Have conservatives learned their lesson from the 47 percent debacle? A new paper from arguably the most influential conservative economist in the country, titled “In Defense Of The One Percent,” suggests no. Even worse, the paper shows how dividing America into Randian producers and naturally subordinate moochers is the only way to resolve a central contradiction in modern conservative economic thinking — meaning that the GOP will be stuck making a losing argument until it conducts a total rethink of its economic philosophy.
Harvard Economics Professor N. Gregory Mankiw, the author of “In Defense,” was the chairman of George W. Bush’s Council of Economic Advisers and counseled Mitt Romney on economic issues in 2006 and 2012. Despite his occasional heresies (Mankiw famously supports a carbon tax to fight global warming), Mankiw is one of the most-respected and most-representative conservative economist active in public life today.
Mankiw’s defense of the one percent proceeds from a fairly conventional script. He argues that structural transformations in the economy, principally caused by the advent of new technology like computers, “have allowed a small number of highly educated and exceptionally talented individuals to command superstar incomes in ways that were not possible a generation ago.” The recent spike in inequality, for Mankiw, is then largely caused by the smart and talented being able to express their talents freely. Much of Mankiw’s paper is devoted to arguing that punishing these talented individuals through more progressive taxation would be unfair because they earned it fair and square.*
This argument doesn’t work if you think, like many Americans, the economic game is rigged in favor of the already-rich. As Mankiw concedes, the evidence that inequality persists over generations — that is, people with rich parents tend to end up rich too — is overwhelming. If this reflected structural disadvantage like unequal access to health care and education, then it would be hard to argue that the best and brightest, rather than richest and whitest, were being rewarded by rising inequality.
Instead of trying to argue away the facts on inequality, Mankiw attempts to reexplain them. He proceeds in part by personal anecdote: “I do not see my children as having significantly better opportunities than I had at their age,” he writes, despite growing up wealthier than their middle-class father. Recognizing this impression to not be enough, Mankiw turns to the somewhat more surprising crutch of genetics. “Parents and children share genes,” which in Mankiw’s telling explains “intergenerational persistence in income even in a world of equal opportunities.” Though he disavows “genetic determinism,” Mankiw nevertheless thinks genetic transmission of things like IQ (a common conservative trope) make it “implausible to interpret generational persistence in income as simply a failure of society to provide equal opportunities.”
Even setting aside the obvious strawmanning here (nobody thinks persistent inequality is only caused by lack of opportunity), Mankiw’s analysis is unpersuasive. It can’t explain, for instance, why the United States has one of the lowest rates of intergenerational mobility in the developed world. Presumably, if genetics overwhelmed the effects of family inequality, more egalitarian distributions of wealth wouldn’t correlate with higher rates of mobility, but evidence from the developed world suggest they do.
But more fundamentally, follow Mankiw’s logic to its conclusion. He believes both that 1) the fact that the rich tend to stay rich, and the middle class tend not to become rich, are consequences of the natural distribution of talents and that 2) the most talented, morally speaking, deserve to keep what they earn.
In essence, Mankiw is arguing that a partly genetically determined upper class deserves most of society’s wealth and deserves to pass it on to their kids. It’s an argument that we’re living in a natural American hierarchy.