How Conservatives Must Address the Issue of Income Inequality
Two nights ago when I turned on CNN at my hotel in Prague, I caught a good deal of Piers Morgan’s interview with Michael Moore, played in a town hall format with a studio audience.
Watching Moore at work can be a frightening experience, as the radical demagogue provides simplistic answers to the growing issue of job loss for the middle class, tanking assets, and growing economic inequality. If you are Moore, it’s all caused by the greed of bankers and capitalists — unlike the days he calls the “golden era” of capitalism, when industry gave people good jobs, and corporate CEOs invested in their businesses and gave back some of the profit they made to people instead of keeping it all for themselves.
Moore knows little. He even argued that things are worse today than during the Great Depression, when he claimed automobile workers could get good jobs at high pay. Moore was obviously confused between the experience of the war years and the post-war age and that of the Depression, when the UAW barely managed to get union recognition after volatile strikes.
But as audience members who looked like regular folks, not like OWS protesters, told their heartbreaking stories of college graduates who couldn’t get jobs, job loss, worthless houses, and the personal crises resulting from these situations, one could see how Moore’s call for a new social movement for redistribution of wealth could gain supporters. Especially given no alternatives forthcoming from others, especially from serious conservatives.
USA Today provides the details about what reporters Marsha Beliso and Paul Overberg call “The Fading Middle Class.” Using Reno, Nevada, as an example, they write:
Reno, which has among the highest rates of unemployment and foreclosures in the United States, is a stark example: the share of income in the metro area that was collected by the middle class fell from 49.8% in 2006 to 45.8% in 2010, the year after the 18-month recession ended.
A USA TODAY analysis of Census data found the Reno area was among 150 nationwide where the share of income going to the middle class — generally made up of households that make $20,700 to $99,900 a year — shrank from 2006 to 2010. Metro areas where the middle class’ share of income dropped outnumbered those where it grew by more than 2-to-1.
…
Analysts call it the middle-class squeeze.
College students are also feeling the pinch. The Wall Street Journal reports that “college grads aren’t feeling any better about the U.S. economy or American politics than the rest of the country. In a recent Wall Street Journal/NBC News poll, 80% of white men with four-year college degrees and no graduate education said the country is on the wrong track, compared with 74% of all those polled. These college grads are just as pessimistic about the next year as everyone else: 33% expect the economy to get worse, while only 17% expect it to get better. The article goes on to note that: “On average, wages for workers with four-year college degrees fell by 8.6% adjusted for inflation between 2000 and 2010, according to government data. For them, it has been a lost decade.”
They write: “The unemployment rate for recent college grads is 10.7%. More than 14% of Americans between 25 and 34 (5.9 million in all) are living with their parents, up significantly from before the recession. Nearly a quarter of them have bachelor’s degrees. Having a college degree no longer guarantees a rising wage or a shot at the American dream.”
These statistics indicate why demagogues like Moore can make arguments that resonate, and why the OWS movement may be gaining support. What, then, can conservatives say to address the issue? An excellent start is made in The Claremont Review of Books, by R. Shep Melnick.
Melnick writes “the problem of growing inequality is undeniable and alarming.” He notes, reviewing a book by Jacob Hacker and Paul Pierson, that “economic inequality in the U.S. has increased dramatically in recent decades. On this there can be little disagreement. They show that since 1979 only those at the top have seen their income rise significantly: since 1979, 36% of all after-tax gains went to the most affluent 1% of the population; over 20% of those gains went to the top thousandth (0.1%) of the income distribution. Economic inequality in the U.S. is now greater than at any time since the beginning of the Great Depression.”
While Richard Epstein makes a convincing case for the benefits of income inequality (you don’t make the poor rich by making the rich poorer), it is Paul Ryan who best articulates the distinction between the traditional American belief in a society based on the equality of opportunity and the possibility of upward mobility and a society based on the equality of outcomes: “More bureaucratic, less hopeful, and less free.” (From an October 26 speech he gave at the Heritage Foundation.)
I am glad Ryan didn’t become a candidate for president. Instead of worrying about gotcha questions, daily polls, and primary backbiting, he has devoted himself to the real problems of the country and he recognizes our strengths. Whether he becomes a VP candidate or remains in congress as overseer of our financial situation, he will be a person we can go to for insight and solid policy recommendations. We are very lucky to have him serve us.
I am not glad, he did not run…although I am glad that he continues to make articulate points on behalf of this land of ours.
I want a brokered convention and want him drafted to serve his country.
Putting that aside for the moment…there is ALWAYS going to be a bottom and a top in a free market society. Always.
I saw Dick Morris the other night explain that the last census of the bottom fifth…compared with the most recent one..found that a large percentage of the LAST bottom fifth…had moved up. In other words…they had upward mobility. They were replaced with new poor…because there is ALWAYS going to be a “bottom fifth”…but, not because people are stuck there.
If Morris is correct…then the system does not need to be overthrown. And anarchists and small c communists and Cloward-Piven inciters to riot can stuff all their lies in one smelly bag and dump them.
Michael Moore is to be listened to…why…exactly? He’s a despicable slob with no apparent grasp on anything except how to lie and slander this country. Why is his position on anything important? He’s a pig and a traitor.
Anyone who listens to him is a fool. The fact that the propaganda machine props him up only further proves their status as co-conspirators in treason.
Try ‘em, find ‘em guilty and hang ‘em…hang ‘em high.
Thomas Sowell also eloquently makes the case for income mobility…but it’s a tough sell. People live in the moment and can’t foresee the benefits of hard work. And it takes years anyway. People wnt the other guy’s money NOW.
