Skip to comments.Inequality
Posted on 06/09/2012 3:49:34 AM PDT by Kaslin
The topic de jour on the political left is inequality. From President Obama to the editorial pages of The New York Times the message is the same: low taxes (especially on the wealthy) and deregulation are making the rich richer and the poor poorer. Their solution: more big government.
Here's the problem: nothing about this message is true. The George W. Bush tax cuts made after-tax incomes in the United States more equal, not less equal. Furthermore, all over the world low taxes, less regulation and limited government are associated with more income equality, not less. In addition, the greatest beneficiaries of economic freedom tend to be those at the bottom of the income ladder, not those at the top.
Because a lot of the work debunking left-wing myths about income inequality has been done by my colleagues at the National Center for Policy Analysis (NCPA), I have had a special interest in these questions over the years. What I am about to summarize are the results of careful study and analysis by some of the nation's top economists. These are studies that are routinely ignored by those who parrot the standard liberal line about how unfair capitalism is.
Let's start with the Bush tax cuts. Stephen F. Austin State University economist Michael Stroup has analyzed their impact based on statistics gathered by the Congressional Budget Office (CBO). As reported in an NCPA study, here is what he found:
· The Bush tax cuts (so hated by almost every left-wing columnist) led to a more progressive tax system with the top 1% of the income distribution now paying about one third of all income taxes, while those in the bottom half saw their share of the tax burden cut in half (falling from 6.3% of income taxes to 3.5%).
· Further, those in the top 1% now pay a greater share of their income in taxes, while those at the bottom are paying a smaller share.
· Over time, pre-tax income in the United States has become more unequal; but the share of taxes paid by the rich has increased by more than their share of national income.
Incidentally, Stroup found that the tax system became more progressive throughout the 1990s as well after the Bush (1990) tax increase, the Clinton (1993) tax increase and the Clinton (1970) decrease in the capital gains tax rate. But here is the message most voters never hear: Virtually every Republican tax cut going all the way back to the early rate reductions under Ronald Reagan left the tax system more progressive. One reason for that is that the Republican tax reform measures took millions of low-income families off the tax rolls. Even though high income taxpayers face lower rates than they once did, they are still shouldering a greater share of the overall tax burden.
As for the international evidence, the Frasier Institute of Canada has gathered an international team of economists to study and measure economic freedom in countries around the world and report annually. (Milton Friedman was an early participant in this project, as was yours truly.) Here are some recent findings:
· There is almost no relationship between the degree of economic freedom and the share of national income going to the poorest 10% of the population. (Its 2.4% in the one-fifth of least free countries and 2.6% in the one-fifth of most free countries.)
· There is a huge difference in absolute income, however: Per capita income for the bottom 10% was only $1,061 in 2009 in the least free countries, but reached $8,735 in the most free.
By the way, economic freedom is also very important for the average person. In 2009, per capita income was $4,545 in the one-fifth of least free countries and a whopping $31,501 in the one-fifth of most free countries. In other words, the difference between living in a country with low taxes, low regulation and limited government versus living in a big government country is a nine-fold increase in income!
A final study of interest was produced by Gerald Scully, one of the finest economists of my generation who passed away a few years ago. Like Stroup, Scully used a general measure of overall inequality. In a seminal NCPA study he found that other things being equal:
· Freer economies enjoy higher rates of economic growth than less free ones.
· Economic growth increases income inequality, but the effect is small.
· Overall, the increase in inequality from economic growth is outweighed by the reduction in inequality caused by greater economic freedom creating a net benefit to lower income groups.
Here is the bottom line: economies with the greatest degree of economic freedom not only produce higher incomes for the average family, they also produce a more equal distribution of income than would otherwise have been the case.
This government creates dependency to fuel it’s existance and purpose. It has increased the rolls by deliberatley killing the economy. I’m no rocket scientist
Numbers that back up the definition of socialists as people who have nothing and want to share it with you.
The truth doesn't matter for many.
What carries the greatest impact is what the leftist media can get the masses to believe.
As I gather my daily news on Free Republic, a few commentators on FOXnews and other select sources, it all seems so clear and easy to perceive - Obama is destroying the country, the far left is mentally deranged, we are on the brink of bankruptcy, etc., etc.
So why is the country in such horrid shape when the truth is so clear and readily available?
I remind myself - Most of the news we are exposed to is never seen by the masses who rely on the leftist mass media for their news. And most of the logic, ethics, morality, and historical references we use to make informed judgments are no longer taught in the government schools.
In fact, the ability of many to make an informed judgment isn't there either. And that is intentional. Whole generations have been taught that to make an informed judgment is discrimination - which everyone knows is BAD, BAD, BAD!
John Edwards was right about one thing - There really are two Americas: the real one and the one fabricated and constructed in government schools and the mass media.
The writer is correct. The facts don't support the argument.
To win in November, however, Republicans need to stop this "in over his head," "doesn't understand how the economy works," excuse for the president, and begin identifying for voters the very real opposing ideas which are doing battle for their hearts and minds.
