Opportunity, Inequality, Public Opinion, and Power

Jared Bernstein Senior Fellow, Center on Budget and Policy Priorities

Opportunity, Inequality, Public Opinion, and Power

Here’s a timely result from a new NBC/WSJ poll out today:

Which concerns you more: the income gap between the wealthiest Americans and the rest of the country or middle and working class Americans not being able to get ahead financially?

Income gap between the wealthy and the rest of the country: 28%
Middle and working class not being able to get ahead: 68%

That’s a big difference, though not a surprising one. To the extent that we share national values, they tend to lean more towards equal opportunities than equal outcomes.

The thing is, these two phenomena are linked, and likely not just through correlation, but through causation. That means that we can’t increase opportunity without reducing inequality.

Though I’ve made this point a lot lately, I’ve got good reason to do so.

First, there is a theme, if not a meme (not totally sure of the difference; maybe the latter is a theme amplified on the internet) developing among candidates for president, especially among the many R’s, that what matters is opportunity, not inequality. As the poll shows, they’ve got public opinion on their side, and it is congenitally discomforting for politicians of all partisan stripes to focus on inequality, as they can be seen by the donor class as fomenting class warfare that’s unfriendly to the top 1%. (Though I’m with Warren Buffet on this one: “…there’s been class warfare going on for the last 20 years, and my class has won.”)

Second, the evidence keeps building for this connection. Yesterday’s NYT was plastered with compelling, if not surprising, research showing that if a family with young kids relocates from a high- to a low-poverty neighborhood, the kids do better in later life in terms of earnings, college attendance, and family structure (e.g., fewer teenage births). The careful nature of the statistical analysis allowed the authors to argue, plausibly in my view, that they were identifying causal, not just correlative, outcomes.

Why does it matter that we as a nation understand this causal linkage? The answer has to do with both policy and power. One way of summarizing the fundamental problem of narrowly distributed growth is that those whose incomes are asset-driven hold disproportionate political power relative to those whose incomes depend on paychecks.

Thus, anti-inequality measures that threaten the top 1%–that attempt to reduce their economic “rents”—like collective bargaining, higher minimum wages, trade policy that protects workers’ rights and wages, full employment, robust safety nets, progressive taxation, are attacked as counterproductive to growth and jobs.

That leaves us stuck in a cul-de-sac: we can’t increase opportunity because we can’t decrease inequality.

Unfortunately, I fear there are more Baltimores in our future. In fact, the research noted above lists cities by their earnings disadvantage, measured by the “negative exposure effect” of living there. Baltimore was the worst out of the 100 largest cities, but one can easily imagine similar pressures building in lots of other places.

Fortunately, there’s an election coming up where these issues will be front and center. When it comes to truly getting the roots of the opportunity deficits faced by too many Americans, it will be essential to differentiate between who’s singing about the problem and its solutions and who’s lip synching.


This has been reposted from Jared Bernstein's blog.

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow.  From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the author and co-author of numerous books, including “Crunch: Why Do I Feel So Squeezed?” and nine editions of “The State of Working America.”