The rich should help, but ask nicely

Richard Riordan and Eli Broad would agree with the typical reader of this blog that the current scale of income inequality in this country is a bad thing. They'd also agree with the premise that wealthier Americans have a responsibility to help close the income gap -- to a point. Riordan and Broad are philanthropists, and Riordan was once mayor of Los Angeles. In an op-ed running in papers across the country, they worry that critics of inequality will blame the rich too much for the current state of affairs. They challenge the assumption that "a minority of Americans has become richer by making a majority of people poorer." At the same time, they note that since 1973, "the number of middle-class jobs has been reduced by global competition and automation." But if jobs have been lost in order to automate a business or otherwise make it more competitive, doesn't that mean that people are being laid off in order to make other people wealthier, or at least so wealthy people can maintain their standard of living? It may be true that from a "compete or die" standpoint, the employer has no choice but to cut jobs, and doesn't do so out of malice toward employees, but the effect on the unemployed is the same however the employer feels about it. In the writers' view, however, the real problem is that working people lack the tech skills to get the jobs still available in this country. That's where the wealthy should come in. Riordan and Broad want others to follow their example by investing in both American jobs and American education, to help make it possible for Americans to get the skills they need to get the jobs. They close high-mindedly:

 What we all need to continue to believe, and to act on, is the conviction that it's wrong and socially destructive for the rich to forget those who still can use a hand up. Rather than investing in hedge funds and other forms of financial speculation divorced from the real economy, more of the wealthy need to accept the responsibility of investing in job-creating enterprises. At the same time, they need to make educating the workers to fill those jobs a principle focus of their philanthropy.

These are good ideas in the long term, but what do you do about now? What do we do for people before they get up to speed in the job market? For that, it seems, Riordan and Broad have nothing, because there's probably no alternative in the short term to income redistribution, and that, to them, is a bad thing. Immediate solutions like increasing tax rates for the rich or raising the minimum wage may not be wrong in principle, but the authors deem these remedies "counterproductive." They are counterproductive mainly because they may provoke capital flight. "When taxes rise to onerous levels," they observe, "the wealthy move on, taking their investments, tax payments and philanthropic contributions with them." The authors can't, or won't, imagine any remedy for this. That's understandable, I suppose, since the man of wealth has as much prerogative to seek his fortune elsewhere as the man without. But the inability of Riordan or Broad to imagine an alternative underscores the limitations of their approach to inequality. Let's take them at their word that they want less inequality, that they find greater parity of wealth desirable. Let's concede that their contributions toward education may help achieve their long-term goal. But for all that they find the idea admirable, they don't quite find it imperative. They're ready to tell their fellow millionaires what they should do, but might not dare tell them what they must do. The exhortation I quoted above is fine stuff, but if they can't or won't compel anyone to live up to their ideal, they may as well say,"These are things you should be doing, but if you don't -- it's too bad, but whatever." What really matters more to them: achieving greater equality or protecting the right of capital to go where it will? I suspect that Riordan and Broad would call this a false choice. Doing so would be their choice, but that wouldn't make it the truth.