Friday, February 09, 2007

Like Robin Hood in Reverse

A couple of readers have commented about the story on income inequality that ran on Thursday's ATC. The story is part of a series that NPR is running to supposedly examine income inequality in the United States - especially the accelerating divide between the haves and have-nots in the United States. I was headed to the gym listening to the report - which noted that even The Decider admits that the widening income divide is a problem - when Adam Davidson about made me fall off of my bike. He reminded us that we should consider University of Chicago's Gary Becker, a Nobel Prize-winning economist who thinks income inequality is a good thing. Becker tells us, "I think inequality in earnings has been mainly the good kind. I strongly believe it's been mainly the good kind."

At the time I thought, "Good God, NPR must have spent a long time looking for someone who would argue that the demise of the middle class is a good thing." I mean, even the World Bank has some harsh words for such inequalities:
  • High inequality reduces the pool of people with access to the resources—such as land or education--needed to unleash their full productive potential. Thus a country deprives itself of the contributions the poor could make to its economic and social development.
  • High inequality threatens a country’s political stability because more people are dissatisfied with their economic status, which makes it harder to reach political consensus among population groups with higher and lower incomes. Political instability increases the risks of investing in a country and so significantly undermines its development potential.
  • High inequality may discourage certain basic norms of behavior among economic agents (individuals or enterprises) such as trust and commitment. Higher business risks and higher costs of contract enforcement impede economic growth by slowing down all economic transactions.
But now I feel sort of silly. I realize that Becker must actually be like one of the Yes Men. He was just pretending to be like a cold-blooded villain out of a Dickens' novel when he said that education is at the heart of the income gap and "that's mostly because the better off have more education. And he says that gap is creating the right incentives." By pretending to be such a crass defender of privilege and exclusion he was really making the case for free universal higher education for everyone--pretty clever! And when he writes that Latin America owes the Pinochet-loving "Chicago Boys" a debt of gratitude he's just making a point that no one in their right mind could sing the praises of serving a fascist government. I get it...

Good job NPR. Thanks for the laugh!


Kevan said...

What kind of bike do you have?

Mytwords said...

Kind of bike: An old "Hard Rock" Specialist that I bought back in 1995.