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A Challenge to Liberals

In his column, the Washington Post’s E.J. Dionne once again issues a “challenge for conservatives.” This time his focus is on income inequality.

According to Dionne, “It’s good that conservatives are finally taking seriously the problems of inequality and declining upward mobility. It’s unfortunate that they often evade the ways in which structural changes in the economy, combined with conservative policies, have made matters worse.” Dionne goes on to praise European nations whose policies are more “’socialist’ or (to be precise) social democratic than ours” and which also have greater social mobility than we find in America today.

Dionne cites several factors for this – guaranteed health insurance, stronger union movements, more generous welfare states, and higher taxes. He then cites William Julius Wilson’s review of Timothy Noah’s book The Great Divergence, which mentions “the increasing importance of a college degree due to the shortage of better-educated workers; trade between the United States and low-wage nations; changes in government policy in labor and finance; and the decline of the labor movement. He also considers the extreme changes in the wage structure of corporations and the financial industry, in which American CEOs typically receive three times the salaries earned by their European counterparts.”

“Most conservatives accept the importance of education,” according to Dionne, “but then choose to ignore all the other forces Noah describes.”

In fact, some of us have written about income inequality in somewhat more detail than Dionne has. This essay in National Affairs, for example, is roughly 10 times longer than Dionne’s column – and is, I think it’s fair to say, less tendentious. (In reading Dionne and some others, I’m reminded of this description: “Like a magnet among iron filings, [his mind] either concentrated acceptable facts in a tight cluster, or repelled them and kept itself clean.”)

The issue of income inequality is a good deal more complicated and less ideologically simplistic than Dionne acknowledges. Among the things the essay points out but Dionne ignores is that (a) income taxes in America are the most progressive among the rich nations in the world; (b) inequality is driven in part by the growing workforce participation rate of women; (c) federal old-age entitlement programs have become less progressive (which argues for means-testing Social Security and Medicare, a policy that has been fiercely rejected by liberals in the past); and (d) one of the quickest ways to increased income equality is a severe recession (because severe recessions destroy capital, which hurts top income earners more than average workers).

Still another factor has contributed to income inequality. In their book The Winner-Take-All Society, economists Robert Frank and Philip Cook argue that certain markets are defined by the concentration of wealth in the hands of a few top performers. The winner-take-all model has come to dominate not just the corporate and financial industry but a number of professional sectors, including sports, art, acting, and music. Yet Dionne never seems to be troubled by the amount someone like, say, Bruce Springsteen makes. (Springsteen is estimated to be worth around $200 million, though that matters not, as his politics are liberal and his songs are, according to Dionne, a paean to communitarianism.) The Washington Post columnist’s wrath is usually directed toward those who are successful in business. I’ll leave it to discerning readers to figure out why.

As for the issue of social mobility, the National Affairs essay I co-authored points out that “Whether one judges by intragenerational mobility (meaning movement within or between income brackets and social classes within an individual’s lifetime) or intergenerational mobility (movement within or between income brackets and social classes occurring from one generation to the next), the United States is less mobile than it should be.”

But here is one fundamental area in which I depart from Dionne, which is that the problem in America today is not wealth but rather persistent poverty. And the right way to deal with income inequality is not by punishing the rich, as the left is eager to do, but by doing more to help the poor become richer, chiefly by increasing their social capital. (Robert Beschel and I sketch out what the broad outlines of a real social-capital agenda might consist of.)

One cannot help but believe that many progressives, in the name of reducing income inequality, would be willing to see the poor get poorer so long as the rich lost ground as well. Whether or not Dionne fits in this category, it should be said that he has never adequately explained his passionate opposition to welfare reform in the 1990s, which ranks as one of the most successful social reforms in the last half-century and which decreased dependency and improved the condition of the poor. It’s curious, too, that Dionne would hold up Europe as a model for America, given the extraordinary fiscal crisis and human suffering that is now sweeping Europe.

In any event, Dionne’s column at least provides an example of the fundamentally different worldviews that are competing and clashing in our time. Dionne really does hold up the socialist/social democracies of Europe as a model. Conservatives do not. Greece is not what conservatives are hoping to replicate in America.

These are matters that really ought to be the subject of a vigorous national debate.


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