Inside Income Inequality

I’m always amazed that society learns the major lessons from almost every academic discipline: we know the earth is a sphere, that leeches aren’t the best medical treatment, and that nature and nurture both play a part in who we are. But, luckily for my job security, people easily forget or willingly reject the lessons economics teaches.

I was reminded of this last Thursday doing the Office of Readings; St. Paul says to the Philippians (3:1, using RSV-CE):

Finally, my brethren, rejoice in the Lord. To write the same things to you is not irksome to me, and is safe for you.

I’m certainly no St. Paul (though I’m getting the hair thing down), but I can dimly relate to the experience of relaying the same helpful message numerous times. When you wonder why people don’t listen to St. Paul, at least you can fall back on concupiscence. But why don’t people listen to or believe what economists have to say?

Case in point: The Anchoress uncovers a story about a Swedish lunch lady who made her food a little too tasty. “The municipality has ordered Eriksson to bring it down a notch since other schools do not receive the same calibre of food – and that is ‘unfair.’” The lunch lady in question said “It has been claimed that we have been spoiled and that it’s about time we do as everyone else.”

The Anchoress concludes:

With socialism, excellence is always set aside for shared mediocrity. The idea appears to be that since it’s hard to achieve excellence for everyone, it simply should not be attempted; everyone should be satisfied with something lesser.

pic by SpecialKRB

Agreed; socialism seeks to pull in both tails of the bell curve and, in so doing, usually also succeeds in reducing the mean. The reasoning is simple; if income, wealth, or whatever is going to be redistributed from rich to poor, it reduces the incentive to be productive and creative for both rich and poor. Lest you think I’m being purely materialistic and overlooking the spiritual dimension, I’ll point you to the parable of the talents.; does not God want us to use our, well, God-given talents to manifest his glory and generosity? Do I do so sitting on the public dole, or refusing to work in order to avoid high marginal tax rates?

The ideas that people respond to incentives and that socialism leads to lower standards of living have been around the world of economics for a few hundred years, so you’d think most people would have learned the lesson by now. They were well-enough known that even a Polish priest in the middle of the twentieth century understood them.

But anyone watching Presidential campaigning knows the lesson hasn’t been spread widely enough. Besides, isn’t the result of socialism a good thing? After all, we’re told that the income gap in the US, bastion of capitalism, is horrible. The distance between rich and poor keeps widening, they say, causing all sorts of social ills. The prevalence of so many “millionaires and billionaires” alongside so many “working poor” is a scandal. (Incidentally, if this keeps happening, the inflation that will result won’t make it very difficult to be a millionaire or billionaire. That graph alone should be enough to sway the election, at least for voters who care about the bill their kids are getting stuck with.)

So there are policies and proposals to help the middle class, to spread prosperity to everyone, to reduce income inequality. As with most political proposals dealing with economics, a good look at data is necessary before we fashion fancy programs to achieve utopian ends:

Yes, the earth is a sphere. Yes, it takes more than phlogiston to make something burn. And yes, even though “the rich get richer and the poor get poorer” makes a nice bumper sticker, the reality is more nuanced and more optimistic for people at all income levels.

But, like St. Paul, I’m prepared to tell everyone this again during the Congressional elections two years down the road.

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35 thoughts on “Inside Income Inequality

  1. Karen says:

    Alert!! RICH IS A TROLL. He is a phony and a fake. Click on his name and his comments on this site will reveal a TRUE picture of him. On some sites, he appears so holy and pious (but obviously fake to the TRUE Christians) but just read his vile and nasty comments on the other posts- especially the marriage posts! He really attacks with venom! He reminds me of SATAN who also quoted scripture. BEWARE OF HIM.

    1. Robert says:

      I agree and have already identified him as a troll. Good work.

    2. Rich says:

      I don’t know what high school game you think you are playing with this troll nonsense, but it makes no sense and is just embarrassing to you. If you are not able to join in intelligent conversation then just let your keyboard rest. No one really thinks you are saying anything worth reading anyway with these “troll alerts.” I am not even sure if you have any ideas what you are talking about any way.
      If you can not be Catholic in you conversation, then don’t try to pretend that throwing insults is Catholic. It is not and never has been. Your confessor will agree, I am sure.
      So have a blessed day if you can get beyond your need to be insulting to others. This is not what God commands.

