Who Cares Why?

Related to the inequality post below, one thing that bugs me about the way liberals often approach these issues is a tendency to get bogged down into picayune controversies about exactly why inequality has exploded. Was it the skill-biased technological change? Were CEOs underpaid in the past? Can we blame globalization? In truth, while these are all interesting questions, in terms of politics and policy they take a back seat to debates over remedies which often lack a tight relationship to the debates over causes.

Oftentimes, though, liberals act as if the thing that needs to be done is to prove somehow that inequality has exploded because people are in some sense "cheating" -- so you get these long stories about corporate governance and corrupt compensation committees, etc. The problem here, though, is that even if this is true, it could still also be true that the cure -- policy interventions into the operation of the market -- would be worse than the disease. And, conversely, if you could prove that the rise in inequality was all above board -- really was driven entirely by globalization and technological change -- nothing about that causal analysis would debunk the idea that we ought to make our tax system more progressive.

The relevant debate isn't about how we got here, it's about what would happen if we tried to change things. Some people, of course, think changing things would be immoral. Indeed, there are some people I know who adhere to the bizarre view that one source of injustice in the contemporary United States is that our richest citizens aren't rich enough. But beyond those people, you have a lot of people who take the view that raising taxes would have dire economic consequences, whereas lowering them would have large benefits. That's the only debate that really matters in this regard. If the costs to the non-rich of higher taxes on the rich would be small (as I believe), then higher taxes on the rich to provide more benefits to the non-rich makes sense irrespective of why inequality has grown so much whereas if the costs would be high then it doesn't make sense -- again, completely apart from the causal issue.