Chapter Review: Inequality

Capitalism: an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state

Socialism: a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole; (in Marxist theory) a transitional social state between the overthrow of capitalism and the realization of Communism

Communism: a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs

Steven Pinker's 2018 book, Enlightenment Now: The Case for Reason, Science, Humanism and Progress, assesses human progress and the factors that underlie it. Pinker, a self-described optimist, addresses common myths about just how bad things are in the US and for the rest of humanity. Pinker sees far more to be optimistic about than there is to be pessimistic about. In the preface, he writes:

“I will show that this beak assessment of the state of the world is wrong. And not just a little wrong -- wrong, wrong, flat Earth wrong, couldn't-be-more wrong.”

He follows that with an assertion that what the data shows is not about President Trump. Instead he analyzes what the data says about human well-being and progress in general and sees far more reason for optimism than pessimism. Chapter 9, Inequality deals with data related to wealth inequality and its social effects. If one accepts the data and Pinker’s logic, popular beliefs about wealth inequality are significantly more wrong than right. Maybe wrong enough to be flat Earth wrong. Pinker’s basic conclusion reflects the disconnect between popular belief and his assessment of the data:

Income inequality, in sum, in not a counterexample to human progress, and we are not living in a dystopia of falling incomes that has reversed the centuries-long rise in prosperity. Nor does it call for smashing the robots, raising the drawbridge, switching to socialism, or bringing back the 50s. . . . . Inequality is not the same as poverty, and it is not a fundamental dimension of human flourishing. In comparisons of well-being across centuries, it pales in importance next to overall wealth. An increase in inequality is not necessarily bad: as societies escape from universal poverty, they are bound to become more unequal, and the uneven surge may be repeated when a society discovers new sources of wealth. Nor is a decrease in inequality always good: the most effective levelers of economic disparities are epidemics, massive wars, violent revolutions, and state collapse.

Pinker points out that, despite conservative and libertarian political ideology against it, social spending to help the poor and low income earners invariably accompanies the rise of wealth as societies escape universal poverty. Despite existing inequality, the overall human condition has been improving since the Enlightenment in large part because of an increasing proportion of social spending that decreases poverty.

Regarding ideology, Pinker correctly observes that “free-market capitalism is compatible with any amount of social spending.” Thus conservative and libertarian arguments that social spending is socialism or communism are simply wrong. That line of attack subtly deflects attention from the fact that the social spending arising from a free-market capitalist economy, does not come from a socialist or communist economy. In other words, social sending does not convert capitalism to socialism or communism.

Despite widespread assertions that capitalism is callous, data from pre-capitalist economies from the Renaissance until the early 20th century is that European countries spent an average of 1.5% of GDP on the social programs, e.g., assistance for the poor and public education. Some of those countries spent nothing at all. By contrast, modern European states and the US spend over 20% of GPD.

The morality of inequality and poverty: Pinker argues inequality is not a matter of morality nearly as much as poverty is. The moral argument is that everyone should have enough, not the same, as long as lives are reasonably healthy and satisfying. Obviously, the unresolvable debate on that point will boil down to how different people differently define the relevant concepts, e.g., ‘reasonably’ or ‘healthy’.

Popular confusion over inequality and wealth arises from multiple sources, one of which is the lump fallacy. That fallacy holds that wealth is a finite resource such that if one person gets one extra dollar, someone else gets one dollar less. That is not how it works. Wealth is not zero sum because it increases over time. The rich get richer, but the poor and other non-rich also get richer and their lives are longer, healthier and better.

The lump fallacy fosters a bias that, like most human biases, is hard to shake. Punker argues that people falsely believe that a person who gets richer took that increase from everyone else. Pinker cites the example of JK Rowling, now a billionaire from selling Harry Potter books, movies, and stuff. Her unequal wealth arose from consumer choices to buy her stuff, not from her taking anything from anyone, but from people enjoying what they voluntarily bought from her.

Given the reality of how capitalism (and probably every other system) works, sometimes the lump fallacy is not a fallacy and sometimes it is. The devil is always in the details. For Rowling, most people would probably see some or all of her wealth as legit. But there really are some who prosper from crime, political corruption and other non-merit-based means. Pinker acknowledges this.

