Posts tagged with: Economic inequality

Every year, the U.S. Census comes out with its report on incomes and poverty. And every year the same finding repeatedly surprises me.

As economist David Henderson says, the report “always shows that there is mobility between income categories, even in the short run, and that poverty is temporary for most people in America who experience it. Virtually all reporters ignore it.”

First, the bad news. The report reveals that during the 4-year period from 2009 to 2012, more than one out of three Americans (34.5 percent) had at least one spell of poverty lasting 2 or more months.

But the good news is that few people stayed in poverty all four years. Chronic poverty from 2009 to 2012 was relatively uncommon, with 2.7 percent of the population living in poverty all 48 months.
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Leighblackall-76202405Andrew Biggs of AEI has a piece up today at Forbes addressing the gender pay gap and provides a neat solution: “forbid women from staying at home with their children.” As Biggs points out, such a policy would address perhaps the greatest root cause of gender pay inequality: varied work experience attributable to choices women make. “Most mothers who stay at home or work only part-time are doing what they wish to do and what they view as best for their kids,” writes Biggs. This results in gaps in pay when those women re-enter the work force or increase their labor participation.

Biggs’ proposal to “make staying at home with kids illegal, just like child labor is illegal” would have another benefit favored by many: it would be a boon to GDP. As I point out in a review essay in the latest issue of Christian Scholar’s Review, the work that stay-at-home parents do is not counted toward GDP. When those parents pay someone to take care of their children as part of a business transaction, however, as in the case of day care centers, then that exchange does count towards GDP.

My piece, “Affluence Agonistes–A Review Essay,” takes a look at the book The Poverty of Nations by Wayne Grudem and Barry Asmus, in addition to a couple of other recent publications. The CSR essay expands upon a review of the Grudem/Asmus book I wrote for Public Discourse, “Life to the Full: The Dangers of Material Wealth and Spiritual Poverty.” As Grudem and Asmus put it simply, to combat poverty “the goal must be to increase a nation’s GDP.”

So not only are stay-at-home moms a major source of wage inequality, they are also “a drag on GDP.” As one press report put it, “With female participation stagnating, potential growth isn’t rising as quickly.”

Biggs’ proposal to ban stay-at-home mothers should logically be embraced by both anti-gender inequality progressives as well as GDP growth fundamentalists. As I argue in the essay, “If a nation were to pursue GDP growth as its highest goal, it would probably institute policies and incentives to induce women to work outside the home and professionalize child care. GDP incentivizes specialization and the division of labor, since such transactions are the only things taken into account.”

But the Grove City College economist Shawn Ritenour rightly concludes, “We ought not give into the temptation that all of human welfare is encapsulated in GDP.” Another way of putting it is that men, women, and children do not “live on GDP per capita alone.”

Update: For those readers who might not bother to read Biggs’ piece, he does not (and neither do I, for that matter) actually advocate for this policy.

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The Bosses of the Senate, a cartoon by Joseph Keppler. First published in Puck 1889.

Cronyism is ugly. It hurts the economy, it’s unjust, and corrupts the core of democracy.  “The damage that cronyism has inflicted on the economy is considerable,” Samuel Gregg writes in a new piece for Public Discourse. “[C]ronyism also creates significant political challenges that, thus far, Western democracies are struggling to overcome.”

The crony capitalism seen from the Trump presidential campaign and many others is not something that’s new to America or Western civilization. As long as there have been governments, there have been powerful people seeking special favors from them. From the 17th to 18th centuries, mercantilism “dominated the West,” which involved powerful guilds working closely with their government officials to limit trade and stifle innovation. Gregg explains the cronyism that’s common today:

Today’s crony capitalism is not outright corruption, though it often verges on or morphs into illegal activity. The expression itself first emerged in 1980 to describe how the Philippines’ economy functioned under the Marcos regime. It became prominent in explanations of the 1997–1998 Asian financial crisis, especially the role played in that crisis by government decisions that favored business “cronies” (many of whom were relatives) of political leaders, such as Indonesia’s then-President Suharto.

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Why do some countries grow richer faster than others? How can we explain wealth disparities between countries? The answer: Growth rates.

Economist Alex Tabarrok explains how even small changes to growth rates can have a big effect on the economy of a country—and on the flourishing of its citizens.

greedy-bastardsRecently, Rev. Robert Sirico spoke in Chicago. He was asked a question regarding income inequality. His answer was that he didn’t care how much money Bill Gates had, nor did it matter to him the difference between Gates’ income and say, Warren Buffet’s. Nor did he care about the difference between how much wealth Gates has and his own personal income. No, Sirico said, what he cared about were the poor: those people so disconnected from the global marketplace that they were not able to live above subsistence level. How do we help them?

One popular answer right now is to “share the wealth.” Those with a lot of money should give a big chunk of it to the poor. Then everyone will be “even.” That seems reasonable, right?

Not so fast, says Rev. Dwight Longenecker, writing at his Patheos blog, Standing On My Head.

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patricia-arquette-oscars-acceptance-speech-w724During last night’s Oscar ceremony, Best Supporting Actress winner Patricia Arquette used her acceptance speech to rail against unfair pay for women:

To every women who gave birth to every taxpayer and citizen of this nation, we have fought for everybody else’s equal rights. It’s our time … to have wage equality once and for all and equal rights for women in the United States of America.

The wage equality that Arquette is referring to is the gender wage gap—the difference between male and female earnings expressed as a percentage of male earnings. Because she frames the issue as a matter of equal rights, Arquette presumably believes that the problem is caused by intentional discrimination.

The gender wage gap certainly exists, but there is considerable debate about the size of the gap and whether it is caused primary by discrimination or by other factors, such as education and work hours. Much of the confusion is caused by the use of misleading statistics by politically motivated groups. For example, last night the Department of Labor (DOL) posted on their Twitter account:
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pic_giant_020915_SM_Paul-Preaching-Raphael“Christianity undergirded the development of Western liberalism (in the old, good sense of the word),” says Rich Lowry. In fact, without Christianity there would probably not be anything like what we conceive as true liberty:

The indispensable role of Christianity in the creation of individual rights and ultimately of secularism itself is the subject of the revelatory new intellectual history Inventing the Individual by Larry Siedentop. Here’s hoping that President Obama gives it a quick skim before he next takes the podium at a prayer breakfast.

Siedentop begins his story with the ancients. The Greeks and Romans of pre-history weren’t secular; the family was, as Siedentop calls it, a religious cult run by the paterfamilias and suffused with ritual and assumptions of social inequality. We are all pro-family, but we can agree that ancestor worship takes it a little far.

At this time, Siedentop points out, the key distinction wasn’t between the public and private spheres, but between the public and domestic spheres, the latter characterized by the family with its rigidly defined hierarchical roles. There was no space for the individual with his or her own rights.

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