Imposing income equality through redistribution fails to promote individual advancement. That’s a point made by Angela Rachidi of AEI in congressional testimony on July 13, 2023. So important. Welfare pays out benefits but usually fails to promote personal advancement.
Here are her comments on individual advancement.
“My final point is that there are better ways to reduce poverty that address concerns over employment and that better target those who are in need. Turning the CTC into a child allowance has implications beyond simply reducing short-term poverty rates. Nobel Laureate Dr. James Heckman from the University of Chicago made a relevant point when describing Denmark’s welfare state, which includes generous universal child benefits. He noted that while Denmark experiences lower income inequality compared to the US because of their universal social policies, lower inequality has not translated into smaller education and skill formation gaps – gaps that still prevent people from progressing over the long term. His point was that imposing income equality through redistribution fails to promote individual advancement.”
This is an excellent point. Too often, welfare focuses on short-term issues such as food security or housing. But for long-term success, individuals need to get good-paying jobs, which means personal advancement ultimately. Redistribution and universal basic income miss this point. So does imposing income equality.