Wall Street Journal columnist Holman Jenkins deems income inequality "a strange obsession, at least to the extent the obsessives focus their policy responses on trying to adjust the condition of the top one percent rather than improving the opportunities of everyone else." Academics who study it are "seemingly incapable of freeing [themselves] from tendentiousness." The "claimed shift toward inequality can be made to disappear" when you take household size and differing definitions of income into account. The "political capital devoted to income inequality" has diverted resources from the fight for school choice and tax reform. Interest in income inequality is a kind of "human soul-sickness" that masks a quest for higher social status; people criticize the rich in order to associate themselves with them.
Wow. Let's take these one by one.
Obsessives want to whack the top one percent, not improve opportunities for everyone else. Not true; we obsessives are very interested in improving opportunities for everyone else. But we're struggling to see how that can possibly happen when the economy's rewards skew so heavily toward the one percent. When 93 percent of the economic recovery ends up in the pockets of the top one percent (as occurred in 2010), the bottom 99 percent is left fighting over table scraps. Basically, you're out of the game if you earn less than $352,000. A growing body of evidence suggests that greater income inequality translates into lower mobility; as Isabel Sawhill of the Brookings Institution has observed, it gets harder to climb the ladder as the rungs grow farther apart.
Academics who study income inequality are tendentious. Academics have been studying income distribution for a century; the National Bureau of Economic Research was founded with the avowed purpose of producing objective, non-ideological research on this topic. America's ruling class used to worry quite a lot about income inequality because it feared it might lead to the radical overthrow of the U.S. government. When it discovered, in recent decades, that all growing income inequality did was boost sales of crystal meth, increase out-of-wedlock pregnancies, and lead to a variety of other self-destructive behaviors on the part of an ever-more-despairing working class that no longer had much of a labor movement to defend its interests, the plutocrats lost interest in the subject.
The specific academics Jenkins refers to are Thomas Piketty and Emmanuel Saez. Their data on growing incomes for the one percent at the expense of the 99 percent, Jenkins says, don't take into account employer benefits and government taxes and transfers. But the Congressional Budget Office does take these factors into account, and finds--surprise, surprise--precisely the same troubling trend of ever-growing income inequality. Redistribution through government taxes and transfers, incidentally, is today about one-quarter as great as it was in 1979.
The "claimed shift toward inequality can be made to disappear." No, it can't. When you correct for household size (a lot more of us live alone than used to be the case) you find the level of income inequality to be lower, but the rate at which it's growing to be faster. The only way to make the Great Divergence disappear is to ignore income, by any definition, altogether. And ignoring income poses a bit of an obstacle when you want to measure... income inequality. If Jenkins thinks income doesn't matter then he can give me his.
The "political capital devoted to income inequality" has been diverted from school choice (read: privatization) and tax reform (read: lower top marginal rates). What political capital would that be? Nicholas Lemann has a piece in the current New Yorker puzzling over why no political capital has been devoted to income inequality. Certainly that's been true in the past; whether Occupy Wall Street and perked up interest in the issue from President Obama and the Democrats are changing that equation remains, I think, an open question. But to suggest that our political system has spent the last three decades wrestling endlessly with the problem of growing income inequality is perverse and untrue.
Critics of income inequality are soul-sick and just want to associate themselves with the rich. Funny, I haven't found that complaining about the top one percent's income share has endeared me to the rich. Nor has it caused me to grow hair on my palms. Maybe I'm doing it wrong.