A leading conservative academic is charging that critics of America’s top-heavy distribution of income are missing the bigger picture. In the process, he’s only fogging that picture up.
By Sam Pizzigati
One of America’s top apologists for our billionaire status quo has a rather daring new approach to defending inequality. He’s claiming to be an egalitarian.
And not just any egalitarian. Tyler Cowen, the director of a Koch brother-backed academic center, is claiming that folks like him — who regularly oppose efforts to tax, regulate, or otherwise discomfort our global super rich — rate as the world’s “true egalitarians.”
Cowen is making these claims, amazingly, without getting laughed out of the room. In fact, just over a week ago, the New York Times gave him a prominent platform to make his case.
At the heart of that case, a single fact: The world is getting more equal.
You read that right. More equal. If you place the incomes of all the people in the world today in one statistical basket, the distribution of those incomes would be less unequal than the distribution of global incomes 10 or 20 years ago, notes Cowen, the top academic at George Mason University’s Mercatus Center.
In other words, he adds, “we have been living in equalizing times for the world.” Life in our global economy is heading “in a fundamentally better direction.”[pullquote]Those who rail against inequality within America, goes this new conservative argument, are hiding behind the ‘cloak of egalitarianism.’[/pullquote]
Cowen, to be sure, does acknowledge that income inequality within individual nations has been rising. He even acknowledges that some policies that help America’s top 1 percent — like “free trade” deals — can hurt American workers and increase inequality within the United States.
But these same policies, Cowen argues, have “also increased prosperity and income equality globally.” Those Americans who rail against policies that enrich America’s rich, he charges, are taking a “narrow” nationalistic view. They’re hiding parochial national interests behind the “cloak of egalitarianism.”
The “true egalitarian,” Cowen goes on to insist, should applaud “wealth-maximizing policies” — translation: policies that let rich people do their thing — and start “worrying less about inequality within the nation.”
After all, Cowen concludes, all “globally minded egalitarians” have cause to be optimistic. Good old “capitalism and economic growth” are still delivering us “the greatest and most effective equalizers the world has ever known.”
America’s most ardent cheerleaders for grand fortune have, not surprisingly, greeted Cowen’s manifesto for “global egalitarianism” with unrestrained glee.[pullquote]This past spring has been a tough slog for grand fortune’s cheerleaders.[/pullquote]
This past spring has been a tough slog for these cheerleaders. French economist Thomas Piketty’s bestseller Capital in the Twenty-First Century has shoved them onto the defensive. The story Piketty tells — of income and wealth concentrating in ever fewer hands — has alarmed readers worldwide and thrust up politically previously unmentionable ideas like a global tax on grand fortunes.
Cowen’s latest formulation offers right-wingers ideological ammunition for fighting back — and they’re shooting away. “Check Mate Pikettards. Income Inequality Is Not Rising Globally. It’s Falling,” blasted out one conservative online site last week. Headlined another: “The Left’s Big Fumble on Inequality.”
Do these right-wingers have reason to gloat? Could Cowen be right? Could the level of income inequality on planet Earth actually be decreasing?
The short answer: Yes. But Cowen’s core statistical observation, as University of London economist emeritus John Weeks contended last week, counts as “trivial to the point of meaningless.”
Statistically, Weeks explains, inequality can be increasing within every nation on Earth at the same exact time inequality on the entire planet, if you sit everyone in a single data dump, is decreasing.
How can that be? We need only look at China, a nation with some 20 percent of the world’s population.[pullquote]The gains from China’s growth have gone largely to China’s elite.[/pullquote]
Over recent decades, rapid economic growth within China has substantially lifted the incomes of Chinese urban workers. Essentially, nearly a billion people have “leapfrogged” their way up the global income ladder. That leap has left the world, taken as a whole, less unequal.
But China internally has become more unequal. The gains from China’s growth have gone disproportionately to China’s elite.
In fact, between 1988 and 2008, China’s top 5 percent accounted for an incredible 44 percent of global income gains, point out economists Christoph Lakner and Branko Milanovic, whose work has been Cowen’s prime source for data on global inequality.
Why should we care about within-nation inequality if global inequality is falling?
Economist John Weeks has the simple answer: “The curse of inequality falls upon people at the national level.”
That curse, as social sciences philosopher Daniel Little chimed in last week, wreaks “profound problems.” Rising income inequality within nations leaves the quality of life for each nation’s poor “significantly lower than it could and should be, given the level of wealth of the societies in which they live.”[pullquote]The curse of inequality falls upon people at the national level.[/pullquote]
Those millions of people who live more poorly housed and nourished than they could be living, Little adds, will also “be less productive than they have the capacity to be, and future society will be the poorer for it.”
Inequality within nations eats away at social cohesion as well, raises levels of status tension, and swells the political power of those with the largest fortunes, a dynamic that degenerates democracies, over time, into oligarchies and worse.
But what about Cowen’s insistence that you can’t be a “true egalitarian” in the developed world as long as you obsess about levels of inequality in your own affluent national backyard?
Last week’s best rejoinder to Cowen on that score came from economist Dean Baker at the Washington, D.C.-based Center on Economic and Policy Research.
Some of the income gains that workers in China have realized over recent years, Baker notes, “have come from displacing workers in rich countries, especially the United States.”
But if we had organized the global economy differently, on everything from patent rules to taxes on global financial speculation, workers everywhere across the globe, the rich countries included, could have benefited more — and the global top 1 percent would have benefited less.[pullquote]We can organize the global economy differently.[/pullquote]
For Baker, Cowen’s argumentation brings to mind a mob boss who “has his thugs go around and shake down a bunch of small business people,” then hands “a portion of the haul to poor children.” The small business people complain. Don’t you care, the mob boss replies, about poor children?
“Just because the world’s poor benefited at the expense of the middle class in rich countries,” relates Baker, “does not mean it had to be this way.”
Last week’s final word on global inequality? That may have come Thursday with the release of the annual UN Human Development Report. Unlike Tyler Cowen, the UN analysts aren’t celebrating “increased prosperity and income equality.”
Nearly 80 percent of the world’s population, their new study relates, still “lack comprehensive social protection.” About 842 million people worldwide still suffer from chronic hunger. The world community, the new Human Development Report advises, has “to ask a basic question.”
[toomuch_promo]“Whose prosperity,” the UN researchers want to know, “are we observing?”
Sam Pizzigati edits Too Much, the Institute for Policy Studies online weekly on excess and inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class (Seven Stories Press).