Sunday, April 30, 2006

Income inequality: Becker and Posner

Check out the posts by Becker and Posner. Forget envy for a second: one problem with economic inequality is the fact that the method by which poor families interact with the world may be qualitatively different than that of rich folks, and this qualitative difference may persist even if the poor are getting richer. (It seems clear, btw, that the poor are indeed getting richer; also, the gap between the races is closing, and the same for the gap between the sexes. Growing inequality, claim Posner and Becker, is largely due to differences in education.) A class of situations where income inequality causes objective dislocation even to better-off poor is the introduction of a new technology which enables a shift in lifestyle that the majority, but not the poor, can adopt, with this shift then isolating the poor. Cars and computers are good examples. Even if the income of the impoverished rose during the middle periods of industrialization, a typical poor person still may not have been able to afford a car; and the introduction of the car on a wide scale changed cities and opportunities in ways that the poor could not easily deal with. An argument can be made that government policies---federal support for single-family homes (through enabling tax deductions for mortgages and real estate taxes, encouraging suburbanism), federally-subsidized commuter routes, and federally-financed urban renewal---effectively isolated the poor in inner cities, which then collapsed from lack of attention and an implosion of social values. In America, the poor should not be experimented with to see if their cultural norms are strong enough to create strong communities without the presence of a middle-class.

The typical sequence of arguments is poor-getting-richer rebutted with increasing-income-inequality rebutted with envy-shouldn't-be-taken-into-account rebutted with yes-it-should rebutted with nyah-nyah. The fact that income inequality structurally divides America through a discrete jump in the accessibility of certain goods at certain incomes---a structural division that affects the poor because the majority's access to the good isolates the poor, whose lack of access persists despite the poor getting richer---can help enrich this discussion.

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