For The American Prospect‘s excellent (and highly competitive) fellowship program I had to submit two article critiques and a critique of their group blog TAPPED, among much else. This article critique was assigned, the second critique is of an article I selected for myself. I’m still waiting–with fingers crossed–to hear back from the Prospect.
To improve the lot of the lowest, we must increase the taxes on those at the top.
Little more than a year after Wall Street’s bad bets brought the world economy crashing down, NYU Professor Dalton Conley told American Prospect readers, “don’t blame the billionaires.” This might have struck some as audacious after the implosion of the global economy, the cleaning up of which has disproportionately benefited the very same billionaire bankers who played such a central role in engineering the collapse.
Yet Conley was merely reiterating what was then and now conventional wisdom about the growing gap between the rich and everyone else. In a June 2006 issue featuring a special report on American income inequality, The Economist editorialized, “government should not be looking for ways to haul the rich down. Rather, it should help others, especially the extremely poor, to climb up.” Two Brookings Institution scholars echoed this sentiment in a recent Huffington Post column, “America Needs More Economic Mobility.” This viewpoint overlooks one key question: Is it possible for the inequality of wealth and income to reach such a level that it inherently limits the economic opportunity open to those at the bottom?
Conley doesn’t think so. The professor is not swayed by arguments that inequality adversely affects the nation’s health, growth, and politics: “It’s the fate of the middle and lower classes that should concern progressives,” Conley writes, “not how many private jets the super rich can afford.” No liberal could argue with his emphasis on improving the lot of the middle and lower classes, but by downplaying the risks of America’s record levels of inequality, Conley implies that enacting redistributive measures is an unwise policy choice.
In spite of the fact that citizens are healthier in countries with less income disparity, like Sweden and the Netherlands, Conley finds the link between health and inequality unconvincing. In every case, from the international to local level, where strong and persistent correlations between inequality and health outcomes are observed, Conley maintains that it could just as well be due to other related factors. He views these cases as the work of a “cottage industry of inequality-health studies,” the work of which that he claims was discredited in a 2002 paper by two economists with no background in medicine. Since then, the Institute for Policy Studies pointed out that a book by a venerated expert in public health and a study published in the Journal of the American Medical Association have reasserted the link between inequality and poor public health.
On the question of growth, Conley concedes that there is a need for improved housing and schooling to ensure the potential of upward mobility for workers on the bottom rungs of the income ladder. But he fails to appreciate how far down that ladder goes. From the comfort of his ivory tower, the professor blithely observes, “there is enough (or even too much) food.” Yet the month before his piece was published, the USDA released an annual report that found 14.6 percent of American households experienced “food insecurity” in 2008, a percentage that has likely increased as the economy has continued to languish. As a result, his suggested remedies to ensuring more equitable growth come off sounding both trite and out of touch. It is difficult to educate students who are worried about where they will find their next meal.
Instead of focusing on America’s extreme inequality, Conley suggests ensuring the poorest basic housing and education, which will provide them with the opportunity for economic growth. This is, he says, “one alternative model” the alleviate wealth and income disparities in the US. But after World War II up until the rise of Reaganism, good infrastructure and schools were not considered an “alternative model,” they were what taxes paid for and the government provided. As the top marginal tax rates have decreased and inequality has increased, that social contract has frayed. In the past thirty years, the median inflation adjusted household income has risen less than 15 percent, David Leonhart noted after the passage of health care reform. “The only period of strong middle-class income growth during this time came in the mid- and late 1990s, which by coincidence was also the one time when taxes on the affluent were rising.”
Politics are the one area in which Conley will readily admit that the accumulation of wealth at the top of the income bracket has a malignant influence, but his proposed remedies again indicate that he underestimates the danger of extreme inequality. His first suggestion to “fix a political system that kowtows to rich donors at the expense of the public good” is to use the public purse to top up the contributions of small donors. He sites the example of New York’s Campaign Finance Board, which offers six-to-one matches on the first $175 donated to candidates running for municipal office. However, even with $3,265,062 in public funds, the 2009 Democratic mayoral challenger Bill Thompson was hugely outspent by Mike Bloomberg, the incumbent running on the Billionaire Party ticket. Bloomberg spent over $100 million, much it from his own deep pockets, to buy a controversial third term. Furthermore, it is important to remember that this experiment in small donor campaign finance is as of yet only available for municipal elections and would be difficult to replicate in cities that lacked corporate cash cows like Wall Street, the industry from which the New York draws a plurality of its tax revenues.
Another suggestion Conley makes to give middle class citizens more say in Washington is to expand the number of Representatives in the House. This suggestion runs against political precedent and the national mood. Indeed, residents of Washington, DC have been clamoring in vain for a vote in the House for decades. The number of representatives has been stuck at 435 for nearly a century. More members of Congress would also multiply the opportunities for pork spending and special interest vote buying while decreasing oversight and accountability. And with Congress far and away the least popular institution in Washington, it is hard to imagine the public clamoring to increase in its size.
Conley, who calls campaigning on reducing inequality “a losing proposition in the United States,” overlooks the colorful history of populist politics in the Midwest in the early 20th century. With income inequality reaching extremes not seen since those days and arguably reducing the health, growth, and political opportunities available to the poorest Americans, it is wrong to dismiss levying inequality-reducing taxes on the wealthy. In a system that Conley acknowledges is “rigged,” it is only fair to question how the so-called “winners” achieved their success. The role of government should be to actively support a vibrant meritocracy that enables more citizens to move up the economic ladder, not to stand by as economic gains flow to an increasingly entrenched class who were born into privilege.
Photo credit: murplejane (via Flickr)