Monday, April 28, 2014

The Real Inequality Problem

Liberals are all worked up about inequality, and we know why.  They want more power.

Thus we can expect the argument for all liberal proposals to give liberals more power and control over the American people to be: Because inequality.

But there really is an inequality problem, writes Cathy Reisenwitz, and Republicans need to face up to it.  You can't just dismiss is as class warfare.  Otherwise the battlefield will belong to Democrats.
Googleing “income inequality” brings up a host of non-jealousy related reasons to care about it. One reason is that it hurts economic growth when the rich see their incomes rise but the poor don’t. The reason? The poor spend their extra wages, unlike the wealthy. Another reason is that income inequality hurts class mobility by making it more difficult for kids to go to college.
You can agree or disagree with those ideas, but people believe them.

I haven't read Thomas Piketty's Capitalism in the Twenty-first Century yet, so I can't comment on his idea that capitalist earn 4-5 percent on their money in perpetuity, while ordinary stiffs get back 1-2 percent because that how fast GDP growth works.  My copy arrives May 2.

But Piketty's reported solution is a laugher.  A global wealth tax?  So the Google guys will pay 1 percent of their wealth per year so politicians can spend it on programs rather than the Google guys on better software?

I don't think so.  Politicians spend money on their supporters, not on growing the economy to reduce inequality.

And really, looking at inequality without looking at the operations of government is clueless. (But then Piketty wouldn't have had the success he's had if he proposed to curb government!)

Let's enumerate a few ways in which government promotes inequality, while accepting the idea that the capitalists have an unfair advantage.

  1. Social Security.  This is a government transfer program not a wealth builder.  Let's reform Social Security so that people have private accounts that they can pass on, tax-free, to their descendants.
  2. Medicare.  This is a government transfer program that encourages seniors to consume excessive amounts of routine healthcare.  Let's reform Medicare so that people save in their working years for Medicare, and pay for routine health care in retirement out of their personal capital income.  Then they get to pass the residue on to their descendants, tax-free.
  3. Unemployment, Workers Comp, Disability.  All these programs take money out of the hands of working people and give the monies to politicians.  Suppose people had their own personal unemployment account.  Then they could forego their right to long periods between jobs and get a new job quicker.  They would end up richer and could enjoy the capitalist income that the rich enjoy.  Then they could pass on their filthy lucre to their descendants.
  4. Crony capitalism.  All the cool things that government does, from mass transit to renewable energy, benefits rich, well-connected supporters of politicians.  How unequal is that?
Yeah.  And so on.  So now let's just segue to Charles Murray, who is now too controversial to speak at Azusa Pacific University.  Murray has been writing the same book for 30 years.  First it was Losing Ground.  Now it's Coming Apart.  Murray makes the point, again and again, that the welfare state is really cool for the top 25 percent.  We 25% guys are educated, have cool jobs, stay married and send our kids to college.  But the further down you go, the more you are talking about government benefits and less marriage and less work and less community.

You wanna talk about inequality, you need to talk about the murrain that the liberal welfare state has sown among the poor.

But liberals don't want to talk about that, and they don't want anyone else to talk about it either.  Because inequality.

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