The 'Income Inequality' Scam

Those peddling “income inequality” use a dishonest term, have provided the economic changes they decry and propose an increase in the cause as a cure. This proclaims their compassion.

The term ‘income inequality’ is preposterous; one may as well bewail inequality of respect. Income and respect are both earned and tend to differ among us. How much that we receive of either responds mostly to our efforts as judged in the eyes of others. ‘Income inequality’ mavens are proclaiming that they, not the market, should decide incomes. Parsing that, one finds the desire to replace economics with politics. Historically, the wealth of Western civilization appears to rest upon doing the opposite. Using “income inequality” in the present fashion seems economic subversion.

Many see the ongoing decline of middle class earnings -- that demographic is dissolving back into its original proletariat. The ‘inequality’ agents avoid that description; they prefer to deplore the increase in the share accruing to the wealthy few. Regardless, more is going to fewer people -- more people are receiving less. A notorious instance is found in skyrocketing CEO compensation relative to workers’ pay. More telling, most government work now pays better than the private sector. Food stamp usage seems an indicator for private sector workers.

The ‘inequality’ pitchmen are using a natural economic response as an excuse to assert more government economic intervention in the name of a false ‘fairness.’ Never mind that in history, government economic control has been inversely proportional to economic success, the recent Soviet Union and its imitators (like present-day Venezuela) in point.   

‘Income inequality’ is a political tool forged by the Left to manage destructive results of its own policies. It was the Left that gave us politicized unions with their inherent wage escalator and endemic corruption. Elected union leaders must compete to show their voters the reward for choosing them just as do politicians in Washington. The unions married the Left’s politicians and the resulting escalating labor costs have driven much production offshore or handed it to machines as economic competition and technology have unified a worldwide market. When a new, cheaper competitor appears in town, the local high-priced producer cuts costs or goes out of business. The world is now one economic town. U.S./E.U. high labor costs are facing inevitable reduction to the new world competitive standard. Though that decline is politically inadmissible, fostering it is one of the unstated motives for welcoming the influx of cheap immigrant labor in the West. In the United States, 16.5% of the labor force  in 2014 was foreign-born and that percentage is increasing.

Appreciators of irony may find that the same government now pandering for the massive importation of cheap foreign labor is also pandering for minimum wage hikes. Who is the real sucker here? How does this address income inequality? It just creates additional costly labor to replace with cheaper foreigners.

The union rapprochement with the political Left is corruption; the resulting substitution of political for economic decisions expresses the rot. A glance at the World Corruption Map suggests strongly that poverty and corruption are directly related and that Western values (E.g. the ‘Protestant Work Ethic’) are a likely contributor to the West’s lesser corruption and resulting wealth, compared to the rest of the world. (See: The Protestant Ethic and the Spirit of Capitalism by Max Weber.)

Reinforcing that, we see poverty and corruption increasing as churchgoers decline. The traditional independent, self-reliant, industrious American who saw receiving charity as a shameful mark of failure has been replaced by citizens asserting entitlement to the wealth of others via government. “In God we trust” is now “In Government we trust.” It appears reasonable that folk with the latter attitude are likely to be less productive, less honest and less wealthy. With reversed social and work attitudes, reversed economic results should not surprise.

We see the corruption: the Internal Revenue Service and  Secret Service acting to impeded political opponents, the president declining (with tacit Congressional support) to enforce immigration laws and Congress (a millionaires’ club) regularly voting upon important but secret bills such as ObamaCare and the Iranian Nuclear Deal. Reacting to these and an endless stream of political scandals, a Gallup poll found 75% of respondents concerned about U.S. government corruption.

Corrupt money accrues to power instead of to productivity. The 'advanced’ West is rejoining the rest of the world, riding the reversal of the West’s previously exceptional values and attitudes. Calling this trend ‘income inequality’ and implicitly ascribing it to the greed of the wealthy is as much snake oil as is offering government intervention to restrain it. No cure can originate in government; that must be born first in the society that has changed itself to its own detriment.

Politicians cannot afford to admit their involvement in the economic decline; ‘income inequality’ provides cover plus an excuse for new intervention. Government commands only two economic tools: Confiscation of money and compulsion applied to economic decisions. Both are economically negative. As we have noted, those are the tools that provided the present conditions. It is a much warmed-over economic fallacy that government spending and redistribution are productive; given that government-spent money is first taken from the economy in need of help. It is evidence of a sort of economic oxymoron. Like providing a blood transfusion using blood drained from the patient just before the procedure.

The only economic salvation is amusingly obvious: Another reversal as great as that behind the present conditions. That is, government’s significant withdrawal from the economy and a general rejection of dependent, corrupt attitudes. If one wishes to return to the wealth production of the past, simply apply past conditions again. But Western politicians have been demonizing those conditions, with considerable truth, for too long to propose a return to them now. Twist and turn as we might, our species has never escaped the reality: Nothing is free…. Western society is entering upon the price of its changed attitudes and governance. Historically, nothing new.

It is said that the human condition is scarcity, poverty, and conflict; power-seekers gather as government to improve their own lot without ability to change those conditions. Once secure, they conspire to maintain the status quo because significant changes are destabilizing, threatening the elites’ grip on power. China famously developed technology and explored the world long before Europe. It was all shut down by its governors in fear of resulting instability, leaving China a sitting duck for eventually more advanced Europeans. Modern welfare states move in that same direction via regulation and legislation. And they never stop their gradual encroachment upon individual initiatives. Thus are economies stifled.  

The American Progressives who exploited the mass displacements of the Industrial Revolution, the Civil War, and the Great Depression to gain and entrench the power “to improve the human condition” are now returning Western humanity to serfdom. Government-mandated income equality contradicts economic reality. When all the wealth not taken by the powerful is equalized among the rest, they end up sharing poverty. Where, with Progressives in power, are the middle-class housewives of yore?

For those who, blinded by neat gadgets, talking cars, and smart homes feel rich by ignoring the mountainous debt that accompanies the toys, another question: with Medicare and Social Security facing a $66 trillion long term deficit and 17.5% of Gross Domestic Product taken in Federal taxes, (never mind states, counties and cities) how will Americans finance their aging years?   

‘Income Inequality’ cures are sold with an implication: those with less, will be somehow, given more. If that were real, why would so many welfare state governments face nonrepayable debts and unsustainable deficits?  ‘Income Inequality’ is only an old scam reprised.