Jul 26 2012

The Great Divergence by Timothy Noah

Nick Baumann

web exclusive


Adbusters' Kalle Lasn came up with the idea of Occupy Wall Street, and, crucially, its name in 2011. But the year before, political columnist Timothy Noah—once of Slate, now at the New Republic—explained the nature of the income inequality problem that Occupy would later decry. "The United States of Inequality," Noah's widely circulated, award-winning series of Slate articles on income inequality in America, outlined exactly what separated the 99% from the 1%, and who was to blame, months before OWS got going.

Now Noah has turned that series, published in ten parts in September 2010, into a book, much of which is an in-depth review of the academic scholarship on income inequality. The basic facts are clear: In 2008, the richest .01% of Americans—about 8400 households—took in 5% of the nation's income (including capital gains). That was almost quadruple the .01%'s share in 1979, and roughly comparable to their share in 1928, before the stock market crash. The top 1% did well, too, doubling their share of the nation's income in the past three decades. The pie has grown larger, but the middle class has had to make due with a smaller share of it. The middle 60% of American households took in 38.5% of national income in 2007, down from 47.8% in 1979. This change in fortunes, in which the fates of the super-rich and the middle class have been decoupled, is the "great divergence" mentioned in the title.

Noah starts from the premise—stated in the epigraph by none other than George W. Bush—that "income inequality is real; it's been rising for more than twenty-five years," and sets out to explain what caused the growth and whether anything can, or should, be done about it. Noah has a deep knowledge of his subject, and presents the reader with a dizzying array of facts, studies, and statistics drawn from academic and government sources. He constantly reminds his audience that, contrary to what most Americans believe, it's actually much harder to climb up the income ladder here than it is in almost any other first-world country. In one particularly memorable section, he explains how for American men, parental income is more hereditable than height or weight. As he puts it, "I am less the master of my fate than I am of my body mass index."

Noah is refreshingly unafraid to make rulings about what has caused income inequality to rise. The increasing importance of a college degree, computerization, trade, and globalization all play a role, he acknowledges; so does immigration, but to a far smaller degree. He also says "the great divergence can't be blamed on either race or gender," because income gaps between men and women and whites and blacks haven't grown, though overall income inequality has. Unfortunately, these early sections often read like lists of studies and statistics, and Noah misses a few opportunities to enliven these chapters with details or anecdotes. In the section on the gender gap, for example, he tells us that in 2010 just forty-two of the richest four hundred Americans are women, and just four of those women did not inherit their fortunes. But those women's names are nowhere to be found. (For the record, they were Doris Fisher, who founded The Gap; Oprah Winfrey; eBay's Meg Whitman, and Forever21's Jin Sook Chang; more women, including Spanx founder Sara Blakely, have joined the club since.) These sorts of flaws are bizarre and unexpected, as Noah's writing is usually lively and witty.

The heart of Noah's argument comes into view about halfway through The Great Divergence. After attributing the growth of income inequality to a handful of relatively uncontroversial factors, Noah argues that "government policy" plays a "central" role "in creating income inequality." Noah contends that politicians from both parties, spurred by corporate influence, have kneecapped the labor movement, paved the way for obscene executive salaries, and deregulated Wall Street, all in ways that increase inequality. As a journalist who spent much of his career at some of Washington's top political magazines, Noah is a crack chronicler of Beltway history and culture, and makes a strong case that decision-makers in Washington aided the rise of income inequality nationwide. A chapter on the rise of lobbying and corporate influence in DC is the highlight of the book, packed with killer quotes (he cites one Washington lobbyist warning his peers in 1962 that their "principal occasion for alarm . . . is the role of our Federal Government in accelerating the drive for equality") and memorable anecdotes (Noah recounts a Sears lobbyist getting Sen. Eugene McCarthy's phone to ring "off the hook" with calls opposing a change in corporate tax law). These bits are well argued and anything but dry.

Noah ends with the obligatory "what is to be done" chapter, featuring a laundry list of suggested ways to reduce income inequality. Political liberals already support most of his proposals—fattening government payrolls, soaking the rich, regulating Wall Street, making college cheaper, introducing universal preschool—even electing Democratic presidents. (He cites an academic study showing that income inequality goes down under Dems and up under Republicans.) But most of Noah's solutions are Democratic ones, and the things they're fixing—the lack of universal health care, shrinking government payrolls, weak unions, the lack of government-subsidized preschool—are things that Republicans don't think are broken.

Noah bravely tries to account for and dismiss the arguments of his opponents— including the many conservatives who say income inequality is good, isn't growing, or doesn't matter. The problem, as Noah acknowledges, is that even "the most honest conservative response" to growing income inequality—one that acknowledges its existence and growth—still insists that we shouldn't do anything about it. As Weekly Standard writer Matthew Continetti says, "Some people will always be poorer than others."

Conservatives—and Republicans, who are about to anoint one of the 10,000 highest earners in the United States as their presidential candidate—just aren't particularly concerned with growing income inequality. In fact, as Noah's "blame politics" thesis and suggested solutions (elect Democrats!) implicitly acknowledge, GOP policies tend to exacerbate income inequality. And unlike Christopher Hayes's recent book on the same subject, Noah's book doesn't offer a new argument about why conservatives should dread income inequality. That's too bad for people who already agree with Noah, because if he's right that politics is a big part of the problem and liberal policies are the solution, liberals have a lot of convincing to do.

Ultimately, The Great Divergence is a deeply researched and thoughtful book that will serve as a useful reference for wonks and reporters covering the subject. But if you're an Occupy protester looking for an introduction to income inequality, Noah's excellent Slate series is a better bet. It has hyperlinks, better charts, and, best of all, it's free.

Nick Baumann is the news editor at Mother Jones and blogs for The Economist.

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