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.

Links: News is bad for you, the UnSlut project, the crab basket effect, self-publishing, space, extinction, flus, and more

* “News is bad for you [. . .] The real news consists of dull but informative reports circulated by consultancies giving in-depth insight into what’s going on. The sort of stuff you find digested in the inside pages of The Economist. All else is comics.”

* Women and the crab-basket effect.

* “New Publisher Authors Trust: Themselves.” File this under “Calling Captain Obvious.”

IMG_2219* The future of U.S. space policy, a topic that is under-discussed.

* Human extinction is an underrated threat.

* Is China covering up another flu pandemic?

* Russell Blake: Why authors annoy me, which is really about how any “rules” about art also meant to be broken.

* “One look at why income inequality is growing,” hat tip and headline tip Tyler Cowen.

* The UnSlut Project: the “It Gets Better” of slut-shaming.

Thoughts on possible and perceived income inequality

Someone in my family sent me “Standard of Living Is in the Shadows as Election Issue,” which is about how we allegedly need to break “out of a decade of income stagnation that has afflicted the middle class and the poor and exacerbated inequality.” But measuring standard of living solely through income has a couple of major problems. One is that a lot of people are getting life improvements through non-income-based measures (surfing the Internet is an obvious example). It also appears that the average basket of goods consumption is changing. Anyone who has to or chooses to consume health care or education is really hurting. Anyone who isn’t is arguably benefiting from the major drop in prices for virtually all manufactured goods.

I’m not convinced that income inequality has changed as much as the media believes it has. Robert J. Gordon wrote “Has the Rise in American Inequality Been Exaggerated?,” which argues that the indices used to measure inequality are flawed, that a lot of income is now needlessly spent on housing (primarily because so many cities restrict housing supply through various means, including arbitrary parking requirements and height limits), and that behavioral choices and changes may have changed perceived inequality. I don’t want to argue the merits of Gordon’s paper. His explanations are at least plausible, and that the more one tries to measure these kinds of changes, the harder it is to really know if what one is measuring is real or evidence of statistical artifacts or measurement biases. Standard of living arguments face the same issues.

I mentioned the kinds of goods we consume in the first paragraph. We have large incentive problems built into healthcare, education, and government, all of which are growing faster than inflation and have been for decades. Tyler Cowen’s The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better discusses these issues. Cowen also says:

More and more, ‘production’—that word my fellow economists have been using for generations—has become interior to the human mind rather than set on a factory floor. Maybe a tweet doesn’t look like much, but its value lies in the mental dimension. We use Twitter, Facebook, MySpace, and other Web services to construct a complex meld of stories, images, and feelings in our minds. No single bit from the Web seems so weighty on its own, but the resulting blend is rich in joy, emotion, and suspense.

This might be overly utopian: consider the arguments of Sherry Turkle’s Together Alone or Nicholas Carr’s The Shallows, neither of which may be fully persuasive but which still give me pause about the Internet as a “resulting blend. . . rich in joy, emotion, and suspense.”

At least “Standard of Living Is in the Shadows” understands this: “The causes of income stagnation are varied and lack the political simplicity of calls to bring down the deficit or avert another Wall Street meltdown.” The Wall Street meltdown is also a symptom, not a cause, of underlying problems. This is also probably true:

Maybe the biggest reason for optimism is that there is still a strong argument that both globalization and automation help the economy in the long run. This argument remains popular with economists: Trade allows countries to specialize in what they do best, while technology creates opportunities to extend and improve life that never before existed.

Previous periods of rapid economic change also created problems that seemed to be permanent but were not. Neither the cotton gin nor the steam engine nor the automobile created mass unemployment.

I don’t pretend to have answers to these questions, but both major political want to sell easy and probably wrong answers. A critical mass of voters haven’t revolted, or won’t revolt. I don’t see the end game. But we may also get self-driving cars, 3-D printing, and human genetic modification in the next decade. All three are big, transformative technologies that may alter the fabric of human life in major and unforeseeable ways. Remember that a huge number of technologies diffused through society incredibly quickly during the depression (radio being the best known). In my own case, for example, Amazon, Barnes & Noble, and Apple’s digital reading devices have made self-publishing pragmatic in a way that it wasn’t prior to about 2010 or so, and that’s a pretty big win for me, given my experience with literary agents.

There does, however, seem to be a pervasive societal sense over the last four years that something has gone wrong.

In an e-mail, one friend said this: “These days, I feel like much of society is living in some sort of shared delusion, where people want what they want but are blithely unaware of the effects of their desires” in the context of a link to Branford Marsalis’ take on students today. Marsalis says that he’s learned that “students today are completely full of shit. [. . .] Much like the generation before them, the only thing they’re really interested in is you telling them how right they are and how good they are.” I said to my friend:

I suspect people have always been “living in some sort of shared delusion, where people want what they want but are blithely unaware of the effects of their desires,” but wealth has enabled us to indulge these desires and shared delusions in new ways. And “shared delusion” as a small and relatively unimportant percentage of GDP / government spending is a cheap, affordable thrill. But shared delusion in an environment where economic growth is weak—I tend to buy the Tyler Cowen argument espoused in The Great Stagnation, along with Peter Thiel’s addendums, though I’m more than willing to consider alternate points of view—is much harder. A lot of people are clawing for a bigger slice of a limited pie, which is a more substantial problem than a lot of people clawing for a sliver of a growing pie. Most people don’t even understand the problems, or try to genuinely understand; it’s easier to fit small pieces of complex problems and phenomena into an existing social / political worldview than it is to try getting a handle on the problem domain and the forces in play (most of the political posts I’ve seen on Facebook look like mood affiliation and simple, Haidt-style posturing and mood affiliation than anything else). The delusion isn’t new, but the large climate /environment has changed. The scale of the delusion has changed too, and scale has qualities of its own.

But I still wonder about something real: when someone makes it really rich (Astors, Vanderbilts, or, today, Gates, Ellison), there’s a tendency for the wealth and the kinds of behaviors that led to the major wealth in the first place to be diluted over time and across generations (think of Paris Hilton as a salient media example). I wonder if that also happens to some extent at the level of countries, but over centuries instead of decades. Most of the time I tend to guess not—the wealthiest countries in 1800 are still mostly the wealthiest countries today, with a couple of notable exceptions (Argentina has gone down, South Korea up)—but it’s still something I ponder. Changing wealth distributions play into this too, although I’m not really sure how.

The preceding paragraphs might be overly pessimistic. Let’s take the long view: things are actually pretty good. The Soviets aren’t threatening us with total annihilation (and vice-versa: the news that Kennedy seriously considered a first strike in the 60s is really scary), we’re not in the Great Depression, there’s still lots of cool stuff happening, books are cheaper than ever, and virtually everyone has a magic box that lets them communicate with almost anyone, anywhere, any time. The minutia and stupidity of politics is being enabled in new ways, but I think the basic content isn’t so different from the past. By virtually every metric people are better off today than they were 30 or 40 years ago (psychologically speaking, I’m not so sure, but we’ll leave that to the side). Anyone who has had medical treatment that wouldn’t have been possible 40 years ago is aware of this.

As I said above, we may also get self-driving cars, 3-D printing, and human genetic modification in the next decade. These technologies might be overhyped or not pan out. But I still think:

Pretty neat!

People who are well-equipped to take advantage of modern nutrition and communication are in an especially good position. People who fall into the defaults—lots of simple sugars and fast foods, four or five hours of TV of dubious value every day—might not be. Simply being a consumer might be getting harder. So is following default paths. Certainly I derive a huge amount of benefit from being part of modern communication networks, but the kind of person who doesn’t care that much about writing or artistic production or whatever might not care or benefit.

In Name of the Rose Adso thinks: “As I lay on my pallet, I concluded that my father should not have sent me out into the world, which was more complicated than I had thought. I was learning too many things” (179). But we can’t avoid getting sent out into the world. All we can do is hope we have or can develop the strength and fortitude necessary to make a go of it. Maybe the very wealthy, who have inherited wealth, can avoid much of the world, but that will only last for a generation or two, and then it’s back against the hard rock face of reality, whether we’re ready for it or not.

School, incidentally, does a poor job of presenting the rock face, which is another issue for another, but I think it’s possible to present that rock face without being a jerk about it. I try to do so.

I also try to remember that life is hard. Even when it’s beautiful.

The 99% are watching four to five hours of TV a day, and other tales from the present

I’m reading “Streaming Dreams: YouTube turns pro” and noticed this:

But there is one category in which YouTube has made little progress. The average ’Tuber spends only fifteen minutes a day on the site—a paltry showing when compared with the four or five hours the average American spends in front of the TV each day.

Emphasis added; the quote is from The New Yorker; Nielsen, who does the most TV tracking, agrees with the four hours number. In all of the contemporary reports and newspaper accounts and blog posts about income equality, I’ve never seen TV consumption mentioned. To me TV consumption is astonishing and might also be linked to Americans’ larger economic problems—I can’t imagine that most successful, people who earn a lot of money watch anything like four hours of TV a day, because where would they get the time? I also doubt TV probably isn’t imparting the skills and knowledge that future high earners need to be high earners. It could be that I’m succumbing to the availability bias and assuming that the high earners I know are representative, but the fact itself still amazes.

This also reminded me of Bryan Caplan’s post “Kahneman, Greed and Success,” in which Caplan says: “Kahneman highlights an important, neglected reason why some people are rich and others are poor: some people care about money more than the rest of us. People who want to be rich make the choices and sacrifices conducive to that end – and on average they succeed.” The key words there are “on average,” but that’s probably true of most things people want: the ones who really strive to achieve something are on average more likely to get it, though no one foresees the future and even those who strive to do everything right may still fail. Those of us who spend four hours a day watching TV, however, are probably not trying—which means it shouldn’t surprise us when we fail to earn as much as we otherwise could. And, to me, skipping TV doesn’t even look like much of a “sacrifice,” because so much of it is boring.

I’m reminded too of friends and acquaintances who mention their artistic aspirations in writing, movies, or music. When they say they want to make movies, write, or record music, I ask to read, see, or hear their work. Very few of them have any to show, or blogs, YouTube shorts, or albums online, and when I express surprise, they seem disconnected from the art they claim they want to make. Which makes me think their ambitions aren’t real ambitions: they’re conversational pieces, or status poses. Or the holders of false artistic ambitions are stuck in antiquity, waiting for someone to give them permission or degrees or deadlines. Whatever the case, I’ve learned to be very skeptical of the people who claim they want to be artists but aren’t actively being artists. Given the proliferation and low cost of the tools necessary to make art, the only thing standing between people and being artists is themselves.

Income doesn’t work quite that way, but the people who really want to make money are taking proactive steps to make money. The people who say they want to earn more but instead watch four or five hours of TV a day are posing, or complaining without taking action, like my would-be artist friends and acquaintances. The obsessives are the ones who succeed as artists. They also appear to be the ones who succeed as startup founders. It looks increasingly like the complaints about income inequality are really based on resentment—not just of those with wealth, but resentment of the complainer’s earlier consumption and time choices, and it comes from people who haven’t chosen professions based on income—like journalism, teaching, or professing. It comes from people who made trade-offs away from earning more and toward consuming more (like TV), but who eventually find that they don’t like the trade-offs they made.

Some might also not realize they’re making choices; I’m reminded of John Scalzi in “Being Poor,” where he says “Being poor is having to live with choices you didn’t know you made when you were 14 years old.” But that probably applies to a minority of people, not a majority, and it would be stupid and misleading to compare the median to the genuinely poor.*

A lot of us probably aren’t, as Caplan points out, “racing for the same finish line: material success” (and, as we’ve been exhorted numerous times, maybe we shouldn’t be). If you race for that materialistic or monetary line and not some other, it’s hard to imagine “normal” behavior more detrimental to getting there than watching four hours of TV a day. The people who are making the money are the ones building YouTube, not watching YouTube and TV. I suppose four hours of TV is an improvement on, say, four hours staring at a wall. But very few people are really building what economists call “human capital” when they watch TV. They’re instead regressing to the mean, in income and in so many other fields.

Read too Scalzi’s later essay, “Why Not Feeling Rich is Not Being Poor, and Other Things Financial,” where he cautions people again the mistake of using “Being Poor” as a stick to beat the wealthy—even those wealthy whose comparison groups make them think they’re not wealthy. One thing that might make us all feel wealthier is simple: not comparing ourselves to our wealthiest neighbors or the people on TV, especially since the extravagance depicted on many TV shows is so astonishing compared to what normal people have. Such a principle doesn’t apply solely to wealth, either: subconsciously assuming that the people you date or marry should be as hot and witty as TV stars is as unwise as using such people for financial comparisons.

EDIT: William Gibson in Distrust That Particular Flavor: “I suspect I have spent just about exactly as much time actually writing as the average person my age has spent watching television, and that, as much as anything, may be the real secret here.”

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