In my last essay, The Vanishing Consumption Gap, I presented several lines of evidence leading to the conclusion that the consumption disparity between rich and poor in the U.S. is drastically less than the income disparity, and seems to be decreasing even as income disparity rises. This continues a historical trend, and there are causal reasons (ephemeralization and the efficiency-seeking effects of markets) to believe it’s happening everywhere on earth.
I concluded the essay by observing that the vanishing consumption gap has political consequences. Among other things (as I hinted in a comment on Oh, those bitter clingers!) it explains what’s the matter with Kansas.
Thomas Frank’s book What’s the Matter With Kansas? bears the standard for a common complaint by left-wing redistributionists. “Why”, Frank asks, “do middle and lower-income Americans keep voting for Republicans when Democrats better serve their economic interests? Why do they let ‘values’ issues trump pocketbook issues?”
In fact, only a little study of public-choice economics is required to show with near certainty that the major premise of Frank’s question is wrong — that more redistributionism would not wind up serving the economic interests of anyone outside the political class itself. But let’s agree for this discussion to ignore everything we know about about rent-seeking and capture effects and address Frank’s question in terms of his own limiting assumptions.
Redistributionists like Frank reason and argue as though (a) Republicans represent the interests of the top income quintile only, (b) Kansans are all lowest-quintile, and (c) they are therefore looking from the bottom up at the 15:1 disparity in quality of life that income statistics suggests. Under those assumptions, Frank’s question would indeed be quite difficult to answer.
I think Frank’s assumption (a) is false; it takes very little research to show that the Democratic Party is actually more reliant on rich donors (notably from the entertainment industry and tort lawyers) than the Republicans are. But I’ll let him keep this premise, too, because I don’t need it to refute his model. Moving on…
Premise (b): Bureau of the Census statistics on states ranked by median income put Kansas squarely in the middle quintile. This suggests that the raw income disparity between the average Kansans and Frank’s hypothetical bloated Republican plutocrats is about half the extreme case, maybe 7:1. Remember, when we get to consumption spreads, that Kansas vs. the hypothetical fat cats only captures the difference between the top and the middle of the distribution, not the top and bottom.
Premise (c) is where things get interesting. I think the real answer to Frank’s question, in his own terms, is that he’s looking at income disparity when he should be looking at consumption disparity. This leads him to grossly overestimate the degree of economic envy that should reasonably be expected to motivate Kansans.
In my last essay I reported that after adjusting for household size, individual consumption disparity between quintiles 1 and 5 is about 2.1:1, an approximately 6:1 compression relative to income disparity. To model Frank’s case, we only have to make two assumptions; (1) consumption, like income, obeys a Gaussian distribution, and (2) the deviation of that distribution is about the same. Both seem easily defensible.
Under these assumptions, the consumption gap between the average Kansan and the average top-quintile Republican drops to…1.05:1. And that would explain a lot. Kansans don’t behave politically like they’re motivated by economic envy because, in fact, they aren’t. They don’t have to be; their actual consumption volume is so close to that of the “wealthy” that the difference might be lost in statistical noise.
Because the upper limit of 2.1:1 on individual consumption spread is so small, this conclusion is not very sensitive to the way you interpolate the particular case of Kansas. And it matches our eyeball evidence. OK, WalMart may seem rather tacky and depressing to an upper-middle-class Ivy League urbanite like Barack Obama or myself, but after they’re out of the store neither of us would have an easy time telling WalMart clothes from the stuff we might buy at Nordstrom’s. And so on. American society looks, dresses and eats in its egalitarian way because, across the 80% represented by the three middle quintiles and a half each of the top and bottom ones, consumption differences are the next thing to nonexistent.
And, really, where’s the surprise here? If consumption weren’t pretty near flat across the SES scale, American society would have to look far more stratified than it does. The rich might be able to pass by underspending, but the poor wouldn’t have the symmetrical option. They’d look, dress, and eat enough differently from the rest of us to stand out a mile. That remained generally true as recently as World War II, and in some of the most rural and backwards areas of Appalachia it continued to be true until the 1970s. But those days are gone, and good riddance.
