The Scourge of Socio-Economic Inequality

A Modest Proposal to Reduce Poverty

It has become the new normal--particularly in these heady election days--to shriek and moan about income inequality in New Zealand.  OK, so it's not helped by parties on the Left loudly alleging that the current government has committed the unpardonable sin of causing wider wealth disparity than when it took office.

But, the government buys into the assumptions and the allegations as well, since its defence is to talk about what new programmes it is going to roll out to combat economic inequality.
  If Government is the solution to the problem the implication that Government is the cause of the same.  But, then again, what else would you expect in an ideologically statist culture, such as is regnant in New Zealand.

In 2009, the Brookings Institution published a far more thorough piece on income inequality in the United States, based on a powerful data set collected in a 40 year longitudinal study by the University of Michigan.  Clearly this piece has not been on the reading list of the disparate gaggle of  folk Occupying Wall Street or wherever.

Here are some choice bits:

The third strategy is to do everything possible to increase the share of children being reared by their married parents. Good studies have linked lone parenting (or the shock of transitions between family living arrangements) with poor education outcomes, delinquency and crime, mental-health problems, lower labor-force participation, and a host of other bad outcomes for children.

Unfortunately, Americans have perfected every known way of producing lone-parent families; we are especially good at having babies outside marriage, boosting their share of all births from about 5% in 1960 to nearly 40% in 2006. We also still have the highest divorce rate among Western nations. As a result, nearly 30% of our children live in lone-parent families at any given moment, and nearly half spend time living apart from at least one of their parents before age 18. Among black children, about 70% are born outside marriage and up to 80% live in a lone-parent family sometime during childhood (many for virtually their entire childhood).

In 2007, the poverty rate for lone-parent families was over 28%, nearly six times the rate for married-couple families. Research shows that if we had the same share of children living in married-couple families as we had in 1970, poverty would decline by almost 30% without any additional government spending. The growth of female-headed families is like a giant poverty-generating machine. Even if government programs to reduce poverty become more effective, they would have an increasingly difficult time just offsetting the powerful upward push on child poverty caused by the continuing growth of lone parenting.

"The growth of female-headed families is like a giant poverty-generating machine."  Translate that to New Zealand.  No fault divorce laws, based upon unfounded human rights doctrines,  coupled with the DPB where the state pays unwed mothers to have more children, has ripped the social fabric of the country apart.  We make a modest prediction: you will not get rid of poverty in this country until you get rid of female-headed families, encouraged by legal and government recognition of sole parenting, and subsidized by the welfare system--incidentally one of the most generous in the world. 

So, since when you tax something you get less of it and when you subsidize it you get more, how about this for a reasonable proposal to combat poverty: reinstate fault-based divorce law; legislate an obligatory tax rate of 50 per cent on the party at fault in a divorce, and upon all people living together outside of the bonds of marriage.  Cut the DPB for every additional child born to an unmarried mother.  Solo motherhood will then stop being a lifestyle choice. Poverty will decline sharply in New Zealand within a generation. 

The inequality debate is actually a misdirection  Great wealth is not the problem; great poverty is.  Stealing from the wealthy and distributing it to the poor--the Robin Hood tax--does nothing to eradicate poverty.  Why?  Because poverty is an outcome of other, non monetary factors.  The Brookings piece concludes:

Poverty in America is a function of culture and behavior at least as much as of entrenched injustice, and economic mobility calls not for wealth-transfer programs but for efforts that support and uphold the cultural institutions that have always enabled prosperity: education, work, marriage, and responsible child-rearing. 

Poverty a function of culture and behaviour: it attenuates through education, work, marriage, and responsible child-rearing.  That about sums it up.