Attention conservative Hollywood screenwriters, both of you: If you’ve cooked up a story about a dystopian future where, say, the rich are hunted for sport, or maybe an update of Soylent Green where the wealthy become foodstuff, I think I know where you might find financing.
In a recent letter to the Wall Street Journal, multimillionaire venture capitalist Tom Perkins expressed great concern about the protests in the San Francisco Bay Area against company buses for tech workers. The episodes have mostly been peaceful, but in December some protesters smashed a window on a Google bus in Oakland. Still, it’s a quite a leap — an impossibly long one, actually — from that bit of vandalism to the Kristallnacht rerun, this time against the rich, described in Perkins’s letter, which carried the headline “Progressive Kristallnacht Coming?” Perkins quickly apologized for his “terrible misjudgment” in making the Nazi Germany analogy.
What’s more, the Bay Area — with its long left-wing tradition and influx of youthful and monied techies — isn’t a representative slice of America. Formerly lovable geeks are now despised by progressive activists for their display of transportation privilege and their presumed inflationary impact on housing prices. Oh, and there is a small minority of Occupy Silicon Valley types/Terminator fans concerned that Google’s purchases of artificial intelligence and robotics companies are creating, as one protester told the New York Times, “an unconscionable world of surveillance, control and automation.”
So, you know, San Francisco. Those parochial and paranoid concerns aside, however, the rest of America does seem to share an unease about income distribution — even if it hardly justifies Perkins’s hyperbolic concerns about demonizing the wealthy. That President Obama incessantly talks about income inequality is evidence: The White House political team surely has taken notice of polls on inequality such as a recent one from Pew Research/USA Today showing that 60 percent of Americans think the U.S. economic system “unfairly favors the wealthy.” In the same poll, 82 percent favor the notion that Washington should try and close the income gap.
Of course Obama’s constant harping has itself influenced public perception. He has suggested that greedy CEOs who are smashing unions and giving themselves outrageous pay hikes are key causes of the growing income gap. And not only is income inequality immoral, according to Obama, but it has “stalled” upward economic mobility.
While reasonable minds can differ on the morality of large income gaps, the evidence shows no correlation between extreme inequality and mobility. Mobility has changed little in the past 40 years, according to new research from the Equality of Opportunity Project. The 60 percent of the people in the Pew/USA Today survey who still believe that most people “who want to get ahead can make it if they’re willing to work hard” are correct. You wouldn’t know that from the president’s speeches, though. Nor would you know that the wealth gap between the 1 percent and the 99 percent has actually narrowed a bit over the past generation.
So it would be helpful to the quality of public debate if Obama presented a fuller and more accurate picture of income inequality. When we depict high-end income inequality as a critical problem, argues Brooking scholar Ron Haskins, “discussion quickly turns to criticizing the rich.”
And to what end? Even higher income taxes? As Haskins points out in a recent report, the top 1 percent of earners pay nearly 40 percent of income taxes, while the bottom 40 percent receive in refundable income-tax credits the equivalent of 5 percent of their salary. America already has an extraordinarily progressive federal tax code by international standards.
Moreover, Obama consistently fails to find any moral or economic distinction between getting rich by creating a new products or services versus taking advantage, for instance, of the federal government’s continued “too big to fail” banking backstop. Nuance matters. So do words.
If Republicans praise the Heroic Entrepreneur and Innovator a tad too much, the Obamacrats seem overly dismissive. As economist Deirdre McCloskey has argued, it was the West’s transformation into a business-admiring civilization that ignited the Industrial Revolution and innovation capitalism.
So here’s the plausible plot for nightmarish future scenario: The rich aren’t rounded up, but disrespect for earned success from innovation and wealth creation leads to less of both — and to a much poorer America.
— James Pethokoukis, a columnist, blogs for the American Enterprise Institute.