4 Ways Government Policy Favors the Rich and Keeps the Rest of Us Poor
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The rich really are different from you and me. There’s the obvious, of course: They have a whole hell of a lot more money. But just as important, they are able to preserve their wealth from the forces that decimate the earning power of your average American. While government programs for working or jobless Americans are under constant attack, the state frequently intervenes on behalf of the rich, or at least lets them keep their earnings, tax free (leaving the rest of us to pick up the tab).
Republicans in Congress, and to a lesser extent the Obama administration, seem to believe that austerity is the best way to deal with our recessionary woes (despite all economic evidence to the contrary). Instead of unraveling the safety net, voters should consider all the ways the government aids and abets the one class of people who clearly don’t need help.
1. Protectionism for high-income professionals, free trade for everyone else
Economists incessantly extol the importance of free trade. Opening up our markets through treaties like NAFTA and CAFTA results in a flood of cheap consumer goods, which we all enjoy. However, these policies further expose America’s workforce to overseas competition, accelerating the decimation of middle-class jobs. The wounds inflicted by globalization are often shrugged off as a sad, but inevitable, part of the process. Those who would try to preserve these jobs are denounced as Neanderthalic protectionists.
But while many Americans are forced into low-wage work with no benefits, our doctors are the highest paid in the world. (Every year the medical profession dominates the Forbes list of best paying jobs in the U.S.) How did this happen? They protected themselves from overseas competition. In 1997, a mere three years after NAFTA, the American Medical Association argued that licensing rules for American doctors were too loose and demanded that we greatly restrict the number of foreign doctors practicing in the U.S. Our political elites happily obliged. Five years later, the number of foreign medical students had fallen by half. Our immigration laws also preserve the privilege of the professional classes by banning the government from hiring foreigners in most instances and snarling those who want to work in the private sector in a staggering amount of red tape.
“Our doctors, on average, get paid twice as much as doctors in Western Europe and Canada,” Dean Baker, co-director of the Center for Economic and Policy Research, said in a phone interview. “The income of high-end professionals is a cost the rest of us bear. Our wages are lower because whatever we take home doesn’t go as far if we pay our doctors $200,000 a year, where they’d get $100,000 in Western Europe.”
These government-protected wages also contribute to our grotesque health care costs that are far higher than those of any other developed nation. If we let people from India or China practice medicine here, we would have more medical professionals, pay them less, and pay less for health care. (Many professional workers are subject to the same principal, to a less extreme degree.)
“Most workers in the U.S. are getting paid the same or less as their counterparts,” Baker said. “If you don’t do the same for high-end workers, that’s class war. People have to understand they are being ripped off.”
2. Rich and own a big house? Here’s some money!
In theory, everyone should love the mortgage interest tax deduction. The lucky homeowner gets to deduct the interest on their mortgage from loans to buy, build, or improve her home directly from her income! (Rent is not deductible because renting, as George W. Bush helpfully explains, is unpatriotic.)