Income Inequality Is Not a Problem. In fact, It’s a Good Thing

By Lloyd the Idiot

 

There’s been a lot of wind and print about the purported income inequality “problem” in the United States and what we need to do to “solve” the problem.   My rebuttal, and your talking points (which should come as a surprise to absolutely no one), are as follows:

  • No one ever promised anyone that they would have equal income.  Equal opportunity is all any one in this country is entitled to.
  • Inequality itself is a motivator.  If we’re all the same (and forced into it), there’s no incentive to strive for more.  Greed is good.
  • It’s not a case of the rich getting richer and the poor getting poorer.  Even the  poorest have benefited from the blessings of liberty.   Compare the poor of today to those of 50 or 100 years ago.  The poor of today are all better off – even without government hand outs.
  • The “inequality” issue is simply Obama’s pandering to his base and demonizing the rich and successful.
  • If you’re the  guy making minimum wage your whole life, then too damn bad.  Either you don’t have the skills or you don’t have the motivation to make more of you life.

All in all, the income inequality discussion is simply absurd.


Comments

  • ed myers says:

    This assumes that equal opportunity exists. The inequity cry is really about the injustice of structural inequalities, and not a desire for socialism.

    One can be a capitalist and still think income inequality is caused by bad government policies and should be addressed. Barriers to job entry mean that monopolistic salaries are being earned by people who are lucky by birth, position, or friends and not because of merit.

    What motivates people? Not everyone desires wealth and power. It is hard work being rich and it makes very few people happy. In the past when the carrot of wealth didn’t make people work hard on the basics of life the stick of starvation did. Today we think the cost of a civilized society is to provide a minimum standard of living for every human being. This means that someone who is happy with art, music or child care can decide to drop out of the rat race and pursue interests that make their life happy and fulfilled but not wealthy…at least not in LI’s terms. All of Society benefits with those personal investments and the rich, who invested in wealth instead of civilization, can make up for their failure to be good citizens by paying for the elements of culture that they neglected in their search for gold.

    Re-read the Midas fable.

  • Liberal Anthropologist says:

    Inequality is the thing which most helps the poor. That is a fact. And it is typical of the leftists to try to advance goals that actually hurt the poor while claiming to be trying to help them.

  • Eric the 1/2 a troll says:

    Yes, and unequal pay for equal work for women really benefits the women. And slavery really benefitted the slaves.

    We have heard the black is really white argument before. Save it.

  • Eric the 1/2 Troll says:

    Off topic @LA:

    Example of positive results from regulation of business:

    http://www.nrdc.org/media/2013/130313.asp

    What is the libertarian alternative to regulation of commercial fishing and the proven impact on fisheries of its absence?

  • Liberal Anthropologist says:

    Eric,

    neither of your examples are relevant. One is forced labor. Immoral. The other is likely not happening or not happening much and would be a disincentive.

    Wealth disparity is different. It provides motivation and the wealthy do a a good job of investing almost all of it back into the economy.

  • Liberal Anthropologist says:

    “What is the libertarian alternative to regulation of commercial fishing and the proven impact on fisheries of its absence?”

    If the fisheries remain “common” then like other air and water, libertarians are ok with SIMPLE regulation. They are subject to the “tragedy of the commons” which libertarianism recognizes.

    However, I wonder whether they would need to all remain common. Private ownership somehow would likely cause an explosion of fish. I don’t know enough about fisheries to know whether such a thing would be technically feasible.

  • Eric the 1/2 a troll says:

    “…and the wealthy do a a good job of investing almost all of it back into the economy. ”

    Simply untrue. It has been shown many times that government spending programs that help the poor are far more beneficial in terms of the money winding up back in the economy than are tax breaks for the rich. The reason is the poor spend the money, the rich bank the money (often outside the US ).

  • Eric the 1/2 Troll says:

    “Private ownership somehow would likely cause an explosion of fish.”

    How do you figure this? On what basis do you make this statement?

  • Eric the 1/2 Troll says:

    “…neither of your examples are relevant….”

    They are both relevent in that conservatives in all three arguments are built on the same premise – that a situtation that does harm to a group of people ACTUALLY is beneficial to them, with that argument being made by the beneficaries of the social system being critiqued.

