Posted on 01/08/2014 6:00:54 AM PST by Cincinatus' Wife
President Obama considers income inequality a “defining challenge of our time.” Continuing from my previous column ( “Questions for redistribution's proponents” ), I have some additional questions for Mr. Obama and others who want government to redistribute more income from “the rich” to “the poor.”
• When you describe growing income inequality in the United States, you typically look only at the incomes of the rich before they pay taxes and at the incomes of the poor before they receive noncash transfers from government such as food stamps, Medicare and Medicaid. You also ignore noncash transfers that the poor receive from private charities. Why? If you're trying to determine whether or not more income redistribution is warranted, doesn't it make more sense to look at income differences after the rich have paid their taxes and after the poor have received all of their benefits from government and private sources?
• You often speak of income inequality as being evidence of economic failure. Can you identify an economic theory that predicts that every well-functioning market economy generates incomes that are equal (or close to equal)? I'm an economist and have never encountered such a theory, so I'd be delighted if you expand my intellectual horizons.
• You also often warn that large differences in incomes make society dangerously unstable. Can you point to historical evidence in support of this claim? But remember: To be valid, the evidence must be from market economies in which the great majority of people — rich and not rich — earn their incomes through voluntary market activities and where the size of the economic pie isn't fixed.
Evidence of social unrest in pre-industrial and nonmarket societies doesn't count. Economic arrangements in such societies are fundamentally different than in our own. And unlike in our market economy, the amount of wealth in nonmarket economies is largely fixed. Therefore, in nonmarket economies, more wealth for some people does indeed mean less wealth for other people. Our economy differs: Because the amount of wealth in market economies isn't fixed, people can get rich by creating more wealth rather than by seizing the wealth of others. In market economies, more wealth for rich people does not necessarily mean less wealth for other people.
• Have you considered that greater income inequality might result from demographic changes that reflect neither weakness or injustice in the economy, nor any increasing differences in economic well-being? For example, do you account for the fact that retirees rely heavily on “consuming” their capital — by, for instance, selling their expensive large homes, moving into less expensive smaller homes and using the differences in sales proceeds to fund some of their living expenses? People's annual incomes are typically lower when they are retired than when they were working, but their wealth — their ability to maintain their standard of living — isn't necessarily lower.
Americans are today on average older — seven years older than we were in 1980. And a larger portion of Americans being retired means that the fall in the annual incomes of the increasing numbers of Americans who retire quite likely causes a rise in inequality of incomes without causing a rise in inequality of spending power.
• Do you not share Thomas Sowell's concern that efforts to “de-concentrate” incomes among the people require concentrating power among the politicians? Asked differently, if you worry that abuses of power are encouraged by concentrations of income, shouldn't you worry even more that abuses of power are encouraged by concentrations of power?
Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.
The president will announce the five areas as the first in a series of so-called "Promise Zones" that combine various other efforts under the Obama administration to address struggling neighborhoods, the White House said in a statement.
Obama has pledged to make addressing income inequality in America a top priority. The selection comes on the 50th anniversary of the unofficial war on poverty launched under President Lyndon Johnson.
A formal announcement is planned for 2 p.m. EST.".....
We are Middle Class. We can’t afford a tax lawyer or a lobbying firm to protect our meager paychecks. The wealth that is being redistributed comes from the shrinking, struggling Middle Class.
The Middle Class is the target - it’s where the money is.
It's a political issue, and a sordid one at that.
The political ramifications are to drive envy and resentment to higher levels and to paint republicans/conservatives as unfeeling bast@rds. And now that the MSM have their script they'll push it hard.
Before you fight a battle its important to survey the battle ground.
OK, how about France and ‘let them eat cake’ and the French Revolution?
That certainly was a mess.
I believe this author knows that. He wants them to prove their assumptions using economics.
Sort of like asking “global warming alarmists” prove their case with cold hard facts.
Can’t we all just get away from: “Figures don’t lie but liars can figure”?
I agree that the middle class is the target. I am curious, however, how we define the terms “middle class” and “money”
Is middle class a group defined by yearly income? Net worth? Social beliefs? Culture?
The Obamacrats will tax, regulate, fine whoever and whatever they can.
Ping
More succinctly, how does pulling down the rich lift up the poor?
Pure communist agenda from a communist president and his communist administration.
And yet many “progressives” are calling Obama the most Conservative President we’ve had. (Reagan was a right wing radical )
I think Communist is the wrong term for Obama & Co. They are more fascist. They allow private ownership but dictate through taxation and regulation the means of production. It’s so much easier and less bloody. They’ll have you believe that they are the only thing standing between you and the dumb masses of communism that are determined to dispossess you of your wealth just to make thing ‘fair’. It will come down to the use of force at some time.
And it's where the lobbyists aren't.
Yes, and 3+ decades of self-serving tone deaf stupidity from business leaders sure hasn’t helped matters any.
The end is not that far in the future.
When there are no more taxpayers to support the takers, this will all collapse and then the takers truly will starve.
Spot on, Buckeye! This is a HUGE part of the problem which I can see even more with being employed exclusively by Japanese companies since 1988 (roughly 55% of that time in Japan, 45% in the U.S.A.)
The Japanese actually care . . . just a little . . . about their own people and nearly universally believe that the most stable and best society is one with a strong middle class. An organization claiming to represent business and actively working to destroy the native working class would be considered sheer lunacy and not mainstream.
Contrary to popular belief, it is relatively easy for a Japanese company to hire a foreign worker, but they have to pay them at least a 10% wage premium over the going rate in the industry. This requirement is pretty much self-policing. It works the same way in the "entertainment" industry (a/k/a sex trade) as it does in skilled employment: Unless the foreign worker is actually worth the premium, they aren't going to get hired.
if you worry that abuses of power are encouraged by concentrations of income, shouldn’t you worry even more that abuses of power are encouraged by concentrations of power?
This is the question that needs to be asked.
Yeah, I ran into that with a libinlaw as well.
Convinced that business people were evil and greedy and exploit people all the time,
but had no concern about concentrating power in the hands of government.
bkmk
The author stipulates that it must have been a market economy.
In 1789, no question that America was a market economy, unless you were a slave.
In 1789 France, I don’t know what kind of economy they had.
I do know that France had severe poverty in 1789.
I also know that America had the highest standard of living in the world in 1789, which is why people willingly risked their lives to get here.
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