Why worry about inequality, Take 2: In Vox, Matt Yglesias
argues explains that the Democrats’ famous “Great Gatsby Curve” is bunk. The Curve purported to show that money inequality has been accompanied by lower “relative mobility” — the ability of Americans to move up and down the economic ladder. But Yglesias notes that “detailed analysis … does not show a decline in intergenerational mobility since 1971, even though inequality has skyrocketed.” Don’t tell President Obama.**
What liberals should focus on instead, says Yglesias, is more what Scott Winship calls “absolute mobility” — rising living standards up and down the ladder. But, according to Winship (whose work Yglesias cites on the Gatsby issue), inequality hasn’t prevented living standards from rising either for the vast majority of Americans, though they haven’t risen all that much. Elizabeth Warren may claim otherwise (“the top 10 percent gets 100 percent of the income growth over the course of a generation”) but her recent op-ed piece actually links to an article that refutes her point and supports Winship.
So if rising income inequality hasn’t undermined those two desirable types of mobility, why worry about it? Is there anything valuable it has undermined, some good whose arrow has actually started to point down as the inequality arrow goes up? I would say yes — social equality, the sense that all Americans are equal in the eyes of each other. Winship can’t easily disprove this because social equality is not an economic concept! If I were a Democratic speechwriter looking to stir up some anti-inequality votes, I’d try that angle.
To be sure: This doesn’t mean that, when it comes to social equality, the main economic problem is those at the very top getting richer. Stagnant wages for unskilled workers at the very bottom may be more important. It also doesn’t mean the way to undo the damage is to reverse the broad income inequality trend. The left (Warren and De Blasio included) has no plan that comes close to being able to do that. The most effective way to attack the problem may be directly (by building class-mixing institutions, like Obamacare could have been) rather than by trying to reshape the whole income bell curve.
But it’s hard to see how the recent changes in that curve — in an unequal direction — haven’t made the problem worse.
** — Or Prof. Krugman.