by John Hawkins | January 4, 2014 12:28 am
After the last century, it shouldn’t even be controversial to assert that the more a nation focuses on income inequality, the more it hurts the poor. After all, there have been whole societies formed around the slogan Marx popularized, “From each according to his ability, to each according to his need” — and they’ve universally been lousy places to be poor. Would you rather be poor in America or Cuba, Vietnam or the old Soviet Union? If the question doesn’t answer itself, P.J. O’Rourke’s quotation about traveling to the Soviet Union with a gang of Communists should answer it for you, “These were people who believed everything about the Soviet Union was perfect, but they were bringing their own toilet paper.” Meanwhile, we live in a world where China has seen tremendous economic growth by embracing some of the capitalistic policies that made America a superpower while the Democrats are embracing some of the policies that led to hundreds of millions of Chinese living in huts on less than a dollar a day.
Getting beyond that, shouldn’t there be massive income inequality between someone with rare skills who works 70 hours a week and an unskilled part time worker? Most people say “yes” and even liberals who talk obsessively about income inequality behave as if there should be a difference. Do you see Michael Moore, Barack Obama, or Al Gore refusing to work for more than $20 an hour because they want to show solidarity with poor workers? No, they believe they deserve their money, but those “other people” should have more of their money taken away for the common good. If a CEO should have his pay limited, why shouldn’t Michael Moore make $20 an hour? If Barack Obama thinks fast food workers are so vitally important to the economy, why doesn’t he reduce his salary to the point where he only makes as much as they do? If Al Gore really believes in fighting income inequality, why doesn’t he refuse to make more than the guy who spends 8 hours a day saying, “Welcome to Wal-Mart?”
The truth is that income inequality is of minimal importance in a nation like America, where so many people already move between classes, where the poor are doing so much better than they used to, and where our poor already do so well compared to the rest of the world. “Among children from families in the bottom fifth of the income distribution, 84 percent of those who go on to get a college degree will escape the bottom fifth, and 19 percent will make it all the way to the top fifth.” During the Great Depression, more than 60% of Americans were living below the poverty line. Over the last 50 years, that number has generally ranged between 12%-15% — and even that dramatically overstates the number of poor Americans because it doesn’t take into account government assistance that’s being paid out. On top of all that, liberals get so angry when people point out that more than 80% of poor Americans have cell phones, televisions and refrigerators while “most Americans living below the official poverty line also own a motor vehicle and have more living space than the average European.” Yet, they don’t take into account the fact that almost half of the world’s population still lives on less than $2.50 a day. In other words, if you are poor, you can live better and have more opportunity to advance in America than you will anywhere else. That’s why immigrants all across the world still want to come to this country.
What liberals don’t realize or alternately, just don’t care about, is that their obsession with income inequality may make them feel good, but it actually hurts the poor in a number of ways.
1) The higher the government mandated minimum wage/living wage, the more people it prices out of jobs: When you force businesses to pay people more than they can return in value with their work, companies tend to respond either by hiring better quality people, replacing the jobs with automation, moving the posts overseas or by looking for opportunities to get rid of the positions entirely. The higher the wages and benefits the government insists on, the more stagnant it makes the labor market for the people who need to build their skills the most. If your goal were to deliberately put as many young, unskilled single mothers out of work as possible, the best politically feasible way to do it would be to jack the minimum wage up into the stratosphere.
2) It emphasizes making people more comfortable, not helping them succeed: There is no shame in taking any honest job, but you’re not supposed to make a living pressing the button that drops the fries into the grease at McDonald’s. If you work long enough at an entry level job to worry about raising the minimum wage, you’re failing your family, your society and yourself. Instead of encouraging minimum skill workers to demand that the government force businesses to give them more money than they’re currently worth, we should be encouraging people to build their skills and move up, move on or start their own business. Want poor people to be eligible for more education or training? Want to give them micro-loans? Want to make it easier for them to create small businesses? Those are policies that make poor Americans more valuable. That’s good for them and the country. On the other hand, trying to redistribute income ultimately brings everyone down, especially the poor Americans who lose their drive after becoming dependent on it.
3) The more government becomes involved, the more it stagnates the economy: As John F. Kennedy said, “A rising tide lifts all boats.” The stronger the economy is, the more jobs it creates and the more everyone — poor, middle-class, or rich — benefits. How do you make the economy stronger? You keep the government small, taxes low, and regulations light. That’s a proven formula that has worked time and time again. On the other hand, if you want to constipate the economy, you make the government bigger, increase taxes and pour on the regulations. How did that latter set of “solutions” work out for Detroit?
4) The more the government focuses on income inequality, the harder it is to get ahead: As Thomas Sowell likes to say, “There are no solutions; there are only trade-offs.” You can see this very clearly with Obamacare, where a few people are getting subsidized care, while tens of millions more are losing their health care and paying considerably more to make up for it. It works the same way with income inequality. Want to make Wal-Mart pay all its employees twice as much? Then that means all the poor Americans who shop at Wal-Mart will have to spend more of their limited incomes to pay for it. Want to give more tax dollars to the poor? Then the rich and middle class will have to pay more in taxes. So, the moment that poor American is making enough money to get into the middle class, he’s hit with a bigger tax bill that makes it harder for him to ever get ahead. In other words, the more resources we put into “helping” the poor, the harder we ultimately make it for those very same people to ever permanently escape poverty and live the American Dream.
5) It ignores the real causes of poverty: The real causes of lasting poverty in America are not greed, the rich, racism, America being “unfair,” or any of the other excuses that you hear so often. Instead, the harsh truth that so many people don’t want to hear is that if you stay poor in America, it’s usually because you made bad life choices. Via Walter Williams, here’s what you have to do in order to avoid poverty in America.
“Complete high school; get a job, any kind of a job; get married before having children; and be a law-abiding citizen. Among both black and white Americans so described, the poverty rate is in the single digits.”
Instead of lying to destitute Americans and telling them that the rich became wealthy by stealing the money that the poor never had in the first place, why not tell people the truth? Yes, it might make some poor Americans feel bad, but do you think welfare, food stamps, and living in a housing project do wonders for people’s moods?
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