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How do we Seek Economic Justice?

The careful reflection that Kelly Johnson provided last week is a great starting point, and I am looking forward to seeing what she writes as the month goes by. While this conversation is designed to create a space for long, careful, and respectful disagreement, it is worth noting from the outset that I found her initial contribution to be illuminating, and there is very little in it that I disagree with.  I agree that economic inequality is a first order moral problem, that Christians are called to care deeply about the material well-being of their neighbors, and that inadequate regard for economic disparities is deeply woven into our culture (and apparently, we both find compelling the doctrine of the universal destination of goods). Hopefully this common ground will set the stage for a fruitful dialogue.

Given this substantial agreement, it is also noteworthy, however, that our focus is quite different. While Dr. Johnson focuses almost entirely on the theological, cultural, and moral dimensions around economic inequalities, I focused instead on economic institutions and policies. This reflects a kind of disagreement, but it is likely a disciplinary difference, not necessarily a political or ideological one. It is not surprising, then, that my reading of her post left me with some large questions. I will organize much of my post around these questions, explaining why they are important and how I would approach each of them. Overall, though, my challenge to my conversation partner is to think in terms of causes and solutions. We must know what causes inequality in order to make judgements about it and to address it. Similarly, it is almost always a good idea to consider not just critiques, but also proposals for change. Usually it is far easier to describe problems with a system than it is to find a workable solution.

 

1. Is inequality a moral problem apart from poverty?

 While it is clear that material deprivation, or poverty, is a first-order moral concern for Christians, economic inequality is less obviously a problem. While I have reasons for thinking that inequality is a problem independent of poverty, I am not certain that my reasoning is theologically well grounded. Moreover, Dr. Johnson focused heavily on the moral challenge of material need. The trends in the U.S. are toward inequality across the distribution, however, and that the gap between the middle-class and the very rich is growing far more than is the gap between the median and the bottom. As a thought experiment, if we discovered and implemented a perfect solution for material need, so that all basic necessities were guaranteed for everyone, and yet there was still substantial inequality between the middle and top of the income distribution, would inequality be a pressing moral problem?

This question matters for a couple of reasons. First, the answer to this question determines how we measure progress, or success. If we are primarily concerned about poverty, then we should focus our attention on quality of life and economic participation for those in bottom half of the income distribution, and ignore the rising gap between the top 20% and the top 1%. Second, the answer to this question changes the kinds of policies we need to think about. If we are only worried about poverty, then social safety net programs, education, and the entry-level job market are the area to focus on.  If we want to worry about inequality more broadly, then there are a host of other concerns about technology and market power that become more important.

Most importantly, though, I think the answer to this question matters because there are many who find it easy to be concerned about poverty but not inequality. When making the argument to this kind of audience, it is tempting to argue that inequality matters because of poverty – that the moral problem is the combination of poverty and wealth. This, I believe, is a large part of what I read in Dr. Johnson’s reflection, and I agree with the thrust of the argument. It is important to note that there are different kinds of injustice at play here, that each of them matter independently, and that an increase in individual generosity is probably not going to bring about a just economy. To illustrate the kind of concerns that can get overlooked if we only concern ourselves with poverty, let me try to sketch out why I believe that economic inequality can, by itself, be a sign of injustice.

First, inequality undermines solidarity and social cohesion. Or perhaps inequality is a sign that solidarity and social cohesion has already broken down. Either way, the political and social interests between two communities diverge sharply when there is a $50,000 gap in average incomes between groups. With different political priorities, different complaints, and different experiences, building a political consensus is harder, and leaders can scapegoat one or the other community for political gain. Providing funds for public services becomes harder if the beneficiaries or need are all clustered in one community.

Second, inequality can undermine social mobility. There is good evidence that in times and places with more economic inequality there is more limited opportunity for a person to improve their economic position. See, for example, this helpful summary of the relationship. Moreover, recent evidence indicates that the unequal distribution of income directly harms the opportunities of young people, when compared to their parents. Most people’s intuitions about economic justice in the U.S. revolve around opportunity and mobility. The sad truth is that we are not building an economy in which there are real opportunities for everyone, and rising inequality is tied up in this problem.

Even more importantly, inequality can point to specific kinds of injustice. Dr. Johnson highlighted the fact that our country has been built, too often, around opportunity for some and the exclusion of others. We are only starting, as a nation, to come to terms with the ways that racism is and has been built into the way the economy functions. African American men, with the same family structure, income, education, and wealth still have substantially lower upward mobility than do white men. Moreover, the evidence for labor market discrimination against African American job candidates is very strong. When you add in the history of racism in housing, education, and law enforcement, it becomes clear that building just economic systems must include a substantial reckoning with the way that our institutions have often excluded or failed to invest in, minorities. This element of inequality is clearly an injustice that is independent of inadequate generosity or poverty.

