How (not) to defend entrenched inequality

[ProSense]

How (not) to defend entrenched inequality

by John Quiggin

The endless EU vs US debate rolls on, but now with an odd twist. Although the objective facts about economic inequality, immobility and so on are far worse in the US than the EU, the political situation seems more promising. (I’m not talking primarily about electoral politics but about the nature of public debate.)

In the EU, the right has succeeded in taking a crisis caused primarily by banks (including the central bank, and bank regulators) and blaming it on government profligacy, which is then being used to push through yet more of the neoliberal policies that caused the crisis. And, as we’ve just seen, formerly social democratic parties like New Labour in the UK, are pushing the same line.

By contrast the success of Occupy Wall Street have changed the US debate, in ways that I think will be hard to reverse. Once the Overton window shifted enough to allow inequality and social immobility to be mentioned, the weight of evidence has been overwhelming.

This post by Tyler Cowen is an indication of how far things have moved. Cowen feels the need, not merely to dispute some aspects of the data on inequality and social mobility in the US, but to make the case that a unequal society with a static social structure isn’t so bad after all.

- more -

http://crookedtimber.org/2012/01/25/how-not-to-defend-entrenched-inequality/

Fascinating read, Quiggin responds point by point to Cowen's subesquent rebuttal of his critique.

Here is Quiggen's latest (follow the links, good stuff).

Social democracy and equal opportunity

John Quiggin

My critique of Tyler Cowen’s post arguing the unimportance of social mobility has started off, or maybe merged into, of those old-fashioned blog firestorms we used to have back in the day, now also reticulated through Twitter – a few links here, here and here. But rather than criticise Cowen further, I thought I would try to work through the bigger issues involved from a social democratic perspective[1]. In particular, as discussed in comments here, should social democrats favor policies to enhance social mobility, or does mobility between generations make inequality even worse, for example by justifying what appears as meritocracy?

It’s helpful to start with some facts, and the big one is that inequality of opportunity and inequality of incomes (or, more generally) outcomes are strongly positively correlated. The US and UK are notable as being highly unequal societies in both respects. More precisely, as would be expected on the basis of even momentary thinking about the ways in which parents try to help their children, highly unequal outcomes in one generation are negatively correlated with intergenerational mobility in the next.

That brute fact kills off one of the central ideas put forward by lots of ‘Third Way’ advocates among former social democrats, namely that it’s fine to have the highly unequal outcomes produced by free-market liberalism if you can get a modest amount of extra growth in aggregate, since governments can use education and similar policies to ensure that everyone has a fair chance at the big prizes. If a highly unequal society allows parents to give their children an unbeatable headstart, then the idea that we can offset greater inequality of outcomes by more efforts to promote equality of opportunity becomes problematic at best.

Matt Cavanagh in Against Equality of Opportunity takes the dilemma seriously and argues for the abandonment of equal opportunity on the basis that it is inconsistent with a market society. That’s pretty much the actual position of most Third Way supporters[2] though not too many are willing to say so.

- more -

http://johnquiggin.com/2012/01/29/social-democracy-and-equal-opportunity/

[ProSense]

1. kick! n/t

[pnorman]

2. Yes, should be more K&R than 2!

K & R!

[ProSense]

4. Thanks. n/t

[niyad]

3. k and r

[pampango]

5. "inequality of opportunity and inequality of incomes...are strongly positively correlated."

And Europe does better in both regards. There is better inter-generational income mobility there as well as the often noted much better distribution of incomes.

The terribly high inequality of income distribution in the US is tied to the lower degree of equality in opportunity.

[ProSense]

6. The

U.S. needs a new work model.

For your own sake, stop working so hard

By Richard Schiffman

<...>

Americans already work hundreds of hours a year more than their counterparts in other developed countries, including workaholic Japan. They also have fewer days off than Europeans, who typically take four to six weeks of paid vacation a year.

Companies argue that grueling work schedules are necessary to boost productivity. But consider that, despite the recession, the productivity of U.S. workers has increased fourfold since the 1950s. Put another way, as of 2000, employees work one hour to produce what it took four hours to create a half-century ago. Meanwhile, the buying power of wages has remained stagnant and in recent years has even begun to decline. Someone is getting rich off the exponential rise in productivity, but it is not the American worker.

In the past, unions struggled not only to raise pay but also to shorten the hours that their members had to work. The trend toward shorter hours continued unabated from the Civil War through the end of the Great Depression and the enactment, in 1938, of the Fair Labor Standard Act’s 40-hour-week provision. But during World War II work hours increased sharply, and it has not been a significant public issue since.

Given the recent troubles in the U.S. economy, this may seem an odd moment to reconsider the value of working less. But this crisis is not due to poor productivity; U.S. workers’ productivity is at an all-time high. Neither is it a crisis in corporate profitability, which continues to soar despite tough economic times for ordinary Americans. It is arguably a crisis in corporate greed, one created by financial entities pushing for ever higher growth rates and levels of profitability regardless of the cost to the long-term health of the economy or for those whose hard work made that economy flourish over the past century.

- more -

http://www.washingtonpost.com/opinions/working-less-would-provide-much-to-americans/2012/01/26/gIQArhKPWQ_story.html

You often hear people with high incomes bragging about how hard they work (60 hours or more per week). Great, you work 60 hours per week and earn at least 10 times as much as the average worker who also works long hours, and sometimes without benefits. Of course, for high income earners there are benefits and also perks. Remember BP's Tony Hayward's, "I'd like my life back"? This is the same guy who took time off in the middle of a crisis to go sailing with his son.