The Income Gap Grows

[mrgorth]

From Sunday's Philly Inquirer:
http://www.philly.com/mld/inquirer/news/editorial/13263286.htm

"Many proponents of smaller government applaud these deficits, arguing that they will force legislators to cut wasteful spending. As always, however, budget cuts focus not on wasteful programs but on those whose beneficiaries are least able to resist them. Recent proposals by House Republicans would eliminate free school lunches for 40,000 children and food stamps for 225,000 people in working households with children. House Republicans also propose $12 billion in cuts for Medicaid, a program on which 25 percent of American children now rely heavily for access to medical care.

The combined effects of market forces and changes in public policy have clearly made life more difficult for middle- and low-income people. They are working longer hours, saving less, borrowing more, commuting longer distances, and doing without things once considered essential. Personal bankruptcy filings have set new records in each of the last several years. The personal savings rate, always low by international standards, has fallen sharply since the 1980s. It has hovered close to zero since the late 1990s, and in recent months has actually been negative. About 45 million Americans now have no health insurance, 5 million more than in the early 1990s.

Although income inequality has increased sharply in recent decades, it has always been greater here than in other industrial democracies. Can a case be made for it? Many have described inequality as the price we must pay to achieve high rates of economic growth.

The evidence, however, suggests otherwise. As economists Alberto Alesina and Dani Rodrik have found, for example, growth rates across countries are negatively related to the share of national income going to top earners.

Others have portrayed inequality as a necessary condition for socioeconomic mobility, arguing that people who are willing to work hard and play by the rules face a better chance of making it to the top here than in any other country. But here, too, the evidence suggests otherwise. Even as economic inequality has been rising, social mobility has been declining. According to sociologist David Wright, the probability that a child born to parents in the third quartile of the income distribution would move up into the top quartile was only half as large in 1998 as in 1973. Economist Thomas Hertz has found that children whose parents are in the bottom fifth of the income distribution have only a 7.3 percent chance of making it into the top fifth. In contrast, children born in the top fifth have a 42.3 percent chance of remaining there. Contrary to popular impressions, socioeconomic mobility is now lower in the United Stated than in most other industrialized countries."

[Al-CIAda]

1. "DLC!, DLC!, DLC!"...everybody join in now...

:sarcasm: