Income Inequality: Steaks and Ideological Stakes

There has been a flurry of editorial activity in relation to the Stats Can report on growing inequality in income distribution. Quite why we should be more interested in income distribution as opposed to asset (wealth) distribution I am not totally sure–although I have my suspicions. But I do know why there has been such a flurry of interest in the Stats Can reports on income.

Initially neoliberalism was sold to the public as a policy paradigm for the restoration of economic growth, full employment and ultimately the restoration of post war consumption norms. That is, each new generation being better off than the last with a greater choice between increased consumption and increased leisure or a little of both: more steaks for the grill and more time to savor them.

This indeed was the cold war gold standard. It was a powerful economic image which settled right down in the bowels of the post-war compromise and supported a particular conservatism within organized labour and social democratic parties. Amelioration was at hand for the patient man.

It is no wonder then that when neoliberalism was being formulated and pushed on the public it was framed according to the gold standard. It is hard for anyone under forty to appreciate that the initial packaging of neoliberalism was quite erotic. To be sure there would be some short term pain (costs of adjustment) but these would be temporary and would be dwarfed by the orgy of consumption that would follow in train: some of us knew it was all bullshit. Alas bullshit is as bullshit does.

As the eighties wore on and the assault on working class freedoms continued apace the rhetoric of neoliberalism shifted in the face of persistently high unemployment and stagnant wage growth. Indeed there was no orgy of consumption to be had for the working classes; although Michael Milken and his ilk were doing exceptionally well.

The new generation (my generation) was told we had been living above our means; that the very organizations and values which had promoted our interests were in fact the cause of the Great Fall. Unions were corrupt little organizations which stood in the way of managerial rationalizing efficiency which would make the country competitive and provide jobs for all those who wanted one.

In a curious twist of fate it became the greedy employed who were responsible for the misery of the unemployed! It became the greedy unionized worker jealously guarding their privileged status within labour markets that was responsible for the misery of the unprotected and temporarily employed. It became the cheap public university that housed untold layabouts who had the audacity to take three different degrees while playing at being refugees from the vicissitudes of the labour market that was responsible for the immanent bankruptcy of the liberal democratic state. I mean how the heck does one justify a degree in medieval literature anyhow–where is the value added in that?

As the eighties came to a hetrodyne conclusion–the recession of the early nineties–the gold standard became a delirious dream only contemplated by mad men and unrepentant Stalinists. The collapse of the Evil Empire which was precipitated on the blood soaked mountains of Afghanistan would in turn precipitate a liberal symphony of triumphalism in the midst of massive global recession. Here we discovered that the cause of the great American decline was caused by, above all things, single black women with children. Canada had a problem. There were not enough black women in the country to make a convincing argument in the great white north of the ubiquitous parallel–no matter, daemons were needed and daemons were found.

As the recession wore on and unemployment failed to mitigate in the headwinds of growth we were entreated to new fantastical theories of hysteresis and a NAIRU above 8 % (12% or more if you lived on the east coast). The cause: workers had failed to make the right training choices and were therefore the victims of their choice to not adequately predict the skill sets required for the new economy. One would think that the talk about rational expectations could blossom in such an environment was laden with some irony to say the least. But no, such musings were uttered with a straight face. Former members of the left intelligencia scribed infantile books entitled The End of Work (which dovetailed so well with th end of ideology) and high school councilors gave the good council that in the new economy one must be prepared to have at least six careers with six different skill sets: to expect anything less was to be unreconstructed romantic of the old economy or worse an unreconstructed soviet.

“It was a beautiful dream but it does not work in practice” was screamed by everyone with a pension for morale rectitude. What does not work was never really spelled out but rather left to abstraction: A kind of elegant tombstone for all those who would stand in the way of capitalist progress.

By the middle of the decade the grand neoliberal plan which had promised the gold standard delivered up what we were told was a bankrupted state. Not of course bankrupted by the high interest rates set by the central banks in their vigilance for what was euphemistically called “price stability”. For it certainly was not price stability in what the hourly wage could purchase. Nor was it stability the cost of borrowing for the state or households. Nor was it stability in the personal income tax revenue stream as the jobless recovery continued well into the twilight of the decade.

And what was the cause of so much unemployment? Certainly not the pursuit of “price stability at all cost” nor the off-shoring and restructuring of manufacturing capacity but rather the insurance scheme for the income of workers and their bad training choices. I mean whose fault is it that individuals did not predict adequately the six different skill sets they would need to stay gainfully employed in jobs that did not exist? Certainly not the markets and certainly not the state!

“The problem with kids toady;” it was often heard, “is that they think the world owes them something; they think they are entitled to at least as much job security and consumption as their parents.” “Lazy bastards!, where did they get such a dumb ass idea?” I dunno.

The grand litany of daemons from the 90s: from single mothers, to First Nations, to immigrants, to unions, to crown corporations, to government itself. The embattled middle class was offered up no end of bogymen to blame. Politicians pandered and euphemistically named “think tanks” churned out one spurious argument after another.

And then Prosperity finally returneth along with a consumer credit (not wage) inspired orgy of consumption. And come to think of it, more blood on the mountains in Afganistan.

I expect it will be to the metrics of average annual family consumption where the debate on income inequality finally turns as neoliberals attempt to prove that in the end they delivered the gold standard…sort-of.