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Pittsburgh Tribune-Review: “Ignoring income inequalities”

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Like most (all?) human beings I understand envy well. I have felt it, and still do on occasion. But never in my adult life have I felt envy without also simultaneously suffering feelings of shame for my envy. Taught by my parents that envy is pointless, impolite, and personally destructive, I fight with all my might against it in myself.

In the past envy likely promoted, in some way, survival. Perhaps envy even today, on some occasions, serves the same purpose. But I’m convinced that among all human emotions, none is as anti-social, dangerous, and destructive as is envy.

This destructiveness becomes turbo-powered when public intellectuals and politicians play on, and endorse, envy as the basis for making government policies. I cannot read the works on differences in monetary incomes and wealth written by the likes of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman without experiencing the strong sensation that, despite their scientific patina, these works are both motivated by, and motivate, envy. It’s all very base, ugly, and uncivilized. I sense upon reading the works of these economists the very same sensation that I would sense were I to witness the parents of a grade-school child self-righteously not only encourage that child to envy the toys and fancier clothing of classmates from richer families, but also to entreat that child to seize some of the possessions of richer children.

Routinely today called “progressive,” the sentiments that drive the call for income and wealth “redistribution” are in reality among the most primitive and mindless of all human sentiments.

In this June 8th, 2005, column in the Pittsburgh Tribune-Review, I wrote on income “inequalities. [2]” You can read the column beneath the fold.

Ignoring income inequalities

A recent barrage of front-page articles in The New York Times has fueled renewed concern about income inequality in America. The conclusion of this series of reports easily is summarized: Income inequality is rising and its chief victims are the poor.

Knowing how easily statistics can be misused, I’m not at all sure that the statistics relied upon by The Times’ reporters show that income inequality is growing. Measuring the dispersion of income requires adjusting for changes in economic and demographic factors too numerous to count.

Inflation reduces the purchasing power of the dollar. The average size of households changes. The average age of the population changes. The proportion of compensation paid as fringe benefits rather than as wages changes. The list goes on and on. Any measure of whether income today is less or more equally “distributed” compared with past decades requires not only very careful gathering of enormous amounts of data, it requires judgment calls about how best to adjust these data to account in quantifiable ways for these countless changes.

In fact, it’s impossible to tell if income inequality today is greater or not than in the recent past.

But let’s pretend. Let’s play along with The New York Times and assume that income inequality in America is unmistakably increasing. So what? I submit that such a development in a free society is unworthy of attention. Here’s my case for ignoring income inequality.

First, income inequality says nothing about absolute levels of income. If the real incomes of society’s poorest people are rising — but not as quickly as are those of society’s wealthiest people — everyone is materially better off even though income inequality is on the rise.

Second, discussions of income inequality promote — psychologically if not logically — the mistaken notion that the amount of total income is fixed. This fact is one reason I use scare-quotes when I write about income “distribution”: Income in market economies is not a pie that is first produced and then distributed.

Instead, income is earned simultaneously with its production. And, in general, the more someone produces, the greater is society’s wealth as well as that person’s income. Prosperity is higher, regardless of what this person’s greater production does to income equality.

Third, obsessing on income inequality fosters envy — one of our ugliest and most-destructive emotions.

Fourth, concern with income inequality denigrates nonmonetary sources of human happiness and flourishing. For example, 13 years ago I turned down a job offer with a big-city law firm. I accepted instead a college teaching job at a much lower salary. Because my decision was voluntary, you can be sure that I found the lower-salaried teaching job more attractive than the high-paying law job. The greater leisure, the greater freedom to work on subjects of my own choosing and the enjoyment I get from teaching college students all combined to outweigh the value of the higher income.

Judging from what my law-school classmates currently earn at their law jobs, I estimate that my income today is a mere 40 percent of what it would be had I instead pursued a career in law. But I assure you that I’m much happier today in my teaching career than I would be as a high-paid and stressed-out practicing attorney.

The lesson, of course, is that money is not life’s be-all and end-all. People frequently choose to forgo higher monetary benefits in favor of greater nonmonetary rewards. How much of the difference in incomes earned in America is due to such choices? I don’t know; no one knows. But you can be sure that part of this difference reflects some people’s choices to forgo higher dollar incomes in return for benefits such as more leisure, more on-the-job safety and more-agreeable work conditions.

Fifth, in America’s market economy the “distribution” of income is merely a summary statistic of one among gazillions of unintended consequences springing from a hugely complex and ongoing decision-making process involving hundreds of millions of consumers and producers. Income isn’t “distributed,” or even earned, according to some grand plan. Therefore, income “distribution” is not a policy variable subject to easy manipulation by politicians and social planners.

So taxing, spending, and regulation schemes aimed at making income “distribution” more equal inevitably cause unexpected adjustments in the way people act in the economy. Higher marginal tax rates, for instance, prompt workers to take more of their compensation in nontaxable form, such as employer-paid health-insurance premiums. The end result might or might not be a more equal “distribution” of income but it surely is an economy more encumbered by burdensome and pointless government intrusions.

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