Saturday, November 19, 2011

Income/wealth inequality is a red herring

Yes, it is absolutely true that the numeric value of the financial wealth of a "rich" person is greater than for a "poor" person or even a "middle class" person or a "working class" person, but in our system of representational government each still gets a single vote. The "inequality" of financial income or wealth is a red herring and completely irrelevant when it comes to choosing representatives. There is a myth or "narrative" that money buys access, but there is plenty of access in our system and the perceived extra access provided by money is grossly overrated. If there is so much money in politics it is precisely because it doesn't manage to buy the degree of access and control or even influence that progressive liberals and groups such as Occupy Wall Street and the rest of the national Occupy movement imagine it does.
Lobbying and bribery are not the same. Bribery and extortion are crimes and of course should be prosecuted, but lobbying and otherwise legally seeking to influence government is neither a crime nor inherently evil or "corrupt." Even unions, environmental groups, state and local governments, and a variety of social advocacy groups pursuing "social justice" engage in lobbying in Washington. Lobbying is hardly limited to business and "corporatists."
Liberal groups are lobbying as much as conservative groups. If conservatives raise a lot of money for lobbying, it is precisely because they are competing against the lobbying of liberal groups.
Sure, the rich have more money, but there are fewer of them. Sure the middle class and working class have less individual income and wealth, but there are more of them. It actually kind of balances out, in a rough sense. In fact, as famed economist Joseph Stiglitz's own numbers show, the 1% only have 25% of total income and only 40% of total wealth. Yes, the 99% actually do get the lion share of the income, 75%, and possess a modest majority of the total wealth, 60%. But when it comes to votes and winning elections, which is all that politicians actually really care about, it is number of votes and not the income or wealth of the individual voters that determines who wins the elections. Sure, campaign funding does matter, but once again there is no clear indication that a smaller number of large donations really "buys" more votes than a larger number of small donations.
The simple fact is that big business needs workers and consumers and has a vested interest in jobs, healthy incomes, and (relatively) happy workers. The problem with declining incomes over the past few decades is a problem, not a "feature" for businesses. Sure, businesses seek to keep expenses down, but they also seek to retain workers and keep them reasonably happy.
A lot of the decline in incomes over the past few decades has far less to do with some devious scheme of the rich and all to do with a needed adjustment after the excesses of unreasonable wage hikes due to union extortion in the 1960's and 1970's ("pay up or we strike!" and state and local politicians "buying" the support of unions) coupled with the high expense of dealing with the ballooning regulatory environment in the U.S. in that period as well. Starting in the early 1980's and even late 1970's, increased foreign competition (e.g., cheaper imported compact cars and electronics and textiles) and the maturing of the Baby Boomers as consumers resulted in intense pressure on businesses to cut costs. They really had no choice. There was no longer a growing market for the products and rising prices that they had depended upon during the earlier period when they passed the cost of higher wages and regulatory expenses directly on to consumers. And the Federal Reserve under Paul Volcker put an end to elevated inflation as well. Competition was changing, consumers were changing, technology was changing, government and regulation were changing, etc. None of that was any kind of grand conspiracy by The 1%.
And it is simply true that far too many middle class, working class, and poor consumers spent too much and saved too little. There was simply too much "consumerism." Was there some grand conspiracy by The 1% to encourage an excess of consumption and a deficit of savings? No, not that I am aware of. Sure, there was lots of advertising to encourage consumption, but there was certainly a dearth of discipline and responsibility on the part of The 99%. To assert that they were not responsible for their own actions is absurd. It is also true than many (most) of us got very poor if any financial education in how to properly budget for the future and how to properly prioritize saving over spending.
If the activists and promoters of the class warfare tactic of blaming income/wealth inequality and blaming The Rich for that inequality believe they have a good case for their beliefs, I have yet to hear that case. Yes, I have heard their arguments, but as I note above, their arguments ring hollow and do not amount to a solid case.
Yes, we have high unemployment and underemployment and stagnant incomes, but businesses stand to benefit from addressing these issues as much as workers themselves, so this really is more of a 100% of us in the same boat than the divisive argument of The 99% vs. The 1% and blaming The Rich for all social and economic ills.
Income/wealth inequality is an ideological "talking point", not an enlightening path to a solution to anybody's problems.


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