Skip to comments.The Democrats' Feckless Attacks on Income Inequality
Posted on 01/10/2014 8:28:26 AM PST by Kaslin
As Barack Obama scrambles to eviscerate key sections of his own signature health care law, he and other Democrats are trying to shift voters' focus to another issue -- income inequality.
Unfortunately, the solutions they advocate are pitifully inadequate or painfully perverse.
Start with the minimum wage, which some Democrats see as an election-winning wedge issue in 2014.
True, raising the minimum wage polls well. But does anybody really care much about it? Few minimum wage earners are heads of households; many more are teenagers earning spare cash.
Most economists agree that a higher minimum wage costs some low-skilled workers their jobs. And the economic redistribution it produces, from fast-food consumers to fast-food employees, is pretty minimal.
Another Democratic policy is to continue extending unemployment benefits. The intellectual argument for this is stronger.
Ordinarily, extended benefits tend to discourage the unemployed from looking for work. Their skills atrophy, and finding a job later gets harder.
But in the current new-normal economy, with record long-term unemployment, there simply haven't been enough job openings for many of the unemployed. Many Republicans look open to a compromise on this issue.
In any case the redistributionist effect will be only minor and, if robust economic growth returns, temporary.
One Democrat who argues for greater change is University of Arizona political scientist Lane Kenworthy. He believes the nation is and should be headed to a European-style welfare state, with the government taxing and spending 10 percent more of gross domestic product than at present.
Kenworthy would transform unemployment benefits into wage insurance, would start early education at age 1 and would vastly expand the Earned Income Tax Credit.
That's progressive economic redistribution, but with a catch. For as Kenworthy admits, you can't get the money for this just by raising taxes on very high earners: "The math simply doesn't work."
So he looks to a federal consumption tax, like Europe's value-added taxes. That would mean shifting from the current progressive income tax toward a more regressive European-style tax regime, with middle-income workers subsidizing non-workers.
Other proposals floated by Democrats, such as Senator Elizabeth Warren's call for substantially increased Social Security benefits, would have similarly perverse effects.
Social Security is already on an unsustainable trajectory. Increased benefits would, in time, require higher taxes on the young, who have negative or minimal wealth, to finance payments to the elderly, who tend to have significant net worth.
This echoes the Obamacare provision that limits premiums on the old and sick to no more than three times the premiums on the young and healthy. Is it really progressive to have the young subsidize the old?
Another left-wing Democrat, incoming New York Mayor Bill de Blasio, wants to raise income tax rates on those earning $500,000 to pay for universal preschool for the city's children.
That would certainly amount to economic redistribution, but to whom? Research over the last 50 years shows that Head Start and other publicly financed pre-school programs have no lasting positive effect on learning.
What de Blasio's proposal would do is to put a lot more unionized teachers on the city payroll. The redistribution here goes from the very rich to the public employee unions and their allies in the Democratic Party.
Liberal pundits are hailing de Blasio and his politics as a harbinger of the political future and a return to the liberal tradition of Franklin Roosevelt and his political ally New York Mayor Fiorello La Guardia.
But in 1944, the heyday of FDR and La Guardia, the five boroughs of New York City cast 7 percent of the nation's votes. In 2012 they cast only 2 percent of the national vote.
It's interesting that New York, which has had more liberal and redistributionist public policies than almost anywhere else in the nation over those 68 years, also has one of the nation's highest rates of income inequality.
High tax rates and high housing costs (exacerbated for many years by rent control) have squeezed middle-class families out of New York. They have migrated in the millions to lower-tax, lower-housing-cost places such as Florida and Texas.
The Obama Democrats did reduce economic inequality somewhat by raising the top income tax rate back to 39.6 percent. The proposals they're talking about now are either small potatoes, or moves to have the working middle-class subsidize non-workers or the young to subsidize the old -- redistribution, but not very progressive.
The war on income inequality will be as much of a dismal failure as the war on poverty, or even Obamacare, for that matter...
if you take their goals as stated and sold to the public.
When measured against their true goals, however, all of these programs are a huge success.
If able-bodied people can’t find a job after 99 weeks of being on the dole, they should have to do some workfare projects like cleaning the streets or painting public buildings. That might incentivize the malingers while helping to keep government spending down, however fractionally.
It is all about power. And buying it.
Of course what else
See my tagline...
None of the Dem proposals to address “income inequality” will make any significant difference. At best, they will make the poor a little less poor, at worst they will drag the struggling middle-class downwards in the direction of poverty. Apart from a small group of athletes, entertainers, academics, and government officials, Cuba is an excellent example of income equality - everyone makes about $20 a month. So which Americans support Cuba? Entertainers, academics, and government officials.
Forced mediocrity, when it applies to the economic dimension of liberty, has been tried and has failed in society after society, but these less-than-brilliant "progressive" regressives, have relabeled its promotions in an effort to fool the people into surrendering more of their freedom.
"When I see the present Socialist Government denouncing capitalism in all its forms, mocking with derision and contempt the tremendous free enterprise capitalist system on which the mighty production of the United States is founded, I cannot help feeling that as a nation we are not acting honorably or even honestly." - Winston Churchill, Woodford Green, July 10, 1948.
"We shall not allow the advance of society and economic well-being of the nation to be regulated and curtailed by the pace of the weakest bretheren among us. Proper incentives must be offered and full freedom given to the strong to use their strength in the commonweal. Initiative, enterprise, thrift, domestic foresight, contrivance, good housekeeping and natural ability must reap their just reward. On any other plan the population of this island will sink by disastrous and agonizing stages to a far lower standard of life and two-thirds of its present numbers." - Winston Churchill, speech, Blenheim Palace, August 4, 1947.
"The difference between what is seen and what is not seen was often noticed by the old economists. What is not seen is the infinite variety of individual transactions and decisions which, in a civilized society, within the framework of just and well-known laws, insure the advantage not only of the individual concerned, but of the community, and provide that general body of well-being constituting the wealth of nations. All this is blotted out by an over-riding State control, however imposing some of its manifestations may be. It is the vital creative impulse that that I deeply fear the doctrines and policy of the socialist Government have destroyed, or are rapidly destroying, in our national life. Nothing that they can plan and order and rush around enforcing will take its place. They have broken the mainspring, and until we get a new one the watch will not go." - Winston Churchill, speech, House of Commons, October 28, 1947.
"It is in the interest of the wage-earner to have many other alternatives open to him than service under one all-powerful employer called the State. He will be in a better position to bargain collectively and production will be more abundant; there will be more for all and more freedom for all when the wage earner is able, in the large majority of cases, to choose and change his work, and deal with a private employer who, like himself, is subject to the ordinary pressures of life and, like himself, is dependent upon his personal thrift, ingenuity and good-housekeeping." - Winston Churchill, speech, Blackpool, October 5, 1946
"Liberalism (classical liberalism) has its own history and its own tradition. Socialism has its own formulas and aims. Socialism seeks to pull down wealth; Liberalism seeks to raise up poverty. Socialism would destroy private interests; Liberalism would preserve private interests in the only way in which they can be safely and justly preserved, namely, by reconciling them with public right. Socialism would kill enterprise; Liberalism would rescue enterprise from the trammels of privilege and preference. Socialism assails the pre-eminence of the individual; Liberalism seeks, and shall seek more in the future, to build up a minimum standard for the mass. Socialism exalts the rule; Liberalism exalts the man. Socialism attacks capital; Liberalism attacks monopoly." - Winston Churchill, Kinnaird Hall, Dundee, May 14, 1908.
"The British nation now has to make one of the most momentous choices in its history. That choice is between two ways of life: between individual liberty and State domination: between concentration of ownership in the hands of the State and the extension of a property-owning democracy; between a policy of increasing restraint and a policy of liberating energy and ingenuity: between a policy of levelling down and a policy of finding opportunities for all to rise upwards from a basic standard." - Winston Churchill, speech in Woodford, England, January 28, 1950.
"It is curious that, while in the days of my youth I was much reproached with inconsistency and being changeable, I am now scolded for adhering to the same views I had early in life and even of repeating passages from speeches which I made long before most of you were born. Of course the world moves on and we dwell in a constantly changing climate of opinion. But the broad principles and truths of wise and sane political actions do not necessarily alter with the changing moods of a democratic electorate. Not everything changes. Two and two still make four, and I could give you many other instances which go to prove that all wisdom is not new wisdom." - Winston Churchill, speech, Bele vue, Manchester, December 6, 1947.
"It is not Parliament that should rule; it is the people who should rule through Parliament." - Winston Churchill, speech, House of Commons. November 11, 1947.
"We have to combat the wolf of socialism, and we shall be able to do it far more effectively as a pack of hounds than as a flock of sheep." - Winston Churchill, speech, 1937.
"Athough it is now put forward in the main by people who have a good grounding in the Liberalism and Radicalism of the early part of this century, there can be no doubt that Socialism is inseparably interwoven with Totalitarianism and the abject worship of the State. It is not alone that property, in all its forms, is struck at, but that liberty, in all its forms, is challenged by the fundamental conceptions of Socialism." - Winston Churchill, B.B.C radio address, June 4, 1945.
"The inherent vice of capitalism is the unequal sharing of blessings; the inherent vice of socialism is the equal sharing of miseries." - Winston Churchill, House of Commons, October 22, 1945.
"Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy." - Winston Churchill, Perth, May 28, 1948.
"I do not wonder that British youth is in revolt against the morbid doctrine that nothing matters but the equal sharing of miseries: that what used to be called the submerged tenth can only be rescued by bringing the other nine-tenths down to their level; against the folly that it is better that everyone should have half rations rather than that any by their exertions, or ability, should earn a second helping." - Winston Churchill, London, June 22, 1948.
"Socialism is based on the idea of an all-powerful State which owns everything, which plans everything, which distributes everything, and thus through its politicians and officials decides the daily life of the individual citizen." - Winston Churchill, London, January 21, 1950.
"The British and Americans do not war with races or governments as such. Tyranny, external or internal, is our foe whatever trappings and disguises it wears, whatever language it speaks, or perverts." - Winston Churchill, Speech, Dorchester Hotel, London, July 4, 1953.
"You may try to destroy wealth, and find that all you have done is to increase poverty." - Winston Churchill, speech, House of Commons. March 12, 1947.
"Nor should it be supposed as you would imagine, to read some of the Left-wing newspaper, that all Americans are multi-millionaires of Wall Street. If they were all multi-millionaires that would be no reason for condemning a system which has produced such material results.: - Winston Churchill, speech, Royal Albert Hall, London. April 21, 1948.
"Rich men, although valuable to the revenue, are not vital to a healthy state of society, but a society in which rich men are got rid of, from motives of jealousy, is not a healthy state." - Winston Churchill, speech, House of Commons, April 24, 1950.