I like Ryan’s arguments but I really doubt that they will impact people other than those who already understand. It’s one of those things like preaching virtue to the unvirtuous. The un’s can come up with a million reasons to prove it doesn’t do any good to be good. Just look at what happened to X.
What I wish is that Republicans would actively debunk the statistics. The Sowell method is part of it, but the big buzz going on now that the rich are richer than ever is almost certainly a big lie. In at least one study, for example, they didn’t include SS or any government transfer programs as income at all! Well, guess what, that makes people who get SS appear a lot poorer than they are. In addition, for the wealthy, income isn’t as clear as the word might seem. The only reliable way to measure income is tax records, and everybody knows that wealthy people take income when taxes are low. The latest study “measures” now compared to 30 years ago. Well guess what, 30 years ago the top tax rate was about 70%…so wealthy people invested in tax shelters so they wouldn’t show any income. That’s why the study goes back 30 years instead of 25, when the results would be much different.
And those aren’t the only two lying aspects of the usual data the marxists wheel out to “prove” the income disparity thing.
And besides, why should someone care what Steve Jobs estate is worth. The poorest peeople in the country have cell phones, cars, huge TV’s, air conditioning, enough leisure time and money to get high half the time, and they are more obese than any population in history. So much for poverty.
Get out much? The increase in income inequality is not subject to debate. It is a fact.Ryan, a Republican, lays it out pretty clearly. Something is wrong with the system. The middle class is under siege and Moore is a fairly articulate frontman for the left, and a needed presence in the discourse to balance out the rhetoric of O’Reilly, Limbaugh, etc. Let them have at it. What is bizzare are people like you who insist that income inequality is a mirage when there are currently massive tent cities (and I’m not talking about OWS here) in pretty much all the major metropoli of America filled with middle class folks who have lost their homes or jobs. If you want to be a mealy-mouthed apologist for Lloyd Blankfein and Larry Summers and all the Wall Street millionaires and billionares who do absolutely nothing productive and are bleeding America dry, come out and say it. Say: “I am a chump.” US tax payers are lining these criminals pockets. All the banks and investment banks have been bailed out and only survive thanks to US taxpayers. They have been “socialised”. Don’t pretend the income inequality problem doesn’t exist. It does, and no matter how much absurd hair-splitting you do, it will continue to exist. Get your head out of the sand. Welcome to reality. Now go spend a Sunday in a soup kitchen and see what’s actually happening on the ground.Talk to people, spread your wings, get off the internet and get some fresh air. I think you need it.
Agree. Paul Ryan is intelligent and convincing when he talks economics. He would probably attract independents, too, if he was chosen as VP candidate.
Conservatives shouldn’t address it at all; generally speaking it’s none of the gov’t's business. Gov’t interference is the problem. The gov’t should police businesses that are criminal enterprises but otherwise leave them alone and stop looking at what everybody does as a source of gov’t income. Our gov’t's, state, Fed, etc., aren’t governing us they’re strangling us. If the gov’t wants to help they can outlaw shorting stocks and option trading where someone hedges a bet good and bad and steals your 401k. Why does a hedge fund manager have 900 million dollars of my and businesses money and get featured on 60 Minutes.
(Sound of Loud Bell) Bingo! We have a winner! The ONLY inequality the government needs to address is protection under the law, ie eliminate the so called “hate crimes”, special deals, overly complex (and thereby easily manipulated) investment and banking regulations, and pardons. Success is as natural an outcome to endeavor as exhaling is to breathing, success is not a crime and CO2 is not a pollutant.
Jane’s point is EXCELLENT, how the hell can it be legal to sell something when you don’t even own it?
JustAl – I’ll ditto that.
Let me add my 2 cents by saying that the Census measures of income inequality are very misleading. First off, they measure income by household, not per capita or per adult. As we get more single-parent households income inequality will look like it’s increasing. Why you ask? Take a household with two parents. The household will earn X. Now divide the household in two (say because of divorce), voila, now the same X will be divided by two households. It will look like income inequality has increased, but it really hasn’t. (Also, because of the progressive nature of the income tax, tax receipts will fall as a result.) Let’s take another example. The population ages and we get relatively more retirees than working people. Retirees generally have lower incomes than working people, moreover, retirees tend to be single adult households (because one spouse dies). So when a worker retires, it will look like income per household has declined and it will look like income inequality has increased; moreover, with only one surviving retiree, household income will go down even further, making it look like income inequality has increased. Finally, there has been an avalance of immigrants from south of the border. The new immigrants tend to have lower incomes (sometimes much lower incomes) than the native population and that will increase income inequality.
To be “poor” in America is to be middle class in Europe. Many “poor” have assets that were unavailable to many American households just forty years ago. Many “poor” own autos, color TVs and live in air-conditioned homes or apartments. (Note – early in the 1970s there were very few color TVs.) And nobody wants for food.
As for whatever Michael Moore says, it should be fact-checked or put in context. He tends to stretch the truth to the point where the facts he selectively presents may be correct, but the omissions falsify the point he is trying to make.
Right; exactly what does a hedge fund manager produce? Answer: nothing. They are leeches and thieves who thrive on Las Vegas-style gambling rules and business capital and investments simply disappear to the benefit of no one but sharks. They would short the stocks of a business right into the ground if they could and they indeed tried a few years ago when stocks collapsed. Even Apple went from 250 to under 80 in a matter of weeks.
