Economic Inclusion and Economic Inequality

Chris Hayes and I touched on a lot of thorny issues in our diavlog. As always, Chris performed very ably — he is an exceptionally articulate spokesperson, and also an insightful, creative thinker. As for me, I failed on a number of fronts. First, I’m pretty sure I did too much talking, in part because I worry that the “conservative” perspective on inequality and the changing nature of the economy is commonly misunderstood. Second, I’m bummed about many of the issues we didn’t manage to cover.

One commenter notes,

Does he [i.e., Reihan] really think that what we liberals think is inequality is just a matter of different, equally valid, choices people make? That for some reason I like to live in a house that I own, and is warm in the winter, and has plenty of room for my family and any friend who want to come over, and my low-income clients for some reason that we might not understand, prefer to live in a falling-down house with broken windows, inadequate heat, with floors they can’t keep clean and doors that don’t provide either safety or security?

I certainly don’t think that’s true. But I do think that in a post-scarcity society, defined loosely as in Brink Lindsey’s excellent The Age of Abundance, a lot of people are choosing not to maximize their cash income. Is this true of ex-offenders living on the edge of poverty, who are subject to punishing marginal tax rates and intense employment discrimination? Well, no. Chances are these guys are trying to maximize, or at least increase, their cash income, and they are having a damn hard time. That’s a big part of why I favor large-scale wage subsidies. But is this the defining aspect of American inequality? It’s certainly not what Robert Frank focuses on, and for good reason — the inequality picture is far larger and far more complex, and it reflects choices about intimacy, geography, leisure, household production, and a lot of other spheres that while not perfectly in the hands of individuals — gender stereotypes, caste distinctions, powerful norms that fuel positional arms races, all of these factors play a role — really do allow a lot of room for agency. And we can’t just dismiss this out of hand. This isn’t to say there is no room for mitigating the resulting inequalities through collective political action. But of course there are real costs to doing so, and we need to weigh the costs and benefits.

Like a lot of right-wingers, I think the inequality we ought to care about isn’t upper-tail inequality but rather lower-tail inequality. Moreover, I think we should care a lot less about inequality than about poverty and, more precisely, economic exclusion — the effective exclusion of substantial numbers of Americans from the so-called mainstream economy, an exclusion that exacerbates many social ills, and that empowers the worst, most violent, most destructive elements in our society. So to the extent measures that mitigate inequality increase economic exclusion, I oppose them. For those who care about economic exclusion, the prison system is an obvious target. But so is the payroll tax. My hope is that an economic inclusion agenda would be embraced by the political right and left, and that it would allow us to bracket some of the more controversial questions surrounding inequality.

Another commenter directed me towards this terrific David Mamet essay, which I strongly recommend.