A foreign government official was recently asked if he was worried that his economic policies might be creating a gap between the rich and poor. “In Cuba, they don’t have any income inequality,” he replied, “because they are all poor.”
In his view, it should be the priority of government officials to provide a “high-wage economy,” and one “that [gives] the people the opportunity to advance.” He’s right. In fact, thanks to his government’s policies — the very policies that have supposedly left the poor behind — the number of low-earners has dropped over its term in power.
Indeed, it’s only because a larger percentage of his constituents have risen from lower income brackets to become high-earners that his government has had to fend off that oft-repeated, but rarely explained, charge — that it is creating a “gap between the rich and the poor.”
In other words, the government has done exactly what it was supposed to do. It made everyone better off; it helped hard workers move up the income scale, and it created the conditions for more low-income individuals to escape the clutches of poverty.
Yet, its reward for such broad-based economic success is depressingly predictable — unrelenting media fixation on an arbitrary “gap.”
Even in a classless society such as ours, we are hearing more and more about this gap. We hear about it from the various Occupy protestors. We hear about it on TV. Even President Obama, perhaps acknowledging that his policies haven’t turned our economy around, has decided that his path to political salvation now runs right through that gap.
This should be incredibly worrying for all Americans — the poor most of all. As Margaret Thatcher once explained, those obsessed with income gaps would “rather have the poor poorer, provided that the rich were less rich.” Too many of today’s politicians seem to reflect this view.
The problem, of course, is that it takes people with money to invest, start businesses, and create jobs so that others can work, earn, save, invest, and otherwise improve their lives. Moreover, it is the wealthy that pay the bulk of taxes to provide a social safety net for the poor. Hence, “leveling” by bringing those better-off taxpayers down is not going help the less well off.
As the saying goes, soak the rich and we all get wet.
That is why it’s so vital we enact pro-growth, pro-opportunity policies that offer everyone the chance to succeed. Not everyone always will, of course, and that’s why government programs are in place to offer temporary assistance so they can get up and try again. But turning to envy-based policies of the kind promoted by the income gap crowd would, in the end, be an absolute disaster for American families of every income level.
There are many examples of governments that have tried to enact these backward policies, and nearly as many stories of the heartbreak they have caused.
Remember the government official I mentioned earlier? His conservative party first swept into office by defeating an incumbent socialist administration in 2001. Those socialists had worked hard to promote equality during their 10 years in power — unfortunately, they only succeeded in making everyone equally miserable. In contrast to today’s rising wages for both low and high-income individuals, per-capita income levels actually dropped during the socialists’ tenure, not even recovering to 1991 levels until after the conservatives took office.
In the U.S., this too is the choice we must make. We can either choose policies that allow everyone to get ahead, poor and wealthy alike, or we can turn to disastrous policies that make everyone equal — and poor.
The choice is ours.