I worry about growing income inequality. But I worry even more that the discussion is too narrowly focused. I worry that our outrage at the top 1 percent is distracting us from the problem that we should really care about: how to create opportunities and ensure a reasonable standard of living for the bottom 20 percent.
Mullainathan makes a careful argument, not that the government shouldn't tax the top 1% more, but that it shouldn't try to tear down the top 1% for the sake of tearing them down. He also points out that tearing them down in itself does no good for people at the bottom.
Mullainathan also gives some sobering data on people at the bottom and their odds of going to prison:
In focusing on the 1 percent, we aren't talking about our failure to create equal, or even reasonable, opportunities for all. The Crime Lab at the University of Chicago says, "A back-of-the-envelope calculation suggests that there are 15 ZIP codes where if you are born into one of them you have at least a one-in-two chance of ending up behind bars at some point; and 775 ZIP codes where birth ensures at least a one-in-three chance of incarceration."
Unfortunately, Mullainathan doesn't run with that argument. His very next paragraph is this:
We should try to ensure that everyone has a fair opportunity to find a great life. It's a quest that will require political will and ingenious policies. President Obama's proposed expansion of the earned-income tax credit goes in this direction, but we need more.
Somehow I doubt that expanding the earned-income credit would do much for the people in those 775 zip codes. But I can tell you what would do a lot for them: ending the drug war, ending the grinding regulation that prevents many of them from selling food on the street, driving cabs, and doing scores of other jobs without government permission.
Still, Mullainathan's piece is a welcome response to those who sound as if they do want simply to tear down the top 1%. After all, he has made it clear that he doesn't object per se to taxing them more if doing so would help the bottom 20%. By the way, I don't want to tax the top 1% more. But we could tax them less and help many in the bottom 1% by letting out of prison the hundreds of thousands of people who have committed victimless crimes, as I've outlined here.
So how could someone who both wants to tax the top 1% more and wants to help the bottom 20% object to Mullainathan's article? Yet Mark Thoma does. He doesn't tell us why, but here's the only comment he makes in his post on this article: "This was *not* my favorite article of the day." OK, but why? By saying it this way, of course, Thoma doesn't come out and disagree. It could, after all, be his second-favorite article of the day. But I doubt it. When you say that someone is not your favorite person, that is your understated way of saying that you don't like, or at least have serious reservations about, that person. I think this was Mark Thoma's way of being negative about the article without putting himself in the position of having to explain why.
By the way, Sendhil is co-author of the article in The Concise Encyclopedia of Economics on "Behavioral Economics."