Is America’s inequality moment over?
Not inequality itself, mind you—there’s little danger that the country’s 35-year runup in income inequality will halt anytime soon. Rather, is the national discussion about income inequality that began in earnest with 2011’s Occupy Wall Street protest in Lower Manhattan’s Zuccotti Park, and quickly moved to the top of everybody’s economic agenda, coming to an end?
In last week’s State of the Union address, President Obama said the word “inequality” only three times; the true focus of his address was opportunity, a word he said 12 times. “For years,” observes the New York Times, “Mr. Obama has spoken of gaps in both income and opportunity between the privileged and everyone else in a changing economy. But his emphasis has shifted.” Whereas two years ago, Obama spoke much more about inequality than opportunity, today the opposite is true. Political professionals appear relieved. Democratic pollster Mark Mellman wants Obama to “banish that term” altogether.
Various commentators, not all of them conservative, have been arguing for months that inequality isn’t America’s biggest economic problem. Unemployment is the real problem, or the deficit, or immobility. The latest argument to surface is that Americans should focus not on economic equality but on social equality by shoring up or reviving egalitarian institutions like the military draft that exist outside the money sphere. The ultimate point, these critics argue, is not to equalize incomes but to limit the extent to which economic differences cause people to feel inferior or superior to one another.
The problem with such rhetoric is that it’s typically an exercise in avoidance. Yes, unemployment remains a huge problem. So does the budget deficit. But those numbers are going down, even as inequality continues to go up. Obviously unemployment and fiscal insolvency are serious problems, but they are problems that would be further eased by addressing the current, historic, and growing imbalance in income inequality. (A larger and more prosperous middle class, for instance, would lower the deficit by increasing federal tax revenues.)
Immobility is a significant problem in America. The U.S. is much less mobile than most experts believed as recently as 1988, and mobility today is greater in Canada, Germany, and France. But an important new study released last month by economists at Harvard and Berkeley found that U.S. mobility is about the same as it’s been since 1971, and perhaps even since 1952. It is not getting worse over time. (Growing inequality and shrinking mobility can be linked spatially, but the argument is complex and doesn’t lend itself well to political rhetoric.)
Income inequality, by contrast, is getting worse over time. Doesn’t it make more sense to focus attention on the problem that’s getting worse rather than all the problems—unemployment, the deficit, limited opportunity—that aren’t? That seems especially true when you remember that the (false) argument that the U.S. was an unusually mobile society was, until quite recently, used to quiet concerns about the unusually high level of income inequality in the U.S.
Arguing that social inequality matters more than economic inequality is an exercise in avoidance, too. In theory, yes, we should all care less about money and stop making invidious distinctions based on who has it and who doesn’t. As Mickey Kaus wrote recently in the Wall Street Journal (drawing on arguments made in his 1992 book, The End of Equality), what is truly wrong with the arrogant super-rich as depicted in, say, The Wolf of Wall Street, isn’t their money—it’s their palpable sense that “they’re better than the rest of us” and their “seemingly endless” rituals “of humiliation and rank-pulling.”
But inequality isn’t just a matter of hurt feelings. Although it’s often argued that inequality’s winners aren’t taking money (and therefore the necessities of life) away from its losers, there is ample reason to doubt that. The percentage of the nation’s collective income going to the top 1% has doubled during the past three decades at least in part because the declining power of labor unions has distributed income away from labor and toward capital. (The share of corporate income claimed by capital, for instance, is higher than at any time since 1966.) Possessing a union card used to be the economic equivalent of possessing a bachelor’s degree. That hasn’t been true for a very long time. Moreover, while it would be great to create more social spheres in which money “doesn’t talk,” those spheres have been disappearing from American life even as income inequality has been rising. The late journalist Jonathan Rowe, who wrote extensively about the virtues of egalitarian social spheres, which he called “the commons,” titled one of his essays “The Vanishing Commons.” Is it merely coincidental that income and social inequality in the U.S. have risen in lockstep? Unlikely. As the rich get richer, they don’t become more interested in finding places where they can meet the non-rich on equal terms. They become less so—as witnessed, for example, by the rapid acceleration in the construction of gated communities that began in the mid-1980s, shortly after the income-inequality boom began. The conservative writer Jonah Goldberg recently seconded Kaus’s argument that what should concern us is not economic inequality but social inequality. He cited as an example Alaska, where he’s been “shocked to discover how casually different economic classes intermingle. Scanning the attendees of a party or patrons of a restaurant, it’s pretty much guesswork to figure out who’s a millionaire and who’s a mechanic.” But Alaska, according to Goldberg, is (after Wyoming) second-best in the nation when it comes to economic equality. It’s inconceivable that the genial social egalitarianism Goldberg appreciates is unrelated to this fact. Perhaps the country really has grown weary of talking about income inequality; historically, it has never been a favorite topic of discussion. The amount of national attention the subject has received during the past three years far exceeds what it got even as it festered during the previous 32. But the question really isn’t whether inequality is an urgent economic problem. A report issued to participants in last month’s World Economic Forum in Davos confirmed that it was. Strangely enough, though, the tycoons and world leaders who assembled there didn’t end up talking much about it. That’s an old story. They know they should talk about it. But they just don’t feel like it.
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