Stephens: Obama's Envy Problem

"As he came to the end of his awful year Barack Obama gave an awful speech," writes Bret Stephens at the Wall Street Journal. "The president thinks America has inequality issues. What it has—what he has—is an envy problem."

In 1835 Alexis de Tocqueville noticed what might be called the paradox of equality: As social conditions become more equal, the more people resent the inequalities that remain.

"Democratic institutions awaken and foster a passion for equality which they can never entirely satisfy," Tocqueville wrote. "This complete equality eludes the grasp of the people at the very moment they think they have grasped it . . . the people are excited in the pursuit of an advantage, which is more precious because it is not sufficiently remote to be unknown or sufficiently near to be enjoyed."

One result: "Democratic institutions strongly tend to promote the feeling of envy." Another: "A depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom."

That is the background by which the current hand-wringing over inequality must be judged. Inequality is not a problem simply because the rich get richer faster than the poor get richer. It's a problem only when the rich get richer at the expense of the poor [emphasis added].

Stephens argues that Mr. Obama's numbers (comparing present-day income with that of 1979) are simply wrong:

Here is a factual error, marred by an analytical error, compounded by a moral error. It's the top 20% that take in just over half of aggregate income, according to the Census Bureau, not the top 10%. That figure is essentially unchanged since the mid-1990s, when Bill Clinton was president. And it isn't dramatically different from 1979, when the top fifth took in 44% of aggregate income.

Besides which, so what? In 1979 the mean household income of the bottom 20% was $4,006. By 2012, it was $11,490. That's an increase of 186%. For the middle class, the increase was 211%. For the top fifth it's 320%. The richer have outpaced the poorer in growing their incomes, just as runners will outpace joggers who will, in turn, outpace walkers. But, as James Taylor might say, the walking man walks. [snip]

The moral greatness of capitalism rests in the fact that it is the only economic system where one person's gain can be another's also—where Steve Jobs's billions are his shareholders' thousands. Capitalism cultivates a sense of admiration where envy would otherwise rule in a zero-sum economic system. It's what, for the past 60 years, has blunted the democratic tendency toward envy in the U.S. and distinguished its free-market democracy from the social democracies of Europe. It's what draws people to this country.

Somewhere in the rubble of Mr. Obama's musings on inequality there was a better speech on economic mobility. Then again, under Mr. Obama the median income of the poorest Americans has declined in absolute terms, to $11,490 in 2012 from $11,552 in 2009, at the height of the recession. Chalk it up as another instance of Mr. Obama being the cause of the very problems he aspires to address.