One of the most profound quotes of Milton Friedman (a competitive arena) is “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.” A corollary in today’s Wall Street Journal would be that “a society that puts equality before economic growth will get less of both. A society that puts economic growth before equality will get a larger measure of both.” You can substitute social justice for equality.
Sir John James Cowperthwaite, the Financial Secretary of Hong Kong from 1961 to 1971, attributed the financial success of Hong Kong to the priority of economic growth over social spending, although he also insisted on financial discipline few other countries emulated.
If financial growth is a priority you wish to harness all resources. Women and minorities are valuable as producers and consumers in the economic ecosystems. Middle East nations ignore half of the their human resources and are perpetually stagnant in spite of their oil resources.
From today’s WSJ, The Economy’s Inequality Dividend:
The comparative data are striking, and mostly ignored by the press. During the first 11 quarters of the Trump Presidency, wages for the bottom 10% of earners over age 25 rose an average 5.9% annually compared to 2.4% during Barack Obama’s second term, according to the latest demographic data from the Bureau of Labor Statistics. Wages for the middle two quartiles increased 3.2% compared to 2.2% and 2.7% between 2012 and 2016. Wage gains for the top 10% have held steady at about 3%.
Less educated workers have also seen the strongest gains. Wages have risen at a 6.1% annual clip for workers over 25 without a high school degree and 3.9% for those with some college—both about three times faster than during the second Obama term. Wage gains have also accelerated though to a lesser degree—to 3.2% from 2.2%—for college grads.
Irony alert: Socialism-loving young people are getting the biggest pay raises. Wages have increased on average 5.8% annually for teens, 4.4% for 20 to 24-year-olds and 4.8% for 25 to 34-year-olds during the Trump Presidency. Maybe as their incomes rise, more millennials will question the tale of woe and revolution that Bernie Sanders is selling them.
As for inequality, the Gini coefficient that measures the income gap has been declining among folks who earn a paycheck. Rising wages have lifted millions of Americans out of poverty and off the government dole. The poverty rate for blacks (20.8%) and Hispanics (17.6%) is the lowest on record.
Forty million fewer people last year lived in households receiving government assistance than in 2016, and the food-stamp rolls have shrunk by 9.5 million over the past three years. Reduced government dependence is a social good far beyond the lower costs to taxpayers. More important are the benefits in self-sufficiency and the contributions to the community that flow from that.
Democrats on the campaign trail say the middle class is vanishing, but the opposite is true as more Americans escape poverty and others join the ranks of the affluent. Between 2016 and 2018 the number of taxpayers earning less than $25,000 declined 5% while increasing 8% for those making between $100,000 to $200,000 and 13.9% for those making more than $200,000, according to IRS data.
Pete Buttigieg claimed during the December debate that wages aren’t keeping up with the cost-of-living. Perhaps he’s spent too much time raising money in California’s Bay Area. In most other areas of the country, wage gains are outpacing the living costs including housing. Average weekly earnings in South Bend, Ind., have grown 9.9% over the last year as employers have increased both hours and pay.
These are the happy wages of a growing economy, and a labor market that has tightened in the long expansion that received a second wind from the Trump-Paul Ryan pro-growth policies of 2017-2018. By stressing growth, they have done more to reduce inequality than did the Obama-Nancy Pelosi policies that stressed inequality at the expense of growth.
Further illumination that we are less racial and that economic growth is benefiting the Black citizens substantially is covered in Joel Kotkin’s Against Tribal America:
Progressives assume that policies designed to help certain racial groups automatically benefit them, yet racial identity and economic empowerment are not the same thing. As Tavis Smiley has commented, black America got “caught up in the symbolism of the Obama presidency” but saw its economic fortunes decline under his administration. Indeed, it turns out that, for the most part, progressive politics do not especially help minorities. Due in part to economic and housing polices, notes researcher Daniel Hertz, some of the politically bluest cities— Milwaukee, New York, and Chicago—are also the most segregated. These places may boast socially aware political cultures, but minorities, particularly African Americans, are moving out.
Evaluating factors like income differentials, homeownership, business ownership, migration, and educational achievement, a study by the Center for Opportunity Urbanism (where I’m executive director) found that, ironically, 13 of the 15 best regions for African-Americans are today located in the old Confederacy, while the other two—Washington and Baltimore—were in border states. The worst performers were Democratic strongholds like Boston, Milwaukee, San Francisco, Minneapolis, and Los Angeles. Blue-state policies—including environmental regulations and higher taxes—also drive out blue-collar businesses that tend to hire minorities and raise housing and other costs. The biggest gap between minority and white homeownership rates—a critical component of the persistent divergence in wealth by race—can be found in left-leaning states like Rhode Island, New York, Massachusetts, and Connecticut.
The passion for equality and social justice often obscures the best way to achieve it. This is the epitome of virtue signaling; policies and results matter more than intent,