Politics & Policy

Obama’s War on Inequality

Economic mobility is a problem, but assaulting the 1 percent won’t help solve it.

President Barack Obama has his answer to Lyndon Johnson’s “War on Poverty.” It is a War on Inequality.

The president’s formal declaration of hostilities came last week in a speech at the Center for American Progress, predictably praised as brilliant by his journalistic cheerleaders and touted by the White House as setting out the cause that will define the rest of his presidency.

#ad#While LBJ’s war on poverty is nothing to emulate — it costs $900 billion a year, yet has manifestly failed in the stated goal of uplifting the poor — at least it had a clear, compelling rationale. Who can disagree that it would be better if fewer Americans were poor? Obama’s implicit argument is that it would be better if fewer Americans were rich, or at least if they weren’t quite so offensively rich.

He relied on dubious research and tendentious analysis to make his case, without ever admitting what, for him, must be the crux of the matter. Surely, income inequality offends his egalitarian sense of justice and aesthetics, and even if he didn’t believe it had harmful real-world effects, he would wish the top 1 percent weren’t so wealthy as a social good in and of itself.  

There is no doubt that we long ago exited the economic Golden Age of the mid 20th century, and we aren’t going to return to it. President Obama could give a speech about that and never need to make a questionable claim. But he wants to make a case for war.

In his speech, the president said that inequality is bad for the economy and cited “one study” showing that greater income inequality means more fragile growth and more frequent recessions. Of course, “one study” can show almost anything. The study in question analyzed mostly developing economies. Scott Winship of the Manhattan Institute points out a review of the literature by the Center for American Progress stipulated, “Ultimately, data and methodological issues mean that analyses are too imprecise to deliver definitive answers to this old and central question in economics research.”

Needless to say the president didn’t mention any such caveat. He could just as easily have said that “one study” by a Harvard economist showed a correlation between increasing inequality and higher economic growth in the U.S. and other developed countries between 1960 and 2000. He could have said that “another study” by a University of Arizona professor showed much the same thing.

To maintain that rising inequality is a threat to the American dream, the president insists that it is reducing income mobility. Here the evidence is just as weak. According to Scott Winship, the gap between the middle class and the poor hasn’t grown much during the past few decades. It has been the very top of the income distribution that has gained the most. Has this diminished mobility?

Winship crunched the numbers for men born in the early 1980s, who experienced widening income inequality, and compared them to men born around 1950, and found almost no difference. “Among those raised in the bottom quarter of the family-income distribution,” he writes in the journal National Affairs, “the fraction escaping the bottom fourth of earnings as adults fell from 63 percent to 60 percent, a decline too small to be reliably different from zero.”

America does indeed have a serious mobility problem, especially in getting people out of poverty. But it has nothing to do with a small fraction of people’s being spectacularly rich. Mark Zuckerberg could be stripped of all his wealth tomorrow, and it wouldn’t help anyone further down the income ladder. It wouldn’t increase wages, or reduce out-of-wedlock child rearing, or lead to less incarceration, or revive the work ethic, all of which would enhance mobility and lift more people into the middle class. It would just make Mark Zuckerberg poor.

Which is why Obama’s war on inequality is so misconceived. We aren’t beset by a wealthy 1 percent destroying opportunity and immiserating the rest of the country. The president needs to reconsider his casus belli.

— Rich Lowry is the editor of National Review. He can be reached via e-mail: comments.lowry@nationalreview.com. © 2013 King Features Syndicate

Rich Lowry — Rich Lowry is the editor of National Review. He can be reached via email: comments.lowry@nationalreview.com. 

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