Why Inequality Matters

Sam beat me to it, but I’d also like to recommend this piece by Brad Plumer:

The statistics on inequality are well known and–setting aside Reynolds’s dissent–present a clear picture. Between 1979 and 2004, the richest 1 percent of Americans saw their after-tax incomes triple, while those of the middle fifth grew by only 21 percent and those of the poorest fifth barely budged, according to Congressional Budget Office data. By the late ’90s, the richest 1 percent of American households held one-third of all wealth in the U.S. economy, and took in 14 percent of the national income–a greater share than at just about any point since the Great Depression.

In politics, this all matters a great deal. Larry Bartels of Princeton has recently studied the voting record of the Senate between 1989 and 1994–a time, note, when Democrats controlled Congress. He found that senators were very responsive to the preferences of the upper third of the income spectrum, somewhat less attentive to the middle third, and completely dismissive of the policy preferences of the poorest third. In one striking example, Bartels discovered that senators were likely to vote for a minimum wage increase only when their wealthier constituents favored it–the views of those directly affected by the hike had “no discernible impact.”

Nor is this pattern limited to domestic policy. Lawrence Jacobs of the University of Minnesota and Benjamin Page of Northwestern have found that the foreign policy views of the executive and legislative branches are primarily influenced by business leaders, policy experts–whose think tanks are often funded by businesses–and, to a lesser extent, organized labor. Jacobs and Page found that the views of the broader public have essentially zero impact on the government when it comes to tariffs, treaties, diplomacy, or military action.

And another problem is that the system becomes largely self-perpetuating. The most important means of redressing the problem (given current First Amendment law) is robust public financing of campaigns–but the pre-existing structural inequalities essentially make this virtually impossible.