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  • Writer's pictureOren Levin-Waldman

The New Inequality Part II

As the country begins a process of reopening, and increasingly more people, especially those deemed non-essential workers, are protesting against the lock-downs, we are seeing more clearly the fault-lines in the economy. On one level, there is a class warfare going on between economic elites who are able to work remotely and ordinary workers who cannot. But on another level, it just continues a tension between elites who presume to know better and instruct others how to behave, and everybody else who is presumed not to know any better. In my last column, I noted that the brunt of the economic consequences was not shared evenly. Let’s consider the following: In February, unemployment by race was 2.9 percent White, 3.9 percent Black, and 5.3 percent Hispanic. In April, it was 13.6 percent White, 16.3 percent Black, and 18.2 percent Hispanic. By level of education, in February it was 5.7 percent for those with less than a High School diploma, 3.6 percent for High School graduates but with no college, and 1.9 for those with a BA degree and higher. By April, it was 21.2 percent for those with less than a High School diploma, 17.3 percent for High School graduates but with no college, and 8.4 percent for those with a BA degree and higher. Already it is clear that more Hispanics and Blacks lost their jobs compared to Whites and that the least educated and/or skilled lost their jobs compared to those with more education and/or skills. All of the talking heads in the media who argue the need to maintain lock-downs until a cure is found are certainly among the more educated. The elites making decisions are also among the more educated. Compared to low-skilled workers, they are less likely to suffer any serious economic hardship. Of course, there are some exceptions to this. Many low-skilled workers will fall into the category of “essential” workers who will be stocking supermarket shelves, working in gas stations and other low-paying retail service jobs. And yet, because they are deemed essential, they are also most exposed. Still, the differences go much deeper than skills levels, educational attainment, and income. Rather it is a matter of world view, which is shaped by these factors. The elites have been telling us that we need to defer to our science and medical experts. This language of deference to expertise is almost to the point that those who argue for a reopening are dismissed as science haters, or worse science deniers. Nothing, of course, could be further from the truth. Nobody is denying the role of science; only that it is not dispositive. The information from the scientists needs to be weighed against the information from other experts, including the economists. Much attention has been on the 1918 H1NI Pandemic, but little mention has been made of the 1968 H3N2 Hong Kong flu pandemic which killed an estimated 1 to 4 million world wide and up to 120,000 in the U.S. Interestingly, the government did absolutely nothing. That is, there were no lock-downs, school closings, and shelter-in-place orders. There have even been some recent studies suggesting that had we only social distanced, our death rate would not have been too much higher than it currently is. Still, it begs the question of why lock-downs then and not now. Many will retort that COVID-19 is more deadly, but the H3N2 virus appears to have been relatively deadly too. Could the main difference be that we simply did not have the technology then that would have allowed the elites to continue making money uninterrupted and now we do? As much as one might be tempted to find irony here, there really isn’t any. The same elites that tell ordinary workers to sit tight and wait until it is “safe” to return to work are the same elites that argued that increased use of technology in the workplace was in the best interests of ordinary workers, even as it was resulting in the disappearance of their jobs and rising income inequality. In effect, the elites have always told workers what was good for them and here it is no different. Just as workers should appreciate the wisdom of the elites in using technology to eliminate their jobs, they should appreciate their wisdom as their livelihoods and hopes for the future are crumbling. There would appear to be an element of cynicism at work. Recall that Anthony Downs argued that policymakers would purchase the quiescence of low-income voters by providing them programs that maximized their money utility while they in turn pursued the interests of more affluent ones. Just throw them a few bones in the form of more stimulus money. How could they not appreciate that? After all, why work if you don’t need to? Perhaps work is deeply ingrained in the American work ethic and the independence that all workers seek to achieve through employment that enables them to live autonomous lives. At the root of the American experience is individual liberty which at its core is about human agency — the ability to make choices about how we will live our lives in our own respective quests for achieving what each of us regards as the good life. That is where Adam Smith’s pursuit of self-interest comes from. Nothing in the U.S. Constitution gives us a positive right to work, but a negative one can certainly be inferred. A negative right means that one, including the state, cannot prevent one from working. Otherwise, there would no basis for anti-discrimination laws. But that is precisely what lock-downs are doing. They are effectively robbing workers of their independence. And when we haggle over whether we are going to pass additional stimulus bills and how much, we aren’t even taking seriously the proposition that the property of workers in their work has been taken without just compensation. Surely this is the case for the small business owner who may be forced to close permanently. The elites who often proclaim to speak in the name of ordinary workers have only made clear that they have nothing but disdain for workers. When the pathologies of depression, alcoholism, increased drug use, and child and spouse abuse increase along with increased suicides, what will their response be? It is probably the case that were they affected in the same way as ordinary non-essential workers, their initial prescriptions would have been very different. We are all familiar with the inequality in wealth and income, but alas we are now in a new, or maybe just a more visible of phase of inequality. We are now clearly seeing the faces of a class-based society. To a certain extent, it was partly obscured by an economy where a rising tide lifted all boats. But there is nothing to obscure that now.

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