October 2009: Best of the Blogs

Here’s a roundup of some notable blog posts in response to this month’s issue. Each post is longer than what I’ve quoted here — which tries only to give you an idea of where the author is headed. All are worth reading.

Rortybomb writes:

What good is money for? Well, in a liberal society, it’s good for two things: more things and more autonomy. The things part is down — as Will is quick to point, goods at the lower end of the consumption scale are cheaper and better working over the past few decades. So even if many consumers have not seen their incomes rise, they feel richer since the goods they are getting are cheaper. True dat!

What I’m more interested in is the autonomy end of it. What about the ability to leave an abusive partner or job without worrying about health care? Travel, spend more time with your family, feel a sense of financial security, etc? Here people less worried about income inequality would say that consumers are in better position to take advantage of this as well since they are richer.

So what they have a cheaper basket of certain goods. Now though autonomy isn’t commodified and sold on a market, the items that we associate with it, insurance, education, perhaps housing, have all seen skyrocketing prices, an effect that blocks out the first effect. This leaves consumers noticeably poorer than they would be otherwise. You’d need to construct a separate index and see the effects played out; I hope researchers are able to do that.

Modeled Behavior writes:

Economists breathed a collective sigh of relief when we saw data showing that GDP really does make people happier.

However, what if all that’s really going on is that the probability of very bad events is going down. That is, the richer you are the less likely your child is to starve to death, the less likely you are to find yourself with no home, the less likely you are to be trapped in an abusive family. These bad things go down and happiness goes up.

In other words Crusoe is happy when his coconut stockpile increases not because he actually going to eat 50,000 coconuts but because implicitly the probability of any series of bad events leaving him with no coconuts or only rotten coconuts goes down.

Let me be clear about what I think we’re saying here. It’s not simply that there is some reservation level of consumption and as people get further from it they are better off. It is that there are a whole range of bad things that could happen to you and higher income gives you the ability to self-insure against more and more of those things.

This can go pretty far. The flat screen and DVD collection insures you against boredom. The night [on] the town insures you against an unhappy mate. Lots of what we think of as happiness from consumption might simply be freedom from worry. In this sense income is not merely an input to consumption, it is a substitute for consumption. We should demand income in and of itself.

Peter Twieg of The Distributed Republic writes,

Elizabeth Anderson uses the phrase “spiteful competition” no less than four times. Does anyone have any idea what exactly this is supposed to mean? I could offer some guesses, but let’s see what she apparently believes about this concept:

- Conspicuous consumption is a form of spiteful competition

- Not all forms of status competition can be classified as spiteful competition

I’m at something of a loss here. Pure status competition in general is usually seen as a zero or negative-sum activity, and if displacing someone else on the social ladder isn’t spiteful, what is? Does it have to be accompanied by an upturned nose and catty banter in order to qualify? This strikes me as an important source of confusion in Anderson’s overall argument: What delineates “good” status competition from “bad” status competition? What forms of inequalities give rise to good versus bad forms of status competition?

It’s unclear whether Anderson actually believes that reducing income inequality would actually reduce status competition instead of just causing it to be expressed along some other dimensions of identity. Observe the trendy prevalence of food and environmental snobbery among certain parts of the American population – can anyone honestly say that these causes have not become broad cultural movements used in order to create “spiteful” hierarchies of social enlightenment? Anderson appeals to the lack of conspicuous consumption in Scandanavian countries, but does she believe that the fact that these countries have much greater status stratification by job title is completely coincidental? Or is this okay because, for whatever reasons, this sort of stratification isn’t done “spitefully”?

Also from this issue

Lead Essay

  • In his lead essay, Will Wilkinson observes what he believes is a poor chain of reasoning: Income inequality is rising; it is also a measure of injustice. To fix this injustice, we should redistribute incomes. Wilkinson attacks this reasoning on several fronts: Income inequality is less important than consumption inequality, and consumption inequality is probably lessening. But if income inequality is a problem, it is so only as a symptom of a different problem: substandard schools, perhaps, or our high incarceration rate, or CEOs who conspire to overpay one another. Rather than redistributing income, we should identify the underlying problem and fix it directly. This may well lessen income inequality, and it will also fix an undoubtedly serious problem somewhere else in our society.

Response Essays

  • Lane Kenworthy argues that income inequality is indeed important, and that we should not be misled by the relatively reassuring data on consumption. Unconsumed income also adds to the quality of life enjoyed by the rich, even if that increase is still hard to measure. A more egalitarian society need not entail a radical social leveling, but it should entail better public services for the poor and the middle class.

  • John Nye adds several considerations to the mix: First, positional goods may make us feel more unequal — there are only so many “top ten” schools for our kids, only so many “best” views or neighborhoods. Yet, with rising incomes, more of us feel that we should be able to afford them, even as they slip further from our grasp. As we become more equal, we feel less equal. Second, one other effect of relative equality has been to erode the security formerly enjoyed at the very top of the economic pyramid. This security itself was a form of compensation, and executive salaries may be rising in recent years in part because executive security has fallen. And third, much of human inequality is not directly measurable in money at all. Differences in appearance, intelligence, ability, and the like are all real and may translate into economic inequality as well. Consideration of these elements is curiously absent from many discussions on inequality.

  • Elizabeth Anderson agrees with Wilkinson that the root causes of inequality are more troubling than inequality taken alone. But economic inequality is still a problem for two reasons: First, economic inequality of the sort we have today is not making the poor better off in absolute terms, but rather it is making them worse off. And second, economic inequality translates directly into inequality of political power, which in turn reinforces economic inequality. This is an unacceptable state of affairs.