Nov 18, 2011
Thinking About Inequality: Living by Our Desires Rather than Our Needs
The Occupy Wall Street movement has shined a spotlight on the issue of economic inequality. While valid objections have occasionally been raised to bailouts and crony capitalism (theft and government-granted privilege should always be opposed), complaints about economic inequality per se, regardless of the source, have been the most consistent message to emerge from the mélange of attitudes that make up the movement. In response, many conservative commentators have attacked the OWS movement as consisting of layabouts and ne’er-do-wells, exemplified by the phrase, “why don’t you occupy a job?” Some conservatives have also highlighted the “Plight of Joe the Puppeteer,” referring to the “overeducated, underemployed” Joe Therrien, an OWS protestor who left his job as a drama teacher to get an MFA in puppetry and now finds himself without a puppeteering job and with $35K in student-loan debt. Mr. Therrien has been cited as an example of those who populate the OWS movement, that is, unemployed or underemployed actors, would-be rock stars, anthropology majors, and beat poets who can’t understand why the world gave them the shorter economic stick.
Michael Barone penned an able defense of Joe the Puppeteer, rightly pointing out that “in an affluent society, more people can find jobs they love.” Barone is on the mark, and I wish to expand on those points here. Specifically, I wish to ask whether, in an affluent, productive society, we should generally expect income inequality to rise while expecting psychological satisfaction—I’ll call it “happiness inequality”—to converge. While the top earners build better mousetraps to sell to a consumer base that is broad enough to turn small innovations into million-dollar ideas, the rest of us can spend more time smelling the roses.
I still consider this an open question, but I think there are strong reasons to suspect it is true. I also think that this gets closer to asking the right question about inequality, namely, when and why is it a bad thing?
First, an initial point that has been made many times before but cannot be ignored: productivity increases the possibilities for living a life according to your desires rather than according to your needs. Throughout history, as well as throughout the world today, most people have toiled and suffered to produce enough for the necessities of life. Productivity increases create surpluses, and producing a surplus means others can satisfy their needs by partaking in your productivity. Those people living off you may be your children, your elderly parents, a monk copying Bibles, or a local minstrel who is not too good at farming, but has a stunning tenor voice. Also living off your productivity is your future self, who can now take evenings, weekends, and even whole weeks off to enjoy the talents of minstrels, bards, actors, and other “creative types.”
Eventually, productivity can create many things that we take for granted: an idle childhood, an adolescence spent playing in garage bands (you can’t have garage bands without garages and relatively cheap guitars), a career spent doing something you love, and a retirement spent in quiet reflection.
While we understandably regard wealth as important because money can be turned into what we love, perhaps we should also be concerned with whether what we love can be turned into money. Money isn’t everything. In fact, for economists, money isn’t anything but an instrumental mechanism to achieve ultimate values. Yet, perhaps oddly, many of those who regard money and success as lesser values seem to analyze the world as if relative income and wealth are the only things that matter. If “creative types” are disproportionately represented in the OWS movement, then many of them have made choices in their lives in which they knowingly sacrificed absolute economic well-being for psychological satisfaction.
Ultimately, productivity made these choices available to them. Perhaps the simplest way of stating my point is this: a world with more choices is a world with more possibilities for divergence (i.e. inequality) along many different metrics. In feudal Europe, where the choices were essentially “work or starve,” there was a lot of equality, both in misery and poverty. As productivity increased, the number of possible life-paths increased and so emerged the ability to maximize one type of inequality—for example, the personal satisfaction received from singing—without starving to death. Thus, inequality and productivity travel together. Having more choices means that people can maximize particular inequalities based on subjective valuations. Some will choose to be rich; some won’t.1
Coming out of law school I had many opportunities to pursue the brass ring, so to speak. But the corner office and the European car only come with 80-hour weeks of slogging through mountains of interrogatories and motions for discovery. A handsome paycheck is the only reason anyone would voluntarily do such work, trust me.2 And those who value money more than either free time or pleasurable work are welcome to it. Yet, do I have a valid grievance against them for their unequal wealth any more than they have a grievance against me for my immensely pleasurable work?
As more opportunities for enjoyable work are created, productivity increases also make it easier to obtain the things that add to our subjective happiness. After all, how much money you want to earn is at least somewhat tied to what you can do with that money, and the more you can do with your money, the less incentive you will have to earn more. For example, I am a music lover and, at one time in the past, putting together a large collection of music was very expensive. At an even earlier time, before recorded music, it was impossible. If I lived 50 years ago, my desire to have an extensive music collection may have been enough incentive to pursue the corner office at a large law firm. If I lived 200 years ago, I may have been driven to sponsor my own string quartet. Now, a $5 monthly subscription to Spotify will give you access to what is likely the largest music library ever compiled.
A similar story is likely true for other subjective values. Do you love books? Books were once luxury items. Do you love making music? Excellent guitars are now produced by machines rather than handcrafted by expensive luthiers. Do you love to travel? Due to cheap air travel, exploring Europe is now available to nearly anyone, which is a far cry from the “Grand Tour” once only available to the idle rich.
In our late adolescence, when most of us first start thinking about “what we want to do with our lives,” many people will say something like, “I just want enough money to be comfortable, to have some music, some books, do some traveling, and not work a job I hate.” Has the presence of more opportunities to achieve this goal created incentives for fewer people to reach for the brass ring? There are certainly those who will always reach for the brass ring, if only so they can have a nicer car to rev at stoplights. As far as I’m concerned, those people are welcome to the 1%. I am less interested in the mere existence of a 1% (which is a statistical necessity, of course) than I am in how are things going in the 99%.3 Isn’t this the more important question?
Clearly, some people can’t choose to be rich. There are valid concerns about unequal opportunities to reach either the top 1% or any other strata of income distribution, as well as opportunities to maximize other inequalities. I do not address those concerns here, but only objections to inequality on principle. On my description, massive inequalities would emerge from a situation in which everyone had equal opportunities at the outset. ↩︎
Pleasurable work and high pay are generally inversely correlated. As productivity brings pleasurable work into existence, we would expect a certain type of income inequality to emerge as people must be lured into mind-numbing, but necessary, drudgery. This is one reason why a thought that will have occurred to some readers will not work, namely, “why can’t we all just have pleasurable work and get paid handsomely?” ↩︎
Before I am chastised relentlessly, let me acknowledge that there are many things not going well for the “99%.” Why things are bad and what to do about it is more a topic for Cato.org. Again, my comments here concern objections to economic inequality on principle. ↩︎