Jane Air – Hedge fund managers are very important people in the financial and commodities arena. They allow people to hedge their bets, so to speak. If Apple can go from 250 to 80, than the 250 number was wrong. It overvalued the company. I’ll give another example. Suppose I am an oil company and I want to lock in the price I am going to sell my oil at in six months. The hedge manager will find someone today willing to buy my oil at the guaranteed price in six months. For commodities and financial instruments, hedge fund managers provide extremely useful functions who absence would maker our economy less stable than it is.
Apple was not overvalued and look where it is now. When it dropped to 80 in late 2008 I put my money where my mouth was and bought 800 shares secure in the knowledge that this company with huge capital was now undervalued by quite a bit. I was right. Shorters and the panic and volatility they inspired and thrive on brought Apple down not the marketplace.
These people made themselves money, me money and ripped off 401ks across America; I invested in the companies future and bought when others ran.
And I’m talking about short term option traders, days and any stock in play, not long term or commodities specifically.
Jane Air – The thread ran out with your comment, so I’ve linked to my original comment.
All your telling me with your examples is that your expectations differred from the market’s expectations. A similar dissonance exists in the real estate market for houses whose values are less than the respective mortgages. Homeowners will not walk away from the house(except when forced to by financial distress) although logically they should. The reason they do not is they expect house prices at some point in the future to exceed the value of their respectives mortgages. The value of the house, though, is what it is and it cannot be sold for more than the market prices is at. (That’s called the ‘efficient market’ theory of prices.) The difference between houses and stock prices is that the market is able to produce a visible price for stocks unlike houses. When you bought at 80, the market, for whatever reason, thought that is what is worth. You, though, thought otherwise, and you were right, but that should be no reason to think hedge fund managers do not produce useful results. Whether they trade long or they trade short, they are assisting the market in establishing the price of an asset at that time.
I’ll give you yet another example. Hedge fund managers at one point starting shorting collateralized debt obligations (the notorious CDOs that became the toxic assets no one wanted to hold after 2008). In this case they were right and all the optimists were wrong.
I think you’re about right. There are two issues here. One is income inequality. The other is criminal (or at least extremely hazardous) business practices. I absolutely encourage the government to “do something” about the latter. The former is none of its business.
Unfortunately, the “1%” meme is out there. Stupid people will latch onto it because it’s simple and explains to them why their lives and our country seem to be so screwed up. It won’t go away because conservative candidates ignore it. So the article’s point about responding to it is still valid.
Bugs – It was the government that got us into this mess. It began when Clinton pressured the banks to make loans available to people who were just not very creditworthy. Believe it or not, the pressure continues. So, if the government prosecutes anybody, it should be itself. Leave the private sector alone.
Carter passed the Community Reinvestment Act
Clinton gave it the current power over Banks. As bank mergers took off in the 1990s ACORN and Community Activists would threaten banks if not meeting complance of the CRA. They collected million from every merger and yes it still works today. Banks not in compliance forfeit their FDIC insurance.
Let’s not forget the repeal of Glass Steigel, 40 to 1 leverage to 5 banks and the crazy loan activity.
I often wonder where the TARP repayments ended up ? They certainly didn’t apply them to debt. LOOK FOR THE UNION LABEL SO YOU CAN AVOID IT !!!!
You have hit the mark exactly. Once again we see the left controlling the conversation and setting the agenda. We are now caught up in questioning how much of ones earnings should he or she be allowed to keep….how little should one earn to then make a legitimate claim for transfer payments from those who make more? These are not legitimate questions in a free market, capitilist democracy and only fuel the statist’s veiw that government even has a right to decide these things. ENOUGH!
Ryan is right: cut corporate welfare and work on legislation that nudges company profit sharing to the lower earning workforce with performance based bonuses maybe. Tax exemptions for Company matched pension payments for individuals should be quadrupled and healthcare should be purchased anywhere the price is lowest. Domestic energy should be a top priority until we get back on our feet. Americans don’t deserve to pay any more than absolutely neccessary for gas, heating oil and natural gas this winter…damn to hell the greenies until we can afford to entertain the idea of alternate energy.
You can boil this argument down even further – the Rich keep getting richer because they continue to do the things that made them rich and the poor keep getting poorer because they continue to do the things that made them poor. Courtesy of Neal Boortz (Conservative Talk Show Host – Atlanta).
Everyone understands the argument when phrased that way.
“…..the poor keep getting poorer because they continue to do the things that made them poor…….”
…….like relying too much on disincentives such as Federal and state “entitlement” and welfare programs.
I applaud Ryan’s analysis and clear articulation of the course our government should follow. I am heartened that the contenders for the GOP nomination are rolling up their sleeves and and confronting the issues raised by the T Party movement. IBut I don’t see what I am looking for: a clear articulation of the core issue: the threat of of entrenching a Socialist administration.
What we have been subjected to for over almost three years is an outright effort to ram Euro-style Socialist legislation through Congress and apply KKeynesian economics. What we arw witnessing right now is an open campaign of Socialist class-divisive platitudes together with a subverted scheme to do an end-run on on Congress by findng means of ruling by dictat, getting as much Maoist fomulation in place as possible before his term is up. Why do conservative politicions, pundits, commentators, nd bloggers insist on refering to outright, in-your-face, doctrinaire SOCIALISM as leftist, left-leaning and left-wing? Why do we play their game, cover their ideology with mild euphemisms, call themselves “blue” when they are still mid-thirties Red?
Simplistic? Certainly. This election will set the course: Free enterprise or Socialism. That simple. Americans will never knowingly elect a Socialist government. This is no time for pussy-footing. The Alinskyites sure aren’t going to be.
I’d be even happier with Congressman Ryan if he would find some place in his plan to articulate the word “Socialist.”
