… or, at least, is not a problem that threatens to tear modern, market-oriented societies apart at the seams. This evidence is reported in Eduardo Porter’s New York Times essay from a few days ago. Here’s a key slice:
In every one of the 26 nations, most of them in the developed world, for which they collected data, people believe that the income gap is smaller than it really is.
Porter’s essay grapples with what Porter apparently believes is a mystery: if monetary income (or wealth) inequality is rising, why don’t the masses see it? Why aren’t the masses up in arms about this inequality? After all, professors and other intellectuals – those whom Deirdre McCloskey rightly ridicules as “the clerisy” – are up in arms about it. Yet the masses are not. Strange, that (if you’re a “Progressive”).
The gaudy and excessive consumption of the one percent should cause the deprived, crumb-eating 99 percent to grab their pitchforks, storm Wall Street and the City of London, and demand their ‘fair share’ from the plutocrats who (somehow) steal it from them. But it’s not happening. The 99 percent aren’t behaving as their “progressive” wannabe-caretakers think they should behave.
One reason, I’m sure, is that rising inequality in monetary incomes or wealth is NOT the same thing as rising inequality in economic welfare (extra emphasis intentional). It’s not even close – although rare is the “Progressive” who acknowledges the reality that changes in income (or wealth) are not identical to changes in consumption-ability (that is, to changes in real economic well-being). Inequality of monetarily reckoned income or wealth can rise while inequality of consumption opportunities can fall. See, for example, here and here and here and, especially, here.
If ordinary people – spared lectures and long tomes by intellectuals – are blind in their daily lives to the vast inequalities in economic fortunes that intellectuals are constantly warning will trigger revolutionary anger in ordinary people, then the most plausible explanation for this blindness is that there is, in reality, nothing to see. Ordinary people aren’t blind; instead, “Progressives” are hallucinating. If ordinary people’s reactions (as reported by Porter) are evidence of economic reality, then everyday life in market-oriented societies is not marked by growing economic inequality of the sort that ultimately matters: inequality in people’s ability to consume. If professors must write 700-page books, and “Progressive” columnists must harp continually about growing economic inequality, in order for ordinary people even to begin to become aware of this inequality, then it’s quite implausible to maintain that modern capitalist societies are generating ‘terrifying’ degrees of economic inequalities.
In short, if you must study charts in economics books in order to learn that you are intolerably destitute compared to some other people, then, in fact, you are not even remotely close to being destitute in any economically meaningful sense of the term.