I recently had the misfortune of reading an article written by Tyler Cowen titled “Income Inequality Is Not Rising Globally. It’s Falling.” Cowen is a professor of economics at George Mason University and, presumably, an actual economist.
GMU being the hotbed of conservative political and economic thought that it is, it doesn’t surprise me that such an article would emerge from it. Indeed, the university is one of the primary recipients of largesse from the Koch brothers, notorious libertarian industrialists and ultra-right wing political hatchet men. Chances are, if you’ve been exposed to any ultra-Capitalist thought or advertising, it came from the Koch brothers (indirectly, of course). My instinct is to view Cowen as a simple minion and mouthpiece of the Koch machine, but he may actually be sincere in his beliefs. If that’s the case, it’s a shame.
The article provoked a spirited exchange between me and Ben Thompson of stratechery.com on Twitter. As a writer and qualitative analyst in the tech field, I think Ben is one of the best in the business. But when it comes to his views on Capitalism, it’s apparent that he and I really don’t see eye to eye.
Though I think my stance on Capitalism is pretty apparent, I want to address a few of the themes that have recently framed the discussions around it, particularly the belief on the part of staunch Capitalists that critics of it are simply negative cynics. They believe that “capitalism and economic growth are continuing their historical roles as the greatest and most effective equalizers the world has ever known” (Cowen) and that critics are not seeing The Big PictureTM. However, as far as I’m concerned, the devil is in the details.
Proponents of Capitalism recently have been vehement in attempting to frame the dialogue by asserting that global economic inequality is falling. Sure, in absolute terms, it is. What they are more reluctant to discuss is how that falling global inequality is increasing inequality in the developed world. Unemployment rates world-wide are skyrocketing. Unemployment among the young (ages 16-24) is so high in the European Union (EU), officials are concerned they are becoming a “lost generation,” not just unemployed but unemployable. The U.S. is currently plagued with a severe long-term unemployment problem that strongly suggests it is structural rather than cyclical in nature. Even positive employment numbers have not moved the needle on wage growth, which is still stagnant or negative by most accounts.
It is the claim of its supporters that Capitalism is not “zero sum.” They are correct. The top 1% are making money hand over fist. If I was an oligarch, I’d think the system was working too.
However, the view from the trenches is a lot different. Sure, I think it’s great that people are less poor around the world. Poverty sucks. But am I happy that the only way for them to become less poor was for the wealthy to engage in a systematic process of slowly impoverishing the developed world with a promise of “great jobs to come, just hold your breath”? Hell no.
What’s ironic about the whole matter is the hypocrisy. I live in a country in which the rich whine daily about taxes and “wealth redistribution.” However, these same people have little problem with wealth redistribution when it’s other people’s money that is being redistributed. Then Capitalism is working fine. The way I see it, the rich aren’t willing to fund the rise in global economic equality with their own profits, but with the middle class’s incomes and then pat themselves on the back for their supposed virtue. That’s the epitome of hubris.
I have a saying: You have no right to judge the quality of another’s life unless you are willing to trade places with them. There’s a notion floating around that the poor in developed countries are somehow spoiled, that they are not appreciating that being poor in a wealthy country is way better than being poor in a developing country. The thinking of the rich is that the poor in developed countries live better than the aristocracy of days past, with their fancy refrigerators, HDTVs, smartphones, and indoor plumbing.
But let’s introduce a bit of perspective. A serf in the Dark Ages had a better quality of life than a pre-historic caveman, but I highly doubt that would have made a difference to the serf. It’s good practice to appreciate the improvements to life that have resulted from progress from which we all benefit. That’s common sense. But we also have a right to judge the opportunity costs of attaining those benefits. Sure, a woman with a job at McDonald’s who lives in a roach-infested apartment in the U.S. is likely better off in both relative and absolute terms than a woman who is a prostitute in a Brazilian favela. But what right does anyone have to make the determination that such a state is suitable for either in relation to the other or even to a pox-ridden doxy of the 18th century? It’s a stupid comparison because it isn’t relevant.
What matters is the ability to live in a dignified manner. In that regard, it doesn’t matter what you do as long as you can do it in a fashion that doesn’t result in shame or humiliation. I don’t think it is a matter of people feeling ungrateful for the improvements in life that progress has provided. I think what is bothering people is the trade-offs in personal dignity that must be made to survive even in developed countries. The mistake often made by Capitalists is thinking that the poor should define themselves by what they have. However, the poor want the world to define them by who they are: industrious, frank people who deserve to lead financially secure, dignified lives.