Are You Smarter Than A Three Year Old: Inequality and fairness

It’s no secret Obama is going to bang the “It’s not fair” drum this election.  Hell, he’s been bangin’ it since LAST election.  He’s continually calling for the rich to “pay their fair share.”  He can’t rub two speeches together without mentioning that everyone should play by the same rules.  Even more, he continues to claim that the richest among us have been doing exceptionally well in the economy while the rest of us are seeing wages stagnate for the last 30 years.

Don’t forget that it isn’t true:

 The claim that the standard of living of middle Americans has stagnated over the past generation is common. An accompanying assertion is that virtually all income growth over the past three decades bypassed middle America and accrued almost entirely to the rich.

The findings reported here—and summarized in Chart 8—refute those claims.  Careful analysis shows that the incomes of most types of middle American households have increased substantially over the past three decades.

So if it isn’t true, why does Obama continue to bang this drum?

Because he thinks that we think it’s true.

Obama continues to call out the struggle of the middle class.  He continues to point to the fact that wages have stagnated for most Americans, he points out that the wealthy pay less in taxes than the middle class – none of it true – and he does this so that he can obtain broad support for policies that would seek to take from one group of people and give it to another.

But is he missing the boat?  Is he missing what America, what PEOPLE, really feel?  Deep down, I think he is:

JONATHAN HAIDT, a professor of psychology at the University of Virginia, and one of our most original and stimulating thinkers about the psychology of politics, discusses some recent research on deep-seated human intuitions about distributional fairness. The gist of the experiments with three-year-olds and ropes and cups of marbles which Mr Haidt discusses is that the impulse to equalise unequal shares is activated only when the kids sense that marble production is the consequence of joint effort. “[T]he ‘share-the-spoils’ button is not pressed by the mere existence of inequality”, Mr Haidt notes. “It is pressed when two or more people collaborated to produce a gain. Once the button is pressed in both brains, both parties willingly and effortlessly share.”

Even a child, a child of three years old, knows that inequality, by itself, is not sufficient reason to redistribute.  Only when the population actually collaborated is this seen to be necessary.

What does this mean to Obama?  It means that while people may resonate with the idea of “sharing” or “redistribution”, they want it done from folks who contribute to the society and TO folks who contribute to society:

Rich countries that succeed in achieving low levels of inequality do so by taxing the whole population rather more heavily than in America, usually through relatively regressive consumption taxes, and then transferring a relatively generous portion of tax revenues to those near the bottom of the income distribution. American inequality is so high not because its taxes aren’t progressive enough. It’s so high because middle-class Americans are taxed too lightly to finance really serious progressive transfers.

See?

“American inequality is so high not because its taxes aren’t progressive enough. It’s so high because middle-class Americans are taxed too lightly to finance really serious progressive transfers.”

And so why doesn’t the American middle-class vote to support more taxes on the middle-class?

I think part of the answer is that huge numbers of middle-class Americans think downward redistribution from the middle to lower class is unfair precisely because the relatively poor are not perceived to be pulling their weight in the collaborative endeavour of American society.

Because the middle-class feels that the class of people who would benefit from the tax DON’T DESERVE IT.

5 responses to “Are You Smarter Than A Three Year Old: Inequality and fairness

  1. Fairness deals in relative measures, you’re talking about absolute measures. Moreover some of the claims in what you quote are dubious. No country taxes its wealthy as low as we do. No country has the level of income inequality we do (of advanced industrialized states). Now, if we wanted to replicate European social welfare systems we’d have to tax everyone more, including the middle class. If we just want a fair way to deal with high debt, you have to tax the wealthy more. Otherwise the wealthy, who have benefited the most from the debt-driven bubble economies since the 80s, pay none of the cost of readjustment, and it’s all paid for by the middle and lower classes. I don’t think they’re going to take that — if the cost of this crisis isn’t paid in part by those who benefited the most, then you will have class war! Justified class war!

    • some of the claims in what you quote are dubious. No country taxes its wealthy as low as we do.

      Well, The Economist is saying the middle class tax rate is too low. Now, I don’t share this belief; I’m still a low tax lower spender kinda guy.

      If we just want a fair way to deal with high debt, you have to tax the wealthy more.

      I think to win that debate, you would first have to do two things:

      1. Reduce spending to an amount we can sustain.
      2. Reduce the number of people who pay no tax.

      No country has the level of income inequality we do (of advanced industrialized states).

      It turns out that there may be reasons for that. Marriage, for example. And, ironically, the low tax rate on the middle class. I found it interesting that The Economist found that the reason the middle class is opposed to an increase on themselves is that they don’t see the relatively poor as contributing enough to be worth the transfer.

  2. Oh, and the flip side of what I wrote – the real solution is a grand compromise. Increase taxes on the wealthiest, enact entitlement reform and seriously look at restructuring social welfare programs. In other words, each party gets part of the solution they want, neither gets their own way completely. That’s the only politically feasible solution.

    • I second that motion. The tax on the wealthy would likely be cosmetics, but I think unless you show that (right or wrong) that everyone’s tightened their belts in some way, I agree with Scott that it’s the only feasible solution. Plus, “We’re all having to pay a little more taxes” comes off way better than “Other countries do it”, I think, in America. America’s a leader, not a follower, so it likely matters little to people how other countries tax by comparison.

      To Tarheel’s and Scott’s point combined, beyond that I think we as a public go too far in thinking this is less of a math problem right now and more of an ideological one.

    • Increase taxes on the wealthiest, enact entitlement reform and seriously look at restructuring social welfare programs.

      I see Vern pitched in here too. And I agree.

      The rich are not going to sit back and continue to pay more and more only as they watch the % of American’s who pay nothing go up and up. It simply isn’t feasible. Nor are people buying this notion that the middle-class is stagnant; it isn’t. When controlled for individuals rather than families AND when nonmonetary contributions are added in, the raise in compensation is 80% over 30 years. This, combined with a generally increasing purchasing power, means that we’re all doing much better.

      And finally the Democrats are going to have to give in on their programs. Medicare, for example, is a great start. Paul Ryan gets hammered for suggesting a voucher to pay for care. Opponents claim that people will overrun that voucher. However, the voucher is to pay for INSURANCE that WOULD cover all the costs.

      And SS needs to be addressed. And unemployment. And all the rest.

      We need less partisan folks on both sides to hammer this out.

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