Good news, Poors! David Brooks has decided to take on the topic of income inequality, and has concluded that 1) income inequality is not actually a problem, and 2) if it were, we shouldn’t solve it by giving poor people more money, and also 3) the growing income of the 1% has nothing to do with the shrinking incomes of the rest of us. Hear that? NOTHING TO DO WITH IT.
In the first place, to frame the issue as income inequality is to lump together different issues that are not especially related. What we call “inequality” is caused by two different constellations of problems.
At the top end, there is the growing wealth of the top 5 percent of workers. This is linked to things like perverse compensation schemes on Wall Street, assortative mating (highly educated people are more likely to marry each other and pass down their advantages to their children) and the superstar effect (in an Internet economy, a few superstars in each industry can reap global gains while the average performers cannot).
At the bottom end, there is a growing class of people stuck on the margins, generation after generation. This is caused by high dropout rates, the disappearance of low-skill jobs, breakdown in family structures and so on.
If you have a primitive zero-sum mentality then you assume growing affluence for the rich must somehow be causing the immobility of the poor, but, in reality, the two sets of problems are different, and it does no good to lump them together and call them “inequality.”
See, when bankers get paid “perverse” amount of money, that money isn’t coming from poor people. It’s coming from thin air.
So the 300% interest rates charged by Wall Street-owned payday lenders, the fees that you are charged to access your own money from the ATM, the student loans that cannot be discharged through bankruptcy or even the death of the borrower — well, none of that has anything to do with the multimillion dollar salaries paid to the upper echelons of bank management.
And the deregulation of Wall Street, which encourages excessive risk and creates an atmosphere of instability detrimental to the average worker, as well as the fact that the “internet economy” thrives on the backs of the middle class and working poor — well, this should not be seen as evidence of a relationship between the high salaries of the rich and the increasingly impossible project of upward mobility for the poor either.
If you think the problem is “income inequality,” then the natural response is to increase incomes at the bottom, by raising the minimum wage.
But raising the minimum wage may not be an effective way to help those least well-off. Joseph J. Sabia of San Diego State University and Richard V. Burkhauser of Cornell looked at the effects of increases in the minimum wage between 2003 and 2007. Consistent with some other studies, they find no evidence that such raises had any effect on the poverty rates.
That’s because raises in the minimum wage are not targeted at the right people. Only 11 percent of the workers affected by such an increase come from poor households. Nearly two-thirds of such workers are the second or third earners living in households at twice the poverty line or above.
The primary problem for the poor is not that they are getting paid too little for the hours they work. It is that they are not working full time or at all. Raising the minimum wage is popular politics; it is not effective policy.
Yes, do not take from the rich and give to the poor. This, says the guy who gets a six figure salary to write a shitty column filled with lies every week, would be misguided and would not help them. You would think that giving poor people more money helps them have more money, but that is “primitive” thinking on your part because the real problem is that Poors do not act like Rich people.
Third, the income inequality frame contributes to our tendency to simplify complex cultural, social, behavioral and economic problems into strictly economic problems.
There is a very strong correlation between single motherhood and low social mobility. There is a very strong correlation between high school dropout rates and low mobility. There is a strong correlation between the fraying of social fabric and low economic mobility. There is a strong correlation between de-industrialization and low social mobility. It is also true that many men, especially young men, are engaging in behaviors that damage their long-term earning prospects; much more than comparable women.
What? Correlation does not equal causation? And maybe poverty causes these complex cultural, social, and behavioral problems rather than the other way around? Whatever, don’t let that bother you; the real issue is that we must NEVER EVER take any money from David Brooks or his friends to make the lives of poor people that much easier.
If we’re going to mobilize a policy revolution, we should focus on the real concrete issues: bad schools, no jobs for young men, broken families, neighborhoods without mediating institutions. We should not be focusing on a secondary issue and a statistical byproduct.
Where is the money going to come from to accomplish these things? Not from rich people; don’t polarize the debate. The best thing to do is to simply judge their “behavioral” and “cultural” problems from our lofty perches in Manhattan, and hope that this gets the job done.