On Tuesday, President Obama in his State of the Union address will again raise the specter of ‚Äúincome inequality‚ÄĚ as our most pressing social and economic problem. He‚Äôs wrong in the diagnosis, and more importantly, he‚Äôs wrong in his prescription for the nation.
‚ÄúEconomic inequality has become the left‚Äôs great hope for recovering its political integrity after the Obamacare disaster,‚ÄĚ says Jim DeMint of the Heritage Foundation. ‚ÄúPresident Obama, trying to change the subject, has latched onto the issue ‚Ä¶ This is a serious subject deserving serious consideration in the marketplace of ideas. Unfortunately, that doesn‚Äôt mean we‚Äôre about to get a thoughtful debate.‚ÄĚ
Instead, we should expect some tired Democratic talking points.
‚ÄúThe president mischaracterizes the problem and offers a simplistic solution: There are just too many rich people, and they are causing the problem,‚ÄĚ DeMint explains. ‚ÄúSo, he proposes, let‚Äôs take more money from those successful people and redistribute it to the poor through welfare, raising the minimum wage, extending endless unemployment benefits and other government handouts.‚ÄĚ
That‚Äôs the wrong approach for two reasons. First, it‚Äôs based on a misunderstanding of some pretty basic economic principles.
The Brookings Institution is a left-leaning think tank, and according to the University of Pennsylvania‚Äôs rankings, the most influential think tank in the world.
But even Brookings has parted with Obama over his reading of the economics of ‚Äúinequality.‚ÄĚ
‚ÄúFirst, the very good news: President Obama is helping to keep social mobility on the agenda,‚ÄĚ Brookings says. ‚ÄúThe less good news: he risks creating more heat than light by over-stating, and over-simplifying, the problems at hand. Moving the needle on social mobility will require cool analysis, bipartisan alliances, and a long-term strategy. It‚Äôs the wrong issue for knock-about politics.‚ÄĚ
There has also been bipartisan agreement that Obama‚Äôs prescription for inequality ‚ÄĒ redistribution ‚ÄĒ fails more often than it succeeds.
‚ÄúAs sensible Republicans and Democrats agreed in reforming welfare in the mid-1990s, federal government poverty programs are no longer safety nets ‚ÄĒ they are snares that trap people in poverty and dependency,‚ÄĚ DeMint explains. ‚ÄúMarriage penalties and ‚Äėcliff effects‚Äô make it all but impossible for people to get off government assistance. They thwart America‚Äôs legendary upward mobility by destroying the financial and social capital required for Americans to grab the ladder of opportunity and climb as high as they can dream.‚ÄĚ
In fact, income inequality is a red herring, DeMint contends. The real problem is a lack of income mobility ‚ÄĒ the ability for people to rise out of poverty and the middle class and into a better way of life.
‚ÄúUpward mobility has declined, but not because of income disparities,‚ÄĚ he says. ‚ÄúFor the real culprit, one must look to broken families and communities. But these are often caused by government action, not fixed by it. What we need, then, is to reform our welfare system to promote work and individual success, not dependency on government.‚ÄĚ
When Obama travels to Capitol Hill on Tuesday and takes the podium, he would do well to focus on ways we can increase opportunity for all Americans.