Posted on 01/06/2015 4:34:33 AM PST by Kaslin
The income gap and income inequality is a hot button topic in the United States that has taken center stage in political debates and college classrooms in recent years. Economic Nobel Laureates Joseph Stiglitz and Paul Krugman have argued in The New York Times that income inequality is a major issue that requires political action to remedy. President Obama even hails income inequality as “the defining challenge of our time.” So what real problems does the income gap propose for American citizens and the country’s future, why is it such a major issue, and what can be done about it, if anything at all?
There are four primary reasons that Joseph Stiglitz lays out that give worry about the income gap issue. The first is that the middle class is too weak to support the consumer spending that has historically driven economic growth. The second is that the middle class is unable move up socio-economically because they are unable to invest in their future by educating themselves and their children. The third is that the weakness of the middle class is decreasing the tax coffers, especially because those at the top are so determined to avoid taxes. Lastly, the fourth reason is that inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable.
Even though Paul Krugman generally agrees that income inequality is an issue, he doesn’t fully agree with the degree of it’s negative effects that Stiglitz does. Disagreeing primarily with the first point about consumer spending driving economic growth and even giving a nod to Milton Friedman on largely debunking it. Specifically he states that it is a statistical illusion that fails to account for effects of savings on economic growth. However, despite these possible problems that even people on the same side of the argument cannot fully agree on, is the income gap in and of itself the real issue facing America or is there an underlying issue?
It’s important to understand that income (measured by money) is not the same as wealth. Money is just a unit of measurement; by itself it has no real use. What’s the point of having ten trillion dollars if nothing can be purchased with that money? Wealth is stuff: a kitchen table, an apartment building, an iPhone. When people say that there is a major income gap, that doesn’t always mean there is a major wealth gap. Wealth, not income, is truly the only thing that actually matters to individuals because that is what determines their standard of living.
Any American earning more than $25,000 a year in income is in the top two percent of world income. Many of the 99 percent that are crusading against the one percent actually fall into this income level. Using percentages to frame debates on fairness and equality is a game of semantics. Using that logic one could argue that some poor helpless multimillionaire that happens to live in a neighborhood of billionaires is disadvantaged and should be supported by the billionaires. This is blatantly ridiculous. Let’s ignore the issue of money, income, and percentages and focus the real issue of wealth.
The real problem behind the income inequality debate shouldn’t be about the digits in one citizens bank account compared to another, but about the ability of citizens to gain wealth and a higher quality of living. America’s poverty line is $23,283 for a four person household according to the U.S Census Bureau. With that amount of money, Americans can still afford better housing than a super majority of citizens in certain African and South American countries experience. These Americans have access to more food than ever and don’t worry about being malnourished. These Americans have wealth.
The reason people in “poverty” can experience a level of wealth that is unprecedented in other countries today and even amongst the wealthiest of citizens over a hundred years ago is because of entrepreneurs and capitals that have found ways to make these good more affordable than ever. Companies throughout history like Ford, Walmart, Microsoft, McDonalds, and Standard Oil that have found ways of making goods more affordable and accessible to more people so that people with lower income can have a better standard of living.
Is income inequality a real issue that should require political intervention? No, it is not. Empowering entrepreneurs to continue to innovate and make goods more affordable is the key to a country’s and it’s citizens prosperity. The underlying issue in America is not income inequality, it’s government barriers and cronyism that prevents the middle class Americans from being able to easily start up businesses. By fixing regulations and lowering barriers to entry, and the income gap will fix itself.
First “income equality” within the US, then US income equality with the rest of the world where the average is (or was) $10,000 a year ...
Income inequality is complete BS.
It’s what people DO with the money they have is what matters. If a person blows their money on useless crap that they don’t need or that breaks shortly after it’s purchased they will lead a poor lifestyle. I have what I need and even a few things that I want. I’m comfortable but don’t make a gazillioin dollars. But I don’t waste my money on stupid crap like the latest fashion or video games.
In come equality is a function of general equality.
So long as the poor refuse to be educated and to do their share of the work, they will have unequal incomes.
Laziness breed income inequality
Income Inequality is a phony leftist issue used to justify ever increasing government control and “wealth redistribution.”
I have my own financial pressures, but I really don’t care whether Bill Gates has 100 times, or 10,000 times, or a billion times more money than I do.
The only thing I want is to have free markets which require one to deliver value in exchange for one’s income, and a limited government that does not have enough power to be bought by those with many time more wealth than I have.
I’d rather see an honestly-earned $500 billion in private hands than expropriated into government coffers. It’s safer that way.
Every dollar the government takes out of private hands is a cost to the citizenry. Sometimes there are legitimate reason why the citizens need to bear those costs. But they are always costs, Keynesian horse-twaddle not withstanding.
Of course we have income inequality!! And it is necessary that we do!
Does a janitor deserve the same income that a brain surgeon has? If so, then what motivation is there to put in the years of hard work to become a brain surgeon?
If the “poor” want better income, they need to do the hard work to earn it.
If income inequality were really a bad thing, those who howl about it would not be using their positions to enrich themselves...
My solution: all teams automatically split all points equally, regardless of who has possession of the ball or what happens on the field. Imagine how much more fair and popular NFL football will be once the disappointment of watching your team lose is banned by a simple rules change. Imagine what will happen to the quality of play when points no longer affect decisions.
I grew up without most of the stuff that poor households typically have today, but I never advocated murdering the police.
In the United States, in 2015, poverty doesn't have much (if anything) to do with money.
I'm acquainted with a 45 year old woman whose sole income is $700 per month S.S.I. and $90 food stamps. She's debating whether to buy a gym membership. That kind of stupid can't be fixed.
Income inequality is a lot like global warming.
I use to counsel Soldiers on finances prior to retirement. Many would buy gym memberships at off post gyms when there were several awesome gyms on post they could use for free.
“equal” means “the same”. So obviously they don’t mean “equality.”
They mean taking money from those earn it honestly and giving it to those who vote for more benefits.
There are, however, causes of income inequality, connected with what I have called the Era of Bad Stewards -- the prevailing zeitgeist in which fiduciaries treat the positions as existing for their own enrichment, rather than to serve those whose good or goods they are charged with overseeing -- and with the suborning of legislation, regulation and government subsidies on behalf of incumbent business interests to the disadvantage of new entrants (the phenomenon briefly called "crony capitalism") which do matter and need to be fought against for both the material and moral good of society.
The left in the US have had to invent more poor people by scribing a line at a certain income level. People are not poor at that level, they just can’t afford to go on a cruise or a trip to Vegas every year, or to buy a 2000 sq ft house, or buy a new car. But once they scribe that line, they gain the voters that are envious of those who make more money than them, because they promise to rectify the problem “poor people” have that they invented.
Nice analogy.
Speaking for myself, as long as I’ve had a roof over my head, heat, electric, running water, ample food and beer in the fridge, I couldn’t care less about Derek Jeter’s or Warren Buffett’s W2.
Excellent point
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.