How the politics of envy (or “income inequality”) work in the broadest sense

Tyler Cowen writes in “Paul Krugman on the political salience of inequality” that

I see the inequality issue as having high salience for NYT readers, for Democratic Party donors, and for progressive activists. It has very little salience for the American public, especially with say swing voters in southern Ohio or soccer moms. Unlike in Singapore or South Korea, where the major concentrations of wealth are pretty hard to avoid for most people, American income inequalities are well hidden for the most part.

McLean is one of the wealthiest towns in Virginia, but if you drive through the downtown frankly it still feels a bit like a dump. I’ve never wanted to live there, not even at lower real estate prices. You don’t stumble upon the nicest homes unless you know where to look. Middleburg is wealthier yet, but it has few homes, feels unreal, and most people don’t go there anyway. If they do, they more likely admire well-groomed horses and still read Princess Diana biographies. They are not choking with envy over the privileges of old money rentiers, and there is no Walmart in town to bring in the masses (who probably would not care anyway).

(Emphasis added.)

This describes greater Seattle as well: how many people outside the area have heard of Medina, city of mansions? Even within the area, most people who mention it only do so as “the place where Bill Gates lives,” despite the many other freakish palaces there. Those who live in Issaquah (further east, away from Seattle proper) don’t appear to care what happens in Medina and even if they did their political ability to affect Medina is limited. Seattle is not exactly like Cowen’s Virginia—Bellevue now has a real downtown where people want to live and go, for example—but the similarities are real.

The only place I’ve lived which seems to generate envy of major concentrations of wealth is New York, perhaps because a) of the demographics, or at least the people I tend to hang out with and b) many average people see / walk by very expensive buildings. I regularly walk by the new skyscraper on 23rd and Park or Lex where Rupert Murdoch is reputed to have bought a $80 million penthouse. Though he seems unlikely to invite me up for a martini and canapés, his dwelling is much more in your face than Medina or other wealthy places in Seattle; when I live in and near Seattle I never walked by or even got near Bill Gates’s house.

Among those I know who have been to Bill Gates’s house, all were Microsoft interns who are more likely to want to be the next Gates than they are to resent him. Gates and other tech zillionaires also appear to generate very little ill will locally. That may be another difference from New York, since tech zillionaires are widely seen as having earned their money by providing value, while finance riches may not be seen in the same way.*

Later in the post Cowen also links to Seattle’s $15 minimum wage debate, despite the many well-known problems of the minimum wage. If Seattle were serious about making poor and lower-middle class people better off, the city would be focused on providing more housing and not in effect putting gates in front of current and potential residents. But the same people who want higher minimum wages are the ones who hate and protest housing supply increases. There are many ways to make people materially better off and some ways, like building, are much closer to being Pareto efficient. The same political dysfunctions that afflict Seattle are common elsewhere too, in places like Santa Monica.


* I don’t have a strong opinion on those because I don’t know enough to judge, though I have heard plausible views about why finance increases liquidity and enables capital to find useful purposes and plausible views about how finance is an increasingly zero-sum game focused on enriching insiders and corrupting the political process.

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