National Review Jukes The Stats

[Guest post by Nathan Pippenger]

Jim Manzi, a sharp writer with whom I frequently disagree, has a post up at National Review that made me do a double-take. It’s about income inequality—and it’s hardly a persuasive argument.

Manzi, who lives in Europe, admits that income inequality is “a symptom of deep problems,” but he bristles at “the cartoon of ‘Europe equal, America unequal.’” Now, I’ve done a lot of reading about income inequality—more, I think it’s fair to say, than even most wonks (I helped TNR’s Tim Noah with his excellent upcoming book). And I have to admit, this “cartoon” is unfamiliar to me. But Manzi is convinced it’s out there, so he’s suggested a revision that might be characterized as: “Europe unequal, just like America, so stop worrying so much!”

To support this revision, Manzi groups all 27 European Union countries together to come up with an EU-wide measure of inequality. He finds that, by this measure, “America and Europe have extremely similar levels of economic inequality — Europe’s is just chunked by country.” Consider that statement for a minute, especially the part after the em-dash. It’s a pretty big qualifier!

The grouping method is, erm, interesting. Its most obvious feature is to basically eliminate the question of how different nations’ policies have affected inequality by collapsing very different governments and societies into one undifferentiated whole.

Manzi does gesture towards a variety of EU-wide policies to indicate why most of the continent can be viewed as one unit, but this is a wildly distorting move. After all, there is surely something interesting about the phenomenon of European countries which have thriving economies, generous welfare states, and low levels of inequality—three things which, according to prevailing conservative dogma, cannot possibly coexist. In fact, eliminating the role of discrete national governments implicitly gives America’s own politicians a pass on growing inequality, even though there is extensive evidence to suggest that the problem is at least partially the result of decades of government policies, mostly Republican.

But there’s another, perhaps even more crippling, problem with the analysis. “Europe” is a pretty big category, and it’s not at all evident that it can be appropriately compared to the United States. (What’s more, Manzi’s method leaves out Norway and Switzerland—two prosperous European nations which are not in the EU, but which are much more equal than the United States.) Isn’t the more natural comparison Western Europe? Manzi should have seen warning signs when he noted that, by his calculations, the bottom income quintile of Europe is populated in large part by “a majority of the population of Bulgaria, Latvia, and Romania.” What do those countries have in common? They were all, until just a few decades ago, ruled by communists. That’s right: National Review is trying to downplay the urgency of income inequality among Americans by noting that it’s only about as bad as the disparity between capitalist Europe and recently-communist Europe.

*A note for the lazy: If you scrolled down to the bottom because this post was too long, here’s an even simpler demonstration of Manzi’s folly: The CIA already constructed a ranking of inequality by its most common measure, the Gini index—and it included the European Union, allowing for easy comparison with the United States. The result: Not even close.