Joel Watts – Income Inequality (Question 4)

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Link to question #4, including the videos referenced in responses.

What, if anything, do you think should be done about income inequality in the United States?

I shall respond to the second video, narrated by Arthur Brookes who fails to understand morality and cultural mores and norms. Unless, of course, Brookes suggests morality is relative, instead of progressive, his arguments — filled with strawmen of Greece — simply do not hold water.

He has three arguments for the morality of the free enterprise system — a system uniquely designed to fit a modern Western mindset, culture, and economy. His first is that free enterprise safeguards lasting happiness. His second is that it promotes real fairness. Finally, it does the most good for the most vulnerable.

Overall, I do not disagree with his first point, nor the discussion that follows. We understand that those who earn something are more likely to be happy. This is called the buy-in. We use it in gimmicks (really, loyalty cards?), organizing drives, and church. When you earn something, it is yours and no one can take it away from you. His second point, however, is bunk, as is his demonstration of college kids and their grades. Finally, this point is a bit of a generalization. While many are coming out of poverty (although, we should seek to define this term in relation to how we think of poverty and such), there are many more who are going into it. Further, not all free market systems across the world are the same. As we see in Europe, free market systems are sometimes controlled, and the better controlled, the more rewarding it is for their economics (German, for example).

Let me focus on the second part. The grades in the class are there to be earned. There is unlimited earning potential. In other words, every student starts out with an A but either continues to earn it or does not. This is not a real world example. A real world example, following the grading analogy would be to take a class of 20 students and have only 100 points to be earned the entire semester. Therefore, if one student is able to earn, say, 36 points (top 1%) what does that leave for the other 99%? If that one student controls 36 of those 100 points, and the nearest person to him, that top 2 to 5% controls another 20 points, well, you understand. This is the idea of limited good, an ancient and necessary idea. This is also the reality. There is only so much wealth, products, services, and power to go around.

This is why the wealth in the United States is unequal. Let me give you another example. A CEO now makes something like 475 times that of his employees. There is only so much money the company can pay out. Therefore, it is not on the employee to make more money, because it is impossible to do so. Why? Because the CEO has already eaten up the money to be made.

So, what do we do? We do exactly what those who first settled this country did. We do what the Founders did. We do what we need to settle the West. We redistribute the wealth and give everyone a starting chance. I’ve covered this before. This need not be done with every dollar, nor every day, but when income and wealth inequality have reached the levels they have, it must be done.