Whether for moral or for practical reasons, most of us would like to see the large gap between the rich and the poor reduced. But how? We could try the “Robin Hood” approach: Take money from the rich and give money to the poor. The progressive income tax code already is a take-from-the-rich device. Taxes on highest earners could be raised even further, as President Obama wishes to do. But, all taxes remove money from the economy. So if higher tax rates were effective money collectors, they would slow the economy, which ultimately hurts then poor.

Taxes could be increased on inheritances and on high-end purchases (furs, jewelry, boats, luxury cars, expensive homes). But, this too removes money from the economy, and past attempts have impacted the businesses supplying these luxury goods, which has impacted employment. The property of the rich simply could be confiscated and distributed to the poor. This has been attempted in several countries, most recently in Zimbabwe, to disastrous results for the poor.

All things considered, take-from-the-rich does not seem to be an effective device for closing the gap between rich and poor.

Alternatively, the federal government can deficit spend. This can lift the poor, though it probably does not close the gap, as it would lift the rich, too. We could eliminate FICA, which falls most heavily on the lower-paid employed, though this also would help the rich who own the businesses paying FICA. We could raise the minimum income for federal taxing. This would help lift the poor, but help the rich business owners by giving the poor more spending money. We could increase federal assistance to Medicaid, food stamps, “affordable” housing, etc. This would help lift the poor, and also help the rich owners of pharmaceutical companies, groceries, builders, etc.

In all, perhaps no attempt to transfer money directly from the rich, or directly to poor, does much, if anything, to close the wealth gap. Giving money to the poor helps the rich. Taking money from the rich, hurts the poor. And the gap remains.

If the gap is to be closed, the poor themselves may have to close it, and I suspect the device is education. Of all the differences between rich and poor, perhaps none is more important than level of education. Today, primary and secondary education are available free to everyone. Sadly, the quality of this education differs markedly, between rich and poor. A college education and an advanced degree are not feasible for a poorly educated child, and despite scholarships, they are not affordable for most poorly financed families.

Affordability might be accomplished if the federal government were to pay for college just as the states and cities pay for primary and secondary education. Even then, some parents want their children to go out into the working world, to bring back support for the family, which can doom the child to a life of menial labor. This problem might be addressed by offering federal support to families who allow their children to attend college. Universal college might put all young people on a more even footing, and help close then financial gap.

There have been many attempts to address differences in educational quality among primary and secondary schools, with NCLB (No Child Left Behind) being the most obvious. The program has supporters, detractors and difficulties. Many teachers’ unions resist quality evaluations. Many families do not have an educational ethic. Many children come from dysfunctional families and neighborhoods. The problem is not just one of poor schools. It is a community-wide problem, requiring a community-wide solution.

School administrators must be given the power, the motivation and the know-how to bring principals, teachers, parents and students — the entire neighborhood population — together as one cooperative force to improve educational quality. Private schools, magnet schools and some religious schools demonstrate that education of the poor can be improved.

The problem is difficult and far beyond the scope of this post and the expertise of this writer. But, assume we could create a nation of outstanding primary and secondary schools, motivated families and free colleges. Let’s say we could close the financial gap. Is this economically wise? That is, would our economy grow better, and would our population live better, happier, more rewarding lives overall, if there were little or no gap?

I hope to write more about this, and meanwhile I welcome your thoughts.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity