Work all day in the Blue Sky Mine….

An alert reader fired off this e-mail query: In my humble opinion, does the free market system guarantee that the poor can become rich–or at least become not poor?

Economic theory doesn’t provide a real answer to that. But my intuitive answer to the question is: No.

I’d say that a free market gives the poor a cleaner shot at improving their lot than a socialist system does, given that free markets generate more wealth. But that’s about it. Better odds…and probably better dentistry and more abundant cheeseburgers.

But for all the great opportunity in the states, rags to riches stories in America are just as much legend and myth as they are reality. There are all sorts of tangled theoretical concepts we could dress up and put center stage at this juncture–complicated actors on the economic set such as Pareto Optimality, Economic Rents, the trading dynamics rooted in Initial Endowments– but that would take more toil and thought than yours truly is willing to commit here.

No, better to take a sweeping and empirical glance at things. The working poor in the states, or anywhere else for that matter, are generally so busy trying to tread financial water that getting ahead of the game seems like an impossibility.

Once they’ve paid the taxes (the biggest expense for the average U.S. family), the rent, the car payment, the insurance, and everything else, they find themselves pretty much out of month at the end of the paycheck. Sure, in theory, any of these struggling proles could start a business on his kitchen table and watch his fortunes snowball.

Some do.

Most don’t.

Many simply can’t, or aren’t interested in business, or whatever. And even if they have the innate skills and imagination necessary to have a theoretically viable enterprise, they’d still be dead in the economic water because most would lack the capital necessary to start the scheme. Money is hard to raise for a start up business. In many cases, it is quite literally impossible.

If entrepreneurship is long odds–and it is–then there’s the second job routine. Here, Big Brother takes an ever bigger chunk of the earnings, though, as higher marginal tax rates kick in. A rich guy may enjoy advantageous capital gains treatment for his investments, but a Working Joe gets taxed full bore for every second of his toil. Returns to labor, in other words, are disadvantaged compared to returns on capital.

Which means that a laborer finds his finances like those fancy gym machines that offer “progressive resistance.” The harder you push, the heavier the weight gets. That’s great if you’re trying to build muscle, but not so great if you’re trying to build a future.

Many of the working poor get preached to by manipulative big government types, who seduce them into thinking that socialism will somehow cure their ills. It won’t. If you think Bill Clinton and his cabal are anything but dictatorial elitists, you’re nuts.

But on the other hand, the constant condescension the working poor face from some of the rich, who insinuate that their tough lot in life is somehow exclusively their fault, isn’t so easy on the ears either. A lot of folks work for the Man, pay their rent to the Man, and have had a belly full of the whole deal in their own grim shafts in the Blue Sky Mine.

Well, so much for defining–or at least acknowledging–the situation. Sadly, most “solutions” offered are simple-minded, but we can take a thoughtful look at that realm in the near future.

Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. “Ed4Saipan@yahoo.com”