Dan Crenshaw’s Refreshingly Rational Take on Income Inequality

I’m pretty sure it’s clear by now that I have a huge crush on Dan Crenshaw (and I don’t think that makes me unique among COTR writers). So, while his recent comments about income inequality and perfectly civil demolition of leftist thought on the matter is hardly surprising, and “Dan Crenshaw is amazing” is hardly a newsworthy headline, I still have to tell y’all about it.

Transcript via the Daily Wire:

CRENSHAW: [It’s] great to be at this hearing, and it’s great because it exposes two very different ways of thinking about our economy, opportunity, and the mutually-shared goal of overcoming poverty.

So, on the one hand, you have a deep and persistent focus on inequality – it’s defined as the gap between the rich and the poor – and at first glance, that seems pretty reasonable. But in reality, it means you’re dividing your attention. Half your attention is focused on protesting the wealthy – and these days that seems actually where most of the attention is – and that leaves only a small amount of focus on the real issue, which is people in poverty and their ability to move up the economic ladder. This is the kind of backwards thinking that leads to ideas like Andrew Yang’s, where we raise taxes on the rich only to give it right back to them in the form of universal basic income. It’s hard to imagine a more inefficient and ineffective way to reduce poverty.

As a conservative, our approach is different. Instead of creating resentment against success, we focus on who actually needs our help, which is the people who are having trouble moving up the economic ladder. After all, the fact that there’s a much wealthier person down the street from you is not the problem. The problem occurs that if you can’t find opportunities even when you make all the right decisions. So, the first step to understanding any problem is to get to the truth. Mr. Ponnuru, I want to go to you on this. We’ve heard inequality is worse than ever. Is that true – especially if we use a more accurate measure of inflation and account for welfare programs and cash transfers?

Ah, the subtle rebuke of misplaced priorities without naming any names (probably because there’s too many to name). The unabashed critique of universal basic income. Sheer poetry.

Ramesh Ponnuru, whom Crenshaw addresses toward the end of this quote, is a journalist, editor, and, as it pertains to this hearing, a visiting fellow at the American Enterprise Institute. He responds,

No, it does not appear to be true. The Congressional Budget Office’s reports on the distribution of income suggest that income inequality peaked in 2007, that it has been falling since then, and so, we are, I think to some extent, looking at a problem in the rearview mirror. Of course that could change. Maybe next year’s numbers will be different, but the trends over the last decade or so have been toward shrinking inequality.

Dan then asks Ponnuru to explain who, exactly, we’re talking about when we talk about the “bottom quintile” of people in the US. Ponnuru explains,

So, people in the bottom quintile differ from people in the other quintiles across a variety of measures. One of the more important things to look at is the number of workers in the household. The top quintile is going to be much more likely to have two earners in that household, and the bottom quintile is much more likely to have zero earners in the household. Obviously, that’s going to make a huge difference in how much income you’ve got. There’s also the question of age. If you’re retired or if you’re young and in school, you may very well be in the lowest quintile – it doesn’t mean you are always going to be in that quintile or always were. Lifetime inequality is lower.

He acknowledges that inequality has increased “however you measure it,” but stresses the importance of including these caveats in one’s estimation of the issue. Crenshaw then adds:

It also turns out that 56% of Americans will at some point in their lives be in the top 10% of earners. 73% of Americans will be in the top 20% of earners in their lifetime. It’s an amazing statistic. Doesn’t mean we can’t always do better, but it’s an amazing statistic. Also turns out my colleagues are right that the middle class is shrinking – it’s just not in the way that they think. Turns out the data shows the middle class is shrinking because they’re moving up into higher income households over time. This is all good news – doesn’t mean we can’t improve – the point is that the rhetoric about inequality is not only inaccurate, but it’s just flat-out unhelpful to the people we are actually trying to help.

I love that he repeatedly acknowledges that we can do better. If leftists are looking for an unsympathetic, Machiavellian free market Republican, they’re not going to find one in Crenshaw. He wants results– as do we all, regardless of where you are on the spectrum. The difference is that Crenshaw actually takes the step past identifying and measuring the problem to actually solving it.

So let’s talk about solutions really quick.

If you want to empower people to rise up instead of disempowering them with more handouts, how do we do that? You don’t need to take my word for this. Mayor Bloomberg, a prominent Democrat, studied this extensively with 30 different pilot programs, and what they found is there’s different solutions for different kinds of poverty, and they’re localized solutions. We have to be thinking about it that way.

So back to you, doctor. How else can we empower people to rise up? We talked about occupational licensing. I have a constituent in my district – her name is Ashley. She owns a hair wash and style company – she can’t find stylists because Texas requires a thousand hours of licensing to wash and dry hair. I learned how to free-fall out of an airplane at 30,000 feet in less time than that. That’s crazy. Can you talk about more solutions like that. You mentioned housing. What kinds of deregulation, what kind of vocational training can we be working on so that we empower people to rise above their current economic status?

Ponnuru is regrettably limited on time here to get into specifics, but reiterates the importance of increasing mobility and the role of governmental deregulation in doing so. The Foundation for Government Accountability breaks down the harm done by occupational licensing; they cite a 2012 study by the Institute for Justice that found that licensing requirements cost an average of $209. What does this accomplish, besides creating a never-ending loop of I don’t have a job -> I’ll learn a trade -> trade has an exorbitant licensing fee -> I can’t afford that, because -> repeat ad infinitum.

Now, will reducing occupational licensing requirements/costs solve all the poverty issues in America? Of course not. Is it a promising place to start, especially compared to taxing the crap out of the rich? Absolutely.

Go get ’em, Crenshaw.