A few thoughts on rising income inequality

 

 

Let us now praise famous men

 

I’ve been asked how I respond to the issue of widening income inequality raised a couple of days ago by President Obama and discussed here.

 

I have a number of thoughts about it.  Here are a few, hastily assembled (upon my return from the annual ward Christmas breakfast) in no particular order and with absolutely no claim to completeness:

 

Government tends not to help on this issue.  In fact, it often tends to hurt.

 

1.  Federal welfare policy has encouraged dependency, and has subsidized delinquent fatherhood.  This has led to a meteoric rise in single-parent families — a fairly reliable predictor of low income — and to the feminization of poverty.  And those, in turn, tend to create a new generation of poor and often unemployable children.

 

2.  Moreover, government agencies — which have proliferated in number and intrusiveness — tend to favor large corporations and large unions, the only organizations with the budget resources to systematically cultivate regulatory agencies and legislators and, thus, the organizations most reliably capable of garnering access to and the attention of powerful politicians.  It’s no coincidence that six of the nation’s ten richest counties are clustered right around Washington DC, which, before the rise of the behemoth regulatory state, was a small, sleepy Southern town.  Many large corporations have moved, or are moving, their headquarters to the greater DC area, because they know where the power is concentrated.  (A simple Google search for corporations moving their head offices to the area around Washington in recent years is instructive, if not stunning.)  Small businesses tend to lag behind in terms of access to federal authorities; most of them are local, for that matter, and cannot simply move to Maryland or Virginia.  Yet it’s in small business that much of American wealth is created and where economic recoveries typically begin.  That’s why it’s such bad news that small-business regulations have surged under President Obama even while the rate of small-business formation fell to record lows.   Although there has been some improvement lately in that rate — people and businesses adapt; they have little choice — the launch of Obamacare (with its difficult registration, its unpredictable consequences, its ever more whimsical enforcement, and its increased costs) may jeopardize those gains and could make the situation much worse.

 

3.  American public education is often mediocre, and it’s especially bad in poor areas.  It underserves disadvantaged people to the point of malfeasance.  (See here, for instance.)  Even graduates of our schools often find it difficult to compete, nationally and internationally.

 

4.  Drug policies have permitted, and perhaps fostered, widespread addiction, which often renders its victims essentially incapable of productive employment.

 

Having hastily written the above, I’ve also located some interesting and relevant links, with either reinforce what I’ve written above or, in some cases, go beyond it.  Here are two of them, chosen essentially at random from a vast pool:

 

http://www.nationalreview.com/corner/365536/obamas-failed-approach-has-increased-income-inequality-jeffrey-h-anderson

 

http://www.washingtonpost.com/blogs/right-turn/wp/2013/12/05/10-problems-with-obamas-income-inequality-speech/

 

And here’s a bracingly partisan take on the matter, with which I fully agree.

 

 

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  • noel

    Why doesn’t Mormon Patheos have someone write on occasion who is not so conservative politically and theologically?

    • DanielPeterson

      You’ll have to take your complaint up with the leadership of Patheos.

      I have nothing to do with the management of the thing.

      I started a blog. They asked me to bring it onto Patheos. I did. End of story.

    • kiwi57

      Oh, you mean like Kiwimormon? Or The Mormon Therapist? Or Faith Promoting Rumor? Or, well, absolutely EVERY other Patheos blogger on the Mormon Channel?

      • DanielPeterson

        Indeed.

  • Sean Healy

    I am not convinced that, from a secular perspective at least, income inequality is per se a bad thing. And therefore I am not convinced that rising income inequality is a bad thing. Sure, if it’s the “rich get richer, poor get poorer” kind of rise in income inequality, that’s one thing. But what’s been going on in this country, at least pre-Obama, is everybody getting richer, just at different rates.

    Consider this Heritage Foundation report: http://www.heritage.org/research/reports/2007/08/how-poor-are-americas-poor-examining-the-plague-of-poverty-in-america

    Here’s an excerpt:

    - Forty-three percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.

    - Eighty percent of poor households have air conditioning. By contrast, in 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.

    - Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.

    - The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)

    - Nearly three-quarters of poor households own a car; 31 percent own two or more cars.

    - Ninety-seven percent of poor households have a color television; over half own two or more color televisions.

    - Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.

    - Eighty-nine percent own microwave ovens, more than half have a stereo, and more than a third have an automatic dishwasher.

    Basically, this report says that in 2005 (when the report was published) 12.6% of Americans lived below the poverty line. That’s about 1 in 8. And yet these poorest Americans have more, in terms of material possessions, than the average European, even though all of Europe practices redistribution of wealth to a much greater degree than America. No wonder so many people would rather be “poor” in America than middle class elsewhere.

    I lived in Europe for four years. We lived in four apartments in three different countries. In none of the places we rented did we ever have an air conditioner. We did have a dishwasher in two of them. We never had more than two rooms per person. We never had a garage, and we only had a car (and only one car) for the second half of our time there. We never had more than one bathroom. In only one place did we have a television (but it was a color television and it did have satellite reception). We had a porch at one place, and a small balcony at two others. Disclaimer: I was a student at the time, so we definitely were not living like middle-class Europeans. But we certainly were not living as well as the “poor” in the U.S.

    So if rising income inequality means that our poor have more wealth than most middle-class people anywhere else in the world, I say let it rise.

    By the way, this additional report shows more of the “hardships” our poor must live through, such as the fact that over 17% of them own big-screen TVs: http://www.heritage.org/research/reports/2011/07/what-is-poverty. (I don’t even have a big-screen TV, and I make almost three times the federal poverty threshold for my family size.)

    Please note, I am not saying that more material wealth automatically means greater quality of living. All I am saying is that rising income equality doesn’t mean the poor are getting poorer. I am also not saying that there are no genuine poor in America, just that our poverty line is artificially high.

    For example, about 1.5% of those below the poverty line say that they often do not have enough to eat, and an additional 6% say they sometimes do not have enough to eat. So yes, real poverty exists here, but it’s less than 3 million people, not over 30 million. (That is, less than 1% of the population instead of over 12%.)

    Again, this is based on pre-Obama data; since he took office, median income levels have dropped across the board – that is, the poor are getting poorer (along with everybody else) – so we may have more truly poor now than we used to.

    • mike

      The census statistics are very telling. Michael Medved, in his book The Ten Big Lies About America, also goes into detail about the incredible increase in home square footage by the middle class over the last 40 years, the greater number of cars and t.v.s owned by the middle class, and the hundreds of thousands of middle income Americans who now go on cruises annually. We face serious economic issues, but the liberal talking point that the rich are getting richer at the expense of the middle class is a sham.

  • RaymondSwenson

    We provide aid to people with disabilities, and free public education, and job training, etc. But Obama wants to repeal the laws of economics by demanding that businesses pay people three times what they are worth in terms of skills. The notion that you should be able to make a lifelong career out of selling burgers is out of touch with reality. The belief that it won’t increase unemployment is just stupid.

    It is ironic that Obama likes to ridicule his opponents on subsidies to “green energy” for scientific ignorance, but then he totally ignores the science of economics in that policy and every other policy of his administration.

  • R Crawford

    DC 28:6 For if ye are not equal in earthly things ye cannot be equal in obtaining heavenly things;

    Francis Bacon wrote “Above all things good policy is to be used so that the treasures and monies in a state be not gathered into a few hands… Money is like fertilizer, not good except it be spread.” (Francis Bacon of Seditions and Troubles)

    In an age where CEO’s make upwards of 300 times per hour of the amount an average employee earns (http://go.bloomberg.com/multimedia/ceo-pay-ratio/) when the top 20% of citizens of the United States control 85% of the nations wealth (2007 figures (http://en.wikipedia.org/wiki/File:U.S._Distribution_of_Wealth,_2007.jpg) when given that wealth enables influential power to legislate and elect. Is the future inevitably bleak. You don’t have to be a prophet to see that practically every time wealth becomes disproportionate, the people will eventually suffer.

    According to the Congressional Budget Office, between 1979 and 2007 incomes of the top 1% of Americans grew by an average of 275%. During the same time period, the 60% of Americans in the middle of the income scale saw their income rise by 40%. Since 1979 the average pre-tax income for the bottom 90% of households has decreased by $900, while that of the top 1% increased by over $700,000, as federal taxation became less progressive. (http://en.wikipedia.org/wiki/Distribution_of_wealth)

    Do those with power, dictators, kings, billionaires, or polical power brokers of any stripe ever attempt to redistribute their wealth? Altruism does exist as described in Maslows’ Hierarchy of Needs, but it remains a relatively small fraction of the available resources. Only democratically represented government can be held accountable to maintain social stability. Inequality socially or financially, historically always leads to separation of classes and suffering by the disadvantaged which is the majority of the population. Given time the disadvantaged will always eventually rebel. One historian (sorry don’t recall the source) commented that if the great depression had gone on for a few more years we would be living in under a different form of government. Minorities have and are rising all over the world. Only the future will reveal the ultimate fulfillment of capitalism. Does capitalism by its very nature eventually lead to such inequality that it will produce its own demise.