Clinton not pressured the banks he obligated them by law. I was there when it happened the bank I worked for had to set aside certain percentage of mortgages for minority low income unworthy borrowers. We had to generate monthly reports to show compliance and submit to the feds. If anyone should go to jail is Carter, Clinton. Frank and Dodd. One more thing income inequality is a canard invented by Marxist. Unlike Europe there is no royalty in America if you work hard you can reach the moon.
Unfortunately your last sentence is lost on black America and the liberal Left who have no use at all for ‘Occam’s Razor’ and prefer to think that obstacles exist where there are in fact none and that the most obvious solution is the only one that will never be looked at since in America today, it is perfectly fine to question the values of white folks yet racist to apply the same principle to black culture in America.
The big thing is opportunity. Equality with respect to buying power is a red herring. It is good fuel for cheap rhetoric appealing to envy and other uninspiring attributes of the human nature. It makes Micheal Moore look important, while in fact he only appeals to the worst instincts of the dopes. But even the dopey will endeavor to elevate their thought process above reflexive behavior when treated with respect by folks truly worthy of respect in the first place.
So the answer to cheap rhetoric is good presentation, solid argument, appeal to reason, personal desire to excel, and personal pursuit of one’s own aspirations. What the conservatives need to do is be the grown-ups in the cacophony. If done right, politics can rise above emotion, and do justice to our intellectual appetites. So the conservative candidates have to go beyond the confines of our so-called debates.
What allowed Herman Cain to elevate himself above the modest circumstances of his childhood? Personal ambition, discipline, and commitment. What makes him so appealing? He elicits good behavior and truthfulness. And so does Paul Ryan. What they have is not something that can be made up for by focus groups and campaigns advisors. By now we know what the poseurs look like, sound like and feel like, don’t we?
To me the answer is simple – in America you are free to be the person you were meant to be, and some people are far better than others in managing money. We don’t have the class restrictions that Europe has. We don’t have the endemic corruption the third world has where the government will steal your assets. When you are free to do what you are good at, you will excel, and some people are realy good at particular things that make them rich. The world class athlete gets paid for being the best. The actor who moves our emotions will build his/her bank account. The businessman with the better idea, or service, or location or whatever is going to make more.
Yeah, there are crooks, but they are a small percentage and eventually get nailed. There are also people who are rich through self-promotion rather than discernable talent – but if you can convince a million people to give you a dollar, who am I to be envious?
Will they listen? I sometimes despair.
“The Wall Street Journal reports that “college grads aren’t feeling any better about the U.S. economy or American politics than the rest of the country. In a recent Wall Street Journal/NBC News poll, 80% of white men with four-year college degrees and no graduate education said the country is on the wrong track, compared with 74% of all those polled. These college grads are just as pessimistic about the next year as everyone else: 33% expect the economy to get worse, while only 17% expect it to get better.”
So how’s that “Hope and Change” working out for you you kids? Four years ago Obama was your Messiah, promising you all great things if you voted for him. Now, not only are you unemployed, but you have a lot of college debts as well. Sure stinks to be wrong, doesn’t it? Well, I hope you’ve learned something from all of this and don’t vote for Obama again. At least try something different. Who knows, you may actually get a job this time because of it.
And whom do they blame? Not the colleges that led them down this primrose path and not O for legislation throwing sand into the gears, but the lenders. These grads were never given the power to think critically, and it shows.
No one may have an answer, but the shrinking income of the middle class and high unemployment IS an issue. When the disparity between the top 10% and the middle is a great as it is, you can be sure that a lot of people will think that the fat, rich cats should be taxed MORE, especially, when historically they have been. Obama knows how to play that card.
Money and income are dull knives as tools to measure wealth and poverty.
When the poorest of the poor have iphones and plasma tv’s, poverty has ceased to exist, except as a tool by criminals who want to sieze more of what other people create.
As VDH has pointed out several times, Donald Trump’s toilet does no better job at flushing his poop than mine does. The water that comes out of my faucet is as good as his. I’m as warm as he is.
If you want to make a big deal of the fact that his wife has a useless rock on her finger that is 10 times the size of the rock on my wife’s finger, your purpose has nothing to do with important matters, but everything to do with setting people up to foresake their freedom as a brainless payoff to alleviate useless envy injected into their brains.
So let me get this straight, the middle class should not mind making less money, they should just be concerned about paying more taxes? Got it. I think the issue is being able to have a decent job and if the economy is moving in a general direction where there are fewer decent jobs, are people supposed to be happy? If the rich are not producing decent jobs for others and they hold disproportionate amounts of the total pot, then tax them more. Of course, then they threaten to hold their breaths and produce fewer jobs. Somehow, because they are protesting taxation, you tend to associate that with virtue, and the promotion of taxation is associated with vice. They are all just numbers. It kills me how to many, the difference between capitalism and socialism appears to be about 5-10% on the tax rate.
I did you the courtesy of reading your inane post 3 times, and still can’t make sense of it, so I can’t respond.
I will say this though, the 11 to 12 trillion in wealth that your marxists masters poofed in 2008 and the the 5 trillion in debt that they have deliberately piled up since then is certainly having an impact on the mobility and security of the American middle class…as well as all economic classes. Yet, even in spite of that, an astonishing number of iphones seem to wend their way into the hands of the middle class. go figger.
