Equal Views Of Inequality

Matt and then Ezra decline to get down to the root causes of inequality in our economic system. Here's Ezra:

Whether inequality is a result of skills-biased technological change or low marginal tax rates or Wall Street or the inequality gnomes is really neither here nor there

And, like Michelle's post about pharma, Matt and Ezra are right, in that what they say is true. But they're also wrong, in the sense that it is incomplete.

Look, as with most such complex issues, there is a huge range of reasons why inequality exists on such a vast (and ever-vastening, if that's a word) scale in 00's America. There is certainly a piece of it having to do with inborn skills. Undoubtedly, Warren Buffet has a innate knack and wisdom about financial matters that I absolutely lack. And there's part of it to do with education. A Harvard-educated MBA is certainly more useful to a hedge fund than I am, even if I am absolutely smarter (however one measures such a thing) than she is.

But part of it is, undoubtedly, that the system is being gamed. It's a simple idea, really. Politicians want money, so they can run campaigns and keep their offices. So they appeal to people with money to give them some of the money. The people with money say 'great, here's some money. And boy, it really sucks that I have to pay taxes on this-and-that investment, if I didn't I would have more money, and would invest it, and the economy would grow, and wouldn't that be super?' And thus the system is rigged in favor of those who already have lots money to get even more money.

Matt and Ezra are right that some of the fixes for inequality won't deal with root causes. We aren't going to keep people uneducated just so everyone is equal, nor are we going to magically make everyone super-duper smart just by wishing it were so. But, at the same time, if we don't fix, or at least improve, the parts of the system that are vulnerable to the type of corruption I sketched above, then no matter what fixes we try to implement now, future generations are going to have to deal with new tactics which have the same net outcome.

If nothing else, future administrations will be Republican, or conservative, or just less-interested in the questions of equality than, say, an Edwards presidency would be. If you don't fix the underlying structure, but simply put on cosmetic, short-term fixes, the whole edifice could still be brought down sometime later on. So it's important to understand and address as many of the root causes of the problem as you can.