Joe Stiglitz and Inequality

Joe Stiglitz has penned an interesting article on the growing inequality of measured income in the United States.  The facts that he uses, of course, are subject to the usual limitations.  If you ignore everything the government does and all employee benefits, then you get one answer.  If you include government spending and employee benefits you get an entirely different answer.  But, lay that aside for the moment, because, I think, Stiglitz is on to something.  There is growing inequality of opportunity in America, but not for the reasons Stiglitz is implying.

It is no wonder that wealthy liberals are at the forefront of the call for reduced inequality.  They know that their policies will solidify their exalted status in society. They are not at risk.

The simplest example can be read in today's editorial in the NY Times in support of raising the national minimum wage from $ 7.25 per hour to $ 9.00 per hour.  That kind of policy won't hurt the liberal elite, protected with incomes far, far above these numbers.  This kind of policy -- outlawing jobs for folks with limited skills -- only hurts those who might have trouble affording a copy of the NY Times, not those writing their editorials.

Minimum wage laws are one of the many reasons that inequality is growing in the United States.  Entitlement programs, welfare programs and the takeover of public schools by teacher unions are other reasons for the growing inequality.  I doubt that many of the editorial writers for the NY Times send their own children to public schools or need access to welfare programs of entitlement programs, so, by all means, make them available to others.

Providing government largesse for those less fortunate inevitably increases the number of those less fortunate.  Outlawing jobs for those with limited skills is cruel and makes things far worse.  Stiglitz is right.  Inequality is growing.  But the reason is that government is growing.  Growing government puts lower income citizens in the penalty box and makes it difficult for them to ever escape.  That is what causes growing inequality.

It is interesting that Stiglitz thinks America was much more a land of opportunity one hundred years ago.  That was a time that predated minimum wage laws, teachers unions, social security, medicare, medicaid and welfare programs.  That was a time when a real land of opportunity existed because government played a much more limited role.