Would You Like Salt with that Intellectual Pretzel?

A faithful reader suggested that I look up a paper entitled "Thinking Clearly about Economic Inequality," by Will Wilkinson, a research fellow at the conservative Cato Institute. I did.

Although it's impossible to summarize 24 pages in a short paragraph, Wilkinson's main point seems to be that, although it's true that income inequality has increased in the US since the 1970s, it doesn't matter. In fact, he says, focusing on the discrepancy may be counterproductive because a) there are more relevant measures of economic and psychological well-being; b) the fact that some people are super-rich doesn't prevent others from having economic opportunity (never mind the most essential tenet of all of economics, the principle of scarcity); and c) economic disparity is independent of social justice.

I had two reactions to this article: 1) Wilkinson and I live in two completely different worlds; and 2) alleged intellectuals have an amazing capacity to twist logic to conform to preconceived conclusions.

Wilkinson wants us to measure not inequality of wealth but "the quantity of goods and services a person has consumed over the course of his lifetime, and the value to that person of all those goods and services" (p. 4). He claims that the inequality of this so-called lifetime "consumption income" [without specifying exactly what it measures] is considerably more stable than the inequality of income per se. Among the reasons for this is "the ability to engage in consumption smoothing...through access to credit...[and] the ability to smooth consumption [by racing] ahead of changes in income volatility" (p. 5). He fails to point out that even rich people generally only eat 3 or 4 meals a day and maintain a limited number of vacation homes; their "consumption" is bound to be less extreme than their income.

A lot of people I know don't have the luxury of "consumption smoothing." They frequently carry less than $20 in their pockets. They postpone maintenance on their elderly cars because they can't afford to have the repairs done. If they have a credit card at all, they carry a balance and pay hefty monthly interest charges (which will not worry you if you own stock in one of this country's major financial institutions). They barely have enough money to buy diapers for their babies. They hold car washes so they can pay to bury their deceased relatives.

Have we in fact "won the war against poverty without even noticing it" (p. 8)? I don't think so.

"If we are worred about inequalities in education and health care, as we should be, we might stop to consider that these are precisely the areas we have chosen to shield most jealously from entrepreneurship and market competition" (p. 9). He might have a reasonable case for education, but health care? Aren't pharmaceutical companies and insurance companies entrepreneurial? Aren't most doctors private practitioners? Aren't many hospitals owned by huge corporations?

Wilkinson admits that income inequality in the US "is higher than in any other wealthy nation" (p. 10) but says it doesn't matter because we are 12th on the UN Human Development Index (HDI) -- "a relatively comprehensive measure of well-being." Using the time-tested method of simply leaving out inconvenient facts, he fails to mention that the US has actually been slipping recently in its HDI compared to other countries. The most recent statistics, published in October of 2008, show the US 15th, not 12th as it was in the previous survey, outperformed by the usual cast of nations conservatives love to hate for their governmental intervention into the free market economy and their caring policies toward their less fortunate citizens -- among them Iceland, Norway, Canada (oh, watch out: socialized medicine!), the Netherlands, Sweden, Luxembourg, Finland, Switzerland, Denmark, and yes, even France.

Finally: "Rising income inequality should have very little effect on the ability of the wealthy to influence the outcome of the democratic process" (p. 18) and "Economic resources are not easily converted into political resources" (p. 22). That will be news to the lobbyists, the kingmakers (frequently land developers) who annoint each succeeding generation of local politians, and the corporations that spend billions of dollars every year influencing public policy. I would enjoy hearing Wilkinson explain his ludicrous assertion to the millions of poor, elderly, and disabled Californians who recently lost essential benefits while the rich were shielded from tax increases by the politicians whose campaigns were financed by, uh, the rich. Yes, Barack Obama collected a lot of small contributions from middle class Americans; watch what's happening to his attempt to provide medical care to poor citizens and get back to me in a couple of months if you still believe money doesn't buy political influence.

To his credit, Wilkinson does list a plethora of problems with existing American society, including "inner-city kids consigned to abysmal public schools,...a larger share of its citizens [imprisoned] than any country on Earth,...and patterns of private discrimination [that] constitute for millions a web of real, seemingly inescapable barriers to opportunity and achievement" (p. 13). What's his proposed solution? First, stop wasting time thinking about income inequality. "Focus on things like intergenerational poverty and failing schools" (p. 23) -- as long as you don't meddle with "well-functioning market institutions and entrepreneurial energy" (p. 24). Just exactly how we solve the problems of intergenerational poverty and failing schools in the context of the primary tenets of conservative political philosophy, he doesn't say.

I could go on, but you get the idea. Besides, what good comes from pouring more salt on a badly twisted would-be intellectual pretzel?