You just naturally assume it will be from a conservative publication when you see a headline like this one: “Obama’s Simplistic View of Income Inequality.”
But this is the headline above a piece by Washington Post editorial writer Charles Lane. Lane notes a recent Gallup poll that shows that people care more about creating jobs than income inequality. Indeed, 52 percent of Americans accept the gap between the rich and the poor “an acceptable part of our economic system.”
Lane compares this to the view of Arthur Okun, who was a Yale economist and author of a book published in 1975, “Equality and Efficiency: The Big Tradeoff.” Lane writes:
Okun saw free markets as a source of unparalleled human progress — and of big gaps between rich and poor. Indeed, he argued, markets are efficient partly because they distribute economic rewards unevenly. Government should try to smooth out income stratification, but such efforts risk undermining incentives to work and invest.
Hence the “big trade-off”: channeling income from rich to poor, Okun wrote, was like trying to carry water in a leaky bucket. He wanted to move money from rich to poor without “leaking” so much economic growth that the whole process became self-defeating.
The American public intuitively shares Okun’s concerns. Consider the responses to another question in the Gallup poll. Asked to rate the importance of alternative federal policies, the public saw both economic growth and redistribution as worthy objectives — but put the former well ahead of the latter. Some 82 percent said growth was either “extremely” or “very” important; only 46 percent said “reduc[ing] the income and wealth gap between rich and poor” was “extremely” or “very” important.
In short, the public wants fairness but retains a healthy skepticism about the federal government’s ability to achieve it.
I want to take issue with Lane on an important matter: the use of the word fairness. Undoubtedly, life is unfair, in the sense President Kennedy meant when he once uttered those words. Some prosper, some don’t. Sometimes this is a matter of luck, and good, hardworking people can have bad luck. But to say that fairness in society involves government programs to ensure outcomes reveals an attitude that undergirds most of the disastrous social problems of the years since the Great Society was instituted in the 1960s.
We could have a debate about the role of government support versus that of charity, which is always good for both the giver and the receiver (and requires humility from the receiver that entitlements don’t). How should these two ways to help those who need it be balanced? But is it really fair, so to speak, to say that life is unfair to somebody who is poor because of his own actions? (That doesn’t mean such a person isn’t deserving of sympathy and help!)
One other thing: Should we have this debate, we need to have accurate figures about poverty. Robert Rector of the Heritage Foundation had a great piece on National Review Online the other day on how poverty figures are jiggered to make an ideological point (“How Obama’s ‘Other Half’ Lives”). New census data shows that 48 percent of Americans live in or near poverty. But poverty has been redefined:
Under President Obama’s new definitions, a family of four in Oakland is “near poor” if their annual pre-tax income is less than $89,700 plus medical insurance. In metropolitan Washington, D.C., the near-poverty line became $80,500. In New York, it’s now $78,500; in Boston, $68,900; and Chicago, $68,600.
One result: The income level for “near poverty” is now very close to the median household income in most communities. (Median income means half the households have more income and half have less.)
So it should be no surprise that, with these new standards, the Census Bureau “discovered” that almost half the U.S. population lives in or “near” poverty. The system is designed to produce that result.
The Obama administration’s new poverty measures are high-octane political propaganda.