March 23, 2010

Relative Income Inequality

did i make things worse?

Part 1
Part 2

Reiterated: Wilkinson finds that one judges equality against people in their own nation; and absolute income is not nearly as important as relative income inequality.

we looked at life expectancy, mental illness, teen birthrates, violence, the percent of populations in prison, and drug use. They were all not just a little bit worse, but much worse, in more unequal countries.

...what matters aren't the incomes themselves but how unequal they are. If you're a more unequal state, the same level of income produces a higher death rate.
It's such a simple argument that it is easy to think he's saying something else.  He's not talking about an inability to access basic services or buy food and shelter-- not "haves" and "have nots" but the "psychosocial" (his word) effects of inequality.

There are problems that we think of as problems of poverty because they're in the poorest areas of society, but a country like the U.S. can be twice as rich... and the problems are no better even though Americans are able to buy twice as much of everything as the poorer developed societies.
The income inequality matters because we are a social species and relate not to absolutes but to each other in our own nation.

So, is he right?

Of course he's right.  You don't need any of his data to know resentment is always relative to the other, frustration is synonymous with a impeded will, and that both of these exact a biological and psychological toll.  I don't need anyone to tell me that massive executive pay drives people bananas.  And as I've hopefully made obvious by this point, most people's anger about policies, politics, and problems are really about our relation to some other group of people.

But slow down.  The mistake everyone is making is conflating the problem-- income inequality-- with the proposed solution-- income redistribution.


First, while the hard data point to "income inequality" because it's the only measurable statistic for the real issue of income justice,  i.e., getting what you deserve and deserving what you get.  When people talk about the social effects of income inequality in America, they always bring up CEOs but never, not once, ever, bring up Warren Buffet.  Or baseball players.  Or the Kennedys.  Or Sandra Bullock.  As much as Sandra Bullock drives me insane I have never set fire to a trash can or impregnated a teenager because she made what is obviously way too much money for agreeing to be in the worst movies ever scripted by spider monkeys.

However, we have some (obviously warped) sense that these people deserved their incomes.  So what we're really wanting isn't income redistribution but a sense of distributive justice.

Well, good luck on that one: who is going to be trusted to redistribute?  "The government" isn't a spirit, it's a bunch of people that seem to be selected for infidelity.  And people  Americans are rightly suspicious of the criminal justice system; why would the distributive justice system be perceived to be any more fair?  It doesn't matter a lick whether it is actually fair or not because it will be filtered through a lifetime of prejudices and cognitive biases.  As one rambling fool put it, it's the Stroop test applied to public policy.

I've not seen anyone bring up a point that will be obvious the moment I say it: rich people can get angry, too.  If people get angry because they don't have what they think they deserve, imagine the anger that will manifest when people have things taken away from them.  Don't yell at me: it matters not at all whether "the rich" are entitled to their anger or justified in their purchase of a Cessna, only that it is a fact that they will be angry. 

You can't pretend social unrest only comes from the bottom up; when a group of feel unfairly  branded as "the problem" by the likes of people whom they believe have never actually produced anything (i.e. congressmen), and what they feel they've earned taken from them, well, they won't be breaking store windows and flipping cars over, but your society will be transformed all the same.

Again, I am not justifying their anger, I am warning against what you think is so obvious a solution.  I am describing reality: rich people can buy guns, too.  And Congressmen. This is a fight that you cannot win, not here and not for at least two more generations.

If you attempt income redistribution, not only will you fail, the country will bury you for 25  years.  It happened to Jimmy Carter.  It will happen again.


The second reason income redistribution will fail is that you change its value by redistributing it. 

If you run Wilkinson's book through Babel Fish, you see that when he writes "income inequality" he actually means "relative inability to participate in society."  In other words, the disparity isn't income, it's consumption.
Income inequality seems to explain why America has more social ills than, say, Costa Rica but it's because income means something completely different to Americans than it does to Costa Ricans.

To any nominally poor nation-- take your pick, from African subcontinent to nearly integrated industrialized Romania-- income is only a supplement to an existence.  In America, it represents expectations, potential, identity, everything.  Even the least materialistic American makes judgments about other people based on this income, even if the judgments are inverse ones ("the rich are bad" etc) or about himself ("I'm not like other Americans, I don't need an income.")

Income represents the potential for consumption, and this potential is the measure of social equality.

Wilkinson strolls right up to this point, has his face bitten off by it, and walks away oblivious:

Status competition causes problems all the way up; we're all very sensitive to how we're judged. Think about Robert Frank's books Luxury Fever or Falling Behind, or the great French sociologist Bourdieu--they show how much of consumption is about status competition. People spend thousands of pounds on a handbag with the right labels to make statements about themselves. In more unequal countries, people are more likely to get into debt. They save less of their income and spend more.
That's what his data actually shows, but he falls back on income inequality.  Status competition, personal branding, attempts at self identification.  Even nearly perfect redistribution of income will not affect these social ills because people will find something else to set themselves apart from the rest.  High school students manage to create a viciously unequal society that drives some kids to suicide and others to Columbine and others to group sex and it has nothing to do with income at all.  Or are we still blaming genetics for all that?


When I tell you that narcissism is the biggest epidemic this generation faces, I'm not looking to get on Oprah, I mean it.   Any tentative political solution-- redistribution of income, modification of entitlements (either more or less), focusing on education, whatever-- while these are all noble approaches that likely will have some immediate impact-- long term all of them will fail.  All of them.  The problem is deeper than incomes, it is expectations, and you can't redistribute expectations.

You could hand every American $10M in gold bullion right now, free and clear-- you could take it right out of a CEOs pocket and call it social justice-- and nothing will change except that they will drink more.

I'm not constructing a conservative argument against a liberal policy, I'm not choosing an economic ideology;  I am taking a strictly realist's perspective that income redistribution will fail.  And it will fail also in China and in Brazil and yes, even Scandinavia.  Everywhere, it is inevitable.

There's a very specific reason for this, Wilkinson hits it but refuses to pursue it to its conclusion; instead, he falls back on income inequality:

If you grow up in an unequal society, your actual experience of human relationships is different. Your idea of human nature changes. If you grow up in a consumerist society, you think of human beings as self-interested. In fact, consumerism is so powerful because we're so highly social. It's not that we actually have an overwhelming desire to accumulate property, it's that we're concerned with how we're seen all the time. So actually, we're misunderstanding consumerism. It's not material self-interest, it's that we're so sensitive. We experience ourselves through each other's eyes--and that's the reason for the labels and the clothes and the cars.

(Part 4 soon.)