    While I have not yet seen the case being made in term of wage disparity between men and women (the case conservatives are currently stuck on now is one of denial – the “black is actually white” case will be made when they can no longer deny the disparity) but I inserted it to demonstrate the absurdity of your argument. I HAVE actually heard conservatives making the argument regarding slavery in the not too distant past (after all they can not argue that slavery did not exist). For instance:

    “… the institution of slavery that the black race has long believed to be an abomination upon its people may actually have been a blessing in disguise. The blacks who could endure those conditions and circumstances would someday be rewarded with citizenship in the greatest nation ever established upon the face of the Earth.” (Pages 183-89)

    http://talkbusiness.net/2012/10/rep-jon-hubbard-slavery-a-blessing-in-disguise/

    The argument is equally absurd.

  • Liberal Anthropologist says:

    Eric,

    ” The reason is the poor spend the money, the rich bank the money (often outside the US ). ”

    It does not matter if it is banked. The bank then invests it. Your argument is that the investments are mostly outside the US? Let’s see some evidence of that.

    I will reverse the question. How does a disparity in income HURT the poor? Especially if (as is true), their standard of living continues to rise.

    I cannot defend someone who sees slavery as a blessing in disguise.

    On the question of an explosion of fish….

    If the waters (and the fish) could be privately owned, then the owners would treat the resource more appropriately than they do a common resource. They would help the population grow as they would gain economic benefit from an increase in their stocks. Much like cows or other privately owned animals.

  • Eric the 1/2 a troll says:

    “It does not matter if it is banked. The bank then invests it.”

    No they do not. They gamble with it.

    “I will reverse the question. How does a disparity in income HURT the poor? Especially if (as is true), their standard of living continues to rise”

    It hurts the poor by diverting money away from them and into the hands of the rich. It is a spiral down as more poor are created more poor are competing for the same job which the buyer (employer) pays less and less for. But your case should be easy to prove. Over the last decade, the gap between rich and poor has exploded. Please show me evidence that the standard of living of the poor has dramatically risen in the US over the last ten years. Granted correlation is not causation but lack of correlation DOES mean lack of causation.

  • Liberal Anthropologist says:

    “No they do not. They gamble with it.”

    That is non-factual.

    “It hurts the poor by diverting money away from them and into the hands of the rich.”

    This is zero sum thinking and obviously you don’t believe the economy is zero sum.

    “Please show me evidence that the standard of living of the poor has dramatically risen in the US over the last ten years. ”

    If it has increased at all, it is getting better. But let’s look at the data. What measure do you think will best represent it?

  • Eric the 1/2 a troll says:

    ““No they do not. They gamble with it.”

    That is non-factual.”

    Did you miss that whole bank collapse and bailout thing from 2008, LA. Do you think buying sub prime mortgage bundles was all about investing in our communities? It was gambling plain and simple and things have not changed one iota since. They are still gambling with our money.

    “This is zero sum thinking and obviously you don’t believe the economy is zero sum.”

    No it is not. The economy can grow but the poor and middle class need not benefit (as is happening right now). It just gets diverted to the rich and the rest of us are stagnant (which means falling behind in real dollar terms).

    In terms of your challenge see what you can pick out of this article:

    http://www.epi.org/publication/a-decade-of-flat-wages-the-key-barrier-to-shared-prosperity-and-a-rising-middle-class/

  • Liberal Anthropologist says:

    I did not miss it. It was not all of banking by any means. And it would have been fine if there were no bail outs. The bailouts are increasing the gambling.

    I read your article. It is not about standard of living. It is about wages. It shows a small amount of growth in inflation adjusted terms. Not falling backward.

    That would mean even by that measure there is growth in the middle class. However, wages are not a good measure as they do not account for all services and access to goods.

    How do you propose we deal with the lack of accounting for those items?

    Not to mention the 2500 dollars a year in savings from Obamacare we are all seeing! :-)

  • liberal anthropologist says:

    And I will repeat I see no evidence of a wave gap between males and females for the same work.

    For example, look up the pay of female loggers versus male loggers.

  • Eric the 1/2 a troll says:

    http://economix.blogs.nytimes.com/2009/11/16/the-gender-pay-gap-persists-especially-for-the-rich/?_php=true&_type=blogs&_r=0

    Women Earn Less Than Men, Especially at the Top
    By CATHERINE RAMPELL
    In most jobs, the gap between men’s and women’s earnings narrows greatly when you adjust for factors like career path and experience. But at the top of the income scale — jobs paying more than $100,000 — the salary gap between equally qualified men and women is still vast.

