Robert Samuelson’s column from today’s Washington Post:
If you’re in Asheville, N.C., stop by Biltmore, the vast estate that George Vanderbilt III — heir to a railroad fortune — constructed between 1889 and 1895. You can tour most of its 250 rooms, including 43 bathrooms and an indoor swimming pool. When few Americans used electricity, Biltmore had its own generators. To take the tour is to grasp one of the great advances of the 20th century: The gap between the super-rich and most Americans has narrowed enormously. In Vanderbilt’s time, most Americans lived in filthy slums or on modest farms. Now even the wealthiest among us live more like ordinary people than Vanderbilt ever did.
To better reflect reality, I’d rewrite that last sentence as follows:
Now even the most ordinary among us live more like wealthy people than Vanderbilt’s contemporaries ever did.
Mr. Samuelson goes on to provide various economic details about how “trickle-up economics” benefits only the rich, which “seems un-American.” Meritocracy is decidedly un-American, I guess, but that’s not really what’s useful here. Instead of debating the merits of the potential causes of this supposed economic disparity, including “costly” employer-provided “squeezing take-home pay in the middle,” this passage matters most:
What might government do? The Bush administration’s enthusiasm for tax cuts for the rich could be tempered; to reduce the budget deficit, their taxes could be raised without dulling economic incentives. (For the record: I supported the first Bush tax cut and opposed his cuts on capital gains and dividends.) Equally, liberals and others who support lax immigration policies across our southern border should understand that these policies deepen U.S. inequality.
But many familiar proposals would be mostly symbolic or hurtful. Raising the minimum wage might directly affect only about 5 percent of workers and might destroy some jobs. Protectionism might save a few well-paid jobs but would inflict higher prices on those least able to afford them. Still, no one should be happy with today’s growing economic inequality. It threatens America’s social compact, which depends on a shared sense of well-being.
Of course government must do something. Otherwise, our shared sense of well-being will die. Huh? From what I can decipher, Mr. Samuelson is not saying we should just continue with the same government policies. Good for him. But what evidence does he have for believing that some other government program we haven’t tried, which I believe is his assertion, will save the social compact? He acknowledges the perverse consequences of existing government policy. To the question of what might government do, the answer just might be to get out of the way.