If you want to feed a hungry person, you need to give them food, and if you want to solve inequality, you need to take money away from wealthy people and redistribute it to non-wealthy people. The Boston Globe Sunday Magazine recently ran 7 solutions to inequality from Brandeis University’s Thomas Shapiro, but six of the seven ideas are akin to trying to solve hunger by distrubuting cookbooks.
The list starts strong with “Baby Bonds” – giving each American child a certain amount of money in a savings account. There are flaws – restricting what the child could do with the money would inflate the program’s cost by adding administrative hurdles & costs, and income restrictions seem divisive & unnecessary. But the point is sound – wealthy people pay more in taxes (though often a lower share of their income) than the poor, so by redistributing tax revenue equally back to children, this solution would accomplish the goal of defeating inequality.
Sometimes centrists are just putting new names on old ideas, like “offer universal retirement accounts.” We already have a federal system of delivering cash to retirees – it’s called Social Security. Why not just raise benefits? If the goal is to nudge workers to save more, we already have 401ks and myriad similar schemes. Why aren’t those working? They’ve been a public policy disaster because they expect workers to save money they don’t have.
“Full employment”? Falling unemployment over the last five years has failed to raise wages. The invisible hand won’t save us.
The rest of the lists consists of giving out cookbooks – nice ideas that would not directly solve inequality. Leveling education funding, universal pre-K, capping mortgage write-offs – these are all really good ideas! But if you’re Sandy Guerrier, working your tail off but still falling behind, none of them put money in your pocket.
There are two problems with trying to fix inequality of opportunity (some have much worse education opportunities than others) instead of inequality of outcome (some have much less money than others). One is that you’re completely giving up on fixing inequality today. The other is that it ignores the impact of inherited wealth. A “family’s economic circumstances play an exceptionally large part in determining a child’s economic prospects later in life,” concluded a Stanford study funded by Pew. As Evan Horowitz wrote for the Globe in 2015, education can’t fix inequality.
Shapiro knows this as well as anyone because he literally wrote the book on it. Black Wealth/White Wealth talks about how black families have, on average, 10 cents of wealth for every dollar white families have. If your family is poor, if follows you throughout your life. You’re more likely to live in a high crime area, more likely to get into trouble, and less likely to have a wealthy family to bail you out of it. You’re more likely to have to pass up educational opportunties to take paying work, more likely to graduate from college with debt, and more likely to need to go much deeper into debt buying a car or a home.
Centrists ignore the single best idea for immediately, effectively curbing inequality: Basic income. Think of it as Social Security for all, regardless of age or work status. By taxing everyone & writing everyone a check, you provide immediate, direct relief of inequality. It could be done in place of or on top of existing programs.
As an added benefit, it would be a massive economic stimulus, moving money from sitting in the bank accounts of the wealthy to working people who’d use it immediately to pay off debts or buy essential goods or services. President George W. Bush knew this – he worked to send taxpayers a check as part of his 2001 tax cut and included a direct rebate in the 2008 stimulus bill, both essentially one-off Basic Income efforts.
There are plenty of other widely-beneficial, inequality-reducing programs the government could offer – single-payer health insurance, free or deeply subsidized child care, free college education – but Basic Income is the biggest, fastest, most effective solution.
But the Kochs would hate it, so centrists don’t talk about it.