there. Liberals have a certain vision of society, and everyone's mutual obligations.