In my column today I criticized Barack Obama for rhetorically embracing Teddy Roosevelt and his trust busting ways, while implementing a very un-TR-like agenda of basically leaving entrenched monopolists in place and just asking people to pay higher taxes. Jon Chait today sagely notes that one can spin this out into a comprehensive critique of Obamaism, which seems founded on the idea that basically all is well with the American economy except rich people don't pay enough in taxes. Chait defends this approach, saying he's "unconvinced that there is a useful plan that can actually reverse or halt growing pre-transfer inequality at an acceptable price."
I think that may be correct, but that it takes an unduly narrow view of the stakes. I'm going to appropriate the term that serves as the title of Dean Baker's excellent book The End of Loser Liberalism, and say that this tax-centric approach to governance misses a lot of crucial issues that don't necessarily relate directly to the issue of inequality. One key element is simply the implicit moral dimension of the economy. Loser liberalism, by implying that all fortunes are created equal, alternately goes too easy on scoundrels and comes down too hard on people who are merely prosperous. Chris Paul is in the one percent, but he's also a kid from a working class background who's spent his entire career being structurally underpaid and victimized by cartels. By contrast, even substantially lower-paid (and there's lots of room to be both lower-paid than Chris Paul and very highly paid) folks working on Wall Street are making a living in an industry that's systematically dependent on implicit and explicit government guarantees. Making a living as a patent troll is totally different from making a living as a genuine innovator. Dentists enriching themselves by blocking competition from independent dental hygenists and tooth whiteners aren't the richest people around, but their income represents a healthy share of ill-gotten gains. A viable egalitarian politics needs to find a way to distinguish between "malefactors of great wealth" whose revenue streams need to be systematically reappropriated, and people who are just paying higher tax rates because of the declining marginal utility of income.
Reasonable people are going to disagree, of course, as to who exactly the malefactors are and what policy levers can and should be used against them. And I hesitate to speculate as to what the consequences of my own preferred ideas would be for the pretax gini coefficient. But there's something deeply unimaginative, cramped, narrow, and -- I think -- fundamentally incorrect about this vision of America where everything is on the level, but people need to pay a top marginal income tax rate of 39.5% rather than 35%.