A Suggestion for Compromise
By: Dora Donaldson
Tags: Inequality, Income Inequality, Politics, Economics, USA

A Suggestion for Compromise

On my mission for political compromise, I’ve previously suggested that we have many misconceptions, made worse by media bias to the point where we can’t even agree on basic facts. My ultimate goal is to encourage more productive conversations. In my mostly liberal circles, in times where even a moderate stance can be the dissenting opinion, I believe conservative viewpoints are the ones that need exploring. But I’m not just playing devil’s advocate — I genuinely do not believe, for example, that conservative economics is fundamentally selfish. I think it’s seriously misunderstood and a better understanding would make us realize how much we have in common.

Conservative economics has a branding problem.

Conservatives want financial agency for individuals and ensuring we use our resources to address a wide range of issues. The final point especially tends to get lost. On the surface, questioning the effectiveness of social policies appears pretty antisocial, but here’s why I disagree:

A series of randomized controlled trials in Kenya found that increasing the number of textbooks, teachers, and other classroom resources did not improve students’ school attendance or test scores. Instead, a deworming medication that cost only 60 cents per pupil had much more impact due to better health, boosting school attendance as well as test scores. This work led to the Deworm the World Initiative, one of the best cost-effective charities in the world. I can recommend this book for more on the study and others like it.

Imagine what other vital programs for health, mental health, pandemics, or climate change could be funded with cost-effective policies. I can see where liberals are coming from — conservatives often do come across as unlikeable. Perhaps calls for cost-efficiency coming from wealthy politicians appear tone-deaf — but it doesn’t mean they’re wrong. We should explain why it matters if an ineffective solution is 20 dollars when there’s an effective 60 cent solution. I believe that for the sake of compromise, the burden here rests on conservatives to articulate their arguments better so that there’s no room for misunderstanding.

Economic issues are social issues.

Poverty rates are at an all-time low, but inequality persists. Income inequality is an emotional and complex topic, which is why it’s especially vulnerable to misconceptions. There are some essential points to make for a productive discussion about inequality:

Most reasonable people agree that there is increasing inequality and that certain groups are disproportionately affected. Most reasonable people are deeply concerned about this regardless of party affiliation. However, because people disagree on the causes, they disagree on the solutions. The passionate debate stems from the worry that specific policies have left low-income groups worse off, while unaffected higher-income advocates are calling for more of the same policies.

Cost-efficiency and compassion are not mutually exclusive.

We all know the teach-a-man-to-fish proverb. For some, freedom means empowering people to choose from various options and make decisions for themselves. For others, it means having safety nets in place, allowing for occasional mistakes while also giving children a fair chance to succeed in life. I’d wager that most people want a healthy combination of these ideals.

Contrary to commonly expressed sentiments, government-provided services are not free. We pay for them through income taxes and various other contributions. Certain programs get funded at the cost of other programs not being funded. COVID-19 stimulus packages, for example, will need to be repaid with a combination of future taxes and austerity measures affecting future generations’ health, education, and social programs.

Research suggests that although there are conditions that off-set excess mortality during recessions, suicides, cardiovascular disease, alcoholism and deteriorating mental health do increase during recessions. While there is ongoing debate over the net effects of recessions on overall mortality, there is a consensus that vulnerable populations (i.e.: the people most likely to face job losses) are more affected by these conditions and additional research is needed. Wealthier socioeconomic layers can maintain options even during economic downturns. They can choose to shift or delay investments. Lower-income people don’t face the same choices. This is why economic downturns matter and why the debate isn’t lives vs. business, but lives vs. future lives.

Pandemic aside, because safety nets cost money, there is a trade-off between government-provided services and individual choices. Your preference for the trade-off is directly influenced by how you define freedom and I believe we can agree that neither definition is fundamentally evil.

Let’s take healthcare as a very crude example. The wealthier you are, the more likely it is that you can afford to pay taxes for public healthcare and pay for additional private healthcare. However, as a middle-class family paying for public healthcare through taxes, it’s unlikely you will have enough disposable income left to pay for additional private care. This means that you have no choice but to take the public health option and you are now at the mercy of the quality of that public option. Long waiting lists for surgeries and staff shortages are costs to consider. Therefore the quality and effectiveness of services are essential in justifying government-run programs because lower-income people’s options are more affected.

When it comes to inequality, we tend to have discussions as if the U.S. has no progressive taxation or safety nets, and the rich don’t pay a fair share. I struggle with this because we spend more on welfare and social programs every year. In 2017, the top 1% paid 38.5% of federal income taxes. The top 25% paid 86.1%, and the top 50% paid 96.9%. What constitutes a fair share is a subjective question, but it’s incorrect to suggest that there isn’t already significant income distribution. It’s not unreasonable to ask why there is still so much inequality despite existing redistribution efforts. If we should increase the federal budget, it’s fair to question whether expanding government programs indeed help lower-income people attain social mobility.

Eradicating all government programs and asking whether existing policies effectively resolve problems are two very different conversations.

Data shows that the biggest predictor of future economic stability (and psychological wellbeing, for that matter) is being raised in a two-parent household. It doesn’t mean that children from single-parent households don’t succeed or that single parents aren’t admirable and resilient. It means that single-parent households face economic disadvantages compared to their double-parent counterparts. The number of children born into single-parent households is increasing and more so in low-income areas. 75% of black Americans are growing up in single-parent households today compared to 31% in the 1930s. Conservatives argue that housing policies creating affordable housing shortages, the war on poverty, fatherlessness, the war on drugs, perverse incentives and poverty traps perpetuate the conditions that have led to more children growing up in single-family homes. I actually see a lot of overlaps with progressive stances here. But our views on the policy implications diverge. The conservative argument is the following: Historical data does not support the notion that more government intervention is the solution for lifting people out of poverty — that if anything, some of these interventions have unintended consequences that are worsening the gap.

