InequalityPresident Obama has spent much of his time and effort “fighting economic inequality” since before his presidency began. Tax policies, spending programs, and rhetoric have combined over the past six years in particular to form a veritable War on Economic Inequality during his administration. This has led many in the Republican Party to snicker even as Democrats have mumbled lamentations over statistics showing an increasing “gap between rich and poor” during that same time period.

It is tempting to laugh off or even sneer at all this hand-wringing over the inevitable fact of inequality. Indeed, “inequality” may be taken as a whiner’s word for “variety.” Economic freedom, after all, entails rewards and punishments for good and bad choices, and also simple choices—as, for example, one may choose the life of an academic, with its many rewards, economic riches most definitely not among them unless one sells one’s soul or gets extremely lucky. 

This would not at all mean that Mr. Obama and his economic policies have not failed. They have—utterly. But the proper measure of their failure should be seen in very concrete terms. The decline in most Americans’ take-home pay, the increase in long-term, structural unemployment, and the drop in overall standards of living for most Americans under this administration’s policies should speak for themselves.

Without denying any of this, I want to point out that economic inequality does actually matter, at least when it is the type and extent of inequality achieved under this administration. Mr. Obama, his advisors, and his cheerleaders in academia and the media focus on the “gap between rich and poor” as the source of all economic evil. In one sense this is intensely silly. It hurts no one, in the abstract, if the rich get richer faster than do the poor. Indeed, it may well be the case that poor people’s income and welfare are improved greatly under circumstances making the rich even richer than otherwise would be the case. Envy is neither a useful nor a virtuous character trait and it certainly does no good as the basis of public policy. Again, there are concrete reasons for worrying about the poor—if they are not, in fact, doing better, but instead doing worse, that is a harm to the well-being of real persons who are, after all, a critical part of any society, whose human dignity and needs we have a duty to address (if not necessarily through yet more government programs). But the concerns need to be related to the actual conditions of people, not simple comparisons of “fair shares” and the like.

That said, something quite troubling is happening in our economy and our society; something that can be traced directly to the deeply hypocritical policies of an administration devoted to the manipulation of people through tax codes and government programs. The “gap” between rich and poor is, in any well-functioning society, filled with the largest portion of the people, namely the middle class. One can think of the old-fashioned Bell Curve. In any mass of people, you can measure most characteristics along a curve shaped like a bell. Whether you are measuring intelligence, performance at a particular task, or income, it is natural for most people to fall “somewhere in the middle,” with those “scoring” really well or poorly showing up in decreasing numbers at the ends.

Of course, many people criticize such statistically minded observations as inhumane or even contrived. We can choose, after all, to decide that all our children are above average, though the consequences to the character of such coddled children may cause damage beyond imagining to them and to our society. Moreover, in some areas, measured in some ways, we may find that all members of a society are doing well or poorly in relation to another society or in relation to itself at an earlier time. But my point is a very limited one: Societies require a large, healthy middle class if they are to remain economically, socially, and culturally vibrant over time. We need a numerous class of people with enough money to take care of their basic needs and give them the confidence to invest and take (reasonable) risks to improve their lot in life, and the lot of their children, if we are to have the stable yet dynamic relations and characteristics that make for a stable yet dynamic economic and social order. We also need these people to maintain real connections between those who make art, be it paintings, music, or our sadly moribund crafts such as wood and glass working. If the middle class is shrinking, especially if it is shrinking a great deal at a significant pace, this is a sign that something is seriously wrong with our economy, and it signals very real troubles to come. Public policy debates will shake out increasingly as ones between those who seek to get more from the state in the form of programs and payments, and those who see the state as something they themselves run, for their own good.

And this is precisely where Mr. Obama’s policies have led us. Europhile that he is, Mr. Obama is trying to turn our nation into a cheap imitation of Europe, complete with socialist policies and a very urban character. New York City may be seen as our future. Anyone who has taken the slightest notice of developments in that city over the last couple of decades has seen where this leads. The rich get infinitely richer by manipulating highly regulated markets, be they in finance or, say, real estate. The poor actually do get poorer measured in real terms, but survive by working the convoluted system of welfare payments and other benefits set up by the government. And the middle class leaves. Some of its members literally pick up and move to greener pastures, or at least less dilapidated suburbs. The rest either claw their way into the upper classes or, far, far more often, sink into the ranks of the working or government-sponsored poor. In essence the choice increasingly must be made between having both spouses working far more than 40 hours per week, ignoring any children they might have in favor of economic pursuits, or losing the rat race, perhaps even both jobs, and going on the dole, with generations of dependency and learned helplessness a real possibility for them and their children.

