Remarks on inequality and social justice

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Ted Everett

(Phil Club debate, 12/02/11)
There is a lot of stuff to talk about here, but I want to focus these remarks on two very basic points about inequality in the United States, both having to do with demographic issues that are usually overlooked in discussions of social justice. The first has to do with disparities in age, and the second with immigration. I have things to say about Bill Gates as well, but I’ll leave that stuff for later.

It has been argued that the United States is a less equal society than most other Western countries, and that it is less equal now than it was a generation ago, according to a common measure called the Gini coefficient. This is held to be a very bad thing – social injustice on its face – and it is widely attributed by the left to moral failings in the capitalist system, and sometimes to racism. On this view, the profit motive under capitalism encourages greed among corporations and the wealthy, while the poor are seen as exploited workers who are paid as little as possible by their employers so that the rich may prosper. Present economic inequalities in the United States are said to be caused primarily and fundamentally by these injustices, and the inequality statistics are presented as strong, even conclusive evidence of such injustice. In this view, a just society would need to limit the power and wealth of the upper class of mainly white owners and managers, and provide greater benefits and opportunities to the lower class of workers and minorities, in order to produce a society that is more compassionate in spirit, more equal in result, and generally happier.

I think that this is for the most part radically false as an analysis of inequality in the United States. And I suspect that if we try to cure perceived social injustices by redistributing a lot more money from the wealthy to the poor than we do now, then, unless we make radical changes in other policies at the same time, we will produce a society that is more unequal than it is now, and less socially just.

My first point is that much of the disparity of wealth and income in the United States is generational. Think about the people in this room right now. Most of you are students, and you have next to no income, and next to no wealth; in fact, most of you probably have negative net worth right because of student loans. And then there are the four of us up here, and we have lots of money: we each make about twice the median income for American adults, and we each have some few hundred thousand dollars in assets, mostly in stock through our retirement accounts. Now, how much social injustice is there in the inequalities within this room between the faculty and students? Are we oppressing you? Are we stealing from you? Are we greedily exploiting your labor? Do we hate you and discriminate against you? No. The obvious fact is that we are old and you are young; we are at the height of our careers, and you haven’t even started yours. When we were your age, we didn’t have any money either, and when you are our age, you will have a lot of money too – probably more than we do if you choose your careers more wisely. It would be crazy just to look at inequality statistics within this room, or within any university, and conclude that the entire system is immoral.

So, when we look at national statistics on income and wealth, how much of the obvious inequalities depend on differences in age? It’s hard to say, because age differences are ignored in all these pie charts that are supposed to prove what an unjust society the United States is, or how wicked capitalism is. But consider that among American households, those headed by people 65 and over have almost 50 times as much wealth as those headed by people 35 and under. Is this unfair? Is it? Think about the typical financial life-cycle of a middle-class person who has a steady job like the four of us: You start with an education but few other assets, and probably some debt from student loans. Then you get a job, and then after a while you get married and buy a house with a mortgage and have a couple of kids, taking on more debt in the process, so that you might well still have no positive net worth throughout your thirties and even forties (depending on largely unpredictable real estate and stock values), even as you start accumulating savings for retirement. Then in your late forties and fifties you get some steady growth in net worth as you pay off your house and maybe some education for your children, and then a big spurt of growth in the last several years before retirement. You usually have your highest net worth on the day you retire, and then you gradually spend it back down because you’re old and you don’t have a job anymore and it’s got to last you for another twenty years or so. People accept this as a perfectly reasonable pattern for a middle-class financial life. They don’t believe that 401k retirement plans are immoral; quite the opposite. But they don’t notice that this pattern produces enormous statistical inequalities. So, people complain that the bottom 80% of the country has only 16% of the wealth like that’s a huge injustice in itself, but guess what? 80% of the country is under 55 years old, which is before most people have accumulated most of their wealth. A perfectly just society made completely out of middle class people is going to look top-heavy in much the same way, though maybe to a lesser extent, as long as people are allowed to own their own retirement accounts.

