What is Fairness?

Conservatives take issue with liberals when we argue for fairness in American economic, political, and social life. “Life isn’t fair,” they argue, with more vehemence than I think warranted, but conservatives can get pretty worked up over anything that sounds like socialism, and to them, everything we liberals say sounds like socialism. I think we liberals are partly at fault for this knee-jerk reaction on the part of our conservative friends, because we use the term “fair” too broadly.

So what is fairness? The Federal Communications Commission (FCC) introduced a law in 1949 that required the holders of broadcast licenses to present both sides of controversial issues of public importance. News was to be presented in a manner that was, “honest, equitable and balanced.” The FCC doctrine is no longer with us (that should be obvious), but the words honest, equitable, and balanced constitute a good definition of “fair.” But when we liberals discuss fairness with our conservatives we sometimes misuse the term, or use it imprecisely.

Consider the Occupy Wall Street (OWS) movement, for example. One of their rallying cries is, “We are the 99%.” The slogan refers to the income disparity in America, which has grown significantly since the late 1970s to the point today where the top 1% control 40% of wealth in the U.S. When liberals, who are largely sympathetic to the OWS activists, argue that this isn’t “fair,” conservatives are apt to call us socialists, or worse, communists, who want the state to dole out equal shares to all.

We liberals give conservatives the opportunity to construct this straw man by not being precise in what we’re saying. What we mean is that policy distortions that lead to inequality, such as unregulated or under-regulated financial institutions, the near monopoly power of too-big-to-fail, and preferential tax treatment for special interests, are bad for America. They’ve allowed unethical and even criminal enterprise, decimated the middle class, led to shrinking opportunities to realize the “American Dream,” resulted in a deteriorating infrastructure, and decreased overall economic efficiency. Clearly, this is a nuanced treatment of “fairness,” and in today’s political climate, nuance is rare.

"Corporations are people too, my friend"

On a related issue of fairness, voters, both liberals and even many conservatives I know, question the “fairness” of the unrestricted flow of cash to political parties, candidates, and their surrogates. This flood of money resulted from the 2010 Citizens United case in which the Supreme Court decided (5 to 4) that bans on corporate contributions were unconstitutional, or as Mitt Romney put it, “Corporations are people, too” (the ruling applies to unions and NGOs, as well). Justice John Paul Stevens wrote in his dissent, “The ruling threatens to undermine the integrity of elected institutions across the Nation.” In this sense, when we complain that campaign financing is no longer “fair,” what we mean is that they are not “balanced” -- they allow moneyed interests to wield disproportionate influence on both elections and the elected.

We depend on our elected officials to represent the people, all the people. And yet the median net worth of our congressional “representatives” is almost nine times the typical American household. Fully 250 members of congress are millionaires, and 57 have a net worth that puts them comfortably in the 1%.

The founding fathers, well-read in history, and well-versed in the literature of the French enlightenment and the philosophy of Descartes, Voltaire, Bacon, Locke and Hobbes concluded that successful republics required an equitable distribution of wealth. They knew that where wealth concentrates, political power can never be democratically shared. They knew such a situation to be inherently unfair. And they knew what unfair meant. 

Oligarchy, American Style

By Paul Krugman
The New York Times, November 4, 2011

Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?

Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It’s time to roll out the obfuscators!

Anyone who has tracked this issue over time knows what I mean. Whenever growing income disparities threaten to come into focus, a reliable set of defenders tries to bring back the blur. Think tanks put out reports claiming that inequality isn’t really rising, or that it doesn’t matter. Pundits try to put a more benign face on the phenomenon, claiming that it’s not really the wealthy few versus the rest, it’s the educated versus the less educated.

IN 1985, THE FORBES 400 were worth $221 billion combined. Today, they’re worth $1.13 trillion—more than the GDP of Canada.

So what you need to know is that all of these claims are basically attempts to obscure the stark reality: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

The budget office laid out some of that stark reality in a recent report, which documented a sharp decline in the share of total income going to lower- and middle-income Americans. We still like to think of ourselves as a middle-class country. But with the bottom 80 percent of households now receiving less than half of total income, that’s a vision increasingly at odds with reality.

In response, the usual suspects have rolled out some familiar arguments: the data are flawed (they aren’t); the rich are an ever-changing group (not so); and so on. The most popular argument right now seems, however, to be the claim that we may not be a middle-class society, but we’re still an upper-middle-class society, in which a broad class of highly educated workers, who have the skills to compete in the modern world, is doing very well.

It’s a nice story, and a lot less disturbing than the picture of a nation in which a much smaller group of rich people is becoming increasingly dominant. But it’s not true.

Workers with college degrees have indeed, on average, done better than workers without, and the gap has generally widened over time. But highly educated Americans have by no means been immune to income stagnation and growing economic insecurity. Wage gains for most college-educated workers have been unimpressive (and nonexistent since 2000), while even the well-educated can no longer count on getting jobs with good benefits. In particular, these days workers with a college degree but no further degrees are less likely to get workplace health coverage than workers with only a high school degree were in 1979.

So who is getting the big gains? A very small, wealthy minority.

The budget office report tells us that essentially all of the upward redistribution of income away from the bottom 80 percent has gone to the highest-income 1 percent of Americans. That is, the protesters who portray themselves as representing the interests of the 99 percent have it basically right, and the pundits solemnly assuring them that it’s really about education, not the gains of a small elite, have it completely wrong.

If anything, the protesters are setting the cutoff too low. The recent budget office report doesn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, found that almost two-thirds of the rising share of the top percentile in income actually went to the top 0.1 percent — the richest thousandth of Americans, who saw their real incomes rise more than 400 percent over the period from 1979 to 2005.

Who’s in that top 0.1 percent? Are they heroic entrepreneurs creating jobs? No, for the most part, they’re corporate executives. Recent research shows that around 60 percent of the top 0.1 percent either are executives in nonfinancial companies or make their money in finance, i.e., Wall Street broadly defined. Add in lawyers and people in real estate, and we’re talking about more than 70 percent of the lucky one-thousandth.

AMONG THE FORBES 400 who gave to a 2004 presidential campaign, 72% gave to Bush.

But why does this growing concentration of income and wealth in a few hands matter? Part of the answer is that rising inequality has meant a nation in which most families don’t share fully in economic growth. Another part of the answer is that once you realize just how much richer the rich have become, the argument that higher taxes on high incomes should be part of any long-run budget deal becomes a lot more compelling.

BUSH’S TAX CUTS GIVE a 2-child family earning $1 million an extra $86,722, equivalent to Harvard tuition, room, board, and an iMac G5 for both kids.

The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?

Some pundits are still trying to dismiss concerns about rising inequality as somehow foolish. But the truth is that the whole nature of our society is at stake.

"If a free society cannot help the many who are poor,

it cannot save the few who are rich" -  John F. Kennedy