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April 25, 2012 4:03 PM The Inequality Debate

By Ed Kilgore

So the exchange at Ten Miles Square between Mark Schmitt and Brink Lindsey over issues raised by Tim Noah’s new book The Great Divergence is complete, with each writer publishing three interactive posts. As you might expect from a debate between a progressive and a libertarian, there was plenty to argue about, but what Schmitt and Lindsay most exhibited was a different set of predispositions they brought to the table. Schmitt regards growing economic inequality as presumptively suspect and likely the result of public policies that are in danger of producing a “vicious circle” of privilege and barriers to upward mobility, while Lindsay simply thinks it’s worth examining and is quick to suggest that inequality is largely the product of otherwise benign economic, political and social trends.

A characteristic exchange was over the role that the decline in union power might have played in producing greater income inequality. Lindsey regards unions as instruments for forcing “above-market” business costs, and their decline as promoting greater efficiency and lower consumer prices. Schmitt responds that union “power,” such as it is, is essential to the establishment of market prices to begin with, and moreover, has been dwarfed by the ability of executives to extract “above-market” pay and benefits, with both the decline of collective baragaining and the rise of executive compensation boosting inequality without necessarily benefitting consumers or anyone else.

Both writers discuss different measurements of inequality—based on income, wealth, or consumption. Schmitt makes the excellent point that wealth inequality is largely generational, reflecting the happier circumstances that today’s seniors enjoyed when they were buying houses whose value consistently rose, planning for retirement with generous private pensions, and “making ends meet” without relying nearly as much on debt as more recent cohorts. Both writers agree that inequality in educational opportunity is an increasingly important inhibitor of social mobility. Both also agree that a major shift in immigration policy encouraging the migration of unskilled labor has worsened indicators of inequality, though Schmitt rates it as a far-less important factor than does Lindsey, and both consider the super-accumulation of wealth by the financial sector problematic, though Lindsey is more concerned with its impact on economic efficiency than on inequality.

You really should read the whole exchange, since both writers get pretty far into specialty literature and often raise issues the other correspondent does not have the time or space to address fully. I came away from the exchange more troubled than before by the structural underpinnings of inequality, and far less sanguine that Brink Lindsey that it’s somehow mostly for the best.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Gandalf on April 25, 2012 4:39 PM:

    Ed you must not have ever had a conversation with a libertarian befor if your more troubled by that exchange. To them greed is good. They basically subsribe to a survival of the fittest ethic when it comes to anything concerning money. They got most of their ideas from the feudalistic models of the past.

  • Walker on April 25, 2012 5:00 PM:

    The worst part about libertarians is how inconsistent they are. It is all Thunderdome until something threatens something they like, and then the government should step in. I had to put up with a "libertarian" taxi driver on a recent trip who was complaining that the city was giving away too many licenses, and so it was hard for him to make a living.

    All conversations with libertarians are like that.

  • Rick B on April 25, 2012 7:43 PM:

    The sociologist Parsons pushed the theory of functionalism for many years, but the conclusion more recently was that it consisted of looking at and describing the conditions that exist today, declaring that by the process of evolution and competition conditions today came into existence because they were the best possible solution, and declaring that because the condition exist today they have to be the best possible solution.

    Obviously that creates a tautology. Today's conditions exist because they were the best solution and the fact that they exist today prove they are the best solution. Libertarians are in the same trap. They declare that markets automatically produce the best possible solution, therefore the solution they have created is the best we can get and should not be changed.

    That tautology supports the existing power structure, so guess what the existing power structure believes should be done? That tautology is the only "support" for free and unregulated markets.

    The fact is that nations with greater economic inequality do not function as well in the international market where industrial nations compete. The so-called "free Markets" which are not subject to government regulation simply do not perform as well as lightly regulated economies. The individual players in such unregulated markets simply do not have time to try to understand and control overall economic trends. That's an appropriate function for government, but libertarians will never admit that. Their decision is made in advance and rather than approaching the subject rationally they attempt to rationalize their preexisting decision (which is why libertarian economist cannot publish in academia. They are propagandists for the existing power structure and are blind to new knowledge of the kind researchers would cite in later research.)

    Libertarians do not look at subjects rationally. They assume that the existing situation is the best possible solution and work to justify that conclusion. That's whey they can so easily ally themselves with conservative religious leaders and conservative financial leaders.

  • Doug on April 25, 2012 8:38 PM:

    There's the inequality that occurs simply because no two people are alike in their aims, drives and abilities. Then there's the inequality that occurs because those with power/money use their power/money to have laws passed that buttress THEIR hold on that power/money by hindering others from reaching the same place.
    The first is what "libertarians" pretend they're referring to when they talk about"inequality", but the second is what they're aiming at.