by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
A political reporter twitterpated by a progressive charlatan is old hat, of course. Even if this one was as tawdry as a dime-store novel.
Nevertheless, I was a little surprised that Rob Christensen still believes Edward’s UNC-Chapel Hill poverty center was not merely a brazenly obvious campaign ploy.
Recall its history:
From the outset, it was clear that the “Edwards center” was a vehicle to keep him politically viable till the 2008 presidential campaign. The center’s formation was announced with copious denials, of course, that Edwards had any political motivations behind it. Then-UNC chancellor James Moeser assured everyone that “We’ve tried to keep this on an academic footing, and he will have his own political life off the campus.”
The denials rang hollow as soon as they were uttered. Edwards announced the center’s formation that night “at a Democratic Party dinner in Manchester, N.H., site of the first primary of the 2008 campaign.”
He then proceeded to do very little with the center, even as it enhanced his own political life off campus. Prior to leaving to run for president, Edwards reportedly made only 20 appearances in two years with the center. That count was quite generous; it included his showing up to the opening reception and his spending an hour having coffee with students.
On October 25, 2006, The Daily Tar Heel ran an investigative report entitled “Edwards on the Road: Travels Point to Political Ambitions.” The report showed that Edwards had spent most of his time not on campus, but instead in the states considered crucial to securing the Democratic nomination.
The center’s online “Events” section was such a running joke that it sported the same typographical error for over a year. Perhaps it would be unfair to pick on a typo, but this particular one was “The [sic] are no events posted at this time.”
Research on work, poverty, and opportunity: two examples
Coffee hour notwithstanding, had the center done actual, useful work on issues of work, poverty, and opportunity (those terms have real meaning, you know; they’re not just buzzwords for campaign press releases), it would have offered productive output such as this, from Stephen Slivinski, a senior research fellow at the Arizona State University Center for the Study of Economic Liberty.
Slivinski’s report explores an innovative and practical idea: “How State Occupational Licensing Hinders Low-Income Entrepreneurship.” He uses research findings to argue that entrepreneurship can be a ladder out of poverty for low-income individuals as well as a boon to low-income neighborhoods.
Here is an excerpt (with emphasis added):
…one of the most important lessons from the past 20 years is how entrepreneurial activity offers an avenue out of poverty for many. As decades of studies show, entrepreneurs can be extremely effective in fostering local job creation and driving economic growth.
Such cases are often found in low-income areas and immigrant communities. As Federal Reserve Bank of Kansas City economist Kelly Edmiston writes:
“Entrepreneurship may yield a double dividend in low and moderate income communities. Many of the retail and services establishments available in higher income areas, such as grocery stores, often are not available to low and moderate income people…[who also] face transportation challenges. Entrepreneurial activity not only provides income to the entrepreneurs and perhaps others in the community, but also provides needed goods and services.”
Some studies have noted that large shares of entrepreneurs are centered in industries that rely on low-wage workers — often the type of workers who find themselves below the poverty line, making those potential workers the most likely new hires for an entrepreneur….
It is for these classes of families that entrepreneurial endeavors are the most important. Evidence of how entrepreneurship can be a ladder out of povertycomes from the Aspen Institute. Researchers there conducted a five-year survey in the mid-1990s, following more than 1,500 low-income entrepreneurs across the nation. Close to three-fourths (72%) of those low-income entrepreneurs experienced an increase in their household income between $8,000 and $22,374. Their household assets increased by an average of more than $15,000 over five years. Perhaps most impressive, more than half (53%) had moved out of poverty in five years. Additionally, those who were on welfare before becoming entrepreneurs were able to generate enough income on their own that, on average, the amount of public assistance they accepted declined by 61 percent
What stands in the way is occupational licensing, especially in a state like North Carolina. Slivinski ranked N.C. tied for 13th highest among the states in percentage of low-income occupations licensed.
I have also recently cited work from the Mercatus Center at George Mason University: a comprehensive study finds that “Countries with more burdensome entry regulations — that is, countries where red tape makes it harder to set up a business — tend to also have greater income inequality.”
As stated in the summary (emphasis added):
Entry regulations require would-be members of a specific profession to pass exams or meet education or experience requirements in order to obtain a license to work. Proponents claim that such regulations might improve the quality of service, but most studies have shown that there is no relationship between licensing and quality.
Entry regulations may, however, increase income inequality by corralling poorer workers into lower-paying, unregulated fields or forcing them to operate illegally and incur the higher costs of doing so. If entry regulations require expensive education, testing, and fees, workers may choose instead to accept jobs that pay less and don’t take full advantage of their skills.
A new study for the Mercatus Center at George Mason University examines the relationship between income inequality and the number of regulatory steps necessary to start a business. Looking at 175 countries and multiple variables, the study finds that there is a positive relationship between entry regulations and income inequality.
To be clear: By “positive relationship,” it doesn’t mean good relationship. It means as entry regulations increase, so does income inequality. It also means if entry regulations fall, so would income inequality.