Why are the very rich doing so well? Family values.
The appearance of income inequality on the political agenda has left conservatives casting about for a response, and after several months of floundering, it has increasingly narrowed down to two words: Charles Murray. Murray is the author of a new book, Coming Apart: The State of White America, which attributes the decline of the middle class to deteriorating social norms. Non-elite whites, he argues, are failing to sustain healthy marriages or strong child-rearing and work habits, leading to economic decline.
I haven’t read Murray’s book, so I can’t evaluate the argument. I have many reasons for skepticism that it actually explains what it purports to explain. There’s Murray’s non-confidence-inspiring history, the intuitive possibility that deteriorating social norms are at least partially the result and not the cause of economic stagnation (it’s no longer easy for a blue-collar earner to support a family), and the simple fact that, you know, many Americans are not white, which limits the value of a book about white people as a totalistic social explanation. But even if we grant, for the sake of argument, all the claims being made on Murray’s behalf, the basic point is that it is not a plausible response to the problem of income inequality. It’s an attempt to change the subject.
Rising income inequality is a phenomenon of the top one percent pulling away from everybody else. Conservatives want to redefine the question as concerning the top 20 percent against everybody else. If you redefine the question as being about the top quintile against the bottom four-fifths, then you can start talking about marriage and Charles Murray and safely steer the debate back onto comfortable conservative terrain. David Brooks tries that sleight of hand in his column today:
Democrats claim America is threatened by the financial elite, who hog society’s resources. But that’s a distraction. The real social gap is between the top 20 percent and the lower 30 percent. The liberal members of the upper tribe latch onto this top 1 percent narrative because it excuses them from the central role they themselves are playing in driving inequality and unfairness.
But these are two completely separate issues. Yes, the top 20 percent has done better than the bottom 80 percent, and it’s very worth exploring the role of social norms in this divergence. But income inequality has occurred between the top one percent and everybody else:
A more blunt version of this technique was previewed a couple months ago by the American Enterprise Institute’s James Pethokoukis, perhaps the right’s most enthusiastic inequality denier. Pethokoukis cited a chart, compiled by Political Calculations, purporting to show that the only change in inequality results from changed family status. Pethokoukis triumphantly presented this as the “The one chart that explodes the myth of U.S. income inequality,” and used it to segue, as Brooks does today, to Murray’s arguments about family values:
So what we have here, as always in America it seems, is culture trumping economics (though the data don’t take into account how different income groups have different inflation rates, another equalizer). AEI’s Charles Murray has a new book coming out that will expand on how values and culture influence inequality.
But the chart is completely wrong. Reader Jacques Distler pointed out to me that it relies on census data, which only asks households if they earn more than $100,000 a year. Since all the change in income inequality has come within households earning well over that mark, the census data is not going to capture the rise in income inequality. (Think of it this way. Imagine you want to show that basketball centers get taller as you move from high school to college to the NBA. If your tallest category is “six foot two and over,” you’re not going to show much of an effect.)
I e-mailed Lane Kenworthy, an inequality expert, who confirmed this for me. Inequality between the top one percent and everybody else has increased dramatically.
The growing gap between the top one percent and everybody else has a lot of important implications, the most immediate being a simple fight over resource allocation. Democrats insist that any fiscal adjustment require the richest one percent to make a meaningful contribution, while Republicans insist that it must not. That’s an important debate. The root causes of the gap between the top 20 percent and the bottom 80 percent is also interesting and important. But “hey, look – Charles Murray!” isn’t a very salient response to the problem of inequality.