There’s much talk these days about inequality and how capitalism is a nasty side effect of the disease of inequality. Andy Kessler (WSJ) writes of a discussion he had on equality with John Cochrane, economist and senior fellow at Stanford’s Hoover Institution.
In discussing inequality, Mr. Cochrane, asks, “Are capitalism and free markets the reasons for income inequality? Or are misguided government interventions to blame?”
As disincentives to work and what keeps people down, Mr. Cochrane quickly points to what Mr. Kessler calls the “Four Progressive Horsemen of Inequality:”
- Poor Schools
- Occupational Licensing
- Land Use Rules
- Disincentives to Work
- Public Schools. COVID proved that teachers unions control public schools:
Forget learning; they push students along to graduation rather than teach them the skills to capture life’s opportunities. We know public schools have failed because more than half of new students at community colleges require remedial courses in math, English or both. Then consider those who don’t attend college.
American Federation of Teachers President Randi Weingarten collects Grade-A compensation—$500,000 a year—but has failed students. The average Chicago public-school teacher made $108,000 last year in salary and benefits.
Illinois State Rep. Blaine Wilhour put it best: “The teachers union has become the biggest obstacle to upward mobility and to breaking the cycle of poverty for poor and minority students.”
- Occupational Licensing, just another way to say job restriction.
Around 1,100 occupations, involving close to a quarter of U.S. workers, require licenses. For doctors and lawyers this might make sense, but for many low-skilled jobs, it’s a huge barrier and a root of inequality. Hair braiding in Mississippi used to require 300 hours of training and a license in “wigology” until workers fought back. It’s now a $25 fee.
Needing a license to be a pedicurist, a home inspector, a security-alarm technician, a pipe-fitter and so on is putting entry-level opportunities out of reach. California’s A.B.5 foolishly restricted freelancers, the so-called gig economy. In Washington, D.C., the House just passed the pro-union PRO Act to repeat this mistake at the national level. Can’t they see this perpetuates inequality?
- Land Use Restrictions – a bipartisan effort to drive up home prices.
The rules keep housing supply from keeping up with demand—but progressives have been heaping on regulations. Try getting a natural-gas hookup in many California cities. The California Energy Commission’s solar mandate adds $9,500 to the cost of the average new home. And don’t try using your own kitchen to sell cupcakes or creole. You’ll run into a goats-head soup of restrictive laws.
- Welfare Disincentives were to have disappeared with Bill Clinton’s ending “welfare as we know it.”
Well, they’re back. The stimulus extended the usual unemployment benefits plus $300 a week (down from $600) and $300 a month for child support. Why work?
Beyond these Four Horsemen, Mr. Cochrane cites other progressive programs that perpetuate opportunity gaps.
- Free Opioids
- The Minimum Wage
In February, the Congressional Budget Office said a $15 minimum would mean 1.4 million fewer jobs, mostly hurting those at the bottom of the ladder. But union lackey Bernie Sanders still pushes for it.
Milton Friedman said it best: “Minimum wage law is most properly described as a law saying employers must discriminate against people who have low skills.”
- Solyndra, the 5th Progressive Horseman of Inequality:
The Barack Obama era of economic ineptitude lives on, continues Mr. Kessler.
Remember (Obama’s) May 2010 quote:
“The true engine of economic growth will always be companies like Solyndra.”
Maybe that’s the Fifth Progressive Horseman of Inequality.
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