How Conservatives Must Address the Issue of Income Inequality

Two nights ago when I turned on CNN at my hotel in Prague, I caught a good deal of Piers Morgan’s interview with Michael Moore, played in a town hall format with a studio audience.

Watching Moore at work can be a frightening experience, as the radical demagogue provides simplistic answers to the growing issue of job loss for the middle class, tanking assets, and growing economic inequality. If you are Moore, it’s all caused by the greed of bankers and capitalists -- unlike the days he calls the “golden era” of capitalism, when industry gave people good jobs, and corporate CEOs invested in their businesses and gave back some of the profit they made to people instead of keeping it all for themselves.

Moore knows little. He even argued that things are worse today than during the Great Depression, when he claimed automobile workers could get good jobs at high pay. Moore was obviously confused between the experience of the war years and the post-war age and that of the Depression, when the UAW barely managed to get union recognition after volatile strikes.

But as audience members who looked like regular folks, not like OWS protesters, told their heartbreaking stories of college graduates who couldn’t get jobs, job loss, worthless houses, and the personal crises resulting from these situations, one could see how Moore’s call for a new social movement for redistribution of wealth could gain supporters. Especially given no alternatives forthcoming from others, especially from serious conservatives.  

USA Today provides the details about what reporters Marsha Beliso and Paul Overberg call “The Fading Middle Class.” Using Reno, Nevada, as an example, they write:

Reno, which has among the highest rates of unemployment and foreclosures in the United States, is a stark example: the share of income in the metro area that was collected by the middle class fell from 49.8% in 2006 to 45.8% in 2010, the year after the 18-month recession ended.

A USA TODAY analysis of Census data found the Reno area was among 150 nationwide where the share of income going to the middle class -- generally made up of households that make $20,700 to $99,900 a year -- shrank from 2006 to 2010. Metro areas where the middle class' share of income dropped outnumbered those where it grew by more than 2-to-1.


Analysts call it the middle-class squeeze.

College students are also feeling the pinch. The Wall Street Journal reports that “college grads aren't feeling any better about the U.S. economy or American politics than the rest of the country. In a recent Wall Street Journal/NBC News poll, 80% of  white men with four-year college degrees and no graduate education said the country is on the wrong track, compared with 74% of all those polled. These college grads are just as pessimistic about the next year as everyone else: 33% expect the economy to get worse, while only 17% expect it to get better. The article goes on to note that: “On average, wages for workers with four-year college degrees fell by 8.6% adjusted for inflation between 2000 and 2010, according to government data. For them, it has been a lost decade.”

They write: “The unemployment rate for recent college grads is 10.7%. More than 14% of Americans between 25 and 34 (5.9 million in all) are living with their parents, up significantly from before the recession. Nearly a quarter of them have bachelor's degrees. Having a college degree no longer guarantees a rising wage or a shot at the American dream.”

These statistics indicate why demagogues like Moore can make arguments that resonate, and why the OWS movement may be gaining support. What, then, can conservatives say to address the issue? An excellent start is made in The Claremont Review of Books, by R. Shep Melnick.

Melnick writes “the problem of growing inequality is undeniable and alarming.” He notes, reviewing a book by Jacob Hacker and Paul Pierson, that “economic inequality in the U.S. has increased dramatically in recent decades. On this there can be little disagreement. They show that since 1979 only those at the top have seen their income rise significantly: since 1979, 36% of all after-tax gains went to the most affluent 1% of the population; over 20% of those gains went to the top thousandth (0.1%) of the income distribution. Economic inequality in the U.S. is now greater than at any time since the beginning of the Great Depression.”

While Richard Epstein makes a convincing case for the benefits of income inequality (you don’t make the poor rich by making the rich poorer), it is Paul Ryan who best articulates the distinction between the traditional American belief in a society based on the equality of opportunity and the possibility of upward mobility and a society based on the equality of outcomes: “More bureaucratic, less hopeful, and less free.” (From an October 26 speech he gave at the Heritage Foundation.)