Poverty, Inequality and Opportunity

Buried in President Obama’s Wednesday address on economic inequality lay this claim about the Affordable Care Act:

It’s the measurable outcomes in reduced bankruptcies and reduced hours that have been lost because somebody couldn’t make it to work, and healthier kids with better performance in schools, and young entrepreneurs who have the freedom to go out there and try a new idea—those are the things that will ultimately reduce a major source of inequality and help ensure more Americans get the start that they need to succeed in the future.

One assumes controversy ensues about the claims that Obamacare will lead to better performance in school and more entrepreneurship. Fair enough. The non-controversial pivot is supposed to be the assumption that these outcomes, if achieved, would reduce inequality.

But this is, strictly speaking, absurd. Such outcomes would likely increase inequality. What they would reduce is poverty. Opportunity has a way of doing both. The distinction is vital, and rhetorical imprecision—assailing inequality when what means to target is poverty—confounds the search for useful solutions to the latter.

The clearest distinction between the two, of course, is that poverty is an objective problem while inequality is not. Nothing about a disparate economic situation between two people reveals itself as inherently problematic. It is true—as, for example, Pope Francis’ recent exhortation on the subject argued—that social cohesion is a worthy goal, but economic inequality need not imperil this unless a vice, envy, is presumed or unless, as Theodore Dalrymple recently argued in this space, zero-sum scenarios are falsely presumed. (A further difficulty is the anthropomorphizing of economic “systems” and the consequent imputation of discrete and ill motives to them—another story.)

Note the lumping together of poverty and inequality in this passage from the President’s address:

Across the developed world, inequality has increased. Some of you may have seen just last week, the Pope himself spoke about this at eloquent length. “How can it be,” he wrote, “that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”

Now, in fairness, the Pope had spoken about inequality, but he certainly did not in this sentence. Inequality, a relative condition, is not deadly; poverty, an objective one, can be. The comparison of the stock market in this case is reasonable insofar as it indicates the skewed allocation of an actually scarce resource—public attention—without implying, at least explicitly, that one problem caused the other.

But simple conceptual confusion between poverty and inequality is less the difficulty than the fact that the profound tension between them requires, in a deep sense, a choice between the two. The most promising means of combating poverty almost certainly would increase inequality. Expanding access to technical skills, college education, entrepreneurial investment, even simple financial relief—all of these, whatever their merits, are not strategies for reducing inequality. They are likely to increase it, and for reasons that should give satisfaction: namely, that opportunity frees people to put it to different uses.

It will be shocking to legislators, but not to anyone who has ever attended a college commencement and heard the list of degrees announced, that the most pronounced inequality today obtains not among the general population but rather between the most highly educated workers.  Surely one explanation is the simple fact that highly educated workers have choices that unskilled ones do not. Some, quite admirably, become schoolteachers and social workers; others—also, dare one say it, admirably—become investment bankers and entrepreneurs. High school dropouts have no such choices, and therefore equality, and misery, is far likelier to obtain between them.

Consider, by way of further illustration, and for sheer sporting fun, George McGovern’s 1972 “Demogrant” proposal to give every American $1,000—much derided by conservatives, but actually traceable to Milton Friedman’s negative income tax (and a concept Charles Murray has revived as a potential replacement for the welfare state). Whether this is an efficacious means of reducing poverty is open to reasonable debate—to the extent that poverty is defined, as Daniel Patrick Moynihan would say, as a condition of not having enough money, it would seem promising—but it is an utterly certain route to increased inequality. Assuming the most responsible behavior, savings all around, give everyone $1,000, invest it at even slightly different rates of return reflecting different attitudes toward risk, compound those over several years, and wild inequalities will ensue—but everyone will be objectively better off.

Nor will society be the worse off, unless, again, one assumes envy—which presumably the regime ought not encourage. What it ought to encourage is clarity as to the choices it faces. That clarity is unattainable so long as poverty and inequality are so readily confounded. The issue is not merely that one of them is an absolute problem while the other is, objectively not. It is that a choice between them is unavoidable—and ought not, for that matter, be resisted.

