Time to Stop the War on Inequality

Advocates of equality are only too eager to overthrow the present economic structures in the name of fairness and opportunity. According to their logic, inequality begets a two-tiered society where moneyed interests rule, while all others languish. In this oversimplified ever richer/ever poorer scenario, some kind of action is deemed necessary to level the playing field. Hence, the need for a war on inequality.

This war has taken on a new emphasis with the recent bestseller, Capital in the Twenty-First Century by Thomas Piketty. The author claims that while capitalism is an excellent tool to allocate resources, it is grossly insufficient when allocating income. 

Naturally, the leveling instrument of choice is the government. Only government has the size, power and capacity to tax and regulate the richness out of the rich. It need not take all riches, but rather focus upon the “excessively” rich -- whatever that means.  

While all this might sound like typical socialist boilerplate that is easily refuted, there are actually those who claim such views can even be free-market friendly. Indeed, economists like Joseph Stiglitz believe that a free economy must be held in check by regulation to avoid the “excessive” concentration of too much power in the hands of the few.

Excessive inequality, Stiglitz and those of his school hold, leads to lesser efficiency, lower growth and lack of opportunity. Such ideas represent a kind of economic determinism where economy alone determines destiny. Thus, when inequality rules, the have-nots will never realize their full potential since the economic structures in place will always work against them. They claim that only government action will help people reach their full potential and therefore favor free markets.

Piketty takes the Stiglitz theory a step further by dropping the free-market window dressing altogether and calling for reallocation for reallocation’s sake regardless of whether it leads to economic growth, efficiency or prosperity.

Government, playing the role of Robin Hood, can bring things back to balance, the equalizers claim. Some advocates even long to go back to the halcyon days when income taxes for the “excessively” rich were sixty-three percent, seventy percent or FDR’s ninety-four percent. Piketty settles on an eighty percent tax rate for incomes starting at “$500,000 or $1 million” among other punitive taxes.

There is one major thing wrong with this reasoning. If indeed there is too great a concentration of wealth in a society, this view assumes that government is the only effective field leveler. It fails to realize that society has natural institutions that can effect a just and voluntary distribution of wealth. Any present imbalance is much more a product of the moral breakdown of society than the result of unjust economic structures.

Natural distributing institutions are those of family, community and faith. Indeed, the family is an economic powerhouse generating great wealth. However, it is also constantly distributing that wealth to its numerous members during life and even in death through inheritance. When the institution of the family is healthy, members help other members. In every generation, family fortunes at all income levels are divided and distributed, much more equitably than by big brother government.

When people have healthy and vibrant links to their communities, schools and associations, they are constantly called upon to support projects and programs that not only help the needy, but help distribute wealth generously.

However, the most important dynamo for wealth distribution is the church. When people have faith, they take seriously Christ’s mandate of loving one’s neighbor out of love of God. Such ardent charity opens the floodgates of wealth and applies it to vast works. It gave rise in the past to hospitals and universities, orphanages and hospices, churches and monasteries, charitable associations and pious confraternities -- all at the service of the poor. A vast social infrastructure was one of the greatest achievements of Christendom against which no other civilization can compare.  Remnants of this order exist today and still benefit all society.

These natural regulating institutions allow everyone to develop their full potential as social beings because they facilitate mutual support especially when working in the social context of family, community and Church.

Moreover, these institutions distribute wealth much more efficiently and effectively than government programs. More importantly, they create personal bonds of affection that unite society. A moral tie is formed when benefactors take personal interest in those receiving aid and recipients express gratitude for help given. This differs from the cold bureaucratic arm of government aid which is polarizing the nation by creating resentment among those forced to pay for programs, and ingratitude by recipients who now consider such benefits as entitlements.

It is time to stop the war on inequality. It is tearing the nation apart. The problem today is the natural regulators of wealth have been undermined. Society and economy are admittedly out of balance. The solution lies not in suppressing “excessive” riches or losing more trillion-dollar wars on poverty through government programs. Rather it lies in a return to that Christian order that will restore balance and favor solutions that promote social harmony.

John Horvat II is a scholar, researcher, educator, international speaker, and author. Recently his book Return to Order ranked first on Amazon in four countries.

