Ben Stein's Diary

Poverty and Income Inequality

One really has nothing to do with the other.

By 4.4.14

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Thursday
I spent almost all day lying in bed listening to old Big Band music. I have not been well, and this is perfect therapy. I just let my mind run free to go down freeways and alleyways and this is where I came out....

At the intersection of Income Inequality and Poverty.

Here is what my mind dredged up.

There is an immense amount of income inequality here and everywhere. I am not sure why that is a bad thing. Some people will just be better students, harder working, more clever, more ruthless than other people. Some people will have better family connections than others. Some people will have richer parents than others. Unless we want to do away with property rights — a surefire route to dictatorship — we will have a lot of men and women who are rich by inheritance. Frankly, I feel sorry for them.

But it’s inevitable that in a free society, some people will have more money than others. Surely some of those people got that money by looting their own stockholders. I know this for a fact. I spent decades writing about it for Barron’s. There will be men in a position of authority who will loot. Some of them will become famous philanderers and some famous philanthropists and some both.

But there are just some people who are better with money than others and will wind up with a ton of money. There will be people who strike oil, who create new Internet toys. They fund symphonies and ballets and schools for inner city kids. They are a bulwark against tyranny because they can afford lawyers to fight overweening government.

We want for there to be a high number of rich people who function as a brake on government just as the nobles did on the crown in long ago England.

So, I don’t see why it’s wrong to have income inequality. It isn’t as if having a lot of rich people creates more poor people. We do not have a finite amount of money in America. There is an infinite amount and generally speaking, the more rich people there are who start businesses and or run them well, the more middle class people there are who work in them or hold stock in them.

So, I just don’t see the problem in there being so many billionaires except for bare envy — an extremely basic emotion. It is an emotion that the politicians and academics and race haters have been able to stir up for a long, long time. It leads to jobs for Democrats but not much else.

But then we come to what is a real, genuine problem: poverty. It is not fine to have Americans (or Cubans or Congolese) in want, unable to afford the necessities in life. Again, I don’t see why or where having a thin super rich slice affects that. But poverty is a real problem.

In olden times, poverty was the common human condition. In the USA, as recently as the Great Depression, poverty was commonplace. FDR might have exaggerated when he described one-third of the nation as “ill housed, ill fed and ill clad...” But surely he was not far off.

Now, real poverty, where Americans lack cars or air conditioning (imagine that we now consider it poverty to lack something that was the ne plus ultra of luxury in my youth!) or solid food is extremely rare. Yes, the government designates many tens of millions as poor, but they almost always have indoor plumbing (which my mother did not have in her small town in the Catskills) and they are super nourished as opposed to mal-nourished. They get food stamps. They get free medical care. They get vouchers for many of the needs of life.

This is not to deny their sorrow and I am sad for them. But why are they poor? Senator Elizabeth Warren, a genuine moron, not a fake one, says it’s because of “corporations.” What can that mean? Corporations are not vampires. They are aggregations of workers, owners, and customers. Senator Warren infamously noted that “corporations don’t cry,” but their workers do when government regulators shut them down for environmental infractions. Their stockholders do when mistaken federal policy causes their stock to crash so that old people cannot retire and young people cannot go to college. If you substituted the words “groups of Americans” for “corporations” I wonder how much applause and hatred you would whip up even at a DNC convention.

Corporations have nothing to do with causing poverty and in fact well-run corporations like Berkshire-Hathaway generate immense income for their stockholders — largely pension funds and hospital and college endowments — that allow for ordinary people to have comfort and rest.

What I have also observed is that government policy rarely causes poverty over the long run. Yes, Fed mistakes can cause recessions and good people are thrown out of work for a time. That unequivocally happens. But good people find new jobs or relocate. (Retraining is often, not always, a fraud.) And recessions end and we have severe labor shortages in some areas as we do now in the oil areas and Silicon Valley.

No, federal policy does not generally cause long-term unemployment and poverty. In general. Obviously, there are exceptions.

My humble observation is that most long-term poverty is caused by self-sabotage by individuals. Drug use. Drunkenness. Having children without a family structure. Gambling. Poor work habits. Disastrously unfortunate appearance. Above all, and counted in the preceding list, psychological problems (very much including basic laziness) cause people to be unemployed, have poor or no work habits, and enter and stay in poverty.

Impoverished people have personal problems. They may have had terrible childhoods. They may have been the victims of abuse. They are often the victims of their own abuse of drugs and alcohol. But they are not the victims of corporations or of the Federal Reserve. Their sad backgrounds lead them into self-destruction.

Is there any public policy that can help them? We just don’t know so far. But whipping up hate against the successful simply cannot do it. There is no connecting mechanism between envy and greater productivity. Quite the opposite. Envy legitimizes class hatred and idleness (see “higher education — 2014”) and produces nothing.

What will make the genuinely poor stop sabotaging themselves? Maybe, just maybe, if we let God back into the public forum it would help. I have seen spiritual solutions work miracles.

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About the Author

Ben Stein is a writer, actor, economist, and lawyer living in Beverly Hills and Malibu. He writes "Ben Stein's Diary" for every issue of The American Spectator.