Monday, April 02, 2007

Income Inequality

This story on income inequality appeared in the business section of Thursday's NY Times.

There are many things wrong with the article, but I want to focus on the way its author uses concepts to slant the story and thereby advance his moral views. Economists and reporters often claim to be "morally neutral" in the pursuit of their professions, but I think this article (which is a business story, not an editorial) illustrates how false this is -- and must be -- since some view of man's choices, motivations and actions is a precondition for operating in any of the more specialized branches of the humanities. (Reporting on the metaphysically-given can perhaps be "neutral", but any report on human activity or its results requires some moral view, otherwise there is simply no way to even know what's relevant and what's not.)

The key concept in the story is that of a "national income" -- a concept whose cause is evaded and which is treated as a kind of pre-existing common good to be "shared" among all people. Note how the reporter carefully chooses to use the causally empty term "income" rather than one which would capture the causal relationship between effort and wealth, e.g. "earnings" or "production". (For reference, the term "income" appears 28 times in the story vs. the term "earnings" which appears once and vs. the term "production" which never appears). And if you think I'm overplaying this, I'll refer you to the fifth pargraph where our supposedly objective reporter shows that he appreciates the importance of the distinction when he subtly uses the term "earn" to describe what the average person does to obtain wealth, but the term "receive" to describe how the rich obtain it!

After evading the cause of wealth by his choice of terms, our reporter then asks the loaded question of how in fact is the "nation's" wealth "shared" or "divided"? A reader not aware of the dropped context and misapplied concepts underlying this question is of course seduced into thinking that any inequality must be condemned.

To further push the reader to this conclusion, our reporter then goes on to quote an economist who hasn't the courage to provide his moral evaluation outright (being neutral and all), but instead resorts to implications followed by veiled threats:
“If the economy is growing but only a few are enjoying the benefits, it goes to our sense of fairness,” Professor Saez said. “It can have important political consequences.”
Tellingly, there is not a single line or footnote analyzing whether the income of the poor went up (though there's a begrudging mention that the income of "average" americans did rise). For reporters and economists such as these, all that matters is that the "gap" has increased. By their logic, if everyone were equally destitute, the world would be a better place.

All of this slanted reporting is based on specific views of productivity, justice, independence and rationality; and more generally it is written from a definite perspective on the issue of which is proper: altruism or egoism. In other words, the reporter's implicit views on moral subjects thoroughly shapes his reporting, from deciding what's important and what isn't, to choosing his language, to the questions he asks of his contributers.

The article continues in this vein, treating the concept of tax cuts as equivalent to alms, i.e. completely failing to distinguish that a tax cut is merely a reduction in the amount that is stolen from the producers, it is not a gift to them.

I could go on, but fortuitously, just a few days ago ARI published an editorial by Peter Schwartz which looks at the moral implications of the egalitarian view of income differences. Read it for an alternative and cure to the NY Times' story and its implicit moral view.


Blogger Galileo Blogs said...

Looking at the data in the New York Times article, I see that income inequality peaked in 1928, the year before the stock market crash and the beginning of the Great Depression.

Let's see. The 1920s were a period of rapid increase in wealth, when even the average American could buy cars and radios, and benefit from the rapid deployment of electricity. But rich people got even richer.

Now with the Great Depression, we had mass impoverishment, unemployment approaching 1/4 of the population, soup kitchens, starvation. But there was greater income equality then.

I wonder, what is the true objective of those who protest income inequality?

9:22 AM  
Blogger Amit Ghate said...

Thanks Galileo, that's a great and telling observation...

3:18 PM  
Blogger Clint said...

A more telling observation is that equality (as measured by the GINI coefficient) peaked in 1968 -- a year dominated by neo-Marxist movements in the U.S. and elsewhere, especially France.

Inequality has increased since Reagan in 1980. It continued through Clinton and peaked under Bush II.

The point, for me, is that inequality itself is not immoral. But if that inequality was produced through unfair means, then the inequality is immoral -- especially if poverty carries with it the risk of starvation, homelessness and early death.

I wrote a longer piece about this here, if you're interested.

12:08 PM  

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