Inequality That Barks and Dogs That Don’t

6 Oct

Jennifer Hochschild, professor of Political Science at Harvard, begins her 1981 book, ‘What’s Fair: American Beliefs about Distributive Justice,’ with an excerpt from Arthur Conan Doyle’s story, Silver Blaze, featuring the popular fictional detective Sherlock Holmes. In the excerpt, Holmes remarks on the curious fact that the dog didn’t bark even when the evidence suggested that it should have. Hochschild uses this analogy to remark on the ‘curious’ fact about the American polity—that it has steadfastly shied away from socialism, even socialist rhetoric, despite rising inequality, and the large pool of likely beneficiaries of socialist policies. American politics has also been largely absent of demands for more income redistribution. I carry Hochschild’s analogy further—to somewhat disastrous extremes—in the service of conveying something simple. After all, all is fair in love, war, and blogging.

Before we investigate why the dog doesn’t bark, we must identify the dog, make a case for why it should bark, and when, and how loudly? And note if it bites. And we must investigate whether the implicit and naive assumption—that barking will result in anything—is correct. Only after we have answered these will we tackle Hochschild’s question.

The Dog

The identity of the dog depends on the counter-factual that we want to use. Is it the bottom 95% of the income earners? Or is it the lowest two quintiles of the income distribution? Or the group below median income? Or the minority of the federally defined poor? All of these groups can coalesce together to demand more redistribution of income taxes. For instance, a progressive income tax with substantially higher marginal tax on incomes above their own. But theoretical counterfactuals base their premise of group formation on automatic group formation on the basis of economic interests. Such counterfactuals ignore things like extant cross-cutting social cleavages—race primarily—that come in way of class consciousness, atomistic drives of the new labor and consumption regimes, apathy, political culture, historical narratives, and the near absolute dispersion of legitimizing discourses of inequality offered by the society. These reasons damn the existence of a dog to only those instances when political entrepreneurship meets economic realities powerfully enough to overcome the centrifugal forces mentioned above. So perhaps then the problem really is that the dog doesn’t bark because mostly there is no dog.

However, political coalitions around class do form, and if the evidence presented by scholars is anything to go by – they are most salient and most persistent among the rich end of the spectrum. Larry Bartels has recently shown that policy choices reflect elite opinion much more so than mass opinion. “In almost every instance, senators appear to be considerably more responsive to the opinions of affluent constituents than to the opinions of middle-class constituents, while the opinions of constituents in the bottom third of the income distribution have no apparent statistical effect on their senators’ roll call votes. Disparities in representation are especially pronounced for Republican senators, who were more than twice as responsive as Democratic senators to the ideological views of affluent constituents. (Bartels, 2005. Economic Inequality and Political Representation).

Hochschild, relying on census data from 1929 to 1977, puts forth the fact that while the shares received by poorest two quintiles has changed little between these years, the largest change has been the transfer of money from the richest quintile to the third and fourth quintile. Hochschild’s story is about the Director’s law (after economist Aaron Director), which goes something like this: Government has coercive power, which allows it to engage in acts (above all, the taking of resources) which could not be performed by voluntary agreement of the members of society. Any portion of the society which can secure control of the state’s machinery will employ the machinery to improve its position. Under a set of conditions to be discussed below, this dominant group will be the middle-income classes. (George Stigler’s summary).

So perhaps there is a dog, a rich and a middle-class dog, just not a poor dog. And that is in itself a mystery.

To bark or not to bark? And when to bark?

Should it on perceiving the narrowing of the opportunities to move to the next class bracket? Or should it be on coming in contact with increased inequality between class peers, as is so nicely documented in a recent series of articles in New York Times, the chronicler of the anxieties of the rich, that show that inequality is the greatest (and gallingly so) in the top 1% with top .001% earning far more than the .01%, which in turn earns substantially less than the next .1%. Or should it be the expansion of difference between the 25th percentile and the 75th percentile? Or having dramatically lower income than say our parents? A lot depends on how we define the dog, and what the dog sees. Both the dog and dog’s vision, if it wasn’t clear from the discussion above, is as much politically constructed as socially (if the two can be pried apart). Perhaps the answer is best approached via historical examples – times when we can be reasonably sure the dog did something or it looked like the dog did something.

If we go back to 1870s, the era of Robber Barons and the original gilded age, the post-reconstruction era of lavish wealth, and even more gratuitous displays, we are at a point of history with indisputable and egregious inequalities. This era with its early stages of thuggish capitalists bought not only the rise of labor but also the trust-busting presidency of Teddy Roosevelt. Perhaps there the dog did whimper. Similarly, there is a period again starting 1933 when there is a precipitous climb in the marginal income tax rate, partly brought upon by the war, and by FDR. The top marginal rates as recently as Eisenhower era were over 90%, and now top off at a miserly 35%. It is relatively unclear except perhaps for the rise of communist parties in the US and response to the depression, why we saw such a rise in redistribution of income. But it seems that that was the last time the dog whimpered.

Data from Piketty and Saez, among others, suggests the oncoming of a new gilded age. For example, according to census data, in 1967, households at 95th percentile had six times more income than ones at the 25th percentile, the ratio in 2005 had grown to 8.6. It may yet be that the dog rises again, albeit slowly and feebly. And it may gnaw at immigrants when it rises before it gnaws at greedy Wall Street guys. Oh, it’s already happening.

The Curious Incident: Why Did The Dog Not Bark (or Bite) Sooner?

Sven Steinmo attributes it to the political culture, the pull yourself up the bootstraps entrepreneurial anti-statist immigrant culture, constitution, the deliberately anti-democratic (in the words of American historian Gordon Wood) fragmentary government structure, weak parties, weak labor, weak government, and the fact that elites play a critical role in shaping people’s preferences. For Hochschild it is the lack of feudal history, the rapid rise of petit bourgeoisie, people being better off than their parents – at least much of the 19th and 20th century as the vast natural resources of US were exploited to carve out wealth, the fact that people have ‘chosen’ Capitalism (gain) over distributive ideas, deliberate fragmented structure of the government, the fact that poor limit their dreams, the fact that poor don’t demand absence of difference but just end of ‘unjust’ differences, and that the fact that people just want an equal opportunity to be unequal. For Gunnar Myrdal, the Swedish political scientist and economist and Nobel Prize Laureate and most significantly author of the Carnegie (who wanted someone from outside the US for objectivity) funded An American Dilemma: The Negro Problem and Modern Democracy, it is the American creed. And perhaps because things haven’t been that bad, mostly. We never ask if things can be better for democracy isn’t about that. It is just mostly avoiding famines (Amartya Sen).