Saturday, April 19, 2014

On the Hypocrisy of the One Per Cent

Well, actually, that should read the hypocrisy of the one per cent's cheerleaders, such as the Wall Street Journal's James Taranto, who has penned a crass article criticising Paul Krugman's new salary as a Research Professor at CUNY ($225,000). Apparently Krugman is a hypocrite: on the one hand he proclaims the injustice of the top one per cent enjoying huge and rising incomes, and on the other he himself has... a huge and rising income. Hypocrite!

This is familiar territory - the right has always enjoyed pointing out the contradiction between egalitarianism in principle and higher-than-equal incomes in practice. There is a superficial appeal to the notion that concern for inequality should translate, in practice, to being poor rather than rich. This has been present in the political rhetoric of the Anglo-Saxon right for some time: Labour's Roy Jenkins was famously condemned as a 'champagne socialist' back in the 1970s, whilst the Daily Telegraph joyfully pointed out that current leader Ed Miliband, the son of a Marxist academic, lives in a massive house in one of London's more exclusive neighbourhoods. If they really cared about inequality, wouldn't they give everything they have to the poor?

Hypocrisy, Wikipedia tells us, is the practice of engaging in the same behaviour one criticises in others. What exactly do people like Krugman or Miliband criticise? Do they really condemn everybody in the top one per cent of earners? I don't think so. What they are criticising is a social phenomenon - the unequal and unfair nature of the distribution of rewards and assets in a capitalist society. Their political position is to do something about this, something you might disagree with, or believe to be futile, but which would probably make them personally worse off (both advocate higher taxes for people in the top income brackets, which includes them). So what's hypocritical about that?

The misunderstanding arises from confusing personal conduct with political commitments. The idea is that you would like to change society so that it produces more equal outcomes. This is a political project, in other words, a set of actions that a society has to pursue collectively, because to do so individually is largely pointless. If Ed Miliband chose to hand over half of his house to a couple of homeless families, that would be laudable, but would make no real difference to the problem of poverty in the UK. What would make a difference is if all people as rich as him were to give up some of their wealth to the benefit of the poor. The way to achieve this is to win election and change policy. How big Ed's house is doesn't really matter (although frankly a more humble dwelling probably would look less incongruous). J.K. Rowling gives very large chunks of her own money away and publicly espouses left-wing causes, but is still nearly a billionaire. Is she a hypocrite?

So what is Paul Krugman's sin? He is a Nobel-prize winner, not loved by everybody but undeniably one of the top economists of his generation. He is giving up a position at Princeton University which, I would bet my pokey London flat, pays him quite a bit more than $225,000. Probably double that, to be conservative. He almost certainly makes a handy pile from his more popular writings. So is he a hypocrite? Well for a start, he is leaving the gilded elite of US private schools to work in the public university system, way down the 'academic food chain'. But more important, Krugman spends a lot of his time advocating giving up a chunk of his wealth in favour of the poorer, as long as others do too (I have no idea how much he gives away privately, that's not the point). It's a political commitment. What would be hypocritical, would be to advocate tax rises for the rich, then avoid or evade those tax rises himself.

The irony of all this is that Paul Krugman has never been an egalitarian as such. No economist is - if you believe markets have any role to play in our society, then you believe in inequality by definition. The question is: how much? Krugman actually adopts a pretty standard Rawslian approach to inequality, typical of progressive-minded economists, and in fact of anyone who is not a raving libertarian. Markets are about talent and productivity being rewarded, and that means Krugman earns more from academic writing than I do. A lot more. But probably nowhere near as much more as he would do in a pure market system. He probably could afford to work for CUNY for free, but why should he? Those criticising him certainly wouldn't, so aren't they the real hypocrites?