Politics & Policy

The Gelded Age

Paul Krugman (Getty Images)
The inequality bed-wetters are misleading you.

The inequality police are worried that we are living in a new Gilded Age. We should be so lucky: Between 1880 and 1890, the number of employed Americans increased by more than 13 percent, and wages increased by almost 50 percent. I am going to go out on a limb and predict that the Barack Obama years will not match that record; the share of employed Americans is lower today than it was when he took office, and household income is down. Grover Cleveland is looking like a genius in comparison.

The inequality-based critique of the American economy is a fundamentally dishonest one, for a half a dozen or so reasons at least. Claims that the (wicked, wicked) “1 percent” saw their incomes go up by such and such an amount over the past decade or two ignore the fact that different people compose the 1 percent every year, and that 75 percent of the super-rich households in 1995 were in a lower income group by 2005. “The 3 million highest-paying jobs in America paid a lot more in 2005 than did the 3 million highest-paying jobs in 1995” is a very different and considerably less dramatic claim than “The top 1 percent of earners in 1995 saw their household incomes go up radically by 2005.” But the former claim is true and the latter is not.

Paul Krugman, who persists in Dickensian poverty, barely making ends meet between six-figure sinecures, is a particularly energetic scourge of the rich, and he is worried about conspicuous consumption: “For many of the rich, flaunting is what it’s all about. Living in a 30,000 square foot house isn’t much nicer than living in a 5,000 square foot house; there are, I believe, people who can really appreciate a $350 bottle of wine, but most of the people buying such things wouldn’t notice if you substituted a $20 bottle, or maybe even a Trader Joe’s special.” In an earlier piece on the same theme, he urged higher taxes as a way to help the rich toward virtue: “While chiding the rich for their vulgarity may not be as offensive as lecturing the poor on their moral failings, it’s just as futile. Human nature being what it is, it’s silly to expect humility from a highly privileged elite. So if you think our society needs more humility, you should support policies that would reduce the elite’s privileges.” That is, seize their money before they order the 1982 Margaux.

I live in the same city as Donald Trump, so the existence of rich people with toxic taste is not exactly a Muppet News Flash for me. But poor people are not poor because rich people are rich, nor vice versa. Very poor people are generally poor because they do not have jobs, and taking away Thurston Howell III’s second yacht is not going to secure work for them.  Nobody has ever been able to satisfactorily answer the question for me: How would making Donald Trump less rich make anybody else better off?

There is, obviously, one direct answer to that question, which is that making Trump less rich by seizing his property and giving it to somebody else would make the recipients better off, and that is true. But the Left does not generally make that straightforward argument for seizing property. Rather, they treat “inequality” as though it were an active roaming malice on the economic landscape, and argue that incomes are stagnant at the lower end of the range because too great a “share of national income” — and there’s a whole Burkina Faso’s worth of illiteracy in that phrase — went to earners at the top. It simply is not the case that if Lloyd Blankfein makes a hundred grand less next year, then there’s $100,000 sitting on shelf somewhere waiting to become part of some unemployed guy in Toledo’s “share of the national income.” Income isn’t a bag of jellybeans that gets passed around.

Further, if your assumption here is that this is about redistribution, then you should want the billionaires’ incomes to go up, not down: The more money they make, the more taxes they pay, and the more money you have to give to the people you want to give money to, e.g., overpaid, lazy, porn-addicted bureaucrats. Maybe you think that the tax rates on the rich are too low, especially given that the very rich tend to have income taxed at the capital-gains rate rather than at the much higher income-tax rate. Strange that when Democrats had uncontested power in Washington — White House, House, and Senate — they did not even make a halfway serious effort to change that. It’s almost as if Chuck Schumer has a bunch of Wall Street guys among his constituents. The tepidness of our national economic-policy leadership suggests very strongly that we are living in a Gelded Age, not a gilded one. We do need radical economic reform, not of the sort that Elizabeth Warren desires but of the kind that will allow the modestly off to thrive through mechanisms other than the largesse of politicians looting others on their behalf.

You can make the straightforward case for property seizure, though Democrats generally are not all that comfortable doing so around election time, or you can ritually chant the 1,001 names of the ancient demon Inequality. Or you can make it a matter of public morals and good taste: David Brooks received jeers for writing that the rich should adhere to a “code of seemliness,” but there’s something to be said for a less ducal executive style. How far you want to take that, though, is a matter of very wide discretion. Old millionaire Main Line families used to look sideways at anybody who drove anything flashier than a Buick — Lincolns and Cadillacs were not for Protestants, and BMWs weren’t even on the mental map. Michelle Obama wears a lot of Comme des Garçons for a class warrior, and the makers of the world’s most expensive cigars say Bill Clinton is a fan. We can do this all day.

What Paul Krugman et al. should do rather than fret about the rich and their conspicuous consumption is take the advice of a superior economist, the one who suggested that we should “focus on the stagnation of real wages and the disappearance of jobs offering middle-class incomes, as well as the constant insecurity that comes with not having reliable jobs or assets.” That’s not advice for a rich-are-too-rich problem, it’s advice for a poor-are-too-poor problem. And those are not the same problem.

That those words were Professor Krugman’s own makes it all the more puzzling that he fails to follow where they lead. The late 19th century saw substantial improvements in the standard of living for average working people in the United States. The early 21st century, not so much. This Gilded Age has a lot of catching up to do before it is anything near as successful as the last one.

— Kevin D. Williamson is roving correspondent at National Review.

NOTE: This column has been corrected; the share of employed Americans, i.e. the workforce-participation rate, is lower than when Barack Obama took office, not the gross number of employed persons. 

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