Real Clear Politics Article: Does Income Inequality Still Matter?

[deejaydana]

I've been fascinated with this topic because it seems to rear its head only when we're in a campaign year and then not as much is made of it in other times. I think at its most base usage, it's a great way to stir up the politics of envy, a typical campaign ploy, but what does it really mean at this point in time in our evolution as a country? Personally I feel empowered when I hear what others are making because I find it inspiring. It gives me hope that if I do things well and take the right course I might also realize wealth and what comes with it. Beyond that I believe that, given the state of our economy (in good and bad times) you are always going to have both the affluent and those that don't have, in relative terms, as good a hand. Is this 'fair' and does it even matter? With that said, when and how should the gov't try to level this field? I'm not sure they should be involved at all because I'm a firm believer that anyone can achieve some level of wealth and comfort in this country (call me an optimist if you want). I'm rambling a bit now, just wanted to see what others felt about this topic.

What's your take regards 'income inequality?'

Income inequality can rise and fall for all sorts of reasons. Twenty-somethings just starting out and retired seventy-somethings both earn a lot less on average than peak-earning fifty-somethings. As the age profile of the population shifts, income inequality figures shift, too. So what? Consider another example. A generous immigration policy can widen the income gap in this country while at the same time reducing world poverty. That's good, if you ask me.

Income inequality can also rise as a side-effect of injustice in our socio-economic system. But injustice should be rooted out because it is wrong, not because it widens the income gap as a side effect. If, just to take a wildly hypothetical example, the government has unjustly dumped loads of taxpayer money on Goldman Sachs, such a narrow allocation of public funds for private use should concern us for its own sake - not because Goldman's bountiful bonuses are likely to exacerbate income inequality.

A good hard jog and an oncoming heart attack may produce the same racing heartbeat. But the distinction matters. A mathematical abstraction like national income inequality is a similarly ambiguous symptom. We can slash the level of income inequality in an instant by slapping even higher taxes on big earners. Or we can slash the level of income inequality by falling into recession. But neither remedy addresses the real problem, which is persisting poverty, not income inequality.

The corruption of a political system in which crises are used to pay off the governing party's allies is also a real problem. The current silence about inequality - from news editors, pundits and politicians alike - would be golden if only it were based on a grasp of the limited utility of income statistics in guiding us toward more effective and humane public policy. But that is not the case. Instead, it appears that the commentators who fretted over income inequality so publicly for so long have simply stopped worrying about it. Inequality, it seems, only matters when a Republican is in the White House.

Link to entire piece:

http://www.realclearmarkets.com/articles/2009/07/31/does_income_inequality_still_matter_97336.html

[SnyderShrugged]

I think income inequality is to be expected and embraced as a motivator in a truly free society.

[deejaydana]

I think income inequality is to be expected and embraced as a motivator in a truly free society.

I couldn't agree more w/you SS. What is not mentioned when politicians opine upon this topic is the fact that the standard of living for every single strata in the US has risen in the past 40 years. Money begets money however, but is this a bad thing ?

[SnyderShrugged]

I couldn't agree more w/you SS. What is not mentioned when politicians opine upon this topic is the fact that the standard of living for every single strata in the US has risen in the past 40 years. Money begets money however, but is this a bad thing ?

I certainly dont think its a bad thing!

I often ask my very class focused friends.."How many people do you know who work for a poor person"?

[gbear]

SS,

the answer in the DC area should be high. Most gov employees better say "I do."

[mardi gras skin]

Poor isn't what it used to be. A bunch of my extended family lives in rural Georgia and they are truly poor. In the 70's and early 80's, poor meant taking baths in wash tubs, using outhouses, no air conditioning, etc. Today, poverty affords them cell phones, window a/c units, satellite tv, etc.

The gap between rich and poor is less relevant than the gap between poor 30 years ago and poor today.

[SnyderShrugged]

SS,

the answer in the DC area should be high. Most gov employees better say "I do."

LOL, it depends if they use real numbers or the funny numbers the treasury and Fed reserve puts out

[81artmonk]

I think income inequality is to be expected and embraced as a motivator in a truly free society.

:groupwave::allhail:

Again took the words right out of my mouth. I might add that trying to bridge that gap is fruitless in a free society. There will always be people who achieve and those who do not. Punishment of the rich is not only foolish but injust.

[MurrayH81]

I am fine with people who build their wealth on their own or via hard work.

I am not fine with Xth generation wealthy people who have no idea what hard work is, riding high on the hog based on what their family elders have done.

That's the income inequality that needs to be rectified.

[Hubbs]

I think income inequality is to be expected and embraced as a motivator in a truly free society.

There's a problem with that, SS. A certain level on inequality should be understood as "normal," and every embraced as economically healthy. However, these are not normal times:

The inequality has actually been at Great Depression levels for a while now, all stats included. And that correlates very strongly to the amount of debt consumers have had to take on to maintain their spending. They can only due so through debt - debt that has now become unavailable to them because the housing crisis has shown that they can't suck out home equity forever.

We have a demand shortage of just about everything right now. And a demand shortage means that the unwashed masses need a bit more of the end of the stick, not vice versa.

[SnyderShrugged]

There's a problem with that, SS. A certain level on inequality should be understood as "normal," and every embraced as economically healthy. However, these are not normal times:

The inequality has actually been at Great Depression levels for a while now, all stats included. And that correlates very strongly to the amount of debt consumers have had to take on to maintain their spending. They can only due so through debt - debt that has now become unavailable to them because the housing crisis has shown that they can't suck out home equity forever.

