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Reducing Poverty, Not Inequality, is the Real Challenge

December 28, 2016
Plain English Version
Reclaiming Detroit.

Reclaiming Detroit.

You can take money from the rich and give it to the poor. Say you take away the wealth of the top twenty percent of Americans. Say you give it to the bottom twenty percent of Americans. You will increase the wealth of the bottom group by twenty-five percent.

But if you do take that action, you will not be able to do it again next year. It is a one-time, one-year plan. That is because the rich, without their money, will not be able to make more money. Or they will have found a way to keep you from taking it again.

If poverty means doing without, the news is promising. In nations from India to Botswana, incomes are growing. Education, healthcare, and housing are growing even more.

Still, there is a strong impulse to rail against the rich. Their wealth is on display. It creates envy and jealousy. It gives politicians a way to appeal for votes. If you wanted to reduce income inequality, how could you do it? Taxes could help. But taxes get money to the government. There is no assurance it will go to the poor.

Overthrowing the government might work for a while. It did not end inequality in the old Soviet Union, or in China or Cuba. It just made more people poor.

Going after the rich could reduce their will to make more money. That could mean fewer inventions. It could mean the economy might not grow as fast as it should.

There is some agreement about what to do in the future. Get more income to those who need it. Get more services to them. Make sure they join in civic life, including voting. Continue stressing the importance of education today. Society can do a lot in that department.

Taking away Rolex watches from the rich will still leave the poor with Timex watches.

It is better to grow the economy than to seize it.

Source: The New York Times December 23, 2016

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