Income and Wealth Inequality

In a recent speech, our President said that income inequality was “the defining issue of our time.” The new mayor of New York, Bill de Blasio, vows to use government to attack income inequality. The Occupy protesters used the “99%” number to represent the wealth and income gaps between the top 1% and the bottom 99% of people in the U.S.

Yet it’s easy to prove nobody truly believes that income inequality, or wealth inequality, in a society is wrong or immoral.

What?

oprah-and-tedImagine Oprah Winfrey (net worth: $2.8B) is on a yacht with Ted Turner (net worth: only $2B). Oprah is worth a whopping $800 million more than poor Ted.

$800 million is a gargantuan gap in wealth.

$800 million dollars is enough to buy Ted a fleet of 400 two million dollar yachts, or send 8,000 of his descendants to a nice college. It’s more than the gross national product of many countries.

Obviously, Oprah needs to correct this immoral inequity immediately by giving Ted $400 million of her ill-gotten gains to even things out, right?

Of course not.

No sane person would protest the huge, $800 million dollar wealth gap between Oprah and Ted as being reprehensible, immoral, or unfair.

Well, that’s just two rich people. What about the wealth gap between a rich and a poor person?

Many might protest the wealth inequality between Doug McMillon, CEO of Walmart, and his lowest paid employee, even when that gap is only $60 million. So $800 million inequality is fine, yet $60 million is too much? That makes no sense.

An arbitrary rule is not a rule.

Well, then it’s not the absolute dollar amount, it’s the ratio.

Nope, you don’t believe that, either. Wall Street Protest

Some of the Wall Street brokers laughing out of the windows at the Occupy protesters make well over a million a year, or approximately 100 times what a Walmart worker makes. But if a 100x gap is immoral, then Oprah, who makes $385 million a year, should definitely be transferring oodles of her wealth to these multimillionaire Wall Street shlubs.

No, not even the most progressive, class-warfare warrior, Socialist Party-card-carrying Daily Kos reader would demand that these Wall Street millionaires go on welfare.

Those are all bad examples. Anyone who cares about social justice believes that as a society we need to work towards more income and wealth equality.

Nope. You don’t believe that. poverty_India_Mumbai_family_washing

Want more proof that inequality is not the issue that anyone cares about? Let’s say there was a vote that would make everyone in the U.S. exactly equal in net worth. And that net worth was the average net worth of a person in rural India or sub-Saharan Africa.

Even though that law would result in perfect wealth equality in the U.S., you know no one would ever vote for it, including you.

I need more proof.

Okay. Let’s say you had a choice between two possible future Americas:

1. A country where the poorest households had an income of $10,000, and the richest had an income of $20,000

or

2. A country where the poorest households had an income of $20,000, and the richest had an income of hundreds of millions

Which would you vote for?

Obviously, if you have any compassion at all, you would vote for the second, even though it is far more unequal than the first. And this example most closely resembles the actual choice we need to make, between socialism and capitalism.

So clearly, inequality is not perceived as a problem by anyone (except, maybe, for those driven by simple envy and not social justice). We’ve proven that.

Okay then, so if it’s not inequality, what is the issue we all care about, really?

We don’t care about wealth inequality when people are doing well. We care when households on the low end of the income scale are struggling to pay bills, or can’t afford the basic necessities of life.

So, we’ve learned the issue is not “correcting inequality.” It’s eliminating poverty.

And while it might seem to some that there are many reasons a household lives in poverty, in truth there is only one: The household has no wage earner with a good paying job.

Well, that changes the picture–and the goal–dramatically!

If even the very poorest households in America could live what we would currently call a “middle class” lifestyle, and easily afford the basics (and then some), would anyone (besides the simply envious) protest inequality? Because if the answer is no, then the goal changes. The goal is no longer reducing inequality.

The goal is simply getting everyone who is able and willing to work a decent paying job.

How do we do that?

We know that businesses must make a profit from each employee to cover their costs and overhead. And we know not all employees are profitable (if they were, every company would hire every last person they could find, of course!). So, in order to solve the problem of poverty, does it make more sense to:

  1. wage war against companies, regulating and taxing them to make it extremely difficult for them to make a profit from each new employee?
  2. or the opposite?

More:

https://jmellicker.wordpress.com/2013/10/20/wiping-out-poverty-again/

https://jmellicker.wordpress.com/2013/01/03/war-on-poverty-now-officially-over/

https://jmellicker.wordpress.com/2012/08/27/the-progressive-conundrum/

https://jmellicker.wordpress.com/2012/11/30/robbing-peter-to-pay-paul-is-not-progress/

 

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One thought on “Income and Wealth Inequality

  1. I admire your ability to cut through all the rhetoric and cut to the chase in the discussion. If only our elected officials were willing to do the same.
    Thank you Josh for continuing to educate and enlighten those who have for so long believed in the false promise that government is the answer. Individuals given the freedom to achieve to their highest ability and true potential is the only true moral answer to alleviating poverty.

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