Income Inequality in the U.S. II. How Do We Alleviate It?

My last post points out that there is a relatively small degree of income inequality in the U.S., not nearly as bad as is commonly portrayed by the media, after taxes and government transfers are taken into account.  Nevertheless, it would represent progress if low-income people could earn higher salaries and not have to depend so much on government welfare programs to boost their disposable incomes.

How can this be accomplished?  A new book, “Unbound” by Heather Boushey makes a number of practical suggestions:

  • Increase early childhood education opportunities. “Children’s test scores at age seven can explain 4 percent to 5 percent of the variation in employment at age thirty-three.”
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  • Increase social mobility. A child is better off in an environment “less segregated by race and income, with a strong middle class, better schools, better test scores, and with fewer single parent families.”
  • Maintain full employment. “One of the best ways to create opportunity is full employment.”  This, of course, is exactly what the Trump economy has accomplished.
  • High degree of market concentration. “One metric of the effects of high market concentration on innovation is the reduction in the number of startups.”  Interestingly, another new book, “The Great Reversal: how America gave up on free markets” by the economic conservative Thomas Philipon, makes the very same case.
  • The economic cycle. “We’re learning from evidence that broad prosperity for those on the bottom and middle rungs of the economic ladder not only reduce inequality but also can create better economic outcomes.”  This is precisely what our currently generous government transfer programs and low unemployment rates are already accomplishing.

Conclusion.  It would be much better to decrease income inequality by increasing market incomes of those on the bottom rather than doing it primarily with government transfer programs. Ms. Boushey has some good ideas for accomplishing this goal, several of which are already being implemented.

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4 thoughts on “Income Inequality in the U.S. II. How Do We Alleviate It?

  1. If a teen-age person becomes the sole-custodial parent of an infant before graduating from high school, they have a nearly 80% chance of subsisting on Medicaid for the next 20 years. If they obtain a high school diploma, it drops to 10-20%. AND, if they achieve one full-year of college, it drops to 5-10%. The teen-age person’s social mobility parallels this association. Increasingly, the occurrence of mentorship, preferably from within an extended family, blunts the effect of a teen-age pregnancy on the independent person as well as their dependent person. It is likely that the phenomena of mentorship within family units is indirectly supported by their community’s underlying level of generational social cohesion.

    SOCIAL COHESION may be defined as a broadly shared expectation among a nation’s communities that the persons residing within each other’s community are trustworthy and that each community’s prevalence of these trustworthy persons is related to their own community’s continuing collaboration with their adjacent communities to endow each other’s Survival Commons with sufficient social capital.

    For social cohesion, a community’s Survival Commons represents an augmented safety-net that includes disaster mitigation planning, equitably available Primary Healthcare, collective action strategies for social mobility adversities, and early childhood education. Social capital is a more widely understood concept with multiple definitions. These are uniformly linked to a community’s capability to take care of each other. Historically, our nation’s social capital can best be identified as our nation’s commitment to primary and secondary education, K-12 beginning with the rural one-room school houses.

    • Social cohesion and mobility are huge factors in helping individuals lead a productive life in society. Unfortunately many communities are not doing a good job these days in providing the right atmosphere for social cohesion.

      • We have no nationally promoted strategy to promote a community-based collaborative process to solve locally entrenched ecological and cultural adversities. Nationally organized and locally initiated and funded. A sustainable strategy with a ‘shoot the moon’ precision and nationally recognizable commitment.

  2. I suspect that what you are talking about will have to get started locally from the ground up. If individual communities would start doing these things on their own, word would quickly get out and other communities would start to do similar things. Pretty soon there would be a national movement.

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