Through the Eyes of Yankelovich
A Debate with Large Consequences
In industrialized nations we are in the early stages of one of the most important debates in our lifetime:
• Is growing income inequality inevitable or susceptible to change?
• If it is inevitable, what should we do to reduce its harmful effects?
• If it is susceptible to change, what actions should we take to restore greater fairness to our economies? Starting in the 1970s, and accelerating after the Great Recession of 2007-8, income of those at the top of the scale grew enormously, while wages for the middle and bottom parts of the scale stagnated.
It wasn’t until the gifted French economist Thomas Piketty published his masterful book, “Capital in the Twenty-First Century” that a serious and thoughtful debate about inequality trends began in earnest. The book has caught the attention of the industrialized nations for several reasons.
One reason is the depth and breadth of Piketty’s documentation of the trend. It is impressive and hard to dispute.
Furthermore Piketty’s conviction that increasing inequality is inevitable and that it is unearned inequality. In Piketty’s view, our future does not bring the sort of inequality that a meritocracy creates when gifted people acquire wealth through hard work and extraordinary skill.
Rather, Piketty describes the kind of inequality in which wealth breeds wealth. The outcome is a small upper class living on its capital and using its political clout to retain its wealth. Piketty calls this “patrimonial capitalism,” and he predicts it as our future destiny.
The first phase of the debate focused on whether patrimonial capitalism is inevitable. Controversy on this issue has ranged from lavish praise to savage criticism of Piketty’s thesis.
The debate is now entering its second phase. This phase focuses on what action, if any, should be taken either to reduce inequality or learn to live with it. There is an impressive consensus that Piketty’s own proposal of a universal wealth tax is not feasible politically even if it makes good economic sense (and many critics don’t think it does).
I believe that some effective interventions may not be economic or political, but cultural. If so, it may be useful to include us culture-critics as well as card carrying economists in the debate
So here goes.
First, I don’t think that the gloomy Piketty scenario is inevitable; it may be a trend but trends can change or be changed. So I would not waste political energy on his proposal for a universal wealth tax.
Second, we should seek to recreate the “rising tide raises all boats” form of capitalism we enjoyed when growth in wealth was broadly shared.
Third, we should ensure that the people at the bottom tier of the income scale who work full time are able to support themselves and their families. In the long run, our economies can readily absorb a combination of a generous minimum wage and work subsidies.
Next, we should greatly increase the bargaining power of skilled workers in the middle ranks of the income spectrum. Highly innovative forms of skill training will require new partnerships between education/ training institutions such as two-year community colleges, major employers such as the automotive industry and government incentive programs. We should design these partnerships to grow the advanced technology skill-set of both high school and college graduates.
All these are important. But the most radical part of my proposed strategy involves far-reaching changes in our cultural norms.
Most adults in the United States identify themselves by their position in the workforce: “I’m a dental hygienist,” “a teacher,” “a lab technician,” “a librarian,” “a sales executive,” “a software engineer…”
If you are unemployed for more than six months you are considered “long-term unemployed,” and you label yourself as “unwanted.” The loss of status that goes with the workforce label creates depression, lower self-esteem, demoralization and the losses a sense of identity. This cultural norm has become toxic for many Americans.
We need to develop alternative identities – and means of support – for the long-term unemployed and even for some people who do have jobs. The support would come in exchange for soul-satisfying work that is productive for both the individual and the society even though it may have a low or zero market value. It would be work that gives participants a strong sense of identity and self-value.
Some of these jobs could be: caring for children, the sick, the elderly and the emotionally disturbed; helping ex-addicts and ex-convicts avoid recidivism; environmental maintenance; school security; music-making in schools and adult education.
All these positions are work that give participants a strong sense of identity and self-value. These socially valuable tasks could be partly or wholly subsidized and should be flexible in terms of hours and regularity.
These sorts of shifts are now taking place unobtrusively. More women are quietly choosing to return from careers in the workplace to preferred roles as homemakers (and some men are returning as house-husbands). People are taking early retirement so that they can devote themselves to activities they prefer. Many young people choose identities as poets, dancers, artists, freelancers and volunteer workers, roles that are not sources of upwardly mobile, well-paying jobs.
The effect of this norm change would be to shrink the conventional workplace carefully and deliberately as the population grows older (It is not an inexorable economic law that all economies should be able to provide full-time jobs for all who want them; it is an arbitrary assumption that conforms to cultural norms).
In contrast to patrimonial capitalism, democracy-friendly capitalism requires employees to have strong bargaining power and citizens to have dignity.
Executing this strategy would require higher taxes, but economic growth coming from increased consumer demand could provide the government funds needed.
In this century, we must maintain strong consumer demand for our economies; self-improvement and fulfillment for individuals; and a flourishing civilization for society.
The right kind of norm change may make democracy-friendly capitalism inevitable. tj