| | Here's the thing. Greenspan is not saying that he thinks income inequality is bad. He is saying that people react enviously, and that their reaction is a threat to the capitalist system." But on the NPR interview, he didn't say that the reason income inequality was a threat is that people react "enviously." He didn't use that word, because it would have placed a negative moral judgment on those who hate capitalism for the reasons he cites. Instead, he spoke as though the inequality of income was a defect of capitalism that needed to be remedied. If you read his book (I still need to read it cover-to-cover, but I skipped to the part on income inequality...), he advocates education and immigration as ways to address income inequality. [emphasis added] He sees the inequality stemming from a shortage of skilled workers and a relative surplus of unskilled workers. He is not advocating income redistribution." Of course, he isn't advocating income redistribution. I said that he didn't favor it, but immigration is not a solution to income inequality, because it tends to increase the number of unskilled workers, especially from south of the border, who are willing to work for lower wages. Economists often cite the influx of immigrants as an explanation for the recent increase in income inequality. Does Greenspan actually say that more immigration would decrease it?
In any case, the proper response is to stress that there is nothing wrong with income inequality and that opposition to it rests on a false egalitarian premise that confuses equality of results with equality of rights. Under capitalism, people get what they earn, and if they earn more, they get more. Even so, because the productivity of labor is so much higher under free enterprise, even those who are modestly productive can be very well off relatively to what they would have been under socialism or welfare statism. Relative poverty should not be confused with absolute poverty, for under capitalism, as the rich get richer, the poor get richer.
These are the kind of points Greenspan should have been stressing.
He is certainly correct that more education is needed. But he didn't come close to providing it, as he soft-pedaled his opposition to government redistribution on the NPR interview. He simply said that redistribution was something that he wasn't comfortable with, suggesting that it was one possible solution but that he hoped others could be found. This sends the wrong message. As someone with the "bully pulpit," he should have come out strongly against it as a confiscation of people's wealth and a gross violation of their rights. If he's really serious about solving the problem through "education," then the education should start with him. He should be forthright in denouncing such schemes and explaining why they are mistaken, not treating them as if they were one possible option on the table that would remedy a defect of capitalism. Inequality of income is not a defect of capitalism; it is one of its virtues.
Sam is right. Greenspan doesn't want to incur the displeasure of those who might disagree with him. His statements on 60 Minutes gave us a candid glimpse into his soul. He really does worry about gaining the approval of others, and it influences how he expresses himself -- in the kind of vague, fuzzy language that is calculated not to offend and can be interpreted however one likes.
- Bill
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