“The Din of Inequity” – a presentation at my Harvard 40th Reunion.
About a week or so before my Harvard 40th Reunion in September, 2002, I got a request from Harvard to participate in a symposium on the first day. The title was to be “The Influence of Money — Personal and Corporate — on Washington Politics,” to be held in Sever 113.
I agreed to do the seminar, but I thought that this was an “old millennium” topic, given the past year’s headlines about Enron, WorldCom, Arthur Andersen, and the like [little did I know!]. I emailed Bob Bennett, the classmate who was to moderate the panel, and he said that the session would be more open-ended and I could bring up whatever I liked. All four panelists met for breakfast before the event, and we each had different favorite subjects.
When it was my turn, I said that corruption in Washington was “so last millennium,” and I wanted to talk about a topic of more concern to Harvard graduates of our generation. I reminded the group that many of us had taken Raphael Demos’ course, Philosophy 1 (A & B), and had of course fancied ourselves philosopher kings, or at least good candidates, ever since.
The two problems worthy of philosopher kings, I said, were global warming and the increasing inequality in American society. These were the two mentioned by a classmate, Peter Barnes, in our 40th Anniversary Report, and I agreed with him. I didn’t want to talk about global warming, so I’d address the growth of inequality. I wanted to make several points (here somewhat expanded):
- Inequality has been growing in America for some years. In 2001, for the first time, households in the top quintile (20%) earned more than half the nation’s income before taxes. The top 5%, with incomes above $150,000, earned 22.4% of the national income, up from 22.1 in 2000. (1) This is no longer news. From the New York Times: “For at least the past 15 years it has been hard to deny the evidence for growing inequality in the United States. Census data clearly show a rising share of income going to the top 20 percent of families, and within that top 20 percent to the top 5 percent, with a declining share going to families in the middle…. And other evidence makes it clear not only that inequality is increasing but that the action gets bigger the closer you get to the top. That is, it’s not simply that the top 20 percent of families have had bigger percentage gains than families near the middle: the top 5 percent have done better than the next 15, the top 1 percent better than the next 4, and so on up to Bill Gates.” (2)
- History shows that greater economic inequality is correlated with less political stability. Good examples here are Sweden and Switzerland on the one hand, and Argentina and Zimbabwe at the other. Does the French Revolution ring a bell?
- Societies with less economic inequality are healthier. “Health in the Americas” (2002 Edition) from the Pan American Health Organization (3) makes this point. As quoted in the Washington Post (4), “The epidemiologists at PAHO found something that had been noticed elsewhere – namely that wide disparity in income in a population is a hazard to health. High-income, wide-gap Brazil has a lower life expectancy (68 years) and higher infant mortality (38 per 1000) than low-income, narrow-gap Peru (70 years and 37 per 1000).” And according to the New York Times article cited earlier: “Canadians can expect to live about two years longer than Americans. In fact, life expectancy in the U.S. is well below that in Canada, Japan and every major nation in Western Europe. On average, we can expect lives a bit shorter than those of Greeks, a bit longer than those of Portuguese. Male life expectancy is lower in the U.S. than it is in Costa Rica… A few months ago the conservative cyberpundit Glenn Reynolds made a splash when he pointed out that Sweden’s G.D.P. per capita is roughly comparable with that of Mississippi — see, those foolish believers in the welfare state have impoverished themselves! Presumably he assumed that this means that the typical Swede is as poor as the typical resident of Mississippi, and therefore much worse off than the typical American. But life expectancy in Sweden is about three years higher than that of the U.S. Infant mortality is half the U.S. level, and less than a third the rate in Mississippi. Functional illiteracy is much less common than in the U.S.”
- Rising inequality in America should be of concern to Liberals and Conservatives alike. Liberals will be concerned that median family income declined 2.2% to $42,228 in one year, and that Black household income is down to $29,500, while the percentage of Americans living below the poverty line rose to 11.7 in 2001. But conservatives should be concerned as well, because a stable American society is good for everyone, and (at least) equally good for the grandchildren and great grandchildren of the conservatives. And we would expect true conservatives to take this longer view.
- We know how our economy creates inequality. The workings of America’s economic system are no longer a mystery to us; there is precious little “terra incognita.” I discussed briefly James K. Galbraith’s book “Created Unequal.” In the book, Galbraith argues (convincingly, to me) that we now know the “levers” on American capitalism that determine our levels of domestic inequality.
- What are the “levers” that create inequality? Galbraith argues that governmental decisions are the main forces affecting inequality. He includes the reliance on monetary policy to battle inflation, the redistribution of the tax burden, hostility to trade unions, and an indifference to preserving the real value of the minimum wage (see page 20).
- What is our intellectual obligation? If indeed increasing economic inequality challenges America’s political stability and physical health, and if we know what government actions are the “levers” controlling economic inequality, then we have an intellectual obligation to set those levers consciously, as a matter of public policy. And where we should set them should be a matter of public debate.
- What is our moral obligation? Clearly, we have a moral obligation to set the “levers” so as to minimize the suffering of our fellow citizens, consistent with other goals. For example, if Galbraith is right in asserting that the 1990’s proved that the NAIRU, (the natural, or non-accelerating inflation rate of unemployment) either doesn’t exist or is several percentage points below the level that results from the Fed’s interest rate manipulations, then a LOT of unemployed workers (and their families) have been suffering needlessly (see (5), pp 172 – 182). I myself would argue that many of us could spare the cash to alleviate a great deal more suffering. That’s part of the public debate, of course.
- The Role of the Harvard Class of 1962. In the stable society we all want, a public debate about inequality and any resulting changes in the positions of the “levers,” will only come about because the “haves” decide that their longterm costs outweigh their short term benefits from societal inequality. Individuals in groups such the Harvard Class of 1962, — in other words, the “haves” – who favor long term societal stability as well as fundamental “fairness” for all American citizens, should take the lead in moving the debate — and in moving the levers.
That’s what philosopher kings do.
(1) See also Money Income in the United States: 2001, Census Report P60-218, available at http://www.census.gov/hhes/www/income.html. This report was summarized in the Washington Post on September 25, 2002: “U.S. Poverty Rate Rises, Income Drops; Increase in Ranks of Poor is First in 8 Years” (Steven Pearlstein; page A-3).
(2) For the full article, see Paul Krugman’s “For Richer” in the New York Times Magazine, October 20, 2002.
(3) Available at http://publications.paho.org/english/index.cfm
(4) “Americas’ Life Expectancy Rises, but Health Mixed,” (David Brown) September 23rd, p A-2
November 8th, 2002