Our hearts go out to the poor and everyone hurting from the recession. New Census figures tell us 1 in 15 Americans is poor, a record high.
Some reflexively call for redistributing wealth, increasing taxes, expanding social safety nets. All at a price. Such tactics also have other detrimental effects.
America remains the most prosperous and upwardly mobile nation in history. We should closely examine places alluded to as models for us to emulate, such as China, which has surged economically in recent years.
Consider Michael Levy, who, after serving in the Peace Corps in rural China, told National Public Radio: “Imagine that there’s a country exactly like the United States. Exactly the same size. It’s got the same cities. It’s got the same number of rich people and poor people. It’s just like us. And now add 1 billion peasants. That’s China.”
What’s it like to be a poor Chinese peasant? The World Bank and United Nations say about 682 million Chinese, more people than live in the U.S., Germany and United Kingdom combined, live on less than $2 a day. And that favorite yardstick of progressives — the gap between rich and poor — is widening.
Then there’s Europe, where, despite its share-the-wealth socialist policies, it has lagged behind the U.S. Even while U.S. economic growth has disappointed over the last decade, it’s still noticeably better than Europe’s, according to David Leonhardt, New York Times Economic Scene columnist.
Now Europe’s “have” nations, such as Germany, are running out of patience with “have-nots,” epitomized by Greece, who have relied on bailouts from the more prosperous states.
The U.S. economy for two centuries has bounced back from recessions and even the Great Depression, not because it adopted foreign solutions, but because it hewed to time-tested tenets of free enterprise and capitalism.
When the U.S. occasionally turned leftward, it increased rather than lessened grief. New Deal public-sector jobs displaced or destroyed private jobs and slowed recovery. Protectionist tariffs benefited a few, select groups but made goods more expensive for the vast majority and eliminated countless jobs. Increased taxes drove investment capital to tax shelters, or worse, overseas. Even apparent benevolence, like extending 26 weeks of unemployment insurance to 99 weeks, harmed the economy and increased the unemployment rate by 0.5 to 1.5 percentage points, according to the Heritage Foundation.
Although the poor always will be with us, in America they don’t necessarily look like Dickens’ ragamuffins. Economist Thomas Sowell reminds, “Their low incomes are as transient as the higher incomes of ‘the rich.’ Most of the people in the bottom 20 percent in income end up in the top half of the income distribution in later years.”
Policy setters should remember that economic mobility is only harmed by government “help.”