17
Can the free market provide opportunity for all?
Arthur Brooks, the president of the American Enterprise Institute, argues that raising taxes won't help the poor and that the free market is the way to bring people out of poverty.
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
Jeremy Hobson: Yesterday on the show, as part of our coverage of Wealth and Poverty issues, we spoke with President Obama's former top economic advisor Larry Summers. We talked about inequality, which is an issue that's become central to the presidential race this year.
Summers told us the government has a responsibility to make sure that everyone in this country at least has an opportunity to succeed.
Larry Summers: The market left to its own devices is not going to help those least fortunate communities provide decent pubilc education. There's much that government needs to do to create more equal opportunity.
Well that is one view.
For another, we're joined by Arthur Brooks. He's the president of the American Enterprise Institute, a conservative think-tank in Washington. Good morning.
Arthur Brooks: Good morning, Jeremy.
Hobson: Yesterday, Larry Summers told us that the discussion really needs to be reframed from inequality of income to inequality of opportunity. What do you think about that?
Brooks: I agree. And even more than that, we need to largely abandon the whole idea of inequality of economic outcome and talk about mobility in America, because that's the real issue. That's what people care about. People are not worried about inequality at all, as long as they feel there's sufficient opportunity to rise, as long as they think that there's mobility in the economy. And that seems to be what people are starting to doubt quite a bit.
Hobson: What do you think needs to be done to make sure that people have the equality of opportunity that you would like right now?
Brooks: Well, the one thing that we don't do is by wasting our time by talking about simply how we can redistribute more money from people at the top simply because they have more money, and that seems to be largely what's going on in America today. We can think of the United States as an apartment building, where people at the top floor are doing very well; people in the bottom are seeing flooding. The trouble is that the elevator doesn't work very well, and we have a president and an administration that seems most content to be throwing rocks at the top floor. Well that doesn't do anything to help the elevator, and that's a metaphor that's rather apt, I think.
Hobson: The way that you say that, it sounds like you think that there's a possibility that we can reach a point that nobody lives on the bottom floor?
Brooks: No, I'm not saying that. I'm saying that people who live on the bottom floor should always have access to the ability to rise. And I think that the responsibility of people in positions of political power should be not simply to try to redistribute more from the top, but rather find more ways to help people get out of their economic situation.
Hobson: Do you think then that the government should ensure that everybody has access to going a university?
Brooks: We spend tons of time talking about college, and college is indeed important, but first let's talk about primary and secondary education. The truth of the matter is that we're spending multiples per kid in real dollar terms compared to what we were spending decades ago, and arguably getting worse student outcomes. We've got to ask ourselves what's going on in this country, primarily because that affects the bottom 20 percent of the income distribution.
Hobson: We've talked about the government. What about the free market? What should they be doing to make sure that more people have the ability to succeed in this country?
Brooks: Well, the free market is exceptionally adroit at doing just that, when it goes largely unimpeded. The problem is that today, the free market's not allowed to help the poor in lots and lots of ways. If you back 100 years or even 50 years, you find that the ability of people in the bottom 20 percent of the income distribution to be entrepreneurs was much higher than it is today. There were fewer regulatory barriers to starting businesses. There were fewer punitive tax barriers to starting businesses. The free market is great at creating opportunity. It's generally speaking the state that gets in the way of the free market, such that the poor really can lift themselves up.
Hobson: So you think that too much regulation is making it impossible for the free market to help the poor in the way that it could?
Brooks: I think it's hurting a lot, and it's not hurting everybody. I think it's disproportionally hurting the people at the bottom. And that's the real moral problem that we should all have with the system that gets more and more complex.
Hobson: Arthur Brooks is president of the American Enterprise Institute. Thank you so much.
Brooks: Thank you Jeremy.
Pages
. ...The truth of the matter is that we're spending multiples per kid in real dollar terms compared to what we were spending decades ago, and arguably getting worse student outcomes....
Study after study shows that it doesn't matter how much you spend per kid, if that kid comes from a poverty home, he/she will NOT do as well as a middle class kid. If you think about it, it's a no-brainer. Most middle class families show their kids in myriad ways daily that education is important, AND they provide large and small tools to help that child succeed, from providing reading materials to sending them to camp, to taking them to museums, etc. These are extras kids in poverty don't get. Nor do they always get a decent meal or health care when needed. In high poverty schools where they have addressed these issues (after school tutoring, meals, a nurse practitioner on site) grades and graduation levels soared. So, the old adage is right - it DOES "take a village", or at least someone who can provide the types of support a village used to.
Perhaps I was too subtle.
I was attempting to address the underlying premise that unequal outcomes are inheretantly unfair.
I was making a very limited scope comparison between two jobs.
I was trying to say that the choices and decisions we make in life do effect these unequal results. My premise is that good planning, forethought and decision-making play a bigger role in these unequal outcomes than any "unfairness" in the world.
I left some things unexplained because my post was already too long.
Okay, so the elevator in the apartment building isn't working very well. Don't the people on the top floor, those "doing very well," have the most to gain by having a functioning elevator, considering that otherwise they would need to resort to climbing stairs to the top? So, shouldn't those on the top floor pay more than (like, more than a 13 1/2% tax rate) those on the floors below them to fix the broken elevator? Maybe those on the very top aren't even using the elevator or stairs; they could be helicoptering in; in which case, they certainly have a lot of disposable income to help fix that elevator. As for the flooding on the bottom floors, the water pipes could be broken on the upper floors and the water is just seeking its lowest point (the bottom floor); but the upper floor is letting those below them live with the damage possibly caused on the higher floors. But, rather than fixing the elevator and the water problem, those on top are demanding lower rent payments and are going about claiming that the entire apartment will collapse if the rents of those on top are raised by even a penny.