That battle is between the ideas of liberty and the ideas of tyranny, masked as a benevolent government which "takes care" of us and uses obscure terms like "fairness" and "equality" to justify its coercive policies. The president is the so-called "progressive" spokesman for the latter, and should be identified as such.
This is a time, much like 1776, when, if liberty is to survive, the "American mind" (Jefferson's description) must come together around the principles of the Declaration of Independence and the 1787 Constitution to limit government power, which was based on those principles.
It was freedom of individual enterprise, under "the influence" of a "benign" government (Madison) which brought economic wealth and growth for the nation and the so-called achievement of the "American Dream" for individuals.
America did not go from being a wilderness, whose occupants still used the tools of ancient Europe, to being the most free, most prosperous, and most admired nation on the earth in the eyes of oppressed individuals all over the globe by a belief that employment in various levels of a government which planned and regulated its citizens would produce wealth and opportunity.
To the contrary, "the wealth of nations," according to moral philosopher Adam Smith and America's Founders arises when individuals are free and government is limited by a written Constitution of laws securing their Creator-endowed rights.
No amount of top-down imposition of equality of results can achieve such results.
From the Liberty Fund Library is "A Plea for Liberty: An Argument Against Socialism and Socialistic Legislation," edited by Thomas Mackay (1849 - 1912), Chapter 1, excerpted final paragraphs from Edward Stanley Robertson's essay:
"I have suggested that the scheme of Socialism is wholly incomplete unless it includes a power of restraining the increase of population, which power is so unwelcome to Englishmen that the very mention of it seems to require an apology. I have showed that in France, where restraints on multiplication have been adopted into the popular code of morals, there is discontent on the one hand at the slow rate of increase, while on the other, there is still a 'proletariat,' and Socialism is still a power in politics.
"I have put the question, how Socialism would treat the residuum of the working class and of all classesthe class, not specially vicious, nor even necessarily idle, but below the average in power of will and in steadiness of purpose. I have intimated that such persons, if they belong to the upper or middle classes, are kept straight by the fear of falling out of class, and in the working class by positive fear of want. But since Socialism purposes to eliminate the fear of want, and since under Socialism the hierarchy of classes will either not exist at all or be wholly transformed, there remains for such persons no motive at all except physical coercion. Are we to imprison or flog all the 'ne'er-do-wells'?
"I began this paper by pointing out that there are inequalities and anomalies in the material world, some of which, like the obliquity of the ecliptic and the consequent inequality of the day's length, cannot be redressed at all. Others, like the caprices of sunshine and rainfall in different climates, can be mitigated, but must on the whole be endured. I am very far from asserting that the inequalities and anomalies of human society are strictly parallel with those of material nature. I fully admit that we are under an obligation to control nature so far as we can. But I think I have shown that the Socialist scheme cannot be relied upon to control nature, because it refuses to obey her. Socialism attempts to vanquish nature by a front attack. Individualism, on the contrary, is the recognition, in social politics, that nature has a beneficent as well as a malignant side. The struggle for life provides for the various wants of the human race, in somewhat the same way as the climatic struggle of the elements provides for vegetable and animal lifeimperfectly, that is, and in a manner strongly marked by inequalities and anomalies. By taking advantage of prevalent tendencies, it is possible to mitigate these anomalies and inequalities, but all experience shows that it is impossible to do away with them. All history, moreover, is the record of the triumph of Individualism over something which was virtually Socialism or Collectivism, though not called by that name. In early days, and even at this day under archaic civilisations, the note of social life is the absence of freedom. But under every progressive civilisation, freedom has made decisive stridesbroadened down, as the poet says, from precedent to precedent. And it has been rightly and naturally so.
"Freedom is the most valuable of all human possessions, next after life itself. It is more valuable, in a manner, than even health. No human agency can secure health; but good laws, justly administered, can and do secure freedom. Freedom, indeed, is almost the only thing that law can secure. Law cannot secure equality, nor can it secure prosperity. In the direction of equality, all that law can do is to secure fair play, which is equality of rights but is not equality of conditions. In the direction of prosperity, all that law can do is to keep the road open. That is the Quintessence of Individualism, and it may fairly challenge comparison with that Quintessence of Socialism we have been discussing. Socialism, disguise it how we may, is the negation of Freedom. That it is so, and that it is also a scheme not capable of producing even material comfort in exchange for the abnegations of Freedom, I think the foregoing considerations amply prove." EDWARD STANLEY ROBERTSON
I’m often envious of rich folk (not proud of that, but there it is) and think many have climbed the corporate ladder by kissing the behind of the guy ahead of them. Yes, I can be quite resentful when I see how the average Joe is dumped on, but the difference between me and a liberal is this: I know life is never fair, and any attempt by government to make life fair only makes politicians and their cronies richer and the average Joe poorer. Politicians know this, too, but they are quite willing to exploit voters’ resentment and envy in order to get power.
The free market is the only means whereby the most people can make the most of their talents, self-reliance, and hard work to achieve success, even if some others do make it to the top by more devious means. Politicians don’t get elected by telling this truth.