    If we believe that in order for meaningful society to exist there has to be a distribution of power with checks and balances. Can there be checks and balances in a society in which the wealth is controlled by the few?

    • DanielPeterson

      I’m all for greater equality. But granting more power to the state is a very ineffective — not to mention a very frequently dangerous and even lethal — way of attempting to achieve that.

      Anyway, the United States simply isn’t an oligarchy. That’s a silly suggestion.

  • Janet Thompson Umberger

    I take issue with your comment on public education. The University of Illinois recently did a study comparing students from public and private schools. They were careful to compare students from similar socio-economic backgrounds. The results showed that the students in public schools did better than their peers from private schools. People think private schools are better. Well, if the kids in private schools don’t make good grades, their parents pull them out of that school and find another which is “selling”grades. OK, that is my take on it. But failing students cost them money and trouble makers are kicked out of their schools. I’m tired of our public schools being maligned. No other country undertakes to provide a free education to all students, including those with special needs. Please find this article and study it. As an Illini alum, I was proud to read this.

    • DanielPeterson

      The simple fact is that, compared internationally, American students fare poorly. And they have for many years.

  • dangerdad

    Of course, the other possibility is that the whole thing is a lie. Nearly every stat about the economy is massaged to a degree that they’re no better than just being made up. A UC Berkeley (my alma mater) econ professor? Why would I believe him without replicating every single datum in his study?

    And furthermore, I keep hearing about income inequality while people ignore economy of scale. Uh, shouldn’t the CEO of the company that now does twice as much economic activity get more pay than the janitor? And proportionally more than it did when it had half the workers? Why would the janitor’s pay go up in that period.

    The whole reasoning is based on lies and sophistry.

  • DanielPeterson

    Wow. I’m really sorry that I’m testing the limits of even YOUR legendary patience and charity, Crixus/Kevin Graham.

    I get a kick out of your mention of Sean Hannity and Thomas Sowell. I can’t remember ever having cited Sean Hannity here or anywhere else. I very rarely see even a few minutes of his show, and almost never an entire episode.) I never, ever, listen to his radio program. Nor, for that matter, can I remember citing Thomas Sowell — though I might have, since (please forgive me, Kevin/Crixus!) I admire his work a great deal.

    This is my blog, incidentally. I started it, and I produce it. It’s for expressing my views and publicizing things that I want to publicize. You seem to regard that not only as evidence of cowardice on my part, but as, somehow, an injustice.

    Your reaction seems, to me at least, more than a bit weird.

    You’re free to start your own blog. In the meantime, I haven’t censored you here, so I’m not quite sure what your complaint is.

  • Sean Healy

    I read the article you linked, and noticed something interesting. The authors do not dispute a single finding of the Heritage Foundation’s series of articles on poverty; they merely dispute the conclusions.

    In fact, their argument essentially boils down to “Well, they’re right that the vast majority of America’s poor are merely relatively poor and not absolutely poor, but in a rich country like ours, people shouldn’t even have to live in relative poverty.”.

    While I agree with this argument, the fact that America’s relatively poor have more material wealth than the average European (note: not the average poor European – the average European overall) means that the relative poor are a low priority in my opinion. And as the Heritage Foundation reports point out, it would probably be a low priority for most Americans if they knew this truth.

    Instead, the Obama administration and the media cite the official poverty rate (12.6%), neglect to point out that that rate includes the relatively poor, and show an example of absolute poverty, while omitting the fact that less than 1% of America’s poor live in such conditions.

    The point of this deception is to garner support for government programs aimed at redistribution of wealth. Unfortunately, no government on earth has ever succeeded at redistributing wealth. What they have succeeded it is reducing overall wealth and then spreading what remains around in what they claim is a more equitable fashion.

    Don’t get me wrong, I don’t disagree that income equality is bad. I just don’t think that attempting to fix the problem via bigger government is a viable solution. Everybody, rich and poor alike, just ends up worse off.

    If you asked most relatively poor Americans whether they would rather keep their big houses, multiple cars, and wide-screen TVs, or take a hit in the material wealth department so that the income gap would be smaller, I’m pretty sure they would pick absolute wealth over relative wealth.

  • mike

    So you are disputing the census data cited by Heritage??

  • DanielPeterson

    Yes. And there are left-wing think tanks, too.

    So what?


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