income inequality tends to be swamped by even greater social equality…. In all of our major cities, there is not a single restaurant where a CEO can lunch or dine with the absolute assurance that he will not run into his secretary. If you fly first class, who will be your traveling companions? You never know. If you go to Paris, you will be lost in a crowd of young people flashing their credit cards.[2]
By claiming that income inequality doesn’t matter because we have social equality, Kristol was in effect admitting that income inequality would be a problem if it led to social inequality. And here’s the thing: It does. Kristol’s fantasy of a world in which the rich live just like you and me, and nobody feels socially inferior, bears no resemblance to the real America we live in.
Lifestyles of the rich and famous are arguably the least important part of the story, yet it’s worth pointing out that Kristol’s vision of CEOs rubbing shoulders with the middle class is totally contradicted by the reporting of Robert Frank of the Wall Street Journal, whose assigned beat is covering the lives of the wealthy. In his book Richistan Frank describes what he learned:
Today’s rich had formed their own virtual country…. [T]hey had built a self-contained world unto themselves, complete with their own health-care system (concierge doctors), travel network (Net Jets, destination clubs), separate economy…. The rich weren’t just getting richer; they were becoming financial foreigners, creating their own country within a country, their own society within a society, and their economy within an economy.[3]
The fact is that vast income inequality inevitably brings vast social inequality in its train. And this social inequality isn’t just a matter of envy and insults. It has real, negative consequences for the way people live in this country. It may not matter much that the great majority of Americans can’t afford to stay in the eleven-thousand-dollar-a-night hotel suites popping up in luxury hotels around the world.[4] It matters a great deal that millions of middle-class families buy houses they can’t really afford, taking on more mortgage debt than they can safely handle, because they’re desperate to send their children to a good school—and intensifying inequality means that the desirable school districts are growing fewer in number, and more expensive to live in.
Elizabeth Warren, a Harvard Law School expert in bankruptcy, and Amelia Warren Tyagi, a business consultant, have studied the rise of bankruptcy in the United States. By 2005, just before a new law making it much harder for individuals to declare bankruptcy took effect, the number of families filing for bankruptcy each year was five times its level in the early 1980s. The proximate reason for this surge in bankruptcies was that families were taking on more debt—and this led to moralistic pronouncements about people spending too much on luxuries they can’t afford. What Warren and Tyagi found, however, was that middle-class families were actually spending less on luxuries than they had in the 1970s. Instead the rise in debt mainly reflected increased spending on housing, largely driven by competition to get into good school districts. Middle-class Americans have been caught up in a rat race, not because they’re greedy or foolish but because they’re trying to give their children a chance in an increasingly unequal society.[5] And they’re right to be worried: A bad start can ruin a child’s chances for life.
Americans still tend to say, when asked, that individuals can make their own place in society. According to one survey 61 percent of Americans agree with the statement that “people get rewarded for their effort,” compared with 49 percent in Canada and only 23 percent in France.[6] In reality, however, America has vast inequality of opportunity as well as results. We may believe that anyone can succeed through hard work and determination, but the facts say otherwise.
There are many pieces of evidence showing that Horatio Alger stories are very rare in real life. One of the most striking comes from a study published by the National Center for Education Statistics, which tracked the educational experience of Americans who were eighth graders in 1988. Those eighth graders were sorted both by apparent talent, as measured by a mathematics test, and by the socioeconomic status of their parents, as measured by occupations, incomes, and education.
The key result is shown in Table 10. Not surprisingly, both getting a high test score and having high-status parents increased a student’s chance of finishing college. But family status mattered more. Students who scored in the bottom fourth on the exam, but came from families whose status put them in the top fourth—what we used to call RDKs, for “rich dumb kids,” when I was a teenager—were more likely to finish college than students who scored in the top fourth but whose parents were in the bottom fourth. What this tells us is that the idea that we have anything close to equality of opportunity is clearly a fantasy. It would be closer to the truth, though not the whole truth, to say that in modern America, class—inherited class—usually trumps talent.
Isn’t that true everywhere? Not to the same extent. International comparisons of “intergenerational mobility,” the extent to which people can achieve higher status than their parents, are tricky because countries don’t collect perfectly comparable data. Nonetheless it’s clear that Horatio Alger has moved to someplace in Europe: Mobility is highest in the Scandinavian countries, and most results suggest that mobility is lower in the United States than it is in France, Canada, and maybe even Britain. Not only don’t Americans have equal opportunity, opportunity is less equal here than elsewhere in the West.
| Table 10. Percentage of 1988 Eighth Graders Finishing College | ||
|---|---|---|
| Score in Bottom Quartile | Score in Top Quartile | |
| Parents in Bottom Quartile | 3 | 29 |
| Parents in Top Quartile | 30 | 74 |
Source: National Center for Education Statistics, The Condition of Education 2003, p. 47.
It’s not hard to understand why. Our unique lack of universal health care, all by itself, puts Americans who are unlucky in their parents at a disadvantage: Because American children from low-income families are often uninsured, they’re more likely to have health problems that derail their life chances. Poor nutrition, thanks to low income and a lack of social support, can have the same effect. Life disruptions that affect a child’s parents can also make upward mobility hard—and the weakness of the U.S. social safety net makes such disruptions more likely and worse if they happen. Then there’s the highly uneven quality of U.S. basic education, and so on. What it all comes down to is that although the principle of “equality of opportunity, not equality of results” sounds fine, it’s a largely fictitious distinction. A society with highly unequal results is, more or less inevitably, a society with highly unequal opportunity, too. If you truly believe that all Americans are entitled to an equal chance at the starting line, that’s an argument for doing something to reduce inequality.
America’s high inequality, then, imposes serious costs on our society that go beyond the way it holds down the purchasing power of most families. And there’s another way in which inequality damages us: It corrupts our politics. “If there are men in this country big enough to own the government of the United States,” said Woodrow Wilson in 1913, in words that would be almost inconceivable from a modern president, “they are going to own it.”[7] Well, now there are, and they do. Not completely, of course, but hardly a week goes by without the disclosure of a case in which the influence of money has grotesquely distorted U.S. government policy.
2.
Irving Kristol, “Income Inequality Without Class Conflict,”
3.
Robert Frank,
4.
“Suites for the Sweet,”
5.
Elizabeth Warren and Amelia Warren Tyagi, “What’s Hurting the Middle Class,”
6.
Tom Hertz,
7.
Woodrow Wilson,