Politics & Policy

The Unhealthy Alliance

When the highest and lowest classes unite, income immobility ensues.

The Republican Party tends to sniff at the question of income inequality. That’s understandable, for were it to declare class warfare, it would be clobbered by the majority of people who haven’t shared in the wealth gains of the super rich. In ignoring the issue, however, Republicans have handed the Democrats a hammer with which to clobber them. Obama’s 2011 Osawatomie speech about income inequality proved highly attractive to voters, and the 2012 election showed that no viable political party could wish away the issue.

That said, there are a number of things we can’t change, or wouldn’t want to in any event. We’ve moved to an information economy that offers premium salaries to the highly skilled, and we live in an era of globalization and free trade that magnifies high-end salaries for a concentrated group of managers. Then there are our welfare payouts and marginal tax rates. The Left would have us think they’re too low. In fact they’re among the highest in the First World – and, if anything, they’re job killers.

#ad#Nor would we ever want to see perfect income mobility. That’s a false ideal and would require massive social engineering of a kind no state has ever imposed. So long as there are differences in wealth, the children of rich parents will have a leg up because of the wealth they inherit. The environment also matters. The children of the wealthy are more likely to have been nurtured in homes that prize education and instill the bourgeois virtues that make people wealthy. A child who observes his parents reading books and using sophisticated words learns to emulate them. She is also less likely to fall into the traps that are a gateway to lower class status: unwed motherhood, crime, drug use. Finally, good genes also help. The developing field of genoeconomics suggests that rich parents have good genes and that earning ability is in part inherited. If we’re told that gays are “born that way,” why not the rich?

What this doesn’t explain, however, is why there is less income mobility today in the U.S. than in most other countries. The answer has eluded French economist Thomas Piketty; and the answer is that, through its laws and institutions, America has become an aristocratic society. Perhaps that’s not surprising. Aristocracy is the natural default position of any society — and not merely aristocracy, but hereditary aristocracy.

For this, only two things are needed, common to all of us. The first is the desire to see our children do well, a sentiment that does not require an evolutionary explanation, but one that it easy to provide. We are hardwired to seek to pass on our genes, and this means that, like Deuteronomy, we distinguish between strangers and brothers. We are willing to incur enormous sacrifices for our children or our close relations, but for strangers to whom we are unrelated we have only a constrained sympathy. The second thing is relative preferences. We have absolute preferences when we want something, and relative preferences when we also want more of it than the other fellow. As we wish well for our children, and have relative preferences, we would also want them to fare better than other people’s children. We might want a poorer world, one that lowers Piketty’s g, so long as our children end up on top, with the highest of r’s. We might even prefer a world that leaves our children worse off, so long as everyone else fares worse still. That was the world of Molière’s Le bourgeois gentilhomme, and it’s our world, too.

#page#Suppose, then, that you were a member of America’s professional elite, and that you wanted your children to remain on top as well. What you wouldn’t want to see is the gardener and his children moving in next door, and to prevent that from happening you’d want a world that’s remarkably similar to the one we inhabit.

You’d first want a broken educational system, lest the spawn of the middle class ascend the social ladder. And that’s what we have. Our K–12 public schools perform poorly, relative to the rest of the First World. As for our universities, they’re great fun for the students, but people emerge on graduation little better educated than when they first walked in the classroom door. What should be an elevator to the upper class is stalled on the ground floor.

#ad#Then there’s immigration. Before the Immigration Reform Act of 1965, immigrants added greatly to the country’s economy, culture, and well-being. Since then, however, the quality of the immigrant intake has declined. We’re still admitting the stellar scientists of years gone by, but on average immigrants are less educated than they were in the past, or even than Americans are today (not the highest of bars). And that’s just as it should be. What we’d want is an immigration system that admits our maids but excludes the entrepreneurs and professionals with whom we’d have to compete. Let them go to Australia or Canada, which seem to want them. Or let them stay home.

Finally, there’s the rule of law. For the Ragged Dicks who seek to rise, nothing is more important than the security of property rights and sanctity of contracts of a mature and efficient legal system. The alternative, contract law in the state of nature, is the old-boy network composed of America’s aristocrats. They know each other, and their personal bonds supply the trust that is needed before deals can be done and promises can be relied on. As well, America’s regulatory barriers are among the stiffest in the world. For the wealthiest of Americans, that’s just as it should be. With more money, one is prepared to buy better protection from the risks that regulations ostensibly reduce, and if that places a stumbling block in the path of middle-class parvenus, so much the better. And let us not forget the regulatory barriers to takeover bids that have done so much to immunize top executives from anyone who might challenge their more-than-generous salaries.

To understand American politics, then, one must recognize its aristocratic nature and the peculiar union of the highest and lowest classes against the middle. We have returned to the 19th-century Red Tory world of Lord John Manners and Benjamin Disraeli, where conservatives sided with the lowest class rather than the newly enfranchised middle class. Like the Red Tories, our new aristocrats claim to a special bond with the underclass, which in return for ever-increasing entitlements tugs at its collective forelock and opposes any policy that might promote entrepreneurship.

We have been asked to choose between aristocracy and income mobility. And we have chosen aristocracy. Piketty is right, but he doesn’t know the half of it.

—  F. H. Buckley is a foundation professor at George Mason School of Law and a senior editor at The American Spectator. His latest book, The Once and Future King, was published in April 2014 by Encounter Books.

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