Boxing in Income Inequality

Income inequality is all the rage on the Left these days.  Of course, they conveniently gloss over the fact that the income gap has increased significantly under Barack Obama.  And one look at the stock market is indicative of the fact that the investment class- those who already “had-” has done remarkably well.  The Left’s solution consists of targeted tax increases against “millionaires” who are often defined as couples making something less than $1 million.  In New Jersey, a millionaires tax was proposed on couples making greater than $400,000.  It must be Common Core mathematics…

First, we must acknowledge that the issue is troublesome.  In his book The Age of Turbulance, Alan Greenspan notes that large income gaps between the haves and the have-nots, or a growing population of the have-nots leads to populist policies that are often anti-democratic.  We have seen this in the real world in Latin America.  That is not to necessarily infer that the US is becoming a new Latin America in the economic sense, but we do see signs of it in the political sense.  The emergence of people like [mc_name name=’Sen. Elizabeth Warren (D-MA)’ chamber=’senate’ mcid=’W000817′ ] as “populist leaders” is indicative of the political trend.  The rhetoric sounds great, but there is a serious disconnect that borders on the hypocritical.

For example, Warren claims to be a voice for the disadvantaged.  She has ranted against the “rapacious” banks and their predatory lending practices taking advantage of misinformed people.  Yet, Warren amassed a small fortune flipping homes and then accepted a cozy Harvard professorship that paid so well she moved into a $2 million home.  Those who are the alleged advocates of the poor are usually the same ones most removed from the poor.  Even in the poorest congressional districts, one doubts their representative lives in the poorest area of those districts just as Warren does not live in the poorest area of Boston.  Obama, who has used income inequality in the past as a political tool, does not live in some squalid section of South Chicago and he will retire to the “slum” that is Hawaii.

In fact, when we look at the issue of income inequality, the biggest gaps occur in congressional districts represented by Democrats- often liberal Democrats.  Let’s take a look at the ten worst congressional districts when it comes to income inequality: NY-10, PA-2, NY-12, IL-7, FL-27, CT-4, NY-16, OH-11, GA-5 and CA-33.  Geographically, these districts correspond to Brooklyn, Philadelphia, Queens, Chicago, Miami, NYC northern suburbs, Cleveland, Atlanta, and Los Angeles- all very urban areas.  Politically, they are represented by Democrats in all but one of those districts ( FL-27).

Conversely, if we look at the ten districts with the least income inequality, we get MN-6, MD-5, NY-2, UT-4, CA-35, AZ-8, CA-42, MN-2, and IL-14.  Geographically, they are the suburbs of Minneapolis, Maryland western shore, Long Island, suburbs of Salt Lake City, parts of Los Angeles, Phoenix suburbs, Orange County, Minneapolis suburbs, and the western suburbs of Chicago.  All but one of these districts is represented by a Republican.

This does not prove that Republican representation necessarily translates into lower levels of income inequality, but it does illustrate that the representatives of the most unequal districts are hypocrites.  Perhaps they rail against it the most because they allegedly see it up close and personal, or they hear about it from their constituents.  But, their policy solutions have largely been failures.  Even the National Urban League has noted that economic inequality by race is concentrated in Left-leaning cities with San Francisco being the worst of the lot (that is Pelosi territory).

Furthermore, it is liberal policies that have fostered the increasing segregation of high income people from low income people.  Liberal stronghold cities have adopted zoning policies that discourage anything but higher income housing in an effort of gentrification.  This HAS drawn higher earners to the city to occupy what amounts to gated communities within the urban center.  However, the lower earners remain trapped in their housing which exacerbates the income inequality gap within these urban areas.  Perhaps the solution is not to lure the more wealthy to the urban centers, but to elevate the low earners already living within these urban areas.

Unfortunately, because we have these self-segregated communities within every urban center, educational opportunity is certainly not equal between the two.  This likely explains why liberals are generally against school choice: they don’t want “them” attending “their” schools.  The same is true of public transportation and crime.  Look at any urban center and the incidence of violent crime. In Philadelphia we rarely hear of killings in the more affluent sections.  In Chicago, the bulk of the crime is relegated to the South Side and even then, the poorest sections.

The unfortunate political outgrowth of this hypocrisy is the urban poor’s allegiance to the Democratic Party when that Party’s policies actually encourage remaining in poverty through a series of government-guaranteed hand outs in the form of food stamps, subsidized housing and the like.  By appealing to guilt, they encourage higher taxes on the elite urban dwellers that in no way alleviates the discrepancies between the affluent and the poor.  The Left doggedly defends these programs for one simple reason- they are a political pay off to the poor while keeping them poor.

In a capitalist society, there will always be inequality.  The first step, however, must be a cessation of the widening gap before we can start to roll back that inequality.  The goal is not a broad equalization of income- that would be socialism or worse.  For the Right, we need to appeal to the language of opportunity and, most importantly, personal responsibility.  If we do this, we can hopefully defuse the class warfare rhetoric of the Left and relegate the Leftist populists to the dustbin of history.  Their rants make “sense” so long as there is a widening income gap.  What does not make sense is their embrace of policies that actually encourage it.  In fact, the only thing that does make sense is their rank hypocrisy.

From a political standpoint, the Democratic Party’s appeal to guilt is likely to fall on deaf ears.  Elections will be decided not in the cities but in the growing suburbs where, the statistics illustrate, income inequality is at its lowest levels.  These claims by the Democratic Left will ring hollow on voters who just do not see or feel it.  This may explain why the suburbs of our greatest urban centers are represented by Republicans, not Democrats.  A concept the Left fails to fathom is that a rising tide raises all boats.