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Obama signals he’s given up on the economy

obamanomicsby Glenn Harlan Reynolds

Last week, President Obama gave a much-touted speech on “income inequality.” But while inequality is a valid concern, it’s not so clear that unequal incomes are the biggest problem America faces.

More troubling — as figures as distinct as Slate’s Matthew Yglesias and National Review’s Mark Steyn both noted — is the growing divide between an America where people have jobs, and an America where people live off of government benefits.

As Yglesias observed:

The Washington, D.C., metropolitan area has become an island of prosperity in an ailing country. But D.C. itself has an 8.9% unemployment rate even as it sits at the center of a metro-area unemployment rate of just 5.4%. For people who haven’t gone to college — the kind of people who live in the neighborhood where Obama was speaking — the unemployment rate is 20%. That’s a disaster. And while Obama talked about plenty of things that could help those unemployed families — subsidized health care, better schools for their kids — he didn’t really talk about anything that would get them jobs. The biggest applause line of the speech was about raising the minimum wage, which is great, but also doesn’t help you very much if your current wage is $0.

And Steyn weighs in on a similar note:

‘Work’ and ‘purpose’ are intimately connected: Researchers at the University of Michigan, for example, found that welfare payments make one unhappier than a modest income honestly earned and used to provide for one’s family. ‘It drains too much of the life from life,’ said Charles Murray in a speech in 2009. ‘And that statement applies as much to the lives of janitors — even more to the lives of janitors — as it does to the lives of CEOs.’ Self-reliance — ‘work’ — is intimately connected to human dignity — ‘purpose.’ So what does every initiative of the Obama era have in common? Obamacare, Obamaphones, Social Security disability expansion, 50 million people on food stamps. … The assumption is that mass, multigenerational dependency is now a permanent feature of life. A coastal elite will devise ever smarter and slicker trinkets, and pretty much everyone else will be a member of either the dependency class or the vast bureaucracy that ministers to them.

Even if incomes are equal, in other words, they’re not really equal if one is earned, and the other is merely bestowed. (This is often true even when the incomes in question are large ones, as trust-fund types are notoriously prone to being aimless and dissolute.)

This problem of “work inequality” isn’t addressed by President Obama, and, in fact, is exacerbated by his programs. Increased dependency on the government may have its political advantages — as The Rainmakers sang in their 1980s hit, Government Cheese, “They’ll turn us all into beggars ’cause they’re easier to please” — but it’s incompatible with the notion of social equality that underlies American democracy. Beggars, even if they’re doing pretty well, are dependents, and a dependent class can never really be equal members of the polity.

In science fiction writer Jerry Pournelle’s future history from the 1970s, 21st century America became divided into two classes: “Citizens,” dependent on government, mostly residing in “welfare islands” where drugs and sex provided a substitute for purpose, and “Taxpayers,” who actually had jobs and enjoyed certain additional legal privileges. That future seemed farfetched, then. It seems less so now, as President Obama talks about “Promise Zones” for the poor.

So why is President Obama less interested in the shortage of jobs and more focused on mere “income inequality?” I think there are two reasons. First, while expanding the dependency class might be bad for America (and for the dependents), it’s good for the political party that passes out the pork. And second — and this is more troubling — I think that Obama has no idea how to address the underlying jobs problem. Let’s hope our next president has some better ideas.

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Glenn Harlan Reynolds is professor of law at the University of Tennessee and the author of The New School: How the Information Age Will Save American Education from Itself. He publishes articles periodically in USA Today. He blogs at InstaPundit.com.