Nor do asinie "models" employed by economists to explain away the facts.
>Consider inequality, the trendy subject of dozens of books in the last few
>years. ...
So the concern with inequality is "trendy"? I guess Aristotle doesn't count.
>years. The facts are uncontroversial: By any hard measure -- wages, income,
>wealth -- the gap between rich and poor in America has been widening for
>decades. And while there are indications that the gap may have stopped
>growing in the mid-1990s, the disparities between Americans of different
>means are wider today than at any time since the end of World War II.
>
>Sounds like a big problem, right? The conventional wisdom says so.
>Oddly, though, none of the authors who spend hundreds of pages and
>thousands of statistics documenting the phenomenon devote even a few
>paragraphs to rigorously demonstrating that greater income disparities --
>as opposed to, say, the persistence of an entrenched underclass -- is a
>serious problem for the nation. They simply assume that it is.
>...
I guess it was too much trouble to read just 5 pages into Jamie Galbraith's latest book:
A high degree of inequality causes the comfortable to disavow the
needy. It increases the social and psychological distance
separating the haves from the have-nots, making it easier to
imagine that defects of character or differences of culture,
rather than an unpleasant turn in the larger schemes of economic
history, are at the root of the separation. It is leading toward
the transformation of the United States from a middle-class
democracy into something that more closely resembles an
authoritarian quasi democracy, with an overclass, an underclass,
and a hidden politics driven by money.
To put the matter the other way around, economic equality blurs
the distinctions between persons. It makes people feel similar to
other people. In this way, equality casts a veil of ignorance
over the comparative future of individual fortunes. As we know
from the philosopher John Rawls, this ignorance, rather than
equality itself, is the key to fairness in social choice. A just
society, providing for the less fortunate in an equable way, is
one that people would freely choose for themselves, without
knowledge of their own position within it.
Inequality lifts the veil. Inequality is information; it is
knowledge. With high inequality, of income and of wealth, it
becomes easy to know whether one is likely in the long run to be
a net gainer, or a net loser, from public programs of family
assistance, pension security, and health care. The more
inequality there is in the present, the more definite is each
person's sense of his or her own position, both in the present
and for the future. The rich feel more secure; the poor feel less
hopeful. High inequality therefore weakens the willingness to
share at the same time that it concentrates resources in hands
least inclined to be willing. In this way, and for this reason,
inequality threatens the ability of society as a whole to provide
for the weak, the ill, and the old.
The rise in inequality is the cause of our dreadful political
condition. It is the cause of the bitter and unending struggle
over the Transfer State, of the ugly battles over welfare,
affirmative action, health care, social security, and the even
uglier preoccupation in some circles with the alleged
relationship of race, intelligence, and earnings. The "end of
welfare as we knew it," to take a recent example, became possible
only as rising inequality ensured that those who ended welfare
did not know it, that they were detached from the life
experiences of those on the receiving end.
Crisis is a misused word, particularly by alarmists who have
presented us in recent years with a budget crisis, a Medicare
crisis, and a social security crisis. None of those alleged
crises really is. They all rest on specious claims about
financial abstractions, on scare stories about impending
bankruptcy --- whether of the government as a whole or of
particular government trust funds. They all fade when the
economic news is good, only to return when hard times make the
public receptive. But they serve the same underlying purpose: to
legitimize the reduction of social welfare and social security
programs, to withdraw resources from the social to the private
realm. And they all enjoy support from the same social quarter:
the financial and commercial interests of the wealthy. The real
crisis is the underlying attack on the elderly, the poor, and the
ill, and the tragic willingness of many working people to join
it.
What brought this crisis into being? According to popular
perception, rising inequality is a kind of black rain, a curse of
obscure origin and no known remedy, a matter of mystery covered
by words like downsizing deregulation, and globalization. There
is a view that capitalism has simply become more savage, a matter
of the temper of the times and a new brutality of markets.2 Many
speak of a paradox in which the social evil of rising inequality
accompanies rising average incomes and general prosperity for the
country as a whole, a single dark cloud in a silver sky.
But is higher inequality, as many believe, something that "just
happens"? Or does it serve a deeper purpose, one that is to be
expected and accepted? Is the splitting apart of America an
accident, or is it the inevitable incident of technological
progress and the spread of free markets, a by-product of change
and modernity? Is it the cost we must pay for the efficiencies of
worldwide production and trade? Is it the price of comparatively
low unemployment? Is it a side effect --- disagreeable perhaps
but a necessary aspect of our development toward a better future?
The idea that rising inequality serves a deeper purpose emerges
from the economics profession, which has produced a kind of
instant wisdom on the subject --- a set of views, usually presented
as orthodox, but in fact established with great haste and in
considerable disorder in recent years. To a predominant faction
within the economics profession, the "why" of rising inequality
has been answered by a single, all-encompassing phrase:
skill-biased technological change.
---James K. Galbraith, *Created Unequal*, pp. 3-5.
Bill