Posts tagged with: Income distribution

the_abyss_of_inequality_3075151Earlier this week I claimed you rarely hear progressives argue that income inequality is a problem since for them it just is an injustice. But there’s another reason you rarely hear them make arguments about why income inequality is morally wrong: their actual arguments are terrible.

CNN columnist John D. Sutter recently asked four people — Nigel Warburton, a freelance philosopher and writer; Arthur Brooks, president of the American Enterprise Institute; Thomas Pogge, director of the Global Justice Program at Yale; and Kentaro Toyama, researcher at the University of California at Berkeley — to answer the question, “Is income inequality ‘morally wrong’?”

Sutter only summarizes their arguments, but it’s doubtful they would become more coherent or persuasive if they were in book-length form. So let’s examine each of the summaries:

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Margaret Thatcher once told an interviewer, “Of course, I am obstinate in defending our liberties and our law. That is why I carry a big handbag.” During her time as Prime Minister, Thatcher’s handbag became an iconic symbol of her ability to handle opponents. The term “handbagging” even entered the Oxford English Dictionary (the verb “to handbag” is defined as: (of a woman politician), treat (a person, idea etc) ruthlessly or insensitively) to describe her rhetorical style.

Thatcher’s handbagging usually occurred during Question Time, the hour every day when members of the parliament ask questions of government ministers—including the prime minister—which they are obliged to answer. A prime example is in her last appearance as Prime Minister in the House of Commons, on November 22, 1990. Liberal Democrat MP Simon Hughes taunts her on the subject of income inequality.
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“You can be for markets without being against redistribution,” says Erik Angner, a philosophy professor at George Mason University. Angner argues that the Nobel-winning economist Friedrich Hayek offers an alternative to contemporary liberals and leftists on the one hand and conservatives and libertarians on the other. As Amanda Winkler notes,

In a controversial Politco op-ed published in 2012, Angner wrote that while Britain’s National Health System and the price-rigging elements of Obamacare violate Hayekian principles, creating an individual mandate and giving poor Americans some amount of money to spend on health care as they see fit does not. To Angner, vouchers for health care would function similarly to vouchers for education, helping to create stronger market forces and spurring the sort of competition that would lead to a more efficient and robust system.

Economist Tyler Cowan is skeptical that Hayek’s approach would work since, he says, “it is hard to have major government involvement in health care without price controls, or should I write ‘price controls,’ in some manner or another.”

Perhaps more interesting than whether a Hayekian could support Obamacare is the question of whether a Christian who favors free markets should be in favor of income redistribution. Personally, for numerous reasons I’m in favor of encouraging individual redistribution and leery of state-mandated redistribution. One reason, as Arthur Brooks explains, is that “[It] just culturally makes it harder for people who believe in income redistribution to give intuitively, to take personal ownership of a problem.” Believing that aiding the poor is the role of the government provides a disincentive for personal engagement with those in need.

What would most Christians consider a strong, compelling argument (assuming any exist) for free markets and government-mandated redistribution?

“Scandinavian economies are some of the most market-oriented on the planet” says economist Scott Sumner, who adds “Denmark is the most market-oriented country on earth.”

This peculiar claim is even more curious considering that it is based on the Heritage Foundation’s 2012 Index of Economic Freedom. On the Heritage Index, which ranks countries based on ten components of economic freedom, the United States comes in at #10, lumped in with the “mostly free” countries. All of the Scandinavian countries are lower on the list: Denmark (#11), the Netherlands (#15), Finland (#17), Sweden (#21), Iceland (#27), and Norway (#40).

Each of these countries are considered “less free” on Heritage’s Index than such nations as the U.S., Canada, and Chile, mostly because they have high levels of wealth redistribution. But Sumners thinks that the “size of government and degree of market freedom” are “two completely separate issues.”

The inimitable Bryan Caplan explains why Sumners is wrong and why size of government and economic freedom are inextricably connected:
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A recent national Pew Research Center survey has found conflicting opinions regarding many Americans’ view of the rich:

As Republicans gather for their national convention in Tampa to nominate a presidential candidate known, in part, as a wealthy businessman, a new nationwide Pew Research Center survey finds that many Americans believe the rich are different than other people. They are viewed as more intelligent and more hardworking but also greedier and less honest.

Nearly six-in-ten survey respondents (58%) also say the rich pay too little in taxes, while 26% say they pay their fair share, and just 8% say they pay too much. Even among those who describe themselves as upper or upper-middle class … 52% say upper-income Americans don’t pay enough in taxes.

In spite of these views, overwhelming majorities of self-described middle- and lower-class Americans say they admire people who get rich by working hard (92% and 84%, respectively). (more…)

Blog author: jcarter
posted by on Monday, August 27, 2012

As the Presidential debates draw near, there is one question that tops my wish list of questions that should (but won’t be) asked of the candidates: What income range constitutes “middle class”?

