The Causes of Wealth Inequality (13): Deliberate Policy?

Some say that the increase in income inequality in countries such as the U.S. has been the result of deliberate government policy. That’s quite an accusation. It’s not controversial to assume that tax policy under right wing governments tends to be less burdensome on the rich, and that social welfare policy under such governments tends to be more stingy. If you look at it like this, it’s not crazy to argue that right wing policies can aggravate income inequality. But it’s quite another thing to claim that right wing governments use these policies in order to deliberately aggravate income inequality. That accusation is incompatible with right wing ideology, which claims that the preferred policies also and ultimately help the poor (trickle down economics etc.), and that left wing policies supposedly favoring the poor are in fact self-destructive (unemployment benefits create labor disincentives, taxes create production disincentives, etc.). However, it’s possible that this ideology is just a smokescreen for anti-poor policies. But I guess that’s somewhat difficult to prove.

If we look at the tax rates, it’s true that the rates for the wealthy tend to go down under Republican presidents:

In 1979, the effective tax rate on the top 0.01 percent (i.e., rich people) was 42.9 percent. … By Reagan’s last year in office it was 32.2 percent. (source)

However, things aren’t as simple as that:

From 1989 to 2005, … as income inequality continued to climb, the effective tax rate on the top 0.01 percent largely held steady; in most years it remained in the low 30s, surging to 41 during Clinton’s first term but falling back during his second, where it remained. The change in the effective tax rate on the bottom 20 percent (i.e., poor and lower-middle-class people) was much more dramatic, but not in a direction that would increase income inequality. Under Clinton, it dropped from 8 percent (about where it had stood since 1979) to 6.4 percent. Under George W. Bush, it fell to 4.3 percent. (source)

The tax rate for the rich dropped somewhat around 2005 following the Bush tax cuts, but all the tax effects over the last decades taken together don’t really make a good case that tax policy is the major cause of rising income inequality. So it’s even more difficult to make the case that tax policy was part of a conscious strategy to aggravate inequality. The increase in inequality has been too big compared to the possible impact of taxation. That’s corroborated by the fact that pre-tax inequality in the U.S. rose faster than after-tax inequality.

What’s interesting, however, is that pre-tax inequality in the U.S. tends to rise much faster under Republican rule. So inequality can still be the result of policy, but policy expressed in other ways than taxation. Other policies that may have contributed – deliberately or not – to rising income inequality are anti-labor union policies, decreases in the minimum wage, etc.

More posts in this series are here.

Terrorism and Human Rights (18): Right-Wing Terrorism in the U.S., and the Shared Responsibility of Conservative Media

Only days after the attack on Dr. Tiller, the U.S. is shocked by yet another terrorist attack by a right-wing extremist, this time at the Holocaust Museum in Washington. Some have questioned the role of the media in all this. It’s true that parts of the U.S. media, especially on the conservative side, are not characterized by nuanced analysis and balanced reporting. There’s a lot of hate speech, stereotyping and shouting on cable news, on the radio and on the internet. So it’s fair to say that there may be a risk that the media are fanning and nurturing extremism and hate in society, and that they may be responsible for pushing sick people over the edge. (See also here).

I personally regret the lack of quality in the media, and I do believe that journalists and pundits should be more careful in what they say and how they say it. But I also believe that critics of the media should be careful when deciding responsibilities and causal relationships. Society is complex, and people are driven by many factors. Still, most people are ultimately responsible for their own acts (I don’t know enough about the two cases at hand to conclude that the mental condition of the perpetrators at the time of the crime was such that they could be held criminally responsible).

We run the risk that these terrorist events will lead to calls for a more restrictive interpretation of the freedom of speech of the media. Let’s hope that this risk incites the media to question their behavior and to abandon the language of hate.