We often hear that the traditional family has become obsolete because we have somehow “outgrown” it, having made different “lifestyle choices.” As we recognize the importance (and bad consequences) of these choices we also should recognize that a government that overtaxes and over-regulates also squeezes the middle class and its norms—potentially out of existence. Such a government sets up huge barriers to entry and economies of scale that punish small businesses and those who work for them; it rewards those who know how to manipulate the system more than those who work hard, work with great skill, and innovate in ways that actually improve people’s lives; it destroys that class of relatively independent, grounded citizens that once made our republic prosper, providing opportunity for poor people to improve their lot in life, a needed counter to the corruptions of concentrated wealth, and a check on the power of government to shape and mis-shape our lives. If taken too far, it is the kind of loss from which a free society cannot recover.

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11 replies to this post
  1. I like Obama moving in the right direction for a project fairest of American society, as he himself experiences of childhood deprivation, but the typical character of Americans will never be like that of Europeans, both original and unique.

  2. The initial part of this post had some valid points to make. But it fell apart when it started with the Obama bashing because the bashing showed an ignorance of what is happening. The first wrong thing we should note is that, to a large extent, Obama is continuing what Bush and others were doing rather than doing something different. After all, how many leaders from the financial sector went to jail for the fraud and other crimes that so hurt the economy toward the end of Bush’s reign? And how many regulations have been put into place to prevent a similar collapse from happening? And since those who needed the most gov’t assistance from the collapse were those who fought regulations or who operated as usual because regulations were not enforced rather than were forced into trouble by regulations, how is it that we are overregulated?

    And how is it that Obama could be called a socialist when neither myself nor any socialist I know or have read would even dare say such a thing? The first tenet of socialism is worker control rather than owner/management control and yet we so easily call both what Obama has pushed for and some of what Europe has as being socialist? Does the word ‘pejorative’ have any meaning here?

    In a socialist system, we would see an expansion of democracy. But that is what neither we have under Obama nor what Europe has. And it is with the expansion of democracy, rather than with a laissez-faire relationship between gov’t and business, where we could have the best setup for putting an end to the manipulation of the markets. It is quite simple that with less democracy, you have more elite-centered rule. And here we should note that the real difference between Republicans and Democrats is that elite-center control revolving around the private sector is more transparent under the Republicans than under the Democrats.

    However, when one bashes gov’t control and wishes to limit it, one would be doing the same democracy–if we would ever achieve that state of being. That is because in a democracy, it is all of the people who decide how we will live with and relate to each other. Thus, the same goes the promotion of economic liberty as it does for limiting government. Because what economic liberty says is that one has little if any social accountability for how one achieves economic success. Those who achieve the greatest economic success become the elites who work the system. And the history of our nation shows that that system has been worked under both Republicans and Democrats long before Obama took office.

    • Socialism does not “expand democracy”. It makes for a larger, more egalitarianized poor, and it destroys the desire for innovation and ambition among the talented, the brilliant and the better. Please stop your rhetoric that all evil are rich and all proletariat are saintly.

      • Thomas,
        Didn’t you ever read Rosa Luxemburg or Karl Kautsky on Lenin? Did you ever read Marx and what he said about the proletariate dictatorship? BTW, Luxemburg pointed out that Lenin was creating a bourgeoisie dictatorship.

        Being a socialist I have problems with nonSocialists tellng me what I believe. This is especially true when, like Capitalism, Socialism is not a monolith.

  3. “However, when one bashes gov’t control and wishes to limit it”

    Bashing government control is the very definition of American patriotism. Indeed, the Founders explicitly set up a system designed to rein in government control. Virtually all of the first 10 Amendments to the Constitution were a set of “Thou shalt nots” aimed at government power. No matter how “Well intended”, the lust to use government to control one’s fellows is basically the root of nearly all modern evil.

