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Opportunity or Inequality? That's No Choice at All

05/14/2015 10:21 am ET | Updated May 14, 2016

An NBC News/Wall Street Journal poll recently asked, "Which concerns you more: the income gap between the wealthiest Americans and the rest of the country, or middle and working class Americans not being able to get ahead financially?"

If you understand how the economy works, that isn't just the wrong question. It's probably a meaningless one.

Fear and Survival

When asked this question, 68 percent of those surveyed said they were most concerned about the middle and working class not being able to get ahead financially. Only 28 percent were more concerned about the income gap -- a major feature of what has come to be known as "wealth inequality."

As economist Jared Bernstein notes, this isn't surprising. "To the extent that we share national values," he writes, "they tend to lean more towards equal opportunities than equal outcomes."

That's true. What's more, we live in a time of economic uncertainty for many Americans. Wages have stagnated, and labor-force participation remains low.

As a result, Americans are understandably fearful. In another poll released this week, 65 percent of those polled said the country has "gone off track," while only 28 percent said it is "going in the right direction." Some 73 percent said they were either "very" or "somewhat worried" that "the United States will suffer another economic downturn which will negatively affect [their] family." And nearly seven out of 10 respondents indicated that they don't expect the next generation to do as well as the preceding generation.

The NBC News/Wall Street Journal poll's question was asking whether people are more concerned with the income gap -- a relatively abstract concept -- or their current circumstances, which they themselves find frightening. When someone is living in fear, their own survival will always be their first priority.

The Wrong Question

What's more, it's a misleading question. We don't live in a world where policy makers must choose between reducing wealth inequality or helping working- and middle-class Americans get ahead. In fact, the opposite is true: As a practical matter, it's impossible to address one without the other. As Bernstein says, "we can't increase opportunity without reducing inequality."

Nobel Prize-winning economist Joseph Stiglitz has been discussing this for a long time. "Inequality undermines the strength of our economy and contributes to economic instability," said Stiglitz in 2012. That was the year Stiglitz's book on the subject, The Price of Inequality, was published.

Stiglitz wrote in 2013, "Inequality stifles, restrains and holds back our growth," and pointed to the its effect: the "hollowing out" of the middle class. That in turns leads to a lack of consumer demand, lower tax receipts (which leads to reductions in needed government investments), and a rise in boom-and-bust economic cycles.

Inequality leads to a weaker economy. That means fewer jobs, stagnant wages, and less opportunity to "get ahead."

False Debates

So why would anybody commission a poll asking people to choose between the income gap and advancement for the middle class? I can't speak to this poll's motives, but the question mirrors a false debate that is consuming politicians and thought leaders in Washington.

Make that two false debates. The first is drawn from the conservative notion that the only way to create opportunity for the middle class is by allowing the ultra-rich to become even richer through tax breaks, deregulation, and other policy contrivances. ("Trickle-down," anyone?) That belief has been throughly discredited by the events of the last two decades, but an idea that benefits so many powerful people has proven understandably hard to kill.

On the Democratic side of the aisle, the debate is between those who want to emphasize inequality and those who want to keep pushing the somewhat blander framing of "opportunity for all." The "opportunity" approach skirts the topic of redistributive policies, which is thought by some to be more controversial (and can alienate wealthy donors). A longtime favorite of the right, the "opportunity" trope was adopted by "centrist" Democrats of recent decades.

Democratic Divide

The Democrats have been wrestling with the opportunity/inequality divide for some time now, and sometimes one politician has been on both sides of it. In 2014, for example, the White House let it be known in advance that inequality would be the central theme of the president's State of the Union address. The president had already described it as "the defining challenge of our time." But, for reasons that can only be speculated upon, he changed his mind and chose a new challenge. Inequality was out.

"Opportunity is who we are," Obama now said, "and the defining project of our generation is to restore that promise" (emphasis mine). As Zachary Goldfarb noted in the Washington Post, over the following months the president "shifted from income inequality to the more politically palatable theme of lifting the middle class...."

But the false polarity between inequality and opportunity had already become the subject of heated debate in policy-wonk circles. In a widely read piece, Ezra Klein argued that the emphasis was misplaced. "Imagine you were given a choice between reducing income inequality by 50 percent and reducing unemployment by 50 percent," argued Klein. "Which would you choose?"

Klein chose unemployment.

Mantra

That engendered considerable pushback, from Paul Krugman, among others. But Klein's fundamental mistake wasn't that he made the wrong choice. His mistake was in choosing at all.

As Krugman noted, "there is a reasonable case for assigning at least partial blame for the economic crisis to rising inequality." Conversely, as Jared Bernstein noted at the time, "full employment enforces a more equitable distribution of growth."

In the end, this false debate may be driven by matters of political economy. An increasingly oligarchical system, with ever-concentrated pockets of wealth and a privately financed campaign system, leads inevitably to a political stasis in which taxes on the wealthy -- a key aspect of the "inequality" approach -- won't be increased, and opportunity-generating jobs and education programs can't be provided for the middle class, especially without tax revenue to pay for them.

Unless it's accompanied by some redistributive measures, the call for "opportunity" is likely to become little more than a feel-good mantra that allows this political paralysis to continue.

The Agenda

We need to create jobs, rebuild our infrastructure, strengthen wages, and increase education funding. These are "opportunity" items. But if they are to succeed, they will require some redistributive policies, including higher taxes on the wealthy and greater sharing of productivity gains with workers (using mechanisms like minimum-wage increases and increased collective bargaining).

This week Joseph Stiglitz joined with New York Mayor Bill de Blasio and Sen. Elizabeth Warren to propose a 13-point agenda for restoring the middle class. It is called "The Progressive Agenda to Combat Income Inequality," but its proposals include both redistributive and opportunity-creating policies.

That's to be expected, and it's a good thing. There's no need to choose between inequality and opportunity. In fact, when it comes right down to it, that's no choice at all.

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