INCOME INEQUALITY

Nobody capable of useful work need today lack food and shelter in the advanced countries, and for those incapable of themselves earning enough these necessities are generally provided outside the market. Poverty in the relative sense must of course continue to exist outside of any completely egalitarian society: so long as there exists inequality, somebody must be at the bottom of the scale. But the abolition of absolute poverty is not helped by the endeavor to achieve 'social justice'; in fact, in many of the countries in which absolute poverty is still an acute problem, the concern for 'social justice' has become one of the greatest obstacles in the elimination of poverty. In the West the rise of the great masses to tolerable comfort has been the effect of the general growth of wealth and has been merely slowed down by measures interfering with the market mechanism. It has been this market mechanism which has created the increase of aggregate income, which also has made it possible to provide outside the market for the support of those unable to earn enough. But the attempts to 'correct' the results of the market in the direction of 'social justice' have probably produced more injustice in the form of new privileges, obstacles to mobility and frustration of efforts than they have contributed to the alleviation of the lot of the poor.

From economist Friedrich Hayek's "Law, Legislation and Liberty, Vol. 2: The Mirage of Social Justice" (1976):

 

  

It seems as if everyone today is  talking about income inequality.  Obama is using it as a bogus political crusade to divert our attention from Benghazi, the IRS and ObamaCare; Pope Francis is denouncing it as an ethical and moral challenge.  Bill DeBlasio ran with it as his signature issue to become Mayor of NYC. 

 

Thomas Piketty,a neo-Marxist French political scientist believes that income inequality is cause by capitalism.  He has written a book called  "Capital in the Twenty-First Century" which the left is having schoolgirl swoons over.  In it Piketty, says only taxation can correct this problem, so he  advocates a world wide tax of 80% for anyone making over $500,000 a year.  For those making less, levies of 40% and 60% are proposed.  This is all social justice masquerading as a path to income equality which history has shown will not work when the market mechanisms of capitalism have been thwarted by ideology.

 

 

Yet no one can really dispute that the gap between the "uber" rich and some of the rest of us is growing.  The real question is why?

Since 2008 the economy has been stagnant.  In the first quarter of 2014 it  grew by a measly .1%.  This was blamed on the severe winter which in turn was blamed on "climate change" thereby turning an economic and political disaster into a cause for further manipulation of the economy, one more time. 

This administration, in point of fact has addressed all things economic, via a comprehensive "progressive" ideology that defies both common sense and the modern marketplace.  In doing this it has conducted a not so secret and not so subtle war on capitalism itself and thereby created income inequality. 

The true cure for income inequality is economic growth coupled with prudent and common sense policies and  regulations which prevent or curtail among other things ..."crony capitalism"...excessive regulation ( 4000 new regulation a year on top of the 200,000 "regs" that exist already)...massive Federal debt and deficits...government growth which causes the private sector to remain in stasis or contract...excessive taxation...waste and corruption in government spending...an educational system that rewards you for showing up in K through 12 and then brainwashes you in the university...and failure to end programs that don't work or need re-imagining in order to work in the 21st century.

The "Fed" has kept the lid on interest rates by "Quantitative Easing" but in so doing has forced those with capital to invest until very recently in the market which is still the only game in town if you want to make a buck.  These investments create wealth but do not create jobs.  The Fed has also increased anxiety about the inevitability of the inflation they seek to forestall.  This in turn adds to the overarching uncertainty which hovers over the economy  like a dark cloud.

The President doubles down on this uncertainty with a war on fossil fuels that raise energy prices for the average person to record levels, stifles job creation  and reduces the wealth of the middle class. This is done in a nation which has longer term sources of energy than any other nation on earth. 

 

EPA regulations in the name of climate change in particular, regularly kill jobs  and shrink the GDP.   But the ideologues who  practice a form of "Green terrorism", don't care if people end  out of work and dependent on government instead of being independent, employed and contributing to a vibrant economy.  Today the levels of unemployment, under employment and people leaving the workforce have reached "great depression" levels with certain demographics within the population.  

ObamaCare also kills growth by driving the cost of health care through the roof while delivering substandard care in a system designed by bureaucrats and not Physicians.  Job growth is thwarted  by artificial requirements placed on the size of private  businesses disguised as reasonable regulatory limitations linked to healthcare  without ever once recognizing that from town to town...state to state...and region to region there is no such thing as one size fits all.

Globalism has moved manufacturing off shore and turned us into a service economy with a technical IT elite who increasingly make what they do and how they do it, unintelligible to the average person.  As it turns out it also makes us dependent on a omnipresent, omnivorous technology which has taken over our lives  to the point of also making us strategically vulnerable from a national security standpoint.

Our politics seem about where they were before the Civil War.  Harry Reid has turned the Senate into a joke where solutions die in childbirth.  It has rocked the Republic to the core and begs the question of can a Republic work without democracy.  Nothing can grow in such a climate.

All of the above and more, create "manmade" income inequality.  All of the above involve deliberate policy decisions that this administration has made which fly in the face of common sense and the lessons of history.

Capitalism today is sick, but not for the reasons the left would have us believe.  Capitalism is sick because of ideologues who say it is  and have proceeded to wreck it in order to prove their point.  Capitalism is sick because this President has infected it with socialism.  The end result is the creation of a society where being reduced to poverty,  joblessness and loss of both economic and political freedom and opportunity  has perversely created a brave new world of income equality where poverty will make us all equal.

ERLANDSSON