The fundamental producer of income inequality is freedom. Individuals have different aptitudes and attitudes. Not even universal free public education, even were it well done, could equalize the ability of individuals to add value to the economy. Besides, some people want to teach, others want to run hedge funds. In an open society, rewards are set not by political power but by impersonal market forces, the rewards of which will differ dramatically but usually predictably. Beyond freedom’s valuable fecundity in producing unequal social outcomes, four other facets of today’s America fuel inequality.
First, the
entitlement state exists primarily to transfer wealth regressively, from the working-age population to the retired elderly who, after a lifetime of accumulation, are the wealthiest age cohort. Second,
big, regulatory government inherently exacerbates inequality because it inevitably serves the strong — those sufficiently educated, affluent, articulate and confident to influence the administrative state’s myriad redistributive actions.
Third, seven years of ZIRP —
zero-interest-rate policy — have not restored the economic dynamism essential for social mobility but have had the intended effect of driving liquidity into equities in search of high yields, thereby enriching the 10 percent of Americans who own approximately 80 percent of the directly owned stocks. Also, by making big government inexpensive, low interest rates exacerbate the political class’s perennial disposition toward deficit spending. And little of the 2016 federal budget’s $283 billion for debt service will flow to individuals earning less than the median income.
Fourth, family disintegration cripples the primary transmitter of social capital — the habits, mores, customs and dispositions necessary for seizing opportunities. When 72 percent of African American children and 53 percent of Hispanic children are born to unmarried women, and 40 percent of all births are to unmarried women, and a majority of all mothers under 30 are not living with the fathers of their children, the consequences for the life chances, and lifetime earnings, of millions of children are enormous.
Sen. Bernie Sanders (I-Vt.) is doing well, if not good, by reducing the debate about equality to resentment of large fortunes. He should read Harry G. Frankfurt’s new book “
On Inequality.” It is so short (89 pages) that even a peripatetic candidate can read it, and so lucid that he cannot miss its inconvenient point: “It is misguided to endorse economic egalitarianism as an authentic moral ideal.”