Mr. Brooks must consider India his ideal country. One businessman I know has a $3.5million apartment but the workers painting it get $2 a day. There are lots of entrepreneurs too- street thieves and beggars, street vendors selling recycled plastic bags from the dump and their sisters.
It seems that America is headed to the same economy
Arthur Brooks of the ultra-conservative American Enterprise Institute claims that government regulations are worse for poor people rather than rich fat-cats like himself. Give me a break! After the criminal activity by American Banks, brokerages, insurance firms and hedge funds that nearly bankrupted us all because of deregulation, he has a lot of chutzpah to make such an outrageous statement. Jeremy just let this outrageous piece of cant slide without comment. Brooks' self-serving piece of chicanery is a patent campaign slogan, and breathtaking deception to tip the scales to Mitt Romney.
to mwade: So, you're including a personal decision to contribute a significances amount of your income to personal saving into a 401K as a 'deduction' to you income?
You don't say that she has either a 401K or health insurance, so I'll assume not.
It seems that you wasted your time getting a college degree, but you're comparing apples to cats. If you want a fair comparison: Cancel you health insurance and stop contributing to your 401K and watch your income go up by $20,000. You can use he emergence room and forgo dental cage just like she does.
Or, are you being sarcastic? Half of your 'not fair' comments are clear advantages to you over her.
I wish that Jeremy would be a little less superficial in his interviews.
re: "pending multiples per kid in real dollar terms compared to what we were spending decades ago" - I expect this comparison doesn't include, growth, inflation, cost of living, or the fact that most current teachers have the equivalent of masters (expensive).
re: "fewer regulatory barriers... fewer punitive tax barriers"
Specifically, what would he change?
Should we build sub-standard housing, office buildings, defective cars,
no restaurant inspections?
Drop the minimum wage?
Remove pollution, clean water requirements?
Allow more convoluted fine print in contracts?
A recent report on having transport/cruise ships within 200 miles of the West coast to run on cleaner fuel will cost the companies about $3.8 billion, but return between $45 - $100 billion in health savings to the public is a clear example of the savings to public (and better health), but a 'barrier' to business.
What opportunities are available for the poor and uneducated? This is just marketing BS. Our local small business owners are are complaining to the city and county over street vendors; yet that's where many of the poor, uneducated and un-financed will start.
While I don't expect NPR to interrogate these guys, I also don't like wasting my time listening to fluff advertising from free market buffoons, disguised as an 'interview'.
Brooks interest is in reducing obstacles to profits, regardless of the effects to 'consumers', the environment, or anything else.
So unequal is unfair.
I have a pretty damn good job where I earn about 70k. Before taxes. But after I pay payroll taxes, federal income tax, state income tax, health insurance (which supreme court just redefines as a tax) and 401k (to shelter some money from tax) I bring home around 33k.
The woman who empties the trash in my office, divrced with 5 kids, makes around 20k, but she pays only payroll. in fact with childcare credits and earned income tax credit, WIC and housing vouchers she received over 11k in tax support on top of her 20 k.
That is right, after tax I have 33k. After tax she has 31k.
And it is not fair.
It is not fair that I went to college when she didn't.
It is not fair that I finished high school and she didn't.
It is not fair that I never went to a court ordered substance abuse program.
It is not fair that I stopped after only two children.
It is not fair that I am still married to my first wife after 29 years. (Divorce is destructive to finances too)
It is not fair that my credit score reflects years of managing my finances responsibly.
It is not fair that I have no prison record.
It is not fair that I can buy a home for a lower payment than she pays in rent.
It is not fair that I can get a car loan on a new car for a lower payment than she can get on a used junker.
It is not fair that I can keep the same car for years without getting it reposessed, or totalled in a wreck.
It is not fair that I have insurance to repair damage to my car if it does get in a wreck.
How did I end up with so many unfair advantages?
Just lucky, I guess.
"That's what people care about. People are not worried about inequality at all, as long as they feel there's sufficient opportunity to rise." (Arthur Brooks)
That's probably so, in an abstract way. First concern of many or most with low income is a healthy, secure, economical dwelling place, enough work to provide groceries, and basic transportation. An occasional medical and dental clinic visit would help, and a bit of money left over to save and learn.
A mix of opportunities and incentives for self sufficiency can be helpful in this regard, no matter their origin in terms of economic structures and institutions. Not everyone wants to rise, in the sense of accumulating large wealth. Many of us are quite content with health, personal security, a stable household, a clean environment, contributing to our communities, and passing a good time once in a while.
The more I think about Mr. Brooks comments the angrier I get; the absolute arrogance and ignorance of this man, and his ideology. I am not a business professional but I am a professional and have read a lot trying to understand how this economic crisis came to be. This crisis was lead in part by the lack of regulation and the people who are paying the biggest price are those on the “middle and lower” floors. Back in 2005 Daniel Altman wrote a book “Neoeconomics”. He detailed the Bush/Greenspan economic policies and stated these policies are risky and those who would lose the most if the economy was hurt would be the middle class, the upper class, those who had the most to make from the “neoeconomy” would be just fine. That is what happened and they are just fine. We need to get these ideologues out of our public policy and take back our representative democracy before we become a plutocracy.
And to Marketplace, any decent media organization needs to get specifics on just what exactly with facts is causing the ruination of the middle class. Somehow I do not think it is onerous government regulations.
Pages
