Economic inequality has become the left’s great hope for recovering its political integrity after the Obamacare disaster. President Obama, trying to change the subject, has latched onto the issue and is sure to make many more speeches about it in the New Year. New York’s new mayor, Bill de Blasio, promises to make that great city an experimental lab for progressive ideas aimed at curing inequality.
And if that doesn’t convince you that the left will speak of little other than inequality for the next few months or years, note that former President Bill Clinton was on hand to swear in Mayor De Blasio and say a few words on the subject. Hillary Clinton, primed to run for president in 2016, looked on from the VIP stands. With the Clintons, there are no coincidences.
For years, analysts across the political spectrum have pondered why, after decades of providing upward economic mobility to millions, the U.S. economy no longer seems able to move so many people up from the lowest rung of the economic ladder. Is the American Dream of upward mobility dead?
This is a serious subject deserving serious consideration in the marketplace of ideas. Unfortunately, that doesn’t mean we’re about to get a thoughtful debate.
Instead, the president mischaracterizes the problem and offers a simplistic solution: There are just too many rich people, and they are causing the problem. So, he proposes, let’s take more money from those successful people and redistribute it to the poor through welfare, raising the minimum wage, extending endless unemployment benefits and other government handouts.
This stance is based on economic fallacies. Worse, it is divisive to our society because it runs on the fumes of envy and resentment. Punishing success will only deter further success … not what you want if you want the economy to grow. Better for the president to curb government policies that pick economic winners and losers (or as someone put it after the Solyndra affair, that picks only losers). Government intervention in the marketplace foments favoritism and cronyism and leads to more inequality.
President Obama has even lost top scholars at the liberal-leaning Brookings Institution, who grumble that the president is “over-stating, and over-simplifying, the problems at hand.” Creating opportunity and economic mobility for the poor, they write, “will require cool analysis, bipartisan alliances, and a long-term strategy. It’s the wrong issue for knock-about politics.”
De Blasio has been no better. His inauguration was so ripe with hate-filled rhetoric that even the New York Times, which endorsed his mayoral campaign, was moved to object. The new mayor himself seems not to grasp that his “tale of two cities” has been created by the very type of government intervention that he seeks now to increase.
As for our former president, he was in classic Clintonian form as he purposely confused community with government. “We are interdependent,” he averred to the New York crowd. “Look around. We can’t get away from each other. We have to define the terms of our dependence.” Does Clinton really conflate government, which seeks to exempt the individual from responsibility for his fellow man, with what Edmund Burke called the “little platoons” of civil society, the agents that actually nurture communities?
Aside from being disingenuous and false—as government has spent $20 trillion on the “War on Poverty” but poverty rates are as high as they were 50 years ago—such narratives are damaging because they will actually diminish economic opportunity for all. As sensible Republicans and Democrats agreed in reforming welfare in the mid-1990s, federal government poverty programs are no longer safety nets—they are snares that trap people in poverty and dependency. “Marriage penalties” and “cliff effects” make it all but impossible for people to get off government assistance. They thwart America’s legendary upward mobility by destroying the financial and social capital required for Americans to grab the ladder of opportunity and climb as high as they can dream.
As Clinton himself said back in 1996, “All Americans, without regard to party, know that our welfare system is broken, that it teaches the wrong values, rewards the wrong choices, hurts those it was meant to help. We also know that no one wants to change the current system in a good way more than people who are trapped in it.”
We must recognize that while the federal government can inefficiently redistribute money, it cannot redistribute success, character, personal satisfaction, dignity, purpose, perseverance or any of the qualities and outcomes that make life worth living. The Bill Clinton of the 1990s knew that.
Income inequality is in any case a red herring. Heritage Foundation analysts David Azerrad and Rea Hederman, for instance, provide evidence that disputes the “1 percent” sloganeering. Their paper, “Defending the Dream: Why Income Inequality Doesn’t Threaten Opportunity,” demonstrates that “how much the top 1 percent of the population earns has no bearing on whether the bottom 20 percent can move up.”
They are not alone. The Manhattan Institute’s Scott Winship, formerly a Brookings scholar, scoured dozens of research studies and showed that there is no evidence that “income inequality” causes less economic mobility or slower economic growth. In fact, there’s a near consensus on this: A recent Harvard-Berkeley study of America’s cities found that “a high concentration of income in the top 1 percent was not highly correlated with mobility patterns.”
So what is to blame? Azerrad and Hederman conclude that “unequal results are a natural outcome of equal opportunity.” Upward mobility has declined, but not because of income disparities. For the real culprit, one must look to broken families and communities. But these are often caused by government action, not fixed by it. What we need, then, is to reform our welfare system to promote work and individual success, not dependency on government. We must restore a culture of marriage, America’s most important inoculation against child poverty, by eliminating marriage penalties in federal programs. And it is far past time to finally help low-income children and parents break free of the bad schools in their neighborhoods through school choice.
In other words, it’s time to stop playing politics, and actually help the poor.