Blindly Following Alan Blinder Over a Poverty Cliff

Alan Blinder wrote about income inequality in the Wall Street Journal last week ( Pikettymania and Inequality in the U.S., June 23, 2014, pA13).  The article regurgitates a lot of well-known facts that support the idea that income inequality has grown. But the article is also the poster child for what is missing in our discussions about cause, effect, and policy. Following Blinder’s hasty policy recommendations will likely make things worse and that is what I am spouting off about today.

Blinder starts with the recent work by Thomas Piketty – giving him credit for focusing on the impact on income distribution made by the richest Americans. He agrees with Piketty that among the solutions for correcting income inequality is to make the rich pay more. But Blinder thinks Piketty does not spend enough energy on the bottom half of the income distribution and therefore misses some important other policies that Blinder advocates – “giving poor children preschool education, bolstering Medicaid, raising the minimum wage, expanding the Earned Income Tax Credit, and defending anti-poverty programs like food stamps.”

It would take a cold heart to argue with Blinder. Most of us boomers supported the programs that Blinder lists. We give to our local charities and we pay taxes to support these programs. But what I find to be so irritating about Blinder is his boldness. Nowhere does he admit that there might be even the tiniest problem with any of these approaches that might make a society of people who truly care about poverty want to evaluate the effectiveness of these programs for the ends we value so much.

Notice the words that Blinder chooses in his list above – giving, bolstering, raising, expanding, and defending. These are his words – not mine. Is it abundantly clear that all these programs are perfect and simply need to be expanded and defended? Even if he wants to tax only the rich to pay $2 trillion or more for these programs – it seems fair to want to ask if this $2 trillion is getting the job done.

You and I are bound by budgets and logic when it comes to our own expenditures. When a merchant wants to charge us more for a good or service we get to work. Is the good worth the extra money? Is there a better way to get the benefits of this service? Is there a different provider who can do a better job? Whether it is getting our lawn mowed, buying a health insurance policy, or purchasing the best 10 year old bourbon, most of us try to get the best results with the least amount of outlay.

But Blinder doesn’t think that way. Nowhere in his article is one word devoted to the effectiveness of these programs. Nowhere does he ponder if $2 trillion of our dollars could be used more effectively to eliminate poverty. Nowhere does he even mention how these programs attack systemic or even cyclical causes of poverty.

I know, some of you think that just raising these issues is a smoke screen. A letter published in my local paper recently described Republicans and other fiscal conservatives as greedy, hateful, mean-spirited people who basically hate the poor. I doubt that most people agree with that but that extreme opinion is clearly out there and it makes it easy for some people to love Blinder and to hate anything that interferes with liberal, progressive doctrines.

But let’s face it – Blinder wouldn’t be writing if it weren’t for at least blemishes in these programs. Like Oliver, Blinder wants MORE. In the case of Oliver he wanted more gruel because he was hungry. Blinder wants more money thrown at social programs. But Blinder offers no connection between his policies and the root causes of poverty. He asks us to trust him. The reason policies have not worked in the past is because they weren’t big enough. So let’s add more money. After 50+ years of a Great Society and a War on Poverty with ever more poor people, I’d like to see a little more time and energy devoted to how to best fix these problems.

But that would take time, effort, and an open mind. I am wondering what Professor Blinder thinks about that?