David Brooks' Problem Understanding Inequality

The David Brooks Problem is that he writes opinion columns for the New York Times, but has no idea what he is talking about. In some ways, responding to him is a largely futile affair that misses the point, but sometimes I am called to do so, and so I will.

Brooks' latest piece is called the "Inequality Problem." He says the debate on inequality in this country is really confusing matters. And he, of all people, is here to set us straight. I take his points in order below.

1. Inequality is not the problem; rather, the problem is that the rich are receiving higher incomes and the poor are not.

Brooks points out that inequality is actually two separate problems. First, the rich are getting way more money than before. Second, the poor are not. I am pretty sure that is what everyone is already talking about with regard to inequality. He gives causes for these two things, but, as I've pointed out many times before, every single cause you have for the maldistribution of income must have attached on the end of it the following caveat: "provided distributive institutions are accommodating."

High school drop out rates, the disappearance of low-skill jobs, the "superstar" effect, and anything else you might talk about is never sufficient to bring about the kind of rise in inequality we've seen in this country. Why? Because, if you are committed to avoiding such disequalization, you can always recalibrate your distributive institutions to do so, e.g. by increasing taxes and increasing transfers. For any of these phenomena to generate a specific distributive outcome, our complete set of distributive institutions have to be accommodating.

He ends this section:

If you have a primitive zero-sum mentality then you assume growing affluence for the rich must somehow be causing the immobility of the poor, but, in reality, the two sets of problems are different, and it does no good to lump them together and call them "inequality."

Throughout the piece, he mixes up social mobility and inequality as if the two are the same. But they aren't. Social mobility, at least as it is popularly measured, has nothing to do with overall inequality. We could have perfect social mobility and still have extreme inequality in theory. Those complaining about outcome inequality are correct to say that gains flowing only to the rich is causing disequalization. That is true by definition.

If we digress into social mobility for a second, it is also true, despite what Brooks suggests, that more unequal societies (in terms of outcomes) are also societies that feature less social mobility. Here is the famed Great Gatsby Curve of researcher Miles Corak:

As inequality goes up, so too does social immobility.

2. The minimum wage does not reduce poverty.

Brooks' next move is to say that because people fail to realize that inequality is actually just caused by the rich getting more while everyone else does not get more, they make bad policy judgments. In particular, they favor increasing the minimum wage though it does not reduce poverty.

Brooks knows it does not reduce poverty because a single study he found says so. The study he cites, from Sabia and Burkhauser, was persuasively attacked one week ago on technical grounds (it did not use the full CPS data). Moreover, a review of one dozen such studies undertaken by Arin Dube actually found widespread agreement among economists that it reduces poverty, even among those who oppose the minimum wage on the grounds that it reduces employment. Mike Konczal had a piece on these studies at the Wonkblog earlier this month.

Finally, as a matter of analyzing politics, this is a poor attempt from Brooks. Politicians like the minimum wage, no doubt, because it is wildly popular in America, while other anti-poverty policies are not. There are a bunch of other things we can do to cut poverty and inequality that do not involve increasing the minimum wage, but few if any have majoritarian (indeed super-majoritarian) support like increasing the minimum wage does.

3. Our discussions about inequality confuses the effect for the cause.

Here Brooks suggests that really it is other social problems, say single motherood and dropping out of high school, that is causing inequality. Once again, go back to point one above, and realize that none of these things can cause, by themselves, a specific distribution of income. At all times, our distributive institutions must be accommodating.

Brooks is following the script I explained last friday in my post "What People Mean When They Say Reducing Poverty Is Difficult." He has stipulated that changing the rules that govern how we distribute income (which are just made up by humans, not imposed by the laws of the universe) is off the table. So from there, he is left only to wring his hands about how basically impossible it is to reduce inequality. But mentally freezing out the super-easy ways to reduce inequality does not actually prove it isn't super-easy.

Beyond that, Brooks is actually confusing the effect for the cause even within his own narrow framework. In fact, poverty and many other social ills exist in a feedback loop (hence the "cycle of poverty"). You know who primarily drops out of high school? Poor people. You know who primarily find themselves as single mothers? Poor people. It is hard to do well in school when you are poor and hard to find attractive mates when you are poor (as Brooks himself identified earlier in the column with a reference to "assortative mating").

Finally, it is not at all clear that poor people who do these identified "bad" behaviors would be better off if they did not do them. For instance, an NBER paper from last year showed that people who had teenage pregnancies fared no worse economically than similarly-situated people who did not. It turned out that the same thing that made them more likely to bear children before the age of 20 is also what made them have wretched future lives, i.e. poverty.

4. Talking about inequality polarizes the debate.

Brooks points out that because Republicans do not want to do anything to fix inequality, talking about it is just not a good idea politically. Instead, folks should do things that Republicans like that don't actually reduce inequality. He identifies (here and elsewhere) increasing human capital as the way to go. This is the dream of the right-wing ultimately. Steering desires to reduce inequality into policies to increase human capital allows us to pretend we are doing something about inequality while never making claims on all that money that flows to the rich in the status quo. And if we've learned anything, it is that rich people loves them that money.

The problem with this human capital focus is that it does not guarantee distributive results. As I wrote in a popular blog post last year, increasing skills and education (which is what "human capital" refers to) does not necessarily reduce inequality. We should know this from the last forty years in this country when inequality dramatically increased alongside a massive expansion of educational attainment, both in terms of high school completion and college completion.

If human capital expansion actually caused inequality to decline, we wouldn't even be talking about inequality right now. We would have already whipped it.


David Brooks is wrong as usual.

UPDATE 1/18: This post was edited to remove an unnecessary remark about Brooks's wealth.