…I don’t think the aim should be to keep the poor poor and feel sorry for them and give them alms; I think the hope for the poor is to help them to break the chains of poverty and become independent people of initiative and energy on their own…
Stephen Moore (chief economist at the Heritage Foundation) and Richard Vedder (a professor of economics at Ohio University) have an editorial in this morning’s Wall Street Journal (The Blue-State Path to Inequality States that emphasize redistribution above growth have a wider gap between lower and higher incomes) that speaks Michael Novak observation that concern for the poor is not enough, we need as well a “to help them to break the chains of poverty and become independent people of initiative and energy on their own” (read the rest here).Among other things they quote a Cato Institute report (“The Work Versus Welfare Trade-Off: 2013) that “measured the value of all welfare benefits by state in 2012.” What the research found is that generally “the higher the benefit package” paid by welfare the higher the rate of income inequality. They aren’t arguing “that state redistributionist policies cause more income inequality.” But their research does “suggest that raising tax rates or the minimum wage fail to achieve greater equality and may make income gaps wider.”
They go on to say that they “believe these income redistribution policies fail.” After having spent “more than 25 years examining why some states grow much faster than others” they conclude that it “is nearly inescapable that liberal policy prescriptions—especially high income-tax rates and the lack of a right-to-work law—make states less prosperous because they chase away workers, businesses and capital.” After offering some examples of the differences among states with different economic policies they observe that
When politicians get fixated on closing income gaps rather than creating an overall climate conducive to prosperity, middle- and lower-income groups suffer most and income inequality rises. The past five years are a case in point. Though a raft of President Obama’s policies—such as expanding the earned-income tax credit and food stamps, and extending unemployment benefits—have been designed to more fairly distribute wealth, inequality has unambiguously risen on his watch. Those at the top have seen gains, especially from the booming stock market, while middle-class real incomes have fallen by about $1,800 since the recovery started in June 2009.
They conclude that the higher income inequality “is a reversal from the 1980s and ’90s when almost all income groups enjoyed gains.” Income inequality in “the United States has risen in each of the last three years and was higher in 2012 (.476) than when George W. Bush left office (.469 in 2008), though Mr. Bush was denounced for economic policies, especially on taxes, that allegedly favored ‘the rich.’” Novak is correct, good intentions aren’t sufficient to raise the poor out of poverty. As a practical matter, at least in the US, policies in the service of income redistribution don’t work.
That said, and I merely ask this as a sympathetic outsider, do you think Pope Francis isn’t interested in lifting the poor out of poverty? I doubt this but, like I said I’m looking at his words from the outside.