Hannah Arendt Center for Politics and Humanities
5Jul/130

The Moral Roots of Income Inequality

ArendtWeekendReading

Inequality is not simply a matter of numbers and economics. Thomas Edsall explores at the moral and cultural roots of income inequality last week in the New York Times. His essay takes as its basis a recent speech by Alan B. Krueger, President Obama’s Chairman of the Council of Economic Advisers, entitled “Fairness as an Economic Force.” Here is one excerpt from Krueger’s speech:

In considering reasons for the growing wage gap between the top and everyone else, economists have tended to shy away from considerations of fairness and instead focus on market forces, mainly technological change and globalization. But given the compelling evidence that considerations of fairness matter for wage setting, I would argue that we need to devote more attention to the erosion of the norms, institutions and practices that maintain fairness in the job market. We also need to focus on the policies that can lead to more widely shared – and stronger – economic growth. It is natural to expect that market forces such as globalization would weaken norms and institutions that support fairness in wage setting. Yet I would argue that the erosion of the institutions and practices that support fairness has gone beyond market forces.

While globalization, outsourcing, and the rise of robots certainly are part of the reduction of wages and the hollowing out of the middle class, they do not tell the whole story.

peanuts

At a time when real wages are stagnant, CEO pay is skyrocketing, income at the highest levels of society is increasing disproportionately, and corporate profits as a share of Gross Domestic Product have reached record levels.

Importantly, Edsall notes that conservatives and liberals both have focused a light on this disintegration of the moral fabric of our society, though they often do so in very different ways. He begins his essay with a discussion of Charles Murray and David Brooks, each of whom argue that the economic and political problems we face have their roots in “disintegrating moral norms.”

While Krueger’s analysis is very different from Charles Murray’s or from David Brooks', all three share an interest in what they see as disintegrating moral norms. And there is something else that binds them: the trends that Murray, Brooks and Krueger deplore continue with unrelenting force. From Murray’s perspective, social decay and irresponsible behavior have spread into the broad working and lower middle class.

Liberals and conservatives often reject alliances on moral questions, and their analyses of the moral decay are meaningfully different. And yet, Edsall does well to bring them together and to remind us that radical inequality and political paralysis may have cultural and moral valences that transcend political affiliation.  His essay on “Our Broken Social Contract” is your weekend read.

You might also look at Alan Krueger’s speech, “Fairness as an Economic Force.” originally given at Oberlin College. I have written about Murray’s book Coming Apart, here and here.

-RB

Roger Berkowitz
Roger Berkowitz is Associate Professor of Political Studies and Human Rights at Bard College, and Academic Director of the Hannah Arendt Center for Politics and the Humanities. He is also the author of "Gift of Science: Leibiniz and the Modern Legal Tradition", as well as co-editor of "Thinking in Dark Times: Hannah Arendt on Ethics and Politics".
21Mar/120

Is Economic Inequality Becoming a Problem for Americans?

Is economic inequality becoming a problem for Americans? The common sense today is that OWS has put inequality on the agenda today in a way that is new in American politics. And today Eduardo Porter makes the argument that OWS is having some traction on the question of income inequality. While Americans traditionally are tolerant of inequality, that may be changing.

Our tolerance for a widening income gap may be ebbing, however. Since Occupy Wall Street and kindred movements highlighted the issue, the chasm between the rich and ordinary workers has become a crucial talking point in the Democratic Party’s arsenal. In a speech in Osawatomie, Kan., last December, President Obama underscored how “the rungs of the ladder of opportunity had grown farther and farther apart, and the middle class has shrunk.”

There are signs that the political strategy has traction. Inequality isn’t quite the top priority of voters: only 17 percent of Americans think it is extremely important for the government to try to reduce income and wealth inequality, according to a Gallup survey last November. That is about half the share that said reigniting economic growth was crucial.

Seventeen percent seem a low number of citizens concerned about inequality, but looking deeper, Porter argues that attitudes are changing.

A slightly different question indicates views have changed: 29 percent said it was extremely important for the government to increase equality of opportunity. More significant, 41 percent said that there was not much opportunity in America, up from 17 percent in 1998.

