High-end inequality colloquium, week 7

Yesterday we concluded our 7-week high-end inequality colloquium by discussing a very interesting work by Daniel Markovits, entitled "Meritocracy and Its Discontents."  The specific text we discussed, which relates to a book project, is not meant for circulation or even citation at this stage. So I will only comment briefly here on the issues that we discussed yesterday.

First, however, a quick word about the high-end inequality colloquium.  This 7-week sprint, with Robert Frank, our students, and others who became regular attendees and participants, was a great experience for me, although I don't when (or if) it will recur.  One of the things I've always enjoyed about the NYU Tax Policy Colloquium is that every week can be completely different from all the others.  It's a smorgasbord that shows how rich and varied the topics of potential interest are.  The high-end inequality colloquium, by contrast, had the advantages of focus and deepening.  We looked at common themes from a number of different but complementary angles, creating intellectual synergies and perhaps even progress for many of the participants (certainly including me).

The 7-week reading list was more focused on recent important things than on current work in progress, which might make it harder to repeat fruitfully.  Plus, in terms of my own teaching schedule, I think the Tax Policy Colloquium works better as an ongoing focus, and between that plus sabbatical and other teaching possibilities over the next few years, it seems unlikely that I, at least, would be participating in another version of this before fall 2019 (if ever).  Others at NYU or elsewhere might conceivably want to step in, which would be great, but that's outside my purview.

Returning to yesterday's session, it was the rare case where going for three hours, rather than the two that were all we had, would have been well worth it.  But because of the project's current state, I will only mention one aspect here.

There’s been a longstanding debate on whether the rise of high-end inequality over the last 3 decades, in the U.S. in particular, should mainly be viewed as inevitable or as chosen.

The inevitabilists emphasize such factors as globalization, declining communication costs that create gigantic winner-take-all markets, and skill-biased technology (taken as inherent to the current technological frontiers, even though technology in other eras was not skill-biased).

The choicists emphasize such deliberate policy moves (associated with Reagan and neoliberalism) as lowering of tax rates, deregulation, the destruction of unions, the strengthening of IP regimes, etcetera.

Suppose (as Daron Acemoglu’s work, may suggest) that skill-biased technology is itself a product of elite hyper-training that creates an exploitable resource – just as, in the late nineteenth century, the emergence of vast pools of unskilled labor drove technology in an anti-skill direction).  This might greatly undermine the ethical appeal of meritocracy, if one bases its claims (Greg Mankiw-style) on the assertion that today’s plutocrats are being justly rewarded for working hard and for being the “best” in a particular sense.

I myself don’t find Mankiw's normative stance at all compelling.  Thus, I would respond to it by asking, among other things, (a) are his beloved plutocrats producing social value commensurate with the private value they are extracting?, and (b) if and when they are, do we risk net social harm by undermining their incentives? My answers to these questions are (a) often no, and (b) yes at some point, but currently we're well short of that point.

So the question of why technology has been skill-biased recently, although important and interesting, lacks for me the predominant normative weight that Markovits is willing to contemplate its having.  Still, his book will be an important one.  I anticipate its both getting and deserving a lot of attention.