Government Can Fight Inequality - poverty research - Brief Article

"Despite recent headlines heralding the latest Census Bureau figures on poverty, the gulf between the rich and the poor has widened significantly since 1973." notes Benjamin Page, the Gordon Scott Fulcher Professor of Decision Making in political science at Northwestern University, Evanston, Ill., co-author of What Government Can Do: Dealing with Poverty and Equality with James R. Simmons of the University of Wisconsin, Oshkosh. The Census Bureau report figures suggest that the economic boom has pushed poverty to its lowest rate since 1979. "It is true that the nation's robust growth finally began to trickle down to low-income workers in the late 1990s." Page indicates "But U.S. inequality and poverty are still at the highest levels in the advanced. industrialized world."

Since 1973, the gap in earnings between well-educated and not-so-well-educated workers has steadily increased, and the real standard of living of a large proportion of the workforce may have declined. This pattern can be traced to a number of powerful economic and political forces, including increasingly free international trade, capital mobility and immigration, the loss of manufacturing jobs in the U.S., increased use of computers and information technology, and weakened trade unions.

Page and Simmons advocate many sweeping changes, while emphasizing that the policies they favor do not and will not have negative impacts on economic efficiency or individuals' freedom and liberty:

* Arguments for abandoning egalitarian programs because of the competitive pressures of economic globalization are greatly exaggerated. though some government initiatives are more vulnerable than others. A comparative look shows that welfare states in the social democracies of northern Europe and other advanced countries have undergone marginal retrenchment, but remain largely intact with no signs of unraveling.

* A number of programs involving investment in the human capital of disadvantaged individuals--particularly in the areas of infant and child health and nutrition, preschooling, and elementary and secondary education--can reduce poverty and inequality while helping, rather than hurting, the economy as a whole.

* Several programs designed to provide abundant jobs at good wages, which are crucial to any serious effort to reduce poverty and inequality, produce net economic benefits or only small costs with little or no vulnerability to global competitive pressures. These include moderately stimulative (and countercyclical) macroeconomic policy, targeted public service employment, low-income wage subsidies such as the Earned Income Tax Credit, and international agreements that require minimal working and environmental standards in low-wage countries.

* Social insurance programs like Social Security, Medicare, and Medicaid are more vulnerable to the pressures of global economic competition, but considerably Jess so than antigovernment rhetoric often suggests Indeed, universal, single-payer medical insurance could actually save money and help the economy while reducing inequalities.

* The corporate income tax--because of its incentives for capital flight and the ease of shifting profits abroad--is vulnerable to global competitive pressures. Other progressive taxes, including personal income and property taxes, are much less so. Competitive pressures and efficiency considerations would not stand in the way of increased levels and increased progressivity of the personal income tax to fund egalitarian programs.

* If Americans could overcome antiegalitarian biases in our political system-especially unequal political participation and the power of money and organized interest groups--it would be possible to do a great deal more about poverty and inequality, and to do so in an effective, efficient fashion without major negative side effects.

"Private markets and free enterprise capitalism, for all their virtues, do not themselves keep the levels of poverty and inequality within acceptable bounds," Page maintains. "Many factors that lead to high or low incomes are beyond individuals' control. To a great extent, they reflect happy or unhappy chance, the results of nature, nurture, and social arrangements: the fortune or misfortune of genes, upbringing, parents, peers, good breaks, catastrophic accidents, economic fluctuations, global trends. We can and should help the unlucky."

COPYRIGHT 2001 Society for the Advancement of Education
COPYRIGHT 2001 Gale Group