Finally, the third part of our response to Barton Hinkle’s critique of economic populism.
Hinkle in effect poses this question: why care about inequality at all, as opposed to simply caring about poverty?
After all, he reasons, if real living standards are improving for everyone, why worry that some are getting much more than others?
That question invites five kinds of responses.
The first is simply to observe that for the bottom quintile, life has not gotten a whole lot better as measured by income standards in the last quarter century. In 1979 the bottom quintile had an average post-tax income of $13,500 (in 2003 dollars). In 2003, they had $14,100. Over that same time period, the proportion of families in poverty has actually risen, from 9.7% in 1975 to 10.2% today. All this has taken place over the same time period that the real (post-tax) average income of the top 1% of the income pile has more than doubled, from $305,000 to over $700,000.
Nor, as Hinkle suggests, does the advance of technology make up for the stagnant prospects of the poor. Yes, some of the poor have access to cable TV and computers and cell phones and Playstations—more sophisticated forms of entertainment. But do they really derive dramatically greater utility, satisfaction, and happiness from those items than they did 30 years ago from black-and-white network TV and old-fashioned pinball machines? That’s questionable. What’s not questionable is that an American child or family that does not have access to most of those items is going to feel left out, socially excluded.
That observation points us to our second response: there is good reason why the “goalposts” (Hinkle’s term) of living standards should change over time as a society develops. The necessaries of life are to a substantial degree socially determined. In some societies historically, it was not a big deal not to have a pair of shoes. But in contemporary societies, to go shoeless would be unthinkable, and a sure sign of utter exclusion from mainstream society.
In short, what people need is not simply calories and shelter and medicine, but also the goods which make it possible to be a fully functioning, fully-respected, and indeed self-respecting member of society. The content of those goods changes over time, and as societies get richer, people need access to more and/or better goods in order to perceive themselves and be perceived by others as full members of the society.
Third, consider again the issue of class mobility across generations. Many conservatives, cogently, insist we should be concerned with not just inequality but with social mobility. But few recognize or acknowledge that there is an internal connection between increases in inequality and rates of mobility. Simply put, the wider the gap there is between classes, and in particular between the very top and everyone else, the more difficult it will be for those in the bottom to climb all the way to the top (and the harder it will be for those at the top to slide very far down the ladder).
Fourth, apologists for growing inequality often write as if workers are simply getting their just desserts in the marketplace. But there is strong evidence that since the mid-1970s, the American worker has simply not been getting a fair share of the economic growth his or her efforts have helped produce. Average productivity per hour jumped 76% between 1973 and 2004; but the median compensation only increased by 18.5% over that same time period. If compensation had increased at the same rate as increases in productivity over that entire time period, the median compensation in 2004 would have been $25.76 per hour, not the $17.36 it actually was.
That huge gap can be explained by two primary factors. First, average compensation only went up 46.4% for workers as a whole over that time period, compared to productivity growth of 76%. In short, workers’ compensation as a whole grew just over 60% as fast as the increase in their own productivity. Second, the best-off workers captured the lion’s share of the increase in compensation which did take place. When the top end gets huge gains and the majority not very much, you end up with what the data show–a big difference between the average increase and the median increase in compensation.
Finally, and perhaps most fundamentally, large-scale inequalities call into serious question the meaning and relevance of two fundamental American ideals: equal opportunity and democracy. Hinkle (and others) seem all too willing to accept as “normal” the fact that some persons within this society have dramatically less promising life prospects than others. But would conservatives who say inequality is no big deal be willing to take their chances and trade places with someone in the bottom quintile of the income bracket? Would they be willing to send their kids to a randomly selected public school within the city of Richmond?
The idea that anyone can make anything that want to of themselves is fundamental to Americans’ conception of this country and what it stands for. The fact that, increasingly, it just ain’t so points to a troubling and growing contradiction between what American claims (or aspires) to be and what it actually is.
The other threatened value is democracy. Democracy is not simply about the right to cast a ballot; it’s about the right and ability to exercise meaningful self-governance over the conditions that shape one’s life. In short, the ability to have a genuine say about decisions and policies which affect them, and the ability to have one’s ideas and viewpoints be taken seriously by others.
Democracy in this sense requires a fairly substantial degree of equality, if it is to be real. Incomes and wealth do not need to be literally equal, but opportunities, skills, and resources to participate in politics need to be broadly distributed over the population. Moreover, no group should be so wealthy or so powerful that they can exercise disproportionate influence over the political process and claim unequal access to and influence over decisionmakers.
That’s a test that American democracy simply can’t meet right now, and growing inequality is both cause and symptom of that failure.
So what would a more fair distribution of income look like? That’s a difficult question to answer with a high degree of specificity, but we can begin to gauge the gap between where we are and where we might and should be by considering this hypothetical scenario: what if, between 1979 and 2003, the bottom three quintiles of the income distribution experienced an increase in income equivalent to the average growth of the income of society as a whole over that time period?
Well, people in those groups would be dramatically better off. After taxes, the average family in the poorest quintile would now earn in $17,900, not $14,100—equivalent to an annual raise of over 25%. Families in second poorest quintile would have post-tax income of $36,200, not $30,800. And families in the middle quintile would earn $51,600, not $44,800. (All figures in 2003 dollars.)
That would have been an economy in which economic growth led to broadly shared prosperity. It also would have been an economy that lifted millions of people out of poverty and made life better and easier for the bulk of workers and middle class folk who form the backbone of American society.
But that’s not the economy we have, and it’s not the economy we are going to have in the absence of some substantial shifts in public policy aimed at bolstering workers’ bargaining power and distributing the benefits of economic growth much more equitably.
That’s where economic populism comes in.
We can’t go back and undo the enormous increase in inequality of the 25 years. But we can take steps to assure that the next quarter century (and beyond) produces something quite a bit better for ordinary people.
All data derived from charts compiled by the Economic Policy Institute
Defending Economic Populism, Part One and Part Two
