Wednesday, June 18, 2003

# Posted 9:23 PM by Ariel David Adesnik  

POVERTY AND INEQUALITY: Thought we'd beaten that topic to death, didn't you? Not by a long shot. In Monday's WaPo, investor Steven Rattner presents an argument that is striking similar to the one on Calpundit.com that set off the whole inequality debate a while back. (For responses, see here, here and here.)

In short, Rattner argues that the poor are getting screwed and that the Bush tax cut will screw them even worse.

After reading Rattner's op-ed, I came across the following column in the NYT by poverty-fighter and Harvard sociologist William Julius Wilson. Based on the NYT summary of Wilson's column, I expected it to be identical Rattner's. According to the summary,
If the president's tax cuts cause huge budget deficits and further weaken the economy, we may again see the high levels of concentrated poverty recorded in 1990.
After reading Wilson's column, I began to wonder if Jayson Blair had written the summary.

Consider the following facts Wilson presents:
The number of people residing in high-poverty neighborhoods decreased by 24 percent, or 2.5 million people, from 1990 to 2000. Moreover, the number of such neighborhoods — the study defined them as census tracts with at least 40 percent of residents below the poverty level — around the country declined by more than a quarter...

...neither the spectacular rise in black [Americans'] concentrated poverty from 1970 to 1990, nor the dramatic decline from 1990 to 2000, can be explained mainly in terms of race. Rather, these shifts demonstrate that the fate of African-Americans and other racial groups is inextricably connected with changes across the modern economy...

So, just as blacks suffered greatly during the decades of growing separation between haves and have-nots, they benefited considerably from the incredible economic boom in the last half of the 1990's, which not only substantially reduced unemployment, including black unemployment, but sharply increased the earnings of all low-wage workers as well...
While Wilson does get around to saying that the Bush tax cut may reverse the gains of the past decade if it results in massive defecits and slower economic growth, his final message is rather different:
The lesson for those committed to fighting inequality, especially those involved in multiracial coalition politics, is to pay more scrutiny to fiscal, monetary and trade policies that may have long-term consequences for the national and regional economies, as seen in future earnings, jobs and concentrated poverty. We must remember that high-poverty neighborhoods reflect America, all of America.
As they used to say, a rising tide lifts all boats. Or is that just a pleasantly-worded justification for trickle-down economics?

While Wilson's arguments hardly justify the Bush tax cut -- to which I am still adamantly opposed -- they do suggest that poverty and inequality may have an inverse relationship to one another rather than a direct one. If economic growth (easier said than done) is the answer to poverty but also results in growing inequality, then what's wrong with inequality?
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