Missing ladder

Niall Ferguson is a commentator for Newsweek and, if memory serves, on the conservative side. I'm not sure in what ways that colors his latest feature article. Even so, he has some interesting ideas to share. We've long known about the spreading inequality gap here in America. Ferguson asks if that is causing the end of the American Dream. In this case it appears that is defined as being born of lowly circumstances and through hard work making it to the upper middle class or higher. Higher inequality in America (higher than in Europe) is tolerated because of our reputation for greater social mobility. But our social mobility is dropping and may now be lower than in Europe.

Ferguson mentions Winston Churchill's distinction between left and right. "The left favors the line, the right the ladder." In America Dems support policies that encourage voters to line up for entitlements while the GOP is about getting people to climb the ladder of opportunity. But the line traps recipients in dependency on the state. And the GOP has pulled up the ladder.

Ferguson goes on to document the drop in social mobility. I'll let you read his statistics. Then Ferguson gets into examples of that trapped dependency.

A single mom can get a part time job for $29,000 and get over $28,000 in various other benefits. In doing so she will do better than taking a $69,000 job that requires she pay $12,000 in taxes.

When welfare use was restricted the poor shifted to Social Security disability benefits. Average payments are $13,500 a year. Working full time at minimum wage ($7.25/hour) is about $15,000 a year. Why work when you can do almost as well being idle? Especially when being idle means you can get Medicaid.

Ferguson notes the federal gov't spend about 4 times on the elderly (Social Security and medical benefits) than it does on the young. At the state and local level the number is 2 times. He wonders why the young put up with this. They consistently vote against their interests. Ferguson implies it is because the young are too poorly educated to figure it out (for the record, I'm wary of his education stats, though he points out the huge disparity in learning between rich kids and poor kids which I see in my teaching).

I've long thought (though probably haven't written about) that many gov't programs encourage dependency. The case I heard about several years ago (and my details are likely wrong) was a program that came with access to Medicaid (which could be Medicaid) if income was below a certain amount. Since most jobs that paid more than that threshold didn't offer health insurance there was a strong incentive to refuse those jobs and to refuse extra hours that might cause them to lose Medicaid. Why not structure programs on a sliding scale so that as one earned more at a job the benefits would be reduced, though the worker would still come out ahead?

So, yeah, Ferguson has a point, the same one the GOP frequently uses to bash the Dems. Too many gov't programs are structured to trap people into dependency. However, it would take a great deal of study and hard questioning (probably skewering a few sacred cows along the way) to redefine these programs to encourage working up the income ladder.

But the Dems also have a point. Want to get people of disability and into jobs? Raise the minimum wage. Make a job look a lot better than idleness. Want people to get a job and off welfare? Make sure they get an education, even a college degree, at a price they can afford. In other words, put that ladder back in place.