Is Flatter Freer?
Bill Henderson’s excellent posts on the bimodal distribution of lawyer salaries have sparked a lot of commentary in the blogosphere. But the stratification of lawyers’ salaries shouldn’t be surprising–inequality pervades the economy. As Robert Frank and Philip Cook observed in The Winner Take All Society (in 1995), professionals like lawyers, doctors, and dentists need clients–and those most adept at serving the interests of the 1% or so in control of over 40% of the nation’s financial wealth are going to prosper. The bimodal distribution of dentist incomes was observed even by the mid-1990s.
How does rising inequality affect career choices? I found this excerpt from Daniel Brooks’s book The Trap pretty compelling:
In 1970, when starting teachers in New York City made just $2,000 less than starting Wall Street lawyers, people who wanted to teach taught. Today, when starting teachers make $100,000 less than starting corporate lawyers and have been priced out of the region’s homeownership market, the considerations are very different. It may be counterintuitive, but talented young people actually have less control over their lives in a society in which they can get rich quick because, in such a society, the consequences of not getting rich quick become much more serious. When a middle-class income no longer buys a middle-class life, things that rarely or never make one rich become harder and harder to pursue. When it comes to the distribution of wealth, you’re freer when it’s flatter.
The mainstream media don’t like to talk about such counterintuitive ideas. But Brooks’s observations ring true with many. In today’s society, your class can determine whether your kids end up in a decent school, whether you have health insurance, even whether you can maintain friendships:
If, as Samuel Butler said, friendships are like money, easier made than kept, economic differences can add yet another obstacle to maintaining them. More friends and acquaintances are now finding themselves at different points on the financial spectrum, scholars and sociologists say. . . . As people with various-sized bank accounts brush up against each other, there is ample cause for social awkwardness, which can strain relationships, sometimes to a breaking point. Many find themselves wrestling with complicated feelings about money and self-worth and improvising coping strategies.
Brooks thinks those coping strategies are hard to come by; he asserts that in a “nation of self-financed higher education, tenuous health-care coverage, and out-of-control housing costs, Adam Smith’s ‘invisible hand’ has hardened into an invisible fist.” Provocative thoughts. I guess there might be some objective harms from inequality.