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 12:42 PM EDT, Wed April 16, 2014
Rick McGahey says Rep. Paul Ryan is signaling his presidential ambitions by appealing to hard core Republican values
updated 11:39 AM EDT, Wed April 16, 2014
Paul Saffo says current Google Glasses are doomed to become eBay collectibles, but they are only the leading edge of a surge in wearable tech that will change our lives
updated 2:49 PM EDT, Tue April 15, 2014
Kathleen Blee says the KKK and white power or neo-Nazi groups give haters the purpose and urgency to use violence.
updated 7:56 AM EDT, Wed April 16, 2014
Sen. Sheldon Whitehouse and Rep. Henry Waxman say read deep, and you'll see the federal Keystone pipeline report spells out the pipeline is bad news
updated 7:53 AM EDT, Wed April 16, 2014
Frida Ghitis says President Obama needs to stop making empty threats against Russia and consider other options
updated 5:29 PM EDT, Tue April 15, 2014
Peter Bergen and David Sterman say the Kansas Jewish Center killings are part of a string of lethal violence in the U.S. that outstrips al Qaeda-influenced attacks. Why don't we pay more attention?
updated 12:41 PM EDT, Tue April 15, 2014
Danny Cevallos says families of the passengers on Malaysian Airlines Flight 370 need legal counsel
updated 11:23 AM EDT, Mon April 14, 2014
David Frum says Russia is on a rampage of mischief while Western leaders and Western alliances charged with keeping the peace hem and haw
updated 7:56 AM EDT, Mon April 14, 2014
Most adults make the mistakes of hitting the snooze button and of checking emails first thing in the morning, writes Mel Robbins
updated 1:54 PM EDT, Mon April 14, 2014
David Wheeler says as middle-class careers continue to disappear, we need a monthly cash payment to everyone
updated 7:55 AM EDT, Mon April 14, 2014
Democrats need to show more political spine when it comes to the issue of taxes.
updated 11:55 AM EDT, Mon April 14, 2014
Donna Brazile recalls the 50th Anniversary of the Civil Rights Act as four presidents honored the heroes of the movement and Lyndon Johnson, who signed the law
updated 9:17 AM EDT, Mon April 14, 2014
Elmer Smith remembers Chuck Stone, the legendary journalist from Philadelphia who was known as a thorn in the side of police and an advocate for the little guy
updated 2:56 PM EDT, Sun April 13, 2014
Al Franken says Comcast, the nation's largest cable provider, wants to acquire Time Warner Cable, the nation's second-largest cable provider. Should we be concerned?
updated 11:22 AM EDT, Fri April 11, 2014
Philip Cook and Kristin Goss says the Pennsylvania stabbing attack, which caused grave injury -- but not death, carries a lesson on guns for policymakers
updated 3:06 PM EDT, Fri April 11, 2014
Wikipedia lists 105 football movies, but all too many of them are forgettable, writes Mike Downey
updated 10:32 AM EDT, Fri April 11, 2014
John Sutter and hundreds of iReporters set out to run marathons after the bombings -- and learned a lot about the culture of running
updated 12:49 PM EDT, Fri April 11, 2014
Timothy Stanley says it was cowardly to withdraw the offer of an honorary degree to Ayaan Hirsi Ali. The university should have done its homework on her narrow views and not made the offer
updated 10:16 AM EDT, Fri April 11, 2014
Al Awlaki
Almost three years after his death in a 2011 CIA drone strike in Yemen, Anwar al-Awlaki continues to inspire violent jihadist extremists in the U.S, writes Peter Bergen
updated 9:21 PM EDT, Fri April 11, 2014
David Bianculli says Colbert is a smart, funny interviewer, but ditching his blowhard persona to take over the mainstream late-night role may cost him fans
updated 1:31 PM EDT, Thu April 10, 2014
Rep. Paul Ryan says the Republican budget places its trust in the people, not in Washington
updated 5:28 PM EDT, Thu April 10, 2014
Aaron David Miller says Obama isn't to blame for Kerry's lack of progress in resolving Mideast talks
updated 11:22 AM EDT, Mon April 14, 2014
David Weinberger says beyond focusing on the horrors of the attack a year ago, it's worth remembering the lessons it taught about strength, the dangers of idle speculation and Boston's solidarity
updated 12:32 PM EDT, Thu April 10, 2014
Katherine Newman says the motive for the school stabbing attack in Pennsylvania is not yet known, but research on such rampages turns up similarities in suspects and circumstances
updated 7:03 AM EDT, Fri April 11, 2014
Simon Tisdall: Has John Kerry's recent track record left Russia's wily leader ever more convinced of U.S. weakness?
updated 12:40 PM EDT, Thu April 10, 2014
Mel Robbins says Nate Scimio deserves credit for acting bravely in a frightening attack and shouldn't be criticized for posting a selfie afterward
updated 2:39 PM EDT, Wed April 9, 2014
Wendy Townsend says the Rattlesnake Roundup -- where thousands of pounds of snakes are killed and tormented -- is barbaric
updated 9:45 AM EDT, Thu April 10, 2014
Dr. Mary Mulcahy says doctors who tell their patients the truth risk getting bad ratings from them
updated 9:28 AM EDT, Wed April 9, 2014
Peggy Drexler says the married Rep. McAllister, caught on video making out with a staffer, won't get a pass from voters who elected him as a Christian conservative with family values
updated 7:43 AM EDT, Wed April 9, 2014
David Frum says the president has failed to react strongly to crises in Iran, Syria, Ukraine and Venezuela, encouraging others to act out
updated 4:57 PM EDT, Wed April 9, 2014
Eric Liu says Paul Ryan gets it very wrong: The U.S.'s problem is not a culture of poverty, it is a culture of wealth that is destroying the American value linking work and reward
updated 7:51 AM EDT, Wed April 9, 2014
Frida Ghitis writes: "We are still seeing the world mostly through men's eyes. We are still hearing it explained to us mostly by men."
updated 10:08 AM EDT, Thu April 10, 2014
Chester Wisniewski says the Heartbleed bug shows how we're all tangled together, relying on each other for Internet security
updated 3:26 PM EDT, Wed April 9, 2014
Danny Cevallos says an Ohio school that suspended a little kid for pointing his finger at another kid and pretending to shoot shows the growth in "zero tolerance" policies at school run amok
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT