Skip to main content

What the inequality debate leaves out

By Richard V. Reeves
updated 3:15 PM EST, Tue January 7, 2014
STORY HIGHLIGHTS
  • Richard V. Reeves: Inequality debate masks complex issue of inequality vs. social mobility
  • Obama says Americans tolerated inequality as long as there was equal opportunity
  • But Reeves says fixing social mobility involves different strategy than fixing inequality
  • Reeves: Gap between rich and poor and little movement between the two is toxic

Editor's note: Richard V. Reeves is policy director of the Center on Children and Families and a fellow in economic studies at the Brookings Institution, which is hosting a Social Mobility Summit on Monday.

(CNN) -- The debate about inequality just keeps heating up. At the end of the year, President Barack Obama called it "the defining challenge of our time." New York Mayor Bill de Blasio just promised a war for equality. Democrats across the country are thrilled at the prospect of raising the minimum wage. The 50th anniversary of President Lyndon Johnson's Great Society speech seems to have riled everybody up. And on Tuesday, Democrats won a small potential victory on behalf of the jobless, squeaking past a procedural hurdle so the Senate can proceed with debate on a bill that would extend emergency unemployment benefits for three months.

But behind the headlines, the story is more complex. For one thing, we need to be clear what kind of inequality we care about. Do we want to close the gap between low and high earners, in which case a higher minimum wage would help? Or is it between the employed and unemployed, where a higher minimum wage is irrelevant or possibly slight harmful -- but where unemployment benefits help a lot?

Or is the income inequality we are worried about the one between the poor and the middle class, or the one between the affluent and the really, really affluent -- that is, the top 1%

Richard V. Reeves
Richard V. Reeves

Most important of all, we need to be clearer about whether we are seeking greater equality of outcomes, or greater equality of opportunity.

Obama reminded us that America has long stood as a nation that promotes equality of rights and opportunities, rather than outcomes. There are big gaps in the United States between rich and poor, mostly because the state is a much less enthusiastic redistributor of income than in other nations.

Inequality is a political choice, rather than an economic fact. Taking money from the successful to help the struggling is close to an un-American idea.

But as Obama noted, American tolerance of inequality has historically rested upon an assumption of shared opportunity. The trouble is, America is now not very equal in terms of opportunity, either.

Scholars are wrestling with the question of how income inequality and intergenerational mobility are related to each other. Intuitively, it seems harder to climb a ladder when the rungs are farther apart. So inequality may cause immobility, in a relationship popularized by the economist Alan Krueger as a "Great Gatsby Curve." But it is not a straightforward relationship. For one thing, there are some nations with similar rates of inequality to the United States, but much higher rates of mobility, such as Canada and Australia.

Digital Doc: Across Lake Providence
Obama calls for a raise in minimum wage
Fareed Zakaria's take: Income inequality

Meanwhile, in other nations with low rates of social mobility, such as Italy, greater government redistribution softens the blow. The children of the poor may end up poor, but their poverty is less biting than in the United States. And of course there are some countries that are both equal and enjoy mobility, such as those in Scandinavia.

Inequality and immobility are a toxic combination regardless. An unequal, immobile society will mutate into a stratified one with sharply separated classes, generation after generation.

In his speech, Obama stirred low mobility, low wages and high inequality together into a political goulash of "an economy that works for all Americans." That's fine for political positioning. But when it comes to policy, choices have to be made.

A higher minimum wage will raise incomes among low-income workers but will do little to reduce inequality, since the poorest don't work -- and the incomes of the top 1%, where the real inequality action is, will be unaffected.

If the goal is to address income inequality seriously, the solution is to tax the richest more and put that revenue into tax credits and welfare benefits. Doing so will even out incomes but will likely do little to alter the distribution of opportunities.

If we want to tackle intergenerational mobility, that money would be far better spent on parenting programs, pre-K schemes, higher salaries to lure talented teachers to tough schools, greater subsidies for smart, poor children going to college and tighter regulation of internships. None of which will influence short-run income inequality one jot.

Obama's rhetoric leaned more toward boosting social mobility. But his policy prescriptions tilted more toward addressing inequality and wage levels. Which does he really want? He might of course say both. But it's not realistic to imagine we can become Denmark. The real choice is to try and recover the notion of an open society in the American Dream, currently flourishing in Canada, or accept the slow ossification of the class divide and do a better job of compensating the poor for their increasingly inherited poverty.

