Nursing its liberal obsession with “income inequality,” the New York Times made it the cover story of its Sunday Book Review. Economist Angus Deaton, who won the Nobel in 2015, penned the lead review of “The Crisis of the Middle-Class Constitution – Why Economic Inequality Threatens Our Republic,” by Ganesh Sitaraman, under the headline “When the Rich Get Richer.” The online headline: “It’s Not Just Unfair: Inequality Is a Threat to Our Governance.”
But does the Times really consider Deaton an expert on the U.S. economy? Deaton, who was born in Scotland and now lives in the United States, showed an incredible lack of understanding of American wealth in a previous statement: “If you had to choose between living in a poor village in India and living in the Mississippi Delta or in a suburb of Milwaukee in a trailer park, I'm not sure who would have the better life."
President Obama labeled income inequality “the defining challenge of our time.” But why exactly? And why “our time” especially? In part because we now know just how much goes to the very top of the income distribution, and beyond that, we know that recent economic growth, which has been anemic in any case, has accrued mostly to those who were already well-heeled, leaving stagnation or worse for many Americans. But why is this a problem?
Why am I hurt if Mark Zuckerberg develops Facebook, and gets rich on the proceeds? Some care about the unfairness of income inequality itself, some care about the loss of upward mobility and declining opportunities for our kids and some care about how people get rich -- hard work and innovation are O.K., but theft, legal or otherwise, is not. Yet there is one threat of inequality that is widely feared, and that has been debated for thousands of years, which is that inequality can undermine governance. In his fine book, both history and call to arms, Ganesh Sitaraman argues that the contemporary explosion of inequality will destroy the American Constitution, which is and was premised on the existence of a large and thriving middle class. He has done us all a great service, taking an issue of overwhelming public importance, delving into its history, helping understand how our forebears handled it and building a platform to think about it today.
Deaton couldn’t locate anything positive about the insanely popular social tool embraced by hundreds of millions of people, besides its founder getting rich? Or the fact that such captalist-driven leaps in technology have enhanced the quality of life by a hundred-fold since the good old days of that paradisiacal era, apparently deep in the past, where just about everyone was impoverished and miserable, but at least were equally so.
The founders worried a good deal about people getting too rich. Jefferson was proud of his achievement in abolishing the entail and primogeniture in Virginia, writing the laws that “laid the ax to the root of Pseudoaristocracy.” He called for progressive taxation and, like the other founders, feared that the inheritance of wealth would lead to the establishment of an aristocracy. (Contrast this with those today who simultaneously advocate both equality of opportunity and the abolition of estate taxes.)
After praising Sitaraman’s focus on using constitutional amendments (including the income tax), Deaton said ominously: “Politics can respond to inequality, and the Constitution is not set in stone.”
What of today, when inequality is back in full force? I am not persuaded that we can be saved by the return of a rational and public-spirited middle class, even if I knew exactly how to identify middle-class people, or to measure how well they are doing. Nor is it clear, postelection, whether the threat is an incipient oligarchy or an incipient populist autocracy; our new president tweets from one to the other. And European countries, without America’s middle-class Constitution, face some of the same threats, though more from autocracy than from plutocracy, which their constitutions may have helped them resist. Yet it is clear that we in the United States face the looming threat of a takeover of government by those who would use it to enrich themselves together with a continuing disenfranchisement of large segments of the population.
Deaton is so fixated that he’s signing on to socialized medicine just to try and reduce income inequality.
Sitaraman reviews many possible correctives, including redistribution to reduce inequality; better enforcement of antitrust laws; campaign finance reform to break the dependence of legislators on deep pockets; compulsory voting; and restrictions on lobbying, including the possibility of “public defender” lobbyists to act on behalf of the people. I would add the creation of a single-payer health system, not because I am in favor of socialized medicine but because the artificially inflated costs of health care are powering up inequality by producing large fortunes for a few while holding down wages....
But the March 27 issue of the Weekly Standard showed how incredibly out of touch Deaton is from the people he claims to be concerned about:
Princeton economics professor emeritus and Nobel laureate Angus Deaton has been running around making an extraordinary claim: “Being really poor in America is in some ways worse than being really poor in India or Africa," he recently told the National Association for Business Economics. Asked about those comments in an interview with the Atlantic, Deaton doubled down: "If you had to choose between living in a poor village in India and living in the Mississippi Delta or in a suburb of Milwaukee in a trailer park, I'm not sure who would have the better life."....When it's pointed out that America has a generous welfare state where Bangladesh does not, Deaton waves the point away, saying, "A lot of these programs have been turned into block grants," he said, making it "very hard for people to get them." This, though as of last year, 45 million people -- one in seven Americans -- were receiving food stamps.
But statistics aside, if Deaton is going to denounce as dismal the existence of rural Americans, one may ask what he actually knows about life on the Mississippi....
Annie Lowrey (formerly of the NYT) did ask him if he had ever spent time in rural places, and Deaton replied: "No, but I spent five weeks every summer in Montana. And that's been an eye-opener."
"You get these people who are really quite poor, in many cases, who are very right-wing," Deaton says of the unfortunates he has met in Montana. As an example of these impoverished, rural, anti-government types, he tells the Atlantic of the angry Montanan he knows who chafes at having to get permission from the feds to protect his livestock from predators: "That wolf is eating my cow and I need to get a bureaucrat on the line before I'm allowed to shoot it! And that's my year's income!" Deaton recalls the poor, hardscrabble fellow saying.
Interestingly, Deaton has told of this wolf-hating right-winger before. In a 2012 article for the Royal Economic Society newsletter, he recounted the same story but with a little more detail: The man with a cow in harm's way was his friend who "raises Black Angus cattle on a ranch in Montana." This is the guy Deaton now puts forward as an example of his contact with "people who are really quite poor," a rancher who raises luxury cattle in one of the most beautiful landscapes on earth....