This undefined group of citizens seems to be a favorite of politicians on both ends of the political spectrum. Reagan and Bush cut their taxes. Clinton too. And Obama promised not to raise their taxes. But who are these people? Ask the janitor sweeping your company’s floors and he’ll likely tell you he’s in ‘middle class.’ Query the vice-president of marketing and he will give you the same answer. The single girls down in accounts payable and the married attorneys in the legal department will give the same response. In the land of equal opportunity, it appears, we’re almost all middle class.

A new survey by the Pew Research Center confirms that almost half (49%) of adult Americans say they are in the middle class. But as Catherine Rampell notes, there is a wide variety of responses about what a family of four needed to earn to maintain a “middle-class lifestyle.”

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On Sunday Saddleback Church pastor Rick Warren appeared on ABC’s This Week and was asked if he agreed with President Obama’s economic gospel. As Kathryn Jean Lopez says, “I’m thinking the president probably wishes he picked a different pastor for the inaugural prayer.” Warren’s answered the question by saying:

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True help for the poor recognizes that they are people, says J. E. Dyer, not income-levels in a “redistribution” equation.

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Blog author: jcouretas
posted by on Wednesday, February 22, 2012

Over at National Review Online, Acton Research Director Samuel Gregg takes a look at a recent Charles Blow op-ed in the New York Times in which the writer hyperventilates about statements made by Rick Santorum on the subject of income inequality.

Economically speaking, income inequality reflects the workings of several factors, many of which are essential if we want a dynamic, growing economy. Even your average neo-Keynesian economist will acknowledge that, without incentives (such as the prospect of a higher income), many entrepreneurial projects that create wealth — not to mention jobs and often greater incomes for others — may lie dormant forever. Either that or the entrepreneur will simply leave for a more friendly economic environment in which his ideas, willingness to assume risk, and potential job-creation capacities are taken more seriously.

Part of Mr. Blow’s unhappiness with Santorum was that he made his inequality remarks in Detroit, despite Blow correctly noting that “income inequality in the Detroit area isn’t particularly high.”

But Detroit’s well-documented economic problems have little to do with income inequality per se. They have far more to do with decades of corporatist collusion between bailed-out car companies and the UAW, rampant political corruption, and assorted crony-capitalist arrangements — the same arrangements that recently helped, as a recent University of Illinois study illustrated, the Chicago metropolitan region merit (yes, merit) the unenviable title of “the most corrupt area in the country since 1976.”

Read “Inequality Anyone?” by Samuel Gregg on National Review Online.

Glenn Barkan, retired dean of Aquinas College’s School of Arts and Sciences here in Grand Rapids, had a piece worth reading in the local paper over the weekend related the current trend (fad?) toward buying local. In “What’s the point of buying local?” Barkan cogently addresses three levels of the case for localism in a way that shows that the movement need not have the economic, environmental, or ethical high ground.

At the economic level, Barkan asks, “Does the local stuff taste better than the imported stuff?” This is essentially a question about competitive advantage. This is the economic idea that some locations, given geographic, cultural, or other features, are better places to produce certain things than other places. Try as one might, it is difficult to grow mangoes in Michigan.

But one of the arguments against large-scale (statewide, national, or global) trade is that there are large environmental consequences. To this point, Barkan writes, “Following this thread means that most decisions which in the past were made on a variety of criteria will now be made only upon the criteria of consuming resources in transportation. How can I keep my carbon footprint small? No more Swiss chocolate, Italian cheese or French wine. Is this what we want?” I think that is what many of the localists in fact do want. It is somehow immoral for me, living in Michigan, to consume mangoes grown in Mexico.

What these kinds of considerations lead to is the moral claim that, in Barkan’s case, for instance, “I have some sort of moral obligation to buy Granny Smith apples from Michigan, and not from Washington.” To this Barkan responds that one mark of moral calculation is discerning where needs really lie: “If I had to choose between making a purchase which provided an income for a very needy family in Alabama, or a less needy family in Kent County, I think I would choose the former.” And better yet, given the relative wealth of even the poor in America on a global scale, we might say that poor workers in the developing world need trade more than the relatively poor in America.

An article in the Spring issue of the Journal of Markets & Morality makes the implications of these kinds of considerations quite well. In “Social Choice: The Neighborhood Effect,” Brian K. Strow and Claudia W. Strow write in the context of wealth redistribution, “a lower-middle-class worker by Massachusetts standards may be a net beneficiary of income redistribution at the Commonwealth definition of society but is likely to be a net contributor at the national definition. They most certainly would lose the vast majority of their income if the world were used as the definition of society.”

The payoff for Barkan is that “a soul is a soul. Whether it is a Kent county soul, or one from California, or Ghana. I choose to have my purchasing decision do the most good for the most needy. Regardless of localism.”

Or as economist Victor Claar put it, “we should treat people as people, no matter where they happen to live. We are all created in the image of God. I find it distressing that we protect relatively affluent Americans when we should give everybody an opportunity to do something they can do well, at a low cost, in a high quality way.”

A person’s a person, no matter how far.