Politics & Policy

The Left’s ‘Income Inequality’ Canard

There is no incentive to get people off their dependency on government programs.

Income inequality has long been one of the liberals’ favorite issues. So there is nothing surprising about its being pushed hard this election year.

If nothing else, it is a much-needed distraction from the disasters of Obamacare and the various IRS, Benghazi, and other Obama-administration scandals.

Like so many other favorite liberal issues, income inequality is seldom discussed in terms of the actual consequences of liberal policies. When you turn from eloquent rhetoric to hard facts, the hardest of those facts is that income inequality has actually increased during five years of Barack Obama’s leftist policies.

#ad#This is not as surprising as some might think. When you make it unnecessary for many people to work, fewer people work. Unprecedented numbers of Americans are on the food-stamp program. Unprecedented numbers are also living off government “disability” payments.

There is a sweeping array of other government subsidies, whether in money or in kind, that together allow many people to receive greater benefits than they could earn by working at low-skilled jobs. Is it surprising that the labor-force participation rate is lower than it has been in decades?

In short, when people don’t have to earn incomes, they are less likely to earn incomes — or, at least, to earn incomes in legal and visible ways that could threaten their government benefits.

Most of the households in the bottom 20 percent of income earners have nobody working. There are more heads of household working full-time and year-round in the top 5 percent than in the bottom 20 percent.

What this means statistically is that liberals can throw around numbers on how many people are living in “poverty” — defined in terms of income received, not in terms of goods and services provided by the government.

Most Americans living in “poverty” have air conditioning, a motor vehicle, and other amenities, including more living space than the average person in Europe — not the average poor person in Europe, the average person.

“Poverty” is in the eye of the statisticians — more specifically, the government statisticians who define what constitutes “poverty,” and who are unlikely to define it in ways that might jeopardize the massive welfare state that they are part of.

In terms of income statistics that produce liberal outcries about “disparities” and “inequities,” millions of people who don’t have to earn incomes typically don’t.

The more people who are in a non-income-earning mode, the greater the disparities with the incomes of those of us who have to work for a living, and who have to earn more to offset high tax rates. Yet liberals often act as if this is an injustice to those who don’t work rather than an injustice to those who do work, and whose taxes support those who don’t.

Actually, the liberal welfare state is an injustice to both, though in different ways.

Despite whatever good intentions some liberals may have had in creating the ever-growing welfare state, practical politicians know that more dependency means more votes for supporters of bigger government.

There are no incentives for either politicians or the bureaucrats who run the welfare-state agencies to get people off their dependency on government programs. Moreover, the eligibility rules create a very high cost to individuals who try to rise by getting a job and earning their own money.

It is not uncommon for someone who is receiving multiple government-provided benefits — housing subsidies, food subsidies, etc. — to lose more in benefits than they gain in income, if they decide to take a legitimate and visible job.

If increasing your income by $10,000 a year would cause you to lose $15,000 worth of government benefits, would you do it? That is more than the equivalent of a 100 percent tax rate on income. Even millionaires and billionaires don’t pay that high a tax rate.

Liberals don’t talk — or perhaps even think — in terms of the actual consequences of their policies, when it is so much more pleasant to think in terms of wonderful goals and lofty rhetoric.

— Thomas Sowell is a senior fellow at the Hoover Institution. © 2014 Creators Syndicate Inc.

Thomas Sowell — Thomas Sowell is an American economist, social theorist, political philosopher, and author, whose books include Basic Economics. He is currently senior fellow at the Hoover Institution, Stanford University.

Most Popular

Culture

White Cats and Black Swans

Making a film of Cats is a bold endeavor — it is a musical with no real plot, based on T. S. Eliot’s idea of child-appropriate poems, and old Tom was a strange cat indeed. Casting Idris Elba as the criminal cat Macavity seems almost inevitable — he has always made a great gangster — but I think there was ... Read More
Politics & Policy

The Other Case against Reparations

Reparations are an ethical disaster. Proceeding from a doctrine of collective guilt, they are the penalty for slavery and Jim Crow, sins of which few living Americans stand accused. An offense against common sense as well as morality, reparations would take from Bubba and give to Barack, never mind if the former ... Read More
Health Care

The Puzzling Problem of Vaping

San Francisco -- A 29-story office building at 123 Mission Street illustrates the policy puzzles that fester because of these facts: For centuries, tobacco has been a widely used, legal consumer good that does serious and often lethal harm when used as it is intended to be used. And its harmfulness has been a ... Read More
Politics & Policy

May I See Your ID?

Identity is big these days, and probably all days: racial identity, ethnic identity, political identity, etc. Tribalism. It seems to be baked into the human cake. Only the consciously, persistently religious, or spiritual, transcend it, I suppose. (“There is neither Jew nor Greek, there is neither bond nor ... Read More
World

Wolf Warrior II Tells Us a Lot about China

The Chinese economy is taking a big hit as a result of the trade war with the U.S: A leading export indicator has fallen several months in a row, Chinese companies postponed campus recruitment, and auto and housing sales dropped. A number of U.S. manufacturers are moving production outside of China. So ... Read More