The Inequality Conundrum

Voters see inequality as a big problem, but they don’t want government to do much about it.

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David Brodwin is a cofounder and board member of American Sustainable Business Council. Follow him on Twitter at @davidbrodwin.

Recent polling by Pew Research Center shows profound, lingering weakness in the world's economies. In most of the 39 countries Pew visited, respondents believe their economies remain in worse shape now than in 2007, before the Great Recession began. Many see their national economy as still deteriorating rather than recovering. They report rising inequality and reduced opportunity. 

The U.S. is no exception to many of these trends, even though it remains the world's wealthiest country on a per capitabasis. While 50 percent of Americans saw the economy as "good" in 2007, only 33 percent see it that way today. 62 percent of Americans think today's children will be worse off economically than their parents. Twenty-four percent of Americans polled reported trouble paying for food and/or medical care at some point over the past twelve months. 

But the greatest puzzle in the poll is the finding about inequality: many Americans see inequality as a problem, but few see it as a high priority for government to address. Behind this finding lies a challenge for those working towards a more just and sustainable economy, and a rhetorical edge for defenders of the status quo.

[See a collection of political cartoons on the economy.]

Most Americans see inequality as an important economic and social problem. Seventy-four percent said that "the gap between the rich and the poor" is a "big problem," compared with only 23 percent who said it was a small problem or not a problem at all. 61 percent think the economic system here is tilted toward the wealthy, rather than being fair to most. And 62 percent believe their children will be worse off economically compared to their parents.

Yet, even though Americans worry about inequality, by and large they do not put inequality high on their list of problems that government should address. The single most important issue for government to tackle is job creation – "a lack of employment opportunities" according to 41 percent of Americans, followed by "public debt" (28 percent); inequality comes in a distant third at 17 percent. It's as if people are saying, "Don't try to solve inequality… create jobs and inequality will get better on its own."

[Read the U.S. News Debate: Is Obama Turning the Economy Around?]

One reason Americans rank inequality low as a focus for government involvement is that most Americans feel it's a problem for someone else rather than for themselves. Even though Americans are discouraged about the economy as a whole, they are somewhat pleased with their own personal economic situation. Sixty-seven percent say their personal situation is very good or somewhat good compared to only 31 percent who say it is bad. 

This reminds me of most polling about Congress: Americans consistently report abysmal views of Congress as an institution while praising their own specific congressional representative. (Apparently, all the lazy, corrupt and venal representatives are in someone else's district!)

The findings about Americans' views toward inequality are challenging for those working toward a more just and sustainable economy. Americans want jobs, first and foremost. (Actually, this is true in most of the 39 countries surveyed, even in ones with far more inequality than the U.S.) The public's overriding preference for jobs gives conservative rhetoric an advantage. Conservatives assert that if we want more jobs, we simply have to get out of the way of the so-called job creators. Cut taxes and gut regulations, they say; then jobs will appear. Those on the other side often try to sidestep this argument rather than confront it directly.

[See a collection of political cartoons on gun control and gun rights.]

If Pew's findings are correct, then the standard progressive narrative could use an update. Job formation, not inequality, needs to be the entry point of the conversation. The progressive narrative must explain what the government should do to support job creation, in addition to having government step in temporarily as the employer of last resort. (Even those who support Keynesian stimulus during a recession believe that ultimately most hiring must be done in the private sector.) The progressive narrative needs to explain how it is that raising taxes and strengthening regulations does not discourage hiring – since the idea that it does do so has intuitive plausibility with many voters.

The Pew poll is an important challenge to those who believe – as I do – that government has a crucial role to play in structuring the market economy. Markets don't manage themselves adequately except in the 200-year old world of Adam's Smith pin factory, where all producers are small, competition is intense and no one dominates their market or buys preferential treatment in Washington. Many important markets – finance, health care, broadband telecommunications, to name a few – don't work that way anymore.

In the modern, globally-connected world, when governments abdicate the role of structuring markets, bad things usually happen. For example, the Great Recession happened because we repealed Glass-Steagall – a Depression-era regulation separating investment and commercial banking – and allowed banks to speculate with the public's money. Millions of jobs were destroyed as a result, and we'll be paying down the debt for decades. 

If Pew is right, then advocates for economic change need to do a much better job of explaining how active government stewardship of the economy creates and preserves jobs. That's what the public wants to know.

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