While based on sound moral intentions, the “White Savior Complex” and wokeness have led to widespread support for policies that even many of the groups we purport to support oppose. I will address these policies and their unintended consequences in more detail in a separate follow-up. For now, here is one example:

It sounds great to say we need to put more resources into disadvantaged school districts. But simply pumping resources to schools and “calling it a day” will have little effect on academic success unless other conditions are also met in those environments. The specifics matter. Research suggests that something like the National Lunch Program, for example, are cost-efficient ways to improve academic success in disadvantaged areas by addressing food insecurity and nutrition. Yet the original intention of the program was not to improve academic success.

The point is, we need randomized controlled trials to figure out what is effective and not base decisions only on what sounds good. We have to discuss welfare reform, affordable housing and family dynamics without questioning each other’s character.

Equal opportunity vs. equal outcomes

I welcome increased awareness of our privileges. For example, it feels a little privileged to call anti-lockdown protesters selfish when “all we have to do” during the pandemic is watch TV and work from our comfortable homes. Have we so quickly forgotten that people lost their livelihoods and perhaps don’t live in comfortable surroundings? Have we forgotten that hardworking people are now worried about their social mobility? Do we not realize perhaps that’s why it matters to them to at least question the marginal benefit of lockdowns compared to, say, social distancing measures alone? But I digress.

We should remember that by nature, there will always be a top 1% and bottom 20% unless you artificially equalize outcomes. We should remember that even if we equalize outcomes, inequality would eventually reappear because people are not the same. We should remember that many inequality statistics don’t represent social mobility within a person’s lifetime. With that said, a lack of socioeconomic mobility is a problem — it destabilizes trust in each other and democracy. That’s precisely why people care so much about whether proposed solutions create more opportunities or more unemployment.

I think a lot about studies like this one – and this one – and this one, where people actually prefer to be worse off in absolute terms so long as they’re better off relative to their neighbors and friends. I think a lot about how that reflects on human nature and decision making. Does it mean eradicating poverty is futile because we won’t be satisfied until we have equal outcomes? Or does it mean even equal outcomes would be futile because it turns out we prefer hierarchy? What happens to innovation under equal outcomes?

Our fascination with fairness is also tricky. For example, if we were to forgive college debt for millions of Americans, what does that mean for millions of other Americans who made sacrifices to pay off their debt? Maybe they didn’t go traveling or they got a second mortgage on their house. Policies like this send the message that there’s no incentive to play by the rules when we should instead address why tuitions are so inflated in the first place. We talk about fairness and historical oppression, but I doubt that most left-leaning progressives, who are arguably benefitting from said systems, would willingly give up their current jobs or homes to disadvantaged individuals as a gesture of fairness.

We’re primed to dislike policies benefitting the rich. We cringe at trickle-down economics and it’s understandable why. Apart from a few superhero movies, the rich guy as the power-hungry antagonist is a deeply ingrained archetype and entitled rich people can be very irritating. But there’s something we forget. The fact is, wealthy people and corporations invest. And when they invest in certain neighborhoods, it creates opportunities for people, not just for potential employees, but for nearby restaurants, shops and services. When people earn more, the federal government organically collects more money from income tax , which can then fund important social safety nets. When investors leave neighborhoods, opportunities dry up very quickly.

If COVID-19 lockdowns have taught us anything, I hope it’s at least that the economy is incredibly interconnected and does trickle — whether up, down, sideways or across.

A suggestion for compromise.

Sometimes well-intentioned policies worsen the problem they set out to solve. If someone opposes a policy, it doesn’t by default mean they’re not deeply concerned with inequality. I vehemently caution against career politicians, authoritarianism, social engineering, utopias and conformist attitudes regardless of left or right leanings. However, I also openly admit that I do not wish to live in anarchy and believe that we willingly exchange individual freedoms to support each other. To find our equilibrium, we have to be able to compete and collaborate. To have balance, we have to walk the fine line between rules ensuring fairness, systems offering safety nets, and flexibility allowing for choice.

Let’s remember that both sides have out-of-touch millionaires. Let’s also remember that both parties are also equally charitable. In fact, both sides pump enormous amounts of wealth into influencing political causes. But for every Koch, there’s a Soros. For every Bezos, a Gates. For every Musk, plenty of Hollywood actors. Very few of us will ever need to debate our stances with them. Meanwhile, your average, non-billionaire, non-lobbyist friends and family are also worried about inequality. Maybe they’re just asking if some well-intentioned policies have truly delivered the equal opportunities they were supposed to. They’re asking if it’s possible that the solutions had unintended consequences, creating conditions where hardworking people become dependent on a system instead of achieving financial independence. They’re asking whether the costs of expanding those same policies would be better allocated to more effective programs.

There was a time when thinking outside the box was welcomed for problem-solving. I’m thinking of the Freakonomics series, authors like Chuck Klosterman, or William MacAskill — writers who offer great insights, data, and information on these issues without being based on identity politics. To think outside the box, we have to allow the questioning of policies without questioning each other’s fundamental goodness.