If we give up on the hope of improving social mobility, the moral claims of European-style egalitarianism will become harder to resist. A large gap between rich and poor is one thing when there's plenty of movement between the two, but quite another when affluence and poverty are inherited.

There is a moral justification for a society with high inequality offset by high mobility, grounded in liberal ideas of freedom and fairness. And there is a moral justification for a society with low mobility, softened by low inequality, based on left-of-center egalitarian ideals. But there is no moral justification for a society with a large gap between rich and poor, and little movement between the two. That's the toxic combination we're suffering from right now.

Follow us on Twitter @CNNOpinion.

Join us on Facebook.com/CNNOpinion.

The opinions expressed in this commentary are solely those of Richard V. Reeves.

ADVERTISEMENT
Part of complete coverage on
updated 5:01 PM EDT, Wed October 22, 2014
Paul Callan says the grand jury is the right process to use to decide if charges should be brought against the police officer
updated 12:19 PM EDT, Thu October 23, 2014
Theresa Brown says the Ebola crisis brought nurses into the national conversation on health care. They need to stay there.
updated 6:35 PM EDT, Tue October 21, 2014
Patrick Hornbeck says don't buy the hype: The arguments the Vatican used in its interim report would have virtually guaranteed that same-sex couples remained second class citizens
updated 9:36 AM EDT, Fri October 24, 2014
Paul Begala says Iowa's U.S. Senate candidate, Joni Ernst, told NRA she has right to use gun to defend herself--even from the government. But shooting at officials is not what the Founders had in mind
updated 6:08 PM EDT, Thu October 23, 2014
John Sutter: Why are we so surprised the head of a major international corporation learned another language?
updated 5:54 PM EDT, Thu October 23, 2014
Jason Johnson says Ferguson isn't a downtrodden community rising up against the white oppressor, but it is looking for justice
updated 12:21 PM EDT, Fri October 24, 2014
Sally Kohn says a video of little girls dressed as princesses using the F-word very loudly to condemn sexism is provocative. But is it exploitative?
updated 4:06 PM EDT, Tue October 21, 2014
Timothy Stanley says Lewinsky is shamelessly playing the victim in her affair with Bill Clinton, humiliating Hillary Clinton again and aiding her critics
updated 10:14 AM EDT, Thu October 23, 2014
Imagine being rescued from modern slavery, only to be charged with a crime, writes John Sutter
updated 12:00 PM EDT, Tue October 21, 2014
Tidal flooding used to be a relatively rare occurrence along the East Coast. Not anymore, write Melanie Fitzpatrick and Erika Spanger-Siegfried.
updated 7:35 AM EDT, Tue October 21, 2014
Carol Costello says activists, writers, politicians have begun discussing their abortions. But will that new approach make a difference on an old battleground?
updated 9:12 AM EDT, Tue October 21, 2014
Sigrid Fry-Revere says the National Organ Transplant Act has caused more Americans to die waiting for an organ than died in both World Wars, Korea, Vietnam, Afghanistan and Iraq
updated 2:51 PM EDT, Tue October 21, 2014
Crystal Wright says racist remarks like those made by black Republican actress Stacey Dash do nothing to get blacks to join the GOP
updated 6:07 PM EDT, Tue October 21, 2014
Mel Robbins says by telling her story, Monica Lewinsky offers a lesson in confronting humiliating mistakes while keeping her head held high
updated 9:29 AM EDT, Mon October 20, 2014
Cornell Belcher says the story of the "tea party wave" in 2010 was bogus; it was an election determined by ebbing Democratic turnout
updated 4:12 PM EDT, Mon October 20, 2014
Les Abend says pilots want protocols, preparation and checklists for all contingencies; at the moment, controlling a deadly disease is out of their comfort zone
updated 11:36 PM EDT, Sun October 19, 2014
David Weinberger says an online controversy that snowballed from a misogynist attack by gamers into a culture war is a preview of the way news is handled in a world of hashtag-fueled scandal
updated 8:23 AM EDT, Mon October 20, 2014
Julian Zelizer says Paul Krugman makes some good points in his defense of President Obama but is premature in calling him one of the most successful presidents.
updated 10:21 PM EDT, Sun October 19, 2014
Conservatives can't bash and slash government and then suddenly act surprised if government isn't there when we need it, writes Sally Kohn
updated 8:05 AM EDT, Wed October 22, 2014
