Wednesday, November 23, 2011

Amount Isn't Key in Income Inequity

Class warfare is a bad thing.

So is wealth redistribution.

I get that.

But when I hear some conservative pundits talk about these issues, particularly regarding income inequity, why do they sound threatened by America's middle class?

In his op-ed today on, Michael Goodwin of the New York Post gives a curiously half-hearted stab at validating the existence of income inequality in the United States.

He allows that income inequality "is real, and growing."  And that our middle class "is losing ground and deserves help."

But he doesn't seem to realize that a vibrant middle class doesn't mean everybody becomes rich.  In an economy, isn't the percentage of folks in the lower, middle, and upper brackets just as important as the dollar amount that puts them there?  And it's the shrinking of the percentage amount occupied by middle income Americans that's a problem.  Right?  Because something's happening to deplete the middle class, and we're the people who provide the economic and political stability for our country.

Yet talking about it seems to make conservatives uneasy.  And not entirely logical.

Asking the Right Question

Goodwin quotes economist David Malpass as questioning "whether our goal as a society should be higher incomes for all, or less disparity between incomes.”

But is that really the question?  In a healthy economy, a rising tide of incomes lift all boats.  At least, all the boats of people willing to work for their income.  Malpass assumes this to be the preferred scenario, and I'd agree with him.

Yet that's not what's been happening, is it?  Instead, the wealthy have been increasing their net worth by laying off the middle class to save costs. They haven't been inventing new products or refining old ideas. Unemployment is stubbornly high and incomes for those who still have jobs have been sinking relative to the cost of living.  Goodwin claims that "income equalizers are pitting Americans against each other," which may be true of some liberal politicians.  However, through their machinations of the employment sector, haven't the high-income-earners already been pitting themselves against the middle and lower classes? Haven't they already been "redistributing wealth," not by taxation, but their own cutthroat business practices?

I am not opposed to wealth, and I don't think many other Americans are, either, yet Goodwin seems to assume otherwise. Like many people of both conservative and liberal stripes, he views this issue through a lens of dollar figures, instead of the methods people use to acquire their wealth.  Wealth in and of itself is not a bad thing, but how it is acquired can be.  And it certainly appears as though the wealth America's top income earners have amassed has come at the expense of the middle class.

Goodwin's mistake is in assuming that the inverse of imbalanced income can only be a "what's mine is mine, and what's yours is mine" mentality, instead of "income equity," meaning income that has been earned equitably.

Many conservatives think we should all be clawing our way up career ladders and finding our rewards in the affluence which comes with mastering capitalism.  But that scenario can't possibly work in capitalism, can it?  Not everybody can get the top job in a capitalist system, can they?  Otherwise, it wouldn't be the top job.  Not everybody can be senior management, either.  If everybody was a manager, who'd get the work done?  If everybody was out inventing something, who'd build it?  If everybody was working on Wall Street, who'd fix dinner?

We're not all going to be rich.  Otherwise, with everybody worth roughly the same amount, wouldn't that look more like Communism?

Capitalism depends on a stratification of labor, doesn't it?  Which means a stratification in incomes based on the importance of various jobs to the overall economy.  It's not an inherently bad system, as long as people get paid what they're worth.  And in theory, Goodwin probably would have no argument with that logic.

Ask "How?" Not "How Much?"

But being paid what they're worth is all most middle class Americans want.  They know they're not running a multi-billion-dollar corporation, but they're putting in enough energy and sweat equity to be treated better than they've been treated lately in our economy.  They know waste needs to be trimmed so that profits can be plowed into more research and development to grow their company, but that's not what's happening.

When investors swoop in and clean up after an acquisition followed by massive layoffs, how does that help the overall economy of the United States?  Doesn't it put more people out of work, which means payroll dollars - and taxes - are being drained from the nation's coffers?  Since so many wealthy Americans have developed a hoarding mentality, instead of a long-range industrial growth strategy for their money, what opportunities are being created for the masses in the middle class to launch their own enterprises?

Chances are, many of the people being laid off in corporate mergers and downsizings are smart enough to launch their own companies if they had the capital to do so.  But who's going to give them the money to do that, since these laid-off employees could become viable competitors to the companies that dismissed them? Wealth can certainly survive better without competition, but can wealth be created in a vacuum?

Maybe Goodwin prefers letting the wealthy suck up everybody else's wealth through their housekeeper's vacuum.

But is that good for America's long-term economic health?  Of course not, for just the same reason redistributing wealth via Robin-Hood style taxes wouldn't.  Nor the Democrat's continued avoidance of sweeping welfare reforms to try and staunch the government-sponsored fallacy of generational poverty.

So, what reason is that?  Quite simply, it matters how wealth is created. No matter what amount that wealth is. What processes have been allowed to exist - and even flourish - that may have disproportionately benefitted the wealthy at the expense of the lower classes? Can we trust money and our greed for it to provide the best determinant for our nation's future?

Remember, it's not whether everybody should have an equal income.  It's whether everybody has an equal opportunity to enjoy "life, liberty, and the pursuit of happiness."

Happiness, in fact, that can't be bought.

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