Ezra Klein’s “Inequality isn’t ‘the defining challenge of our time‘” adds some useful perspective to the latest political buzzword. Klein argues that reducing unemployment is a more urgent policy priority than addressing “inequality”:
…Joblessness is still endemic. Growth simply isn’t producing enough jobs. This is a more severe and more urgent problem than inequality. Moreover, fixing it is necessary, though not sufficient, to making real headway against inequality.
It is, however, a harder problem to mobilize a political coalition around. It doesn’t offend our moral intuitions so much as confuse them. Someone making $85,000 annually can look at the incomes of the top one percent and be angry and scared. They can hear that Germany has more social mobility than the does the United States and be offended. The plight of the long-term unemployed and the economy’s stubborn refusal to generate catch-up growth are more abstract concerns to someone with a good job. It’s harder to build a political movement around the intense pain of the few than the more generalized anger of the many.
It’s fair to wonder whether any of this matters. The Obama administration would like to boost demand. But Congress isn’t going to let them. Asking whether inequality or joblessness or growth is the defining economic challenge of our time is like asking how many John Boehners can dance on the head of a pin.
But the same logic applies to inequality: The policies Obama mentioned in his speech — like raising taxes on the rich — also don’t have a shadow of a prayer of passing the House.
The game being played here is a longer one. Of late, inequality become a much more popular research topic — and much more money has been devoted to researching it. Obama consigliere John Podesta founded the Washington Center for Equitable Growth, a think tank dedicated to funding research into inequality. The political system’s focus on the issue is leading to more thinking, more concern, more ideas and more pressure for action.
None of that will matter much now. But it will matter eventually. When the left next gets a chance to make economic policy, what will they choose to do? A world in which inequality is the top concern is a world in which raising taxes on the rich is perhaps the most important policy choice the government can make. A world in which growth and unemployment are top concerns are worlds in which very different policies — from stimulus spending to permitting more inflation — might be the top priorities.
Difficult as the challenge is, reducing unemployment is a more politically-coherent policy priority than addressing “inequality.” Yet tax hikes for the rich and pubic service employment or infrastructure investment, for example, may be popular with the public, but neither one is possible with the Republican blockade in the House.
Economic inequality and unemployment are intertwined to a great extent — it’s hard to envision substantial progress in either without some benefit to the other, provided you define employment in terms of “a job at a living wage.” Too many of the jobs created in recent years, however, provide inadequate pay, which enables festering economic inequality. An increase in decent jobs would likely reduce prevailing pay gaps.
What is certain is that neither malady will be addressed until Democrats secure working majorities in both houses of congress. Klein is right that putting jobs first makes more sense than arguing about how to divide a shrinking pie.