Statistics on income mobility are notoriously hard to measure and contested, but the surveys indicate that optimistic Americans are losing that sense of mobility and possibility. Even if people can and do often earn more than their parents, the vast rifts opening up between rich and middle class means that increasingly Americans live in different worlds. These vast divisions are now seen as a problem not only by liberals, but also by conservatives like Charles Murray, whose book Coming Apart bemoans the loss of a common sense of American values. There is a way in which the truly extraordinary gaps in income are unraveling the social contract that holds the country together.

In other words, even for those who are accepting of inequality and who believe in a meritocracy, excessive inequality cannot be justified.  As Porter writes:

One doesn’t have to believe in equality to be concerned about these trends. Once inequality becomes very acute, it breeds resentment and political instability, eroding the legitimacy of democratic institutions. It can produce political polarization and gridlock, splitting the political system between haves and have-nots, making it more difficult for governments to address imbalances and respond to brewing crises. That too can undermine economic growth, let alone democracy.

Read more here.

-RB

 

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
15Feb/121

For the Welfare of All

A reader responds to my post on The Great Cultural Divide and reminds me that perhaps Charles Murray's most interesting suggestion in his new book, Coming Apart: The State of White America, 1960–2010, is for a Basic Income Guarantee (BIG) or what used to be called a "negative income tax." The post, by a reader named Murfmensch, reads:

Murray also calls for a Basic Income Guarantee to replace all other government provisions. I think his particular proposal would harm the wrong people. He thinks provisions for “widows and orphans” have wrought harms that I don’t see.  However, I think a Basic Income Guarantee, funded by a tax on pollution and/or income past twice the median, would increase the number of people conducting civic, cultural, entrepreneurial, and political work. Alaska has a small BIG and it seems to help out in this way.

 One point Murray made at a conference was interesting. With a BIG, not only would people receive money they need, others would [not] know you are receiving money.

While I don’t know what amount would “do the trick” I think a BIG would offer a corrective to problems that Hannah Arendt diagnoses as stemming from a “job-holder” society.

The Basic Income Guarantee is basically a refashioning of the proposal for a negative income tax (NIT), which is commonly thought to have originated with economist Milton Friedman, who advocated it in his 1962 book, Capitalism and Freedom. I have long been an advocate of a negative income tax, for many of the reasons Murfmensch mentions.

A negative income tax, as Friedman wrote in 1968 in Newsweek,

is to use the mechanism by which we now collect tax revenue from people with incomes above some minimum level to provide financial assistance to people with incomes below that level.

The point is to replace the overlapping and bureaucratic welfare programs in society (welfare, food stamps, unemployment, etc.) with a simple cash payment to every citizen.

Let's imagine that every person would receive—to take just one number often used—$8,000/year. Whatever the number, it is one we determine is necessary to live with some dignity in contemporary society.  If you make $0 in a year, you receive $8,000 from the IRS—in essence a negative income tax. If you make $5,000, you'd receive $3,000. Anyone making more than $8,000 pays no taxes on that first $8,000 and begins paying the "positive" income tax on all extra income that supports those who make nothing. A family of four with no income would receive $32,000/year. With your base income you can do whatever you want. You can freeload or work, your choice. You can be an artist or a father. These are your choices.

The advantage of the negative income tax is that it offers a guaranteed minimal cash payment to every person and yet does away with the dehumanizing and costly apparatus of the welfare state. We could still offer Social Security, Medicaid, and Medicare. But all other bureaucracies go. Everyone, rich and poor, fills out the same tax forms. Those who choose not to work (let's stop calling them poor) simply get a check. They don't have to use food stamps or live in a shelter or apply for welfare. They can share apartments or group houses with others. There is no long-term unemployment insurance. They can simply use their money to live as they will.

Obviously some people will benefit pretty well doing nothing. Some will game the system and freeload. But the real advantage is that for those who don't care about making lots of money, for those who choose professions with inconsistent and often low remuneration, and even for those who simply prefer raising a family or doing community service to working, there is another option. You can basically choose to drop out of the jobholders society and the rat race with the security that you will have enough money to survive. Sure, you won't be buying fancy clothes or driving a big car. You won't be able to send your kids to fancy schools. But you can take years off work to take care of a dying relative or choose to be an artist, craftsperson, or thinker and know that in those years when you don't make enough to live on you will have a guaranteed income every year that you need it.

