Monday, February 14, 2011
Renowned behavioral economist Dan Ariely (Duke University) and Michael I. Norton (Harvard Business School) recently demonstrated that everyone - including conservatives - thinks there should be more equality.
Their study found:
Respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution. Most important from a policy perspective, we observed a surprising level of consensus: all demographic groups—even those not usually associated with wealth redistribution such as Republicans and the wealthy—desired a more equal distribution of wealth than the status quo.Ariely comments:
Taken as a whole, the results suggest to us that there is much more agreement than disagreement about wealth inequality. Across differences in wealth, income, education, political affiliation and fiscal conservatism, the vast majority of people (89%) preferred distributions of wealth significantly more equal than the current wealth spread in the United States. In fact, only 12 people out of 849 favored the US distribution. The media portrays huge policy divisions about redistribution and inequality – no doubt differences in ideology exist, but we think there may be more of a consensus on what's fair than people realize.How could the media portrayal regarding this issue be so wrong?
Well, for one thing, as a study the Pew Research Center found, the corporate media tends to take Wall Street's view on economics. Indeed, the media is largely set up to spout propaganda which supports the view of the powers-that-be. The financial sector has been by far the biggest beneficiary of government policies over the past 10 years or so. So the media tends to defer to Wall Street's own arguments against equality.
Many conservatives are, of course, opposed to a redistribution of wealth via raising taxes on the wealthy. The conservative argument is straightforward: people who have worked harder should be able to earn more money by the sweat of their brow. If we tax the wealthy in order to redistribute wealth to help the poor, then no one will be motivated to work hard, as the wealthy will be penalized and the poor can sit back and take hand-outs.
Whether you agree with that argument or not, everyone agrees that a system which uses the power of the state to reward the fraud and gambling of the largest banks and biggest corporations through socialism for the rich and capitalism for everyone else is not free market capitalism, and is downright anti-American.
As I noted last November:
Conservatives tend to view big government with suspicion, and think that government should be held accountable and reined in.
Liberals tend to view big corporations with suspicion, and think that they should be held accountable and reined in.
Specifically, a Rassmussen poll conducted in February found:70% [of all voters] believe that the government and big business typically work together in ways that hurt consumers and investors.
(and see this).
Remember that the government helped and encouraged the giant banks to get even bigger, and then has hidden their insolvency and shielded them from the free market, and helped them grow even during the severe downturn.
In return, the big banks and giant corporations have literally bought and paid for the politicians.Conservatives might call it "socialism" and liberals might call it "fascism" - they are the same thing economically.
But all Americans - conservatives and liberals alike - can agree that it is not capitalism, and it is not American.
As I pointed out in December:
In other words, while many conservatives are against raising taxes on the wealthy, they are overwhelmingly for stopping the use of the power of the state to increase inequality. See this, this and this.
Conservatives hate big unfettered government and liberals hate big unchecked corporations, so both hate legislation which encourages the federal government to reward big corporations at the expense of small businesses.
As an example, both liberals and conservatives are angry that the feds are propping up the giant banks - while letting small banks fail by the hundreds - even though that is horrible for the economy and Main Street.
The Dodd-Frank financial legislation ... enshrines big government propping up the big banks ... more ore less permanently.
Many liberals and conservatives look at the government's approach to the financial crisis as socialism for the rich and free market capitalism for the little guy. No wonder both liberals and conservatives hate it.
And it's not just the big banks. Americans are angry that the federal government under both Bush and Obama have handed giant defense contractors like Blackwater and Halliburton no-bid contracts. They are mad that - instead of cracking down on BP - the government has acted like BP's p.r. spokesman-in-chief and sugar daddy.
They are peeved that companies like Monsanto are able to sell genetically modified foods without any disclosure, and that small farmers are getting sued when Monsanto crops drift onto their fields.
They are mad that Obama promised "change" - i.e. standing up to Wall Street and the other powers-that-be - but is just delivering more of the same.They are furious that there is no separation between government and a handful of favored giant corporations. In other words, Americans are angry that we've gone from capitalism to oligarchy.
So if both liberals and conservatives hate something, it doesn't necessarily mean it's a compromise. It may mean that they feel disenfranchised from a government that is of the powerful and for the powerful.
This is an area of agreement between people of good faith on the left and on the right. As Robert Shiller said in 2009:
And it's not like we want to level income. I'm not saying spread the wealth around, which got Obama in trouble. But I think, I would hope that this would be a time for a national consideration about policies that would focus on restraining any possible further increases in inequality.If we stop bailing out the fraudsters and financial gamblers, the big banks would focus more on traditional lending and less on speculative plays which only make the rich richer and the poor poorer, and which guarantee future economic crises (which hurt the poor more than the rich).
Indeed, if we break up the big banks, it will increase the ability of smaller banks to make loans to Main Street, which will level the playing field.
Moreover, both conservatives and liberals agree that we need to prosecute financial fraud. As I've previously noted, fraud disproportionally benefits the big players, makes boom-bust cycles more severe, and otherwise harms the economy - all of which increase inequality and warp the market.
And as I noted last April, prosecutors could claw back ill-gotten gains from the criminals and use that money to help the economy:
The government could use existing laws to force ill-gotten gains to be disgorged (see this and this) [and] fraudulent transfers to be voided ...The bottom line - as conservative blogger Michael Rivero writes - is that too much inequality kills the market:
For an economic system to be a system, money must flow freely at all levels and in all corners. When those in charge of the system decide to so order the mechanisms of the financial sector to drive the money into a single huge pile, the system cease to be a system and a crash becomes inevitable. One might as well force all the blood in your body to stay in the brain. The end result is the same; death for the body.He's right.