Manzi's Questions on Inequality

Besides being a brilliant guy, Jim Manzi is to my “right” politically, which I think makes his worries about inequality particularly interesting. He has kindly taken the time to read my paper and has some questions. I'll take them in turn.

1. Let’s assume that the social mechanisms that produce some highly skewed income distribution do not violate any norms of justice. Can a sufficient degree of inequality be itself a violation of a norm against very high inequality? If our minds are evolved instruments, and have evolved to regard such an outcome as inherently wrong, then is it valid in Will’s philosophy of justice to declare a norm against it?

I think there is good evidence that there is an evolved sense of “fairness” relevant to questions of distributive justice. But distributive justice, in the first instance, deals with the distribution of the gains from cooperation in small groups. It's not clear that this capacity has any relevance to questions of the pattern of holdings in the vast populations of contemporary nations states–questions light-years from any posed by life on the Pleistocene savanna. And, in any case, that a capacity evolved, and was adaptive at some point in the history of the human lineage, does not even establish a presumption of normative authority for the outputs of that capacity. So, my answer is a very strong No.

2. Given my views on social science, I think that it would be all but impossible to build a convincing analytical case for any non-obvious phenomenon that can not be subjected to controlled experimentation because it extends across all of society over a long period. So I agree that an analytical proof that sufficient inequality will lead to a political dystopia does not exist and will not be forthcoming. But that is different than saying I do not believe it to be a problem. Is it Will’s judgment that, in our current social and political context, current levels of economic inequality are not dangerous?

First, let me emphasize that a main point of my paper is that real material inquality is much lower than nominal income and consumption measure lead many people to think. The reason is that these measures aren't measures of real material inequality. I argue that there is good (though not drop-dead) reason to believe that standards of living have become more equal over time. That said, given my views on social science, I think it's wrong to think of levels of inequality, measured anyway you like, as a cause of anything in the absence of auxilliary hypotheses about the relation of the inequality level to real mechanisms of social change. As I argue in the paper, inequality and other very bad things often have a common cause. For instance, places with a great deal of corruption and political predation often have, for those very reasons, extremely high levels of economic inequality. When distribution is determined primarily through political means, there will be a great deal of conflict over control of the state. So these kinds of places tend to be marked by strife and instability. And thus you will in fact find a reasonably strong correlation between income inequality and instability across countries. But inequality doesn't drive the instability. Rather, the causes of instability also drive up inequality.

So, to answer Jim's question, (1) real material inequality in the U.S. is lower than most people think and (2) the level is not dangerous. (3) Some part of the level is surely driven by dangerous mechanisms (e.g., political redistribution with little perceived legitimacy), but then the injustice and danger lies in the mechanism, not in the mechanism's knock-on effects on equality.

3. To put my cards on the table, I think that inequality, as it interacts with other facts about contemporary American society, is a problem. But, I think that, even more fundamentally, it is an indicator of a much more severe problem. As globalization continues inexorably (in practical terms, this has very little to do with McDonald’s in France, and almost everything to do with the economic rise of Asia), U.S. income inequality is a demonstration that many — probably most — Americans don’t have the capabilities required to maintain anything like their current standard of living in competition with a global labor force. Does Will think this is accurate, and if so, is it a problem?

I don't think this is even close to accurate. I see most signs pointing in the direction of a rising standard of living for most Americans. The worry makes sense only if you (1) see world economic growth as a zero-sum game, which it most certainly is not, or if you (2) think the standard of living of most Americans is, like the standard of living of Michigan autoworkers, a result of direct of indirect subsidies that cannot be sustained in the face of increasing global competitiveness, which it is not. Globalization does squeeze out the kind subsidies that do prop up many people's wages. Maybe a declining standard of living due to disappearing subsidies is a source of social instability–or at least a source of new demand for inefficient protectionism. This is, in fact, why some scholars think “trade adjustment assistance” and other forms of redistribution are so important. But then, again, inequality is a symptom here, not the disease. If people get out the pitchforks when their subsidies are removed, inequality per se has nothing to do with it. What people are angry about is a declining standard of living. (And, yes, some people care about relative decline, but their frame of reference is generally local, not national.) If some other form of subsidy is needed to buy civil peace and/or buy out resistance to good trade policy, then that might be a good reason for redistribution. In my view, to see it as an issue of inequality is simply to lose focus.