We have a demand shortage of just about everything right now. And a demand shortage means that the unwashed masses need a bit more of the end of the stick, not vice versa.

Oh dont get me wrong Hubbs, I fully realize that there is income inequality present and the debt burden. And I even support helping those tht need the help the most. But what I dont support is the demonizing of those that are in the higher brackets as "evil" and confiscating their wealth.

[stevenaa]

I am fine with people who build their wealth on their own or via hard work.

I am not fine with Xth generation wealthy people who have no idea what hard work is, riding high on the hog based on what their family elders have done.

That's the income inequality that needs to be rectified.

Jealous much? Why should you care how someone comes into their fortune? Who gives a rats behind if they know what hard work is? I just don't understand this thinking. Why does it need to be rectified? How do you propose rectifying it?

Some people were just lucky enough to be born into wealth. Good on 'em. I wish I had such luck. Working sucks and is much overrated. I'd much rather be kicking back doing the things I enjoy on a daily basis. I could easily fill my time with the many interests I have. Working just takes away from the time I could be spending doing the things I'd prefer doing.

[endzone_dave]

Jealous much? Why should you care how someone comes into their fortune? Who gives a rats behind if they know what hard work is? I just don't understand this thinking. Why does it need to be rectified? How do you propose rectifying it?

Some people were just lucky enough to be born into wealth. Good on 'em. I wish I had such luck. Working sucks and is much overrated. I'd much rather be kicking back doing the things I enjoy on a daily basis. I could easily fill my time with the many interests I have. Working just takes away from the time I could be spending doing the things I'd prefer doing.

I don't mind people having a ton of money. Like you said, good for them. I don't like seeing CEOs and higher company executives keeping more and more of the pie. Eventually that will affect the drive of the American worker and that is very bad for this country.

[SnyderShrugged]

I don't mind people having a ton of money. Like you said, good for them. I don't like seeing CEOs and higher company executives keeping more and more of the pie. Eventually that will affect the drive of the American worker and that is very bad for this country.

Americans are some the highest paid workers in the world

[Vicious]

It has to be monitored. If it gets out of hand it causes societal problems that are not easily rectified. When the middle class gets used, abused and pushed under, it's very bad for the economy.

[SnyderShrugged]

It has to be monitored. If it gets out of hand it causes societal problems that are not easily rectified. When the middle class gets used, abused and pushed under, it's very bad for the economy.

I'd say its bad for the economy if any "class" (hate that term) is used, abused and pushed under.

[twist]

I'd say its bad for the economy if any "class" (hate that term) is used, abused and pushed under.

Since money = power, and having money makes making money easier, any system you would like facilitates it.

[SnyderShrugged]

Since money = power, and having money makes making money easier, any system you would like facilitates it.

I dont understand what you are trying to say.

yes, having money makes it easier to make money, but it appears you are trying to say that those with less money cant make any more money, and thats untrue.

[twist]

I dont understand what you are trying to say.

yes, having money makes it easier to make money, but it appears you are trying to say that those with less money cant make any more money, and thats untrue.

I am just going by your signature and saying quite plainly that you would support a system that would use, abuse and push under a great many people.

Rands philosophy would create a system where wealth and power were highly sequestered, more so even than we see now.

The idea that this it is not coercion to force someone to choose between massively unfair wages and starvation is a funny notion of the purer brands of unrestrained capitalism, but that is exactly what we saw in the late 1800's - early 1900's.

[hkHog]

I am fine with people who build their wealth on their own or via hard work.

I am not fine with Xth generation wealthy people who have no idea what hard work is, riding high on the hog based on what their family elders have done.

That's the income inequality that needs to be rectified.

Um, that's not income inequality, that's wealth inequality. INCOME inequality implies that people are CURRENTLY MAKING vastly different amounts of money. Also, the capitalist nature of this country is the absolute best way to rectify this situation because a majority of the truly wealthy people in this country made their money themselves.

[SnyderShrugged]

I am just going by your signature and saying quite plainly that you would support a system that would use, abuse and push under a great many people.

Rands philosophy would create a system where wealth and power were highly sequestered, more so even than we see now.

The idea that this it is not coercion to force someone to choose between massively unfair wages and starvation is a funny notion of the purer brands of unrestrained capitalism, but that is exactly what we saw in the late 1800's - early 1900's.

I'm not a fan of Rand's objectivism, but I am a huge fan of Atlas Shrugged.

I certainly would not support any system that favors one income bracket over another. The system I would believe in is, well....Our original system in this country. That which made us great to begin with.

[twist]

I'm not a fan of Rand's objectivism, but I am a huge fan of Atlas Shrugged.

I certainly would not support any system that favors one income bracket over another. The system I would believe in is, well....Our original system in this country. That which made us great to begin with.

My apologies then.

[HOF44]

The problem is with wealth comes power to shape policy. Often that policy is shaped to keep the wealth where it is at currently. The American dream may become the American myth if things keep going as they have been.

One of the purposes of the death tax was to keep families from cornering the market on wealth and making each generation responsible to do more for themselves rather than collecting capital gains.

[HokieSkinsFan]

Americans are some the highest paid workers in the world

While cost of living, and costs of goods and services have gone through the roof. The salaries of most middle class Americans hasn't risen enough to keep up with these costs. Hence, the credit card craze.

[SnyderShrugged]

While cost of living, and costs of goods and services have gone through the roof. The salaries of most middle class Americans hasn't risen enough to keep up with these costs. Hence, the credit card craze.

Oh it goes back further than that. The decision to become a debt based economy spawned the credit card craze and the mortgage craze. It was never sustainable