      1. Joe M says:

        Rich. In the same comment you chastise Karen that insults are not Catholic and manage to send several insults of your own.

        Are you just pretending to care about Catholic values in the hopes that some people will agree with your political positions?

        1. Rich says:

          There was nothing insulting in what I said. Calling someone out for bad behavior is not an insult even though it may be embarrassing to them. The embarrassment is not from the correction, but from the behavior.
          Speaking of which, I am very glad to see how you have changed your behavior and have been more conversant and respectful.
          Thanks.

      2. John200 says:

        Rich cannot be properly embarrassed because he is anonymous.
        He can yap away until the admins decide he has to go. That’s part of the game in comboxes. The trolls can troll on for a time.

        Just ignore him/her/it/them (I dunno which).

    3. BufordJr says:

      Ooooooooh Karen. I bet you’re a TIGRESS in a certain room of a house!

    4. Curious says:

      Karen,
      Please don’t respond to the post from “R” or “B” below. They may be one in the same. Instead, let’s all say a prayer for him/her everytime we see his/her posts. This will serve more good than responding to him/her. Let’s say a Hail Mary. Our Blessed Mother will plead with us for his/her conversion to God. This will also cut down on the number of payments he/she is getting paid for each response he/she gets. God bless.

  2. Tammy says:

    http://www.huffingtonpost.com/2012/10/09/mitt-romney-abortion_n_1952780.html
    Who cares? Romney just came out today and said he won’t push to limit abortions! Oh Catholic Vote. You sold yourselves out to the devil. You must be so proud!

    1. KT1 says:

      Go away Troll. No one here is going to click on Puffy Ho.

      1. Rich says:

        Maybe you had better find out what Bishop Mitt is telling you today. After all you have made him you Savior.

      2. Curious says:

        KT1,
        Please don’t respond to the post from “R” below. Instead, let’s all say a prayer for him/her everytime we see his/her posts. This will serve more good than responding to him/her. Let’s say a Hail Mary. Our Blessed Mother will plead with us for his/her conversion to God. This will also cut down on the number of payments he/she is getting paid for each response he/she gets. God bless.

  3. Robert says:

    This video is the story of my parents- immigrants who grew up in poverty and through sweat and hard work, made it into the midddle class. I would like to say that education helped, because I firmly believe in quality education, but my mother only went up to eighth grade. She would be considered a “child laborer” in todays world. However, my parents sacrificed to send all of their children to Catholic school and we are all successful- thanks be to God- and have our heads srewed on straight morally.

    1. Rich says:

      We should all praise God for his wondrous blessing he bestows upon us. Witnessing God’s benevolence surely fills you with undying gratitude and a spirit of generosity towards all, especially others who now live in poverty.
      How Great Indeed is Our God.

      1. Robert says:

        The so-called “poor” of today live like kings compared to the way my parents were brought up. They had no indoor plumbing or heat and grew gardens and raised chickens for food. Yet, they were HAPPY! Proves that money does not buy happiness, that’s for sure. I would rather give a man a HAND UP than a HAND OUT. The hand out kills his dignity.

        1. Rich says:

          Well at least give him or her respect.
          As for living like kings, we are all called to be priest, prophet and king in our baptism. The King of Kings was born poor and lowly, 75% of the kings decided to give to him. The 25% tried to kill him.
          I would encourage you to go to the food pantry or shelter that your parish supports and serve the poor a bit before making the assumptions that only your parents had it bad, and that it is so much better for everyone today. I am not sure that Mother Teresa is so loved for his life of luxury among the poor living in palaces today, nor would you find her followers in the US cities among the poorest of the poor, to agree with you so readily.
          Lacking gratitude for what you have and begrudging the poor are not good Catholic practices.

          1. Robert says:

            How pious of you since you know nothing of what I do to help the “poor”. Well, let me share just some with you: I volunteer tutor adults and children of immigrants in their homes. They have to meet the poverty criteria in order to receive in-home tutoring. They have TV’s- flat screen, cell phones, enough food because they are “obese” to put it gently (and the food is good quality because I have eaten with the familes), nice furniture, a nice apartment, pets that are well-fed because they are overweight, too. My relative counsels through the local St. Vincent de Paul, and has told me of all the social programs available to the families I tutor. In addition, my family has volunteered many, many times at the food pantry and we have slept at the church when they house the homeless (a requirement in our area due to legal issues) and I have conversed with the homeless familes and found out they they were only temporarily “homeless” while waiting for an apartment to be vacant and had no family to rely upon. These are brand-new townhomes, because my neighbor is living in one, after losing her house to foreclosure- she was “homeless” but had relatives to live with temporarily. I have visited several third world countries and I just recently got back from a business trip to India and am fully qualified to make the comment that I did: the poor in America live like kings and queens compared to the way my parents were brought up AND compared to the way most people live in third world countries.