This leaves redistributionists like Thomas Frank in a hole. It would leave them in a worse one if they recognized that most of todays’s lifetime poor are stuck in a poverty culture created by previous rounds of redistributionism, but they’re blind to that. Never mind; even in terms of the facts they allow themselves to see, they have a problem.
The problem is this: how do you generate mass support for more redistributionist policies when economic envy no longer motivates voters? That is the question What’s the Matter With Kansas? is really asking, underneath.
The answer is, basically, that you can’t. Kansans have jumped up a level on the Maslovian hierarchy; freed of the necessity to vote their pocketbook interests, they choose sides in culture wars instead. When this happens, Thomas Frank’s political allies almost always lose, for reasons I discussed directly in Oh, those bitter clingers!.
Historically this is is not unlike the problem the Left faced after World War II, when it became apparent that Marx’s industrial proletariat, far from being “immiserized”, had actually disappeared rather cheerfully into the petty bourgeoisie. They didn’t cope so well then, either; in retrospect, the money and organizational armature secretly provided by Stalin’s Soviet Union is probably the only thing that kept the socialist Left any more relevant than the Free Silver movement or the Henry Georgists.
Today, the first-level response by America’s would-be socialists is to heatedly deny that the consumption gap is in fact vanishing. That is, to construct a rhetorical fantasy world in which domestic poverty and inequality remain Huge, Crushing Problems That Must Be Dealt With and their preferred solutions are still relevant. Sadly for them, this doesn’t work; Americans signaled that they’d stopped buying it in the 1990s when they voted for the effective abolition of Federal welfare and against Hillary Clinton’s health-care takeover. And Kansas keeps right on voting Republican.
The second-level response seems to be to invest heavily in disaster scenarios. “Nice late capitalism you’ve got there,” goes this line “…be a shame if something happened to it.” Like a peak oil collapse, or global warming. Nature isn’t cooperating, though; market incentives are improving solar-energy and synthetic-fuel technology right on schedule, and global average temperature is dropping like a brick.
As Kansas goes, so goes the U.S. And as the U.S, the world. The forces tending to narrow the consumption gap are broad, deep, and no respecters of national borders. It’s hard to see how they could be even slowed down by anything shy of a major war or a killer pandemic. And the political consequences (voters jumping up a level on the Maslovian hierarchy to non-economic concerns) are likely to be similar everywhere. The Left seems in for a rough time and dwindling influence, unless they get the slate-wiping disaster they seem to crave so keenly these days.
Not all of the consequences of the vanishing gap will be so benign. One of the games humans play when they’re not worried about food and shelter is “hate the other”. Yugoslavia’s welter of tribal animosities didn’t blow up until after Communism fell and they jumped up a Maslovian level. Islamofascist terrorism is a movement of millionaires and the tiny Arab middle class, not the subsistence-level poor. In general I think we might see quite a lot of uncorking of old resentments, and not a few invented new ones.
Still, the general trends accompanying the flattening of consumption have certainly been positive up to now. Lots of people get decent food and clothes and houses and even toys like games consoles. It may not be quite true that democracies never war on each other, but there may well be a threshold consumption spread below which they never do.
But what about the further future?
One of my commenters has proposed that a society with perfectly (or near-perfectly) flat consumption would be one that wouldn’t care about capitalism versus socialism, and approximated the “gift culture” I described in Homesteading the Noosphere. I doubt it.
I agree that in that future almost nobody will care about capitalism versus socialism, and it will be for the same reason nobody cares about Henry Georgism or the Free Silver movement now. Deprived of poverty and inequality as issues, socialism will be moribund; the ugly authoritarian impulses that drive it will have to find other forms of rationalization.
Capitalism, on the other hand will not be dead. The reason is that material things aren’t like software. The gift culture is a superb adaptation for producing software because the limiting factor of production is human attention and the marginal cost per unit of goods is zero. Unfortunately, neither of these things, is true of goods that consist even partly of atoms. There are inescapable costs to shoving atoms around, and we will need capital to meet those costs and markets to clear them.
As usual, utopia is not an option. But a much wealthier and happier human species is. In fact, it seems almost inevitable.