Sunday, March 27, 2011

Good Inequality; Bad Inequality

Mickey Kaus, who wrote a book about how income inequality doesn't matter so much as long as it doesn't lead to social inequality, puts together a list of what Scott Walker should do, that starts with the following:

1) Pointing out the growing disparity between cushy union contracts and the working situation of average American taxpayers. Horror stories are useful here;
The "growing disparity" isn't because things have been getting increasingly cushier for government employees; it's because things have been getting poorer and poorer for workers in the private sector, with Wall Street and C-level executives pocketing the savings.  So I'm not convinced that the proper response to this situation is to drag public employees down to the level of private sector employees.

Besides, years of debate about income inequality has taught me that the proper response to growing disparities is not to resent and punish the parties who are benefitting, but to tip our cap to them for their success.  This is their just reward for the work they do in keeping the economy humming, and the incentive they need to ensure they keep working so hard for us.  When we find out that GE paid no corporate income taxes on their $14.2 billion of profit, we shouldn't be angry, but admiring of their skill.

So to summarize:  We shouldn't resent CEO's of established companies who make factor-of-10 multiples of what their predecessors did, and shouldn't resent hedge fund managers who make fortunes doing work whose benefit to society is not terribly apparent.  But we should resent our kids' public school teachers if they have a lower co-pay when they go to the doctor than we do.

Look -- I get that there is a difference between 2012 public employee unions and the type of unions that began the labor movement.  And I understand the possibility of corruption and self-dealing when the union is negotiating with government officials it helped get elected.  And I certainly understand how union work rules and inflexibility can be a barrier to progress.

But they also seem to be one of the only forces pushing against the deterioration of the middle class.  And for every "horror story" about government unions, I'm quite sure I can come up with examples of people in entertainment, sports, and business who are being richly compensated for work of dubious benefit.  But we seem to think that's OK.

If exorbitant salaries, golden parachutes, etc, are the price we pay for excellence, then I don't think benefits that are marginally more generous than what's offered by the private sector is too high a price to pay for solid services and support for the middle class.