the latter society did not come about because it has worse leadership but because it lives in a different environment. And changes in the environment—in world markets, or in technology—might change a society of middle-class fishermen into a society with dismaying extremes of wealth and poverty, without it necessarily being the result of deliberate policies.
In fact, it’s pretty certain that this is what has happened in the United States. Ronald Reagan did not single-handedly cause the incomes of the rich to soar and those of the poor to decline. He did cut taxes at the top and social programs at the bottom, but most of the growth in inequality took place in the marketplace, in the pretax incomes of families. (There is a wide range of opinion as to just what happened with the markets, though clearly technology and the changing international trade scene played big roles.) Furthermore, the upward trend in inequality began in the seventies under Nixon, Ford, and Carter and continues in the nineties under Clinton; similar trends, if not so dramatic, are visible in many other countries.
Yet income distribution is a politicized subject all the same. The reason is obvious: The extent of inequality is relevant for policymaking. In the fisherman society, for example, people might feel that only invalids, widows, and orphans deserve public support. In the vastly unequal prospecting world, however, it is easy to imagine a broad public demand that those who have been lucky enough to find gold be required to share a significant fraction of their winnings with those who have not. Indeed, it is hard to see how such a redistributionist program would not be popular—if the public understood just what was going on.
It is in the light of this possibility—that a redistributionist policy would have broad support if people understood the realities—that we should consider Armey’s The Freedom Revolution . It is not, to say the least, a carefully written or argued book; it consists largely of standard conservative bromides, backed by a number of unsupported assertions. But despite the book’s sloppiness, it is an important document, because of what it says about the majority leader’s intellectual processes. Armey, a former economics professor, could have made the case that there is nothing that can or should be done about growing inequality. But instead he tries to claim, in essence, that nothing has happened—that we really are still a society of middle-class fishermen.
First, Armey denies that the eighties were a period in which the rich got richer and the poor got poorer. “The statisticians,” he writes, “break our population into five income groups, called quintiles. During the eighties they gained in average real income as follows:
Lowest quintile—up 12.2 percent.
Second-lowest—up 10.1 percent.
Middle—up 10.7 percent.
Second-highest—up 11.6 percent.
Highest—up 18.8 percent.”
The source for this data, not cited, is the Bureau of the Census’s Current Population Report . This is helpful to know, because if you check Armey’s facts you will find he is fibbing a bit. These figures are not income gains for all of the eighties, but only from 1983 to 1989. Immediately preceding that recovery, the economy experienced a savage recession, the worst since the Great Depression, that affected the poor much more severely than the rich. The first column of the table below gives the percentage changes for the slump years from 1979 to 1983.
Conservatives will say, “The recession was Carter’s fault, while the recovery proved the success of Reagan’s policies.” But put politics aside for a moment and accept this simple fact: At the end of the 1983 to 1989 recovery, the bottom quintile was still worse off than it was in 1979, while the only really large gains over the decade went to the top quintile. If one takes the long view, as in the second column of the table (which measures from the business cycle peak in
In fact, it’s pretty certain that this is what has happened in the United States. Ronald Reagan did not single-handedly cause the incomes of the rich to soar and those of the poor to decline. He did cut taxes at the top and social programs at the bottom, but most of the growth in inequality took place in the marketplace, in the pretax incomes of families. (There is a wide range of opinion as to just what happened with the markets, though clearly technology and the changing international trade scene played big roles.) Furthermore, the upward trend in inequality began in the seventies under Nixon, Ford, and Carter and continues in the nineties under Clinton; similar trends, if not so dramatic, are visible in many other countries.
Yet income distribution is a politicized subject all the same. The reason is obvious: The extent of inequality is relevant for policymaking. In the fisherman society, for example, people might feel that only invalids, widows, and orphans deserve public support. In the vastly unequal prospecting world, however, it is easy to imagine a broad public demand that those who have been lucky enough to find gold be required to share a significant fraction of their winnings with those who have not. Indeed, it is hard to see how such a redistributionist program would not be popular—if the public understood just what was going on.
It is in the light of this possibility—that a redistributionist policy would have broad support if people understood the realities—that we should consider Armey’s The Freedom Revolution . It is not, to say the least, a carefully written or argued book; it consists largely of standard conservative bromides, backed by a number of unsupported assertions. But despite the book’s sloppiness, it is an important document, because of what it says about the majority leader’s intellectual processes. Armey, a former economics professor, could have made the case that there is nothing that can or should be done about growing inequality. But instead he tries to claim, in essence, that nothing has happened—that we really are still a society of middle-class fishermen.
First, Armey denies that the eighties were a period in which the rich got richer and the poor got poorer. “The statisticians,” he writes, “break our population into five income groups, called quintiles. During the eighties they gained in average real income as follows:
Lowest quintile—up 12.2 percent.
Second-lowest—up 10.1 percent.
Middle—up 10.7 percent.
Second-highest—up 11.6 percent.
Highest—up 18.8 percent.”
The source for this data, not cited, is the Bureau of the Census’s Current Population Report . This is helpful to know, because if you check Armey’s facts you will find he is fibbing a bit. These figures are not income gains for all of the eighties, but only from 1983 to 1989. Immediately preceding that recovery, the economy experienced a savage recession, the worst since the Great Depression, that affected the poor much more severely than the rich. The first column of the table below gives the percentage changes for the slump years from 1979 to 1983.
Conservatives will say, “The recession was Carter’s fault, while the recovery proved the success of Reagan’s policies.” But put politics aside for a moment and accept this simple fact: At the end of the 1983 to 1989 recovery, the bottom quintile was still worse off than it was in 1979, while the only really large gains over the decade went to the top quintile. If one takes the long view, as in the second column of the table (which measures from the business cycle peak in
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