Equality through Capitalist Mobility

Contrary to popular media headlines, the average American is now making approximately 20% more than his father. Much of the change has been in non-monetary compensation, meaning that workers are now getting more health care, 401 (k)s, vacation days, and optional training than ever before. That, coupled with more productivity, means the average American can buy things today that were impossible even two decades ago: personal computers and music players, four phone lines, flat screen TVs, central air, imported cars, digital cameras, video cameras…

That growth has not been limited to the rich. Now, even most poor households have TVs, computers, cell phones, freezers, climate control, and other amenities that were limited to at least the middle class a few decades ago.

America is more unequal in terms of short-run wealth, maybe, but what about social mobility, another crucial factor in equality (in the long run)? France’s presidents have been culled from elites at the top civic universities for years, and business leaders in the UK are often descended from old lines of prestige (Sir Richard Branson, anyone?). Meanwhile, in the US, Warren Buffett has lived in the same modest house that he first bought fifty years ago when it was all he could afford and the president-elect grew up in a broken urban household.

Our willingness to have less short-term equality by lowering tax rates and reducing regulations in fact makes the field more open for nouveaux riche to get a foothold. Fewer tariffs, subsidies, corporate taxes, labor regulations, and nationalized industries means less of a skewed field towards established corporations and more room for the kind of innovation and creativity that means the powerful stay on their toes and the young guns just might have a shot at glory.

The exception to this rule, of course, is government action. America has joined Britain in subsidizing its banks, meaning fresh lenders with new business strategies will be unlikely to take the place of disastrously bad management. America has joined France in subsidizing its automakers, meaning new companies and even foreign-owned companies better set to meet the market’s demands are shoved back.

The kind of inequality that we need to worry about more than any other is the kind that puts trenches in the playing field of the market and that combines the power of politicians and corporate elites. It is the abandoning of the free market for corporatism. It is the rise of those too big to fail backed up by those to important to lose.

It is, in a phrase, government intervention.