Toxic Waste and Inequality are Good for You

To paraphrase Homer Simpson, Reason is the only magazine with the guts to tell it like it is — that everything is just fine. This time Jim Pagels (“Misleading Inequality Report Is Nothing to Fear,” January 22) reassures us that inequality’s nothing to worry about, despite Oxfam’s “misleading” recent report that the 1% may soon have more wealth than the rest of us.

Pagels really has to reach for objections to the study’s findings. He starts out with head-shakingly incoherent methodological quibbles . For example, he has a problem with ranking people’s wealth based on net worth, because many cases of large negative net worth are people deeply in debt who live in rich countries. Yeah, so? Is he saying Bill Gates somehow isn’t richer than someone with an underwater mortgage and $100,000 in student loans because they both live in the United States?

He also appeals to a couple of standard talking points found in most right-wing pro-inequality apologetics. First, there is some mobility between quintiles — in other words, meritocracy. But there’s nothing self-evidently just about meritocracy. What matters is how just the structural distribution of wealth is at any one time; if the people at the top obtain their wealth unjustly, it’s beside the point how many people manage to move from being unjustly exploited to being unjust exploiters.

Second, he appeals to economic growth as the solution to poverty. But GDP metrics basically include everything money gets spent on — including waste, expenditures on inputs to inefficient production processes, and monetizing functions that previously took place outside the cash nexus. For example, when you evict a Third World peasant from land on which he previously supported himself and force him into agricultural wage labor to earn the money to buy the food he used to grow, his nominal income will explode; but is he really better off?

What’s really perplexing, though, is why Pagels feels such a strong need to disprove that inequality is increasing. What is it about attacking the levels of inequality in a heavily state-controlled economy like ours that would be objectionable on libertarian principles?

I keep forgetting whether people like Pagels are defending free market principles, or defending current concentrations of wealth and power. I suspect they have a hard time remembering that themselves, the way they keep shifting rhetorical ground. A lot of it depends on whether criticism of the present system comes from the right or the left. It’s totally fine to point out the extent to which our actually economy differs from a free market and that things are going to hell in a handbasket — unless your criticism involves economic inequality or corporate power, in which the present system suddenly becomes a defensible stand-in for the “free market.”

After making the arguments above, Pagels slips and reveals the real source of his primary concern: “Most income inequality reports focus only on the most negative interpretation of the data, creating a narrative that the world’s economic situation is spiraling toward a dystopian hell. People then use that misperception to justify wide-reaching government redistribution policies.”

To reassure Mr. Pagels, I believe we have soaring inequality and concentration of wealth precisely BECAUSE of “wide-reaching government redistribution policies.” The government redistributes trillions of dollars upward every year by enforcing the artificial scarcities and artificial property rights through which big business and the super rich extract monopoly rents from the rest of us. And far from wanting more government intervention, my response to the all too accurate perception of rising inequality is to remove the existing government interventions that enable the plutocracy to tax us right now in the form of inflated land rent, usury and monopoly profits.

The Gateses and Waltons, the bankers and corporate CEOs aren’t a bunch of John Galts, rugged individualists who climbed to the top through entrepreneurial genius. They’re welfare cases. They’re looters.

It’s time for honest libertarians to start acknowledging the state’s complicity in creating inequality — and fight to correct that inequality by abolishing the state — instead of working as apologists for the main beneficiaries of state intervention.

Citations to this article:

Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist