The Problem of Income Inequality

Thursday Thoughts for August 20, 2020

This week’s topic is about one of our nation’s greatest problems: income inequality.  We have a nation of haves and have-nots and the gap has been widening.  This is not only scary, but dangerous to all of us.  One of the underlying principles of our nation was the opportunity for prosperity for oneself and one’s family.  Please note that I used the word opportunity, not guarantee.  Achieving this goal should require hard work and effort over a number of years.  But, in our current society, we have a number of structural barriers that prevent many from having a reasonable opportunity to succeed.  Rather than going through just a list of barriers, I am going to outline a number of the needed solutions.

1. The basic needs of life

A person has basic needs that have to be addressed in order to survive, let alone prosper.  This list includes food, clothing, shelter, and healthcare (both physical and mental).  It is appropriate for the government to have programs to help with these items, but many of these programs need fundamental reform.  When I was governor, we looked at the list of programs and found dozens of them that were well-meaning but generally ineffective.  Most are from the federal government with lots of complex mandated rules.  When these programs were created, it was done with good intentions; but they have become too numerous and complicated so instead of treating people as individuals, they are treated as program participants in a wide variety of silos.  We need to step back and help participants as real people by working to identify the underlying issues holding them back from economic progress.  We built several programs to work at helping with the core issues, including Community Ventures, Pathways to Potential, and Healthy Michigan.

2. Education

Everyone knows education is critical.  The old principle relevant here is to teach someone how to fish, rather than giving them fish.  There are at least two key elements to education - access and effectiveness.  We have a well-established system of access for K-12.  But, we haven’t done well on pre-K or higher education regarding access.  

More below on pre-K.  On higher education, constantly growing costs have become a barrier to access. In my personal experience, I was able to work my way through the University of Michigan with limited help; however, I don’t know how someone could do that today.  

Fortunately, there are a number of programs to address the issue but many more are needed.  Success stories here include The Kalamazoo Promise, The Detroit Promise, and The Go Blue Guarantee.  I was proud to have been one of the founders of The Detroit Promise, which provides higher education funding to any Detroit student.

At all levels of education, we need to improve the effectiveness of our programs.  We have far too many students drop out of programs or not learn enough to be successful in the employment marketplace.  We need much stronger measures of success and tracking systems so we can help every student achieve success.  As governor, I wanted to explore tracking students’ school and work until age 25 to see if they had successfully found a career with reasonable pay and opportunity.  Lots of people told me why this was hard and wouldn’t happen, but It should happen!  

One important element from our education initiatives was learning about the value of success coaches.  We had success coaches in The Detroit Promise.  Their role was to help participating students with issues in life outside of the classroom.  In many cases, students had problems including their living situation, transportation, or finding a caring person to talk to. The coach helps with these issues.  At the K-12 level, Pathways to Potential involved putting human services people right into the school so they could more directly help students and their families.  It worked.  

3. Child care and Pre-K education

This topic is a crisis today due to COVID-19 and its impact on traditional childcare centers.  If parents don’t have a decent alternative option to care for their children while they work, this barrier becomes a huge problem in their life.  I have combined these two topics since I believe we should be working to do as much education as possible during a child’s early years.  I was proud that Michigan led the nation in additional investment in this area during at least two years of my administration.  We need to become much more innovative and proactive in creating more options for caring for our youngest children.  Too often, this area is treated as a secondary subject to K-12 and higher education.  That’s backward!  What happens in those first few years of life will have a disproportionately large impact on their lives.  

I became a nerd during my youngest years .  I had a family that encouraged me to learn about everything.  I finished my sister’s fourth and fifth grade readers by kindergarten and had collections of almost any item including rocks, stamps, sports cards, and milk bottle caps.  Support during the most formative years is critical. 

4. Technology

Part of the income inequality problem is the digital divide.  We need to make technology universally accessible.  There are three pieces to the solution: high speed access, equipment access and learning resources.  High speed access is a problem in both our urban and rural areas.  Government should be much more aggressive in ensuring success here.  This doesn’t mean we will all have the world’s best service; but it should mean that we can successfully live and work throughout our nation.  

The equipment access problem is a larger issue given its relatively high expense.  With COVID-19, we also are seeing shortages of portable computer equipment.   There are good products such as the Chromebook which are less expensive; but, we need to keep working to bring down the price points even more.  

Many people talk about these first two points; but better learning resources are just as important and even harder to find.  Without proper learning resources, a computer is just an expensive paperweight and likely will not be properly cared for.  We need to invest much more into people and online tools to show students how to leverage exciting technology.

5. Discrimination

This is a major topic of discussion today.  We need to do better.  I include all forms of discrimination in this category: sex, race, ethnicity, religion, gender, etc.  This topic is very challenging since it needs to address not only explicit discrimination, but implicit discrimination.  All of us need to work harder to understand, appreciate and support one another on a human level. 

6. Economic growth

A lot of people have been communicating about income inequality, but their discussion tends to focus on giving more money to the disadvantaged.  I understand the point and agree with the overall goal of increasing standards of living.  But, quite often, this comes across as a win-lose proposition.  Essentially, the commentary boils down to taking money from one person and giving it to another.  Government does that today with our tax and social services systems.  But, there are limits to the effectiveness of this approach.  In the 1960s, we had income tax rates that reached 70%.  This didn’t work well for anyone. 

I believe that we need to focus on growing the economy so everyone can win.  In recent years, the primary beneficiaries of economic growth have been the wealthy.  We need to change this mix by investing much more in the areas above.  In addition, we need to do more to encourage innovation, small-business creation, and economic development in urban centers and rural areas.  

Income inequality is one of our nation’s greatest problems and long-term threats to our survival.  Too often, we just talk about this topic or we implement a piecemeal solution to one segment of the problem.  We need to be addressing this topic strategically.  There is no short-term solution, major progress will realistically take decades.  It is critically important that we operate in a win-win fashion as much as possible.  We have too many people losing now.  Let’s get back to building the American Dream for all Americans.

I hate to share this next thought, but, it’s important.  I just mentioned that the income inequality solution has to be strategic, take a long-term approach, and be win-win.  Our current political culture is terrible at all three of these items.  

We need leadership that believes in civility, service to all Americans regardless of who they voted for, and a win-win vision that future leaders are willing to follow even if they are from a different political party. Think about this when you are voting for candidates at all levels of government. Who is going to work hard to accomplish something and not just fight hard against their opposition?

Remember, Relentless Positive Action in your life will help you and others. So, I wish you RPA every day!