Greg Weiner

Greg Weiner, who teaches political science at Assumption College, is the author of Madison’s Metronome: The Constitution, Majority Rule and the Tempo of American Politics. His book American Burke: The Uncommon Liberalism of Daniel Patrick Moynihan will be published by University Press of Kansas in early 2015.

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Comments

  1. gabe says

    great, great piece:

    I especially liked the mention of envy – it is one of the most effective tools in the Proggie’s arsenal – without it they would be just another party seeking power. Having it, and deploying it as skillfully as they do, makes them a potent force for those on the “un-equal” end of the spectrum. One could argue that this is in fact their ideology – or at least it is the engine that drives their ideology.

    Sadly, one must ask, how can you compete with that?

    take care
    gabe

    • Kevin R. Hardwick says

      Greg–

      As an Augustinian, I have to believe that Envy, like most human vices, is both present and widespread–something of a given–among most humans. So it seems to me that any sensible account of politics must take envy, as well as other vices too, into account.

      Moreover, I don’t see envy as necessarily present in all strands of progressivism. Conservative progressives, for example–guys like Theodore Roosevelt–argued that progressivism is the price for democracy. As TR put (I am paraphrasing) some regulation of corporate property in order to prevent monopoly (both local and national) is requisite, otherwise the people will vote for mor extreme alternatives like those advocated by Eugene Debs. Thus TR supported breaking up of trusts, at the national level, but also the regulation of railroads by the ICC at the local level, in both cases to prevent monopoly. Similarly, he supported modest consumer protection regulation. I don’t see that envy has much of a place in this kind of progressivism.

      The argument that capitalism and democracy are to some degree in tension, and that it is prudent and wise to strive to maximize both, strikes me as both an important strand of progressive thought, on the one hand, and as an argument we must take seriously, on the other. But I do not apprehend a central role for envy in it.

      All best wishes,
      Kevin

      • Kevin R. Hardwick says

        Greg, gabe–

        Please accept my apology–I wrote too much in haste, and got off to a wrong start when I opened with “Greg.”

        I intended this post to be a response to Gabe, and in particular what I took to be his claim that envy is central to the ideas of progressivism.

        I did not infer a similar claim from Greg,

        My guess is that Gabe did not intend his statement to be read as broadly as I did, and that he basically agrees with my qualifications above. So all I was really trying to do was to expand the conversation slightly, and to qualify what looked like a heat-of-the-moment over generalization.

        I would be surprised if there are any deep disagreements here!

        All best,
        Kevin

  2. Kevin R. Hardwick says

    Greg–

    It is possible objectively to measure inequality–the Gini Coefficient represents one way of doing precisely that. I find your argument above to be a priori persuasive. But that said–I raise this possibility not to assert it with any confidence but in the hope that someone more knowledgable than I will comment–I have a recollection of encountering claims by economists that there is an empirical relationship between high Gini Coefficients and poverty–that is, the close that the GC approaches 1, the greater the incidence of poverty. I have no idea what the linkage would be, and don’t recall the argument sufficiently well to reproduce it here. Nor do I have any sense at all of to what degree the folks who assert such a relationship are reliable and should be taken seriously. But all of these caveats aside, it seems to me that if such a linkage exists, that would force you to revise your reasoning.

    Hopefully my very tentative comment above makes some modicum of sense!

    All best wishes,
    Kevin

    • Greg WeinerGreg Weiner says

      Kevin,

      Thanks as always. A few thoughts that I, too, hope make modicum of sense. First, I would certainly grant that inequality can be objectively measured. The Gini coefficient is what I referred to in noting that inequality is most pronounced among college graduates. What I’m questioning is whether it’s objectively problematic. I certainly agree that politics must take account of envy, but it seems to me it ought to do so by discouraging it or channeling those energies more productively.