Finally, and perhaps most generally, the dramatic increases in inequality over the last 40 years make it harder to maintain that the way our market institutions distribute rewards is just. Many economists have begun to build the case that concentrations of market power are holding down wages, limiting competition, and increasing returns for the largest companies. Some pieces of this argument are summarized here. With the decline in union bargaining power over the last 50 years, a rise in the market power of large firms will can allow employers to give a smaller share of new wealth to employees.

There is much more that could be said here, but this should be enough to give readers a sense that inequality can point to broader economic problems, and so the simple stories we tell about the economy (as I tried to describe last week), and simple solutions, will often fall short. None of this should be read as a critique of Dr. Johnson’s post. While I am much more comfortable discussing these kinds of social-scientific arguments, her argument approached this topic from a different, though complementary angle. Thinking about the particular ways in which economic inequality can point to injustice is essential for the next step.

 

2. What is the solution?

While it is vital that we have people who will speak the truths that Dr. Johnson wrote so eloquently, it is also important that we do not stop there. We must be able to articulate what a just economy would look like, and how we can get from here to there. This again, is my primary challenge to my conversation partner: to think clearly about inequality, we need to know what causes it, and we must consider ways to fix it. Here I should note that I recognize I am following a well-worn track in challenging a theologian to provide some clear policy prescriptions. Economists have a practice of evaluating particular alternatives, rather than just pointing out problems, or appealing to an impossible standard. There is much to be gained, however, by forcing yourself to make a proposal.

First, our political disagreements often revolve around differences in policy, not differences in goals. It is easy to get people to agree that poverty and racism are bad and that education is good. The disagreements really gain momentum once we try to help the poor, reform schools, or implement affirmative action. Economic inequality is this kind of problem. Until we agree on a solution, we have not really agreed on much.

Moreover, since Dr. Johnson is an accomplished theologian, I must note that it is easier to find theological arguments about poverty, or broad principles of justice, than it is to craft theological arguments in favor of specific policies. I would love to see her help economists push a bit further.  We must, in the end, come to some consensus about what kind of institutions we want to build. Navigating the path between a theology of wealth and poverty on the one hand, and tax law on the other, will require all hands on deck.

Second, thinking about solutions can reveal big differences in how we diagnose the problem. Or, alternatively, different stories about what causes inequality lead us to very different conclusions. If you believe that inequality is due to immigration and trade, and that ordinary working Americans have been hurt by globalization, then it might appear that building a wall and renegotiating NAFTA is a good idea. On the other hand, if you believe that inequality is the result of a shift in bargaining power, with weaker unions and more concentrated firms, then the solution might be higher minimum wage laws and strict anti-trust enforcement. Or, to push it further, if you believe that inequality is the result of fast technological change and stagnating education growth, then the solution might be a radical new investment in education programming and funding, or more generous social programs.

Finally, it is really important to talk about solutions because good intentions are not enough for good policy. One recent example will make the point here. There was a big push in recent years to find ways to improve opportunities for those leaving prison and reentering the labor market. Unfortunately, those with a criminal record have a very difficult time finding an employer willing to hire them. Many lawmakers moved to prohibit employers from asking about an applicant’s criminal record prior to hiring. This “ban the box” movement gained significant ground, and was partially implemented by the federal government as well. A couple of recent studies, however, make a strong case that this policy ended up doing substantial harm. Employers ended up engaging in more discrimination against African American and Hispanic men when they were not able to ask about criminal records. Because they were not able to distinguish between those with a criminal record and those who did not, employers engaged in statistical discrimination, and increasingly favored white job candidates.

This example illustrates an important point: identifying the problem is not even half the battle, and often the difference between a moderate progressive and a moderate conservative is not in the identification of the problem, it is in the willingness to accept the imperfections of a particular policy agenda. Those on the left may be willing to trade some economic growth and accept some bureaucracy in order to provide more public goods and a more generous safety net. Those on the right may be willing to accept some corporate malfeasance and greater inequality in exchange for fewer restrictions and faster economic growth.

 

How Can Christians Be Different?

As a conclusion, it is worth pointing out that Dr. Johnson and I offer very different ways in which Christians can contribute to the larger conversation about inequality. She calls us to see the way our culture and history are wrapped up in inequality, and how our Christian tradition should push us to face the injustice. My approach is to zero in on economic institutions and policies, and try to discern how our Christian tradition can help us design a more just system. These are not in conflict, and they clearly reflect different disciplinary priorities. Each approach has natural pitfalls, though. We economists tend to assume that we can approach everything as a kind of amoral technocratic problem to be solved. Theologians can, instead, approach the topic as only a moral problem.

I certainly hope that dialogue will be helpful for both of us, and our readers. It has been so far for me.

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