    • Eric,
      Actually, you are wrong about the founding fathers. The Constitution was written in response to Shays Rebellion, not the American Revolution. And it was written because of that rebellion and widespread dissent against the financial elite of this country. And the Constitution was written to strengthen the federal gov’t in comparison to what existed at that time in order to prevent the rebellion and quell dissent

      • Curt, you miss the distinction between “Limited government” and “No government”. The Founders were not anarchists, but it would not be much of a stretch to call them libertarians.

        • Eric,
          The founding fathers were calling for an increase in central gov’t over what was there before. The reason for their call was the widespread dissent and Shays Rebellion.

          Thus their call for increased gov’t could hardly be confused with anarchism the latter of which is the least centralized of all forms of self-government.

  4. The loudest voices against economic inequality seem to be concerned with the wasteful conspicuous consumption of the idle rich (those second and third generationers who only inherited the wealth.) To perceive someone using greenbacks to light cigars or employ as toilet paper is an abomination in need of redress. (The other gripe is the too-rich spending their cash to take over the nation.) This is the image.

    As someone once said, envy and resentment are fueled by a wish to be able to do what is being condemned, coupled with the realization the wish will never be fulfilled. Assuming the truth of that notion, we have the desire of Levelers to bring down the obscenely wealthy into a common poverty rather than to rise to their level by diligence.

    The first, dethrone the rich, is the object of communards since before Marx. The second, to rise to their level, has always (until of late) been the aspiration of Americans.

    As John Steinbeck famously said, “Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”

    But, That was Then.

  5. Even if there are similarities between administrations, the move toward economic equality has been greatly accelerated under the current administraion. It is the basis of his approach to life: find an enemy to identify (the rich) and stir up opposition to them, and try to level everyone in the name of “fairness.” I have never been hired for a job by a poor person. This administration is again tinkering with the economy without any knowledge where it will lead.

  6. The problem is not “too little” or “too much government.” The problem is that a tiny oligarchic minority now control American fiscal policy, for their benefit. Fewer than 140 families funded over 60% of all 2012 primary SuperPACs (both rightists and leftists). In 1978, the 99%-class owned 75-80% of American wealth (Wolff, et al). Today, the 99% own just 50% to 55% of our wealth (depending on whose numbers you follow).

    All that 99% wealth? It trickled UP into the hands of a few plutocratic interests (and continues to trickle up at the 10-yr moving average rate of 0.5% per year). The 1% class pays 38% of Fed taxes, and yet possess upwards of 50%+ of all wealth (at least $21T in offshore / offbook accts – perhaps twice that amount). And that ratio continues to grow. In 1978, the 1% possessed 20-25% of all wealth and paid >40% of all taxes. Eisenhower-Truman fiscal policy created the finest ALL-class socioeconomic experience in human history.

    Today, the average 0.01%-er pays 14% Fed rate, while a 0.9%-er like me pays %24 (read that again until it sinks in). America hasn’t been this socioeconomically imbalanced since 1929, the beginning of the great depression (and the end of our first experiment with Supply Side policy).

    Ultimately, the core problem is crony control of Washington. Eisenhower warned us of this in 1961, and today it is fully in place. FDR said, “when private economic interests control government, that’s fascism. David Stockman calls today’s fiscal travesty “crony fascism.” Jefferson said (paraphrased), “The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations.”

    Our legislative system is corrupted, and has been for 30 years of rigged fiscal votes. The common citizen has ZERO input in matters of fiscal and tax policy (as shown by a number of academic studies over the last 15 years). The Federal legislative system is poisoned. It can’t fix itself. We need a constitutional amendment to assure that money is not free speech and corporations are not people. We need to end K-Street revolving door payola. We must end dark money in politics. And nothing but sweeping reform to campaign finance will bring us back to honest government.

    Smart, honorable people on both sides of the aisle are fighting this fight. Conservatives like Hunter Lewis, Tim Carney, and Mike Lee, have joined with progressives like Larry Lessig and Cenk Uygar in fighting this plague on the American soul, along with myriad non-profit groups moving forward towards a constitutional amendment.

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