Thursday, September 07, 2006

How Lower Incomes Look To Conservatives

They look good. I've been visiting some blogs in Wingnuttia. Instapundit had a post about a week ago on the new income statistics (which for us latte-sipping limousine welfare queens showed that the real earnings of individuals have declined and that the share of nonlabor income (profit, interest income, rents) has risen). Now, I would have thought that all this is good news in Wingnuttia. Isn't capitalism one of the major religions over there? But surprisingly, quite a few righty bloggers felt the need to reinterpret the evidence or its meaning.

The most interesting of these interpretations is the idea that being poorer now is a lot better than it was in the past. Hence, there is no real need to worry about increasing income inequality or declining earnings. People have cell phones! And a television sets and McDonald's hamburgers! David R. Henderson summarizes this argument like this:

The bottom line is that the vast majority of us are doing well by the standard measures. Finally, (like Don Boudreaux) ask yourself this: Would you rather be in the middle 20 percent of the income distribution today or in the top 20 percent 50 years ago? How much do you value cell phones, cars that last 10 years, airline travel to Europe, iPods, and being able to fight cancer and win?

How much do you value health insurance? Without it the chance to fight cancer and win is a lot less, and health insurance is becoming an ever rarer benefit for even middle-income workers.

A somewhat different version of the same argument has been used to explain why we shouldn't worry about real poverty that much. First, the poor can buy cheap electronic gadgets; cheap, because the price of electronics tends to drop in real terms fairly rapidly after the product is first introduced. We are all equal on the internet, too! Second, the poor are a lot happier than the wealthier people.

Sadly, over forty million Americans have no health insurance, housing is more expensive in real terms than it has been for decades and higher education is out of reach for many, too. But there's always gadgets to play with and cheap fast meals to eat. And smiles aplenty, too, I guess.

Rush Limbaugh even suggested that the poor have too much, that the "liberal" state has given them food stamps and hence obesity. Interesting, huh?

It's almost as if it's the rich who should be really envious of the middle classes and the chubby/happy poor. Note that Mr. Henderson didn't offer us the choice of belonging to the top twenty percent of the income distribution today. We are meant to focus on how nice it is not to have that much income, compared to years past. We are not meant to think about the well-off of today.

But let's do so. Suppose that income differences really don't matter that much anymore, that it's in fact quite comfy to be poor or at least middle-class. If this is true, why would the rich want to get rid of the estate tax? Why would they want their taxes lowered? What do they have to gain by trying to have more than the iPods and the cars and the cell phones?

Clearly nothing much. And then add to that the sadness that follows greater incomes, and you have a fairly drastic case for a more progressive system of taxation.