House of Eratosthenes

One factor that is often overlooked in the debate over causes of income inequality is a shift in the distribution of working hours. The rich now work more than the poor.

The United States and most other industrialized countries have experienced a rapid increase in inequality since around the 1970s. Unsurprisingly, the discussion of inequality has become politicized. Some deny the increase in inequality entirely, in spite of overwhelming evidence. Others exaggerate the magnitude of inequality, for example by claiming that all income gains have gone to the rich.

The estimates of income distribution by the Congressional Budget Office avoids several common methodological problems. The CBO adjusts for declining household size and uses a broader definition of income that includes pension and health care contributions by employers. Between 1979 and 2010 in the United States, the top 1 percent’s share of pre-tax income increased from an already high 9 percent to 15 percent. It is an overstatement that the middle class did not witness any gains, but it is certainly true that gains were slower than in the past. Real median income increased by a disappointing 36 percent between 1979 and 2010. During the same period, real earnings of the 1 percent of highest earners grew by an astonishing 280 percent. One-quarter of income growth in the United States from 1979 to 2010 flowed to the top 1 percent alone.

This rise of income inequality is intensely debated, but its causes are not well understood. Potential explanations include skill-biased technological change, globalization, tax cuts, the expansion of the financial industry, low-skill immigration, and measurement problems that exaggerate inequality. Many of these explanations have merit, and it is unlikely that one factor alone explains the phenomenon. It has, however, proven difficult to determine the relative importance of the various theories, with multiple causes competing to explain a single phenomenon.

Some of this is questionable, at least. “Some deny the increase in inequality entirely”? Who? On what basis? Other parts of it are somewhat laughable: “its causes are not well understood.” A good example of manufactured confusion. In order to be completely baffled by this, you’d have to be completely baffled about how to generate an income, and most of us can noodle that one out effectively and quickly: You figure out what work pays the most, on a basis of per-hour, per-effort, how much you like doing it, whatever — and then you invest your time in doing that thing. If some of us are making more than others, then some of us must be doing more of that than others.

Which is not necessarily the same as saying we work harder. Although that would be the default assumption, and if some semblance of confirming evidence is all we want to see, the article itself provides us that much. Other people may be struggling on the lean end of the inequality curve even though they’re working very hard. But it isn’t showing them a benefit where it counts, in their billfold. They may need to be getting into another line of work. Is it so awful to say that? People say that to professionals in the technology industry, pretty much non-stop. Sometimes with justification, other times not so much.

But in the years mentioned, 1970’s-to-now, we have taken unprecedented cultural steps to rearrange our stigmas. Not, I hasten to say, entirely repeal them, just rearrange them. Tobacco bad, pot good, men bad, women good, straight bad, gay good, white bad, non-white good, private sector bad, public sector good…two lifestyles that have found renewed acceptance through this loud-but-quiet revolution, are 1) single motherhood and 2) sloth. Laziness doesn’t earn you the local scorn that it used to. Technology has made us sufficiently comfortable that we feel like we can afford it.

Because of that, the ownership of material goods has evolved, or devolved, into a matter of personal preference. It’s no longer a matter of survival, but more a matter of taste. Oh, so you like money; well, there’s more to life than making money you know! People lose track of what the cliché advertises even as they repeat it incessantly: I/we don’t like money. And, optionally: That makes me/us better than you.

Well, okay then. Unless we’re all forced to work as hard as we can, with our diverse desires made irrelevant by fiat, there is going to be inequality. Lots and lots of it. By design and by intent, albeit perhaps not conscious intent.

So why is anyone confused? Who are these people who are having trouble understanding?

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Redistribute the Work Ethic, Not the IncomeThursday, August 7th, 2014

Redistribute the Work Ethic, Not the Income
Thursday, August 7th, 2014