Feature:Opinion

Ten things we can do about the rich-poor gap

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Max Borders
Editor, The Freeman
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      Max Borders

      Max Borders is editor of The Freeman and author of "Superwealth: Why We Should Stop Worrying about the Gap between Rich and Poor."

6. Delink Cadillac care: Duke Law Professors Clark Havighurst and Barack Richman write that: “[T]he U.S. health care system operates more like a robber baron than like Robin Hood, burdening ordinary payers of health insurance premiums disproportionately for the benefit of industry interests and higher-income consumer-taxpayers.” So people with good jobs get tax-protected insurance while the working poor have to fend for themselves on the individual market. That’s crazy. We need to delink employment and health insurance.

7. Starve the bureaucrats: Iain Murray in his excellent book Stealing You Blind writes: “‘We are spending more on [insert name of program]’ is a badge of honor for any bureaucrat or politician. Yet it’s actually a sign of failure. Spending more to help more is not a sign that the program is working, it is a sign that it is failing to address the ill it is meant to cure, whether that be poverty, obesity, insert your cause here.” We’ve got to starve ineffective bureaucracies by applying cost-benefit analyses and tying them to budgets and/or by implementing a Taxpayer Bill of Rights.

8. Stop state-level arms races: “Economic incentives” are designed to attract existing companies from this state or that. But they are just another form of corporate welfare. Politicians think they should lure companies from other states with your tax dollars, but this process is self-destructive — particularly as some of these companies are insolvent. We should demand states abandon the incentives arms race, for it is the worst form of “trickle down” economics.

9. Minimize minimum wages: The minimum wage is an idea born out of good intentions. But the unintended consequences can be devastating. Every time Congress raises the minimum wage, it raises the costs of hiring new employees. That removes the bottom rungs of the economic ladder for many — especially black teenagers. We should abolish the minimum wage or at least cut it in half.

10. Bust state-supported unions: Unions — public and private — are labor cartels that artificially raise labor costs. The perverse effect is that workers who aren’t unionized have higher barriers to entry. Unions use government power to enrich themselves and use forced union dues to fund political campaigns. They transfer resources from taxpayers and deny opportunities to folks who would otherwise work at market wages. We need to remove state crutches from private unions and abolish public-sector unions outright.

The inequality that doesn’t matter

Some inequality emerges naturally from entrepreneurs and investors growing the economy. Those who work hard and make good decisions enlarge the economic pie for everyone. These aren’t the same as corporate raiders who lobby politicians for a slice of the pie. People like Ray Brescia, who would redistribute wealth from real entrepreneurs, are motivated by envy, guilt or indignation.

If we’re genuinely concerned about the poor, we’ll return to an economy that rewards the Makers and punishes the Takers, Gini Index be damned.

Max Borders is a 2011-12 Robert Novak Fellow. He’s writing a book on wealth inequality.