      I would be curious to see the linkage between the GC and poverty. My own suspicion is that the correlation isn’t causal, but I am certainly open to being disproved on that. Lastly, I don’t mean to equate Progressivism generally with envy–only to suggest that concern with inequality simply, as opposed to concern with poverty as an objective condition, can partake of envy. But the early Progressive concerns with poverty and the economic regulation necessary for the healthy functioning of capitalism need certainly to be given their historical due. That said (and this is a genuine rather than rhetorical question), is the Progressive movement of the early 20th century — as opposed to strains within Progressivism today — concerned with inequality per se, as opposed to the objective conditions of poverty and corruption?

      • Kevin R. Hardwick says

        Greg–

        Hopefully my redirect in the initial branch of the conversation started by gabe will be useful. Please accept my apology for the confusion–as I mention above, I did not intend the comment about envy to be directed at your thought.

        I agree with your much that proper government properly framed must take into account people’s intrinsic fallibilities–of which I take sins like envy to be one. I also agree with you much that that proper government should act both to discourage human vices and to channel them in productive ways–this is one of the reasons for which I admire Madison, and his notion that ambition must be channeled to restrain ambition.

        Allow me a digression, or perhaps better, an extended riff off of your comment:

        To my eye, one of the important strands in the history of American political theory is the idea that what we do in our lives shapes our character, that certain kinds of character conduce to republican democracy and some not, and that government should act to encourage people to do those things that produce the right character and to discourage them from doing those things that produce the wrong character.

        This is what I take to be the core insight in Jeffersonian Agrarian Republicanism and the expanded “small business republicanism” of the 1850s Republican Party.

        I see the politics of the 1880s and 1890s as an attempt to retain the vitality of small business republicanism in an era in which fundamental economic change increasingly meant that family farms and other forms of small business were not viable. I think you hear a kind of nostalgic echo of the 1850s Republican ethic in the “Rugged Individualism” of both Theodore Roosevelt and Herbert Hoover.

        One of the failures of the 20th century, it seems to me, is that progressives–those intellectuals and politicians who argued that fundamental economic and social change had occurred and that the government needed to act in consequence of that–disengaged from the tradition of Jefferson and Lincoln, and with the concerns for individual character that were at the root of that tradition.

        If a government premised on popular sovereignty is only as good as the people who comprise it, and if most people most of the time are badly flawed, and if the work that we do shapes our character–if you grant those assumptions, then Jefferson and Lincoln were right to be concerned for issues not just of statecraft, but also of soul-craft.

        All best wishes,
        Kevin

      • Kevin R. Hardwick says

        Greg–

        When I teach this, I distinguish between the early progressives of 1904-1928, and the New Deal progressives of 1932-1980.

        To my eye, the essential difference is that the early progressives retain a deep respect for the negative rights of the Constitution (this is true even for WW) whereas the New Deal progressives place increasing focus on positive rights–entitlements.

        Incorporation, it seems to me, takes much of its importance from the final clause of the 14th amendment–which looks to the Fed. government to enforce rights. This amounts to the partial conversion of the negative rights in the Bill of Rights into positive obligations that the government must provide. “Congress shall make no law” becomes “restrict my personal rights, and I will sue–and the government must provide me with that judicial recourse” as well as the pre-emptive efforts of Fed. government enforcement agencies to restrain individual behavior via regulation.

        • gabe says

          Kevin:
          You are correct. There is not much difference in our positions – and you are certainly correct with respect to the early Progressives and their alarm at the loss of Jeffersonian agrarianism.
          My concern, as is yours, is with the end state of that early Progressive impulse via, as you point out, incorporation. This has led to a radically different conception of what the state must provide while also inducing in the citizenry a sense of “slight” when they do not receive what they perceive to be their “right.” I call this proto-envy and with skillful manipulation by Proggie rhetoric, it becomes simple envy.

          take care
          gabe

          • Kevin R. Hardwick says

            Gabe–

            I wish I had a better handle on how to respond to our contemporary situation.

