Government Punishes The Poor
In thinking about politics and economics, one is considering how particular aspects of our society should function. Economics is basically the study of how society provisions its members (for an in depth description see Robert Heilbronner – “Behind the Veil of Economics”). Politics, on the other hand, is how the people combine to use power to force or enforce certain actions on all members of society. Ms. Fannie Flono, an editorial writer for the uptown paper, conflates the two, as many do, and expects politics to remedy the economic problems she is concerned with.
First one must understand that our society provisions itself with a mix of socialistic and capitalistic methods. We have never been solely capitalistic, although we have leaned more in that direction than many countries. Even now, opportunities for the success that capitalism offers exist. On the other hand, through government, socialistic programs continue to increase and in doing so impinge on capitalism. How to balance the two is the ongoing question; it was brought to the fore in recent election campaigns and remains a major concern considering the ‘fiscal cliff’ Washington politicians are currently debating.
Numerous examples of the thinking that inhibit a rational resolution of these issues are found in Ms. Flono’s opinion and it is this type thinking which we must overcome if our society is to remain viable. One of the major themes of Ms. Flono has to do with the differentiation between rich and poor.
In citing specific statistical descriptions of various groups, Ms. Flono leads one to believe these groups are static in makeup. Thus she refers to the poor or the rich as if they are the same people year in and year out. This is not true. People move in and out of every income level. Those who are poor this year will not be the same people who are poor in 10 years, and the same is true of those at the top. Those with middle or high incomes will move higher and lower as their individual circumstances change. Ms. Flono ignores this truth and advocates pretending each group is static. It is this mindset which, unfortunately, influences many of the political programs used to address the situation of the poor. Instead of helping the poor, they keep the poor from improving. One example of this is by making additional income a detriment to receiving aid. A person receiving welfare who might find a part-time job can easily lose a dollar of aid for every dollar they make. The same is true of Medicaid recipients and other programs. If we are to help the poor, programs need to be designed to help them improve their situation, not keep them in it.
Another issue Ms. Flono raises is shown by how she addresses recent NC legislation to reduce taxes on small businesses. To quote Ms. Flono, “That break meant a loss of $336 million a year in state revenue….” This point of view is typical of many who advocate for larger government. An equally accurate statement would be: This action would leave $336 million in the hands of those who earned it. The facts are the same, but one acknowledges the authority of individuals over what they have earned, the other believes government has the right to the fruits of your labor before you do. For many, income and property belongs to the government and you only get to keep what they decide you might have. This attitude is the exact opposite of one which believes in private property and free enterprise. In order for capitalism to function efficiently, we must have private property and for private property to exist, government must be limited in its reach.
In arguing for tax policies that punish those with higher incomes, Ms. Flono adheres to the mistaken belief that government can fix the differential between rich and poor. Nothing could be farther from the truth, but it is an argument those who believe in larger government use to increase taxes. The problem between high incomes and low incomes, between rich and poor is not something government can address without dictating what people are to be paid. Some people are willing to work harder, some are smarter, some handle money better, some go to school for an education which should help them make more money. The fact is there is a difference between people and situations. Some do well, some don’t. If government is going to be an arbiter of results, how are they going to decide who should get what? Do you think those in government will not treat themselves better than others? Think again.
Certainly we should provide a safety net of programs to assist those who are in dire straights. But the problem with high incomes is a moral problem that government cannot easily address without inflicting more harm than good. Personally I believe top management of corporations should not make more than seven times the salary of their lowest-paid employee. If the president of Walmart thinks someone should be able to live on $8/hour then seven times that should be plenty. If he doesn’t like that salary, then raise the lowest paid. But government does the same thing by taxing the income of the too well paid. Nor do I think it should. The leftists get in an uproar if the head of Chick-fil-A states his opinion about marriage. Where are they on the issue of excessive pay? Unfortunately they are looking to government to address the issue.
Ms. Flono goes on to advocate increasing the minimum wage, increasing unemployment compensation, and improving support for low-income workers. These are easy things to say but difficult to do. The minimum wage affects many people the wrong way. Some employees aren’t worth that much; having come through the public school system where one can graduate for showing up, they come to work with a similar attitude and no work ethic. Having not learned personal responsibility they think they should get paid for doing nothing. They already have an entitlement attitude and a minimum wage that is too high will keep them from having a job where they might learn to work. Employers might be willing to teach someone, but they have to be able to afford the pay to do so.
Ms. Flono continues with ways government can make things better. She is wrong. What has made the lives of people better is free enterprise. Private property and capitalism have done more to improve the lives of people than government ever has or will. In countries which have allowed free enterprise to flourish, the poor are much better off. In countries without it, many are still destitute, living on less than $1 per day.
People must be encouraged to work, to produce, to provide services for which others will pay. In doing so the lives of everyone is improved. When government takes from one to give to another, the first is discouraged from doing more, the second encouraged to do nothing. There is less for all. Arthur Brooks, in “The Road to Freedom,” provides an apt example: “Swedish economists Andreas Bergh and Magnus Henrekson have measured the negative relationship between government spending and economic growth. In a large survey of the economic literature, they found that a 10 percent increase in government spending corresponds to a decrease in economic growth of between 0.5 and 1 percentage point. ….. Studies vary in their conclusions, finding that every government job created eliminates between 1 and 2.2 private sector jobs.”
As a society we have an obligation to each of our members. What Ms. Flono advocates is that the poorest remain poor. If we want everyone to do better, then we have to encourage those who can, to do so. Free enterprise is the way to raise the tide for all. Free stuff just leads to less stuff.
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