Inequality and Economic Dust

Ash Wednesday seems an appropriate day to consider ruminations on economic inequality, from James Nuechterlein’s “Public Square” column in last April’s First Things (subscription required):

… the connection between inequality and hard times is so prevalent in folk wisdom that expressions of alarm over the nation’s distribution of income followed in the wake of the recent economic downturn pretty much as night follows day.  And those concerns were not without foundation.  A long post-1945 trend toward greater equality petered out in the 1970s, and since then economic rewards have gone disproportionately to those already well off, especially to the very well off.  That development was little remarked on as long as the economy remained healthy, but it has come prominently to attention since the onset of the economic nosedive in late 2007.

The causes involved in the renewed trend to inequality are varied and complex — family structure, education, immigration, weakening of trade unions, international competition, technology, decline of industry, politics and public policy — and analysts emphasize those factors that coincide with their ideological inclinations.

The items on Nuechterlein’s list are surely all factors in the shifts of the economy (and none can doubt that ax grinders will favor those wheels that suit their steel), but they aren’t really parallel.  That is, they can be grouped into larger causes, which the author appears to recognize, consciously or not, by the order in which he places them.  Family structure and education affect the nature of the workforce.  Immigration and trade unions bear on the cost of a region’s labor. International competition determines how much companies can afford to spend on their employees.  Technology and the decline of industry relate to the work that has to be done (especially that has to be done by human beings).  And politics and public policy are mechanisms by which the population determines how it will address the shifting marketplace.

No serious thinker will deny the importance of each of these groups, and few will ignore the individual factors.  Divisions appear most profoundly in the degree to which the mix can be manipulated, and the degree to which they are considered to be akin to natural forces.  A liberal might begin with the assumption that traditional family structures were stultifying and fostered an unacceptable inequality along gender lines, while tight immigration laws did the same across national lines.  To empower people to address the economic challenges of transitioning away from those forms, the Left presents education as a route to greater individual value in the marketplace and unions as a method of forcing compensation up.  Accompanying the loosening of borders for immigration is a tendency to tighten them for trade (to better manage the economy within them).  Meanwhile, technology is valuable mainly insomuch as it furthers other social goals, and choice of industry is heavily influenced by the ability of social managers to bend it toward the perceived public good, privileging highly taxable industries that will permit heavy regulation.  This view holds the market, in a sense, as a renewable resource to be tapped for the furtherance of social advancement.

By contrast, the conservative begins with the assumptions that a given activity has a natural (if abstract) value at any particular time and that time will change the marketplace in dramatic, often unexpected, ways.  The social objective, therefore, is to ensure that the population is perpetually prepared weather storms and capitalize on opportunities.  Thus, the traditional family structure is a mechanism for fostering a baseline stability, and any desirable changes (with gender equality being desirable, indeed) must be accomplished with care not to undermine that purpose.  For its part, education is valuable mainly insofar as it helps people to meet the requirements of the economic world in which they find themselves.  (And an undue emphasis on education for its own sake, especially with public subsidization, has siphoned human and financial resources away from more immediately productive ends.)  The Right tends to prefer to use restrained immigration to keep workers’ value up, with a focus on prioritizing those immigrants who answer economic needs, while taking unions’ effect to be an unnatural inflation of labor costs and burden on market adaptation.  Internationally, the emphasis is on allowing workforces across the globe to undertake the tasks to which they are best suited, for nation-specific reasons, with oppressive conditions addressed through an increase of freedom and open exchange.  (Here, conservatives might actually find unions to be a valuable ally.)  Meanwhile, technology is a vast region to explore for economic opportunity, and industrial mix is best determined by the niche that international competition and existing workforce suggest.

Readers will readily identify the side with which my sympathies lie.  Still, addressing inequality and (more importantly) hardship are worth goals whether pursued in either direction.  The central question to be answered, however, is whether inequality is a mountain to be overcome or a byproduct of human diversity to be continually addressed.

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