Under capitalism, the rich get richer and the poor get poorer.
Sigh. How many more years are we going to have to put up with this malarkey before headline writers, politicians, and others whose job or whose preference it is to speak in clichés finally acknowledge that it's not true?
Those types must have enjoyed themselves a few weeks ago when Statistics Canada released its houshold income figures for the 1980's. Never mind that the text of the news story didn't even support the second half of the cliché. There was the headline, in the Globe and Mail: "Rich get richer" --an open invitation to mentally supply the missing words and then to wallow in guilt.
As an economic doctrine, this cliché doesn't stand up very well to the test of common sense.
Three hundred years ago, the richest people around were the royalty. They had no central heating, no hot running water, no flush toilets, no electric lights. They were likely to die of tuberculosis, smallpox, bubonic plague or something equally horrible at a relatively early age. Their children died in infancy with dismal regularity.
They had no radios, television, or movies for entertainment. If they wanted to talk to someone, they had to wait until he could be summoned to the scene; there were no telephones.
If they lived north of the tropics, they never ate oranges or bananas. If they wanted to travel fifty miles, they spent all day doing it, in considerable discomfort. City streets were filthy and smelly; highways were dangerous; rivers flowed with untreated sewage.
Life was, in the words of Thomas Hobbes, nasty, brutish and short--and that was for the rich. The poor were infinitely worse off. Many couldn't afford even a single change of clothing. Starvation hovered constantly in the background.
Today in Canada, even the poor live better in virtually every respect than the royalty of three hundred years ago. We all take for granted our heated homes, our plumbing, our electricity, our antibiotics, our telephones, our cars and our tropical fruit.
If we want a nice, neat headline to sum up the last three centuries of western history, it should be: under capitalism, the rich got richer, and the poor got immensely richer.
So why does the cliché persist? Why have we been hearing more and more about poverty in North America with each passing year? Has the three hundred year old trend changed?
Social scientist Charles Murray, in his book Losing Ground: American Social Policy, 1950-1980 argues that since the mid-1960s the poor in the United States have indeed been losing gains they had made earlier. He details how their standard of living has declined in many important respects: income, employment opportunities, education, victimization by crime, and family breakdown.
It's a depressing story, especially because Murray's analysis proves that it doesn't have to be that way. In each area where progress has been lost, he traces the cause to the backfiring of some policy or program that was designed to have the opposite effect.
The problem is not, as the anti-poverty lobby would have us believe, that we have been ignoring the plight of the poor. On the contrary, we have been spending ever increasing amounts on a kaleidoscope of idealistic schemes. The problem is that each program supposedly designed to let the poor help themselves contains what Murray calls "incentives to fail."
To borrow some recent trendy military jargon, in the war on poverty declared by Lyndon Johnson in 1964 and still being fought today, the poor are being killed by "friendly fire."
A prime example is the minimum wage. Every time it's raised, people at the bottom end of the wage scale lose their jobs. Some businesses become unprofitable and simply shut down. Others replace expensive human employees with now relatively cheaper machines. Those few who can afford to pay the new wage suddenly have a choice between hiring lower skilled workers and higher skilled workers at the same price. The lower skilled workers, who probably need their jobs more desperately, are left out in the cold.
Then someone gets the idea that what's really needed is better education, especially job training programs. One example is Ontario's "Futures" program, a scheme designed to get high-school dropouts into the work force by upgrading basic skills, then subsidizing entry-level positions.
I spoke recently to a sixteen-year-old girl who had quit Grade 9 and gone into Futures. She said they studied "the same stuff--math, English, computers" as in high school, but she got paid for going. What teenager could be expected to pass up a deal like that? It would last only thirty-two weeks, but teenagers aren't noted for having distant horizons.
The Futures program doesn't encourage kids to get an education. If anything, it encourages them to drop out. It provides a rewarding alternative to the onerous task of completing high school. It provides an incentive to fail.
For three centuries, capitalism has been helping the poor. For three decades, the welfare state has been reversing the progress. The choice seems clear. If it just so happens that the rich get richer too, so what?