Tag Archives: renewing prosperity

Inequality Does Not Reduce Prosperity

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In the national elections this year four states: Alaska, Arkansas, Nebraska and South Dakota raised their state minimum wage rates above the national rate of $7.25 per hour and, at the same time, elected Republicans to the U.S. Senate, in three cases replacing Democratic incumbents.  Does this represent contradictory behavior by the voters?
CaptureThe American Enterprise Institute’s James Pethokoukis recently reported (see above) that the U.S. has the third highest rate of billionaire entrepreneurs behind only Hong Kong and Israel, as well as by far the most billionaires over all.  These are the high-impact innovators like Bill Gates, Steve Jobs and Mark Zuckerberg and the Google Guys.
These observations are put in context by the Manhattan Institute’s Scott Winship who recently reported that “Inequality Does Not Reduce Prosperity.” Here is a summary of his findings:

  • Across the developed world, countries with more inequality tend to have higher living standards.
  • Larger increases in inequality correspond with sharper rises in living standards for the middle class and poor alike.
  • In developed nations, greater inequality tends to accompany stronger economic growth.
  • American income inequality below the top 1 percent is of the same magnitude as that of our rich-country peers in continental Europe and the Anglosphere.
  • In the English-speaking world, income concentration at the top is higher than in most of continental Europe; in the U.S., income concentration is higher than in the rest of the Anglosphere.
  • With the exception of a few small countries with special situations, America’s middle class enjoys living standards as high as, or higher than, any other nation.
  • America’s poor have higher living standards than their counterparts across much of Europe and the Anglosphere.

Conclusion: Americans are fair-minded and would like to help the working poor do better.   But Americans also appreciate the value of innovation and entrepreneurship.  When there is a tradeoff between increasing prosperity and reducing inequality, greater prosperity comes first.

Freedom and Equality

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The Wall Street Journal published its first issue on July 8, 1889 and today it is appropriately celebrating its 125th anniversary.  The lead editorial refers to its consistent editorial policy over the years as well as admitting several mistakes along the way. “These columns emphasize liberty, but on occasion those who prize equality can provide a necessary corrective.  The best example is the civil rights movement … Yet those who promote freedom typically do better by equality than the progressives who elevate equality do by freedom.”
CaptureToday’s WSJ Op Ed page is devoted to “Ideas for Renewing American Prosperity” provided by many different luminaries (who were asked to propose one change in American policy, society or culture to revive prosperity and self-confidence), such as:

  • George Shultz, Return to Constitutional Government, meaning that “the president governs through people who are confirmed by the Senate and can be called upon to testify by the House or the Senate at any time. They are accountable people,” as opposed to unaccountable White House aids.
  • Heather MacDonald, Encourage Two-Parent Families. “Children raised by single mothers fail in school and commit crime at much higher rates than children raised by both parents. Single-parent households are far more likely to be poor and dependent on government assistance. But far more consequential is the cultural pathology of regarding fathers as an optional appendage for child rearing.”
  • George Gilder, Listen to Peter Drucker on Regulations. “At least half the bureaus and agencies in government regulate what no longer needs regulation.” We need “a new principle of effective administration under which every act, every agency, and every program of government is conceived as temporary and as expiring automatically after a fixed number of years.”
  • Sheila Bair, Find a Better Way to Tax the Rich. “By eliminating corporate income taxes, we would ease pressure on U.S. wages, bring back jobs and repatriate an estimated $2 trillion in profits stashed elsewhere. … It would be smarter to tax corporate profits once, at the shareholder level, and apply the same, higher rates to capital gains and dividends that apply to us working stiffs.”

These sentiments are really just non-ideological common sense.  They might seem to be overly idealistic but are, nevertheless, quite doable if enough of our national leaders would just make them a priority.  This is why we so badly need independent-minded non-partisans in national office!