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Wednesday, June 22, 2005

How bad is U.S. Inequality?

During her lifetime, Ayn Rand approved writings from only two other people to be included in the "cannon" of works that made up her egoist philosophy, Objectivism. One of them was Alan Greenspan, current Federal Reserve Chairman. Greenspan opposes helping the poor on principle. His inegalitarian credentials are second to no one else alive.

So, when Alan Greenspan tells Congress that the income gap between the rich and the rest of the U.S. population has become so wide, and is growing so fast, that it threatens the stability of democratic capitalism, perhaps it is time they admitted there is a problem, no?

Of course, his proposed solution is exactly what I described in my article for The Free Liberal as the conservative solution: Better education. As I stated in my article, the problem with that is that better education just provides more increased value from the labor-capital exchange that capital can take for itself. (Which is why conservatives, who represent the capitalists, like it.) Want proof of my claim? Consider the Flynn effect on IQs. Political scientist James Flynn did a survey of IQ scores all around the world over the last hundred years and discovered that they are increasing steadily everywhere for every type of intelligence. Rates vary, but some scores are increasing by as much as one standard deviation per generation. For one type of test, he concluded that someone who scored among the best 10% a hundred years ago, would nowadays be categorized among the 5% weakest.

Now, apparently there are reasons to be suspicious that education is the cause of this increase, and I certainly agree that our education system fails many children - particualrly the poor - miserably. But despite this, the population is apparently getting smarter anyway. But the average person in the lowest 5% of IQ today is probably still much poorer than the average person in the top 10% of IQ a century ago, despite their equal intelligences. And when given modern equipment and production methods, the modern "moron" is probably MUCH more productive than his equally intelligent "bright" counterpart a century ago. So if he is equally intelligent and more productive, why is he poorer? Who is getting all of that excess wealth that he is producing?

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