I agree with Will Wilkinson that, considered in isolation, the pattern of income distribution in a society doesn’t tell us much about whether that society is just or unjust. Nevertheless, as an egalitarian, I think inequality in wealth and income, when considered in its causal context matters a lot. Economic inequality is objectionable when it makes people, especially the less well-off, less well-off than they otherwise would be.It is also objectionable when it reflects government favoritism toward the better-off.In the United States, economic inequality is objectionable for both of these reasons.
There are several ways in which economic inequality undermines people’s well-being.(I don’t claim that mere awareness that others are better off makes people worse off:I don’t credit envy with a genuine grievance.)For lack of space I’ll set aside the intriguing evidence that economic inequality makes people ill, reduces life expectancy, increases stress and violence, and undermines social trust.Here I’ll argue that economic inequality (1) makes the less well-off vulnerable to domination, (2) makes them vulnerable to stigmatization, and (3) causes governments to favor the better-off at the expense of the worse-off.
Consider the problem of domination.People’s bargaining power is tied to their relative exit costs.This often enables people with superior wealth to dominate others.Women are more likely to submit to domestic abuse and control if the cost of leaving their partners is a drastic fall in material well-being.Low-wage workers are often unable to bargain for predictable work hours because they can’t afford to quit.This empowers employers to wreak havoc with workers’ lives, as arbitrary changes to their work schedules leave them scrambling for (often unavailable or very costly) child care, or forced to withdraw from community college courses, turning their hard-earned tuition payments into a deadweight loss and crushing their dreams for a better life.Such despotic control over workers’ time can be humiliating.At one Nabisco plant, female workers were forbidden to take time off the production line to use the restroom, and were told to wear diapers.
Economic inequality can also lead to stigmatization.Adam Smith famously observed that, as the general level of consumption increases, so does the level of consumption needed by each individual to be able to appear in public without shame:
A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably, though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty, which, it is presumed, no body can well fall into without extreme bad conduct.
The consumption of the better-off thereby raises the cost of living for the worse off.The demands of respectable appearance can be crushing in regions where spiteful competition inflames a culture of conspicuous consumption.In the 2008 documentary Kids + Money, Lauren Greenfield depicts the competitive consumption among teenagers of all classes in Los Angeles, sometimes to the financial ruin of parents who are less well-off.One single mother, desperate to see her daughter wear socially accepted clothes, couldn’t pay her utility bills because she spent her income on a pricey t-shirt for her daughter.
Finally, economic inequality causes governments to make favorites of the better-off and neglect the interests of the worse-off.A recent study by Larry Bartels finds that the preferences of low-income constituents have no influence at all on senators’ votes, while the preferences of middle-income constituents have middling influence, and the views of high-income constituents had great influence. (His findings apply to Democratic as well as Republican senators.)
How does catering to the preferences of the well-off harm the worse-off?In some cases, the state grants or extends monopoly privileges to the better off.Consider the extension of copyright terms, dramatic consolidation of broadcasting ownership, and huge giveaways of public spectrum to existing broadcasters due to IP and communications laws passed in the 1990s.In other cases, the state effectively exempts the well-off from laws that are supposed to protect the worse-off.After discovering that Wal-Mart had violated child labor laws dozens of times, the Labor Department under President Bush agreed to give Wal-Mart 15 days notice before inspecting its stores for further violations, giving it time to hide its lawbreaking from authorities.This is hardly an exception.Many employers steal from their low-wage workers with impunity.One recent study found that a quarter of low-wage workers were paid less than the minimum wage, most were denied meal breaks to which they were legally entitled, many were forced to work off the clock, not paid for overtime, suffered the theft of their tips, and illegally fined, among numerous other labor-law violations.In still other cases, the state grants the better-off legal loopholes or vast subsidies at the expense of the worse-off.Payday loans are largely exempt from usury laws.For years, the federal government paid a 9.5% interest rate to student loan companies, even though prevailing interest rates were much lower than this, and the government guaranteed the loans, obviating any rationale for a risk premium.Even after Congress had enacted a law to end this absurd subsidy, the Bush administration failed to act on it.That’s billions of dollars to the wealthy at taxpayer expense.
Yet to focus on government subsidies and favors to wealthy rent-seekers offers a narrow view of the ways the better off use their superior wealth to skew government policy toward their interests, at the expense of the less well-off.As economic inequality increases, the better off perceive fewer and fewer shared interests with the less well-off.Because they buy many critical goods — health insurance, education, security services, transportation, recreation facilities — individually from the private sector, or pool the provision of these goods within private gated communities or municipalities governed by zoning regulations designed to exclude the less well-off, they tend to oppose public provision of these goods to the wider population.At the same time, the ways they provide these goods for themselves raises the costs to the less well-off of obtaining them.When the better-off vote down public transportation because they own their own cars, the less well-off must buy cars too.When the better-off spend more on schooling, so too must the less well-off, to give their children a fighting chance to compete for better opportunities.Since municipal zoning regulations create class-segregated cities, the less well-off must tax themselves more heavily to provide inferior public services to what their better off counterparts in other towns pay.
Wilkinson’s evidence on consumption inequality fails to account for these facts, because he looks only at individuals’ consumption of private goods, not their access to publicly provided goods.Yet for the less well-off, consumption of the sorts of consumer goods that the market has — to its credit — so successfully delivered to all classes pales in importance to public and publicly provided goods.To live in a low-crime, orderly, unpolluted neighborhood, free of run-down and abandoned property, graffiti-marred buildings, open drug dealing, prostitution, and gangs; to have access to public parks where one’s children can safely play, to well-maintained sidewalks and roads, to schools that offer an education good enough to qualify one for more than menial, dead-end jobs: how many cell phones and athletic shoes is that worth?Enjoying warranted confidence that the police will, if one is innocent of any crime, treat one with the respect one is due, rather than as a criminal suspect, and extend one the protections of the law rather than police harassment, accusation, and prosecutorial abuse:here there can be no question of comparison to consumer goods. But access to these public goods depends on one’s relative wealth.As wealth inequality increases, such goods are less and less within reach of the less well-off.
Wilkinson says, “There is overwhelming reason to believe that in the United States the deck really is stacked against some people. As a consequence, many millions are doing much less well than they might be.”I agree entirely with this judgment.I also agree with Wilkinson that to deal with this, we must get the causal story right, and attack the root causes of injustice, rather than just the epiphenomena.I suspect that we also agree that right causal story would identify state action (or inaction) as critical to stacking the deck.But I suggest that economic inequality is also among the root causes of the stacked deck, because it motivates the affluent to skew state policy in their interests, at the expense of the less well-off.As wealth inequality increases, the rich lose interest in state action to promote security, prosperity, and opportunity to all, and instead use their vast wealth advantage to buy access to government officials via campaign contributions, and to out-lobby more diffuse and less well-funded public interests.They thereby acquire agenda-setting and veto powers over public policies, which they use to limit provision of public goods to the less advantaged, and to obtain special privileges for themselves — monopolies, subsidies to favored industries, and effective exemption from laws that are supposed to protect the less well-off from exploitation and domination by the better-off.Economic inequality thereby harms the worse off, and reduces them to second-class citizens.