          2. Rich says:

            Then why do you speak so bitterly about the poor. To be blessed with all these opportunities should make you grateful to God to be in such ministries. There seems to be some disconnect between what you say and what you do. If you are doing all of this and yet seeing the poor in such a negative light, then God must be hammering pretty hard at your heart to let him in and to let you know the joy of your service to the poor. As Catholics, we do not stand on good works alone, but by being in Solidarity with the poor, even in our political discourse. The Lord hears the cry of the Poor, Blessed be the Lord. How good it is and how pleasant were brothers live as one. God is always calling us to recognize him in the ones we serve. We serve the poor in Justice, not pity. We work for systems in society and in government that give people dignity, as we serve God in the poor with gladness. To remain bitter is to not live in the spirit, and good work not in God’s Holy Spirit is not what Catholics strive for.
            Release yourself from the hatred and give gladly to the poor, and work hard for Justice for all. You dishonor your parents by claiming the poor are not poor. God, not you, is the center of the Universe, and God, not you, is the God of Justice. Take your anger to therapy and not to the voting booth, for God calls you beyond your own pettiness.

          3. BufordJr says:

            Only on a Republican website like CatholicVote dot org would a plea for someone to visit a food pantry or shelter that served poor people get voted down twice. I guess to you people Jesus was a bleeding-hearted wimp, not like YOU PEOPLE, you’re more TOUGH-MINDED than wimpy Jesus on poor people. Rush Is Right.

            Yeah, go congratulate yourselves. You’re not just mere Catholics; like C.S. Lewis would say, you’re “Catholics With A [Republican] Difference.”

          4. Rich says:

            Thanks dear brother.

  4. Rich says:

    What a wonderful Scriptural Analysis of St Paul the Capitalist.
    But I thought he was talking about rejoicing in the Lord, and not is off shore assets. Somehow I think the message the he said he would keep repeating in the Jesus Christ rose from the dead.
    It may be good to remember that Paul preached after he was knocked of his his high horse and not before. He changed from being a know it all who persecuted people to one who realized that he was nothing without Christ, and that we should come together despite differences to care for one another. He urged those with to share it with those that had not, while encouraging everyone to work, but to work together to build up the Body of Christ.
    This is the message that we are supposed to preach unceasingly, not the Gospel of economic theories. Gods love does not fluctuate as the stock market, and as an economist you must know how the “truth” of economics is based on situations and changing factors. However, God’s plan is unchanging. As Paul tells us it is “to bring all things under one in Christ.”

    1. Joe M says:

      Rich. Are you justifying the use of the lie that the “rich are getting richer and the poor are getting poorer?”

      Whatever Paul preached about giving to the poor, I’m pretty sure that he did not advocate for politicians to lie about the conditions of people in order to falsely represent the level of need for government social programs.

      1. Rich says:

        Not really sure what you were trying to say here.
        When Paul preached about giving to the poor, he meant that.
        I am not sure why any of us should feel good whether or not the rich get richer or poorer or the poor get poorer or richer as long as there are the poor and the needy that our church tells us to take care of. The Church is alright with whether the care is given through the state or through the Charity of Justice.
        We are to feed the hungry and clothe the naked and care for the sick. For what we do to those without anything we do to God.
        St Basil tells us if we have two coats and you met a man with none, unless you give him one, you are stealing from him. The Justice of living in a World created by God is that there can be no one with nothing without the rest helping out.
        Jesus says if a man asks for your coat give him your shirt as well. He never said make sure that the politicians are not exaggerating the numbers that make this man only appear to be asking for my coat.

        1. Joe M says:

          Rich. You suggest that providing care through government is equivalent to individual care in the eyes of the Church. That idea is clearly at odds with the Catholic concept of Subsidiarity.

          It’s great that you want to preach the virtues of giving here. But, I don’t think anyone is convinced by your leap from that to promoting increased government spending. After all, the massive debt caused by the policies you seem to embrace are themselves a source of impoverishment.

