January 30 2012

Poor? Don't Blame The Rich

Charlotte Hays

We’re going to be hearing a lot about income inequality in 2012 as President Obama hits the campaign trail to run against “the rich,” who, he says, are somehow holding the rest of us back.

If you are struggling to put food on the table and make ends meet, the president seems to be saying, it’s because of the rich. He wants to solve our problems by raising taxes on these culprits.

But are the rich making us poor?

If we are going to blame these alleged miscreants, we have to first figure out who they are. As James Q. Wilson, the Harvard and Pepperdine political scientist, points out in the Washington Post, the rich in the U.S. aren’t an unchanging and monolithic group. People climb in and out of this category all the time. Indeed, Wilson asserts, our cause for concern isn't the rich. It's the poor, who tend be an unchanging group, stuck at the bottom:

The real income problem in this country is not a question of who is rich, but rather of who is poor. Among the bottom fifth of income earners, many people, especially men, stay there their whole lives.

Low education and unwed motherhood only exacerbate poverty, which is particularly acute among racial minorities. Brookings Institution economist Scott Winshiphas argued that two-thirds of black children in America experience a level of poverty that only 6 percent of white children will ever see, calling it a “national tragedy.”

The rich and the merely affluent, on the other hand, are those who have more education and often two spouses who work full-time. Women’s increasing participation in the workforce has been an important factor in increasing family affluence.

The plight of the poor will not be lessened, Wilson notes, by raising taxes on the rich or affluent: one may fondly imagine that doing so would free up more money to help the poor (through government programs that actually foster dependency, no doubt), but the poor are permanently weighed down by something more damaging that the lack of money: the lack of skills and opportunities required to leave poverty behind.

Encouraging marriage and teaching marketable skills will do more to rescue families from poverty than taking every cent from every billionaire in America. The route out of poverty has nothing to do with raising Warren Buffett's taxes. It has more to do with being able to enter the legitimate workforce and hold down a job (something that is especially difficult for a single mother).

Americans have historically chosen to focus on upward mobility rather than income inequality. We still have faith in the ability of people to rise by their own efforts. A 2009 book, “Class War? What Americans Really Think About Economic Inequality,” by political scientists Benjamin Page and Lawrence Jacobs, reported that large majorities of Americans believe that “it is ‘still possible’ to start out poor in this country, work hard, and become rich.” They don't think the government has any business trying to step in and equalize incomes.

The GOP had better be able to make a good case that opportunity trumps leveling because that is one of the basic questions that will be a the heart of this year's race for the White House. To succeed, they will need to come up with ways the poor can escape poverty (you should read the whole piece: poverty isn’t quite what it used to be—but that is another topic for another post).

Britain is experimenting with a creative strategy known as the “social impact bond,” according to Wilson, which includes businesses and foundations putting up money to help poor people remain in school, stay out of prison, and acquire skills. If the programs succeed, the government reimburses the donors. The Obama administration has endorsed this, and it is an intriguing idea. Wilson, too, also finds it appealing:

Instead of carping about who is rich, we would be trying to help people who are poor.

But don’t think this is going to prevent us from getting a good dose of the politics of envy in the coming months.

 

 

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