Wealth Inequality Focus is Toxic (2019 Aug)

by Barry A. Liebling

For centuries members of the leftist coterie have been obsessed with wealth inequality (and its close cousin, income inequality). The flawed concept is useful to them because inequality is perpetually present (in greater or lesser degrees). Consequently, it is always a handy rationalization (invalid excuse) for stealing money and “redistributing” it to those favored by the nomenklatura.

On several occasions I have written that wealth inequality is not a legitimate concern. Instead, how wealth is acquired should be the focus of attention. My recent remark was “If your money is the result of adhering to honesty, being productive, and trading by mutual consent you have a right to all of it. Conversely, a person who uses force or fraud to acquire money is not entitled to any of it. And this applies to everyone – regardless of wealth status.” http://www.alertmindpublishing.com/data/2019-columns/professor-advocates-grand-theft-2019-jul/

Consider how the acceptance of the notion that wealth inequality is a problem inevitably leads to bitter feelings toward others and toward oneself.

Suppose through constant repetition (from school, from the media, from political pundits) you cave in to the bromide that in an ideal world everyone should have an equal share of the money. We may never see an ideal world, but we can take steps to “fix” it. You look at people richer than you and feel resentment. They are hoarding wealth that by right does not belong to them but according to your leftist teachers should be confiscated and given to those who have less (possibly yourself). In this scenario, rich people (regardless of how they act) are tainted and ought to be cut down to size. When politicians propose raising taxes on the rich you applaud. No matter how much they are currently paying in taxes (even if it is proportionately more than everyone else combined) they are still rich, and taking away more serves a dual purpose. First, higher taxes reduces inequality. But more important it is symbolic punishment against those you have been told to despise (the greedy rich).

Next look at people who are less affluent than you. Now you have a more complicated situation. If you believe they should have more you may feel uncomfortable dipping in to your own pocket. Whatever wealth you have, you feel you deserve. You resent the idea that you should be compelled to give up any of your assets. Your reflexive reaction is, “penalize someone else, but not me.” So instead of tackling the “inequality problem” by sacrificing any of your own wealth you yearn for government action. You come out in favor of state intervention, tout increases in welfare programs, cheer when government agencies shower prizes on “the less fortunate,” and hope that it is funded by taxes that are levied on citizens other than yourself.

And that is only one possible perverse response to recognizing that some people have less than you. If inequality is the problem an obvious solution is to cut everyone down a notch. If all people share the same misery that is better (according to leftist dogma) than allowing some people to accumulate more. This is one of the animating ideas behind the proposed Green New Deal which recommends that everyone (excluding the leftist elite of course) lead a torturous parsimonious life where energy and material goods will deliberately be made much more expensive.

If you are sufficiently woke (that is piously leftist), you can turn the malice you feel for people who are prosperous inward (in case it is not already there). You can feel guilty about your own relative affluence and assuage your discomfort by endlessly apologizing for your success. One way to signal that you are a person of virtue is to proclaim (regardless of the truth) that any money you have is merely the product of good luck and that productivity and effort do not really count for much. After all, if you are inspired by the leftist spirit, spotting and damning all instances of wealth inequality is your duty.

Of course, there are many people who do not buy in to the “wealth inequality is bad” mantra. There is plenty of opposition to the Marxist-inspired call for redistributing riches by government force. Unfortunately, most of the critics zoom in on fringe issues and, consequently, fail to address the essential principle involved. Here are three typical examples.

The most popular measure of wealth inequality used by academics is the Gini coefficient – named after the Italian economist Corrado Gini who developed it more than 100 years ago. The index can range from zero to one – where zero indicates that riches are distributed evenly among everyone, and one suggests that one person or entity has all the wealth. As would be anticipated there are many ways to calculate the number – largely because it depends on what data are included in the sample. So conservative and libertarian critics often scrutinize the methodology and assert that a particular Gini coefficient overestimates wealth inequality. People in some specific location are not really as unequal as the progressives claim. Note well that this comment plays directly into the hands of meddling activists. As soon as the critics concede that there is some importance – with policy implications – to measuring inequality they lost the battle. If you accept the premise that wealth inequality – per se – needs to be “fixed” you have joined the leftist army.

Some conservative opponents of the “wealth inequality” cult look at the Gini coefficient and take it at face value. Frequently they point to cities and states where the government is controlled by Democratic party members and say that in these locations inequality is actually higher than in regions with Republican officials. Again, even if this is true, it does not make a dent in the leftist narrative. Progressive politicians can simply reply that they have to work even harder and implement more interventions to bring inequality down.

Finally, there is the argument that attempts to reduce wealth inequality through taxation leads to lower productivity, less innovation, and less wealth. Free market economists have pointed out – and backed up with real-life examples – that lowering taxes and reducing regulations allows businesses to thrive and results in more riches for everyone – at all levels of affluence. The assertion is true, but it is irrelevant to the “wealth inequality” boosters. A sincere leftist progressive would say that it is fine if a lot of wealth is created, but more important to the Marxist-enthusiast than the amount of wealth is how it is distributed. If some people wind up with more or less than the leftist prefers “adjustments” have to be made.

The proper response to those who fixate on wealth inequality as something to fix is to explain that it is really not a legitimate issue. How people acquire their money – honestly or dishonestly – is what really matters.

*** See other entries at AlertMindPublishing.com in “Monthly Columns.” ***

Comments are closed.