Your garbled response said something about taxes as well. I won’t speculate on what you had in mind about that, if indeed there was a cogent thought imbedded in the garglygook, but I will say that my position is that taxes are the least of the problems caused by your marxist masters. I can’t figure out why anybody even talks about them. What people should be focussed on is the DOWNGRADE of our economy and the mind-blowing 5 TRILLION in new debt (and growing minute by minute) that the adolescent criminal in the White House is ladling on in his concerted effor to implode the United States economy. Taxes are a triviality compared to those crimes.
Your man, 0, threw sand into the recovery and we are all paying for it now. But don’t blame people at the top end for being better off. After all, it’s their money. What you are proposing is simply a form of legalized looting (a/k/a social justice).
“Total pot”? Am I misunderstanding you or do you actually regard it as group property?
“Total pot.” Good catch, MayberryLady!
The disparity in “income inequality” is quite modest in comparison to other inequalities that exist in the US economy. For example, the difference between what the average US citizen earns versus what they pay in federal taxes. There are over 300 million US citizens, but there are probably fewer than 80 million Americans that actually pay any income taxes. And out of those 80 million that actually pay some amount of income tax, the bottom 50% (40 million) of those federal taxpayers probably pay less than 25% of all income tax revenues.
Virtually every single one of the 200 million+ adult Americans (and at least 12 million+ illegal aliens) has some sort of income, whether it’s from wages, social security, pensions or welfare. Yet only a very small minority pay income taxes. So the “tax disparity” is far more egregious than the “income disparity”.
And when one considers the “national debt disparity”, the picture becomes even more disturbing. Consider this, the only people who have any financial liability for paying off the $14 trillion national debt are those that actually pay federal taxes.
Hey, Ron, you need to chill. Election time is a year away. We can manage this. You sound like you’ve just woken from a horrible nightmare, jibbering on about Michael Moore making sense or something. Get a grip. Income inequality? What the hell is new with that? We gave up the hunter-gatherer thing several thousand years ago. Now everybody has cell phones and plasma t.v.s — including multi-generational welfare recipients. Have you seen any three-block-long waiting lines for free soup? Times are tough, but they are NOTHING compared to what Americans endured in the not-so-distant past. The problem is not that some folks are rich while more folks are poor. Rather, the problem is that Obama & Co. are doing everything they can to destroy the middle class. The good news. however, is that people are waking up, despite the fact that the real pain of Obamanomics has yet to set in. If Team Barry manages to hoodwink the people into another four years of national suicide, I’ll be ready to join you in jumping off the nearest suspension bridge. But until then ,,,
It shows better when populations are poorer but the natural undistorted economy is for half of income to go to the top one percent. That is who earns it by capital formation and putting the capital to work.
Ask how much of Spain’s population sent out Columbus? How many received income from his successful venture. And the royalty of Spain represented how much of European royalty?
However you start cutting it the people who have the idea and make it work are always going to be less than one percent. Usually left alone the top 1% will bring in 50% of a societies income. Cutting their income cuts society’s income as a whole.
“As a result of this dishonest argument, Obama’s popularity is slowly rising.”
This is the most disturbing sentence in the entire piece. Is is also contrary to anything recent regarding O’s overall popularity, or at least that of his policies, that I can think of. Ron, can you clarify?
The only reason why there is any middle-class sympathy for the Occubaggers is because the press has done an extremely poor job of showing the public what the Occubaggers are all about.
Does the Occupy movement speak for you?
Charles Payne touched on the very same opaque CBO and this BS ‘Hacker & Pierson’ book Melnick reviewed.
I’m attaching the meat & potatoes of Mr. Payne’s piece: (whereas you can read the piece in its entirety if a Mr. Payne/ W Street subscriber.. http://www.wstreet.com/member/commentary.asp?con_id=25195)
If you can get the proper definition of trouble, then we can find out who the real troublemakers are. -Al Sharpton
Flipping television channels this week, the story of income inequality was a common theme but taken and twisted in such a devious way as to incite anger rather than enthusiasm. I find it interesting in the land of opportunity where we all like to talk about the sky being the limit there is so much anger at the top 1% percentile for reaching after tax household income that’s risen 275% higher from 1979 to 2007. The report from the Congressional Budget Office was said to justify the anger at Occupy Wall Street and proves we should punish the rich.
The story was told as if the same people in the top 1% income category in 1979 were its sole members in 2007. But that’s not the way America works. In 1979 I was in the lowest quintile, and now I’m in the top 1 percent. When measuring my income, and judging America, the change in my income should be calculated in the lowest quintile to reflect where I started and my upward mobility. This is the disingenuous part of how this report was communicated. In this case, the trouble is the idea that a small group of people in 1979 established a way to increase their income at the expense of the rest of the nation.
We obviously know who the troublemakers are, but they are more than opponents of capitalism, they are destroyers of dreams. If we tell the story of this CBO report the right way, it’s a story of increased fortune for anyone to go and grab. In 1979 Nolan Ryan signed a $1.17 million a year deal with the Houston Astros – it was a record breaking deal and first above one million annually. In 2007, Jason Giambi raked in $23.4 million as the highest paid player in baseball, an increase of 1900% from 1979.
I guarantee you that Alex Rodriquez, currently the highest paid guy in baseball, wasn’t born in the top 1%. So, let’s assume for argument sake he was born in the second quintile. At age 18, he would have been placed at $23,939 a year and this year at $32.0 million. His change in income would be 139,100% and that number should be added to the second quintile so we can get a true picture of what opportunity is in America. Do me a favor and figure out the percentage change using your current income against your quintile bracket back in 1979. I want a sense of what America is really about and not the scare tactics that the rich are hoarding. Email me at Charles.payne@wstreet.com.
