-By Gary Krasner
Chek out “The Dangers of America’s Obsession with Inequality.” That’s the title of Michael Tanner’s much too short essay.
It prompted me to add my thoughts to it and some more detail to what he’s saying because class warfare is still the prime political strategy for Democrats. Resentment of the wealthy is a great motivator during hard times. It is one reason Obama ran the economy into an 8-year-long business recession. All for political gain. Even lefty economists, like Krugman of course, got with the program, claiming that the eras of greater than 2 percent growth were over.
As soon as he got into office Trump disabused them of that idea. We now have over 3 percent growth, which Obama never achieved a single time in 8 years. Then following his tax cut in January, the Fed collected more revenue than any other month in the last 30 years.
ALSO SEE: CNSNews.com: Feds Collect Record Taxes in First Month Under Tax Cut; Run Surplus in January
Which brings us to the inequality theme which Dems (pardon the phrase), are banking on in November.
In 1996, I asked my boss why my friend Sally was earning more than I was. He showed me the job printouts. He said, “See, she works faster and makes fewer mistakes. Mistakes are costly”
I worked in the printing industry and back then Imagesetter film WAS costly This was before computer-aided typesetting and digital printing presses were widespread. I got his point. But liberals ignore it, because “income inequality” is the new name for the old Marxist phrase, “to each according to his needs.”
If liberals get their way on “equal pay for equal work”, then workers like Sally will earn less, but it will be equal to their less talented cohorts. How does that help women?!
Libs have their issue. So they don’t bother to realize that there’s no such thing as equal work. People have differing talents, ambitions, and capacity to perform their work.
But if government mandates that wages must be equal, then the US economy will decline to the production levels of Soviets, and every other nation that experimented with income equality. Bread lines were the catchword in those societies, but there was scarcity across the board. Just look at the once-thriving country of Venezuela today.
And that means there will be poverty across the board, because less wealth generated means less wealth tricking down from the business creators to the job holders. No profits, no jobs.
Tanner says it another way. He says the economy must grow. I say that too, but explain it this way: transactions (i.e. selling and buying) is how wealth is created. Wealth–which is defined as anything of value and people want–can only be created through private enterprise. Not government. And large companies, thru capital investment, creates huge (value-added) wealth, IN THE FORM OF PROFITS. Without profits, there are no jobs to share wealth that was created.
Under our tax system, government taxes income and profits. So from the sale of iPhones and Trump Steaks, the profits are taxed, and the workers income from wages for that company is taxed. Without that initial business investment (and the risk that goes along with any investment), with the expectation of reward in the form profits, WHICH NECESSARILY (in capitalism) results in INCOME INEQUALITY, government gets no revenue. And it is government revenue, via taxes on business and workers’ wages, which pays for roads and bridges and city workers. So the government didn’t build that road, Walmart and Exxon did.
SO GOVERNMENT DOESN’T CREATE WEALTH. IT ONLY SPENDS THE WEALTH THAT’S CREATED BY PRIVATE INVESTMENT. And when government spends it, it’s gone. It didn’t stimulate (except in the very short term) the economy to grow. Only the creation of wealth does that. And government is a not for profit entity. Collecting wealth from “A” and giving it to “B” is just a wealth transfer, like scooping a cup of water from the deep end of the pool and pouring it into the shallow end. No gain, no loss. No expansion of the economy.
So income inequality is NECESSARY for the health of the economy. As NYU professor Richard Epstein says, there must be income inequality for capitalism to function properly. Profit is essential to incentivise people in any endeavor. Great profit produces great incentive. Michael Jordan and George Clooney don’t receive the same rewards as their lesser peers. Talented sports figures, like tennis players, left Russia and Cuba and Soviet bloc nations to live here. Guess why?
There is cut-throat competition in computers and electronics. Prices are low and quality is always improving. The CEOs of Apple and Google earn huge incomes. Yet liberals argue that profits for health insurance companies is what makes medicine so expensive. Huh? Why one but not the other. In fact, the price of healthcare has no bearing on the profits and income of the providers. In fact, the price of healthcare has no bearing on the profits and income of the providers. In a provider-driven, monopoly market, the prices are whatever the providers can get away with.
income inequality is necessary, and it only matters that it increases for the rich and poor, albeit unequally, as JFK said. “A rising tide lifts all boats.” Where income and wealth declines equally is in communist and socialist countries. The formerly socialist nations in the EU have been transforming their nations towards free market capitalism, having seen their GDP decline year after year.