Income inequality

Will Wilkinson has this to say about income inequality:

He [i.e. Nicolas Kristof] writes that "the wealthiest plutocrats now actually control a greater share of the pie in the United States" than in many Latin American countries, where income inequality has recently declined. Are America’s wealthiest people really "plutocrats"? Can you tell whether a country is a plutocracy or a "banana republic" just by looking at the Gini coefficient? The answer is: No, you cannot. Despite all our inevitable complaints, America is a relatively healthy and functional democracy. Perhaps Mr Kristof noticed that Meg Whitman, a billionaire, failed to take the governor’s mansion in California, despite spending more of her personal fortune on a political campaign than anyone in history. In a plutocratic California, the state’s fourth wealthiest person wouldn’t have to win an election to rule.

I agree with Mr Wilkinson that inequality isn’t necessarily a bad thing. However, the combination of inequality and democracy may be deadly.

Mr Wilkinson argues that America is a "relatively healthy and functional democracy" because Californians didn’t elect a billionaire who spent lots of her own money on her campaign.

On the merits, I suppose I should agree with Mr Wilkinson, since he is merely disagreeing with Nicolas Kristof. But, Mr Kristof hasn’t had an interesting idea in decades, if ever. Being a leftist in 21st Century America is really boring.

Both Mssrs Wilkinson and Kristof miss the interesting argument. Perhaps income inequality and democracy are creating a different sort of failure than the one imagined by the leftist. We may soon see they day when the majority of voters don’t pay any income taxes, for example. I know of no arguments which suggest that this situation would be fair. Why would Californians elect a billionaire, when instead they can elect someone else to confiscate the billionaire’s wealth and give it to them? After all, the majority of voters will be able to take some of her stuff and won’t have to pay anything more into the system.

The situation to be feared then, is not that the rich will take over politics. The situation to be feared is that the poor, unwashed masses will take over politics with some help from their progressive friends (Whitman might have spent a lot of her own money, but her opponent got record levels of support from California’s public sector unions).

Finally, Mr Wilkinson concludes with this interesting argument:

More relevant to the American case is the fact that a great deal of ethnic and cultural diversity tends to dampen the general sense of solidarity and social cohesion, and this in part explains why Americans demand less progressive redistribution than do voters in smaller, more homogeneous countries.

If I’m reading this correctly, Mr Wilkinson is arguing that "diversity" will reduce the desire for redistribution. Unfortunately, "diversity" today means the uncontrolled importation of the Mexican underclass. Since these new "diverse" members of our society will be able to vote like everyone else (it’s their "right" after all), I find it hard to believe that the future of American politics will involve less redistribution. Maybe I’m wrong though, and the trend of the last 400 years will begin to reverse itself because of massive waves of anti-distributionist Mexican immigrants. Anyone want to bet?


6 Responses to Income inequality

  1. aretae says:

    I think there’s some fairly solid work that says that the primary reason that the US doesn’t have a heavy duty social net now is because in the last 100 years, those with money and those without have tended to be ethnically different.

    All of Europe went redistributionist in a way that makes American socialists drool. On the other hand, American rich folks were of different ethnicities than American poor folks (Polish, Italian, Irish, Chinese, Black, Hispanic), and so the social cohesion that leads a community to share and share alike just wasn’t there.

    Furthermore, rich, educated folks vote at levels that are massively higher than poor uneducated folks. There is a bigger danger of Arizona going socialist as California voters move in than there is of Arizona going socialist from Mexican immigration.

    • Foseti says:

      If diversity discourages redistribution, why is CA among the most redistributive states?

      Even you’re correct historically, there’s clearly *some *tipping point beyond which I will be correct. Only so much underclass immigration can be tolerated in a democratic country.

  2. Steve Johnson says:

    There’s doublethink going on around the word diversity that’s shifting this conversation.

    According to the de jure definition of diversity a 90% black 10% Hispanic neighborhood is not diverse.

    According to the de facto definition of diversity that same neighborhood is perfectly diverse.

    California is growing less diverse by the de jure definition (one particular ethnic group is rapidly increasing its share of the population) and more diverse according to the de facto definition (that ethnic group adds “diversity” regardless of numbers). Wil Wilkinson slips in that the increasing de jure diversity implies a less monolithic state, therefore less redistribution*; in fact what is being observed is that the state is becoming more de facto diverse, which means a stronger coalition of “diverse” groups to appropriate the wealth of a smaller group. However, this is a taboo thought since it’s not permitted to think of “diverse” ethnic groups as net drains of resources from non-“diverse” groups.

    * He’s even wrong about this part; although there is a better surface argument for it – Europe – they have less “diversity” and are more redistributionist (but actually more efficiently redistributionist). Moldbug described a weak state as a red giant state – most people confuse “large” with “strong”. As the state gets weaker, it gets larger to pay off more and more people using more and more inefficient methods (TSA workers, for example, get a psychic benefit from feeling important and a financial benefit from having federal jobs, but it’s very small compared to the damage they do to air travelers – that’s a very inefficient (but very democratic) payoff).

  3. Jehu says:

    The whites in SA are experiencing all time lows in redistribution from them as a result of their increased diversity 🙂 Oh, wait a minute.

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