            As an historian, one of the evils to combat is teleology. We know how the story turned out, but the people at the time did not. It is woefully easy, and to some degree unavoidable, to read into the past one’s position in the present. But when we do that, we tend to distort our understanding of how history actually unfolded.

            So I’ve spent much of my life trying to understand the 20th century from a non-teleological perspective–which among other things means not thinking too systematically on contemporary problems.

            It is affirming to hear that my take on the American political tradition, idiosyncratic as it is, makes a modicum of sense. Other than a handful of books written by people like Alpheus Mason now a very long time ago, I’ve had to rely on my own reading of primary sources to assemble my interpretation for myself–the big surveys either do not exist, or else, like those of Nash and Wilenz, are to my eye badly infected by teleological agendas.

            Thank you for the feedback.

  3. gabe says

    Interesting tidbit:
    The highest Gini is located where? You guessed it – Washington D.C.
    All of the other states are fairly equal with not more than a 10% variation between high and low with most States much closer.
    Also from an Investment website:
    “Don’t mistake the measurement of income distribution with the measurement of wealth. A wealthy country and a poor country can have the same Gini coefficient, even if the wealthy country has a relatively equal distribution of affluent residents and the poor country has a relatively equal distribution of cash-strapped residents.”
    Thus, I am not certain just how effective or meaningful of a measure this is as it does not appear to give an accurate picture of overall conditions (wealth, health, etc) of an economy. I wonder what the Gini score was for the Soviet Union or Cuba?

    With respect to envy;
    Kevin, you are correct regarding early progressives and TR. Can one still make that assertion today. All one need do is to study the rhetoric of Dem candidates and their “secretaries” in the media to realize that so much of their electoral showing (success?) has been driven by encouraging envy and resentment toward those who have attained some level of success.
    In short, we could probably live with TR (although that too is debatable) but I do not think we can survive the current Proggie approach.

    take care
    gabe

  4. R Richard Schweitzer says

    Of course it was a lawyer who generated the response:
    Matthew 22:40 that two Laws are requisite.
    and Matthew 22:39 is the Law by which to engage our observance and acts with regard to both poverty and inequalities; which I think one can parse from the words of Pope Francis, but not those of our hyper-secular politicians.

    That, from a non-R.C.

  5. Kevin R. Hardwick says

    Greg–

    There does seem to be a broad discussion taking place among economists and commentators of the center-left, regarding the linkage between extreme income inequality and economic growth. Some of the people in the conversation also seem to be imputing a connection with poverty.

    Here is an example of the kind of light journalism in which this conversation gets reported to the rest of us. I have no idea what to make of it, other than that it exists, and seems to suggest that these linkages empirically exist.

    http://www.politico.com/magazine/story/2013/12/income-equality-ripple-effect-john-podesta-100891.html?wpisrc=nl_wonk

    All best,
    Kevin

  6. gueppebarre says

    In Obama’s typical fashion his speech is full of false dichotomies and false choices.

    Anyone not being able to recognize these fallacies, the tools of fascist speechifiers, should take some lessons from the author and be alert in the future – if you care about your liberty, that is.

  7. Jean-François says

    Why do you dismiss the idea of zero-sum economics without even a thought? To me it’s quite clear that if the scope of your reckoning is wide enough, our global economic system (over time) is very nearly zero sum. If you only integrate over only a few years or artificially only count people in a specific region, then yes, there can be “wealth creation” and such. But if you consider the system as a whole, namely the whole planet and over time, it is quite clear that any wealth created in a local region (in time or space) is eventually paid for by others. Currently our wealth in North America is paid for in our own time by workers in foreign countries and the poor in our own, and by people not even born yet.

    The only part of the system where there is a new source of wealth is basically solar energy, and it’s a very small contribution.

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