Toxic Inequality - A Review

In the last decade or so, economic discourse on the left has begun to focus on inequality rather than poverty alleviation. Thomas Shapiro’s recent book, Toxic Inequality: How America’s Wealth Gap Destroys Mobility, Deepens the Racial Divide, and Threatens Our Future, explores that theme. Analysis like that in Shapiro’s volume relies on catching people at the stage after the Great Recession before they had fully recovered and blaming their lot on insufficiency of government regulation. Books like this do well for their cause to claim a crisis for their advantage.


There are basic ideas that Shapiro relies upon that are flawed. He speaks of “tax expenditures” when dealing with exemptions, cuts, and other deductions in the tax code. This is indicative of an underlying assumption that the state is the primary owner of all property and has the right to determine who should get to keep it or not. He also simply assumes that inequality is fundamentally immoral, which he makes no effort to defend.

Despite these assumptions, the book does highlight problems that deserve common concern, even if the solutions differ from those that are likely to be successful in the long run. The fundamental problem is not that rich people have too much, but that the poor are significantly disadvantaged by their poverty. The poor are, in many cases, cut off from adequate (there will never be equal) opportunity to flourish merely because of their poverty.

That should raise concerns among people across the political spectrum. Some of the case studies that Shapiro highlights reflect the logical outcomes of choices made by the subjects of the study. There are several instances that his subjects made irrational decisions and reaped the whirlwind during the financial crisis. However, there are many more cases where circumstances beyond the control of the individual or family drove negative outcomes or closed doors.

Shapiro’s book emphasizes the ongoing changes in the job market, which should be a significant concern to us all. Upper and lower skill jobs are increasing in number while middle skill jobs are largely being outsourced or automated. This is creating a narrower window for people to climb the social ladder, as the gap between low and high skill often involves a significant capital investment for a college education. This represents a challenge our factory-style schools need to adapt to, but also one which lower income, lower funding districts will increasing have difficulty overcoming.

The data in this book is sound and points toward the need for meaningful action on the part of society to seek to increase opportunities for success for those on the bottom end of the financial spectrum and their children. Some of the means that Shapiro suggests to solve the dilemma are likely to lead to worse conditions and be financially unsustainable. For example, Shapiro argues for the creation of make-work jobs by the government designed to inspire full employment. He also argues for increasing the already often unsustainable defined benefit pension plans, like those offered by many municipalities. Additionally, increasing the ability for unions to force people to join is a proposed solution. This assumes that unions always use their dues well, represent the interests of their members effectively, and facilitate authentic human flourishing. In short, many of Shapiro’s suggestions are more likely to exacerbate the negative attributes of our present economy, though they are well-intentioned.

Although the solutions are questionable, Shapiro reveals are real societal problems that need to be addressed. These are just the sorts of issues Ben Sasse was attempting to address in his recent book, The Vanishing American Adult. This conversation needs to continue as we work together across political lines to address the significant problem of the dissociative impact of poverty in our society.