Of course there is no outrage at baseball players, no Occupy Yankee Stadium, because they are way too cool. This is so dangerous as to be irresponsible. When the CBO talks about “after-tax income received by 20 percent of the population with the highest income” it makes it seem like these are people that don’t work or didn’t work for the money they invested. There are other elements that skew the report, such as transfer payments, which have shifted to older people in higher income brackets as a consequence of entitlements. But, the narrative concentrates on this idea that there is a fixed amount of wealth in the United States, and greedy people have controlled it for decades.
This kind of stuff has been tried in the past in many different cultures and dare I say civilizations, and it has led to the ugliest periods in world history. The idea of income inequality is ridiculous if the goal is to help poorer people become wealthier. Even those nations that pride themselves on income equality are seeing increases in so-called inequality with this report acknowledging its occurrence in two-thirds of all countries even Finland, Norway and Sweden. This means people with good paying jobs are demanding higher salaries. This is good news not something to be embarrassed about.
The report points out that numerous researchers have concluded that, on balance, the technological changes of the past several decades- perhaps the entire century- increased employer’s demand for workers with higher skills and more education. That increase, along with a smaller increase in the supply of workers with higher skills and more education, generated substantial gains in the relative wages of more-educated workers.
In other words, the days of a person on an assembly line making as much as someone working at a computer chip lab are over with the former able to demand less for services while the latter demands more. It’s not unlike how LeBron James made his decision last year to skip to Miami and form the dream basketball team. So what exactly should be done about this? Should we make people that have these great skills work for less than market wages to appease those with more common skills for not having the brains or leaping ability?
What do these trouble makers want other than people that make less to feel like crap and people that make more to feel like crap and everyone to give up on the idea of making it in America? I hope income for the top 1% goes up another 275% over the next thirty years and maybe my son can get a piece of that action. The goal is to make sure all of our children get a piece of the action higher on the income scale. Most people don’t want to take what others have earned- that’s called stealing.
If the troublemakers could make their dream come true what would it mean for you?
If Alex Rodriquez takes a pay cut from $32.0 million a year to $7.0 million a year would you pay your babysitter more money? If last year’s high flying money manager who scored $1.0 billion craps out this year and loses millions would you go to work tomorrow and demand a raise? Would there be more money in the pot? World the world be a better place? Would the American dream be more alive?
We all would like to see the lower quintiles pay increase, but it’s not coming at the expense of higher paying jobs. The idea to punish someone from climbing the ladder of success in the nation that prides itself , or at least used to pride itself on such achievements is dumb and dangerous and would mean serious trouble for everyone.
“Can you think of a pettier way to describe sincere disagreements between the two parties on regulation and health care?”
How about Death Panels?
Screw their equality! I have no desire to be equal to the OWS idiots or New York’s homeless population. If they’re concerned about it, they can work to become equal with me.
So, the rich get richer? They frequently don’t stay rich. Charles Carroll of Carrollton was the richest man in the Colonies in 1776. Where are the Carrolls now? The Astors? The other great families of time past? No better than middle class now. We see this in lottery winners. They don’t always stay rich. It gets blown or spread too thin over generations. The mcMansions built by the rich now simply aren’t much compared to what the old ‘uns built. The rich will be poor and the poor will be rich. This is America, folks.
There was a problem even before the slump. The CIA’s figures show much greater inequality in the USA than in such similar countries as Australia, Canada, Ireland, New Zealand and the UK. Why ? Is life better or worse in the US ? What is the pay-off for ordinary Americans?
BUT. One main cause of inequality is immigration. An influx of unskilled labor makes wages lower. No wonder limousine liberals like it.Cheap servants, gardeners,flunkies.
Another problem is too much education which means a surplus of people with Bachelor’s degees.The answer is to raise college standards so that more students fail.Raise admission standards so that fewer attend college. At present many graduates have worthless bits of paper because they know and can do very little and because you cannot hide innate stupidity with a degree for dimwits. The market knows this. Also get rid of credentialism. Then you do not need a degree.
In England a medical degree takes just over five years and the English live longer than Americans. You can be a practising graduate lawyer at 24. You don’t need a law degree. The legal system works better.
America needs fewer immigrants and less education. Agitate and demonstrate for it now.
You’re right on all counts especially illegal aliens and labor jobs.
There are infinite-like jobs which a computer or robotics line can and does more efficiently and quickly than their human counterparts.
Yet our country encourages (when not enforcing the federal immigration statutes and strong-arming states in not enforcing their LEGALLY passed bills to treat this disease) uneducated masses to the land of plenty.. of entitlements.
Though Australia is becoming more and more Illiberal regarding illegals (the Illiberal Aussie gubmint refers to them as ‘refugees’) with many coming via boat from Indonesia and other SE Asian crapholes.
To sell the empathy more so, the Aussies keep the captured illegals in a processing compound where Illiberal and Conservative pols are atguing on what to do with them. Though you and I know what will be the end result.
You’d think the filmmaker from UNicef was hired to see the footage of these folks.
The Aussie PM Julia Gillard is an Illiberal nutter. Her recent CO2 tax and other ‘progressive’ actions are straight out of Uhbama’s playbook.
My wife and I just got back from Sydney, Melbourne this past week-end. Goes without saying a beautiful country though the cost-of-living there is outrageous. Were in our 30′s and are working professionals though would take up residence in the bohemian-like areas to live as comfortably as we had in the U.S.
Uneasy – Income inequality in the US was at its lowest level in the Great Depression (and I would suppose, there was very little income inequality in the Soviet Union). Economics, however, is not a zero sum game, so the gains of the top of the income spectrum do not mean that the bottom is worse off. We are all grateful to Bob Gates for his inventions and to the late Steve Jobs for his. They may be very wealthy, but we are all better off.
