Progressives, these days, are a gloomy bunch, and it's not just because of the outcomes of last week's election. As they see it, there's much to be gloomy about: Poverty levels are stuck, they say, with little improvements made in recent decades. What's more, according to the standard progressive line, income inequality is soaring, and back to levels last seen in the roaring '20s. And, to top it all off, middle class incomes are flat, or even falling.
But here's the thing: Each of these claims is a significant overstatement. In fact: Progressives have every reason to be celebrating right now. Why? Because by and large, things aren't so bad as progressives claim, and the reason things aren't so bad is because progressive policies are working...
|The Atlantic, Progressives Lost the Election, but Their Ideas Are Winning, 2014. |
Illustration modified by Politics and Critical Thinking.
I have taken the liberty to add some lines which shows the boom/bust cycle, aka recessions, to this chart. As you will notice there is a distinct rise in poverty which correlates to these recessions officially beginning, or right before, and a relatively substantial drop after they abate. The two exceptions are the 1990-91 recession and the Great Recession in which the poverty rates actually rose or are continuing to rise.
Why is this important? What drove and does drive poverty reduction is not the usage of government programs such as wealth transfers and tax credits; it is job creation. When the boom cycle starts, jobs flourish, people become employed, make better wages, get promoted, etc. and are removed from the poverty rolls. What wealth transfers and tax credits accomplish is keeping already poverty ridden people from sinking lower, which is a good and moral thing to accomplish. It, however, does not push them off of poverty and when these policies are left to their own devices they cause stagnation. There is no no chance for upward mobility or opportunity.
Again...progressive policies have NOT kept forty million people out of poverty, what these policies do is keep people from falling further down. As stated before it is job destruction which has the propensity of putting people there and hence it's job creation which keeps them off. This is the most basic of economic thought and fact and will not change no matter how you parse it.
Next Mr. Reeves tackles inequality.
Inequality: Mostly in Check
One of the staple progressive mantras is that income inequality is soaring, with the minority at the top vacuuming up most of the national income. But the picture is much more complex, and more positive, than that. Critically, the most dramatic figures for inequality are generated by looking at "market income"—i.e. before any taxes and transfers.
Between 2000 and 2010, the biggest gains in real after-tax income were actually at the bottom of the ladder:
The maintenance of incomes at the bottom of distribution is the result of strenuous government efforts to mitigate the effects of inequality, especially by cutting taxes and/or providing tax credits to lower-income Americans. Without this government action, inequality almost certainly would have risen quite sharply in the bottom 90 percent.
Then it must be the riches' fault? Not exactly, income generation versus wealth generation are two different phenomena. Income generation can be explained as "earned compensation for performing a service, selling goods or property." Whereas wealth generation "having enough of said money and valuable possessions to preserve your current lifestyle without having to work to do." This is done through savings, investment and then return, and lowering debt. Many of the upper one economic quintiles do not live off of income, but rather returns on investments. (Consequently this is why it is ultimately ridiculous to call for raising the income tax on these people, since most of their wealth is generated through other means besides income.) Lower wages are a not a consequence of the upper one percenters stealing a part of the pie from the lower quintiles. While there is no denying that a minority has a larger share of the "pie" than most, they did not acquire this through theft of wages from the lower economic quintiles. That would be an impossibility since the "pie" is always contracting or expanding.
Therefore, if there are companies to invest in and people have capital available to invest in them, and these firms are successful, there will be a return larger than the primary investment. Hence you will see the rich accruing more profit and the gap growing between them and the persons who rely on income--which is stagnant for the most part--for their living.
But as already mentioned...these are hardly Progressive ideas. In fact the idea tax cuts opposes the progressive philosophy since it takes away from the funding mechanisms, i.e taxes, which make government run safety nets possible. Tax-cuts and to a lesser degree tax credits are more of a right-wing function and perception.