What the negative income tax or the Basic Income Guarantee does is make it possible to choose to opt out of the economy without stigma or danger to one's health and ability to live.

Political thinkers and economists on the left and right have embraced these proposals since Friedman originated them. There have been two major sticking points.

On the right, the fear of freeloaders and thus the desire to prevent people from choosing not to work—which is something I think is one of the great advantages of the program. There is a real debate about whether the negative income tax will increase laziness or free people to do what they love. It is probably some of both.

On the left, the fear is what happens when someone spends their money unwisely and then has nothing left. Once we get rid of welfare and food stamps to replace them with the negative income tax, there is always the danger that people will end up starving out in the cold. This too is a real risk and no doubt it will happen. There is of course charity, but that may not be enough for some people. And what about parents who waste their children's guaranteed income?

Questions remain about the negative income tax and there are details to be decided. But the benefits of negative income tax are worth these risks on both right and left. It seems that this is an Arendtian idea whose time has come.

Read an interview with Milton Friedman on the Negative Income Tax Here.

Read and essay in the NY Times about the Negative Income Tax Here.

-RB

 

The Hannah Arendt Center
The Hannah Arendt Center at Bard is a unique institution, offering a marriage of non-partisan politics and the humanities. It serves as an intellectual incubator for engaged thinking and public discussion of the nation's most pressing political and ethical challenges.
10Feb/124

America’s Great Cultural Divide

You know that the problem of inequality has gone mainstream when even Charles Murray has written a book about it. Not only the Occupy movement and the Tea Party, but also Murray—the conservative force between The Bell Curve and other controversial contributions to the culture wars—is now loudly screaming about the dangers of inequality in America. But with Murray, there is a difference.

If the Occupy Wall Street movement focuses on the vast income inequality that divides the country into haves, have nots, and have-it-alls, and if the Tea Party divides the country into the self-sufficient and the governmental dependents, Murray points to yet another divide: the Cultural Divide.

Murray begins with a point that I take to be essential:

Life sequestered from anybody not like yourself tends to be self-limiting.

Americans (Murray means by this term always white Americans) are living increasingly amongst those like themselves. Murray means by this that American elites (both Republican and Democrat) have separated themselves from the rest of the country. Specifically, he is worried that wealthy white Americans live apart from and are ignorant of poor white Americans. And vice versa.

In his new book, Coming Apart: The State of White America, 1960–2010, Murray argues that an enormous cultural divide has separated white Americans into classes that don't mix. While many liberals might welcome Murray's voice pointing to the rise of inequality in America, his analysis and prescriptions are radically different from those usually suggested by the left. For one thing, Murray focuses on white Americans between 30-49. Part of this focus is to support his argument that "Cultural inequality is not grounded in race or ethnicity." This itself will strike many on the left as an evasion, which it is. And yet, Murray's focus on the increasingly vast class divisions amongst white Americans points to the profound depths of the rising class and income inequality that pervades and divides American society.

Murray does not only point out the vast class divide in the United States. He points to solutions as well. His book is a call to action, but one that has little if nothing to say about the need for government to help the poor. No, for Murray, what both the lower and upper classes need are better values. The lower classes must learn from the upper classes the values of hard work, marriage, and family. The upper classes must learn from the lower classes the value of community, patriotism, and religion.

Whatever one thinks of Murray's analysis, he is right that we all need to do more to read and think and interact with others with whom we don't always agree. Those interested in and concerned by inequality in American can learn from Murray's book, and they should, even as they should wonder at his single-minded concern with white people. Problematic books can teach us much. Thus, for this week's weekend read, I suggest you take a look at Murray's latest essay on "The New American Divide."

-RB

Roger Berkowitz
Roger Berkowitz is Associate Professor of Political Studies and Human Rights at Bard College, and Academic Director of the Hannah Arendt Center for Politics and the Humanities. He is also the author of "Gift of Science: Leibiniz and the Modern Legal Tradition", as well as co-editor of "Thinking in Dark Times: Hannah Arendt on Ethics and Politics".