          Jesus taught us to give to the poor. He didn’t say it was a good thing to mismanage giving to the point that it impoverishes as many or more people than it helps.

          1. Rich says:

            Actually state provided assistance is not at all in conflict with Subsidiarity, even though Ryan used a bad definition of the concept. The Church first recognizes that it lacks the resources and ability to deal with the magnitude of many social problems. Subsidiarity has more to do with the smallest unit that CAN or is able to deal with the issue. It is essentially the same notion applied by governments that allow the major decision about a school to be done at the community level (school boards, etc.) yet holds armies for the Federal government. Subsidiarity is not about charity that is understood about generosity, but about the Charity of Justice which also is part of the Teaching on Human Dignity. The Catholic Church supports having a strong safety net provided by the state. The church does not find the state to be the enemy in all cases.
            I am not sure what you mean by the debt creating impoverishment. That does not seem right. Most of the poor are not poor because of the debt, but many because the lack of good opportunity to leave poverty behind, or the loss of a good paying job, or a catastrophic situation that both cost them a lot and took away their earning power.
            Again, no one is advocating for increasing the debt or maintaining it high for no reason. Tax increases to lower debt are a hard sell to anyone, but having some put in more would be helpful, if a lower debt is truly thought needed. Of course the continual looking at spending to see where it can be lowered or what programs can be ended is also a good idea. Anyone who will not consider both may not really be interested in lowering the debt.
            Jesus never promoted himself as an economist, not called his followers to define tax policy, but to heal the sick and feed the hungry. No one wants any system mismanaged, but it does no good to let a child go hungry just so someone can pay less tax. Our system of care is built upon the English Poor Laws which for some was motivated by compassion and for others by repulsion. That is some could not stand to see all the hungry in the streets so they wanted to help feed them. The alms boxes and church collections could not handle it all so they appealed to the government to help, the state being the smallest entity available to really help in this problem. Others could not stand to see the hungry in he street, but were more concerned that the hungry were dying and rotting in the streets. They appealed to the government to take care of the hungry and keep the streets clean. Again there was no smaller organization available to handle this so subsidiarity would dictate that the state would be the the best available to undertake such a big goal.

          2. Joe M says:

            Rich. Subsidiarity means that state assistance is plan B. Plan A is for individuals and community groups to provide assistance directly. In other words, as I wrote, state assistance is not the equivalent of individual giving.

          3. Rich says:

            I am not sure what you are trying to say, but that is not Subsidiarity as a Catholic Social Teaching.
            You may be thinking more of Subsidairy, which is supplemental. Subsidiarity is about handling something at the lowest authority capable. The thing that most people miss is the Capability determination.

          4. Joe M says:

            No Rich. Subsidiarity is about limiting state interference. From the Catechism:

            “The principle of subsidiarity is opposed to all forms of collectivism. It sets limits for state intervention.”

            In Obama’s case, his policies have not served the Common Good. They have served an exclusive good at the expense of others. For example, the GM Bailout helped people that Obama feels will vote for him. However, the cost of bailing out GM has been charged to the rest of society, further impoverishing us in a time of crisis.

          5. BufordJr says:

            “Subsidiarity” was tried from October 1929 through January 1933. People starved in the meantime, so “Subsidiarity” alone didn’t work. That’s why the New Deal was needed.

          6. Joe M says:

            Subsidiarity isn’t a specific policy that you try. It is a principle that you strive for. Subsidiarity does not call for the eliminiation of all state help programs. It says that they should be a method of last resort.

            And on your point about the great depression, the conditions leading up to it were quite a bit like they are today: stagnated growth. Obama has had 4 years to fix it. His policies did not work, even by the standards he set for himself.

    2. BufordJr says:

      Rich you’re getting under their skin, that’s a great sign. The Catholic Reich-wingers here know their Hannity and Limbaugh far more than they know their Scriptures.

      1. Rich says:

        To Paraphrase Paul, not I, but Christ under their skin.
        If it was up to me, I would leave them alone in their mess, but Jesus apparently loves them still and tells me I have to.

        1. Joe M says:

          So, you hate us here at CV but a voice tells you to preach to us?

          Do you seriously think that your comments are effective in any way?

      2. Joe M says:

        I don’t know. I don’t get the impression that Rich goes to Church, let alone knows much about scripture beyond Googling it.

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