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A New Spin from the Inequality Denialist Set

Research & Commentary
June 15, 2014


A key keeper of the free-market fundamentalist flame wants us to know that all his rich and powerful red-state pals really do care about income maldistribution.

By Sam Pizzigati

Heritage Foundation heavyweight Stephen Moore is calling on defenders of plutocracy to make a course correction.

Heritage Foundation heavyweight Stephen Moore is calling on defenders of plutocracy to make a course correction.

The go-to intellectual guardians of our corporate order — those conservative analysts whose op-eds appear regularly in the Wall Street Journal — have a problem. Their defense of plutocracy just isn’t selling.

Two events this spring have now put this failure in particularly stark relief.

First came the cultural phenomenon of Thomas Piketty: An obscure French economist jumps to the top of the bestseller lists with a book that makes a compelling case for no longer tolerating, anywhere on earth, grand concentrations of private wealth.

Then last week came a political shocker, the stunning Republican primary election collapse of Wall Street waterboy Eric Cantor, the House majority leader. His opponent Dave Brat, an obscure Tea Party professor who fancies Ayn Rand, presented himself to voters as a fighter against “the rich and powerful.”

“I am running against Cantor,” Brat declared, “because he does not represent the citizens of the 7th District, but rather large corporations seeking insider deals, crony bailouts, and a constant supply of low-wage workers.”

What to do in the face of such distressing — for deep pockets — new realities? One major player in right-wing thought-leader circles, Heritage Foundation chief economist Stephen Moore, wants cheerleaders for concentrated wealth to start chanting a new cheer.[pullquote]Moore is claiming that America’s existing inequality results from misguided progressive policies.[/pullquote]

Those cheerleaders have essentially been denying that the United States has any problem with inequality. Even the poor in America, they’ve been arguing, are living high on the hog, texting away on cell phones and clicking the remotes of flat-screen TVs.

Moore is now pushing a different line. In a just-published Wall Street Journal piece co-authored with Ohio University’s Richard Vedder, Moore accepts inequality as a reality that should trouble all decent-minded Americans and makes no effort to minimize the width and breadth of America’s grand divide.

Instead, Moore tries to turn the tables. He and his colleague Vedder are arguing that America’s existing inequality results from misguided “progressive” policies that in one way or another either attack America’s richest or tie their hands.

Blue states, Moore and Vedder contend, have a “standard prescription” for our economic ills that “involves raising taxes on the well-to-do, increasing the minimum wage, and generally expanding government benefits.”

This policy brew, the pair mockingly note, supposedly reduces inequality: “If only America took a more ‘progressive’ approach, the thinking goes, leaving behind conservative, red-state priorities like keeping taxes low and encouraging business, fairness would sprout across the land.”

In fact, Moore and Vedder go on to pronounce, the progressive prescription has been a lollapalooza of a loser. Their proof? They trumpet a simple stat: “The income gap between rich and poor tends to be wider in blue states than in red states.”[pullquote]Moore’s case rests on Census Department stats that don’t measure what his thesis argues.[/pullquote]

Moore’s income gap contrast reflects the Census Bureau’s latest figures on state-by-state levels of inequality, as measured by the Gini coefficient, a conventional but much-criticized yardstick. These Gini figures rate blue-state bastions like New York and California among America’s most unequal places.

“The conclusion is nearly inescapable,” Moore and Vedder proceed to assert, “that liberal policy prescriptions — especially high income-tax rates and the lack of a right-to-work law — make states less prosperous because they chase away workers, businesses, and capital.”

The Heritage Foundation, America’s lead enforcer of politically correct right-wing ideology, is spotlighting Moore’s new analysis and likely hoping that other right-wing defenders of the free-market faith will pick up on his riposte to progressives “obsessed with reducing income inequality.”

But if conservative ideologues do attempt to run with the new Moore line, they may find themselves sinking even deeper into defense-of-the-indefensible ideological quicksand. The new Moore line — that progressive governance increases inequality — simply doesn’t hold up.

The Center for Equitable Growth’s Carter Price has already exposed the glaring statistical glitch in the Moore-Vedder analysis. The Gini coefficient numbers the two trumpet don’t factor in the impact of either taxes or social safety net benefits. As a result, Price notes, “the measure they are using explicitly misses the impact of the policies that they claim are ineffective.”

In other words, you can’t with a straight face claim, as Moore and Vedder do, that progressive taxes and government social safety net programs make inequality worse and then give as your evidence numbers that don’t take the impact of taxes and social safety net benefits into account.[pullquote]Blue states, recent history shows, don’t necessarily implement progressive policies.[/pullquote]

Los Angeles Times commentator Michael Hiltzik has noted a more political problem with the new Moore line: You can’t assume that “blue states” — states that typically vote Democratic in national elections — are implementing policies that merit the “progressive” label.

Take California, for instance. Moore and Vedder gloat that blue-state California has a higher Gini inequality rating than red-state Texas.

Back in the mid 20th century, to be sure, California did richly deserve the progressive tag. The state had a tax system that put a serious burden on the affluent and raised enough revenue to fund a wide array of programs — including free postsecondary education through community college — that placed California at the vanguard of the nation’s emerging mass middle class.

But by the late 1970s California was leading the nation in a much more unequal direction. The 1978 passage of the tax-capping Proposition 13 would prove a windfall for the state’s rich and powerful and begin the unraveling of the state unparalleled infrastructure for middle class prosperity.

“California may be blue,” notes Los Angeles Times analyst Hiltzik, “but until very recently economic policymaking in Sacramento was hamstrung by the strong veto held by conservative Republicans in the legislature.”

In New York, another Moore example of a deeply unequal “blue state,” a similar story. New York once did help set the progressive pace. But that era ended decades ago. Distinctly non-progressive majorities, New York City Bill de Blasio pointed out recently, have enjoyed a state senate veto for all but two of the last 50 years, this “in the state that brought you Fiorello LaGuardia and FDR.”

[toomuch_promo]In both California and New York, and other states as well, egalitarian-minded groups are working to upend rich people-friendly pols and regain the political momentum. Bit by bit, these groups are starting to undo the policies that derailed the mid 20th century march to greater social and economic equality.

Moore and his crew see all this. They realize all too well that knee-jerk inequality denialism, the right’s stock in trade up to now, isn’t going to stop the emerging new egalitarian wave.

Unfortunately — for plutocrats everywhere — neither will Moore’s latest move to muddy the inequality waters.

Labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, writes widely about inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.

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