  • Eric the 1/2 a troll says:

    I guess that pay gap for women CEOs is really for their own good.

  • Eric the 1/2 a troll says:

    “That would mean even by that measure there is growth in the middle class.”

    No, in order for your theory to be sound middle class wages must soar as the rich’s compensation soars and the gap between rich and poor expand dramatically. If they don’t, theory is wrong. So sorry.

    “However, wages are not a good measure … ”

    Foul! You asked for a measure. I gave you one. The obvious one. If you want to reject it, you need to build your own case and prove it is an invalid measure.

  • Liberal Anthropologist says:

    I read the article in detail and is typical, you left out what it said that was important to drawing conclusions. It said it had a non-random data set and it did not have all the data necessary to control for all external factors.

    I will give you a scenario it didn’t cover. 2 people who are Senior project managers at a consulting company. Both make well over 100K a year. Both do a good job and have the same number of years of experience. One – Female – puts in 40 to 45 hours a week and is only willing to travel 2 or 3 times a month and for no more than one night away due to a desire to be with her family and children a lot. The other – male – works 50 to 55 hours a week normally and will do 60-70 in difficult, high value, crunch projects. He is also willing to travel 75% and can therefore be more readily assigned to difficult projects far from home.

    Which gets paid more? The guy. Because he is more valuable and more versatile. In a sense he gets paid less per hour even.

    Your study did not control for any of that. There is no evidence of a gender gap and your study helped show that it barely exists – if at all – in lower wage jobs.

    On the other thing, look at my sentence again. The middle class have had wage growth in real terms. They are getting better – slowly (mainly because of Obama’s failed policies). You cannot claim stagnant when there is growth.

  • Eric the 1/2 a troll says:

    “They are getting better – slowly (mainly because of Obama’s failed policies). You cannot claim stagnant when there is growth.”

    Yet they were improving faster when there was less of a gap between rich and poor. The opposite of what you claim (that as the gap between rich and poor increase, the poor gain increasingly). That is not what happened. The gains of the poor and middle class have slowed with an increasing gap between rich and poor. Why? Because resources that normally find their way back into the economy via the lower and middle classes have been diverted to the rich.

  • Liberal Anthropologist says:

    An interesting theory. Show me economic data over the last 150 years that shows such a correlation between gap and economic growth. The only way your theory is true is if the Rich do not put their money back in the economy. But they do. So it seems like a weak theory that you should be able to prove through a chart that shows gap movement and economic growth. You could show two lines or just the statistical correlation.

    I think you are mistaking cause and correlation. Low growth in GDP would be tied to low middle class growth since the middle class dominate the economic engine. I don’t think the rich move the GDP needle very much due to a small population.

    There is no government policy that helps with this stuff through redistribution. Lowering tax rates and providing other incentives to invest would lure more direct investment perhaps.

  • Eric the 1/2 a troll says:

    LA, what you need to see for my theory to be true is an inverse relationship between the growth between rich and poor and GDP growth. You can see it here:

    http://www.cbpp.org/images/cms//6-25-10inc-f1.jpg

    Clear upward trend.

    Vs.

    http://www.advisorperspectives.com/dshort/charts/indicators/Real-GDP-per-capita-YoY-since-1960.gif

    Clear downward trend over same time period.

  • Eric the 1/2 a troll says:

    Btw, I am not arguing causation, but you asked to see the correlation.

  • Eric the 1/2 a troll says:

    In moderation, LA. It happens anytime I post more than one link.

  • MalcolmH says:

    Hello you two … Eric, and Lib. Anthro.

    I would like to commend you on your style of argument. You have both attempted to address the other’s points in a constructive and courteous manner, and neither of you have resorted to name-calling or other forms of irrelevant abuse.

    I find your behaiour very refreshing. Even though you obviously disagree very strongly and, I suspect, will never come around to the other person’s point of view, the basic human respect for the other which you have both demonstrated is an example to us all.

    Regards,
    Malcolm

  • Liberal Anthropologist says:

    Thanks Malcolm. I think it comes from the basic assumption that people of a different position do not come to that position from a place of ill will.

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