Why Care About Inequality

Over at Ezra Klein's blog, Dylan Matthews suggests that inequality in the United States isn't as big a deal as we might think. Yes the gap between rich and poor in the US is growing, but even the poor in America are relatively wealthy by international standards. If we take a cosmopolitan perspective, then global inequality is decreasing, not increasing. At the end of his piece, Matthews says the following:

"Humans have an unfortunate tendency to care more about those physically and/or socially proximate to them and to severely discount the well-being of those whose pain they don’t see. Milanovic’s data is an important reminder of just how dangerous a blinder that is."

Matthews data is all very interesting, and entirely besides the point.  Many thinkers of the cosmopolitan persuasion disagree with me, but I don't find global inequality terribly relevant. What we should mainly be concerned with is the very "local" inequality - if one can consider a nation-state with 300 million people "local" - Matthews is downplaying. I won't bore you all with an involved analysis, so let me boil it down into two propositions:

1. Empirically speaking, most economic activity happens within a country, and is regulated by the government within that country. Therefore if we are concerned about exploitation and the very distribution of rewards, then the nation-state is the right frame of reference. Any contribution by some middle class citizen in Madison, Wisconsin towards the poverty of somebody Bogata is pretty tenuous. National legal and economic structures are far more salient than global ones.

2. My main interest is in the preservation and extension of democracy, which is permanently menaced by the specter of oligarchy. In every country there is a group of rich people trying to skim off the social surplus and subordinate every economic, social, and political institution. When a democratic nation's wealthy elite grows too powerful, there is a very real risk that the democracy will be overthrown so they can protect (and extend) their privileges. Inequalities in India don't threaten the American republic - it's the home-grown ones you have to worry about.

So from my point of view, whether we are talking about moral questions of social justice or empirical questions of democratic stability, Matthews has it precisely wrong. For Americans, inequality in the United States is a  problem second only to climate change.