ISIS is looking to take over a good chunk of the Middle East -- if not the entire Muslim world, write Peter Bergen and Emily Schneider.
updated 9:00 AM EDT, Mon October 20, 2014
The world's response to Ebola is its own sort of tragedy, writes John Sutter
updated 4:33 PM EDT, Fri October 17, 2014
Hidden away in Russian orphanages are thousands of children with disabilities who aren't orphans, whose harmful treatment has long been hidden from public view, writes Andrea Mazzarino
updated 1:22 PM EDT, Sat October 18, 2014
When you hear "trick or treat" this year, think "nudge," writes John Bare
updated 12:42 AM EDT, Sat October 18, 2014
The more than 200 kidnapped Nigerian schoolgirls have become pawns in a larger drama, writes Richard Joseph.
updated 9:45 AM EDT, Fri October 17, 2014
Peggy Drexler said Amal Alamuddin was accused of buying into the patriarchy when she changed her name to Clooney. But that was her choice.
updated 4:43 PM EDT, Thu October 16, 2014
Ford Vox says the CDC's Thomas Frieden is a good man with a stellar resume who has shown he lacks the unique talents and vision needed to confront the Ebola crisis
updated 4:58 AM EDT, Sat October 18, 2014
How can such a numerically small force as ISIS take control of vast swathes of Syria and Iraq?
updated 9:42 AM EDT, Fri October 17, 2014
How big a threat do foreign fighters in Syria and Iraq pose to the West? It's a question that has been much on the mind of policymakers and commentators.
updated 8:21 AM EDT, Fri October 17, 2014
More than a quarter-million American women served honorably in the Iraq and Afghanistan wars. Now they are home, we have an obligation to help them transition back to civilian life.
updated 4:27 PM EDT, Thu October 16, 2014
Paul Begala says Rick Scott's deeply weird refusal to begin a debate because rival Charlie Crist had a fan under his podium spells disaster for the Florida governor--delighting Crist
updated 12:07 AM EDT, Thu October 16, 2014
The longer we wait to engage on Ebola, the more limited our options will become, says Marco Rubio.
updated 7:53 AM EDT, Wed October 15, 2014
Democratic candidates who run from President Obama in red states where he is unpopular are making a big mistake, says Donna Brazile
updated 12:29 AM EDT, Thu October 16, 2014
At some 7 billion people, the world can sometimes seem like a crowded place. But if the latest estimates are to be believed, then in less than a century it is going to feel even more so -- about 50% more crowded, says Evan Fraser
updated 12:53 PM EDT, Mon October 20, 2014
Paul Callan says the Ebola situation is pointing up the need for better leadership
updated 6:45 PM EDT, Wed October 15, 2014
Nurses are the unsung heroes of the Ebola outbreak. Yet, there are troubling signs we're failing them, says John Sutter
updated 1:00 PM EDT, Wed October 15, 2014
Dean Obeidallah says it's a mistake to give up a business name you've invested energy in, just because of a new terrorist group
updated 7:01 PM EDT, Wed October 15, 2014
Fear of Ebola is contagious, writes Mel Robbins; but it's time to put the disease in perspective
updated 1:44 PM EDT, Tue October 14, 2014
Oliver Kershaw says that if Big Tobacco is given monopoly of e-cigarette products, public health will suffer.
updated 9:35 AM EDT, Sat October 18, 2014
Stop thinking your job will make you happy.
updated 10:08 PM EDT, Tue October 14, 2014
Ruben Navarrette says it's time to deal with another scandal involving the Secret Service — one that leads directly into the White House.
updated 7:25 AM EDT, Tue October 14, 2014
Americans who choose to fight for militant groups or support them are young and likely to be active in jihadist social media, says Peter Bergen
updated 9:03 AM EDT, Mon October 13, 2014
Stephanie Coontz says 11 years ago only one state allowed same sex marriage. Soon, some 60% of Americans will live where gays can marry. How did attitudes change so quickly?
updated 4:04 PM EDT, Tue October 14, 2014
Legalizing assisted suicide seems acceptable when focusing on individuals. But such laws would put many at risk of immense harm, writes Marilyn Golden.
updated 9:07 AM EDT, Mon October 13, 2014
Julian Zelizer says the issues are huge, but both parties are wrestling with problems that alienate voters
updated 6:50 PM EDT, Mon October 13, 2014
Mel Robbins says the town's school chief was right to cancel the season, but that's just the beginning of what needs to be done
updated 11:43 AM EDT, Sat October 11, 2014
He didn't discover that the world was round, David Perry writes. So what did he do?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT