The One-Percenter State.

AuthorLemieux, Pierre

A Republic of Equals: A Manifesto for a Just Society

By Jonathan Rothwell

392 pp.; Princeton University Press, 2019

Jonathan Rothwell's latest book--he himself calls it a manifesto--is a big endeavor. It aims at persuading people on the left that "the extreme inequality that exists in the contemporary United States and other countries is not the result of well-functioning markets," but, on the contrary, of "political inequality and corrupted markets." In other words, "well-functioning markets--characterized by mutually beneficial exchange among political equals--lead to egalitarian outcomes with respect to income and well-being."

As the subtitle indicates, the book defends certain moral and political values, but it is based on an extensive review and analysis of the empirical evidence on inequality. The author, who holds a doctorate in public affairs from Princeton University, is the principal economist at Gallup and a senior fellow at the Brookings Institution.

Income and wealth inequality have been prominent topics in the media and public debates for several years now. It's commonly said that, in the United States, the top 1% (about two million individuals) in the pre-tax income distribution increased their share of all pre-tax income from 10% to 20% between 1980 and 2014. Several recent studies, reviewed by Rothwell, argue that this estimate exaggerates inequality, but few analysts dispute that it has been increasing. The threshold to get in the one-percenter group is an annual income of $477,500 (or $268,937 if we consider only the top 1% in labor income). Rothwell emphasizes that all these numbers are estimates that are very difficult to calculate not only because data are limited but also by the very nature of complex constructs like income, wealth, and inequality.

Among the ideas debunked by A Republic of Equals is the frequent claim that the growth in inequality has been caused by globalization. Only 16% of one-percenters in the United States work in trade-oriented, goods-producing sectors. In rich countries, most people, including the rich, work in services. In America, two-thirds of the one-percenters work in health care, education, public administration, finance, real estate, and business services. Rothwell also argues that "trade protectionism is immoral from the perspective of justice"--poorer individuals are the people most harmed by protectionism.

Egalitarian market / The first crucial argument in A Republic of Equals is that human inequality is mostly due to environmental factors, not genetics. Rothwell's review of the statistical and genetic evidence suggests that only 13%-40% of the variation in cognitive ability between individuals is explained by genes. (The 40% figure comes from studies of twins, but more recent genomic studies have revolutionized the field and gravitated to the lower bound.) The so-called Flynn effect--the fact that measured IQ has increased with timewould be unexplainable with a purely genetic explanation of cognitive ability. This is a complex and controversial topic, but many readers will be persuaded by Rothwell's argument that most human differences are explained by environmental factors such as education, family, or where one lives.

According to the author of A Republic of Equals, education plays a major role in cognitive ability and the acquisition of useful character traits. He cites much evidence that IQ, measured by standard tests, increases with education. Unequal access to education is then viewed as a major impediment to cognitive ability and, thus, to future income and health. (This claim clashes head-on with Bryan Caplan's thesis in his 2018 book The Case Against Education, which argues that education does not contribute much to increasing intellectual abilities, but only to revealing or signaling them, and that individuals spend too much time in school. See "A Degree Too Far," Fall 2018.)

Rothwell demonstrates the absence of any significant difference between the cognitive abilities of different racial groups. Jews' and Asians' abilities have been exaggerated while blacks' have been underestimated. Citing tests done at the time, he notes that "Northern black people had higher IQs than recent Jewish immigrants in the 1920s." It is only during the last half-century that the IQs of Jews and Asians have surpassed those of whites and blacks. Rothwell provides much evidence for this fascinating claim. "No group of people," he writes, "has persisted in maintaining sustained levels of high status for long enough periods for population genetics to explain their success."

The individuals who show better results at IQ tests or in life success have simply invested more in education. But why have they done this? Because--if I read Rothwell correctly--their circumstances incited them to and because they did not believe that their futures were genetically predetermined...

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