By Joseph Clines

___________________________________________

For the richest nation in the world, poverty and ever-increasing income inequality remain a massive problem. In everything from airline seating to  seating in sporting venues, the disparity between those in first class and those in economy seating is becoming more blatant by the day.  The rich continue to get richer, and the middle class is rapidly disappearing. What is so alarming about the growing income gap is that there is no remedy in sight and the trend only seems to be gaining steam.

One of the more tempting means to combat poverty in our increasingly progressive society is the practice of income redistribution. It is the most direct system for augmenting the income  of  the impoverished, but as anyone who has frequented a Bronx bodega knows, the system is prone to abuse.

Ideally, the system would serve as a safety net, allowing those who have fallen on hard times to get back on their feet and to aid the members of society who are unable to support themselves. In the real world, however, people do not act ideally. They do not respond almost exclusively to incentives. Income redistribution destroys the incentive to work, directly by creating less of a need to earn income and indirectly by fostering a “loser” mentality that would cripple the ambitions of even the most earnest job seeker. Handouts foster dependency and would likely result in a semi-permanent segment of society made up of individuals who are able to work but choose to exist at the mercy of government checks

An interesting article in The Atlantic raised one potential solution to halving poverty: distributing $3,000 to each person falling below a determined poverty line and allowing the recipients to use the funds as they see fit. Economics professor Robert Derrell believes that the practice could be feasible and is especially fond of the government allowing recipients to decide the best usage of the money themselves. Derrell also pointed out that enacting the redistribution policy would be difficult without causing some harm to the economy at large. Derrell believes that the combination of tax increases, spending cuts and an unbreakable political gridlock makes the real-world implementation far trickier than it appears in print.

The difficulty in enacting such a policy is that our GDP is finite and the funds would have to be reallocated, mostly away from a military budget that many view to be inflated. Our military budget may appear excessive; however, thousands of jobs would be lost in trimming the fat off the budget, as well as creating legitimate national security concerns. I believe that the societal ramifications would be far larger than juggling the funds of our national budget.

On paper, this makes perfect sense. In practice, abuse occurs and the lack of incentive to work harder causes the economy to stagnate.

  The Atlantic article paints the decision to implement this system as a “no brainer” of sorts however, allowing the recipients of the funds to use the money as they see fit would be chaotic. In many cases, the money would become deadweight on our GDP. What would stop a recipient from taking the handouts to a casino? The recipient would not be better off, and the funds, intended to help the impoverished, would be lost.

The puritan work ethic is the basis of our national identity. America is a nation of strivers, as proven by the story of immigrants coming to America for the opportunity to better themselves. The basic promise of the “American Dream” is that people can better themselves and their families through hard work and perseverance through struggles.

As tempting as it may be, handouts to those at or near the poverty line are not the solution, and to insist that they would be is to neglect the larger causes of poverty. Handouts will not bring back the disappearing middle class, and they will certainly not spur job creation. We will have to deal with the reality that the solution to poverty is not merely one government check away.

________

Joseph Clines, FCRH ’14, is an economics major from Malverne, N.Y.