Though President Obama insists that income inequality is the “defining challenge of our time,” most Americans beg to differ.
“What do you think is the most important problem facing this country today?” asked Gallup in a nationwide survey this month. Dissatisfaction with the federal government — its incompetence, abuse, dysfunction, venality — topped the list, with 21 percent of respondents saying it was their key concern. The overall state of the economy was second, at 18 percent. Unemployment and health care were tied for third, with each cited by 16 percent as the nation’s most pressing problem.
How many shared Obama’s view that the gap between rich and poor is the issue that should concern us most? Four percent.
The president has been banging this populist drum for years. As a candidate in 2008, he famously told “Joe the Plumber” that it was good for everybody when the government acts to “spread the wealth around.” In 2011 he went to Osowatomie, Kan., site of a famous speech by Theodore Roosevelt a century earlier, to condemn the “gaping inequality” in modern America, where those at the top of the economic ladder are “wealthier than ever before,” while everyone else struggles with growing bills and stagnant paychecks. He told the Center for American Progress last December that “increased inequality and decreasing mobility pose a fundamental threat to the American Dream,” and warned that America’s basic bargain — “if you work hard, you have a chance to get ahead” — is disintegrating.
Class-war rhetoric excites the Democratic base. There have always been some voters for whom nothing is more repellent than a growing gap between the rich and the non-rich, or a stronger justification for more government regulation. But most Americans don’t react that way. “When is the last time you heard a shoeshine person or a taxicab driver complain about inequality?” asks economist John C. Goodman. “For most people, having a lot of rich people around is good for business.”
In a relatively free society, wealth is typically earned. There are exceptions, of course. Some people cheat their way to a fortune; some are just lucky; some pull political strings. But on the whole, Americans with a lot of money have usually produced more, worked harder, or aimed higher than the rest of us. Inequality is built into the human condition, and the world is generally better off when people of uncommon talent and industry are free to climb as high as their abilities will take them.
If income inequality were off the charts and upward mobility were now a thing of the past, the president’s claim that this is the “defining challenge of our time” might be more convincing. That isn’t what the data show.
According to a 2010 Congressional Budget Office report, income inequality stands only slightly higher now than the average of the past 30 years.
This is still a land of significant income mobility. “A child born in the top 20 percent has about a 2-in-3 chance of staying at or near the top,” Obama laments. “A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top.” But why should that be an indictment? It means that even Americans who start out in the wealthiest income bracket get no guarantees — at least a third of them are likely to slip down the ladder. And taxpayers starting at the bottom aren’t condemned to lifelong poverty. Many will move to higher income groups (nearly 60 percent did so in less than a decade, according to one study). Some will make it all the way to the top.
To be sure, it has grown harder under this administration to climb up from the lowest quintile. But that has little to do with the “millionaires and billionaires” not being taxed enough. It has much more to do with government policies that have undermined work incentives, increased dependency, and priced the low-skilled unemployed out of the labor market.
The “defining challenge of our time” isn’t to end inequality or redistribute the income of the wealthy. It is to get the government’s clammy hand out of the way, and enable more of the poor to climb their way to success.