Also, the fact that the English life expectancies at birth exceed those of the US is an accident of demographics. Non-whites have shorter life expectancies than whites and the US has many more non-white than does England. To get an idead of the real difference you have to look at life expectancies later in life and those in the US exceed England’s.
On being poor in 1911 and 2011
October 28, 2011 5:31 R.D. Walker
1911: The rich had plenty of food. If you were poor, you were hungry. You almost never had a chance to overeat.
2011: Obesity among the poor is a major problem.
1911: The rich had symphonies and stage plays. If you were poor, you seldom heard music or saw a stage play because of the cost.
2011: The poor have almost endless opportunities for entertainment.
1911: The rich often attended college. The poor seldom had the opportunity to graduate high school.
2011: The poor get free education through high school and grants for college.
1911: The rich were warm in the winter. The poor were cold in winter.
2011: The poor have central heat.
1911: The rich rode. The poor walked.
2011: The poor have access to many forms of transportation and many considered poor own their own automobiles.
The poor have more parity with the rich in the necessities of life today than ever before in history. Nevertheless, leftists argue that income inequality is a growing problem.
You know, that might just be propaganda.
There is less income inequality in the US today than any civilization in history, and probably any time in the history of the United States. (the latter might not be true of the Colonial period, since much of the wealth of the colonies was taken by the British aristocracy).
If you don’t believe it, tour the palaces of Europe or the mansions built in the late 19th and early 20th century in Rhode Island, the pleasure palaces of the American elite at the time. Wealth was much more concentrated in the hands of the elites in every other era than it is now (excepting nomadic pre-civilizations, but who wants to go back to that other than Al Gore…oh wait, HE doesn’t want to go back there, he want YOU to go back there). Particularly for countries other than the United States.
Income inequality, or better stated as social classes, has essentially become as fixed as it was back in the dark ages of Euorpe. In those days, the Church and the Royalty kept people in place, and promoted a few for heroic acts or other achievements into the upper class, and everyone else was kept into place as either skilled labor (rare) or unskilled labor the vast majority.
This is a direct result of the government actions, from all the regulations, the incomprehensible tax code, lawsuits supported through government courts. decades past, it did not require an entire law firm to be on your payroll in order to start a business and know that you are following the law, as the laws were limited in number and specific in content, now the laws are legion and their meanings ethereal and subject to change by decree of man and not rule of law.
Lets say you want to start a business. Lets say something as easy as your child running a lemonade stand to learn the ropes. Should be pretty easy, right? Build a little booth or just a simple table, a few jars for holding the lemonade and some plastic cups and straws. Nope. You need a permit and plans and inspection to build a booth. You then need a license to open a food selling business, along with inspections and so forth. You need to pay your employee’s appropriately and pay the taxes associated with all of this. Essentially, there is no way for you to get the skills to run a business inexpensively, which removes many people from the pool from which prosperity might be gained.
Do you have enough money to defend against a lawsuit, enough liability insurance, have you studied all the laws that pertain to your business, pay all the fees, bribe all the right officials, verified that you are not using patented processes that any 5th grade science student would commonly understand as generic and not patentable. Are you making certain you are not hiring liabilities for unemployment insurance, fraud, theft, sexual harassment and the like. How can you know and it does not matter if you do due diligence and then some, you are still going to be held to account for their actions.
In the end, the government determines who the winners and loser are by shielding existing companies from competition, that would be you unless you are already in the top 1%. So, you want to cut the amount of money the top 1% make? First stop buying things by brand name alone, iPhone’s are making other people 1% and keeping you the 99%, buy off brand quality items from new companies. Stop spending hundreds of billions of dollars a year on movies by the star name, coffee by Starbucks or what ever your favorite brand is, jeans by so and so, $300 t-shirts (WTF?!?) and so forth.
Then again, if you want to have a chance to become the 1%, vote for people who promise to give you bad air (lies) and dirty water (more lies) and cut the amount of regulations and simplify the tax code and get rid of the lawsuit lottery. A simple single source flat tax with a single exemption equal to a properly calculated poverty rate for your family size would allow many more people to open businesses without risk of being put out of business due to a mistake in figuring out business taxes. Simple easy and limited regulations would allow you to open a business and not be at risk of being shut down for some arbitrary mistake in running your company and creating wealth. Not being the target of lawsuits will give your business the opportunity to grow and for you to create and build for yourself wealth.
total bullshit
There is more income mobility in the United States than anywhere, anytime.
Despite your resorting to profanity Mr. Reason, you are not entitled to your own facts. Among OECD countries, most are ahead of the US in terms of “income elasticity” the economist’s term for income mobility. Among these are the usual suspects (the far northern European redistributionist/socialist states) but also Canada, Australia, and…France! Now, we may agree that income mobility is a good or bad thing, but we certainly cannot honestly say that the US currently has the highest income mobility, anywhere, anytime.
And your earlier assertion that “…there is less income inequality in the US today than any civilization in history…” is simply untrue. Again, among OECD countries we rank only ahead of Turkey, Mexico, and Chile. Globally, we rank 52nd worst(out of 125 countries).
If you want to argue that income inequality is not a bad thing, which is a different argument, fine. But to assert that the US has the highest income mobility and lowest income inequality is simply not true.
Good article Mr. Radosh. Republicans who ignore how there is a lot of hurt out there are not doing their party any good.
