In what seems to be a follow-up of sorts to the inequality article I posted earlier in the week, a separate author for the New York Times argues that the focus should not be addressing economic inequality but rather economic immobility (link here).
Tyler Cowen, the author, states that "since 1973, for workers as a whole, wages have stagnated largely because of a severe productivity slowdown." He argues that "if productivity growth had maintained its pre-1973 pace, the median or
typical household would now earn about $30,000 more today. Those higher
earnings would constitute a form of upward mobility. For purposes of
comparison, if income inequality had maintained its pre-1973 trend, the
gain for the median household would be about $9,000 in income this year,
a much smaller figure."
Cowen's argument is that "accelerating the growth of productivity has the potential to do more for
upward economic mobility than redistributing money from the top 1
percent." Basically, he is saying that having the opportunity to change your wage is more beneficial than spreading the wealth between everyone.
An example of what Cowen is talking about is what George Sher, a professor of philosophy at Rice University believes. He "argues that
the equality we should care most about is giving everyone a chance to 'live effectively.' Most of all that means ensuring that people have
enough for their daily needs. We can tolerate many of the inequalities
that arise above this minimum income level, provided there is protection
on the downside and plenty of opportunities for those who are
economically ambitious."
This stance seems to be purely philosophical in terms of helping people through the financial crisis. I am certain that there are advocates for economic equality over economic mobility and that their argument is in stark contrast to Cowen's. What do we think, is economic equality or economic mobility the answer?
I don't think one necessarily exist without the other. In fact economic immobility leads to economic inequality. I.e. it's hard to imagine someone coming from a neighborhood imbued with gang violence and make it to Wall Street. I disagree with Cowen in that I don't think anyone is lumping the two together. These issues typically are addressed specifically in more details. But one cannot address inequality without addressing the social immobility and the latter is a subset of what inequality constitute. Economic inequality, unlike what Cowen seems to suggest (or maybe late night hours mean I am reading it incorrectly), constitutes of more than income inequality. It is also the lack of access to jobs, fresh food, education. Economic immobility is also not just about "elevating the poor." It is just the ability for one average Jane or Joe to move from one social class to another (upward or not). There are more data on this written by Charles Murray (he is ****not politically liberal and I am specifically referring to Murray as a clearer counterpoint). But historically people have been immigrating to America (including white colar European PhDs) due to the significantly higher economic mobility that the American economy offers. The fact that the American economy has been increasingly less mobile is hurting everyone, not just the poor.
ReplyDeleteI am resisting the urge to discuss why I think Tyler Cowen just wrote an article about really unimportant (and IMHO incorrect) distinction ....
Again, it's late but I can link to some statistics on another day ...
I do agree that these two topics too often get lumped together, mostly because of how much they overlap. I think he's right that we could benefit from remembering that both are important when discussing the overall economy and the standard of living in the US.
ReplyDeleteHowever I do not think that increasing economic mobility trumps income equality as he seems to imply. A major issue in income inequality is that there are people who work 40+ hours a week and cannot live well, while others are able to live more than extravagantly. When thinking about this issue, I always think of "plutocrat" Nick Hanauer, who discusses how he does not think that he deserves the large amounts of money he is paid (TED talk link below). He does not think that his work is exponentially more difficult than other workers' and therefore does not think he deserves to be paid exponentially more, and I would have to agree. Creating more economic mobility does not solve this problem.
Another important issue is that economic mobility, while bad for everyone in the US, is already significantly worse for women and people of color. How do we increase economic mobility in a way that does not further amplify these interrelated issues of inequality? This is not to say increasing economic mobility is bad, it certainly needs to happen. However when crafting policy around wages – income inequality and economic immobility – we must keep in mind that is people who are born into a lower socioeconomic classes, women, and people of color that are already the most disadvantaged by these income issues.
Nick Hanauer TED Talk “Beware Fellow Plutocrats, the Pitchforks are Coming: https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming?language=en