RedBlueAmerica: how to create economic opportunities
By Ben Boychuk and Joel Mathis
What is the best way to create economic opportunity?
The November election is set: Mitt Romney will challenge Barack Obama for the presidency. The economy is likely to be the main issue, for several reasons. First, unemployment remains high.
Second, there's a growing concern about income inequality which is also the topic of a new book by New Republic columnist Timothy Noah, "The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It."
What's wrong with the economy? How can we fix it? Joel Mathis and Ben Boychuk debate the issue. (Listen to their interview with Noah at www.infinitemonkeysblog.com.)
MATHIS: America's economy works very well for the people at the top. Over the last 30 years, our richest citizens have seen their incomes explode beyond belief. The same has not been true for the middle class and poor, whose incomes have stagnated during that time. When we're talking about "economic opportunity," then, we're really talking about how to lift the vast majority of Americans who have been left behind.
So the best thing we can do is empower Americans to help themselves so that they can adapt to globalization, advances in technology and other factors that keep the economy in a state of constant flux.
There are two ways we can empower those Americans.
First, education. Noah, in his book, offers two ways to improve access to education. One is to "universalize" preschool to give young children a running start. The other is to impose price controls on colleges and universities, so that every young adult can afford the education they need to compete in a global economy.
"American colleges," Noah writes, "are starting to price themselves out of the market for middle- and low-income families." That trend must be reversed.
Second: It is time to revive unions. Yes, anti-union sentiment seems to be at an all-time high but the truth is that the last 30 years of stagnating incomes has coincided with the decline of union strength in America.
"Businesses treat their least powerful employees as poorly as they can get away with, end of story," Noah writes. The ability of workers to band together for collective bargaining purposes is probably vital to raising their wages.
Republicans talk a lot about "job creators," but those job creators frankly haven't done much for us lately. Giving Americans the education and power to help themselves offers the best possibilities for economic advancement.
BOYCHUK: Demonizing business and flogging the successful might narrow the gap between rich and poor, but in the long run it won't revive America's flagging fortunes.
For Noah and others on the left side of the political spectrum, the answer to the very real problem of economic inequality is the flipside of Ronald Reagan's famous 1981 dictum: In the present crisis, liberals say, government is the solution to our problem.
Noah's first prescription in his book is to "soak the rich." Because tax rates are at historic lows, he argues the top 3 percent of income earners ― families earning roughly $250,000 or more per year ― "can afford" to have the top marginal tax rate return to Clinton-era levels.
I asked Noah what he would do with the additional revenue at a time when the federal budget deficit tops $1.4 trillion and the national debt now exceeds $15 trillion (to say nothing of tens of trillions in unfunded entitlements).
Closing the deficit and paying down the debt would be a swell start, he said. In fact, we could confiscate 100 percent of the richest 1 percent's wealth and still remain trillions in the red.
In another blast from the failed past, Noah suggests imposing price controls on college tuition. True, he admits, "price controls are a clumsy policy instrument with a checkered history" ― in fact, price controls always lead to higher prices and scarcity. But maybe we can overcome the law of supply and demand just this once.
We do need serious tax reform in the United States. And college costs are too high. But instead of merely soaking the rich, we need to broaden the base and encourage new investment here at home. We need market-driven alternatives to four-year colleges, such as technical schools.
But diminishing the standard of living of one despised class won't raise the quality of life of everyone else. Reagan was right. In the present crisis, government remains the problem.
Ben Boychuk is associate editor of the Manhattan Institute's City Journal. Joel Mathis is a writer in Philadelphia. Email bboychuk(at)city-journal.org or joelmmathis(at)gmail.com.