Barack Obama called it “the defining issue of our time.” The widely quoted but rarely read author of “Capital in the Twenty-First Century,” Thomas Piketty, called it a threat to democracy. And the Australian Council of Social Services fears it is getting much worse.
What is this scourge? Is it the war raging in Europe, the pandemic menacing the world, or the dangerously changing climate?
No, the poison seeping through the body politic is inequality. The rich, it appears, are getting even richer.
Why should we care?
According to Richard Wilkinson and Kate Pickett’s book, “The Spirit Level,” wealth inequality increases crime, lowers life expectancy, and makes people fat.
It seems the stress produced by envying the rich (“social status differentiation”) causes lower-income people to overwork to keep up. To find the energy to keep going, they gorge on comfort food and get fat. Then, when all else fails, they turn to crime.
One obvious way to reduce income inequality is to get rid of the super-rich. If Bill Gates, Jeff Bezos, Warren Buffett, Rupert Murdoch, and their American billionaire friends could be persuaded to emigrate, inequality in America would decrease overnight.
If you believe Wilkinson and Pickett, their departure will make Americans healthier, more law-abiding, and thinner.
As a social policy, deporting billionaires presents a practical problem. Given their pernicious social and economic effects, what country would provide the billionaires with a home?
In contrast to “The Spirit Level,” which focuses on the social costs of inequality, Nobel Laureate economist Joseph Stiglitz’s book, “The Price of Inequality,” is concerned with its economic consequences.
Because wealthy people save more of their income than the less well off, Stiglitz says inequality reduces overall economic activity. He calls for a more “balanced” distribution of income to increase demand, stimulate growth, and give more people the chance to realise their economic potential.
Instead of deporting the rich, Stiglitz prefers raising their taxes. Thomas Piketty agrees. He and Stiglitz call for a top income tax rate of 50, 60, or 70 per cent and high inheritance, capital gains, and gift taxes.
If the rich have anything left, Piketty also advocates a wealth tax. An election platform proposing soak-the-rich tax increases would not be attractive to wealthy people. Still, it could be a vote winner among those who believe that inequality is unfair.
Not content with ending social and economic inequality, academic authors worry about inequality arising from differences in talent, strength, and intelligence.
In “The Tyranny of the Meritocracy,” Lani Guinier criticises the entry examinations often used to determine university admissions. In her view, interviews and quotas would produce “fairer” outcomes than traditional selection methods.
Not content with focusing on university admissions, Daniel Markovits’ book, “The Meritocracy Trap,” portrays merit-based competition as a class struggle where high scorers capture the rewards. Michael Sandel agrees. In his book “The Tyranny of Merit: What’s Become of the Common Good?” Sandel emphasises the effect of luck in determining success.
Even if it were possible to provide every individual with an equal opportunity to succeed in life, Sandel says that unacceptable inequalities would still arise because of bad luck (illness, accident, poverty). He is equally worried about the bad effects of good luck because some fortunate people are born more talented, hardworking, and intelligent than others.
Guinier, Markovits, and Sandel are all professors in elite, highly meritocratic universities, but none see the irony in their arguments or offer any radical solutions.
Guinier suggests broadening the criteria used for deciding university admission, while Sandel advocates randomly selecting students from among those who score above a minimum threshold. He believes students selected in a lottery would gain valuable humility from knowing their admission was partly based on chance.
A little humility would not hurt anyone, but selecting students randomly from among relatively high achievers will not change the world. Ensuring total equality requires draconian measures such as those described in “Harrison Bergeron,” a story by Kurt Vonnegut.
Vonnegut depicts a future society in which a government Handicapper General enforces equality. Those who are above average in brains, beauty, or brawn are handicapped—deliberately made dull, unattractive, or weak. Beautiful women must wear masks. Strong people are forced to carry weights. Deep thinkers are fitted with noise-producing earphones to disrupt their thoughts. Everyone in society is equal—equally miserable.
Thinking about equality is hampered by confusing fairness with equality. These words are not synonyms. Sometimes, inequality is unjust, but there are times when inequality is not only fair but also preferable to equality.
Consider an example adapted from the work of political philosopher Robert Nozick.
Imagine a town of 1,000 persons, each of whom has an identical wealth of $10,000. One citizen—a much-admired singer, called Elvis—decides to stage a concert. Tickets cost $100. Attendance is a matter of choice, but everyone in the town loves Elvis and is happy to pay to hear him sing.
The audience considered the concert a great success. However, after the show, the town, which once had perfect wealth equality, now has massive inequality. Elvis is not only a better singer than everyone else in town, but he is more than ten times richer. Since the town residents voluntarily exchanged their money for concert tickets, it is difficult to see in what way the town’s unequal distribution of wealth is unfair.
To return the town to equal wealth, the government could tax Elvis’ earnings at confiscatory levels and return the money to the townspeople. Elvis would not be happy. He gave a great concert, and he did not force anyone to buy a ticket. If Elvis knew he would not get to keep the money he earned, he would surely think twice before staging another concert. He might choose not to sing again, which would greatly diminish the quality of life in an Elvis-loving town.
Similar contingencies apply across society. The clever creators of computer games, life-saving drugs, and new housing developments may be fabulously wealthy. Still, their cleverness benefits everyone, including those at the bottom of the economic ladder.
Don’t get me wrong; I know many people are struggling. In a decent society, it is right to expect the wealthy to contribute to the welfare of the community by paying higher than average taxes. It is also fair and just to provide everyone with an equal opportunity to better themselves. A social safety net, high-quality education, and health care provide a necessary foundation for fulfilling lives.
But engineering equal life outcomes is neither achievable nor desirable; it isn’t even fair.