My second point is about diversity and immigration. Imagine that the village of Geneseo becomes an independent republic, able to make all of its own laws. It’s a pretty happy town, without really gross disparities, but we look around and we see that a few people in the village are rich and a few people are poor, and we decide to try to make things more equal for the sake of social justice. So, we take some money and property away from the local millionaires – and this means particular people we may know, including a few college administrators and a handful of professors in their sixties. Suppose we take away a quarter of the wealth and income from these local millionaires and redistribute it to the poor of Geneseo. This makes everything more equal in our little republic…but only for that day. The next morning we all wake up and there's a thousand people from Dansville camped out on the village green, demanding benefits. Now, suddenly, everything is less equal – less equal than yesterday, and less equal than it was before we started, because we now have a much larger population of poor people than we had when we began. What are we going to do about this? We can add more taxes so that the wealthy Geneseans give up more of their income and property, and use that to support more and more new people from Dansville, but this means that the level of benefits will keep getting lower, and the society of Geneseo will still become more and more unequal over time. If we see these inequalities as a problem, increasing the level of taxation and redistribution is never going to fix the problem more than temporarily. So we have a choice: either we keep poor outsiders out so that we can have less inequality among the insiders, or we let poor outsiders in, at the cost of a more unequal result for the new, larger society.

In the United States, the population that is growing fastest, and having the most influence over our statistical measures of well-being, is Mexican immigrants, most of whom come in here very poor, and many of whom do not even here legally, although they still use a lot of services and their children born here are automatically accorded citizenship (not to imply that they just live on welfare payments – most of them work very hard). On top of this great increase in legal and illegal immigration, the Mexican population also has many more children, and has them at much younger ages, than any other segment of our society. The result is that the Hispanic American population has gone from under 5% in 1970 to 16% in 2010 and is projected to be 30% in 2050 (which is going to be more people than the entire population of Mexico right now). Letting this demographic revolution happen is probably to everybody’s benefit. But poor immigrant families are not going to earn as much money or hold as much wealth as non-immigrants over their first few decades in America, no matter what we do, so statistical inequalities are going to increase, no matter what we do.

Now consider the fact that non-Hispanic white people are generally much older than everybody else in the United States. The median age for white Americans is (as of the 2000 census) 38.6 years old; for Asian Americans, 32.7; for black Americans, 30.2; and for Hispanic Americans, 25.8. In a perfectly just middle-class society, who ought to make more money: people who are 39 years old, or people who are 26? Assuming you are treated fairly, what do you expect to happen to your own future salaries, after any thirteen years of hard work and developing skills? Average faculty salaries, for one random example, have been pretty flat over the last thirteen years, but our four salaries as individuals have roughly doubled in that time as we’ve each worked our way up in the profession, and that’s pretty typical.

Another crucial fact is that white Americans, just like white people everywhere, are no longer replacing their full numbers with their own children, while Asian and black Americans are having just enough children to hold steady. The four of us here (plus our four wives) would need to have had at least eight children among us if we wanted to replace ourselves with our own offspring, but we have only five, I think, which is pretty typical for white baby-boom professionals like us. So, who is going to succeed us highly educated and well-paid older white people as we die off in American society, if not our own dwindling supply of cherished and highly educated children? Well, we already know the answer: hard-working, but extremely young, unskilled, low-paid Mexican immigrants who have lots and lots of children. We can welcome them, and we can treat them fairly, and we can do our best to educate them and help them find good jobs. What we cannot do is prevent the United States from becoming more and more statistically unequal over the next forty years, no matter how hard we try.

Meanwhile, my friends on the left complain about how much more unequal the United States is than little Nordic countries like Norway and Finland, which also have better statistics for infant mortality and educational achievement and all kinds of other stuff. But they never take into account the fact that Norway and Finland have very, very little immigration compared to us, and almost all of it is from other Northern European countries, with the result that Norway is now about 98% white Europeans, and Finland is actually 99.8% white Europeans, whereas the US is currently only 63.7% white if we exclude Hispanics, and by 2050 that’s expected to get down to 46%. So, when people on the left compare America statistically with the boutique social democracies of Scandinavia, it’s like comparing a public golf course to a private country club. Yes, our clubhouse isn’t always nice and clean like theirs. Yes, we have to pay for our own burgers, and they get little crab-meat sandwiches for free. But at our club, everybody gets to play.

Nobody else in the developed world has cultural diversity anything like what we have. Nobody else has immigration policies anything like as generous as ours. We are the open society. The United Kingdom, which has considerably more racial and ethnic strife than we do (including a violent crime rate that is four times as high as ours), is still 92% white Europeans compared to our 64%. Even Canada, which likes to boast about its welcoming immigration policies, is still over 80% white, and almost all of its immigrants are educated Asians, cherry-picked for their productive skills. It is simply ludicrous to make statistical comparisons between an open and inclusive society like the United States, which takes in unskilled immigrants by the millions, and essentially closed societies like every other Western country, which maintain high levels of equality and welfare for insiders at the cost of accepting only a trickle of outsiders. Think about these differences before you decide who’s being selfish.

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