Income Distribution Policy: Dead End or Over the Cliff?

Writing about income distribution policy is a little like getting a lobotomy. You know the operation is necessary but you also know the end result is nothing one would wish for. But it is a rainy Saturday here in Bloomington and my self-imposed Tuesday deadline is looming.

I recently went to my 50^th high school reunion in Miami and it reminded me of a lot of things. Life was simpler in the 1950s but the world was very cruel for a lot of people. Segregation ruled in Miami and women dealt with more than glass ceilings. Many Cuban immigrants found Miami more hospitable than Fidel, yet conditions often “forced” them into ghetto life along the Tamiami Trail. Most gays stayed in the closet. Today much has been improved for these and other minorities but we all know that there remains much to do. There is no question that we can improve results.

What gets me spouting today, however, is the related but important issue of income distribution. It is no secret that the current US presidential administration is highly motivated by polices to improve income equality. This is a noble goal but his ways of going about this seem wrong to me – and worse than wrong is that they are counter-productive. You wouldn’t throw an anchor to a drowning man. But current thinking about income distribution policy seems like doing just that. Of course, this post is not so much about President Obama as it is about a total dis-function of our elected representatives when it comes to making any progress with poverty or income distribution. 

Thus my title – Income distribution policy might be a dead end. Actually it could be worse than a dead end. Most dead ends have a turnaround place. Once you know you cannot get through, you can turn around and try again. There is hope you can get to your destination. My worry is that we have gone beyond the turnaround place and don’t know it. As a result we should aptly describe our situation as over the cliff. You heard the joke about the guy who falls off the top of a very tall building. At about the fifth floor a guy leans out the window and asks the man how it is going. He replies, “Okay so far.” That’s the definition of an optimist.

Already some of you are ready to remove my JD. You have branded me a big bad meany and you are ready to stop my subscription to the Wall Street Journal.

Let’s be honest. This issue of income distribution has become a war cry for extremes on the left and right and many of us get sucked into unthinking knee-jerk reactions that in and of themselves prevent us from making headway. We can’t even have a civil discussion about how to improve income distribution. Wouldn’t it be nice to know that when I go to my 100^th high school reunion that we can say we made some progress? 

Or do we want to acknowledge in 2064 that we failed again to move the needle?

Wouldn’t it be nice if we could apply logic or common sense to this challenge? For example, we noticed a few days ago that no matter how low we set our AC’s thermostat, the temperature in our house was rising. That is what I call detection of a problem. So we called an expert who looked over the situation and found that a part had been installed incorrectly. We didn’t notice this in the winter but as soon as we had some hot days, it became obvious that a problem existed. The expert fixed it and now we are back to being cool.

To summarize – we detected a problem, we searched for the source of the problem, and then we applied a solution to fix that problem. We do that all the time. We do this at home, at work, and we sometimes do that in the public arena.

It is possible that two experts might have different opinions at each stage of the process. They might disagree that a problem exists, about the source of the problem, and then about the remedy. The sad thing is that politics is very different from home electronics. Two electricians might disagree but with a little more investigation, they can search for the correct approach. Politicians, on the other hand, will search out their base political support and continue saying things for years if not decades to keep getting elected.  

But surely we can do better than that. Economic and social success is not a partisan issue. Presidents Kennedy and Johnson are often given credit for starting the War on Poverty. They had the right idea. They wanted to eradicate if not minimize poverty. Their presumption was that people wanted to take care of themselves and not be permanently dependent on government assistance. Yet we find ourselves today after more than a half century of social programs far removed from that goal. Too often government programs lead to long-term dependency if not inter-generational reliance on fiscal support. Social programs have not wiped out poverty.  It is as much or more evident than it was in the early 1960s.

What is the problem?

            Racism has worsened?

            Reverse racism has worsened?

            Rich people are better able to take advantage of the poor?

            Rich people do not pay enough in taxes?

            Social programs are too skimpy with benefits?

            Social programs do not address the root causes of poverty?

            Social programs themselves engender dependence?

            The minimum wage is too low?

            The minimum wage is too high?

            Globalization reduces domestic wages and job opportunities?  

            Companies replace US workers with machines?

            Too many young people do not finish high school?

            Too many children are raised by single parents?

            Too many young people have children before they finish high school?

            Too many people are hooked on drugs?

Most of you might agree with some of the above possible causes but not all of them. But let’s face it – these and other issues deserve to be looked at objectively. After such a real inquiry then perhaps we can prioritize this list. Some items will go to the head of the list. Some will be dropped entirely.

But let’s face it – while the average guy might think this is a logical approach can you imagine some of the leaders of our two parties digging in examining these issues dispassionately? I can’t. If you agree then the problem is pretty obvious. Poverty can be addressed and reduced – but the people we pay in Washington to accomplish this are simply not up to the task. We should vote for people who are.