Is all of the talk about economic inequality really about envy?
I caught a few minutes of Thom Hartmann talking today with Professor Donald Boudreaux about the nation’s economic inequality debate and whether income inequality really exists in any significant way and whether it matters. Boudreaux argued that it really isn’t a problem at all. What fuels the debate is envy and that has little to do with sound economic thinking.
Donald Boudreaux is an economist, one of the libertarian ilk, and a scholar at the Mercatus Center at George Mason University. Mercatus is a market-oriented economic think tank at George Mason University. It is noteworthy for its ties to big business, most publicly the Koch brothers when it was disclosed the Koch brothers gave the university more than $30 million dollars with strings attached. Specifically the strings tie up Mercatus which is dedicated to research that bridge “the gap between academic ideas and real-world problems.”
It isn’t surprising then that Donald Boudreaux doesn’t see an issue with income and wealth distribution in the United States. His own paycheck might depend on it.
I’m not entirely sure that people concerned about decreasing wealth, lower wages, and diminished economic power are so because they are jealous of people making millions or even billions more than they earn. I think they are concerned because they have to do more with less and it isn’t adding up. But even if they were envious, does it matter?
Moreover, if the question is posed about whether income equality exists and does it matter an answer that relies on envy seems to skirt the issue. Why can’t one be both envious and concerned? On a practical matter, does an envy argument belay the debate about what is best overall for society and the economy?
Philosophers like Kierkegaard and Nietzsche wrote about the concept of ressentiment, but that explained how people could live with failure and accept it. It created, for example, the so-called slave morality for which Nietzsche is famous and often misunderstood. This slave morality drove people to accept their fate with the belief that it was not their fault that they were weak. In the final judgement God would square the score. Nietzsche was critical of this. He believed it created a society of weakness among people. However it is very important to note that the privileged elite in Nietzsche’s day would not have dismissed criticism from the rabble as envy, they wouldn’t have even noticed it! So I think it is telling — very telling, indeed — that today’s elite and mouthpieces like Boudreaux dismiss public outcry merely as an expression of envy. Perhaps the masters are slaves to contradictions within their own morality…
But back again to envy. Say it exists. So what? The real motivation for economic reform for many people is a matter of maintaining a quality standard of living and some security for the future, not a ploy to live in a Park Avenue penthouse. We should be so fortunate that our society were wealthy enough so that when people did look for economic advantage they looked to the penthouse and not just their next meal or next month’s rent.
And, as an economist, people like Donald Boudreax should be more objective about the costs of income inequality. Instead he argues that the inequality doesn’t matter. Ask the question the other way, would it matter economically if the wealthiest had a little less so the majority could have a little more? On a practical measure, if the economy were growing at 4% rather than 1%, every one — rich and poor alike — would be better off. What is the economic cost to us all if the overwhelming majority of wealth accumulates and is held by a very few who quite literally have no need or use for it? Can we answer those questions?
Or do we ask a counter question: What motivates greed? What are the incentives behind undoing progressive social programs that served generations of Americans so well? If this is a moral question rather than an economic one, perhaps we want to start judging greed as much as envy.
Perhaps we hold people harmless in this debate. Perhaps we talk about corporations who evade taxes at a cost of more than $70 billion annually to the United States Treasury. Is it envy that drives people to ask that they pay more? Probably not. Let’s restart the debate there.
Emotions rarely lead to good policy. When we talk emotions we don’t talk the objective facts that should steer policy. Clearly what we have now is not working for most people, even those who a generation ago might have been deemed well off. Does the future economic order rely on a very small minority enjoying all the gains while the rest tread water or sink? That hardly seems sustainable. What changed in the past 40 years that would make us think it would be so? This isn’t a question of envy, it is a question of fact.