On the bright side, Paul Ryan reminds me how there are a lot of great, young Republicans now such as himself and several GOP governors, who are doing good things. Its too bad they’re not running for president.
An Alternative to Capitalism (if the people knew about it, they would demand it)
Several decades ago, Margaret Thatcher claimed: “There is no alternative”. She was referring to capitalism. Today, this negative attitude still persists.
I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
Perhaps in time the so-called dark ages will be thought of as including our own.
–Georg C. Lichtenberg
I have wondered, even before the financial collapse, if the standards of many Americans were getting a bit too high…..vacations in exotic places, home renovations costing more than the original house, all those electronic gadgets, among other things.
Yesterday I saw a news clip of an apple-grower in Washington who could not find any takers for his apple picking jobs which paid $150.00 a week. Unless the apples were picked he would have to go out of a business which has been owned by several generations of his family. While that pay may not attract the many college graduates complaining about the lack of available jobs, it is probably as much as a lot of the people, including them, are worth. I bet it is less than they would get from the unemployment benefits they can collect for about 2 years. For a number of years, Americans have been told that they are very worthy people…so what if they can’t read, write a decent sentence or do even simple math, they are human beings who can breathe and they deserve the promotion, graduation and a lot of benefits. They are entitled. Even an older resident of the Tennessee town in which a whisky is made claims to be entitled to the benefits an additional tax on that whisky would bring. I found myself hoping the distillery would move out of town, leaving the “entitlee” high and dry.
I don’t know how the attitude regarding worthiness can be returned to its former state but it should be.
Addressing the “issue” gives it substance that it inherently lacks- one might as well address the “inequality” as to the “issue” of rainfall in Arizona vs. Washington.
It boils down to some people having more s**t than others, and the envy thereof.
I do think there is a class warfare. Not between haves and have nots. Between rent seekers and all the rest whether they have wealth or not. That is the nub of the whole Republican position against business strangulation by regulation. They are engaged in class warfare. They should use the terminology but not change the thrust of the fix at all. They can use the terminology in the correct formulation and make it pointedly clear that Obama has his sights set on the wrong opponent; not people of wealth necessarily but people of ambition and drive. I do believe the problem isn’t the substance of the Republican ideas. It is the relative arcane marketing of the message compared to the democrats that fails to connect with some people.
The candidates could say things like… Government won’t even let your daughter run a lemonade stand. Why, you can’t flush your toilets, change a light bulb or cut the tag on your own pillow without government sticking their nose into your business. Why getting a job, learning a trade or profession requires a person to undergo as much government meddling as might be required to get a national security clearance. To fix hair or paint nails? Yes, really! people have untapped and pent up reserves of drive and ambition to succeed but not to run a government gauntlet usually set up at the behest of some rent seeking fat cat who doesn’t want the competition.
And so on…
A problem with the center and right is that they really don’t know how to shape the narrative. It might even be doubtful that they realize that this is a necessary thing to do. They might even think they don’t need to because their positions should be self evident to all as they’ve existed for generations immemorial, and therefore taken for granted.
The problem with this is for every given ‘what’, we as a people no longer remember the ‘why’. Appeals to morality, reason, economics, law, fact, etc. all fail, or they’ve been co-opted to mean their opposite in this new world. A lot of words used in these appeals have become shibboleths. They’re Pavlovian acoustic cues lead to ridicule, dismissing, and outrage.
The left has mastered framing the debate and redefining words. So they increasingly own the mindshare of the people. I’ve always said it’s more important to be effective than right. I’m not saying being right is not important. It’s just that it’s meaningless if you’re not effective in getting that right message across.
So as to candidates for political office, Cain as only one example, using the appeal to ‘boot straps’ in response to unemployment is a fail. This is partly so, because in this economy, there are fewer opportunities, and while in better circumstances it may be more right than wrong, it’s awfully tin-eared. It would be better to educate people on what the causes of those fewer opportunities are. To teach with examples how governmental misadventure is the cause, and show the way out. Instead, what he’s left with is a sound bite that will be used against him.
So dear politicians, except for your uncritical base, you need to engage the public, on your terms, but in their words and assumptions. Since you seem incapable of doing this, you should hire handlers who are intelligent enough to see through shibboleths, to deconstruct assumptions and narratives, to see cause and effect, and to persuade. Oh, and listen to them before shooting off your mouth and shooting yourself, and the cause, in the foot.
many college grads are unemployed because they dont have skills (other than watching Jon Stewart or posting on Facebook). Many of them would have a difficult time naming the capital of the US or the first president
I believe that Hacker and Pierson are uninformed about Obama!
‘Petty and trivial? Just last week, the president told a crowd in North Carolina that Republicans are in favor of “dirtier air, dirtier water, and less people with health insurance.” Can you think of a pettier way to describe sincere disagreements between the two parties on regulation and health care?’
Dirtier air and water? Just because GOP candidates want to abolish the EPA, drill baby drill (including fracking – don’t worry about a few kitchen faucets catching fire; we can trust the gas companies), roll back regs on coal-burning industries, etc.? How petty and trivial it all is! As far as less people with health insurance, I’ll cede the rest of my time to the candidate from Texas.
“A preference for scoring cheap political points instead of consensus-building?”
Consensus building? With a House that won’t compromise because they’ve pledged allegiance to Grover Norquist? You wingnuts are getting crazier and crazier.
Quote: “…the promise of restoring equality of opportunity, rather than mandating equality of results, which will make us all much poorer.”
I suspect most Occupy folks are interested in restoring equality of opportunity, not in mandated outcomes. That, an end to the crony capitalism that got us into this mess. Not very different from the Tea Party, in fact.