In addition to the lump fallacy, another psychological factor in public discontent is a perception that a person’s situation looks poor compared to what rich people have. Usually, people who feel poor by looking at the rich are themselves increasing their own standard of living by income increases and by the usually invisible benefits of improvements in technology.

Debunking the Spirit Level Theory?:Some have argued that inequality is a major source of unhappiness that leads to increased rates of homicide, imprisonment, teen pregnancy, drug abuse, obesity, etc. Pinker calls this the ‘Spirit Level Theory’, which is named after the influential book, The Spirit Level, which makes this argument. Despite its influence among liberals, research has shown that the theory is wrong:

“Kelly and Evans held constant the major factors that are known to affect happiness, including GDP per capita, age, sex, education, marital status, and religious attendance, and found that the theory ‘comes to shipwreck on the rock of the facts.’ In developing countries, inequality is not dispiriting but heartening: people in the more unequal societies are happier.”

While that is probably true in developing countries, the US is not considered one of those countries. Whether that debunks the Spirit Level Theory is unclear. Pinker believes it does.

Unfairness vs merit: Another source of unhappiness with inequality is a widespread perception that wealth accumulation is unfair for the rich. Pinker cites data showing that people will generally accept that people who do or contribute more than others deserve more. But when people perceive unfairness, they resent it. That leads to conflation of wealth with unfairness in the minds of many people. To his credit, Pinker acknowledges the elephant in the room:

“In addition to the effects on individual psychology, inequality has been linked to several different kinds of society-wide dysfunction, including economic stagnation, financial instability, intergenerational immobility, and political influence peddling. . . . . The influence of money on politics is particularly pernicious because it can distort every government policy, but it’s not the same issue as income inequality. . . . . Economic inequality, then, is not itself a dimension of human well-being, and it should not be confused with unfairness or with poverty.”

Pinker argues that how rich a very rich person is relative to other very rich people isn't important because all very rich people can get politicians to pay attention to what they want. From that he concludes that inequality is not a dimension of human well-being. He argues that (1) correlation and causation between money and political corruption is not proven, and (2) the situation calls for electoral reform, not criticism of inequality.

That logic strikes this observer as weak and not persuasive. However, people will differ in how they assess this. For example, many or most conservatives and Evangelical Christians believe that being rich is a sign of success, moral superiority, and moral and/or social authority. To them, rich people buying what they want from politicians is not a matter of corruption. Instead, it is a matter of good and moral people helping to shape government for the betterment of the entire society. There may be some truth in it, but there arguably is much that isn’t so true.

Conclusion: Overall, Pinker makes a solid case that the sources and impacts of inequality are mostly misunderstood. The impact of the generosity of American society to the poor and low income people is rather opaque to most people. Policies and programs such as the earned income tax credit and social spending programs do much more than most people believe.

This review covers only 23 pages as one of the 23 chapters in Pinker’s 453 page book, Enlightenment Now. This book is highly recommended for people who want to get an evidence-based view of politics and society. A myriad of myths and fallacies are questioned, many debunked entirely.[1] In all, Pinker's emphasis on attacking false realities is important and timely for obvious reasons, i.e., the other elephant in the room.

Footnote:
1. A children's program (aimed at middle school?) being broadcast by the truTV channel, Adam Ruins Everything, is very much like Pinker's book. It debunks an amazing range of myths common in American society. For example, Adam ruins cowboys by arguing, among other things, that (1) most cowboys were hispanic or black, not white, (2) gun control laws in most western towns were far stricter than they are now because towns were for working, not for shooting at bad guys, (3) prostitutes, not cowboys built the towns and civilized the American West, and (4) the life of the cowboy was a matter of three holes: (a) you sleep in this hole (a tent), (b) you work in this hole (a hole in the ground), and (c) you die in this hole (a grave next to the work hole). Adam does the same thing to modern science - he just rips it to pieces, e.g., citing the irreproducibility crisis, political-commercial control over funding priorities, etc. Adam's arguments are backed by evidence he provides in the programs and at the website linked to above.

B&B orig: 1/30/19