I spoke last evening by phone with a friend of mine, a business executive and small private investor in Amsterdam. He called just to check in. We always like to talk politics. He said, “You know I’m a capitalist, but I don’t understand your country at all. How can you stand to have such a huge gap between the very rich and everybody else? I think here in the Netherlands, we have too much forced equality, but you go too far in the other direction. This is something none of us get: why aren’t more of you in the streets demanding that things change?”
I gave him my opinions on that, but he still seemed mystified why we Americans settle for what we do.
In that spirit, here are some things to think about from Megan McArdle. Excerpt:
I don’t care about income inequality. I care about the absolute condition of the poor–whether they are hungry, cold, and sick. But I do not care about the gap between their incomes, and those of Warren Buffett and Bill Gates. Nor the ratio of Gates and Buffett’s incomes to mine. And I’m not sure why anyone should. Other than pure envy, it’s hard to see how I could somehow be made worse off if Bill Gates’ income suddenly doubled, but everything else remained the same.
But while I do not care about gaps and ratios, I do care about opportunity. It is fine that CEOs earn many times what their workers do–but it is not fine if some are born to be workers, and others to be CEOs. And unfortunately, that increasingly seems to be the story in America.
The old aristocracy was, I think, at least dimly aware that it wasn’t quite fair for them to have what they had by mere virtue of being born to the right parents. But in the new aristocracy, it is rarely enough to just get born to the right parents; you also have to work very hard. (Higher earning men are now more likely to work more than 50 hours a week than are men in lower earnings quintiles.) Whatever the systemic injustices, it’s also quite clear to everyone . . . even parasitic leeches of investment bankers . . . that their salaries only come as the result of frantic effort.
The ability of one’s parents to confer such enduring advantages is obviously unfair. And while I don’t want to say that a society cannot last that way–obviously, many have, for hundreds of years–I don’t think it’s healthy for society. It is hard to get civic engagement, or respect for the law, when the bottom 40% or so feels that the game is rigged.
Seems like in the America we have created, not only can’t you get ahead economically, but if you do, you probably won’t have much of a life. Is this what we want? Is this what we should want?