Money: Who Has How Much and Why?

Over the last two decades the distribution of economic rewards in the United States has grown steadily more unequal. Although living standards have improved -- at least a little -- for just about everyone, the incomes of those at the top of the scale have increased much faster than those at the bottom. Between 1975 and 1995, the income of the top one-fifth grew by 35 percent while the bottom fifth's inched up by a mere one or two percent. The average household now has an income of $45,000 a year, but the spread between the richest one-fifth (with an average income of $109,000) and the poorest one-fifth (with only $8,000 a year) is wider than it has been in the past and wider than it is in other industrialized democracies. These growing disparities are partly driven by demographic changes, including more single-parent families at the bottom of the distribution and more two-paycheck families at the top. But they also result from a job market which rewards the talented and fortunate exceedingly well while leaving the less talented and fortunate with meager incomes. It's a high stakes game in which education is, more than ever, the key to success.

These are just a few of the facts to be gleaned from Andrew Hacker's new book, Money: Who Has How Much and Why? In the book, you discover just about everything you ever wanted to know about this topic, at a level of detail that would delight any town gossip. For example, we learn that orthopedic surgeons have an average income of $304,000 a year whereas pediatricians earn only $113,000 a year; that in 1995, the paychecks of corporate chairmen averaged 190 times that of a typical worker, up from a ratio of 40 times the wages of a typical worker 20 years ago; that in the country's hundred largest law firms, partners typically make $446,000; that 137 Americans have personal fortunes exceeding $1 billion; and that Imelda Marcos has 3,000 pairs of shoes. It is often said that Americans would rather talk about sex than money. Hacker makes the topic of money not only sexy but, wherever possible, titillating. The prose bounces playfully off the pages, albeit in a tone that leaves little doubt in the reader's mind about the author's own ideology.

Despite his explicit request that the book not be read as a plea for more income redistribution, it is hard to read it as anything else.

But an easy fluency with these issues doesn't add u to a new paradigm. What the country needs right now is not just more facts about who makes how much money. It needs to have a deeper conversation about how to interpret these facts and what to do about them. On these matters, I found the book disappointing. Although Hacker gives some attention to the underlying reasons for current disparities -- and there are some fascinating glimpses of how wealthy individuals justify their very large incomes -- in the end the author seems to favor an explanation that emphasizes greed and materialism over talent and energy. He has no faith in market solutions to the complex question of how much someone is worth, but neither does he have anything better to suggest.

The focus of the book is almost entirely on the unevenness of rewards. Equally important is the process by which some win and some lose in this competition for money. If the process were fair and efficient, then the fact that some do very well and others quite badly would presumably be acceptable. Certainly, we do not have a complete meritocracy in the United States. But this book, like so many others, gives pride of place to the handicaps of race and gender, when the real problem is that children who are born into very disadvantaged families, whatever their other characteristics, have few routes out of poverty. If we knew how to improve their life chances -- while still preserving the right of families to have and raise their own children -- perhaps those greedy billionaires would see the wisdom of sharing more of their wealth with others. Public opinion polls suggest that public stinginess about supporting welfare or other social programs is related less to greed than to disappointment about what such programs have been able to accomplish.

Yes, too much money is concentrated in too few hands, and too many are mired at the bottom, but this is not news, and hand wringing about the unfairness of it all won't produce solutions.