Advocates of equality are only too eager to overthrow the present economic structures in the name of fairness and opportunity. According to their logic, inequality begets a two-tiered society where moneyed interests rule, while all others languish. In this oversimplified ever richer/ever poorer scenario, some kind of action is deemed necessary to level the playing field. Hence, the need for a war on inequality.

This war has taken on a new emphasis with the recent bestseller, Capital in the Twenty-First Century by Thomas Piketty. The author claims that while capitalism is an excellent tool to allocate resources, it is grossly insufficient when allocating income. 

Naturally, the leveling instrument of choice is the government. Only government has the size, power and capacity to tax and regulate the richness out of the rich. It need not take all riches, but rather focus upon the “excessively” rich -- whatever that means.  

While all this might sound like typical socialist boilerplate that is easily refuted, there are actually those who claim such views can even be free-market friendly. Indeed, economists like Joseph Stiglitz believe that a free economy must be held in check by regulation to avoid the “excessive” concentration of too much power in the hands of the few.

Excessive inequality, Stiglitz and those of his school hold, leads to lesser efficiency, lower growth and lack of opportunity. Such ideas represent a kind of economic determinism where economy alone determines destiny. Thus, when inequality rules, the have-nots will never realize their full potential since the economic structures in place will always work against them. They claim that only government action will help people reach their full potential and therefore favor free markets.

Piketty takes the Stiglitz theory a step further by dropping the free-market window dressing altogether and calling for reallocation for reallocation’s sake regardless of whether it leads to economic growth, efficiency or prosperity.

Government, playing the role of Robin Hood, can bring things back to balance, the equalizers claim. Some advocates even long to go back to the halcyon days when income taxes for the “excessively” rich were sixty-three percent, seventy percent or FDR’s ninety-four percent. Piketty settles on an eighty percent tax rate for incomes starting at “$500,000 or $1 million” among other punitive taxes.

There is one major thing wrong with this reasoning. If indeed there is too great a concentration of wealth in a society, this view assumes that government is the only effective field leveler. It fails to realize that society has natural institutions that can effect a just and voluntary distribution of wealth. Any present imbalance is much more a product of the moral breakdown of society than the result of unjust economic structures.

Natural distributing institutions are those of family, community and faith. Indeed, the family is an economic powerhouse generating great wealth. However, it is also constantly distributing that wealth to its numerous members during life and even in death through inheritance. When the institution of the family is healthy, members help other members. In every generation, family fortunes at all income levels are divided and distributed, much more equitably than by big brother government.

When people have healthy and vibrant links to their communities, schools and associations, they are constantly called upon to support projects and programs that not only help the needy, but help distribute wealth generously.

However, the most important dynamo for wealth distribution is the church. When people have faith, they take seriously Christ’s mandate of loving one’s neighbor out of love of God. Such ardent charity opens the floodgates of wealth and applies it to vast works. It gave rise in the past to hospitals and universities, orphanages and hospices, churches and monasteries, charitable associations and pious confraternities -- all at the service of the poor. A vast social infrastructure was one of the greatest achievements of Christendom against which no other civilization can compare.  Remnants of this order exist today and still benefit all society.

These natural regulating institutions allow everyone to develop their full potential as social beings because they facilitate mutual support especially when working in the social context of family, community and Church.

Moreover, these institutions distribute wealth much more efficiently and effectively than government programs. More importantly, they create personal bonds of affection that unite society. A moral tie is formed when benefactors take personal interest in those receiving aid and recipients express gratitude for help given. This differs from the cold bureaucratic arm of government aid which is polarizing the nation by creating resentment among those forced to pay for programs, and ingratitude by recipients who now consider such benefits as entitlements.

It is time to stop the war on inequality. It is tearing the nation apart. The problem today is the natural regulators of wealth have been undermined. Society and economy are admittedly out of balance. The solution lies not in suppressing “excessive” riches or losing more trillion-dollar wars on poverty through government programs. Rather it lies in a return to that Christian order that will restore balance and favor solutions that promote social harmony.

John Horvat II is a scholar, researcher, educator, international speaker, and author. Recently his book Return to Order ranked first on Amazon in four countries.