Three weeks ago a typically anonymous article in The Economist reviewed two of the less obvious obstacles to reducing inequality and poverty in America ...
Economics focus: Don’t look down | The Economist August 13th, 2011
... America is far less inclined than many of its rich-world peers to use taxation and redistribution to reduce inequality. The OECD, a think-tank, reckons that taxation eats up a little less than 30% of the average American’s total compensation, compared with nearly 50% in Germany and France...
... Broadly speaking, countries that are more ethnically or racially homogeneous are more comfortable with the state seeking to mitigate inequality by transferring some resources from richer to poorer people through the fiscal system...
... A new NBER paper finds evidence for an even more intriguing and provocative hypothesis [about why the poor may not support poverty reduction]. Its authors note that those near but not at the bottom of the income distribution are often deeply ambivalent about greater redistribution....
... Instead of opposing redistribution because people expect to make it to the top of the economic ladder, the authors of the new paper argue that people don’t like to be at the bottom. One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions...
The claimed relationship between tribal homogeneity and support for progressive taxation is hard to prove, but it feels consistent with the humanity I know. The second claim, that poor Americans may fear assistance that may make them "better but last", has some college-student experimental evidence (for what that's worth) -- but it also feels familiar. Pratchett called this "Crab Bucket" in his novel Unseen Academicals.
These obstacles don't make progressive taxation and poverty reduction impossible, but they do make it harder. It's worth understanding where resistance comes from.
