September 13, 2011

The Real Issue Behind the Wealth Gap

Steven Horwitz

Senior Affiliated Scholar

More important than the gap between the rich and the poor in America is the degree to which the poor can earn their way out of poverty, and the evidence suggests that this is still very much the case for the clear majority of the poor in any one year.

Unfortunately, there is almost no mainstream discussion of what economists call “income mobility,” or the degree to which people can move up and down the income ladder. 

It's true that the gap itself might well give the rich differential access to politics, but that’s not a problem of the gap, but of politics. If we want to take the money out of politics, we first need to get politicians out of the economy. 

After all, the government isn't doing a very good job of reducing poverty, anyway. Despite hundreds of billions spent on anti-poverty programs, the official poverty rate hasn’t budged all that much in the last 40 years.