Stephens: Obama’s Envy Problem

Inequality is a problem when the rich get richer at the expense of the poor. That’s not happening in America.

Dec. 30, 2013 7:27 p.m. ET
As he came to the end of his awful year Barack Obama gave an awful speech. The president thinks America has inequality issues. What it has—what he has—is an envy problem.I’ll get to the point in a moment, but first a word about the speech’s awfulness. To illustrate the evils of income inequality, the president said this:

“Ordinary folks can’t write massive campaign checks or hire high-priced lobbyists and lawyers to secure policies that tilt the playing field in their favor at everyone else’s expense. And so people get the bad taste that the system is rigged, and that increases cynicism and polarization, and it decreases the political participation that is a requisite part of our system of self-government.”

This is coming from the man who signs legislation, such as Dodd-Frank, that only high-priced lawyers can understand; who, according to the Guardian newspaper, has spent much of 2013 on a “record-breaking fundraising spree,” making “30 separate visits to wealthy donors,” at “more than twice the rate of the president’s two-term predecessors.”

In my last column, comparing Jane Fonda with Pope Francis, I wrote that liberalism was haunted by its hypocrisy. Consider Mr. Obama’s campaign-finance pieties as Exhibit B.

Alexis de Tocqueville (1805-59) saw the dark side of the politics of equality. Corbis

Now about inequality. In 1835 Alexis de Tocqueville noticed what might be called the paradox of equality: As social conditions become more equal, the more people resent the inequalities that remain.

“Democratic institutions awaken and foster a passion for equality which they can never entirely satisfy,” Tocqueville wrote. “This complete equality eludes the grasp of the people at the very moment they think they have grasped it . . . the people are excited in the pursuit of an advantage, which is more precious because it is not sufficiently remote to be unknown or sufficiently near to be enjoyed.”

One result: “Democratic institutions strongly tend to promote the feeling of envy.” Another: “A depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom.”

That is the background by which the current hand-wringing over inequality must be judged. Inequality is not a problem simply because the rich get richer faster than the poor get richer. It’s a problem only when the rich get richer at the expense of the poor.

Mr. Obama tried to prove that in his speech, comparing present-day income with that halcyon year of 1979: “The top 10 percent no longer takes in one-third of our income—it now takes half,” he said, suggesting that the rich are eating a larger share of the national pie. “Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today’s CEO now makes 273 times more. And meanwhile, a family in the top one percent has a net worth 288 times higher than the typical family, which is a record for this country.”

Here is a factual error, marred by an analytical error, compounded by a moral error. It’s the top 20% that take in just over half of aggregate income, according to the Census Bureau, not the top 10%. That figure is essentially unchanged since the mid-1990s, when Bill Clinton was president. And it isn’t dramatically different from 1979, when the top fifth took in 44% of aggregate income.

Besides which, so what? In 1979 the mean household income of the bottom 20% was $4,006. By 2012, it was $11,490. That’s an increase of 186%. For the middle class, the increase was 211%. For the top fifth it’s 320%. The richer have outpaced the poorer in growing their incomes, just as runners will outpace joggers who will, in turn, outpace walkers. But, as James Taylor might say, the walking man walks.

As it is, to whom except the envious should it matter that the boss now makes a lot more, provided you, too, also make more? Class-consciousness has always been a fact of American life, but rarely is it about how the poor, or even the middle class, feel toward the very rich. It has been about how the professional class—lawyers, journalists, administrators, academics—feel toward the financial class. It’s what Volvo America thinks about S-class America.

That idiot you knew freshman year, always fondling a lacrosse stick, before he became the head of his fraternity—his bonus last year was how much?

The moral greatness of capitalism rests in the fact that it is the only economic system where one person’s gain can be another’s also—where Steve Jobs‘s billions are his shareholders’ thousands. Capitalism cultivates a sense of admiration where envy would otherwise rule in a zero-sum economic system. It’s what, for the past 60 years, has blunted the democratic tendency toward envy in the U.S. and distinguished its free-market democracy from the social democracies of Europe. It’s what draws people to this country.

Somewhere in the rubble of Mr. Obama’s musings on inequality there was a better speech on economic mobility. Then again, under Mr. Obama the median income of the poorest Americans has declined in absolute terms, to $11,490 in 2012 from $11,552 in 2009, at the height of the recession. Chalk it up as another instance of Mr. Obama being the cause of the very problems he aspires to address.

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